<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 March 31, 1999
--------------
Commission file number 1-11060
--------------
AERICAN 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 March 31, 1999, 10,000,125 depository units of limited
partnership interest were outstanding.
<PAGE>2
AMERICAN INSURED MORTGAGE INVESTORS
INDEX TO FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1999
PAGE
----
PART I. Financial Information (Unaudited)
Item 1. Financial Statements
Balance Sheets - March 31, 1999 (unaudited)
and December 31, 1998.................... 3
Statements of Income and Comprehensive Income -
for the three months ended March 31, 1999
and 1998 (unaudited)..................... 4
Statement of Changes in Partners' Equity -
for the three months ended March 31, 1999
(unaudited)......................... 5
Statements of Cash Flows - for the three
months ended March 31, 1999 and 1998
(unaudited).............................. 6
Notes to Financial Statements.............. 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................... 11
Item 2A. Qualitative and Quantitative Disclosures
About Market Risk. . . . . . . . . . . 15
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K........... 16
Signature............................................ 17
<PAGE>3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<PAGE>
AMERICAN INSURED MORTGAGE INVESTORS
BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
----------- --------------
<S> <C> <C>
(Unaudited)
ASSETS
Investment in FHA-Insured Loans,
at amortized cost, net of unamortized
discount:
Originated Insured Mortgages $ 4,980,128 $ 4,994,145
Acquired Insured Mortgages 7,877,124 7,896,870
------------ -------------
12,857,252 12,891,015
Investment in FHA-Insured Certificates,
at fair value 13,403,728 13,458,100
Cash and cash equivalents 1,803,446 958,375
Due from Affiliate -- 1,148,049
Receivables and other assets 217,096 279,302
------------ ------------
Total assets $ 28,281,522 $ 28,734,841
============ ============
LIABILITIES AND PARTNERS' EQUITY
Distributions payable $ 1,750,794 $ 926,891
Accounts payable and accrued expenses 95,312 58,060
------------ ------------
Total liabilities 1,846,106 984,951
------------ ------------
Partners' equity:
Limited partners' equity, 10,000,125 Units authorized,
issued and outstanding 29,342,757 30,596,406
General partner's deficit (5,242,478) (5,205,036)
Accumulated other
comprehensive income 2,335,137 2,358,520
------------ ------------
Total partners' equity 26,435,416 27,749,890
------------ ------------
Total liabilities and partners'
equity $ 28,281,522 $ 28,734,841
============ ============
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 INCOME AND COMPREHENSIVE INCOME
(Unaudited)
<TABLE>
<CAPTION>
For the three months ended
March 31,
--------------------------------
1999 1998
--------- ---------
<S> <C> <C>
Income:
Mortgage investment income $ 584,478 $ 874,119
Interest and other income 14,677 12,880
---------- ----------
599,155 886,999
---------- ----------
Expenses:
Asset management fee to
related parties 60,905 85,773
General and administrative 78,547 50,413
--------- ----------
139,452 136,186
--------- ----------
Earnings before gain on
mortgage dispositions 459,703 750,813
Gain on mortgage dispositions -- 200,074
--------- ----------
Net earnings $ 459,703 $ 950,887
========= ==========
Other comprehensive income (loss) (23,383) 26,779
--------- ----------
Comprehensive income $ 436,320 $ 977,666
--------- ----------
Net earnings allocated to:
Limited partners - 97.1% $ 446,372 $ 923,311
General partner - 2.9% 13,331 27,576
--------- ----------
$ 459,703 $ 950,887
========= ==========
Net earnings per Unit of limited
partnership interest - Basic $ 0.04 $ 0.09
========= ==========
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 three months ended March 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
Accumulated
Other
General Limited Comprehensive
Partner Partners Income Total
---------------- ---------------- ----------------- ----------------
<S> <C> <C> <C> <C>
Balance, December 31, 1998 $ (5,205,036) $ 30,596,406 $ 2,358,520 $ 27,749,890
Net earnings 13,331 446,372 -- 459,703
Adjustment to unrealized gains (losses)
on investments in insured mortgages -- -- (23,383) (23,383)
Distributions paid or accrued of
$0.17 per Unit, including
return of capital of $0.13 per Unit (50,773) (1,700,021) -- (1,750,794)
---------------- ----------------- ---------------- ----------------
Balance, March 31, 1999 $ (5,242,478) $ 29,342,757 $ 2,335,137 $ 26,435,416
================ ================= ================ ================
Limited Partnership Units
outstanding - Basic, March 31, 1999 10,000,125
===========
</TABLE>
The accompanying notes are an
integral part of these financial
statements.
<PAGE>6
AMERICAN INSURED MORTGAGE INVESTORS
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the three months ended
March 31,
1999 1998
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 459,703 $ 950,887
Adjustments to reconcile net
earnings to net cash provided by
operating activities:
Gain on disposition of insured mortgages -- (200,074)
Changes in assets and liabilities:
Decrease (increase) in receivables and other assets 62,206 (13,366)
Increase(decrease) in accounts payable and accrued expenses 37,252 (4,353)
------------ -----------
Net cash provided by operating activities 559,161 733,094
------------ -----------
Cash flows from investing activities:
Receipt of mortgage principal from scheduled payments 64,752 62,997
Debenture proceeds received from affiliate 1,148,049 --
------------ -----------
Net cash provided by investing activities 1,212,801 62,997
------------ -----------
Cash flows from financing activities:
Distributions paid to partners (926,891) (823,903)
------------ -----------
Net cash used in financing activities (926,891) (823,903)
------------ -----------
Net increase (decrease) in cash and cash equivalents 845,071 (27,812)
Cash and cash equivalents, beginning of period 958,375 878,867
------------ -----------
Cash and cash equivalents, end of period $ 1,803,446 $ 851,055
============ ===========
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).
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.
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.
On October 5, 1998, CRIIMI MAE, the parent of the General Partner, and
CRIIMI MAE Management, Inc., an affiliate of CRIIMI MAE and provider of
personnel and administrative services to the Partnership, filed a voluntary
petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code. As
a debtor-in-possession, CRIIMI MAE will not be permitted to provide any
available capital to the General Partner without approval from the
bankruptcy court. This restriction or potential loss of the availability of a
potential capital resource could adversely affect the General Partner and the
Partnership; however, CRIIMI MAE has not historically represented a
significant source of capital for the General Partner or the Partnership.
Such bankruptcy filings could also result in the potential need to replace
CRIIMI MAE Management, Inc. as a provider of personnel and
administrative services to the Partnership.
<PAGE>8
AMERICAN INSURED MORTGAGE INVESTORS
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
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
March 31, 1999 and December 31, 1998, the results of its operations for the
three months ended March 31, 1999 and 1998 and its cash flows for the three
months ended March 31, 1999 and 1998.
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, 1998.
Comprehensive Income
--------------------
Comprehensive income is the change in Partners' equity during
a period from transactions from nonowner sources. This includes 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." Unrealized gains and losses are reported in
the equity section of the Balance Sheet as "Accumulated Other
Comprehensive Income."
3. INVESTMENT IN FHA-INSURED LOANS
Listed below is the Partnership's aggregate investment in FHA-Insured
Loans as of March 31, 1999 and December 31, 1998:
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
-------------- ----------------
<S> <C> <C>
Number of
Acquired Insured Mortgages 3 3
Originated Insured Mortgages 1 1
Amortized Cost $ 12,857,252 $ 12,891,015
Face Value 15,114,654 15,170,295
Fair Value 15,133,317 15,238,597
</TABLE>
<PAGE>9
AMERICAN INSURED MORTGAGE INVESTORS
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
3. INVESTMENT IN FHA-INSURED LOANS - Continued
All of the FHA-Insured Loans are current with respect to payment of
principal and interest as of May 1, 1999.
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 months ended March
31, 1999 and 1998, the Partnership received $0 and $52,526, respectively, from
the Participations.
4. INVESTMENT IN FHA-INSURED CERTIFICATES
Listed below is the Partnership's aggregate investment in FHA-Insured
Certificates as of March 31, 1999 and December 31, 1998:
<TABLE>
<CAPTION>
March 31, December 31,
1998 1998
--------------- ----------------
<S> <C> <C>
Number of mortgages 9 9
Amortized Cost $ 11,068,591 $ 11,099,580
Face Value 13,385,377 13,440,088
Fair Value 13,403,728 13,458,100
</TABLE>
All of the FHA-Insured Certificates were current with respect to the
payment of principal and interest as of May 1, 1999.
<PAGE>10
AMERICAN INSURED MORTGAGE INVESTORS
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
5. DISTRIBUTIONS TO UNITHOLDERS
The distributions paid or accrued to Unitholders on a per Unit basis
for the three months ended March 31, 1999 and 1998 are as follows:
<TABLE><CAPTION>
Quarter Ended 1999 1998
- ------------- -------- --------
<S> <C> <C>
March 31, $ 0.17(1) $ 0.07
======== ========
(1) This amount includes approximately $0.12 per Unit of return of capital due
to redemption of debentures received from the assignment of the mortgage on
Portervillage I Apartments. This amount was received from an affiliate of the
partnership, American Insured Mortgage Investors - Series 85, L.P. (AIM 85). The
debenture was issued to AIM 85, since the mortgage on Portervillage I Apartments
was owned 50% by the Partnership and 50% by AIM 85.
</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. As the partnership continues to
liquidate its mortgage investments and investors receive distributions of return
of capital and taxable gains, investors should expect a reduction in earnings
and distributions due to the decreasing mortgage base.
6. TRANSACTIONS WITH RELATED PARTIES
The General Partner and certain affiliated entities have, during the
three months ended March 31, 1999 and 1998, earned or received compensation or
payments for services from the Partnership as follows:
<TABLE>
<CAPTION>
COMPENSATION PAID OR ACCRUED TO RELATED PARTIES
-----------------------------------------------
For the three months
Capacity in Which ended March 31,
Name of Recipient Served/Item 1999 1998
- ----------------- ---------------------- ----------- ----------
<S> <C> <C> <C>
CRIIMI, Inc. General Partner/Distribution $ 50,773 $ 20,907
AIM Acquisition Advisor/Asset Management Fee 60,905 85,773
Partners, L.P.(1)
CRIIMI MAE
Management, Inc. Affiliate of General Partner/ 6,806 7,246
Expense Reimbursement
<FN>
(1) The Advisor, pursuant to the Partnership Agreement, effective October 1,
1991, 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 (CMSLP), the sub-advisor to the Partnership, is entitled to a fee of
0.28% of Total Invested Assets. Of the amounts paid to the Advisor, CMSLP earned
a fee equal to $17,949 and $25,278 for the three months ended March 31, 1999 and
1998, respectively. The limited partner of CMSLP is a wholly-owned subsidiary of
CRIIMI MAE Inc. which filed for protection under Chapter 11 of the U.S.
Bankruptcy Code.
</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 on Form 10-K for the year ended December 31, 1998 for a more detailed
discussion of such risks and uncertainties.
On October 5, 1998, CRIIMI MAE Inc., the parent of the General Partner,
and CRIIMI MAE Management, Inc., an affiliate of CRIIMI MAE Inc. and provider of
personnel and administrative services to the Partnership, filed voluntary
petitions for reorganization under Chapter 11 of the Bankruptcy Code. Such
bankruptcy filings could result in certain adverse effects to the Partnership
including without limitation, the potential loss of CRIIMI MAE Inc. as a
potential source of capital, as discussed under Liquidity and Capital Resources,
and the potential need to replace CRIIMI MAE Management, Inc. as a provider of
personnel and administrative services to the Partnership.
Year 2000
- ---------
The Year 2000 issue is a computer programming issue that may affect
many electronic processing systems. Until relatively recently, in order to
minimize the length of data fields, most date-sensitive programs eliminated the
first two digits of the year. This issue could affect information technology
("IT") systems and date sensitive embedded technology that controls certain
systems (such as telecommunications systems, security systems, etc.) leaving
them unable to properly recognize or distinguish dates in the twentieth and
twenty-first centuries. This treatment could result in significant
miscalculations when processing critical date-sensitive information relating to
dates after December 31, 1999.
The General Partner is currently in the process of assessing and
testing Year 2000 compliance of its IT systems, which include software systems
to administer and manage mortgage assets and for internal accounting purposes. A
majority of the IT systems used by the Partnership is licensed from third
parties. These third parties have either provided upgrades to existing systems
or have indicated that their systems are Year 2000 compliant. The General
Partner has applied upgrades and has completed a substantial amount of
compliance testing as of May 10, 1999. There can be no assurance, however, that
the Partnership's IT systems will be Year 2000 compliant by December 31, 1999.
<PAGE>12
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS - Continued
The Year 2000 issue may also affect the General Partner's
date-sensitive embedded technology, which controls systems such as the
telecommunications systems, security systems, etc. The General Partner does not
believe that the cost to modify or replace such technology to make it Year 2000
compliant will be material. The failure of any such systems to be Year 2000
compliant could be material to the Partnership.
The potential impact of the Year 2000 issue depends not only on the
corrective measures the General Partner has undertaken and will undertake, but
also on the ways in which the Year 2000 issue is addressed by third parties with
whom the Partnership directly interfaces or whose financial condition or
operations are important to the Partnership. The Partnership has initiated
communications with third parties with which it directly interfaces to evaluate
the risk of their failure to be Year 2000 compliant and the extent to which the
Partnership may be vulnerable to such failure. There can be no assurance that
the systems of these third parties will be Year 2000 compliant by December 31,
1999. The failure of these third parties to be Year 2000 compliant could have a
material adverse effect on the operations of the Partnership.
The Partnership believes that its greatest risk with respect to the
Year 2000 issue relates to failures by third parties to be Year 2000 compliant.
In addition to risks posed by third parties with which the Partnership
interfaces directly, risks are created by third parties providing services to
large segments of society. The failure of third parties (i.e., tenants
in mortgage collateral, borrowers, building service providers to mortgage
collateral, banks and other financial institutions, etc.) to be Year 2000
compliant could, among other things, cause disruptions in the capital and real
estate markets and borrower defaults on real estate loans and mortgage-backed
securities as well as the pools of mortgage loans underlying such securities.
The Partnership believes that its greatest internal exposure to the Year
2000 issue involves the loan servicing operations of an affiliate of the
Partnership. CMSLP currently services approximately 21% of the total mortgage
investments in the AIM Funds. CMSLP has applied a vendor upgrade and has
completed compliance testing on the upgrade.
Currently the Partnership estimates the cost of system upgrades related
to Year 2000 issues to be immaterial.
Although the General Partner has substantially completed its
organizational compliance testing and remediation, it is also in the process of
developing contingency plans for the risks of the failure of the Partnership or
third parties to be Year 2000 compliant. The General Partner intends to complete
contingency plans for the Year 2000 issue by mid 1999. Due to the inability to
predict all of the potential problems that may arise from the Year 2000 issue,
there can be no assurance that all contingencies will be adequately addressed by
such plans.
General
- -------
As of March 31, 1999, the Partnership had invested in 13 Insured
Mortgage Investments, with an aggregate amortized cost of approximately $23.9
million, face value of approximately $28.5 million and fair value of
approximately $28.5 million.
<PAGE>13
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS - Continued
All of the mortgage investments are current with respect to payment of
principal and interest as of May 1, 1999.
Results of Operations
- ---------------------
Net earnings decreased for the three months ended March 31, 1999, as
compared to the corresponding period in 1998, primarily due to a reduction in
mortgage investment income, as discussed below, and due to a decrease in gains
recognized on the disposition of mortgages, as discussed below.
Mortgage investment income decreased for the three months ended March
31, 1999, as compared to the corresponding period in 1998, primarily due to the
disposition of mortgages on Waters Edge Apartments and Portervillage I
Apartments during the first quarter of 1998.
Asset management fees to related parties decreased for the three months
ended March 31, 1999, as compared to the corresponding period in 1998, primarily
due to the decrease in the mortgage base.
General and administrative expense increased for the three months ended
March 31, 1999, as compared to the corresponding period in 1998, primarily due
to increased temporary employment costs in 1999.
Gain on mortgage dispositions decreased for the three months ended
March 31, 1999, as compared to the corresponding period in 1998. No gains or
losses were recognized for the first quarter of 1999. During the first quarter
of 1998, a gain of approximately $200,000 was recognized from the assignment of
the mortgage on Portervillage I Apartments. The assignment proceeds were issued
in the form of a 9.5% debenture. This mortgage was owned 50% by the Partnership
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 and earned interest semi-annually on January 1 and July 1. In
January 1999, the debenture was redeemed and the net proceeds of approximately
$1.1 million were received by the Partnership. A distribution of $0.12 per Unit
was declared in March 1999 and paid to Unitholders in May 1999.
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 three months ended March 31,
1999 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
<PAGE>14
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS - Continued
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. As the partnership
continues to liquidate its mortgage investments and investors receive
distributions of return of capital and taxable gains, investors should expect a
reduction in earnings and distributions due to the decreasing mortgage base.
Net cash provided by operating activities decreased for the three
months ended March 31, 1999, as compared to the corresponding period in 1998,
primarily due to a decrease in mortgage investment income, as previously
discussed.
Net cash provided by investing activities increased for the three
months ended March 31, 1999, as compared to the corresponding period in 1998,
primarily due to an increase in debenture proceeds received from affiliate, as
previously discussed.
Net cash used in financing activities increased for the three months
ended March 31, 1999, as compared to the corresponding period in 1998 due to
larger distributions paid to Unitholders during the first quarter of 1999.
On October 5, 1998, CRIIMI MAE, the parent of the General Partner,
and CRIIMI MAE Management, Inc., an affiliate of CRIIMI MAE and provider of
personnel and administrative services to the Partnership, filed a voluntary
petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code. As
a debtor-in-possession, CRIIMI MAE will not be permitted to provide any
available capital to the General Partner without approval from the
bankruptcy court. This restriction or potential loss of the availability of a
potential capital resource could adversely affect the General Partner and the
Partnership; however, CRIIMI MAE has not historically represented a
significant source of capital for the General Partner or the Partnership.
Such bankruptcy filings could also result in the potential need to replace
CRIIMI MAE Management, Inc. as a provider of personnel and
administrative services to the Partnership.
<PAGE>15
ITEM 2A. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET
RISK
The Partnership's principal market risk is exposure to changes in
interest rates in the US Treasury market, which coupled with the related spread
to treasury investors required for the Partnership's Insured Mortgages, will
cause fluctuations in the market value of Partnership's assets. Management has
determined that there has not been a material change as of March 31, 1999, in
market risk from December 31, 1998 as reported in the Partnership's Annual
Report on Form 10-K for the year ended December 31, 1998.
<PAGE>16
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 March 31, 1999.
The exhibits filed as part of this report are listed below:
Exhibit No. Description
- ------------- -----------------------
27 Financial Data Schedule
<PAGE>17
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/ /s/ Cynthia O. Azzara
- ------------------- ------------------------
Date Cynthia O. Azzara
Principal Financial
and Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM
THE QUARTERLY REPORT ON FORM 10-Q FOR THE THREE MONTHS ENDED
MARCH 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH QUARTERLY REPORT ON FORM 10-Q.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 1,803
<SECURITIES> 13,404
<RECEIVABLES> 13,075
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 28,282
<CURRENT-LIABILITIES> 1,847
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 26,435
<TOTAL-LIABILITY-AND-EQUITY> 28,282
<SALES> 0
<TOTAL-REVENUES> 599
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 139
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 460
<INCOME-TAX> 0
<INCOME-CONTINUING> 460
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 460
<EPS-PRIMARY> .04
<EPS-DILUTED> 0
</TABLE>
