<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, 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:
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, 2000, 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 2000 appraisal of Partnership properties) held
by non-affiliates was approximately $17,652,516.
DOCUMENTS INCORPORATED BY REFERENCE
SEE ITEM 14.
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PART I
This form 10-K contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21e of the Securities
Exchange Act of 1934. Actual results could differ materially from those
projected in the forward-looking statements as a result of a number of factors,
including those identified herein.
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 (248) 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; and (2) obtaining capital appreciation. There can be no
assurance that such objectives can be achieved.
On March 25, 1997 the Partnership borrowed $33,500,000 from Nomura
Asset Capital Corporation and secured the borrowing with liens on its Properties
(the "Financing"). The interest rate on the Financing is 8.24% and the term is
120 months. The loan is amortized over 360 months. 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 continues to own and operate its
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properties and has been able to continue to pay cash distributions to the
Limited Partners, although in amounts substantially lower than the distributions
paid prior to the Financing. Limited Partners continue to have an interest in
the Partnership because their original capital contributions have appreciated
since their initial investments were made and only the original capital
contributions were returned on March 26, 1997.
Financial Information About Industry Segment
The Partnership's business and only industry segment is the operation
of its four manufactured housing communities. 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, 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. The General
Partner has the discretion to determine when a Property is to be sold; provided,
however, that 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"). In making their decisions
they will consider 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 seven communities offering approximately 2,713 housing sites
competing with Aztec Estates.
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The Davie/Fort Lauderdale area contains approximately five communities offering
approximately 1,765 housing sites competing with Kings Manor. Old Dutch Farms
competes with approximately seven communities offering approximately 3,455
housing sites. Park of the Four Seasons competes with approximately 11
communities offering approximately 3,207 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 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 two 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
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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.
ITEM 2. PROPERTIES
The Partnership purchased all four manufactured housing communities for
cash. As a result of the 1997 financing, the Properties are now encumbered with
mortgages.
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.
The table below contains certain information concerning the
Partnership's four properties.
<TABLE>
<CAPTION>
PROPERTY NAME YEAR NUMBER OF
------------- ---- ---------
AND LOCATION CONSTRUCTED ACREAGE SITES
------------ ----------- ------- -----
<S> <C> <C> <C>
Aztec Estates
Sundial Circle
Margate, FL 1970 100 645
Kings Manor
State Road 84
& Flamingo Road
Ft. Lauderdale, FL 1972 45 314
Old Dutch Farms
Novi Road
Novi, MI 1972 47 293
Park of the Four
Seasons
University Avenue
Blaine, MN 1972 107 572
</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. No matters were
submitted to Limited Partners for vote during 1999.
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
four 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 March 2000, the Properties were
appraised at an aggregate fair market value of $58,675,000. Assuming a sale of
the four properties at the appraised value in March 2000, less payment of 3.0%
selling expenses, mortgage debt of $32,879,105, the $1,970,000 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 $17,652,516, or $588 per Unit, as of March 31, 2000. There can
be no assurance that the estimated net asset value could ever
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be realized. As of March 31, 2000, the Partnership had approximately 2,650
Limited Partners holding Units.
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, 1999, 1998, 1997, 1996 and 1995:
<TABLE>
<CAPTION>
FISCAL YEAR FISCAL YEAR FISCAL YEAR FISCAL YEAR FISCAL YEAR
ENDED ENDED ENDED ENDED ENDED
DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER
31, 1999 31, 1998 31, 1997 31, 1996 31, 1995
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Total Assets $22,403,064 $22,508,884 $23,052,433 $21,307,555 $21,822,565
=========== =========== =========== =========== ===========
Income $8,748,916 $8,451,561 $8,234,904 $7,751,358 $7,502,221
Expenses (7,977,428) (7,934,674) (7,175,119) (4,776,905) (4,513,031)
----------- ----------- ----------- ----------- -----------
Net Income $ 771,488 $ 516,887 $1,059,785 $2,974,453 $2,989,190
=========== =========== =========== =========== ===========
Distributions to
Limited Partners,
per Unit $9.25 $8 $1,052 $100 $100
Income per Unit:
Class A $8 $2 $17 $69 $69
Class B $46 $39 $52 $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
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
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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, 1999 and does not anticipate any during the next fiscal year.
In an effort to provide Limited Partners with a full return of original
capital contributions of $1,000 per unit, the General Partner, with majority
consent from the Limited Partners, mortgaged the four Properties owned by the
Partnership on March 25, 1997 in the aggregate amount of $33,500,000. The
General Partner acknowledges that the mortgages impose some risks to the
Partnership, but considers that such risks are not greater than risks typically
associated with real estate financing.
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
operating needs, amounts sufficient to pay debt service, and cash reserves have
been distributed to the Partners, quarterly.
While the Partnership is not required to maintain a working capital
reserve, it has not distributed all the cash generated from operations in order
to build cash reserves. As of December 31, 1999, the Partnership cash reserves
amounted to $1,113,061. 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 and debt service during the next
fiscal year.
The Partnership has a renewable line of credit of $600,000 with
National City Bank of Michigan/Illinois (formerly First of America Bank). The
interest rate floats 180 basis points above 1 month LIBOR, which on December 31,
1999 was 5.95%. The sole purpose for the line of credit is to purchase new and
used homes to be used as model homes and offered for sale with the Partnership's
communities. Over the past four years, sales of the new and used model homes has
been steady and the General Partner believes that continuing the model home
program is in the best interest of the Partnership. As of December 31, 1999, the
outstanding balance on the line of credit was $600,000. During 2000, the General
Partner has determined that cash reserves are adequate, and that the Partnership
may therefore begin to pay down the outstanding balance on the line of credit.
If the Partnership's consultant, Manufactured Housing Services, agrees with the
Partnership's intent to pay down the balance, payments will be quarterly until
the balance is paid in full.
On March 25, 1997 the Partnership completed the Financing pursuant to
which the Partnership borrowed $33,500,000 from Nomura Asset Capital Corporation
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. On March 26, 1997, the
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Partnership distributed $30,000,000 of the financing proceeds to the Limited
Partners, representing a full return of original capital contributions of $1,000
per Unit held. The Partnership continues its operations and expects to be able
to continue to pay cash distributions to the Limited Partners, although, due to
payment of debt service resulting from the Financing, in amounts substantially
lower than paid prior to the financing. 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
contributions were returned on March 26, 1997.
Net Cash from Operations available for aggregate distributions to all
Partners during the year ended December 31, 1999 amounted to $1,724,770.
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 depreciation and amortization expense. 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 yearly Partnership Management Distribution due and paid to the
General Partner for 1999 was $569,250, or 1.0% of the then most recent appraised
value of the properties held by the Partnership.
The cash available after payment of the Partnership Management
Distribution of $569,250 from Net Cash from Operations was $1,155,520. From this
amount the General Partner elected to make a total distribution of $346,850 for
1999, 80.0% of which, or $277,500, was paid to the Limited Partners and 20.0% of
which, or $69,350, was paid to the General Partner. The remaining Net Cash from
Operations was used to reduce debt and purchase certain equipment.
Results of Operations
a. Distributions
For the year ended December 31, 1999, the Partnership made
distributions to Limited Partners of $9.25 per Unit held, or $277,500. In 1998
the Partnership made distributions to Limited Partners of $8.00 per Unit held,
or $240,000. In 1997 the Partnership made distributions to Limited Partners of
$1,052 per Unit held, or $31,568,400. The General Partner received distributions
totaling $638,600, $611,500, and $871,000 during the same periods. Included in
the 1997 distributions was $30,000,000, which was the result of the 1997
financing, constituting a complete return of the Limited Partners' original
capital contributions of $1,000 per Unit.
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b. Net Income
For the years ended December 31, 1999, 1998 and 1997 net income was
$771,488, $516,887 and $1,059,785 on total revenues of $8,748,916, $8,451,561
and $8,234,904. The increase in net income from 1998 to 1999 is the result of
higher gross revenues. The significant decline in net income from 1997 to 1998
is due primarily to the Partnership's first full year of interest payments
associated with the Financing and an increase in property operating expenses.
Net income, plus depreciation and amortization, less distributions to
all Partners, was $808,670, $601,960 and $650,476, for the years ended December
31,1999, 1998, and 1997, respectively. The $650,476 indicated for 1997 excludes
the effects of the Financing, which resulted in a $30,000,000 distribution to
Limited Partners.
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 $162,104 in 1999, $246,847 in 1998 and
$459,343 in 1997.
The decrease in net expenses for the management of the Partnership from
1998 to 1999 is due to lower legal and professional fees. The decrease in net
expenses from 1997 to 1998 is the result of higher legal expenses associated
with the Proxy Statement that was submitted to the Limited Partners in
connection with the Financing.
d. Property Operations
Overall, the four Properties had a combined average occupancy of 96.8%
(1,766/1,824 sites) as of December 1999; 97.4% as of December 1998; and 98.2% as
of December 1997. The average collected monthly rent as of December 1999 was
approximately $411 per homesite versus $398 as of December 1998 and $386 as of
December 1997, an increase each year of 3.3% and 3.1%, respectively.
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<TABLE>
<CAPTION>
TOTAL
SITES OCCUPIED SITES OCCUPANCY RATE AVERAGE RENT
----- -------------- --------------- ------------
1999 1998 1997 1999 1998 1997 1999 1998 1997
---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Aztec Estates 645 614 616 628 95.2% 95.5% 97.4% $ 454 $ 441 $ 427
Kings Manor 314 298 304 308 94.9 96.8 98.1 438 422 405
Old Dutch Farms 293 282 284 288 96.3 96.9 98.3 401 388 393
Park 4 Seasons 572 572 572 568 100.0 100.0 99.3 362 347 332
----- ----- ----- ----- ----- ----- ---- ----- ----- -----
Overall 1,824 1,766 1,776 1,792 96.8% 97.4% 98.2% $ 411 $ 398 $ 386
</TABLE>
The table below summarizes gross revenues and net operating income for
the Partnership and Properties during 1999, 1998 and 1997.
<TABLE>
<CAPTION>
GROSS REVENUE NET OPERATING INCOME
AND NET INCOME
--------------------------------------------- ---------------------------------------------
1999 1998 1997 1999 1998 1997
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Aztec Estates $3,292,625 $3,187,994 $3,101,572 $ 1,635,311 $ 1,652,513 $ 1,643,833
Kings Manor 1,491,893 1,470,598 1,405,468 915,165 923,980 892,472
Old Dutch Farms 1,403,048 1,378,539 1,319,097 893,138 897,758 873,242
Park of the Four Seasons 2,501,226 2,373,946 2,345,585 1,515,013 1,426,937 1,378,661
--------- --------- --------- --------- --------- ---------
$8,688,792 $8,411,077 $8,171,722 $ 4,958,627 $ 4,901,188 $ 4,788,208
Partnership
Management 60,124 40,484 63,182 (162,104) (246,847) (459,343)
Other Non-Recurring
Expenses (231,720) (345,512) (235,746)
Debt Service (2,840,033) (2,855,369) (2,142,196)
Depreciation and
Amortization (953,282) (936,573) (891,138)
--------- --------- --------- --------- --------- ---------
TOTAL: $8,748,916 $8,451,561 $8,234,904 $ 771,488 $ 516,887 $ 1,059,785
</TABLE>
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COMPARISON OF YEAR ENDED DECEMBER 31, 1999 TO YEAR ENDED DECEMBER 31, 1998
Gross revenues increased $297,355, or 3.5%, to $8,748,916 in 1999,
compared to $8,451,561 in 1998. The increase was primarily the result of the
increase in rental income due to higher average monthly rents. (See table on
previous page.)
As described in the Statements of Income, the Partnership's operating
expenses increased minimally, from $7,934,674 in 1998, to $7,977,428 in 1999.
As a result of the foregoing factors, net income increased from
$516,887 in 1998 to $771,488 in 1999.
COMPARISON OF YEAR ENDED DECEMBER 31, 1998 TO YEAR ENDED DECEMBER 31, 1997
Gross revenues increased $216,657, or 2.6%, to $8,451,561 in
1998, compared to $8,234,904 in 1997. The increase was primarily the result of
the increase in rental income due to higher average monthly rents.
(See table on previous page.)
As described in the Statements of Income, the Partnership's operating
expenses increased $759,555, or 10.6%, to $7,934,674 in 1998, compared to
$7,175,119 in 1997. The increase is primarily due to the Partnership's first
full year of interest payments associated with the mortgage debt and an increase
in property operating expenses. The increase in property operating expenses is
specifically related to non-recurring costs associated with the removal of older
homes from the Properties and expenses incurred related to improvements to the
vacant homesites. The higher operating expenses were partially offset by a
decrease in administrative costs in 1998 from 1997.
As a result of the foregoing factors, net income decreased from
$1,059,785 in 1997 to $516,887 in 1998.
Year 2000 Costs
The Partnership's significant business relations with external parties,
including its banking and vendor relations, along with its information systems
were fully "Year 2000" compliant and therefore, there were no adverse effects
related to "Year 2000".
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Partnership is exposed to interest rate risk primarily through its
borrowing activities. There is inherent roll over risk for borrowings as they
mature and are renewed at current market rates. The extent of this risk is not
quantifiable or predictable because of the variability of future interest rates
and the Partnership's future financing requirements.
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Note Payable: At December 31, 1999 the Partnership had a note payable
outstanding in the amount of $32,879,105. Interest on this note is at a fixed
annual rate of 8.24% through June 2007.
Line-of-Credit: At December 31, 1999 the Partnership owed $600,000
pursuant to its line-of-credit agreement, whereby interest is charged at a
variable rate of 1.80% in excess of LIBOR.
A 10% adverse change in interest rates on the portion of the
Partnership's debt bearing interest at variable rates would result in an
increase in interest expense of less than $10,000.
The Partnership does not enter into financial instruments transactions
for trading or other speculative purposes or to manage its interest rate
exposure.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Partnership's financial statements for the fiscal years ended
December 31, 1999, 1998 and 1997, 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.
PART III
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 of P.I. Associates. 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:
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Paul M. Zlotoff, 50, is and has been an individual general partner of
P.I. Associates since its inception in May 1985. Mr. Zlotoff became the Chairman
of Uniprop, Inc. in May 1986 and was its President from 1979 through 1997. 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.
The following individuals are the directors and officers of GP P.I.
Associates Corp.:
Name and Age Position Held
- ------------ -------------
Paul M. Zlotoff, 50 Director and President, Secretary and
Treasurer
Arthur Weiss, 50 Director
Charles Soberman, 50 Director
Arthur Weiss, 50 has been practicing law at Jaffe, Raitt, Heuer &
Weiss, Professional Corporation ("JRH&W"), which has represented the company in
various matters since 1976. Mr. Weiss is currently a shareholder, director and
vice president of JRH&W.
Arthur Weiss is an Independent Director, meaning that he 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.
Charles Soberman, 50, joined Uniprop, Inc. in June 1999 as its Chief
Executive Officer and Executive Vice President. Mr. Soberman's responsibilities
include supervision of property operations and corporate oversight. Mr. Soberman
has a law degree from The Harvard Law School and a M.B.A. from Michigan State
University. Mr. Soberman also has a B.A. from the University of Michigan. From
1979 through 1996, he was president of Mercury Paint Company, a manufacturer and
retailer of coatings and allied products. From 1996 to 1999 Mr. Soberman was a
Senior Lecturer at Wayne State University School of Business Administration.
-14-
<PAGE> 15
Under the Articles of Incorporation of GP P.I. Associates Corp., until
such time as the notes payable to the lender in connection with the Financing
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;
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. To the Partnership's knowledge, 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
-15-
<PAGE> 16
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. The Contingent
Purchase Price for each Property was determined by reference to the average of
two independent real estate appraisals that 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 becomes 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. Because the Financing resulted 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 did receive $1,500,000 in partial payment of the Contingent
Purchase Price on or about May 15, 1997. 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; Old Dutch Farms, $452,359; and Park of the
Four Seasons, $1,113,594. The partial payment made for each property was as
follows: Aztec Estates, $594,088; Kings Manor, $228,987; Old Dutch Farms,
$195,544; and Park of the 4 Seasons, $481,381. The maximum amounts remaining
which could be payable to the successors of the sellers are as follows: Aztec
Estates, $780,235; Kings Manor, $300,737; Old Dutch Farms, $256,815; and Park of
the Four Seasons, $632,213. 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.
The Partnership paid and will continue to 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. As a result of the Financing and full
return of the $30,000,000 original capital contributions of the Limited
Partners, 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 Incentive Management Interest is 20% of the
net cash from operations (cash revenues less cash operating expenses and
specified reserves) in any taxable year. As of December 31, 1999, the General
Partner had earned and was entitled to an Incentive Management Interest of
$18,750. The actual amount to be received in future years will depend upon the
results of the Partnership's operations and is not determinable at this time.
Because the Limited Partners have received the return of their
-16-
<PAGE> 17
adjusted capital contributions, the General Partner also has a right to receive
20% of any sale or financing proceeds.
The General Partner is also entitled to 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 is paid in arrears, 45 days after the end of each
fiscal quarter. The Partnership Management Distribution was proposed by the
General Partner and approved by the Limited Partners to compensate, 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.
Based on the Properties' March 1999 aggregate appraised value of $57,300,000,
the Partnership Management Distribution due to the General Partner was $573,000.
The Partnership Management Distribution paid to the General Partner during 1999
was $569,250, a portion of which was calculated on the 1998 aggregate appraised
value of $55,800,000. As of December 31, 1999, the Partnership Management
Distribution due the General Partner totaled $143,250. This amount was paid to
the General Partner on February 15, 2000 from cash reserves. Based on the
Properties' March 2000 aggregate appraised value of $58,675,000, the Partnership
Management Distribution due the General Partner for the Partnership's 2000
fiscal year will be $586,750 ($58,675,000 x 1.0% = $586,000).
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 $432,033: Aztec Estates, $164,102; Kings
Manor, $74,695; Old Dutch Farms, $69,343; and Park of the Four Seasons,
$123,893. 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 $158,491 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
-17-
<PAGE> 18
(1) The following financial statements and related documents are filed
with this Report:
(i) Report of Independent Certified Public Accountants
(ii) Balance Sheets as of December 31, 1999 and 1998 and Statements
of Income for the fiscal years ended December 31, 1999, 1998
and 1997
(iii) Statements of Partners' Equity for the fiscal years ended
December 31, 1999, 1998 and 1997
(iv) Statements of Cash Flows for the fiscal years ended December
31, 1999, 1998 and 1997
(2) The following financial statement schedule is filed with this
report:
Schedule III - Real Estate and Accumulated
Depreciation for the fiscal years ended December 31,
1999, 1998 and 1997
(3) 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, 1997:
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
-18-
<PAGE> 19
10(c) Contingent Purchase Price Agreement between the Partnership, Aztec
Estates (Originally filed with Form 10-K for the fiscal year ended
December 31, 1987)
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:
10(f) First Amended and Restated Consulting Agreement among the
Partnership, the General Partner and the Consultant.
27 Financial Data Schedule
28 Letter summary of the estimated fair market values of the
Partnership's four Manufactured housing communities, as of March 1,
2000.
(b) Reports on Form 8-K
The Partnership did not file any Forms 8-K during the fourth quarter of
1999.
-19-
<PAGE> 20
\
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 30, 2000 BY: /s/ Paul M. Zlotoff
------------------------------
Paul M. Zlotoff, General Partner
BY: GP P.I. Associates Corp.,
General Partner
Dated: March 30, 2000 BY: /s/ Paul M. Zlotoff
------------------------------
Paul M. Zlotoff, President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
By: /s/ Gloria A. Koster By: /s/ Paul M. Zlotoff
--------------------- --------------------
Gloria A. Koster Paul M. Zlotoff
(Chief Financial Officer) (Principal Executive Officer)
(President & Director of GP
P.I. Associates Corp)
Dated: March 30, 2000 Dated: March 30, 2000
By: /s/ Susann Szepytowski By: /s/ Charles A. Soberman
---------------------- -----------------------
Susann Szepytowski (Director of GP P.I.
(Controller) Associates Corp.)
Dated: March 30, 2000 Dated: March 30, 2000
-20-
<PAGE> 21
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 Incorporated by reference to
Agreement Form 10-K for the fiscal year
of Limited Partnership ended December 31, 1996.
3(e) Second Amendment to Incorporated by reference to Form
Agreement of Limited reference to Form 10-K fiscal year
Partnership ended December 31, 1996.
4 Form of Certificate of Limited Incorporated by reference to Form
Partnership Interest in the 10-K for fiscal year ended
Partnership (originally filed with December 1997.
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.
</TABLE>
-21-
<PAGE> 22
<TABLE>
<S> <C> <C>
10(b) Form of Consulting Incorporated by reference to
Agreement between the The Registration Statement.
Partnership, the General
Partner and Consultant
10(c) Contingent Purchase Price Incorporated by reference to Form
Agreement between the 10-K for fiscal year ended
Partnership, Aztec Estates, December 1997.
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 Form
Agreement between the 10-K for fiscal year ended
Partnership and O.D.F. December 1997.
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 Form
Agreement between the 10-K for fiscal year ended
Partnership and The Park of December 1997.
the Four Seasons (originally
filed with Form 10-K for the
fiscal year ended December
31, 1987)
10(f) First Amended and Restated Consulting Filed Herewith
Agreement among the Partnership, the
General Partner and the Consultant.
</TABLE>
-22-
<PAGE> 23
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 March
1, 2000
-23-
<PAGE> 24
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,
1999 and 1998, and the related statements of income, partners' equity (deficit)
and cash flows for each of the three years in the period ended December 31,
1999. 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, 1999 and 1998 and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1999 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
February 4, 2000
<PAGE> 25
UNIPROP MANUFACTURED
HOUSING COMMUNITIES INCOME FUND
(A MICHIGAN LIMITED PARTNERSHIP)
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, 1999 1998
- --------------------------------------------------------------------------------------------------------------------
ASSETS
<S> <C> <C>
PROPERTY AND EQUIPMENT (Note 2)
Buildings and improvements $ 24,134,260 $ 23,934,391
Land 5,280,000 5,280,000
Manufactured homes and improvements 1,002,680 748,657
Furniture and equipment 169,741 127,800
- -------------------------------------------------------------------------------------------------------------------
30,586,681 30,090,848
Less accumulated depreciation 10,521,838 9,654,556
- -------------------------------------------------------------------------------------------------------------------
NET PROPERTY AND EQUIPMENT 20,064,843 20,436,292
Cash 1,113,061 537,777
Unamortized financing costs 624,548 710,548
Other assets (Note 3) 600,612 824,267
- -------------------------------------------------------------------------------------------------------------------
$ 22,403,064 $ 22,508,884
===================================================================================================================
LIABILITIES AND PARTNERS' DEFICIT
Note payable (Note 2) $ 32,879,105 $ 33,119,108
Line-of-credit (Note 4) 600,000 469,523
Accounts payable 197,810 76,588
Other liabilities (Note 5) 874,936 847,840
- -------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 34,551,851 34,513,059
- -------------------------------------------------------------------------------------------------------------------
PARTNERS' DEFICIT
Class A limited partners (9,656,324) (9,636,980)
Class B limited partners (238,133) (597,167)
General partner (2,254,330) (1,770,028)
- -------------------------------------------------------------------------------------------------------------------
TOTAL PARTNERS' DEFICIT (12,148,787) (12,004,175)
- -------------------------------------------------------------------------------------------------------------------
$ 22,403,064 $ 22,508,884
===================================================================================================================
See accompanying notes to financial statements.
</TABLE>
<PAGE> 26
UNIPROP MANUFACTURED
HOUSING COMMUNITIES INCOME FUND
(A MICHIGAN LIMITED PARTNERSHIP)
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Year Ended December 31, 1999 1998 1997
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCOME
Rental $ 8,226,292 $ 8,004,749 $ 7,821,138
Interest 63,526 45,423 73,543
Other 459,098 401,389 340,223
- ---------------------------------------------------------------------------------------------------------------------
8,748,916 8,451,561 8,234,904
- ---------------------------------------------------------------------------------------------------------------------
OPERATING EXPENSES
Property operations 2,570,534 2,568,006 2,354,635
Depreciation and amortization 953,282 936,573 891,138
Property taxes 867,491 797,971 792,452
Administrative (Note 6) 746,088 776,755 994,698
Interest 2,840,033 2,855,369 2,142,196
- ---------------------------------------------------------------------------------------------------------------------
7,977,428 7,934,674 7,175,119
- ---------------------------------------------------------------------------------------------------------------------
NET INCOME $ 771,488 $ 516,887 $ 1,059,785
=====================================================================================================================
INCOME PER LIMITED PARTNERSHIP UNIT (Note 8)
Class A $ 8 $ 2 $ 17
Class B $ 46 $ 39 $ 52
DISTRIBUTIONS PER LIMITED
PARTNERSHIP UNIT (Note 8)
Class A $ 9.25 $ 8 $ 1,052
Class B $ 9.25 $ 8 $ 1,052
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 $ 154,298 $ 103,377 $ 211,957
DISTRIBUTIONS ALLOCABLE TO GENERAL PARTNER $ 638,600 $ 611,500 $ 871,000
=====================================================================================================================
See accompanying notes to financial statements.
</TABLE>
<PAGE> 27
UNIPROP MANUFACTURED
HOUSING COMMUNITIES INCOME FUND
(A MICHIGAN LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
TOTAL
Class A Class B PARTNERS'
General Limited Limited EQUITY
Partner Partners Partners (DEFICIT)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BALANCE, January 1, 1997 $ (602,862) $ 11,438,140 $ 8,874,775 $ 19,710,053
Distributions to partners (871,000) (21,287,624) (10,280,776) (32,439,400)
Net income for the year 211,957 339,548 508,280 1,059,785
- ---------------------------------------------------------------------------------------------------------------------------
BALANCE, December 31, 1997 (1,261,905) (9,509,936) (897,721) (11,669,562)
Distributions to partners (611,500) (161,840) (78,160) (851,500)
Net income for the year 103,377 34,796 378,714 516,887
- ---------------------------------------------------------------------------------------------------------------------------
BALANCE, December 31, 1998 (1,770,028) (9,636,980) (597,167) (12,004,175)
Distributions to partners (638,600) (187,128) (90,372) (916,100)
Net income for the year 154,298 167,784 449,406 771,488
- ---------------------------------------------------------------------------------------------------------------------------
BALANCE, December 31, 1999 $ (2,254,330) $ (9,656,324) $ (238,133) $ (12,148,787)
===========================================================================================================================
See accompanying notes to financial statements.
</TABLE>
<PAGE> 28
UNIPROP MANUFACTURED
HOUSING COMMUNITIES INCOME FUND
(A MICHIGAN LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended December 31, 1999 1998 1997
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 771,488 $ 516,887 $ 1,059,785
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation 867,282 850,574 826,638
Amortization 86,000 85,999 64,500
Gain on disposals of property and equipment (54,075) (99,577) (86,216)
Decrease (increase) in other assets 223,655 (339,860) 123,349
Increase (decrease) in accounts payable 121,222 (39,478) 5,483
Increase (decrease) in other liabilities 27,096 (43,233) (100,546)
- ----------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 2,042,668 931,312 1,892,993
- ----------------------------------------------------------------------------------------------------------------------
CASH FLOWS USED IN INVESTING ACTIVITIES
Purchase of property and equipment (1,322,832) (1,285,501) (956,133)
Proceeds from disposals of property and equipment 881,074 1,220,554 653,082
Payment of contingent purchase price - - (1,500,000)
- ----------------------------------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES (441,758) (64,947) (1,803,051)
- ----------------------------------------------------------------------------------------------------------------------
CASH FLOWS USED IN FINANCING ACTIVITIES
Distributions to partners (916,100) (851,500) (32,439,400)
Repayment of note payable (240,003) (236,832) (144,060)
Net advances (payments) under line of credit 130,477 110,607 (136,384)
Proceeds from note payable - - 33,500,000
Payment for financing costs - - (861,047)
- ----------------------------------------------------------------------------------------------------------------------
NET CASH USED IN FINANCING ACTIVITIES (1,025,626 (977,725) (80,891)
- ----------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH 575,284 (111,360) 9,051
CASH, at beginning of year 537,777 649,137 640,086
- ----------------------------------------------------------------------------------------------------------------------
CASH, at end of year $ 1,113,061 $ 537,777 $ 649,137
======================================================================================================================
See accompanying notes to financial statements.
</TABLE>
<PAGE> 29
UNIPROP MANUFACTURED
HOUSING COMMUNITIES INCOME FUND
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF ACCOUNTING ORGANIZATION AND BUSINESS
POLICIES
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
The preparation of financial statements in
conformity with generally accepted accounting
principles requires management to make
estimates and assumptions that affect the
reported amounts of (1) 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,
the line-of-credit and note payable,
approximate their fair values.
<PAGE> 30
UNIPROP MANUFACTURED
HOUSING COMMUNITIES INCOME FUND
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost.
Depreciation is provided using the
straight-line method over the following
estimated useful lives:
<TABLE>
<S><C>
Buildings and improvements 30 years
Manufactured homes and improvements 30 years
Furniture and equipment 3-10 years
</TABLE>
Accumulated depreciation for tax purposes was
$11,939,258 and $10,989,216 as of December 31,
1999 and 1998, respectively.
Long-lived assets, such as property and
equipment, are evaluated for impairment when
events or changes in circumstances indicate
that the carrying amount of the assets may not
be recoverable through the estimated
undiscounted future cash flows from the use of
these assets. When any such impairment exists,
the related assets will be written down to fair
value. No impairment loss recognition has been
required through December 31, 1999.
FINANCING COSTS
As a result of management's present intent to
refinance the note payable after ten years,
costs to obtain the 1997 financing (see Note 2)
are amortized over a ten-year period.
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.
<PAGE> 31
UNIPROP MANUFACTURED
HOUSING COMMUNITIES INCOME FUND
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting
Standards Board issued Statement of Financial
Accounting Standards (SFAS) No. 133 "Accounting
for Derivative Instruments and Hedging
Activities." This statement, which was
subsequently amended by SFAS No. 137, will
become effective in fiscal 2001, and is not
expected to have an impact on the Partnership's
financial statements.
2. NOTE PAYABLE In 1997, the Partnership entered into a
$33,500,000 note payable agreement. The
borrowings are secured by mortgages on the
Partnership's properties and the assignment of
all current and future leases and rents. The
note is payable in monthly installments of
$251,439, including interest, through March
2027. The interest rate is 8.24% per annum
through June 2007; thereafter, the interest
rate will be adjusted based on the provisions
of the note agreement. The loan may be prepaid
without penalty beginning in January 2007.
There are certain requirements and restrictions
contained in the note payable agreement. The
Partnership is in compliance with these
requirements.
The proceeds of the note were used primarily to
return to the limited partners their original
$30,000,000 capital contribution, to pay
certain amounts to the general partner as
described in Note 6, and to pay related
financing costs.
Future maturities on the note payable for the
next five years are as follows: 2000 -
$265,000; 2001 - $295,000; 2002 - $320,000;
2003 - $350,000; and 2004 - $372,000.
<PAGE> 32
UNIPROP MANUFACTURED
HOUSING COMMUNITIES INCOME FUND
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
3. OTHER ASSETS At December 31, 1999 and 1998, "Other assets"
included cash of approximately $216,000 and
$372,000, respectively, in an escrow account
for property taxes, capital improvements, and
debt service payments, as required by the
Partnership's note payable agreement, which is
restricted from operating use.
At December 31, 1999 and 1998, "Other assets"
also included cash of $231,000 and $241,000,
respectively, 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.
4. LINE-OF-CREDIT The Partnership currently has an unsecured
$600,000 revolving line-of-credit agreement
with a bank. Interest on outstanding balances
is charged at 1.80% in excess of LIBOR; the
Partnership's interest rate at December 31,
1999 was 7.75%.
5. OTHER LIABILITIES Other liabilities consisted of:
<TABLE>
<CAPTION>
December 31, 1999 1998
----------------------------------------------------------------------------
<S> <C> <C>
Tenants' security deposits $ 543,541 $ 528,008
Accrued interest 156,000 158,691
Accrued property taxes 11,894 11,894
Other 163,501 149,247
---------------------------------------------------------------------------
TOTAL $ 874,936 $ 847,840
---------------------------------------------------------------------------
</TABLE>
6. RELATED PARTY MANAGEMENT AGREEMENT
TRANSACTIONS
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> 33
UNIPROP MANUFACTURED
HOUSING COMMUNITIES INCOME FUND
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
FEES AND EXPENSES
During the years ended December 31, 1999, 1998
and 1997 the affiliate earned property
management fees of $432,033, $419,223 and
$404,514, respectively, as permitted in the
Agreement of Limited Partnership. These fees
are included with "Administrative" expenses in
the respective statements of income. The
Partnership was owed $5,012 and $776 by the
affiliate at December 31, 1999 and 1998,
respectively.
Certain employees of the Partnership are also
employees of affiliates of the general partner.
These employees were paid by the Partnership
the amounts of $158,491, $141,046 and $128,094,
in 1999, 1998 and 1997, 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.
Since inception of the Partnership, there has
been no shortfall in the 9% cumulative return
and, as described in Note 2, the Partnership
used a portion of the proceeds from the 1997
financing to return the limited partners'
original capital contribution. In addition,
$1,500,000 of the proceeds from the financing
transaction was used to make a partial payment
in 1997 on the contingent purchase price. The
total remaining contingent purchase price will
not exceed $1,970,000. Additional amounts to be
paid, 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; such amounts are
not determinable at this time. Therefore, no
liability related to this remaining contingency
has been recorded at December 31, 1999.
<PAGE> 34
UNIPROP MANUFACTURED
HOUSING COMMUNITIES INCOME FUND
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
<TABLE>
7. RECONCILIATION OF Year Ended December 31, 1999 1998 1997
---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FINANCIAL STATEMENT
INCOME AND TAXABLE Income per the financial
INCOME statements $ 771,488 $ 516,887 $1,059,785
Adjustments to depreciation
for difference in methods (82,759) (79,790) (74,828)
Adjustments for prepaid
rent, meals and
entertainment 19,926 6,079 3,379
--------------------------------------------------------------------------
Income Per the Partnership's
Tax Return $ 708,655 $ 443,176 $ 988,336
==========================================================================
</TABLE>
8. PARTNERS' CAPITAL Subject to the orders of priority under certain
specified conditions more fully described in
the Agreement of Limited Partnership (as
amended on February 6, 1997), distributions of
partnership funds and allocations of net income
from operations are principally determined as
follows:
DISTRIBUTIONS
The general partner receives a quarterly
Partnership Management Distribution equal to
.25% of the appraised value of the properties
of the Partnership (equal to $573,000 annually
based on current 1999 appraisals). Thereafter,
distributions are made at the discretion of the
general partner, and are allocated 20% to the
general partner as an Incentive Management
Interest and 80% 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> 35
UNIPROP MANUFACTURED
HOUSING COMMUNITIES INCOME FUND
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
9. CONTINGENCY The Partnership is currently undergoing a sales
and use tax audit which is being conducted by
the Florida Department of Revenue. No provision
for any expense related to this ongoing audit
has been recorded in the accompanying financial
statements since management believes the
eventual liability (if any) that may result
will not be a material amount.
10. SUPPLEMENTAL CASH Cash paid for interest totaled approximately
FLOW INFORMATION $2,843,000, $2,854,000 and $1,984,000 in 1999,
1998 and 1997, respectively.
<PAGE> 36
UNIPROP MANUFACTURED
HOUSING COMMUNITIES INCOME FUND
(A MICHIGAN LIMITED PARTNERSHIP)
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1999
<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) $ 12,439,795 $ 2,199,868 $ 8,799,475 $ - $ 843,395
Kings Manor
(Ft. Lauderdale, 6,284,002 847,923 3,391,694 - 424,116
FL)
Park of the Four
Seasons
(Blaine, MN) 8,531,313 1,508,121 6,032,483 - 778,434
Old Dutch Farms
(Novi, MI) 5,623,995 724,088 2,896,348 - 968,315
- --------------------------------------------------------------------------------------------------
$32,879,105 $ 5,280,000 $21,120,000 $ - $3,014,260
==================================================================================================
</TABLE>
<TABLE>
<CAPTION>
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 $ 9,642,870 $ 11,842,738 $ 4,277,034 1986 30 years
Kings Manor
(Ft. Lauderdale, 847,923 3,815,810 4,663,733 1,659,628 1986 30 years
FL)
Park of the Four
Seasons
(Blaine, MN) 1,508,121 6,810,917 8,319,038 1,566,587 1986 30 years
Old Dutch Farms
(Novi, MI) 724,088 3,864,663 4,588,751 2,897,447 1986 30 years
- -----------------------------------------------------------------------------------------------------------------------------
$ 5,280,000 $24,134,260 $ 29,414,260 $ 10,400,696
=============================================================================================================================
</TABLE>
<PAGE> 37
UNIPROP MANUFACTURED
HOUSING COMMUNITIES INCOME FUND
(A MICHIGAN LIMITED PARTNERSHIP)
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1999
<TABLE>
<CAPTION>
1. RECONCILIATION OF BUILDINGS The following table reconciles buildings and improvements from January 1, 1997
AND IMPROVEMENTS to December 31, 1999:
1999 1998 1997
----------------------------------------------------------------------------------
<S> <C> <C> <C>
BALANCE, at January 1 $ 23,934,391 $ 23,862,182 $ 22,128,664
Additions to buildings and
improvements 199,869 72,209 233,518
Partial payment of
contingent purchase price - - 1,500,000
---------------------------------------------------------------------------------
BALANCE, at December 31 $ 24,134,260 $ 23,934,391 $ 23,862,182
=================================================================================
There were no additions to land during this three-year period.
</TABLE>
<TABLE>
<CAPTION>
2. RECONCILIATION OF
ACCUMULATED DEPRECIATION The following table reconciles the accumulated depreciation from January 1,
1997 to December 31, 1999:
1999 1998 1997
---------------------------------------------------------------------------------
<S> <C> <C> <C>
BALANCE, at January 1 $ 9,550,371 $ 8,711,473 $ 7,905,581
Current year depreciation
expense 850,325 838,898 805,892
---------------------------------------------------------------------------------
BALANCE, at December 31 $ 10,400,696 $ 9,550,371 $ 8,711,473
=================================================================================
3. TAX BASIS OF BUILDINGS The aggregate cost of buildings and improvements for federal income tax purposes
AND IMPROVEMENTS is equal to the cost basis used for financial statements purposes.
</TABLE>
<PAGE> 1
EXHIBIT 10(f)
FIRST AMENDED AND RESTATED CONSULTING AGREEMENT
This FIRST AMENDED AND RESTATED CONSULTING AGREEMENT, dated as of
January 9, 1998, among UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND, a
Michigan limited partnership (the "Partnership"), P.I. ASSOCIATES, a Michigan
limited partnership (the "General Partner") and MANUFACTURED HOUSING SERVICES
INC. (the "Consultant").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, pursuant to the Section 12i of the Agreement of Limited
Partnership (as amended by the First Amendment to Uniprop Manufactured Housing
Communities Income Fund Agreement of Limited Partnership dated May 16, 1985,
executed as of March 4, 1986, and by the Second Amendment to Agreement of
Limited Partnership dated as of February 6, 1997, the "Partnership Agreement"),
the General Partner has no authority to take any action without the prior
consent of the Consultant, to the extent that such consent is required by this
Agreement, without the prior approval of a majority in interest of the Limited
Partners of the Partnership;
WHEREAS, the Partnership, the General Partner and the Consultant
entered into a Consulting Agreement as of February 10, 1986 in order to set
forth the types of transactions as to which the General Partner is required to
consult with the Consultant and the terms and conditions on which the Consultant
will provide such consulting services; and
WHEREAS, the Partnership, the General Partner and the Consultant now
desire to enter into this First Amended and Restated Consulting Agreement (the
"Agreement") to modify and expand upon the services to be provided by the
Consultant and to provide for a fee to be paid to the Consultant;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the parties hereto agree as follows:
1. Transactions Covered. The Partnership and the General Partner agree
that in the following transactions and matters the General Partner (i) shall
consult with the Consultant and obtain its written recommendation, and (ii)
shall not take action on such transactions or matters on behalf of the
Partnership contrary to any recommendation of the Consultant without the prior
approval of a majority in interest of the Limited Partners.
a. The Financing of any Property owned by the
Partnership. In this connection, the General Partner
shall obtain the written affirmative recommendation
of the Consultant prior to incurring any indebtedness
or pledging directly or indirectly any property of
the Partnership as security for the payment of any
obligation.
b. The sale of any Property owned by the Partnership. In
this connection, the General Partner shall obtain the
written affirmative recommendation of the Consultant
prior to entering into any agreement for the sale of
any
<PAGE> 2
Property, but not including occasional sales in the
ordinary course of business of inventory, operating
equipment or furniture, fixtures and equipment.
c. The entering into by the Partnership of any other
Capital Transaction. In this connection, the General
Partner shall obtain the written affirmative
recommendation of the Consultant prior to entering
into any agreement for or with respect to a Capital
Transaction on behalf of the Partnership.
d. Annual appraisals of Properties and net asset value
per Unit. In this connection, the General Partner
shall obtain the written affirmative recommendation
of the Consultant prior to selecting any real estate
appraiser other than Cushman & Wakefield, Inc. to
perform the annual appraisal of the Properties, and
the General Partner shall select only national real
estate appraisers comparable in reputation to Cushman
& Wakefield, Inc.
e. Property management arrangements. In this
connection, the General Partner shall obtain the
written affirmative recommendation of the Consultant
prior to taking any action authorizing any party
other than Uniprop, Inc. to provide management
services with respect to any of the Properties and
prior to authorizing any arrangement with any
property manager, including Uniprop, Inc., with
respect to fees payable for such management services,
other than as set forth in the Partnership Agreement.
The Consultant has the right at any time to recommend
the removal or change of any property manager.
f. The entering into by the Partnership of any
other agreement. In this connection, the General
Partner shall furnish to the Consultant, prior to
entering into, a copy of every written agreement and
a summary of every oral agreement to be entered into
by or on behalf of the Partnership or the General
Partner (in its capacity as such) involving (i) the
furnishing of property or services to the Partnership
by any person other than the General Partner if such
agreement provides for payment by the Partnership
equal to or in excess of $50,000 in any year, or (ii)
the furnishing of property or services to the
Partnership by the General Partner or an Affiliate of
the General Partner if such agreement provides for
payment by the Partnership in excess of $25,000 in
any year and in the case of each of clauses (i) or
(ii) shall obtain the written affirmative
recommendation of the Consultant prior to entering
into any such agreement relating to the Partnership's
business. The Consultant has the right at any time to
recommend the amendment or termination of any such
agreement in accordance with its terms.
g. The establishment of Reserves. In this connection,
the General Partner shall obtain the written
affirmative recommendation of the Consultant
-2-
<PAGE> 3
prior to creating or distributing any Reserves and
prior to changing the level of Reserves that the
Partnership shall maintain.
h. Amendment of the Partnership Agreement. In this
connection, the General Partner shall obtain the
written affirmative recommendation of the Consultant
prior to effecting any amendment to the Partnership
Agreement or submitting any proposed amendment for
approval by the Limited Partners.
i. Reports to Partners. In this connection, the General
Partner shall furnish to the Consultant or its
designated Affiliate all information furnished to the
Limited Partners generally.
j. Investor servicing. In this connection, the
Consultant has the right at any time to recommend the
removal of any person performing investor services
for the Partnership and to recommend the appointment
of any other person, including itself or an Affiliate
of the Consultant, to perform such services at
reasonable cost to the Partnership.
k. Insurance. In this connection, the General Partner
shall obtain, prior to entering into any contract of
insurance with respect to the Partnership or the
Properties, the written affirmative recommendation of
the Consultant as to the type, terms and amounts of
insurance to be maintained under such contract. The
Consultant shall have the right at any time to make
recommendations to the General Partner as to
increasing, decreasing or otherwise changing the
type, terms and amounts of insurance maintained by
the Partnership, so long as the costs of such
insurance are reasonable.
l. Selection of accountants. In this connection, the
General Partner shall obtain the written affirmative
recommendation of the Consultant prior to the
selection of any Person to perform accounting
services for the Partnership other than BDO Seidman,
LLP, and the Consultant shall have the right at any
time to recommend to the General Partner the change
or removal of any accountants performing services for
the Partnership, provided such change shall not cause
the Partnership to incur unreasonable additional
costs.
2. Consulting Services.
a. The General Partner shall submit from time to time
in writing to the Consultant each proposal to be
considered by the Consultant pursuant to the
provisions of Section 1 above, and shall notify the
Consultant of the date the Consultant's
recommendation shall be submitted, which date shall
not be less than fifteen business days after the
receipt of the General Partner's notice unless
otherwise agreed in writing by the Consultant. The
Consultant shall render its recommendation to the
Partnership by the date
-3-
<PAGE> 4
specified by the General Partner; provided that the
Consultant may submit its recommendation to the
Partnership up to thirty calendar days after the date
specified by the General Partner if the Consultant
submits a written request for such an extension to
the General Partner and the General Partner receives
that request on or before the due date originally
specified. If the General Partner makes a material
modification to the proposal during the 15 business
day period or during the 30 calendar day extension,
if applicable, the Consultant may submit its
recommendation up to 15 calendar days after the end
of the 15 business day period or 30 calendar day
extension, as applicable. The General Partner shall
concurrently or thereafter furnish to the Consultant
the following information:
(i) if the General Partner has submitted a
proposal for the Financing of a Property by
the Partnership, current operating
information concerning such Property
including the latest financial statements
for such Property, the proposed terms of
such Financing including whether any lender
will require as a condition to such
Financing that its consent be obtained prior
to any change in or removal of the General
Partner of the Partnership, and projections
showing the impact of the proposed Financing
on the anticipated results of operation of
the Property and allocations and
distributions of the Partnership;
(ii) if the General Partner has submitted a
proposal for the sale of a Property by the
Partnership, current operating information
concerning such Property including the
latest financial statements for such
Property and the proposed terms of sale
including whether the Partnership intends to
accept purchase-money obligations from the
buyers of such Property; and
(iii) with respect to every other transaction or
matter listed in Section 1 above, such
information as the Partnership possesses
that is directly or indirectly related to
the matter being considered by the
Consultant.
In addition, the General Partner shall furnish to the Consultant such
other information as is in its possession upon request with respect to any such
transaction or matter and shall endeavor to obtain such other information as the
Consultant shall reasonably request if it is not then in the possession of the
General Partner.
b. The Consultant shall review all proposals submitted
to it by the General Partner for the transactions and
matters listed in Section 1 above and shall provide
the General Partner and the Partnership with a
written recommendation with respect to each such
proposal. The Consultant's recommendation shall
address the proposal from the perspective of the
Partnership and its Limited Partners. The Consultant
shall submit its
-4-
<PAGE> 5
recommendation to the General Partner on or before
the date specified in Section 2(a).
c.
If the Consultant makes a recommendation with
respect to any transaction or matter covered by
Section 1 and the General Partner determines to
solicit the approval of a majority in interest of the
Limited Partners of the Partnership in order that it
may nevertheless enter into such transaction or
matter on the Partnership's behalf or not comply with
the recommendation of the Consultant, the General
Partner shall, not less than 15 days before the first
mailing of materials soliciting the approval of any
Limited Partner, notify promptly the Consultant of
such determination by the General Partner. The
Consultant shall thereupon have the right to furnish
to the General Partner a written statement of the
Consultant in support of its recommendation within 10
days after the notice of the General Partner referred
to in the preceding sentence. The General Partner
shall include in its soliciting material the
statement of the Consultant, and neither the General
Partner nor the Partnership shall be responsible for
such statement. If the General Partner intends to
include in its soliciting material any statement
supporting the approval by the Limited Partners, the
General Partner shall, not later than five days prior
the earlier of the date such soliciting materials are
first filed with the Securities and Exchange
Commission or mailed to the Limited Partners, furnish
to the Consultant a copy of the General Partner's
statement supporting approval by the Limited
Partners.
The Consultant's written recommendation shall be in a
form suitable for distribution to the Limited
Partners and for filing with the Securities and
Exchange Commission or state securities regulators as
part of a registration statement or proxy statement.
The Consultant agrees that it will revise or expand
upon such written recommendation if and to the extent
required by the Securities and Exchange Commission or
any other regulatory authority. The parties
acknowledge that the requirements of the paragraph do
not expand upon the scope of the recommendation
letter required to be rendered by the Consultant
pursuant to Section 2(b). In particular, the parties
acknowledge that if a formal fairness opinion were
required to be rendered in connection with a
particular proposal, the preparation and rendering of
such an opinion would be outside the scope of this
Agreement. The Partnership and the General Partner
would be free to contract with the Consultant or with
any other party, in their sole and absolute
discretion, to obtain such a formal fairness opinion.
3. Compensation. For its services hereunder, the Consultant will be
paid a fee of $18,000 annually, as adjusted beginning on January 1, 2000 in
accordance with the change in Consumer Price Index for all Urban Consumers (the
"CPI-U") as set forth in the fourth paragraph of this Section (the "Consultant's
Fee"). The Consultant's Fee shall be payable in four equal installments, in part
in advance and in part in arrears, on the forty-fifth day of each calendar
-5-
<PAGE> 6
quarter. If this Agreement commences other than on the first day of a calendar
quarter the Consultant's Fee for the partial calendar quarter shall be pro rated
to reflect the actual number of days in the calendar quarter for which the
Consultant is to provide services and shall be paid on the forty-fifth day of
such calendar quarter or on the date of commencement of this Agreement, if
later.
If this Agreement terminates for cause pursuant to Section 5(a) hereof,
no further Consultant's Fee shall be payable pursuant to this Agreement. If the
for-cause termination occurs other than on the last day of a calendar quarter,
the Consultant's Fee shall be pro rated to reflect the actual number of days in
the calendar quarter for which this Agreement is in force, and within 10
business days following termination the Partnership shall pay the Consultant any
amount then owing or the Consultant shall refund to the Partnership any amount
overpaid with respect to that quarter, as the case may be.
If this Agreement terminates for any reason other than a for-cause
termination pursuant to Section 5(a) hereof, the Partnership shall continue to
pay the Consultant the Consultant's Fee through the period ending seven years
from the date of this Agreement.
Beginning January 1, 2000, the Consultant's fee shall be adjusted once
annually using the percentage change (computed on a time-weighted, annualized
basis) of the yearly CPI-U published by the United States Bureau of Labor
Statistics (the "BLS"), or if such index is not published annually, then the
CPI-U published for periods closest to annually. If the CPI-U is no longer
published by the BLS, the CPI-U shall mean that rate determined by the General
Partner as the closest approximation of the CPI-U. The calculation of the CPI-U
shall take 1999 as its base period.
In addition, the Consultant shall be reimbursed up to a maximum of
$11,250 in any year for all accountable out-of-pocket expenses incurred by it in
connection with the performance of consulting services hereunder, other than
expenses for any person retained by Consultant to perform an additional current
appraisal of a Property in connection with a transaction being reviewed by
Consultant. The Consultant shall not have recourse against the General Partner
in the event such fees and expenses are not paid by the Partnership. This
Section 3 shall survive termination of this Agreement.
4. Term. Unless sooner terminated under Section 5, this Agreement shall
continue until the first to occur of the following: the expiration of this
Agreement on January 8, 2005; the dissolution and liquidation of the Partnership
in accordance with the terms of the Partnership Agreement; or the expiration of
the term of the Partnership as provided therein. The term of this Agreement may
be extended by mutual agreement of all of the parties.
5. Termination for Cause. The Partnership or the General Partner may
terminate this Agreement at any time for cause upon delivery of written notice
to the Consultant. The Consultant may terminate this Agreement at any time for
cause upon delivery of written notice to the Partnership.
a. The Partnership or General Partner shall have cause
for termination:
-6-
<PAGE> 7
(i) If the Consultant shall default in the
performance of its obligations pursuant
to Section 2(b) of this Agreement; or
(ii) If bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or
other proceedings for relief under any
bankruptcy law or similar law for the relief
of debtors, are instituted by or against the
Consultant, are allowed against the
Consultant or are consented to or are not
dismissed, stayed or otherwise nullified
within thirty days after such institution;
or
(iii) If Donald Petrow shall cease to be the sole
shareholder and President of the Consultant
unless the Partnership, in its sole and
absolute discretion, shall give written
consent for the transfer of Donald Petrow's
ownership interest in the Consultant; or
(iv) If any change in applicable law renders this
Agreement, in whole or material part,
illegal or unenforceable.
b. The Consultant shall have cause for termination:
(i) If the Partnership or the General Partner
shall default in the performance of any
material covenant, agreement, term or
provision of this Agreement and such default
shall continue for a period of sixty days
after written notice to the Partnership from
the Consultant stating the specific default;
or
(ii) If bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or
other proceedings for relief under any
bankruptcy law or similar law for the relief
of debtors, are instituted by or against the
Partnership, and, if instituted against the
Partnership, are allowed against the
Partnership or are consented to or are not
dismissed, stayed or otherwise nullified
within thirty days after such institution;
or
(iii) If any change in applicable law renders this
Agreement, in whole or material part,
illegal or unenforceable.
c. Upon the expiration or termination of this Agreement,
no party shall have any further right hereunder or
any further obligation hereunder to the others,
except for the obligations, promises or covenants
contained herein which are expressly made to extend
beyond the term of this Agreement.
d. Any party having actual knowledge of an event
creating cause for termination of this Agreement
shall be deemed to have waived its right to terminate
with cause on the basis of that particular event
pursuant to this
-7-
<PAGE> 8
Section 5 if it has not exercised its termination
right within 30 calendar days after actually knowing
of the event.
6. Relationship of the Parties. It is expressly understood and agreed
by the parties that, in providing services under this Agreement, the Consultant
shall at all times act as an independent contractor, not as an employee or agent
of the Partnership, nor shall the Partnership be an employee or agent of the
Consultant. Further, it is expressly understood and agreed by the parties that
nothing contained in this Agreement shall be construed to create a joint
venture, partnership, association or other affiliation or like relationship
among the parties, or a relationship of landlord and tenant, it being
specifically agreed that their relationship is and shall remain that of
independent parties to a contractual relationship as set forth in this
Agreement. In no event shall either party be liable for the debts or obligations
of the other of them, except as otherwise specifically provided in this
Agreement.
7. Indemnification.
(a) The Partnership agrees to indemnify and hold
harmless the Consultant against any losses, claims,
damages or liabilities, joint or several, to which
the Consultant may become subject under this
Agreement, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out
of or are based upon any breach or alleged breach of
this Agreement by the Partnership or the General
Partner. The Partnership will reimburse the
Consultant for any legal or other expenses reasonably
incurred by the Consultant in connection with
investigating or defending against any such loss,
claim, damage, liability or action; provided,
however, that if the Partnership has specifically
agreed to pay any settlement or judgment in respect
of such action or claim, has made all such
reimbursements of such expenses to such date and can
reasonably demonstrate the continuing financial
ability to comply with the terms of this Section
7(a), it shall not be required to indemnify the
Consultant for any payment made by the Consultant to
any claimant in settlement of any suit or claim
unless such payment is approved by the Partnership
(which approval shall not be unreasonably withheld)
or by a court having jurisdiction of the controversy;
and provided further that the Partnership shall not
be liable under this Section 7(a) for any losses,
claims, damages or liabilities arising out of any act
or failure to act on the part of any other person,
but shall be liable only with respect to the
Partnership's own acts or failures to act. This
Section 7(a) shall remain in full force and effect
notwithstanding any investigation made by the
Consultant or on behalf of the Consultant, shall
survive termination of this Agreement, and shall be
in addition to any liability which the Partnership
may otherwise have.
(b) The Consultant agrees to indemnify and hold
harmless the Partnership and the General Partner, and
any person which controls either of them, against any
losses, claims, damages or liabilities, joint or
several, to which the Partnership or the General
Partner or such controlling person may become
-8-
<PAGE> 9
subject, under this Agreement, insofar as such
losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any
breach or alleged breach of this Agreement by the
Consultant. The Consultant will reimburse the
Partnership and the General Partner for any legal or
other expenses reasonably incurred by them in
connection with investigating or defending against
any such loss, claim, damage, liability or action;
provided, however, that if the Consultant has
specifically agreed to pay any settlement or judgment
in respect of such action or claim, has made all such
reimbursements of such expenses to such date and can
reasonably demonstrate the continuing financial
ability to comply with the terms of this Section
7(b), the Consultant shall not be required to
indemnify the Partnership or the General Partner for
any payment made to any claimant in settlement of any
suit or claim unless such payment is approved by the
Consultant (which approval shall not be unreasonably
withheld), or by a court having jurisdiction of the
controversy; and provided further that the Consultant
shall not be liable under this Section 7(b) for any
losses, claims, damages or liabilities arising out of
any act or failure to act on the part of any other
person, but shall be liable only with respect to the
Consultant's own acts or failures to act. This
indemnity shall remain in full force and effect
notwithstanding any investigation made by or on
behalf of the Partnership or the General Partner,
shall survive any termination of this Agreement, and
shall be in addition to any liability which the
Consultant may otherwise have.
(c) No indemnifying party shall be liable under the
indemnity provisions contained in Sections 7(a) and
7(b) unless the indemnified party shall have notified
such indemnifying party in writing promptly after the
first written notice or the summons or other first
legal process giving information of the nature of the
claim or of the commencement of the action shall have
been delivered to or served upon the indemnified
party (but failure to notify an indemnifying party of
any such claim shall not relieve it from any
liability otherwise than on account of its indemnity
rights contained in Sections 7(a) or 7(b) which it
may have to the indemnified party against whom action
is brought). In case any claim is made or any action
is brought against any indemnified party upon any
claim as to which such indemnified party claims
indemnity pursuant to Sections 7(a) or 7(b) or
otherwise, the indemnifying party shall be entitled
to participate at its own expense in the defense, or,
if it so elects, in accordance with arrangements
satisfactory to any other indemnifying party or
parties similarly notified, to assume the defense
thereof, with counsel who shall be satisfactory to
such indemnified party and any other indemnified
parties who are defendants in such action; and after
notice from the indemnifying party to such
indemnified party of its election so to assume the
defense thereof and the retaining of such counsel by
the indemnifying party, the indemnifying party shall
not be liable to such indemnified party under
Sections 7(a) or 7(b) or otherwise for any legal or
other expenses subsequently incurred by
-9-
<PAGE> 10
such indemnified party in connection with the defense
thereof, other than the reasonable costs of
investigation. Notwithstanding the election of an
indemnifying party to assume the defense of any such
action, if (i) the indemnifying party shall not have
employed counsel to have charge of the defense of
such action or proceeding or (ii) such indemnified
party shall have reasonably concluded that there may
be defenses available to it which are different from
or additional to those available to the indemnifying
party (in which case the indemnifying party shall not
have the right to direct the defense of such action
or proceeding on behalf of the indemnified party),
then in either of such events the indemnifying party
shall bear all legal or other expenses incurred by
the indemnified party in connection with the defense
of such action.
8. Waiver. The failure of a party to insist upon strict adherence to
any term of this Agreement on any occasion shall not be considered a waiver or
deprive that party of the right thereafter to that term or any other term of
this Agreement.
9. Entire Agreement. This Agreement supersedes all previous contracts
or agreements among the parties with respect to the subject matter hereof and
constitutes the entire Agreement among the parties with respect thereto.
10. Amendments. This Agreement may be amended only be an instrument in
writing signed in the manner provided in Section 12 below, effective as of the
date stipulated therein.
11. Invalidity of Particular Provisions. If any term or provisions of
this Agreement, or any application thereof to any person or circumstance shall
to any extent, be invalid or unenforceable, the remainder of this Agreement, or
the application of such term or provision to persons or circumstances other than
those as to which it is held invalid or unenforceable, shall not be affected
thereby and each term and provision of this Agreement shall be valid and be
enforceable to the fullest extent allowable by law.
12. Execution. This Agreement and any amendments hereto shall be
executed in no fewer than two counterparts by a duly authorized officer or agent
of each party hereto. Each counterpart so executed shall be deemed an original,
but all original counterparts shall together constitute one and the same
instrument.
13. Further Actions. Each of the parties agrees that it shall hereafter
execute and deliver such further instruments and do such further acts and things
as may be reasonably required or useful to carry out the intent and purpose of
this Agreement and as are not inconsistent with the terms hereof.
14. Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the Consultant, the General Partner, the
Partnership and their respective successors and assigns. This Agreement may not
be assigned by the General Partner or the Partnership
-10-
<PAGE> 11
without the prior written consent of the Consultant. This Agreement may not be
assigned by the Consultant without the prior written consent of the General
Partner.
15. Notices. All demands, notices and other communications under this
Agreement shall be in writing shall be personally delivered or sent by
registered mail, telecopy or overnight courier, shall be deemed to have been
duly given when received, and shall be addressed as follows:
To the General Partner or the Partnership:
P.I. Associates
280 Daines Street, 3rd Floor
Birmingham, Michigan 48009
Attention: Mr. Paul M. Zlotoff
with a copy to:
Nicholas S. Hodge, Esq.
Edwards & Angell
101 Federal Street
Boston, MA 02110
Fax: (617) 439-4170
To the Consultant:
Manufactured Housing Services, Inc.
Attention: Mr. Donald E. Petrow, President
14 Pitching Way
Scotch Plains, New Jersey 07076
Fax: (908) 889-7326
with a copy to:
Jonathan Baum, Esq.
39 Hollenbeck Avenue
Great Barrington, MA 01230
Fax: (413) 528-6725
or at such address as may hereafter be furnished in writing by any party to the
others.
16. Defined Terms. Capitalized terms defined in the Partnership
Agreement but not defined herein shall have the same meanings as are provided
therefor in the Partnership Agreement.
17. Governing Law. This Agreement shall be governed by, and construed
and enforced in accordance with, the internal laws of the State of New York.
-11-
<PAGE> 12
18. Remedies. In the case of any disputes arising under this Agreement,
the prevailing party shall be entitled to recover reasonable legal fees and
costs from the adverse party.
IN WITNESS WHEREOF, the parties hereto have executed this Consulting
Agreement as of the date first above written.
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND,
a Michigan Limited Partnership
By: P.I. Associates, a Michigan Limited
Partnership, General Partner
By: /s/ Paul M. Zlotoff
-----------------------
P.I. ASSOCIATES,
a Michigan Limited Partnership
By: /s/ Paul M. Zlotoff
-----------------------
MANUFACTURED HOUSING
SERVICES, INC.
By: /s/ Donald E. Petrow
-----------------------
-12-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 1,113,061
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,713,673
<PP&E> 30,586,681
<DEPRECIATION> 10,521,838
<TOTAL-ASSETS> 22,403,064
<CURRENT-LIABILITIES> 1,672,746
<BONDS> 32,879,105
0
0
<COMMON> 0
<OTHER-SE> (12,148,787)
<TOTAL-LIABILITY-AND-EQUITY> 22,403,064
<SALES> 0
<TOTAL-REVENUES> 8,748,916
<CGS> 0
<TOTAL-COSTS> 7,024,146
<OTHER-EXPENSES> 953,282
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,926,033
<INCOME-PRETAX> 771,488
<INCOME-TAX> 0
<INCOME-CONTINUING> 771,488
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 771,488
<EPS-BASIC> 8<F1>
<EPS-DILUTED> 46
<FN>
<F1>"In this RELP there are two classes of LP units."
EPS Primary are earnings per Class A unit.
EPS Diluted are earnings per Class B unit.
</FN>
</TABLE>
<PAGE> 1
EXHIBIT 28
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND
2000 PROPERTY APPRAISALS
Cushman & Wakefield recently completed market value appraisals of UMHCIF's four
properties as of March 2000. The table below sets forth certain appraisal
information for each property, as well as relevant comparisons:
<TABLE>
<CAPTION>
MARCH 00 MARCH 99 VARIANCE
PROPERTY APPRAISALS APPRAISALS IN %
<S> <C> <C> <C>
Aztec Estates, FL $21,400,000 $21,100,000 1.4%
Kings Manor, FL 10,900,000 10,700,000 1.9%
Old Dutch Farms, MI 10,375,000 10,000,000 3.8%
Park of Four Seasons, MN 16,000,000 15,500,000 3.2%
---------- ---------- -------
GRAND TOTAL: $58,675,000 $57,300,000 2.4%
Other Comparisons versus March 2000 Appraisal:
- ----------------------------------------------
Original Cash Purchase Price of Properties: 26,400,000 +122.3%
</TABLE>
2000 ESTIMATED NET ASSET VALUE OF UNITS
Based on the March 2000 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 2000 for there appraised value.
- - Costs and selling expenses are 3.0% of the sale price.
- - Amount payable to creditors other than the mortgage debt, is negligible.
- - Tax consequences of a sale are not taken into consideration.
<TABLE>
<CAPTION>
Calculations:
- -------------
<S> <C>
March 2000 appraised value of the properties: $58,675,000
-----------
Minus: Costs and selling expenses (3.0%): 1,760,250
Mortgage Debt: 32,879,105
Sellers' Contingent Purchase Price: 1,970,000 *
---------
Net Sale Proceeds: $22,065,645
===========
Limited Partners' Share of Net Sales Proceeds (80.0%) $17,652,516
ESTIMATED CURRENT NET ASSET VALUE PER UNIT: $588
======
</TABLE>
* Reflects the $1,500,000 partial payment of Contingent Purchase Price which
was paid on May 15, 1997 out of operating cash reserves.
