-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ed8dWmE9lYrZQN+GknuLBMg6KaSSwjwwgy02SAvkOnrsY+zy6AL8oFD6sJQuPuy7 wQCpUmWPAzEKUIbAMm+2Yg== 0000950146-98-001411.txt : 19980817 0000950146-98-001411.hdr.sgml : 19980817 ACCESSION NUMBER: 0000950146-98-001411 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980814 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN MORTGAGE INVESTORS TRUST CENTRAL INDEX KEY: 0000878774 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 136972380 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-23972 FILM NUMBER: 98691508 BUSINESS ADDRESS: STREET 1: 625 MADISON AVE CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 2124215333 MAIL ADDRESS: STREET 1: 625 MADISON AVENUE CITY: NEW YORK STATE: NY ZIP: 10022 10-Q 1 QUARTERLY REPORT SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) _X_ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1998 OR ___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 0-23972 AMERICAN MORTGAGE INVESTORS TRUST --------------------------------- (Exact name of registrant as specified in its charter) Massachusetts 13-6972380 - ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 625 Madison Avenue, New York, New York 10022 - ---------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (212)421-5333 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 ___ PART I Item 1. Financial Statements AMERICAN MORTGAGE INVESTORS TRUST Balance Sheets ============ ============ June 30, December 31, 1998 1997 (unaudited) ------------ ------------ ASSETS Investments in mortgage loans (Note 2) $ 46,409,414 $ 46,792,853 Investments in REMIC and GNMA Certificates (Note 3) 11,509,166 12,495,878 Cash and cash equivalents 2,302,992 1,840,715 Deferred costs (net of accumulated amortization of $50,000 and $45,000, respectively) 9,549 14,549 Accrued interest receivable 699,800 501,927 ------------ ------------ Total assets $ 60,930,921 $ 61,645,922 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Accounts payable and accrued expenses $ 62,548 $ 49,123 Due to affiliates (Note 4) 1,463,473 1,210,874 ------------ ------------ Total liabilities 1,526,021 1,259,997 ------------ ------------ Commitments (Note 5) Shareholders' equity: Shares of beneficial interest; $.10 par value; 12,500,000 shares authorized; 4,131,087 and 4,087,583 shares issued and outstanding, respectively 413,109 408,759 Treasury shares of beneficial interest; $.10 par value; 291,842 and 248,339 shares, respectively (29,184) (24,834) Additional paid-in capital 68,849,739 68,849,725 Distributions in excess of net income (9,947,942) (9,021,323) Accumulated other comprehensive income: Net unrealized gain on marketable securities (Note 3) 119,178 173,598 ------------ ------------ Total shareholders' equity 59,404,900 60,385,925 Total liabilities and shareholders' equity $ 60,930,921 $ 61,645,922 ============ ============ See Accompanying Notes to Financial Statements 2 AMERICAN MORTGAGE INVESTORS TRUST Statements of Income (Unaudited) ======================= ======================= Three Months Ended Six Months Ended June 30, June 30, ----------------------- ----------------------- 1998 1997 1998 1997 ----------------------- ----------------------- Revenues: Interest income: Mortgage loans (Note 2) $ 802,370 $ 784,218 $1,648,069 $1,560,730 REMIC and GNMA Certificates and FHA Insured Project Loan (Note 3) 230,184 225,791 463,569 486,032 Temporary investments 27,196 52,350 51,619 96,266 ---------- ---------- ---------- ---------- Total revenues 1,059,750 1,062,359 2,163,257 2,143,028 Expenses: General and administrative 167,901 216,778 308,433 367,283 Realized loss on sale of REMICs and GNMAs and FHA Insured Project Loan (Note 3) 249 51,776 617 61,772 Amortization 2,500 2,500 5,000 5,000 ---------- ---------- ---------- ---------- Total expenses 170,650 271,054 314,050 434,055 ---------- ---------- ---------- ---------- Net income $ 889,100 $ 791,305 $1,849,207 $1,708,973 ========== ========== ========== ========== Basic net income per weighted average share $ .23 $ .21 $ .48 $ .44 ========== ========== ========== ========== See Accompanying Notes to Financial Statements 3 AMERICAN MORTGAGE INVESTORS TRUST Statement of Changes in Shareholders' Equity (Unaudited)
Net Unrealized Shares of Treasury Shares of Distributions Gain (Loss) Beneficial Interest Beneficial Interest Additional in Excess on Securities -------------------- -------------------- Paid-in of Avail- Shares Amount Shares Amount Capital Net Income able for Sale Total --------- -------- -------- -------- ------------ ----------- --------- ------------ Balance at 4,087,583 $408,759 (248,339) $(24,834) $ 68,849,725 $(9,021,323) $ 173,598 $ 60,385,925 January 1, 1998 Net Income 0 0 0 0 0 1,849,207 0 1,849,207 Distributions 0 0 0 0 0 (2,775,826) 0 (2,775,826) Purchase of 0 0 (43,503) (4,350) (676,645) 0 (680,995) Treasury Stock Issuance of 43,504 4,350 0 0 676,659 0 0 681,009 shares of beneficial interest Change in 0 0 0 0 0 0 (54,420) (54,420) net unrealized gain on securities available for sale --------- -------- -------- -------- ------------ ----------- --------- ------------ Balance at 4,131,087 $413,109 (291,842) $(29,184) $ 68,849,739 $(9,947,942) $ 119,178 $ 59,404,900 June 30, 1998 ========= ======== ======== ======== ============ =========== ========= ============
See accompanying notes to financial statements. 4 AMERICAN MORTGAGE INVESTORS TRUST Statements of Cash Flows (Unaudited) =========================== Six Months Ended June 30, --------------------------- 1998 1997 --------------------------- Cash flows from operating activities: Net income $1,849,207 $1,708,973 ---------- ---------- Adjustments to reconcile net income to net cash provided by operating activities Amortization expense - organization costs 5,000 5,000 Amortization expense - loan premium and origination costs 250,655 238,375 Accretion of REMIC premium 0 585 Amortization of REMIC and GNMA and FHA Insured Project Loan discount (20,808) (18,215) Loss on sale of REMIC certificates 0 17,764 Loss on sale of GNMAs 617 927 Loss on sale of FHA Insured Project Loan 0 43,080 Changes in operating assets and liabilities: (Increase) decrease in accrued interest receivable (197,873) 27,220 Increase in due to affiliates 252,599 261,353 Increase (decrease) in accounts payable and accrued expenses 13,425 (6,570) ---------- ---------- Total adjustments 303,615 569,519 ---------- ---------- Net cash provided by operating activities 2,152,822 2,278,492 ---------- ---------- -5- AMERICAN MORTGAGE INVESTORS TRUST Statements of Cash Flows (continued) (Unaudited) =========================== Six Months Ended June 30, --------------------------- 1998 1997 --------------------------- Cash flows from investing activities: Investments in mortgage loans 0 (1,888,948) Principal repayments of mortgage loans 132,784 93,660 Purchase of REMIC Certificates 0 (1,889,817) Purchase of GNMA Certificate 0 (1,981,566) Principal repayments of GNMA certificates 145,511 51,045 Principal repayments of REMIC certificates 806,972 526,166 Principal repayments of FHA Insured Project Loan 0 3,408,238 ---------- ---------- Net cash provided by (used in) investing activities 1,085,267 (1,681,222) ---------- ---------- Cash flows from financing activities: Distributions to shareholders (2,775,826) (2,783,760) Proceeds from issuance of shares of beneficial interest 681,009 704,876 Purchase of treasury shares (680,995) (704,874) ---------- ---------- Net cash used in financing activities (2,775,812) (2,783,758) ---------- ---------- Net increase (decrease) in cash and cash equivalents 462,277 (2,186,488) Cash and cash equivalents at beginning of period 1,840,715 4,828,561 ---------- ---------- Cash and cash equivalents at end of period $2,302,992 $2,642,073 ========== ========== Supplemental schedule of noncash investing activities: Decrease in deferred costs $ 0 $ 3,032 Increase in investments in mortgage loans $ 0 $ (3,032) ---------- ---------- $ 0 $ 0 ---------- ---------- -6- AMERICAN MORTGAGE INVESTORS TRUST Notes to Financial Statements June 30, 1998 (Unaudited) Note 1 - General American Mortgage Investors Trust (the "Company") was formed on June 11, 1991 as a Massachusetts business trust for the primary purpose of investing in government-insured mortgages and guaranteed mortgage-backed certificates. The Company is electing to be treated as a real estate investment trust ("REIT") under the Internal Revenue Code of 1986, as amended. Pursuant to the Redemption Plan which became effective November 30, 1994, the Company is required to redeem eligible shares presented for redemption for cash to the extent it has sufficient net proceeds from the sale of shares under the Reinvestment Plan. As of June 30, 1998, the backlog of shares to be redeemed is 129,029. Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these financial statements in conformity with generally accepted accounting principals. Actual results could differ from those estimates. The unaudited financial statements have been prepared on the same basis as the audited financial statements included in the Company's Form 10-K for the year ended December 31, 1997. In the opinion of the Advisor, the accompanying unaudited financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the financial position of the Company as of June 30, 1998, the results of its operations for the three and six months ended June 30, 1998 and 1997 and its cash flows for the six months ended June 30, 1998 and 1997. However, the operating results for the interim periods may not be indicative of the results for the full year. Certain information and note disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted. It is suggested that these financial statements be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 1997. -7- AMERICAN MORTGAGE INVESTORS TRUST Notes to Financial Statements June 30, 1998 (Unaudited) Net income per weighted average share is computed based on the net income for the period, divided by the weighted average number of shares outstanding for the period. The weighted average number of shares outstanding for the three and six months ended June 30, 1998 and 1997 were 3,840,656 and 3,849,317 and 3,844,835 and 3,849,921, respectively. The Company adopted SFAS No. 130, Reporting Comprehensive Income on January 1, 1998. SFAS No. 130 establishes standards for reporting and displaying comprehensive income and its components in a financial statement that is displayed with the same prominence as other financial statements. The statement also requires the accumulated balance of other comprehensive income to be displayed separately from retained earnings and additional paid-in capital in the equity section of the balance sheet. Total comprehensive income for the three and six months ended June 30, 1998 and 1997 was $873,250 and $911,219 and $1,794,787 and $1,692,285, respectively. The Company adopted SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information on January 1, 1998. SFAS No. 131 establishes standards for reporting information about operating segments in annual and interim financial statements. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Categories required to be reported as well as reconciled to the financial statements are segment profit or loss, certain specific revenue and expense items, and segment assets. The Company operates in one segment, investment in mortgages or mortgage backed securities. Certain prior year amounts have been reclassified to conform with current year presentation. -8- AMERICAN MORTGAGE INVESTORS TRUST Notes to Financial Statements June 30, 1998 (Unaudited) Note 2 - Investments in Loans The Company originally funded five Originated Mortgages (excluding GNMAs-see Note 3), five noninterest bearing Additional Loans and two additional loan-bridge loans in the aggregate amount of $46,837,304. Information relating to investments in Originated Mortgages and Additional Loans as of June 30, 1998 and December 31, 1997 is as follows:
Date of Invest- ment/ Amounts Advanced Total Final -------------------------------------- Amounts Matu Total Advanced Outstanding Origi- Descrip -rity Mortgage Additional Amounts Amounts and Loan nation Property -tion Date Loans Loans Advanced Unadvanced Unadvanced Balance Costs ----------- ---------- ----------- -------- ----------- ----------- ---------- The Cove 308 12/93 $ 6,800,000 $ 840,500 $ 7,640,500 $ 0 $ 7,640,500 $ 7,436,547 $ 444,215 Apts Apt 1/29 Houston, Units (D) TX (A) Oxford on 405 12/93 9,350,000 1,156,000 10,506,000 0 10,506,000 10,225,566 610,814 Greenridge Apt. 1/29 Apts Units (D) Houston, TX (A) Town & 330 4/94 9,348,000 1,039,000 10,387,000 0 10,387,000 10,116,694 603,895 Country IV Apt. 5/29 Apts Units (E) Urbana, IL (B) Columbiana 204 4/94 8,276,895 563,000 8,839,895 406,105 9,246,000 8,815,743 532,835 Lakes Apts Apt. 11/35 Columbia, Units (F) SC (C) Stony Brook 125 12/95 8,500,000 763,909 9,263,909 0 9,263,909 9,231,367 413,492 Village II Apt. 6/37 Apts Units (F) East Haven, CT (G) ------------------------------------------------------------------------------------------ Total $42,274,895 $4,362,409 $46,637,304 $406,105 $47,043,409 $45,825,917 $2,605,251 ========================================================================================== Interest Accum Balance Earned Less -ulated at Balance at by the 1998 Net Amor- June 30, December Company Amor- Interest Property tization 1998 31, 1997(H) for 1998 tization Earned ---------- ----------- ----------- ---------- -------- ---------- The Cove $ 459,559 $ 7,421,203 $ 7,498,346 $ 297,734 $ 50,473 $ 247,261 Apts Houston, TX (A) Oxford on 631,910 10,204,470 10,310,443 480,842 69,303 411,539 Greenridge Apts Houston, TX (A) Town & 488,501 10,232,088 10,327,840 405,885 58,134 347,751 Country IV Apts Urbana, IL (B) Columbiana 233,489 9,115,089 9,158,473 331,494 28,150 303,344 Lakes Apts Columbia, SC (C) Stony Brook 208,295 9,436,564 9,497,751 382,769 44,595 338,174 Village II Apts East Haven, CT (G) --------------------------------------------------------------------------- Total $2,021,754 $46,409,414 $46,792,853 $1,898,724 $250,655 $1,648,069 ===========================================================================
-9- AMERICAN MORTGAGE INVESTORS TRUST Notes to Financial Statements June 30, 1998 (Unaudited) (A) The interest rates for The Cove and Oxford are 7.625%-9.129% during the permanent loan period. In addition to the interest rate during the permanent loan period, the Company will be entitled to 30% of the cash flow remaining after payment of 9.129% interest and accrued interest, if any. Payments at the rate of 9.129% were guaranteed by the developer until December 1996. (B) The interest rates for Town and Country are 7.375%-9.167% during the permanent loan period. In addition to the interest rate during the permanent loan period, the Company will be entitled to 30% of the cash flow remaining after payment of 9.167% interest. Payments at the rate of 9.167% were guaranteed by the developer until June 1997. (C) The interest rates for Columbiana are 7.9%-8.678% during the permanent loan period and 7.4% during the construction period. In addition to the interest rate during the permanent loan period, the Company will be entitled to 25% of the cash flow remaining after payment of 8.678% interest. Payments at the rate of 8.678% are guaranteed by the developer until December 1998. (D) The Originated Mortgages have terms of 35 years, subject to mandatory prepayment at any time after 10 years and upon one year's notice. (E) The Originated Mortgage has a term of 35 years, subject to mandatory prepayment at any time after 12 years and upon one year's notice. (F) The Originated Mortgage has a term of 40 years, subject to mandatory prepayment at any time after 10 years and upon one year's notice. (G) The interest rates for Stony Brook are 7.75%-9.128% during the permanent loan period and 8.625% during the construction period. In addition to the interest rate during the permanent loan period, the Company will be entitled to 40% of the cash flow remaining after payment of 9.128% interest. (H) Aggregate cost for federal income tax purposes is $45,707,370. -10- AMERICAN MORTGAGE INVESTORS TRUST Notes to Financial Statements June 30, 1998 (Unaudited) Note 3 - Investment in REMIC and GNMA Certificates Information relating to investments in REMIC and GNMA Certificates as of June 30, 1998 and December 31, 1997 is as follows:
Original Accum Date Purchase -ulated Purchased Price Amorti- /Final Stated Including Principal at (Discount) -zation Certificate Payment Interest Prem/ June 30, June 30, June 30, Seller Number Date Rate (Disc) 1998 1998 1998 - ------ ------------ --------- ---- ----------- ------------ --------- -------- GNMA Certificates - ----------------- Bear Stearns 0355540 7/27/94 7.125% $ 2,407,102 $ 2,577,390 $(238,409) $ 78,918 3/15/29 Malone Mortgage 0382486 7/28/94 8.500% 2,197,130 2,161,957 (8,107) 2,802 8/15/29 Goldman Sachs 0328502 7/29/94 8.250% 3,928,615 3,675,135 (3,443) 1,295 7/15/29 SunCoast Capital Group, Ltd. G22412(6) 6/23/97 7.000% 1,981,566 1,880,272 (12,339) 9,987 4/20/27 REMIC Certificates - ------------------ SunCoast Capital Group, Ltd. FHLMC 3/30/97 7.000% 507,288 0 0 0 17218 2/1/98 SunCoast Capital Group, Ltd. FHLMC 5/30/97 6.500% 251,967 0 0 0 17161 2/1/98 SunCoast Capital Group, Ltd. FHLMC 6/23/97 7.000% 147,437 0 0 0 17125 4/20/27(1) SunCoast Capital Group, Ltd. FNMA 6/30/97 7.500% 983,125 1,000,000 (16,875) 3,068 1997-42V 10/18/09 --------------------------------------------------- Total $12,404,230 $ 11,294,754 $(279,173) $ 96,070 =================================================== Loan Interest Origination Unrealized Earned Costs at Gain (Loss) Balance Balance at by the 1998 Net June 30, at June 30, at June 30, December 31, Company Amor- Interest Seller 1998 1998 1998 1997 for 1998 tization Earned - ------ ----------- ------------ ----------- ----------- -------- -------- -------- GNMA Certificates - ----------------- Bear Stearns $ 79,738 $ 90,828 $ 2,588,465 $ 2,604,394 $ 91,978 $ 10,095 $102,073 Malone Mortgage 73,427 19,033 2,249,112 2,253,185 92,000 358 92,358 Goldman Sachs 125,172 (9,897) 3,788,262 3,833,576 152,253 166 152,419 SunCoast Capital Group, Ltd. 0 8,962 1,886,882 1,982,055 67,394 8,655 76,049 REMIC Certificates - ------------------ SunCoast Capital Group, Ltd. 0 0 0 473,051 767 0 767 SunCoast Capital Group, Ltd. 0 0 0 198,075 869 0 869 SunCoast Capital Group, Ltd. 0 0 0 148,495 0 0 0 SunCoast Capital Group, Ltd. 0 10,252 996,445 1,003,047 37,500 1,534 39,034 ------------------------------------------------------------------------------------- Total $278,337 $ 119,178 $11,509,166 $12,495,878 $442,761 $ 20,808 $463,569 =====================================================================================
(1) The stated final payment date was April 20, 2027. The actual final payment amounting to $145,942 was received January 22, 1998. -11- AMERICAN MORTGAGE INVESTORS TRUST Notes to Financial Statements June 30, 1998 (Unaudited) Note 3 - Investment in REMIC and GNMA Certificates (continued) The amortized cost, unrealized gain (loss) and fair value for the investment in REMIC and GNMA Certificates at June 30, 1998 and December 31, 1997 were as follows:
Gross Gross Gross Gross Amortized Unrealized Unrealized Amortized Unrealized Unrealized Fair Cost at Gain at (Loss) at Fair Value Cost at Gain at (Loss) at Value at June 30, June 30, June 30, June 30, December 31, December 31, December 31, December 31, Security 1998 1998 1998 1998 1997 1997 1997 1997 - -------- ----------- --------- ---------- ----------- ----------- ----------- ----------- ----------- Fannie Mae REMICs $ 986,193 $ 10,252 $ 0 $ 996,445 $ 984,659 $ 18,388 $ 0 $ 1,003,047 Federal Home Loan 0 0 0 0 806,972 12,649 0 819,621 REMICs Ginnie Mae Certificates 10,403,795 118,823 (9,897) 10,512,721 10,530,649 146,012 (3,451) 10,673,210 ----------- --------- ------- ----------- ----------- -------- ------- ----------- $11,389,988 $ 129,075 $(9,897) $11,509,166 $12,322,280 $177,049 $(3,451) $12,495,878 =========== ========= ======= =========== =========== ======== ======= ===========
-12- AMERICAN MORTGAGE INVESTORS TRUST Notes to Financial Statements June 30, 1998 (Unaudited) The change in the unrealized gain (loss) for the six months ended June 30, 1998 and the year ended December 31, 1997 were as follows: Unrealized loss at January 1, 1997 $ (81,386) Sale of securities during the year ended December 31, 1997 included in unrealized loss at December 31, 1996 15,647 Unrealized gain on securities purchased during the twelve months ended December 31, 1997 53,925 Unrealized gain on securities held at December 31, 1997 and 1996 185,412 --------- Unrealized gain at December 31, 1997 $ 173,598 Sale of securities during the six months ended June 30, 1998 included in unrealized gain at December 31, 1997 (14,159) Unrealized loss on securities held at June 30, 1998 and December 31, 1997 (40,261) --------- Unrealized gain at June 30, 1998 $ 119,178 ========= For the six months ended June 30, 1998, there were losses of $617 (including acquisition fees and expenses) on principal repayments of REMICs and GNMAs. Note 4 - Related Party Transactions The Company has an agreement with the Advisor pursuant to which the Advisor receives compensation consisting primarily of (i) asset management fees calculated as a percentage of total assets invested by the Company, (ii) a subordinated incentive fee based on the economic gain on the sale of Mortgage Investments; (iii) certain other fees. In addition to the costs, fees and expenses discussed above, the Company will reimburse affiliates of the Advisor for certain administrative and other costs incurred on behalf of the Company. -13- AMERICAN MORTGAGE INVESTORS TRUST Notes to Financial Statements June 30, 1998 (Unaudited) The costs incurred to related parties for the three and six months ended June 30, 1998 and 1997 were as follows: Three Months Ended Six Months Ended June 30, June 30, --------------------- --------------------- 1998 1997 1998 1997 --------------------- --------------------- Expense reimburse- ment $ 47,625 $ 55,593 $ 68,085 $ 81,923 Asset manage- ment fees 91,826 89,776 181,789 179,245 -------- -------- -------- -------- $139,451 $145,369 $249,874 $261,168 ======== ======== ======== ======== Note 5 - Subsequent Event On August 14, 1998, a distribution of $1,370,449 and $17,464 was paid to the Investors and the Advisor, respectively, representing the 1998 second quarter distribution. The distribution was funded from cash collections of debt service payments and interest income through approximately the distribution date, August 14, 1998. -14- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. When used in this quarterly report on form 10-Q, the words "believes," "anticipates," "expects" and similar expressions are intended to identify forward-looking statements. Statements looking forward in time are included in this quarterly report on form 10-Q pursuant to the "safe harbor" provision of the private securities litigation reform act of 1995. Such statements are subject to certain risks and uncertainties which could cause actual results to differ materially, including, but not limited to, those set forth in "management's discussion and analysis of financial condition and results of operations." Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Liquidity and Capital Resources - ------------------------------- During 1997 the Company completed the offering and acquisition stage and has utilized the Net Proceeds of the Offering primarily to make or invest in Originated Mortgages and Acquired Mortgages. The Company has also invested in uninsured Additional Loans made directly to the developers or sponsors of Developments. Not more than an aggregate of 7% of the Net Proceeds raised in the Offering may be invested in Additional Loans. As of June 30, 1998, of the total Net Proceeds available for investment, 84.9% had been invested in Originated Mortgages (including 6.32% in Additional Loans) and 15.1% in Acquired Mortgages. Pursuant to the Redemption Plan which became effective November 30, 1994, the Company is required to redeem eligible shares presented for redemption for cash to the extent it has sufficient net proceeds from the sale of shares under the Reinvestment Plan. As of June 30, 1998, the backlog of shares to be redeemed is 129,029. During the six months ended June 30, 1998, cash and cash equivalents increased approximately $462,000 due to principal repayments of loans, GNMAs and REMICs ($1,085,000) and cash provided by operating activities ($2,153,000) which exceeded distributions to shareholders ($2,776,000). Included in the adjustments to reconcile the net income to cash provided by operating activities is net amortization in the amount of $235,000. -15- For a description of the Company's investments in Originated Mortgages, REMIC and GNMA Certificates (see Notes 2 and 3 of Notes to Financial Statements). Net unrealized gains on REMIC and GNMA investments included in shareholders' equity pursuant to Statement of Financial Accounting Standards No. 115 aggregated $119,178 at June 30, 1998. This represents a decrease of $54,420 in the unrealized gain for the six months ended June 30, 1998, of which a decrease of $14,159 is attributable to the sale of securities (which resulted in a realized loss of $617) and a decrease of $40,261 is attributable to a decrease in market prices for the investments held at June 30, 1998 and December 31, 1997. As of August 10, 1998, the unrealized gain was approximately $140,865. The yield on the REMIC and GNMA Certificates will depend, in part, upon the rate and timing of principal prepayments on the underlying mortgages in the asset pool. Generally, as market interest rates decrease, mortgage prepayment rates increase and the market value of interest rate sensitive obligations like the REMIC and GNMA Certificates increases. As market interest rates increase, mortgage prepayment rates tend to decrease and the market value of interest rate sensitive obligations like the REMICs and GNMAs tends to decrease. The effect of prepayments on yield is greater the earlier a prepayment of principal is received. Due to the complexity of the REMIC structure and the uncertainty of future economic and other factors that affect interest rates and mortgage prepayments, it is not possible to predict the effect of future events upon the yield to maturity or the market value of the REMIC and GNMA Certificates upon any sale or other disposition or whether the Company, if it chose to, would be able to reinvest proceeds from prepayments at favorable rates relative to the coupon rate. The Company expects to use its reinvestment dividend to redeem shares through its Redemption Plan and does not expect to have reinvested dividends available for investment. Unadvanced amounts of Originated Mortgages will be invested in temporary investments. The Company expects that cash generated from the Company's investments will be sufficient to pay all of the Company's expenses in the foreseeable future. The Company's liquidity is based primarily on interest received from permanent Mortgage Investments. In order to qualify as a REIT under the Internal Revenue Code, as amended, the Com- -16- pany must, among other things, distribute at least 95% of its taxable income. Results of Operations - --------------------- Results of operations for the three and six months ended June 30, 1998, consists of interest income from Originated Mortgages, REMIC certificates and temporary investments less administrative expenses, realized losses on sale of REMICs and GNMAs and amortization expenses. Results of operations for the three and six months ended June 30, 1997, primarily consists of interest income from Originated Mortgages, REMIC certificates, a FHA Insured Project Loan and temporary investments less administrative expenses, realized losses on sale of REMICs and GNMAs, and a FHA Insured Project Loan and amortization expenses. The total of the annual operating expenses of the Company may not exceed the greater of (i) 2% of the Average Invested Assets of the Company or (ii) 25% of the Company's Net Income, unless such excess is approved by the Independent Trustees. On an annualized basis, there was no such excess for the six months ended June 30, 1998 and 1997. Interest income from Originated Mortgages (excluding GNMAs) increased approximately $18,000 and $87,000 for the three and six months ended June 30, 1998 as compared to the corresponding periods in 1997 primarily due to the additional advances on the Stonybrook Originated Mortgage during 1997 and the receipt of cash flow interest in the first quarter of 1998 from Oxford. Interest income from temporary investments decreased approximately $25,000 and $45,000 for the three and six months ended June 30, 1998 as compared to the corresponding periods in 1997 primarily due to a decrease in temporarily invested proceeds earning interest in 1998. General and administrative expenses decreased approximately $49,000 and $59,000 for the three and six months ended June 30, 1998 as compared to the corresponding periods in 1997 primarily due to a decrease in printing, expense reimbursements to the Advisor for certain administrative and other costs incurred on behalf of the Company as well as decreases in several other general and administrative expenses in 1998. Realized loss on sale of REMICs and GNMAs and FHA Insured Project Loan decreased approximately $52,000 and $61,000 for the three and six months ended June 30, 1998 as compared to the cor- -17- responding periods in 1997 primarily due to the repayment of four REMICs and the FHA Insured Project Loan in 1997. Distribution Policy - ------------------- The Company has completed the offering and acquisition stage and therefore, in 1997 the Board reviewed and changed the distribution policy. Beginning in 1998, the Company's distribution policy calls for quarterly distributions which more closely reflect collections of interest payments. Of the total distributions of $2,775,826 and $2,783,760 made for the six months ended June 30, 1998 and 1997, $926,619 ($.24 per share or 33%) and $1,074,787 ($.27 per share or 39%) represents a return of capital determined in accordance with generally accepted accounting principles. As of June 30, 1998, the aggregate amount of the distributions made since the commencement of the Offering representing a return of capital, in accordance with generally accepted accounting principles, totaled $9,939,351. The portion of the distributions which constitutes a return of capital was significant during the acquisition stage in order to maintain level distributions to shareholders. However, the aggregate amount of the disposition proceeds used for distributions cannot in the aggregate exceed 3% of the Gross Proceeds. As of June 30, 1998, the aggregate amount of disposition proceeds used to support distributions equaled 2.44% of the Gross Proceeds. Management expects that cash flow from operations will be sufficient to fund the Company's operating expenses and to make distributions as determined by the Board on a quarterly basis. Accounting Standards Issued but not yet Adopted - ----------------------------------------------- In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133 ("SFAS 133") "Accounting for Derivative Instruments and Hedging Activities". The Statement establishes accounting and reporting standards for derivative instruments and hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. If certain conditions are met, a derivative may be specifically designated as (a) a hedge of the exposure to changes in the fair value of a recognized asset or liability or an unrecognized firm commitment, (b) a hedge of the exposure to variable cash flows of a forecasted transaction, or (c) a hedge of foreign currency exposure of a net investment in a foreign operation, an unrecog- -18- nized firm commitment, an available-for-sale security or a foreign-currency-denominated forecasted transaction. This Statement is effective for all fiscal quarters of fiscal years beginning after June 15, 1999. The adoption of SFAS 133 is not expected to have any impact on the financial position or results of operations of the Company. Year 2000 Compliance - -------------------- As the year 2000 approaches, an issue has emerged regarding how existing application software programs and operating systems can accommodate this date value. Failure to adequately address this issue could have potentially serious repercussions. The Advisor is in the process of working with the Company's service providers to prepare for the year 2000. Based on information currently available, the Company does not expect that it will incur significant operating expenses or be required to incur material costs to be year 2000 compliant. -19- PART II. OTHER INFORMATION Item 1. Legal Proceedings - None Item 2. Changes in Securities - None Item 3. Defaults Upon Senior Securities - None Item 4. Submission of Matters to a Vote of Security Holders A proxy and proxy statement soliciting the vote of the Company's shareholders for the Company's annual meeting of shareholders was sent to shareholders on or about May 1, 1998. Such meeting was held on June 24, 1998. Peter T. Allen, Arthur P. Fisch and J. Michael Fried were reelected as trustees. (1930082 shares voted for reelection and 27041 shares voted against reelection) Item 5. Other Information Alan P. Hirmes ceased to serve as Chief Financial Officer effective June 18, 1998. Effective June 18, 1998, John B. Roche was elected Chief Financial Officer. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 1(a) Dealer Manager Agreement, dated March 29, 1993 as previously filed as an Exhibit to Amendment No. 3 dated March 23, 1993 to Registrant's Registration Statement No. 33-42481. 1(b) Form of Soliciting Dealer Agreement as previously filed as an Exhibit to Amendment No. 3 dated March 23, 1993 to Registrant's Registration Statement No. 33-42481. 3, 4 Amended and Restated Declaration of Trust, dated as of March 29, 1993, as amended as of July 1, 1993 as previously filed as an Exhibit to Post-Effective Amendment No. 1 dated November 9, 1993. Amendment No. 2 to Amended and Restated Declaration of Trust, dated as of April 5, 1994 as previously filed as an Exhibit to Annual Report on Form 10-K for the year ended December 31, 1993. 10(a) Escrow Agreement, dated as of April 16, 1993 and amended as of August 25, 1993 as previously filed as an Exhibit to Post-Effective Amendment No. 1 dated November 9, 1993. 10(b) Advisory Services Agreement, dated as of March 29, 1993, as amended as of October 26, 1993 as previously -20- Item 6. Exhibits and Reports on Form 8-K (continued) (a) Exhibits (continued) filed as an Exhibit to Post-Effective Amendment No. 1 dated November 9, 1993. Amendment to Advisory Services Agreement, dated as of December 31, 1993 as previously filed as an Exhibit to Annual Report on Form 10-K for the year ended December 31, 1993. Third Amendment to Advisory Services Agreement, dated as of March 29, 1994 as previously filed as an Exhibit to Annual Report on Form 10-K for the year ended December 31, 1993. 10(c) TRI Capital Corporation Mortgage Note in the principal amount of $9,350,000 dated December 16, 1993 as previously filed as an Exhibit to Current Report on Form 8-K dated December 16, 1993. 10(d) Equity Loan Note in the principal amount of $1,156,000 dated December 16, 1993 as previously filed as an Exhibit to Current Report on Form 8-K dated December 16, 1993. 10(e) Bridge Loan Note in the principal amount of $115,790, dated December 16, 1993 as previously filed as an Exhibit to Current Report on Form 8-K dated December 16, 1993. 10(f) Subordinated Promissory Note by Oxford Apartments, L.C., dated December 16, 1993 as previously filed as an Exhibit to Current Report on Form 8-K dated December 16, 1993. 10(g) Limited Operating Guaranty between Al L. Bradley, Jr., Tim L. Myers, Allied Realty Services, Ltd. and American Mortgage Investors Trust, dated December 16, 1993 as previously filed as an Exhibit to Current Report on Form 8-K dated December 16, 1993. 10(h) TRI Capital Corporation Mortgage Note in the principal amount of $6,800,000, dated December 16, 1993 as previously filed as an Exhibit to Current Report on Form 8-K dated December 16, 1993. -21- Item 6. Exhibits and Reports on Form 8-K (continued) (a) Exhibits (continued) 10(i) Equity Loan Note in the principal amount of $840,500, dated December 16, 1993 as previously filed as an Exhibit to Current Report on Form 8-K dated December 16, 1993. 10(j) Bridge Loan Note in the principal amount of $84,210, dated December 16, 1993 as previously filed as an Exhibit to Current Report of Form 8-K dated December 1, 1993. 10(k) Subordinated Promissory Note by Cove Apartments, L.C., dated December 16, 1993 as previously filed as an Exhibit to Current Report on Form 8-K dated December 16, 1993. 10(l) Limited Operating Guaranty between Al L. Bradley, Jr., Tim L. Myers, Allied Realty Services, Ltd. and American Mortgage Investors Trust, dated December 16, 1993 as previously filed as an Exhibit to Current Report on Form 8-K dated December 16, 1993. 10(m) Cambridge Realty Capital LTD Mortgage Note in the principal amount of $9,348,000, dated April 5, 1994 as previously filed as an Exhibit to Current Report on Form 8-K dated April 21, 1994. 10(n) Equity Loan Note in the principal amount of $1,039,000, dated April 5, 1994 as previously filed as an Exhibit to Current Report on Form 8-K dated April 21, 1994. 10(o) Subordinated Promissory Note by Town and Country IV Apartments, L.C., dated April 5, 1994 as previously filed as an Exhibit to Current Report on Form 8-K dated April 21, 1994. 10(p) Limited Operating Guaranty between Leonard E. Wineburgh, Arnold H. Dwinn and the Company, dated April 5, 1994 as previously filed as an Exhibit to Current Report on Form 8-K dated April 21, 1994. 10(q) American Capital Resource, Inc. Mortgage Note in the principal amount of $8,683,000 dated April 5, 1994 as previously filed as an Exhibit to Current Report on Form 8-K dated April 28, 1994. -22- Item 6. Exhibits and Reports on Form 8-K (continued) (a) Exhibits (continued) 10(r) Equity Loan Note in the principal amount of $563,000 dated April 5, 1994 as previously filed as an Exhibit to Current Report on Form 8-K dated April 28, 1994. 10(s) Subordinated Promissory Note by Columbiana Lakes Apartments, L.C., dated April 5, 1994 as previously filed as an Exhibit to Current Report on Form 8-K dated April 28, 1994. 10(t) Limited Operating Guaranty between Anderson G. Wise, Ronald P. Curry and the Company, dated April 5, 1994 as previously filed as an Exhibit to Current Report on Form 8-K dated April 28, 1994. 10(u) Rockport Mortgage Corporation Mortgage Note is the principal amount of $8,500,000 dated December 15, 1995, as previously filed as an Exhibit to Current Report on Form 8-K dated December 15, 1995. 10(v) Equity Loan Note in the principal amount of $1,039,000 dated December 15, 1995, as previously filed as an Exhibit to Current report on Form 8-K dated December 15, 1995. 10(w) Subordinated Promissory Note by SCI-ROEV East Haven Land Limited Partnership, dated December 15, 1995, as previously filed as an Exhibit to Current Report on Form 8-K dated December 15, 1995. 10(x) Limited Operating Guaranty between SCI Real Estate Development, Ltd., and Euro General East Haven, Inc., and the Company dated December 15, 1995, as previously filed as an Exhibit to Current Report in Form 8-K dated December 15, 1995. 27 Financial Data Schedule (filed herewith). (b) Reports on Form 8-K. No reports on Form 8-K were filed during the quarter. -23- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. AMERICAN MORTGAGE INVESTORS TRUST (Registrant) Date: August 13, 1998 By: /s/ John B. Roche -------------------------------------- John B. Roche Senior Vice President and Chief Financial Officer Date: August 13, 1998 By: /s/ Richard A. Palermo -------------------------------------- Richard A. Palermo Treasurer and Chief Accounting Officer EX-27 2 ART. 5 FDS FOR 2ND QUARTER 10-Q
5 The Schedule contains summary financial information extracted from the financial statements for American Mortgage Investors Trust and is qualified in its entirety by reference to such financial statements 0000878774 American Mortgage Investors Trust 1 6-MOS DEC-31-1998 JAN-1-1998 JUN-30-1998 2,302,992 11,509,166 47,109,214 0 0 0 0 0 60,930,921 1,526,021 0 0 0 0 59,404,900 60,930,921 0 2,163,257 0 0 314,050 0 0 1,849,207 0 0 0 0 0 1,849,207 .48 0
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