<PAGE>1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
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Commission file number 33-94694
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CRIIMI MAE FINANCIAL CORPORATION
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(Exact name of registrant as specified in charter)
Maryland 52-1931369
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
11200 Rockville Pike, Rockville, Maryland 20852
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(Address of principal executive offices) (Zip Code)
(301) 816-2300
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(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
NONE
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(Title of Class)
Securities registered pursuant to Section 12(g) of the Act:
NONE
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(Title of class)
<PAGE>2
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
As of March 28, 1997, 1,000 shares of common stock were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
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Form 10-K Parts Document
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I, II, III and IV Current Reports on Form 8-K filed with the
Commission on January 11, 1996, February 15, 1996,
March 13, 1996, April 12, 1996, May 15, 1996, June
12, 1996, July 12, 1996, August 12, 1996,
September 13, 1996, October 16, 1996, November 12,
1996 and December 12, 1996.
<PAGE>3
CRIIMI MAE FINANCIAL CORPORATION
1996 ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS
PART I
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Page
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Item 2. Properties . . . . . . . . . . . . . . . . . 4
Item 3. Legal Proceedings . . . . . . . . . . . . . . 4
Item 4. Submission of Matters to a Vote
of Security Holders . . . . . . . . . . . . 4
PART II
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Item 5. Market for the Registrant's Common Stock
and Related Stockholder Matters . . . . . . 4
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure . . 4
PART III
--------
Item 13. Certain Relationships and Related
Transactions . . . . . . . . . . . . . . . 5
PART IV
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Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K . . . . . . . . . . . . 5
Signatures . . . . . . . . . . . . . . . . . . . . . . 6
<PAGE>4
PART I
ITEM 2. PROPERTIES
The information required by item 2 is incorporated herein by reference
to the Current Reports on Form 8-K filed with the Commission on January 11,
1996, February 15, 1996, March 13, 1996, April 12, 1996, May 15, 1996, June 12,
1996, July 12, 1996, August 12, 1996, September 13, 1996, October 16, 1996,
November 12, 1996 and December 12, 1996 and to the Accountant's Report and the
Annual Compliance Statement filed in response to Item 14 of this Form 10-K.
ITEM 3. LEGAL PROCEEDINGS
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to the security holders to be voted on
during the fourth quarter of 1996.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND
RELATED STOCKHOLDER MATTERS
The Registrant's 1,000 shares of authorized Common Stock are held by
CRIIMI MAE Inc. (CRIIMI MAE), are not traded and have no trading market.
As of December 31, 1996 Collateralized Mortgage Obligations (Bonds),
with a face value of $200,035,759 and a fair market value of $191,284,195, were
outstanding. The Bonds are held by 23 Bondholders. The Bonds trade on the
over-the-counter market.
Reference is made to the Current Reports on Form 8-K filed with the
Commission on January 11, 1996, February 15, 1996, March 13, 1996, April 12,
1996, May 15, 1996, June 12, 1996, July 12, 1996, August 12, 1996, September 13,
1996, October 16, 1996, November 12, 1996 and December 12, 1996 for information
concerning payments of principal and interest on the Bonds to Bondholders and
dividends paid to CRIIMI MAE as the sole shareholder of the Registrant.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
<PAGE>5
PART III
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(a) Transactions with management and others.
During 1996, CRIIMI MAE was paid $755,813 by the Registrant for
interest expense due to CRIIMI MAE on the Mortgage Interest Strip
Certificates that were issued in conjunction with the Bonds.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
REPORTS ON FORM 8-K
<TABLE>
<CAPTION>
(c) Exhibits
Sequentially
Exhibit No. Description Numbered Page
---------- ----------- -------------
<S> <C> <C>
4. Indenture, dated as of October
1, 1995, among CRIIMI MAE
Financial Corporation and State
Street Bank and Trust Company,
as Trustee. (Incorporated by
reference to Exhibit 2 to the
Current Report on Form 8-K
filed with the Commission on
October 24,1995) --
10.1 Master Servicing Agreement, dated
as of October 11, 1995, among
CRIIMI MAE Financial Corporation,
as Issuer, CRIIMI MAE Services Limited
Partnership, as Master Servicer,
State Street Bank and Trust Company,
as Lead, and State Street Bank and Trust
Company, as Trustee. (Incorporated by
reference to Exhibit 3 to the Current
Report on Form 8-K filed with the
Commission on October 24, 1995). --
99.1 Report of Independent Public Accountants
on Applying Agreed-upon procedures.
(filed herewith). 8
99.2 Annual Report for 1996 (filed herewith). 9
99.3 Management's Assertion (filed herewith). 12
99.4 Annual Compliance Statement (filed herewith). 13
</TABLE>
<PAGE>6
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, Registrant has duly caused this Report to be
signed on its behalf by the undersigned, thereunto duly authorized.
CRIIMI MAE FINANCIAL CORPORATION
(Registrant)
March 28, 1997 /s/ William B. Dockser
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DATE William B. Dockser
Chairman of the Board and
Principal Executive Officer
<PAGE>7
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated:
March 28, 1997 /s/ William B. Dockser
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DATE William B. Dockser
Chairman of the Board and
Principal Executive Officer
March 28, 1997 /s/ H. William Willoughby
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DATE H. William Willoughby
Director, President and
Secretary
March 28, 1997 /s/ Cynthia O. Azzara
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DATE Cynthia O. Azzara
Senior Vice President, Chief
Financial Officer and Principal
Accounting Officer
March 28, 1997 /s/ Bruce Lane
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DATE Bruce Lane
Director
<PAGE>8
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON APPLYING AGREED-UPON PROCEDURES
CRIIMI MAE Financial Corporation
11200 Rockville Pike
Rockville, MD 20852
State Street Bank and Trust Company
Two International Place
Boston, MA 02110
We have performed the procedures enumerated below, which were agreed to by
CRIIMI MAE Financial Corporation (the "Issuer") and State Street Bank and Trust
Company (collectively, the "Specified Users"), solely to assist you in
evaluating the Issuer's compliance, as set forth in the accompanying management
assertion, with the Indenture agreement among CRIIMI MAE Financial Corporation
as Issuer and State Street Bank and Trust Company as Trustee dated October 1,
1995 and the accuracy of the Issuer's records for the year ended December 31,
1996. This agreed-upon procedures engagement was performed in accordance with
standards established by the American Institute of Certified Public Accountants.
The sufficiency of these procedures is solely the responsibility of the
specified users of the report. Consequently, we make no representation
regarding the sufficiency of the procedures described below either for the
purpose for which this report has been requested or for any other purpose.
However, it is our understanding that these procedures are sufficient for your
purposes.
During our engagement, we were furnished with or referred to the following
documents:
o The Indenture agreement
o The Payment Date Statements for each of the months in the year
beginning January 1, 1996 which represent all such Payment Date
Statements for the year ended December 31, 1996, as provided by
the Specified Users
o Collateral information attached to the Payment Date Statements
listed above, as provided by the Specified Users
o The CRIIMI MAE Financial Corporation, 7% Collateralized Mortgage
Obligations, Annual Report for 1996 (the "Annual Report") as
attached to this letter
Procedures to Comply with Section 8.4(b) of the Indenture
- ---------------------------------------------------------
We read such provisions of the Indenture agreement as we deemed necessary for
purposes of this letter. We also read each of the Payment Date Statements for
the months listed above and performed the following procedures:
1. We agreed the Scheduled Principal distributions for the Mortgages
and the GNMAs as detailed in the Principal Distribution Detail
table to the collateral information attached to the Payment Date
Statement. We agreed the Principal Prepayments for the Mortgages
and the GNMAs as detailed in the Principal Distribution Detail
table to the collateral information attached to the Payment Date
Statement. We verified with the Issuer that there were no FHA
Insurance Proceeds or Realized Losses during the period covered
by the Payment Date Statement. We also tested the clerical
accuracy of the Net Principal Distribution.
2. For the Payment Date Statements listed above, we agreed the
Beginning Balance as detailed in the Interest Payable on Bonds
table to the Actual Ending Balance of the bonds detailed in the
prior month's Payment Date Statement. We recalculated the
Interest Payable based on the Beginning Balance and the Interest
Rate on the Bonds of 7%.
We performed the calculations as set forth in this letter in accordance with
Section 8.4(b) of the Indenture and found the calculations of the trustee to be
in agreement with those recomputed by us within $1.00.
No exceptions were found as a result of applying the above procedures.
Procedures Related to the 1996 Annual Report
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1. We read the Annual Report.
2. We tested the Annual Report for mathematical accuracy.
3. We agreed the amounts disclosed for Scheduled Principal, Principal
Prepayments, FHA Insurance Proceeds, Realized Losses and Net Principal
Distribution as stated in the Principal Distribution Detail table of
the Annual Report to the sum of the stated amounts as detailed in the
Payment Date Statements.
4. We agreed the amounts disclosed for Interest Amount, Interest Strip
Amount and Net Interest Distribution as stated in the Interest
Distribution Detail table of the Annual Report to the sum of the
stated amounts as detailed in the Payment Date Statements.
5. We agreed the amounts disclosed for the Beginning Balance, Interest
Rate and Interest Payable as stated in the Interest Payable on the
Bonds table of the Annual Report to amounts detailed in the applicable
Payment Date Statement.
6. We agreed the Actual Beginning Balance, Actual Principal Payable and
the Actual Ending Balance as stated in the Principal Balance of
Collateral table of the Annual Report to the sum of the stated amounts
as detailed in the Payment Date Statements.
7. We agreed the Beginning Balance, Principal Payable and the Ending
Balance as detailed in the Principal Balance of Bonds table of the
Annual Report to amounts detailed in the applicable Payment Date
Statement.
8. We agreed the Number, Stated Principal Balance and Unpaid Principal
Balance delinquent for One Month, Two Months, Three Months + and
Foreclosures as detailed in the Delinquent Mortgage Loans table of the
Annual Report to the stated amounts in the latest Payment Date
Statement.
9. We agreed the Months Delinquent, Loan Number, Stated Principal Balance
and Status of Foreclosures as detailed in the Delinquent Mortgage
Loans Detail table of the Annual Report to the detail stated in the
latest Payment Date Statement.
10. We agreed the Loan Number, Nature of Liquidation, Final Recovery
Determination, FHA Proceeds and Realized Loss as detailed in the
Liquidation table of the Annual Report to the detail stated in the
latest Payment Date Statement.
11. We agreed the Aggregate P&I Advances, Aggregate unreimbursed P&I
Advances, Interest on P&I Advances Paid to Master Servicer, Interest
accrued on unreimbursed P&I Advances as stated in the P&I Advances
table of the Annual Report to the stated amounts detailed in the
latest Payment Date Statement.
12. We agreed the Aggregate Realized Losses incurred as stated in the
Realized Losses table of the Annual Report to the stated amount in the
latest Payment Date Statement.
13. We agreed the Master Servicing Fee and the Trustee Fee detailed in the
Fees table of the Annual Report to the sum of the stated amounts
disclosed in the Payment Date Statements.
We considered differences of less than $1.00 to be immaterial and, as such, are
not reported as exceptions herein.
No exceptions were found as a result of applying the above procedures.
We were not engaged to, and did not, perform an examination, the objective of
which would be the expression of an opinion on management's assertion.
Accordingly, we do not express such an opinion. Had we performed additional
procedures, other matters might have come to our attention that would have been
reported to you.
This report is intended solely for the use of the specified users and should not
be used by those who have not agreed to the procedures and taken responsibility
for the sufficiency of the procedures for their purposes. However, this report
is a matter of public record and its distribution is not limited.
Washington, D.C.
March 28, 1997
<PAGE>9
CRIIMI MAE Financial Corporation
7.00% Collateralized Mortgage Obligations
Annual Report for 1996
<TABLE><CAPTION>
Principal Distribution Detail
Scheduled Principal FHA Insurance Realized Net Principal
Principal Prepayments Proceeds Losses Distribution
------------- -------------- ------------- -------- --------------
<S> <C> <C> <C> <C> <C>
Mortgages $ 978,647.78 $14,252,707.81 $ 0.00 $ 0.00 $15,231,355,59
GNMA $ 499,212.39 N/A N/A $ 0.00 $ 499,212.39
Total $1,477,860.17 $14,252,707.81 $ 0.00 $ 0.00 $15,730,567.98
Interest Distribution Detail
Interest Interest Strip Net Interest
Amount Amount Distribution
-------------- ------------- --------------
<S> <C> <C> <C>
Mortgages $12,615,125.57 $ 766,275.60 $11,848,849.97
GNMA $ 6,297,691.77 N/A $ 6,297,691.77
Total $18,912,817.34 $ 766,275.60 $18,146,541.74
Interest Payable on Bonds
Beginning Interest Interest
Balance Rate (Fixed) Payable
--------------- ------------ --------------
<C> <C> <C>
$215,766,327.91 7.00% $14,964,783.43
</TABLE>
<PAGE>10
<TABLE><CAPTION>
Balance Information
- -------------------
Principal Balance of Collateral
Actual Beginning Actual Principal Actual Ending
Balance Payable Balance
---------------- ---------------- ------------
<S> <C> <C> <C>
Mortgages $ 144,920,750.79 $ 15,231,355.26 $129,689,395.53
GNMA $ 77,717,114.59 $ 499,212.41 $ 77,217,902.18
Total $ 222,637,865.38 $ 15,730,567.67 $206,907,297.71
Principal Balance of Bonds
Beginning Principal Ending
Balance Payable Balance
--------------- -------------- ---------------
<C> <C> <C>
$215,766,327.91 $15,730,567.98 $200,035,759.93
</TABLE>
CRIIMI MAE Financial Corporation
7.00% Collateralized Mortgage Obligations
Annual Report for 1996
<TABLE>
<CAPTION>
Delinquency Information
Delinquent Mortgage Loans
One Month Two Months Three Months+ Foreclosures
--------- ---------- ------------- ------------
<S> <C> <C> <C> <C>
Number 0 0 0 0
Stated Principal Balance $ 0.00 $ 0.00 $ 0.00 $ 0.00
Unpaid Principal Balance $ 0.00 $ 0.00 $ 0.00 $ 0.00
Delinquent Mortgage Loans Detail
Stated
Months Loan Principal Status of
Delinq. Number Balance Foreclosure
------- ------ --------- -----------
<C> <C> <C> <C>
Liquidations
Loan Nature of Final Recovery FHA Realized
Number Liquidation Determination Proceeds Loss
------ ----------- -------------- -------- --------
<C> <C> <C> <C> <C>
</TABLE>
<PAGE>11
CRIIMI MAE Financial Corporation
7.00% Collateralized Mortgage Obligations
Annual Report for 1996
Other Information
P&I Advances
Aggregate P&I Advances $0.00
Aggregate unreimbursed P&I Advances $0.00
Interest on P&I Advances paid to Master Servicer $0.00
Interest accrued on unreimbursed P&I Advances $0.00
Realized Losses
Aggregate Realized Losses incurred $0.00
Fees
Master Trustee
Servicing Fee Fee
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Mortgages $ 71,579.97 $12,884.40
GNMA $ 38,747.07 $ 6,974.49
Total $ 110,327.04 $19,858.89<PAGE>
<PAGE>12
MANAGEMENT'S ASSERTION
For the year ended December 31, 1996, the mathematical accuracy of CRIIMI MAE
Financial Corporation's Payment Date Statements provided by State Street Bank
and Trust Company as trustee is correct. CRIIMI MAE Financial Corporation's
1996 Annual Report is mathematically accurate and the amounts disclosed agree to
the Payment Date Statements. Also, for the same period, CRIIMI MAE Financial
Corporation has complied with the Indenture agreement among CRIIMI MAE Financial
Corporation as Issuer and State Street Bank and Trust Company as Trustee dated
October 1, 1995.
/s/ Cynthia O. Azzara
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Cynthia O. Azzara
Senior Vice President and Chief
Financial Officer
/s/ Nikole S. Sheridan
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Nikole S. Sheridan
Vice President/Controller<PAGE>
<PAGE>13
ANNUAL COMPLIANCE STATEMENT
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March 28, 1997
Mr. William G. Swan
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02170
Dear Mr. Swan:
In accordance with Section 9.9 of the Indenture dated as of October 1,
1995, between CRIIMI MAE Financial Corporation as Issuer and State Street Bank
and Trust Company as Trustee, I certify that review of the activities of the
Issuer for the period January 1, 1996 to December 31, 1996 and of the Issuer's
performance under this Indenture has been made under my supervision. To the
best of my knowledge, based on such review, the Issuer has fulfilled all of its
obligations under this Indenture.
Sincerely,
/s/ Cynthia O. Azzara
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By: Cynthia O. Azzara
Senior Vice President and Chief
Financial Officer
/s/ Jay R. Cohen
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By: Jay R. Cohen
Executive Vice President and
Treasurer<PAGE>
