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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2001
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Commission file number 33-94694
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CRIIMI MAE FINANCIAL CORPORATION
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(Exact name of registrant as specified in charter)
Maryland 52-1931369
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
11200 Rockville Pike, Rockville, Maryland 20852
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(Address of principal executive offices) (Zip Code)
(301) 816-2300
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(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
NONE
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(Title of Class)
Securities registered pursuant to Section 12(g) of the Act:
NONE
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(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
As of March 25, 2002, 1,000 shares of common stock were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
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Form 10-K Parts Document
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I, II, III Current Reports on Form 8-K filed with the
and IV Securities and Exchange Commission on
January 12, 2001, February 14, 2001,
March 13, 2001, April 11, 2001, May 10,
2001, June 14, 2001, July 13, 2001,
August 8, 2001, September 14, 2001,
October 11, 2001, November 13, 2001 and
December 13, 2001.
CRIIMI MAE FINANCIAL CORPORATION
2001 ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS
PART I
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Page
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Item 2. Properties......................................................................... 3
Item 3. Legal Proceedings.................................................................. 3
Item 4. Submission of Matters to a Vote
of Security Holders.............................................................. 3
PART II
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Item 5. Market for the Registrant's Common Stock
and Related Stockholder Matters.................................................. 3
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure........................................... 3
PART III
--------
Item 13. Certain Relationships and Related
Transactions..................................................................... 4
PART IV
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Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K.............................................................. 4
Signatures ................................................................................. 6
Page 2
PART I
ITEM 2. PROPERTIES
The information required by Item 2 is incorporated herein by reference to
the Current Reports on Form 8-K filed with the Securities and Exchange
Commission ("SEC") on January 12, 2001, February 14, 2001, March 13, 2001, April
11, 2001, May 10, 2001, June 14, 2001, July 13, 2001, August 8, 2001, September
14, 2001, October 11, 2001, November 13, 2001 and December 13, 2001 and to the
Accountant's Report and the Annual Compliance Statement filed in response to
Item 14 of this Annual Report on Form 10-K.
ITEM 3. LEGAL PROCEEDINGS
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of 2001.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND
RELATED STOCKHOLDER MATTERS
CRIIMI MAE Financial Corporation's (the "Registrant") 1,000 shares of
authorized Common Stock are held by CRIIMI MAE Inc. ("CRIIMI MAE"), are not
traded and have no trading market.
As of December 31, 2001, Collateralized Mortgage Obligations ("Bonds"),
with a face value of $100,727,533 and a fair market value of $105,393,702, were
outstanding. The Bonds are held by 23 Bondholders. The Bonds trade on the
over-the-counter market.
Reference is made to the Current Reports on Form 8-K filed with the SEC on
January 12, 2001, February 14, 2001, March 13, 2001, April 11, 2001, May 10,
2001, June 14, 2001, July 13, 2000, August 8, 2001, September 14, 2001, October
11, 2001, November 13, 2001 and December 13, 2001 for information concerning
payments of principal and interest on the Bonds to Bondholders and dividends
paid to CRIIMI MAE as the sole shareholder of the Registrant.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
Page 3
PART III
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(a) Transactions with management and others.
During 2001, CRIIMI MAE was paid $413,936 by the Registrant for interest
expense due to CRIIMI MAE on the Mortgage Interest Strip Certificates that were
issued in conjunction with the Bonds.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
REPORTS ON FORM 8-K
(c) Exhibits
Exhibit No. Description Page
4. Indenture, dated as of October 1, 1995, among
CRIIMI MAE Financial Corporation and State
Street Bank and Trust Company, as Trustee.
(Incorporated by reference to Exhibit 2 to the
Current Report on Form 8-K filed with the
SEC on October 24, 1995). --
10.1 Master Servicing Agreement, dated as of October
11, 1995, among CRIIMI MAE Financial Corporation,
as Issuer, CRIIMI MAE Services Limited Partnership,
as Master Servicer, State Street Bank and Trust
Company, as Lead, and State Street Bank and Trust
Company, as Trustee. (Incorporated by reference to
Exhibit 3 to the Current Report on Form 8-K filed
with the SEC on October 24, 1995). --
99.1 Independent Public Accountants' Report on Applying
Agreed-Upon Procedures (filed herewith). 8
99.2 Annual Report for 2001 (filed herewith). 12
99.3 Management's Assertion (filed herewith). 15
99.4 Annual Compliance Statement (filed herewith). 16
99.5 Letter to Securities and Exchange Commission
from the Registrant dated March 29, 2002 regarding
representations received from Arthur Andersen LLP
in connection with its agreed upon procedures. 17
Page 4
(b) Reports on Form 8-K
Date Purpose
January 12, 2001 Report to Mortgage Certificateholders for payment date January 1, 2001
February 14, 2001 Report to Mortgage Certificateholders for payment date February 1, 2001
March 13, 2001 Report to Mortgage Certificateholders for payment date March 1, 2001
April 11, 2001 Report to Mortgage Certificateholders for payment date April 1, 2001
May 10, 2001 Report to Mortgage Certificateholders for payment date May 1, 2001
June 14, 2001 Report to Mortgage Certificateholders for payment date June 1, 2001
July 13, 2001 Report to Mortgage Certificateholders for payment date July 1, 2001
August 8, 2001 Report to Mortgage Certificateholders for payment date August 1, 2001
September 14, 2001 Report to Mortgage Certificateholders for payment date September 1, 2001
October 11, 2001 Report to Mortgage Certificateholders for payment date October 1, 2001
November 13, 2001 Report to Mortgage Certificateholders for payment date November 1, 2001
December 13, 2001 Report to Mortgage Certificateholders for payment date December 1, 2001
Page 5
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.
CRIIMI MAE FINANCIAL CORPORATION
(Registrant)
March 29, 2002 /s/William B. Dockser
- ------------------- ------------------------------------
DATE William B. Dockser
Chairman of the Board and
Principal Executive Officer
Page 6
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
March 29, 2002 /s/William B. Dockser
- --------------------- ---------------------------------
DATE William B. Dockser
Chairman of the Board and
Principal Executive Officer
March 29, 2002 /s/H. William Willoughby
- --------------------- ---------------------------------
DATE H. William Willoughby
Director, President and
Secretary
March 29, 2002 /s/Brian Hanson
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DATE Brian Hanson
Senior Vice President
March 28, 2002 /s/Kim E. Lutthans
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DATE Kim E. Lutthans
Director
Page 7
Exhibit 99.1
INDEPENDENT PUBLIC ACCOUNTANTS' REPORT ON APPLYING
AGREED-UPON PROCEDURES
CRIIMI MAE Financial Corporation
11200 Rockville Pike
Rockville, MD 20852
State Street Bank and Trust Company
Two Avenue De Lafayette
6th Floor
Boston, MA 02111
We have performed the procedures enumerated below, which were agreed to by
CRIIMI MAE Financial Corporation (the "Issuer") and State Street Bank and Trust
Company (collectively, the "Specified Users"), solely to assist the Specified
Users in evaluating the Issuer's compliance, as set forth in the accompanying
management assertion, with the Indenture Agreement between CRIIMI MAE Financial
Corporation as Issuer and State Street Bank and Trust Company as Trustee dated
October 1, 1995 (the "Indenture Agreement") and the accuracy of the Issuer's
records for the year ended December 31, 2001. This agreed-upon procedures
engagement was performed in accordance with standards established by the
American Institute of Certified Public Accountants. The sufficiency of these
procedures is solely the responsibility of the Specified Users of the report.
Consequently, we make no representation regarding the sufficiency of the
procedures described below either for the purpose for which this report has been
requested or for any other purpose. However, it is our understanding that these
procedures are sufficient for your purposes. This report does not constitute a
legal determination as to the Issuer's compliance with specified requirements.
During our engagement, we were furnished with or referred to the following
documents:
o The Indenture Agreement;
o The Portfolio Summary and Remittance Reports for
each of the months in the year beginning January 1, 2001 which
represent all such Portfolio Summary and Remittance Reports
for the year ended December 31, 2001, as provided by the
Specified Users;
o The CRIIMI MAE Financial Corporation 7%
Collarteralized Mortgage Obligations Monthly Payment Date
Statements (the "Payment Date Statements") for each of the
months in the year beginning January 1, 2001, which represent
all such Payment Date Statements for the year ended December
31, 2001, as provided by the Specified Users;
o The CRIIMI MAE Financial Corporation 7% Collateralized Mortgage
Obligations Annual Report for 2001 (the "Annual
Report") as attached to this letter.
Page 8
Procedures to Comply with Section 8.4(b) of the Indenture Agreement
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We read such provisions of the Indenture Agreement as we deemed necessary for
purposes of this letter. We also read each of the Payment Date Statements for
the months listed above and performed the following procedures:
1. We agreed the Scheduled Principal Distributions for the FHA
Mortgages and the GNMAs as detailed in the Principal Distribution
Detail table to the Portfolio Summary and Remittance Reports. We agreed
the Principal Prepayments for the FHA Mortgages and the GNMAs as
detailed in the Principal Distribution Detail table to the Portfolio
Summary and Remittance Reports. We verified with the Issuer that there
were no FHA Insurance Proceeds or Realized Losses during the period
covered by the Payment Date Statement. We also tested the clerical
accuracy of the Net Principal Distribution.
2. We agreed the Interest Amount for the FHA Mortgages and the
GNMAs as detailed in the Interest Distribution Detail table to the
Portfolio Summary and the Remittance Reports. We agreed the Interest
Strip Amount for the FHA Mortgages as detailed in the Interest
Distribution Detail table to the Portfolio Summary and the Remittance
Reports. We also tested the clerical accuracy of the Net Interest
Distribution, which includes any Prepayment Penalty.
3. We agreed the Beginning Balance as detailed in the Interest
Payable on Bonds table to the Actual Ending Balance of the bonds
detailed in the prior month's Payment Date Statement. We recalculated
the Interest Payable based on the Beginning Balance and the Interest
Rate on the Bonds of 7%.
We performed the calculations as set forth in this letter in accordance with
Section 8.4(b) of the Indenture Agreement. We considered differences of $3.00 or
less to be immaterial and, as such, are not reported as exceptions herein.
No exceptions were found as a result of applying the above procedures.
Procedures Related to the 2001 Annual Report
- --------------------------------------------
1. We read the Annual Report.
2. We tested the Annual Report for mathematical accuracy.
3. We agreed the amounts disclosed for Scheduled Principal
Distributions, Principal Prepayments, FHA Insurance Proceeds, Realized
Losses and Net Principal Distributions as stated in the Principal
Distribution Detail table of the Annual Report to the sum of the stated
amounts as detailed in the Payment Date Statements.
4. We agreed the amounts disclosed for Interest Amount, Interest
Strip Amount and Net Interest Distribution as stated in the Interest
Distribution Detail table of the Annual Report to the sum of the stated
amounts as detailed in the Payment Date Statements.
Page 9
5. We agreed the amounts disclosed for the Beginning Balance,
Interest Rate and Interest Payable as stated in the Interest Payable on
the Bonds table of the Annual Report to amounts detailed in the
applicable Payment Date Statement.
6. We agreed the Actual Beginning Balance, Actual Principal
Payable and Actual Ending Balance as stated in the Principal Balance of
Collateral table of the Annual Report to the amounts detailed in the
applicable Payment Date Statements or the sum of the stated amounts as
detailed in the Payment Date Statements, as appropriate.
7. We agreed the Beginning Balance, Principal Payable and Ending
Balance as detailed in the Principal Balance of Bonds table of the
Annual Report to amounts detailed in the applicable Payment Date
Statement.
8. We agreed the Number, Stated Principal Balance and Unpaid
Principal Balance delinquent for One Month, Two Months, Three Months +
and Foreclosures as detailed in the Delinquent Mortgage Loans table of
the Annual Report to the stated amounts in the latest Payment Date
Statement.
9. We agreed the Months Delinquent, Loan Number, Stated Principal
Balance and Status of Foreclosures as detailed in the Delinquent
Mortgage Loans Detail table of the Annual Report to the detail stated
in the latest Payment Date Statement.
10. We agreed the Loan Number, Nature of Liquidation, Final Recovery
Determination, FHA Proceeds and Realized Loss as detailed in the
Liquidation table of the Annual Report to the detail stated in the
latest Payment Date Statement.
11. We agreed the Aggregate P&I Advances, Aggregate Unreimbursed P&I
Advances, Interest on P&I Advances Paid to Master Servicer, Interest
Accrued on Unreimbursed P&I Advances as stated in the P&I Advances
table of the Annual Report to the stated amounts detailed in the latest
Payment Date Statement.
12. We agreed the Aggregate Realized Losses incurred as stated in
the Realized Losses table of the Annual Report to the stated amount in
the latest Payment Date Statement.
13. We agreed the Master Servicing Fee and the Trustee Fee detailed
in the Fees table of the Annual Report to the sum of the stated amounts
disclosed in the Payment Date Statements.
We considered differences of $3.00 or less to be immaterial and, as such, are
not reported as exceptions herein. No exceptions were found as a result of
applying the above procedures.
We were not engaged to perform an examination, the objective of which would be
the expression of an opinion on management's assertion. Accordingly, we do not
express such an opinion. Had we been engaged to perform additional procedures,
other matters might have come to our attention that would have been reported to
you.
Page 10
This report is intended solely for the use of the Specified Users and should not
be used by those who have not agreed to the procedures and taken responsibility
for the sufficiency of the procedures for their purposes. However, this report
is a matter of public record and its distribution is not restricted.
/s/Arthur Andersen LLP
Vienna, Virginia
March 22, 2002
Page 11
Exhibit 99.2
CRIIMI MAE Financial Corporation
7.00% Collateralized Mortgage Obligations
2001 Year-End Report
Principal Distribution Detail
Scheduled Principal FHA Insurance Realized Net Principal
Principal Prepayments Proceeds Losses Distribution
--------------- ------------------ ----------------- ---------- -------------
Mortgages $ 510,095.34 $14,843,128.97 $ 0.00 $ 0.00 $15,353,224.31
GNMA $ 670,532.13 $ 978,375.78 N/A $ 0.00 $ 1,648,907.91
-------------- ---------------- ------------- -------- ---------------
Total $1,180,627.47 $15,821,504.75 $ 0.00 $ 0.00 $17,002,132.22
============= ============== ============= ======== ==============
Interest Distribution Detail
Net Interest
Interest Interest Strip Distribution
Amount Amount Prepayments Includes Prepay Penalty
-------------- ------------- -------------- ---------------------------
Mortgages $ 4,890,943.33 $ 410,724.67 $ 86,999.03 $ 4,567,217.69
GNMA $ 5,044,500.27 N/A $ 29,373.54 $ 5,073,873.81
-------------- ------------- ------------- --------------
Total $ 9,935,443.60 $ 410,724.67 $ 116,372.57 $ 9,641,091.50
============== ============= ============ ==============
Interest Payable on Bonds Additional
Beginning Interest Interest Interest
Balance Rate (Fixed) Payable Payable
--------------- ------------ -------------- -----------
$117,729,664.96 7.00% $ 7,833,260.74 $ 0.00
Balance Information
- -------------------
Principal Balance of Collateral
Actual Beginning Actual Principal Actual Ending
Balance Payable Balance
---------------- ---------------- -------------------
Mortgages $ 61,340,337.59 $15,353,224.31 $ 45,987,113.28
GNMA $ 63,260,963.50 $ 1,648,907.91 $ 61,612,055.59
----------------- --------------- ----------------
Total $ 124,601,301.09 $17,002,132.22 $ 107,599,168.87
================= ============== ================
Principal Balance of Bonds
Beginning Principal Ending
Balance Payable Balance
--------------- -------------- -------------------
$117,729,664.96 $17,002,132.22 $100,727,532.74
Page 12
CRIIMI MAE Financial Corporation
7.00% Collateralized Mortgage Obligations
2001 Year-End Report (continued)
Delinquency Information
Delinquent Mortgage Loans
One Month Two Months Three Months+ Foreclosures
--------- ---------- ------------- --------------
Number 0 0 2 0
Stated Principal Balance $ 0.00 $ 0.00 $117,638.63 $ 0.00
Unpaid Principal Balance $ 0.00 $ 0.00 $269,769.79 $ 0.00
Delinquent Mortgage Loans Detail
Stated
Months Loan Principal Status of
Delinq. Number Balance Foreclosure
------- ------ --------- --------------
13 158925 $151,838.16 N/A
13 158926 $117,931.63 N/A
Liquidations
Loan Nature of Final Recovery FHA Realized
Number Liquidation Determination Proceeds Loss
------ ----------- -------------- -------- ----------
0 0 0 $ 0.00 $ 0.00
Page 13
CRIIMI MAE Financial Corporation
7.00% Collateralized Mortgage Obligations
2001 Year-End Report (continued)
Other Information
P&I Advances
Aggregate P&I Advances $0.00
Aggregate unreimbursed P&I Advances $0.00
Interest on P&I Advances paid to Master Servicer $0.00
Interest accrued on unreimbursed P&I Advances $0.00
Realized Losses
Aggregate Realized Losses incurred $0.00
Fees
Master Trustee
Servicing Fee Fee
---------------- -----------
Mortgages $ 27,908.59 $ 5,023.55
GNMA $ 31,479.08 $ 5,666.23
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Total $ 59,387.67 $ 10,689.78
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Page 14
Exhibit 99.3
MANAGEMENT'S ASSERTION
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March 22, 2002
For the year ended December 31, 2001, the mathematical accuracy of CRIIMI MAE
Financial Corporation's Payment Date Statements provided by State Street Bank
and Trust Company as Trustee is correct. The CRIIMI MAE Financial Corporation 7%
Collateralized Mortgage Obligations Annual Report for 2001 is mathematically
accurate and the amounts disclosed agree to the Payment Date Statements. Also,
for the same period, CRIIMI MAE Financial Corporation has complied with the
Indenture Agreement between CRIIMI MAE Financial Corporation as Issuer and State
Street Bank and Trust Company as Trustee dated October 1, 1995.
/s/Cynthia O. Azzara
-------------------------------------
Cynthia O. Azzara
Senior Vice President
Chief Financial Officer and Treasurer
/s/Brian L. Hanson
-------------------------------------
Brian L. Hanson
Senior Vice President
Mortgage Servicing
/s/Eugene J. Bredow
------------------------------------
Eugene J. Bredow
Vice President
Corporate Controller
Page 15
Exhibit 99.4
ANNUAL COMPLIANCE STATEMENT
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March 22, 2002
Mr. Daniel M. Scully, Jr.
State Street Bank and Trust Company
Two Avenue De Lafayette
6th Floor
Boston, MA 02111
Dear Mr. Scully:
In accordance with Section 9.9 of the Indenture Agreement dated as of
October 1, 1995, between CRIIMI MAE Financial Corporation as Issuer and State
Street Bank and Trust Company as Trustee, I certify that review of the
activities of the Issuer for the period January 1, 2001 to December 31, 2001 and
of the Issuer's performance under this Indenture Agreement has been made under
my supervision. To the best of my knowledge, based on such review, the Issuer
has fulfilled all of its obligations under this Indenture Agreement.
Sincerely,
/s/Brian L. Hanson
-----------------------------------
By: Brian L. Hanson
Senior Vice President
Mortgage Servicing
Page 16
Exhibit 99.5
March 29, 2002
Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549
Re: Annual Report on Form 10-K for the year ended December 31, 2001 for CRIIMI
MAE Financial Corporation
Ladies and Gentlemen:
Consistent with the Commission's release of March 18, 2002, please be advised
that the Company has obtained a letter from Arthur Andersen LLP, the Company's
independent public accountants, dated March 29, 2002, containing the following
representations regarding the agreed-upon procedures performed to evaluate the
Company's compliance with the Indenture Agreement between CRIIMI MAE Financial
Corporation as Issuer and State Street Bank and Trust as Trustee dated
October 1, 1995 and the accuracy of the Company's records for the year ended
December 31, 2001:
o the agreed-upon procedures were subject to Arthur Andersen's quality
control system for the U.S. accounting and auditing practice to provide
reasonable assurance that the engagement was conducted in compliance with
professional standards;
o there was appropriate continuity of Arthur Andersen personnel working on
the agreed-upon procedures; and
o there was appropriate availability of national office consultation.
Representation relating to the availability of personnel at foreign affiliates
of Arthur Andersen was not relevant to these agreed-upon procedures.
Sincerely,
/s/William B. Dockser
---------------------------
William B. Dockser
Chairman of the Board and
Principal Executive Officer
Page 17