<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, 1999 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)
Securities registered pursuant to Section 12(g) of the Act:
$20 per unit, units of limited partnership interest
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes [ X ] No [ ]
<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, 1999 (Unaudited) and
December 31, 1998 3
Statements of Income
Nine months ended September 30, 1999
and 1998 and Three Months ended
September 30, 1999 and 1998 (Unaudited) 4
Statements of Cash Flows
Nine months ended September 30, 1999
and 1998 (Unaudited) 5
Notes to Financial Statements
September 30, 1999 (Unaudited) 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS 7
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK 10
PART II OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 10
-2-
<PAGE> 3
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II,
A MICHIGAN LIMITED PARTNERSHIP
BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS SEPTEMBER 30, 1999 DECEMBER 31, 1998
------------------ -----------------
(UNAUDITED)
<S> <C> <C>
Properties:
Land $ 11,644,103 $ 11,644,103
Buildings And Improvements 49,707,927 49,421,935
Furniture And Fixtures 451,670 400,872
Manufactured Homes 2,162,583 2,100,666
------------------ -----------------
63,966,283 63,567,576
Less Accumulated Depreciation 20,184,413 18,819,413
------------------ -----------------
43,781,870 44,748,163
Cash And Cash Equivalents 2,569,668 2,482,314
Unamortized Finance Costs 600,314 622,800
Other Assets 1,430,684 981,346
------------------ -----------------
Total Assets $ 48,382,536 $ 48,834,623
------------------ -----------------
<CAPTION>
LIABILITIES SEPTEMBER 30, 1999 DECEMBER 31, 1998
------------------ -----------------
(UNAUDITED)
Accounts Payable $ 387,863 $ 322,340
Other Liabilities 1,202,635 876,996
Notes Payable 29,654,183 29,915,975
------------------ -----------------
Total Liabilities $ 31,244,681 $ 31,115,311
Partners' Equity:
General Partner 254,036 242,012
Unit Holders 16,883,819 17,477,300
Total Partners' Equity 17,137,855 17,719,312
------------------ -----------------
Total Liabilities And
Partners' Equity $ 48,382,536 $ 48,834,623
------------------ -----------------
</TABLE>
See Notes to Financial Statements
-3-
<PAGE> 4
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II,
A MICHIGAN LIMITED PARTNERSHIP
<TABLE>
<CAPTION>
STATEMENTS OF INCOME NINE MONTHS ENDED THREE MONTHS ENDED
(UNAUDITED) SEPT. 30, 1999 SEPT. 30, 1998 SEPT. 30, 1999 SEPT. 30, 1998
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Income:
Rental Income $ 8,938,928 $ 8,652,931 $ 2,993,519 $ 2,945,129
Other 552,777 626,757 193,220 235,541
R Security Income 0 151,075 0 151,075
-------------- -------------- -------------- --------------
Total Income $ 9,491,705 $ 9,430,763 $ 3,186,739 $ 3,331,745
-------------- -------------- -------------- --------------
Operating Expenses:
Administrative Expenses
(Including $472,050 and $457,304, in Property Management
Fees Paid to an Affiliate for the Nine Month Period Ending
Sept. 30, 1999 and 1998, Respectively, and $158,626 and $156,547
in Property Management Fees Paid to an Affiliate for the
Three Month Period Ending Sept. 30, 1999 and 1998,
Respectively) 2,544,445 2,679,039 982,422 961,010
Property Taxes 717,357 706,869 238,875 235,464
Utilities 706,738 747,219 267,011 248,690
Property Operations 1,495,180 1,196,644 388,666 409,256
Depreciation And Amortization 1,387,500 1,386,082 462,500 466,082
Interest 1,438,107 1,912,926 479,977 572,909
-------------- -------------- -------------- --------------
Total Operating Expenses $ 8,289,327 $ 8,628,779 $ 1,837,029 $ 1,932,401
-------------- -------------- -------------- --------------
Net Income $ 1,202,378 $ 801,984 $ 1,349,710 $ 1,399,344
-------------- -------------- -------------- --------------
Income Per Unit: $ 0.36 $ 0.24 $ 0.11 $ 0.13
Distribution Per Unit: $ 0.54 $ 0.51 $ 0.19 $ 0.17
Weighted Average Number Of Units
Of Beneficial Assignment Of Limited Partnership
Interest Outstanding During The Period Ending
Sept. 30, 1999 And 1998 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
<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS
(UNAUDITED)
NINE MONTHS ENDED
SEPTEMBER 30, 1999 SEPTEMBER 30, 1998
------------------ ------------------
<S> <C> <C>
Cash Flows From Operating Activities:
Net Income (Loss) $ 1,202,378 $ 801,990
Adjustments To Reconcile Net Income
(Loss) To Net Cash Provided By
Operating Activities:
Depreciation 1,365,000 1,344,000
Amortization 22,500 42,082
(Increase) Decrease In Other Assets From Operations (449,352) 1,574,850
Increase (Decrease) In Accounts Payables 65,523 434,701
Increase (Decrease) Other Liabilities From Operations 325,639 (432,735)
------------------ ------------------
Total Adjustments 1,329,310 2,962,898
------------------ ------------------
Net Cash Provided By (Used In)
Operating Activities 2,531,688 3,764,888
------------------ ------------------
Cash Flows From Investing Activities:
Redemption of Marketable Securities 0 775,859
Capital Expenditures (398,707) (410,749)
Sale of Fixed Assets 0 189,319
Payment On Mortgage (261,792) (45,000)
------------------ ------------------
Net Cash Provided By (Used In)
Investing Activities (660,499) 509,429
------------------ ------------------
Cash Flows From Financing Activities:
Distributions To Partners (1,783,835) (1,684,728)
------------------ ------------------
Net Cash Provided By (Used In)
Financing Activities (1,783,835) (1,684,728)
------------------ ------------------
Increase (Decrease) In Cash 87,354 2,589,589
Cash, Beginning 2,482,314 1,630,552
------------------ ------------------
Cash, Ending $ 2,569,668 $ 4,220,141
------------------ ------------------
</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, 1999 (Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Presentation:
The balance sheet as of September 30, 1999, the related statements of income and
statements of cash flow for the periods ended September 30, 1999 and 1998 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, 1999 SEPT. 30, 1998 SEPT. 30,1999 SEPT. 30,1998
--------------- --------------- ------------- -------------
<S> <C> <C> <C> <C>
Property management fee
to Uniprop, Inc.: $ 472,050 $ 457,304 $ 158,626 $ 156,547
</TABLE>
-6-
<PAGE> 7
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Capital Resources
The capital resources of Uniprop Manufactured Housing Communities Income Fund II
(the "Partnership") consist primarily of its nine manufactured home communities.
On August 20, 1998 the Partnership refinanced seven of its nine properties with
GMAC Commercial Mortgage (the "Refinancing").
Liquidity
As a result of the Refinancing, seven of the Partnership's nine properties are
mortgaged. At the time of the Refinancing, the aggregate principal amounts due
under the seven mortgage notes was $30,000,000 and the aggregate fair market
value of the Partnership's mortgage properties was $66,000,000. 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. The
properties owned by the Partnership were expected to be sold or financed within
seven to ten years after their acquisition. All of the properties have been
owned by the Partnership at least ten years and they were refinanced
approximately 10 years after their acquisition. Genesis Associates Limited
Partnership (the "General Partner"), may elect to have the Partnership own the
properties for as long as, in the opinion of the General Partner, it is in the
best interest of the Partnership to do so.
Distributable Cash from Operations totaled $829,788 for the quarter ending
September 30, 1999. Distributable Cash from Operations is defined to mean net
income computed in accordance with generally accepted accounting principals
("GAAP"), plus real estate related depreciation and amortization. Distributable
Cash from Operations does not represent cash generated from operating activities
in accordance with GAAP and is not necessarily indicative of cash available to
fund cash needs. Distributable Cash from Operations should not be considered as
an alternative to net income as the primary indicator of the Partnership's
operating performance or as an alternative to cash flow as a measure of
liquidity. From Distributable Cash from Operations for the third quarter of
1999, the General Partner has decided to distribute $627,644, or 4.4%, on an
annualized basis, to the Unit Holders. The General Partner will continue to
monitor on-going Distributable Cash from Operations generated by the Partnership
during the coming quarters. If Distributable Cash from Operations generated is
lower or higher than the amount needed to maintain the current distribution
level, the General Partner may elect to reduce or increase the level of future
distributions paid to Unit Holders.
-7-
<PAGE> 8
While the Partnership is not required to maintain a working capital reserve, the
Partnership has not distributed all the Distributable Cash from Operations in
order to build reserves. As of September 30, 1999, the Partnership added
$202,166 to cash reserves. During the same quarter in 1998, the Partnership
added $271,024 to cash reserves. The level of cash reserves maintained is at the
discretion of the General Partner.
Results of Operations
Overall, as illustrated in the following table, the Partnership's nine
properties reported a combined occupancy of 93.2%, (3,102/3,330 sites), versus
93.9% (3,126/3,330) for September 1998. The average monthly homesite rent as of
September 30, 1999 was approximately $356, versus $346, an increase of 2.9% from
September 1998.
<TABLE>
<CAPTION>
TOTAL OCCUPIED OCCUPANCY AVERAGE
CAPACITY SITES RATE RENT
<S> <C> <C> <C> <C>
Ardmor Village 339 327 96.5% $329
Camelot Manor 335 327 97.6 327
Country Roads 312 293 93.9 253
Dutch Hills 278 270 97.1 329
El Adobe 371 348 94.8 403
Paradise Village 611 508 82.7 291
Stonegate Manor 308 298 96.8 334
Sunshine Village 356 329 92.4 434
West Valley 420 402 95.5 467
----- ----- ---- ----
Total on 9/30/99: 3,330 3,102 93.2% $356
Total on 9/30/98: 3,330 3,126 93.9% $346
</TABLE>
-8-
<PAGE> 9
<TABLE>
<CAPTION>
GROSS REVENUES NET OPERATING
INCOME
9/30/99 9/30/98 9/30/99 9/30/98
<S> <C> <C> <C> <C>
Ardmor Village $ 345,088 $ 298,044 $ 171,234 $ 193,707
Camelot Manor 290,972 286,259 118,048 128,252
Country Roads 208,169 212,653 18,312 (13,030)
Dutch Hills 245,018 240,935 110,655 128,999
El Adobe 440,484 443,717 281,685 276,682
Paradise Village 361,163 385,047 32,845 67,206
Stonegate Manor 280,787 281,105 123,278 144,995
Sunshine Village 426,171 384,805 292,181 227,375
West Valley 575,544 599,570 349,791 405,860
----------- ----------- ----------- -----------
3,173,396 3,132,135 1,498,029 1,560,046
Partnership Management: 13,343 151,075 (28,770) 94,578
Other Non Recurring expenses: -- -- (159,494) (177,299)
Debt Service: (479,977) (572,909)
Depreciation and Amortization: -- -- (462,500) (466,082)
----------- ----------- ----------- -----------
$ 3,186,739 $ 3,283,210 $ 367,288 $ 438,334
</TABLE>
COMPARISON OF QUARTER ENDED SEPTEMBER 30, 1999 TO QUARTER ENDED
SEPTEMBER 30, 1998
Gross revenues decreased $96,471, or 2.9%, to $3,186,739 in 1999, as compared to
$3,283,210 in 1998. The decrease was the primarily the result of the absence of
the "R" Security income. During the third quarter of 1998, the Partnership
recognized income of $151,075 (which was net of a write-off of $868,000 in
related, deferred financing costs) representing the liquidation of the "R"
Security.
As reflected in the Statements of Income, total operating expenses decreased
$73,960, or 2.6%, to $2,819,451 in 1999, as compared to $2,893,411 in 1998. The
decrease in total operating expenses was primarily the result of lower interest
associated with the Partnership's mortgage debt on seven of its nine properties.
As a result of the foregoing factors, net operating income decreased to $367,288
for the quarter ended September 30, 1999 from $438,334 for the quarter ended
September 30, 1998.
MANAGEMENT EXPENSES
Net Partnership management expenses for the quarter amounted to $28,770.
Expenses of $42,113 (data processing, accounting and legal expenses, appraisal
fees and wages
-9-
<PAGE> 10
to employees of the Partnership) were offset by gross income of $13,343,
generated by interest on the Partnership's reserves and transfer fees. The
equivalent figures for the third quarter of 1998 were $56,497, $105,032 and
$1,067,610, respectively. The gross income in 1998 was inflated by $1,019,075,
which was the result of the 1998 Refinancing.
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK
Not applicable, because the Partnership does not hold any financial instruments
subject to market risk.
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, 1999.
-10-
<PAGE> 11
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 15, 1999
-11-
<PAGE> 12
EXHIBIT INDEX
Exhibit
No. Description Page
27 Financial Data Schedule
-12-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 2569668
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4600666
<PP&E> 63966283
<DEPRECIATION> 20184413
<TOTAL-ASSETS> 48382536
<CURRENT-LIABILITIES> 1590498
<BONDS> 29654183
0
0
<COMMON> 0
<OTHER-SE> 17137855
<TOTAL-LIABILITY-AND-EQUITY> 48382536
<SALES> 0
<TOTAL-REVENUES> 9491705
<CGS> 0
<TOTAL-COSTS> 6901827
<OTHER-EXPENSES> 1365000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1460607
<INCOME-PRETAX> 1202378
<INCOME-TAX> 0
<INCOME-CONTINUING> 1202378
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1202378
<EPS-BASIC> .36<F1>
<EPS-DILUTED> 0
<FN>
<F1>IN THIS RELP THE EARNINGS PER SHARE INDICATE INCOME PER LP UNIT.
</FN>
</TABLE>
