UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------- FORM 10-K [X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the year ended December 31, 2000 or [_] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission file number 1-12496 - ------------------------------------------------------------------------------- CHATEAU COMMUNITIES, INC. (exact name of registrant as specified in its charter) MARYLAND 38-3132038 (State of incorporation) (I.R.S. Employer Identification No.) 6160 South Syracuse Way, Greenwood Village, Colorado 80111 (Address of principal executive offices) Registrant's telephone number, including area code: (303) 741-3707 Securities registered pursuant to section 12(b) of the Act and listed on the New York Stock Exchange: Common Stock, $0.01 Par Value Securities registered pursuant to Section 12(g) of the Act: NONE Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities 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 [_] Indicate by check mark if disclosure of delinquent filer pursuant to Item 405 of Regulations S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy of information statements incorporated by references in Part III of this Form 10-K or any amendments to this Form 10-K. [_] The aggregate market value of voting stock held by non-affiliates of the Registrant on March 8, 2001 was approximately $726,008,000 based on the closing price of the stock on the New York Stock Exchange on such date. For the purposes of this response, executive officers and directors have been deemed to be affiliates of the Registrant. The number of shares of the Registrant's Common Stock outstanding on March 8, 2001 was 28,598,673 shares. Portions of the Registrant's 2000 definitive Proxy Statement to be filed for its 2000 Annual Meeting of Shareholders are incorporated by reference into Part III of this report. CHATEAU COMMUNITIES, INC. FORM 10-K ANNUAL REPORT FOR THE YEAR ENDED DECEMBER 31, 2000 TABLE OF CONTENTS Item Pages - ----- -------------- PART I 1. Business 3 2. Properties 7 3. Legal Proceedings 12 4. Submission of Matters to a Vote of Security Holders 12 PART II 5. Market for Registrant's Common Equity and Related Security Holder Matters 13 6. Selected Financial Data 14 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 16 7A. Quantitative and Qualitative Disclosures About Market Risk 22 8. Financial Statements and Supplementary Data 23 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 42 PART III 10. Directors and Executive Officers of the Registrant 43 11. Executive Compensation 43 12. Security Ownership of Certain Beneficial Owners and Management 43 13. Certain Relationships and Related Transactions 43 PART IV 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K 44 Signatures 48 PART I Item 1. Business - ------- -------- General Development of Business Chateau Communities, Inc. ("the Company"), a self-administered and self-managed equity real estate investment trust ("REIT"), is one of the largest owner/managers of manufactured home communities in the United States. The Company conducts substantially all of its activities through CP Limited Partnership, a Maryland Limited Partnership (the "Operating Partnership"), in which it owns, directly and through ROC Communities, Inc. ("ROC"), the other general partner of the Operating Partnership, an approximate 89% general partner interest. The Company owns and operates 166 manufactured home community properties (the "Properties") containing 52,347 homesites and 1,359 park model/RV sites in 28 states. The Company also fee manages 44 manufactured home community properties containing 9,200 homesites. In addition, the Company is involved in the development and expansion of manufactured home communities, and through its subsidiary, Community Sales, Inc. ("CSI"), the sale of new and pre- owned homes, brokerage of used homes and in assisting residents in arranging financing and insurance services. Formation of the Company The Company was formed in Maryland on August 25, 1993, as Chateau Properties, Inc., to continue and expand the manufactured home community operations and business objectives of Chateau Estates, a Michigan co-partnership, which had developed, owned and operated manufactured home communities and properties since 1966. 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. 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 expenditures 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 selective acquisition and development 3 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 and to minimize turnover; * Providing frequent personal contact between on-site managers and residents to foster a sense of pride within the community and to enhance community desirability; * Offering potential community residents the convenience of purchasing a home already in place within the community or ordering a new home; * Increasing value to residents by providing additional value-added services; and * Assisting potential residents in securing financing and insurance for their home. Development, Expansion 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; * Capitalizing on opportunities to renovate and expand properties consistent with local market demand; * Selectively acquiring well-located manufactured home communities that demonstrate the potential for increase in revenue and cash flow through professional property management, improved operating efficiencies, aggressive leasing and, where appropriate, expansion on adjacent land; and * 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. 4 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 2000, the Company substantially completed the development of 275 expansion sites. As of December 31, 2000, the Company owned undeveloped land adjacent to existing communities containing approximately 4,600 expansion sites, which are zoned for manufactured housing. The 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 market. 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, performing all accounting and property management functions and 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 related debt in its balance sheet. In the majority of the arrangements, the Company has an option to purchase the completed community when it reaches a pre-determined occupancy rate. The Company is also involved in two joint ventures in which its joint venture partner is constructing the communities. The Company has similar arrangements to lend these joint ventures funds to finance development. The Company accounts for joint ventures that it does not control utilizing the equity method of accounting. 2000 Property Acquisitions During 2000, the Company completed two acquisitions in Alabama and Georgia of 410 homesites for $4,150,000. In addition, the Company acquired land to be used for future development for a total of $3,427,000. Sales Brokerage and Finance The Company conducts its sales and brokerage activities through CSI, which is operated as a taxable subsidiary of the Operating Partnership. During 2000, CSI sold 562 new or pre-owned homes and brokered the sales of 1,201 homes. CSI also has a Financial Services Division, which arranges financing and insurance services for prospective residents. During 2000, the Financial Services Division arranged financing on approximately 770 loans. 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 the rents charged. 5 In addition, other forms of multi-family residential properties and single- family housing provide housing alternatives to residents. Employees As of December 31, 2000, the Company had approximately 1,200 full-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 the 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. Approximately 90 corporate employees, who assist on-site administrators in all the property management functions, also support field management staff. Commitment to resident satisfaction is demonstrated by 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 has elected to be taxed as a REIT under Section 856(c) of the Internal Revenue Code of 1986, as amended (the "Code"). The Company generally will not be subject to Federal income tax to the extent it distributes 95 percent of its REIT taxable income to its stockholders. REITs are subject to a number of organizational and operational requirements. If the Company fails to qualify as a REIT in any taxable year, the Company will be subject to Federal income tax (including any applicable alternative minimum tax) on its taxable income at regular corporate rates. As a REIT, the Company is subject to certain state and local taxes on its income and property and Federal income and excise taxes to the extent of its undistributed income. Cautionary Statement Concerning Forward-Looking Information 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 which are all 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. 6 Item 2. Properties - ------- ---------- On December 31, 2000, the Properties consisted of 166 manufactured home communities containing 52,347 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 9,200 sites in 16 states. The Company also owned land adjacent to certain existing communities containing approximately 4,600 expansion sites, which, although not yet developed, was zoned for manufactured housing. On December 31, 2000, the Properties had an occupancy rate of approximately 91.1 percent with weighted average rent for the year ended December 31, 2000 of $316 per month. This compares to an occupancy rate of 91.7 percent and weighted average rent of $302 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 appealing 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 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 consent of both parties or, in some instances, as provided by statute. Property Information The Company classifies all 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 normally have stable occupancy rates. The Active Expansion are those properties where the Company is currently, or has recently, expanded the community by adding homesites to the available homesites for rent. Generally, these communities will have a lower occupancy rate than the 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, 2000, regarding the Properties, excluding the three park model/RV communities. 7 Total Weighted Average Total Number of Occupancy Monthly Rent per Location Communities Sites as of Site Community State (Closest Major City) 12/31/00 12/31/00 12/31/00 ---------------------------------------------------------------------------------------------------------------------------------- 100 Oaks AL Fultondale 230 89.1% $ 227 Lakewood AL Montgomery 310 74.5% $ 172 Green Park South AL Montgomery 417 93.8% $ 254 Total Alabama 3 957 86.4% $ 221 Bermuda Palms CA Palm Springs 185 95.1% $ 374 Eastridge CA San Jose 187 99.5% $ 659 La Quinta Ridge CA Palm Springs 152 96.1% $ 421 The Colony CA Palm Springs 220 98.2% $ 675 The Orchard CA San Francisco 233 99.6% $ 604 Total California 5 977 97.9% $ 558 CV-Denver CO Denver 345 93.9% $ 389 CV-Longmont CO Longmont 310 99.0% $ 402 Friendly Village CO Greeley 226 98.2% $ 312 Pine Lakes Ranch CO Denver 762 98.8% $ 360 Redwood Estates CO Denver 753 98.0% $ 358 Total Colorado 5 2,396 97.8% $ 365 Cedar Grove CT New Haven 60 96.7% $ 301 Evergreen CT New Haven 102 96.1% $ 302 Green Acres CT New Haven 64 95.3% $ 300 Highland CT New Haven 50 92.0% $ 319 Total Connecticut 4 276 95.3% $ 305 Anchor North FL Tampa Bay 94 94.7% $ 279 Audubon FL Orlando 280 96.8% $ 276 Colony Cove FL Sarasota 2,211 99.4% $ 354 Conway Circle FL Orlando 111 96.4% $ 310 Crystal Lake FL St. Petersburg 166 91.6% $ 277 * Crystal Lakes FL Tampa 330 59.7% $ 155 CV-Jacksonville FL Jacksonville 643 88.8% $ 315 Del Tura FL Fort Myers 1,344 88.0% $ 456 Eldorado Estates FL Daytona Beach 126 96.0% $ 271 Emerald Lake FL Fort Myers 201 99.0% $ 296 Fairways Country Club FL Orlando 1,141 99.3% $ 302 * Foxwood Farms FL Orlando 375 79.2% $ 211 Hidden Valley FL Orlando 303 99.3% $ 311 Indian Rocks FL Clearwater 148 64.2% $ 265 Jade Isle FL Orlando 101 98.0% $ 320 Lakeland Harbor FL Tampa 504 99.8% $ 256 Lakeland Junction FL Tampa 191 100.0% $ 201 Lakes at Leesburg FL Orlando 640 100.0% $ 269 Land O' Lakes FL Orlando 173 98.3% $ 260 Midway Estates FL Vero Beach 204 72.1% $ 347 Oak Springs FL Orlando 438 72.8% $ 250 Orange Lake FL Orlando 242 97.1% $ 259 Palm Beach Colony FL West Palm Beach 285 95.4% $ 311 Pedaler's Pond FL Orlando 214 85.5% $ 209 Pinellas Cascades FL Clearwater 238 92.0% $ 380 Shady Lane FL Clearwater 108 92.6% $ 275 8 Shady Oak FL Clearwater 250 98.0% $335 Shady Village FL Clearwater 156 96.8% $309 Southwind Village FL Naples 338 93.8% $313 Starlight Ranch FL Orlando 783 95.5% $315 Tarpon Glen FL Clearwater 170 88.2% $312 Town & Country FL Orlando 73 97.3% $316 Whispering Pines FL Clearwater 392 96.4% $369 Winter Haven Oaks FL Orlando 343 53.1% $214 Total Florida 34 13,316 91.9% $314 Atlanta Meadows GA Atlanta 75 98.7% $242 * Butler Creek GA Augusta 376 77.9% $198 Camden Point GA Kingsland 268 58.6% $167 Castlewood Estates GA Atlanta 334 83.8% $328 Colonial Coach Estates GA Atlanta 481 82.7% $295 Golden Valley GA Atlanta 131 94.7% $265 Landmark GA Atlanta 524 92.2% $296 Marnelle GA Atlanta 205 96.1% $290 Oak Grove Estates GA Albany 174 88.5% $146 Paradise Village GA Albany 226 73.9% $160 South Oaks GA Atlanta 295 48.8% $165 Total Georgia 11 3,089 80.0% $242 Lakewood Estates IA Davenport 180 93.3% $265 Terrace Heights IA Dubuque 317 94.0% $262 Total Iowa 2 497 93.8% $263 Coach Royale ID Boise 91 98.9% $299 Maple Grove Estates ID Boise 270 91.1% $310 Shenandoah Estates ID Boise 154 95.5% $296 Total Idaho 3 515 93.8% $304 Falcon Farms IL Moline 215 90.7% $241 Maple Ridge IL Kankakee 75 98.7% $279 Maple Valley IL Kankakee 201 99.5% $279 Total Illinois 3 491 95.5% $263 * Broadmore IN South Bend 358 86.0% $259 Forest Creek IN South Bend 167 97.6% $300 * Fountainvue IN Marion 120 89.2% $167 Hickory Knoll IN Indianapolis 326 96.0% $306 Mariwood IN Indianapolis 296 87.2% $296 Oak Ridge IN South Bend 204 97.1% $258 Pendleton IN Indianapolis 102 92.2% $224 * Sherwood IN Marion 135 48.9% $163 Skyway IN Indianapolis 156 92.9% $298 Twin Pines IN Goshen 238 95.0% $244 Total Indiana 10 2,102 89.3% $263 Mosby's Point KY Cincinnati 150 96.0% $305 Rolling Hills KY Louisville 158 89.2% $214 Total Kentucky 2 308 92.5% $258 Pinecrest Village LA Shreveport 446 72.6% $163 Stonegate, LA LA Shreveport 157 96.2% $184 Total Louisiana 2 603 78.8% $169 Hillcrest MA Boston 82 98.8% $329 Leisurewoods Rockland MA Boston 394 99.2% $340 * Leisurewoods Taunton MA Boston 223 78.9% $293 The Glen MA Boston 36 100.0% $398 Total Massachusetts 4 735 93.1% $328 9 * Algoma Estates MI Grand Rapids 308 91.9% $310 Anchor Bay MI Detroit 1,384 95.7% $353 Arbor Village MI Jackson 266 97.7% $252 Avon MI Detroit 617 98.9% $415 * Canterbury Estates MI Grand Rapids 290 62.8% $246 Chesterfield MI Detroit 345 96.8% $370 * Chestnut Creek MI Flint 221 82.4% $280 Clinton MI Detroit 1,000 97.5% $367 Colonial Acres MI Kalamazoo 612 95.1% $294 Colonial Manor MI Kalamazoo 195 95.9% $280 Country Estates MI Grand Rapids 254 91.3% $283 * Cranberry MI Pontiac 328 75.3% $372 Ferrand Estates MI Grand Rapids 420 98.8% $345 * Forest Lake Estates MI Grand Rapids 221 81.0% $287 * Grand Blanc MI Flint 478 89.3% $349 Holiday Estates MI Grand Rapids 205 98.0% $331 Howell MI Lansing 455 98.0% $376 * Huron Estates MI Flint 111 89.2% $219 Lake in the Hills MI Detroit 238 99.2% $387 Leonard Gardens MI Grand Rapids 271 86.7% $273 Macomb MI Detroit 1,427 98.1% $381 Norton Shores MI Grand Rapids 656 86.0% $267 Novi MI Detroit 725 93.0% $417 Oakhill MI Flint 504 92.1% $357 Old Orchard MI Flint 200 98.5% $331 Orion MI Detroit 423 97.9% $356 Pinewood MI Columbus 380 97.1% $315 Pleasant Ridge MI Lansing 305 76.4% $229 Royal Estates MI Kalamazoo 183 93.4% $322 Science City MI Midland 171 95.3% $301 Springbrook MI Utica 400 97.5% $338 Sun Valley MI Jackson 197 92.9% $249 Swan Creek MI Ann Arbor 294 99.3% $354 * The Highlands MI Flint 683 89.3% $300 * Torrey Hills MI Flint 346 96.2% $354 Valley Vista MI Grand Rapids 137 94.2% $316 Villa MI Flint 319 92.8% $347 * Westbrook MI Detroit 299 86.0% $384 Yankee Spring MI Grand Rapids 284 90.1% $261 Total Michigan 39 16,152 93.1% $337 Cedar Knolls MN Minneapolis 458 97.8% $403 Cimmaron MN St. Paul 505 98.4% $405 Rosemount MN Minneapolis/St. Paul 182 99.5% $391 Twenty-Nine Pines MN St. Paul 152 90.8% $323 Total Minnesota 4 1,297 97.5% $393 * Springfield Farms MO Springfield 136 77.2% $184 Total Missouri 1 136 77.2% $184 Countryside Village G.F. MT Great Falls 226 99.1% $204 Total Montana 1 226 99.1% $204 Autumn Forest NC Greensboro 299 82.9% $240 Foxhall Village NC Raleigh 315 94.3% $341 Oakwood Forest NC Greensboro 481 91.7% $259 Woodlake NC Greensboro 308 93.8% $246 Total North Carolina 4 1,403 90.9% $247 10 Buena Vista ND Fargo 400 98.0% $270 Columbia Heights ND Grand Forks 302 98.3% $282 President's Park ND Grand Forks 174 85.6% $232 Meadow Park ND Fargo 117 84.6% $210 Total North Dakota 4 993 90.8% $251 Casual Estates NY Syracuse 953 69.0% $315 Meadowbrook NY Ithaca 237 67.1% $271 Oak Orchard Estates NY Rochester 235 89.8% $287 Shadybrook NY Syracuse 97 72.2% $315 Total New York 4 1,522 72.1% $304 * Hunter's Chase OH Lima 135 58.5% $170 Vance OH Columbus 110 88.2% $248 Willo-Arms OH Cleveland 262 99.2% $207 Yorktowne OH Cincinnati 354 95.8% $331 Total Ohio 4 861 90.0% $258 Crestview OK Stillwater 237 85.7% $216 Total Oklahoma 1 237 85.7% $216 Knoll Terrace OR Salem 212 92.9% $371 Riverview OR Portland 133 97.7% $408 Total Oregon 2 345 94.8% $385 * Carnes Crossing SC Summerville 535 97.4% $186 * Conway Plantation SC Myrtle Beach 299 69.9% $182 Saddlebrook SC Charleston 426 95.8% $206 Total South Carolina 3 1,260 90.3% $192 * Eagle Creek TX Tyler 199 89.9% $158 Homestead Ranch TX McAllen 126 87.3% $210 Leisure World TX Brownsville 201 95.0% $207 The Homestead TX McAllen 99 96.0% $233 Trail's End TX Brownsville 299 81.3% $205 Total Texas 5 924 88.5% $199 * Regency Lakes VA Winchester 384 81.8% $214 Total Virginia 1 384 81.8% $214 Eagle Point WA Seattle 230 97.0% $462 Total Washington 1 230 97.0% $462 Breazeale WY Laramie 115 98.3% $248 Total Wyoming 1 115 98.3% $248 Totals 163 52,347 91.1% $316 * These properties are included in the Active Expansion Portfolio. 11 Indebtedness The following table sets forth certain information relating to the secured and unsecured indebtness of the Company outstanding as of December 31, 2000. Weighted Average Amount of Percent of Interest (In thousands) Indebtedness Total Debt Rate Maturity Date ------------ ---------- --------- ------------- Mortgage Debt: Collateral Mortgage (7 properties) $115,829 22% 7.8% 2010 Other (8 properties) 21,070 4% 7.8% 2002-2008 ------------ --------- -------- Total Mortgages 136,899 26% 7.8% Unsecured Debt: Unsecured Senior Notes 50,000 9% 8.0% 2003 Unsecured Senior Notes 70,000 13% 7.5% 2003 Unsecured Senior Notes 100,000 19% 8.3% 2005 Unsecured Senior Notes 100,000 19% 6.4% 2004 ------------ --------- -------- Total Unsecured 320,000 60% 7.5% ------------ --------- -------- Total Fixed Rate 456,899 86% 7.6% Variable Rate Debt: Credit Facilities 74,730 14% 7.5% 2001 ------------ Total Secured and Unsecured $531,629 ============ Item 3. Legal Proceedings None. Item 4. Submission of Matters to a Vote of Security Holders No matters were submitted to a vote of the Company's security holders during the last quarter of its fiscal year ended December 31, 2000. 12 PART II Item 5. Market for Registrant's Common Equity and Related Security Holder Matters The Company's Common Stock is traded on the New York Stock Exchange ("NYSE") under the symbol CPJ. The following table sets forth, for the quarterly periods shown, the high and low sales price per share as reported on the NYSE for the years ended December 31, 1999 and 2000. Price Range Cash Dividend ----------------------- Quarter Ended High Low Declared -------------------- -------- -------- ------------- March 31, 1999 $ 30-1/4 $ 27-1/8 $ 0.485 June 30, 1999 $ 31 $26-5/16 $ 0.485 September 30, 1999 $30-3/16 $ 26 $ 0.485 December 31, 1999 $ 27-1/4 $24-3/16 $ 0.485 March 31, 2000 $27-5/16 $ 23-1/4 $ 0.515 June 30, 2000 $ 28-3/8 $24-5/16 $ 0.515 September 30, 2000 $ 28-7/8 $ 26 $ 0.515 December 31, 2000 $ 31-5/8 $ 26-1/2 $ 0.515 Distributions by the Company to the extent of its current and accumulated earnings and profits for Federal income tax purposes will be taxable to stockholders as dividend income. Distributions in excess of earnings and profits generally will be treated as a non-taxable reduction of the stockholder's basis in the common stock to the extent thereof, with the remainder as taxable gain. At March 8, 2001 there were approximately 600 holders of record and approximately 14,000 beneficial owners of the Company's common stock. 13 Item 6. Selected Financial Data The following table sets forth summary financial information of the Company for the periods and dates indicated. For the Year Ended December 31, (In thousands, except per share data) 2000 1999 1998 1997(1) 1996 ---------- ---------- ---------- --------- --------- Operating Data: Revenues Rental income $ 186,963 $ 177,789 $ 167,206 $ 134,801 $ 67,233 Management fee, interest and other income 17,802 11,574 5,924 3,368 151 ---------- ---------- ---------- --------- --------- Total revenues 204,765 189,363 173,130 138,169 67,384 Expenses Property operating and administrative 75,723 73,062 67,699 56,053 26,870 Depreciation and amortization 43,920 41,826 39,658 31,510 11,452 Interest and related amortization 36,400 32,318 31,287 25,918 12,962 ---------- ---------- ---------- --------- --------- Total expenses 156,043 147,206 138,644 113,481 51,284 ---------- ---------- ---------- --------- --------- Income before net gain on sales of properties and minority interests 48,722 42,157 34,486 24,688 16,100 Net gain on sales of properties - 2,805 - - - ---------- ---------- ---------- --------- --------- Income before minority interests 48,722 44,962 34,486 24,688 16,100 Less income allocated to minority interests Preferred OP Units 6,094 6,094 4,249 - - Common OP Units 4,842 4,242 3,436 2,986 9,566 ---------- ---------- ---------- --------- --------- Net income available to common shareholders $ 37,786 $ 34,626 $ 26,801 $ 21,702 $ 6,534 ========== ========== ========== ========= ========= Weighted average common shares outstanding 28,480 28,135 27,282 23,688 6,022 Weighted average common shares and OP Units outstanding 32,130 31,582 30,779 26,947 14,837 Earnings per Common Share/OP Unit Data: Net income - basic $ 1.33 $ 1.23 $ 0.98 $ 0.92 $ 1.09 Net income - diluted $ 1.32 $ 1.23 $ 0.97 $ 0.91 $ 1.08 Dividends/distributions declared $ 2.06 $ 1.94 $ 1.82 $ 1.72 $ 1.62 Tax status of dividends, return of capital portion $ 0.64 $ 0.60 $ 0.69 $ 0.62 $ 0.65 Cash Flow Data: Net cash provided by operating activities $ 84,961 $ 77,464 $ 72,560 $ 54,545 $ 29,755 Net cash used in investing activities $ (73,123) $ (56,777) $ (167,089) $ (61,309) $ (29,518) Net cash provided by (used in) financing activities $ (12,087) $ (20,789) $ 80,069 $ 21,088 $ (595) Balance Sheet Data: Rental property, before accumulated depreciation $1,091,451 $1,055,450 $1,026,509 $ 836,175 $ 300,631 Rental property, net of accumulated depreciation $ 855,798 $ 863,435 $ 875,249 $ 723,861 $ 219,338 Total assets $1,017,864 $ 981,673 $ 959,194 $ 782,738 $ 232,066 Total debt $ 535,470 $ 452,556 $ 427,778 $ 387,015 $ 168,315 Minority interests in Operating Partnership $ 116,863 $ 121,142 $ 120,475 $ 35,272 $ 26,552 Shareholders' equity $ 335,912 $ 361,820 $ 367,935 $ 322,966 $ 16,191 (Dollars in thousands) Total properties (at end of period) 166 165 165 131 47 Total sites (at end of period) (2) 52,347 51,659 51,101 43,800 20,279 Weighted average occupied sites 47,466 47,181 45,882 38,053 18,889 Funds from operations (3) $ 85,917 $ 77,629 $ 69,392 $ 55,962 $ 27,460 (1) In February 1997, the Company completed the Merger with ROC (2) Does not include 1,359 park model/RV sites, purchased in 1998 (3) Funds from operations ("FFO") is defined by the National Association of Real Estate Investment Trusts ("NAREIT") as consolidated net income of the Company without giving effect to gains (or losses) from debt restructuring and sales of property and rental property depreciation and amortization. Management believes that FFO is an important and widely used measure of the operating performance of REITs, which provides a relevant basis for comparison among REITs. FFO (i) does not represent cash flow from operations as defined by generally accepted accounting principles; (ii) should not be considered as an alternative to net income as a measure of operating performance or to cash flows from operating, investing and financing activities; and (iii) is not an alternative to cash flows as a measure of liquidity. FFO is calculated as follows: 14 For the Year Ended December 31, (In thousands) 2000 1999 1998 1997 1996 -------- -------- -------- -------- -------- Income before minority interests $ 48,722 $ 44,962 $ 34,486 $ 24,688 $ 16,100 Less: Income allocated to Preferred OP Units 6,094 6,094 4,249 - - Plus: Depreciation of rental property 43,289 41,161 38,962 30,867 11,360 Amortization of intangibles - 405 446 407 - Gain on sales of properties - (2,805) (253) - - -------- -------- -------- -------- -------- Funds from operations $ 85,917 $ 77,629 $ 69,392 $ 55,962 $ 27,460 ======== ======== ======== ======== ======== NAREIT has revised its definition of FFO. The company adopted the new definition effective January 1, 2000. The new definition of FFO substantially eliminates the add-back of non-recurring items in the calculation of FFO. The application of this new definition decreased FFO in 1998 by $375,000, and had no effect on any other years reported. 15 Item 7. Management 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 which are all 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 8,500 manufactured home sites to its portfolio over the three-year period ended December 31, 2000. At the end of this period, the Company's portfolio comprised 166 manufactured home communities containing 52,347 manufactured homesites and 1,359 park model/RV sites, located in 28 states. The Company provides property management services to N'Tandem Trust ("N'Tandem") and other manufactured home community owners, with an aggregate of 9,200 homesites. In addition, the Company owns approximately ten percent of N'Tandem outstanding equity, has made loans to N'Tandem, and provides advisory services to N'Tandem. Company growth since the beginning of 1998 can be attributed to community acquisitions, increased operating performance at existing communities, community expansions, and new community development. During 1998, the Company acquired 34 communities in four separate portfolio acquisitions, containing an aggregate of 7,045 manufactured homesites and 1,359 park model/RV sites. During 1999 and 2000, the Company acquired two communities each year, containing a total of 1,034 sites (624 sites in 1999 and 410 sites in 2000). Since its organization, the Company has elected to qualify as a REIT under the Internal Revenue Code and thus does not generally pay Federal corporate income taxes on its earnings to the extent that such earnings are distributed to shareholders. The Company conducts substantially all of its activities through CP Limited Partnership (the "Operating Partnership") in which it owned a combined 89 percent general partner interest as of December 31, 2000. Historical Results of Operations Comparison of the year ended December 31, 2000 to the year ended December 31, 1999 The following table summarizes certain information relative to the Company's properties, as of and for the years ended December 31, 2000 and 1999. The Company considers all communities owned by the Company as of January 1, 1999 as the "Core 1999 Portfolio". 16 Core 1999 Portfolio Total Dollars in thousands, except per site 2000 1999 2000 1999 --------- --------- --------- --------- As of December 31, - -------------------------------------- Number of communities 161 161 166 165 Total manufactured homesites 51,325 51,042 52,347 51,659 Occupied sites 46,912 46,847 47,678 47,383 Occupancy % 91.4% 91.8% 91.1% 91.7% For the year ended, December 31, - -------------------------------------- Rental income $ 184,438 $ 176,872 $ 186,963 $ 177,789 Property operating expenses $ 64,557 $ 62,770 $ 65,275 $ 63,181 Net operating income $ 119,881 $ 114,102 $ 121,688 $ 114,608 Weighted average monthly rent per site $ 316 $ 302 $ 316 $ 302 For the year ended December 31, 2000, income before minority interests was $48,722,000, an increase of $3,760,000 from the year ended December 31, 1999. The increase was due primarily to increased net operating income from the Core 1999 Portfolio and acquisitions. The increase in net operating income from the Company's Core 1999 Portfolio was due to increased occupancy and rental increases partially offset by general operating expense increases. Rental revenue for the year ended December 31, 2000 was $186,963,000, an increase of $9,174,000 from 1999. Approximately 17 percent of the increase was due to acquisitions, net of dispositions, and 83 percent was due to rental increases and occupancy gains in the Company's Core 1999 Portfolio. Weighted average occupancy for the year ended December 31, 2000 was 47,466 sites compared with 47,181 sites for the same period in 1999. The occupancy rate for the total portfolio was 91.1 percent on 52,347 sites as of December 31, 2000, compared to 91.7 percent on 51,659 sites as of December 31, 1999. The occupancy rate on the stabilized portfolio (communities where the Company does not have or has not recently had, expansion of the community) was 92.5 percent as of December 31, 2000. The Company also added 275 available sites to its portfolio through expansion of its communities. On a per-site basis, weighted monthly rental revenue for the year ended December 31, 2000 was $316 compared with $302 for the same period in 1999. Interest income primarily includes interest on notes receivable and advances to affiliates. The increase of $3,998,000 for the year ended December 31, 2000 from the same period in 1999 is due primarily to increased interest income from Company-funded development projects, increased lending activity, as well as an increase in interest rates. Management fee and other income primarily includes management fee and transaction fee income for the management of 44 manufactured home communities and equity earnings from CSI. Included in this amount is approximately $3.2 million of acquisition and transaction fees due to N'Tandem's acquisitions activity in 2000. Also included in management fee and other income is approximately $2.1 million of management and advisory fees from the N'Tandem properties. The Company expects to continue to earn management, advisory and other fees from N'Tandem in 2001, and estimates the recurring component of revenues from N'Tandem and it's properties to stabilize. Property operating and maintenance expense for the year ended December 31, 2000 increased by $1,343,000 or 2.7 percent from the prior year. The majority of the increase was due to operating expense increases in the Company's Core 1999 Portfolio, and to a lesser extent, acquisitions. On a per site basis, monthly weighted average property operating and maintenance expense increased to $91.03 per site, or 2.0 percent. Real estate taxes for the year ended December 31, 2000 increased by $751,000 or 5.9 percent from the year ended December 31, 1999. The increase is due primarily to acquisitions, expansions of communities, and increases in property tax rates. 17 On a per site basis, monthly weighted average real estate taxes were $23.57 in 2000 compared to $22.39 in 1999, an increase of 5.3 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 in 2000 was 5.1 percent of total revenues as compared to 5.2 percent in 1999. Interest and related amortization costs increased for the year ended December 31, 2000 by $4,082,000, as compared with the year ended December 31, 1999. The increase is attributed primarily to the indebtedness incurred to finance acquisitions, development, and lending activities. Interest expense as a percentage of average debt outstanding decreased to approximately 7.3 percent in 2000 from 7.4 percent in 1999. Depreciation expense for the year ended December 31, 2000 increased $2,094,000 from the same period a year ago. The increase is directly attributed to acquisitions, expansions, and additions. Depreciation expense as a percentage of average depreciable rental property in 2000 remained relatively unchanged from 1999. 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". Core 1998 Portfolio Total Dollars in thousands, except per site 1999 1998 1999 1998 --------- --------- --------- --------- 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 expenses $ 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 For the year ended December 31, 1999, income before minority interests 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. 18 Interest income primarily includes interest on notes receivable and advances to joint ventures affiliates. The increase of $3,115,000 for the year ended December 31, 1999 from the same period in 1998 is due primarily to increased interest income from Company-funded development projects, as well as increases in interest rates. Management fee and other income primarily include management fee and transaction fee income for the management of 44 manufactured home communities, and equity earnings from CSI. 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 and increased equity earnings from CSI. 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 increases in the Company's Core 1998 Portfolio, and to a lesser extent, acquisitions. 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 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 tax rates in the tax jurisdictions in which the Company operates. Administrative expense in 1999 was 5.2 percent of total revenues as compared to 4.8 percent in 1998. Interest and related amortization costs for the year ended December 31, 1999 increased by $1,031,000, as compared with the year ended December 31, 1998. The increase is attributed 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 for 1999 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 attributed to acquisitions and expansions. Depreciation expense as a percentage of average depreciable rental property in 1999 remained relatively unchanged from 1998. Liquidity and Capital Resources Net cash provided by operating activities was $84,961,000 for the year ended December 31, 2000, compared to $77,464,000 for the same period in 1999. The increase in cash provided by operating activities was due primarily to the increase in net operating income. Net cash used in investing activities for the year ended December 31, 2000 was $73,123,000. This amount represents acquisitions, joint venture investments and advances, lending activity, capital expenditures and development costs. During 2000, the Company acquired two communities with a total of 410 sites and purchased development properties in Michigan and Iowa. These acquisitions were financed primarily by borrowings under the Company's lines of credit. Net cash used in financing activities for the year ended December 31, 2000 was $12,087,000. This consisted primarily of $81,534,000 in dividends and distributions paid to shareholders and OP Unitholders, $214,997,000 in payment of debt, and repurchasing approximately $11.3 million of common shares, offset partially by proceeds from debt issuances of $295,295,000. 19 During 2000, the Company invested approximately $10,100,000 in the expansion of its existing communities, resulting in the addition of 275 available sites to its portfolio. In addition, during 2000, the Company invested or advanced $22,000,000 to certain affiliates of the Company. This consisted primarily of approximately $5,500,000 to joint ventures, through which the Company, or its joint venture partner is developing manufactured home communities, and $13,800,000 to N'Tandem, an entity in which the Company owns approximately 10 percent of its outstanding equity and has made loans aggregating $38,466,000 as of December 31, 2000. For the year ended December 31, 2000, recurring property capital expenditures, other than development costs, were approximately $7,400,000. Capital expenditures have historically been financed out of operating cash flow and it is the Company's intention that such future expenditures will also be financed out of operating cash flow. At December 31, 2000, the Company had a $100 million line of credit arrangement with BankOne, NA acting as lead agent for a bank group to provide financing for future construction, acquisitions and general business obligations (the "BankOne Credit Facility"). The line of credit is unsecured, bears interest at the prime rate of interest or, at the Company's option, LIBOR plus 80 basis points. The line was scheduled to mature in 2001. In February 2001, the Company renegotiated the BankOne Credit Facility and increased it from $100 million to $125 million. The term of the new facility is three years and bears interest at LIBOR plus 90 basis points. 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 and matures in October 2001 (the "US Bank Facility" and, together with the BankOne Credit Facility the "Credit Facilities"). As of December 31, 2000, approximately $74.7 million was outstanding under the Company's Credit Facilities and the Company had $32.8 million available in additional borrowing capacity, which was increased to approximately $57.8 million in available capacity with the February 2001 expansion of the BankOne Credit Facility. As of December 31, 2000, the Company had outstanding, in addition to the Credit Facilities, $320 million of unsecured senior debt with a weighted average interest rate and remaining maturity of 7.5 percent and 3.7 years, respectively, and $136.9 million of secured mortgage debt with a weighted average interest rate and remaining maturity of 7.8 percent and 8.9 years, respectively. As of December 31, 2000, the Company had approximately $535 million of total debt outstanding, representing approximately 34 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 7.6 percent. In June 2000, the Company issued $116 million of 7.8% fixed rate mortgage debt, maturing in 2010, and collateralized by seven properties. Also in 2000, the Company issued a total of $150 million of Unsecured Senior Notes, $100 million at 8.3% maturing March 1, 2005 and $50 million at 8% maturing August 1, 2003, resulting in net proceeds of $149 million. During 2000, the Company issued and repaid a $30 million unsecured short-term loan. On February 29, 2000, the Company announced the establishment of a share repurchase program pursuant to which it may repurchase up to 1,000,000 shares of common stock from time to time. As of December 31, 2000, the Company repurchased 453,900 shares for approximately $11.3 million. 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, through cash flow from operations and, if necessary, borrowings under the Credit Facilities and other lines of credit. 20 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. Recently Issued Accounting Standards In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities", which establishes accounting and reporting standards for derivative instruments and for hedging activities. This new standard requires that all companies record derivatives on the balance sheet as assets or liabilities, measured at fair value. Gains or losses resulting from changes in the values of those derivatives would be accounted for depending on the use of the derivative and whether it qualifies for hedge accounting. In June 1999, FASB issued SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities-Deferral of the Effective Date of SFAS No. 133-an amendment of SFAS No. 133." SFAS No. 137 defers the effective date of SFAS No. 133 to fiscal years beginning after June 15, 2000. In June 2000, the FASB issued SFAS No. 138,"Accounting for Certain Derivative Instruments and Certain Hedging Activities-an amendment of FASB Statement No. 133". This statement amends certain requirements of SFAS 133. The Company will prospectively adopt SFAS No. 138 on January 1, 2001, the required date of adoption. The adoption of SFAS No. 138 will not have a material impact on the financial statements of the Company, but will result in the reclassification of certain deferred gains and losses to accumulated other comprehensive income. In 2000, the Company adopted Staff Accounting Bulletin ("SAB") 101 released by the Securities and Exchange Commission, entitled "Revenue Recognition in Financial Statements". SAB 101 establishes guidelines in applying generally accepted accounting principles to the recognition of revenue in financial statements based on specific criteria. The adoption of SAB 101 had no material effect on the Company's financial position or results of operations. Other Funds from operations ("FFO") is defined by the National Association of Real Estate Investment Trusts ("NAREIT") as consolidated net income of the Company without giving effect to gains (or losses) from debt restructuring and sales of property and rental property depreciation and amortization. Management believes that FFO is an important and widely used measure of the operating performance of REITs, which provides a relevant basis for comparison among REITs. FFO (i) does not represent cash flow from operations as defined by generally accepted accounting principles; (ii) should not be considered as an alternative to net income as a measure of operating performance or to cash flows from operating, investing and financing activities; and (iii) is not an alternative to cash flows as a measure of liquidity. FFO is calculated as follows: 21 For the Year Ended December 31, (In thousands) 2000 1999 1998 1997 1996 --------- --------- --------- --------- --------- Income before minority interest $ 48,722 $ 44,962 $ 34,486 $ 24,688 $ 16,100 Less: Income allocated to Preferred OP Units 6,094 6,094 4,249 - - Plus: Depreciation of rental property 43,289 41,161 38,962 30,867 11,360 Amortization of intangibles - 405 446 407 - Gain on sales of properties - (2,805) (253) - - --------- --------- --------- --------- --------- Funds from operations $ 85,917 $ 77,629 $ 69,392 $ 55,962 $ 27,460 ========= ========= ========= ========= ========= NAREIT has revised its definition of FFO. The Company adopted 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 FFO. The application of this new definition decreased FFO in 1998 by $375,000, and had no effect on any other years reported. 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, 2000, the Company's Credit Facilities represented its only variable rate debt. The following table sets forth information as of December 31, 2000, concerning the Company's debt obligations, including principal cash flows by scheduled maturity, weighted average interest rates and estimated fair value ("FV"): For the Year Ended December 31, 2001 2002 2003 2004 2005 Thereafter Total FV Debt obligations Fixed rate $ 1,320 $ 1,842 $ 121,483 $ 103,338 $ 107,947 $ 120,969 $ 456,899 $ 454,079 Average interest rate 7.9% 7.9% 7.7% 6.8% 8.5% 7.8% 7.6% Variable rate $ 74,730 $ 74,730 $ 74,730 Average interest rate 7.5% Total debt $ 76,050 $ 1,842 $ 121,483 $ 103,338 $ 107,947 $ 120,969 $ 531,629 $ 528,809 The Company faces market risk relating to its fixed-rate debt upon re-financing of such debt and depending upon prevailing interest rates at the time of such re-finance. As a result of the Company's successful re-financing and extension of its fixed-rate debt, as illustrated in the above chart, it will not need to re-finance any of its fixed-rate debt until 2003. In addition, the Company has assessed the market risk for its variable rate debt and believes that a 1% increase in LIBOR rates would result in an approximate $747,000 increase in interest expense based on $74.7 million of variable rate debt outstanding at December 31, 2000. The fair value of the Company's long term debt is estimated based on discounted cash flows at interest rates that management believes reflects the risks associated with long term debt of similar risk and duration. 22 Item 8. Financial Statements and Supplementary Data - ------- ------------------------------------------- Report of Independent Accountants To the Shareholders and Board of Directors of Chateau Communities, Inc.: 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 Chateau Communities, Inc. (the "Company") at December 31, 2000 and 1999, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2000, in conformity with accounting principles generally accepted in the United States of America. These financial statements and the financial statement schedule are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements and the financial statement schedule based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. PricewaterhouseCoopers LLP Denver, Colorado February 14, 2001 23 CHATEAU COMMUNITIES, INC. CONSOLIDATED STATEMENTS OF INCOME For the Year Ended December 31, --------------------------------------------- In thousands, except per share data 2000 1999 1998 --------- --------- --------- Revenues Rental income $ 186,963 $ 177,789 $ 167,206 Interest income 10,794 6,796 3,681 Management fee and other income 7,008 4,778 2,243 --------- --------- --------- 204,765 189,363 173,130 Expenses Property operating and maintenance 51,849 50,506 47,094 Real estate taxes 13,426 12,675 12,251 Depreciation and amortization 43,920 41,826 39,658 Administrative 10,448 9,881 8,354 Interest and related amortization 36,400 32,318 31,287 --------- --------- --------- 156,043 147,206 138,644 --------- --------- --------- Income before net gain on sales of properties 48,722 42,157 34,486 Net gain on sales of properties - 2,805 - --------- --------- --------- Income before minority interests 48,722 44,962 34,486 Less income allocated to minority interests: Preferred OP Units 6,094 6,094 4,249 Common OP Units 4,842 4,242 3,436 --------- --------- --------- Net income available to common shareholders $ 37,786 $ 34,626 $ 26,801 ========= ========= ========= Per share/OP Unit information Basic earnings per common share $ 1.33 $ 1.23 $ 0.98 ========= ========= ========= Diluted earnings per common share $ 1.32 $ 1.23 $ 0.97 ========= ========= ========= The accompanying notes are an integral part of the financial statements. 24 CHATEAU COMMUNITIES, INC. CONSOLIDATED BALANCE SHEETS (In thousands) December 31, -------------------------------------- 2000 1999 ----------- ----------- Assets Rental property: Land $ 139,417 $ 135,811 Land and improvements for expansion sites 26,145 23,320 Manufactured home community improvements 836,228 816,278 Community buildings 56,403 55,978 Furniture and other equipment 33,258 24,063 ----------- ----------- Total rental property 1,091,451 1,055,450 Less accumulated depreciation 235,653 192,015 ----------- ----------- Net rental property 855,798 863,435 Cash and cash equivalents 99 348 Rents and other receivables, net 7,107 3,257 Notes receivable 24,539 8,485 Investments in and advances to affiliates 119,727 97,761 Prepaid expenses and other assets 10,594 8,387 ----------- ----------- Total assets $ 1,017,864 $ 981,673 =========== =========== Liabilities Debt $ 535,470 $ 452,556 Accrued interest payable 6,953 5,284 Accounts payable and accrued expenses 14,085 17,688 Rents received in advance and security deposits 7,816 7,044 Dividends and distributions payable 765 16,139 ----------- ----------- Total liabilities 565,089 498,711 Minority interests in Operating Partnership 116,863 121,142 Commitments and contingencies (Notes 11 & 12) - - Shareholders' Equity Preferred stock, $.01 par value, 2 million shares authorized; no shares issued or outstanding - - Common stock, $.01 par value, 90 million shares authorized 28,531,675 and 28,424,900 shares issued and outstanding at December 31, 2000 and 1999, respectively 285 284 Additional paid-in capital 445,905 446,231 Dividends in excess of accumulated earnings (97,605) (76,647) Notes receivable from officers, 577,432 and 371,698 shares outstanding at December 31, 2000 and 1999, respectively (12,673) (8,048) ----------- ----------- Total shareholders' equity 335,912 361,820 ----------- ----------- Total liabilities and shareholders' equity $ 1,017,864 $ 981,673 =========== =========== The accompanying notes are an integral part of the financial statements. 25 CHATEAU COMMUNITIES, INC. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY For the Year Ended December 31 , ------------------------------------------------ In thousands, except per share data 2000 1999 1998 ------------- ---------- ----------- Common stock: Balance at beginning of period $ 284 $ 279 $ 255 Common stock issued, net of issuance costs - - 19 Issuance of shares from awards, exercise of options and sales to key employees 4 1 4 Issuance of shares in exchange for OP Units 1 4 2 Repurchase and retirement of shares (4) - (1) ----------- --------- ---------- Balance at end of period $ 285 $ 284 $ 279 =========== ========= ========== Additional paid-capital: Balance at beginning of period $ 446,231 $ 432,711 $ 356,780 Common stock issued, net of issuance costs - - 53,659 Issuance of shares from awards, exercise of options and sales to key employees 8,607 3,394 9,115 Issuance of shares in exchange for OP Units 3,700 9,212 6,553 Repurchase and retirement of shares (11,319) (61) (931) Transfer (to) from minority interests ownership in Operating Partnership (1,314) 975 7,535 ----------- --------- ---------- Balance at end of period $ 445,905 $ 446,231 $ 432,711 =========== ========= ========== Dividends in excess of accumulated earnings: Balance at beginning of period $ (76,647) $ (56,637) $ (33,174) Net income 37,786 34,626 26,801 Dividends declared $2.06, $1.94 and $1.82 per share (58,744) (54,636) (50,264) ----------- --------- ---------- Balance at end of period $ (97,605) $ (76,647) $ (56,637) =========== ========= ========== Notes receivable, officers: Balance at beginning of period $ (8,048) $ (8,418) $ (895) Issuance of 205,734 and 357,062 shares in 2000 and 1998, respectively, through sales to key employees (4,670) - (7,557) Payments received 45 370 34 ----------- --------- ---------- Balance at end of period $ (12,673) $ (8,048) $ (8,418) =========== ========= ========== Total shareholders' equity, end of period $ 335,912 $ 361,820 $ 367,935 =========== ========= ========== The accompanying notes are an integral part of the financial statements. 26 CHATEAU COMMUNITIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS For the Year Ended December 31, --------------------------------------------------- In thousands 2000 1999 1998 --------- -------- --------- Cash flows from operating activities: Net income $ 37,786 $ 34,626 $ 26,801 Adjustments to reconcile net income to net cash provided by operating activities: Income attributed to minority interests 4,842 4,242 3,436 Net gain on sale of properties - (2,805) - Depreciation and amortization 43,920 41,826 39,658 Amortization of debt issuance costs 605 730 764 Increase in operating assets (1,299) (3,243) (690) Increase (decrease) in operating liabilities (893) 2,088 2,591 --------- -------- --------- Net cash provided by operating activities 84,961 77,464 72,560 --------- -------- --------- Cash flows from investing activities: Acquisitions of rental properties and land to be developed (5,725) (13,259) (116,605) Dispositions of rental properties - 13,108 3,329 Additions to rental properties and equipment (29,378) (24,606) (14,958) Investments in and advances to affiliates (21,966) (27,682) (38,855) Advances on notes receivables, net (16,054) (4,338) - --------- -------- --------- Net cash used in investing activities (73,123) (56,777) (167,089) --------- -------- --------- Cash flows from financing activities: Borrowings on lines of credit 305,599 119,130 120,935 Payments on lines of credit (328,186) (58,549) (109,200) Principal payments on debt (1,572) (1,176) (1,828) Proceeds from the issuance of debt 295,295 - - Payoff of debt (190,838) (23,598) (3,315) Payment of debt issuance costs (617) - (237) Distributions to shareholders/OP Unitholders (81,534) (60,244) (53,629) Common shares/OP Units repurchased and retired (11,323) (76) (932) Net proceeds from the issuance of common shares - - 53,678 Net proceeds from the issuance of Preferred OP Units - - 73,002 Exercise of common stock options and other 1,089 3,724 1,595 --------- -------- --------- Net cash provided by (used in) financing activities (12,087) (20,789) 80,069 --------- -------- --------- Decrease in cash and cash equivalents (249) (102) (14,460) Cash and cash equivalents, beginning of period 348 450 14,910 --------- -------- --------- Cash and cash equivalents, end of period $ 99 $ 348 $ 450 ========= ======== ========= Supplemental information: Cash paid for interest, net of amounts capitalized $ 34,126 $ 30,626 $ 30,110 ========= ======== ========= Fair market value of OP Units/shares issued for acquisitions/development $ 754 $ 13,341 $ 29,150 ========= ======== ========= Debt assumed in connection with acquisitions and development $ 1,835 $ 650 $ 34,171 ========= ======== ========= The accompanying notes are an integral part of the financial statements. 27 CHATEAU COMMUNITIES, INC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ______ 1. Organization and Formation of Company: ------------------------------------- Chateau Communities, Inc. (the "Company"), a real estate investment trust, was formed in November 1993 as Chateau Properties, Inc. 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 CP Limited Partnership (the "Operating Partnership"). As of December 31, 2000, the Company owned 166 properties containing an aggregate of 52,347 homesites and 1,359 park model/RV sites, located in 28 states. Approximately 31 percent of these homesites were in Michigan and 25 percent were in Florida. The Company also fee managed 44 properties containing an aggregate of 9,200 homesites. 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 of less. 2. Summary of Significant Accounting Policies: ------------------------------------------ Basis of Presentation The accompanying consolidated financial statements include all accounts of the Company, its wholly owned qualified REIT subsidiaries and its Operating Partnership. The Company and ROC are general partners of the Operating Partnership. 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, since the Company does not own any of the voting common stock of this entity. 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. Rent received in advance is deferred and recognized in income when earned. Income Taxes The Company has elected to be taxed as a real estate investment trust (REIT) under Section 856(c) of the Internal Revenue Code of 1986, as amended. The Company generally will not be subject to Federal income tax to the extent it distributes at least 95% of its REIT taxable income to its shareholders. REITs are subject to a number of organizational and operational requirements. If the Company fails to qualify as a REIT in any taxable year, the Company will be subject to Federal income tax (including any applicable alternative minimum tax) on its taxable income at regular corporate rates. The Company remains subject to certain state and local taxes on its income and property as well as Federal income and excise taxes on its undistributed income. 28 CHATEAU COMMUNITIES, INC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued ______ Earnings Per Share Basic earnings per share are computed based upon the weighted average number of common shares outstanding during the period. The conversion of an OP Unit to common stock has no effect on earnings per common share since the earnings of an OP Unit are equivalent to the earnings of a share of common stock. Diluted earnings per common share are computed assuming the exercise of all outstanding stock options that would have a dilutive effect. 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. For the years ended December 31, 2000 and 1999 there were no impairment conditions at any of the Company's properties. 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 sales proceeds, are recognized in income as gains or losses on disposition. Capitalized Interest Interest is capitalized on development projects during periods of construction through the substantial completion of the site. Interest capitalized by the Company for the years ended December 31, 2000, 1999, 1998, was $1,646,000, $1,249,000, and $579,000 respectively. Cash Equivalents All highly liquid investments with an initial maturity of three months or less are considered to be cash equivalents. 29 CHATEAU COMMUNITIES, INC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued ______ 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. Fair Value of Financial Instruments The fair value of the Company's financial instruments other than debt approximate their carrying values at December 31, 2000 and 1999. The fair value of the Company's debt at December 31, 2000 and 1999 was estimated to be $533 million and $447 million, respectively, based on current interest rates for comparable loans. Minority Interests Minority interests include common operating partnership units ("OP Units") that are convertible into an equivalent number of shares of the Company's common stock. Issuance of additional shares of common stock or OP Units changes the percentage ownership of both the minority interests and the Company. Since an OP Unit is equivalent to a common share (due to, among other things, its exchangeability for a common stock share), such transactions are treated as capital transactions and result in an equity transfer adjustment among shareholders' equity and minority interests in the Company's consolidated balance sheet to account for the change in the respective ownership in the underlying equity of the Operating Partnership. Income before minority interests is ascribed to the holders of common OP Units based on their respective weighted average ownership percentage of the Operating Partnership. The ownership percentage is determined by dividing the number of common OP Units held by the limited partners by the total common OP Units outstanding, including the OP Units held by the Company. Also included in minority interests 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 the Company. 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. 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. 30 CHATEAU COMMUNITIES, INC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued ______ Recently Issued Accounting Standards In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities", which establishes accounting and reporting standards for derivative instruments and for hedging activities. This new standard requires that all companies record derivatives on the balance sheet as assets or liabilities, measured at fair value. Gains or losses resulting from changes in the values of those derivatives would be accounted for depending on the use of the derivative and whether it qualifies for hedge accounting. In June 1999, FASB issued SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities-Deferral of the Effective Date of SFAS No. 133-an amendment of SFAS No. 133." SFAS No. 137 defers the effective date of SFAS No. 133 to fiscal years beginning after June 15, 2000. In June 2000, the FASB issued SFAS No. 138,"Accounting for Certain Derivative Instruments and Certain Hedging Activities-an amendment of FASB Statement No. 133". This statement amends certain requirements of SFAS 133. The Company will prospectively adopt SFAS No. 138 on January 1, 2001, the required date of adoption. The adoption of SFAS No. 138 will not have a material impact on the financial statements of the Company, but will result in the reclassification of certain deferred gains and losses to accumulated other comprehensive income. In 2000, the Company adopted Staff Accounting Bulletin ("SAB") 101 released by the Securities and Exchange Commission, entitled "Revenue Recognition in Financial Statements." SAB 101 establishes guidelines in applying generally accepted accounting principles to the recognition of revenue in financial statements based on specific criteria. The adoption of SAB 101 had no material effect on the Company's financial position or results of operations. 3. Common Stock and Related Transactions: ---------------------------------------- On February 29, 2000, the Company announced the establishment of a share repurchase program pursuant to which it may repurchase up to 1,000,000 shares of common stock from time to time. As of December 31, 2000, the Company repurchased 453,900 shares for approximately $11.3 million. The following table represents the changes in the Company's outstanding common stock for the years ended December 31, 2000, 1999, and 1998. 2000 1999 1998 ------------ ------------ ------------ Common shares outstanding at January 1 28,424,900 27,936,016 25,476,172 Common stock issued - - 1,850,000 Shares repurchased and retired (453,900) (2,765) (43,333) Shares issued in exchange for OP Units 141,328 349,233 246,489 Shares issued through stock awards, sales to key employees and the exercise of stock options 419,347 142,416 406,688 ------------ ------------ ------------ Common shares outstanding at December 31 28,531,675 28,424,900 27,936,016 ============ ============ ============ 31 CHATEAU COMMUNITIES, INC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued ______ The Company paid a dividend/distribution of $.515 per common share/OP Unit on April 14, 2000; July 14, 2000; October 16, 2000 and December 29, 2000 to shareholders and OP Unitholders of record as of March 31, 2000; June 30, 2000; September 30, 2000 and December 15, 2000, respectively. The Company paid a dividend/distribution of $.485 per common share/OP Unit on April 14, 1999; July 15, 1999; October 15, 1999 and January 18, 2000 to shareholders and OP Unitholders of record as of March 31, 1999; June 30, 1999; September 30, 1999 and December 27, 1999, respectively. The dividend/distribution paid on January 18, 2000 was included in distributions payable in the accompanying consolidated balance sheet as of December 31, 1999. The notes receivable from officers bear interest and are collateralized by the underlying common shares. In February 1998, the Company received net proceeds of approximately $53.7 million from the issuance of 1,850,000 shares of its common stock. The proceeds from the offering 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 1998. For the Year Ended December 31, ----------------------------------------------- (In thousands, except per share data) 2000 1999 1998 --------- --------- --------- Basic EPS: Income (1) $ 42,628 $ 38,868 $ 30,237 ========= ========= ========= Weighted average common shares outstanding 28,480 28,135 27,282 Weighted average common OP Units outstanding 3,650 3,447 3,497 --------- --------- --------- Weighted average common shares and OP Units - Basic 32,130 31,582 30,779 ========= ========= ========= Per Share $ 1.33 $ 1.23 $ 0.98 ========= ========= ========= Diluted EPS Income (1) $ 42,628 $ 38,868 $ 30,237 ========= ========= ========= Weighted average common shares outstanding 28,480 28,135 27,282 Weighted average common OP Units outstanding 3,650 3,447 3,497 Employee stock options 94 132 275 --------- --------- --------- Weighted average common shares and OP Units - Diluted 32,224 31,714 31,054 ========= ========= ========= Per Share $ 1.32 $ 1.23 $ 0.97 ========= ========= ========= (1) Represents income before minority interests less the income allocated to the Preferred OP Units. 32 CHATEAU COMMUNITIES, INC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued ______ 4. Acquisitions and Dispositions of Rental Property: ------------------------------------------------ The following table summarizes acquisitions made by the Company as follows: (Dollars in thousands) Allocated to Value of OP Number of Number of Assets Units/Shares Debt Acquisition Date Communities Sites State Acquired Issued Assumed Cash (1) ------------------------------------------------------------------------------------------------------------------------------- December 2000 1 295 GA $ 2,550 $ 17 $ 1,835 $ 698 February 2000 1 115 AL $ 1,600 $ - $ - $ 1,600 October 1999 1 315 AL $ 8,712 $ - $ 650 $ 8,062 April 1999 1 309 AL $ 4,013 $ - $ - $ 4,013 April 1998 10 2,587 MI $78,100 $ - $ 12,401 $ 65,699 2 607 NC March 1998 5 839 IN $37,600 $ - $ - $ 37,600 1 662 MI 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 (1) The cash used to finance the Company's acquisitions was provided by borrowings on the line of credit, the issuance of 1.85 million common shares in February 1998 (see Note 3) and the issuance of $75 million of Preferred Units in 1998. (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, 1998. No pro forma adjustments were made for the 2000 and 1999 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, 1998. (In thousands, except per share data) 1998 ----------- Revenues $ 176,154 =========== Total expenses $ 141,125 =========== Net income * $ 29,872 =========== Per common share* $ 0.93 =========== *After allocation to Preferred OP Units. Assumes all common OP Units are exchanged for common stock. 33 CHATEAU COMMUNITIES, INC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued ______ In 2000, the Company also acquired land to be used for future development for a total of $3,427,000. 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. 5. Notes Receivable ---------------- Included in notes receivable is $20.4 million of notes receivable from entities that are not affiliated with the Company. These entities all own, or are developing, manufactured home communities. These notes are collateralized by manufactured home communities or by partnership interest in partnerships that own manufactured home communities. These notes have a weighted average interest rate of 12.2% and mature between 2002 and 2009. Management has evaluated the collectibility of these receivables and has determined that no valuation allowance is necessary. 6. Investments in and Advances to Affiliates ----------------------------------------- Investments in and advances to affiliates as of December 31, consisted of the following: 2000 1999 ------------ ------------ Community Sales, Inc. ("CSI") $ 25,242 $22,538 Development joint ventures 56,019 50,567 N'Tandem Trust ("N'Tandem") 38,466 24,656 ------------ ------------ $119,727 $97,761 ============ ============ CSI - ---- Advances to CSI are primarily used to finance inventory purchases. These advances have an interest rate of prime plus 1% (10.5 percent as of December 31, 2000). The Company accounts for its investment in CSI using the equity method of accounting Development 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, performing all accounting and property management functions, and 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 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. The Company is also involved in two joint ventures in which its joint venture partner is constructing the communities. The Company has similar arrangements to lend these joint ventures funds to finance development. The Company accounts for its joint ventures which it does not control utilizing the equity method of accounting. 34 CHATEAU COMMUNITIES, INC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued ______ N'Tandem - -------- 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 accounts for its investment utilizing the equity method of accounting. The Company also recognizes income from a property management agreement, an advisory agreement and interest income on advances as earned. During 2000, 1999, and 1998, N'Tandem borrowed $13.8 million, $23.6 million and $10.7 million from the Company in order to fund acquisitions. In 1999 N'Tandem obtained a line of credit that was used to repay some of the borrowings in 1999 and 2000. These notes were due December 31, 2000. During 2000, the Company extended the maturity to December 2001. As of December 31, 2000, all amounts owed the Company were unsecured borrowings bearing interest at the prime rate of interest plus one percent per annum. As of December 31, 2000 N'Tandem owned 36 communities with 7,835 homesites. 7. Financing: ---------- The following table sets forth certain information regarding debt at December Weighted Principal Balance Average (In thousands) Interest Rate Maturity Date 2000 1999 ---------------- ------------------ --------------- ------------- Fixed rate mortgage notes 7.82% 2002-2010 $136,899 $105,802 Unsecured Senior Notes 7.50% 2003-2005 320,000 245,000 Unsecured lines of credit 7.46% 2001 74,730 97,317 Other notes payable 3,841 4,437 ----------- ---------- $535,470 $452,556 =========== ========== At December 31, 2000, the Company had a $100 million line of credit arrangement with BankOne, NA acting as lead agent for a bank group to provide financing for future construction, acquisitions and general business obligations. The line of credit is unsecured, bears interest at the prime rate of interest or, at the Company's option, LIBOR plus 80 basis points (7.32 percent at December 31, 2000). The line was scheduled to mature in 2001. In February 2001, the Company renegotiated this facility and increased it from $100 million to $125 million. The term of the new facility is three years and bears interest at LIBOR plus 90 basis points. 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 (7.77 percent at December 31, 2000). As of December 31, 2000, approximately $74.7 million was outstanding under the Company's lines of credit and the Company had available $32.8 million in additional borrowing capacity. 35 CHATEAU COMMUNITIES, INC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued ______ During 2000, the Company had approximately $86.2 million of mortgage debt and $75 million of unsecured Senior Notes mature. The Company repaid this debt using the proceeds from the issuance of new debt in 2000. In June 2000, the Company issued $116 million of 7.8% fixed rate mortgage debt, maturing in 2010, and collateralized by seven properties. Also in 2000, the Company issued a total of $150 million of Unsecured Senior Notes, $100 million at 8.3% maturing March 1, 2005 and $50 million at 8% maturing August 1, 2003, resulting in net proceeds of $149 million. During 2000, the Company issued and repaid a $30 million unsecured short-term loan. The Company has $100 million 6.92% MandatOry Par Put Remarketed Securities(SM) ("MOPPRS(SM)") due December 10, 2014. The remarketing dealer paid the Company $2 million for the right to remarket the securities in 2004. The remarketing fee is being amortized over the life of the related debt. 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 in 2004. As of December 31, 2000 the Company has a total of 15 collateralized properties. 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. The aggregate amount of principal maturities for the fixed rate debt subsequent to December 31, 2000 (in thousands) is as follows: 2001 $ 1,320 2002 1,842 2003 121,483 2004 103,338 2005 107,947 Thereafter 120,969 ------------- $456,899 ============= 8. Minority Interests in Operating Partnership: -------------------------------------------- Minority interests in the accompanying consolidated balance sheets represent both the common and preferred ownership interest in the Operating Partnership held by third parties. The common minority interest represents common OP Units, which are convertible into an equivalent number of shares of the Company's common stock. As of December 31, 2000 and 1999, common minority interest was approximately 11 and 12 percent, respectively. Certain OP Unitholders convert their common OP Units into shares of common stock of the Company at a one for one exchange ratio. These transactions result in an increase of outstanding common shares, and a corresponding decrease of outstanding OP Units, classified as minority interests in the consolidated balance sheet. 36 CHATEAU COMMUNITIES, INC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued ______ The following is a summary of activity of the common minority interest in the Operating Partnership, including the transfer adjustment among the common minority interest and shareholders' equity in the consolidated balance sheets to account for the change in the respective ownership in the underlying equity of the Operating Partnership. Operating Partnership Minority (In thousands) Units Interest --------------- --------------- Minority interest in Operating Partnership at January 1, 1998 2,775 $35,272 Minority interest in income - 3,436 Distributions declared, $1.82 per unit - (6,295) Issuance of OP Units at fair value in connection with acquisitions and development 995 29,150 Exchange of OP Units for shares of common stock (246) (6,555) Transfer to shareholders' equity - (7,535) ------------- ------------- Minority interest in Operating Partnership at December 31, 1998 3,524 $47,473 Minority interest in income - 4,242 Distributions declared, $1.94 per unit - (6,680) Issuance of OP Units at fair value in connection with acquisitions and development 531 13,341 Exchange of OP Units for shares of common stock (349) (9,216) Transfer to shareholders' equity - (975) ------------- ------------- Minority interest in Operating Partnership at December 31, 1999 3,706 $48,185 Minority interest in income - 4,842 Distributions declared, $2.06 per unit - (7,488) Issuance of OP Units at fair value in connection with acquisitions and development 28 754 Exchange of OP Units for shares of common stock (141) (3,701) Transfer from shareholders' equity - 1,314 ------------- ------------- Minority interest in Operating Partnership at December 31, 2000 3,593 $43,906 ============= ============= Also included in minority interests on the accompanying consolidated balance sheets are 1.5 million Preferred OP Units issued in April 1998. The balance at both December 31, 2000 and 1999 was approximately $73 million. 37 CHATEAU COMMUNITIES, INC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued ______ 9. Stock Option Plans: ------------------- The Company 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." The Company'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. The Plans provide for the grant of options, restricted stock awards and stock appreciation rights. The compensation committee of the Board of Directors determines the vesting schedule of each option and the term, which term shall not exceed ten years from the date of grant. Information concerning stock options is as follows: 2000 1999 1998 --------------------------- ------------------------- --------------------------- Weighted- Weighted- Weighted- Average Average Average Shares subject to option: Shares Price Shares Price Shares Price - -------------------------------- ---------- -------- ---------- -------- ---------- --------- Outstanding at beginning of year 1,417,218 $ 25.66 1,236,893 $ 24.79 1,197,406 $ 21.66 Granted (1) 547,000 24.19 384,160 27.73 447,500 30.12 Exercised (364,486) 21.79 (137,480) 21.30 (406,838) 19.30 Forfeited (59,398) 27.46 (66,355) 28.97 (1,175) 19.10 ---------- -------- ---------- -------- ---------- --------- Outstanding at end of year (2) 1,540,334 $ 26.01 1,417,218 $ 25.66 1,236,893 $ 24.79 ========== ======== ========== ======== ========== ========= Options exercisable at year-end 634,442 803,696 823,257 ========== ========== ========== Options available for grant at year-end 458,268 945,870 363,675 ========== ========== ========== (1) The options granted do not include the grant of 50,000 shares of restricted stock in 2000 to executive officers of the Company. (2) For the year-ended December 31, 2000, 721,000 options are considered anti- dilutive. For all options granted during 2000, 1999, and 1998, the weighted average market price of the Company's common stock on the grant date was approximately equal to the weighted average exercise price. 38 CHATEAU COMMUNITIES, INC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued ________ The following table summarizes information concerning outstanding and exercisable options at December 31, 2000. Options Outstanding Options Exercisable ------------------------------------------------ ------------------------ Weighted Average Weighted- Average Range of Exercise Number Remaining Average Number Exercise Prices Outstanding Contract Life Exercise Price Exercisable Price - ----------------- ----------- ------------- -------------- ----------- -------- $18.26 - $26.00 822,334 7.6 years $23.36 345,442 $22.18 $27.44 - $30.13 718,000 7.6 years $29.04 289,000 $29.43 The fair value of each option was estimated as of date of grant using an option-pricing model with the following assumptions used: 2000 1999 1998 ------------ ------------- -------------- Estimated fair value per option granted $ 2.44 $ 2.22 $ 3.56 Assumptions: Annualized dividend yield 7.70% 6.90% 6.25% Common stock price volatility 20.5% 17.3% 22.6% Risk-free rate of return 6.38% 5.29% 5.63% Expected option term (in years) 9 10 10 If compensation cost for stock option grants had been recognized based on the fair value at the grant dates for 2000, 1999 and 1998 consistent with the method allowed by SFAS No. 123 "Accounting for Stock-Based Compensation", net income and net income per common share would have been: 2000 1999 1998 ------------- ------------- ------------- Net income, as reported $ 37,786,000 $ 34,626,000 $ 26,801,000 ============ ============ ============ Net income, pro forma $ 36,756,000 $ 34,347,000 $ 26,490,000 ============ ============ ============ Basic earnings per common share, as reported $ 1.33 $ 1.23 $ 0.98 ============ ============ ============ Basic earnings per common share, pro forma $ 1.29 $ 1.22 $ 0.97 ============ ============ ============ Diluted earnings per common share, as reported $ 1.32 $ 1.23 $ 0.97 ============ ============ ============ Diluted earnings per common share, pro forma $ 1.29 $ 1.22 $ 0.96 ============ ============ ============ 39 CHATEAU COMMUNITIES, INC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued ______ 10. 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 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 $500,000, $560,000, and $550,000 for the Plan years ended December 31, 2000, 1999 and 1998 respectively. 11. Related Party Transactions: --------------------------- Rental expense of approximately $130,000 annually has been incurred for leased space in an office building owned by certain officers and equity owners. The office lease expires November 2001. The Company, through CSI, purchases manufactured home inventory for resale from Clayton Homes, Inc. ("Clayton Homes"), which is affiliated with one of the Company's directors. During 1998 and 1999, CSI purchased 22 homes and one home respectively for a cost of approximately $540,000 and $32,000 from Clayton Homes. In addition, when CSI sells homes, the purchaser may obtain financing from Vanderbilt Mortgage and Finance, Inc. ("Vanderbilt"), which is also affiliated with the same director. 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, 2000 there is a total of approximately $13.2 million of such amounts that are recourse to the Company. Included in management and other income is $4,549,000, $1,610,000 and $582,000 of management and other fee income received from N'Tandem for the years ended December 31, 2000, 1999, and 1998 respectively. Included in this amount is approximately $3.2 million of acquisition and transaction fees and $1.3 million of management and advisory fees. In December 2000, the Company purchased a manufactured home community from a partnership owned by two officers of the Company for $2,550,000. This community contains 295 developed homesites (See Note 4.) 12. 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 effect 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 $47.8 million of debt, $20 million of which is to N'Tandem. 40 CHATEAU COMMUNITIES, INC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued ______ 13. Quarterly Financial Information (Unaudited): -------------------------------------------- The following is quarterly financial information for the years ended December 31, 2000 and 1999 (amounts in thousands, except per share data) First Second Third Fourth Quarter Quarter Quarter Quarter 2000 March 31, June 30, September 30, December 31, --------- --------- ------------- ----------- Total revenues $ 48,849 $ 50,774 $ 51,270 $ 53,872 --------- --------- ------------- ----------- Operating income (a) $ 30,593 $ 31,976 $ 32,235 $ 34,238 --------- --------- --------- ---------- Income before minority interests $ 11,307 $ 12,607 $ 11,759 $ 13,049 Less income allocated to minority interests Preferred OP Units 1,523 1,524 1,523 1,524 Common OP Units 1,125 1,256 1,160 1,301 --------- --------- --------- ---------- Net income available to common shareholders $ 8,659 $ 9,827 $ 9,076 $ 10,224 ========= ========= ========= ========== Net income per share - basic (b) $ 0.30 $ 0.35 $ 0.32 $ 0.36 ========= ========= ========= ========== Net income per share - diluted (b) $ 0.30 $ 0.34 $ 0.32 $ 0.36 ========= ========= ========= ========== 1999 Total revenues $ 45,608 $ 46,837 $ 48,106 $ 48,812 --------- --------- --------- ---------- Operating income (a) $ 28,238 $ 28,953 $ 28,910 $ 30,200 --------- --------- --------- ---------- Income before minority interests $ 9,617 $ 13,641 $ 10,909 $ 10,795 Less income allocated to minority interests Preferred OP Units 1,523 1,524 1,523 1,524 Common OP Units 910 1,346 1,037 949 ========= ========= ========= ========== Net income available to common shareholders $ 7,184 $ 10,771 $ 8,349 $ 8,322 ========= ========= ========= ========== Net income per share - basic (b) $ 0.26 $ 0.38 $ 0.30 $ 0.29 ========= ========= ========= ========== Net income per share - diluted (b) $ 0.26 $ 0.38 $ 0.30 $ 0.29 ========= ========= ========= ========== (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 common share amounts may not total to the annual amounts due to rounding and to the change in the number of common shares outstanding. 41 Item 9. Changes in and Disagreements with Accountants on Accounting and - ------- --------------------------------------------------------------- Financial Disclosures - --------------------- None. 42 PART III Item 10. Directors and Executive Officers of the Registrant - -------- -------------------------------------------------- The information required by Item 10 is incorporated by reference to the information in the Registrant's proxy statement (filed or to be filed pursuant to Regulation 14A) for its Annual Meeting of Shareholders to be held on May 17, 2001. Item 11. Executive Compensation - -------- ---------------------- The information required by Item 11 is incorporated by reference to the information in the Registrant's proxy statement (filed or to be filed pursuant to Regulation 14A) for its Annual Meeting of Shareholders to be held on May 17, 2001. Item 12. Security Ownership of Certain Beneficial Owners and Management - -------- -------------------------------------------------------------- The information required by Item 12 is incorporated by reference to the information in the Registrant's proxy statement (filed or to be filed pursuant to Regulation 14A) for its Annual Meeting of Shareholders to be held on May 17, 2001. Item 13. Certain Relationships and Related Transactions - -------- ---------------------------------------------- The information required by Item 13 is incorporated by reference to the information in the Registrant's proxy statement (filed or to be filed pursuant to Regulation 14A) for its Annual Meeting of Shareholders to be held on May 17, 2001. 43 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, 2000, 1999, and 1998. Consolidated Balance Sheets as of December 31, 2000 and 1999. Consolidated Statements of Shareholders' Equity for the years ended December 31, 2000, 1999, and 1998 Consolidated Statements of Cash Flows for the years ended December 31, 2000, 1999, and 1998. 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) 3 (i) (a)(c) Chateau Communities, Inc. Amended and Restated Articles of Incorporation 3 (ii) (b)(e) Chateau Communities, Inc. Amended and Restated Bylaws 3 (iii) (m) Amendment to Bylaws of Chateau Communities, Inc. dated March 21, 2000 4.1 (b) Form of Stock Certificate 4.2 (i) (f) Indenture dated as of December 19, 1997 between CP Limited Partnership and The First National Bank of Chicago, as supplemented. 4.2 (ii) (f) 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 Remarked Securities(SM) ("MOPPRS(SM)") due December 10, 2014. 4.2 (iii) (f) Remarking Agreement dated as of December 23,1997 among Chateau Communities, Inc., CP Limited Partnership and the "Remarketing Dealer" named therein. 4.3* (k) $100,000,000 8.5% Indenture, dated February 25, 2000, of CP Limited Partnership. 4.4* (g) 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 10.1 (h) Amended and Restated Agreement of Limited Partnership of CP Limited Partnership dated January 22, 1997 10.2 Lease of 19500 Hall Road 10.3 (b) Form of Noncompetition Agreement (Boll and Allen) 10.4(i) (e) Employment Agreement (McDaniel) 10.4(ii) (e) Employment Agreement (Kellogg) 10.4(iii) (e) Employment Agreement (Fischer) 10.4(iv) (e) Employment Agreement (Davis) 10.5 (h) 1997 Equity Compensation Plan 10.6 (m) Long-Term Incentive Stock Plan 44 10.7 (i) Amendment to Amended and restated Agreement of Limited Partnership of CP Limited Partnership dated April 20, 1998 10.8 (j) Articles supplementary dated April 20, 1998 10.9 (l) 1999 Equity Compensation Plan 21 (d) 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 request of the Commission. (a) Incorporated by reference to the Exhibits filed with the Company'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 Registration Statement on Form S-11 filed with the Commission on November 10, 1993 (Commission File No. 33-69150). (c) Incorporated by reference to the Exhibits filed with the Company's Form 8-K filed with Commission on May 23, 1997 (d) Incorporated by reference to the Exhibits filed with the Company's annual Report on Form 10-K filed for the year ended December 31, 1995 with the Commission on March 29, 1996. (e) Incorporated by reference to the Company's Quarterly Report on Form 10-Q filed with the Commission on May 14, 1997. (f) Incorporated by reference to the Company's Form 8-K filed with the Commission on December 9, 1997. (g) Incorporated by reference to the Company's Form S-4 filed with the Commission on September 24, 1996. (h) Incorporated by reference to the Company's Annual Report on Form 10-K filed for the year ended December 31, 1997. (i) Incorporated by reference to CP Limited Partnership's Form 8-K filed with the Commission on May 1, 1998. (j) Incorporated by reference to the Company's Form 8-K filed with the Commission on May 1, 1998. (k) Incorporated by reference to the Exhibits filed with CP Limited Partnership's Form 8-K dated February 24 2000 and filed with the Commission on February 25, 2000. (l) Incorporated by reference to the Company's Proxy Statement for the Annual Meeting held on May 20, 1999 as filed with the Commission on April 7, 1999. (m) Incorporated by reference to the Company's Annual Report on Form 10-K filed for the year ended December 31, 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, 2000. 45 Exhibits Index Exhibits Number (Referenced to Item 601 of Regulation S-K) 3 (i) (a)(c) Chateau Communities, Inc. Amended and Restated Articles of Incorporation 3 (ii) (b)(e) Chateau Communities, Inc. Amended and Restated Bylaws 3 (iii) (m) Amendment to Bylaws of Chateau Communities, Inc. dated March 21, 2000 4.1 (b) Form of Stock Certificate 4.2 (i) (f) Indenture dated as of December 19, 1997 between CP Limited Partnership and The First National Bank of Chicago, as supplemented. 4.2 (ii) (f) 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 Remarked SecuritiesSM ("MOPPRSSM") due December 10, 2014. 4.2 (iii) (f) Remarking Agreement dated as of December 23,1997 among Chateau Communities, Inc., CP Limited Partnership and the "Remarketing Dealer" named therein. 4.3* (k) $100,000,000 8.5% Indenture, dated February 25, 2000, of CP Limited Partnership. 4.4* (g) 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 10.1 (h) Amended and Restated Agreement of Limited Partnership of CP Limited Partnership dated January 22, 1997 10.2 Lease of 19500 Hall Road 10.3 (b) Form of Noncompetition Agreement (Boll and Allen) 10.4(i) (e) Employment Agreement (McDaniel) 10.4(ii) (e) Employment Agreement (Kellogg) 10.4(iii) (e) Employment Agreement (Fischer) 10.4(iv) (e) Employment Agreement (Davis) 10.5 (h) 1997 Equity Compensation Plan 10.6 (m) Long-Term Incentive Stock Plan 10.7 (i) Amendment to Amended and restated Agreement of Limited Partnership of CP Limited Partnership dated April 20, 1998 10.8 (j) Articles supplementary dated April 20, 1998 10.9 (l) 1999 Equity Compensation Plan 21 (d) List of Subsidiaries of Chateau Communities, Inc. 23 Consent of PricewaterhouseCoopers LLP 46 Exhibits 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 request of the Commission. (a) Incorporated by reference to the Exhibits filed with the Company'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 Registration Statement on Form S-11 filed with the Commission on November 10, 1993 (Commission File No. 33-69150). (c) Incorporated by reference to the Exhibits filed with the Company's Form 8-K filed with Commission on May 23, 1997 (d) Incorporated by reference to the Exhibits filed with the Company's annual Report on Form 10-K filed for the year ended December 31, 1995 with the Commission on March 29, 1996. (e) Incorporated by reference to the Company's Quarterly Report on Form 10-Q filed with the Commission on May 14, 1997. (f) Incorporated by reference to the Company's Form 8-K filed with the Commission on December 9, 1997. (g) Incorporated by reference to the Company's Form S-4 filed with the Commission on September 24, 1996. (h) Incorporated by reference to the Company's Annual Report on Form 10-K filed for the year ended December 31, 1997 with the Commission on March 23, 1998. (i) Incorporated by reference to CP Limited Partnership's Form 8-K filed with the Commission on May 1, 1998. (j) Incorporated by reference to the Company's Form 8-K filed with the Commission on May 1, 1998. (k) Incorporated by reference to the Exhibits filed with CP Limited Partnership's Form 8-K dated February 24 2000 and filed with the Commission on February 25, 2000. (l) Incorporated by reference to the Company's Proxy Statement for the Annual Meeting held on May 20, 1999 as filed with the Commission on April 7, 1999. (m) Incorporated by reference to the Company's Annual Report on Form 10-K filed for the year ended December 31, 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, 2000. 47 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 27th day of March, 2001. CHATEAU COMMUNITITES, 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, the following persons on behalf of the Registrant and in the capacities indicated on March 27, 2001, have signed this report below. 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. /s/James L. Clayton Director - ------------------------- James l. Clayton 48 /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 49 CHATEAU COMMUNITIES, INC. SCHEDULE III, REAL ESTATE AND ACCUMULATED DEPRECIATION for the year ended December 31, 2000 (in thousands) Gross Amount Cost Capitalized Carried at Initial Cost Subsequent to Acquisition Close of to Company (Improvements) Period 12/31/00 ------------------ -------------------------- ------------------- Date of Accum- Construc- Depreciable Depreciable Depreciable lated tion (C) Encum- Depre- Acquis- Community Location brance Land Property Land Property Land Property Total ciation ition (A) - ------------------------------------------------ ------- ----------- ------ --------- ------- --------- ------- -------- ---------- Algoma Algoma Township, MI 60 - 72 3,436 132 3,436 3,568 1,078 1974(C) Anchor Bay Ira Township, MI 432 80 2,877 16,573 3,309 16,653 19,962 8,500 1968(C) Anchor North Bay Tampa Bay, FL 288 1,422 - 53 288 1,475 1,763 122 1998(A) Arbor Village Jackson, MI 1,086 813 4,787 - 192 813 4,979 5,792 669 1998(A) Atlanta Meadows Atlanta, GA 625 435 - 39 625 474 1,099 93 1993(A) Audubon Orlando, FL 281 296 2 2,987 283 3,283 3,566 1,985 1988(A) Autumn Forest Greensboro, NC 4,571 918 6,747 - 345 918 7,092 8,010 943 1998(A) Avalon RV Park Clearwater, FL 263 2,202 - 21 263 2,223 2,486 307 1998(A) Avon Rochester Hills, MI 621 484 633 7,139 1,254 7,623 8,877 5,868 1988(A) - Bennington West Jackson, MI 2,012 - - - 2,012 - 2,012 - 2000(C) Bermuda Palms Indio, CA 1,291 2,477 - 129 1,291 2,606 3,897 455 1994(A) Breazeale Laramie, WY. 251 1,618 - 58 251 1,676 1,927 274 1993(A) Broadmore South Bend, IN 777 4,115 396 2,468 1,173 6,583 7,756 700 1998(A) Buena Vista Fargo, ND 713 6,248 - 348 713 6,596 7,309 1,712 1994(A) Butler Creek Augusta, GA 1,238 2,309 - 430 1,238 2,739 3,977 464 1993(A) - Camden Point Kingsland, GA 466 1,701 - 150 466 1,851 2,317 309 1993(A) Camp Inn RV Park Frostproof, FL 796 4,220 - 129 796 4,349 5,145 378 1998(A) Canterbury Grand Rapids, MI 705 3,107 87 1,629 792 4,736 5,528 511 1998(A) Carnes Crossing Summerville, SC 1,503 7,161 449 1,721 1,952 8,882 10,834 1,070 1998(A) Castlewood Estates Mabelton, GA 656 2,918 - 374 656 3,292 3,948 557 1997(A) Casual Estates Syracuse, NY 2,136 14,324 - 564 2,136 14,888 17,024 2,843 1993(A) 50 Cedar Grove Clinton, CT 180 1,140 - 112 180 1,252 1,432 108 Cedar Knolls Minneapolis, MN 1,217 11,006 - 440 1,217 11,446 12,663 3,023 Central Office Englewood, CO - - 80 6,274 80 16,274 16,354 3,258 Chesterfield Chesterfield Township, MI 405 - 262 2,150 667 2,150 2,817 1,774 Cimarron Park St. Paul, MN 1,424 12,882 - 447 1,424 13,329 14,753 3,530 Clinton Clinton Township, MI 989 - 430 5,844 1,419 5,844 7,263 4,983 Coach Royale Boise, ID 197 1,065 - 39 197 1,104 1,301 208 Colonial Kalamazoo, MI 816 195 4 7,827 820 8,022 8,842 5,926 Colonial Coach Riverdale, GA 1,052 4,277 25 572 1,077 4,849 5,926 832 Colony Cove Ellenton, FL 5,683 28,256 - 539 5,683 28,795 34,478 5,126 Columbia Heights Grand Forks, ND 588 5,282 - 218 588 5,500 6,088 1,430 Conway Circle Orlando, FL 544 864 - 43 544 907 1,451 159 Conway Plantation Conway, SC 428 3,696 - 240 428 3,936 4,364 688 Country Estates Spring Lake Township, MI 30 - - 1,851 30 1,851 1,881 1,436 Countryside Great Falls Great Falls, MT 361 1,650 - 118 361 1,768 2,129 313 Countryside Village Denver Denver, CO 1,460 4,384 - 204 1,460 4,588 6,048 795 Countryside Village Jackson. Jacksonville, FL 962 4,796 - 639 962 5,435 6,397 950 Countryside Village Longmont Longmont, CO 1,481 4,455 - 266 1,481 4,721 6,202 842 Cranberry Lake White Lake Township, MI 432 220 1,052 5,335 1,484 5,555 7,039 2,182 Crestview Stillwater, OK 362 963 - 133 362 1,096 1,458 184 Crystal Lake St. Petersburg, FL 498 2,475 - 33 498 2,508 3,006 208 Crystal Lakes Zephryhills, FL 1,323 2,239 - 182 1,323 2,421 3,744 439 - Del Tura Fort Myers, FL 42,501 4,360 50,508 418 3,925 4,778 54,433 59,211 14,131 - Eagle Creek Tyler, TX 1,291 1,761 299 974 1,590 2,735 4,325 394 Eagle Point Seattle, WA 1,048 3,514 - 112 1,048 3,626 4,674 645 Eastridge San Jose, CA 7,140 2,476 4,671 - 148 2,476 4,819 7,295 847 Eldorado Daytona Bch, FL 408 1,248 - 94 408 1,342 1,750 232 Emerald Lake Punta Gorda, FL 399 1,150 - 297 399 1,447 1,846 806 Evergreen New Haven, CT 309 1,883 - 247 309 2,130 2,439 171 Cedar Grove 1998(A) Cedar Knolls 1994(A) Central Office Chesterfield 1969(C) Cimarron Park 1994(A) Clinton 1969(C) Coach Royale 1994(A) Colonial 1985(A) Colonial Coach 1997(A) Colony Cove 1994(A) Columbia Heights 1994(A) Conway Circle 1993(A) Conway Plantation 1997(A) Country Estates 1974(C) Countryside Great Falls 1993(A) Countryside Village Denver 1993(A) Countryside Village Jackson. 1993(A) Countryside Village Longmont 1993(A) Cranberry Lake 1986(A) Crestview 1993(A) Crystal Lake 1998(A) Crystal Lakes 1998(A) Del Tura 1994(A) Eagle Creek 1997(A) Eagle Point 1993(A) Eastridge 1994(A) Eldorado 1993(A) Emerald Lake 1988(A) Evergreen 1998(A) 51 Fairways Country Club Orlando, FL 955 5,823 9 2,127 964 7,950 8,914 5,832 1979(A) Falcon Farms Moline, IL 295 1,576 - 330 295 1,906 2,201 321 1993(A) Ferrand Estates Wyoming, MI 8,083 257 1,579 - 401 257 1,980 2,237 1,610 1989(A) Forest Creek South Bend, IN 501 4,849 - 112 501 4,961 5,462 643 1998(A) Forest Lake Estates Spring Lake Township, MI 414 2,293 36 736 450 3,029 3,479 827 1994(A) Fountain Vue Marion, IN 360 1,210 90 189 450 1,399 1,849 175 1998(A) Foxhall Village Raleigh, NC 521 5,283 - 520 521 5,803 6,324 1,045 1997(A) Foxwood Farms Ocala, FL 691 1,502 - 408 691 1,910 2,601 316 1994(A) Friendly Village Greely, CO 523 2,702 - 130 523 2,832 3,355 509 1994(A) - Glenmoor Battle Creek, MI 3,400 203 199 (148) 3,599 55 3,654 3 1999 - 2000(C) Golden Valley Douglasville, TX 254 800 - 235 254 1,035 1,289 178 1997(A) Grand Blanc Grand Blanc, MI 1,749 - 284 9,041 2,033 9,041 1,074 2,941 1990(C) Green Acres New Haven, CT 195 1,286 - 31 195 1,317 1,512 179 1998(A) Green Park South Montgomery, AL 1,021 7,704 351 1,372 1,372 9,076 0,448 424 1999(A) - Hickory Knoll Indianapolis, IN 356 2,669 - 103 356 2,772 3,128 507 1993(A) Hidden Valley Orlando, FL 492 5,714 - 208 492 5,922 6,414 1,167 1995(A) Highland New Haven, CT 153 1,140 - 11 153 1,151 1,304 158 1998(A) Highlands (The) Flint, MI 6,000 2,323 3,260 1,126 5,009 3,449 8,269 1,718 2,091 1998(A) Hillcrest Rockland, MA 236 1,285 1 35 237 1,320 1,557 194 1997(A) Holiday Estates Byron Township, MI 93 - - 1,789 93 1,789 1,882 1,364 1984(C) Homestead Ranch McAllen, TX 195 1,108 - 173 195 1,281 1,476 241 1997(A) Howell Howell, MI 345 - 151 2,876 496 2,876 3,372 2,452 1972(C) Hunters Chase Lima, OH 921 1,246 - 804 921 2,050 2,971 278 1997(A) Huron Estates Flint, MI 354 1,882 66 432 420 2,314 2,734 278 1998(A) - Indian Rocks Clearwater, FL 441 1,032 - 29 441 1,061 1,502 106 1998(A) - Jade Isle Orlando, FL 273 1,076 - 25 273 1,101 1,374 193 1993(A) - Knoll Terrace Salem, OR 1,379 2,050 - 203 1,379 2,253 3,632 389 1993(A) 52 La Quinta Ridge Indio, CA 1,014 1,873 - 409 1,014 2,282 3,296 367 1994(A) Lake in the Hills Auburn Hills, MI 952 6,389 - 93 952 6,482 7,434 2,070 1994(A) Lakeland Harbor Lakeland, FL 875 - - 3,368 875 3,368 4,243 2,587 1983(C) Lakeland Junction Lakeland, FL 471 972 - 137 471 1,109 1,580 915 1981(C) Lakes at Leesburg Leesburg, FL 9,160 1,178 - 38 3,564 1,216 3,564 4,780 2,395 1984(C) Lakewood Montgomery, AL 2,007 2,107 3 966 2,010 3,073 5,083 197 1999(A) Lakewood Estates Davenport, LA 442 1,210 - 348 442 1,558 2,000 273 1993(A) Land O'Lakes Orlando, FL 473 2,507 - 94 473 2,601 3,074 461 1993(A) Landmark Village Fairburn, GA 2,539 4,352 - 391 2,539 4,743 7,282 841 1994(A) Leisure Woods / Rockland Rockland, MA 831 4,326 - 110 831 14,436 15,267 1,427 1997(A) Leisure Woods / Tauton Tauton, MA 256 2,780 162 1,580 418 4,360 4,778 349 1997(A) Leisure World Weslaco, TX 228 1,639 - 89 228 1,728 1,956 307 1994(A) Leonard Gardens Walker, MI 94 - 657 5,423 751 5,423 6,174 1,701 1987(C) - Macomb Macomb Township, MI 36,237 1,459 - 1,182 14,690 2,641 14,690 17,331 9,455 1973(C) Maple Grove Boise, ID 702 2,384 - 172 702 2,556 3,258 441 1993(A) Maple Ridge Manteno, IL 126 - - 1,459 126 1,459 1,585 322 1997(A) Maple Valley Manteno, IL 338 - - 4,254 338 4,254 4,592 881 1997(A) Mariwood Indianapolis, IN 324 2,415 - 226 324 2,641 2,965 465 1993(A) Marnelle Fayetteville, GA 910 464 2,635 - 408 464 3,043 3,507 559 1997(A) Meadow Park Fargo, ND 133 1,183 - 77 133 1,260 1,393 324 1994(A) Meadowbrook Ithaca, NY 291 4,029 - 89 291 4,118 4,409 664 1993(A) Midway Estates Vero Bch., FL 1,313 2,095 2 210 1,315 2,305 3,620 397 1993(A) Mosby's Point Florence, KY 608 1,574 - 66 608 1,640 2,248 292 1993(A) - Norton Shores Norton Shores, MI 103 - 118 4,924 221 4,924 5,145 3,230 1978(C) Novi Novi, MI 896 - 393 5,227 1,289 5,227 6,516 4,889 1973(C) 53 Oak Grove Albany, GA 418 764 - 42 418 806 1,224 141 1993(A) Oak Hill Groveland Township, MI 115 2,165 - 4,344 115 6,509 6,624 3,818 1983(A) Oak Orchard Albion, NY 701 3,425 - 81 701 3,506 4,207 645 1997(A) Oak Ridge South Bend, IN 615 3,770 - 84 615 3,854 4,469 506 1998(A) Oak Springs Sorrento, FL 206 1,461 4 498 210 1,959 2,169 1,518 1981(A) Oakley Point Moncks Corner, SC 904 446 904 446 1,350 21 2000(C) Oakwood Forest Greensboro, NC 1,111 3,843 - 422 1,111 4,265 5,376 752 1993(A) Old Orchard Davison, MI 210 182 - 2,695 210 2,877 3,087 1,745 1988(A) One Hundred Oaks Fultondale, AL 345 1,839 - 102 345 1,941 2,286 311 1997(A) Orange Lake Clermont, FL 246 85 - 2,227 246 2,312 2,558 1,220 1988(A) Orion Orion Township, MI 422 198 722 5,148 1,144 5,346 6,490 3,396 1986(A) - Palm Beach Colony West Palm Beach, FL 691 1,962 - 216 691 2,178 2,869 905 1983(A) Paradise Village Albany, GA 340 918 - 47 340 965 1,305 175 1993(A) Pedaler's Pond Lake Wales, FL 350 285 - 2,356 350 2,641 2,991 1,433 1990(A) Pendleton Indianapolis, IN 122 964 - 79 122 1,043 1,165 176 1993(A) Pine Lakes Ranch Thornton,CO 2,463 0,379 34 331 2,497 10,710 13,207 1,927 1997(A) Pinecrest Village Shreveport, LA 93 719 - 504 93 1,223 1,316 212 1997(A) Pinellas Cascades Clearwater, FL 1,747 2,313 - 54 1,747 2,367 4,114 413 1993(A) Pinewood Columbus, MI 1,242 0,070 58 388 1,300 10,458 11,758 1,389 1998(A) Pleasant Ridge Lansing, MI 915 3,898 - 120 915 4,018 4,933 548 1998(A) Presidents Park Grand Forks, ND 258 1,283 - 308 258 1,591 1,849 257 1994(A) - Redwood Estates Thornton,CO 2,473 0,044 - 162 2,473 10,206 12,679 1,870 1997(A) Regency Lakes Winchester, VA 1,176 3,705 - 2,124 1,176 5,829 7,005 886 1997(A) Riverview Portland, OR 537 1,942 - 68 537 2,010 2,547 359 1993(A) Rolling Hills Louisville, KY 342 1,034 - 44 342 1,078 1,420 195 1993(A) Rosemount Woods Minneapolis/St. Paul, MN 475 4,297 - 130 475 4,427 4,902 1,149 1994(A) Royal Estates Kalamazoo, MI 1,015 2,475 - 72 1,015 2,547 3,562 464 1993(A) 54 Saddlebrook N. Charleston, SC 1,284 5,497 - 98 1,284 5,595 6,879 767 1998(A) Science City Midland, MI 870 1,760 - 83 870 1,843 2,713 334 1993(A) Shady Lane Clearwater, FL 324 1,574 - 25 324 1,599 1,923 218 1998(A) Shady Oaks Clearwater, FL 750 6,967 - 59 750 7,026 7,776 954 1998(A) Shady Village Clearwater, FL 468 3,179 - - 468 3,179 3,647 263 1998(A) Shenandoah Boise, ID 443 2,528 - 221 443 2,749 3,192 464 1994(A) Sherwood Marion, IN 264 1,175 240 811 504 1,986 2,490 183 1998(A) Skyway Indianapolis, IN 178 1,366 - 150 178 1,516 1,694 257 1993(A) South Oaks Palmetto, GA 1,834 885 2,550 - (884) 885 1,666 2,551 78 2000(A) Southwind Naples, FL 1,476 3,463 - 154 1,476 3,617 5,093 639 1993(A) Spring Brook Utica, MI 4,605 1,209 0,928 - 107 1,209 1,035 12,244 1,505 1998(A) Springfield Farms Brookline, MO 1,698 2,157 - 1,997 1,698 4,154 5,852 579 1997(A) Starlight Ranch Orlando, FL 5,597 8,859 - 372 5,597 9,231 14,828 1,637 1997(A) Steeple Chase Battle Creek, MI 1,049 - 1,049 - 1,049 - 2000(C) Stonegate, LA Shreveport, LA 160 642 - 102 160 744 904 116 1993(A) Sun Valley Jackson, MI 606 2,514 9 112 615 2,626 3,241 357 1998(A) Swan Creek Ann Arbor, MI 882 9,709 - 36 882 9,745 10,627 1,323 1998(A) - Tarpon Glen Clearwater, FL 510 2,893 - 72 510 2,965 3,475 248 1998(A) Terrace Heights Dubuque, IA 919 2,413 - 250 919 2,663 3,582 456 1993(A) The Colony Rancho Mirage, CA 4,762 2,259 4,745 - 187 2,259 4,932 7,191 844 1994(A) The Glen Rockland, MA 261 252 - 638 261 890 1,151 90 1997(A) The Homestead McAllen, TX 529 100 742 - 227 100 969 1,069 165 1997(A) The Orchard Sanat Rosa, CA 7,947 2,795 6,363 - 50 2,795 6,413 9,208 1,066 1994(A) Timber Heights Davison, MI 274 - 363 6,595 637 6,595 7,232 976 1996(A) Torrey Hills Flint, MI 346 205 49 4,657 395 4,862 5,257 3,039 1987(A) Town & Country, FL Orlando, FL 245 896 - 18 245 914 1,159 158 1993(A) Trails End Weslaco, TX 260 1,804 - 172 260 1,976 2,236 330 1994(A) Twenty Nine Pines St. Paul, MN 317 2,871 - 38 317 2,909 3,226 777 1994(A) Twin Pines Goshen, IN 197 1,934 - 217 197 2,151 2,348 374 1993(A) 55 Valley Vista Grand Rapids, MI 1,534 411 2,791 - 108 411 2,899 3,310 370 1998(A) Vance Columbus, OH 200 993 - 399 200 1,392 1,592 179 1993(A) Villa Flint, MI 135 332 - 2,861 135 3,193 3,328 2,478 1984(A) - Westbrook Detroit, MI 190 2,451 530 5,092 720 7,543 8,263 804 1996(C) Whispering Pines Clearwater, FL 4,208 4,071 - 260 4,208 4,331 8,539 671 1993(A) Willo Arms Cleveland, OH 473 2,146 - 67 473 2,213 2,686 402 1993(A) Winter Haven Oaks Winter Haven, FL 490 705 362 1,371 852 2,076 2,928 1,206 1988(A)(C) Winter Paradise RV Hudson, FL 300 1,593 - 66 300 1,659 1,959 140 1998(A) Woodlake Greensboro, NC 924 6,311 - 156 924 6,467 7,391 877 1998(A) Yankee Springs Grand Rapids, MI 948 5,360 90 789 1,038 6,149 7,187 778 1998(A) Yorktowne Sharonville, OH 2,130 6,311 - 338 2,130 6,649 8,779 1,216 1997(A) Difference between allocated purchase price and historical cost of properties acquired in the ROC Acquistion 959 178,279 179,238 37,216 --------------------------------------------------------------------- 136,899 138,996 542,043 156,323 935,128 1,091,451 235,653 ===================================================================== 56 SCHEDULE III Continued CHATEAU COMMUNITIES, INC. REAL ESTATE AND ACCUMULATED DEPRECIATION, Continued The changes in total real estate for the years ended December 31, 2000, 1999, and 1998 are as follows: 2000 1999 1998 ---------- ---------- ---------- Balance, beginning of year $1,055,450 $1,026,509 $ 836,175 Acquisitions 7,577 14,808 172,422 Improvements 28,424 25,105 21,486 Dispositions and other - (10,972) (3,574) ---------- ---------- ---------- Balance, end of year $1,091,451 $1,055,450 $1,026,509 ========== ========== ========== The change in accumulated depreciation for the years ended December 31, 2000, 1999, and 1998 are as follows: 2000 1999 1998 ---------- ---------- ---------- Balance, beginning of year $ 192,015 $ 151,260 $ 112,314 Depreciation for the year 43,638 41,422 39,213 Dispositions and other - (667) (267) ---------- ---------- ---------- Balance, end of year $ 235,653 $ 192,015 $ 151,260 ========== ========== ========== 57