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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended June 30, 2000 Commission File No. 0-15940
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND,
a Michigan Limited Partnership
(Exact name of registrant as specified in its charter)
MICHIGAN 38-2593067
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
280 Daines Street, Birmingham, Michigan 48009
(Address of principal executive offices) (Zip Code)
(248) 645-9261
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(g) of the Act:
$1,000 per unit, units of limited partnership interest
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
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UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND,
A MICHIGAN LIMITED PARTNERSHIP
INDEX
<TABLE>
<CAPTION>
Page
PART I FINANCIAL INFORMATION
<S> <C> <C>
ITEM 1. FINANCIAL STATEMENTS
Balance Sheets
June 30, 2000 (Unaudited) and
December 31, 1999 3
Statements of Income Six months ended June 30, 2000 and 1999
(unaudited) and Three months ended
June 30, 2000 and 1999 (unaudited) 4
Statements of Cash Flows
Six months ended June 30, 2000
and 1999 (Unaudited) 5
Notes to Financial Statements
June 30, 2000 (Unaudited) 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS 7
ITEM 3. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK 9
PART II OTHER INFORMATION 10
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 11
</TABLE>
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UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND,
A MICHIGAN LIMITED PARTNERSHIP
BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS JUNE 30,2000 DECEMBER 31, 1999
------------ -----------------
(Unaudited)
<S> <C> <C>
Properties:
Land $ 5,280,000 $ 5,280,000
Buildings And Improvements 24,211,276 24,134,260
Furniture And Fixtures 196,123 169,741
Manufactured Homes and Improvements 951,793 1,002,680
----------- -----------
30,639,192 30,586,681
Less Accumulated Depreciation 10,955,479 10,521,838
----------- -----------
19,683,713 20,064,843
Cash And Cash Equivalents 959,039 1,113,061
Unamortized Finance Costs 581,548 624,548
Other Assets 1,007,523 600,612
----------- -----------
Total Assets $22,231,823 $22,403,064
=========== ===========
LIABILITIES
Line of Credit $ 450,000 $ 600,000
Accounts Payable 112,692 197,810
Mortgage Payable 32,720,887 32,879,105
Other Liabilities 1,037,574 874,936
----------- -----------
Total Liabilities $34,321,153 $34,551,851
Partners' Equity:
General Partner (2,474,389) (2,254,330)
Class A Limited Partners (9,595,565) (9,656,324)
Class B Limited Partners (19,377) (238,133)
----------- -----------
Total Partners' Equity (12,089,330) (12,148,787)
----------- -----------
Total Liabilities And
Partners' Equity $22,231,823 $22,403,064
=========== ===========
</TABLE>
See Notes to Financial Statements
3
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UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND
A MICHIGAN LIMITED PARTNERSHIP
<TABLE>
<CAPTION>
STATEMENTS OF INCOME SIX MONTHS ENDED THREE MONTHS ENDED
JUNE 30,2000 JUNE 30,1999 JUNE 30, 2000 JUNE 30,1999
------------ ------------ ------------- ------------
(unaudited) (unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C>
Income:
Rental Income $4,192,932 $4,129,853 $2,080,199 $2,070,070
Other 317,434 236,807 163,781 105,608
---------- ---------- ----------- ----------
Gross Revenue: $4,510,366 $4,366,660 $2,243,980 $2,175,678
========== ========== =========== ==========
Operating Expenses:
Administrative Expenses
(Including $221,253 ,$217,117,$111,883 and $109,273
in Property Management Fees Paid to An Affiliate for
the Six and Three Month Period
Ended June 30, 2000 and 1999, respectively) 974,493 882,879 513,417 430,108
Property Taxes 422,205 411,331 211,080 206,274
Utilities 258,490 253,516 125,714 129,310
Property Operations 478,790 547,418 242,929 287,909
Depreciation And Amortization 476,641 468,000 238,321 234,000
Interest 1,353,477 1,369,004 684,552 696,317
---------- ---------- ---------- ----------
Total Operating Expenses $3,964,096 $3,932,148 $2,016,013 $1,983,918
========== ========== ========== ==========
Net Income $ 546,270 $ 434,512 $ 227,967 $ 191,760
========== ========== ========== ==========
Income Per Limited Partnership Unit:
Class A $8.25 $5.41 $2.93 $2.03
Class B $27.64 $24.39 $12.60 $11.51
Distribution Per Limited Partnership Unit
Class A $5.25 $4.25 $2.75 $2.25
Class B $5.25 $4.25 $2.75 $2.25
Weighted Average Number Of Limited
Partnership Units Outstanding
Class A 20,230 20,230 20,230 20,230
Class B 9,770 9,770 9,770 9,770
</TABLE>
See Notes to Financial Statements
4
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UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND
A MICHIGAN LIMITED PARTNERSHIP
<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED
JUNE 30,2000 JUNE 30, 1999
------------ -------------
(unaudited) (unaudited)
<S> <C> <C>
Cash Flows From Operating Activities:
Net
Income $ 546,270 $ 434,512
Adjustments To Reconcile Net Income
To Net Cash Provided By
Operating Activities:
Depreciation 433,641 425,000
Amortization 43,000 43,000
(Increase) Decrease In Other Assets (406,911) (159,777)
Increase (Decrease) In Accounts Payables (85,118) (12,661)
Increase (Decrease) Other Liabilities 162,638 398,927
--------- ---------
Total Adjustments: 147,250 694,489
--------- ---------
Net Cash Provided By (Used In)
Operating Activities 693,520 1,129,001
--------- ---------
Cash Flows From Investing Activities:
Capital Expenditures (52,511) (129,521)
--------- ---------
Net Cash Provided By (Used In)
Investing Activities (52,511) (129,521)
Cash Flows From Financing Activities:
(Net Payments) Advances from Line of Credit (150,000) 130,477
Distributions To Partners (486,813) (442,100)
Principal Payments on Mortgage (158,218) (134,276)
--------- ---------
Net Cash Provided By (Used In) (795,031) (445,899)
--------- ---------
Increase (Decrease) In Cash and Equivalents (154,022) 553,581
Cash and Equivalents, Beginning 1,113,061 537,777
--------- ---------
Cash and Equivalents, Ending $ 959,039 $1,091,358
========= =========
</TABLE>
See Notes to Financial Statements
5
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UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND,
A MICHIGAN LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
June 30, 2000 (Unaudited)
1. BASIS OF PRESENTATION:
The accompanying unaudited 2000 and audited 1999 financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. The balance sheet at December 31, 1999 has been derived from the
audited financial statements at that date. Operating results for the three and
six months ended June 30, 2000 are not necessarily indicative of the results
that may be expected for the year ending December 31, 2000, or for any other
interim period. For further information, refer to the consolidated financial
statements and footnotes thereto included in the Partnership's Form 10-K for the
year ending December 31, 1999.
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ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Capital Resources
The Partnership's capital resources consist primarily of its four manufactured
housing communities. On March 25, 1997 the Partnership borrowed $33,500,000 from
Nomura Asset Capital Corporation (the "Financing"). It secured the Financing by
placing liens on its four communities. As a result of the Financing, the
Partnership distributed $30,000,000 to the Limited Partners, which represented a
full return of the original capital contributions of $1,000 per unit.
Liquidity
As a result of the Financing, the Partnership's four properties are mortgaged.
At the time of the Financing, the aggregate principal amounts due under the four
mortgage notes was $33,500,000 and the aggregate fair market value of the
Partnership's mortgaged properties was $53,200,000. The Partnership expects to
meet its short-term liquidity needs generally through its working capital
provided by operating activities.
The Partnership's long-term liquidity is based, in part, upon its investment
strategy. The properties owned by the Partnership were expected to be held for
seven to ten years after their acquisition. All of the properties have been
owned by the Partnership for more than ten years. The General Partner may elect
to have the Partnership own the properties for as long as, in the opinion of the
General Partner, it is in the best interest of the Partnership to do so.
The Partnership has a renewable $600,000 line of credit with National City Bank
of Michigan/Illinois (formerly First of America Bank). The interest rate on the
line of credit floats at 180 basis points above 1 month LIBOR, which on June 30,
2000 was 6.78%. The sole purpose of the line of credit is to purchase new and
used homes to be used as model homes offered for sale within the Partnership's
communities. Over the past three years, sales of the new and used model homes
have been growing and the General Partner believes that continuing the model
home program is in the best interest of the Partnership. As of June 30, 2000,
the outstanding balance on the line of credit was $450,000, a reduction of
$150,000 from the balance of $600,000 as of December 31, 1999. In the event that
the General Partner deems it necessary to increase the existing line of credit,
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the General Partner will consult with Manufactured Housing Services, the
Partnership's consultant (with whom it is required to consult on such matters)
to obtain such increase.
Net Cash from Operations available for aggregate distributions to all Partners
in UMHCIF during the quarter ended June 30, 2000 amounted to $466,288. The
amount available during the same period in 1999 was $425,760. Management
considers Net Cash from Operations to be a supplemental measure of the
Partnership's operating performance. Net Cash from Operations is defined as net
income computed in accordance with generally accepted accounting principles
("GAAP"), plus real estate related depreciation and amortization. Net Cash from
Operations does not represent cash generated from operating activities in
accordance with GAAP and is not necessarily indicative of cash available to fund
cash needs. Net Cash from Operations should not be considered as an alternative
to net income as the primary indicator of the Partnership's operating
performance or as an alternative to cash flow as a measure of liquidity.
The quarterly Partnership Management Distribution due and paid to the General
Partner for the second quarter was $146,687.50, or one-fourth of 1.0% of the
most recent appraised value of the properties held by the Partnership.
($58,675,000 x .01 = $586,750 / 4 = $146,687.50)
The cash available after payment of the Partnership Management Distribution of
$146,687.50 from Net Cash from Operations was $319,601. From this amount, the
General Partner elected to make a total distribution of $103,125 for the second
quarter of 2000, of which 80.0%, or $82,500, was paid to the Limited Partners
and 20.0%, or $20,625, was paid to the General Partner. The General Partner will
continue to monitor on-going Net Cash from Operations generated by the
Partnership during the coming quarters. If Net Cash from Operations generated is
lower or higher than the amount needed to maintain the current distribution
level, the General Partner may elect to reduce or increase the level of future
distributions paid to the Limited Partners.
While the Partnership is not required to maintain a working capital reserve, the
Partnership has not distributed all the cash generated from operations in order
to build cash reserves. For the quarter ended June 30, 2000, the Partnership
added $216,475 to reserves. During the same quarter in 1999, the Partnership
added $188,760 to cash reserves. The amount placed into reserves is at the
discretion of the General Partner.
Results of Operations
Overall, as illustrated in the tables below, the four properties enjoyed a
combined average occupancy of 95% (1,742/1,824 sites) at the end of June 2000,
versus 97% a year ago. The average monthly rent in June 2000 was approximately
$425, or 4.4% more than the $407 average monthly rent in June, 1999.
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<TABLE>
<CAPTION>
Total Occupied Occupancy Average
Capacity Sites Rate Rent
<S> <C> <C> <C> <C>
Aztec Estates 645 607 94% $472
Kings Manor 314 292 93 451
Old Dutch Farms 293 271 93 407
Park of the Four Seasons 572 572 100 369
--- --- --- ---
Total on 6/30/00: 1,824 1,742 95% $425*
Total on 6/30/99: 1,824 1,779 97% $407*
</TABLE>
* Average Rent is not weighted average.
<TABLE>
<CAPTION>
GROSS REVENUES NET INCOME
FOR THREE MONTHS ENDING JUNE 30, 2000
6/30/00 6/30/99 6/30/00 6/30/99
<S> <C> <C> <C> <C>
Aztec Estates $ 844,920 $ 822,799 $ 416,047 $ 444,866
Kings Manor 388,388 374,565 239,598 243,059
Old Dutch Farms 350,192 352,905 196,346 224,677
Park of the Four Seasons 638,284 612,371 399,303 383,912
---------- ---------- ---------- ----------
2,221,784 $2,162,640 $1,251,294 $1,296,514
Partnership Management: 22,196 13,038 (53,387) (50,937)
Other Non Recurring expenses: ----- ---- (47,067) (123,500)
Interest Expense (684,552) (696,317)
Depreciation and Amortization (238,321) (234,000)
---------- ---------- ---------- ----------
Total $2,243,980 $2,175,678 $ 227,967 $ 191,760
</TABLE>
COMPARISON OF QUARTER ENDED JUNE 30, 2000 TO QUARTER ENDED JUNE 30, 1999
Gross revenues increased $68,302 to $2,243,980 in 2000, as compared to
$2,175,678 in 1999. The increase in gross revenues is the result of higher
average rents at the Partnership's four communities (see table on above).
As described in the Statements of Income total operating expenses increased
$32,095, to $2,016,013 in 2000, as compared to $1,983,918 in 1999. The slight
increase is due to an increase in property operating expenses.
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As a result of the foregoing factors, net income increased to $227,967 for the
quarter ended June 30, 2000 from $191,760 for the quarter ended June 30, 1999.
COMPARISON OF THE SIX MONTHS ENDED JUNE 30, 2000 TO THE SIX MONTH ENDED JUNE 30,
1999
For the first six months of 2000, Gross Revenues were $4,510,366 or 3% above the
$4,366,660 for the same period of 1999. Total Operating Expenses for the first
two quarters of 2000 were $3,964,096 an increase of 80 basis points compared to
$3,932,148 for 1999. Net Income for the first six months ending June 30, 2000
was $546,270, an increase of 26% compared to the first six months ending June
30, 1999.
MANAGEMENT EXPENSES
Net Partnership management expenses paid during the quarter amounted to $53,387.
Gross expenses of $75,583 (data processing, accounting and legal expenses,
office supplies and wages to employees of the Partnership) were partially offset
by income of $22,196 generated by interest on the Partnership's reserves and
transfer fees. The figures for last year's second quarter were $50,937, $63,975
and $13,038, respectively.
ITEM 3.
QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
The Partnership is exposed to interest rate rise 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.
Note Payable: At June 30, 2000 the Partnership had a note payable
outstanding in the amount of $32,720,887. Interest on this note is at a fixed
annual rate of 8.24% through June 2007.
Line-of-Credit: At June 30, 2000 the Partnership owed $450,000 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 of 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 annually.
The Partnership does not enter into financial instruments transactions for
trading or other speculative purposes or to manage its interest rate exposure.
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PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS OF FORM 8-K
(a) Exhibits
Exhibit Number Description
-------------- -----------
27 Financial Data Schedule
(b) Reports of Form 8-K
There were no reports filed on Form 8-K
during the three months ended June 30,
2000.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Uniprop Manufactured Housing
Communities Income Fund,
A Michigan Limited Partnership
BY: P.I. Associates Limited Partnership,
A Michigan Limited Partnership,
its General Partner
BY: /s/ Paul M. Zlotoff
---------------------------------------------
Paul M. Zlotoff, General Partner
BY: /s/ Gloria A. Koster
---------------------------------------------
Gloria A. Koster, Principal Financial Officer
Dated: August 8, 2000
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EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION PAGE
27 Financial Data Schedule
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