AMERICAN INSURED MORTGAGE INVESTORS, 10-K, 1998-03-23

AMERICAN INSURED MORTGAGE INVESTORS
10-K, 1998-03-23
INVESTORS, NEC

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<PAGE>1

FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 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)

Securities registered pursuant to Section 12(b) of the Act:

Name of each exchange on
Title of each class which registered
- ----------------------------------- ---------------------------
Depositary Units of Limited American Stock Exchange
Partnership Interest

Securities registered pursuant to Section 12(g) of the Act:

None
- -----------------------------------------------------------------
(Title of class)

Indicated 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 [ ]

<PAGE>2

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.[X]

As of March 6, 1998, 10,000,000 depositary units of limited partnership
interest were outstanding and the aggregate market value of such units held by
non-affiliates of the Registrant on such date was $33,085,515.

<PAGE>3

AMERICAN INSURED MORTGAGE INVESTORS

1997 ANNUAL REPORT ON FORM 10-K

TABLE OF CONTENTS

PART I
------
Page
----
Item 1. Business . . . . . . . . . . . . . . . . . . 4
Item 2. Properties . . . . . . . . . . . . . . . . . 5
Item 3. Legal Proceedings . . . . . . . . . . . . . . 5
Item 4. Submission of Matters to a Vote of
Security Holders . . . . . . . . . . . . . 5

PART II
-------
Item 5. Market for Registrant's Securities and
Related Security Holder Matters . . . . . . 6
Item 6. Selected Financial Data . . . . . . . . . . . 8
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of
Operations . . . . . . . . . . . . . . . . 9
Item 8. Financial Statements and Supplementary Data . 14
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure . . 14

PART III
--------
Item 10. Directors and Executive Officers of the
Registrant . . . . . . . . . . . . . . . . 14
Item 11. Executive Compensation . . . . . . . . . . . 15
Item 12. Security Ownership of Certain Beneficial
Owners and Management . . . . . . . . . . . 15
Item 13. Certain Relationships and Related
Transactions . . . . . . . . . . . . . . . 16

PART IV
-------
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K . . . . . . . . . . . . 17

Signatures . . . . . . . . . . . . . . . . . . . . . . 20

<PAGE>4

PART I

ITEM 1. BUSINESS

Development and Description of Business
- ---------------------------------------
Information concerning the business of American Insured Mortgage Investors
(the Partnership) is contained in Part II, Item 7, Management's Discussion and
Analysis of Financial Condition and Results of Operations and in Notes 1, 4, 5
and 6 of the notes to the financial statements of the Partnership (filed in
response to Item 8 hereof), which is incorporated herein by reference. Also see
Schedule IV-Mortgage Loans on Real Estate for the table of the Insured Mortgages
(as defined below) invested in by the Partnership as of December 31, 1997.

Employees
- ---------
The Partnership has no employees. The business of the Partnership is
managed by CRIIMI, Inc. (the General Partner), while its portfolio of mortgages
is managed by AIM Acquisition Partners, L.P. (the Advisor) pursuant to an
advisory agreement (the Advisory Agreement). CRIIMI, Inc. is a wholly-owned
subsidiary of CRIIMI MAE Inc. (CRIIMI MAE).

The general partner of the Advisor is AIM Acquisition Corporation (AIM
Acquisition) and the limited partners include, but are not limited to, AIM
Acquisition, The Goldman Sachs Group, L.P., Broad, Inc. and CRIIMI MAE.
Effective September 6, 1991 and through June 30, 1995, a sub-advisory agreement
(the Sub-advisory Agreement) existed whereby CRI/AIM Management, Inc., an
affiliate of CRI, Inc., managed the Partnership's portfolio. In connection with
the transaction in which CRIIMI MAE became a self-administered real estate
investment trust (REIT), an affiliate of CRIIMI MAE acquired the Sub-advisory
Agreement. As a consequence of this transaction, effective June 30, 1995,
CRIIMI MAE Services Limited Partnership manages the Partnership's portfolio.
These transactions had no effect on the Partnership's financial statements.

Competition
- -----------
In disposing of mortgage investments, the Partnership competes with private
investors, mortgage banking companies, mortgage brokers, state and local
government agencies, lending institutions, trust funds, pension funds, and other
entities, some with similar objectives to those of the Partnership and some of
which are or may be affiliates of the Partnership, its General Partner, the
Advisor or their respective affiliates. Some of these entities may have
substantially greater capital resources and experience in disposing of Federal
Housing Administration (FHA) insured mortgages than the Partnership.

CRIIMI MAE and its affiliates also may serve as general partners, sponsors
or managers of real estate limited partnerships, REITS or other entities in the
future. The Partnership may attempt to dispose of mortgage investments at or
about the same time that CRIIMI MAE, one or more of the other AIM Partnerships
and/or other entities sponsored or managed by CRIIMI MAE are attempting to
dispose of mortgages. As a result of market conditions that could limit
dispositions, CRIIMI MAE Services Limited Partnership and its affiliates could
be faced with conflicts of interest in determining which mortgages would be
disposed of. Both CRIIMI MAE Services Limited Partnership and CRIIMI, Inc.,
however, are subject to their fiduciary duties in evaluating the appropriate
action to be taken when faced with such conflicts.

Forward-Looking Statements
- --------------------------
In accordance with the Private Securities Litigation Reform Act of 1995,
the Partnership can obtain a "Safe Harbor" for forward-looking statements by
identifying those statements and by accompanying those statements with
cautionary statements which identify factors that could cause actual results to
differ from those in the forward-looking statements. Accordingly, the following

<PAGE>5

information contains or may contain forward-looking statements: (1) information
included or incorporated by reference in this Annual Report on Form 10-K,
including, without limitation, statements made under Item 7, Management's
Discussion and Analysis of Financial Condition and Results of Operations, (2)
information included or incorporated by reference in future filings by the
Partnership with the Securities and Exchange Commission including, without
limitation, statements with respect to growth, projected revenues, earnings,
returns and yields on its portfolio of mortgage assets, the impact of interest
rates, costs and business strategies and plans and (3) information contained in
written material, releases and oral statements issued by or on behalf of, the
Partnership, including, without limitation, statements with respect to growth,
projected revenues, earnings, returns and yields on its portfolio of mortgage
assets, the impact of interest rates, costs and business strategies and plans.
The Partnership's actual results may differ materially from those contained in
the forward-looking statements identifed above. Factors which may cause such a
difference to occur include, but are not limited to (i) regulatory and
litigation matters, (ii) interest rates, (iii) trends in the economy, (iv)
prepayment of mortgages and (v) defaulted mortgages.

ITEM 2. PROPERTIES

Although the Partnership does not own the underlying real estate, the
mortgages underlying the Partnership's mortgage investments are non-recourse
first liens on the respective multifamily residential developments.

ITEM 3. LEGAL PROCEEDINGS

There are no material legal proceedings to which the Partnership is a
party.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to the security holders to be voted on during the
fourth quarter of 1997.

<PAGE>6

PART II

ITEM 5. MARKET FOR REGISTRANT'S SECURITIES AND RELATED SECURITY HOLDER MATTERS

Principal Market and Market Price for Units and Distributions
- -------------------------------------------------------------
The Units are traded on the American Stock Exchange (AMEX) with a trading
symbol of "AIA". The high and low bid prices for the Units as reported on AMEX
and the distributions, as applicable, for each quarterly period in 1997 and 1996
were as follows:

Amount of
1997 Distribution
Quarter Ended High Low Per Unit
- ------------------- ------- ------- ------------

March 31 $3 1/2 3 1/4 $ 0.07
June 30 3 9/16 3 1/4 0.07
September 30 3 9/16 3 3/16 0.07
December 31 3 7/16 3 1/8 0.08
---------
$ 0.29
=========

Amount of
1996 Distribution
Quarter Ended High Low Per Unit
- ------------------- ------- ------- -----------
March 31 $3 9/16 $3 3/16 $ 0.08
June 30 3 7/16 3 1/8 0.08
September 30 3 7/16 3 1/8 0.07
December 31 3 7/16 3 1/8 0.07
---------
$ 0.30
=========

There are no material legal restrictions upon the Partnership's present or
future ability to make distributions in accordance with the provisions of the
Partnership Agreement.

<PAGE>7

PART II

ITEM 5. MARKET FOR REGISTRANT'S SECURITIES AND RELATED SECURITY HOLDER MATTERS
- Continued

Approximate Number
of Unitholders as of
Title of Class December 31, 1997
- --------------------------- ----------------------

Depositary Units of Limited
Partnership Interest 7,600

<PAGE>8

PART II

ITEM 6. SELECTED FINANCIAL DATA
(Dollars in thousands, except per Unit amounts)

<TABLE><CAPTION>
For the years ended December 31,
1997 1996 1995 1994 1993
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Income $ 3,415 $ 3,445 $ 3,626 $ 3,736 $ 4,487

Net gains (loss) from
mortgage modifications/dispositions -- (146) -- 196 762

Net earnings 2,879 2,758 3,041 3,280 4,528

Composition of distributions
per Limited Partnership
Unit(1)(2):
Net earnings - Basic $ 0.28 $ 0.27 $ 0.30 $ 0.32 $ 0.440
Return of capital 0.01 0.03 0.02 0.81 0.205
-------- -------- -------- -------- --------
Total $ 0.29 $ 0.30 $ 0.32 $ 1.13 $ 0.645
======== ======== ======== ======== ========

As of December 31,
------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------

Total assets $ 38,551 $ 38,385 $ 39,415 $ 38,161 $ 47,630

Partners' equity 37,661 37,590 38,493 37,241 43,749

(1) Calculated based upon the weighted average number of Limited Partnership Units outstanding.
(2) Includes distributions due the Unitholders for the Partnership's fiscal quarters ended December 31, 1997, 1996, 1995, 1994 and
1993 which were paid subsequent to each year end. See Notes 4 and 7 of the Notes to Financial Statements contained in Item 8.
"Financial Statements and Supplementary Data."
</TABLE>

The selected statements of operations data presented above for the years
ended December 31, 1997, 1996 and 1995 and the balance sheet data as of December
31, 1997 and 1996, are derived from and are qualified by reference to the
Partnership's financial statements which have been included elsewhere in this
Form 10-K. The statements of operations data for the years ended December 31,
1994 and 1993 and the balance sheet data as of December 31, 1995, 1994 and 1993
are derived from audited financial statements not included in this Form 10-K.
This data should be read in conjunction with the financial statements and the
notes thereto.

<PAGE>9

PART II

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

General
- -------
American Insured Mortgage Investors (the Partnership) was formed under the
Uniform Limited Partnership Act in the state of California on July 12, 1983.
During the period from March 1, 1984 (the initial closing date of the
Partnership's public offering) through December 31, 1984, the Partnership,
pursuant to its public offering of 10,000,000 depositary units of limited
partnership interest (Units), raised a total of $200,000,000 in gross proceeds.
In addition, the initial limited partner contributed $2,500 to the capital of
the Partnership and received 125 Units of limited partnership interest in
exchange therefor.

CRIIMI, Inc. (the General Partner) holds a partnership interest of 2.9%.
CRIIMI, Inc. is a wholly owned subsidiary of CRIIMI MAE Inc. (CRIIMI MAE).
Prior to June 30, 1995, CRIIMI MAE was managed by an advisor whose general
partner is CRI, Inc. (CRI). However, effective June 30, 1995, CRIIMI MAE became
a self-administered real estate investment trust (REIT) and, as a result, the
advisor no longer advises CRIIMI MAE.

AIM Acquisition Partners L.P. (the Advisor) serves as the advisor to the
Partnership. The general partner of the Advisor is AIM Acquisition Corporation
(AIM Acquisition) and the limited partners include, but are not limited to, AIM
Acquisition, The Goldman Sachs Group, L.P., Broad, Inc. and CRIIMI MAE.
Pursuant to the terms of certain amendments to the Partnership agreement, the
General Partner is required to receive the consent of the Advisor prior to
taking certain significant actions which affect the management and policies of
the Partnership.

Effective September 6, 1991 and through June 30, 1995, a sub-advisory
agreement(the Sub-advisory Agreement) existed whereby CRI/AIM Management, Inc.,
an affiliate of CRI, Inc. managed the Partnership's portfolio. In connection
with the transaction in which CRIIMI MAE became a self-administered REIT, an
affiliate of CRIIMI MAE acquired the Sub-advisory Agreement. As a consequence
of this transaction, effective June 30, 1995, CRIIMI MAE Services Limited
Partnership, an affiliate of CRIIMI MAE, manages the Partnership's portfolio.
These transactions had no effect on the Partnership's financial statements.

The Partnership is currently in the process of evaluating its information
technology infrastructure for Year 2000 compliance. The Partnership does not
expect that the cost to modify its information technology infrastructure to be
Year 2000 compliant will be material to its financial condition or results of
operations. The Partnership does not anticipate any material disruption in its
operations as a result of any failure by the Partnership to be in compliance.
The Partnership is currently evaluating the Year 2000 compliance status of its
service providers. The Partnership does not expect any non Year 2000 compliance
by its service providers to cause any disruption in its operations.

Prior to the expiration of the Partnership's reinvestment period in
November 1988, the Partnership was engaged in the business of originating
mortgage loans (Originated Insured Mortgages) and acquiring mortgage loans
(Acquired Insured Mortgages and, together with Originated Insured Mortgages,
referred to herein as Insured Mortgages). In accordance with the terms of the
Partnership Agreement, the Partnership is no longer authorized to originate or
acquire Insured Mortgages and, consequently, its primary objective is to manage
its portfolio of mortgage investments, all of which are insured under Section
221(d)(4) or Section 231 of the National Housing Act. The Partnership Agreement
states that the Partnership will terminate on December 31, 2008, unless
previously terminated under the provisions of the Partnership Agreement.

<PAGE>10

PART II

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS - Continued

As of December 31, 1997, the Partnership had invested in 15 Insured
Mortgages, with an aggregate amortized cost of approximately $34.3 million, a
face value of approximately $39.7 million and a fair value of approximately
$41.0 million, as discussed below.

The Partnership's investment in Insured Mortgages consists of FHA-insured
mortgage loans (FHA-Insured Loans) and 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). The mortgages underlying the FHA-Insured Certificates
and FHA-Insured Loans are non-recourse first liens on multifamily residential
developments.

Investment in FHA-Insured Loans
- --------------------------------
Listed below is the Partnership's aggregate investment in FHA-Insured Loans
as of December 31, 1997 and 1996:

<TABLE>
<CAPTION> December 31,
1997 1996
------------ ------------
<S> <C> <C>
Number of
Acquired Insured Mortgages 4 4
Originated Insured Mortgages 2 2
Amortized Cost $ 23,096,728 $ 23,262,738
Face Value 26,077,186 26,338,828
Fair Value 26,840,133 26,801,846

</TABLE>

All of the FHA-Insured Loans were current with respect to the payment of
principal and interest as of March 1, 1998, 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 received 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 years ended December
31, 1997, 1996 and 1995, the Partnership received $61,988, $12,158 and $39,465,
respectively, from the Participations. These amounts are included in mortgage
investment income on the accompanying statements of operations.

<PAGE>11

PART II

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS - Continued

Investment in FHA-Insured Certificates
- --------------------------------------
Listed below is the Partnership's aggregate investment in FHA-Insured
Certificates as of December 31, 1997 and 1996:

<TABLE>
<CAPTION> December 31,
1997 1996
------------ ------------
<S> <C> <C>
Number of mortgages 9 9
Amortized Cost $ 11,216,144 $ 11,321,727
Face Value 13,648,992 13,843,564
Fair Value 14,178,168 14,105,760

</TABLE>

All of the FHA-Insured Certificates were current with respect to the
payment of principal and interest as of March 1, 1998.

Results of Operations
- ---------------------

1997 versus 1996
- ----------------
Net earnings increased for 1997 as compared to 1996 primarily due to the
loss incurred in 1996 on the mortgage modification of Creekside Village, as
discussed below. No mortgages were disposed of or modified during 1997.

1996 versus 1995
- ----------------
Net earnings decreased for 1996 as compared to 1995 primarily due to the
mortgage modification of Creekside Village, as discussed below. No mortgages
were disposed of or modified during 1995. Partially offsetting the reduction in
income was a decrease in general and administrative expenses, as discussed
below.

General and administrative expenses decreased for 1996 as compared to 1995.
The decrease is primarily due to a reduction in investor relations expenses
resulting from a decrease in the number of registered unitholders.

In May 1996, the mortgage note on Creekside Village was amended to reduce
the mortgage interest rate from 11.5% (with no lockout provision) to 7.75%,
(which includes a lockout provision and prepayment penalty). In connection with
this modification, the Partnership recognized a loss of $146,464 on the
accompanying statements of operations for the year ended December 31, 1996,
primarily representing the unamortized balance of acquisition and closing costs
paid in connection with the origination of this mortgage.

Liquidity and Capital Resources
- -------------------------------
The Partnership's operating cash receipts, derived from payments of
principal and interest on Insured Mortgages, plus cash receipts from interest on
short-term investments, were sufficient for the years ended December 31, 1997,
1996 and 1995 to meet operating requirements.

The basis for paying distributions to Unitholders is net proceeds from
mortgage dispositions, if any, and cash flow from operations, which includes

<PAGE>12

PART II

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS - Continued

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.

Since the Partnership is obligated to distribute the Proceeds of Mortgage
Prepayments, Sales and Insurance of Insured Mortgages (as defined in the
Partnership Agreement) to its Unitholders, the size of the Partnership's
portfolio will continue to decrease. The magnitude of the decrease will depend
upon the size of the Insured Mortgages which are prepaid, sold or assigned for
insurance proceeds.

Cash Flow - 1997 versus 1996
- ----------------------------
Net cash provided by operating activities decreased for 1997 as compared to
1996 primarily due to an increase in receivables and other assets due to the
delinquent mortgage on Portervillage I Apartments, which was assigned to HUD in
May 1997.

Net cash provided by investing activities decreased slightly for 1997 as
compared to 1996 primarily due to a reduction in the receipt of mortgage
principal from scheduled payments as a result of the normal amortization of the
mortgage base.

Net cash used in financing activities decreased for 1997 as compared to
1996 primarily due to a decrease in the quarterly distributions in 1997 as
compared to 1996.

Cash flow - 1996 versus 1995
- ----------------------------
Net cash provided by operating activities decreased for 1996 as compared to
1995 primarily due to a reduction in mortgage investment income, as discussed
above.

Net cash provided by investing activities increased for 1996 as compared to
1995 primarily due to the receipt of mortgage principal from scheduled payments,
which increased as a result of the modification of the mortgage on Creekside
Village, as discussed above, and due to the normal amortization of the mortgage
base.

Net cash used in financing activities decreased for 1996 as compared to
1995 primarily due to the decrease in the third quarter 1996 distribution as a
result of the modification of the mortgage on Creekside Village.

New Accounting Standards
- ------------------------
In February 1997, FASB issued SFAS No. 128 "Earnings per Share" ("FAS
128"). FAS 128 changes the requirements for the calculation and disclosure of
earnings per share. The Partnership is required to present basic net earnings
per limited partnership unit as opposed to net earnings per limited partnership
unit. However, the computational differences between FAS 128 and the prior
accounting standard do not impact the Partnership. FAS 128 has been applied to
the year ended December 31, 1997, and all prior periods.

<PAGE>13

PART II

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS - Continued

During 1997 FASB issued SFAS No. 129 "Disclosure of Information about
Capital Structure" ("FAS 129"). FAS 129 continues the existing requirements to
disclose the pertinent rights and privileges of all securities other than
ordinary common stock but expands the number of companies subject to portions of
its requirements. The Partnership's disclosures comply with the requirements of
this statement.

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 is
effective for years beginning on or after December 15, 1997.

During 1997, FASB issued SFAS 131 "Disclosures about Segments of an
Enterprise and Related Information" ("FAS 131"). FAS 131 establishes standards
for the way that public business enterprises report information about operating
segments and related disclosures about products and services, geographical areas
and major customers. FAS 131 is effective for years beginning on or after
December 15, 1997.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The information required by this item is contained on pages 21 through 39.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURES
None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

(a), (b), (c) and (e)

The Partnership has no officers or directors. CRIIMI, Inc. (the General
Partner) holds a Partnership interest of 2.9%. The affairs of the Partnership
are generally managed by the General Partner, which is wholly owned by CRIIMI
MAE, a company whose shares are listed on the New York Stock Exchange. Prior to
June 30, 1995, CRIIMI MAE was managed by an advisor whose general partner was
CRI, Inc. However, effective June 30, 1995, CRIIMI MAE became a self-
administered REIT and, as a result, such advisor no longer advises CRIIMI MAE.

AIM Acquisition Partner L.P., (the Advisor) serves as the advisor to the
Partnership. AIM Acquisition is the general partner of the Advisor and the
limited partners include, but are not limited to, AIM Acquisition, The Goldman
Sachs Group, L.P., Broad, Inc. and CRIIMI MAE. Pursuant to the terms of certain
amendments to the Partnership Agreement, the General Partner is required to
receive the consent of the Advisor prior to taking certain significant actions
which affect the management and policies of the Partnership. Effective
September 6, 1991 and through June 30, 1995, a sub-advisory agreement (the Sub-
advisory Agreement) existed whereby CRI/AIM Management, Inc., an affiliate of
CRI, managed the Partnership's portfolio. In connection with the transaction in
which CRIIMI MAE became a self-administered REIT, an affiliate of CRIIMI MAE
acquired the Sub-advisory Agreement. As a consequence of this transaction,
effective June 30, 1995, CRIIMI MAE Services Limited Partnership, an affiliate

<PAGE>14

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT -
Continued

of CRIIMI MAE, manages the Partnership's portfolio. These transactions had no
effect on the Partnership's financial statements.

The General Partner is also the general partner of American Insured
Mortgage Investors - Series 85, L.P. (AIM 85), American Insured Mortgage
Investors L.P. - Series 86 (AIM 86) and American Insured Mortgage Investors L.P.
- - Series 88 (AIM 88), limited partnerships with investment objectives similar to
those of the Partnership.

(d) There is no family relationship between any of the officers and
directors of the General Partner.

(f) Involvement in certain legal proceedings.

None.

(g) Promoters and control persons.

Not applicable.

(h) Based solely on its review of Forms 3 and 4 and amendments thereto
furnished to the Partnership, and written representations from certain
reporting persons that no Form 5s were required for those persons, the
Partnership believes that all reporting persons have filed on a timely
basis Forms 3, 4, and 5 as required in the fiscal year ended December
31, 1997.

ITEM 11. EXECUTIVE COMPENSATION

The information required by Item 11 is incorporated herein by reference to
Note 4 of the notes to the financial statements of the Partnership.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

As of December 31, 1997, no person was known by the Partnership to be the
beneficial owner of more than five percent (5%) of the outstanding Units of the
Partnership.

As of December 31, 1997, neither the officers and directors, as a group, of
the General Partner nor any individual director of the General Partner, are
known to own more than 1% of the outstanding Units of the Partnership.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

(a) Transactions with management and others.

Note 4 of the notes to the Partnership's financial statements of this
report contains a discussion of the amounts, fees and other
compensation paid or accrued by the Partnership to the directors and
executive officers of the General Partner and their affiliates, and is
incorporated herein by reference.

(b) Certain business relationships.

Other than as set forth in Item 11 of this report which is
incorporated herein by reference, the Partnership has no business

<PAGE>15

PART III

relationship with entities of which the General Partner of the
Partnership are officers, directors or equity owners.

None.

(d) Transactions with promoters.

Not applicable.

<PAGE>16

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K

(a)(1) Financial Statements:

Page
Description Number
- ----------- --------------

Balance Sheets as of December 31, 1997
and 1996 23

Statements of Operations for the years
ended December 31, 1997, 1996 and 1995 24

Statements of Changes in Partners' Equity
for the years ended December 31, 1997,
1996 and 1995 25

Statements of Cash Flows for the years
ended December 31, 1997, 1996 and 1995 26

Notes to Financial Statements 27

(a)(2) Financial Statement Schedules:

IV - Mortgage Loans on Real Estate 36

All other schedules have been omitted because they are
inapplicable, not required, or the information is included in the
Financial Statements or Notes thereto.

(a)(3) Exhibits:

4.0 Amended and Restated Certificates of Limited Partnership are
incorporated by reference to Exhibit 4(a) to the Registration
Statement on Form S-11 (No. 33-6747) dated June 25, 1986 (such
Registration Statement, as amended, is referred to herein as the
"Registration Statement").

4.1 Agreement of Limited Partnership, incorporated by reference to
Exhibit 3 to the Registration Statement.

4.2 Form of Depository Receipt, incorporated by reference to Exhibit
4(b) to the Registration Statement.

4.3 Amendment to the Amended and Restated Agreement of Limited
Partnership of the Partnership dated February 12, 1990,
incorporated by reference to Exhibit 4(c) to the Partnership's
Annual Report on Form 10-K for the year ended December 31, 1989.

4.4 Amendments to Partnership Agreement dated August 16, 1991,
incorporated by reference to Exhibit 28(c) to the Partnership's
Annual Report on Form 10-K for the year ended December 31, 1991.

10.0 Origination and Acquisition Services Agreement, dated September
1, 1983, between the Partnership and IFI, incorporated by
reference to Exhibit 10(b) to the registration statement on Form
S-11 (No. 2-85476) dated November 30, 1983 (such registration
statement, as amended, is referred to herein as the "Initial
Registration Statement").

<PAGE>17

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K - Continued

10.1 Management Services Agreement, dated November 30, 1983, between
the Partnership and IFI, incorporated by reference to Exhibit
10(c) to the Initial Registration Statement.

10.2 Disposition Services Agreement, dated November 30, 1983, between
the Partnership and IFI, incorporated by reference to Exhibit
10(d) to the Initial Registration Statement.

10.3 Agreement, dated November 30, 1983, among the former managing
general partner, the former associate general partner and
Integrated, incorporated by reference to Exhibit 10(e) to the
Initial Registration Statement.

10.4 Reinvestment Plan, incorporated by reference to the Prospectus
contained in the Registration Statement.

10.5 Mortgage Note dated March 26, 1986 between Mastic Associates and
IFI, incorporated by reference to Exhibit 10(l) to the
Partnership's Annual Report on Form 10-K for the year ended
December 31, 1986.

10.6 Mortgage dated March 26, 1986 between Mastic Associates and IFI,
incorporated by reference to Exhibit 10(m) to the Partnership's
Annual Report on Form 10-K for the year ended December 31, 1986.

10.7 Mortgagor/Mortgagee Agreement dated March 26, 1986 between Mastic
Associates and IFI, incorporated by reference to Exhibit 10(n) to
the Partnership's Annual Report on Form 10-K for the year ended
December 31, 1986.

10.8 Lease Agreement dated as of December 10, 1984 between NHP Land
Associates, as Landlord and Mastic Associates, as Tenant,
incorporated by reference to Exhibit 10(o) to the Partnership's
Annual Report on Form 10-K for the year ended December 31, 1986.

10.9 Purchase Agreement among AIM Acquisition, the former managing
general partner, the former corporate general partner, IFI and
Integrated dated as of December 1, 1990, as amended January 9,
1991, incorporated by reference to Exhibit 28(a) to the
Partnership's Annual Report on Form 10-K for the year ended
December 31, 1990.

10.10 Purchase Agreement among CRIIMI, Inc., AIM Acquisition, the
former managing general partner, the former corporate general
partner, IFI and Integrated dated as of December 13, 1990 and
executed as of September 6, 1991, incorporated by reference to
Exhibit 28(b) to the Partnership's Annual Report on Form 10-K for
the year ended December 31, 1990.

10.11 Sub-Management Agreement by and between AIM Acquisition and
CRI/AIM Management, Inc. dated as of March 1, 1991, incorporated
by reference to Exhibit 28(d) to the Partnership's Annual Report
on Form 10-K for the year ended December 31, 1992.

27. Financial Data Schedule (filed herewith).

(b) Reports on Form 8-K filed during the last quarter of the fiscal year:
None

All other items are not applicable.

<PAGE>18

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, 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

March 18, 1998 /s/ William B. Dockser
- --------------------------- ----------------------------
DATE William B. Dockser
Chairman of the Board
and Principal Executive
Officer

March 18, 1998 /s/ H. William Willoughby
- --------------------------- ----------------------------
DATE H. William Willoughby
President and Director

March 18, 1998 /s/ Cynthia O. Azzara
- --------------------------- ----------------------------
DATE Cynthia O. Azzara
Principal Financial and
Accounting Officer

March 18, 1998 /s/ Garrett G. Carlson, Sr.
- --------------------------- ----------------------------
DATE Garrett G. Carlson, Sr.
Director

March 18, 1998 /s/ Larry H. Dale
- --------------------------- ----------------------------
DATE Larry H. Dale
Director

March 18, 1998 /s/ G. Richard Dunnells
- --------------------------- ----------------------------
DATE G. Richard Dunnells
Director

March 18, 1998 /s/ Robert Merrick
- --------------------------- ----------------------------
DATE Robert Merrick
Director

<PAGE>19

AMERICAN INSURED MORTGAGE INVESTORS

Financial Statements as of December 31, 1997 and 1996

and for the Years Ended December 31, 1997, 1996 and 1995

<PAGE>20

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Partners of
American Insured Mortgage Investors:

We have audited the accompanying balance sheets of American Insured
Mortgage Investors (the Partnership) as of December 31, 1997 and 1996, and the
related statements of operations, changes in partners' equity and cash flows for
the years ended December 31, 1997, 1996 and 1995. These financial statements and
the schedule referred to below are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements and schedule based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the Partnership as of
December 31, 1997 and 1996, and the results of its operations and its cash flows
for the years ended December 31, 1997, 1996 and 1995, in conformity with
generally accepted accounting principles.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. Schedule IV-Mortgage Loans on Real
Estate as of December 31, 1997 and for the year then ended is presented for
purposes of complying with the Securities and Exchange Commission's rules and
regulations and is not a required part of the basic financial statements. The
information in this schedule has been subjected to the auditing procedures
applied in our audits of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.

Arthur Andersen LLP
Washington, DC
March 13, 1998

<PAGE>21

AMERICAN INSURED MORTGAGE INVESTORS

BALANCE SHEETS

<TABLE><CAPTION>
December 31, December 31,
1997 1996
------------ ------------
<S> <C> <C>
ASSETS

Investment in FHA-Insured Loans,
at amortized cost, net of unamortized
discount:
Originated insured mortgages $ 14,184,505 $ 14,274,528
Acquired insured mortgages 8,912,223 8,988,210
------------ ------------
23,096,728 23,262,738

Investment in FHA-Insured Certificates,
at fair value 14,178,168 14,105,760

Cash and cash equivalents 878,867 656,051

Receivables and other assets 397,201 360,640
------------ ------------
Total assets $ 38,550,964 $ 38,385,189
============ ============
LIABILITIES AND PARTNERS' EQUITY

Distributions payable $ 823,903 $ 720,916

Accounts payable and accrued expenses 66,482 74,473
------------ ------------
Total liabilities 890,385 795,389
------------ ------------
Partners' equity:
Limited partners' equity 39,633,683 39,737,785
General partner's deficit (4,935,128) (4,932,018)
Unrealized gains on investment
in FHA-Insured Certificates 2,962,024 2,784,033
------------ ------------
Total partners' equity 37,660,579 37,589,800
------------ ------------
Total liabilities and partners'
equity $ 38,550,964 $ 38,385,189
============ ============

The accompanying notes are an integral part
of these financial statements.

</TABLE>

<PAGE>22

AMERICAN INSURED MORTGAGE INVESTORS

STATEMENTS OF OPERATIONS

<TABLE><CAPTION>
For the years ended December 31,
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Income:
Mortgage investment income $ 3,376,465 $ 3,413,739 $ 3,589,374
Interest and other income 38,282 31,263 37,115
------------ ------------ ------------
3,414,747 3,445,002 3,626,489
------------ ------------ ------------
Expenses:
Asset management fee to related parties 343,092 343,092 343,092
General and administrative 192,218 197,413 242,209
------------ ------------ ------------
535,310 540,505 585,301
------------ ------------ ------------
Earnings before mortgage modification 2,879,437 2,904,497 3,041,188

Loss on mortgage modification -- (146,464) --
------------ ------------ ------------
Net earnings $ 2,879,437 $ 2,758,033 $ 3,041,188
============ ============ ============
Net earnings allocated to:
Limited partners - 97.1% $ 2,795,933 $ 2,678,050 $ 2,952,994
General partner - 2.9% 83,504 79,983 88,194
------------ ------------ ------------
$ 2,879,437 $ 2,758,033 $ 3,041,188
============ ============ ============
Net earnings per limited
partnership Unit - Basic $ .28 $ .27 $ .30
============ ============ ============

The accompanying notes are an integral part
of these financial statements.
</TABLE>

<PAGE>23

AMERICAN INSURED MORTGAGE INVESTORS

STATEMENTS OF CHANGES IN PARTNERS' EQUITY
For the years ended December 31, 1997, 1996 and 1995

Unrealized
Gains on
Investment
General Limited in Insured
Partner Partners Mortgages Total
------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>

Balance, January 1, 1995 (4,915,023) 40,306,817 1,848,753 37,240,547

Net earnings 88,194 2,952,994 -- 3,041,188

Distributions paid or accrued of
$0.32 per Unit, including
return of capital of $0.02 per
Unit (95,572) (3,200,040) -- (3,295,612)

Unrealized gains
on investment in FHA-insured
certificates -- -- 1,507,121 1,507,121
------------ ------------ ------------ -------------
Balance, December 31, 1995 (4,922,401) 40,059,771 3,355,874 38,493,244

Net earnings 79,983 2,678,050 -- 2,758,033

Distributions paid or accrued of
$0.30 per Unit, including
return of capital of $0.03 per
Unit (89,600) (3,000,036) -- (3,089,636)

Reduction in unrealized gains
on investment in FHA-insured
certificates -- -- (571,841) (571,841)
------------ ------------ ------------ -------------
Balance, December 31, 1996 $ (4,932,018) $ 39,737,785 $ 2,784,033 $ 37,589,800

Net earnings 83,504 2,795,933 -- 2,879,437

Distributions paid or accrued of
$0.29 per Unit, including
return of capital of $0.01 per
Unit (86,614) (2,900,035) -- (2,986,649)

Unrealized gains
on investment in FHA-insured
certificates -- -- 177,991 177,991
------------ ------------ ------------ -------------

Balance, December 31, 1997 $ (4,935,128) $ 39,633,683 $ 2,962,024 $ 37,660,579
============ ============ ============ =============

Limited Partnership Units
outstanding - basic, as of
December 31, 1997, 1996
and 1995 10,000,125
=============

The accompanying notes are an integral part
of these financial statements.

</TABLE>

<PAGE>24

AMERICAN INSURED MORTGAGE INVESTORS

STATEMENTS OF CASH FLOWS

<TABLE><CAPTION>
For the years ended December 31,
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings $ 2,879,437 $ 2,758,033 $ 3,041,188
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Loss on mortgage modification -- 146,464 --
Changes in assets and liabilities:
(Increase) decrease in receivables and other assets (36,561) 16,683 (2,676)
(Decrease) increase in accounts payable and
accrued expenses (7,991) (23,819) 1,809
------------ ----------- ------------
Net cash provided by operating activities 2,834,885 2,897,361 3,040,321
------------ ------------- ------------
Cash flows from investing activities:
Receipt of mortgage principal from scheduled payments 271,593 277,580 206,038
------------ ------------ ------------
Cash flows from financing activities:
Distributions paid to partners (2,883,662) (3,192,623) (3,295,612)
------------ ------------ ------------
Net increase (decrease) in cash and cash equivalents 222,816 (17,682) (49,253)

Cash and cash equivalents, beginning of year 656,051 673,733 722,986
------------ ------------ ------------
Cash and cash equivalents, end of year $ 878,867 $ 656,051 $ 673,733
============ ============ ============

The accompanying notes are an integral part
of these financial statements.

</TABLE>

<PAGE>25

AMERICAN INSURED MORTGAGE INVESTORS

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION

American Insured Mortgage Investors (the Partnership) was formed under the
Uniform Limited Partnership Act in the state of California on July 12, 1983.

AIM Acquisition Partners L.P. (the Advisor) serves as the advisor to the
Partnership. The general partner of the Advisor is AIM Acquisition Corporation
(AIM Acquisition) and the limited partners include, but are not limited to, AIM
Acquisition, The Goldman Sachs Group, L.P., Broad, Inc. and CRIIMI MAE.
Pursuant to the terms of certain amendments to the Partnership Agreement, the
General Partner is required to receive the consent of the Advisor prior to
taking certain significant actions which affect the management and policies of
the Partnership.

Effective September 6, 1991 and through June 30, 1995, a sub-advisory
agreement (the Sub-advisory Agreement) existed whereby CRI/AIM Management, Inc.,
an affiliate of CRI, Inc., managed the Partnership's portfolio. In connection
with the transaction in which CRIIMI MAE became a self-administered REIT, an
affiliate of CRIIMI MAE acquired the Sub-advisory Agreement. As a consequence
of this transaction, effective June 30, 1995, CRIIMI MAE Services Limited
Partnership, an affiliate of CRIIMI MAE, manages the Partnership's portfolio.
These transactions had no effect on the Partnership's financial statements.

2. SIGNIFICANT ACCOUNTING POLICIES

Method of Accounting
--------------------
The Partnership's 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 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.

Investment in Insured Mortgages
-------------------------------
The Partnership's investment in Insured Mortgages is comprised of FHA-
insured mortgage loans (FHA-Insured Loans) and participation certificates
evidencing a 100% undivided beneficial interest in government insured

<PAGE>26

AMERICAN INSURED MORTGAGE INVESTORS

NOTES TO FINANCIAL STATEMENTS

2. SIGNIFICANT ACCOUNTING POLICIES - Continued

multifamily mortgages issued or sold pursuant to programs of the Federal
Housing Administration (FHA) (FHA-Insured Certificates). The mortgages
underlying the FHA-Insured Certificates and FHA-Insured Loans are non-
recourse first liens on multifamily residential developments.

Payment of principal and interest on FHA-Insured Certificates and FHA-
Insured Loans is insured by the United States Department of Housing and
Urban Development (HUD) pursuant to Title 2 of the National Housing Act.

As of December 31, 1997, the weighted average remaining term of the
Partnership's investments in FHA-Insured Certificates is approximately 24
years. However, the Partnership Agreement states that the Partnership will
terminate in approximately 11 years, on December 31, 2008, unless
previously terminated under the provisions of the Partnership Agreement.
As the Partnership is anticipated to terminate prior to the weighted
average remaining term of its FHA-Insured Certificates, the Partnership
does not have the ability, at this time, to hold these investments to
maturity. Consequently, the General Partner believes that the
Partnership's FHA-Insured Certificates should be included in the Available
for Sale category. Although the Partnership's FHA-Insured Certificates are
classified as Available for Sale for financial statement purposes, the
General Partner does not intend to voluntarily sell these assets other than
those which may be sold as a result of a default or those which are
eligible to be put to FHA at the expiration of 20 years from the date of
the final endorsement.

In connection with this classification, as of December 31, 1997, 1996
and 1995, all of the Partnership's investments in FHA-Insured Certificates
are recorded at fair value, with the net unrealized gains on these
investments reported as a separate component of partners' equity.
Subsequent increases or decreases in the fair value of FHA-Insured
Certificates classified as Available for Sale will be included as a
separate component of partners' equity. Realized gains and losses on FHA-
Insured Certificates classified as Available for Sale will continue to be
reported in earnings. The amortized cost of the investments in this
category is adjusted for amortization of discounts to maturity. Such
amortization is included in mortgage investment income.

As of December 31, 1997, 1996 and 1995, Investment in FHA-Insured
Loans, are recorded at amortized cost.

Gains from dispositions of mortgage investments are recognized upon
the receipt of cash or debentures.

Losses on dispositions of mortgage investments are recognized when it
becomes probable that a mortgage will be disposed of and that the
disposition will result in a loss. In the case of Originated Insured
Mortgages fully insured by HUD, the Partnership's maximum exposure for
purposes of determining the loan losses would generally be an assignment
fee charged by HUD representing approximately 1% of the unpaid principal
balance of the Originated Insured Mortgage at the date of default, plus the
unamortized balance of acquisition fees and closing costs paid in
connection with the acquisition of the Originated Insured Mortgage and the
loss of 30 days accrued interest.

Since Acquired Insured Mortgages were purchased at a discount from the
unpaid principal balance of the mortgage, the Partnership's investment in
the Acquired Insured Mortgages is less than the amount that would be

<PAGE>27

AMERICAN INSURED MORTGAGE INVESTORS

NOTES TO FINANCIAL STATEMENTS

2. SIGNIFICANT ACCOUNTING POLICIES - Continued

recovered from HUD in the event of a default. Therefore, the Partnership
would experience no loan losses on discounted Acquired Insured Mortgages in
the case of a default.

Cash and Cash Equivalents
-------------------------
Cash and cash equivalents consist of time and demand deposits with
original maturities of three months or less.

Income Taxes
------------
No provision has been made for Federal, state or local income taxes in
the accompanying financial statements since they are the personal
responsibility of the Unitholders.

New Accounting Standards
------------------------
In February 1997, FASB issued SFAS No. 128 "Earnings per Share" ("FAS
128"). FAS 128 changes the requirements for the calculation and disclosure
of earnings per share. The Partnership is required to present basic net
earnings per limited partnership unit as opposed to net earnings per
limited partnership unit. However, the computational differences between
FAS 128 and the prior accounting standard do not impact the Partnership.
FAS 128 has been applied to the year ended December 31, 1997, and all prior
periods.

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's
disclosures comply with the requirements of this statement.

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 is effective for years beginning on or after
December 15, 1997.

During 1997, FASB issued SFAS 131 "Disclosures about Segments of an
Enterprise and Related Information" ("FAS 131"). FAS 131 establishes
standards for the way that public business enterprises report information
about operating segments and related disclosures about products and
services, geographical areas and major customers. FAS 131 is effective for
years beginning on or after December 15, 1997.

3. FAIR VALUE OF FINANCIAL INSTRUMENTS

The following estimated fair values of the Partnership's financial
instruments are presented in accordance with generally accepted accounting
principles which define fair value as the amount at which a financial instrument
could be exchanged in a current transaction between willing parties, other than
in a forced or liquidation sale. These estimated fair values, however, do not
represent the liquidation value or the market value of the Partnership.

<PAGE>28

AMERICAN INSURED MORTGAGE INVESTORS

NOTES TO FINANCIAL STATEMENTS

3. FAIR VALUE OF FINANCIAL INSTRUMENTS - Continued

<TABLE><CAPTION>
As of December 31, 1997 As of December 31, 1996
Amortized Fair Amortized Fair
Cost Value Cost Value
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>

Investment in FHA-Insured
Certificates $ 11,216,144 $ 14,178,168 $ 11,321,727 $ 14,105,760
============ ============ ------------ ------------
Investment in FHA-Insured
Loans:
Originated Insured Mortgages $ 14,184,505 $ 14,969,834 $ 14,274,528 $ 14,936,979
Acquired Insured Mortgage 8,912,223 11,870,299 8,988,210 11,864,867
------------ ------------ ------------ ------------
$ 23,096,728 26,840,133 $ 23,262,738 $ 26,801,846
============ ============ ============ ============

Cash and cash equivalents $ 878,867 $ 878,867 $ 656,051 $ 656,051

Accrued interest receivable $ 361,525 $ 361,525 $ 277,289 $ 277,289

</TABLE>

The following methods and assumptions were used to estimate the fair value
of each class of financial instrument:

Investment in FHA-Insured Certificates and FHA-
Insured Loans
------------------------------------------------
The fair value of the FHA-Insured Certificates and FHA-Insured Loans
is based on quoted market prices.

Cash and cash equivalents and accrued interest receivable
---------------------------------------------------------
The carrying amount approximates fair value because of the short
maturity of these instruments.

4. TRANSACTIONS WITH RELATED PARTIES

The principal officers of the General Partner for the years ended December
31, 1997, 1996 and 1995 did not receive fees for serving as officers of the
General Partner, nor are any fees expected to be paid to the officers in the
future.

The General Partner and certain affiliated entities have, during the years
ended December 31, 1997, 1996 and 1995, earned or received compensation or
payments for services from the Partnership as follows:

<PAGE>29

AMERICAN INSURED MORTGAGE INVESTORS

NOTES TO FINANCIAL STATEMENTS

4. TRANSACTIONS WITH RELATED PARTIES - Continued

COMPENSATION PAID OR ACCRUED TO RELATED PARTIES
----------------------------------------------

Capacity in Which For the year ended December 31,
Name of Recipient Served/Item 1997 1996 1995
- ----------------- ---------------------------- -------- -------- --------
<S> <C> <C> <C> <C>
CRIIMI, Inc. General Partner/Distribution $ 86,614 $ 89,600 $ 95,572

AIM Acquisition Advisor/Asset Management Fee 343,092 343,092 343,092
Partners, L.P.(1)

CRIIMI MAE Affiliate of General Partner/ 36,226 39,974 16,862
Management, Inc. (2) Expense Reimbursement

CRI(2) Affiliate of General Partner/ -- -- 37,365
Expense Reimbursement

</TABLE>

(1) The Advisor, pursuant to the Partnership Agreement, effective October
1, 1991, is entitled to an Asset Management Fee equal to .95% of Total Invested
Assets (as defined in the Partnership Agreement). The sub-advisor to the
Partnership (the Sub-advisor) is entitled to a fee equal to 0.28% of Total
Invested Assets from the Advisor's Asset Management Fee. As discussed in Note
1, effective June 30, 1995, CRIIMI MAE Services Limited Partnership now serves
as the Sub-advisor. Of the amounts paid to the Advisor, CRIIMI MAE Services
Limited Partnership earned a fee equal to $101,112, $101,112 and $50,566 for the
years ended December 31, 1997, and 1996 and for the six months ended December
31, 1995, respectively. CRI/AIM Management, Inc., which acted as the Sub-
advisor through June 30, 1995, earned a fee equal to $50,556 for the six months
ended June 30, 1995.

(2) Prior to CRIIMI MAE becoming a self-administered REIT, amounts were
paid to CRI as reimbursement for expenses incurred prior to June 30, 1995 on
behalf of the General Partner and the Partnership. As discussed in Note 1, the
transaction in which CRIIMI MAE became a self-administered REIT has no impact on
the payments required to be made by the Partnership, other than that the expense
reimbursement previously paid by the Partnership to CRI in connection with the
provision of services by the Sub-advisor are, effective June 30, 1995, paid to a
wholly-owned subsidiary of CRIIMI MAE, CRIIMI MAE Management, Inc. The amounts
paid to CRI during the year ended December 31, 1995 represent reimbursement of
expenses incurred prior to June 30, 1995. This is included in general and
administrative expenses.

5. INVESTMENT IN FHA-INSURED LOANS

Listed below is the Partnership's aggregate investment in FHA-Insured Loans
as of December 31, 1997 and 1996:

<PAGE>30

AMERICAN INSURED MORTGAGE INVESTORS

NOTES TO FINANCIAL STATEMENTS

5. INVESTMENT IN FHA-INSURED LOANS - Continued

</TABLE>

6. INVESTMENT IN FHA-INSURED CERTIFICATES

Listed below is the Partnership's aggregate investment in FHA-Insured
Certificates as of December 31, 1997 and 1996:

</TABLE>

All of the FHA-Insured Certificates were current with respect to the
payment of principal and interest as of March 1, 1998.

7. DISTRIBUTIONS TO UNITHOLDERS

The distributions paid or accrued to Unitholders on a per Unit basis for
the years ended December 31, 1997, 1996 and 1995 are as follows:

<PAGE>31

AMERICAN INSURED MORTGAGE INVESTORS

NOTES TO FINANCIAL STATEMENTS

7. DISTRIBUTIONS TO UNITHOLDERS - Continued

Quarter Ended 1997 1996 1995
- ------------- -------- -------- --------

March 31 $ 0.07 $ 0.08 $ 0.08
June 30 0.07 0.08 0.08
September 30 0.07 0.07 0.08
December 31 0.08 0.07 0.08
-------- -------- --------
$ 0.29 $ 0.30 $ 0.32
======== ======== ========

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 year 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.

8. PARTNERS' EQUITY

Depositary Units representing economic rights in limited partnership
interests (Units) were issued at a stated value of $20. A total of 10,000,000
Units were issued for an aggregate capital contribution of $200,000,000. In
addition, the initial limited partner contributed $2,500 to the capital of the
Partnership and received 125 Units in exchange therefor.

<PAGE>32

AMERICAN INSURED MORTGAGE INVESTORS

NOTES TO FINANCIAL STATEMENTS

9. SUMMARY OF QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

The following is a summary of unaudited quarterly results of operations for
the years ended December 31, 1997, 1996 and 1995:

(In Thousands, Except Per Unit Data)

<TABLE><CAPTION>
1997
Quarter ended
March 31 June 30 September 30 December 31
---------- ---------- ------------ -----------
<S> <C> <C> <C> <C>
Income $ 901 $ 840 $ 836 $ 838
Net earnings 758 701 708 712
Net earnings per Limited
Partnership Unit - Basic $ 0.07 $ 0.07 $ 0.07 $ 0.07

</TABLE>

<TABLE><CAPTION>
1996
Quarter ended
March 31 June 30 September 30 December 31
---------- ---------- ------------ -----------
<S> <C> <C> <C> <C>
Income $ 906 $ 859 $ 841 $ 839
Net earnings 754 572 722 710
Loss on mortgage modification -- (146) -- --
Net earnings per Limited
Partnership Unit - Basic $ 0.07 $ 0.06 $ 0.07 $ 0.07

</TABLE>

<TABLE><CAPTION>
1995
Quarter ended
March 31 June 30 September 30 December 31
---------- ---------- ------------ -----------
<S> <C> <C> <C> <C>
Income $ 927 $ 900 $ 895 $ 904
Net earnings 758 767 749 767
Net earnings per Limited
Partnership Unit - Basic $ 0.07 $ 0.08 $ 0.07 $ 0.08

</TABLE>

<PAGE>33

AMERICAN INSURED MORTGAGE INVESTORS
SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE
DECEMBER 31, 1997
<TABLE>
<CAPTION>
Interest Face Net Annual Payment
Maturity Put Rate on Amount of Carrying Value (Principal and
Development Name/Location Date Date(1) Mortgage(5) Mortgage (3)(7)(9)(10) Interest)(5)(8)
- ------------------------- -------- ------- ------------ ------------ ----------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Acquired Insured Mortgages
- --------------------------
Investment in FHA-Insured Loans
(carried at amortized cost)(2)

Eastdale Apts.
Montgomery, AL 3/23 10/01 7.5% $ 6,602,017 $ 5,067,311 $ 592,406
North River Place
Chillecothe, OH 10/21 12/01 7.5% 3,095,607 2,380,516 279,509
Portervillage I Apts.
Porterville, CA 8/21 5/01 7.5% 1,144,441 941,454 103,733(4)
Town Park Apts.
Rockingham, NC 10/22 10/02 7.5% 637,453 522,942 56,755(4)
------------ ------------
Total Investment in FHA-Insured Loans -
Acquired Insured Mortgages 11,479,518 8,912,223
------------ ------------
Originated Insured Mortgages
- ----------------------------
Investment in FHA-Insured Loans
(carried at amortized cost)(2)

Creekside Village
Beaverton, OR 11/25 1/01 7.75% 5,047,583 5,047,583 442,752
Waters Edge Apts.
Columbus, OH 1/31 5/03 8.75% 9,550,085 9,136,922 885,419(6)
------------ ------------
Total Investment in FHA-Insured Loans -
Originated Insured Mortgages 14,597,668 14,184,505
------------ ------------

Total Investment in FHA-Insured Loans 26,077,186 23,096,728
------------ ------------
See notes to Schedule IV - Mortgage Loans on Real Estate.

</TABLE>

<PAGE>34

AMERICAN INSURED MORTGAGE INVESTORS
SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE
DECEMBER 31, 1997
<TABLE>
<CAPTION>
Interest Face Net Annual Payment
Maturity Put Rate on Amount of Carrying Value (Principal and
Development Name/Location Date Date(1) Mortgage(5) Mortgage (3)(7)(9)(10) Interest)(5)(8)
- ------------------------- -------- ------- ------------ ------------ ---------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Acquired Insured Mortgages
- --------------------------
Investment in FHA-Insured
Certificates
(carried at fair value)

Bay Pointe Apts.
Lafayette, IN 2/23 10/02 7.5% 2,069,768(4) 2,149,966 185,272(4)
Baypoint Shoreline Apts.
Duluth, MN 1/22 10/01 7.5% 977,925(4) 1,015,854 87,967(4)
Berryhill Apts.
Grass Valley, CA 1/21 11/02 7.5% 1,268,509(4) 1,317,862 115,899(4)
Brougham Estates II
Kansas City, KS 11/22 3/02 7.5% 2,597,377(4) 2,697,876 230,860(4)
College Green Apts.
Wilmington, NC 3/23 2/02 7.5% 1,395,308(4) 1,449,246 123,455(4)
Fox Run Apts.
Dothan, AL 10/19 11/99 7.5% 1,243,489(4) 1,292,094 116,242(4)
Kaynorth Apts.
Lansing, MI 4/23 9/02 7.5% 1,893,162(4) 1,966,332 167,318(4)
Lakeside Apts.
Bennettsville, SC 1/22 2/02 7.5% 392,461(4) 407,683 35,303(4)
Westbrook Apts.
Kokomo, IN 11/22 9/02 7.5% 1,810,993(4) 1,881,255 163,177(4)
------------ ------------
Total Investment in FHA-Insured Certificates 13,648,992 14,178,168
------------ ------------
TOTAL INVESTMENT IN INSURED MORTGAGES $ 39,726,178 $ 37,274,896
============ ============

See notes to Schedule IV - Mortgage Loans on Real Estate
</TABLE>

<PAGE>35

AMERICAN INSURED MORTGAGE INVESTORS

NOTES TO SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE

(1) Under the Section 221 program of the National Housing Act of 1937, as
amended, a mortgagee has the right to assign a mortgage ("put") to FHA at
the expiration of 20 years from the date of final endorsement if the
mortgage is not in default at such time. Any mortgagee electing to assign
an FHA-insured mortgage to FHA will receive, in exchange therefor, HUD
debentures having a total face value equal to the then outstanding
principal balance of the FHA-insured mortgage plus accrued interest to the
date of assignment. These HUD debentures will mature 10 years from the date
of assignment and will bear interest at the "going Federal rate" at such
date. This assignment procedure is applicable to an insured mortgage which
had a firm or conditional FHA commitment for insurance on or before
November 30, 1983. The Partnership anticipates that each eligible insured
mortgage, for which a prepayment has not occurred and which has not been
sold, will be assigned to FHA at the expiration of 20 years from the date
of final endorsement. The Partnership, therefore, does not anticipate
holding any eligible insured mortgage beyond the expiration of 20 years
from final endorsement of that insured mortgage.

(2) Inclusive of closing costs and acquisition fees.

(3) Prepayment of these insured mortgages would be based upon the unpaid
principal balance at the time of prepayment.

(4) These amounts represent the Partnership's 50% interest in these insured
mortgages. The remaining 50% interest was acquired by American Insured
Mortgage Investors - Series 85, L.P. (AIM 85).

(5) In addition, the servicer of the insured mortgages (primarily unaffiliated
third parties) is entitled to receive compensation for certain services
rendered in an amount up to ten basis points (.10%) of the unpaid principal
balance of the insured mortgages.

(6) This represents the base interest rate during the permanent phase of this
insured mortgage loan. Additional interest, (referred to as
Participations) measured as a percentage of surplus cash and a percentage
of the proceeds from sale or refinancing of the development (as defined in
the Participation Agreements), will also be due. The Partnership received
$61,988, $12,158 and $39,465 from the Participations for the years ended
December 31, 1997, 1996 and 1995, respectively.

(7) The mortgages underlying the Partnership's investment in FHA-Insured
Certificates and FHA-Insured Loans are non-recourse first liens on
multifamily residential developments.

(8) Principal and interest are payable at level amounts over the life of the
Insured Mortgages.

<PAGE>36

AMERICAN INSURED MORTGAGE INVESTORS

NOTES TO SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE - Continued

(9) A reconciliation of the carrying value of Insured Mortgages, for the years
ended December 31, 1997 and 1996, is as follows:

1997 1996
------------ ------------
Beginning balance $ 37,368,498 $ 38,364,383

Loss on mortgage
modification -- (146,464)
Principal receipts on
Insured Mortgages (271,593) (277,580)
Increase (decrease) in
unrealized gains on
investment in Insured
Mortgages 177,991 (571,841)
------------ ------------
Ending balance $ 37,274,896 $ 37,368,498
============ ============

(10) The tax basis of the Insured Mortgages was approximately $33.7 million and
$34.1 million as of December 31, 1997 and 1996, respectively.<PAGE>

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED
FROM THE ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH ANNUAL REPORT ON FORM 10-K.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 879
<SECURITIES> 14,178
<RECEIVABLES> 23,494
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 38,551
<CURRENT-LIABILITIES> 890
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 37,661
<TOTAL-LIABILITY-AND-EQUITY> 38,551
<SALES> 0
<TOTAL-REVENUES> 3,415
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 536
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,879
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,879
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,879
<EPS-PRIMARY> .28
<EPS-DILUTED> 0

</TABLE>