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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
FORM 10-K
[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the year ended December 31, 2001
or
[_] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
Commission file number 1-12496
- --------------------------------------------------------------------------------
CHATEAU COMMUNITIES, INC.
(exact name of registrant as specified in its charter)
MARYLAND 38-3132038
(State of incorporation) (I.R.S. Employer
Identification No.)
6160 South Syracuse Way, Greenwood Village, Colorado 80111
(Address of principal executive offices)
Registrant's telephone number, including area code: (303) 741-3707
Securities registered pursuant to section 12(b) of the Act
and listed on the New York Stock Exchange:
Common Stock, $0.01 Par Value
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days. Yes [X] No [_]
Indicate by check mark if disclosure of delinquent filer pursuant to Item 405 of
Regulations S-K is not contained herein, and will not be contained, to the best
of registrant's knowledge, in definitive proxy of information statements
incorporated by references in Part III of this Form 10-K or any amendments to
this Form 10-K. [_]
The aggregate market value of voting stock held by non-affiliates of the
Registrant on March 15, 2002 was approximately $727,000,000 based on the closing
price of the stock on the New York Stock Exchange on such date. For the purposes
of this response, executive officers and directors have been deemed to be
affiliates of the Registrant.
The number of shares of the Registrant's Common Stock outstanding on March 15
2002 was 29,188,500 shares.
Portions of the Registrant's 2001 definitive Proxy Statement to be filed for its
2002 Annual Meeting of Shareholders are incorporated by reference into Part III
of this report.
CHATEAU COMMUNITIES, INC.
FORM 10-K ANNUAL REPORT
FOR THE YEAR ENDED DECEMBER 31, 2001
TABLE OF CONTENTS
------------
Item Pages
- -------- -------
PART
1. Business 3
2. Properties 6
3. Legal Proceedings 14
4. Submission of Matters to a Vote of Security Holders 14
PART II
5. Market for Registrant's Common Equity and Related Security Holder Matters 15
6. Selected Financial Data 16
7. Management's Discussion and Analysis of Financial Condition and Results
of Operations 18
7A. Quantitative and Qualitative Disclosures About Market Risk 26
8. Financial Statements and Supplementary Data 28
9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure 49
PART III
10. Directors and Executive Officers of the Registrant 49
11. Executive Compensation 49
12. Security Ownership of Certain Beneficial Owners and Management 49
13. Certain Relationships and Related Transactions 49
PART IV
14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K 49
Signatures 54
PART I
Item 1. Business
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General Development of Business
Chateau Communities, Inc. is a self-administered and self-managed equity real
estate investment trust ("REIT"), and the largest owner/manager of manufactured
home communities in the United States. We conduct substantially all of our
activities through CP Limited Partnership, a Maryland Limited Partnership (the
"Operating Partnership"), in which we own, directly and through ROC Communities,
Inc. ("ROC"), the other general partner of the Operating Partnership, an
approximate 83% general partner interest. We consider ourselves to be engaged in
only one industry segment. We own and operate 217 manufactured home communities
(the "Properties") containing 70,723 homesites and 1,359 park model/RV sites in
33 states. We also fee manage 38 manufactured home community properties
containing 8,118 homesites. In addition, we are involved in the development and
expansion of manufactured home communities, and through our subsidiary,
Community Sales, Inc. ("CSI"), the sale of new and pre-owned homes, brokerage of
used homes and in assisting residents in arranging financing and insurance
services.
Formation of the Company
We were formed in Maryland on August 25, 1993, as Chateau Properties, Inc., to
continue and expand the manufactured home community operations and business
objectives of Chateau Estates, a Michigan co-partnership, which had developed,
owned and operated manufactured home communities and properties since 1966.
Industry Overview
A manufactured home community is a residential subdivision designed and improved
with homesites for the placement of manufactured homes, including related
improvements and amenities. Manufactured homes are detached, single-family homes
which are produced off-site by manufacturers and installed on sites within the
community. Manufactured homes are available in a variety of architectural styles
and floor plans, offering a variety of amenities, custom options and on-site
built additional structures, such as a garage, carport or storage unit.
Modern manufactured home communities are similar to typical residential
subdivisions and generally contain centralized entrances, paved streets, curbs,
gutters and parkways. In addition, such communities often provide a variety of
amenities to residents which may include: a clubhouse; swimming pools and
jacuzzis; playgrounds; basketball, shuffleboard, and tennis courts; picnic
areas; cable television service; golf courses; marinas; and laundry facilities.
Utilities are provided or arranged for by the owner of the community. Some
communities provide water and sewer service through public or private utilities,
while others provide these services to residents from on-site facilities.
The owner of each home in a manufactured home community leases a site from the
community. The manufactured home community is the owner of the underlying land,
utility connections, streets, lighting, driveways, common area amenities and
other capital improvements and is responsible for enforcement of community
guidelines and maintenance. Each resident within the manufactured home community
is responsible for the maintenance of his/her home and leased site.
Additionally, manufactured home communities tend to have stable resident bases,
with relatively few residents moving their homes out of the communities.
Management thus tends to be more stable, and capital expenditures needs less
significant, relative to multi-family rental apartment complexes.
3
Operating and Investment Strategies
We seek to maximize long-term growth in income and portfolio value through
active management and expansion of certain manufactured home communities and
selective acquisition and development of additional communities. We focus on
manufactured home communities that have growth potential and expect to hold such
properties for long-term investment and capital appreciation. We have reviewed
the focus of our basic property management activities to include:
Operations
* Collections
* Budget Control
* Sales and marketing
* Community appearance
* Resident Relations
Development, Expansion and Acquisitions
* Utilizing the expertise and relationships developed by our
management to identify acquisition and development opportunities;
* Selectively developing new communities in strategically desirable
regions where development is supported by favorable demographics
and strong market demand;
* Capitalizing on opportunities to renovate and expand properties
consistent with local market demand;
* Selectively acquiring well-located manufactured home communities
that demonstrate the potential for increase in revenue and cash
flow through professional property management, improved operating
efficiencies, aggressive leasing and, where appropriate, expansion
on adjacent land; and
4
Financing Strategies
We intend to maintain a conservative and flexible capital structure that enables
us to (i) continue to access the capital markets on favorable terms; (ii)
enhance potential earnings growth; (iii) minimize our level of encumbered
assets; and (iv) limit our exposure to variable rate debt. We intend to maintain
a debt-to-market capitalization ratio of approximately 50% or less. We will,
however, re-evaluate this policy from time to time and decrease or increase such
ratio accordingly in light of then current economic conditions, relative costs
to us of debt and equity capital, market values of the properties and other
factors.
During 2001, we made a significant acquisition of 46 communities for $552
million. In connection with this acquisition, we increased our leverage to just
over fifty percent. Simultaneously, we announced a disposition strategy to
identify non-core assets for disposition. The proceeds from the dispositions
will be used to reduce our short-term debt issued in connection with the
acquisition and ultimately to reduce our debt to market capitalization ratio.
During 2001, we disposed of seven properties for an aggregate sales price of $42
million and reduced our debt to market capitalization ratio to 48 percent as of
December 31, 2001.
To the extent we seek to obtain additional financing in the future, we may,
depending on market conditions, do so through additional equity or debt
financings. Equity financing may include sales of our common stock or preferred
stock or issuance of common or preferred partnership units by our operating
partnership for cash. We may also issue our equity securities in exchange for
property acquisitions. Debt financings are expected to involve the issuance of
senior notes by our operating partnership, additional mortgage financings and
borrowings under existing or new revolving credit facilities.
Expansion and Improvement of Manufactured Home Community Properties
We will seek to increase the income generated from our manufactured home
communities by expanding the number of sites available to be leased to
residents, if justified by local market conditions and permitted by zoning and
other applicable laws, and by filling vacant sites. We are currently involved in
expansion of our existing properties, as well as the development of our 14
greenfield developments. The majority of these greenfield properties are owned
through joint ventures. During 2001, we substantially completed the development
of approximately 350 sites. As of December 31, 2001, we owned undeveloped land
adjacent to existing communities containing approximately 4,800 expansion sites,
and greenfield developments which contain approximately 4,900 future sites, all
of which are zoned for manufactured housing. The undeveloped land will
facilitate additional growth to the extent market conditions warrant. In
addition, where appropriate, we will consider upgrading or adding facilities and
amenities to certain communities in order to make those communities more
attractive in their market.
Other Policies
We may, although we have no plans to do so, make acquisitions, investments and
engage in development activities outside of the strategies described above. In
connection with our joint venture investments, we may make loans to the joint
ventures as part of the financing package. We may also invest in the securities
of other issuers in connection with a proposed or contemplated acquisition. We
will not engage in trading, underwriting or agency distribution of securities of
other issues. We have in the past and may in the future, depending on market
conditions, repurchase our common stock. At all times, we will seek to operate
in a manner consistent with maintaining our REIT status.
2001 Property Acquisitions
During 2001, we purchased CWS Communities Trust ("CWS"), a private real estate
investment trust for $552 million. The portfolio consisted of 46 manufactured
home communities with approximately 16,600 homesites, approximately 1,500
expansion sites and three RV communities with 431 RV sites in 11 states. The
properties are concentrated in Florida, Georgia and Texas. In addition to CWS,
we also completed 3 acquisitions in Indiana, Georgia and Colorado for a total of
1,445 homesites and an aggregate purchase price of $43 million.
2001 Property Dispositions
In the third quarter of 2001, we began implementing a disposition plan and
started identifying a number of mature properties that no longer meet our
portfolio objectives. As of December 31, 2001, we had sold 7 properties for
approximately $42 million. The net proceeds from these sales, of approximately
$37 million were used primarily to pay down the Acquisition Facility. These
dispositions resulted in a net gain of $585,000.
5
Sales Brokerage and Finance
We conduct our sales and brokerage activities through our taxable subsidiary,
Community Sales, Inc. ("CSI"). During 2001, CSI sold 684 new or pre-owned homes
and brokered sales of 1,221 homes. CSI also has a financial services division,
which arranges financing and insurance services for prospective residents and,
on a limited basis, provides financing to residents. During 2001, the financial
services division arranged financing on approximately 750 loans and provided
financing on approximately 40 loans, including a balance of approximately $1.8
million.
Competition
Many of the Properties are located in developed areas that include other
manufactured home communities. The number of competitive manufactured home
community properties in a particular area could have a material effect on our
ability to lease sites at our communities and the rents charged. In addition,
other forms of multi-family residential properties and single-family housing
provide housing alternatives to residents.
Employees
As of December 31, 2001, we had approximately 1,400 full and part-time
employees. We utilize a resident administrator for the on-site administration of
each of the Properties. Important duties of on-site administrators, as well as
the office manager, include extensive contact with residents through initial
introduction to community guidelines and on-going accessibility for resident
assistance. Typically, clerical and maintenance workers are employed to assist
in the management and care of residents and the properties. Direct supervision
of on-site administrators is the responsibility of our regional vice presidents
and managers and four divisional presidents. These individuals have significant
experience in addressing the needs of residents and are charged to find or
create innovative approaches to value maximization and increasing cash flow from
property operations. Approximately 90 corporate employees support on-site
administrators in all property management functions, as well as divisional and
regional property management staff.
Commitment to resident satisfaction is demonstrated by ongoing training that we
provide for all our employees. Community administrators meet periodically at
regional and divisional seminars to review Company philosophy and policy, to
discuss relevant administration issues and solutions, and to share ideas and
experiences.
Tax Status
We have elected to be taxed as a REIT under Section 856(c) of the Internal
Revenue Code of 1986, as amended (the "Code"). We are generally not subject to
Federal income tax to the extent we distribute 90 percent of our REIT taxable
income to our shareholders. REITs are subject to a number of organizational and
operational requirements. If we fail to qualify as a REIT in any taxable year,
we will be subject to Federal income tax (including any applicable alternative
minimum tax) on our taxable income at regular corporate rates. As a REIT, we are
subject to certain state and local taxes on our income and property and Federal
income and excise taxes to the extent of our undistributed income.
Item 2. Properties
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On December 31, 2001, we owned and operated 217 manufactured home communities
containing 70,723 homesites and 1,359 park model/RV sites, in 33 states, with
amenities designed for either retirement or family living. We also fee managed
38 manufactured home communities containing 8,118 sites in 14 states. In
addition, we owned land adjacent to certain existing communities containing
approximately 4,800 expansion sites, and greenfield developments with a
potential of approximately 4,900 future sites, which, although not yet
developed, are zoned for manufactured housing.
6
As of December 31, 2001, occupancy in our stabilized portfolio was 92.5 percent.
The active expansion portfolio had occupancy of 79.5 percent, while our
greenfield development portfolio had occupancy of 30.8 percent, for a total
occupancy of 88.3 percent. On a per-site basis, weighted monthly rental revenue
for the year ended December 31, 2001 was $331 compared with $316 for the same
period in 2000, an increase of 4.6 percent. Weighted average rent is calculated
as rental and utility income for the period, on a monthly basis, divided by the
weighted average occupied sites. Weighted average occupancy is computed by
averaging the number of revenue producing sites at the end of each month in the
period.
We believe that our properties provide amenities and common facilities that
create a safe and attractive community for residents. All of our properties
provide residents with appealing amenities with most offering a clubhouse, a
swimming pool and playgrounds. Many properties offer additional amenities such
as jacuzzis, indoor pools, libraries, shuffleboard, basketball, and tennis
courts, golf courses, day care facilities, exercise rooms, marinas and laundry
facilities.
Since residents own their homes, it is their responsibility to maintain their
homes and surrounding area. The communities have extensive guidelines for
maintenance. It is our role to maintain common areas, facilities and amenities
and to ensure that residents comply with community guidelines. We hold periodic
meetings of our property management team for training and implementation of our
strategies. In addition, the property administrators are expected to make a
daily inspection of their community. We believe that, due in part to this
strategy, the Properties historically have had and will continue to have low
turnover and high occupancy rates.
Leases
The typical lease entered into between the resident and one of our manufactured
home communities for the rental of a site is month-to-month or year-to-year,
renewable upon consent of both parties or, in some instances, as provided by
statute.
Property Information
We classify all our properties in either the stable, greenfield development, or
active expansion portfolio. The stable portfolio includes communities where we
do not have, or have not recently had, expansion of the community. These
communities normally have stable occupancy rates. The greenfield development
portfolio includes properties where we are developing the community. The active
expansion portfolio includes properties where we are currently, or have
recently, expanded the community by adding homesites to the available homesites
for rent. Generally, both the greenfield and the active expansion portfolios
will have a lower occupancy rate than the stable portfolio, as they are in the
lease-up phase. In addition, we own three park model/RV communities.
The following table sets forth certain information, as of December 31, 2001,
regarding our properties, excluding the three park model/RV communities. A park
model/RV community is a community where the majority of the sites are leased on
an annual basis, although the resident only occupies the home for a portion of
the year. A minority of the sites are rented with recreational vehicles on a
daily, weekly or monthly basis. This table excludes four of our greenfield
properties as there are currently no developed sites.
7
Weighted
Average
Total Monthly
Location (Closest Total Comm- Number of Rent Per
Community State Major City) unities Sites Occupancy Site
- -------------------------------------------------------------------------------------------------------------
100 Oaks AL Fultondale 230 86.52% $ 232.19
(a) Lakewood AL Montgomery 397 49.75% $ 192.64
Green Park South AL Montgomery 417 92.29% $ 272.25
Total Alabama 3 1,044 74.83% $ 233.11
Westpark AZ Phoenix 222 86.94% $ 345.61
Total Arizona 1 222 86.94% $ 345.61
Bermuda Palms CA Palm Springs 185 96.22% $ 366.83
Eastridge CA San Jose 187 99.47% $ 661.62
La Quinta Ridge CA Palm Springs 152 92.76% $ 430.94
The Colony CA Palm Springs 220 98.18% $ 650.00
The Orchard CA San Francisco 233 99.57% $ 654.62
Green River CA Los Angeles 333 99.40% $ 716.44
Jurupa Hills Cascade CA Los Angeles 323 98.76% $ 579.80
Los Ranchos CA Los Angeles 389 73.01% $ 350.67
Total California 8 2,022 93.32% $ 551.36
CV-Denver CO Denver 345 93.91% $ 428.51
CV-Longmont CO Longmont 310 98.71% $ 428.71
Friendly Village CO Greeley 226 98.67% $ 342.01
Pine Lakes Ranch CO Denver 762 98.69% $ 394.51
Redwood Estates CO Denver 753 98.67% $ 382.94
(b) Prairie Greens CO Denver 139 5.04% $ 244.75
Longview CO Longmont 400 99.00% $ 457.10
(b) Antelope Ridge CO Colorado Springs 140 47.86% $ 420.18
Total Colorado 8 3,075 91.64% $ 397.62
Cedar Grove CT New Haven 60 98.33% $ 329.17
Evergreen CT New Haven 102 98.04% $ 329.28
Green Acres CT New Haven 64 98.44% $ 322.26
Highland CT New Haven 50 96.00% $ 337.10
Total Connecticut 4 276 97.83% $ 329.05
Anchor North FL Tampa Bay 94 93.55% $ 294.44
Audubon FL Orlando 280 97.50% $ 286.29
Colony Cove FL Sarasota 2,211 99.10% $ 375.67
Conway Circle FL Orlando 111 90.09% $ 321.91
Crystal Lake FL St. Petersburg 166 92.17% $ 272.46
(a) Crystal Lakes FL Tampa 330 61.21% $ 163.48
CV-Jacksonville FL Jacksonville 643 89.58% $ 321.42
Del Tura FL Fort Myers 1,344 88.02% $ 450.89
Eldorado Estates FL Daytona Beach 126 97.62% $ 304.71
Emerald Lake FL Fort Myers 201 99.00% $ 307.81
Fairways Country Club FL Orlando 1,141 99.56% $ 305.33
(a) Foxwood Farms FL Orlando 375 80.27% $ 229.39
Hidden Valley FL Orlando 303 99.67% $ 326.81
8
Weighted
Average
Total Monthly
Location (Closest Total Comm- Number of Rent per
Community State Major City) unities Sites Occupancy Site
- ----------------------------------------------------------------------------------------------------------------
Indian Rocks FL Clearwater 148 70.55% $ 266.71
Jade Isle FL Orlando 101 95.05% $ 315.90
Lakeland Harbor FL Tampa 504 99.80% $ 266.89
Lakeland Junction FL Tampa 191 100.00% $ 205.63
Lakes at Leesburg FL Orlando 640 99.84% $ 282.43
Land O' Lakes FL Orlando 173 96.53% $ 270.85
Midway Estates FL Vero Beach 204 70.59% $ 322.39
Oak Springs FL Orlando 438 72.83% $ 249.45
Orange Lake FL Orlando 242 97.52% $ 269.38
Palm Beach Colony FL West Palm Beach 285 89.82% $ 324.64
Pedaler's Pond FL Orlando 214 84.11% $ 229.72
Pinellas Cascades FL Clearwater 238 92.44% $ 390.98
Shady Lane FL Clearwater 108 94.44% $ 275.80
Shady Oak FL Clearwater 250 95.60% $ 354.37
Shady Village FL Clearwater 156 96.15% $ 325.25
Southwind Village FL Naples 338 92.90% $ 331.43
Starlight Ranch FL Orlando 783 95.53% $ 328.03
Tarpon Glen FL Clearwater 170 87.06% $ 326.04
Town & Country FL Orlando 73 93.15% $ 342.03
Whispering Pines FL Clearwater 392 94.64% $ 388.19
Winter Haven Oaks FL Orlando 343 53.64% $ 219.82
Beacon Hill Colony FL Tampa 201 99.50% $ 243.58
Beacon Terrace FL Tampa 297 100.00% $ 245.56
Crystal Lake Club FL Tampa 599 77.63% $ 332.79
Haselton Village FL Orlando 292 98.29% $ 246.71
Lakeside Terrace FL Orlando 241 99.17% $ 254.12
(a) Palm Valley FL Orlando 789 81.27% $ 362.06
Parkwood Communities FL Orlando 698 96.13% $ 187.62
(a) Pinelake Gardens FL Vero Beach 532 84.02% $ 322.03
Shadow Hills FL Orlando 670 81.04% $ 349.72
Sunny South Estates FL West Palm Beach 319 94.98% $ 413.33
Tara Woods FL Tampa 531 98.12% $ 323.96
University Village FL Orlando 480 83.13% $ 349.93
Village Green FL Vero Beach 780 100.00% $ 336.13
Total Florida 47 19,745 91.16% $ 320.30
Atlanta Meadows GA Atlanta 75 96.00% $ 273.40
(a) Butler Creek GA Augusta 376 66.76% $ 201.45
Camden Point GA Kingsland 268 44.40% $ 181.49
Castlewood Estates GA Atlanta 334 83.83% $ 338.10
Colonial Coach Estates GA Atlanta 481 77.55% $ 332.00
Golden Valley GA Atlanta 131 92.37% $ 303.60
Landmark GA Atlanta 524 88.17% $ 308.58
9
Weighted Average
Location (Closest Total Comm- Total Number Monthly Rent
Community State Major City) unities of Sites Occupancy per Site
- -------------------------------------------------------------------------------------------------------------------------------
Marnelle GA Atlanta 205 92.68% $ 313.09
Oak Grove Estates GA Albany 174 85.63% $ 159.71
Paradise Village GA Albany 226 64.60% $ 180.57
South Oaks GA Atlanta 295 40.34% $ 146.45
Hunter Ridge GA Atlanta 850 94.59% $ 288.89
Four Seasons GA Atlanta 214 96.73% $ 299.34
Friendly Village GA Atlanta 203 97.03% $ 378.33
Lamplighter Village GA Atlanta 431 98.14% $ 372.18
The Mill GA Atlanta 150 86.67% $ 308.60
Pooles Manor GA Atlanta 194 78.87% $ 342.45
Shadowood GA Atlanta 506 95.45% $ 361.99
Smoke Creek GA Atlanta 264 85.23% $ 309.90
Stone Mountain GA Atlanta 354 96.05% $ 379.24
Suburban Woods GA Atlanta 216 91.20% $ 339.96
Woodlands of Kennesaw GA Atlanta 273 95.97% $ 389.55
Total Georgia 22 6,744 84.56% $ 301.52
Lakewood Estates IA Davenport 180 91.67% $ 303.57
Terrace Heights IA Dubuque 317 93.69% $ 275.07
Total Iowa 2 497 92.96% $ 285.39
Coach Royale ID Boise 91 96.70% $ 326.02
Maple Grove Estates ID Boise 270 95.56% $ 331.16
Shenandoah Estates ID Boise 154 96.10% $ 322.10
Total Idaho 3 515 95.92% $ 327.54
Falcon Farms IL Moline 215 88.37% $ 265.85
Maple Ridge IL Kankakee 75 98.67% $ 285.30
Maple Valley IL Kankakee 201 98.51% $ 285.30
Total Illinois 3 491 94.09% $ 276.78
(a) Broadmore IN South Bend 358 81.67% $ 280.07
Forest Creek IN South Bend 167 89.22% $ 314.70
(a) Fountainvue IN Marion 120 85.83% $ 181.33
Hickory Knoll IN Indianapolis 325 95.08% $ 330.32
Hoosier Estates IN Indianapolis 288 98.26% $ 172.60
Mariwood IN Indianapolis 296 83.11% $ 312.88
Oak Ridge IN South Bend 205 88.29% $ 277.40
Pendleton IN Indianapolis 102 84.31% $ 239.92
(a) Sherwood IN Marion 135 40.00% $ 203.87
Skyway IN Indianapolis 156 86.54% $ 305.57
Twin Pines IN Goshen 238 93.28% $ 290.15
Total Indiana 11 2,390 86.20% $ 258.50
Mosby's Point KY Cincinnati 150 95.33% $ 319.70
Total Kentucky 1 150 95.33% $ 319.70
Pinecrest Village LA Shreveport 446 74.22% $ 171.79
10
Weighted Average
Location (Closest Total Comm- Total Number Monthly Rent
Community State Major City) unities of Sites Occupancy per Site
- -------------------------------------------------------------------------------------------------------------------------------
Stonegate, LA LA Shreveport 157 98.09% $ 194.40
Total Louisiana 2 603 80.43% $ 177.67
Hillcrest MA Boston 83 98.80% $ 359.27
Leisurewoods Rockland MA Boston 394 99.24% $ 355.63
(a) Leisurewoods Taunton MA Boston 222 95.50% $ 309.79
The Glen MA Boston 36 100.00% $ 417.86
Total Massachusetts 4 735 98.10% $ 345.24
(a) Algoma Estates MI Grand Rapids 343 82.80% $ 333.45
Anchor Bay MI Detroit 1,384 93.86% $ 369.45
Arbor Village MI Jackson 266 96.62% $ 279.74
Avon MI Detroit 617 97.41% $ 432.64
(a) Canterbury Estates MI Grand Rapids 290 65.52% $ 256.43
Chesterfield MI Detroit 345 96.23% $ 390.31
(a) Chestnut Creek MI Flint 221 86.88% $ 316.07
Clinton MI Detroit 1,000 93.30% $ 381.14
Colonial Acres MI Kalamazoo 612 92.96% $ 315.03
Colonial Manor MI Kalamazoo 195 95.38% $ 278.17
Country Estates MI Grand Rapids 254 87.01% $ 312.50
(a) Cranberry MI Pontiac 328 78.96% $ 392.13
(b) Deerfield Manor (aka Allendale) MI Allendale 96 36.46% $ 180.85
Ferrand Estates MI Grand Rapids 420 99.05% $ 364.40
(a) Forest Lake Estates MI Grand Rapids 221 77.83% $ 317.84
(b) Glenmoor MI Leroy Township 41 0.00% $ -
(a) Grand Blanc MI Flint 478 87.66% $ 380.30
Holiday Estates MI Grand Rapids 205 97.06% $ 349.11
(b) Holly Hills MI Holly 96 41.67% $ 189.84
Howell MI Lansing 455 95.82% $ 407.03
(a) Huron Estates MI Flint 111 81.98% $ 235.20
Lake in the Hills MI Detroit 238 99.16% $ 416.38
(a) Leonard Gardens MI Grand Rapids 271 87.82% $ 310.57
Macomb MI Detroit 1,427 92.64% $ 411.17
(b) Maple Run MI Clio 145 53.10% $ 269.25
(c) Norton Shores MI Grand Rapids 656 82.16% $ 292.43
Novi MI Detroit 725 88.69% $ 441.27
Oakhill MI Flint 504 86.71% $ 363.13
Old Orchard MI Flint 200 99.50% $ 360.22
Orion MI Detroit 423 94.56% $ 372.05
(b) Pine Lakes MI Lapeer 137 62.50% $ 326.68
Pinewood MI Columbus 380 94.47% $ 348.47
Pleasant Ridge MI Lansing 305 68.20% $ 230.55
Royal Estates MI Kalamazoo 183 87.98% $ 351.46
Science City MI Midland 171 91.81% $ 320.18
11
Weighted Average
Location (Closest Total Comm- Total Number Monthly Rent
Community State Major City) unities of Sites Occupancy per Site
- -------------------------------------------------------------------------------------------------------------------------------
Springbrook MI Utica 400 98.24% $ 344.58
Sun Valley MI Jackson 197 90.86% $ 268.74
Swan Creek MI Ann Arbor 294 99.66% $ 380.72
(a) The Highlands MI Flint 683 89.15% $ 314.97
(a) Torrey Hills MI Flint 377 88.86% $ 374.50
Valley Vista MI Grand Rapids 137 92.70% $ 337.27
Villa MI Flint 319 84.64% $ 342.57
(a) Westbrook MI Detroit 386 85.75% $ 408.84
(c) Yankee Spring MI Grand Rapids 284 84.15% $ 252.58
Total Michigan 44 16,820 88.99% $ 353.72
Cedar Knolls MN Minneapolis 458 96.51% $ 427.39
Cimmaron MN St. Paul 505 97.43% $ 421.99
Rosemount MN Minneapolis/St. Paul 182 100.00% $ 414.27
Twenty-Nine Pines MN St. Paul 152 90.79% $ 332.16
Total Minnesota 4 1,297 96.68% $ 412.29
(b) North Creek MO Kansas City 234 0.00% $ -
(a) Springfield Farms MO Springfield 290 48.28% $ 187.67
Total Missouri 2 524 26.72% $ 187.67
Countryside Village G.F. MT Great Falls 226 95.58% $ 215.85
Total Montana 1 226 95.58% $ 215.85
Autumn Forest NC Greensboro 299 78.93% $ 261.39
Foxhall Village NC Raleigh 315 96.83% $ 317.10
Oakwood Forest NC Greensboro 481 84.65% $ 271.80
Woodlake NC Greensboro 308 88.31% $ 265.00
Total North Carolina 4 1,403 86.97% $ 247.00
Buena Vista ND Fargo 400 96.75% $ 277.18
Columbia Heights ND Grand Forks 302 97.02% $ 294.34
President's Park ND Grand Forks 174 85.63% $ 234.93
Meadow Park ND Fargo 117 97.44% $ 217.69
Total North Dakota 4 993 94.96% $ 258.34
Shenandoah Village NJ Philadelphia 359 100.00% $ 356.90
Total New Jersey 1 359 100.00% $ 356.90
Tierra West NM Albuquerque 653 60.64% $ 363.19
Total New Mexico 1 653 60.64% $ 363.19
Mountain View NV Las Vegas 349 99.71% $ 528.52
Total Nevada 1 349 99.71% $ 528.52
Casual Estates NY Syracuse 961 67.85% $ 316.77
Meadowbrook NY Ithaca 237 65.40% $ 287.60
Total New York 2 1,198 67.36% $ 311.00
(a) Hunter's Chase OH Lima 135 65.93% $ 180.99
Vance OH Columbus 110 79.65% $ 252.59
12
Weighted Average
Location (Closest Total Comm- Total Number Monthly Rent
Community State Major City) unities of Sites Occupancy per Site
- -------------------------------------------------------------------------------------------------------------------------------
Willo-Arms OH Cleveland 262 95.80% $ 226.44
Yorktowne OH Cincinnati 354 93.50% $ 345.64
Total Ohio 4 861 88.08% $ 271.59
Crestview OK Stillwater 237 67.93% $ 201.67
Total Oklahoma 1 237 67.93% $ 201.67
Knoll Terrace OR Salem 212 91.04% $ 388.59
Riverview OR Portland 133 93.98% $ 456.15
Total Oregon 2 345 92.17% $ 414.63
(b) Berryman's Branch PA Philadelphia 221 98.22% $ 352.93
Greenbriar Village PA Allentown 319 98.43% $ 383.03
Total Pennsylvania 2 540 98.35% $ 370.58
(a) Carnes Crossing SC Summerville 608 85.29% $ 210.95
(a) Conway Plantation SC Myrtle Beach 299 75.92% $ 189.43
Saddlebrook SC Charleston 426 93.90% $ 223.88
Total South Carolina 3 1,333 85.94% $ 210.25
(a) Eagle Creek TX Tyler 199 89.39% $ 177.47
Homestead Ranch TX McAllen 126 88.10% $ 209.15
Leisure World TX Brownsville 201 93.53% $ 209.08
The Homestead TX McAllen 99 96.97% $ 237.00
Trail's End TX Brownsville 299 83.39% $ 205.04
Arlington Lakeside TX Dallas 233 94.42% $ 315.83
Creekside TX Dallas 585 97.61% $ 397.85
Grand Place TX Dallas 333 97.30% $ 368.16
(a) Misty Winds TX Corpus Christi 357 81.51% $ 289.23
North Bluff Estates TX Austin 274 95.62% $ 361.87
Northwood TX Dallas 455 95.60% $ 386.56
Oakcrest Pointe TX San Antonio 297 91.58% $ 349.02
Stonegate Austin TX Austin 359 97.77% $ 369.77
Stonegate Pines TX Dallas 160 99.38% $ 316.70
(b) Harston Woods TX Dallas 180 0.00% $ -
(b) Onion Creek TX Austin 190 62.63% $ 316.01
Total Texas 16 4,347 88.02% $ 309.03
(a) Regency Lakes VA Winchester 384 91.41% $ 244.64
Total Virginia 1 384 91.41% $ 244.64
Eagle Point WA Seattle 230 96.09% $ 480.09
Total Washington 1 230 96.09% $ 480.09
Breazeale WY Laramie 115 96.58% $ 255.35
Total Wyoming 1 115 96.58% $ 255.35
Totals 214 70,723 88.30% $ 331.00
(a) These properties are included in our active expansion portfolio.
(b) These properties are included in our greenfield development portfolio
13
The following table provides additonal information for our top five properties,
which together represent 13.8% of our total revenues for the year ended December
31, 2001. We do not have any current plans to dispose of any of these
communities.
Occupancy Weighted Average Monthly Rent Per Site Expansion Sites
--------------------------------- ---------------------------------------------- as of December 31,
2001 2000 1999 1998 1997 2001 2000 1999 1998 1997 2001
--------------------------------- ---------------------------------------------- --------------
Anchor Bay 93.9% 95.7% 95.5% 94.9% 94.9% $369.45 $353.19 $338.91 $325.06 $303.97 222
Colony Cove 99.1% 99.4% 99.5% 99.9% 99.8% $375.67 $353.86 $334.53 $320.71 $308.41 -
*Del Tura 88.0% 88.0% 87.8% 89.0% 88.2% $450.89 $432.65 $448.59 $434.95 $421.67 -
*Fairways Country Club 99.6% 99.3% 99.2% 99.2% 98.4% $305.33 $302.04 $292.35 $286.83 $278.32 -
Macomb 92.6% 98.1% 97.5% 98.2% 97.3% $411.17 $384.23 $362.79 $352.26 $341.23 -
* The note that is secured by the mortgage on this property bears interest at
a rate of 7.83% per annum and matures in 2010.
Our policy is generally to add expansion sites to the extent that market
conditions warrant. The cost of each site expansion varies depending on location
and market conditions and generally range from $15,000 to $18,000 per site. We
expect to fund the cost of our new site expansions for these properties out of
our cash generated from operations, or borrowing from our line of credit.
Indebtedness
The following table sets forth certain information relating to secured and
unsecured indebtness outstanding as of December 31, 2001.
Weighted
Average
Amount of Percent of Effective Maturity
(In thousands) Indebtedness Total Debt Interest Rate Date
----------------- ------------ ----------------- -------------
Fixed Rate Debt:
Mortgage Debt:
FNMA Mortgage (5 properties) $ 114,929 10.9% 7.8% 2010
Northwestern (9 properties) 73,496 7.0% 7.2% 2009-2010
Other (22 properties) 97,225 9.2% 7.6% 2002-2011
----------------- ------------ -----------------
Total Mortgages 285,650 27.1% 7.6%
Unsecured Debt:
Unsecured Senior Notes 20,000 2.0% 7.5% 2003
Unsecured Senior Notes 50,000 4.7% 8.3% 2021
Unsecured Senior Notes 50,000 4.7% 8.0% 2003
Unsecured Senior Notes 100,000 9.5% 6.4% 2004
Unsecured Senior Notes 100,000 9.5% 8.3% 2005
Unsecured Senior Notes 150,000 14.2% 7.1% 2011
---------------- ------------ -----------------
Total Unsecured 470,000 44.6% 7.5%
---------------- ------------ -----------------
Unsecured Installment Notes 9,942 0.9% 7.5% 2012
---------------- ------------ -----------------
Total Fixed Rate 765,592 72.6% 7.6%
Variable Rate Debt:
Acquisition Facility 162,700 15.5% 3.6% 2002
Credit Facilities 125,144 11.9% 3.0% 2002-2004
---------------- -------------
Total Fixed and Variable $ 1,053,436 100.0%
================ =============
In August 2001, we entered into a forward interest rate swap agreement to hedge
the interest rate risk associated with the anticipated issuance of $150 million
of fixed rate senior notes. The bonds were issued in October 2001. We entered
into the swap to hedge movements in interest rates between the trade date on the
swap and the date the bonds were issued.
Item 3. Legal Proceedings
None.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of the Company's security holders during the
last quarter of its fiscal year ended December 31, 2001.
14
PART II
Item 5. Market for Registrant's Common Equity and Related Security Holder
Matters
Our Common Stock is traded on the New York Stock Exchange ("NYSE") under the
symbol CPJ. The following table sets forth, for the quarterly periods shown, the
high and low sales price per share as reported on the NYSE for the years ended
December 31, 2000 and 2001.
Cash
Price Range Dividend
-------------------------------
Quarter Ended High Low Declared
- ------------------------------------- ------------ ---------------- ----------------
March 31, 2000 $27-5/16 $23-1/4 $ 0.515
June 30, 2000 $28-3/8 $24-5/16 $ 0.515
September 30, 2000 $28-7/8 $26 $ 0.515
December 31, 2000 $31-5/8 $26-1/2 $ 0.515
March 31, 2001 $31.60 $29.19 $ 0.545
June 30, 2001 $31.75 $29.90 $ 0.545
September 30, 2001 $31.75 $28.90 $ 0.545
December 31, 2001 $31.70 $28.95 $ 0.545
Distributions by us, to the extent of our current and accumulated earnings and
profits for Federal income tax purposes, will be taxable to stockholders as
dividend income. Distributions in excess of earnings and profits generally will
be treated as a non-taxable reduction of the shareholder's basis in the common
stock to the extent thereof, with the remainder as taxable gain.
At March 15, 2002 there were approximately 600 holders of record and
approximately 12,500 beneficial owners of our common stock.
15
Item 6. Selected Financial Data
The following table sets forth selected financial data and other data concerning
Chateau Communities for each of the last five years.
For the Year Ended December 31,
(In thousands, except per share data) 2001(1) 2000 1999 1998 1997
-------------------------------------------------------------------------
Operating Data:
Revenues
Rental income $ 224,431 $ 186,963 $ 177,789 $ 167,206 $ 134,801
Management fee, interest and other income 15,089 17,802 11,574 5,924 3,368
------------ --------------- ---------- ------------ -----------
Total revenues 239,520 204,765 189,363 173,130 138,169
Expenses
Property operating and administrative 96,362 75,723 73,062 67,699 56,053
Depreciation and amortization 57,919 43,920 41,826 39,658 31,510
Interest and related amortization 47,618 36,400 32,318 31,287 25,918
------------ ------------ ---------- ------------ -----------
Total expenses 201,899 156,043 147,206 138,644 113,481
------------ ------------ ---------- ------------ -----------
Income before impairment/net gain on sales
of properties and minority interests 37,621 48,722 42,157 34,486 24,688
Impairment/net gain on sales of properties (1,503 - 2,805 - -
------------ ------------ ---------- ------------ -----------
Income before minority interests 36,118 48,722 44,962 34,486 24,688
Less income allocated to minority interests
Preferred OP Units 6,094 6,094 6,094 4,249 -
Common OP Units 3,768 4,842 4,242 3,436 2,986
------------ ------------ ---------- ------------ -----------
Net income available to common shareholders $ 26,256 $ 37,786 $ 34,626 $ 26,801 $ 21,702
============ ============ ========== ============ ===========
Weighted average common shares outstanding 28,723 28,480 28,135 27,282 23,688
Weighted average common shares
and OP Units outstanding 33,346 32,130 31,582 30,779 26,947
Earnings per Common Share/OP Unit Data:
Net income - basic $ 0.90 $ 1.33 1.23 $ 0.98 $ 0.92
Net income - diluted $ 0.90 $ 1.32 1.23 $ 0.97 $ 0.91
Dividends/distributions declared $ 2.18 $ 2.06 1.94 $ 1.82 $ 1.72
Tax status of dividends, return of capital
portion $ 0.91 $ 0.64 0.60 $ 0.69 $ 0.62
Cash Flow Data:
Net cash provided by operating activities $ 88,898 $ 84,961 77,464 $ 72,560 $ 54,545
Net cash used in investing activities $ (371,048) $ (73,123) (56,777) $ (167,089) $ (61,309)
Net cash provided by (used in) financing
activities $ 282,112 $ (12,087) (20,789) $ 80,069 $ 21,088
Balance Sheet Data:
Rental property, before accumulated
depreciation $ 1,686,674 $ 1,132,493 $1,055,450 $ 1,026,509 $ 836,175
Rental property, net of accumulated
depreciation $ 1,401,465 $ 896,253 $ 863,435 $ 875,249 $ 723,861
Total assets $ 1,591,873 $ 1,017,864 $ 981,673 $ 959,194 $ 782,738
Total debt $ 1,053,436 $ 531,629 $ 452,556 $ 427,778 $ 387,015
Minority interests in Operating Partnership $ 144,919 $ 116,863 $ 121,142 $ 120,475 $ 35,272
Shareholders' equity $ 344,954 $ 335,912 $ 361,820 $ 367,935 $ 322,966
Other Data:
Total properties (at end of period) 217 166 165 165 131
Total sites (at end of period) (2) 70,723 52,347 51,659 51,101 43,800
Occupied sites (at end of period) 62,478 47,678 47,383 47,192 40,286
Weighted average occupied sites 54,333 47,466 47,181 45,882 38,053
Funds from operations (3) $ 88,331 $ 85,917 $ 77,629 $ 69,392 $ 55,962
(1) In August 2001, we purchased CWS for $552 million.
(2) Does not include park model/RV sites.
(3) Funds from operations ("FFO") is defined by the National Association of
Real Estate Investment Trusts ("NAREIT") as consolidated net income without
giving effect
16
to gains (or losses) from debt restructuring and sales of property and
rental property depreciation and amortization. Management believes that FFO
is an important and widely used measure of the operating performance of
REITs, which provides a relevant basis for comparison among REITs. FFO (i)
does not represent cash flow from operations as defined by generally
accepted accounting principles; (ii) should not be considered as an
alternative to net income as a measure of operating performance or to cash
flows from operating, investing and financing activities; (iii) is not an
alternative to cash flows as a measure of liquidity; and (iv) may not be
comparable to similarly titled measures reported by other companies. FFO is
calculated as follows:
For the Year Ended December 31,
(In thousands) 2001 2000 1999 1998 1997
--------- -------- -------- -------- --------
Income before minority interests $ 36,118 48,722 44,962 34,486 24,688
Less:
Income allocated to Preferred OP Units 6,094 6,094 6,094 4,249 -
Plus: 56,804 43,289 41,161 38,962 30,867
Depreciation of rental property
Amortization of intangibles - - 405 446 407
Impairment / (gain) on sales of properties 1,503 - (2,805) (253) -
--------- -------- -------- -------- --------
Funds from operations $ 88,331 $ 85,917 $ 77,629 $ 69,392 $ 55,962
========= ======== ========= ======== ========
NAREIT has revised its definition of FFO. We adopted the new definition
effective January 1, 2000. The new definition of FFO substantially eliminates
the add-back of non-recurring items in the calculation of FFO. The application
of this new definition decreased FFO in 1998 by $375,000, and had no effect on
any other years reported.
17
Item 7. Management Discussion and Analysis of Financial Condition and Results
- ------ ---------------------------------------------------------------------
of Operations
-------------
The following discussion should be read in conjunction with the consolidated
financial statements and Notes thereto included elsewhere in this Annual Report.
Certain statements in this discussion constitute "forward-looking statements"
within the meaning of Section 21E of the Securities Exchange Act of 1934, as
amended. Such forward-looking statements may involve our plans, objectives and
expectations, which are dependent upon a number of factors, including site
expansions, development, acquisitions, dispositions and other new business
initiatives which are all subject to a number of contingency factors such as the
effects of national and local economic conditions, changes in interest rates,
supply and demand for affordable housing and the condition of the capital
markets that may prevent us from achieving our objectives.
Overview
We added 19,622 manufactured home sites to our portfolio over the three-year
period ended December 31, 2001. This includes acquisitions and dispositions of
manufactured home communities, as well as our development activity. At the end
of this period, our portfolio comprised 217 manufactured home communities
containing 70,723 manufactured homesites and 1,359 park model/RV sites, located
in 33 states.
We also provide property management and advisory services to N'Tandem Trust
("N'Tandem"). N'Tandem owns 36 communities with an aggregate of 7,882 homesites.
We own approximately ten percent of N'Tandem's outstanding equity and have made
loans and advances to N'Tandem.
We conduct substantially all of our activities through CP Limited Partnership
(the "Operating Partnership") in which we owned a combined 83 percent general
partner interest as of December 31, 2001. In addition, effective January 1,
2001, we consolidated six development joint ventures that we control. The
effects of consolidation were not material to our financial position or results
of our operations.
We also conduct manufactured home sales and brokerage activities through our
taxable subsidiary Community Sales, Inc. ("CSI").
Company growth since the beginning of 1999 can be attributed to community
acquisitions, increased operating performance at existing communities, community
expansions, and new community development, offset somewhat by property
dispositions. On August 1, 2001, we purchased CWS Communities Trust ("CWS"), a
private real estate investment trust for approximately $552 million. The
portfolio consisted of 46 manufactured home communities with approximately
16,600 homesites and approximately 1,500 expansion sites and three RV
communities with 431 RV sites in 11 states. This transaction extended our
leading position in the manufactured housing community sector, making us
substantially larger than our next largest REIT competitor in that sector.
Since our organization, we have elected to qualify as a REIT under the Internal
Revenue Code and thus do not generally pay Federal corporate income taxes on
earnings to the extent that such earnings are distributed to shareholders in
accordance with REIT requirements.
Historical Results of Operations
Comparison of the year ended December 31, 2001 to the year ended December 31,
2000
The following table summarizes certain information relative to our properties,
as of and for the years ended December 31, 2001 and 2000. We consider all
communities owned by us at both January 1, 2000 and December 31, 2001, as the
"Core 2000 Portfolio".
18
Core 2000 Portfolio Total
Dollars in thousands, except per site 2001 2000 2001 2000
--------- ----------- ----------- ------------
As of December 31,
- --------------------------------
Number of communities 160 160 217 166
Total manufactured homesites 52,078 51,570 70,723 52,347
Occupied sites 46,455 47,114 62,478 47,678
Occupancy % 89.2% 91.4% 88.3% 91.1%
For the year ended, December 31,
- --------------------------------
Rental income $ 192,234 $ 185,026 $ 224,431 $ 186,963
Property operating expenses $ 73,066 $ 65,417 $ 86,481 $ 65,845
Net operating income $ 119,168 $ 119,609 $ 137,950 $ 121,118
Weighted average monthly rent per site $ 331 $ 316 $ 331 $ 316
For the year ended December 31, 2001, income before minority interests was
$36,118,000, a decrease of $12,604,000 from the year ended December 31, 2000.
The decrease was due primarily to increased depreciation due to the acquisition
of CWS. Rental revenue for the year ended December 31, 2001 was $224,431,000, an
increase of $37,468,000 from 2000. Approximately 81 percent of the increase was
due to acquisitions, net of dispositions, and 19 percent was due to rental
increases in our Core 2000 Portfolio.
As of December 31, 2001, occupancy in our stabilized portfolio, was 92.5
percent. The active expansion portfolio had occupancy of 79.5 percent, while our
greenfield development portfolio had occupancy of 30.8 percent, for a total
occupancy of 88.3 percent. On a per-site basis, weighted monthly rental revenue
for the year ended December 31, 2001 was $331 compared with $316 for the same
period in 2000, an increase of 4.6 percent.
Management fee and other income primarily include management fee and transaction
fee income for the management of 38 manufactured home communities and equity
earnings from CSI.
Property operating and maintenance expense for the year ended December 31, 2001
increased by $18,360,000 or 35.0 percent from the prior year. The majority of
the increase was due to the acquisition of CWS, along with increased bad debt
and collection costs of approximately $5,300,000 and operating expense increases
in our Core 2000 Portfolio. The increase in bad debt expense was due to economic
conditions as well as the implementation of our enterprise-wide technology
solution. In many of our market areas the economic conditions have created a
more difficult than normal collections environment, which has significantly
impacted the cost of collections, as well the overall ability to collect past
due amounts. In addition, difficulties encountered related to the implementation
and utilization of our enterprise-wide technology solution, which was initiated
in the last quarter of 2000, was also a factor in the unusually high expense
recognized in 2001.
The majority of problems were isolated to less than 10 percent of our
communities, and we are working diligently to bring the collections performance
of these locations in line with the rest of the portfolio. Although we believe
that these issues have been substantially resolved, we will continue to monitor
the collections performance of each community as well as to improve operational
processes to ensure timely billing and collection of delinquent accounts.
Real estate taxes for the year ended December 31, 2001 increased by $2,276,000
or 17.0 percent from the year ended December 31, 2000. The increase is due
primarily to acquisitions, expansion of communities, and increases in property
tax rates. On a per site basis, monthly weighted average real estate taxes were
$24.10 in 2001 compared to $23.57 in 2000. Real estate taxes may increase or
decrease due to inflation, expansion and improvement of communities, as well as
changes in taxation in the tax jurisdictions in which we operate.
19
Administrative expense in 2001 was 4.1 percent of total revenues as compared to
4.8 percent in 2000.
Interest and related amortization costs increased for the year ended December
31, 2001 by $11,218,000, as compared with the year ended December 31, 2000. The
increase is attributed primarily to the indebtedness incurred to finance
acquisitions and lending activities. Interest expense as a percentage of average
debt outstanding decreased to approximately 6.8 percent in 2001 from 7.3 percent
in 2000, due to lower interest rates, and greater amounts of variable rate debt.
Depreciation expense for the year ended December 31, 2001 increased $13,999,000
from the same period a year ago. The increase is directly attributed to
acquisitions, expansions, and additions of rental property. Depreciation expense
as a percentage of average depreciable rental property in 2001 remained
relatively unchanged from 2000.
Comparison of the year ended December 31, 2000 to the year ended December 31,
1999
The following table summarizes certain information relative to our properties,
as of and for the years ended December 31, 2000 and 1999. We consider all
communities owned by us at both January 1, 1999 and December 31, 2000 as the
"Core 1999 Portfolio".
Core 1999 Portfolio Total
Dollars in thousands, except per site 2000 1999 2000 1999
-------- ---------- --------- ------------
As of December 31,
- -----------------
Number of Communities 161 161 166 165
Total manufactured homesites 51,325 51,042 52,347 51,659
Occupied sites 46,912 46,847 47,678 47,383
Occupancy % 91.4% 91.8% 91.1% 91.7%
For the year ended, December 31,
- --------------------------------
Rental income $ 184,438 $ 176,872 $ 186,963 $ 177,789
Property operating expenses $ 64,557 $ 62,770 $ 65,845 $ 63,181
Net operating income $ 119,881 $ 114,102 $ 121,118 $ 114,608
Weighted average monthly rent per site $ 316 $ 302 $ 316 $ 302
For the year ended December 31, 2000, income before minority interests was
$48,722,000, an increase of $3,760,000 from the year ended December 31, 1999.
The increase was due primarily to increased net operating income from the Core
1999 Portfolio and acquisitions. The increase in net operating income from our
Core 1999 Portfolio was due to increased occupancy and rental increases
partially offset by general operating expense increases. Rental revenue for the
year ended December 31, 2000 was $186,963,000, an increase of $9,174,000 from
1999. Approximately 17 percent of the increase was due to acquisitions, net of
dispositions, and 83 percent was due to rental increases and occupancy gains in
our Core 1999 Portfolio.
Weighted average occupancy for the year ended December 31, 2000 was 47,466 sites
compared with 47,181 sites for the same period in 1999. The occupancy rate for
the total portfolio was 91.1 percent on 52,347 sites as of December 31, 2000,
compared to 91.7 percent on 51,659 sites as of December 31, 1999. The occupancy
rate on the stabilized portfolio (communities where we do not have or have not
recently had, expansion of the community) was 94.7 percent as of December 31,
2000. We also added 275 available sites to our portfolio through expansion of
our communities. On a per-site basis, weighted monthly rental revenue for the
year ended December 31, 2000 was $316 compared with $302 for the same period in
1999.
Management fee and other income primarily includes management fee and
transaction fee income for the management of 44 manufactured home communities
and equity earnings from CSI.
20
Included in interest income and management fee and other income is approximately
$3.2 million of interest and related fees, from N'Tandem.
Property operating and maintenance expense for the year ended December 31, 2000
increased by $1,913,000 or 3.8 percent from the prior year. The majority of the
increase was due to operating expense increases in our Core 1999 Portfolio, and
to a lesser extent, acquisitions. On a per site basis, monthly weighted average
property operating and maintenance expense increased to $91.03 per site, or 2.0
percent.
Real estate taxes for the year ended December 31, 2000 increased by $751,000 or
5.9 percent from the year ended December 31, 1999. The increase is due primarily
to acquisitions, expansions of communities, and increases in property tax rates.
On a per site basis, monthly weighted average real estate taxes were $23.57 in
2000 compared to $22.39 in 1999, an increase of 5.3 percent. Real estate taxes
may increase or decrease due to inflation, expansions and improvements of
communities, as well as changes in taxation in the tax jurisdictions in which we
operate.
Administrative expense in 2000 was 4.8 percent of total revenues as compared to
5.2 percent in 1999.
Interest and related amortization costs increased for the year ended December
31, 2000 by $4,082,000, as compared with the year ended December 31, 1999. The
increase is attributed primarily to the indebtedness incurred to finance
acquisitions and lending activities. Interest expense as a percentage of average
debt outstanding decreased to approximately 7.3 percent in 2000 from 7.4 percent
in 1999.
Depreciation expense for the year ended December 31, 2000 increased $2,094,000
from the same period a year ago. The increase is directly attributed to
acquisitions, expansions, and additions. Depreciation expense as a percentage of
average depreciable rental property in 2000 remained relatively unchanged from
1999.
Liquidity and Capital Resources
Net cash provided by operating activities was $88.9 million for the year ended
December 31, 2001, compared to $85.0 million for the same period in 2000. The
increase in cash provided by operating activities was due primarily to increases
in net operating income, offset by the changes in operating assets and
liabilities.
Net cash used in investing activities for the year ended December 31, 2001 was
$371.1 million. In 2001, we purchased CWS Communities Trust ("CWS"), a private
real estate investment trust for a net amount of approximately $320 million and
three additional communities for $22.2 million in cash. We also sold seven
properties and received net proceeds of $36.7 million in the latter part of
2001. Total investments in development, expansion, and property and equipment
were $40.9 million in 2001 and we advanced $12.1 million on our notes
receivables.
On August 3, 2001 we purchased CWS for $552 million, consisting of $323 million
borrowed under a bridge facility, $151 million in assumed liabilities, 2,040,878
OP Units (valued for purposes of the transaction at $30.935 per OP Unit) and
$9.9 million in 7.5% Senior Unsecured Notes due 2012 (the "August 2012 Notes").
The portfolio consisted of 46 manufactured home communities with approximately
16,600 homesites and approximately 1,500 expansion sites and three RV
communities with 431 RV sites in 11 states. We financed the cash portion of this
transaction primarily through borrowings of a $323 million bridge facility (the
"Acquisition Facility"), which carries an interest rate of LIBOR plus 150 basis
points, and matures August 2, 2002. In connection with this transaction, we
agreed to issue in a private placement to the holders of the August 2012 Notes,
an aggregate of 309,371 OP Units at $30.935 per OP Unit, in exchange for the
issuance by such holders of 7.5% notes, due August 2010, subject to extension in
certain events. These notes are collateralized by the related OP Units. We also
acquired three other communities in 2001 for approximately $10 million in OP
units and approximately $22 million in cash, which were financed primarily by
borrowings under our lines of credit.
21
During 2001, we invested approximately $26 million in the expansion and
development of our communities; resulting in the addition of approximately 350
available sites to our portfolio in 2002, and including finish costs on sites
added previously and substantial progress on sites that will be added to our
portfolio in 2002. For the year ended December 31, 2001, recurring property
capital expenditures, other than development costs, were approximately $7.2
million. Capital expenditures have historically been financed out of operating
cash flow and it is our intention that such future expenditures will also be
financed out of operating cash flow. In addition, during 2001, we advanced $12
million to non-affiliated entities that own or are developing manufactured home
communities.
Net cash provided by financing activities for the year ended December 31, 2001
was $282.1 million. This consisted primarily of the issuance of $150 million of
debt and net borrowings under our Credit Facilities and the Acquisition Facility
of $213.1 million. These were offset partially by $72.7 million in dividends and
distributions paid to shareholders and OP Unitholders.
On October 23, 2001, we issued $150 million of 7.125% Senior Unsecured Notes,
due 2011 in a private placement. Net proceeds of $148.3 million were used to
repay a portion of the outstanding indebtedness under the Acquisition Facility.
In connection with the private placement, we entered into a hedge of forecasted
interest payments. We recorded a hedge loss of approximately $7.1 million in
other comprehensive income and will amortize this into interest expense over the
life of the debt.
In October 2001, we extended $50 million of our $70 million 7.54% senior
unsecured notes scheduled to mature in November 2003 to October 2021 at 8.3%.
In addition to the Acquisition Facility, we have a $125 million line of credit
arrangement with BankOne, NA acting as lead agent for a bank group to provide
financing for future construction, acquisitions and general business obligations
(the "BankOne Credit Facility"). The line of credit is unsecured, bears interest
at the prime rate of interest or, at our option, LIBOR plus 90 basis points. The
line is scheduled to mature in 2004. In addition, we have a $7.5 million
unsecured line of credit from US Bank, which bears interest at a rate of LIBOR
plus 125 basis points and matures in March 2002, which is under discussion for
an extension, (the "US Bank Facility" and, together with the BankOne Credit
Facility the "Credit Facilities"). As of December 31, 2001, approximately $125.1
million was outstanding under our Credit Facilities and we had $7.4 million
available in additional borrowing capacity.
As of December 31, 2001, we had outstanding, in addition to the Credit
Facilities, $470.0 million of unsecured senior debt with a weighted average
interest rate and remaining maturity of 7.5 percent and 6.9 years, respectively,
$285.6 million of secured mortgage debt with a weighted average interest rate
and remaining maturity of 7.6 percent and 7.5 years, respectively, and $163
million on our Acquisition Facility with an interest rate of 3.6 percent. As of
December 31, 2001, we had approximately $1.1 billion of total debt outstanding,
representing approximately 48.4 percent of our total market capitalization. All
of the debt is fixed rate debt, other than our Credit Facilities and Acquisition
Facility. The fixed rate debt carries a weighted average interest rate of 7.5
percent.
In the third quarter of 2001, we began implementing a disposition plan,
identifying a number of properties that do not fit strategically with our
overall investment portfolio, due to location, proximity to other properties,
alternative investment opportunities or other factors. As of December 31, 2001,
we had sold seven properties for approximately $42 million. The net proceeds
from these sales, of approximately $37 million were used primarily to pay down
the Acquisition Facility. Due to the timing of these sales, approximately $11
million was received in January of 2002. Since December 31, 2001, we have sold
an additional three properties for approximately $6.2 million. The net proceeds
were used to pay down the Acquisition Facility. As of March 15, 2002, we had
$145.8 million outstanding under the Acquisition Facility and $22.4 million
available under our Credit Facilities. We will continue to evaluate our
properties and, depending on market conditions, expect to sell additional
communities in 2002.
22
We expect to re-pay the balance of the Acquisition Facility, which matures in
August of 2002, depending on current market conditions and capital availability
factors, with proceeds from the disposition of properties, and the issuance of
additional debt or equity securities.
Our principal long term liquidity needs include: repayment of long-term
borrowings and amounts outstanding under the Credit Facilities and the
Acquisition Facility, future acquisitions of communities and land for
development, and new and existing community development activities. We do not
expect to generate sufficient funds from operations to finance these long-term
liquidity needs and instead intend to meet our long-term liquidity requirements
through additional borrowing under the Credit Facilities or other lines of
credit, the assumption of existing secured or unsecured indebtedness and,
depending on market conditions and capital availability factors, the issuance of
additional equity or debt securities.
We expect to meet our short-term liquidity requirements, including expansion
activities and capital expenditure requirements, through cash flow from
operations and, if necessary, and depending on our operating performance,
borrowings under the Credit Facilities and other lines of credit.
The following is a summary of our aggregate commitments, in millions, as of
December 31, 2001:
Payments Due by Period
-----------------------------------------------------------------------------
Contractual Less than 1
Obligations Total year 1 - 3 years 4 - 5 years After 5 years
- ---------------------------------------------------------------------------------------------------
Fixed Rate Debt $766 $ 6 $190 $121 $449
Variable Rate Debt 288 167 121 - -
Amount of Commitment Expiration Per Period
----------------------------------------------------------------
Total
Other Commercial Amounts Less than 1
Commitments Committed year 1 - 3 years 4 - 5 years After 5 years
- ---------------------------------------------------------------------------------------------------
Lines of Credit $132.5 $7.5 $125 - -
Guarantees 48.4 (1) (1) (1) (1)
(1) These guarantees expire at various times.
The financing arrangements contain customary covenants, including a debt service
coverage ratio and a restriction on the incurrence of additional collateralized
indebtedness without a corresponding increase in rental property. We were out of
compliance on one of our covenants as of December 31, 2001 associated with both
our BankOne Credit Facility and the Acquisition Facility. Also, in February
2002, we were out of compliance on another of our covenants under both
agreements that limit the amount of variable rate debt outstanding. In February
2002, we received waivers from the lenders and amended the agreements to change
the covenant for the remaining term of the Acquisition Facility and until March
2003 for the Credit Facility.
In March 2002, Moody's Investor Service lowered our debt rating to Baa3 from
Baa2. The reason for the change was due to a weaker capital structure and
coverage ratios since completing the CWS acquisition. Standard and Poors has not
changed its rating of BBB. In the event that our debt rating is lowered again,
it may have an impact on the cost of our debt.
We currently own approximately 10 percent of N'Tandem's outstanding stock and
account for our investment utilizing the equity method of accounting. We also
recognize income from a property management agreement, an advisory agreement,
overhead reimbursements and interest income on advances as earned. The amount of
fee income and interest income earned is outlined in the table below.
23
2001 2000 1999
--------- --------- ---------
Interest income and related fees $ 3,345 $ 3,165 $ 1,914
Transaction fees 522 2,530 1,055
Advisory fees 1,335 777 346
Management and overhead fees 1,935 1,303 1,217
------ --------- ---------
$ 7,137 $ 7,775 $ 4,532
====== ========= =========
Interest is earned on the loan to N'Tandem (Prime plus one percent, or 5.75
percent at December 31, 2001) and includes fees paid by N'Tandem for the
subordination of our loan to the N'Tandem bank debt ($730,000 in both 2001 and
2000). The transaction fees are related to acquisition services provided by us
to N'Tandem and are calculated as three percent of the acquisition price. The
advisory fees are charged based on one percent of N'Tandem's average assets. The
management fees are charged based on five percent of revenues of properties
managed by us on behalf of N'Tandem. Overhead reimbursement fees are based on a
fixed fee per site. We expect to receive modest increases on the recurring fees
due to increases in expected revenues and sites. However, as the non-recurring
fees are subject to the completion of a transaction, these are difficult to
predict.
N'Tandem currently has net losses of approximately $8 million for the year ended
December 31, 2001 and also has experienced negative cash flows from operations.
We serve as a guarantor on N'Tandem's $20 million line of credit. We do not have
any agreements to fund future operating losses of N'Tandem, however our ability
to recover our fees charged to N'Tandem and our loans and advances to N'Tandem
is dependent on the ultimate sale of the N'Tandem properties. N'Tandem will
likely continue to generate negative cash flow from operations in the near term.
We believe that based on current market conditions the loans and advances to
N'Tandem, which totaled approximately $33 million at December 31, 2001, will be
recovered from the ultimate sale of the properties.
The following table summarizes certain financial information for N'Tandem for
the years ending December 31, 2001 and 2000.
2001 2000
-------------------------
Total revenues $ 23,066 $ 10,487
Operating and administrative expenses 14,103 5,986
Interest expense 11,744 7,287
Depreciation expense 5,555 2,623
Preferred dividends 110 110
-------------------------
Net loss $ (8,446) $ (5,519)
-------------------------
Rental property $ 128,941 $ 127,291
Total assets $ 134,009 $ 132,678
Amounts due to the Company $ 33,348 $ 32,120
Other debt $ 109,675 $ 102,216
Shareholders' deficit $ (27,892) $ (10,474)
24
Critical Accounting Policies and Estimates
Our consolidated financial statements are prepared in accordance with generally
accepted accounting principles, which requires us to make certain estimates and
assumptions. A summary of our significant accounting policies is provided in
Note 2 to our consolidated financial statements. The following section is a
summary of certain aspects of those accounting policies that both require our
most difficult, subjective or complex judgments and are most important to the
portrayal of our financial condition and results of operations. We believe that
there is a low probability that the use of different estimates or assumptions in
making these judgments would result in materially different amounts being
reported on our consolidated financial statements.
. When we acquire real estate properties, we allocate the components of
these acquisitions using relative fair values computed using our
estimates and assumptions. These estimates and assumptions impact the
amount of costs allocated between land and different categories of
land improvements as well as the amount of costs assigned to
individual properties in multiple property acquisitions. These
allocations also impact depreciation expense and gains or losses
recorded on future sales of properties.
. We recognize an impairment loss on a real estate asset to be held and
used in operations if the asset's undiscounted expected future cash
flows are less than its depreciated cost. We compute a real estate
assets undiscounted expected future cash flow using certain estimates
and assumptions.
. We use two different accounting methods to report our investments in
entities: the consolidation method and the equity method. We use the
consolidation method when we own most of the outstanding voting
interests in an entity and/or can control its operations. We use the
equity method of accounting when we own an interest in an entity and
can exert significant influence over the entity's operations but
cannot control the entity's operations. We review these investments
regularly for possible impairment using certain estimates and
assumptions regarding undiscounted expected future cash flows. We also
review these investments regularly for proper accounting treatment.
However, a key factor in this review, the determination of whether or
not we can control or exert significant influence over an entity's
operations, is subjective in nature.
. We report receivables net of an allowance for receivables that may be
uncollectible in the future. We review our receivables regularly for
potential collection problems in computing the allowance recorded
against our receivables; this review process requires we make certain
judgments regarding collections that are inherently difficult to
predict.
. Collectibility of advances to N'Tandem and other Notes Receivable is
based on the determination of the fair market value of the properties
and the related net proceeds from the ultimate liquidation of the
properties.
Inflation
All of the leases or terms of tenants' occupancies at the communities allow for
at least annual rental adjustments. In addition, all leases are short-term
(generally one year or less) and enable us to seek market rentals upon reletting
the sites. Such leases generally minimize the risk to us of any adverse effect
of inflation.
25
Recently Issued Accounting Standards
In June 2001, the FASB issued SFAS No. 141, Business Combinations and SFAS No.
142, Goodwill and Other Intangible Assets. SFAS No. 141 requires all business
combinations to be accounted for by the purchase method and defines criteria
under which intangible assets acquired in connection with a business combination
be recognized as assets apart from goodwill. SFAS No. 141 is effective for all
fiscal business combinations initiated after June 30, 2001. SFAS No. 142 changes
the useful life of goodwill recorded on a company's books from 40 years to
indefinite and requires goodwill to be reviewed annually for impairment. SFAS
No. 142 is effective for all fiscal years beginning after December 15, 2001.
Adoption of SFAS No. 141 and No. 142 did not have and is not expected to have a
significant impact on the Company's financial position or results of operations.
In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment on
Disposal of Long-Lived Assets. SFAS No. 144 addresses financial accounting and
reporting for the impairment or disposal of long-lived assets and provides
guidance for measuring the amount of impairment. SFAS No. 144 is effective for
fiscal years beginning after December 15, 2001. As individual properties to be
sold qualify as components of an entity, properties classified as held for sale
or sold in a reporting period will be treated as discontinued operations for
reporting purposes. The statement of income will reflect the properties' results
of operations, including any gains or losses recognized, as a separate component
in the income statement.
Other
Funds from operations ("FFO") is defined by the National Association of Real
Estate Investment Trusts ("NAREIT") as consolidated net income without giving
effect to gains (or losses) from debt restructuring and sales of property and
rental property depreciation and amortization. Management believes that FFO is
an important and widely used measure of the operating performance of REITs,
which provides a relevant basis for comparison among REITs. FFO (i) does not
represent cash flow from operations as defined by generally accepted accounting
principles; (ii) should not be considered as an alternative to net income as a
measure of operating performance or to cash flows from operating, investing and
financing activities; (iii) is not an alternative to cash flows as a measure of
liquidity; and (iv) may not be comparable to similarly titled measures reported
by other companies. FFO is calculated as follows:
For the Year Ended December 31,
(In thousands) 2001 2000 1999
--------- --------- ----------
Income before minority interests $ 36,118 $ 48,722 $ 44,962
Less:
Income allocated to Preferred OP Units 6,094 6,094 6,094
Plus:
Depreciation of rental property 56,804 43,289 41,161
Amortization of intangibles - - 405
Impairment / (gain) on sales of properties 1,503 - (2,805)
--------- --------- ----------
Funds from operations $ 88,331 $ 85,917 $ 77,629
========= ========= ==========
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
- ------- ----------------------------------------------------------
Our primary market risk exposure is interest rate risk. Management has and will
continue to manage interest rate risk by (1) maintaining a conservative ratio of
fixed-rate, long-term debt to total debt such that variable rate exposure is
kept at an acceptable level and (2) taking advantage of favorable market
conditions for long-term debt and/or equity. As of December 31, 2001, our Credit
and Acquisition Facilities represented our only variable rate debt.
26
The following table sets forth information as of December 31, 2001, concerning
our debt obligations, including principal cash flows by scheduled maturity,
weighted average interest rates and estimated fair value ("FV"):
For the Year Ended December 31,
2002 2003 2004 2005 2006 Thereafter Total FV
Debt obligations
Fixed rate 5,617 76,177 113,894 109,615 11,644 448,645 $ 765,592 788,914
Average interest rate 7.7% 7.8% 7.1% 8.5% 8.1% 7.5%
Variable rate 166,844 121,000 $ 287,844 287,844
Average interest rate 3.4% 3.0%
Total debt 172,461 76,177 234,894 109,615 11,644 448,645 1,053,436 1,076,758
We face market risk relating to our fixed-rate debt upon re-financing of such
debt and depending upon prevailing interest rates at the time of such
re-finance. As a result of our successful re-financing and extension of our
fixed-rate debt, as illustrated in the above chart, we will not need to
re-finance any of our fixed-rate debt until 2003. Our Acquisition Facility
matures in August of 2002. We expect to re-pay the balance, depending on current
market conditions and capital availability factors, with proceeds from the
disposition of properties, a bank term loan, or the issuance of additional debt
or equity securities.
In addition, we have assessed the market risk for our variable rate debt and
believe that a 1% increase in LIBOR rates would result in an approximate $2.9
million increase in interest expense based on $287.8 million of variable rate
debt outstanding at December 31, 2001.
The fair value of our long-term debt is estimated based on discounted cash flows
at interest rates that management believes reflect the risks associated with
long term debt of similar risk and duration.
27
Item 8. Financial Statements and Supplementary Data
- ------- -------------------------------------------
Report of Independent Accountants
To the Shareholders and Board of Directors of Chateau Communities, Inc.:
In our opinion, the consolidated financial statements listed in the index
appearing under Item 14(a)(1) and (2) present fairly, in all material respects,
the financial position of Chateau Communities, Inc. (the "Company") at December
31, 2001 and 2000, and the results of its operations and its cash flows for the
three years then ended, in conformity with accounting principles generally
accepted in the United States of America. These financial statements and the
financial statement schedule are the responsibility of Company management; our
responsibility is to express an opinion on these financial statements and the
financial statement schedule based on our audits. We conducted our audits of
these statements in accordance with auditing standards generally accepted in the
United States of America, which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
/s/ PricewaterhouseCoopers LLP
Denver, Colorado
February 27, 2002
28
CHATEAU COMMUNITIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
For the Year Ended December 31,
-----------------------------------------
In thousands, except per share data
2001 2000 1999
----------- ------------ -----------
Revenues
Rental income $224,431 $ 186,963 $ 177,789
Interest income 10,084 10,794 6,796
Management fee and other income 5,005 7,008 4,778
-------- --------- ---------
239,520 204,765 189,363
Expenses
Property operating and maintenance 70,779 52,419 50,506
Real estate taxes 15,702 13,426 12,675
Depreciation and amortization 57,919 43,920 41,826
Administrative 9,881 9,878 9,881
Interest and related amortization 47,618 36,400 32,318
-------- --------- ---------
201,899 156,043 147,206
-------- --------- ---------
Income before impairment/net gain on sales of properties 37,621 48,722 42,157
Impairment / net gain on sales of properties (1,503) - 2,805
-------- --------- ---------
Income before minority interests 36,118 48,722 44,962
Less income allocated to minority interests:
Preferred OP Units 6,094 6,094 6,094
Common OP Units 3,768 4,842 4,242
-------- --------- ---------
Net income available to common shareholders $ 26,256 $ 37,786 $ 34,626
======== ========= =========
Per share/OP Unit information
Basic earnings per common share $ 0.90 $ 1.33 $ 1.23
======== ========= =========
Diluted earnings per common share $ 0.90 $ 1.32 $ 1.23
======== ========= =========
The accompanying notes are an integral part of financial statements.
29
CHATEAU COMMUNITIES, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands) December 31,
-----------------------------
Assets 2001 2000
------------- ------------
Rental property:
Land $ 205,416 $ 139,565
Land and improvements for expansion sites 112,821 51,043
Manufactured home community improvements 1,212,195 851,325
Community buildings 116,677 57,152
Furniture and other equipment 39,565 33,408
------------- ------------
Total rental property 1,686,674 1,132,493
Less accumulated depreciation 285,209 236,240
------------- ------------
Net rental property 1,401,465 896,253
Rental properties held for sale 6,626 -
Cash and cash equivalents 61 99
Rents and other receivables, net 17,591 7,107
Notes receivable 45,514 24,539
Investments in and advances to affiliates 108,674 79,272
Prepaid expenses and other assets 11,942 10,594
------------- ------------
Total assets $ 1,591,873 $ 1,017,864
============= ============
Liabilities
Debt $ 1,053,436 $ 531,629
Accrued interest payable 10,668 6,953
Accounts payable and accrued expenses 24,387 17,926
Rents received in advance and security deposits 12,749 7,816
Dividends and distributions payable 760 765
------------- ------------
Total liabilities 1,102,000 565,089
Minority interests in Operating Partnership 144,919 116,863
Commitments and contingencies (Note 13) - -
Shareholders' Equity
Preferred stock, $.01 par value, 2 million shares authorized;
no shares issued or outstanding - -
Common stock, $.01 par value, 90 million shares authorized
29,188,440 and 28,531,675 shares issued and outstanding
at December 31, 2001 and 2000, respectively 292 285
Additional paid-in capital 499,068 445,905
Dividends in excess of accumulated earnings (134,158) (97,605)
Accumulated other comprehensive income (6,516) -
Notes receivable from officers, 577,432 shares