SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 2001 Commission File No. 0-16701
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II,
A MICHIGAN LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
MICHIGAN 38-2593067
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
280 DAINES STREET, BIRMINGHAM, MICHIGAN 48009
(Address of principal executive offices) (Zip Code)
(248) 645-9261
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(g) of the Act:
units of beneficial assignments of limited partnership interest
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes [ X ] No [ ]
As of March 1, 2002, 3,303,387 units of limited partnership interest of the
registrant were outstanding and the estimated aggregate market value of the
units as of such date held by non-affiliates, as estimated by the General
Partner (based on a 2002 appraisal of Partnership properties), was approximately
$49,558,242.
DOCUMENTS INCORPORATED BY REFERENCE
SEE ITEM 14.
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PART I
This Form 10-K contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. Such statements are
based on assumptions and expectations which may not be realized and are
inherently subject to risks and uncertainties, many of which cannot be predicted
with accuracy and some of which might not even be anticipated. Future events and
actual results, financial and otherwise, may differ materially from the results
discussed in the forward-looking statements. Risks and other factors that might
cause such a difference include, but are not limited to, the effect of economic
and market conditions; financing risks, such as the inability to obtain debt
financing on favorable terms; the level and volatility of interest rates; and
failure of the Partnership's properties to generate additional income to offset
increases in operating expenses, as well as other risks listed herein under Item
1.
ITEM 1. BUSINESS
General Development of Business
Uniprop Manufactured Housing Communities Income Fund II, a Michigan
Limited Partnership (the "Partnership"), acquired, maintains, operates and
ultimately will dispose of income producing residential real properties
consisting of nine manufactured housing communities (the "Properties"). The
Partnership was organized and formed under the laws of the State of Michigan on
November 7, 1986. Its principal offices are located at 280 Daines Street,
Birmingham, Michigan 48009 and its telephone number is (248) 645-9261.
The Partnership filed an S-11 Registration Statement in November 1986,
which was declared effective by the Securities and Exchange Commission on
December 23, 1986. The Partnership thereafter sold 3,303,387 units (the "Units")
of beneficial assignment of limited partnership interest representing capital
contributions by unit holders (the "Unit Holders") to the Partnership of $20 per
unit. The sale of all 3,303,387 Units was completed in December 1987, generating
$66,067,740 of contributed capital to the Partnership.
The Partnership acquired seven of the Properties in 1987 and acquired
two additional Properties in 1988.
The Partnership operates the Properties as manufactured housing
communities with the primary investment objectives of: (1) providing cash from
operations to investors; (2) obtaining capital appreciation; and (3) preserving
capital of the Partnership. There can be no assurance that such objectives can
be achieved.
On August 20, 1998, the Partnership borrowed $30,000,000 (the "Loan")
from GMAC Commercial Mortgage Corporation. It secured the Loan by placing new
mortgages on seven of its nine properties. The Loan carries a fixed interest
rate of 6.37% over its
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term of 120 months and is amortized over 360 months. The Partnership used the
proceeds from the Loan to refinance the Partnership's outstanding indebtedness
of $30,045,000, which was the result of a 1993 mortgage financing transaction.
Financial Information About Industry Segment
The Partnership's business and only industry segment is the operation
of its nine manufactured housing communities. Partnership operations commenced
in April 1987 upon the acquisition of the first two Properties. For a
description of the Partnership's revenues, operating profit and assets, please
refer to Items 6 and 8.
Narrative Description of Business
General
The Sunshine Village, Ardmor Village and Camelot Manor Properties were
selected from 25 manufactured housing communities then owned by affiliates of
Genesis Associates Limited Partnership, the General Partner of the Partnership
(the "General Partner"). The other six communities were purchased from
unaffiliated third parties. The Partnership rents space in the Properties to
owners of manufactured homes thereby generating rental revenues. It was intended
that the Partnership would hold the Properties for extended periods of time,
originally anticipated to be seven to ten years after their acquisition. The
General Partner has the discretion to determine when a Property is to be sold;
provided, however, that the determination of whether a particular Property
should be disposed of will be made by the General Partner only after
consultation with an independent consultant, Manufactured Housing Services Inc.
(the "Consultant"). In making their decision, the General Partner and Consultant
will consider relevant factors, including current operating results of the
particular Property and prevailing economic conditions, and will make the
decision with a view to achieving maximum capital appreciation to the
Partnership considering relevant tax consequences and the Partnership's
investment objectives.
Competition
The business of owning and operating residential manufactured housing
communities is highly competitive, and the Partnership may be competing with a
number of established companies having greater financial resources. Moreover,
there has been a trend for manufactured housing community residents to purchase
(where zoning permits) their manufactured home sites on a collective basis. This
trend may result in increased competition with the Partnership for tenants. In
addition, the General Partner, its affiliates or both, has and may in the future
participate directly or through other partnerships or investment vehicles in the
acquisition, ownership, development, operation and sale of projects which may be
in direct competition with one or more of the Properties.
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Each of the Properties competes with numerous similar facilities
located in its geographic area. The Davie/Fort Lauderdale area contains
approximately five communities offering approximately 2,045 housing sites
competing with Sunshine Village. Ardmor Village competes with approximately nine
communities in the Lakeville, Minnesota area offering approximately 2,363
housing sites. Camelot Manor competes with approximately 16 communities in the
Grand Rapids, Michigan area offering approximately 3,631 housing sites. In the
Jacksonville, Florida area, Country Roads competes with approximately nine
communities offering approximately 3,636 housing sites. The Tampa, Florida area
contains approximately four communities offering approximately 1,190 housing
sites competing with Paradise Village. Dutch Hills and Stonegate Manor compete
with approximately 11 other communities in the Lansing, Michigan area offering
approximately 3,438 housing sites. In the Las Vegas, Nevada area, West Valley
and El Adobe compete with approximately 13 other communities offering
approximately 3,719 housing sites. The Properties also compete against other
forms of housing, including apartment and condominium complexes.
Governmental Regulations
The Properties owned by the Partnership are subject to certain state
regulations regarding the conduct of the Partnership operations. For example,
the State of Florida regulates agreements and relationships between the
Partnership and the residents of Sunshine Village, Country Roads and Paradise
Village. Under Florida law, the Partnership is required to deliver to new
residents of those Properties a prospectus describing the property and all
tenant rights, Property rules and regulations, and changes to Property rules and
regulations. Florida law also requires minimum lease terms, requires notice of
rent increases, grants to tenant associations certain rights to purchase the
community if being sold by the owner and regulates other aspects of the
management of such properties. The Partnership is required to give 90 days
notice to the residents of Florida Properties of any rate increase, reduction in
services or utilities, or change in rules and regulations. If a majority of the
residents object to such changes as unreasonable, the matter must be submitted
to the Florida Department of Professional Business Regulations for mediation
prior to any legal adjudication of the matter. In addition, if the Partnership
seeks to sell Florida Properties to the general public, it must notify any
homeowners association for the residents, and the association shall have the
right to purchase the Property on the price, terms and conditions being offered
to the public within 45 days of notification by the owner. If the Partnership
receives an unsolicited bona fide offer to purchase the Property from any party
that it is considering or negotiating with, it must notify any such homeowners
association that it has received an offer, state to the homeowners association
the price, terms and conditions upon which the Partnership would sell the
Property, and consider (without obligation) accepting an offer from the
homeowners association. The Partnership has, to the best of its knowledge,
complied in all material respects with all requirements of the States of
Florida, Michigan, Minnesota and Nevada, where its operations are conducted.
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Employees
The Partnership employs two part-time employees to perform Partnership
management and investor relations' services. The Partnership retains an
affiliate, Uniprop, Inc., as the property manager for each of its Properties.
Uniprop, Inc. is paid a fee equal to the lesser of 5% of the annual gross
receipts from each of the Properties or the amount which would be payable to
unaffiliated third parties for comparable services. Uniprop, Inc. retains local
managers on behalf of the Partnership at each of the Properties. Salaries and
fringe benefits of such local managers are paid by the Partnership and are not
included in any property management fee payable to Uniprop, Inc. Local managers
are employees of the Partnership and are paid semi-monthly. The yearly salaries
and expenses for local managers range from $20,000 to $40,000. Local managers
have no direct management authority, make no decisions regarding operations and
act only in accordance with instructions from the property manager. They are
utilized by the Partnership to provide on-site maintenance and administrative
services. Uniprop, Inc., as property manager, has overall management authority
for each Property.
ITEM 2. PROPERTIES
The Partnership purchased all nine manufactured housing communities for
cash. As a result of the Loan, however, seven of the nine Properties are now
encumbered with mortgages.
Each of the Properties is a modern manufactured housing community
containing lighted and paved streets, side-by-side off-street parking and
complete underground utility systems. The Properties consist of only the
underlying real estate and improvements, not the actual homes themselves. In
January 1990, the Partnership did begin acquiring some homes in conjunction with
its home purchase/lease program for Country Roads and Paradise Village. Each of
the Properties has a community center, which includes offices, meeting rooms and
game rooms. Country Roads has a 1,200 square foot rental cottage. Each of the
Properties, except Stonegate Manor, has a swimming pool. Several of the
Properties also have laundry rooms, playground areas, garage and maintenance
areas and recreational vehicle or boat storage areas.
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The table below contains certain information concerning the Partnership's nine
properties.
- ----------------------------------------------------------------------------------------------------------------
PROPERTY NAME NUMBER
AND LOCATION YEAR CONSTRUCTED ACREAGE OF SITES
- ------------ ---------------- ------- --------
- ---------------------------------------------------------------------------------------------------------------
Ardmor Village
Cedar Avenue S.
Lakeville, MN 1974 74 339
Camelot Manor
South Division
Grand Rapids, MI 1973 57 335
Country Roads
Townsend Road
Jacksonville, FL 1967 37 312
Dutch Hills
Upton Road
Haslett, MI 1975 42.8 278
El Adobe
N. Lamb Blvd.
Las Vegas, NV 1975 36 371
Paradise Village
Paradise Drive
Tampa, FL 1971 91 611
Stonegate Manor
Eaton Rapids Drive
Lansing, MI 1968 43.6 308
Sunshine Village
Southwest 5th St.
Davie, FL 1972 45 356
West Valley
W. Tropicana Ave
Las Vegas, NV 1972 53 420
- ---------------------------------------------------------------------------------------------------------------
ITEM 3. LEGAL PROCEEDINGS
In the opinion of the Partnership and its legal counsel, there are no
material legal proceedings pending except such ordinary routine matters as are
incident to the kind of business conducted by the Partnership. To the knowledge
of the Partnership and its counsel, no legal proceedings have been instituted or
are being contemplated by any governmental authority against the Partnership.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The voting privileges of the Unit Holders and Limited Partners are
restricted to certain matters of fundamental significance to the Partnership.
The Unit Holders and Limited Partners must approve certain major decisions of
the General Partner if the General Partner proposes to act without the approval
of the Consultant. The Unit Holders and Limited Partners also have a right to
vote upon removal and replacement of the General Partner, dissolution of the
Partnership, material amendments to the partnership agreement and the sale or
other disposition of all or substantially all of the Partnership's assets,
except in the ordinary course of the Partnership's disposing of the Properties.
Such matters must be approved by Unit Holders and Limited Partners, as a group,
holding more than 50% of the then outstanding interests. No matters were
submitted to Unit Holders for vote during 2001.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SECURITY HOLDER
MATTERS
There is no established public trading market for the Units of the
Partnership and it is not anticipated that one will ever develop. During the
last twelve months, less than five percent (5.0%) of the Units have been
transferred, excluding transfers due to death or intra-family transfers. The
Partnership believes there is no formal secondary market, or the substantial
equivalent thereof, and none will develop.
The General Partner calculates the estimated net asset value of each
Unit by dividing (i) the amount of distributions that would be made to the
Limited Partners in the event of the current sale of the Properties at their
current appraised value, less the outstanding balances of the mortgages on the
mortgaged Properties and sales expenses (but without consideration to tax
consequences of the sale), by (ii) 3,303,387. In March 2002, the Properties were
appraised at an aggregate fair market value of $80,800,000. Assuming a sale of
the nine properties in March 2002, at the appraised value, less payment of
selling expenses and mortgage debt, the net aggregate proceeds available for
distribution to the Unit Holders is estimated to be $49,558,242 or $15.01 per
Unit. There can be no assurance that the estimated net asset value could ever be
realized. As of March 1, 2002, the Partnership had approximately 4,650 Unit
Holders.
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ITEM 6. SELECTED FINANCIAL DATA
The following table summarizes selected financial data for the
Partnership for the periods ended December 31, 2001, 2000, 1999, 1998 and 1997:
FISCAL YEAR FISCAL YEAR FISCAL YEAR FISCAL YEAR FISCAL YEAR
ENDED ENDED ENDED ENDED ENDED
DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER
31, 2001 31, 2000 31, 1999 31, 1998 31, 1997
-------- -------- -------- -------- --------
Total Assets $ 45,616,944 $ 46,542,559 $ 47,525,657 $ 48,834,623 $ 52,652,238
============ ============ ============ ============ ============
Long Term
Debt $ 28,817,758 $ 29,209,358 $ 29,572,116 $ 29,915,975 $ 30,045,000
============ ============ ============ ============ ============
Income 12,959,345 13,023,905 12,718,010 12,419,636 11,992,526
Operating Expenses (10,848,522) (11,034,041) (11,077,253) (11,488,193) (10,755,270)
------------ ------------ ------------ ------------ ------------
Income before
Extraordinary Item: $ 2,110,823 $ 1,989,864 $ 1,640,757 $ 931,443 $ 1,167,256
Extraordinary Item: - - - $ 250,998 -
------------ ------------ ------------ ------------
Net Income: $ 2,110,823 $ 1,989,864 $ 1,640,757 $ 1,182,441 $ 1,167,256
============ ============ ============ ============ ============
Distributions to Unit
Holders,
per Unit: $ .82 $ .76 $ .73 $ 1.43 $ .64
Income per Unit:
Before Extra. Item $ .63 $ .60 $ .49 $ .28 $ .35
Extraordinary Item .08
Weighted average
Number of Units
Outstanding: 3,303,387 3,303,387 3,303,387 3,303,387 3,303,387
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION
Capital Resources
The capital formation phase of the Partnership began on April 1, 1987
when Sunshine Village and Ardmor Village were purchased by the Partnership and
operations commenced. It ended on January 15, 1988 when El Adobe, the
Partnership's last property, was purchased. The total capital raised through
December 1987 was $66,067,740 of which approximately $58,044,000 was used to
purchase the nine Properties after deducting sales commissions, advisory fees
and other organization and offering costs.
-8-
As described in Item 1, the Partnership borrowed $30,000,000 from GMAC
Commercial Mortgage Corporation. The Loan carries a fixed interest rate of 6.37%
over its term of 120 months, amortized over 30 years. The Loan was secured by
mortgages on the Partnership's Ardmor Village, Camelot Manor, Dutch Hills, El
Adobe, Stonegate Manor, Sunshine Village and West Valley Properties. The
Partnership used the proceeds from the Loan to refinance the Partnership's
outstanding indebtedness of $30,045,000.
The General Partner acknowledges that the mortgages pose some risks to
the Partnership, but believes that such risks are not greater than risks
typically associated with real estate financing.
Liquidity
The Partnership has, since inception, generated adequate amounts of
cash to meet its operating needs. The Partnership retains cash reserves, which
it considers adequate to maintain the Properties. All funds in excess of
operating needs, amounts sufficient to pay debt service, and cash reserves are
distributed to the Unit Holders on a quarterly basis. While the Partnership is
not required to maintain a working capital reserve, the Partnership has not
distributed all the cash generated from operations in order to build capital
reserves. As of December 31, 2001, the Partnership had $3,741,016 in cash
balances.
In February of 1994, the Partnership distributed $23,119,767 to the
Unit Holders, or $7.00 per $20.00 Unit held. Of this amount, $13,572,978 (or
$4.11 per Unit), restored the then shortfall in the Unit Holders' 10.0%
cumulative preferred return, and $9,546,789 (or $2.89 per Unit), was a partial
return of the Limited Partners' original capital contributions.
Results of Operations
Distributions
For the year ended December 31, 2001, the Partnership made
distributions to the Unit Holders of $2,708,777, which is equal, on an
annualized basis, to 4.8% on their adjusted capital contributions ($.82 per
$17.11 Unit). Distributions paid to Unit Holders in 2000 totaled $2,510,569, and
$2,411,479 was paid in 1999.
The distributions paid in 2001 were less than the amount required for
the annual 10.0% preferred return to the Unit Holders by approximately
$2,943,000. As described in Note 7 to the Partnership's financial statements,
the cumulative preferred return deficit through December 2001 was approximately
$24,949,000. No distributions can be made to the General Partner in regard to
its incentive management interest until the cumulative preferred return deficit
has been distributed to the Unit Holders. At December 31, 2001, the unpaid
amount to be distributed to the General Partner was approximately $8,200,000.
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Net Income
For the years ended December 31, 2001, 2000 and 1999, net income was
$2,110,823, $1,989,864 and $1,640,757 on total revenues of $12,959,345,
$13,023,905 and $12,718,010, respectively. The increases are due primarily to
higher revenue and lower operating expenses, specifically the reduction in
interest paid on the Partnership's mortgage debt.
Net income plus depreciation and amortization less distributions to
Unit Holders, was $1,159,447, $1,280,243 and $1,072,491, for the years ended
December 31, 2001, 2000 and 1999, respectively.
Partnership Management
Certain employees of the Partnership are also employees of affiliates
of the general partner. These employees were paid by the Partnership the amount
of $89,494, $87,165, and $80,622, in 2001,2000 and 1999 respectively, to perform
partnership management and investor relation services for the Partnership.
Property Operations
Overall, as illustrated in the table below, the Partnership's nine
properties had a combined average occupancy of 86% as of December 2001, versus
91% in December 2000, and 93% in December 1999. The average monthly rent (not
weighted average) was approximately $373 per home site in December 2001, versus
$363 in December 2000 and $353 in December 1999, an increase of 2.7% and 2.8%,
respectively.
Recent Accounting Pronouncements
In October 2001, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets (SFAS 144). SFAS 144 establishes a
single accounting model for the impairment or disposal of long-lived assets,
including discontinued operations. SFAS 144 superseded Statement of Financial
Accounting Standards No. 121, Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed of (SFAS 121), and APB Opinion No.30,
Reporting the Results of Operations - Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions. The provisions of SFAS 144 are effective in fiscal
years beginning after December 15, 2001, with early adoption permitted, and in
general are to be applied prospectively.
The Partnership does not expect that the adoption of this standard
will have a material impact on its results of operations and financial position.
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TOTAL
SITES OCCUPIED SITES OCCUPANCY RATE AVERAGE RENT
- ------------------------------------------------------------------------------------------------------------------------------------
2001 2000 1999 2001 2000 1999 2001 2000 1999
---- ---- ---- ---- ---- ---- ---- ---- ----
Ardmor Village 339 331 336 335 98% 99% 98.8% $358 $346 $333
Camelot Manor 335 297 311 323 89% 93% 96.4 355 342 331
Country Roads 312 268 273 283 87% 88% 90.7 251 242 253
Dutch Hills 278 266 274 269 96% 99% 96.8 351 341 331
El Adobe 371 299 323 344 82% 87% 93.7 424 419 404
Paradise Village 611 431 481 504 71% 79% 82.1 315 303 291
Stonegate Manor 308 271 293 302 88% 95% 98.1 356 348 336
Sunshine Village 356 335 325 327 95% 91% 91.9 462 447 434
West Valley 420 380 401 403 91% 95% 95.7 486 479 467
----- ----- ----- ----- -- ---- ---- ---- ---- ----
Overall 3,330 2,878 3,017 3,090 86% 91% 93% $373 $363 $353
The table below summarizes gross revenues and net operating income for
the Partnership and Properties during 2001, 2000 and 1999.
GROSS REVENUE NET OPERATING INCOME
AND NET INCOME
- ------------------------------------------------------------------------------------------------------------------------------------
2001 2000 1999 2001 2000 1999
---- ---- ---- ---- ---- ----
Ardmor Village $ 1,437,448 $ 1,373,948 $ 1,267,773 $ 857,734 $ 789,214 $ 614,910
Camelot Manor 1,235,844 1,223,979 1,172,434 631,981 595,198 508,750
Country Roads 778,425 810,253 864,405 160,166 197,804 284,374
Dutch Hills 1,060,398 1,032,657 989,591 527,537 492,197 487,671
El Adobe 1,563,480 1,703,048 1,748,554 879,277 1,051,291 1,128,435
Paradise Village 1,681,400 1,641,550 1,570,490 481,810 356,666 248,023
Stonegate Manor 1,116,636 1,157,531 1,146,597 567,852 591,013 568,042
Sunshine Village 1,728,105 1,607,842 1,595,829 1,024,580 916,686 913,078
West Valley 2,244,655 2,315,855 2,288,155 1379,525 1,458,246 1,458,086
----------- ----------- ----------- ---------- ---------- ----------
12,846,391 12,866,663 12,643,828 6,510,463 6,448,315 6,211,369
Partnership $ 112,954 $ 157,241 $ 74,182 (242,249) (176,792) (213,440)
Mgmt.
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GROSS REVENUE NET OPERATING INCOME
AND NET INCOME
- ------------------------------------------------------------------------------------------------------------------------------------
2001 2000 1999 2001 2000 1999
---- ----- ---- ---- ---- ----
Extinguishment of Debt - -
Other nonrecurring
Expenses (524,039) (590,678) (578,247)
Debt Service (1,875,951) (1,890,033) (1,935,712)
Depreciation and
Amortization (1,757,401) (1,800,948) (1,843,213)
----------- ----------- ----------- ---------- ---------- ----------
TOTAL: $12,959,345 $13,023,905 $12,718,010 $2,110,823 $1,989,864 $1,640,757
COMPARISON OF YEAR ENDED DECEMBER 31, 2001 TO YEAR ENDED DECEMBER 31, 2000
Gross revenues decreased $64,560 or 0.5% to $12,959,345 in 2001, compared to
$13,023,905 in 2000. The decrease is primarily the result of lower occupancy,
partially offset by increased monthly rental rates. (See table on previous
page).
The Partnership's operating expenses decreased $185,519, or 1.7% to $10,848,522
in 2001, compared to $11,034,041 in 2000. The decrease is due primarily to lower
utilities due to lower occupancy.
As a result of the forgoing factors, net income increased from $1,989,864 in
2000 to $2,110,823 in 2001.
COMPARISON OF YEAR ENDED DECEMBER 31, 2000 TO YEAR ENDED DECEMBER 31, 1999
Gross revenues increased $305,895, or 2.4%, to $13,023,905 in 2000, compared to
$12,718,010 in 1999. The increase is primarily the result of an increase in
rental income due to higher average monthly rents. (See table on previous page).
The Partnership's operating expenses decreased $43,212, or .4%, to
$11,034,041 in 2000, compared to $11,077,253 in 1999. The decrease was due
primarily to lower interest expense associated with the Partnership's mortgage
debt.
As a result of the foregoing factors, net income increased from
$1,640,757 in 1999 to $1,989,864 in 2000.
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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Partnership is exposed to interest rate risk primarily through its
borrowing activities. There is inherent roll over risk for borrowings as they
mature and are renewed at current market rates. The extent of this risk is not
quantifiable or predictable because of the variability of future interest rates
and the Partnership's future financing requirements.
Note Payable: At December 31, 2001 the Partnership had a note payable
outstanding in the amount of $28,817,758. Interest on this note is at a fixed
rate of 6.37% through March 2009.
The Partnership does not enter into financial instruments transactions
for trading or other speculative purposes or to manage its interest rate
exposure.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Partnership's financial statements for the fiscal year ended
December 31, 2001, 2000 and 1999, and supplementary data are filed with this
Report under Item 14.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There have been no changes in the Partnership's independent public
accountants nor have there been any disagreements during the past two fiscal
years.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Partnership, as an entity, does not have any officers or directors.
The General Partner, Genesis Associates Limited Partnership, is a Michigan
limited partnership which has two general partners, Uniprop, Inc., the managing
General Partner, and Paul M. Zlotoff.
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Information concerning Mr. Zlotoff's age and principal occupations, as
well as for other officers of Uniprop, Inc., during the last five years or more
is as follows:
Paul M. Zlotoff, 52, is and has been an individual general partner of
Genesis Associates since its inception in November 1986. Mr. Zlotoff became the
Chairman of Uniprop, Inc. in May 1986 and was its President from 1979 through
1997. He is also an individual general partner of P.I. Associates Limited
Partnership, the general partner of Uniprop Manufactured Housing Communities
Income Fund, a public limited partnership which owns and operates four
manufactured housing communities. Mr. Zlotoff currently, and in the past, has
acted as the general partner for various other limited partnerships owning
manufactured housing communities and some commercial properties.
Charles Soberman, 52, joined Uniprop, Inc. in June 1999 as its Chief
Executive Officer and Executive Vice President. Mr. Soberman's responsibilities
include supervision of property operations and corporate oversight. Mr. Soberman
has a law degree from The Harvard Law School and a M.B.A. from Michigan State
University. Mr. Soberman also has a B.A. from the University of Michigan. From
1979 through 1996, he was president of Mercury Paint Company, a manufacturer and
retailer of coatings and allied products. From 1996 to 1999 Mr. Soberman was a
Senior Lecturer at Wayne State University School of Business Administration.
Gloria Koster, 48, became Chief Financial Officer of Uniprop, Inc. on
January 1, 1998. Previously, Ms. Koster had been Vice President - Finance of
Uniprop, Inc. since July 1989. She is responsible for accounting, financial
controls, data processing, cash management, financial reporting, budgeting,
financing, and tax matters. Prior to joining Uniprop, Inc., Ms. Koster had been
with Michigan National Bank for 13 years, most recently as a first
vice-president. Ms. Koster has a M.B.A. from the University of Detroit.
Roger Zlotoff, 41, became Chief Investment Officer of Uniprop, Inc. on
October 18, 1999. Mr. Zlotoff is primarily responsible for raising equity
capital, managing partnership investments, evaluating acquisitions of existing
properties and leading the development process for new properties. From 1997 to
1999, Mr. Zlotoff served as Director of Business Development for Vistana, Inc.
in Orlando, FL. Previously, Mr. Zlotoff was Managing Director for Sterling
Finance International from 1994 to 1997 and was a corporate banker with First
Union National Bank from 1988 to 1994. Mr. Zlotoff received his B.A. from the
University of Central Florida as a philosophy major, and received his Masters
Degree in International Business from the University of South Carolina.
Paul M. Zlotoff and Roger Zlotoff are brothers.
ITEM 11. EXECUTIVE COMPENSATION
The Partnership has no executive officers and therefore, no officers
received a salary or remuneration exceeding $100,000 during the last fiscal
year. The General Partner of the Partnership and an affiliate, Uniprop, Inc.,
received certain compensation
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and fees during the fiscal year in the amounts described in Item 13. Depending
upon the results of operations and other factors, the Partnership anticipates
that it will provide similar compensation to the General Partner and Uniprop,
Inc. during the next fiscal year.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The Partnership is a limited partnership duly formed pursuant to the
Uniform Limited Partnership Act, as amended, of the State of Michigan. The
General Partner, Genesis Associates Limited Partnership, is vested with full
authority as to the general management and supervision of business and the other
affairs of the Partnership, subject to certain constraints in the partnership
agreement and consulting agreement. Unit holders and/or Limited Partners have no
right to participate in the management of the Partnership and have limited
voting privileges only on certain matters of fundamental significance. To the
knowledge of the Partnership, no person owns of record or beneficially, more
than five percent of the Partnership's Units.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The following discussion describes all of the types of compensation,
fees or other distributions paid by the Partnership or others to the General
Partner or its affiliates from the operations of the Partnership during the last
fiscal year, as well as certain of such items which may be payable during the
next fiscal year. Certain of the following arrangements for compensation and
fees were not determined by arm's length negotiations between the General
Partner, its affiliates and the Partnership.
Paul M. Zlotoff has an interest in the original sellers of Sunshine
Village and Ardmor Village and is entitled to share in a contingent purchase
price with respect to each Property, when and if the Properties are sold and the
sellers become entitled thereto. The maximum amounts which could be payable to
the sellers are as follows: Sunshine Village, $1,108,260 and Ardmor Village,
$946,236. The cash purchase price and contingent purchase price for each
Property were determined by reference to the average of two independent real
estate appraisals which were obtained by the General Partner. Such appraisals
are only estimates of value and are not necessarily indicative of the actual
real estate value. Each seller will become entitled to any unpaid contingent
purchase price upon the sale, financing or other disposition of each such
Property, but, only after the receipt by each Unit Holder and Limited Partner of
aggregate distributions equal to the sum of (i) his 10% cumulative preferred
return plus (ii) 125% of his capital contribution. The actual amounts to be
received, if any, will depend upon the results of the Partnership's
-15-
operations and the amounts received upon the sale, financing or other
disposition of the Properties and are not determinable at this time. The
Partnership does not anticipate any such amount will become payable during the
next fiscal year.
The Partnership will pay an Incentive Management Interest to
the General Partner for managing the Partnership's affairs, including:
determining distributions, negotiating agreements, selling or financing
properties, preparing records and reports, and performing other ongoing
Partnership responsibilities. This incentive management interest is 15%
of distributable cash from operations in any quarter. However, in each
quarter, the General Partner's right to receive any net cash from
operations is subordinated to the extent necessary to first provide
each Unit Holder and Limited Partner his 10% cumulative preferred
return. During the last fiscal year, the General Partner received no
distributions on account of its Incentive Management Interest from
operations because distributions were approximately $2,943,000 less
than the 10% cumulative preferred return due Unit Holders. Any such
amounts of Incentive Management Interest unpaid in a taxable year will
be accumulated and paid from distributable cash from capital
transactions, but only after each Unit Holder and Limited Partner has
first received his 10% cumulative preferred return and 125% of his
capital contribution. For 2001, approximately $500,000 was accumulated
for the General Partner, and the General Partner's aggregate
accumulated Incentive Management Interest as of December 2001 was
$8,800,000. The actual Incentive Management Interest from operations to
be accumulated or paid during the next fiscal year will depend upon the
results of the Partnership's operations and is not determinable at this
time. The Partnership does not anticipate any such amount will be
distributed to the General Partner during the next fiscal year and will
again be accumulated with payment deferred. No distributions of
Incentive Management Interest could be made to the General Partner
until the 10% cumulative preferred return of approximately $24,949,000,
as of December 31, 2001, is first distributed to the Unit Holders. In
February of 1994, as part of the 1993 mortgage financing, $23,119,767
was distributed to the Unit Holders, $13,572,978 of which eliminated
the Unit Holders' preferred return deficit through December 31, 1993.
The Partnership must also pay an Incentive Management Interest
from capital transactions to the General Partner for its services
rendered to the Partnership. The General Partner will be entitled to
receive its share of distributable cash from capital transactions after
(i) each Unit Holder and Limited Partner has received aggregate
distributions in an amount equal to the sum of (a) his 10% cumulative
preferred return plus (b) 125% of his capital contribution, (ii) any
contingent purchase prices have been paid, and (iii) any property
disposition fees to Uniprop, Inc. have been paid. The General Partner's
share of distributable cash from capital transactions so payable will
be (i) 100% of such distributable cash from capital distributions until
the General Partner's share of the aggregate capital distributions made
under section 11c(iii) and 11c(v) of the partnership agreement equal
25% and (ii) thereafter, 25% of such distributable cash from capital
transactions. No Incentive Management Interest from capital
transactions was paid
-16-
to the General Partner for the fiscal year ended December 31, 2001. The
Partnership does not anticipate that any such amounts will be paid or
become payable to the General Partner during the next fiscal year.
Uniprop, Inc. received and will receive property management
fees for each Property managed by it. Uniprop, Inc. is primarily
responsible for the day-to-day management of the Properties and for the
payment of the costs of operating each Property out of the rental
income collected. The property management fees are equal to the lesser
of 5% of the annual gross receipts from the Properties managed by
Uniprop, Inc., or the amount which would be payable to an unaffiliated
third party for comparable services. During the last fiscal year,
Uniprop, Inc. received the following property management fees totaling
$657,600: Ardmor Village, $70,800; Camelot Manor, $62,400; Country
Roads, $39,600; Dutch Hills, $54,000; El Adobe, $82,800; Paradise
Village, $87,600; Stonegate Manor, $57,600; Sunshine Village, $85,200;
and West Valley, $117,600. The actual amounts to be received during the
next fiscal year will depend upon the results of the Partnership's
operations and are not determinable at this time.
Certain employees of affiliates of the General Partner were
paid an aggregate of $89,494 during 2001 to perform local management,
data processing and investor relation services for the Partnership. It
is anticipated comparable amounts will be paid in the next fiscal year.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8K
(a) Financial Statements
(1) The following financial statements and related documents are
filed with this report:
(i) Report of Independent Certified Public Accountants
(ii) Balance Sheets as of December 31, 2001 and 2000
(iii) Statements of Income for the fiscal years ended
December 31, 2001, 2000 and 1999
(iv) Statements of Partners' Equity for the fiscal years
ended December 31, 2001, 2000 and 1999
(v) Statements of Cash Flows for the fiscal years ended
December 31, 2001, 2000 and 1999
(2) The following financial statement schedule is filed with this
report:
-17-
Schedule III - Real Estate and Accumulated
Depreciation for the fiscal years ended December 31,
2001, 2000 and 1999
(3) Exhibits
The following exhibits are incorporated by reference to the S-11
Registration Statement of the Partnership filed November 12, 1986, as amended on
December 22, 1986 and January 16, 1987:
3(a) Certificate of Limited Partnership for the Partnership
3(b) Uniprop Income Fund II Agreement of Limited Partnership
4(a) First Amendment to Uniprop Income Fund II Agreement of Limited
Partnership (April 1, 1987)
10(a) Form of Management Agreement between the Partnership and
Uniprop, Inc.
10(b) Form of Consulting Agreement among the Partnership, the
General Partner and Consultant
(b) Reports on Form 8-K
The Partnership did not file any Forms 8-K during the fourth
quarter of 2001.
The following exhibits are incorporated by reference to the Form 10-K
for the fiscal year ended December 31, 1997:
4(b) Form of Beneficial Assignment Certificate (BAC) for the
Partnership (Originally submitted with Form 10-K for the
fiscal year ended December 31, 1987.)
10(c) Contingent Purchase Price Agreement with Sunrise Broward
Associates, Ltd. (As last submitted with Form 10-K for the
fiscal year ended December 31, 1997.)
10(d) Contingent Purchase Price Agreement with Ardmor Associates
Limited Partnership. (As last submitted with Form 10-K for the
fiscal year ended December 31, 1997.)
10(e) Incentive Acquisition Fee Agreement between the Partnership
and Uniprop, Inc. (As last submitted with Form 10-K for the
fiscal year ended December 31, 1997.)
-18-
The following exhibit is incorporated by reference to the Form 8-K that
was filed on September 8, 1998:
2 Mortgage notes, made as of August 20, 1998, between Uniprop
Manufactured Housing Communities Income Fund II and GMACCM.
The following exhibits are attached to this Report:
28 Letter summary of the estimated fair market values of the
Partnership's nine manufactured housing communities, as of
March 1, 2002
-19-
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Partners
Uniprop Manufactured Housing
Communities Income Fund II
(a Michigan limited partnership)
We have audited the accompanying balance sheets of Uniprop Manufactured Housing
Communities Income Fund II (a Michigan limited partnership), as of December 31,
2001 and 2000, and the related statements of income, partners' equity and cash
flows for each of the three years in the period ended December 31, 2001. We have
also audited the schedule listed under Item 14 of Form 10-K. These financial
statements and the schedule are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements and the schedule based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and the schedule are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and the schedule. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall presentation of the financial statements and the
schedule. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Uniprop Manufactured Housing
Communities Income Fund II at December 31, 2001 and 2000 and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 2001 in conformity with accounting principles generally accepted in
the United States of America.
Also, in our opinion, the schedule listed under Item 14 of Form 10-K presents
fairly, in all material respects, the information set forth therein.
BDO SEIDMAN, LLP
February 8, 2002
-20-
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
BALANCE SHEETS
================================================================================
December 31, 2001 2000
=====================================================================================================================
ASSETS
PROPERTY AND EQUIPMENT (Note 2)
Buildings and improvements $ 50,708,179 $ 50,263,748
Land 11,662,525 11,662,525
Manufactured homes and improvements 1,142,579 1,495,538
Furniture and equipment 551,111 506,322
- ---------------------------------------------------------------------------------------------------------------------
64,064,394 63,928,133
Less accumulated depreciation 23,894,162 22,262,202
- ---------------------------------------------------------------------------------------------------------------------
NET PROPERTY AND EQUIPMENT 40,170,232 41,665,931
Cash 3,741,016 3,155,170
Unamortized financing costs 557,736 578,652
Other assets (Note 3) 1,147,960 1,142,806
- ---------------------------------------------------------------------------------------------------------------------
$ 45,616,944 $ 46,542,559
=====================================================================================================================
LIABILITIES AND PARTNERS' EQUITY
Note payable (Note 2) $ 28,817,758 $ 29,209,358
Accounts payable 265,037 179,442
Other liabilities (Note 4) 704,218 725,874
- ---------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 29,787,013 30,114,674
- ---------------------------------------------------------------------------------------------------------------------
PARTNERS' EQUITY
Unit holders 15,530,504 16,149,566
General partner 299,427 278,319
- ---------------------------------------------------------------------------------------------------------------------
TOTAL PARTNERS' EQUITY 15,829,931 16,427,885
- ---------------------------------------------------------------------------------------------------------------------
$ 45,616,944 $ 46,542,559
=====================================================================================================================
See accompanying notes to financial statements.
-21-
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
STATEMENTS OF INCOME
================================================================================
Year Ended December 31, 2001 2000 1999
=======================================================================================================================
INCOME
Rental $ 12,246,049 $ 12,227,243 $ 12,091,007
Other 713,296 796,662 627,003
- -----------------------------------------------------------------------------------------------------------------------
12,959,345 13,023,905 12,718,010
- -----------------------------------------------------------------------------------------------------------------------
OPERATING EXPENSES
Administrative (Note 5) 3,264,387 3,215,493 3,285,855
Property taxes 1,077,617 1,046,485 955,266
Utilities 852,880 941,596 981,165
Property operations 2,020,286 2,140,363 2,076,042
Depreciation and amortization 1,757,401 1,800,948 1,843,213
Interest 1,875,951 1,889,156 1,935,712
- -----------------------------------------------------------------------------------------------------------------------
10,848,522 11,034,041 11,077,253
- -----------------------------------------------------------------------------------------------------------------------
NET INCOME $ 2,110,823 $ 1,989,864 $ 1,640,757
=======================================================================================================================
INCOME PER LIMITED PARTNERSHIP UNIT (Note 7) $ .63 $ .60 $ .49
=======================================================================================================================
DISTRIBUTIONS PER LIMITED PARTNERSHIP UNIT (Note 7) $ .82 $ .76 $ .73
=======================================================================================================================
NUMBER OF LIMITED PARTNERSHIP UNITS OUTSTANDING 3,303,387 3,303,387 3,303,387
=======================================================================================================================
NET INCOME ALLOCABLE TO GENERAL PARTNER (Note 7) $ 21,108 $ 19,899 $ 16,408
=======================================================================================================================
DISTRIBUTIONS ALLOCABLE TO GENERAL PARTNER $ - $ - $ -
=======================================================================================================================
See accompanying notes to financial statements.
-22-
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERS' EQUITY
YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
================================================================================
General
Partner Unit Holders TOTAL
- ---------------------------------------------------------------------------------------------------------------------
BALANCE, January 1, 1999 $ 242,012 $ 17,477,300 $ 17,719,312
Distributions to unit holders - (2,411,479) (2,411,479)
Net income for the year 16,408 1,624,349 1,640,757
- ---------------------------------------------------------------------------------------------------------------------
BALANCE, December 31, 1999 258,420 16,690,170 16,948,590
Distributions to unit holders - (2,510,569) (2,510,569)
Net income for the year 19,899 1,969,965 1,989,864
- ---------------------------------------------------------------------------------------------------------------------
BALANCE, December 31, 2000 278,319 16,149,566 16,427,885
Distributions to unit holders - (2,708,777) (2,708,777)
Net income for the year 21,108 2,089,715 2,110,823
- ---------------------------------------------------------------------------------------------------------------------
BALANCE, December 31, 2001 $ 299,427 $ 15,530,504 $ 15,829,931
=====================================================================================================================
See accompanying notes to financial statements.
-23-
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
================================================================================
Year Ended December 31, 2001 2000 1999
=======================================================================================================================
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 2,110,823 $ 1,989,864 $ 1,640,757
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation 1,736,485 1,779,936 1,817,941
Amortization 20,916 21,012 25,272
Loss (gain) on sale of property and equipment 117,203 220,950 (70,903)
(Increase) decrease in other assets (5,154) (200,564) 36,968
Increase (decrease) in accounts payable 85,595 (55,656) (87,242)
Decrease in other liabilities (21,656) (43,979) (107,143)
- -----------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 4,044,212 3,711,563 3,255,650
- -----------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (1,547,650) (1,723,045) (994,655)
Proceeds from sale of property and equipment 1,189,661 1,218,298 833,710
- -----------------------------------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES (357,989) (504,747) (160,945)
- -----------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions to unit holders (2,708,777) (2,510,569) (2,411,479)
Repayments of notes payable (391,600) (362,758) (343,859)
- -----------------------------------------------------------------------------------------------------------------------
NET CASH USED IN FINANCING ACTIVITIES (3,100,377) (2,873,327) (2,755,338)
- -----------------------------------------------------------------------------------------------------------------------
NET INCREASE IN CASH 585,846 333,489 339,367
CASH, at beginning of year 3,155,170 2,821,681 2,482,314
- -----------------------------------------------------------------------------------------------------------------------
CASH, at end of year $ 3,741,016 $ 3,155,170 $ 2,821,681
=======================================================================================================================
See accompanying notes to financial statements.
-24-
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
================================================================================
1. SUMMARY OF ACCOUNTING ORGANIZATION AND BUSINESS
POLICIES
Uniprop Manufactured Housing Communities
Income Fund II, a Michigan Limited
Partnership (the "Partnership")
acquired, maintains, operates and will
ultimately dispose of income producing
residential real properties consisting
of nine manufactured housing communities
(the "properties") located in Florida,
Michigan, Nevada and Minnesota. The
Partnership was organized and formed
under the laws of the State of Michigan
on November 7, 1986.
In accordance with its Prospectus dated
December 1986, the Partnership sold
3,303,387 units of beneficial assignment
of limited partnership interest
("Units") for $66,067,740. The
Partnership purchased the properties for
an aggregate purchase price of
approximately $56,000,000. Three of the
properties costing approximately
$16,008,000 were previously owned by
entities which were affiliates of the
general partner.
The general partner is Genesis
Associates Limited Partnership. Uniprop
Beneficial Corporation was the initial
limited partner who assigned to those
persons purchasing units a beneficial
limited partnership interest when the
minimum number of units were sold.
USE OF ESTIMATES
The preparation of financial statements
in conformity with generally accepted
accounting principles requires
management to make estimates and
assumptions that affect the reported
amounts of (1) assets and liabilities
and the disclosure of contingent assets
and liabilities as of the date of the
financial statements, and (2) revenues
and expenses during the reporting
period. Actual results could differ from
these estimates.
FAIR VALUES OF FINANCIAL INSTRUMENTS
The carrying amounts of cash and notes
payable approximate their fair values.
-25-
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
================================================================================
PROPERTY AND EQUIPMENT
Property and equipment are stated at
cost. Depreciation is provided using the
straight-line method over a period of
thirty years except for furniture and
equipment which is depreciated over a
period ranging from three to ten years.
Accumulated depreciation for tax
purposes was $21,368,798 and $19,817,204
as of December 31, 2001 and 2000,
respectively.
Long-lived assets such as property and
equipment are evaluated for impairment
when events or changes in circumstances
indicate that the carrying amount of the
assets may not be recoverable through
the estimated undiscounted future cash
flows from the use of these assets. When
any such impairment exists, the related
assets will be written down to fair
value. No impairment loss recognition
has been required through December 31,
2001.
FINANCING COSTS
Costs to obtain financing have been
capitalized and are amortized using the
straight-line method over the 30-year
term of the related mortgage note
payable.
REVENUE RECOGNITION
Rental income attributable to leases is
recorded when due from the lessees.
INCOME TAXES
Federal income tax regulations provide
that any taxes on income of a
partnership are payable by the partners
as individuals. Therefore, no provision
for such taxes has been made at the
partnership level.
RECLASSIFICATIONS
Certain amounts in prior years'
financial statements have been
reclassified to conform with current
year's presentation.
-26-
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
================================================================================
RECENT ACCOUNTING PRONOUNCEMENTS
In October 2001, the Financial
Accounting Standards Board issued
Statement of Financial Accounting
Standards No. 144, Accounting for the
Impairment or Disposal of Long-Lived
Assets (SFAS 144). SFAS 144 establishes
a single accounting model for the
impairment or disposal of long-lived
assets, including discontinued
operations. SFAS 144 superseded
Statement of Financial Accounting
Standards No. 121, Accounting for the
Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed of
(SFAS 121), and APB Opinion No. 30,
Reporting the Results of
Operations--Reporting the Effects of
Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently
Occurring Events and Transactions. The
provisions of SFAS 144 are effective in
fiscal years beginning after December
15, 2001, with early adoption permitted,
and in general are to be applied
prospectively.
The Partnership does not expect that the
adoption of this standard will have a
material impact on its results of
operations and financial position.
2. NOTE PAYABLE In 1998, the Partnership entered into a
$30,000,000 note payable agreement. The
borrowings are secured by mortgages on
the Partnership's properties. The note
is payable in monthly installments of
$188,878, including interest at 6.37%,
through March, 2009. Thereafter, the
monthly installment and interest rate
will be adjusted based on the provisions
of the agreement through the note
maturity date of September 2028.
Future maturities on the note payable
for the next five years are as follows:
2002 - $418,000; 2003 - $445,000; 2004 -
$470,000; 2005 - $506,000; and 2006 -
$540,000.
3. OTHER ASSETS At December 31, 2001 and 2000, "Other
Assets" included cash of approximately
$284,000 and $316,000 in an escrow
account for property taxes, insurance,
and capital improvements, as required by
the Partnership's note payable
agreement. The cash is restricted from
operating use.
-27-
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
================================================================================
At December 31, 2001 and 2000, "Other
assets" also included cash of
approximately $263,000 and $216,000 in a
security deposit escrow account for
three of the Partnership's properties,
which is required by the laws of the
state in which they are located and is
restricted from operating use.
4. OTHER LIABILITIES Other liabilities consisted of:
December 31, 2001 2000
-----------------------------------------------------------------------------
Tenants' security deposits $ 549,346 $ 558,773
Accrued interest 107,082 106,066
Other 47,790 61,035
-----------------------------------------------------------------------------
TOTAL $ 704,218 $ 725,874
-----------------------------------------------------------------------------
5. RELATED PARTY MANAGEMENT AGREEMENT
TRANSACTIONS
The Partnership has an agreement with an
affiliate of the general partner to
manage the properties owned by the
Partnership. The management agreement is
automatically renewable annually, but
may be terminated by either party upon
sixty days written notice. The property
management fee is the lesser of 5% of
annual gross receipts from the
properties managed, or the amount which
would be payable to an unaffiliated
third party for comparable services.
FEES AND EXPENSES
During the years ended December 31,
2001, 2000 and 1999, the affiliate
earned property management fees of
$643,915, $643,765, and $631,175,
respectively, as permitted in the
Agreement of Limited Partnership. These
fees are included with "Administrative"
expenses in the respective statements of
income. The Partnership was owed $13,685
and $18,635 by the affiliate at December
31, 2001 and 2000, respectively.
-28-
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
================================================================================
CONTINGENT PURCHASE PRICE
A general partner of Genesis Associates
Limited Partnership has an interest in
the sellers of two of the properties
acquired by the Partnership and is
entitled to share in a contingent
purchase price that will not exceed
$2,054,000. Additional amounts to be
paid, if any, will depend upon the
results of the Partnership's operations
and the amounts received upon the sale,
financing or other disposition of the
properties, and are not determinable at
this time. The Partnership does not
anticipate any such amount will become
payable during the next fiscal year.
6. RECONCILIATION OF
FINANCIAL STATEMENT
INCOME AND TAXABLE
INCOME
Year Ended December 31, 2001 2000 1999
-------------------------------------------------------------------------------
Income per the financial
Statements $ 2,110,823 $ 1,989,864 $ 1,640,757
Adjustments to depreciation
for difference in methods 80,367 271,397 158,545
Adjustments for prepaid
rent, meals and
entertainment (7,263) 47,582 (7,920)
-------------------------------------------------------------------------------
INCOME PER THE PARTNER-
SHIP'S TAX RETURN $ 2,183,927 $ 2,308,843 $ 1,791,382
===============================================================================
7. PARTNERS' CAPITAL Subject to the orders of priority under
certain specified conditions more fully
described in the Agreement of Limited
Partnership, distributions of
partnership funds and allocations of net
income from operations are principally
determined as follows:
-29-
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
================================================================================
DISTRIBUTIONS
Distributable cash from operations in
the Agreement (generally defined as net
income plus depreciation and
amortization) is to be distributed to
unit holders until they have received a
10% cumulative preferred return. After
the unit holders have received their 10%
cumulative preferred return, all
remaining cash from operations is
distributed to the general partner in
the form of an incentive management
interest until the total amount received
by the general partner is equal to 15%
of the aggregate amount of cash
distributed from operations in a given
year. Amounts payable to but not paid to
the general partner will be accumulated
and paid from future capital
transactions after the unit holders have
first received their 10% preferred
return and 125% of their capital
contributions. Thereafter, 85% of
distributable cash from operations is to
be paid to the unit holders and 15% to
the general partner.
Annual distributable cash from
operations was less than the amount
required for the annual 10% preferred
return to the unit holders by
approximately $2,943,000 and $3,142,000
in 2001 and 2000, respectively. No
distributions can be made to the general
partner until the cumulative preferred
return deficit of approximately
$24,949,000 has been distributed to the
unit holders.
At December 31, 2001, the general
partner's cumulative incentive
management interest to be distributed
was approximately $8.2 million. The
actual amount to be accumulated or paid
in the future depends on the results of
the Partnership's operations and is not
currently determinable; however, no such
distribution to the general partner is
anticipated during fiscal 2002.
-30-
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
================================================================================
ALLOCATION OF NET INCOME
Net income is principally allocated 99%
to the unit holders and 1% to the
general partner until the cumulative
amount of net income allocated to the
unit holders equals the aggregate
cumulative amount of cash distributable
to the unit holders. After sufficient
net income has been allocated to the
unit holders to equal the amount of cash
distributable to them, all the net
income is to be allocated to the general
partner until it equals the amount of
cash distributed to it.
8. SUPPLEMENTAL CASH FLOW Interest paid during 2001, 2000 and
INFORMATION 1999 was approximately $1,875,000,
$1,889,000, and $1,935,000,
respectively.
9. INTERIM RESULTS The following summary represents the
(UNAUDITED) unaudited results of operations of the
Partnership, expressed in thousands
except per unit amounts, for the periods
from January 1, 2000 through December
31, 2001:
Three Months Ended
--------------------------------------------------------------------------------------------
2001 March 31, June 30, September 30, December 31,
--------------------------------------------------------------------------------------------
REVENUES $ 3,292 $ 3,252 $ 3,227 $ 3,188
============================================================================================
NET INCOME $ 657 $ 497 $ 509 $ 448
============================================================================================
INCOME PER LIMITED PARTNERSHIP UNIT $ .20 $ .15 $ .15 $ .13
============================================================================================
Three Months Ended
--------------------------------------------------------------------------------------------
2000 March 31, June 30, September 30, December 31,
============================================================================================
REVENUES $ 3,244 $ 3,251 $ 3,316 $ 3,213
============================================================================================
NET INCOME $ 615 $ 402 $ 446 $ 527
============================================================================================
INCOME PER LIMITED PARTNERSHIP UNIT $ .19 $ .12 $ .13 $ .16
============================================================================================
-31-
UNIPROP MANUFACTURED
HOUSING COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2001
================================================================================
Column A Column B Column C Column D
- -------------------- -------------- ------------------------- ---------------------
Costs
Capitalized
Subsequent to
Initial Cost Acquisition
------------------------- ---------------------
Buildings and Buildings and
Description Encumbrance Land Improvements Land Improvements
- -----------------------------------------------------------------------------------------
Ardmor Village
(Lakeville, MN) $ 2,795,323 $ 1,063,253 $ 4,253,011 $ - $ 1,053,650
Sunshine Village
(Davie, FL) 4,120,939 1,215,862 4,875,878 - 202,610
Camelot Manor
(Grand Rapids, MI) 3,328,451 918,949 3,681,051 - 672,006
Country Roads
(Jacksonville, FL) - 636,550 2,546,200 38,106 660,460
Paradise Village
(Tampa, FL) - 1,760,000 7,040,000 279,053 1,360,560
Dutch Hills
(Haslett, MI) 2,478,327 839,693 3,358,771 41,526 522,039
Stonegate Manor
(Lansing, MI) 2,896,185 930,307 3,721,229 40,552 606,131
El Adobe
(Las Vegas, NV) 5,312,074 1,480,000 5,920,000 39,964 388,198
West Valley
(Las Vegas NV) 7,886,459 2,289,700 9,158,800 89,010 687,585
- ------------------------------------------------------------------------------------------------
$28,817,758 $11,134,314 $44,554,940 $ 528,211 $ 6,153,239
================================================================================================
Column A Column E Column F Column G Column H
- ------------------ ------------------------------------- ------------ ---------- ------------
Gross Amount at Which Carried Life on Which
at Close of Period Depreciation in
------------------------------------------- Latest Income
Buildings and Accumulated Date Statement is
Description Land Improvements Total Depreciation Acquired Computed
- -------------------------------------------------------------------------------------------------------------
Ardmor Village
(Lakeville, MN) $ 1,063,253 $ 5,306,661 $ 6,369,914 $ 2,344,861 1987 30 years
Sunshine Village
(Davie, FL) 1,215,862 5,078,488 6,294,350 2,492,737 1987 30 years
Camelot Manor
(Grand Rapids, MI 918,949 4,353,057 5,272,006 2,034,146 1987 30 years
Country Roads
(Jacksonville, FL 674,656 3,206,660 3,881,316 1,507,771 1987 30 years
Paradise Village
(Tampa, FL) 2,039,053 8,400,560 10,439,613 3,941,547 1987 30 years
Dutch Hills
(Haslett, MI) 881,219 3,880,810 4,762,029 1,770,822 1987 30 years
Stonegate Manor
(Lansing, MI) 970,859 4,327,360 5,298,219 1,909,118 1987 30 years
El Adobe
(Las Vegas, NV) 1,519,964 6,308,198 7,828,162 2,933,066 1988 30 years
West Valley
(Las Vegas NV) 2,378,710 9,846,385 12,225,095 4,539,588 1988 30 years
- --------------------------------------------------------------------------------------------------------------------
11,662,525 $50,708,179 $62,370,704 $ 23,473,656
====================================================================================================================
-32-
1. RECONCILIATION OF LAND The following table reconciles the land
from January 1, 1999 to December 31,
2001:
2001 2000 1999
---------------------------------------------------------------------------------
BALANCE, at January 1 $ 11,662,525 $ 11,644,103 $ 11,644,103
Additions to land - 18,422 -
---------------------------------------------------------------------------------
BALANCE, at December 31 $ 11,662,525 $ 11,662,525 $ 11,644,103
==================================================================================
2. RECONCILIATION OF BUILDINGS The following table reconciles the
AND IMPROVEMENTS buildings and improvements from January
1, 1999 to December 31, 2001:
2001 2000 1999
==================================================================================
BALANCE, at January 1 $ 50,263,748 $ 49,776,786 $ 49,421,935
Additions to buildings and
improvements 444,431 720,962 354,851
Cost of assets sold - (234,000) -
---------------------------------------------------------------------------------
BALANCE, at December 31 $ 50,708,179 $ 50,263,748 $ 49,776,786
==================================================================================
3. RECONCILIATION OF ACCUMULATED The following table reconciles the
DEPRECIATION accumulated depreciation from January 1,
1999 to December 31, 2001:
2001 2000 1999
=======================================================================================
BALANCE, at January 1 $ 21,830,404 $ 20,240,011 $ 18,528,418
Current year
depreciation expense 1,643,252 1,718,836 1,711,593
Accumulated depreciation
on assets sold - (128,443) -
---------------------------------------------------------------------------------------
BALANCE, at December 31 $ 23,473,656 $ 21,830,404 $ 20,240,011
=======================================================================================
4. TAX BASIS OF BUILDINGS AND The aggregate cost of buildings and
IMPROVEMENTS improvements for federal income tax
purposes is equal to the cost basis used
for financial statements purposes.
-33-
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Uniprop Manufactured Housing Communities Income Fund II, a
Michigan Limited Partnership, has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Uniprop Manufactured Housing Communities
Income Fund II, a Michigan Limited Partnership
BY: Genesis Associates Limited Partnership,
General Partner
BY: Uniprop, Inc., Managing General
Partner
By: /s/ Paul M. Zlotoff
----------------------------
Paul M. Zlotoff, Chairman
Dated: March 30, 2001
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
By: /s/ Gloria A. Koster By: /s/ Paul M. Zlotoff
------------------------------- --------------------------------------
Gloria A. Koster Paul M. Zlotoff, Chairman of Uniprop,
(Chief Financial Officer of Inc. (Principal Executive Officer)
Uniprop, Inc.)
Dated: March 22, 2002 Dated: March 22, 2002
By: /s/ Susann Szepytowski
-------------------------------
Susann Szepytowski
(Controller of Uniprop, Inc.)
Dated: March 22, 2002
-34-
EXHIBIT INDEX
EXHIBIT
- -------
NUMBER DESCRIPTION METHOD OF FILING PAGE
- ------ ----------- ---------------- ----
2 Mortgage Notes, made on August 20, Incorporated by reference to the Form
1998 between Uniprop Income Fund II 8-K filed on September 8, 1998.
and GMACCM
3(a)
Incorporated by reference to the S-11
Certificate of Limited Partnership Registration Statement of the
for the Partnership Partnership filed November 12, 1986, as
amended on December 22, 1986 and
January 16, 1987 (the "Registration
Statement").
3(b) Uniprop Income Fund II Agreement of Incorporated by reference to the
Limited Partnership Registration Statement.
4(a) First Amendment to Uniprop Income Incorporated by reference to the
Fund II Agreement of Limited Registration Statement.
Partnership (April 1, 1987)
-35-
4(b) Form of Beneficial Assignment Incorporated by reference to Form 10-K
Certificate (BAC) for the for fiscal year ended December 31, 1997.
Partnership (originally filed with
Form 10-K for the fiscal year ended
December 31, 1987)
10(a) Form of Management Agreement Incorporated by reference to the
between the Partnership and Registration Statement.
Uniprop, Inc.
10(b) Form of Consulting Agreement among Incorporated by reference to the
the Partnership, the General Registration Statement.
Partner and Consultant
10(c) Contingent Purchase Price Agreement Incorporated by reference to Form 10-K
with Sunrise Broward Associates, for fiscal year ended December 31, 1997.
Ltd. (originally filed with Form
10-K for the fiscal year ended
December 31, 1987)
10(d) Contingent Purchase Price Agreement Incorporated by reference to Form 10-K
with Ardmor Associates Limited for fiscal year ended December 31, 1997.
Partnership (originally filed with
Form 10-K for the fiscal year ended
December 31, 1987)
10(e) Incentive Acquisition Fee Agreement Incorporated by reference to Form 10-K
between the Partnership and for fiscal year ended December 31, 1997.
Uniprop, Inc. (originally filed
with Form 10-K for the fiscal year
ended December 31, 1987)
28 Letter summary of the estimated Filed herewith.
fair market values of the Partnership's
nine manufactured housing communities,
as of March 1, 2002.
-36-