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, 2004 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 38-2702802
(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 ]
The estimated aggregate net asset value of the units as of March 1, 2005 held by
non-affiliates, as estimated by the General Partner (based on a 2005 appraisal
of Partnership properties), was $50,308,196. As of March 1, 2005 the number of
units of limited partnership interest of the registrants outstanding was
3,303,387.
DOCUMENTS INCORPORATED BY REFERENCE
NONE
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.
-2-
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 Loan Agreement through the note maturity date of September
2028. The Partnership used the proceeds from the Loan to refinance the
Partnership's outstanding indebtedness of $30,045,000, which was incurred in 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. 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, with a view to achieving maximum capital
appreciation to the Partnership while 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
-3-
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
seven communities offering approximately 3,441 housing sites competing with
Sunshine Village. Ardmor Village competes with approximately fourteen
communities in the Lakeville, Minnesota area offering approximately 3,251
housing sites. Camelot Manor competes with approximately eleven communities in
the Grand Rapids, Michigan area offering approximately 2,309 housing sites. In
the Jacksonville, Florida area, Country Roads competes with approximately eleven
communities offering approximately 4,047 housing sites. The Tampa, Florida area
contains approximately seventeen communities offering approximately 4,600
housing sites competing with Paradise Village. Dutch Hills and Stonegate Manor
compete with approximately 12 other communities in the Lansing, Michigan area
offering approximately 3,878 housing sites. In the Las Vegas, Nevada area, West
Valley and El Adobe compete with approximately 13 other communities offering
approximately 2,781 housing sites and El Adobe competes with 19 other
communities offering 1,167 homesites. 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, 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)
-4-
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.
Employees
The Partnership employs three part-time employees to perform Partnership
management and investor relations' services. The Partnership retains an
affiliate, Uniprop AM, LLC, as the property manager for each of its Properties.
Uniprop AM, LLC 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 AM, LLC 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 Community and are not
included in any property management fee payable to Uniprop AM, LLC. The yearly
salaries and expenses for local managers range from $15,000 to $42,000.
Community Managers are utilized by the Partnership to provide on-site
maintenance and administrative services. Uniprop AM, LLC 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, 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. Each
of the Properties has a community center, which includes offices, meeting rooms
and game rooms. 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.
-5-
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
Camelot Blvd. S.W.
Grand Rapids, MI 1973 57 335
Country Roads
Townsend Road
Jacksonville, FL 1967 37 311
Dutch Hills
Upton Road
E. Lansing, 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 53 421
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.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The voting privileges of the Unit Holders are restricted to certain
matters of fundamental significance to the Partnership. The Unit Holders 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 also
have a right to vote on the removal and replacement of the General Partner,
dissolution of the Partnership, material amendments
-6-
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 holding in the aggregate more than 50% of the then outstanding
interests. No matters were submitted to the Unit Holders for a vote during 2004.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SECURITY HOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
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 Unit
Holders 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 2005, the Properties were appraised at an
aggregate fair market value of $80,050,000. Assuming a sale of the nine
properties in March 2005, 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 $50,308,196 or $15.23 per
Unit. There can be no assurance that the estimated net asset value could ever be
realized. As of March 1, 2005, the Partnership had approximately 3,941 Unit
Holders.
The following table sets forth the distributions per limited partnership unit
for each calendar quarter in the last two fiscal years. Distributions were paid
in the periods immediately subsequent to the periods in which such distributions
were declared.
Distribution per
Limited Partnership Unit
Quarter Ended
March 31, 2004 $0.23
June 30, 2004 $0.23
September 30, 2004 $0.23
December 31, 2004 $0.23
March 31, 2003 $0.23
June 30, 2003 $0.23
September 30, 2003 $0.23
December 31, 2003 $0.23
-7-
The Partnership intends to continue to declare quarterly distributions. However,
distributions are determined by the General Partner and will depend on the
results of the Partnership's operations.
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, 2004, 2003, 2002, 2001 and 2000:
FISCAL YEAR FISCAL YEAR FISCAL YEAR FISCAL YEAR FISCAL YEAR
ENDED ENDED ENDED ENDED ENDED
DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER
31, 2004 31, 2003 31, 2002 31, 2001 31, 2000
------------ ------------ ------------ ------------ ------------
Total Assets $ 40,749,401 $ 42,826,320 $ 44,130,856 $ 45,616,944 $ 46,542,559
============ ============ ============ ============ ============
Note Payable $ 27,340,304 $ 27,819,236 $ 28,273,124 $ 28,817,758 $ 29,209,358
============ ============ ============ ============ ============
Revenue 12,979,388 14,402,693 13,741,599 14,530,327 14,474,625
Operating Expenses (11,604,261) (12,290,990) (11,623,613) (12,419,504) (12,484,761)
------------ ------------ ------------ ------------ ------------
Total Net Income $ 1,375,127 $ 2,111,703 $ 2,117,986 $ 2,110,823 $ 1,989,864
============ ============ ============ ============ ============
Distributions to Unit Holders,
per Unit: $ .92 $ .92 $ .90 $ .82 $ .76
Income per Unit: $ .42 $ .64 $ .63 $ .63 $ .60
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
-8-
$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.
As described in Item 1, the Partnership borrowed $30,000,000 from GMAC
Commercial Mortgage Corporation in August 1998. 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: 2005 - $506,000; 2006 - $540,000; 2007 - $587,000 and 2008 - $622,000;
and 2009 - $660,000.
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
believes will be 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 of the cash generated from operations in order to build capital
reserves. As of December 31, 2004, the Partnership had $2,017,513 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), was applied to 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, 2004, the Partnership made distributions
to the Unit Holders of $3,039,115, which is equal, on an annualized basis, to a
5% return on their adjusted capital contributions ($.92 per $17.11 Unit).
Distributions paid to Unit Holders in 2003 totaled $3,039,116, and $2,973,048
was paid in 2002.
-9-
The distributions paid in 2004 were less than the amount required for the
annual 10.0% preferred return to the Unit Holders by approximately $2,613,000.
As described in Note 7 to the Partnership's financial statements, the cumulative
preferred return deficit through December 2004 was approximately $32,854,000. 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, 2004, the unpaid amount to be
distributed to the General Partner was approximately $9,900,000.
Revenue and Net Income
For the years ended December 31, 2004, 2003 and 2002, net income was
$1,375,127, $2,111,703 and $2,117,986 and gross revenue was $12,979,388,
$14,402,693 and $13,741,599, respectively.
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.
Partnership Management
Certain employees of the Partnership are also employees of affiliates of
the General Partner. The Partnership paid these employees an aggregate of
$116,571, $113,501, and $96,345, in 2004, 2003 and 2002 respectively, to perform
partnership management and investor relation services for the Partnership.
Recent Accounting Pronouncements
There are no recent accounting pronouncements that the Fund is required to
adopt.
Critical Accounting Policies
In the course of developing and evaluating accounting policies and
procedures, we use estimates, assumptions and judgments to determine the most
appropriate methods to be applied. Such processes are used in determining
capitalization of costs related to real estate investments and potential
impairment of real estate investments.
Real estate assets are stated at cost less accumulated depreciation.
Expenditures for property maintenance are charged to operations as incurred,
while significant renovations are capitalized. Depreciation of the buildings is
recorded on the straight-line method using as estimated useful life of thirty
years.
-10-
In determining the fair value of real estate investments, we consider
future cash flow projections on a property by property basis, current interest
rates and current market conditions of the geographical location of each
property.
The following table outlines our contractual obligations (in thousands) as
of December 31, 2004.
Total Yr1 2-3 Yrs 4-5 Yrs Over 5 Yrs
----- --- ------- ------- ----------
Mortgages payable $ 27,340 $ 506 $ 1,127 $ 1,282 $ 24,425
The future payments listed above for long-term debt repayments exclude interest
payments.
Property Operations
Overall, as illustrated in the table below, the Partnership's nine
properties had a combined average occupancy of 68% for the year ended December
31, 2004, as compared to 76% for the fiscal year December 31, 2003, and 81% for
the fiscal year ended December 31, 2002. The average monthly rent (not weighted
average) was approximately $402 per home site for the year ended December 31,
2004, as compared to $397 for the year ended December 31, 2003 and $384 for the
year ended December 31, 2002. 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.
TOTAL
SITES OCCUPIED SITES OCCUPANCY RATE AVERAGE RENT
----- ------------------- ---------------- -------------------
2004 2003 2002 2004 2003 2002 2004 2003 2002
----- ----- ----- ---- ---- ---- ---- ------ -----
Ardmor Village 339 265 301 316 78% 89% 93% $414 $ 394 $ 374
Camelot Manor 335 216 257 266 65% 77% 79% 366 372 365
Country Roads 311 182 227 249 59% 73% 80% 278 272 261
Dutch Hills 278 213 248 262 77% 89% 94% 386 371 360
El Adobe 367 235 266 282 64% 72% 77% 437 450 432
Paradise Village 614 308 356 390 50% 58% 64% 340 335 325
Stonegate Manor 308 206 233 244 67% 76% 79% 385 374 363
Sunshine Village 356 311 322 333 87% 90% 94% 512 494 477
West Valley 421 317 334 357 75% 79% 85% 499 512 494
----- ----- ----- ----- ---- ---- ---- ---- ----- -----
Overall 3,329 2,253 2,544 2,699 68% 76% 81% $402 $ 397 $ 384
- 11-
The following table summarizes gross revenues and net operating income for
the Partnership and Properties during 2004, 2003, 2002 twelve month period.
NET OPERATING INCOME
GROSS REVENUE AND NET INCOME
--------------------------------------- ----------------------------------------
2004 2003 2002 2004 2003 2002
----------- ----------- ----------- ----------- ----------- -----------
Ardmor Village $ 1,591,966 $ 2,048,194 $ 1,739,467 $ 815,426 $ 801,896 $ 864,742
Camelot Manor 1,137,522 1,384,266 1,268,160 517,127 527,365 510,157
Country Roads 811,738 878,556 805,292 267,828 307,423 311,401
Dutch Hills 1,124,377 1,219,250 1,239,154 514,329 593,790 591,862
El Adobe 1,374,120 1,542,349 1,538,618 666,732 786,259 824,163
Paradise Village 1,698,099 1,825,944 1,724,890 477,613 450,805 335,509
Stonegate Manor 1,173,422 1,196,556 1,194,174 439,779 461,438 498,340
Sunshine Village 2,104,982 2,086,697 2,056,581 1,074,067 1,101,982 1,108,979
West Valley 1,955,140 2,206,617 2,143,653 1,115,613 1,331,024 1,301,637
----------- ----------- ----------- ----------- ----------- -----------
12,971,366 14,388,429 13,709,989 5,888,514 6,361,982 6,346,790
Partnership Mgmt. $ 8,022 $ 14,264 $ 31,610 (380,865) (303,092) (281,991)
Other Expenses (522,779) (333,947) (343,093)
Debt Service (1,806,738) (1,831,875) (1,861,761)
Depreciation (1,803,005) (1,781,365) (1,741,959)
----------- ----------- -----------
TOTAL: $12,979,388 $14,402,693 $13,741,599 1,375,127 $ 2,111,703 $ 2,117,986
Net Operating Income ("NOI") is a non-GAPP financial measure equal to net
income, the most comparable GAAP financial measure, plus depreciation, interest
expense, partnership management expense, and other expenses. The Partnership
believes that NOI is useful to investors and the Partnership's management as an
indication of the Partnership's ability to service debt and pay cash
distributions. NOI presented by the Partnership may not be comparable to NOI
reported by other companies that define NOI differently, and should not be
considered as an alternative to net income as an indication of performance or to
cash flows as a measure of liquidity or ability to make distributions.
-12-
COMPARISON OF YEAR ENDED DECEMBER 31, 2004 TO YEAR ENDED DECEMBER 31, 2003
Total revenues decreased $1,423,305 to $12,979,388 in 2004, compared to
$14,402,693 in 2003. The decrease is primarily the result of a decrease in home
sales as well as in occupancy. The decrease in occupancy is due primarily to
increased foreclosures on home mortgages, which frequently results in the home
being moved out of the property. Rental Revenue decreased $710,200 due to lower
occupancy. Home Sale Revenue decreased $865,703.
The Partnership's operating expenses decreased $686,729, to $11,604,261 in
2004, compared to $12,290,990 in 2003. Home sale expense decreased due to the
decreased volume of home sales.
As a result of the forgoing factors, net income decreased $736,576 from
$2,111,703 in 2003 to $1,375,127 in 2004.
COMPARISON OF YEAR ENDED DECEMBER 31, 2003 TO YEAR ENDED DECEMBER 31, 2002
Gross revenue increased $661,094 to $14,402,693 in 2003, compared to
$13,741,599 in 2002. The increase was primarily the result of an increase in
home sales. The decrease in occupancy was due primarily to increased
foreclosures on home mortgages, which frequently results in the home being moved
out of the property. Rental Revenue decreased $145,007, due to lower occupancy.
Home Sale Revenue increased $925,624 due to an aggressive marketing of home
sales.
The Partnership's operating expenses increased $667,377, to $12,290,990 in
2003, compared to $11,623,613 in 2002. Home sale expense increased due to the
increased volume of home sales.
As a result of the forgoing factors, net income decreased from $6,283 from
$2,117,986 in 2002 to $2,111,703 in 2003.
IMPORTANT DISCLOSURES
The General Partner believes it is important to disclose certain recent
events to the Unit Holders along with a description of the actions taken by the
General Partner to respond to the events.
During 2004, industry conditions remained depressed due to the lack of
available retail financing. Declining retail home sales for manufactured homes
and high default rates on chattel mortgage loans for manufactured homes
continued through 2004. The increase in foreclosures has created a surplus of
pre-owned homes for sale in the market place. The availability of pre-owned home
inventory contributed to the reduced purchase of new homes for the industry as a
whole. The Partnership has aggressively pursued home sales by increasing
marketing efforts including but not limited to the addition of sales personnel.
-13-
The surplus of pre-owned homes available in the market has presented an
opportunity for the Partnership to purchase homes at low prices. On a limited
basis, these homes have been purchased by the Partnership and reviewed on a case
by case basis for retail sale. The maximum term of the typical retail contract
provided by the Partnership is ten years, significantly less than is generally
available from retail lenders. This shorter amortization period allows for a
faster return of principal for the Partnership and reduces the risk of loss
through repossession. The total amount of retail loans at this time is not
material relative to the total assets and revenues of the Partnership. The
General Partner believes that its retail sales and finance activity can help
increase occupancy and thereby rental income. To date, the delinquency and
default rates of the retail loans are not significant. 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, 2004 the Partnership had a note payable
outstanding in the amount of $27,340,304. 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 following Partnership financial statements for the fiscal years ended
December 31, 2004, 2003 and 2002, and supplementary data are filed with this
Report:
(i) Report of Independent Registered Public Accounting Firm
(ii) Balance Sheets as of December 31, 2004 and 2003
(iii) Statements of Income for the fiscal years ended December 31,
2004, 2003 and 2002
(iv) Statements of Partners' Equity for the fiscal years ended
December 31, 2004, 2003 and 2002
-14-
(v) Statements of Cash Flows for the fiscal years ended December
31, 2004, 2003 and 2002
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There has been no change in the Partnership's independent registered
public accounting firm nor have there been any disagreements during the
Partnership's most recent two fiscal years.
ITEM 9A. CONTROLS AND PROCEDURES
The Partnership maintains disclosure controls and procedures that are
designed to ensure that information required to be disclosed in the
Partnership's Exchange Act reports is recorded, processed, summarized and
reported within the time periods specified in the Securities and Exchange
Commission rules and forms, and that such information is accumulated and
communicated to the Partnership's management, including its Principal Executive
Officer and Principal Financial Officer, as appropriate to allow timely
decisions regarding required disclosure based closely on the definition of
"disclosure controls and procedures" in Rule 13a - 14(c). In designing and
evaluating the disclosure controls and procedures, management recognized that
any controls and procedures, no matter how well designed and operated, can
provide only reasonable assurance of achieving the desired control objectives,
and management necessarily was required to apply its judgment in evaluating the
cost-benefit relationship of possible controls and procedures. As of the end of
the period covered by this report (the-evaluation date), the Partnership
conducted an evaluation under the supervision and with the participation of its
Principal Executive Officer and Principal Financial Officer, of the
effectiveness of the design and operation of its disclosure controls and
procedures (as defined in Rule 13a - 14(c) under the Securities Exchange Act of
1934 ("the Exchange Act")). Based on this evaluation, the Principal Executive
Officer and Principal Financial Officer concluded that, as of the evaluation
date, the Partnership's disclosure controls and procedures were effective to
reasonably ensure that information required to be disclosed by us in the reports
we file or submit under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in Securities and Exchange Commission
rules and forms.
There was no significant change in the Partnership's internal control over
financial reporting during its most recently completed fiscal year that has
materially affected, or is reasonably likely to materially affect, its internal
control over financial reporting.
-15-
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 Uniprop, Inc. is the General Partner .
Information concerning officers of Uniprop, Inc., during the last five
years or more is as follows:
Paul M. Zlotoff, 55, 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, 56, 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.
Joel Schwartz CPA, 43, became Chief Financial Officer of Uniprop Inc. on
June 1, 2004. Mr. Schwartz is responsible for all financial affairs including
accounting operations, banking relationships, raising mortgage capital, asset
management and investor relations. From 1998 to 2004, Mr. Schwartz was Chief
Financial Officer for Village Green Companies. From 1990 to 1998, Mr. Schwartz
was Project Manager for Ford Motor Land Services Corporation. Mr. Schwartz was
also an Associate at Plante & Moran CPA's from 1983 to.1989. Mr. Schwartz
received his B.A. from Michigan State University in 1983 with a major in
accounting and received an MBA from the University of Michigan in 1990.
Roger Zlotoff, 44, is Vice President and became Chief Operating Officer of
Uniprop, Inc. in 2004. He has been with Uniprop since 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
-16-
philosophy major, and received his Masters Degree in International Business from
the University of South Carolina.
Paul M. Zlotoff and Roger Zlotoff are brothers.
CODE OF ETHICS
Because the Partnership has no executive officers, the Partnership has not
adopted a code of ethics for the Partnership. A code of ethics has been
established for the Directors, Officers, and Employees of Uniprop. A copy of the
Code of ethics is available at no charge upon request.
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 AM, LLC,
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 AM, LLC. during the next fiscal year.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED UNITHOLDER MATTERS
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 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.
-17-
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 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 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 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 $2,613,000 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
has first received his 10% cumulative preferred return and 125% of his capital
contribution. For 2004, approximately $500,000 was accumulated for the General
Partner, and the General Partner's aggregate accumulated Incentive Management
Interest as of December 2004 was $9,900,000. 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 may be made to the General Partner until the 10% cumulative
preferred return of approximately $32,854,000, as of December 31, 2004, is first
distributed to the Unit Holders. In February of 1994, as part of the 1993
mortgage financing with mortgage backed securities held with Bankers Trust,
$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
-18-
General Partner will be entitled to receive its share of distributable cash from
capital transactions after (i) each Unit Holder 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 AM,
LLC 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, 2004. 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 AM, LLC received and will receive property management fees for
each Property managed by it. Uniprop AM, LLC 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 AM, LLC, or the amount which would be payable
to an unaffiliated third party for comparable services. During the last fiscal
year, Uniprop AM, LLC received property management fees totaling $584,865. 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 $116,571 during 2004 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. Uniprop Homes, Inc., a related
entity, received commissions totaling $58,711 for certain services provided as a
broker/dealer of manufactured homes for the communities. Uniprop Homes, Inc.
represented the communities in the sale of new and pre-owned homes to community
residents.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The Partnership retained BDO Seidman, LLP to audit its financial statements for
the year ended December 31, 2004. The Partnership also retained BDO Seidman, LLP
to provide other services in 2004.
The Aggregate fees billed to the Partnership for professional services performed
by BDO Seidman, LLP were as follows.
-19-
2004 2003
------- -------
(1) Audit Fees $34,000 $30,800
(2) Audit-Related Fees $ 0 $ 0
(3) Tax Fees $14,300 $13,900
(4) All Other Fees $ 0 $ 0
(5) Total $48,300 $44,700
AUDIT FEES: pertain to the audit of the Partnerships annual financial
statements, including reviews of the interim financial statements contained in
the Partnerships Quarterly Reports of Form 10-Q.
TAX FEES: pertain to services performed for tax compliance, tax planning and tax
advice, including preparation of tax returns and partners Schedule K-1
processing.
The services performed by BDO Seidman in 2004 were pre-approved by the General
Partner.
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Financial Statements
(1) The following financial statements and related documents are filed
with this report:
(i) Report of Independent Registered Public Accounting Firm
(ii) Balance Sheets as of December 31, 2004 and 2003
(iii) Statements of Income for the fiscal years ended December 31,
2004, 2003 and 2002
(iv) Statements of Partners' Equity for the fiscal years ended
December 31, 2004, 2003 and 2002
(v) Statements of Cash Flows for the fiscal years ended December
31, 2004, 2003 and 2002
-20-
(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, 2004, 2003 and 2002
(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 AM, LLC.
10(b) Form of Consulting Agreement among the Partnership, the
General Partner and Consultant
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.)
-21-
The following exhibit is incorporated by reference to the Form 8-K that was
filed on September 8, 1998:
Mortgage notes, made as of August 20, 1998, between Uniprop Manufactured
Housing Communities Income Fund II and GMAC CMC.
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, 2005
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Partners
Uniprop Manufactured Housing
Communities Income Fund II
(a Michigan limited partnership)
We have audited the accompanying balance sheets Uniprop Manufactured Housing
Communities Income Fund II (a Michigan limited partnership), as of December 31,
2004 and 2003, and the related statements of income, partners' equity and cash
flows for each of the three years in the period ended December 31, 2004. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatements. An audit includes consideration
of internal control over financial reporting as a basis for designing audit
procedures that me appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company's internal control
over financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall presentation of the financial statements. 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, 2004 and 2003 and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 2004 in conformity with accounting principles generally accepted in
the United States of America
Also, in our opinion, the schedule listed under Item 15 of Form 10-K presents
fairly, in all material respects, the information set forth therein.
/s/ BDO SEIDMAN, LLP
BDO SEIDMAN, LLP
Troy, Michigan
February 8, 2005
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
BALANCE SHEETS
<Table>
<Caption>
DECEMBER 31, 2004 2003
------------- -------------
ASSETS
PROPERTY AND EQUIPMENT
Buildings and improvements $ 51,896,262 $ 51,610,447
Land 11,666,645 11,666,645
Furniture and equipment 651,482 628,258
------------- -------------
64,214,389 63,905,350
Less accumulated depreciation 29,164,191 27,361,187
------------- -------------
NET PROPERTY AND EQUIPMENT 35,050,198 36,544,163
Cash 2,017,513 2,652,394
Manufactured homes and improvements 1,372,272 1,210,686
Unamortized financing costs 494,988 515,904
Other assets 1,814,430 1,903,173
------------- -------------
$ 40,749,401 $ 42,826,320
============= =============
LIABILITIES AND PARTNERS' EQUITY
Note payable $ 27,340,304 $ 27,819,236
Accounts payable 412,513 257,209
Other liabilities 613,116 702,419
------------- -------------
TOTAL LIABILITIES 28,365,933 28,778,864
------------- -------------
PARTNERS' EQUITY
Unit holders 12,027,993 13,705,732
General partner 355,475 341,724
------------- -------------
TOTAL PARTNERS' EQUITY 12,383,468 14,047,456
------------- -------------
$ 40,749,401 $ 42,826,320
============= =============
</Table>
See accompanying notes to financial statements.
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
STATEMENTS OF INCOME
<Table>
<Caption>
YEAR ENDED DECEMBER 31, 2004 2003 2002
----------- ----------- -----------
REVENUE
Rental $10,969,832 $11,680,032 $11,825,039
Home sale income 1,195,191 2,060,894 1,135,270
Other 814,365 661,767 781,290
----------- ----------- -----------
12,979,388 14,402,693 13,741,599
----------- ----------- -----------
OPERATING EXPENSES
Administrative 3,413,401 3,274,642 3,243,321
Property taxes 1,071,516 1,097,809 1,068,910
Utilities 730,202 826,225 857,262
Property operations 1,573,191 1,540,609 1,701,880
Depreciation 1,803,005 1,781,365 1,741,959
Interest 1,806,738 1,831,875 12,861,761
Home sale expense 1,206,208 1,938,465 1,148,520
----------- ----------- -----------
11,604,261 12,290,990 11,623,613
----------- ----------- -----------
NET INCOME $ 1,375,127 $ 2,111,703 $ 2,117,986
=========== =========== ===========
INCOME PER LIMITED PARTNERSHIP UNIT $ .42 $ .64 $ .63
=========== =========== ===========
DISTRIBUTIONS PER LIMITED PARTNERSHIP UNIT $ .92 $ .92 $ .90
=========== =========== ===========
NUMBER OF LIMITED PARTNERSHIP UNITS OUTSTANDING 3,303,387 3,303,387 3,303,387
=========== =========== ===========
NET INCOME ALLOCABLE TO GENERAL PARTNER $ 13,751 $ 21,117 $ 21,180
=========== =========== ===========
DISTRIBUTIONS ALLOCABLE TO GENERAL PARTNER $ -- $ -- $ --
=========== =========== ===========
</Table>
See accompanying notes to financial statements.
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERS' EQUITY
YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
<Table>
<Caption>
General
Partner Unit Holders TOTAL
-------- ------------- -----------
BALANCE, January 1, 2002 $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
Distributions to unit holders -- (3,039,116) (3,039,116)
Net income for the year 21,117 2,090,586 2,111,703
-------- ----------- -----------
BALANCE, December 31, 2003 341,724 13,705,732 14,047,456
Distributions to unit holders -- (3,039,115) (3,039,115)
Net income for the year 13,751 1,361,376 1,375,127
-------- ----------- -----------
BALANCE, December 31, 2004 $355,475 $12,027,993 $12,383,468
======== =========== ===========
</Table>
See accompanying notes to financial statements.
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
<Table>
<Caption>
Year Ended December 31, 2004 2003 2002
----------- ----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,375,127 $ 2,111,703 $ 2,117,986
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation 1,803,005 1,781,365 $ 1,741,959
Amortization 20,916 20,916 20,916
Gain on sale of property and equipment -- (8,846) (95,221)
(Increase) decrease in manufactured homes
and improvements (161,586) (100,484) 32,377
Decrease (increase) in other assets 88,743 (395,126) (360,087)
Increase (decrease) in accounts payable 155,304 78,881 (86,709)
(Decrease) increase in other liabilities (89,303) (2,116) 317
----------- ----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 3,192,206 3,486,293 3,371,538
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (309,040) (467,775) (586,838)
Proceeds from sale of property and equipment -- 8,846 110,000
----------- ----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (309,040) (458,929) (476,838)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions to unit holders (3,039,115) (3,039,116) (2,973,048)
Repayments of notes payable (478,932) (453,888) (544,634)
----------- ----------- -----------
NET CASH USED IN FINANCING ACTIVITIES (3,518,074) (3,493,004) (3,517,682)
----------- ----------- -----------
NET DECREASE IN CASH (634,881) (456,640) (622,982)
CASH, at beginning of year 2,652,394 3,118,034 3,741,016
----------- ----------- -----------
CASH, at end of year $ 2,017,513 $ 2,652,394 $ 3,118,034
=========== =========== ===========
</Table>
See accompanying notes to financial statements
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
I. 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.
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 $26,805,335 and $25,022,310 as of
December 31, 2004 and 2003, 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, 2004.
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.
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.
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 though the note
maturity date of September 2028.
Future maturities on the note payable for
the next five years are as follows: 2005 -
$506,000; 2006 - $540,000; 2007 - $587,000;
2008 - $622,000; and 2009 - $660,000.
3. OTHER ASSETS At December 31, 2004 and 2003, "Other
Assets" included cash of approximately
$291,000 and $330,000, respectively, 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, 2004 and 2003, "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:
<Table>
<Caption>
DECEMBER 31, 2004 2003
------------------------------------------------------
Tenants' security deposits $ 478,549 $ 536,510
Accrued interest 101,592 103,372
Other 32,975 62,537
--------- ---------
TOTAL $ 613,116 $ 702,419
========= =========
</Table>
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
================================================================================
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, 2004, 2003 and
2002, the affiliate earned property management
fees of $584,865, $613,980, and $624,188,
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
$15,134 and $34,020 by the affiliate at
December 31, 2004 and 2003, respectively.
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.
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
================================================================================
<Table>
<Caption>
6. RECONCILIATION OF Year Ended December 31, 2004 2003 2002
FINANCIAL STATEMENT ------------------------------------------------------------------------------------
INCOME AND TAXABLE
INCOME
Income per the financial
statements $1,375,127 $2,111,703 $2,117,986
Adjustments to depreciation
for difference in methods 19,982 (106,175) (69,998)
Adjustments for prepaid
rent, meals and
entertainment (26,521) 7,881 14,250
------------------------------------------------------------------------------------
INCOME PER THE PARTNER-
SHOP'S TAX RETURN $1,368,588 $2,013,409 $2,062,238
====================================================================================
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:
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.
</Table>
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
================================================================================
Annual distributable cash from operations was less
than the amount required for the annual 10%
preferred return to the unit holders by
approximately $2,613,000 in 2004 and 2003. No
distributions can be made to the general partner
until the cumulative preferred return deficit of
approximately $32,854,000 has been distributed to
the unit holders.
At December 31, 2004, the general partner's
cumulative incentive management interest to be
distributed was approximately $9.9 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 year 2005.
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 2004, 2003 and 2002 was
INFORMATION approximately $1,788,000, $1,813,000, and
$1,843,000, respectively.
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
================================================================================
9. INTERIM RESULTS The following summary represents the unaudited results of operations of the Partnership,
(UNAUDITED) expressed in thousands except per unit amounts, for the periods from January 1, 2003
through December 31, 2004:
Three Months Ended
----------------------------------------------------------------------------------------
2004 March 31, June 30, September 30, December 31,
----------------------------------------------------------------------------------------
REVENUES $3,213 $3,234 $3,293 $3,239
========================================================================================
NET INCOME $ 377 $ 484 $ 359 $ 155
========================================================================================
INCOME PER LIMITED
PARTNERSHIP UNIT $ .11 $ .15 $ .11 $ .05
========================================================================================
Three Months Ended
----------------------------------------------------------------------------------------
2003 March 31, June 30, September 30, December 31,
----------------------------------------------------------------------------------------
REVENUES $3,251 $3,756 $3,675 $3,721
========================================================================================
NET INCOME $ 522 $ 632 $ 457 $ 501
========================================================================================
INCOME PER LIMITED
PARTNERSHIP UNIT $ .16 $ .19 $ .14 $ .15
========================================================================================
UNIPROP MANUFACTURED HOUSING
COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
NOTES TO SCHEDULE III
DECEMBER 31, 2004
================================================================================
1. RECONCILIATION OF LAND The following table reconciles the land from
January 1, 2002 to December 31, 2004:
<Table>
<Caption>
2004 2003 2002
----------- ----------- -----------
Balance, at January 1 $11,666,645 $11,647,745 $11,662,525
Additions to land - 18,900 -
Cost of land sold - - (14,780)
----------- ----------- -----------
Balance, at December 31 $11,666,645 $11,666,645 $11,647,745
=========== =========== ===========
</Table>
2. RECONCILIATION OF BUILDINGS The following table reconciles the buildings
AND IMPROVEMENTS and improvements from January 1, 2002 to
December 31, 2004:
<Table>
<Caption>
2004 2003 2002
----------- ----------- -----------
Balance, at January 1 $51,610,447 $51,212,057 $50,708,179
Additions to buildings and
improvements 285,815 398,390 503,878
Cost of land sold - - -
----------- ----------- -----------
Balance, at December 31 $51,896,262 $51,610,447 $51,212,057
=========== =========== ===========
</Table>
3. RECONCILIATION OF The following table reconciles the
ACCUMULATED DEPRECIATION accumulated depreciation from January 1,
2002 to December 31, 2004:
<Table>
<Caption>
2004 2003 2002
----------- ----------- -----------
Balance, at January 1 $26,908,653 $25,177,324 $23,473,656
Current year depreciation
expense 1,754,720 1,731,329 1,703,668
Accumulated depreciation
on assets sold - - -
----------- ----------- -----------
Balance, at December 31 $28,663,373 $26,908,653 $25,177,324
=========== =========== ===========
</Table>
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.
UNIPROP MANUFACTURED
HOUSING COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2004
================================================================================
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) $ 2,521,557 $ 1,063,253 $ 4,253,011 $ 4,120 $1,167,725
Sunshine Village
(Davis, FL) 3,930,322 1,225,862 4,875,878 - 232,802
Camelot Manor
Grand Rapids, MI) 3,174,491 918,949 3,681,051 - 1,043,243
Country Roads
(Jacksonville, FL) - 636,550 2,546,200 38,106 761,213
Paradise Village
(Tampa, FL) - 1,760,000 7,040,000 279,053 1,421,256
Dutch Hills
(Haslett, MI) 2,363,690 839,693 3,358,771 41,526 682,923
Stonegate Manor
(Lansing, MI) 2,762,219 930,307 3,721,229 40,552 883,169
El Adobe
(Las Vegas, NV) 5,066,359 1,480,000 5,920,000 39,364 401,415
West Valley
(Las Vegas, NV) 7,521,666 2,289,700 9,158,800 89,010 748,517
----------- ----------- ----------- -------- ----------
$27,340,304 $11,134,314 $44,554,940 $532,331 $7,341,322
=========== =========== =========== ======== ==========
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) $ 1,067,373 $ 5,420,736 $ 6,488,109 $ 2,911,741 1987 30 years
Sunshine Village
(Davis, FL) 1,215,862 5,108,680 6,324,542 2,987,472 1987 30 years
Camelot Manor
Grand Rapids, MI) 918,949 4,724,294 5,643,243 2,496,305 1987 30 years
Country Roads
(Jacksonville, FL) 674,656 3,307,413 3,982,069 1,87O,295 1987 30 years
Paradise Village
(Tampa, FL) 2,039,053 8,461,256 10,500,309 4,799,408 1987 30 years
Dutch Hills
(Haslett, MI) 881,219 4,040,753 4,921,972 2,171,488 1987 30 years
Stonegate Manor
(Lansing, MI) 970,859 4,604,398 5,575,257 2,346,853 1987 30 years
El Adobe
(Las Vegas, NV) 1,519,964 6,321,415 7,841,379 3,559,932 1988 30 years
West Valley
(Las Vegas, NV) 2,378,710 9,907,317 12,286,027 5,519,878 1988 30 years
----------- ----------- ----------- -----------
$11,666,645 $51,896,262 $63,562,907 $28,663,373
=========== =========== =========== ===========
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 Zlotoff
Paul M. Zlotoff, Chairman
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.
Dated: March 18, 2005
By: /s/ Joel Schwartz By: /s/ Paul M. Zlotoff
--------------------------- ---------------------------
Joel Schwartz Paul M. Zlotoff, Chairman of Uniprop, Inc.
Principal Financial Officer (Principal Executive Officer)
(Chief Financial Officer of
Uniprop, Inc.)
By: /s/ Susann Szepytowski
--------------------------
Susann Szepytowski
Principal Accounting Officer
(Controller of Uniprop, Inc.)
EXHIBIT 28
UNIPROP INCOME FUND II
2005 PROPERTY APPRAISALS
Cushman & Wakefield has recently completed market value appraisals of Uniprop
Income Fund II's nine properties. The table below sets forth certain appraisal
information for each property, as well as a comparison to the original cash
purchase price:
(IN $1,000)
3/05 3/04 %
PROPERTY APPRAISALS APPRAISALS VARIANCE
Ardmor Village $10,250 $10,400 (1.5%)
Camelot Manor 6,000 6,650 (9.8%)
Country Roads 3,700 3,700 0.0
Dutch Hills 6,000 7,200 (16.7%)
El Adobe 10,400 10,300 1.0%
Paradise Village 5,850 6,050 (3.3%)
Stonegate Manor 5,700 6,300 (9.5%)
Sunshine Village 15,850 14,000 13.2%
West Valley 16,300 16,000 1.9%
------- ------- -----
Grand Total: $80,050 $80,600 (0.7%)
======= ======= ======
2005 ESTIMATED NET ASSET VALUE OF UNITS
Based on the March 2005 appraisal of the Partnership's properties, the General
Partner has calculated the estimated net asset value of each Unit, based on the
following assumptions:
- - Sale of the Properties in March 2005 for their appraised value.
- - Costs and selling expenses are 3.0% of the sale price.
- - Tax consequences of a sale are not taken into consideration.
The estimated net asset value of each unit, assuming the sale of the properties
at their present appraised value is $15.23 calculated as follows:
Aggregate appraised value: $80,050,000
Less: Selling Expenses (3.0%) 2,401,500
Mortgage Debt: 27,340,304
-----------
Net Sales Proceeds: $50,308,196
-----------
Number of Units: 3,303,387
Net Sales Proceeds per unit: $15.23
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION METHOD OF FILING PAGE
- ------- ----------- ---------------- ----
3(a) Certificate of Limited Incorporated by reference to the
Partnership for the S-11 Registration Statement of
Partnership the Partnership filed November 12,
1986, as amended on December 22, 1986
and January 16, 1987 (the
"Registration Statement").
3(b) Uniprop Income Fund II Incorporated by reference to the
Agreement of Limited Registration Statement.
Partnership
4(a) First Amendment to Uniprop Incorporated by reference to the
Income Fund II Agreement Registration Statement.
of Limited Partnership
(April 1, 1987)
4(b) Form of Beneficial Incorporated by reference to
Assignment Certificate Form 10-K for fiscal year ended
(BAC) for the Partnership December 31, 1997.
(originally filed with Form
10-K for the fiscal year
ended December 31, 1987)
10(a) Form of Management Incorporated by reference to the
Agreement between the Registration Statement.
Partnership and Uniprop
AM, LLC
10(b) Form of Consulting Incorporated by reference to the
Agreement among the Registration Statement.
Partnership, the General
Partner and Consultant
10(c) Contingent Purchase Price Incorporated by reference to
Agreement with Sunrise Form 10-K for fiscal year ended
Broward Associates, Ltd. December 31, 1997.
(originally filed with Form
10-K for the fiscal year
ended December 31, 1987)
10(d) Contingent Purchase Price Incorporated by reference to
Agreement with Ardmor Form 10-K for fiscal year ended
Associates Limited December 31, 1997.
Partnership (originally filed
with Form 10-K for the fiscal
year ended December 31,
1987)
10(e) Incentive Acquisition Fee Incorporated by reference to
Agreement between the Form 10-K for fiscal year ended
Partnership and Uniprop, December 31, 1997.
Inc. (originally filed with
Form 10-K for the fiscal year
ended December 31, 1987)
10(f) Mortgage Notes, made on Incorporated by reference to the
August 20, 1998 between Form 8-K filed on September 8,
Uniprop Income Fund II and 1998.
GMAC CMC
28 Letter summary of the Filed herewith.
estimated fair market values
of the Partnership's nine
manufactured housing
communities, as of March 1,
2005.
31.1 Certificate of Principal Filed herewith.
Executive Officer pursuant
to Section 302 of the
Sarbanes-Oxley Act of 2002
31.2 Certificate of Principal Filed herewith.
Financial Officer pursuant to
Section 302 of the
Sarbanes-Oxley Act of 2002
*32.1 Certification Pursuant to Filed herewith.
Section 906 of the
Sarbanes-Oxley Act of 2002
*32.2 Certification Pursuant to Filed herewith.
Section 906 of the
Sarbanes-Oxley Act of 2002
* This certificate is being furnished solely to accompany the report pursuant
to 18 U.S.C. 1350 and is not being filed for purposes of Section 18 of the
Securities and Exchange Act of 1934, as amended, and is not to be incorporated
by reference into any filing of the Partnership, whether made before or after
the date hereof, regardless of any general incorporation language in such
filing.