<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended September 30, 1998 Commission File No. 0-15940
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND,
A MICHIGAN LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
MICHIGAN 38-2593067
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
280 DAINES STREET, BIRMINGHAM, MICHIGAN 48009
(Address of principal executive offices) (Zip Code)
(248) 645-9261
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(g) of the Act:
$1,000 per unit, units of limited partnership interest
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
<PAGE> 2
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND,
A MICHIGAN LIMITED PARTNERSHIP
INDEX
<TABLE>
<CAPTION>
Page
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<S> <C>
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Balance Sheets
September 30, 1998 (Unaudited) and
December 31, 1997 3
Statements of Income Nine months ended September 30, 1998 and
1997 and Three months ended
September 30, 1998 and 1997 (Unaudited) 4
Statements of Cash Flows
Nine months ended September 30, 1998
and 1997 (Unaudited) 5
Notes to Financial Statements
September 30, 1998 (Unaudited) 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS 7
PART II OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 10
</TABLE>
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<PAGE> 3
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND,
A MICHIGAN LIMITED PARTNERSHIP
BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS SEPTEMBER 30, 1998 DECEMBER 31, 1997
------------------ -----------------
(UNAUDITED)
Properties:
<S> <C> <C>
Land $ 5,280,000 $ 5,280,000
Buildings And Improvements 23,925,558 23,862,182
Furniture And Fixtures 120,945 668,108
Manufactured Homes 688,295 117,847
----------- -----------
30,014,798 29,928,137
Less Accumulated Depreciation 9,425,795 8,805,795
----------- -----------
20,589,003 21,122,342
Cash And Cash Equivalents 966,643 649,137
Unamortized Finance Costs 732,048 796,547
Other Assets 670,151 484,407
----------- -----------
Total Assets $22,957,845 $23,052,433
=========== ===========
<CAPTION>
LIABILITIES SEPTEMBER 30, 1998 DECEMBER 31, 1997
------------------ ----------------
(UNAUDITED)
Line of Credit $ 469,523 $ 358,916
Accounts Payable 93,368 116,066
Mortgage Payable 33,179,842 33,355,940
Other Liabilities 1,106,862 891,073
----------- -----------
Total Liablities $ 34,849,595 $ 34,721,995
Partners' Equity:
General Partner (1,372,014) (1,261,905)
Class A Limited Partners (9,622,015) (9,509,936)
Class B Limited Partners (897,721) (897,721)
----------- -----------
Total Partners' Equity (11,891,750) (11,669,562)
----------- -----------
Total Liabilities And
Partners' Equity $ 22,957,845 $ 23,052,433
------------ ------------
</TABLE>
See Notes to Financial Statements
3
<PAGE> 4
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND
A MICHIGAN LIMITED PARTNERSHIP
<TABLE>
<CAPTION>
STATEMENTS OF INCOME NINE MONTHS ENDED THREE MONTHS ENDED
(UNAUDITED) SEPT. 30, 1998 SEPT. 30, 1997 SEPT. 30, 1998 SEPT. 30, 1997
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Income:
Rental Income $5,971,994 $5,863,350 $1,983,302 $1,967,425
Other 341,220 249,466 152,183 49,784
---------- ---------- ---------- ----------
Total Income $6,313,214 $6,112,816 $2,135,485 $2,017,209
========== ========== ========== ==========
Operating Expenses:
Administrative Expenses
(Including $312,361, $303,058, $104,362, And $101,549
In Property Management Fees Paid
To An Affiliate For The Nine and Three Month
Periods Ended Sept. 30, 1998 and 1997
Respectively) 1,351,728 1,256,942 437,790 411,116
Property Taxes 622,152 622,512 207,372 206,646
Utilities 352,795 342,291 116,307 105,333
Property Operations 785,211 699,210 255,355 236,862
Depreciation And Amortization 684,500 620,847 228,200 206,949
Interest 2,102,016 1,462,857 699,156 704,060
---------- ---------- ---------- ----------
Total Operating Expenses $5,898,402 $5,004,659 $1,944,180 $1,870,966
========== ========== ========== ==========
Net Income $ 414,812 $1,108,157 $ 191,305 $ 146,243
========== ========== ========== ==========
Income Per Limited Partnership Unit:
Class A $ 0.46 $ 30.00 $ 0.37 $ 2.00
Class B $ 6.00 $ 50.00 $ 2.00 $ 2.00
Distribution Per Limited Partnership Unit
Class A $ 6.00 $ 50.00 $ 2.00 $ 2.00
Class B $ 6.00 $ 50.00 $ 2.00 $ 2.00
Weighted Average Number Of Limited
Partnership Units Outstanding
Class A 20,230 20,230 20,230 20,230
Class B 9,770 9,770 9,770 9,770
</TABLE>
See Notes to Financial Statements
4
<PAGE> 5
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND
A MICHIGAN LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, 1998 SEPTEMBER. 30, 1997
------------------ -------------------
<S> <C> <C>
Cash Flows From Operating Activities:
Net Income (Loss) $ 414,812 $ 1,108,157
Adjustments To Reconcile Net Income
(Loss) To Net Cash Provided By
Operating Activities:
Depreciation 620,000 588,558
Amortization 64,500 32,289
(Increase) Decrease In Other Assets From Operations (185,745) (1,191,028)
Increase (Decrease) In Accounts Payables (22,698) (11,902)
Increase (Decrease) Other Liabilities From Operations 215,789 82,128
---------- ------------
Total Adjustments 691,846 (499,955)
---------- ------------
Net Cash Provided By (Used In)
Operating Activities 1,106,658 608,202
---------- ------------
Cash Flows From Investing Activities:
Capital Expenditures (86,661) (1,758,258)
Funds From Line of Credit 110,607 (64,818)
---------- ------------
Net Cash Provided By (Used In)
Investing Activities 23,946 (1,823,076)
---------- ------------
Cash Flows From Financing Activities:
Funds from Mortgage 0 33,500,000
Distributions To Partners (637,000) (2,113,400)
Return of Capital 0 (30,000,000)
Principal Payments on Mortgage (176,098) (85,327)
----------- ------------
Net Cash Provided By (Used In)
Financing Activities (813,098) 1,301,273
---------- ------------
Increase (Decrease) In Cash 317,506 86,399
Cash, Beginning 649,137 640,086
Cash, Ending $ 966,643 $ 726,485
========== ============
</TABLE>
See Notes to Financial Statements
5
<PAGE> 6
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND,
A MICHIGAN LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
September 30, 1998 (Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Presentation:
The balance sheet as of September 30, 1998, the related statements of income and
statements of cash flow for the periods ended September 30, 1998 and 1997 have
been prepared by management, pursuant to the rules and regulations of the
Securities and Exchange Commission, without audit by independent public
accountants. In the opinion of management, all adjustments (consisting of only
normal recurring accruals) necessary for a fair presentation of such financial
statements have been included.
The financial statements and notes are presented as permitted by the rules and
regulations of the Securities and Exchange Commission for Form 10-Q and do not
contain certain information included in the Company's annual financial
statements and notes, which should be consulted.
2. PAYMENTS TO AFFILIATES:
<TABLE>
<CAPTION>
NINE MONTHS ENDED THREE MONTHS ENDED
SEPT. 30, 1998 SEPT. 30, 1997 SEPT. 30, 1998 SEPT. 30, 1997
-------------- -------------- -------------- --------
<S> <C> <C> <C> <C>
PROPERTY MANAGEMENT FEE
TO UNIPROP, INC.: $312,361 $303,058 $104,362 $101,549
</TABLE>
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<PAGE> 7
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Capital Resources
The Partnership's capital resources consist primarily of its four manufactured
housing communities. On March 25, 1997 the Partnership borrowed $33,500,000 from
Nomura Asset Capital Corporation (the "Financing"). The Partnership secured the
Financing by placing liens on its four communities. As a result of the
Financing, the Partnership distributed $30,000,000 to the Limited Partners,
which represented a full return of the original capital contributions of $1,000
per unit.
Liquidity
As a result of the Financing, the Partnership's four properties are mortgaged.
At the time of the Financing, the aggregate principal amounts due under the four
mortgage notes was $33,500,000 and the aggregate fair market value of the
Partnership's mortgaged properties was $53,200,000. The Partnership expects to
meet its short-term liquidity needs generally through its working capital
provided by operating activities.
The Partnership's long-term liquidity is based, in part, upon its investment
strategy. Notwithstanding, that the properties owned by the Partnership were
anticipated to be held for seven to ten years after their acquisition, all of
the properties have been owned by the Partnership more than ten years. The
General Partner may elect to have the Partnership own the properties for as long
as, in the opinion of the General Partner, it is in the best interest of the
Partnership to do so.
The Partnership has a renewable $600,000 line of credit with National City Bank
of Michigan/Illinois (formerly First of America Bank). The interest rate on such
line of credit, floats 180 basis points above 1 month LIBOR, which on September
30, 1998 was 5.66%. The sole purpose of the line of credit is to purchase new
and used homes to be used as model homes and offered for sale within the
Partnership's communities. Over the past two years, sales of the new and used
model homes have been growing and the General Partner believes that continuing
the model home program is in the best interest of the Partnership. As of
September 30, 1998, the outstanding balance on the line of credit was $469,523.
Net Cash from Operations available for aggregate distributions to all Partners
in UMHCIF during the quarter ended September 30, 1998 amounted to $419,505. The
amount available during the same period in 1997 was $353,192. Management
considers Net Cash from Operations to be a supplemental measure of the
Partnership's operating performance. Net Cash from Operations is defined to mean
net income computed in accordance with generally accepted accounting principles
("GAAP"), plus real estate
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<PAGE> 8
related depreciation and amortization. Net Cash from Operations does not
represent cash generated from operating activities in accordance with GAAP and
is not necessarily indicative of cash available to fund cash needs. Net Cash
from Operations should not be considered as an alternative to net income as the
primary indicator of the Partnership's operating performance or as an
alternative to cash flow as a measure of liquidity.
The quarterly Partnership Management Distribution due and paid to the General
Partner for the second quarter was $139,500, or one-fourth of 1.0% of the most
recent appraised value of the properties held by the Partnership.
($55,800,000 x .01 = $558,000 / 4 = $139,500)
The cash available, after payment of the Partnership Management Distribution of
$139,500 from Net Cash from Operations, was $280,005. From this amount, the
General Partner elected to make a total distribution of $75,000 for the third
quarter of 1998, 80.0% or $60,000 was paid to the Limited Partners and 20.0% or
$15,000 was paid to the General Partner. The General Partner will continue to
monitor on-going Net Cash from Operations generated by the Partnership during
the coming quarters. If Net Cash from Operations is lower or higher than the
amount needed to maintain the current distribution level, the General Partner
may elect to reduce or increase the level of future distributions paid to the
Limited Partners.
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. As of September 30, 1998, the Partnership cash reserves
amounted to $966,643. The level of cash reserves maintained is at the discretion
of the General Partner.
Results of Operations
Overall, as illustrated in the tables below, the four properties enjoyed a
combined average occupancy of 98.1% (1,790/1,824 sites) at the end of September
1998, versus 97.9% a year ago. The average monthly rent in September 1998 was
approximately $396, or 3.1% more than the $384 average monthly rent in September
1997.
<TABLE>
<CAPTION>
Total Occupied Occupancy Average
Capacity Sites Rate Rent
<S> <C> <C> <C> <C>
Aztec Estates 645 628 97.4% $441
Kings Manor 314 304 96.8 422
Old Dutch Farms 293 286 97.6 389
Park of the Four Seasons 572 572 100.0 343
--- --- ----- -----
Total on 9/30/98: 1,824 1,790 98.1% $396
Total on 9/30/97: 1,824 1,786 97.9% $384
</TABLE>
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<PAGE> 9
<TABLE>
<CAPTION>
GROSS REVENUES NET OPERATING
INCOME
9/30/98 9/30/97 9/30/98 9/30/97
<S> <C> <C> <C> <C>
Aztec Estates $ 825,133 $ 728,660 $ 402,763 $ 397,097
Kings Manor 363,761 353,653 220,337 217,509
Old Dutch Farms 341,989 331,215 216,252 220,806
Park of the Four Seasons 593,453 598,273 364,050 357,412
- ---------- ---------- ---------- ----------
2,124,336 2,011,801 1,203,402 1,192,824
Partnership Management: 11,149 5,408 (28,471) (75,289)
Other Non Recurring expenses: ----- ----- (56,271) (60,283)
Debt Service (699,155) (704,060)
Depreciation and Amortization ----- ----- (228,200) (206,949)
---------- ---------- ---------- ----------
$2,135,485 $2,017,209 $ 191,305 $ 146,243
</TABLE>
COMPARISON OF QUARTER ENDED SEPTEMBER 30, 1998
TO QUARTER ENDED SEPTEMBER 30, 1997
Gross revenues increased $118,276, or 5.9%, to $2,135,485 in 1998, as compared
to $2,017,209 in 1997. The increase in gross revenues is the result of higher
overall occupancy and higher average rents at the Partnership's four communities
(see table on previous page).
Administrative expenses increased $26,674, or 6.5% to $437,790 in 1998, as
compared to $411,116 in 1997. The increase is the result of higher wages and an
increase in property management fees. Partnership management costs decreased
$46,818, or 62.2%, to $28,471 in 1998, as compared to $75,289 in 1997. This
decrease is due to the absence of legal/professional fees associated with the
financing of the properties that was completed by the Partnership in 1997.
Property operation costs increased $18,493, or 7.8%, to $255,355 in 1998, as
compared to $236,862 in 1997. The increase was the result of higher maintenance
and marketing expense.
As a result of the foregoing factors, net income increased to $191,305 for the
quarter ended September 30, 1998 from $146,243 reported for the same period in
1997.
MANAGEMENT EXPENSES
Net Partnership management expenses paid during the quarter amounted to $28,471.
Gross expenses of $39,620 (data processing, accounting and legal expenses,
office supplies and wages to employees of the Partnership) were partially offset
by income of $11,149 generated by interest on the Partnership's reserves and
transfer fees. The figures for last year's third quarter were $75,289, $80,697
and $5,408, respectively.
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<PAGE> 10
PART II - OTHER INFORMATION
---------------------------
ITEM 6. EXHIBITS AND REPORTS OF FORM 8-K
(a) Exhibits
Exhibit Number Description
-------------- -----------
27 Financial Data Schedule
(b) Reports of Form 8-K
There were no reports filed on Form 8-K during the three
months ended September 30, 1998.
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Uniprop Manufactured Housing
Communities Income Fund,
A Michigan Limited Partnership
BY: P.I. Associates Limited Partnership,
A Michigan Limited Partnership,
its General Partner
BY: /s/Paul M. Zlotoff
----------------------------------------------
Paul M. Zlotoff, General Partner
BY: /s/Gloria A. Koster
----------------------------------------------
Gloria A. Koster, Principal Financial Officer
Dated: November 13, 1998
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<PAGE> 11
EXHIBIT INDEX
-------------
EXHIBIT NUMBER DESCRIPTION PAGE
- -------------- ----------- ----
27 Financial Data Schedule
-11-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 966,643
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,368,842
<PP&E> 30,014,798
<DEPRECIATION> 9,425,795
<TOTAL-ASSETS> 22,957,845
<CURRENT-LIABILITIES> 34,849,595
<BONDS> 33,179,842
0
0
<COMMON> 0
<OTHER-SE> (11,891,750)
<TOTAL-LIABILITY-AND-EQUITY> 22,957,845
<SALES> 0
<TOTAL-REVENUES> 6,313,214
<CGS> 0
<TOTAL-COSTS> 5,213,902
<OTHER-EXPENSES> 620,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,166,516
<INCOME-PRETAX> 414,812
<INCOME-TAX> 0
<INCOME-CONTINUING> 414,812
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 414,812
<EPS-PRIMARY> .46<F1>
<EPS-DILUTED> 6.00<F2>
<FN>
<F1>5-03(b)(20) EPS Primary - Income per Class A unit
<F2>EPS Diluted - Income per Class B unit
</FN>
</TABLE>
