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, 2002 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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K [ ]
Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2).
Yes [ ] No [X]
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As of March 1, 2003, 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 2003 appraisal of Partnership properties), was approximately
$49,569,376.
DOCUMENTS INCORPORATED BY REFERENCE
SEE ITEM 14.
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.
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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 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. The Partnership used the proceeds from the Loan to refinance to
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 home sites 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
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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 residents. 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.
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, and site built
homes.
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
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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.
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 $55,000. 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, that
program has expanded and all nine properties now purchase a limited number of
homes as inventory for sale. 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 36 367
Paradise Village
Paradise Drive
Tampa, FL 1971 91 614
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 2002.
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 2003, the Properties were
appraised at an aggregate fair market value of $80,250,000. Assuming a sale of
the nine properties in March 2003, 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 $49,569,376 or $15.00 per
Unit. There can be no assurance that the estimated net asset value could ever be
realized. As of March 1, 2003, the Partnership had approximately 3,959 Unit
Holders.
The Partnership has no equity compensation plans.
ITEM 6. SELECTED FINANCIAL DATA
The following table summarizes selected financial data for the
Partnership for the periods ended December 31, 2002, 2001, 2000, 1999 and 1998:
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FISCAL YEAR FISCAL YEAR FISCAL YEAR FISCAL YEAR FISCAL YEAR
ENDED ENDED ENDED ENDED ENDED
DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER
31, 2002 31, 2001 31, 2000 31, 1999 31, 1998
-------- -------- -------- -------- --------
Total Assets $44,130,856 $45,616,944 $46,542,559 $47,525,657 $48,834,623
=========== =========== =========== =========== ===========
Long Term
Debt $28,273,124 $28,817,758 $29,209,358 $29,572,116 $29,915,975
=========== =========== =========== =========== ===========
Income 13,741,599 14,530,327 14,474,625 12,718,010 12,419,636
Operating Expenses (11,623,613) (12,419,504) (12,484,761) (11,077,253) (11,488,193)
----------- ----------- ----------- ----------- -----------
Income before
Extraordinary Item: $2,117,986 $2,110,823 $1,989,864 $1,640,757 $931,443
Extraordinary Item: - - - - $250,998
---------- ---------- ---------- ---------- ----------
Net Income: $2,117,986 $2,110,823 $1,989,864 $1,640,757 $1,182,441
========== ========== ========== ========== ==========
Distributions to Unit
Holders,
per Unit: $.90 $.82 $.76 $.73 $1.43
Income per Unit:
Before Extra. Item $.63 $.63 $.60 $.49 $.28
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 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.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.
Future maturities on the note payable for the next five years are as
follows: 2003 - $445,000; 2004 - $470,000; 2005 - $506,000; 2006 - $540,000 and
2007 - $587,000.
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, 2002, the Partnership had $3,118,034 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, 2002, the Partnership made
distributions to the Unit Holders of $2,973,048, which is equal, on an
annualized basis, to 4.9% on their adjusted capital contributions ($.90 per
$17.11 Unit). Distributions paid to Unit Holders in 2001 totaled $2,708,777, and
$2,510,569 was paid in 2000.
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The distributions paid in 2002 were less than the amount required for
the annual 10.0% preferred return to the Unit Holders by approximately
$2,679,000. As described in Note 7 to the Partnership's financial statements,
the cumulative preferred return deficit through December 2002 was approximately
$27,628,000. 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, 2002, the unpaid
amount to be distributed to the General Partner was approximately $8,800,000.
Revenue and Net Income
For the years ended December 31, 2002, 2001 and 2000, net income was
$2,117,986, $2,110,823 and $1,989,864 on total revenues of $13,741,599,
$14,530,327 and $14,474,625, respectively. The consistent Net Income is due
primarily to higher rents and lower operating expenses, offset by lower
occupancy.
The manufactured housing industry in general has experienced lower retail sales
over the past three years due to restrictive financing. In addition, the U.S.
economy has been sluggish. Nonetheless, the Partnership has maintained stable
Net Income for three years.
Net income plus depreciation and amortization less distributions to
Unit Holders, was $909,183, $1,159,447 and $1,280,243, for the years ended
December 31, 2002, 2001 and 2000, 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 $96,345, $89,494, and $87,165, in 2002, 2001 and 2000 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 81% as of December 2002, versus
86% in December 2001, and 91% in December 2000. The average monthly rent (not
weighted average) was approximately $384 per home site in December 2002, versus
$373 in December 2001 and $363 in December 2000, an increase of 2.8% and 2.7%,
respectively. The decline in occupancy is due primarily to an increase in
foreclosures on homes financed by third-party lenders. The rate of new
foreclosures has abated.
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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 adopted of this standard on January 1, 2002. The
adoption had no impact on its results of operations and financial position.
TOTAL
SITES OCCUPIED SITES OCCUPANCY RATE AVERAGE RENT
----- ------------------------ ------------------------- -------------------------
2002 2001 2000 2002 2001 2000 2002 2001 2000
---- ---- ---- ---- ---- ---- ---- ---- ----
Ardmor Village 339 316 331 336 93% 98% 99% $374 $358 $346
Camelot Manor 335 266 297 311 79% 89% 93% 365 355 342
Country Roads 312 249 268 273 80% 87% 88% 261 251 242
Dutch Hills 278 262 266 274 94% 96% 99% 360 351 341
El Adobe 367 282 299 323 77% 82% 87% 432 424 419
Paradise Village 614 390 431 481 64% 71% 79% 325 315 303
Stonegate Manor 308 244 271 293 79% 88% 95% 363 356 348
Sunshine Village 356 333 335 325 94% 95% 91% 477 462 447
West Valley 420 357 380 401 85% 91% 95% 494 486 479
----- ----- ----- ----- --- --- --- ---- ---- ----
Overall 3,329 2,699 2,878 3,017 81% 86% 91% $384 $373 $363
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The table below summarizes gross revenues and net operating income for
the Partnership and Properties during 2002, 2001 and 2000.
GROSS REVENUE NET OPERATING INCOME
AND NET INCOME
2002 2001 2000 2002 2001 2000
---- ------ ---- ---- ---- ----
Ardmor Village $1,739,467 $2,043,593 $2,041,197 $864,742 $857,734 $ 789,214
Camelot Manor 1,268,160 1,275,744 1,223,979 510,157 631,981 595,198
Country Roads 805,292 895,231 1,020,569 311,401 160,166 197,804
Dutch Hills 1,239,154 1,092,465 1,032,657 591,862 527,537 492,197
El Adobe 1,538,618 1,563,480 1,703,048 824,163 879,277 1,051,291
Paradise Village 1,724,890 1,880,534 1799,456 335,509 481,810 356,666
Stonegate Manor 1,194,174 1,226,436 1,165,531 498,340 567,852 591,013
Sunshine Village 2,056,581 2,195,235 1,966,092 1,108,979 1,024,580 916,686
West Valley 2,143,653 2,244,655 2,364,855 1,301,637 1,379,525 1,458,246
---------- ---------- ---------- -------- -------- ---------
13,709,989 14,417,373 14,317,384 6,346,790 6,510,463 6,448,315
Partnership $31,610 $112,954 $157,241 (281,991) (242,249) (176,792)
Mgmt.
Other nonrecurring - -
Expenses (343,093) (524,039) (590,678)
Debt Service (1,840,845) (1,875,951) (1,890,033)
Depreciation and
Amortization (1,762,875) (1,757,401) (1,800,948)
----------- ----------- ----------- ---------- ----------- -----------
TOTAL: $13,741,599 $14,530,327 $14,474,625 $2,117,986 $2,110,823 $1,989,864
==============================================================================================================================
COMPARISON OF YEAR ENDED DECEMBER 31, 2002 TO YEAR ENDED DECEMBER 31, 2001
Gross revenues decreased $788,728 or 5% to $13,741,599 in 2002, compared to
$14,530,327 in 2001. The decrease is primarily the result of a decrease in home
sales and lower occupancy, partially offset by increased monthly rental rates.
The decrease in occupancy is due primarily to increased foreclosures on home
mortgages, which frequently results in the home moving out of the property.
Rental Income decreased $421,000 or 3%
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due to lower occupancy. Home Sale Income declined $435,000 or 28% due to lower
home sales as a result of more restrictive retail financing.
The Partnership's operating expenses decreased $795,891, or 6.4% to $11,623,613
in 2002, compared to $12,419,504 in 2001.Property operations expense decreased
by approximately $157,000 or 8% as staffing and other expenses were reduced in
response to lower revenues. Home sale expense also declined by $584,000 due to
lower sales volumes.
As a result of the forgoing factors, net income increased slightly from
$2,110,823 in 2001 to $2,117,986 in 2002, as expenses declined in the same
amount as revenue, due to quick action by the General Partner to adjust the cost
structure in response to a weaker economy.
COMPARISON OF YEAR ENDED DECEMBER 31, 2001 TO YEAR ENDED DECEMBER 31, 2000
Gross revenues increased $55,702 to $14,530,327 in 2001, compared to $14,474,625
in 2000. The increase is primarily the result of increased monthly rental rates
and home sale income.
The Partnership's operating expenses decreased $65,257, to $12,419,504 in 2001,
compared to $12,484,761 in 2000.
As a result of the forgoing factors, net income increased from $1,989,864 in
2000 to $2,110,823 in 2001.
IMPORTANT DISCLOSURES
The General Partner believes it is important to disclose certain recent events
to the Limited Partners along with a description of the actions taken by the
General Partner to respond to the events.
During 2002, two prominent publicly traded companies in the manufactured housing
industry filed for protection under Chapter 11 (reorganization) of the Federal
Bankruptcy Code. The two companies were Oakwood Homes (NYSE: OH), a fully
integrated manufacturer, retailer and retail financier of manufactured homes,
and Conseco Finance Corporation, a company that provided retail financing for
manufactured homes. The companies filed for bankruptcy protection due to
declining retail sales for manufactured homes and increased default rates on
chattel mortgage loans for manufactured homes. The increase in foreclosures has
created a surplus of pre-owned homes for sale which contributed to reduced sales
of new homes.
In response to these industry conditions, the General Partner has increased the
retail sales activity at the Properties owned by the Partnership. This includes
purchasing a limited amount of homes in inventory for retail sale, along with
increased advertising for home
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sales. In addition, the Partnership has engaged in a very limited amount of
retail financing of manufactured homes, in order to facilitate sales. The
maximum term of the retail contracts is 10 years, significantly less than is
generally available from retail lenders. This shorter amortization creates a
faster return of principal and thereby reduces the risk of loss. The total
amount of retail loans at this time is also not material relative to the total
assets and revenues of the Partnership. The General Partner believes that this
retail sales and finance activity is an important part of increasing occupancy
and thereby rental income. To date, the delinquency and default rates of the
retail loans have been minimal. However, the General Partner will continue to
monitor the portfolio and adjust its underwriting criteria accordingly.
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, 2002 the Partnership had a note payable
outstanding in the amount of $28,273,124. 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, 2002, 2001 and 2000, 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.
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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.
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, 53, 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, 53, 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, 49, 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, 42, 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.
-15-
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 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
-16-
actual amounts to be received, 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.
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 $2,679,000 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 2002, approximately $600,000 was
accumulated for the General Partner, and the General Partner's aggregate
accumulated Incentive Management Interest as of December 2002 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 $27,628,000,
as of December 31, 2002, 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 to the General Partner
for the fiscal year ended December 31, 2002. The Partnership does not
-17-
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 property management fees totaling $624,188. 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 $96,345 during 2002 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.
ITEM 14. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
The Chairman, Chief Financial Officer and Controller of Uniprop, Inc.
have reviewed and evaluated the effectiveness of disclosure controls and
procedures ( as defined in Exchange Act Rules 240.13a-14(c) and 15d-14 (c)
within 90 days before the filing of this annual report. Based on that
evaluation, the Chairman, Chief Financial Officer and the Controller have
concluded that their current disclosure controls and procedures are effective
and timely, providing them with material information relating to that required
to be disclosed in the reports we file or submit under the Exchange Act.
Changes in Internal Controls
There have not been any significant changes in our internal controls or
in other factors that could significantly affect these controls subsequent to
the date of their evaluation. We are not aware of any significant deficiencies
or material weaknesses, therefore no corrective actions were taken.
-18-
PART IV
ITEM 15. 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, 2002 and 2001
(iii) Statements of Income for the fiscal years ended
December 31, 2002, 2001 and 2000
(iv) Statements of Partners' Equity for the fiscal years
ended December 31, 2002, 2001 and 2000
(v) Statements of Cash Flows for the fiscal years ended
December 31, 2002, 2001 and 2000
(2) The following financial statement schedule is filed with this
report:
Schedule III - Real Estate and Accumulated
Depreciation for the fiscal years ended December 31,
2002, 2001 and 2000
(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
-19-
The Partnership did not file any Forms 8-K during the fourth
quarter of 2002.
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.)
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, 2003
-20-
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,
2002 and 2001, and the related statements of income, partners' equity and cash
flows for each of the three years in the period ended December 31, 2002. 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, 2002 and 2001 and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 2002 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 7, 2003
-21-
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
BALANCE SHEETS
December 31, 2002 2001
- -------------------------------------------------------------------------------------------------------------
ASSETS
PROPERTY AND EQUIPMENT (Note 2)
Buildings and improvements $ 51,212,057 $ 50,708,179
Land 11,647,745 11,662,525
Furniture and equipment 616,662 551,111
- -------------------------------------------------------------------------------------------------------------
63,476,464 62,921,815
Less accumulated depreciation 25,618,711 23,894,162
- -------------------------------------------------------------------------------------------------------------
NET PROPERTY AND EQUIPMENT 37,857,753 39,027,653
Cash 3,118,034 3,741,016
Manufactured homes and improvements 1,110,202 1,142,579
Unamortized financing costs 536,820 557,736
Other assets (Note 3) 1,508,047 1,147,960
- -------------------------------------------------------------------------------------------------------------
$ 44,130,856 $ 45,616,944
=============================================================================================================
LIABILITIES AND PARTNERS' EQUITY
Note payable (Note 2) $ 28,273,124 $ 28,817,758
Accounts payable 178,328 265,037
Other liabilities (Note 4) 704,535 704,218
- -------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 29,155,987 29,787,013
- -------------------------------------------------------------------------------------------------------------
PARTNERS' EQUITY
Unit holders 14,654,262 15,530,504
General partner 320,607 299,427
- -------------------------------------------------------------------------------------------------------------
TOTAL PARTNERS' EQUITY 14,974,869 15,829,931
- -------------------------------------------------------------------------------------------------------------
$ 44,130,856 $ 45,616,944
=============================================================================================================
See accompanying notes to financial statements.
-22-
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
STATEMENTS OF INCOME
Year Ended December 31, 2002 2001 2000
- -------------------------------------------------------------------------------------------------------------------
INCOME
Rental $11,825,039 $12,246,049 $12,227,243
Home sale income 1,135,270 1,570,982 1,450,720
Other 781,290 713,296 796,662
- -------------------------------------------------------------------------------------------------------------------
13,741,599 14,530,327 14,474,625
- -------------------------------------------------------------------------------------------------------------------
OPERATING EXPENSES
Administrative (Note 5) 3,243,321 3,264,387 3,215,493
Property taxes 1,068,910 1,077,617 1,046,485
Utilities 857,262 852,880 941,596
Property operations 1,701,880 1,858,650 1,919,413
Depreciation and amortization 1,762,875 1,757,401 1,800,948
Interest 1,840,845 1,875,951 1,889,156
Home sale expense 1,148,520 1,732,618 1,671,670
- -------------------------------------------------------------------------------------------------------------------
11,623,613 12,419,504 12,484,761
- -------------------------------------------------------------------------------------------------------------------
NET INCOME $ 2,117,986 $ 2,110,823 $ 1,989,864
====================================================================================================================
INCOME PER LIMITED PARTNERSHIP UNIT (Note 7) $ .63 $ .63 $ .60
====================================================================================================================
DISTRIBUTIONS PER LIMITED PARTNERSHIP UNIT (Note 7) $ .90 $ .82 $ .76
====================================================================================================================
NUMBER OF LIMITED PARTNERSHIP UNITS OUTSTANDING 3,303,387 3,303,387 3,303,387
====================================================================================================================
NET INCOME ALLOCABLE TO GENERAL PARTNER (Note 7) $ 21,180 $ 21,108 $ 19,899
====================================================================================================================
DISTRIBUTIONS ALLOCABLE TO GENERAL PARTNER $ - $ - $ -
====================================================================================================================
See accompanying notes to financial statements.
-23-
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERS' EQUITY
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
General
Partner Unit Holders TOTAL
- ----------------------------------------------------------------------------------------------------------
BALANCE, January 1, 2000 $ 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
Distributions to unit holders - (2,973,048) (2,973,048)
Net income for the year 21,180 2,096,806 2,117,986
- ----------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 2002 $ 320,607 $ 14,654,262 $ 14,974,869
==========================================================================================================
See accompanying notes to financial statements.
-24-
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
Year Ended December 31, 2002 2001 2000
- ---------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 2,117,986 $ 2,110,823 $ 1,989,864
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation 1,741,959 1,736,485 1,779,936
Amortization 20,916 20,916 21,012
Gain on sale of property and equipment (95,221) - -
Decrease in manufactured homes and improvements 32,377 352,958 380,029
Increase in other assets (360,087) (5,154) (200,564)
Increase (decrease) in accounts payable (86,709) 85,595 (55,656)
Increase (decrease) in other liabilities 317 (21,656) (43,979)
- ---------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 3,371,538 4,279,967 3,870,642
- ---------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (586,838) (593,744) (663,826)
Proceeds from sale of property and equipment 110,000 - -
- ---------------------------------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES (476,838) (593,744) (663,826)
- ---------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions to unit holders (2,973,048) (2,708,777) (2,510,569)
Repayments of notes payable (544,634) (391,600) (362,758)
- ---------------------------------------------------------------------------------------------------------------------
NET CASH USED IN FINANCING ACTIVITIES (3,517,682) (3,100,377) (2,873,327)
- ---------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH (622,982) 585,846 333,489
CASH, at beginning of year 3,741,016 3,155,170 2,821,681
- ---------------------------------------------------------------------------------------------------------------------
CASH, at end of year $ 3,118,034 $ 3,741,016 $ 3,155,170
=====================================================================================================================
See accompanying notes to financial statements.
-25-
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
ORGANIZATION AND BUSINESS
1. SUMMARY OF ACCOUNTING
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.
-26-
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 $23,163,344 and $21,368,798
as of December 31, 2002 and 2001,
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,
2002.
MANUFACTURED HOMES AND IMPROVEMENTS
Manufactured homes and improvements are stated
at the lower of cost or market and represent
manufactured homes held for sale.
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.
-27-
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
RECLASSIFICATIONS
Certain amounts in prior years' financial
statements have been reclassified to conform
with current year's presentation.
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 adopted this standard on January
1, 2002. The adoption had no 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: 2003 - $445,000;
2004 - $470,000; 2005 - $506,000; 2006 -
$540,000 and 2007 -- 587,000.
-28-
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
3. OTHER ASSETS At December 31, 2002 and 2001, "Other Assets"
included cash of approximately $332,000 and
$284,000 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.
At December 31, 2002 and 2001, "Other assets"
also included cash of approximately $263,000 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, 2002 2001
---------------------------------------------------------------------
Tenants' security deposits $ 540,733 $ 549,346
Accrued interest 105,058 107,082
Other 58,744 47,790
---------------------------------------------------------------------
TOTAL $ 704,535 $ 704,218
=====================================================================
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, 2002, 2001
and 2000, the affiliate earned property
management fees of $624,188, $643,915, and
$643,765, 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 $29,812 and $13,685 by the affiliate at
December 31, 2002 and 2001, respectively.
-29-
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, 2002 2001 2000
---------------------------------------------------------------------------------
Income per the financial
statements $ 2,117,986 $ 2,110,823 $ 1,989,864
Adjustments to depreciation
for difference in methods (69,998) 80,367 271,397
Adjustments for prepaid
rent, meals and
entertainment 14,250 (7,263) 47,582
---------------------------------------------------------------------------------
INCOME PER THE PARTNER-
SHIP'S TAX RETURN $ 2,062,238 $ 2,183,927 $ 2,308,843
=================================================================================
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:
-30-
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 $2,679,000 and $2,943,000 in 2002
and 2001, respectively. No distributions can be
made to the general partner until the cumulative
preferred return deficit of approximately
$27,628,000 has been distributed to the unit
holders.
At December 31, 2002, the general partner's
cumulative incentive management interest to be
distributed was approximately $8.8 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
2003.
-31-
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 2002, 2001 and 2000 was
INFORMATION approximately $1,843,000, $1,875,000, and
$1,889,000, 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, 2001 through
December 31, 2002:
Three Months Ended
-------------------------------------------------------------------------------------------
2002 March 31, June 30, September 30, December 31,
-------------------------------------------------------------------------------------------
REVENUES $ 3,319 $ 3,408 $ 3,502 $ 3,513
===========================================================================================
NET INCOME $ 503 $ 655 $ 432 $ 528
===========================================================================================
INCOME PER LIMITED PARTNERSHIP UNIT $ .15 $ .20 $ .13 $ .15
===========================================================================================
Three Months Ended
-------------------------------------------------------------------------------------------
2001 March 31, June 30, September 30, December 31,
-------------------------------------------------------------------------------------------
REVENUES $ 3,443 $ 3,698 $ 3,702 $ 3,687
===========================================================================================
NET INCOME $ 657 $ 497 $ 509 $ 448
===========================================================================================
INCOME PER LIMITED PARTNERSHIP UNIT $ .20 $ .15 $ .15 $ .13
===========================================================================================
-32-
UNIPROP MANUFACTURED
HOUSING COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2002
==================================================================================================================
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) $ 2,627,828 $ 1,063,253 $ 4,253,011 $ (14,780) $ 1,115,492
Sunshine Village
(Davie, FL) 4,061,215 1,215,862 4,875,878 - 214,802
Camelot Manor
(Grand Rapids, MI) 3,280,212 918,949 3,681,051 - 906,441
Country Roads
(Jacksonville, FL) - 636,550 2,546,200 38,106 675,102
Paradise Village
(Tampa, FL) - 1,760,000 7,040,000 279,053 1,381,560
Dutch Hills
(Haslett, MI) 2,442,409 839,693 3,358,771 41,526 585,425
Stonegate Manor
(Lansing, MI) 2,854,211 930,307 3,721,229 40,552 697,100
El Adobe
(Las Vegas, NV) 5,235,086 1,480,000 5,920,000 39,964 393,910
West Valley
(Las Vegas NV) 7,772,163 2,289,700 9,158,800 89,010 687,285
- ------------------------------------------------------------------------------------------------------------------
$ 28,273,124 $ 11,134,314 $ 44,554,940 $ 513,431 $ 6,657,117
==================================================================================================================
==================================================================================================================
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
Land Improvements Total Depreciation Acquired Computed
- ------------------------------------------------------------------------------------------------------------------
$ 1,048,473 $ 5,368,503 $ 6,416,976 $ 2,525,710 1987 30 years
1,215,862 5,090,680 6,306,542 2,660,772 1987 30 years
918,949 4,587,492 5,506,441 2,181,468 1987 30 years
674,656 3,221,302 3,895,958 1,625,087 1987 30 years
2,039,053 8,421,560 10,460,613 4,228,351 1987 30 years
881,219 3,944,196 4,825,415 1,899,990 1987 30 years
970,859 4,418,329 5,389,188 2,047,409 1987 30 years
1,519,964 6,313,910 7,833,874 3,142,207 1988 30 years
2,378,710 9,846,085 12,224,795 4,866,330 1988 30 years
- ------------------------------------------------------------------------------------------------------------------
$ 11,647,745 $ 51,212,057 $ 62,859,802 $25,177,324
==================================================================================================================
-33-
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO SCHEDULE III
DECEMBER 31, 2002
1. RECONCILIATION OF LAND The following table reconciles the land from
January 1, 2000 to December 31, 2002:
2002 2001 2000
-------------------------------------------------------------------------------
BALANCE, at January 1 $ 11,662,525 $ 11,662,525 $ 11,644,103
Additions to land - - 18,422
Cost of land sold (14,780) - -
-------------------------------------------------------------------------------
BALANCE, at December 31 $ 11,647,745 $ 11,662,525 $ 11,662,525
===============================================================================
2. RECONCILIATION OF The following table reconciles the buildings and
BUILDINGS AND improvements from January 1, 2000 to December
IMPROVEMENTS 31, 2002:
2002 2001 2000
-------------------------------------------------------------------------------
BALANCE, at January 1 $ 50,708,179 $ 50,263,748 $ 49,776,786
Additions to buildings and
improvements 503,878 444,431 720,962
Cost of assets sold - - (234,000)
-------------------------------------------------------------------------------
BALANCE, at December 31 $ 51,212,057 $ 50,708,179 $ 50,263,748
===============================================================================
3. RECONCILIATION OF
ACCUMULATED DEPRECIATION The following table reconciles the accumulated
depreciation from January 1, 2000 to
December 31, 2002:
2002 2001 2000
-------------------------------------------------------------------------------
BALANCE, at January 1 $ 23,473,656 $ 21,830,404 $ 20,240,011
Current year
depreciation expense 1,703,668 1,643,252 1,718,836
Accumulated depreciation
on assets sold - - (128,443)
-------------------------------------------------------------------------------
BALANCE, at December 31 $ 25,177,324 $ 23,473,656 $ 21,830,404
===============================================================================
4. TAX BASIS OF BUILDINGS
AND IMPROVEMENTS The aggregate cost of buildings and improvements
for federal income tax purposes is equal to the
cost basis used for financial statements
purposes.
-34-
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 24, 2003
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 24, 2003
By: /s/ Susann Szepytowski
-----------------------
Susann Szepytowski
(Controller of Uniprop, Inc.)
Dated: March 24, 2003
-35-
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Paul M Zlotoff, certify that:
1. I have reviewed this annual report on Form 10-K of Uniprop
Manufactured Housing Income Fund II;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by the annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and we have:
a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the
period in which this annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this annual report (the "Evaluation
Date"); and
c) presented in this annual report our conclusions about the
effectiveness of the of the disclosure controls and
procedures based on our evaluation as the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and
the audit committee of registrant's board of directors (or persons
performing the equivalent function):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and
report financial data and have identified for the
registrant's auditors any material weaknesses in internal
controls; and
b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and
6. The Registrant's other certifying officers and I have indicated in
this annual report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date: March 24, 2003 Signature: /s/ Paul M. Zlotoff
-------------------
Paul M. Zlotoff, Principal
Executive Officer
President & Director of GP
Genesis Corp.
-36-
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Gloria A. Koster, certify that:
1. I have reviewed this annual report on Form 10-K of Uniprop
Manufactured Housing Income Fund II.
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by the annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and we have;
a. designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the
period in which this annual report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this annual report (the "Evaluation
Date"); and
c. presented in this annual report our conclusions about the
effectiveness of the of the disclosure controls and
procedures based on our evaluation as the Evaluation Date.
5. The registrant's other certifying officers and I have evaluation, to
the registrant's auditors and the audit committee of registrant's
board of directors (or persons performing the equivalent function):
a. all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and
report financial data and have identified for the
registrant's auditors and material weaknesses in internal
controls; and
b. any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and
6. The Registrant's other certifying officers and I have indicated in
this annual report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date: March 24, 2003 Signature: /s/ Gloria A. Koster
--------------------
Gloria A. Koster, Chief Financial Officer
-37-
EXHIBIT INDEX
EXHIBIT
- -------
NUMBER DESCRIPTION METHOD OF FILING PAGE
- ------ ----------- ---------------- ----
2 Mortgage Notes, made on August 20, Incorporated by reference
1998 between Uniprop Income Fund II to the Form 8-K filed on September
and GMACCM 8, 1998.
Incorporated by reference to the S-11
3(a) 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)
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
-38-
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, 2003.
99.1 Certification Pursuant Filed here within
99.2 Certification Pursuant Filed here within
-39-