-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, HtNv4y3vutfuiVawvGJYcUCb/8U39i//esNsSePuV7MPOzI6Sx2Od81qgwPlwsVx wP+IBZqjEz19C+1NXtc44g== 0000724533-94-000003.txt : 19940309 0000724533-94-000003.hdr.sgml : 19940309 ACCESSION NUMBER: 0000724533-94-000003 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19931231 FILED AS OF DATE: 19940308 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN INSURED MORTGAGE INVESTORS CENTRAL INDEX KEY: 0000724533 STANDARD INDUSTRIAL CLASSIFICATION: 6799 IRS NUMBER: 133180848 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 34 SEC FILE NUMBER: 000-13120 FILM NUMBER: 94515032 BUSINESS ADDRESS: STREET 1: 11200 ROCKVILLE PIKE CITY: ROCKVILLE STATE: MD ZIP: 20852 BUSINESS PHONE: 3014689200 MAIL ADDRESS: STREET 1: 11200 ROCKVILLE PIKE CITY: ROCKVILLE STATE: MD ZIP: 20852 10-K 1 AIM 84 12/31/93 FORM 10K 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 ----------------------------------------------------------------- (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 ----------------------------------------------------------------- (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 ----------------------------------------------------------------- (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 ----------------------------------------------------------------- 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. -----END PRIVACY-ENHANCED MESSAGE-----