<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
|X| Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended March 31, 1999
--------------
OR
|_| Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission file number 1-12496
-------
CHATEAU COMMUNITIES, INC.
(Exact name of Registrant as specified in its charter)
MARYLAND 38-3132038
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
6160 South Syracuse Way, Greenwood
Village, CO 80111 (Address of principal
executive offices, including zip code)
(303) 741-3707
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes |X| No|_|
The number of shares outstanding of Registrant's Common Stock, $0.01par value,
on May 10, 1999 was 28,040,717 shares.
<PAGE>
CHATEAU COMMUNITIES, INC.
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
Page Number
-----------
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Condensed Consolidated Statements of Income for the Three
Months Ended March 31, 1999 and 1998 1
Condensed Consolidated Balance Sheets as of March 31, 1999 and
December 31, 1998 2
Condensed Consolidated Statements of Cash Flows for the Three Months
Ended March 31, 1999 and 1998 3
Notes to Condensed Consolidated Financial Statements 4-6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7-11
Item 3. Quantitative and Qualitative Disclosures about Market Risk 12
PART II. OTHER INFORMATION 13-19
SIGNATURES 20
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CHATEAU COMMUNITIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------------
1999 1998
---------- ----------
<S> <C> <C>
Revenues:
Rental income $ 44,170 $ 39,093
Management fee, interest and other income 1,438 1,112
---------- ----------
45,608 40,205
Expenses:
Property operating and maintenance 12,092 11,076
Real estate taxes 3,206 2,955
Depreciation and amortization 10,323 9,109
Administrative 2,072 2,150
Interest and related amortization 7,962 7,546
---------- ----------
35,655 32,836
---------- ----------
Income before loss on sale of property
and minority interests 9,953 7,369
Loss on sale of property (336) --
---------- ----------
Income before minority interests 9,617 7,369
Less income allocated to minority interests:
Preferred OP Units 1,523 --
Common OP Units 910 779
---------- ----------
Net income available to common shareholders $ 7,184 $ 6,590
========== ==========
Per share/OP Unit information:
Basic earnings per common share $ .26 $ .25
========== ==========
Diluted earnings per common share $ .26 $ .25
========== ==========
Dividend/distribution declared per common
share/OP Unit outstanding $ .485 $ .455
========== ==========
Weighted average common shares
outstanding - basic 27,960 26,370
========== ==========
Weighted average common shares
and OP Units outstanding - assuming dilution 31,688 29,822
========== ==========
</TABLE>
The accompanying notes are an integral
part of the financial statements.
1
<PAGE>
CHATEAU COMMUNITIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
March 31, December 31,
ASSETS 1999 1998
------------ ------------
<S> <C> <C>
Rental property:
Land $ 134,339 $ 135,444
Land and improvements for expansion sites 17,584 22,184
Depreciable property 874,991 868,881
------------ ------------
1,026,914 1,026,509
Less accumulated depreciation 161,234 151,260
------------ ------------
Net rental property 865,680 875,249
Cash and cash equivalents 318 450
Receivables 3,546 3,123
Notes receivable 7,691 7,163
Investment in and advances to affiliates 70,230 65,473
Prepaid expenses and other assets 9,179 7,736
------------ ------------
Total assets $ 956,644 $ 959,194
============ ============
LIABILITIES
Debt $ 428,314 $ 427,778
Accounts payable and accrued expenses 20,914 21,030
Rents received in advance and security deposits 8,983 6,898
Dividends and distributions payable 16,054 15,078
------------ ------------
Total liabilities 474,265 470,784
Minority interests in Operating Partnership 120,011 120,475
SHAREHOLDERS' EQUITY
Preferred stock, $.01 par value, 2 million shares
authorized; no shares issued or outstanding
Common stock; $.01 par value, 90 million shares authorized;
27,979,357 and 27,936,016 shares issued and outstanding
at March 31, 1999 and December 31, 1998, respectively 280 279
Additional paid-in capital 433,520 432,711
Dividends in excess of accumulated earnings (63,023) (56,637)
Notes receivable from officers, 406,569 shares (8,409) (8,418)
------------ ------------
Total shareholders' equity 362,368 367,935
------------ ------------
Total liabilities and shareholders' equity $ 956,644 $ 959,194
============ ============
</TABLE>
The accompanying notes are an integral
part of the financial statements.
2
<PAGE>
CHATEAU COMMUNITIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998.
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------
1999 1998
-------- --------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 7,184 $ 6,590
Adjustments to reconcile net income to net cash
provided by operating activities:
Loss on sale of property 336
Income attributable to minority interests 2,433 779
Depreciation and amortization 10,323 9,109
Amortization of debt issuance costs 226 186
Decrease (increase) in operating assets (2,838) 244
Increase in operating liabilities 1,969 2,113
-------- --------
Net cash provided by operating activities 19,633 19,021
Cash flows from financing activities:
Borrowings on the line of credit 9,711 23,145
Payments on the line credit (1,000) (23,145)
Payoff of mortgages (7,789)
Mortgage principal payments (386) (572)
Dividends/distributions to shareholders/OP Unitholders (15,839) (12,144)
Proceeds from the issuance of common shares -- 53,924
Exercise of common stock options and other financing activities 481 99
-------- --------
Net cash (used in) provided by financing activities (14,822) 41,307
Cash flows from investing activities:
Acquisition of rental properties (761) (61,168)
Additions to rental property (2,408) (1,700)
Disposition of rental property 2,983 --
Investment in and advances to joint ventures/affiliates (4,757) (11,929)
-------- --------
Net cash used in investing activities (4,943) (74,797)
-------- --------
Decrease in cash and cash equivalents (132) (14,469)
Cash and cash equivalents, beginning of period 450 14,910
-------- --------
Cash and cash equivalents, end of period $ 318 $ 441
======== ========
Supplemental cash flow information:
Fair Market Value of OP Units/common shares issued in connection
with acquisitions/development $ 686 $ 9,620
======== ========
</TABLE>
The accompanying notes are an integral
part of the financial statements.
3
<PAGE>
CHATEAU COMMUNITIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation:
The accompanying unaudited condensed consolidated financial statements of
Chateau Communities, Inc. (the "Company"), a real estate investment trust
("REIT"), have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly,
they do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments considered
necessary for a fair presentation have been included, and such adjustments
are of a normal recurring nature. The year-end condensed consolidated
balance sheet was derived from audited consolidated financial statements,
but does not include all disclosures required by generally accepted
accounting principles. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's
annual report on Form 10-K for the year ended December 31, 1998.
2. Rental Property
On January 25, 1999, the Company sold one manufactured home community
located in Melbourne, Florida with 217 sites for a gross sales price of
$3,200,000. Upon the sale of the property, the Company recognized a net
loss of $336,000.
As of March 31, 1999, the Company owned 164 communities with an aggregate
of 51,076 residential homesites and 1,359 park model/RV sites. In
addition, it fee managed approximately 7,600 residential homesites in 37
communities.
3. Common Stock and Related Transactions:
On February 25, 1999, the Company declared a cash dividend/distribution of
$.485 per share/OP Unit to shareholders and OP Unitholders of record as of
March 31, 1999. The dividend/distribution was paid on April 14, 1999, and
is included in dividends and distributions payable in the accompanying
condensed consolidated balance sheet as of March 31, 1999.
On November 18, 1998, the Company declared a cash dividend/distribution of
$.455 per share/OP Unit to shareholders and OP Unitholders of record as of
December 28, 1998. The dividend/distribution was paid on January 15, 1999,
and is included in dividends and distributions payable in the accompanying
condensed consolidated balance sheet as of December 31, 1998.
4
<PAGE>
CHATEAU COMMUNITIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, Continued
3. Common Stock and Related Transactions Continued:
<TABLE>
<CAPTION>
(In thousands, except per share data) For the three months ended March 31,
------------------------------------
1999 1998
------- -------
<S> <C> <C>
Basic EPS:
Income (1) $ 8,094 $ 7,369
Weighted average common shares outstanding 27,960 26,370
Weighted average common OP Units outstanding 3,542 3,116
------- -------
Weighted average common shares/OP Units - basic 31,502 29,486
------- -------
Per share - basic 0.26 .25
======= =======
Diluted EPS:
Income (1) $ 8,094 $ 7,369
Weighted average common shares outstanding 27,960 26,370
Weighted average common OP Units outstanding 3,542 3,116
Employee stock options 186 336
------- -------
Weighted average common shares/OP
Units - assuming dilution 31,688 29,822
------- -------
Per share - assuming dilution $ 0.26 $ 0.25
======= =======
</TABLE>
(1) Represents income before minority interests less the income allocated to
the Preferred OP Units.
5
<PAGE>
CHATEAU COMMUNITIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, Continued
5. Debt:
The following table sets forth certain information regarding debt of the
Company at March 31, 1999.
<TABLE>
<CAPTION>
Weighted Average
Dollars in thousands: Interest Rate Maturity Date Principal Balance
------------- ------------- -----------------
<S> <C> <C> <C>
Fixed Rate Mortgage Debt 7.91% 1999-2011 $ 122,113
Unsecured Senior Notes 7.46% 2000-2004 245,000
Unsecured Lines of Credit 5.83% -- 45,446
Other notes payable various various 15,755
-------------
$ 428,314
=============
</TABLE>
In June 1998, the FASB issued Statement of Financial Accounting Standards
No. 133, "Accounting for Derivative Instruments and Hedging Activities":
("SFAS 133"), which is effective for the Company in the year 2000. The
only derivative instrument the Company currently utilizes is an interest
rate hedge agreement related to the anticipated refinancing of $75 million
of its senior notes. SFAS 133 requires that all derivative instruments be
measured on the balance sheet at fair value. The interest rate hedge
agreement fixes the base rate for the anticipated refinancing at 6.28
percent. The Company anticipates that the adoption of SFAS 133 will not
have a significant effect on its 2000 financial statements.
6. Subsequent Events:
In April 1999, the Company completed the acquisition of one manufactured
home community located in Montgomery, Alabama for a purchase price of $4
million. The property contains 309 homesites, and additional potential
expansion of 360 homesites.
In April 1999, the Company sold one manufactured home community located in
Bradenton, Florida with 295 homesites. The Company received net sales
proceeds of $8.8 million.
6
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion should be read in conjunction with the consolidated
financial statements and Notes thereto included elsewhere in this Quarterly
Report. Certain statements in this discussion constitute "forward-looking
statements" within the meaning of Section 21E of the Securities Exchange Act of
1934, as amended. Such forward-looking statements may involve the Company's
plans, objectives and expectations, which are dependent upon a number of
factors, including site expansions, acquisitions, development and other new
business initiatives that are subject to a number of contingency factors such as
the effects of national and local economic conditions, changes in interest
rates, supply and demand for affordable housing and the condition of the capital
markets that may prevent the Company from achieving its objectives.
Results of Operations
The following table summarizes certain information relative to the Company's
properties as of and for the three months ended March 31, 1999 and 1998. The
Company considers all communities owned by the Company for the majority of both
periods as the "Core Portfolio."
<TABLE>
<CAPTION>
Core Portfolio Total
------------------ ------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Dollars in thousands, except per site
As of March 31,
Number of Communities 144 144 164 153
Total manufactured homesites 46,277 45,791 51,076 47,654
Occupied sites 42,673 42,214 47,110 43,833
Occupancy % 92.2% 92.2% 92.2% 92.0%
For the three months ended March 31,
Rental income $40,546 $38,500 $44,170 $39,093
Property operating expenses $14,106 $13,555 $15,298 $14,031
Net operating income $26,440 $24,945 $28,872 $25,062
Weighted average monthly rent per site $ 303 $ 291 $ 299 $ 293
</TABLE>
Comparison of three months ended March 31, 1999 to three months ended March 31,
1998
For the three months ended March 31, 1999, income before minority interests was
$9,617,000, an increase of $2,248,000 from the three months ended March 31,
1998. The increase was due primarily to acquisitions and increased net operating
income from the Core Portfolio. The increase in net operating income in the
Company's Core Portfolio is primarily due to increases in occupancy and rental
increases partially offset by general operating expense increases.
Rental revenue for the three months ended March 31, 1999 was $44,170,000, an
increase of $5,077,000 from the three months ended March 31, 1998. Approximately
60 percent was due to acquisitions, net of dispositions, and the remaining 40
percent was due to rental increases and occupancy gains in the Company's Core
1998 Portfolio.
7
<PAGE>
Weighted average occupancy for the three months ended March 31, 1999 was 47,117
sites compared with 42,684 sites for the same period in 1998. The occupancy rate
was 92.2 percent on 51,076 sites as of March 31, 1999, compared to 92 percent on
47,654 sites as of March 31, 1998. The occupancy rate on the stabilized
portfolio was 93.9 percent as of March 31, 1999. On a per site basis, weighted
average monthly rental revenue for the three months ended March 31, 1999 was
$299 compared with $293 in the same period of 1998. For the Company's Core
Portfolio, on a per site basis, weighted average monthly rental revenue for the
three months ended March 31, 1999 was $303 compared with $291 for the same
period in 1998, an increase of 4.1 percent.
Management fee, interest and other income primarily includes management fee
income for the management of 37 manufactured home communities, equity earnings
from the Company's sales subsidiary and interest income on notes receivable and
advances to joint ventures/affiliates. The increase in the three months ended
March 31, 1999 from the same period in 1998 is due primarily to increased
development activities in which the Company funds the development of joint
ventures.
Property operating and maintenance expense for the three months ended March 31,
1999 increased by $1,016,000 or 9.2 percent from the same period a year ago. The
majority of the increase was due to the 1998 acquisitions and increases in the
Company's Core Portfolio.
Real estate taxes for the three months ended March 31, 1999, increased by
$251,000 or 8.5 percent from the three months ended March 31, 1998. On a per
site basis, monthly weighted real estate taxes were $22.68 for the three months
ended March 31, 1999, compared to $23.08 for the same period in 1998. Real
estate taxes may increase or decrease due to inflation, expansions and
improvements of communities, as well as changes in taxation in the tax
jurisdictions in which the Company operates.
Administrative expense for the three months ended March 31, 1999 decreased
slightly from the same period a year ago. Administrative expense in 1999 was 4.5
percent of revenues as compared to 5.4 percent in 1998.
Interest and related amortization costs increased for the three months ended
March 31, 1999 by $416,000, as compared with the three months ended March 31,
1998. Interest expense as a percentage of average debt outstanding decreased to
approximately 7.3 percent in 1999 from approximately 7.7 percent in 1998. The
decrease is due primarily to the Company's lower borrowing rate of 80 basis
points over LIBOR on the Company's line of credit and lower interest rates in
general, combined with higher borrowing on the lines of credit as a percentage
of total debt.
Depreciation and amortization expense for the three months ended March 31, 1999
increased $1,214,000 from the same period a year ago. The increase is directly
attributable to the 1998 acquisitions. Depreciation expense as a percentage of
average depreciable rental property in 1999 remained relatively unchanged from
1998.
Liquidity and Capital Resources
Net cash provided by operating activities was $19,633,000 for the three months
ended March 31, 1999, compared with $19,021,000 for the three months ended March
31, 1998. The increase in cash provided by operating activities was due
primarily to the increase in net operating income.
Net cash used in financing activities for the three months ended March 31, 1999
was $14,822,000. This was due primarily to $15,839,000 in dividends and
distributions paid to shareholders and OP Unitholders in the first quarter of
1999.
8
<PAGE>
Net cash used in investing activities for the three months ended March 31, 1999
was $4,943,000. This amount represented joint venture advances, capital
expenditures and construction and development costs. For the three months ended
March 31, 1999, acquisition costs, primarily deferred payments, were $761,000,
construction and development costs were approximately $1.6 million, advances to
joint ventures and affiliates, including construction costs were $4.8 million,
while recurring property capital expenditures was approximately $1.1 million.
Capital expenditures have historically been financed with funds from operations
and it is the Company's intention that such future expenditures will be financed
with funds from operations.
The Company has available a line of credit with Bank One, N.A., acting as lead
agent, for $100 million (the "Bank One Credit Facility"). The interest rate on
the Bank One Credit Facility is LIBOR plus 80 basis points. In addition, the
Company has a $7.5 million revolving line of credit from US Bank which bears
interest at a rate of LIBOR plus 125 basis points (the "USB Facility" and,
together with the Bank One Credit Facility, the "Credit Facilities"). As of
March 31, 1999, approximately $45 million was outstanding under the Credit
Facilities and the Company had available $62.5 million in additional borrowing
capacity.
As of March 31, 1999, the Company had outstanding, in addition to the Credit
Facilities, $245 million of other unsecured senior debt with a weighted average
interest rate and maturity of 7.5 percent and 4.0 years, respectively, and $122
million of secured mortgage debt with a weighted average interest rate and
maturity of 7.9 percent and 2.2 years, respectively. For the Company's total
fixed rate debt, the weighted average interest rate and maturity was 7.6 percent
and 3.4 years, respectively.
Repayment of long-term borrowings and amounts outstanding under the Credit
Facilities, future acquisitions of communities and land for development and new
community development activities represent the principal long-term liquidity
needs of the Company. The Company does not expect to generate sufficient funds
from operations to finance these long-term liquidity needs and instead intends
to meet its long-term liquidity requirements through additional borrowing under
the Credit Facilities or other lines of credit, the issuance of additional
equity or debt securities and the assumption of existing secured or unsecured
indebtedness.
The Company expects to meet its short-term liquidity requirements, including
dividends, expansion activities and capital expenditure requirements, through
cash flow from operations and, if necessary, borrowings under the Credit
Facilities and other lines of credit.
Recently Issued Accounting Standards
In June 1998, the FASB issued Statement of Financial Accounting Standards No.
133, "Accounting for Derivative Instruments and Hedging Activities": ("SFAS
133"), which is effective for the Company in the year 2000. The only derivative
instrument the Company currently utilizes is an interest rate hedge agreement
related to the anticipated refinancing of $75 million of its senior notes. SFAS
133 requires that all derivative instruments be measured on the balance sheet at
fair value. The interest rate hedge agreement fixes the base rate for the
anticipated refinancing at 6.28 percent. The Company anticipates that the
adoption of SFAS 133 will not have a significant effect on its 2000 financial
statements.
9
<PAGE>
Year 2000
Management has assessed the impact of the year 2000 issue on its reporting
systems and operations. The year 2000 issue exists because many computer systems
and applications abbreviate dates by eliminating the first two digits of the
year, assuming that these two digits are always "19". As a result,
date-sensitive computer programs may recognize a date using "00" as the year
1900 rather than the year 2000. Unless corrected, the potential exists for
computer system failures or incorrect processing of financial and operational
information, which could disrupt operations. To help facilitate the Company's
continued growth, substantially all of the computer systems and applications and
other operating systems in use in its home office and properties have been, or
are in the process of being upgraded and modified. The Company is of the opinion
that, in connection with those upgrades and modifications, it has addressed
applicable year 2000 issues as they might affect the computer systems and
applications located in the Company's offices and properties. The Company
anticipates that implementation of solutions to any year 2000 issue which it may
discover will require the expenditure of sums which the Company does not expect
to be material.
The Company is exposed to the risk that one or more of its vendors or service
providers may experience year 2000 problems which impact the ability of such
vendor or service provider to provide goods and services. Due to the
availability of alternative suppliers, this is not considered as significant a
risk with respect to the suppliers of goods. The disruption of certain services,
however, such as utilities, could, depending upon the extent of the disruption,
have a material adverse impact on the Company's operations. To date, the Company
is not aware of any vendor or service provider year 2000 issue that management
believes would have a material adverse impact on the Company's operations.
The Company, however, has no means of ensuring that its vendors or service
providers will be year 2000 ready. The inability of vendors or service providers
to complete the year 2000 resolution process in a timely fashion could have an
adverse impact on the Company and the effect of non-compliance by vendors or
service providers is not determinable at this time. Residents do not pose year
2000 problems for the Company in view of the nature of the Company's properties.
Widespread disruptions in the national or international economy, including
disruptions affecting the financial markets, resulting from year 2000 issues, or
in certain industries, such as commercial or investment banks, could also have
an adverse impact on the Company. The likelihood and effect of such disruptions
is not determinable at this time.
The Company expects to have all systems appropriately modified before any
significant processing malfunctions could occur and does not expect the year
2000 issue will materially impact the financial condition or operations of the
Company.
10
<PAGE>
Other
Funds from operations ("FFO") is defined by the National Association of Real
Estate Investment Trusts ("NAREIT") as consolidated net income of the Company
without giving effect to gains (or losses) from debt restructuring and sales of
property, certain non-recurring items and rental property depreciation and
amortization. Management believes that FFO is an important and widely used
measure of the operating performance of REITs which provides a relevant basis
for comparison among REITs. FFO (i) does not represent cash flow from operations
as defined by generally accepted accounting principles; (ii) should not be
considered as an alternative to net income as a measure of operating performance
or to cash flows from operating, investing and financing activities; and (iii)
is not an alternative to cash flows as a measure of liquidity. FFO is calculated
as follows:
For the Quarter
ended March 31
--------------------------------
1999 1998
------------ -----------
Income before minority interests $ 9,617 $ 7,369
Plus:
Depreciation and amortization 10,323 9,109
Loss on sale of property 336 --
Less:
Depreciation expense on corporate assets 65 62
Distribution on Preferred OP Units 1,523 --
------------ -----------
FFO $ 18,688 $ 16,416
============ ===========
11
<PAGE>
Item 3. Quantitative and Qualitative Disclosures about Market Risk
The following table sets forth certain information relating to the secured and
unsecured indebtness of the Company outstanding as of March 31, 1999.
<TABLE>
<CAPTION>
Weighted
Amount of Percent of Average Maturity
Indebtedness total debt Interest Rate Date
------------ ---------- ------------- ----
<S> <C> <C> <C> <C>
(dollars in thousands)
Mortgage Debt:
Del Tura $ 31,956 7.7% 8.40% 2000
Macomb 15,504 3.8% 9.82% 1999
Other (8 properties) 19,919 4.8% 7.69% 2002-2011
Pacific Life (36 properties) 54,734 13.3% 7.16% 2000
-------- ---- ----
Total Mortgage 122,113 29.6% 7.91%
Unsecured Debt:
Unsecured Senior Notes 70,000 17.0% 7.52% 2003
Unsecured Senior Notes 75,000 18.2% 8.75% 2000
Unsecured Senior Notes 100,000 24.2% 6.44% 2004
-------- ---- ----
Total Unsecured 245,000 59.4% 7.46%
-------- ---- ----
Total Fixed Rate 367,113 89.0% 7.61%
Variable Rate Debt:
Credit Facilities 45,446 11.0% 5.83% 1999-2001
--------
Total Secured and Unsecured Debt $412,559
========
</TABLE>
Based on the amount outstanding under the Credit Facilities at March 31, 1999 of
$45,446,000, if the interest rate under the Credit Facilities was 100 basis
points higher or lower during the period, then the Company's interest expense
(net of adjustments for capitalized items), for the three months ended March 31,
1999, would have increased or decreased by approximately $151,000.
12
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities and Use of Proceeds
None
Item 3. Defaults Upon Senior Securities
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
None
13
<PAGE>
Item 5. Other Information
Property Information
The Company classifies all of its properties in either the Stable Portfolio or
the Active Expansion Portfolio. The Stable Portfolio includes the communities
where the Company does not have, or has not recently had, expansion of the
community. These communities generally have stable occupancy rates. The Active
Expansion Portfolio are those properties where the Company is currently, or has
recently, expanded the community by adding homesites to the available homesites
for rental. Generally, these communities will have a lower occupancy rate than
our Stable Portfolio as they are in the lease-up phase. In addition, the Company
owns three park model/RV communities.
The following table sets forth certain information, as of March 31, 1999,
regarding the Properties.
<TABLE>
<CAPTION>
Total Total Weighted
Comm- Number Occupancy as Average Monthly
Location unities of Sites of Rent per Site
- ------------------------------------------------------------------------------------------------------------------------------------
Community State (Closest Major City) 3/31/99 3/31/99 3/31/99
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
100 Oaks AL Fultondale 230 90% $199
Total Alabama 1 230 90% $199
Bermuda Palms CA Palm Springs 185 97% $335
Eastridge CA San Jose 187 99% $657
La Quinta Ridge CA Palm Springs 152 92% $416
The Colony CA Palm Springs 220 98% $630
The Orchard CA San Francisco 233 100% $592
Total California 5 977 98% $537
CV-Denver CO Denver 345 94% $358
CV-Longmont CO Longmont 310 99% $367
Friendly Village CO Greeley 226 98% $279
Pine Lakes Ranch CO Denver 762 97% $320
Redwood Estates CO Denver 753 98% $325
Total Colorado 5 2,396 97% $329
Cedar Grove CT New Haven 60 100% $288
Evergreen CT New Haven 102 99% $289
Green Acres CT New Haven 64 97% $285
Highland CT New Haven 50 94% $299
Total Connecticut 4 276 98% $290
Anchor North FL Tampa Bay 94 95% $259
Audubon FL Orlando 280 97% $256
Colony Cove FL Sarasota 2,211 100% $335
Conway Circle FL Orlando 111 95% $291
Crystal Lake FL St. Petersburg 166 98% $266
* Crystal Lakes FL Tampa 330 54% $153
CV-Jacksonville FL Jacksonville 643 97% $300
Del Tura FL Fort Myers 1,343 88% $441
Eldorado Estates FL Daytona Beach 126 96% $261
Emerald Lake FL Fort Myers 201 100% $289
Fairways Country Club FL Orlando 1,141 99% $292
* Foxwood Farms FL Orlando 375 75% $198
* Gold Tree** FL Tampa 295 89% $338
Hidden Valley FL Orlando 303 100% $293
Indian Rocks FL Clearwater 148 64% $237
Jade Isle FL Orlando 101 95% $315
Lakeland Harbor FL Tampa 504 100% $251
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
Total Total Weighted
Comm- Number Occupancy as Average Monthly
Location unities of Sites of Rent per Site
- ------------------------------------------------------------------------------------------------------------------------------------
Community State (Closest Major City) 3/31/99 3/31/99 3/31/99
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Lakeland Junction FL Tampa 191 100% $196
Lakes at Leesburg FL Orlando 640 100% $261
Land O' Lakes FL Orlando 173 100% $257
Midway Estates FL Vero Beach 204 83% $318
Oak Springs FL Orlando 438 74% $243
Orange Lake FL Orlando 242 94% $248
Palm Beach Colony FL West Palm Beach 285 95% $306
Pedaler's Pond FL Orlando 214 86% $195
Pinellas Cascades FL Clearwater 238 94% $368
Shady Lane FL Clearwater 108 91% $253
Shady Oak FL Clearwater 250 99% $320
Shady Village FL Clearwater 156 97% $304
Southwind Village FL Naples 337 92% $299
Starlight Ranch FL Orlando 783 94% $291
Tarpon Glen FL Clearwater 170 90% $285
Town & Country FL Orlando 73 95% $312
Whispering Pines FL Clearwater 392 95% $357
Winter Haven Oaks FL Orlando 343 52% $210
Total Florida 35 13,609 92% $301
Atlanta Meadows GA Atlanta 75 100% $230
* Butler Creek GA Augusta 376 80% $186
Camden Point GA Kingsland 268 53% $179
Castlewood Estates GA Atlanta 334 85% $312
Colonial Coach Estates GA Atlanta 481 86% $277
Golden Valley GA Atlanta 131 98% $248
Landmark GA Atlanta 524 95% $268
Marnelle GA Atlanta 205 98% $258
Oak Grove Estates GA Albany 174 98% $129
Paradise Village GA Albany 226 97% $141
Total Georgia 10 2,794 87% $233
Lakewood Estates IA Davenport 180 92% $248
Terrace Heights IA Dubuque 317 97% $253
Total Iowa 2 497 95% $251
Coach Royale ID Boise 91 99% $268
Maple Grove Estates ID Boise 270 99% $281
Shenandoah Estates ID Boise 154 97% $272
Total Idaho 3 515 98% $276
Falcon Farms IL Moline 215 91% $226
Maple Ridge IL Kankakee 201 100% $245
Maple Valley IL Kankakee 75 100% $245
Total Illinois 3 491 96% $236
* Broadmore IN South Bend 343 82% $236
Forest Creek IN South Bend 167 99% $291
* Fountainvue IN Marion 120 87% $152
Hickory Knoll IN Indianapolis 325 98% $289
Mariwood IN Indianapolis 296 95% $289
Oak Ridge IN South Bend 204 100% $236
Pendleton IN Indianapolis 102 98% $213
Sherwood IN Marion 89 80% $157
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
Total Total Weighted
Comm- Number Occupancy as Average Monthly
Location unities of Sites of Rent per Site
- ------------------------------------------------------------------------------------------------------------------------------------
Community State (Closest Major City) 3/31/99 3/31/99 3/31/99
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Skyway IN Indianapolis 156 99% $285
Twin Pines IN Goshen 238 97% $224
Total Indiana 10 2,040 94% $249
Mosby's Point KY Cincinnati 150 97% $286
Rolling Hills KY Louisville 158 96% $198
Total Kentucky 2 308 96% $241
Pinecrest Village LA Shreveport 446 72% $150
Stonegate, LA LA Shreveport 157 98% $170
Total Louisiana 2 603 79% $155
Hillcrest MA Boston 83 93% $299
Leisurewoods Rockland MA Boston 394 99% $323
* Leisurewoods Taunton MA Boston 128 96% $280
The Glen MA Boston 36 100% $380
Total Massachusetts 4 641 98% $315
Algoma Estates MI Grand Rapids 294 94% $276
* Anchor Bay MI Detroit 1,384 94% $336
Arbor Village MI Jackson 266 98% $245
Avon MI Detroit 617 99% $390
Canterbury Estates MI Grand Rapids 209 80% $230
Chesterfield MI Detroit 345 97% $358
Chestnut Creek MI Flint 221 68% $308
Clinton MI Detroit 1,000 99% $357
Colonial Acres MI Kalamazoo 612 95% $279
Colonial Manor MI Kalamazoo 195 96% $266
Country Estates MI Grand Rapids 254 94% $268
Cranberry MI Pontiac 232 100% $344
Ferrand Estates MI Grand Rapids 420 99% $321
* Forest Lake Estates MI Grand Rapids 221 78% $272
* Grand Blanc MI Flint 415 96% $326
Holiday Estates MI Grand Rapids 205 100% $305
Howell MI Lansing 455 99% $364
Huron Estates MI Flint 111 68% $196
Lake in the Hills MI Detroit 238 100% $372
* Leonard Gardens MI Grand Rapids 216 82% $289
Macomb MI Detroit 1,426 99% $358
Norton Shores MI Grand Rapids 656 86% $245
Novi MI Detroit 725 98% $405
Oakhill MI Flint 504 90% $350
Old Orchard MI Flint 200 100% $316
Orion MI Detroit 423 98% $337
Pinewood MI Columbus 380 98% $290
Pleasant Ridge MI Lansing 305 85% $212
Royal Estates MI Kalamazoo 183 92% $297
Science City MI Midland 171 98% $279
Springbrook MI Utica 398 98% $326
Sun Valley MI Jackson 203 97% $237
Swan Creek MI Ann Arbor 294 99% $328
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Total Total Weighted
Comm- Number Occupancy as Average Monthly
Location unities of Sites of Rent per Site
- ------------------------------------------------------------------------------------------------------------------------------------
Community State (Closest Major City) 3/31/99 3/31/99 3/31/99
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
* The Highlands MI Flint 682 89% $272
Torrey Hills MI Flint 346 97% $340
Valley Vista MI Grand Rapids 137 93% $323
Villa MI Flint 319 97% $330
* Westbrook MI Detroit 217 57% $364
Yankee Spring MI Grand Rapids 284 91% $247
Total Michigan 39 15,763 94% $320
Cedar Knolls MN Minneapolis 458 97% $380
Cimmaron MN St. Paul 505 99% $383
President's Park MN Grand Forks 174 82% $219
Rosemount MN Minneapolis/St. Paul 182 100% $373
Twenty-Nine Pines MN St. Paul 152 93% $308
Total Minnesota 5 1,471 96% $354
* Springfield Farms MO Springfield 134 69% $177
Total Missouri 1 134 69% $177
Countryside Village G.F. MT Great Falls 222 99% $200
Total Montana 1 222 99% $200
Autumn Forest NC Greensboro 299 99% $213
Foxhall Village NC Raleigh 315 97% $330
Oakwood Forest NC Greensboro 481 96% $256
Woodlake NC Greensboro 308 100% $227
Total North Carolina 4 1,403 98% $247
Buena Vista ND Fargo 400 96% $255
Columbia Heights ND Grand Forks 302 99% $264
Meadow Park ND Fargo 118 90% $191
Total North Dakota 3 820 96% $249
Casual Estates NY Syracuse 961 74% $318
Meadowbrook NY Ithaca 237 74% $253
Oak Orchard Estates NY Rochester 235 94% $282
Shadybrook NY Syracuse 89 74% $318
Total New York 4 1,522 77% $303
* Hunter's Chase OH Lima 135 39% $165
Vance OH Columbus 110 95% $209
Willo-Arms OH Cleveland 262 100% $192
Yorktowne OH Cincinnati 354 97% $322
Total Ohio 4 861 89% $244
Crestview OK Stillwater 237 86% $191
Total Oklahoma 1 237 86% $191
Knoll Terrace OR Salem 212 97% $337
Riverview OR Portland 133 99% $372
Total Oregon 2 345 98% $351
* Carnes Crossing SC 535 96% $166
* Conway Plantation SC Myrtle Beach 299 64% $178
Saddlebrook SC 426 98% $185
Total South Carolina 3 1,260 89% $175
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
Total Total Weighted
Comm- Number Occupancy as Average Monthly
Location unities of Sites of Rent per Site
- ------------------------------------------------------------------------------------------------------------------------------------
Community State (Closest Major City) 3/31/99 3/31/99 3/31/99
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
* Eagle Creek TX Tyler 198 43% $158
Homestead Ranch TX McAllen 126 88% $220
Leisure World TX Brownsville 201 91% $207
The Homestead TX McAllen 99 98% $214
Trail's End TX Brownsville 307 83% $200
Total Texas 5 931 79% $197
* Regency Lakes VA Winchester 384 71% $205
Total Virginia 1 384 71% $205
Eagle Point WA Seattle 230 98% $440
Total Washington 1 230 98% $440
Breazeale WY Laramie 116 97% $227
Total Wyoming 1 116 97% $227
Totals 51,076 92.2% $299
</TABLE>
* These properties are included in the Active Expansion Portfolio.
** This property was sold in April 1999.
18
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 318
<SECURITIES> 0
<RECEIVABLES> 11,237
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 1,026,914
<DEPRECIATION> 161,234
<TOTAL-ASSETS> 956,644
<CURRENT-LIABILITIES> 0
<BONDS> 428,314
0
0
<COMMON> 362,368
<OTHER-SE> 120,011
<TOTAL-LIABILITY-AND-EQUITY> 956,644
<SALES> 0
<TOTAL-REVENUES> 45,608
<CGS> 0
<TOTAL-COSTS> 15,298
<OTHER-EXPENSES> 12,395
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,962
<INCOME-PRETAX> 7,184
<INCOME-TAX> 0
<INCOME-CONTINUING> 7,184
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,184
<EPS-PRIMARY> .26
<EPS-DILUTED> .26
</TABLE>
