1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended September 30, 1995
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Commission file number 1-11060
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AMERICAN INSURED MORTGAGE INVESTORS
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(Exact name of registrant as specified in charter)
California 13-3180848
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
11200 Rockville Pike, Rockville, Maryland 20852
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(Address of principal executive offices) (Zip Code)
(301) 816-2300
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(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
As of November 13, 1995, 10,000,000 depositary units of limited partnership
interest were outstanding.
2
AMERICAN INSURED MORTGAGE INVESTORS
INDEX TO FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1995
PAGE
----
PART I. Financial Information
Item 1. Financial Statements
Balance Sheets - September 30, 1995 (unaudited)
and December 31, 1994 . . . . . . . . . . . . . 3
Statements of Operations - for the three and
nine months ended September 30, 1995 and
1994 (unaudited) . . . . . . . . . . . . . . . 4
Statement of Changes in Partners' Equity -
for the nine months ended September 30,
1995 (unaudited) . . . . . . . . . . . . . . 5
Statements of Cash Flows - for the nine
months ended September 30, 1995 and 1994
(unaudited) . . . . . . . . . . . . . . . . . 6
Notes to Financial Statements (unaudited) . . . . 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations . . . . . . . . . . . . . . . . 11
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K . . . . . . 13
Signature . . . . . . . . . . . . . . . . . . . . . . . 14
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AMERICAN INSURED MORTGAGE INVESTORS
BALANCE SHEETS
September 30, December 31,
1995 1994
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ASSETS (Unaudited)
Investment in FHA-Insured Loans,
at amortized cost, net of unamortized
discount:
Acquired insured mortgages $ 9,072,527 $ 9,118,002
Originated insured mortgages 14,547,904 14,590,272
------------ ------------
23,620,431 23,708,274
Investment in FHA-Insured Certificates,
at fair value:
Acquired insured mortgages 14,282,825 13,355,026
Cash and cash equivalents 668,208 722,986
Receivables and other assets 376,013 374,647
------------ ------------
Total assets $ 38,947,477 $ 38,160,933
============ ============
LIABILITIES AND PARTNERS' EQUITY
Distributions payable $ 823,903 $ 823,903
Accounts payable and accrued expenses 87,513 96,483
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Total liabilities 911,416 920,386
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Partners' equity:
Limited partners' equity 40,115,529 40,306,817
General partner's deficit (4,920,735) (4,915,023)
Net unrealized gains on investment
in FHA-Insured Certificates 2,841,267 1,848,753
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Total partners' equity 38,036,061 37,240,547
------------ ------------
Total liabilities and partners'
equity $ 38,947,477 $ 38,160,933
============ ============
The accompanying notes are an integral part
of these financial statements.
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AMERICAN INSURED MORTGAGE INVESTORS
STATEMENTS OF OPERATIONS
(Unaudited)
For the three months ended For the nine months ended
September 30, September 30,
---------------------------- ----------------------------
1995 1994 1995 1994
------------ ------------ ------------ ------------
Income:
Mortgage investment income $ 886,843 $ 891,859 $ 2,692,925 $ 2,748,651
Interest and other income 8,259 9,044 28,982 85,233
------------ ------------ ------------ ------------
895,102 900,903 2,721,907 2,833,884
------------ ------------ ------------ ------------
Expenses:
Asset management fee to
related parties 85,773 85,773 257,319 270,107
General and administrative 59,888 82,230 189,879 233,786
------------ ------------ ------------ ------------
145,661 168,003 447,198 503,893
------------ ------------ ------------ ------------
Earnings before mortgage
disposition 749,441 732,900 2,274,709 2,329,991
Gain on mortgage disposition -- -- -- 235,873
------------ ------------ ------------ ------------
Net earnings $ 749,441 $ 732,900 $ 2,274,709 $ 2,565,864
============ ============ ============ ============
Net earnings allocated to:
Limited partners - 97.1% $ 727,707 $ 711,646 $ 2,208,742 $ 2,491,454
General partner - 2.9% 21,734 21,254 65,967 74,410
------------ ------------ ------------ ------------
$ 749,441 $ 732,900 $ 2,274,709 $ 2,565,864
============ ============ ============ ============
Net earnings per Unit of
limited partnership interest $ 0.07 $ 0.07 $ 0.22 $ 0.25
============ ============ ============ ============
The accompanying notes are an integral part
of these financial statements.
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AMERICAN INSURED MORTGAGE INVESTORS
STATEMENT OF CHANGES IN PARTNERS' EQUITY
For the nine months ended September 30, 1995
(Unaudited)
Net
Unrealized
Gains on
Investment in
General Limited FHA-Insured
Partner Partners Certificates Total
------------ ------------ -------------- -------------
Balance, January 1, 1995 $ (4,915,023) $ 40,306,817 $ 1,848,753 $ 37,240,547
Net earnings 65,967 2,208,742 -- 2,274,709
Distributions paid or accrued of
$0.24 per Unit (71,679) (2,400,030) -- (2,471,709)
Adjustment to net unrealized gains
on investment in FHA-Insured
Certificates -- -- 992,514 992,514
------------ ------------- ------------- -------------
Balance, September 30, 1995 $ (4,920,735) $ 40,115,529 $ 2,841,267 $ 38,036,061
============ ============= ============= =============
Limited Partnership Units
outstanding - September 30,
1995 10,000,125
=============
The accompanying notes are an integral part
of these financial statements.
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AMERICAN INSURED MORTGAGE INVESTORS
STATEMENTS OF CASH FLOWS
(Unaudited)
For the nine months ended
September 30,
1995 1994
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Cash flows from operating activities:
Net earnings $ 2,274,709 $ 2,565,864
Adjustments to reconcile net
earnings to net cash provided by
operating activities:
Gain on mortgage disposition -- (235,873)
Changes in assets and liabilities:
(Increase) decrease in receivables
and other assets (1,366) 83,496
(Decrease) increase in accounts
payable and accrued expenses (8,970) 29,339
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Net cash provided by operating
activities 2,264,373 2,442,826
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Cash flows from investing activities:
Proceeds from disposition of insured
mortgage -- 8,177,380
Receipt of mortgage principal from
scheduled payments 152,558 137,884
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Net cash provided by investing
activities 152,558 8,315,264
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Cash flows from financing activities:
Distributions paid to partners (2,471,709) (13,800,378)
------------ ------------
Net decrease in cash and cash
equivalents (54,778) (3,042,288)
Cash and cash equivalents, beginning
of period 722,986 3,778,696
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Cash and cash equivalents, end of
period $ 668,208 $ 736,408
============ ============
The accompanying notes are an integral part
of these financial statements.
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AMERICAN INSURED MORTGAGE INVESTORS
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. ORGANIZATION
American Insured Mortgage Investors (the Partnership) was formed under the
Uniform Limited Partnership Act in the state of California on July 12, 1983. The
Partnership Agreement states that the Partnership will terminate on December 31,
2008, unless previously terminated under the provisions of the Partnership
Agreement.
Effective September 6, 1991, CRIIMI, Inc. (the General Partner) succeeded
the former general partners to become the sole general partner of the
Partnership. CRIIMI, Inc. is a wholly owned subsidiary of CRIIMI MAE Inc.
(CRIIMI MAE), formerly CRI Insured Mortgage Association, Inc.
AIM Acquisition Partners L.P. (the Advisor) serves as the advisor of the
Partnership. The general partner of the Advisor is AIM Acquisition Corporation
and the limited partners include an affiliate of CRIIMI MAE (and through June
30, 1995, an affiliate of CRI, Inc. (CRI)). Effective September 6, 1991 and
through June 30, 1995, a sub-advisory agreement (the Sub-advisory Agreement)
existed whereby CRI/AIM Management, Inc., an affiliate of CRI, managed the
Partnership's portfolio. In connection with the transaction in which CRIIMI MAE
became a self-managed and self-administered real estate investment trust
(REIT)on June 30, 1995, an affiliate of CRIIMI MAE, CRIIMI MAE Services Limited
Partnership, acquired the Sub-advisory Agreement. As a consequence of this
transaction, CRIIMI MAE Services Limited Partnership manages the Partnership's
portfolio. These transactions had no effect on the Partnership's financial
statements.
The Partnership's investment in mortgages consists of participation
certificates evidencing a 100% undivided beneficial interest in government
insured multifamily mortgages issued or sold pursuant to Federal Housing
Administration (FHA) programs (FHA-Insured Certificates) and FHA-insured
mortgage loans (FHA-Insured Loans). The mortgages underlying the FHA-Insured
Certificates and FHA-Insured Loans are non-recourse first liens on multifamily
residential developments.
2. BASIS OF PRESENTATION
In the opinion of the General Partner, the accompanying unaudited financial
statements contain all adjustments of a normal recurring nature necessary to
present fairly the financial position of the Partnership as of September 30,
1995 and December 31, 1994 and the results of its operations for the three and
nine months ended September 30, 1995 and 1994, and its cash flows for the nine
months ended September 30, 1995 and 1994.
These unaudited financial statements have been prepared pursuant to the
rules and regulations of the Securities and Exchange Commission. Certain
information and note disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted. While the General Partner believes that the disclosures
presented are adequate to make the information not misleading, it is suggested
that these financial statements be read in conjunction with the financial
statements and the notes to the financial statements included in the
Partnership's Annual Report filed on Form 10-K for the year ended December 31,
1994.
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AMERICAN INSURED MORTGAGE INVESTORS
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
3. INVESTMENT IN FHA-INSURED LOANS
As of September 30, 1995 and December 31, 1994, the Partnership's
investment in FHA-Insured Loans consisted of four acquired insured mortgages and
two originated insured mortgages. As of September 30, 1995 and December 31,
1994, these investments had an aggregate amortized cost of $23,620,431 and
$23,708,274, respectively, face value of $26,625,718 and $26,776,001,
respectively, and fair value of $27,152,780 and $26,065,185, respectively. All
of the FHA-Insured Loans are current with respect to payment of principal and
interest as of September 30, 1995.
In addition to base interest payments under originated insured mortgages,
the Partnership is entitled to additional interest based on a percentage of the
net cash flow from the underlying development and of the net proceeds from the
refinancing, sale or other disposition of the underlying development (referred
to as Participations). During the nine months ended September 30, 1995 and
1994, the Partnership received $28,524 and $13,010, respectively, from the
Participations. During the three months ended September 30, 1995 and 1994, the
Partnership received no additional interest from the Participations. These
amounts, if any, are included in mortgage investment income on the accompanying
statements of operations.
4. INVESTMENT IN FHA-INSURED CERTIFICATES
As of September 30, 1995 and December 31, 1994, the Partnership's
investment in FHA-Insured Certificates consisted of nine acquired insured
mortgages with an aggregate amortized cost of $11,441,558 and $11,506,273,
respectively, face value of $14,066,297 and $14,190,281, respectively, and fair
value of $14,282,825 and $13,355,026, respectively. All of the FHA-Insured
Certificates are current with respect to payment of principal and interest as of
September 30, 1995.
5. DISTRIBUTIONS TO UNITHOLDERS
The distributions paid or accrued to Unitholders on a per Unit basis for
the nine months ended September 30, 1995 and 1994 are as follows:
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AMERICAN INSURED MORTGAGE INVESTORS
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
5. DISTRIBUTIONS TO UNITHOLDERS - CONTINUED
Quarter Ended 1995 1994
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March 31, $ 0.08 $ 0.89(1)
June 30, 0.08 0.08
September 30, 0.08 0.08
-------- --------
Total $ 0.24 $ 1.05
======== ========
<FN>
(1) This includes a special distribution of $0.81 per Unit comprised of: (i)
$0.80 per Unit return of capital and capital gain from the disposition of
the insured mortgage on Hidden Oaks Apartments and (ii) $0.01 per Unit of
previously accrued but undistributed interest received from the insured
mortgage on Creekside Village.
</FN>
The basis for paying distributions to Unitholders is net proceeds from
mortgage dispositions, if any, and cash flow from operations, which includes
regular interest income and principal from insured mortgages. Although insured
mortgages yield a fixed monthly mortgage payment once purchased, the cash
distributions paid to the Unitholders will vary during each period due to (1)
the fluctuating yields in the short-term money market where the monthly mortgage
payments received are temporarily invested prior to the payment of quarterly
distributions, (2) the reduction in the asset base due to monthly mortgage
payments received or mortgage dispositions, (3) variations in the cash flow
attributable to the delinquency or default of insured mortgages and (4) changes
in the Partnership's operating expenses.
6. TRANSACTIONS WITH RELATED PARTIES
The General Partner and certain affiliated entities have, during the three
and nine months ended September 30, 1995 and 1994, earned or received
compensation or payments for services from the Partnership as follows:
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AMERICAN INSURED MORTGAGE INVESTORS
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
6. TRANSACTIONS WITH RELATED PARTIES - CONTINUED
COMPENSATION PAID OR ACCRUED TO RELATED PARTIES
----------------------------------------------
For the three months For the nine months
Capacity in Which ended September 30, ended September 30,
Name of Recipient Served/Item 1995 1994 1995 1994
- ----------------- ---------------------------- -------- -------- -------- --------
CRIIMI, Inc. General Partner/Distribution $ 23,893 $ 23,893 $ 71,679 $313,598(3)
AIM Acquisition Advisor/Asset Management Fee 85,773 85,773 257,319 270,107
Partners, L.P.(1)
CRI(2) Affiliate of General Partner/
Expense Reimbursement 4,455 20,851 37,365 58,856
CRIIMI MAE Affiliate of General Partner/ 6,449 -- 6,449 --
Management, Inc.(2) Expense Reimbursement
<FN>
(1) Of the amounts paid to the Advisor, the sub-advisor to the Partnership (the Sub-advisor) is entitled to a fee of .28% of
Total Invested Assets. CRI/AIM Management, Inc., which through June 30, 1995 acted as the Sub-advisor, earned a fee equal to $0 and
$25,278, for the three months ended September 30, 1995 and 1994, respectively. CRI/AIM Management, Inc. earned a fee equal to
$50,556 and $79,602, for the nine months ended September 30, 1995 and 1994, respectively. As discussed in Note 1 above, effective
June 30, 1995, CRIIMI MAE Services Limited Partnership now serves as the Sub-advisor. Of the amounts paid to the Advisor, CRIIMI
MAE Services Limited Partnership earned a fee equal to $25,278 and $0, for the three months ended September 30, 1995 and 1994,
respectively. CRIIMI MAE Services Limited Partnership earned a fee equal to $25,278 and $0, for the nine months ended September 30,
1995 and 1994, respectively.
(2) Prior to CRIIMI MAE becoming a self-administered REIT, amounts were paid to CRI as reimbursement for expenses incurred
prior to June 30, 1995 on behalf of the General Partner and the Partnership. As discussed in Note 1, the transaction in which
CRIIMI MAE became a self-managed and self-administered REIT has no impact on the payments required to be made by the Partnership,
other than that the expense reimbursement previously paid by the Partnership to CRI in connection with the provision of services by
the Sub-advisor are, effective June 30, 1995, paid to a wholly-owned subsidiary of CRIIMI MAE, CRIIMI MAE Management, Inc. The
amounts paid to CRI during the three months ended September 30, 1995 represent reimbursement of expenses incurred prior to June 30,
1995.
(3) This amount includes a special distribution as described above in Note 5.
</FN>
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PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
General
- -------
As of September 30, 1995, the Partnership had invested in 15 insured
mortgage investments, as discussed further below, with an aggregate amortized
cost of approximately $35 million, face value of approximately $41 million and
fair value of approximately $41 million.
All of the mortgage investments are current with respect to payment of
principal and interest as of September 30, 1995.
Results of Operations
- ---------------------
Net earnings decreased for the nine months ended September 30, 1995 as
compared to the corresponding period in 1994 primarily due to the gain
recognized in February 1994 on the disposition of the mortgage on Hidden Oaks
Apartments. Also contributing to this decrease in net earnings was the decrease
in mortgage investment income as a result of this mortgage disposition. Net
earnings did not change significantly for the three months ended September 30,
1995 as compared to the corresponding period in 1994.
Interest and other income decreased for the nine months ended September 30,
1995 as compared to the corresponding period in 1994 primarily due to the short-
term investment of the disposition proceeds received during February 1994 prior
to the distribution to Unitholders in May 1994. Interest and other income did
not change significantly for the three months ended September 30, 1995 as
compared to the corresponding period in 1994.
Asset management fees decreased for the nine months ended September 30,
1995 as compared to the corresponding period in 1994 as a result of the
reduction in the mortgage base, as discussed above. Asset management fees did
not change for the three months ended September 30, 1995 as compared to the
corresponding period in 1994.
General and administrative expenses decreased for the three and nine months
ended September 30, 1995, as compared to the corresponding periods in 1994.
These decreases were due primarily to decreases in investor services expenses
and annual and quarterly reporting expenses resulting primarily from a reduction
in the number of Unitholders.
Gain on mortgage disposition decreased for the nine months ended September
30, 1995 as compared to the corresponding period in 1994. Gains and losses on
mortgage dispositions are based on the number, carrying amounts and proceeds of
mortgage investments disposed of during the period. During the nine months
ended September 30, 1994, the mortgage on Hidden Oaks Apartments was prepaid,
resulting in a gain of $235,873. The Partnership did not dispose of any
mortgage investments during the nine months ended September 30, 1995.
Liquidity and Capital Resources
- -------------------------------
The Partnership's operating cash receipts, derived from payments of
principal and interest on insured mortgages, plus cash receipts from interest on
short-term investments, were sufficient for the nine months ended September 30,
1995 to meet operating requirements.
The basis for paying distributions to Unitholders is net proceeds from
insured mortgage dispositions, if any, and cash flow from operations, which
includes regular interest income and principal from insured mortgages. Although
insured mortgages yield a fixed monthly mortgage payment once purchased, the
cash distributions paid to the Unitholders will vary during each period due to
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PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(1) the fluctuating yields in the short-term money market where the monthly
mortgage payments received are temporarily invested prior to the payment of
quarterly distributions, (2) the reduction in the asset base due to monthly
mortgage payments received or mortgage dispositions, (3) variations in the cash
flow attributable to the delinquency or default of insured mortgages and (4)
changes in the Partnership's operating expenses.
Net cash provided by operating activities decreased for the nine months
ended September 30, 1995 as compared to the corresponding period in 1994
primarily due to a decrease in mortgage investment income and interest and other
income, as discussed above. A decrease in receivables and other assets in 1994
as a result of the prepayment,and the related accrued but unpaid interest, of
the mortgage on Hidden Oaks Apartments during the first quarter of 1994, also
contributed to decrease net cash from operating activities in 1995.
Net cash provided by investing activities decreased for the nine months
ended September 30, 1995 as compared to the corresponding period in 1994
primarily due to the receipt in February 1994 of net proceeds of approximately
$8.2 million from the prepayment of the insured mortgage on Hidden Oaks
Apartments.
Net cash used in financing activities decreased for the nine months ended
September 30, 1995 as compared to the corresponding period in 1994 primarily due
to the special distributions paid to Unitholders during the first and second
quarters of 1994 of net proceeds from the prepayment of the mortgage on Hidden
Oaks Apartments and of net proceeds received in 1993 from the sale of the
defaulted mortgages on Chapelgate Apartments and Cumberland Village. This
compares to the distribution to Unitholders during the first three quarters of
1995 of regular cash flow from the fourth quarter of 1994 and the first two
quarters of 1995.
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PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
No reports on Form 8-K were filed with the Securities and Exchange
Commission during the quarter ended September 30, 1995.
The exhibits filed as part of this report are listed below:
Exhibit No. Description
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27 Financial Data Schedule
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMERICAN INSURED MORTGAGE
INVESTORS (Registrant)
By: CRIIMI, Inc.
General Partner
November 13, 1995 By: /s/ Cynthia O. Azzara
- ----------------- ------------------------
Date Cynthia O. Azzara
Principal Financial
and Accounting Officer