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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
FILED BY REGISTRANT [X] FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
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Check the appropriate box: [ ] Definitive Additional Materials
[x] Preliminary Proxy Statement [ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
[ ] Definitive Proxy Statement [ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction: $___________________
5) Total fee paid: $_______________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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Uniprop Manufactured Housing Communities Income Fund II
June 1, 1998
Dear Unit Holder or Limited Partner:
We are very pleased to announce what we believe is an attractive
opportunity for the Partnership to refinance its existing variable-rate
financing into a fixed-rate financing. The refinancing, if effected, should
enable the Partnership to increase quarterly cash distributions and to make a
substantial payment to the Unit Holders and Limited Partners toward the
shortfall in their 10% Cumulative Preferred Return.
The attached Proxy Statement describes the proposals to implement the
refinancing.
Before voting, we encourage Unit Holders and Limited Partners to
examine carefully the attached Proxy Statement for a description of the
proposals. In particular, Unit Holders and Limited Partners should read
"INTRODUCTION--EFFECT OF THE PROPOSALS" and "MATERIAL DIFFERENCES AND RISK
FACTORS."
Your approval or disapproval can be given by completing, signing, and
returning the enclosed proxy card. In order for your vote to be effective, your
signed proxy card must be received by the General Partner prior to the Special
Meeting of the Partnership at 10 o'clock a.m. Eastern Daylight Savings Time on
August 3, 1998, or any adjournments thereof. For your convenience, a
self-addressed, postage-paid return envelope has been enclosed.
We recommend you vote FOR all of the proposals. NONE OF THE PROPOSALS
WILL BE ADOPTED UNLESS ALL OF THE PROPOSALS ARE ADOPTED. See "CONFLICTS OF
INTEREST" regarding the General Partner's conflicts of interest in recommending
the proposals.
If you have any questions about completing the proxy card or any other
aspect of the proposals, please call 1-800-541-7767.
Sincerely,
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Paul M. Zlotoff, General Partner of Genesis
Associates Limited Partnership, General
Partner of Uniprop Manufactured Housing
Communities Income Fund II
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UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II
A MICHIGAN LIMITED PARTNERSHIP
280 DAINES STREET, SUITE 300, BIRMINGHAM, MICHIGAN 48009
NOTICE OF SPECIAL MEETING OF THE UNIT HOLDERS AND LIMITED PARTNERS TO BE HELD ON
AUGUST 3, 1998.
NOTICE IS HEREBY GIVEN that a special meeting of the unit holders and
limited partners (collectively, the "Limited Partners") of Uniprop Manufactured
Housing Communities Income Fund II, a Michigan limited partnership (the
"Partnership"), will be held at the principal executive offices of the
Partnership at 280 Daines Street, Suite 300, Birmingham, Michigan 48009, on
August 3, 1998, at 10:00 a.m. Eastern Daylight Savings Time, or at any
postponement or adjournment thereof (the "Special Meeting"), for the following
purposes, as more fully described in the attached Proxy Statement (the "Proxy
Statement"):
THE PROPOSALS
1. To consider and act upon the following Proposals (each, a
"Proposal"):
- to authorize the Partnership to borrow up to an aggregate
principal amount not to exceed $30,000,000 (the "Refinancing"),
the proceeds of which will be used to refinance the Partnership's
outstanding indebtedness of approximately $30,045,000 (the
"Existing Indebtedness"), and to secure the indebtedness incurred
by the Partnership under and pursuant to the agreements, documents
and instruments evidencing the proposed Refinancing, including,
without limitation, all accrued and unpaid interest thereon, with
a lien and security interest on seven of its nine manufactured
home communities (such properties subject to such liens and
security interests, collectively the "Mortgaged Properties") and
the proceeds thereof (together with the Mortgaged Properties, the
"Collateral");
- to authorize the Partnership to liquidate the Partnership's
interest in two of the Uniprop MHC Mortgage Pass-Through
Certificates, Series 1993-1 (the "Mortgage-Backed Securities")
issued to the Partnership by a grantor trust designed to take
advantage of pass-through tax treatment (the "Trust") in
connection with the transactions contemplated by the Existing
Indebtedness, and to distribute the proceeds of such liquidation,
net of a fee and expenses, to the Limited Partners; specifically,
to liquidate all of its right, title and interest in and to (a)
its residual interest in the Trust, which interest has a
liquidation value of approximately $2,300,000 and is represented
by the Partnership's interest in the Uniprop MHC Mortgage
Pass-Through Certificate, Series 1993-1, Class R, issued by the
Trust to Uniprop MHC Residual L.L.C., a Michigan limited liability
company of which the Partnership is a member ("Uniprop MHC") (the
"Class R Security" and said liquidation, the "Residual Interest
Liquidation"), and (b) the Uniprop MHC Mortgage Pass-Through
Certificate, Series 1993-1, Class D, issued by the Trust to the
Partnership and valued at $1,502,250 (the
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"Class D Security" and said liquidation, the "Class D
Liquidation"), and distribute the aggregate gross proceeds of the
Residual Interest Liquidation (after the payment of (i) the
"Refinancing Fee" (as defined below), and (ii) up to $600,000, in
the aggregate, for legal fees, underwriting fees, accountants'
fees, fees of other professionals, closing costs, filing fees and
other similar fees, costs and expenses incurred by the Partnership
in connection with the consummation of the transactions
contemplated by the proposed Refinancing and the related
Proposals) and the aggregate gross proceeds of the Class D
Liquidation to the Limited Partners pursuant to and in accordance
with Section 11 of the Partnership's Agreement of Limited
Partnership (as in effect on the date hereof, the "Partnership
Agreement");
- to authorize the Partnership to pay a fee of approximately
$300,000 from the aggregate gross proceeds of the Residual
Interest Liquidation to an affiliate of Genesis Associates Limited
Partnership, the general partner of the Partnership (the "General
Partner"), for its services in arranging the proposed Refinancing
(the "Refinancing Fee"); and
- to approve the "Second Amendment" to the Partnership Agreement (as
defined in the Proxy Statement) and authorize the execution,
delivery and filing thereof.
and to consider and approve such actions as are necessary or appropriate to
effectuate the foregoing Proposals, all as more fully described in the Proxy
Statement.
THE EFFECTIVENESS OF EACH PROPOSAL IS CONDITIONED ON THE APPROVAL OF
ALL OF THE OTHER PROPOSALS. ACCORDINGLY, A VOTE AGAINST ONE PROPOSAL WILL HAVE
THE EFFECT OF A VOTE AGAINST ALL OF THE PROPOSALS AS A GROUP.
THE EFFECTIVENESS OF EACH PROPOSAL IS FURTHER CONDITIONED ON THE
TRUST'S (1) APPLYING THE AGGREGATE PROCEEDS OF PREPAYMENTS BY SOME OR ALL OF THE
"BORROWERS" (AS DEFINED IN THE PROXY STATEMENT) OF THEIR INDEBTEDNESS UNDER THE
MORTGAGE NOTES, DATED AS OF DECEMBER 1, 1993, EXECUTED BY SUCH BORROWERS AND
PAYABLE TO THE ORDER OF NEUTRON-UNIPROP, INC. ("NEUTRON") AND ASSIGNED BY
NEUTRON TO THE TRUST (EACH SUCH MORTGAGE NOTE, A "MORTGAGE NOTE") TO THE PAYMENT
OF THE CLASS A, CLASS B, AND CLASS C MORTGAGE-BACKED SECURITIES, (2) PAYING IN
FULL ALL AMOUNTS DUE AND PAYABLE UNDER THE CLASS D SECURITY AND THE CLASS R
SECURITY OR THE PARTNERSHIP'S OTHERWISE REALIZING THE VALUE OF THE CLASS D
SECURITY AND THE CLASS R SECURITY, AND (3) RELEASING AND TERMINATING THE
"MORTGAGES" (AS DEFINED IN THE PROXY STATEMENT). THE PARTNERSHIP WILL NOT BE
ABLE TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED BY THE PROPOSALS UNLESS THE
FOREGOING CONDITIONS ARE FULLY SATISFIED EVEN IF IT OBTAINS THE
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REQUISITE NUMBER OF VOTES OF THE LIMITED PARTNERS TO THE PROPOSALS. SEE
"INTRODUCTION-VOTING REQUIREMENTS AND OTHER CONDITIONS--CONDITIONS."
2. To consider and act upon such other matters, if any, as may properly
come before the Special Meeting.
If the Proposals are adopted and implemented, the Partnership
interests of the Limited Partners would be materially modified. Specifically,
the Proposals:
- will, in the event the proposed Refinancing is for a 30 year term
(i.e. the maximum term contemplated by the Proposals), require the
Partnership to make payments on indebtedness for borrowed money
for a period of six years longer than that contemplated by the
Existing Indebtedness and thus: (a) increase the risk that the
portion of the Limited Partners' investment in the Partnership
that has not been returned will be lost or reduced in value; (b)
increase the Partnership's operating costs during such six year
period; and (c) reduce the amount of cash distributions from the
Partnership to the Limited Partners during such six year period;
- will, in the event the proposed Refinancing is for a term of less
than 30 years but is structured with an amortization longer than
the term with a final payment due and payable on the last day of
such term in an amount equal to the outstanding indebtedness under
the proposed Refinancing (the "Balloon Payment"), result in the
Partnership's having insufficient funds to make the Balloon
Payment which could in turn cause the Limited Partners' investment
in the Partnership to be lost unless the Partnership is able to
refinance the indebtedness evidenced by the Balloon Payment; and
- will, contrary to the current provisions of the Partnership
Agreement, authorize the Partnership to:
(i) borrow up to an aggregate principal amount not to exceed
$30,000,000, the proceeds of which will be used to refinance
the Existing Indebtedness, and to secure the indebtedness
incurred by the Partnership under and pursuant to the
agreements, documents and instruments evidencing the proposed
Refinancing, including, without limitation, all accrued and
unpaid interest thereon, with a lien and security interest on
the Collateral;
(ii) liquidate all of its right, title and interest in and to
the Class R Security and the Class D Security and distribute
the aggregate gross proceeds of the Residual Interest
Liquidation (after the payment of (a) the Refinancing Fee of
approximately $300,000, and (b) up to $600,000, in the
aggregate, for legal fees, underwriting fees, accountants'
fees, fees of other professionals,
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closing costs, filing fees and other similar fees, costs and
expenses incurred by the Partnership in connection with the
consummation of the transactions contemplated by the proposed
Refinancing and the related Proposals) and the aggregate gross
proceeds of the Class D Liquidation to the Limited Partners
pursuant to and in accordance with Section 11 of the
Partnership Agreement; and
(iii) pay the Refinancing Fee of approximately $300,000 from
the aggregate gross proceeds of the Residual Interest
Liquidation to Uniprop, Inc., the managing general partner of
the General Partner, for its services in arranging the
proposed Refinancing, with the result that the Limited
Partners will receive approximately $0.09 less per unit of
beneficial assignment of limited partnership interest (a
"Unit") from the aggregate net proceeds of the proposed
Residual Interest Liquidation than they otherwise would.
GENERAL PARTNER'S CONFLICTS OF INTEREST
The General Partner is subject to conflicts of interest in connection
with the Proposals since Uniprop, Inc., the managing general partner of the
General Partner, will be receiving the Refinancing Fee of approximately $300,000
from the aggregate gross proceeds of the Residual Interest Liquidation for its
services in arranging the proposed Refinancing. Several of the Borrowers under
the Existing Indebtedness are affiliated with the general partner of the General
Partner. If the Refinancing is approved and accomplished, it is likely that the
loans to these affiliated Borrowers will be refinanced concurrently as part of
the same financing package. While the Collateral will not serve as collateral
for a loan to any Borrower other than the Partnership, it is likely that the
affiliated Borrowers will obtain better terms on their refinancings as a result
of the inclusion of the Collateral in the Refinancing.
The General Partner has not retained an unaffiliated representative to
act on behalf of the Limited Partners.
See "Conflicts of Interest" in the accompanying Proxy Statement for a
more detailed discussion of these matters.
THE CONSULTANT
Manufactured Housing Services, Inc., a New York corporation and a
consultant to the Partnership (the "Consultant"), pursuant to a Consulting
Agreement, dated December 23, 1986 and amended as of January 9, 1998, entered
into between Hutton Manufactured Housing Services, Inc., a predecessor in
interest of the Consultant, and the Partnership at the time the Units were
offered to the public, has issued a Consultant's Statement dated May 8, 1998
(the "Consultant's Statement") with respect to the Proposals. The Consultant
has recommended that the Limited Partners vote FOR the implementation of the
Proposals. The Consultant's statement
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is subject to certain assumptions and limitations. See "Consulting Agreement and
Consultant's Statement" in the Proxy Statement.
The General Partner has fixed 5:00 p.m., local time, on May 13, 1998
as the record date for determining the Limited Partners entitled to notice of,
and to vote at, the Special Meeting or at any adjournment thereof.
You are cordially invited to attend the Special Meeting in person. To
ensure your representation at the Special Meeting, however, please promptly
complete, date, sign and return the enclosed proxy in the accompanying envelope.
If you should decide to attend the Special Meeting and vote your Partnership
interests in person, you may revoke your proxy at that time.
Requests for information regarding the attached Proxy Statement can be
directed to the General Partner's Investor Relations Department, at 280 Daines
Street, Suite 300, Birmingham, Michigan 48009, telephone number (800) 541-7767.
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Paul M. Zlotoff,
as general partner of Genesis
Associates Limited Partnership,
General Partner of Uniprop
Manufactured Housing Communities
Income Fund II
Birmingham, Michigan
June 1, 1998
YOUR VOTE IS IMPORTANT. PLEASE EXECUTE AND RETURN THE ENCLOSED PROXY
PROMPTLY, WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE SPECIAL MEETING.
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PROXY STATEMENT
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II
A MICHIGAN LIMITED PARTNERSHIP
280 DAINES STREET, SUITE 300, BIRMINGHAM, MICHIGAN 48009
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SPECIAL MEETING OF UNIT HOLDERS AND LIMITED PARTNERS
TO BE HELD ON AUGUST 3, 1998
INTRODUCTION
This Proxy Statement is being furnished in connection with the solicitation of
proxies from the unit holders and limited partners (collectively, the "Limited
Partners") of Uniprop Manufactured Housing Communities Income Fund II, a
Michigan limited partnership (the "Partnership"), by Genesis Associates Limited
Partnership, the general partner of the Partnership (the "General Partner"), on
behalf of the Partnership for use at a special meeting of the Limited Partners
to be held at the principal executive offices of the Partnership at 280 Daines
Street, Suite 300, Birmingham, Michigan 48009, on August 3, 1998, at 10:00 a.m.
Eastern Daylight Savings Time or at any postponement or adjournment thereof (the
"Special Meeting"). This Proxy Statement and the enclosed revocable proxy are
first being mailed to the Limited Partners on or about June 8, 1998. The date of
this Proxy Statement is June 1, 1998.
THE PROPOSALS
At the Special Meeting, the Limited Partners will be asked to act upon
the following Proposals (each, a "Proposal"):
- To authorize the Partnership to borrow up to an aggregate
principal amount not to exceed $30,000,000 (the "Refinancing"),
the proceeds of which will be used to refinance the Partnership's
outstanding indebtedness of $30,045,000 (the "Existing
Indebtedness"), and to secure the indebtedness incurred by the
Partnership under and pursuant to the agreements, documents and
instruments evidencing the proposed Refinancing, including,
without limitation, all accrued and unpaid interest thereon, with
a lien and security interest on seven of its nine manufactured
home communities (such properties subject to such liens and
security interests, collectively the "Mortgaged Properties") and
the proceeds thereof (together with the Mortgaged Properties, the
"Collateral"). If the Refinancing is approved, the Refinancing
will be structured as a conventional loan within the parameters
set forth in this Proxy Statement.
- To authorize the Partnership to liquidate the Partnership's
interest in two of the Uniprop MHC Mortgage Pass-Through
Certificates, Series 1993-1 (the "Mortgage-
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Backed Securities") issued to the Partnership by a grantor trust
designed to take advantage of pass-through tax treatment (the
"Trust") in connection with the transactions contemplated by the
Existing Indebtedness, and to distribute the proceeds of such
liquidation, net of a fee and expenses, to the Limited Partners;
specifically, to liquidate all of its right, title and interest in
and to (a) its residual interest in the Trust, which interest has
a liquidation value of approximately $2,300,000 and is represented
by the Partnership's interest in the Uniprop MHC Mortgage
Pass-Through Certificate, Series 1993-1, Class R, issued by the
Trust to Uniprop MHC Residual L.L.C., a Michigan limited liability
company of which the Partnership is a member ("Uniprop MHC") (the
"Class R Security" and said liquidation, the "Residual Interest
Liquidation"), and (b) the Uniprop MHC Mortgage Pass-Through
Certificate, Series 1993-1, Class D, issued by the Trust to the
Partnership and valued at $1,502,250 (the "Class D Security" and
said liquidation, the "Class D Liquidation"), and distribute the
aggregate gross proceeds of the Residual Interest Liquidation
(after the payment of (i) the "Refinancing Fee" (as defined
below), and (ii) up to $600,000, in the aggregate, for legal fees,
underwriting fees, accountants' fees, fees of other professionals,
closing costs, filing fees and other similar fees, costs and
expenses (the "Transaction Costs") incurred by the Partnership in
connection with the consummation of the transactions contemplated
by the proposed Refinancing and the related Proposals) and the
aggregate gross proceeds of the Class D Liquidation to the Limited
Partners pursuant to and in accordance with Section 11 of the
Agreement of Limited Partnership of the Partnership as in effect
on the date hereof (the "Partnership Agreement").
- To authorize the Partnership to pay a fee, in an amount not to
exceed 1% of the gross aggregate principal amount of the proposed
Refinancing (i.e. approximately $300,000), from the aggregate
gross proceeds of the Residual Interest Liquidation to Uniprop,
Inc., the managing general partner of the General Partner, for its
services in arranging the proposed Refinancing (the "Refinancing
Fee").
- To approve the "Second Amendment" (as defined below) and authorize
the execution, delivery and filing thereof.
IT IS A CONDITION TO THE IMPLEMENTATION OF EACH OF THE PROPOSALS, AND THE
CORRESPONDING AMENDMENTS TO THE PARTNERSHIP AGREEMENT, THAT ALL OF THE PROPOSALS
BE APPROVED BY THE LIMITED PARTNERS. ACCORDINGLY, A VOTE AGAINST ONE PROPOSAL
WILL HAVE THE EFFECT OF A VOTE AGAINST ALL OF THE PROPOSALS AS A GROUP. See "The
Proposals" for more detailed information regarding each of the Proposals.
THE EFFECTIVENESS OF EACH PROPOSAL IS FURTHER CONDITIONED ON THE TRUST'S (1)
APPLYING THE AGGREGATE PROCEEDS OF PREPAYMENTS BY SOME OR ALL OF THE "BORROWERS"
(AS DEFINED IN THE PROXY STATEMENT) OF THEIR INDEBTEDNESS UNDER THE MORTGAGE
NOTES, DATED AS OF DECEMBER 1, 1993, EXECUTED BY SUCH BORROWERS AND PAYABLE TO
THE ORDER OF NEUTRON-UNIPROP, INC. ("NEUTRON") AND
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ASSIGNED BY NEUTRON TO THE TRUST (EACH SUCH MORTGAGE NOTE, A "MORTGAGE
NOTE") TO THE PAYMENT OF THE CLASS A, CLASS B, AND CLASS C MORTGAGE-BACKED
SECURITIES, (2) PAYING IN FULL ALL AMOUNTS DUE AND PAYABLE UNDER THE CLASS D
SECURITY AND THE CLASS R SECURITY OR THE PARTNERSHIP'S OTHERWISE REALIZING THE
VALUE OF THE CLASS D SECURITY AND THE CLASS R SECURITY, AND (3) RELEASING AND
TERMINATING THE "MORTGAGES" (AS DEFINED HEREIN). THE PARTNERSHIP WILL NOT BE
ABLE TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED BY THE PROPOSALS UNLESS THE
FOREGOING CONDITIONS ARE FULLY SATISFIED EVEN IF IT OBTAINS THE REQUISITE
NUMBER OF VOTES OF THE LIMITED PARTNERS TO THE PROPOSALS. SEE
"INTRODUCTION-VOTING REQUIREMENTS AND OTHER CONDITIONS--CONDITIONS."
AMENDMENTS TO THE PARTNERSHIP AGREEMENT
A copy of the proposed Second Amendment to the Agreement of Limited
Partnership (the "Second Amendment") containing the amendments to the
Partnership Agreement is attached hereto as Exhibit A and made a part hereof.
The information in this Proxy Statement is qualified in its entirety by the
provisions of the Partnership Agreement and the Second Amendment, and the
Limited Partners are urged to review carefully such documents with their
attorneys, accountants and investment advisers.
EFFECT OF THE PROPOSALS
If the Proposals are adopted and implemented, the Partnership
interests of the Limited Partners would be materially modified. Specifically,
the Proposals:
- will, in the event the proposed Refinancing is for a 30 year term
(i.e. the maximum term contemplated by the Proposals), require the
Partnership to make payments on indebtedness for borrowed money
for a period of six years longer than that contemplated by the
Existing Indebtedness and thus (a) increase the risk that the
portion of the Limited Partners' investment in the Partnership
that has not been returned will be lost or reduced in value, (b)
increase the Partnership's operating costs during such six year
period, and (c) reduce the amount of cash distributions from the
Partnership to the Limited Partners during such six year period;
- will, in the event the proposed Refinancing is for a term of less
than 30 years but is structured with an amortization longer than
the term with a final payment due and payable on the last day of
such term in an amount equal to the outstanding indebtedness under
the proposed Refinancing (the "Balloon Payment"), result in the
Partnership's having insufficient funds to make the Balloon
Payment which could in turn cause the Limited Partners' investment
in the Partnership to be lost unless the Partnership is able to
refinance the indebtedness evidenced by the Balloon Payment; and
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- will, contrary to the current provisions of the Partnership
Agreement, authorize the Partnership to:
(i) borrow up to an aggregate principal amount not to exceed
$30,000,000, the proceeds of which will be used to refinance
the Existing Indebtedness, and to secure the indebtedness
incurred by the Partnership under and pursuant to the
agreements, documents and instruments evidencing the proposed
Refinancing, including, without limitation, all accrued and
unpaid interest thereon, with a lien and security interest on
the Collateral;
(ii) liquidate all of its right, title and interest in and to
the Class R Security and the Class D Security and distribute
the aggregate gross proceeds of the Residual Interest
Liquidation (after the payment of (a) the Refinancing Fee of
approximately $300,000, and (b) up to $600,000, in the
aggregate, in Transaction Costs) and the aggregate gross
proceeds of the Class D Liquidation to the Limited Partners
pursuant to and in accordance with Section 11 of the
Partnership Agreement; and
(iii) pay the Refinancing Fee of approximately $300,000 from
the aggregate gross proceeds of the Residual Interest
Liquidation to Uniprop, Inc., the managing general partner of
the General Partner, for its services in arranging the
proposed Refinancing, with the result that the Limited
Partners will receive approximately $0.09 less per unit of
beneficial assignment of limited partnership interest (a
"Unit") from the aggregate net proceeds of the proposed
Residual Interest Liquidation than they otherwise would.
See "Material Differences and Risk Factors" for a more detailed discussion of
these matters.
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GENERAL PARTNER'S CONFLICTS OF INTEREST
The General Partner is subject to conflicts of interest in connection
with the Proposals. Uniprop, Inc., the managing general partner of the General
Partner, will be receiving the Refinancing Fee of approximately $300,000 from
the aggregate gross proceeds of the Residual Interest Liquidation for its
services in arranging the proposed Refinancing. Several of the Borrowers under
the Existing Indebtedness are affiliated with the general partner of the General
Partner. If the Refinancing is approved and accomplished, it is likely that the
loans to these affiliated Borrowers will be refinanced concurrently as part of
the same financing package. While the Collateral will not serve as collateral
for a loan to any Borrower other than the Partnership, it is likely that the
affiliated Borrowers will obtain better terms on their refinancings as a result
of the inclusion of the Collateral in the Refinancing.
The General Partner has not retained an unaffiliated representative to
act on behalf of the Limited Partners.
See "Conflicts of Interest" for a more detailed discussion of these
matters.
ADVANTAGES OF THE PROPOSALS
The General Partner believes that the proposed Refinancing would
offer the following advantages to the Limited Partners:
- The proposed Refinancing should enable the Partnership to increase
quarterly cash distributions to Limited Partners by approximately
15% (i.e. an annual increase of approximately $0.11 per Unit). If
the Refinancing is not accomplished, the General Partner does not
expect to be able to increase quarterly cash distributions in the
foreseeable future. The Existing Indebtedness would require the
Partnership to commence making principal payments of approximately
$337,081 per annum (i.e., 1.107% of the outstanding principal
amount of the Existing Indebtedness) beginning January 1, 1999,
thus precluding a current increase in quarterly cash distributions
notwithstanding the increase in the Partnership's net operating
income in 1997.
- The proposed Refinancing would lock in a fixed interest rate which
would be lower than the variable interest rate currently payable
with respect to the Existing Indebtedness and thus decrease the
Partnership's debt service obligations. Furthermore, a fixed
interest rate will permit the Partnership to predict its debt
service obligations and plan accordingly. The interest rate on the
Existing Indebtedness is variable and could increase to as high as
9.9% per annum through December 1, 2003 and to as high as 10.9%
per annum thereafter if market interest rates increased. Under
such formula, the Partnership paid an average of approximately 9%
per annum in interest during 1997. See "--Interest Rate on
Existing Indebtedness," below.
- Two relatively high risk securities currently held by the
Partnership, the Class D Security and the Class R Security, would
be liquidated. After payment of the
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Refinancing Fee and the Transaction Costs, the proceeds of the
liquidation of these securities, approximately $2.5 million, would
be distributed to the Limited Partners as a partial payment
against the current shortfall in their 10% Cumulative Preferred
Return. Limited Partners would receive approximately $0.75 per
Unit.
The General Partner believes that the proposed Refinancing offers these
advantages because: (i) market interest rates will be more favorable when the
proposed Refinancing is consummated than they were when the Existing
Indebtedness was incurred; and (ii) the increase in value and improvement in
operating performance of the Mortgaged Properties since 1993 will cause the
interest rate on the proposed Refinancing to be lower than the interest rate
currently charged on the Existing Indebtedness. See "The Proposals-The
Refinancing and Granting of Mortgages on the Partnership's
Properties-Background."
The General Partner believes that the Proposals are fair to the Limited
Partners and that, as a result of the proposed structure of the proposed
Refinancing, the interest costs to the Partnership under the proposed
Refinancing will be lower than such costs under the Existing Indebtedness. The
General Partner believes that the Proposals are more advantageous to the
Partnership than other alternatives considered by the General Partner, namely,
structuring the proposed Refinancing as a financing involving the issuance of
mortgage-backed securities, liquidating the Partnership, or continuing the
business of the Partnership in accordance with its existing business plan. See
"Recommendations of General Partner" for a more detailed discussion of certain
of these matters.
INTEREST RATE ON EXISTING INDEBTEDNESS
The Existing Indebtedness bears interest at the "Effective Interest
Rate" (as hereinafter defined). The "Effective Interest Rate" equals the
"Weighted Average" (as hereinafter defined) of the interest rates payable under
each of the Mortgage-Backed Securities plus (a) 1.35% per annum during the
period between December 1, 1993 (the "Closing Date") and the day immediately
preceding the tenth anniversary of that date (the "First Period"), and (b) 2.35%
per annum during the period between the tenth anniversary of the Closing Date
and December 1, 2023 (the "Second Period"); provided, however, that the
Effective Interest Rate (i) in the First Period shall not exceed 9.9% or fall
below 7%; and (ii) in the Second Period shall not exceed 10.9% or fall below 8%.
Under such formula, the Partnership paid an average of approximately 9% per
annum in interest during 1997. If the Partnership is able to realize the value
of the Class R Security, some portion of the amounts paid as interest by the
Partnership under the Existing Indebtedness may inure to the benefit of the
Partnership. The ability of the Partnership to realize any value from the Class
R Security is dependent, among other things, on the continued performance by the
Borrowers of their obligations under the Mortgage Notes.
The Weighted Average of the interest rates payable under the
Mortgage-Backed Securities is equal to the sum of the products derived by
multiplying the interest rate applicable to each of the Mortgage-Backed
Securities for any "Interest Accrual Period" (as hereinafter defined) by the
percentage that the outstanding principal balance of each class of
Mortgage-Backed Securities bears to the aggregate principal balances of all of
the Mortgage-Backed
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Securities. The "Interest Accrual Period" is the period commencing on the first
day of each month and ending on (but not including) the first day of the next
month.
The interest rates payable under each of the Mortgage-Backed Securities
is as follows:
Class A Securities: variable rate equal to "Base LIBOR" (as
hereinafter defined) plus 1.67% per annum, but not to exceed
9.74% for the First Period and 10.74% for the Second Period.
Class B Securities: fixed rate equal to 7.04% per annum.
Class C Securities: variable rate equal to Base LIBOR plus 2.5%
per annum, but not to exceed 9.74% for the First Period and
10.74% for the Second Period.
Class D Securities: fixed rate equal to 7.5% per annum.
The "Base LIBOR" rate for an Interest Accrual Period is determined as
follows: (i) if on any "Interest Determination Date" (as hereinafter defined)
two or more "Reference Banks" (as hereinafter defined) provide such offered
quotations, the Base LIBOR rate shall mean the arithmetic mean of such offered
quotations (rounding such arithmetic mean upwards if necessary to the nearest
whole multiple of 1/14%); and (ii) if on any Interest Determination Date only
one or none of the Reference Banks provides such offered quotations, the Base
LIBOR rate shall be whichever is the higher of (x) the Base LIBOR rate as
determined on the previous Interest Determination Date; and (y) the "Reserve
Interest Rate" (as hereinafter defined). The "Reserve Interest Rate" is the rate
per annum that the paying agent, which is appointed by the trustee of the Trust
(the "Paying Agent") for the purpose of making distributions to holders of the
Mortgage-Backed Securities, determines to be either: (i) the arithmetic mean
(rounded upwards if necessary to the nearest whole multiple of 1/14%) of the
one-month U.S. dollar lending rates that New York City banks selected by the
Paying Agent are quoting, on the relevant Interest Determination Date, to the
principal London offices of at least two of the Reference Banks to which such
quotations are, in the opinion of the Paying Agent, being so made; or (ii) in
the event that the Paying Agent can determine no such arithmetic mean, the
lowest one-month United States dollar lending rate which New York City banks
selected by such Paying Agent are quoting on such Interest Determination Date to
leading European banks. The "Interest Determination Date" is the second LIBOR
Business Day (i.e., the day on which banks are open for dealing in foreign
currency and exchange in New York and London) of each calendar month prior to
the 15th day of such calendar month. A "Reference Bank" is a bank that: (i) is a
leading bank engaged in transactions in Eurodollar deposits in the international
Eurocurrency market; (ii) has an established place of business in London; and
(iii) does not control, is not controlled by and is not under common control
with Neutron, in its capacity as originator or previous owner of the Mortgage
Notes. The initial Reference Banks will be the Bank of Tokyo, Ltd., Barclay's
Bank Plc, National Westminster Bank, Plc, and Bankers Trust Company; provided,
that if any of the above-referenced banks are not offering LIBOR quotations, or
if the Reuters Screen LIBOR Page is unavailable for any reason, the trustee
under the Trust may designate alternative Reference Banks.
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THE CONSULTANT
Manufactured Housing Services, Inc., a New York corporation and a
consultant to the Partnership (the "Consultant"), pursuant to a Consulting
Agreement, dated December 23, 1986 and amended as of January 9, 1998, entered
into between Hutton Manufactured Housing Services, Inc., a predecessor in
interest of the Consultant, and the Partnership at the time the Units were
offered to the public, has issued a Consultant's Statement dated May 8, 1998
(the "Consultant's Statement") with respect to the Proposals. The Consultant
has recommended that the Limited Partners vote FOR the implementation of the
Proposals.
See "Consulting Agreement and Consultant's Statement" for a more detailed
discussion of these matters. A copy of the Consultant's Statement is attached
hereto as Exhibit B and made a part hereof.
VOTING REQUIREMENTS AND OTHER CONDITIONS
Vote under the Partnership Agreement. Under the Partnership Agreement,
the affirmative vote of Limited Partners holding more than 50% of the
outstanding Units is necessary for the adoption of each of the Proposals. None
of the Proposals will be implemented unless all of the other Proposals are
approved by the Limited Partners. Accordingly, a vote against one Proposal will
have the effect of a vote against all of the Proposals as a group.
Conditions. In 1992, the Partnership, affiliates of the General Partner
and affiliates of an unrelated third party (the "Borrowers") established
Neutron which in turn established the Trust in order to obtain financing for
the Borrowers (the "Existing Financing"). In connection with the transactions
contemplated by the Existing Financing, each Borrower issued a Mortgage Note to
Neutron which was secured by certain manufactured home communities owned by
such Borrower (collectively, the "Mortgages"). The Mortgage Note issued by the
Partnership is secured by the Collateral. Immediately upon the execution and
delivery of the Mortgage Notes to Neutron, Neutron assigned the Mortgage Notes
to the Trust, which then issued the Mortgage-Backed Securities to the Borrowers
and other investors. The proceeds of the Mortgage-Backed Securities were used
by Neutron to fund the Mortgage Notes. In addition, the right to receive
payments under each Mortgage was assigned by Neutron to the Trust. As payments
are received by the Trust on the Mortgages, the proceeds thereof are
distributed to the holders of the Mortgage-Backed Securities pursuant to the
terms of the Pooling and Servicing Agreement, dated as of December 1, 1993,
among Neutron, Union Bank as trustee under the Trust, and Bankers Trust Company
(the "Servicing Agreement"). See "The Proposals-The Refinancing and Granting of
Mortgages on the Partnership's Properties-Background" for the background and a
description of the Existing Financing.
The Partnership will not consummate the proposed Refinancing unless the
following conditions are satisfied: the Trust must (i) apply the proceeds from
the prepayment of the Mortgage Notes to pay down the Class A, Class B and Class
C Mortgage-Backed Securities, (ii) pay in full all amounts due and payable
under the Class D Security and the Class R Security or the Partnership must
otherwise realize the value of the Class D Security and the Class R Security,
and (iii) release and terminate the Mortgages. The terms of the Mortgage Notes
permit the Borrowers to prepay
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the outstanding indebtedness evidenced by the Mortgage Notes. Such prepayment is
not prohibited by the Servicing Agreement. See "The Proposals--The Refinancing
and Granting of Mortgages on the Partnership's Properties--Background." The
Partnership will not consummate the transactions contemplated by the Proposals
unless the foregoing conditions are fully satisfied even if it obtains the
requisite number of votes of the Limited Partners to the Proposals.
Borrowers who are affiliates of the General Partner have orally
consented to the prepayment of their indebtedness under the Mortgage Notes
executed by them.
The Borrowers which are unaffiliated with the General Partner (the
"Unaffiliated Borrowers") are expected to refinance their mortgages with a
lender other than the Lender that will be providing the Refinancing. Unless the
Unaffiliated Borrowers refinance their Mortgage Notes prior to or concurrently
with the Refinancing, the Partnership may not be able to liquidate its interest
in the Class D Security and the Class R Security at the time of the
Refinancing. Consequently, the Partnership will not undertake the Refinancing,
even if the Proposals are approved, unless the Unaffiliated Borrowers have
already refinanced their Mortgage Notes or will refinance their Mortgage Notes
concurrently with the Refinancing or unless the Partnership can realize the
value of the Class D Security and the Class R Security by other means.
APPRAISAL RIGHTS AND ACCESS TO PARTNERSHIP RECORDS
Neither the Partnership Agreement nor Michigan law provides any right
for Limited Partners to have their respective Units appraised or redeemed in
connection with or as a result of the implementation of the Proposals.
Therefore, while each Limited Partner has the opportunity to make an individual
decision on whether to vote for any of the Proposals, a Limited Partner who
votes against the Proposals will have no right to have its Units redeemed for
cash if the Proposals are approved.
Under Michigan law any Limited Partner is entitled, upon reasonable
request and at such Limited Partner's expense, to inspect and copy, during the
Partnership's normal business hours, a list of the names and addresses of each
partner of the Partnership. Under the Partnership Agreement, any Limited Partner
is entitled: (i) to inspect and examine the Partnership's books and records of
account upon reasonable notice (e.g., written or telephonic notice received one
week in advance of proposed examination) during business hours; and (ii) to
receive by mail, upon written request to the Partnership and at such Limited
Partner's sole cost and expense, a copy of a list of names and addresses of the
Limited Partners and the number of Units owned by each of them.
Under the federal proxy rules a Limited Partner may request that the
Partnership provide such Limited Partner with a list of Limited Partners or mail
soliciting materials to other Limited Partners. The Partnership may either
provide the list or mail the materials, at the Partnership's option. If the
Partnership provides such a list, the Limited Partner must undertake that such
Limited Partner will not use the list information for any purpose other than to
solicit Limited
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Partners with respect to the subject matter of the meeting. The Limited Partner
must also return the list without retaining any copies thereof.
MATERIAL DIFFERENCES AND RISK FACTORS
If the Proposals are adopted and implemented, the Partnership interests
of the Limited Partners will be modified or affected in the following material
ways:
EXTEND MATURITY DATE OF FINANCING
The Existing Indebtedness provides for payments of principal and
interest through 2023. If the Proposals are approved and implemented, the terms
of the proposed Refinancing may extend the maturity date and could require the
Partnership to make payments of principal and interest through 2029. In the
event the proposed Refinancing is for a 30 year term (i.e. the maximum term
contemplated by the Proposals), the Partnership will be required to make
payments on indebtedness for borrowed money for a period of six years longer
than that contemplated by the Existing Indebtedness and thus: (a) increase the
risk that the portion of the Limited Partners' investment in the Partnership
that has not been returned will be lost or reduced in value; (b) increase the
Partnership's operating costs during such six year period; and (c) reduce the
amount of cash distributions from the Partnership to the Limited Partners during
such six year period.
REMAINING INVESTMENT MAY BE APPLIED TO BALLOON PAYMENT
In the event the proposed Refinancing is for a term of less than 30
years but is structured with an amortization longer than the term with a final
payment due and payable on the last day of such term in an amount equal to the
Balloon Payment, the Partnership may have insufficient funds to make the
Balloon Payment. This would in turn cause part or all of the Limited Partners'
investment in the Partnership to be lost unless the Partnership is able to
refinance the indebtedness evidenced by the Balloon Payment. There can be no
assurance that the Partnership will be able to obtain such refinancing. Such
refinancing could not be accomplished without an additional amendment to the
Partnership Agreement effected with the approval of a majority in interest of
the Limited Partners.
MAKE ADDITIONAL PAYMENT TO AFFILIATE OF GENERAL PARTNER
The Partnership will be authorized to pay the Refinancing Fee of
approximately $300,000 to Uniprop, Inc., the managing general partner of the
General Partner, for its services in arranging the proposed Refinancing. The
Refinancing Fee will be paid from the aggregate gross proceeds of the Residual
Interest Liquidation. Under the Partnership Agreement there is no specific
authorization for the payment of the Refinancing Fee. Accordingly, the payment
of the Refinancing Fee must be authorized in an amendment to the Partnership
Agreement. If the payment of the Refinancing Fee to Uniprop, Inc. were not
authorized, the Partnership would be required to distribute the amount of the
Refinancing Fee (approximately $300,000) to the Limited Partners. If the
Refinancing Fee is authorized, the aggregate amount of the Residual Interest
Liquidation proceeds that will be distributed to the Limited Partners will be
reduced by
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an amount equal to the Refinancing Fee. See "The Proposals-Proposal No. 2: The
Liquidation" and "The Proposals-Proposal No. 3: Payment of Refinancing Fee to
Affiliate of General Partner and Payment of Transaction Costs."
REDUCE DISTRIBUTION TO LIMITED PARTNERS; INCREASE CAPITAL REMAINING AT RISK
The Partnership will be authorized to pay from the aggregate gross
proceeds of the Residual Interest Liquidation up to $600,000, in the aggregate,
in Transaction Costs. Under the Partnership Agreement, there is no specific
authorization for the payment of such costs. Accordingly, the payment of such
costs must be authorized in an amendment to the Partnership Agreement. If the
payment of such costs was not authorized, the Partnership would be required to
distribute the amount of such costs to the Limited Partners. If the Proposals
are approved, the aggregate amount of the Residual Interest Liquidation proceeds
that will be distributed to the Limited Partners will be reduced by an amount
equal to such costs. See "The Proposals-Proposal No. 2: The Liquidation."
ABILITY TO ACCOMPLISH REFINANCING MAY DEPEND ON REFINANCING BY UNAFFILIATED
BORROWERS
The Partnership will not undertake the Refinancing, even if the
Proposals are approved, unless certain conditions are satisfied. See
"Introduction--Voting Requirements and Other Conditions." Certain of the
Borrowers under the Existing Financing, which are not affiliates of the General
Partner (the "Unaffiliated Borrowers"), may not refinance their Mortgage Notes
with the same lender that is providing the Refinancing. The General Partner
expects the Unaffiliated Borrowers to refinance their Mortgage Notes through a
lender other than the Lender which is providing the Refinancing. If the
Unaffiliated Borrowers do not refinance their Mortgage Notes prior to or
concurrently with the Refinancing, there will be no prepayment proceeds
available from the Unaffiliated Borrowers to make it possible for the
Partnership to realize the value of the Class D Security and the Class R
Security. In such event, the General Partner would seek an alternative method of
realizing the value of the Class D Security and the Class R Security. If no
alternative method can be implemented, then the Refinancing could not occur even
if the Proposals are approved.
GENERAL PARTNER'S CONFLICTS OF INTEREST
The General Partner is accountable to the Partnership as a fiduciary
and consequently must exercise good faith and integrity in handling Partnership
affairs. The General Partner has conflicts of interest in recommending the
Proposals. The General Partner has not retained an unaffiliated representative
to act on behalf of the Limited Partners. See "Conflicts of Interest."
VOTING RIGHTS AND PROXIES
As described in more detail below, you may vote (i) by attending the
meeting, or (ii) by delivering your proxy. Since the Partnership Agreement
requires the affirmative vote of Limited Partners holding more than 50% of the
outstanding Units to adopt a Proposal, the failure by a Limited Person to vote,
in person or by Proxy, on such Proposal, a broker "non-vote" (as
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described below under "--Record Date and Vote Required") or the return of a
Proxy by a Limited Partner with directions to abstain with respect to such
Proposal, will have the effect of a vote against such Proposal. Limited
Partners, therefore, are urged to vote either in person or by completing,
signing, dating and returning the enclosed Proxy by the date of the Special
Meeting to ensure the presence at the Special Meeting of a quorum.
COMPLETION OF PROXIES
The Proxy accompanies this Proxy Statement. THE PROXY SHOULD BE
COMPLETED, EXECUTED, DATED AND RETURNED AS SOON AS POSSIBLE TO THE GENERAL
PARTNER IN THE ENCLOSED, SELF-ADDRESSED POSTAGE-PREPAID ENVELOPE WHICH IS
ADDRESSED AS FOLLOWS:
Uniprop, Inc.
c/o Resource/Phoenix
2401 Kerner Boulevard
San Rafael, CA 94901-5529
Returned Proxies fully completed will be voted by the General Partner
as directed in the Proxies. Returned Proxies that do not give directions as to a
Proposal will be voted FOR the Proposals. Limited Partners may also transmit
Proxies via facsimile to the General Partner at (415) 485-4553, Attention: Proxy
Tabulation of Resource/Phoenix.
REVOCATION OF PROXY
A Limited Partner may revoke a Proxy as to any or all of the Proposals
at any time before it is exercised by: (i) filing with the General Partner
before the Special Meeting an instrument revoking the Proxy before the Proxy is
exercised; (ii) duly executing and filing with the General Partner before the
Special Meeting a Proxy bearing a later date; or (iii) attending the Special
Meeting and voting in person.
RECORD DATE AND VOTE REQUIRED
The General Partner has fixed 5:00 p.m., local time, on May 13, 1998
as the record date (the "Record Date") for determining which Limited Partners
are entitled to notice of, and to vote at, the Special Meeting. Each Limited
Partner will be entitled to one vote for each Unit held of record by the
Limited Partner on the Record Date. As of the close of business on the Record
Date, 3,303,387 Units were issued and outstanding, all of which are held by the
Limited Partners. The presence at the Special Meeting of the Limited Partners
holding a majority (i.e., 1,651,694) of the outstanding Units, whether
represented in person or by Proxy, will constitute a quorum for the transaction
of business. Units represented by Proxies which contain one or more abstentions
or broker "non-votes" are counted as present for purposes of determining the
presence or absence of a quorum for this Special Meeting but are not considered
to have voted FOR a Proposal. A "non-vote" occurs when a broker or other
nominee holding Units for a beneficial owner votes on one Proposal but does not
vote on another Proposal because such broker or other nominee does
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not have discretionary voting power and has not received instructions from
the beneficial owner. Provided a quorum is present, the affirmative vote of
Limited Partners holding more than 1,651,694 Units will be sufficient for
approval of each of the Proposals. However, none of the Proposals will be
implemented unless all of the other Proposals are approved.
Each Limited Partner is urged to vote either in person or by
completing, signing, dating and returning the enclosed Proxy by the date of the
Special Meeting to ensure the presence at the Special Meeting of a quorum. If a
quorum is not present at the Special Meeting, the General Partner will vote the
returned Proxies to adjourn the Special Meeting to a time and place to be
announced.
EXPENSES OF SOLICITATION
The Partnership will bear the expenses of soliciting the Proxies.
Proxies may be solicited by mail, telephone or telegraph by the General Partner
and its regular employees and affiliates, none of whom will receive any
additional compensation for his or her services. The General Partner will
request brokers, nominees and other fiduciaries and custodians who hold Units in
their names to furnish this Proxy Statement and any accompanying materials to
the beneficial owners of such Units. The Partnership will reimburse such
persons, if requested, for their reasonable fees and expenses incurred in
completing the mailing of such material to the beneficial owners. If
appropriate, the Partnership may retain the services of an independent proxy
solicitor or other professionals, with an estimated cost of approximately
$20,000 plus expenses, to assist in the solicitation of proxies.
CONFLICTS OF INTEREST
A number of conflicts of interest are inherent in the relationships
among the Partnership, the General Partner and the Limited Partners, as they
relate to the Proposals. Certain of these conflicts of interest are summarized
below.
FIDUCIARY DUTIES OF GENERAL PARTNER
The General Partner has fiduciary duties to the Partnership that go
beyond the specific duties and obligations imposed upon it under the Partnership
Agreement. The General Partner in handling the affairs of the Partnership is
expected to exercise good faith, to use care and prudence and to act with an
undivided duty of loyalty to the Partners. Under these fiduciary duties, the
General Partner is obligated to ensure that the Partnership is treated fairly
and equitably in transactions with third parties, especially where consummation
of such transactions may result in the interests of the General Partner being
opposed to, or not totally consistent with, the interests of the Limited
Partners. Accordingly, the General Partner is required to assess whether the
Proposals are fair and equitable. As discussed in detail under "Recommendations
of General Partner," after consideration of each of the Proposals, the General
Partner is recommending that the Limited Partners vote in favor of each of the
Proposals.
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SUBSTANTIAL BENEFITS TO GENERAL PARTNER AND AFFILIATES
The General Partner and certain affiliates of the General Partner have
participated in the initiation and structuring of the proposed Refinancing and
the related Proposals and will realize substantial economic benefits if the
Proposals are implemented. Because the General Partner and such affiliates have
a financial interest in the consummation of the proposed Refinancing and the
related Proposals, there is an inherent conflict of interest in their
structuring the terms and conditions of the proposed Refinancing and the related
Proposals. Such terms and conditions may have been structured differently by
persons having no financial interest in the implementation of the Proposals. The
General Partner is subject to conflicts of interest in connection with the
Proposals since Uniprop, Inc., the managing general partner of the General
Partner, will be receiving a fee of approximately $300,000 for its services in
arranging the proposed Refinancing (the "Refinancing Fee") from the aggregate
gross proceeds of the Residual Interest Liquidation. Since the Refinancing Fee
is not currently permitted under the Partnership Agreement, the amount of such
proceeds to be used to pay the Refinancing Fee would otherwise be distributed to
the Limited Partners.
Several of the Borrowers under the Existing Indebtedness are affiliated
with the general partner of the General Partner. If the Refinancing is approved
and accomplished, it is likely that the loans to these affiliated Borrowers will
be refinanced concurrently as part of the same financing package. While the
Collateral will not serve as collateral for a loan to any Borrower other than
the Partnership, it is likely that the affiliated Borrowers will obtain better
terms on their refinancings as a result of the inclusion of the Collateral in
the Refinancing.
LACK OF INDEPENDENT REPRESENTATION
The General Partner has not retained an independent representative to
act on behalf of the Limited Partners in designing the overall structure of the
proposed Refinancing and the related Proposals. No group of Limited Partners was
empowered to negotiate the terms and conditions of the proposed Refinancing and
the related Proposals or to determine what procedures should be in place to
safeguard the rights and interests of the Limited Partners. In addition, no
investment banker, attorney, financial consultant or expert was engaged to
represent the interests of the Limited Partners. On the contrary, the General
Partner and certain of its affiliates have been the parties responsible for
structuring all the terms and conditions of the proposed Refinancing and the
related Proposals. If an independent representative or representatives had been
retained for the Partnership, the terms of the proposed Refinancing and the
related Proposals might have been different and possibly more favorable to the
Limited Partners.
The General Partner did not believe it was necessary to engage an
independent representative to represent the interests of the Limited Partners in
order to structure a refinancing fair to the Limited Partners. The General
Partner, prior to determining the structure of the proposed Refinancing and the
related Proposals, consulted with a number of investment bankers, financial
consultants and experts, and legal counsel. These deliberations were critical to
the structuring of the proposed Refinancing and the related Proposals and,
though the advice and counsel of such advisors, experts and consultants was not
binding upon the General Partner, it
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did affect the manner in which the proposed Refinancing and the related
Proposals were structured.
In accordance with the Consulting Agreement, pursuant to which the
Partnership is required to consult with the Consultant and the Consultant is
required to advise the Partnership with respect to the terms of all capital
transactions, the Consultant has issued the Consultant's Statement. In the
Consultant's Statement, the Consultant has recommended that the Limited Partners
vote FOR the implementation of the Proposals. See "Consulting Agreement and
Consultant's Statement."
THE PROPOSALS
INTRODUCTION
If each Proposal is approved by the requisite affirmative vote of the
Limited Partners, the Partnership will be permitted to:
(i) incur the indebtedness contemplated by the proposed Refinancing
and secure such indebtedness with the Collateral;
(ii) liquidate all of the Partnership's right, title and interest in
and to the Class R Security;
(iii) liquidate all of the Partnership's right, title and interest in
and to the Class D Security;
(iv) use the proceeds of the Residual Interest Liquidation to (a) pay
the $300,000 Refinancing Fee to Uniprop, Inc., the managing general
partner of the General Partner, for its services in arranging the
proposed Refinancing, and (b) pay up to $600,000, in the aggregate,
in Transaction Costs; and
(v) adopt, execute, deliver and file the Second Amendment.
In addition, after setting aside approximately $300,000 of the gross proceeds of
the Residual Interest Liquidation for the payment of the Refinancing Fee and up
to $600,000, in the aggregate, for payment of the Transaction Costs, the
Partnership will distribute the balance of the aggregate gross proceeds of the
Residual Interest Liquidation and the aggregate gross proceeds of the Class D
Liquidation entirely to the Limited Partners. Of this amount, approximately $2.5
million, or $0.75 per Unit, would be distributed to the Limited Partners as a
partial payment against the current shortfall in their 10% Cumulative Preferred
Return.
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THE REFINANCING AND GRANTING OF MORTGAGES ON THE PARTNERSHIP'S PROPERTIES
BACKGROUND
The Partnership was formed in November 1986. Through December 1987, the
Partnership raised $66,067,740 from investors through the sale of 3,303,387
Units. Out of those proceeds, after deducting sales commissions, advisory fees
and other organization and offering costs, the Partnership used $58,044,000 to
acquire nine manufactured home communities which include the seven manufactured
home communities currently securing the indebtedness evidenced by the "Existing
Financing" (as defined below). In investing and managing its assets, the
Partnership's primary investment objectives have been: (i) to obtain net cash
from operations; (ii) to obtain capital appreciation; and (iii) to preserve
capital. Based on the most recent appraisals of its properties, dated March
1998, the properties are estimated to have a fair market value of $77,200,000.
Since the acquisition of the nine manufactured home communities, the Partnership
has made distributions to the Limited Partners at an average annual rate of 7.6%
of their original capital contributions. Through December 31, 1997, there was an
aggregate shortfall of approximately $14,696,000 in the Limited Partners' 10%
Cumulative Preferred Return.
In approximately the first quarter of 1992, the General Partner and its
affiliates began discussions with investment bankers regarding the feasibility
of obtaining financing through the issuance of mortgage-backed securities for
the Partnership's manufactured home communities as well as for other
manufactured home community properties owned by the General Partner's affiliates
(the "Existing Financing"). In September 1992, the General Partner and certain
of its affiliates retained Goldman, Sachs & Co. to formally explore and pursue
such financing. In addition, in September 1992, it was determined that an
unaffiliated group of manufactured home communities would participate in the
Existing Financing so as to increase the economies of scale involved in such
financing.
The Existing Financing and the "Existing Indebtedness" (as defined
below) were approved by the Limited Partners at a Special Meeting held on August
6, 1993 and were consummated as of December 1, 1993.
The Existing Financing involves not only the 7 manufactured home
communities owned by the Partnership but also 13 other manufactured home
communities owned in part by affiliates of the General Partner and 8 other
manufactured home communities owned by affiliates of an unrelated third party
(together with the Partnership, the "Borrowers"). The Existing Financing is
secured by liens and security interests in the Collateral and such 21 other
manufactured home communities (together with the Collateral, the "Existing
Collateral") and was funded through the issuance of mortgage-backed securities
(collectively, the "Mortgage-Backed Securities"). As of December 1, 1993, the
Partnership borrowed $30,045,000 of the proceeds of the issuance of the
Mortgage-Backed Securities (together with accrued and unpaid interest thereon,
the "Existing Indebtedness").
The Mortgage-Backed Securities were issued by a newly created REMIC
Trust (that is, a grantor trust designed to take advantage of pass-through tax
treatment) (the "Trust") whose
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primary purpose was to hold the Mortgage Notes and the Existing Collateral
securing such Notes. The Mortgage-Backed Securities are comprised of (i) Uniprop
MHC Mortgage Pass-Through Certificate, Series 1993-1, Class A securities (the
"Class A Securities"), (ii) Uniprop MHC Mortgage Pass-Through Certificate,
Series 1993-1, Class B securities (the "Class B Securities"), (iii) Uniprop MHC
Mortgage Pass-Through Certificate, Series 1993-1, Class C securities (the "Class
C Securities"), and (iv) Uniprop MHC Mortgage Pass-Through Certificate, Series
1993-1, Class D securities (the "Class D Securities"), and were issued for an
aggregate original principal amount of approximately $143,167,719. There is an
independent trustee of the Trust; neither the General Partner nor any of its
affiliates has any control over the Trust. The mortgages relating to the
Partnership's properties have terms similar to the mortgages on the other
properties involved in the Existing Financing. The Partnership's seven mortgaged
manufactured home communities and the proceeds thereof serve as collateral for
the indebtedness evidenced by the Mortgage Note executed by the Partnership;
otherwise, none of the properties of the Partnership serves as collateral for
any loan.
As part of the transactions contemplated by the Existing Financing and
to enhance its attractiveness to outside investors and its benefits to the
Partnership, as described below, the Partnership was required to purchase Class
D Securities for an aggregate original principal amount equal to $1,502,250. The
principal amount of the Class D Securities which the Partnership (and each of
the other Borrowers) was required to purchase was equal to 5% of the amount of
the gross proceeds of the Existing Financing borrowed by it. To the extent that
the Trust has insufficient money to make timely principal payments on all of the
classes of the Mortgage-Backed Securities which it has issued, the Class D
Securities held by the Partnership and the other Borrowers will be the first
class not to receive principal payments. The use of the Class D Securities was
considered to have several advantages for the overall transactions contemplated
by the Existing Financing, specifically to increase the likelihood of a
favorable rating of the Class A Securities and Class B Securities from the
rating agencies and to enhance the marketability, and lower the cost, of the
overall Existing Financing. However, it did lower the amount of the proceeds of
the Existing Financing that the Partnership initially obtained and carried with
it significant risks. The Class D Securities are unrated securities with a fixed
interest rate and are subordinate to the Class A Securities, Class B Securities
and Class C Securities. The original principal amount of the Mortgage-Backed
Securities was approximately as follows:
CLASS AGGREGATE PRINCIPAL
----- BALANCES AT ISSUANCE
--------------------
Class A Securities $105,944,000
Class B Securities $7,158,000
Class C Securities $22,907,000
Class D Securities $7,158,719
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In connection with the transactions contemplated by the Existing
Financing, the Trust issued the Class R Security representing the residual
interest in the Trust to Uniprop MHC. The Class R Security represents 99.9999%
of the residual interests in the Trust. The Partnership, as a member of Uniprop
MHC, holds a beneficial interest equal to approximately 21% in the Class R
Security. Accordingly, upon liquidation of the Class R Security, the Partnership
would be entitled to approximately 21% of the proceeds of such liquidation.
If the Mortgage Notes are prepaid prior to December 1, 1998, each
Borrower would be required to pay a prepayment premium equal to 1% of the
outstanding principal amount of the Mortgage Notes issued by it. However, since
the aggregate proceeds of the prepayment of the Mortgage Notes net of such
prepayment premiums is sufficient to pay the Mortgage-Backed Securities in full
and all other costs and expenses provided for in the Servicing Agreement, the
General Partner expects that any prepayment premium paid by the Partnership will
be returned to it as part of the proceeds of the Residual Interest Liquidation.
The liquidation value of the Partnership's interest in the Class R Security,
after giving effect to such prepayment premium, is currently valued at
approximately $2,300,000.
In June, 1997 the General Partner and its affiliates began discussions
with Newman & Associates Inc. regarding the feasibility of refinancing the
Existing Indebtedness. Since the time that the Existing Indebtedness was
incurred, the Partnership has been required to make payments of interest only
with respect to the Existing Indebtedness. Commencing January 1, 1999, however,
the Partnership will be required to make payments of principal and interest with
respect to the Existing Indebtedness. Although the Partnership's net operating
income increased in 1997 such that it expects to be able to satisfy its debt
service obligations in 1999 and make quarterly cash distributions to the Limited
Partners at current levels, there can be no guaranty that the Partnership's net
operating income will so permit in subsequent years.
The General Partner expects that the proposed Refinancing would enable
the Partnership to increase quarterly cash distributions to the Limited Partners
by approximately 15% (i.e., an annual increase of approximately $0.11 per Unit),
whereas under the Existing Financing the General Partner expects to be able to
continue only the current level of quarterly distributions once principal
payments become due commencing January 1, 1999. Unlike the Existing Financing,
the proposed Refinancing would provide for level payments of principal and
interest subject, however, to a possible Balloon Payment in the event the term
of the proposed Refinancing is for less than 30 years. The monthly amount of
these payments (other than the Balloon Payment, if any) would be less than the
amount being paid solely for interest under the Existing Financing. In addition,
the proposed Refinancing would enable the Partnership to lock in a fixed rate of
interest which is lower than the variable interest rate currently payable with
respect to the Existing Indebtedness. The interest rate on the Existing
Indebtedness, which is calculated as provided in "Introduction-Interest Rate on
Existing Indebtedness," is variable and could increase to as high as 9.9% per
annum through 2003 and to as high as 10.9% per annum thereafter if market
interest rates increased. Under such formula, the Partnership paid an average of
approximately 9% per annum in interest during 1997.
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PROPOSAL NO. 1: AUTHORIZATION TO REFINANCE AND MORTGAGE THE PROPERTIES
Under this Proposal the Partnership would be authorized to refinance
the Existing Indebtedness and to grant liens and security interests in the
Collateral as security for the indebtedness incurred under the proposed
Refinancing.
Terms of the Proposed Refinancing
The proposed Refinancing, if approved, will be structured as a
conventional loan. As part of this Proposal the General Partner would be
authorized to obtain the proposed Refinancing and mortgage seven of the
Partnership's nine manufactured home communities within the following
parameters:
Terms of the Proposed Refinancing
---------------------------------
Principal Amount: Not to exceed $30,000,000
Loan to Value Ratio: Not greater than 50:100*
Debt Service Coverage Ratio: Between 1.4:1 and 1.6:1
Amortization: 30 year schedule
Term: A minimum of 10 years and a maximum
of 30 years
Prepayment Penalty: Yield maintenance or other customary
provisions
Stated Interest Rate: Not to exceed 8% per annum, fixed
for the duration of the loan
- ---------------------
*An independent appraiser has determined that the value of the Partnership's
properties results in a loan-to-value ratio not greater than 50:100.
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If the Refinancing is accomplished, it is likely that the lender will
later assign the loan to a securitization pool; in such event, the loan would
continue to conform to the terms set forth above.
COSTS OF REFINANCING; DISTRIBUTION OF NET PROCEEDS OF THE PROPOSED REFINANCING;
AND DISTRIBUTION OF NET PROCEEDS OF RESIDUAL INTEREST LIQUIDATION AND CLASS D
LIQUIDATION
Set forth below are estimates of the costs associated with the proposed
Refinancing and the distribution of the net proceeds thereof:
SOURCES:
Loan Proceeds $30,000,000
Liquidation of Class R Security $2,300,000
Liquidation of Class D Security $1,502,250
Total: $33,802,250
===========
USES:
Pay-off Current Mortgage Note* $30,345,450
Transaction Costs $600,000
Refinancing Fee $300,000
Distribution to Limited Partners $2,556,800
Total: $33,802,250
===========
*$300,450 of this amount represents the 1% prepayment premium required by the
Mortgage Notes. See "-The Refinancing and Granting of Mortgages on the
Partnership's Properties-Background."
The Partnership Agreement currently prohibits the Partnership from
incurring additional indebtedness for borrowed money and, subject to certain
exceptions, granting liens and security interests with respect to the
Collateral. This Proposal seeks the authorization of the Limited Partners to the
incurrence by the Partnership of the indebtedness contemplated by the proposed
Refinancing and the granting of liens and security interests in the Collateral
to secure such indebtedness.
If the Proposed Refinancing is approved, the Partnership will be
authorized to borrow an aggregate principal amount not to exceed $30,000,000
secured by the Collateral. The other principal terms of this proposed structure
are set forth above in the table entitled "Terms of the Proposed Refinancing."
As a consequence of this structure of the proposed Refinancing, the
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Class D Securities held by the Partnership and the Class R Security held by
Uniprop MHC will be liquidated, generating gross proceeds of $1,502,250 and
approximately $2,300,000, respectively. The proceeds of the Class D Liquidation
will be distributed to the Limited Partners and the proceeds of the Residual
Interest Liquidation will be distributed to the Limited Partners after deduction
of the Refinancing Fee and up to $600,000, in the aggregate, for payment of
Transaction Costs.
The General Partner believes that the proposed Refinancing would
offer the following advantages to the Limited Partners:
- The proposed Refinancing should enable the Partnership to increase
quarterly cash distributions to Limited Partners by approximately
15% (i.e. an annual increase of approximately $0.11 per Unit). If
the Refinancing is not accomplished, the General Partner does not
expect to be able to increase quarterly cash distributions in the
foreseeable future. The Existing Indebtedness would require the
Partnership to commence making principal payments of approximately
$337,081 per annum (i.e., 1.107% of the outstanding principal
amount of the Existing Indebtedness) beginning January 1, 1999,
thus precluding a current increase in quarterly cash distributions
notwithstanding the increase in the Partnership's net operating
income in 1997.
- The proposed Refinancing would lock in a fixed interest rate which
would be lower than the variable interest rate currently payable
with respect to the Existing Indebtedness and thus decrease the
Partnership's debt service obligations. Furthermore, a fixed
interest rate will permit the Partnership to predict its debt
service obligations and plan accordingly. The interest rate on the
Existing Indebtedness, which is calculated as provided in
"Introduction-Interest Rate on Existing Indebtedness," is variable
and could increase to as high as 9.9% per annum through 2003 and
to as high as 10.9% per annum thereafter if market interest rates
increased. Under such formula, the Partnership paid an average of
approximately 9% per annum in interest during 1997. See
"Introduction - Interest Rate on Existing Indebtedness."
- Two relatively high risk securities currently held by the
Partnership, the Class D Security and the Class R Security, would
be liquidated. After payment of the Refinancing Fee and the
Transaction Costs, the proceeds of the liquidation of these
securities, approximately $2.5 million, would be distributed to
the Limited Partners as a partial payment against the current
shortfall in their 10% Cumulative Preferred Return. Limited
Partners would receive approximately $0.75 per Unit.
The Proposed Refinancing subjects the Partnership and the Limited
Partners to certain risks which are described under "Material Differences and
Risk Factors" herein.
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The proposed Refinancing and the grant of a lien and security in the
Collateral are not permitted under the Partnership Agreement. Thus, to implement
this Proposal, the Partnership Agreement must be amended to authorize
specifically such transactions.
PROPOSAL NO. 2: THE LIQUIDATION
This Proposal provides for the liquidation by the Partnership of all of
its right, title and interest in and to (i) its residual interest in the Trust,
which interest has a liquidation value of approximately $2,300,000 and is
represented by the Partnership's interest in the Class R Security issued by the
Trust to Uniprop MHC (the "Residual Interest Liquidation"), and (ii) the Class D
Security issued by the Trust to the Partnership and valued at $1,502,250 (the
"Class D Liquidation"). For more information on the Class R Security and the
Class D Security, see "-The Refinancing and Granting of Mortgages on the
Partnership's Properties-Background." See also "-Proposal No. 1: Authorization
to Refinance and Mortgage the Properties" and "-Proposal No. 3: Payment of
Refinancing Fee to Affiliate of General Partner and Payment of Transaction
Costs" for a more detailed discussion on the use of the proceeds of the Residual
Interest Liquidation and the Class D Liquidation.
The Residual Interest Liquidation and the Class D Liquidation, required
to consummate the Proposed Refinancing, may not be permitted under the
Partnership Agreement. Thus, to implement this Proposal, the Partnership
Agreement must be amended to authorize specifically each such liquidation.
PROPOSAL NO. 3: PAYMENT OF REFINANCING FEE TO AFFILIATE OF GENERAL PARTNER AND
PAYMENT OF TRANSACTION COSTS
This Proposal provides for the payment (i) to Uniprop, Inc., the
managing general partner of the General Partner, of a fee, in an amount not to
exceed one percent (1%) of the gross aggregate principal amount of the proposed
Refinancing, for its services in arranging the proposed Refinancing (the
"Refinancing Fee"), and (ii) of up to $600,000, in the aggregate, for legal
fees, underwriting fees, accountants' fees, fees of other professionals, closing
costs, filing fees and other similar fees, costs and expenses (the "Transaction
Costs") incurred by the Partnership in connection with the consummation of the
transactions contemplated by the proposed Refinancing and the related Proposals.
The Refinancing Fee and Transaction Costs will be paid from the proceeds of the
Residual Interest Liquidation. Assuming the gross aggregate principal amount of
the proposed Refinancing is $30,000,000, the Refinancing Fee would equal
$300,000. The Refinancing Fee is payable to Uniprop, Inc., the managing general
partner of the General Partner, upon the closing of the proposed Refinancing for
services provided by Uniprop, Inc. relating to the investigation, analysis and
negotiation of the terms and conditions of the proposed Refinancing.
The Partnership Agreement currently provides for the payment to the
General Partner or its affiliates of various fees in connection with its
management of the business and affairs of the Partnership and permitted payment
in 1992 of a $300,000 fee in connection with the Existing Financing. The
Partnership Agreement does not, however, permit the payment to Uniprop, Inc.
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30
of the Refinancing Fee in connection with the transactions contemplated by the
proposed Refinancing. In addition, the Partnership Agreement provides that the
proceeds of the Residual Interest Liquidation and the Class D Liquidation are to
be distributed to the Limited Partners. Thus, before the proceeds of the
Residual Interest Liquidation and the Class D Liquidation can be used for
purposes other than distributions to the Limited Partners, the Partnership
Agreement will have to be amended to authorize specifically such payments.
PROPOSAL NO. 4: APPROVAL AND ADOPTION OF SECOND AMENDMENT
This Proposal provides for approval of the Second Amendment and
authorization of the execution and delivery thereof. A copy of the Second
Amendment is attached hereto as Exhibit A and the Limited Partners are urged to
review carefully the same with their attorneys, accountants and investment
advisers.
---------------------------------------------
The General Partner will not cause the Partnership to enter into the
proposed Refinancing unless all of the above Proposals are approved by the
Limited Partners. See "Material Differences and Risk Factors" for additional
information regarding the risks relating to these Proposals.
COMPENSATION TO GENERAL PARTNER AND AFFILIATES
The following table sets forth the compensation payable to the General
Partner and its affiliates and the distributions to the General Partner and
Limited Partners for the years 1995, 1996 and 1997, as actually paid and
distributed and, in the Pro Forma estimate columns, as they would have been paid
and distributed had the proposed Refinancing been consummated as of January 1,
1995:
=========================================================================================================================
1995 1995 1996 1996 1997 1997
(Pro Forma) (Actual) (Pro Forma) (Actual) (Pro Forma) (Actual)
- -------------------------------------------------------------------------------------------------------------------------
Capital returned $0 $0 $0 $0 $0 $0
to Limited
Partners
- -------------------------------------------------------------------------------------------------------------------------
Net cash from $2,311,293 $2,195,720 $1,812,059 $1,783,868 $2,134,184 $2,114,171
operations ($0.70 per ($0.66 per ($0.55 per ($0.54 per ($0.65 per ($0.64 per
distributed to Unit) Unit) Unit) Unit) Unit) Unit)
Limited Partners
- -------------------------------------------------------------------------------------------------------------------------
Distributed to $0 $0 $0 $0 $0 $0
General Partner
from loan
proceeds
- -------------------------------------------------------------------------------------------------------------------------
Net cash from $0 $0 $0 $0 $0 $0
=========================================================================================================================
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=========================================================================================================================
operations
distributed to
General Partner
- -------------------------------------------------------------------------------------------------------------------------
Property Same as 1995 $524,609 Same as 1996 $552,346 Same as 1997 $585,394
management fee Actual Actual Actual
paid to
affiliate of
General Partner
- -------------------------------------------------------------------------------------------------------------------------
Refinancing fee $300,000 $0 $0 $0 $0 $0
paid to
affiliate of
General Partner
- -------------------------------------------------------------------------------------------------------------------------
Reimbursement of $0 $0 $0 $0 $0 $0
expenses of
General Partner
and Affiliates
- -------------------------------------------------------------------------------------------------------------------------
Payments by Same as 1995 $164,657 Same as 1996 $196,491 Same as 1997 $177,046
Partnership to Actual Actual Actual
employees of
General Partner
- -------------------------------------------------------------------------------------------------------------------------
Shortfall $2,500,000 $0 $0 $0 $0 $0
Distributions to
Limited Partners
from Loan
Proceeds
=========================================================================================================================
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CONSULTING AGREEMENT AND CONSULTANT'S STATEMENT
Pursuant to the Consulting Agreement, the Partnership is required to
consult with the Consultant and the Consultant is required to advise the
Partnership with respect to the terms of certain transactions, including
financing transactions. The Consultant is a New York corporation. Affiliates of
the Consultant directly or indirectly own a 1% general partner interest and an
11.8% limited partner interest in Exodus Associates Limited Partnership, which
owns a 23.968% limited partnership interest in the General Partner. The
Partnership Agreement provides that the General Partner will not take any action
with respect to such matters contrary to the recommendations of the Consultant
or where the Consultant cannot, for reasonable cause, make a recommendation with
respect to such matters, unless it obtains the approval of Limited Partners
holding a majority of the Units.
The Consultant's Statement to the General Partner and the Partnership
is attached hereto as Exhibit B and is incorporated herein by this reference.
The Consultant's Statement states, in relevant part, that, subject to and based
upon the matters set forth therein, the Consultant affirmatively recommends FOR
the Proposals.
Limited Partners are urged to read the Consultant's Statement carefully
and in its entirety. The Consultant's Statement sets forth the procedures
followed, the assumptions made, the matters considered and the limits of the
Consultant's review. The Consultant assumed, among other things, that no
Partnership property will be sold prior to the expiration of five years from the
date of the transactions contemplated by the Proposals. In rendering the
Consultant's Statement, the Consultant relied on the accuracy and completeness
of all financial and other information that was publicly available or furnished
to it by the General Partner.
The Consultant was asked only to consider the proposals as described in
this Proxy Statement. The Consultant was not asked to, and did not, participate
in the General Partner's decision to undertake (or in the structuring of) any of
the Proposals described herein. The Consultant was not asked to solicit
alternate transactions to the Proposals or to evaluate whether the Refinancing
will be consummated.
The Consultant's Statement is necessarily based upon financial and
economic data existing as of the date thereof. The Consultant did not make an
independent appraisal of the Partnership's assets and was not asked to do so.
The Consultant does not have a duty to update (and does not intend to update)
the Consultant's Statement to reflect facts arising or information learned by
the Consultant after the date thereof.
The foregoing description of the Consultant's Statement is not intended
to be complete and is qualified in its entirety by reference to the Consultant's
Statement.
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RECOMMENDATIONS OF GENERAL PARTNER
FAIRNESS OF THE PROPOSALS
The General Partner believes that the Proposals are fair and in the
best interest of the Partnership although they would, if adopted, financially
benefit the General Partner and involve some economic costs to the Limited
Partners.
The proposed Refinancing and the related Proposals benefit the Limited
Partners as follows:
- The proposed Refinancing should enable the Partnership to increase
quarterly cash distributions to Limited Partners by approximately
15% (i.e. an annual increase of approximately $0.11 per Unit). If
the Refinancing is not accomplished, the General Partner does not
expect to be able to increase quarterly cash distributions in the
foreseeable future. The Existing Indebtedness would require the
Partnership to commence making principal payments of approximately
$337,081 per annum (i.e., 1.107% of the outstanding principal
amount of the Existing Indebtedness) beginning January 1, 1999
thus precluding a current increase in quarterly cash distributions
notwithstanding the increase in the Partnership's net operating
income in 1997.
- The proposed Refinancing would lock in a fixed interest rate which
would be lower than the variable interest rate currently payable
with respect to the Existing Indebtedness and thus decrease the
Partnership's debt service obligations. Furthermore, a fixed
interest rate will permit the Partnership to predict its debt
service obligations and plan accordingly. The interest rate on the
Existing Indebtedness, which is calculated as provided in
"Introduction-Interest Rate on Existing Indebtedness," is variable
and could increase to as high as 9.9% per annum through 2003 and
to as high as 10.9% per annum thereafter if market interest rates
increased.
- Two relatively high risk securities currently held by the
Partnership, the Class D Security and the Class R Security, would
be liquidated. After payment of the Refinancing Fee and the
Transaction Costs, the proceeds of the liquidation of these
securities, approximately $2.5 million, would be distributed to
the Limited Partners as a partial payment against the current
shortfall in their 10% Cumulative Preferred Return. Limited
Partners would receive approximately $0.75 per Unit.
By entering into the transactions contemplated by the Proposals now, the
Partnership can take advantage of the existing favorable low interest rate
environment. The Partnership has attempted to obtain refinancing at a lower rate
than the terms of the proposed Refinancing described in "The Proposals-Proposal
No. 1: Authorization to Refinance and Mortgage the Properties" but was unable to
do so.
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34
The General Partner acknowledges that the Proposals impose some costs
and risks to the Partnership. The General Partner estimates that the Partnership
will incur fees and costs equal to approximately 3% of the gross aggregate
principal amount of the proceeds of the proposed Refinancing. In addition, as a
result of the proposed Refinancing, the Partnership may be required to make debt
service payments for six years after the time when such payments would cease to
be required to be made under the Existing Financing. For a more detailed
discussion of risks relating to the Proposals, see "Material Differences and
Risk Factors."
As provided in the Partnership Agreement, the General Partner intends
to seek the approval of Limited Partners holding more than 1,651,694 Units to
the Proposals. The Consultant has recommended that Limited Partners vote for the
adoption of the Proposals. See "Consulting Agreement and Consultant's
Statement."
ALTERNATIVES TO THE REFINANCING
Initially, the Partnership received refinancing proposals from several
financial firms and institutions. One such proposal was to structure the
proposed Refinancing as a financing involving the issuance of mortgage-backed
securities. This structure would have been similar to the current structure of
the Existing Financing, with additional properties possibly added to, and
certain of the properties currently in the Trust removed from, the pool of
mortgages held by the Trust. The General Partner chose the structure of the
proposed Refinancing over the mortgage-backed security structure for two major
reasons. First, the General Partner determined that the interest rate that would
have been applicable to a mortgage-backed financing would have been higher than
the interest rate the General Partner expects to obtain on the proposed
Refinancing. Second, if the proposed Refinancing were structured as a
mortgage-backed financing, the Partnership would likely be required to purchase
a subordinated security similar to the Class D Security. If such structure were
used, the General Partner would have to use the aggregate gross proceeds of the
Class D Liquidation to purchase such securities, thus reducing the return to the
Limited Partners upon consummation of the proposed Refinancing.
Among the other alternatives to the proposed Refinancing considered by
the General Partner were: (i) the liquidation of the Partnership's assets and
the distribution of the net proceeds thereof to the Limited Partners and others,
in accordance with the Partnership Agreement; and (ii) the continuation of the
Partnership in accordance with its existing business plan with the Existing
Financing.
Liquidation. In lieu of consummating the proposed Refinancing, the
Partnership could sell its real estate assets, pay off existing liabilities and
debts, and distribute the net liquidation proceeds to the Limited Partners and
others in accordance with the terms and conditions of the current Partnership
Agreement. The Partnership would then be dissolved after the final distribution
of net proceeds. The General Partner calculates the estimated net asset value of
each Unit by dividing (i) the amount of distributions that would be made to the
Limited Partners if the Partnership's properties were sold at their current
appraised value, less sales expenses (but without consideration to tax
consequences of the sale), by (ii) 3,303,387. In March, 1998, the
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35
Partnership's properties were appraised at an aggregate fair market value of
$77,200,000, and the estimated net asset value of the Units was $13.57.
The primary advantage of this alternative strategy is that it allows
for a final liquidation of the Limited Partners' investment in the Partnership.
Following the liquidation, the Limited Partners would be at liberty to use the
funds received for investment, business, personal or other purposes. The
attractiveness of this alternative depends in part on whether the Partnership
will be able to realize on the sale of its properties the aggregate amount at
which the properties were most recently appraised. Another factor to consider is
whether the continued holding of the investment by the Limited Partners is apt
to yield them a greater return than may be available to them after liquidation
through other investment vehicles.
The principal disadvantage of this strategy is that a sale at this time
is unlikely to enable the Partnership to return the Limited Partners' remaining
invested principal, which is currently $17.11 per Unit, nor would it enable the
Partnership to make up the remaining shortfall in the Limited Partners' 10%
Cumulative Preferred Return, which is currently $4.45 per Unit. Since the
valuation of the Partnership's properties has been increasing significantly in
recent years, the General Partner considers it advisable to continue to hold the
properties and to attempt to achieve the Partnership's original objective of
preserving and returning capital. It is not certain whether market conditions
will continue to improve in the next several years to permit more favorable
sales of real estate, but historically real estate has been considered a stable
long-term investment, despite periodic market fluctuations.
Continuation of Partnership. The last alternative considered by the
General Partner is to continue the business of the Partnership in accordance
with its existing business plan and the Existing Financing. The General Partner
does not believe that there are material risks to Limited Partners if the
proposed Refinancing is not implemented. However, the General Partner does
believe, as described above, that the proposed Refinancing presents the best
available alternative for increasing quarterly cash distributions to the Limited
Partners. In addition, the General Partner considers the fixed rate financing
now available to the Partnership in the proposed Refinancing to be more
attractive than the variable rate under the Existing Financing.
THE GENERAL PARTNER RECOMMENDS THAT THE LIMITED PARTNERS VOTE "FOR" ALL OF THE
PROPOSALS.
PRO FORMA FINANCIAL STATEMENTS
The pro forma financial statements of the Partnership for the fiscal
year ended December 31, 1997 are attached hereto as Exhibit C and made a part
hereof.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The Partnership is a limited partnership duly formed pursuant to the
Uniform Limited Partnership Act, as amended, of the State of Michigan. The
General Partner is vested with full
28
36
authority as to the general management and supervision of the business and other
affairs of the Partnership, subject to certain constraints in the Partnership
Agreement and in the Consulting Agreement. Limited Partners have no right to
participate in the management of the Partnership and have limited voting
privileges only on certain matters of fundamental significance. No person owns
of record or beneficially more than five percent of the Units.
The Partnership, as an entity, does not have any officers or directors.
The General Partner of the Partnership is Genesis Associates Limited
Partnership. Genesis Associates Limited Partnership is a Michigan limited
partnership and its general partners are Paul M. Zlotoff and Uniprop, Inc.
Paul M. Zlotoff is 48 and has been an individual general partner of
Genesis Associates Limited Partnership since its inception in November, 1986.
Mr. Zlotoff became the Chairman and Chief Executive Officer of Uniprop, Inc. in
May, 1986 and has been its President since 1979. He is also an individual
general partner of P.I. Associates Limited Partnership, the general partner of
Uniprop Manufactured Housing Communities Income Fund, a limited partnership
which owns and operates four manufactured home communities. Mr. Zlotoff
currently acts and has acted in the past as the general partner for various
other limited partnerships owning manufactured home communities and some
commercial properties.
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.
The sellers of all the properties acquired by the Partnership, in some
of which sellers Paul M. Zlotoff has an interest, may be entitled to a
contingent purchase price payable by the Partnership with respect to each
property, when and if the properties are sold. The maximum amounts which could
be payable to the sellers are as follows: Sunshine Village, $1,108,260; and
Ardmor Village $946,236. Each seller will become entitled to any unpaid
contingent purchase price upon the sale, financing or other disposition of one
or more properties, but only after the receipt by each Limited Partner of
certain distributions, including the return of his or her cash contribution to
the Partnership. The actual amounts to be received, if any, will depend upon the
results of the Partnership's operations and the amounts received upon a sale,
financing or other disposition of the Partnership's properties and are not
determinable at this time. However, under the terms of the Proposals, no portion
of the contingent purchase price will be due or paid as a result of the proposed
Refinancing.
The Partnership has paid and 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
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37
ongoing Partnership responsibilities. This incentive management interest could
be up to 15% of the Partnership's distributable cash from operations in any
quarter. However, in each quarter the General Partner's right to receive any
distributable cash from operations is subordinated to the extent necessary to
first provide the Limited Partners with certain specified returns. Any such
amounts not paid to the General Partner in a taxable year will be accumulated
and paid from distributable cash from certain Partnership transactions,
including financing transactions, but only after each Limited Partner has
received its 10% Cumulative Preferred Return and 125% of its capital
contributions to the Partnership. While the General Partner is not entitled to
receive any incentive management interest upon consummation of the Proposals,
one of the Proposals does provide for the payment to Uniprop, Inc., the managing
general partner of the General Partner, of a Refinancing Fee equal to 1% of the
amount borrowed. During the last fiscal year, the General Partner received no
distribution on account of its incentive management interest from operations
because distributions were approximately $3,538,000 less than the 10% Cumulative
Preferred Return due to the Limited Partners. For 1997, approximately $400,000
was accumulated for the General Partner, and the General Partner's aggregate
accumulated incentive management interest as of December 1997 was approximately
$6,100,000. The actual amount to be received during the 1998 fiscal year will
depend upon the results of the Partnership's operations and is not determinable
at this time.
Uniprop, Inc., the managing general partner of the General Partner,
received and will receive property management fees for each property of the
Partnership managed by it. Uniprop, Inc. is primarily responsible for the
day-to-day management of the properties and for the payment of the costs of
operating each property out of the rental income collected. The property
management fees are equal to the lesser of 5% of the annual gross receipts from
the properties managed by Uniprop, Inc., or the amount which would be payable to
an unaffiliated third party for comparable services. During the 1997 fiscal
year, Uniprop, Inc. received the following property management fees totaling
$585,394: Ardmor Village, $56,791; Camelot Manor, $55,433; Country Roads,
$38,701; Dutch Hills, $45,230; El Adobe, $81,229; Paradise Village, $71,965;
Stonegate Manor, $50,893; Sunshine Village, $74,669; and West Valley, $110,483.
In addition, certain employees of the Partnership are also employees of
the General Partner. During the last fiscal year, these employees received
$177,046 for performing on-site property management, data processing and
investor relations services for the Partnership. The actual amounts to be
received during the 1998 fiscal year will depend upon the results of the
Partnership's operations.
Uniprop, Inc. would receive the Refinancing Fee (specifically, an
amount equal to one percent (1%) of the gross aggregate principal amount of the
proposed Refinancing) for its services in arranging the proposed Refinancing.
FEDERAL INCOME TAX CONSIDERATIONS
GENERAL
30
38
The following discussion summarizes the material aspects of the Federal
income taxation of the Limited Partners that should be considered by the Limited
Partners in connection with the Refinancing. Such discussion is not intended as
personal tax advice, but merely as an aid to the Limited Partners in
understanding certain tax consequences of the Refinancing. Moreover, such
discussion does not attempt to address the tax consequences that may be
applicable to a particular group of investors, such as foreign investors,
tax-exempt entities, banks and insurance companies, nor does it attempt to
address the tax consequences to a Limited Partner due to such Partner's
particular tax situation. This discussion is based on the Internal Revenue Code
of 1986, as amended, Treasury regulations promulgated thereunder, and
administrative and judicial decisions, all of which are subject to change,
possibly with retroactive effect. This discussion does not consider state, local
and foreign income and other tax aspects of the Refinancing, and does not deal
with Federal tax consequences other than Federal income tax consequences.
The Partnership has not requested and has no intention of requesting a
ruling from the Internal Revenue Service on any of the tax matters discussed
herein. No assurance can be given that the Internal Revenue Service will not
take a contrary position or that a court will not find in a contrary manner. The
following discussion represents merely the views of the General Partner as to
the Federal income tax consequences of the Refinancing under existing law and
can in no way be taken as an assurance that the Internal Revenue Service will
agree with these views.
LIMITED PARTNERS ARE URGED TO CONSULT WITH THEIR OWN TAX ADVISORS IN
ORDER TO UNDERSTAND FULLY THE FEDERAL, STATE, LOCAL AND FOREIGN INCOME AND OTHER
TAX CONSEQUENCES OF THE REFINANCING.
DISTRIBUTIONS
In general, a distribution of cash to a Limited Partner is not taxable
unless such distribution exceeds a Limited Partner's basis in its Units.
A Limited Partner's tax basis in its Units will generally equal the
amount paid for such Units, (i) increased by (A) the amount of money and the
adjusted basis of any property subsequently contributed by the Limited Partner
to the Partnership and (B) such Partner's allocable share of Partnership taxable
income and gain and tax-exempt income, and (ii) decreased by (A) the amount of
money and the adjusted basis of any property distributed by the Partnership to
the Limited Partner and (B) such Partner's allocable share of Partnership losses
and deductions and nondeductible Partnership expenses not properly chargeable to
such Partner's capital account. Moreover, any increase in a Limited Partner's
share of the liabilities of the Partnership, or any increase in the Limited
Partner's individual liabilities by reason of the assumption by such Limited
Partner of Partnership liabilities, will generally be considered as a
contribution of money by such Limited Partner to the Partnership, thereby
increasing the Limited Partner's tax basis in its Units. Conversely, any
decrease in a Limited Partner's share of the liabilities of the Partnership, or
any decrease in a Limited Partner's individual liabilities by reason of the
assumption by the Partnership of such individual liabilities, will generally be
31
39
considered as a distribution of money to the Limited Partner by the Partnership,
thereby decreasing the Limited Partner's tax basis in its Units.
If the Refinancing is accomplished, a Limited Partner that receives a
distribution that exceeds such Partner's tax basis in its Units will recognize
gain in the amount of such excess. Such gain will capital gain if the Limited
Partner has held its Units as capital assets, and such capital gain will be
long-term capital gain if the Limited Partner has held its Units for more than
one year. Individual investors that hold Units for more than 18 months may be
taxed on their capital gains at a lower rate.
SPECIAL FEDERAL INCOME TAX CONSIDERATIONS
FOR TAX-EXEMPT ENTITIES
Tax-exempt organizations, including qualified pension, profit-sharing
and stock bonus plans and IRAs, are generally exempt from Federal income
taxation but are subject to taxation on their "unrelated business taxable
income" as defined in Section 512 of the Code and may be required to file
Federal income tax returns for any taxable year in which they have gross
unrelated business income (whether or not any tax is due). Unrelated business
taxable income is income from an unrelated trade or business regularly carried
on, excluding certain items including dividends, interest, royalties, certain
rents and gains from the sale of property that is neither inventory nor held
primarily for sale to customers in the ordinary course of business, adjusted by
deductions directly connected with such income. The unrelated business tax is
imposed directly on, and is paid out of the assets of, the tax-exempt
organization. The rate of tax depends upon the type of organization. In addition
to possible Federal income taxation, unrelated business taxable income might
also be subject to state and local income taxation, which may differ in method
of computation and amount from the Federal tax.
A tax-exempt entity is engaged in an unrelated trade or business if it
carries on a trade or business unrelated to its exempt purpose or is a partner
in a partnership which carries on such business. The unrelated business taxable
income of a tax-exempt organization from an investment in a limited partnership
is determined with reference to the various types of income realized by the
partnership.
The Partnership will derive all but minor portions of its income from
real property rents and gains from sale of real property investments. While
these types of income are generally excluded from unrelated business taxable
income, such income will be unrelated business taxable income if the
Partnership's property is financed with "acquisition indebtedness." Acquisition
indebtedness is defined as indebtedness incurred by a tax-exempt organization
directly or through a partnership: (i) in acquiring or improving a property;
(ii) prior to acquiring or improving a property if the indebtedness would not
have been incurred but for such acquisition or improvement; or (iii) after
acquiring or improving a property if the indebtedness would not have been
incurred but for such acquisition or improvement and the incurrence was
reasonably foreseeable at the time of the acquisition or improvement. The law is
not clear as to the circumstances under which indebtedness incurred by the
Partnership subsequent to the acquisition of the properties but not specifically
arranged or contemplated at the time the
32
40
properties were acquired would be deemed to have been "reasonably foreseeable"
and therefore "acquisition indebtedness." Accordingly, there is no assurance
that the income allocated to a tax-exempt Partner would not be treated as
unrelated business taxable income by the IRS.
TAX-EXEMPT ORGANIZATIONS ARE STRONGLY URGED TO CONSULT THEIR LEGAL AND
TAX ADVISERS CONCERNING THE POSSIBLE TAX CONSEQUENCES OF AN INVESTMENT IN THE
PARTNERSHIP AND THE EFFECTS OF THE PROPOSALS ON THEIR EXISTING INVESTMENTS IN
THE PARTNERSHIP.
OTHER MATTERS
The only matters that the General Partner intends to present at the
Special Meeting are set forth in this Proxy Statement, and the General Partner
knows of no other matters that will be brought before the Limited Partners at
the Special Meeting. However, if any other matters are properly presented at the
Special Meeting, the General Partner will vote the Proxies on such matters in
accordance with its best judgment.
A representative of the Partnership's independent certified public
accountants, BDO Seidman LLP, is expected to be present at the Special Meeting
to respond to appropriate questions and will have the opportunity to make a
statement if so desired.
33
41
INFORMATION INCORPORATED BY REFERENCE
Incorporated by reference in and accompanying this Proxy Statement is a
copy of the Partnership's Annual Report on Form 10-K (including Schedules 5 and
6) for the fiscal year ended December 31, 1997 (without exhibits), as filed with
the Securities and Exchange Commission. All documents filed by the Partnership
pursuant to sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934, as amended, prior to August 3, 1998 (or any later date to which the
Special Meeting is postponed or adjourned) shall be deemed to be incorporated by
reference into this Proxy Statement. Copies of any document incorporated by
reference herein and not attached hereto may be obtained without cost by any
person to whom this Proxy Statement is delivered by written or oral request to
the General Partner's Investor Relations Department at 280 Daines Street, Suite
300, Birmingham, Michigan 48009, telephone no. (800) 541-7767.
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II
BY: GENESIS ASSOCIATES LIMITED PARTNERSHIP,
ITS GENERAL PARTNER
BY: _____________________________________
NAME: PAUL M. ZLOTOFF
TITLE: GENERAL PARTNER
34
42
EXHIBIT A
TO
PROXY STATEMENT
SECOND AMENDMENT
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II
SECOND AMENDMENT TO
AGREEMENT OF LIMITED PARTNERSHIP
This Second Amendment to Agreement of Limited Partnership (this
"Amendment") is made as of ________________, 1998 by Genesis Associates Limited
Partnership, a Michigan limited partnership ("Genesis"), as general partner of
Uniprop Manufactured Housing Communities Income Fund II, a Michigan limited
partnership (the "Partnership," and Genesis in such capacity as a general
partner, the "General Partner"), for itself and as attorney-in-fact for the
Partnership's unit holders and limited partners, upon the approval of a majority
in interest, as a group, of "Unit Holders" and "Limited Partners" (each as
defined in the "Agreement" (as defined below)), in accordance with Section 19b
of that certain Agreement of Limited Partnership of the Partnership, dated
November 7, 1986, by and among the General Partner, Uniprop Beneficial
Corporation, a Michigan corporation, and the unit holders and limited partners
of the Partnership parties thereto, as amended by that certain First Amendment
to Agreement of Limited Partnership, made as of September 15, 1993, by the
General Partner and a majority in interest, as a group, of the unit holders and
limited partners of the Partnership (the "Agreement"). Capitalized terms used
herein and not otherwise defined herein shall have the meanings ascribed thereto
in the Agreement.
1. AMENDMENTS.
Effective as of the date hereof the Agreement is amended as follows:
1.1 Section 1 of the Agreement is hereby amended to delete the term
"Class D Securities" in its entirety and to substitute the following therefor:
"Class D Security" means that certain Uniprop MHC Mortgage
Pass-Through Certificate, Series 1993-1, Class D, issued to the
Partnership on or about December 27, 1993 for an aggregate principal
amount equal to $1,502,250.
1.2 Section 1 of the Agreement is hereby amended to add the following
definitions thereto in the correct alphabetical order:
"Class R Security" means that certain Uniprop MHC Mortgage
Pass-Through Certificate, Series 1993-1, Class R, issued to Uniprop MHC
Residual
43
L.L.C., a Michigan limited liability company of which the Partnership
is a member, on or about December 27, 1993.
"Liquidation" means the liquidation by the Partnership of all
of its right, title and interest in and to the Class D Security and the
Class R Security.
"Refinancing" means the borrowing of up to an aggregate
principal amount of $30,000,000, secured by a lien and security
interest on seven of the Partnership's nine manufactured home
communities and the proceeds thereof, the proceeds of which will be
used to refinance the Partnership's Borrowing; provided, that the terms
of the Refinancing are within the following parameters:
Principal Amount: Not to exceed $30,000,000
Loan to Value Ratio: Not greater than 50:100
Debt Service Coverage Between 1.4:1 and 1.6:1
Ratio:
Amortization: 30 year schedule
Term: A minimum of 10 years and a
maximum of 30 years
Prepayment Penalty: Yield maintenance or other
customary provisions
Stated Interest Rate: Not to exceed 8% per annum,
fixed for the duration of the
loan
"Refinancing Documents" means all agreements, documents and
instruments (including, without limitation, all mortgages, security
agreements and other collateral documents), together with all
amendments, supplements, extensions, renewals, replacements,
restatements or other modifications thereto (in each case whether in
whole or in part), evidencing the Refinancing or the transactions
contemplated thereby, or any part thereof.
"Refinancing Fee" means that certain fee to be paid by the
Partnership to Uniprop, Inc. upon the consummation of the Refinancing
which fee shall be in an aggregate amount not to exceed one percent
(1%) of the aggregate principal amount of the Refinancing.
"Transaction Costs" means the legal fees, underwriting fees,
accountants' fees, fees of other professionals, closing costs, filing
fees and other similar fees, costs and expenses relating to the
Refinancing and incurred by the Partnership in
2
44
connection with the consummation of the transactions contemplated by
the Refinancing.
1.4 Section 14b of the Agreement is hereby amended to add the
following at the end thereof:
"Notwithstanding anything to the contrary set forth in this
Section 14 or elsewhere in this Agreement, in addition to the rights
and powers granted to the General Partner in this Agreement, the
General Partner is authorized and empowered, for and on behalf of the
Partnership, to take all appropriate action in connection with the
following without any further approval of the Consultant, any Unit
Holder or any Limited Partner:
(a) To consummate the Refinancing and enter into the
applicable Refinancing Documents; and
(b) To consummate the Liquidation; provided that the proceeds
of the Liquidation of the Class R Security shall be applied as follows:
(i) up to $300,000 to Uniprop, Inc., as payment in full
of the Refinancing Fee; and
(ii) up to $600,000 to pay the Transaction Costs;
and the balance thereof, together with the proceeds of the liquidation
of the Class D Security, shall constitute Distributable Cash From
Capital Transactions and shall be distributed to the Unit Holders and
the Limited Partners as provided in Section 11c of this Agreement.
2. REFERENCE TO AND EFFECT UPON THE AGREEMENT.
2.1 Except as specifically amended above, the Agreement shall remain in
full force and effect and is hereby ratified and confirmed.
2.2 Upon the effectiveness of this Amendment each reference in (i) the
Agreement to "this Agreement," "hereunder," "hereof," "herein" or words of
similar import shall mean and be a reference to the Agreement as amended hereby,
and (ii) any other agreement, document or instrument to the Agreement shall mean
and be a reference to the Agreement as amended hereby.
3. SECTION TITLES.
The section titles contained in this Amendment are and shall be without
substance, meaning or content of any kind whatsoever and are not a part of the
agreement among the parties hereto.
3
45
4. GOVERNING LAW.
The terms and provisions of this Amendment and any dispute arising
hereunder shall be governed by the laws of the State of Michigan without giving
effect to its conflict of laws provisions. The courts of the State of Michigan
shall have the sole and exclusive jurisdiction in any case or controversy
arising under this Amendment or by reason of the Agreement.
4
46
IN WITNESS WHEREOF, the General Partner, the Unit Holders, and the
Limited Partners have duly executed and delivered this Amendment as of the day
and year first above written.
GENERAL PARTNER:
GENESIS ASSOCIATES
LIMITED PARTNERSHIP
BY:____________________________________________
PAUL M. ZLOTOFF, GENERAL PARTNER
BY: UNIPROP, INC., A MICHIGAN CORPORATION AND A
GENERAL PARTNER OF GENESIS ASSOCIATES
LIMITED PARTNERSHIP
BY:___________________________________________
PAUL M. ZLOTOFF, PRESIDENT
UNIT HOLDERS AND LIMITED PARTNERS:
BY: GENESIS ASSOCIATES LIMITED PARTNERSHIP, A
MICHIGAN LIMITED PARTNERSHIP, AS
ATTORNEY-IN-FACT FOR ALL UNIT HOLDERS AND
LIMITED PARTNERS
BY:_______________________________________________
5
47
EXHIBIT B
TO
PROXY STATEMENT
CONSULTANT'S STATEMENT
Attached
48
MANUFACTURED HOUSING SERVICES INC.
May 8, 1998
Uniprop Manufactured Housing Communities Income Fund II
and
Genesis Associates Limited Partnership
280 Daines Street
Suite 300
Birmingham, Michigan 48009
Attention: Mr. Paul M. Zlotoff
Re: First Amended and Restated Consulting Agreement, dated as of January 9,
1998 (the "Consulting Agreement"), among Uniprop Manufactured Housing
Communities Income Fund II (the "Partnership"), Genesis Associates Limited
Partnership (the "General Partner") and Manufactured Housing Services Inc.
(the "Consultant")
Dear Mr. Zlotoff:
Pursuant to the Consulting Agreement, the General Partner has requested that the
Consultant provide its written recommendation as to the General Partner's
Proposals (defined below) set forth in the drafts provided to us on May 5, 1998
of the "Notice of Special Meeting of the Unit Holders and Limited Partners to be
Held on August 3, 1998" and the "Proxy Statement" associated therewith
(collectively, the "Proxy Materials"). This letter sets forth a brief summary of
the Proposals, a description of the scope of our engagement, certain of those
assumptions which form the basis of the recommendation contained in this letter
and our recommendation.
THE PROPOSALS
The Proposals for which our recommendation is sought are (a) to authorize the
Partnership to borrow up to $30,000,000, the proceeds of which will be used to
refinance the Partnership's existing indebtedness and to secure such
indebtedness of up to $30,000,000 with mortgages on seven of its nine
properties; (b) to authorize the Partnership to liquidate its interest in two
of the Uniprop MHC Mortgage Pass-Through Certificates, Series 1993-1 issued to
the Partnership in connection with a prior financing, and to distribute the
proceeds of such liquidation, net of fees and expenses, to the Limited
Partners; (c) to authorize the Partnership to pay a fee of approximately
$300,000 to an affiliate of the General Partner; and (d) to approve the Second
Amendment to the Partnership Agreement.
This summary of the Proposals is qualified in its entirety by the description of
the Proposals in the Proxy Materials. The Proxy Materials should be carefully
reviewed for a more complete description of the matters contemplated thereby.
(The terms "Proposal" and "Proposals" shall have the meanings set forth in the
Proxy Materials.)
SCOPE OF ENGAGEMENT
The Consulting Agreement provides, among other things, that we shall review all
proposals submitted to us by the General Partner for those transactions listed
in the Consulting Agreement, and that we
49
shall provide the General Partner and the Partnership with a written
recommendation with respect to such proposals.
In connection with our consideration of the Proposals, we have been provided
with and have reviewed, among other things, copies of the following items: (a)
the Proxy Materials; (b) the Consulting Agreement; (c) the partnership agreement
of the Partnership; (d) the audited financial statements of the Partnership for
the year ended December 31, 1997; (e) the General Partner's budgets for each
Partnership property for the year ending December 31, 1998; (f) preliminary
financing proposals, applications or bids from Nomura Asset Capital Corporation,
Deutsche Bank Morgan Grenfell and Greentree (Commercial Lending Division); (g)
the property operating statements for 1996 and 1997; (h) certain charts and
schedules, prepared by the General Partner, relating to appraised values,
average rents and net operating income growth for various periods; (i) the 1998
year to date operating statement for each Partnership property; (j) five year
refinancing pro forma, prepared by the General Partner, for each of the
Partnership properties; (k) the Partnership's Annual Report on Form 10-K for the
year ended December 31, 1997; and (l) the Partnership's prospectus, dated
December 23, 1986.
We have not independently verified the accuracy or completeness of the
information supplied to us with respect to the transactions and other actions
contemplated by the Proposals and we do not assume any responsibility with
respect thereto.
Our engagement is limited to responding with a recommendation to the Proposals.
We were not engaged and do not purport (a) to develop, consider, solicit or
evaluate alternate proposals; (b) to broaden, negotiate or restructure the
Proposals; (c) to consider the relative merits of a disposition of Partnership
assets, in whole or in part; (d) to evaluate or to comment on the reasonableness
of the various fees and expenses to be incurred by the Partnership or paid to
the General Partner or its affiliates in consummating the transactions and other
actions contemplated by the Proposals; (e) to evaluate or to comment on whether
the consummation of the transactions and other actions contemplated by the
Proposals are consistent with the fiduciary responsibility of the General
Partner to the Partnership and the Limited Partners; (f) to evaluate or to
comment on the adequacy, accuracy or completeness of the description of the
Proposals and each of the matters set forth in the Proxy Materials, including
without limitation the manner in which this letter is characterized, described
or excerpted; (g) to evaluate or comment on the probability that the
transactions and actions contemplated by the Proposals will be consummated; (h)
to perform or to obtain an independent evaluation or appraisal of the
Partnership's assets; and (i) to evaluate the reasonableness of the assumptions
contained in the Proxy Materials and the materials provided to us by the General
Partner.
This letter should not be construed as investment or tax advice to any of the
Limited Partners of the Partnership. We understand that the Partnership and the
Limited Partners will seek their own investment and tax advice regarding their
vote on the Proposals.
2
50
ASSUMPTIONS
In making the recommendation set forth below, we have assumed, among other
things, that (a) the various assumptions contained in the Proxy Materials are
true and accurate; (b) all the Proposals are approved and all the transactions
and actions contemplated by all the Proposals are consummated; (c) all
conditions precedent, as set forth in the Proxy Materials, to the consummation
of the transactions and actions contemplated by the Proposals, have been or will
be satisfied; (d) all information provided to us by the General Partner,
including the Proxy Materials, do not make any untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
made, in light of the circumstances under which they are made, not misleading;
(e) the General Partner has provided to us such information as the Partnership
possesses that is directly or indirectly related to the Proposals; and (f) that
no Partnership property will be sold prior to the expiration of five years from
the date of the transactions contemplated by the Proposals. Changes in the
assumptions made by us in preparing this recommendation, contained in the Proxy
Materials or contained in any of the materials provided to us by the General
Partner may result in a conclusion different from the recommendation set forth
below.
RECOMMENDATION
BASED UPON AND SUBJECT TO THE ASSUMPTIONS, QUALIFICATIONS AND LIMITATIONS SET
FORTH HEREIN, WE AFFIRMATIVELY RECOMMEND FOR THE PROPOSALS.
We alert you to the fact that the principal of the Consultant is the holder of
an indirect limited partner interest in the General Partner in the approximate
amount of 2.8%, and, accordingly, may indirectly benefit from the transactions
described in the Proxy Materials.
This letter is furnished to you solely in connection with the Consulting
Agreement and is not to be used, circulated, quoted or otherwise referred to for
any other purpose without our express prior written consent.
Very truly yours,
MANUFACTURED HOUSING SERVICES INC.
By:/s/ Donald E. Petrow
-------------------------------
Donald E. Petrow
President
3
51
EXHIBIT C
TO
PROXY STATEMENT
PRO FORMA FINANCIAL STATEMENTS
Attached
52
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following pro forma balance sheet as of December 31, 1997 and pro forma
statements of income and cash flows for the year then ended have been prepared
to reflect the Proposed Refinancing and the related adjustments described in the
accompanying notes. The pro forma information is based on the historical
financial statements of Uniprop Manufactured Housing Communities Income Fund II
and should be read in conjunction with the notes thereto. The pro forma
statements of income and cash flows were prepared as if the Proposed Refinancing
had occurred on January 1, 1997. The pro forma financial information is
unaudited and not necessarily indicative of the results of operations and cash
flows which actually would have occurred if the Proposed Refinancing has been
consummated at the beginning of 1997, nor does it purport to represent the
financial position, results of operations and cash flows for future periods. The
pro forma balance sheet was prepared as if the Proposed Refinancing had occurred
at December 31, 1997.
53
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
PRO FORMA BALANCE SHEET
DECEMBER 31, 1997
(UNAUDITED)
Historical Adjustments Pro Forma
- -------------------------------------------------------------------------------------
ASSETS
Net property and equipment $ 46,137,846 $ - $46,137,846
Cash and cash equivalents 1,630,552 (174,730) (A) 1,455,822
Marketable securities 875,859 - 875,859
Mortgage-backed securities 1,502,250 (1,502,250) (B) -
Unamortized financing costs 891,000 9,000 (C) 900,000
Investment 998,995 (998,995) (D) -
Other assets 615,736 - 615,736
- -----------------------------------------------------------------------------------
$ 52,652,238 $ (2,666,975) $ 49,985,263
===================================================================================
LIABILITIES AND PARTNERS' EQUITY
Notes payable $ 30,045,000 $ (45,000) (E) $ 30,000,000
Accounts payable 126,063 - 126,063
Other liabilities 1,220,472 (229,730) (F) 990,742
- -----------------------------------------------------------------------------------
TOTAL LIABILITIES 31,391,535 (274,730) 31,116,805
- -----------------------------------------------------------------------------------
PARTNERS' EQUITY
Unit holders 21,030,515 (2,393,323) 18,637,192
General partner 230,188 1,078 231,266
- -----------------------------------------------------------------------------------
TOTAL PARTNERS' EQUITY 21,260,703 (2,392,245) (G) 18,868,458
- -----------------------------------------------------------------------------------
$ 52,652,238 $ (2,666,975) $ 49,985,263
===================================================================================
NOTES
(A) The net decrease relates to the assumed payment of $229,730 of historical
accrued interest on the existing indebtedness, and the receipt of $55,000 in
cash reserves as a result of the refinancing.
(B) Represents proceeds from liquidation of mortgage-backed securities ("Class
D").
(C) The net increase is as a result of the write-off of $891,000 historical
financing costs related to the existing indebtedness, and the payment of
$900,000 in financing costs related to the refinancing.
(D) Represents a portion of the proceeds from the liquidation of the investment
("Class R Security"). See also (G) below.
(E) The net decrease is as a result of the pay-off of the existing indebtedness
of $30,045,000 and the receipt of $30,000,000 in loan proceeds from the
refinancing.
(F) See (A) above.
(G) The net decrease has four components:
1. The expense related to the write-off of $891,000 in financing costs (See
(C) above).
2. The gain of $1,298,755 ($2,297,750 total proceeds less $998,995 cost -
see (D) above) from the liquidation of the investment ("Class R
Security").
3. Payment of $2,500,000 to the limited partners using available proceeds of
the refinancing.
4. Payment of $300,000 prepayment penalty on the existing indebtedness.
54
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
PRO FORMA STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
Historical Adjustments Pro Forma
- -------------------------------------------------------------------------------------------------------------------
INCOME
Rental $11,340,654 $ -- $11,340,654
Interest 203,570 (112,675) (a) 90,895
Gain on liquidation of investment ("Class R Security") -- 1,298,755 (b) 1,298,755
Other 378,302 -- 378,302
- ------------------------------------------------------------------------------------------------------------------
11,922,526 1,186,080 13,108,606
- ------------------------------------------------------------------------------------------------------------------
OPERATING EXPENSES
Property Operations 4,347,873 -- 4,347,873
Depreciation and Amortization 1,850,779 (9,139) (c) 1,841,640
Administrative 998,950 -- 998,950
Write-off of financing costs -- 1,230,139 (d) 1,230,139
Property taxes 896,103 -- 896,103
Interest 2,661,565 (263,377) (e) 2,398,188
- -------------------------------------------------------------------------------------------------------------------
10,755,270 957,623 11,712,893
- -------------------------------------------------------------------------------------------------------------------
NET INCOME $ 1,167,256 $ 228,457 $ 1,395,713
===================================================================================================================
INCOME PER LIMITED PARTNERSHIP UNIT $ .35 $ .42
DISTRIBUTIONS PER LIMITED PARTNERSHIP UNIT $ .64 $ 1.40
BOOK VALUE PER LIMITED PARTNERSHIP UNIT $ 6.37 $ 5.67
NUMBER OF LIMITED PARTNERSHIP UNITS 3,303,387 3,303,387
NET INCOME ALLOCABLE TO GENERAL PARTNER $ 11,673 $ 13,957
DISTRIBUTIONS ALLOCABLE TO GENERAL PARTNER -- --
BOOK VALUE ALLOCABLE TO GENERAL PARTNER $ 230,188 $ 232,472
RATIO OF EARNINGS TO FIXED CHARGES (F) 1.44 1.58
====================================================================================================================
NOTES
(A) ELIMINATION OF INTEREST EARNINGS ON MORTGAGE-BACKED SECURITIES ("CLASS D")
THAT WERE INCLUDED IN HISTORICAL INTEREST INCOME.
(B) REPRESENTS THE GAIN RECOGNIZED ON LIQUIDATION OF INVESTMENT ("CLASS R
SECURITY").
(C) NET DECREASE RESULTS FROM THE ELIMINATION OF $39,139 IN AMORTIZATION OF
FINANCING COSTS RELATED TO THE EXISTING INDEBTEDNESS, AND THE ADDITION OF
AMORTIZATION TOTALLING $30,000 RELATED TO FINANCING COSTS INCURRED IN THE
REFINANCING. (FINANCING COSTS ARE AMORTIZED OVER A 30-YEAR PERIOD USING THE
STRAIGHT-LINE METHOD.)
(D) WRITE-OFF OF FINANCING COSTS OF $930,139 AS OF JANUARY 1, 1997 RELATING TO
THE EXISTING INDEBTEDNESS AND THE PAYMENT OF A $300,000 PREPAYMENT PENALTY
ON THE EXISTING INDEBTEDNESS.
(E) THE DECREASE REPRESENTS THE ESTIMATED INTEREST EXPENSE REDUCTION AS A RESULT
OF THE REFINANCING, CALCULATED AS FOLLOWS:
- ELIMINATION OF HISTORICAL INTEREST EXPENSE ON
EXISTING INDEBTEDNESS $ (2,654,320)
- INTEREST EXPENSE AS A RESULT OF REFINANCING 2,390,943
(F) CALCULATED AS FOLLOWS: (NET INCOME + INTEREST EXPENSE) / INTEREST EXPENSE.
55
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II
(A MICHIGAN LIMITED PARTNERSHIP)
PRO FORMA STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
Historical Adjustments (A) Pro Forma
- -------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,167,256 $ 228,457 $ 1,395,713
Adjustments to reconcile net income to net cash
Provided by operating activities:
Depreciation 1,792,127 - 1,792,127
Amortization 58,652 (9,139) 49,513
Write-off of financing costs - 1,230,139 1,230,139
Gain on liquidation of investment ("Class R Security") - (1,298,755) (1,298,755)
Gain on sale of property and equipment (18,850) - (18,850)
Increase in other assets (178,077) - (178,077)
Decrease in accounts payable (29,826) - (29,826)
Increase (decrease) in other liabilities 26,085 (31,256) (5,171)
- -------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 2,817,367 119,446 2,936,813
- -------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (982,115) - (982,115)
Proceeds from sale of property and equipment 822,721 - 822,721
Purchase of marketable securities (507,677) - (507,677)
Proceeds from redemption of marketable securities 450,000 - 450,000
Proceeds from liquidation of mortgage-backed securities ("Class D") - 1,502,250 1,502,250
Proceeds from liquidation of investment ("Class R Securities") - 2,297,750 2,297,750
- -------------------------------------------------------------------------------------------------------------------
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES (217,071) 3,800,000 3,582,929
- -------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Prepayment penalty on existing indebtedness - (300,000) (300,000)
Payment for financing costs - (900,000) (900,000)
Proceeds from notes payable - refinancing - 30,000,000 30,000,000
Payment of notes payable - existing indebtedness - (30,045,000) (30,045,000)
Repayment of notes payable - refinancing debt - (228,953) (228,953)
Distributions to unit holders (2,114,171) (2,500,000) (4,614,171)
- -------------------------------------------------------------------------------------------------------------------
NET CASH USED IN FINANCING ACTIVITIES (2,114,171) (3,973,953) (6,088,124)
- -------------------------------------------------------------------------------------------------------------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 486,125 (54,507) 431,618
CASH AND CASH EQUIVALENTS, AT BEGINNING OF YEAR 1,144,427 - 1,144,427
- -------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, AT END OF YEAR $ 1,630,552 $ (54,507) $ 1,576,045
====================================================================================================================
NOTES
(A) See notes to pro forma balance sheet and proforma statement of income for
the explanation of these adjustments.
56
PROXY
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II
SPECIAL MEETING OF UNIT HOLDERS AND LIMITED PARTNERS TO BE HELD ON AUGUST 3,
1998
THIS PROXY IS SOLICITED ON BEHALF OF THE PARTNERSHIP
The undersigned, revoking all prior proxies, hereby appoints Genesis
Associates Limited Partnership, the general partner of the Partnership (the
"General Partner"), with full power of substitution, as proxy to represent and
vote all units of beneficial assignment of limited partnership interest (each, a
"Unit") of Uniprop Manufactured Housing Communities Income Fund II, a Michigan
limited partnership (the "Partnership"), which the undersigned would be entitled
to vote if personally present at the Special Meeting of Unit Holders and Limited
Partners to be held on August 3, 1998, at 10:00 a.m. Eastern Daylight Savings
Time, or at any postponement or adjournment thereof, at the offices of the
Partnership at 280 Daines Street, Suite 300, Birmingham, Michigan 48009, upon
the matters set forth in the Notice of Special Meeting of the Unit Holders and
Limited Partners and Proxy Statement dated June 1, 1998, a copy of which has
been received by the undersigned (the "Proxy Statement"). The proxy is further
authorized to vote, in its discretion, upon such other business as may properly
come before the meeting or any postponements or adjournments thereof.
Unit holders and limited partners are referred to collectively as the
"Limited Partners." Capitalized terms used herein and not otherwise defined
herein shall have the meanings ascribed thereto in the Proxy Statement.
The General Partner recommends a vote FOR each of the proposals. THE
EFFECTIVENESS OF EACH PROPOSAL IS CONDITIONED ON THE APPROVAL OF ALL OF THE
OTHER PROPOSALS. ACCORDINGLY, A VOTE AGAINST ONE PROPOSAL WILL HAVE THE EFFECT
OF A VOTE AGAINST ALL OF THE PROPOSALS AS A GROUP.
SEE REVERSE SIDE
57
[X]Please mark votes as in this example.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED UNIT HOLDERS OR LIMITED PARTNER(S). IF NO DIRECTION IS GIVEN, THIS
PROXY WILL BE VOTED FOR EACH OF THE PROPOSALS.
1. To authorize the Partnership to borrow up to an aggregate principal
amount not to exceed $30,000,000 (the "Refinancing"), the proceeds of
which will be used to refinance the Partnership's outstanding
indebtedness of approximately $30,045,000, and to secure the
indebtedness incurred by the Partnership under and pursuant to the
agreements, documents and instruments evidencing the proposed
Refinancing, including, without limitation, all accrued and unpaid
interest thereon, with a lien and security interest on seven of its
nine manufactured home communities and the proceeds thereof.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. To authorize the Partnership to liquidate all of its right, title and
interest in and to (a) its residual interest in the "Trust" (as defined
in the Proxy Statement), which interest has a liquidation value of
approximately $2,300,000 and is represented by the Partnership's
interest in the Uniprop MHC Mortgage Pass-Through Certificate, Series
1993-1, Class R, issued by the Trust to Uniprop MHC Residual L.L.C., a
Michigan limited liability company of which the Partnership is a member
(the "R Security" and said liquidation, the "Residual Interest
Liquidation"), and (b) the Uniprop MHC Mortgage Pass-Through
Certificate, Series 1993-1, Class D, issued by the Trust to the
Partnership and valued at $1,502,250 (the "Class D Security" and said
liquidation, the "Class D Liquidation"), and distribute the aggregate
gross proceeds of the Residual Interest Liquidation (after the payment
of (a) the "Refinancing Fee" (as defined below), and (b) up to
$600,000, in the aggregate, for legal fees, underwriting fees,
accountants' fees, fees of other professionals, closing costs, filing
fees and similar fees, costs and expenses incurred by the Partnership
in connection with the consummation of the transactions contemplated by
the proposed Refinancing and the related proposals) and the aggregate
gross proceeds of the Class D Liquidation to the Limited Partners
pursuant to and in accordance with Section 11 of the Agreement of
Limited Partnership of the Partnership, as amended.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To authorize the Partnership to pay a fee in an amount not to exceed 1%
of the gross aggregate principal amount of the proposed Refinancing
(approximately $300,000) from the aggregate gross proceeds of the
Residual Interest Liquidation to Uniprop, Inc., the managing general
partner of the General Partner, for its services in arranging the
proposed Refinancing (the "Refinancing Fee").
[ ] FOR [ ] AGAINST [ ] ABSTAIN
58
4. To approve the "Second Amendment" (as defined in the Proxy Statement)
and authorize the execution, delivery and filing thereof.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. To transact such other business as may properly come before the meeting
and any adjournment thereof.
[ ] MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW
_____________________________
_____________________________
_____________________________
_____________________________
Please sign exactly as name appears below. Joint owners must both sign.
Attorney, executor, administrator, trustee or guardian must give full title as
such. A corporation, partnership or other legal entity must sign its full name
by authorized person.
_____________________________
Signature of Limited Partner
Date: _____________________ , 1998
_____________________________
Signature if held jointly
PLEASE COMPLETE, SIGN DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE
I/We will attend the meeting: [ ] YES [ ] NO
2