<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 June 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
Page
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Balance Sheets
June 30, 1998 (Unaudited) and
December 31, 1997 3
Statements of Income
Six months ended June 30, 1998
and 1997 and Three months ended
June 30, 1998 and 1997 (unaudited) 4
Statements of Cash Flows
Six months ended June 30, 1998
and 1997 (Unaudited) 5
Notes to Financial Statements
June 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
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<PAGE> 3
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND,
A MICHIGAN LIMITED PARTNERSHIP
BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS JUNE 30, 1998 DECEMBER 31, 1997
------------- -----------------
(UNAUDITED)
<S> <C> <C>
Properties:
Land $ 5,280,000 $ 5,280,000
Buildings And Improvements 23,893,423 23,862,182
Manufactured Homes 727,420 668,108
Furniture And Fixtures 120,945 117,847
------------ ------------
30,021,788 29,928,137
Less Accumulated Depreciation 9,219,095 8,805,795
------------ ------------
20,802,693 21,122,342
Cash And Cash Equivalents 788,177 649,137
Unamortized Finance Costs 753,548 796,547
Other Assets 682,862 484,407
------------ ------------
Total Assets $ 23,027,280 $ 23,052,433
------------ ------------
LIABILITIES JUNE 30, 1998 DECEMBER 31, 1997
------------- -----------------
(UNAUDITED)
Line of Credit $ 469,523 $ 358,916
Accounts Payable 72,164 116,066
Mortgage Payable 33,234,751 33,355,940
Other Liabilities 1,119,397 891,073
------------ ------------
Total Liablities $ 34,895,835 $ 34,721,995
Partners' Equity:
General Partner (1,380,352) (1,261,905)
Class A Limited Partners (9,590,482) (9,509,936)
Class B Limited Partners (897,721) (897,721)
Total Partners' Equity (11,868,555) (11,669,562)
------------ ------------
Total Liabilities And
Partners' Equity $ 23,027,280 $ 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 SIX MONTHS ENDED THREE MONTHS ENDED
(UNAUDITED) JUNE 30, 1998 JUNE 30, 1997 JUNE 30, 1998 JUNE 30, 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Income:
Rental Income $3,988,692 $3,895,925 $1,996,805 $1,958,640
Other 189,037 199,682 99,057 129,013
---------- ---------- ---------- ----------
Total Income $4,177,729 $4,095,607 $2,095,862 $2,087,653
---------- ---------- ---------- ----------
Operating Expenses:
Administrative Expenses
(Including $207,999, $201,509, $104,623, And $101,545
In Property Management Fees Paid
To An Affliate For The Six and Three Month
Periods Ended June 30, 1998 and 1997
Respectively) 913,938 845,826 434,550 413,673
Property Taxes 414,780 415,866 207,375 204,721
Utilities 236,488 236,958 124,132 125,753
Property Operations 529,856 462,348 270,223 255,978
Depreciation And Amortization 456,300 413,898 227,800 217,712
Interest 1,402,860 758,797 700,360 758,797
---------- ---------- ---------- ----------
Total Operating Expenses $3,954,222 $3,133,693 $1,964,440 $1,976,634
---------- ---------- ---------- ----------
Net Income $ 223,507 $ 961,914 $ 131,422 $ 111,019
---------- ---------- ---------- ----------
Income Per Limited Partnership Unit:
Class A $ 0.02 $ 28.00 $ 0.02 $ 10.00
Class B $ 4.00 $ 48.28 $ 2.00 $ 23.00
Distribution Per Limited Partnership Unit
Class A $ 4.00 $ 48.00 $ 2.00 $ 23.00
Class B $ 4.00 $ 48.00 $ 2.00 $ 23.00
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
<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30, 1998 JUNE 30, 1997
------------- -------------
<S> <C> <C>
Cash Flows From Operating Activities:
Net Income (Loss) $ 223,507 $ 961,914
Adjustments To Reconcile Net Income
(Loss) To Net Cash Provided By
Operating Activities:
Depreciation 413,300 392,372
Amortization 43,000 21,526
(Increase) Decrease In Other Assets From Operations (198,456) (1,235,424)
Increase (Decrease) In Accounts Payables (43,902) (3,313)
Increase (Decrease) Other Liabilities From Operations 228,324 77,541
--------- ------------
Total Adjustments 442,266 (747,298)
--------- ------------
Net Cash Provided By (Used In)
Operating Activities 665,773 214,616
--------- ------------
Cash Flows From Investing Activities:
Capital Expenditures (93,651) (1,610,218)
Funds From Line of Credit 110,607 104,700
--------- ------------
Net Cash Provided By (Used In)
Investing Activities 16,956 (1,505,518)
--------- ------------
Cash Flows From Financing Activities:
Funds from Mortgage 0 33,500,000
Distributions To Partners (422,500) (2,053,400)
Return of Capital 0 (30,000,000)
Principal Payments on Mortgage (121,189) (35,295)
--------- ------------
Net Cash Provided By (Used In)
Financing Activities (543,689) 1,411,305
--------- ------------
Increase (Decrease) In Cash 139,040 120,403
Cash, Beginning 649,137 640,086
--------- ------------
Cash, Ending $ 788,177 $ 760,489
--------- ------------
</TABLE>
See Notes to Financial Statements
5
<PAGE> 6
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND,
A MICHIGAN LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
June 30, 1998 (Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Presentation:
The balance sheet as of June 30, 1998, the related statements of income and
statements of cash flow for the periods ended June 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>
SIX MONTHS ENDED THREE MONTHS ENDED
JUNE 30, 1998 JUNE 30, 1997 JUNE 30, 1998 JUNE 30, 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
PROPERTY MANAGEMENT FEE
TO UNIPROP, INC.: $207,999 $201,509 $104,623 $101,545
</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"). It 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. The properties owned by the Partnership were anticipated to be held
for seven to ten years after their acquisition, although it was expected that
they could be disposed of earlier or later. All of the properties have been
owned by the Partnership at least 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 First of America
Bank. The interest rate on such line of credit, floats 180 basis points above 1
month LIBOR, which on June 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 June 30, 1998, the oustanding 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 June 30, 1998 amounted to $359,222. The
amount available during the same period in 1997 was $328,731. 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 related depreciation
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<PAGE> 8
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 $219,722. From this amount, the
General Partner elected to make a total distribution of $75,000 for the second
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 generated 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 June 30, 1998, the Partnership cash reserves
amounted to $788,177. 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 97.9% (1,786/1,824 sites) at the end of June 1998,
versus 97.3% a year ago. The average monthly rent in June 1998 was approximately
$395, or 3.1% more than the $383 average monthly rent in June 1997.
<TABLE>
<CAPTION>
Total Occupied Occupancy Average
Capacity Sites Rate Rent
<S> <C> <C> <C> <C>
Aztec Estates 645 625 96.9% $ 441
Kings Manor 314 305 97.1 422
Old Dutch Farms 293 284 96.9 391
Park of the Four Seasons 572 572 100.0 338
--- --- ----- ------
Total on 6/30/98: 1,824 1,786 97.9% $ 395
Total on 6/30/97: 1,824 1,774 97.3% $ 383
</TABLE>
-8-
<PAGE> 9
<TABLE>
<CAPTION>
GROSS REVENUES NET OPERATING
INCOME
6/30/98 6/30/97 6/30/98 6/30/97
<S> <C> <C> <C> <C>
Aztec Estates $ 779,187 $ 811,037 $ 404,992 $ 398,759
Kings Manor 370,797 356,768 228,017 232,116
Old Dutch Farms 346,621 328,828 230,513 223,535
Park of the Four Seasons 589,511 568,801 353,818 345,975
----------- ----------- ----------- -----------
2,086,116 $ 2,065,434 1,217,341 $ 1,200,385
Partnership Management: 9,746 22,219 (59,657) (64,961)
Other Non Recurring expenses: ----- ---- (98,101) (47,896)
Debt Service (700,360) (758,797)
Depreciation and Amortization ----- ---- (227,800) (217,712)
----------- ----------- ----------- -----------
$ 2,095,862 $ 2,087,653 $ 131,422 $ 111,019
</TABLE>
COMPARISON OF QUARTER ENDED JUNE 30, 1998 TO QUARTER ENDED JUNE 30, 1997
Gross revenues increased $8,209, to $2,095,862 in 1998, as compared to
$2,087,653 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 $20,877, or 5.0% to $434,550 in 1998, as
compared to $413,573 in 1997. The increase is the result of higher wages.
Partnership management costs decreased $5,304, or 8.2%, to $59,657 in 1998, as
compared to $64,961 in 1997. Property operation costs increased $14,245, or
5.6%, to $270,223 in 1998, as compared to $255,978 in 1997. The increase was the
result of higher maintenance and marketing expense. Interest expense associated
with the Partnership's mortgage debt decreased by $58,437, or 7.7%, to $700,360
in 1998, as compared to $758,797. The decrease is the result of the prepayment
of interest in 1997.
As a result of the foregoing factors, net income increased to $131,422 for the
quarter ended June 30, 1998 from $111,019 for the quarter ended June 30, 1997.
MANAGEMENT EXPENSES
Net Partnership management expenses paid during the quarter amounted to $59,657.
Gross expenses of $69,403 (data processing, accounting and legal expenses,
office supplies and wages to employees of the Partnership) were partially offset
by income of $9,746 generated by interest on the Partnership's reserves and
transfer fees. The figures for last year's second quarter were $64,961, $87,180
and $22,219, 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 June 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: August 14, 1998
-10-
<PAGE> 11
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION PAGE
- -------------- ----------- ----
27 Financial Data Schedule
-11-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 788,177
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,224,587
<PP&E> 30,021,788
<DEPRECIATION> 9,219,095
<TOTAL-ASSETS> 23,027,280
<CURRENT-LIABILITIES> 34,895,835
<BONDS> 33,234,751
0
0
<COMMON> 0
<OTHER-SE> (11,868,555)
<TOTAL-LIABILITY-AND-EQUITY> 23,027,280
<SALES> 0
<TOTAL-REVENUES> 4,177,729
<CGS> 0
<TOTAL-COSTS> 2,095,062
<OTHER-EXPENSES> 413,300
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,445,860
<INCOME-PRETAX> 223,507
<INCOME-TAX> 0
<INCOME-CONTINUING> 223,507
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 223,507
<EPS-PRIMARY> .02<F1>
<EPS-DILUTED> 4.00<F2>
<FN>
<F1>EPS - Primary - in this RELP the earnings per share indicate income per
Class A LP unit.
<F2>EPS - Diluted - in this RELP the earnings per share indicate income per
Class B LP unit.
</FN>
</TABLE>
