<PAGE>
 
                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
                                _______________

                                 FORM 10-K
(Mark One)

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

                     For the year ended December 31, 1998
                                      OR
   _____     Transition report pursuant to Section 13 or 15(d) of the Securities
             Exchange Act of 1934

                        Commission file number 33-85492
                                ______________

                            CP LIMITED PARTNERSHIP 
            (Exact name of registrant as specified in its charter)

                MARYLAND                          38-3140664
     (State or other jurisdiction               I.R.S. Employer
    of incorporation or organization)          Identification No.)

              6430 South Quebec Street, Englewood, Colorado       80111
               (Address of principal executive offices)        (zip code)
      Registrant's telephone number, including area code:  (303) 741-3707

          Securities registered pursuant to section 12(b) of the Act:
 
                                     None

          Securities registered pursuant to Section 12(g) of the Act:

                                     NONE

     Indicate by check mark whether the registrant: (l) 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 _________
     ---------                   
<PAGE>
 
                             CP LIMITED PARTNERSHIP
<TABLE>
<CAPTION>
 
                            FORM 10-K ANNUAL REPORT
                     for the year ended December 31, 1998
                               TABLE OF CONTENTS

                               -----------------
<S>                                                                              <C>
 
Item                                                                             Pages
----                                                                             -----
                                    PART I
         1.     Business...........................................................3
                                                                                  
         2.     Properties.........................................................9
                                                                                  
         3.     Legal Proceedings.................................................15
                                                                                  
         4.     Submission of Matters to a Vote of Security Holders...............15
 
                                    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
 
         8.     Financial Statements and Supplementary Data.......................26
 
         9.     Changes in and Disagreements with Accountants on
                      Accounting and Financial Disclosure.........................47
 
                                   PART III
         10.    Directors and Executive Officers of the Registrant................48
 
         11.    Executive Compensation............................................48
 
         12.    Security Ownership of Certain Beneficial Owners
                      and Management..............................................48
 
         13.    Certain Relationships and Related Transactions....................48
 
                                    PART IV
         14.    Exhibits, Financial Statement Schedules, and
                      Reports on Form 8-K.........................................49
 
                Signatures........................................................53
 
                         FINANCIAL STATEMENT SCHEDULES
                CP Limited Partnership Financial Statement Schedules..............F1
</TABLE> 

                                       2
<PAGE>
 
                                 PART I

Item 1.   Business
-------   --------

General Development of Business.

CP Limited Partnership (the "Company") is a Maryland Partnership.  Chateau
Communities, Inc. ("Chateau"), a Maryland Corporation, is a self-administered
and self-managed equity real estate investment trust ("REIT") and is one of the
largest owner/manager of manufactured home communities in the United States,
based both on the number of communities and the number of residential homesites
owned.  Chateau conducts substantially all of its activities through the Company
in which it owns, directly and through ROC Communities, Inc. ("ROC"), the other
general partner of the Company, an approximate 89% general partner interest.
The Company owns and operates 164 manufactured home community properties (the
"Properties") containing 50,887 homesites and 1,359 park model/RV sites in 28
states.  The Company also fee manages 36 manufactured home community properties
containing 7,500 homesites.  The Company is also involved in the development and
expansion of manufactured home communities and through its subsidiary, Community
Sales, Inc., the sale of new and pre-owned homes, brokerage of used homes and
assisting residents in the arrangements of financing and insurance services.

Formation of the Company

The Company was formed by Chateau, as general partner, and Chateau Estates, as
the initial limited partner, on September 16, 1993.

On February 11, 1997, the Company completed a strategic merger of equals with
ROC (the "Merger").  The Merger and related transactions were accounted for
using the purchase method of accounting in accordance with generally accepted
accounting principles.  Accordingly, the assets and liabilities of ROC were
adjusted to fair value for financial accounting purposes and the results of
operations of ROC are included in the results of operations of the Company
beginning in February 1997.

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.

Modern manufactured home communities are similar to typical residential
subdivisions and generally contain centralized entrances, paved streets, curbs
and 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 courts, picnic areas, shuffleboard courts,
tennis courts, 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.
                                       3
<PAGE>
 
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 owner within the manufactured home community
is responsible for the maintenance of his home and leased site.  Additionally,
manufactured home communities tend to have stable resident bases, with
relatively few residents moving manufactured homes out of the communities.
Management thus tends to be more stable, and capital expenditure needs less
significant, relative to multi-family rental apartment complexes.

Operating and Investment Strategies

The Company seeks to maximize long-term growth in income and portfolio value
through active management and expansion of certain of its manufactured home
communities and the selective acquisition and selective development of
additional communities.  The Company focuses on manufactured home communities
that have growth potential and expects to hold such properties for long-term
investment and capital appreciation.  The Company's operating and investment
strategies include:

Operations

    *     Providing attractive and desirable manufactured home communities for
          existing and prospective residents;

    *     Maintaining and upgrading communities on a continuous basis through  a
          program of regular and preventive maintenance and replacement;

    *     Offering residents accessibility to on-site managers to maximize
          retention, encourage home maintenance and improvements and to minimize
          turnover;

    *     Providing frequent personal contact between on-site managers and
          residents to foster a sense of pride in the community and to promote
          desirability of each property;

    *     Offering potential community residents the convenience of purchasing a
          home already in place within the community or ordering a new product;

    *     Increasing value to residents and Unitholders of the Company by
          providing additional value-added leasing programs to our residents;
          and

    *     Assisting potential residents in securing financing and insurance for
          their home.

                                       4
<PAGE>
 
Acquisitions, Development and Expansions

   *      Selectively acquiring well-located manufactured home communities that
          demonstrate the potential for increases in revenue and cash flow
          through professional property management, improved operating
          efficiencies, aggressive leasing and, where appropriate, expansion on
          adjacent land;

   *      Acquiring properties in existing markets in order to achieve economies
          of scale in operations, and in new markets where portfolios may be
          acquired with regional management in place;

   *      Utilizing the expertise and relationships developed by the Company's
          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; and

   *      Capitalizing on opportunities to renovate and expand properties
          consistent with local market demand.

Financing Strategies

The Company intends to maintain a conservative and flexible capital structure
that enables it to  (i)  continue to access the capital markets on favorable
terms;  (ii)  enhance potential earnings growth;  (iii)  minimize its level of
encumbered assets;  and  (iv)  limit its exposure to variable rate debt.  The
Company intends to maintain a debt-to-market capitalization ratio of
approximately 50% or less.  The Company, however, may from time to time re-
evaluate this policy and decrease or increase such ratio accordingly in light of
then current economic conditions, relative costs to the Company of debt and
equity capital, market values of the properties and other factors.

Expansion and Improvement of Manufactured Home Community Properties

The Company will seek to increase the income generated from its manufactured
home communities and from any additional properties acquired 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.  During 1998, the Company substantially completed the development
of 407 expansion sites.  As of December 31, 1998, the Company owned undeveloped
land adjacent to existing communities containing approximately 4,700 expansion
sites, which are zoned for manufactured housing. All necessary utilities are
available at these expansion sites; however, building permits would need to be
obtained prior to development.  This undeveloped land will facilitate additional
growth to the extent conditions warrant.  In addition, where appropriate, the
Company will consider upgrading or adding facilities and amenities to certain
communities in order to make those communities more attractive in their markets.

                                       5
<PAGE>
 
The Company is currently involved in seven joint ventures to construct ground-up
"greenfield communities".  In the majority of the arrangements, the Company acts
as the developer or co-developer, performs all accounting and property
management functions and, in many of the arrangements, the Company acts as a
lender to finance the development costs.  As such, the Company advances amounts
to the joint ventures to fund construction and recognizes the related interest
income as earned.  The Company primarily borrows on its line of credit to fund
the advances and, accordingly, includes the related borrowing costs in interest
expense.  In the majority of the arrangements, the Company has the option to
purchase the completed community when it reaches a pre-determined occupancy
rate.  The Company is also involved in two joint ventures in which the
communities are being constructed by its joint venture partner.  The Company has
similar arrangements to lend these joint ventures funds to finance development.

1998 Property Acquisitions

During 1998, the Company completed the following acquisitions:

 
<TABLE>
<CAPTION>
         Acquisition                     Acquisition                                          Purchase 
             Date                        and Location                                          Price
        ---------------                  ------------                                         ------
                                                                                           (in thousands)
   
    <S>                           <C>                                                            <C>
        January 1998             2 communities in South Carolina, containing an
                                 aggregate of  961 homesites                                     $15,900
 
 
        January 1998             11 manufactured home communities and 3 park
                                 model/RV communities in Connecticut (4) and Florida
                                 (10), containing an aggregate of 1,372 homesites
                                 and 1,359 park model/RV sites                                    38,700
 
 
 
 
        March 1998               6 communities in Indiana (5) and Michigan (1),
                                 containing an aggregate of 1,521 homesites                       37,600
 
        April 1998               12 communities in Michigan (10 )
                                 and North Carolina (2), containing an aggregate
                                 of 3,036 homesites                                               78,100
                                                                                                --------
                                                                                                $170,300
                                                                                                ========
</TABLE>

Community Sales, Inc.

The Company conducts its sales and brokerage activities through Community Sales,
Inc. ("CSI"), which is operated as a taxable subsidiary of the Company.  During
1998, CSI sold 481 new or pre-owned homes and brokered the sales of 1,067 homes.
CSI added a Financial Services Division, which arranges financing and insurance
services for prospective residents.  During 1998, the Financial Services
Division arranged financing on approximately 250 loans.

The Windsor Corporation

In September 1997, the Company completed the acquisition of The Windsor
Corporation ("Windsor"), the general partner in five partnerships and advisor to
one REIT, N'Tandem Trust ("N'Tandem", previously known as Windsor Real Estate
Investment Trust 8).  These six entities owned 30 manufactured home communities
(containing 6,300 homesites), all of which have been managed by the Company or
ROC on a fee basis since 1993.

                                       6
<PAGE>
 
In March 1998, the Company entered into an investment agreement ("Agreement")
with N'Tandem.  Pursuant to the Agreement, the Company purchased 19,139 common
shares of N'Tandem and issued two notes; one secured and one unsecured, for an
aggregate of $5,001,000 due March 1999 for the acquisition by N'Tandem of one
community in Montgomery, Alabama.  On November 30, 1998, N'Tandem borrowed
$5,650,000 from the Company for the acquisition of three communities in
Lexington Park, Maryland.  The notes bear interest at the prime rate of interest
plus one percent per annum and are due November 1999.  The Company owns
approximately 17 percent of N'Tandem's outstanding common stock and accounts for
its investment on an equity basis, recognizing income from an advisory agreement
and interest income on the notes as earned.  As of December 31, 1998, N'Tandem
owned 6 communities with 1,307 homesites and an interest in 3 communities with
419 homesites.

Competition

Many of the Properties are located in developed areas that include other
manufactured home community properties. The number of competitive manufactured
home community properties in a particular area could have a material effect on
the Company's ability to lease sites at its communities and on 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, 1998, the Company had approximately 1,200 full and part-time
employees.  The Company utilizes 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 these individuals in the management and care of
the residents and properties. Direct supervision of on-site administrators is
the responsibility of the Company's regional vice presidents and managers and
four divisional presidents.  These individuals have significant experience in
addressing the needs of residents and in finding or creating innovative
approaches to value maximization and increased cash flow from property
operations.  Complementing this field management staff are 53 corporate
employees who assist on-site administrators in all property management
functions.

Commitment to resident satisfaction is demonstrated by the ongoing training that
the Company provides for on-site staff.  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

The Company is not liable for Federal income taxes as the partners recognize
their proportionate share of income or loss in their tax returns.  Therefore, no
provision for income taxes is included in the Company's financial statements.

                                       7
<PAGE>
 
Cautionary Statements Concerning Forward-Looking Information

Certain information both included and incorporated by reference in this Annual
Report on Form 10-K may contain forward-looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act, and as
such may involve known and unknown risks, uncertainties and other factors which
may cause the actual results, performance or achievements of our company to be
materially different from future results, performance or achievements expressed
or implied by such forward-looking statements.  Forward-looking statements,
which are based on certain assumptions and describe our future plans, strategies
and expectations are generally identifiable by use of the words "may," "will,"
"should," "expect," "anticipate," "estimate,"  "believe," "intend," or
"project," or the negative thereof or other variations thereon or comparable
terminology.  Factors which could have a material adverse effect on the
operations and future prospects of our company include, but are not limited to,
changes in:  economic conditions generally and the real estate market
specifically legislative/regulatory changes, availability of capital, interest
rates, competition, supply and demand for properties in our current and proposed
market areas and general accounting principles.  These risks and uncertainties
should be considered in evaluating any forward-looking statements contained or
incorporated by reference herein.


                                       8
<PAGE>
 
Item 2.   Properties
-------   ----------

At December 31, 1998, the Properties consisted of 165 manufactured home
communities containing 51,101 homesites and 1,359 park model/RV sites, in 28
states, with amenities designed for either retirement or family living.  The
Company also fee managed 36 manufactured home communities containing 7,500 sites
in 15 states.  The Company also owned land adjacent to certain existing
communities containing approximately 4,700 expansion sites which, although not
yet developed, was zoned for manufactured housing.

At December 31, 1998, the Properties had an occupancy rate of approximately 92.4
percent with weighted average rent for the year ended December 31, 1998 of $292
per month.  This compares to an occupancy rate of 92 percent and with weighted
average rent of $287 per month for the prior year.  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.

The Company believes that the Properties provide amenities and common facilities
that create a safe and attractive community for residents. All of the Properties
provide residents with attractive amenities with most offering a clubhouse, a
swimming pool and playgrounds.  Many Properties offer additional amenities such
as sauna/whirlpool spas, indoor pools, tennis courts, libraries, shuffleboard
courts, basketball courts, golf courses, day care facilities, exercise rooms and
marinas.

Since residents own their homes, it is their responsibility to maintain their
homes and the surrounding area. The communities have extensive guidelines for
maintenance.  It is management's role to provide maintenance of common areas,
facilities and amenities and to ensure that residents comply with community
policies.  The Company holds periodic meetings of its property management
personnel for training and implementation of the Company's strategies, and
property administrators make a daily inspection of the Properties.  The Company
believes that, due in part to this strategy, the Properties historically have
had and will continue to have low turnover and high occupancy rates.  Since
1989, the Properties have averaged an annual turnover of homes (where the home
is moved out of the community) of three to four percent.

Leases

The typical lease entered into between the resident and one of the Company's
manufactured home communities for the rental of a site is month-to-month or
year-to-year, renewable upon the consent of both parties or, in some instances,
as provided by statute.

                                       9
<PAGE>
 
Indebtedness

The following table sets forth certain information relating to the secured and
unsecured indebtedness of the Company outstanding as of December 31, 1998.

<TABLE>
<CAPTION>
                                                                                       Weighted
                                                                                        Average
                                                    Amount of         Percent of       Interest         Maturity 
                                                   Indebtedness       Total Debt          Rate            Date
                                                   ------------       ---------           ----            ----
                                                  (in thousands)
Mortgage Debt:
 
<S>                                                  <C>                 <C>              <C>            <C>

Del Tura                                             $ 32,120              7.8%          8.40%           2000
Macomb                                                 15,574              3.8%          9.82%           1999
Other (11 properties)                                  24,575              6.0%          7.68%        1999-2011
Pacific Life (37 properties)                           57,179             13.9%          7.16%           2000
                                                     --------             ----           ----      
                                                                                                   
   Total Mortgage                                     129,448             31.5%          7.89%     
                                                                                                   
Unsecured Debt:                                                                                    
                                                                                                   
Unsecured Senior Notes                                 70,000             17.0%          7.52%           2003
Unsecured Senior Notes                                 75,000             18.2%          8.75%           2000
Unsecured Senior Notes                                100,000             24.4%          6.44%           2004
                                                     --------             ----           ----
 
   Total Unsecured                                    245,000             59.6%          7.50%
                                                     --------             ----           ----
 
                                                      374,448             91.1%          7.60%
   Total Fixed Rate
 
Variable Rate Debt:
 
Credit Facilities                                      36,735              8.9%          6.39%         1999-2001
                                                     --------
 
   Total Secured and Unsecured Debt                  $411,183
                                                     ========
</TABLE>

Based on the average amount outstanding under the Credit Facilities during the
year ended December 31, 1998 of approximately $20,600,000, if the interest rate
under the Credit Facilities was 100 basis points higher or lower during the
period, then the Company's interest expense (net of adjustments for capitilized
items) would have been increased or decreased by approximately $206,000.

                                      10
<PAGE>
 
The following table sets forth certain information, as of December 31, 1998,
regarding the Properties.
 
The Company classifies all of its properties in either the Stable Portfolio or
the Active Expansion Portfolio. The Stable Portfolio includes the communities
where we do not have, or have not recently had, expansion of the community.
These communities generally have stable occupancy rates. The Active Expansion
Portfolio are those properties where the Company is currently, or has recently,
expanded the community by adding homesites to the available homesites for
rental. Generally, these communities will have a lower occupancy rate than our
stable portfolio as they are in the lease-up phase. In addition, the Company
owns three park model/RV communities.
 
Property
Information
 
The following table sets forth certain information, as of December 31, 1998,
regarding the properties.

<TABLE> 
<CAPTION> 

                                                                                                                   Weighted
                                                                                      Total                         Average     
                                                                       Total        Number of        Occupancy    Monthly Rent     
                                                     Location       Communities       Sites            as of        Per Site
---------------------------------------------------------------------------------------------------------------------------  
Community                           State        (Closest Major City)               12/31/98         12/31/98      12/31/98
---------------------------------------------------------------------------------------------------------------------------  
<S>                                   <C>          <C>                     <C>       <C>              <C>           <C>  
  100 Oaks                             AL           Fultondale                          230            92%           $197
                      Total Alabama                                         1           230            92%           $197
  Bermuda Palms                        CA           Palm Springs                        185            98%           $335
  Eastridge                            CA           San Jose                            187            99%           $617
  La Quinta Ridge                      CA           Palm Springs                        152            88%           $408
  The Colony                           CA           Palm Springs                        220            98%           $649
  The Orchard                          CA           San Francisco                       233           100%           $550
                   Total California                                         5           977            97%           $522
  CV-Denver                            CO           Denver                              345            94%           $353
  CV-Longmont                          CO           Longmont                            310           100%           $363
  Friendly Village                     CO           Greeley                             226            98%           $280
  Pine Lakes Ranch                     CO           Denver                              762            98%           $310
  Redwood Estates                      CO           Denver                              753            97%           $306
                     Total Colorado                                         5         2,396            97%           $319
  Cedar Grove                          CT           New Haven                            60           100%           $286
  Evergreen                            CT           New Haven                           102            99%           $289
  Green Acres                          CT           New Haven                            64            98%           $280
  Highland                             CT           New Haven                            50            98%           $313
                    Total Connecticut                                      4            276            99%           $291
  Anchor North                         FL           Tampa Bay                            94            96%           $261
  Audubon                              FL           Orlando                             280            97%           $256
  Colony Cove                          FL           Sarasota                          2,207           100%           $321
  Conway Circle                        FL           Orlando                             111            98%           $297
  Crystal Lake                         FL           St. Petersburg                      166            95%           $259
* Crystal Lakes                        FL           Tampa                               330            53%           $149
  CV-Jacksonville                      FL           Jacksonville                        643            96%           $290
  Del Tura                             FL           Fort Myers                        1,342            89%           $435
  Eldorado Estates                     FL           Daytona Beach                       126            95%           $248
  Emerald Lake                         FL           Fort Myers                          201           100%           $285
  Fairways Country Club                FL           Orlando                           1,141            99%           $287
* Foxwood Farms                        FL           Orlando                             375            75%           $188
* Gold Tree                            FL           Tampa                               295            89%           $326
  Hidden Valley                        FL           Orlando                             303           100%           $282
  Indian Rocks                         FL           Clearwater                          148            64%           $231
  Jade Isle                            FL           Orlando                             101            99%           $297
  Lakeland Harbor                      FL           Tampa                               504           100%           $246
  Lakeland Junction                    FL           Tampa                               191           100%           $192
  Lakes at Leesburg                    FL           Orlando                             640           100%           $254
  Land O' Lakes                        FL           Orlando                             173            99%           $242
</TABLE> 
                                      11
 
<PAGE>
 
<TABLE> 
<CAPTION>  
                                                                                                                   Weighted
                                                                                      Total                         Average     
CORE                                                                   Total        Number of        Occupancy    Monthly Rent     
PORTFOLIO                                            Location       Communities       Sites            as of        Per Site
------------------------------------------------------------------------------------------------------------------------------  
Community                           State        (Closest Major City)               12/31/98         12/31/98      12/31/98
------------------------------------------------------------------------------------------------------------------------------  
<S>                                   <C>          <C>                     <C>       <C>              <C>           <C>   
    
   Midway Estates                      FL               Vero Beach                      204             82%        $303
   Mobiland-by-the-Sea                 FL               Melbourne                       217             71%        $306
   Oak Springs                         FL               Orlando                         438             74%        $233
   Orange Lake                         FL               Orlando                         242             94%        $237
   Palm Beach Colony                   FL               West Palm Beach                 285             95%        $297
   Pedaler's Pond                      FL               Orlando                         214             85%        $188
   Pinellas Cascades                   FL               Clearwater                      238             92%        $353
   Shady Lane                          FL               Clearwater                      108             94%        $257
   Shady Oaks                          FL               Clearwater                      250             99%        $317
   Shady Village                       FL               Clearwater                      156             98%        $299
   Southwind Village                   FL               Naples                          337             93%        $297
   Starlight Ranch                     FL               Orlando                         783             94%        $284
   Tarpon Glen                         FL               Clearwater                      170             90%        $272
   Town & Country                      FL               Orlando                          73             96%        $287
   Whispering Pines                    FL               Clearwater                      392             98%        $346
   Winter Haven Oaks                   FL               Orlando                         343             52%        $205
                          Total Florida                                   36         13,821             92%        $292
   Atlanta Meadows                    GA               Atlanta                           75             97%        $226
*  Butler Creek                       GA               Augusta                          358             82%        $177
   Camden Point                       GA               Kingsland                        268             47%        $175
   Castlewood Estates                 GA               Atlanta                          334             84%        $306
   Colonial Coach Estates             GA               Atlanta                          481             85%        $266
   Golden Valley                      GA               Atlanta                          131             96%        $241
   Landmark                           GA               Atlanta                          524             95%        $266
   Marnelle                           GA               Atlanta                          205             99%        $253
   Oak Grove Estates                  GA               Albany                           174             97%        $134
   Paradise Village                   GA               Albany                           226             95%        $138
                          Total Georgia                                   10          2,776             86%        $229
   Lakewood Estates                   IA               Davenport                        172             94%        $242
   Terrace Heights                    IA               Dubuque                          317             97%        $245
                             Total Iowa                                    2            489             96%        $244
   Coach Royale                       ID               Boise                             91             99%        $262
   Maple Grove Estates                ID               Boise                            270             99%        $274
   Shenandoah Estates                 ID               Boise                            154             97%        $265
                           Total Idaho                                     3            515             98%        $269
   Falcon Farms                       IL               Moline                           215             91%        $220
   Maple Ridge / Valley               IL               Kankakee                         276            100%        $233
                         Total Illinois                                    2            491             96%        $227
*  Broadmore                          IN               South Bend                       297             89%        $226
   Forest Creek                       IN               South Bend                       167             97%        $273
*  Fountainvue                        IN               Marion                           120             87%        $153
   Hickory Knoll                      IN               Indianapolis                     325             99%        $281
   Mariwood                           IN               Indianapolis                     296             94%        $276
   Oak Ridge                          IN               South Bend                       204            100%        $227
   Pendleton                          IN               Indianapolis                     102             98%        $205
   Sherwood                           IN               Marion                            89             80%        $167
   Skyway                             IN               Indianapolis                     156             97%        $272
   Twin Pines                         IN               Goshen                           238             97%        $216
                                                                                                                    
                          Total Indiana                                   10          1,994             95%        $241

</TABLE> 

                                      12 
<PAGE>
 
<TABLE> 
<CAPTION> 


 
                                                                                                                   Weighted
                                                                                      Total                         Average     
CORE                                                                      Total      Number of        Occupancy    Monthly Rent  
PORTFOLIO                                               Location       Communities    Sites            as of        Per Site
------------------------------------------------------------------------------------------------------------------------------  
Community                              State     (Closest Major City)                12/31/98         12/31/98      12/31/98
------------------------------------------------------------------------------------------------------------------------------  
<S>                                   <C>          <C>                     <C>        <C>             <C>           <C> 
 
   Mosby's Point                       KY              Cincinnati                     150               97%         $275
   Rolling Hills                       KY              Louisville                     158               95%         $190
                          Total Kentucky                                    2         308               96%         $232
   Pinecrest Village                   LA               Shreveport                    446               71%         $150
   Stonegate, LA                       LA               Shreveport                    157               97%         $170
                        Total Louisiana                                     2         603               78%         $155
   Hillcrest                           MA               Boston                         83               94%         $280
   Leisurewoods Rockland               MA               Boston                        394               99%         $286
*  Leisurewoods Taunton                MA               Boston                        128               94%         $249
   The Glen                            MA               Boston                         36              100%         $365
                     Total Massachusetts                                    4         641               97%         $282
*  Algoma Estates                      MI               Grand Rapids                  294               95%         $276
*  Anchor Bay                          MI               Detroit                     1,384               93%         $326
   Arbor Village                       MI               Jackson                       266               98%         $241
   Avon                                MI               Detroit                       617               99%         $385
   Canterbury Estates                  MI               Grand rapids                  209               77%         $224
   Chesterfield                        MI               Detroit                       345               98%         $350
   Chestnut Creek                      MI               Flint                         160               96%         $304
   Clinton                             MI               Detroit                     1,000               99%         $352
   Colonial Acres                      MI               Kalamazoo                     612               96%         $271
   Colonial Manor                      MI               Kalamazoo                     195               97%         $259
   Country Estates                     MI               Grand Rapids                  254               93%         $260
   Cranberry                           MI               Pontiac                       232              100%         $336
   Ferrand Estates                     MI               Grand Rapids                  420               99%         $317
*  Forest Lake Estates                 MI               Grand Rapids                  221               77%         $270
*  Grand Blanc                         MI               Flint                         415               96%         $331
   Holiday Estates                     MI               Grand Rapids                  205              100%         $303
   Howell                              MI               Lansing                       455               99%         $354
   Huron Estates                       MI               Flint                         111               68%         $202
   Lake in the Hills                   MI               Detroit                       238              100%         $359
*  Leonard Gardens                     MI               Grand Rapids                  216               80%         $286
   Macomb                              MI               Detroit                     1,426               99%         $352
   Norton Shores                       MI               Grand Rapids                  656               86%         $242
   Novi                                MI               Detroit                       725               98%         $392
   Oakhill                             MI               Flint                         504               90%         $349
   Old Orchard                         MI               Flint                         200              100%         $306
   Orion                               MI               Detroit                       423               99%         $332
   Pinewood                            MI               Columbus                      380               98%         $273
   Pleasant Ridge                      MI               Lansing                       305               88%         $206
   Royal Estates                       MI               Kalamazoo                     183               92%         $293
   Science City                        MI               Midland                       171               99%         $277
   Springbrook                         MI               Utica                         398               97%         $314
   Sun Valley                          MI               Jackson                       203               96%         $238
   Swan Creek                          MI               Ann Arbor                     294              100%         $323
*  The Highlands                       MI               Flint                         682               89%         $261
   Torrey Hills                        MI               Flint                         346               97%         $330
   Valley Vista                        MI               Grand Rapids                  137               93%         $313
   Villa                               MI               Flint                         319               97%         $322
*  Westbrook                           MI               Detroit                       162               68%         $356
   Yankee Spring                       MI               Grand Rapids                  284               90%         $244
                          Total Michigan                                   39      15,647               95%         $314
   Cedar Knolls                        MN               Minneapolis                   458               98%         $365
</TABLE> 

                                      13
 
<PAGE>
 
<TABLE> 
<CAPTION> 
                                                                                                                   Weighted
                                                                                      Total                         Average     
CORE                                                                      Total      Number of        Occupancy    Monthly Rent  
PORTFOLIO                                               Location       Communities    Sites            as of        Per Site
------------------------------------------------------------------------------------------------------------------------------  
Community                              State     (Closest Major City)                12/31/98         12/31/98      12/31/98
------------------------------------------------------------------------------------------------------------------------------  
<S>                                   <C>          <C>                     <C>        <C>             <C>           <C> 

   Cimmaron                               MN        St. Paul                            505              98%        $368
   President's Park                       MN        Grand Forks                         174              80%        $214
   Rosemount                              MN        Minneapolis/St. Paul                182             100%        $356
   Twenty-Nine Pines                      MN        St. Paul                            152              92%        $294
                        Total Minnesota                                      5        1,471              96%        $340
*  Springfield Farms                      MO        Springfield                         134              68%        $170
                         Total Missouri                                      1          134              68%        $170
   Countryside Village G.F.               MT        Great Falls                         222              98%        $199
                          Total Montana                                      1          222              98%        $199
   Autumn Forest                          NC        Greensboro                          299              98%        $204
   Foxhall Village                        NC        Raleigh                             315              98%        $314
   Oakwood Forest                         NC        Greensboro                          481              96%        $248
   Woodlake                               NC        Greensboro                          308              98%        $218
                   Total North Carolina                                      4        1,403              97%        $247
   Buena Vista                            ND        Fargo                               400              97%        $242
   Columbia Heights                       ND        Grand Forks                         302              99%        $256
   Meadow Park                            ND        Fargo                               118              88%        $180
                     Total North Dakota                                      3          820              96%        $238
   Casual Estates                         NY        Syracuse                            961              74%        $315
   Meadowbrook                            NY        Ithaca                              237              75%        $251
   Oak Orchard Estates                    NY        Rochester                           235              93%        $272
   Shadybrook                             NY        Syracuse                             89              74%        $315
                          Total New York                                      4       1,522              77%        $299
*  Hunter's Chase                         OH        Lima                                136              36%        $165
   Vance                                  OH        Columbus                            110              95%        $204
   Willo-Arms                             OH        Cleveland                           262             100%        $184
   Yorktowne                              OH        Cincinnati                          354              98%        $311
                              Total Ohio                                      4         862              88%        $236
   Crestview                              OK        Stillwater                          237              89%        $185
                          Total Oklahoma                                      1         237              89%        $185
   Knoll Terrace                          OR        Salem                               212              99%        $328
   Riverview                              OR        Portland                            133              99%        $362
                            Total Oregon                                      2         345              99%        $341
*  Carnes Crossing                        SC        Summersville                        535              96%        $158
*  Conway Plantation                      SC        Myrtle Beach                        299              64%        $177
   Saddlebrook                            SC        Charleston                          426              97%        $180
                    Total South Carolina                                      3       1,260              88%        $170
*  Eagle Creek                            TX        Tyler                               198              40%        $158
   Homestead Ranch                        TX        McAllen                             126              91%        $211
   Leisure World                          TX        Brownsville                         201              92%        $190
   The Homestead                          TX        McAllen                              99              98%        $208
   Trail's End                            TX        Brownsville                         307              82%        $183
                             Total Texas                                      5         931              78%        $185
*  Regency Lakes                          VA        Winchester                          384              70%        $202
                           Total Virginia                                     1         384              70%        $202
   Eagle Point                            WA        Seattle                             230              99%        $430
                         Total Washington                                     1         230              99%        $430
   Breazeale                              WY        Laramie                             116              96%        $221
                            Total Wyoming                                     1         116              96%        $221
   Totals                                                                            51,101            92.4%        $292
</TABLE>

*Communities in the Active Expansion Portfolio.

                                      14
<PAGE>
 
Item 3.   Legal Proceedings
-------   -----------------

None

Item 4.   Submission of Matters to a Vote of Security Holders
-------   ---------------------------------------------------

Not Applicable

                                    PART II


Item 5.   Market for Registrant's Common Equity and Related Security Holder
-------   -----------------------------------------------------------------
          Matters
          -------

Not Applicable


                                      15
<PAGE>
 
Item 6.   Selected Financial Data
-------   -----------------------

The following table sets forth summary financial information of the Company for
the periods and dates indicated.
 
 
                        
<TABLE>
<CAPTION>
                                                                       For the Year Ended December 31, 
In thousands, except per OP Unit data              1998         1997(1)       1996        1995        1994
                                               ------------   ------------  ----------  ---------   ---------
<S>                                            <C>            <C>           <C>         <C>         <C>
 
Operating Data:
Revenues:
  Rental income                                 $  167,206     $134,801     $ 67,233    $ 61,558    $ 47,318              
  Management, interest and other income              5,924        3,368          151         297         749              
                                                ----------     --------     --------    --------    --------              
    Total revenues                                 173,130      138,169       67,384      61,855      48,067              
Expenses:                                                                                                                 
  Property operating and                                                                                                  
    administrative                                  67,699       56,053       26,870      24,410      19,944              
  Depreciation and amortization                     39,658       31,510       11,452      11,014       7,230              
  Interest and related amortization                 31,287       25,918       12,962      12,452       5,996              
                                                ----------     --------      --------    --------    --------             
    Total expenses                                 138,644      113,481       51,284      47,876      33,170              
                                                ----------     --------     --------    --------    --------              
Income before extraordinary                                                                                               
         Item                                       34,486       24,688       16,100      13,979      14,897              
  Extraordinary item (2)                                 -            -            -        (829)          -              
   Preferred OP Unit distributions                  (4,249)           -            -           -           -              
                                                ----------     --------     --------    --------    --------              
  Net income attributable to common                                                                                       
   OP Unitholders                               $   30,237     $ 24,688     $ 16,100    $ 13,150    $ 14,897              
                                                ==========     ========     ========    ========    ========              
                                                                                                                          
Net income attributable to:                                                                                               
  General Partner                               $   26,801     $ 21,702     $  6,534    $  5,303    $  6,037              
  Limited Partners                                   3,436        2,986        9,566       7,847       8,860              
                                                ----------     --------     --------    --------    --------              
                                                $   30,237     $ 24,688     $ 16,100    $ 13,150    $ 14,897              
                                                ==========     ========     ========    ========    ========              
                                                                                                                          
Weighted average OP Units outstanding               30,779       26,947       14,837      14,779      14,189              
                                                                                                                          
Earnings per OP Unit Data:                                                                                                
  Income before extraordinary                                                                                             
    item                                        $      .98     $    .92     $   1.09    $    .95    $   1.05              
  Extraordinary item                            $        -     $      -     $      -    $   (.06)   $      -              
                                                                                                                          
  Income attributable to common                                                                                           
   OP Unitholders - basic                       $      .98     $    .92     $   1.09    $    .89    $   1.05              
  Income attributable to common                                                                                           
   OP Unitholders - diluted                     $      .97     $    .91     $   1.08    $    .89    $   1.05              
  Distributions declared                        $     1.82     $   1.72     $   1.62    $  1.525    $  1.425              
                                                                                                                          
Cash Flow Data:                                                                                                           
  Net cash provided by operating                                                                                          
    activities                                  $   76,809     $ 54,545     $ 27,755    $ 28,097    $ 22,584              
  Net cash provided by (used in)                                                                                          
    financing activities                        $   75,820     $ 21,088     $   (595)   $(24,365)   $  7,056              
  Net cash (used in) investing activities       $ (167,089)    $(61,309)    $(29,518)   $ (6,158)   $(46,214)             
                                                                                                                          
Balance Sheet Data:                                                                                                       
  See attached                                                                                                            
  Rental property, before accumulated                                                                                     
    depreciation                                $1,026,509     $836,175     $300,631    $276,423    $266,833              
  Rental property, net of accumulated                                                                                     
    depreciation                                $  875,249     $723,861     $219,338    $206,555    $207,977              
  Total assets                                  $  959,194     $782,738      232,066    $212,034    $215,418              
  Total debt                                    $  427,778     $387,015      168,315    $132,700    $132,747              
  Total Partners' Capital                       $  488,410     $358,238       42,743    $ 60,572    $ 67,111               
</TABLE>

                                      16

<PAGE>
 
Item 6.    Selected Financial Data, Continued
-------    ----------------------------------
<TABLE> 
<CAPTION> 
                                                                       For the Year Ended December 31,
Other Data:
Dollars in thousands                                    1998        1997  (1)      1996          1995            1994
                                                     ----------  ------------   -----------   ------------   ------------
<S>                                                  <C>         <C>           <C>          <C>             <C> 
Total properties (at end of period)                         165          131            47             44             43
Total sites (at end of period) (3)                       51,101       43,800        20,279         19,594         19,185  
Weighted average occupied sites                          45,882       38,053        18,889         18,051         14,913        
Funds from operations (4)                             $  69,767      $55,962       $27,460        $24,898        $22,015
</TABLE> 

(1)      In February 1997, the Company completed the Merger with ROC.  See Note
          3 to the Consolidated Financial Statements for information regarding
          the Merger.

(2)       The extraordinary item represents prepayment penalties and certain
          other related costs associated with the early extinguishment of debt.
 
(3)       Does not include 1,359 park model/RV sites, purchased in 1998

(4)       Funds from operations ("FFO") is defined by the National Association
          of Real Estate Investment Trusts ("NAREIT") as consolidated net income
          of the Company without giving effect to gains (or losses) from debt
          restructuring and sales of property, certain non-recurring items 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.  For all periods presented, depreciation of rental
          property, amortization of intangibles and certain non-recurring items
          are the only non-cash adjustments.  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; and (iii) is not an
          alternative to cash flows as a measure of liquidity.  FFO is
          calculated as follows:

-
                                                            
<TABLE>
<CAPTION>
                                                 For the Year Ended December 31,
(In thousands)                            1998       1997      1996      1995      1994
                                        --------   --------   -------   -------   -------
<S>                                     <C>        <C>        <C>       <C>       <C>
Income before extraordinary item
      and preferred distributions        $34,486    $24,688   $16,100   $13,979   $14,897
Less:
       Distributions to
         Preferred OP Unitholders          4,249          -         -         -         -
Plus:
       Depreciation of rental
         property                         38,962     30,867    11,360    10,919     7,118
       Amortization of intangibles           446        407         -         -         -
       Non-recurring items, net              122          -         -         -         -
                                         -------    -------   -------   -------   -------
 
Funds from Operations                    $69,767    $55,962   $27,460   $24,898   $22,015
                                         =======    =======   =======   =======   =======
</TABLE>

                                      17

<PAGE>
 
Item 7.    Management's 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 the Company's
plans, objectives and expectations, which are dependent upon a number of
factors, including site expansions, acquisitions, development and other new
business initiatives that are 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 the Company from achieving its objectives.

Overview

The Company is one of the largest owner/managers of manufactured home
communities in the United States, based both on the number of communities and
the number of residential homesites owned.  The Company added 121 manufactured
home communities to its portfolio over the three-year period ended December 31,
1998.  At the end of this period, the Company's portfolio was comprised of 165
manufactured home communities containing 51,101 manufactured homesites and 1,359
park model/RV sites, located in 28 states.

A substantial portion of the Company's growth since the beginning of 1996 can be
attributed to the Company's merger with ROC on February 11, 1997.  The
historical results of the Company include the results of operations of ROC since
February 1, 1997.  In addition, as a result of the Merger, the Company acquired
ROC's third-party property management  operations and its taxable sales and
brokerage subsidiary, CSI.  During 1998, the Company acquired 34 communities
(the "Acquisition Properties") in four separate portfolio acquisitions,
containing an aggregate of 7,045 manufactured homesites and 1,359 park model/RV
sites.

Company growth since the beginning of 1996 can also be attributed to increased
operating performance at existing communities, community expansions, new
community development and additional acquisition activities.

                                      18

<PAGE>
 
Historical Results of Operations

Comparison of the year ended December 31, 1998 to the year ended December 31,
1997

The following table summarizes certain information relative to the Company's
properties, as of and for the years ended December 31, 1998 and 1997.  The
Company considers all communities owned by the Company or ROC as of January 1,
1997 as the "Core 1997 Portfolio".

<TABLE>
<CAPTION>
                                          Core 1997 Portfolio                            Total
                                        1998              1997                   1998              1997
                                    -------------   ----------------        ---------------   --------------
 
Dollars in thousands, except per site
 
As of December 31,
<S>                                 <C>             <C>                     <C>               <C>
Number of Communities                        126                126                    165              131
Total manufactured homesites              43,379             43,051                 51,101           43,800
Occupied sites                            39,973             39,564                 47,192           40,286
Occupancy %                                 92.1%              91.9%                  92.4%            92.0%
 
 
For the year ended December 31,
Rental income                           $146,445           $139,048               $167,206         $134,801
Property operating expense              $ 52,259           $ 50,712               $ 59,345         $ 49,092
Net operating income                    $ 94,186           $ 88,336               $107,861         $ 85,709
Weighted average monthly rent           $    299           $    286               $    292         $    287
 per site
</TABLE>

For the year ended December 31, 1998, net income was $34,486,000, an increase of
$9,798,000 from the year ended December 31, 1997.  The increase was due
primarily to acquisitions and the Merger, as well as increased net operating
income from the Core 1997 Portfolio.  The increase in net operating income from
the Company's Core 1997 Portfolio was due to increased occupancy and rental
increases partially offset by general operating expense increases.  Rental
revenue for the year ended December 31, 1998 was $167,206,000, an increase of
$32,405,000 from 1997.  Approximately 57 percent was due to acquisitions and 18
percent was due to the Merger.  The remaining 25 percent increase was due to
rental increases and occupancy gains in the Company's Core 1997 Portfolio.

Weighted average occupancy for the year ended December 31, 1998 was 45,882 sites
compared with 38,053 sites for the same period in 1997. During 1998, the Company
increased occupancy by 627 sites, of which 344 were in its active expansion
communities.  The Company also added 407 sites to its portfolio through the
expansion of its communities.  The occupancy rate for the total portfolio was
92.4 percent on 51,101 sites as of December 31, 1998, compared to 92.0 percent
on sites as of December 31, 1997.  The occupancy rate on the stabilized
portfolio was 94.0 percent as of December 31, 1998. On a per site basis,
weighted average monthly rental revenue for the year ended December 31, 1998 was
$292 compared with $287 for the same period in 1997. For the Company's Core 1997
Portfolio, on a per site basis, weighted average monthly rental revenue for the
year ended December 31, 1998 was $299 compared with $286 for the same period in
1997, an increase of 4.5 percent.

                                      19

<PAGE>
 
Management fee, interest and other income primarily include management fee
income for the management of 36 manufactured home communities, equity earnings
from the Company's sales subsidiary, CSI, and interest income on notes
receivable and advances to affiliates.  The increase in 1998 from 1997 is due
primarily to increased development activities in which the Company funds the
development costs and recognizes interest income and expense.

Property operating and maintenance expense for the year ended December 31, 1998
increased by $7,948,000 or 20.3 percent from the same period a year ago.  The
majority of the increase was due to the acquisitions and the Merger.  The
remaining increase was due to increases in the Company's Core 1997 Portfolio.
On a per site basis, monthly weighted average property operating and maintenance
expense remained constant at $86.

Real estate taxes for the year ended December 31, 1998 increased by $2,305,000
or 23.2 percent from the year ended December 31, 1997.  The increase is due
primarily to acquisitions and expansions of communities, the Merger and general
increases.  On a per site basis, monthly weighted average real estate taxes were
$22.25 in 1998 compared to $21.78 in 1997, an increase of 2.2 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 the Company operates.

Administrative expense for the year ended December 31, 1998 increased due to
acquisitions and the Merger. Administrative expense in 1998 was 4.8 percent of
total revenues as compared to 5.0 percent in 1997.

Interest and related amortization costs increased for the year ended December
31, 1998 by $5,369,000, as compared with the year ended December 31, 1997.  The
increase is attributable primarily to the indebtedness incurred to finance the
acquisitions.  Interest expense as a percentage of average debt outstanding
remained relatively constant at approximately 7.7 percent.

Depreciation expense for the year ended December 31, 1998, increased $8,148,000
from the same period a year ago.  The increase is directly attributable to
acquisitions and the Merger.  Depreciation expense as a percentage of average
depreciable rental property in 1998 remained relatively unchanged from 1997.

Comparison of the year ended December 31, 1997 to the year ended December 31,
1996

For the year ended December 31, 1997, net income was $24,688,000, an increase of
$8,588,000 from the year ended December 31, 1996.  The increase was due
primarily to the Merger, as well as acquisitions that were consummated in 1997
and 1996 by the Company or ROC, and increased net operating income from
communities owned by the Company and ROC at the beginning of the period (the
"Core 1996 Portfolio").  The increase in net operating income from the Company's
Core 1996 Portfolio was due to increased occupancy and rental increases
partially offset by general operating expense increases.

Rental revenue for the year ended December 31, 1997 was $134,801,000, an
increase of $67,568,000 from 1996.  Approximately 80 percent of the increase was
due to the Merger, and 9 percent was due to 1997 and 1996 acquisitions made by
the Company or ROC.  The remaining 11 percent increase was due to rental
increases and occupancy gains in the Company's Core 1996 Portfolio.

                                      20

<PAGE>
 
Weighted average occupancy for the year ended December 31, 1997 was 38,053 sites
compared with 18,889 sites for the same period in 1996. During 1997, the Company
increased occupancy by nearly 400 sites, primarily in its active expansion
communities.  The occupancy rate for the total portfolio was 92.0 percent on
approximately 43,800 sites as of December 31, 1997, compared to 94.4 percent on
approximately 20,279 sites as of December 31, 1996. The decrease in the
occupancy rate is due to the increase in available sites added through
expansions of existing communities.  The occupancy rate on the stabilized
portfolio was 93.6 percent as of December 31, 1997. On a per site basis,
weighted average monthly rental revenue for the year ended December 31, 1997 was
$287, which is consistent with the same period of 1996. For the Company's Core
1996 Portfolio, on a per site basis, weighted average monthly rental revenue for
the year ended December 31, 1997 was $289 compared with $278 for the same period
in 1996, an increase of 4.1 percent.

Management fee, interest and other income primarily include management fee
income for the management of 32 manufactured home communities, equity earnings
from the Company's sales subsidiary, CSI, and interest income on notes
receivable.  The increase in 1997 from 1996 is due primarily to business
activities acquired in conjunction with the Merger.

Property operating and maintenance expense for the year ended December 31, 1997
increased by $20,945,000 or 115 percent from the same period a year ago.  The
majority of the increase was due to the Merger and 1997 and 1996 acquisitions.
The remaining increase was due to increases in the Company's Core 1996
Portfolio.  On a per site basis, monthly weighted average property operating and
maintenance expense increased 6.8 percent from approximately $80 in 1996 to
approximately $86 in 1997.  A portion of this increase is due to the operating
expenses related to the properties managed by the Company for a management fee
beginning in 1997.

Real estate taxes for the year ended December 31, 1997 increased by $5,090,000
or 105 percent from the year ended December 31, 1996.  The increase is due
primarily to the Merger, acquisitions and expansions of communities and general
increases.  On a per site basis, monthly weighted average real estate taxes were
$21.78 in 1997 compared to $21.42 in 1996, an increase of 1.7 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 the Company operates.

Administrative expense for the year ended December 31, 1997 increased due to the
Merger.  Administrative expense in 1997 was 5.0 percent of total revenues as
compared to 5.7 percent in 1996.

Interest and related amortization costs increased for the year ended December
31, 1997 by $12,956,000, as compared with the year ended December 31, 1996.  The
increase is attributable to the indebtedness incurred in connection with the
Merger and to finance the 1997 and 1996 acquisitions.  Interest expense as a
percentage of average debt outstanding decreased to approximately 7.7 percent in
1997 from approximately 8.1 percent in 1996.  The decrease is due primarily to
the ROC debt assumed in the Merger having a lower average interest rate as well
as much of the financing in connection with the Merger and the 1997 and 1996
acquisitions being done with the Company's lines of credit which had a lower
average interest rate.  In addition, in July 1997,  the Company renegotiated its
lines of credit into a new line with a lower borrowing rate of 110 basis points
over LIBOR versus 150 basis points over LIBOR on the old lines.

Depreciation expense for the year ended December 31, 1997, increased $20.1
million from the same period a year ago.  The increase is directly attributable
to the Merger and acquisitions.  Depreciation expense as a percentage of average
depreciable rental property in 1997 remained relatively unchanged from 1996.

                                      21

<PAGE>
 
Liquidity and Capital Resources

Net cash provided by operating activities was $76,809,000 for the year ended
December 31, 1998, compared to $54,545,000 for the same period in 1997.  The
increase in cash provided by operating activities was due primarily to the
increase in net operating income.

Net cash provided by financing activities for the year ended December 31, 1998
was $75,820,000.  This consisted primarily of $53,678,000 of net cash
contribution from Chateau from the proceeds it received from the issuance in
February 1998 of 1,850,000 shares of common stock, $73,002,000 in net proceeds
received by the Company from the issuance in April 1998 of Series A Preferred OP
Units to an institutional investor, and net borrowings on the Company's line of
credit of $11,736,000.  These proceeds were offset partially by $57,878,000 in
distributions paid to OP Unitholders in 1998.

Net cash used in investing activities for the year ended December 31, 1998 was
$167,089,000.  This amount represents acquisitions, joint venture investments
and advances, capital expenditures and development costs. During 1998, the
Company acquired, through four separate portfolio acquisitions, 31 manufactured
home communities and three park model/RV communities with a total of 7,045
homesites and 1,359 park model/RV sites.  The Company's total investment of
approximately $170 million was financed primarily by the assumption of $31.7
million of mortgage and other notes, the issuance of 943,075 OP Units, borrowing
under the Company's lines of credit and the proceeds received from the issuance
of common stock.  The lines of credit were subsequently repaid with the proceeds
of $73 million from the issuance of Series A Preferred OP Units.

During 1998, the Company invested approximately $6.5 million in the expansion of
its existing communities. During 1998, the Company added 407 available sites to
its portfolio. In addition, during 1998, the Company invested or advanced $33.2
million to certain affiliates of the Company.  This consisted primarily of
approximately $10.2 million to seven joint ventures, through which the Company
is developing manufactured home communities, $11.1 million to N'Tandem Trust, an
entity in which the Company owns approximately 17 percent of its outstanding
common stock and $10 million in other investments in entities owning
manufactured home communities.  For the year ended December 31, 1998, recurring
property capital expenditures, other than development costs, were approximately
$5.2 million.  Capital expenditures have historically been financed out of funds
from operations and it is the Company's intention that such future expenditures
will be financed with funds from operations.

In August 1998, the Company renegotiated its line of credit with Bank One, N.A.,
acting as lead agent, (the "Bank One Credit Facility") increasing the line from
$75 million to $100 million.  The interest rate was reduced from LIBOR plus 110
basis points to a maximum of LIBOR plus 80 basis points and its maturity date
was extended to 2001.

As of December 31, 1998, in addition to the Bank One Credit Facility, the
Company had a $7.5 million revolving line of credit from US Bank which bears
interest at a rate of LIBOR plus 125 basis points (the "USB Facility" and,
together with the Bank One Credit Facility, the "Credit Facilities").  As of
December 31, 1998, approximately $36.7 million was outstanding under the Credit
Facilities and the Company had available $70.8 million in additional borrowing
capacity.

In December 1997, the Company issued 6.92% MandatOry Par Put Remarketed
Securities/SM /("MOPPRS/SM/") due December 10, 2014.  The net proceeds to the
Company from the issuance before deducting offering expenses, were approximately
$102.0 million.  The net proceeds from the MOPPRS/SM/ were utilized primarily to
reduce outstanding balances under the Credit Facilities and to finance
acquisitions.  The MOPPRS/SM/ are rated as "BBB" by Standard & Poor's Rating
Service and "Baa3" by Moody's Investors Service.

                                      22

<PAGE>
 
In connection with the issuance of the MOPPRS/SM/, the Company and Chateau
entered into a Remarketing Agreement, dated as of December 23, 1997 (the
"Remarketing Agreement"), with the remarketing dealer named therein (the
"Remarketing Dealer"), pursuant to which the MOPPRS/SM/ are subject to mandatory
tender in favor of the Remarketing Dealer on December 10, 2004 (the "Remarketing
Date"), for a purchase price equal to 100% of the principal amount of the
outstanding MOPPRS/SM/.  Upon the Remarketing Dealer's election to remarket the
MOPPRS/SM/, the interest rate to the December 10, 2014 maturity date of the
MOPPRS/SM/ will be adjusted to equal the sum of 5.75% plus the Applicable Spread
(as defined in the Remarketing Agreement).  In the event the Remarketing Dealer
does not elect to remarket the MOPPRS/SM/, the MOPPRS/SM/ will mature on the
Remarketing Date.

As of December 31, 1998, the Company had outstanding, in addition to the Credit
Facilities, $245 million of unsecured senior debt with a weighted average
interest rate and maturity of 7.5 percent and 4.2 years, respectively, and $129
million of secured mortgage debt with a weighted average interest rate and
maturity of 7.9 percent and 2.5 years, respectively.  As of December 31, 1998,
the Company had approximately $428 million of total debt outstanding,
representing 29 percent of the Company's total market capitalization.  All of
the debt is fixed rate debt, other than the Company's Credit Facilities and has
a weighted average interest rate of 7.6 percent.

Repayment of long-term borrowings and amounts outstanding under the Credit
Facilities, future acquisitions of communities and land for development and new
community development activities represent the principal long-term liquidity
needs of the Company.  The Company does not expect to generate sufficient funds
from operations to finance these long-term liquidity needs and instead intends
to meet its 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.

The Company expects to meet its short-term liquidity requirements, including
expansion activities and capital expenditure requirements, through cash flows
from operations and, if necessary, borrowings under the Credit Facilities and
other lines of credit.

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 the Company to seek market rentals upon
reletting the sites.  Such leases generally minimize the risk to the Company of
any adverse effect of inflation.

Year 2000 Compliance

Management has assessed the impact of the year 2000 issue on its reporting
systems and operations. The year 2000 issue exists because many computer systems
and applications abbreviate dates by eliminating the first two digits of the
year, assuming that these two digits are always "19".  As a result, date-
sensitive computer programs may recognize a date using "00" as the year 1900
rather than the year 2000.  Unless corrected, the potential exists for computer
system failures or incorrect processing of financial and operational
information, which could disrupt operations.

                                      23

<PAGE>
 
To help facilitate the Company's continued growth, substantially all of the
computer systems and applications and other operating systems in use in its home
office and properties have been, or are in the process of being upgraded and
modified.  The Company is of the opinion that, in connection with those upgrades
and modifications, it has addressed applicable year 2000 issues as they might
affect the computer systems and applications located in the Company's offices
and properties. The Company anticipates that implementation of solutions to any
year 2000 issue which it may discover will require the expenditure of sums which
the Company does not expect to be material.

The Company is exposed to the risk that one or more of its vendors or service
providers may experience year 2000 problems which impact the ability of such
vendor or service provider to provide goods and services.  Due to the
availability of alternative suppliers, this is not considered as significant a
risk with respect to the suppliers of goods. The disruption of certain services,
however, such as utilities, could, depending upon the extent of the disruption,
have a material adverse impact on the Company's operations.  To date, the
Company is not aware of any vendor or service provider year 2000 issue that
management believes would have a material adverse impact on the Company's
operations.

The Company, however, has no means of ensuring that its vendors or service
providers will be year 2000 ready.  The inability of vendors or service
providers to complete the year 2000 resolution process in a timely fashion could
have an adverse impact on the Company and the effect of non-compliance by
vendors or service providers is not determinable at this time.  Residents do not
pose year 2000 problems for the Company in view of the nature of the Company's
properties.

Widespread disruptions in the national or international economy, including
disruptions affecting the financial markets, resulting from year 2000 issues, or
in certain industries, such as commercial or investment banks, could also have
an adverse impact on the Company.  The likelihood and effect of such disruptions
is not determinable at this time.

Management expects to have all systems appropriately modified before any
significant processing malfunctions could occur and does not expect the year
2000 issue will materially impact the financial condition or operations of the
Company.

Recently Issued Accounting Standard

In June 1998, the FASB issued Statement of Financial Accounting Standards No.
133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS
133"), which is effective for the Company in the year 2000.  The only derivative
instrument the Company currently utilizes is an interest rate hedge agreement
for $75 million of its senior notes.  SFAS 133 requires that all derivative
instruments be measured on the balance sheet at fair value.  The Company
anticipates that the adoption of SFAS 133 will not have a significant effect on
its 2000 financial statements.

                                      24

<PAGE>
 
Other

Funds from operations ("FFO") is defined by the National Association of Real
Estate Investment Trusts ("NAREIT") as consolidated net income of the Company
without giving effect to gains (or losses) from debt restructuring and sales of
property, certain non-recurring items 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.  For all periods presented, depreciation of rental
property, amortization of intangibles and certain non-recurring items are the
only non-cash adjustments.  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; and (iii)
is not an alternative to cash flows as a measure of liquidity.  FFO is
calculated as follows:

 
                                                                      For the
                                                          -------------------
year ended December 31,              
--------------------------------      
<TABLE>
<CAPTION>
 
                                                       1998       1997       1996
                                                      -------   --------   --------
<S>                                                   <C>       <C>        <C>
(in thousands)
 
Income before extraordinary item
    and preferred distributions                       $34,486    $24,688    $16,100
Less:
       Distributions to Preferred OP Unitholders        4,249          -          -
Plus:
    Depreciation of rental property                    38,962     30,867     11,360
    Amortization of intangibles                           446        407          -
    Non-recurring items, net                              122          -          -
                                                      -------    -------    -------
 
Funds from operations                                 $69,767    $55,962    $27,460
                                                      =======    =======    =======
</TABLE>

                                      25

<PAGE>
 
Item 8.   Financial Statements and Supplementary Data
-------   -------------------------------------------

Report of Independent Accountants

To the Partners of CP Limited Partnership:

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 CP Limited Partnership (the "Company") at December 31,
1998 and 1997, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 1998, in conformity with
generally accepted accounting principles.  These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits.  We conducted our
audits of these statements in accordance with generally accepted auditing
standards 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.



PricewaterhouseCoopers LLP
Denver, Colorado
February 8, 1999

                                      26

<PAGE>
 
                            CP LIMITED PARTNERSHIP
                       CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
 
  In thousands, except per OP Unit data
                                             For the Year Ended December 31,
                                               1998        1997        1996
                                             ---------   ---------   --------
<S>                                          <C>         <C>         <C>
 
Revenues:
  Rental income                               $167,206    $134,801    $67,233
  Management, interest and other income          5,924       3,368        151
                                              --------    --------    -------
                                               173,130     138,169     67,384
Expenses:
  Property operating and maintenance            47,094      39,146     18,201
  Real estate taxes                             12,251       9,946      4,856
  Depreciation and amortization                 39,658      31,510     11,452
  Administrative                                 8,354       6,961      3,813
  Interest and related amortization             31,287      25,918     12,962
                                              --------    --------    -------
                                               138,644     113,481     51,284
                                              --------    --------    -------
 
Net income                                      34,486      24,688     16,100
 
  Less distributions to Preferred
   OP Unitholders                                4,249           -          -
                                              --------    --------    -------
  Net income attributable to common
   OP Unitholders                             $ 30,237    $ 24,688    $16,100
                                              ========    ========    =======
 
     Net income attributable to
       common OP Unitholders:
   General Partner                            $ 26,801    $ 21,702    $ 6,534
   Limited Partners                              3,436       2,986      9,566
                                              --------    --------    -------
                                              $ 30,237    $ 24,688    $16,100
                                              ========    ========    =======
 
Per OP Unit information:
 
  Basic earnings per OP Unit                  $    .98    $    .92    $  1.09
                                              ========    ========    =======
 
  Diluted earnings per OP Unit                $    .97    $    .91    $  1.08
                                              ========    ========    =======
 
  Distributions declared per
    OP Unit outstanding                       $   1.82    $   1.72    $  1.62
                                              ========    ========    =======
 
Weighted average
 OP Units outstanding - basic                   30,779      26,947     14,837
                                              ========    ========    =======
 
</TABLE>
    The accompanying notes are an integral part of the financial statements.

                                      27

<PAGE>
 
                            CP LIMITED PARTNERSHIP
                          CONSOLIDATED BALANCE SHEETS

<TABLE> 
<CAPTION> 
                                                                           December 31,
In thousands, except unit data                                           1998       1997
                                                                      ----------   --------
<S>                                                                   <C>          <C>  
Assets
Rental property:
  Land                                                                $  135,444   $111,832
  Land and improvements for expansion sites                               22,184     14,437
  Manufactured home community improvements                               791,859    647,388
  Community buildings                                                     55,887     44,406
  Furniture and other equipment                                           21,135     18,112
                                                                      ----------   --------
  Total rental property                                                1,026,509    836,175
 
    Less accumulated depreciation                                        151,260    112,314
                                                                      ----------   --------
 
      Net rental property                                                875,249    723,861
 
Cash and cash equivalents                                                    450     14,910
Rents, notes and other receivables                                        10,286     11,034
Investments in and advances to affiliates                                 65,473     25,662
Prepaid expenses and other assets                                          7,736      7,271
                                                                      ----------   --------
 
         Total assets                                                 $  959,194   $782,738
                                                                      ==========   ========
 
Liabilities
Debt                                                                  $  427,778   $387,015
Accrued interest payable                                                   4,322      3,909
Accounts payable and accrued expenses                                     16,708     15,848
Rents received in advance and security deposits                            6,898      5,580
Distributions payable                                                     15,078     12,148
                                                                      ----------   --------
 
      Total liabilities                                                  470,784    424,500
 
Commitments and contingencies (Notes 10 & 11)                                  -          -
 
Partners' Capital, Unlimited Authorized Units:
      31,459,888 and 28,250,803 common OP Units outstanding
      at December 31, 1998  and 1997, respectively;  1,500,000
      Preferred OP Units outstanding at December 31, 1998
 
            General Partner                                              367,935    322,966
            Limited Partners                                              47,473     35,272
          Preferred OP Units, Series A                                    73,002          -
                                                                      ----------   --------
 
            Total partners' capital                                      488,410    358,238
                                                                      ----------   --------
 
                      Total liabilities and partners' capital         $  959,194   $782,738
                                                                      ==========   ========
 
</TABLE>


    The accompanying notes are an integral part of the financial statements.

                                      28

<PAGE>
 
                                             CP LIMITED PARTNERSHIP
                                 CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL


 
<TABLE>
<CAPTION>
Dollars in thousands, except per OP Unit data.
                                                               For the Year Ended December 31,
                                                        1998                   1997                    1996
                                      ---------------------------------  ---------------------   ---------------------
                                                   Common     Preferred              Common                  Common
                                       General     Limited    Limited    General     Limited     General     Limited
 
Partners' Capital
<S>                                   <C>         <C>         <C>        <C>         <C>         <C>         <C>
  Balance at beginning of period      $322,966    $ 35,272           -   $ 16,191     $26,552    $ 24,308    $ 36,264
  Net income                            26,801       3,436           -     21,702       2,986       6,534       9,566
  Issuance of units in connection                             
    with the Merger                          -           -           -    359,780           -           -           -
  Issuance of units at fair market                            
   value                                62,797      29,150     $73,002      7,517         660         239       1,964
                                                              
  Transfer (from) to limited                                  
   partners to (from) general                                 
   partners resulting from                                    
   issuance of OP Units                 14,090     (14,090)          -     (9,819)      9,819       6,031      (6,031)
                                                              
                                                              
                                                              
  OP Units reacquired and                                     
   retired                                (930)          -           -    (28,687)          -     (11,239)       (932)
                                                              
  Distributions declared                                      
   $1.82 in 1998, $1.72 in 1997                               
   and $1.62 in 1996                   (50,264)     (6,295)          -    (43,643)     (4,745)     (9,703)    (14,279)
                                                              
                                                              
  Other                                 (7,525)          -           -        (75)          -          21           -
                                      --------    --------    --------   --------     -------    --------    --------
                                                              
  Balance at end of period            $367,935    $ 47,473     $73,002   $322,966     $35,272    $ 16,191    $ 26,552
                                      ========    ========    ========   ========     =======    ========    ========
</TABLE>
                                                                               



    The accompanying notes are an integral part of the financial statements.

                                      29

<PAGE>
 
                            CP LIMITED PARTNERSHIP
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
 
 
                                                Year Ended December 31,
In thousands                                 1998         1997        1996
                                           ---------   ----------   ---------
<S>                                       <C>          <C>          <C>         
 
Cash flows from operating
 activities:
  Net income                                $  34,486    $  24,688    $ 16,100
  Adjustments to reconcile net
   income to net cash provided 
    by operating activities:
  Depreciation and amortization                39,658       31,510      11,452    
  Amortization of debt issuance costs             764          480         437
  Decrease (increase) in operating
   assets                                        (690)       1,495        (562)
  Increase (decrease) in operating
   liabilities                                  2,591       (3,628)      2,328
                                            ---------    ---------    --------
   Net cash provided by operating
    activities                                 76,809       54,545      29,755
                                            ---------    ---------    --------
 
Cash flows from financing
 activities:
  Proceeds from issuance of Senior
   notes                                            -      102,630           -
  Borrowings on line of credit                120,935      105,111      36,750
  Payments on line of credit                 (109,200)    (150,945)          -
  Principal payments on mortgages              (1,828)      (1,596)     (1,135)
  Payoff of mortgages                          (3,315)           -           -
  Payment of debt issuance costs                 (237)        (895)       (234)
  Distributions to OP Unitholders             (57,878)     (42,111)    (24,065)
  OP Units repurchased and retired               (932)     (19,851)    (12,171)
  Net proceeds from the issuance
   of OP Units                                 53,678       25,477           -
  Net proceeds from the issuance
   of Preferred OP Units                       73,002            -           -
  Other                                         1,595        3,268         260
                                            ---------    ---------    --------
    Net cash provided by (used in)
      financing activities                     75,820       21,088        (595)
                                            ---------    ---------    --------
 
Cash flows from investing
 activities:
  Acquisition of rental properties           (116,605)     (22,655)    (21,727)
  Disposition of rental property                3,329        2,455           -
  Additions to rental properties              (14,958)     (15,544)     (4,731)
  Investments in and advances to
   affiliates                                 (32,205)      (4,259)          -
  Advances to CSI                              (6,650)      (8,849)          -
  Merger costs                                      -      (12,457)     (3,060)
                                            ---------    ---------    --------
    Net cash used in investing
     activities                              (167,089)     (61,309)    (29,518)
                                            ---------    ---------    --------
 
Increase (decrease) in cash and
 cash equivalents                             (14,460)      14,324        (358)
Cash and cash equivalents,
 beginning of period                           14,910          586         944
                                            ---------    ---------    --------
 
Cash and cash equivalents, end of
 period                                     $     450    $  14,910    $    586
                                            =========    =========    ========
 
Supplemental information:
  Cash paid for interest, net of
   amounts capitalized                      $  30,110    $  24,325    $ 12,176
                                            =========    =========    ========
 
  Fair market value of OP Units
   issued for acquisitions/joint 
    venture investments                     $  29,150    $   3,683    $  1,964
                                            =========    =========    ========
 
  Debt assumed in connection with
   acquisitions and development             $  34,171    $   1,049    $166,100
                                            =========    =========    ========
 
</TABLE>
    The accompanying notes are an integral part of the financial statements.

                                      30

<PAGE>
 
                            CP LIMITED PARTNERSHIP

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                    _______


1.   Organization and Formation of Company:
     ------------------------------------- 

CP Limited Partnership (the "Company") is a limited partnership and was formed
by Chateau Communities, Inc. ("Chateau"), a real estate investment trust, as
general partner and Chateau Estates, as the initial limited partner, on
September 16, 1993.  In 1997, the Company merged with ROC Communities, Inc.
("ROC").

The Company is engaged in the business of owning and operating manufactured
housing community properties primarily through the Company.  As of December 31,
1998, the Company owned 165 properties containing an aggregate of 51,101
homesites and 1,359 park model/RV sites, located in 28 states. Approximately 29
percent of these homesites were in Florida and 27 percent were in Michigan.  The
Company also fee managed 36 properties containing an aggregate of 7,500
homesites. A manufactured housing community is real estate designed and improved
with sites for placement of manufactured homes. The owner of the home leases the
site from the Company generally for a term of one year or less.

2.   Summary of Significant Accounting Policies:
     ------------------------------------------ 

Basis of Presentation

The accompanying consolidated financial statements of the Company include all
accounts of the Company and its subsidiaries.  Chateau and ROC are the general
partners.  As of December 31, 1998, Chateau owned on a combined basis, a 89
percent general partner interest.  Pursuant to the terms of the operating
partnership agreement, the Company is required to reimburse Chateau for the net
expenses incurred by Chateau. Amounts paid on behalf of Chateau by the Company
are reflected in the statement of income as general and administrative expenses.
The balance sheet of Chateau as of December 31, 1998 is identical to the
accompanying balance sheet of the Company, except as follows:

<TABLE>
<CAPTION>
                                                                 (in thousands)
                                            As Presented
                                               Herein                        Chateau Communities,Inc.
                                          December 31, 1998   Adjustments        December 31, 1998
                                          -----------------   ------------   -------------------------
 
<S>                                       <C>                 <C>            <C>
Minority interests in CP Limited                                                                      
 Partnership                                                    $ 120,475                    $120,475 
 
Equity:
   General partner                                 $367,935      (367,935)
   Limited partners                                 120,475      (120,475)
   Common stock                                                                                   279
   Additional paid-in capital                                                                 432,711
   Dividends in excess of
    accumulated earnings                                                                      (56,637)
 
   Notes receivable, officers                                                                  (8,418)
                                                   --------                                  --------
    Partners' capital/shareholders'  
     equity                                        $488,410                                  $367,935
                                                   ========                                  ========
</TABLE>

All significant inter-entity balances and transactions have been eliminated in
consolidation.

The Company conducts manufactured home sales and brokerage activities through
its taxable subsidiary Community Sales, Inc. ("CSI").  The Company owns 100% of
the preferred stock of CSI and is entitled to 100% of its cash flow.  The
Company accounts for its investment in CSI utilizing the equity method of
accounting.

                                      31

<PAGE>
 
                            CP LIMITED PARTNERSHIP

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
                                    _______
                                        
2.   Summary of Significant Accounting Policies Continued:
     ---------------------------------------------------- 
 
Use of Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles involves the use of certain management estimates and
assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period.  Actual results could differ from those estimates.

Revenue Recognition

Rental income is recognized when earned and due from residents. The leases
entered into by residents for the rental of a site are generally for terms not
longer than one year and are renewable upon the consent of both parties or, in
some instances, as provided by statute.

                                      32

<PAGE>
 
                            CP LIMITED PARTNERSHIP

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
                                    _______

2.    Summary of Significant Accounting Policies Continued:
      -----------------------------------------------------

Rental Property

Rental property is carried at cost less accumulated depreciation.  Management
evaluates the recoverability of its investment in rental property whenever
events or changes in circumstances indicate that full asset recoverability is
questionable.  Management's assessment of the recoverability of its rental
property includes, but is not limited to, recent operating results, expected net
operating cash flow and management's plans for future operations.  If a rental
property is determined to be significantly impaired, the asset is written down
to its estimated fair value.

Depreciation

Depreciation on manufactured home communities is computed primarily on the
straight-line method over the estimated useful lives of the assets.  The
estimated useful lives of the various classes of rental property assets are
primarily as follows:
<TABLE>
<CAPTION>
                                              Estimated Useful
Class of Asset                                 Lives (Years)
-------------------------------------------   ----------------
<S>                                              <C> 
Manufactured home community improvements          20 to 30
Community buildings                               25 to 30
Furniture and other equipment                     3 to 10
</TABLE>

Maintenance, repairs and minor improvements to rental properties are expensed
when incurred.  Major improvements and renewals are capitalized.  When rental
property assets are sold or otherwise retired, the cost of such assets, net of
accumulated depreciation compared to the sale proceeds, are recognized in income
as gains or losses on disposition.

Capitalized Interest

Interest is capitalized on development projects during periods of construction
through obtainment of a certificate of occupancy.  Interest capitalized by the
Company during 1998 and 1997 was $579,000 and $708,000, respectively.
 
Income Taxes

The Company is not liable for Federal income taxes as the partners recognize
their proportionate share of income or loss in their tax returns.  Therefore, no
provision for income taxes is included in the Company's financial statements.

                                       33
<PAGE>
 
                             CP LIMITED PARTNERSHIP

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
                                    _______

2.      Summary of Significant Accounting Policies Continued:
        ---------------------------------------------------- 


Earnings Per OP Unit

Basic earnings per OP Unit are computed based upon the weighted average number
of OP Units outstanding during the period.  Diluted earnings per OP Unit are
computed assuming the exercise of all outstanding stock options of Chateau,
which would have a dilutive effect.

Cash Equivalents

All highly liquid investments with an initial maturity of three months or less
are considered to be cash equivalents.

Reclassifications

Certain reclassifications have been made to the prior year information to
conform to the current year presentation.  These reclassifications have no
impact on net operating results previously reported.

Fair Value of Financial Instruments

The fair value of the Company's financial instruments approximate their carrying
values at December 31, 1998 and 1997.

Debt Issuance Costs

Costs incurred to obtain financing and costs of interest rate protection are
deferred and amortized on a straight line basis, which approximates the
effective interest method, over the term of the related loans or agreements.
These costs, net of accumulated amortization, are included in prepaid expenses
and other assets in the accompanying consolidated balance sheets.

Recently Issued Accounting Standard

In June 1998, the FASB issued Statement of Financial Accounting Standards No.
133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS
133"), which is effective for the Company in the year 2000.  The only derivative
instrument the Company currently utilizes is an interest rate hedge agreement
for $75 million of its senior notes.  SFAS 133 requires that all derivative
instruments be measured on the balance sheet at fair value.  The Company
anticipates that the adoption of SFAS 133 will not have a significant effect on
its 2000 financial statements.

                                       34
<PAGE>
 
                             CP LIMITED PARTNERSHIP

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
                                    _______

3.       Merger with ROC Communities, Inc.:
         ----------------------------------

On February 11, 1997, the Company completed its merger with ROC Communities,
Inc. (the "Merger"). The Merger and related transactions was accounted for using
the purchase method of accounting in accordance with generally accepted
accounting principles. Accordingly, the assets and liabilities of ROC were
adjusted to fair value for financial accounting purposes and the results of
operations of ROC were included in the results of operations of the Company
beginning in February 1997.

In connection with the Merger, the related transactions occurred

-    The Company repurchased and retired 1,200,000 OP Units from Chateau, of
     which 750,000, and 450,000 were repurchased in 1997 and 1996, respectively

-    ROC purchased 350,000 shares of common stock of Chateau, in 1996, which was
     retired, along with an equivalent number of units, at the time of the
     Merger

-    The Company issued 1.042 OP Units to Chateau, to reflect an equivalent
     number of shares issued by Chateau, for each share of ROC stock outstanding

-    The Company paid a distribution equal to .0326 OP Units per OP Unit
     outstanding, to reflect an equivalent stock dividend by Chateau

                                       35
<PAGE>
 
                             CP LIMITED PARTNERSHIP

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
                                    _______

3.   Merger with ROC Communities, Inc. Continued:
     --------------------------------------------


-    Certain limited partners converted 6,170,908 OP Units into common shares,
     which results in those units being held by Chateau.  These limited partners
     waived their right to receive the above distribution with respect to those
     OP Units exchanged and as a result it was re-allocated, resulting in a
     distribution to the general partners of .068 units.

-    These exchanging limited partners purchased 984,423 additional shares of
     common stock from Chateau at $25.88 per share and Chateau purchased the
     same number of units from the Company with these proceeds.

The total price of  $351 million was allocated as follows:
 
<TABLE>
<S>                                                  <C>
Rental property                                          $ 501.3
Net working capital                                         15.8
Debt assumed                                              (166.1)
                                                         -------
                                                         $ 351.0
                                                         =======
</TABLE>

The following unaudited pro forma income statement information has been prepared
as if the Merger and related transactions had occurred on January 1, 1996.  In
addition, the pro forma information is presented as if the acquisitions of 14
properties made in 1996 by the Company and ROC had occurred on January 1, 1996.
No adjustments were made for the 1997 acquisitions made by the Company.  The pro
forma income statement information is not necessarily indicative of the results
which actually would have occurred if the Merger had been consummated on January
1, 1996.
<TABLE>
<CAPTION>
 
 (In thousands, except per OP Unit data)        1997        1996
                                             ----------   --------
<S>                                          <C>          <C>
 
Revenues                                      $142, 600   $132,800
                                              =========   ========
Total expenses                                $ 117,500   $113,200
                                              =========   ========
Net income                                    $  25,100   $ 19,600
                                              =========   ========
Per OP Unit                                   $     .89   $    .70
                                              =========   ========
</TABLE>

                                       36
<PAGE>
 
                             CP LIMITED PARTNERSHIP

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
                                    _______

4.    Capital Transactions:
      ---------------------

The following table presents the changes in the Company's outstanding common OP
Units for the years ended December 31, 1998, 1997, and 1996.

<TABLE>
<CAPTION>
                                                                      1998          1997          1996
                                                                   -----------   -----------   -----------
<S>                                                                <C>           <C>           <C>
 
Common OP Units outstanding at January 1                           28,250,803    14,497,270    14,886,214
Units repurchased and retired                                         (43,333)   (1,100,100)     (493,334)
Units issued  in exchange for ROC
  common stock outstanding                                                  -    13,109,941             -
Units issued in connection with the dividend                                -       397,198             -
Units issued to certain OP Unitholders for cash                             -       984,423             -
Units issued through stock awards, sales to key
  employees and the exercise of Chateau stock options                 406,689       238,478        15,000
Units issued in connection with acquisitions                        2,845,729       123,593        89,390
                                                                   ----------    ----------    ----------
Common OP Units outstanding at December 31                         31,459,888    28,250,803    14,497,270
                                                                   ==========    ==========    ==========
</TABLE>

The Company paid a distribution of $.455 per OP Unit on April 14, 1998, July 15,
1998, October 15, 1998 and January 15, 1999 to OP Unitholders of record as of
March 31, 1998, June 30, 1998, September 30, 1998 and December 28, 1998,
respectively.  The distribution paid on January 15, 1999 was included in
distributions payable in the accompanying consolidated balance sheet as of
December 31, 1998.

In February 1998, the Company received a net cash contribution from Chateau from
the proceeds of approximately $53.7 million from the issuance of 1,850,000
shares of Chateau's common stock.  The contribution from the proceeds were used
to finance acquisitions made in March 1998 and to reduce outstanding balances
under the Company's line of credit, which was used to finance acquisitions made
in January.

Included in partners' capital is $73,002,000, which represents 1.5 million
8.125% Series A Cumulative Redeemable Preferred Units ("Preferred Units").  The
Preferred Units are exchangeable on or after April 20, 2008 for authorized but
unissued shares of 8.125% Series A Cumulative Redeemable Preferred Stock of
Chateau.

                                       37
<PAGE>
 
                             CP LIMITED PARTNERSHIP

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
                                    _______

Basic and diluted earnings per OP Unit are summarized in the table below:

<TABLE> 
<CAPTION> 
(In thousands, except per OP Unit data)                             For the Year Ended December 31,
                                                    1998                         1997                        1996
                                                ------------                 -------------                -----------
Basic Earnings per OP Unit:
<S>                                             <C>                          <C>                          <C>
    Net income attributable to common
         OP Unitholders                              $30,237                       $24,688                    $16,100
                                             ===============              ================             ==============
 
    Weighted average OP Units - Basic                 30,779                        26,947                     14,837
                                             ===============              ================             ==============
 
    Per OP Unit                                      $   .98                       $   .92                    $  1.09
                                             ===============              ================             ==============
</TABLE>
                                                                               
<TABLE>
<CAPTION>
Diluted Earnings per OP Unit:
<S>                                             <C>                          <C>                          <C>
    Net income attributable to common
      OP Unitholders                                 $30,237                       $24,688                    $16,100
                                             ===============              ================             ==============
 
    Weighted average OP Units outstanding             30,779                        26,947                     14,837
    Chateau employee stock options                       275                           245                        120
                                             ---------------              ----------------             --------------   
 
    Weighted average OP Units - Diluted               31,054                        27,192                     14,957
                                             ===============              ================             ==============
 
    Per OP Unit                                      $   .97                       $   .91                    $  1.08
                                             ===============              ================             ==============
</TABLE>

                                       38
<PAGE>
 
                             CP LIMITED PARTNERSHIP

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
                                    _______

5.   Acquisitions of Rental Property:
     --------------------------------

(Dollars in thousands)
<TABLE>
<CAPTION>
                                                                   Amount       Fair Market
                                                                 Allocated       Value of
  Acquisition            # of                                    to Assets       OP Units        Debt
     Date             Communities     # of Sites      State       Acquired        Issued        Assumed      Cash(1)
----------------      -----------     ----------      -----      ----------      --------     -----------   ---------
 
<S>                  <C>             <C>             <C>       <C>              <C>           <C>           <C>
January 1998                     2          961        SC             $15,900       $ 9,620          -       $ 6,280
 
January 1998                    10        1,093(2)     FL             $38,700       $18,307    $19,335(4)    $ 1,058
                                 4          276        CT
 
March 1998                       5          839        IN             $37,600             -          -       $37,600
                                 1          682        MI
 
April 1998                      10        2,587        MI             $78,100             -    $12,401       $65,699
                                 2          607        NC
-------------------------------------------------------------------------------------------------------------------- 
 
November 1997                    4          641        MA             $20,000       $   500                  $19,500
 
-------------------------------------------------------------------------------------------------------------------- 
March 1996                       1          160        MI             $ 3,400                                $ 3,400
 
May 1996                         2          276        IL             $ 5,800       $ 1,000                  $ 4,800
 
September 1996 (3)               6                   Various          $10,300                                $10,300
</TABLE>
                                        
(1) The cash used to finance the Company's acquisitions was provided by
    borrowings on the line of credit, the contribution of 1.85 million common
    shares from Chateau in February 1998 and the issuance of $75 million of
    Preferred Units (see Note 4).
(2) Does not include park model/RV sites.
(3) Represents a 50 percent interest in a joint venture with ROC. After the
    Merger in February 1997, the Company owns 100 percent of these properties.
(4) Includes $12 million for a capital lease obligation.

The following unaudited pro forma income statement information has been prepared
as if the significant acquisitions made in 1998 had occurred on January 1, 1997.
No pro forma adjustments were made for the 1997 acquisitions as the effects on
reported results were not material.  The pro forma income statement information
is not necessarily indicative of the results which actually would have occurred
if these acquisitions had been consummated on January 1, 1997.

<TABLE>
<CAPTION>
(in thousands, except per unit data)                       1998              1997
                                                     ----------------   ---------------
 
<S>                                                  <C>                <C>
Revenues                                                     $176,154          $150,055
                                                             ========          ========
Total expenses                                               $141,125          $124,982
                                                             ========          ========
Net income                                                   $ 29,872          $ 21,441
                                                             ========          ========
Per OP Unit                                                  $    .93          $    .75
                                                             ========          ========
</TABLE>

                                       39
<PAGE>
 
                             CP LIMITED PARTNERSHIP

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
                                    _______

6.     Investments in and Advances to Affiliates:
       ------------------------------------------

Investments in and advances to affiliates as of December 31, consisted primarily
of the following:

<TABLE>
<CAPTION>
                                                                               1998              1997
                                                                          ---------------   ---------------
<S>                                                                       <C>               <C>
Community Sales, Inc. ("CSI")                                                $19,600           $12,950
Development and other joint ventures                                          34,743            12,712
N'Tandem Trust ("N'Tandem")                                                   11,130                 -
                                                                             -------           -------
                                                                             $65,473           $25,662
                                                                             =======           =======
</TABLE>

CSI
---

Advances to CSI are primarily used to finance inventory purchases.  The Company
accounts for its investment in CSI using the equity method of accounting.

Development Joint Ventures
--------------------------

The Company is currently involved in seven joint ventures to construct ground-up
"greenfield communities". In the majority of the arrangements, the Company acts
as the developer or co-developer, performs all accounting and property
management functions and, in many of the arrangements, the Company acts as a
lender to finance the development costs.  As such, the Company advances amounts
to the joint ventures to fund construction and recognizes the related interest
income as earned.  The Company primarily borrows on its line of credit to fund
the advances and, accordingly, includes the related borrowing costs in interest
expense.  In the majority of the arrangements, the Company has the option to
purchase the completed community when it reaches a pre-determined occupancy
rate.  The Company is also involved in two joint ventures in which the
communities are being constructed by its joint venture partner.  The Company has
similar arrangements to lend these joint ventures funds to finance development.

N'Tandem
--------

In September 1997, the Company completed the acquisition of The Windsor
Corporation ("Windsor"), the general partner in five partnerships and advisor to
one REIT, N'Tandem Trust ("N'Tandem", previously known as Windsor Real Estate
Investment Trust 8).  These six entities owned 30 manufactured home communities
(containing 6,300 homesites), all of which have been managed by the Company or
ROC on a fee basis since 1993.

In March 1998, the Company entered into an investment agreement ("Agreement")
with N'Tandem.  Pursuant to the Agreement, the Company purchased 19,139 common
shares of N'Tandem and issued two notes; one secured and one unsecured, for an
aggregate of $5,001,000 due March 1999 for the acquisition by N'Tandem of one
community in Montgomery, Alabama.  On November 30, 1998, N'Tandem borrowed
$5,650,000 from the Company for the acquisition of three communities in
Lexington Park, Maryland.  The notes bear interest at the prime rate of interest
plus one percent per annum and are due November 1999.  The Company owns
approximately 17 percent of N'Tandem's outstanding common stock and accounts for
its investment on an equity basis, recognizing income from an advisory agreement
and interest income on the notes as earned.  As of December 31, 1998, N'Tandem
owned 6 communities with 1,307 homesites and an interest in 3 communities with
419 homesites.

                                       40
<PAGE>
 
                             CP LIMITED PARTNERSHIP

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
                                    _______

7.     Financing:
       ---------

The following table sets forth certain information regarding debt at December
31:

<TABLE>
<CAPTION>
                                      Weighted                                       Principal Balance
                                       Average            Maturity                   -----------------            
                                    Interest Rate           Date                 1998                 1997
                                    -------------           ----                 ----                 ----      
<S>                                <C>                <C>                 <C>                  <C>
                                                                                      (in thousands)
 
Fixed rate mortgages                     7.89%           1999-2011             $129,448             $113,969
Unsecured Senior Notes                   7.50%           2000-2004              245,000              245,000
Unsecured lines of credit                6.39%           1999-2001               36,735               25,000
Capital lease obligation                                                         11,836                    -
Other notes payable                                                               4,759                3,046
                                                                               --------             --------
                                                                               $427,778             $387,015
                                                                               ========             ========
 
</TABLE>

At December 31, 1998, the Company had a $100 million line of credit arrangement
with Bank One, NA acting as lead agent for a bank group to provide financing for
future construction, acquisitions and general business obligations.  The line of
credit arrangement is unsecured, bears interest at the prime rate of interest
or, at the Company's option, LIBOR plus 80 basis points.  The line matures in
2001.  In addition, the Company has a $7.5 million unsecured line of credit from
US Bank which bears interest at a rate of LIBOR plus 125 basis points.  As of
December 31, 1998, approximately $36.7 million was outstanding under the
Company's lines of credit and the Company had available $70.8 million in
additional borrowing capacity. 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.

During 1998, the Company assumed $19.4 million in fixed rate mortgages related
to 6 properties, in connection with the acquisitions of the properties, with a
weighted average interest rate of 7.54 percent.

In connection with the acquisitions made in 1998, the Company acquired nine
communities, containing 900 homesites and 1,100 park model/RV sites, subject to
long-term capital leases.  The leases were convertible, at the lessor's option,
into common OP Units.  That option was exercised in January 1999.

On December 23, 1997, the Company issued 6.92% MandatOry Par Put Remarketed
Securities/SM /("MOPPRS/SM/") due December 10, 2014.  The net proceeds to the
Company from the issuance before deducting offering expenses, was approximately
$102 million.  The additional $2 million, included in prepaid expenses and other
assets in the accompanying balance sheets, represents a payment made by a
remarketing dealer for the right to remarket the securities in 2004.  The
remarketing fee is being amortized over the life of the related debt.

                                       41
<PAGE>
 
                             CP LIMITED PARTNERSHIP

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
                                    _______

7.     Financing Continued:
       ------------------- 

In connection with the issuance of the MOPPRS/SM/, the Company and Chateau
entered into a remarketing agreement, dated as of December 23, 1997 (the
"Remarketing Agreement"), with the remarketing dealer named therein (the
"Remarketing Dealer"), pursuant to which the MOPPRS/SM/ are subject to mandatory
tender in favor of the Remarketing Dealer on December 10, 2004 (the "Remarketing
Date"), for a purchase price equal to 100% of the principal amount of the
outstanding MOPPRS/SM/.  Upon the Remarketing Dealer's election to remarket the
MOPPRS/SM/, the interest rate to the December 10, 2014 maturity date of the
MOPPRS/SM/ will be adjusted to equal the sum of 5.75% plus the Applicable Spread
(as defined in the Remarketing Agreement).  In the event the Remarketing Dealer
does not elect to remarket the MOPPRS/SM/, the MOPPRS/SM/ will mature on the
Remarketing Date.

The aggregate amount of principal maturities on the fixed rate mortgages and
Senior Notes payable subsequent to December 31, 1998 (in thousands) is as
follows:
<TABLE>
<CAPTION>
 
Years Ending
 December 31,
----------------
<S>                <C>

      1999          $ 21,160
      2000           163,976
      2001               390
      2002               839
      2003            70,394
 Thereafter          117,689
                    --------
                    $374,448
                    ========
</TABLE>

The Company has entered into an interest rate hedge agreement in order to hedge
the interest rate on $75 million of senior notes.

                                       42
<PAGE>
 
                             CP LIMITED PARTNERSHIP

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
                                    _______

8.   Stock Option Plan:
     ----------------- 

The Company measures compensation cost using the intrinsic value method, in
accordance with Accounting Principles Board Opinion No. 25 ("APB 25"),
"Accounting for Stock Issued to Employees."

Chateau's 1997 Equity Compensation Plan and 1993 Long Term Incentive Stock Plan
(collectively, the "Plans") provide for up to 2.2 million shares of common stock
that may be granted to directors, executive officers and other key employees.
The Plans provide for the grant of options, restricted stock awards and stock
appreciation rights. The Plans provide for the grant of options at "fair market
value" which represents the quoted market price of Chateau's common stock on the
date of grant.  The Compensation Committee of the Board of Directors determines
the vesting schedule of each option and the term, which term shall not exceed
ten years from the date of grant.

Information concerning stock options is as follows:
<TABLE>
<CAPTION>
 
                                                       1998                     1997                    1996
                                                   ------------------------------------------------------------
                                                           Weighted-                Weighted-              Weighted-
                                                            Average                  Average                Average
                                                Shares       Price       Shares       Price      Shares      Price
                                              ----------   ---------   ----------   ---------   --------   ---------
<S>                                           <C>          <C>         <C>          <C>         <C>        <C>
Shares subject to option:
Outstanding at beginning of year              1,197,406      $ 21.66     735,300      $ 21.66   454,150      $ 20.08
 
Granted (1)                                     447,500        30.12      60,000        25.62   308,150        23.99
 
Issued in connection with the Merger (2)              -            -     557,334        21.06         -            -
 
Exercised                                      (406,838)       19.30    (155,228)       21.00   (11,250)       21.21
 
Forfeited                                        (1,175)       19.10           -            -   (15,750)       22.11
                                              ---------      -------   ---------      -------   -------      -------
 
Outstanding at end of year                    1,236,893      $24.79*   1,197,406      $21.66*   735,300      $21.66*
                                              =========      =======   =========      =======   =======      =======
 
Options exercisable at year-end                 823,257                1,182,406                176,287
                                              =========                =========                =======
 
Options available for grant at year-end         363,675                  810,000                238,900
                                              =========                =========                =======
 
Weighted average remaining
  contractual life (in years)                       7.7                      7.3                    8.2
                                              =========                  =======                =======
</TABLE>

(1)  The options granted do not include the grant of 80,000 shares of restricted
     stock in 1997 to executive officers of Chateau.

(2)  These represent options issued in exchange for existing ROC options at the
     time of the Merger and the adjustments for a 6.8 percent stock dividend
     paid on Chateau's common stock, also in connection with the Merger.

*    Ranging in price from $18.18-$29.94 and $19.50 - $24.25 at December 31,
     1997 and 1996, respectively. See table below for information as of December
     31, 1998.

The following table summarizes information concerning outstanding and
exercisable options at December 31, 1998.

<TABLE>
<CAPTION>
                                Options Outstanding                         Options Exercisable
                 --------------------------------------------------   --------------------------------
                                        Average         Weighted                         Weighted
      Range of           Number        Remaining        Average         Number            Average
   Exercise Price      Outstanding   Contract Life   Exercise Price   Exercisable     Exercise Price
--------------------   -----------   -------------   --------------   -----------   -------------------
<S>                    <C>           <C>             <C>              <C>           <C>

  $  18.25-$27.11          774,393     6.8 years             $21.68       774,393                $21.68
      $  30.01             462,500     9.2 years             $30.01        48,864                $29.23
</TABLE>

                                       43
<PAGE>
 
                             CP LIMITED PARNTERSHIP

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
                                    _______

8.   Stock Option Plan Continued:
     --------------------------- 

The fair value of each option was estimated as of date of grant using an option-
pricing model with the following assumptions used:

<TABLE>
<CAPTION>
                                                              1998               1997                1996
                                                              ----               ----                ----        
 
<S>                                                  <C>                   <C>                 <C>
Estimated fair value per option granted                      $3.56               $3.58               $3.39
                                              
Assumptions:                                  
        Annualized dividend yield                             6.25%                6.1%                6.7%
        Common stock price volatility                         22.6%               20.0%               20.0%
        Risk-free rate of return                              5.63%               6.35%               6.56%
        Expected option term (in years)                         10                  10                  10
</TABLE>

If compensation cost for stock option grants had been recognized based on the
fair value at the grant dates for 1998, 1997 and 1996 consistent with the
method allowed by SFAS No. 123 "Accounting for Stock-Based Compensation", net
income and net income per OP Unit would have been:

<TABLE>
<CAPTION>
                                                             1998                      1997                    1996
                                                             ----                      ----                    ----           
 
Net income attributable to common OP
<S>                                               <C>                          <C>                     <C>
Unitholders, pro forma                                    $29,885,000             $22,854,000             $15,911,000
Basic earnings per OP Unit, pro forma                     $       .97             $       .85             $      1.07
Diluted earnings per OP Unit, pro forma                   $       .96             $       .84             $      1.06
</TABLE>


9.   Savings Plan:
     ------------ 

The Company has a qualified retirement plan designed to qualify under Section
401 of the Internal Revenue Code (the "Plan").  The Plan allows employees of the
Company and its subsidiaries to defer a portion of their eligible compensation
on a pre-tax basis subject to certain maximum amounts.  Contributions by the
Company are discretionary and determined by the Company's management. Company
contributions are allocated to each participant based on the relative
compensation of the participant to the compensation of all participants.  The
Company contributed approximately $550,000, $421,000 and $300,000 to the Plan
for the years ended December 31, 1998, 1997 and 1996, respectively.

                                       44
<PAGE>
 
                             CP LIMITED PARTNERSHIP

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
                                    _______

10.   Related Party Transactions:
      -------------------------- 

Rental expense of approximately $100,000 annually has been incurred for leasing
space in an office building owned by certain officers and equity owners. The
office lease expires November 2001.

The Company, through CSI, purchases manufactured home inventory for resale from
Clayton Homes, Inc., which is affiliated with one of Chateau's directors. During
1998 and 1997, CSI purchased approximately 22 homes for a cost of approximately
$540,000 and 94 homes for a cost of approximately $2.2 million, respectively,
from Clayton Homes, Inc.  In certain instances, the Company finances the
purchase of these homes with Vanderbilt Mortgage and Finance, Inc.
("Vanderbilt"), which is also affiliated with the same director. As of December
31, 1998 and 1997, the Company had a payable to Vanderbilt for $122,000 and
$656,000, respectively.

In addition, when CSI sells homes, the purchaser often obtains financing from
Vanderbilt.  In certain cases, Vanderbilt has recourse to the Company if these
loans are not repaid for homes sold through June 1998.  As of December 31, 1998
there is a total of approximately $16.5 million of such amounts that are
recourse to the Company.

Included in management, interest and other income is $581,800 and $28,500 of
management and other fee income received from N'Tandem for the years ended
December 31, 1998 and 1997, respectively.

As of December 31, 1998 the Company had a receivable of $3.3 million from a
partnership with which several officers of the Company are affiliated. The
partnership owns a manufactured home community that the Company has the option
to purchase. The receivable is collateralized by the property and was approved
by Chateau's directors who have no interest in the partnership.

 Contingencies:
 ------------- 

Several claims and legal actions arising from the normal course of business have
been asserted against the Company, and are pending final resolution.  In the
opinion of management, none of these matters will have a material adverse affect
upon the results of operations, financial condition or cash flows of the
Company.

The Company, through its joint venture arrangements, has guaranteed
approximately $20 million of debt.

                                       45
<PAGE>
 
                             CP LIMITED PARTNERSHIP

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
                                    _______

12.   Quarterly Financial Information (Unaudited):
      --------------------------------------------

The following is quarterly financial information for the years ended December
31, 1998 and 1997 (amounts in thousands, except per unit data.)

<TABLE>
<CAPTION>
                                                 First      Second         Third           Fourth
                                                Quarter     Quarter       Quarter          Quarter
                                               March 31,   June 30,    September 30,    December 31,
                                               ---------   ---------   --------------   -------------
<S>                                            <C>         <C>         <C>              <C>
  1998
Total revenues                                   $40,205    $43,749          $44,065         $45,111
                                                 =======    =======          =======         =======
Operating income (a)                             $24,024    $26,895          $26,659         $27,853
                                                 =======    =======          =======         =======
Net income                                       $ 7,369    $ 9,036          $ 8,412         $ 9,669
 
Distributions to Preferred OP Unitholders              -     (1,202)          (1,523)         (1,524)
                                                 -------    -------          -------         -------
          Net income attributable to
                common OP Units                  $ 7,369    $ 7,834          $ 6,889         $ 8,145
                                                 =======    =======          =======         =======
 
Weighted average OP Units outstanding             29,486     30,995           31,169          31,441
                                                 =======    =======          =======         =======
 
Net income per OP Unit - basic (b)               $   .25    $   .25          $   .22         $   .26
                                                 =======    =======          =======         =======
Net income per OP Unit - diluted (b)             $   .25    $   .25          $   .22         $   .26
                                                 =======    =======          =======         =======
 
    1997
Total revenues                                   $29,376    $35,600          $36,560         $36,633
                                                 =======    =======          =======         =======
Operating income (a)                             $17,693    $21,264          $21,395         $21,764
                                                 =======    =======          =======         =======
 
          Net income                             $ 5,588    $ 6,123          $ 5,670         $ 7,307
                                                 =======    =======          =======         =======
 
Weighted average OP Units outstanding             23,480     28,009           28,064          28,242
                                                 =======    =======          =======         =======
 
Net income per OP Unit - basic (b)               $   .24    $   .22          $   .20         $   .25
                                                 =======    =======          =======         =======
Net income per OP Unit - diluted (b)             $   .24    $   .22          $   .20         $   .25
                                                 =======    =======          =======         =======
</TABLE>

(a) Operating income represents total revenues less property operating and
    maintenance expense, real estate taxes and administrative expense.
    Operating income is a measure of the performance of the properties before
    the effects of depreciation and interest and related amortization costs.

(b) Quarterly earnings per OP Unit amounts may not total to the full year
    amounts due to rounding and to the change in the number of OP Units
    outstanding. 

                                       46
<PAGE>
 
Item 9.  Changes in and Disagreements with Accountants on Accounting and
-------  ---------------------------------------------------------------
Financial Disclosures
---------------------

None

                                       47
<PAGE>
 
                                    PART III


Item 10.  Directors and Executive Officers of the Registrant
--------  --------------------------------------------------

Not Applicable

Item 11.  Executive Compensation
--------  ----------------------

Not Applicable

Item 12.  Security Ownership of Certain Beneficial Owners and Management
--------  --------------------------------------------------------------

Not Applicable

Item 13.  Certain Relationships and Related Transactions
--------  ----------------------------------------------

Not Applicable

                                       48
<PAGE>
 
                                    PART IV


Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K
--------  ----------------------------------------------------------------

(a) 1. Financial Statements

       Report of Independent Accountants

       Consolidated Statements of Income for the years ended December 31, 1998,
       1997 and 1996

       Consolidated Balance Sheets as of December 31, 1998 and 1997

       Consolidated Statements of Partners' Capital for
       the years ended December 31, 1998, 1997 and 1996

       Consolidated Statements of Cash Flows for the years ended December 31,
       1998, 1997 and 1996

       Notes to Consolidated Financial Statements

    2. Financial Statement Schedule
       ----------------------------

       III - Real Estate and Accumulated Depreciation

    3. Exhibits

Exhibit Number
(Referenced to Item 601 of
Regulation S-K)
                    Exhibit Description
                    -------------------

4.1                 (a) Form of Stock Certificate
4.2(i)              (d)Indenture dated as of December 19, 1997 between CP
                    Limited Partnership and The First National Bank of Chicago,
                    as supplemented
4.2(ii)             (d)First Supplemental Indenture dated as of December 19,
                    1997 between CP Limited Partnership and The First National
                    Bank of Chicago related to the $100,000,000 MadatOry Par Put
                    Remarketed Securities/SM/ ("MOPPRS/SM/") due December 10,
                    2014.
4.2(iii)            (d) Remarketing Agreement dated as of December 23, 1997
                    among Chateau Communities, Inc., CP Limited Partnership and
                    the "Remarketing Dealer" named therein.
4.3*                (i) $75,000,000 8 3/4% Indenture, dated March 2, 1995, of CP
                    Limited Partnership.
4.4*                (e) Note Purchase Agreement dated as of November 4, 1996,
                    between Pacific Mutual and ROC Communities, Inc. for
                    $70,000,000 in Senior Notes due November 4, 2003

                                       49
<PAGE>
 
<TABLE>
<CAPTION>
 
<C>               <S>
4.5*                (e) Deed to secure Debt and Security Agreement from ROCF, Inc. to Pacific Mutual, dated as of August 25, 1993
10.1                (f) Amended and Restated Agreement of Limited Partnership of CP Limited Partnership dated January 22, 1997.
10.2                (a) Lease of 19500 Hall Road
10.3                (a) Form of Noncompetition Agreement (Boll and Allen)
10.4(i)             (c) Employment Agreement (McDaniel)
10.4(ii)            (c) Employment Agreement (Kellogg)
10.4(iii)           (c) Employment Agreement (Fischer)
10.4(iv)            (c) Employment Agreement (Davis)
10.5                (f)1997 Equity Compensation Plan
10.6                (a) Long-Term Incentive Stock Plan
10.7                (g) Amended and Restated Agreement of Limited Partnership of
                    CP Limited Partnership dated April 20, 1998.
10.8                (h) Articles supplementary dated April 20, 1998
21                  (b)List of Subsidiaries of Chateau Communities, Inc.
23                  Consent of PricewaterhouseCoopers LLP
27                  Financial Data Schedule
</TABLE> 

* Other instruments defining long-term debt not exceeding 10 percent of total
  assets have been omitted in reliance on Item 601(b)(4)(iii)(A) of Regulation
  S-K but will be filed upon the request of the Commission.
(a)  Incorporated by reference to the Exhibits filed with Chateau's Registration
     Statement on Form S-11 filed with the Securities and Exchange Commission on
     November 10, 1993 (Commission File No. 33-69150).

(b)  Incorporated by reference to the exhibits filed with the Company's Annual
     Report on Form 10-K for the year ended December 31, 1995 filed with the
     commission on March 29, 1996 (Commission File No. 1-12496).

(c)  Incorporated by reference to Chateau's Quarterly Report on Form 10-Q filed
     with the Commission on May 14, 1997.

(d)  Incorporated by reference to Chateau's Form 8-K filed with the Commission
     on December 9, 1997.

(e)  Incorporated by reference to Chateau's Form S-4 filed with the Commission
     on September 24, 1996.

(f)  Incorporated by reference to Chateau's Annual Report on Form 10-K for the
     year ended December 31, 1997

(g)  Incorporated by reference to the Company's Form 8-K filed with the
     Commission on May 1, 1998.

(h)  Incorporated by reference to Chateau's Form 8-K filed with the Commission
     on May 1, 1998.

(i)  Incorporated by reference to the Exhibits filed with the Company's Annual
     Report on Form 10-K for the year ended December 31, 1994 filed with the
     Commission on March 30, 1995 (Commission File No. 1-12496).

b.   Reports on Form 8-K
     -------------------

     No reports on Form 8-K were filed in the fourth quarter of the year ended
     December 31, 1998.
     

                                       50
<PAGE>
 
                                    Exhibit
                                     Index


Exhibit Number
(Referenced to Item 601 of
Regulation S-K)


4.1               (a) Form of Stock Certificate
4.2(i)            (d)Indenture dated as of December 19, 1997 between CP
                  Limited Partnership and The First National Bank of Chicago, as
                  supplemented
4.2(ii)           (d)First Supplemental Indenture dated as of December 19,
                  1997 between CP Limited Partnership and The First National
                  Bank of Chicago related to the $100,000,000 MadatOry Par Put
                  Remarketed Securities/SM/ ("MOPPRS/SM/") due December 10,
                  2014.
4.2(iii)          (d) Remarketing Agreement dated as of December 23, 1997
                  among Chateau Communities, Inc., CP Limited Partnership and
                  the "Remarketing Dealer" named therein.
4.3*              (i)$75,000,000 8 3/4% Indenture, dated March 2, 1995, of CP
                  Limited Partnership.
4.4*              (e)Note Purchase Agreement dated as of November 4, 1996,
                  between Pacific Mutual and ROC Communities, Inc. for
                  $70,000,000 in Senior Notes due November 4, 2003
4.5*              (e)Deed to secure Debt and Security Agreement from ROCF, Inc.
                  to Pacific Mutual, dated as of August 25, 1993
10.1              (f) Amended and Restated Agreement of Limited Partnership of
                  CP Limited Partnership dated January 22, 1997.
10.2              (a) Lease of 19500 Hall Road
10.3              (a) Form of Noncompetition Agreement (Boll and Allen)
10.4(i)           (c) Employment Agreement (McDaniel)
10.4(ii)          (c) Employment Agreement (Kellogg)
10.4(iii)         (c) Employment Agreement (Fischer)
10.4(iv)          (c) Employment Agreement (Davis)
10.5              (f)1997 Equity Compensation Plan
10.6              (b) Long-Term Incentive Stock Plan
10.7              (g) Amended and Restated Agreement of Limited Partnership of
                  CP Limited Partnership dated April 20, 1998.
10.8              (h) Articles supplementary dated April 20, 1998
21                (b)List of Subsidiaries of Chateau Communities, Inc.
23                Consent of PricewaterhouseCoopers LLP
27                Financial Data Schedule

                                       51
<PAGE>
 
                                    Exhibit
                                     Index


*    Other instruments defining long-term debt not exceeding 10 percent of total
     assets have been omitted in reliance on Item 601(b)(4)(iii)(A) of
     Regulation S-K but will be filed upon the request of the Commission.
(a)  Incorporated by reference to the Exhibits filed with the Chateau's
     Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1995
     filed with the Commission on August 10, 1995 (Commission File No. 1-12496).

(b)  Incorporated by reference to the exhibits filed with the Company's Annual
     Report in Form 10-K for the year ended December 31, 1995 filed with the
     commission on March 29, 1996 (Commission File No. 1-12496).

(c)  Incorporated by reference to Chateau's Quarterly Report on Form 10-Q filed
     with the Commission on May 14, 1997.

     Incorporated by reference to Chateau's Form 8-K filed with the Commission
     on December 9, 1997.

     Incorporated by reference to Chateau's Form S-4 filed with the Commission
     on September 24, 1996.

     Incorporated by reference to the Company's Annual Report on Form 10-K for
     the year ended December 31, 1997

     Incorporated by reference to the Company's Form 8-K filed with the
     Commission on May 1, 1998.

     Incorporated by reference to Chateau's Form 8-K filed with the Commission
     on May 1, 1998.

     Incorporated by reference to the Exhibits filed with the Company's Annual
     Report on Form 10-K for the year ended December 31, 1994 filed with the
     Commission on March 30, 1995 (Commission File No. 1-12496).


b.   Reports on Form 8-K
     -------------------

     No reports on Form 8-K were filed in the fourth quarter of the year ended
     December 31, 1998.

                                       52
<PAGE>
 
                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, and in the capacities
indicated, on the 24/th/ day of March, 1999.

                                  CP LIMITED PARTNERSHIP
                                  BY:  CHATEAU COMMUNITIES, INC.

                                  By:/s/ Gary P. McDaniel
                                  ------------------------------------
                                  Gary P. McDaniel
                                  Director and Chief Executive Officer
                                  (Principal Executive Officer)

                                  By:/s/ Tamara D. Fischer
                                  ------------------------------------
                                  Tamara D. Fischer
                                  Executive Vice President and Chief Financial
                                  Officer
                                  (Principal Financial and Accounting Officer)

Pursuant to the requirements of the Securities and Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated on March 24, 1999.

              Signature                           Title
              ---------                           -----

/s/ John Boll                            Chairman of the Board of Directors
----------------------------
John A. Boll


/s/C.G. Kellogg                          Director and President
----------------------------
C.G. Kellogg


/s/Gary P. McDaniel                      Director and Chief Executive Officer
----------------------------
Gary P. McDaniel


/s/Edward R. Allen                       Director
----------------------------
Edward R. Allen


/s/Gebran S. Anton, Jr.                  Director
----------------------------
Gebran S. Anton, Jr.

                                       53
<PAGE>
 
/s/James L. Clayton                      Director
----------------------------
James L. Clayton


/s/Steven G. Davis                       Director
----------------------------
Steven G. Davis


/s/James M. Hankins                      Director
----------------------------
James M. Hankins


/s/Rhonda Hogan                          Director
----------------------------
Rhonda Hogan


/s/James M. Lane                         Director
----------------------------
James M. Lane


/s/Donald E. Miller                      Director
----------------------------
Donald E. Miller

                                       54
<PAGE>
 
                            CP LIMITED PARTNERSHIP

                         FINANCIAL STATEMENT SCHEDULES
                     PURSUANT TO ITEM 14(a)(2) OF FORM 10-K
            ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION

                      for the year ended December 31, 1998

                             CP LIMITED PARTNERSHIP

                          FINANCIAL STATEMENT SCHEDULE


                                                                          Pages
                                                                          -----

III. Real Estate and Accumulated Depreciation.............................. F-2


No other financial statement schedules are required as the amounts are not
significant, or not applicable, or reported in the Company's consolidated
financial statements or notes thereto.

                                      F-1
<PAGE>
 
                            CP LIMITED PARTNERSHIP
            SCHEDULE III, REAL ESTATE AND ACCUMULATED DEPRECIATION
                     For the year ended December 31, 1998
                                (in thousands)
<TABLE> 
<CAPTION> 
                                                                                               Cost Capitalized     
                                                                                           Subsequent to Acquisition
                                                                 Initial Cost to Company       (Improvements)       
                                                                 ----------------------- -------------------------  
                                                                              Building &              
Community                Location               Encumbrance        Land       Fixtures         Land   
------------------------------------------------------------------------------------------------------
<S>                       <C>                            <C>          <C>             <C>        <C>  
Algoma                   Algoma Township, MI              0            60              0         66   
Anchor Bay               Ira Township, MI                 0           432             80      2,877   
Anchor North Bay         Tampa Bay, FL                    0           288          1,422          0   
Arbor Village            Jackson, MI                  1,156           813          4,787          0   
Atlanta Meadows          Atlanta, GA                    554           625            435          0   
Audubon                  Orlando, FL                      0           281            296          2   
Autumn Forest            Greensboro, NC               4,742           918          6,747          0   
Avalon RV Park           Clearwater, FL                   0           263          2,202          0   
Avon                     Rochester Hills, MI              0           621            484        640   
Bermuda Palms            Indio, CA                        0         1,291          2,477          0   
Breazeale                Laramie, WY.                 1,094           251          1,618          0   
Broadmore                South Bend, IN                   0           777          4,115        421   
Buena Vista              Fargo, ND                        0           713          6,248          0   
Butler Creek             Augusta, GA                      0         1,238          2,309          0
Camden Point             Kingsland, GA                    0           466          1,701          0   
Camp Inn RV Park         Frostproof, FL                   0           796          4,220          0   
Canterbury               Grand Rapids, MI                 0           705          3,107          0   
Carnes Crossing          Summerville, SC                  0         1,503          7,161        450   
Castlewood Estates       Mabelton, GA                     0           656          2,918          0   
Casual Estates           Syracuse, NY                 9,208         2,136         14,324          0   
Cedar Grove              Clinton, CT                      0           180          1,140          0   
Cedar Knolls             Minneapolis, MN                  0         1,217         11,006          0   
Central Office           Englewood, CO                    0             0              0         80   
Chesterfield             Chesterfield Township, MI        0           405              0        262   
Chestnut Creek           Davison, MI                      0           274              0        334   
</TABLE>


<TABLE> 
 <CAPTION> 
                                                                             Gross Amount
                                                                          Carried at Close of
                                                                            Period 12/31/98                            Date of
                                                                         ----------------------
                                                 Building &                   Buildings &           Accumulated     Construction (C)

Community                Location                Fixtures         Land        Fixtures       Total  Depreciation    Acquisition (A)
------------------------------------------------------------------------------------------------------------------------------------

<S>                       <C>                   
Algoma                   Algoma Township, MI          2,284         126            2,284      2,410          831    1974(C)
Anchor Bay               Ira Township, MI            15,483       3,309           15,483     18,792        7,087    1968(C)
Anchor North Bay         Tampa Bay, FL                    0         288            1,422      1,710            4    1998(A)
Arbor Village            Jackson, MI                      0         813            4,787      5,600          193    1998(A)
Atlanta Meadows          Atlanta, GA                     19         625              454      1,079           48    08/25/93 (A)
Audubon                  Orlando, FL                  2,920         283            3,216      3,499        1,676    1988(A)
Autumn Forest            Greensboro, NC                   0         918            6,747      7,665          268    1998(A)
Avalon RV Park           Clearwater, FL                   0         263            2,202      2,465           91    1998(A)
Avon                     Rochester Hills, MI          7,019       1,261            7,503      8,764        5,142    1988(A)
Bermuda Palms            Indio, CA                       77       1,291            2,554      3,845          208    08/29/94(A)
Breazeale                Laramie, WY.                    17         251            1,635      1,886          119    08/25/93(A)
Broadmore                South Bend, IN               1,284       1,198            5,399      6,597          185    1998(A)
Buena Vista              Fargo, ND                      258         713            6,506      7,219        1,120    1994(A)
Butler Creek             Augusta, GA                    374       1,218            2,683      3,927          205    08/25/93(A)
Camden Point             Kingsland, GA                   64         466            1,765      2,231          127    08/25/93(A)
Camp Inn RV Park         Frostproof, FL                   0         796            4,220      5,016           19    1998(A)
Canterbury               Grand Rapids, MI                 0         705            3,107      3,812          120    1998(A)
Carnes Crossing          Summerville, SC                 49       1,953            7,210      9,163          295    1998(A)
Castlewood Estates       Mabelton, GA                   132         656            3,050      3,706          251    2/1/97(A)
Casual Estates           Syracuse, NY                   314       2,136           14,638     16,774        1,416    08/25/93(A)
Cedar Grove              Clinton, CT                      0         180            1,148      1,320            4    1998(A)
Cedar Knolls             Minneapolis, MN                200       1,217           11,206     12,423        1,997    1994(A)
Central Office           Englewood, CO               11,513          80           11,513     11,593        1,224
Chesterfield             Chesterfield Township,       2,174         667            2,174      2,841        1,624    1969(C)
Chestnut Creek           Davison, MI                  5,072         608            5,072      5,680          405    1996(A)
</TABLE>

                                      F-2
<PAGE>
 
<TABLE>
<CAPTION>
                            CP LIMITED PARTNERSHIP
            SCHEDULE III, REAL ESTATE AND ACCUMULATED DEPRECIATION
                     for the year ended December 31, 1998
                                (in thousands)
 
 
                                                                                                                    
                                                                                                                    
                                                                         Initial Cost to Company  
                                                                        -------------------------------
                                                                                         Building &                 
Community                       Location                     Encumbrance     Land        Fixtures       
--------------------------------------------------------------------------------------------------------
<S>                       <C>                                <C>                  <C>                   
Cimarron Park                   St. Paul, MN                     0            1,424         12,882      
Clinton                         Clinton Township, MI             0              989              0      
Coach Royale                    Boise, ID                        0              197          1,065      
Colonial                        Kalamazoo, MI                    0              816            195      
Colonial Coach                  Riverdale, GA                    0            1,052          4,277      
Colony Cove                     Ellenton, FL                     0            5,683         28,256      
Columbia Heights                Grand Forks, ND                  0              588          5,282      
Conway Circle                   Orlando, FL                    931              544            864      
Conway Plantation               Conway, SC                       0              428          3,696      
Country Estates                 Spring Lake Township, MI         0               30              0      
Countryside Great Falls         Great Falls, MT                629              361          1,650      
Countryside Village Denver      Denver, CO                       0            1,460          4,384      
Countryside Village Jackson     Jacksonville, FL                 0              962          4,796      
Countryside Village Longmont    Longmont, CO                     0            1,481          4,455      
Cranberry Lake                  White Lake Township, MI          0              432            220      
Crestview                       Stillwater, OK                 689              362            963      
Crystal Lake                    St. Petersburg, FL               0              498          2,475      
Crystal Lakes                   Zephryhills, FL                  0            1,323          2,239      
Del Tura                        Fort Myers, FL              32,120            4,360         50,508      
Eagle Creek                     Tyler, TX                        0            1,291          1,761      
Eagle Point                     Seattle, WA                  2,738            1,048          3,514      
Eastridge                       San Jose, CA                     0            2,476          4,671      
Eldorado                        Daytona Bch, FL                967              408          1,248      
Emerald Lake                    Punta Gorda, FL                  0              399          1,150      


 
                                                                                    
                                                                    Cost Capitalized                 Gross Amount 
                                                                  Subsequent to Acquisition       Carried at close of           
                                                                    (Improvements)                  Period 12/31/98  
                                                                 --------------------------------------------------------
                                                                            Building &               Building &           
Community                       Location                         Land       Fixtures      Land       Fixtures       Total  
-------------------------------------------------------------------------------------------------------------------------  
<S>                             <C>                                <C>           <C>       <C>          <C>          <C> 
Cimarron Park                   St. Paul, MN                         0           191      1,424        13,073      14,497       
Clinton                         Clinton Township, MI               430          5,536      1,419         5,536       6,955      
Coach Royale                    Boise, ID                            0             11        197         1,076       1,273      
Colonial                        Kalamazoo, MI                        4          7,575        820         7,770       8,590      
Colonial Coach                  Riverdale, GA                       26            350      1,078         4,627       5,705      
Colony Cove                     Ellenton, FL                         0            246      5,683        28,502      34,185      
Columbia Heights                Grand Forks, ND                      0            127        588         5,409       5,997      
Conway Circle                   Orlando, FL                          0             12        544           876       1,420      
Conway Plantation               Conway, SC                           0             22        428         3,718       4,146      
Country Estates                 Spring Lake Township, MI             0          1,814         30         1,814       1,844      
Countryside Great Falls         Great Falls, MT                      0            -12        361         1,638       1,999      
Countryside Village Denver      Denver, CO                           0             40      1,460         4,424       5,884      
Countryside Village Jackson     Jacksonville, FL                     0            221        962         5,017       5,979      
Countryside Village Longmont    Longmont, CO                         0            175      1,481         4,630       6,111      
Cranberry Lake                  White Lake Township, MI          1,050          2,833      1,482         3,053       4,535      
Crestview                       Stillwater, OK                       0             48        362         1,011       1,373      
Crystal Lake                    St. Petersburg, FL                   0              0        498         2,475       2,973      
Crystal Lakes                   Zephryhills, FL                      0            154      1,323         2,393       3,716      
Del Tura                        Fort Myers, FL                     418          3,346      4,778        53,854      58,632      
Eagle Creek                     Tyler, TX                          300            387      1,591         2,148       3,739      
Eagle Point                     Seattle, WA                          0             10      1,048         3,524       4,572      
Eastridge                       San Jose, CA                         0             33      2,476         4,704       7,180      
Eldorado                        Daytona Bch, FL                      0             39        408         1,287       1,695      
Emerald Lake                    Punta Gorda, FL                      0            257        399         1,407       1,806      

                                                            
                                                            
                                                               
                                                                                   Date of              
                                                                  Accumulated    Construction (C)
Community                       Location                          Depreciation   Acquisition (A)
-----------------------------------------------------------------------------------------------------------------------------------
<S>                       <C>                                <C>                  <C> 
Cimarron Park                   St. Paul, MN                         2,334      1994(A)
Clinton                         Clinton Township, MI                 4,572      1969(C)
Coach Royale                    Boise, ID                              101      01/01/94(A)
Colonial                        Kalamazoo, MI                        5,156      1985(A)
Colonial Coach                  Riverdale, GA                          375      2/1/97(A)
Colony Cove                     Ellenton, FL                         2,369      08/02/94(A)
Columbia Heights                Grand Forks, ND                        938      1994(A)
Conway Circle                   Orlando, FL                             72      08/25/93(A)
Conway Plantation               Conway, SC                             317      2/1/97(A)
Country Estates                 Spring Lake Township, MI             1,278      1974(C)
Countryside Great Falls         Great Falls, MT                        142      08/25/93(A)
Countryside Village Denver      Denver, CO                             375      08/25/93(A)
Countryside Village Jackson     Jacksonville, FL                       425      08/25/93(A)
Countryside Village Longmont    Longmont, CO                           385      08/25/93(A)
Cranberry Lake                  White Lake Township, MI              1,778      1986(A)
Crestview                       Stillwater, OK                          77      08/25/93(A)
Crystal Lake                    St. Petersburg, FL                       7      1998(A)
Crystal Lakes                   Zephryhills, FL                        210      2/1/1998(A)
Del Tura                        Fort Myers, FL                       9,296      1994(A)
Eagle Creek                     Tyler, TX                              172      2/1/97(A)
Eagle Point                     Seattle, WA                            298      08/25/93(A)
Eastridge                       San Jose, CA                           391      08/29/94(A)
Eldorado                        Daytona Bch, FL                        104      08/25/93(A)
Emerald Lake                    Punta Gorda, FL                        668      1988(A)
</TABLE>

                                      F-3
<PAGE>
 
                            CP LIMITED PARTNERSHIP
            SCHEDULE III, REAL ESTATE AND ACCUMULATED DEPRECIATION
                     for the year ended December 31, 1998
                                (in thousands)



<TABLE> 
<CAPTION> 
 
                                                                                                        Cost Capitalized         
                                                                                                    Subsequent to Acquisition    
                                                                         Initial Cost to Company            (Improvements)       
                                                                      --------------------------   ----------------------------- 
                                                                                      Building &             Building &          
Community                    Location                   Encumbrance      Land         Fixtures     Land      Fixtures            
------------------------------------------------------------------------------------------------------------------------         
<S>                          <C>                        <C>                  <C>        <C>         <C>        <C>               
Evergreen                    New Haven, CT                      0        309           1,883          0          0               
Fairways Country Club        Orlando, FL                        0        955           5,823          9      1,660               
Falcon Farms                 Moline, IL                       801        295           1,576          0        207               
Ferrand Estates              Wyoming, MI                        0        257           1,579          0        236               
Forest Creek                 South Bend, IN                     0        501           4,849          0          0               
Forest Lake Estates          Spring Lake Township, MI           0        414           2,293         18        674               
FountainVue                  Marion, IN                         0        360           1,210         90         12               
Foxhall Village              Raleigh, NC                        0        521           5,283          0        414               
Foxwood Farms                Ocala, FL                          0        691           1,502          0        311               
Friendly Village             Greely, CO                         0        523           2,702         -5         83               
Gold Tree                    Bradenton, FL                      0      1,285           3,850          0        191               
Golden Valley                Douglasville, TX                   0        254             800          0        162               
Grand Blanc                  Grand Blanc, MI                    0      1,749               0        284      8,104               
Green Acres                  New Haven, CT                      0        195           1,286          0          0               
Hickory Knoll                Indianapolis, IN               3,029        356           2,669          0         29               
Hidden Valley                Orlando, FL                        0        492           5,714          0         76               
Highland                     New Haven, CT                      0        153           1,140          0          0               
Highlands (the)              Flint, MI                      7,000      2,323          13,260      1,160      2,042               
Hillcrest                    Rockland, MA                       0        236           1,285          0          0               
Holiday Estates              Byron Township, MI                 0         93               0          0      1,703               
Homestead Ranch              McAllen, TX                      250        195           1,108          0        170               
Howell                       Howell, MI                         0        345               0        151      2,714               
Hunters Chase                Lima, OH                           0        921           1,246          0        163               
Huron Estates                Flint, MI                          0        354           1,882          0          0               
</TABLE>


<TABLE> 
<CAPTION> 
 
                                                                     Gross Amount
                                                                      Close of
                                                                   Period 12/31/98             
                                                                  ---------------------------                       Date of 
                                                                       Building &               Accumulated     Construction (C)
Community                    Location                       Land       Fixtures      Total      Depreciation     Acquisition (A)
-----------------------------------------------------------------  ---------------  ---------  ------------------------------------
<S>                          <C>                            <C>              <C>        <C>            <C>         <C>
Evergreen                    New Haven, CT                    309            1,883       2,192              6      1998(A)
Fairways Country Club        Orlando, FL                      964            7,483       8,447          5,114      1979(A)(C)
Falcon Farms                 Moline, IL                       295            1,783       2,078            142      08/25/93(A)
Ferrand Estates              Wyoming, MI                      257            1,815       2,072          1,479      1989(A)
Forest Creek                 South Bend, IN                   501            4,849       5,350            180      1998(A)
Forest Lake Estates          Spring Lake Township, MI         432            2,967       3,399            552      1994(A)
FountainVue                  Marion, IN                       450            1,222       1,672             47      1998(A)
Foxhall Village              Raleigh, NC                      521            5,697       6,218            486      2/1/97(A)
Foxwood Farms                Ocala, FL                        691            1,813       2,504            135      07/26/94(A)
Friendly Village             Greely, CO                       518            2,785       3,303            235      01/18/94(A)
Gold Tree                    Bradenton, FL                  1,285            4,041       5,326            299      11/23/93(A)
Golden Valley                Douglasville, TX                 254              962       1,216             80      2/1/97(A)
Grand Blanc                  Grand Blanc, MI                2,033            8,104      10,137          2,151      1990(C)
Green Acres                  New Haven, CT                    195            1,286       1,481             53      1998(A)
Hickory Knoll                Indianapolis, IN                 356            2,698       3,054            236      08/25/93(A)
Hidden Valley                Orlando, FL                      492            5,790       6,282            691      1995(A)
Highland                     New Haven, CT                    153            1,140       1,293             47      1998(A)
Highlands (the)              Flint, MI                      3,483           15,302      18,785            574      1998(A)
Hillcrest                    Rockland, MA                     236            1,285       1,521             67      11/5/97(A)
Holiday Estates              Byron Township, MI                93            1,703       1,796          1,198      1984(C)
Homestead Ranch              McAllen, TX                      195            1,278       1,473            114      2/1/97(A)
Howell                       Howell, MI                       496            2,714       3,210          2,246      1972(C)
Hunters Chase                Lima, OH                         921            1,409       2,330            116      2/1/97(A)
Huron Estates                Flint, MI                        354            1,882       2,236             73      1998(A)
</TABLE>

                                      F-4
<PAGE>
 
                            CP LIMITED PARTNERSHIP
            SCHEDULE III, REAL ESTATE AND ACCUMULATED DEPRECIATION
                     for the year ended December 31, 1998
                                (in thousands)
 
 
<TABLE> 
<CAPTION> 
                                                                                                           Cost Capitalized     
                                                                                                       Subsequent to Acquisition
                                                                            Initial Cost to Company         (Improvements)      
                                                                           -------------------------  --------------------------
                                                                                          Building &              Building &    
Community                      Location                   Encumbrance         Land        Fixtures      Land      Fixtures      
-------------------------------------------------------------------------------------  ----------------------  -------------  
<S>                            <C>                        <C>              <C>           <C>            <C>      <C> 
                                                                                                                                
Indian Rocks                   Clearwater, FL                       0             441         1,032         0            0     
Jade Isle                      Orlando, FL                        863             273         1,076         0           15     
Knoll Terrace                  Salem, OR                        1,986           1,379         2,050         0           77     
La Quinta Ridge                Indio, CA                            0           1,014         1,873         0          332     
Lake in the Hills              Auburn Hills, MI                     0             952         6,389         0           27     
Lakeland Harbor                Lakeland, FL                         0             875             0         0        3,306     
Lakeland Junction              Lakeland, FL                         0             471           972         0          116     
Lakes at Leesburg              Leesburg, FL                         0           1,178             0        39        3,451     
Lakewood                       Davenport, LA                      892             442         1,210         0          270     
Land O'Lakes                   Orlando, FL                      1,416             473         2,507         0           28     
Landmark Village               Fairburn, GA                         0           2,539         4,352         0          138     
Leisure Woods 0 Rockland       Rockland, MA                         0             831        14,326         0           48     
Leisure Woods 0 Tauton         Tauton, MA                           0             256         2,780       174          -68     
Leisure World                  Weslaco, TX                          0             228         1,639         0           36     
Leonard Gardens                Walker, MI                           0              94             0       245        4,263     
Macomb                         Macomb Township, MI             15,574           1,459             0     1,182       14,206     
Maintenance                    Clinton, Township, MI                0               0             0         0            0     
Maple Grove                    Boise, ID                        1,139             702         2,384         0           34     
Maple Ridge                    Manteno, IL                          0             126             0         0        1,455     
Maple Valley                   Manteno, IL                          0             338             0         0        3,901     
Mariwood                       Indianapolis, IN                 2,138             324         2,415         0           99     
Marnelle                       Fayetteville, GA                 1,105             464         2,635         0          376     
Meadow Park                    Fargo, ND                            0             133         1,183         0           47     
Meadowbrook                    Ithaca, NY                       1,849             291         4,029         0           47     
</TABLE>
<TABLE> 
<CAPTION> 
                                                                    Gross Amount
                                                                 Carried at Close of
                                                                   Period 12/31/98                                 
                                                          ---------------------------------                      Date of 
                                                                     Building &                Accumulated    Construction (C)
Community                      Location                   Land       Fixtures      Total       Depreciation   Acquisition (A)
------------------------------------------------------------------  ------------  ---------  ---------------------------------
<S>                            <C>                        <C>       <C>           <C>        <C>              <C> 
Indian Rocks                   Clearwater, FL               441         1,032       1,473              4      1998(A)
Jade Isle                      Orlando, FL                  273         1,091       1,364             88      08/25/93(A)
Knoll Terrace                  Salem, OR                  1,379         2,127       3,506            175      08/25/93(A)
La Quinta Ridge                Indio, CA                  1,014         2,205       3,219            159      08/29/94(A)
Lake in the Hills              Auburn Hills, MI             952         6,416       7,368          1,442      1994(A)
Lakeland Harbor                Lakeland, FL                 875         3,306       4,181          2,286      1983(C)
Lakeland Junction              Lakeland, FL                 471         1,088       1,559            816      1981(C)
Lakes at Leesburg              Leesburg, FL               1,217         3,451       4,668          2,070      1984(C)
Lakewood                       Davenport, LA                442         1,480       1,922            124      08/25/93(A)
Land O'Lakes                   Orlando, FL                  473         2,535       3,008            212      08/25/93(A)
Landmark Village               Fairburn, GA               2,539         4,490       7,029            388      07/15/94(A)
Leisure Woods 0 Rockland       Rockland, MA                 831        14,374      15,205            389      11/5/97(A)
Leisure Woods 0 Tauton         Tauton, MA                   430         2,712       3,142             75      11/5/97(A)
Leisure World                  Weslaco, TX                  228         1,675       1,903            140      05/06/94(A)
Leonard Gardens                Walker, MI                   339         4,263       4,602          1,266      1987(C)
Macomb                         Macomb Township, MI        2,641        14,206      16,847          8,296      1973(C)
Maintenance                    Clinton, Township, MI          0             0           0                     2/1/97(A)
Maple Grove                    Boise, ID                    702         2,418       3,120            201      08/25/93(A)
Maple Ridge                    Manteno, IL                  126         1,455       1,581            182      2/1/97(A)
Maple Valley                   Manteno, IL                  338         3,901       4,239            481      2/1/97(A)
Mariwood                       Indianapolis, IN             324         2,514       2,838            212      08/25/93(A)
Marnelle                       Fayetteville, GA             464         3,011       3,475            265      2/1/97(A)
Meadow Park                    Fargo, ND                    133         1,230       1,363            212      1994(A)
Meadowbrook                    Ithaca, NY                   291         4,076       4,367            287      08/25/93(A)
</TABLE>

                                      F-5
<PAGE>
 
                            CP LIMITED PARTNERSHIP
            SCHEDULE III, REAL ESTATE AND ACCUMULATED DEPRECIATION
                     for the year ended December 31, 1998
                                (in thousands)
 
<TABLE> 
<CAPTION>  
                                                                                                     Cost Capitalized         
                                                                                                Subsequent to Acquisition     
                                                                  Initial Cost to Company             (Improvements)          
                                                                 ---------------------------    -------------------------     
                                                                                  Building &                 Building &           
Community                 Location                  Encumbrance      Land         Fixtures       Land         Fixtures     
-------------------------------------------------------------------------------------------------------------------------  
                                                                                                                              
<S>                       <C>                      <C>               <C>          <C>            <C>         <C>           
Midway Estates            Vero Bch., FL                  1,841         1,313          2,095          2            66    
Mobiland                  Melbourne, FL                  1,941         1,247          2,238          0            25    
Mosby's Point             Florence, KY                   1,201           608          1,574          0            27    
Norton Shores             Norton Shores, MI              3,327           103              0        118         4,748    
Novi                      Novi, MI                           0           896              0        393         4,921    
Oak Grove                 Albany, GA                       416           418            764          0            22    
Oak Hill                  Groveland Township, MI             0           115          2,165          0         4,027    
Oak Orchard               Albion, NY                         0           701          3,425          0            30    
Oak Ridge                 South Bend, IN                     0           615          3,770          0             0    
Oak Springs               Sorrento, FL                       0           206          1,461          2           380    
Oakwood Forest            Greensboro, NC                     0         1,111          3,843          0           205    
Old Orchard               Davison, MI                        0           210            182          0         2,645    
One Hundred Oaks          Fultondale, AL                     0           345          1,839          0             4    
Orange Lake               Clermont, FL                       0           246             85          1         2,051    
Orion                     Orion Township, MI                 0           422            198          0         4,608    
Palm Beach Colony         West Palm Beach, FL                0           691          1,962          0           164    
Paradise Village          Albany, GA                       492           340            918          0            14    
Pedaler's Pond            Lake Wales, FL                     0           350            285          0         2,345    
Pendleton                 Indianapolis, IN                 634           122            964          0            12    
Pine Lakes Ranch          Thornton, CO                       0         2,463         10,099         34           609    
Pinecrest Village         Shreveport, LA                     0            93            719          0           486    
Pinellas Cascades         Clearwater, FL                 2,169         1,747          2,313          0            14    
Pinewood                  Columbus, MI                       0         1,242         10,070          0                  
Pleasant Ridge            Lansing, MI                        0           915          3,898          0             6    
</TABLE>

<TABLE> 
<CAPTION>  
                                                              Gross Amount
                                                           Carried at Close of
                                                             Period 12/31/98                                
                                                    ---------------------------------                      Date of 
                                                               Building &               Accumulated     Construction (C)
Community                 Location                   Land       Fixtures      Total     Depreciation    Acquisition (A)
-------------------------------------------------   -------   -------------  --------  ----------------------------------
<S>                       <C>                         <C>      <C>           <C>         <C>            <C>

Midway Estates            Vero Bch., FL               1,315      2,161         3,476         178         08/25/93(A)
Mobiland                  Melbourne, FL               1,247      2,263         3,510         192         08/25/93(A)
Mosby's Point             Florence, KY                  608      1,601         2,209         134         08/25/83(A)
Norton Shores             Norton Shores, MI             221      4,748         4,969       2,782         1978(C)
Novi                      Novi, MI                    1,289      4,921         6,210       4,615         1973(C)
Oak Grove                 Albany, GA                    418        786         1,204          63         08/25/93(A)
Oak Hill                  Groveland Township, MI        115      6,192         6,307       3,244         1983(A)
Oak Orchard               Albion, NY                    701      3,455         4,156         304         2/1/97(A)
Oak Ridge                 South Bend, IN                615      3,770         4,385         144         1998(A)
Oak Springs               Sorrento, FL                  208      1,841         2,049       1,339         1981(A)
Oakwood Forest            Greensboro, NC              1,111      4,048         5,159         339         08/25/93(A)
Old Orchard               Davison, MI                   210      2,827         3,037       1,475         1988(A)
One Hundred Oaks          Fultondale, AL                345      1,843         2,188         124         2/1/97(A)
Orange Lake               Clermont, FL                  247      2,136         2,383        1005         1988(A)
Orion                     Orion Township, MI            422      4,806         5,228       2,913         1986(A)
Palm Beach Colony         West Palm Beach, FL           691      2,126         2,817         729         1983(A)
Paradise Village          Albany, GA                    340        932         1,272          80         08/25/93(A)
Pedaler's Pond            Lake Wales, FL                350      2,630         2,980       1,182         1990(A)
Pendleton                 Indianapolis, IN              122        976         1,098          80         08/25/93(A)
Pine Lakes Ranch          Thornton, CO                2,497     10,708        13,205         890         2/1/97(A)
Pinecrest Village         Shreveport, LA                 93      1,205         1,298          92         2/1/97(A)
Pinellas Cascades         Clearwater, FL              1,747      2,327         4,074         189         08/25/93(A)
Pinewood                  Columbus, MI                1,242     10,070        11,312         389         1998(A)
Pleasant Ridge            Lansing, MI                   915      3,904         4,819         160         1998(A)
</TABLE>

                                      F-6
<PAGE>
 
                            CP LIMITED PARTNERSHIP
            SCHEDULE III, REAL ESTATE AND ACCUMULATED DEPRECIATION
                     for the year ended December 31, 1998
                                (in thousands)
 
<TABLE> 
<CAPTION> 
                                                                                                     Cost Capitalized             
                                                                                                 Subsequent to Acquisition        
                                                                    Initial Cost to Company            (Improvements)             
                                                                 -----------------------------------------------------------------
                                                                                  Building &                 Building &           
Community               Location                     Encumbrance      Land        Fixtures        Land       Fixtures        Land 
----------------------------------------------------------------------------------------------------------------------------------
<S>                     <C>                         <C>          <C>              <C>            <C>        <C>             <C>   
Presidents Park         Grand Forks, ND                                  258          1,283           0              70        258
Redwood Estates         Thornton,CO                         0          2,473         10,044           0              95      2,473
Regency Lakes           Winchester, VA                      0          1,176          3,705           0           1,233      1,176
Riverview               Portland, OR                    1,429            537          1,942           0              49        537
Rolling Hills           Louisville, KY                    736            342          1,034           0              25        342
Rosemount Woods         Minneapolis/St. Paul, MN            0            475          4,297           0              61        475
Royal Estates           Kalamazoo, MI                       0          1,015          2,475           0              34      1,015
Saddlebrook             Charleston, SC                      0          1,284          5,497           0               0      1,284
Science City            Midland, MI                     1,496            870          1,760           0              67        870
Shady Lane              Clearwater, FL                      0            324          1,574           0               0        324
Shady Oaks              Clearwater, FL                      0            750          6,967           0               0        750
Shady Village           Clearwater, FL                      0            468          3,179           0               0        468
Shenandoah              Boise, ID                           0            443          2,528           0             153        443
Sherwood                Marion, IN                          0            264          1,175         240               0        504
Skyway                  Indianapolis, IN                1,207            178          1,366           0              38        178
Southwind               Naples, FL                      2,619          1,476          3,463           0             112      1,476
Spring Brook            Utica, MI                       4,774          1,209         10,928           0               0      1,209
Springfield Farms       Brookline, MO                       0          1,698          2,157           0           1,729      1,698
Starlight Ranch         Orlando, FL                         0          5,597          8,859           0              79      5,597
Stonegate, LA           Shreveport, LA                    455            160            642           0              95        160
Sun Valley              Jackson, MI                         0            606          2,514           0               0        606
Swan Creek              Ann Arbor, MI                       0            882          9,709           0               0        882
Tarpon Glen             Clearwater, FL                      0            510          2,893           0               0        510
Terrace Heights         Dubuque, IA                     1,686            919          2,413           0              30        919
</TABLE>

<TABLE> 
<CAPTION> 
                                                         Gross Amount
                                                      Carried at Close of
                                                        Period 12/31/98                                 
                                                    --------------------------                          Date of 
                                                          Building &                Accumulated     Construction (C)
Community               Location                          Fixtures      Total       Depreciation    Acquisition (A)
------------------------------------------------------------------------------    ----------------------------------
<S>                     <C>                         <C>                 <C>       <C>              <C> 
Presidents Park         Grand Forks, ND                      1,353       1,611            113      01/01/94(A)
Redwood Estates         Thornton,CO                         10,139      12,612            880      2/1/97(A)
Regency Lakes           Winchester, VA                       4,938       6,114            371      2/1/97(A)
Riverview               Portland, OR                         1,991       2,528            165      08/25/93(A)
Rolling Hills           Louisville, KY                       1,059       1,401             90      08/25/93(A)
Rosemount Woods         Minneapolis/St. Paul, MN             4,358       4,833            758      1994(A)
Royal Estates           Kalamazoo, MI                        2,509       3,524            217      08/25/93(A)
Saddlebrook             Charleston, SC                       5,497       6,781            227      1998(A)
Science City            Midland, MI                          1,827       2,697            153      08/25/93(A)
Shady Lane              Clearwater, FL                       1,574       1,898             65      1998(A)
Shady Oaks              Clearwater, FL                       6,967       7,717            276      1998(A)
Shady Village           Clearwater, FL                       3,179       3,647              8      1998(A)
Shenandoah              Boise, ID                            2,681       3,124            207      05/06/94(A)
Sherwood                Marion, IN                           1,175       1,679             40      1998(A)
Skyway                  Indianapolis, IN                     1,404       1,582            116      08/25/93(A)
Southwind               Naples, FL                           3,575       5,051            291      08/25/93(A)
Spring Brook            Utica, MI                           10,928      12,137            432      1998(A)
Springfield Farms       Brookline, MO                        3,886       5,584            215      2/1/97(A)
Starlight Ranch         Orlando, FL                          8,938      14,535            754      2/1/97(A)
Stonegate, LA           Shreveport, LA                         737         897             49      08/25/93(A)
Sun Valley              Jackson, MI                          2,514       3,120            104      1998(A)
Swan Creek              Ann Arbor, MI                        9,709      10,591            380      1998(A)
Tarpon Glen             Clearwater, FL                       2,893       3,403              8      1998(A)
Terrace Heights         Dubuque, IA                          2,443       3,362            206      08/25/93(A)
</TABLE>

                                      F-7
<PAGE>
 
                            CP LIMITED PARTNERSHIP
            SCHEDULE III, REAL ESTATE AND ACCUMULATED DEPRECIATION
                     for the year ended December 31, 1998
                                (in thousands)
 
<TABLE> 
<CAPTION>  
                                                                                                  Cost Capitalized            
                                                                                             Subsequent to Acquisition        
                                                                 Initial Cost to Company           (Improvements)             
                                                           -------------------------------------------------------------------
                                                                                 Building &             Building &            
Community                     Location             Encumbrance      Land         Fixtures     Land      Fixtures      Land    
------------------------------------------------------------------------------------------------------------------------------
<S>                  <C>              <C>          <C>          <C>       <C>          <C>           <C>          <C>         
The Colony                    Rancho Mirage, CA               0        2,259        4,745           0           63     2,259  
The Glen                      Rockland, MA                    0          261          252           0          266       261  
The Homestead                 McAllen, TX                   628          100          742           0          216       100  
The Orchard                   Santa Rosa, CA                  0        2,795        6,363           0           10     2,795  
Torrey Hills                  Flint, MI                       0          346          205          50        4,307       396  
Town & Country, FL            Orlando, FL                   458          245          896           0           13       245  
Trails End                    Weslaco, TX                     0          260        1,804           0           60       260  
Twenty Nine Pines             St. Paul, MN                    0          317        2,871           0           16       317  
Twin Pines                    Goshen, IN                  1,078          197        1,934           0           77       197  
Valley Vista                  Grand Rapids, MI            1,593          411        2,791           0            0       411  
Vance                         Columbus, OH                  670          200          993           0           31       200  
Villa                         Flint, MI                       0          135          332          -7        2,744       128  
Westbrook                     Detroit, MI                     0          190        2,451         531        2,120       721  
Whispering Pines              Clearwater, FL              4,165        4,208        4,071           0           84     4,208  
Willo Arms                    Cleveland, OH               1,563          473        2,146           0           32       473  
Winter Haven Oaks             Winter Haven, FL                0          490          705         362        1,319       852  
Winter Paradise RV            Hudson, FL                      0          300        1,593           0            0       300  
Woodlake                      Montgomery, AL                  0          924        6,311           0            0       924  
Yankee Springs                Grand Rapids, MI                0          948        5,360           0            0       948  
Yorktowne                     Sharonville, OH                 0        2,130        6,311           0          167     2,130  
Difference between allocated purchase price                                                                                   
   and historical cost of properties acquired in the                                                                          
   ROC Acquisition                                                                                959      179,080       959  
                                                       129,448       132,203      535,287      13,392      345,627   145,595  
</TABLE>

<TABLE> 
<CAPTION>  
                                                     Gross Amount
                                                       Close of
                                                    Period 12/31/98                                
                                                   ------------------------                      Date of 
                                                      Building &               Accumulated     Construction (C)
Community                     Location                Fixtures      Total      Depreciation    Acquisition (A)
---------------------------------------------------------------------------   ---------------------------------
<S>                           <C>                     <C>          <C>            <C>          <C>
The Colony                    Rancho Mirage, CA        4,808          7,067          382      09/02/94(A)
The Glen                      Rockland, MA               518            779           16      11/5/97(A)
The Homestead                 McAllen, TX                958          1,058           75      2/1/97(A)
The Orchard                   Santa Rosa, CA           6,373          9,168          475      08/29/94(A)
Torrey Hills                  Flint, MI                4,512          4,908        2,594      1987(A)
Town & Country, FL            Orlando, FL                909          1,154           72      08/25/93(A)
Trails End                    Weslaco, TX              1,864          2,124          146      05/06/94(A)
Twenty Nine Pines             St. Paul, MN             2,887          3,204          517      1994(A)
Twin Pines                    Goshen, IN               2,011          2,208          168      08/25/93(A)
Valley Vista                  Grand Rapids, MI         2,791          3,202           88      1998(A)
Vance                         Columbus, OH             1,024          1,224           69      08/25/93(A)
Villa                         Flint, MI                3,076          3,204        2,181      1984(A)
Westbrook                     Detroit, MI              4,571          5,292          265      1978(C)
Whispering Pines              Clearwater, FL           4,155          8,363          262      08/25/93(A)
Willo Arms                    Cleveland, OH            2,178          2,651          187      08/25/93(A)
Winter Haven Oaks             Winter Haven, FL         2,024          2,876        1,000      1988(A)(C)
Winter Paradise RV            Hudson, FL               1,593          1,893            6      1998(A)
Woodlake                      Montgomery, AL           6,311          7,235          253      1998(A)
Yankee Springs                Grand Rapids, MI         5,360          6,308          205      1998(A)
Yorktowne                     Sharonville, OH          6,478          8,608          571      2/1/97(A)
Difference between allocated purchase price        
   and historical cost of properties acquired in the
   ROC Acquisition                                    179,080        180,039       20,371
                                                      880,914      1,026,509      151,260
</TABLE>

                                      F-8
<PAGE>
 
                                  SCHEDULE III
                                   Continued


                             CP LIMITED PARTNERSHIP

              REAL ESTATE AND ACCUMULATED DEPRECIATION, Continued
                                    _______


The changes in total real estate for the years ended December 31, 1998, 1997 and
1996 are as follows:

<TABLE>
<CAPTION>
 
                                                                      1998         1997        1996
                                                                   -----------   ---------   ---------
<S>                                                                <C>           <C>         <C>
                                           
Balance, beginning of year                                         $  836,175    $300,631    $276,423
Acquisitions                                                          172,422     525,625      19,531
Improvements                                                           21,486      13,250       4,731
Dispositions and other                                                 (3,574)     (3,331)        (54)
                                                                   ----------    --------    --------
                                           
Balance, end of year                                               $1,026,509    $836,175    $300,631
                                                                   ==========    ========    ========
 
The change in accumulated depreciation for the years ended December 31, 1998, 1997 and 1996
 are as follows:
 
                                                                      1998        1997        1996
                                                                   ----------    --------    --------
                                           
Balance, beginning of year                                         $  112,314    $ 81,293    $ 69,868
Depreciation for the year                                              39,213      31,103      11,452
Dispositions and other                                                   (267)        (82)        (27)
                                                                   ----------    --------    --------
                                           
Balance, end of year                                               $  151,260    $112,314    $ 81,293
                                                                   ==========    ========    ========
</TABLE>

                                      F-9