<PAGE>1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended March 31, 1997
------------------
Commission file number 1-12724
-----------------
AMERICAN INSURED MORTGAGE INVESTORS - L.P.- SERIES 88
-----------------------------------------------------------------
(Exact name of registrant as specified in charter)
Delaware 13-3398206
------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
11200 Rockville Pike, Rockville, Maryland 20852
- ----------------------------------------- -----------------
(Address of principal executive offices) (Zip Code)
(301) 816-2300
----------------------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
---- ----
As of May 12, 1997, 8,802,091 depositary units of limited partnership
interest were outstanding.
<PAGE>2
AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88
INDEX TO FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1997
Page
----
PART I. Financial Information
Item 1. Financial Statements
Balance Sheets - March 31, 1997 (unaudited)
and December 31, 1996 . . . . . . . . . . . 3
Statements of Operations - for the three
months ended March 31, 1997 and
1996 (unaudited) . . . . . . . . . . . . . 5
Statement of Changes in Partners' Equity -
for the three months ended March 31,
1997 (unaudited) . . . . . . . . . . . . . 6
Statements of Cash Flows - for the three
months ended March 31, 1997 and
1996 (unaudited) . . . . . . . . . . . . . 7
Notes to Financial Statements (unaudited) . . 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results
of Operations . . . . . . . . . . . . . . . 16
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K . . . . . . 18
Signature . . . . . . . . . . . . . . . . . . . . . . . 19
<PAGE>3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88
BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
------------- ------------
(Unaudited)
ASSETS
<S> <C> <C>
Investment in FHA-Insured Certificates
and GNMA Mortgage-Backed Securities,
at fair value:
Acquired insured mortgages $ 73,088,201 $ 74,492,545
Originated insured mortgages 43,668,066 44,668,622
------------- -------------
116,756,267 119,161,167
Investment in FHA-Insured Loans,
at amortized cost, net of unamortized
discount and premium:
Originated insured mortgages 29,706,834 29,746,073
Acquired insured mortgages 1,121,130 1,129,575
------------- -------------
30,827,964 30,875,648
Due from HUD 663,360 3,221,611
Cash and cash equivalents 4,518,568 1,918,341
Investment in affiliate 1,177,774 1,177,774
Notes receivable from affiliates and due
from affiliates 833,583 797,687
Receivables and other assets 2,509,325 2,402,130
------------- -------------
Total assets $ 157,286,841 $ 159,554,358
============= =============
<PAGE>4
LIABILITIES AND PARTNERS' EQUITY
Distributions payable $ 5,460,814 $ 2,776,685
Accounts payable and accrued expenses 120,214 133,484
------------ -------------
Total liabilities 5,581,028 2,910,169
------------ -------------
Commitments and contingencies
Partners' equity:
Limited partners' equity 155,753,154 158,381,944
General partner's deficit (1,112,880) (977,432)
Less: Repurchased Limited Partnership
Units - 50,000 Units (618,750) (618,750)
Net unrealized gains (losses) on investment
in FHA-Insured Certificates and GNMA
Mortgage-Backed Securities (2,315,711) (141,573)
------------ -------------
Total partners' equity 151,705,813 156,644,189
------------ -------------
Total liabilities and
partners' equity $157,286,841 $159,554,358
============ ============
The accompanying notes are an integral part
of these financial statements.
</TABLE>
<PAGE>5
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the three months ended
March 31,
1997 1996
------------ ------------
<S> <C> <C>
Income:
Mortgage investment income $ 3,059,346 $ 3,104,487
Interest and other income 63,080 95,128
------------ ------------
3,122,426 3,199,615
------------ ------------
Expenses:
Asset management fee to
related parties 372,870 376,587
General and administrative 52,980 58,938
------------ ------------
425,850 435,525
------------ ------------
Earnings before gains on
mortgage dispositions 2,696,576 2,764,090
Gain on mortgage disposition -- 628
------------ ------------
Net earnings $ 2,696,576 $ 2,764,718
============ ============
Net earnings allocated to:
Limited partners - 95.1% $ 2,564,444 $ 2,629,247
General partner - 4.9% 132,132 135,471
------------ ------------
$ 2,696,576 $ 2,764,718
============ ============
Net earnings per Limited Partnership Unit $ 0.29 $ 0.30
============ ============
The accompanying notes are an integral part
of these financial statements.
</TABLE>
<PAGE>6
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88
STATEMENT OF CHANGES IN PARTNERS' EQUITY
For the three months ended March 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Unrealized Unrealized
Gains on Losses on
Investment Investment
in FHA-Insured in FHA-Insured
Repurchased Certificates Certificates
Limited and GNMA and GNMA Total
General Limited Partnership Mortgage-Backed Mortgage-Backed Partners'
Partner Partners Units Securities Securities Equity
------------ ------------- ----------- --------------- ---------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1996 $ (977,432) $ 158,381,944 $ (618,750) $ 2,099,266 $ (2,240,839) $ 156,644,189
Net earnings 132,132 2,564,444 -- -- -- 2,696,576
Distributions paid or accrued
of $.59 per Unit,
including return of capital
of $.30 per Unit (267,580) (5,193,234) -- -- -- (5,460,814)
Adjustment to net unrealized
gains (losses) on investment in
FHA-Insured Certificates and
GNMA Mortgage-Backed
Securities -- -- -- (568,133) (1,606,005) (2,174,138)
------------ ------------- ----------- -------------- ------------ ------------
Balance, March 31, 1997 $ (1,112,880) $ 155,753,154 $ (618,750) $ 1,531,133 $ (3,846,844) $151,705,813
============ ============= =========== ============== ============ ============
Limited Partnership Units
outstanding - March 31,
1997 8,802,091
=============
The accompanying notes are an integral part
of these financial statements.
</TABLE>
<PAGE>7
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the three months
ended March 31,
1997 1996
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 2,696,576 $ 2,764,718
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Gain on mortgage dispositions -- (628)
Payments made and treated as additions to Certificates held for
disposition and Due from HUD 2,558,251 (12,632)
Changes in assets and liabilities:
Increase in receivables and other assets (107,195) (87,298)
Decrease in accounts payable and accrued
expenses (13,270) (39,840)
Increase in investment in affiliate and
notes receivable and due from affiliates (35,896) (35,908)
------------ ------------
Net cash provided by operating activities 5,098,466 2,588,412
------------ ------------
Cash flows from investing activities:
Proceeds from dispositions of insured mortgages -- 691,675
Receipt of principal from scheduled payments 278,446 247,763
------------ ------------
Net cash provided by investing activities 278,446 939,438
------------ ------------
Cash flows from financing activities:
Distributions paid to partners (2,776,685) (2,961,797)
------------ ------------
Net cash used in financing activities (2,776,685) (2,961,797)
------------ ------------
Net increase in cash and cash equivalents 2,600,227 566,053
Cash and cash equivalents, beginning of period 1,918,341 2,881,537
------------ ------------
Cash and cash equivalents, end of period $ 4,518,568 $ 3,447,590
The accompanying notes are an integral part
of these financial statements.
</TABLE>
<PAGE>8
AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. ORGANIZATION
American Insured Mortgage Investors L.P. - Series 88 (the Partnership) was
formed under the Uniform Limited Partnership Act of the state of Delaware on
February 13, 1987. The Partnership's reinvestment period expired on December
31, 1996 and the Partnership will terminate on December 31, 2021, unless
previously terminated under the provisions of the Partnership Agreement.
Effective September 6, 1991, CRIIMI, Inc. (the General Partner) succeeded
the former general partners to become the sole general partner of the
Partnership. CRIIMI, Inc. is a wholly owned subsidiary of CRIIMI MAE Inc.
(CRIIMI MAE).
The Partnership's investment in mortgages consists of participation
certificates evidencing a 100% undivided beneficial interest in government
insured multifamily mortgages issued or sold pursuant to Federal Housing
Administration (FHA) programs (FHA-Insured Certificates), mortgage-backed
securities guaranteed by the Government National Mortgage Association (GNMA)
(GNMA Mortgage-Backed Securities) and FHA-insured mortgage loans (FHA-Insured
Loans) and together with FHA-Insured Certificates and GNMA Mortgage-Backed
Securities, referred to herein as Insured Mortgages. The mortgages underlying
the FHA-Insured Certificates, GNMA Mortgage-Backed Securities and FHA-Insured
Loans, insured in whole or in part by the federal government, are non-recourse
first liens on multifamily residential developments or retirement homes.
2. BASIS OF PRESENTATION
In the opinion of the General Partner, the accompanying unaudited financial
statements contain all adjustments of a normal recurring nature necessary to
present fairly the financial position of the Partnership as of March 31, 1997
and December 31, 1996 and the results of its operations and its cash flows for
the three months ended March 31, 1997 and 1996.
These unaudited financial statements have been prepared pursuant to the
rules and regulations of the Securities and Exchange Commission. Certain
information and note disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted. While the General Partner believes that the disclosures
presented are adequate to make the information not misleading, it is suggested
that these financial statements be read in conjunction with the financial
statements and the notes to the financial statements included in the
Partnership's Annual Report filed on Form 10-K for the year ended December 31,
1996.
New Accounting Standards
------------------------
In February 1997, FASB issued SFAS No. 128 "Earnings per Share" ("FAS
128"). FAS 128 changes the requirements for calculation and disclosure of
earnings per share. This statement eliminates the calculation of primary
earnings per share and requires the disclosure of basic earnings per share
and diluted earnings per share. There will be no impact to the earnings
per Unit of limited partnership interest.
During 1997 FASB issued SFAS No. 129 "Disclosure of Information about
Capital Structure" ("FAS 129"). FAS 129 continues the existing
requirements to disclose the pertinent rights and privileges of all
securities other than ordinary common stock but expands the number of
<PAGE>9
AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
2. BASIS OF PRESENTATION - Continued
companies subject to portions of its requirements. The Partnership does
not anticipate an impact to its current disclosures.
3. INVESTMENT IN FHA-INSURED CERTIFICATES AND GNMA MORTGAGE-
BACKED SECURITIES
A. Fully Insured Mortgage Investments
----------------------------------
Listed below is the Partnership's aggregate investment in Fully
Insured Acquired Insured Mortgages:
<TABLE><CAPTION> March 31, December 31,
1997 1996
------------ ------------
<S> <C> <C>
Number of:
GNMA Mortgage-Backed Securities 22 22
FHA-Insured Certificates 5 5
Amortized Cost $ 73,566,116 $ 73,722,912
Face Value 73,812,234 73,970,506
Fair Value 73,088,201 74,492,545
</TABLE>
<PAGE>10
AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
3. INVESTMENT IN FHA-INSURED CERTIFICATES AND GNMA MORTGAGE-
BACKED SECURITIES - Continued
Listed below is the Partnership's aggregate investment in fully
insured Originated Insured Mortgages:
<TABLE><CAPTION> March 31, December 31,
1997 1996
------------ ------------
<S> <C> <C>
Number of Mortgages 1 1
Amortized Cost $ 11,341,649 $ 11,356,150
Face Value 10,981,644 10,994,620
Fair Value 10,876,138 11,128,509
</TABLE>
As of May 1, 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 March 31, 1997, the Partnership had received
approximately $10.2 million from the assignment including partial repayment
of accrued interest. The remaining balance of approximately $1.5 million,
is included in Due from HUD and Receivables and other assets. HUD has
disallowed the remaining $1.5 million balance 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.
B. Coinsured FHA-Insured Certificates
----------------------------------
As of March 31, 1997 and December 31, 1996, the Partnership held
investments in three FHA-Insured Certificates secured by coinsured
mortgages. One of these coinsured mortgage investments, the mortgage on
St. Charles Place - Phase II, is coinsured by The Patrician Mortgage
Company (Patrician), an unaffiliated third party coinsurance lender under
the HUD coinsurance program. As of March 31, 1997 and December 31, 1996,
the remaining two FHA-Insured Certificates are coinsured by Integrated
Funding, Inc. (IFI), an affiliate of the Partnership.
1. Coinsured by third party
------------------------
As of March 31, 1997, the Originated Coinsured Mortgage which is
coinsured by Patrician, St. Charles Place-Phase II, was delinquent
with respect to principal and interest. The following is a discussion
of actual and potential performance problems with respect to this
mortgage investment.
<PAGE>11
AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
3. INVESTMENT IN FHA-INSURED CERTIFICATES AND GNMA MORTGAGE-
BACKED SECURITIES - Continued
<TABLE><CAPTION>
March 31, 1997 December 31, 1996
--------------------------------------------- ------------------------------------------
Amortized Face Fair Amortized Face Fair
Cost Value Value Cost Value Value
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
St. Charles Place -
Phase II(1) $ 3,725,981 $ 3,725,980 $ 3,466,726 $ 3,730,991 $ 3,730,991 $ 3,527,521
(1) 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, an affiliate of the Partnership. As of May 1, 1997,
the mortgagor has made payments of principal and interest due on the mortgage through October 1995 to the Partnership.
Patrician is litigating the case in bankruptcy court while pursuing negotiations on a modification agreement with the borrower.
</TABLE>
The General Partner intends to continue to oversee the Partnership's
interest in this mortgage investment to ensure that Patrician meets
its coinsurance obligations. The General Partner's assessment of the
realizability of the carrying value of the St. Charles Place-Phase II
mortgage is based on the most recent information available and to the
extent these conditions change or additional information becomes
available, the General Partner's assessment may change. However, the
General Partner does not believe that there would be a material
adverse impact on the Partnership's financial condition or its results
of operations should Patrician be unable to comply with its full
coinsurance obligation.
2. Coinsured by affiliate
----------------------
As of March 31, 1997 and December 31, 1996, the Partnership held
investments in two FHA-Insured Certificates secured by coinsured
mortgages, where the coinsurance lender is Integrated Funding Inc.
(IFI), an affiliate of the Partnership. No loan losses were
recognized on these coinsured mortgages during the three months ended
March 31, 1997 and 1996.
As of May 1, 1997, these two IFI coinsured mortgages, as shown in the
table below, were current with respect to the payment of principal and
interest.
<PAGE>12
AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
3. INVESTMENT IN FHA-INSURED CERTIFICATES AND GNMA MORTGAGE-
BACKED SECURITIES - Continued
<TABLE><CAPTION>
March 31, 1997 December 31, 1996
--------------------------------------------- ------------------------------------------
Amortized Face Fair Amortized Face Fair
Cost Value Value Cost Value Value
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
The Breakers at
Golf Mill $ 22,447,578 $ 22,447,578 $ 20,553,194 $ 22,492,106 $ 22,492,106 $ 21,084,011
Summerwind Apts.-
Phase II 7,990,656 9,427,030 8,772,008 8,000,581 9,442,628 8,928,581
------------ ------------ ------------ ------------ ------------ -------------
$ 30,438,234 $ 31,874,608 $ 29,325,202 $ 30,492,687 $ 31,934,734 $ 30,012,592
============ ============ ============ ============ ============ =============
</TABLE>
4. INVESTMENT IN FHA-INSURED LOANS
Listed below is the Partnership's aggregate investment in fully insured
Originated Insured Mortgages as of March 31, 1997 and December 31, 1996:
<TABLE>
<CAPTION> March 31, December 31,
1997 1996
------------ ------------
<S> <C> <C>
Number of Mortgages 4 4
Amortized Cost $ 29,706,834 $ 29,746,073
Face Value 29,126,181 29,163,152
Fair Value 29,171,737 29,712,245
</TABLE>
<PAGE>13
AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
4. INVESTMENT IN FHA-INSURED LOANS - Continued
Listed below is the Partnership's aggregate investment in fully
insured Acquired Insured Mortgages as of March 31, 1997 and December 31,
1996:
<TABLE><CAPTION> March 31, December 31,
1997 1996
------------ ------------
<S> <C> <C>
Number of Mortgages 2 2
Amortized Cost $ 1,121,129 $ 1,129,575
Face Value 1,118,327 1,126,731
Fair Value 1,132,363 1,173,057
</TABLE>
As of May 1, 1997, all of the Partnership's FHA-Insured Loans were current
with respect to the payment of principal and interest.
In addition to base interest payments from Fully Insured Originated Insured
Mortgages, the Partnership is entitled to additional interest based on a
percentage of the net cash flow from the underlying development and of the net
proceeds from the refinancing, sale or other disposition of the underlying
development (referred to as Participations). All of the FHA-Insured Loans
contain Participations. During the three months ended March 31, 1997 and 1996,
the Partnership received additional interest of $43,232 and $70,562,
respectively, from one and three of the Participations, respectively. These
amounts are included in mortgage investment income on the accompanying
statements of operations.
5. DUE FROM HUD
Due from HUD consists of amounts due to the Partnership in connection with
losses incurred on the disposition of fully insured and coinsured mortgage
investments.
As of March 31, 1997, Due from HUD includes approximately $605,000 related
to the assignment of the mortgage on Water's Edge of New Jersey, as discussed in
Note 3 and approximately $59,000 related to the disposition of Hazeltine Shores.
The disposition of an additional receivable totalling approximately $940,000
related to this assignment is reflected in Receivables and other assets on the
balance sheet. As of December 31, 1996, Due from HUD included approximately
$59,000 related to the disposition of Hazeltine Shores and approximately $3.2
million related to the assignment of Water's Edge of New Jersey.
<PAGE>14
AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
6. DISTRIBUTIONS TO UNITHOLDERS
The distributions paid or accrued to Unitholders on a per Unit basis for
the quarters ended March 31, 1997 and 1996 are as follows:
1997 1996
------- -------
Quarter ended March 31, $ 0.59(1) $0.32(2)
======= =====
(1) This amount includes approximately $0.27 per Unit return of capital from
additional proceeds received in January 1997 related to the assignment of
the mortgage on Water's Edge of New Jersey. In addition, this amount
includes $0.02 per Unit return of capital due to remaining net proceeds
from mortgage dispositions not reinvested prior to the expiration of the
reinvestment period on December 31, 1996.
(2) This amount includes approximately $0.02 per Unit representing net proceeds
from mortgage dispositions, if any, and previously undistributed accrued
interest received from delinquent mortgages.
The basis for paying distributions to Unitholders is net proceeds from
mortgage dispositions, if any, and cash flow from operations, which includes
regular interest income and principal from Insured Mortgages. Although 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.
7. TRANSACTIONS WITH RELATED PARTIES
The General Partner and certain affiliated entities, during the three
months ended March 31, 1997 and 1996, have earned or received compensation or
payments for services from the Partnership as follows:
<PAGE>15
AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
7. TRANSACTIONS WITH RELATED PARTIES - Continued
<TABLE>
<CAPTION>
COMPENSATION PAID OR ACCRUED TO RELATED PARTIES
For the three months ended
Capacity in Which March 31,
Name of Recipient Served/Item 1997 1996
- ----------------- ----------------------------- -------- --------
<S> <C> <C> <C>
CRIIMI, Inc. General Partner/Distributions $267,580 $145,128
AIM Acquisition Advisor/Asset Management Fee 372,870 376,587
Partners, L.P.(1)
CRIIMI MAE Affiliate of General Partner/
Management, Inc. Expense Reimbursement 16,875 18,874
(1) The Advisor, pursuant to the Partnership Agreement, effective October 1, 1991, is entitled to an Asset Management Fee equal to
0.95% of Total Invested Assets (as defined in the Partnership Agreement) for the three months ended March 31, 1997 and 1996,
respectively. The sub-advisor to the Partnership (the Sub-advisor) is entitled to a fee of 0.28% of Total Invested Assets. Of
the amounts paid to the Advisor, CRIIMI MAE Services Limited Partnership earned a fee equal to $109,893 and $116,610, for the
three months ended March 31, 1997 and 1996. The Sub-advisor is an affiliate of CRIIMI MAE.
</TABLE>
<PAGE>16
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Introduction
- ------------
The Partnership's Management's Discussion and Analysis of Financial
Condition and Results of Operations contains statements that may be considered
forward looking. These statements contain a number of risks and uncertainties
as discussed herein and in the Partnership's other reports filed with the
Securities and Exchange Commission that could cause actual results to differ
materially.
General
- -------
As of March 31, 1997, the Partnership had invested in 37 Insured Mortgages
with an aggregate amortized cost of approximately $150 million, a face value of
approximately $151 million and a fair value of approximately $147 million.
As of May 1, 1997, all of the fully insured FHA-Insured Certificates, GNMA
Mortgage-Backed Securities and FHA-Insured Loans were current with respect to
the payment of principal and interest except for the coinsured mortgage on St.
Charles Place - Phase II which has made payments through October 1995. As
discussed in Notes 3 and 4 to the financial statements, management does not
anticipate that the delinquency will have an adverse material impact on the
Partnership's financial statements.
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
March 31, 1997, the Partnership had received approximately $10.2 million from
the assignment including partial repayment of accrued interest. The remaining
balance of approximately $1.5 million, is included in Due from HUD and
Receivables and other assets. HUD has disallowed the remaining $1.5 million
balance 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.
Results of Operations
- ---------------------
Net earnings decreased slightly for the three months ended March 31, 1997
as compared to the corresponding period in 1996 primarily due to a decrease in
mortgage interest income, and a reduction in interest and other income, as
discussed below. Partially offsetting these decreases was a reduction in
expenses, as discussed below.
Mortgage investment income decreased slightly for the three months ended
March 31, 1997 as compared to the corresponding period in 1996. This decrease
was primarily due to a decrease in contingent interest as discussed in Note 4.
Also contributing to the decrease in mortgage investment income was the normal
amortization of the mortgage base.
Interest and other income decreased for the three months ended March 31,
1997 as compared to the corresponding period in 1996 primarily due to the
reinvestment in 1996 of proceeds from coinsurance claims related to 1995
dispositions.
General and administrative expenses decreased slightly for the three months
ended March 31, 1997 as compared to the corresponding periods in 1996.
<PAGE>17
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS - Continued
Gains on mortgage dispositions decreased slightly for the three months
ended March 31, 1997 as compared to the corresponding period in 1996. Gains or
losses on mortgage dispositions are based on the number, carrying amounts and
proceeds of mortgage investments disposed of during the period. There were no
mortgage dispositions during the three months ended March 31, 1997.
Liquidity and Capital Resources
- -------------------------------
The Partnership's operating cash receipts, derived from payments of
principal and interest on insured mortgages, plus cash receipts from interest on
short-term investments, were sufficient during the first three months of 1997 to
meet operating requirements.
The basis for paying distributions to Unitholders is net proceeds from
mortgage dispositions, if any, and cash flow from operations, which includes
regular interest income and principal from Insured Mortgages. 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. Since the Partnership is
obligated to distribute the Proceeds of Mortgage Prepayments, Sales and
Insurance on Insured Mortgages (as defined in the Partnership Agreement) to its
Unitholders, the size of the Partnership's portfolio will continue to decrease.
The magnitude of the decrease will depend upon the size of the Insured Mortgages
which are prepaid, sold or assigned for insurance proceeds as reflected in the
preceding table.
Net cash provided by operating activities increased for the three months
ended March 31, 1997 as compared to the corresponding period in 1996, primarily
due to the receipt of approximately $2.6 million related to the assignment of
the mortgage on Water's Edge of New Jersey.
Net cash provided by investing activities decreased for the three months
ended March 31, 1997 as compared to the corresponding period in 1996 primarily
due to a reduction in proceeds from mortgage dispositions to $0 for the three
months ended March 31, 1997 from approximately $700,000 for the corresponding
period in 1996.
Net cash used in financing activities decreased for the three months ended
March 31, 1997 as compared to the corresponding period in 1996 primarily due to
a reduction in distributions paid to partners. The distribution paid during the
three months ended March 31, 1996 included a special distribution of $0.02 per
Unit in addition to regular cash flow whereas the distribution paid during the
three months ended March 31, 1997 only consisted of regular cash flow.
<PAGE>18
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FROM 8-K
No reports on Form 8-K were filed with the Securities and Exchange
Commission during the quarter ended March 31, 1997.
The exhibits filed as part of this report are listed below:
Exhibit No. Description
- ------------- -----------------------
27 Financial Data Schedule
<PAGE>19
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMERICAN INSURED MORTGAGE
INVESTORS L.P. - SERIES 88
(Registrant)
By:CRIIMI, Inc.
General Partner
May 15, 1997 /s/ Cynthia O. Azzara
- ------------------ ---------------------------------
Date Cynthia O. Azzara
Principal Financial and
Accounting Officer<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM
THE QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED
MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH QUARTERLY REPORT ON FORM 10-Q.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 4,519
<SECURITIES> 116,756
<RECEIVABLES> 36,012
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 157,287
<CURRENT-LIABILITIES> 5,581
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 151,706
<TOTAL-LIABILITY-AND-EQUITY> 157,287
<SALES> 0
<TOTAL-REVENUES> 3,122
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 426
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,696
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,696
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,696
<EPS-PRIMARY> .29
<EPS-DILUTED> 0
</TABLE>
