<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-KSB
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _______________ to _______________
Commission file number 000-21722
WINDSOR PARK PROPERTIES 7, A CALIFORNIA LIMITED PARTNERSHIP
-----------------------------------------------------------
(Exact name of small business issuer in its charter)
California 33-0363181
- ------------------------------- -----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
6160 South Syracuse Way, Greenwood Village, Colorado 80111
-----------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (303) 741-3707
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act: Units of Limited
----------------
Partnership Interest (Title of Class)
- --------------------
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 [ ]
Check if disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]
Issuer's revenues for its most recent fiscal year: $2,975,500
DOCUMENTS INCORPORATED BY REFERENCE: None
<PAGE>
TABLE OF CONTENTS
PART I
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<TABLE>
<CAPTION>
Page
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<S> <C>
Item 1. Description of Business 3
Item 2. Description of Properties 5
Item 3. Legal Proceedings 7
Item 4. Submission of Matters to a Vote of Security Holders 7
PART II
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Item 5. Market for the Partnership's Units and Related Security Holder Matters 7
Item 6. Management's Discussion and Analysis 8
Item 7. Financial Statements 10
Item 8. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure 22
PART III
--------
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act 22
Item 10. Executive Compensation 23
Item 11. Security Ownership of Certain Beneficial Owners and Management 23
Item 12. Certain Relationships and Related Transactions 24
Item 13. Exhibits and Reports on Form 8-K 25
SIGNATURES 26
</TABLE>
2
<PAGE>
PART I
------
Certain matters discussed under the captions "Description of Business,"
"Description of Properties," "Management's Discussion and Analysis" and
elsewhere in this Annual Report on Form 10-KSB may constitute forward-looking
statements and as such involve known and unknown risks, uncertainties and other
factors which may cause the actual results, performance or achievements of
Windsor Park Properties 7, A California Limited Partnership (the "Partnership"),
to be materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements.
Item 1. DESCRIPTION OF BUSINESS
-----------------------
Business Development
- --------------------
The Partnership was formed in June 1989 pursuant to the provisions of the
California Uniform Limited Partnership Act. The general partners of the
Partnership are The Windsor Corporation, A California Corporation ("TWC"), and
John A. Coseo, Jr. (together with TWC, the "General Partners"). In September
1997, Chateau Communities, Inc., a publicly held real estate investment trust
("Chateau"), purchased 100% of the outstanding shares of capital stock of TWC.
The Partnership was organized to acquire and hold existing manufactured home
communities for investment. Its principal investment objectives are to provide
to the Limited Partners: (i) distributions of cash from operations, (ii)
preservation, protection and eventual return of the Limited Partners investment,
and (iii) realization of appreciation in the value of the properties acquired.
The Partnership was funded through a public offering of 250,000 limited partner
units ("Units"). A total of 159,332 Units were sold for gross proceeds
aggregating $15,933,200. The offering commenced in March 1990 and terminated in
January 1992. The net proceeds from the offering were originally expended for
the acquisition of undivided interests in four manufactured home communities
located in Florida, Washington and Indiana. The Partnership paid cash for these
four properties. The Partnership term is set to expire in December 2005;
however, the Partnership may either be dissolved earlier or extended under
certain circumstances. The Partnership may be extended at the recommendation of
the General Partners with approval of a majority-in-interest of the Limited
Partners.
In February 1995, through a proxy vote of the Limited Partners, an amendment to
the Agreement of Limited Partnership was approved permitting the financing of
currently owned manufactured home communities and the reinvestment of financing
proceeds into newly acquired manufactured home communities to be purchased with
permanent mortgage financing. Overall Partnership mortgage financing will not
exceed 55% of the value of existing and newly acquired properties.
Subsequent to the approval of the financing and reinvestment proposal discussed
above, the Partnership obtained two loans collateralized by interests in
currently owned manufactured home communities. The proceeds from these loans
were used as partial consideration to purchase interests in six additional
manufactured home communities. The remaining consideration was obtained from
permanent mortgage financing.
3
<PAGE>
The General Partners are currently exploring possible strategic alternatives for
the Partnership with a view towards providing Limited Partners with the
opportunity to achieve liquidity in their investment. There can, however, be no
assurances that any such strategic alternative will be consummated or that the
Partnership will not continue in its current form until the end of its stated
term.
The Partnership owns interests in the following manufactured home communities at
December 31, 1999:
<TABLE>
<CAPTION>
Date
Name of Property Ownership % Acquired Location
- ---------------- ----------- -------- --------
<S> <C> <C> <C>
Carefree Village 56% July 1990 Tampa, Florida
North Glen 100% October 1991 Westfield, Indiana
Kings & Queens 100% February 1992 Lakeland, Florida
The Hills 100% December 1992 Richland, Washington
Lucerne 100% June 1995 Winter Haven, Florida
Long Lake Village 60% June 1995 West Palm Beach, Florida
Garden Walk 69% August 1995 Palm Beach Gardens, Florida
Village Glen 100% October 1995 Melbourne, Florida
Apache East 26% February 1997 Apache Junction, Arizona
Denali Park Estates 26% February 1997 Apache Junction, Arizona
</TABLE>
The Partnership owns (i) a 56% partial ownership interest in Carefree Village as
a tenant in common with Windsor Park Properties 6, A California Limited
Partnership, (ii) a 60% partial ownership interest in Long Lake Village as a
tenant in common with N'Tandem Trust, an unincorporated California Business
Trust, (iii) a 69% partial ownership interest in Garden Walk as a tenant in
common with Windsor Park Properties 6, A California Limited Partnership, and
(iv) a 26% limited partner interest in Windsor Park 345, An Arizona Limited
Partnership, which holds Apache East and Denali Park Estates.
The overall occupancy of the ten manufactured home communities owned by the
Partnership at December 31, 1999 was approximately 94%. The General Partners
continue to maintain the properties in good condition and promote them to
improve occupancy.
No further property financings or investment property acquisitions are planned
by the General Partners.
Business of Issuer
- ------------------
The Partnership is in the business of managing, and eventually selling its
interests in, the ten manufactured home communities in its portfolio.
Competitors of the Partnership include other public and private limited
partnerships, individuals, corporations, and other entities engaged in real
estate investment activities. Competition for such properties varies with
changes in the supply or demand for similar or competing properties in a given
area, changes in interest rates and the availability of mortgage funds, and
changes in tax, real estate, environmental, and zoning laws.
The Partnership's profitability depends in part on maximizing occupancy and
rental rates in its manufactured home communities. Rents and occupancy rates
are affected by both changes in general economic conditions and changes in local
conditions, such as levels of employment, supply of other comparable units or
competitive housing alternatives, zoning laws, and the availability and cost of
energy and transportation.
All of the Partnership's properties are located in or near large urban areas.
Accordingly, they compete for rentals not only with other manufactured home
communities, but also with apartments and other forms of low-cost housing that
might exist in their respective market areas.
The Partnership's profitability also depends on the minimization of both
property and partnership administration expenses. Expenses are affected by
changes in general economic trends and changes in local conditions, such as
prevailing wages, utility rates, insurance costs, and real estate taxation
practices.
4
<PAGE>
The Partnership has no employees. Partnership administrative services are
provided by TWC, which is reimbursed for costs incurred on behalf of the
Partnership. Chateau employs all of the properties' on-site personnel and is
reimbursed by the Partnership for all such costs.
Item 2. DESCRIPTION OF PROPERTIES
-------------------------
The Partnership owned interests in ten properties at December 31, 1999. The
Partnership operates the properties as manufactured home communities, renting
sites to manufactured home residents on a month-to-month basis. The properties
compete for rentals with other manufactured home communities and apartments in
their local markets. All of the Partnership's properties are encumbered with
outstanding mortgage indebtedness totaling approximately $20,965,200. It is the
General Partners' opinion that the properties are in good condition and are
adequately insured.
<TABLE>
<CAPTION>
Carefree Village North Glen Kings & Queens The Hills
---------------- ---------- -------------- -----------
Tampa Westfield, Lakeland, Richland
Location Florida Indiana Florida Washington
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Percentage of Ownership 56% 100% 100% 100%
Date Acquired 7/90 10/91 2/92 12/92
Acreage 58 38 19 52
Number of Sites 406 289 107 223
Monthly Rents (1) $324 $274 $232 $280
Occupancy Level:
December 31, 1999 86% 99% 100% 98%
Real Estate Taxes $146,200 $32,200 $19,900 $32,000
Federal Tax Basis (3) $3,753,900 $3,110,700 $962,700 $2,396,600
Mortgage Information:
Balance Payable $3,479,800 $4,620,000 (2) (2)
Interest Rate 9.07% 9.07% (2) (2)
Amortization Period -- -- (2) (2)
Maturity Date 6/02 6/02 (2) (2)
Balance Due at Maturity $3,479,800 $4,620,000 (2) (2)
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
Village Glen Garden Walk Long Lake Village
------------ ----------- -----------------
Melbourne, Palm Beach Gardens, West Palm Beach,
Location Florida Florida Florida
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Percentage of Ownership 100% 69% 60%
Date Acquired 10/95 8/95 6/95
Acreage 27 71 19
Number of Sites 143 484 134
Monthly Rents (1) $268 $371 $382
Occupancy Level:
December 31, 1999 96% 90% 94%
Real Estate Taxes $34,800 $189,600 $58,300
Federal Tax Basis (3) $2,045,500 $6,552,200 $2,968,900
Mortgage Information:
Balance Payable $1,500,000 $5,700,000 $1,600,000
Interest Rate 8.82% 9.07% 9.07%
Amortization Period -- -- --
Maturity Date 8/02 8/02 6/02
Balance Due at Maturity $1,500,000 $5,700,000 $1,600,000
Lucerne Apache East Denali Park Estates
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Winter Haven, Apache Junction, Apache Junction,
Location Florida Arizona Arizona
- ----------------------------------------------------------------------------------------------------------------------
Percentage of Ownership 100% 26% 26%
Date Acquired 6/95 2/97 2/97
Acreage 14 16 33
Number of Sites 140 123 162
Monthly Rents (1) $229 $212 $228
Occupancy Level:
December 31, 1999 96% 96% 94%
Real Estate Taxes $27,800 $18,100 $25,300
Federal Tax Basis (3) $1,571,100 $2,238,700 $2,729,800
Mortgage Information:
Balance Payable $1,100,000 $2,965,400 (4)
Interest Rate 9.07% 8.38% (4)
Amortization Period -- 24 years (4)
Maturity Date 6/02 3/06 (4)
Balance Due at Maturity $1,100,000 $2,583,200 (4)
</TABLE>
___________________________________
(1) Average rental rates in effect on December 31, 1999.
(2) Mortgage note is the same as is set forth for North Glen.
(3) For income tax purposes, the properties and their components are
depreciated using both straight-line and accelerated methods over useful
lives ranging from 5 to 40 years.
(4) Mortgage note is the same as is set forth for Apache East.
6
<PAGE>
Item 3. LEGAL PROCEEDINGS
-----------------
There are no pending legal proceedings, other than ordinary routine litigation
incidental to the business, to which the Partnership is a party or of which any
of its properties is the subject.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
There were no matters submitted to security holders for a vote during the fourth
quarter of the fiscal year covered by this report.
PART II
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Item 5. MARKET FOR THE PARTNERSHIP'S UNITS AND RELATED SECURITY HOLDER
--------------------------------------------------------------
MATTERS
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A public market for the Partnership's Units does not exist and is not likely to
develop. As of December 31, 1999, there were approximately 1,706 holders of
record holding an aggregate of 153,393 Units.
Cash distributions to Limited Partners paid since December 31, 1997 are as
follows:
<TABLE>
<CAPTION>
Aggregate Per $1,000
Date Paid Amount Invested (2)
- --------- --------- ------------
<S> <C> <C>
December 1999 $95,800 $6.01
November 1999 $95,800 $6.01
October 1999 $95,800 $6.01
September 1999 $96,700 $6.07
August 1999 $96,700 $6.07
July 1999 $96,700 $6.07
June 1999 $96,500 $6.06
May 1999 $96,500 $6.06
April 1999 $96,500 $6.06
March 1999 $96,400 $6.05
February 1999 $96,400 $6.05
January 1999 $96,300 $6.04
December 1998 $97,000 $6.09
November 1998 $97,000 $6.09
October 1998 $97,000 $6.09
September 1998 $97,700 $6.09
August 1998 $97,900 $6.14
July 1998 $97,900 $6.14
June 1998 $97,900 $6.14
May 1998 $97,900 $6.14
April 1998 $97,900 $6.14
March 1998 $97,900 $6.14
February 1998 $97,900 $6.14
January 1998 $97,900 $6.14
</TABLE>
_______________________________
(1) Amounts exclude General Partner participation.
(2) Computed based on $15,933,200 original investment.
Cash distributions paid to the General Partners since December 31, 1997 have
been $23,800.
7
<PAGE>
Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS
------------------------------------
The following discussion should be read in conjunction with the financial
statements and Notes thereto included elsewhere in this Annual Report on Form
10-KSB. Certain statements in this discussion constitute "forward-looking
statements" and as such involve known and unknown risks, uncertainties and other
factors which may cause the actual results, performance or achievements of the
partnership or industry to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements.
Results of Operations
- ---------------------
The Partnership realized net income of $421,100 and $309,500 for the years ended
December 31, 1999 and 1998, respectively. Net income per Unit was $2.71 in 1999
as compared to $1.97 in 1998.
Equity in earnings of joint ventures and limited partnerships represents the
Partnership's share of the net income of the five manufactured home communities.
Equity in earnings of joint ventures and limited partnerships increased from
$145,300 in 1998 to $182,800 in 1999 due to rent increases at all of the
communities. The overall occupancy of these five properties increased from 89%
at December 31, 1998 to 90% at December 31, 1999.
Interest income decreased from $14,300 in 1998 to $4,000 in 1999 due to lower
investment balances maintained by the Partnership.
Property operating and maintenance expense increased from $1,111,000 in 1998 to
$1,170,800 in 1999 mainly due to increased utility expenses at North Glen and
The Hills.
Interest expense decreased from $661,800 in 1998 to $647,600 in 1999 primarily
due to a lower average interest rate in 1999.
General and administrative expense increased from $108,200 in 1998 to $118,100
in 1999 primarily due to costs incurred to appraise the Partnership's
properties.
Liquidity and Capital Resources
- -------------------------------
The Partnership's principal sources of liquidity during the years ended December
31, 1999 and 1998 were its cash flow generated from the operation of its
communities and distributions from investments in joint ventures and limited
partnerships. Net cash provided by operating activities was $1,079,600 and
$976,900 for the years ended December 31, 1999 and 1998, respectively. At
December 31, 1999, the partnership's cash amounted to $195,200.
The Partnership's primary uses of its capital resources during the same periods
were for cash distributions to partners and debt service. Cash distributions to
partners totaled $1,168,000 and $1,183,800 for the years ended December 31, 1999
and 1998, respectively.
The Partnership's principal long-term liquidity requirement will be the
repayment of principal on its outstanding mortgage debt. At December 31, 1999,
the Partnership's total mortgage debt, including its proportionate share of
joint venture and limited partnership debt, was approximately $14,832,700,
consisting of $1,500,000 of fixed rate debt and $13,332,700 of variable rate
debt. The average rate of interest on the fixed rate debt and variable rate
debt was 8.8% and 9.0%, respectively, at December 31, 1999. The Partnership and
affiliated entities are contingently liable for the full amounts of the loans
obtained jointly through joint ventures and limited partnerships.
The future sources of liquidity for the Partnership will be provided from
property operations, cash reserves, and ultimately from the sale of its
communities and investments in joint ventures and limited partnerships.
8
<PAGE>
The Partnership expects to meets its short-term liquidity requirements,
including capital expenditures, administrative expenses, debt service, and
distributions to partners, from cash flow provided from property operations and
distributions from investments in joint ventures and limited partnerships. The
Partnership expects to meet its long-term liquidity requirements through the
sale of its communities and investments in joint ventures and limited
partnerships and the use of cash reserves.
Inflation
- ---------
All of the leases or terms of residents' occupancies at the properties allow for
at least annual rental adjustments. In addition, all of the leases are month-to-
month and enable the Partnership to seek market rentals upon reletting the
sites. Such leases generally minimize the risk to the Partnership of any
adverse effect of inflation.
Year 2000 Compliance
- --------------------
The Partnership had all systems appropriately modified to be compliant for the
year 2000, and following the date change to the year 2000, has not experienced
any material impact on its financial condition or operations.
9
<PAGE>
Item 7. FINANCIAL STATEMENTS
--------------------
The following financial statements are filed as a part of this report:
<TABLE>
<CAPTION>
Page
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<S> <C>
Report of Independent Accountants 11
Balance Sheet as of December 31, 1999 12
Statements of Operations for the Years Ended
December 31, 1999 and 1998 13
Statements of Partners' Equity for the Years
Ended December 31, 1999 and 1998 14
Statements of Cash Flows for the Years Ended
December 31, 1999 and 1998 15
Notes to Financial Statements 16
</TABLE>
10
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners of Windsor Park Properties 7,
(A California Limited Partnership)
In our opinion, the accompanying balance sheet and the related statements of
operations, partners' equity and cash flows present fairly, in all material
respects, the financial position of Windsor Park Properties 7, A California
Limited Partnership (the "Partnership"), at December 31, 1999, and the results
of its operations and its cash flows for each of the two years in the period
ended December 31, 1999, in conformity with accounting principles generally
accepted in the United States. These financial statements are the
responsibility of the Partnership's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with auditing standards generally
accepted in the United States which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
PricewaterhouseCoopers LLP
Denver, Colorado
March 23, 2000
11
<PAGE>
WINDSOR PARK PROPERTIES 7
-------------------------
(A California Limited Partnership)
BALANCE SHEET
-------------
<TABLE>
<CAPTION>
ASSETS December 31, 1999
- ------ -----------------
<S> <C>
Property held for investment, net $ 10,396,000
Investments in joint ventures and limited partnerships 4,347,300
Cash and cash equivalents 195,200
Deferred financing costs, net 111,100
Other assets 130,800
-------------
Total Assets $ 15,180,400
=============
LIABILITIES AND PARTNERS' EQUITY
- --------------------------------
Liabilities:
Mortgage notes payable $ 7,220,000
Accrued expenses 226,800
Due to general partners and affiliates 111,300
Tenant deposits and other liabilities 45,100
------------
Total Liabilities 7,603,200
------------
Commitments and Contingencies (Note 8)
Partners' Equity:
Limited partners 7,633,900
General partners (56,700)
------------
Total Partners' Equity 7,577,200
------------
Total Liabilities and Partners' Equity $ 15,180,400
============
</TABLE>
See accompanying notes to financial statements.
12
<PAGE>
WINDSOR PARK PROPERTIES 7
-------------------------
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
------------------------
<TABLE>
<CAPTION>
For the Year Ended December 31,
---------------------------------------
1999 1998
---------- ------------
<S> <C> <C>
REVENUES
- -----------
Rent and Utilities $2,759,800 $ 2,611,500
Equity in earnings of joint ventures and limited partnerships 182,800 145,300
Interest 4,000 14,300
Other 28,900 29,400
---------- ------------
2,975,500 2,800,500
---------- ------------
COSTS AND EXPENSES
- ------------------
Property operating 1,170,800 1,111,000
Interest 647,600 661,800
Depreciation 617,900 610,000
General and administrative:
Related parties 26,200 42,900
Other 91,900 65,300
---------- ------------
2,554,400 2,491,000
---------- ------------
Net income $ 421,100 $ 309,500
========== ============
Net income - general partners $ 4,200 $ 3,100
========== ============
Net income - limited partners $ 416,900 $ 306,400
========== ============
Basic and diluted earnings per limited partnership unit $ 2.71 $ 1.97
========== ============
</TABLE>
See accompanying notes to financial statements.
13
<PAGE>
WINDSOR PARK PROPERTIES 7
-------------------------
(A California Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY
------------------------------
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
----------------------------------------------
<TABLE>
<CAPTION>
General Partners Limited Partners Total
---------------- ---------------- --------------
<S> <C> <C> <C>
Balance at December 31, 1997 $(40,200) $ 9,518,700 $ 9,478,500
Cash distributions (11,900) (1,171,900) (1,183,800)
Net income 3,100 306,400 309,500
Repurchase of limited partnership units (177,700) (177,700)
-------- ----------- -----------
Balance at December 31, 1998 (49,000) 8,475,500 8,426,500
Cash distributions (11,900) (1,156,100) (1,168,000)
Net income 4,200 416,900 421,100
Repurchase of limited partnership units (102,400) (102,400)
-------- ----------- -----------
Balance at December 31, 1999 $(56,700) $ 7,633,900 $ 7,577,200
======== =========== ===========
</TABLE>
See notes to accompanying financial statements.
14
<PAGE>
WINDSOR PARK PROPERTIES 7
-------------------------
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
------------------------
<TABLE>
<CAPTION>
For the Year Ended December 31,
-------------------------------------
1999 1998
-------------- ---------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 421,100 $ 309,500
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 617,900 610,000
Equity in earnings of joint ventures and limited partnerships (182,800) (145,300)
Joint ventures' and limited partnerships cash distributions 182,800 145,300
Amortization of deferred financing costs 42,400 42,500
Changes in operating assets and liabilities:
(Increase) decrease in other assets (87,900) 16,400
Decrease in accounts payable (1,600) (23,100)
Increase (decrease) in due to general partners and affiliates 83,500 (70,900)
Increase in accued expenses 5,400 161,400
Decrease in tenant deposits and other liabilities (1,200) (68,900)
----------- -----------
Net cash provided by operating activities 1,079,600 976,900
----------- -----------
Cash flows from investing activities:
Increase in property held for investment (206,500) (158,000)
Joint ventures' and limited partnerships' cash distributions 274,300 501,700
Investment in joint venture and limited partnerships 134,600 (54,200)
----------- -----------
Net cash provided by investing activities 202,400 289,500
----------- -----------
Cash flows from financing activities:
Cash distributions to partners (1,168,000) (1,183,800)
Repurchase of limited partnership units (102,400) (177,700)
Payment of mortgage note payable - (200,000)
----------- -----------
Net cash used in financing activities (1,270,400) (1,561,500)
----------- -----------
Net decrease in cash and cash equivalents $ 11,600 $ (295,100)
Cash and cash equivalents at beginning of year 183,600 478,700
----------- -----------
Cash and cash equivalents at end of year $ 195,200 $ 183,600
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid during the year for Interest (non captialized) $ 605,200 $ 612,000
=========== ===========
</TABLE>
See notes to accompanying financial statements.
15
<PAGE>
WINDSOR PARK PROPERTIES 7
-------------------------
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
-----------------------------
NOTE 1. THE PARTNERSHIP AND A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
----------------------------------------------------------------
The Partnership
- ---------------
Windsor Park Properties 7, A California Limited Partnership (the "Partnership"),
was formed in June 1989 for the purpose of acquiring and holding existing
manufactured home communities for investment. The general partners of the
Partnership are The Windsor Corporation, A California Corporation ("TWC"), and
John A. Coseo, Jr. (together with TWC, the "General Partners"). In September
1998, Chateau Communities, Inc., a publicly held real estate investment trust
("Chateau"), purchased 100% of the outstanding shares of capital stock of TWC.
The Partnership was funded through a public offering of 250,000 limited
partnership units at $100 per unit which commenced in March 1990 and terminated
in January 1992. A total of 159,332 limited partnership units were sold. The
Partnership term is set to expire on December 31, 2005; however, the Partnership
may either be dissolved earlier or extended under certain circumstances. The
Partnership may be extended at the recommendation of the General Partners with
approval of a majority-in-interest of the Limited Partners.
Property Held for Investment
- ----------------------------
Property held for investment is carried at cost unless facts and circumstances
indicate that the carrying value of the property may be impaired. Impairment is
determined by comparing the estimated future cash flows (undiscounted and
without interest charges) from an individual property to its carrying value. If
such cash flows are less than the property's carrying value, the carrying value
of the property is written down to its estimated fair value. No such writedowns
were recorded for the years ended December 31, 1999 or 1998.
Property held for investment is depreciated over various estimated useful lives
(building and improvements - 5 to 20 years; fixtures and equipment - 3 to 5
years) using the straight-line method. When assets are sold or otherwise
disposed of, the cost and related accumulated depreciation are removed from the
accounts, and any gain or loss is included in net income. Repairs and
maintenance are charged to operations as incurred.
Investments In Joint Ventures and Limited Partnerships
- ------------------------------------------------------
The investments in joint ventures are accounted for utilizing the equity method
as the properties are subject to joint control requiring approval or mutual
agreement of the investees. The investment in limited partnerships is also
accounted for utilizing the equity method as the limited partners have
significant rights.
Financing Costs
- ---------------
Financing costs are amortized to interest expense over the life of the note
utilizing a method, which approximates the effective interest method.
Income Taxes
- ------------
Under provisions of the Internal Revenue Code of 1986, as amended, and the
California Revenue and Taxation Code, partnerships are generally not subject to
income taxes. The tax effect of any income or loss accrues to the individual
partners.
16
<PAGE>
Basic and Diluted Earnings per Limited Partnership Unit
- -------------------------------------------------------
Basic and diluted earnings per limited partnership unit is calculated based on
the weighted average number of limited partnership units outstanding during the
year and the net income allocated to the limited partners. Basic and diluted
earnings per limited partnership unit are the same, as the Partnership has no
dilutive securities. The weighted average number of limited partnership units
outstanding during the years ended December 31, 1999 and 1998 was 154,057 and
155,873, respectively.
Statements of Cash Flows
- ------------------------
For purposes of the statements of cash flows, the Partnership considers all
highly-liquid investments purchased with an original maturity of three months or
less to be cash equivalents.
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 assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Revenue Recognition
- -------------------
Rental income is recognized when earned and due from residents. The leases
entered into by residents for the rental of a site are generally for terms not
longer than one year and renewable upon the consent of both parties or, in some
instances, as provided by statute.
NOTE 2. PARTNERSHIP AGREEMENT
---------------------
In accordance with the Partnership Agreement, the maximum liability of the
limited partners is the amount of their capital contributions. The number of
limited partnership units outstanding at December 31, 1999 and 1998 was 153,393
and 154,578, respectively, which represented capital contributions of
$15,339,300 and $15,457,800, respectively. During the years ended December 31,
1999 and 1998, the Partnership repurchased 1,185 and 2,063 units for $102,400
and $177,700, respectively. The General Partners owned 91 units at both
December 31, 1999 and 1998.
The General Partners are entitled to receive from the Partnership various fees
and compensation which are summarized as follows:
Operational Stage
- -----------------
The profits, losses and cash distributions of the Partnership during the
operational stage are allocated 99% to the limited partners and 1% to the
general partners. During the years ended December 31, 1999 and 1998, the
general partners received cash distributions from operations of $11,900.
The Partnership reimburses TWC for certain direct expenses, and employee,
executive and administrative time which are incurred on the Partnership's
behalf. The Partnership was charged $26,200 and $42,900 for such costs during
the years ended December 31, 1999 and 1998, respectively. These costs are
included in property operating and general and administrative expenses in the
accompanying statements of operations. As of December 31, 1999, the Partnership
owed TWC $111,300.
17
<PAGE>
TWC receives a management fee which is based on a percent of actual gross
receipts collected from the operations of the properties. TWC receives 2.5%
each for the Lucerne and Village Glen communities. For the years ended December
31, 1999 and 1998, the amounts paid to TWC were $20,900 and $19,700,
respectively.
Liquidation Stage
- -----------------
During the Partnership's liquidation stage, the total compensation paid to all
persons for the sale of Partnership properties is limited to competitive real
estate commissions, not to exceed 6% of the contract price for the sale of the
property. The general partners may receive up to one-half of the competitive
real estate commission, not to exceed 3%, if they provide a substantial amount
of services in the sales effort. The general partners' commission is
subordinated to the limited partners receiving a 6% cumulative, non-compounded,
annual return on their original invested capital.
The general partners also receive 15% of profits, losses and cash distributions
from the sale or financing of Partnership properties after the limited partners
have received a 9% cumulative, non-compounded, annual return on their original
invested capital.
NOTE 3. PROPERTY HELD FOR INVESTMENT
----------------------------
Property held for investment consists of five manufactured home communities
summarized as follows:
<TABLE>
<CAPTION>
Name of Property Date Acquired Location
- ---------------------------------- ------------------------- ------------------------------------
<S> <C> <C>
North Glen October 4, 1991 Westfield, Indiana
Kings & Quieens February 4, 1992 Lakeland, Florida
The Hills December 24, 1992 Richland, Washington
Lucerne June 23, 1995 Winter Haven, Florida
Village Glen October 3, 1995 Melbourne, Florida
<CAPTION>
December 31, 1999
---------------------
Land $ 2,841,300
Buildings and improvements 11,079,100
Construction in progress 4,800
Fixtures and equipment 209,000
---------------------
14,134,200
Less accumulated depreciation (3,738,200)
---------------------
$ 10,396,000
=====================
</TABLE>
18
<PAGE>
NOTE 4. INVESTMENTS IN JOINT VENTURES AND LIMITED PARTNERSHIPS
------------------------------------------------------
The Partnership's investments in joint ventures consist of interests in three
manufactured home communities summarized as follows:
<TABLE>
<CAPTION>
Ownership
Name of Property Percentage Date Acquired Location
- ---------------- ---------- ------------- --------
<S> <C> <C> <C>
Carefree Village 56% July 31, 1990 Tampa, Florida
Long Lake Village 60% June 30, 1995 West Palm Beach, Florida
Garden Walk 69% August 15, 1995 Palm Beach Gardens, Florida
</TABLE>
The Partnership's interest in the two remaining communities are owned through an
affiliated Arizona limited partnership which has the same general partners as
the Partnership.
<TABLE>
<CAPTION>
Ownership
Name of Property Percentage Date Acquired Location
- ---------------- ---------- ------------- --------
<S> <C> <C> <C>
Apache East 26% February 18, 1997 Apache Junction, Arizona
Denali Park Estates 26% February 18, 1997 Apache Junction, Arizona
</TABLE>
19
<PAGE>
NOTE 4. INVESTMENTS IN JOINT VENTURES AND LIMITED PARTNERSHIPS (Continued)
------------------------------------------------------
The combined condensed financial position and results of operations of the joint
ventures and limited partnerships are as follows:
<TABLE>
<CAPTION>
December 31, 1999
-----------------
<S> <C>
Financial Position:
- ------------------
Property held for sale, net $21,547,000
Cash 136,200
Other assets 481,700
-----------
Total assets $22,164,900
===========
Mortgage notes payable $13,745,300
Other liabilities 367,000
-----------
Total liabilities 14,112,300
Partners' equity 8,052,600
-----------
Total Liabilities and Partners' Equity $22,164,900
===========
<CAPTION>
For the Year Ended December 31,
---------------------------------------
Results of Operations 1999 1998
- --------------------- ---------- ----------
<S> <C> <C>
Property revenues $4,556,300 $ 4,391,900
---------- -----------
Expenses:
Property operating 2,349,100 2,248,600
Interest 1,210,500 1,270,900
Depreciation 787,800 777,300
General and Administrative 16,300 -
---------- -----------
4,363,700 4,296,800
---------- -----------
Net income $ 192,600 $ 95,100
========== ===========
</TABLE>
20
<PAGE>
NOTE 5. MORTGAGE NOTES PAYABLE
----------------------
Mortgage notes payable consist of the following at December 31, 1999:
Notes payable, collateralized by property held for
investment, payable in montly interest only
installments bearing interest at 90-day LIBOR plus
2.95% (9.07% at December 31, 1999), due in 2002. $ 5,720,000
Note payable, collateralized by property held for
investment, payable in monthly interest only
installments bearing interest at a fixed rate of
8.82%, due in 2002. 1,500,000
------------
$ 7,220,000
============
NOTE 6. DISTRIBUTIONS TO LIMITED PARTNERS
---------------------------------
Distributions to limited partners in excess of net income allocated to limited
partners are considered a return of capital. A breakdown of cash distributions
to the limited partners for the years ended December 31, 1999 and 1998 follows:
<TABLE>
<CAPTION>
1999 1998
----------------------------------------- ------------------------------------------
Amount Per Unit Amount Per Unit
------ -------- ------ --------
Net income
<S> <C> <C> <C> <C>
Limited Partners $ 416,900 $ 2.71 $ 306,400 $ 1.97
Return of Captial $ 739,200 $ 4.79 $ 865,500 $ 5.55
---------- ------- ---------- -------
Total distributions $1,156,100 $ 7.50 $1,171,900 $ 7.52
========== ======= ========== =======
</TABLE>
NOTE 7. FAIR VALUE OF FINANCIAL INSTRUMENTS
-----------------------------------
The carrying amounts of cash equivalents, accounts payable, accrued expenses and
other liabilities approximate fair value because of the short maturity of the
financial instruments. The general partners believe the carrying value of the
mortgage notes payable approximates fair value based upon interest rates
available for the issuance of debt with similar terms and maturities.
NOTE 8. CONTINGENCIES
-------------
The Partnership, as an owner of real estate, is subject to various environmental
laws. Compliance by the Partnership with existing laws has not had a material
effect on the results of operations, financial condition or cash flows of the
Partnership, nor does management believe it will have a material impact in the
future.
21
<PAGE>
The Partnership is jointly and severally liable for $13,745,200 of debt issued
by affiliated entities in which it has a joint venture or limited partnership
investment.
NOTE 9. RELATED PARTY TRANSACTIONS
--------------------------
Chateau and/or its predecessor have been providing property management services
to the Partnership since 1992. For this service, Chateau is paid a property
management fee, which is based on a percentage of actual gross receipts of the
properties. The total management fees paid to Chateau were $118,400 and $112,300
for the years ended December 31, 1999 and 1998, respectively. In addition
certain direct expenses are paid by Chateau on behalf of the Partnership and
then reimbursed by the Partnership. These amounts were $278,900 and $278,400 for
the years ended December 31, 1999 and 1998, respectively.
Item 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
---------------------------------------------------------------
FINANCIAL DISCLOSURE
--------------------
There were no disagreements over accounting or financial disclosure with the
independent accountants for the Partnership.
PART III
--------
Item 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS;
--------------------------------------------------------------
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
-------------------------------------------------
The General Partners of the Partnership are TWC, and John A. Coseo, Jr.
In July 1994, TWC merged into Windsor Group, Inc., a majority-owned subsidiary.
In conjunction with the merger, Windsor Group, Inc. changed its name to TWC.
These entities were incorporated in 1977 and 1992, respectively, to engage in
the real estate syndication business. Historically, they have concentrated
solely on the acquisition, management, and sale of fully-developed manufactured
home communities through the investment programs which they sponsor.
The executive officers of TWC do not receive direct compensation from the
Partnership in these capacities and are only required to spend such time on the
Partnership's affairs as is deemed necessary. Substantial amounts of these
officers' time is spent on matters unrelated to the Partnership.
The names, ages, and nature of the positions held by the directors and executive
officers of TWC follow:
<TABLE>
<CAPTION>
Name Age Office
---------------------------- --------- ------------------------------------
<S> <C> <C>
Steven G. Waite 45 President and Director
Gary P. McDaniel 54 Director
C.G. Kellogg 56 Director
</TABLE>
A brief background of the general partners, directors and certain executive
officers of TWC follows.
Steven G. Waite (45) joined TWC in August 1998 as President. Since 1991, until
his involvement with Windsor, Mr. Waite served as Vice President/General Manager
of the Communities Division at Clayton Homes. He was responsible for the
original start up of this division, and subsequently built it into a successful
and profitable area of Clayton Homes, expanding from eight communities to 67
communities. In addition, Mr. Waite has over eight years of experience in the
manufactured home community-lending arena. He earned a Bachelor of Arts degree
from the University of Colorado and a Master of Business Administration from the
University of Alabama. Mr. Waite is active in the Manufactured Housing
Institute.
22
<PAGE>
Gary P. McDaniel (54), a director of TWC has been Chief Executive Officer and a
director of Chateau since February 1998. He served as the Chairman of the
Board, President and Chief Executive Officer for ROC Communities, Inc., which
was merged with Chateau in 1998. Since 1993 he has been an executive and
shareholder of ROC and its predecessors since 1979, and has been active in the
manufactured home industry since 1972. Mr. McDaniel is also a Trustee of
N'Tandem Trust, which is advised by TWC. Mr. McDaniel has been active in
several state and national manufactured home associations, including
associations in Florida and Colorado. In 1996, he was named "Industry Person of
the Year" by the National Manufactured Housing Industry Association. Mr.
McDaniel is on the Board of Directors of the Manufactured Housing Institute. He
is a graduate of the University of Wyoming and served as a Captain in the United
States Air Force.
C.G. ("Jeff") Kellogg (56) has been President and a director of Chateau since
its inception and was Chief Executive Officer of Chateau from its inception to
February 1998. For the five years preceding the formation of Chateau, Mr.
Kellogg was President and Chief Operating Officer of Chateau Estates. He is
extremely active in local and national industry associations, often in
leadership positions. Mr. Kellogg is a past President of the Michigan
Manufactured Housing Association and served on the Manufactured Housing
Institute's Community Operations Committee. He is a graduate of Michigan
Technological University with a B.S. in Civil Engineering.
John A. Coseo, Jr. (60), the other general partner of the Partnership was the
founder of TWC in 1977 and has been actively involved in all facets of the
manufactured housing business since that time. Mr. Coseo resigned from his
positions as a director and executive officer of TWC in 1998. From 1979 to the
present, Mr. Coseo has acted as general partner or advisor in the acquisition
and management of 56 manufactured home communities throughout the United States.
Mr. Coseo is a general partner of seven limited partnerships which have
registered their securities under the Securities and Exchange Act of 1934.
Item 10. EXECUTIVE COMPENSATION
----------------------
The Partnership has not paid and does not propose to pay any remuneration or
retirement benefits to John A. Coseo, Jr. and the directors or executive
officers of TWC. Refer to Item 12 (Certain Relationships and Related
Transactions) for cash distributions and expense reimbursements paid to TWC by
the Partnership.
Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------------------------------------
(a) Security Ownership of Certain Beneficial Owners
No person is known by the Partnership to be the beneficial owner of more
than 5% of the Units.
(b) Security Ownership of Management
The following table presents certain information regarding the number of Units
owned, directly or indirectly, by (i) each General Partner and (ii) all General
Partners as a group as of December 31, 1999
<TABLE>
<CAPTION>
Amount and Nature of Percent of
Title of Class Beneficial Owner Beneficial Ownership Class
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Units of Limited John A. Coseo, Jr.
Partnership Interest A General Partner 91 .059%
-- ---------
Units of Limited All General Partners
Partnership Interest As a group 91 .059%
== =========
</TABLE>
23
<PAGE>
Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------
The following table reflects all compensation accrued or paid to the General
Partners during the years ended December 31, 1999 and 1998.
<TABLE>
<CAPTION>
Form of Compensation and Entity Receiving 1999 1998
- ----------------------------------------- --------------- ---------------
<S> <C> <C>
Expense reimbursement - TWC $26,200 $42,900
Property Management Fee - TWC 20,900 19,700
Cash distributions - TWC 11,900 11,900
--------------- ---------------
$59,000 $74,500
=============== ===============
</TABLE>
Item 13. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) Exhibits and Index of Exhibits
(3) - Certificate and Agreement of Limited Partnership filed as
Exhibit A to Registration Statement No. 33-23183 and incorporated herein by
reference.
(27) - Financial Data Schedule
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the last quarter
of the period covered by this Form 10-KSB.
24
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized on this 30th day of
March, 2000.
WINDSOR PARK PROPERTIES 7,
A California Limited Partnership
THE WINDSOR CORPORATION
By: /s/ Steven G. Waite
----------------------------------
STEVEN G. WAITE
President
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>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Steven G. Waite President of The Windsor Corporation, a March 30, 2000
- ------------------------------- general partner
STEVEN G. WAITE
/s/ Gary P. McDaniel Director of The Windsor Corporation, a March 30, 2000
- ------------------------------- general partner
GARY P. MCDANIEL
/s/ C.G. Kellogg Director of The Windsor Corporation, a March 30, 2000
- ------------------------------- general partner
C.G. KELLOGG
/s/ John A. Coseo, Jr. General Partner March 30, 2000
- -------------------------------
JOHN A. COSEO, JR.
</TABLE>
25
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 195,200
<SECURITIES> 0
<RECEIVABLES> 130,800
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 10,396,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 15,180,400
<CURRENT-LIABILITIES> 0
<BONDS> 7,220,000
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 15,180,400
<SALES> 0
<TOTAL-REVENUES> 2,975,500
<CGS> 0
<TOTAL-COSTS> 1,170,800
<OTHER-EXPENSES> 736,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 647,600
<INCOME-PRETAX> 421,100
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 421,100
<EPS-BASIC> 2.71
<EPS-DILUTED> 2.71
</TABLE>
