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1
FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1993
------------------
Commission file number 0-13120
-----------------
AMERICAN INSURED MORTGAGE INVESTORS
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(Exact name of registrant as specified in charter)
California 13-3180848
------------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
11200 Rockville Pike, Rockville, Maryland 20852
----------------------------------------- ----------------------
(Address of principal executive offices) (Zip Code)
(301) 468-9200
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(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
----------------------------------- ---------------------------
Depository Units of Limited American Stock Exchange
Partnership Interest
Securities registered pursuant to Section 12(g) of the Act:
None
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(Title of class)
Indicated 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 February 1, 1994, 10,000,000 depositary units of
limited partnership interest were outstanding and the aggregate
market value of such shares held by non-affiliates of the
Registrant on such date was $48,125,000.
DOCUMENTS INCORPORATED BY REFERENCE
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Form 10-K Parts Document
---------------- ---------
II and IV Prospectus of Registrant dated
November 30, 1983
2
AMERICAN INSURED MORTGAGE INVESTORS
1993 ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS
PART I
------
Page
----
Item 1. Business . . . . . . . . . . . . . . . . . . 3
Item 2. Properties . . . . . . . . . . . . . . . . . 3
Item 3. Legal Proceedings . . . . . . . . . . . . . . 4
Item 4. Submission of Matters to a Vote of
Security Holders . . . . . . . . . . . . . 4
PART II
-------
Item 5. Market for Registrant's Securities and
Related Security Holder Matters . . . . . . 5
Item 6. Selected Financial Data . . . . . . . . . . . 7
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of
Operations . . . . . . . . . . . . . . . . 9
Item 8. Financial Statements and Supplementary Data . 14
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure . . 14
PART III
--------
Item 10. Directors and Executive Officers of the
Registrant . . . . . . . . . . . . . . . . 15
Item 11. Executive Compensation . . . . . . . . . . . 16
Item 12. Security Ownership of Certain Beneficial
Owners and Management . . . . . . . . . . . 16
Item 13. Certain Relationships and Related Transactions 16
PART IV
-------
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K . . . . . . . . . . . . 17
Signatures . . . . . . . . . . . . . . . . . . . . . . 19
3
PART I
ITEM 1. BUSINESS
Development and Description of Business
---------------------------------------
Information concerning the business of American Insured
Mortgage Investors (the Partnership) is contained in Part II,
Item 7, Management's Discussion and Analysis of Financial
Condition and Results of Operations and in Notes 1, 4, 5, and 6
of the notes to the financial statements of the Partnership
contained in Part IV (filed in response to Item 8 hereof), which
is incorporated herein by reference. Also see Schedule XII-
Mortgage Loans on Real Estate, contained in Item 14, for the
table of the Insured Mortgages (as defined below) invested in by
the Partnership as of December 31, 1993.
Employees
---------
The business of the Partnership is managed by CRIIMI, Inc.
(the General Partner), while its portfolio of mortgages is
managed by AIM Acquisition Partners, L.P. (the Advisor) and
CRI/AIM Management, Inc. (the Sub-advisor). CRIIMI, Inc. is a
wholly-owned subsidiary of CRIIMI MAE Inc. (CRIIMI MAE), formerly
CRI Insured Mortgage Association, Inc., which is managed by an
adviser whose general partner is C.R.I., Inc. (CRI). CRI is also
an affiliate of the Sub-advisor. The Partnership has no
employees.
Competition
-----------
In disposing of Insured Mortgages, the Partnership competes
with private investors, mortgage banking companies, mortgage
brokers, state and local government agencies, lending insti-
tutions, trust funds, pension funds, and other entities, some
with similar objectives to those of the Partnership and some of
which are or may be affiliates of the Partnership, its General
Partner, the Advisor or their respective affiliates. Some of
these entities may have substantially greater capital resources
and experience in disposing of FHA insured mortgages than the
Partnership.
Pursuant to the Sub-advisory Agreements, the Advisor
retained the Sub-advisor to perform the services required of the
Advisor under the Advisory Agreements. CRI also serves as a
general partner of the advisers to CRIIMI MAE and CRI Liquidating
REIT, Inc., which have investment objectives similar to those of
American Insured Mortgage Investors-Series 85, L.P. (AIM 85),
American Insured Mortgage Investors L.P. - Series 86 (AIM 86) and
American Insured Mortgage Investors L.P. - Series 88 (AIM 88) as
well as the Partnership (collectively, the AIM Partnerships).
CRI and its affiliates are also general partners of a number of
other real estate limited partnerships. CRI and its affiliates
also may serve as general partners, sponsors or managers of real
estate limited partnerships, real estate investment trusts
(REITs) or other entities in the future. The Partnership may
attempt to dispose of mortgages at or about the same time that
one or more of the other AIM Partnerships and/or other entities
sponsored or managed by CRI, including CRIIMI MAE and CRI
Liquidating REIT, Inc., are attempting to dispose of mortgages.
As a result of market conditions that could limit dispositions,
the Sub-advisor and its affiliates could be faced with conflicts
of interest in determining which mortgages would be disposed of.
Both CRI and CRIIMI, Inc., however, are subject to their
fiduciary duties in evaluating the appropriate action to be taken
when faced with such conflicts.
ITEM 2. PROPERTIES
Although the Partnership does not own the related real
estate, the Insured Mortgages in which the Partnership has
invested are first liens on the respective multifamily
residential developments or retirement homes.
4
PART I
ITEM 3. LEGAL PROCEEDINGS
There are no material legal proceedings to which the
Partnership is a party.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to the security holders to be
voted on during the fourth quarter of 1993.
5
PART II
ITEM 5. MARKET FOR REGISTRANT'S SECURITIES AND RELATED SECURITY
HOLDER MATTERS
Principal Market and Market Price for Units and Distributions
-------------------------------------------------------------
From November 5, 1985 through July 6, 1989, the Units were
included in the NASDAQ National Market System. From July 7, 1989
through April 7, 1992, the Units were traded in the
over-the-counter market and quoted on the NASDAQ quotation system
under the symbol "AIMAZ."
Since April 8, 1992, the Units have traded on the American
Stock Exchange with a trading symbol of AIA.
The high and low bid prices for the Units as reported in
AMEX or the NASDAQ Quotation System and distributions, as
applicable, for each quarterly period in 1993 and 1992 were as
follows:
Amount of
1993 Distribution
Quarter Ended High Low Per Unit
------------------- ------- ------- ------------
March 31, $4 7/8 $4 5/16 $ .095
June 30, 4 3/4 4 5/16 .090
September 30, 4 13/16 4 7/16 .090
December 31, 5 1/8 4 1/4 .370(1)
---------
$ .645
=========
Amount of
1992 Distribution
Quarter Ended High Low Per Unit
------------------- ------- ------- ------------
March 31, $4 5/8 $4 1/2 $ 1.53(2)
June 30, 5 5/8 3 7/8 .10
September 30, 4 3/4 3 7/8 .09
December 31, 4 5/8 4 1/8 .10
--------
$ 1.82
========
(1) This includes a special distribution of $.28 per Unit
comprised of: (i) $.21 per Unit return of capital from the
disposition of the mortgages on Chapelgate Apartments and
Cumberland Village and (ii) $.07 per Unit capital gain from
these dispositions plus additional sales proceeds from the
sale of the mortgage on Clark and Elm Apartments.
(2) This includes a $1.34 per Unit special distribution due to
the disposition of the mortgage on Clark and Elm Apartments
and the receipt of the remaining 9% of assignment proceeds
from the mortgage on Foxfire West Apartments.
The United States Congress recently repealed portions of the
federal tax code which had an adverse impact on tax-exempt
investors in "publicly traded partnerships." In an effort to
allow pension funds and other tax-exempt organizations to invest
in publicly-traded partnerships, the Revenue Reconciliation Act
of 1993 repealed the rule that automatically treated income from
publicly-traded partnerships as gross income that is derived from
an unrelated trade or business. As a result, investments in
publicly-traded partnerships such as AIM 84 are now treated the
same as investments in other partnerships for purposes of the
unrelated business taxable income rules.
6
PART II
ITEM 5. MARKET FOR REGISTRANT'S SECURITIES AND RELATED SECURITY
HOLDER MATTERS - Continued
There are no material legal restrictions upon the
Partnership's present or future ability to make distributions in
accordance with the provisions of the Partnership Agreement.
The Partnership's Dividend Reinvestment Plan was amended
effective April 10, 1992 to exclude the amount of any special
distributions from reinvestment under the Plan. The regular
distributions will continue to be automatically reinvested in
additional Units as in the past.
Approximate Number
of Unitholders as of
Title of Class December 31, 1993
--------------------------- ----------------------
Depository Units of Limited
Partnership Interest 11,000
7
PART II
ITEM 6. SELECTED FINANCIAL DATA
(Dollars in thousands, except per Unit amounts)
For the years ended December 31,
1993 1992 1991 1990 1989
-------- -------- -------- -------- --------
Income $ 4,487 $ 4,747 $ 5,761 $ 11,231 $ 18,647
Net gains (losses) from
mortgage dispositions 762 (21) 260 (3,323) 556
Net earnings 4,528 3,867 4,626 5,448 15,878
Composition of distributions
per Limited Partnership
Unit(1)(2):
Earnings $ .440 $ .38 $ .450 $ .53 $ 1.540
Return of capital .205 1.44 .099 10.76 2.045
-------- -------- -------- -------- --------
Total $ .645 $ 1.82 $ .549 $ 11.29 $ 3.585
======== ======== ======== ======== ========
Total assets $ 47,630 $ 46,971 $ 62,029 $ 63,962 $177,697
Partners' equity 43,749 45,864 60,741 61,773 172,718
(1) Calculated based upon the weighted average number of Limited Partnership Units outstanding. See Note 2 of
Notes to Financial Statements contained in Item 8. "Financial Statements and Supplementary Data."
(2) Includes distributions due the Unitholders for the Partnership's fiscal quarters ended December 31, 1993, 1992,
1991, 1990 and 1989 which were paid subsequent to each year end. See Notes 3 and 6 of Notes to Financial
Statements contained in Item 8. "Financial Statements and Supplementary Data."
8
PART II
ITEM 6. SELECTED FINANCIAL DATA - Continued
The selected statements of operations data presented above
for the years ended December 31, 1993, 1992 and 1991, and the
balance sheet data as of December 31, 1993 and 1992, are derived
from and are qualified by reference to the Partnership's
financial statements which have been included elsewhere in this
Form 10-K. The statements of operations data for the years ended
December 31, 1990 and 1989 and the balance sheet data as of
December 31, 1991, 1990 and 1989 are derived from audited
financial statements not included in this Form 10-K. This data
should be read in conjunction with the financial statements and
the notes thereto.
9
PART II
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
General
-------
American Insured Mortgage Investors (the Partnership) was
formed under the Uniform Limited Partnership Act in the state of
California on July 12, 1983. During the period from March 1,
1984 (the initial closing date of the Partnership's public
offering) through December 31, 1984, the Partnership, pursuant to
its public offering of 10,000,000 depositary units of limited
partnership interest (Units), raised a total of $200,000,000 in
gross proceeds. In addition, the initial limited partner
contributed $2,500 to the capital of the Partnership and received
125 limited partnership interests in exchange therefor.
At a special meeting of the limited partners and Unitholders
of the Partnership held on August 16, 1991, a majority of these
interests approved, among other items, the assignment of the
general partner interests and the shares of the company which
acts as the assignor limited partner in the Partnership, as
described below, and the adoption of provisions which prohibit a
"Reorganization Transaction" (including transactions commonly
known as "roll-ups") for a period of five years unless approved
by a super-majority.
Effective September 6, 1991, CRIIMI, Inc. (the General
Partner) succeeded AIM Capital Management Corp. (the former
managing general partner with a partnership interest of 2.8%) and
IRI Properties Capital Corp. (the former corporate general
partner with a partnership interest of 0.1%) as the sole general
partner of the Partnership. CRIIMI, Inc. is a wholly-owned
subsidiary of CRIIMI MAE Inc. (CRIIMI MAE) formerly CRI Insured
Mortgage Association, Inc., which is managed by an adviser whose
general partner is CRI. In addition, the General Partner acquired
the shares of the company which acts as the assignor limited
partner in the Partnership. The interest of the former associate
general partner (0.1%) was purchased by the Partnership on
September 6, 1991, pursuant to the terms of the Partnership
Agreement. The former managing general partner, former corporate
general partner and former associate general partner are
sometimes collectively referred to as former general partners.
Also, on September 6, 1991, AIM Acquisition Partners, L.P.
(the Advisor) succeeded Integrated Funding, Inc. (Integrated
Funding) as the adviser of the Partnership. AIM Acquisition
Corporation (AIM Acquisition) is the general partner of the
Advisor and the limited partners include, but are not limited to,
AIM Acquisition, The Goldman Sachs Group, L.P., Broad Inc. and a
limited partnership formed by CRI and CRIIMI MAE. Pursuant to
the terms of certain amendments to the Partnership Agreement, as
discussed below, the General Partner is required to receive the
consent of the Advisor prior to taking certain significant
actions which affect the management and policies of the
Partnership. The limited partners and Unitholders of the
Partnership approved the execution of a Sub-advisory Agreement
with CRI/AIM Management, Inc., an affiliate of CRI, pursuant to
which CRI/AIM Management, Inc. manages the Partnership's
portfolio and disposes of the Partnership's mortgages.
Prior to the expiration of the Partnership's reinvestment
period in November 1988, the Partnership was engaged in the
business of originating mortgage loans (Originated Insured
Mortgages) and acquiring mortgage loans (Acquired Insured
Mortgages and together with Originated Insured Mortgages,
referred to herein as Insured Mortgages). The Partnership
purchased the Acquired Insured Mortgages from unaffiliated third
parties at a discount from the outstanding principal balance.
With respect to the two remaining Originated Insured Mortgages,
the Partnership is entitled to receive, in addition to base
interest payments, additional interest (commonly termed
Participations) based on a percentage of the net cash flow from
the development and of the net proceeds from the refinancing,
sale or other disposition of the development. No payments were
10
PART II
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS - Continued
received in 1993, 1992 or 1991 as a result of the Participations.
Through November 1988, the former managing general partner had
the right to reinvest the proceeds from any sale or prepayment of
an Insured Mortgage or any insurance proceeds received from the
assignment of an Insured Mortgage (subject to the conditions set
forth in the Partnership Agreement). After the expiration of the
reinvestment period, the Partnership is required (subject to the
conditions set forth in the Partnership Agreement) to distribute
such proceeds to its Unitholders. The Partnership Agreement
states that the Partnership will terminate on December 31, 2008,
unless previously terminated under the provisions of the
Partnership Agreement.
As of December 31, 1993, the Partnership had remaining
investments in 16 Insured Mortgages, including one Originated
Insured Mortgage classified as Mortgage Held for Disposition,
with an aggregate carrying value and face value of $43,342,199
and $49,225,550, respectively, all of which were originated or
acquired by the former managing general partner. All of the
Partnership's Insured Mortgages are insured by the United States
Department of Housing and Urban Development (HUD) for 100% of
their current face value, less a 1% assignment fee, and are
nonrecourse first liens on multifamily residential developments
or retirement homes owned by entities unaffiliated with the
Partnership, its General Partner, or their affiliates and are
insured under Section 221(d)(4) of the National Housing Act. As
of December 31, 1993, all of the Partnership's Insured Mortgages
are current with respect to the payment of principal and
interest.
Mortgage Dispositions
---------------------
A summary of dispositions that are included in the
statements of operations for the years ended December 31, 1993,
1992 and 1991 are as follows:
11
PART II
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS - Continued
Financial
Statement
Year of Type of Net Carrying Net Gain/(Loss)
Complex Name Disposition Disposition Value Proceeds Recognized
------------------ ----------- ----------- ------------ ------------ -----------
Foxfire West Apts.(a) 1991(c) Assignment $ 1,408,357 $ 1,590,050 $ 340,677
Clark & Elm Apts.(b) 1991 Sale of a
defaulted
mortgage -- -- (80,215)
Foxfire West Apts.(a) 1992(c) Assignment -- 158,984 --
Clark & Elm Apts.(b) 1992 Sale of a
defaulted
mortgage 13,673,692 13,652,589 (21,103)
Clark & Elm Apts.(b) 1993 Sale of a
defaulted
mortgage -- 108,415(d) 108,415
Chapelgate Apts.(a) 1993 Sale of a
defaulted
mortgage 682,731 901,171 218,440
Cumberland Village(a) 1993 Sale of a
defaulted
mortgage 1,520,268 1,955,663 435,395
(a) Disposition of Acquired Insured Mortgage.
(b) Disposition of Originated Insured Mortgage.
(c) Approximately 90% of the net proceeds were received and distributed in 1991. The remaining balance was
received and distributed in 1992.
(d) Represents additional proceeds received resulting from an adjustment to the 1992 sale price.
12
PART II
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS - Continued
Results of Operations
---------------------
1993 versus 1992
----------------
Net earnings for 1993 increased compared to 1992 primarily
due to the recognition of gains from mortgage dispositions in
September and November 1993 as shown in the above chart.
Mortgage investment income decreased during 1993 compared to
1992 primarily due to the decrease in the mortgage base resulting
from mortgage dispositions during 1993 and 1992.
Interest and other income decreased during 1993 compared to
1992 due to the temporary investment of proceeds received during
January 1992 from the sale of the defaulted mortgage on Clark and
Elm Apartments pending the distribution to Unitholders in May
1992.
General and administrative expenses decreased for 1993 as
compared to 1992. This decrease was due primarily to the payment
in 1992 of non-recurring professional fees in connection with the
transfer of the title of the Partnership's mortgages necessitated
by the change in general partner, as well as the payment in 1992
of a one-time American Stock Exchange listing fee. This decrease
was also attributable to a decrease in professional fees and
reimbursable wages due to the decrease in the mortgage base.
1992 versus 1991
----------------
Net earnings for 1992 decreased compared to 1991 primarily
due to the impact on the mortgage base of the disposition of the
mortgage on Clark and Elm Apartments during January 1992. During
the first quarter of 1992, the Partnership recognized a financial
statement loss on the disposition of this mortgage in the amount
of $21,103. In addition, the net earnings for 1991 included the
gain recognized from the assignment of the mortgage on Foxfire
West Apartments in the amount of $340,677.
Mortgage investment income decreased during 1992 compared to
1991 primarily due to the decrease in the mortgage base, as
previously discussed.
Interest and other income increased during 1992 as compared
to 1991 primarily due to the short-term investment of the
disposition proceeds received during January 1992 pending the
distribution to Unitholders in May 1992.
The asset management fee decreased during 1992 compared to
1991 as a result of a reduction in the mortgage base in 1992 and
a reduction in the asset management fee percentage, effective
October 1, 1991. At the special meeting held on August 16, 1991,
the limited partners and Unitholders of the Partnership consented
to, among other things, a reduction in the asset management fee
payable by the Partnership to the Advisor from the previous level
of 1.75% to .95%, effective October 1, 1991, and a reduction in
the asset management fee payable after January 1, 1999 from the
previous level of 1.00% to .95%. The limited partners and
Unitholders also consented to the elimination of the subordinated
fees.
During 1992, general and administrative expenses decreased
compared to 1991 primarily due to cost savings in investor
services expenses resulting primarily from a reduction in mailing
costs. This decrease was partially offset by an increase in non-
recurring professional fees incurred in 1992 in connection with
the transfer of the title of the Partnership's mortgages as
discussed above. Also offsetting the decrease in general and
administrative expenses for 1992 compared to 1991 was the payment
of the American Stock Exchange listing fee for the Partnership's
13
PART II
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS - Continued
Units, coupled with an increase in mortgage servicing fees.
During the first quarter of 1992, a servicer detected that it had
neglected to charge service fees in the last quarter of 1991,
which resulted in the recognition of higher than expected service
fees in the first quarter of 1992.
Liquidity and Capital Resources
-------------------------------
The Partnership's operating cash receipts, derived from
payments of principal and interest on Insured Mortgages, plus
cash receipts from interest on short-term investments, were
sufficient during 1993 to meet operating requirements.
The basis for paying distributions to Unitholders is net
proceeds from mortgage dispositions and cash flow from
operations, which is comprised of regular interest income and
principal from Insured Mortgages. Although Insured Mortgages
yield a fixed monthly mortgage payment once purchased, the cash
distributions paid to the Unitholders will vary during each year
due to (1) the fluctuating yields in the short-term money market
where the monthly mortgage payments received are temporarily
invested prior to the payment of quarterly distributions, (2) the
reduction in the asset base due to monthly mortgage payments
received or mortgage dispositions, (3) variations in the cash
flow attributable to the delinquency or default of Insured
Mortgages and (4) changes in the Partnership's operating
expenses.
Since the Partnership is obligated to distribute the
Proceeds of Mortgage Prepayments, Sales and Insurance of Insured
Mortgages (as defined in the Partnership Agreement) to its
Unitholders, the size of the Partnership's portfolio will
continue to decrease. The magnitude of the decrease will depend
upon the size of the Insured Mortgages which are prepaid, sold or
assigned for insurance proceeds as reflected in the preceding
table.
If necessary, the Partnership has the right to establish
reserves either from the Proceeds of Mortgage Prepayments, Sales
and Insurance of Insured Mortgages or from Cash Flow (as defined
in the Partnership Agreement). It should be noted, however, that
to the extent reserves are not established, the Partnership is
required to distribute the Proceeds of Mortgage Prepayments,
Sales and Insurance of Insured Mortgages, and generally intends
to distribute substantially all of its Cash Flow from operations.
If any reserves are deemed to be necessary by the Partnership,
they will be invested in short-term, interest-bearing
investments.
The Partnership anticipates that reserves generally would
only be necessary in the event the Partnership elected to
foreclose on an Originated Insured Mortgage insured by the
Federal Housing Administration (FHA) and take over the operations
of the underlying development. In such case, there may be a need
for additional capital. Since foreclosure proceedings can be
expensive and time-consuming, the Partnership expects that it
will generally assign these Originated Insured Mortgages to HUD
for insurance proceeds rather than foreclose. The determination
of whether to assign the mortgage to HUD or institute foreclosure
proceedings or whether to set aside any reserves will be made on
a case-by-case basis by the General Partner, the Advisor and the
Sub-advisor. As of December 31, 1993 and 1992, the Partnership
had not set aside any reserves.
14
PART II
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS - Continued
Cash flow - 1993 versus 1992
----------------------------
Net cash provided by operating activities decreased during
1993 as compared to 1992 principally due to the receipt of
accrued interest, in 1992, on the mortgage on Clark and Elm
Apartments which defaulted in 1991 and was sold in 1992. This
decrease was also attributable to a decrease in interest and
other income and mortgage investment income, as previously
discussed.
Net cash provided by investing activities decreased during
1993 compared to 1992 principally due to the receipt of proceeds
of $13,652,589 from the January 1992 sale of the mortgage on
Clark and Elm Apartments compared to proceeds of $2,965,249
received during September and November 1993 from an adjustment to
the sale price for the 1992 sale of the mortgage on the Clark and
Elm Apartments, as well as proceeds from the sale of the
mortgages on Chapelgate Apartments and Cumberland Village.
The decrease in cash used in financing activities during
1993 as compared to 1992 was principally due to the distribution
to Unitholders in 1992 of net proceeds received from the sale of
the mortgage on Clark and Elm Apartments.
Cash flow - 1992 versus 1991
----------------------------
Net cash provided by operating activities increased during
1992 as compared to 1991 principally due to the receipt of
accrued interest on the mortgage on Clark and Elm Apartments
which defaulted in 1991 and was sold in 1992. This increase was
partially offset by a decrease in mortgage investment income
during 1992 due to the reduced mortgage base.
Net cash provided by investing activities increased during
1992 compared to 1991 principally due to the receipt of proceeds
of $13,652,589 from the disposition of the mortgage on Clark and
Elm Apartments compared to proceeds of $1,714,086 received during
1991 representing a portion of the disposition proceeds from the
assignment of the mortgage on Foxfire West Apartments and the
remaining amount due from the disposition of the mortgage on
Wellington Apartments.
The increase in cash used in financing activities during
1992 as compared to 1991 was principally due to the distribution
to Unitholders in 1992 of net proceeds received from the sale of
the mortgage on Clark and Elm Apartments. This compares to the
distribution to Unitholders in 1991 of net proceeds received from
the assignment of the mortgage on Foxfire West Apartments.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this item is contained in
Part IV.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURES
None.
15
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(a), (b), (c) and (e)
The Partnership has no officers or directors. The affairs
of the Partnership are generally managed by the General Partner,
which is wholly owned by CRIIMI MAE, a company whose shares are
listed on the New York Stock Exchange. CRIIMI MAE is managed by
an adviser whose general partner is CRI.
At a special meeting of the limited partners and Unitholders
of the Partnership held on August 16, 1991, a majority of these
interests approved, among other items, the assignment of the
general partner interests and the shares of the company which
acts as the assignor limited partner in the Partnership.
Effective September 6, 1991, the General Partner succeeded
AIM Capital Management Corp. (the former managing general partner
with a partnership interest of 2.8%) and IRI Properties Capital
Corp. (the former corporate general partner with a partnership
interest of 0.1%) as the sole general partner of the Partnership.
In addition, the General Partner acquired the shares of the
company which acts as the assignor limited partner in the
Partnership. The interest of the former associate general
partner (0.1%) was purchased by the Partnership on September 6,
1991, pursuant to the terms of the Partnership Agreement.
Also, on September 6, 1991, the Advisor succeeded Integrated
Funding as the adviser of the Partnership. AIM Acquisition is the
general partner of the Advisor and the limited partners include,
but are not limited to, AIM Acquisition, The Goldman Sachs Group,
L.P., Broad Inc. and a limited partnership formed by CRI and
CRIIMI MAE. Pursuant to the terms of certain amendments to the
Partnership Agreement, the General Partner is required to receive
the consent of the Advisor prior to taking certain significant
actions which affect the management and policies of the
Partnership. The limited partners and Unitholders of the
Partnership approved the execution of a Sub-advisory Agreement
with CRI/AIM Management, Inc., an affiliate of CRI, pursuant to
which CRI/AIM Management, Inc. manages the Partnership's
portfolio and disposes of the Partnership's mortgages.
The General Partner is also the general partner of AIM 85,
AIM 86 and AIM 88, limited partnerships with investment
objectives similar to those of the Partnership.
(d) There is no family relationship between any of the
officers and directors of the General Partner.
(f) Involvement in certain legal proceedings.
None.
(g) Promoters and control persons.
Not applicable.
(h) Based solely on its review of Forms 3 and 4 and
amendments thereto furnished to the Partnership, and
written representations from certain reporting persons
that no Form 5s were required for those persons, the
Partnership believes that all reporting persons have
filed on a timely basis Forms 3, 4, and 5 as required
in the fiscal year ended December 31, 1993.
16
PART III
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 11 is incorporated herein
by reference to Note 3 of the notes to the financial statements
of the Partnership contained in Part IV.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
As of December 31, 1993, no person was known by the Partner-
ship to be the beneficial owner of more than five percent (5%) of
the outstanding Units of the Partnership.
As of December 31, 1993, neither the officers and directors,
as a group, of the General Partner nor any individual director of
the General Partner, are known to own more than 1% of the out-
standing Units of the Partnership.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(a) Transactions with management and others.
Note 3 of the notes to the Partnership's financial
statements contained in Part IV of this report contains
a discussion of the amounts, fees and other
compensation paid or accrued by the Partnership to the
directors and executive officers of the General Partner
and their affiliates, and is incorporated herein by
reference.
(b) Certain business relationships.
Other than as set forth in Item 11 of this report which
is incorporated herein by reference, the Partnership
has no business relationship with entities of which the
former general partners or the current General Partner
of the Partnership are officers, directors or equity
owners.
(c) Indebtedness of management.
None.
(d) Transactions with promoters.
Not applicable.
17
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
(a)(1) Financial Statements:
See Item 8. "Financial Statements and
Supplementary Data."
(a)(2) Financial Statement Schedules:
XII - Mortgage Loans on Real Estate
All other schedules have been omitted because they
are inapplicable, not required, or the information
is included in the Financial Statements or Notes
thereto.
(a)(3) Exhibits:
3. Amended and Restated Certificates of Limited
Partnership are incorporated by reference to
Exhibit 4(a) to the Registration Statement on Form
S-11 (No. 33-6747) dated June 25, 1986 (such
Registration Statement, as amended, is referred to
herein as the "Registration Statement").
4. Agreement of Limited Partnership, incorporated by
reference to Exhibit 3 to the Registration
Statement.
4.(b) Form of Depository Receipt, incorporated by
reference to Exhibit 4(b) to the Registration
Statement.
4.(c) Amendment to the Amended and Restated Agreement of
Limited Partnership of the Partnership dated
February 12, 1990, incorporated by reference to
Exhibit 4(c) to the Partnership's Annual Report on
Form 10-K for the year ended December 31, 1989.
10.(b) Origination and Acquisition Services Agreement,
dated September 1, 1983, between the Partnership
and IFI, incorporated by reference to Exhibit
10(b) to the registration statement on Form S-11
(No. 2-85476) dated November 30, 1983 (such
registration statement, as amended, is referred to
herein as the "Initial Registration Statement").
(c) Management Services Agreement, dated November 30,
1983, between the Partnership and IFI,
incorporated by reference to Exhibit 10(c) to the
Initial Registration Statement.
(d) Disposition Services Agreement, dated November 30,
1983, between the Partnership and IFI,
incorporated by reference to Exhibit 10(d) to the
Initial Registration Statement.
(e) Agreement, dated November 30, 1983, among the
former managing general partner, the former
associate general partner and Integrated,
incorporated by reference to Exhibit 10(e) to the
Initial Registration Statement.
(f) Reinvestment Plan, incorporated by reference to
the Prospectus contained in the Registration
Statement.
(l) Mortgage Note dated March 26, 1986 between Mastic
Associates and IFI, incorporated by reference to
Exhibit 10(l) to the Partnership's Annual Report
on Form 10-K for the year ended December 31, 1986.
18
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K - Continued
(m) Mortgage dated March 26, 1986 between Mastic
Associates and IFI, incorporated by reference to
Exhibit 10(m) to the Partnership's Annual Report
on Form 10-K for the year ended December 31, 1986.
(n) Mortgagor/Mortgagee Agreement dated March 26, 1986
between Mastic Associates and IFI, incorporated by
reference to Exhibit 10(n) to the Partnership's
Annual Report on Form 10-K for the year ended
December 31, 1986.
(o) Lease Agreement dated as of December 10, 1984
between NHP Land Associates, as Landlord and
Mastic Associates, as Tenant, incorporated by
reference to Exhibit 10(o) to the Partnership's
Annual Report on Form 10-K for the year ended
December 31, 1986.
28. Pages A-1 - A-4 of the Partnership Agreement of
Registrant.
28.(a) Purchase Agreement among AIM Acquisition, the
former managing general partner, the former
corporate general partner, IFI and Integrated
dated as of December 1, 1990, as amended January
9, 1991.
28.(b) Purchase Agreement among CRIIMI, AIM Acquisition,
the former managing general partner, the former
corporate general partner, IFI and Integrated
dated as of December 13, 1990 and executed as of
September 6, 1991.
28.(c) Amendments to Partnership Agreement dated August
16, 1991. Incorporated by reference to Exhibit
28.(a), above.
28.(d) Sub-Management Agreement by and between AIM
Acquisition and CRI/AIM Management, Inc. dated as
of March 1, 1991.
(b) Reports on Form 8-K filed during the last quarter of
the fiscal year: None
All other items are not applicable.
19
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.
AMERICAN INSURED MORTGAGE
INVESTORS (Registrant)
By: CRIIMI, Inc.
General Partner
March 2, 1994 /s/H. William Willoughby
--------------------------- -------------------------
DATE H. William Willoughby
President and Principal
Financial Officer and
Board Member
March 2, 1994 /s/William B. Dockser
--------------------------- -----------------------
DATE William B. Dockser
Chairman of the Board
and Principal Executive
Officer
March 8, 1994 /s/Garrett G. Carlson
--------------------------- -------------------------
DATE Garrett G. Carlson
Director
March 3, 1994 /s/G. Richard Dunnells
--------------------------- -------------------------
DATE G. Richard Dunnells
Director
March 4, 1994 /s/Robert F. Tardio
--------------------------- -------------------------
DATE Robert F. Tardio
Director
20
AMERICAN INSURED MORTGAGE INVESTORS
Financial Statements as of December 31, 1993 and 1992
and for the Years Ended December 31, 1993, 1992 and 1991
21
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of
American Insured Mortgage Investors:
We have audited the accompanying balance sheets of American
Insured Mortgage Investors (the Partnership) as of December 31,
1993 and 1992, and the related statements of operations, changes
in partners' equity and cash flows for the years ended December
31, 1993, 1992 and 1991. These financial statements and the
schedule referred to below are the responsibility of the
Partnership's management. Our responsibility is to express an
opinion on these financial statements and the schedule based on
our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of the Partnership as of December 31, 1993 and 1992, and the
results of its operations and its cash flows for the years ended
December 31, 1993, 1992 and 1991, in conformity with generally
accepted accounting principles.
Our audits were made for the purpose of forming an opinion
on the basic financial statements taken as a whole. Schedule
XII-Mortgage Loans on Real Estate as of December 31, 1993 and for
the year then ended is presented for purposes of complying with
the Securities and Exchange Commission's rules and regulations
and is not a required part of the basic financial statements. The
information in this schedule has been subjected to the auditing
procedures applied in our audits of the basic financial
statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a
whole.
Arthur Andersen & Co.
Washington, D.C.
February 28, 1994
22
AMERICAN INSURED MORTGAGE INVESTORS
BALANCE SHEETS
ASSETS
December 31,
1993 1992
------------ ------------
Investment in mortgages:
Originated insured mortgages $ 14,892,273 $ 22,904,779
Acquired insured mortgages 26,415,525 29,430,679
------------ ------------
41,307,798 52,335,458
Less: unamortized discount (5,907,106) (6,574,580)
------------ ------------
35,400,692 45,760,878
Mortgage held for disposition, at lower
of cost or market 7,941,507 --
Cash and cash equivalents 3,778,696 722,809
Receivables and other assets 509,426 487,000
------------ ------------
Total assets $ 47,630,321 $ 46,970,687
============ ============
The accompanying notes are an integral part
of these financial statements.
23
AMERICAN INSURED MORTGAGE INVESTORS
BALANCE SHEETS
LIABILITIES AND PARTNERS' EQUITY
December 31,
1993 1992
------------ ------------
Distributions payable $ 3,810,552 $ 1,029,880
Accounts payable and accrued expenses 70,812 76,868
------------ ------------
Total liabilities 3,881,364 1,106,748
------------ ------------
Partners' equity:
Limited partners' equity 48,421,623 50,475,271
General partner's deficit (4,672,666) (4,611,332)
------------ ------------
Total partners' equity 43,748,957 45,863,939
------------ ------------
Total liabilities and partners' equity $ 47,630,321 $ 46,970,687
============ ============
The accompanying notes are an integral part
of these financial statements.
24
AMERICAN INSURED MORTGAGE INVESTORS
STATEMENTS OF OPERATIONS
For the years ended December 31,
1993 1992 1991
------------ ----------- -----------
Income:
Mortgage investment income $ 4,454,241 $ 4,539,068 $ 5,699,449
Interest and other income 32,722 207,627 61,991
------------ ------------ ------------
4,486,963 4,746,695 5,761,440
------------ ------------ ------------
Expenses:
Asset management fee to related parties 439,158 451,813 942,991
General and administrative 282,310 407,146 452,632
------------ ------------ ------------
721,468 858,959 1,395,623
------------ ------------ ------------
Earnings before mortgage dispositions 3,765,495 3,887,736 4,365,817
Mortgage Dispositions:
Losses -- (21,103) (80,215)
Gains 762,250 -- 340,677
------------ ------------ ------------
Net earnings $ 4,527,745 $ 3,866,633 $ 4,626,279
============ ============ ============
Net earnings allocated to:
Limited partners - 97.1% $ 4,396,440 $ 3,754,501 $ 4,492,117
General partner(s) - 2.9% 131,305 112,132 134,162
------------ ------------ ------------
$ 4,527,745 $ 3,866,633 $ 4,626,279
============ ============ ============
Net earnings per unit of limited
partnership interest $ .44 $ .38 $ .45
============ ============ ============
The accompanying notes are an integral part
of these financial statements.
25
AMERICAN INSURED MORTGAGE INVESTORS
STATEMENTS OF CHANGES IN PARTNERS' EQUITY
For the years ended December 31, 1993, 1992 and 1991
General Limited
Partner(s) Partners Total
------------ ------------- -------------
Balance, December 31, 1990 $ (4,145,907) $ 65,919,128 $ 61,773,221
Net earnings 134,162 4,492,117 4,626,279
Distributions paid or accrued of $.549 per Unit,
including return of capital of $.10 per Unit (168,148) (5,490,247) (5,658,395)
------------ ------------- -------------
Balance, December 31, 1991 (4,179,893) 64,920,998 60,741,105
Net earnings 112,132 3,754,501 3,866,633
Distributions paid or accrued of $1.82 per Unit,
including return of capital of $1.44 per Unit (543,571) (18,200,228) (18,743,799)
------------ ------------- -------------
Balance, December 31, 1992 (4,611,332) 50,475,271 45,863,939
Net earnings 131,305 4,396,440 4,527,745
Distributions paid or accrued of $.645 per Unit,
including return of capital of $.205 per Unit
(192,639) (6,450,088) (6,642,727)
------------ ------------- -------------
Balance, December 31, 1993 $ (4,672,666) $ 48,421,623 $ 43,748,957
============ ============= =============
Limited Partnership Units outstanding -
December 31, 1993, 1992 and 1991 10,000,125
=============
The accompanying notes are an integral part
of these financial statements.
26
AMERICAN INSURED MORTGAGE INVESTORS
STATEMENTS OF CASH FLOWS
For the years ended December 31,
1993 1992 1991
------------ ------------ ------------
Cash flows from operating activities:
Net earnings $ 4,527,745 $ 3,866,633 $ 4,626,279
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Loan losses -- 21,103 80,215
Gains on mortgage dispositions (762,250) -- (340,677)
Changes in assets and liabilities:
(Increase) decrease in receivables and other assets (22,426) 901,486 (793,779)
Decrease in due to related affiliates -- (142,920) (508,634)
(Decrease) increase in accounts payable and
accrued expenses (6,056) (100,185) 32,003
------------ ------------ ------------
Net cash provided by operating activities 3,737,013 4,546,117 3,095,407
------------ ------------ ------------
Cash flows from investing activities:
Proceeds from disposition of Insured Mortgages 2,965,249 13,652,589 1,714,086
Receipt of mortgage principal from scheduled payments 215,680 195,279 199,908
Payment from redemption of HUD debentures -- 34,948 668,154
------------ ------------ ------------
Net cash provided by investing activities 3,180,929 13,882,816 2,582,148
------------ ------------ ------------
Cash flows from financing activities:
Distributions paid to partners (3,862,055) (18,682,005) (6,082,090)
------------ ------------ ------------
Net increase (decrease) in cash and cash equivalents 3,055,887 (253,072) (404,535)
Cash and cash equivalents, beginning of year 722,809 975,881 1,380,416
------------ ------------ ------------
Cash and cash equivalents, end of year $ 3,778,696 $ 722,809 $ 975,881
============ ============ ============
The accompanying notes are an integral part
of these financial statements.
27
AMERICAN INSURED MORTGAGE INVESTORS
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
American Insured Mortgage Investors (the Partnership) was
formed under the Uniform Limited Partnership Act in the state of
California on July 12, 1983. From inception through September 6,
1991, AIM Capital Management Corp. served as managing general
partner (with a partnership interest of 2.8%), IRI Properties
Capital Corp. served as corporate general partner (with a
partnership interest of 0.1%) and Z Square G Partners II served
as the associate general partner (with a partnership interest of
0.1%). All of the foregoing general partners are sometimes
collectively referred to as former general partners.
At a special meeting of the limited partners and Unitholders
of the Partnership held on August 16, 1991, a majority of these
interests approved, among other items, the assignment of the
general partner interests and the shares of the company which
acts as the assignor limited partner in the Partnership.
Effective September 6, 1991, CRIIMI, Inc. (the General
Partner) succeeded the former general partners to become the sole
general partner of the Partnership. CRIIMI, Inc. purchased the
interests of the former managing general partner and the former
corporate general partner pursuant to the terms of the
Partnership Agreement. The Partnership purchased the interest of
the former associate general partner. CRIIMI, Inc. is a wholly-
owned subsidiary of CRIIMI MAE Inc. (CRIIMI MAE), formerly CRI
Insured Mortgage Association, Inc. CRIIMI MAE is managed by an
adviser whose general partner is C.R.I., Inc. (CRI).
Also, on September 6, 1991, AIM Acquisition Partners, L.P.
(the Advisor) succeeded Integrated Funding, Inc. (Integrated
Funding) as the adviser of the Partnership. AIM Acquisition
Corporation (AIM Acquisition) is the general partner of the
Advisor and the limited partners include, but are not limited to,
AIM Acquisition, The Goldman Sachs Group, L.P., Broad Inc. and a
limited partnership formed by CRI and CRIIMI MAE. Pursuant to
the terms of certain amendments to the Partnership Agreement, as
discussed below, the General Partner is required to receive the
consent of the Advisor prior to taking certain significant
actions which affect the management and policies of the
Partnership. The limited partners and Unitholders of the
Partnership approved the execution of a Sub-advisory Agreement
with CRI/AIM Management, Inc., an affiliate of CRI, pursuant to
which CRI/AIM Management, Inc. manages the Partnership's
portfolio and disposes of the Partnership's mortgages.
Prior to the expiration of the Partnership's reinvestment
period in November 1988, the Partnership was engaged in the
business of originating mortgage loans (Originated Insured
Mortgages) and acquiring mortgage loans (Acquired Insured
Mortgages and, together with Originated Insured Mortgages
referred to herein as Insured Mortgages). In accordance with the
terms of the Partnership Agreement, the Partnership is no longer
authorized to originate or acquire Insured Mortgages and,
consequently, its primary objective is to manage its portfolio of
Insured Mortgages, all of which constitute nonrecourse first
liens on multifamily residential developments and are insured
under Section 221(d)(4) of the National Housing Act. The
Partnership Agreement states that the Partnership will terminate
on December 31, 2008, unless previously terminated under the
provisions of the Partnership Agreement.
During the first quarter of 1992, the General Partner
applied to list the Units on the American Stock Exchange (AMEX)
and the application was approved by AMEX. Trading commenced on
April 8, 1992 with a trading symbol of AIA.
28
AMERICAN INSURED MORTGAGE INVESTORS
NOTES TO FINANCIAL STATEMENTS
2. SIGNIFICANT ACCOUNTING POLICIES
Method of Accounting
--------------------
The financial statements of the Partnership are
prepared on the accrual basis of accounting in accordance
with generally accepted accounting principles.
Investment in Mortgages
-----------------------
As of December 31, 1993 and 1992, the Partnership
accounted for its investment in mortgages at amortized cost.
The difference between the cost and the unpaid principal
balance at the time of purchase is carried as a discount or
premium and amortized over the remaining contractual life of
the mortgage using the effective interest method. The
effective interest method provides a constant yield of
income over the term of the mortgage. Mortgage investment
income is comprised of amortization of the discount plus the
stated mortgage interest payments received or accrued less
amortization of the premium.
In May 1993, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 115
"Accounting for Certain Investments in Debt and Equity
Securities" (SFAS 115), effective for fiscal years beginning
after December 15, 1993. This statement requires that
investments in debt and equity securities be classified into
one of the following investment categories based upon the
circumstances under which such securities might be sold:
Held to Maturity, Available for Sale, and Trading.
Generally, certain debt securities for which an enterprise
has both the ability and intent to hold to maturity should
be accounted for using the amortized cost method and all
other securities must be recorded at their fair values. The
General Partner believes that the majority of securities
held by the Partnership will fall into either the Held to
Maturity or Available for Sale categories. However, the
General Partner has not yet determined the ultimate impact
of the implementation of this statement on the Partnership's
financial statements.
Mortgage Held for Disposition
-----------------------------
At any point in time, the Partnership may be aware of
certain mortgages which have been assigned to the United
States Department of Housing and Urban Development (HUD) or
for which the servicer has received proceeds from a
prepayment. In addition, at certain times the Partnership
may have entered into a contract to sell certain mortgages.
In these cases, the Partnership will classify these
mortgages as Mortgages Held for Disposition.
Gains from dispositions of mortgages are recognized
upon the receipt of cash or debentures.
29
AMERICAN INSURED MORTGAGE INVESTORS
NOTES TO FINANCIAL STATEMENTS
2. SIGNIFICANT ACCOUNTING POLICIES - Continued
Losses on dispositions of mortgages are recognized when
it becomes probable that a mortgage will be disposed of and
that the disposition will result in a loss. In the case of
Originated Insured Mortgages fully insured by HUD, the
Partnership's maximum exposure for purposes of determining
the loan losses would generally be an assignment fee charged
by HUD representing approximately 1% of the unpaid principal
balance of the Originated Insured Mortgage at the date of
default, plus the unamortized balance of acquisition fees
and closing costs paid in connection with the acquisition of
the Originated Insured Mortgage and the loss of 30-days
accrued interest.
In the case of Acquired Insured Mortgages, since they
were purchased at a discount from the unpaid principal
balance of the mortgage, the Partnership's investment in the
Acquired Insured Mortgage is less than the amount that would
be recovered from HUD in the event of a default under the
Acquired Insured Mortgage. Therefore, the Partnership should
experience no loan losses on discounted Acquired Insured
Mortgages in the case of a default.
Cash and Cash Equivalents
-------------------------
Cash and cash equivalents consist of time and demand
deposits with original maturities of three months or less.
Income Taxes
------------
No provision has been made for Federal, state or local
income taxes since they are the personal responsibility of
the Unitholders.
Per Unit Amount
---------------
Net earnings per Limited Partnership Unit are computed
based upon the weighted average number of Units outstanding
of 10,000,125 for each of the years ended December 31, 1993,
1992 and 1991.
3. TRANSACTIONS WITH RELATED PARTIES
The principal officers of the General Partner for the period
September 7, 1991 through December 31, 1993 did not receive fees
for serving as officers of the General Partner, nor are any fees
expected to be paid to the officers in the future.
The General Partner, former general partners and certain
affiliated entities have, during the Partnership's years ended
December 31, 1993, 1992 and 1991, earned or received compensation
or payments for services from the Partnership as follows:
30
AMERICAN INSURED MORTGAGE INVESTORS
NOTES TO FINANCIAL STATEMENTS
3. TRANSACTIONS WITH RELATED PARTIES - Continued
COMPENSATION PAID OR ACCRUED TO RELATED PARTIES
----------------------------------------------
Capacity in Which
For the year ended December 31,
Name of Recipient Served/Item 1993 1992 1991
----------------- ---------------------------- -------- -------- --------
CRIIMI, Inc.(1) General Partner/Distribution $192,639(6) $543,571(6) $ 46,384
AIM Acquisition Advisor/Asset Management Fee 439,158 451,813 213,128
Partners, L.P.(2)
CRI(5) Affiliate of General Partner/ 67,076 127,953 49,401
Expense Reimbursement
AIM Capital Management Former general partners/ -- -- 121,764
Corp.; IRI Properties Distribution January 1, 1991
Capital Corp.; and through September 6, 1991
Z Square G Partners II(3)
Integrated Funding, Inc.(4) Former advisor/Asset Management Fee -- -- 729,863
January 1, 1991 through
September 6, 1991
31
AMERICAN INSURED MORTGAGE INVESTORS
NOTES TO FINANCIAL STATEMENTS
3. TRANSACTIONS WITH RELATED PARTIES - Continued
(1) The General Partner, pursuant to amendments to the
Partnership Agreement effective September 6, 1991, is entitled to
receive 2.9% of the Partnership's income, loss, capital and
distributions including, without limitation, the Partnership's
Adjusted Cash from Operations and Proceeds of Mortgage
Prepayments, Sales or Insurance (both as defined in the
Partnership Agreement).
(2) The Advisor, pursuant to the Purchase Agreement and
amendments to the Partnership Agreement, is entitled to an Asset
Management Fee equal to .95% of Total Invested Assets (as defined
in the Partnership Agreement), effective October 1, 1991. The
Asset Management Fee was based on 1.75% of Total Invested Assets
from September 7, 1991 through September 30, 1991.
Of the amounts paid to the Advisor, the Sub-advisor, CRI/AIM
Management, Inc., earned a fee equal to $129,429, $133,160 and
$53,358, or .28% of Total Invested Assets, for the years ended
December 31, 1993 and 1992 and the period September 7, 1991
through December 31, 1991, respectively.
(3) The former general partners were entitled to receive 3%
of the Partnership's income, loss, capital and distributions
through September 6, 1991 (2.8% to the former managing general
partner, 0.1% to the former corporate general partner and 0.1% to
the former associate general partner).
(4) Asset Management Fees for managing the Partnership's
mortgage portfolio for the period January 1, 1990 through
September 6, 1991 were based on 1.75% of Total Invested Assets.
(5) These amounts are paid to CRI as reimbursement for
expenses incurred on behalf of the General Partner and the
Partnership.
(6) These amounts include special distributions resulting
from mortgage dispositions, as discussed in Note 6.
4. INVESTMENT IN MORTGAGES
As of December 31, 1993, the Partnership had remaining
investments in 16 Insured Mortgages, including one Originated
Insured Mortgage classified as Mortgage Held for Disposition,
with an aggregate carrying value and face value of $43,342,199
and $49,225,550, respectively, all of which were originated or
acquired by the former managing general partner. All of the
Partnership's Insured Mortgages are insured under Section
221(d)(4) of the National Housing Act, by HUD for 100% of their
current face value, less a 1% assignment fee, and are nonrecourse
first liens on multifamily residential developments or retirement
homes owned by entities unaffiliated with the Partnership, its
General Partner, or their affiliates. As of December 31, 1993,
all of the Partnership's Insured Mortgages are current with
respect to the payment of principal and interest.
A summary of dispositions that are included in the
statements of operations for the years ended December 31, 1993,
1992 and 1991 are as follows:
32
AMERICAN INSURED MORTGAGE INVESTORS
NOTES TO FINANCIAL STATEMENTS
4. INVESTMENT IN MORTGAGES - Continued
Financial
Statement
Year of Type of Net Carrying Net Gain/(Loss)
Complex Name Disposition Disposition Value Proceeds Recognized
------------------ ----------- ----------- ------------ ------------ -----------
Foxfire West Apts.(a) 1991(c) Assignment $ 1,408,357 $ 1,590,050 $ 340,677
Clark & Elm Apts.(b) 1991 Sale of a
defaulted
mortgage -- -- (80,215)
Foxfire West Apts.(a) 1992(c) Assignment -- 158,984 --
Clark & Elm Apts.(b) 1992 Sale of a
defaulted
mortgage 13,673,692 13,652,589 (21,103)
Clark & Elm Apts.(b) 1993 Sale of a
defaulted
mortgage -- 108,415(d) 108,415
Chapelgate Apts.(a) 1993 Sale of a
defaulted
mortgage 682,731 901,171 218,440
Cumberland Village(a) 1993 Sale of a
defaulted
mortgage 1,520,268 1,955,663 435,395
(a) Disposition of Acquired Insured Mortgage.
(b) Disposition of Originated Insured Mortgage.
(c) Approximately 90% of the net proceeds were received and distributed in 1991. The remaining balance was
received and distributed in 1992.
(d) Represents additional proceeds received resulting from an adjustment to the 1992 sale price.
33
AMERICAN INSURED MORTGAGE INVESTORS
NOTES TO FINANCIAL STATEMENTS
5. MORTGAGE HELD FOR DISPOSITION
As of December 31, 1993, the following Originated Insured
Mortgage was classified as Mortgage Held for Disposition:
Financial
Net Statement
Anticipated Net Proceeds Gain
Year of Type of Carrying Received in Recognized
Complex Disposition Disposition Value 1994 in 1994
---------------- ----------- ----------- ----------- ----------- -----------
Hidden Oaks Apts. 1994 Prepayment $ 7,941,507 $ 8,177,380 $ 235,873
As of December 31, 1992, there were no Insured Mortgages classified as Mortgages Held for Disposition.
34
AMERICAN INSURED MORTGAGE INVESTORS
NOTES TO FINANCIAL STATEMENTS
6. DISTRIBUTIONS TO UNITHOLDERS
The distributions paid or accrued to Unitholders on a per
Unit basis for the years ended December 31, 1993, 1992 and 1991
are as follows:
Quarter Ended 1993 1992 1991
------------- -------- -------- --------
March 31, $ .095 $ 1.53(2) $ .135
June 30, .090 .10 .085
September 30, .090 .09 .235(3)
December 31, .370(1) .10 .094
-------- -------- --------
$ .645 $ 1.82 $ .549
======== ======== ========
(1) This includes a special distribution of $.28 per Unit
comprised of: (i) $.21 per Unit return of capital from the
disposition of the mortgages on Chapelgate Apartments and
Cumberland Village and (ii) $.07 per Unit capital gain from
these dispositions plus additional sales proceeds from the
sale of the mortgage on Clark and Elm Apartments.
(2) This includes a $1.34 per Unit special distribution due to
the disposition of the mortgage on Clark and Elm Apartments
and the receipt of the remaining 9% of assignment proceeds
from the mortgage on Foxfire West Apartments.
(3) This amount includes a special distribution of $.153 per
Unit due to the assignment of 90% of the mortgage on Foxfire
West Apartments.
The basis for paying distributions to Unitholders is net
proceeds from mortgage dispositions and cash flow from
operations, which is comprised of regular interest income and
principal from Insured Mortgages. Although Insured Mortgages
yield a fixed monthly mortgage payment once purchased, the cash
distributions paid to the Unitholders will vary during each year
due to (1) the fluctuating yields in the short-term money market
where the monthly mortgage payments received are temporarily
invested prior to the payment of quarterly distributions, (2) the
reduction in the asset base due to monthly mortgage payments
received or mortgage dispositions, (3) variations in the cash
flow attributable to the delinquency or default of Insured
Mortgages and (4) changes in the Partnership's operating
expenses.
During 1993 and 1992, the distributions to Unitholders were
paid approximately 30 days after the end of the calendar quarter
versus 10 days after the end of the calendar quarter in previous
years.
7. PARTNERS' EQUITY
Depositary Units representing economic rights in limited
partnership interests were issued at a stated value of $20. A
total of 10,000,000 depositary Units of limited partnership
interest were issued for an aggregate capital contribution of
$200,000,000. In addition, the initial limited partner
contributed $2,500 to the capital of the Partnership and received
125 Units of limited partnership interest in exchange therefor,
and the former general partners contributed a total of $1,000 to
the Partnership.
35
AMERICAN INSURED MORTGAGE INVESTORS
NOTES TO FINANCIAL STATEMENTS
8. SUMMARY OF QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
(In Thousands, Except Per Unit Data)
The following is a summary of unaudited quarterly results of
operations for the years ended December 31, 1993, 1992 and 1991:
1993
Quarter ended
March 31 June 30 September 30 December 31
---------- ---------- ------------ -----------
Income $ 1,129 $ 1,126 $ 1,124 $ 1,108
Gain on mortgage dispositions -- -- 108 654
Net earnings 920 934 1,052 1,622
Net earnings per Limited .09 .09 .10 .16
Partnership Unit
1992
Quarter ended
March 31 June 30 September 30 December 31
---------- ---------- ------------ -----------
Income $ 1,304 $ 1,182 $ 1,131 $ 1,129
Loss on mortgage disposition (21) -- -- --
Net earnings 1,027 927 919 994
Net earnings per Limited
Partnership Unit .10 .09 .09 .10
36
AMERICAN INSURED MORTGAGE INVESTORS
NOTES TO FINANCIAL STATEMENTS
8. SUMMARY OF QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
(In Thousands, Except Per Unit Data)
1991
Quarter ended
March 31 June 30 September 30 December 31
---------- ---------- ------------ -----------
Income $ 1,473 $ 1,323 $ 1,451 $ 1,514
Gain (loss) on mortgage
dispositions 341 (167) (4) 90
Net earnings 1,448 790 1,072 1,316
Net earnings per Limited
Partnership Unit .14 .08 .10 .13
37
AMERICAN INSURED MORTGAGE INVESTORS
SCHEDULE XII - MORTGAGE LOANS ON REAL ESTATE
DECEMBER 31, 1993
Interest
Maturity Put Rate on
Development Name/Location Date Date(1) Mortgages(5)
------------------------- -------- ------- ------------
Acquired Insured Mortgages
--------------------------
Eastdale Apts.
Montgomery, AL 3/23 10/01 7.5%
North River Place
Chillecothe, OH 10/21 12/01 7.5%
Bay Pointe Apts.
Lafayette, IN 2/23 10/02 7.5%
Baypoint Shoreline Apts.
Duluth, MN 1/22 10/01 7.5%
Berryhill Apts.
Grass Valley, CA 1/21 11/02 7.5%
Brougham Estates II
Kansas City, KS 11/22 3/02 7.5%
College Green Apts.
Wilmington, NC 3/23 2/02 7.5%
Fox Run Apts.
Dothan, AL 10/19 11/99 7.5%
Kaynorth Apts.
Lansing, MI 4/23 9/02 7.5%
Lakeside Apts.
Bennettsville, SC 1/22 2/02 7.5%
Portervillage I Apts.
Porterville, CA 8/21 5/01 7.5%
Town Park Apts.
Rockingham, NC 10/22 10/02 7.5%
Westbrook Apts.
Kokomo, IN 11/22 9/02 7.5%
38
AMERICAN INSURED MORTGAGE INVESTORS
SCHEDULE XII - MORTGAGE LOANS ON REAL ESTATE (Continued)
DECEMBER 31, 1993
Face Net Annual Payment
Amount of Carrying Value (Principal and
Development Name/Location Mortgage (2)(3)(7)(9)(10) Interest)(5)(8)
------------------------- ------------ --------------- ---------------
Acquired Insured Mortgages
--------------------------
Eastdale Apts.
Montgomery, AL $ 6,937,208 $ 5,208,980 $ 592,406
North River Place
Chillecothe, OH 3,258,760 2,450,265 279,509
Bay Pointe Apts.
Lafayette, IN 2,173,299(4) 1,758,416 185,272(4)
Baypoint Shoreline Apts.
Duluth, MN 1,028,322(4) 830,294 87,967(4)
Berryhill Apts.
Grass Valley, CA 1,340,063(4) 1,083,630 115,899(4)
Brougham Estates II
Kansas City, KS 2,721,649(4) 2,193,680 231,860(4)
College Green Apts.
Wilmington, NC 1,460,127(4) 1,176,558 123,455(4)
Fox Run Apts.
Dothan, AL 1,322,690(4) 1,072,199 116,242(4)
Kaynorth Apts.
Lansing, MI 1,980,467(4) 1,595,431 167,318(4)
Lakeside Apts.
Bennettsville, SC 412,686(4) 333,563 35,303(4)
Portervillage I Apts.
Porterville, CA 1,206,133(4) 974,750 103,733(4)
Town Park Apts.
Rockingham, NC 668,285(4) 539,276 56,755(4)
Westbrook Apts.
Kokomo, IN 1,905,836(4) 1,541,650 163,177(4)
----------- -----------
26,415,525 20,758,692
----------- -----------
39
AMERICAN INSURED MORTGAGE INVESTORS
SCHEDULE XII - MORTGAGE LOANS ON REAL ESTATE (Continued)
DECEMBER 31, 1993
Interest
Maturity Put Rate on
Development Name/Location Date Date(1) Mortgages(5)
------------------------- -------- ------- ------------
Originated Insured Mortgages
----------------------------
Creekside Village
Beaverton, OR 11/25 1/01 11.50%(6)
Waters Edge Apts.
Columbus, OH 1/31 5/03 8.75%(6)
Total Originated
Insured Mortgages
Mortgage Held for Disposition
-----------------------------
Hidden Oaks Apts.
Cary, NC 9/28 8/03 8.50%(6)
See notes to Schedule XII - Mortgage Loans on Real Estate.
40
AMERICAN INSURED MORTGAGE INVESTORS
SCHEDULE XII - MORTGAGE LOANS ON REAL ESTATE (Continued)
DECEMBER 31, 1993
Face Net Annual Payment
Amount of Carrying Value (Principal and
Development Name/Location Mortgage (2)(3)(7)(9)(10) Interest)(5)(8)
------------------------- ------------ --------------- ---------------
Originated Insured Mortgages
----------------------------
Creekside Village
Beaverton, OR 5,174,668 5,363,063 612,632(6)
Waters Edge Apts.
Columbus, OH 9,717,605 9,278,937 885,419(6)
----------- -----------
Total Originated
Insured Mortgages 14,892,273 14,642,000
----------- -----------
TOTAL INVESTMENT IN MORTGAGES $41,307,798 $35,400,692
=========== ===========
Mortgage Held for Disposition
-----------------------------
Hidden Oaks Apts.
Cary, NC $ 7,917,752 $ 7,941,507 710,528(6)
=========== ===========
See notes to Schedule XII - Mortgage Loans on Real Estate.
41
AMERICAN INSURED MORTGAGE INVESTORS
NOTES TO SCHEDULE XII - MORTGAGE LOANS ON REAL ESTATE
(1) Under the Section 221 program of the National Housing Act of
1937, as amended, a mortgagee has the right to assign a
mortgage ("put") to the FHA at the expiration of 20 years
from the date of final endorsement, if the mortgage is not
in default at such time. Any mortgagee electing to assign an
FHA insured mortgage to FHA will receive in exchange
therefor HUD debentures having a total face value equal to
the then outstanding principal balance of the FHA insured
mortgage plus accrued interest to the date of assignment.
These HUD debentures will mature 10 years from the date of
assignment and will bear interest at the "going Federal
rate" at such date. This assignment procedure is applicable
to a mortgage which had a firm or conditional FHA commitment
for insurance on or before November 30, 1983 and, in the
case of mortgages sold in Government National Mortgage
Association (GNMA) auctions, prior to February of 1984. The
Partnership anticipates that each eligible mortgage for
which a prepayment has not occurred and which has not been
sold will be assigned to FHA at the expiration of 20 years
from the date of final endorsement. The Partnership,
therefore, does not anticipate holding any eligible mortgage
beyond the expiration of 20 years from final endorsement of
that mortgage.
(2) Inclusive of closing costs and acquisition fees.
(3) Prepayment of these mortgages would be based upon the unpaid
principal balance at the time of prepayment.
(4) These amounts represent the Partnership's 50% interest in
these mortgages. The remaining 50% interest was acquired by
AIM 85.
(5) In addition, the servicer of the mortgages, an unaffiliated
third party, is entitled to receive compensation for certain
services rendered in an amount up to ten basis points (.10%)
of the unpaid principal balance of the mortgages.
(6) This represents the base interest rate during the permanent
phase of these mortgage loans. Additional interest,
(referred to as Participations) measured as a percentage of
surplus cash and a percentage of the proceeds from sale or
refinancing of the development (as defined in the
Participation Agreements), will also be due. No payments
were received for the years ended December 31, 1993, 1992 or
1991 as a result of the Participations.
(7) The Partnership's mortgages are nonrecourse first liens on
multifamily residential developments or retirement homes.
(8) Principal and interest are payable at level amounts over the
life of the mortgages.
(9) A reconciliation of the carrying value of Insured Mortgages,
including a Mortgage Held for Disposition, for the years
ended December 31, 1993 and 1992 is as follows:
1993 1992
------------ ------------
Beginning balance $ 45,760,878 $ 59,629,849
Net gain (loss) on mortgage
dispositions 762,250 (21,103)
Disposition of Insured
Mortgages (2,965,249) (13,652,589)
Principal receipts on
mortgages (215,680) (195,279)
------------ ------------
Ending balance $ 43,342,199 $ 45,760,878
============ ============
(10) The tax basis of the Insured Mortgages was approximately
$43.1 and $45.6 million as of December 31, 1993 and 1992,
respectively.