<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended March 31, 1997 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 38-2702802
(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)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [ X ] No [ ]
<PAGE> 2
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II,
A MICHIGAN LIMITED PARTNERSHIP
INDEX
Page
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS 3
Balance Sheets
March 31, 1997 (Unaudited) and
December 31, 1996 3
Statements of Income
Three months ended March 31, 1997
and 1996 (Unaudited) 4
Statements of Cash Flows
Three months ended March 31, 1997
and 1996 (Unaudited) 5
Notes to Financial Statements
March 31, 1997 (Unaudited) 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS 7
PART II OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 12
-2-
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II,
A MICHIGAN LIMITED PARTNERSHIP
BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS MARCH 31, 1997 DEC. 31, 1996
-------------- -------------
(Unaudited)
<S> <C> <C>
Properties:
Land $11,644,603 $11,644,603
Buildings And Improvements 48,616,993 48,558,632
Furniture And Fixtures 342,651 342,651
Manufactured Homes 2,432,312 2,535,831
----------- -----------
$63,036,559 $63,081,717
Less Accumulated Depreciation 15,769,988 15,329,988
----------- -----------
$47,266,571 $47,751,729
Cash And Cash Equivalents 956,774 1,144,427
Marketable Securities 818,182 818,182
Mortgage-backed Securities 1,502,250 1,502,250
Unamortized financing costs 921,540 930,139
Investment 998,995 998,995
Other Assets 508,667 437,659
----------- -----------
Total Assets $52,972,979 $53,583,381
LIABILITIES AND PARTNERS' EQUITY
Accounts Payable $122,448 $155,889
Other Liabilities 849,136 1,194,387
Note Payable 30,033,487 30,025,487
----------- -----------
Total Liabilities $31,005,071 $31,375,763
Partners' Equity:
General Partner 221,073 218,515
Unit Holders 21,746,835 21,989,103
----------- -----------
Total Partners' Equity $21,967,908 $22,207,618
Total Liabilities And
Partners' Equity $52,972,979 $53,583,381
</TABLE>
See Notes To Financial Statements
3
<PAGE> 4
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II,
A MICHIGAN LIMITED PARTNERSHIP
STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, 1997 MARCH 31, 1996
<S> <C> <C>
Income:
Rental Income $2,746,882 $2,582,022
Other 188,626 189,207
---------- ----------
Total Income $2,935,508 $2,771,229
Operating Expenses:
Administrative Expenses
(Including $144,617 and $136,383
In Property Management Fees Paid To
An Affliate For The Three Month Periods
Ended March 31,1997 And 1996, Respectively 768,140 788,688
Property Taxes 224,025 219,174
Utilities 256,735 236,380
Property Operations 317,387 320,011
Depreciation And Amortization 457,083 473,250
Interest 656,340 663,494
---------- ----------
Total Operating Expenses $2,679,710 $2,700,997
---------- ----------
Net Income $255,798 $70,232
Income Per Unit: $0.08 $0.02
Distribution Per Unit $0.15 $0.13
Weighted Average Number Of Units Of Beneficial
Assignment Of Limited Partnership Interest
Outstanding During The Periods Ending
March 31, 1997 and 1996 3,303,387 3,303,387
</TABLE>
See Notes To Financial Statements
4
<PAGE> 5
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II,
A MICHIGAN LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, 1997 MARCH 31, 1996
-------------- --------------
<S> <C> <C>
Cash Flows From Operations:
Net Income $255,798 $70,232
Adjustments To Reconcile Net Income To Net Cash
Provided By Operating Activities:
Depreciation 440,000 437,500
Amortization 17,083 35,750
(Increase) Decrease In Other Assets (71,492) 23,074
Increase (Decrease) In Accounts Payables (33,441) (60,697)
Increase (Decrease) In Other Liabilities (345,251) 6,152
--------- ---------
Total Adjustments 6,899 441,779
Net Cash Provided By
Operating Activities 262,697 512,011
Cash Flows From Investing Activities:
Purchase of Marketable Securities 0 (10,948)
Capital Expenditures 45,158 (132,321)
--------- ---------
Net Cash Provided By (Used In)
Investing Activities 45,158 (143,269)
Cash Flows From Financing Activities:
Distributions To Partners (495,508) (429,440)
Net Cash Provided By (Used In)
Financing Activities (495,508) (429,440)
Increase (Decrease) In Cash (187,653) (60,698)
Cash, Beginning 1,144,427 388,328
Cash, Ending $956,774 $327,630
--------- ---------
</TABLE>
See Notes To Financial Statements
5
<PAGE> 6
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II,
A MICHIGAN LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
March 31, 1997 (Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Presentation:
The balance sheet as of March 31, 1997, the related statements of income and
statements of cash flow for the periods ended March 31, 1997 and 1996 have been
prepared by management, pursuant to the rules and regulations of the Securities
and Exchange Commission, without audit by independent public accountants. In
the opinion of management, all adjustments (consisting of only normal recurring
accruals) necessary for a fair presentation of such financial statements have
been included.
The financial statements and notes are presented as permitted by the rules and
regulations of the Securities and Exchange Commission for Form 10-Q and do not
contain certain information included in the Company's annual financial
statements and notes, which should be consulted.
2. PAYMENTS TO AFFILIATES
THREE MONTHS ENDED
MARCH 31, 1997 MARCH 31, 1996
-------------- --------------
Property management fee
to Uniprop, Inc. $144,617 $136,383
-6-
<PAGE> 7
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Capital Resources
The Partnership's capital resources consist primarily of its nine manufactured
home communities. As part of the mortgage financing the Partnership completed
in 1993, the Partnership was required to purchase $1,502,250 in mortgage-backed
securities, known as the "Class D Certificates". 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. 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 28 properties participating in the financing
transaction which include mortgages on 21 additional properties not owned by
the Partnership.
Liquidity
As a result of the 1993 mortgage financing, seven of the Partnership's nine
properties are mortgaged. At the time of the mortgage financing, the aggregate
principal amounts due under the seven mortgage notes was $30,045,000 and the
aggregate fair market value of the Partnership's mortgage properties was
$56,400,000. The Partnership expects to meet its short-term liquidity needs
generally through its working capital provided by operating activities.
Partnership liquidity is based, in part, upon its investment strategy. Upon
acquisition, the partnership anticipated owning the properties for seven to ten
years. All of the properties have been owned by the Partnership at least
seven years and the General Partner may elect to have the Partnership own the
properties for longer than ten years, if, in the opinion of the General
Partner, it is in the best interest of the Partnership to do so.
Distributable cash from operations totaled $712,881 for the quarter ending
March 31, 1997. Included in distributable cash from operations is interest
income of $28,130 from the Class D Certificates. The General Partner has
decided to distribute $495,508, or 3.51%, on an annualized basis, to the Unit
Holders. The difference between income generated by operations and cash
distributed, or $217,373, has been added to the Partnership's cash reserves.
The General Partner will continue to monitor on-going cash flow generated by
the Partnership's nine properties during the coming quarters. If cash flow
generated is lower or higher than the amount needed to maintain the current
distribution level, the General Partner may elect to reduce or increase the
level of future distributions paid to Unit Holders.
-7-
<PAGE> 8
Results of Operations
OVERALL, as illustrated in the following table, the Partnership's nine
properties reported a combined occupancy of 91.9% (3,059/3,330 sites), versus
89.2% (2,972/3,330) for March 1996. The average monthly homesite rent as of
March 31, 1997 was approximately $331, versus $318, an increase of 4.1% from
March 31, 1996.
<TABLE>
<CAPTION>
TOTAL OCCUPIED OCCUPANCY AVERAGE
CAPACITY SITES RATE RENT
<S> <C> <C> <C> <C>
Ardmor Village 339 324 95.6% $328
Camelot Manor 335 326 97.3 300
Country Roads 312 284 91.0 215
Dutch Hills 278 266 95.7 301
El Adobe 371 366 98.7 359
Paradise Village 611 446 73.0 272
Stonegate Manor 308 297 96.4 304
Sunshine Village 356 331 93.0 399
West Valley 420 419 99.8 438
--- --- ---- ---
TOTAL ON 3/31/97: 3,330 3,059 91.9% $331
TOTAL ON 3/31/96: 3,330 2,972 89.2% $318
</TABLE>
During the first quarter of 1997, the Partnership generated gross revenues of
$2,935,508, a 5.9% increase over the $2,771,229 generated in the first quarter
of 1996. The net operating income generated by the Partnership during the
first quarter was $1,369,221, a 13.4% increase over the $1,206,975 generated
during the first quarter of 1996. The increase in net operating income was due
to higher average rents and lower operating expenses. Distributable cash from
operations for the first quarter, after mortgage debt service and non-recurring
items was $712,881 or 31.2% more than the $543,482 generated during the first
quarter of 1996.
<TABLE>
<CAPTION>
GROSS NET OPERATING MORTGAGE CASH
REVENUES INCOME DEBT FLOW
<S> <C> <C>
ARDMOR VILLAGE $315,688 $175,795 $64,006 $111,789
CAMELOT MANOR 276,495 151,058 76,240 74,818
COUNTRY ROADS 181,373 10,007 -0- 10,007
DUTCH HILLS 225,736 108,648 56,360 52,288
EL ADOBE 404,206 259,624 120,804 138,820
PARADISE VILLAGE 351,885 72,525 -0- 72,525
STONEGATE MANOR 259,119 135,113 65,864 69,249
SUNSHINE VILLAGE 369,447 216,970 93,717 123,253
WEST VALLEY 548,726 373,395 179,349 194,046
PARTNERSHIP MGT: 2,833 (61,039) -0- (61,039)
OTHER NON
RECURRING EXPENSES: -- ( 72,875) -0- (72,875)
-------- ---------- ------- --------
QTR. END 3/31/97: $2,935,508 $1,369,221 $656,340 $712,881
QTR. END 3/31/96: $2,771,229 $1,206,975 $663,493 $543,482
</TABLE>
-8-
<PAGE> 9
ARDMOR VILLAGE, in Lakeville, Minnesota, reported an occupancy of 95.6%
(324/339 sites) as of March 31, 1997, versus 89.4% as of March 31, 1996. The
average rent was approximately $328 per homesite as of March 31, 1997, versus
$306 as of March 31, 1996, an increase of 7.2%. A $10 per month rent increase
went into effect for all residents in March. For the first quarter, Ardmor
Village generated gross revenues of $315,688, a 8.9% increase from the $289,960
reported for the same quarter in 1996 Net operating income for the first
quarter was $175,795, a 11.7% increase over the $157,336 reported for the same
quarter in 1996. The increase in first quarter net operating income from 1996
to 1997 was due to higher occupancy and higher average monthly rent.
Improvement and maintenance actions undertaken at the community during the
quarter were limited to site upgrades required to handle new resident homes
being moved into the community. Management has budgeted approximately $87,000
in capital improvements for Ardmor Village during 1997. The most significant
items budgeted are $45,000 for road repairs, $15,000 for new resident
driveways, and $10,000 for site upgrades.
CAMELOT MANOR, in Grand Rapids, Michigan, reported an occupancy of 97.3%
(326/335 sites) as of March 31, 1997, versus 96.4% as of March 31, 1996. The
average rent was $300 per homesite as of March 31, 1997, versus $291 as of
March 31, 1996, an increase of 3.1%. For the first quarter of 1997, Camelot
Manor generated gross revenues of $276,495, versus $263,879, for the same
quarter in 1996. Net operating income for the quarter was $151,058, a 6.0%
increase from the $142,567 earned during the same quarter in 1996.
Improvement and maintenance actions undertaken during the quarter involved
minor repairs to the community manager's home, site upgrades for new resident
homes moving into the community, and repairs to maintenance equipment, which
was due to heavy snow during February. Management has budgeted approximately
$49,000 in capital improvements for Camelot Manor during 1997. The most
significant items budgeted are $11,000 for site upgrades and $10,000 for the
installation of a new sprinkler system. In addition, management has budgeted
$7,200 for upgrading old electric pedestals.
COUNTRY ROADS, in Jacksonville, Florida, reported an occupancy of 91.0%
(284/312 sites) as of March 31, 1997, versus 86.2% as of March 31, 1996. The
average rent was $215 per homesite as of March 31, 1997, versus $206 during
the same quarter of 1996, an increase of 4.4%. For the first quarter of 1997,
Country Roads generated gross revenues of $181,373, 8.7% more than the $166,825
reported during the same quarter in 1996. Net operating income for the quarter
was $10,007, versus $25,129 for the first quarter of 1996. The decline in
first quarter net operating income from 1996 to 1997 was due to higher
marketing expenses related to dealer incentives.
Improvement and maintenance actions undertaken at the community during the
quarter involved repairs to the community water system, upgrading electric
pedestals, and the asphalt resurfacing of 14 resident driveways. Management
has budgeted approximately $44,000 in capital improvements for Country Roads
during 1997. The most significant
-9-
<PAGE> 10
items budgeted are $9,600 for driveway resurfacing, $6,000 for new playground
equipment, and $6,000 for new furniture in the community center building.
DUTCH HILLS, in Haslett, Michigan, reported an occupancy of 95.7% (266/278
sites) as of March 31, 1997, versus 95.0% as of March 31, 1996. The average
rent was $301 per homesite as of March 31, 1997, versus $292 as of March 31,
1996, an increase of 3.1%. For the first quarter, Dutch Hills generated gross
revenues of $225,736, 2.6% more than the $220,023 reported during the same
quarter in 1996. Net operating income was $108,648, 3.9% less than the $112,851
earned during the same quarter in 1996. The decline in first quarter net
operating income from 1996 to 1997 was due to unexpected costs of $11,000 to
repair a broken main water line at the community.
Improvement and maintenance actions undertaken during the first quarter focused
on repairs to the broken main water line at the community during January.
Management has budgeted approximately $22,000 in capital improvements for Dutch
Hills during 1997. The primary capital improvements budgeted are $10,000 for
road repairs and $10,000 for resurfacing of resident driveways.
EL ADOBE, in Las Vegas, Nevada, reported an occupancy of 98.7% (366/371
sites) as of March 31, 1997, versus 95.4% as March 31, 1996. The average rent
on March 31, 1997 was $359 per homesite, versus $348 as of March 31, 1996, an
increase of 3.2%. For the first quarter of 1997, El Adobe generated gross
revenues of $404,206, 10.3% more than the $366,536 reported for the same
quarter in 1996. Net operating income for the quarter was $259,624, a 9.1%
increase over the $237,891 generated during the same quarter in 1996. The
increase in net operating income is the result of higher occupancy and higher
average rent.
Improvement and maintenance actions undertaken during the first quarter were
limited to on-going site upgrades for new resident homes. Management has
budgeted approximately $48,000 in capital improvements for El Adobe during
1997. The most significant items budgeted are $16,000 for new playground
equipment and $12,000 for resurfacing resident driveways.
PARADISE VILLAGE, in Tampa, Florida, reported an occupancy of 73.0% (446/611
sites) as of March 31, 1997, versus 72.0% as March 31, 1996. The average rent
on March 31, 1997 was $272 per homesite, versus $257 as of March 31, 1996, an
increase of 5.8%. For the first quarter of 1997, Paradise Village generated
gross revenues of $351,885, versus the $324,739 reported for the same quarter
in 1996. Net operating income for the quarter was $72,525, a significant
increase compared to the $43,795 earned during the same quarter in 1996. The
increase in first quarter net operating income from 1996 to 1997 was due to
higher lease home income.
Improvement and maintenance actions undertaken during the quarter focused on
renovations to community-owned lease homes, site upgrades, and repairs to the
sewage treatment plant. Management has budgeted approximately $112,000 in
capital improvements at Paradise Village during 1997. The most significant
items budgeted are
-10-
<PAGE> 11
$20,000 for lease home renovations, $20,000 for road and driveway repairs, and
$12,000 for site upgrades to new resident homes.
STONEGATE MANOR, in Lansing, Michigan, reported an occupancy of 96.4% (297/308
sites) as of March 31, 1997, versus 93.5% as of March 31, 1996. The average
rent was $304 per homesite as of March 31, 1997, versus $295 as of March
31, 1996, an increase of 3.1%. For the first quarter
of 1997, Stonegate Manor generated gross revenues of $259,119, versus $249,921
reported for the same quarter in 1996. Net operating income for the quarter
was $135,113, compared to $135,114 reported during the same quarter in 1996.
Improvement and maintenance actions undertaken during the quarter were limited
to site upgrades and snow removal. Management has budgeted approximately
$40,000 in capital improvements for Stonegate Manor during 1997. The two major
improvements are $18,000 for site improvements and $10,000 for upgrading the
community's water system.
SUNSHINE VILLAGE, in Davie, Florida, reported an occupancy of 93.0% (331/356
sites) as of March 31, 1997, versus 92.4% as of March 31, 1996. The average
rent was $399 per homesite as of March 31, 1997, versus $381 as of March 31,
1996, an increase of 4.7%. For the first quarter of 1997, Sunshine Village
generated gross revenues of $369,447, slightly less than the $373,792 reported
for the same quarter in 1996. Net operating income was $216,970, versus the
$227,370 reported for the same quarter in 1996. The decline in income is due
to higher resident rent incentives resulting in lower over-all rent collections
during the quarter.
Improvement and maintenance actions undertaken during the quarter involved the
seal coating of driveways, tree trimming, and upgrading of electric pedestals.
Management has budgeted approximately $64,000 in capital improvements at
Sunshine Village during 1997. The largest capital improvements are $18,000 for
a new roof on the community center building and $14,000 for new playground
equipment. Also budgeted is $7,500 for seal coating resident driveways.
WEST VALLEY, in Las Vegas, Nevada, reported an occupancy of 99.8% (419/420
sites) as of March 31, 1997, versus 95.7% as of March 31, 1996. The average
rent was $438 per homesite as of March 31, 1997, versus $428 as of March 31,
1996, an increase of 2.3%. For the first quarter of 1997, West Valley generated
gross revenues of $548,726, 8.9% more than the $503,774 reported during the
same quarter in 1995. Net operating income was $373,395, 26.0% more than the
$296,250 generated during the same quarter in 1996. The increase in net
operating income from 1996 to 1997 was the result of higher average rent and
higher occupancy.
Improvement and maintenance actions undertaken during the quarter were limited
to the general spring clean-up and pool opening. Management has budgeted
approximately $72,000 in capital improvements for West Valley during 1997. The
most significant items budgeted are $16,000 for new playground equipment,
$12,000 for community center building furniture, and $10,000 for road repairs.
-11-
<PAGE> 12
MANAGEMENT EXPENSES
Net Partnership management expenses for the quarter amounted to $61,039.
Expenses of $63,872 (data processing, accounting and legal expenses, appraisals
and wages to employees of the Partnership) were offset by gross income of
$2,833, generated by interest on the Partnership's cash reserves and transfer
fees. The equivalent figures for the first quarter of 1996 were $71,780,
$83,560 and $11,780, respectively. Please note that the income of $2,833
reported here on cash reserves, does not include income from reserves held in
securities.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit Number Description
-------------- -----------
27 Financial Data Schedule
(b) Reports on Form 8-K
There were no reports filed on Form 8-K during
the three months ended March 31, 1997.
-12-
<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Uniprop Manufactured Housing Communities
Income Fund II, a Michigan Limited Partnership
BY: Genesis Associates Limited Partnership,
General Partner
BY: Uniprop, Inc.,
its Managing General Partner
By: /s/ Paul M. Zlotoff
-----------------------------
Paul M. Zlotoff, President
By: /s/ Gloria A. Koster
-----------------------------
Gloria A. Koster, Principal Financial Officer
Dated: May 15, 1997
-13-
<PAGE> 14
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION PAGE
- -------------- ----------- ----
27 Financial Data Schedule
-14-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 956,774
<SECURITIES> 818,182
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,283,623
<PP&E> 63,036,559
<DEPRECIATION> 15,769,988
<TOTAL-ASSETS> 52,972,979
<CURRENT-LIABILITIES> 971,585
<BONDS> 30,033,487
0
0
<COMMON> 0
<OTHER-SE> 21,967,908
<TOTAL-LIABILITY-AND-EQUITY> 52,972,979
<SALES> 0
<TOTAL-REVENUES> 2,935,508
<CGS> 0
<TOTAL-COSTS> 1,566,287
<OTHER-EXPENSES> 440,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 673,423
<INCOME-PRETAX> 255,798
<INCOME-TAX> 0
<INCOME-CONTINUING> 255,798
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 255,798
<EPS-PRIMARY> .08<F1>
<EPS-DILUTED> 0
<FN>
<F1>5-03(b)(20) EPS Primary In this RELP the earnings per share indicates
income per Limited Partnership unit.
</FN>
</TABLE>
