<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, 1996 Commission File No. 0-16701
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II,
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)
(810) 645-9261
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(g) of the Act:
$20 per unit, units of beneficial assignments 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, 1997, 3,303,387 units of limited partnership interest of the
registrant were outstanding and the estimated aggregate market value of the
units as of such date held by non-affiliates, as estimated by the General
Partner (based on a 1997 appraisal of Partnership properties), was
approximately $42,317,000.
DOCUMENTS INCORPORATED BY REFERENCE
SEE ITEM 14.
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PART I
ITEM 1. BUSINESS
General Development of Business
Uniprop Manufactured Housing Communities Income Fund II, a Michigan
Limited Partnership (the "Partnership"), acquired, maintains, operates and
ultimately will dispose of income producing residential real properties
consisting of nine manufactured housing communities (the "Properties"). The
Partnership was organized and formed under the laws of the State of Michigan on
November 7, 1986. Its principal offices are located at 280 Daines Street,
Birmingham, Michigan 48009 and its telephone number is (810) 645-9261.
The Partnership filed an S-11 Registration Statement in November 1986
which was declared effective by the Securities and Exchange Commission on
December 23, 1986. The Partnership thereafter sold 3,303,387 units (the
"Units") of beneficial assignment of limited partnership interest representing
capital contributions by unit holders (the "Unit Holders") to the Partnership
of $20 per unit. The sale of all 3,303,387 Units was completed in December,
1987, generating $66,067,740 of contributed capital to the Partnership.
On April 1, 1987, the Partnership acquired Sunshine Village, a
356-space manufactured housing community located in Davie, Florida and Ardmor
Village, a 339-space manufactured housing community located in Lakeville,
Minnesota. On May 22, 1987, the Partnership acquired Camelot Manor, a
335-space manufactured housing community located in Grand Rapids, Michigan. On
July 1, 1987, Country Roads, a 312-space manufactured housing community located
in Jacksonville, Florida and Paradise Village, a 611-space manufactured housing
community located in Tampa, Florida, were acquired by the Partnership. On
September 1, 1987, Dutch Hills, a 278-space manufactured housing community
located in Haslett, Michigan and Stonegate Manor, a 308-space manufactured
housing community located in Lansing, Michigan, were acquired by the
Partnership. On January 8 and 15, 1988, respectively, the Partnership acquired
West Valley, a 420-space manufactured housing community, and El Adobe, a
371-space manufactured housing community, both located in Las Vegas, Nevada.
The Partnership operates the Properties as manufactured housing
communities with the primary investment objectives of: (1) providing cash from
operations to investors; (2) obtaining capital appreciation; and (3) preserving
capital of the Partnership. There can be no assurance that such objectives can
be achieved.
On December 27, 1993, the Partnership participated in a financing
transaction (the "Mortgage Financing") which created mortgage financing for 28
manufactured housing communities (collectively, the "Projects," and
individually, a "Project"). Seven (7) of the Projects are owned by the
Partnership; thirteen (13) are owned by affiliates of Genesis Associates
Limited Partnership, the general partner of the Partnership (the "General
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Partner"), and eight (8) are owned by unrelated third parties. The Projects
owned by the Partnership (the "Fund II Projects") are as follows:
Ardmor Village
Camelot Manor
Dutch Hills
El Adobe
Stonegate
Sunshine Village
West Valley
Essentially, mortgage notes executed by the owners of each of the
Projects were issued in favor of Neutron-Uniprop, Inc. ("Neutron"), a
wholly-owned subsidiary of Uniprop, Inc. (an affiliate of the General Partner),
and assigned by Neutron to an independent trustee of a newly-formed trust (the
"Trust"). The specific purpose of the Trust is to hold the mortgage notes and
the mortgages and other security provided in connection therewith for the
benefit of the owners of the newly-issued Uniprop MHC Mortgage Pass-Through
Certificates (the "Mortgage Certificates"). The proceeds derived from the sale
of the Mortgage Certificates were used to fund the mortgage loans made to the
Project owners and pay the various expenses of the transaction.
Five classes of Mortgage Certificates were issued with varying
seniority and carrying different interest rates. The interest rate on the
senior securities (i.e. the Class A Certificates) floats and equals 1.67% in
excess of the LIBOR rate, computed monthly. The Class B and D Certificates
carry fixed rates of interest of 7.04% and 7.5%, respectively. The interest
rate on the Class C Certificate floats and equals 2.5% in excess of the libor
rate, computed monthly. The Class R Certificates do not have a principal
balance or accrue interest.
The original principal amounts of the mortgage loans for the Fund II
Projects and their terms are as follows:
Ardmor Village $2,930,000
Camelot Manor $3,490,000
Dutch Hills $2,580,000
El Adobe $5,530,000
Stonegate $3,015,000
Sunshine Village $4,290,000
West Valley $8,210,000
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Term: 30 years
Amortization: Years 1-5; none
Years 6-30; 25 year schedule
Interest Rate: Weighted average cost of the
Mortgage Certificates plus 135 basis
points (the "Excess Interest"),
computed monthly, but in no event
greater than 9.9% per annum in years
1 through 10 and 10.9% per annum in
years 11 through 30, or less than 7%
per annum in years 1 through 10 or
8% per annum in years 11 through 30.
After payment of certain servicing
expenses and the costs of
administering the Trust, the Excess
Interest will be used to reduce the
principal balance of the Mortgage
Certificates, which could ultimately
result in an increase in the value
of the Class R Certificates.
Prepayment: Penalty of 5%, 4%, 3%, 2%, and 1% of the
principal amount outstanding for prepayment
in years 1, 2, 3, 4, and 5, respectively. No
prepayment penalty after year 5.
All prepayments of principal made under any of the mortgage notes will
be applied in reduction of the principal balance of the Mortgage Certificates
according to their respective payment priorities. To the extent the Excess
Interest is not used to pay servicing fees and other costs of the trustee and
servicers, it will be applied first in reduction of the principal balance of
the Class B Certificates and Class C Certificates, pro rata until reduced to
zero, then in reduction of the principal balance of the Class A Certificates
until reduced to zero, and then in reduction of the Class D Certificates until
reduced to zero. As a result of the foregoing, the weighted average cost of
the Mortgage Certificates and, therefore, the interest rate charged to each
Project owner, may increase due to prepayment by another borrower and as the
principal amount of the Mortgage Certificates is reduced. In addition, because
the Fund II Projects all have a common owner, the loans to each of the Fund II
Projects are cross-defaulted and cross-collateralized with one another, such
that a default by Uniprop Income Fund II with respect to any one of its loans
will permit the enforcement of remedies on behalf of the Trust against all
seven (7) Fund II Projects and recovery against each Fund II Project in excess
of the amount of its mortgage loan.
As a condition to participating in the mortgage-backed securities
transaction, each Project owner was required to use approximately 5% of its
mortgage proceeds to purchase a subordinated portion of the mortgage-backed
securities, the Class D Certificates. The Class D Certificates are not rated,
carry a fixed interest rate of 7.5% per annum and are subordinated to the Class
A, Class B and Class C Mortgage Certificates, although, as long as there are
sufficient funds in the Trust, the holders of the Class D Certificates are
entitled to receive monthly payments of interest. The Partnership was issued a
Class D Certificate with a face amount of $1,502,250.
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The Class R Certificates, which constitute the residual interest in
the Trust, are owned by Uniprop MHC Residual L.L.C., a newly created Michigan
limited liability company (the "R Holder" or "LLC"). The owners of the R
Holder are the respective owners of the Projects participating in this
mortgage-backed securities financing, with their ownership interest determined
based on the amount each Project owner contributes to the value of the Class R
Certificates. Initially, the Partnership holds a 20.986% interest in the R
Holder.
Financial Information About Industry Segment
The Partnership's business and only industry segment is the operation
of its nine manufactured housing communities. Partnership operations commenced
in April 1987 upon the acquisition of the first two Properties. 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 Sunshine Village, Ardmor Village and Camelot Manor Properties were
selected from 25 manufactured housing communities then owned by affiliates of
Genesis Associates Limited Partnership, the General Partner of the Partnership
(the "General Partner"). The other six communities were purchased from
unaffiliated third parties. 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,
although a Property may be disposed of later, if in the opinion of the General
Partner, it is in the best interest of the Partnership to do so. The
determination of whether a particular Property should be disposed of will be
made by the General Partner only after consultation with Hutton Manufactured
Housing Services Inc. (the "Consultant"). In making their decision, the
General Partner and Consultant will consider relevant factors, including,
current operating results of the particular Property and prevailing economic
conditions, and will make the decision 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 home sites 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, has and may
in the future participate directly or through other partnerships or
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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 Davie/Fort Lauderdale area contains
approximately seven communities offering approximately 3,441 housing sites
competing with Sunshine Village. Ardmor Village competes with approximately
nine communities in the Lakeville, Minnesota area offering approximately 2,363
housing sites. Camelot Manor competes with approximately 16 communities in the
Grand Rapids, Michigan area offering approximately 3,697 housing sites. In the
Jacksonville, Florida area, Country Roads competes with approximately nine
communities offering approximately 2,181 housing sites. The Tampa, Florida
area contains approximately five communities offering approximately 1,566
housing sites competing with Paradise Village. Dutch Hills and Stonegate Manor
compete with approximately 11 other communities in the Lansing, Michigan area
offering approximately 3,386 housing sites. In the Las Vegas, Nevada area,
West Valley and El Adobe compete with approximately 10 other communities
offering approximately 2,897 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 Sunshine Village, Country Roads and Paradise
Village. 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 Professional 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 on 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, Minnesota and Nevada, where
its operations are conducted.
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Employees
The Partnership employs three 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 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 nine manufactured housing communities
for cash. As a result of the Mortgage Financing, seven of the nine Properties
are encumbered with mortgages in the following original principal amounts:
Ardmor Village $2,930,000
Camelot Manor $3,490,000
Dutch Hills $2,580,000
El Adobe $5,530,000
Stonegate $3,015,000
Sunshine Village $4,290,000
West Valley $8,210,000
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. In January
1990, the Partnership did begin acquiring some homes in conjunction with its
home purchase/lease program for Country Roads and Paradise Village. Each of
the Properties has a community center which includes offices, meeting rooms and
game rooms. The Ardmor Village community includes a resident manager's
apartment. Country Roads has a 1,200 square foot rental cottage. Each of the
Properties, except Stonegate Manor, has a swimming pool. Several of the
Properties also have laundry rooms, playground areas, garage and maintenance
areas and recreational vehicle or boat storage areas.
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The table below contains certain information concerning the
Partnership's nine properties.
<TABLE>
<CAPTION>
PROPERTY NAME NUMBER
AND LOCATION YEAR CONSTRUCTED ACREAGE OF SITES
- ------------ ---------------- ------- --------
<S> <C> <C> <C>
Ardmor Village
Cedar Avenue S.
Lakeville, MN 1974 74 339
Camelot Manor
South Division
Grand Rapids, MI 1973 57 335
Country Roads
Townsend Road
Jacksonville, FL 1967 37 312
Dutch Hills
Upton Road
Haslett, MI 1975 42.8 278
El Adobe
N. Lamb Blvd.
Las Vegas, NV 1975 36 371
Paradise Village
Paradise Drive
Tampa, FL 1971 91 611
Stonegate Manor
Eaton Rapids Drive
Lansing, MI 1968 43.6 308
Sunshine Village
Southwest 5th St.
Davie, FL 1972 45 356
West Valley
W. Tropicana Ave
Las Vegas, NV 1972 53 420
</TABLE>
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.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The voting privileges of the Unit Holders and limited partners are
restricted to certain matters of fundamental significance to the Partnership.
The Unit Holders and 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 Unit Holders and 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 Unit Holders and Limited Partners, as a group,
holding more than 50% ofthe then outstanding interests. There have been no
matters submitted to a vote of the limited partners during the last fiscal
year.
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 of the
Partnership and it is not anticipated that one will ever develop. During the
last twelve months, less than two and one-half percent (2.5%) of the Units
have been transferred, 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 (i) 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 the outstanding balances of the mortgages on the
mortgaged Properties and sales expenses (but without consideration to tax
consequences of the sale), by (ii) 3,303,387. In March, 1997, the Properties
were appraised at an aggregate fair market value of $74,600,000. Assuming a
sale of the nine properties in March 1997, at the appraised value, less payment
of selling expenses, the contingent purchase price due to sellers and mortgage
debt, the net aggregate proceeds available for distribution to the Unit Holders
is estimated to be $42,317,000 or $12.81 per unit. There can be no assurance
that the estimated net asset value could ever be realized. As of March 1,
1997, the Partnership had approximately 4,850 Limited Partners holding Units.
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ITEM 6. SELECTED FINANCIAL DATA
The following table summarizes selected financial data for the
Partnership for the periods ended December 31, 1996, 1995, 1994, 1993 and 1992:
<TABLE>
<CAPTION>
FISCAL YEAR FISCAL YEAR FISCAL YEAR FISCAL YEAR FISCAL YEAR
ENDED ENDED ENDED ENDED ENDED
DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER
31, 1996 31, 1995 31, 1994 31, 1993 31, 1992
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Total Assets $53,583,381 $54,472,196 $56,093,938 $80,219,220 $54,341,204
=========== =========== =========== =========== ===========
Long Term
Debt $30,025,487 $29,894,586 $29,786,033 $29,660,353 N/A
----------- ----------- ----------- ----------- -----------
Income 11,250,156 11,210,541 11,302,229 10,114,080 9,771,109
Expenses (10,854,181) (10,670,390) (9,857,350) (7,261,446) (6,761,328)
------------ ------------ ------------ ------------ -----------
Net Income $395,975 $540,151 $1,444,879 $2,852,634 $3,009,781
=========== =========== ========== ========== ===========
Distributions to
Unit Holders,
per Unit: $ .54 $ .66 $ 7.60 $ 1.40 $ 1.05
Income per Unit: $ .12 $ .16 $ .43 $ .85 $ .90
Weighted average
number of Units
outstanding: 3,303,387 3,303,387 3,303,387 3,303,387 3,303,387
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
Liquidity
During 1996, the Partnership's distributable cash from operations was
$2,340,252. The distributable cash from operations does not include income
reported from the Partnership's 20.98% residual interest ("Class R
Certificates") of the trust fund which was established as part of the 1993
financing transaction (See Note 3 of the Financial Statements). However, the
distributable cash from operations does include approximately $112,669 of
interest income from the mortgage backed securities ("Class D Certificates")
purchased as part of the 1993 financing transaction (See Note 1 of the
Financial Statements). The Partnership made distributions of $1,783,868 to
the Unit Holders during the calender year 1996. The difference between
distributable cash from operations
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of $2,340,252 and distributions of $1,783,868 made to Unit holders during 1996
was approximately $556,384, which was added to the Partnership's reserves.
As a result the Partnership generating higher than anticipated
distributable cash from operation, the General Partner adjusted the level of
quarterly distributions paid to the Unit Holders during the third quarter of
1996. The adjustment of the quarterly distribution was approximatley $66,000
higher than previous quarters. The General Partner expects the Partnership to
generate sufficient distributable cash from operations in the future to meet
the adjusted distribution target and maintain an adequate level of reserves.
As of December 31, 1995, the Partnership had $1,345,081 in reserves.
Through the 1996 calender year, the Partnership funded into reserves
approximatley $556,384. On December 31, 1996, the Partnership had $1,962,609 in
reserves, of which $1,144,427 was in cash and $818,182 was in short term
marketable securities. (See Note 1 to the Financial Statements).
The Partnership borrowed $30,045,000 in December of 1993 through the
Mortgage Financing. The net proceeds from the Mortgage Financing, after
expenses and repayment of $2,350,523 in unsecured debt, were approximately
$24,800,000. With the financing proceeds, the Partnership's Statement of Cash
Flows for the year ended December 31, 1993 reflected Cash and Cash Equivalents,
at year end of $25,701,460. However, as discussed under the section entitled
"Capital Resources," $23,119,767 of the net proceeds of the Mortgage Financing
was distributed to the Unit Holders in February, 1994.
Capital Resources
The capital formation phase of the Partnership began on April 1, 1987
when Sunshine Village and Ardmor Village were purchased by the Partnership and
operations commenced. It ended on January 15, 1988 when El Adobe, the
Partnership's last property, was purchased. The total capital raised through
December 1987 was $66,067,740 of which approximately $58,044,000 was used to
purchase the nine Properties after deducting sales commissions, advisory fees
and other organization and offering costs.
In an effort to provide Unit Holders with a return of capital and
eliminate the cumulative preferred return deficit owed to them, the General
Partner, with majority consent from the Unit Holders, mortgaged seven of its
nine Properties through the Mortgage Financing at approximately 56.0% of their
appraised value, or $30,045,000.
On or around February 15, 1994, the Partnership distributed
$23,119,767 to the Unit Holders or $6.99 per $20.00 Unit held. $13,572,978 (or
$4.11 per Unit), restored the shortfall in the Unit Holders 10.0% cumulative
preferred return, and $9,546,789 (or $2.89 per unit), was a partial return of
the Limited Partners' original capital contributions.
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After payment of the $23,119,767 distribution to the Unit Holders, the
Partnership had sufficient cash to establish a long-term capital improvement
reserve of $1,500,000. This capital improvement reserve will be used to cover
expenses associated with the long term capital improvements budgeted for the
Properties over the next five years.
As described in Note 3 to the Financial Statements, the term of the
mortgage notes executed in connection with the Mortgage Financing payable are
for a period of 30 years with interest only payments required for the first 5
years. Beginning in year 6, principal and interest payments are required on a
self amortizing basis through December of 2023. The minimum mortgage interest
rate is 7.0% per annum through December 2003 and 8.0% thereafter. The maximum
mortgage interest rate is 9.9% per annum through December 2003 and 10.9%
thereafter. Each of the seven mortgaged Properties is cross-collateralized.
As part of the Mortgage Financing, the Partnership was required to
purchase $1,502,250 in mortgage-backed securities. These mortgage-backed
securities equal approximately 5.0% of the seven mortgage notes payable and pay
interest computed at a monthly fixed rate of 7.5% per annum. As described in
Note 1 of the Financial Statements the interest income, as well as the future
value of the Class D Certificates could be adversely affected by a foreclosure
or a significant decline in operating results involving any of the twenty-eight
properties participating in the financing transaction, (including any of the
seven Properties mortgaged by the Partnership).
The General Partner acknowledges that the mortgages impose some risks
to the Partnership, but that such risks are not greater than risks typically
associated with real estate financing. In addition, as a result of the
borrowing, there is potential adverse impact on the amount of distributions to
the Unit Holders in future years. However, the General Partner anticipates,
based on 1997 projections, that distributions to the Unit Holders will be
approximately 3.0% to 4.5% through 1998.
Results of Operations
Distributable Cash From Operations
Distributable cash from operations totaled $2,340,252 in 1996,
$1,932,955 in 1995, and $2,806,877 in 1994. Distributions paid to the Unit
Holders totaled $1,783,868 in 1996, $2,195,720 in 1995, and $25,098,000 in 1994
(Includes $23,119,767 distribution from the 1993 financing transaction).
As reflected in the table on page 6, distributable cash from
operations declined from 1993 to 1994 due to the 1993 financing transaction
and establishment of mortgage debt service. Furthermore, because the interest
rate on the mortgage debt floats above the LIBOR rate, the Partnership's
mortgage payments increase or decrease monthly based on fluctuations in the
LIBOR rate. Between 1994 and 1995, the LIBOR rate increased. As a result, the
Partnership's distributable cash from operations between 1994 and 1995
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declined, due in part, to an increase in the debt service of approximatley
$389,600. In addition, distributable cash from operations between 1994 and
1995 was also affected by higher operating expenses and lower than anticipated
occupancy rates at the Properties. (See Property Operations for more detailed
information)
In February 1994, $23,119,767, a part of the Mortgage Financing
proceeds, was distributed to the Unit Holders, of which $13,572,978 represented
the elimination of the preferred return deficit that existed and $9,546,789
represented a partial return of capital.
Annual distributable cash from operations was less than the amount
required for the annual 10% preferred return to Unit Holders in 1996, 1995 and
1994. As described in Note 3 to the Partnership's financial statements, the
cumulative preferred return deficit, through December 1993 was paid in full in
February 1994. The cumulative unpaid preferred return deficit that has
accumulated during 1996 totalled approximately $3,868,000. No distributions
can be made to the General Partner until the cummulative preferred return
deficit has been distributed to the Unit Holders. At December 31, 1996, the
unpaid amount to be distributed to the General Partner from future capital
transactions was approximately $5,700,000.
Net Income
As reflected in the Statement of Income included in the Financial
Statements, net income was $395,975 in 1996, $540,151 in 1995, and $1,444,879
in 1994. The decline in net income between 1994 and 1995 was primarily due to
the 1993 financing transaction and the establishment of mortgage debt service.
The decline in net income between 1995 and 1996 is due to managements decision
not to recognize any income associated with the equity interest in the LLC. It
is managements belief that any further increases in the carrying amount of the
LLC investment are subject to various subjective valuation assumptions which
are not currently verifiable.(See Note 3 to the Financial Statements). Because
management recognized income of $498,099, associated with the equity interest
in the LLC in 1995, it would be inappropriate to compare the 1995 net income to
the 1996 net income without taking out the $498,099 of income associated with
the equity interest in the LLC. By removing the $498,099 LLC income from the
reported 1995 net income of $540,151, the comparative net income for 1995 would
have been $42,052. Thus, reflecting an increase in the net income from 1995 to
1996 of $353,923. The increase in the compairative net income between 1995 and
1996 was due to higher combined occupancy and higher average month rent at the
Partnerships nine communities.
Partnership Management
Net expenses for the management of the Partnership (i.e. gross
expenses for such management, less transfer fees, interest on reserves,
interest on funds awaiting distribution, and certain non-recurring income) were
$177,328 in 1996, $149,523 in 1995 and $49,897 in 1994. The increase from 1994
to 1995 was due primarily to interest income
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on cash reserves. The increase from 1995 to 1996 was due to higher legal fees
and lower interest income on cash reserves.
Property Operations
Overall, as illustrated in the table below, the Partnership's nine
properties had a combined average occupancy of 91.0% (3,031/3,330 sites) as of
December 1996, versus 88.2% in December 1995; and 89.3% in December 1994. The
average collected monthly rent was approximately $327 per home site in December
1996, versus $316 in December 1995 and $307 in December 1994, an increase each
year of 3.5% and 2.9%, respectively.
<TABLE>
<CAPTION>
TOTAL
SITES OCCUPIED SITES OCCUPANCY RATE AVERAGE RENT
- ----------------------------------------------------------------------------------------------------------
1996 1995 1994 1996 1995 1994 1996 1995 1994
---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Ardmor Village 339 323 298 290 95.3% 87.9% 85.5% $314 $304 $297
Camelot Manor 335 325 316 318 97.0 94.3 94.9 299 290 281
Country Roads 312 273 265 257 87.5 84.9 82.4 215 205 205
Dutch Hills 278 266 260 252 95.7 93.5 90.6 297 289 281
El Adobe 371 360 347 342 97.0 93.5 92.2 359 347 337
Paradise Village 611 437 435 487 71.5 71.2 79.7 272 257 246
Stonegate Manor 308 298 292 285 96.8 94.8 92.5 299 291 283
Sunshine Village 356 331 331 342 93.0 93.0 96.1 381 368 364
West Valley 420 418 392 400 99.5 93.3 95.2 438 428 412
------ ----- ------ ------ ------- -------- ------- ----- ---- ----
Overall 3,330 3,031 2,936 2,973 91.0% 88.2% 89.3% $327 $316 $307
- ----------------------------------------------------------------------------------------------------------
</TABLE>
During the 1996 fiscal year, before Partnership management and
nonrecurring expenses and debt service, the Partnership's nine properties
generated net operating income of $5,447,566 or 48.4% of total revenues
compared to $5,069,250 or 47.4% of total revenues; and $5,424,401 or 51.2% of
total revenues, in 1995 and 1994, respectively.
The increase in net operating income between 1996 and 1995, is a
direct result of increased occupancies and higher average monthly rents at the
Partnership's nine communities.
-14-
<PAGE> 15
The table below summarizes gross revenues and net operating income for
the Properties during 1996, 1995 and 1994.
<TABLE>
<CAPTION>
GROSS REVENUE NET OPERATING INCOME(1)
- -------------------------------------------------------------------------------------------------------------
1996 1995 1994 1996 1995 1994
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ardmor Village $1,104,595 $1,058,592 $ 997,311 $ 613,967 $ 563,269 $ 548,538
Camelot Manor 1,085,052 1,050,043 1,022,205 564,878 560,413 486,508
Country Roads 708,498 624,061 582,832 100,722 (43,518) 54,916
Dutch Hills 886,536 859,073 834,170 458,055 449,811 449,401
El Adobe 1,542,026 1,436,567 1,355,322 955,055 902,642 861,757
Paradise Village 1,308,743 1,236,377 1,479,452 191,971 78,478 304,769
Stonegate Manor 973,178 956,926 959,618 440,726 474,846 529,542
Sunshine Village 1,462,935 1,448,518 1,451,896 850,923 881,978 904,305
West Valley 2,098,742 1,931,920 1,902,286 1,271,269 1,201,331 1,284,665
---------- ---------- ---------- --------- ---------- ---------
11,170,305 10,602,077 10,585,092 5,447,566 5,069,250 5,424,401
Partnership
Mgmt. 79,851 608,464 717,137 (177,328) (149,523) (49,897)
Other nonrecurring
expenses (316,627) (229,647) (200,126)
Debt Service (2,613,361) (2,757,125) (2,367,501)
---------- ---------- ---------- ----------- ---------- ---------
TOTAL: $11,250,156 $11,210,541 $11,302,229 $2,340,250 $1,932,955 $2,806,877
- -------------------------------------------------------------------------------------------------------------
</TABLE>
____________________________________
(1) Net operating income from operations does not include depreciation,
amortization, or net income from the LLC.
Each of the following two Properties had occupancy rates well below
the other six Properties which had occupancy rates between 90% and 97%.
Country Roads, in Jacksonville, Florida, reported an occupancy of
87.5% (273/312 sites) as of December 1996 compared to 84.9% in 1995 and 82.4%
in 1994. The average rent in December 1996 was $215, versus $205 reported in
1995 and 1994, an increase of 4.9%.
The property's 1996 net operating income of $100,722 represented 14.2%
of revenues versus a net operating income loss of ($43,518) or - 7.0% of
revenues in 1995 and $54,916 or 9.4% of revenues in 1994. The increase in net
operating income from 1995 to 1996 is primarily due to higher occupancy and
higher average rent.
Paradise Village, in Tampa, Florida, reported an occupancy of 71.5%
(437/611 sites) as of December 1996 compared to 71.2% in 1995 and 79.7% in
1994. The average rent in December 1996 was $272, versus $257 in 1995 and
$246 in 1994, an increase of 5.8% and 4.5% respectively.
The property's 1996 net operating income of $191,971 represented 14.7%
of revenues compared to $78,478 or 6.3% of revenues in 1995 and $304,769 or
20.6% in 1994. The increase in net operating income from 1995 to 1996 was due
to lower operating expenses and sales proceeds from the disposition of
community-owned lease homes.
-15-
<PAGE> 16
In 1996 and for the foreseeable future, the Partnership expects to
meet its expenditures from operating revenues and to distribute excess cash
flow, after retention of an adequate cash reserve, to its Unit Holders and
Partners.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Partnership's financial statements for the fiscal year ended
December 31, 1996, 1995 and 1994, 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.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Partnership, as an entity, does not have any officers or
directors. The General Partner is a Michigan limited partnership which has
two general partners; Uniprop, Inc. and Paul M. Zlotoff. The managing general
partner of Genesis Associates is Uniprop, Inc.
Information concerning Mr. Zlotoff's age and principal occupations, as
well as for other officers and directors of Uniprop, Inc., during the last five
years or more is as follows:
Paul M. Zlotoff, 47, is and has been an individual general partner of
Genesis Associates since its inception in November 1986. Mr. Zlotoff became
the Chairman and Chief Executive Officer of Uniprop, Inc. in May 1986 and has
been its President since 1979. He is also an individual general partner of
P.I. Associates Limited Partnership, the general partner of Uniprop
Manufactured Housing Communities Income Fund, a public limited partnership
which owns and operates four manufactured housing communities. Mr. Zlotoff
currently, and in the past, has acted as the general partner for various other
limited partnerships owning manufactured housing communities and some
commercial properties.
Steven P. Adler, 46, has been Vice President - Acquisitions and
Director of Operations for Uniprop, Inc. since 1984. Mr. Adler is a past
member of the Michigan Mobile Home Commission. He has been involved in the
manufactured housing industry since 1978. Mr. Adler's responsibilities on
behalf of Uniprop, Inc. include property acquisitions, and the overall
direction for the operation of properties, including management, marketing and
construction. Mr. Adler obtained a B.A. from Bard College, a M.S. in Resource
Management and a M.A. in Sociology from the University of New Hampshire.
Gloria Koster, 43, has been Vice President - Finance of Uniprop, Inc.
since July 1989. She is responsible for accounting, financial controls, data
processing, cash
-16-
<PAGE> 17
management, financial reporting, budgeting, financing, and tax matters. Prior
to joining Uniprop, Inc., Ms. Koster had been with Michigan National Bank for
13 years, most recently as a first vice-president. She has an M.B.A. from the
University of Detroit.
Terry Winter, 37, has been Vice President - Public Programs since
August 1990. He is responsible for financial analysis of properties, placement
of investments, management and marketing for public and private programs. From
March 1989 until August 1990, Mr. Winter was vice president of
marketing/business development in Dallas, Texas, with Home Owners Funding Corp.
of America, a mortgage banking originator and servicer specializing in loans
for manufactured homes and manufactured housing communities. From February
1987 to March 1989, he had been vice president of loan services at Home Owners.
From July 1982 until February 1987, before assets of that company were acquired
by Home Owners in 1987, Mr. Winter had been vice-president of real estate
management with Commodore Financial Services Corp. Mr. Winter has a B.B.A. in
finance from Wayne State University.
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. Depending upon the results of operations and other
factors, 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 duly formed pursuant to the
Uniform Limited Partnership Act, as amended, of the State of Michigan. The
General Partner, Genesis Associates Limited Partnership, is vested with full
authority as to the general management and supervision of business and the
other affairs of the Partnership, subject to certain constraints in the
partnership agreement and consulting agreement. Unit holders and/or 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. 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 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
-17-
<PAGE> 18
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 original sellers of Sunshine
Village and Ardmor Village and is entitled to share in a contingent purchase
price with respect to each Property, when and if the Properties are sold and
the sellers become entitled thereto. The maximum amounts which could be
payable to the sellers are as follows: Sunshine Village, $1,108,260 and Ardmor
Village, $946,236. The cash purchase price and contingent purchase price for
each Property were determined by reference to the average of two independent
real estate appraisals which were obtained by the General Partner. Such
appraisals are only estimates of value and are not necessarily indicative of
the actual real estate. Each seller will become entitled to any unpaid
contingent purchase price upon the sale, financing or other disposition of each
such Property, but, only after the receipt by each Unit Holder and Limited
Partner of aggregate distributions equal to the sum of (I) his 10% cumulative
preferred return plus (ii) 125% of his capital contribution. 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 does not anticipate any such amount will become payable during the
next fiscal year.
The Partnership will 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. This incentive management interest is 15% of distributable
cash from operations in any quarter. However, in each quarter, the General
Partner's right to receive any net cash from operations is subordinated to the
extent necessary to first provide each Unit Holder and Limited Partner his 10%
cumulative preferred return. During the last fiscal year, the General Partner
received no distributions on account of its incentive management interest from
operations because distributions were approximately $3,868,000 less than the
10% cumulative preferred return due Unit Holders. Any such amounts unpaid in a
taxable year will be accumulated and paid from distributable cash from capital
transactions, but only after each Unit Holder and Limited Partner has first
received his 10% cumulative preferred return and 125% of his capital
contribution. For 1996, approximately $400,000 was accumulated for the General
Partner, and the General Partner's aggregate accumulated incentive management
interest as of December 1996 was approximately $5,700,000. The actual
incentive management interest from operations to be accumulated or paid during
the next fiscal year will depend upon the results of the Partnership's
operations and is not determinable at this time. The Partnership does not
anticipate any such amount will be distributed to the General Partner during
the next fiscal year and will again be accumulated with payment deferred. No
distributions could be made to the General Partner until an approximately
$11,158,000, 10% cumulative preferred return deficit as of December 31, 1996,
is first distributed to the Unit Holders. In February of 1994, as part of the
Mortgage Financing, $23,119,767 was distributed to the Unit Holders,
$13,572,978 of which eliminated the Unit Holders' preferred return deficit
through December 31, 1993.
-18-
<PAGE> 19
The Partnership must also pay an incentive management interest from
capital transactions to the General Partner for its services rendered to the
Partnership. The General Partner will be entitled to receive its share of
distributable cash from capital transactions after (I) each Unit Holder and
Limited Partner has received aggregate distributions in an amount equal to the
sum of (a) his 10% cumulative preferred return plus (b) 125% of his capital
contribution, (ii) any contingent purchase prices have been paid, and (iii) any
property disposition fees to Uniprop, Inc. have been paid. The General
Partner's share of distributable cash from capital transactions so payable will
be (I) 100% of such distributable cash from capital distributions until the
General Partner's share of the aggregate capital distributions made under
section 11c(iii) and 11c(v) of the partnership agreement equal 25% and (ii)
thereafter, 25% of such distributable cash from capital transactions. No
incentive management interest from capital transactions was paid to the General
Partner for the fiscal year ended December 31, 1996. The Partnership does not
anticipate that any such amounts will be paid or become payable to the General
Partner during the next fiscal year.
Uniprop, Inc. 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
$552,846: Ardmor Village, $54,528; Camelot Manor, $53,589; Country Roads,
$35,425; Dutch Hills, $43,802; El Adobe, $75,998; Paradise Village, $65,417;
Stonegate Manor, $48,346; Sunshine Village, $72,341; and West Valley, $103,400.
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.
Certain employees of affiliates of the General Partner were paid an
aggregate of $196,491 during 1996 to perform local property management, data
processing and investor relations services for the Partnership. It is
anticipated comparable amounts will be paid in the next fiscal year.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Financial Statements
The following financial statements and related documents are filed
with this Report:
(1) Report of Independent Certified Public Accountants
-19-
<PAGE> 20
(2) Balance Sheets as of December 31, 1996 and 1995
(3) Statements of Income for the fiscal years ended
December 31, 1996, 1995 and 1994
(4) Statements of Partners' Equity for the fiscal years
ended December 31, 1996, 1995 and 1994
(5) Statements of Cash Flows for the fiscal years ended
December 31, 1996, 1995 and 1994
(6) Schedule III - Real Estate and Accumulated
Depreciation for the fiscal
years ended December 31,
1996, 1995 and 1994
(b) Reports on Form 8-K
The Partnership did not file any Forms 8-K during the fourth quarter
of 1996.
(C) Exhibits
The following exhibits are incorporated by reference to the S-11
Registration Statement of the Partnership filed November 12, 1986, as amended
on December 22, 1986 and January 16, 1987:
3(a) Certificate of Limited Partnership for the Partnership
3(b) Uniprop Income Fund II Agreement of Limited Partnership
4(a) First Amendment to Uniprop Income Fund II Agreement of Limited
Partnership (April 1, 1987)
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 the fiscal year ended December 31, 1992:
4(b) Form of Beneficial Assignment Certificate (BAC) for the Partnership
(originally filed with Form 10-K for the fiscal year ended December
31, 1987)
10(c) Contingent Purchase Price Agreement with Sunrise Broward
Associates, Ltd
-20-
<PAGE> 21
10(d) Contingent Purchase Price Agreement with Ardmor Associates Limited
Partnership
10(e) Incentive Acquisition Fee Agreement between the Partnership and
Uniprop, Inc.
The following exhibits are incorporated by reference to the Form 8-K
filed January 7, 1994:
28(a) Specimen Mortgage Note (without exhibit)
28(b) Specimen Open-End Mortgage, Deed of Trust, Security Agreement,
Fixture Financing Statement and Assignment of Leases and Rents
(without exhibits), with: Specimen Rider for properties
located in Michigan; Specimen Rider for property located in
Minnesota; Specimen Rider for property located in Florida; and
Specimen Rider for properties located in Nevada
28(c) Specimen Assignment of Rents and Leases (without exhibits),
with: Specimen Rider for property located in Minnesota;
Specimen Rider for properties located in Nevada
The following exhibit is attached to this Report:
27 Financial Data Schedule
28 Letter summary of the estimated fair market values of the
Partnership's nine manufactured housing communities, as of
March 1, 1997
(d) Other Financial Statements
There are no other financial statements required by the instructions
contained in Regulation S-X or, the information is included elsewhere in the
financial statements or the notes thereto.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Uniprop Manufactured Housing Communities Income Fund II,
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 II, a Michigan Limited Partnership
BY: Genesis Associates Limited Partnership,
General Partner
-21-
<PAGE> 22
BY: Uniprop, Inc., Managing General Partner
By: /s/ Paul M. Zlotoff
------------------------------------
Paul M. Zlotoff, President
Dated: March 31, 1997
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.
<TABLE>
<S> <C>
By: /s/ Gloria Koster By: /s/ Paul M. Zlotoff
------------------------------ ---------------------------------------------------
Gloria Koster Paul M. Zlotoff, Director of Uniprop, Inc.
(Principal Financial Officer of
Uniprop, Inc.)
Date: March 31, 1997 Date: March 31, 1997
By: /s/ Andrew Feuereisen
---------------------
Andrew Feuereisen
(Controller of Uniprop, Inc.)
Date: March 31, 1997
</TABLE>
-22-
<PAGE> 23
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Partners
Uniprop Manufactured Housing
Communities Income Fund II
(a Michigan limited partnership)
We have audited the accompanying balance sheets of Uniprop Manufactured Housing
Communities Income Fund II (a Michigan limited partnership), as of December 31,
1996 and 1995 and the related statements of income, partners' equity and cash
flows for each of the three years in the period ended December 31, 1996. 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 II at December 31, 1996 and 1995 and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1996 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
Troy, Michigan
February 12, 1997
<PAGE> 24
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, 1996 1995
- -------------------------------------------------------------------------
ASSETS
<S> <C> <C>
PROPERTY AND EQUIPMENT (Note 3)
Buildings and improvements $ 48,558,632 $ 48,305,293
Land 11,644,603 11,644,603
Manufactured homes and improvements 2,535,831 2,456,505
Furniture and equipment 342,651 295,715
- -------------------------------------------------------------------------
63,081,717 62,702,116
Less accumulated depreciation 15,329,988 13,566,058
- -------------------------------------------------------------------------
NET PROPERTY AND EQUIPMENT 47,751,729 49,136,058
=========================================================================
Cash and cash equivalents 1,144,427 388,328
Marketable securities 818,182 956,753
Mortgage-backed securities (Note 3) 1,502,250 1,502,250
Unamortized financing costs 930,139 964,585
Investment (Note 3) 998,995 998,995
Other assets (Note 2) 437,659 525,227
- -------------------------------------------------------------------------
$ 53,583,381 $ 54,472,196
LIABILITIES AND PARTNERS' EQUITY
Notes payable (Note 3) $ 30,025,487 $ 29,894,586
Accounts payable 155,889 154,712
Other liabilities (Note 4) 1,194,387 827,387
- -------------------------------------------------------------------------
TOTAL LIABILITIES 31,375,763 30,876,685
- -------------------------------------------------------------------------
PARTNERS' EQUITY
Unit holders 21,989,103 23,380,956
General partner 218,515 214,555
- -------------------------------------------------------------------------
TOTAL PARTNERS' EQUITY 22,207,618 23,595,511
$ 53,583,381 $ 54,472,196
=========================================================================
</TABLE>
See accompanying notes to financial statements.
<PAGE> 25
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Year Ended December 31, 1996 1995 1994
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCOME
Rental $ 10,824,604 $ 10,257,258 $ 10,275,710
Interest 194,493 224,027 330,581
Equity in net income of LLC (Note 3) - 498,099 500,896
Other 231,059 231,157 195,042
- -------------------------------------------------------------------------------------------
11,250,156 11,210,541 11,302,229
- -------------------------------------------------------------------------------------------
OPERATING EXPENSES
Property operations 4,417,300 4,230,166 3,885,849
Depreciation and amortization 1,944,277 1,890,903 1,862,892
Administrative (Note 5) 1,009,113 956,742 915,617
Property taxes 870,130 835,454 825,491
Interest 2,613,361 2,757,125 2,367,501
- -------------------------------------------------------------------------------------------
10,854,181 10,670,390 9,857,350
- -------------------------------------------------------------------------------------------
NET INCOME $ 395,975 $ 540,151 $ 1,444,879
===========================================================================================
INCOME PER LIMITED PARTNERSHIP
UNIT (Note 7) $ .12 $ .16 $ .43
===========================================================================================
DISTRIBUTIONS PER LIMITED
PARTNERSHIP UNIT (Note 7) $ .54 $ .66 $ 7.60
===========================================================================================
NUMBER OF LIMITED PARTNERSHIP
UNITS OUTSTANDING 3,303,387 3,303,387 3,303,387
===========================================================================================
NET INCOME ALLOCABLE TO
GENERAL PARTNER $ 3,960 $ 5,402 $ 14,449
===========================================================================================
DISTRIBUTIONS ALLOCABLE TO
GENERAL PARTNER $ - $ - $ -
===========================================================================================
</TABLE>
See accompanying notes to financial statements.
<PAGE> 26
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERS' EQUITY
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
General
Partner Unit Holders TOTAL
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BALANCE, January 1, 1994 $ 194,704 $ 48,709,497 $ 48,904,201
Distributions to unit holders - (25,098,000) (25,098,000)
Net income for the year 14,449 1,430,430 1,444,879
- ---------------------------------------------------------------------------------------------------------------
BALANCE, December 31, 1994 209,153 25,041,927 25,251,080
Distributions to unit holders - (2,195,720) (2,195,720)
Net income for the year 5,402 534,749 540,151
- ---------------------------------------------------------------------------------------------------------------
BALANCE, December 31, 1995 214,555 23,380,956 23,595,511
Distributions to unit holders - (1,783,868) (1,783,868)
Net income for the year 3,960 392,015 395,975
- ---------------------------------------------------------------------------------------------------------------
BALANCE, December 31, 1996 $ 218,515 $ 21,989,103 $ 22,207,618
===============================================================================================================
</TABLE>
See accompanying notes to financial statements.
<PAGE> 27
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended December 31, 1996 1995 1994
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 395,975 $ 540,151 $ 1,444,879
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation 1,778,930 1,747,977 1,704,979
Amortization 165,347 142,926 157,913
Equity in net income of LLC - (498,099) (500,896 )
(Gain) loss on sale of property and equipment (40,188) (1,933) 1,394
Decrease in other assets 87,568 96,924 156,428
Increase (decrease) in accounts payable 1,177 (85,176) 105,459
Increase (decrease) in other liabilities 367,000 10,450 (682,944 )
- ---------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 2,755,809 1,953,220 2,387,212
- ---------------------------------------------------------------------------------------------------------------
CASH FLOWS USED IN INVESTING ACTIVITIES
Purchase of property and equipment (1,115,173) (961,537) (805,848)
Proceeds from sale of property and equipment 760,760 175,936 188,358
Proceeds from sale of marketable securities 200,000 525,000 -
Purchase of marketable securities (61,429) (481,753) (1,000,000)
- ---------------------------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES (215,842) (742,354) (1,617,490)
- ---------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions to unit holders (1,783,868) (2,195,720) (25,098,000)
- ---------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 756,099 (984,854) (24,328,278)
CASH AND CASH EQUIVALENTS,
at beginning of year 388,328 1,373,182 25,701,460
- ---------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS,
at end of year $ 1,144,427 $ 388,328 $ 1,373,182
===============================================================================================================
</TABLE>
See accompanying notes to financial statements.
<PAGE> 28
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
1. SUMMARY OF ORGANIZATION AND BUSINESS
ACCOUNTING
POLICIES Uniprop Manufactured Housing Communities Income Fund II, a Michigan Limited
Partnership (the "Partnership") acquired, maintains, operates and will ultimately
dispose of income producing residential real properties consisting of nine
manufactured housing communities (the "properties") located in Florida, Michigan,
Nevada and Minnesota. The Partnership was organized and formed under the laws of
the State of Michigan on November 7, 1986.
In accordance with its Prospectus dated December 1986, the Partnership sold
3,303,387 units of beneficial assignment of limited partnership interest
("Units") for $66,067,740. The Partnership purchased the properties for an
aggregate purchase price of approximately $56,000,000. Three of the properties
costing approximately $16,008,000 were previously owned by entities which were
affiliates of the general partner.
The general partner is Genesis Associates Limited Partnership. Uniprop Beneficial
Corporation was the initial limited partner who assigned to those persons
purchasing units a beneficial limited partnership interest when the minimum
number of units were sold.
USE OF ESTIMATES
In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and assumptions
that affect (1) the reported amounts of 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.
CASH AND CASH EQUIVALENTS
The Partnership considers all highly liquid investments purchased with a maturity
term of less than three months to be cash equivalents.
</TABLE>
<PAGE> 29
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
FAIR VALUES OF FINANCIAL INSTRUMENTS
The carrying amounts of cash and cash equivalents, and marketable securities
approximate fair value because of the relative short maturity of these items.
The carrying amounts of notes payable approximate fair value because the interest
rates change with market rates.
The fair value of the mortgage-backed securities could not be reasonably
estimated due to their lack of liquidity and their unique nature. The Partnership
has the positive intent and ability to hold these securities to maturity (see
"Mortgage-Backed Securities" below).
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is provided using the
straight-line method over the following estimated useful lives:
Building and improvements 30 years
Manufactured homes and improvements 30 years
Furniture and equipment 3-10 years
Accumulated depreciation for tax purposes was $13,658,919 and $12,057,650 as of
December 31, 1996 and 1995, respectively.
MARKETABLE SECURITIES
Marketable securities at December 31, 1996 consist mainly of U.S. Government and
Federal Agency Bonds with maturity dates ranging from April 1997 to April 1998.
These securities are stated at amortized cost and management intends to hold such
securities to maturity. The rate of return on these securities ranged from 6.87%
to 7.87%. During 1996, $200,000 of marketable securities matured.
</TABLE>
<PAGE> 30
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
During 1995, two of the Partnership's marketable securities were called by the
issuer, thereby accelerating their maturity, and, consequently, such securities
were not held to maturity. The amortized cost of the securities called was
approximately $395,000, resulting in a realized gain of $5,000. In addition,
marketable securities totalling $125,000 matured during 1995.
MORTGAGE-BACKED SECURITIES
In connection with the Partnership's 1993 financing transaction (see Note 3), the
Partnership was required to use approximately 5% of its mortgage proceeds to
purchase a subordinated portion of the trust fund's mortgage-backed securities
("Class D Certificates"). These Class D Certificates are not rated, carry a fixed
interest rate of 7.5% per annum and are subordinated to the Class A, B and C
mortgage certificates issued as part of the aforementioned financing transaction.
The Partnership was issued a Class D Certificate in 1993 with a face amount of
$1,502,250.
These securities are carried at cost and the Partnership intends to hold such
securities to maturity. The actual maturity date, which is dependent upon future
interest rates and other factors, is anticipated to occur before or during the
year 2023. The future value of the Class D Certificates would be adversely
affected by a foreclosure or a significant decline in operating results involving
any of the twenty-eight properties participating in the financing transaction
(including any of the seven properties mortgaged by the Partnership) (see
Note 3); however, all scheduled payments to the trust fund have been made to date
by the participating properties and management is not aware of any situations
that would adversely affect future scheduled payments. The Partnership currently
intends to pay its notes payable underlying the Class D Certificates in
accordance with their scheduled terms.
FINANCING COSTS
Costs to obtain financing have been capitalized and are amortized using the
straight-line method over the 30-year term of the related mortgage notes payable.
</TABLE>
<PAGE> 31
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
INVESTMENT
The "Investment" reflected on the Partnership's balance sheets represents a
20.98% residual interest ("Class R Certificates") of the trust fund which was
established as part of the 1993 financing transaction (see Note 3). The owners of
the Class R Certificates are the respective owners of the properties
participating in the mortgage-backed securities transaction, with their ownership
interest based on the amount each property contributed to the value of the
Class R Certificates. These certificates have no principal or interest amount
associated with them, but represent the amount which the Partnership will be
entitled to receive after all other classes of certificates have been reduced to
zero, which is anticipated to occur before or during the year 2023; the actual
maturity date is dependent upon future interest rates and other factors. The
future value of the Class R Certificates would be adversely affected by a
foreclosure or a significant decline in operating results involving any of the
twenty-eight properties participating in the financing transaction, including any
of the seven properties mortgaged by the Partnership (see Note 3); however, all
scheduled payments to the trust fund have been made to date by the participating
properties and management is not aware of any situations that would adversely
affect future scheduled payments. The Partnership currently intends to pay its
notes payable underlying the Class R Certificates in accordance with their
scheduled terms.
The Partnership's "Investment" is accounted for using the equity method of
accounting, whereby 20.98% of the trust fund's residual interest (which generally
represents mortgage interest payments to the trust fund in excess of amounts paid
to certificate holders) is recorded in the accompanying financial statements,
subject to management's estimation of the carrying value of the investment (see
Note 3).
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.
</TABLE>
<PAGE> 32
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
2. OTHER ASSETS At December 31, 1996 and 1995, "Other assets" included cash of approximately
$88,000 in a security deposit escrow account for two of the Partnership's
properties, which is required by the laws of the state in which they are located
and is restricted from operating use.
3. NOTES PAYABLE Notes payable consisted of:
December 31, 1996 1995
-----------------------------------------------------------------------------------
Mortgage notes payable totalling $30,045,000,
less unamortized discount of $19,513 and
$150,414 in 1996 and 1995, respectively
(See further description below) $ 30,025,487 $ 29,894,586
-----------------------------------------------------------------------------------
In December 1993, the Partnership mortgaged seven of its properties in
connection with a financing transaction which involved twenty-one other
properties, thirteen of which are owned in part by affiliates of the general
partner. The borrowings, which are secured by the mortgages on the Partnership's
properties as well as the mortgages on the other twenty-one properties, were
funded through the issuance of mortgage-backed securities. As part of the
financing, the Partnership was required to purchase $1,502,250 in mortgage-backed
securities. The entity that issued these securities was a newly created trust
fund.
The proceeds of the mortgage notes payable were obtained primarily to eliminate
the cumulative preferred return deficit owed to the unit holders that existed as
of December 31, 1993, and also to distribute a return of capital to the unit
holders. In February 1994, $23,119,767 was distributed to the unit holders, of
which $13,572,978 represented the elimination of the preferred return deficit
that existed, and $9,546,789 which represented a return of capital.
</TABLE>
<PAGE> 33
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
The mortgage notes payable require monthly payments of interest only through
December 1998. Thereafter, monthly payments of principal and interest are
required through December 2023. Principal payments to be made in 1999, 2000 and
2001 are approximately $363,000, $395,000 and $430,000, respectively. The minimum
mortgage interest rate is 7.0% per annum through December 2003 and 8.0%
thereafter. The maximum mortgage interest rate is 9.9% per annum through December
2003 and 10.9% thereafter. These minimum and maximum rates are determined based
on formulas specified in the borrowing agreement. Each of the seven mortgaged
properties of the Partnership is cross-collateralized under the terms of the
agreement.
The Partnership also has a 20.98% interest in the residual interest of the trust
fund and will be entitled to receive a pro-rata share of the proceeds of the
remaining assets of the trust fund after the principal balances of the regular
security holders have been paid. The residual interest of the trust fund is a
separate legal entity and is organized as a Limited Liability Corporation ("LLC")
for federal income tax purposes. At December 31, 1996 and 1995, the Partnership's
equity in the LLC reflected in the accompanying balance sheets was $998,995,
which was determined using the equity method of accounting. The Partnership
recognized its share of the net income of the LLC for financial statement
purposes in the statements of income prior to 1996. During 1996, the Partnership
did not recognize any income related to the LLC due to management's belief that
any further increases in the carrying amount of the investment are subject to
various subjective valuation assumptions which are not currently verifiable.
During 1995 and 1994, $498,099 and $500,896, respectively, was recognized in the
statements of income; however, as reflected in the statements of cash flows, no
cash was received by the Partnership for these amounts.
</TABLE>
<PAGE> 34
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
4. OTHER Other liabilities consisted of:
LIABILITIES
December 31, 1996 1995
----------------------------------------------------------------------------------
Tenants' security deposits $ 495,522 $462,178
Accrued property taxes 344,090 -
Accrued interest 221,761 229,221
Other 133,014 135,988
----------------------------------------------------------------------------------
TOTAL $ 1,194,387 $827,387
==================================================================================
5. 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.
REPORT OF FEES
During the years ended December 31, 1996, 1995 and 1994, the affiliate earned
property management fees of $552,846, $524,609 and $523,331, respectively, as
permitted in the Agreement of Limited Partnership. These operating expenses are
included with "Administrative" expenses in the respective statements of income.
The Partnership was owed $13,559 and $37,677 by the affiliate at December 31,
1996 and 1995, respectively, for overpayments made.
Certain employees of the Partnership are also employees of affiliates of the
general partner. These employees were paid by the Partnership $196,491, $164,657
and $119,734 in 1996, 1995 and 1994, respectively, to perform local property
management and investor relations services for the Partnership.
</TABLE>
<PAGE> 35
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
During 1994, the Partnership paid approximately $161,000 to an affiliate,
representing an accrued incentive acquisition fee.
CONTINGENT PURCHASE PRICE
A general partner of Genesis Associates Limited Partnership has an interest in
the sellers of two of the properties acquired by the Partnership and is entitled
to share in a contingent purchase price of approximately $2,054,000 with respect
to these properties, when and if the properties are sold and the sellers become
entitled thereto. 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 does not anticipate any such amount will become
payable during the next fiscal year.
6. RECONCILIATION OF Year Ended December 31, 1996 1995 1994
FINANCIAL INCOME AND -------------------------------------------------------------------------------
TAXABLE Income per the financial
INCOME statements $ 395,975 $ 540,151 $ 1,444,879
Adjustments to depreciation
for difference in methods 159,898 168,185 174,624
Adjustments for prepaid rent,
meals and entertainment 8,198 25,580 9,609
Adjustment for LLC income 530,069 - -
-------------------------------------------------------------------------------
Income Per the Partnership's
Tax Return $ 1,094,140 $ 733,916 $ 1,629,112
===============================================================================
</TABLE>
<PAGE> 36
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
7. PARTNERS' Subject to the orders of priority under certain specified conditions more fully
CAPITAL described in the Agreement of Limited Partnership, distributions of partnership
funds and allocations of net income from operations are principally determined as
follows:
DISTRIBUTIONS
Distributable cash from operations in the Agreement (generally defined as net
income plus depreciation and amortization) is to be distributed to unit holders
until they have received a 10% cumulative preferred return. After the unit
holders have received their 10% cumulative preferred return, all remaining cash
from operations is distributed to the general partner until the total amount
received by the general partner is equal to 15% of the aggregate amount of cash
distributed from operations in a given year. Amounts payable to but not paid to
the general partner will be accumulated and paid from future capital transactions
after the unit holders have first received their 10% preferred return and 125% of
their capital contributions. Thereafter, 85% of distributable cash from
operations is to be paid to the unit holders and 15% to the general partner.
Annual distributable cash from operations was less than the amount required for
the annual 10% preferred return to the unit holders by approximately $3,868,000
in 1996 and $3,456,000 in 1995. No distributions can be made to the general
partner until the cumulative preferred return deficit of approximately
$11,158,000 has been distributed to the unit holders.
At December 31, 1996, the unpaid amount to be distributed to the general partner
from future capital transactions was approximately $5.7 million.
</TABLE>
<PAGE> 37
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
ALLOCATION OF NET INCOME
Net income is principally allocated 99% to the unit holders and 1% to the general
partner until the cumulative amount of net income allocated to the unit holders
equals the aggregate cumulative amount of cash distributable to the unit holders.
After sufficient net income has been allocated to the unit holders to equal the
amount of cash distributable to them, all the net income is to be allocated to
the general partner until it equals the amount of cash distributed to it.
8. SUPPLEMENTAL CASH Interest paid during 1996, 1995 and 1994 was approximately $2,621,000, $2,760,000
FLOW INFORMATION and $2,307,000, respectively.
</TABLE>
<PAGE> 38
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1996
<TABLE>
<CAPTION>
Column A Column B Column C Column D
- --------------------- ------------- -------------------------- ------------------------------
Costs Capitalized
Initial Cost Subsequent to Acquisition
-------------------------- ------------------------------
Buildings and Buildings and
Description Encumbrance Land Improvements Land Improvements
<S> <C> <C> <C> <C> <C>
Ardmor Village
(Lakeville, MN) $ 2,930,000 $ 1,063,253 $ 4,253,011 $ - $ 760,473
Sunshine Village
(Davie, FL) 4,290,000 1,215,862 4,875,878 - 81,555
Camelot Manor
(Grand Rapids, MI) 3,490,000 918,949 3,681,051 - 518,183
Country Roads
(Jacksonville, FL) - 636,550 2,546,200 38,106 491,802
Paradise Village
(Tampa, FL) - 1,760,000 7,040,000 279,553 877,594
Dutch Hills
(Haslett, MI) 2,580,000 839,693 3,358,771 23,104 295,679
Stonegate Manor
(Lansing, MI) 3,015,000 930,307 3,721,229 40,552 234,035
El Adobe
(Las Vegas, NV) 5,530,000 1,480,000 5,920,000 39,964 326,507
West Valley
(Las Vegas NV) 8,210,000 2,289,700 9,158,800 89,010 417,864
- -------------------------------------------------------------------------------------------------------------------
$30,045,000 $11,134,314 $44,554,940 $510,289 $ 4,003,692
===================================================================================================================
<Caption
Column A 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>
Ardmor Village
(Lakeville, MN) $ 1,063,253 $ 5,013,484 $ 6,076,737 $ 1,465,924 1987 30 years
Sunshine Village
(Davie, FL) 1,215,862 4,957,433 6,173,295 1,615,519 1987 30 years
Camelot Manor
(Grand Rapids, MI) 918,949 4,199,234 5,118,183 1,290,984 1987 30 years
Country Roads
(Jacksonville, FL) 674,656 3,038,002 3,712,658 923,801 1987 30 years
Paradise Village
(Tampa, FL) 2,039,553 7,917,594 9,957,147 2,362,756 1987 30 years
Dutch Hills
(Haslett, MI) 862,797 3,654,450 4,517,247 1,131,924 1987 30 years
Stonegate Manor
(Lansing, MI) 970,859 3,955,264 4,926,123 1,218,547 1987 30 years
El Adobe
(Las Vegas, NV) 1,519,964 6,246,507 7,766,471 1,862,739 1988 30 years
West Valley
(Las Vegas NV) 2,378,710 9,576,664 11,955,374 2,862,810 1988 30 years
- -------------------------------------------------------------------------------------------------------------------
$11,644,603 $48,558,632 $60,203,235 $14,735,004
===================================================================================================================
</TABLE>
<PAGE> 39
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO SCHEDULE III
DECEMBER 31, 1996
<TABLE>
<S> <C>
1. RECONCILIATION OF The following table reconciles the land from January 1, 1994 to December 31,
LAND 1996:
1996 1995 1994
---------------------------------------------------------------------------------
BALANCE, at January 1 $ 11,644,603 $ 11,562,361 $ 11,412,361
Additions to land - 82,242 150,000
---------------------------------------------------------------------------------
BALANCE, at December 31 $ 11,644,603 $ 11,644,603 $ 11,562,361
=================================================================================
2. RECONCILIATION OF The following table reconciles the buildings and improvements from January 1,
BUILDINGS AND 1994 to December 31, 1996:
IMPROVEMENTS 1996 1995 1994
---------------------------------------------------------------------------------
BALANCE, at January 1 $ 48,305,293 $ 47,691,900 $ 47,223,775
Additions to buildings
and improvements 253,339 613,393 468,125
---------------------------------------------------------------------------------
BALANCE, at December 31 $ 48,558,632 $ 48,305,293 $ 47,691,900
=================================================================================
3. RECONCILIATION OF The following table reconciles the accumulated depreciation from January 1, 1994
ACCUMULATED to December 31, 1996:
DEPRECIATION
1996 1995 1994
---------------------------------------------------------------------------------
BALANCE, at January 1 $ 13,080,592 $ 11,449,637 $ 9,855,036
Current year
depreciation expense 1,654,412 1,630,955 1,594,601
---------------------------------------------------------------------------------
BALANCE, at December 31 $ 14,735,004 $ 13,080,592 $ 11,449,637
=================================================================================
4. TAX BASIS OF The aggregate cost of buildings and improvements for federal income tax purposes
BUILDINGS is equal to the cost basis used for financial statement purposes.
AND IMPROVEMENTS
</TABLE>
<PAGE> 40
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION METHOD OF FILING PAGE
- ------ ----------- ---------------- ----
<S> <C> <C> <C>
3(a) Certificate of Limited Partnership Incorporated by reference to the S-11
for the Partnership Registration Statement of the
Partnership filed November 12, 1986, as
amended on December 22, 1986 and
January 16, 1987 (the "Registration
Statement").
3(b) Uniprop Income Fund II Agreement Incorporated by reference to the
of Limited Partnership Registration Statement.
4(a) First Amendment to Uniprop Income Incorporated by reference to the
Fund II Agreement of Limited Registration Statement.
Partnership (April 1, 1987)
4(b) Form of Beneficial Assignment Incorporated by reference to Form 10-K
Certificate (BAC) for the for the fiscal year ended December 31,
Partnership (originally filed with 1992.
Form 10-K for the fiscal year
ended December 31, 1987)
10(a) Form of Management Agreement Incorporated by reference to the
between the Partnership and Registration Statement.
Uniprop, Inc.
10(b) Form of Consulting Agreement Incorporated by reference to the
between the Partnership, the Registration Statement.
General Partner and Consultant
</TABLE>
-23-
<PAGE> 41
<TABLE>
<S> <C> <C>
10(C) Contingent Purchase Price Incorporated by reference to Form 10-K
Agreement with Sunrise Broward for the fiscal year ended December 31,
Associates, Ltd. (originally filed 1992.
with Form 10-K for the fiscal year
ended December 31, 1987)
10(d) Contingent Purchase Price Incorporated by reference to Form 10-K
Agreement with Ardmor Associates for the fiscal year ended December 31,
Limited Partnership (originally 1992.
filed with Form 10-K for the
fiscal year ended December 31,
1987)
10(e) Incentive Acquisition Fee Incorporated by reference to Form 10-K
Agreement between the Partnership for the fiscal year ended December 31,
and Uniprop, Inc. (originally 1992.
filed with Form 10-K for the
fiscal year ended December 31,
1987)
27 Financial Data Schedule Filed herewith. Page 26
28 Letter summary of the estimated Filed herewith. Page 27
fair market values of the
Partnership's nine manufactured
housing communities, as of
March 1, 1997.
</TABLE>
-24-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 1,144,427
<SECURITIES> 2,320,432
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,400,268
<PP&E> 63,081,717
<DEPRECIATION> 15,329,988
<TOTAL-ASSETS> 53,583,381
<CURRENT-LIABILITIES> 1,350,276
<BONDS> 30,025,487
0
0
<COMMON> 0
<OTHER-SE> 22,207,618
<TOTAL-LIABILITY-AND-EQUITY> 53,583,381
<SALES> 0
<TOTAL-REVENUES> 11,250,156
<CGS> 0
<TOTAL-COSTS> 8,909,937
<OTHER-EXPENSES> 1,778,930
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 165,347
<INCOME-PRETAX> 395,975
<INCOME-TAX> 0
<INCOME-CONTINUING> 395,975
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 395,975
<EPS-PRIMARY> .12
<EPS-DILUTED> 0
</TABLE>
<PAGE> 1
EXHIBIT 28
UNIPROP INCOME FUND II
1997 PROPERTY APPRAISALS
Cushman & Wakefield has recently completed market value appraisals of Uniprop
Income Fund II's nine properties. The table below sets forth certain
appraisal information for each property, as well as a comparison to the
original cash purchase price:
<TABLE>
(IN $1,000)
CASH
3/97 3/96 96/97 PURCHASE 97CPP
PROPERTY APPRAISALS APPRAISALS VARIANCE PRICE VARIANCE
<S> <C> <C> <C> <C> <C>
Ardmor Village $7,250 $7,000 3.6% $5,316 36.4%
Camelot Manor 6,700 6,500 3.1% 4,600 45.7%
Country Roads 2,200 2,000 10.0% 3,183 (30.9%)
Dutch Hills 5,750 5,600 2.7% 4,198 37.0%
El Adobe 11,000 10,700 2.8% 7,400 48.7%
Paradise Village 8,800 8,800 0.0% 8,800 00.0%
Stonegate Manor 6,400 6,300 1.6% 4,652 37.6%
Sunshine Village 11,000 10,900 .92% 6,092 80.6%
West Valley 15,500 15,100 2.7% 11,448 35.4%
------- ------- ----- ------- ------
Grand Total: $74,600 $72,900 2.3% $55,689 34.0%
</TABLE>
1997 ESTIMATED NET ASSET VALUE OF UNITS
Based on the March 1997 appraisal of the Partnership's properties, the General
Partner has calculated the estimated net asset value of each Unit, based on the
following assumptions:
o Sale of the Properties in March 1997 for their appraised value.
o Costs and selling expenses are 3.0% of the sale price.
o Tax consequences of a sale are not taken into consideration.
The estimated net asset value of each unit, assuming the sale of the properties
at their present appraised value is $12.81 is calculated as follows:
Aggregate appraised value: $ 74,600,000
Less:Selling Expenses (3.0%) 2,238,000
Mortgage Debt: 30,045,000
--------------
Net Sales Proceeds: 42,317,000
==============
Number of Units: 3,303,387
Net Sales Proceeds per unit: $12.81
