SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended March 31, 2005 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-Q or any amendment to this
Form 10-Q [ ]
Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2).
Yes [ ] No [X]
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II,
A MICHIGAN LIMITED PARTNERSHIP
INDEX
Page
----
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Balance Sheets
March 31, 2005 (Unaudited) and
December 31, 2004 3
Statements of Operations
Three months ended March 31, 2005
and 2004 (Unaudited) 4
Statement of Partners Equity
Three months ended March 31, 2005(Unaudited) 4
Statements of Cash Flows
Three months ended March 31, 2005
and 2004 (Unaudited) 5
Notes to Financial Statements
March 31, 2005 (Unaudited) 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 6
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 9
ITEM 4. CONTROLS AND PROCEDURES 10
PART II OTHER INFORMATION
ITEM 6. EXHIBITS 11
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II,
A MICHIGAN LIMITED PARTNERSHIP
BALANCE SHEETS
ASSETS MARCH 31,2005 DECEMBER 31, 2004
------------- -----------------
(UNAUDITED)
Properties:
Land $ 11,666,645 $ 11,666,645
Buildings And Improvements 52,239,458 52,136,962
Furniture And Fixtures 653,926 651,482
------------ ------------
64,560,029 64,455,089
Less Accumulated Depreciation (29,631,849) (29,164,191)
------------ ------------
34,928,180 35,290,898
Cash And Cash Equivalents 1,446,259 2,017,513
Unamortized Finance Costs 489,759 494,988
Manufactured Homes and Improvements 1,457,277 1,131,572
Other Assets 1,596,938 1,814,430
------------ ------------
Total Assets $ 39,918,413 $ 40,749,401
------------ ------------
LIABILITIES & PARTNERS' EQUITY MARCH 31,2005 DECEMBER 31, 2004
------------- -----------------
(UNAUDITED)
Accounts Payable $ 272,514 $ 412,513
Other Liabilities 633,805 613,116
Notes Payable 27,208,465 27,340,304
----------- -----------
Total Liabilities 28,114,784 28,365,933
Partners' Equity:
General Partner 357,274 355,475
Unit Holders 11,446,355 12,027,993
----------- -----------
Total Partners' Equity 11,803,629 12,383,468
----------- -----------
Total Liabilities And
Partners' Equity $39,918,413 $40,749,401
----------- -----------
See Notes to Financial Statements
3
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II,
A MICHIGAN LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
THREE MONTHS ENDED
MARCH 31, 2005 MARCH 31, 2004
-------------- --------------
(unaudited) (unaudited)
Income:
Rental Income $2,567,737 $2,832,398
Other 186,137 163,046
Home Sale Income 278,166 217,620
---------- ----------
Total Income $3,032,040 $3,213,064
---------- ----------
Operating Expenses:
Administrative Expenses
(Including $136,701 and $148,945, in Property Management
Fees Paid to an Affiliate for the Three Month Period Ending
March 31, 2005 and 2004 Respectively) 833,135 884,732
Property Taxes 275,070 278,573
Utilities 168,728 182,873
Property Operations 377,479 362,296
Depreciation And Amortization 472,886 454,126
Interest 434,304 446,928
Home Sale Expense 290,498 226,391
---------- ----------
Total Operating Expenses $2,852,100 $2,835,919
---------- ----------
Net Income $ 179,940 $ 377,145
---------- ----------
Income Per Unit: 0.05 0.11
Distribution Per Unit: 0.23 0.23
Weighted Average Number Of Units
Of Beneficial Assignment Of Limited Partnership
Interest Outstanding During The Period Ending
March 31, 2005 and 2004 3,303,387 3,303,387
STATEMENT OF PARTNERS' EQUITY (Unaudited)
General Partner Unit Holders Total
--------------- ------------- -----------
Balance, January 1, 2005 $ 355,475 $ 12,027,993 $12,383,468
Distributions (759,779) (759,779)
Net Income 1,799 178,141 $ 179,940
--------- ------------ -----------
Balance as of March 31, 2005 $ 357,274 $ 11,446,355 $11,803,629
========= ============ ===========
See Notes to Financial Statements
4
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II,
A MICHIGAN LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED
MARCH 31,2005 MARCH 31,2004
------------- -------------
(Unaudited) (Unaudited)
Cash Flows From Operating Activities:
Net Income $ 179,940 $ 377,145
------------ ------------
Adjustments To Reconcile Net Income
To Net Cash Provided By
Operating Activities:
Depreciation 467,657 448,897
Amortization 5,229 5,229
Increase in Manufactured Homes and Improvements (325,705) (189,868)
Decrease In Other Assets 217,492 135,607
Decrease In Accounts Payables (139,999) (36,860)
Increase In Other Liabilities 20,689 32,543
------------ ------------
Total Adjustments 245,363 395,548
------------ ------------
Net Cash Provided By
Operating Activities 425,303 772,693
------------ ------------
Cash Flows From Investing Activities:
Capital Expenditures (104,939) (124,212)
------------ ------------
Net Cash Used In
Investing Actvities (104,939) ($ 124,212)
------------ ------------
Cash Flows From Financing Activities:
Distributions To Partners (759,779) (759,778)
Payment On Mortgage (131,839) (119,262)
------------ ------------
Net Cash Used In Financing Activities (891,618) (879,040)
------------ ------------
Decrease In Cash and Equivalents (571,254) (230,559)
Cash and Equivalents, Beginning 2,017,513 2,652,394
------------ ------------
Cash and Equivalents, Ending $ 1,446,259 $ 2,421,835
------------ ------------
See Notes to Financial Statements
5
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II,
A MICHIGAN LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
March 31, 2005 (Unaudited)
1. BASIS OF PRESENTATION:
The accompanying unaudited 2005 financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. The balance sheet at December 31, 2004 has been derived from the
audited financial statements at that date. Operating results for the three
months ended March 31, 2005 are not necessarily indicative of the results that
may be expected for the year ending December 31, 2005, or for any other interim
period. For further information, refer to the consolidated financial statements
and footnotes thereto included in the Partnership's Form 10-K for the year ended
December 31, 2004.
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Capital Resources
The Partnership's capital resources consist primarily of its nine manufactured
home communities. On August 20, 1998, the Partnership refinanced seven of its
nine properties with GMAC Commercial Mortgage Corporation (the "Refinancing").
Liquidity
As a result of the Refinancing, seven of the Partnership's nine properties are
mortgaged. At the time of the Refinancing, the aggregate principal amount due
under the seven mortgage notes was $30,000,000 and the aggregate fair market
value of the Partnership's mortgaged properties was $66,000,000. The Partnership
expects to meet its short-term liquidity needs generally through its working
capital provided by operating activities.
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Partnership liquidity is based, in part, upon its investment strategy. Upon
acquisition, the Partnership anticipated owning the properties for seven to ten
years. All of the properties have been owned by the Partnership for more than
ten years. The General Partner may elect to have the Partnership own the
properties for as long as, in the opinion of the General Partner, it is in the
best interest of the Partnership to do so.
The General Partner has decided to distribute $759,779, or $.23 per unit, to the
unit holders for the first quarter ended March 31, 2005. The General Partner
will continue to monitor cash flow generated by the Partnership's nine
properties during the coming quarters. If cash flow generated is greater or
lesser than the amount needed to maintain the current distribution level, the
General Partner may elect to reduce or increase the level of future
distributions paid to Unit Holders.
As of March 31, 2005, the Partnership's cash balance amounted to $1,446,259. The
level of cash balance maintained is at the discretion of the General Partner.
Results of Operations
Overall, as illustrated in the following table, the Partnership's nine
properties reported combined occupancy of 66% at the end of March 2005, versus
75% for March 2004. The average monthly homesite rent as of March 31, 2005 was
approximately $414, versus $401from March 2004.
TOTAL OCCUPIED OCCUPANCY AVERAGE*
CAPACITY SITES RATE RENT
Ardmor Village 339 251 74% $499
Camelot Manor 335 204 61% 366
Country Roads 312 177 57% 278
Dutch Hills 278 205 74% 386
El Adobe 367 231 63% 437
Paradise Village 614 299 49% 334
Stonegate Manor 308 201 65% 388
Sunshine Village 356 307 86% 535
West Valley 421 316 75% 499
----- ----- -- ----
TOTAL ON 3/31/05: 3,330 2,191 66% $414
TOTAL ON 3/31/04: 3,330 2,490 75% $401
*NOT A WEIGHTED AVERAGE
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GROSS REVENUE NET INCOME
3/31/2005 3/31/2004 3/31/2005 9/30/2004
three months ended three months ended
Ardmor $ 386,003 $ 365,881 $ 161,784 $ 203,145
Camelot Manor 248,202 338,936 101,045 157,015
Country Roads 206,892 198,947 73,512 69,343
Dutch Hills 244,890 300,327 124,626 119,234
El Adobe 366,759 355,023 163,287 174,911
Paradise 317,096 409,226 94,652 107,229
Stonegate 257,334 298,770 92,200 128,048
Sunshine 441,766 457,287 245,038 264,955
West Valley 559,213 487,127 290,579 271,888
---------- ---------- ----------- -----------
3,028,155 3,211,524 1,346,723 1,495,768
Partnership Management 3,885 1,540 (117,471) (129,095)
Other Expense -- -- (142,122) (88,474)
Interest Expense -- -- (434,304) (446,928)
Depreciation and Amortization -- -- (472,886) (454,126)
---------- ---------- ----------- -----------
$3,032,040 $3,213,064 $ 179,940 $ 377,145
COMPARISON OF QUARTER ENDED MARCH 31, 2005 TO QUARTER ENDED MARCH 31, 2004
Gross revenues decreased $181,024 to $3,032,040 in 2005, as compared to
$3,213,064 in 2004. The decrease was the result of lower occupancy due to weak
economic conditions.
(See table on previous page.)
As described in the Statements of Income, total operating expenses increased
$16,181, to $2,852,100 in 2005, as compared to $2,835,919 in 2004. The increase
is due to higher home sale expense as well as higher property operating cost.
As a result of the aforementioned factors, Net Income decreased to $179,940 for
the first quarter of 2005 compared to $377,145 for the first quarter of 2004.
-8-
ITEM 3.
QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
The Partnership is exposed to interest rate rise 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 March 31, 2005 the Partnership had a note payable outstanding
in the amount of $27,208,465. Interest on this note is at a fixed annual 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 4. CONTROLS AND PROCEDURES
As of the end of the period covered by this report, the Partnership carried out
an evaluation, under the supervision and with the participation of the Principal
Executive Officer and the Principal Financial Officer, of the effectiveness of
the design and operation of our disclosure controls and procedures pursuant to
Exchange Act Rule 13a-15. Based upon, and as of the date of, this evaluation,
the Principal Executive Officer and the Principal Financial Officer concluded
that our disclosure controls and procedures are effective to ensure that
information required to be disclosed in the quarterly report is recorded,
processed, summarized and reported as and when required.
There was no change in the Partnership's internal controls over financial
reporting that occurred during the most recent completed quarter that has
materially affected, or is reasonably likely to materially affect, the
Partnership's internal control over financial reporting.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS
EXHIBIT 31.1 Principal Executive Officer Certification pursuant to Rule
13a-14(a)/15d-14(a) of The Securities and Exchange Act of 1934, as
amended
EXHIBIT 31.2 Principal Financial Officer Certification pursuant to Rule
13a-14(a)/15d-14(a) of The Securities and Exchange Act of 1934, as
amended
EXHIBIT 32.1 Certifications pursuant to 18 U.S C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes - Oxley Act of 2002.
-9-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant 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.,
its Managing General Partner
By: /s/ Paul M. Zlotoff
------------------------------------------
Paul M. Zlotoff, President
By: /s/ Joel Schwartz
------------------------------------------
Joel Schwartz, Principal Financial Officer
Dated: May 10, 2005
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EXHIBIT INDEX
EX. No. Description
Exhibit 31.1 Principal Executive Officer Certification pursuant to Rule
13a-14(a)/15d-14(a) of The Securities and Exchange Act of 1934, as
amended
Exhibit 31.2 Principal Financial Officer Certification pursuant to Rule
13a-14(a)/15d-14(a) of The Securities and Exchange Act of 1934, as
amended
Exhibit 32.1 Certifications pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to section 906 of the Sarbanes-Oxley Act of 2002.
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