10-Q 1 sept03_aim88-10q.txt 10Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended September 30, 2003 ------------------ Commission file number 1-12724 ------------------- AMERICAN INSURED MORTGAGE INVESTORS L.P.-SERIES 88 -------------------------------------------------- (Exact name of registrant as specified in charter) Delaware 13-3398206 ------------------------------- ------------------------------------ (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 11200 Rockville Pike, Rockville, Maryland 20852 ----------------------------------------- ----------------------------- (Address of principal executive offices) (Zip Code) (301) 816-2300 --------------------------------------------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X] As of September 30, 2003, 8,802,091 depositary units of limited partnership interest were outstanding. 2 AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88 INDEX TO FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2003

3 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88 BALANCE SHEETS

The accompanying notes are an integral part of these financial statements. 4 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88 STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Unaudited)

The accompanying notes are an integral part of these financial statements. 5 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88 STATEMENT OF CHANGES IN PARTNERS' EQUITY For the nine months ended September 30, 2003 (Unaudited)

The accompanying notes are an integral part of these financial statements. 6 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88 STATEMENTS OF CASH FLOWS (Unaudited)

The accompanying notes are an integral part of these financial statements. 7 AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88 NOTES TO FINANCIAL STATEMENTS (Unaudited) 1. ORGANIZATION American Insured Mortgage Investors L.P. - Series 88 (the "Partnership") was formed pursuant to a limited partnership agreement, as amended, ("Partnership Agreement") under the Uniform Limited Partnership Act of the State of Delaware on February 13, 1987. During the period from October 2, 1987 (the initial closing date of the Partnership's public offering) through March 10, 1989 (the termination date of the offering), the Partnership, pursuant to its public offering of Units, raised a total of $177,039,320 in gross proceeds. In addition, the initial limited partner contributed $2,500 to the capital of the Partnership in exchange for 125 units of limited partnership interest. CRIIMI, Inc., a wholly-owned subsidiary of CRIIMI MAE Inc. ("CRIIMI MAE"), acts as the General Partner (the "General Partner") for the Partnership and holds a partnership interest of 4.9%. The General Partner provides management and administrative services on behalf of the Partnership. AIM Acquisition Partners L.P. serves as the advisor (the "Advisor") to the Partnership. The general partner of the Advisor is AIM Acquisition Corporation ("AIM Acquisition") and the limited partners include, but are not limited to, The Goldman Sachs Group, L.P., Sun America Investments, Inc. (successor to Broad, Inc.) and CRI/AIM Investment, L.P., a subsidiary of CRIIMI MAE, over which CRIIMI MAE exercises 100% voting control. AIM Acquisition is a Delaware corporation that is primarily owned by Sun America Investments, Inc. and The Goldman Sachs Group, L.P. Pursuant to the terms of certain origination and acquisition services, management services and disposition services agreements between the Advisor and the Partnership (collectively the "Advisory Agreements"), the Advisor renders services to the Partnership, including but not limited to, the management of the Partnership's portfolio of mortgages and the disposition of the Partnership's mortgages. Such services are subject to the review and ultimate authority of the General Partner. However, the General Partner is required to receive the consent of the Advisor prior to taking certain significant actions, including but not limited to the disposition of mortgages, any transaction or agreement with the General Partner or its affiliates, or any material change as to policies regarding distributions or reserves of the Partnership (collectively the "Consent Rights"). The Advisor is permitted and has delegated the performance of services to CRIIMI MAE Services Limited Partnership ("CMSLP"), a subsidiary of CRIIMI MAE, pursuant to a sub-management agreement (the "Sub-Advisory Agreement"). The general partner and limited partner of CMSLP are wholly-owned subsidiaries of CRIIMI MAE. The delegation of such services by the Advisor to CMSLP does not relieve the Advisor of its obligation to perform such services. Furthermore the Advisor has retained its Consent Rights. The General Partner also serves as the General Partner for American Insured Mortgage Investors ("AIM 84"), American Insured Mortgage Investors. - Series 85, L.P ("AIM 85") and American Insured Mortgage Investors L.P. - Series 86 ("AIM 86") and owns general partner interests therein of 2.9%, 3.9% and 4.9%, respectively. The Partnership, AIM 84, AIM 85 and AIM 86 are collectively referred to as the "AIM Limited Partnerships". Prior to December 1996, the Partnership was engaged in the business of originating government insured mortgage loans ("Originated Insured Mortgages") and acquiring government insured mortgage loans ("Acquired Insured Mortgages" and, together with Originated Insured Mortgages, referred to herein as "Insured Mortgages"). In accordance with the terms of the Partnership Agreement, the Partnership is no longer authorized to originate or acquire Insured Mortgages and, consequently, its primary objective is to manage its portfolio of mortgage investments, all of which are insured under Section 221(d)(4) or Section 231 of the National Housing Act of 1937, as amended (the "National Housing Act"). The Partnership Agreement states that the Partnership will terminate on December 31, 2021, unless terminated earlier under the provisions thereof. The Partnership is required, pursuant to the Partnership Agreement, to dispose of its assets prior to this date. Early prepayment of the Partnership's Insured Mortgages or other disposition by the General Partner in accordance with the terms of the Partnership Agreement may effect an early termination and dissolution of the Partnership before the stated termination date. 8 2. BASIS OF PRESENTATION The Partnership's financial statements are prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States ("GAAP"). The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. In the opinion of the General Partner, the accompanying unaudited financial statements contain all adjustments of a normal recurring nature necessary to present fairly the financial position of the Partnership as of September 30, 2003, the results of its operations for the three and nine months ended September 30, 2003 and 2002 and its cash flows for the nine months ended September 30, 2003 and 2002. These unaudited financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted. While the General Partner believes that the disclosures presented are adequate to make the information not misleading, these financial statements should be read in conjunction with the financial statements and the notes to the financial statements included in the Partnership's Annual Report on Form 10-K for the year ended December 31, 2002. 3. INVESTMENT IN FHA-INSURED CERTIFICATES AND GNMA MORTGAGE-BACKED SECURITIES Fully Insured Mortgage Investments ---------------------------------- Listed below is the Partnership's aggregate investment in fully insured acquired FHA-Insured Certificates and GNMA Mortgage-Backed Securities:

(1) In April 2003, the mortgage on Sylvan Manor was prepaid. The partnership received net proceeds of approximately $2.8 million and recognized a loss of approximately $900 for the nine months ended September 30, 2003. A distribution of approximately $0.305 per Unit related to the prepayment of this mortgage was declared in April 2003 and paid to Unitholders in August 2003. (2) In late May 2003, the mortgage on Lamplighter Apartments was prepaid. The Partnership received net proceeds of approximately $2.2 million and recognized a gain of approximately $19,000 for the nine months ended September 30, 2003. A distribution of approximately $0.235 per Unit related to the prepayment of this mortgage was declared in June 2003 and paid to Unitholders in August 2003. (3) In late June 2003, the GNMA Security secured by the mortgage on Garden Terrace Apartments was sold to the servicer. The Partnership received net proceeds of approximately $2.4 million and recognized a gain of approximately $82,000 for the nine months ended September 30, 2003. A distribution of approximately $0.265 per Unit related to the sale of this mortgage was declared in July 2003 and paid to Unitholders in November 2003. (4) In late July 2003, the mortgage on Greenview Garden was prepaid. The Partnership received net proceeds of approximately $901,000 and recognized a gain of approximately $51,000 for the nine months ended September 30, 2003. A distribution of approximately $0.095 per Unit related to the sale of this mortgage was declared in August 2003 and paid to Unitholders in November 2003. 9 As of November 1, 2003, all fully insured GNMA Mortgage-Backed Securities were current with respect to the payment of principal and interest. Coinsured by affiliate ---------------------- Listed below is the Partnership's investment in the mortgage coinsured by affiliate as of September 30, 2003 and December 31, 2002: September 30, 2003 December 31, 2002 ------------------ ----------------- Amortized Cost $ - $7,679,488 Face Value - 8,958,360 Fair Value - 8,293,338 As of December 31, 2002, the Partnership held an investment in one FHA-Insured Certificate secured by a coinsured mortgage, where the coinsurance lender was Integrated Funding Inc. ("IFI"), an affiliate of the Partnership. In July 2003, this mortgage, which was on Summerwind Apartments - Phase II, was prepaid. The Partnership received net proceeds of approximately $10.0 million and recognized a gain of approximately $2.3 million for the three and nine months ended September 30, 2003. A distribution of approximately $1.08 per Unit related to the prepayment of this mortgage was declared in July 2003 and paid to Unitholders in November 2003. 4. INVESTMENT IN FHA-INSURED LOAN Listed below is the Partnership's investment in the one FHA-Insured Loan as of September 30, 2003 and December 31, 2002: September 30, 2003 December 31, 2002 ------------------ ----------------- Amortized Cost $ - $5,516,188 Face Value - 5,516,188 Fair Value - 5,520,512 In June 2003, the mortgage on The Turn at Gresham, the Partnership's remaining FHA-Insured Loan, was prepaid. The Partnership received net proceeds of approximately $5.7 million and recognized a gain of approximately $161,000 for the nine months ended September 30, 2003. A distribution of approximately $0.61 per Unit related to the prepayment of this mortgage was declared in June 2003 and paid to Unitholders in August 2003. 5. INVESTMENT IN AFFILIATE In order to capitalize IFI with sufficient net worth under regulations of the United States Department of Housing and Urban Development ("HUD") in April 1994, the Partnership transferred a GNMA Mortgage-Backed Security in the amount of approximately $2.0 million (the "GNMA Security") to IFI. As of September 30, 2003 and December 31, 2002, this GNMA Security had a face value and a fair value of approximately $1.8 million. The Partnership, along with AIM 85 and AIM 86, equally own AIM Mortgage, Inc. In turn, AIM Mortgage, Inc. owns all of the outstanding preferred and common stock of IFI. The Partnership's interest in AIM Mortgage, Inc. is included on the balance sheet in Investment in affiliate. 10 As part of the Partnership's transfer of the GNMA Security to IFI, the Partnership is reimbursed for expenses related to IFI, pursuant to an expense reimbursement agreement, as amended on January 1, 2001. The Partnership's expense reimbursement and the Partnership's equity interest in IFI's net income or loss substantially equal the mortgage interest on the GNMA Security transferred to IFI. The Partnership received expense reimbursements of approximately $33,000 and $98,000 for the three and nine months ended September 30, 2003, respectively, and $33,000 and $99,000 for the three and nine months ended September 30, 2002, respectively, which partially offset general and administrative expenses on the accompanying statements of income and comprehensive income. The General Partner expects to dissolve IFI in the fourth quarter of 2003 since the last mortgage coinsured by IFI was prepaid in July 2003. As part of the dissolution of IFI, the General Partner expects to distribute all of the assets of IFI, including the GNMA Security, to AIM Mortgage, Inc. Subsequently, during the fourth quarter of 2003, AIM Mortgage, Inc. is expected to dissolve. As part of the dissolution of AIM Mortgage, Inc., the General Partner expects to distribute all of the assets of AIM Mortgage Inc., including the GNMA Security, to the Partnership. This transaction is not expected to have a material effect on the Partnership's results of operations. 6. DISTRIBUTIONS TO UNITHOLDERS The distributions paid or accrued to Unitholders on a per Unit basis for the nine months ended September 30, 2003 and 2002 are as follows: 2003 2002 ------- ------- Quarter ended March 31, $ 0.080 $ 0.355(3) Quarter ended June 30, 1.215(1) 0.090 Quarter ended September 30, 1.470(2) 0.655(4) ------- ------- $ 2.765 $ 1.100 ======= ======= (1) This amount includes (i) approximately $0.305 per Unit representing net proceeds from the prepayment of the mortgage on Sylvan Manor, (ii) approximately $0.235 per Unit representing net proceeds from the prepayment of the mortgage on Lamplighter Apartments, and (iii) approximately $0.61 per Unit representing net proceeds from the prepayment of the mortgage on The Turn at Gresham. (2) This amount includes (i) approximately $0.265 per Unit representing net proceeds from the prepayment of the mortgage on Garden Terrace, (ii) approximately $1.08 per Unit representing net proceeds from the prepayment of the mortgage on Summerwind Apartments-Phase II, and (iii) approximately $0.095 per Unit representing net proceeds from the prepayment of the mortgage on Greenview Garden. (3) This amount includes approximately $0.14 per Unit representing net proceeds from the prepayment of the mortgage on Orchard Creek Apartments and approximately $0.12 per Unit representing net proceeds from the prepayment of the mortgage on Westview Terrace Apartments. (4) This amount includes approximately $0.565 per Unit representing net proceeds from the prepayment of the mortgage on Stoney Creek. The basis for paying distributions to Unitholders is net proceeds from mortgage dispositions, if any, and cash flow from operations, which includes regular interest income and principal from Insured Mortgages. Although the Insured Mortgages pay a fixed monthly mortgage payment, the cash distributions paid to the Unitholders will vary during each quarter due to (1) the fluctuating yields in the short-term money market where the monthly mortgage payments received are temporarily invested prior to the payment of quarterly distributions, (2) the reduction in the asset base and monthly mortgage payments due to monthly mortgage payments received or mortgage dispositions, (3) variations in the cash flow attributable to the delinquency or default of Insured Mortgages and professional fees incurred in connection with those Insured Mortgages and (4) variations in the Partnership's operating expenses. As the Partnership continues to liquidate its mortgage investments and Unitholders receive distributions of return of 11 capital and taxable gains, Unitholders should expect a reduction in earnings and distributions due to the decreasing mortgage base. Early prepayment of the Partnership's Insured Mortgages or other disposition by the General Partner in accordance with the terms of the Partnership Agreement are likely to result in reduced operating cash receipts to meet the Partnership's operating expenses, and may effect an early termination and dissolution of the Partnership before the stated termination date December 31, 2021. Accordingly, Unitholders' yield to maturity on their respective investments in the Partnership may be adversely affected by such early termination of the Partnership. Upon the termination and liquidation of the Partnership, distributions to Unitholders will be made in accordance with the terms of the Partnership Agreement, as amended. A final distribution to Unitholders will be based on the Partnership's remaining net assets, and such distribution to Unitholders is likely to be substantially less than the amount referenced in limited partners' equity in the Partnership's financial statements. 7. TRANSACTIONS WITH RELATED PARTIES The General Partner, CMSLP and certain affiliated entities have earned or received compensation or payments for services from the Partnership as follows: COMPENSATION PAID OR ACCRUED TO RELATED PARTIES

(1) The General Partner, pursuant to amendments to the Partnership Agreement, is entitled to receive 4.9% of the Partnership's income, loss, capital and distributions, including, without limitation, the Partnership's adjusted cash from operations and proceeds of mortgage prepayments, sales or insurance (as defined in the Partnership Agreement). (2) The Advisor, pursuant to the Partnership Agreement, is entitled to an Asset Management Fee equal to 0.95% of Total Invested Assets (as defined in the Partnership Agreement). CMSLP is entitled to a fee of 0.28% of Total Invested Assets from the Advisor's Asset Management Fee. Of the amounts paid to the Advisor, CMSLP earned a fee equal to $13,703 and $69,057 for the three and nine months ended September 30, 2003, respectively, and $35,799 and $108,236 for the three and nine months ended September 30, 2002, respectively. The general partner and limited partner of CMSLP are wholly owned subsidiaries of CRIIMI MAE. (3) CRIIMI MAE Management, Inc., an affiliate of the General Partner, is reimbursed for personnel and administrative services on an actual cost basis. 12 PART I. FINANCIAL INFORMATION ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FORWARD-LOOKING STATEMENTS. When used in this Quarterly Report on Form 10-Q, the words "believe," "anticipate," "expect," "contemplate," "may," "will," and similar expressions are intended to identify forward-looking statements. Statements looking forward in time are included in this Quarterly Report on Form 10-Q pursuant to the "safe harbor" provision of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties, which could cause actual results to differ materially. Accordingly, the following information contains or may contain forward-looking statements: (1) information included or incorporated by reference in this Quarterly Report on Form 10-Q, including, without limitation, statements made under Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations, (2) information included or incorporated by reference in prior and future filings by the Partnership with the Securities and Exchange Commission ("SEC") including, without limitation, statements with respect to growth, projected revenues, earnings, returns and yields on its portfolio of mortgage assets, the impact of interest rates, costs and business strategies and plans and (3) information contained in written material, releases and oral statements issued by or on behalf of, the Partnership, including, without limitation, statements with respect to growth, projected revenues, earnings, returns and yields on its portfolio of mortgage assets, the impact of interest rates, costs and business strategies and plans. Factors which may cause actual results to differ materially from those contained in the forward-looking statements identified above include, but are not limited to (i) regulatory and litigation matters, (ii) interest rates, (iii) trends in the economy, (iv) prepayment of mortgages, (v) defaulted mortgages, (vi) errors in servicing defaulted mortgages and (vii) sales of mortgage investments below fair market value. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only of the date hereof. The Partnership undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Mortgage Investments -------------------- As of September 30, 2003, the Partnership had invested in six Insured Mortgages with an aggregate amortized cost of approximately $12.5 million, a face value of approximately $12.4 million and a fair value of approximately $12.6 million. As of November 1, 2003, all of the Insured Mortgages were current with respect to the payment of principal and interest. Results of Operations --------------------- Net earnings increased by approximately $1.8 million and $1.5 million for the three and nine months ended September 30, 2003, as compared to the corresponding periods in 2002, primarily due to an increase in gains on mortgage dispositions, partially offset by a decrease in mortgage investment income. Mortgage investment income decreased by approximately $643,000 and $1.2 million for the three and nine months ended September 30, 2003, respectively, as compared to the corresponding periods in 2002, primarily due to a reduction in the mortgage base. The mortgage base decreased as a result of seven mortgage dispositions with an aggregate principal balance of approximately $27.1 million, representing an approximate 68% decrease in the aggregate principal balance of the total mortgage portfolio since September 2002. The Partnership experienced a high rate of prepayments during the nine months ended September 30, 2003 during the current low interest rate environment. Interest and other income increased by approximately $29,000 and $36,000 for the three and nine months ended September 30, 2003, respectively, as compared to the corresponding periods in 2002, primarily due to the amounts and timing of temporary investment of mortgage disposition proceeds prior to distribution to Unitholders. Asset management fee to related parties decreased by approximately $75,000 and $133,000 for the three and nine months ended September 30, 2003, respectively, as compared to the corresponding periods in 2002, due to the reduction in the mortgage base, as discussed previously. 13 General and administrative expenses increased by approximately $25,000 and $19,000 for the three and nine months ended September 30, 2003, respectively, as compared to the corresponding periods in 2002, primarily due to an increase in legal and audit fees related to the Partnership's Corporate Governance. Net gains on mortgage dispositions increased by approximately $2.3 million and $2.5 million for the three and nine months ended September 30, 2003, respectively, as compared to the corresponding periods in 2002. During the three months ended September 30, 2003, the Partnership recognized gains of approximately $2.4 million from the prepayment of the mortgages on Summerwind Apartments-Phase II and Greenview Garden. During the first six months of 2003, the Partnership recognized net gains of approximately $179,000 from the prepayment of the mortgages on Sylvan Manor, Lamplighter Apartments and The Turn at Gresham and a gain of approximately $82,000 from the sale of the GNMA Security secured by the mortgage on Garden Terrace Apartments. During the three months ended September 30, 2002, the Partnership recognized a gain of approximately $41,000 from the prepayment of the mortgage on Stoney Creek. During the first six months of 2002, the Partnership recognized gains of approximately $82,000 from the prepayment of the mortgages on Orchard Creek Apartments and Westview Terrace Apartments. Liquidity and Capital Resources ------------------------------- The Partnership's operating cash receipts, derived from payments of principal and interest on Insured Mortgages, plus cash receipts from interest on short-term investments are the Partnership's principal sources of cash flows and were sufficient during the nine months ended September 30, 2003 to meet operating requirements. The basis for paying distributions to Unitholders is net proceeds from mortgage dispositions, if any, and cash flow from operations, which includes regular interest income and principal received from Insured Mortgages. Although the Insured Mortgages pay a fixed monthly mortgage payment, the cash distributions paid to the Unitholders will vary during each quarter due to (1) the fluctuating yields in the short-term money market where the monthly mortgage payments received are temporarily invested prior to the payment of quarterly distributions, (2) the reduction in the asset base and monthly mortgage payments due to monthly mortgage payments received or mortgage dispositions, (3) variations in the cash flow attributable to the delinquency or default of Insured Mortgages and professional fees incurred in connection with those Insured Mortgages and (4) variations in the Partnership's operating expenses. As the Partnership continues to liquidate its mortgage investments and Unitholders receive distributions of return of capital and taxable gains, Unitholders should expect a reduction in earnings and distributions due to the decreasing mortgage base. Early prepayment of the Partnership's Insured Mortgages or other disposition by the General Partner in accordance with the terms of the Partnership Agreement are likely to result in reduced operating cash receipts to meet the Partnership's operating expenses, and may effect an early termination and dissolution of the Partnership before the stated termination date of December 31, 2021. Accordingly, Unitholders' yield to maturity on their respective investments in the Partnership may be adversely affected by such early termination of the Partnership. Upon the termination and liquidation of the Partnership, distributions to Unitholders will be made in accordance with the terms of the Partnership Agreement, as amended. A final distribution to Unitholders will be based on the Partnership's remaining net assets, and such distribution to Unitholders is likely to be substantially less than the amount referenced in limited partners' equity in the Partnership's financial statements. Net cash provided by operating activities decreased by approximately $803,000 for the nine months ended September 30, 2003, as compared to the corresponding period in 2002, primarily resulting from a decrease in mortgage investment income, as previously discussed. Net cash provided by investing activities increased by approximately $16.2 million for the nine months ended September 30, 2003, as compared to the corresponding period in 2002, primarily due to an increase in proceeds received from mortgage dispositions, as previously discussed. 14 Net cash used in financing activities increased by approximately $7.3 million for the nine months ended September 30, 2003, as compared to the corresponding period in 2002, due to an increase in the amount of distributions paid to partners during the first nine months of 2003 as compared to the same period in 2002, due to significant mortgage dispositions as previously discussed. ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK Management has determined that there has not been a material change as of September 30, 2003, in market risk from December 31, 2002 as reported in the Partnership's Annual Report on Form 10-K for the year ended December 31, 2002. ITEM 4. CONTROLS AND PROCEDURES Within 90 days prior to the date of filing this quarterly report on Form 10-Q, the General Partner carried out an evaluation, under the supervision and with the participation of the General Partner's management, including the General Partner's Chairman of the Board and Chief Executive Officer (CEO) and the Chief Financial Officer (CFO), of the effectiveness of the design and operation of its disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. Based on that evaluation, the General Partner's CEO and CFO concluded that its disclosure controls and procedures are effective and timely in alerting them to material information relating to the Partnership required to be included in the Partnership's periodic SEC filings. There were no significant changes in the General Partner's internal controls or in other factors that could significantly affect these internal controls subsequent to the date of its most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. 15 PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits Exhibit No. Purpose ----------- ------- 31.1 Certification pursuant to the Exchange Act Rule 13a-14(a) from Barry S. Blattman, Chairman of the Board and Chief Executive Officer of the General Partner (Filed herewith). 31.2 Certification pursuant to the Exchange Act Rule 13a-14(a) from Cynthia O. Azzara, Executive Vice President, Chief Financial Officer and Treasurer of the General Partner (Filed herewith). 32.1 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 from Barry S. Blattman, Chairman of the Board and Chief Executive Officer of the General Partner (Filed herewith). 32.2 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 from Cynthia O. Azzara, Executive Vice President, Chief Financial Officer and Treasurer of the General Partner (Filed herewith). (b) Reports on Form 8-K Date ---- July 23, 2003 To report a press release issued on July 22, 2003 announcing the July 2003 distribution to the Partnership's Unitholders. August 14, 2003 To report a press release issued on August 13, 2003 announcing the Partnership's second quarter financial results. August 20, 2003 To report a press release issued on August 20, 2003 announcing the August 2003 distribution to the Partnership's Unitholders. September 24, 2003 To report a press release issued on September 19, 2003 announcing the September 2003 distribution to the Partnership's Unitholders. 16 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88 (Registrant) By: CRIIMI, Inc. General Partner November 13, 2003 /s/ Cynthia O. Azzara ---------------- ----------------------- Date Cynthia O. Azzara Executive Vice President, Chief Financial Officer and Treasurer (Principal Accounting Officer)

AMERICAN INSURED MORTGAGE INVESTORS L P SERIES 88 10-Q