<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 June 30, 1998
------------------
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 June 30, 1998, 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 JUNE 30, 1998
PAGE
----
PART I. Financial Information (Unaudited)
Item 1. Financial Statements
Balance Sheets - June 30, 1998 (unaudited)
and December 31, 1997.................... 3
Statements of Operations - for the three and
six months ended June 30, 1998 and 1997
(unaudited).............................. 4
Statement of Changes in Partners' Equity -
for the six months ended June 30, 1998
(unaudited)......................... 5
Statements of Cash Flows - for the six
months ended June 30, 1998 and 1997
(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>
June 30, December 31,
1998 1997
------------- ------------
<S> <C> <C>
(Unaudited)
ASSETS
Investment in FHA-Insured Loans,
at amortized cost, net of unamortized
discount:
Acquired Insured Mortgages $ 7,934,809 $ 8,912,223
Originated Insured Mortgages 14,136,583 14,184,505
------------ ------------
22,071,392 23,096,728
Investment in FHA-Insured Certificates,
at fair value 13,970,760 14,178,168
Cash and cash equivalents 855,661 878,867
Receivables and other assets 1,585,682 397,201
------------ ------------
Total assets $ 38,483,495 $ 38,550,964
============ ============
LIABILITIES AND PARTNERS' EQUITY
Distributions payable $ 720,915 $ 823,903
Accounts payable and accrued expenses 45,436 66,482
------------ ------------
Total liabilities 766,351 890,385
------------ ------------
Partners' equity:
Limited partners' equity 39,834,809 39,633,683
General partner's deficit (4,929,121) (4,935,128)
Unrealized gains on investment
in FHA-Insured Certificates 2,811,456 2,962,024
------------ ------------
Total partners' equity 37,717,144 37,660,579
------------ ------------
Total liabilities and partners'
equity $ 38,483,495 $ 38,550,964
============ ============
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 six months ended
June 30, June 30,
---------------------------- ----------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Income:
Mortgage investment income $ 799,377 $ 829,454 $ 1,673,496 $ 1,722,483
Interest and other income 37,801 10,500 50,681 18,093
------------ ------------ ------------ ------------
837,178 839,954 1,724,177 1,740,576
------------ ------------ ------------ ------------
Expenses:
Asset management fee to
related parties 85,773 85,773 171,546 171,546
General and administrative 53,329 52,910 103,742 109,920
------------ ------------ ------------ -----------
139,102 138,683 275,288 281,466
------------ ------------ ------------ -----------
Earnings before gain on
mortgage disposition 698,076 701,271 1,448,889 1,459,110
Gain on mortgage disposition -- -- 200,074 --
------------ ------------ ------------ -----------
Net earnings $ 698,076 $ 701,271 $ 1,648,963 $ 1,459,110
============ ============ ============ ===========
Net earnings allocated to:
Limited partners - 97.1% $ 677,832 $ 680,934 $ 1,601,143 $ 1,416,796
General partner - 2.9% 20,244 20,337 47,820 42,314
------------ ------------ ------------ -----------
$ 698,076 $ 701,271 $ 1,648,963 $ 1,459,110
============ ============ ============ ===========
Net earnings per limited
partnership Unit-Basic $ 0.07 $ 0.07 $ 0.16 $ 0.14
============ ============ ============ ===========
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 six months ended June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Unrealized
Gains on
Investment in
General Limited FHA-Insured
Partner Partners Certificates Total
------------ ------------ -------------- -------------
<S> <C> <C> <C> <C>
Balance, December 31, 1997 $ (4,935,128) $ 39,633,683 $ 2,962,024 $ 37,660,579
Net earnings 47,820 1,601,143 -- 1,648,963
Distributions paid or accrued of
$0.14 per Unit (41,813) (1,400,017) -- (1,441,830)
Adjustment to unrealized gains
on investment in FHA-Insured
Certificates -- -- (150,568) (150,568)
------------ ------------ ------------- -------------
Balance, June 30, 1998 $ (4,929,121) $ 39,834,809 $ 2,811,456 $ 37,717,144
============ ============ ============= =============
Limited Partnership Units
outstanding - Basic, June 30,
1998 10,000,125
============
The accompanying notes are an integral part
of these financial statements.
</TABLE>
<PAGE>6
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AMERICAN INSURED MORTGAGE INVESTORS
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the six months ended
June 30,
1998 1997
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 1,648,963 $ 1,459,110
Adjustments to reconcile net
earnings to net cash provided by
operating activities:
Gain on disposition of insured mortgage (200,074) --
Changes in assets and liabilities:
(Increase) decrease in receivables and
other assets (40,432) 14,262
(Decrease) increase in accounts payable and
accrued expenses (21,046) 2,214
------------ ------------
Net cash provided by operating activities 1,387,411 1,475,586
------------ ------------
Cash flows from investing activities:
Receipt of mortgage principal from
scheduled payments 134,201 132,542
------------ ------------
Net cash provided by investing activities 134,201 132,542
------------ ------------
Cash flows from financing activities:
Distributions paid to partners (1,544,818) (1,441,832)
------------ ------------
Net cash used in financing activities (1,544,818) (1,441,832)
------------ ------------
Net (decrease) increase in cash and cash equivalents (23,206) 166,296
------------ ------------
Cash and cash equivalents, beginning of period 878,867 656,051
------------ ------------
Cash and cash equivalents, end of period $ 855,661 $ 822,347
============ ============
Non cash investing activity:
50% share of debenture received from HUD in exchange
for the mortgage on Portervillage I Apartments
(Debenture is held by an affiliate, AIM 85) $ 1,148,049 --
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 June 30, 1998 and
December 31, 1997, the results of its operations for the three and six months
ended June 30, 1998 and 1997 and its cash flows for the six months ended June
30, 1998 and 1997.
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, 1997.
New Accounting Standards
------------------------
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
a separate statement of 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 was
adopted by the Partnership January 1, 1998. For the three and six months ended
June 30, 1998, comprehensive income was $520,729 and $1,498,395, respectively.
For the three and six months ended June 30, 1997, comprehensive income was
$800,480 and $1,168,669, respectively.
<PAGE>8
AMERICAN INSURED MORTGAGE INVESTORS
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
3. INVESTMENT IN FHA-INSURED LOANS
Listed below is the Partnership's aggregate investment in FHA-Insured Loans
as of June 30, 1998 and December 31, 1997:
<TABLE>
<CAPTION> June 30, December 31,
1998 1997
------------- ------------
<S> <C> <C>
Number of
Acquired Insured Mortgages (1) 3 4
Originated Insured Mortgages 2 2
Amortized Cost $ 22,071,392 $ 23,096,728
Face Value 24,803,213 26,077,186
Fair Value 25,374,100 26,840,133
(1) In March 1998, HUD issued assignment proceeds in the form of a 9.5%
debenture for the mortgage on Portervillage I Apartments. This mortgage was
owned 50% by AIM 84 and 50% by an affiliate of the partnership, American Insured
Mortgage Investors - Series 85, L.P. (AIM 85). The debenture, with a face value
of $2,296,098, was issued to AIM 85, with interest payable semi-annually on
January 1 and July 1. The Partnership expects to receive net proceeds of
approximately $1.1 million and has recognized a gain of approximately $200,000
for the six months ended June 30, 1998. The net proceeds and accrued interest
are included on the Balance Sheet in Receivables and other assets. A
distribution will be declared in the quarter in which cash is received for the
debenture.
</TABLE>
All of the FHA-Insured Loans are current with respect to payment of
principal and interest as of August 1, 1998.
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, 1998, the
Partnership received $0 and $52,526, respectively, from the Participations.
These amounts are included in mortgage investment income on the accompanying
statements of operations. For the three and six months ended June 30, 1997, the
Partnership received $0 and $61,988, respectively from the Participations.
<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 June 30, 1998 and December 31, 1997:
<TABLE>
<CAPTION> June 30, December 31,
1998 1997
------------- ------------
<S> <C> <C>
Number of mortgages 9 9
Amortized Cost $ 11,159,302 $ 11,216,144
Face Value 13,546,494 13,648,992
Fair Value 13,970,760 14,178,168
</TABLE>
All of the FHA-Insured Certificates were current with respect to the
payment of principal and interest as of August 1, 1998.
5. DISTRIBUTIONS TO UNITHOLDERS
The distributions paid or accrued to Unitholders on a per Unit basis for
the six months ended June 30, 1998 and 1997 are as follows:
<TABLE><CAPTION>
Quarter Ended 1998 1997
- ------------- -------- --------
<S> <C> <C>
March 31, $ 0.07 $ 0.07
June 30, 0.07 0.07
-------- --------
$ 0.14 $ 0.14
======== ========
</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 six
months ended June 30, 1998 and 1997, 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 six months
Capacity in Which ended June 30, ended June 30,
Name of Recipient Served/Item 1998 1997 1998 1997
- ----------------- ---------------------------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
CRIIMI, Inc. General Partner/Distribution $ 20,906 $ 20,907 $ 41,813 $ 41,814
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/ 11,323 13,286 18,569 23,280
Inc. Expense Reimbursement
<FN>
(1) The Advisor, pursuant to the Partnership Agreement 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, 1998, respectively, and a fee equal to $25,278 and
$50,556 for the three and six months ended June 30, 1997, 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. See Item 1, "Forward-Looking Statements" in the Partnership's
Annual Report for 1997 on Form 10-K for a more detailed discussion of such risks
and uncertainties.
General
- -------
As of June 30, 1998, the Partnership had invested in 14 Insured Mortgage
Investments, with an aggregate amortized cost of approximately $33.2 million,
face value of approximately $38.3 million and fair value of approximately $39.3
million.
All of the mortgage investments are current with respect to payment of
principal and interest as of August 1, 1998.
Results of Operations
- ---------------------
Net earnings increased for the six months ended June 30, 1998, as compared
to the corresponding period in 1997, primarily due to the gain recognized on the
disposition of the mortgage on Portervillage I Apartments. Net earnings before
gain on mortgage disposition did not change significantly for the three and six
months ended June 30, 1998, as compared to the corresponding periods in 1997.
In March 1998, HUD issued assignment proceeds in the form of a 9.5%
debenture for the mortgage on Portervillage I Apartments. This mortgage was
owned 50% by AIM 84 and 50% by an affiliate of the partnership, American Insured
Mortgage Investors - Series 85, L.P. (AIM 85). The debenture, with a face value
of $2,296,098, was issued to AIM 85, with interest payable semi-annually on
January 1 and July 1. The Partnership expects to receive net proceeds of
approximately $1.1 million and has recognized a gain of approximately $200,000
for the six months ended June 30, 1998. The net proceeds and accrued interest
are included on the Balance Sheet in Receivables and other assets. A
distribution will be declared in the quarter in which cash is received for the
debenture.
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, 1998
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.
<PAGE>12
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS - Continued
Net cash provided by operating activities decreased slightly for the six
months ended June 30, 1998, as compared to the corresponding period in 1997.
This was primarily due to an increase in accrued interest due on the 9.5%
debenture, as previously discussed.
Net cash used in financing activities increased for the six months ended
June 30, 1998, as compared to the corresponding period in 1997, primarily
resulting from an increase in distributions paid to partners.
<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 June 30, 1998.
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
/s/ August 13, 1998 /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 SIX MONTHS ENDED
JUNE 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH QUARTERLY REPORT ON FORM 10-Q.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 856
<SECURITIES> 13,971
<RECEIVABLES> 23,656
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 38,483
<CURRENT-LIABILITIES> 766
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 37,717
<TOTAL-LIABILITY-AND-EQUITY> 38,483
<SALES> 0
<TOTAL-REVENUES> 1,924
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 275
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,649
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,649
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,649
<EPS-PRIMARY> .16
<EPS-DILUTED> 0
</TABLE>
