x

Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2003

or

o

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)

303.741.3707

Registrant’s telephone number, including area code

Yes   x

No   o

Yes   x

No   o

Pages

PART I.

FINANCIAL INFORMATION

Item 1.

Financial Statements (unaudited)

Condensed Consolidated Statements of Income for the Three Months Ended March 31, 2003 and 2002

1

Condensed Consolidated Balance Sheets as of March 31, 2003 and December 31, 2002

2

Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2003 and 2002

3

Notes to Condensed Consolidated Financial Statements

4 - 9

Item 2.

Management Discussion and Analysis of Financial Condition and Results of Operations

9 - 16

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

16

Item 4.

Controls and Procedures

16

PART II.

OTHER INFORMATION

17

SIGNATURE

22

CERTIFICATIONS

23 - 24

Three Months Ended
March 31,

(In thousands, except per share data)

2003

2002

Revenues

Rental income

$

63,432

$

61,936

Interest income

2,806

2,752

Management fee and other income (loss)

(94

)

466

66,144

65,154

Expenses

Property operating and maintenance

19,707

18,445

Real estate taxes

4,335

4,214

Depreciation and amortization

17,683

16,277

Administrative

3,102

3,367

Interest and related amortization

16,702

16,800

61,529

59,103

Income before gain on disposition of properties and minority interests

4,615

6,051

Gain on disposition of properties

—  

1,164

Minority interests of preferred OP Unitholders

(1,523

)

(1,523

)

Minority interests of common OP Unitholders

(496

)

(950

)

Income from continuing operations

2,596

4,742

Discontinued operations

Income from discontinued operations, net of minority interests

641

1,467

Gain on disposition of properties, net of minority interests

385

—  

Income from discontinued operations

1,026

1,467

Income before cumulative effect of accounting change

3,622

6,209

Cumulative effect of accounting change, net of minority interests

—  

(845

)

Net income available to common shareholders

$

3,622

$

5,364

Earnings per common share / OP Unit - basic

Income from continuing operations

$

0.09

$

0.16

Income from discontinued operations

0.03

0.05

Income before cumulative effect of accounting change

0.12

0.21

Cumulative effect of accounting change

—  

(0.03

)

Net income available to common shareholders

$

0.12

$

0.18

Weighted average common shares - basic

29,351

29,185

Earnings per common share / OP Unit - diluted

Income from continuing operations

$

0.09

$

0.16

Income from discontinued operations

0.03

0.05

Income before cumulative effect of accounting change

0.12

0.21

Cumulative effect of accounting change

—  

(0.03

)

Net income available to common shareholders

$

0.12

$

0.18

Weighted average common shares - diluted

29,359

29,344

(Dollars in thousands)

March 31,
2003
(unaudited )

December 31,
2002

ASSETS

Rental property:

Land

$

199,328

$

207,137

Land and improvements for expansion sites

42,596

41,751

Depreciable property, net

1,395,074

1,433,327

1,636,998

1,682,215

Less:  accumulated depreciation

351,169

346,583

Net rental property

1,285,829

1,335,632

Rental property held for sale

39,177

6,004

Cash and cash equivalents

4,013

2,025

Rents and other receivables, net

5,092

5,304

Notes receivable

43,388

42,611

Investments in and advances to affiliates

106,408

112,054

Prepaid expenses and other assets

13,766

11,358

Total assets

$

1,497,673

$

1,514,988

LIABILITIES

Debt

$

1,006,573

$

1,013,809

Accrued interest payable

14,306

13,911

Accounts payable and accrued expenses

16,009

15,248

Rents received in advance and security deposits

19,246

16,266

Dividends and distributions payable

20,006

20,038

Total liabilities

1,076,140

1,079,272

Minority interests in Operating Partnership

130,956

134,477

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; 29,398,309 and 29,263,416, shares issued and outstanding at March 31, 2003 and December 31, 2002, respectively

294

293

Additional paid-in capital

500,350

498,869

Dividends in excess of accumulated earnings

(195,493

)

(182,991

)

Accumulated other comprehensive income

(5,293

)

(5,537

)

Notes receivable from officers, 347,875 and 355,885 shares outstanding at March 31, 2003 and December 31, 2002, respectively

(9,281

)

(9,395

)

Total shareholders’ equity

290,577

301,239

Total liabilities and shareholders’ equity

$

1,497,673

$

1,514,988

Three Months Ended March 31,

(In thousands)

2003

2002

Cash flows from operating activities:

Net income

$

3,622

$

5,364

Adjustments to reconcile net income to net cash provided by operating activities:

Non-cash items included in discontinued operations

415

915

Equity in loss of CSI

622

472

Share of loss from N’Tandem

27

130

Net gain on disposition of properties - continuing operations

—  

(1,164

)

Income attributed to common minority interests - continuing operations

496

950

Cumulative effect of accounting change, net of minority interests

—  

845

Bad debt expense

188

464

Depreciation and amortization from continuing operations

17,683

16,277

Amortization of debt issuance costs

1,111

735

Decrease in operating assets

176

2,463

Increase in operating liabilities

1,264

3,273

Net cash provided by operating activities

25,604

30,724

Cash flows from investing activities:

Net proceeds from dispositions of rental properties

4,067

6,232

Collection of amounts held in escrow, from prior year property dispositions

—  

10,660