<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, 1999 Commission File No. 0-15940
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND,
A MICHIGAN LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
MICHIGAN 38-2593067
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
280 DAINES STREET, BIRMINGHAM, MICHIGAN 48009
(Address of principal executive offices) (Zip Code)
(248) 645-9261
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(g) of the Act:
$1,000 per unit, units of limited partnership interest
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
<PAGE> 2
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND,
A MICHIGAN LIMITED PARTNERSHIP
INDEX
Page
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Balance Sheets
September 30, 1999 (Unaudited) and
December 31, 1998 3
Statements of Income
Nine months ended September 30, 1999
and 1998 and Three months ended
September 30, 1999 and 1998 (Unaudited) 4
Statements of Cash Flows
Nine months ended September 30, 1999
and 1998 (Unaudited) 5
Notes to Financial Statements
September 30, 1999 (Unaudited) 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS 7
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK 10
PART II OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 10
-2-
<PAGE> 3
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND,
A MICHIGAN LIMITED PARTNERSHIP
BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS SEPTEMBER 30, 1999 DECEMBER 31, 1998
------------------ -----------------
(Unaudited)
<S> <C> <C>
Properties:
Land $ 5,280,000 $ 5,280,000
Buildings And Improvements 24,076,632 23,934,391
Furniture And Fixtures 160,879 127,800
Manufactured Homes 904,845 748,657
------------------ -----------------
30,422,356 30,090,848
Less Accumulated Depreciation 10,292,486 9,654,556
------------------ -----------------
20,129,870 20,436,292
Cash And Cash Equivalents 1,202,892 537,777
Unamortized Finance Costs 646,048 710,548
Other Assets 1,016,691 824,267
------------------ -----------------
Total Assets $ 22,995,501 $ 22,508,884
------------------ -----------------
<CAPTION>
LIABILITIES SEPTEMBER 30, 1999 DECEMBER 31, 1998
------------------ -----------------
(UNAUDITED)
<S> <C> <C>
Line of Credit $ 600,000 $ 469,523
Accounts Payable 61,330 76,588
Mortgage Payable 32,924,624 33,119,108
Other Liabilities 1,330,739 847,840
------------------ -----------------
Total Liabilities $ 34,916,693 $ 34,513,059
Partners' Equity:
General Partner (1,589,919) (1,770,028)
Class A Limited Partners (9,734,106) (9,636,980)
Class B Limited Partners (597,167) (597,167)
------------------ -----------------
Total Partners' Equity (11,921,192) (12,004,175)
------------------ -----------------
Total Liabilities And
Partners' Equity $ 22,995,501 $ 22,508,884
------------------ -----------------
</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, 1999 Sept. 30, 1998 Sept. 30, 1999 Sept. 30, 1998
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Income:
Rental Income $6,187,382 $5,971,994 $2,057,529 $1,983,302
Other 410,174 341,220 173,367 152,183
---------- ---------- ---------- ----------
Total Income $6,597,556 $6,313,214 $2,230,896 $2,135,485
---------- ---------- ---------- ----------
Operating Expenses:
Administrative Expenses
(Including $327,796 and $312,361 in Property Management
Fees Paid to An Affiliate for the Nine Month Period
Ended Sept. 30, 1999 and 1998, Respectively, and
$110,679 and $104,362 in Property Management Fees
Paid to an Affiliate for the Three Month Period
Ended Sept. 30, 1999 and 1998, Respectively) 1,314,971 1,351,728 482,093 437,790
Property Taxes 617,617 622,152 206,286 207,372
Utilities 376,120 352,795 122,604 116,307
Property Operations 761,841 785,211 264,423 255,355
Depreciation And Amortization 702,430 684,500 234,000 228,200
Interest 2,062,494 2,102,016 693,490 699,156
---------- ---------- ---------- ----------
Total Operating Expenses $5,835,473 $5,898,402 $2,002,896 $1,944,180
---------- ---------- ---------- ----------
Net Income $ 762,083 $ 414,812 $ 228,000 $ 191,305
---------- ---------- ---------- ----------
Income Per Limited Partnership Unit:
Class A $ 1.60 $ 0.46 $ 0.62 $ 0.02
Class B $ 6.75 $ 6.00 $ 2.25 $ 2.00
Distribution Per Limited Partnership Unit
Class A $ 6.75 $ 6.00 $ 2.25 $ 2.00
Class B $ 6.75 $ 6.00 $ 2.25 $ 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, 1999 SEPTEMBER 30, 1998
------------------ ------------------
<S> <C> <C>
Cash Flows From Operating Activities:
Net Income (Loss) $ 762,083 $ 414,812
Adjustments To Reconcile Net Income
(Loss) To Net Cash Provided By
Operating Activities:
Depreciation 637,930 620,000
Amortization 64,500 64,500
(Increase) Decrease In Other Assets From Operations (192,424) (185,745)
Increase (Decrease) In Accounts Payables (15,258) (22,698)
Increase (Decrease) Other Liabilities From Operations 482,899 215,789
------------------ ------------------
Total Adjustments 977,647 691,846
------------------ ------------------
Net Cash Provided By (Used In)
Operating Activities 1,739,730 1,106,658
------------------ ------------------
Cash Flows From Investing Activities:
Capital Expenditures (331,508) (86,661)
Funds From Line of Credit 130,477 110,607
------------------ ------------------
Net Cash Provided By (Used In)
Investing Activities (201,031) 23,946
------------------ ------------------
Cash Flows From Financing Activities:
Distributions To Partners (679,100) (637,000)
Principal Payments on Mortgage (194,484) (176,098)
------------------ ------------------
Net Cash Provided By (Used In)
Financing Activities (873,584) (813,098)
------------------ ------------------
Increase (Decrease) In Cash 665,115 317,506
Cash, Beginning 537,777 649,137
------------------ ------------------
Cash, Ending $ 1,202,892 $ 966,643
------------------ ------------------
</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, 1999 (Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Presentation:
The balance sheet as of September 30, 1999, the related statements of income and
statements of cash flow for the periods ended September 30, 1999 and 1998 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, 1999 SEPT. 30, 1998 SEPT. 30, 1999 SEPT. 30, 1998
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
PROPERTY MANAGEMENT FEE
TO UNIPROP, INC.: $ 327,796 $ 312,361 $ 110,679 $ 104,362
</TABLE>
6
<PAGE> 7
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Capital Resources
The capital resources of Uniprop Manufactured Housing Communities Income Fund
(the "Partnership") consists 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. The properties owned by the Partnership were expected to be sold or
financed within seven to ten years after their acquisition. All of the
properties have been owned by the Partnership more than ten years, and they were
financed approximately 11 years after their acquisition. 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, 1999 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, 1999, the outstanding balance on the line of credit was $600,000.
Net Cash from Operations available for aggregate distributions to all Partners
in the Partnership during the quarter ended September 30, 1999 amounted to
$462,000. The amount available during the same period in 1998 was $419,505.
Management considers Net Cash from Operations to be a supplemental measure of
the Partnership's operating
7
<PAGE> 8
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 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 third quarter was $143,250, or one-fourth of 1.0% of the most
recent appraised value of the properties held by the Partnership.
($57,300,000 x .01 = $573,000 / 4 = $143,250)
The cash available, after payment of the Partnership Management Distribution of
$143,250 from Net Cash from Operations, was $318,750. From this amount, the
General Partner elected to make a total distribution of $93,750 for the third
quarter of 1999, 80.0% or $75,000 was paid to the Limited Partners and 20.0% or
$18,750 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, 1999, the Partnership cash reserves
amounted to $1,202,892. 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 97.1% (1,771/1,824 sites) at the end of September
1999, versus 98.1% a year ago. The average monthly rent in September 1999 was
approximately $410, or 3.1% more than the $396 average monthly rent in September
1998.
<TABLE>
<CAPTION>
Total Occupied Occupancy Average
Capacity Sites Rate Rent
<S> <C> <C> <C> <C>
Aztec Estates 645 614 95.2% $454
Kings Manor 314 300 95.5 438
Old Dutch Farms 293 285 97.3 397
Park of the Four Seasons 572 572 100.0 358
----- ----- ----- ----
Total on 9/30/99: 1,824 1,771 97.1% $410
Total on 9/30/98: 1,824 1,790 98.1% $396
</TABLE>
8
<PAGE> 9
<TABLE>
<CAPTION>
GROSS REVENUES NET OPERATING
INCOME
9/30/99 9/30/98 9/30/99 9/30/98
<S> <C> <C> <C> <C>
Aztec Estates $ 871,083 $ 825,133 $ 419,818 $ 402,763
Kings Manor 379,758 363,761 261,606 220,337
Old Dutch Farms 345,187 341,989 212,318 216,252
Park of the Four Seasons 618,407 593,453 394,979 364,050
----------- ----------- ----------- -----------
2,214,435 2,124,336 1,288,721 1,203,402
Partnership Management: 16,461 11,149 (30,176) (28,471)
Other Non Recurring expenses: -- -- (103,055) (56,271)
Debt Service (693,490) (699,155)
Depreciation and Amortization -- -- (234,000) (228,200)
----------- ----------- ----------- -----------
$ 2,230,896 $ 2,135,485 $ 228,000 $ 191,305
</TABLE>
COMPARISON OF QUARTER ENDED SEPTEMBER 30, 1999
TO QUARTER ENDED SEPTEMBER 30, 1998
Gross revenues increased $95,411, or 4.5%, to $2,230,896 in 1999, as compared to
$2,135,485 in 1998. The increase in gross revenues is the result of higher
average rents at the Partnership's four communities (see table on previous
page).
As described in the Statements of Income, total operating expenses increased
$58,716, or 3.0%, to $2,002,896 in 1999, as compared to $1,944,180 in 1998. The
increase in total operating expenses is primarily due to higher administrative
expenses associated with professional fees.
As a result of the foregoing factors, net operating income increased to $228,000
for the quarter ended September 30, 1999 from $191,305 reported for the same
period in 1998.
MANAGEMENT EXPENSES
Net Partnership management expenses paid during the quarter amounted to $30,176.
Gross expenses of $46,637 (data processing, accounting and legal expenses,
office supplies and wages to employees of the Partnership) were partially offset
by income of $16,461 generated by interest on the Partnership's reserves and
transfer fees. The figures for last year's third quarter were $28,471, $39,620
and $11,149, respectively.
9
<PAGE> 10
ITEM 3.
QUANTITATIVE AND QUALITATIVE
DISCLOSURE ABOUT MARKET RISK
Not applicable, because the Partnership does not hold any financial instruments
subject to market risk.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS OF FORM 8-K
(a) Exhibits
Exhibit Number Description
27 Financial Data Schedule
(b) Reports on Form 8-K
There were no reports filed on Form 8-K during
the three months ended September 30, 1999.
10
<PAGE> 11
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 15, 1999
11
<PAGE> 12
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION PAGE
27 Financial Data Schedule
12
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1998
<CASH> 1202892
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2865631
<PP&E> 30422356
<DEPRECIATION> 10292486
<TOTAL-ASSETS> 22995501
<CURRENT-LIABILITIES> 1992069
<BONDS> 32924624
0
0
<COMMON> 0
<OTHER-SE> (11921192)
<TOTAL-LIABILITY-AND-EQUITY> 22995501
<SALES> 0
<TOTAL-REVENUES> 6597556
<CGS> 0
<TOTAL-COSTS> 5136043
<OTHER-EXPENSES> 637930
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2126994
<INCOME-PRETAX> 762083
<INCOME-TAX> 0
<INCOME-CONTINUING> 762083
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 762083
<EPS-BASIC> 1.60<F1>
<EPS-DILUTED> 6.75<F2>
<FN>
<F1>INCOME PER CLASS A UNIT
<F2>INCOME PER CLASS B UNIT
</FN>
</TABLE>
