<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended September 30, 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)
(248) 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
Balance Sheets
September 30, 1997 (Unaudited) and
December 31, 1996 3
Statements of Income
Nine months ended September 30, 1997
and 1996 and Three Months ended
September 30, 1997 and 1996 (Unaudited) 4
Statements of Cash Flows
Nine months ended September 30, 1997
and 1996 (Unaudited) 5
Notes to Financial Statements
September 30, 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 SEPT. 30, 1997 DEC. 31, 1996
-------------- -------------
(Unaudited)
<S> <C> <C>
Properties:
Land $11,644,603 $11,644,603
Buildings And Improvements 48,906,031 48,558,632
Furniture And Fixtures 368,275 342,651
Manufactured Homes 2,203,016 2,535,831
----------- -----------
$63,121,925 $63,081,717
Less Accumulated Depreciation 16,649,988 15,329,988
----------- -----------
$46,471,937 $47,751,729
Cash And Cash Equivalents 1,319,093 1,144,427
Marketable Securities 818,182 818,182
Mortgage-backed Securities 1,502,250 1,502,250
Unamortized financing costs 903,374 930,139
Investment 998,995 998,995
Other Assets 514,494 437,659
----------- -----------
Total Assets $52,528,325 $53,583,381
LIABILITIES AND PARTNERS' EQUITY
Accounts Payable $160,472 $155,889
Other Liabilities 950,225 1,194,387
Note Payable 30,045,000 30,025,487
----------- -----------
Total Liabilities $31,155,697 $31,375,763
Partners' Equity:
General Partner 225,691 218,515
Unit Holders 21,146,937 21,989,103
----------- -----------
Total Partners' Equity $21,372,628 $22,207,618
Total Liabilities And
Partners' Equity $52,528,325 $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>
NINE MONTHS ENDED THREE MONTHS ENDED
SEPT. 30, 1997 SEPT. 30, 1996 SEPT. 30, 1997 SEPT. 30, 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Income:
Rental Income $8,298,191 $7,845,787 $2,765,264 $2,635,696
Other 555,324 527,781 210,524 137,798
---------- ---------- ---------- ----------
Total Income $8,853,515 $8,373,568 $2,975,788 $2,773,494
Operating Expenses:
Administrative Expenses
(Including $438,866, 411,783, 147,961 and 137,938
In Property Management Fees Paid To
An Affliate For The Nine and Three Month Periods
Ended Sept. 30, 1997 And 1996, Respectively} 2,349,908 2,349,271 800,299 794,130
Property Taxes 672,137 657,958 224,066 219,535
Utilities 688,404 774,659 180,280 274,352
Property Operations 1,077,160 923,233 459,685 319,376
Depreciation And Amortization 1,366,762 1,417,050 452,596 472,350
Interest 1,981,539 1,965,444 665,282 650,975
---------- ---------- ---------- ----------
Total Operating Expenses $8,135,910 $8,087,615 $2,782,208 $2,730,718
---------- ---------- ---------- ----------
Net Income $ 717,605 $ 285,953 $ 193,580 $ 42,776
Income Per Unit: $ 0.22 $ 0.09 $ 0.06 $ 0.01
Distribution Per Unit $ 0.47 $ 0.39 $ 0.17 $ 0.13
Weighted Average Number Of Units Of Beneficial
Assignment Of Limited Partnership Interest
Outstanding During The Periods Ending
Sept. 30, 1997 and 1996 3,303,387 3,303,387 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>
NINE MONTHS ENDED
SEPT. 30, 1997 SEPT. 30, 1996
-------------- --------------
<S> <C> <C>
Cash Flows From Operations:
Net Income $ 717,605 $ 285,953
Adjustments To Reconcile Net Income To Net Cash
Provided By Operating Activities:
Depreciation 1,320,000 1,312,500
Amortization 46,762 104,550
(Increase) Decrease In Other Assets (77,319) 132,655
Increase (Decrease) In Accounts Payables 4,583 (62,681)
Increase (Decrease) In Other Liabilities (244,162) 189,763
-------------- --------------
Total Adjustments 1,049,864 1,676,787
Net Cash Provided By
Operating Activities 1,767,469 1,962,740
Cash Flows From Investing Activities:
Purchase of Marketable Securities 0 0
Capital Expenditures (373,023) (37,440)
Sale of Fixed Assets 332,815 (274,414)
-------------- --------------
Net Cash Provided By (Used In)
Investing Activities (40,208) (311,854)
Cash Flows From Financing Activities:
Distributions To Partners (1,552,595) (1,288,320)
Net Cash Provided By (Used In)
Financing Activities (1,552,595) (1,288,320)
Increase (Decrease) In Cash 174,666 362,566
Cash, Beginning 1,144,427 388,328
Cash, Ending $ 1,319,093 $ 750,894
-------------- --------------
</TABLE>
See Notes To Financial Statements
5
<PAGE> 6
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II,
A MICHIGAN LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
September 30, 1997 (Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Presentation:
The balance sheet as of September 30, 1997, the related statements of income and
statements of cash flow for the periods ended September 30, 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:
<TABLE>
<CAPTION>
NINE MONTHS ENDED THREE MONTHS ENDED
SEPT. 30, 1997 SEPT. 30, 1996 SEPT. 30,1997 SEPT. 30,1996
--------------- --------------- ------------- -------------
<S> <C> <C> <C> <C>
Property management fee
to Uniprop, Inc.: $ 438,866 $ 411,783 $147,961 $137,938
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
-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 $646,176 for the quarter ending
September 30, 1997. Included in distributable cash from operations is interest
income of $28,130 from the Class D Certificates. Of this amount, the General
Partner has decided to distribute $561,575.79 to the Unit Holders, representing
a 4.0% annualized return on capital. The difference between income generated by
operations and cash distributed, or $163,735.21, 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 combined occupancy of 92.3%, (3,072/3,330 sites), versus
90.1% (3,000/3,330) for September 1996. The average monthly homesite rent as of
September 30, 1997 was approximately $333, versus $326, an increase of 2.1% from
September 1996.
TOTAL OCCUPIED OCCUPANCY AVERAGE
CAPACITY SITES RATE RENT
Ardmor Village 339 322 95.0% $310
Camelot Manor 335 331 98.8 305
Country Roads 312 286 91.7 225
Dutch Hills 278 258 92.8 306
El Adobe 371 367 98.9 374
Paradise Village 611 472 77.3 282
Stonegate Manor 308 291 93.0 308
Sunshine Village 356 331 93.0 399
West Valley 420 414 98.6 430
--- --- ---- ---
TOTAL ON 9/30/97: 3,330 3,072 92.3% $333
TOTAL ON 9/30/96: 3,330 3,000 90.1% $326
During the third quarter of 1997, the Partnership generated gross revenues of
$2,975,788, a 7.3% increase over the $2,773,494 generated in the third quarter
of 1996. The net operating income generated by the Partnership during the third
quarter was $1,311,458, a 12.5% increase over the $1,166,101 generated during
the third quarter of 1996. Cash flow for the third quarter, after mortgage debt
service and non-recurring items was $646,176, or 25.4% more than the $515,126
generated during the third quarter of 1996. The increase in cash flow was a
direct result of increased occupancy and higher average rents.
GROSS NET OPERATING MORTGAGE CASH
REVENUES INCOME DEBT FLOW
ARDMOR VILLAGE $ 271,585 $ 110,533 $ 64,878 $ 45,655
CAMELOT MANOR 284,376 147,806 77,279 70,527
COUNTRY ROADS 198,097 35,733 -0- 35,733
DUTCH HILLS 235,160 120,478 57,129 63,349
EL ADOBE 417,441 263,947 122,450 141,497
PARADISE VILLAGE 351,209 54,156 -0- 54,156
STONEGATE MANOR 284,370 154,769 66,760 88,009
SUNSHINE VILLAGE 370,967 203,741 94,993 108,748
WEST VALLEY 559,686 366,566 181,793 184,773
PARTNERSHIP MGT: 2,897 (43,128) -0- (43,128)
OTHER NON
RECURRING EXPENSES: -- (103,143) -0- (103,143)
---------- ---------- -------- ---------
QTR. END 9/30/97: $2,975,788 $1,311,458 $665,282 $ 646,176
QTR. END 9/30/96: $2,773,494 $1,166,101 $650,975 $ 515,126
-8-
<PAGE> 9
As shown in the Partnership's financial statements, the properties' operating
expenses for the first nine months of 1997 compared to the same period in 1996,
reflect slight increases in wages, legal fees, marketing expenses, and taxes.
ARDMOR VILLAGE, in Lakeville, Minnesota, reported an occupancy of 95.0% (322/339
sites) as of September 30, 1997, versus 92.9% as of September 30, 1996. The
average rent was approximately $310 per homesite as of September 30, 1997,
versus $311 as of September 30, 1996. For the third quarter, Ardmor Village
generated gross revenues of $271,585, 5.9% more than the $256,401 reported for
the same quarter in 1996. Net operating income for the quarter was $110,533,
15.2% less than the $127,298 earned during the same quarter in 1996. The
decrease in net operating income was the result of higher legal expenses related
to evictions and required repair and maintenance to the communities' sewer and
water system.
Improvement and maintenance actions undertaken during the quarter involved
$20,680 in driveway and sidewalk repairs, and completing the installation of the
underground sprinklers at the entrance. Site upgrades in the amount of $7,295
were done over the third quarter to accommodate the new homes being moved into
the community. Management has $45,000 budgeted for road repairs that will begin
during the next quarter.
CAMELOT MANOR, in Grand Rapids, Michigan, reported an occupancy of 98.8%
(331/335 sites) as of September 30, 1997, versus 94.6% as of September 30, 1996.
The average rent was $305 per homesite as of September 30, 1997, versus $297 as
of September 30, 1996, an increase of 2.7%. For the third quarter of 1997,
Camelot Manor generated gross revenues of $284,376, 6.0% more than the $268,287
reported for the same quarter in 1996. Net operating income for the quarter was
$147,806, 10.4% more than the $133,885 earned during the same quarter in 1996.
Improvement and maintenance actions undertaken during the quarter involved minor
road repairs, and site and pedestal upgrades. During the next quarter, the
community plans to replace the furniture in the offices and install an
underground sprinkler system at the front entrance.
COUNTRY ROADS, in Jacksonville, Florida, reported an occupancy of 91.7% (286/312
sites) as of September 30, 1997, versus 88.1% as of September 30, 1996. The
average rent was $225 per homesite as of September 30, 1997, versus $215 during
the same quarter of 1996, an increase of 4.7%. For the third quarter of 1997,
Country Roads generated gross revenues of $198,097, 7.8% more than the $183,751
reported during the same quarter in 1996. Net operating income for the quarter
was $35,733, versus $28,359 for the third quarter of 1996.
Improvement and maintenance actions undertaken at the community during the
quarter included installing new electric pedestals at some sites, minor driveway
repairs, and approximately $17,000 in costs associated with landscaping and
planting trees around the office area.
-9-
<PAGE> 10
DUTCH HILLS, in Haslett, Michigan, reported an occupancy of 92.8% (258/278
sites) as of September 30, 1997, versus 96.4% as of September 30, 1996. The
average rent was $306 per homesite as of September 30, 1997, versus $295 as of
September 30, 1996, an increase of 3.7%. For the third quarter, Dutch Hills
generated gross revenues of $235,160, 6.5% more than the $220,735 reported
during the same quarter in 1996. Net operating income was $120,478, 12.3% more
than the $107,252 earned during the same quarter in 1996. Although occupancy is
down compared to the same quarter in 1996 gross revenues and operating income
have increased due to increases in the average rent and lower operating
expenses.
Improvement and maintenance actions undertaken during the third quarter were
limited to site upgrades to the piers and pedestals to accommodate the new
larger homes.
EL ADOBE, in Las Vegas, Nevada, reported an occupancy of 98.9% (367/371 sites)
as of September 30, 1997, versus 95.7% as September 30, 1996. The average rent
on September 30, 1997 was $374 per homesite, versus $359 as of September 30,
1996, an increase of 4.2%. For the third quarter of 1997, El Adobe generated
gross revenues of $417,441, 7.1% more than the $389,708 reported for the same
quarter in 1996. Net operating income for the quarter was $263,947, an 18.5%
increase over the $222,689 generated during the same quarter in 1996. The
increase in net operating income is due to increased occupancy and higher
average homesite rent combined with stable expenses.
Improvement and maintenance actions undertaken during the third quarter included
driveway repairs, a new sidewalk from the parking lot to the door of the
community center, and approximately $10,000 in new playground equipment.
As a result of the strong housing market in Las Vegas, occupancy at El Adobe has
increased by 12 homesites, or 3.4%, since the third quarter of 1996. Management
reported that three new homes were moved into the community over the third
quarter and one home was moved out. With the current strong market conditions
management anticipates occupancy to remain stable through the fourth quarter.
PARADISE VILLAGE, in Tampa , Florida, reported an occupancy of 77.3% (472/611
sites) as of September 30, 1997, versus 71.0% as of September 30, 1996. The
average rent as of September 30, 1997 was $282 per homesite, versus $271 as of
September 30, 1996, an increase of 4.1%. For the third quarter of 1997, Paradise
Village generated gross revenues of $351,209, 14.8% more than the $308,158
reported for the same quarter in 1996. Net operating income for the quarter was
$54,156 compared to the $31,793 reported during the same quarter in 1996.
Improvement and maintenance actions undertaken during the quarter focused
primarily on sidewalk and driveway repairs, replacement of the retaining walls
throughout the community, and office decorations. Pruning and trimming the trees
was also completed over the last quarter.
-10-
<PAGE> 11
STONEGATE MANOR, in Lansing, Michigan, reported an occupancy of 94.5% (291/308
sites) as of September 30, 1997, versus 95.8% as of September 30, 1996. The
average rent was $308 per homesite as of September 30, 1997, versus $297 as of
September 30, 1996, an increase of 3.7%. For the third quarter of 1997,
Stonegate Manor generated gross revenues of $284,370, 16.2% more than the
$244,712 reported for the same quarter in 1996. Net operating income for the
quarter was $154,769, 27% more than the $121,930 reported during the same
quarter in 1996. The significant increase in income from 1996 to 1997 is due to
a one time payment from the cable tv provider to let them provide additional
services at the community.
Improvement and maintenance actions undertaken during the quarter involved
primarily site and pedestal upgrades due to the increase in multi-sectional
homes moving into the community which adds additional set up costs. Due to
increases in operating expenses management has decided to postpone any other
budgeted improvement and maintenance items until 1998.
SUNSHINE VILLAGE, in Davie, Florida, reported an occupancy of 93.0% (331/356
sites) as of September 30, 1997, versus 91.9% as of September 30, 1996. The
average rent was $399 per homesite as of September 30, 1997, versus $381 as of
September 30, 1996, an increase of 4.7%. For the third quarter of 1997, Sunshine
Village generated gross revenues of $370,967, slightly more than the $363,104
reported for the same quarter in 1996. Net operating income was $203,741, 3.3%
less than the $210,512 reported for the same quarter in 1996. The slight drop in
net operating income is due to increased expenses.
Improvement and maintenance actions undertaken during the quarter involved the
removal of old homes, the continuation of the pressure wash program, tree
trimming throughout the community, and the installation of new playground
equipment.
WEST VALLEY, in Las Vegas, Nevada, reported an occupancy of 98.6%
(414/420 sites) as of September 30, 1997, which reflects no change from to the
same quarter in 1996. The average rent was $430 per homesite as of September 30,
1997, versus $438 as of September 30, 1996. For the third quarter of 1997, West
Valley generated gross revenues of $559,686, 5.7% more than the $529,618
reported during the same quarter in 1996. Net operating income was $366,566,
18.5% more than the $309,259 generated during the same quarter in 1996. The
average monthly rent is lower due to a rollback related to the implementation of
individual metering for residents' water use.
Improvement and maintenance actions undertaken during the quarter included
approximately $30,000 in costs associated with the building of a new play
structure. In addition, a pool awning was built and new furniture in the
community center was purchased over the third quarter.
-11-
<PAGE> 12
MANAGEMENT EXPENSES
Net Partnership management expenses for the quarter amounted to $43,128.
Expenses of $46,025 (data processing, accounting and legal expenses, appraisals
and wages to employees of the Partnership) were offset by gross income of
$2,897, generated by inter est on the Partnership's reserves and transfer fees.
The equivalent figures for the third quarter of 1996 were $38,035, $47,055 and
$9,020, respectively.
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 September 30,
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: November 14, 1997
-13-
<PAGE> 14
EXHIBIT INDEX
Exhibit
No. Description Page
- ------- ----------- ----
27 Financial Data Schedule
-14-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 1,319,093
<SECURITIES> 818,182
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6,056,388
<PP&E> 63,121,925
<DEPRECIATION> 16,649,988
<TOTAL-ASSETS> 52,528,325
<CURRENT-LIABILITIES> 1,110,697
<BONDS> 30,045,000
0
0
<COMMON> 0
<OTHER-SE> 21,372,628
<TOTAL-LIABILITY-AND-EQUITY> 52,528,325
<SALES> 0
<TOTAL-REVENUES> 8,853,515
<CGS> 0
<TOTAL-COSTS> 4,787,609
<OTHER-EXPENSES> 1,320,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,028,301
<INCOME-PRETAX> 717,605
<INCOME-TAX> 0
<INCOME-CONTINUING> 717,605
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 717,605
<EPS-PRIMARY> .22<F1>
<EPS-DILUTED> 0
<FN>
<F1>
In this RELP the earnings per share indicate income per LP unit.
</FN>
</TABLE>
