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FORM 10-K/A
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ________________ TO _______________
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)
STATE OF MICHIGAN 38-2702802
State of incorporation I.R.S. employer I.D. No.
280 DAINES STREET, BIRMINGHAM, MICHIGAN 48009
(248) 645-9261
(Address of principal executive offices and telephone number)
Securities Registered Pursuant to Section 12(g) of the Act:
$20 PER UNIT, UNITS OF BENEFICIAL ASSIGNMENT OF LIMITED PARTNERSHIP INTERESTS
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 (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
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As of March 1, 1998, 3,303,387 units of limited partnership interest of the
registrant were outstanding and the estimated aggregate market value of the
units as of such date held by non-affiliates, as estimated by the General
Partner (based on a 1998 appraisal of Partnership properties), was approximately
$44,839,000.
DOCUMENTS INCORPORATED BY REFERENCE
SEE ITEM 14.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
Liquidity
The Partnership retains cash reserves which it considers adequate to
maintain the Properties. All funds in excess of operating needs and cash
reserves are distributed to the Unit Holders, quarterly.
As of December 31, 1996, the Partnership had $1,962,609 in reserves.
Through the 1997 calendar year, the Partnership funded into reserves
approximately $903,864. On December 31, 1997, the Partnership had $2,506,411 in
reserves, of which $1,630,552 was in cash and $875,859 was in short term
marketable securities. (See Note 1 to the Financial Statements).
Capital Resources
The capital formation phase of the Partnership began on April 1, 1987
when Sunshine Village and Ardmor Village were purchased by the Partnership and
operations commenced. It ended on January 15, 1988 when El Adobe, the
Partnership's last property, was purchased. The total capital raised through
December 1987 was $66,067,740 of which approximately $58,044,000 was used to
purchase the nine Properties after deducting sales commissions, advisory fees
and other organization and offering costs.
In an effort to provide Unit Holders with a return of capital and
eliminate the cumulative preferred return deficit owed to them, the General
Partner, with majority consent from the Unit Holders, mortgaged seven of its
nine Properties through the Mortgage Financing at approximately 56.0% of their
appraised value, or $30,045,000.
On or around February 15, 1994, the Partnership distributed $23,119,767
to the Unit Holders or $7.00 per $20.00 Unit held. $13,572,978 (or $4.11 per
Unit), restored the 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.
As described in Note 3 to the Financial Statements, the term of the
mortgage notes executed in connection with the Mortgage Financing payable are
for a period of 30 years with interest only payments required for the first 5
years. Beginning in 1999, principal and interest payments are required on a self
amortizing basis through December of 2023. The minimum mortgage interest rate is
7.0% per annum through December 2003 and 8.0% thereafter. The maximum mortgage
interest rate is 9.9% per annum through December 2003 and 10.9% thereafter. Each
of the seven mortgaged Properties is cross-collateralized.
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As part of the Mortgage Financing, the Partnership was required to
purchase $1,502,250 in mortgage-backed securities. These mortgage-backed
securities equal approximately 5.0% of the seven mortgage notes payable and pay
interest computed at a monthly fixed rate of 7.5% per annum. As described in
Note 1 of the Financial Statements the interest income, as well as the future
value of the Class D Certificates could be adversely affected by a foreclosure
or a significant decline in operating results involving any of the twenty-eight
properties participating in the financing transaction, (including any of the
seven Properties mortgaged by the Partnership).
The General Partner acknowledges that the mortgages impose some risks
to the Partnership, but believes that such risks are not greater than risks
typically associated with real estate financing. In addition, as a result of the
borrowing, there is potential adverse impact on the amount of distributions to
the Unit Holders in future years. However, the General Partner anticipates,
based on 1998 projections, that distributions to the Unit Holders will be at an
annual rate of approximately 3.0% to 4.5% of adjusted capital contributions
through 1998.
Results of Operations
Distributions
For the year ended December 31, 1997, the Partnership made
distributions to the Unit Holders equal, on an annualized basis, to 3.74% on
their adjusted capital contributions, or $ .64 per $17.11 unit.
Distributions paid to the Unit Holders totaled $2,114,171 in 1997,
$1,783,868 in 1996, and $2,195,720 in 1995.
The distributions paid in 1997 were less than the amount required for
the annual 10.0% preferred return to the Unit Holders by approximately
$3,538,000. As described in Note 7 to the Partnership's financial statements,
the cumulative preferred return deficit through December 1997 was approximately
$14,696,000. No distributions can be made to the General Partner until the
cumulative preferred return deficit has been distributed to the Unit Holders. At
December 31, 1997, the unpaid amount to be distributed to the General Partner
from future capital transactions was approximately $6,100,000.
Net Income
The Partnership generated net income of $1,167,256 in 1997, $395,975 in
1996, and $540,151 in 1995.
The increase in 1997 net income resulted from higher occupancy and
rental increases. The decline in net income from 1995 to 1996 was due in part
to management's decision to no longer recognize any
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income associated with the equity interest in the LLC. (See Note 3 to the
Financial Statements).
Net income plus depreciation and amortization less distributions to
Unit Holders, and Net Income from the LLC were $903,864, $556,384 and
$(262,765). Approximately 12.0% of the distributions to the Unit Holders in 1995
were funded with cash reserves.
Partnership Management
Net expenses for the management of the Partnership (i.e. gross expenses
for such management, less transfer fees, interest on reserves, interest on funds
awaiting distribution, and certain non-recurring income) were $155,024 in 1997,
$177,328 in 1996 and $149,523 in 1995.
The increase from 1995 to 1996 was due to higher legal fees and lower
interest income on cash reserves. The decrease from 1996 to 1997 was due to
higher interest income on cash reserves and lower administrative expenses.
Property Operations
Overall, as illustrated in the table below, the Partnership's nine
properties had a combined average occupancy of 92.5% (3,080/3,330 sites) as of
December 1997, versus 91.0% in December 1996, and 88.2% in December 1995. The
average monthly rent was approximately $333 per home site in December 1997,
versus $327 in December 1996 and $316 in December 1995, an increase each year of
1.8% and 3.5%, respectively.
TOTAL
SITES OCCUPIED SITES OCCUPANCY RATE AVERAGE RENT
----- -------------- -------------- ------------
1997 1996 1995 1997 1996 1995 1997 1996 1995
---- ---- ---- ---- ---- ---- ---- ---- ----
Ardmor Village 339 326 323 298 96.2% 95.3% 87.9% $306 $314 $304
Camelot Manor 335 323 325 316 96.4 97.0 94.3 308 299 290
Country Roads 312 288 273 265 92.3 97.5 84.9 225 215 205
Dutch Hills 278 260 266 260 93.5 95.7 93.5 309 297 289
El Adobe 371 366 360 347 98.7 97.0 93.5 374 359 347
Paradise Village 611 480 437 435 78.6 71.5 71.2 282 272 257
Stonegate Manor 308 293 298 292 95.1 96.8 94.8 312 299 291
Sunshine Village 356 326 331 331 91.6 93.0 93.0 399 381 368
West Valley 420 418 418 392 99.5 99.5 93.3 429 438 428
------ ----- ------ ------ ------ ------ ------ ----- ---- ----
Overall 3,330 3,080 3,031 2,936 92.5% 91.0% 88.2% $333 $327 $316
====== ===== ====== ====== ====== ====== ====== ===== ==== ====
The table below summarizes gross revenues and net operating income for the
Partnership and Properties during 1997, 1996 and 1995.
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GROSS REVENUE NET OPERATING INCOME
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1997 1996 1995 1997 1996 1995
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Ardmor Village $ 1,129,735 $ 1,104,595 $ 1,058,592 $ 523,625 $ 613,967 $ 563,269
Camelot Manor 1,123,127 1,085,052 1,050,043 614,242 564,878 560,413
Country Roads 763,727 708,498 624,061 109,568 100,722 (43,518)
Dutch Hills 918,958 886,536 859,073 481,335 458,055 449,811
El Adobe 1,646,510 1,542,026 1,436,567 1,051,448 955,055 902,642
Paradise Village 1,460,543 1,308,743 1,236,377 326,009 191,971 78,478
Stonegate Manor 1,035,924 973,178 956,926 578,851 440,726 474,846
Sunshine Village 1,513,820 1,462,935 1,448,518 901,389 850,925 881,978
West Valley 2,240,418 2,098,742 1,931,920 1,510,414 1,271,269 1,201,331
----------- ---------- ----------- ---------- ---------- ----------
11,832,762 11,170,305 10,602,077 6,096,881 5,447,568 5,069,250
Partnership
Mgmt. 89,764 79,851 110,455 (155,024) (177,328) (149,523)
Equity in Net Income
of LLC(1) - - 498,099 - - 498,099
Other nonrecurring (262,257) (316,627) (229,647)
expenses
Debt Service (2,661,565) (2,613,361) (2,757,125)
Depreciation and
Amortization (1,850,779) (1,944,277) (1,890,903)
----------- ----------- ----------- ---------- ---------- ----------
TOTAL: $11,922,526 $11,250,156 $11,210,541 $1,167,256 $ 395,975 $ 540,151
=========== =========== =========== ========== ========== ==========
(1) Refer to Note 3 of the Financial Statements
COMPARISON OF YEAR ENDED DECEMBER 31, 1997 TO YEAR ENDED DECEMBER 31, 1996
Gross revenues increased $672,370, or 6.0%, to $11,922,526 in 1997,
compared to $11,250,156 in 1996. The increase was primarily the result of the
increase in rental income due to an increase in average monthly rents and an
increase in overall occupancy.
(See table on previous page.)
Operating expenses decreased $98,911, or .09%, to $10,755,270 in 1997,
compared to $10,854,181 in 1996. There were no significant fluctuations in
individual line items that comprise the Partnership's total operating expenses.
As a result of the foregoing factors, net income increased from
$395,975 in 1996 to $1,167,256 in 1997.
COMPARISON OF YEAR ENDED DECEMBER 31, 1996 TO YEAR ENDED DECEMBER 31, 1995
Gross revenues increased $39,615, or .03%, to $11,250,156 in 1996,
compared to $11,210,541 in 1995. The increase was primarily the result of
$567,346 in rental income resulting from higher average monthly rents and an
increase in overall occupancy. (See table on previous page). This increase was
partially offset by $498,099 in income from the LLC which was recognized in
1995, but was not recognized in 1996.
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Operating expenses increased $183,791, or 1.7%, to $10,854,181 in 1996,
compared to $10,670,390 in 1995. There were no significant fluctuations in
individual line items that comprise the partnership's total operating expenses.
As a result of the foregoing factors, net income decreased from
$540,151 in 1995 to $395,975 in 1996.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Uniprop Manufactured Housing Communities Income Fund II, a
Michigan Limited Partnership, has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Uniprop Manufactured Housing Communities
Income Fund II, a Michigan Limited Partnership
BY: Genesis Associates Limited Partnership,
General Partner
BY: Uniprop, Inc., Managing General Partner
By: /s/ Paul M. Zlotoff
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Paul M. Zlotoff, President
Dated: May 12, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
By: /s/ Gloria Koster By: /s/ Paul M. Zlotoff
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Gloria Koster Paul M. Zlotoff,
(Principal Financial Officer of Director of Uniprop, Inc.
Uniprop, Inc.)
Date: May 12, 1998 Date: May 12, 1998
By: /s/ Andrew Feuereisen
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Andrew Feuereisen
(Controller of Uniprop, Inc.)
Date: May 12, 1998
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