<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 June 30, 2000
-------------
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, $0.01 par value,
on August 10, 2000 was 28,467,205 shares.
<PAGE>
CHATEAU COMMUNITIES, INC.
FORM 10-Q
INDEX
Page Number
-----------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Condensed Consolidated Statements of Income for the Three
and Six Months Ended June 30, 2000 and 1999 1
Condensed Consolidated Balance Sheets as of June 30, 2000
and December 31, 1999 2
Condensed Consolidated Statements of Cash Flows for the Six
Months Ended June 30, 2000 and 1999 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
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CHATEAU COMMUNITIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2000 AND 1999
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
--------------------------------------- ----------------------------------------
2000 1999 2000 1999
------------------ ---------------- --------------- ------------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 46,190 $ 44,119 $ 92,395 $ 88,289
Interest income 2,290 1,394 4,468 2,637
Management fee and other income 2,294 1,324 2,760 1,519
------------------ ---------------- --------------- ------------------
50,774 46,837 99,623 92,445
Expenses:
Property operating and maintenance 12,930 12,482 25,291 24,574
Real estate taxes 3,333 3,167 6,667 6,373
Depreciation and amortization 10,602 10,326 21,407 20,649
Administrative 2,535 2,235 5,096 4,307
Interest and related amortization 8,767 8,127 17,248 16,089
------------------ ---------------- --------------- ------------------
38,167 36,337 75,709 71,992
------------------ ---------------- --------------- ------------------
Income before net gain on sales of properties
and minority interests 12,607 10,500 23,914 20,453
Net gain on sales of properties -- 3,141 -- 2,805
------------------ ---------------- --------------- ------------------
Income before minority interests 12,607 13,641 23,914 23,258
Less income allocated to minority interests:
Preferred OP Units 1,524 1,524 3,047 3,047
Common OP Units 1,256 1,346 2,383 2,258
------------------ ---------------- --------------- ------------------
Net income available to common
shareholders $ 9,827 $ 10,771 $ 18,484 $ 17,953
================== ================ =============== ==================
Per share/OP Unit information
Basic earnings per common share $ 35 $ .38 $ .65 $ .64
================== ================ =============== ==================
Diluted earnings per common share $ .34 $ .38 $ .65 $ .64
================== ================ =============== ==================
Dividend/distribution declared per
common share/OP Unit outstanding $ .515 $ .485 $ 1.03 $ .97
================== ================ =============== ==================
Weighted average common shares
outstanding - basic 28,458 28,078 28,477 28,020
================== ================ =============== ==================
Weighted average common shares
and OP Units outstanding -
assuming dilution 32,143 31,748 32,189 31,716
================== ================ =============== ==================
</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>
June 30, December 31,
2000 1999
---------- -----------
<S> <C> <C>
ASSETS
Rental property:
Land $ 138,472 $ 135,811
Land and improvements for expansion sites 31,265 23,320
Depreciable property 905,297 896,319
---------- -----------
1,075,034 1,055,450
Less accumulated depreciation 213,175 192,015
---------- -----------
Net rental property 861,859 863,435
Cash and cash equivalents 272 348
Rents, notes and other receivables 18,608 11,742
Investment in and advances to affiliates 105,776 97,761
Prepaid expenses and other assets 10,950 8,387
---------- -----------
Total assets $ 997,465 $ 981,673
========== ===========
LIABILITIES
Debt $ 486,900 $ 452,556
Accrued interest payable 4,632 5,284
Accounts payable and accrued expenses 17,237 17,688
Rents received in advance and security deposits 7,941 7,044
Dividends and distributions payable 17,498 16,139
---------- -----------
Total liabilities 534,208 498,711
Minority interests in Operating Partnership 118,581 121,142
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;
28,467,205 and 28,424,900 shares issued and outstanding
at June 30, 2000 and December 31, 1999, respectively 285 284
Additional paid-in capital 444,842 446,231
Dividends in excess of accumulated earnings (87,813) (76,647)
Notes receivable from officers, 577,432 and 406,569 shares
at June 30, 2000 and December 31, 1999, respectively (12,638) (8,048)
---------- -----------
Total shareholders' equity 344,676 361,820
---------- -----------
Total liabilities and shareholders' equity $ 997,465 $ 981,673
========== ===========
</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 SIX MONTHS ENDED JUNE 30, 2000 AND 1999.
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
--------------------
2000 1999
--------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 18,484 $ 17,953
Adjustments to reconcile net income to net cash
provided by operating activities:
Gain on sales of properties - (2,805)
Income attributable to minority interests 2,383 2,258
Depreciation and amortization 21,407 20,649
Amortization of debt issuance costs 282 407
Increase in operating assets (5,720) (4,153)
(Decrease) increase in operating liabilities (206) (460)
--------- --------
Net cash provided by operating activities 36,630 33,849
Cash flows from financing activities:
Borrowings on the line of credit 168,376 43,201
Payments on the line credit (218,579) (10,267)
Payoff of mortgages and other debt (160,824) (8,050)
Mortgage principal payments (705) (703)
Dividends/distributions to shareholders/OP Unitholders (31,708) (26,823)
Common shares/OP Units reacquired and retired (11,323) -
Proceeds from the issuance of debt 245,295 -
Payment of debt issuance costs (447) -
Exercise of common stock options and other financing activities 731 1,626
--------- --------
Net cash used in financing activities (9,184) (1,016)
Cash flows from investing activities:
Acquisition of rental properties (1,972) (5,706)
Additions to rental property (15,064) (7,659)
Disposition of rental property - 9,620
Other investments (2,471) -
Investment in and advances to joint ventures/affiliates (8,015) (22,795)
--------- --------
Net cash used in investing activities (27,522) (26,540)
--------- --------
Decrease in cash and cash equivalents (76) 6,293
Cash and cash equivalents, beginning of period 348 450
--------- --------
Cash and cash equivalents, end of period $ 272 $ 6,743
========= ========
Supplemental cash flow information:
Fair Market Value of OP Units/common shares issued in connection
with acquisitions/development $ 551 $ 890
========= ========
</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 statement
presentation. 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. Certain reclassifications of prior year
data have been made to conform with current year presentation. 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, 1999.
2. Rental Property
---------------
On February 1, 2000, the Company purchased a manufactured home community
located in Pelham, Alabama with 115 homesites for a purchase price of
approximately $1.7 million.
3. Common Stock and Related Transactions:
--------------------------------------
On May 18, 2000, the Company declared a cash dividend/distribution of $.515
per share/OP Unit to shareholders and OP Unitholders of record as of June
30, 2000. The dividend/distribution was paid on July 14, 2000, and is
included in dividends and distributions payable in the accompanying
condensed consolidated balance sheet as of June 30, 2000.
On February 29, 2000, the Company announced the establishment of a share
repurchase program pursuant to which it may repurchase up to 1,000,000
shares of common stock from time to time. During the first six months, the
Company repurchased 453,900 shares for approximately $11.3 million.
On February 24, 2000, the Company declared a cash dividend/distribution of
$.515 per share/OP Unit to shareholders and OP Unitholders of record as of
March 31, 2000. The dividend/distribution was paid on April 14, 2000.
On December 3, 1999, the Company declared a cash dividend/distribution of
$.485 per share/OP Unit to shareholders and OP Unitholders of record as of
December 27, 1999. The dividend/distribution was paid on January 17, 2000,
and is included in dividends and distributions payable in the accompanying
condensed consolidated balance sheet as of December 31, 1999.
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 For the Six
Months Ended Months Ended
June 30, June 30
-------------------- -------------------
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Basic EPS:
Income (1) $11,083 $12,117 $20,867 $20,211
======= ======= ======= =======
Weighted average common shares outstanding 28,458 28,078 28,477 28,020
Weighted average common OP Units outstanding 3,638 3,497 3,671 3,521
------- ------- ------- -------
Weighted average common shares/OP Units - Basic 32,096 31,575 32,148 31,541
======= ======= ======= =======
Per share - basic $ .35 $ .38 $ .65 $ .64
======= ======= ======= =======
Diluted EPS:
Income (1) $11,083 $12,117 $20,867 $20,211
======= ======= ======= =======
Weighted average common shares outstanding 28,458 28,078 28,477 28,020
Weighted average common OP Units outstanding 3,638 3,497 3,671 3,521
Employee stock options 47 173 41 175
------- ------- ------- -------
Weighted average common shares/OP Units -
assuming dilution 32,143 31,748 32,189 31,716
======= ======= ======= =======
Per share - assuming dilution $ .34 $ .38 $ .65 $ .64
======= ======= ======= =======
</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
-------
4. Financing:
----------
The following table sets forth certain information regarding debt of the
Company at June 30, 2000.
<TABLE>
<CAPTION>
Weighted Average
Dollars in thousands: Interest Rate Maturity Date Principal Balance
-------------- ------------- -----------------
<S> <C> <C> <C>
Fixed Rate Mortgage Debt (15 properties) 7.81 % 2002-2011 $135,611
Unsecured Senior Notes 7.41 % 2003-2005 270,000
Unsecured Short-term Note 7.35 % 2000 30,000
Unsecured Lines of Credit 7.59 % - 47,114
Other notes payable - - 4,175
----------------
$486,900
================
</TABLE>
On February 25, 2000, the Company issued $100 million of 8.5% Unsecured
Senior Notes due March 1, 2005. The Company received net proceeds of nearly
$99 million, which were used to repay $75 million of 8.75% Unsecured Senior
Notes which matured March 2, 2000. The remaining $24 million was used to
repay a portion of the borrowings on its line of credit.
On February 17, 2000, the Company unwound an interest rate hedge that was
scheduled to mature April 1, 2000. The Company received approximately $1.5
million, which lowered the effective yield on the above 8.5% unsecured notes
by 30 basis points.
The Company, in February, also entered into a $30 million unsecured short-
term note that matures in August of 2000.
On June 15, 2000 the Company issued $116 million of 7.8% fixed rate mortgage
debt due June 14, 2010. The mortgage debt is collateralized by seven
properties. The proceeds from this issuance were used to repay approximately
$85.8 million of mortgage debt, which was scheduled to mature in June and
August. The mortgage debt that was repaid was collateralized by 37
properties. The remaining proceeds were used to repay a portion of the
borrowings on the lines of credit.
5. Subsequent Event
----------------
On August 2, 2000, the Company issued $50 million of 8.0% unsecured senior
notes due August 1, 2003. The Company received net proceeds of approximately
$49.9 million. The proceeds were used to repay the $30 million unsecured
short-term note discussed above and the remaining funds were used to repay a
portion of the borrowings on the line of credit.
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 and six months ended June 30, 2000 and 1999.
The Company considers all communities owned by the Company at the beginning of
the period as the "Core Portfolio."
<TABLE>
<CAPTION>
Core Portfolio Total
--------------------------- -------------------------
2000 1999 2000 1999
------- ------- ------- -------
<S> <C> <C> <C> <C>
Dollars in thousands, except per site
As of June 30,
Number of communities 164 164 165 164
Total manufactured homesites 51,496 51,156 51,913 51,156
Occupied sites 47,014 47,165 47,413 47,165
Occupancy % 91.3% 92.2% 91.3% 92.2%
For the three months ended June 30,
Rental income $45,872 $44,047 $46,190 $44,119
Property operating expenses $16,155 $15,584 $16,263 $15,649
Net operating income $29,717 $28,463 $29,927 $28,470
Weighted average monthly rent per $ 314 $ 300 $ 313 $ 300
site
For the six months ended June 30,
Rental income $91,527 $87,809 $92,395 $88,289
Property operating expenses $31,634 $30,718 $31,958 $30,947
Net operating income $59,893 $57,091 $60,437 $57,342
Weighted average monthly rent $ 314 $ 300 $ 312 $ 300
per site
</TABLE>
7
<PAGE>
Comparison of three months ended June 30, 2000 to three months ended June 30,
1999
For the three months ended June 30, 2000, income before net gain on sales of
properties and minority interests was $12,607,000, an increase of $2,107,000
from the three months ended June 30, 1999. The increase was due primarily to
increased net operating income from the Core Portfolio. The increase in net
operating income in the Company's Core Portfolio is primarily due to rental
increases partially offset by general operating expense increases.
Rental revenue for the three months ended June 30, 2000 was $46,190,000, an
increase of $2,071,000 from the three months ended June 30, 1999. The increase
is primarily due to rental increases in the Company's Core Portfolio.
Weighted average occupancy for the three months ended June 30, 2000 was 47,385
sites compared with 47,172 sites for the same period in 1999. The occupancy rate
was 91.3 percent on 51,913 sites as of June 30, 2000, compared to 92.2 percent
on 51,156 sites as of June 30, 1999. The occupancy rate on the stabilized
portfolio was 92.9 percent as of June 30, 2000. The stabilized portfolio
includes communities where the Company does not have, or has not recently had,
an expansion of the community. On a per site basis, weighted average monthly
rental revenue for the three months ended June 30, 2000 was $313 compared with
$300 in the same period of 1999. For the Company's Core Portfolio, on a per site
basis, weighted average monthly rental revenue for the three months ended June
30, 2000 was $314 compared with $300 for the same period in 1999, an increase of
4.5 percent.
Management fee and other income primarily includes management and transaction
fee income for the management of 44 manufactured home communities, and equity
earnings from the Company's sales subsidiary. The increase of $970,000 is due
to increased transaction and management fee income, as well as increased home
sales. Interest income primarily includes interest on notes receivable and
advances to joint ventures/affiliates. The increase of $896,000 in the three
months ended June 30, 2000 from the same period in 1999 is due primarily to
increased interest income from Company funded development projects, as well as
increases in interest rates.
Total property operating expenses for the three months ended June 30, 2000
increased by $614,000 or 3.9 percent from the same period a year ago. The
majority of the increase was due to increases in the Company's Core Portfolio.
Administrative expense for the three months ended June 30, 2000 increased by
$300,000 from the same period a year ago. Administrative expense in the second
quarter of 2000 was 5.0 percent of revenues as compared to 4.8 percent in 1999.
Interest and related amortization increased $640,000 for the three months ended
June 30, 2000 from 1999. The weighted average interest rate increased to 7.6%
from 7.4%.
Depreciation and amortization expense for the three months ended June 30, 2000
increased $276,000 from the same period a year ago. Depreciation expense as a
percentage of average depreciable rental property in the second quarter of 2000
remained relatively unchanged from 1999.
Comparison of six months ended June 30, 2000 to six months ended June 30, 1999
For the six months ended June 30, 2000, income before net gain on sales of
properties and minority interests was $23,914,000, an increase of $3,461,000
from the six months ended June 30, 1999. The increase was due primarily to
increased net operating income from the Core Portfolio. The increase in net
operating income in the Company's Core Portfolio is primarily due to rental
increases partially offset by general operating expense increases.
Rental revenue for the six months ended June 30, 2000 was $92,395,000, an
increase of $4,106,000 from the six months ended June 30, 1999. The increase is
primarily due to rental increases in the Company's Core Portfolio.
Weighted average occupancy for the six months ended June 30, 2000 was 47,388
sites compared with 47,139 sites for the same period in 1999. On a per site
basis, weighted average monthly rental revenue for the six months ended June 30,
8
<PAGE>
2000 was $312 compared with $300 in the same period of 1999. For the Company's
Core Portfolio, on a per site basis, weighted average monthly rental revenue for
the six months ended June 30, 2000 was $314 compared with $300 for the same
period in 1999, an increase of 4.4 percent.
Management fee and other income increased $1,241,000 due to increased
transaction and management fee income, as well as increased home sales. The
increase in interest income of $1,831,000 for the six months ended June 30, 2000
from the same period in 1999 is due primarily to increased Company funded
development projects, as well as increase s in interest rates.
Total property operating and maintenance expense for the six months ended June
30, 2000 increased by $1,011,000 or 3.3 percent from the same period a year ago.
The majority of the increase was due to increases in the Company's Core
Portfolio.
Administrative expense for the six months ended June 30, 2000 increased by
$789,000 from the same period a year ago. Administrative expense in the first
six months of 2000 was 5.1 percent of revenues as compared to 4.7 percent in
1999.
Interest and related amortization for the six months ended June 30, 2000
increased $1,159,000 or 7.2 percent. The weighted average interest rate
increased to 7.5% from 7.3%.
Depreciation and amortization expense for the six months ended June 30, 2000
increased $758,000 from the same period a year ago. Depreciation expense as a
percentage of average depreciable rental property in the first six months of
2000 remained relatively unchanged from 1999.
Liquidity and Capital Resources
Net cash provided by operating activities was $36,630,000 for the six months
ended June 30, 2000, compared with $33,849,000 for the six months ended June 30,
1999. 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 six months ended June 30, 2000 was
$9,184,000. Net cash used in financing activities consisted primarily of the
payoff of $160.8 million of debt, net payments of $50.2 million on the Company's
lines of credit, $31.7 million in dividends and distributions and $11.3 million
for the repurchase of common stock. Partially offsetting these uses was the
proceeds of $245.3 million from the issuance of debt.
On February 25, 2000, the Company issued $100 million of 8.5% Unsecured Senior
Notes due March 1, 2005. The Company received net proceeds of nearly $99
million, which were used to repay $75 million of 8.75% Unsecured Senior Notes
which matured March 2, 2000. The remaining $24 million was used to repay a
portion of the borrowings on its lines of credit.
On February 29, 2000, the Company announced the establishment of a share
repurchase program pursuant to which it may repurchase up to 1,000,000 shares of
common stock from time to time. During the first six months, the Company
repurchased 453,900 shares for approximately $11.3 million.
The Company, in February, also entered into a $30 million unsecured short-term
note that matures in August of 2000.
On June 15, 2000, the Company issued $116 million of 7.8% fixed rate mortgage
debt due June 14, 2010. The mortgage debt is collateralized by seven
properties. The proceeds from this issuance were used to repay approximately
$85.8 million of mortgage debt, which was scheduled to mature in June and
August. The mortgage debt that was repaid was collateralized by 37 properties.
The remaining proceeds were used to repay a portion of the borrowings on the
lines of credit.
9
<PAGE>
Net cash used in investing activities for the six months ended June 30, 2000 was
$27,522,000. This amount represented primarily joint venture advances, capital
expenditures and construction and development costs. For the six months ended
June 30, 2000, acquisition costs were approximately $2.0 million, including the
acquisition of one manufactured home community with 115 homesites for a purchase
price of approximately $1.7 million. Construction and development costs were
approximately $8.3 million, recurring property capital expenditures were
approximately $3.1 million, and advances to joint ventures and affiliates,
including construction costs were $8.0 million. Capital expenditures have
historically been financed with cash from operations and it is the Company's
intention that such future expenditures will be financed with cash 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
June 30, 2000, approximately $47 million was outstanding under the Credit
Facilities and the Company had available $60 million in additional borrowing
capacity.
As of June 30, 2000, the Company had outstanding, in addition to the Credit
Facilities, $270 million of other unsecured senior debt with a weighted average
interest rate and maturity of 7.4 percent and 4.3 years, respectively, and $136
million of secured mortgage debt with a weighted average interest rate and
maturity of 7.8 percent and 9.5 years, respectively, and an unsecured short-term
note of $30 million, with an interest rate of 7.35 percent. For the Company's
total fixed rate debt, the weighted average interest rate and maturity was 7.5
percent and 6.0 years, respectively.
On August 2, 2000, the Company issued $50 million of 8.0% unsecured senior notes
due August 1, 2003. The Company received net proceeds of approximately $49.9
million. The proceeds were used to repay the $30 million unsecured short-term
note discussed above and the remaining funds were used to repay a portion of the
borrowings on the lines of credit.
In addition to repayment of long-term borrowings and amounts outstanding under
the Credit Facilities, future acquisitions of communities and land for
development and community development activities represent the principal long-
term liquidity needs of the Company. The Company does not expect to generate
sufficient cash 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 assumption
of existing secured or unsecured indebtedness, and depending on market
conditions and capital availability factors, the issuance of additional equity
or debt securities.
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.
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, 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:
<TABLE>
<CAPTION>
For the Quarter For the Six Months
Ended June 30, Ended June 30,
---------------------------------- --------------------------------
2000 1999 2000 1999
--------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
Income before minority interests $12,607 $13,641 $23,914 $23,258
Plus:
Depreciation and amortization 10,602 10,326 21,407 20,649
Less:
Depreciation expense on corporate assets 125 65 215 130
Distribution on Preferred OP Units 1,524 1,524 3,047 3,047
Net gain on sales of properties - 3,141 - 2,805
--------------- -------------- ------------- --------------
FFO $21,560 $19,237 $ 2,059 $37,925
=============== ============== ============= ==============
</TABLE>
11
<PAGE>
Item 3. Quantitative and Qualitative Disclosures about Market Risk
The following table sets forth certain information relating to the secured and
unsecured indebtedness of the Company outstanding as of June 30, 2000.
<TABLE>
<CAPTION>
Amount of Percent of Weighted Average Maturity
Indebtedness Total Debt Interest Rate Date
--------------- --------------- ------------------- --------------
<S> <C> <C> <C> <C>
(dollars in thousands)
Mortgage Debt:
Collateral Mortgage (7 Properties) $116,161 24.1% 7.83% 2010
Other (8 properties) 19,450 4.0% 7.67% 2002-2011
-------- ---- ----
Total Mortgage 135,611 28.1% 7.81%
Unsecured Debt:
Unsecured Senior Notes 70,000 14.5% 7.52% 2003
Unsecured Senior Notes 100,000 20.7% 6.44% 2004
Unsecured Senior Notes 100,000 20.7% 8.30% 2005
-------- ---- ----
Total Unsecured 270,000 55.9% 7.41%
-------- ---- ----
Total Fixed Rate 405,611 84.0% 7.54%
Variable Rate Debt:
Unsecured Short-Term Note 30,000 6.2% 7.35% 2000
Credit Facilities 47,114 9.8% 7.59%
-------- ---- ----
Total Variable Debt 77,114 16.0% 7.50%
--------
Total Secured and Unsecured Debt $482,725
========
</TABLE>
Based on the amount outstanding under the Credit Facilities at June 30, 2000 of
$47,114,000, if the interest rate under the Credit Facilities was 100 basis
points higher or lower during the six months ended June 30, 2000, then the
Company's interest expense (net of adjustments for capitalized items), for the
period would have increased or decreased by approximately $236,000.
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
On May 18, 2000, the Company held its annual meeting of
shareholders. The following matters were voted upon at the meeting:
1. The election of the following Class I directors named in the proxy
statement:
<TABLE>
<CAPTION>
Abstentions and
Votes for Votes against Broker Non-votes
--------------- ------------- ----------------
<S> <C> <C> <C>
Gebran S. Anton, Jr. 21,204,306 0 42,389
Rhonda G. Hogan 21,210,524 0 36,171
James M. Lane 21,202,019 0 44,676
Gary P. McDaniel 21,211,676 0 35,019
</TABLE>
Class II directors (C.G. ("Jeff") Kellogg, Edward R. Allen, James M. Hankins and
Donald E. Miller), and Class III directors (John A. Boll, James L. Clayton, and
Steven G. Davis) also continued in office as directors after the meeting.
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 June 30, 2000,
regarding the Properties.
* These properties are included in the Active Expansion Portfolio.
<TABLE>
<CAPTION>
Total Weighted
Number of Occupancy Average Monthly
Location Total Sites as of Rent per Site
Community State (Closest Major City) Communities 6/30/00 6/30/00 6/30/00
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
100 Oaks AL Fultondale 230 91% $ 222
Greenpark South AL Montgomery 416 96% $ 258
Lakewood AL Montgomery 310 78% $ 176
Total Alabama 3 956 89% $ 223
Bermuda Palms CA Palm Springs 185 95% $ 356
Eastridge CA San Jose 187 99% $ 647
La Quinta Ridge CA Palm Springs 152 85% $ 410
The Colony CA Palm Springs 220 98% $ 625
The Orchard CA San Francisco 233 100% $ 597
Total California 5 977 96% $ 538
CV-Denver CO Denver 345 94% $ 378
CV-Longmont CO Longmont 310 99% $ 391
Friendly Village CO Greeley 226 99% $ 303
Pine Lakes Ranch CO Denver 762 98% $ 351
Redwood Estates CO Denver 753 98% $ 350
Total Colorado 5 2,396 98% $ 355
Cedar Grove CT New Haven 60 98% $ 300
Evergreen CT New Haven 102 95% $ 303
Green Acres CT New Haven 64 95% $ 299
Highland CT New Haven 50 92% $ 315
Total Connecticut 4 276 95% $ 304
Anchor North FL Tampa Bay 94 97% $ 273
Audubon FL Orlando 280 99% $ 275
Colony Cove FL Sarasota 2,211 100% $ 354
Conway Circle FL Orlando 111 95% $ 307
Crystal Lake FL St. Petersburg 166 93% $ 275
* Crystal Lakes FL Tampa 330 57% $ 156
CV-Jacksonville FL Jacksonville 643 91% $ 312
Del Tura FL Fort Myers 1,344 88% $ 431
Eldorado Estates FL Daytona Beach 126 97% $ 270
Emerald Lake FL Fort Myers 201 100% $ 296
Fairways Country Club FL Orlando 1,141 99% $ 302
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
Total Weighted
Number of Occupancy Average Monthly
Location Total Sites as of Rent per Site
Community State (Closest Major City) Communities 6/30/00 6/30/00 6/30/00
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
* Foxwood Farms FL Orlando 375 78% $ 209
Hidden Valley FL Orlando 303 99% $ 312
Indian Rocks FL Clearwater 148 67% $ 260
Jade Isle FL Orlando 101 97% $ 320
Lakeland Harbor FL Tampa 504 100% $ 257
Lakeland Junction FL Tampa 191 100% $ 201
Lakes at Leesburg FL Orlando 640 100% $ 270
Land O' Lakes FL Orlando 173 99% $ 261
Midway Estates FL Vero Beach 204 73% $ 353
Oak Springs FL Orlando 438 73% $ 249
Orange Lake FL Orlando 242 96% $ 258
Palm Beach Colony FL West Palm Beach 285 92% $ 314
Pedaler's Pond FL Orlando 214 85% $ 205
Pinellas Cascades FL Clearwater 238 94% $ 380
Shady Lane FL Clearwater 108 94% $ 273
Shady Oak FL Clearwater 250 97% $ 331
Shady Village FL Clearwater 156 96% $ 301
Southwind Village FL Naples 338 93% $ 313
Starlight Ranch FL Orlando 783 95% $ 312
Tarpon Glen FL Clearwater 170 86% $ 307
Town & Country FL Orlando 73 96% $ 322
Whispering Pines FL Clearwater 392 96% $ 367
Winter Haven Oaks FL Orlando 343 53% $ 214
Total Florida 34 13,316 92% $ 311
Atlanta Meadows GA Atlanta 75 99% $ 240
* Butler Creek GA Augusta 376 82% $ 196
Camden Point GA Kingsland 268 57% $ 163
Castlewood Estates GA Atlanta 334 85% $ 327
Colonial Coach Estates GA Atlanta 481 87% $ 293
Golden Valley GA Atlanta 131 95% $ 259
Landmark GA Atlanta 524 94% $ 283
Marnelle GA Atlanta 205 99% $ 285
Oak Grove Estates GA Albany 174 90% $ 145
Paradise Village GA Albany 226 81% $ 159
Total Georgia 10 2,794 86% $ 246
Lakewood Estates IA Davenport 180 93% $ 255
Terrace Heights IA Dubuque 317 95% $ 261
Total Iowa 2 497 94% $ 259
Coach Royale ID Boise 91 97% $ 295
Maple Grove Estates ID Boise 270 92% $ 305
Shenandoah Estates ID Boise 154 95% $ 290
Total Idaho 3 515 94% $ 299
Falcon Farms IL Moline 215 92% $ 234
Maple Ridge IL Kankakee 75 100% $ 263
Maple Valley IL Kankakee 201 100% $ 263
Total Illinois 3 491 96% $ 250
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
Total Weighted
Number of Occupancy Average Monthly
Location Total Sites as of Rent per Site
Community State (Closest Major City) Communities 6/30/00 6/30/00 6/30/00
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
* Broadmore IN South Bend 357 88% $ 248
Forest Creek IN South Bend 167 98% $ 300
* Fountainvue IN Marion 120 89% $ 161
Hickory Knoll IN Indianapolis 326 98% $ 306
Mariwood IN Indianapolis 296 91% $ 302
Oak Ridge IN South Bend 204 97% $ 254
Pendleton IN Indianapolis 102 97% $ 225
Sherwood IN Marion 135 49% $ 157
Skyway IN Indianapolis 156 90% $ 297
Twin Pines IN Goshen 238 95% $ 233
Total Indiana 10 2,101 90% $ 259
Mosby's Point KY Cincinnati 150 99% $ 303
Rolling Hills KY Louisville 158 94% $ 215
Total Kentucky 2 308 96% $ 258
Pinecrest Village LA Shreveport 445 73% $ 161
Stonegate, LA LA Shreveport 157 96% $ 181
Total Louisiana 2 602 79% $ 166
Hillcrest MA Boston 83 98% $ 320
Leisurewoods Rockland MA Boston 394 99% $ 345
* Leisurewoods Taunton MA Boston 182 85% $ 295
The Glen MA Boston 36 100% $ 398
Total Massachusetts 4 695 95% $ 332
Algoma Estates MI Grand Rapids 308 92% $ 304
* Anchor Bay MI Detroit 1,384 95% $ 352
Arbor Village MI Jackson 266 96% $ 252
Avon MI Detroit 617 99% $ 408
Canterbury Estates MI Grand Rapids 290 58% $ 248
Chesterfield MI Detroit 345 97% $ 369
Chestnut Creek MI Flint 221 78% $ 280
Clinton MI Detroit 1,000 97% $ 370
Colonial Acres MI Kalamazoo 612 95% $ 293
Colonial Manor MI Kalamazoo 195 95% $ 280
Country Estates MI Grand Rapids 257 91% $ 278
Cranberry MI Pontiac 232 98% $ 365
Ferrand Estates MI Grand Rapids 420 99% $ 338
* Forest Lake Estates MI Grand Rapids 221 81% $ 285
* Grand Blanc MI Flint 478 89% $ 337
Holiday Estates MI Grand Rapids 205 98% $ 327
Howell MI Lansing 455 98% $ 375
Huron Estates MI Flint 111 86% $ 220
Lake in the Hills MI Detroit 238 99% $ 385
* Leonard Gardens MI Grand Rapids 271 81% $ 274
Macomb MI Detroit 1,426 98% $ 376
Norton Shores MI Grand Rapids 656 86% $ 260
Novi MI Detroit 725 95% $ 414
Oakhill MI Flint 504 90% $ 355
Old Orchard MI Flint 200 98% $ 311
Orion MI Detroit 423 98% $ 351
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Total Weighted
Number of Occupancy Average Monthly
Location Total Sites as of Rent per Site
Community State (Closest Major City) Communities 6/30/00 6/30/00 6/30/00
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Pinewood MI Columbus 380 99% $ 312
Pleasant Ridge MI Lansing 305 80% $ 227
Royal Estates MI Kalamazoo 183 93% $ 318
Science City MI Midland 171 95% $ 297
Springbrook MI Utica 398 97% $ 340
Sun Valley MI Jackson 197 95% $ 252
Swan Creek MI Ann Arbor 294 99% $ 346
* The Highlands MI Flint 682 89% $ 296
Torrey Hills MI Flint 346 96% $ 354
Valley Vista MI Grand Rapids 137 91% $ 324
Villa MI Flint 319 94% $ 344
* Westbrook MI Detroit 299 73% $ 375
Yankee Spring MI Grand Rapids 284 92% $ 255
Total Michigan 39 16,055 93% $ 334
Cedar Knolls MN Minneapolis 458 98% $ 404
Cimmaron MN St. Paul 505 99% $ 403
President's Park MN Grand Forks 174 87% $ 232
Rosemount MN Minneapolis/St. Paul 182 100% $ 390
Twenty-Nine Pines MN St. Paul 152 93% $ 320
Total Minnesota 5 1,471 97% $ 373
* Springfield Farms MO Springfield 134 81% $ 178
Total Missouri 1 134 81% $ 178
Countryside Village G.F. MT Great Falls 226 98% $ 204
Total Montana 1 226 98% $ 204
Autumn Forest NC Greensboro 299 90% $ 236
Foxhall Village NC Raleigh 315 90% $ 311
Oakwood Forest NC Greensboro 481 88% $ 262
Woodlake NC Greensboro 308 92% $ 244
Total North Carolina 4 1,403 90% $ 247
Buena Vista ND Fargo 400 96% $ 271
Columbia Heights ND Grand Forks 302 99% $ 282
Meadow Park ND Fargo 117 94% $ 207
Total North Dakota 3 819 97% $ 266
Casual Estates NY Syracuse 961 67% $ 320
Meadowbrook NY Ithaca 237 67% $ 266
Oak Orchard Estates NY Rochester 235 91% $ 305
Shadybrook NY Syracuse 89 67% $ 320
Total New York 4 1,522 71% $ 309
* Hunter's Chase OH Lima 135 53% $ 169
Vance OH Columbus 110 96% $ 232
Willo-Arms OH Cleveland 262 100% $ 207
Yorktowne OH Cincinnati 354 95% $ 328
Total Ohio 4 861 90% $ 254
Crestview OK Stillwater 237 81% $ 209
Total Oklahoma 1 237 81% $ 209
Knoll Terrace OR Salem 212 94% $ 366
Riverview OR Portland 133 98% $ 400
Total Oregon 2 345 96% $ 379
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
Total Weighted
Number of Occupancy Average Monthly
Location Total Sites as of Rent per Site
Community State (Closest Major City) Communities 6/30/00 6/30/00 6/30/00
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
* Carnes Crossing SC 536 96% $ 182
* Conway Plantation SC Myrtle Beach 299 68% $ 180
Saddlebrook SC 426 97% $ 203
Total South Carolina 3 1,261 90% $ 189
* Eagle Creek TX Tyler 198 72% $ 156
Homestead Ranch TX McAllen 126 83% $ 222
Leisure World TX Brownsville 201 88% $ 214
The Homestead TX McAllen 99 97% $ 230
Trail's End TX Brownsville 299 77% $ 210
Total Texas 5 923 81% $ 203
* Regency Lakes VA Winchester 384 78% $ 214
Total Virginia 1 384 78% $ 214
Eagle Point WA Seattle 230 98% $ 459
Total Washington 1 230 98% $ 459
Breazeale WY Laramie 116 94% $ 245
Total Wyoming 1 116 94% $ 245
Totals 162 51,913 91.3% $ 312
</TABLE>
18
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits and Index of Exhibits
(27) Financial Data Schedule
(b) Reports on Form 8-K
There were no reports filed on Form 8-K this quarter.
19
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, and in the capacities indicated, on the
11th day of August, 2000.
CHATEAU COMMUNITIES, INC.
By: /s/ Tamara D. Fischer
-------------------------------
Tamara D. Fischer
Executive Vice President
and Chief Financial Officer
(Duly Authorized Officer and
Principal Financial and
Accounting Officer)
20
