FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
X Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended June 30, 2000 or
Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
Commission File Number: 1-13991
AMERICA FIRST MORTGAGE INVESTMENTS, INC.
(Exact name of registrant as specified in its charter)
Maryland 13-3974868
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
399 Park Avenue, 36th Floor, New York, New York 10022
(Address of principal executive offices) (Zip Code)
(212) 935-8760
(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 (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES X NO
The number of shares of the Registrant's common stock outstanding on August 7,
2000, was 8,870,446.
<PAGE> -i-
Part I. Financial Information
Item 1. Financial Statements
AMERICA FIRST MORTGAGE INVESTMENTS, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, 2000
(Unaudited) Dec. 31, 1999
--------------- ---------------
<S> <C> <C>
Assets
Investment in mortgage securities (Note 3) $ 486,096,972 $ 475,719,711
Investment in corporate debt securities (Note 4) 12,830,082 8,020,026
Investment in corporate equity securities (Note 5) 9,743,117 3,130,823
Cash and cash equivalents
Unrestricted 16,205,439 19,895,833
Restricted 927,695 3,709,577
Accrued interest and dividends receivable 3,466,226 2,855,321
Other investments (Note 6) 3,261,482 3,220,346
Goodwill, net 7,488,097 7,587,948
Other assets 645,738 244,888
--------------- ---------------
$ 540,664,848 $ 524,384,473
=============== ===============
Liabilities
Repurchase agreements (Note 7) $ 472,415,829 $ 452,101,803
Accrued interest payable 1,410,995 2,778,842
Accounts payable 418,021 595,805
Dividends payable 1,296,952 1,293,410
--------------- ---------------
475,541,797 456,769,860
--------------- ---------------
Stockholders' Equity
Stockholders' Equity
Common stock, $.01 par value; 10,000,000 shares authorized
8,873,946 and 8,978,642 issued and outstanding in 2000 and 1999, respectively 88,739 89,786
Additional paid-in capital 75,314,151 75,831,560
Retained earnings (2,554,186) (2,877,971)
Accumulated other comprehensive income (7,725,653) (5,428,762)
--------------- ---------------
65,123,051 67,614,613
--------------- ---------------
$ 540,664,848 $ 524,384,473
=============== ===============
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
<PAGE> - 1 -
AMERICA FIRST MORTGAGE INVESTMENTS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
For the Three For the Three For the Six For the Six
Months Ended Months Ended Months Ended Months Ended
June 30, 2000 June 30, 1999 June 30, 2000 June 30, 1999
----------------- --------------- -------------- -------------
<S> <C> <C> <C> <C>
Mortgage securities income $ 8,434,999 $ 6,023,386 $ 16,612,151 $ 10,588,175
Corporate debt securities income 255,986 139,816 496,360 270,715
Dividend income 255,019 120,915 459,050 177,818
Interest income on temporary cash investments 140,174 62,512 293,008 136,994
--------------- --------------- -------------- -------------
Total interest and dividend income 9,086,178 6,346,629 17,860,569 11,173,702
Interest expense on borrowed funds 7,626,956 4,318,692 14,593,351 7,461,847
--------------- --------------- -------------- -------------
Net interest and dividend income 1,459,222 2,027,937 3,267,218 3,711,855
--------------- --------------- -------------- -------------
Income from other investments 354,142 62,125 502,362 248,822
Gain on sale of investments 119,619 56,528 119,619 54,994
--------------- --------------- -------------- -------------
473,761 118,653 621,981 303,816
--------------- --------------- -------------- -------------
General and administrative expenses 512,495 628,400 973,960 1,244,593
Minority interest - 4,230 - 4,720
--------------- --------------- -------------- -------------
512,495 632,630 973,960 1,249,313
--------------- --------------- -------------- -------------
Net income $ 1,420,488 $ 1,513,960 $ 2,915,239 $ 2,766,358
=============== =============== ============== =============
Net income, basic, per share $ .16 $ .17 $ .33 $ .31
=============== =============== ============== =============
Net income, fully diluted, per share $ .16 $ .17 $ .33 $ .31
=============== =============== ============== =============
Weighted average number of shares outstanding 8,877,434 9,055,142 8,906,186 9,055,142
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
<PAGE> - 2 -
AMERICA FIRST MORTGAGE INVESTMENTS, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
Stockholders' Equity
--------------------------------------------------------------------------------------------------
Accumulated
Treasury Other
Common Stock Paid-in Stock Retained Comprehensive
# of Shares Amount Capital At Cost Earnings Income Total
------------ ------------ ------------ ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1999 8,978,642 $ 89,786 $ 75,831,560 $ - $(2,877,971) $(5,428,762) $ 67,614,613
Comprehensive income:
Net income - - - - 2,915,239 - 2,915,239
Net unrealized holding losses
arising during the period - - - - - (2,375,887) (2,375,887)
Plus: reclassification
adjustment for losses included
in net income - - - - - 78,996 78,996
------------ ------------ ------------- ------------ ------------ ------------ -------------
Comprehensive income - - - - 2,915,239 (2,296,891) 618,348
Dividends paid or accrued - - - - (2,591,454) - (2,591,454)
Common stock issued 7,804 78 39,918 - - - 39,996
Purchase of shares for treasury - - - (558,452) - - (558,452)
Retirement of treasury stock (112,500) (1,125) (557,327) 558,452 - - -
------------ ------------ ------------- ------------ ------------ ------------ -------------
Balance at June 30, 2000 8,873,946 $ 88,739 $ 75,314,151 $ - $(2,554,186) $(7,725,653) $ 65,123,051
============ ============ ============= ============ ============ ============ =============
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
<PAGE> - 3 -
AMERICA FIRST MORTGAGE INVESTMENTS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
For the Six For the Six
Months Ended Months Ended
June 30, 2000 June 30, 1999
--------------- ---------------
<S> <C> <C>
Cash flows from operating activities
Net income $ 2,915,239 $ 2,766,358
Adjustments to reconcile net income to net cash
from operating activities:
Gain on sale of investments (119,619) (54,994)
Minority interest - 4,720
Amortization 892,629 792,429
Increase in accrued interest and dividends receivable (610,905) (892,579)
(Increase) decrease in other assets 157,797 (1,255,642)
Increase (decrease) in accounts payable (177,784) 363,765
Increase (decrease) in accrued interest payable (1,367,847) 667,389
---------------- ---------------
Net cash provided by operating activities 1,689,510 2,391,446
---------------- ---------------
Cash flows from investing activities
Decrease in restricted cash 2,781,882 -
Principal payments on mortgage securities 47,821,943 49,725,446
Proceeds from sale of mortgage securities 5,018,677 -
Proceeds from sale of corporate debt securities 372,500 -
Proceeds from sale of corporate equity securities 42,294 1,070,972
(Increase) decrease in other investments (41,136) 34,730
Purchases of mortgage securities (67,095,668) (225,430,664)
Purchases of corporate debt securities (4,963,750) (1,049,000)
Purchases of corporate equity securities (6,480,808) (1,351,830)
---------------- ---------------
Net cash used in investing activities (22,544,066) (177,000,346)
---------------- ---------------
Cash flows from financing activities
Net borrowings from repurchase agreements 20,314,026 180,418,806
Stock purchased for treasury (558,452) -
Dividends and distributions paid (2,591,412) (4,871,307)
---------------- ---------------
Net cash provided by financing activities 17,164,162 175,547,499
---------------- ---------------
Net (decrease) increase in cash and cash equivalents (3,690,394) 938,599
Cash and temporary cash investments at beginning
of period 19,895,833 6,045,956
---------------- ---------------
Cash and temporary cash investments at end of period $ 16,205,439 $ 6,984,555
================ ===============
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 15,961,198 $ 6,794,458
Supplemental disclosure of non-cash investing activities:
Goodwill of $150,000 was recorded by the Company in 1999 as a result of the Merger.
During the six months ended June 30, 2000, the Company issued 7,804 shares of its common stock
to its non-employee directors in partial payment of the annual retainer paid by the Company
to such directors. The aggregate value of such common stock issued was $39,996.
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
<PAGE> - 4 -
AMERICA FIRST MORTGAGE INVESTMENTS, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000
(UNAUDITED)
1. Organization
America First Mortgage Investments, Inc. (the Company) was incorporated in
Maryland on July 24, 1997. The Company began operations on April 10, 1998
when it merged with three partnerships: America First Participating/Preferred
Equity Mortgage Fund Limited Partnership (Prep Fund 1), America First Prep
Fund 2 Limited Partnership (Prep Fund 2), America First Prep Fund 2 Pension
Series Limited Partnership (Pension Fund).
The Company has entered into an advisory agreement with America First Mortgage
Advisory Company (the Advisor) which provides advisory services in connection
with the conduct of the Company's business activities.
2. Summary of Significant Accounting Policies
A) Method of Accounting
The accompanying 2000 financial statements include the
accounts of the Company and the accompanying 1999 consolidated financial
statements include the accounts of the Company and its subsidiaries,
Pension Fund and Pension Fund's general partner, America First Capital
Associates Limited Partnership Six (AFCA 6). All significant intercompany
transactions and accounts have been eliminated in consolidation. Pension
Fund and AFCA 6 were liquidated and dissolved under the terms of their
respective partnership agreements during December 1999. In addition, as
more fully discussed in Note 6, the Company has an investment in a
corporation and investments in four real estate limited partnerships, none
of which are controlled by the Company. These investments are accounted
for under the equity method.
The financial statements are prepared on the accrual basis of accounting
in accordance with generally accepted accounting principles.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts 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.
B) Cash and Cash Equivalents
Cash and cash equivalents include cash on hand and highly liquid
investments with original maturities of three months or less. The
carrying amount of cash equivalents approximates their fair value.
Restricted cash represents amounts held with certain lending
institutions with which the Company has repurchase agreements. Such
amounts may be used to make principal payments on the related
repurchase agreements.
C) Mortgage Securities, Corporate Debt Securities and Corporate Equity
Securities
Statement of Financial Accounting Standards No. 115, "Accounting for
Certain Investments in Debt and Equity Securities" (SFAS 115), requires
the Company to classify its investments in mortgage securities,
corporate debt securities and corporate equity securities (collectively
referred to as investment securities) as either held-to-maturity,
available-for-sale or trading.
Although the Company generally intends to hold most of its mortgage
securities until maturity, it may, from time to time, sell any of its
mortgage securities as part of its overall management of its business.
In order to be prepared to respond to potential future opportunities in the
market, to sell mortgage securities in order to optimize the portfolio's
total return and to retain its ability to respond to economic conditions
that require the Company to sell assets in order to maintain an appropriate
level of liquidity, the Company has classified all its mortgage securities
as available-for-sale. Likewise, the Company has classified all its
corporate equity securities as available-for-sale. Mortgage securities and
<PAGE> - 5 -
corporate equity securities classified as available-for-sale are reported
at fair value, with unrealized gains and losses excluded from earnings and
reported in other comprehensive income. Corporate debt securities are
classified as held-to-maturity and are carried at amortized cost.
Unrealized losses on investment securities that are considered
other-than-temporary, as measured by the amount of decline in fair value
attributable to factors other than temporary, are recognized in income and
the cost basis of the investment security is adjusted.
Other-than-temporary unrealized losses on mortgage securities are based on
management's assessment of various factors affecting the expected cash flow
from such securities, including an other-than-temporary deterioration of
the credit quality of the underlying mortgages and/or the credit protection
available to the related mortgage pool.
Gains or losses on the sale of investment securities are based on the
specific identification method.
Interest income is accrued based on the outstanding principal amount of
the investment securities and their contractual terms. Premiums and
discounts associated with the purchase of the investment securities are
amortized into interest income over the lives of the securities using the
effective yield method based on, among other things, anticipated estimated
prepayments. Such calculations are periodically adjusted for actual
prepayment activity.
Dividend income is recognized based on the ex-dividend date.
D) Credit Risk
The Company limits its exposure to credit losses on its investment
portfolio by requiring that at least 70% of its investment portfolio
consist of mortgage securities or mortgage loans that are:
(i) insured or guaranteed as to principal and interest by an agency of
the U.S. government, such as the Government National Mortgage Association
(GNMA), the Federal National Mortgage Association (FNMA), or the Federal
Home Loan Mortgage Corporation (FHLMC), (ii) rated in one of the two
highest rating categories by either Standard & Poor's or Moody's, or
(iii) considered to be of equivalent credit quality as determined by the
Advisor and approved by the Company's investment committee. The remainder
of the Company's assets may be: (i) mortgage assets rated at least
investment grade or considered to be of equivalent credit quality by the
Advisor with approval from the Company's investment committee; (ii) direct
investment (mezzanine or equity) in multifamily projects collateralizing
mortgage loans owned by the Company; (iii) investments in limited
partnerships, equities, real estate investment trusts or closed-end funds
owning a portfolio of mortgage and/or real estate assets; or (iv) other
corporate debt or corporate equity securities or government fixed-income
instruments that provide increased call protection relative to the
Company's securities. Corporate debt that is rated below investment grade
will be limited to less than 5% of the Company's total assets. As of June
30, 2000, and December 31, 1999, approximately 79% of the Company's total
assets consisted of mortgage securities insured or guaranteed by the U.S.
government or an agency thereof. At June 30, 2000, management determined
no allowance for credit losses was necessary.
E) Other Investments
Other investments consist of: (i) non-voting preferred stock of a
corporation owning interests in real estate limited partnerships, and
(ii) investments in limited partnerships owning real estate.
F) Net income per Share
Net income per share is based on the weighted average number of common
shares and common equivalent shares (e.g., stock options), if dilutive,
outstanding during the period. Basic net income per share is computed by
dividing net income available to shareholders by the weighted average
number of common shares outstanding during the period. Diluted net
income per share is computed by dividing the diluted net income available
to common shareholders by the weighted average number of common shares and
common equivalent shares outstanding during the period. The common
equivalent shares are calculated using the treasury stock method which
assumes that all dilutive common stock equivalents are exercised and the
funds generated by the exercise are used to buy back outstanding common
stock at the average market price during the reported period.
<PAGE> - 6 -
As more fully discussed in Note 8, options to purchase 520,000 and
300,000 shares of common stock were granted on April 6, 1998, and August
13, 1999, respectively. During the quarter ended June 30, 2000, the
average price of the Company's stock was slightly greater than the exercise
price of the options granted on August 13, 1999. As such, exercise of such
options under the treasury stock method is slightly dilutive. Accordingly,
these dilutive securities were considered in fully diluted earnings per
share. With regard to the options granted on April 6, 1998, the exercise
price is greater than the average stock price during the quarters ended
June 30, 2000, and June 30, 1999; therefore, exercise of such options
under the treasury stock method would be anti-dilutive. Accordingly,
these potentially dilutive securities were not considered in fully diluted
earnings per share.
The following table sets forth the reconciliation of the weighted average
shares outstanding for the calculation of basic earnings per share to the
weighted average shares outstanding for the calculation of fully diluted
earnings per share for each period presented:
<TABLE>
<CAPTION>
For the Three For the Three For the Six For the Six
Months Ended Months Ended Months Ended Months Ended
June 30, 2000 June 30, 1999 June 30, 2000 June 30, 1999
-------------- -------------- ------------- -------------
<S> <C> <C> <C> <C>
Weighted average shares outstanding for 8,877,434 9,055,142 8,906,186 9,055,142
basic earnings per share
Add effect of assumed shares issued under
treasury stock method for stock options 14,973 - 11,282 -
Weighted average shares outstanding for -------------- --------------- ------------- --------------
diluted earnings per share 8,892,407 9,055,142 8,917,468 9,055,142
============== =============== ============= ==============
</TABLE>
G) Comprehensive Income
Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income" requires the Company to display and report
comprehensive income, which includes all changes in Stockholders' Equity
with the exception of additional investments by or dividends to
shareholders. Comprehensive income for the Company includes net income and
the change in net unrealized holding gains (losses) on investments.
Comprehensive income for the three and six months ended June 30, 2000, and
1999 was as follows:
<TABLE>
<CAPTION>
For the Three For the Three For the Six For the Six
Months Ended Months Ended Months Ended Months Ended
June 30, 2000 June 30, 1999 June 30, 2000 June 30, 1999
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
--------------- --------------- ------------- -------------
<S> <C> <C> <C> <C>
Net income $ 1,420,488 $ 1,513,960 $ 2,915,239 $ 2,766,358
Other comprehensive income (loss)
Unrealized holding gains (losses)
Net unrealized holding gains (losses) arising
during the period 139,701 (2,351,261) (2,375,887) (1,548,616)
Plus: reclassification adjustment for losses
included in net income 78,996 - 78,996 -
--------------- ---------------- -------------- --------------
Change in net unrealized holding gains (losses) 218,697 (2,351,261) (2,296,891) (1,548,616)
--------------- ---------------- -------------- --------------
Comprehensive income (loss) $ 1,639,185 $ (837,301) $ 618,348 $ 1,217,742
=============== ================ ============== ==============
</TABLE>
H) Federal Income Taxes
The Company has elected to be taxed as a real estate investment trust
(REIT) under the provisions of the Internal Revenue Code and the
corresponding provisions of state law. As such, no provision for income
taxes has been made in the accompanying consolidated financial statements.
<PAGE> - 7 -
I) New Accounting Pronouncement
In June, 1998, the Financial Accounting Standards Board issued Financial
Accounting Standards No. 133, "Accounting for Derivative Instruments and
Hedging Activities " (FAS 133). Certain provisions of FAS 133 were amended
by Financial Accounting Standards No. 138, "Accounting for Certain
Derivative Instruments and Certain Hedging Activities" (FAS 138) in June,
2000. The statements provide new accounting and reporting standards for the
use of derivative instruments. Adoption of the statements is required by
the Company effective January 1, 2001. Management intends to adopt the
statements as required in fiscal 2001. Management believes that the impact
of such adoption will not be material to the financial statements. Although
the Company has not historically used such derivative instruments, it is not
precluded from doing so. In the future, management anticipates using such
derivative instruments only as hedges to manage interest rate risk.
Management does not anticipate entering into derivatives for speculative or
trading purposes.
3. Mortgage Securities
The following table presents the Company's mortgage securities as of June 30,
2000 and December 31, 1999.
<TABLE>
<CAPTION>
June 30, 2000
(Unaudited) December 31, 1999
----------------- -----------------
<S> <C> <C>
FNMA Certificates $ 381,307,750 $ 359,891,164
GNMA Certificates 34,927,772 43,678,897
FHLMC Certificates 10,527,924 13,220,884
Commercial mortgage-backed securities 17,131,000 16,650,544
Private label CMOs 42,202,526 42,278,222
----------------- -----------------
$ 486,096,972 $ 475,719,711
================= =================
</TABLE>
At June 30, 2000, and December 31, 1999, mortgage securities consisted of
pools of adjustable-rate mortgage securities with carrying values of
$455,599,401 and $444,140,267, respectively, and fixed-rate mortgage
securities with carrying values of $30,497,571 and $31,579,444,
respectively.
The Federal National Mortgage Association (FNMA) Certificates are backed by
first mortgage loans on pools of single-family properties. The FNMA
Certificates are debt securities issued by FNMA and are guaranteed by FNMA as
to the full and timely payment of principal and interest on the underlying
loans.
The Government National Mortgage Association (GNMA) Certificates are backed by
first mortgage loans on multifamily residential properties and pools of
single-family properties. The GNMA Certificates are debt securities issued
by a private mortgage lender and are guaranteed by GNMA as to the full and
timely payment of principal and interest on the underlying loans.
The Federal Home Loan Mortgage Corporation (FHLMC) Certificates are backed by
first mortgage loans on pools of single-family properties. The FHLMC
Certificates are debt securities issued by FHLMC and are guaranteed by FHLMC
as to the full and timely payment of principal and interest on the underlying
loans.
The commercial mortgage securities are rated AA or A by Standard and Poor's.
The private label CMOs (collateralized mortgage obligations) are rated AAA by
Standard and Poor's.
<PAGE> - 8 -
At June 30, 2000, and December 31, 1999, all mortgage securities were
classified as available-for-sale and as such are carried at their fair value.
The following table presents the amortized cost, gross unrealized gains, gross
unrealized losses and fair value of mortgage securities at June 30, 2000, and
December 31, 1999, respectively:
<TABLE>
<CAPTION>
June 30, 2000
(Unaudited) Dec. 31, 1999
------------------ ------------------
<S> <C> <C>
Amortized cost $ 494,021,816 $ 481,176,498
Gross unrealized gains 232,068 461,675
Gross unrealized losses (8,156,912) (5,918,462)
------------------ ------------------
Fair value $ 486,096,972 $ 475,719,711
================== ==================
</TABLE>
4. Corporate Debt Securities
Corporate debt securities are classified as held-to-maturity. The following
table presents the amortized cost, gross unrealized gains, gross unrealized
losses and fair value of the corporate debt securities as of June 30, 2000,
and December 31, 1999:
<TABLE>
<CAPTION>
As of
June 30, 2000 As of
(Unaudited) December 31, 1999
------------------ ------------------
<S> <C> <C>
Amortized cost $ 12,830,082 $ 8,020,026
Gross unrealized gains - 92,211
Gross unrealized losses (723,632) (174,487)
------------------ ------------------
Fair value $ 12,106,450 $ 7,937,750
================== ==================
</TABLE>
5. Corporate Equity Securities
Corporate equity securities are classified as available-for-sale. The
following table presents the cost, gross unrealized gains, gross unrealized
losses and fair value of the corporate equity securities as of June 30, 2000,
and December 31, 1999:
<TABLE>
<CAPTION>
As of
June 30, 2000 As of
(Unaudited) December 31, 1999
------------------ ------------------
<S> <C> <C>
Cost $ 9,543,926 $ 3,102,798
Gross unrealized gains 627,483 224,865
Gross unrealized losses (428,292) (196,840)
------------------ -------------------
Fair value $ 9,743,117 $ 3,130,823
================== ==================
</TABLE>
<PAGE> - 9 -
6. Other Investments
Other investments consisted of the following as of June 30, 2000 and December
31, 1999:
<TABLE>
<CAPTION>
As of
June 30, 2000 As of
(Unaudited) Dec. 31, 1999
-------------- -------------
<S> <C> <C>
Investment in Retirement Centers Corporation $ 2,431,116 $ 2,389,980
Investment in and advances to real estate limited partnerships 830,366 830,366
------------- -------------
Total $ 3,261,482 3,220,346
============= =============
</TABLE>
The Company's investment in Retirement Centers Corporation (RCC) represents a
95% ownership interest in such corporation. The Company owns 100% of the
non-voting preferred stock of RCC and a third party owns 100% of the common
stock. The Company accounts for its investment in RCC on the equity method.
As of June 30, 2000, RCC owned (i) a limited partnership interest in a real
estate limited partnership which operates an assisted living center located in
Salt Lake City, Utah, and (ii) a 127-unit apartment property located in Omaha,
Nebraska, which was acquired on January 12, 2000. As of December 31, 1999,
RCC's investments consisted of (i) its interest in the real estate limited
partnership referenced above and (ii) cash which was utilized to acquire the
apartment property on January 12, 2000.
Investments in and advances to real estate limited partnerships consist of
investments in or advances made to four limited partnerships which own the
properties underlying certain mortgage securities owned by the Company. These
investments are not insured or guaranteed but rather are collateralized by the
value of the real estate underlying the real estate owned by such limited
partnerships. They are accounted for under the equity method of accounting.
Certain of the investments have a zero carrying value and, as such, earnings
are recorded only to the extent distributions are received. Such investments
have not been reduced below zero through recognition of allocated investment
losses since the Company has no legal obligation to provide additional cash
support to the underlying property partnerships as it is not the general
partner, nor has it indicated any commitment to provide this support.
7. Repurchase Agreements
As of June 30, 2000, the Company had outstanding balances of $472,415,829
under 48 repurchase agreements with a weighted average borrowing rate of 6.62%
and a weighted average remaining maturity of 2.3 months. As of June 30,
2000, all of the Company's borrowings were fixed-rate term repurchase
agreements with original maturities that range from one to twelve months. As
of December 31, 1999, the Company had outstanding balances of $452,101,803
under 38 repurchase agreements with a weighted average borrowing rate of
5.72%.
At June 30, 2000, the repurchase agreements had the following remaining
maturities:
<TABLE>
<CAPTION>
<S> <C>
Within 30 days $ 335,651,408
30 to 90 days 5,809,750
90 days to one year 130,954,671
-------------
$ 472,415,829
=============
</TABLE>
The repurchase agreements are collateralized by the Company's mortgage
securities and corporate debt securities with an aggregate current face value
of approximately $485.5 million and corporate equity securities with a current
market value of approximately $9.7 million. The repurchase agreements bear
interest at rates that are LIBOR based.
<PAGE> - 10 -
8. Stockholders' Equity
1997 Stock Option Plan
---------------------
The Company has a 1997 Stock Option Plan (the Plan) which authorizes the
granting of options to purchase an aggregate of up to 1,000,000 shares of the
Company's common stock, but not more than 10% of the total outstanding shares
of the Company's common stock. The Plan authorizes the Board of Directors, or
a committee of the Board of Directors, to grant Incentive Stock Options (ISOs)
as defined under section 422 of the Internal Revenue Code, Non-Qualified Stock
Options (NQSOs) and Dividend Equivalent Rights (DERs) to eligible persons,
other than non-employee directors. Non-employee directors are eligible to
receive grants of NQSOs with DERs pursuant to the provisions of the Plan. The
exercise price for any options granted to eligible persons under the Plan
shall not be less than the fair market value of the common stock on the day of
the grant. The options expire if not exercised ten years after the date
granted.
On April 6, 1998, 500,000 ISOs were granted to buy common shares at an
exercise price of $9.375 per share (the 1998 Grant). In addition, 20,000
NQSOs were issued at an exercise price of $9.375 per share. On August 13,
1999, 300,000 ISOs were granted to buy common shares at an exercise price of
$4.875 per share (the 1999 Grant). Prior to the 1998 Grant, no other options
were outstanding. As of June 30, 2000 and December 31, 1999, respectively,
450,000 and 325,000 ISOs were vested and exercisable. As of June 30, 2000 and
December 31, 1999, 20,000 NQSOs were vested and exercisable. As of June 30,
2000, no options had been exercised.
In addition to the options granted on April 6, 1998, 500,000 and 5,000 DERs
were also granted on the ISOs and NQSOs, respectively, based on the provisions
of the Plan. No DERs were granted on the ISOs granted on August 13, 1999.
DERs on ISOs vest on the same basis as the options. DERs on NQSOs became
fully vested in April, 1999. Payments are made on vested DERs only. Vested
DERs are paid only to the extent of ordinary income and not on returns of
capital. Dividends paid on ISOs are charged to stockholders' equity when
declared and dividends paid on NQSOs are charged to earnings when declared.
For the three and six months ended June 30, 2000, the Company recorded charges
of $70,000 and $105,000, respectively, to stockholders' equity (included in
dividends paid or accrued) associated with the DERs on ISOs and charges of
$700 and $2,100, respectively, to earnings associated with DERs on NQSOs.
For the three and six months ended June 30, 1999, the Company recorded charges
of $31,250 and $47,500, respectively, to stockholders' equity (included in
dividends paid or accrued) associated with DERs on ISOs and charges of $1,250
and $1,900, respectively, to earnings associated with DERs on NQSOs.
The options and related DERs issued were accounted for under the provisions of
SFAS 123, "Accounting for Stock Based Compensation". Because the ISOs were
not issued to officers who are direct employees of the Company, ISOs granted
were accounted for under the option value method as variable grants and a
periodic charge will be recognized based on the vesting schedule. The charge
for options which vested immediately with the 1998 Grant was included as
capitalized transaction costs in connection with the Merger. Until fixed and
determinable, management estimates the value of the ISOs granted as of each
balance sheet date using a Black-Scholes valuation model, as adjusted for the
discounted value of dividends not to be received under the unvested DERs. In
the absence of comparable historical market information for the Company,
management originally utilized assumptions consistent with activity of a
comparable peer group of companies including an estimated option life, a
volatility rate, a risk-free rate and a current dividend yield (or 0% if the
related DERs are issued). For the three and six months ended June 30, 2000,
as part of operations, the Company reflected earnings charges of $55,821 and
$152,675, respectively, representing the value of ISOs/DERs granted over their
vesting period. For the three and six months ended June 30, 1999, as part of
operations, the Company reflected earnings charges of $58,899 and $117,798,
respectively, representing the value of the ISOs/DERs granted over their
vesting period. NQSOs granted were accounted for using the intrinsic method
and, accordingly, no earnings charge was reflected since the exercise price
was equal to the fair market value of the common stock at the date of the
grant.
<PAGE> - 11 -
Dividends/Distributions
-----------------------
The Company declared the following distributions during 2000 and 1999:
<TABLE>
<CAPTION>
Amount per
Declaration Date Record Date Payment Date Share
---------------- ------------ ------------ -----------
<S> <C> <C> <C>
During 2000:
March 17, 2000 April 14, 2000 May 17, 2000 $ .140
June 14, 2000 June 30, 2000 August 17, 2000 $ .140
During 1999:
March 24, 1999 April 5, 1999 May 17, 1999 $ .265 (1)
June 14, 1999 June 30, 1999 August 17, 1999 $ .125
(1) As part of the Merger transaction, the Company made quarterly distributions of
$.265 per common share ($1.06 per common share per year) in the first year
following the Merger (i.e. through the first quarter of 1999.)
</TABLE>
Stock Repurchase Plan
---------------------
In connection with the Company's 400,000 share repurchase program, the Company
purchased and retired 112,500 shares during the six months ended June 30,
2000, at an aggregate cost of $558,452 (33,100 shares at an aggregate cost of
$166,282 for the three months ended June 30, 2000). Since implementing the
stock repurchase program during the fourth quarter of 1999, through June 30,
2000, the Company has purchased and retired 197,100 shares at an aggregate
cost of $970,660.
9. Related Party Transactions
The Advisor manages the operations and investments of the Company and performs
administrative services for the Company. In turn, the Advisor receives a
management fee payable monthly in arrears in an amount equal to 1.10% per
annum of the first $300 million of Stockholders' Equity of the Company, plus
.80% per annum of the portion of Stockholders' Equity of the Company above
$300 million. The Company also pays the Advisor, as incentive compensation
for each fiscal quarter, an amount equal to 20% of the dollar amount by which
the annualized Return on Equity for such fiscal quarter exceeds the amount
necessary to provide an annualized Return on Equity equal to the Ten-Year U.S.
Treasury Rate plus 1%. For the three and six months ended June 30, 2000, the
Advisor earned a base management fee of $179,422 and $362,347, respectively,
and incentive compensation of $53,969 and $125,229, respectively. For the
three and six months ended June 30, 1999, the Advisor earned a base management
fee of $192,964 and $382,786, respectively, and incentive compensation of
$89,689 and $134,607, respectively.
America First Properties Management Company L.L.C., (the Manager), provides
property management services for certain of the multifamily properties in
which the Company has an interest. The Manager receives a management fee
equal to a stated percentage of the gross revenues generated by the properties
under management, ranging from 3.5% to 5% of gross revenues. Such fees paid
by the Company for the three and six months ended June 30, 2000, amounted to
$97,017 and $191,566, respectively. Such fees paid by the Company for the
three and six months ended June 30, 1999, amounted to $82,082 and $167,445,
respectively.
<PAGE> - 12 -
Item 2.
AMERICA FIRST MORTGAGE INVESTMENTS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
General
The Company was incorporated in Maryland on July 24, 1997. The Company began
operations on April 10, 1998 when it merged with three partnerships: America
First Participating/Preferred Equity Mortgage Fund Limited Partnership ("Prep
Fund 1"), America First Prep Fund 2 Limited Partnership ("Prep Fund 2"),
America First Prep Fund 2 Pension Series Limited Partnership ("Pension Fund").
America First Mortgage Advisory Corporation (the "Advisor") provides advisory
services to the Company in connection with the conduct of the Company's
business activities. The Company's principal investment strategy includes
leveraged investing in adjustable rate mortgage securities and mortgage
loans. Since commencing operations and through June 30, 2000, the Company
purchased mortgage securities with a face value at the time of purchase of
approximately $630.5 million (mortgage securities with a face value of
approximately $59.4 million were purchased during the six months ended June
30, 2000).
The Company has elected to be treated as a real estate investment trust
("REIT") for federal income tax purposes beginning with its 1998 taxable year
and, as such, anticipates distributing annually at least 95% of its taxable
income, subject to certain adjustments. Generally, cash for such
distributions is expected to be largely generated from the Company's
operations, although the Company may borrow funds to make distributions. On
June 14, 2000, the Company's board of directors declared a dividend of $.14
per share for the quarter ended June 30, 2000, payable on August 17, 2000, to
shareholders of record as of June 30, 2000. On March 17, 2000, the Company's
board of directors declared a dividend of $.14 per share for the quarter ended
March 31, 2000, payable on May 17, 2000, to shareholders of record as of April
14, 2000.
The Company's operations for any period may be affected by a number of factors
including the investment assets held, general economic conditions affecting
underlying borrowers and, most significantly, factors which affect the
interest rate market. Interest rates are highly sensitive to many factors,
including governmental monetary and tax policies, domestic and international
economic and political considerations, and other factors beyond the control of
the Company.
Due to the on-going implementation of the Company's investment strategy, the
currently reported financial information is not necessarily indicative of the
Company's future operating results or financial condition.
Liquidity and Capital Resources
The Company's principal sources of capital consist of borrowings under
repurchase agreements, principal payments received on its portfolio of
mortgage securities and cash provided by operations. Principal uses of cash
include the acquisition of investment securities, the payment of operating
expenses and the payment of dividends to shareholders.
During the six months ended June 30, 2000, the Company acquired $78.5 million
of mortgage securities, corporate debt securities and corporate equity
securities. Financing for these acquisitions was provided primarily through
the utilization of repurchase agreements, supplemented by cash flow from
operations of $7.0 million. Net borrowings under such repurchase agreements
totaled $20.3 million during the six months ended June 30, 2000. The Company
also received principal payments of $47.8 million on its mortgage securities
during the six months ended June 30, 2000. Other uses of funds during the six
months ended June 30, 2000, consisted of $2.6 million for dividend payments
and $.6 million for the acquisition of 112,500 shares of its own common stock
pursuant to a stock repurchase program implemented in the fourth quarter of
1999.
The Company's borrowings under repurchase agreements totaled $472.4 million at
June 30, 2000, and had a weighted average borrowing rate of 6.62% as of such
date. At June 30, 2000, the repurchase agreements had balances of between $.6
million and $62.2 million. These arrangements have original terms to maturity
ranging from one month to twelve months and annual interest rates based on
LIBOR. To date, the Company has not had any significant margin calls on its
repurchase agreements that were related to a decrease in the value of its
collateral.
<PAGE> - 13 -
In connection with the Company's 400,000 share repurchase program, the Company
purchased and retired 112,500 shares during the six months ended June 30,
2000, at an aggregate cost of $558,452. Since implementing the stock
repurchase program during the fourth quarter of 1999, through June 30, 2000,
the Company has purchased and retired 197,100 shares at an aggregate cost of
$970,660.
The Company believes it has adequate financial resources to meet its
obligations as they come due and fund committed dividends as well as to
actively pursue its investment policy.
Results of Operations
Three Month Period Ended June 30, 2000 Compared to 1999
During the three months ended June 30, 2000, total interest and dividend
income for the Company increased $2.7 million (43%) as compared to total
interest and dividend income for the three months ended June 30, 1999. This
increase is primarily the result of a 35% increase in the Company's average
interest earning assets from $395 million to $532 million for the respective
periods in 1999 and 2000. Also contributing to the increase was an increase
in the annualized yield on the Company's average interest earning assets to
6.84% for the three months ended June 30, 2000, up from 6.43% for the
comparable period in 1999.
The Company's interest expense increased $3.3 million (77%) for the three
months ended June 30, 2000 compared to the comparable period in 1999. Such
increase is primarily due to a 43% increase in average amount of funds
borrowed from $334 million to $479 million for the respective periods in 1999
and 2000. In addition, the Company's interest cost on such borrowed funds
increased to an average of 6.38% for the three months ended June 30, 2000 up
from 5.17% for the three months ended June 30, 1999.
As a result of the narrowing of the Company's interest rate margin, net
interest and dividend income decreased by 28% from $2,027,937 for the quarter
ended June 30, 1999 to $1,459,222 for the quarter ended June 30, 2000. This
reduction was partially offset by a $292,000 increase in income from other
investments and a $63,000 increase in gain on the sale of investments during
the second quarter of 2000 compared to the second quarter of 1999. The
increase in income from other investments was due to an increase in cash flow
received by the Company from its investment in real estate limited
partnerships which reflects improved operating results at these properties.
Gain on the sale of investments increased due primarily to the sale of more
investment securities at gains during the second quarter of 2000 compared to
the same period in 1999. During the quarter ended June 30, 2000, the Company
sold corporate debt securities and corporate equity securities for a gain of
$199,000 which was partially offset by a loss of $79,000 on the sale of
numerous small pools of fixed-rate mortgage securities. This compares to a
gain of $57,000 realized on the sale of corporate equity securities during the
quarter ended June 30, 1999.
General and administrative expenses for the Company for the three months ended
June 30, 2000 decreased $116,000 as compared to the three months ended June
30, 1999. Approximately $36,000 of such decrease is due to expenses incurred
in 1999 by a consolidated subsidiary which was liquidated in December 1999.
Also contributing to the decrease were reductions of $36,000 and $14,000 in
incentive compensation and base management fees, respectively, payable to the
Advisor by the Company. The remaining decrease of $30,000 is attributable to
decreases in other general and administrative expenses.
Six Month Period Ended June 30, 2000 Compared to 1999
During the six months ended June 30, 2000, total interest and dividend income
for the Company increased $6.7 million (60%) as compared to total interest and
dividend income for the six months ended June 30, 1999. This increase is
primarily the result of a 51% increase in the Company's average interest
earning assets from $342 million to $518 million for the respective periods in
1999 and 2000. Also contributing to the increase was an increase in the
annualized yield on the Company's average interest earning assets to 6.89% for
the six months ended June 30, 2000, up from 6.54% for the comparable period in
1999.
The Company's interest expense increased $7.1 million (96%) for the six months
ended June 30, 2000 compared to the comparable period in 1999. Such increase
<PAGE> - 14 -
is primarily due to a 65% increase in funds borrowed from $280 million to $462
million for the respective periods in 1999 and 2000. In addition, the
Company's interest cost on such borrowed funds increased to an average of
6.31% for the six months ended June 30, 2000 up from 5.32% for the six months
ended June 30, 1999.
As a result of the narrowing of the Company's interest rate margin, net
interest and dividend income decreased by 12% from $3,711,855 for the six
months ended June 30, 1999 to $3,267,218 for the six months ended June 30,
2000. This reduction was partially offset by a $254,000 increase in income
from other investments and a $65,000 increase in gain on the sale of
investments during the first six months of 2000 compared to the first six
months of 1999. The increase in income from other investments was due to an
increase in cash flow received by the Company from its investment in real
estate limited partnerships which reflects improved operating results at these
properties. Gain on the sale of investments increased due primarily to the
sale of more investment securities at gains during the first six months of
2000 compared to the same period in 1999. During the six months ended June
30, 2000, the Company sold corporate debt securities and corporate equity
securities for a gain of $199,000 which was partially offset by a loss of
$79,000 on the sale of numerous small pools of fixed-rate mortgage
securities. This compares to a gain of $55,000 realized on the sale of
corporate equity securities and a number of small pools of fixed-rate mortgage
securities during the six months ended June 30, 1999
General and administrative expenses for the Company for the six months ended
June 30, 2000 decreased $271,000 as compared to the six months ended June
30, 1999. Approximately $81,000 of such decrease is due to expenses incurred
in 1999 by a consolidated subsidiary which was liquidated in December 1999.
The remaining decrease of $190,000 is primarily attributable to decreases in
various servicing, filing fees and printing costs.
Other Matters
The Company at all times intends to conduct its business so as to not become
regulated as an investment company under the Investment Company Act of 1940.
If the Company were to become regulated as an investment company, then, among
other things, the Company's ability to use leverage would be substantially
reduced. The Investment Company Act exempts entities that are "primarily
engaged in the business of purchasing or otherwise acquiring mortgages and
other liens on and interests in real estate" (i.e. "Qualifying Interests").
Under the current interpretation of the staff of the SEC, in order to qualify
for this exemption, the Company must maintain at least 55% of its assets
directly in Qualifying Interests. In addition, unless certain mortgage
securities represent an undivided interest in the entire pool backing such
mortgage securities (i.e. "whole pool" mortgage securities), such mortgage
securities may be treated as securities separate from the underlying mortgage
loan, thus, may not be considered Qualifying Interests for purposes of the 55%
exemption requirement. Accordingly, the Company monitors its compliance with
this requirement in order to maintain its exempt status. As of June 30,
2000, the Company determined that it is in and has maintained compliance with
this requirement.
Forward Looking Statements
When used in this Form 10-Q, in future SEC filings or in press releases or
other written or oral communications, the words or phrases "will likely
result", "are expected to", "will continue", "is anticipated", "estimate",
"project" or similar expressions are intended to identify "forward looking
statements" within the meaning of the Private Securities Litigation Reform
Act of 1995. The Company cautions that such forward looking statements
speak only as of the date made and that various factors including regional
and national economic conditions, changes in levels of market interest
rates, credit and other risks of lending and investment activities, and
competitive and regulatory factors could affect the Company's financial
performance and could cause actual results for future periods to differ
materially from those anticipated or projected.
The Company does not undertake and specifically disclaims any obligation to
update any forward-looking statements to reflect events or circumstances after
the date of such statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
There have been no material changes in the Company's market risk since
December 31, 1999.
<PAGE> - 15 -
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds.
On May 31, 2000, the Company issued 7,804 shares of its common stock to
its four non-employee directors in partial payment of the annual
retainer paid by the Company to such directors. Each such director was
entitled to payment of a number of shares determined by dividing $10,000
by the closing sale price of the common stock on the date of issuance
which was $5-1/8. The issuance of these shares is exempt from
registration under the Securities Act of 1933, as amended (the "Securities
Act") under Section 4(2) thereof in that the transaction did not involve a
public offering.
Item 4. Submission of Matters to Vote of Securities Holders.
The Company held its Annual Meeting of Stockholders on May 25, 2000 for
the purpose of electing two directors and ratifying the appointment of
its auditors. The following sets forth the results of the election of
officers:
NAME OF NOMINEE FOR WITHHELD
---------------- --------------- -----------
Michael L Dahir 7,909,683 (99%) 77,199 (1%)
George H. Krauss 7,908,175 (99%) 78,707 (1%)
There was no solicitation in opposition to the nominees by the
Stockholders.
The ratification of the appointment of PricewaterhouseCoopers LLP as
independent auditors for the Company for the fiscal year ending December
31, 2000 was approved by the Stockholders with 7,844,253 votes FOR (98%),
53,077 votes AGAINST (1%), and 89,552 votes ABSTAINED OR BROKER
NON-VOTES (1%).
Further information regarding these matters is contained in the Company's
Proxy Statement dated March 30, 2000.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
2.1 Agreement and Plan of Merger by and among the Registrant,
America First Participating/Preferred Equity Mortgage Fund
Limited Partnership, America First Prep Fund 2 Limited
Partnership, America First Prep Fund 2 Pension Series
Limited Partnership and certain other parties, dated as of
July 29, 1997 (incorporated herein by reference to Exhibit
2.1 of the Registration Statement on Form S-4 dated
February 12, 1998, filed by the Registrant pursuant to the
Securities Act of 1933 (Commission File No. 333-46179)).
3.1 Amended and Restated Articles of Incorporation of the
Registrant (incorporated herein by reference to Form 8-K
dated April 10, 1998, filed by the Registrant pursuant to
the Securities Exchange Act of 1934 (Commission File No.
1-13991)).
3.2 Amended and Restated Bylaws of the Registrant (incorporated
herein by reference to Form 8-K dated April 10, 1998,
filed by the Registrant pursuant to the Securities Exchange
Act of 1934 (Commission File No. 1-13991)).
4.1 Specimen of Common Stock Certificate of the Company.
(incorporated herein by reference to Exhibit 4.1 of the
Registration Statement on Form S-4 dated February 12, 1998,
filed by the Registrant pursuant to the Securities Act of
1933 (Commission File No. 333-46179)).
10.1 Advisory Agreement, dated April 9, 1998, by and between
the Company and the Advisor (incorporated herein by
reference to Form 8-K dated April 10, 1998 filed by
<PAGE> - 16 -
the Company pursuant to the Securities Exchange Act of
1934 (Commission File No. 1-13991)).
10.2 Employment Agreement of Stewart Zimmerman (incorporated
herein by reference to Exhibit 10.2 of the Registration
Statement on Form S-4 dated February 12, 1998, filed by
the Company pursuant to the Securities Act of 1933
(Commission File No. 333-46179)).
10.3 Employment Agreement of William S. Gorin (incorporated
herein by reference to Exhibit 10.3 of the Registration
Statement on Form S-4 dated February 12, 1998, filed by
the Company pursuant to the Securities Act of 1933
(Commission File No. 333-46179)).
10.4 Employment Agreement of Ronald A. Freydberg (incorporated
herein by reference to Exhibit 10.4 of the Registration
Statement on Form S-4 dated February 12, 1998, filed by
the Company pursuant to the Securities Act of 1933
(Commission File No. 333-46179)).
10.5 Addendum to Employment Agreement of Stewart Zimmerman
(incorporated herein by reference to Form 10-Q dated
March 31, 2000, filed with the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934
(Commission File No. 1-13991)).
10.6 Addendum to Employment Agreement of William S. Gorin
(incorporated herein by reference to Form 10-Q dated
March 31, 2000, filed with the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934
(Commission File No. 1-13991)).
10.7 Addendum to Employment Agreement of Ronald A. Freydberg
(incorporated herein by reference to Form 10-Q dated
March 31, 2000, filed with the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934
(Commission File No. 1-13991)).
10.8 Amended and Restated 1997 Stock Option Plan of the Company
(incorporated herein by reference to Form 10-K dated
December 31, 1999, filed with the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934
(Commission File No. 1-13991)).
10.9 Form of Dividend Reinvestment Plan (incorporated herein by
reference to Appendix C of the Registration Statement on
Form S-4 dated February 12, 1998, filed by the Registrant
pursuant to the Securities Act of 1933 (Commission File No.
333-46179)).
27. Financial Data Schedule
(b) Reports on Form 8-K
The Registrant did not file any reports on Form 8-K during
the quarter for which this report is filed.
<PAGE> - 17 -
SIGNATURES
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.
Dated: August 11, 2000 AMERICA FIRST MORTGAGE INVESTMENTS, INC.
By /s/ Stewart Zimmerman
Stewart Zimmerman
President and Chief Executive Officer
By /s/ Gary Thompson
Gary Thompson
Authorized Officer and Chief Financial Officer
<PAGE> - 18 -
