<PAGE>1
<PAGE>
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, 1993
------------------
Commission file number 1-10359
-----------------
CRI LIQUIDATING REIT, INC.
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(Exact name of registrant as specified in charter)
Maryland 52-1647537
------------------------------------- ----------------------
(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) 468-9200
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(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
-------------------------------- -----------------------------
Common Stock New York Stock Exchange, Inc.
Securities registered pursuant to Section 12(g) of the Act:
NONE
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(Title of class)
<PAGE>
<PAGE>2
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
--- ---
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 January 7, 1994, 13,222,674 shares of common stock,
with an aggregate market value of $109,087,061, were outstanding
and held by nonaffiliates of the Registrant on such date.
DOCUMENTS INCORPORATED BY REFERENCE
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Form 10-K Parts Document
---------------- ---------
I, II and IV 1993 Annual Report to Shareholders
III 1994 Notice of Annual Meeting of
Shareholders and Proxy Statement
</PAGE>
<PAGE>
<PAGE>3<PAGE>
CRI LIQUIDATING REIT, INC.
1993 ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS
PART I
------
Page
----
Item 1. Business . . . . . . . . . . . . . . . . . . 5
Item 2. Properties . . . . . . . . . . . . . . . . . 5
Item 3. Legal Proceedings . . . . . . . . . . . . . . 6
Item 4. Submission of Matters to a Vote
of Security Holders . . . . . . . . . . . . 6
PART II
-------
Item 5. Market for the Registrant's Common Stock
and Related Stockholder Matters . . . . . . 6
Item 6. Selected Financial Data . . . . . . . . . . . 6
Item 7. Management's Discussion and Analysis
of Financial Condition and Results
of Operations . . . . . . . . . . . . . . . 6
Item 8. Financial Statements and Supplementary Data . 7
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure . . 7
PART III
--------
Item 10. Directors and Executive Officers
of the Registrant . . . . . . . . . . . . . 8
Item 11. Executive Compensation . . . . . . . . . . . 9
Item 12. Security Ownership of Certain Beneficial
Owners and Management . . . . . . . . . . . 9
Item 13. Certain Relationships and Related Transactions 9
<PAGE>
<PAGE>4
PART IV
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Page
----
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K . . . . . . . . . . . . 11
Signatures . . . . . . . . . . . . . . . . . . . . . . 15
Cross Reference Sheet . . . . . . . . . . . . . . . . . 17
Exhibit Index . . . . . . . . . . . . . . . . . . . . . 19
</PAGE>
<PAGE>
<PAGE>5
PART I
ITEM 1. BUSINESS
Development and Description of Business
---------------------------------------
Information concerning the business of CRI Liquidating REIT,
Inc. (the Liquidating Company) is contained in Part II, Item 7,
Management's Discussion and Analysis of Financial Condition and
Results of Operations, and in Notes 1 and 5 of the notes to the
financial statements of the Liquidating Company contained in Part
IV (filed in response to Item 8 hereof), which is incorporated
herein by reference.
Employees
---------
The Liquidating Company has no employees. Services are
performed for the Liquidating Company by CRI Insured Mortgage
Associates Adviser Limited Partnership (the Adviser) and agents
retained by it.
ITEM 2. PROPERTIES
The Liquidating Company does not hold title to any real
estate. The Liquidating Company indirectly holds interests in real
estate through its equity investment in three Participating
Mortgage Investments. These investments were comprised of two
components: 85% of the original investment amount was a Mortgage-
Backed Security; and 15% of the original investment amount was an
uninsured equity contribution to the limited partnership (a
Participation) which owns the underlying property. During 1993,
the Liquidating Company sold the Mortgage-Backed Securities, but
retained its Participations. The aggregate carrying value of these
Participations represents less than 1% of the Liquidating
Company's total assets as of December 31, 1993 and 1992.
Although the Liquidating Company does not own the related
real estate, the Federally Insured Mortgages and Mortgage-Backed
Securities in which the Liquidating Company has invested are first
liens, or are collateralized by first liens, on the respective
residential apartment or townhouse complexes.
<PAGE>
<PAGE>6
PART I
ITEM 3. LEGAL PROCEEDINGS
Reference is made to Note 10 of the notes to the financial
statements on page 81 of the 1993 Annual Report to Shareholders,
which is incorporated herein by reference.
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 1993.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND
RELATED STOCKHOLDER MATTERS
(a), (b) and (c) The information required in these
sections is included in Selected
Financial Data on pages 21 through 24 of
the 1993 Annual Report to Shareholders,
which section is incorporated herein by
reference.
ITEM 6. SELECTED FINANCIAL DATA
Reference is made to Selected Financial Data on pages 21
through 24 of the 1993 Annual Report to Shareholders, which
section is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Reference is made to Management's Discussion and Analysis of
Financial Condition and Results of Operations on pages 25 through
39 of the 1993 Annual Report to Shareholders, which section is
incorporated herein by reference.
<PAGE>
<PAGE>7
PART II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Reference is made to pages 40 through 47 of the 1993 Annual
Report to Shareholders for the financial statements of the
Liquidating Company, which are incorporated herein by reference.
See also Item 14 of this report for information concerning
financial statements and financial statement schedules.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
<PAGE>
<PAGE>8
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(a), (b), (c) and (e)
The information required by Item 10 (a), (b), (c) and (e)
with regard to directors and executive officers of the registrant
is incorporated herein by reference to the Liquidating Company's
1994 Notice of Annual Meeting of Shareholders and Proxy Statement
to be filed with the Commission no later than April 30, 1994.
(d) There is no family relationship between any of the
foregoing directors and executive officers.
(f) Involvement in certain legal proceedings.
None.
(g) Promoters and control persons.
Not applicable.
<PAGE>
<PAGE>9
PART III
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 11 is incorporated herein
by reference to the Liquidating Company's 1994 Notice of Annual
Meeting of Shareholders and Proxy Statement and Note 3 of the
notes to the financial statements, included in the 1993 Annual
Report to Shareholders.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The information required by Item 12 is incorporated herein
by reference to the Liquidating Company's 1994 Notice of Annual
Meeting of Shareholders and Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(a) Transactions with management and others.
The Liquidating Company has 5 directors, two of whom are
also executive officers. The Liquidating Company's 1994
Notice of Annual Meeting of Shareholders and Proxy
Statement and Note 3 of the notes to the financial
statements, included in the 1993 Annual Report to
Shareholders, which contain a discussion of the amounts,
fees and other compensation paid or accrued by the
Liquidating Company to the directors and officers and
their affiliates, are incorporated herein by reference.
(b) Certain business relationships.
The Liquidating Company has no business relationship
with entities of which the general and limited partners
of the Adviser to the Liquidating Company are officers,
directors or equity owners other than as set forth in
the Liquidating Company's 1994 Notice of Annual Meeting
of Shareholders and Proxy Statement, which is
incorporated herein by reference.
<PAGE>
<PAGE>10
PART III
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS -
Continued
(c) Indebtedness of management.
None.
(d) Transactions with promoters.
Not applicable.
<PAGE>
<PAGE>11
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
REPORTS ON FORM 8-K
(a) List of documents filed as part of this report:
1 and 2. Financial Statements and Financial Statement
Schedules
The following financial statements are incorporated herein
by reference in Item 8 from the indicated pages of the 1993
Annual Report to Shareholders:
Page
Description Number(s)
----------- ---------
Balance Sheets as of December 31,
1993 and 1992 41-42
Statements of Income for the years ended
December 31, 1993, 1992 and 1991 43-44
Statements of Changes in Shareholders' Equity
for the years ended December 31, 1993, 1992
and 1991 45
Statements of Cash Flows for the years ended
December 31, 1993, 1992 and 1991 46-47
Notes to financial statements which include
the information required to be included in
Schedule XII - Mortgage Loans on Real Estate 48-81
The report of the Liquidating Company's independent
accountants with respect to the above listed financial
statements appears on page 40 of the 1993 Annual Report to
Shareholders.
All other financial statements and schedules have been
omitted since the required information is included in the
financial statements or the notes thereto, or is not applica-
ble or required.
<PAGE>
<PAGE>12
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
REPORTS ON FORM 8-K - Continued
(a) 3. Exhibits (listed according to the number assigned
in the table in Item 601 of Regulation S-K)
Exhibit No. 3 - Articles of incorporation and
bylaws.
d. Articles of Incorporation of CRI Liquidating
Maryland REIT, Inc. (Incorporated by reference
from Exhibit 3(d) to the Quarterly Report on
Form 10-Q for the quarter ended June 30,
1993).
e. Bylaws of CRI Liquidating Maryland REIT, Inc.
(Incorporated by reference from Exhibit 3(e)
to the Quarterly Report on Form 10-Q for the
quarter ended June 30, 1993).
<PAGE>
<PAGE>13
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
REPORTS ON FORM 8-K - Continued
f. Agreement and Articles of Merger between CRI
Liquidating Maryland REIT, Inc. and CRI
Liquidating REIT, Inc. as filed with the
Office of the Secretary of the State of
Delaware. (Incorporated by reference from
Exhibit 3(f) to the Quarterly Report on Form
10-Q for the quarter ended June 30, 1993).
g. Agreement and Articles of Merger between CRI
Liquidating Maryland REIT, Inc. and CRI
Liquidating REIT, Inc. as filed with the State
Department of Assessment and Taxation for the
State of Maryland. (Incorporated by reference
from Exhibit 3(g) to the Quarterly Report on
Form 10-Q for the quarter ended June 30,
1993).
Exhibit No. 10 - Material contracts.
a. Revised Form of Advisory Agreement.
(Incorporated by reference from Exhibit No.
10.2 to the Registration Statement).
b. Registration Rights Agreement, dated November
27, 1989 between the Registrant and CRI
Insured Mortgage Association, Inc.
(Incorporated by reference from Exhibit 10(b)
to the Annual Report on Form 10-K for 1989).
<PAGE>
<PAGE>14
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
REPORTS ON FORM 8-K - Continued
Exhibit No. 13 - Annual Report to security holders,
Form 10-Q or Quarterly Report to security holders.
a. 1993 Annual Report to Shareholders.
Exhibit No. 21 - Other documents or statements to
security holders.
a. 1994 Notice of Annual Meeting of Shareholders
and Proxy Statement to be filed with the
Commission no later than April 30, 1994.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the fourth
quarter of 1993.
(c) Exhibits
The list of Exhibits required by Item 601 of
Regulation S-K is included in Item (a)(3) above.
(d) Financial Statement Schedules
See Item (a) 1 and 2 above.
<PAGE>
<PAGE>15
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, Registrant has duly caused
this Report to be signed on its behalf by the undersigned,
thereunto duly authorized.
CRI LIQUIDATING REIT, INC.
January 28, 1994 /s/William B. Dockser
----------------------- -----------------------
DATE William B. Dockser
Chairman of the Board
<PAGE>
<PAGE>16
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities and on
the dates indicated:
January 28, 1994 /s/H. William Willoughby
--------------------------- -------------------------
DATE H. William Willoughby
Director, President,
Secretary and Chief
Financial Officer
January 28, 1994 /s/Jay R. Cohen
--------------------------- -------------------------
DATE Jay R. Cohen
Executive Vice President
and Treasurer
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DATE Garrett G. Carlson
Director
January 25, 1994 /s/G. Richard Dunnells
--------------------------- -------------------------
DATE G. Richard Dunnells
Director
--------------------------- -------------------------
DATE Robert F. Tardio
Director
<PAGE>
<PAGE>17
CROSS REFERENCE SHEET
The item numbers and captions in Parts II, III and IV hereof
and the page and/or pages in the referenced materials where the
corresponding information appears are as follows:
<TABLE><CAPTION>
Item Reference Materials Page
---- ------------------- ------------
<S> <C> <C>
3. Legal Proceedings 1993 Annual Report 81
5. Market for the Registrant's 1993 Annual Report 21 through 24
Common Stock and Related
Stockholder Matters
6. Selected Financial Data 1993 Annual Report 21 through 24
7. Management's Discussion and 1993 Annual Report 25 through 39
Analysis of Financial
Condition and Results of
Operations
8. Financial Statements, 1993 Annual Report 40 through 47
including Auditors' Report
and Supplementary Data
10. Directors and Executive 1994 Notice of Annual
Officers of the Registrant Meeting of Shareholders
and Proxy Statement
11. Executive Compensation 1993 Annual Report and 57 through 63
1994 Notice of Annual
Meeting of Shareholders
and Proxy Statement
12. Security Ownership of 1994 Notice of Annual
Certain Beneficial Owners Meeting of Shareholders
and Management and Proxy Statement
13. Certain Relationships and 1993 Annual Report and 57 through 63
Related Transactions 1994 Notice of Annual
Meeting of Shareholders
and Proxy Statement
</TABLE>
<PAGE>
<PAGE>18
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
Item Reference Materials Page
---- ------------------- ------------
<S> <C> <C>
14. Exhibits, Financial State- 1993 Annual Report 40 through 81
ment Schedules, and Reports
on Form 8-K
</TABLE>
<PAGE>
<PAGE>19
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Page
------- -------------
<S> <C>
(13) 1993 Annual Report to Shareholders 20 through 88
(21) 1994 Notice of Annual Meeting of
Shareholders and Proxy Statement
to be filed with the Commission
no later than April 30, 1994
</TABLE>
<PAGE>
<PAGE>20
CRI LIQUIDATING REIT, INC.
ANNUAL REPORT TO SHAREHOLDERS
<PAGE>
<PAGE>21 CRI LIQUIDATING REIT, INC.
Selected Financial Data
<TABLE>
<CAPTION>
For the years ended December 31,
1993 1992 1991 1990 1989(a)
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
TAX BASIS ACCOUNTING
Tax basis income $ 35,517,491 $ 36,104,737 $ 42,135,788 $ 42,817,534 $ 41,405,787
============ ============ ============ ============ ============
Composition of dividends per
share for income tax purposes:
Ordinary income $ .81 $ .86 $ .97 $ 1.41 $ 1.36
Non-taxable dividend 1.61 1.21 1.76 1.11 .25
Long-term capital gains .36 .33 .42 -- --
------------ ------------ ------------ ------------ ------------
$ 2.78 $ 2.40 $ 3.15 $ 2.52 $ 1.61
============ ============ ============ ============ ============
ACCOUNTING UNDER GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES
Mortgage investment income $ 21,663,403 $ 24,531,636 $ 29,613,222 $ 35,414,176 $ 39,529,148
Other income 2,947,933 2,731,623 1,907,279 1,192,917 2,008,555
Operating expenses (2,822,703) (2,852,565) (3,242,595) (3,341,445) (3,890,162)
Interest expense (2,242,347) (966,679) -- -- --
Non-recurring Merger costs -- -- -- -- (7,754,509)
Loss on investment in
limited partnership -- (731,951) -- -- --
Net gains from mortgage
dispositions 8,089,840 6,097,102 4,481,534 3,853,503 2,957,598
------------ ------------ ------------ ------------ ------------
Net income $ 27,636,126 $ 28,809,166 $ 32,759,440 $ 37,119,151 $ 32,850,630
============ ============ ============ ============ ============
Net income per weighted
average share outstanding $ .91 $ .95 $ 1.08 $ 1.22 $ 1.08
============ ============ ============ ============ ============
Dividends per weighted average
share outstanding $ 2.78 $ 2.40 $ 3.15 $ 2.52 $ 1.61
============ ============ ============ ============ ============
<PAGE>
<PAGE>22
CRI LIQUIDATING REIT, INC.
Selected Financial Data - Continued
</TABLE>
<TABLE>
<CAPTION>
For the years ended December 31,
1993 1992 1991 1990 1989(a)
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Composition of dividends per share
for financial statement purposes:
Net income $ .91 $ .95 $ 1.08 $ 1.22 $ 1.08
Return of capital 1.87 1.45 2.07 1.30 .53
------------ ------------ ------------ ------------ ------------
$ 2.78 $ 2.40 $ 3.15 $ 2.52 $ 1.61
============ ============ ============ ============ ============
Investment in mortgages $233,514,233 $231,808,424 $251,985,901 $351,781,402 $382,779,740
============ ============ ============ ============ ============
Mortgages held for disposition $ 9,581,409 $ 15,463,528 $ 36,094,540 $ -- $ --
============ ============ ============ ============ ============
Total assets $248,927,134 $254,233,958 $298,940,530 $361,712,226 $401,936,108
============ ============ ============ ============ ============
Shareholders' equity $248,497,177 $254,065,662 $298,272,916 $361,355,062 $400,638,315
============ ============ ============ ============ ============
</TABLE>
The selected statements of income data presented above for
the years ended December 31, 1993, 1992 and 1991, and the balance
sheet data as of December 31, 1993 and 1992, are derived from and
are qualified by reference to the Liquidating Company's financial
statements which have been included elsewhere in this Annual
Report to Shareholders. The statements of income data for the
years ended December 31, 1990 and 1989 and the balance sheet data
as of December 31, 1991, 1990 and 1989 are derived from audited
financial statements not included in this Annual Report to
Shareholders. This data should be read in conjunction with the
financial statements and the notes thereto.
<PAGE>
<PAGE>23
CRI LIQUIDATING REIT, INC.
Selected Financial Data - Continued
(a) All financial information for the periods prior to the Merger
on November 27, 1989 has been presented in a manner similar
to a pooling of interests, which effectively combines the
historical results of the CRIIMI Funds. The dividend and net
income per share amounts for the year ended December 31, 1989
have been restated based upon the weighted average shares
outstanding as if the Merger had been consummated on January
1, 1989.
Market Data
-----------
On November 28, 1989, the Liquidating Company was listed on
the New York Stock Exchange (Symbol CFR). Prior to that date,
there was no public market for the Liquidating Company's shares.
As of December 31, 1993 and 1992, there were 30,422,711 shares
held by approximately 10,000 and 9,500 investors, respectively.
The following table sets forth the high and low closing sales
prices and the dividends per share for the Liquidating Company
shares during the periods indicated:
1993
----------------------------------
Sales Price Dividends
Quarter Ended High Low per Share
------------- -------- ------- ----------
March 31, $ 10 $ 9 1/8 $ 0.62
June 30, 10 1/4 9 0.97
September 30, 9 5/8 9 0.21
December 31, 9 3/8 7 7/8 0.98
--------
$ 2.78
========
<PAGE>
<PAGE>24
CRI LIQUIDATING REIT, INC.
Selected Financial Data - Continued
1992
-----------------------------------
Sales Price Dividends
Quarter Ended High Low per Share
------------- -------- ------- ----------
March 31, $ 12 $ 10 1/2 $ 0.60
June 30, 11 3/8 10 3/8 0.32
September 30, 11 1/2 10 3/8 0.31
December 31, 11 9 1/4 1.17
--------
$ 2.40
========
<PAGE>
<PAGE>25
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
General
CRI Liquidating REIT, Inc. (the Liquidating Company) is a
finite-life, self-liquidating real estate investment trust (REIT)
which as of December 31, 1993, owned a portfolio of 63 U.S.
government insured and guaranteed mortgage investments secured by
multifamily housing complexes located throughout the United
States. Mortgage investments in the portfolio are comprised of 61
loans insured pursuant to programs of the U.S. government through
the Federal Housing Administration (FHA) (FHA - Insured Loans) and
two securities backed by FHA-Insured Loans which have been
securitized by private issuers and guaranteed as to timely payment
of principal and interest by the Government National Mortgage
Association (GNMA and Mortgage-Backed Securities, respectively).
As discussed further below, the Liquidating Company does not
intend to acquire any additional mortgage investments, except as
may be necessary in connection with maintaining its REIT status,
and intends to liquidate its portfolio by March 31, 1997.
The Liquidating Company was created in November 1989 in
connection with the merger (the Merger) of three funds which owned
government insured multifamily mortgages (the CRIIMI Funds), all
of which were sponsored by C.R.I., Inc. (CRI), a Delaware
corporation formed in 1974. At the time of the Merger, the CRIIMI
Funds collectively owned 110 government insured multifamily
mortgages. The Merger resulted in two new REITs: (i) the
Liquidating Company, a finite-life, self-liquidating REIT, and
(ii) CRIIMI MAE Inc. (CRIIMI MAE) (formerly CRI Insured Mortgage
Association, Inc.) an infinite-life, growth-oriented REIT.
Consistent with the original objectives of the CRIIMI Funds, the
Liquidating Company intends to continue to liquidate its assets
over time and distribute the proceeds to its shareholders.
Dividends to shareholders consist of ordinary income, capital
gains and return of capital. Shareholders should expect dividends
representing ordinary income and the market price of the shares to
decrease as the Liquidating Company liquidates its assets and
distributes return of capital over time to its shareholders.
<PAGE>
<PAGE>26
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
---------------------------------------------
In the Merger, the Liquidating Company acquired the assets of
the CRIIMI Funds. Investors in the CRIIMI Funds received, at
their option, shares of common stock of either the Liquidating
Company or CRIIMI MAE. To allow those investors who chose CRIIMI
MAE shares to maintain their interest in the original assets of
the CRIIMI Funds, CRIIMI MAE received one share of common stock of
the Liquidating Company for each share of CRIIMI MAE issued in the
Merger to investors in the CRIIMI Funds. As a result, CRIIMI MAE
owned approximately 67% of the Liquidating Company's common stock
as of December 31, 1992. Following the sale of approximately 3.1
million of its shares of common stock of the Liquidating Company,
in November 1993, CRIIMI MAE reduced its ownership percentage to
approximately 57%. The Liquidating Company shares have been
trading on the New York Stock Exchange under the trading symbol
CFR since November 28, 1989.
The Liquidating Company is governed by a Board of Directors
which includes the two shareholders of CRI. The Board of
Directors has engaged CRI Insured Mortgage Associates Adviser
Limited Partnership (the Adviser) to act in the capacity of
adviser to the Liquidating Company. The Adviser's general partner
is CRI, and its limited partners include the shareholders of CRI.
The Adviser and its affiliates (1) manage the Liquidating
Company's assets with the goal of maximizing the returns to
shareholders and (2) conduct the day-to-day operations of the
Liquidating Company. The Adviser and its affiliates receive fees
and expense reimbursements in connection with the administration
and operation of the Liquidating Company. The Adviser also acts
in a similar capacity for CRIIMI MAE.
The Portfolio
-------------
The Liquidating Company's portfolio consists of government
insured multifamily mortgages. As of December 31, 1993, the
Liquidating Company held a total of 63 government insured
multifamily mortgages, 61 of which were FHA-Insured Loans and two
of which were GNMA Mortgage-Backed Securities.
<PAGE>
<PAGE>27
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
---------------------------------------------
As of December 31, 1993, the portfolio consisted of
government insured multifamily mortgages with face values ranging
from approximately $374,000 to $13.6 million with an average
balance of approximately $3.8 million. Coupon rates in the
portfolio range from 7.0% to 11.18%. Approximately 70% of the
government insured multifamily mortgages have a coupon rate of
7.5%, and the entire portfolio has a weighted average coupon rate
of approximately 7.65%. Additionally, the portfolio has a
weighted average effective interest rate of approximately 10.03%.
Maturities in the portfolio range from approximately 19 to 32
years as of December 31, 1993, with a weighted average remaining
term based on face value of approximately 27 years.
The Liquidating Company owns government insured multifamily
mortgages on properties which were acquired by the predecessor
CRIIMI Funds at a discount to face (Discount Mortgage Investments)
on the belief that based on economic, market, legal and other
factors, such Discount Mortgage Investments might be sold for
cash, converted to condominium housing or otherwise disposed of or
refinanced in a manner requiring prepayment or permitting other
profitable disposition three to twelve years after acquisition by
the predecessor CRIIMI Funds. The Liquidating Company also owns
near or at par or premium government insured multifamily mortgages
(Near Par or Premium Mortgage Investments) on properties which the
Adviser does not expect to incur a significant financial statement
loss if disposed of, refinanced or otherwise prepaid prior to
maturity. On a tax basis, based on current information, including
the current interest rate environment, the disposition of any
mortgage investment is expected to result in a gain.
Government Insurance Programs
-----------------------------
The government insured multifamily mortgages in the
Liquidating Company's portfolio include: (i) FHA-Insured Loans and
(ii) GNMA Mortgage-Backed Securities. FHA is part of the United
States Department of Housing and Urban Development (HUD), and FHA-
Insured Loans are insured pursuant to Title II of the National
Housing Act. Should an FHA-Insured Loan default, the mortgagee is
typically entitled to approximately 99% of the face value of the
mortgage. GNMA, which is also part of HUD, was federally
chartered to provide liquidity in the secondary mortgage market.
<PAGE>
<PAGE>28
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
---------------------------------------------
GNMA Mortgage-Backed Securities are guaranteed pursuant to Title
III of the National Housing Act. If an issuer of a GNMA Mortgage-
Backed Security defaults, GNMA continues to make interest and
principal payments until such mortgage is assigned to HUD. In the
event of a default of an FHA-Insured Loan underlying a GNMA
Mortgage-Backed Security, the issuer or GNMA will make timely
payments of principal and interest until such mortgage is assigned
to HUD and pay 100% of the GNMA Mortgage-Backed Security's
principal balance when such mortgage is assigned to HUD and GNMA
receives the insurance proceeds.
REIT Status
-----------
The Liquidating Company has qualified and intends to continue
to qualify as a REIT under Sections 856-860 of the Internal
Revenue Code. As a REIT, the Liquidating Company does not pay
taxes at the corporate level. Qualification for treatment as a
REIT requires the Liquidating Company to meet certain criteria,
including certain requirements regarding the nature of its
ownership, assets, income and distributions of taxable income.
Business Plan
-------------
The Liquidating Company intends to dispose of its existing
government insured mortgage investments by March 31, 1997 through
an orderly liquidation. Consequently, the Adviser to the
Liquidating Company developed a business plan which is intended to
effect the orderly liquidation of the portfolio by March 31, 1997,
which plan of liquidation was approved by the Liquidating
Company's Board of Directors. The business plan assumes that the
portfolio will be liquidated through a combination of defaults on
or prepayments of (Involuntary Dispositions) and sales of
(Voluntary Dispositions) government insured multifamily mortgages.
During the term of the business plan, the Liquidating Company
expects to generate cash flow from scheduled mortgage payments,
Involuntary Dispositions, Voluntary Dispositions and interest
earned on short-term investments. For the year ended December 31,
1993, the Liquidating Company experienced a 22% disposition rate
based on the December 31, 1992 portfolio balance. In each of the
next four calendar years, the business plan assumes a total annual
disposition rate of approximately 25% of the portfolio as of
<PAGE>
<PAGE>29
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
---------------------------------------------
December 31, 1993. This is based on a relatively equal annual
disposition of the portfolio over the remainder of the term of the
business plan. The Liquidating Company intends to make Voluntary
Dispositions, in addition to any Involuntary Dispositions that
occur, if necessary to attempt to achieve such 25% rate and to
liquidate the portfolio by March 31, 1997 in an orderly manner.
Although the Liquidating Company expects to profitably dispose of
its government insured multifamily mortgages, there can be no
assurance as to when any insured mortgage will be disposed of by
the Liquidating Company or the amount of proceeds the Liquidating
Company would receive from any such disposition. The
determination of whether and when to dispose of a particular
government insured multifamily mortgage will be made by
considering a variety of factors, including, without limitation,
the market conditions at that time. As of December 31, 1993, the
carrying value of the mortgage investments on a tax basis,
including Mortgages Held for Disposition, was approximately $173
million; the par value was approximately $236 million; and the
fair market value was approximately $243 million.
Settlement of Litigation
------------------------
On March 22, 1990, a complaint was filed on behalf of a class
comprised of certain former investors of CRI Insured Mortgage
Investments III Limited Partnership (CRIIMI III) and CRI Insured
Mortgage Investments II, Inc. (CRIIMI II) (the Plaintiffs) in the
Circuit Court for Montgomery County, Maryland against the
Liquidating Company, CRIIMI MAE, CRI Insured Mortgage Investments
Limited Partnership (CRIIMI I) and its general partner, CRIIMI II,
CRIIMI III and its general partner, CRI, and Messrs. William B.
Dockser, H. William Willoughby and Martin C. Schwartzberg (the
Defendants). On November 18, 1993, the Court entered an order
granting final approval of a settlement agreement between the
Plaintiffs and the Defendants. Under the terms of the settlement,
CRIIMI MAE will issue to class members, including certain former
investors of CRIIMI I, up to 2,500,000 warrants to purchase shares
of its common stock. In addition, the settlement includes a
payment of $1,400,000 for settlement administration costs and
Plaintiff's attorneys' fees and expenses. Insurance provided
$1,150,000 of the $1,400,000 cash payment, with the balance paid
by CRIIMI MAE.
<PAGE>
<PAGE>30
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
---------------------------------------------
Results of Operations
1993 Versus 1992
----------------
Total income decreased $2.7 million or 9.7% to $24.6 million
for 1993 from $27.3 million for 1992. This decrease was due
primarily to a reduction in mortgage investment income partially
offset by an increase in other investment income, as discussed
below.
Mortgage investment income decreased $2.9 million or 11.7% to
$21.7 million for 1993 from $24.5 million for 1992. This decrease
was principally the result of a reduction in the mortgage base
resulting from the disposition of mortgage investments during 1993
and 1992. It is not anticipated that the nature of income from
mortgage investments resulting from fixed payments of principal
and interest or the expenses related to the ordinary
administration of such mortgage investments will differ materially
in future years. However, mortgage dispositions will reduce the
recurring mortgage income in future periods.
Other investment income increased $.8 million or 36.3% to
$2.9 million for 1993 from $2.1 million for 1992. This increase
was primarily attributable to approximately $133 million in other
short-term investments acquired by the Liquidating Company during
1993, all of which were disposed of by December 31, 1993, as
compared to approximately $67 million in other short-term
investments acquired by the Liquidating Company during 1992, all
of which were disposed of by December 31, 1992.
Total expenses increased $1.3 million or 32.6% to $5.1
million for 1993 from $3.8 million for 1992. This increase was
principally due to an increase in interest expense, professional
fees and annual fees paid to the Adviser, as discussed below.
Interest expense increased $1.2 million or 132.0% to $2.2
million for 1993 from $1.0 million for 1992. This increase was
due primarily to the financing of a total of approximately $116
million in other short-term investments in February and October
1993 through November 1993 at an interest rate of approximately
3.35%, versus approximately $56 million which was financed in July
<PAGE>
<PAGE>31
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
---------------------------------------------
and August 1992 through December 1992 at an interest rate of 4.0%
and 3.45%, respectively.
Professional fees increased $.3 million or 97.1% to $.5
million for 1993 from $.2 million for 1992. This increase was
primarily attributable to an increase in legal fees incurred in
connection with the litigation described above.
Annual Fees are paid to the Adviser for managing the
Liquidating Company portfolio. These fees include a base
component equal to a percentage of average invested assets. In
addition, fees paid to the Adviser may include a performance based
component that is referred to as the deferred component. The
deferred component, which is also calculated as a percentage of
average invested assets, is computed each quarter but paid (and
expensed) only upon meeting certain cumulative performance goals.
If these goals are not met, the deferred component accumulates,
and may be paid in the future if cumulative goals are met. In
addition, certain incentive fees are paid by the Liquidating
Company on a current basis if certain performance goals are met.
Annual Fees increased approximately $20,000 or 1.6% to $1.2
million for 1993 from $1.2 million for 1992. This increase was
primarily due to the payment by the Liquidating Company, in 1993,
of the deferred component of the annual fee due to specific
performance goals being met, which included the payment of the
deferred component for the second half of 1992. Partially
offsetting the increase in annual fees for 1993 as compared to
1992 was a reduction in the mortgage base which is a component
used in determining the annual fees payable by the Liquidating
Company. The mortgage base has been decreasing as the Liquidating
Company effects its business plan to liquidate by 1997.
Gains on mortgage dispositions increased $2.0 million or
32.7% to $8.1 million in 1993 from $6.1 million in 1992. The
gains or losses on mortgage dispositions are based on the number,
carrying amounts, and the proceeds of mortgage investments
disposed of during the period. The increase in gains was
primarily due to the disposition of ten mortgages during 1993,
nine of which resulted in gains. This compared to the disposition
of three mortgages during 1992, two of which resulted in gains.
<PAGE>
<PAGE>32
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
---------------------------------------------
<PAGE>
Historical Dispositions
-----------------------
<TABLE><CAPTION>
Net Gain
Recognized for Net Gain
Financial Recognized
Type of Dispositions Statement For Tax
Year Assignment(1) Sale Prepayment Total Purposes Purposes(3)
---- ------------ ---- ---------- ----- -------------- -----------
<S> <C> <C> <C> <C> <C> <C>
1987 1 1 3 5 $ 4,149,765 $ 4,149,765
1988 3 10 1 14 20,567,386 20,567,386
1989 5 1 1 7 2,957,598 2,977,188
1990 6 0 0 6 3,853,503 8,005,092
1991 8 19 0 27 4,481,534 12,706,737
1992 3 0 0 3 6,097,102 11,202,237
1993 2 5 3 10 8,089,840 14,938,128
--- --- --- --- ----------- -----------
28(2) 36 8 72 $50,196,728 $74,546,533
=== === === === =========== ===========
(1) The Liquidating Company may elect to receive insurance benefits in the form of cash when a government insured
multifamily mortgage defaults. In this case, 90% of the face value of the mortgage is received by the
Liquidating Company within approximately 90 days of assignment and 9% of the face value of the mortgage is
received upon final processing by HUD which may not occur in the same year as assignment. If the Liquidating
Company elects to receive insurance benefits in the form of debentures, 99% of the face value of the mortgage
is received upon final processing by HUD. Gains from dispositions are recognized upon receipt of funds or
debentures and losses are recognized at the time of assignment.
(2) Seven of the 28 assignments were sales of government insured multifamily mortgages then in default and
resulted in the CRIIMI Funds or the Liquidating Company receiving face value or near face value.
(3) In connection with the Merger, the Liquidating Company recorded its investment in mortgages at the lower of
cost or fair value, which resulted in an overall net write down for tax purposes. For financial statement
purposes, carryover basis of accounting was used. Therefore, since the Merger, the net gain for tax purposes
was greater than the net gain recognized for financial statement purposes. As a REIT, dividends to the
Liquidating Company's shareholders are based on net gains recognized for tax purposes.
</TABLE></PAGE>
<PAGE>
<PAGE>33
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
---------------------------------------------
For financial statement purposes, the Liquidating Company
accounted for the Merger of the CRIIMI Funds in a manner similar
to the pooling-of-interests method as a result of the common
control existing over the Liquidating Company, the CRIIMI Funds
and CRIIMI MAE. Accordingly, there was no change in the basis
assigned to each of the mortgage investments for financial
statement purposes. However, for tax purposes, the Merger was
treated as a taxable event resulting in a new basis being assigned
to the assets. Specifically, the merger of CRIIMI I into the
Liquidating Company resulted in a taxable gain, while the merger
of CRIIMI II and CRIIMI III into the Liquidating Company resulted
in taxable losses. As a result, the tax bases of the CRIIMI I
assets were adjusted slightly upward and the tax bases of the
CRIIMI II and CRIIMI III assets were adjusted downward.
Consequently, there exists a difference in the bases of the
mortgage investments for financial statement and tax purposes.
Although one of the mortgage dispositions during 1993 resulted in
a loss for financial statement purposes, all of the dispositions
resulted in a tax basis gain totalling $14.9 million. The
mortgage disposition resulting in a loss for financial statement
purposes was the result of the prepayment of a Near Par or Premium
Mortgage Investment formerly held by CRIIMI III. Generally, the
Involuntary Disposition of Near Par or Premium Mortgage
Investments will result in a loss, for financial statement
purposes, because the carrying value of the mortgage investment,
including acquisition costs, is the same as or slightly more than
the insured amount of the mortgage investment.
1992 Versus 1991
----------------
Total income decreased $4.2 million or 13.5% to $27.3 million
in 1992 from $31.5 million in 1991 primarily due to a decrease in
mortgage investment income attributable to the reduction in the
mortgage base resulting from the mortgage dispositions noted
above.
Overall, expenses for 1992 increased from 1991 primarily due
to interest expense on the financing of other short-term
investments. Interest expense was based on the seller financing
of 99% of the purchase price of the other short-term investments
purchased in July and August 1992 and disposed of in December
<PAGE>
<PAGE>34
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
---------------------------------------------
1992. The overall increase in expenses was partially offset by a
decrease in annual fees, amortization of deferred costs and
mortgage servicing fees due to mortgage dispositions, as well as a
decrease in professional fees. The decrease in professional fees
for 1992 as compared to 1991 was primarily attributable to
increased legal fees in 1991 resulting from the litigation
described above.
Gains from mortgage dispositions of $6.1 million in 1992
increased from $5.2 million in 1991 principally due to the
disposition of one mortgage which resulted in the recognition of a
gain in 1992 of approximately $6.0 million.
During 1992, the Liquidating Company determined that one of
its investment in limited partnerships was fully impaired and as a
result recognized a loss of $.7 million.
Fair Value of Mortgage Investments
-----------------------------------
The following estimated fair values of the Liquidating
Company's mortgage investments are presented in accordance with
generally accepted accounting principles. These estimated fair
values, however, do not represent the liquidation value or the
market value of the Liquidating Company.
As of December 31, 1992, the Liquidating Company's mortgage
investments were recorded at amortized cost (excluding Mortgages
Held for Disposition which were recorded at the lower of cost or
market). In connection with the Liquidating Company's
implementation of Financial Accounting Standards No. 115
"Accounting for Certain Investments in Debt and Equity Securities"
(SFAS 115) as of December 31, 1993, the Liquidating Company's
Investment in Mortgages, including Mortgages Held for Disposition,
are recorded at fair value, as estimated below, as of December 31,
1993. The difference between the amortized cost and the fair
value of the mortgage investments represents the net unrealized
gains on the Liquidating Company's mortgage investments and is
reported as a separate component of shareholders' equity as of
December 31, 1993.
<PAGE>
<PAGE>35
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
---------------------------------------------
The fair value of the mortgage investments is based on the
average of the quoted market prices from three investment banking
institutions which trade insured mortgage loans as part of their
day-to-day activities.
As of December 31, 1993
Amortized Fair
Cost Value
------------ ------------
Investment in Mortgages:
Discount $166,913,207 $215,866,436
Near par or premium 16,983,594 17,647,797
Mortgages held for disposition 7,849,077 9,581,409
------------ ------------
$191,745,878
$243,095,642
============ ============
Liquidity
The Liquidating Company closely monitors its cash flow and
liquidity position in an effort to ensure that sufficient cash is
available for operations and debt service requirements and to
continue to qualify as a REIT. The Liquidating Company's cash
receipts, which are derived from scheduled payments of outstanding
principal of and interest on, and proceeds from the disposition
of, mortgage investments held by the Liquidating Company, plus
cash receipts from interest on temporary investments and cash
received from the Liquidating Company's investment in limited
partnerships (Participations), were sufficient for the years 1993,
1992 and 1991 to meet operating, investing, and financing cash
requirements. It is anticipated that cash receipts will be
sufficient in future years to meet similar cash requirements.
Cash flow was also sufficient to provide for the payment of
dividends to the shareholders. The Liquidating Company's dividend
on an annual basis is comprised of substantially all of its
ordinary income, capital gains and return of capital. Because the
Liquidating Company is a liquidating entity, a substantial portion
of the dividends paid to shareholders represents return of
capital. For the years 1993, 1992 and 1991, total cash dividends
were $2.78, $2.40 and $3.15 per share, respectively, of which
$1.87, $1.45 and $2.07 per share, respectively, represented return
<PAGE>
<PAGE>36
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
---------------------------------------------
of capital for financial statement purposes. For tax purposes,
the portion representing a non-taxable dividend for 1993, 1992 and
1991 was $1.61, $1.21 and $1.76, respectively. As of December 31,
1993, there were no material commitments for capital expenditures.
Although the mortgage investments yield a fixed monthly
mortgage payment once purchased, the cash dividends paid to
shareholders may vary during each year 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 dividends, (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
received from the Participations, and (4) changes in the
Liquidating Company's operating expenses. Mortgage dispositions
may increase the return to shareholders for a period, although
neither the timing nor the amount can be predicted.
Decreases in market interest rates could result in the
prepayment of certain mortgage investments. Although decreases in
interest rates could increase prepayment levels of mortgages on
single-family dwellings, the Liquidating Company's experience with
mortgages on multifamily dwellings has been that decreases in
interest rates do not necessarily result in increased levels of
prepayments primarily due to the fact that most of the Liquidating
Company's mortgage investments have coupon rates of approximately
7.5% and also due to lockouts (i.e., prepayment prohibitions),
prepayment penalties on existing financing or difficulties in
obtaining refinancing. Decreases in occupancy levels, rental rates
or value of any property underlying a mortgage investment may
result in the mortgagor being unable or unwilling to make required
payments on the mortgage and thereby defaulting. Whether by
prepayment, sale or assignment, the proceeds of a disposition of a
Discount Mortgage Investment are expected to exceed the carrying
amount of the mortgage for financial statement purposes, while the
proceeds from the disposition of a Near Par or Premium Mortgage
Investment may be slightly less than, the same as or slightly more
than, the financial statement carrying amount of the mortgage.
<PAGE>
<PAGE>37
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
---------------------------------------------
However, the proceeds of any mortgage disposition, based on
current information, including the current interest rate
environment, is expected to exceed the carrying amount of the
mortgage on a tax basis and, therefore, result in a tax gain.
Changes in interest rates will affect the proceeds received
through Voluntary Dispositions: (i) by increasing the value of the
portfolio in the event of decreases in long-term and intermediate-
term U.S. Treasury Rates (Treasury Rates) or decreasing the value
of the portfolio in the event of increases in Treasury Rates
(assuming the interest rate differential between Treasury Rates
and the yields on government insured multifamily mortgages remains
constant) and (ii) if the Adviser deems appropriate, increasing
the pace at which the Liquidating Company liquidates the portfolio
in the event of decreases in Treasury Rates or decreasing the pace
of such liquidation in the event of increases in Treasury Rates.
Borrowing Policy
----------------
Subject to customary business considerations, there is no
specific limitation on the amount of debt that the Liquidating
Company may incur. The Liquidating Company does not intend to
incur any indebtedness, except in connection with the maintenance
of its REIT status.
Other Short-Term Investments
----------------------------
On January 28, 1993, October 15, 1993 and October 28, 1993,
the Liquidating Company entered into investment and financing
agreements with Daiwa Securities America, Inc. (Daiwa). These
transactions assisted in maintaining the Liquidating Company's
REIT status. Pursuant to the terms of these agreements, the
Liquidating Company invested in GNMA mortgage-backed securities or
certificates backed by FHA-Insured project loans (collectively,
the Securities) with unpaid principal balances of approximately
$74.7 million, $40.3 million and $11.9 million, respectively, at
purchase prices of 104.615%, 106.41% and 100.8%, respectively, of
the face values, which earned interest at per annum pass-through
coupon rates of 9.1875%, 13.18% and 8.625%, respectively. In
<PAGE>
<PAGE>38
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
---------------------------------------------
addition, Daiwa provided financing for approximately 99% and 86%
of the purchase price for the transactions which occurred on
January 28, 1993 and October 15, 1993, respectively, at an
interest rate of approximately 3.35%. The related debt was non-
recourse and fully secured with the Securities which were held by
Daiwa in the Liquidating Company's name. The Liquidating Company
disposed of these Securities and repaid the related debt by the
end of 1993. These investments provided a net interest rate spread
(after borrowing costs) of approximately 4%, 3.5% and 3.5%,
respectively.
Cash Flow
---------
Net cash provided by operating activities decreased for 1993
compared to 1992 primarily as a result of a decrease in mortgage
investment income due to the reduction in the mortgage base and an
increase in interest expense on the financing of other short-term
investments, partially offset by the other investment income on
the respective securities financed. Net cash provided by
operating activities decreased in 1992 as compared to 1991
principally due to the decrease in mortgage investment income due
to the smaller mortgage base, partially offset by a decrease in
interest receivable and other assets. The decrease in interest
receivable and other assets is attributable to the receipt of
interest accrued on one mortgage which defaulted in the second
half of 1991. Although other investment income increased in 1992
as compared to 1991, it was partially offset by interest expense
on the financing of other short-term investments.
Net cash provided by investing activities increased for 1993
as compared to 1992. This increase was principally due to an
increase in proceeds from mortgage dispositions from approximately
$45 million for 1992 to approximately $56 million for 1993. In
addition, cash of approximately $6 million was received during
1993 from the sale of HUD debentures as compared to the receipt of
$2 million during 1992 from the redemption of HUD debentures.
Also contributing to the increase was the receipt of proceeds of
approximately $129 million in 1993 from the sale of other short-
term investments as compared to approximately $65 million received
in 1992, offset by the purchase of other short-term investments of
<PAGE>
<PAGE>39
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
---------------------------------------------
approximately $133 million for 1993 as compared to approximately
$67 million for 1992. Net cash provided by investing activities
decreased for 1992 as compared to 1991. This decrease was
principally due to fewer mortgage dispositions during 1992. Cash
of approximately $65 million and approximately $2 million was
received during 1992 from the sale of other short-term investments
and the redemption of HUD debentures, respectively. However, this
was offset by the purchase of other short-term investments in
1992.
Net cash used in financing activities increased for 1993
compared to 1992 due to an increase in dividends paid to
shareholders attributable to an increase in mortgage dispositions
in 1993. This increase was offset by the receipt of proceeds from
short-term debt of approximately $116 million for 1993 as compared
to $56 million for 1992. This debt was repaid during 1993 and
1992, respectively. Net cash used in financing activities
decreased for 1992 compared to 1991 due to a reduction in
dividends paid to shareholders. This reduction in dividends was
attributable to fewer mortgage dispositions in 1992. Also during
1992, the Liquidating Company financed the acquisition of other
short-term investments. This debt was repaid in December 1992.
<PAGE>
<PAGE>40
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders of
CRI Liquidating REIT, Inc.
We have audited the accompanying balance sheets of CRI
Liquidating REIT, Inc. (the Liquidating Company) as of December
31, 1993 and 1992, and the related statements of income, changes
in shareholders' equity and cash flows for the years ended
December 31, 1993, 1992 and 1991. These financial statements are
the responsibility of the Liquidating Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we plan
and perform an 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 Liquidating Company as of December 31, 1993 and 1992, and
the results of its operations and its cash flows for the years
ended December 31, 1993, 1992, and 1991, in conformity with
generally accepted accounting principles.
As explained in Note 2 to the financial statements,
effective December 31, 1993, the Liquidating Company changed its
method of accounting for its investment in mortgages.
Arthur Andersen & Co.
Washington, D.C.
January 21, 1994
</PAGE>
<PAGE>
<PAGE>41
<PAGE><TABLE>
CRI LIQUIDATING REIT, INC.
BALANCE SHEETS
ASSETS
<CAPTION>
December 31,
1993 1992
------------ ------------
<S> <C> <C>
Investment in mortgages, at fair value
Discount $215,866,436 $ --
Near par or premium 17,647,797 --
Mortgages held for disposition 9,581,409 --
------------ ------------
Total 243,095,642 --
------------ ------------
Investment in mortgages, at amortized cost,
net of unamortized discount of $49,960,459:
Discount -- $191,796,854
Near par or premium -- 17,986,686
Participating -- 22,024,884
------------ ------------
Total -- 231,808,424
Mortgages held for disposition,
at lower of cost or market -- 15,463,528
Investment in limited partnerships 436,090 953,868
Cash and cash equivalents 2,907,147 2,557,264
Receivables and other assets 2,175,453 2,789,539
Deferred costs, principally paid to related parties, net of
accumulated amortization of $1,635,320 and $1,803,883,
respectively 312,802 661,335
------------ ------------
Total assets $248,927,134 $254,233,958
============ ============
The accompanying notes are an integral part
of these financial statements.
</TABLE></PAGE>
<PAGE>
<PAGE>42
<PAGE><TABLE>
CRI LIQUIDATING REIT, INC.
BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
<CAPTION>
December 31,
1993 1992
------------ ------------
<S> <C> <C>
Liabilities:
Accounts payable and accrued expenses $ 429,957 $ 168,296
------------ ------------
Commitments and contingencies
Shareholders' equity:
Common stock 304,227 304,227
Net unrealized gains on investment in mortgages 51,349,764 --
Additional paid-in capital 196,843,186 253,761,435
------------ ------------
Total shareholders' equity 248,497,177 254,065,662
------------ ------------
Total liabilities and
shareholders' equity $248,927,134 $254,233,958
============ ============
The accompanying notes are an integral part
of these financial statements.
</TABLE></PAGE>
<PAGE>
<PAGE>43
<PAGE><TABLE>
CRI LIQUIDATING REIT, INC.
STATEMENTS OF INCOME
<CAPTION>
For the years ended December 31,
1993 1992 1991
------------ ----------- -----------
<S> <C> <C> <C>
Income:
Mortgage investment income:
Stated interest $20,363,560 $23,267,100 $28,256,992
Discount amortization 1,306,553 1,269,828 1,367,765
Premium amortization (6,710) (5,292) (11,535)
------------ ----------- -----------
21,663,403 24,531,636 29,613,222
Other investment income 2,904,328 2,130,771 1,283,403
Income from investment in limited partnerships 43,605 600,852 623,876
------------ ----------- -----------
24,611,336 27,263,259 31,520,501
------------ ----------- -----------
Expenses:
Interest expense 2,242,347 966,679 --
Annual fee to related party 1,234,291 1,214,409 1,532,096
General and administrative 657,110 879,106 807,871
Professional fees 488,244 247,775 302,845
Amortization of deferred costs 251,203 305,057 353,464
Mortgage servicing fees 191,855 206,218 246,319
------------ ----------- -----------
5,065,050 3,819,244 3,242,595
------------ ----------- -----------
<PAGE>
<PAGE>44
CRI LIQUIDATING REIT, INC.
STATEMENTS OF INCOME - Continued
For the years ended December 31,
1993 1992 1991
------------ ----------- -----------
<S> <C> <C> <C>
Income before mortgage dispositions and loss
on investment in limited partnership 19,546,286 23,444,015 28,277,906
Mortgage dispositions:
Gains 8,110,395 6,110,209 5,230,542
Losses (20,555)
(13,107) (749,008)
Loss on investment in limited partnership -- (731,951) --
------------ ----------- -----------
Net income $ 27,636,126 $28,809,166 $32,759,440
============ =========== ===========
Net income per share $ .91 $ .95 $ 1.08
============ =========== ===========
Weighted average shares outstanding 30,422,711 30,422,711 30,425,901
============ =========== ===========
The accompanying notes are an integral part
of these financial statements.
</TABLE></PAGE>
<PAGE>
<PAGE>45
<PAGE><TABLE>
CRI LIQUIDATING REIT, INC.
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
For the years ended December 31, 1993, 1992 and 1991
<CAPTION>
Net
Unrealized
Gains on Additional Total
Common Stock Investment Paid-in Undistributed Shareholders'
Shares Par Value in Mortgages Capital Net Income Equity
---------- ------------ ------------ ------------ ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1990 30,425,901 $ 304,259 $ -- $361,050,803 $ -- $ 361,355,062
Net income -- -- -- -- 32,759,440 32,759,440
Dividends of $1.08 per share -- -- -- -- (32,759,440) (32,759,440)
Return of capital of $2.07
per share -- -- -- (63,082,146) -- (63,082,146)
---------- ----------- ---------- ------------ ------------ -------------
Balance, December 31, 1991 30,425,901 304,259 -- 297,968,657 -- 298,272,916
Net income -- -- -- -- 28,809,166 28,809,166
Dividends of $0.95 per share -- -- -- -- (28,809,166) (28,809,166)
Return of capital of $1.45
per share -- -- -- (44,207,254) -- (44,207,254)
Adjustment to amounts issued (3,190) (32) -- 32 -- --
---------- ------------ ---------- ------------ ------------ -------------
Balance, December 31, 1992 30,422,711 304,227 -- 253,761,435 -- 254,065,662
Net income -- -- -- -- 27,636,126 27,636,126
Dividends of $0.91 per share -- -- -- -- (27,636,126) (27,636,126)
Return of capital of $1.87
per share -- -- -- (56,939,013) -- (56,939,013)
Net unrealized gains on
investment in mortgages -- -- 51,349,764 -- -- 51,349,764
Reimbursement of dividends
from prior years -- -- -- 20,764 -- 20,764
---------- ------------ ----------- ------------ ------------ -------------
Balance, December 31, 1993 30,422,711 $ 304,227 $51,349,764 $196,843,186 $ -- $ 248,497,177
========== ============ =========== ============ ============ =============
The accompanying notes are an integral part
of these financial statements.
</TABLE></PAGE>
<PAGE>
<PAGE>46
<PAGE><TABLE>
CRI LIQUIDATING REIT, INC.
STATEMENTS OF CASH FLOWS
<CAPTION>
For the years ended December 31,
1993 1992 1991
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 27,636,126 $ 28,809,166 $ 32,759,440
Adjustments to reconcile net income to net
cash provided by operating activities:
Amortization of deferred costs 251,203 305,057 353,464
Mortgage discount amortization (1,306,553) (1,269,828) (1,367,765)
Mortgage premium amortization 6,710 5,292 11,535
Other short-term investment premium amortization 4,072,781 1,226,457 --
Gains on mortgage dispositions (8,110,395) (6,110,209) (5,230,542)
Losses on mortgage dispositions 20,555 13,107 749,008
Loss on investment in limited partnership -- 731,951 --
Other operating activities -- (69,086) 75,120
Equity earnings from investment in limited partnerships (43,605) (600,852) (623,876)
Interest received under the equity method of accounting
but treated as reduction of investment in limited
partnerships 308,093 972,704 919,755
Changes in assets and liabilities:
Decrease (increase) in receivables and other assets 614,086 1,412,097 (129,169)
Increase (decrease) in accounts payable and accrued
expenses 261,661 (499,318) 310,450
----------- ------------ ----------
Net cash provided by operating activities 23,710,662 24,926,538 27,827,420
----------- ------------ ----------
Cash flows from investing activities:
Proceeds from mortgage dispositions 56,077,712 45,263,903 64,062,317
Purchase of other short-term investments (132,977,702) (66,751,139) --
Proceeds from sale of other short-term investments 128,617,469 65,491,782 --
Receipt of mortgage and other short-term investment
principal from scheduled payments 3,062,993 3,008,210 3,067,138
Decrease in deferred costs 97,330 89,355 248,784
Annual return from investment in limited partnerships 253,292 253,292 373,310
Proceeds from sale/redemption of HUD debentures 6,062,502 2,334,150 --
----------- ------------ ------------
Net cash provided by investing activities 61,193,596 49,689,553 67,751,549
----------- ------------ ------------
<PAGE>
<PAGE>47
CRI LIQUIDATING REIT, INC.
STATEMENTS OF CASH FLOWS - Continued
For the years ended December 31,
1993 1992 1991
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from financing activities:
Dividends and return of capital paid to shareholders (84,554,375) (73,016,420) (95,841,586)
Proceeds from short-term debt 115,631,517 56,150,273 --
Payment on short-term debt (115,631,517) (56,150,273) --
------------ ------------ ------------
Net cash used in financing activities (84,554,375) (73,016,420) (95,841,586)
------------ ------------ ------------
Net increase (decrease) in cash and cash equivalents 349,883 1,599,671 (262,617)
Cash and cash equivalents, beginning of year 2,557,264 957,593 1,220,210
------------ ------------ ------------
Cash and cash equivalents, end of year $ 2,907,147 $ 2,557,264 $ 957,593
============ ============ ============
The accompanying notes are an integral part
of these financial statements.
</TABLE></PAGE>
<PAGE>
<PAGE>48
CRI LIQUIDATING REIT, INC.
NOTES TO FINANCIAL STATEMENTS
1. Organization
CRI Liquidating REIT, Inc. (the Liquidating Company) is a
finite-life, self-liquidating real estate investment trust (REIT)
which as of December 31, 1993, owned a portfolio of 63 U.S.
government insured and guaranteed mortgage investments secured by
multifamily housing complexes located throughout the United
States. Mortgage investments in the portfolio are comprised of 61
loans insured pursuant to programs of the U.S. government through
the Federal Housing Administration (FHA) (FHA - Insured Loans) and
two securities backed by FHA-Insured Loans which have been
securitized by private issuers and guaranteed as to timely payment
of principal and interest by the Government National Mortgage
Association (GNMA and Mortgage-Backed Securities, respectively).
As discussed further below, the Liquidating Company does not
intend to acquire any additional mortgage investments, except as
may be necessary in connection with maintaining its REIT status,
and intends to liquidate its portfolio by March 31, 1997.
The Liquidating Company was created in November 1989 in
connection with the merger (the Merger) of three funds which owned
government insured multifamily mortgages (the CRIIMI Funds), all
of which were sponsored by C.R.I., Inc. (CRI), a Delaware
corporation formed in 1974. At the time of the Merger, the CRIIMI
Funds collectively owned 110 government insured multifamily
mortgages. The Merger resulted in two new REITs: (i) the
Liquidating Company, a finite-life, self-liquidating REIT, and
(ii) CRIIMI MAE Inc. (CRIIMI MAE) (formerly CRI Insured Mortgage
Association, Inc.) an infinite-life, growth-oriented REIT.
Consistent with the original objectives of the CRIIMI Funds, the
Liquidating Company intends to continue to liquidate its assets
over time and distribute the proceeds to its shareholders.
Dividends to shareholders consist of ordinary income, capital
gains and return of capital. Shareholders should expect dividends
representing ordinary income and the market price of the shares to
decrease as the Liquidating Company liquidates its assets and
distributes return of capital over time to its shareholders.
<PAGE>
<PAGE>49
CRI LIQUIDATING REIT, INC.
NOTES TO FINANCIAL STATEMENTS
1. Organization - Continued
In the Merger, the Liquidating Company acquired the assets of
the CRIIMI Funds. Investors in the CRIIMI Funds received, at
their option, shares of common stock of either the Liquidating
Company or CRIIMI MAE. To allow those investors who chose CRIIMI
MAE shares to maintain their interest in the original assets of
the CRIIMI Funds, CRIIMI MAE received one share of common stock of
the Liquidating Company for each share of CRIIMI MAE issued in the
Merger to investors in the CRIIMI Funds. As a result, CRIIMI MAE
owned approximately 67% of the Liquidating Company's common stock
as of December 31, 1992. Following the sale of approximately 3.1
million of its shares of common stock of the Liquidating Company,
in November 1993, CRIIMI MAE reduced its ownership percentage to
approximately 57%. The Liquidating Company shares have been
trading on the New York Stock Exchange under the trading symbol
CFR since November 28, 1989.
The Liquidating Company is governed by a Board of Directors
which includes the two shareholders of CRI. The Board of
Directors has engaged CRI Insured Mortgage Associates Adviser
Limited Partnership (the Adviser) to act in the capacity of
adviser to the Liquidating Company. The Adviser's general partner
is CRI, and its limited partners include the shareholders of CRI.
The Adviser and its affiliates (1) manage the Liquidating
Company's assets with the goal of maximizing the returns to
shareholders and (2) conduct the day-to-day operations of the
Liquidating Company. The Adviser and its affiliates receive fees
and expense reimbursements in connection with the administration
and operation of the Liquidating Company (see Note 3). The
Adviser also acts in a similar capacity for CRIIMI MAE.
Prior to the Merger, the Liquidating Company did not have any
assets or liabilities and did not engage in any activities other
than those incident to its formation and the Merger. As a result
of the common control existing over the Liquidating Company, the
CRIIMI Funds and CRIIMI MAE, the Merger was accounted for at
historical cost in a manner similar to the pooling-of-interests
method. However, for tax purposes, the Merger was treated as a
taxable event resulting in a new basis being assigned to the
assets. Specifically, the merger of CRI Insured Mortgage
<PAGE>
<PAGE>50
CRI LIQUIDATING REIT, INC.
NOTES TO FINANCIAL STATEMENTS
1. Organization - Continued
Investment Limited Partnership (CRIIMI I) into the Liquidating
Company resulted in a taxable gain, while the merger of CRI
Insured Mortgage Investments II, Inc. (CRIIMI II) and CRI Insured
Mortgage Investments III Limited Partnership (CRIIMI III) into the
Liquidating Company resulted in taxable losses. As a result, the
tax bases of the CRIIMI I assets were adjusted slightly upward and
the tax bases of the CRIIMI II and CRIIMI III assets were adjusted
downward.
The Liquidating Company intends to dispose of its existing
government insured mortgage investments by March 31, 1997 through
an orderly liquidation. Consequently, the Adviser to the
Liquidating Company developed a business plan which is intended to
effect the orderly liquidation of the portfolio by March 31, 1997,
which plan of liquidation was approved by the Liquidating
Company's Board of Directors. The business plan assumes that the
portfolio will be liquidated through a combination of defaults on
or prepayments of (Involuntary Dispositions) and sales of
(Voluntary Dispositions) government insured multifamily mortgages.
During the term of the business plan, the Liquidating Company
expects to generate cash flow from scheduled mortgage payments,
Involuntary Dispositions, Voluntary Dispositions and interest
earned on short-term investments. For the year ended December 31,
1993, the Liquidating Company has experienced a 22% disposition
rate based on the December 31, 1992 portfolio balance. In each of
the next four calendar years, the business plan assumes a total
annual disposition rate of approximately 25% of the portfolio as
of December 31, 1993. This is based on a relatively equal annual
disposition of the portfolio over the remainder of the term of the
business plan. The Liquidating Company intends to make Voluntary
Dispositions, in addition to any Involuntary Dispositions that
occur, if necessary to attempt to achieve such 25% rate and to
liquidate the portfolio by March 31, 1997 in an orderly manner.
Although the Liquidating Company expects to profitably dispose of
its government insured multifamily mortgages, there can be no
assurance as to when any government insured mortgage will be
disposed of by the Liquidating Company or the amount of proceeds
the Liquidating Company would receive from any such disposition.
The determination of whether and when to dispose of a particular
<PAGE>
<PAGE>51
CRI LIQUIDATING REIT, INC.
NOTES TO FINANCIAL STATEMENTS
1. Organization - Continued
government insured multifamily mortgage will be made by
considering a variety of factors, including, without limitation,
the market conditions at that time. As of December 31, 1993, the
carrying value of the mortgage investments on a tax basis,
including Mortgages Held for Disposition, was approximately $173
million; the par value was approximately $236 million; and the
fair market value was approximately $243 million.
The Liquidating Company has qualified and intends to continue
to qualify as a REIT under Sections 856-860 of the Internal
Revenue Code (the Code). As a REIT, the Liquidating Company does
not pay taxes at the corporate level. Qualification for treatment
as a REIT requires the Liquidating Company to meet certain
criteria, including certain requirements regarding the nature of
its ownership, assets, income and distributions of taxable income.
2. Summary of Significant Accounting Policies
Method of accounting
--------------------
The financial statements of the Liquidating Company are
prepared on the accrual basis of accounting in accordance
with generally accepted accounting principles.
Reclassifications
-----------------
Certain amounts in the balance sheet as of December 31,
1992 has been reclassified to conform with the 1993
presentation.
Cash and cash equivalents
-------------------------
Cash and cash equivalents consist of money market funds,
time and demand deposits, commercial paper and repurchase
agreements with original maturities of three months or less.
<PAGE>
<PAGE>52
CRI LIQUIDATING REIT, INC.
NOTES TO FINANCIAL STATEMENTS
2. Summary of Significant Accounting Policies - Continued
Statements of cash flows
------------------------
Since the statements of cash flows are intended to
reflect only cash receipt and cash payment activity, the
statements of cash flows do not reflect investing and
financing activities that affect recognized assets and
liabilities but do not result in cash receipts or cash
payments. Such activity consisted of the following:
o In July 1991, the Liquidating Company received
$2,334,150 in 12 3/4% United States Department of
Housing and Urban Development (HUD) Debentures as
proceeds from the disposition of the mortgage
investment in Oak Hill Road Apartments. The
proceeds from the redemption of the HUD Debentures,
including interest, were received in January 1992.
Cash payments made for interest during 1993 and 1992
totalled $2,242,347 and $966,679, respectively. There were
no cash payments made for interest during 1991.
Investment in Mortgages
-----------------------
In May 1993, the Financial Accounting Standards Board
issued Statement on Financial Accounting Standards No. 115
"Accounting for Certain Investments in Debt and Equity
Securities" (SFAS 115). This statement requires that most
investments in debt and equity securities be classified into
one of the following investment categories based upon the
circumstances under which such securities might be sold:
Held to Maturity, Available for Sale, and Trading.
Generally, certain debt securities for which an enterprise
has both the ability and intent to hold to maturity should be
accounted for using the amortized cost method and all other
securities must be recorded at their fair values. This
statement, though not required to be adopted until 1994 for
the Liquidating Company, has been adopted as of December 31,
1993.
<PAGE>
<PAGE>53
CRI LIQUIDATING REIT, INC.
NOTES TO FINANCIAL STATEMENTS
2. Summary of Significant Accounting Policies - Continued
The Liquidating Company intends to liquidate its
portfolio by March 31, 1997. In order to achieve this
objective, the Liquidating Company will sell certain of its
mortgage investments in addition to mortgages assigned to
HUD. Consequently, the Adviser believes that the securities
held by the Liquidating Company fall into the Available for
Sale category. As such, as of December 31, 1993, all
mortgage investments are recorded at fair value with the net
unrealized gains on its investment in mortgages reported as a
separate component of shareholders' equity. Subsequent
increases or decreases in the fair value of Available for
Sale securities shall be included as a separate component of
equity. Realized gains and losses for securities classified
as Available for Sale will continue to be reported in
earnings, as discussed below. Prior to December 31, 1993, the
Liquidating Company accounted for its investment in mortgages
at amortized cost.
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.
The Liquidating Company's investment in mortgages is
comprised of Federally Insured Mortgages (as defined below)
and Mortgage-Backed Securities guaranteed by GNMA. Payment
of principal and interest on Federally Insured Mortgages is
insured by HUD. Payment of principal and interest on
Mortgage-Backed Securities is guaranteed by GNMA pursuant to
Title 3 of the National Housing Act.
<PAGE>
<PAGE>54
CRI LIQUIDATING REIT, INC.
NOTES TO FINANCIAL STATEMENTS
2. Summary of Significant Accounting Policies - Continued
At any point in time, the Liquidating Company may be
aware of certain mortgages which have been assigned to HUD or
for which the servicer has received proceeds from a
prepayment. In addition, at certain times the Liquidating
Company may have entered into a contract to sell certain
mortgages. In these cases, the Liquidating Company will
classify these mortgages as Mortgages Held for Disposition.
Gains from dispositions of mortgages are recognized upon
the receipt of funds or HUD debentures.
Losses on dispositions of mortgages are recognized when
it becomes probable that a mortgage will be disposed of and
that the disposition will result in a loss.
Investment in limited partnerships
----------------------------------
The investment in limited partnerships (Participations),
which do not carry any GNMA or HUD guarantees, are accounted
for under the equity method. Under this method, the
Liquidating Company's investment in the Participations is
adjusted for the Liquidating Company's share of net earnings
or losses and reduced by distributions from the limited
partnerships. In addition, mortgage investment income from
the mortgages of such limited partnerships, which were sold
during 1993, has been reduced and income from the investment
in limited partnerships has been increased to the extent the
underlying interest expense is included in the Liquidating
Company's share of net earnings or losses from the
Participations. When received by the Liquidating Company,
these interest amounts, as with distributions, reduce the
investment in the Participations.
Deferred costs
--------------
Included in deferred costs are mortgage selection fees,
which were paid to the former general partners or adviser to
the CRIIMI Funds. These deferred costs are being amortized
using the effective interest method on a specific mortgage
<PAGE>
<PAGE>55
CRI LIQUIDATING REIT, INC.
NOTES TO FINANCIAL STATEMENTS
2. Summary of Significant Accounting Policies - Continued
basis from the date of the acquisition of the related
mortgage to the expected dissolution date of the Liquidating
Company (see Note 1). Upon disposition of a mortgage, the
related unamortized fee is treated as part of the mortgage
investment balance in order to measure the gain or loss on
the disposition.
Also included in deferred costs are organizational costs
which were incurred in connection with the organization of
the Liquidating Company and which are amortized using the
straight-line method over 60 months beginning as of the
Merger consummation date of November 27, 1989. The
Liquidating Company's costs incurred in connection with the
Merger were expensed upon the consummation of the Merger (see
Note 1).
Borrowing Policy
----------------
The Liquidating Company's Articles of Incorporation do
not limit the amount or percentage of indebtedness which the
Liquidating Company may incur. The Liquidating Company does
not intend to incur any indebtedness, except in connection
with the maintenance of its REIT status. During 1993 and
1992, the Liquidating Company entered into transactions in
which it incurred debt in connection with the purchase of
government guaranteed mortgage-backed securities and
government insured certificates backed by project loans.
This debt was nonrecourse and fully secured with the
purchased government guaranteed mortgage-backed securities
and government insured certificates backed by project loans.
As of December 31, 1993 and 1992, the Liquidating Company
disposed of these government guaranteed mortgage-backed
securities and government insured certificates backed by
project loans, and repaid the related debt.
Interest expense is based on the seller financing of a
portion of the purchase price of the other short-term
investments in government guaranteed mortgage-backed
<PAGE>
<PAGE>56
CRI LIQUIDATING REIT, INC.
NOTES TO FINANCIAL STATEMENTS
2. Summary of Significant Accounting Policies - Continued
securities and government insured certificates backed by
project loans (see Note 7).
Income taxes
------------
The Liquidating Company has qualified and intends to
continue to qualify as a REIT as defined in the Code and, as
such, will not be taxed on that portion of its taxable income
which is distributed to shareholders provided that at least
95% of such taxable income is distributed. The Liquidating
Company intends to distribute substantially all of its
taxable income and, accordingly, no provision for income
taxes has been made in the accompanying financial statements.
The Liquidating Company, however, may be subject to tax at
normal corporate rates on net income or capital gains not
distributed.
Per share amounts
-----------------
Net income, dividends and return of capital per share
amounts for 1993, 1992 and 1991 represent net income,
dividends and return of capital, respectively, divided by the
weighted average equivalent shares outstanding during each
year. The per share amounts are based on the weighted
average shares outstanding, including shares held for
issuance pending presentation of units in the CRIIMI Funds.
Common stock
------------
The Liquidating Company has authorized 30,425,901 shares
of $.01 par value common stock and issued 30,422,711 shares
and 30,421,134 shares as of December 31, 1993 and 1992,
respectively. All shares issued are outstanding. The
remaining 1,577 shares, as of December 31, 1992, were held
for issuance pending presentation of predecessor units and
were considered outstanding.
<PAGE>
<PAGE>57
CRI LIQUIDATING REIT, INC.
NOTES TO FINANCIAL STATEMENTS
3. Transactions with Related Parties
Below is a summary of the amounts paid or accrued to related
parties during the years 1993, 1992 and 1991. These items are
described further in the text which follows.
<PAGE><TABLE><CAPTION>
For the years ended December 31,
1993 1992 1991
----------- ----------- -----------
<S> <C> <C> <C>
Adviser:
-------
Annual fee $ 1,234,291(c) $ 1,214,409 $ 1,532,096
Incentive fee (a) 256,290 -- 517,399
----------- ----------- -----------
Total $ 1,490,581 $ 1,214,409 $ 2,049,495
=========== =========== ===========
CRI:
---
Expense reimbursement (b) $ 254,039 $ 244,457 $ 279,951
=========== =========== ===========
(a) Included as a component of gains from mortgage dispositions on the accompanying statements of
income.
(b) Included as general and administrative expenses on the accompanying statements of income.
(c) As a result of reaching the Carryover CRIIMI I Target Yield (as defined below) during the first and fourth
quarters of 1993, the Liquidating Company paid deferred annual fees during these quarters (including
$86,395 of deferred annual fees from the third and fourth quarters of 1992).
</TABLE></PAGE>
<PAGE>
<PAGE>58
CRI LIQUIDATING REIT, INC.
NOTES TO FINANCIAL STATEMENTS
3. Transactions with Related Parties - Continued
The Liquidating Company has entered into an agreement with
the Adviser (see Note 1) (the Advisory Agreement) under which the
Adviser is obligated to evaluate and negotiate voluntary mortgage
dispositions, provide administrative services for the Liquidating
Company and conduct the Liquidating Company's day-to-day affairs.
The Advisory Agreement is for a term through November 27,
1995. The Advisory Agreement, absent a notice of termination or
non-renewal, will be automatically renewed for successive
three-year terms. The Advisory Agreement may be terminated solely
for cause, as defined in the Advisory Agreement, by the
Liquidating Company or the Adviser. Notice of non-renewal must be
given at least 180 days prior to the expiration date of the
Advisory Agreement. If the Liquidating Company terminates the
Advisory Agreement other than for cause, or the Adviser terminates
the Advisory Agreement for cause, in addition to compensation
otherwise due, the Liquidating Company will be required to pay the
Adviser a fee equal to the Annual Fee (as described below) payable
for the previous fiscal year. If the Advisory Agreement is not
renewed, no termination fee will be payable.
Under the Advisory Agreement, the Adviser receives
compensation from the Liquidating Company as follows:
o An Annual Fee for managing the Liquidating Company's
portfolio of mortgages. The Annual Fee is calculated
separately for each of the remaining mortgage pools from
the former CRIIMI Funds. With respect to CRIIMI I, the
Annual Fee will equal 0.75% of Average Invested Assets
invested in mortgage investments transferred by CRIIMI
I in the Merger, one-third of which will be deferred and
paid on a cumulative basis only during such quarters as
the Carryover CRIIMI I Target Yield, as discussed below,
is achieved on a cumulative basis. Any such deferred
<PAGE>
<PAGE>59
CRI LIQUIDATING REIT, INC.
NOTES TO FINANCIAL STATEMENTS
3. Transactions with Related Parties - Continued
amounts will be paid only out of proceeds of mortgage
dispositions attributable to CRIIMI I mortgage
investments representing market discount.
With respect to CRIIMI II, the Annual Fee will equal
0.75% of Average Invested Assets invested in existing
mortgage investments transferred by CRIIMI II in the
Merger, one-fourth of which will be deferred and paid on
a cumulative basis only during such quarters as the
Carryover CRIIMI II Target Yield, as discussed below, is
achieved on a cumulative basis. Any such deferred
amounts will be paid only out of operating income
attributable to CRIIMI II mortgage investments.
With respect to CRIIMI III, the Annual Fee will equal
0.25% of Average Invested Assets invested in mortgage
investments transferred by CRIIMI III in the Merger.
After December 31, 1993, this fee will be reduced to
0.125% for any quarter that the Carryover CRIIMI III
Cumulative Annual Fee Yield, as discussed below, is not
achieved.
The Carryover CRIIMI I Target Yield will be achieved
during any quarter that the former CRIIMI I mortgage
investments transferred in the Merger generate a
cumulative yield (including gains or losses on mortgage
dispositions) on amounts invested in such assets of
13.33% per annum based on financial statement income.
The Carryover CRIIMI II Target Yield will be achieved
during any quarter that the former CRIIMI II mortgage
investments transferred in the Merger generate a
cumulative yield (including gains or losses on mortgage
dispositions) on amounts invested in such assets of
11.66% per annum based on financial statement income.
The Carryover CRIIMI III Cumulative Annual Fee Yield
will be achieved during any quarter, commencing after
<PAGE>
<PAGE>60
CRI LIQUIDATING REIT, INC.
NOTES TO FINANCIAL STATEMENTS
3. Transactions with Related Parties - Continued
December 31, 1993, that the former CRIIMI III mortgage
investments transferred in the Merger generate a
cumulative yield (including gains or losses on mortgage
dispositions) on amounts invested in such assets of
10.89% per annum based on financial statement income.
Detail of the Annual Fees paid for the years 1993, 1992
and 1991 is as follows:
<PAGE>
<PAGE>61
CRI LIQUIDATING REIT, INC.
NOTES TO FINANCIAL STATEMENTS
3. Transactions with Related Parties - Continued
<PAGE><TABLE><CAPTION>
For the year ended December 31, 1993
Cumulative Actual
Annual Fees Paid
Target/Annual Cumulative Annual Deferred Cumulative
Yield Yield Component Component Total Deferred Deferred
------------- ---------- ----------- ----------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
CRIIMI I 13.33% 13.33% $ 314,595 $ 243,692 $ 558,287 $ -- $ --
CRIIMI II 11.66% 10.05% 484,147 -- 484,147 162,390 1,873,520
CRIIMI III 10.89% 8.05%
191,857 --
191,857 -- --
----------- ----------- ----------- ---------- -----------
Totals $ 990,599 $ 243,692 $ 1,234,291 $ 162,390 $ 1,873,520
=========== =========== =========== ========== ===========
</TABLE></PAGE>
<PAGE><TABLE><CAPTION>
For the year ended December 31, 1992
Cumulative Actual
Annual Fees Paid
Target/Annual Cumulative Annual Deferred Cumulative
Yield Yield Component Component Total Deferred Deferred
------------- ---------- ----------- ----------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
CRIIMI I 13.33% 13.24% $ 344,090 $ 85,650 $ 429,740 $ 86,395 $ 86,395
CRIIMI II 11.66% 9.92% 540,204 -- 540,204 180,068 1,711,130
CRIIMI III 10.89% 8.07% 244,465 -- 244,465 -- --
----------- ----------- ----------- ---------- -----------
Totals $ 1,128,759 $ 85,650 $ 1,214,409 $ 266,463 $ 1,797,525
=========== =========== =========== ========== ===========
</TABLE></PAGE>
<PAGE>
<PAGE>62
CRI LIQUIDATING REIT, INC.
NOTES TO FINANCIAL STATEMENTS
3. Transactions with Related Parties - Continued
<PAGE><TABLE><CAPTION>
For the year ended December 31, 1991
Cumulative Actual
Annual Fees Paid
Target/Annual Cumulative Annual Deferred Cumulative
Yield Yield Component Component Total Deferred Deferred
------------- ---------- ----------- ----------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
CRIIMI I 13.33% 13.53% $ 362,235 $ 181,118 $ 543,353 $ -- $ --
CRIIMI II 11.66% 9.49% 690,925 -- 690,925 230,308 1,531,062
CRIIMI III 10.89% 8.13% 297,818 -- 297,818 -- --
----------- ----------- ----------- ---------- -----------
Totals $ 1,350,978 $ 181,118 $ 1,532,096 $ 230,308 $ 1,531,062
=========== =========== =========== ========== ===========
</TABLE></PAGE>
o The Adviser is also entitled to certain Incentive Fees
(the Incentive Fee) in connection with the disposition
of certain mortgage investments. Like the Annual Fee,
the Incentive Fees are calculated separately with
respect to mortgage investments transferred in the
Merger by CRIIMI I and CRIIMI II. No Incentive Fees are
payable with respect to mortgage investments transferred
by CRIIMI III.
During any quarter in which either the Carryover CRIIMI
I or CRIIMI II Target Yields have been achieved on a
cumulative basis and the Adviser has been paid any
deferred amounts of the Annual Fee, the Incentive Fee
will equal approximately 9.08% of net disposition
proceeds representing the financial statement gain on
the related CRIIMI I or CRIIMI II mortgage investments
disposed of. After the Carryover CRIIMI I Adjusted
Contribution or the Carryover CRIIMI II Adjusted Share
Capital has been reduced to zero, the Incentive Fee will
increase to approximately 9.08% of the net disposition
<PAGE>
<PAGE>63
CRI LIQUIDATING REIT, INC.
NOTES TO FINANCIAL STATEMENTS
3. Transactions with Related Parties - Continued
proceeds from the disposition of CRIIMI I or CRIIMI II
mortgage investments, each determined separately.
The Carryover CRIIMI I Adjusted Contribution and the
Carryover CRIIMI II Adjusted Share Capital equal the
aggregate Adjusted Contribution of CRIIMI I investors
(initial investment of investors reduced by all amounts
distributed to them representing distributions of
principal on their original mortgage investments other
than distributions of proceeds of mortgage dispositions
representing market discount that have been applied to
the Target Yield) and the aggregate Share Capital of
CRIIMI II investors (initial investment of investors
reduced by all amounts distributed to them representing
distributions of principal on their original mortgage
investments other than distributions of proceeds of
mortgage dispositions representing market discount that
have been applied to the Target Yield), respectively, as
of November 27, 1989, the consummation date of the
Merger. Subsequent to November 27, 1989, the Carryover
CRIIMI I Adjusted Contribution and the Carryover CRIIMI
II Adjusted Share Capital are reduced by all amounts of
principal received from their respective former mortgage
investments, whether as part of regular mortgage
payments or as proceeds of mortgage dispositions, except
for proceeds of mortgage dispositions representing
market discount that have been applied to the respective
Target Yield.
<PAGE>
<PAGE>64
CRI LIQUIDATING REIT, INC.
NOTES TO FINANCIAL STATEMENTS
4. Fair Value of Financial Instruments
The following estimated fair values of the Liquidating
Company's financial instruments are presented in accordance
with generally accepted accounting principles. These
estimated fair values, however, do not represent the
liquidation value or the market value of the Liquidating
Company.
As of December 31, 1992, the Liquidating Company's
mortgage investments were recorded at amortized cost
(excluding Mortgages Held for Disposition which were recorded
at the lower of cost or market as discussed in Note 6). In
connection with the Liquidating Company's implementation of
SFAS 115 as of December 31, 1993 (see Note 2), the
Liquidating Company's Investment in Mortgages, including
Mortgages Held for Disposition (see Note 6) are recorded at
fair value, as estimated below, as of December 31, 1993. The
difference between the amortized cost and the fair value of
the mortgage investments represents the net unrealized gains
on the Liquidating Company's mortgage investment and is
reported as a separate component of shareholders' equity as
of December 31, 1993.
<PAGE>
<PAGE>65
CRI LIQUIDATING REIT, INC.
NOTES TO FINANCIAL STATEMENTS
4. Fair Value of Financial Instruments - Continued
<PAGE><TABLE><CAPTION>
As of December 31, 1993
As of December 31, 1992
Amortized Fair Amortized Fair
Cost Value Cost Value
------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
Investment in Mortgages:
Discount $166,913,207 $215,866,436 $191,796,854 $235,939,861
Near-par or premium 16,983,594 17,647,797 17,986,686 18,640,097
Participating -- -- 22,024,884 22,817,941
------------ ------------ ------------ ------------
183,896,801 233,514,233 231,808,424 277,397,899
------------ ------------ ------------ ------------
Mortgages held for disposition 7,849,077 9,581,409 15,463,528 17,948,147
Cash and cash equivalents 2,907,147 2,907,147 2,557,264 2,557,264
Accrued interest receivable 1,946,369 1,946,369 2,534,114 2,534,114
</TABLE></PAGE>
The following methods and assumptions were used to estimate
the fair value of each class of financial instruments:
Investment in mortgages and mortgages held for disposition
----------------------------------------------------------
The fair value of the mortgage investments and mortgages
held for disposition is based on the average of the quoted
market prices from three investment banking institutions
which trade insured mortgage loans as part of their day-to-
day activities.
Cash and cash equivalents and accrued interest receivable
---------------------------------------------------------
The carrying amount approximates fair value because of
the short maturity of these instruments.
<PAGE>
<PAGE>66
CRI LIQUIDATING REIT, INC.
NOTES TO FINANCIAL STATEMENTS
5. Investment in Mortgages
As of December 31, 1993, the Liquidating Company owned
63 mortgages. These mortgage investments have a weighted
average coupon rate of approximately 7.65%, a weighted
average effective interest rate of approximately 10.03%, and
a weighted average remaining term based on face value of
approximately 27 years. Based on the carrying value as of
December 31, 1993, approximately 92% of the 63 mortgage
investments were purchased at a discount (Discount Mortgage
Investments) and 8% were purchased near or at par or for a
premium (Near Par or Premium Mortgage Investments). A
discussion of these types of mortgages is as follows:
Federally Insured Mortgages
---------------------------
The Liquidating Company owns Federally Insured Mortgages
on properties which were acquired by the predecessor CRIIMI
Funds at a discount to face on the belief that based on
economic, market, legal and other factors, such Discount
Mortgage Investments might be sold for cash, converted to
condominium housing or otherwise disposed of or refinanced in
a manner requiring prepayment or permitting other profitable
disposition three to twelve years after acquisition by the
predecessor CRIIMI Funds. The Liquidating Company also owns
near or at par or premium Federally Insured Mortgages on
properties which the Adviser does not expect to incur a
significant financial statement loss if disposed of,
refinanced or otherwise prepaid prior to maturity. On a tax
basis, based on current information, including the current
interest rate environment, the disposition of any mortgage
investment is expected to result in a gain.
Mortgage-Backed Securities
--------------------------
The Liquidating Company also owns Mortgage-Backed
Securities issued by private entities for which the monthly
principal and interest payments of the underlying mortgages
are guaranteed by GNMA (GNMA Mortgage-Backed Securities) or
which are backed by Federally Insured Mortgages. In the
<PAGE>
<PAGE>67
CRI LIQUIDATING REIT, INC.
NOTES TO FINANCIAL STATEMENTS
5. Investment in Mortgages - Continued
original selection of Mortgage-Backed Securities, the
properties underlying such securities were evaluated
utilizing criteria similar to those employed in selecting the
Liquidating Company's Federally Insured Mortgages.
Participating Mortgages
-----------------------
As of December 31, 1992, the Liquidating Company also
owned three Participating Mortgage Investments. Each
Participating Mortgage Investment consisted of two
components: 85% of the original investment amount was a
Mortgage-Backed Security; and 15% of the original investment
amount was an uninsured equity contribution to the limited
partnership which owns the underlying property. The equity
contributions represent a purchase of 50 percent ownership
interests in the three limited partnerships and entitle the
Liquidating Company to participate in 50 percent of the net
available cash flow from operations and/or a portion of the
residual value, if any, of the property underlying the GNMA
Mortgage-Backed Security. In addition, the Liquidating
Company is entitled to an annual return on its
Participations. During 1993, the Liquidating Company sold
the mortgage investment components of each of its
Participating Mortgage Investments but retained the
Participation components for all three Participating Mortgage
Investments.
General
-------
The safekeeping and servicing of the mortgage
investments (excluding the Participations) is performed by
various trustees and servicers under the terms of the
Servicing Agreements.
<PAGE>
<PAGE>68
CRI LIQUIDATING REIT, INC.
NOTES TO FINANCIAL STATEMENTS
5. Investment in Mortgages - Continued
Descriptions of the mortgage investments owned by the
Liquidating Company which exceed approximately 3% of the
aggregate carrying value of the total mortgage investments as
of December 31, 1993, summarized information regarding other
mortgage investments and mortgage investment income earned in
1993, 1992 and 1991, including interest earned on the
disposed mortgage investments, are as follows:
<PAGE>
<PAGE>69
CRI LIQUIDATING REIT, INC.
NOTES TO FINANCIAL STATEMENTS
5. Investment in Mortgages - Continued
<PAGE><TABLE><CAPTION>
Mortgage Mortgage Mortgage
Carrying Investment Investment Investment
Face Value of Effective Income Income Income Final
Amount of Mortgages Interest Earned Earned Earned Maturity
Complex Name Mortgages(B) (A),(C),(D) Rate in 1993 in 1992 in 1991 Date
------------ ------------- ------------- --------- ------------ ------------ ------------ ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Federally Insured
Mortgages (FHA)
-----------------
Discount
--------
Cloverset Valley
Apts. $ 9,944,418 $10,417,993 11.28% $ 810,494 $ 813,643 $ 816,458 April 2023
Cinnamon Run I 10,536,917 11,039,018 11.18% 859,709 863,296 866,505 November 2022
Villa de Mission 7,611,408 7,975,094 11.12% 626,418 629,627 632,500 March 2021
Windemere House 8,006,546 8,387,744 10.99% 649,885 652,526 654,893 June 2023
1120 North LaSalle 13,643,931 13,832,024 9.78% 1,091,728 1,097,990 1,103,672 February 2022
Firethorn I 6,861,215 7,187,767 12.28% 563,026 564,683 566,149 September 2023
Windrush Apts. 6,751,322 7,072,758 12.29% 554,892 556,573 558,060 June 2023
Other
(46 mortgages) 146,362,536 149,954,038 8.35% 11,819,151 11,908,377 12,002,467 August 2012 -
12.48% March 2025
Near Par or Premium
-------------------
Other
(6 mortgages) 12,044,486 12,806,520 9.22% 1,179,560 1,187,778 1,195,239 December 2022 -
10.79% June 2025
<PAGE>
<PAGE>70
CRI LIQUIDATING REIT, INC.
NOTES TO FINANCIAL STATEMENTS
5. Investment in Mortgages - Continued
Mortgage Mortgage Mortgage
Carrying Investment Investment Investment
Face Value of Effective Income Income Income Final
Amount of Mortgages Interest Earned Earned Earned Maturity
Complex Name Mortgages(B) (A),(C),(D) Rate in 1993 in 1992 in 1991 Date
------------ ------------- ------------- --------- ------------ ------------ ------------ ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Mortgage-Backed
Securities (GNMA)
Near Par or Premium
--------------------
Other
(2 mortgages) 4,690,126 4,841,277 10.14%- 459,925 462,392 464,621 May 2022 -
------------ ----------- 10.16% ------------ ------------ ------------ September 2022
Subtotals 226,452,905 233,514,233 18,614,788 18,736,885 18,860,564
Less Liquidating Company's
share of mortgage interest
relating to investment in
limited partnerships
accounted for under the
equity method (see Note 2) (308,093) (972,704) (919,755)
</TABLE>
<PAGE>
<PAGE>71
CRI LIQUIDATING REIT, INC.
NOTES TO FINANCIAL STATEMENTS
5. Investment in Mortgages - Continued
<TABLE>
<CAPTION>
Mortgage Mortgage Mortgage
Carrying Investment Investment Investment
Face Value of Effective Income Income Income
Amount of Mortgages Interest Earned Earned Earned
Complex Name
Mortgages(B) (A),(C),(D) Rate in 1993 in 1992 in 1991
------------
------------- ------------- --------- ------------ ------------ ------------
<S>
<C> <C> <C> <C> <C> <C>
Mortgage Dispositions:
1986 -- -- 12.31%- -- -- --
13.23%
1987 -- -- 10.93%- -- -- --
11.48%
1988 -- -- 9.53%- -- -- --
13.23%
1989 -- -- 9.51%- -- -- --
12.33%
1990 -- -- 9.39%- -- -- --
12.32%
1991 -- -- 9.42%- -- -- 2,038,264
12.84%
1992
-- -- 9.48%- -- 916,225 3,736,266
12.04%
1993 -- -- 8.44%- 2,625,933 5,116,300 5,159,165
11.79%
Mortgages Held for Disposition:
1993* -- -- 8.44%- 730,775 734,930 738,718
11.47%
------------- ------------- ------------ ------------ ------------
<PAGE>
<PAGE>72
CRI LIQUIDATING REIT, INC.
NOTES TO FINANCIAL STATEMENTS
5. Investment in Mortgages - Continued
Mortgage Mortgage Mortgage
Carrying Investment Investment Investment
Face Value of Effective Income Income Income
Amount of Mortgages Interest Earned Earned Earned
Complex Name
Mortgages(B) (A),(C),(D) Rate in 1993 in 1992 in 1991
------------
------------- ------------- --------- ------------ ------------ ------------
<S>
<C> <C> <C> <C> <C> <C>
Investment in Mortgages
$226,452,905 $233,514,233 $21,663,403 $24,531,636 $29,613,222
============ ============ =========== =========== ===========
Investment in Limited
Partnerships
$ -- $ 436,090 $ 43,605 $ 600,852 $ 623,876
============ ============ =========== =========== ===========
* For additional information regarding Mortgages Held for Disposition, see Note 6 of the notes to financial
statements.
</TABLE></PAGE>
<PAGE>
<PAGE>73
CRI LIQUIDATING REIT, INC.
NOTES TO FINANCIAL STATEMENTS
5. Investment in Mortgages - Continued
(A) All mortgages are collateralized by first liens on
residential apartment or townhouse complexes which have diverse
geographic locations and are Federally Insured Mortgages or
Mortgage-Backed Securities issued or sold pursuant to a program of
GNMA. Payment of principal and interest on Federally Insured
Mortgages is insured by HUD. Payment of the principal and interest
on Mortgage-Backed Securities is guaranteed by GNMA pursuant to
Title 3 of the National Housing Act. The investment in limited
partnerships is not federally insured or guaranteed.
(B) Principal and interest are payable at level amounts over the
life of the mortgage investment. Total annual debt service payable
to the Liquidating Company (excluding principal and interest on
the mortgages held for disposition, but including the annual
return on one Participation) for the mortgage investments held as
of December 31, 1993, is approximately $20.3 million.
<PAGE>
<PAGE>74
CRI LIQUIDATING REIT, INC.
NOTES TO FINANCIAL STATEMENTS
5. Investment in Mortgages - Continued
(C) Reconciliations of the carrying amount of the mortgage
investments for the years ended December 31, 1993 and 1992 follow:
<PAGE><TABLE>
<CAPTION>
For the year ended
For the year ended
December 31, 1993
December 31, 1992
---------------------------------
----------------------------------
<S> <C> <C> <C> <C>
Balance at beginning of year $231,808,424 $251,985,901
Additions during year:
Amortization of discount 1,306,553 1,269,828
Net unrealized gains on investment
in mortgages 51,349,764 --
Deductions during year:
Principal payments $ 2,744,035 $ 2,906,224
Mortgage dispositions:
Mortgages 54,050,374 39,166,801
Mortgages previously classified as
held for disposition (15,432,020) (36,063,032)
Mortgages reclassified to held
for disposition 9,581,409 15,432,020
Amortization of premium 6,710 50,950,508 5,292 21,447,305
------------ ------------ ----------- ------------
Balance at end of year $233,514,233 $231,808,424
============ ============
</TABLE></PAGE>
(D) Principal Amount of Loans Subject to Delinquent Principal or
Interest is not presented since all required payments with respect
to these Federally Insured Mortgages or Mortgage-Backed Securities
are current and none of these mortgages are delinquent as of
December 31, 1993, except for the mortgages classified as
Mortgages Held for Disposition as discussed below in Note 6.
<PAGE>
<PAGE>75
CRI LIQUIDATING REIT, INC.
NOTES TO FINANCIAL STATEMENTS
5. Investment in Mortgages - Continued
<PAGE>
Historical Dispositions
-----------------------
<TABLE><CAPTION>
Net Gain
Recognized for Net Gain
Financial Recognized
Type of Dispositions Statement For Tax
Year Assignment(1) Sale Prepayment Total Purposes Purposes(3)
---- ------------ ---- ---------- ----- -------------- -----------
<S> <C> <C> <C> <C> <C> <C>
1987 1 1 3 5 $ 4,149,765 $ 4,149,765
1988 3 10 1 14 20,567,386 20,567,386
1989 5 1 1 7 2,957,598 2,977,188
1990 6 0 0 6 3,853,503 8,005,092
1991 8 19 0 27 4,481,534 12,706,737
1992 3 0 0 3 6,097,102 11,202,237
1993 2 5 3 10 8,089,840 14,938,128
--- --- --- --- ----------- -----------
28(2) 36 8 72 $50,196,728 $74,546,533
=== === === === =========== ===========
(1) The Liquidating Company may elect to receive insurance benefits in the form of cash when a government insured
multifamily mortgage defaults. In this case, 90% of the face value of the mortgage is received by the
Liquidating Company within approximately 90 days of assignment and 9% of the face value of the mortgage is
received upon final processing by HUD which may not occur in the same year as assignment. If the Liquidating
Company elects to receive insurance benefits in the form of debentures, 99% of the face value of the mortgage
is received upon final processing by HUD. Gains from dispositions are recognized upon receipt of funds or
debentures and losses are recognized at the time of assignment.
(2) Seven of the 28 assignments were sales of government insured multifamily mortgages then in default and
resulted in the CRIIMI Funds or the Liquidating Company receiving face value or near face value.
(3) In connection with the Merger, the Liquidating Company recorded its investment in mortgages at the lower of
cost or fair value, which resulted in an overall net write down for tax purposes. For financial statement
purposes, carryover basis of accounting was used. Therefore, since the Merger, the net gain for tax purposes
was greater than the net gain recognized for financial statement purposes. As a REIT, dividends to the
Liquidating Company's shareholders are based on net gains recognized for tax purposes.
</TABLE></PAGE>
<PAGE>
<PAGE>76
CRI LIQUIDATING REIT, INC.
NOTES TO FINANCIAL STATEMENTS
6. Mortgages Held for Disposition
As of December 31, 1993 and 1992, the following mortgages
were classified as Mortgages Held for Disposition:
<PAGE><TABLE><CAPTION>
Anticipated
Anticipated Financial Anticipated
Date of Type of Net Carrying Statement Tax Basis
Complex Name Disposition Disposition Value (1) (Loss)/Gain Gain
------------------ ----------- ----------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Booker Gardens Apts.-9% 1994 Assignment $ 31,508 $ (3,815) $ 2,733
Lincoln Countrywood Apts. 1994 Assignment 4,991,963 586,179 1,100,971
Timberlake Apts. 1994 Assignment 4,557,938 1,044,698 1,457,193
----------- ----------- -----------
Mortgages Held for Disposition
as of December 31, 1993 $ 9,581,409 $ 1,627,062 $ 2,560,897
=========== =========== ===========
Booker Gardens Apts.-9% 1993 Assignment $ 31,508 $ (3,815) $ 2,733
The Manhattan Bldg. 1993 Assignment 4,929,861 1,839,707 1,695,797
Woodbridge Apts. 1993 Assignment 5,552,934 431,399 1,107,332
White Oak Apts. 1993 Sale 4,949,225 37,780 1,052,137
----------- ----------- -----------
Mortgages Held for Disposition
as of December 31, 1992 $15,463,528 $ 2,305,071 $ 3,857,999
=========== =========== ===========
(1) In connection with the Liquidating Company's implementation of SFAS 115 (see Note 2) as of December 31, 1993,
all mortgage investments including Mortgages Held for Disposition, are recorded at fair value. As of December 31,
1992, all Mortgages Held for Disposition were recorded at the lower of cost or market.
</TABLE></PAGE>
<PAGE>
<PAGE>77
CRI LIQUIDATING REIT, INC.
NOTES TO FINANCIAL STATEMENTS
7. Other Short-term Investments
On January 28, 1993, October 15, 1993 and October 28, 1993,
the Liquidating Company entered into investment and financing
agreements with Daiwa Securities America, Inc. (Daiwa). These
transactions assisted in maintaining the Liquidating Company's
REIT status. Pursuant to the terms of these agreements, the
Liquidating Company invested in GNMA mortgage-backed securities or
certificates backed by FHA-Insured project loans (collectively,
the Securities) with unpaid principal balances of approximately
$74.7 million, $40.3 million and $11.9 million, respectively, at
purchase prices of 104.615%, 106.41% and 100.8%, respectively, of
the face values, which earned interest at per annum pass-through
coupon rates of 9.1875%, 13.18% and 8.625%, respectively. In
addition, Daiwa provided financing for approximately 99% and 86%
of the purchase price for the transactions which occurred on
January 28, 1993 and October 15, 1993, respectively, at an
interest rate of approximately 3.35%. The related debt was non-
recourse and fully secured with the Securities which were held by
Daiwa in the Liquidating Company's name. The Liquidating Company
disposed of these Securities and repaid the related debt by the
end of 1993. These investments provided a net interest rate spread
(after borrowing costs) of approximately 4%, 3.5% and 3.5%,
respectively.
<PAGE>
<PAGE>78
CRI LIQUIDATING REIT, INC.
NOTES TO FINANCIAL STATEMENTS
8. Reconciliation of Financial Statement Net Income to Tax Basis
Income
Reconciliations of the financial statement net income to the
tax basis income for the years ended December 31, 1993, 1992 and
1991 are as follows:
<PAGE><TABLE><CAPTION>
1993 1992 1991
----------- ----------- -----------
<S> <C> <C> <C>
Financial statement net income $27,636,126 $28,809,166 $32,759,440
Adjustments:
Nondeductible expense:
Amortization of deferred costs 251,203 305,057 353,464
Additional income due to basis
differences:
Amortization of premium - other
short-term investments 3,862,866 1,201,037 --
Disposition of other short-term
investments (3,862,866) (1,202,579) --
Mortgage dispositions 6,848,288 5,105,135 8,225,203
Loss on investment in limited
partnership -- 731,951 --
Reamortization of mortgages 589,793 664,204 939,868
Income (loss) from investment in
limited partnerships 192,081 490,766 (142,187)
----------- ----------- -----------
Tax basis income $35,517,491 $36,104,737 $42,135,788
=========== =========== ===========
</TABLE></PAGE>
Differences in the financial statement net income and the tax
basis income principally relate to differences in the tax bases of
assets and liabilities and their related financial reporting
amounts resulting from the Merger and the acquisition of other
short-term investments. Such differences relate to investments in
mortgages, other short-term investments, and deferred costs.
<PAGE>
<PAGE>79
CRI LIQUIDATING REIT, INC.
NOTES TO FINANCIAL STATEMENTS
8. Reconciliation of Financial Statement Net Income to Tax Basis
Income - Continued
As a result of the foregoing, the nature of the dividends for
income tax purposes on a per share basis is as follows:
1993 1992 1991
------ ------ ------
Ordinary income $ .81 $ .86 $ .97
Long-term capital
gains .36 .33 .42
Non-taxable dividend 1.61 1.21 1.76
------ ------ ------
$ 2.78 $ 2.40 $ 3.15
====== ====== ======
9. Summary of Quarterly Results of Operations (Unaudited)
The following is a summary of unaudited quarterly results of
operations for the years ended December 31, 1993, 1992 and 1991:
<PAGE><TABLE><CAPTION>
1993
Quarter ended
March 31 June 30 September 30 December 31
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Income (primarily mortgage
investment income) $ 6,473,945 $ 6,445,357 $ 6,125,585 $ 5,566,449
Net gain on
mortgage dispositions 2,058,901 436,123 509,567 5,085,249
Net income 7,338,417 5,583,956 5,167,514 9,546,239
Net income per share .24 .18 .17 .31
</TABLE></PAGE>
<PAGE>
<PAGE>80
CRI LIQUIDATING REIT, INC.
NOTES TO FINANCIAL STATEMENTS
9. Summary of Quarterly Results of Operations (Unaudited) -
Continued
<PAGE><TABLE><CAPTION>
1992
Quarter ended
March 31 June 30 September 30 December 31
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Income (primarily mortgage
investment income) $ 7,030,851 $ 6,395,139 $ 7,095,501 $ 6,741,768
Net gain on
mortgage dispositions 5,409,909 4,170 620,747 62,276
Loss on investment in limited
partnership -- -- -- (731,951)
Net income 11,624,859 5,649,572 6,523,786 5,010,949
Net income per share .38 .19 .21 .17
</TABLE></PAGE>
<PAGE><TABLE><CAPTION>
1991
Quarter ended
March 31 June 30 September 30 December 31
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Income (primarily mortgage
investment income) $ 8,678,348 $ 7,987,368 $ 7,423,547 $ 7,431,238
Net gain (loss) on
mortgage dispositions 3,998,344 (193,281) (6,509) 682,980
Net income 11,858,754 7,003,776 6,613,964 7,282,946
Net income per share .39 .23 .22 .24
</TABLE></PAGE>
<PAGE>
<PAGE>81
CRI LIQUIDATING REIT, INC.
NOTES TO FINANCIAL STATEMENTS
10. Settlement of Litigation
On March 22, 1990, a complaint was filed on behalf of a class
comprised of certain former investors of CRIIMI III and CRIIMI II
(the Plaintiffs) in the Circuit Court for Montgomery County,
Maryland against the Liquidating Company, CRIIMI MAE, CRIIMI I and
its general partner, CRIIMI II, CRIIMI III and its general
partner, CRI, and Messrs. William B. Dockser, H. William
Willoughby and Martin C. Schwartzberg (the Defendants). On
November 18, 1993, the Court entered an order granting final
approval of a settlement agreement between the Plaintiffs and the
Defendants. Under the terms of the settlement, CRIIMI MAE will
issue to class members, including certain former investors of
CRIIMI I, up to 2,500,000 warrants to purchase shares of its
common stock. In addition, the settlement includes a payment of
$1,400,000 for settlement administration costs and Plaintiff's
attorneys' fees and expenses. Insurance provided $1,150,000 of
the $1,400,000 cash payment, with the balance paid by CRIIMI MAE.
<PAGE>
<PAGE>82
<PAGE><TABLE>
Appendix
The Liquidating Company Mortgage Investments
(Excluding Mortgages Held for Disposition)
As of December 31, 1993
(Unaudited)
<CAPTION>
Section
No. of of the Loan Carrying Net Maturity Put
Property Name/Location Units Act Type Value (Tax) Face Value Coupon Date Date
---------------------- ------ ------- ---- --------------- --------------- ------ ---------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Brookridge Twnhs 2
Salisbury, MD 140 221(d)4 FHA $ 3,189,003.96 $ 4,584,909.98 7.430% 7/01/22 2/02
Central Park Apts.
Detroit, MI 92 223(f) GNMA 1,316,892.13 1,673,621.67 9.750% 5/15/22 N/A
Charles River E.
Boston, MA 152 236 FHA 2,146,214.52 2,993,956.27 6.875% 1/01/16 N/A
Cinnamon Run I
Silver Spring, MD 288 221(d)4 FHA 7,917,301.27 10,536,916.79 7.430% 11/01/22 12/02
Cloverset Valley
Kansas City, MO 258 221(d)4 FHA 7,397,051.35 9,944,417.90 7.430% 4/01/23 4/02
Colony Manor Apts.
Goodlettsville, TN 112 221(d)4 FHA 2,164,017.70 3,077,034.16 7.430% 12/01/24 N/A
Crestwood Villas
Birmingham, AL 270 221(d)4 FHA 4,661,914.19 6,702,549.50 7.430% 7/01/22 6/01
Crooked Creek Apts.
Indianapolis, IN 216 221(d)4 FHA 4,678,602.59 6,292,047.66 7.430% 6/01/23 5/02
Dillerwood Apts.
Bronx, NY 75 207 FHA 632,173.87 726,005.42 11.110% 2/01/23 N/A
Festival Field
Newport, RI 204 236 FHA 2,114,447.73 2,941,441.27 6.875% 1/01/15 N/A
Firethorn I
Indianapolis, IN 240 221(d)4 FHA 4,721,674.35 6,861,214.85 7.430% 9/01/23 9/02
Firethorn II Apts.
Indianapolis, IN 160 221(d)4 FHA 3,218,860.87 3,963,622.18 9.680% 9/01/23 N/A
Fox Hill Apts.
Hampton, VA 96 236 FHA 1,251,617.79 1,784,219.35 6.850% 12/01/15 N/A
Gordon Terrace
Chicago, IL 96 207 FHA 3,201,613.52 4,172,453.48 7.500% 4/01/19 N/A
Grandview Plaza
Great Falls, MT 97 236 FHA 764,977.76 1,058,127.00 6.930% 3/01/15 N/A
<PAGE>
<PAGE>83
Appendix
The Liquidating Company Mortgage Investments
(Excluding Mortgages Held for Disposition) (Continued)
As of December 31, 1993
(Unaudited)
<CAPTION>
Section
No. of of the Loan Carrying Net Maturity Put
Property Name/Location Units Act Type Value (Tax) Face Value Coupon Date Date
---------------------- ------ ------- ---- --------------- --------------- ------ ---------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Hampton Gardens
North Hampton, MA 207 236 FHA 2,803,281.75 3,901,558.07 6.875% 3/01/15 N/A
Havenside Terrace
Sacramento, CA 38 221(d)4 FHA 1,086,308.98 1,523,410.67 7.430% 1/01/20 8/00
Hidden Oaks II
Albany, GA 112 221(d)4 FHA 1,854,739.48 2,604,962.66 7.430% 2/01/21 3/01
Hidden Valley Apts.
Spring Township, PA 154 221(d)4 FHA 2,557,580.25 3,611,460.87 7.430% 5/01/19 2/00
Holiday Park
Garland, TX 184 223(f) GNMA 2,376,995.95 3,016,504.51 9.750% 9/01/22 N/A
Holly St. Tnhs 2
Waldorf, MD 60 221(d)4 FHA 1,106,182.36 1,575,458.87 7.400% 2/01/21 10/00
Holly Stn Tnhs I
Waldorf, MD 150 221(d)4 FHA 2,807,779.49 4,002,075.53 7.400% 6/01/21 12/00
Kingston Townhouses
Essex, MD 115 236 FHA 1,297,842.03 1,809,669.76 6.875% 11/01/15 N/A
Kulana Nani
Kaneohe, HI 160 236 FHA 2,181,481.24 3,001,580.40 6.930% 6/01/13 N/A
Lawyers Hill
Ellicott City, MD 84 236 FHA 873,712.36 1,219,096.17 6.875% 3/01/16 N/A
Lincoln Disc. Pk.
Sacramento, CA 128 221(d)4 FHA 2,782,721.95 3,930,814.29 7.430% 9/01/24 N/A
Los Robles Apts.
Union City, CA 140 236 FHA 2,020,744.65 2,819,554.55 6.875% 2/01/16 N/A
Manassas Park
Manasas Park, VA 166 236 FHA 2,543,856.76 3,542,169.31 6.875% 5/01/15 N/A
Meadows East
Sparks, NV 200 236 FHA 1,844,423.95 2,543,788.50 6.930% 3/01/14 N/A
<PAGE>
<PAGE>84
Appendix
The Liquidating Company Mortgage Investments
(Excluding Mortgages Held for Disposition) (Continued)
As of December 31, 1993
(Unaudited)
<CAPTION>
Section
No. of of the Loan Carrying Net Maturity Put
Property Name/Location Units Act Type Value (Tax) Face Value Coupon Date Date
---------------------- ------ ------- ---- --------------- --------------- ------ ---------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Mountain View Apts.
Camarillo, CA 106 221(d)4 FHA 2,359,582.32 3,301,219.85 7.430% 11/01/19 1/00
Northshore Woods
Knoxville, TN 140 221(d)4 FHA 2,765,054.92 3,711,121.08 7.430% 7/01/22 3/03
Old Oak Apartments
Little Rock, AR 112 221(d)4 FHA 2,620,402.08 3,247,150.24 7.430% 7/01/24 N/A
Parker House Apts.
Detroit, MI 36 221(d)4 FHA 303,649.53 373,683.92 9.680% 11/01/22 N/A
Parkview Apts.
Great Falls, MT 84 236 FHA 656,950.00 901,418.38 6.930% 9/01/12 N/A
Pin Oak Village
Oil City, PA 100 236 FHA 1,016,091.42 1,445,936.86 6.850% 11/01/15 N/A
Pleasant Greens
Pleasanton, CA 131 236 FHA 1,985,538.24 2,756,168.16 6.930% 5/01/16 N/A
Pleasant Village
Fresno, CA 100 236 FHA 863,140.73 1,195,281.88 6.930% 8/01/15 N/A
Pleasantdale Apts.
Doraville, GA 210 221(d)4 FHA 4,272,599.47 6,417,131.23 7.430% 9/01/24 N/A
Regency Manor
Rutland, VT 120 236 FHA 1,202,494.58 1,672,806.72 6.875% 1/01/15 N/A
Riverwood Apts.
Milwaukee, WI 90 221(d)4 FHA 1,940,738.70 2,525,227.45 7.430% 1/01/22 8/00
Russell Square Apts.
Phenix City, AL 100 221(d)4 FHA 1,801,696.68 2,191,261.98 9.680% 2/01/25 N/A
Shelter Hill Apts.
Mill Valley, CA 75 236 FHA 1,736,329.56 2,430,408.73 6.875% 5/01/17 N/A
Sleepy Hollow Apt.
Madison, WI 124 221(d)4 FHA 2,229,150.91 3,163,296.81 7.430% 5/01/21 5/01
Stonewood Village
Madison, WI 144 221(d)4 FHA 2,880,745.86 3,690,816.42 9.680% 2/01/25 N/A
<PAGE>
<PAGE>85
Appendix
The Liquidating Company Mortgage Investments
(Excluding Mortgages Held for Disposition) (Continued)
As of December 31, 1993
(Unaudited)
<CAPTION>
Section
No. of of the Loan Carrying Net Maturity Put
Property Name/Location Units Act Type Value (Tax) Face Value Coupon Date Date
---------------------- ------ ------- ---- --------------- --------------- ------ ---------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Tanglewood Apts.
Knoxville, TN 105 221(d)4 FHA 1,545,638.81 2,108,048.36 7.430% 8/01/20 11/01
The Glen
Falls Church, VA 152 221(d)4 FHA 1,870,274.00 2,611,626.18 7.430% 4/01/19 11/99
The Tree House
Schaumburg, IL 272 221(d)4 FHA 4,293,765.20 6,115,313.65 7.400% 1/01/21 4/01
The Willows
Port Arthur, TX 168 221(d)4 FHA 3,078,491.17 3,744,811.82 9.680% 6/01/25 N/A
Timbercroft IV & V
Reistertown, MD 279 236 FHA 3,577,946.18 4,859,022.32 7.600% 11/01/17 N/A
Treehaven Apts.
Summerville, SC 88 221(d)4 FHA 800,227.89 1,133,839.17 7.400% 2/01/19 2/00
Turtle Creek Apts.
Pontiac, MI 125 221(d)4 FHA 3,069,519.47 3,778,504.79 7.430% 8/01/21 N/A
Villa de Mission
Las Vegas, NV 226 221(d)4 FHA 5,794,308.42 7,611,407.87 7.430% 3/01/21 2/01
Wakefield Terrace
St. Charles, MD 204 236 FHA 3,760,314.88 5,231,385.34 7.350% 4/01/20 N/A
Westwind Apts.
Roseville, CA 126 221(d)4 FHA 2,520,472.09 3,596,688.11 7.400% 4/01/21 5/01
Willow Creek
Portage, IN 130 236 FHA 1,576,526.97 2,192,065.10 6.875% 11/01/14 N/A
Willow Dayton II
Chicago, IL 87 220 FHA 3,286,727.94 4,187,903.93 9.680% 3/01/25 N/A
Willocrest Prcl G
Frederick, MD 204 221(d)4 FHA 3,064,373.67 4,397,817.38 7.430% 8/01/19 5/00
Windermere House
Chicago, IL 220 221(d)4 FHA 6,085,988.39 8,006,545.94 7.430% 6/01/23 1/03
<PAGE>
<PAGE>86
Appendix
The Liquidating Company Mortgage Investments
(Excluding Mortgages Held for Disposition) (Continued)
As of December 31, 1993
(Unaudited)
<CAPTION>
Section
No. of of the Loan Carrying Net Maturity Put
Property Name/Location Units Act Type Value (Tax) Face Value Coupon Date Date
---------------------- ------ ------- ---- --------------- --------------- ------ ---------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Windrush Apartments
Decatur, GA 202 221(d)4 FHA 4,649,155.96 6,751,322.29 7.430% 6/01/23 5/03
1120 North LaSalle
Chicago, IL 263 220 FHA 9,830,123.53 13,643,931.31 7.500% 2/01/22 N/A
441 Ocean Avenue
Brooklyn, NY 207 223(f) FHA 877,159.91 1,045,100.24 9.340% 1/01/25 N/A
--------------- ---------------
Total Loans 61 $165,829,194.28 $226,452,905.15
=============== ===============
</TABLE></PAGE>
<PAGE>
<PAGE>87
<PAGE>
Directors and Executive Officers
--------------------------------
<TABLE><CAPTION>
Liquidating Company
Name Position Principal Occupation
---------------------- --------------------- ---------------------------------------
<S> <C> <C>
William B. Dockser Chairman of the Board Chairman of the Board and Shareholder -
C.R.I., Inc.
H. William Willoughby Director, President President, Secretary, Director and
and Secretary Shareholder - C.R.I., Inc.
Garrett G. Carlson Director Chairman of the Board-SCA Realty, Inc.;
President - Can American Realty
Corporation and Canadian Financial
Corporation
G. Richard Dunnells Director Partner - Holland & Knight
Robert F. Tardio Director Chairman - The Tardio Corporation
Jay R. Cohen Executive Vice Senior Vice President, Mortgages -
President and C.R.I., Inc.
Treasurer
</TABLE></PAGE>
<PAGE>
<PAGE>88
<PAGE>
The Annual Report to the Securities and Exchange Commission on
Form 10-K is available to Shareholders and may be obtained by
writing:
Investor Services/CRI Liquidating REIT, Inc.
C.R.I., Inc.
The CRI Building
11200 Rockville Pike
Rockville, Maryland 20852
CRI Liquidating REIT, Inc. shares are traded on the New York Stock
Exchange under the symbol CFR.
</PAGE>
<PAGE>
