<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1996 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)
(810) 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 [ ]
As of March 1, 1997, 30,000 units of limited partnership interest of the
registrant were outstanding and the estimated aggregate market value of the
units as of such date (based on a 1996 appraisal of Partnership properties)
held by non-affiliates was approximately $11,700,000.
DOCUMENTS INCORPORATED BY REFERENCE
SEE ITEM 14.
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PART I
ITEM 1. BUSINESS
General Development of Business
Uniprop Manufactured Housing Communities Income Fund, a Michigan Limited
Partnership (the "Partnership"), acquired, maintains, operates and ultimately
will dispose of income producing residential real properties consisting of four
manufactured housing communities (the "Properties"). The Partnership was
organized and formed under the laws of the State of Michigan on May 16, 1985.
Its principal offices are located at 280 Daines Street, Birmingham, Michigan
48009 and its telephone number is (810) 645-9261.
The Partnership filed an S-11 Registration Statement (Registration No.
2-98180) in June 1985 which was declared effective by the Securities and
Exchange Commission on September 24, 1985. The Partnership thereafter offered
a maximum of 30,000 units of limited partnership interest representing capital
contributions by the limited partners to the Partnership of $1,000 per unit
(the "Units"). The sale of all 30,000 Units was completed in March, 1986
generating $30 million of contributed capital to the Partnership.
On February 10, 1986, the Partnership acquired Aztec Estates, a 645-space
manufactured housing community in Margate, Florida and Kings Manor, a 314-space
manufactured housing community in Ft. Lauderdale, Florida. On March 4, 1986,
the Partnership acquired Old Dutch Farms, a 293-space manufactured housing
community in Novi, Michigan. On March 27, 1986, the Partnership acquired The
Park of the Four Seasons, a 572-space manufactured housing community in Blaine,
Minnesota.
The Partnership operates the Properties as manufactured housing
communities with the primary investment objectives of: (1) obtaining net cash
from operations; (2) obtaining capital appreciation; and (3) preserving
capital. There can be no assurance that such objectives can be achieved.
Financial Information About Industry Segment
The Partnership's business and only industry segment is the operation of
its four manufactured housing communities. Partnership operations commenced in
February 1986 upon the acquisition of the first two Properties. The
Partnership's first full year of operations was the fiscal year ended December
31, 1987. For a description of the Partnership's revenues, operating profit
and assets, please refer to Items 6 and 8.
Narrative Description of Business
General
The Properties were selected from 23 manufactured housing communities then
owned by affiliates of P.I. Associates Limited Partnership, a Michigan limited
partnership,
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the General Partner (the "General Partner") of the Partnership. 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 Manufactured Housing Services Inc. (the "Consultant") and
after consideration of relevant factors, including, current operating results
of the particular Property, prevailing economic conditions and with a view to
achieving maximum capital appreciation to the Partnership considering relevant
tax consequences and the Partnership's investment objectives.
Competition
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 homesites 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, have
participated, 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 Margate/Fort Lauderdale area contains
approximately 10 communities offering approximately 3,725 housing sites
competing with Aztec Estates. The Davie/Fort Lauderdale area contains
approximately five communities offering approximately 1,765 housing sites
competing with Kings Manor. Park of the Four Seasons competes with
approximately 11 communities offering approximately 3,031 housing sites. Old
Dutch Farms competes with approximately six communities offering approximately
2,836 housing sites. The Properties also compete against other forms of
housing, including apartment and condominium complexes.
Governmental Regulations
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 Aztec Estates and Kings Manor. Under Florida
law, the Partnership is required to deliver
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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 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 for 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 and Minnesota, where its
operations are conducted.
Employees
The Partnership employs three part-time 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 on-site maintenance
and administrative services. Uniprop, Inc., as property manager, has overall
management authority for each Property.
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ITEM 2. PROPERTIES
The Partnership purchased all four manufactured housing communities for
cash and the Properties are unencumbered, except for normal zoning, building
and use restrictions for properties of that kind. Each of the Properties is a
modern manufactured housing community containing lighted and paved streets,
side-by-side off-street parking and complete underground utility systems. The
Properties consist of only the underlying real estate and improvements, not the
actual homes themselves. Each of the Properties has a community center which
includes offices, meeting rooms and game rooms. Each of the Properties, except
Old Dutch Farms, has a swimming pool and tennis courts.
Overall, as illustrated in the table below, the Properties reported, as of
December 31, 1996, a combined occupancy of 97.0% and an average monthly
homesite rent of $373.
<TABLE>
<CAPTION>
CURRENT CURRENT
--------- -------
PROPERTY NAME OCCUPANCY AVERAGE
- ------------------ --------- -------
AND LOCATION YEAR CONSTRUCTED ACREAGE NUMBER OF SITES OCCUPIED SITES LEVELS RENTS
- ------------------ ---------------- ------- --------------- -------------- --------- -------
<S> <C> <C> <C> <C> <C> <C>
Aztec Estates
Sundial Circle
Margate, FL 1970 100 645 608 94.3% $411
Kings Manor
State Road 84
& Flamingo Road
Ft. Lauderdale, FL 1972 45 314 304 96.8 $388
Park of the Four
Seasons
University Avenue
Blaine, MN 1972 107 572 568 99.3 $321
Old Dutch Farms
Novi Road
Novi, MI 1972 47 293 290 99.0 $381
---- ---- ---- ----
Total on
12/31/96 1,824 1,770 97.0% $373
12/31/95 1,824 1,735 95.1% $362
</TABLE>
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ITEM 3. LEGAL PROCEEDINGS
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 limited partners are restricted to certain
matters of fundamental significance to the Partnership. The 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 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 Limited
Partners, as a group, holding more than 50% of the then outstanding Units.
On December 4, 1996, a Notice of Special Meeting of the Limited Partners
and Proxy Statement were sent to the Limited Partners.
On February 6, 1997, the Special Meeting of the Limited Partners was held
at the offices of the Partnership. The following proposals, each of which was
described in the Proxy Statement, were submitted to a vote of the Limited
Partners at the Special Meeting:
1. To authorize the Partnership to enter into a financing (the
"Financing"), whereby the Partnership would borrow between $33,000,000 and
$34,000,000, secure the borrowing with mortgages on its properties, and return
in full the Limited Partners' capital contributions, and to make various
changes to the Agreement of Limited Partnership of the Partnership, as amended
(the "Partnership Agreement") to accommodate the Financing.
16,727 votes were cast for this proposal, 4,679 votes were cast against
it, 8,003 votes were withheld, and 591 votes abstained.
2. To amend the Partnership Agreement to permit the Partnership to
undertake the Financing notwithstanding that it may reduce Net Cash from
Operations (as defined in the Partnership Agreement) distributed to the Limited
Partners in the year in which the Financing occurs below $3,000,000.
16,522 votes were cast for this proposal, 4,806 votes were cast against
it, 8,003 votes were withheld, and 669 votes abstained.
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3. To authorize the Partnership to pay, on an ongoing basis, a
distribution to the General Partner equal to one-fourth of 1% quarterly of the
appraised value of the properties of the Partnership, as determined from time
to time.
15,782 votes were cast for this proposal, 5,445 votes were cast against
it, 8,003 votes were withheld, and 770 votes abstained.
4. To authorize the Partnership to pay a fee out of the net proceeds of
the Financing equal to 1% of the gross proceeds of the Financing to an
affiliate of the General Partner for its services in arranging the Financing.
15,742 votes were cast for this proposal, 5,501 votes were cast against
it, 8,003 votes were withheld, and 754 votes abstained.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND
RELATED SECURITY HOLDER MATTERS
There is no established public trading market for the Units and it is not
anticipated that one will ever develop. During the last two years, less than
two percent of the Units have been transferred each year, excluding transfers
on account of death or intra-family transfers. The Partnership believes there
is no secondary market, or the substantial equivalent thereof, and none will
develop.
The General Partner calculates the estimated net asset value of each Unit
by dividing the amount of distributions that would be made to the Limited
Partners in the event of the current sale of the Properties at their current
appraised value, less sales expenses (but without consideration to tax
consequences of the sale), by 30,000. In October 1996, the Properties were
appraised at an aggregate fair market value of $53,200,000. Assuming a sale of
the four properties at the appraised value in March 1997, less payment of
3.0% selling expenses, mortgage debt of $33,500,000, the $3,470,000 Contingent
Purchase Price due to certain partners of the General Partner, and after the
80/20% split of sale or financing proceeds with the General Partner, the net
aggregate proceeds available for distribution to the Limited Partners is
estimated to be $11,700,000 or $390 per unit as of March 31, 1997. There can
be no assurance that the estimated net asset value could ever be realized. As
of March 31, 1997, the Partnership had approximately 2,730 limited partners
holding Units.
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ITEM 6. SELECTED FINANCIAL DATA
The following table summarizes selected financial data for Uniprop Manufactured
Housing Communities Income Fund, a Michigan Limited Partnership, for the
periods ended December 31, 1996, 1995, 1994, 1993 and 1992:
<TABLE>
<CAPTION>
FISCAL YEAR FISCAL YEAR FISCAL YEAR FISCAL YEAR FISCAL YEAR
ENDED ENDED ENDED ENDED ENDED
DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER
31, 1996 31, 1995 31, 1994 31, 1993 31, 1992
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Total Assets $21,307,555 $21,822,565 $22,113,778 $22,701,925 $23,252,126
=========== =========== =========== =========== ===========
Income $ 7,751,358 $ 7,502,221 $ 7,321,328 $ 6,997,507 $ 6,700,706
Expenses (4,776,905) (4,513,031) (4,436,966) (4,292,755) (3,910,512)
----------- ----------- ----------- ----------- -----------
Net Income $ 2,974,453 $ 2,989,190 $ 2,884,362 $ 2,704,752 $ 2,790,194
=========== =========== =========== =========== ===========
Distributions to
Limited Partners,
per Unit $ 100 $ 100 $ 100 $ 100 $ 100
Income per Unit:
Class A $ 69 $ 69 $ 69 $ 68 $ 69
Class B $ 100 $ 100 $ 100 $ 100 $ 100
Weighted average
number of Units
outstanding:
Class A 20,230 20,230 20,230 20,230 20,230
Class B 9,770 9,770 9,770 9,770 9,770
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
Liquidity
The Partnership has, since inception, generated adequate amounts of cash
to meet its operating needs. The Partnership retains cash reserves which it
considers adequate to maintain the Properties. All funds in excess of the
operating needs and cash reserves have been distributed to the Partners,
quarterly. 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 year ended December 31,
1996 the Partnership added $179,159 to reserves. The amount of any funds
placed in reserves is at the discretion of the General Partner. The
Partnership expects to generate adequate amounts of cash to meet its operating
needs during the next fiscal year.
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On August 24, 1994, the Partnership obtained a $200,000 line of credit
with Comerica Bank to establish an inventory of new and used manufactured
homes. The inventory of homes purchased with the Comerica line are set-up as
"model homes" and are sold to retail customers through a licensed affiliate,
Uniprop Homes. Over the last two years, sales of the new and used model homes
have been growing and maintaining sufficient inventory has been a problem. As a
result, in 1995, the line was increased to $400,000 and in 1996, the line was
further increased to $600,000.The net advances from the line of credit have
been $152,000 in 1996, $208,000 in 1995, and $135,000 in 1994. As of December
31, 1996, the outstanding balance on the line of credit was $495,300. Increases
in the line were necessary to provide a sufficient inventory of model homes in
the communities owned by the Fund. The General Partner believes that the model
home sales program is in the best interest of the Partnership.
On March 25, 1997 the Partnership completed the Financing that the Limited
Partners approved at the Special Meeting held on February 6, 1997, as described
in Item 4. The Partnership borrowed $33,500,000 from Nomura Asset Capital
Corporation (the "Lender") on March 25, 1997 and secured the borrowing with
liens on its Properties. The interest rate on the Financing is 8.24%, and the
term is 120 months. The loan is amortized over 360 months. No prepayment is
permitted. As contemplated in the Proxy Statement, on March 26, 1997 the
Partnership distributed $30,000,000 to the Limited Partners, representing a
full return of original capital contributions of $1,000 per Unit held. The
Partnership will continue its operations. It will continue to own and operate
its properties and expects to be able to continue to pay cash distributions to
the Limited Partners, although in amounts substantially lower than in the past.
Limited Partners will continue to have an interest in the Partnership because
their original capital contributions have appreciated since their initial
investments were made. Only the original capital contribution was returned on
March 26, 1997.
Capital Resources
The capital formation phase of the Partnership began on February 10, 1986,
when Aztec Estates and Kings Manor were purchased by the Partnership and
operations commenced. On March 4, 1986, and March 27, 1986, Old Dutch Farms
and Park of the Four Seasons were purchased, respectively. From the
$30,000,000 capital raised from the sale of the Units, $26,400,000 was used to
purchase the four Properties after deducting sales commissions, advisory fees
and other organization and offering costs. The Partnership had no capital
expenditure commitments as of December 31, 1996 and does not anticipate any
during the next fiscal year.
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Results of Operations
a. Distributions
During the years ended December 31, 1996, 1995 and 1994, cash generated by
operations, and available for distribution, was $3,759,195, $3,773,017 and
$3,652,772 respectively. For the years ended December 31, 1996, 1995 and 1994,
respectively, the Partnership made distributions to Limited Partners equal, on
an annualized basis, to 10% of their original capital contributions. These
distributions totaled $3,000,000 in each year. The General Partner received
distributions totaling $600,000, $595,000 and $400,000 during the same periods.
No distributions made to the limited partners to date constitute, in whole or
in part, a return of their capital contributions. With the closing of the
Financing on March 25, 1997, the Partnership expects to make a distribution to
the Limited Partners on or about March 26, 1997 which will constitute a
complete return of their capital contributions.
b. Net Income
For the years ended December 31, 1996, 1995 and 1994 net income was
$2,974,453, $2,989,190 and $2,884,362 on total revenues of $7,751,358,
$7,502,221 and $7,321,328.
Net income plus depreciation and amortization less distributions to all
Partners was $159,195, $178,017 and $252,772, for the same periods. This
fluctuation results from differences in the timing of distributions to the
Partners and the fact that the Partnership had established cash reserves when
deemed necessary from time to time.
c. Partnership Management
Net expenses for the management of the Partnership (i.e. gross expenses
for such management, less transfer fees, interest on reserves and interest on
funds awaiting distribution) were $357,469 in 1996, $249,760 in 1995 and
$266,907 in 1994.
The increase in net expenses for the management of Partnership from 1995 to
1996 is a result of higher legal expenses associated with the Proxy Statement
that was submitted to the Limited Partners, as described in Item 4.
d. Property Operations
Overall, the four Properties had a combined average occupancy of 97.0%
(1,770/1,824 sites) as of December 1996; 95.1% as of December 1995; and 94.8%
as of December 1994. The average collected monthly rent as of December 1996
was approximately $373 per homesite versus $362 as of December 1995 and $352 as
of December 1994, an increase each year of 3.0% and 2.8%, respectively.
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During the 1996, 1995 and 1994 fiscal years, the Properties generated a
net operating income of $4,420,836 or 57.1% of total revenues; $4,253,489 or
56.7% of total revenues; and $4,140,507 or 56.6% of total revenues,
respectively. Net operating income is computed before deduction of (i) certain
non-recurring expenses of $304,172, $230,712 and $335,243, respectively, (ii)
depreciation and amortization of $784,743, $783,827, and $768,410, and (iii)
partnership management expenses of $357,469, $249,760, and $266,907.
Aztec Estates, in Margate, Florida, had an occupancy of 94.3% (608/645
sites) as of December 1996 compared to 95.9% as of December 1995 and 98.4% in
1994. The average rent in December 1996 was $411 per homesite versus $395 in
December 1995 and $385 in December 1994, an increase each year of 4.0% and
2.6%, respectively.
The property's 1996 net operating income of $1,587,687 represented 52.4%
of revenues versus $1,614,553 or 53.7% of revenues in 1995, and $1,543,235 or
51.9% of revenues in 1994. The decline in income is a result of lower
occupancy and higher expenses.
Kings Manor, in Fort Lauderdale, Florida, had an occupancy of 96.8%
(304/314 sites) as of December 1996 compared to 96.5% as of December 1995 and
99.0% in 1994. The average rent in December 1996 was $388 per homesite versus
$372 in December 1995 and $354 in December 1994, an increase each year of 4.3%
and 5.1% respectively.
The property's 1996 net operating income of $843,448 represented 62.1% of
revenues, versus $821,053 or 60.6% in 1995, and $781,390 or 59.5% in 1994. The
increase in income is a result of lower operating expenses.
Old Dutch Farms, in Novi, Michigan, had an occupancy of 99.0% (290/293
sites) as of December 1996 compared to 96.9% in 1995 and 94.2% in 1994. The
average rent in December 1996 was $381 per homesite versus $371 in December
1995 and $359 in December 1994, an increase each year of 2.7% and 3.3%,
respectively.
The property's 1996 net operating income of $770,431 represented 62.1% of
revenues, versus $731,943 or 61.5% in 1995, and $744,447 or 64.3% in 1994. The
increase in income was the result of higher occupancy.
The Park of the Four Seasons, in Blaine, Minnesota, had an occupancy of
99.3% (568/572 sites) as of December 1996 compared to 92.5% in 1995 and 88.6%
in 1994. The average rent in December 1996 was $321 per homesite versus $312
in December 1995 and $306 in December 1994, an increase each year of 2.9% and
2.0%, respectively.
The property's 1996 net operating income of $1,219,270 represented 57.9%
of revenues versus $1,085,940 or 56.1% in 1995, and $1,055,557 or 56.3% in
1994. The increase in income is a result of higher occupancy and higher rent.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Partnership's financial statements for the fiscal years ended December
31, 1996, 1995 and 1994, and supplementary data are filed with this Report
under Item 14.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
There have been no changes in the Partnership's independent public
accountants nor have there been any disagreements during the past two fiscal
years.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Partnership, as an entity, does not have any officers or directors.
The General Partner of the Partnership is P.I. Associates Limited Partnership.
P.I. Associates is a Michigan limited partnership. From November, 1985 until
March 19, 1997, Paul M. Zlotoff served as the sole general partner of P.I.
Associates. In order to address concerns raised by the Lender in connection
with the Financing, on March 19, 1997, GP P.I. Associates Corp. was admitted as
a corporate General Partner. GP P.I. Associates Corp. is wholly-owned by Paul
M. Zlotoff. Under the amended partnership agreement of P.I. Associates, all
actions taken by P.I. Associates must be approved by both general partners.
Information concerning Mr. Zlotoff's age and principal occupations during
the last five years or more is as follows:
Paul M. Zlotoff, 47, is and has been an individual general partner of P.I.
Associates since its inception in May 1985. Mr. Zlotoff became the Chairman
and Chief Executive Officer of Uniprop, Inc. in May 1986 and has been its
President since 1979. He is also an individual general partner of Genesis
Associates Limited Partnership, the general partner of Uniprop Manufactured
Housing Communities Income Fund II, a public limited partnership which owns and
operates nine manufactured housing communities. Mr. Zlotoff currently, and in
the past, has acted as the general partner for various other limited
partnerships owning manufactured home communities, as well as some commercial
properties.
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The following individuals are the directors and officer of GP P.I.
Associates Corp.:
Name and Age Position Held
------------ -------------
Paul M. Zlotoff, 47 Director and President, Secretary
and Treasurer
Arthur Weiss, 48 Director
Steve Adler, 46 Director
Arthur Weiss, 48 has been practicing law at Jaffe, Raitt, Heuer & Weiss,
P.C. ("JRH&W") since 1976, which represents the company in various matters.
Mr. Weiss is currently a shareholder, director and vice president of JRH&W.
Steve Adler, 46, is vice president of acquisitions and development and
director of operations for Uniprop. He joined Uniprop in 1984. As an officer
of Uniprop, he became president of Uniprop Homes, the marketing affiliate of
Uniprop. In this capacity, he is responsible for developing new home sales,
and establishing resale operations in each of Uniprop's 40 family and adult
retirement communities.
Arthur Weiss is an Independent Director, meaning that he is in fact
independent, and is not, and has not been at any time in the five years
preceding his appointment: (a) a stockholder, director, officer, employee, or
partner of GP P.I. Associates Corp., P.I. Associates, or the Partnership; (b) a
customer, supplier, or other person who derives more than 10% of its purchases
or revenues from its activities with GP P.I. Associates Corp., P.I. Associates,
or the Partnership; [c] a person or other entity controlling or under common
control with any such stockholder, partner, customer, supplier or other person
referenced in subparagraph (a) or (b) above; or (d) a member of the immediate
family of any such stockholder, director, officer employee, partner, customer,
supplier or other person referenced in subparagraph (a) or (b) above.
Under the Articles of Incorporation of GP P.I. Associates Corp., until
such time as the notes payable to the Lender have been discharged and the liens
have been released from the Properties, certain major corporate actions may be
taken only with the unanimous vote of the directors of GP P.I. Associates Corp.
These actions include:
a) filing or consenting to the filing of any bankruptcy, insolvency or
reorganization case or proceeding, instituting any proceedings under any
applicable insolvency law or otherwise seeking relief under any laws relating
to the relief from debts or the protection of debtors generally;
b) seeking or consenting to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator, custodian or any similar official for GP P.I.
Associates Corp., P.I. Associates, or the Partnership or a substantial portion
of any of their properties;
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c) making any assignment for the benefit of the creditors of GP P.I.
Associates Corp., P.I. Associates, or the Partnership; or
d) taking any action in furtherance of the foregoing subparagraphs (a)
through (c).
ITEM 11. EXECUTIVE COMPENSATION
The Partnership has no executive officers and therefore, no officers
received a salary or remuneration exceeding $100,000 during the last fiscal
year. The General Partner of the Partnership and an affiliate, Uniprop, Inc.,
received certain compensation and fees during the fiscal year in the amounts
described in Item 13. The Partnership anticipates that it will provide similar
compensation to the General Partner and Uniprop, Inc. during the next fiscal
year.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The Partnership is a limited partnership formed pursuant to the Michigan
Uniform Limited Partnership Act, as amended. The General Partner, P.I.
Associates Limited Partnership, is vested with full authority as to the general
management and supervision of the business and other affairs of the
Partnership, subject to certain constraints in the partnership agreement and
consulting agreement. Limited partners have no right to participate in the
management of the Partnership and have limited voting privileges only on
certain matters of fundamental significance. No person owns of record or
beneficially, more than five percent of the Partnership's Units.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The following discussion describes all of the types of compensation, fees
or other distributions paid by the Partnership or others to the General Partner
or its affiliates from the operations of the Partnership during the last fiscal
year, as well as certain of such items which may be payable during the next
fiscal year. Certain of the following arrangements for compensation and fees
were not determined by arm's length negotiations between the General Partner,
its affiliates and the Partnership.
Paul M. Zlotoff has an interest in the successors to the sellers of all
the Properties acquired by the Partnership and may be entitled to share in a
contingent purchase price with respect to each Property, when and if the
successors to the sellers become entitled thereto. Each of the sellers has
been dissolved and liquidated and their interests in the Contingent Purchase
Price have been assigned to certain partners of the General Partner.
-14-
<PAGE> 15
The maximum amounts which could be payable to the successors to the sellers are
as follows: Aztec Estates, $1,374,323; Kings Manor, $529,724; Park of the Four
Seasons, $1,113,594; and Old Dutch Farms, $452,359. The contingent purchase
price for each Property was determined by reference to the average of two
independent real estate appraisals which were obtained by the General Partner.
Such appraisals are only estimates of value and are not necessarily indicative
of the actual real estate value. Each seller will become entitled to any
unpaid contingent purchase price upon the sale, financing or other disposition
of one or more Properties, but, only after the receipt by each Limited Partner
of any shortfall in his 9% cumulative preferred return plus the return of his
adjusted capital contribution. The actual amounts to be received, if any, will
depend upon the results of the Partnership's operations and the amounts
received upon the sale, financing or other disposition of the Properties and
are not determinable at this time. Because the Financing will result in a
complete return of the Limited Partners' capital contributions, and because the
Limited Partners have received their cumulative preferred return in full, the
successors to the sellers will receive $1,500,000 in partial payment of the
Contingent Purchase Price on or about May 15, 1997.
The Partnership paid and will pay an incentive management interest to the
General Partner for managing the Partnership's affairs, including: determining
distributions, negotiating agreements, selling or financing properties,
preparing records and reports, and performing other ongoing Partnership
responsibilities. This incentive management interest could be up to 20% of the
net cash from operations (cash revenues less cash operating expenses and
specified reserves) in any taxable year. However, in each taxable year the
General Partner's right to receive any net cash from operations is subordinated
to the extent necessary to first provide each limited partner his 10% preferred
return plus any shortfall in his 9% cumulative preferred return. During the
last fiscal year, the General Partner was entitled to an incentive management
interest of $751,839. The actual amount of incentive management interest paid
to the General Partner during 1996 was $600,000. The actual amount to be
received during the next fiscal year will depend upon the results of the
Partnership's operations and is not determinable at this time, however, because
the capital contributions of the Limited Partners will be returned in full
connection with the Financing, after such return of capital contributions no
further Preferred Return or Cumulative Return will apply, and the payment of
the Incentive Management Interest will not be contingent on the satisfaction of
those returns. The General Partner also has a right to receive 20% of any
sale or financing proceeds remaining after each limited partner has received an
amount equal to any shortfall in his 9% cumulative preferred return, plus the
return of his adjusted capital contribution.
At the Special Meeting, the Limited Partners approved an amendment to the
Partnership Agreement to provide that the Partnership will pay the General
Partner a quarterly Partnership Management Distribution equal to one-fourth of
1% of the most recent appraised value of the Properties of the Partnership.
The Partnership Management Distribution for each quarter will be paid in
arrears, 45 days after the end of each fiscal quarter. The General Partner
proposed the Partnership Management Distribution to substitute, in part, for
the substantial reduction in the amounts expected to be paid to the General
Partner pursuant to the Incentive Management Interest following the Financing.
-15-
<PAGE> 16
The actual amounts to be received during the next fiscal year pursuant to the
Partnership Management Distribution will depend on the appraised values of the
Properties.
Also at the Special Meeting, the Limited Partners approved the payment of
a finance fee to Uniprop, Inc., an affiliate of the General Partner, equal to
1% of the amount borrowed in the Financing. Because the amount borrowed was
$33,500,000, the finance fee paid to Uniprop, Inc. on March 25, 1997 was
$335,000. The finance fee is payable for unusual services rendered in
arranging financing for all the Properties.
Uniprop, Inc., an affiliate of the General Partner, received and will
receive property management fees for each Property managed by it. Uniprop,
Inc. is primarily responsible for the day-to-day management of the Properties
and for the payment of the costs of operating each Property out of the rental
income collected. The property management fees are equal to the lesser of 5%
of the annual gross receipts from the Properties managed by Uniprop, Inc., or
the amount which would be payable to an unaffiliated third party for comparable
services. During the last fiscal year, Uniprop, Inc. received the following
property management fees totaling $387,854: Aztec Estates, $152,718; Kings
Manor, $67,980; Old Dutch Farms, $61,761; and Park of the Four Seasons,
$105,395. In addition, certain employees of the Partnership are also employees
of affiliates of the General Partner. During the last fiscal year, these
employees received an aggregate of $105,798 for performing local property
management, data processing and investor relations services for the
Partnership. The actual amounts to be received during the next fiscal year
will depend upon the results of the Partnership's operations and are not
determinable at this time.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Financial Statements
The following financial statements and related documents are filed with
this Report:
(1) Report of Independent Certified Public Accountants
(2) Balance Sheets as of December 31, 1996 and 1995 and Statements of
Income for the fiscal years ended December 31, 1996, 1995 and 1994
(3) Statements of Partners' Equity for the fiscal years ended
December 31, 1996, 1995 and 1994
(4) Statements of Cash Flows for the fiscal years ended
December 31, 1996, 1995 and 1994
-16-
<PAGE> 17
(5) Schedule III - Real Estate and Accumulated
Depreciation for the fiscal years ended December 31, 1996,
1995 and 1994
(b) Reports on Form 8-K
The Partnership did not file any Forms 8-K during the fourth quarter of
1996.
(c) Exhibits
The following exhibits are incorporated by reference to the S-11
Registration Statement of the Partnership filed June 4, 1985, as amended on
August 1, 1985 and September 11, 1985:
3(a) Amended Certificate of Limited Partnership for the Partnership
3(b) Agreement of Limited Partnership for the Partnership
10(a) Form of Management Agreement between the Partnership and
Uniprop, Inc.
10(b) Form of Consulting Agreement between the Partnership, the
General Partner and Consultant
The following exhibits are incorporated by reference to the Form 10-K for
fiscal year ended December 31, 1992.
3(c) Certificate of Amendment to the Certificate of Limited Partnership
for the Partnership (originally filed with Form 10-Q for the fiscal
quarter ended June 30, 1986).
4 Form of Certificate of Limited Partnership Interest in the
Partnership (originally filed with Form 10-K for the fiscal year
ended December 31, 1986)
10(c) Contingent Purchase Price Agreement between the Partnership, Aztec
Estates
10(d) Contingent Purchase Price Agreement between the Partnership
and O.D.F. Mobile Home Park (originally filed with Form 10-K for the
fiscal year ended December 31, 1987)
10(e) Contingent Purchase Price Agreement between the Partnership
and The Park of the Four Seasons (originally filed with Form 10-K
for the fiscal year ended December 31, 1987)
The following exhibits are attached to this Report:
3 (d) First Amendment to Agreement of Limited Partnership.
-17-
<PAGE> 18
3 (e) Second Amendment to Agreement of Limited Partnership.
27 Financial Data Schedule
28 Letter summary of the estimated fair market values of the
Partnership's four manufactured housing communities, as of
October 3, 1996.
(d) Other Financial Statements
There are no other financial statements required by the instructions
contained in Regulation S-X or, the information is included elsewhere in the
financial statements or the notes thereto.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Uniprop Manufactured Housing Communities Income Fund, a
Michigan Limited Partnership, 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,
General Partner
Dated: March 31, 1997 BY: /s/ Paul M. Zlotoff
---------------------------------
Paul M. Zlotoff, General Partner
BY: GP P.I. Associates Corp.
BY: /s/ Paul M. Zlotoff
----------------------------------
Paul M. Zlotoff, President
-18-
<PAGE> 19
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Partners
Uniprop Manufactured Housing
Communities Income Fund
(a Michigan limited partnership)
We have audited the accompanying balance sheets of Uniprop Manufactured Housing
Communities Income Fund (a Michigan limited partnership), as of December 31,
1996 and 1995, and the related statements of income, partners' equity and cash
flows for each of the three years in the period ended December 31, 1996. We
have also audited the schedule listed under Item 14 of Form 10-K. These
financial statements and the schedule are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements and the schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the schedule
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements and the schedule. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall presentation of the financial statements and the
schedule. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Uniprop Manufactured Housing
Communities Income Fund at December 31, 1996 and 1995 and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1996 in conformity with generally accepted accounting principles.
Also, in our opinion, the schedule listed under Item 14 of Form 10-K presents
fairly, in all material respects, the information set forth therein.
BDO SEIDMAN, LLP
Troy, Michigan
February 12, 1997
<PAGE> 20
UNIPROP MANUFACTURED
HOUSING COMMUNITIES INCOME FUND
(A MICHIGAN LIMITED PARTNERSHIP)
BALANCE SHEETS
================================================================================
<TABLE>
<CAPTION>
December 31, 1996 1995
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
PROPERTY AND EQUIPMENT
Buildings and improvements $ 22,128,664 $ 22,087,145
Land 5,280,000 5,280,000
Manufactured homes and improvements 538,914 412,052
Furniture and equipment 101,700 98,320
- ---------------------------------------------------------------------------------------------------------------
28,049,278 27,877,517
Less accumulated depreciation 7,989,565 7,214,093
- ---------------------------------------------------------------------------------------------------------------
NET PROPERTY AND EQUIPMENT 20,059,713 20,663,424
Cash 640,086 468,664
Other assets (Note 2) 607,756 690,477
- ---------------------------------------------------------------------------------------------------------------
$ 21,307,555 $ 21,822,565
===============================================================================================================
LIABILITIES AND PARTNERS' EQUITY
Line of credit (Note 3) $ 495,300 $ 343,210
Accounts payable 110,583 170,213
Other liabilities (Note 4) 991,619 973,542
- ---------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 1,597,502 1,486,965
PARTNERS' EQUITY
Class A limited partners 11,438,140 12,064,399
Class B limited partners 8,874,775 8,874,775
General partner (602,862) (603,574 )
- --------------------------------------------------------------------------------------------------------------
TOTAL PARTNERS' EQUITY 19,710,053 20,335,600
- ---------------------------------------------------------------------------------------------------------------
$ 21,307,555 $ 21,822,565
===============================================================================================================
</TABLE>
See accompanying notes to financial statements.
<PAGE> 21
UNIPROP MANUFACTURED
HOUSING COMMUNITIES INCOME FUND
(A MICHIGAN LIMITED PARTNERSHIP)
STATEMENTS OF INCOME
================================================================================
<TABLE>
<CAPTION>
Year Ended December 31, 1996 1995 1994
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCOME
Rental $ 7,490,744 $ 7,183,229 $ 6,999,810
Interest 30,760 28,057 28,289
Other 229,854 290,935 293,229
- ---------------------------------------------------------------------------------------------------------------
7,751,358 7,502,221 7,321,328
- ---------------------------------------------------------------------------------------------------------------
OPERATING EXPENSES
Property operations 2,386,289 2,252,437 2,094,276
Administrative (Note 5) 785,186 665,407 711,692
Depreciation 784,742 783,827 768,410
Property taxes 820,688 811,360 862,588
- ---------------------------------------------------------------------------------------------------------------
4,776,905 4,513,031 4,436,966
- ---------------------------------------------------------------------------------------------------------------
NET INCOME $ 2,974,453 $ 2,989,190 $ 2,884,362
===============================================================================================================
INCOME PER LIMITED PARTNERSHIP
UNIT (Note 7)
Class A $ 69 $ 69 $ 69
Class B $ 100 $ 100 $ 100
DISTRIBUTIONS PER LIMITED
PARTNERSHIP UNIT (Note 7)
Class A $ 100 $ 100 $ 100
Class B $ 100 $ 100 $ 100
NUMBER OF LIMITED PARTNERSHIP
UNITS OUTSTANDING
Class A $ 20,230 $ 20,230 $ 20,230
Class B $ 9,770 $ 9,770 $ 9,770
NET INCOME ALLOCABLE TO
GENERAL PARTNER $ 600,712 $ 612,411 $ 515,457
DISTRIBUTIONS ALLOCABLE TO
GENERAL PARTNER $ 600,000 $ 595,000 $ 400,000
===============================================================================================================
</TABLE>
See accompanying notes to financial statements.
<PAGE> 22
UNIPROP MANUFACTURED
HOUSING COMMUNITIES INCOME FUND
(A MICHIGAN LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERS' EQUITY
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
================================================================================
<TABLE>
<CAPTION>
Class A Class B
General Limited Limited
Partner Partners Partners TOTAL
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BALANCE, January 1, 1994 $ (736,442) $ 13,318,715 $ 8,874,775 $ 21,457,048
Distributions to partners (400,000) (2,023,000) (977,000) (3,400,000)
Net income for the year 515,457 1,391,905 977,000 2,884,362
- --------------------------------------------------------------------------------------------------------------
BALANCE, December 31, 1994 (620,985) 12,687,620 8,874,775 20,941,410
Distributions to partners (595,000) (2,023,000) (977,000) (3,595,000)
Net income for the year 612,411 1,399,779 977,000 2,989,190
- ---------------------------------------------------------------------------------------------------------------
BALANCE, December 31, 1995 (603,574) 12,064,399 8,874,775 20,335,600
Distributions to partners (600,000) (2,023,000) (977,000) (3,600,000)
Net income for the year 600,712 1,396,741 977,000 2,974,453
- ---------------------------------------------------------------------------------------------------------------
BALANCE, December 31, 1996 $ (602,862) $ 11,438,140 $ 8,874,775 $ 19,710,053
===============================================================================================================
</TABLE>
See accompanying notes to financial statements.
<PAGE> 23
UNIPROP MANUFACTURED
HOUSING COMMUNITIES INCOME FUND
(A MICHIGAN LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
================================================================================
<TABLE>
<CAPTION>
Year Ended December 31, 1996 1995 1994
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 2,974,453 $ 2,989,190 $ 2,884,362
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation 784,742 783,827 768,410
(Gain) loss on disposals of property and equipment 38,386 (34,074) (31,902)
(Increase) decrease in other assets 82,721 (274,628) 23,181
Increase (decrease) in accounts payable (59,630) 78,297 (29,994)
Increase (decrease) in other liabilities 18,077 28,090 (177,515)
- ---------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 3,838,749 3,570,702 3,436,542
- ---------------------------------------------------------------------------------------------------------------
CASH FLOWS USED IN INVESTING ACTIVITIES
Purchase of property and equipment (726,175) (564,061) (352,251)
Proceeds from disposals of property and equipment 506,758 475,645 154,868
- ---------------------------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES (219,417) (88,416) (197,383)
- ---------------------------------------------------------------------------------------------------------------
CASH FLOWS USED IN FINANCING ACTIVITIES
Distributions to partners (3,600,000) (3,595,000) (3,400,000)
Net advances under line of credit 152,090 208,210 135,000
- ---------------------------------------------------------------------------------------------------------------
NET CASH USED IN FINANCING ACTIVITIES (3,447,910) (3,386,790) (3,265,000)
- ---------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH 171,422 95,496 (25,841)
CASH, at beginning of year 468,664 373,168 399,009
- ---------------------------------------------------------------------------------------------------------------
CASH, at end of year $ 640,086 $ 468,664 $ 373,168
===============================================================================================================
</TABLE>
See accompanying notes to financial statements.
<PAGE> 24
UNIPROP MANUFACTURED
HOUSING COMMUNITIES INCOME FUND
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
===============================================================================
1. SUMMARY OF ACCOUNTING POLICIES
ORGANIZATION AND BUSINESS
Uniprop Manufactured Housing Communities Income Fund, a Michigan Limited
Partnership (the "Partnership") acquired, maintains, operates and will
ultimately dispose of income producing residential real properties consisting
of four manufactured housing communities (the "properties") located in Florida,
Minnesota and Michigan. The Partnership was organized and formed under the laws
of the State of Michigan on May 16, 1985.
The general partner of the Partnership is P. I. Associates Limited Partnership.
Taxable investors acquired 20,230 Class A units, and 9,770 Class B units were
acquired by tax exempt investors. Depreciation is allocated only to holders of
Class A units and to the general partner.
USE OF ESTIMATES
In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and assumptions
that affect (1) the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities as of the date of the financial
statements, and (2) revenues and expenses during the reporting period. Actual
results could differ from these estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of the Partnership's financial instruments, which consist
of cash, its line of credit and accounts payable, approximate their fair
values.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is provided using
the straight-line method over the following estimated useful lives:
Building and improvements 30 years
Manufactured homes and improvements 30 years
Furniture and equipment 3-10 years
<PAGE> 25
UNIPROP MANUFACTURED
HOUSING COMMUNITIES INCOME FUND
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
===============================================================================
Accumulated depreciation for tax purposes was $9,169,549 and $8,324,900 as of
December 31, 1996 and 1995, respectively.
INCOME TAXES
Federal income tax regulations provide that any taxes on income of a
partnership are payable by the partners as individuals. Therefore, no provision
for such taxes has been made at the partnership level.
2. OTHER ASSETS
At December 31, 1996 and 1995, "Other assets" included cash
of $171,000 in a security deposit escrow account for two of the Partnership's
properties, as required by the laws of the state in which they are located,
which is restricted from operating use.
3. REVOLVING CREDIT AGREEMENT
The Partnership currently has a $600,000 revolving line of credit agreement with
a bank. Interest accrues on outstanding balances at the bank's prime rate (prime
was 8.25% at December 31, 1996). The amounts outstanding were $495,300 and
$343,210 at December 31, 1996 and 1995, respectively.
4. OTHER LIABILITIES
Other liabilities consisted of:
<TABLE>
<CAPTION>
December 31, 1996 1995
- ----------------------------------------------------------------------------------
<S> <C> <C>
Tenants' security deposits $ 483,809 $ 443,571
Accrued property taxes 496,898 520,888
Other 10,912 9,083
- ----------------------------------------------------------------------------------
TOTAL $ 991,619 $ 973,542
==================================================================================
</TABLE>
5. RELATED PARTY TRANSACTIONS
MANAGEMENT AGREEMENT
The Partnership has an agreement with an affiliate of the general partner to
manage the properties owned by the Partnership. The management agreement is
automatically renewable annually, but may be terminated by either party upon
sixty days written notice. The property management fee is the lesser of 5% of
annual gross receipts from the properties managed, or the amount which would be
payable to an unaffiliated third party for comparable services.
<PAGE> 26
UNIPROP MANUFACTURED
HOUSING COMMUNITIES INCOME FUND
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
===============================================================================
REPORT OF FEES
During the years ended December 31, 1996, 1995 and 1994, the affiliate earned
property management fees of $387,855, $371,984, and $362,755, respectively, as
permitted in the Agreement of Limited Partnership. These operating expenses are
included with "Administrative" expenses in the respective statements of income.
The Partnership was owed $6,945 and $8,415 by the affiliate at December 31,
1996 and 1995, respectively, for overpayments made.
Certain employees of the Partnership are also employees of affiliates of the
general partner. These employees were paid by the Partnership the amounts of
$130,321, $105,798, and $120,876, in 1996, 1995 and 1994, respectively, to
perform local property management and investor relations services for the
Partnership.
CONTINGENT PURCHASE PRICE
The general partner of P.I. Associates has an interest in the sellers of all
the properties acquired by the Partnership and is entitled to share in a
contingent purchase price with respect to each property. Each seller will
become entitled to any unpaid contingent purchase price upon the sale,
financing or other distribution of one or more of the properties, but, only
after the receipt by the limited partners of any shortfall in their 9%
cumulative preferred return, plus the return of their adjusted capital
contribution. Management estimates that the total contingent purchase price at
December 31, 1996 is approximately $3,470,000. It is currently anticipated that
$1,500,000 of the contingent purchase price will be paid in 1997 using a
portion of the proposed financing transaction proceeds described in Note 8.
However, no liability related to this contingency has been recorded at December
31, 1996 since the proposed financing transaction has not yet been finalized.
<PAGE> 27
UNIPROP MANUFACTURED
HOUSING COMMUNITIES INCOME FUND
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
================================================================================
6. RECONCILIATION OF FINANCIAL INCOME AND TAXABLE INCOME
<TABLE>
<CAPTION>
Year Ended December 31, 1996 1995 1994
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
Income per the financial
statements $ 2,974,453 $ 2,989,190 $ 2,884,362
Adjustments to depreciation
for difference in methods (69,114) (68,563) (83,776)
Adjustments for prepaid rent,
meals and entertainment 7,468 (2,877) (457)
- ----------------------------------------------------------------------------------
Income Per The Partnership's
Tax Return $ 2,912,807 $ 2,917,750 $ 2,800,129
==================================================================================
</TABLE>
7. PARTNERS' CAPITAL
Subject to the orders of priority under certain specified conditions more fully
described in the Agreement of Limited Partnership, distributions of partnership
funds and allocations of net income from operations are principally determined
as follows:
DISTRIBUTIONS
Net cash from operations (generally defined in the Agreement as net income plus
depreciation) is to be distributed to the limited partners until they have
received their 10% preferred return plus any shortfall in their 9% cumulative
return. Secondly, the general partner will receive 20% of net cash from
operations, as an incentive management interest for managing the Partnership's
affairs. Thereafter, all remaining net cash from operations is to be
distributed to the limited partners.
ALLOCATION OF NET INCOME
Net income is to be allocated in the same manner as distributions except that:
a) Depreciation expense is allocated only to the general partner and the
Class A (taxable) limited partners and,
b) In all cases, the general partner is to be allocated at least 1% of all
Partnership items.
<PAGE> 28
UNIPROP MANUFACTURED
HOUSING COMMUNITIES INCOME FUND
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
================================================================================
Since inception, the Fund earned sufficient cash from operations to distribute
the 10% preferred return to the limited partners and therefore, there has been
no shortfall in the 9% cumulative return. At December 31, 1996, the general
partner has earned but not yet received an incentive management interest of
approximately $605,000. It is management's intent to pay a portion of this
amount with proceeds from the proposed financing transaction described
in Note 8.
8. SUBSEQUENT EVENT
At a special meeting of the limited partners held on February 6, 1997, the
limited partners approved a proposed financing plan relating to (a) the
mortgaging of partnership properties, (b) the distribution of a portion of the
proceeds to the limited partners, (c) the investment of a portion of the
proceeds and (d) payment of specified fees to an affiliate of the general
partner. A summary of the sources and uses of funds related to the proposed
financing plan is included in the followings tables:
NET PROCEEDS FROM PROPOSED FINANCING $ 32,500,000
===========================================================================
USES OF PROCEEDS:
Distribution to Limited Partners
Class A $ 20,230,000
Class B 9,770,000
Partial payment of contingent purchase price 1,500,000
Available cash for operations 500,000
Cash reserve 500,000
- ---------------------------------------------------------------------------
NET PROCEEDS DISTRIBUTED AND INVESTED $ 32,500,000
===========================================================================
The limited partners also authorized the Partnership to pay a quarterly
partnership management fee to the general partner, upon completion of the
financing, equal to 1/4% of the most recent appraised value of the
Partnership's properties.
9. SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest totaled approximately $35,000, $15,000 and $3,000 in
1996, 1995 and 1994, respectively.
<PAGE> 29
UNIPROP MANUFACTURED
HOUSING COMMUNITIES INCOME FUND
(A MICHIGAN LIMITED PARTNERSHIP)
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1996
================================================================================
<TABLE>
<CAPTION>
Column A Column B Column C Column D
- -------------------- ---------- ------------------------------- -------------------------------
Costs
Capitalized
Subsequent to
Initial Cost Acquisition
------------------------------- -------------------------------
Buildings and Buildings and
Description Encumbrance Land Improvements Land Improvements
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Aztec Estates
(Margate, FL) $ - $ 2,199,868 $ 8,799,475 $ - $ 109,369
Kings Manor
(Ft. Lauderdale, FL) - 847,923 3,391,694 - 95,008
Park of the Four Seasons
(Blaine, MN) - 1,508,121 6,032,483 - 119,676
Old Dutch Farms
(Novi, MI) - 724,088 2,896,348 - 684,611
- ------------------------------------------------------------------------------------------------------------------------------------
$ - $ 5,280,000 $ 21,120,000 $ - $ 1,008,664
====================================================================================================================================
<CAPTION>
Column A Column E Column F Column G Column H
- -------------------------- ----------------------------------------- ------------ -------- -------------------
Gross Amount at Which Carried Life on Which
at Close of Period Depreciation in
----------------------------------------- Latest Income
Buildings and Accumulated Date Statement is
Description Land Improvements Total Depreciation Acquired Computed
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Aztec Estates
(Margate, FL) $ 2,199,868 $ 8,908,844 $11,108,712 $ 3,257,754 1986 30 years
Kings Manor
(Ft. Lauderdale, FL) 847,923 3,486,702 4,334,625 1,261,168 1986 30 years
Park of the Four Seasons
(Blaine, MN) 1,508,121 6,152,159 7,660,280 2,227,251 1986 30 years
Old Dutch Farms
(Novi, MI) 724,088 3,580,959 4,305,047 1,159,408 1986 30 years
- ------------------------------------------------------------------------------------------------------------------------------------
5,280,000 $22,128,664 $27,408,664 $ 7,905,581
====================================================================================================================================
</TABLE>
<PAGE> 30
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO SCHEDULE III
DECEMBER 31, 1996
===============================================================================
1. RECONCILIATION OF BUILDINGS AND IMPROVEMENTS
The following table reconciles buildings and improvements from January 1, 1994
to December 31, 1996:
<TABLE>
<CAPTION>
1996 1995 1994
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
BALANCE, at January 1 $ 22,087,145 $ 22,033,371 $ 21,869,734
Additions to buildings
and improvements 41,519 53,774 163,637
- ----------------------------------------------------------------------------------
BALANCE, at December 31 $ 22,128,664 $ 22,087,145 $ 22,033,371
==================================================================================
</TABLE>
There were no additions to land during this three-year period.
2. RECONCILIATION OF ACCUMULATED DEPRECIATION
The following table reconciles the accumulated depreciation from January 1,
1994 to December 31, 1996:
<TABLE>
<CAPTION>
1996 1995 1994
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
BALANCE, at January 1 $ 7,142,041 $ 6,377,185 $ 5,629,867
Current year
depreciation expense 763,540 764,856 747,318
- ----------------------------------------------------------------------------------
BALANCE, at December 31 $ 7,905,581 $ 7,142,041 $ 6,377,185
==================================================================================
</TABLE>
3. TAX BASIS OF BUILDINGS AND IMPROVEMENTS
The aggregate cost of buildings and improvements for federal income tax
purposes is equal to the cost basis used for financial statement purposes.
<PAGE> 31
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
- -------
NUMBER DESCRIPTION METHOD OF FILING PAGE
- ------ ----------- ---------------- ----
<S> <C> <C> <C>
3(a) Amended Certificate of Incorporated by reference to
Limited Partnership for the the S-11 Registration
Partnership Statement of the Partnership
filed June 4, 1985, as
amended on August 1, 1985
and September 11, 1985
("Registration Statement").
3(b) Agreement of Limited Incorporated by reference to
Partnership for the the Registration Statement.
Partnership
3(c) Certificate of Amendment to Incorporated by reference to
the Certificate of Limited Form 10-K for fiscal year
Partnership for the ended December 31, 1992.
Partnership (originally filed
with Form 10-Q for the fiscal
quarter ended June 30, 1986).
3(d) First Amendment to Agreement Filed herewith
of Limited Partnership
3(e) Second Amendment to Filed herewith
Agreement of Limited Partnership
4 Form of Certificate of Limited Incorporated by reference to
Partnership Interest in the Form 10-K for fiscal year
Partnership (originally filed ended December 31, 1992.
with Form 10-K for the fiscal
year ended December 31, 1986).
10(a) Form of Management Incorporated by reference to
Agreement between the the Registration Statement.
Partnership and Uniprop, Inc.
10(b) Form of Consulting Incorporated by reference to
Agreement between the the Registration Statement.
Partnership, the General
Partner and Consultant
</TABLE>
<PAGE> 32
<TABLE>
<CAPTION>
EXHIBIT
- -------
NUMBER DESCRIPTION METHOD OF FILING PAGE
- ------ ----------- ---------------- ----
<S> <C> <C> <C>
10(c) Contingent Purchase Price Incorporated by reference to
Agreement between the Form 10-K for fiscal year
Partnership, Aztec Estates, ended December 31, 1992.
Ltd., and Kings Manor
Associates (originally filed
with Form 10-K for the fiscal
year ended December 31, 1987)
10(d) Contingent Purchase Price Incorporated by reference to
Agreement between the Form 10-K for fiscal year
Partnership and O.D.F. ended December 31, 1992.
Mobile Home Park (originally
filed with Form 10-K for the
fiscal year ended December
31, 1987
10(e) Contingent Purchase Price Incorporated by reference to
Agreement between the Form 10-K for fiscal year
Partnership and The Park of ended December 31, 1992.
the Four Seasons (originally
filed with Form 10-K for the
fiscal year ended December
31, 1987)
27 Financial Data Schedule Filed herewith.
28 Letter summary of the Filed herewith.
estimated fair market values
of the Partnership's four
manufactured housing
communities, as of October 3,
1996
</TABLE>
<PAGE> 1
EXHIBIT 3(b)
FIRST AMENDMENT TO
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND
AGREEMENT OF LIMITED PARTNERSHIP DATED MAY 16, 1985
This First Amendment To Uniprop Manufactured Housing Communities Income
Fund Agreement Of Limited Partnership Dated May 16, 1985 (this "Agreement")
executed as of March 4, 1986 by P.I. Associates Limited Partnership, a Michigan
limited partnership (the "General Partner") pursuant to the powers granted to
the General Partner in the Uniprop Manufactured Housing Communities Income Fund
Agreement of Limited Partnership dated as of May 16, 1985 (as amended and
restated to date, the "Partnership Agreement").
1. The following provisions of the Partnership Agreement are
amended in accordance with the provisions of Section 17a thereof to effect the
following changes;
(A) The definition of "Capital Account" set forth in
Section 1 is amended and restated in its entirety as follows:
"Capital Account" means the Capital Contribution of a Partner
(or predecessor in interest) to the Partnership increased by such
Partner's (or predecessor in interest's) distributive share of income
and gain (including income and gain exempt from Federal income tax) of
the Partnership and reduced by such Partner's (or predecessor in
interest's) distributive share of losses, deductions and expenditures
not deductible in computing taxable income, but not properly chargeable
to Capital Account, of the Partnership and by the amount of all
distributions of cash to such Partner (or predecessor in interest). For
purposes of the preceding sentence, (i) all amounts paid or incurred to
organize the Partnership or to promote the sale of (or to sell)
interests in the Partnership (other than amounts with respect to which
an election is properly made under Section 709(b) of the Code, and (ii)
any losses incurred in connection with the sale or exchange of
Partnership property which are disallowed to the Partnership under
Section 267(a)(l) or 707(b) of the Code, shall be treated as
expenditures of the Partnership not deductible in computing taxable
income but not properly chargeable to capital account. Notwithstanding
anything in this Agreement to the contrary, the Capital Accounts of the
Partners shall be subject to adjustment as necessary to maintain said
Capital Accounts in the manner required under Section 704 of the Code
and the Treasury Regulations promulgated from time to time thereunder.
<PAGE> 2
(B) The definition of "Gain From Sale" set forth in Section
1 is amended and restated in its entirety as follows:
"Gain From Sale" means any net income or gain of the
Partnership for Federal income tax purposes resulting from a Capital
Transaction other than "recapture income" realized by the Partnership
pursuant to Section 1245 or Section 1250 of the Code in respect of cost
recovery and depreciation deductions subject to allocation under Section
10a(v) hereof.
(C) Section 10a(v) is amended and restated in its entirety
as follows:
(v) Notwithstanding the foregoing, (a) Depreciation and
cost recovery deductions in each taxable year shall be allocated to the
Class A Partners and the General Partner, respectively, in the same
ratio as Net Income is allocated to the Limited Partners and the General
Partner, and the Limited Partners and the General Partner, respectively,
pursuant to Section 10a(ii); provided, however, that in no event shall
any depreciation or cost recovery deduction be allocated to any Limited
Partner in excess of the positive balance, if any, in his Capital
Account, and any such excess depreciation or cost recovery deductions
shall be allocated to the General Partner. "Recapture income", if any,
realized by the Partnership pursuant to Section 1245 or Section 1250 of
the Code shall be allocated to the Partners to whom the prior
corresponding cost recovery and depreciation deductions were allocated
under Section 10a(v) in proportion to and to the extent of such
allocations. The allocation provided for in the preceding sentence
shall be made prior to the making of any allocation of Gain From Sale
under Section 10a(iv); (b) Investment tax credits, if any, shall be
allocated among the Partners in the same proportions as Net Income is
allocated among the Partners pursuant to Section 10a(ii) for the taxable
year in which the property for which such investment tax credits are
allowable is placed in service. Any upward or downward adjustment in
the adjusted basis of any such property pursuant to Section 48(q) of the
Code shall be reflected by a corresponding increase or decrease in the
Capital Accounts of the Partners. Any "recapture" of investment tax
credits in subsequent taxable years shall be allocated to the Partners
to whom such investment tax credits previously were allocated in
proportion to and to the extent of the amounts so allocated; and (c) Any
expenditures by the Partnership which constitute "nondeductible
syndication expenses" under Section 709(a) of the Code or partnership
organizational expenses under Section 709(b) of the Code (other than
any such organizational expenses with respect to which an election is
properly made under Section 709(b) of the Code) and any income
of the Partnership which is exempt from Federal income tax shall be
allocated 99% to the Limited Partners and 1% to the General Partner.
-2-
<PAGE> 3
(D) Section 10a is amended to add a new subsection (vii) as
follows:
(vii) For purposes of this Agreement, each Partner's
Capital Account balance as of the end of any taxable year of the
Partnership shall be reduced by the amount of any adjustments,
allocations and distributions described in Treasury Regulations Section
1.704-1(b)(2)(ii)(d)(4), (5) or (6) and reasonably expected to be made.
In the event that during any taxable year any Partner unexpectedly
receives such an adjustment, allocation or distribution, such Partner
will be allocated items of income and gain in an amount and manner
sufficient to eliminate any deficit balance in his Capital Account
resulting from such unexpected adjustment, allocation or distribution as
quickly as possible.
(E) Section 18e is amended and restated in its entirety as
follows:
e. Depreciation and Elections--With respect to all
depreciable assets of the Partnership, the General Partner on behalf of
the Partnership may elect to use any permissible method of depreciation
or cost recovery for Federal income tax purposes. The General Partner
shall have the authority to make any or all permissible elections or
other determinations on behalf of the Partnership under the Code or
other Federal, state or local tax laws. However, the partnership will
not make an election under Section 754 of the Code to adjust the basis
of Partnership property on the transfer of a Partnership interest unless
the General Partner, in its sole discretion, determines that such an
election would be in the best interests of the Partnership and all the
Limited Partners. In the event of an adjustment to the adjusted basis
of any Partnership property under Section 732, Section 734 or Section
743 of the Code, the Capital Accounts of the Partners shall be adjusted
as provided in Treasury Regulation Section 1.704-1(b)(2)(iv)(m).
2. Except as amended herein, the Uniprop Manufactured Housing
Communities Income Fund Agreement Of Limited Partnership dated as of May 16,
1985, as amended and restated to date, shall continue to be in full force and
effect.
3. The Uniprop Manufactured Housing Communities Income Fund
Agreement of Limited Partnership dated as of May 16, 1985, as amended and
restated to date and as amended by this Agreement, supersedes any prior
understanding or agreement, oral or written, with respect thereto.
4. (A) The invalidity of any portion of this Agreement shall
not affect the validity of the remainder hereof.
-3-
<PAGE> 4
(B) Whenever the singular number is used in this Agreement,
and when required by context, the same shall include the plural, and the
masculine gender shall include the feminine and neuter genders and the word
"person" shall include a corporation, firm, partnership or other form of
association.
(C) The terms and provisions of this Agreement and any
dispute arising hereunder shall be governed by the laws of the State of
Michigan. The Courts of the State of Michigan shall have the sole and
exclusive jurisdiction in any case or controversy arising under this
Agreement or by reason of this Agreement.
GENERAL PARTNER
P.I. Associates Limited Partnership,
a Michigan limited partnership
BY: /s/ Ivan Bloch
-------------------------------------
IVAN BLOCH, general partner
BY: /s/ Paul M. Zlotoff
-------------------------------------
PAUL ZLOTOFF, general partner
-4-
<PAGE> 1
EXHIBIT 3(e)
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND
SECOND AMENDMENT TO
AGREEMENT OF LIMITED PARTNERSHIP
Agreement dated as of the 7th day of February, 1997, by and among
Uniprop Manufactured Housing Communities Income Fund, a Michigan limited
partnership (the "Partnership"), P.I. Associates, the General Partner of the
Partnership (the "General Partner"), and those persons identified on Schedule 1
attached hereto as Limited Partners.
WHEREAS, the General Partner formed the Partnership by filing a
Certificate of Limited Partnership with the Secretary of State of Michigan on
May 16, 1985 and by entering into an Agreement of Limited Partnership dated as
of May 16, 1985, as amended by the First Amendment to the Uniprop Manufactured
Housing Communities Income Fund Agreement of Limited Partnership dated May 16,
1985, executed as of March 4, 1986 (the "Agreement"), and wishes to
continue the Partnership under this Second Amendment to Agreement of Limited
Partnership and the provisions of the Michigan Revised Uniform Limited
Partnership Act;
WHEREAS, the General Partner wishes to amend the Agreement in
anticipation of causing the Partnership to enter into a Financing;
WHEREAS, the General Partner wishes to amend the Agreement to permit
the Partnership to undertake the Financing notwithstanding that it may reduce
the Net Cash from Operations distributed to the Limited Partners in the year in
which the Financing occurs below $3,000,000;
WHEREAS, the General Partner wishes to amend the Agreement to authorize
the Partnership to pay to the General Partner, on an ongoing basis, a
Partnership management distribution;
WHEREAS, the General Partner wishes to amend the Agreement to authorize
the Partnership to pay a fee out of the net proceeds to the Financing to an
affiliate of the General Partner for its services in arranging the Financing;
and
WHEREAS, the General Partner may, pursuant to Section 17.b of the
Agreement, amend the Agreement with the consent of Limited Partners holding
more than 50% of the then-outstanding Units;
NOW THEREFORE, the parties hereto agree as follows:
1. The definition of the term "Gain From Sale" in Section 1 of the
Agreement is hereby amended and restated as follows:
<PAGE> 2
"Gain From Sale" means any net income or gain of the
Partnership for Federal income tax purposes resulting from a
Capital Transaction, determined without regard to allocations
required by Section 10.a.(v) or 10.a.(vii).
2. The definition of the term "Loss From Sale" in Section 1 of the
Agreement is hereby amended and restated as follows:
"Loss From Sale" means any net loss of the Partnership for
Federal income tax purposes resulting from a Capital
Transaction, determined without regard to allocations required
by Section 10.a.(v) or 10.a.(vii).
3. The definition of the terms "Net Income" and "Net Loss"
in Section 1 of the Agreement is hereby amended and restated as
follows:
"Net Income" or "Net Loss" means the net income or net loss,
determined without regard to depreciation (including cost
recovery allowances), allocations required by Section 10.a.(v)
or 10.a.(vii), Gain From Sale or Loss From Sale, for each
taxable year as determined for Federal income tax purposes.
4. The definition of the term "Partnership Management
Distribution" is hereby added to Section 1 of the Agreement to
read as follows:
"Partnership Management Distribution" means the distribution
described in Section 12.f.(vii).
5. The definition of the term "Regulations" is hereby added to
Section 1 of the Agreement to read as follows:
"Regulations" means the income tax regulations promulgated under
the Code and any successor provisions.
6. Section 10.a.(v) of the Agreement is hereby amended and
restated as follows:
(v) Notwithstanding anything to the contrary in this Section
10, other than Section 10.a.(vii), any income from
depreciation recapture under Section 1245 or 1250 of the
Code attributable to depreciation (including cost recovery
allowances) as of the date of this Amendment shall be
allocated to the Class A Limited Partners and General
Partner in proportion to and in the amount of any deductions
giving rise to such recapture, provided, however, that to
the extent a Partner has received a distribution from the
proceeds of a nonrecourse liability under Section 10.b.(iv)
hereof that would otherwise be charged back under Section
10.a.(vii)(d), such recapture income shall be treated as if
it were also a minimum gain chargeback allocation under
Section 10.a.(vii)(d) hereof.
-2-
<PAGE> 3
7. Section 10.a.(vii) is hereby amended and restated to read as
follows:
(vii) Notwithstanding anything to the contrary in the
Agreement:
(a) The Partnership shall not allocate
Net Loss to the Partners to the extent such
allocation would violate the alternate test for
economic effect under Section 1.704-1(b)(2)(ii)(d)
of the Regulations;
(b) The Partnership shall make all qualified income
offset allocations required by Section
1.704-1(b)(2)(ii)(d) of the Regulations;
(c) The Partnership shall make all nonrecourse
deduction allocations (as defined in Regulations
Section 1.704-2(c)),20% to the General Partner and
80% to the Limited Partners in proportion to the
Units held by each Limited Partner;
(d) The Partnership shall make the minimum gain
chargeback allocations required by Regulations
Section 1.704-2(f)(1); provided, however, that to
the extent such allocation is caused by a repayment
of all or a portion of a nonrecourse financing of
the Partnership and would reduce the negative
Capital Account of a Partner below the negative
Capital Account of the Partner as of the end of the
Partnership taxable year in which the distribution
of such nonrecourse financing occurs, such
allocation shall be treated as if it were also
recapture income allocated under Section 10.a.(v)
hereof;
(e) The Partnership shall take the allocations
required by this Section 10.a.(vii) (other than
Section 10.a.(vii)(g)) into account when making
future allocations so that the net amount of such
allocations to a Partner shall be equal to the net
amount that would have been allocated to such
Partner if the allocations pursuant to this Section
10.a.(vii) (other than Section 10.a.(vii)(g))
had not occurred; and
(f) The Partnership shall otherwise comply with
Regulations Section 1.704-1(b) and -2.
(g) Notwithstanding anything to the contrary in this
Agreement, any payment of the Partnership
Management Distribution shall be treated as an
additional distribution to the General Partner in
excess of the aggregate distributions to which the
General Partner would otherwise have been entitled
under Section 10.b. hereof if the Partnership
Management Distribution were not made to it, and,
after giving effect to all of the special
allocations under this Section 10.a.(vii) (except
Section 10.a.(vii)(e) and this Section
10.a.(vii)(g)), income shall first be allocated to
the General Partner and then gain shall be
specially
-3-
<PAGE> 4
allocated to the General Partner until the cumulative
income and gain allocated to the General Partner
pursuant to this Section 10.a.(vii)(g) for the current
and all prior fiscal years of the Partnership equals the
cumulative Partnership Management Distribution paid to
the General Partner for the current and all prior fiscal
years of the Partnership. In the event that such
Partnership Management Distribution or Incentive
Management Interest or any other distribution is
recharacterized as a payment under Code Section 707(a)
or a guaranteed payment under Code Section 707(c), any
income, gain, loss or deduction realized as a direct or
indirect result of the recharacterization of the
distribution as such a payment or guaranteed payment for
tax purposes shall be allocated among the Partners so
that (after effecting appropriate adjustments to the
Capital Accounts of the Partners to reflect the tax
treatment of the recharacterization) the aggregate
amount (including any distributions recharacterized
as payments for tax purposes and any amounts received
upon liquidation of the Partnership) that each Partner
is entitled to receive from the Partnership over the
life thereof (and each accounting period thereof) is
equal to the aggregate amount that each such Partner
would have been entitled to receive had the
recharacterization not occurred. In addition to the
extent possible without contravening the previous
sentence, such income, gain, loss or deduction shall be
allocated in a manner that puts each Partner, as soon as
possible, in the same after-tax position as they would
have been in had the recharacterization not occurred.
8. Section 10.a.(viii) is hereby added to the Agreement to read as
follows:
(viii) Solely for purposes of determining a Partner's
proportionate share of the "excess nonrecourse
liabilities" of the Partnership within the meaning of
Regulations Section 1.752-3(a)(3), the Partners'
interests in Partnership profits are as follows: 20% to
the General Partner and 80% to the Limited Partners in
proportion to the number of Units held by each Limited
Partner.
9. Section 10.b.(iv) is hereby added to the Agreement to read as
follows:
(iv) To the extent permitted by Regulations Section
1.704-2(h)(3), the General Partner shall endeavor to
treat distributions of the Sale or Financing Proceeds
attributable to any financing or indebtedness of the
Partnership as having been made from the proceeds of a
nonrecourse liability (as such term is defined in
Regulations Section 1.704-2(b)(3)) only to the extent
that such distributions would cause or increase a
deficit in the Capital Account of any Partner that
exceeds the amount such Partner is otherwise obligated
to restore (within the meaning of Regulations Section
1.704-1(b)(2)(ii)(c)) as of the end of the Partnership
taxable year in which the distribution occurs.
-4-
<PAGE> 5
10. Section 12.d (xvii) of the Agreement is hereby removed.
11. Section 12.f (vii) and (viii) are hereby added to the Agreement
to read as follows:
(vii) Agree to pay to the General Partner a quarterly
Partnership Management Distribution equal to one-fourth
of 1% of the most recent appraised value of the
properties held by the Partnership, payable in arrears 45
days after the end of each fiscal quarter. The
Partnership Management Distribution shall commence on the
date of the closing of a Financing which results in a
complete return to the Limited Partners of their Adjusted
Capital Contributions (a "Major Financing") and shall be
pro rated for the balance of the quarter in which such a
Major Financing occurs. In the event of termination of
the Partnership other than at the end of a quarter, the
Partnership Management Distribution shall be pro rated
for the partial quarter and paid on the date of
termination.
The General Partner will calculate Net Cash From
Operations with respect to each fiscal quarter by
applying the definition of Net Cash From Operations in
Section 1 as if "taxable quarter" were substituted for
"taxable year." The Partnership Management Distribution
will be payable only if and to the extent that there is
sufficient Net Cash From Operations in the quarter with
respect to which the Partnership Management Distribution
is proposed to be paid and only if and to the extent that
the Partnership has sufficient cash to pay the
Partnership Management Distribution at the time it is
due and any portion of the Partnership Management
Distribution that cannot be paid as a result of the
limitations in this sentence will not be payable at any
future time.
(viii) Agree to pay to an Affiliate of the General Partner a
finance fee equal to 1% of the amount of any Major
Financing. The finance fee shall be payable in full at
the closing of such a Major Financing.
12. Except as otherwise provided herein, the parties hereto
confirm the Agreement in its entirety.
-5-
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Second Amendment to Agreement of Limited Partnership as of the date first
specified above.
GENERAL PARTNER
P.I. ASSOCIATES LIMITED PARTNERSHIP
By: /s/ Paul M. Zlotoff,
--------------------------------
Paul M. Zlotoff, General Partner
LIMITED PARTNERS
Each of the Limited Partners named in Schedule 1 hereto,
By: P.I. ASSOCIATES LIMITED PARTNERSHIP, their attorney-in-fact
By: /s/ Paul M. Zlotoff
--------------------------------
Paul M. Zlotoff, General Partner
-6-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 640,086
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,247,842
<PP&E> 28,049,278
<DEPRECIATION> 7,989,565
<TOTAL-ASSETS> 21,307,555
<CURRENT-LIABILITIES> 1,597,502
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 19,710,053
<TOTAL-LIABILITY-AND-EQUITY> 21,307,555
<SALES> 0
<TOTAL-REVENUES> 7,751,358
<CGS> 0
<TOTAL-COSTS> 3,992,163
<OTHER-EXPENSES> 784,742
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,974,453
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,974,453
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,974,453
<EPS-PRIMARY> 69.<F1>
<EPS-DILUTED> 100.<F1>
<FN>
<F1>
FOOTNOTES:
5.03(b)(20)EPS
In this RELP there are two classes of LP units. EPS Primary are earnings per
Class A LP unit. EPS Diluted are earnings per Class B LP unit.
</FN>
</TABLE>
<PAGE> 1
EXHIBIT 28
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND
1997 PROPERTY APPRAISALS
Cushman & Wakefield has recently completed market value appraisals of UMHCIF's
four properties as of March 1997. The table below sets forth certain appraisal
information for each property, as well as relevant comparisons:
<TABLE>
<CAPTION>
MARCH 1997 MARCH 1996 VARIANCE
PROPERTY APPRAISALS APPRAISALS IN %
<S> <C> <C>
Aztec Estates, FL $20,500,000 $20,200,000 1.5%
Kings Manor, FL 9,900,000 9,700,000 2.1%
Park of Four Seasons, MN 13,750,000 13,000,000 5.8%
Old Dutch Farms, MI 9,050,000 8,500,000 6.5%
----------- ----------- ----
GRAND TOTAL: $53,200,000 $51,400,000 3.5%
Other Comparisons versus March 1997 Appraisal:
- ----------------------------------------------
Limited Partners' Capital Contribution: $30,000,000 Variance +77.3%
Original Cash Purchase Price of Properties: 26,400,000 +101.5%
</TABLE>
1997 ESTIMATED NET ASSET VALUE OF UNITS
Based on the March 1997 appraisal of the Partnership's properties, the General
Partner has calculated the estimated net asset value of each Unit, based on the
following assumptions:
- - Sale of the Properties in March 1997 for their appraised value.
- - Costs and selling expenses are 3.0% of the sale price.
- - Amount payable to creditors of the Partnership are negligible.
- - Tax consequences of a sale are not taken into consideration.
Calculations:
March 1997 appraised value of the properties: $53,200,000
Minus: Costs and selling expenses (3.0%): 1,596,000
Limited Partners' Shortfall -0-
Mortgage Debt 33,500,000
Sellers' contingent Purchase Price: 3,470,000
-----------
Net Sale Proceeds: 14,634,000
===========
Limited Partners' Share of Net Sales Proceeds (80.0%) $11,700,000
-----------
Estimated Current Net Asset Value per Unit: $ 390
===========
