SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
_X_ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1997
OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 0-23972
AMERICAN MORTGAGE INVESTORS TRUST
---------------------------------
(Exact name of registrant as specified in its charter)
Massachusetts 13-6972380
- - - ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
625 Madison Avenue, New York, New York 10022
- - - --------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212)421-5333
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes _X_ No ____
<PAGE>
PART I
Item 1. Financial Statements
AMERICAN MORTGAGE INVESTORS TRUST
Balance Sheets
(Unaudited)
============= ============
September 30, December 31,
1997 1996
------------- ------------
ASSETS
Investments in loans (Note 2) $46,788,060 $45,049,596
Investment in REMIC and GNMA
Certificates and FHA
Insured Project Loan (Note 3) 12,521,613 12,683,331
Cash and cash equivalents 2,501,615 4,828,561
Organization costs (net of
accumulated amortization
of $42,500 and $35,000,
respectively) 7,500 15,000
Deferred costs 9,549 12,581
Accrued interest receivable 632,947 558,146
----------- -----------
Total assets $62,461,284 $63,147,215
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Accounts payable and
accrued expenses $ 76,326 $ 99,768
Due to affiliates (Note 4) 1,251,947 886,783
----------- -----------
Total liabilities 1,328,273 986,551
----------- -----------
Commitments (Note 5)
Shareholders' equity:
Shares of beneficial interest;
$.10 par value; 12,500,000
shares authorized; 4,065,486
and 4,010,000 shares issued
and outstanding, respectively 406,550 401,001
Treasury stock; $.10 par value;
206,214 and 169,115 shares,
respectively (20,622) (16,912)
Additional paid-in capital 69,197,104 68,849,567
Accumulated deficit (8,520,394) (6,991,606)
Net unrealized gain (loss) on
marketable securities (Note 3) 70,373 (81,386)
----------- -----------
Total shareholders' equity 61,133,011 62,160,664
----------- -----------
Total liabilities and shareholders'
equity $62,461,284 $63,147,215
=========== ===========
See Accompanying Notes to Financial Statements
2
<PAGE>
AMERICAN MORTGAGE INVESTORS TRUST
Statements of Operations
(Unaudited)
======================= =======================
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- -----------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
Revenues:
Interest income:
Mortgage loans
(Note 2) $ 793,562 $ 690,911 $2,354,292 $2,086,545
REMIC and
GNMA
Certificates
and FHA
Insured
Project Loan
(Note 3) 245,286 327,321 731,318 1,042,659
Temporary
investments 28,155 61,093 124,421 186,346
---------- ---------- ---------- ----------
Total revenues 1,067,003 1,079,325 3,210,031 3,315,550
---------- ---------- ---------- ----------
Expenses:
General and
administrative 22,889 50,747 129,004 157,315
General and
administrative -
related parties
(Note 4) 103,495 106,209 364,663 396,932
Realized
loss on sale
of REMICs
and GNMAs
and FHA
Insured
Project Loan
(Note 3) 3,614 407,708 65,386 405,886
Amortization 2,500 2,500 7,500 7,500
---------- ---------- ---------- ----------
Total expenses 132,498 567,164 566,553 967,633
---------- ---------- ---------- ----------
Net income $ 934,505 $ 512,161 $2,643,478 $2,347,917
========== ========== ========== ==========
Net income
per weighted
average share $ .23 $ .13 $ .65 $ .59
========== ========== ========== ==========
See Accompanying Notes to Financial Statements
3
<PAGE>
AMERICAN MORTGAGE INVESTORS TRUST
Statement of Changes in Shareholders' Equity
(Unaudited)
<TABLE>
<CAPTION>
Net
Unrealized
Gain
Shares of (Loss) on
Beneficial Interest Treasury Stock Securities
-------------------- -------------------- Additional Accumulated Available
Shares Amount Shares Amount Paid-in Capital Deficit for Sale Total
--------- -------- -------- -------- ------------ ----------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at
January 1, 1997 4,010,000 $401,001 (169,115) $(16,912) $ 68,849,567 $(6,991,606) $ (81,386) $ 62,160,664
Net Income 0 0 0 0 0 2,643,478 0 2,643,478
Distributions 0 0 0 0 0 (4,172,266) 0 (4,172,266)
Purchase of
Treasury Stock 0 0 (37,099) (3,710) (701,164) 0 0 (704,874)
Issuance of shares of
beneficial interest 55,486 5,549 0 0 1,048,701 0 0 1,054,250
Change in net
unrealized gain
(loss) on securities
available
for sale (Note 3) 0 0 0 0 0 0 151,759 151,759
--------- -------- -------- -------- ------------ ----------- --------- ------------
Balance at
September 30, 1997 4,065,486 $406,550 (206,214) $(20,622) $ 69,197,104 $(8,520,394) $ 70,373 $ 61,133,011
========= ======== ======== ======== ============ =========== ========= ============
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
AMERICAN MORTGAGE INVESTORS TRUST
Statements of Cash Flows
(Unaudited)
===========================
Nine Months Ended
September 30,
---------------------------
1997 1996
---------------------------
Cash flows from operating activities:
Net income $2,643,478 $2,347,917
---------- ----------
Adjustments to reconcile net income
to net cash provided by
operating activities
Amortization expense -
organization costs 7,500 7,500
Amortization expense - loan
premium and origination costs 357,513 358,046
Amortization of REMIC premium 3,055 19,523
Amortization of REMIC
and GNMA and FHA
Insured Project Loan discount (24,274) (33,481)
Loss on sale of REMIC
certificates 21,070 399,155
Loss on sale of GNMAs 1,236 5,253
Loss on sale of FHA
Insured Project Loan 43,080 1,478
Changes in operating assets and
liabilities:
Increase in accrued
interest receivable (74,801) (158,992)
Increase in due to affiliates 365,164 291,350
(Decrease) increase in accounts
payable and accrued expenses (23,442) 83,145
---------- ----------
Total adjustments 676,101 972,977
---------- ----------
Net cash provided by
operating activities 3,319,579 3,320,894
---------- ----------
See Accompanying Notes to Financial Statements
5
<PAGE>
AMERICAN MORTGAGE INVESTORS TRUST
Statements of Cash Flows
(continued)
(Unaudited)
============================
Nine Months Ended
September 30,
----------------------------
1997 1996
----------------------------
Cash flows from investing activities:
Investments in loans (2,242,671) (4,629,892)
Proceeds from sale of REMIC
Certificates 0 4,940,625
Principal repayments of loans 149,726 131,568
Purchase of REMIC Certificates (1,889,817) 0
Purchase of GNMA Certificate (1,981,566) 0
Principal repayments of GNMAs 86,164 70,802
Principal repayments of REMICs 646,291 866,765
Principal repayments of FHA
Insured Project Loan 3,408,238 33,064
Increase in deferred costs 0 (11)
----------- -----------
Net cash (used in) provided by
investing activities (1,823,635) 1,412,921
----------- -----------
Cash flows from financing activities:
Increase in due to affiliates 0 50,000
Distributions to shareholders (4,172,266) (4,165,518)
Proceeds from issuance of shares
of beneficial interest 1,054,250 1,079,671
Purchase of Treasury Stock (704,874) (1,079,661)
Increase in offering costs 0 (50,000)
----------- -----------
Net cash used in financing
activities (3,822,890) (4,165,508)
----------- -----------
Net (decrease) increase in cash and
cash equivalents (2,326,946) 568,307
Cash and cash equivalents at
beginning of period 4,828,561 6,242,945
----------- -----------
Cash and cash equivalents at
end of period $ 2,501,615 $ 6,811,252
=========== ===========
Supplemental schedule of non cash
investing activities:
Decrease in deferred costs $ 3,032 $ 53,835
Increase in investments
in loans (3,032) (53,835)
----------- -----------
$ 0 $ 0
=========== ===========
See Accompanying Notes to Financial Statements
6
<PAGE>
AMERICAN MORTGAGE INVESTORS TRUST
Notes to Financial Statements
September 30, 1997
(Unaudited)
Note 1 - General
American Mortgage Investors Trust (the "Company") was formed on June 11, 1991 as
a Massachusetts business trust for the primary purpose of investing in
government-insured mortgages and guaranteed mortgage-backed certificates. The
Company is electing to be treated as a real estate investment trust ("REIT")
under the Internal Revenue Code of 1986, as amended.
The Company issued 10,000 shares of beneficial interest at $20 per share in
exchange for $200,000 cash from Related AMI Associates, Inc., the current
advisor to the Company (the "Advisor").
On March 29, 1993, the Company commenced a public offering (the "Offering")
through Related Equities Corporation (the "Dealer Manager"), an affiliate of the
Advisor, and other broker-dealers on a "best efforts" basis, for up to
10,000,000 of its shares of beneficial interest at an initial offering price of
$20 per share. The Offering terminated as of November 30, 1994. As of November
30, 1994, a total of 3,809,601 shares had been sold to the public, either
through the Offering or the Company's dividend reinvestment plan (the
"Reinvestment Plan"), representing Gross Proceeds (the "Gross Proceeds") of
$76,192,021 (before volume discounts of $40,575). Pursuant to the Redemption
Plan which became effective November 30, 1994, the Company is required to redeem
eligible shares presented for redemption for cash to the extent it has
sufficient net proceeds from the sale of shares under the Reinvestment Plan.
After November 30, 1994, 207,404 shares were sold through the Reinvestment Plan,
the proceeds of which are restricted for use in connection with the Redemption
Plan and are not included in gross proceeds. As of September 30, 1997, 206,042
shares were redeemed, pursuant to the Redemption Plan, for an aggregate price of
$3,911,227. Of such redemptions, 16,931 shares were redeemed from proceeds from
the Reinvestment Plan before the termination of the Offering and, therefore, the
proceeds available for future investment were reduced by $319,987. During the
Offering, the Advisor received 38,481 restricted shares (including 717 from the
Reinvestment Plan) in addition to the 10,000 shares purchased, which the Advisor
has valued at $14.75 per share, pursuant to the terms of the Offering. As a
result of the shares being redeemed, the Advisor was required to return 172
shares as
7
<PAGE>
AMERICAN MORTGAGE INVESTORS TRUST
Notes to Financial Statements
September 30, 1997
(Unaudited)
of September 30, 1997. As of September 30, 1997, the backlog of shares to be
redeemed is 129,431. As permitted by the provisions of the Redemption Plan, the
Board of Trustees implemented the following change to the calculation of the
redemption price for the quarter ended June 30, 1997: the original $19 per share
redemption price was reduced to reflect any return of principal received by
shareholders. As of June 30, 1997, the amount of principal which had been
distributed to shareholders was $1.53 per share and, therefore, the redemption
price was $17.47 per share ($19 per share less $1.53 per share) for redemptions
which occurred in October 1997 for the quarter ended June 30, 1997. The Board
subsequently adopted a policy to adjust the redemption price each quarter to
reflect the then net asset value of a share of the Company's stock. This new
policy is effective for redemptions with respect to quarters ended September 30,
1997 and thereafter. With respect to the Reinvestment Plan, the Board also
adopted a policy to adjust the reinvestment price at which participants may
acquire additional shares under the Reinvestment Plan to also reflect the then
net asset value of a share of the Company's stock. The change in policy with
respect to the reinvestment price is effective November 30, 1997.
The Company has invested principally in two types of mortgage investments
("Mortgage Investments"): (i) new mortgage loans originated by or on behalf of
the Company or by other lenders and sold to the Company prior to the loans being
fully funded and (ii) Ginnie Mae mortgage-backed securities and pass-through
certificates ("Originated Mortgages") and existing mortgage loans that it
acquires ("Acquired Mortgages") on multifamily residential rental properties
("Developments"). No more than 7% of the Net Proceeds may be invested in
non-interest bearing uninsured loans made directly to developers or sponsors of
Developments (or the general partners or other principals of the owner of the
Developments) with respect to which the Company holds a mortgage ("Additional
Loans"). As of September 30, 1997, of the total Net Proceeds available for
investment, 84.9% had been invested in Originated Mortgages (including 6.32% in
Additional Loans) and 15.1% had been invested in Acquired Mortgages.
The Company also invests in REMICs and in CMOs or participations therein that
are backed by single family and/or multifamily mortgage loans insured by FHA or
mortgage certificates guaran-
8
<PAGE>
AMERICAN MORTGAGE INVESTORS TRUST
Notes to Financial Statements
September 30, 1997
(Unaudited)
teed by Ginnie Mae, Fannie Mae or Freddie Mac. Due to the complexity of the
REMIC structure and the uncertainty of future economic and other factors that
affect interest rates and mortgage prepayments, it is not possible to predict
the effect of future events upon the yield to maturity or the market value of
the REMIC and GNMA Certificates upon sale or other disposition or whether the
Company, if it chose to, would be able to reinvest proceeds from prepayments at
favorable rates relative to the coupon rate.
Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosures of
contingent assets and liabilities to prepare these financial statements in
conformity with generally accepted accounting principals. Actual results could
differ from those estimates.
The unaudited financial statements have been prepared on the same basis as the
audited financial statements included in the Company's Form 10-K for the year
ended December 31, 1996. In the opinion of the Advisor, the accompanying
unaudited financial statements contain all adjustments (consisting only of
normal recurring adjustments) necessary to present fairly the financial position
of the Company as of September 30, 1997, the results of operations for the three
and nine months ended September 30, 1997 and 1996 and cash flows for the nine
months ended September 30, 1997 and 1996. However, the operating results for the
nine months ended September 30, 1997 may not be indicative of the results for
the year.
Certain information and note disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been omitted. It is suggested that these financial statements be read in
conjunction with the financial statements and notes thereto included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1996.
Certain prior year amounts have been reclassified to conform with current year
presentation.
9
<PAGE>
AMERICAN MORTGAGE INVESTORS TRUST
Notes to Financial Statements
September 30, 1997
(Unaudited)
Note 2 - Investments in Loans
The Company originally funded five Originated Mortgages (excluding GNMAs-see
Note 3), five noninterest bearing Additional Loans and two additional
loan-bridge loans in the aggregate amount of $46,613,871.
10
<PAGE>
AMERICAN MORTGAGE INVESTORS TRUST
Notes to Financial Statements
September 30, 1997
(Unaudited)
Information relating to investments in Originated Mortgages (excluding GNMAs-see
Note 3) and Additional Loans as of September 30, 1997 and December 31, 1996 are
as follows:
Investments in loans - January 1, 1996 $39,497,133
Additions:
Columbiana Originated Mortgage 8,683,000
Columbiana Originated Mortgage -
unadvanced (666,872)
----------
Columbiana total advanced 8,016,128
Columbiana advanced prior
to 1996 (7,552,100)
----------
Columbiana-advanced in 1996 464,028
Columbiana - loan origination
costs 5,395
Stonybrook Originated Mortgage 8,500,000
Stonybrook Originated Mortgage -
unadvanced (2,205,337)
----------
Stonybrook total advanced 6,294,663
Stonybrook advanced prior
to 1996 (610,209)
----------
Stonybrook-advanced in 1996 5,684,454
Stonybrook - loan origination
costs 53,023
-----------
45,704,033
-----------
Deductions:
Amortization of Additional Loans (372,916)
Amortization of loan origination costs (104,426)
Collection of principal
- Cove (46,706)
- Oxford (64,222)
- Town and Country (66,167)
-----------
(654,437)
-----------
11
<PAGE>
AMERICAN MORTGAGE INVESTORS TRUST
Notes to Financial Statements
September 30, 1997
(Unaudited)
Investments in loans - December 31, 1996 $45,049,596
Additions:
Columbiana Originated Mortgage 8,683,000
Columbiana Originated Mortgage -
unadvanced (406,105)
-----------
Columbiana total advanced 8,276,895
Columbiana advanced prior
to 1997 (8,016,128)
-----------
Columbiana-advanced in 1997 260,767
Columbiana - loan origination
costs 3,032
Stonybrook Originated Mortgage 8,500,000
Stonybrook Originated Mortgage -
unadvanced (223,433)
-----------
Stonybrook total advanced 8,276,567
Stonybrook advanced prior
to 1997 (6,294,663)
-----------
Stonybrook-advanced in 1997 1,981,904
-----------
47,295,299
-----------
Deductions:
Amortization of Additional Loans (279,687)
Amortization of loan origination costs (77,826)
Collection of principal
- Cove (37,435)
- Oxford (51,473)
- Town and Country (52,917)
- Stonybrook (7,901)
-----------
(507,239)
-----------
Investments in loans - September 30, 1997 $46,788,060
-----------
12
<PAGE>
AMERICAN MORTGAGE INVESTORS TRUST
Notes to Financial Statements
September 30, 1997
(Unaudited)
NOTE 2 - Investments in Loans (continued)
Information relating to investments in Originated Mortgages (excluding GNMAs -
see Note 3) and Additional Loans as of September 30, 1997 and December 31, 1996
is as follows:
<TABLE>
<CAPTION>
Date of
Invest- Amounts Advanced Total
ment/ -------------------------------------------------- Amounts
Final Total Advanced
Maturity Equity Bridge Mortgage Amounts Amounts and Outstanding
Property Description Date Loans Loans Loans Advanced Unadvanced Unadvanced Loan Balance
- - - ------------- ----------- -------- ----------- -------- ----------- ----------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
The Cove Apts 308 Dec. 93 $ 840,500 $ 84,210 $ 6,800,000 $ 7,724,710 $ 0 $ 7,724,710 $ 7,476,179
Houston, Apartment Jan. 29 (D)
TX (A) Units (E)
Oxford on 405 Dec. 93 1,156,000 115,790 9,350,000 10,621,790 0 10,621,790 10,280,058
Greenridge Apartment Jan. 29 (D)
Apts Units (E)
Houston,
TX (A)
Town & 330 Apr. 94 1,039,000 None 9,348,000 10,387,000 0 10,387,000 10,172,612
Country IV Apartment May 29
Apts Units (F)
Urbana,
IL (B)
Columbiana 204 Apr. 94 563,000 None 8,276,895 8,839,895 406,105 9,246,000 8,839,895
Lakes Apts Apartment Nov. 35
Columbia, Units (G)
SC (C)
Stony Brook 125 Dec. 95 763,909 None 8,276,567 9,040,476 223,433 9,263,909 9,032,575
Village II Apts. Apartment Sept. 37
East Haven, Units (G)
CT (H)
------------------------------------------------------------------------------------------
Total $4,362,409 $200,000 $42,051,462 $46,613,871 $629,538 $47,243,409 $45,801,319
==========================================================================================
Interest
Earned
Loan Final Balance Final Balance by the Net
Origination Accumulated At September At December Company Less 1997 Interest
Property Costs Amortization 30, 1997 31, 1996 (I) for 1997 Amortization Earned
- - - ------------- ----------- ------------ ------------- ------------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
The Cove Apts $ 444,215 $ 383,813 $ 7,536,581 $ 7,649,877 $ 450,354 $ 75,861 $ 374,493
Houston,
TX (A)
Oxford on 610,814 527,852 10,363,020 10,518,823 630,844 104,330 526,514
Greenridge
Apts
Houston,
TX (A)
Town & 603,895 401,266 10,375,241 10,515,510 613,788 87,352 526,436
Country IV
Apts
Urbana,
IL (B)
Columbiana 532,835 191,264 9,181,466 8,959,892 529,550 42,225 487,325
Lakes Apts
Columbia,
SC (C)
Stony Brook 413,491 114,314 9,331,752 7,405,494 487,269 47,745 439,524
Village II Apts.
East Haven,
CT (H)
----------------------------------------------------------------------------------------------
Total $2,605,250 $1,618,509 $46,788,060 $45,049,596 $2,711,805 $357,513 $2,354,292
==============================================================================================
</TABLE>
(A) The interest rates for The Cove and Oxford are 7.625%-9.129% during the
permanent loan period. In addition to the interest rate during the
permanent loan period the Company will be entitled to 30% of the cash flow
remaining after payment of 9.129% interest and accrued interest, if any.
Payments at the rate of 9.129% are guaranteed by the developer for three
years after closing of the loans.
(B) The interest rates for Town and Country are 7.375%-9.167% during the
permanent loan period. In addition to the interest rate during the
permanent loan period, the Company will be entitled to 30% of the cash flow
remaining after payment of 9.167% interest.
(C) The interest rates for Columbiana are 7.9%-8.678% during the permanent loan
period and 7.4% during the construction period. In addition to the interest
rate during the permanent loan period, the Company will be entitled to 25%
of the cash flow remaining after payment of 8.678% interest..
(D) Bridge loans were repaid in full on April 7, 1994.
(E) The Originated Mortgages have terms of 35 years, subject to mandatory
prepayment at any time after 10 years and upon one year's notice.
(F) The Originated Mortgage has a term of 35 years, subject to mandatory
prepayment at any time after 12 years and upon one year's notice.
(G) The Originated Mortgage has a term of 40 years, subject to mandatory
prepayment at any time after 10 years and upon one year's notice.
(H) The interest rates for Stony Brook are 7.75%-9.128% during the permanent
loan period and 8.625% during the construction period. In addition to the
interest rate during the permanent loan period, the Company will be
entitled to 40% of the cash flow remaining after payment of 9.128%
interest.
(I) Aggregate cost for federal income tax purposes is $45,707,370.
13
<PAGE>
AMERICAN MORTGAGE INVESTORS TRUST
Notes to Financial Statements
September 30, 1997
(Unaudited)
Note 3 - Investment in REMIC and GNMA Certificates and FHA Insured Project Loan
Originated Mortgages
- - - --------------------
GNMA Certificates
- - - -----------------
The Company used a portion of the Net Proceeds of its Offering to purchase four
Ginnie Mae Guaranteed FHA Insured Project Loan Backed Certificates from
unaffiliated third parties. The full amount of the purchase price of each of the
GNMA Certificates was allocated as a permanent Originated Mortgage. The table
set forth below outlines pertinent information relating to the GNMA
Certificates.
Acquired Mortgages
- - - ------------------
REMIC Certificates
- - - ------------------
The Company used a portion of the Net Proceeds of its Offering to purchase ten
REMIC Certificates from unaffiliated third parties. Except as set forth in the
notes to the table, each of the REMIC Certificates was purchased as a permanent
Acquired Mortgage. The table set forth below outlines pertinent information
relating to the REMIC Certificates.
FHA Insured Project Loan
- - - ------------------------
The Company used a portion of the Net Proceeds of its Offering to purchase a FHA
Insured Project Loan from an unaffiliated third party. The full amount of the
purchase price was allocated as a permanent Acquired Mortgage. The table set
forth below outlines pertinent information relating to the FHA Insured Project
Loan.
14
<PAGE>
AMERICAN MORTGAGE INVESTORS TRUST
Notes to Financial Statements
September 30, 1997
(Unaudited)
Information relating to investments in REMIC and GNMA Certificates and FHA
Insured Project Loan as of September 30, 1997 and December 31, 1996:
Investments in REMIC and GNMA
Certificates and FHA Insured
Project Loan - January 1, 1996 $19,327,518
Additions:
Amortization of Discounts 43,376
-----------
19,370,894
-----------
Deductions:
Principal Repayments (Sales) of GNMA
Certificates (95,396)
Principal Repayments (Sales) of REMIC
Certificates (1,149,123)
Principal Repayments (Sales) of
FHA Insured Project Loan (44,598)
Proceeds from sale of REMIC Certificates (4,940,625)
Loss on Sale of REMIC Certificates (408,692)
Loss on Sale of GNMA Certificates (5,689)
Loss on Sale of FHA Insured Project Loan (1,594)
Amortization of Premiums (19,523)
-----------
(6,665,240)
-----------
Amortized Cost at December 31, 1996
(including unrealized loss of $59,063
at December 31, 1995) 12,705,654
Change in net unrealized loss on securities
available for sale (22,323)
-----------
Carrying value at December 31, 1996 $12,683,331
15
<PAGE>
AMERICAN MORTGAGE INVESTORS TRUST
Notes to Financial Statements
September 30, 1997
(Unaudited)
Additions:
Purchase of GNMA Certificate 1,981,566
Purchase of REMIC Certificates 1,889,817
Amortization of Discounts 24,274
-----------
16,578,988
-----------
Deductions:
Principal Repayments (Sales) of GNMA
Certificates (86,164)
Principal Repayments (Sales) of REMIC
Certificates (646,291)
Principal Repayments (Sales) of
FHA Insured Project Loan (3,408,238)
Loss on Sale of REMIC Certificates (21,070)
Loss on Sale of GNMA Certificates (1,236)
Loss on Sale of FHA Insured Project Loan (43,080)
Amortization of Premiums (3,055)
-----------
(4,209,134)
-----------
Amortized Cost at September 30, 1997
(including unrealized loss of $81,386
at December 31, 1996) 12,369,854
Change in net unrealized gain on securities
available for sale 151,759
-----------
Carrying value at September 30, 1997 $12,521,613
-----------
16
<PAGE>
AMERICAN MORTGAGE INVESTORS TRUST
Notes to Financial Statements
September 30, 1997
(Unaudited)
NOTE 3 - Investment in REMIC and GNMA Certificates and FHA Insured Project Loan
(continued)
Information relating to investments in REMIC and GNMA Certificates and FHA
Insured Project Loan as of September 30, 1997 and December 31, 1996 is as
follows:
<TABLE>
<CAPTION>
Date Original Loan
Purchased Purchase Premium Accumulated Origination Unrealized
/Final Stated Price Principal (Discount) Amortization Costs Gain (Loss)
Certificate Payment Interest Including at Sept. at Sept. at Sept. at Sept. at Sept.
Seller Number Date Rate Prem/(Disc) 30, 1997 30, 1997 30, 1997 30, 1997 30, 1997
- - - ----------------- ----------- -------- -------- ----------- ----------- --------- ------------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GNMA Certificates
- - - -----------------
Bear Stearns 0355540 7/27/94 7.125% $ 2,407,102 $2,593,485 $(239,897) $64,198 $80,236 $67,705
3/15/29
Malone Mortgage 0382486 7/28/94 8.500% 2,197,130 2,171,636 (8,143) 2,276 73,756 (25)
8/15/29
Goldman Sachs 0328502 7/29/94 8.250% 3,928,615 3,731,199 (3,496) 1,063 127,081 (31,368)
7/15/29
SunCoast Capital G22412(7) 6/23/97 7.000% 1,981,566 1,985,402 (12,887) 716 0 12,171
Group, Ltd. 4/20/27
REMIC Certificates
Bear Stearns FNMA 8/27/93 6.500% 10,160,938 0 0 0 0 0
1992-17G(1) Sold(1)
Bear Stearns FHLMC 10/26/93 4.850% 4,838,600 0 0 0 0 0
G-024C(2) Sold(3)
Meridan Capital FHLMC 10/25/94 5.750% 1,721,291 0 0 0 0 0
Markets 1292ZA(3) 6/15/97(4)
Meridan Capital FNMA 10/25/94 5.250% 258,357 0 0 0 0 0
Markets 1992-153A(3) 9/25/97(8)
Meridan Capital FHLMC 10/27/94 6.500% 742,538 37,203 (256) 256 1,260 (1,325)
Markets 1580A(3) 9/15/98
Meridan Capital FHLMC 11/9/94 7.350% 269,658 0 0 0 0 0
Markets 1258C(3) 5/15/04(5)
SunCoast Capital FHLMC 5/30/97 7.000% 507,288 466,537 1,443 (1,155) 0 4,523
Group, Ltd. 17218(7) 2/1/98
SunCoast Capital FHLMC 5/30/97 6.500% 251,967 250,241 484 (484) 0 756
Group, Ltd. 17161(7) 2/1/98
SunCoast Capital FHLMC 6/23/97 7.000% 147,437 146,604 497 (373) 0 1,388
Group, Ltd. 17125(7) 1/1/98
SunCoast Capital FNMA 6/30/97 7.500% 983,125 1,000,000 (16,875) (767) 0 16,548
Group, Ltd. 1997-42V(7) 10/18/09
FHA Insured Project Loan
- - - ------------------------
Donaldson, Lufkin 092-11005 1/3/95 8.600% 3,374,679 0 0 0 0 0
& Jenrette 4/1/19(6) ----------- ----------- --------- ------- -------- -------
Total $33,770,291 $12,382,307 $(279,130) $65,730 $282,333 $70,373
=========== =========== ========= ======= ======== =======
Interest
Final Final Earned
Balance Balance by the Net
at Sept. at Dec. Company 1997 Interest
Seller 30, 1997 31, 1996 for 1997 Amortization Earned
- - - ----------------- ----------- ---------- -------- ------------ --------
<S> <C> <C> <C> <C> <C>
GNMA Certificates
- - - -----------------
Bear Stearns $ 2,565,727 $ 2,526,991 $138,955 $15,250 $154,205
Malone Mortgage 2,239,500 2,227,043 138,702 540 139,242
Goldman Sachs 3,824,479 3,802,730 232,332 253 232,585
SunCoast Capital 1,985,402 0 37,910 722 38,632
Group, Ltd.
REMIC Certificates
Bear Stearns 0 0 0 0 0
Bear Stearns 0 0 0 0 0
Meridan Capital 0 338,033 3,848 0 3,848
Markets
Meridan Capital 0 61,081 1,060 0 1,060
Markets
Meridan Capital 37,138 214,816 5,499 0 5,499
Markets
Meridan Capital 0 28,779 266 0 266
Markets
SunCoast Capital 471,348 0 11,218 (1,415) 9,803
Group, Ltd.
SunCoast Capital 250,997 0 5,482 (498) 4,984
Group, Ltd.
SunCoast Capital 148,116 0 2,795 (375) 2,420
Group, Ltd.
SunCoast Capital 998,906 0 18,958 (767) 18,191
Group, Ltd.
FHA Insured Project Loan
- - - ------------------------
Donaldson, Lufkin 092-11005 0 3,483,858 113,074 7,509 120,583
& Jenrette ----------- ----------- -------- ------- --------
Total $12,521,613 $12,683,331 $710,099 $21,219 $731,318
=========== =========== ======== ======= ========
</TABLE>
17
<PAGE>
AMERICAN MORTGAGE INVESTORS TRUST
Notes to Financial Statements
September 30, 1997
(Unaudited)
(1) On October 15, 1993, the Company allocated $5,000,000 of the principal face
value as an Acquired Mortgage based on the expectation that a majority of the
investment would be held for at least two years. Based on such allocation,
compensation was paid to the Advisor. The Advisor has undertaken to reimburse
the Company for any compensation paid to it which is attributable to the portion
of any REMIC Certificate which is sold to support the Company's distribution
policy (the "Advisor's Reimbursement Undertaking"). On both November 4, 1993 and
February 1, 1994, the Company sold $200,000 of the REMIC Certificate and the
Advisor has reimbursed the Company for the fees previously paid and the trading
loss incurred with respect to the portions of the REMIC Certificate which were
sold. On March 30, 1995, the Company sold $4,500,000 of the temporary portion at
the discounted price of 90.9375% or $4,092,188. The realized loss on this sale
was $447,472. Also on August 15, 1996, the Company sold the remaining balance of
the temporary and permanent portions of the REMIC Certificate which totaled
$5,100,000. The realized loss on this sale was $328,895.
The REMIC Certificate represented beneficial ownership interest in Fannie Mae
REMIC Trust 1992-17. The assets of the trust consisted primarily of interests in
a separate trust which held Fannie Mae Guaranteed Pass-Through Certificates (the
"MBS Certificates"), each of which represented a beneficial interest in a pool
of first lien, fixed-rate residential mortgage loans (the "Mortgage Loans").
The Company was entitled to monthly interest payments on the outstanding
principal amount of the REMIC Certificate.
(2) Represented an FHLMC Mortgage Participation Certificate. On May 4, 1994, the
Company allocated $2,419,300 of the principal face value as an Acquired Mortgage
based on the expectation that a majority of the investment would be held for at
least two years. Based upon such allocation, compensation was paid to the
Advisor. On May 5, 1994, the Company sold $1,000,000 of the permanent portion of
the Mortgage Participation Certificate and on October 11, 1994, the Company sold
the remaining balance of the temporary and permanent portions of the Mortgage
Participation Certificate which totaled $3,838,600. Pursuant to the Advisor's
Reimbursement Undertaking, the Advisor has reimbursed the
18
<PAGE>
AMERICAN MORTGAGE INVESTORS TRUST
Notes to Financial Statements
September 30, 1997
(Unaudited)
Company for the fees previously paid and the trading loss incurred with respect
to the permanent investment portion of the certificate which was sold. A loss of
$297,836 was recorded on these sales in 1994.
(3) Purchased as a permanent investment using a portion of the proceeds from the
sale of FHLMC REMIC Certificate #G-024C. See (2) above.
(4) The stated final payment date was June 15, 1997. The actual final payment
amounting to $40,553 was received on June 16, 1997.
(5) The stated final payment date was May 15, 2004. The actual final payment
amounting to $7,099 was received on April 15, 1997.
(6) The stated final payment date was April 1, 2019. The actual final payment
amounting to $3,392,445 was received on May 23, 1997.
(7) Purchased as a permanent investment using the proceeds from the final
payment received from the FHA Insured Project Loan (See (6) above) and a portion
of the proceeds from the sale of Fannie Mae REMIC Certificate #1992-17G (see (1)
above).
(8) The stated final payment date was September 25, 1997. The actual final
payment amounting to $6,564 was received on September 29, 1997.
19
<PAGE>
AMERICAN MORTGAGE INVESTORS TRUST
Notes to Financial Statements
September 30, 1997
(Unaudited)
Note 3 - Investment in REMIC and GNMA Certificates and FHA Insured Project Loan
(continued)
The amortized cost, unrealized gain (loss) and fair value for the investment in
REMIC and GNMA Certificates and FHA Insured Project Loan at September 30, 1997
and December 31, 1996 are as follows:
<TABLE>
<CAPTION>
Unrealized Unrealized
Amortized Gain Fair Amortized Gain Fair
Cost at at Value at Cost at (Loss) at Value at
September September September December December December
Security 30, 1997 30, 1997 30, 1997 31, 1996 31, 1996 31, 1996
----------- ------- ----------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
FHA Insured
Project Loan $ 0 $ 0 $ 0 $ 3,443,808 $40,050 $ 3,483,858
Fannie Mae
REMICs 982,358 16,548 998,906 63,467 (2,386) 61,081
Federal
Home Loan
REMICs 902,257 5,342 907,599 601,749 (20,121) 581,628
Ginnie Mae
Certificates 10,566,625 48,483 10,615,108 8,655,693 (98,929) 8,556,764
----------- ------- ----------- ----------- -------- -----------
$12,451,240 $70,373 $12,521,613 $12,764,717 $(81,386) $12,683,331
=========== ======= =========== =========== ======== ===========
</TABLE>
20
<PAGE>
AMERICAN MORTGAGE INVESTORS TRUST
Notes to Financial Statements
September 30, 1997
(Unaudited)
The change in the unrealized loss for the nine months ended September 30, 1997
and the year ended December 31, 1996 were as follows:
Unrealized loss at December 31, 1995 $ (59,063)
Sale of securities during the year
ended December 31, 1996 included in
unrealized loss at December 31, 1995 248,254
Unrealized loss on securities held
at December 31, 1996 and 1995 (270,577)
---------
Unrealized loss at December 31, 1996 (81,386)
Sale of securities during the nine months
ended September 30, 1997 included in
unrealized loss at December 31, 1996 17,349
Unrealized gain on securities purchased
during the nine months ended
September 30, 1997 35,386
Unrealized gain on securities held at
September 30, 1997 and December 31, 1996 99,024
---------
Unrealized gain at September 30, 1997 $ 70,373
=========
For the nine months ended September 30, 1997, there were losses of $65,386
(including acquisition fees and expenses) on principal repayments of REMICs,
GNMAs and the FHA Insured Project Loan.
Note 4 - Related Party Transactions
The Company has entered into an agreement with the Advisor pursuant to which the
Advisor receives compensation consisting primarily of (i) compensation in
connection with the organization and start-up of the Company and the Company's
investment in the Mortgage Investments; (ii) asset management fees calculated as
a percentage of total assets invested by the Company, which totaled $93,958 and
$99,332 for the three months ended September 30, 1997 and 1996, and $273,203 and
$279,522 for the nine months ended September 30, 1997 and 1996, respectively,
such amounts are included in due to affiliates; (iii) a subordinated incentive
fee based on the economic gain on the sale of Mortgage Investments; (iv) an
amount, payable in shares of the Company which, after
21
<PAGE>
AMERICAN MORTGAGE INVESTORS TRUST
Notes to Financial Statements
September 30, 1997
(Unaudited)
issuance, will equal 1% of all shares of the Company issued during the offering
period or pursuant to the Company's Reinvestment Plan as compensation for
services rendered. During the Offering the Advisor received 38,481 shares, in
addition to the 10,000 shares purchased, however, as a result of the shares
being redeemed, the Advisor was required to return 172 shares. (As of September
30, 1997 and December 31, 1996, shares received by the Advisor totaled 38,309 at
a total value of $565,058 ($14.75 per share)); (v) acquisition expense allowance
and acquisition fees calculated as a percentage of the Gross Proceeds applicable
to the origination of Originated Mortgages and related Additional Loans and the
acquisition of Acquired Mortgages and Additional Loans; (acquisition fees and
acquisition expense allowance incurred approximated $2,545,000 and $761,000 at
both September 30, 1997 and December 31, 1996 of which $2,545,000 and $725,000
at September 30, 1997 and $2,545,000 and $722,000 at December 31, 1996 have been
capitalized and included in Investment in Loans and Investment in REMIC and GNMA
Certificates and FHA Insured Project Loan, and (vi) certain other fees. In
addition to the costs, fees and expenses discussed above, the Company will
reimburse affiliates of the Advisor for certain administrative and other cost
incurred on behalf of the Company. The costs and expenses incurred for the three
months ended September 30, 1997 and 1996 were $9,537 and $6,877, respectively,
and the costs and expenses incurred for the nine months ended September 30, 1997
and 1996 were $91,460 and $117,410, respectively.
In order to minimize the possible adverse effects of the Company's investment
and distribution policy of attempting to maintain stable distributions to
shareholders during the offering and acquisition stages, the Company has made
the following undertakings: (a) the Advisor has agreed not to retain acquisition
fees or loan disposition fees with respect to any portion of REMICs or CMOs
which are sold pursuant to the distribution policy; such fees totaled $96,112 as
of September 30, 1997 and December 31, 1996; (b) the Advisor has agreed to
contribute to the Company funds equal to the amount by which all trading losses
exceed the gains resulting from the sale of REMIC and CMO investments to
supplement the distribution policy; such funds totaled $97,221 as of September
30, 1997 and December 31, 1996; and (c) the Company has agreed to limit the
total amount which can be returned to investors from the early sale of
investments to support the distributions policy to
22
<PAGE>
AMERICAN MORTGAGE INVESTORS TRUST
Notes to Financial Statements
September 30, 1997
(Unaudited)
less than 3% of the Gross Proceeds. As of September 30, 1997, the aggregate
amount of disposition proceeds used to support distributions equaled 2.44% of
the Gross Proceeds, resulting in approximately $428,000 being available to
support future distributions if necessary.
Note 5 - Subsequent Event
On October 17, 1997, the Company redeemed approximately 19,751 shares, pursuant
to the Redemption Plan, for an aggregate price of $345,053.
On November 14, 1997, a distribution of $1,385,610 and $17,656 will be paid to
the Investors and the Advisor, respectively, representing the 1997 third quarter
distribution. The distribution was funded from cash collections of debt service
payments and interest income through approximately the distribution date,
November 14, 1997.
23
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Liquidity and Capital Resources
- - - -------------------------------
The Company issued 10,000 shares of beneficial interest at $20 per share in
exchange for $200,000 cash from Related AMI Associates, Inc., the Advisor to the
Company. As of November 30, 1994, the Company had received $76,192,021 (before
volume discounts of $40,575) in Gross Proceeds from the sale of 3,738,613 shares
pursuant to the Offering and 70,988 shares through the Reinvestment Plan,
resulting in Net Proceeds available for investment of approximately $69,334,743
after volume discounts, payments of sales commissions and organization and
offering expenses. Pursuant to the Redemption Plan, which became effective
November 30, 1994, the Company is required to redeem eligible shares presented
for redemption for cash to the extent it has sufficient net proceeds from the
sale of shares under the Reinvestment Plan. After November 30, 1994, 207,404
shares were sold through the Reinvestment Plan, the proceeds of which are
restricted for use in connection with the Redemption Plan and are not included
in gross proceeds. As of September 30, 1997, the Company redeemed 206,042
shares, pursuant to the Redemption Plan, for an aggregate price of $3,911,227.
Of such redemptions, 16,931 shares were redeemed from proceeds from the
Reinvestment Plan before the termination of the Offering and therefore, the
proceeds available for future investment were reduced by $319,987. During the
Offering, the Advisor received 38,481 restricted shares (including 717 from the
Reinvestment Plan) in addition to the 10,000 shares purchased, which the Advisor
has valued at $14.75 per share, pursuant to the terms of the Offering. As a
result of the shares being redeemed, the Advisor was required to return 172
shares as of September 30, 1997. As of September 30, 1997, the backlog of shares
to be redeemed is 129,431. As permitted by the provisions of the Redemption
Plan, the Board of Trustees implemented the following change to the calculation
of the redemption price for the quarter ended June 30, 1997: the original $19
per share redemption price was reduced to reflect any return of principal
received by shareholders. As of June 30, 1997, the amount of principal which had
been distributed to shareholders was $1.53 per share and, therefore, the
redemption price was $17.47 per share ($19 per share less $1.53 per share) for
redemptions which occurred in October 1997 for the quarter ended June 30, 1997.
The Board subsequently adopted a policy to adjust the redemption price each
quarter to reflect the then net asset value of a share of the Company's stock.
This new policy is effective for redemptions with respect to quarters ended
September 30, 1997 and thereafter. With respect to the
24
<PAGE>
Reinvestment Plan, the Board also adopted a policy to adjust the reinvestment
price at which participants may acquire additional shares under the Reinvestment
Plan to also reflect the then net assets value of a share of the Company's
stock. The change in policy with respect to the reinvestment price is effective
November 30, 1997.
During the nine months ended September 30, 1997, cash and cash equivalents
decreased approximately $2,327,000 due to investments in loans ($2,243,000),
purchase of REMIC Certificates and GNMA Certificate (3,871,000) and
distributions to shareholders ($4,172,000) which exceeded cash provided by
operating activities ($3,320,000), proceeds from the issuance of shares of
beneficial interest net of the purchase of treasury stock ($349,000) and
principal repayments of loans, GNMAs, REMICs and FHA Insured Project Loan
($4,290,000). Included in the adjustments to reconcile the net income to cash
provided by operating activities is net amortization in the amount of $344,000.
The Company has utilized the Net Proceeds of the Offering primarily to make or
invest in Originated Mortgages and Acquired Mortgages. The Company has also
invested in uninsured Additional Loans made directly to the developers or
sponsors of Developments provided that not more than an aggregate of 7% of the
Net Proceeds raised in the Offering were invested in Additional Loans. As of
September 30, 1997, of the total Net Proceeds available for investment, 84.9%
had been invested in Originated Mortgages (including 6.32% in Additional Loans)
and 15.1% in Acquired Mortgages.
As of September 30, 1997, the Company had funded five Originated Mortgages
(excluding GNMAs-see below) in an aggregate amount of $42,051,462 and five
non-interest bearing Additional Loans in the aggregate amount of $4,362,409 in
connection with the permanent financing provided on five Developments.
In 1993, the Company made investments in two REMIC Certificates in the aggregate
amount of $14,999,538, which were sold during 1993, 1994, 1995 and 1996. In
1994, the Company acquired (i) three Ginnie Mae Guaranteed FHA Insured Project
Loan Backed Certificates in the aggregate amount of $8,532,847 and (ii) three
FHLMC REMIC Certificates, two of which matured during 1997, and one Fannie Mae
Mortgage Guaranteed REMIC Certificate in the aggregate amount of $2,991,844. In
1995, the company acquired a FHA Insured Project Loan in the aggregate amount of
$3,374,679 which matured in 1997. In 1997, the Company acquired (i) three FHLMC
REMIC certificates and one Fannie Mae
25
<PAGE>
Mortgage Guaranteed REMIC Certificate in the aggregate amount of $1,889,817 and
(ii) a portion of one Ginnie Mae Guaranteed Single Family Pool Certificate in
the amount of $1,981,566. Net unrealized gains on REMIC and GNMA investments
included in shareholders' equity pursuant to Statement of Financial Accounting
Standards No. 115 aggregated $70,373 at September 30, 1997. This represents a
decrease of $151,759 in the unrealized loss at December 31, 1996, of which a
decrease of $17,349 is attributable to the sale of securities (which resulted in
a realized loss of $65,386), a decrease of $35,386 is attributable to securities
purchased during 1997 and a decrease of $99,024 is attributable to an increase
in market prices for the investments held at September 30, 1997 and December 31,
1996. As of November 6, 1997, the unrealized gain was approximately $110,000.
The yield on the REMIC and GNMA Certificates will depend, in part, upon the rate
and timing of principal prepayments on the underlying mortgages in the asset
pool. Generally, as market interest rates decrease, mortgage prepayment rates
increase and the market value of interest rate sensitive obligations like the
REMIC and GNMA Certificates increases. As market interest rates increase,
mortgage prepayment rates tend to decrease and the market value of interest rate
sensitive obligations like the REMICs and GNMAs tends to decrease. The effect of
prepayments on the yield is greater the earlier a prepayment of principal is
received. Due to the complexity of the REMIC structure and the uncertainty of
future economic and other factors that affect interest rates and mortgage
prepayments, it is not possible to predict the effect of future events upon the
yield to maturity or the market value of the REMIC and GNMA Certificates upon
any sale or other disposition or whether the Company, if it chose to, would be
able to reinvest proceeds from prepayments at favorable rates relative to the
coupon rate.
The Company intends to continue to invest the Net Proceeds (including the
portion of reinvested dividends not used for the Redemption Plan), if any, in
Mortgage Investments. Unadvanced amounts will be invested in temporary
investments. The Company expects that cash generated from the Company's
investments will be sufficient to pay all of the Company's expenses in the
foreseeable future.
The Company's liquidity is based primarily on interest received from permanent
Mortgage Investments and interest on unadvanced amounts from Originated
Mortgages. In order to qualify as a REIT under the Internal Revenue Code, as
amended, the Company must distribute at least 95% of its taxable income.
26
<PAGE>
For a description of the Company's investment in Originated Mortgages, REMIC and
GNMA Certificates and FHA Insured Project Loan, see Notes 2 and 3 of Notes to
Financial Statements.
Results of Operations
- - - ---------------------
Results of operations for the three and nine months ended September 30, 1997 and
1996 consisted primarily of interest income of approximately $794,000 and
$691,000 and $2,354,000 and $2,087,000, respectively, earned on Originated
Mortgages (excluding GNMAs), approximately $245,000 and $327,000 and $731,000
and $1,043,000, respectively, earned from investments in REMIC and GNMA
Certificates and FHA Insured Project Loan and approximately $28,000 and $61,000
and $124,000 and $186,000, respectively, earned from temporary investments less
administrative expenses. The total of the annual operating expenses of the
Company may not exceed the greater of (i) 2% of the Average Invested Assets of
the Company or (ii) 25% of the Company's Net Income, unless such excess is
approved by the Independent Trustees. On an annualized basis, there was no
excess for the nine months ended September 30, 1997 and 1996.
Interest income from Originated Mortgages (excluding GNMAs) increased
approximately $103,000 and $268,000 for the three and nine months ended
September 30, 1997 as compared to the corresponding periods in 1996, primarily
due to the additional advances on the Stonybrook Originated Mortgage since
September 30, 1996.
Interest income from REMIC and GNMA Certificates and FHA Insured Project Loan
decreased approximately $82,000 and $311,000 for the three and nine months ended
September 30, 1997 as compared to the corresponding periods in 1996 primarily
due to the sale of one REMIC in August 1996 and the repayment of the FHA Insured
Project Loan in May 1997, partially offset by the purchase of two REMICs in May
1997 and two REMICs and one GNMA in June 1997.
Interest income from temporary investments decreased approximately $33,000 and
$62,000 for the three and nine months ended September 30, 1997 as compared to
the corresponding periods in 1996, primarily due to a decrease in uninvested
proceeds earning interest in 1997.
General and administrative decreased approximately $28,000 and $28,000 for the
three and nine months ended September 30, 1997
27
<PAGE>
as compared to the corresponding periods in 1996 primarily due to a decrease in
legal fees as well as small decreases in several other general and
administrative expenses in 1997.
Realized loss on sale of REMICs and GNMAs and FHA Insured Project Loan decreased
approximately $404,000 and $341,000 for the three and nine months ended
September 30, 1997 as compared to the corresponding periods in 1996 primarily
due to the sale of one REMIC in August 1996.
Distribution Policy
- - - -------------------
The Company has adopted a policy of attempting to maintain stable distributions
to shareholders during the offering and acquisition stages of the Company. In
order to accomplish this result, it has disposed of, and may be required to
continue to dispose of, a portion of the CMOs and REMICs during this period. The
effect of this policy has been the following: (a) a portion of the distributions
have constituted, and will continue to constitute, a return of capital; (b)
earlier investors' returns from an investment in the Company will be greater
than later investors' returns; and (c) there will be a decrease in funds
remaining to be invested in Mortgage Investments. The Company has completed the
offering and acquisition stage and therefore, the Board has reviewed the
current distribution policy. Beginning in the first quarter of 1998 the Company
will change its distribution policy. The new policy will call for quarterly
distributions which more closely reflect collections of interest payments.
In order to minimize the possible adverse effects of the investment and
distribution policy described above, the Company has made the following
undertakings: (a) the Advisor has agreed not to retain acquisition fees or loan
disposition fees with respect to any portion of REMICs or CMOs which are sold
pursuant to the distribution policy; such fees totaled $96,112 as of September
30, 1997 and December 31, 1996; (b) the Advisor has agreed to contribute to the
Company funds equal to the amount by which all trading losses exceed the gains
resulting from the sale of REMIC and CMO investments to supplement the
distribution policy; such funds totaled $97,221 as of September 30, 1997 and
December 31, 1996; and (c) the Company has agreed to limit the total amount
which can be returned to investors from the early sale of investments to support
the distributions policy to less than 3% of the Gross Proceeds. During the nine
months ended September 30, 1997, no investments were sold in order to support
the distribution policy.
Of the total distributions of $4,172,266 and $4,165,518 made for the nine months
ended September 30, 1997 and 1996, $1,528,788 ($.38 per share or 37%) and
$1,817,601 ($.46 per share or 44%) represents a return of capital determined in
accordance with generally accepted accounting principles. As of September 30,
1997, the aggregate amount of the distributions made since the commence-
28
<PAGE>
ment of the Offering representing a return of capital, in accordance with
generally accepted accounting principles, totaled $8,511,803 ($2.09 per share or
41%). The portion of the distributions which constitutes a return of capital may
be significant during the acquisition stage in order to maintain level
distributions to shareholders. However, as described above, the aggregate amount
of the disposition proceeds used for distributions cannot in the aggregate
exceed 3% of the Gross Proceeds. As of September 30, 1997, the aggregate amount
of disposition proceeds used to support distributions equaled 2.44% of the Gross
Proceeds resulting in approximately $428,000 being available to support future
distributions if necessary.
Management expects that cash flow from operations combined with the balance of
the disposition proceeds above will be sufficient to fund the Company's
operating expenses and to make distributions as determined by the Board on a
quarterly basis.
29
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings - None
Item 2. Changes in Securities - None
Item 3. Defaults Upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders - None
Item 5. Other Information - None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
--------
3, 4 Amended and Restated Declaration of Trust, dated as of March
29, 1993, as amended as of July 1, 1993 as previously filed as an Exhibit to
Post-Effective Amendment No. 1 dated November 9, 1993.
Amendment No. 2 to Amended and Restated Declaration of Trust,
dated as of April 5, 1994 as previously filed as an Exhibit to Annual Report on
Form 10-K for the year ended December 31, 1993.
10(a) Escrow Agreement, dated as of April 16, 1993 and amended as of
August 25, 1993 as previously filed as an Exhibit to Post-Effective Amendment
No. 1 dated November 9, 1993.
10(b) Advisory Services Agreement, dated as of March 29, 1993, as
amended as of October 26, 1993 as previously filed as an Exhibit to
Post-Effective Amendment No. 1 dated November 9, 1993.
Amendment to Advisory Services Agreement, dated as of December
31, 1993 as previously filed as an Exhibit to Annual Report on Form 10-K for the
year ended December 31, 1993.
Third Amendment to Advisory Services Agreement, dated as of
March 29, 1994 as previously filed as an Exhibit to Annual Report on Form 10-K
for the year ended December 31, 1993.
10(c) TRI Capital Corporation Mortgage Note in the principal amount
of $9,350,000 dated December 16, 1993 as previ-
30
<PAGE>
Item 6. Exhibits and Reports on Form 8-K (continued)
(a) Exhibits (continued)
--------
ously filed as an Exhibit to Current Report on Form 8-K dated December 16, 1993.
10(d) Equity Loan Note in the principal amount of $1,156,000 dated
December 16, 1993 as previously filed as an Exhibit to Current Report on Form
8-K dated December 16, 1993.
10(e) Bridge Loan Note in the principal amount of $115,790, dated
December 16, 1993 as previously filed as an Exhibit to Current Report on Form
8-K dated December 16, 1993.
10(f) Subordinated Promissory Note by Oxford Apartments, L.C., dated
December 16, 1993 as previously filed as an Exhibit to Current Report on Form
8-K dated December 16, 1993.
10(g) Limited Operating Guaranty between Al L. Bradley, Jr., Tim L.
Myers, Allied Realty Services, Ltd. and American Mortgage Investors Trust, dated
December 16, 1993 as previously filed as an Exhibit to Current Report on Form
8-K dated December 16, 1993.
10(h) TRI Capital Corporation Mortgage Note in the principal amount
of $6,800,000, dated December 16, 1993 as previously filed as an Exhibit to
Current Report on Form 8-K dated December 16, 1993.
10(i) Equity Loan Note in the principal amount of $840,500, dated
December 16, 1993 as previously filed as an Exhibit to Current Report on Form
8-K dated December 16, 1993.
10(j) Bridge Loan Note in the principal amount of $84,210, dated
December 16, 1993 as previously filed as an Exhibit to Current Report of Form
8-K dated December 1, 1993.
10(k) Subordinated Promissory Note by Cove Apartments, L.C., dated
December 16, 1993 as previously filed as an Exhibit to Current Report on Form
8-K dated December 16, 1993.
10(l) Limited Operating Guaranty between Al L. Bradley, Jr., Tim L.
Myers, Allied Realty Services, Ltd. and American Mortgage Investors Trust, dated
December 16, 1993 as previ-
31
<PAGE>
Item 6. Exhibits and Reports on Form 8-K (continued)
(a) Exhibits (continued)
--------
ously filed as an Exhibit to Current Report on Form 8-K dated December 16, 1993.
10(m) Cambridge Realty Capital LTD Mortgage Note in the principal
amount of $9,348,000, dated April 5, 1994 as previously filed as an Exhibit to
Current Report on Form 8-K dated April 21, 1994.
10(n) Equity Loan Note in the principal amount of $1,039,000, dated
April 5, 1994 as previously filed as an Exhibit to Current Report on Form 8-K
dated April 21, 1994.
10(o) Subordinated Promissory Note by Town and Country IV Apartments,
L.C., dated April 5, 1994 as previously filed as an Exhibit to Current Report on
Form 8-K dated April 21, 1994.
10(p) Limited Operating Guaranty between Leonard E. Wineburgh, Arnold
H. Dwinn and the Company, dated April 5, 1994 as previously filed as an Exhibit
to Current Report on Form 8-K dated April 21, 1994.
10(q) American Capital Resource, Inc. Mortgage Note in the principal
amount of $8,683,000 dated April 5, 1994 as previously filed as an Exhibit to
Current Report on Form 8-K dated April 28, 1994.
10(r) Equity Loan Note in the principal amount of $563,000 dated
April 5, 1994 as previously filed as an Exhibit to Current Report on Form 8-K
dated April 28, 1994.
10(s) Subordinated Promissory Note by Columbiana Lakes Apartments,
L.C., dated April 5, 1994 as previously filed as an Exhibit to Current Report on
Form 8-K dated April 28, 1994.
10(t) Limited Operating Guaranty between Anderson G. Wise, Ronald P.
Curry and the Company, dated April 5, 1994 as previously filed as an Exhibit to
Current Report on Form 8-K dated April 28, 1994.
10(u) Rockport Mortgage Corporation Mortgage Note is the principal
amount of $8,500,000 dated December 15, 1995, as previously filed as an Exhibit
to Current Report on Form 8-K dated December 15, 1995.
32
<PAGE>
Item 6. Exhibits and Reports on Form 8-K (continued)
(a) Exhibits (continued)
--------
10(v) Equity Loan Note in the principal amount of $1,039,000 dated
December 15, 1995, as previously filed as an Exhibit to Current report on Form
8-K dated December 15, 1995.
10(w) Subordinated Promissory Note by SCI-ROEV East Haven Land
Limited Partnership, dated December 15, 1995, as previously filed as an Exhibit
to Current Report on Form 8-K dated December 15, 1995.
10(x) Limited Operating Guaranty between SCI Real Estate
Development, Ltd., and Euro General East Haven, Inc., and the Company dated
December 15, 1995, as previously filed as an Exhibit to Current Report in Form
8-K dated December 15, 1995.
27 Financial Data Schedule (filed herewith).
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter.
33
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
AMERICAN MORTGAGE INVESTORS TRUST
(Registrant)
Date: November 13, 1997
By: /s/ Alan P. Hirmes
------------------
Alan P. Hirmes
Senior Vice President and
Chief Financial Officer
Date: November 13, 1997
By: /s/ Richard A. Palermo
----------------------
Richard A. Palermo
Treasurer and
Chief Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The Schedule contains
summary financial
information extracted from
the financial statements for
American Mortgage Investors
Trust and is qualified in
its entirety by reference to
such financial statements
</LEGEND>
<CIK> 0000878774
<NAME> American Mortgage Investors Trust
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-1-1997
<PERIOD-END> SEP-30-1997
<CASH> 2,501,615
<SECURITIES> 12,521,613
<RECEIVABLES> 47,421,007
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 62,461,284
<CURRENT-LIABILITIES> 1,328,273
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 61,133,011
<TOTAL-LIABILITY-AND-EQUITY> 62,461,284
<SALES> 0
<TOTAL-REVENUES> 3,210,031
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 566,553
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,643,478
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,643,478
<EPS-PRIMARY> .65
<EPS-DILUTED> 0
</TABLE>
