<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
|X| Quarterly report pursuant to Section 13 of 15(d) of the Securities
Exchange Act of 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2000.
OR
|_| Transition pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
COMMISSION FILE NUMBER 333-2522-01
SUN COMMUNITIES OPERATING LIMITED PARTNERSHIP
(Exact Name of Registrant as Specified in its Certificate)
Michigan 38-3144240
(State of Organization) (I.R.S. Employer Identification No.)
31700 Middlebelt Road
Suite 145
Farmington Hills, Michigan 48334
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (248) 932-3100
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Page 1 of 17
<PAGE> 2
SUN COMMUNITIES OPERATING LIMITED PARTNERSHIP
INDEX
<TABLE>
<CAPTION>
PAGES
-----
<S> <C>
PART I
Item 1. Financial Statements:
Consolidated Balance Sheets as of June 30, 2000 and
December 31, 1999 3
Consolidated Statements of Income for the Periods
Ended June 30, 2000 and 1999 4
Consolidated Statements of Cash Flows for the Six Months
Ended June 30, 2000 and 1999 5
Notes to Consolidated Financial Statements 6-9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10-14
PART II
Item 6.(a) Exhibits required by Item 601 of Regulation S-K 15
Item 6.(b) Reports on Form 8-K 15
Signatures 16
</TABLE>
2
<PAGE> 3
SUN COMMUNITIES OPERATING LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2000 AND DECEMBER 31, 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS 2000 1999
------------- -------------
<S> <C> <C>
Investment in rental property, net $ 781,133 $ 755,138
Cash and cash equivalents 6,706 11,330
Notes and other receivables 109,545 96,028
Investment in and advances to affiliate 26,422 18,841
Other assets 26,264 25,295
------------ -------------
Total assets $ 950,070 $ 906,632
============= =============
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Line of credit $ 92,000 $ 47,000
Debt 353,501 354,564
Accounts payable and accrued expenses 16,732 17,616
Deposits and other liabilities 9,337 8,660
------------- -------------
Total liabilities 471,570 427,840
------------- -------------
Partners' Capital:
Preferred Operating Partnership ("POP Units"),
unlimited authorized, 3,361 and 3,325 Units issued and
outstanding in 2000 and 1999, respectively 89,347 85,783
Operating Partnership Units ("OP Units"), unlimited
authorized; 20,187 and 20,163 issued and
outstanding in 2000 and 1999, respectively
General partner 343,223 346,417
Limited partners 51,076 52,051
Unearned compensation (5,146) (5,459)
------------- -------------
Total partners' capital 478,500 478,792
------------- -------------
Total liabilities and partners' capital $ 950,070 $ 906,632
============= =============
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
3
<PAGE> 4
SUN COMMUNITIES OPERATING LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF INCOME
FOR THE PERIODS ENDED JUNE 30, 2000
(IN THOUSANDS EXCEPT FOR PER SHARE DATA)
<TABLE>
<CAPTION>
For the Three Months For the Six Months
Ended June 30, Ended June 30,
2000 1999 2000 1999
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues:
Income from property $ 32,947 $ 30,567 $ 66,076 $ 61,941
Other income, principally interest 3,117 2,194 6,021 3,820
------------ ----------- ----------- -----------
Total revenues 36,064 32,761 72,097 65,761
------------ ----------- ----------- -----------
Expenses:
Property operating and maintenance 6,703 6,440 13,875 13,289
Real estate taxes 2,271 2,206 4,518 4,411
Property management 709 646 1,449 1,257
General and administrative 1,001 952 2,052 1,862
Depreciation and amortization 7,678 7,135 15,224 14,017
Interest 7,306 6,655 14,153 13,260
------------ ----------- ----------- -----------
Total expenses 25,668 24,034 51,271 48,096
------------ ----------- ----------- -----------
Income before distribution
to Preferred OP Units 10,396 8,727 20,826 17,665
Less distribution to Preferred OP Units 1,956 626 3,871 1,252
------------ ----------- ----------- -----------
Earnings attributable to OP Units $ 8,440 $ 8,101 $ 16,955 $ 16,413
============ =========== =========== ===========
Net income attributed to:
General Partner $ 7,305 $ 6,964 $ 14,662 $ 14,099
Limited Partners 1,135 1,137 2,293 2,314
------------ ----------- ----------- -----------
$ 8,440 $ 8,101 $ 16,955 $ 16,413
============ =========== =========== ===========
Earnings per OP Unit:
Basic $ 0.42 $ 0.40 $ 0.85 $ 0.82
============ =========== =========== ===========
Diluted $ 0.42 $ 0.40 $ 0.84 $ 0.81
============ =========== =========== ===========
Weighted average OP Units
outstanding - basic 19,999 19,964 20,003 19,950
============ =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
4
<PAGE> 5
SUN COMMUNITIES OPERATING LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
2000 1999
------------- ------------
<S> <C> <C>
Cash flows from operating activities:
Earnings attributable to OP Units $ 16,955 $ 16,413
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 15,224 14,017
Amortization of deferred financing costs 317 404
Increase in other assets (3,140) (3,410)
Decrease in accounts payable and other liabilities (207) (2,792)
------------- ------------
Net cash provided by operating activities 29,149 24,632
------------- ------------
Cash flows from investing activities:
Investment in rental properties (35,565) (28,395)
Investment in and advances to affiliate (18,592) (3,323)
Investment in notes receivable, net (2,311) (16,927)
------------- ------------
Net cash used in investing activities (56,468) (48,645)
------------- ------------
Cash flows from financing activities:
Borrowings on line of credit, net 45,000 38,000
Repayments on notes payable and other debt (1,063) (976)
Capital contribution (withdrawal) (267) 918
Distributions (20,975) (20,083)
Payments for deferred financing costs -- (244)
------------- ------------
Net cash provided by financing activities 22,695 17,615
------------- ------------
Net decrease in cash and cash equivalents (4,624) (6,398)
Cash and cash equivalents, beginning of period 11,330 9,646
------------- ------------
Cash and cash equivalents, end of period $ 6,706 $ 3,248
============= ============
Supplemental information:
Conversion of partnership interest to notes receivable $ 11,011 $ --
Preferred OP Units issued for rental properties $ 3,564 $ --
Debt assumed for rental properties $ -- $ 1,700
Capitalized lease obligation for rental properties $ -- $ 10,605
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements
5
<PAGE> 6
SUN COMMUNITIES OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION:
These unaudited condensed consolidated financial statements of Sun
Communities Operating Limited Partnership (the "Company"), have been
prepared pursuant to the Securities and Exchange Commission ("SEC") rules
and regulations and should be read in conjunction with the financial
statements and notes thereto of the Company as of December 31, 1999. The
following notes to consolidated financial statements present interim
disclosures as required by the SEC. The accompanying consolidated financial
statements reflect, in the opinion of management, all adjustments necessary
for a fair presentation of the interim financial statements. All such
adjustments are of a normal and recurring nature. Certain reclassifications
have been made to the prior period financial statements to conform with
current period presentation.
The Company owns 100 percent of the preferred stock of an affiliate, Sun
Home Services, Inc. ("Sun Homes"), is entitled to 95 percent of the
operating cash flow of Sun Homes, and accounts for its investment utilizing
the equity method of accounting. The common stock of Sun Homes is owned by
two officers of Sun (as defined below) and the estate of a former officer
of Sun who collectively are entitled to receive 5 percent of the operating
cash flow of Sun Homes.
At June 30, 2000, "SunChamp", a joint venture among the Company and
Champion Enterprises, Inc., owned ten communities under initial
development. The Company accounts for its investment utilizing the equity
method of accounting.
Sun Communities, Inc. ("Sun"), a self-administered and self-managed Real
Estate Investment Trust with no independent operations of its own, is the
sole general partner of the Company. As general partner, Sun has unilateral
control and complete responsibility for management of the Company. Pursuant
to the terms of the Company's partnership agreement, the Company is
required to reimburse Sun for the net expenses incurred by Sun. Amounts
paid on behalf of Sun by the Company are reflected in the statement of
operations as general and administrative expenses. The balance sheet of Sun
as of June 30, 2000 is identical to the accompanying Company balance sheet,
except as follows:
6
<PAGE> 7
SUN COMMUNITIES OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION: CONTINUED
<TABLE>
<CAPTION>
As Presented
Herein Sun Communities, Inc.
June 30, 2000 Adjustments June 30, 2000
------------- ------------ --------------
(in thousands)
<S> <C> <C> <C>
Notes and other receivables................$ 106,545 $ (2,600) $ 103,945
================= ============== ================
Total assets...............................$ 950,070 $ (2,600) $ 947,470
================= ============== ================
Minority interests......................... $ 140,423 $ 140,423
============== ================
Preferred OP Units.........................$ 89,347 (89,347)
General partner............................ 343,223 (343,223)
Limited partners........................... 51,076 (51,076)
Common stock............................... 175 $ 175
Additional paid-in capital................. 393,474 393,474
Distributions in excess of.................
accumulated earnings................... (41,769) (41,769)
Officers' notes............................ (11,257) (11,257)
Unearned compensation...................... (5,146) -- (5,146)
----------------- -------------- ----------------
Partners' capital/Stockholders'
equity.............................$ 478,500 $ (143,023) $ 335,477
================= ============== ================
Total liabilities and partners'
capital/Stockholders' equity...........$ 950,070 $ (2,600) $ 947,470
================= ============== ================
</TABLE>
2. RENTAL PROPERTY:
The following summarizes rental property (in thousands):
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
-------------- ----------------
<S> <C> <C>
Land $ 78,121 $ 76,069
Land improvements and buildings 747,078 720,662
Furniture, fixtures, equipment 17,730 16,943
Land held for future development 16,331 17,046
Property under development 27,565 16,976
------------- ---------------
886,825 847,696
Accumulated depreciation 105,692 92,558
------------- ---------------
Rental property, net $ 781,133 $ 755,138
============= ===============
</TABLE>
7
<PAGE> 8
SUN COMMUNITIES OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. NOTES AND OTHER RECEIVABLES:
Notes receivable consisted of the following (in thousands):
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
-------- ------------
<S> <C> <C>
Mortgage notes receivable with minimum monthly interest payments
ranging from 7% to LIBOR + 3.25% maturing from May 2002 through
June 2012, collateralized by four communities $ 29,555 $ 15,093
Note receivable, bears interest at LIBOR + 2.35%
and payable on demand 41,307 40,794
Note receivable, bears interest at 9.75% and
matures September 2005 4,000 4,000
Installment loans on manufactured homes with interest payable monthly
at a weighted average interest rate
and maturity of 11% and 21 years, respectively 17,348 18,635
Notes receivable, other, various interest rates ranging from 6% to 9.5%
or prime + 1.5%, various
maturity dates through December 31, 2003 1,562 1,562
10 year note receivable from an officer of Sun bearing interest at
LIBOR + 1.75%, with a minimum and maximum interest rate of 6% and
9%, respectively, collateralized by 80,000 shares of Sun's common
stock with personal liability up to $1.3 million 2,600 2,600
Other receivables 13,173 13,344
-------- --------
$109,545 $ 96,028
======== ========
</TABLE>
8
<PAGE> 9
SUN COMMUNITIES OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. DEBT:
The following table sets forth certain information regarding debt (in
thousands):
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
------------- ---------------
<S> <C> <C>
Collateralized term loan, interest at 7.01%,
due September 9, 2007 $ 43,664 $ 43,927
Senior notes, interest at 7.375%, due May 1, 2001 65,000 65,000
Senior notes, interest at 7.625%, due May 1, 2003 85,000 85,000
Senior notes, interest at 6.97%, due December 3, 2007 35,000 35,000
Callable/redeemable notes, interest at 6.77%,
due May 14, 2015, callable/redeemable
May 16, 2005 65,000 65,000
Capitalized lease obligations, interest ranging
from 5.5% to 6.3%, due March 2001 through
January 2004 36,326 36,620
Mortgage notes, other 23,511 24,017
------------- ---------------
$ 353,501 $ 354,564
============= ===============
</TABLE>
The Company had $33 million available to borrow under its $125 million
line of credit at June 30, 2000. Borrowings under the line of credit bear
interest at the rate of LIBOR plus 1.0% and mature January 1, 2003.
5. EARNINGS PER OP UNIT (IN THOUSANDS):
<TABLE>
<CAPTION>
For the Three Months For the Six Months
Ended June 30, Ended June 30,
2000 1999 2000 1999
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
Earnings used for basic and diluted
earnings per OP unit computation $ 8,440 $ 8,101 $ 16,955 $ 16,413
============ =========== =========== ===========
Total units for basic earnings per
OP unit 19,999 19,964 20,003 19,950
Dilutive securities, principally
Sun's stock options 123 193 91 155
------------ ----------- ----------- -----------
Total shares used for diluted
earnings per OP unit computation 20,122 20,157 20,094 20,105
============ =========== =========== ===========
</TABLE>
Diluted earnings per OP unit reflect the potential dilution that would
occur if securities were exercised or converted into OP units.
Convertible Preferred OP Units are excluded from the computations as
their inclusion would have an antidilutive effect on earnings per share
in 2000 and 1999.
9
<PAGE> 10
SUN COMMUNITIES OPERATING LIMITED PARTNERSHIP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The following discussion and analysis of the consolidated financial condition
and results of operations should be read in conjunction with the consolidated
financial statements and the notes thereto. Capitalized terms are used as
defined elsewhere in this Form 10-Q.
RESULTS OF OPERATIONS
Comparison of the six months ended June 30, 2000 and 1999
For the six months ended June 30, 2000, income before distribution to Preferred
OP Units increased by 17.9 percent from $17.7 million to $20.8 million, when
compared to the six months ended June 30, 1999. The increase was due to
increased revenues of $6.3 million while expenses increased by $3.2 million.
Income from property increased by $4.1 million from $62.0 million to $66.1
million, or 6.7 percent, due primarily to rent increases and other community
revenues ($3.2 million), lease up of manufactured home sites including new
developments ($1.8 million), and acquisitions ($1.5 million), offset by a
revenue reduction of $2.4 million due to the sale of four communities during
1999.
Other income increased by $2.2 million from $3.8 million to $6.0 million due
primarily to an increase in interest income.
Property operating and maintenance expenses increased by $0.6 million from $13.3
million to $13.9 million, or 4.4 percent, due primarily to acquisitions.
Real estate taxes increased by $0.1 million from $4.4 million to $4.5 million
primarily due to acquisitions and changes in property tax assessments.
Property management expenses increased by $0.2 million from $1.2 million to $1.4
million representing 2.2 percent and 2.0 percent of income from property in 2000
and 1999, respectively.
General and administrative expenses increased by $0.2 million from $1.9 million
to $2.1 million, representing 2.8 percent of total revenues in 2000 and 1999.
Earnings before interest, taxes, depreciation and amortization ("EBITDA")
increased by $5.3 million from $44.9 million to $50.2 million. EBITDA as a
percent of revenues increased to 69.6 percent in 2000 compared to 68.3 percent
in 1999.
Depreciation and amortization increased by $1.2 million from $14.0 million to
$15.2 million, or 8.6 percent, due primarily to acquisitions and development of
communities in 2000 and 1999.
Interest expense increased by $0.9 million from $13.3 million to $14.2 million,
or 6.7 percent, due primarily to investment in rental property and investment in
and advances to affiliates.
10
<PAGE> 11
SUN COMMUNITIES OPERATING LIMITED PARTNERSHIP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS, CONTINUED
Comparison of the three months ended June 30, 2000 and 1999
For the three months ended June 30, 2000, income before distribution to
Preferred OP Units increased by 19.1 percent from $8.7 million to $10.4 million,
when compared to the three months ended June 30, 1999. The increase was due to
increased revenues of $3.3 million while expenses increased by $1.6 million.
Income from property increased by $2.4 million from $30.6 million to $33.0
million, or 7.8 percent, due primarily to rent increases and other community
revenues ($1.5 million), lease up of manufactured home sites including new
developments ($1.1 million), and acquisitions ($0.9 million), offset by a
revenue reduction of $1.1 million due to the sale of four communities during
1999.
Other income increased by $0.9 million from $2.2 million to $3.1 million due
primarily to an increase in interest income.
Property operating and maintenance expenses increased by $0.3 million from $6.4
million to $6.7 million, or 4.1 percent, due primarily to acquisitions.
Real estate taxes increased by $0.1 million from $2.2 million to $2.3 million
primarily due to acquisitions and changes in property tax assessments.
Property management expenses increased by $0.1 million from $0.6 million to $0.7
million representing 2.2 percent and 2.1 percent of income from property in 2000
and 1999, respectively.
General and administrative expenses remain constant at $1.0 million,
representing 2.8 percent and 2.9 percent of total revenues in 2000 and 1999,
respectively.
Earnings before interest, taxes, depreciation and amortization ("EBITDA")
increased by $2.9 million from $22.5 million to $25.4 million. EBITDA as a
percent of revenues increased to 70.4 percent in 2000 compared to 68.7 percent
in 1999.
Depreciation and amortization increased by $0.6 million from $7.1 million to
$7.7 million, or 7.6 percent, due primarily to acquisitions and development of
communities in 2000 and 1999.
Interest expense increased by $0.6 million from $6.7 million to $7.3 million, or
9.8 percent, due primarily to investment in rental property and investment in
and advances to affiliates.
11
<PAGE> 12
SUN COMMUNITIES OPERATING LIMITED PARTNERSHIP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SAME PROPERTY INFORMATION
The following table reflects property-level financial information as of and for
the six months ended June 30, 2000 and 1999. The "Same Property" data represents
information regarding the operation of communities owned as of January 1, 1999
and June 30, 2000. Site, occupancy, and rent data for those communities is
presented as of the last day of each period presented. The table includes sites
where the Company is providing financing and managing the properties. Such
amounts relate to the total portfolio data and include 923 sites in 2000 and
1999.
<TABLE>
<CAPTION>
SAME PROPERTY TOTAL PORTFOLIO
--------------------- ---------------------
2000 1999 2000 1999
------ ------ ------ ------
<S> <C> <C> <C> <C>
Income from property $ 49,712 $ 47,103 $ 66,076 $ 61,941
-------- -------- -------- --------
Property operating expenses:
Property operating and maintenance 3,870 3,553 13,875 13,289
Real estate taxes 8,831 8,445 4,518 4,411
-------- -------- -------- --------
Property operating expenses 12,701 11,998 18,393 17,700
-------- -------- -------- --------
Property EBITDA $ 37,011 $ 35,105 $ 47,683 $ 44,241
======== ======== ======== ========
Number of operating properties 88 88 118 (2) 108
Developed sites 30,000 29,463 39,896 (2) 38,500
Occupied sites 28,623 28,054 36,631 35.600
Occupancy % 95.4% 95.2% 95.4%(1) 94.7% (1)
Weighted average monthly rent per site $ 287 $ 274 $ 284 (1) $ 274 (1)
Sites available for development 1,711 2,156 9,434 (3) 7,763
Sites planned for development in current year 267 723 1,830 (3) 2,343
</TABLE>
(1) Occupancy % and weighted average rent relates to manufactured housing sites,
excluding recreational vehicle sites and sites owned through joint ventures.
(2) Includes 7 communities and 1,255 developed sites owned through joint
ventures.
(3) Includes 3,590 sites available for development and 640 sites planned for
development owned through joint ventures.
On a same property basis, property revenues increased by $2.6 million from $47.1
million to $49.7 million, or 5.5 percent, due primarily to increases in rents
and occupancy related charges including water and property tax pass through.
Also contributing to revenue growth was the increase of 569 leased sites at June
30, 2000 compared to June 30, 1999.
Property operating expenses increased by $0.7 million from $12.0 million to
$12.7 million or 5.9 percent, due to increased occupancies and costs. Property
EBITDA increased by $1.9 million from $35.1 million to $37.0 million, or 5.4
percent.
12
<PAGE> 13
SUN COMMUNITIES OPERATING LIMITED PARTNERSHIP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents decreased by $4.6 million to $6.7 million at June 30,
2000 compared to $11.3 million at December 31, 1999 because cash used in
investing activities exceeded cash provided by operating and financing
activities.
Net cash provided by operating activities increased by $4.5 million to $29.1
million for the six months ended June 30, 2000 compared to $24.6 million for the
same period in 1999. This increase was primarily due to a $2.8 million change in
accounts payable and other liabilities and other assets and a $1.7 million
increase in earnings attributable to OP Units before depreciation and
amortization.
Net cash used in investing activities increased by $7.8 million to $56.5 million
from $48.7 million primarily due to a $15.2 million increase in investment in
and advances to affiliates and a $7.2 million increase in rental property
acquisition activities offset by a $14.6 million decrease in investments in
notes receivable, net.
Net cash provided by financing activities increased by $5.1 million to $22.7
million for the six months ended June 30, 2000 compared to $17.6 million for the
same period in 1999. This increase was primarily because of a $7.0 million
increase in borrowings on the line of credit offset by a $1.2 million reduction
in proceeds from common stock and operating partnership units and a $0.9 million
increase in distributions.
The Company expects to meet its short-term liquidity requirements generally
through its working capital provided by operating activities. The Company
expects to meet certain long-term liquidity requirements such as scheduled debt
maturities and property acquisitions through the issuance of debt securities, or
general or limited partnership interests. The Company considers these sources to
be adequate and anticipates they will continue to be adequate to meet operating
requirements, capital improvements, investment in development, and payment of
distributions by the Company in accordance with REIT requirements in both the
short and long term. The Company may also meet these short-term and long-term
requirements by utilizing its $125 million line of credit which bears interest
at LIBOR plus 1.0% and is due January 1, 2003. See "Special Note Regarding
Forward-Looking Statements."
At June 30, 2000, the Company's debt to total market capitalization ratio
approximated 36.5% (assuming conversion of all Common and Preferred OP Units
into shares of common stock), with a weighted average maturity of approximately
5.3 years and a weighted average interest rate of 7.2%.
Recurring capital expenditures approximated $2.0 million for the six months
ended June 30, 2000.
13
<PAGE> 14
SUN COMMUNITIES OPERATING LIMITED PARTNERSHIP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OTHER
Year 2000 Update
In February 2000, the Company officially concluded its Year 2000 compliance
program as no events had occurred that significantly affected either the
Company's operation or its financial statements.
Special Note Regarding Forward-Looking Statements
This Form 10-Q contains various "forward-looking statements" within the meaning
of the Securities Act of 1933 and the Securities Exchange Act of 1934, and the
Company intends that such forward-looking statements be subject to the safe
harbors created thereby. The words "may", "will", "expect", "believe",
"anticipate", "should", "estimate", and similar expressions identify
forward-looking statements. These forward-looking statements reflect the
Company's current views with respect to future events and financial performance,
but are based upon current assumptions regarding the Company's operations,
future results and prospects, and are subject to many uncertainties and factors
relating to the Company's operations and business environment which may cause
the actual results of the Company to be materially different from any future
results expressed or implied by such forward-looking statements. Such
uncertainties and factors include the ability of manufactured home buyers to
obtain financing, the level of repossessions by manufactured home lenders, and
those referenced in the section entitled "Risk Factors" of the Company's
Registration Statement on Form S-3 filed with the Securities and Exchange
Commission on February 15, 2000.
Such factors include, but are not limited to, the following: (i) changes in the
general economic climate; (ii) increased competition in the geographic areas in
which the Company owns and operates manufactured housing communities; (iii)
changes in government laws and regulations affecting manufactured housing
communities; and (iv) the ability of the Company to continue to identify,
negotiate and acquire manufactured housing communities and/or vacant land which
may be developed into manufactured housing communities on terms favorable to the
Company. The Company undertakes no obligation to publicly update or revise any
forward-looking statements whether as a result of new information, future
events, or otherwise.
Recent Accounting Pronouncements
In June 1998, FASB issued SFAS No. 133 "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS 133"). This statement establishes accounting and
reporting standards for derivative instruments including certain derivative
instruments embedded in other contracts, (collectively referred to as
derivatives) and for hedging activities. This statement will be effective
January 1, 2001. There is no effect from the application of SFAS 133 on the
earnings and financial position of the Company as the Company had no derivative
instruments at June 30, 2000 and December 31, 1999.
14
<PAGE> 15
SUN COMMUNITIES OPERATING LIMITED PARTNERSHIP
PART II
ITEM 6.(a) - EXHIBITS REQUIRED BY ITEM 601 OF REGULATION S-K
EXHIBIT NO. DESCRIPTION
27 Financial Data Schedule
ITEM 6.(b) - REPORTS ON FORM 8-K
The Company did not file any reports on Form 8-K during the period covered by
this Form 10-Q.
15
<PAGE> 16
SUN COMMUNITIES OPERATING LIMITED PARTNERSHIP
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.
Dated: August 4, 2000
SUN COMMUNITIES OPERATING LIMITED PARTNERSHIP
BY: Sun Communities, Inc., General Partner
BY: /s/ Jeffrey P. Jorissen
--------------------------------------------------------------
Jeffrey P. Jorissen, Chief Financial Officer
and Secretary
16
<PAGE> 17
SUN COMMUNITIES OPERATING LIMITED PARTNERSHIP
EXHIBIT INDEX
<TABLE>
<CAPTION>
PAGE FILED NUMBER
EXHIBIT NO. DESCRIPTION HEREWITH HEREIN
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27 Financial Data Schedule X
</TABLE>
17
