<PAGE>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, 1997
------------------
Commission file number 1-11060
--------------
AMERICAN INSURED MORTGAGE INVESTORS
- -----------------------------------------------------------------
(Exact name of registrant as specified in charter)
California 13-3180848
- ------------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
11200 Rockville Pike, Rockville, Maryland 20852
- ----------------------------------------- ----------------------
(Address of principal executive offices) (Zip Code)
(301) 816-2300
- -----------------------------------------------------------------
(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 September 30, 1997, 10,000,000 depository units of limited
partnership interest were outstanding.
<PAGE>2
AMERICAN INSURED MORTGAGE INVESTORS
INDEX TO FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1997
PAGE
----
PART I. Financial Information (Unaudited)
Item 1. Financial Statements
Balance Sheets - September 30, 1997 (unaudited)
and December 31, 1996.................... 3
Statements of Operations - for the three and
nine months ended September 30, 1997 and 1996
(unaudited).............................. 4
Statement of Changes in Partners' Equity -
for the nine months ended September 30,
1997 (unaudited)......................... 5
Statements of Cash Flows - for the nine
months ended September 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
<PAGE>3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AMERICAN INSURED MORTGAGE INVESTORS
BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------- ------------
<S> <C> <C>
(Unaudited)
ASSETS
Investment in FHA-Insured Loans,
at amortized cost, net of unamortized
discount:
Acquired Insured Mortgages $ 8,931,982 $ 8,988,210
Originated Insured Mortgages 14,207,724 14,274,528
------------ ------------
23,139,706 23,262,738
Investment in FHA-Insured Certificates,
at fair value 13,715,227 14,105,760
Cash and cash equivalents 841,412 656,051
Receivables and other assets 370,421 360,640
------------ ------------
Total assets $ 38,066,766 $ 38,385,189
============ ============
LIABILITIES AND PARTNERS' EQUITY
Distributions payable $ 720,916 $ 720,916
Accounts payable and accrued expenses 64,379 74,473
------------ ------------
Total liabilities 785,295 795,389
------------ ------------
Partners' equity:
Limited partners' equity 39,741,676 39,737,785
General partner's deficit (4,931,903) (4,932,018)
Unrealized gains on investment
in FHA-Insured Certificates 2,471,698 2,784,033
------------ ------------
Total partners' equity 37,281,471 37,589,800
------------ ------------
Total liabilities and partners'
equity $ 38,066,766 $ 38,385,189
============ ============
The accompanying notes are an integral part
of these financial statements.
</TABLE>
<PAGE>4
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AMERICAN INSURED MORTGAGE INVESTORS
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the three months ended For the nine months ended
September 30, September 30,
---------------------------- ----------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Income:
Mortgage investment income $ 827,825 $ 833,902 $ 2,550,308 $ 2,581,356
Interest and other income 8,263 7,546 26,356 24,543
------------ ------------ ------------ ------------
836,088 841,448 2,576,664 2,605,899
------------ ------------ ------------ ------------
Expenses:
Asset management fee to
related parties 85,773 85,773 257,319 257,319
General and administrative 42,671 33,698 152,591 153,483
------------ ------------ ------------ ------------
128,444 119,471 409,910 410,802
------------ ------------ ------------ ------------
Earnings before loss on
mortgage modification 707,644 721,977 2,166,754 2,195,097
Loss on mortgage modification -- -- -- (146,464)
------------ ------------ ------------ ------------
Net earnings $ 707,644 $ 721,977 $ 2,166,754 $ 2,048,633
============ ============ ============ ============
Net earnings allocated to:
Limited partners - 97.1% $ 687,122 $ 701,040 $ 2,103,918 $ 1,989,223
General partner - 2.9% 20,522 20,937 62,836 59,410
------------ ------------ ------------ ------------
$ 707,644 $ 721,977 $ 2,166,754 $ 2,048,633
============ ============ ============ ============
Net earnings per Unit of limited
partnership interest $ 0.07 $ 0.07 $ 0.21 $ 0.20
============ ============ ============ ============
The accompanying notes are an integral part
of these financial statements.
</TABLE>
<PAGE>5
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, 1997
(Unaudited)
<TABLE>
<CAPTION>
Unrealized
Gains on
Investment in
General Limited FHA-Insured
Partner Partners Certificates Total
------------ ------------ -------------- -------------
<S> <C> <C> <C> <C>
Balance, December 31, 1996 $ (4,932,018) $ 39,737,785 $ 2,784,033 $ 37,589,800
Net earnings 62,836 2,103,918 -- 2,166,754
Distributions paid or accrued of
$0.21 per Unit (62,721) (2,100,027) -- (2,162,748)
Adjustment to unrealized gains
on investment in FHA-Insured
Certificates -- -- (312,335) (312,335)
------------ ------------ ------------- -------------
Balance, September 30, 1997 $ (4,931,903) $ 39,741,676 $ 2,471,698 $ 37,281,471
============ ============ ============= =============
Limited Partnership Units
outstanding - September 30,
1997 10,000,125
============
</TABLE>
The accompanying notes are an integral part
of these financial statements.
<PAGE>6
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AMERICAN INSURED MORTGAGE INVESTORS
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the nine months ended
September 30,
1997 1996
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 2,166,754 $ 2,048,633
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:
(Increase) decrease in receivables and
other assets (9,781) 16,681
Decrease in accounts payable and
accrued expenses (10,094) (27,717)
------------ ------------
Net cash provided by operating
activities 2,146,879 2,184,061
------------ ------------
Cash flows from investing activities:
Receipt of mortgage principal from
scheduled payments 201,230 212,727
------------ ------------
Net cash provided by investing
activities 201,230 212,727
------------ ------------
Cash flows from financing activities:
Distributions paid to partners (2,162,748) (2,471,708)
------------ ------------
Net cash used in financing activities (2,162,748) (2,471,708)
------------ ------------
Net increase (decrease) in cash and cash
equivalents 185,361 (74,920)
------------ ------------
Cash and cash equivalents, beginning
of period 656,051 673,733
------------ ------------
Cash and cash equivalents, end of
period $ 841,412 $ 598,813
============ ============
The accompanying notes are an integral part
of these financial statements.
</TABLE>
<PAGE>7
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).
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 September 30,
1997 and December 31, 1996, the results of its operations for the three and nine
months ended September 30, 1997 and 1996 and its cash flows for the nine months
ended September 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
------------------------
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.
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.
<PAGE>8
AMERICAN INSURED MORTGAGE INVESTORS
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
2. BASIS OF PRESENTATION - Continued
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 September 30, 1997 and December 31, 1996:
<TABLE>
<CAPTION> September 30, December 31,
1997 1996
------------- ------------
<S> <C> <C>
Number of
Acquired Insured Mortgages 4 4
Originated Insured Mortgages 2 2
Amortized Cost $ 23,139,706 $ 23,262,738
Face Value 26,144,510 26,338,828
Fair Value 25,485,513 26,801,846
</TABLE>
All of the FHA-Insured Loans are current with respect to payment of
principal and interest as of November 4, 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 nine months ended September 30,
1997, the Partnership received $0 and $61,988, respectively, from the
Participations. During the three and nine months ended September 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.
<PAGE>9
AMERICAN INSURED MORTGAGE INVESTORS
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
4. INVESTMENT IN FHA-INSURED CERTIFICATES
Listed below is the Partnership's aggregate investment in FHA-Insured
Certificates as of September 30, 1997 and December 31, 1996:
<TABLE>
<CAPTION> September 30, December 31,
1997 1996
------------- ------------
<S> <C> <C>
Number of mortgages 9 9
Amortized Cost $ 11,243,528 $ 11,321,727
Face Value 13,698,822 13,843,564
Fair Value 13,715,227 14,105,760
</TABLE>
All of the FHA-Insured Certificates were current with respect to the
payment of principal and interest as of November 1, 1997.
5. DISTRIBUTIONS TO UNITHOLDERS
The distributions paid or accrued to Unitholders on a per Unit basis for
the nine months ended September 30, 1997 and 1996 are as follows:
<TABLE><CAPTION>
Quarter Ended 1997 1996
- ------------- -------- --------
<S> <C> <C>
March 31, $ 0.07 $ 0.08
June 30, 0.07 0.08
September 30, 0.07 0.07
-------- --------
$ 0.21 $ 0.23
======== ========
</TABLE>
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 nine months ended September 30, 1997 and 1996, earned or received
compensation or payments for services from the Partnership as follows:
<PAGE>10
AMERICAN INSURED MORTGAGE INVESTORS
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
6. TRANSACTIONS WITH RELATED PARTIES - Continued
<TABLE>
<CAPTION>
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 1997 1996 1997 1996
- ----------------- ---------------------------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
CRIIMI, Inc. General Partner/Distribution $ 20,907 $ 20,907 $ 62,721 $ 68,693
AIM Acquisition Advisor/Asset Management Fee 85,773 85,773 257,319 257,319
Partners, L.P.(1)
CRIIMI MAE Management, Affiliate of General Partner/ 6,282 5,912 29,562 38,741
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 $75,834 for the three and nine months ended September 30, 1997,
respectively, and a fee equal to $25,278 and $75,834 for the three and nine months ended September 30, 1996, respectively. The Sub-
advisor is an affiliate of CRIIMI MAE.
</FN>
</TABLE>
<PAGE>11
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Introduction
- ------------
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 other reports filed with the
Securities and Exchange Commission that could cause actual results to differ
materially.
General
- -------
As of September 30, 1997, the Partnership had invested in 15 Insured
Mortgage Investments, with an aggregate amortized cost of approximately $34.4
million, face value of approximately $39.8 million and fair value of
approximately $39.2 million.
All of the mortgage investments are current with respect to payment of
principal and interest as of November 4, 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 nine months ended September 30, 1997, as
compared to the corresponding period in 1996, primarily due to a decrease in
losses in 1997. The Partnership recognized a loss on the modification of the
mortgage on Creekside Village in May 1996. No losses were recognized in 1997.
Net earnings did not change significantly for the three months ended September
30, 1997, as compared to the corresponding period in 1996.
Mortgage investment income decreased slightly for the three and nine months
ended September 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. The decrease for the nine
months ended September 30, 1997, is partially offset by an increase in cash flow
received from Participations.
General and administrative expenses increased for the three months ended
September 30, 1997, as compared to the corresponding period in 1996. This
increase is due primarily to the adjustment and reallocation of annual expenses.
The Partnership did not dispose of any mortgage investments during the
three and nine months ended September 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 nine months ended September 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
<PAGE>12
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS - Continued
short-term investments, were sufficient for the nine months ended September 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
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 nine months ended September 30, 1997, as compared to the corresponding
period in 1996.
Net cash provided by investing activities decreased for the nine months
ended September 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 partially offset by an increase in the
receipt of mortgage principal from scheduled payments.
Net cash used in financing activities decreased for the nine months ended
September 30, 1997, as compared to the corresponding period in 1996, primarily
due to the decrease in the first and second quarters' distributions during 1997
as compared to 1996.
<PAGE>13
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, 1997.
The exhibits filed as part of this report are listed below:
Exhibit No. Description
- ------------- -----------------------
27 Financial Data Schedule
<PAGE>14
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
- ------------- ------------------------
Date Cynthia O. Azzara
Principal Financial
and Accounting Officer<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE
QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED
SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH QUARTERLY REPORT ON FORM 10-Q.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 841
<SECURITIES> 13,715
<RECEIVABLES> 23,511
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 38,067
<CURRENT-LIABILITIES> 785
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 37,282
<TOTAL-LIABILITY-AND-EQUITY> 38,067
<SALES> 0
<TOTAL-REVENUES> 2,577
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 410
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,167
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,167
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,167
<EPS-PRIMARY> .21
<EPS-DILUTED> 0
</TABLE>
