<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
FORM 10-K
(Mark One)
X Annual report pursuant to Section 13 or 15(d) of the Securities
-----
Exchange Act of 1934
For the year ended December 31, 1999
OR
_____ Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission file number 33-85492
______________
CP LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
MARYLAND 38-3140664
(State or other jurisdiction I.R.S. Employer
of incorporation or organization) Identification No.)
6160 S. Syracuse Way, Greenwood Village, Colorado 80111
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (303) 741-3707
Securities registered pursuant to section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
NONE
Indicate by check mark whether the registrant: (l) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities 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 _________
---------
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CP LIMITED PARTNERSHIP
FORM 10-K ANNUAL REPORT
for the year ended December 31, 1999
TABLE OF CONTENTS
_________
<TABLE>
<CAPTION>
Item Pages
- ---- -----
<S> <C>
PART I
1. Business.................................................. 3
2. Properties................................................ 8
3. Legal Proceedings......................................... 14
4. Submission of Matters to a Vote of Security Holders....... 14
PART II
5. Market for Registrant's Common Equity and
Related Security Holder Matters....................... 15
6. Selected Financial Data................................... 16
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations................... 18
7A. Quantitative and Qualitative Disclosures About
Market Risk........................................... 26
8. Financial Statements and Supplementary Data............... 27
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure................... 49
PART III
10. Directors and Executive Officers of the Registrant........ 50
11. Executive Compensation.................................... 50
12. Security Ownership of Certain Beneficial Owners
and Management........................................ 50
13. Certain Relationships and Related Transactions............ 50
PART IV
14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K................................... 51
Signatures................................................ 55
FINANCIAL STATEMENT SCHEDULES
CP Limited Partnership Financial Statement Schedules...... F1
</TABLE>
2
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PART I
Item 1. Business
- ------- --------
General Development of Business.
CP Limited Partnership (the "Company") is a Maryland Partnership. Chateau
Communities, Inc. ("Chateau"), a Maryland Corporation, is a self-administered
and self-managed equity real estate investment trust ("REIT") and is one of the
largest owner/managers of manufactured home communities in the United States.
Chateau conducts substantially all of its activities through the Company in
which it owns, directly and through ROC Communities, Inc. ("ROC"), the other
general partner of the Company, an approximate 89% general partner interest. The
Company owns and operates 165 manufactured home community properties (the
"Properties") containing 51,659 homesites and 1,359 park model/RV sites in 28
states. The Company also fee manages 44 manufactured home community properties
containing 9,718 homesites. The Company is also involved in the development and
expansion of manufactured home communities and through its subsidiary, Community
Sales, Inc., the sale of new and pre-owned homes, brokerage of used homes and
assisting residents in the arrangements of financing and insurance services.
Formation of the Company
The Company was formed by Chateau, as general partner, and Chateau Estates, as
the initial limited partner, on September 16, 1993.
On February 11, 1997, the Company completed a strategic merger of equals with
ROC (the "Merger"). The Merger and related transactions were accounted for using
the purchase method of accounting in accordance with generally accepted
accounting principles. Accordingly, the assets and liabilities of ROC were
adjusted to fair value for financial accounting purposes and the results of
operations of ROC are included in the results of operations of the Company
beginning in February 1997.
Industry Overview
A manufactured home community is a residential subdivision designed and improved
with homesites for the placement of manufactured homes, including related
improvements and amenities. Manufactured homes are detached, single-family homes
which are produced off-site by manufacturers and installed on sites within the
community. Manufactured homes are available in a variety of architectural styles
and floor plans, offering a variety of amenities, custom options and on-site
built additional structures.
Modern manufactured home communities are similar to typical residential
subdivisions and generally contain centralized entrances, paved streets, curbs
and gutters and parkways. In addition, such communities often provide a variety
of amenities to residents which may include a clubhouse, swimming pools and
jacuzzis, playgrounds, basketball courts, picnic areas, shuffleboard courts,
tennis courts, cable television service, golf courses, marinas and laundry
facilities. Utilities are provided or arranged for by the owner of the
community. Some communities provide water and sewer service through public or
private utilities, while others provide these services to residents from on-site
facilities.
3
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The owner of each home in a manufactured home community leases a site from the
community. The manufactured home community is the owner of the underlying land,
utility connections, streets, lighting, driveways, common area amenities and
other capital improvements and is responsible for enforcement of community
guidelines and maintenance. Each owner within the manufactured home community is
responsible for the maintenance of his home and leased site. Additionally,
manufactured home communities tend to have stable resident bases, with
relatively few residents moving manufactured homes out of the communities.
Management thus tends to be more stable, and capital expenditure needs less
significant, relative to multi-family rental apartment complexes.
Operating and Investment Strategies
The Company seeks to maximize long-term growth in income and portfolio value
through active management and expansion of certain of its manufactured home
communities and the selective acquisition and development of additional
communities. The Company focuses on manufactured home communities that have
growth potential and expects to hold such properties for long-term investment
and capital appreciation. The Company's operating and investment strategies
include:
Operations
* Providing attractive and desirable manufactured home communities for
existing and prospective residents;
* Maintaining and upgrading communities on a continuous basis through a
program of regular and preventive maintenance and replacement;
* Offering residents accessibility to on-site managers to maximize
retention, encourage home maintenance and improvements to minimize
turnover;
* Providing frequent personal contact between on-site managers and
residents to foster a sense of pride in the community and to promote
desirability of each property;
* Offering potential community residents the convenience of purchasing a
home already in place within the community or ordering a new product;
* Increasing value to residents and shareholders of the Company by
providing additional value-added services to residents; and
* Assisting potential residents in securing financing and insurance for
their home.
Development, Expansions and Acquisitions
* Utilizing the expertise and relationships developed by the Company's
management to identify new development opportunities;
* Selectively developing new communities in strategically desirable
regions where development is supported by favorable demographics and
strong market demand; and
* Capitalizing on opportunities to renovate and expand properties
consistent with local market demand;
4
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* Selectively acquiring well-located manufactured home communities that
demonstrate the potential for increases in revenue and cash flow
through professional property management, improved operating
efficiencies, aggressive leasing and, where appropriate, expansion on
adjacent land;
* Acquiring properties in existing markets in order to achieve economies
of scale in operations, and in new markets where portfolios may be
acquired with regional management in place.
Financing Strategies
The Company intends to maintain a conservative and flexible capital structure
that enables it to (i) continue to access the capital markets on favorable
terms; (ii) enhance potential earnings growth; (iii) minimize its level of
encumbered assets; and (iv) limit its exposure to variable rate debt. The
Company intends to maintain a debt-to-market capitalization ratio of
approximately 50% or less. The Company, however, may from time to time re-
evaluate this policy and decrease or increase such ratio accordingly in light of
then current economic conditions, relative costs to the Company of debt and
equity capital, market values of the properties and other factors.
Expansion and Improvement of Manufactured Home Community Properties
The Company will seek to increase the income generated from its manufactured
home communities by expanding the number of sites available to be leased to
residents if justified by local market conditions and permitted by zoning and
other applicable laws, and by filling vacant sites. During 1999, the Company
substantially completed the development of 525 expansion sites. As of December
31, 1999, the Company owned undeveloped land adjacent to existing communities
containing approximately 5,600 expansion sites, which are zoned for manufactured
housing. This undeveloped land will facilitate additional growth to the extent
market conditions warrant. In addition, where appropriate, the Company will
consider upgrading or adding facilities and amenities to certain communities in
order to make those communities more attractive in their markets.
The Company is currently involved in seven joint ventures to construct ground-up
"greenfield communities". In the majority of the arrangements, the Company acts
as the developer or co-developer, performs all accounting and property
management functions and, in many of the arrangements, the Company acts as a
lender to finance the development costs. As such, the Company advances amounts
to the joint ventures to fund construction and recognizes the related interest
income as earned. The Company primarily borrows on its line of credit to fund
the advances and, accordingly, includes the related borrowing costs in interest
expense and the related debt in its balance sheet. In the majority of the
arrangements, the Company has the option to purchase the completed community
when it reaches a pre-determined occupancy rate. Based on the Company's
ownership in these joint ventures the Company accounts for the investment
utilizing the equity method of accounting for six of these ventures. The Company
is also involved in two joint ventures in which the communities are being
constructed by its joint venture partner. The Company has similar arrangements
to lend these joint ventures funds to finance development. Based on the
Company's investment in these ventures, the Company accounts for its investments
utilizing the equity method of accounting.
5
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1999 Property Acquisitions
During 1999, the Company completed the following acquisitions:
<TABLE>
<CAPTION>
Acquisition Acquisition Purchase
Date and Location Price
------------------- ------------ -----
(in thousands)
<S> <C> <C>
April 1999 1 community in Alabama, containing an aggregate of
309 homesites $ 4,013
October 1999 1 community in Alabama containing an aggregate of
315 homesites
8,712
--------
$ 12,725
========
</TABLE>
Community Sales, Inc.
The Company conducts its sales and brokerage activities through CSI, which is
operated as a taxable subsidiary of the Operating Partnership. During 1999, CSI
sold 587 new or pre-owned homes and brokered the sales of 1,273 homes. CSI also
has a Financial Services Division, which arranges financing and insurance
services for prospective residents. During 1999, the Financial Services Division
arranged financing on approximately 863 loans.
Affiliated Companies
In September 1997, the Company completed the acquisition of The Windsor
Corporation ("Windsor"), the general partner in five partnerships and advisor to
one REIT, N'Tandem Trust ("N'Tandem", previously known as Windsor Real Estate
Investment Trust 8). These six entities owned 30 manufactured home communities
(containing 6,300 homesites), all of which have been managed by the Company or
ROC on a fee basis since 1993.
In March 1998, the Company entered into an investment agreement ("Agreement")
with N'Tandem. Pursuant to the Agreement, the Company purchased 19,139 common
equity shares of N'Tandem. The Company owns approximately 10 percent of
N'Tandem's outstanding stock and recognizes income from an advisory agreement
and interest income on the notes as earned.
During 1998, in order to finance acquisitions, N'Tandem borrowed $10.7 million
from the Company through the issuance of notes which were due November 1999 and
bore interest at the prime rate of interest plus one percent per annum. These
notes were refinanced and the maturities extended by the Company in 1999. Also,
during 1999, N'Tandem borrowed $ 23.6 million from the Company for the
acquisition of 6 communities. During 1999 N'Tandem obtained a line of credit and
repaid $10.7 million of these notes to the Company. As of December 31, 1999,
N'Tandem owed the Company $ 23.6 million under unsecured notes that are due
December 31, 2000 and bear interest at the prime rate of interest plus one
percent.
As of December 31, 1999 N'Tandem owned 12 communities with 2,644 homesites and
an interest in 7 communities with 1,345 homesites.
6
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Competition
Many of the Properties are located in developed areas that include other
manufactured home communities. The number of competitive manufactured home
community properties in a particular area could have a material effect on the
Company's ability to lease sites at its communities and on the rents charged. In
addition, other forms of multi-family residential properties and single-family
housing provide housing alternatives to residents.
Employees
As of December 31, 1999, the Company had approximately 1,200 full and part-time
employees. The Company utilizes a resident administrator for the on-site
administration of each of the Properties. Important duties of on-site
administrators as well as the office manager include extensive contact with
residents through initial introduction to community guidelines and on-going
accessibility for resident assistance. Typically, clerical and maintenance
workers are employed to assist in the management and care of residents and
properties. Direct supervision of on-site administrators is the responsibility
of the Company's regional vice presidents and managers and four divisional
presidents. These individuals have significant experience in addressing the
needs of residents and in finding or creating innovative approaches to value
maximization and increasing cash flow from property operations. Field management
staff is also supported by approximately 60 corporate employees who assist on-
site administrators in all the property management functions.
Commitment to resident satisfaction is demonstrated by the ongoing training that
the Company provides for on-site staff. Community administrators meet
periodically at regional and divisional seminars to review Company philosophy
and policy, to discuss relevant administration issues and solutions and to share
ideas and experiences.
Tax Status
The Company is not liable for Federal income taxes as the partners recognize
their proportionate share of income or loss in their tax returns. Therefore, no
provision for income taxes is included in the Company's financial statements.
Cautionary Statements Concerning Forward-Looking Information
Certain information both included and incorporated by reference in this Annual
Report on Form 10-K may contain forward-looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act, and as
such may involve known and unknown risks, uncertainties and other factors which
may cause the actual results, performance or achievements of our company to be
materially different from future results, performance or achievements expressed
or implied by such forward-looking statements. Forward-looking statements, which
are based on certain assumptions and describe our future plans, strategies and
expectations are generally identifiable by use of the words "may," "will,"
"should," "expect," "anticipate," "estimate," "believe," "intend," or "project,"
or the negative thereof or other variations thereon or comparable terminology.
Factors which could have a material adverse effect on the operations and future
prospects of the company include, but are not limited to, changes in: economic
conditions generally and the real estate market specifically,
legislative/regulatory changes, availability of capital, interest rates,
competition, supply and demand for properties in our current and proposed market
areas and general accounting principles. These risks and uncertainties should be
considered in evaluating any forward-looking statements contained or
incorporated by reference herein.
7
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Item 2. Properties
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At December 31, 1999, the Properties consisted of 165 manufactured home
communities containing 51,659 homesites and 1,359 park model/RV sites, in 28
states, with amenities designed for either retirement or family living. The
Company also fee managed 44 manufactured home communities containing 9,718 sites
in 15 states. The Company also owned land adjacent to certain existing
communities containing approximately 5,600 expansion sites which, although not
yet developed, was zoned for manufactured housing.
At December 31, 1999, the Properties had an occupancy rate of approximately 91.7
percent with weighted average rent for the year ended December 31, 1999 of $302
per month. This compares to an occupancy rate of 92.4 percent and with weighted
average rent of $292 per month for the prior year. Weighted average rent is
calculated as rental and utility income for the period, on a monthly basis,
divided by the weighted average occupied sites. Weighted average occupancy is
computed by averaging the number of revenue producing sites at the end of each
month in the period.
The Company believes that the Properties provide amenities and common facilities
that create a safe and attractive community for residents. All of the Properties
provide residents with attractive amenities with most offering a clubhouse, a
swimming pool, and playgrounds. Many Properties offer additional amenities such
as sauna/whirlpool spas, indoor pools, tennis courts, libraries, shuffleboard
courts, basketball courts, golf courses, day care facilities, exercise rooms,
marinas and laundry facilities.
Since residents own their homes, it is their responsibility to maintain their
homes and the surrounding area. The communities have extensive guidelines for
maintenance. It is management's role to provide maintenance of common areas,
facilities and amenities and to ensure that residents comply with community
policies. The Company holds periodic meetings of its property management
personnel for training and implementation of the Company's strategies, and
property administrators make a daily inspection of the Properties. The Company
believes that, due in part to this strategy, the Properties historically have
had and will continue to have low turnover and high occupancy rates. Since 1989,
the Properties have averaged an annual turnover of homes (where the home is
moved out of the community) of three to four percent.
Leases
The typical lease entered into between the resident and one of the Company's
manufactured home communities for the rental of a site is month-to-month or
year-to-year, renewable upon the consent of both parties or, in some instances,
as provided by statute.
8
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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 December 31, 1999,
regarding the Properties.
* These properties are included in the Active Expansion Portfolio.
<TABLE>
<CAPTION>
Total
Number of Weighted Average
Location Total Sites Occupancy as of Monthly Rent per Site
Community State (Closest Major City) Communities 12/31/99 12/31/99 12/31/99
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
100 Oaks AL Fultondale 230 92% $209
Lakewood AL Montgomery 310 79% $162
Green Park South AL Birmingham 307 95% $230
Total Alabama 3 847 88% $199
Bermuda Palms CA Palm Springs 185 95% $343
Eastridge CA San Jose 187 99% $636
La Quinta Ridge CA Palm Springs 152 87% $413
The Colony CA Palm Springs 220 96% $651
The Orchard CA San Francisco 233 100% $575
Total California 5 977 96% $535
CV-Denver CO Denver 345 94% $369
CV-Longmont CO Longmont 310 99% $378
Friendly Village CO Greeley 226 99% $291
Pine Lakes Ranch CO Denver 762 98% $337
Redwood Estates CO Denver 753 98% $329
Total Colorado 5 2,396 98% $340
Cedar Grove CT New Haven 60 100% $292
Evergreen CT New Haven 102 96% $295
Green Acres CT New Haven 64 95% $289
Highland CT New Haven 50 92% $306
Total Connecticut 4 276 96% $295
Anchor North FL Tampa Bay 94 96% $268
Audubon FL Orlando 280 98% $267
Colony Cove FL Sarasota 2,211 100% $335
Conway Circle FL Orlando 111 100% $304
Crystal Lake FL St. Petersburg 166 91% $265
* Crystal Lakes FL Tampa 330 56% $152
CV-Jacksonville FL Jacksonville 643 95% $305
Del Tura FL Fort Myers 1,344 88% $449
Eldorado Estates FL Daytona Beach 126 98% $258
Emerald Lake FL Fort Myers 201 100% $290
Fairways Country Club FL Orlando 1,141 99% $292
* Foxwood Farms FL Orlando 375 76% $198
Hidden Valley FL Orlando 303 99% $295
Indian Rocks FL Clearwater 148 70% $243
Jade Isle FL Orlando 101 95% $310
Lakeland Harbor FL Tampa 504 100% $251
Lakeland Junction FL Tampa 191 100% $196
Lakes at Leesburg FL Orlando 640 100% $261
Land O' Lakes FL Orlando 173 99% $254
Midway Estates FL Vero Beach 204 77% $321
Oak Springs FL Orlando 438 73% $245
Orange Lake FL Orlando 242 95% $248
Palm Beach Colony FL West Palm Beach 285 93% $308
</TABLE>
9
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<TABLE>
<CAPTION>
Total
Number of Weighted Average
Location Total Sites Occupancy as of Monthly Rent per Site
Community State (Closest Major City) Communities 12/31/99 12/31/99 12/31/99
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Pedaler's Pond FL Orlando 214 86% $198
Pinellas Cascades FL Clearwater 238 91% $370
Shady Lane FL Clearwater 108 95% $263
Shady Oak FL Clearwater 250 98% $325
Shady Village FL Clearwater 156 95% $305
Southwind Village FL Naples 337 92% $301
Starlight Ranch FL Orlando 783 95% $297
Tarpon Glen FL Clearwater 170 88% $295
Town & Country FL Orlando 73 99% $312
Whispering Pines FL Clearwater 392 95% $364
Winter Haven Oaks FL Orlando 343 52% $211
Total Florida 34 13,315 92% $302
Atlanta Meadows GA Atlanta 75 99% $232
* Butler Creek GA Augusta 376 82% $187
Camden Point GA Kingsland 268 61% $167
Castlewood Estates GA Atlanta 334 85% $310
Colonial Coach Estates GA Atlanta 481 86% $280
Golden Valley GA Atlanta 131 97% $255
Landmark GA Atlanta 524 94% $276
Marnelle GA Atlanta 205 98% $271
Oak Grove Estates GA Albany 174 95% $136
Paradise Village GA Albany 226 84% $146
Total Georgia 10 2,794 87% $237
Lakewood Estates IA Davenport 180 92% $251
Terrace Heights IA Dubuque 317 96% $255
Total Iowa 2 497 94% $254
Coach Royale ID Boise 91 98% $279
Maple Grove Estates ID Boise 270 96% $294
Shenandoah Estates ID Boise 154 96% $279
Total Idaho 3 515 97% $287
Falcon Farms IL Moline 215 93% $230
Maple Ridge IL Kankakee 75 100% $249
Maple Valley IL Kankakee 201 100% $249
Total Illinois 3 491 97% $241
* Broadmore IN South Bend 356 87% $240
Forest Creek IN South Bend 167 99% $291
* Fountainvue IN Marion 120 88% $156
Hickory Knoll IN Indianapolis 326 98% $294
Mariwood IN Indianapolis 296 92% $289
Oak Ridge IN South Bend 204 98% $245
Pendleton IN Indianapolis 102 97% $216
Sherwood IN Marion 89 76% $159
Skyway IN Indianapolis 156 98% $286
Twin Pines IN Goshen 238 94% $233
Total Indiana 10 2,054 93% $253
Mosby's Point KY Cincinnati 150 96% $289
Rolling Hills KY Louisville 158 97% $204
Total Kentucky 2 308 96% $246
Pinecrest Village LA Shreveport 445 74% $156
Stonegate, LA LA Shreveport 157 97% $176
Total Louisiana 2 602 80% $161
Hillcrest MA Boston 83 95% $308
Leisurewoods Rockland MA Boston 394 99% $312
* Leisurewoods Taunton MA Boston 182 79% $277
The Glen MA Boston 36 100% $380
Total Massachusetts 4 695 93% $306
Algoma Estates MI Grand Rapids 294 95% $288
* Anchor Bay MI Detroit 1,384 96% $339
Arbor Village MI Jackson 266 97% $251
Avon MI Detroit 617 99% $398
Canterbury Estates MI Grand Rapids 209 80% $244
Chesterfield MI Detroit 345 97% $362
Chestnut Creek MI Flint 221 74% $307
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Total
Number of Weighted Average
Location Total Sites Occupancy as of Monthly Rent per Site
Community State (Closest Major City) Communities 12/31/99 12/31/99 12/31/99
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Clinton MI Detroit 1,000 98% $359
Colonial Acres MI Kalamazoo 612 95% $281
Colonial Manor MI Kalamazoo 195 95% $269
Country Estates MI Grand Rapids 257 91% $270
Cranberry MI Pontiac 232 99% $354
Ferrand Estates MI Grand Rapids 420 98% $331
* Forest Lake Estates MI Grand Rapids 221 80% $271
* Grand Blanc MI Flint 478 86% $333
Holiday Estates MI Grand Rapids 205 98% $316
Howell MI Lansing 455 98% $370
Huron Estates MI Flint 111 83% $223
Lake in the Hills MI Detroit 238 100% $375
* Leonard Gardens MI Grand Rapids 271 76% $285
Macomb MI Detroit 1,426 97% $363
Norton Shores MI Grand Rapids 656 86% $253
Novi MI Detroit 725 96% $408
Oakhill MI Flint 504 88% $354
Old Orchard MI Flint 200 100% $318
Orion MI Detroit 423 97% $345
Pinewood MI Columbus 380 98% $301
Pleasant Ridge MI Lansing 305 82% $218
Royal Estates MI Kalamazoo 183 93% $304
Science City MI Midland 171 96% $289
Springbrook MI Utica 398 97% $330
Sun Valley MI Jackson 197 95% $245
Swan Creek MI Ann Arbor 294 99% $342
* The Highlands MI Flint 683 90% $271
Torrey Hills MI Flint 346 96% $343
Valley Vista MI Grand Rapids 137 88% $317
Villa MI Flint 319 93% $337
* Westbrook MI Detroit 299 60% $369
Yankee Spring MI Grand Rapids 284 90% $252
Total Michigan 39 15,961 93% $326
Cedar Knolls MN Minneapolis 458 98% $386
Cimmaron MN St. Paul 505 99% $383
Rosemount MN Minneapolis/St. Paul 182 100% $376
Twenty-Nine Pines MN St. Paul 152 92% $307
Total Minnesota 4 1,297 98% $374
* Springfield Farms MO Springfield 134 72% $174
Total Missouri 1 134 72% $174
Countryside Village G.F. MT Great Falls 226 97% $199
Total Montana 1 226 97% $199
Autumn Forest NC Greensboro 299 95% $225
Foxhall Village NC Raleigh 315 97% $332
Oakwood Forest NC Greensboro 481 87% $264
Woodlake NC Greensboro 308 97% $236
Total North Carolina 4 1,403 93% $247
Buena Vista ND Fargo 400 97% $258
Columbia Heights ND Grand Forks 302 99% $268
President's Park ND Grand Forks 174 87% $220
Meadow Park ND Fargo 117 95% $193
Total North Dakota 4 993 92% $237
Casual Estates NY Syracuse 961 69% $321
Meadowbrook NY Ithaca 237 69% $259
Oak Orchard Estates NY Rochester 235 91% $282
Shadybrook NY Syracuse 89 69% $321
Total New York 4 1,522 72% $305
* Hunter's Chase OH Lima 135 47% $168
Vance OH Columbus 110 96% $214
Willo-Arms OH Cleveland 262 100% $196
Yorktowne OH Cincinnati 354 97% $331
Total Ohio 4 861 90% $249
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
Total
Number of Weighted Average
Location Total Sites Occupancy as of Monthly Rent per Site
Community State (Closest Major City) Communities 12/31/99 12/31/99 12/31/99
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Crestview OK Stillwater 237 88% $199
Total Oklahoma 1 237 88% $199
Knoll Terrace OR Salem 212 96% $353
Riverview OR Portland 133 99% $385
Total Oregon 2 345 97% $365
* Carnes Crossing SC Summerville 535 97% $173
* Conway Plantation SC Myrtle Beach 299 70% $180
Saddlebrook SC Charleston 426 99% $191
Total South Carolina 3 1,260 91% $181
* Eagle Creek TX Tyler 198 56% $159
Homestead Ranch TX McAllen 126 85% $220
Leisure World TX Brownsville 201 91% $197
The Homestead TX McAllen 99 97% $222
Trail's End TX Brownsville 299 84% $192
Total Texas 5 923 81% $193
* Regency Lakes VA Winchester 384 77% $209
Total Virginia 1 384 77% $209
Eagle Point WA Seattle 230 98% $451
Total Washington 1 230 98% $451
Breazeale WY Laramie 116 97% $236
Total Wyoming 1 116 97% $236
Totals 162 51,659 91.7% $302
</TABLE>
12
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Indebtedness
The following table sets forth certain information relating to the secured and
unsecured indebtedness of the Company outstanding as of December 31, 1999.
<TABLE>
<CAPTION>
Weighted
Average
Amount of Percent of Interest Maturity
Indebtedness total debt Rate Date
------------ ---------- ---- ----
(in thousands)
<S> <C> <C> <C> <C>
Mortgage Debt:
Del Tura $ 31,447 7.1% 8.40% 2000
Other (7 properties) 19,621 4.3% 7.68% 2000-2011
Pacific Life (36 properties) 54,734 12.2% 7.16% 2000
-------- ---- ----
Total Mortgage 105,802 23.6% 7.62%
Unsecured Debt:
Unsecured Senior Notes 70,000 15.6% 7.52% 2003
Unsecured Senior Notes 75,000 16.8% 8.75% 2000
Unsecured Senior Notes 100,000 22.3% 6.44% 2004
-------- ---- ----
Total Unsecured 245,000 54.7% 7.46%
-------- ---- ----
Total Fixed Rate 350,802 78.3% 7.60%
Variable Rate Debt:
Credit Facilities 97,317 21.7% 6.91% 2000-2001
--------
Total Secured and Unsecured Debt $448,119
========
</TABLE>
The $75 million 8.75% Senior Notes were retired on March 2, 2000. Since
December 31, 1999, the Company, issued $100 million of 8.5% Senior Notes due
2005.
13
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Item 3. Legal Proceedings
- ------- -----------------
None
Item 4. Submission of Matters to a Vote of Security Holders
- ------- ---------------------------------------------------
Not Applicable
14
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Related Security Holder
- ------- -----------------------------------------------------------------
Matters
- -------
Not Applicable
15
<PAGE>
Item 6. Selected Financial Data
- ------- -----------------------
The following table sets forth summary financial information of the Company for
the periods and dates indicated.
<TABLE>
<CAPTION>
For the Year Ended December 31,
In thousands, except per OP Unit data 1999 1998 1997(1) 1996 1995
---- ---- ------- ---- ----
<S> <C> <C> <C> <C> <C>
Operating Data:
Revenues:
Rental income $ 177,789 $ 167,206 $134,801 $ 67,233 $ 61,558
Management, interest and other income 11,574 5,924 3,368 151 297
---------- ---------- -------- -------- --------
Total revenues 189,363 173,130 138,169 67,384 61,855
Expenses:
Property operating and
administrative 73,062 67,699 56,053 26,870 24,410
Depreciation and amortization 41,826 39,658 31,510 11,452 11,014
Interest and related amortization 32,318 31,287 25,918 12,962 12,452
---------- ---------- -------- -------- --------
Total expenses 147,206 138,644 113,481 51,284 47,876
---------- ---------- -------- -------- --------
Income before net gain on sales of properties
and extraordinary item 42,157 34,486 24,688 16,100 13,979
Net gain on sales of properties 2,805
Income before extraordinary
Item 44,962 34,486 24,688 16,100 13,979
Extraordinary item (2) - - - 829
Preferred OP Unit distributions 6,094 4,249 - - -
---------- ---------- -------- -------- --------
Net income attributable to common
OP Unitholders $ 38,868 $ 30,237 $ 24,688 $ 16,100 $ 13,150
========== ========== ======== ======== ========
Net income attributable to:
General Partner $ 34,626 $ 26,801 $ 21,702 $ 6,534 $ 5,303
Limited Partners 4,242 3,436 2,986 9,566 7,847
---------- ---------- -------- -------- --------
$ 38,868 $ 30,237 $ 24,688 $ 16,100 $ 13,150
========== ========== ======== ======== ========
Weighted average OP Units outstanding 31,582 30,779 26,947 14,837 14,779
Earnings per OP Unit Data:
Income before extraordinary item $ 1.23 $ .98 $ .92 $ 1.09 $ .95
Extraordinary item $ - $ - $ - $ - $ (.06)
Income attributable to common
OP Unitholders - basic $ 1.23 $ .98 $ .92 $ 1.09 $ .89
Income attributable to common
OP Unitholders - diluted $ 1.23 $ .97 $ .91 $ 1.08 $ .89
Distributions declared $ 1.94 $ 1.82 $ 1.72 $ 1.62 $ 1.525
Cash Flow Data:
Net cash provided by operating
activities $ 77,464 $ 72,560 $ 54,545 $ 29,755 $ 28,097
Net cash provided by (used in)
financing activities $ (20,789) $ 80,069 $ 21,088 $ (595) $(24,365)
Net cash (used in) investing activities $ (56,777) $ (167,089) $(61,309) $(29,518) $ (6,158)
Balance Sheet Data:
Rental property, before accumulated
depreciation $1,055,450 $1,026,509 $836,175 $300,631 $276,423
Rental property, net of accumulated
depreciation $ 863,435 $ 875,249 $723,861 $219,338 $206,555
Total assets $ 981,673 $ 959,194 $782,738 $232,066 $212,034
Total debt $ 452,556 $ 427,778 $387,015 $168,315 $132,700
Total Partners' Capital $ 482,962 $ 488,410 $358,238 $ 42,743 $ 60,572
</TABLE>
16
<PAGE>
Item 6. Selected Financial Data, Continued
- ------- ----------------------------------
<TABLE>
<CAPTION>
For the Year Ended December 31,
Other Data:
Dollars in thousands 1999 1998 1997 (1) 1996 1995
-------- -------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
Total properties (at end of period) 165 165 131 47 44
Total sites (at end of period) (3) 51,659 51,101 43,800 20,279 19,594
Weighted average occupied sites 47,181 45,882 38,053 18,889 18,051
Funds from operations (4) $ 77,629 $ 69,767 $ 55,962 $ 27,460 $ 24,898
</TABLE>
(1) In February 1997, the Company completed the Merger with ROC. See Note
3 to the Consolidated Financial Statements for information regarding
the Merger.
(2) The extraordinary item represents prepayment penalties and certain
other related costs associated with the early extinguishment of debt.
(3) Does not include 1,359 park model/RV sites, purchased in 1998.
(4) Funds from operations ("FFO") is defined by the National Association
of Real Estate Investment Trusts ("NAREIT") as consolidated net income
of the Company without giving effect to gains (or losses) from debt
restructuring and sales of property, certain non-recurring items and
rental property depreciation and amortization. Management believes
that FFO is an important and widely used measure of the operating
performance of REITs, which provides a relevant basis for comparison
among REITs. FFO (i) does not represent cash flow from operations as
defined by generally accepted accounting principles; (ii) should not
be considered as an alternative to net income as a measure of
operating performance or to cash flows from operating, investing and
financing activities; and (iii) is not an alternative to cash flows as
a measure of liquidity. FFO is calculated as follows:
<TABLE>
<CAPTION>
For the Year Ended December 31,
(In thousands) 1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Income before extraordinary item
and preferred distributions $44,962 $34,486 $24,688 $16,100 $13,979
Less:
Distributions to
Preferred OP Unitholders 6,094 4,249 - - -
Plus:
Depreciation of rental
property 41,161 38,962 30,867 11,360 10,919
Amortization of intangibles 405 446 407 - -
Non-recurring items, net - 122 - - -
Gain on sales of properties (2,805) - - - -
-------- -------- -------- -------- --------
Funds from operations $ 77,629 $ 69,767 $ 55,962 $ 27,460 $ 24,898
======== ======== ======== ======== ========
</TABLE>
NAREIT has revised its definition of FFO. The Company plans to adopt the new
definition effective January 1, 2000. The new definition of FFO substantially
eliminates the add back of the non-recurring items in the calculation of the
FFO. The application of this new definition would not have affected reported FFO
for calendar year 1999 or 1997, and would have decreased FFO in 1998 by
$375,000.
17
<PAGE>
Item 7. Managements 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 Annual 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.
Overview
The Company is one of the largest owner/managers of manufactured home
communities in the United States. The Company added a net of 118 manufactured
home communities to its portfolio over the three-year period ended December 31,
1999. At the end of this period, the Company's portfolio was comprised of 165
manufactured home communities containing 51,659 manufactured homesites and 1,359
park model/RV sites, located in 28 states.
Company growth since the beginning of 1997 can be attributed to the Company's
merger with ROC in February 1997 (the "Merger"), as well as acquisitions,
increased operating performance at existing communities, community expansions,
and new community development. During 1998, the Company acquired 34 communities
(the "Acquisition Properties") in four separate portfolio acquisitions,
containing an aggregate of 7,045 manufactured homesites and 1,359 park model/RV
sites. During 1999, the Company acquired 2 communities, containing 624 sites.
18
<PAGE>
Historical Results of Operations
Comparison of the year ended December 31, 1999 to the year ended December 31,
1998
The following table summarizes certain information relative to the Company's
properties, as of and for the years ended December 31, 1999 and 1998. The
Company considers all communities owned by the Company as of January 1, 1998 as
the "Core 1998 Portfolio".
<TABLE>
<CAPTION>
Core 1998 Portfolio Total
----------------------------------------- -----------------------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Dollars in thousands, except per site
As of December 31,
Number of Communities 145 145 165 165
Total manufactured homesites 46,235 45,836 51,659 51,101
Occupied sites 42,418 42,374 47,383 47,192
Occupancy % 91.7% 92.4% 91.7% 92.4%
For the year ended, December 31,
Rental income $162,115 $154,712 $177,789 $167,206
Property operating expense $ 57,971 $ 55,122 $ 63,181 $ 59,345
Net operating income $104,144 $ 99,590 $114,608 $107,861
Weighted average monthly rent
per site $ 307 $ 295 $ 302 $ 292
</TABLE>
For the year ended December 31, 1999, net income was $44,962,000, an increase of
$10,476,000 from the year ended December 31, 1998. The increase was due
primarily to acquisitions and increased net operating income from the Core 1998
Portfolio. The increase in net operating income from the Company's Core 1998
Portfolio was due to increased occupancy and rental increases partially offset
by general operating expense increases. Rental revenue for the year ended
December 31, 1999 was $177,789,000, an increase of $10,583,000 from 1998.
Approximately 30 percent of the increase was due to acquisitions, net of
dispositions, and 70 percent was due to rental increases and occupancy gains in
the Company's Core 1998 Portfolio.
Weighted average occupancy for the year ended December 31, 1999 was 47,181 sites
compared with 45,882 sites for the same period in 1998. The Company also added
525 available sites to its portfolio through the expansion of its communities.
The occupancy rate for the total portfolio was 91.7 percent on 51,659 sites as
of December 31, 1999, compared to 92.4 percent on 51,101 sites as of December
31, 1998. The occupancy rate on the stabilized portfolio was 93.2 percent as of
December 31, 1999. On a per site basis, weighted average monthly rental revenue
for the year ended December 31, 1999 was $302 compared with $292 for the same
period in 1998. For the Company's Core 1998 Portfolio, on a per site basis,
weighted average monthly rental revenue for the year ended December 31, 1999 was
$307 compared with $295 for the same period in 1998, an increase of 4.0 percent.
19
<PAGE>
Management fee, interest and other income primarily include management fee and
transaction fee income for the management of 44 manufactured home communities,
equity earnings from the Company's sales subsidiary, CSI, and interest income on
notes receivable and advances to affiliates. The increase in 1999 from 1998 is
due primarily to increased development activities in which the Company funds the
development costs and recognizes interest income and expenses, increased equity
earnings from CSI, increased advances to affiliates other than for development,
and increases in management and transaction fees from properties managed by the
Company.
Property operating and maintenance expense for the year ended December 31, 1999
increased by $3,412,000 or 7.3 percent from the same period a year ago. The
majority of the increase was due to acquisitions and increases in the Company's
Core 1998 Portfolio. On a per site basis, monthly weighted average property
operating and maintenance expense increased to $89.21 per site, or 4.3 percent.
Real estate taxes for the year ended December 31, 1999 increased by $424,000 or
3.5 percent from the year ended December 31, 1998. The increase is due primarily
to acquisitions and expansions of communities and general increases. On a per
site basis, monthly weighted average real estate taxes were $22.39 in 1999
compared to $22.25 in 1998, an increase of .63 percent. Real estate taxes may
increase or decrease due to inflation, expansions and improvements of
communities, as well as changes in taxation in the tax jurisdictions in which
the Company operates.
Administrative expense for the year ended December 31, 1999 increased primarily
due to the increased size of the Company. Administrative expense in 1999 was 5.2
percent of total revenues as compared to 4.8 percent in 1998.
Interest and related amortization costs increased for the year ended December
31, 1999 by $1,031,000, as compared with the year ended December 31, 1998. The
increase is attributable primarily to the indebtedness incurred to finance
acquisitions and development. Interest expense as a percentage of average debt
outstanding decreased to approximately 7.4 percent from 7.7 percent in 1998.
Depreciation expense for the year ended December 31, 1999, increased $2,168,000
from the same period a year ago. The increase is directly attributable to
acquisitions and expansions. Depreciation expense as a percentage of average
depreciable rental property in 1999 remained relatively unchanged from 1998.
20
<PAGE>
Comparison of the year ended December 31, 1998 to the year ended December 31,
1997
The following table summarizes certain information relative to the Company's
properties, as of and for the years ended December 31, 1998 and 1997. The
Company considers all communities owned by the Company or ROC as of January 1,
1997 as the "Core 1997 Portfolio".
<TABLE>
<CAPTION>
Core 1997 Portfolio Total
------------------------ ----------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Dollars in thousands, except per site
As of December 31,
Number of Communities 126 126 165 131
Total manufactured homesites 43,379 43,051 51,101 43,800
Occupied sites 39,973 39,564 47,192 40,286
Occupancy % 92.1% 91.9% 92.4% 92.0%
For the year ended December 31,
Rental income $146,445 $139,048 $167,206 $134,801
Property operating expense $ 52,259 $ 50,712 $ 59,345 $ 49,092
Net operating income $ 94,186 $ 88,336 $107,861 $ 85,709
Weighted average monthly rent per site $ 299 $ 286 $ 292 $ 287
</TABLE>
For the year ended December 31, 1998, net income was $34,486,000, an increase of
$9,798,000 from the year ended December 31, 1997. The increase was due primarily
to acquisitions and the Merger, as well as increased net operating income from
the Core 1997 Portfolio. The increase in net operating income from the Company's
Core 1997 Portfolio was due to increased occupancy and rental increases
partially offset by general operating expense increases. Rental revenue for the
year ended December 31, 1998 was $167,206,000, an increase of $32,405,000 from
1997. Approximately 57 percent was due to acquisitions and 18 percent was due to
the Merger. The remaining 25 percent increase was due to rental increases and
occupancy gains in the Company's Core 1997 Portfolio.
Weighted average occupancy for the year ended December 31, 1998 was 45,882 sites
compared with 38,053 sites for the same period in 1997. During 1998, the Company
increased occupancy by 627 sites, of which 344 were in its active expansion
communities. The Company also added 407 sites to its portfolio through the
expansion of its communities. The occupancy rate for the total portfolio was
92.4 percent on 51,101 sites as of December 31, 1998, compared to 92.0 percent
on 43,800 sites as of December 31, 1997. The occupancy rate on the stabilized
portfolio was 94.0 percent as of December 31, 1998. On a per site basis,
weighted average monthly rental revenue for the year ended December 31, 1998 was
$292 compared with $287 for the same period in 1997. For the Company's Core 1997
Portfolio, on a per site basis, weighted average monthly rental revenue for the
year ended December 31, 1998 was $299 compared with $286 for the same period in
1997, an increase of 4.5 percent.
21
<PAGE>
Management fee, interest and other income primarily include management fee
income for the management of 36 manufactured home communities, equity earnings
from the Company's sales subsidiary, CSI, and interest income on notes
receivable and advances to affiliates. The increase in 1998 from 1997 is due
primarily to increased development activities in which the Company funds the
development costs and recognizes interest income and expense.
Property operating and maintenance expense for the year ended December 31, 1998
increased by 20.3 percent from the same period a year ago. The majority of the
increase was due to the acquisitions and the Merger. The remaining increase was
due to increases in the Company's Core 1997 Portfolio. On a per site basis,
monthly weighted average property operating and maintenance expense remained
constant at $86.
Real estate taxes for the year ended December 31, 1998 increased by $2,305,000
or 23.2 percent from the year ended December 31, 1997. The increase is due
primarily to acquisitions and expansions of communities, the Merger and general
increases. On a per site basis, monthly weighted average real estate taxes were
$22.25 in 1998 compared to $21.78 in 1997, an increase of 2.2 percent. Real
estate taxes may increase or decrease due to inflation, expansions and
improvements of communities, as well as changes in taxation in the tax
jurisdictions in which the Company operates.
Administrative expense for the year ended December 31, 1998 increased due to
acquisitions and the Merger. Administrative expense in 1998 was 4.8 percent of
total revenues as compared to 5.0 percent in 1997.
Interest and related amortization costs increased for the year ended December
31, 1998 by $5,369,000, as compared with the year ended December 31, 1997. The
increase is attributable primarily to the indebtedness incurred to finance the
acquisitions. Interest expense as a percentage of average debt outstanding
remained relatively constant at approximately 7.7 percent.
Depreciation expense for the year ended December 31, 1998, increased $8,148,000
from the same period a year ago. The increase is directly attributable to
acquisitions and the Merger. Depreciation expense as a percentage of average
depreciable rental property in 1998 remained relatively unchanged from 1997.
Liquidity and Capital Resources
Net cash provided by operating activities was $77,464,000 for the year ended
December 31, 1999, compared to $72,560,000 for the same period in 1998. The
increase in cash provided by operating activities was due primarily to the
increase in net operating income.
Net cash used in financing activities for the year ended December 31, 1999 was
$20,789,000. This consisted primarily of $60,244,000 distributions paid to OP
Unitholders and $23,598,000 in payoffs of mortgages, offset partially by net
borrowings on the Company's lines of credit of $60,581,000.
Net cash used in investing activities for the year ended December 31, 1999 was
$56,777,000. This amount represents acquisitions, joint venture investments and
advances, capital expenditures and development costs. During 1999, the Company
acquired two communities with a total of 624 sites and purchased a development
property in Michigan. These acquisitions were financed primarily by borrowings
under the Company's lines of credit. The Company also disposed of two properties
containing 509 sites.
During 1999, the Company invested approximately $14 million in the expansion of
its existing communities, resulting in the addition of 525 available sites to
its portfolio. In addition, during 1999, the Company invested or advanced $32
million to certain affiliates of the Company. This consisted primarily of
approximately $16 million to 9 joint ventures, through which the Company, or its
joint venture partner is developing manufactured home communities, and $13.5
million to N'Tandem Trust, an entity in which the Company
22
<PAGE>
owns approximately 10 percent of its outstanding equity. For the year ended
December 31, 1999, recurring property capital expenditures, other than
development costs, were approximately $7 million. Capital expenditures have
historically been financed out of funds from operations and it is the Company's
intention that such future expenditures will also be financed with funds from
operations.
As of December 31, 1999, the Company had a line of credit with Bank One, N.A.,
acting as lead agent, for $100 million (the "Bank One Credit Facility"). The
interest rate is at LIBOR plus 80 basis points, and matures in May 2001. In
addition to the Bank One Credit Facility, the Company had a $7.5 million
revolving line of credit from US Bank which bears interest at a rate of LIBOR
plus 125 basis points and a maturity of September 2000 (the "USB Facility" and,
together with the Bank One Credit Facility, the "Credit Facilities"). As of
December 31, 1999, approximately $97.3 million was outstanding under the Credit
Facilities and the Company had available $10.2 million in additional borrowing
capacity.
As of December 31, 1999, the Company had outstanding, in addition to the Credit
Facilities, $245 million of unsecured senior debt with a weighted average
interest rate and remaining maturity of 7.5 percent and 3.2 years, respectively,
and $106 million of secured mortgage debt with a weighted average interest rate
and remaining maturity of 7.6 percent and 1.7 years, respectively. As of
December 31, 1999, the Company had approximately $453 million of total debt
outstanding, representing approximately 33 percent of the Company's total market
capitalization. All of the debt is fixed rate debt, other than the Company's
Credit Facilities, and has a weighted average interest rate of 7.5 percent.
In February 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% Senior Unsecured Notes which
matured March 2, 2000. The remaining $24 million was used to repay a portion of
the borrowings on its line of credit.
The Company, in February, also entered into a $30 million note with Bank One,
N.A. The note can be drawn on for thirty, sixty or ninety day increments
beginning February 18, 2000, and must be repaid in full on August 18, 2000. The
note bears interest at a rate of LIBOR plus 125 basis points. The funds
available under the note are expected to be used to fund short term liquidity
needs of the Company.
The Company has another $86 million coming due in 2000 which it expects to repay
with the proceeds from the issuance of secured or unsecured debt, depending on
the current market conditions.
In addition to repayment of long-term borrowings and amounts outstanding under
the Credit Facilities, future acquisitions of communities and land for
development and new community development activities represent the principal
long-term liquidity needs of the Company. The Company does not expect to
generate sufficient funds from operations to finance these long-term liquidity
needs and instead intends to meet its long-term liquidity requirements through
additional borrowing under the Credit Facilities or other lines of credit, the
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
expansion activities and capital expenditure requirements and maturing debt
obligations, through cash flows from operations and, if necessary, borrowings
under the Credit Facilities and other lines of credit.
Inflation
All of the leases or terms of tenants' occupancies at the communities allow for
at least annual rental adjustments. In addition, all leases are short-term
(generally one year or less) and enable the Company to seek market rentals upon
reletting the sites. Such leases generally minimize the risk to the Company of
any adverse effect of inflation.
23
<PAGE>
Recently Issued Accounting Standards
In June 1998, the FASB issued Statement of Financial Accounting Standards No.
133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS
133"), which is effective for the Company in the year 2000. The only derivative
instrument the Company currently utilizes is an interest rate hedge agreement
for $75 million of its senior notes. SFAS 133 requires that all derivative
instruments be measured on the balance sheet at fair value. The Company
anticipates that the adoption of SFAS 133 will not have a significant effect on
its 2000 financial statements.
In June 1999, the FASB issued SFAS 137, "Accounting for Derivative Instruments
and Hedging Activities - Deferral of the Effective Date of FASB Statement No.
133," which delays the implementation of SFAS 133 for the Company's financial
statements to January 1, 2001.
In anticipation of the $75 million senior notes maturing on March 2, 2000, the
Company entered into a $75 million interest rate hedge transaction with a
financial institution in order to hedge its exposure to interest rate
fluctuations, with a maturity of April 2000. Under this arrangement, the Company
pays or receives an amount equal to the difference between the hedge rate and
the market rate on the date of settlement, based on an anticipated $75 million
borrowing. The realized gain or loss on the transaction settlement date will be
recorded on the balance sheet and amortized to interest expense over the period
of the related notes. At December 31, 1999, the treasury lock rate was lower
than the market rate, therefore, the Company has an unrealized gain of
approximately $692,000.
Year 2000
The year 2000 issue exists because many computer systems and applications
abbreviate dates by eliminating the first two digits of the year, assuming that
these two digits are always "19". As a result, date-sensitive computer programs
may recognize a date using "00" as the year 1900 rather than the year 2000.
Unless corrected, the potential exists for computer system failures or incorrect
processing of financial and operational information, which could disrupt
operations.
The Company believes that all systems have been appropriately modified and does
not expect the year 2000 issue will materially impact the financial condition or
operations of the Company.
24
<PAGE>
Other
Funds from operations ("FFO") is defined by the National Association of Real
Estate Investment Trusts ("NAREIT") as consolidated net income of the Company
without giving effect to gains (or losses) from debt restructuring and sales of
property, certain non-recurring items and rental property depreciation and
amortization. Management believes that FFO is an important and widely used
measure of the operating performance of REITs, which provides a relevant basis
for comparison among REITs. FFO (i) does not represent cash flow from operations
as defined by generally accepted accounting principles; (ii) should not be
considered as an alternative to net income as a measure of operating performance
or to cash flows from operating, investing and financing activities; and (iii)
is not an alternative to cash flows as a measure of liquidity. FFO is
calculated as follows:
<TABLE>
<CAPTION>
For the year ended December 31,
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
(in thousands)
Income before extraordinary item
and preferred distributions $ 44,962 $ 34,486 $ 24,688
Less:
Distributions to Preferred OP Unitholders 6,094 4,249 -
Plus:
Depreciation of rental property 41,161 38,962 30,867
Amortization of intangibles 405 446 407
Non-recurring items, net - 122 -
Gain on sales of properties (2,805) - -
---------- ---------- ----------
Funds from operations $ 77,629 $ 69,767 $ 55,962
========== ========== ==========
</TABLE>
NAREIT has revised its definition of FFO. The Company plans to adopt the new
definition effective January 1, 2000. The new definition of FFO substantially
eliminates the add back of the non-recurring items in the calculation of the
FFO. The application of this new definition would not have affected reported FFO
for calendar year 1999 or 1997, and would have decreased FFO in 1998 by
$375,000.
25
<PAGE>
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
- --------------------------------------------------------------------
The Company's primary market risk exposure is interest rate risk. Management
has and will continue to manage interest rate risk by (1) maintaining a
conservative ratio of fixed rate, long-term debt to total debt such that
variable rate exposure is kept at an acceptable level and (2) taking advantage
of favorable market conditions for long-term debt and/or equity. As of December
31, 1999, the Company's Credit Facilities represented its only variable rate
debt.
The following table sets forth information as of December 31, 1999, concerning
the Company's long term debt obligations, including principal cash flows by
scheduled maturity, weighted average interest rates and estimated fair value
("FV"):
<TABLE>
<CAPTION>
For the Year Ended December 31,
2000 2001 2002 2003 2004 Thereafter Total FV
---- ---- ---- ---- ---- ---------- ----- --
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Long term debt:
Fixed Rate $161,545 $ 396 $ 843 $ 70,401 $100,436 $ 17,181 $350,802 $345,246
Average interest rate 8.1% 8.3% 8.2% 7.5% 6.9% 7.6% 7.5%
Variable rate 5,317 92,000 97,317 97,317
Average interest rate 7.1% 6.9%
Total debt $166,862 $ 92,396 $ 843 $ 70,401 $100,436 $ 17,181 $448,119 $442,563
</TABLE>
In addition, the Company has assessed the market risk for its variable rate debt
and believes that a 1% increase in interest rates would have an approximate
$973,000 increase in interest expense based on $97.3 million outstanding at
December 31, 1999.
The fair value of the Company's long term debt is estimated based on discounted
cash flows at interest rates that management believes reflect the risks
associated with long term debt of similar risk and duration.
26
<PAGE>
Item 8. Financial Statements and Supplementary Data
- ------- -------------------------------------------
Report of Independent Accountants
To the Partners of CP Limited Partnership:
In our opinion, the consolidated financial statements listed in the index
appearing under Item 14(a)(1) and (2) present fairly, in all material respects,
the financial position of CP Limited Partnership (the "Company") at December 31,
1999 and 1998, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 1999, in conformity with
accounting principles generally accepted in the United States. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States which require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Denver, Colorado
February 8, 2000
27
<PAGE>
CP LIMITED PARTNERSHIP
CONDSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
In thousands, except per OP Unit data
For the Year Ended December 31,
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Revenues:
Rental income $177,789 $167,206 $134,801
Management, interest and other income 11,574 5,924 3,368
-------- -------- --------
189,363 173,130 138,169
Expenses:
Property operating and maintenance 50,506 47,094 39,146
Real estate taxes 12,675 12,251 9,946
Depreciation and amortization 41,826 39,658 31,510
Administrative 9,881 8,354 6,961
Interest and related amortization 32,318 31,287 25,918
-------- -------- --------
147,206 138,644 113,481
-------- -------- --------
Net income 44,962 34,486 24,688
Less distributions to Preferred
OP Unitholders 6,094 4,249 -
-------- -------- --------
Net income attributable to common
OP Unitholders $ 38,868 $ 30,237 $ 24,688
======== ======== ========
Net income attributable to
common OP Unitholders:
General Partner $ 34,626 $ 26,801 $ 21,702
Limited Partners 4,242 3,436 2,986
-------- -------- --------
$ 38,868 $ 30,237 $ 24,688
======== ======== ========
Per OP Unit information:
Basic earnings per OP Unit $ 1.23 $ .98 $ .92
======== ======== ========
Diluted earnings per OP Unit $ 1.23 $ .97 $ .91
======== ======== ========
Distributions declared per
OP Unit outstanding $ 1.94 $ 1.82 $ 1.72
======== ======== ========
Weighted average
OP Units outstanding - basic 31,582 30,779 26,947
======== ======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
28
<PAGE>
CP LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
In thousands, except unit data 1999 1998
---- ----
<S> <C> <C>
Assets
Rental property:
Land $ 135,811 $ 135,444
Land and improvements for expansion sites 23,320 22,184
Manufactured home community improvements 816,278 791,859
Community buildings 55,978 55,887
Furniture and other equipment 24,063 21,135
---------- ----------
Total rental property 1,055,450 1,026,509
Less accumulated depreciation 192,015 151,260
---------- ----------
Net rental property 863,435 875,249
Cash and cash equivalents 348 450
Rents, notes and other receivables 11,742 10,286
Investments in and advances to affiliates 97,761 65,473
Prepaid expenses and other assets 8,387 7,736
---------- ----------
Total assets $ 981,673 $ 959,194
========== ==========
Liabilities
Debt $ 452,556 $ 427,778
Accrued interest payable 5,284 4,322
Accounts payable and accrued expenses 17,688 16,708
Rents received in advance and security deposits 7,044 6,898
Distributions payable 16,139 15,078
---------- ----------
Total liabilities 498,711 470,784
Commitments and contingencies (Notes 10 & 11) - -
Partners' Capital, Unlimited Authorized Units:
32,130,598 and 31,459,888 common OP Units outstanding
at December 31, 1999 and 1998, respectively; 1,500,000
Preferred OP Units outstanding at December 31, 1999 and 1998
General Partner 361,820 367,935
Limited Partners 48,185 47,473
Preferred OP Units, Series A 72,957 73,002
---------- ----------
Total partners' capital 482,962 488,410
---------- ----------
Total liabilities and partners' capital $ 981,673 $ 959,194
========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
29
<PAGE>
CP LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
Dollars in thousands, except per OP Unit data.
<TABLE>
<CAPTION>
For the Year Ended December 31,
1999 1998 1997
------------------------------- ------------------------------ -------------------
Common Preferred Common Preferred Common
General Limited Limited General Limited Limited General Limited
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Partners' Capital
Balance at beginning $367,935 $ 47,473 $ 73,002 $322,966 $ 35,272 - 16,191 $ 26,552
of period
Net income 34,626 4,242 - 28,801 3,436 - 21,702 2,986
Issuance of units in connection
With the Merger - - - - - - 359,780 -
Issuance of units at fair market
value 3,394 13,326 - 62,797 29,150 $ 73,002 7,517 660
Transfer (from) to limited
partners to (from)
general partners resulting
from issuance of OP Units 10,187 (10,187) - 14,090 (14,090) - (9,819) 9,819
OP Units reacquired and
retired (61) - - (930) - - (28,687) -
Distributions declared
$1.94 in 1999 and 1.82 in
1998 and $1.72 in 1997 (54,636) (6,669) - (50,264) (6,295) - (43,643) (4,745)
Other 375 - (45) (7,525) - - (75) -
-------- -------- -------- -------- -------- --------- --------- --------
Balance at end of period $361,820 $ 48,185 $ 72,957 $367,935 $ 47,473 $ 73,002 $ 322,966 $ 35,272
======== ======== ======== ======== ======== ========= ========= ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
30
<PAGE>
CP LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended December 31,
In thousands 1999 1998 1997
------------- ------------- -------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 38,868 $ 30,237 $ 24,688
Adjustments to reconcile net income to net cash
provided by operating activities:
Net gain on sales of properties (2,805)
Depreciation and amortization 41,826 39,658 31,510
Amortization of debt issuance costs 730 764 480
Decrease (increase) in operating assets (3,243) (690) 1,495
Increase (decrease) in operating liabilities 2,088 2,591 (3,628)
------------- ------------- ------------
Net cash provided by operating activities 77,464 72,560 54,545
------------- ------------- ------------
Cash flows from financing activities:
Proceeds from issuance of Senior Notes - - 102,630
Borrowings on line of credit 119,130 120,935 105,111
Payments on line of credit (58,549) (109,200) (150,945)
Principal payments on mortgages (1,176) (1,828) (1,596)
Payoff of mortgages (23,598) (3,315) -
Payment of debt issuance costs - (237) (895)
Distributions to OP Unitholders (60,244) (53,629) (42,111)
OP Units repurchased and retired (76) (932) (19,851)
Net proceeds from the issuance of OP Units - 53,678 25,477
Net proceeds from the issuance of Preferred OP Units - 73,002 -
Other 3,724 1,595 3,268
------------- ------------- ------------
Net cash provided by (used in)
financing activities (20,789) 80,069 21,088
------------- ------------- ------------
Cash flows from investing activities:
Acquisition of rental properties (13,259) (116,605) (22,655)
Disposition of rental property 13,108 3,329 2,455
Additions to rental properties (24,606) (14,958) (15,544)
Investments in and advances to affiliates (30,698) (32,205) (4,259)
Advances to CSI (1,322) (6,650) (8,849)
Merger costs - - (12,457)
------------- ------------- ------------
Net cash used in investing activities (56,777) (167,089) (61,309)
------------- ------------- ------------
Increase (decrease) in cash and cash equivalents (102) (14,460) 14,324
Cash and cash equivalents, beginning of period 450 14,910 586
------------- ------------- ------------
Cash and cash equivalents, end of period $ 348 $ 450 $ 14,910
============= ============= ============
Supplemental information:
Cash paid for interest, net of amounts capitalized $ 30,626 $ 30,110 $ 24,325
============= ============= ============
Fair market value of OP Units issued
for acquisitions/joint venture investments $ 13,341 $ 29,150 $ 3,683
============= ============= ============
Debt assumed in connection with acquisitions
and development $ 650 $ 34,171 $ 1,049
============= ============= ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
31
<PAGE>
CP LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
_______
1. Organization and Formation of Company:
-------------------------------------
CP Limited Partnership (the "Company") is a limited partnership and was formed
by Chateau Communities, Inc. ("Chateau"), a real estate investment trust, as
general partner and Chateau Estates, as the initial limited partner, on
September 16, 1993. In 1997, the Company merged with ROC Communities, Inc.
("ROC").
The Company considers itself to be engaged in only one industry segment. The
Company is engaged in the business of owning and operating manufactured housing
community properties primarily through the Company. As of December 31, 1999, the
Company owned 165 properties containing an aggregate of 51,659 homesites and
1,359 park model/RV sites, located in 28 states. Approximately 26 percent of
these homesites were in Florida and 31 percent were in Michigan. The Company
also fee managed 44 properties containing an aggregate of 9,718 homesites and
175 park model/RV sites. A manufactured housing community is real estate
designed and improved with sites for placement of manufactured homes. The owner
of the home leases the site from the Company generally for a term of one year or
less.
2. Summary of Significant Accounting Policies:
------------------------------------------
Basis of Presentation
The accompanying consolidated financial statements of the Company include all
accounts of the Company and its subsidiaries. Chateau and ROC are the general
partners. As of December 31, 1999, Chateau owned on a combined basis, an 89
percent general partner interest. Pursuant to the terms of the operating
partnership agreement, the Company is required to reimburse Chateau for the net
expenses incurred by Chateau. Amounts paid on behalf of Chateau by the Company
are reflected in the statement of income as general and administrative expenses.
The balance sheet of Chateau as of December 31, 1999 is identical to the
accompanying balance sheet of the Company, except as follows:
<TABLE>
<CAPTION>
(in thousands)
As Presented
Herein Chateau Communities,Inc.
December 31, 1999 Adjustments December 31, 1999
----------------- ------------ -------------------------
<S> <C> <C> <C>
Minority interests in CP Limited Partnership $ 121,142 $121,142
Equity:
General partner $361,820 (361,820)
Limited partners 121,142 (121,142)
Common stock 284 284
Additional paid-in capital 446,231 446,231
Dividends in excess of
accumulated earnings (76,647) (76,647)
Notes receivable, officers (8,048) (8,048)
-------- --------
Partners' capital/shareholders' equity $482,962 $361,820
======== ========
</TABLE>
All significant inter-entity balances and transactions have been eliminated in
consolidation.
The Company conducts manufactured home sales and brokerage activities through
its taxable subsidiary Community Sales, Inc. ("CSI"). The Company owns 100% of
the preferred stock of CSI and is entitled to 100% of its cash flow. The Company
accounts for its investment in CSI utilizing the equity method of accounting.
32
<PAGE>
CP LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
_______
2. Summary of Significant Accounting Policies, Continued:
-----------------------------------------------------
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles involves the use of certain management estimates and
assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Revenue Recognition
Rental income is recognized when earned and due from residents. The leases
entered into by residents for the rental of a site are generally for terms not
longer than one year and are renewable upon the consent of both parties or, in
some instances, as provided by statute.
Rental Property
Rental property is carried at cost less accumulated depreciation. Management
evaluates the recoverability of its investment in rental property whenever
events or changes in circumstances indicate that full asset recoverability is
questionable. Management's assessment of the recoverability of its rental
property includes, but is not limited to, recent operating results, expected net
operating cash flow and management's plans for future operations. If a rental
property is determined to be significantly impaired, the asset is written down
to its estimated fair value.
Depreciation
Depreciation on manufactured home communities is computed primarily on the
straight-line method over the estimated useful lives of the assets. The
estimated useful lives of the various classes of rental property assets are
primarily as follows:
Estimated Useful
Class of Asset Lives (Years)
- -------------- -------------
Manufactured home community improvements 20 to 30
Community buildings 25 to 30
Furniture and other equipment 3 to 10
Maintenance, repairs and minor improvements to rental properties are expensed
when incurred. Major improvements and renewals are capitalized. When rental
property assets are sold or otherwise retired, the cost of such assets, net of
accumulated depreciation compared to the sale proceeds, are recognized in income
as gains or losses on disposition.
33
<PAGE>
CP LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
_______
2. Summary of Significant Accounting Policies, Continued:
------------------------------------------------------
Capitalized Interest
Interest is capitalized on development projects during periods of construction
through the substantial completion of the site. Interest capitalized by the
Company during the years ended December 31, 1999, 1998, and 1997 was $1,249,000,
$579,000 and $708,000, respectively.
Income Taxes
The Company is not liable for Federal income taxes as the partners recognize
their proportionate share of income or loss in their tax returns. Therefore, no
provision for income taxes is included in the Company's financial statements.
Cash Equivalents
All highly liquid investments with an initial maturity of three months or less
are considered to be cash equivalents.
Reclassifications
Certain reclassifications have been made to the prior year information to
conform to the current year presentation. These reclassifications have no impact
on net operating results previously reported.
Fair Value of Financial Instruments
The fair value of the Company's financial instruments other than debt and an
interest rate hedge approximate their carrying values at December 31, 1999 and
1998. The fair value of the Company's debt at December 31, 1999 was estimated to
be $447 million, based on current interest rates for comparable loans. The fair
value of the Company's debt at December 31, 1998 approximated its carrying
value.
Debt Issuance Costs
Costs incurred to obtain financing and costs of interest rate protection are
deferred and amortized on a straight line basis, which approximates the
effective interest method, over the term of the related loans or agreements.
These costs, net of accumulated amortization, are included in prepaid expenses
and other assets in the accompanying consolidated balance sheets.
Recently Issued Accounting Standards
In June 1998, the FASB issued Statement of Financial Accounting Standards No.
133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS
133"), which is effective for the Company in the year 2000. The only derivative
instrument the Company currently utilizes is an interest rate hedge agreement
for $75 million of its senior notes. SFAS 133 requires that all derivative
instruments be measured on the balance sheet at fair value. The Company
anticipates that the adoption of SFAS 133 will not have a significant effect
34
<PAGE>
CP LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
_______
2. Summary of Significant Accounting Policies, Continued:
-----------------------------------------------------
on its 2000 financial statements.
In June 1999, the FASB issued SFAS 137, "Accounting for Derivative Instruments
and Hedging Activities - Deferral of the Effective Date of FASB Statement No.
133," which delays the implementation of SFAS 133 for the Company's financial
statements to January 1, 2001.
In anticipation of the $75 million senior notes maturing on March 2, 2000, the
Company entered into a $75 million interest rate hedge transaction with a
financial institution in order to hedge its exposure to interest rate
fluctuations, with a maturity of April 2000. Under this arrangement, the Company
pays or receives an amount equal to the difference between the hedge rate and
the market rate on the date of settlement, based on an anticipated $75 million
borrowing. The realized gain or loss on the transaction settlement date will be
recorded on the balance sheet and amortized to interest expense over the period
of the related notes. At December 31, 1999, the treasury lock rate was lower
than the market rate, therefore, the Company has an unrealized gain of
approximately $692,000.
35
<PAGE>
CP LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
_______
3. Merger with ROC Communities, Inc.:
----------------------------------
On February 11, 1997, the Company completed its merger with ROC (the "Merger").
The Merger and related transactions was accounted for using the purchase method
of accounting. Accordingly, the assets and liabilities of ROC were adjusted to
fair value for financial accounting purposes and the results of operations of
ROC were included in the results of operations of the Company beginning in
February 1997.
In connection with the Merger, the following transactions occurred:
- - The Company repurchased and retired 1,200,000 shares of its common stock,
of which 750,000 and 450,000 shares were repurchased in 1997 and 1996,
respectively;
- - ROC purchased 350,000 shares of the Company's common stock in 1996, which
was retired at the time of the Merger;
- - The Company issued 1.042 shares of its common stock for each share of ROC
stock outstanding;
- - The Company paid a stock dividend equal to .0326 shares of Company common
stock per common share/OP Unit outstanding;
- - Certain limited partners converted 6,170,908 OP Units into common shares,
which resulted in those units being held by Chateau. These limited partners
waived their right to receive the above distribution with respect to those
OP Units exchanged and as a result it was re-allocated, resulting in a
distribution to the general partners of .068 units;
- - These exchanging limited partners purchased 984,423 additional shares of
common stock from Chateau at $25.88 per share and Chateau purchased the
same number of units from the Company with these proceeds.
The total ROC purchase price of $351 million was allocated as follows:
Rental property $ 501.3
Net working capital 15.8
Debt assumed (166.1)
-------
$ 351.0
=======
36
<PAGE>
CP LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
_______
3. Merger with ROC Communities, Inc., Continued
--------------------------------------------
The following unaudited pro forma income statement information has been prepared
as if the Merger and related transactions had occurred on January 1, 1997. No
pro forma adjustments were made for the 1997 acquisitions made by the Company.
The pro forma income statement information is not necessarily indicative of the
results which actually would have occurred if the Merger had been consummated on
January 1, 1997.
(In thousands, except OP Unit data)
1997
---------
Revenues $142,600
========
Total expenses $117,500
========
Net income $ 25,100
========
Per common share $ .89
========
4. Capital Transactions:
---------------------
The following table presents the changes in the Company's outstanding common
stock for the years ended December 31, 1999, 1998, and 1997.
<TABLE>
<CAPTION>
1999 1998 1997
------------------- ------------------- -------------------
<S> <C> <C> <C>
Common OP Units outstanding at January 1 31,459,888 28,250,803 14,497,270
Units repurchased and retired (2,765) (43,333) (1,100,100)
Units issued in exchange for ROC
common stock outstanding - - 13,109,941
Units issued in connection with the dividend - - 397,198
Units issued to certain OP Unitholders for cash - - 984,423
Units issued through stock awards, sales to key
employees and the exercise of Chateau stock options 142,416 406,689 238,478
Units issued in connection with acquisitions 531,059 2,845,729 123,593
------------------ ---------- ----------
Common OP Units outstanding at December 31 32,130,598 31,459,888 28,250,803
================== ========== ==========
</TABLE>
The Company paid a distribution of $.485 per OP Unit on April 14, 1999, July 15,
1999, October 15, 1999 and January 18, 2000 to OP Unitholders of record as of
March 31, 1999, June 30, 1999, September 30, 1999 and December 27, 1999,
respectively. The distribution paid on January 18, 2000 was included in
distributions payable in the accompanying consolidated balance sheet as of
December 31, 1999.
The Company paid a distribution of $.455 per OP Unit on April 14, 1998, July 15,
1998, October 15, 1998 and January 15, 1999 to OP Unitholders of record as of
March 31, 1998, June 30, 1998, September 30, 1998 and December 28, 1998,
respectively. The distribution paid on January 15, 1999 was included in
distributions payable in the accompanying consolidated balance sheet as of
December 31, 1998.
37
<PAGE>
CP LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
_______
4. Capital Transactions, Continued:
--------------------------------
In February 1998, the Company received a net cash contribution from Chateau from
the proceeds of approximately $53.7 million from the issuance of 1,850,000
shares of Chateau's common stock. The contribution from the proceeds were used
to finance acquisitions made in March 1998 and to reduce outstanding balances
under the Company's line of credit, which was used to finance acquisitions made
in January.
Included in partners' capital is approximately $73 million which represents 1.5
million 8.125% Series A Cumulative Redeemable Preferred Units ("Preferred
Units"). The Preferred Units are exchangeable on or after April 20, 2008 for
authorized but unissued shares of 8.125% Series A Cumulative Redeemable
Preferred Stock of Chateau.
Basic and diluted earnings per OP Unit are summarized in the table below:
<TABLE>
<CAPTION>
(In thousands, except per OP Unit data) For the Year Ended December 31,
1999 1998 1997
----------- ------------- -----------
<S> <C> <C> <C>
Basic Earnings per OP Unit:
Net income attributable to common
OP Unitholders $38,868 $30,237 $24,688
============= =============== =============
Weighted average OP Units - Basic 31,582 30,779 26,947
============= =============== =============
Per OP Unit $ 1.23 $ .98 $ .92
============= =============== =============
Diluted Earnings per OP Unit:
Net income attributable to common
OP Unitholders $38,868 $30,237 $24,688
============= =============== ==============
Weighted average OP Units outstanding 31,582 30,779 26,947
Chateau employee stock options 132 275 245
------------- --------------- --------------
Weighted average OP Units - Diluted 31,714 31,054 27,192
============= =============== ==============
Per OP Unit $ 1.23 $ .97 $ .91
============= =============== ==============
</TABLE>
38
<PAGE>
CP LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
_______
5. Acquisitions & Dispositions of Rental Property:
-----------------------------------------------
The following table summarizes acquisitions made by the Company as follows:
<TABLE>
<CAPTION>
(Dollars in thousands)
Fair Market Value
Amount of OP
Allocated to Units
Acquisition Date # of Communities # of Sites State Assets Acquired Issued Debt Assumed Cash (1)
- -------------------- ---------------- ----------- ------ --------------- ------ ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
April 1999 1 309 AL $ 4,013 - - $ 4,013
October 1999 1 315 AL $ 8,712 - $ 650 $ 8,062
- ----------------------------------------------------------------------------------------------------------------------------------
January 1998 2 961 SC $15,900 $ 9,620 - $ 6,280
January 1998 10 1,093 (2) FL $38,700 $18,307 $ 19,335 (3) $ 1,058
4 276 CT
March 1998 5 839 IN $37,600 - - $37,600
1 682 MI
April 1998 10 2,587 MI $78,100 - $ 12,401 $65,669
2 607 NC
- ----------------------------------------------------------------------------------------------------------------------------------
November 1997 4 641 MA $20,000 $ 500 - $19,500
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The cash used to finance the Company's acquisitions was provided by
borrowings on the line of credit, the contribution of 1.85 million shares
from Chateau in February 1998 (see Note 4) and the issuance of $75 million
of Preferred Units (see Note 2).
(2) Does not include park model/RV sites.
(3) Includes $12 million for a capital lease obligation, which was converted to
OP Units in 1999.
The following unaudited pro forma income statement information has been prepared
as if the significant acquisitions made in 1998 had occurred on January 1, 1997.
No pro forma adjustments were made for the 1999 and 1997 acquisitions as the
effects on reported results were not material. The pro forma income statement
information is not necessarily indicative of the results which actually would
have occurred if these acquisitions had been consummated on January 1, 1997.
(in thousands, except per share data) 1998 1997
---- ----
Revenues $176,154 $150,055
======== ========
Total expenses $141,125 $124,982
======== ========
Net income $ 29,872 $ 21,441
======== ========
Per OP Unit $ .93 $ .75
======== ========
During the year 1999, the Company disposed of two properties in Florida, with a
total of 509 sites for a combined price of $11,700,000. These dispositions
resulted in a net gain of $2,805,000.
39
<PAGE>
CP LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
_______
6. Investments in and Advances to Affiliates:
------------------------------------------
Investments in and advances to affiliates as of December 31, consisted primarily
of the following:
1999 1998
---- ----
Community Sales, Inc. ("CSI") $22,538 $19,600
Equity investment joint ventures 37,518 22,184
N'Tandem Trust ("N'Tandem") 24,656 11,130
Other joint ventures 13,049 12,559
------- -------
$97,761 $65,473
======= =======
CSI
- ---
Advances to CSI are primarily used to finance inventory purchases. The Company
accounts for its investment in CSI using the equity method of accounting.
Equity investments in joint ventures
- ------------------------------------
The Company is currently involved in seven joint ventures to construct ground-up
"greenfield communities". In the majority of the arrangements, the Company acts
as the developer or co-developer, performs all accounting and property
management functions and, in many of the arrangements, the Company acts as a
lender to finance the development costs. As such, the Company advances amounts
to the joint ventures to fund construction and recognizes the related interest
income as earned. The Company primarily borrows on its line of credit to fund
the advances and, accordingly, includes the related borrowing costs in interest
expense and the related debt in its balance sheet. In the majority of the
arrangements, the Company has the option to purchase the completed community
when it reaches a pre-determined occupancy rate. Based on the Company's
ownership in these joint ventures the Company accounts for the investment
utilizing the equity method of accounting for six of these ventures. The Company
is also involved in two joint ventures in which the communities are being
constructed by its joint venture partner. The Company has similar arrangements
to lend these joint ventures funds to finance development. Based on the
Company's investment in these ventures, the Company accounts for its investments
utilizing the equity method of accounting.
N'Tandem
- --------
In September 1997, the Company completed the acquisition of The Windsor
Corporation ("Windsor"), the general partner in five partnerships and advisor to
one REIT, N'Tandem Trust ("N'Tandem", previously known as Windsor Real Estate
Investment Trust 8). These six entities owned 30 manufactured home communities
(containing 6,300 homesites), all of which have been managed by the Company or
ROC on a fee basis since 1993.
In March 1998, the Company entered into an investment agreement ("Agreement")
with N'Tandem. Pursuant to the Agreement, the Company purchased 19,139 common
equity shares of N'Tandem. The Company owns approximately 10 percent of
N'Tandem's outstanding stock and recognizes income from an advisory agreement
and interest income on the notes as earned.
40
<PAGE>
CP LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
_______
6. Investments in and Advances to Affiliates, Continued:
-----------------------------------------------------
During 1998, in order to finance acquisitions, N'Tandem borrowed $10.7 million
from the Company through the issuance of notes which were due November 1999 and
bore interest at the prime rate of interest plus one percent per annum. These
notes were refinanced and the maturities extended by the Company in 1999. Also,
during 1999, N'Tandem borrowed $ 23.6 million from the Company for the
acquisition of 6 communities. During 1999 N'Tandem obtained a line of credit and
repaid $10.7 million of these notes to the Company. As of December 31, 1999,
N'Tandem owed the Company $ 23.6 million under unsecured notes that are due
December 31, 2000 and bear interest at the prime rate of interest plus one
percent.
As of December 31, 1999 N'Tandem owned 12 communities with 2,644 homesites and
an interest in 7 communities with 1,345 homesites. As of December 31, 1998,
N'Tandem owned 6 communities with 1,307 homesites and an interest in 3
communities with 419 homesites.
7. Financing:
----------
The following table sets forth certain information regarding debt at December
31:
<TABLE>
<CAPTION>
Weighted Principal Balance
Average Maturity (In Thousands)
Interest Rate Date 1999 1998
--------------- ----------- --------- ----------
<S> <C> <C> <C> <C>
Fixed rate mortgages 7.62% 2000-2011 $105,802 $129,448
Unsecured Senior Notes 7.46% 2000-2004 245,000 245,000
Unsecured lines of credit 6.91% 2000-2001 97,317 36,735
Capital lease obligation - 11,836
Other notes payable 4,437 4,759
-------- --------
$452,556 $427,778
======== ========
</TABLE>
At December 31, 1999, the Company had a $100 million line of credit arrangement
with Bank One, N.A. acting as lead agent for a bank group to provide financing
for future construction, acquisitions and general business obligations. The line
of credit arrangement is unsecured, bears interest at the prime rate of interest
or, at the Company's option, LIBOR plus 80 basis points. The line matures in
2001. In addition, the Company has a $7.5 million unsecured line of credit from
US Bank which bears interest at a rate of LIBOR plus 125 basis points. As of
December 31, 1999, approximately $97.3 million was outstanding under the
Company's lines of credit and the Company had available $10.2 million in
additional borrowing capacity. The financing arrangements contain customary
covenants, including a debt service coverage ratio and a restriction on the
incurrence of additional collateralized indebtedness without a corresponding
increase in rental property.
During 1999, the Company repaid $23.6 million in mortgage debt which was
collateralized by 5 properties.
During 1998, the Company assumed $19.4 million in fixed rate mortgages related
to 6 properties, in connection with the acquisitions of the properties, with a
weighted average interest rate of 7.5 percent.
41
<PAGE>
CP LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
_______
7. Financing, Continued:
--------------------
In connection with the acquisitions made in 1998, the Company acquired nine
communities, containing 900 homesites and 1,100 park model/RV sites, subject to
long-term capital leases. The leases were convertible, at the lessor's option,
into common OP Units. The lessor exercised that option in 1999.
On December 23, 1997, the Company issued 6.92% Mandatory Par Put Remarketed
Securities/SM/ ("MOPPRS/SM/") due December 10, 2014. The net proceeds to the
Company from the issuance before deducting offering expenses, was approximately
$102 million. The additional $2 million, included in prepaid expenses and other
assets in the accompanying balance sheets, represents a payment made by a
remarketing dealer for the right to remarket the securities in 2004. The
remarketing fee is being amortized over the life of the related debt.
In connection with the issuance of the MOPPRS/SM/, the Company and Chateau
entered into a remarketing agreement, dated as of December 23, 1997 (the
"Remarketing Agreement"), with the remarketing dealer named therein (the
"Remarketing Dealer"), pursuant to which the MOPPRS/SM/ are subject to mandatory
tender in favor of the Remarketing Dealer on December 10, 2004 (the "Remarketing
Date"), for a purchase price equal to 100% of the principal amount of the
outstanding MOPPRS/SM/. Upon the Remarketing Dealer's election to remarket the
MOPPRS/SM/, the interest rate to the December 10, 2014 maturity date of the
MOPPRS/SM/ will be adjusted to equal the sum of 5.75% plus the Applicable Spread
(as defined in the Remarketing Agreement). In the event the Remarketing Dealer
does not elect to remarket the MOPPRS/SM/, the MOPPRS/SM/ will mature on the
Remarketing Date.
The aggregate amount of principal maturities on the fixed rate mortgages and
Senior Notes payable subsequent to December 31, 1999 (in thousands) is as
follows:
Years Ending
December 31,
- -------------
2000 $161,545
2001 396
2002 843
2003 70,401
2004 100,436
Thereafter 17,181
--------
$350,802
========
42
<PAGE>
8. Stock Option Plan:
-----------------
Chateau measures compensation cost using the intrinsic value method, in
accordance with Accounting Principles Board Opinion No. 25 ("APB 25"),
"Accounting for Stock Issued to Employees."
Chateau's 1999 and 1997 Equity Compensation Plans and 1993 Long Term Incentive
Stock Plan (collectively, the "Plans" provide for up to 3.1 million shares of
common stock that may be granted to directors, executive officers and other key
employees of the Company. The Plans provide for the grant of options, restricted
stock awards and stock appreciation rights. The Plans provide for the grant of
options at fair value which represents the quoted market price of Chateau's
common stock on the date of grant. The Compensation Committee of the Board of
Directors of Chateau determines the vesting schedule of each option and the
term, which term shall not exceed ten years from the date of grant.
Information concerning Chateau's stock options is as follows:
<TABLE>
<CAPTION>
1999 1998 1997
-----------------------------------------------------
Weighted- Weighted- Weighted-
Average Average Average
Shares Price Shares Price Shares Price
---------- --------- ---------- -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Shares subject to option:
Outstanding at beginning of year 1,236,893 $ 24.79 1,197,406 $ 21.66 735,300 $ 21.66
Granted (1) 384,160 27.73 447,500 30.12 60,000 25.62
Issued in connection with the Merger (2) - - - - 557,334 21.06
Exercised (137,480) 21.30 (406,838) 19.30 (155,228) 21.00
Forfeited (66,355) 28.97 (1,175) 19.10 - -
--------- -------- --------- ------- --------- -------
Outstanding at end of year 1,417,218 $ 25.66* 1,236,893 $ 24.79* 1,197,406 $ 21.66*
========= ======== ========= ======= ========= =======
Options exercisable at year-end 803,696 823,257 1,182,406
========= ========= =========
Options available for grant at year-end 945,870 363,675 810,000
========= ======== =========
Weighted average remaining
contractual life (in years) 7.5 7.7 7.3
========= ======== =========
</TABLE>
(1) The options granted do not include the grant of 80,000 shares of restricted
stock in 1997 to executive officers of Chateau.
(2) These represent options issued in exchange for existing ROC options at the
time of the Merger and the adjustments for a 6.8 percent stock dividend
paid on Chateau's common stock, also in connection with the Merger.
* Ranging in price from $18.25-$29.94 at December 31, 1997. See tables below
for information as of December 31, 1998 and 1999.
43
<PAGE>
CP LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
_______
8. Stock Option Plan, Continued:
----------------------------
The following table summarizes information concerning outstanding and
exercisable options at December 31, 1998.
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
----------------------------------------------------------------------------------
Average Weighted Weighted
Range of Number Remaining Average Number Average
Exercise Price Outstanding Contract Life Exercise Price Exercisable Exercise Price
- -------------------- ----------- ------------- -------------- ----------- -------------------
<S> <C> <C> <C> <C> <C>
$ 18.25-$ 27.11 774,393 6.8 years $21.68 774,393 $21.68
$ 27.12-$ 30.13 462,500 9.2 years $30.01 48,864 $29.23
</TABLE>
The following table summarizes information concerning outstanding and
exercisable options at December 31, 1999.
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
----------------------------------------------------------------------------------
Average Weighted Weighted
Range of Number Remaining Average Number Average
Exercise Price Outstanding Contract Life Exercise Price Exercisable Exercise Price
- -------------------- ----------- ------------- -------------- ----------- -------------------
<S> <C> <C> <C> <C> <C>
$ 18.25-$ 27.11 647,218 5.9 years $21.68 635,496 $21.60
$ 27.12-$ 30.13 770,000 8.7 years $29.01 168,200 $29.79
</TABLE>
The fair value of each option was estimated as of date of grant using an option-
pricing model with the following assumptions used:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Estimated fair value per option granted $2.22 $3.56 $3.58
Assumptions:
Annualized dividend yield 6.90% 6.25% 6.1%
Common stock price volatility 17.3% 22.6% 20.0%
Risk-free rate of return 5.29% 5.63% 6.35%
Expected option term (in years) 10 10 10
</TABLE>
If compensation cost for stock option grants had been recognized based on the
fair value at the grant dates for 1999, 1998 and 1997 consistent with the method
allowed by SFAS No. 123 "Accounting for Stock-Based Compensation", net income
and net income per OP Unit would have been:
44
<PAGE>
CP LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
_______
8. Stock Option Plan, Continued:
----------------------------
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Net income attributable to Common
Op Unitholders, as reported $ 38,868,000 $ 30,237,000 $ 24,688,000
=================== =================== ==================
Net income attributable to Common OP
Unitholders, pro forma $ 38,555,000 $ 29,885,000 $ 22,854,000
=================== =================== ==================
Basic earnings per OP Unit, as reported $ 1.23 $ .98 $ .92
=================== =================== ==================
Basic earnings per OP Unit, pro forma $ 1.22 $ .97 $ .85
=================== =================== ==================
Diluted earnings per OP Unit, as reported $ 1.23 $ .97 $ .91
=================== =================== ==================
Diluted earnings per OP Unit, pro forma $ 1.22 $ .96 $ .84
=================== =================== ==================
</TABLE>
9. Savings Plan:
------------
The Company has a qualified retirement plan designed to qualify under Section
401 of the Internal Revenue Code (the "Savings Plan"). The Savings Plan allows
employees of the Company and its subsidiaries to defer a portion of their
eligible compensation on a pre-tax basis subject to certain maximum amounts.
Contributions by the Company are discretionary and determined by the Company's
management. Company contributions are allocated to each participant based on the
relative compensation of the participant to the compensation of all
participants. The Company contributed approximately $560,000, $550,000, and
$421,000 to the Plan for the years ended December 31, 1999, 1998, and 1997,
respectively.
45
<PAGE>
CP LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
_______
10. Related Party Transactions:
--------------------------
Rental expense of approximately $100,000 annually has been incurred for leasing
space in an office building owned by certain officers of Chateau and equity
owners. The office lease expires November 2001.
The Company, through CSI, purchases manufactured home inventory for resale from
Clayton Homes, Inc., which is affiliated with one of Chateau's directors.
During1998, CSI purchased approximately 22 homes for a cost of approximately
$540,000 from Clayton Homes, Inc. In certain instances, the Company financed
purchase of these homes with Vanderbilt Mortgage and Finance, Inc.
("Vanderbilt"), which is also affiliated with the same director. As of December
31, 1998, the Company had a payable to Vanderbilt for $122,000. During 1999 the
Company repaid this amount and purchased one home from Clayton Homes, Inc.
In addition, when CSI sells homes, the purchaser may obtain financing from
Vanderbilt. In certain cases, for homes sold before June 1998, Vanderbilt has
recourse to the Company if the loans are not repaid. As of December 31, 1999
there is a total of approximately $15.6 million of such amounts that are
recourse to the Company.
Included in management, interest and other income is $1,610,465 and $581,800 of
management and other fee income received from N'Tandem for the years ended
December 31, 1999 and 1998, respectively.
As of December 31, 1998 the Company had a receivable of $3.3 million from a
partnership with which several officers of Chateau are affiliated, which was
paid back in 1999. The partnership owned a manufactured home community that the
Company had the option to purchase. The receivable was collateralized by the
property and was approved by Chateau's directors who have no interest in the
partnership.
11. Contingencies:
-------------
Several claims and legal actions arising from the normal course of business have
been asserted against the Company, and are pending final resolution. In the
opinion of management, none of these matters will have a material adverse affect
upon the results of operations, financial condition or cash flows of the
Company.
The Company, through its joint venture and affiliate arrangements, has
guaranteed approximately $42.8 million of debt.
46
<PAGE>
CP LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
_______
12. Quarterly Financial Information (Unaudited):
--------------------------------------------
The following is quarterly financial information for the years ended December
31, 1999 and 1998
(amounts in thousands, except per OP Unit data.)
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
March 31, June 30, September 30, December 31,
---------- --------- -------------- -------------
<S> <C> <C> <C> <C>
1999
Total revenues $45,608 $46,837 $48,106 $48,812
======= ======= ======= =======
Operating income (a) $28,238 $28,953 $28,910 $30,200
======= ======= ======= =======
Net income $ 9,617 $13,641 $10,909 $10,795
Distributions to Preferred OP Unitholders (1,523) (1,524) (1,523) (1,524)
------- ------- ------- -------
Net income attributable to
common OP Units $ 8,094 $12,117 $ 9,386 $ 9,271
======= ======= ======= =======
Weighted average OP Units outstanding 31,502 31,575 31,609 31,634
======= ======= ======= =======
Net income per OP Unit - basic (b) $ .26 $ .38 $ .30 $ .29
======= ======= ======= =======
Net income per OP Unit - diluted (b) $ .26 $ .38 $ .30 $ .29
======= ======= ======= =======
1998
Total revenues $40,205 $43,749 $44,065 $45,111
======= ======= ======= =======
Operating income (a) $24,024 $26,895 $26,659 $27,853
======= ======= ======= =======
Net income $ 7,369 $ 9,036 $ 8,412 $ 9,669
======= ======= ======= =======
Distributions to Preferred OP Unitholders - (1,202) (1,523) (1,524)
------- ------- ------- -------
Net income attributable to
common OP Units $ 7,369 $ 7,834 $ 6,889 $ 8,145
======= ======= ======= =======
Weighted average OP Units outstanding 29,486 30,995 31,169 31,441
======= ======= ======= =======
Net income per OP Unit - basic (b) $ .25 $ .25 $ .22 $ .26
======= ======= ======= =======
Net income per OP Unit - diluted (b) $ .25 $ .25 $ .22 $ .26
======= ======= ======= =======
</TABLE>
(a) Operating income represents total revenues less property operating and
maintenance expense, real estate taxes and administrative expense.
Operating income is a measure of the performance of the properties before
the effects of depreciation and interest and related amortization costs.
(b) Quarterly earnings per OP Unit amounts may not total to the full year
amounts due to rounding and to the change in the number of OP Units
outstanding.
47
<PAGE>
13. Subsequent Event
----------------
In February 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% Senior Unsecured 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 will lower the effective yield on the above 8.5% unsecured notes
by 30 basis points.
On February 29, 2000, Chateau announced the establishment of a share repurchase
program pursuant to which it may purchase up to 1,000,000 shares of common stock
from time to time.
48
<PAGE>
Item 9. Changes in and Disagreements with Accountants on Accounting and
- ------- ---------------------------------------------------------------
Financial Disclosures
- ---------------------
None.
49
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant
- -------- --------------------------------------------------
Not Applicable
Item 11. Executive Compensation
- -------- ----------------------
Not Applicable
Item 12. Security Ownership of Certain Beneficial Owners and Management
- -------- --------------------------------------------------------------
Not Applicable
Item 13. Certain Relationships and Related Transactions
- -------- ----------------------------------------------
Not Applicable
50
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
- -------- ----------------------------------------------------------------
a. 1. Financial Statements
Report of Independent Accountants
Consolidated Statements of Income for the years ended December 31, 1999,
1998 and 1997.
Consolidated Balance Sheets as of December 31, 1999 and 1998
Consolidated Statements of Partners' Capital for the years ended December
31, 1999, 1998 and 1997
Consolidated Statements of Cash Flows for the years ended December 31,
1999, 1998 and 1997
Notes to Consolidated Financial Statements
2. Financial Statement Schedule
----------------------------
III - Real Estate and Accumulated Depreciation
3. Exhibits
Exhibit Number
(Referenced to Item 601 of
Regulation S-K)
Exhibit Description
-------------------
4.1 (a) Form of Stock Certificate
4.2(i) (d)Indenture dated as of December 19, 1997 between CP
Limited Partnership and The First National Bank of Chicago,
as supplemented
4.2(ii) (d)First Supplemental Indenture dated as of December 19,
1997 between CP Limited Partnership and The First National
Bank of Chicago related to the $100,000,000 MadatOry Par Put
Remarketed SecuritiesSM ("MOPPRSSM") due December 10, 2014.
4.2(iii) (d) Remarketing Agreement dated as of December 23, 1997
among Chateau Communities, Inc., CP Limited Partnership and
the "Remarketing Dealer" named therein.
4.3* (i) $100,000,000 8.5% Indenture, dated February 25, 2000, of
CP Limited Partnership.
4.4* (e) Note Purchase Agreement dated as of November 4, 1996,
between Pacific Mutual and ROC Communities, Inc. for
$70,000,000 in Senior Notes due November 4, 2003
4.5* (e) Deed to secure Debt and Security Agreement from ROCF,
Inc. to Pacific Mutual, dated as of August 25, 1993
51
<PAGE>
10.1 (f) Amended and Restated Agreement of Limited Partnership of
CP Limited Partnership dated January 22, 1997.
10.2 (a) Lease of 19500 Hall Road
10.3 (a) Form of Noncompetition Agreement (Boll and Allen)
10.4(i) (c) Employment Agreement (McDaniel)
10.4(ii) (c) Employment Agreement (Kellogg)
10.4(iii) (c) Employment Agreement (Fischer)
10.4(iv) (c) Employment Agreement (Davis)
10.5 (f)1997 Equity Compensation Plan
10.6 (a) Long-Term Incentive Stock Plan
10.7 (g) Amendment of Amended and Restated Agreement of Limited
Partnership of CP Limited Partnership dated April 20, 1998.
10.8 (h) Articles supplementary dated April 20, 1998
10.9 (j) 1999 Equity Compensation Plan
21 (b) List of Subsidiaries of Chateau Communities, Inc.
23 Consent of PricewaterhouseCoopers LLP
* Other instruments defining long-term debt not exceeding 10 percent of total
assets have been omitted in reliance on Item 601(b)(4)(iii)(A) of Regulation
S-K but will be filed upon the request of the Commission.
(a) Incorporated by reference to the Exhibits filed with Chateau's Registration
Statement on Form S-11 filed with the Securities and Exchange Commission on
November 10, 1993 (Commission File No. 33-69150).
(b) Incorporated by reference to the exhibits filed with the Company's Annual
Report on Form 10-K for the year ended December 31, 1995 filed with the
commission on March 29, 1996 (Commission File No. 1-12496).
(c) Incorporated by reference to Chateau's Quarterly Report on Form 10-Q filed
with the Commission on May 14, 1997.
(f) Incorporated by reference to Chateau's Form 8-K filed with the Commission
on December 9, 1997.
(e) Incorporated by reference to Chateau's Form S-4 filed with the Commission
on September 24, 1996.
(f) Incorporated by reference to Chateau's Annual Report on Form 10-K for the
year ended December 31, 1997
(g) Incorporated by reference to the Company's Form 8-K filed with the
Commission on May 1, 1998.
(h) Incorporated by reference to Chateau's Form 8-K filed with the Commission
on May 1, 1998.
(i) Incorporated by reference to the Exhibits filed with the Company's
Form 8-K dated February 24, 2000 and filed with the Commission on
February 25, 2000.
(j) Incorporated by reference to Chateau's Proxy Statement for the Annual
Meeting held on May 20, 1999 as filed with the Commission on April 7, 1999.
b. Reports on Form 8-K
-------------------
No reports on Form 8-K were filed in the fourth quarter of the year ended
December 31, 1999.
52
<PAGE>
Exhibit
Index
Exhibit Number
(Referenced to Item 601 of
Regulation S-K)
4.1 (a) Form of Stock Certificate
4.2(i) (d) Indenture dated as of December 19, 1997 between CP
Limited Partnership and The First National Bank of Chicago,
as supplemented
4.2(ii) (d) First Supplemental Indenture dated as of December 19,
1997 between CP Limited Partnership and The First National
Bank of Chicago related to the $100,000,000 MadatOry Par Put
Remarketed SecuritiesSM ("MOPPRSSM") due December 10, 2014.
4.2(iii) (d) Remarketing Agreement dated as of December 23, 1997
among Chateau Communities, Inc., CP Limited Partnership and
the "Remarketing Dealer" named therein.
4.3* (i) $100,000,000 8.5% Indenture dated February 25, 2000,
of CP Limited Partnership.
4.4* (e) Note Purchase Agreement dated as of November 4, 1996,
between Pacific Mutual and ROC Communities, Inc. for
$70,000,000 in Senior Notes due November 4, 2003
4.5* (e) Deed to secure Debt and Security Agreement from ROCF,
Inc. to Pacific Mutual, dated as of August 25, 1993
10.1 (f) Amended and Restated Agreement of Limited Partnership of
CP Limited Partnership dated January 22, 1997.
10.2 (a) Lease of 19500 Hall Road
10.3 (a) Form of Noncompetition Agreement (Boll and Allen)
10.4(i) (c) Employment Agreement (McDaniel)
10.4(ii) (c) Employment Agreement (Kellogg)
10.4(iii) (c) Employment Agreement (Fischer)
10.4(iv) (c) Employment Agreement (Davis)
10.5 (f) 1997 Equity Compensation Plan
10.6 (b) Long-Term Incentive Stock Plan
10.7 (g) Amendment to Amended and Restated Agreement of Limited
Partnership of CP Limited Partnership dated April 20, 1998.
10.8 (h) Articles supplementary dated April 20, 1998
10.9 (j) 1999 Equity Compensation Plan
21 (b) List of Subsidiaries of Chateau Communities, Inc.
23 Consent of PricewaterhouseCoopers LLP
53
<PAGE>
Exhibit
Index
* Other instruments defining long-term debt not exceeding 10 percent of total
assets have been omitted in reliance on Item 601(b)(4)(iii)(A) of
Regulation S-K but will be filed upon the request of the Commission.
(a) Incorporated by reference to the Exhibits filed with the Chateau's
Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1995
filed with the Commission on August 10, 1995 (Commission File No. 1-12496).
(b) Incorporated by reference to the exhibits filed with the Company's Annual
Report in Form 10-K for the year ended December 31, 1995 filed with the
commission on March 29, 1996 (Commission File No. 1-12496).
(c) Incorporated by reference to Chateau's Quarterly Report on Form 10-Q filed
with the Commission on May 14, 1997.
(d) Incorporated by reference to Chateau's Form 8-K filed with the Commission
on December 9, 1997.
(e) Incorporated by reference to Chateau's Form S-4 filed with the Commission
on September 24, 1996.
(f) Incorporated by reference to the Company's Annual Report on Form 10-K for
the year ended December 31, 1997
(g) Incorporated by reference to the Company's Form 8-K filed with the
Commission on May 1, 1998.
(h) Incorporated by reference to Chateau's Form 8-K filed with the Commission
on May 1, 1998.
(i) Incorporated by reference to the Exhibits filed with the Company's Form 8-K
dated Februry 24, 2000 and filed with the Commission on February 25, 2000.
(j) Incorporated by reference to Chateau's Proxy Statement for the Annual
Meeting held on May 20, 1999 as filed with the Commission on April 7, 1999.
b. Reports on Form 8-K
-------------------
No reports on Form 8-K were filed in the fourth quarter of the year ended
December 31, 1999.
54
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and
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 29th day of March, 2000.
CP LIMITED PARTNERSHIP
By: CHATEAU COMMUNITIES, INC.
By: /s/ Gary P. McDaniel
---------------------------------------------
Gary P. McDaniel
Director and Chief Executive Officer
(Principal Executive Officer)
By: /s/ Tamara D. Fischer
---------------------------------------------
Tamara D. Fischer
Executive Vice President and Chief Financial
Officer
(Principal Financial and Accounting Officer)
Pursuant to the requirements of the Securities and Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated on March 29, 2000.
Signature Title
--------- -----
/s/ John A. Boll Chairman of the Board of Directors
- ---------------------------------
John A. Boll
/s/ C.G. Kellogg Director and President
- ---------------------------------
C.G. Kellogg
/s/ Gary P. McDaniel Director and Chief Executive Officer
- ---------------------------------
Gary P. McDaniel
/s/ Edward R. Allen Director
- ---------------------------------
Edward R. Allen
/s/ Gebran S. Anton, Jr. Director
- ---------------------------------
Gebran S. Anton, Jr.
55
<PAGE>
/s/ James L. Clayton Director
- ---------------------------------
James L. Clayton
/s/ Steven G. Davis Director
- ---------------------------------
Steven G. Davis
/s/ James M. Hankins Director
- ---------------------------------
James M. Hankins
/s/ Rhonda Hogan Director
- ---------------------------------
Rhonda Hogan
/s/ James M. Lane Director
- ---------------------------------
James M. Lane
/s/ Donald E. Miller Director
- ---------------------------------
Donald E. Miller
56
<PAGE>
CP LIMITED PARTNERSHIP
FINANCIAL STATEMENT SCHEDULES
PURSUANT TO ITEM 14(a)(2) OF FORM 10-K
ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION
for the year ended December 31, 1999
CP LIMITED PARTNERSHIP
FINANCIAL STATEMENT SCHEDULE
Pages
-----
III. Real Estate and Accumulated Depreciation............................. F-2
No other financial statement schedules are required as the amounts are not
significant, or not applicable, or reported in the Company's consolidated
financial statements or notes thereto.
F-1
<PAGE>
CP LIMITED PARTNERSHIP
SCHEDULE III, REAL ESTATE AND ACCUMULATED DEPRECIATION
for the year ended December 31, 1999
(in thousands)
<TABLE>
<CAPTION>
Cost Capitalized
Subsequent to Acquisition
Initial Cost to Company (Improvements)
---------------------------------------------------
Building & Building &
Community Location Encumbrance Land Fixtures Land Fixtures
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Algoma Algoma Township, MI 60 - 66 2,792
Anchor Bay Ira Township, MI 432 80 2,877 15,949
Anchor North Bay Tampa Bay, FL 288 1,422 - 31
Arbor Village Jackson, MI 1,123 813 4,787 - 109
Atlanta Meadows Atlanta, GA 549 625 435 - 27
Audubon Orlando, FL 281 296 2 2,946
Autumn Forest Greensboro, NC 4,660 918 6,747 - 163
Avalon RV Park Clearwater, FL 263 2,202 - 6
Avon Rochester Hills, MI 621 484 640 7,093
Bermuda Palms Indio, CA 1,291 2,477 - 129
Breazeale Laramie, WY. 1,083 251 1,618 - 56
Broadmore South Bend, IN 777 4,115 396 2,130
Buena Vista Fargo, ND 713 6,248 - 315
Butler Creek Augusta, GA 1,238 2,309 - 391
Camden Point Kingsland, GA 466 1,701 - 112
Camp Inn RV Park Frostproof, FL 796 4,220 - 61
Canterbury Grand Rapids, MI 705 3,107 69 883
Carnes Crossing Summerville, SC 1,503 7,161 450 444
Castlewood Estates Mabelton, GA 656 2,918 - 196
Casual Estates Syracuse, NY 9,121 2,136 14,324 - 487
Cedar Grove Clinton, CT 180 1,140 - 41
Cedar Knolls Minneapolis, MN 1,217 11,006 - 310
Central Office Englewood, CO - - 80 13,051
Chesterfield Chesterfield Township, MI 405 - 262 2,126
Chestnut Creek Davison, MI 274 - 347 5,586
Cimarron Park St. Paul, MN 1,424 12,882 - 356
Clinton Clinton Township, MI 989 - 430 5,743
Coach Royale Boise, ID 197 1,065 - 36
Colonial Kalamazoo, MI 816 195 4 7,667
Colonial Coach Riverdale, GA 1,052 4,277 26 458
Colony Cove Ellenton, FL 5,683 28,256 - 389
Columbia Heights Grand Forks, ND 588 5,282 - 170
Conway Circle Orlando, FL 922 544 864 - 38
Conway Plantation Conway, SC 428 3,696 - 190
Country Estates Spring Lake Township, MI 30 - - 1,839
Countryside Great Falls Great Falls, MT 629 361 1,650 - 62
Countryside Village Denver Denver, CO 1,460 4,384 - 22
<CAPTION>
Gross Amount
Carried at Close of
Period 12/31/99
-------------------------------- Date of
Building & Accumulated Construction (C)
Community Location Land Fixtures Total Depreciation Acquisition (A)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Algoma Algoma Township, MI 126 2,792 2,918 918 1974(C)
Anchor Bay Ira Township, MI 3,309 16,029 19,338 7,723 1968(C)
Anchor North Bay Tampa Bay, FL 288 1,453 1,741 53 1998(A)
Arbor Village Jackson, MI 813 4,896 5,709 437 1998(A)
Atlanta Meadows Atlanta, GA 625 462 1,087 71 08/25/93(A)
Audubon Orlando, FL 283 3,242 3,525 1,832 1988(A)
Autumn Forest Greensboro, NC 918 6,910 7,828 612 1998(A)
Avalon RV Park Clearwater, FL 263 2,208 2,471 203 1998(A)
Avon Rochester Hills, MI 1,261 7,577 8,838 5,512 1988(A)
Bermuda Palms Indio, CA 1,291 2,606 3,897 333 08/29/94(A)
Breazeale Laramie, WY. 251 1,674 1,925 196 08/25/93(A)
Broadmore South Bend, IN 1,173 6,245 7,418 393 1998(A)
Buena Vista Fargo, ND 713 6,563 7,276 1,404 1994(A)
Butler Creek Augusta, GA 1,238 2,700 3,938 336 08/25/93(A)
Camden Point Kingsland, GA 466 1,813 2,279 223 08/25/93(A)
Camp Inn RV Park Frostproof, FL 796 4,281 5,077 175 1998(A)
Canterbury Grand Rapids, MI 774 3,990 4,764 290 1998(A)
Carnes Crossing Summerville, SC 1,953 7,605 9,558 656 1998(A)
Castlewood Estates Mabelton, GA 656 3,114 3,770 403 2/1/97(A)
Casual Estates Syracuse, NY 2,136 14,811 16,947 2,148 08/25/93(A)
Cedar Grove Clinton, CT 180 1,181 1,361 50 1998(A)
Cedar Knolls Minneapolis, MN 1,217 11,316 12,533 2,489 1994(A)
Central Office Englewood, CO 80 13,051 13,131 2,499
Chesterfield Chesterfield Township, MI 667 2,126 2,793 1,674 1969(C)
Chestnut Creek Davison, MI 621 5,586 6,207 668 1996(A)
Cimarron Park St. Paul, MN 1,424 13,238 14,662 2,908 1994(A)
Clinton Clinton Township, MI 1,419 5,743 7,162 4,710 1969(C)
Coach Royale Boise, ID 197 1,101 1,298 156 01/01/94(A)
Colonial Kalamazoo, MI 820 7,862 8,682 5,552 1985(A)
Colonial Coach Riverdale, GA 1,078 4,735 5,813 606 2/1/97(A)
Colony Cove Ellenton, FL 5,683 28,645 34,328 3,782 08/02/94(A)
Columbia Heights Grand Forks, ND 588 5,452 6,040 1,173 1994(A)
Conway Circle Orlando, FL 544 902 1,446 117 08/25/93(A)
Conway Plantation Conway, SC 428 3,886 4,314 504 2/1/97(A)
Country Estates Spring Lake Township, MI 30 1,839 1,869 1,350 1974(C)
Countryside Great Falls Great Falls, MT 361 1,712 2,073 230 08/25/93(A)
Countryside Village Denver Denver, CO 1,460 4,406 5,866 581 08/25/93(A)
</TABLE>
F-2
<PAGE>
CP LIMITED PARTNERSHIP
SCHEDULE III, REAL ESTATE AND ACCUMULATED DEPRECIATION
for the year ended December 31, 1999
(in thousands)
<TABLE>
<CAPTION>
Cost Capitalized
Subsequent to Acquisition
Initial Cost to Company (Improvements)
---------------------------------------------------
Building & Building &
Community Location Encumbrance Land Fixtures Land Fixtures
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Countryside Village Jackson. Jacksonville, FL 962 4,796 - 533
Countryside Village Longmont Longmont, CO 1,481 4,455 209
Cranberry Lake White Lake Township, MI 432 220 1,050 3,236
Crestview Stillwater, OK 683 362 963 - 76
Crystal Lake St. Petersburg, FL 498 2,475 - 25
Crystal Lakes Zephryhills, FL 1,323 2,239 - 133
Del Tura Fort Myers, FL 31,447 4,360 50,508 418 3,721
Eagle Creek Tyler, TX 1,291 1,761 300 736
Eagle Point Seattle, WA 2,712 1,048 3,514 - 84
Eastridge San Jose, CA 2,476 4,671 - 62
Eldorado Daytona Bch, FL 958 408 1,248 - 73
Emerald Lake Punta Gorda, FL 399 1,150 - 278
Evergreen New Haven, CT 309 1,883 - 127
Fairways Country Club Orlando, FL 955 5,823 9 1,838
Falcon Farms Moline, IL 793 295 1,576 - 210
Ferrand Estates Wyoming, MI 257 1,579 - 346
Forest Creek South Bend, IN 501 4,849 - 42
Forest Lake Estates Spring Lake Township, MI 414 2,293 27 724
Fountain Vue Marion, IN 360 1,210 90 111
Foxhall Village Raleigh, NC 521 5,283 - 470
Foxwood Farms Ocala, FL 691 1,502 - 333
Friendly Village Greely, CO 523 2,702 (5) 104
Glenmoor Battle Creek, MI 3,400 203 - -
Golden Valley Douglasville, TX 254 800 - 197
Grand Blanc Grand Blanc, MI 1,749 - 284 8,616
Green Acres New Haven, CT 195 1,286 - 15
Green Park South Montgomery, AL 1,021 7,704 - -
Hickory Knoll Indianapolis, IN 3,001 356 2,669 - 65
Hidden Valley Orlando, FL 492 5,714 - 156
Highland New Haven, CT 153 1,140 - 1
Highlands (The) Flint, MI 6,000 2,323 13,260 1,124 2,463
Hillcrest Rockland, MA 236 1,285 - 17
Holiday Estates Byron Township, MI 93 - - 1,762
Homestead Ranch McAllen, TX 195 1,108 - 170
Howell Howell, MI 345 - 151 2,840
Hunters Chase Lima, OH 921 1,246 - 440
Huron Estates Flint, MI 354 1,882 33 204
<CAPTION>
Gross Amount
Carried at Close of
Period 12/31/99
-------------------------------- Date of
Building & Accumulated Construction (C)
Community Location Land Fixtures Total Depreciation Acquisition (A)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Countryside Village Jackson. Jacksonville, FL 962 5,329 6,291 696 08/25/93(A)
Countryside Village Longmont Longmont, CO 1,481 4,664 6,145 622 08/25/93(A)
Cranberry Lake White Lake Township, MI 1,482 3,456 4,938 1,923 1986(A)
Crestview Stillwater, OK 362 1,039 1,401 133 08/25/93(A)
Crystal Lake St. Petersburg, FL 498 2,500 2,998 91 1998(A)
Crystal Lakes Zephryhills, FL 1,323 2,372 3,695 326 2/1/1998(A)
Del Tura Fort Myers, FL 4,778 4,229 59,007 1,591 1994(A)
Eagle Creek Tyler, TX 1,591 2,497 4,088 266 2/1/97(A)
Eagle Point Seattle, WA 1,084 3,598 4,646 476 08/25/93(A)
Eastridge San Jose, CA 2,476 4,733 7,209 622 08/29/94(A)
Eldorado Daytona Bch, FL 408 1,321 1,729 169 08/25/93(A)
Emerald Lake Punta Gorda, FL 399 1,428 1,827 738 1988(A)
Evergreen New Haven, CT 309 2,010 2,319 72 1998(A)
Fairways Country Club Orlando, FL 964 7,661 8,625 5,461 1979(A)(C)
Falcon Farms Moline, IL 295 1,786 2,081 232 08/25/93(A)
Ferrand Estates Wyoming, MI 257 1,925 2,182 1,518 1989(A)
Forest Creek South Bend, IN 501 4,891 5,392 411 1998(A)
Forest Lake Estates Spring Lake Township, MI 441 3,017 3,458 686 1994(A)
Fountain Vue Marion, IN 450 1,321 1,771 110 1998(A)
Foxhall Village Raleigh, NC 521 5,753 6,274 774 2/1/97(A)
Foxwood Farms Ocala, FL 691 1,835 2,526 227 07/26/94(A)
Friendly Village Greely, CO 518 2,806 3,324 377 01/18/94(A)
Glenmoor Battle Creek, MI 3,400 203 3,603 - 1999(C)
Golden Valley Douglasville, TX 254 997 1,251 130 2/1/97(A)
Grand Blanc Grand Blanc, MI 2,033 8,616 10,649 2,519 1990(C)
Green Acres New Haven, CT 195 1,301 1,496 118 1998(A)
Green Park South Montgomery, AL 1,021 7,704 8,725 - 1999(A)
Hickory Knoll Indianapolis, IN 356 2,734 3,090 378 08/25/93(A)
Hidden Valley Orlando, FL 492 5,870 6,362 891 1995(A)
Highland New Haven, CT 153 1,141 1,294 104 1998(A)
Highlands (The) Flint, MI 3,447 15,723 19,170 1,238 1998(A)
Hillcrest Rockland, MA 236 1,302 1,538 132 11/5/97(A)
Holiday Estates Byron Township, MI 93 1,762 1,855 1,281 1984(C)
Homestead Ranch McAllen, TX 195 1,278 1,473 181 2/1/97(A)
Howell Howell, MI 496 2,840 3,336 2,318 1972(C)
Hunters Chase Lima, OH 921 1,686 2,607 182 2/1/97(A)
Huron Estates Flint, MI 387 2,086 2,473 170 1998(A)
</TABLE>
F-3
<PAGE>
CP LIMITED PARTNERSHIP
SCHEDULE III, REAL ESTATE AND ACCUMULATED DEPRECIATION
for the year ended December 31, 1999
(in thousands)
<TABLE>
<CAPTION>
Cost Capitalized
Subsequent
Acquisition
Initial Cost to Company (Improvements)
- ------------------------------------------------------------------------------------------------------------------------------------
Building & Building &
Community Location Encumbrance Land Fixtures Land Fixtures Land
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Indian Rocks Clearwater, FL 441 1,032 - 12 441
Jade Isle Orlando, FL 855 273 1,076 - 23 273
Knoll Terrace Salem, OR 1,967 1,379 2,050 - 150 1,379
La Quinta Ridge Indio, CA 1,014 1,873 - 377 1,014
Lake in the Hills Auburn Hills, MI 952 6,389 - 76 952
Lakeland Harbor Lakeland, FL 875 - - 3,335 875
Lakeland Junction Lakeland, FL 471 972 - 126 471
Lakes at Leesburg Leesburg, FL 1,178 - 39 3,491 1,217
Lakewood Estates Davenport, LA 884 442 1,210 - 279 442
Lakewood Montgomery, AL 2,007 2,107 - - 2,007
Land O'Lakes Orlando, FL 1,403 473 2,507 - 76 473
Landmark Village Fairburn, GA 2,539 4,352 - 223 2,539
Leisure Woods 0 Rockland Rockland, MA 831 14,326 - 82 831
Leisure Woods 0 Tauton Tauton, MA 256 2,780 162 755 418
Leisure World Weslaco, TX 228 1,639 - 64 228
Leonard Gardens Walker, MI 94 - 619 5,114 713
Macomb Macomb Township, MI 1,459 - 1,182 4,350 2,641
Maple Grove Boise, ID 1,140 702 2,384 - 66 702
Maple Ridge Manteno, IL 126 - - 1,456 126
Maple Valley Manteno, IL 338 - - 4,249 338
Mariwood Indianapolis, IN 2,118 324 2,415 - 157 324
Marnelle Fayetteville, GA 998 464 2,635 - 383 464
Meadow Park Fargo, ND 133 1,183 - 54 133
Meadowbrook Ithaca, NY 1,832 291 4,029 - 58 291
Midway Estates Vero Bch., FL 1,823 1,313 2,095 2 165 1,315
Mosby's Point Florence, KY 1,190 608 1,574 - 41 608
Norton Shores Norton Shores, MI 103 - 118 4,905 221
Novi Novi, MI 896 - 393 5,086 1,289
Oak Grove Albany, GA 413 418 764 - 31 418
Oak Hill Groveland Township, MI 115 2,165 - 4,151 115
Oak Orchard Albion, NY 701 3,425 - 47 701
Oak Ridge South Bend, IN 615 3,770 - 12 615
Oak Springs Sorrento, FL 206 1,461 2 429 208
Oakwood Forest Greensboro, NC 1,111 3,843 - 274 1,111
Old Orchard Davison, MI 210 182 - 2,660 210
One Hundred Oaks Fultondale, AL 345 1,839 - 57 345
<CAPTION>
Gross Amount
Carried at Close of
Period 12/31/99
-------------------------------- Date of
Building & Accumulated Construction (C)
Community Location Land Fixtures Total Depreciation Acquisition (A)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Indian Rocks Clearwater, FL 441 1,044 1,485 56 1998(A)
Jade Isle Orlando, FL 273 1,099 1,372 142 08/25/93(A)
Knoll Terrace Salem, OR 1,379 2,200 3,579 284 08/25/93(A)
La Quinta Ridge Indio, CA 1,014 2,250 3,264 261 08/29/94(A)
Lake in the Hills Auburn Hills, MI 952 6,465 7,417 1,768 1994(A)
Lakeland Harbor Lakeland, FL 875 3,335 4,210 2,430 1983(C)
Lakeland Junction Lakeland, FL 471 1,098 1,569 863 1981(C)
Lakes at Leesburg Leesburg, FL 1,217 3,491 4,708 2,229 1984(C)
Lakewood Estates Davenport, LA 442 1,489 1,931 200 08/25/93(A)
Lakewood Montgomery, AL 2,007 2,107 4,114 54 1999(A)
Land O'Lakes Orlando, FL 473 2,583 3,056 340 08/25/93(A)
Landmark Village Fairburn, GA 2,539 4,575 7,114 620 07/15/94(A)
Leisure Woods 0 Rockland Rockland, MA 831 14,408 15,239 753 11/5/97(A)
Leisure Woods 0 Tauton Tauton, MA 418 3,535 3,953 146 11/5/97(A)
Leisure World Weslaco, TX 228 1,703 1,931 226 05/06/94(A)
Leonard Gardens Walker, MI 713 5,114 5,827 1,448 1987(C)
Macomb Macomb Township, MI 2,641 14,350 16,991 8,769 1973(C)
Maple Grove Boise, ID 702 2,450 3,152 322 08/25/93(A)
Maple Ridge Manteno, IL 126 1,456 1,582 254 2/1/97(A)
Maple Valley Manteno, IL 338 4,249 4,587 682 2/1/97(A)
Mariwood Indianapolis, IN 324 2,572 2,896 342 08/25/93(A)
Marnelle Fayetteville, GA 464 3,018 3,482 417 2/1/97(A)
Meadow Park Fargo, ND 133 1,237 1,370 265 1994(A)
Meadowbrook Ithaca, NY 291 4,087 4,378 472 08/25/93(A)
Midway Estates Vero Bch., FL 1,315 2,260 3,575 289 08/25/93(A)
Mosby's Point Florence, KY 608 1,615 2,223 215 08/25/83(A)
Norton Shores Norton Shores, MI 221 4,905 5,126 3,000 1978(C)
Novi Novi, MI 1,289 5,086 6,375 4,645 1973(C)
Oak Grove Albany, GA 418 795 1,213 103 08/25/93(A)
Oak Hill Groveland Township, MI 115 6,316 6,431 3,514 1983(A)
Oak Orchard Albion, NY 701 3,472 4,173 481 2/1/97(A)
Oak Ridge South Bend, IN 615 3,782 4,397 326 1998(A)
Oak Springs Sorrento, FL 208 1,890 2,098 1,427 1981(A)
Oakwood Forest Greensboro, NC 1,111 4,117 5,228 553 08/25/93(A)
Old Orchard Davison, MI 210 2,842 3,052 1,611 1988(A)
One Hundred Oaks Fultondale, AL 345 1,896 2,241 220 2/1/97(A)
</TABLE>
F-4
<PAGE>
CP LIMITED PARTNERSHIP
SCHEDULE III, REAL ESTATE AND ACCUMULATED DEPRECIATION
for the year ended December 31, 1999
(in thousands)
<TABLE>
<CAPTION>
Cost Capitalized
Subsequent
Acquisition
Initial Cost to Company (Improvements)
--------------------------------------------------------
Building & Building &
Community Location Encumbrance Land Fixtures Land Fixtures Land
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Orange Lake Clermont, FL 246 85 1 2,092 247 2,177
Orion Orion Township, MI 422 198 721 4,948 1,143 5,146
Palm Beach Colony West Palm Beach, FL 691 1,962 - 189 691 2,151
Paradise Village Albany, GA 487 340 918 - 21 340 939
Pedaler's Pond Lake Wales, FL 350 285 - 2,336 350 2,621
Pendleton Indianapolis, IN 628 122 964 - 18 122 982
Pine Lakes Ranch Thornton,CO 2,463 10,379 34 521 2,497 10,900
Pinecrest Village Shreveport, LA 93 719 - 497 93 1,216
Pinellas Cascades Clearwater, FL 2,148 1,747 2,313 - 33 1,747 2,346
Pinewood Columbus, MI 1,242 10,070 57 372 1,299 10,442
Pleasant Ridge Lansing, MI 915 3,898 - 106 915 4,004
Presidents Park Grand Forks, ND 258 1,283 - 99 258 1,382
Redwood Estates Thornton,CO 2,473 10,044 - 118 2,473 10,162
Regency Lakes Winchester, VA 1,176 3,705 - 1,712 1,176 5,417
Riverview Portland, OR 1,415 537 1,942 - 67 537 2,009
Rolling Hills Louisville, KY 729 342 1,034 - 15 342 1,049
Rosemount Woods Minneapolis/St. Paul, MN 475 4,297 - 61 475 4,358
Royal Estates Kalamazoo, MI 1,015 2,475 - 45 1,015 2,520
Saddlebrook N. Charleston, SC 1,284 5,497 - 75 1,284 5,572
Science City Midland, MI 1,482 870 1,760 - 75 870 1,835
Shady Lane Clearwater, FL 324 1,574 - - 324 1,574
Shady Oaks Clearwater, FL 750 6,967 - 23 750 6,990
Shady Village Clearwater, FL 468 3,179 - - 468 3,179
Shenandoah Boise, ID 443 2,528 - 220 443 2,748
Sherwood Marion, IN 264 1,175 240 276 504 1,451
Skyway Indianapolis, IN 1,196 178 1,366 - 91 178 1,457
Southwind Naples, FL 2,594 1,476 3,463 - 116 1,476 3,579
Spring Brook Utica, MI 4,693 1,209 10,928 - 84 1,209 11,012
Springfield Farms Brookline, MO 1,698 2,157 - 1,757 1,698 3,914
Starlight Ranch Orlando, FL 5,597 8,859 - 211 5,597 9,070
Stonegate, LA Shreveport, LA 450 160 642 - 102 160 744
Sun Valley Jackson, MI 606 2,514 9 46 615 2,560
Swan Creek Ann Arbor, MI 882 9,709 - 31 882 9,740
Tarpon Glen Clearwater, FL 510 2,893 - 50 510 2,943
Terrace Heights Dubuque, IA 1,671 919 2,413 - 43 919 2,456
The Colony Rancho Mirage, CA 2,259 4,745 157 2,259 4,902 7,161
<CAPTION>
Gross Amount
Carried at Close of
Period 12/31/99
-------------------------------- Date of
Building & Accumulated Construction (C)
Community Location Land Fixtures Total Depreciation Acquisition (A)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Orange Lake Clermont, FL 247 2,177 2,424 1,112 1988(A)
Orion Orion Township, MI 1,143 5,146 6,289 3,147 1986(A)
Palm Beach Colony West Palm Beach, FL 691 2,151 2,842 803 1983(A)
Paradise Village Albany, GA 340 939 1,279 130 08/25/93(A)
Pedaler's Pond Lake Wales, FL 350 2,621 2,971 1,310 1990(A)
Pendleton Indianapolis, IN 122 982 1,104 127 08/25/93(A)
Pine Lakes Ranch Thornton,CO 2,497 10,900 13,397 1,427 2/1/97(A)
Pinecrest Village Shreveport, LA 93 1,216 1,309 155 2/1/97(A)
Pinellas Cascades Clearwater, FL 1,747 2,346 4,093 303 08/25/93(A)
Pinewood Columbus, MI 1,299 10,442 11,741 901 1998(A)
Pleasant Ridge Lansing, MI 915 4,004 4,919 360 1998(A)
Presidents Park Grand Forks, ND 258 1,382 1,640 183 01/01/94(A)
Redwood Estates Thornton,CO 2,473 10,162 12,635 1,394 2/1/97(A)
Regency Lakes Winchester, VA 1,176 5,417 6,593 614 2/1/97(A)
Riverview Portland, OR 537 2,009 2,546 265 08/25/93(A)
Rolling Hills Louisville, KY 342 1,049 1,391 145 08/25/93(A)
Rosemount Woods Minneapolis/St. Paul, MN 475 4,358 4,833 942 1994(A)
Royal Estates Kalamazoo, MI 1,015 2,520 3,535 345 08/25/93(A)
Saddlebrook N. Charleston, SC 1,284 5,572 6,856 506 1998(A)
Science City Midland, MI 870 1,835 2,705 248 08/25/93(A)
Shady Lane Clearwater, FL 324 1,574 1,898 143 1998(A)
Shady Oaks Clearwater, FL 750 6,990 7,740 626 1998(A)
Shady Village Clearwater, FL 468 3,179 3,647 115 1998(A)
Shenandoah Boise, ID 443 2,748 3,191 336 05/06/94(A)
Sherwood Marion, IN 504 1,451 1,955 90 1998(A)
Skyway Indianapolis, IN 178 1,457 1,635 186 08/25/93(A)
Southwind Naples, FL 1,476 3,579 5,055 470 08/25/93(A)
Spring Brook Utica, MI 1,209 11,012 12,221 990 1998(A)
Springfield Farms Brookline, MO 1,698 3,914 5,612 385 2/1/97(A)
Starlight Ranch Orlando, FL 5,597 9,070 14,667 1,206 2/1/97(A)
Stonegate, LA Shreveport, LA 160 744 904 81 08/25/93(A)
Sun Valley Jackson, MI 615 2,560 3,175 234 1998(A)
Swan Creek Ann Arbor, MI 882 9,740 10,622 868 1998(A)
Tarpon Glen Clearwater, FL 510 2,943 3,453 110 1998(A)
Terrace Heights Dubuque, IA 919 2,456 3,375 332 08/25/93(A)
The Colony Rancho Mirage, CA 2,259 4,902 7,161 614 09/02/94(A)
</TABLE>
F-5
<PAGE>
CP LIMITED PARTNERSHIP
SCHEDULE III, REAL ESTATE AND ACCUMULATED DEPRECIATION
for the year ended December 31, 1999
(in thousands)
<TABLE>
<CAPTION>
Cost Capitalized
Subsequent
Acquisition
Initial Cost to Company (Improvements)
--------------------------------------------------------
Building & Building &
Community Location Encumbrance Land Fixtures Land Fixtures Land
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
The Glen Rockland, MA 261 252 - 612
The Homestead McAllen, TX 581 100 742 - 216
The Orchard Sanat Rosa, CA 2,795 6,363 - 37
Torrey Hills Flint, MI 346 205 50 4,448
Town & Country, FL Orlando, FL 454 245 896 - 18
Trails End Weslaco, TX 260 1,804 - 129
Twenty Nine Pines St. Paul, MN 317 2,871 - 37
Twin Pines Goshen, IN 1,068 197 1,934 - 123
Valley Vista Grand Rapids, MI 1,566 411 2,791 - 85
Vance Columbus, OH 664 200 993 - 69
Villa Flint, MI 135 332 (7) 2,780
Westbrook Detroit, MI 190 2,451 534 3,415
Whispering Pines Clearwater, FL 4,125 4,208 4,071 - 219
Willo Arms Cleveland, OH 1,547 473 2,146 - 49
Winter Haven Oaks Winter Haven, FL 490 705 362 1,330
Winter Paradise RV Hudson, FL 300 1,593 - 38
Woodlake Greensboro, NC 924 6,311 - 60
Yankee Springs Grand Rapids, MI 948 5,360 78 686
Yorktowne Sharonville, OH 2,130 6,311 - 301
Difference between allocated
purchase price and historical cost
of properties acquired in the
ROC Acquistion 959 178,279 179,238 28,898
150,784 904,666 1,055,450 192,015
<CAPTION>
Gross Amount
Carried at Close of
Period 12/31/99
---------------------------------------- Date of
Building & Accumulated Construction (C)
Community Location Land Fixtures Total Depreciation Acquisition (A)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
The Glen Rockland, MA 261 864 1,125 48 11/5/97(A)
The Homestead McAllen, TX 100 958 1,058 120 2/1/97(A)
The Orchard Sanat Rosa, CA 2,795 6,400 9,195 767 08/29/94(A)
Torrey Hills Flint, MI 396 4,653 5,049 2,812 1987(A)
Town & Country, FL Orlando, FL 245 914 1,159 115 08/25/93(A)
Trails End Weslaco, TX 260 1,933 2,193 238 05/06/94(A)
Twenty Nine Pines St. Paul, MN 317 2,908 3,225 641 1994(A)
Twin Pines Goshen, IN 197 2,057 2,254 274 08/25/93(A)
Valley Vista Grand Rapids, MI 411 2,876 3,287 235 1998(A)
Vance Columbus, OH 200 1,062 1,262 114 08/25/93(A)
Villa Flint, MI 128 3,112 3,240 2,329 1984(A)
Westbrook Detroit, MI 724 5,866 6,590 452 1996(C)
Whispering Pines Clearwater, FL 4,208 4,290 8,498 469 08/25/93(A)
Willo Arms Cleveland, OH 473 2,195 2,668 299 08/25/93(A)
Winter Haven Oaks Winter Haven, FL 852 2,035 2,887 1,109 1988(A)(C)
Winter Paradise RV Hudson, FL 300 1,631 1,931 63 1998(A)
Woodlake Greensboro, NC 924 6,371 7,295 575 1998(A)
Yankee Springs Grand Rapids, MI 1,026 6,046 7,072 491 1998(A)
Yorktowne Sharonville, OH 2,130 6,612 8,742 906 2/1/97(A)
Difference between allocated
purchase price and historical cost
of properties acquired in the
ROC Acquistion 959 178,279 179,238 28,898
150,784 904,666 1,055,450 192,015
</TABLE>
F-6
<PAGE>
SCHEDULE III
Continued
CP LIMITED PARTNERSHIP
REAL ESTATE AND ACCUMULATED DEPRECIATION, Continued
_______
The changes in total real estate for the years ended December 31, 1999, 1998 and
1997 are as follows:
<TABLE>
<CAPTION>
1999 1998 1997
----------- ----------- ---------
<S> <C> <C> <C>
Balance, beginning of year $ 1,026,509 $ 836,175 $ 300,631
Acquisitions 14,808 172,422 525,625
Improvements 25,105 21,486 13,250
Dispositions and other (10,972) (3,574) ( 3,331)
----------- ----------- ---------
Balance, end of year $ 1,055,450 $ 1,026,509 $ 836,175
=========== =========== =========
</TABLE>
The change in accumulated depreciation for the years ended December 31, 1999,
1998 and 1997 are as follows:
<TABLE>
<CAPTION>
1999 1998 1997
----------- ----------- ---------
<S> <C> <C> <C>
Balance, beginning of year $ 151,260 $ 112,314 $ 81,293
Depreciation for the year 41,422 39,213 31,103
Dispositions and other (667) (267) (82)
----------- ----------- ---------
Balance, end of year $ 192,015 $ 151,260 $ 112,314
=========== =========== =========
</TABLE>
F-7
<PAGE>
Exhibit 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statements of
Chateau Communities, Inc. or CP Limited Partnership on Form S-8 (File Nos. 33-
84616 and 333-28583) and Form S-3 (File Nos. 333-36323, 333-28703, 333-4544,
333-4544-01, 333-43981, 333-74399, and 333-38307) of our report dated February
8, 2000, on our audits of the consolidated financial statements and financial
statement schedule of Chateau Communities, Inc. and CP Limited Partnership,
respectively, as of December 31, 1999 and 1998, and for each of the three years
in the period ended December 31, 1999, which reports are included in the Annual
Reports on Form 10-K, respectively.
PRICEWATERHOUSECOOPERS LLP
Denver, CO
March 29, 2000
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<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
BALANCE SHEET AND STATEMENTS OF INCOME AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
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<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
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0
0
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<EPS-BASIC> 1.23
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