Back to GetFilings.com
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended March 31, 2003
--------------
Commission file number 1-12724
--------------
AMERICAN INSURED MORTGAGE INVESTORS L.P.- SERIES 88
---------------------------------------------------
(Exact name of registrant as specified in charter)
Delaware 13-3398206
- ------------------------------- ---------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
11200 Rockville Pike, Rockville, Maryland 20852
- ----------------------------------------- ------------------------------
(Address of principal executive offices) (Zip Code)
(301) 816-2300
- -------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
As of March 31, 2003, 8,802,091 depositary units of limited partnership
interest were outstanding.
2
AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88
INDEX TO FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 2003
PAGE
----
PART I. Financial Information
Item 1. Financial Statements
Balance Sheets - March 31, 2003 (unaudited) and
December 31, 2002..................................... 3
Statements of Income and Comprehensive Income - for the
three months ended March 31, 2003 and 2002
(unaudited) .......................................... 4
Statement of Changes in Partners' Equity - for the
three months ended March 31, 2003 (unaudited)......... 5
Statements of Cash Flows - for the three months ended
March 31, 2003 and 2002 (unaudited)................... 6
Notes to Financial Statements (unaudited)............... 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 12
Item 3. Qualitative and Quantitative Disclosures About Market Risk . 14
Item 4. Controls and Procedures..................................... 14
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K............................ 15
Signature ............................................................ 16
Certification .......................................................... 17
3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88
BALANCE SHEETS
March 31, December 31,
2003 2002
------------ ------------
(Unaudited)
ASSETS
Investment in FHA-Insured Certificates and GNMA
Mortgage-Backed Securities, at fair value
Acquired insured mortgages $ 21,001,786 $ 21,211,314
Originated insured mortgages 8,269,559 8,293,338
------------ ------------
29,271,345 29,504,652
Investment in FHA-Insured Loan, at cost
Originated insured mortgage 5,501,032 5,516,188
Cash and cash equivalents 846,862 5,240,883
Investment in affiliate 1,843,066 1,843,066
Receivables and other assets 278,642 278,608
------------ ------------
Total assets $ 37,740,947 $ 42,383,397
============ ============
LIABILITIES AND PARTNERS' EQUITY
Distributions payable $ 740,449 $ 5,183,145
Accounts payable and accrued expenses 140,900 67,315
------------ ------------
Total liabilities 881,349 5,250,460
------------ ------------
Partners' equity:
Limited partners' equity, 15,000,000 Units authorized,
8,802,091 Units issued and outstanding 43,534,833 43,686,324
General partner's deficit (6,894,893) (6,887,087)
Less: Repurchased Limited Partnership
Units - 50,000 Units (618,750) (618,750)
Accumulated other comprehensive income 838,408 952,450
------------ ------------
Total partners' equity 36,859,598 37,132,937
------------ ------------
Total liabilities and partners' equity $ 37,740,947 $ 42,383,397
============ ============
The accompanying notes are an integral part
of these financial statements.
4
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Unaudited)
For the three months ended
March 31,
2003 2002
------------ ------------
Income:
Mortgage investment income $ 709,289 $ 919,804
Interest and other income 5,891 11,454
------------ ------------
715,180 931,258
------------ ------------
Expenses:
Asset management fee to related parties 97,449 124,320
General and administrative 36,579 40,372
------------ ------------
134,028 164,692
------------ ------------
Net earnings before gains on
mortgage dispositions 581,152 766,566
Gains on mortgage dispositions - 82,518
------------ ------------
Net earnings $ 581,152 $ 849,084
============ ============
Other comprehensive (loss) income - adjustment to
unrealized gains on investments in insured mortgages (114,042) 247,586
------------ ------------
Comprehensive income $ 467,110 $ 1,096,670
============ ============
Net earnings allocated to:
Limited partners - 95.1% $ 552,676 $ 807,479
General Partner - 4.9% 28,476 41,605
------------ ------------
$ 581,152 $ 849,084
============ ============
Net earnings per Unit of limited
partnership interest - basic $ 0.06 $ 0.09
============ ============
The accompanying notes are an integral part
of these financial statements.
5
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88
STATEMENT OF CHANGES IN PARTNERS' EQUITY
For the three months ended March 31, 2003
(Unaudited)
Repurchased Accumulated
Limited Other
General Limited Partnership Comprehensive
Partner Partners Units Income Total
------------- ------------- ------------- ------------- -------------
Balance, December 31, 2002 $ (6,887,087) $ 43,686,324 $ (618,750) $ 952,450 $ 37,132,937
Net earnings 28,476 552,676 - - 581,152
Adjustment to unrealized gains on
investments in insured mortgages - - - (114,042) (114,042)
Distributions paid or accrued of
$0.080 per Unit, including return
of capital of $0.020 per Unit (36,282) (704,167) - - (740,449)
------------- ------------- ------------- ------------- -------------
Balance, March 31, 2003 $ (6,894,893) $ 43,534,833 $ (618,750) $ 838,408 $ 36,859,598
============= ============= ============= ============= =============
Limited Partnership Units outstanding -
basic, as of March 31, 2003 8,802,091
=========
The accompanying notes are an integral part
of these financial statements.
6
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88
STATEMENTS OF CASH FLOWS
(Unaudited)
For the three months ended
March 31,
2003 2002
------------ ------------
Cash flows from operating activities:
Net earnings $ 581,152 $ 849,084
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Net gains on mortgage dispositions - (82,518)
Changes in assets and liabilities:
Increase (decrease) in accounts payable and accrued expenses 73,585 (26,680)
(Increase) decrease in receivables and other assets (34) 9,826
------------ ------------
Net cash provided by operating activities 654,703 749,712
------------ ------------
Cash flows from investing activities:
Receipt of mortgage principal from scheduled payments 134,421 147,751
Proceeds from mortgage dispositions - 2,429,898
------------ ------------
Net cash provided by investing activities 134,421 2,577,649
------------ ------------
Cash flows used in financing activities:
Distributions paid to partners (5,183,145) (5,784,764)
------------ ------------
Net decrease in cash and cash equivalents (4,394,021) (2,457,403)
Cash and cash equivalents, beginning of period 5,240,883 5,626,184
------------ ------------
Cash and cash equivalents, end of period $ 846,862 $ 3,168,781
============ ============
The accompanying notes are an integral part
of these financial statements.
7
AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. ORGANIZATION
American Insured Mortgage Investors L.P. - Series 88 (the "Partnership")
was formed pursuant to a limited partnership agreement, as amended,
("Partnership Agreement") under the Uniform Limited Partnership Act of the State
of Delaware on February 13, 1987. During the period from October 2, 1987 (the
initial closing date of the Partnership's public offering) through March 10,
1989 (the termination date of the offering), the Partnership, pursuant to its
public offering of Units, raised a total of $177,039,320 in gross proceeds. 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.
CRIIMI, Inc., a wholly-owned subsidiary of CRIIMI MAE Inc. ("CRIIMI MAE"),
acts as the General Partner (the "General Partner") for the Partnership and
holds a partnership interest of 4.9%. The General Partner provides management
and administrative services on behalf of the Partnership. AIM Acquisition
Partners L.P. serves as the advisor (the "Advisor") to the Partnership. The
general partner of the Advisor is AIM Acquisition Corporation ("AIM
Acquisition") and the limited partners include, but are not limited to, The
Goldman Sachs Group, L.P., Sun America Investments, Inc. (successor to Broad,
Inc.) and CRI/AIM Investment, L.P., a subsidiary of CRIIMI MAE, over which
CRIIMI MAE exercises 100% voting control. AIM Acquisition is a Delaware
corporation that is primarily owned by Sun America Investments, Inc. and The
Goldman Sachs Group, L.P.
Pursuant to the terms of certain origination and acquisition services,
management services and disposition services agreements between the Advisor and
the Partnership (collectively the "Advisory Agreements"), the Advisor renders
services to the Partnership, including but not limited to, the management of the
Partnership's portfolio of mortgages and the disposition of the Partnership's
mortgages. Such services are subject to the review and ultimate authority of the
General Partner. However, the General Partner is required to receive the consent
of the Advisor prior to taking certain significant actions, including but not
limited to the disposition of mortgages, any transaction or agreement with the
General Partner or its affiliates, or any material change as to policies
regarding distributions or reserves of the Partnership (collectively the
"Consent Rights"). The Advisor is permitted and has delegated the performance of
services to CRIIMI MAE Services Limited Partnership ("CMSLP"), a subsidiary of
CRIIMI MAE, pursuant to a sub-management agreement (the "Sub-Advisory
Agreement"). The general partner and limited partner of CMSLP are wholly-owned
subsidiaries of CRIIMI MAE. The delegation of such services by the Advisor to
CMSLP does not relieve the Advisor of its obligation to perform such services.
Furthermore the Advisor has retained its Consent Rights.
The General Partner also serves as the General Partner for American Insured
Mortgage Investors ("AIM 84"), American Insured Mortgage Investors. - Series 85,
L.P ("AIM 85") and American Insured Mortgage Investors L.P. - Series 86 ("AIM
86") and owns general partner interests therein of 2.9%, 3.9% and 4.9%,
respectively. The Partnership, AIM 84, AIM 85 and AIM 86 are collectively
referred to as the "AIM Limited Partnerships".
Prior to December 1996, the Partnership was engaged in the business of
originating government insured mortgage loans ("Originated Insured Mortgages")
and acquiring government insured 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 mortgage
investments, all of which are insured under Section 221(d)(4) or Section 231 of
the National Housing Act of 1937, as amended (the "National Housing Act"). The
Partnership Agreement states that the Partnership will terminate on December 31,
2021, unless terminated earlier under the provisions thereof. The Partnership is
required, pursuant to the Partnership Agreement, to dispose of its assets prior
to this date. Early prepayment of the Partnership's Insured Mortgages or other
disposition by the General Partner in accordance with the terms of the
Partnership Agreement may effect an early termination and dissolution of the
Partnership before the stated termination date.
8
AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
2. BASIS OF PRESENTATION
In the opinion of the General Partner, the accompanying unaudited financial
statements contain all adjustments of a normal recurring nature necessary to
present fairly the financial position of the Partnership as of March 31, 2003
and the results of its operations and its cash flows for the three months ended
March 31, 2003 and 2002.
These unaudited financial statements have been prepared pursuant to the
rules and regulations of the Securities and Exchange Commission. Certain
information and note disclosures normally included in annual financial
statements prepared in accordance with generally accepted accounting principles
("GAAP") have been condensed or omitted. While the General Partner believes that
the disclosures presented are adequate to make the information not misleading,
these financial statements should be read in conjunction with the financial
statements and the notes to the financial statements included in the
Partnership's Annual Report on Form 10-K for the year ended December 31, 2002.
3. INVESTMENT IN FHA-INSURED CERTIFICATES AND GNMA MORTGAGE-BACKED SECURITIES
Fully Insured Mortgage Investments
----------------------------------
Listed below is the Partnership's aggregate investment in fully insured
acquired FHA-Insured Certificates and GNMA Mortgage-Backed Securities:
March 31, 2003 December 31, 2002
-------------- -----------------
Number of:
GNMA Mortgage-Backed Securities 9 9
FHA-Insured Certificates (1) 1 1
Amortized Cost $ 20,806,745 $ 20,908,052
Face Value 20,722,443 20,822,378
Fair Value 21,001,787 21,211,314
(1) In April 2003, the mortgage on Sylvan Manor was prepaid. The Partnership
received net proceeds of approximately $2.8 million and expects to
recognize a loss of approximately $1,000 in the second quarter of 2003. A
distribution of approximately $0.305 per Unit related to the prepayment of
this mortgage was declared in April 2003 and is expected to be paid to
Unitholders in August 2003.
As of May 1, 2003, all fully insured GNMA Mortgage-Backed Securities were
current with respect to the payment of principal and interest.
Coinsured by affiliate
----------------------
As of March 31, 2003 and December 31, 2002, the Partnership held an
investment in one FHA-Insured Certificate secured by a coinsured mortgage, where
the coinsurance lender is Integrated Funding Inc. ("IFI"), an affiliate of the
Partnership.
9
AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Listed below is the Partnership's investment in the mortgage coinsured by
affiliate as of March 31, 2003 and December 31, 2002:
March 31, 2003 December 31, 2002
-------------- -----------------
Amortized Cost $7,661,531 $7,679,488
Face Value 8,932,271 8,958,360
Fair Value 8,269,559 8,293,338
As of May 1, 2003, the coinsured mortgage, was current with respect to the
payment of principal and interest.
4. INVESTMENT IN FHA-INSURED LOAN
Listed below is the Partnership's investment in the one FHA-Insured Loan as
of March 31, 2003 and December 31, 2002:
March 31, 2003 December 31, 2002
-------------- -----------------
Amortized Cost $5,501,032 $5,516,188
Face Value 5,501,032 5,516,188
Fair Value 5,505,567 5,520,512
As of May 1, 2003, the Partnership's FHA-Insured Loan was current with
respect to the payment of principal and interest.
5. INVESTMENT IN AFFILIATE
In order to capitalize IFI with sufficient net worth under regulations of
the United States Department of Housing and Urban Development ("HUD") in April
1994, the Partnership transferred a GNMA Mortgage-Backed Security in the amount
of approximately $2.0 million (the "GNMA Security") to IFI. As of March 31, 2003
and December 31, 2002, this GNMA Security had a face value and a fair value of
approximately $1.8 million. The Partnership's interest in this security is
included on the balance sheet in Investment in affiliate. The Partnership, along
with AIM 85 and AIM 86, equally own AIM Mortgage, Inc. In turn, AIM Mortgage,
Inc. owns all of the outstanding preferred and common stock of IFI.
As part of the Partnership's transfer of the GNMA Security to IFI, the
Partnership is reimbursed for expenses related to IFI, pursuant to an expense
reimbursement agreement, as amended on January 1, 2001. The Partnership's
expense reimbursement and the Partnership's equity interest in IFI's net income
or loss substantially equals the mortgage interest on the GNMA Security
transferred to IFI. The Partnership received expense reimbursements of
approximately $32,675 and $33,036 for the three months ended March 31, 2003 and
2002, respectively, which are included in general and administrative expenses on
the accompanying statements of income and comprehensive income.
10
AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
6. DISTRIBUTIONS TO UNITHOLDERS
The distributions paid or accrued to Unitholders on a per Unit basis for
the three months ended March 31, 2003 and 2002 are as follows:
2003 2002
------- --------
Quarter ended March 31, $ 0.08 $ 0.355(1)
------- --------
$ 0.08 $ 0.355
======= ========
(1) This amount includes approximately $0.14 per Unit representing net proceeds
from the prepayment of the mortgage on Orchard Creek Apartments and
approximately $0.12 per Unit representing net proceeds from the prepayment
of the mortgage on Westview Terrace Apartments.
The basis for paying distributions to Unitholders is net proceeds from
mortgage dispositions, if any, and cash flow from operations, which includes
regular interest income and principal from Insured Mortgages. Although the
Insured Mortgages pay a fixed monthly mortgage payment, the cash distributions
paid to the Unitholders will vary during each quarter 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 and monthly mortgage payments
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 professional fees incurred in connection with those
Insured Mortgages and (4) variations in the Partnership's operating expenses. As
the Partnership continues to liquidate its mortgage investments and Unitholders
receive distributions of return of capital and taxable gains, Unitholders should
expect a reduction in earnings and distributions due to the decreasing mortgage
base.
11
AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
7. TRANSACTIONS WITH RELATED PARTIES
The General Partner, CMSLP and certain affiliated entities have earned or
received compensation or payments for services from the Partnership as follows:
COMPENSATION PAID OR ACCRUED TO RELATED PARTIES
-----------------------------------------------
For the three months
Capacity in Which ended March 31,
Name of Recipient Served/Item 2003 2002
----------------- ----------------------------- ---------- ----------
CRIIMI, Inc. (1) General Partner/Distribution $ 36,282 $ 161,002
AIM Acquisition Advisor/Asset Management Fee 97,449 124,320
Partners, L.P. (2)
CRIIMI MAE Management, Affiliate of General Partner/ 15,732 13,061
Inc. (3) Expense Reimbursement
(1) The General Partner, pursuant to amendments to the Partnership Agreement,
is entitled to receive 4.9% 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 (as defined in the Partnership Agreement).
(2) The Advisor, pursuant to the Partnership Agreement, is entitled to an Asset
Management Fee equal to 0.95% of Total Invested Assets (as defined in the
Partnership Agreement). CMSLP is entitled to a fee of 0.28% of Total
Invested Assets from the Advisor's Asset Management Fee. Of the amounts
paid to the Advisor, CMSLP earned a fee equal to $28,719 and $36,638 for
the three months ended March 31, 2003 and 2002, respectively. The general
partner and limited partner of CMSLP are wholly owned subsidiaries of
CRIIMI MAE.
(3) CRIIMI MAE Management, Inc., an affiliate of the General Partner, is
reimbursed for personnel and administrative services on an actual cost
basis.
12
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS. When used in this Quarterly Report on Form 10-Q, the
words "believe," "anticipate," "expect," "contemplate," "may," "will," and
similar expressions are intended to identify forward-looking statements.
Statements looking forward in time are included in this Quarterly Report on Form
10-Q pursuant to the "safe harbor" provision of the Private Securities
Litigation Reform Act of 1995. Such statements are subject to certain risks and
uncertainties, which could cause actual results to differ materially.
Accordingly, the following information contains or may contain forward-looking
statements: (1) information included or incorporated by reference in this
Quarterly Report on Form 10-Q, including, without limitation, statements made
under Item 2, Management's Discussion and Analysis of Financial Condition and
Results of Operations, (2) information included or incorporated by reference in
prior and future filings by the Partnership with the Securities and Exchange
Commission ("SEC") including, without limitation, statements with respect to
growth, projected revenues, earnings, returns and yields on its portfolio of
mortgage assets, the impact of interest rates, costs and business strategies and
plans and (3) information contained in written material, releases and oral
statements issued by or on behalf of, the Partnership, including, without
limitation, statements with respect to growth, projected revenues, earnings,
returns and yields on its portfolio of mortgage assets, the impact of interest
rates, costs and business strategies and plans. Factors which may cause actual
results to differ materially from those contained in the forward-looking
statements identified above include, but are not limited to (i) regulatory and
litigation matters, (ii) interest rates, (iii) trends in the economy, (iv)
prepayment of mortgages, (v) defaulted mortgages, (vi) errors in servicing
defaulted mortgages and (vii) sales of mortgage investments below fair market
value. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only of the date hereof. The Partnership
undertakes no obligation to publicly revise these forward-looking statements to
reflect events or circumstances occurring after the date hereof or to reflect
the occurrence of unanticipated events.
Mortgage Investments
- --------------------
As of March 31, 2003, the Partnership had invested in 12 Insured Mortgages
with an aggregate amortized cost of approximately $34.0 million, a face value of
approximately $35.2 million and a fair value of approximately $34.8 million.
In April 2003, the mortgage on Sylvan Manor was prepaid. The Partnership
received net proceeds of approximately $2.8 million and expects to recognize a
loss of approximately $1,000 in the second quarter of 2003. A distribution of
approximately $0.305 per Unit related to the prepayment of this mortgage was
declared in April 2003 and is expected to be paid to Unitholders in August 2003.
As of May 1, 2003, all of the Insured Mortgages were current with respect
to the payment of principal and interest.
Results of Operations
- ---------------------
Net earnings decreased by approximately $268,000 for the three months ended
March 31, 2003, as compared to the corresponding period in 2002, primarily due
to decreases in mortgage investment income and gains on mortgage dispositions,
as discussed below.
Mortgage investment income decreased by approximately $211,000 for the
three months ended March 31, 2003, as compared to the corresponding period in
2002, primarily due to a reduction in the mortgage base. The mortgage base
decreased as a result of two mortgage dispositions with an aggregate principal
balance of approximately $9.5 million, representing an approximate 21% decrease
in the aggregate principal balance of the total mortgage portfolio since April
2002.
Interest and other income decreased by approximately $5,600 for the three
months ended March 31, 2003 as compared to the corresponding period in 2002,
primarily due to the amounts and timing of temporary investment of mortgage
disposition proceeds prior to distribution to Unitholders.
13
Asset management fee to related parties decreased by approximately $27,000
for the three months ended March 31, 2003, as compared to the corresponding
period in 2002, due to the reduction in the mortgage base, as discussed
previously.
General and administrative expenses decreased by approximately $4,000 for
the three months ended March 31, 2003, as compared to the corresponding period
in 2002, primarily due to decreases in professional fees and public relations
expense.
Gains on mortgage dispositions decreased by approximately $83,000 for the
three months ended March 31, 2003, as compared to the corresponding period in
2002. During the first three months of 2003, the Partnership recognized no gains
or losses. During the first three months of 2002, the Partnership recognized
gains of approximately $83,000 from the prepayment of the mortgages on Orchard
Creek Apartments and Westview Terrace Apartments.
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 are the Partnership's principal sources of cash flows and
were sufficient during the first three months of 2003 to meet operating
requirements. The basis for paying distributions to Unitholders is net proceeds
from mortgage dispositions, if any, and cash flow from operations, which
includes regular interest income and principal received from Insured Mortgages.
Although the Insured Mortgages pay a fixed monthly mortgage payment, the cash
distributions paid to the Unitholders will vary during each quarter 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 and monthly mortgage payments
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 professional fees incurred in connection with those
Insured Mortgages and (4) variations in the Partnership's operating expenses. As
the Partnership continues to liquidate its mortgage investments and Unitholders
receive distributions of return of capital and taxable gains, Unitholders should
expect a reduction in earnings and distributions due to the decreasing mortgage
base. Early prepayment of the Partnership's Insured Mortgages or other
disposition by the General Partner in accordance with the terms of the
Partnership Agreement may effect an early termination and dissolution of the
Partnership before the stated termination date of December 31, 2021.
Net cash provided by operating activities decreased by approximately
$95,000 for the three months ended March 31, 2003, as compared to the
corresponding period in 2002, primarily resulting from a decrease in mortgage
investment income, as previously discussed, partially offset by an increase in
accounts payable and accrued expenses. Accounts payable and accrued expenses
increased due to the timing of the payment of the quarterly asset management
fee.
Net cash provided by investing activities decreased by approximately $2.4
million for the three months ended March 31, 2003, as compared to the
corresponding period in 2002, primarily due to a decrease in proceeds received
from mortgage dispositions.
Net cash used in financing activities decreased by approximately $602,000
for the three months ended March 31, 2003, as compared to the corresponding
period in 2002, due to a decrease in the amount of distributions paid to
partners during the first three months of 2003 as compared to the same period in
2002.
14
PART I. FINANCIAL INFORMATION
ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
Management has determined that there has not been a material change as of
March 31, 2003, in market risk from December 31, 2002 as reported in the
Partnership's Annual Report on Form 10-K for the year ended December 31, 2002.
ITEM 4. CONTROLS AND PROCEDURES
Within 90 days prior to the date of filing this quarterly report on Form
10-Q, the General Partner carried out an evaluation, under the supervision and
with the participation of the General Partner's management, including the
General Partner's Chairman of the Board and Chief Executive Officer (CEO) and
the Chief Financial Officer (CFO), of the effectiveness of the design and
operation of its disclosure controls and procedures pursuant to Exchange Act
Rule 13a-14. Based on that evaluation, the General Partner's CEO and CFO
concluded that its disclosure controls and procedures are effective and timely
in alerting them to material information relating to the Partnership required to
be included in the Partnership's periodic SEC filings. There were no significant
changes in the General Partner's internal controls or in other factors that
could significantly affect these internal controls subsequent to the date of its
most recent evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
15
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit No. Purpose
----------- -------
99.1 Certification pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002 from
Barry S. Blattman, Chairman of the Board,
Chief Executive Officer and President of
the General Partner (Filed herewith).
99.2 Certification pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002 from
Cynthia O. Azzara, Senior Vice President,
Chief Financial Officer and Treasurer of
the General Partner (Filed herewith).
(b) Reports on Form 8-K
Date
----
March 26, 2003 To report (i) a press release issued on
March 21, 2003 announcing the March 2003
distribution to the Partnership's
Unitholders and (ii) a press release
issued on March 24, 2003 announcing the
Partnership's fourth quarter and year
ended December 31, 2002 financial results.
16
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
AMERICAN INSURED MORTGAGE
INVESTORS L.P. - SERIES 88
(Registrant)
By: CRIIMI, Inc.
General Partner
May 13, 2003 /s/ Cynthia O. Azzara
- ------------ -------------------------------------------
Date Cynthia O. Azzara
Senior Vice President,
Chief Financial Officer and
Treasurer (Principal Accounting Officer)
17
CERTIFICATION
I, Barry S. Blattman, Chairman of the Board, Chief Executive Officer and
President, certify that:
1. I have reviewed this quarterly report on Form 10-Q of American Insured
Mortgage Investors L.P. - Series 88;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and we have:
a) Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
c) Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent functions):
a) All significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
AMERICAN INSURED MORTGAGE
INVESTORS L.P. - SERIES 88
(Registrant)
By: CRIIMI, Inc.
General Partner
Date: May 13, 2003 /s/ Barry S. Blattman
-------------------------------------
Barry S. Blattman
Chairman of the Board,
Chief Executive Officer and President
18
CERTIFICATION
I, Cynthia O. Azzara, Senior Vice President, Chief Financial Officer and
Treasurer, certify that:
1. I have reviewed this quarterly report on Form 10-Q of American Insured
Mortgage Investors L.P. - Series 88;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and we have:
a) Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
c) Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent functions):
a) All significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
AMERICAN INSURED MORTGAGE
INVESTORS L.P. - SERIES 88
(Registrant)
By: CRIIMI, Inc.
General Partner
Date: May 13, 2003 /s/ Cynthia O. Azzara
------------------------------------
Cynthia O. Azzara
Senior Vice President, Chief
Financial Officer and Treasurer