<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 September 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 November 10, 2000 was 28,496,502 shares.
<PAGE>
CHATEAU COMMUNITIES, INC.
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
Page Number
-----------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
<S> <C>
Condensed Consolidated Statements of Income for the Three and Nine Months Ended
September 30, 2000 and 1999 1
Condensed Consolidated Balance Sheets as of September 30, 2000 and December 31, 1999 2
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended
September 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
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CHATEAU COMMUNITIES, INC.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Three Months Ended September 30 Nine Months Ended September 30
(Unaudited) (Unaudited)
------------------------------- ------------------------------
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 47,495 $ 44,607 $139,890 $132,896
Interest income 2,827 1,725 7,295 4,362
Management fee and other income 948 1,774 3,708 3,293
-------- -------- -------- --------
51,270 48,106 150,893 140,551
Expenses:
Property operating and maintenance 13,488 13,218 38,779 37,792
Real estate taxes 3,327 3,115 9,994 9,488
Depreciation and amortization 11,050 10,383 32,457 31,032
Administrative 2,220 2,863 7,316 7,170
Interest and related amortization 9,426 7,618 26,674 23,707
-------- -------- -------- --------
39,511 37,197 115,220 109,189
-------- -------- -------- --------
Income before net gain on sales of properties
and minority interests 11,759 10,909 35,673 31,362
Net gain on sales of properties - - - 2,805
-------- -------- -------- --------
Income before minority interests 11,759 10,909 35,673 34,167
Less income allocated to minority interests:
Preferred OP Units 1,523 1,523 4,570 4,570
Common OP Units 1,160 1,037 3,543 3,296
-------- -------- -------- --------
Net income available to common shareholders $ 9,076 $ 8,349 $ 27,560 $ 26,301
======== ======== ======== ========
Per share/OP Unit information:
Basic earnings per common share $ .32 $ .30 $ .97 $ .94
======== ======== ======== ========
Diluted earnings per common share $ .32 $ .30 $ .97 $ .93
======== ======== ======== ========
Dividend/distribution declared per common
share/OP Unit outstanding $ .515 $ .485 $ 1.545 $ 1.455
======== ======== ======== ========
</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>
ASSETS September 30, December 31,
2000 1999
------------------- -------------------
<S> <C> <C>
Rental property (Unaudited)
Land $ 138,499 $ 135,811
Land and improvements for expansion sites 34,043 23,320
Depreciable property 910,108 896,319
------------------- -------------------
1,082,650 1,055,450
Less accumulated depreciation (224,208) (192,015)
------------------- -------------------
Net rental property 858,442 863,435
Cash and cash equivalents 2,564 348
Rents, notes and other receivables 30,351 11,742
Investment in and advances to affiliates 108,359 97,761
Prepaid expenses and other assets 10,710 8,387
------------------- -------------------
Total assets $ 1,010,426 $ 981,673
=================== ===================
LIABILITIES
Debt $ 500,952 $ 452,556
Accrued interest payable 6,870 5,284
Accounts payable and accrued expenses 18,795 17,688
Rents received in advance and security deposits 9,450 7,044
Dividends and distributions payable 17,235 16,139
------------------- -------------------
Total liabilities 553,302 498,711
Minority interests in Operating Partnership 117,933 121,142
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; 28,468,115 and
28,424,900 shares issued and outstanding at September 30, 2000 and
December 31, 1999, respectively 285 284
Additional paid-in capital 444,680 446,231
Dividends in excess of accumulated earnings (93,122) (76,647)
Notes receivable from officers, 577,432 and 406,569 shares at September 30, 2000
and December 31, 1999, respectively (12,652) (8,048)
------------------- -------------------
Total shareholders' equity 339,191 361,820
------------------- -------------------
Total liabilities and shareholders' equity $ 1,010,426 $ 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 NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(DOLLARS IN THOUSANDS)
UNAUDITED
<TABLE>
<CAPTION>
Nine Months Ended September 30,
----------------------------------------
Cash flows from operating activities: 2000 1999
----------------- ---------------
<S> <C> <C>
Net income $ 27,560 $ 26,301
Adjustments to reconcile net income to net cash provided by operating activities:
Gain on sales of properties - (2,805)
Income attributable to minority interests 3,543 3,296
Depreciation and amortization 32,457 31,032
Amortization of debt issuance costs 431 575
Increase in operating assets (4,927) (3,959)
Increase in operating liabilities 5,099 2,342
----------------- ---------------
Net cash provided by operating activities 64,163 56,782
Cash flows from financing activities:
Borrowings on the line of credit 190,227 84,318
Payments on the line credit (246,179) (26,048)
Payoff of mortgages and other debt (160,824) (23,448)
Payoff of short-term note (30,000) -
Mortgage principal payments (904) (874)
Dividends/distributions to shareholders/OP Unitholders (48,506) (44,914)
Common shares/OP Units reacquired and retired (11,323) (76)
Proceeds from the issuance of debt 295,295
Payment of debt issuance costs (617)
Exercise of common stock options and other financing activities 821 2,563
----------------- ---------------
Net cash used in financing activities (12,010) (8,479)
Cash flows from investing activities:
Acquisition of rental properties (1,972) (6,228)
Additions to rental property (20,914) (13,883)
Disposition of rental property - 13,201
Other investments (4,132) -
Investment in and advances to joint ventures/affiliates and others (22,919) (39,250)
----------------- ---------------
Net cash used in investing activities (49,937) (46,160)
----------------- ---------------
Increase in cash and cash equivalents 2,216 2,143
Cash and cash equivalents, beginning of period 348 450
----------------- ---------------
Cash and cash equivalents, end of period $ 2,564 $ 2,593
================= ===============
Supplemental cash flow information:
Fair Market Value of OP Units/common shares issued in connection with
acquisitions/development $ 656 $ 1,327
================= ===============
</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 August 16, 2000, the Company declared a cash dividend/distribution of
$.515 per share/OP Unit to shareholders and OP Unitholders of record as of
September 30, 2000. The dividend/distribution was paid on October 16, 2000,
and is included in dividends and distributions payable in the accompanying
condensed consolidated balance sheet as of September 30, 2000.
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.
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 nine 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 Months Ended For the Nine Months Ended
September 30, September 30,
---------------------------------- ----------------------------------
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Basic EPS:
Income (1) $ 10,236 $ 9,386 $ 31,103 $ 29,597
========== ========== ========== ==========
Weighted average common shares
outstanding 28,467 28,115 28,474 28,052
Weighted average common OP
Units outstanding 3,639 3,494 3,660 3,512
---------- ---------- ---------- ----------
Weighted average common
shares/OP Units - Basic 32,106 31,609 32,134 31,564
========== ========== ========== ==========
Per share - basic $ .32 $ .30 $ .97 $ .94
========== ========== ========== ==========
Diluted EPS:
Income (1) $ 10,236 $ 9,386 $ 31,103 $ 29,597
========== ========== ========== ==========
Weighted average common shares
outstanding 28,467 28,115 28,474 28,052
Weighted average common OP
Units outstanding 3,639 3,494 3,660 3,512
Employee stock options 117 151 83 167
---------- ---------- ---------- ----------
Weighted average common
shares/OP Units - assuming
dilution 32,223 31,760 32,217 31,731
========== ========== ========== ==========
Per share - assuming dilution $ .32 $ .30 $ .97 $ .93
========== ========== ========== ==========
</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 September 30, 2000.
<TABLE>
<CAPTION>
Dollars in thousands:
Weighted Average Maturity Principal
Interest Rate Date Balance
---------------- ------------ -----------
<S> <C> <C> <C>
Fixed Rate Mortgage Debt (15 properties) 7.8 % 2002 - 2011 $ 135,412
Unsecured Senior Notes 7.5 % 2003 - 2005 320,000
Unsecured Lines of Credit 7.6 % - 41,379
Other notes payable - - 4,161
-----------
$ 500,952
===========
</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 Senior
Notes by 30 basis points.
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
2000. 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.
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 $49.8
million. The net proceeds were used to repay a $30 million unsecured short-term
note 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 nine months ended September 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 September 30,
-------------------
Number of communities 164 164 165 164
Total manufactured homesites 51,498 51,296 51,915 51,296
Occupied sites 47,210 47,143 47,595 47,143
Occupancy % 91.7 % 91.9 % 91.7 % 91.9 %
For the three months ended September 30,
----------------------------------------
Rental income $ 46,459 $ 44,607 $ 47,495 $ 44,607
Property operating expenses $ 16,695 $ 16,333 $ 16,815 $ 16,333
Net operating income $ 29,764 $ 28,274 $ 30,680 $ 28,274
Weighted average monthly rent per site $ 317 $ 304 $ 317 $ 304
For the nine months ended September 30,
---------------------------------------
Rental income $137,861 $132,290 $139,890 $132,896
Property operating expenses $ 48,227 $ 46,986 $ 48,773 $ 47,280
Net operating income $ 89,634 $ 85,304 $ 91,117 $ 85,616
Weighted average monthly rent per site $ 315 $ 302 $ 316 $ 301
</TABLE>
7
<PAGE>
Comparison of three months ended September 30, 2000 to three months ended
September 30, 1999
For the three months ended September 30, 2000, income before net gain on sales
of properties and minority interests was $11,759,000, an increase of $850,000,
from the three months ended September 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 September 30, 2000 was $47,495,000, an
increase of $2,888,000 from the three months ended September 30, 1999. The
increase is primarily due to rental increases in the Company's Core Portfolio
and an increase in utility income.
Weighted average occupancy for the three months ended September 30, 2000 was
47,485 sites compared with 47,159 sites for the same period in 1999. The
occupancy rate was 91.7 percent on 51,915 sites as of September 30, 2000,
compared to 91.9 percent on 51,296 sites as of September 30, 1999. The
occupancy rate on the stabilized portfolio was 91.7 percent as of September 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
September 30, 2000 was $317 compared with $304 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 September 30, 2000 was $317 compared
with $304 for the same period in 1999, an increase of 4.3 percent.
Interest income primarily includes interest on notes receivable and advances to
joint ventures/affiliates. The increase of $1,102,000 in the three months ended
September 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.
Management fee and other income primarily includes management and transaction
fee income from related entities for the management of manufactured home
communities, and equity earnings from the Company's sales subsidiary. The
decrease of $826,000 is due to decreased transaction and management fee income,
as well as decreased home sales.
Total property operating expenses for the three months ended September 30, 2000
increased by $482,000 or 3.0 percent from the same period a year ago. The
majority of the increase was due to increases in the Company's Core Portfolio.
General and administrative expense for the three months ended September 30, 2000
decreased by $643,000 from the same period a year ago. Administrative expense
in the third quarter of 2000 was 4.3 percent of revenues as compared to 6.0
percent in 1999.
Interest and related amortization increased $1,808,000 for the three months
ended September 30, 2000 from 1999. The weighted average interest rate on the
Company's borrowings increased to 7.6% from 7.2%.
Depreciation and amortization expense for the three months ended September 30,
2000 increased $667,000 from the same period a year ago. Depreciation expense
as a percentage of average depreciable rental property in the third quarter of
2000 remained relatively unchanged from 1999.
Comparison of nine months ended September 30, 2000 to nine months ended
September 30, 1999
For the nine months ended September 30, 2000, income before net gain on sales of
properties and minority interests was $35,673,000, an increase of $4,311,000
from the nine months ended September 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 and an increase in utility income, partially offset by general
operating expense increases.
Rental revenue for the nine months ended September 30, 2000 was $139,890,000, an
increase of $6,994,000 from the nine months ended September 30, 1999. The
increase is primarily due to rental increases in the Company's Core Portfolio.
Weighted average occupancy for the nine months ended September 30, 2000 was
47,420 sites compared with 47,126 sites for the same period in 1999. On a per
site basis, weighted average monthly rental revenue for the nine months
8
<PAGE>
ended September 30, 2000 was $316 compared with $301 in the same period of 1999.
For the Company's Core Portfolio, on a per site basis, weighted average monthly
rental revenue for the nine months ended September 30, 2000 was $315 compared
with $302 for the same period in 1999, an increase of 4.3 percent.
Management fee and other income increased $415,000 due primarily to increased
transaction and management fee income from related entities, as well as
increased home sales in the first two quarters of 2000. The increase in
interest income of $2,933,000 for the nine months ended September 30, 2000 from
the same period in 1999 is due primarily to increased Company funded development
projects through advances and loans, as well as increases in interest rates.
Total property operating and maintenance expense for the nine months ended
September 30, 2000 increased by $1,493,000 or 3.2 percent from the same period a
year ago. The majority of the increase was due to increases in the Company's
Core Portfolio.
General and administrative expense for the nine months ended September 30, 2000
increased by $146,000 from the same period a year ago. Administrative expense in
the first nine months of 2000 was 4.8 percent of revenues as compared to 5.1
percent in 1999.
Interest and related amortization for the nine months ended September 30, 2000
increased $2,967,000 or 12.5 percent. The weighted average interest rate on the
Company's borrowings increased to 7.6% from 7.2%.
Depreciation and amortization expense for the nine months ended September 30,
2000 increased $1,425,000 from the same period a year ago. Depreciation expense
as a percentage of average depreciable rental property in the first nine months
of 2000 remained relatively unchanged from 1999.
Liquidity and Capital Resources
Net cash provided by operating activities was $64,163,000 for the nine months
ended September 30, 2000, compared with $56,782,000 for the nine months ended
September 30, 1999. The increase in cash provided by operating activities was
due primarily to the increase in net operating income and changes in working
capital.
Net cash used in financing activities for the nine months ended September 30,
2000 was $12,010,000. Net cash used in financing activities consisted primarily
of the payoff of $191 million of debt, net payments of $56 million on the
Company's lines of credit, $49 million in dividends and distributions and $11
million for the repurchase of common stock. Partially offsetting these uses was
the proceeds of $295 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 line 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 nine months, the Company
repurchased 453,900 shares for approximately $11.3 million.
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>
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 $49.8
million. The proceeds were used to repay a $30 million unsecured short-term
note and the remaining funds were used to repay a portion of the borrowings on
the line of credit.
Net cash used in investing activities for the nine months ended September 30,
2000 was $49,937,000. This amount represented primarily joint venture advances,
capital expenditures and construction and development costs. For the nine
months ended September 30, 2000, acquisition costs were approximately $2
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 $10.4 million, recurring property capital
expenditures were approximately $6.4 million, and advances to joint ventures and
affiliates, including construction costs were $22.9 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 $100 million line of credit with Bank One, N.A.,
acting as lead agent, (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
September 30, 2000, approximately $41 million was outstanding under the Credit
Facilities and the Company had available $67 million in additional borrowing
capacity.
As of September 30, 2000, the Company had outstanding, in addition to the Credit
Facilities, $320 million of other unsecured senior debt with a weighted average
interest rate and maturity of 7.5 percent and 3.9 years, respectively, and $135
million of secured mortgage debt with a weighted average interest rate and
maturity of 7.8 percent and 9.2 years, respectively. For the Company's total
fixed rate debt, the weighted average interest rate and maturity was 7.6 percent
and 5.5 years, respectively
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 Nine Months
Ended September 30, Ended Jun September 30,
---------------------------------- --------------------------------
2000 1999 2000 1999
--------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
Income before minority interests $ 11,759 $ 10,909 $ 35,673 $ 34,167
Plus:
Depreciation and amortization 11,050 10,383 32,457 31,032
Less:
Non-recurring item (1) - - - 2,805
Depreciation expense on corporate assets 108 65 323 195
Distribution on Preferred OP Units 1,523 1,523 4,570 4,570
--------------- -------------- ------------- --------------
FFO $ 21,178 $ 19,704 $ 63,237 $ 57,629
=============== ============== ============= ==============
</TABLE>
(1) Represents net gain recorded on disposition of properties.
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 September 30, 2000.
<TABLE>
<CAPTION>
Amount Weighted
of Percent of Average Maturity
Indebtedness Total Debt Interest Rate Date
------------ ---------- ------------- ------------
(dollars in thousands)
Mortgage Debt:
<S> <C> <C> <C> <C>
Collateral Mortgage (7 Properties) $ 116,050 23.4% 7.83% 2010
Other (8 properties) 19,362 3.9% 7.67% 2002 - 2011
------------ ---------- -------------
Total Mortgage 135,412 27.3% 7.81%
Unsecured Debt:
Unsecured Senior Notes 50,000 10.1% 8.00% 2003
Unsecured Senior Notes 70,000 14.1% 7.52% 2003
Unsecured Senior Notes 100,000 20.1% 8.30% 2005
Unsecured Senior Notes 100,000 20.1% 6.44% 2004
------------ ---------- -------------
Total Unsecured 320,000 64.4% 7.50%
------------ ---------- -------------
Total Fixed Rate 455,412 91.7% 7.59%
Variable Rate Debt:
Credit Facilities 41,379 8.3% 7.60%
------------ ----------
Total Secured and Unsecured Debt $ 496,791 100%
============ ==========
</TABLE>
Based on the amount outstanding under the Credit Facilities at September 30,
2000 of $41,379,000, if the interest rate under the Credit Facilities was 100
basis points higher or lower during the nine months ended September 30, 2000,
then the Company's interest expense (net of adjustments for capitalized items),
for the period would have increased or decreased by approximately $310,000.
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
Not Applicable
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 September 30, 2000,
regarding the Properties.
* These properties are included in the Active Expansion Portfolio.
<TABLE>
<CAPTION>
Weighted
Average
Total Total Revenue Monthly
Comm- Number of Producing Occupancy as Rent per
Location unities Sites Sites of Site
Community State (Closest Major City) 9/30/00 9/30/00 9/30/00 9/30/00
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
100 Oaks AL Fultondale 230 203 88% $ 231
Lakewood AL Montgomery 310 235 76% $ 176
Green Park South AL Montgomery 417 385 92% $ 255
Total Alabama 3 957 86% $ 224
Bermuda Palms CA Palm Springs 185 176 95% $ 356
Eastridge CA San Jose 187 185 99% $ 647
La Quinta Ridge CA Palm Springs 152 131 86% $ 410
The Colony CA Palm Springs 220 216 98% $ 625
The Orchard CA San Francisco 233 232 100% $ 597
Total California 5 977 96% $ 538
CV-Denver CO Denver 345 323 94% $ 400
CV-Longmont CO Longmont 310 305 98% $ 409
Friendly Village CO Greeley 226 225 100% $ 319
Pine Lakes Ranch CO Denver 762 755 99% $ 371
Redwood Estates CO Denver 753 743 99% $ 359
Total Colorado 5 2,396 98% $ 371
Cedar Grove CT New Haven 60 58 97% $ 305
Evergreen CT New Haven 102 99 97% $ 303
Green Acres CT New Haven 64 61 95% $ 303
Highland CT New Haven 50 47 94% $ 315
Total Connecticut 4 276 96% $ 305
Anchor North FL Tampa Bay 94 92 98% $ 282
Audubon FL Orlando 280 273 98% $ 281
Colony Cove FL Sarasota 2,211 2,199 99% $ 354
Conway Circle FL Orlando 111 105 95% $ 320
Crystal Lake FL St. Petersburg 166 149 90% $ 279
*Crystal Lakes FL Tampa 330 194 59% $ 154
CV-Jacksonville FL Jacksonville 643 569 88% $ 324
Del Tura FL Fort Myers 1,344 1,183 88% $ 459
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Eldorado Estates FL Daytona Beach 126 122 97% $ 273
Emerald Lake FL Fort Myers 201 199 99% $ 305
Fairways Country Club FL Orlando 1,141 1,134 99% $ 302
*Foxwood Farms FL Orlando 375 295 79% $ 210
Hidden Valley FL Orlando 303 300 99% $ 312
Indian Rocks FL Clearwater 148 95 64% $ 267
Jade Isle FL Orlando 101 99 98% $ 310
Lakeland Harbor FL Tampa 504 503 100% $ 256
Lakeland Junction FL Tampa 191 191 100% $ 201
Lakes at Leesburg FL Orlando 640 640 100% $ 272
Land O' Lakes FL Orlando 173 170 98% $ 260
Midway Estates FL Vero Beach 204 145 71% $ 340
Oak Springs FL Orlando 438 319 73% $ 247
Orange Lake FL Orlando 242 236 98% $ 259
Palm Beach Colony FL West Palm Beach 285 265 93% $ 314
Pedaler's Pond FL Orlando 214 182 85% $ 212
Pinellas Cascades FL Clearwater 238 224 94% $ 381
Shady Lane FL Clearwater 108 99 92% $ 277
Shady Oak FL Clearwater 250 243 97% $ 339
Shady Village FL Clearwater 156 149 96% $ 317
Southwind Village FL Naples 338 317 94% $ 311
Starlight Ranch FL Orlando 783 751 96% $ 318
Tarpon Glen FL Clearwater 170 148 87% $ 322
Town & Country FL Orlando 73 70 96% $ 321
Whispering Pines FL Clearwater 392 378 96% $ 372
Winter Haven Oaks FL Orlando 343 181 53% $ 215
Total Florida 34 13,316 92% $ 315
Atlanta Meadows GA Atlanta 75 74 99% $ 244
*Butler Creek GA Augusta 376 303 81% $ 198
Camden Point GA Kingsland 268 141 53% $ 170
Castlewood Estates GA Atlanta 334 282 84% $ 321
Colonial Coach Estates GA Atlanta 481 416 86% $ 287
Golden Valley GA Atlanta 131 126 96% $ 265
Landmark GA Atlanta 524 490 94% $ 301
Marnelle GA Atlanta 205 198 97% $ 295
Oak Grove Estates GA Albany 174 157 90% $ 149
Paradise Village GA Albany 226 184 81% $ 161
Total Georgia 10 2,794 85% $ 250
Lakewood Estates IA Davenport 180 167 93% $ 273
Terrace Heights IA Dubuque 317 298 94% $ 264
Total Iowa 2 497 94% $ 267
Coach Royale ID Boise 91 89 98% $ 305
Maple Grove Estates ID Boise 270 248 92% $ 315
Shenandoah Estates ID Boise 154 149 97% $ 299
Total Idaho 3 515 94% $ 309
Falcon Farms IL Moline 215 195 91% $ 251
Maple Ridge IL Kankakee 75 74 99% $ 267
Maple Valley IL Kankakee 201 199 99% $ 267
Total Illinois 3 491 95% $ 260
*Broadmore IN South Bend 358 302 84% $ 260
Forest Creek IN South Bend 167 164 98% $ 305
*Fountainvue IN Marion 120 106 88% $ 174
Hickory Knoll IN Indianapolis 326 315 97% $ 307
Mariwood IN Indianapolis 296 263 89% $ 298
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Oak Ridge IN South Bend 204 198 97% $ 259
Pendleton IN Indianapolis 102 95 93% $ 226
*Sherwood IN Marion 135 65 48% $ 176
Skyway IN Indianapolis 156 144 92% $ 296
Twin Pines IN Goshen 238 227 95% $ 257
Total Indiana 10 2,102 89% $ 266
Mosby's Point KY Cincinnati 150 142 95% $ 315
Rolling Hills KY Louisville 158 151 96% $ 214
Total Kentucky 2 308 95% $ 263
Pinecrest Village LA Shreveport 446 336 75% $ 163
Stonegate, LA LA Shreveport 157 151 96% $ 184
Total Louisiana 2 603 81% $ 169
Hillcrest MA Boston 82 82 100% $ 336
Leisurewoods Rockland MA Boston 394 392 99% $ 341
*Leisurewoods Taunton MA Boston 182 166 91% $ 292
The Glen MA Boston 36 36 100% $ 402
Total Massachusetts 4 694 97% $ 331
*Algoma Estates MI Grand Rapids 308 290 94% $ 316
Anchor Bay MI Detroit 1,384 1,327 96% $ 351
Arbor Village MI Jackson 266 260 98% $ 252
Avon MI Detroit 617 610 99% $ 420
*Canterbury Estates MI Grand Rapids 290 179 62% $ 245
Chesterfield MI Detroit 345 339 98% $ 370
*Chestnut Creek MI Flint 221 182 82% $ 281
Clinton MI Detroit 1,000 975 98% $ 365
Colonial Acres MI Kalamazoo 612 582 95% $ 292
Colonial Manor MI Kalamazoo 195 184 94% $ 280
Country Estates MI Grand Rapids 254 234 92% $ 286
*Cranberry MI Pontiac 232 230 99% $ 380
Ferrand Estates MI Grand Rapids 420 415 99% $ 360
*Forest Lake Estates MI Grand Rapids 221 180 81% $ 290
*Grand Blanc MI Flint 478 422 88% $ 353
Holiday Estates MI Grand Rapids 205 202 99% $ 333
Howell MI Lansing 455 446 98% $ 375
*Huron Estates MI Flint 111 98 88% $ 221
Lake in the Hills MI Detroit 238 237 100% $ 383
Leonard Gardens MI Grand Rapids 271 227 84% $ 271
Macomb MI Detroit 1,427 1,393 98% $ 378
Norton Shores MI Grand Rapids 656 560 85% $ 271
Novi MI Detroit 725 683 94% $ 417
Oakhill MI Flint 504 463 92% $ 364
Old Orchard MI Flint 200 196 98% $ 330
Orion MI Detroit 423 415 98% $ 357
Pinewood MI Columbus 380 376 99% $ 318
Pleasant Ridge MI Lansing 305 238 78% $ 227
Royal Estates MI Kalamazoo 183 171 93% $ 327
Science City MI Midland 171 163 95% $ 309
Springbrook MI Utica 400 389 97% $ 339
Sun Valley MI Jackson 197 191 97% $ 249
Swan Creek MI Ann Arbor 294 293 100% $ 362
*The Highlands MI Flint 683 614 90% $ 305
*Torrey Hills MI Flint 346 331 96% $ 355
Valley Vista MI Grand Rapids 137 129 94% $ 319
Villa MI Flint 319 303 95% $ 349
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
*Westbrook MI Detroit 299 240 80% $ 392
Yankee Spring MI Grand Rapids 284 259 91% $ 261
Total Michigan 39 16,056 94% $ 338
Cedar Knolls MN Minneapolis 458 450 98% $ 404
Cimmaron MN St. Paul 505 502 99% $ 401
Rosemount MN Minneapolis/St. Paul 182 182 100% $ 393
Twenty-Nine Pines MN St. Paul 152 138 91% $ 325
Total Minnesota 4 1,297 98% $ 392
*Springfield Farms MO Springfield 136 115 85% $ 178
Total Missouri 1 136 85% $ 178
Countryside Village G.F. MT Great Falls 226 224 99% $ 204
Total Montana 1 226 99% $ 204
Autumn Forest NC Greensboro 299 257 86% $ 239
Foxhall Village NC Raleigh 315 287 91% $ 346
Oakwood Forest NC Greensboro 481 444 92% $ 257
Woodlake NC Greensboro 308 290 94% $ 244
Total North Carolina 4 1,403 91% $ 247
Buena Vista ND Fargo 400 389 97% $ 270
Columbia Heights ND Grand Forks 302 295 98% $ 284
President's Park ND Grand Forks 174 149 86% $ 226
Meadow Park ND Fargo 117 109 93% $ 209
Total North Dakota 4 993 91% $ 250
Casual Estates NY Syracuse 953 662 69% $ 317
Meadowbrook NY Ithaca 237 158 67% $ 276
Oak Orchard Estates NY Rochester 235 218 93% $ 282
Shadybrook NY Syracuse 97 75 77% $ 317
Total New York 4 1,522 73% $ 305
*Hunter's Chase OH Lima 135 76 56% $ 171
Vance OH Columbus 110 102 93% $ 250
Willo-Arms OH Cleveland 262 261 100% $ 208
Yorktowne OH Cincinnati 354 341 96% $ 331
Total Ohio 4 861 91% $ 258
Crestview OK Stillwater 237 204 86% $ 219
Total Oklahoma 1 237 86% $ 219
Knoll Terrace OR Salem 212 198 93% $ 375
Riverview OR Portland 133 131 98% $ 404
Total Oregon 2 345 95% $ 386
*Carnes Crossing SC Summerville 535 522 98% $ 192
*Conway Plantation SC Myrtle Beach 299 212 71% $ 187
Saddlebrook SC Charleston 426 413 97% $ 203
Total South Carolina 3 1,260 91% $ 194
*Eagle Creek TX Tyler 199 166 83% $ 159
Homestead Ranch TX McAllen 126 110 87% $ 218
Leisure World TX Brownsville 201 182 91% $ 214
The Homestead TX McAllen 99 96 97% $ 235
Trail's End TX Brownsville 299 234 78% $ 210
Total Texas 5 924 85% $ 204
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
*Regency Lakes VA Winchester 384 317 83% $ 216
Total Virginia 1 384 83% $ 216
Eagle Point WA Seattle 230 226 98% $ 473
Total Washington 1 230 98% $ 473
Breazeale WY Laramie 115 111 97% $ 256
Total Wyoming 1 115 97% $ 256
Totals 162 51,915 91.7% $ 316
</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
The company filed a report on Form 8-K on July 31, 2000.
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 November, 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
