AMERICAN INSURED MORTGAGE INVESTORS L P SERIES 88, 10-K, 1997-03-31

AMERICAN INSURED MORTGAGE INVESTORS L P SERIES 88
10-K, 1997-03-31
INVESTORS, NEC

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<PAGE>1
FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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

For the fiscal year ended December 31, 1996
------------------

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

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

Delaware 13-3398206
- ------------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

11200 Rockville Pike, Rockville, Maryland 20852
- ----------------------------------------- ----------------------
(Address of principal executive offices) (Zip Code)

(301) 816-2300
- -----------------------------------------------------------------
(Registrant's telephone number, including area code)

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 February 27, 1997, 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 $130,920,037.

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

1996 ANNUAL REPORT ON FORM 10-K

TABLE OF CONTENTS

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

PART II
-------
Item 5. Market for Registrant's Securities and
Related Security Holder Matters . . . . . . 6
Item 6. Selected Financial Data . . . . . . . . . . . 7
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of
Operations . . . . . . . . . . . . . . . . 8
Item 8. Financial Statements and Supplementary Data . 18
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure . . 19

PART III
--------
Item 10. Directors and Executive Officers of the
Registrant . . . . . . . . . . . . . . . . 20
Item 11. Executive Compensation . . . . . . . . . . . 20
Item 12. Security Ownership of Certain Beneficial
Owners and Management . . . . . . . . . . . 20
Item 13. Certain Relationships and Related Transactions. 20

PART IV
-------
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K . . . . . . . . . . . . 21
Signatures . . . . . . . . . . . . . . . . . . . . . . 24

<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, 1996.

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).

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 (CRI, Inc.), managed the Partnership's portfolio. On June
30, 1995, in connection with a merger transaction approved by CRIIMI MAE's
shareholders, an affiliate of CRIIMI MAE acquired the Sub-advisory Agreement and
as a result, CRIIMI MAE Services Limited Partnership acts as the sub-advisor to
the Partnership effective June 30, 1995.

Competition
- -----------
In acquiring and disposing of mortgage investments, the Partnership
competes with private investors, mortgage banking companies, mortgage brokers,
state and local government agencies, lending institutions, trust funds, pension
funds, and other entities, some with similar objectives to those of the
Partnership and some of which are or may be affiliates of the Partnership, its
General Partner, the Advisor 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, are attempting to dispose of mortgages. As
a result of market conditions that could limit dispositions, CRIIMI MAE Services
Limited Partnership and its affiliates could be faced with conflicts of interest
in determining which mortgages would be disposed of. Both CRIIMI MAE Services
Limited Partnership and CRIIMI, Inc., however, are subject to their fiduciary
duties in evaluating the appropriate action to be taken when faced with such
conflicts.

<PAGE>5

PART I

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 1996.

PART II

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

Principal Market and Market Price for Units
- -------------------------------------------
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 1996 and 1995 were as follows:

1996
----
Quarter Ended High Low
------------- ------- -------

March 31, 1996 $14 1/8 $12 3/4
June 30, 1996 13 5/8 12 5/8
September 30, 1996 13 3/8 12 3/4
December 31, 1996 13 7/8 13 1/8

<PAGE>6

PART II

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

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

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 1996 and 1995 were as follows:

Distributions for the Amount of Distribution
Quarter Ended Per Unit
--------------------- ----------------------
March 31, 1996 $ 0.32 (1)
June 30, 1996 0.30
September 30, 1996 0.30
December 31, 1996 0.30
---------
$ 1.22
=========

March 31, 1995 $ 0.49 (2)
June 30, 1995 0.53 (3)
September 30, 1995 0.32 (4)
December 31, 1995 0.32 (1)
---------
$ 1.66
=========

Approximate Number of Unitholders
Title of Class as of December 31, 1996
- ----------------- -------------------------------
Depositary Units of Limited
Partnership Interest 7,200

<PAGE>7

PART II

ITEM 6. SELECTED FINANCIAL DATA
(Dollars in thousands, except per Unit amounts)
<TABLE>
<CAPTION>
For the Years Ended December 31,
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Income $ 12,465 $ 13,236 $ 13,332 $ 13,644 $ 12,018

Net (losses) gains on
mortgage dispositions/modifications (378) 2,452 978 (972) (1,582)

Net earnings 10,293 13,795 11,540 10,542 8,383

Net earnings per Limited
Partnership Unit (1) 1.11 1.49 1.24 1.13 0.90

Distributions per Limited
Partnership Unit (1)(2) 1.22 1.66 1.41 1.12 1.1128

As of December 31,
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------

Total assets $159,554 $161,927 $154,805 $166,904 $166,768

Partners' equity $156,644 $158,806 $150,506 $161,498 $161,381

(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, 1996, 1995, 1994, 1993 and
1992, 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, 1996, 1995 and 1994, and the balance sheet data as of
December 31, 1996 and 1995, 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, 1993 and 1992 and the balance sheet data as of December 31, 1994, 1993 and
1992 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>8

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.

AIM Acquisition Partners, L.P. (the Advisor), serves 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. 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
(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, 1996, 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).

The Partnership's reinvestment period expired 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, 1996, the Partnership had invested in 37 Insured
Mortgages with aggregate amortized cost, face and fair values of approximately
$150 million, $151 million, and $150 million, respectively.

<PAGE>9

PART II

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

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
-----------------------------------------------
Listed below is the Partnership's aggregate investment in fully
insured Acquired Insured Mortgages as of December 31, 1996 and 1995:

<TABLE>
<CAPTION> December 31,
1996 1995
------------ ------------
<S> <C> <C>
Number of:
GNMA Mortgage-Backed Securities 22(1) 19
FHA-Insured Certificates 5 7
Amortized Cost $ 73,722,912 $ 76,462,511
Face Value 73,970,506 76,636,450
Fair Value 74,492,545 77,918,878

(1) During 1996, the Partnership purchased three Acquired Insured Mortgages
totalling approximately $9.4 million, as discussed below.
</TABLE>

Listed below is the Partnership's aggregate investment in fully
insured Originated Insured Mortgages as of December 31, 1996 and 1995:
<TABLE>
<CAPTION> December 31,
1996 1995
------------ ------------
<S> <C> <C>
Number of Mortgages 1 1
Amortized Cost $ 11,356,150 $ 11,411,412
Face Value 10,994,620 11,043,976
Fair Value 11,128,509 11,289,584

</TABLE>

As of February 28, 1997, all fully insured mortgages were current with
respect to the payment of principal and interest.

<PAGE>10

PART II

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

In February 1996, the General Partner instructed the servicer for the
mortgage on Water's Edge of New Jersey, a fully insured acquired
construction loan, to file a Notice of Default and an Election to Assign
the mortgage with the Department of Housing and Urban Development (HUD).
The property underlying this construction loan is a nursing home located in
Trenton, New Jersey. As of December 31, 1996, the Partnership had received
approximately $7.6 million from the assignment including repayment of
accrued interest. The remainder of the proceeds, approximately $4.1
million, is included in Due from HUD and Receivables and other assets. In
January 1997, the Partnership received additional gross proceeds of
approximately $2.6 million from HUD. These proceeds of $0.27 per unit were
declared as part of the January 1997 distribution and will be distributed
in May 1997. HUD has disallowed approximately $1.5 million of the
assignment claim. The Servicer is currently negotiating with HUD in regard
to collection of the disallowed portion of the claim. The General Partner
believes the full amount of the receivable will be recovered from either
HUD or the Servicer. In conjunction with the assignment of the mortgage,
the Partnership recognized a net loss of approximately $204,000 in the
second quarter of 1996.

During March 1996, a retained yield holder in the Harbor View Estates
loan exercised its right to purchase the participation certificate with
respect to this insured mortgage after a Notice of Default was filed with
HUD. In March 1996, the Partnership received approximately $709,100 in
disposition proceeds, including approximately $17,400 of interest due to
the Partnership from this prepayment. The net principal proceeds were
approximately $691,000, resulting in a gain of approximately $600. The net
proceeds were reinvested in fully insured mortgages. In April 1996,
approximately $4,900 was remitted to the retained yield holder in the
Harbor View Estates mortgage in connection with the final accounting of
this disposition. This resulted in a net loss of approximately $4,300
which is included on the accompanying statement of operations for the year
ended December 31, 1996.

In June 1996, the Partnership entered into a modification agreement
with the mortgagor of Turn at Gresham. This agreement effectively lowered
the interest rate on the mortgage from 8.375% to 8% for a period until
maturity. In addition, a seven year prepayment lockout was included in the
modification, followed by a 3%, 2%, and 1% penalty in years eight, nine,
and ten, respectively. The Partnership incurred a loss of approximately
$169,600 in connection with this modification which represents the write
off of unamortized costs.

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.

<PAGE>11

PART II

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

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
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, 1996 and 1995, the Partnership held investments in
three coinsured FHA-Insured Certificates secured by coinsured mortgages.
One of these coinsured mortgage investments, the mortgage on St. Charles
Place - Phase II, is coinsured by The Patrician Mortgage Company
(Patrician), an unaffiliated third party coinsurance lender under the HUD
coinsurance program. As of December 31, 1996, and 1995, 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. Listed below is the Partnership's investment in
the St. Charles Place - Phase II mortgage as of December 31, 1996 and
1995. 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.

<TABLE>
<CAPTION> December 31,
1996 1995
------------ ------------
<S> <C> <C>
Amortized Cost $ 3,730,991 $ 3,749,991
Face Value 3,730,991 3,749,991
Fair Value 3,527,521 3,583,856

</TABLE>

As of February 28, 1997, the mortgagor had made payments of principal
and interest due to the Partnership on the mortgage through October

<PAGE>12

PART II

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

1995. Patrician is litigating the case in bankruptcy court while
pursuing negotiations on 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.

<PAGE>13

PART II

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

2. Coinsured by affiliate
----------------------
As of December 31, 1996 and 1995, the Partnership held investments in
two FHA-Insured Certificates secured by coinsured mortgages, where the
coinsurance lender is IFI. These investments were made on behalf of
the Partnership by the former managing general partner. As structured
by the former managing general partner, with respect to these
mortgages, the Partnership bears the risk of loss upon default for
IFI's portion of the coinsurance loss on these mortgage investments.

The IFI coinsured mortgages had an aggregate fair value of $30,012,592
and $30,553,317, as of December 31, 1996 and 1995, respectively, and
amortized costs and face values as follows:

<PAGE>14

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
1996 1996 1995 1995 1996 1995 Recognized
------------ ------------ ------------ ------------ ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
The Breakers at Golf
Mill(1) $ 22,492,106 $ 22,492,106 $ 22,662,648 $ 22,662,648 $ -- $ -- $ 980,000
Summerwind Apts.-Phase
II(1) 8,000,581 9,442,628 8,037,922 9,501,784 -- -- 1,511,743
------------ ------------ ------------ ------------ ---------- ---------- -----------
$ 30,492,687 $ 31,934,734 $ 30,700,570 $ 32,164,432 $ -- $ -- $ 2,491,743
============ ============ ============ ============ ========== ========== ===========

(1) As of February 28, 1997, the mortgagor was current with respect to payment of principal and interest on this mortgage.
</TABLE>

C. FHA-Insured Loans
-----------------
Listed below is the Partnership's aggregate investment in fully
insured Originated Insured Mortgages as of December 31, 1996 and 1995:

<TABLE>
<CAPTION> December 31,
1996 1995
------------ ------------
<S> <C> <C>
Number of Mortgages 4 4
Amortized Cost $ 29,746,073 $ 30,162,342
Face Value 29,163,152 29,299,733
Fair Value 29,712,245 30,199,166

</TABLE>

<PAGE>15

PART II

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

Listed below is the Partnership's aggregate investment in fully
insured Acquired Insured Mortgages as of December 31, 1996 and 1995:

<TABLE>
<CAPTION> December 31,
1996 1995
------------ ------------
<S> <C> <C>
Number of Mortgages 2 2
Amortized Cost $ 1,129,575 $ 1,161,339
Face Value 1,126,731 1,158,329
Fair Value 1,173,057 1,219,590

</TABLE>

As of February 28, 1997, 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, 1996, 1995 and 1994, the Partnership received additional
interest of $63,045, $46,581 and $13,938, respectively, from the FHA-
Insured Loans which contain Participations. These amounts are included in
mortgage investment income on the accompanying statements of operations.

Results of Operations
---------------------
1996 versus 1995
----------------
Net earnings decreased for 1996 as compared to 1995 primarily as a result
of a reduction in net gains on mortgage dispositions and modifications, as
discussed below. Also contributing to this decrease were decreases in
mortgage investment income and interest and other income, as discussed
below.

Mortgage investment income decreased for 1996 as compared to 1995. This
decrease was primarily due to the timing of the reinvestment of net
proceeds from the May 1996 assignment of the Water's Edge of New Jersey
mortgage. Additionally, the participation agreement with The Breakers at
Golf Mill was terminated effective March 1, 1995, therefore Participations
received by the Partnership decreased from $133,120 in 1995 to $21,902 in
1996.

Interest and other income decreased for 1996 as compared to 1995. This
decrease was primarily due to interest earned on claim proceeds from
Hazeltine Shores and Pinewood Park Apartments during 1995. Also
contributing to this decrease was a decrease in short-term investment
income.

General and administrative expenses decreased for 1996 as compared to 1995.
This decrease was primarily the result of non-recurring professional fees
in connection with the disposition of problem mortgages in 1995, as well as
a decrease in service fee expense as a result of the reduction in the
mortgage base.

Net gains on mortgage dispositions and modifications decreased for 1996 as
compared to 1995. Gains or losses on mortgage dispositions and
modifications are based on the number, carrying amounts and proceeds of
mortgage investments disposed of during the period. During 1996, the
Partnership incurred net losses on mortgage dispositions and modifications

<PAGE>16

PART II

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

of approximately $378,000 related to the prepayment of the mortgage on
Harbor View Estates, the partial settlement of the coinsurance claim on
Water's Edge of New Jersey and the modification of the mortgage on Turn at
Gresham. This compares to gains recognized in 1995 of approximately $2.3
million related to the settlement of the coinsurance claims on Pinewood
Park Apartments and Hamlet at Cobb's Landing, and to a gain of
approximately $140,000 in connection with the prepayment of the mortgage on
Gilbert Greens Apartments.

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.

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.
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.

<PAGE>17

PART II

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

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 1996 to meet
operating requirements.

The basis for paying distributions to Unitholders is cash flow from
operations, which includes regular interest income and principal from
Insured Mortgages, and gains, if any, from mortgage dispositions. Although
the Insured Mortgages yield a fixed monthly mortgage payment once
purchased, the cash distributions paid to the Unitholders will vary during
each quarter due to (1) the fluctuating yields in the short-term money
market where the monthly mortgage payments received are temporarily
invested prior to the payment of quarterly distributions, (2) the reduction
in the asset base and monthly mortgage payments due to monthly mortgage
payments received or mortgage dispositions, (3) variations in the cash flow
attributable to the delinquency or default of Insured Mortgages and
professional fees and foreclosure and acquisition costs incurred in
connection with those Insured Mortgages and (4) variations in the
Partnership's operating expenses.

Cash flow - 1996 versus 1995
----------------------------
Net cash provided by operating activities decreased for 1996 as compared to
1995 primarily due to a decrease in net earnings in 1996 as a result of a
decrease in mortgage investment income and interest and other income, as
discussed above. Also contributing to the decrease was an increase in
receivables and other assets during 1996 as a result of the assignment of
the mortgage on Water's Edge of New Jersey.

Net cash provided by investing activities decreased for 1996 as compared to
1995 primarily due to an increase in the acquisition of Acquired Insured
Mortgages from approximately $7.6 million in 1995 to approximately $9.4
million in 1996. This decrease was also due to a reduction in proceeds
from mortgage dispositions and modifications from approximately $9.3
million in 1995 to approximately $8.6 million in 1996.

Net cash used in financing activities decreased for 1996 as compared to
1995 primarily due to a decrease 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 first three quarters of 1995.

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

<PAGE>18

PART II

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

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.

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 27 through 54.

<PAGE>19

PART II

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 advisor whose general partner is
CRI. However, effective June 30, 1995, CRIIMI MAE became a self-administered
REIT, and, as a result, the advisor 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
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.

<PAGE>20

PART III

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

(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, 1996.

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.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

As of December 31, 1996, 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, 1996, 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>21

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, 1996
and 1995 27

Statements of Operations for the years ended
December 31, 1996, 1995 and 1994 28

Statements of Changes in Partners' Equity for
the years ended December 31, 1996, 1995 and
1994 29

Statements of Cash Flows for the years ended
December 31, 1996, 1995 and 1994 32

Notes to Financial Statements 33

(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>22

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>23

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>24

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 18, 1997 /s/ William B. Dockser
- --------------------------- -------------------------
DATE William B. Dockser
Chairman of the Board and
Principal Executive Officer

March 18, 1997 /s/ H. William Willoughby
- --------------------------- -------------------------
DATE H. William Willoughby
President and Director

March 18, 1997 /s/ Cynthia O. Azzara
- --------------------------- -------------------------
DATE Cynthia O. Azzara
Principal Financial and
Accounting Officer

March 18, 1997 /s/ Garrett G. Carlson, Sr.
- --------------------------- --------------------------
DATE Garrett G. Carlson, Sr.
Director

March 18, 1997 /s/ Larry H. Dale
- --------------------------- -------------------------
DATE Larry H. Dale
Director

March 18, 1997 /s/ G. Richard Dunnells
- --------------------------- -------------------------
DATE G. Richard Dunnells
Director

March 18, 1997 /s/ Robert F. Tardio
- --------------------------- -------------------------
DATE Robert F. Tardio
Director

<PAGE>25

AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88

Financial Statements as of December 31, 1996 and 1995

and for the Years Ended December 31, 1996, 1995 and 1994

<PAGE>26

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, 1996
and 1995 and the related statements of operations, changes in partners' equity
and cash flows for the years ended December 31, 1996, 1995 and 1994. 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, 1996 and 1995, and the results of its operations and its cash flows
for the years ended December 31, 1996, 1995 and 1994, 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, 1996 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 18, 1997

<PAGE>27

AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88

BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
As of December 31,
1996 1995
------------ ------------
<S> <C> <C>
Investment in FHA-Insured Certificates
and GNMA Mortgage-Backed
Securities, at fair value:
Acquired insured mortgages $ 74,492,545 $ 77,918,878
Originated insured mortgages 44,668,622 45,426,757
------------ ------------
119,161,167 123,345,635
Investment in FHA-Insured Loans,
at amortized cost, net of unamortized
discount and premium:
Originated insured mortgages 29,746,073 30,162,342
Acquired insured mortgages 1,129,575 1,161,339
------------ ------------
30,875,648 31,323,681

Due from HUD 3,221,611 285,330

Cash and cash equivalents 1,918,341 2,881,537

Investment in affiliates 1,177,774 1,189,316

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

Receivables and other assets 2,402,130 2,103,710
------------ ------------
Total assets $159,554,358 $161,926,896
============ ============

<PAGE>28

AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88

LIABILITIES AND PARTNERS' EQUITY

Distributions payable $ 2,776,685 $ 2,961,797

Accounts payable and accrued expenses 133,484 159,092
------------ ------------
Total liabilities 2,910,169 3,120,889
------------ ------------
Commitments and contingencies

Partners' equity:
Limited partners' equity 158,381,944 159,332,082
General partner's deficit (977,432) (928,476)
Less: Repurchased Limited Partnership
Units - 50,000 Units (618,750) (618,750)
Net unrealized (losses) on investment
in FHA-Insured Certificates and GNMA
Mortgage-Backed Securities (2,240,839) (1,519,157)
Net unrealized gains on investment in
FHA-Insured Certificates and GNMA
Mortgage-Backed Securities 2,099,266 2,540,308
------------ ------------

Total partners' equity 156,644,189 158,806,007
------------ ------------
Total liabilities and
partners' equity $159,554,358 $161,926,896
============ ============

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

<PAGE>29

AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88

STATEMENTS OF OPERATIONS

For the years ended December 31,
1996 1995 1994
----------- ----------- ------------
<S> <C> <C> <C>
Income:
Mortgage investment income $12,229,747 $12,524,904 $ 12,575,210
Interest and other income 235,386 710,734 757,271
----------- ----------- ------------
12,465,133 13,235,638 13,332,481
----------- ----------- ------------
Expenses:
Asset management fee to related parties 1,503,297 1,493,283 1,503,831
General and administrative 291,178 399,681 881,855
Interest expense to affiliate -- -- 35,694
Provision for settlement of
litigation -- -- 349,824
----------- ----------- ------------
1,794,475 1,892,964 2,771,204
----------- ----------- ------------
Earnings before gains (losses) on
mortgage dispositions/modifications 10,670,658 11,342,674 10,561,277

Gains on mortgage dispositions/modifications -- 2,452,221 1,020,793
Losses on mortgage dispositions/modifications (377,900) -- (42,488)
----------- ----------- ------------
Net earnings $10,292,758 $13,794,895 $ 11,539,582
=========== =========== ============

Net earnings allocated to:
Limited partners - 95.1% $ 9,788,413 $13,118,945 $ 10,974,142
General partner - 4.9% 504,345 675,950 565,440
----------- ----------- ------------
$10,292,758 $13,794,895 $ 11,539,582
=========== =========== ============

Net earnings per weighted average
Limited Partnership Unit
outstanding $ 1.11 $ 1.49 $ 1.24
=========== =========== ============
Weighted average Limited Partnership Units
outstanding 8,802,091 8,802,091 8,816,201
=========== =========== ===========

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

<PAGE>30

AMERICAN INSURED INVESTORS L.P. - SERIES 88

STATEMENTS OF CHANGES IN PARTNERS' EQUITY

For the years ended December 31, 1996, 1995 and 1994

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>
Balance, January 1, 1994 $ (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>31

AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88

STATEMENTS OF CHANGES IN PARTNERS' EQUITY - Continued

For the years ended December 31, 1996, 1995 and 1994

</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

Net earnings 504,345 9,788,413 -- -- -- 10,292,758

Distributions paid or accrued
of $1.22 per Unit, including
return of capital of $.11 per
Unit (553,301) (10,738,551) -- -- -- (11,291,852)

Adjustment to net unrealized gains
(losses) on investment in FHA-
Insured Certificates and
GNMA Mortgage-Backed
Securities -- -- -- (441,042) (721,682) (1,162,724)
-------------- ------------- ------------- ---------------- -------------- -------------
Balance, December 31, 1996 $ (977,432) $ 158,381,944 $ (618,750) $ 2,099,266 $ (2,240,839) $ 156,644,189
============== ============= ============= ================ ============== =============
Limited Partnership Units outstanding -
December 31, 1994, 1995 and 1996 8,802,091
=============

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

<PAGE>32

AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88

STATEMENTS OF CASH FLOWS

For the years ended December 31,
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings $ 10,292,758 $ 13,794,895 $ 11,539,582

Adjustments to reconcile net earnings to net cash
provided by operating activities:
Gains on mortgage dispositions/modifications -- (2,452,221) (1,020,793)
Losses on mortgage dispositions/modifications 377,900 -- 42,488
Provision for settlement of litigation -- -- 349,824
Changes in assets and liabilities:
Decrease in investment in affiliate and notes
receivable and due from affiliates 11,542 88,035 1,696,074
(Increase) decrease in receivables and other assets (298,420) 169,312 (520,988)
Decrease in accounts payable and accrued expenses (25,608) (67,462) (44,119)
Decrease in note payable and due to affiliate -- -- (1,784,688)
------------ ------------ ------------
Net cash provided by operating activities 10,358,172 11,532,559 10,257,380
------------ ------------ ------------
Cash flows from investing activities:
Payments made and treated as an
addition to Assets Held for Sale
Under Coinsurance Program/mortgage
investment income accrued/accreted on AHFS (37,452) (97,952) (745,431)
Proceeds from dispositions/modifications of
Insured Mortgages 8,571,748 9,316,015 29,372,643
Investment in Acquired Insured Mortgages and advances on
construction loans (9,416,014) (7,687,752) (25,334,265)
Receipt of principal from scheduled payments 1,037,314 929,409 788,169
------------ ------------ ------------
Net cash provided by investing activities 155,596 2,459,720 4,081,116
------------ ------------ ------------
Cash flows from financing activities:
Distributions paid to partners (11,476,964) (16,474,997) (12,342,566)
Repurchase of Limited Partnership Units -- -- (968,574)
------------ ------------ ------------
Net cash used in financing activities (11,476,964) (16,474,997) (13,311,140)
------------ ------------ ------------
Net (decrease) increase in cash and cash equivalents (963,196) (2,482,718) 1,027,356

Cash and cash equivalents, beginning of year 2,881,537 5,364,255 4,336,899
------------- ------------ ------------
Cash and cash equivalents, end of year $ 1,918,341 $ 2,881,537 $ 5,364,255
============= ============ ============

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

<PAGE>33

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.

CRIIMI, Inc. (the General Partner) holds a partnership interest of 4.9%
which includes shares acquired from the former assignor limited partner.
CRIIMI, Inc. is a wholly-owned subsidiary of CRIIMI MAE Inc. (CRIIMI MAE). From
September 6, 1991 through June 30, 1995, CRIIMI MAE was managed by an advisor
whose general partner is CRI, Inc. (CRI). However, effective June 30, 1995,
CRIIMI MAE became a self-administered real estate investment trust (REIT) and,
as a result, the advisor no longer advises CRIIMI MAE.

AIM Acquisition Partners, L.P. (the Advisor) serves as the advisor to the
Partnership. 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.

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.

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 expired 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. After the expiration of the reinvestment period, the Partnership
will be required (subject to the conditions set forth in the Partnership
Agreement) to distribute such proceeds to its Unitholders. 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.

The General Partner listed the Partnership's Units for trading on the
American Stock Exchange (AMEX) on January 18, 1994, in order to provide

<PAGE>34

AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION - Continued

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.

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

<PAGE>35

AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88

NOTES TO FINANCIAL STATEMENTS

2. SIGNIFICANT ACCOUNTING POLICIES - Continued

using the amortized cost method and all other securities must be recorded
at their fair values.

As of December 31, 1996, the weighted average remaining term of the
Partnership's investments in GNMA Mortgage-Backed Securities and FHA-
Insured Certificates is approximately 32 years. However, the Partnership
Agreement states that the Partnership will terminate in approximately 25
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, 1996 and
1995, 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
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>36

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 year ended
December 31, 1994 have been reclassified to conform with the 1996 and 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, 8,802,091 and
8,816,201, for the years ended December 31, 1996, 1995 and 1994,
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>37

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, 1996 As of December 31, 1995
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 $ 73,722,912 $ 74,492,545 $ 76,462,511 $ 77,918,878
Originated insured mortgages 45,579,828 44,668,622 45,861,973 45,426,757
------------ ------------ ------------ ------------
$119,302,740 $119,161,167 $122,324,484 $123,345,635
============ ============ ============ ============

Investment in FHA-Insured Loans:
Originated insured mortgages $ 29,746,073 $ 29,712,245 $ 30,162,342 $ 30,199,166
Acquired insured mortgages 1,129,575 1,173,057 1,161,339 1,219,590
------------ ------------ ------------ ------------
$ 30,875,648 $ 30,885,302 $ 31,323,681 $ 31,418,756
============ ============ ============ ============

Cash and cash equivalents $ 1,918,341 $ 1,918,341 $ 2,881,537 $ 2,881,537

Accrued interest receivable $ 1,344,679 $ 1,344,679 $ 1,971,322 $ 1,971,322

</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>38

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.

(1) During 1996, the Partnership purchased three Acquired Insured Mortgages
totalling approximately $9.4 million.

</TABLE>

Listed below is the Partnership's aggregate investment in fully
insured Originated Insured Mortgages as of December 31, 1996 and 1995:

<TABLE>
<CAPTION> December 31,
1996 1995
------------ ------------
<S> <C> <C>
Number of Mortgages 1 1
Amortized Cost $ 11,356,150 $ 11,411,412
Face Value 10,994,620 11,043,976
Fair Value 11,128,509 11,289,584

</TABLE>

As of February 28, 1997, all fully insured mortgages were current with
respect to the payment of principal and interest.

In February 1996, the General Partner instructed the servicer for the
mortgage on Water's Edge of New Jersey, a fully insured acquired
construction loan, to file a Notice of Default and an Election to Assign
the mortgage with the Department of Housing and Urban Development (HUD).
The property underlying this construction loan is a nursing home located in
Trenton, New Jersey. As of December 31, 1996, the Partnership had received
approximately $7.6 million including repayment of accrued interest. The
remainder of the proceeds, approximately $4.1 million, is included in Due
from HUD and Receivables and other assets. In January 1997, the
Partnership received proceeds of approximately $2.6 million from HUD.
These proceeds of $0.27 per unit were declared as part of the January 1997
distribution and will be distributed in May 1997. HUD has disallowed
approximately $1.5 million of the assignment claim. The Servicer is

<PAGE>39

AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88

NOTES TO FINANCIAL STATEMENTS

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

currently negotiating with HUD in regard to collection of the disallowed
portion of the claim. The General Partner believes the full amount of the
receivable will be recovered from either HUD or the Servicer. In
conjunction with the assignment of the mortgage, the Partnership recognized
a net loss of approximately $204,000 in the second quarter of 1996.

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.

<PAGE>40

AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88

NOTES TO FINANCIAL STATEMENTS

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

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, 1996 and 1995, the Partnership held investments in
three coinsured FHA-Insured Certificates secured by coinsured mortgages.
One of these coinsured mortgage investments, the mortgage on St. Charles
Place - Phase II, is coinsured by The Patrician Mortgage Company
(Patrician), an unaffiliated third party coinsurance lender under the HUD
coinsurance program. As of December 31, 1996 and 1995, 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. Listed below is the Partnership's investment in
the St. Charles Place - Phase II mortgage as of December 31, 1996 and
1995. 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.

<TABLE>
<CAPTION> December 31,
1996 1995
------------ ------------
<S> <C> <C>
Amortized Cost $ 3,730,991 $ 3,749,991
Face Value 3,730,991 3,749,991
Fair Value 3,527,521 3,583,856

</TABLE>

As of February 28, 1997, the mortgagor had made payments of principal
and interest due to the Partnership on the mortgage through October
1995. Patrician is litigating the case in bankruptcy court while
pursuing negotiations on 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.

<PAGE>41

AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88

NOTES TO FINANCIAL STATEMENTS

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

Coinsured by affiliate
----------------------
As of December 31, 1996 and 1995, the Partnership held investments in
two FHA-Insured Certificates secured by coinsured mortgages, where the
coinsurance lender is IFI. These investments were made on behalf of
the Partnership by the former managing general partner. As structured
by the former managing general partner, with respect to these
mortgages, the Partnership bears the risk of loss upon default for
IFI's portion of the coinsurance loss on these mortgage investments.

The IFI coinsured mortgages had an aggregate fair value of $30,012,592
and $30,553,317, as of December 31, 1996 and 1995, respectively, and
amortized costs and face values as follows:

<PAGE>42

AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88

NOTES TO FINANCIAL STATEMENTS

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

(1) As of February 28, 1997, the mortgagor was current with respect to payment of principal and interest on this mortgage.
</TABLE>

5. INVESTMENT IN FHA-INSURED LOANS

Listed below is the Partnership's aggregate investment in fully insured
Originated Insured Mortgages as of December 31, 1996 and 1995:

</TABLE>

Listed below is the Partnership's aggregate investment in fully
insured Acquired Insured Mortgages as of December 31, 1996 and 1995:

</TABLE>

As of February 28, 1997, all of the Partnership's FHA-Insured Loans were
current with respect to the payment of principal and interest.

<PAGE>43

AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88

NOTES TO FINANCIAL STATEMENTS

5. INVESTMENT IN FHA-INSURED LOANS - Continued

All of the FHA-Insured Loans contain Participations. During the years
ended December 31, 1996, 1995 and 1994, the Partnership received additional
interest of $63,045, $46,581 and $13,938, respectively, from the FHA-Insured
Loans which contain Participations. These amounts are included in mortgage
investment income on the accompanying statements of operations.

6. DUE FROM HUD

Due from HUD consists of amounts due to the Partnership in connection with
losses incurred on the disposition of fully insured and coinsured mortgage
investments. Prior to these dispositions, the mortgage investments were
accounted for as Assets Held For Sale (AHFS) under the coinsurance program.

As of December 31, 1996, Due from HUD includes approximately $3.2 million
related to the assignment of Water's Edge of New Jersey, as discussed in Note 4.
As of December 31, 1996 and 1995, Due from HUD includes approximately $59,000
and $285,000, respectively, related to the disposition of Hazeltine Shores.

7. DISTRIBUTIONS TO UNITHOLDERS

The distributions paid or accrued to Unitholders on a per Unit basis for
the years ended December 31, 1996, 1995 and 1994 are as follows:

1996 1995 1994
------- ------- ------
Quarter ended March 31, $0.32(1) $0.49(2) $0.26(5)
Quarter ended June 30, 0.30 0.53(3) 0.25(6)
Quarter ended September 30, 0.30 0.32(4) 0.46(7)
Quarter ended December 31, 0.30 0.32(1) 0.44(8)
----- ----- -----
$1.22 $1.66 $1.41
===== ===== =====

(1) This amount includes approximately $0.02 per Unit representing previously
undistributed accrued interest received from Water's Edge of New Jersey.
(2) 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.
(3) This amount includes approximately $0.22 per Unit representing accrued, but
previously undistributed, interest and capital gain related to the receipt
of claim proceeds from the mortgage on Hamlet at Cobb's Landing.
(4) This amount includes approximately $0.02 per Unit representing capital gain
from the disposition of the mortgage on Gilbert Greens Apartments.
(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.

<PAGE>44

AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88

NOTES TO FINANCIAL STATEMENTS
7. DISTRIBUTIONS TO UNITHOLDERS - Continued

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 resulting from the receipt of
monthly mortgage payments 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
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
during the years ended December 31, 1996 and 1995, 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

<PAGE>45

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

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, 1996, 1995 and 1994, have earned or received compensation or
payments for services from the Partnership as follows:

<PAGE>46

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 1996 1995 1994
- ----------------- ---------------------------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
CRIIMI, Inc.(1) General Partner/Distribution $ 553,301 $ 752,852 $ 640,140

AIM Acquisition Advisor/Asset Management Fee 1,503,297 1,493,283 1,503,831
Partners, L.P.(2)

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

CRIIMI MAE Affiliate of General Partner/ 62,376 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 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 is entitled to a fee of 0.28% of Total
Invested Assets. Of the amounts paid to the Advisor, CRIIMI MAE Services Limited Partnership, the Sub-advisor, earned a fee equal
to $443,060 and $219,670 for the year ended December 31, 1996 and for the six months ended December 31, 1995, respectively. No fees
were earned by CRIIMI MAE Services Limited Partnership for the year ended December 31, 1994. CRI/AIM Management, Inc., which acted
as the Sub-advisor through June 30, 1995, earned a fee equal to $220,449 and $443,224, for the six months ended June 30, 1995 and
for the year ended December 31, 1994, respectively.

(3) Prior to June 30, 1995, these amounts were paid to CRI as reimbursement for expenses incurred prior to June 30, 1995 on
behalf of the General Partner and the Partnership. The transaction in which CRIIMI MAE became a self-administered REIT had no
impact on the payments required to be made by the Partnership, other than the expense reimbursement previously paid by the
Partnership to CRI in connection with the provision of services by the Sub-advisor are, effective June 30, 1995, paid to a wholly-
owned subsidiary of CRIIMI MAE, CRIIMI MAE Management, Inc.

</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>47

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, 1996, 1995 and 1994:

<TABLE>
<CAPTION>
1996
Quarter ended
March 31 June 30 September 30 December 31
----------- ---------- ------------- ------------
<S> <C> <C> <C> <C>
Income $ 3,200 $ 3,184 $ 3,034 $ 3,047
Net gains (losses) from
mortgage dispositions/modifications 1 (379) -- --
Net earnings 2,765 2,333 2,589 2,606
Net earnings per
Limited Partnership Unit 0.30 0.25 0.28 0.28

</TABLE>

<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 0.43 0.48 0.29 0.29

</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>

<PAGE>48

AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88

NOTES TO FINANCIAL STATEMENTS

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
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>49

AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88
SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE
DECEMBER 31, 1996

<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) (5)(6) Mortgage (3)(10)(11)(13) Loan Losses (5)(6)(12)(14)
- ------------------------- -------- -------- ----------- ----------- --------------- ----------- --------------
<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%$ 3,178,553 $ 3,219,878 -- $ 284,523
Northpoint Apartments
Richland, Washington 1/23 N/A 8.550% 1,734,725 1,771,037 -- 166,490
Heather Ridge Apartments
Fayetteville, North Carolina 4/27 N/A 8.625% 4,467,331 4,559,502 -- 416,231
Olde Mill Apartments
Liverpool, New York 4/27 N/A 8.920% 5,057,932 5,162,111 -- 484,083
Park Avenue Plaza
Omaha, Nebraska 9/29 N/A 9.000% 1,976,432 2,016,903 -- 187,923
------------ -------------

Total Investment in FHA-Insured
Certificates - Acquired Insured
Mortgages 16,414,973 16,729,431
------------ -------------
GNMA Mortgage-Backed Securities
(carried at fair value)

Garden Terrace
Douglasville, Georgia 1/20 N/A 7.125% 2,745,154 2,728,800 -- 236,149
Lioncrest Towers
Richton Park, Illinois 10/28 N/A 7.000% 6,530,007 6,486,429 -- 496,706
San Jose South
San Jose, California 10/23 N/A 7.750% 8,325,158 8,271,424 -- 697,086
Beauvoir Manor Apts.
Biloxi, Mississippi 9/18 N/A 8.875% 1,270,317 1,311,962 -- 127,434
Greenview Garden
Butler, Pennsylvania 8/33 N/A 9.000% 883,877 911,963 -- 78,238
Lorenzo Carolina Apts.
Tampa, Florida 6/26 N/A 8.250% 1,027,983 1,021,075 -- 89,179
Silver Lake Plaza Apts.
Los Angeles, California 11/35 N/A 7.950% 5,338,422 5,300,721 -- 431,562
Woodcrest Townhomes
Chaska, Minnesoata 8/31 N/A 8.375% 3,123,893 3,102,114 -- 269,269

<PAGE>50

AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88
SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE
DECEMBER 31, 1996

Interest Annual Payment
Rate on Face Net Principal and
Maturity Put Mortgage Value of Carrying Value Cumulative Interest
Development Name/Location Date Date (1) (5)(6) Mortgage (3)(10)(11)(13) Loan Losses (5)(6)(12)(14)
- ------------------------- -------- -------- ----------- ----------- --------------- ----------- --------------
<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% 4,481,265 4,624,361 -- 404,843
Lamplighter Apts.
Port Arthur, Texas 10/29 N/A 9.000% 2,238,093 2,309,502 -- 207,115
Linville Manor
Shelby, North Carolina 7/31 N/A 8.750% 1,998,028 2,061,693 -- 178,916
Oak Grove Apts.
Austin, Texas 9/26 N/A 8.750% 560,993 578,991 -- 51,680
Oakwood Gardens
San Jose, California 10/23 N/A 7.750% 1,164,222 1,156,708 -- 97,483
Seven Springs
College Park, Maryland 12/21 N/A 7.625% 4,801,407 4,771,311 -- 418,918
Stony Creek
Washington Township, Michigan 2/29 N/A 7.500% 5,421,380 5,384,720 -- 426,882
Burlwood Apts.
Portland, Oregon 8/15 N/A 9.000% 639,138 635,522 -- 61,320
Collin Care Centers
Plano, Texas 9/30 N/A 8.125% 1,707,558 1,695,758 -- 144,187
Holton Manor
Elkhorn, Wisconsin 11/21 N/A 8.250% 1,022,363 1,015,853 -- 94,368
Oaklawn Apts.
Boise, Idaho 8/24 N/A 9.000% 482,402 479,170 -- 40,173
Orchard Creek Apts.
Farmington Hills, Michigan 1/30 N/A 8.625% 1,287,332 1,328,443 -- 113,121
Tehama Estates
Sacramento,California 7/29 N/A 8.750% 1,356,303 1,399,626 -- 122,700
Westview Terrace Apts.
Tacoma, Washington 4/30 N/A 8.550% 1,150,238 1,186,968 -- 101,042
----------- ------------
Total Investment in GNMA Mortgage-Backed
Securities, carried at fair value 57,555,533 57,763,114
----------- ------------
Total Investment in Acquired Insured
Mortgages, carried at fair value 73,970,506 74,492,545
----------- ------------

<PAGE>51

AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88
SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE
DECEMBER 31, 1996

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

Arbor Village
Tallahassee, Florida 1/34 -- 8.125% 10,994,620 11,128,509 -- 944,868
------------- ------------
Coinsured Mortgages
- -------------------
FHA-Insured Certificates
(carried at fair value)

Summerwind Apartments-Phase II
Naples, Florida (7) 6/30 7/03 8.500% 9,442,628 8,928,581 -- 865,175
St. Charles Place - Phase II
Miramar, Florida (4) 2/30 12/03 8.625% 3,730,991(4)(8)(9) 3,527,521 -- 341,697
The Breakers at Golf Mill
Niles, Illinois (7) 11/29 11/02 7.000% 22,492,106(7) 21,084,011 -- 1,751,525
------------- ------------
Total Investment in coinsured
FHA-Insured Certificates,
carried at fair value 35,665,725 33,540,113
------------- ------------
Total Investment in Originated Insured
Mortgages, carried at fair value 46,660,345 44,668,622
------------- ------------
Total Investment in FHA-Insured Certificates
and GNMA Mortgage-Backed Securities,
carried at fair value 120,630,851 119,161,167
------------- ------------

<PAGE>52

AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88
SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE
DECEMBER 31, 1996

Rate on Face Net Principal and
Maturity Put Mortgage Value of Carrying Value Cumulative Interest
Development Name/Location Date Date (1) (5)(6) Mortgage (3)(10)(11)(13) Loan Losses (5)(6)12)(14)
- ------------------------- -------- -------- ----------- ----------- --------------- ----------- --------------
<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% 565,859 566,892(2) -- 86,862
Kon Tiki Apts.
League City, TX 1/27 N/A 9.875% 560,872 562,683(2) -- 58,444
----------- ------------
Total Investment in FHA-
Insured Loans - Acquired
Insured Mortgages, carried
at amortized cost 1,126,731 1,129,575
----------- ------------

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

The Turn at Gresham
Gresham, OR 8/29 12/02 8.000% 5,802,413 5,802,413(2) -- 501,516
Parkside Estates
Glendale Heights, IL 2/31 12/06 8.375% 6,833,362 7,015,062(2) -- 607,634
Olmstead Park Apts.
Charlotte, NC 7/32 12/07 8.500% 5,795,975 6,018,551(2) -- 518,476
Water's Edge II
Columbus, OH 7/33 N/A 8.250% 10,731,402 10,910,047(2) -- 933,734
------------ ------------

Total Investment in FHA-
Insured Loans - Originated
Insured Mortgages, carried
at amortized cost 29,163,152 29,746,073
------------ ------------
Total Investment in FHA-Insured Loans 30,289,883 30,875,648
------------ ------------
TOTAL INVESTMENT IN INSURED MORTGAGES $150,920,734 $150,036,815
============ ============

</TABLE>

<PAGE>53

AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88

NOTES TO SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE

DECEMBER 31, 1996

(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 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
1996, 1995 and 1994, additional interest was recognized in the amount of
$84,947, $179,701 and $36,550, respectively. These amounts are included in
mortgage investment income on the accompanying statements of operations.

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

(7) 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.

(8) 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.

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

(10) A reconciliation of the carrying value of the Partnership's investment in
Insured Mortgages, for the years ended December 31, 1996 and 1995, is as
follows:

<PAGE>54

AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88

NOTES TO SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE

DECEMBER 31, 1996

1996 1995
------------ ------------
<S> <C> <C>
Beginning balance $154,669,316 $140,906,391

Investment in Acquired Insured
Mortgages and advances on
construction loans, including
acquisition costs 9,416,014 7,687,752

Principal receipts on mortgages (1,037,314) (929,409)

Proceeds from mortgages assigned
or sold (8,308,830)(a) (3,007,796)(b)

Net (losses) gains on mortgage
dispositions (377,900) 143,107(b)

Coinsurance claims due from HUD (3,161,747) --

Net unrealized (losses) gains on
investment in FHA-Insured
Certificates and GNMA Mortgage-
Backed Securities (1,162,724) 9,869,271
------------ ------------
Ending balance $150,036,815 $154,669,316
============ ============

(a) Excludes proceeds received in connection with the
settlement of the HUD coinsurance claim related to Hazeltine
Shores.

(b) 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>

(11) 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.

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

(13) As of December 31, 1996 and 1995, the tax basis of the
Insured Mortgages, including AHFS, was approximately
$153 million and $156 million, respectively.

(14) Annual principal and interest payments for mortgages
acquired during 1996 are annualized.<PAGE>

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED
FROM THE ANNUAL REPORT ONF FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1996 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-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 1,918
<SECURITIES> 119,161
<RECEIVABLES> 38,475
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 159,554
<CURRENT-LIABILITIES> 2,910
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 156,644
<TOTAL-LIABILITY-AND-EQUITY> 159,554
<SALES> 0
<TOTAL-REVENUES> 12,465
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,794
<LOSS-PROVISION> 378
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 10,293
<INCOME-TAX> 0
<INCOME-CONTINUING> 10,293
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,293
<EPS-PRIMARY> 1.11
<EPS-DILUTED> 0

</TABLE>