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 June 30, 1998
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
============ ============
June 30, December 31,
1998 1997
(unaudited)
------------ ------------
ASSETS
Investments in mortgage loans
(Note 2) $ 46,409,414 $ 46,792,853
Investments in REMIC and
GNMA Certificates (Note 3) 11,509,166 12,495,878
Cash and cash equivalents 2,302,992 1,840,715
Deferred costs (net of
accumulated amortization
of $50,000 and $45,000,
respectively) 9,549 14,549
Accrued interest receivable 699,800 501,927
------------ ------------
Total assets $ 60,930,921 $ 61,645,922
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Accounts payable and
accrued expenses $ 62,548 $ 49,123
Due to affiliates (Note 4) 1,463,473 1,210,874
------------ ------------
Total liabilities 1,526,021 1,259,997
------------ ------------
Commitments (Note 5)
Shareholders' equity:
Shares of beneficial interest;
$.10 par value; 12,500,000
shares authorized; 4,131,087
and 4,087,583 shares issued
and outstanding, respectively 413,109 408,759
Treasury shares of beneficial
interest; $.10 par value;
291,842 and 248,339 shares, respectively (29,184) (24,834)
Additional paid-in capital 68,849,739 68,849,725
Distributions in excess of net income (9,947,942) (9,021,323)
Accumulated other comprehensive income:
Net unrealized gain on marketable
securities (Note 3) 119,178 173,598
------------ ------------
Total shareholders' equity 59,404,900 60,385,925
Total liabilities and
shareholders' equity $ 60,930,921 $ 61,645,922
============ ============
See Accompanying Notes to Financial Statements
2
<PAGE>
AMERICAN MORTGAGE INVESTORS TRUST
Statements of Income
(Unaudited)
======================= =======================
Three Months Ended Six Months Ended
June 30, June 30,
----------------------- -----------------------
1998 1997 1998 1997
----------------------- -----------------------
Revenues:
Interest income:
Mortgage loans
(Note 2) $ 802,370 $ 784,218 $1,648,069 $1,560,730
REMIC and
GNMA
Certificates and
FHA Insured
Project Loan
(Note 3) 230,184 225,791 463,569 486,032
Temporary
investments 27,196 52,350 51,619 96,266
---------- ---------- ---------- ----------
Total revenues 1,059,750 1,062,359 2,163,257 2,143,028
Expenses:
General and
administrative 167,901 216,778 308,433 367,283
Realized loss on
sale of REMICs
and GNMAs and
FHA Insured
Project Loan
(Note 3) 249 51,776 617 61,772
Amortization 2,500 2,500 5,000 5,000
---------- ---------- ---------- ----------
Total expenses 170,650 271,054 314,050 434,055
---------- ---------- ---------- ----------
Net income $ 889,100 $ 791,305 $1,849,207 $1,708,973
========== ========== ========== ==========
Basic net income
per weighted
average share $ .23 $ .21 $ .48 $ .44
========== ========== ========== ==========
See Accompanying Notes to Financial Statements
3
<PAGE>
AMERICAN MORTGAGE INVESTORS TRUST
Statement of Changes in Shareholders' Equity
(Unaudited)
<TABLE>
<CAPTION>
Net
Unrealized
Shares of Treasury Shares of Distributions Gain (Loss)
Beneficial Interest Beneficial Interest Additional in Excess on Securities
-------------------- -------------------- Paid-in of Avail-
Shares Amount Shares Amount Capital Net Income able for Sale Total
--------- -------- -------- -------- ------------ ----------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at 4,087,583 $408,759 (248,339) $(24,834) $ 68,849,725 $(9,021,323) $ 173,598 $ 60,385,925
January 1, 1998
Net Income 0 0 0 0 0 1,849,207 0 1,849,207
Distributions 0 0 0 0 0 (2,775,826) 0 (2,775,826)
Purchase of 0 0 (43,503) (4,350) (676,645) 0 (680,995)
Treasury Stock
Issuance of 43,504 4,350 0 0 676,659 0 0 681,009
shares of
beneficial
interest
Change in 0 0 0 0 0 0 (54,420) (54,420)
net unrealized
gain on
securities
available
for sale
--------- -------- -------- -------- ------------ ----------- --------- ------------
Balance at 4,131,087 $413,109 (291,842) $(29,184) $ 68,849,739 $(9,947,942) $ 119,178 $ 59,404,900
June 30, 1998
========= ======== ======== ======== ============ =========== ========= ============
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
AMERICAN MORTGAGE INVESTORS TRUST
Statements of Cash Flows
(Unaudited)
===========================
Six Months Ended
June 30,
---------------------------
1998 1997
---------------------------
Cash flows from operating activities:
Net income $1,849,207 $1,708,973
---------- ----------
Adjustments to reconcile net income
to net cash provided by
operating activities
Amortization expense -
organization costs 5,000 5,000
Amortization expense - loan
premium and origination costs 250,655 238,375
Accretion of REMIC premium 0 585
Amortization of REMIC
and GNMA and FHA
Insured Project Loan discount (20,808) (18,215)
Loss on sale of REMIC
certificates 0 17,764
Loss on sale of GNMAs 617 927
Loss on sale of FHA
Insured Project Loan 0 43,080
Changes in operating assets and
liabilities:
(Increase) decrease in accrued
interest receivable (197,873) 27,220
Increase in due to affiliates 252,599 261,353
Increase (decrease) in accounts
payable and accrued expenses 13,425 (6,570)
---------- ----------
Total adjustments 303,615 569,519
---------- ----------
Net cash provided by
operating activities 2,152,822 2,278,492
---------- ----------
-5-
<PAGE>
AMERICAN MORTGAGE INVESTORS TRUST
Statements of Cash Flows
(continued)
(Unaudited)
===========================
Six Months Ended
June 30,
---------------------------
1998 1997
---------------------------
Cash flows from investing activities:
Investments in mortgage loans 0 (1,888,948)
Principal repayments of mortgage
loans 132,784 93,660
Purchase of REMIC Certificates 0 (1,889,817)
Purchase of GNMA Certificate 0 (1,981,566)
Principal repayments of GNMA
certificates 145,511 51,045
Principal repayments of REMIC
certificates 806,972 526,166
Principal repayments of FHA
Insured Project Loan 0 3,408,238
---------- ----------
Net cash provided by (used in)
investing activities 1,085,267 (1,681,222)
---------- ----------
Cash flows from financing activities:
Distributions to shareholders (2,775,826) (2,783,760)
Proceeds from issuance of shares
of beneficial interest 681,009 704,876
Purchase of treasury shares (680,995) (704,874)
---------- ----------
Net cash used in financing
activities (2,775,812) (2,783,758)
---------- ----------
Net increase (decrease) in cash and
cash equivalents 462,277 (2,186,488)
Cash and cash equivalents at
beginning of period 1,840,715 4,828,561
---------- ----------
Cash and cash equivalents at
end of period $2,302,992 $2,642,073
========== ==========
Supplemental schedule of noncash
investing activities:
Decrease in deferred costs $ 0 $ 3,032
Increase in investments
in mortgage loans $ 0 $ (3,032)
---------- ----------
$ 0 $ 0
---------- ----------
-6-
<PAGE>
AMERICAN MORTGAGE INVESTORS TRUST
Notes to Financial Statements
June 30, 1998
(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.
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. As of June 30, 1998, the backlog of shares to be redeemed is
129,029.
Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure 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, 1997. 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 June 30, 1998, the results of its operations for the three
and six months ended June 30, 1998 and 1997 and its cash flows for the six
months ended June 30, 1998 and 1997. However, the operating results for the
interim periods may not be indicative of the results for the full 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, 1997.
-7-
<PAGE>
AMERICAN MORTGAGE INVESTORS TRUST
Notes to Financial Statements
June 30, 1998
(Unaudited)
Net income per weighted average share is computed based on the net income for
the period, divided by the weighted average number of shares outstanding for the
period. The weighted average number of shares outstanding for the three and six
months ended June 30, 1998 and 1997 were 3,840,656 and 3,849,317 and 3,844,835
and 3,849,921, respectively.
The Company adopted SFAS No. 130, Reporting Comprehensive Income on January 1,
1998. SFAS No. 130 establishes standards for reporting and displaying
comprehensive income and its components in a financial statement that is
displayed with the same prominence as other financial statements. The statement
also requires the accumulated balance of other comprehensive income to be
displayed separately from retained earnings and additional paid-in capital in
the equity section of the balance sheet. Total comprehensive income for the
three and six months ended June 30, 1998 and 1997 was $873,250 and $911,219 and
$1,794,787 and $1,692,285, respectively.
The Company adopted SFAS No. 131, Disclosures about Segments of an Enterprise
and Related Information on January 1, 1998. SFAS No. 131 establishes standards
for reporting information about operating segments in annual and interim
financial statements. Operating segments are defined as components of an
enterprise about which separate financial information is available that is
evaluated regularly by the chief operating decision maker in deciding how to
allocate resources and in assessing performance. Categories required to be
reported as well as reconciled to the financial statements are segment profit or
loss, certain specific revenue and expense items, and segment assets. The
Company operates in one segment, investment in mortgages or mortgage backed
securities.
Certain prior year amounts have been reclassified to conform with current year
presentation.
-8-
<PAGE>
AMERICAN MORTGAGE INVESTORS TRUST
Notes to Financial Statements
June 30, 1998
(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 $46,837,304.
Information relating to investments in Originated Mortgages and Additional Loans
as of June 30, 1998 and December 31, 1997 is as follows:
<TABLE>
<CAPTION>
Date of
Invest-
ment/ Amounts Advanced Total
Final -------------------------------------- Amounts
Matu Total Advanced Outstanding Origi-
Descrip -rity Mortgage Additional Amounts Amounts and Loan nation
Property -tion Date Loans Loans Advanced Unadvanced Unadvanced Balance Costs
----------- ---------- ----------- -------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
The Cove 308 12/93 $ 6,800,000 $ 840,500 $ 7,640,500 $ 0 $ 7,640,500 $ 7,436,547 $ 444,215
Apts Apt 1/29
Houston, Units (D)
TX (A)
Oxford on 405 12/93 9,350,000 1,156,000 10,506,000 0 10,506,000 10,225,566 610,814
Greenridge Apt. 1/29
Apts Units (D)
Houston,
TX (A)
Town & 330 4/94 9,348,000 1,039,000 10,387,000 0 10,387,000 10,116,694 603,895
Country IV Apt. 5/29
Apts Units (E)
Urbana,
IL (B)
Columbiana 204 4/94 8,276,895 563,000 8,839,895 406,105 9,246,000 8,815,743 532,835
Lakes Apts Apt. 11/35
Columbia, Units (F)
SC (C)
Stony Brook 125 12/95 8,500,000 763,909 9,263,909 0 9,263,909 9,231,367 413,492
Village II Apt. 6/37
Apts Units (F)
East Haven,
CT (G)
------------------------------------------------------------------------------------------
Total $42,274,895 $4,362,409 $46,637,304 $406,105 $47,043,409 $45,825,917 $2,605,251
==========================================================================================
<CAPTION>
Interest
Accum Balance Earned Less
-ulated at Balance at by the 1998 Net
Amor- June 30, December Company Amor- Interest
Property tization 1998 31, 1997(H) for 1998 tization Earned
---------- ----------- ----------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
The Cove $ 459,559 $ 7,421,203 $ 7,498,346 $ 297,734 $ 50,473 $ 247,261
Apts
Houston,
TX (A)
Oxford on 631,910 10,204,470 10,310,443 480,842 69,303 411,539
Greenridge
Apts
Houston,
TX (A)
Town & 488,501 10,232,088 10,327,840 405,885 58,134 347,751
Country IV
Apts
Urbana,
IL (B)
Columbiana 233,489 9,115,089 9,158,473 331,494 28,150 303,344
Lakes Apts
Columbia,
SC (C)
Stony Brook 208,295 9,436,564 9,497,751 382,769 44,595 338,174
Village II
Apts
East Haven,
CT (G)
---------------------------------------------------------------------------
Total $2,021,754 $46,409,414 $46,792,853 $1,898,724 $250,655 $1,648,069
===========================================================================
</TABLE>
-9-
<PAGE>
AMERICAN MORTGAGE INVESTORS TRUST
Notes to Financial Statements
June 30, 1998
(Unaudited)
(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% were guaranteed by the developer until December 1996.
(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. Payments at the rate of 9.167% were guaranteed
by the developer until June 1997.
(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. Payments at the rate of
8.678% are guaranteed by the developer until December 1998.
(D) The Originated Mortgages have terms of 35 years, subject to mandatory
prepayment at any time after 10 years and upon one year's notice.
(E) 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.
(F) 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.
(G) 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.
(H) Aggregate cost for federal income tax purposes is $45,707,370.
-10-
<PAGE>
AMERICAN MORTGAGE INVESTORS TRUST
Notes to Financial Statements
June 30, 1998
(Unaudited)
Note 3 - Investment in REMIC and GNMA Certificates
Information relating to investments in REMIC and GNMA Certificates as of June
30, 1998 and December 31, 1997 is as follows:
<TABLE>
<CAPTION>
Original Accum
Date Purchase -ulated
Purchased Price Amorti-
/Final Stated Including Principal at (Discount) -zation
Certificate Payment Interest Prem/ June 30, June 30, June 30,
Seller Number Date Rate (Disc) 1998 1998 1998
- ------ ------------ --------- ---- ----------- ------------ --------- --------
GNMA Certificates
- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Bear Stearns 0355540 7/27/94 7.125% $ 2,407,102 $ 2,577,390 $(238,409) $ 78,918
3/15/29
Malone Mortgage 0382486 7/28/94 8.500% 2,197,130 2,161,957 (8,107) 2,802
8/15/29
Goldman Sachs 0328502 7/29/94 8.250% 3,928,615 3,675,135 (3,443) 1,295
7/15/29
SunCoast Capital Group, Ltd. G22412(6) 6/23/97 7.000% 1,981,566 1,880,272 (12,339) 9,987
4/20/27
REMIC Certificates
- ------------------
SunCoast Capital Group, Ltd. FHLMC 3/30/97 7.000% 507,288 0 0 0
17218 2/1/98
SunCoast Capital Group, Ltd. FHLMC 5/30/97 6.500% 251,967 0 0 0
17161 2/1/98
SunCoast Capital Group, Ltd. FHLMC 6/23/97 7.000% 147,437 0 0 0
17125 4/20/27(1)
SunCoast Capital Group, Ltd. FNMA 6/30/97 7.500% 983,125 1,000,000 (16,875) 3,068
1997-42V 10/18/09
---------------------------------------------------
Total $12,404,230 $ 11,294,754 $(279,173) $ 96,070
===================================================
<CAPTION>
Loan Interest
Origination Unrealized Earned
Costs at Gain (Loss) Balance Balance at by the 1998 Net
June 30, at June 30, at June 30, December 31, Company Amor- Interest
Seller 1998 1998 1998 1997 for 1998 tization Earned
- ------ ----------- ------------ ----------- ----------- -------- -------- --------
GNMA Certificates
- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Bear Stearns $ 79,738 $ 90,828 $ 2,588,465 $ 2,604,394 $ 91,978 $ 10,095 $102,073
Malone Mortgage 73,427 19,033 2,249,112 2,253,185 92,000 358 92,358
Goldman Sachs 125,172 (9,897) 3,788,262 3,833,576 152,253 166 152,419
SunCoast Capital Group, Ltd. 0 8,962 1,886,882 1,982,055 67,394 8,655 76,049
REMIC Certificates
- ------------------
SunCoast Capital Group, Ltd. 0 0 0 473,051 767 0 767
SunCoast Capital Group, Ltd. 0 0 0 198,075 869 0 869
SunCoast Capital Group, Ltd. 0 0 0 148,495 0 0 0
SunCoast Capital Group, Ltd. 0 10,252 996,445 1,003,047 37,500 1,534 39,034
-------------------------------------------------------------------------------------
Total $278,337 $ 119,178 $11,509,166 $12,495,878 $442,761 $ 20,808 $463,569
=====================================================================================
</TABLE>
(1) The stated final payment date was April 20, 2027. The actual final payment
amounting to $145,942 was received January 22, 1998.
-11-
<PAGE>
AMERICAN MORTGAGE INVESTORS TRUST
Notes to Financial Statements
June 30, 1998
(Unaudited)
Note 3 - Investment in REMIC and GNMA Certificates (continued)
The amortized cost, unrealized gain (loss) and fair value for the investment in
REMIC and GNMA Certificates at June 30, 1998 and December 31, 1997 were as
follows:
<TABLE>
<CAPTION>
Gross Gross Gross Gross
Amortized Unrealized Unrealized Amortized Unrealized Unrealized Fair
Cost at Gain at (Loss) at Fair Value Cost at Gain at (Loss) at Value at
June 30, June 30, June 30, June 30, December 31, December 31, December 31, December 31,
Security 1998 1998 1998 1998 1997 1997 1997 1997
- -------- ----------- --------- ---------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fannie Mae REMICs $ 986,193 $ 10,252 $ 0 $ 996,445 $ 984,659 $ 18,388 $ 0 $ 1,003,047
Federal Home Loan 0 0 0 0 806,972 12,649 0 819,621
REMICs
Ginnie Mae Certificates 10,403,795 118,823 (9,897) 10,512,721 10,530,649 146,012 (3,451) 10,673,210
----------- --------- ------- ----------- ----------- -------- ------- -----------
$11,389,988 $ 129,075 $(9,897) $11,509,166 $12,322,280 $177,049 $(3,451) $12,495,878
=========== ========= ======= =========== =========== ======== ======= ===========
</TABLE>
-12-
<PAGE>
AMERICAN MORTGAGE INVESTORS TRUST
Notes to Financial Statements
June 30, 1998
(Unaudited)
The change in the unrealized gain (loss) for the six months ended June 30, 1998
and the year ended December 31, 1997 were as follows:
Unrealized loss at January 1, 1997 $ (81,386)
Sale of securities during the year ended
December 31, 1997 included in
unrealized loss at December 31, 1996 15,647
Unrealized gain on securities
purchased during the twelve months
ended December 31, 1997 53,925
Unrealized gain on securities held at
December 31, 1997 and 1996 185,412
---------
Unrealized gain at December 31, 1997 $ 173,598
Sale of securities during the six months
ended June 30, 1998 included in
unrealized gain at December 31, 1997 (14,159)
Unrealized loss on securities held at
June 30, 1998 and December 31, 1997 (40,261)
---------
Unrealized gain at June 30, 1998 $ 119,178
=========
For the six months ended June 30, 1998, there were losses of $617 (including
acquisition fees and expenses) on principal repayments of REMICs and GNMAs.
Note 4 - Related Party Transactions
The Company has an agreement with the Advisor pursuant to which the Advisor
receives compensation consisting primarily of (i) asset management fees
calculated as a percentage of total assets invested by the Company, (ii) a
subordinated incentive fee based on the economic gain on the sale of Mortgage
Investments; (iii) 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 costs incurred on behalf of the Company.
-13-
<PAGE>
AMERICAN MORTGAGE INVESTORS TRUST
Notes to Financial Statements
June 30, 1998
(Unaudited)
The costs incurred to related parties for the three and six months ended June
30, 1998 and 1997 were as follows:
Three Months Ended Six Months Ended
June 30, June 30,
--------------------- ---------------------
1998 1997 1998 1997
--------------------- ---------------------
Expense reimburse-
ment $ 47,625 $ 55,593 $ 68,085 $ 81,923
Asset manage-
ment fees 91,826 89,776 181,789 179,245
-------- -------- -------- --------
$139,451 $145,369 $249,874 $261,168
======== ======== ======== ========
Note 5 - Subsequent Event
On August 14, 1998, a distribution of $1,370,449 and $17,464 was paid to the
Investors and the Advisor, respectively, representing the 1998 second quarter
distribution. The distribution was funded from cash collections of debt service
payments and interest income through approximately the distribution date, August
14, 1998.
-14-
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
When used in this quarterly report on form 10-Q, the words "believes,"
"anticipates," "expects" and similar expressions are intended to identify
forward-looking statements. Statements looking forward in time are included in
this quarterly report on form 10-Q pursuant to the "safe harbor" provision of
the private securities litigation reform act of 1995. Such statements are
subject to certain risks and uncertainties which could cause actual results to
differ materially, including, but not limited to, those set forth in
"management's discussion and analysis of financial condition and results of
operations." Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof. The company
undertakes no obligation to publicly revise these forward-looking statements to
reflect events or circumstances occurring after the date hereof or to reflect
the occurrence of unanticipated events.
Liquidity and Capital Resources
- -------------------------------
During 1997 the Company completed the offering and acquisition stage and 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. Not more than an aggregate of 7% of the Net Proceeds raised in the
Offering may be invested in Additional Loans. As of June 30, 1998, 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.
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. As of June 30, 1998, the backlog of shares to be redeemed is
129,029.
During the six months ended June 30, 1998, cash and cash equivalents increased
approximately $462,000 due to principal repayments of loans, GNMAs and REMICs
($1,085,000) and cash provided by operating activities ($2,153,000) which
exceeded distributions to shareholders ($2,776,000). Included in the adjustments
to reconcile the net income to cash provided by operating activities is net
amortization in the amount of $235,000.
-15-
<PAGE>
For a description of the Company's investments in Originated Mortgages, REMIC
and GNMA Certificates (see Notes 2 and 3 of Notes to Financial Statements).
Net unrealized gains on REMIC and GNMA investments included in shareholders'
equity pursuant to Statement of Financial Accounting Standards No. 115
aggregated $119,178 at June 30, 1998. This represents a decrease of $54,420 in
the unrealized gain for the six months ended June 30, 1998, of which a decrease
of $14,159 is attributable to the sale of securities (which resulted in a
realized loss of $617) and a decrease of $40,261 is attributable to a decrease
in market prices for the investments held at June 30, 1998 and December 31,
1997. As of August 10, 1998, the unrealized gain was approximately $140,865.
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 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 expects to use its reinvestment dividend to redeem shares through
its Redemption Plan and does not expect to have reinvested dividends available
for investment. Unadvanced amounts of Originated Mortgages 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. In order to qualify as a REIT under the Internal Revenue
Code, as amended, the Com-
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<PAGE>
pany must, among other things, distribute at least 95% of its taxable income.
Results of Operations
- ---------------------
Results of operations for the three and six months ended June 30, 1998, consists
of interest income from Originated Mortgages, REMIC certificates and temporary
investments less administrative expenses, realized losses on sale of REMICs and
GNMAs and amortization expenses. Results of operations for the three and six
months ended June 30, 1997, primarily consists of interest income from
Originated Mortgages, REMIC certificates, a FHA Insured Project Loan and
temporary investments less administrative expenses, realized losses on sale of
REMICs and GNMAs, and a FHA Insured Project Loan and amortization 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 such excess for the six months
ended June 30, 1998 and 1997.
Interest income from Originated Mortgages (excluding GNMAs) increased
approximately $18,000 and $87,000 for the three and six months ended June 30,
1998 as compared to the corresponding periods in 1997 primarily due to the
additional advances on the Stonybrook Originated Mortgage during 1997 and the
receipt of cash flow interest in the first quarter of 1998 from Oxford.
Interest income from temporary investments decreased approximately $25,000 and
$45,000 for the three and six months ended June 30, 1998 as compared to the
corresponding periods in 1997 primarily due to a decrease in temporarily
invested proceeds earning interest in 1998.
General and administrative expenses decreased approximately $49,000 and $59,000
for the three and six months ended June 30, 1998 as compared to the
corresponding periods in 1997 primarily due to a decrease in printing, expense
reimbursements to the Advisor for certain administrative and other costs
incurred on behalf of the Company as well as decreases in several other general
and administrative expenses in 1998.
Realized loss on sale of REMICs and GNMAs and FHA Insured Project Loan decreased
approximately $52,000 and $61,000 for the three and six months ended June 30,
1998 as compared to the cor-
-17-
<PAGE>
responding periods in 1997 primarily due to the repayment of four REMICs and the
FHA Insured Project Loan in 1997.
Distribution Policy
- -------------------
The Company has completed the offering and acquisition stage and therefore, in
1997 the Board reviewed and changed the distribution policy. Beginning in 1998,
the Company's distribution policy calls for quarterly distributions which more
closely reflect collections of interest payments.
Of the total distributions of $2,775,826 and $2,783,760 made for the six months
ended June 30, 1998 and 1997, $926,619 ($.24 per share or 33%) and $1,074,787
($.27 per share or 39%) represents a return of capital determined in accordance
with generally accepted accounting principles. As of June 30, 1998, the
aggregate amount of the distributions made since the commencement of the
Offering representing a return of capital, in accordance with generally accepted
accounting principles, totaled $9,939,351. The portion of the distributions
which constitutes a return of capital was significant during the acquisition
stage in order to maintain level distributions to shareholders. However, the
aggregate amount of the disposition proceeds used for distributions cannot in
the aggregate exceed 3% of the Gross Proceeds. As of June 30, 1998, the
aggregate amount of disposition proceeds used to support distributions equaled
2.44% of the Gross Proceeds.
Management expects that cash flow from operations will be sufficient to fund the
Company's operating expenses and to make distributions as determined by the
Board on a quarterly basis.
Accounting Standards Issued but not yet Adopted
- -----------------------------------------------
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 ("SFAS 133") "Accounting for Derivative
Instruments and Hedging Activities". The Statement establishes accounting and
reporting standards for derivative instruments and hedging activities. It
requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those instruments
at fair value. If certain conditions are met, a derivative may be specifically
designated as (a) a hedge of the exposure to changes in the fair value of a
recognized asset or liability or an unrecognized firm commitment, (b) a hedge of
the exposure to variable cash flows of a forecasted transaction, or (c) a hedge
of foreign currency exposure of a net investment in a foreign operation, an
unrecog-
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<PAGE>
nized firm commitment, an available-for-sale security or a
foreign-currency-denominated forecasted transaction. This Statement is effective
for all fiscal quarters of fiscal years beginning after June 15, 1999. The
adoption of SFAS 133 is not expected to have any impact on the financial
position or results of operations of the Company.
Year 2000 Compliance
- --------------------
As the year 2000 approaches, an issue has emerged regarding how existing
application software programs and operating systems can accommodate this date
value. Failure to adequately address this issue could have potentially serious
repercussions. The Advisor is in the process of working with the Company's
service providers to prepare for the year 2000. Based on information currently
available, the Company does not expect that it will incur significant operating
expenses or be required to incur material costs to be year 2000 compliant.
-19-
<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
A proxy and proxy statement soliciting the vote of the Company's
shareholders for the Company's annual meeting of shareholders was sent to
shareholders on or about May 1, 1998. Such meeting was held on June 24, 1998.
Peter T. Allen, Arthur P. Fisch and J. Michael Fried were reelected as trustees.
(1930082 shares voted for reelection and 27041 shares voted against reelection)
Item 5. Other Information
Alan P. Hirmes ceased to serve as Chief Financial Officer effective June
18, 1998. Effective June 18, 1998, John B. Roche was elected Chief Financial
Officer.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
1(a) Dealer Manager Agreement, dated March 29, 1993 as previously
filed as an Exhibit to Amendment No. 3 dated March 23, 1993 to Registrant's
Registration Statement No. 33-42481.
1(b) Form of Soliciting Dealer Agreement as previously filed as an
Exhibit to Amendment No. 3 dated March 23, 1993 to Registrant's Registration
Statement No. 33-42481.
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
-20-
<PAGE>
Item 6. Exhibits and Reports on Form 8-K (continued)
(a) Exhibits (continued)
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 previously 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.
-21-
<PAGE>
Item 6. Exhibits and Reports on Form 8-K (continued)
(a) Exhibits (continued)
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 previously 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.
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<PAGE>
Item 6. Exhibits and Reports on Form 8-K (continued)
(a) Exhibits (continued)
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.
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.
-23-
<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: August 13, 1998
By: /s/ John B. Roche
--------------------------------------
John B. Roche
Senior Vice President and
Chief Financial Officer
Date: August 13, 1998
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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-1-1998
<PERIOD-END> JUN-30-1998
<CASH> 2,302,992
<SECURITIES> 11,509,166
<RECEIVABLES> 47,109,214
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 60,930,921
<CURRENT-LIABILITIES> 1,526,021
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 59,404,900
<TOTAL-LIABILITY-AND-EQUITY> 60,930,921
<SALES> 0
<TOTAL-REVENUES> 2,163,257
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 314,050
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,849,207
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,849,207
<EPS-PRIMARY> .48
<EPS-DILUTED> 0
</TABLE>
