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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, 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 38-2593067
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
280 DAINES STREET, BIRMINGHAM, MICHIGAN 48009
(Address of principal executive offices) (Zip Code)
(248) 645-9261
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(g) of the Act:
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, 2000, 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 2000 appraisal of Partnership properties), was approximately
$48,658,384.
DOCUMENTS INCORPORATED BY REFERENCE
SEE ITEM 14.
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PART I
This form 10-K contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21e of the Securities
Exchange Act of 1934. Actual results could differ materially from those
projected in the forward-looking statements as a result of a number of factors,
including those identified herein.
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 (248) 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.
The Partnership acquired seven of the Properties in 1987 and acquired
two additional Properties in 1988.
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 August 20, 1998, the Partnership borrowed $30,000,000 (the "Loan")
from GMAC Commercial Mortgage Corporation. It secured the Loan by placing new
mortgages on seven of its nine properties. The Loan carries a fixed interest
rate of 6.37% over its term of 126 months and is amortized over 360 months. The
Partnership used the proceeds from the Loan to refinance the Partnership's
outstanding indebtedness of $30,045,000, which was the result of a 1993 mortgage
financing transaction.
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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. The
General Partner has the discretion to determine when a Property is to be sold;
provided, however, that the determination of whether a particular Property
should be disposed of will be made by the General Partner only after
consultation with 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 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 five communities offering approximately 2,045 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
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3,631 housing sites. In the Jacksonville, Florida area, Country Roads competes
with approximately nine communities offering approximately 3,636 housing sites.
The Tampa, Florida area contains approximately four communities offering
approximately 1,190 housing sites competing with Paradise Village. Dutch Hills
and Stonegate Manor compete with approximately 11 other communities in the
Lansing, Michigan area offering approximately 3,438 housing sites. In the Las
Vegas, Nevada area, West Valley and El Adobe compete with approximately 13 other
communities offering approximately 3,719 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 with, 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.
Employees
The Partnership employs two 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.
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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 Loan, however, seven of the nine Properties are now
encumbered with mortgages.
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.
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
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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% of the
then outstanding interests. No matters were submitted to Unit Holders for vote
during 1999.
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 five percent (5.0%) 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 2000, the Properties were
appraised at an aggregate fair market value of $80,650,000. Assuming a sale of
the nine properties in March 2000, at the appraised value, less payment of
selling expenses and mortgage debt, the net aggregate proceeds available for
distribution to the Unit Holders is estimated to be $48,658,384 or $14.72 per
Unit. There can be no assurance that the estimated net asset value could ever be
realized. As of March 1, 2000, the Partnership had approximately 4,675 Unit
Holders.
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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, 1999, 1998, 1997, 1996 and 1995:
<TABLE>
<CAPTION>
FISCAL YEAR FISCAL YEAR FISCAL YEAR FISCAL YEAR FISCAL YEAR
ENDED ENDED ENDED ENDED ENDED
DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER
31, 1999 31, 1998 31, 1997 31, 1996 31, 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Total Assets $47,525,657 $48,834,623 $52,652,238 $53,583,381 $ 53,583,381
=========== =========== =========== =========== ============
Long Term
Debt $29,572,116 $29,915,975 $30,045,000 $30,025,487 $ 29,894,581
=========== =========== =========== =========== ============
Income 12,718,010 12,419,636 11,922,526 11,250,156 11,210,541
Operating Expenses (11,077,253) (11,488,193) (10,755,270) (10,854,181) (10,670,390)
----------- ----------- ----------- ----------- -----------
Extraordinary Item: $ 1,640,757 $ 931,443 $ 1,167,256 $ 395,975 $ 540,151
Extraordinary Item: - 250,998 - - -
----------- ----------- ----------- ----------- -----------
Net Income: $ 1,640,757 $ 1,182,441 $ 1,167,256 $ 395,975 $ 395,975
=========== =========== =========== =========== ============
Distributions to Unit
Holders,
per Unit: $ .73 $ 1.43 $ .64 $ .54 $ .66
Income per Unit:
Before Extra. Item $ .50 $ .28 $ .35 $ .12 $ .16
Extraordinary Item - .08 - - -
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 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.
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The Partnership had no capital expenditure commitments as of December
31, 1999 and does not anticipate any during the next fiscal year.
As described in Item 1, the Partnership borrowed $30,000,000 from GMAC
Commercial Mortgage Corporation. The Loan carries a fixed interest rate of 6.37%
over its term of 120 months, amortized over 30 years. The Loan was secured by
mortgages on the Partnership's Ardmor Village, Camelot Manor, Dutch Hills, El
Adobe, Stonegate Manor, Sunshine Village and West Valley Properties. The
Partnership used the proceeds from the Loan to refinance the Partnership's
outstanding indebtedness of $30,045,000.
The General Partner acknowledges that the mortgages pose some risks to
the Partnership, but believes that such risks are not greater than risks
typically associated with real estate financing.
Liquidity
The Partnership has, since inception, generated adequate amounts of
cash to meet its operating needs. The Partnership retains cash reserves, which
it considers adequate to maintain the Properties. All funds in excess of
operating needs, amounts sufficient to pay debt service, and cash reserves are
distributed to the Unit Holders on a quarterly basis. While the Partnership is
not required to maintain a working capital reserve, the Partnership has not
distributed all the cash generated from operations in order to build capital
reserves. As of December 31, 1999, the Partnership had $2,821,681 in reserves.
In February of 1994, the Partnership distributed $23,119,767 to the
Unit Holders, or $7.00 per $20.00 Unit held. Of this amount, $13,572,978 (or
$4.11 per Unit), restored the then 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.
Results of Operations
Distributions
For the year ended December 31, 1999, the Partnership made
distributions to the Unit Holders of $2,411,473, which is equal, on an
annualized basis, to 4.3% on their adjusted capital contributions, or $.73 per
$17.11 Unit. Distributions paid to Unit Holders in 1998 totaled $4,723,832, (of
which $2,543,608 was the result of the liquidation of the Class D and R
certificates, which were issued as a result of the original 1993 financing
transaction), and $2,114,171 in 1997.
The distributions paid in 1999 were less than the amount required for
the annual 10.0% preferred return to the Unit Holders by approximately
$3,240,000. As described in Note 7 to the Partnership's financial statements,
the cumulative preferred return deficit
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through December 1999 was approximately $18,864,000. No distributions can be
made to the General Partner in regard to its incentive management interest until
the cumulative preferred return deficit has been distributed to the Unit
Holders. At December 31, 1999, the unpaid amount to be distributed to the
General Partner was approximately $7,100,000.
Net Income
For the years ended December 31, 1999, 1998 and 1997, income before
extraordinary item was $1,640,757, $931,443 and $1,167,256 on total revenues of
$12,718,010, $12,419,636 and $11,922,526, respectively. The increase in 1999
from 1998 was due primarily to lower operating expenses, specifically the
reduction in interest paid on the Partnership's mortgage debt. The decrease from
1997 to 1998 was due primarily to property operating expenses, which increased
approximately $707,000, whereas total revenues increased only $497,000.
Net income plus depreciation and amortization less distributions to
Unit Holders, was $1,072,491, ($1,694,214) and $903,864, for the years ended
December 31, 1999, 1998 and 1997, respectively. The shortfall reflected in 1998
was funded with proceeds from the liquidation of the Class D and R Certificates.
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 $213,440 in 1999,
$413,691 in 1998 and $155,024 in 1997.
The decrease in Partnership management expenses from 1998 to 1999 was
due to the absence of costs associated with the proxy completed in 1998. The
increase in Partnership management expenses from 1997 to 1998, again, was due to
costs associated with the 1998 proxy.
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Property Operations
Overall, as illustrated in the table below, the Partnership's nine
properties had a combined average occupancy of 92.8% (3,090/3,330 sites) as of
December 1999, versus 93.4% in December 1998, and 92.5% in December 1997. The
average monthly rent was approximately $357 per home site in December 1999,
versus $348 in December 1998 and $333 in December 1997, an increase each year of
2.6% and 4.5%, respectively.
<TABLE>
<CAPTION>
TOTAL
SITES OCCUPIED SITES OCCUPANCY RATE AVERAGE RENT
1999 1998 1997 1999 1998 1997 1999 1998 1997
---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Ardmor Village 339 335 329 326 98.8% 97.1% 96.2% $333 $319 $306
Camelot Manor 335 323 321 323 96.4 95.8 96.4 331 320 308
Country Roads 312 283 287 288 90.7 92.0 92.3 253 240 225
Dutch Hills 278 269 261 260 96.8 93.9 93.5 331 321 309
El Adobe 371 344 363 366 93.7 97.8 98.7 404 384 374
Paradise Village 611 504 504 480 82.1 82.5 78.6 291 297 282
Stonegate Manor 308 302 295 293 98.1 95.8 95.1 336 326 312
Sunshine Village 356 327 336 326 91.9 94.4 91.6 434 418 399
West Valley 420 403 415 418 95.7 98.8 99.5 467 449 429
--- --- --- --- ---- ---- ---- --- --- ---
Overall 3,330 3,090 3,111 3,080 92.8% 93.4% 92.5% $357 $348 $333
</TABLE>
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The table below summarizes gross revenues and net operating income for
the Partnership and Properties during 1999, 1998 and 1997.
<TABLE>
<CAPTION>
GROSS REVENUE NET OPERATING INCOME
AND NET INCOME
1999 1998 1997 1999 1998 1997
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ardmor Village $1,267,773 $1,241,339 $1,129,735 $ 614,910 $ 664,873 $ 523,625
Camelot Manor 1,172,434 1,131,841 1,123,127 508,750 519,695 614,242
Country Roads 864,405 836,800 763,727 284,374 43,923 109,568
Dutch Hills 989,591 958,776 918,958 487,671 500,881 481,335
El Adobe 1,748,554 1,731,799 1,646,510 1,128,435 1,137,530 1,051,448
Paradise Village 1,570,490 1,448,095 1,460,543 248,023 297,217 326,009
Stonegate Manor 1,146,597 1,110,040 1,035,924 568,042 544,209 578,851
Sunshine Village 1,595,829 1,547,644 1,513,820 913,078 950,739 901,389
West Valley 2,288,155 2,326,778 2,240,418 1,458,086 1,548,420 1,510,414
----------- ---------- ---------- ---------- ---------- ----------
12,643,828 12,333,112 11,832,762 6,211,369 6,207,487 6,096,881
Partnership
Mgmt. 74,182 86,524 89,764 (213,440) (413,691) (155,024)
Extinguisment of Debt - 250,998 -
Other nonrecurring
Expenses (578,247) (589,597) (262,257)
Debt Service (1,935,712) (2,425,579) (2,661,565)
Depreciation and
Amortization (1,843,213) (1,847,177) (1,850,779)
----------- ---------- ---------- ---------- ---------- ----------
TOTAL: $12,718,010 $12,419,636 $11,922,526 $1,640,757 $1,182,441 $1,167,256
=========== =========== =========== ========== ========== ==========
</TABLE>
COMPARISON OF YEAR ENDED DECEMBER 31, 1999 TO YEAR ENDED DECEMBER 31, 1998
Gross revenues increased $298,374, or 2.4%, to $12,718,010 in 1999,
compared to $12,419,636 in 1998. The increase is primarily the result of an
increase in rental income due to higher average monthly rents. (See table on
previous page).
As described in the Statements of Income, the Partnership's operating
expenses decreased $410,940, or 3.6%, to $11,077,253 in 1999, compared to
$11,488,193 in 1998. The decrease in due primarily to lower interest expense
associated with the Partnership's mortgage debt and lower administrative
expenses due to the absence of costs associated with the 1998 proxy.
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As a result of the foregoing factors, net income increased from
$1,182,441 in 1998 to $1,640,757 in 1999.
COMPARISON OF YEAR ENDED DECEMBER 31, 1998 TO YEAR ENDED DECEMBER 31, 1997
Gross revenues increased $497,110, or 4.2%, to $12,419,636 in 1998,
compared to $11,922,526 in 1997. The increase was primarily the result of higher
average occupancy and an increase in rental income due to higher average monthly
rents. (See table on previous page.)
As described in the Statements of Income, the Partnership's operating
expenses increased $707,033, or 16.3%, to $5,054,906 in 1998, compared to
$4,347,873 in 1997. The increase is due primarily to increases in marketing
expenses, repairs and maintenance to the Properties, and wages. The
Partnership's administrative expenses also increased $234,784, or 23.5%, to
$1,233,734 in 1998, compared to $998,950 in 1997. The increase in administrative
expenses is due to costs associated with the proxy completed in 1998.
Also reported in the Statements of Income is a gain of $250,998 on the
extinguishment of debt, which includes the gain on the liquidation of the Class
R Certificate, less loan prepayment penalties and the write-off of unamortized
financing costs related to the original 1993 financing.
As a result of the foregoing factors, net income increased slightly from
$1,167,256 in 1997 to $1,182,441 in 1998.
Year 2000 Costs
The Partnership's significant business relations with external parties,
including its banking and vendor relations, along with its information systems
were fully "Year 2000" compliant and therefore, there were no adverse effects
related to "Year 2000".
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK
The Partnership is exposed to interest rate risk primarily through its
borrowing activities. There is inherent roll over risk for borrowings as they
mature and are renewed at current market rates. The extent of this risk is not
quantifiable or predictable because of the variability of future interest rates
and the Partnership's future financing requirements.
Note Payable: At December 31, 1999 the Partnership had a note payable
outstanding in the amount of $29,572,116. Interest on this note is at a fixed
rate of 6.37% through March 2009.
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The Partnership does not enter into financial instruments transactions
for trading or other speculative purposes or to manage its interest rate
exposure.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Partnership's financial statements for the fiscal year ended
December 31, 1999, 1998 and 1997, 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.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Partnership, as an entity, does not have any officers or directors.
The General Partner, Genesis Associates Limited Partnership, is a Michigan
limited partnership which has two general partners, Uniprop, Inc., the managing
General Partner, and Paul M. Zlotoff.
Information concerning Mr. Zlotoff's age and principal occupations, as
well as for other officers of Uniprop, Inc., during the last five
years or more is as follows:
Paul M. Zlotoff, 50, is and has been an individual general partner of
Genesis Associates since its inception in November 1986. Mr. Zlotoff became the
Chairman of Uniprop, Inc. in May 1986 and was its President from 1979 through
1997. 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.
Charles Soberman, 50, joined Uniprop, Inc. in June 1999 as its Chief
Executive Officer and Executive Vice President. Mr. Soberman's responsibilities
include supervision of property operations and corporate oversight. Mr. Soberman
has a law degree from The Harvard Law School and a M.B.A. from Michigan State
University. Mr. Soberman also has a B.A. from the University of Michigan. From
1979 through 1996, he was president of Mercury Paint Company, a manufacturer and
retailer of coatings and allied products. From 1996 to 1999 Mr. Soberman was a
Senior Lecturer at Wayne State University School of Business Administration.
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Gloria Koster, 46, became Chief Financial Officer of Uniprop, Inc. on
January 1, 1998. Previously, Ms. Koster had been Vice President - Finance of
Uniprop, Inc. since July 1989. She is responsible for accounting, financial
controls, data processing, cash 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. Ms. Koster has a M.B.A. from the University of Detroit.
Roger Zlotoff, 38, became Chief Investment Officer of Uniprop, Inc. on
October 18, 1999. Mr. Zlotoff is primarily responsible for raising equity
capital, managing partnership investments, evaluating acquisitions of existing
properties and leading the development process for new properties. From 1997 to
1999, Mr. Zlotoff served as Director of Business Development for Vistana, Inc.
in Orlando, FL. Previously, Mr. Zlotoff was Managing Director for Sterling
Finance International from 1994 to 1997 and was a corporate banker with First
Union National Bank from 1988 to 1994. Mr. Zlotoff received his B.A. from the
University of Central Florida as a philosophy major, and received his Masters
Degree in International Business from the University of South Carolina.
Paul M. Zlotoff and Roger Zlotoff are brothers.
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. To the
knowledge of the Partnership, 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
-15-
<PAGE> 16
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 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 value. 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 $3,240,000 less than the 10%
cumulative preferred return due Unit Holders. Any such amounts of incentive
management interest 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 1999, approximately $500,000 was
accumulated for the General Partner, and the General Partner's aggregate
accumulated incentive management interest as of December 1999 was approximately
$7,100,000. 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 of incentive management interest could be
made to the General Partner until the 10% cumulative preferred return of
approximately
-16-
<PAGE> 17
$18,864,000, as of December 31, 1999, is first distributed to the Unit Holders.
In February of 1994, as part of the 1993 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.
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, 1999. 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
$631,175: Ardmor Village, $63,248; Camelot Manor, $58,604; Country Roads,
$43,724; Dutch Hills, $49,454; El Adobe, $87,309; Paradise Village, $77,699;
Stonegate Manor, $57,232; Sunshine Village, $79,509; and West Valley, $114,396.
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 $208,593 during 1999 to perform local property management, data
processing and investor relation services for the Partnership. It is anticipated
comparable amounts will be paid in the next fiscal year.
-17-
<PAGE> 18
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Financial Statements
(1) The following financial statements and related documents are
filed with this report:
(i) Report of Independent Certified Public Accountants
(ii) Balance Sheets as of December 31, 1999 and 1998
(iii) Statements of Income for the fiscal years ended
December 31, 1999, 1998 and 1997
(iv) Statements of Partners' Equity for the fiscal years ended
December 31, 1999, 1998 and 1997
(v) Statements of Cash Flows for the fiscal years ended
December 31, 1999, 1998 and 1997
(2) The following financial statement schedule is file with this
report:
Schedule III - Real Estate and Accumulated Depreciation
for the fiscal years ended December 31,
1999, 1998 and 1997
(3) 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.
-18-
<PAGE> 19
10(b) Form of Consulting Agreement among the Partnership, the
General Partner and Consultant
(b) Reports on Form 8-K
The Partnership did not file any Forms 8-K during the fourth
quarter of 1999.
The following exhibits are incorporated by reference to the Form 10-K
for the fiscal year ended December 31, 1997:
4(b) Form of Beneficial Assignment Certificate (BAC) for the
Partnership (Originally submitted with Form 10-K for the
fiscal year ended December 31, 1987.)
10(c) Contingent Purchase Price Agreement with Sunrise Broward
Associates, Ltd. (As last submitted with Form 10-K for the
fiscal year ended December 31, 1997.)
10(d) Contingent Purchase Price Agreement with Ardmor Associates
Limited Partnership. (As last submitted with Form 10-K for the
fiscal year ended December 31, 1997.)
10(e) Incentive Acquisition Fee Agreement between the Partnership
and Uniprop, Inc.(As last submitted with Form 10-K for the
fiscal year ended December 31, 1997.)
The following exhibit is incorporated by reference to the Form 8-K that
was filed on September 8, 1998:
2 Mortgage notes, made as of August 20, 1998, between Uniprop
Manufactured Housing Communities Income Fund II and GMACCM.
The following exhibits are attached to this Report:
10(f) First Amended and Restated Consulting Agreement among the
Partnership, the General Partner and the Consultant.
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, 2000
-19-
<PAGE> 20
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
BY: Uniprop, Inc., Managing General Partner
By: /s/ Paul M. Zlotoff
-------------------------
Paul M. Zlotoff, Chairman
Dated: March 30, 2000
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 A. Koster By: /s/ Paul M. Zlotoff
-------------------------------- --------------------------------
Gloria A. Koster Paul M. Zlotoff, Chairman and
Director of Uniprop, Inc.
(Chief Financial Officer of (Principal Executive Officer)
Uniprop, Inc.)
Dated: March 30, 2000 Dated: March 30, 2000
By: /s/ Susann Szepytowski
--------------------------------
Susann Szepytowski
(Controller of Uniprop, Inc.)
Dated: March 30, 2000
</TABLE>
-20-
<PAGE> 21
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION METHOD OF FILING PAGE
- ------ ----------- ---------------- ----
<S> <C> <C> <C>
2 Mortgage Notes, made on August 20, Incorporated by reference to the Form
1998 between Uniprop Income Fund II 8-K filed on September 8, 1998.
and GMACCM
3(a)
Incorporated by reference to the S-11
Certificate of Limited Partnership Registration Statement of the
for the Partnership 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 of Incorporated by reference to the
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 fiscal year ended December 31, 1997.
Partnership (originally filed with
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 among Incorporated by reference to the
the Partnership, the General Registration Statement.
Partner and Consultant
</TABLE>
-21-
<PAGE> 22
<TABLE>
<S> <C> <C>
10(c) Contingent Purchase Price Agreement Incorporated by reference to Form 10-K
with Sunrise Broward Associates, for fiscal year ended December 31, 1997.
Ltd. (originally filed with Form
10-K for the fiscal year ended
December 31, 1987)
10(d) Contingent Purchase Price Agreement Incorporated by reference to Form 10-K
with Ardmor Associates Limited for fiscal year ended December 31, 1997.
Partnership (originally filed with
Form 10-K for the fiscal year ended
December 31, 1987)
10(e) Incentive Acquisition Fee Agreement Incorporated by reference to Form 10-K
between the Partnership and for fiscal year ended December 31, 1997.
Uniprop, Inc. (originally filed
with Form 10-K for the fiscal year
ended December 31, 1987)
10(f) First Amended and Restated Filed herwith.
Consulting Agreement among the
Partnership, the General Partner
and the Consultant.
27 Financial Data Schedule Filed herewith.
28 Letter summary of the estimated Filed herewith.
fair market values of the
Partnership's nine manufactured
housing communities, as of March 1,
2000.
</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,
1999 and 1998, and the related statements of income, partners' equity and cash
flows for each of the three years in the period ended December 31, 1999. 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, 1999 and 1998 and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1999 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
February 4, 2000
<PAGE> 24
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, 1999 1998
===========================================================================================
<S> <C> <C>
ASSETS
PROPERTY AND EQUIPMENT (Note 2)
Buildings and improvements $49,776,786 $49,421,935
Land 11,644,103 11,644,103
Manufactured homes and improvements 1,875,567 2,100,666
Furniture and equipment 453,437 400,872
- -------------------------------------------------------------------------------------------
63,749,893 63,567,576
Less accumulated depreciation 20,587,823 18,819,413
- -------------------------------------------------------------------------------------------
NET PROPERTY AND EQUIPMENT 43,162,070 44,748,163
Cash 2,821,681 2,482,314
Unamortized financing costs (Note 2) 597,528 622,800
Other assets (Note 3) 944,378 981,346
- -------------------------------------------------------------------------------------------
$47,525,657 $48,834,623
===========================================================================================
LIABILITIES AND PARTNERS' EQUITY
Notes payable (Note 2) $29,572,116 $29,915,975
Accounts payable 235,098 322,340
Other liabilities (Note 4) 769,853 876,996
- -------------------------------------------------------------------------------------------
TOTAL LIABILITIES 30,577,067 31,115,311
- -------------------------------------------------------------------------------------------
PARTNERS' EQUITY
Unit holders 16,690,170 17,477,300
General partner 258,420 242,012
- -------------------------------------------------------------------------------------------
TOTAL PARTNERS' EQUITY 16,948,590 17,719,312
- -------------------------------------------------------------------------------------------
$47,525,657 $48,834,623
===========================================================================================
</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, 1999 1998 1997
=======================================================================================================================
<S> <C> <C> <C>
INCOME
Rental $12,091,007 $11,737,284 $11,340,654
Interest 76,964 183,803 203,570
Other 550,039 498,549 378,302
- ------------------------------------------------------------------------------------------------------------------------
12,718,010 12,419,636 11,922,526
- ------------------------------------------------------------------------------------------------------------------------
OPERATING EXPENSES
Property operations 5,170,508 5,054,906 4,347,873
Depreciation and amortization 1,843,213 1,847,177 1,850,779
Administrative (Note 5) 1,134,947 1,233,734 998,950
Property taxes 992,873 926,797 896,103
Interest 1,935,712 2,425,579 2,661,565
- -----------------------------------------------------------------------------------------------------------------------
11,077,253 11,488,193 10,755,270
- -----------------------------------------------------------------------------------------------------------------------
INCOME BEFORE EXTRAORDINARY ITEM 1,640,757 931,443 1,167,256
EXTRAORDINARY ITEM - GAIN ON EXTINGUISHMENT
OF DEBT (Note 2) -- 250,998 --
- ------------------------------------------------------------------------------------------------------------------------
NET INCOME $ 1,640,757 $ 1,182,441 $ 1,167,256
=======================================================================================================================
INCOME PER LIMITED PARTNERSHIP UNIT (Note 7)
Income before extraordinary item $ .50 $ .28 $ .35
Extraordinary item -- .08 --
- -----------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS PER LIMITED PARTNERSHIP UNIT (Note 7) .73 1.43 .64
=======================================================================================================================
NUMBER OF LIMITED PARTNERSHIP UNITS OUTSTANDING 3,303,387 3,303,387 3,303,387
=======================================================================================================================
NET INCOME ALLOCABLE TO GENERAL PARTNER (Note 7)
Income before extraordinary item $ 16,408 $ 9,314 $ 11,673
Extraordinary item -- 2,510 --
- -----------------------------------------------------------------------------------------------------------------------
16,408 11,824 11,673
=======================================================================================================================
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, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
General
Partner Unit Holders TOTAL
================================================================================================================
<S> <C> <C> <C>
BALANCE, January 1, 1997 $ 218,515 $ 21,989,103 $ 22,207,618
Distributions to unit holders -- (2,114,171) (2,114,171)
Net income for the year 11,673 1,155,583 1,167,256
- -----------------------------------------------------------------------------------------------------------------
BALANCE, December 31, 1997 230,188 21,030,515 21,260,703
Distributions to unit holders -- (4,723,832) (4,723,832)
Net income for the year 11,824 1,170,617 1,182,441
- -----------------------------------------------------------------------------------------------------------------
BALANCE, December 31, 1998 242,012 17,477,300 17,719,312
Distributions to unit holders -- (2,411,479) (2,411,479)
Net income for the year 16,408 1,624,349 1,640,757
- -----------------------------------------------------------------------------------------------------------------
BALANCE, December 31, 1999 $ 258,420 $ 16,690,170 $ 16,948,590
=================================================================================================================
</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, 1999 1998 1997
=================================================================================================================
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,640,757 $ 1,182,441 $ 1,167,256
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation 1,817,941 1,817,628 1,792,127
Amortization 25,272 29,549 58,652
Gain on sale of property and equipment (70,903) (188,583) (18,850)
Extraordinary item - gain on extinguishment of debt -- (250,998) --
Decrease (increase) in other assets 36,968 (365,610) (178,077)
(Decrease) increase in accounts payable (87,242) 196,277 (29,826)
(Decrease) increase in other liabilities (107,143) (343,476) 26,085
- -----------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 3,255,650 2,077,228 2,817,367
- -----------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (994,655) (1,422,431) (982,115)
Proceeds from sale of property and equipment 833,710 1,183,069 822,721
Proceeds from redemption of investment -- 2,418,891 --
Proceeds from redemption of mortgage backed securities -- 1,502,250 --
Proceeds from sale of marketable securities -- 875,859 450,000
Purchase of marketable securities -- -- (507,677)
- -----------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (160,945) 4,557,638 (217,071)
- -----------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions to unit holders (2,411,479) (4,723,832) (2,114,171)
Repayments of notes payable (343,859) (30,129,025) --
Payment for financing costs -- (930,247) --
Proceeds from note payable -- 30,000,000 --
- -----------------------------------------------------------------------------------------------------------------
NET CASH USED IN FINANCING ACTIVITIES (2,755,338) (5,783,104) (2,114,171)
- -----------------------------------------------------------------------------------------------------------------
NET INCREASE IN CASH 339,367 851,762 486,125
CASH, at beginning of year 2,482,314 1,630,552 1,144,427
- -----------------------------------------------------------------------------------------------------------------
CASH, at end of year $ 2,821,681 $ 2,482,314 $ 1,630,552
=================================================================================================================
</TABLE>
See accompanying notes to financial statements.
<PAGE> 28
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF ACCOUNTING ORGANIZATION AND BUSINESS
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
The preparation of financial statements in
conformity with generally accepted accounting
principles requires management to make estimates
and assumptions that affect the reported amounts of
(1) 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.
FAIR VALUES OF FINANCIAL INSTRUMENTS
The carrying amounts of cash and notes payable
approximate their fair values.
<PAGE> 29
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost.
Depreciation is provided using the straight-line
method over the following estimated useful lives:
Buildings and improvements 30 years
Manufactured homes and improvements 30 years
Furniture and equipment 3-10 years
Accumulated depreciation for tax purposes was
$18,414,221 and $16,805,437 as of December 31, 1999
and 1998, respectively.
Long-lived assets such as property and equipment
are evaluated for impairment when events or changes
in circumstances indicate that the carrying amount
of the assets may not be recoverable through the
estimated undiscounted future cash flows from the
use of these assets. When any such impairment
exists, the related assets will be written down to
fair value. No impairment loss recognition has been
required through December 31, 1999.
MORTGAGE-BACKED SECURITIES
In connection with the Partnership's 1993 financing
transaction (see Note 2), the Partnership was
required to use approximately 5% of its mortgage
proceeds to purchase a subordinated portion of the
mortgage-backed securities ("Class D
Certificates"). These Class D Certificates were not
rated, carried a fixed interest rate of 7.5% per
annum and were 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, which
represented cost.
In 1998, as part of the refinancing of its note
payable (see Note 2), the Partnership redeemed the
Class D Certificate at cost.
<PAGE> 30
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
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 note
payable.
INVESTMENT
In 1998, as part of the refinancing of its note
payable (see Note 2), the Partnership redeemed the
Class R Certificates. As a result, the Partnership
recognized a gain of $1,419,896 on the redemption
of the certificates, which has been included in the
calculation of the extraordinary gain on the
extinguishment of debt (see Note 2).
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.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards
Board issued Statement of Financial Accounting
Standards (SFAS) No. 133 "Accounting for Derivative
Instruments and Hedging Activities." This
statement, which was subsequently amended by SFAS
No. 137, will become effective in fiscal 2001, and
is not expected to have an impact on the
Partnership's financial statements.
<PAGE> 31
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
2. NOTES PAYABLE In 1998, the Partnership refinanced its outstanding
long-term debt by entering into a new note
agreement totaling $30,000,000. These borrowings
are secured by mortgages on the Partnership's
properties. The note is payable in monthly
installments of $188,878, including interest at
6.37%, through March, 2009. Thereafter, the monthly
installment and interest rate will be adjusted
based on the provisions of the agreement through
the note maturity date of September 2028. The
outstanding balance on the note payable at December
31, 1999 and 1998 was $29,572,116 and $29,915,975,
respectively.
In connection with the refinancing, the Partnership
recorded a gain in 1998 on the extinguishment of
debt of $250,998, which includes the gain on the
redemption of the Class R Certificates
($1,419,896), less loan prepayment penalties
($300,450) and the write-off of unamortized
financing costs related to the original 1993
financing ($868,448).
Future maturities on the note payable for the next
five years are as follows: 2000 - $362,000; 2001 -
$392,000; 2002 - $418,000; 2003 - $445,000; and
2004 - $470,000.
3. OTHER ASSETS At December 31, 1999 and 1998, "Other Assets"
included cash of approximately $319,000 and
$425,000 in an escrow account for property taxes,
insurance, and capital improvements, as required by
the Partnership's note payable agreement. The
account is restricted from operating use.
At December 31, 1999 and 1998, "Other assets" also
included cash of approximately $216,000, in a
security deposit escrow account for three 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.
<PAGE> 32
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
4. OTHER LIABILITIES Other liabilities consisted of:
<TABLE>
<CAPTION>
December 31, 1999 1998
===========================================================
<S> <C> <C>
Tenants' security deposits $ 548,434 $ 509,707
Accrued interest 125,049 124,050
Accrued property taxes - 106,481
Other 96,370 136,758
-----------------------------------------------------------
TOTAL $ 769,853 $ 876,996
===========================================================
</TABLE>
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.
FEES AND EXPENSES
During the years ended December 31, 1999, 1998 and
1997, the affiliate earned property management fees
of $631,175, $611,741 and $585,394, respectively,
as permitted in the Agreement of Limited
Partnership. These fees are included with
"Administrative" expenses in the respective
statements of income. The Partnership owed $13,231
to the affiliate at December 31, 1999, and owed
$335 to the affiliate at December 31, 1998.
Certain employees of the Partnership are also
employees of affiliates of the general partner.
These employees were paid by the Partnership
$208,593, $222,949 and $177,046 in 1999, 1998 and
1997, respectively, to perform local property
management and investor relations services for the
Partnership.
<PAGE> 33
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
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
that will not exceed $2,054,000. Additional amounts
to be paid, 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.
FINANCING COSTS
In 1998, as part of the financing transaction
described in Note 2, the Partnership paid
approximately $300,000 in financing costs to an
affiliate of the general partner.
6. RECONCILIATION OF
FINANCIAL STATEMENT
INCOME AND TAXABLE
INCOME
<TABLE>
<CAPTION>
Year Ended December 31, 1999 1998 1997
=============================================================================
<S> <C> <C> <C>
Income per the financial
statements $ 1,640,757 $ 1,182,441 $ 1,167,256
Adjustments to depreciation
for difference in methods 158,545 168,071 175,340
Adjustments for prepaid
rent, meals and
entertainment (7,920) 3,448 (3,100)
Adjustment for LLC income - (1,106,973) 576,904
-----------------------------------------------------------------------------
INCOME PER THE PARTNER-
SHIP'S TAX RETURN $ 1,791,382 $ 246,987 $ 1,916,400
=============================================================================
</TABLE>
<PAGE> 34
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
7. PARTNERS' CAPITAL Subject to the orders of priority under certain
specified conditions more fully 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 in the form of an incentive
management interest 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 $3,240,000 and $928,000 in 1999 and
1998, respectively. No distributions can be made to
the general partner until the cumulative preferred
return deficit of approximately $18,864,000 has
been distributed to the unit holders.
At December 31, 1999, the general partner's
cumulative incentive management interest to be
distributed was approximately $7.1 million. The
actual amount to be accumulated or paid in the
future depends on the results of the Partnership's
operations and is not currently determinable;
however, no such distribution to the general
partner is anticipated during fiscal 2000.
<PAGE> 35
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
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. CONTINGENCY The Partnership is currently undergoing a sales and
use tax audit which is being conducted by the
Florida Department of Revenue. No provision for any
expense related to this ongoing audit has been
recorded in the accompanying financial statements
since management believes the eventual liability
(if any) that may result will not be a material
amount.
9. SUPPLEMENTAL CASH FLOW Interest paid during 1999, 1998 and 1997 was
INFORMATION approximately $1,935,000, $2,531,000 and
$2,654,000, respectively.
<PAGE> 36
UNIPROP MANUFACTURED
HOUSING COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
- ----------------------- ----------- -------------------------- -------------------------- -----------------------------------
Costs
Capitalized
Subsequent to Gross Amount at Which Carried
Initial Cost Acquisition at Close of Period
-------------------------- -------------------------- -----------------------------------
Buildings and Buildings and Buildings and
Description Encumbrance Land Improvements Land Improvements Land Improvements Total
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ardmor Village
(Lakeville, MN) ...... $2,868,425 $1,063,253 $ 4,253,011 $ -- $ 932,695 $ 1,063,253 $ 5,185,706 $ 6,248,959
Sunshine Village
(Davie, FL) .......... 4,229,436 1,215,862 4,875,878 -- 168,960 1,215,862 5,044,838 6,260,700
Camelot Manor
(Grand Rapids, MI) ... 3,415,495 918,949 3,681,051 -- 619,687 918,949 4,300,738 5,219,687
Country Roads
(Jacksonville, FL) ... -- 636,550 2,546,200 38,106 559,300 674,656 3,105,500 3,780,156
Paradise Village
(Tampa, FL) .......... -- 1,760,000 7,040,000 279,053 1,139,954 2,039,053 8,179,954 10,219,007
Dutch Hills
(Haslett, MI) ........ 2,543,140 839,693 3,358,771 23,104 458,816 862,797 3,817,587 4,680,384
Stonegate Manor
(Lansing, MI) ........ 2,971,924 930,307 3,721,229 40,552 337,604 970,859 4,058,833 5,029,692
El Adobe
(Las Vegas, NV) ...... 5,450,993 1,480,000 5,920,000 39,964 366,492 1,519,964 6,286,492 7,806,456
West Valley
(Las Vegas NV) ....... 8,092,703 2,289,700 9,158,800 89,010 638,338 2,378,710 9,797,138 12,175,848
---------- ----------- ----------- --------- ----------- ------------ ----------- -----------
$29,572,116 $11,134,314 $44,554,940 $509,789 $5,221,846 $ 11,644,103 $49,776,786 $61,420,889
=========== =========== =========== ======== ========== ============ =========== ===========
<CAPTION>
Column A Column F Column G Column H
- ------------------------ ----------- -------- --------------
Life on Which
Depreciation in
Latest Income
Accumulated Date Statement is
Description Depreciation Acquired Computed
- ------------------------------------------------------------------
Ardmor Village
<S> <C> <C> <C>
(Lakeville, MN) ...... $ 2,010,007 1987 30 years
Sunshine Village
(Davie, FL) .......... 2,144,133 1987 30 years
Camelot Manor
(Grand Rapids, MI) ... 1,734,778 1987 30 years
Country Roads
(Jacksonville, FL) ... 1,249,232 1987 30 years
Paradise Village
(Tampa, FL) .......... 3,194,330 1987 30 years
Dutch Hills
(Haslett, MI) ........ 1,505,621 1987 30 years
Stonegate Manor
(Lansing, MI) ........ 1,624,045 1987 30 years
El Adobe
(Las Vegas, NV) ...... 2,499,333 1988 30 years
West Valley
(Las Vegas NV) ....... 3,851,988 1988 30 years
----------- ---- --------
$19,813,467
=========== ==== ========
</TABLE>
<PAGE> 37
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
NOTE TO SCHEDULE III
DECEMBER 31, 1999
1. RECONCILIATION OF LAND The following table reconciles the
land from January 1, 1997 to
December 31, 1999:
<TABLE>
<CAPTION>
1999 1998 1997
------------------------------ ----------------- ---------------- ----------------
<S> <C> <C> <C> <C>
BALANCE, at January 1 $ 11,644,103 $ 11,644,103 $ 11,644,603
Additions to land, net - - (500)
------------------------------ ----------------- ---------------- ----------------
BALANCE, at December 31 $ 11,644,103 $ 11,644,103 $ 11,644,103
------------------------------ ----------------- ---------------- ----------------
</TABLE>
2. RECONCILIATION OF BUILDINGS The following table reconciles the
AND IMPROVEMENTS buildings and improvements from
January 1, 1997 to December 31,
1999:
<TABLE>
<CAPTION>
1999 1998 1997
------------------------------ ----------------- ---------------- ----------------
<S> <C> <C> <C> <C>
BALANCE, at January 1 $ 49,421,935 $ 49,099,290 $ 48,558,632
Additions to buildings and
improvements 354,851 322,645 540,658
------------------------------ ----------------- ---------------- ----------------
BALANCE, at December 31 $ 49,776,786 $ 49,421,935 $ 49,099,290
------------------------------ ----------------- ---------------- ----------------
</TABLE>
3. RECONCILIATION OF The following table reconciles the
ACCUMULATED DEPRECIATION accumulated depreciation from
January 1, 1997 to December 31,
1999:
<TABLE>
<CAPTION>
1999 1998 1997
------------------------------ ----------------- ---------------- ----------------
<S> <C> <C> <C> <C>
BALANCE, at January 1 $ 18,101,874 $ 16,399,511 $ 14,735,004
Current year
depreciation expense 1,711,593 1,702,363 1,664,507
------------------------------ ----------------- ---------------- ----------------
BALANCE, at December 31 $ 19,813,467 $ 18,101,874 $ 16,399,511
------------------------------ ----------------- ---------------- ----------------
</TABLE>
4. TAX BASIS OF BUILDINGS AND The aggregate cost of buildings and
IMPROVEMENTS improvements for federal income tax
purposes is equal to the cost basis
used for financial statements
purposes.
<PAGE> 1
EXHIBIT 10(F)
FIRST AMENDED AND RESTATED CONSULTING AGREEMENT
This FIRST AMENDED AND RESTATED CONSULTING AGREEMENT, dated as of
January 9, 1998, among UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II,
a Michigan limited partnership (the "Partnership"), GENESIS ASSOCIATES, a
Michigan limited partnership and the general partner of the Partnership (the
"General Partner") and MANUFACTURED HOUSING SERVICES INC. (the "Consultant").
W I T N E S S E T H:
WHEREAS, pursuant to the Section 12i of the Agreement of Limited
Partnership (as amended by the First Amendment to Uniprop Manufactured Housing
Communities Income Fund II Agreement of Limited Partnership dated May 16, 1985,
executed as of March 4, 1986, and by the First Amendment to Agreement of Limited
Partnership dated as of September 15, 1993, the "Partnership Agreement"), the
General Partner has no authority to take any action without the prior consent of
the Consultant, to the extent that such consent is required by this Agreement,
without the prior approval of a majority in interest of the Limited Partners of
the Partnership;
WHEREAS, the Partnership, the General Partner and the Consultant
entered into a Consulting Agreement as of February 10, 1986 in order to set
forth the types of transactions as to which the General Partner is required to
consult with the Consultant and the terms and conditions on which the Consultant
will provide such consulting services; and
WHEREAS, the Partnership, the General Partner and the Consultant now
desire to enter into this First Amended and Restated Consulting Agreement (the
"Agreement") to modify upon the services to be provided by the Consultant and to
provide for a fee to be paid to the Consultant;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the parties hereto agree as follows:
1. Transactions Covered. The Partnership and the General Partner agree
that in the following transactions and matters the General Partner (i) shall
consult with the Consultant and obtain its written recommendation, and (ii)
shall not take action on such transactions or matters on behalf of the
Partnership contrary to any recommendation of the Consultant without the prior
approval of a majority in interest of the Limited Partners.
(a) Financing. In connection with the Financing or
refinancing of any Property owned by the Partnership,
the General Partner shall obtain the written
affirmative recommendation of the Consultant prior to
(i) incurring any indebtedness or (ii) pledging
directly or indirectly any property of the
Partnership as security for the payment of any
obligation.
<PAGE> 2
(b) Acquisitions and Sales. In connection with the sale
of any Property owned by the Partnership, the General
Partner shall obtain the written affirmative
recommendation of the Consultant prior to entering
into such transaction on behalf of the Partnership.
(c) Joint Ventures. In connection with the investment or
disposition of any interest in a joint venture by the
Partnership, the General Partner shall obtain the
written affirmative recommendation of the Consultant
prior to making any such investment or disposition.
(d) Other Capital Transactions. In connection with the
entering into by the Partnership of any Capital
Transaction other than as described in Sections 2(a)
or (b), the General Partner shall obtain the written
affirmative recommendation of the Consultant prior to
entering into any Capital Transaction on behalf of
the Partnership.
(e) Appraisals. In connection with annual appraisals of
Properties, the General Partner shall obtain the
written affirmative recommendation of the Consultant
prior to selecting any real estate appraiser other
than Cushman & Wakefield, Inc. to perform the annual
appraisal of the Properties, and the General Partner
shall select only national real estate appraisers
comparable in reputation to Cushman & Wakefield, Inc.
The Consultant has the right at any time to recommend
to the General Partner and the Partnership (i) the
removal or change of real estate appraiser, (ii) the
selection of an appraiser of the net asset value of
the Units independent of the General Partner
(including an Affiliate of the Consultant) and (iii)
any other matter related to such real estate
appraisals, provided that the compliance by the
Partnership with such recommendation will not prevent
the Partnership from complying with the requirements
of ERISA.
(f) Property Management. In connection with Property
management arrangements, the General Partner shall
obtain the written affirmative recommendation of the
Consultant prior to taking any action authorizing any
party other than Uniprop, Inc. to provide management
services with respect to any of the Properties and
prior to authorizing any arrangement with any
Property manager, including Uniprop, Inc., with
respect to fees payable for such management services.
The Consultant has the right at any time to recommend
the removal or change of any Property manager,
including Uniprop, Inc., for reasonable cause. Upon
such recommendation by the Consultant, the General
Partner has 120 days to decide to either remove or
change the Property manager or seek arbitration as
provided herein to determine whether "reasonable
cause" exists. If the General Partner initiates an
arbitration proceeding, no removal or change of the
Property manager will be required until a final
decision has been issued in the arbitration
proceeding.
-2-
<PAGE> 3
(g) Agreements. The entering into by the Partnership of
any other agreement. In this connection, the General
Partner shall furnish to the Consultant, prior to
entering into, a copy of every written agreement and
a summary of every oral agreement to be entered into
by or on behalf of the Partnership or the General
Partner (in its capacity as such) involving (i) the
furnishing of property or services to the Partnership
by any person other than the General Partner if such
agreement provides for payment by the Partnership
equal to or in excess of $50,000 in any year, or (ii)
the furnishing of property or services to the
Partnership by the General Partner or an Affiliate of
the General Partner if such agreement provides for
payment by the Partnership in excess of $25,000 in
any year and in the case of each of clauses (i) or
(ii) shall obtain the written affirmative
recommendation of the Consultant prior to entering
into any such agreement relating to the Partnership's
business. The Consultant has the right at any time to
recommend the amendment or termination of any such
agreement in accordance with its terms.
(h) Reserves. In connection with the establishment of
Reserves, the General Partner shall obtain the
written affirmative recommendation of the Consultant
prior to creating any Reserves and prior to changing
the level of Reserves that the Partnership shall
maintain.
(i) Distribution Computations. In connection with
distribution of funds to the Unit Holders and
Partners, the General Partner shall obtain the
written affirmative approval of the Consultant (or
failing written approval, no response from the
Consultant within five days after receipt of the
written proposal described in Section 4 hereof) as to
computation of the amount of any proposed
distribution prior to making any distribution of
Partnership funds to the Partners and prior to
authorizing any such distribution.
(j) Amendments. In connection with amendment of the
Partnership Agreement, the General Partner shall
obtain the written affirmative recommendation of the
Consultant prior to effecting any amendment to the
Partnership Agreement or submitting any proposed
amendment for approval by Unit Holders and the
Limited Partners.
(k) Reporting. In connection with reports to Partners,
the General Partner shall furnish for review and
approval to the Consultant all information furnished
to the Unit Holders and Limited Partners generally,
in reasonably final draft form, at least five days
prior to distribution during the period until all
Offering Proceeds available for investment are
invested in Specified and Unspecified Properties (or
failing written approval, no response from the
Consultant within five days after receipt of the
written proposal described in Section 4 hereof), and
the Consultant has the right at any time to recommend
to the General Partner the furnishing of any
information to the Limited Partners. The General
Partner shall cooperate
-3-
<PAGE> 4
with the Consultant, including making available for
review such books and records of the Partnership as
the Consultant deems, from time to time, necessary.
The Consultant also has the right at any time to make
recommendations regarding reports furnished to
Limited Partners, including with respect to parties
preparing such report, the information contained in
such reports and the timing of such reports.
(l) Investor Services. In connection with Partnership
administration and investor servicing, the Consultant
shall review, with the cooperation of the General
Partner, the performance of any Person performing
Partnership administrative and investor servicing
tasks, and for reasonable cause may recommend the
replacement of such Person. Upon such recommendation
by the Consultant, the General Partner has 120 days
to decide to either replace such Person or seek
arbitration as provided herein to determine whether
"reasonable cause" exists. If the General Partner
initiates an arbitration proceeding, no replacement
of such Person will be required until a final
decision has been issued in the arbitration
proceeding.
(m) Professional Services. In connection with selection
of accountants, attorneys, investment bankers,
appraisers and other professionals other than in
connection with the organization of the Partnership
or the public offering of Units, the General Partner
shall obtain the written affirmative recommendation
of the Consultant prior to the selection of any
Person to perform accounting services for the
Partnership other than BDO Seidman, LLP. The
Consultant shall have the right at any time to review
and approve the fees (but only to the extent that
such fees would exceed $25,000 per annum to any one
Person or firm) and performance of such accountants,
attorneys, investment bankers, appraisers or other
professionals and to recommend to the General Partner
for reasonable cause to take effect automatically 60
days after written notice to the General Partners, if
the circumstances giving rise to such recommendation
shall not have been cured to the satisfaction of the
Consultant within such period. Within such period,
the General Partner has the right to seek arbitration
as provided herein to determine whether "reasonable
cause" exists, and if any such arbitration proceeding
is continuing, the General Partner shall have an
additional 60 days or until completion of the
arbitration, whichever comes earlier, the change or
removal of any accountants, attorneys, investment
bankers, appraisers or other professionals.
(n) Tax Election. In connection with various tax
elections required or permitted to be made by the
Partnership, including, without limitation, under
Section 754 of the Code, the General Partner shall
consult with the Consultant and obtain the
Consultant's written recommendation as to whether or
not to make such election.
-4-
<PAGE> 5
(o) Partnership Changes. In connection with the matters
referred to in Section 18e of the Partnership
Agreement, the General Partner shall obtain the
written affirmative recommendation of the Consultant
before taking any action in connection therewith. In
addition, the Consultant shall have the right to make
its own recommendations to the Partnership with
respect to such matters.
2. Consulting Services.
a. The General Partner shall submit from time to time in
writing to the Consultant each proposal to be
considered by the Consultant pursuant to the
provisions of Section 1 above, and shall notify the
Consultant of the date the Consultant's
recommendation shall be submitted, which date shall
not be less than fifteen business days after the
receipt of the General Partner's notice unless
otherwise agreed in writing by the Consultant. The
Consultant shall render its recommendation to the
Partnership by the date specified by the General
Partner; provided that the Consultant may submit its
recommendation to the Partnership up to thirty
calendar days after the date specified by the General
Partner if the Consultant submits a written request
for such an extension to the General Partner and the
General Partner receives that request on or before
the due date originally specified. If the General
Partner makes a material modification to the proposal
during the 15 business day period or during the 30
calendar day extension, if applicable, the Consultant
may submit its recommendation up to 15 calendar days
after the end of the 15 business day period or 30
calendar day extension, as applicable. The General
Partner shall concurrently or thereafter furnish to
the Consultant the following information:
(i) if the General Partner has submitted a
proposal for the Financing of a Property by
the Partnership, current operating
information concerning such Property
including the latest financial statements
for such Property, the proposed terms of
such Financing including whether any lender
will require as a condition to such
Financing that its consent be obtained prior
to any change in or removal of the General
Partner of the Partnership, and projections
showing the impact of the proposed Financing
on the anticipated results of operation of
the Property and allocations and
distributions of the Partnership;
(ii) if the General Partner has submitted a
proposal for the sale of a Property by the
Partnership, current operating information
concerning such Property including the
latest financial statements for such
Property and the proposed terms of sale
including whether
-5-
<PAGE> 6
the Partnership intends to accept
purchase-money obligations from the buyers
of such Property; and
(iii) with respect to every other transaction or
matter listed in Section 1 above, such
information as the Partnership possesses
that is directly or indirectly related to
the matter being considered by the
Consultant.
In addition, the General Partner shall furnish to the Consultant such
other information as is in its possession upon request with respect to any such
transaction or matter and shall endeavor to obtain such other information as the
Consultant shall reasonably request if it is not then in the possession of the
General Partner.
b. The Consultant shall review all proposals submitted
to it by the General Partner for the transactions and
matters listed in Section 1 above and shall provide
the General Partner and the Partnership with a
written recommendation with respect to each such
proposal. The Consultant's recommendation shall
address the proposal from the perspective of the
Partnership and its Limited Partners. The Consultant
shall submit its recommendation to the General
Partner on or before the date specified in Section
2(a).
c. If the Consultant makes a recommendation with respect
to any transaction or matter covered by Section 1 and
the General Partner determines to solicit the
approval of a majority in interest of the Limited
Partners of the Partnership in order that it may
nevertheless enter into such transaction or matter on
the Partnership's behalf or not comply with the
recommendation of the Consultant, the General Partner
shall, not less than 15 days before the first mailing
of materials soliciting the approval of any Limited
Partner, notify promptly the Consultant of such
determination by the General Partner. The Consultant
shall thereupon have the right to furnish to the
General Partner a written statement of the Consultant
in support of its recommendation within 10 days after
the notice of the General Partner referred to in the
preceding sentence. The General Partner shall include
in its soliciting material the statement of the
Consultant, and neither the General Partner nor the
Partnership shall be responsible for such statement.
If the General Partner intends to include in its
soliciting material any statement supporting the
approval by the Limited Partners, the General Partner
shall, not later than five days prior the earlier of
the date such soliciting materials are first filed
with the Securities and Exchange Commission or mailed
to the Limited Partners, furnish to the Consultant a
copy of the General Partner's statement supporting
approval by the Limited Partners.
-6-
<PAGE> 7
The Consultant's written recommendation shall be in a
form suitable for distribution to the Limited
Partners and for filing with the Securities and
Exchange Commission or state securities regulators as
part of a registration statement or proxy statement.
The Consultant agrees that it will revise or expand
upon such written recommendation if and to the extent
required by the Securities and Exchange Commission or
any other regulatory authority. The parties
acknowledge that the requirements of the paragraph do
not expand upon the scope of the recommendation
letter required to be rendered by the Consultant
pursuant to Section 2(b). In particular, the parties
acknowledge that if a formal fairness opinion were
required to be rendered in connection with a
particular proposal, the preparation and rendering of
such an opinion would be outside the scope of this
Agreement. The Partnership and the General Partner
would be free to contract with the Consultant or with
any other party, in their sole and absolute
discretion, to obtain such a formal fairness opinion.
3. Compensation. For its services hereunder, the Consultant will be
paid a fee of $18,000 annually, as adjusted beginning on January 1, 2000 in
accordance with the change in Consumer Price Index for all Urban Consumers (the
"CPI-U") as set forth in the fourth paragraph of this Section (the "Consultant's
Fee"). The Consultant's Fee shall be payable in four equal installments, in part
in advance and in part in arrears, on the forty-fifth day of each calendar
quarter. If this Agreement commences other than on the first day of a calendar
quarter the Consultant's Fee for the partial calendar quarter shall be pro rated
to reflect the actual number of days in the calendar quarter for which the
Consultant is to provide services and shall be paid on the forty-fifth day of
such calendar quarter or on the date of commencement of this Agreement, if
later.
If this Agreement terminates for cause pursuant to Section 5(a) hereof,
no further Consultant's Fee shall be payable pursuant to this Agreement. If the
for-cause termination occurs other than on the last day of a calendar quarter,
the Consultant's Fee shall be pro rated to reflect the actual number of days in
the calendar quarter for which this Agreement is in force, and within 10
business days following termination the Partnership shall pay the Consultant any
amount then owing or the Consultant shall refund to the Partnership any amount
overpaid with respect to that quarter, as the case may be.
If this Agreement terminates for any reason other than a for-cause
termination pursuant to Section 5(a) hereof, the Partnership shall continue to
pay the Consultant the Consultant's Fee through the period ending seven years
from the date of this Agreement.
Beginning January 1, 2000, the Consultant's fee shall be adjusted once
annually using the percentage change (computed on a time-weighted, annualized
basis) of the yearly CPI-U published by the United States Bureau of Labor
Statistics (the "BLS"), or if such index is not published annually, then the
CPI-U published for periods closest to annually. If the CPI-U is no longer
published by the BLS, the CPI-U shall mean that rate determined by the General
Partner
-7-
<PAGE> 8
as the closest approximation of the CPI-U. The calculation of the CPI-U shall
take 1999 as its base period.
In addition, the Consultant shall be reimbursed up to a maximum of
$11,250 in any year for all accountable out-of-pocket expenses incurred by it in
connection with the performance of consulting services hereunder, other than
expenses for any person retained by Consultant to perform an additional current
appraisal of a Property in connection with a transaction being reviewed by
Consultant. The Consultant shall not have recourse against the General Partner
in the event such fees and expenses are not paid by the Partnership. This
Section 3 shall survive termination of this Agreement.
4. Term. Unless sooner terminated under Section 5, this Agreement shall
continue until the first to occur of the following: the expiration of this
Agreement on January 8, 2005; the dissolution and liquidation of the Partnership
in accordance with the terms of the Partnership Agreement; or the expiration of
the term of the Partnership as provided therein. The term of this Agreement may
be extended by mutual agreement of all of the parties.
5. Termination for Cause. The Partnership or the General Partner may
terminate this Agreement at any time for cause upon delivery of written notice
to the Consultant. The Consultant may terminate this Agreement at any time for
cause upon delivery of written notice to the Partnership.
a. The Partnership or General Partner shall have cause
for termination:
(i) If the Consultant shall default in the
performance of its obligations pursuant to
Section 2(b) of this Agreement; or
(ii) If bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or
other proceedings for relief under any
bankruptcy law or similar law for the relief
of debtors, are instituted by or against the
Consultant, are allowed against the
Consultant or are consented to or are not
dismissed, stayed or otherwise nullified
within thirty days after such institution;
or
(iii) If Donald Petrow shall cease to be the sole
shareholder and President of the Consultant
unless the Partnership, in its sole and
absolute discretion, shall give written
consent for the transfer of Donald Petrow's
ownership interest in the Consultant; or
(iv) If any change in applicable law renders this
Agreement, in whole or material part,
illegal or unenforceable.
b. The Consultant shall have cause for termination:
-8-
<PAGE> 9
(i) If the Partnership or the General Partner
shall default in the performance of any
material covenant, agreement, term or
provision of this Agreement and such default
shall continue for a period of sixty days
after written notice to the Partnership from
the Consultant stating the specific default;
or
(ii) If bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or
other proceedings for relief under any
bankruptcy law or similar law for the relief
of debtors, are instituted by or against the
Partnership, and, if instituted against the
Partnership, are allowed against the
Partnership or are consented to or are not
dismissed, stayed or otherwise nullified
within thirty days after such institution;
or
(iii) If any change in applicable law renders this
Agreement, in whole or material part,
illegal or unenforceable.
c. Upon the expiration or termination of this Agreement,
no party shall have any further right hereunder or
any further obligation hereunder to the others,
except for the obligations, promises or covenants
contained herein which are expressly made to extend
beyond the term of this Agreement.
d. Any party having actual knowledge of an event
creating cause for termination of this Agreement
shall be deemed to have waived its right to terminate
with cause on the basis of that particular event
pursuant to this Section 5 if it has not exercised
its termination right within 30 calendar days after
actually knowing of the event.
6. Relationship of the Parties. It is expressly understood and agreed
by the parties that, in providing services under this Agreement, the Consultant
shall at all times act as an independent contractor, not as an employee or agent
of the Partnership, nor shall the Partnership be an employee or agent of the
Consultant. Further, it is expressly understood and agreed by the parties that
nothing contained in this Agreement shall be construed to create a joint
venture, partnership, association or other affiliation or like relationship
among the parties, or a relationship of landlord and tenant, it being
specifically agreed that their relationship is and shall remain that of
independent parties to a contractual relationship as set forth in this
Agreement. In no event shall either party be liable for the debts or obligations
of the other of them, except as otherwise specifically provided in this
Agreement.
7. Indemnification.
(a) The Partnership agrees to indemnify and hold harmless
the Consultant against any losses, claims, damages or
liabilities, joint or several, to which the
Consultant may become subject under this Agreement,
insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise
-9-
<PAGE> 10
out of or are based upon (i) any breach or alleged
breach of this Agreement by the Partnership or the
General Partner or (ii) any amendment to this
Agreement, unless such amendment specifically states
that this indemnification will not be available. The
Partnership will reimburse the Consultant for any
legal or other expenses reasonably incurred by the
Consultant in connection with investigating or
defending against any such loss, claim, damage,
liability or action; provided, however, that if the
Partnership has specifically agreed to pay any
settlement or judgment in respect of such action or
claim, has made all such reimbursements of such
expenses to such date and can reasonably demonstrate
the continuing financial ability to comply with the
terms of this Section 7(a), it shall not be required
to indemnify the Consultant for any payment made by
the Consultant to any claimant in settlement of any
suit or claim unless such payment is approved by the
Partnership (which approval shall not be unreasonably
withheld) or by a court having jurisdiction of the
controversy; and provided further that the
Partnership shall not be liable under this Section
7(a) for any losses, claims, damages or liabilities
arising out of any act or failure to act on the part
of any other person, but shall be liable only with
respect to the Partnership's own acts or failures to
act. This Section 7(a) shall remain in full force and
effect notwithstanding any investigation made by the
Consultant or on behalf of the Consultant, shall
survive termination of this Agreement, and shall be
in addition to any liability which the Partnership
may otherwise have.
(b) The Consultant agrees to indemnify and hold harmless
the Partnership and the General Partner, and any
person which controls either of them, against any
losses, claims, damages or liabilities, joint or
several, to which the Partnership or the General
Partner or such controlling person may become
subject, under this Agreement, insofar as such
losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any
breach or alleged breach of this Agreement by the
Consultant. The Consultant will reimburse the
Partnership and the General Partner for any legal or
other expenses reasonably incurred by them in
connection with investigating or defending against
any such loss, claim, damage, liability or action;
provided, however, that if the Consultant has
specifically agreed to pay any settlement or judgment
in respect of such action or claim, has made all such
reimbursements of such expenses to such date and can
reasonably demonstrate the continuing financial
ability to comply with the terms of this Section
7(b), the Consultant shall not be required to
indemnify the Partnership or the General Partner for
any payment made to any claimant in settlement of any
suit or claim unless such payment is approved by the
Consultant (which approval shall not be unreasonably
withheld), or by a court having jurisdiction of the
controversy; and provided further that the Consultant
shall not be liable under this Section 7(b) for any
losses, claims, damages or liabilities arising out of
any act or
-10-
<PAGE> 11
failure to act on the part of any other person, but
shall be liable only with respect to the Consultant's
own acts or failures to act. This indemnity shall
remain in full force and effect notwithstanding any
investigation made by or on behalf of the Partnership
or the General Partner, shall survive any termination
of this Agreement, and shall be in addition to any
liability which the Consultant may otherwise have.
(c) No indemnifying party shall be liable under the
indemnity provisions contained in Sections 7(a) and
7(b) unless the indemnified party shall have notified
such indemnifying party in writing promptly after the
first written notice or the summons or other first
legal process giving information of the nature of the
claim or of the commencement of the action shall have
been delivered to or served upon the indemnified
party (but failure to notify an indemnifying party of
any such claim shall not relieve it from any
liability otherwise than on account of its indemnity
rights contained in Sections 7(a) or 7(b) which it
may have to the indemnified party against whom action
is brought). In case any claim is made or any action
is brought against any indemnified party upon any
claim as to which such indemnified party claims
indemnity pursuant to Sections 7(a) or 7(b) or
otherwise, the indemnifying party shall be entitled
to participate at its own expense in the defense, or,
if it so elects, in accordance with arrangements
satisfactory to any other indemnifying party or
parties similarly notified, to assume the defense
thereof, with counsel who shall be satisfactory to
such indemnified party and any other indemnified
parties who are defendants in such action; and after
notice from the indemnifying party to such
indemnified party of its election so to assume the
defense thereof and the retaining of such counsel by
the indemnifying party, the indemnifying party shall
not be liable to such indemnified party under
Sections 7(a) or 7(b) or otherwise for any legal or
other expenses subsequently incurred by such
indemnified party in connection with the defense
thereof, other than the reasonable costs of
investigation. Notwithstanding the election of an
indemnifying party to assume the defense of any such
action, if (i) the indemnifying party shall not have
employed counsel to have charge of the defense of
such action or proceeding or (ii) such indemnified
party shall have reasonably concluded that there may
be defenses available to it which are different from
or additional to those available to the indemnifying
party (in which case the indemnifying party shall not
have the right to direct the defense of such action
or proceeding on behalf of the indemnified party),
then in either of such events the indemnifying party
shall bear all legal or other expenses incurred by
the indemnified party in connection with the defense
of such action.
-11-
<PAGE> 12
8. Waiver. The failure of a party to insist upon strict adherence to
any term of this Agreement on any occasion shall not be considered a waiver or
deprive that party of the right thereafter to that term or any other term of
this Agreement.
9. Entire Agreement. This Agreement supersedes all previous contracts
or agreements among the parties with respect to the subject matter hereof and
constitutes the entire Agreement among the parties with respect thereto.
10. Amendments. This Agreement may be amended only be an instrument in
writing signed in the manner provided in Section 12 below, effective as of the
date stipulated therein.
11. Invalidity of Particular Provisions. If any term or provisions of
this Agreement, or any application thereof to any person or circumstance shall
to any extent, be invalid or unenforceable, the remainder of this Agreement, or
the application of such term or provision to persons or circumstances other than
those as to which it is held invalid or unenforceable, shall not be affected
thereby and each term and provision of this Agreement shall be valid and be
enforceable to the fullest extent allowable by law.
12. Execution. This Agreement and any amendments hereto shall be
executed in no fewer than two counterparts by a duly authorized officer or agent
of each party hereto. Each counterpart so executed shall be deemed an original,
but all original counterparts shall together constitute one and the same
instrument.
13. Further Actions. Each of the parties agrees that it shall hereafter
execute and deliver such further instruments and do such further acts and things
as may be reasonably required or useful to carry out the intent and purpose of
this Agreement and as are not inconsistent with the terms hereof.
14. Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the Consultant, the General Partner, the
Partnership and their respective successors and assigns. This Agreement may not
be assigned by the General Partner or the Partnership without the prior written
consent of the Consultant. This Agreement may not be assigned by the Consultant
without the prior written consent of the General Partner.
15. Notices. All demands, notices and other communications under this
Agreement shall be in writing shall be personally delivered or sent by
registered mail, overnight courier or telecopy, shall be deemed to have been
duly given when received, and shall be addressed as follows:
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<PAGE> 13
To the General Partner or the Partnership:
Genesis Associates
280 Daines Street, 3rd Floor
Birmingham, Michigan 48009
Attention: Mr. Paul M. Zlotoff
with a copy to:
Nicholas S. Hodge, Esq.
Edwards & Angell
101 Federal Street
Boston, MA 02110
Fax: (617) 439-4170
To the Consultant:
Manufactured Housing Services, Inc.
Attention: Mr. Donald E. Petrow, President
14 Pitching Way
Scotch Plains, New Jersey 07076
Fax: (908) 889-7326
with a copy to:
Jonathan Baum, Esq.
39 Hollenbeck Avenue
Great Barrington, MA 01230
Fax: (413) 528-6725
or at such address as may hereafter be furnished in writing by any party to the
others.
16. Defined Terms. Capitalized terms defined in the Partnership
Agreement but not defined herein shall have the same meanings as are provided
therefor in the Partnership Agreement.
17. Governing Law. This Agreement shall be governed by, and construed
and enforced in accordance with, the internal laws of the State of New York.
18. Remedies. In the case of any disputes arising under this Agreement,
the prevailing party shall be entitled to recover reasonable legal fees and
costs from the adverse party.
-13-
<PAGE> 14
IN WITNESS WHEREOF, the parties hereto have executed this Consulting
Agreement as of the date first above written.
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II,
a Michigan Limited Partnership
By: Genesis Associates, a Michigan Limited
Partnership, General Partner
By: /s/ Paul M. Zlotoff
-----------------------------------
GENESIS ASSOCIATES,
a Michigan Limited Partnership
By: /s/ Paul M. Zlotoff
-----------------------------------
MANUFACTURED HOUSING SERVICES, INC.
By: /s/ Donald E. Petrow
-----------------------------------
-14-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 2,821,681
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,766,059
<PP&E> 63,749,893
<DEPRECIATION> 20,587,823
<TOTAL-ASSETS> 47,525,657
<CURRENT-LIABILITIES> 1,004,951
<BONDS> 29,572,116
0
0
<COMMON> 0
<OTHER-SE> 16,948,590
<TOTAL-LIABILITY-AND-EQUITY> 47,525,657
<SALES> 0
<TOTAL-REVENUES> 12,718,010
<CGS> 0
<TOTAL-COSTS> 9,234,040
<OTHER-EXPENSES> 1,843,213
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,960,984
<INCOME-PRETAX> 1,640,757
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,640,757
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,640,757
<EPS-BASIC> .50<F1>
<EPS-DILUTED> 0
<FN>
<F1>5-03(b)(20) EPS Primary - In this RELP the earnings per share indicate earnings
per LP unit.
</FN>
</TABLE>
<PAGE> 1
EXHIBIT 28
UNIPROP INCOME FUND II
2000 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:
(IN $1,000)
<TABLE>
<CAPTION>
CASH
3/00 3/99 99/00 PURCHASE 00CPP
PROPERTY APPRAISALS APPRAISALS VARIANCE PRICE VARIANCE
<S> <C> <C> <C> <C> <C>
Ardmor Village .... $ 7,750 $ 7,500 3.3% $ 5,316 45.8%
Camelot Manor ..... 7,000 7,000 0.0% 4,600 52.2%
Country Roads ..... 2,600 2,500 4.0% 3,183 (18.3%)
Dutch Hills ....... 6,000 6,000 0.0 4,198 42.9%
El Adobe .......... 12,500 12,300 1.6% 7,400 68.9%
Paradise Village... 8,800 8,800 0.0% 8,800 0.0%
Stonegate Manor.... 7,000 6,800 2.9% 4,652 50.5%
Sunshine Village... 11,500 11,400 0.9% 6,092 88.8%
West Valley ....... 17,500 17,300 1.2% 11,448 52.9%
------- ------- --- -------- -----
Grand Total: ...... $80,650 $79,600 1.3% $ 55,689 44.8%
======= ======= === ======== ====
</TABLE>
2000 ESTIMATED NET ASSET VALUE OF UNITS
Based on the March 2000 appraisal of the Partnership's properties, the General
Partner has calculated the estimated net asset value of each Unit, based on the
following assumptions:
- - Sale of the Properties in March 2000 for their appraised value.
- - Costs and selling expenses are 3.0% of the sale price.
- - 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 $14.72 calculated as follows:
<TABLE>
<S> <C>
Aggregate appraised value: $80,650,000
Less: Selling Expenses (3.0%) 2,419,500
Mortgage Debt: 29,572,116
-----------
Net Sales Proceeds: $48,658,384
===========
Number of Units: 3,303,387
Net Sales Proceeds per unit: $ 14.72
</TABLE>
