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 June 30, 1997
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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 June 30, 1997, 10,000,000 depository units of limited partnership
interest were outstanding.
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AMERICAN INSURED MORTGAGE INVESTORS
INDEX TO FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 1997
PAGE
----
PART I. Financial Information (Unaudited)
Item 1. Financial Statements
Balance Sheets - June 30, 1997 (unaudited)
and December 31, 1996.................... 3
Statements of Operations - for the three and
six months ended June 30, 1997 and 1996
(unaudited).............................. 4
Statement of Changes in Partners' Equity -
for the six months ended June 30,
1997 (unaudited)......................... 5
Statements of Cash Flows - for the six
months ended June 30, 1997 and 1996
(unaudited).............................. 6
Notes to Financial Statements.............. 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
June 30, December 31,
1997 1996
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(Unaudited)
ASSETS
Investment in FHA-Insured Loans,
at amortized cost, net of unamortized
discount:
Acquired Insured Mortgages $ 8,951,224 $ 8,988,210
Originated Insured Mortgages 14,230,460 14,274,528
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23,181,684 23,262,738
Investment in FHA-Insured Certificates,
at fair value 13,763,831 14,105,760
Cash and cash equivalents 822,347 656,051
Receivables and other assets 346,378 360,640
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Total assets $ 38,114,240 $ 38,385,189
============ ============
LIABILITIES AND PARTNERS' EQUITY
Distributions payable $ 720,916 $ 720,916
Accounts payable and accrued expenses 76,687 74,473
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Total liabilities 797,603 795,389
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Partners' equity:
Limited partners' equity 39,754,563 39,737,785
General partner's deficit (4,931,518) (4,932,018)
Unrealized gains on investment
in FHA-Insured Certificates 2,493,592 2,784,033
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Total partners' equity 37,316,637 37,589,800
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Total liabilities and partners'
equity $ 38,114,240 $ 38,385,189
============ ============
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 six months ended
June 30, June 30,
---------------------------- ----------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
Income:
Mortgage investment income $ 829,454 $ 851,160 $ 1,722,483 $ 1,747,454
Interest and other income 10,500 7,575 18,093 16,997
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839,954 858,735 1,740,576 1,764,451
------------ ------------ ------------ ------------
Expenses:
Asset management fee to
related parties 85,773 85,773 171,546 171,546
General and administrative 52,910 54,308 109,920 119,785
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138,683 140,081 281,466 291,331
------------ ------------ ------------ ------------
Earnings before loss on
mortgage modification 701,271 718,654 1,459,110 1,473,120
Loss on mortgage modification -- (146,464) -- (146,464)
------------ ------------ ------------ ------------
Net earnings $ 701,271 $ 572,190 $ 1,459,110 $ 1,326,656
============ ============ ============ ============
Net earnings allocated to:
Limited partners - 97.1% $ 680,934 $ 555,597 $ 1,416,796 $ 1,288,183
General partner - 2.9% 20,337 16,593 42,314 38,473
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$ 701,271 $ 572,190 $ 1,459,110 $ 1,326,656
============ ============ ============ ============
Net earnings per Unit of limited
partnership interest $ 0.07 $ 0.06 $ 0.14 $ 0.13
============ ============ ============ ============
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 six months ended June 30, 1997
(Unaudited)
Unrealized
Gains on
Investment in
General Limited FHA-Insured
Partner Partners Certificates Total
------------ ------------ -------------- -------------
Balance, December 31, 1996 $ (4,932,018) $ 39,737,785 $ 2,784,033 $ 37,589,800
Net earnings 42,314 1,416,796 -- 1,459,110
Distributions paid or accrued of
$0.14 per Unit (41,814) (1,400,018) -- (1,441,832)
Adjustment to unrealized gains
on investment in FHA-Insured
Certificates -- -- (290,441) (290,441)
------------ ------------ ------------- -------------
Balance, June 30, 1997 $ (4,931,518) $ 39,754,563 $ 2,493,592 $ 37,316,637
============ ============ ============= =============
Limited Partnership Units
outstanding - June 30,
1997 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 six months ended
June 30,
1997 1996
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Cash flows from operating activities:
Net earnings $ 1,459,110 $ 1,326,656
Adjustments to reconcile net
earnings to net cash provided by
operating activities:
Loss on modification of insured mortgage -- 146,464
Changes in assets and liabilities:
Decrease in receivables and
other assets 14,262 9,611
Increase (decrease) in accounts
payable and accrued expenses 2,214 (3,958)
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Net cash provided by operating activities 1,475,586 1,478,773
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Cash flows from investing activities:
Receipt of mortgage principal from
scheduled payments 132,542 150,109
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Net cash provided by investing activities 132,542 150,109
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Cash flows from financing activities:
Distributions paid to partners (1,441,832) (1,647,806)
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Net cash used in financing activities (1,441,832) (1,647,806)
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Net increase (decrease) in cash and cash
equivalents 166,296 (18,924)
Cash and cash equivalents, beginning
of period 656,051 673,733
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Cash and cash equivalents, end of
period $ 822,347 $ 654,809
============ ============
The accompanying notes are an integral part
of these financial statements.
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
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).
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, and together with FHA-Insured Certificates
referred to herein as Insured Mortgages). 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 June 30, 1997 and
December 31, 1996, the results of its operations for the three and six months
ended June 30, 1997 and 1996 and its cash flows for the six months ended June
30, 1997 and 1996.
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, these financial
statements should 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, 1996.
New Accounting Standards
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In February 1997, FASB issued SFAS No. 128 "Earnings per Share" ("FAS
128"). FAS 128 changes the requirements for calculation and disclosure of
earnings per share. This statement eliminates the calculation of primary
earnings per share and requires the disclosure of basic earnings per share
and diluted earnings per share. There will be no impact to the earnings
per Unit of limited partnership interest.
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
2. BASIS OF PRESENTATION - Continued
During 1997 FASB issued SFAS No. 129 "Disclosure of Information about
Capital Structure" ("FAS 129"). FAS 129 continues the existing
requirements to disclose the pertinent rights and privileges of all
securities other than ordinary common stock but expands the number of
companies subject to portions of its requirements. The Partnership does
not anticipate an impact to its current disclosures.
During 1997 FASB issued SFAS No. 130 "Reporting Comprehensive Income"
("FAS 130"). FAS 130 states that all items that are required to be
recognized under accounting standards as components of comprehensive income
are to be reported in either the statement of income or another statement
of comprehensive income. This would include net income as currently
reported by the Partnership adjusted for unrealized gains and losses
related to the Partnership's mortgages accounted for as "available for
sale". FAS 130 is effective beginning January 1, 1998.
3. INVESTMENT IN FHA-INSURED LOANS
Listed below is the Partnership's aggregate investment in FHA-Insured Loans
as of June 30, 1997 and December 31, 1996:
June 30, December 31,
1997 1996
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Number of
Acquired Insured Mortgages 4 4
Originated Insured Mortgages 2 2
Amortized Cost $ 23,181,684 $ 23,262,738
Face Value 26,210,541 26,338,828
Fair Value 26,195,338 26,801,846
All of the FHA-Insured Loans are current with respect to payment of
principal and interest as of August 1, 1997, except for the mortgage on
Portervillage I Apartments, which has been delinquent since January 1997. In
May 1997, the servicer of this mortgage filed a Notice of Default and an
Election to Assign the mortgage with HUD. The face value of this mortgage was
approximately $1.2 million at December 31, 1996. The Partnership expects to
receive 99% of this amount plus accrued interest.
In addition to base interest payments from 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 three and six months ended June 30, 1997, the
Partnership received $0 and $61,988, respectively, from the Participations.
During the three and six months ended June 30, 1996, the Partnership received $0
and $12,158, respectively, from the Participations. These amounts are included
in mortgage investment income on the accompanying statements of operations.
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
4. INVESTMENT IN FHA-INSURED CERTIFICATES
Listed below is the Partnership's aggregate investment in FHA-Insured
Certificates as of June 30, 1997 and December 31, 1996:
June 30, December 31,
1997 1996
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Number of mortgages 9 9
Amortized Cost $ 11,270,239 $ 11,321,727
Face Value 13,747,729 13,843,564
Fair Value 13,763,831 14,105,760
All of the FHA-Insured Certificates were current with respect to the
payment of principal and interest as of August 1, 1997.
5. DISTRIBUTIONS TO UNITHOLDERS
The distributions paid or accrued to Unitholders on a per Unit basis for
the six months ended June 30, 1997 and 1996 are as follows:
Quarter Ended 1997 1996
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March 31, $ 0.07 $ 0.08
June 30, 0.07 0.08
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$ 0.14 $ 0.16
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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
payment receipts are temporarily invested prior to the payment of quarterly
distributions, (2) the reduction in the asset base resulting from 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 six months ended June 30, 1997 and 1996, earned or received compensation or
payments for services from the Partnership as follows:
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
6. TRANSACTIONS WITH RELATED PARTIES - Continued
COMPENSATION PAID OR ACCRUED TO RELATED PARTIES
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For the three months For the six months
Capacity in Which ended June 30, ended June 30,
Name of Recipient Served/Item 1997 1996 1997 1996
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CRIIMI, Inc. General Partner/Distribution $ 20,907 $ 23,893 $ 41,814 $ 47,786
AIM Acquisition Advisor/Asset Management Fee 85,773 85,773 171,546 171,546
Partners, L.P.(1)
CRIIMI MAE Management, Affiliate of General Partner/ 13,286 23,860 23,280 32,829
Inc. Expense Reimbursement
<FN>
(1) The Advisor, pursuant to the Partnership Agreement, effective July 12, 1983, is entitled to an Asset Management Fee equal
to 0.95% of Total Invested Assets (as defined in the Partnership Agreement). CRIIMI MAE Services Limited Partnership, the sub-
advisor to the Partnership (the Sub-advisor) is entitled to a fee of 0.28% of Total Invested Assets. Of the amounts paid to the
Advisor, the Sub-advisor earned a fee equal to $25,278 and $50,556 for the three and six months ended June 30, 1997, respectively,
and a fee equal to $25,278 and $50,556 for the three and six months ended June 30, 1996, respectively. The Sub-advisor is an
affiliate of CRIIMI MAE.
</FN>
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PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Introduction
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The Partnership's Management's Discussion and Analysis of Financial
Condition and Results of Operations contains statements that may be considered
forward looking. These statements contain a number of risks and uncertainties
as discussed herein and in the Partnership's reports filed with the Securities
and Exchange Commission that could cause actual results to differ materially.
General
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As of June 30, 1997, the Partnership had invested in 15 Insured Mortgage
Investments, with an aggregate amortized cost of approximately $34.5 million,
face value of approximately $40.0 million and fair value of approximately $40.0
million.
All of the mortgage investments are current with respect to payment of
principal and interest as of August 1, 1997, except for the mortgage on
Portervillage I Apartments, which has been delinquent since January 1997. In
May 1997, the servicer of this mortgage filed a Notice of Default and an
Election to Assign the mortgage with HUD. The face value of this mortgage was
approximately $1.2 million at December 31, 1996. The Partnership expects to
receive 99% of this amount plus accrued interest.
Results of Operations
- ---------------------
Net earnings increased for the three and six months ended June 30, 1997, as
compared to the corresponding periods in 1996, primarily due to the loss
recognized on the modification of the mortgage on Creekside Village in May 1996.
Mortgage investment income decreased slightly for the three and six months
ended June 30, 1997, as compared to the corresponding periods in 1996. The
decrease is due primarily to a reduction in mortgage investment income as a
result of the normal amortization of the mortgages, partially offset by an
increase in cash flow received from Participations.
General and administrative expenses decreased for the three and six months
ended June 30, 1997, as compared to the corresponding periods in 1996. This
decrease was due primarily to decreases in legal and payroll related expenses.
The Partnership did not dispose of any mortgage investments during the
three and six months ended June 30, 1997 and 1996. In May 1996, the mortgage
note on Creekside Village was amended to reduce the mortgage interest rate from
11.50% to 7.75%. In connection with this modification, the Partnership
recognized a loss of $146,464 on the accompanying statements of operations for
the three and six months ended June 30, 1996, primarily representing the
unamortized balance of acquisition and closing costs paid in connection with the
origination of this mortgage.
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 six months ended June 30, 1997
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
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PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
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 payment receipts are temporarily invested prior to the payment of
quarterly distributions, (2) the reduction in the asset base resulting from
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 did not change significantly for
the six months ended June 30, 1997, as compared to the corresponding period in
1996.
Net cash provided by investing activities decreased for the six months
ended June 30, 1997, as compared to the corresponding period in 1996 primarily
due to the modification of the mortgage on Creekside Village, as discussed
above. This decrease was offset by an increase in the receipt of mortgage
principal from scheduled payments.
Net cash used in financing activities decreased for the six months ended
June 30, 1997, as compared to the corresponding period in 1996, primarily due to
the decrease in the 1997 first and second quarters' distributions.
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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 June 30, 1997.
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
By: /s/ Cynthia O. Azzara
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Date Cynthia O. Azzara
Principal Financial
and Accounting Officer