<PAGE>1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended March 31, 1996
------------------
Commission file number 1-12724
-----------------
AMERICAN INSURED MORTGAGE INVESTORS - L.P.- SERIES 88
-----------------------------------------------------------------
(Exact name of registrant as specified in charter)
Delaware 13-3398206
------------------------------- ------------------
(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 May 13, 1996, 8,802,091 depositary units of limited partnership
interest were outstanding.
<PAGE>2
AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88
INDEX TO FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1996
Page
----
PART I. Financial Information
Item 1. Financial Statements
Balance Sheets - March 31, 1996 (unaudited)
and December 31, 1995 . . . . . . . . . . . 3
Statements of Operations - for the three
months ended March 31, 1996 and
1995 (unaudited) . . . . . . . . . . . . . 4
Statement of Changes in Partners' Equity -
for the three months ended March 31,
1996 (unaudited) . . . . . . . . . . . . . 5
Statements of Cash Flows - for the three
months ended March 31, 1996 and
1995 (unaudited) . . . . . . . . . . . . . 6
Notes to Financial Statements (unaudited) . . 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results
of Operations . . . . . . . . . . . . . . . 15
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K . . . . . . 17
Signature . . . . . . . . . . . . . . . . . . . . . . . 18
<PAGE>3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88
BALANCE SHEETS
<TABLE><CAPTION>
March 31, December 31,
1996 1995
------------- ------------
(Unaudited)
ASSETS
<S> <C> <C>
Investment in FHA-Insured Certificates
and GNMA Mortgage-Backed Securities,
at fair value:
Acquired insured mortgages $ 76,423,168 $ 77,918,878
Originated insured mortgages 45,072,405 45,426,757
------------- ------------
121,495,573 123,345,635
Investment in FHA-Insured Loans,
at amortized cost, net of unamortized
discount and premium:
Originated insured mortgages 30,125,570 30,162,342
Acquired insured mortgages 1,153,690 1,161,339
------------- ------------
31,279,260 31,323,681
Due from HUD 297,962 285,330
Cash and cash equivalents 3,447,590 2,881,537
Investment in affiliate 1,189,316 1,189,316
Notes receivable from affiliates and due
from affiliates 833,595 797,687
Receivables and other assets 2,191,008 2,103,710
------------- ------------
Total assets $ 160,734,304 $161,926,896
============= ============
LIABILITIES AND PARTNERS' EQUITY
Distributions payable $ 2,961,797 $ 2,961,797
Accounts payable and accrued expenses 119,252 159,092
------------ ------------
Total liabilities 3,081,049 3,120,889
------------ ------------
Commitments and contingencies
Partners' equity:
Limited partners' equity 159,144,660 159,332,082
General partner's deficit (938,133) (928,476)
Less: Repurchased Limited Partnership
Units - 50,000 Units (618,750) (618,750)
Net unrealized gains on investment
in FHA-Insured Certificates and GNMA
Mortgage-Backed Securities 65,478 1,021,151
------------ ------------
Total partners' equity 157,653,255 158,806,007
------------ ------------
Total liabilities and
partners' equity $160,734,304 $161,926,896
============ ============
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 L.P. - SERIES 88
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the three months ended
March 31,
1996 1995
------------ ------------
<S> <C> <C>
Income:
Mortgage investment income $ 3,104,487 $ 3,065,303
Interest and other income 95,128 346,219
------------ ------------
3,199,615 3,411,522
------------ ------------
Expenses:
Asset management fee to
related parties 376,587 372,898
General and administrative 58,938 98,421
------------ ------------
435,525 471,319
------------ ------------
Earnings before gains on
mortgage dispositions 2,764,094 2,940,203
Gains on mortgage dispositions 628 1,075,099
------------ ------------
Net earnings $ 2,764,718 $ 4,015,302
============ ============
Net earnings allocated to:
Limited partners - 95.1% $ 2,629,247 $ 3,818,552
General partner - 4.9% 135,471 196,750
------------ ------------
$ 2,764,718 $ 4,015,302
============ ============
Net earnings per Limited Partnership Unit $ .30 $ 0.43
============ ============
</TABLE>
The accompanying notes are an integral part
of these financial statements.
<PAGE>5
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88
STATEMENT OF CHANGES IN PARTNERS' EQUITY
For the three months ended March 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Unrealized Unrealized
Gains on Losses on
Investment Investment
in FHA-Insured in FHA-Insured
Repurchased Certificates Certificates
Limited and GNMA and GNMA Total
General Limited Partnership Mortgage-Backed Mortgage-Backed Partners'
Partner Partners Units Securities Securities Equity
------------ ------------- ----------- --------------- ---------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1995 $ (928,476) $ 159,332,082 $ (618,750) $ 2,540,308 $ (1,519,157)$ 158,806,007
Net earnings 135,471 2,629,247 -- -- -- 2,764,718
Distributions paid or accrued
of $0.32 per Unit,
including return of capital (145,128) (2,816,669) -- -- -- (2,961,797)
Adjustment to net unrealized
gains (losses) on investment in
FHA-Insured Certificates and
GNMA Mortgage-Backed
Securities -- -- -- 19,082 (974,755) (955,673)
------------ ------------- ----------- -------------- ------------ ------------
Balance, March 31, 1996 $ (938,133) $159,144,660 $ (618,750) $ 2,559,390 $ (2,493,912) $157,653,255
============ ============= =========== ============== ============ ============
Limited Partnership Units
outstanding - March 31,
1996 8,802,091
=============
</TABLE>
The accompanying notes are an integral part
of these financial statements.
<PAGE>6
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the three months
ended March 31,
1996 1995
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 2,764,718 $ 4,015,302
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Gain on mortgage dispositions (628) (1,075,099)
Payments made and treated as additions to Certificates held for
disposition and Due from HUD (12,632) (302,984)
Changes in assets and liabilities:
Increase in receivables and other assets (87,298) (38,415)
Decrease in accounts payable and accrued
expenses (39,840) (18,155)
(Increase) decrease in investment in affiliate and
notes receivable and due from affiliates (35,908) 44,913
------------ ------------
Net cash provided by operating activities 2,588,412 2,625,562
------------ ------------
Cash flows from investing activities:
Proceeds from dispositions of Insured Mortgages 691,675 3,552,931
Investment in Acquired Insured Mortgages and advances on
construction loans -- (1,328,768)
Receipt of principal from scheduled payments 247,763 224,674
------------ ------------
Net cash provided by investing activities 939,438 2,448,837
------------ ------------
Cash flows from financing activities:
Distributions paid to partners (2,961,797) (4,072,471)
------------ ------------
Net cash used in financing activities (2,961,797) (4,072,471)
------------ ------------
Net increase in cash and cash equivalents 566,053 1,001,928
Cash and cash equivalents, beginning of period 2,881,537 5,364,255
------------ ------------
Cash and cash equivalents, end of period $ 3,447,590 $ 6,366,183
============ ============
</TABLE>
The accompanying notes are an integral part
of these financial statements.
<PAGE>7
AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. ORGANIZATION
American Insured Mortgage Investors L.P. - Series 88 (the Partnership) was
formed under the Uniform Limited Partnership Act of the state of Delaware on
February 13, 1987. The Partnership's reinvestment period expires on December
31, 1996 and the Partnership Agreement states that the Partnership will
terminate on December 31, 2021, unless previously terminated under the
provisions of the Partnership Agreement.
Effective September 6, 1991, CRIIMI, Inc. (the General Partner) succeeded
the former general partners to become the sole general partner of the
Partnership. CRIIMI, Inc. is a wholly owned subsidiary of CRIIMI MAE Inc.
(CRIIMI MAE).
The Partnership's investment in mortgages consists of participation
certificates evidencing a 100% undivided beneficial interest in government
insured multifamily mortgages issued or sold pursuant to Federal Housing
Administration (FHA) programs (FHA-Insured Certificates), mortgage-backed
securities guaranteed by the Government National Mortgage Association (GNMA)
(GNMA Mortgage-Backed Securities) and FHA-insured mortgage loans (FHA-Insured
Loans). The mortgages underlying the FHA-Insured Certificates, GNMA Mortgage-
Backed Securities and FHA-Insured Loans are non-recourse first liens on
multifamily residential developments or retirement homes.
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, 1996
and December 31, 1995 and the results of its operations and its cash flows for
the three months ended March 31, 1996 and 1995.
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, it is suggested
that these financial statements 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,
1995.
<PAGE>8
AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
3. INVESTMENT IN FHA-INSURED CERTIFICATES AND GNMA MORTGAGE-
BACKED SECURITIES
A. Fully-insured mortgage investments
----------------------------------
As of March 31, 1996 and December 31, 1995, the Partnership's
investment in fully insured Acquired Insured Mortgages, recorded at fair
value, consisted of 19 GNMA Mortgage-Backed Securities and 6 and 7 FHA-
Insured Certificates, respectively. As of March 31, 1996 and December 31,
1995, these mortgage investments had an aggregate amortized cost of
$76,636,652 and $76,462,511, respectively, an aggregate face value of
$75,807,127 and $76,636,450, respectively, and an aggregate fair value of
$76,423,168 and $77,918,878, respectively.
As of March 31, 1996 and December 31, 1995, the Partnership's
investment in fully insured Originated Insured Mortgages, recorded at fair
value, consisted of one FHA-Insured Certificate with an amortized cost of
$11,397,998 and $11,411,412, respectively, a face value of $11,032,009 and
$11,043,976, respectively, and a fair value of $11,163,629 and $11,298,584,
respectively.
As of May 10, 1996, all of the Partnership's fully insured mortgage
investments, recorded at fair value, were current with respect to the
payment of principal and interest, except for the mortgage on Water's Edge
of New Jersey, a fully insured construction loan. The property underlying
this construction loan is a nursing home located in Trenton, New Jersey.
As of May 10, 1996, the mortgagor had made payments of interest through
June 1995 and the total delinquent interest was approximately $840,000.
In February 1996, the General Partner instructed the servicer of this
Insured Mortgage to file a Notice of Default and an Election to Assign the
mortgage with HUD. The Partnership expects to receive 70% of the
Assignment Proceeds in mid 1996 and the remainder of the proceeds during
the fourth quarter of 1996. The Partnership intends to reinvest the net
proceeds less the 1% Assignment fee prior to December 31, 1996, the
expiration of the reinvestment period.
During March 1996, one of the investors in the Harbor View Estates
loan, exercised its right to purchase the participation certificate with
respect to this Insured Mortgage after a Notice of Default was filed with
HUD. The Partnership received approximately $709,000 in proceeds including
approximately $17,400 of interest due to the Partnership from this
prepayment in March 1996. The net principal proceeds received were
approximately $691,000 which resulted in a gain of approximately $600 which
is included on the accompanying statement of operations for the three
months ended March 31, 1996, the net proceeds of which are expected to be
reinvested in fully insured Acquired Insured Mortgages prior to the end of
the reinvestment period.
B. Coinsured FHA-Insured Certificates
----------------------------------
As discussed in the Partnership's Annual Report on Form 10-K for the
year ended December 31, 1995, under the HUD coinsurance program, both HUD
<PAGE>9
AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
3. INVESTMENT IN FHA-INSURED CERTIFICATES AND GNMA MORTGAGE-
BACKED SECURITIES - Continued
and the coinsurance lender are responsible for paying a portion of the
insurance benefits if a mortgagor defaults and the sale of the development
collateralizing the mortgage produces insufficient net proceeds to repay
the mortgage obligation. In such cases, the coinsurance lender will be
liable to the Partnership for the first part of such loss in an amount up
to 5% of the outstanding principal balance of the mortgage as of the date
foreclosure proceedings are instituted or the deed is acquired in lieu of
foreclosure. For any loss greater than 5% of the outstanding principal
balance, the responsibility for paying the insurance benefits will be borne
on a pro-rata basis, 85% by HUD and 15% by the coinsurance lender.
As of March 31, 1996 and December 31, 1995, the Partnership held
investments in three FHA-Insured Certificates secured by coinsured
mortgages. One of these coinsured mortgage investments, the mortgage on
St. Charles Place - Phase II, is coinsured by The Patrician Mortgage
Company (Patrician), an unaffiliated third party coinsurance lender under
the HUD coinsurance program. As of March 31, 1996 and December 31, 1995,
the remaining two FHA-Insured Certificates are coinsured by Integrated
Funding, Inc. (IFI), an affiliate of the Partnership.
1. Coinsured by third party
------------------------
The Partnership's investment in the St. Charles Place - Phase II
mortgage had an amortized cost equal to its face value of $3,745,393
and $3,749,991, as of March 31, 1996 and December 31, 1995,
respectively, and a fair value of $3,597,060 and $3,583,856, as of
March 31, 1996 and December 31, 1995, respectively. These amounts
represent the Partnership's approximate 55% ownership interest in the
mortgage. The remaining 45% ownership interest is held by American
Insured Mortgage Investors L.P. - Series 86 (AIM 86), an affiliate of
the Partnership. As of May 10, 1996, the mortgagor has made payments
of principal and interest due on the mortgage through April 1995 to
the Partnership. Patrician is litigating the case in bankruptcy court
while negotiating a modification agreement with the borrower.
The General Partner intends to continue to oversee the Partnership's
interest in this mortgage investment to ensure that Patrician meets
its coinsurance obligations. The General Partner's assessment of the
realizability of the carrying value of the St. Charles Place-Phase II
mortgage is based on the most recent information available and to the
extent these conditions change or additional information becomes
available, the General Partner's assessment may change. However, the
General Partner does not believe that there would be a material
adverse impact on the Partnership's financial condition or its results
of operations should Patrician be unable to comply with its full
coinsurance obligation.
2. Coinsured by affiliate
----------------------
As of March 31, 1996 and December 31, 1995, the Partnership held
investments in two FHA-Insured Certificates secured by coinsured
mortgages, where the coinsurance lender is IFI. These investments
were made on behalf of the Partnership by the former managing general
partner. As structured by the former managing general partner, with
respect to these mortgages, the Partnership bears the risk of loss
<PAGE>10
AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
3. INVESTMENT IN FHA-INSURED CERTIFICATES AND GNMA MORTGAGE-
BACKED SECURITIES - Continued
upon default for IFI's portion of the coinsurance loss on these
mortgage investments.
As of May 10, 1996, both mortgages were current with respect to the
payment of principal and interest.
As of March 31, 1996 and December 31, 1995, these two mortgage
investments had an aggregate fair value of $30,311,716 and
$30,553,317, respectively, and amortized costs and face values as
follows:
<PAGE>11
AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
3. INVESTMENT IN FHA-INSURED CERTIFICATES AND GNMA MORTGAGE-
BACKED SECURITIES - Continued
<TABLE>
<CAPTION>
Amortized Face Amortized Face
Cost Value Cost Value Cumulative
March 31, March 31, December 31, December 31, Loan Losses
1996 1996 1995 1995 Recognized(1)
------------- ------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
The Breakers at
Golf Mill $ 22,621,122 $ 22,621,122 $ 22,662,648 $ 22,662,648 $ 980,000
Summerwind Apts.-
Phase II 7,899,017 9,357,554 8,037,922 9,501,784 1,511,743
------------ ------------ ------------ ------------ -----------
$ 30,520,139 $31,978,676 $ 30,700,570 $ 32,164,432 $ 2,491,743
============ ============ ============ ============ ===========
</TABLE>
(1) No loan losses were recognized on these coinsured mortgages during the
three months ended March 31, 1996 and 1995.
In connection with the coinsured FHA-Insured Certificates, the
Partnership has sought, in addition to base interest payments,
additional interest based on a percentage of the net cash flow from
the development and the net proceeds from the refinancing, sale or
other disposition of the underlying development (commonly termed
Participations). All of the coinsured FHA-Insured Certificates, with
the exception of one, contain such Participations. In conjunction
with a 1994 mortgage modification, the participation agreement was
terminated, and effective March 1, 1995, the Partnership is no longer
entitled to receive Participations with respect to The Breakers at
Golf Mill. The January and February 1995 participation payment of
$21,902 was received during the first quarter of 1996. This amount is
included in mortgage investment income on the accompanying statement
of operations.
4. INVESTMENT IN FHA-INSURED LOANS
As of March 31, 1996 and December 31, 1995, the Partnership's investment in
fully insured FHA-Insured Loans, recorded at amortized cost, consisted of four
Originated Insured Mortgages and two Acquired Insured Mortgages. The four
Originated Insured Mortgages had an aggregate amortized cost of $30,125,570 and
$30,162,342, an aggregate face value of $29,266,416 and $29,299,733, and an
aggregate fair value of $30,127,446 and $30,199,166, as of March 31, 1996 and
December 31, 1995, respectively. The two Acquired Insured Mortgages had an
aggregate amortized cost of $1,153,690 and $1,161,339, an aggregate face value
of $1,150,722 and $1,158,329, and an aggregate fair value of $1,222,476 and
$1,219,590, as of March 31, 1996 and December 31, 1995, respectively.
As of May 10, 1996, all of the Partnership's FHA Insured Loans, recorded at
amortized cost, were current with respect to the payment of principal and
interest.
All of the FHA-Insured Loans contain Participations. During the three
months ended March 31, 1996 and 1995, the Partnership received additional
interest of $70,562 and $3,241, respectively, from three and one of the
<PAGE>12
AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
4. INVESTMENT IN FHA-INSURED LOANS - Continued
Participations, respectively. These amounts are included in mortgage investment
income on the accompanying statements of operations.
5. DUE FROM HUD
Due from HUD consists of amounts due in connection with losses incurred on
the disposition of a coinsured mortgage investment. Prior to this disposition,
this mortgage investment was accounted for as certificates held for disposition
under the coinsurance program.
During 1994, the Partnership filed claims with HUD for insurance benefits
in connection with losses incurred on the sale of the property underlying the
coinsured mortgages on Hazeltine Shores. In January 1994, the Partnership
received sales proceeds of approximately $6.6 million from the December 1993
sale of the property underlying the coinsured mortgage on Hazeltine Shores. A
claim for insurance benefits was submitted to HUD in January 1994. In August
1994, the Partnership received claim proceeds of approximately $3.2 million,
which included accrued interest. Additionally, during 1994, the Partnership
received approximately $457,000 from the mortgagor's trustee. The Partnership
reinvested the net disposition proceeds in Acquired Insured Mortgages during
1995. As of March 31, 1996 and December 31, 1995, Due from HUD includes
approximately $298,000 and $285,000, respectively, related to the disposition of
Hazeltine Shores, which will be included in a supplemental claim expected to be
filed with HUD during 1996.
6. DISTRIBUTIONS TO UNITHOLDERS
The distributions paid or accrued to Unitholders on a per Unit basis for
the quarters ended March 31, 1996 and 1995 are as follows:
1996 1995
------- -------
Quarter ended March 31, $0.32(1) $0.49(2)
===== =====
(1) This amount includes approximately $0.02 per Unit representing previously
undistributed accrued interest received from delinquent mortgages.
(2) This amount includes approximately $0.15 per Unit of accrued, but
previously undistributed, interest related to the receipt of claim proceeds
from the mortgage on Pinewood Park Apartments and approximately $0.01 per
Unit representing previously undistributed accrued interest received from a
delinquent mortgage.
The basis for paying distributions to Unitholders is cash flow from
operations, which includes regular interest income and principal from Insured
Mortgages and gains, if any, from mortgage dispositions. Although the Insured
Mortgages yield a fixed monthly mortgage payment once purchased, the cash
distributions paid to the Unitholders will vary during each quarter due to (1)
the fluctuating yields in the short-term money market where the monthly mortgage
payments received are temporarily invested prior to the payment of quarterly
distributions, (2) the reduction in the asset base and monthly mortgage payments
due to monthly mortgage payments received or mortgage dispositions, (3)
variations in the cash flow attributable to the delinquency or default of
Insured Mortgages and professional fees and foreclosure and acquisition costs
<PAGE>13
AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
6. DISTRIBUTIONS TO UNITHOLDERS - Continued
incurred in connection with those Insured Mortgages and (4) variations in the
Partnership's operating expenses.
7. TRANSACTIONS WITH RELATED PARTIES
The General Partner and certain affiliated entities, during the three
months ended March 31, 1996 and 1995, have earned or received compensation or
payments for services from the Partnership as follows:
<PAGE>14
AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
7. TRANSACTIONS WITH RELATED PARTIES - Continued
<TABLE>
<CAPTION>
COMPENSATION PAID OR ACCRUED TO RELATED PARTIES
For the three months ended
Capacity in Which March 31,
Name of Recipient Served/Item 1996 1995
- ----------------- ----------------------------- -------- --------
<S> <C> <C> <C>
CRIIMI, Inc.(1) General Partner/Distributions $145,128 $222,227
AIM Acquisition Advisor/Asset Management Fee 376,587 372,898
Partners, L.P.(2)
CRI(3) Affiliate of General Partner/ -- 23,599
Expense Reimbursement
CRIIMI MAE Affiliate of General Partner/
Management, Inc.(3) Expense Reimbursement 18,874 --
(1) The General Partner, pursuant to amendments to the Partnership Agreement, effective September 6, 1991, is entitled to
receive 4.9% of the Partnership's income loss, capital and distributions, including, without limitation, the Partnership's Adjusted
Cash from Operations and Proceeds of Mortgage Prepayments, Sales or Insurance (both as defined in the Partnership Agreement).
(2) Of the amounts paid to the Advisor, the Sub-advisor to the Partnership (the Sub-advisor) is entitled to a fee of .28% of
Total Invested Assets. CRI/AIM Management, Inc., which through June 30, 1995 acted as the Sub-advisor, earned a fee equal to $0 and
$109,904 for the three months ended March 31, 1996 and 1995, respectively. 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 $110,991 and $0, for the three months ended March 31, 1996 and 1995, respectively.
(3) Prior to June 30, 1995, these amounts were paid to CRI as reimbursement for expenses incurred on behalf of the General
Partner and the Partnership. 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 will be paid to a wholly-owned subsidiary of CRIIMI MAE, which is
the General Partner of CRIIMI MAE Services Limited Partnership, effective June 30, 1995. No amounts were paid to CRIIMI MAE
or its affiliates during the six months ended June 30, 1995.
</TABLE>
<PAGE>15
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
- -------
As of March 31, 1996, the Partnership had invested in 35 Insured Mortgages
with an aggregate amortized cost, face value and fair value of approximately
$153 million.
As of May 10, 1996, all of the FHA-Insured Certificates, GNMA Mortgage-
Backed Securities and FHA-Insured Loans were current with respect to the payment
of principal and interest except for the fully insured construction loan on
Waters Edge of New Jersey, for which the mortgagor had made payments through
June 1995, and the coinsured mortgage on St. Charles Place - Phase II, for which
the mortgagor had made payments through May 1995. In February 1996, the General
Partner instructed the servicer to file a Notice of Default and Election to
Assign the Waters Edge of new jersey mortgage to HUD. As discussed in Notes 3
and 4 to the financial statements, management does not anticipate that these
delinquencies will have an adverse material impact on the Partnership's
financial statements.
Results of Operations
- ---------------------
Net earnings decreased for the three months ended March 31, 1996 as
compared to the corresponding period in 1995 primarily as a result of a
reduction in gains on mortgage dispositions and interest and other income, as
discussed below. Partially offsetting these decreases was an increase in
mortgage investment income and a decrease in general and administrative
expenses, as discussed below.
Mortgage investment income increased for the three months ended March 31,
1996, as compared to the corresponding period in 1995. This increase was
primarily due to income recognized on Insured Mortgages acquired during 1995 and
1996 as a result of settlement of the coinsurance claims related to the
disposition of the properties underlying the mortgages on Hazeltine Shores,
Pinewood Park Apartments and Hamlet at Cobb's Landing and the reinvestment of
the net proceeds related thereto.
Interest and other income decreased for the three months ended March 31,
1996 as compared to the corresponding period in 1995 primarily due to the timing
of the reinvestment of coinsurance claims, as discussed above.
General and administrative expenses decreased for the three months ended
March 31, 1996 as compared to the corresponding periods in 1995. This decrease
was primarily the result of a reduction in annual report costs. Additionally,
there was a reduction in legal fees due to the decrease in mortgage
dispositions and legal issues relating to the mortgage dispositions.
<PAGE>16
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS - Continued
Gains on mortgage dispositions decreased for the three months ended March
31, 1996 as compared to the corresponding period in 1995. Gains or losses on
mortgage dispositions are based on the number, carrying amounts and proceeds of
mortgage investments disposed of during the period. During the three months
ended March 31, 1995, the Partnership recognized a gain of approximately $1.1
million related to the settlement of the coinsurance claim related to the
disposition of Pinewood Park Apartments, as discussed below. During March 1996,
one of the investors in the Harbor View Estates Loan, exercised its right to
purchase the participation certificates with respect to this Insured Mortgage
after a Notice of Default was filed with HUD. The Partnership received proceeds
from this prepayment in March 1996, and recognized a gain of approximately $600
which is included on the accompanying statement of operations for the three
months ended March 31, 1996, which are expected to be reinvested in fully
insured Acquired Insured Mortgages prior to December 31, 1996, the end of the
reinvestment period.
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 during the first three months of 1996 to
meet operating requirements.
The basis for paying distributions to Unitholders is cash flow from
operations, which includes regular interest income and principal from Insured
Mortgages and gains, if any, from mortgage dispositions. Although the Insured
Mortgages yield a fixed monthly mortgage payment once purchased, the cash
distributions paid to the Unitholders will vary during each quarter due to (1)
the fluctuating yields in the short-term money market where the monthly mortgage
payments received are temporarily invested prior to the payment of quarterly
distributions, (2) the reduction in the asset base and monthly mortgage payments
due to monthly mortgage payments received or mortgage dispositions, (3)
variations in the cash flow attributable to the delinquency or default of
insured mortgages and professional fees and foreclosure and acquisition costs
incurred in connection with those insured mortgages and (4) variations in the
Partnership's operating expenses.
Net cash provided by operating activities decreased for the three months
ended March 31, 1996 as compared to the corresponding period in 1995, primarily
due to a reduction in net earnings, as discussed above. Also contributing to
this decrease was an increase in receivable and other assets due to an increase
in mortgage interest receivable on the mortgages for Waters Edge of New Jersey
and St. Charles Place - Phase II. Additionally, there was a decrease in
accounts payable due to a reduction in accrued general and administrative
expenses.
Net cash provided by investing activities decreased for the three months
ended March 31, 1996 as compared to the corresponding period in 1995 primarily
due to a reduction in proceeds from mortgage dispositions from approximately
$3.6 million for the three months ended March 31, 1995 to approximately $700,000
for the corresponding period in 1996. Partially offsetting this decrease was a
reduction in the acquisition of mortgages during the first quarter of 1996 as
compared to the corresponding period in 1995.
Net cash used in financing activities decreased for the three months ended
March 31, 1996 as compared to the corresponding period in 1995 primarily due to
a reduction in distributions paid to partners as a result of special
distributions related to the receipt of net disposition proceeds and previously
undistributed accrued interest received in connection with the disposition of
the mortgages on Hazeltine Shores, Pinewood Park Apartments and Hamlet at Cobb's
Landing during the fourth quarter of 1994, which was distributed during the
first quarter of 1995.
<PAGE>17
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FROM 8-K
No reports on Form 8-K were filed with the Securities and Exchange
Commission during the quarter ended March 31, 1996.
The exhibits filed as part of this report are listed below:
Exhibit No. Description
- ------------- -----------------------
27 Financial Data Schedule
<PAGE>18
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 L.P. - SERIES 88
(Registrant)
By:CRIIMI, Inc.
General Partner
May 14, 1995 /s/ Cynthia O. Azzara
- ------------------ ---------------------------------
Date Cynthia O. Azzara
Principal Financial and
Accounting Officer<PAGE>
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<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED
FROM THE QUARTERLY REPORT ON FORM 10-Q AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH QUARTERLY REPORT ON FORM 10-Q.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
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<SECURITIES> 121,496
<RECEIVABLES> 34,602
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0
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<OTHER-SE> 157,653
<TOTAL-LIABILITY-AND-EQUITY> 160,734
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