AMERICAN INSURED MORTGAGE INVESTORS L P SERIES 88, 10-K, 1996-04-01

AMERICAN INSURED MORTGAGE INVESTORS L P SERIES 88
10-K, 1996-04-01
FINANCE SERVICES

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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, 1995
------------------

Commission file number 1-12724
-----------------

AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88
- -----------------------------------------------------------------
(Exact name of registrant as specified in charter)

California 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)

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)

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 (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 22, 1996, 8,802,091 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 $119,918,353.

<PAGE>3
AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88

1995 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 . . . . . . 5
Item 6. Selected Financial Data . . . . . . . . . . . 9
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of
Operations . . . . . . . . . . . . . . . . 10
Item 8. Financial Statements and Supplementary Data . 23
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure . . 23

PART III
--------
Item 10. Directors and Executive Officers of the
Registrant . . . . . . . . . . . . . . . . 23
Item 11. Executive Compensation . . . . . . . . . . . 24
Item 12. Security Ownership of Certain Beneficial
Owners and Management . . . . . . . . . . . 25
Item 13. Certain Relationships and Related Transactions 25

PART IV
-------
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K . . . . . . . . . . . . 27
Signatures . . . . . . . . . . . . . . . . . . . . . . 29

<PAGE>4

PART I

ITEM 1. BUSINESS

Development and Description of Business
- ---------------------------------------
Information concerning the business of American Insured Mortgage Investors
L.P.-Series 88 (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 7 of the notes to the financial statements of the Partnership.
Also see Schedule IV-Mortgage Loans on Real Estate for a summary of mortgage
investments held by the Partnership as of December 31, 1995.

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). CRIIMI MAE was formerly managed by
an affiliate of C.R.I., Inc. (CRI).

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 obtain 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 a
merger transaction in which CRIIMI MAE became a self-administered real estate
investment trust (REIT) on June 30, 1995, 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 acquiring 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 and their respective affiliates. Some of these entities may have
substantially greater capital resources and experience than the Partnership in
acquiring mortgage investments which are fully insured or guaranteed by the
Federal National Mortgage Association, the Government National Mortgage
Association (GNMA), the Federal Housing Administration (FHA) or the Federal Home
Loan Mortgage Corporation.

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 mortgages at or about the
same time that one or more of the other AIM Partnerships and/or other entities
sponsored or managed by CRIIMI MAE, including CRI Liquidating REIT Inc., is
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.,

<PAGE>5
PART I

ITEM 1. BUSINESS - Continued

however, are subject to their fiduciary duties in evaluating the appropriate
action to be taken when faced with such conflicts.

ITEM 2. PROPERTIES

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

ITEM 3. LEGAL PROCEEDINGS

The information required by Item 3 is incorporated herein by reference to
Note 12 of the notes to the Partnership's financial statements.

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 1995.

PART II

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

Principal Market and Market Price for Units
- -------------------------------------------
Effective January 1, 1994, the United States Congress repealed portions of
the Federal tax code which have had an adverse impact on tax-exempt investors in
publicly-traded partnerships. This tax code change cleared away the major
impediment standing in the way of listing the Partnership's Depositary Units of
Limited Partnership Interest (Units) for trading on a national stock exchange.
In an effort to allow pension funds and other tax-exempt organizations to invest
in publicly-traded partnerships, the Revenue Reconciliation Act of 1993 repealed
the rule that automatically treated income from publicly-traded partnerships as
gross income that is derived from an unrelated trade or business. As a result,
investments in publicly-traded partnerships such as the Partnership are now
treated the same as investments in other partnerships for purposes of the
unrelated business taxable income rules. The General Partner listed the
Partnership's Units for trading on the American Stock Exchange (AMEX) on January
18, 1994, in order to provide investment liquidity as contemplated in the
Partnership's original prospectus. The Units are traded under the symbol "AIK."

The high and low bid prices for the Units as reported on AMEX for each
quarterly period in 1995 and 1994 were as follows:

1995
Quarter Ended High ---- Low
------------- ------ --------

March 31, 1995 $ 12 3/8 $ 11 3/8
June 30, 1995 13 5/8 11 7/8
September 30, 1995 13 1/4 12 7/8
December 31, 1995 13 1/2 12 3/4

<PAGE>6

PART II

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

1994
Period Ended High ---- Low
------------- ------- --------

January 18, 1994 through
March 31, 1994 $ 14 3/4 $ 12 1/8
April 1, 1994 through June 30, 1994 12 5/8 11 1/2
July 1, 1994 through
September 30, 1994 12 5/8 11 5/8
October 1, 1994 through
December 31, 1994 11 7/8 11

Prior to listing of the Partnership's Units for trading on the AMEX, the
Units were only tradable through the informal market called the "secondary
market."

Distribution Information
- ------------------------
Distributions per Unit, payable out of the cash flow of the Partnership,
during 1995 and 1994 were as follows:

Distributions for the Amount of Distribution
Quarter Ended Per Unit
--------------------- ----------------------
March 31, 1995 $ 0.49 (1)
June 30, 1995 0.53 (2)
September 30, 1995 0.32 (3)
December 31, 1995 0.32 (4)
---------
$ 1.66
=========

March 31, 1994 $ 0.26 (5)
June 30, 1994 0.25 (6)
September 30, 1994 0.46 (7)
December 31, 1994 0.44 (8)
---------
$ 1.41
=========

<PAGE>7

PART II

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

(7) This amount includes approximately $0.22 per Unit of accrued but previously
undistributed interest and gain received from HUD relating to the
foreclosure and sale of the mortgage on Hazeltine Shores.
(8) This amount includes approximately $0.05 per Unit representing additional
gain received from the disposition of the mortgage on Hazeltine Shores; and
approximately $0.08 per Unit representing previously undistributed accrued
interest from delinquent mortgages.

<PAGE>8

PART II

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

Approximate Number of Unitholders
Title of Class as of December 31, 1995
- ----------------- -------------------------------
Depositary Units of Limited
Partnership Interest 8,100

<PAGE>9

PART II

ITEM 6. SELECTED FINANCIAL DATA
(Dollars in thousands, except per Unit amounts)
<TABLE>
<CAPTION>
For the Years Ended December 31,
1995 1994 1993 1992 1991
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Income $ 13,236 $ 13,332 $ 13,644 $ 12,018 $ 12,648

Net gains (losses) on
mortgage dispositions and
loan losses 2,452 978 (972) (1,582) (4,568)

Net earnings 13,795 11,540 10,542 8,383 6,066

Net earnings per Limited
Partnership Unit (1) 1.49 1.24 1.13 0.90 0.65

Distributions per Limited
Partnership Unit (1)(2) 1.66 1.41 1.12 1.1128 1.323

As of December 31,
1995 1994 1993 1992 1991
-------- -------- -------- -------- --------

Total assets $161,927 $154,805 $166,904 $166,768 $168,029

Partners' equity $158,806 $150,506 $161,498 $161,381 $163,356

(1) Calculated based upon the weighted average number of Units outstanding. See Note 2 of the notes to the financial statements of
the Partnership.

(2) Includes distributions due the Unitholders for the Partnership's fiscal quarters ended December 31, 1995, 1994, 1993, 1992 and
1991, which were paid subsequent to year end. See Notes 7 and 9 of the notes to the Partnership's financial statements.

</TABLE>

The selected statements of operations data presented above for the years
ended December 31, 1995, 1994 and 1993, and the balance sheet data as of
December 31, 1995 and 1994, 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, 1992 and 1991 and the balance sheet data as of December 31, 1993, 1992 and
1991 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>10

PART II

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

General
- -------
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. During the period from October 2, 1987 (the initial closing
date of the Partnership's public offering) through March 10, 1989 (the
termination date of the offering), the Partnership, pursuant to its public
offering of Units, raised a total of $177,039,320 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.

From inception through September 6, 1991, AIM Capital Management Corp.
served as managing general partner (with a partnership interest of 4.8%), IRI
Properties Capital Corp. served as the corporate general partner (with a
partnership interest of 0.1%) and Third Group Partners, an affiliate of the
former general partners, served as the associate general partner (with a
partnership interest of 0.1%). All of the foregoing general partners are
sometimes collectively referred to as former general partners.

At a special meeting of the limited partners and Unitholders, as defined in
the Partnership Agreement, of the Partnership held on August 13, 1991, a
majority of these interests approved, among other items, the assignment of the
general partner interests and shares of the company which acted as the assignor
limited partner in the Partnership.

Effective September 6, 1991, CRIIMI, Inc. (the General Partner) succeeded
AIM Capital Management Corp. and IRI Properties Capital Corp. as the sole
general partner of the Partnership. CRIIMI, Inc. purchased the interests of the
former managing general partner and the former corporate general partner
pursuant to the terms of the Partnership Agreement. CRIIMI, Inc. is a wholly-
owned subsidiary of CRIIMI MAE Inc. (CRIIMI MAE), which was formerly managed by
an affiliate of C.R.I., Inc. (CRI). In addition, the General Partner acquired
the shares of the company which acted as the assignor limited partner in the
Partnership. AIM Acquisition Partners, L.P. (the Advisor) purchased the
interest of the former associate general partner (0.1%) but withdrew from the
Partnership effective September 19, 1991. The Partnership succeeded to the 0.1%
interest formerly held by the Advisor.

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 real estate
investment trust (REIT) on June 30, 1995, 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.

Until the change in the Partnership's investment policy, as discussed
below, the Partnership was in the business of originating mortgage loans

<PAGE>11

PART II

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

(Originated Insured Mortgages) and acquiring mortgage loans (Acquired Insured
Mortgages, and together with Originated Insured Mortgages, referred to herein as
Insured Mortgages). As of December 31, 1995, the Partnership had invested in
either Originated Insured Mortgages which are insured or guaranteed, in whole or
in part, by the Federal Housing Administration (FHA) or Acquired Insured
Mortgages which are fully insured (as more fully described below).

Effective September 19, 1991, the General Partner changed, at the Advisor's
recommendation, the investment policies of the Partnership to invest only in
Acquired Insured Mortgages which are fully insured or guaranteed by the Federal
National Mortgage Association, the Government National Mortgage Association
(GNMA), FHA or the Federal Home Loan Mortgage Corporation.

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. The Partnership's principal investment objectives are to invest in
Insured Mortgages which (i) preserve and protect the Partnership's invested
capital; (ii) provide quarterly distributions of adjusted cash from operations
which may be increased over time as a result of Participations (as defined
below), when obtainable, on Originated Insured Mortgages; and (iii) provide
appreciation by selecting Acquired Insured Mortgages which present the
possibility of early prepayment.

As of December 31, 1995, the Partnership had invested in 36 Insured
Mortgages with an aggregate amortized cost of approximately $154 million, an
aggregate face value of approximately $154 million and an aggregate fair value
of approximately $155 million.

Investment in Insured Mortgages
- -------------------------------
The Partnership's investment in Insured Mortgages is comprised of
participation certificates evidencing a 100% undivided beneficial interest in
government insured multifamily mortgages issued or sold pursuant to FHA programs
(FHA-Insured Certificates), mortgage-backed securities guaranteed by GNMA (GNMA
Mortgage-Backed Securities) and FHA-insured mortgage loans (FHA-Insured Loans).
The mortgages underlying the FHA-Insured Certificates, the GNMA Mortgage-Backed
Securities and the FHA-Insured Loans are non-recourse first liens on multifamily
residential developments or retirement homes.

Payments of principal and interest on FHA-Insured Certificates and FHA-
Insured Loans are insured by the United States Department of Housing and Urban
Development (HUD) pursuant to Title 2 of the National Housing Act. Payments of
principal and interest on GNMA Mortgage-Backed Securities are guaranteed by GNMA
pursuant to Title 3 of the National Housing Act.

The following is a discussion of the Partnership's mortgage investments,
along with the risks related to each type of investment.

A. Fully Insured FHA-Insured Certificates and GNMA
Mortgage-Backed Securities
-----------------------------------------------
As of 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 seven FHA-Insured Certificates with an
aggregate amortized cost of $76,462,511, an aggregate face value of
$76,636,450 and an aggregate fair value of $77,918,878. As of December 31,
1994, the Partnership's investment in fully insured Acquired Insured
Mortgages, recorded at fair value, consisted of 12 GNMA Mortgage-Backed

<PAGE>12

PART II

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

Securities and eight FHA-Insured Certificates, with an aggregate amortized
cost of $72,138,726, an aggregate face value of $72,256,566 and an
aggregate fair value of $67,450,597.

The Partnership's investment in fully insured Originated Insured
Mortgages, recorded at fair value, consisted of one FHA-Insured Certificate
as of December 31, 1995 and 1994. As of December 31, 1995, this investment
had an amortized cost of $11,411,412, a face value of $11,043,976, and a
fair value of $11,289,584. As of December 31, 1994, this investment had an
amortized cost of $11,462,535, a face value of $11,089,493 and a fair value
of $10,421,526.

As of March 1, 1996, all of the Partnership's fully insured FHA-
Insured Certificates and GNMA Mortgage-Backed Securities 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 March 1, 1996, the mortgagor has made payments
of interest through June 1995. The total delinquent interest as of March
1, 1996 is approximately $675,000. 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 proceeds from the assignment in mid 1996 and intends to
reinvest the net proceeds prior to the expiration of the reinvestment
period of December 31, 1996.

During March, 1996, one of the investors in the Harbor View Estates loan
exercised its right to purchase the participation interests 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, the net
proceeds of which are expected to be reinvested prior to the end of the
reinvestment period.

During the year ended December 31, 1995, the Partnership acquired the
following fully insured Acquired Insured Mortgages:

<PAGE>13

PART II

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

<TABLE>
<CAPTION>
Purchase Effective
Date of Price/ Interest
Complex Name Acquisition Advance Rate
- -------------------------- ------------ ----------- ---------
<S> <C> <C> <C>
Acquired Insured Mortgages
- --------------------------
Tehama Estates January 1995 $ 1,328,768 9.07%
Westview Apartments April 1995 1,149,323 8.65%
Orchard Creek May 1995 1,297,631 8.63%
Burlwood Apartments August 1995 656,900 9.00%
Oak Lawn Apartments August 1995 487,700 9.00%
Collin Care Center August 1995 1,719,800 8.13%
Holton Manor October 1995 1,047,630 8.14%
-----------
Total $ 7,687,752
===========
</TABLE>

During the years ended December 31, 1995, 1994 and 1993, the Partnership
disposed of the following fully insured FHA-Insured Certificates and GNMA
Mortgage-Backed Securities:

<PAGE>14

PART II

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

<TABLE>
<CAPTION>
Financial
Statement
Year of Type of Net Carrying Net (Loss)/Gain
Complex Name Disposition Disposition Value Proceeds Recognized
- ------------------- ----------- ------------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Gilbert Greens 1995 Prepayment $ 2,864,689 $ 3,007,796 $ 143,107

Graymere Apartments 1993 Assignment/Sale of 5,539,630 5,788,194 248,564(a)
Debentures

Arborview Apartments 1993 Sale of a 17,571,849 17,569,959 (1,890)
defaulted loan

Arlington Heights Apartments 1993 Sale of a -- 277,465(b) 277,465
defaulted loan

(a) During 1992, the Partnership recognized a loss of $268,005 in anticipation of the assignment of this defaulted mortgage.
(b) Represents additional proceeds received resulting from an adjustment to the 1992 sales price.

</TABLE>

In the case of fully insured Originated Insured Mortgages and Acquired
Insured Mortgages, the Partnership's maximum exposure for purposes of
determining loan losses would generally be approximately 1% of the unpaid
principal balance of the Insured Mortgage (an assignment fee charged by
FHA) at the date of a default, plus the unamortized balance of acquisition
fees and closing costs paid in connection with the acquisition of the
Insured Mortgages and the loss of approximately 30 days accrued interest.

B. Coinsured FHA-Insured Certificates
----------------------------------
Under the HUD coinsurance program, both HUD 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.

While the Partnership is due payment of all amounts owed under the
mortgage, the coinsurance lender is responsible for the timely payment of
principal and interest to the Partnership. The coinsurance lender is
prohibited from entering into any workout arrangement with the borrower
without the Partnership's consent and must file a claim for coinsurance
benefits with HUD, upon default, if the Partnership so directs. As an
ongoing HUD-approved coinsurance lender, and under the terms of the
participation documents, the coinsurance lender is required to satisfy
certain minimum net worth requirements as set forth by HUD. However, it is
possible that the coinsurance lender's potential liability for loss on
these developments, and others, could exceed its HUD-required minimum net
worth. In such case, the Partnership would bear the risk of loss if the
coinsurance lenders were unable to meet their coinsurance obligations. In

<PAGE>15

PART II

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

addition, HUD's obligation for the payment of its share of the loss could
be diminished under certain conditions, such as the lender not adequately
pursuing regulatory violations of the borrower or the failure to comply
with other terms of the mortgage. However, the General Partner is not
aware of any conditions or actions that would result in HUD diminishing its
insurance coverage.

As of December 31, 1995 and 1994, the Partnership held investments in
three coinsured FHA-Insured Certificates. 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 December 31,
1995, and 1994, the remaining two FHA-Insured Certificates are coinsured by
Integrated Funding, Inc. (IFI), an affiliate of the Partnership, and are
discussed below.

1. Coinsured by third party
------------------------
St. Charles Place - Phase II is a 156-unit apartment complex located
in Miramar, Florida. The Partnership's investment in the St. Charles
Place - Phase II mortgage had an amortized cost equal to its face
value of $3,749,991 and $3,767,426 as of December 31, 1995 and 1994,
respectively. As of December 31, 1995 and 1994, this mortgage had a
fair value of $3,583,856 and $3,337,126, 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 March 1, 1996, the mortgagor had made payments of principal and
interest due on the mortgage through May 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 December 31, 1995 and 1994, 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 upon default for
IFI's portion of the coinsurance loss on these mortgage investments.

The IFI coinsured mortgages had an aggregate fair value of $30,553,317
and $28,204,766, as of December 31, 1995 and 1994, respectively, and

<PAGE>16

PART II

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

amortized costs and face values as of December 31, 1995 and 1994 as
follows:

<PAGE>17

PART II

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

Amortized Face Amortized Face Loan Losses Recognized
Cost Value Cost Value for the year ended Cumulative
December 31, December 31, December 31, December 31, December 31, Loan Losses
1995 1995 1994 1994 1995 1994 Recognized
------------ ------------ ------------ ------------ ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
The Breakers at Golf
Mill $ 22,662,648 $ 22,662,648 $ 22,821,693 $ 22,821,693 $ -- $ -- $ 980,000
Summerwind Apts.-Phase II 8,037,922 9,501,784 8,071,755 9,556,080 -- -- 1,511,743
------------ ------------ ------------ ------------ ---------- ---------- -----------
$ 30,700,570 $ 32,164,432 $ 30,893,448 $ 32,377,773 $ -- $ -- $ 2,491,743
============ ============ ============ ============ ========== ========== ===========
</TABLE>

The following is a description of each of the Partnership's coinsured
mortgage investments for which IFI is the coinsurance lender.

In March 1994, the mortgage note for The Breakers at Golf Mill was
amended to reduce the mortgage interest rate from 8.25% to 7.0%. The
Partnership recognized aggregate loan losses of $980,000 during 1993
in anticipation of the refinancing or prepayment of the mortgage,
which primarily represented the unamortized balance of acquisition
fees and closing costs paid in connection with the acquisition of the
mortgage. As of March 1, 1996, the mortgagor was current with respect
to payment of principal and interest on this mortgage.

Summerwind Apartments-Phase II is a 190-unit garden complex located in
Naples, Florida. Since 1987, the property had been operating at a
loss and the mortgagor on this mortgage had been delinquent on its
principal and interest payments to the Partnership since mid-1991.
The servicer filed an Initial Notice of Default with HUD in September
1991. As a result of the above, and the General Partner's evaluation
of the collateral underlying the mortgage in 1991, a loan loss of
$1,511,743 was recorded. However, during 1992, the financial
performance of the property improved substantially as a result of the
property entering into a master lease with a financially capable
tenant for a majority of the building's units. As of March 1, 1996,
the mortgagor was current with respect to payment of principal and
interest on this mortgage.

In October 1993, the mortgagor of the coinsured mortgage on Ashbury
Meadows informed the General Partner that the mortgagor was attempting
to refinance the mortgage. As a result, the Partnership recognized a
loan loss of $515,900 during the fourth quarter of 1993 which was
primarily due to the write-off of the unamortized balance of
acquisition fees and closing costs paid in connection with the
acquisition of this mortgage. In April 1994, the Partnership received
net proceeds of approximately $6.0 million from the prepayment of the
mortgage on Ashbury Meadows. The Partnership recognized a loss of
$42,488, as shown on the accompanying statement of operations for the
year ended December 31, 1994. This loss was in addition to the loan
loss of $515,900 recognized in the fourth quarter of 1993. The
Partnership reinvested the net disposition proceeds from this mortgage
in fully insured Acquired Insured Mortgages.

In connection with the coinsured FHA-Insured Certificates, the
Partnership has sought, in addition to base interest payments,

<PAGE>18

PART II

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

additional interest based on a percentage of the net cash flow from
the development and of the net proceeds from the refinancing, sale of
other disposition of the underlying development (commonly termed
Participations). All of the coinsured FHA-Insured Certificates, with
the exception of one, contain such Participations. During the years
ended December 31, 1995, 1994 and 1993, the Partnership received
additional interest of $133,120, $22,612 and $12,580, respectively,
from The Breakers at Golf Mill, one of the Participations. These
amounts are included in mortgage investment income on the accompanying
statements of operations. In conjunction with the 1994 mortgage
modification, as discussed above, the participation agreement was
terminated, and effective March 1, 1995, the Partnership was no longer
entitled to receive Participations with respect to The Breakers at
Golf Mill.

C. FHA-Insured Loans
-----------------
As of December 31, 1995 and 1994, 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
$30,162,342 and $30,302,269, an aggregate face value of $29,299,733 and
$29,426,280, and an aggregate fair value of $30,199,166 and $28,272,394, as
of December 31, 1995 and 1994, respectively. The two Acquired Insured
Mortgages had an aggregate amortized cost of $1,161,339 and $1,190,107, an
aggregate face value of $1,158,329 and $1,186,936, and an aggregate fair
value of $1,219,590 and $1,205,546, as of December 31, 1995 and 1994,
respectively.

As of March 1, 1996, all of the Partnership's FHA-Insured Loans were
current with respect to the payment of principal and interest.

All of the FHA-Insured Loans contain Participations. During the years
ended December 31, 1995 and 1994, the Partnership received additional
interest of $46,581 and $13,938, respectively, from three and one of the
FHA-Insured Loans which contain Participations, respectively. No monies
were received from these Participations during the year ended December 31,
1993. These amounts, if any, are included in mortgage investment income on
the accompanying statements of operations.

Due from HUD
------------
Due from HUD consists of amounts due to the Partnership resulting from
losses incurred on the disposition of coinsured mortgage investments.
Prior to these dispositions, the mortgage investments were accounted for as
Certificates held for disposition under the coinsurance program. The
following is a summary of amounts due from HUD as of December 31, 1995 and
1994:

During 1994, the Partnership filed claims with HUD for insurance
benefits in connection with losses incurred on the sales of the properties
underlying the coinsured mortgages on Hazeltine Shores, Pinewood Park
Apartments and Hamlet at Cobb's Landing.

<PAGE>19

PART II

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

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 fully insured
Acquired Insured Mortgages during the 1994. As of December 31, 1995 and
1994, Due from HUD includes approximately $285,000 and $202,000,
respectively, related to the disposition of Hazeltine Shores, $285,000 of
which will be included in a supplemental claim expected to be filed with
HUD during 1996.

Pinewood Park Apartments is a 204-unit garden complex located in
Kissimmee, Florida. Beginning in mid-1991, the mortgagor was delinquent on
its principal and interest payments and subsequently defaulted.
Consequently, the servicer filed an Initial Notice of Default with HUD in
April 1992 and the General Partner initiated foreclosure related to
proceedings in November 1992. On March 18, 1993, the borrower filed for
protection under Chapter 11 of the Federal Bankruptcy Code. During 1994,
the Partnership acquired the deed to the property from the mortgagor in
lieu of foreclosure and, in August 1994, received proceeds of approximately
$5.1 million from the sale of the property. Additionally, during 1994, the
Partnership received approximately $287,000 from the mortgagor. In
September 1994, a claim for insurance benefits was submitted to HUD, and in
March 1995, the Partnership received claim proceeds of approximately $3.6
million, which included accrued interest, and recognized a gain of
$1,075,099. The Partnership reinvested the net proceeds in Acquired
Insured Mortgages in the second and third quarters of 1995. As of December
31, 1995, no amounts were due from HUD related to the Pinewood Park
Apartments coinsurance claim. As of December 31, 1994, Due from HUD
includes approximately $2.4 million related to this claim.

The mortgage on Hamlet at Cobb's Landing converted to a permanent loan
during the first quarter of 1992. The mortgagor had been delinquent on its
payments to the Partnership beginning with the last quarter of 1991. As a
result, the servicer filed an Initial Notice of Default with HUD in May
1992. The General Partner initiated foreclosure proceedings in November
1992. On March 18, 1993, the borrower filed for protection under Chapter
11 of the Federal Bankruptcy Code. During 1994, the Partnership acquired
the deed to the property from the mortgagor in lieu of foreclosure and, in
September 1994, received proceeds of approximately $8.5 million from the
sale of the property. Additionally, during 1994, the Partnership received
approximately $685,000 from the mortgagor. In October 1994, a claim for
insurance benefits was submitted to HUD, and in May 1995, the Partnership
received claim proceeds of approximately $3.1 million, which included
accrued interest, and recognized a gain of $1,234,015. The Partnership
reinvested the net proceeds in fully insured Acquired Insured Mortgages
during the second and third quarters of 1995. As of December 31, 1995, no
amounts were due from HUD related to the Hamlet at Cobb's Landing
coinsurance claim. As of December 31, 1994, Due from HUD includes
approximately $1.6 million related to this claim.

Results of Operations
---------------------
1995 versus 1994
----------------
Net earnings increased for 1995 as compared to 1994 primarily as a result
of an increase in gains on mortgage dispositions. Also contributing to
this increase were decreases in general and administrative expenses and the
provision for settlement of litigation, as discussed below.
Mortgage investment income remained relatively constant for 1995 as
compared to 1994.

<PAGE>20

PART II

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

General and administrative expenses decreased for 1995 as compared to 1994.
This decrease was primarily a result of non-recurring payroll expenses and
professional fees incurred in connection with the disposition of Hazeltine
Shores, Pinewood Park Apartments and Hamlet at Cobb's Landing during 1994.
Also contributing to the decrease was a one-time payment in 1994 for the
Partnership's initial listing on the American Stock Exchange.

Provision for settlement of litigation decreased for 1995 as compared to
1994 due to the recognition of a non-recurring provision for settlement of
litigation, as discussed below.

Net gains on mortgage dispositions increased for 1995 as compared to 1994.
Gains or losses on mortgage dispositions are based on the number, carrying
amounts and proceeds of mortgage investments disposed of during the period.
During 1995, the Partnership recognized aggregate gains of approximately
$2.4 million related to the settlement of the coinsurance claims on
Pinewood Park Apartments and Hamlet at Cobb's Landing and the prepayment of
the mortgage on Gilbert Greens Apartments. This compares to the
recognition in 1994 of a gain of approximately $1.0 million related to the
settlement of the coinsurance claim on Hazeltine Shores, and a loss of
approximately $42,000 in connection with the disposition of the mortgage on
Ashbury Meadows Apartments.

1994 versus 1993
----------------
Net earnings increased for 1994 as compared to 1993 primarily as a result
of an increase in net gains from mortgage dispositions, and a decrease in
loan losses as described below. These amounts were partially offset by a
decrease in mortgage investment income and an increase in general and
administrative expenses and the provision for settlement of litigation, as
discussed below.

Mortgage investment income decreased for 1994 as compared to 1993. This
decrease was primarily due to income recognized on the Hazeltine Shores
claim which was classified as interest and other income in 1994 and as
mortgage investment income in 1993. Also contributing to the decrease in
mortgage investment income was a reduction in mortgage interest rates on
Acquired Insured Mortgages purchased in 1993 and 1994 as compared to the
mortgage interest rates on Insured Mortgages which were disposed of during
1993 and 1994. The decrease was also attributable to the timing of the
reinvestment of net proceeds from mortgage dispositions and settlement of
the coinsurance claim on Hazeltine Shores.

Interest and other income increased for 1994 as compared to 1993 primarily
due to the recognition of interest from the Hazeltine Shores claim for
insurance benefits, as discussed above. Also contributing to the increase
was interest earned from the short-term investment of net disposition
proceeds prior to reinvestment in Acquired Insured Mortgages.

Asset management fees to related parties increased for 1994 compared to
1993 primarily as a result of the continued funding of construction loan
advances.

General and administrative expenses increased for 1994 as compared to 1993.
This increase was primarily a result of increased payroll expenses related
to the management of the Partnership's coinsured loans and costs incurred
in connection with the disposition of Hazeltine Shores, Pinewood Park
Apartments, and Hamlet at Cobb's Landing during 1994. Partially offsetting
these increases was a decrease in legal and professional fees, as a result
of the settlement of litigation, as discussed below.

<PAGE>21

PART II

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

Interest expense to affiliate decreased for 1994 as compared to 1993 as a
result of the paydown of the note payable to American Insured Mortgage
Investors Series 85, L.P. during the second quarter of 1994.

During 1994, the Partnership recognized a provision for settlement of
litigation in the amount of $349,824 related to the repurchase of 50,000
Units of limited partnership interest in connection with the settlement of
litigation, as described below in "Other Events."

Net gains on mortgage dispositions increased for 1994 as compared to 1993,
and loan losses decreased for 1994 as compared to 1993. During 1993, the
Partnership recognized aggregate loan losses of approximately $1.5 million
and disposed of three mortgage investments which resulted in aggregate net
gains of approximately $524,000. During 1994, the Partnership accepted a
discounted prepayment on the mortgage on Ashbury Meadows, resulting in a
loss of approximately $42,000 and settled the coinsurance claim related to
the foreclosure and sale of Hazeltine Shores resulting in a gain of
approximately $1.0 million.

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 1995 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.

If necessary, the Partnership has the right to establish reserves either
from the Net Proceeds of the Offering or from Cash Flow (as defined in the
Partnership Agreement). It should be noted, however, that the Partnership
also has the right to reinvest the Proceeds of Mortgage Prepayments, Sales,
and Insurance in Acquired Insured Mortgages through December 31, 1996 and
generally intends to distribute substantially all of its Cash Flow from
operations. If any reserves are deemed to be necessary by the Partnership,
they will be invested in short-term, interest-bearing investments.

The Partnership anticipates that reserves generally would only be necessary
in the event the Partnership elected to foreclose on an Originated Insured
Mortgage insured by FHA and take over the operations of the underlying
development. In such case, there may be a need for additional capital.
Since foreclosure proceedings can be expensive and time-consuming, the
Partnership expects that it will generally assign the fully insured
Originated Insured Mortgages to HUD for insurance proceeds rather than
initiate foreclosure. In the case of an Originated Insured Mortgage
insured under the HUD coinsurance program, the likelihood of foreclosure

<PAGE>22

PART II

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

(and the potential need for reserves) exists since these coinsured
mortgages generally cannot be assigned to HUD and the coinsurance lender
would be required to acquire title to the property and hold the property
for 12 months or until an earlier sale in order to realize the benefit of
HUD insurance. The determination of whether to assign the mortgage to HUD
or institute foreclosure proceedings or whether to set aside any reserves
will be made on a case-by-case basis by the General Partner, the Advisor
and the sub-advisor. As of December 31, 1995 and 1994, the Partnership had
not set aside any reserves.

Cash flow - 1995 versus 1994
----------------------------
Net cash provided by operating activities increased for 1995 as compared to
1994 primarily due to an increase in receivables and other assets during
1994 as a result of the disposition of the properties underlying the
coinsured mortgages on Pinewood Park Apartments, Hazeltine Shores and
Hamlet at Cobb's Landing, as discussed above. Also contributing to the
increase was a decrease in payments made and treated as an addition to AHFS
and Due from HUD during 1995, as compared to 1994, as well as a decrease in
general and administrative costs, as previously discussed.

Net cash provided by investing activities decreased for 1995 as compared to
1994 primarily due to a decrease in proceeds from mortgage dispositions
from approximately $29.4 million for 1994 to approximately $9.3 million for
1995. Partially offsetting this decrease was a decrease in the acquisition
of Acquired Insured Mortgages from approximately $25.3 million in 1994 to
approximately $7.7 million in 1995.

Net cash used in financing activities increased for 1995 as compared to
1994 primarily due to an increase in distributions paid to partners as a
result of special distributions related to the receipt of previously
undistributed accrued interest and capital gain 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 and the
first three quarters of 1995.

Cash flow - 1994 versus 1993
----------------------------
Net cash provided by operating activities decreased for 1994 as compared to
1993. This decrease was primarily due to a decrease in mortgage investment
income and an increase in general and administrative expenses, as discussed
above. Also contributing to the decrease in net cash provided by operating
activities was an increase in receivables and other assets during 1994 as a
result of the disposition of the properties underlying the coinsured
mortgages on Hazeltine Shores, Pinewood Park Apartments and Hamlet at
Cobb's Landing, as discussed above.

Net cash provided by investing activities increased for 1994 as compared to
1993 primarily due to the receipt of net proceeds of approximately $29.4
million from the disposition of Hazeltine Shores, Pinewood Park Apartments
and Hamlet at Cobb's Landing, the prepayment of the mortgage on Ashbury
Meadows and receipt of proceeds related to the Hazeltine Shores coinsurance
claim, as compared to net disposition proceeds of $23.6 million received in
1993. Also contributing to the increase in net cash provided by investing
activities was a decrease in the acquisition of Insured Mortgages and
advances on construction loans from approximately $31.8 million during 1993
to approximately $25.3 million during 1994. Partially offsetting this
increase in net cash provided by investing activities was a decrease in

<PAGE>23

PART II

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

proceeds received on short-term investments of approximately $2.7 million
from 1993 to 1994.

Net cash used in financing activities increased for 1994 as compared to
1993 primarily due to an increase in distributions paid to partners as a
result of the increase in net earnings in 1994 and due to the repurchase of
50,000 Units of limited partnership interest during 1994, as discussed
below.

Other Events
------------
On November 6, 1992, a complaint was filed on behalf of a limited partner
of the Partnership in the Superior Court for the State of California for
the County of Los Angeles, Southwest District against the Partnership. On
March 28, 1994, the Partnership entered into an agreement to settle the
lawsuit. Under the terms of the settlement, the Partnership paid $968,574
to the plaintiff on April 14, 1994, and the plaintiff returned its 50,000
Units of limited partnership interest to the Partnership. In connection
with the settlement, the Partnership recorded a provision for settlement of
litigation in the amount of $349,824 in the accompanying statement of
operations for the year ended December 31, 1994. This provision represented
the difference between the market value of the 50,000 Units, as of April
14, 1994, and the Partnership's cost to repurchase the Units.

During 1994, IFI, an affiliate of the Partnership, filed a Complaint in the
United States District Court for the District of Minnesota. The case
concerned the violation of the HUD regulatory agreement and breach of
fiduciary duty by the mortgagor of the mortgage on Hazeltine Shores. In
response to this Complaint, the mortgagor filed counterclaims against IFI
and against the Partnership, the General Partner and CRI. A motion to
dismiss the counterclaims was granted with prejudice on July 24, 1995.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The information required by this item is contained on pages 35 through 70.

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),(e)

The Partnership has no officers or directors. The affairs of the
Partnership are 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 adviser whose general partner is
CRI. However, effective June 30, 1995, CRIIMI MAE became a self-administered
REIT, and, as a result, the adviser no longer manages CRIIMI MAE.

Effective September 6, 1991, the General Partner succeeded the former
general partners to become the sole general partner of the Partnership. CRIIMI,
Inc. purchased the interests of the former managing general partner and the
former corporate general partner pursuant to the terms of the Partnership

<PAGE>24

PART III

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

Agreement. In addition, the General Partner acquired the shares of the company
which acted as the assignor limited partner in the Partnership. The Advisor
purchased the interest of the associate general partner but withdrew from the
Partnership effective September 19, 1991. The Partnership succeeded to the 0.1%
interest formerly held by the Advisor.

Also, on September 6, 1991, the Advisor succeeded IFI as the advisor of 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, on June 30,
1995, an affiliate of CRIIMI MAE acquired the Sub-advisory Agreement. As a
consequence of this transaction, 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 General Partner is also the general partner of AIM 84, AIM 85 and AIM
86, 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, 1995.

ITEM 11. EXECUTIVE COMPENSATION

The information required by Item 11 is incorporated herein by reference to
Note 9 of the notes to the Partnership's financial statements.

<PAGE>25

PART III

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

As of December 31, 1995, no person was known by the Partnership to be the
beneficial owner of more than 5% of the outstanding Units of the Partnership.

As of December 31, 1995, 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 PARTY TRANSACTIONS

(a) Transactions with management and others.

Note 9 of the notes to the Partnership's financial statements, which
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, 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 relationship with
entities of which the former general partners or the current General
Partner of the Partnership are officers, directors or equity owners.

None.

(d) Transactions with promoters.

Not applicable.

<PAGE>26

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, 1995
and 1994 32

Statements of Operations for the years ended
December 31, 1995, 1994 and 1993 34

Statements of Changes in Partners' Equity for
the years ended December 31, 1995, 1994 and
1993 35

Statements of Cash Flows for the years ended
December 31, 1995, 1994 and 1993 37

Notes to Financial Statements 38

(a)(2) Financial Statement Schedules:

IV - Mortgage Loans on Real Estate

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:

3. Certificate of Limited Partnership is incorporated by reference to
Exhibit 4(a) to Amendment No. 1 to the Partnership's Registration
Statement on Form S-11 (No. 33-12479) filed with the Commission on
June 10, 1987.

4. Agreement of Limited Partnership, incorporated by reference to
Exhibit 3 to the Post-Effective Amendment No. 1 to the Partnership's
Registration Statement on Form S-11 (No. 33-12479) filed with the
Commission on March 8, 1988 (such Amendment is referred to
hereinbelow as Post-Effective Amendment No.1).

4. (a) Material Amendments to Agreement of Limited Partnership are
incorporated by reference to Exhibit 3(a) to Post-Effective
Amendment No.1.

4. (b) Amendment to the Amended and Restated Agreement of Limited
Partnership of the Partnership dated February 12, 1990.

10. (a) Escrow Agreement is incorporated by reference to Exhibit 10(a)
to the Partnership's Annual Report on Form 10-K for the year ended
December 31, 1987.

10. (b) Origination and Acquisition Services Agreement is incorporated
by reference to Exhibit 10(b) to the Partnership's Annual Report on
Form 10-K for the year ended December 31, 1987.

<PAGE>27

PART IV

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

10. (c) Management Services Agreement is incorporated by reference to
Exhibit 10(c) to the Partnership's Annual Report on Form 10-K for
the year ended December 31, 1987.

10. (d) Disposition Services Agreement is incorporated by reference to
Exhibit 10(d) to the Partnership's Annual Report on Form 10-K for
the year ended December 31, 1987.

10. (e) Agreement among the former managing general partner, the former
associate general partner and Integrated Resources, Inc. is
incorporated by reference to Exhibit 10(e) to the Partnership's
Annual Report on Form 10-K for the year ended December 31, 1987.

10. (f) Reinvestment Plan is incorporated by reference to Exhibit 10(f)
to Post- Effective Amendment No. 1.

10. (g) Mortgagor-Participant Agreement, Mortgage Assignment of Rents
and Security Agreement and Mortgage Note with respect to The
Breakers (sometimes also referred to as the Niles Senior
Lifestyle Community) is incorporated by reference to Exhibit 10(g)
to Post-Effective Amendment No. 1.

10. (h) Mortgagor-Mortgagee Agreement, Mortgage Note and Mortgage with
respect to the Arlington development is incorporated by reference to
Exhibit 10(h) to Post-Effective Amendment No. 1.

10. (i) Pages A-1 - A-5 of the Partnership Agreement of Registrant,
incorporated by reference to Exhibit 28 to the Partnership's Annual
Report on Form 10-K for the year ended December 31, 1990.

10. (j) Purchase Agreement among AIM Acquisition, the former managing
general partner, the former corporate general partner, IFI and
Integrated dated as of December 13, 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. (k) 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 March 1, 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. (l) Amendments to Partnership Agreement dated August 13, 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.(m) Non-negotiable promissory note to American Insured Investors -
Series 85, L.P. in the amount of $1,784,688 dated December 31, 1991,
incorporated by reference to Exhibit 28(d) to the Partnership's
Annual Report on Form 10-K for the year ended December 31, 1991.

10. (n) 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(e) the Partnership's Annual Report on Form
10-K for the year ended December 31, 1992.

<PAGE>28

PART IV

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

10.(o) Expense Reimbursement Agreement by Integrated Funding Inc. and the
AIM Funds, effective December 31, 1992, incorporated by reference to
Exhibit 28(f) to the Partnership's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1993.

10.(p) Non-negotiable promissory note from American Insured Investors L.P.
- Series 85 in the amount of $319,074.67 dated April 1, 1994,
incorporated by reference to Exhibit 10(p) to the Partnership's
Annual Report on Form 10-K for the year ended December 31, 1994.

10.(q) Non-negotiable promissory note from American Insured Investors L.P.
- Series 86 in the amount of $478,612.00 dated April 1, 1994,
incorporated by reference to Exhibit 10(q) to the Partnership's
Annual Report on Form 10-K for the year ended December 31, 1994.

10.(r) Amendment to Reimbursement Agreement by Integrated Funding Inc. and
the AIM Funds, effective April 1, 1994, incorporated by reference to
Exhibit 10(r) to the Partnership's Annual Report on Form 10-K for
the year ended December 31, 1994.

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>29

SIGNATURES

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

March 28, 1996 /s/ William B. Dockser
- --------------------------- -------------------------
DATE William B. Dockser
Chairman of the Board and
Principal Executive Officer

March 28, 1996 /s/ H. William Willoughby
- --------------------------- -------------------------
DATE H. William Willoughby
President and Director

March 28, 1996 /s/ Cynthia O. Azzara
- --------------------------- -------------------------
DATE Cynthia O. Azzara
Principal Financial and
Accounting Officer

March 28, 1996 /s/ Garrett G. Carlson, Sr.
- --------------------------- --------------------------
DATE Garrett G. Carlson, Sr.
Director

March 28, 1996 /s/ Larry H. Dale
- --------------------------- -------------------------
DATE Larry H. Dale
Director

March 28, 1996 /s/ G. Richard Dunnells
- --------------------------- -------------------------
DATE G. Richard Dunnells
Director

March 28, 1996 /s/ Robert F. Tardio
- --------------------------- -------------------------
DATE Robert F. Tardio
Director

<PAGE>30

AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88

Financial Statements as of December 31, 1995 and 1994

and for the Years Ended December 31, 1995, 1994 and 1993

<PAGE>31

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Partners of
American Insured Mortgage Investors L.P. - Series 88:

We have audited the accompanying balance sheets of American Insured
Mortgage Investors L.P. - Series 88 (the Partnership) as of December 31, 1995
and 1994 and the related statements of operations, changes in partners' equity
and cash flows for the years ended December 31, 1995, 1994 and 1993. 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 the 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, 1995 and 1994, and the results of its operations and its cash flows
for the years ended December 31, 1995, 1994 and 1993, in conformity with
generally accepted accounting principles.

As explained in Note 2 of the notes to the financial statements, effective
January 1, 1994, the Partnership changed its method of accounting for its
investment in insured mortgages.

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, 1995 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, D.C.
March 22, 1996

<PAGE>32

AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88

BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
As of December 31,
1995 1994
------------ ------------
<S> <C> <C>
Investment in FHA-Insured Certificates
and GNMA Mortgage-Backed
Securities, at fair value:
Acquired insured mortgages $ 77,918,878 $ 67,450,597
Originated insured mortgages 45,426,757 41,963,418
------------ ------------
123,345,635 109,414,015
Investment in FHA-Insured Loans,
at amortized cost, net of unamortized
discount and premium:
Originated insured mortgages 30,162,342 30,302,269
Acquired insured mortgages 1,161,339 1,190,107
------------ ------------
31,323,681 31,492,376

Due from HUD 285,330 4,186,483

Cash and cash equivalents 2,881,537 5,364,255

Investment in affiliates 1,189,316 1,196,530

Notes receivable from affiliates
and due from affiliates 797,687 878,508

Receivables and other assets 2,103,710 2,273,022
------------ ------------
Total assets $161,926,896 $154,805,189
============ ============

LIABILITIES AND PARTNERS' EQUITY

Distributions payable $ 2,961,797 $ 4,072,471

Accounts payable and accrued expenses 159,092 226,554
------------ ------------
Total liabilities 3,120,889 4,299,025
------------ ------------
Commitments and contingencies

Partners' equity:
Limited partners' equity 159,332,082 160,824,608
General partner's deficit (928,476) (851,574)
Less: Repurchased Limited Partnership
Units - 50,000 Units (618,750) (618,750)
Net unrealized gains (losses) on investment
in FHA-Insured Certificates and GNMA
Mortgage-Backed Securities 1,021,151 (8,848,120)
------------ ------------

Total partners' equity 158,806,007 150,506,164
------------ ------------
Total liabilities and
partners' equity $161,926,896 $154,805,189
============ ============

<PAGE>33

AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88

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

</TABLE>

<PAGE>34

AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88

STATEMENTS OF OPERATIONS

For the years ended December 31,
1995 1994 1993
----------- ----------- ------------
<S> <C> <C> <C>
Income:
Mortgage investment income $12,524,904 $12,575,210 $13,230,394
Interest and other income 710,734 757,271 413,702
----------- ----------- -----------
13,235,638 13,332,481 13,644,096
----------- ----------- -----------
Expenses:
Asset management fee to related parties 1,493,283 1,503,831 1,489,467
General and administrative 399,681 881,855 498,260
Interest expense to affiliate -- 35,694 142,775
Provision for settlement of
litigation -- 349,824 --
----------- ----------- ------------
1,892,964 2,771,204 2,130,502
----------- ----------- ------------
Earnings before loan losses and
gains (losses) on mortgage dispositions 11,342,674 10,561,277 11,513,594

Loan Losses -- -- (1,495,900)

Mortgage Dispositions:
Gains 2,452,221 1,020,793 526,029
Losses -- (42,488) (1,890)
----------- ----------- ------------
Net earnings $13,794,895 $11,539,582 $ 10,541,833
=========== =========== ============

Net earnings allocated to:
Limited partners - 95.1% $13,118,945 $10,974,142 $ 10,025,283
General partner - 4.9% 675,950 565,440 516,550
----------- ----------- ------------
$13,794,895 $11,539,582 $ 10,541,833
=========== =========== ============

Net earnings per weighted average
Limited Partnership Unit
outstanding $ 1.49 $ 1.24 $ 1.13
=========== =========== ============
Weighted average Limited Partnership Units
outstanding 8,802,091 8,816,201 8,852,091
=========== =========== ============

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

<PAGE>35

AMERICAN INSURED INVESTORS L.P. - SERIES 88

STATEMENTS OF CHANGES IN PARTNERS' EQUITY

For the years ended December 31, 1995, 1994 and 1993

Unrealized Unrealized
Gains Losses
on Investment on 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>
Balance, January 1, 1993 $ (782,590) $ 162,163,493 $ -- $ -- $ -- $ 161,380,903

Net earnings 516,550 10,025,283 -- -- -- 10,541,833

Distributions paid or accrued
of $1.12 per Unit (510,834) (9,914,362) -- -- -- (10,425,196)
------------ ------------ ----------- --------------- ---------------- -------------
Balance, December 31, 1993 (776,874) 162,274,414 -- -- -- 161,497,540

Repurchase of 50,000 Limited
Partnership Units -- -- (618,750) -- -- (618,750)

Net earnings 565,440 10,974,142 -- -- -- 11,539,582

Distributions paid or accrued
of $1.41 per weighted
average Unit outstanding,
including return of capital
of $0.17 per Unit (640,140) (12,423,948) -- -- -- (13,064,088)

Unrealized gains (losses) on
investment in FHA-Insured
Certificates and GNMA
Mortgage-Backed Securities -- -- -- 393,579 (9,241,699) (8,848,120)
------------ ------------- ----------- ------------- ---------------- -------------
Balance, December 31, 1994 (851,574) 160,824,608 (618,750) $ 393,579 (9,241,699) 150,506,164

<PAGE>36

AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88

STATEMENTS OF CHANGES IN PARTNERS' EQUITY

For the years ended December 31, 1995, 1994 and 1993

</TABLE>
<TABLE><CAPTION>

Unrealized Unrealized
gains losses
on Investment on 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>
Net earnings 675,950 13,118,945 -- -- -- 13,794,895

Distributions paid or accrued
of $1.66 per Unit, including
return of capital of $0.17 per
Unit (752,852) (14,611,471) -- -- -- (15,364,323)

Adjustment to net unrealized gains
(losses) on investment in FHA-
Insured Certificates and
GNMA Mortgage-Backed
Securities -- -- -- 2,146,729 7,722,542 9,869,271
-------------- ------------- ----------- ---------------- ---------------- -------------
Balance December 31, 1995 $ (928,476) $ 159,332,082 $ (618,750) $ 2,540,308 $ (1,519,157)$ 158,806,007
============== ============= =========== ================ ================ =============
Limited Partnership Units outstanding -
December 31, 1994 and 1995 8,802,091
=============
Limited Partnership Units outstanding -
December 31, 1993 8,852,091
=============

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

<PAGE>37

AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88

STATEMENTS OF CASH FLOWS

For the years ended December 31,
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings $ 13,794,895 $ 11,539,582 $ 10,541,833

Adjustments to reconcile net earnings to net cash
provided by operating activities:
Loan losses -- -- 1,495,900
Gains on mortgage dispositions (2,452,221) (1,020,793) (526,029)
Losses on mortgage dispositions -- 42,488 1,890
Provision for settlement of litigation -- 349,824 --
Payments made and treated as an
addition to Assets Held for Sale
Under Coinsurance Program/mortgage
investment income accrued/accreted on AHFS (97,952) (745,431) (1,158,839)
Changes in assets and liabilities:
Decrease (increase) in receivables and other assets 169,312 (520,988) 144,465
Decrease in accounts payable and accrued expenses (67,462) (44,119) (241,354)
Decrease in investment in affiliate and notes
receivable and due from affiliates 88,035 1,696,074 --
Decrease in note payable and due to affiliate -- (1,784,688) --
Increase in other liabilities -- -- 7,793
------------ ------------ ------------
Net cash provided by operating activities 11,434,607 9,511,949 10,265,659
------------ ------------ ------------
Cash flows from investing activities:
Proceeds from disposition of Insured Mortgages 9,316,015 29,372,643 23,635,618
Investment in Acquired Insured Mortgages and advances on
construction loans (7,687,752) (25,334,265) (30,832,997)
Receipt of principal from scheduled payments 929,409 788,169 506,574
Investment in Originated Insured Mortgages and advances
on construction loans -- -- (968,618)
Proceeds from restricted short-term investments -- -- 584,900
Proceeds from short-term investments -- -- 2,142,876
------------ ------------ ------------
Net cash provided by (used in) investing
activities 2,557,672 4,826,547 (4,931,647)
------------ ------------ ------------
Cash flows from financing activities:
Distributions paid to partners (16,474,997) (12,342,566) (10,172,013)
Repurchase of Limited Partnership Units -- (968,574) --
------------ ------------ ------------
Net cash used in financing activities (16,474,997) (13,311,140) (10,172,013)
------------ ------------ ------------
Net (decrease) increase in cash and cash equivalents (2,482,718) 1,027,356 (4,838,001)

Cash and cash equivalents, beginning of year 5,364,255 4,336,899 9,174,900
------------- ------------ ------------
Cash and cash equivalents, end of year $ 2,881,537 $ 5,364,255 $ 4,336,899
============= ============ ============

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

</TABLE>

<PAGE>38

AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88

NOTES TO FINANCIAL STATEMENTS

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. From inception through September 6, 1991, AIM Capital
Management Corp. served as managing general partner (with a partnership interest
of 4.8%), IRI Properties Capital Corp. served as the corporate general partner
(with a partnership interest of 0.1%) and Third Group Partners, an affiliate of
the former general partners, served as the associate general partner (with a
partnership interest of 0.1%). All of the foregoing general partners are
sometimes collectively referred to as former general partners.

At a special meeting of the limited partners and Unitholders of the
Partnership held on August 13, 1991, a majority of these interests approved,
among other items, the assignment of the general partner interests and the
shares of the company which acted as the assignor limited partner in the
Partnership. AIM Acquisition Partners, L.P. (the Advisor) purchased the
interest of the former associate general partner, but withdrew from the
Partnership effective September 19, 1991. The Partnership succeeded to the 0.1%
interest formerly held by the Advisor.

Effective September 6, 1991, CRIIMI, Inc. (the General Partner) succeeded
AIM Capital Management Corp. and IRI Properties Capital Corp. as the sole
general partner of the Partnership. CRIIMI, Inc. purchased the interests of the
former managing general partner and the former corporate general partner
pursuant to the terms of the Partnership Agreement. CRIIMI, Inc. is a wholly-
owned subsidiary of CRIIMI MAE Inc. (CRIIMI MAE). From inception through June
30, 1995, CRIIMI MAE was managed by an adviser whose general partner is C.R.I.,
Inc. (CRI). However, effective June 30, 1995, CRIIMI MAE became a self-
administered real estate investment trust (REIT), and, as a result, the adviser
no longer advises CRIIMI MAE.

Also, on September 6, 1991, the Advisor succeeded Integrated Funding, Inc.
(IFI) as the advisor to the Partnership. AIM Acquisition Corporation (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 obtain 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 and directed the
acquisition and disposition of the Partnership's mortgage investments. 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.

Until the change in the Partnership's investment policy, as discussed
below, the Partnership was 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). As of December 31, 1995, the Partnership had invested in
either Originated Insured Mortgages which are insured or guaranteed, in whole or
in part, by the Federal Housing Administration (FHA) or Acquired Insured
Mortgages which are fully insured (as more fully described below).

<PAGE>39

AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION - Continued

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. The Partnership's principal investment objectives are to invest in
Insured Mortgages which (i) preserve and protect the Partnership's invested
capital; (ii) provide quarterly distributions of adjusted cash from operations
which may be increased over time as a result of Participations (as defined
below), when obtainable, on Originated Insured Mortgages; and (iii) provide
appreciation by selecting Acquired Insured Mortgages which present the
possibility of early prepayment.

Effective January 1, 1994, the United States Congress repealed portions of
the Federal tax code which have had an adverse impact on tax-exempt investors in
"publicly-traded partnerships." This tax code change cleared away the major
impediment standing in the way of listing the Partnership's Depositary Units of
Limited Partnership Interest (Units) for trading on a national stock exchange.
In an effort to allow pension funds and other tax-exempt organizations to invest
in publicly-traded partnerships, the Revenue Reconciliation Act of 1993 repealed
the rule that automatically treated income from publicly-traded partnerships as
gross income that is derived from an unrelated trade or business. As a result,
investments in publicly-traded partnerships such as the Partnership are now
treated the same as investments in other partnerships for purposes of the
unrelated business taxable income rules. As a result, the General Partner
listed the Partnership's Units for trading on the American Stock Exchange (AMEX)
on January 18, 1994, in order to provide investment liquidity as contemplated in
the Partnership's original prospectus. The Units are traded under the symbol
"AIK."

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 Mortgages
-----------------------
The Partnership's investment in Insured Mortgages is comprised of
participation certificates evidencing a 100% undivided beneficial interest
in government insured multifamily mortgages issued or sold pursuant to FHA
programs (FHA-Insured Certificates), mortgage-backed securities guaranteed
by 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.

<PAGE>40

AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88

NOTES TO FINANCIAL STATEMENTS

2. SIGNIFICANT ACCOUNTING POLICIES - Continued

Payments of principal and interest on FHA-Insured Certificates and
FHA-Insured Loans are insured by the United States Department of Housing
and Urban Development (HUD) pursuant to Title 2 of the National Housing
Act. Payments of principal and interest on GNMA Mortgage-Backed Securities
are guaranteed by GNMA pursuant to Title 3 of the National Housing Act.

Prior to January 1, 1994 the Partnership accounted for its investment
in Insured Mortgages at amortized cost in accordance with Statement of
Financial Accounting Standards No. 65 "Accounting for Certain Mortgage
Banking Activities" (SFAS 65) since it had the ability and intent to hold
these assets for the foreseeable future. The difference between the cost
and the unpaid principal balance, at the time of purchase, is carried as a
discount or premium and amortized over the remaining contractual life of
the mortgage using the effective interest method. The effective interest
method provides a constant yield of income over the term of the mortgage.
Mortgage investment income is comprised of amortization of the discount
plus the stated mortgage interest payments received or accrued, less
amortization of the premium.

In May 1993, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 115 "Accounting for Certain
Investments in Debt and Equity Securities" (SFAS 115), effective for fiscal
years beginning after December 15, 1993. The Partnership adopted this
statement as of January 1, 1994. This statement requires that investments
in debt and equity securities be classified into one of the following
investment categories based upon the circumstances under which such
securities might be sold: Held to Maturity, Available for Sale, and
Trading. Generally, certain debt securities for which an enterprise has
both the ability and intent to hold to maturity should be accounted for
using the amortized cost method and all other securities must be recorded
at their fair values.

As of December 31, 1995, the weighted average remaining term of the
Partnership's investments in GNMA Mortgage-Backed Securities and FHA-
Insured Certificates is approximately 33 years. However, the Partnership
Agreement states that the Partnership will terminate in approximately 26
years, on December 31, 2021, 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 the GNMA
Mortgage-Backed Securities and FHA-Insured Certificates in its portfolio,
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 investments in GNMA Mortgage-Backed Securities and FHA-
Insured Certificates should be included in the Available for Sale category.
Although the Partnership's investments in GNMA Mortgage-Backed Securities
and 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.

In connection with this classification, as of December 31, 1995 and
1994, the Partnership's investments in GNMA Mortgage-Backed Securities and
FHA-Insured Certificates are recorded at fair value, with the net
unrealized gains or losses on these investments reported as a separate
component of partners' equity. Subsequent increases or decreases in the
fair value of GNMA Mortgage-Backed Securities and FHA-Insured Certificates,
classified as Available for Sale, will be included as a separate component
of partners' equity. Realized gains and losses on GNMA Mortgage-Backed

<PAGE>41

AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88

NOTES TO FINANCIAL STATEMENTS

2. SIGNIFICANT ACCOUNTING POLICIES - Continued

Securities and FHA-Insured Certificates, classified as Available for Sale,
will continue to be reported in earnings. The amortized cost of the
investments in GNMA Mortgage-Backed Securities and FHA-Insured Certificates
in this category is adjusted for amortization of discounts and premiums to
maturity. Such amortization is included in mortgage investment income.

Gains from dispositions of mortgage investments are recognized upon
the receipt of cash or HUD 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 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
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 Insured Mortgage and the loss of approximately 30-days accrued
interest.

Cash and Cash Equivalents
-------------------------
Cash and cash equivalents consist of money market funds, time and
demand deposits, commercial paper, certificates of deposit, and repurchase
agreements with original maturities of three months or less.

<PAGE>42

AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88

NOTES TO FINANCIAL STATEMENTS

2. SIGNIFICANT ACCOUNTING POLICIES - Continued

Reclassification
----------------
Certain amounts in the financial statements for the years ended
December 31, 1994 and 1993 have been reclassified to conform with the 1995
presentation.

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.

Net Earnings Per Limited Partnership Unit
-----------------------------------------
Net earnings per Limited Partnership Unit is computed based upon the
weighted average number of Units outstanding of 8,802,091, 8,816,201 and
8,852,091, for the years ended December 31, 1995, 1994 and 1993,
respectively.

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>43

AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88

NOTES TO FINANCIAL STATEMENTS
3. FAIR VALUE OF FINANCIAL INSTRUMENTS - Continued

<TABLE>
<CAPTION>
As of December 31, 1995 As of December 31, 1994
Amortized Fair Amortized Fair
Cost Value Cost Value
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Investment in FHA-Insured
Certificates and GNMA
Mortgage-Backed Securities:
Acquired insured mortgages $ 76,462,511 $ 77,918,878 $ 72,138,726 $ 67,450,597
Originated insured mortgages 45,861,973 45,426,757 46,123,409 41,963,418
------------ ------------ ------------ ------------
$122,324,484 $123,345,635 $118,262,135 $109,414,015
============ ============ ============ ============

Investment in FHA-Insured Loans:
Originated insured mortgages $ 30,162,342 $ 30,199,166 $ 30,302,269 $ 28,272,394
Acquired insured mortgages 1,161,339 1,219,590 1,190,107 1,205,546
------------ ------------ ------------ ------------
$ 31,323,681 $ 31,418,756 $ 31,492,376 $ 29,477,940
============ ============ ============ ============

Cash and cash equivalents $ 2,881,537 $ 2,881,537 $ 5,364,255 $ 5,364,255

Accrued interest receivable $ 1,971,322 $ 1,971,322 $ 2,176,996 $ 2,176,996
</TABLE>

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

Investment in FHA-Insured Certificates, GNMA Mortgage-Backed
Securities and FHA-Insured Loans
-----------------------------------------------------------
The fair value of the fully insured FHA-Insured Certificates, GNMA
Mortgage-Backed Securities and FHA-Insured Loans is based on quoted market
prices. In order to determine the fair value of coinsured FHA-Insured
Certificates, the Partnership valued the coinsured FHA-Insured Certificates
as though they were fully insured FHA-Insured Certificates (in the same
manner fully insured FHA-Insured Certificates were valued). From this
amount, the Partnership deducted a discount factor from the face value of
the loan. This discount factor is based on the Partnership's historical
analysis of the difference in fair value between coinsured FHA-Insured
Certificates and fully insured FHA-Insured Certificates.

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

<PAGE>44

AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88

NOTES TO FINANCIAL STATEMENTS

4. INVESTMENT IN FHA-INSURED CERTIFICATES AND GNMA MORTGAGE-
BACKED SECURITIES

The following is a discussion of the Partnership's mortgage investments,
along with the risks related to each type of investment.

As of March 1, 1996, all of the Partnership's fully insured FHA-
Insured Certificates and GNMA Mortgage-Backed Securities 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 March 1, 1996, the mortgagor has made payments
of interest through June 1995. The total delinquent interest as of March
1, 1996 is approximately $675,000. 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 proceeds from the assignment in mid 1996 and
intends to reinvest the net proceeds from this assignment prior to the
expiration of the reinvestment period of December 31, 1996.

During March 1996, one of the investors in the Harbor View Estates
loan, exercised its right to purchase the participation interests 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, the net proceeds of which are expected to be reinvested in fully
insured Acquired Insured Mortgages prior to the end of the reinvestment
period.

During the year ended December 31, 1995, the Partnership acquired the
following fully insured Acquired Insured Mortgages and committed to make
future advances on the following fully insured construction loans:

<PAGE>45

AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88

NOTES TO FINANCIAL STATEMENTS

4. INVESTMENT IN FHA-INSURED CERTIFICATES AND GNMA MORTGAGE-
BACKED SECURITIES - Continued

<TABLE>
<CAPTION>
Purchase Funding Effective
Date of Price/ Commitments as of Interest
Complex Name Acquisition Advance December 31, 1995 Rate
- -------------------------- ------------ ----------- ------------------ ---------
<S> <C> <C> <C> <C>
Acquired Insured Mortgages
- --------------------------
Tehama Estates January 1995 $ 1,328,768 $ -- 9.07%
Westview Apartments April 1995 1,149,323 -- 8.65%
Orchard Creek May 1995 1,297,631 -- 8.63%
Burlwood Apartments August 1995 656,900 -- 9.00%
Oak Lawn Apartments August 1995 487,700 -- 9.00%
Collin Care Center August 1995 1,719,800 -- 8.13%
Holton Manor October 1995 1,047,630 -- 8.14%
----------- ------------
Total $ 7,687,752 --
-----------
</TABLE>

During the years ended December 31, 1995, 1994 and 1993, the
Partnership disposed of the following fully insured FHA-Insured
Certificates and GNMA Mortgage-Backed Securities:

<PAGE>46

AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88

NOTES TO FINANCIAL STATEMENTS

4. INVESTMENT IN FHA-INSURED CERTIFICATES AND GNMA MORTGAGE-
BACKED SECURITIES - Continued

Graymere Apartments 1993 Assignment/Sale of 5,539,630 5,788,194 248,564(a)
Debentures

Arborview Apartments 1993 Sale of a 17,571,849 17,569,959 (1,890)
defaulted loan

Arlington Heights Apartments 1993 Sale of a -- 277,465(b) 277,465
defaulted loan

</TABLE>

<PAGE>47

AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88

NOTES TO FINANCIAL STATEMENTS

4. INVESTMENT IN FHA-INSURED CERTIFICATES AND GNMA MORTGAGE-
BACKED SECURITIES - Continued

As of December 31, 1995 and 1994, the Partnership held investments in
three coinsured FHA-Insured Certificates. 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 December 31,
1995 and 1994, the remaining two FHA-Insured Certificates are coinsured by
IFI, an affiliate of the Partnership. The following is a discussion of
actual and potential performance problems with respect to the Partnership's
coinsured mortgage investments.

Coinsured by third party
------------------------
St. Charles Place - Phase II is a 156-unit apartment complex located
in Miramar, Florida. The Partnership's investment in the St. Charles
Place - Phase II mortgage had an amortized cost equal to its face
value of $3,749,991 and $3,767,426 as of December 31, 1995 and 1994,
respectively. As of December 31, 1995 and 1994, this mortgage had a
fair value of $3,583,856 and $3,337,126, 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.

Coinsured by affiliate
----------------------
As of December 31, 1995 and 1994, 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 upon default for
IFI's portion of the coinsurance loss on these mortgage investments.

The IFI coinsured mortgages had an aggregate fair value of $30,553,317
and $28,204,766, as of December 31, 1995 and 1994, respectively, and
amortized costs and face values as of December 31, 1995 and 1994 as
follows:

<PAGE>48

AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88

NOTES TO FINANCIAL STATEMENTS

4. INVESTMENT IN FHA-INSURED CERTIFICATES AND GNMA MORTGAGE-
BACKED SECURITIES - Continued

</TABLE>

The following is a description of each of the Partnership's coinsured
mortgage investments for which IFI is the coinsurance lender.

In March 1994, the mortgage note for The Breakers at Golf Mill was
amended to reduce the mortgage interest rate from 8.25% to 7.0%. The
Partnership recognized aggregate loan losses of $980,000 during 1993
in anticipation of a refinancing or prepayment of the mortgage, which
primarily represented the unamortized balance of acquisition fees and
closing costs paid in connection with the acquisition of the mortgage.
As of March 1, 1996, the mortgagor was current with respect to payment
of principal and interest on this mortgage.

In October 1993, the mortgagor of the coinsured mortgage on Ashbury
Meadows informed the General Partner that the mortgagor was attempting
to refinance the mortgage. As a result, the Partnership recognized a
loan loss of $515,900 during the fourth quarter of 1993 which was
primarily due to the write-off of the unamortized balance of
acquisition fees and closing costs paid in connection with the
acquisition of this mortgage. In April 1994, the Partnership received
net proceeds of approximately $6.0 million from the prepayment of the
mortgage on Ashbury Meadows. The Partnership recognized a loss of
$42,488, as shown on the accompanying statement of operations for the
year ended December 31, 1994. This loss was in addition to the loan
loss of $515,900 recognized in the fourth quarter of 1993 in
anticipation of a refinancing or prepayment of the mortgage. The

<PAGE>49

AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88

NOTES TO FINANCIAL STATEMENTS

4. INVESTMENT IN FHA-INSURED CERTIFICATES AND GNMA MORTGAGE-
BACKED SECURITIES - Continued

Partnership reinvested the net disposition proceeds from this mortgage
in fully insured Acquired Insured Mortgages.

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. During the years
ended December 31, 1995, 1994 and 1993, the Partnership received
additional interest of $133,120, $22,612, and $12,580, respectively,
from The Breakers at Golf Mill, one of the Participations. These
amounts are included in mortgage investment income on the accompanying
statements of operations. In conjunction with the 1994 mortgage
modification, as discussed above, the participation agreement was
terminated, and effective March 1, 1995, the Partnership was no longer
entitled to receive Participations with respect to The Breakers at
Golf Mill.

5. INVESTMENT IN FHA-INSURED LOANS

As of December 31, 1995 and 1994, 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 $30,162,342 and
$30,302,269, an aggregate face value of $29,299,733 and $29,426,280, and an
aggregate fair value of $30,199,166 and $28,272,394, as of December 31, 1995 and
1994, respectively. The two Acquired Insured Mortgages had an aggregate
amortized cost of $1,161,339 and $1,190,107, an aggregate face value of
$1,158,329 and $1,186,936, and an aggregate fair value of $1,219,590 and
$1,205,546, as of December 31, 1995 and 1994, respectively.

As of March 1, 1996, all of the Partnership's FHA-Insured Loans were
current with respect to the payment of principal and interest.

All of the FHA-Insured Loans contain Participations. During the years
ended December 31, 1995 and 1994, the Partnership received additional interest
of $46,581 and $13,938, respectively, from three and one of the FHA-Insured
Loans which contains insured Participations, respectively. No monies were
received from these fully insured Participations during the year ended December
31, 1993. These amounts, if any, are included in mortgage investment income on
the accompanying statements of operations.

6. DUE FROM HUD

Due from HUD consists of amounts due in connection with losses incurred on
the disposition of coinsured mortgage investments. Prior to these dispositions,
these mortgage investments were accounted for as assets held for sale under the
coinsurance program (AHFS). The following is a summary of amounts due from HUD
as of December 31, 1995 and 1994:

During 1994, the Partnership filed claims with HUD for insurance benefits
in connection with losses incurred on the sales of the properties underlying the
coinsured mortgages on Hazeltine Shores, Pinewood Park Apartments and Hamlet at
Cobb's Landing.

<PAGE>50

AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88

NOTES TO FINANCIAL STATEMENTS

6. DUE FROM HUD - Continued

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 fully insured Acquired Insured Mortgages during 1994. As of
December 31, 1995 and 1994, Due from HUD includes approximately $285,000 and
$202,000, respectively, related to the disposition of Hazeltine Shores, $285,000
of which will be included in a supplemental claim expected to be filed with HUD
during 1996.

Pinewood Park Apartments is a 204-unit garden complex located in Kissimmee,
Florida. Beginning in mid-1991, the mortgagor was delinquent on its principal
and interest payments and subsequently defaulted. Consequently, the servicer
filed an Initial Notice of Default with HUD in April 1992 and the General
Partner initiated foreclosure proceedings in November 1992. On March 18, 1993,
the borrower filed for protection under Chapter 11 of the Federal Bankruptcy
Code. During 1994, the Partnership acquired the deed to the property from the
mortgagor in lieu of foreclosure and, in August 1994, received proceeds of
approximately $5.1 million from the sale of the property. Additionally, during
1994, the Partnership received approximately $287,000 from the mortgagor. In
September 1994, a claim for insurance benefits was submitted to HUD, and in
March 1995, the Partnership received claim proceeds of approximately $3.6
million, which included accrued interest, and recognized a gain of $1,075,099.
The Partnership reinvested the net proceeds in Acquired Insured Mortgages during
the second and third quarters of 1995. As of December 31, 1995, no amounts were
due from HUD related to the Pinewood Park Apartments coinsurance claim. As of
December 31, 1994, Due from HUD includes approximately $2.4 million related to
this claim.

The mortgage on Hamlet at Cobb's Landing converted to a permanent loan
during the first quarter of 1992. The mortgagor on this mortgage had been
delinquent on its payments to the Partnership beginning with the last quarter of
1991. As a result, the servicer filed an Initial Notice of Default with HUD, in
May 1992. The General Partner initiated foreclosure proceedings in November
1992. On March 18, 1993, the borrower filed for protection under Chapter 11 of
the Federal Bankruptcy Code. During 1994, the Partnership acquired the deed to
the property from the mortgagor in lieu of foreclosure and, in September 1994,
received proceeds of approximately $8.5 million from the sale of the property.
Additionally, during 1994, the Partnership received approximately $685,000 from
the mortgagor. In October 1994, a claim for insurance benefits was submitted to
HUD, and in May 1995, the Partnership received claim proceeds of approximately
$3.1 million, which included accrued interest, and recognized a gain of
$1,234,015. The Partnership reinvested the net proceeds in Acquired Insured
Mortgages during the second and third quarters of 1995. As of December 31,
1995, no amounts were due from HUD related to the Hamlet at Cobb's Landing
coinsurance claim. As of December 31, 1994, Due from HUD includes approximately
$1.6 million related to this claim.

7. DISTRIBUTIONS TO UNITHOLDERS

The distributions paid or accrued to Unitholders on a per Unit basis for
the years ended December 31, 1995, 1994 and 1993 are as follows:

<PAGE>51

AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88

NOTES TO FINANCIAL STATEMENTS
7. DISTRIBUTIONS TO UNITHOLDERS - Continued

1995 1994 1993
------- ------- ------
Quarter ended March 31, $0.49(1) $0.26(5) $0.275
Quarter ended June 30, 0.53(2) 0.25(6) 0.265
Quarter ended September 30, 0.32(3) 0.46(7) 0.220
Quarter ended December 31, 0.32(4) 0.44(8) 0.360(9)
----- ----- ------
$1.66 $1.41 $1.120
===== ===== ======

(1) This amount includes approximately $0.15 per Unit representing 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
Water's Edge of New Jersey.
(2) This amount includes approximately $0.22 per Unit of accrued, but
previously undistributed, interest and capital gain related to the receipt
of claim proceeds from the mortgage on Hamlet at Cobb's Landing.
(3) This amount includes approximately $0.02 per Unit representing capital gain
from the disposition of the mortgage on Gilbert Greens Apartments.
(4) This amount includes approximately $0.02 per Unit representing previously
undistributed interest received from Water's Edge of New Jersey.
(5) This amount includes approximately $0.05 per Unit representing previously
undistributed accrued interest received from delinquent mortgages.
(6) This amount includes approximately $0.02 per Unit representing previously
undistributed accrued interest received from delinquent mortgages.
(7) This amount includes approximately $0.22 per Unit of accrued but previously
undistributed interest and gain received from HUD relating to the
foreclosure and sale of the mortgage on Hazeltine Shores.
(8) This amount includes $0.05 per Unit representing additional gain received
from the disposition of the mortgage on Hazeltine Shores; and $0.08 per
Unit representing previously undistributed accrued interest from delinquent
mortgages.
(9) This amount includes approximately $0.18 per Unit representing previously
undistributed accrued interest received from the disposition of the
mortgages on Graymere Apts. and Arborview Apts. and previously
undistributed accrued interest received from delinquent mortgages.

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.

8. INVESTMENT IN AFFILIATE, NOTES RECEIVABLE FROM AFFILIATES,
DUE FROM AFFILIATES AND NOTE PAYABLE AND DUE TO AFFILIATE

Effective December 31, 1991, American Insured Mortgage Investors - Series
85, L.P. (AIM 85), an affiliate of the Partnership, transferred a GNMA Mortgage-
Backed Security (the GNMA Security) in the amount of approximately $4.7 million
to IFI in order to capitalize IFI with sufficient net worth under HUD

<PAGE>52

AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88

NOTES TO FINANCIAL STATEMENTS

8. INVESTMENT IN AFFILIATE, NOTES RECEIVABLE FROM AFFILIATES,
DUE FROM AFFILIATES AND NOTE PAYABLE AND DUE TO AFFILIATE -
Continued

regulations. The Partnership and AIM 86 each issued a demand note payable to AIM
85 and recorded an investment in IFI through an affiliate (AIM Mortgage, Inc.)
at an amount proportionate to each entity's coinsured mortgages for which IFI
was the mortgagee of record as of December 31, 1991. AIM Mortgage, Inc. is
jointly owned by AIM 85, AIM 86, and the Partnership. The Partnership accounts
for its investment in IFI under the equity method of accounting. Interest
expense on the note was based on an interest rate of 8% per annum.

In 1992, IFI entered into an expense reimbursement agreement with the
Partnership, AIM 85 and AIM 86 (collectively, the AIM Funds) whereby IFI
reimburses the AIM Funds for general and administrative expenses incurred on
behalf of IFI. The expense reimbursement is allocated to the AIM Funds based on
an amount proportionate to each entity's coinsured mortgages. The expense
reimbursement, along with the Partnership's equity interest in IFI's net income
or loss, substantially equalled the Partnership's interest expense on the note
payable.

In April 1994, IFI received net proceeds of approximately $4.7 million from
the prepayment of the GNMA Mortgage-Backed Security, which IFI distributed to
the AIM Funds, in proportion to each entity's coinsured mortgage investments for
which IFI was the mortgagee of record as of December 31, 1991. On June 30,
1994, the Partnership repaid its note payable to AIM 85.

As a result of the prepayment, in April 1994, the Partnership transferred a
GNMA Mortgage-Backed Security in the amount of approximately $2.0 million to IFI
in order to recapitalize IFI with sufficient net worth under HUD regulations.
AIM 85 and AIM 86 each issued a demand note payable to the Partnership and
recorded an investment in IFI through AIM Mortgage, Inc. at an amount
proportionate to each entity's coinsured mortgages for which IFI was the
mortgagee of record as of April 1, 1994. Interest income on the note, which is
based on an annual interest rate of 7.25% (representing the interest rate on the
GNMA Mortgage-Backed Security transferred by the Partnership), was $57,832 and
$43,374 during the years ended December 31, 1995 and 1994, respectively, and is
included in interest and other income on the accompanying statements of
operations.

In connection with these transfers, the expense reimbursement agreement was
amended as of April 1, 1994, to adjust the allocation of the expense
reimbursement to the AIM Funds to an amount proportionate to each entity's
coinsured mortgage investments for which IFI was the mortgagee of record as of
April 1, 1994. The expense reimbursement, as amended, along with the
Partnership's interest income from the notes receivable, and the Partnership's
equity interest in IFI's net income or loss, substantially equals the mortgage
principal and interest on the GNMA Mortgage-Backed Security transferred to IFI.

9. TRANSACTIONS WITH RELATED PARTIES

In addition to the related party transactions described above in Note 8,
the General Partner and certain affiliated entities, during the years ended
December 31, 1995, 1994 and 1993, have earned or received compensation or
payments for services from the Partnership as follows:

<PAGE>53

AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88

NOTES TO FINANCIAL STATEMENTS

9. TRANSACTIONS WITH RELATED PARTIES - Continued

<TABLE>
<CAPTION>
COMPENSATION PAID OR ACCRUED TO RELATED PARTIES
-----------------------------------------------
Capacity in Which For the years ended December 31,
Name of Recipient Served/Item 1995 1994 1993
- ----------------- ---------------------------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
CRIIMI, Inc.(1) General Partner/Distribution $ 752,852 $ 640,140 $ 510,834

AIM Acquisition Advisor/Asset Management Fee 1,493,283 1,503,831 1,489,467
Partners, L.P.(2)

CRI(3) Affiliate of General Partner/ 62,347 215,001 155,064
Expense Reimbursement

CRIIMI MAE Affiliate of General Partner/ 24,696 -- --
Management, Inc.(3) Expense Reimbursement

(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) 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). The sub-advisor to the partnership (the Sub-
advisor) is entitled to a fee of 0.28% of Total Invested Assets. CRI/AIM Management, Inc., which through June 30, 1995 acted as the
Sub-advisor, earned a fee equal to $220,449, $443,224 and $439,000, for the six months ended June 30, 1995 and for the years ended
December 31, 1994 and 1993, respectively. As discussed in Note 1 above, 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 $219,670 for the six months ended December 31, 1995. No fees were earned by CRIIMI MAE Services Limited Partnership for
the years ended December 31, 1994 and 1993.

(3) Prior to CRIIMI MAE becoming a self-administered REIT, amounts were paid to CRI for reimbursement of expenses incurred 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 reimbursements
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 CRIIMI MAE Management, Inc., a wholly owned subsidiary of CRIIMI MAE. The amounts paid to CRI represent reimbursement
of expenses incurred prior to June 30, 1995.

</TABLE>

10. PARTNERS' EQUITY

Depositary Units representing economic rights in limited partnership
interests (Units) were issued at a stated value of $20. A total of 8,851,966
Units were issued for an aggregate capital contribution of $177,039,320. In
addition, the initial limited partner contributed $2,500 to the capital of the
Partnership and received 125 Units in exchange therefor, and the former general
partners contributed a total of $1,000 to the Partnership. During 1994, the
Partnership repurchased 50,000 Units in connection with the settlement of
litigation, as discussed in Note 12.

<PAGE>54

AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88

NOTES TO FINANCIAL STATEMENTS

11. SUMMARY OF QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
(In Thousands, Except Per Unit Data)

The following is a summary of unaudited quarterly results of operations for
the years ended December 31, 1995, 1994 and 1993:

<TABLE>
<CAPTION>
1995
Quarter ended
March 31 June 30 September 30 December 31
----------- ---------- ------------- ------------
<S> <C> <C> <C> <C>
Income $ 3,412 $ 3,469 $ 3,175 $ 3,180
Net gains from
mortgage dispositions 1,075 1,377 -- --
Net earnings 4,015 4,392 2,686 2,702
Net earnings per
Limited Partnership Unit .43 .48 0.29 .29

</TABLE>

<TABLE>
<CAPTION>
1994
Quarter ended
March 31 June 30 September 30 December 31
----------- ---------- ------------- ------------
<S> <C> <C> <C> <C>
Income $ 3,326 $ 3,326 $ 3,141 $ 3,539
Net (losses) gains from
mortgage dispositions (42) -- 864 156
Net earnings 2,372 2,710 3,240 3,218
Net earnings per
Limited Partnership Unit 0.25 0.29 0.35 0.35

</TABLE>

<TABLE>
<CAPTION>
1993
Quarter ended
March 31 June 30 September 30 December 31
----------- ---------- ------------- ------------
<S> <C> <C> <C> <C>
Income $ 3,523 $ 3,382 $ 3,397 $ 3,342
Loan losses -- -- (751) (745)
Net gains from mortgage
dispositions -- -- -- 524
Net earnings 2,978 2,908 2,038 2,618
Net earnings per
Limited Partnership Unit 0.32 0.31 0.22 0.28

</TABLE>

12. LITIGATION

On November 6, 1992, a complaint was filed on behalf of a limited partner
of the Partnership in the Superior Court for the State of California for the
County of Los Angeles, Southwest District against the Partnership. On March 28,
1994, the Partnership entered into an agreement to settle the claims in the

<PAGE>55

AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88

NOTES TO FINANCIAL STATEMENTS

12. LITIGATION - Continued

lawsuit. Under the terms of the settlement, the Partnership paid $968,574 to
the plaintiff on April 14, 1994, and the plaintiff returned its 50,000 Units to
the Partnership. In connection with the settlement, the Partnership recorded a
provision for settlement of litigation in the amount of $349,824 in the
accompanying statement of operations for the year ended December 31, 1994. This
provision represents the difference between the market value of the 50,000 Units
as of April 14, 1994 of $618,750 and the Partnership's cost to repurchase the
Units of $968,574.

During 1994, IFI, an affiliate of the Partnership, filed a Complaint in the
United States District Court for the District of Minnesota. The case concerned
the violation of the HUD regulatory agreement and breach of fiduciary duty by
the mortgagor of the mortgage on Hazeltine Shores. In response to this
Complaint, the mortgagor filed counterclaims against IFI and against the
Partnership, the General Partner and CRI. A motion to dismiss the counterclaims
was granted with prejudice on July 24, 1995.

<PAGE>56

AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88
SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE
DECEMBER 31, 1995

<TABLE>
<CAPTION>
Interest Annual Payment
Rate on Face Net Principal and
Maturity Put Mortgage Value of Carrying Value Cumulative Interest
Development Name/Location Date Date (1) (6)(7) Mortgage (3)(11)(12)(14) Loan Losses (6)(7)(13)
- ------------------------- -------- --------- --------- ---------- --------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>

ACQUIRED INSURED MORTGAGES:
- --------------------------
FHA-Insured Certificates
(carried at fair value)

Sylvan Manor
Silver Spring, Maryland 5/21 N/A 7.500% $3,222,864 $ 3,296,987 -- $ 284,523
Northpoint Apartments
Richland, Washington 1/23 N/A 8.550% 1,752,082 1,806,614 -- 166,490
Heather Ridge Apartments
Fayetteville, North Carolina 4/27 N/A 8.625% 4,496,857 4,635,587 -- 416,231
Olde Mill Apartments
Liverpool, New York 4/27 N/A 8.920% 5,089,310 5,246,147 -- 484,083
Water's Edge of New Jersey
Trenton, New Jersey 9/33 N/A 9.375% 10,902,576(10) 10,902,576 -- 1,123,728(5)
Harbor View Estates
Duluth, Minnesota 10/33 N/A 9.500% 693,387 722,205 -- 84,516(5)
Park Avenue Plaza
Omaha, Nebraska 9/29 N/A 9.000% 1,986,003 2,046,987 -- 187,923
------------ -------------

Total fully insured FHA-Insured
Certificates 28,143,079 28,657,103
------------ -------------
GNMA Mortgage-Backed Securities
(carried at fair value)

Garden Terrace
Douglasville, Georgia 1/20 N/A 7.125% 2,790,802 2,817,167 -- 235,930
Lioncrest Towers
Richton Park, Illinois 10/28 N/A 7.000% 6,583,885 6,641,736 -- 496,447
San Jose South
San Jose, California 10/23 N/A 7.750% 8,414,897 8,490,496 -- 696,227
Beauvoir Manor Apts.
Biloxi, Mississippi 9/18 N/A 8.875% 1,288,875 1,329,463 -- 127,301
Greenview Garden
Butler, Pennsylvania 8/33 N/A 9.000% 886,840 913,965 -- 78,210
</TABLE/

<PAGE>57

AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88
SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE
DECEMBER 31, 1995

</TABLE>
<TABLE>
<CAPTION>
Interest Annual Payment
Rate on Face Net Principal and
Maturity Put Mortgage Value of Carrying Value Cumulative Interest
Development Name/Location Date Date (1) (6)(7) Mortgage (3)(11)(12)(14) Loan Losses (6)(7)(13)
- ------------------------- -------- -------- ----------- ---------- -------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C> <C>

ACQUIRED INSURED MORTGAGES:
- --------------------------

GNMA Mortgage-Backed Securities
(carried at fair value)- Continued

Hewitt Gardens Apts.
Omaha, Nebraska 10/29 N/A 8.750% 4,504,109 4,642,510 -- 404,735
Lamplighter Apts.
Port Arthur, Texas 10/29 N/A 9.000% 2,248,846 2,317,893 -- 207,064
Linville Manor
Shelby, North Carolina 7/31 N/A 8.750% 2,006,697 2,068,234 -- 178,875
Oak Grove Apts.
Austin, Texas 9/26 N/A 8.750% 564,806 582,239 -- 51,662
Oakwood Gardens
San Jose, California 10/23 N/A 7.750% 1,176,772 1,187,344 -- 97,363
Seven Springs
College Park, Maryland 12/21 N/A 7.625% 4,863,636 4,908,169 -- 418,617
Stony Creek
Washington Township, Michigan 2/29 N/A 7.500% 5,460,398 5,507,911 -- 426,602
Burlwood Apts.
Portland, Oregon 8/15 N/A 9.000% 651,908 658,226 -- 70,924
Collin Care Centers
Plano, Texas 9/30 N/A 8.125% 1,716,862 1,731,560 -- 148,458
Holton Manor
Elkhorn, Wisconsin 11/21 N/A 8.250% 1,034,399 1,043,771 -- 96,926
Oaklawn Apts.
Boise, Idaho 8/24 N/A 9.000% 486,211 490,466 -- 47,414
Orchard Creek Apts.
Farmington Hills, Michigan 1/30 N/A 8.625% 1,293,938 1,333,702 -- 117,951
Tehama Estates
Sacramento,California 7/29 N/A 8.750% 1,363,378 1,405,285 -- 126,092
Westview Terrace Apts.
Tacoma, Washington 4/30 N/A 8.550% 1,156,112 1,191,638 -- 104,495
----------- ------------
Total investment in GNMA Mortgage-Backed
Securities, carried at fair value 48,493,371 49,261,775
----------- ------------
Total investment in Acquired Insured
Mortgages, carried at fair value 76,636,450 77,918,878
----------- ------------

</TABLE>

<PAGE>58

AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88
SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE
DECEMBER 31, 1995

<TABLE>
<CAPTION>
Interest Annual Payment
Rate on Face Net Principal and
Maturity Put Mortgage Value of Carrying Value Cumulative Interest
Development Name/Location Date Date (1) (6)(7) Mortgage (3)(11)(12)(14) Loan Losses (6)(7)(13)
- ------------------------- -------- -------- ----------- ---------- --------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>

ORIGINATED INSURED MORTGAGES:
- ----------------------------
Fully Insured Mortgages
- -----------------------
FHA-Insured Certificates
(carried at fair value)

Arbor Village
Tallahassee, Florida 1/34 -- 8.125% 11,043,976 11,289,584 -- 944,868
------------- ------------
Coinsured Mortgages
- -------------------
FHA-Insured Certificates
(carried at fair value)

Summerwind Apartments-Phase II
Naples, Florida (8) 6/30 7/03 8.500% 9,501,784 9,081,667 -- 865,175
St. Charles Place - Phase II
Miramar, Florida (4) 2/30 12/03 8.625% 3,749,991(4)(9)(10) 3,583,856 -- 341,697
The Breakers at Golf Mill
Niles, Illinois (8) 11/29 11/02 7.000% 22,662,648(8) 21,471,650 -- 1,751,525
------------ -------------
Total investment in coinsured
FHA-Insured Certificates,
carried at fair value 35,914,423 34,137,173
------------- -------------
Total investment in Originated Insured
Mortgages, carried at fair value 46,958,399 45,426,757
------------- -------------
Total investment in FHA-Insured Certificates
and GNMA Mortgage-Backed Securities,
carried at fair value 123,594,849 123,345,635
------------- ------------

</TABLE>

<PAGE>59

AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88
SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE
DECEMBER 31, 1995

<TABLE>
<CAPTION>
Rate on Face Net Principal and
Maturity Put Mortgage Value of Carrying Value Cumulative Interest
Development Name/Location Date Date (1) (6)(7) Mortgage (3)(11)(12)(14) Loan Losses (6)(7)(13)
- ------------------------- -------- -------- ----------- ---------- --------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>

ACQUIRED INSURED MORTGAGES:
- --------------------------
FHA-Insured Loans
(carried at amortized cost)(2)

Kingsway Apts.
Monroe, LA 8/07 N/A 10.000% 594,557 595,722(2) -- 86,862
Kon Tiki Apts.
League City, TX 1/27 N/A 9.875% 563,772 565,617(2) -- 58,443
----------- ------------
Total investment in FHA-
Insured Loans - Acquired
Insured Mortgages, carried
at amortized cost 1,158,329 1,161,339
----------- ------------

ORIGINATED INSURED MORTGAGES:
- ----------------------------
Fully Insured Mortgages
- -----------------------
FHA-Insured Loans
(carried at amortized cost)(2)

The Turn at Gresham
Gresham, OR 8/29 12/02 8.375% 5,834,241 6,105,145(2) -- 520,159
Parkside Estates
Glendale Heights, IL 2/31 12/06 8.375% 6,867,149 7,052,060(2) -- 607,634
Olmstead Park Apts.
Charlotte, NC 7/32 12/07 8.500% 5,820,643 6,046,751(2) -- 518,476
Water's Edge II
Columbus, OH 7/33 N/A 8.250% 10,777,700 10,958,386(2) -- 933,734
------------ ------------

Total investment in FHA-
Insured Loans - Originated
Insured Mortgages, carried
at amortized cost 29,299,733 30,162,342
------------ ------------
Total investment in FHA-Insured Loans 30,458,062 31,323,681
------------ ------------
TOTAL INVESTMENT IN INSURED MORTGAGES $154,052,911 $154,669,316
============ ============

</TABLE>

<PAGE>60

AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88

NOTES TO SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE

DECEMBER 31, 1995

(1) Under the Section 221 program of the National Housing Act of 1937, as
amended, a mortgagee has the right to assign an Insured 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 a 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 and, in the case of mortgages sold in a GNMA auction, was
sold in an auction prior to February 1984. Certain of the Partnership's
Insured Mortgages may have the right of assignment under this program.
Certain Insured Mortgages that do not qualify under this program possess a
special assignment option, in certain mortgage documents, which allow the
Partnership, anytime after this date, to require payment by the borrower of
the unpaid principal balance of the Insured Mortgages. At such time, the
borrowers must make payment to the Partnership or the Partnership may
cancel the FHA insurance and institute foreclosure proceedings.

(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) This mortgage is insured under the HUD coinsurance program, as previously
discussed. The Patrician Mortgage Company is the HUD-approved coinsurance
lender.

(5) This information is based upon the estimated amount of the Insured Mortgage
upon completion of construction.

(6) This represents the base interest rate during the permanent phase of this
Insured Mortgage loan. Additional interest, measured as a percentage of
surplus cash (as defined in the participation agreements) and a percentage
of the proceeds from the sale or refinancing of the development (as defined
in the participation agreements), will also be due. During the years ended
1995, 1994 and 1993, additional interest was recognized in the amount of
$179,701, $36,550 and 12,580, respectively. These amounts are included in
mortgage investment income on the accompanying statements of operations.

(7) In addition, the servicer or the sub-servicer of the mortgage, primarily
unaffiliated third parties, is entitled to receive compensation for certain
services rendered.

(8) These mortgages are insured under the HUD coinsurance program. IFI is the
HUD-approved coinsurance lender and the Partnership bears the risk of any
coinsurance loss, as previously discussed.

(9) These amounts represent the Partnership's 55% interest in this mortgage.
The remaining 45% interest was acquired by AIM 86, an affiliate of the
Partnership.

(10) Represents the principal amount subject to delinquent principal or
interest. See Note 4 to the Partnership's financial statements.

<PAGE>61

AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88

NOTES TO SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE

DECEMBER 31, 1995

(11) A reconciliation of the carrying value of the Partnership's investment in
Insured Mortgages, for the years ended December 31, 1995 and 1994, is as
follows:

<PAGE>62

AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88

NOTES TO SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE

DECEMBER 31, 1995

1995 1994
------------ ------------
<S> <C> <C>
Beginning balance $140,906,391 $159,038,022

Investment in Acquired Insured
Mortgages and advances on
construction loans, including
acquisition costs 7,687,752 25,334,265

Principal receipts on mortgages (929,409) (788,169)

Payments made for AHFS/mortgage
investment income accrued/accreted
on AHFS -- 745,431

Proceeds from mortgages assigned
or sold (3,007,796)(a) (29,372,643)

Net gains on mortgage dispositions 143,107(a) 978,305

Coinsurance claims due from HUD -- (4,186,483)

GNMA Mortgage-Backed Security
transferred to IFI -- (1,994,217)

Net unrealized gains (losses) on
investment in FHA-Insured
Certificates and GNMA Mortgage-
Backed Securities 9,869,271 (8,848,120)
------------ ------------
Ending balance $154,669,316 $140,906,391
============ ============

(a) Excludes proceeds received and gains recognized in connection with the
settlement of the HUD coinsurance claims related to Pinewood Park Apartments and
the Hamlet at Cobb's Landing.
</TABLE>

(12) The mortgages underlying the Partnership's investments in FHA-Insured
Certificates, GNMA Mortgage-Backed Securities and FHA-Insured Loans are
primarily non-recourse first liens on multifamily residential developments
or retirement homes.

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

(14) As of December 31, 1995 and 1994, the tax basis of the Insured Mortgages,
including AHFS, was approximately $156 million and $153 million,
respectively.<PAGE>

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED
FROM THE ANNUAL REPORT ON FORM 10-K 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-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 2,882
<SECURITIES> 123,346
<RECEIVABLES> 34,510
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 161,927
<CURRENT-LIABILITIES> 3,121
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 158,806
<TOTAL-LIABILITY-AND-EQUITY> 161,927
<SALES> 0
<TOTAL-REVENUES> 15,688
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,893
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 13,795
<INCOME-TAX> 0
<INCOME-CONTINUING> 13,795
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,795
<EPS-PRIMARY> 1.49
<EPS-DILUTED> 0

</TABLE>