UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                      ------------------------------------

                                    FORM 10-K
                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
                      ------------------------------------

For the fiscal year ended December 31, 2002       Commission file number 1-11060

                       AMERICAN INSURED MORTGAGE INVESTORS
                       -----------------------------------
             (Exact name of registrant as specified in it's charter)

         California                                              13-3180848
-------------------------------                              -------------------
(State or other jurisdiction of                              (I.R.S. Employer
Incorporation or organization)                               Identification No.)

                              11200 Rockville Pike
                            Rockville, Maryland 20852
                                 (301) 816-2300
               (Address, including zip code, and telephone number,
        including area code, of registrant's principal executive offices)

                      ------------------------------------

           Securities registered pursuant to Section 12(b) of the Act:

                                                        Name of each exchange on
     Title of each class                                    which registered
---------------------------                             ------------------------
Depositary Units of Limited                              American Stock Exchange
     Partnership Interest

           Securities registered pursuant to Section 12(g) of the Act:

                                      None
                      ------------------------------------

     Indicate  by check mark  whether the  Registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
Registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

     Indicate by check mark whether the registrant is an  accelerated  filer (as
defined in Exchange Act Rule 12b-2). Yes [ ] No [X]

     As of December 31, 2002, 10,000,125 depositary units of limited partnership
interest  were  outstanding.  The  aggregate  market value of such units held by
non-affiliates of the Registrant,  based on the last reported sale price on June
28, 2002 was $22,073,657.

                       Documents incorporated by Reference

                                      None

<PAGE>2


                       AMERICAN INSURED MORTGAGE INVESTORS

                         2002 ANNUAL REPORT ON FORM 10-K

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                                        Page
                                                                                                        ----
                                     PART I

<S>                                                                                                      <C>
Item 1.           Business                                                                                3
Item 2.           Properties                                                                              5
Item 3.           Legal Proceedings                                                                       5
Item 4.           Submission of Matters to a Vote of Security Holders                                     5


                                     PART II

Item 5.           Market for Registrant's Securities and Related Security Holder Matters                  6
Item 6.           Selected Financial Data                                                                 7
Item 7.           Management's Discussion and Analysis of Financial Condition and Results of
                     Operations                                                                           8
Item 7A.          Qualitative and Quantitative Disclosures About Market Risk                             15
Item 8.           Financial Statements and Supplementary Data                                            15
Item 9.           Changes in and Disagreements with Accountants on Accounting and Financial
                     Disclosure                                                                          15

                                    PART III

Item 10.          Directors and Executive Officers of the Registrant                                     17
Item 11.          Executive Compensation                                                                 19
Item 12.          Security Ownership of Certain Beneficial Owners, Management and Related
                     Unitholder Matters                                                                  19
Item 13.          Certain Relationships and Related Transactions                                         20
Item 14.          Controls and Procedures                                                                20

                                     PART IV

Item 15.          Exhibits, Financial Statement Schedules and Reports on Form 8-K                        21

Signatures                                                                                               24

Certifications                                                                                           25
</TABLE>

<PAGE>3
                                     PART I

ITEM 1.   BUSINESS

FORWARD-LOOKING  STATEMENTS.  When used in this Annual Report on Form 10-K,  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 Annual  Report on Form
10-K  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 Annual
Report on Form 10-K, including,  without limitation,  statements made under Item
7,  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  (defined  below)  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.

Development and Description of Business
---------------------------------------

     American Insured Mortgage Investors (the "Partnership") was formed pursuant
to a limited partnership agreement  ("Partnership  Agreement") under the Uniform
Limited  Partnership Act 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 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 2.9%. 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

<PAGE>4

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  -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") and owns general partner  interests therein of 3.9%,
4.9% and 4.9%,  respectively.  The  Partnership,  AIM 85,  AIM 86 and AIM 88 are
collectively referred to as the "AIM Limited Partnerships".

     Prior to November  1988,  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,
2008 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.

     Additional  information  concerning  the  business  of 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, 5, 6 and 7 of the Notes to
Financial  Statements  (filed in  response  to Item 8 hereof),  all of which are
incorporated by reference  herein.  See also Schedule  IV-Mortgage Loans on Real
Estate for the table of the Insured  Mortgages (as defined below) invested in by
the  Partnership  as of December 31, 2002,  which is  incorporated  by reference
herein.

Employees and Management of the Partnership
-------------------------------------------

     The  Partnership  has no  employees.  The  business of the  Partnership  is
managed by its General  Partner  while its  portfolio of mortgages is managed by
the  Advisor and CMSLP  pursuant to the  Advisory  Agreements  and  Sub-Advisory
Agreement, respectively, as discussed above. A wholly-owned subsidiary of CRIIMI
MAE, CRIIMI MAE Management, Inc., provides personnel and administrative services
to the Partnership on behalf of the General Partner. The Partnership  reimburses
CRIIMI MAE Management,  Inc. for these services on an actual cost basis pursuant
to the terms of the Partnership Agreement.


     The fee paid by the Partnership to the Advisor for services performed under
the  Advisory  Agreements  (the  "Advisory  Fee"),  is  equal  to  0.95%  of the
Partnership's  Total Invested Assets (as defined in the Partnership  Agreement).
The Advisor pays CMSLP, as sub-advisor,  a fee of 0.28% (the "Sub-Advisory Fee")
of Total Invested Assets for services performed under the Sub-Advisory Agreement
from its Advisory Fee. The Partnership is not liable for paying the Sub-Advisory
Fee to CMSLP.  Additional information concerning these fees is contained in Part
II, Item 7,  Management's  Discussion  and Analysis of Financial  Condition  and
Results of Operations and in Note 8 of the Notes to Financial  Statements (filed
in  response  to Item 8  hereof),  all of which are  incorporated  by  reference
herein.

<PAGE>5

Competition
-----------

     The Partnership's  business consists of holding government insured mortgage
investments  primarily on multifamily housing  properties,  and distributing the
payments of  principal  and  interest on such  mortgage  investments,  including
debentures  issued  by  the  United  States  Department  of  Housing  and  Urban
Development  ("HUD")  in  exchange  for such  mortgages,  to the  holders of its
depository  units  of  limited  partnership   interests   ("Unitholders").   The
Partnership may elect to dispose of its mortgage  investments  through a sale to
third parties. In disposing of mortgage  investments,  the Partnership  competes
with private investors,  mortgage banking companies, mortgage brokers, state and
local government agencies, lending institutions, 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,  CMSLP or their respective  affiliates.  Some of these entities may
have  substantially  greater  capital  resources and  experience in disposing of
mortgages investments than the Partnership.

     CRIIMI  MAE and its  affiliates  also may  serve  as  general  partners  or
managers of real estate limited  partnerships,  real estate investment trusts or
other similar entities in the future.  The Partnership may attempt to dispose of
mortgages  at or about the same time that CRIIMI  MAE,  one or more of the other
AIM Limited  Partnerships  and/or  other  entities  managed by CRIIMI MAE or its
affiliates,  or the  Advisor or its  affiliates,  are  attempting  to dispose of
mortgages.  As a result of  market  conditions  that  could  have the  effect of
limiting the number of mortgage dispositions or adversely affecting the proceeds
received from such dispositions,  CMSLP, the General Partner and the Advisor and
their affiliates could be faced with conflicts of interest in determining  which
mortgages  would be disposed of and at which price.  CMSLP,  the General Partner
and the Advisor,  however,  are required to exercise their  fiduciary  duties of
good faith, care and loyalty when evaluating the appropriate  action to be taken
when faced with such conflicts.


ITEM 2.   PROPERTIES

     The  Partnership  does not own any  properties.  Generally,  the  mortgages
underlying the  Partnership's  mortgage  investments are primarily  non-recourse
first liens on multifamily residential developments or retirement homes.


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 a vote of the Partnership's Unitholders during
the fourth quarter of 2002.

<PAGE>6
                                     PART II

ITEM 5.   MARKET FOR REGISTRANT'S SECURITIES AND RELATED SECURITY HOLDER
          MATTERS

Principal Market and Market Price for Units and Distributions
-------------------------------------------------------------

     The depository units of Limited Partnership interests ("Limited Partnership
Units") are listed for trading on the American Stock Exchange ("AMEX") under the
trading symbol of "AIA." The high and low trade prices for the Units as reported
on AMEX and the distributions,  as applicable, for each quarterly period in 2002
and 2001 were as follows:

                                                             Amount of
                                      2002                 Distribution
Quarter Ended                 High            Low            Per Unit
-------------                 ----            ---            --------
March 31                     $ 2.65         $ 2.30            $ 0.16
June 30                        2.50           2.21              0.05
September 30                   2.39           2.15              0.47
December 31                    2.29           1.55              0.18
                                                              ------
                                                              $ 0.86
                                                              ======

                                                             Amount of
                                      2002                 Distribution
Quarter Ended                 High            Low            Per Unit
-------------                 ----            ---            --------
March 31                     $ 2.60         $ 2.25            $ 0.05
June 30                        2.75           2.40              0.05
September 30                   2.70           2.30              0.17
December 31                    3.00           2.30              0.05
                                                              ------
                                                              $ 0.32
                                                              ======

     Detailed information regarding quarterly distributions is contained in Note
9 of the Notes to  Financial  Statements  (filed in  response  to Item 8 hereof)
incorporated by reference herein.

     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.  However, in August 2002, the Partnership announced that
regular net cash flow  distributions  for the third and fourth  quarters of 2002
were being  temporarily  retained to fund the Partnership's  operating  expenses
during the period of reduced  cash flows while  mortgages  are being put to HUD.
Quarterly  net cash  flow  distributions  are  expected  to  resume in the first
quarter of 2003. Proceeds from mortgage dispositions and debenture  redemptions,
if any, are expected to be  distributed  to investors as usual in the quarter in
which such proceeds are received.

     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
Partnership's  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 in which the  monthly
mortgage  payment  receipts are temporarily  invested,  by the General  Partner,
prior to the payment of quarterly distributions,  (2) the reduction in the asset
base resulting from monthly mortgage payments received or mortgage dispositions,
(3) variations in the cash flow  attributable  to the  delinquency or default of
Insured  Mortgages,  the timing of receipt of  debentures,  the interest rate on
debentures  and  debenture  redemptions,  and (4)  changes 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.

<PAGE>7

     As of December 31, 2002, there were approximately 6,800 Unitholders.

     The  Partnership  has no  compensation  plans  or  individual  compensation
arrangements under which equity securities of the Partnership are authorized for
issuance.


ITEM 6.   SELECTED FINANCIAL DATA
          (Dollars in thousands, except per Unit amounts)
<TABLE>
<CAPTION>
                                                            For the years ended December 31,
                                               2002         2001          2000          1999         1998
                                               ----         ----          ----          ----         ----
<S>                                         <C>          <C>           <C>           <C>          <C>
Income                                      $  1,857     $  2,215      $  2,279      $  2,354     $  3,191

Net gains from
 mortgage dispositions                           386          190           188            67        1,290

Net earnings                                   1,849        1,955         2,011         1,925        3,978

Net earnings per Limited
  Partnership Unit - Basic (1)              $   0.18     $   0.19      $   0.20      $   0.19     $   0.39

Distributions per Limited
  Partnership Unit (1)(2)                   $   0.86     $   0.32      $   0.20      $   0.36     $   1.29



                                                                    As of December 31,
                                               2002         2001          2000          1999         1998
                                               ----         ----          ----          ----         ----

Total assets                                $ 18,408     $ 24,138      $ 25,857      $ 26,416     $ 28,735

Partners' equity                              16,492       23,530        25,271        25,422       27,750
</TABLE>

(1)  Calculated  based upon the weighted  average number of Limited  Partnership
     Units outstanding.

(2)  Includes  distributions  due the Unitholders for the  Partnership's  fiscal
     years  ended  December  31,  2002,  2001,  2000,  1999 and 1998  which were
     partially paid  subsequent to each year end. See Notes 8 and 9 of the Notes
     to Financial Statements.

     The selected  income  statement  data  presented  above for the years ended
December 31, 2002,  2001 and 2000,  and the  selected  balance  sheet data as of
December 31, 2002 and 2001, are derived from, and are qualified by, reference to
the Partnership's  financial  statements,  which are included  elsewhere in this
Form 10-K. The selected  income  statement data for the years ended December 31,
1999 and 1998, and the selected balance sheet data as of December 31, 2000, 1999
and 1998 are derived from audited  financial  statements not included as part of
this Annual Report on Form 10-K.  This data should be read in  conjunction  with
the financial statements and the notes thereto.

<PAGE>8

ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
          AND RESULTS OF OPERATIONS

General
-------

     The  following  discussion  and analysis  contains  statements  that may be
considered  forward  looking.  These  statements  contain  a number of risks and
uncertainties  as  discussed  herein  and in Item 1 of this Form 10-K that could
cause actual results to differ materially.

Mortgage Investments
--------------------

     The   Partnership's   investment  in  Insured  Mortgages  is  comprised  of
participation  certificates  evidencing a 100% undivided  beneficial interest in
government  insured  multifamily  mortgages  issued or sold  pursuant to Federal
Housing  Administration   ("FHA")  programs  ("FHA-Insured   Certificates")  and
FHA-insured  mortgage loans ("FHA-Insured  Loans"). The mortgages underlying the
FHA-Insured  Certificates and FHA-Insured Loans are primarily non-recourse first
liens on multifamily residential developments or retirement homes.

     As of March 1, 2003, all of the Insured  Mortgages held by the  Partnership
are eligible for assignment to HUD (i) as a default  assignment or (ii) pursuant
to Section  221(g)(4) of the National  Housing Act (the "Section 221  Program").
Under the Section 221  Program,  a mortgagee  has the right to assign a mortgage
("put") to the United States Department of Housing and Urban Development ("HUD")
at the expiration of 20 years from the date of final  endorsement  ("Anniversary
Date") if the  mortgage  is not in  default  at such  time.  The  mortgagee  may
exercise  its  option to put the  mortgage  to HUD  during  the one year  period
subsequent to the Anniversary  Date. This assignment  procedure is applicable to
an  Insured  Mortgage,  which  had a firm  or  conditional  commitment  for  HUD
insurance  benefits on or before  November 30, 1983.  Any mortgagee  electing to
assign an Insured Mortgage to HUD receives, in exchange therefor, HUD debentures
having a total face value equal to (i) the then outstanding principal balance of
the Insured  Mortgage (ii) plus accrued  interest on the mortgage to the date of
assignment ("Debenture Issuance Date"). These HUD debentures generally mature 10
years  from  the  date of  assignment  and  bear  interest  at a rate  announced
semi-annually  by HUD in the Federal  Register  ("going  Federal  rate") at such
date.  AIM  85  is  the  named  mortgagee  for  the  Partnership's   FHA-Insured
Certificates.  AIM 85 is responsible  for  transferring  to the  Partnership the
related HUD insurance claim proceeds.  Debenture interest is expected be paid to
the  Partnership in the month it is received by AIM 85.  Debenture  proceeds are
expected to be paid to the Partnership in the month the debenture is redeemed by
HUD or sold by AIM 85. Based on the  recommendation  of CMSLP,  the sub-advisor,
and the  consent of the  Advisor  the  General  Partner may elect to put Insured
Mortgages to HUD,  based upon, in general,  but not limited to, (i) the interest
rates on  mortgages,  (ii) the interest  rates on  debentures  issued by HUD and
(iii) the  costs  and  risks  associated  with  continuing  to hold the  Insured
Mortgages.

     Once the  servicer  of an Insured  Mortgage  has filed an  application  for
insurance  benefits  ("HUD put date") under the Section 221 program on behalf of
the Partnership,  the Partnership  will no longer receive the monthly  principal
and interest on the applicable  mortgage,  and instead, HUD will begin receiving
the  monthly  principal  and  interest.  HUD issues  debentures  at the time the
mortgage  is  assigned  to HUD  (approximately  30 days after the HUD put date);
however, the debentures are not transferred to the mortgagee until HUD completes
its assignment  process of the Insured Mortgage.  Based on the General Partner's
experience,  HUD's assignment process is generally six to eighteen months. After
HUD completes its assignment process for the Insured Mortgage,  HUD transfers to
the mortgagee (i) HUD debentures, as discussed above, (ii) plus cash for accrued
interest  on the  debentures  at the  going  Federal  rate,  from the  Debenture
Issuance  Date to the  most  current  interest  payment  date.  Thereafter,  the
mortgagee  receives interest on the debentures on the semi-annual  payment dates
of January 1 and July 1. The going Federal rate for HUD debentures  issued under
the  Section  221  Program  for the period  January 1 through  June 30, 2002 was
6.375%;  for the period July 1 through December 31, 2002 it was 6.625%;  and for
the period  January 1 through June 30, 2003 it is 5.75%.  The  Partnership  will
recognize a gain on a mortgage  assignment at the time it receives  notification

<PAGE>9

that the assignment has been approved.  HUD assignment approval generally occurs
when HUD transfers the debentures to the mortgagee  and/or when the  Partnership
receives  cash for the  accrued  interest  on the  debentures.  The  Partnership
recognizes a loss on a mortgage  assignment when it becomes probable that a loss
will be incurred.  The gain or loss  recognized  is generally  equal to proceeds
received from HUD, as discussed  above,  less the amortized  cost of the Insured
Mortgage.

     Pursuant to the terms of the Partnership  Agreement,  the Partnership  must
terminate  and  dissolve  after  disposition  of all Insured  Mortgages  and HUD
debentures  held in its portfolio,  but no later than December 31, 2008. Most of
the  Insured  Mortgages  held by the  Partnership  have  been  put to HUD by the
respective servicers,  as discussed below. The Partnership expects to dispose of
any  remaining  mortgages  and HUD  debentures  prior to the  December  31, 2008
partnership termination date. Early prepayment by HUD of all HUD debentures held
by the  Partnership  may  effect an early  termination  and  dissolution  of the
Partnership  before the stated  termination  date of  December  31,  2008.  As a
result,  Unitholders'  yield to maturity on their respective  investments in the
Partnership  may  be  adversely  affected  by  such  early  termination  of  the
Partnership.

     As of  December  31,  2002,  the  Partnership  had  invested  in 8  Insured
Mortgages,  with an aggregate  amortized cost of approximately  $14.2 million, a
face value of  approximately  $17.3  million  and a fair value of  approximately
$17.4 million, as discussed below.

     The  following is a discussion of the types of the  Partnership's  mortgage
investments, along with the risks related to each type of investment:

Investment in FHA-Insured Loans
-------------------------------

     Listed below is the Partnership's aggregate investment in FHA-Insured Loans
as of December 31, 2002 and 2001:
<TABLE>
<CAPTION>
                                                               December 31,
                                                      2002                     2001
                                                      ----                     ----
<S>                                              <C>                      <C>
Number of
  Acquired Insured Mortgages                                3                        3
  Originated Insured Mortgage (1)                           -                        1
Amortized Cost                                   $  7,507,672             $ 12,427,801
Face Value                                          9,407,103               14,428,107
Fair Value                                          9,419,737               13,846,281
</TABLE>

(1)  In July 2002, the mortgage on Creekside Village Apartments was prepaid. The
     Partnership  received  net  proceeds  of  approximately  $4.9  million  and
     recognized a gain of approximately  $96,000 for the year ended December 31,
     2002.  A  distribution  of  approximately  $0.47  per Unit  related  to the
     prepayment  of this  mortgage was  declared in  September  2002 and paid to
     Unitholders in November 2002.

     As of March 1, 2003, all of the FHA-Insured  Loans are current with respect
to payment of  principal  and  interest,  except for the  mortgage  on Town Park
Apartments,  which is  delinquent  with respect to the February  2003 payment of
principal and interest.  This mortgage is eligible under the Section 221 Program
with an anniversary date in October 2002. The Partnership  expects this mortgage
to be put to HUD, if not otherwise  disposed,  by the servicer during the second
quarter of 2003.

<PAGE>10

The mortgages discussed below are included in the table above.

     The Section 221 Program
     -----------------------

     a. Issuance of debenture
        ---------------------

     In February 2003, HUD transferred assignment proceeds to the Partnership in
the  form of a  6.375%  debenture  in  exchange  for the  mortgage  on  Eastdale
Apartments.  The servicer of this mortgage  filed an  application  for insurance
benefits under the Section 221 Program in June 2002. The debenture,  with a face
value of approximately  $6.1 million,  pays interest  semi-annually on January 1
and July 1 with a maturity  date of June 26, 2012.  The  debenture may be called
prior to its maturity date. A distribution  will be declared after the debenture
proceeds are received. In February 2003, the Partnership received  approximately
$201,000 in cash of accrued interest on this debenture.  The Partnership expects
to recognize a gain of  approximately  $1.2 million  during the first quarter of
2003. The amortized  cost of the mortgage on Eastdale  Apartments is included in
Investment  in  FHA-Insured  Loans  on the  Partnership's  balance  sheet  as of
December 31, 2002.

     b. Mortgages in the HUD assignment process
        ---------------------------------------

      The mortgage on North River Place was put to HUD under the Section 221
Program by the servicer in June 2002. The aggregate face value of this mortgage
was approximately $2.8 million as of the HUD put date. The Partnership no longer
receives monthly principal and interest from mortgages that are put to HUD under
the Section 221 Program. HUD receives the monthly principal and interest and the
Partnership earns semi-annual interest on debentures issued by HUD, as discussed
above. The Partnership has not received approval for this assignment as of March
1, 2003, and will continue to accrue interest on the mortgage until the
debenture is transferred to the mortgagee and the Partnership begins receiving
the debenture interest. The amortized cost of this mortgage is included in
Investment in FHA-Insured Loans on the Partnership's balance sheet as of
December 31, 2002.

Investment in FHA-Insured Certificates
--------------------------------------

      Listed below is the Partnership's aggregate investment in FHA-Insured
Certificates as of December 31, 2002 and 2001:
<TABLE>
<CAPTION>
                                                               December 31,
                                                      2002                     2001
                                                      ----                     ----
<S>                                               <C>                     <C>
Number of mortgages (1)(2)                                  5                        6
Amortized Cost                                    $ 6,685,273             $  8,415,866
Face Value                                          7,936,376               10,037,064
Fair Value                                          7,966,438                9,727,346
</TABLE>

(1)  In December  2002, the mortgage on Bay Pointe  Apartments was prepaid.  The
     Partnership  received  net  proceeds  of  approximately  $1.9  million  and
     recognized a gain of approximately $290,000 for the year ended December 31,
     2002.  A  distribution  of  approximately  $0.18  per Unit  related  to the
     prepayment  of this  mortgage was declared in December 2002 and was paid to
     Unitholders in February 2003.
(2)  In January 2003, the Partnership  received assignment proceeds from HUD for
     the mortgage on Westbrook Apartments. The servicer of this mortgage filed a
     Notice of Election to Assign in  November  2002 due to its default  status.
     The Partnership received net proceeds of approximately $1.5 million,  which
     included  90% of the  unpaid  principal  balance  of  this  mortgage,  plus
     interest  at the  debenture  rate of 9.875%  from  September  2002  through
     January 2003. The remaining amount due from HUD is  approximately  $150,000
     (representing  9% of the unpaid  principal  balance)  and is expected to be
     received during the next 12 months. The Partnership  expects to recognize a
     gain of approximately  $228,000 for the first quarter 2003. The Partnership
     expects to declare a distribution of  approximately  $0.14 per Unit related
     to this  assignment in March 2003 and expects to pay to  Unitholders in May
     2003.

     As of March 1, 2003, all of the Partnership's FHA-Insured Certificates were
current with respect to the payment of principal and interest.

<PAGE>11

The mortgages discussed below are included in the table above.

     The Section 221 Program
     -----------------------

     a. Issuance of Debenture
        ---------------------

     In February 2003, HUD transferred assignment proceeds to AIM 85 in the form
of a 6.375%  debenture  in  exchange  for the  mortgage  on  Baypoint  Shoreline
Apartments. The mortgage on Baypoint Shoreline Apartments was beneficially owned
50% by the Partnership and 50% by AIM 85. The servicer of this mortgage filed an
application  for insurance  benefits under the Section 221 Program in June 2002.
The debenture,  with a face value of approximately  $1.8 million,  pays interest
semi-annually on January 1 and July 1 with a maturity date of June 27, 2012. The
debenture  may be called prior to its  maturity  date.  A  distribution  will be
declared  after the  debenture  proceeds  are  received.  Since the  mortgage on
Baypoint  Shoreline  Apartments was owned 50% by the  Partnership and 50% by AIM
85, approximately  $906,000 of the debenture face is due to the Partnership.  In
February 2003, the Partnership received approximately $29,000 in cash of accrued
interest on this debenture from AIM 85. The  Partnership  expects to recognize a
gain of approximately  $131,000 during the first quarter of 2003. The fair value
of the mortgage on Baypoint  Shoreline  Apartments  is included in Investment in
FHA-Insured  Certificates on the Partnership's  balance sheet as of December 31,
2002.

     b. Mortgages in the HUD assignment process
        ---------------------------------------

     The mortgages on Brougham  Estates and College Green Apartments were put to
HUD under the Section 221 Program by the respective  servicers in February 2003.
The aggregate face value of these mortgages was approximately $3.7 million as of
the HUD put date.  The  Partnership  no longer  receives  monthly  principal and
interest from mortgages  that are put to HUD under the Section 221 Program.  HUD
receives  the  monthly   principal  and  interest  and  the  Partnership   earns
semi-annual  interest on  debentures  issued by HUD,  as  discussed  above.  The
Partnership has not received approval for these assignments as of March 1, 2003,
and will continue to accrue interest on these mortgages until the debentures are
transferred to the mortgagee and the Partnership  begins receiving the debenture
interest.  The fair  value of these  mortgages  is  included  in  Investment  in
FHA-Insured  Certificates on the Partnership's  balance sheet as of December 31,
2002.

     c. Remaining mortgages eligible for assignment
        -------------------------------------------

     The Partnership's  mortgage portfolio includes one FHA-Insured Certificate,
Kaynorth Apartments,  eligible under the Section 221 Program with an anniversary
date in September 2002. The Partnership  expects this mortgage to be put to HUD,
if not otherwise disposed, by the servicer during the second quarter of 2003.

Due from affiliate
------------------

     The  mortgage  on Fox Run  Apartments  was  beneficially  owned  50% by the
Partnership  and  50% by AIM  85.  A  7.125%  debenture,  with a face  value  of
approximately  $2.4  million,  was issued by HUD to AIM 85 in December 2000 with
interest  payable  semi-annually  on January 1 and July 1. In January 2002,  the
debenture was liquidated at par value.  The Partnership  received  approximately
$1.2  million for its share of the  debenture  proceeds,  including  interest of
approximately $42,000. A distribution of approximately $0.11 per Unit related to
the receipt of these proceeds was declared in March 2002 and paid to Unitholders
in May 2002.

Results of Operations
---------------------

2002 compared to 2001
---------------------

     Net earnings  decreased by  approximately  $106,000 for 2002 as compared to
2001 primarily due to a decrease in mortgage investment income, partially offset
by an increase in gains on mortgage dispositions, as discussed below.

<PAGE>12

     Mortgage investment income decreased by approximately  $292,000 for 2002 as
compared to 2001 primarily due to a reduction in the mortgage base. The mortgage
base  decreased  due to the  prepayment  of the  mortgages on Creekside  Village
Apartments   and  Bay  Pointe   Apartments  in  July  2002  and  December  2002,
respectively.  The  aggregate  principal  balance  of these  two  mortgages  was
approximately  $6.8 million,  representing  an  approximate  30% decrease in the
aggregate principal balance of the total mortgage portfolio since December 2001.

     Interest and other income  decreased by  approximately  $65,000 for 2002 as
compared  to 2001.  This  decrease  is  primarily  due to a decrease in interest
earned on the HUD debenture due from an affiliate, as discussed above, partially
offset by an increase in interest earned on the temporary investment of mortgage
disposition proceeds prior to distribution.

     Asset management fee to related parties decreased by approximately  $29,000
for 2002 as compared to 2001  primarily due to a reduction in the mortgage base,
as previously discussed.

     General and administrative  expenses decreased by approximately $28,000 for
2002 as compared to 2001  primarily due to a decrease in overhead costs directly
related to the size of the mortgage base.

     Gains on mortgage dispositions increased by approximately $196,000 for 2002
as  compared  to  2001.  During  2002,  the  Partnership   recognized  gains  of
approximately  $386,000 on the prepayment of the mortgages on Creekside  Village
Apartments and Bay Pointe Apartments.  During 2001, the Partnership recognized a
gain of  approximately  $190,000 on the  prepayment of the mortgage on Berryhill
Apartments.

2001 compared to 2000
---------------------

     Net  earnings  decreased by  approximately  $56,000 for 2001 as compared to
2000  primarily due to a decrease in mortgage  investment  income,  as discussed
below.

     Mortgage investment income decreased by approximately  $154,000 for 2001 as
compared to 2000 primarily due to a reduction in the mortgage base. The mortgage
base  decreased due to the  assignment of the mortgage on Fox Run  Apartments in
December  2000 and the  prepayment  of the mortgage on Berryhill  Apartments  in
September  2001.  The  aggregate  principal  balance of these two  mortgages was
approximately  $2.4  million,  representing  an  approximate  9% decrease in the
aggregate principal balance of the total mortgage portfolio since November 2000.

     Interest and other income  increased by  approximately  $90,000 for 2001 as
compared to 2000.  This  increase is  primarily  due to the timing of  temporary
investment of mortgage disposition proceeds prior to distribution.

     Asset management fee to related parties decreased by approximately  $13,000
for 2001 as compared to 2000  primarily due to a reduction in the mortgage base,
as previously discussed.

     Gains on mortgage  dispositions  increased by approximately $2,000 for 2001
as compared to 2000. In 2001, a gain of  approximately  $190,000 was  recognized
from the prepayment of the mortgage on Berryhill Apartments, as discussed above.
In 2000, a gain of approximately  $188,000 was realized on the assignment of the
mortgage on Fox Run Apartments, as previously discussed.

Liquidity and Capital Resources
-------------------------------

     The Partnership's  remaining Insured Mortgages may be put to HUD by October
2003, if not otherwise disposed, as previously discussed. As these mortgages are
put to HUD, the Partnership's net cash flows could be significantly  reduced for
several  months.  As a  result,  net cash flow  distributions  for the third and
fourth  quarters of 2002 were  temporarily  retained  to fund the  Partnership's
operating  expenses during the period of reduced cash flows.  Quarterly net cash
flow distributions are expected to resume in the first quarter of 2003. Proceeds

<PAGE>13

from mortgage dispositions and debenture redemptions, if any, are expected to be
distributed  to  investors  as usual in the quarter in which such  proceeds  are
received.

     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
Partnership's  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 in which the  monthly
mortgage  payment  receipts  are  temporarily  invested  prior to the payment of
quarterly  distributions,  (2) the  reduction in the asset base  resulting  from
monthly mortgage payments received or mortgage  dispositions,  (3) variations in
the cash flow  attributable to the delinquency or default of Insured  Mortgages,
the  timing of  receipt of  debentures,  the  interest  rate on  debentures  and
debenture redemptions,  and (4) changes 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.

     Since the  Partnership  is obligated to distribute the proceeds of mortgage
prepayments,  sales and  insurance  on  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.

Cash Flow - 2002 compared to 2001
---------------------------------

     Net cash  provided  by  operating  activities  decreased  by  approximately
$776,000 in 2002 as compared to 2001 primarily due to lower mortgage  investment
income resulting from a reduction in the mortgage base, as discussed previously,
and an increase in receivables and other assets of approximately  $424,000.  The
increase in receivables  and other assets is due to an increase in principal and
interest accrued for the mortgages awaiting  assignment to HUD under the Section
221 Program, as previously discussed.

     Net cash provided by investing  activities  increased by approximately $6.7
million for 2002 as compared to 2001,  primarily  due to an increase in proceeds
received from the prepayment of mortgages and the receipt of debenture  proceeds
from AIM 85 in 2002, as discussed above.

     Net cash used in  financing  activities  increased  by  approximately  $4.2
million for 2002 as compared to 2001 due to an increase in distributions paid to
partners.

Cash Flow - 2001 compared to 2000
---------------------------------

     Net cash provided by operating activities increased by approximately
$7,000 in 2001 as compared to 2000.

     Net cash provided by investing  activities  increased by approximately $1.2
million for 2001 as compared to 2000,  due to the increase in proceeds  received
from the disposition of mortgages, as previously discussed.

     Net cash used in financing activities  increased by approximately  $824,000
for  2001 as  compared  to 2000  due to an  increase  in  distributions  paid to
partners.

Critical Accounting Policy
--------------------------

     The Partnership's significant accounting polices are described in Note 2 to
the Financial Statements.  The Partnership believes its most critical accounting
policy (a critical  accounting  policy being one that is both very  important to
the portrayal of the Partnership's financial condition and results of operations
and requires management's most difficult,  subjective,  or complex judgments) is
the determination of fair value of Insured Mortgages.

<PAGE>14

-    Fair Value of Insured Mortgages - The Partnership  estimates the fair value
     of its Insured Mortgages internally. The Partnership uses a discounted cash
     flow methodology to estimate the fair value.  This requires the Partnership
     to  make  certain   estimates   regarding   discount   rates  and  expected
     prepayments.  The cash flows were discounted using a discount rate that, in
     the Partnership's  view, was commensurate  with the market's  perception of
     risk and value.  The Partnership used a variety of sources to determine its
     discount rate including:  (i)  institutionally-available  research reports,
     and (ii)  communications  with dealers and active insured mortgage security
     investors  regarding the valuation of comparable  securities.  Increases in
     the  discount  rate used by the  Partnership  would  generally  result in a
     corresponding  decrease  in the  fair  value of the  Partnership's  insured
     mortgages.  Decreases in the discount  rate used by the  Partnership  would
     generally  result  in a  corresponding  increase  in the fair  value of the
     Partnership's  insured  mortgages.   The  Partnership  also  makes  certain
     assumptions regarding the prepayment speeds of its Insured Mortgages.  In a
     low interest rate environment,  mortgages are more likely to prepay even if
     the mortgage contains prepayment penalties.  In general, if the Partnership
     increases  its  assumed  prepayment  speed,  the fair value of the  Insured
     Mortgages  will  decrease.   If  the  Partnership   decreases  its  assumed
     prepayment speed, the fair value of the Insured Mortgages will increase.


Recent Accounting Pronouncements
--------------------------------

     In January  2003,  the FASB  issued  FASB  Interpretation  ("FIN")  No. 46,
"Consolidation of Variable Interest  Entities",  an interpretation of Accounting
Research  Bulletin  No.  51,  "Consolidated  Financial  Statements."  FIN No. 46
explains  how to  identify  variable  interest  entities  and how an  enterprise
assesses  its  interests  in a  variable  interest  entity to decide  whether to
consolidate that entity.  This Interpretation  requires existing  unconsolidated
variable interest entities to be consolidated by their primary  beneficiaries if
the entities do not effectively  disperse risks among parties involved.  FIN No.
46 is effective immediately for variable interest entities created after January
31, 2003, and to variable  interest  entities in which an enterprise  obtains an
interest after that date. The Interpretation applies in the first fiscal year or
interim period beginning after June 15, 2003, to variable  interest  entities in
which an enterprise  holds a variable  interest that it acquired before February
1, 2003.  The  Partnership  does not expect the adoption of FIN No. 46 to have a
material effect on its financial position or results of operations.


<PAGE>15


ITEM 7A.  QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

     The Partnership's  principal market risk is exposure to changes in interest
rates in the U.S. Treasury market. The Partnership will experience  fluctuations
in the market value of its assets  related to (i) changes in the interest  rates
of U.S.  Treasury  securities,  (ii) changes in the spread  between the interest
rates on U.S.  Treasury  securities and the interest rates on the  Partnership's
Insured Mortgages, and (iii) changes in the weighted average life of the Insured
Mortgages,  determined by reviewing the  attributes of the Insured  Mortgages in
relation to the current market interest rates.  The weighted average life of the
Insured  Mortgages  decreased as of December  31, 2002  compared to December 31,
2001, due to the lower market interest rates,  which may imply faster prepayment
rates, and other attributes of the Partnership's Insured Mortgages.

     The  Partnership   has  changed  its  method  of  presenting   market  risk
disclosures  from those  disclosures  presented  in the December 31, 2001 Annual
Report on Form 10-K. The Partnership  believes that the market risk  disclosures
presented  below  provide more  meaningful  information  to its  Unitholders  in
assessing the affect of changes in interest rates on the values of its assets.

     As of December 31, 2002,  the  weighted  average life of the U.S.  Treasury
securities that were used to value the insured mortgage  securities were shorter
than those used at December  31,  2001 due to lower  market  interest  rates and
other loan attributes of the underlying insured mortgage securities,  which made
the likelihood of the mortgage assets prepaying  greater than the previous year.
If the  Partnership  assumed that the discount  rate used to determine  the fair
values of its insured mortgage securities  increased by 100 basis points and 200
basis  points,  the  increase  in the  discount  rate would have  resulted  in a
corresponding  decrease in the fair values of its insured mortgage securities by
approximately   $23,000  (or  0.1%)  and  approximately   $46,000  (or  0.3%),
respectively,  as of December  31,  2002.  A 100 basis point and 200 basis point
increase in the discount rate would have resulted in a corresponding decrease in
the  fair  values  of  the   Partnership's   insured   mortgage   securities  by
approximately  $987,000  (or 4.2%) and  approximately  $1.9  million  (or 8.1%),
respectively, as of December 31, 2001.



ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The information required by this Item is set forth in this Annual Report on
Form 10-K commencing on page 27.


ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
          AND FINANCIAL DISCLOSURE

     On May 8,  2002,  the Board of  Directors  of the  General  Partner  of the
Partnership   dismissed   Arthur   Andersen  LLP  ("Arthur   Andersen")  as  the
Partnership's   independent   auditors.   Arthur  Andersen  had  served  as  the
Partnership's independent accountants since 1991.

     Arthur  Andersen's  reports on the Partnership's  financial  statements for
each of the  past two  fiscal  years  did not  contain  an  adverse  opinion  or
disclaimer  of  opinion,  nor were such  reports  qualified  or  modified  as to
uncertainty, audit scope or accounting principles.

     During each of the  Partnership's  two most recent fiscal years and through
the date of Arthur Andersen's  dismissal,  there were: (i) no disagreements with
Arthur Andersen on any matter of accounting  principles or practices,  financial
statements disclosure,  or auditing scope or procedure which, if not resolved to
Arthur Andersen's satisfaction,  would have caused them to make reference to the
subject matter in connection  with their report on the  Partnership's  financial
statements for such years;  and (ii) there were no reportable  events as defined
in Item 304(a)(1)(v) of Regulation S-K.

     The  Partnership  had provided Arthur Andersen with a copy of the foregoing
disclosure.  The  Partnership  requested  Arthur  Andersen  to furnish it with a

<PAGE>16

letter addressed to the SEC stating whether it agreed with the above statements.
A copy of that letter  dated May 9, 2002 was filed as Exhibit 16 to the Form 8-K
filed with the SEC by the Partnership on May 10, 2002.

     On June 5, 2002, the General Partner of the  Partnership  appointed Ernst &
Young LLP to audit the  Partnership's  financial  statements for the year ending
December  31,  2002.  During the years ended  December 31, 2001 and 2000 and the
subsequent  interim period  through June 5, 2002,  neither the  Partnership  nor
anyone on its behalf consulted Ernst & Young LLP with respect to the application
of  accounting  principles  to  a  specified  transaction  either  completed  or
proposed,  or  the  type  of  audit  opinion  that  might  be  rendered  on  the
Partnership's  financial  statements or any other  matters or reportable  events
listed in Items 304(a)(2)(1) and (11) of Regulation S-K.


<PAGE>17
                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OT THE REGISTRANT

     The  Partnership  has no executive  officers or directors.  The Partnership
does not directly  employ any persons  responsible for managing or operating the
Partnership or for providing  services  relating to day to day business affairs.
The affairs of the Partnership are managed by its General Partner,  CRIIMI, Inc.
a wholly-owned  subsidiary of CRIIMI MAE, a corporation  whose shares are listed
on the New  York  Stock  Exchange.  CRIIMI,  Inc.  holds a  general  partnership
interest of 2.9%.

     The business of the Partnership is managed by its General Partner while its
portfolio  of  mortgages  is managed by the  Advisor  and CMSLP  pursuant to the
Advisory  Agreements and  Sub-Advisory  Agreements,  respectively,  as discussed
above. A wholly-owned  subsidiary of CRIIMI MAE,  CRIIMI MAE  Management,  Inc.,
provides personnel and  administrative  services to the Partnership on behalf of
the General Partner.

     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.

     The Board of Directors of the General  Partner has  established a committee
(the "Audit  Committee")  consisting  of  independent  directors  (as defined in
Section 121 of the AMEX listing  standards.)  The Audit Committee of the General
Partner has appointed Ernst & Young LLP as the Partnership's  independent public
accountants for the fiscal year ending  December 31, 2003,  such  appointment to
continue at the discretion of the Audit Committee.

     All  directors of the General  Partner are elected  annually by CRIIMI MAE.
All executive officers serve at the discretion of the General Partner. There are
no family relationships among any directors or executive officers of the General
Partner.

     The  following  table  sets  forth  information  concerning  the  executive
officers and the directors of the General Partner as of March 5, 2003:
<TABLE>
<CAPTION>

Name                                        Age                  Position
----                                        ---                  --------
<S>                                         <C>                  <C>
Barry S. Blattman                           40                   Chairman of the Board of Directors,
                                                                   President and Chief Executive Officer

David B. Iannarone                          42                   Executive Vice President,
                                                                   Chief Operating Officer and a Director

Cynthia O. Azzara                           43                   Senior Vice President, Chief Financial Officer and Treasurer

Craig M. Lieberman                          41                   Senior Vice President and
                                                                   Chief Portfolio Risk Officer

Brian L. Hanson                             41                   Senior Vice President

John R. Cooper                              55                   Director

Robert J. Merrick                           57                   Director

Robert E. Woods                             55                   Director
</TABLE>


<PAGE>18

     Barry S.  Blattman  has been  Chairman  of the  Board of  Directors,  Chief
Executive  Officer and President of the General  Partner since January 23, 2003.
Mr. Blattman is the Managing Partner of Brascan Real Estate Financial  Partners.
From 1996 until the end of 2001,  Mr.  Blattman was a Managing  Director of Real
Estate Investment Banking at Merrill Lynch.

     David B.  Iannarone has served as Chief  Operating  Officer and Director of
the General  Partner  since  January 2003 and  Executive  Vice  President of the
General  Partner  since  December  2000,  as Senior Vice  President  and General
Counsel of the General  Partner  from March 1998 to December  2000;  and as Vice
President  and General  Counsel of the General  Partner  from July 1996 to March
1998.

     Cynthia  O.  Azzara has served as Chief  Financial  Officer of the  General
Partner since 1994, as Senior Vice  President of the General  Partner since 1995
and Treasurer of the General Partner since 1997.

     Craig M. Lieberman has served as Senior Vice President and Chief  Portfolio
Risk Officer of the General  Partner since February  2003.  From 2001 to January
2003, Mr. Lieberman was a managing partner for Quantico  Partners.  From 1998 to
2001,  Mr.  Lieberman  served  as the  Director  of  Commercial  Mortgage-Backed
Securitization  for First  Union  Securities.  From  1996 to 1998 Mr.  Lieberman
practiced  as both a  partner  and  counsel  in the law  firm  of  Kilpatrick  &
Stockton, LLP.

     Brian L. Hanson has served as Senior Vice President of the General  Partner
since March 1998; and as Group Vice President of the General  Partner from March
1996 to March 1998.

     John R. Cooper has served as Director  of the General  Partner  since April
2001. Mr. Cooper was Senior Vice  President,  Finance,  of PG&E National  Energy
Group,  Inc. until  February 2003. He had been with PG&E National  Energy Group,
Inc. and its predecessor, U.S. Generating Company, since its inception in 1989.

     Robert J. Merrick has served as Director of the General Partner since 1997.
Mr.  Merrick  has served as Chief  Credit  Officer  and  Director of MCG Capital
Corporation  since February  1998;  Executive Vice President from 1985 and Chief
Credit Officer of Signet Banking  Corporation through 1997. While at Signet, Mr.
Merrick also served as Chairman of the Credit Policy Committee and member of the
Asset and Liability Committee and the Management Committee.

     Robert E. Woods has served as Director of the General  Partner  since 1998.
Mr. Woods has served as Managing  Director and Head of Loan Syndications for the
Americas at Societe  Generale,  New York since 1997,  and as Managing  Director,
Head of Real Estate Capital Markets and  Mortgage-Backed  Securities division at
Citicorp from 1991 to 1997.

Section  16(a)  Beneficial  Ownership  Reporting  Compliance - Section 16 of the
Securities Exchange Act of 1934, as amended,  (the "Exchange Act") requires each
director and executive  officer of the General  Partner and each person who owns
more than 10% of the  Partnership's  Units to  report to the SEC by a  specified
date, his, her or its beneficial  ownership of, and certain  transactions in the
Partnership's  Units.  Based  solely  on  its  review  of  Forms  3, 4 and 5 and
amendments  thereto  furnished to the Partnership,  and written  representations
from certain reporting persons that no Form 5's were required for those persons,
the Partnership  believes that all directors,  executive officers and beneficial
owners of more than 10% of the Partnership's  Units have filed on a timely basis
Forms 3, 4 and 5 as required in the fiscal year ended December 31, 2002.

<PAGE>19

ITEM 11.  EXECUTIVE COMPENSATION

     The  Partnership  does not have any  directors or executive  officers.  The
Partnership  does not directly  employ any persons  responsible  for managing or
operating  the  Partnership  or for  providing  services  relating to day to day
business   affairs.   The  General  Partner   provides  such  services  for  the
Partnership. None of the directors or executive officers of the General Partner,
however,  received  compensation  from the Partnership,  and the General Partner
does not receive  reimbursement  from the  Partnership  for any portion of their
salaries or other  compensation.  The  Partnership's  portfolio  of mortgages is
managed  by the  Advisor  and CMSLP  pursuant  to the  Advisory  Agreements  and
Sub-Advisory  Agreement,   respectively,  as  discussed  above.  A  wholly-owned
subsidiary of CRIIMI MAE, CRIIMI MAE  Management,  Inc.  provides  personnel and
administrative services to the Partnership on behalf of the General Partner. The
Partnership  reimburses  CRIIMI MAE  Management,  Inc. for these  services on an
actual cost basis.

     The fee paid by the Partnership to the Advisor for services performed under
the  Advisory  Agreements  (the  "Advisory  Fee"),  is  equal  to  0.95%  of the
Partnership's  Total Invested Assets (as defined in the Partnership  Agreement).
The Advisor pays CMSLP as sub-advisor,  a fee of 0.28% (the "Sub-Advisory  Fee")
of Total Invested Assets for services performed under the Sub-Advisory Agreement
from its Advisory Fee. The Partnership is not liable for paying the Sub-Advisory
Fee to CMSLP.  Additional information concerning these fees is contained in Part
II, Item 7,  Management's  Discussion  and Analysis of Financial  Condition  and
Results of Operations and in Note 8 of the Notes to Financial  Statements (filed
in  response  to Item 8  hereof),  all of which are  incorporated  by  reference
herein.


ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, MANAGEMENT AND
          RELATED UNITHOLDER MATTERS

The Partnership does not provide for equity compensation plans.

(a)  The following table sets forth certain information regarding the beneficial
     ownership  of Units as of March 5,  2003,  by  holders  of more  than  five
     percent (5%) of the Partnership's Units.

<TABLE>
<CAPTION>
                                                           Number of           Percent of
          Name                        Address                Units               Class
          ----                        -------                -----               -----
<S>                             <C>                          <C>                 <C>
Financial and Investment        417 St. Joseph Street
Management Group, Ltd. *        P.O. Box 40
                                Suttins Bay, MI 49682        2,051,262           20.51%
* An Investment Advisor
</TABLE>

(b)  The following table sets forth certain information regarding the beneficial
     ownership  of the  Partnership's  Units as of March 5, 2003 by each  person
     known by the Partnership to be the beneficial  owner of more than 5% of its
     Units,  each director of the General Partner,  each named executive officer
     of the  General  Partner,  and by  affiliates  of the  Partnership.  Unless
     otherwise  indicated,  each Unitholder has sole voting and investment power
     with respect to the Units beneficially owned.

                              Amount and Nature
                                  of Units                   Percentage of Units
Name                         Beneficially Owned                  Outstanding
----                         ------------------                  -----------
CRIIMI MAE                       12,045                              *

*    Less than 1%

(c)  There are no arrangements known to the Partnership,  the operation of which
     may  at  any  subsequent  date  result  in  a  change  in  control  of  the
     Partnership.
<PAGE>20

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

(a)  Transactions with management and others.

     Note 8 of the Notes to Financial  Statements of the Partnership  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 hereby  incorporated  by  reference
     herein.

(b)  Certain business relationships.

     Other than as set forth in Item 11 of this Annual Report on Form 10-K which
     is hereby incorporated by reference herein, the Partnership has no business
     relationship  with  entities  of which the current  General  Partner of the
     Partnership are officers, directors or equity owners.


ITEM 14.  CONTROLS AND PROCEDURES

     Within 90 days prior to the date of filing this Annual Report on Form 10-K,
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.

<PAGE>21
                                     PART IV

ITEM 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

     (a)(1) Financial Statements:
<TABLE>
<CAPTION>
                                                                                                                              Page
Description                                                                                                                  Number
-----------                                                                                                                  ------
<S>                                                                                                                            <C>
Balance Sheets as of December 31, 2002 and 2001 ............................................................................   30

Statements of Income and Comprehensive Income for the years
     ended December 31, 2002, 2001 and 2000 ................................................................................   31

Statements of Changes in Partners' Equity for the years
     ended December 31, 2002, 2001 and 2000 ................................................................................   32

Statements of Cash Flows for the years ended December 31, 2002, 2001 and 2000 ..............................................   33

Notes to Financial Statements ..............................................................................................   34

     (a)(2) Financial Statement Schedules:

         IV - Mortgage Loans on Real Estate ................................................................................   45
</TABLE>

         All other schedules have been omitted because they are not applicable,
         not required, or the information is included in the Financial
         Statements or Notes thereto.

         (a)(3)   Exhibits:

     4.0  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").

     4.1  Agreement of Limited Partnership, incorporated by reference to Exhibit
          3 to the Registration Statement.

     4.2  Form of Depository Receipt,  incorporated by reference to Exhibit 4(b)
          to the Registration Statement.

     4.3  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.

     4.4  Amendments   to   Partnership   Agreement   dated   August  16,  1991,
          incorporated by reference to Exhibit 28(c) to the Partnership's Annual
          Report on Form 10-K for the year ended December 31, 1991.


    10.0  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").

    10.1  Management  Services  Agreement,  dated November 30, 1983, between the
          Partnership and IFI, incorporated by reference to Exhibit 10(c) to the
          Initial Registration Statement.

<PAGE>22

    10.2  Disposition  Services Agreement,  dated November 30, 1983, between the
          Partnership and IFI, incorporated by reference to Exhibit 10(d) to the
          Initial Registration Statement.

    10.3  Agreement,  dated November 30, 1983, among the former managing general
          partner,   the  former   associate   general  partner  and  Integrated
          Resources,  Inc.,  incorporated  by reference to Exhibit  10(e) to the
          Initial Registration Statement.

    10.4  Reinvestment  Plan,   incorporated  by  reference  to  the  Prospectus
          contained in the Registration Statement.

    10.5  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.

    10.6  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.

    10.7  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.

    10.8  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.

    10.9  Purchase Agreement among AIM Acquisition,  the former managing general
          partner,  the former corporate  general partner,  Integrated  Funding,
          Inc. and Integrated  Resources,  Inc. dated as of December 1, 1990, as
          amended January 9, 1991, incorporated by reference to Exhibit 28(a) to
          the  Partnership's  Annual  Report  on Form  10-K for the  year  ended
          December 31, 1990.

    10.10 Purchase  Agreement among CRIIMI,  Inc., 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,  incorporated  by reference to Exhibit 28(b) to the
          Partnership's  Annual Report on Form 10-K for the year ended  December
          31, 1990.

    10.11 Sub-Management  Agreement by and between AIM  Acquisition  and CRI/AIM
          Management,  Inc. dated as of March 1, 1991, incorporated by reference
          to Exhibit 28(d) to the  Partnership's  Annual Report on Form 10-K for
          the year ended December 31, 1992.

    16.0  Letter  from  Arthur  Andersen  LLP to  the  Securities  and  Exchange
          Commission dated May 9, 2002, regarding the General Partner's decision
          to change its  certifying  accountant,  incorporated  by  reference to
          Exhibit 16 to the Partnership's Form 8-K filed on May 10, 2002.

    99.0  Letter to  Securities  and Exchange  Commission  from the  Partnership
          dated March 20,  2002,  regarding  the  representation  received  from
          Arthur  Andersen LLP in performing  the audit of the December 31, 2001
          financial statements, incorporated by reference to Exhibit 99.0 to the
          Partnership's  Annual Report on Form 10-K for the year ended  December
          31, 2001.

<PAGE>23

    99.1  Certification  pursuant  to Section 906 of the  Sarbanes-Oxley  Act of
          2002 from Barry S. Blattman,  Chief  Executive  Officer of the General
          Partner (Filed herewith).

    99.2  Certification  pursuant  to Section 906 of the  Sarbanes-Oxley  Act of
          2002 from Cynthia O. Azzara,  Chief  Financial  Officer of the General
          Partner (Filed herewith).

     (b)  Reports on Form 8-K filed  during the last quarter of the fiscal year:
          None.

          All other items are not applicable.

<PAGE>24
                                   SIGNATURES

     KNOW ALL  PERSONS  BY THESE  PRESENTS,  that each  person  whose  signature
appears below constitutes and appoints Barry S. Blattman,  his attorney-in-fact,
each with the power of substitution  for him in any and all capacities,  to sign
any  amendments  to this  Annual  Report  on Form 10-K and to file the same with
exhibits  thereto  and  other  documents  in  connection  therewith,   with  the
Securities  and Exchange  Commission,  hereby  ratifying and confirming all that
each said attorney-in-fact, or his substitute or substitutes, may do or cause to
be done by virtue hereof.

     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 19, 2003                            /s/Barry S. Blattman
--------------                            --------------------------------------
DATE                                      Barry S. Blattman
                                          Chairman of the Board,
                                          Chief Executive Officer and President
                                          (Principal Executive Officer)


March 20, 2003                            /s/Cynthia O. Azzara
--------------                            --------------------------------------
DATE                                      Cynthia O. Azzara
                                          Senior Vice President,
                                          Chief Financial Officer and Treasurer
                                          (Principal Accounting Officer)


March 19, 2003                            /s/David B. Iannarone
--------------                            --------------------------------------
DATE                                      David B. Iannarone
                                          Executive Vice President,
                                          Chief Operating Officer and a Director



March 19, 2003                            /s/John R. Cooper
--------------                            --------------------------------------
DATE                                      John R. Cooper
                                          Director


March 19, 2003                            /s/Robert J. Merrick
--------------                            --------------------------------------
DATE                                      Robert J. Merrick
                                          Director


March 19, 2003                            /s/Robert E. Woods
--------------                            --------------------------------------
DATE                                      Robert E. Woods
                                          Director
<PAGE>25

     I, Barry S. Blattman,  Chairman of the Board,  Chief Executive  Officer and
President, certify that:

1.   I have  reviewed  this  annual  report  on Form  10-K of  American  Insured
     Mortgage Investors;

2.   Based on my  knowledge,  this  annual  report  does not  contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this annual report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information included in this annual report,  fairly present in all material
     respects the financial  condition,  results of operations and cash flows of
     the registrant as of, and for, the periods presented in this annual report;

4.   The  registrant's  other  certifying  officers  and I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

     a)   Designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during the period in which this annual report
          is being prepared;

     b)   Evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this annual report (the "Evaluation Date"); and

     c)   Presented   in  this   annual   report  our   conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's other certifying  officers and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent functions):

     a)   All  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and

     b)   Any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

6.   The  registrant's  other  certifying  officers and I have indicated in this
     annual report whether there were significant  changes in internal  controls
     or in other  factors  that could  significantly  affect  internal  controls
     subsequent  to the  date  of our  most  recent  evaluation,  including  any
     corrective  actions with regard to  significant  deficiencies  and material
     weaknesses.

                                           AMERICAN INSURED
                                           MORTGAGE INVESTORS
                                           (Registrant)
                                           By: CRIIMI, Inc.
                                               General Partner


Date:  March 19, 2003                      /s/Barry S. Blattman
       --------------                      -------------------------------------
                                           Barry S. Blattman
                                           Chairman of the Board,
                                           Chief Executive Officer and President
<PAGE>26

     I, Cynthia O. Azzara,  Senior Vice President,  Chief Financial  Officer and
Treasurer, certify that:

1.   I have  reviewed  this  annual  report  on Form  10-K of  American  Insured
     Mortgage Investors;

2.   Based on my  knowledge,  this  annual  report  does not  contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this annual report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information included in this annual report,  fairly present in all material
     respects the financial  condition,  results of operations and cash flows of
     the registrant as of, and for, the periods presented in this annual report;

4.   The  registrant's  other  certifying  officers  and I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

     a)   Designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant  including,   its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during the period in which this annual report
          is being prepared;

     b)   Evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this annual report (the "Evaluation Date"); and

     c)   Presented   in  this   annual   report  our   conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's other certifying  officers and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent functions):

     a)   All  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and

     b)   Any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

6.   The  registrant's  other  certifying  officers and I have indicated in this
     annual report whether there were significant  changes in internal  controls
     or in other  factors  that could  significantly  affect  internal  controls
     subsequent  to the  date  of our  most  recent  evaluation,  including  any
     corrective  actions with regard to  significant  deficiencies  and material
     weaknesses.

                                  AMERICAN INSURED
                                  MORTGAGE INVESTORS
                                  (Registrant)
                                  By: CRIIMI, Inc.
                                      General Partner



Date: March 20, 2003             /s/ Cynthia O. Azzara
      --------------             -----------------------------------------------
                                 Cynthia O. Azzara
                                 Senior Vice President, Chief Financial Officer,
                                 and Treasurer
<PAGE>27










                       AMERICAN INSURED MORTGAGE INVESTORS



                              Financial Statements

                        as of December 31, 2002 and 2001

                             and for the Years Ended

                        December 31, 2002, 2001 and 2000







<PAGE>28

                         REPORT OF INDEPENDENT AUDITORS

Partners
American Insured Mortgage Investors


We have audited the  accompanying  balance  sheet of American  Insured  Mortgage
Investors (the Partnership) as of December 31, 2002, and the related  statements
of income and comprehensive income,  changes in partners' equity, and cash flows
for the year then  ended.  Our  audit  also  included  the  financial  statement
schedule listed in the Index at Item 15(a)(2).  These  financial  statements and
schedule  are  the   responsibility   of  the  Partnership's   management.   Our
responsibility  is to  express  an opinion  on these  financial  statements  and
schedule based on our audit.  The financial  statements of the Partnership as of
December 31,  2001,  and for the years ended  December  31, 2001 and 2000,  were
audited by other  auditors  who have ceased  operations  and whose  report dated
March 4, 2002, expressed an unqualified opinion on those statements.

We conducted our audit in accordance with auditing standards  generally accepted
in the United States. 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 audit  provides a  reasonable  basis for our
opinion.

In our opinion,  the 2002 financial statements referred to above present fairly,
in all material respects,  the financial position of the Partnership at December
31, 2002, and the results of its operations and its cash flows for the year then
ended in conformity with accounting  principles generally accepted in the United
States.  Also, in our opinion,  the related financial statement  schedule,  when
considered  in  relation  to the basic  financial  statements  taken as a whole,
presents fairly in all material respects the information set forth therein.



/s/Ernst & Young LLP
McLean, Virginia
March 14, 2003

<PAGE>29

                    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, 2001 and 2000, and the
related  statements  of income and  comprehensive  income,  changes in partners'
equity and cash flows for the years  ended  December  31,  2001,  2000 and 1999.
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  auditing  standards  generally
accepted in the United States.  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, 2001 and 2000, and the results of its operations and its cash flows
for the years  ended  December  31,  2001,  2000 and 1999,  in  conformity  with
accounting principles generally accepted in the United States.

     Our  audits  were made for the  purpose  of forming an opinion on the basic
financial statements taken as a whole. Schedule IV-Mortgage Loans on Real Estate
as of  December  31,  2001 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.



/s/ Arthur Andersen LLP
Vienna, Virginia
March 4, 2002


--------------------------------------------------------------------------------
This is a copy of the audit report  previously  issued by Arthur Andersen LLP in
connection with the  Partnership's  filing of its Annual Report on Form 10-K for
the year ended  December  31, 2001.  This audit report has not been  reissued by
Arthur  Andersen LLP in  connection  with this Annual  Report on Form 10-K.  See
exhibit 16.0 for further discussion.


<PAGE>30


                       AMERICAN INSURED MORTGAGE INVESTORS

                                 BALANCE SHEETS
<TABLE>
<CAPTION>
                                                              December 31,    December 31,
                                                                  2002            2001
                                                              ------------    ------------
                             ASSETS

<S>                                                           <C>             <C>
Investment in FHA-Insured Loans, at amortized cost,
  net of unamortized discount:
    Originated insured mortgages                              $          -    $  4,806,675
    Acquired insured mortgages                                   7,507,672       7,621,126
                                                              ------------    ------------

                                                                 7,507,672      12,427,801

Investment in FHA-Insured Certificates,
  at fair value                                                  7,966,438       9,727,346

Cash and cash equivalents                                        2,252,969         534,890

Receivables and other assets                                       680,850         212,451

Due from affiliate                                                       -       1,235,104
                                                              ------------    ------------

      Total assets                                            $ 18,407,929    $ 24,137,592
                                                              ============    ============



                LIABILITIES AND PARTNERS' EQUITY

Distributions payable                                         $  1,853,782    $    514,940

Accounts payable and accrued expenses                               62,286          92,319
                                                              ------------    ------------

      Total liabilities                                          1,916,068         607,259
                                                              ------------    ------------

Partners' equity:
  Limited partners' equity, 10,000,125 Units authorized,
    issued and outstanding                                      20,710,971      27,515,891
  General partner's deficit                                     (5,500,275)     (5,297,038)
  Accumulated other comprehensive income                         1,281,165       1,311,480
                                                              ------------    ------------

      Total partners' equity                                    16,491,861      23,530,333
                                                              ------------    ------------

      Total liabilities and partners' equity                  $ 18,407,929    $ 24,137,592
                                                              ============    ============
</TABLE>

                   The accompanying notes are an integral part
                         of these financial statements.


<PAGE>31


                       AMERICAN INSURED MORTGAGE INVESTORS

                  STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
                                                               For the years ended December 31,
                                                            2002             2001            2000
                                                        ------------     ------------    ------------
<S>                                                     <C>              <C>             <C>
Income:
  Mortgage investment income                            $  1,818,290     $  2,110,712    $  2,264,907
  Interest and other income                                   38,755          104,224          13,933
                                                        ------------     ------------    ------------

                                                           1,857,045        2,214,936       2,278,840
                                                        ------------     ------------    ------------

Expenses:
  Asset management fee to related parties                    195,466          224,202         237,264
  General and administrative                                 198,606          226,255         219,282
                                                        ------------     ------------    ------------

                                                             394,072          450,457         456,546
                                                        ------------     ------------    ------------

Earnings before gains on mortgage dispositions             1,462,973        1,764,479       1,822,294

Gains on mortgage dispositions                               385,829          190,206         188,455
                                                        ------------     ------------    ------------

     Net earnings                                       $  1,848,802     $  1,954,685    $  2,010,749
                                                        ============     ============    ============

Other comprehensive loss - adjustment to unrealized
  gains on investments in insured mortgages                  (30,315)        (399,261)       (102,162)
                                                        ------------     ------------    ------------
Comprehensive income                                    $  1,818,487     $  1,555,424    $  1,908,587
                                                        ============     ============    ============


Net earnings allocated to:
  Limited partners - 97.1%                              $  1,795,187     $  1,897,999    $  1,952,437
  General partner -   2.9%                                    53,615           56,686          58,312
                                                        ------------     ------------    ------------

                                                        $  1,848,802     $  1,954,685    $  2,010,749
                                                        ============     ============    ============

Net earnings per Limited Partnership Unit - Basic       $       0.18     $       0.19    $       0.20
                                                        ============     ============    ============
</TABLE>

                   The accompanying notes are an integral part
                         of these financial statements.



<PAGE>32


                       AMERICAN INSURED MORTGAGE INVESTORS

                    STATEMENTS OF CHANGES IN PARTNERS' EQUITY

              For the years ended December 31, 2002, 2001 and 2000
<TABLE>
<CAPTION>
                                                                                        Accumulated
                                                                                           Other            Total
                                                        General         Limited        Comprehensive       Partners'
                                                        Partner         Partners           Income           Equity
                                                     -------------    -------------    -------------    -------------
<S>                                                  <C>              <C>              <C>              <C>
Balance, January 1, 2000                             $  (5,256,730)   $  28,865,520    $   1,812,903    $  25,421,693

Net earnings                                                58,312        1,952,437                -        2,010,749

  Adjustment to unrealized gains on
     investments in insured mortgages                            -                -         (102,162)        (102,162)
  Distributions paid or accrued of $0.20 per Unit,
     including return of capital of $0 per Unit            (59,733)      (2,000,025)              -        (2,059,758)
                                                     -------------    -------------    ------------     -------------

Balance, December 31, 2000                              (5,258,151)      28,817,932        1,710,741       25,270,522

Net earnings                                                56,686        1,897,999                -        1,954,685

  Adjustment to unrealized gains on
     investments in insured mortgages                            -                -         (399,261)        (399,261)
  Distributions paid or accrued of $0.32 per Unit,
     including return of capital of $0.13 per Unit         (95,573)      (3,200,040)               -       (3,295,613)
                                                     -------------    -------------    -------------    -------------

Balance, December 31, 2001                              (5,297,038)      27,515,891        1,311,480       23,530,333

Net earnings                                                53,615        1,795,187                -        1,848,802

  Adjustment to unrealized gains on
     investments in insured mortgages                            -                -          (30,315)         (30,315)
  Distributions paid or accrued of $0.86 per Unit,
     including return of capital of $0.68 per Unit        (256,852)      (8,600,107)               -       (8,856,959)
                                                     -------------    -------------    -------------    -------------

Balance, December 31, 2002                           $  (5,500,275)   $  20,710,971    $   1,281,165    $  16,491,861
                                                     =============    =============    =============    =============

Limited Partnership Units outstanding - Basic, as of
    December 31, 2002, 2001 and 2000                                     10,000,125
                                                                         ==========
</TABLE>

                   The accompanying notes are an integral part
                         of these financial statements.


<PAGE>33


                       AMERICAN INSURED MORTGAGE INVESTORS

                            STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                              For the years ended December 31,
                                                                            2002            2001            2000
                                                                        ------------    ------------    ------------
<S>                                                                     <C>             <C>             <C>
Cash flows from operating activities:
   Net earnings                                                         $  1,848,802    $  1,954,685    $  2,010,749
   Adjustments to reconcile net earnings to net cash provided by
      operating activities:
      Gains on mortgage dispositions                                        (385,829)       (190,206)       (188,455)
      Changes in assets and liabilities:
         Increase in due from affiliate, receivables and other assets       (425,912)         (1,667)        (50,797)
         (Decrease) increase in accounts payable and accrued expenses        (30,033)         20,556           4,573
                                                                        ------------    ------------    ------------

            Net cash provided by operating activities                      1,007,028       1,783,368       1,776,070
                                                                        ------------    ------------    ------------

Cash flows from investing activities:
   Proceeds from disposition of mortgages                                  6,769,063       1,184,199               -
   Debenture proceeds received from affiliate                              1,192,617               -               -
   Receipt of mortgage principal from scheduled payments                     267,488         295,445         280,200
                                                                        ------------    ------------    ------------

            Net cash provided by investing activities                      8,229,168       1,479,644         280,200
                                                                        ------------    ------------    ------------

Cash flows from financing activities:
   Distributions paid to partners                                         (7,518,117)     (3,295,613)     (2,471,709)
                                                                        ------------    ------------    ------------

Net increase (decrease) in cash and cash equivalents                       1,718,079         (32,601)       (415,439)

Cash and cash equivalents, beginning of year                                 534,890         567,491         982,930
                                                                        ------------    ------------    ------------

Cash and cash equivalents, end of year                                  $  2,252,969    $    534,890    $    567,491
                                                                        ============    ============    ============


Non cash investing activity:
   50% share of debenture received from HUD in exchange for the
   mortgage on Fox Run Apartments (Debenture was held by
   an affiliate, AIM 85)                                                           -               -       1,192,617
</TABLE>


                   The accompanying notes are an integral part
                         of these financial statements.


<PAGE>34

                       AMERICAN INSURED MORTGAGE INVESTORS

                          NOTES TO FINANCIAL STATEMENTS

1.   ORGANIZATION

     American Insured Mortgage Investors (the "Partnership") was formed pursuant
to a limited partnership agreement  ("Partnership  Agreement") under the Uniform
Limited  Partnership Act 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 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 2.9%. 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  -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") and owns general partner interests of 3.9%, 4.9% and
4.9%, respectively.  The Partnership, AIM 85, AIM 86 and AIM 88 are collectively
referred to as the "AIM Limited Partnerships".

     Prior to November  1988,  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,
2008 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.

<PAGE>35

2.   SIGNIFICANT ACCOUNTING POLICIES

Method of Accounting
--------------------

     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.

Investment in Insured Mortgages
-------------------------------

     The   Partnership's   investment  in  Insured  Mortgages  is  comprised  of
participation  certificates  evidencing a 100% undivided  beneficial interest in
government  insured  multifamily  mortgages  issued or sold  pursuant to Federal
Housing  Administration   ("FHA")  programs  ("FHA-Insured   Certificates")  and
FHA-insured  mortgage loans ("FHA-Insured  Loans"). The mortgages underlying the
FHA-Insured  Certificates and FHA-Insured Loans are primarily non-recourse first
liens on multifamily residential developments or retirement homes.

     Payment  of  principal  and  interest  on  FHA-Insured   Certificates   and
FHA-Insured  Loans is insured by the United  States  Department  of Housing  and
Urban Development ("HUD") pursuant to Title 2 of the National Housing Act.

     As of  December  31,  2002,  the  weighted  average  remaining  term of the
Partnership's investments in FHA-Insured Certificates is approximately 20 years.
However, the partnership agreement states that the Partnership will terminate in
approximately 6 years, on December 31, 2008, unless terminated earlier under the
provisions of the  partnership  agreement.  As the Partnership is anticipated to
terminate  prior  to the  weighted  average  remaining  term of its  FHA-Insured
Certificates, the Partnership does not have the ability or intent, at this time,
to hold  these  investments  to  maturity.  Consequently,  the  General  Partner
believes that the Partnership's  FHA-Insured  Certificates should be included in
the available for sale category.

     In  connection  with  this   classification,   all  of  the   Partnership's
investments  in  FHA-Insured  Certificates  are  recorded  at fair  value  as of
December 31, 2002 and 2001,  with the net  unrealized  gains and losses on these
investments  reported as other comprehensive  income and as a separate component
of  partners'  equity.  Subsequent  increases  or decreases in the fair value of
FHA-Insured  Certificates classified as available for sale will be included as a
separate component of partners' equity. Realized gains and losses on FHA-Insured
Certificates  classified  as available  for sale will continue to be reported in
earnings.

     As of March 1, 2003, all of the Insured  Mortgages held by the  Partnership
are eligible for assignment to HUD (i) as a Default  Assignment  (defined below)
or (ii) pursuant to Section  221(g)(4) of the National Housing Act (the "Section
221  Program").  Under the Section  221  Program,  a mortgagee  has the right to
assign a mortgage  ("put") to the United States  Department of Housing and Urban
Development  ("HUD")  at the  expiration  of 20  years  from  the  date of final
endorsement ("Anniversary Date") if the mortgage is not in default at such time.
The  mortgagee may exercise its option to put the mortgage to HUD during the one
year period  subsequent to the Anniversary  Date.  This assignment  procedure is
applicable to an Insured  Mortgage,  which had a firm or conditional  commitment
for HUD  insurance  benefits  on or before  November  30,  1983.  Any  mortgagee
electing to assign an Insured  Mortgage to HUD receives,  in exchange  therefor,
HUD  debentures  having a total  face  value  equal to (i) the then  outstanding
principal  balance of the Insured  Mortgage  (ii) plus  accrued  interest on the
mortgage  to the date of  assignment  ("Debenture  Issuance  Date").  These  HUD
debentures  generally  mature  10 years  from the  date of  assignment  and bear
interest  at a rate  announced  semi-annually  by HUD  in the  Federal  Register
("going Federal rate") at such date. Generally, the Partnership is not the named
mortgagee for the  FHA-Insured  Certificates.  AIM 85 is the named mortgagee for

<PAGE>36

the  Partnership's   FHA-Insured   Certificates.   AIM  85  is  responsible  for
transferring  the  related HUD  insurance  claim  proceeds  to the  Partnership.
Debenture  interest is expected  be paid to the  Partnership  in the month it is
received  by  AIM  85.  Debenture  proceeds  are  expected  to be  paid  to  the
Partnership  in the month the  debenture  is  redeemed by HUD or sold by AIM 85.
Based on the  recommendation  of CMSLP, the sub-advisor,  and the consent of the
Advisor the General  Partner may elect to put Insured  Mortgages  to HUD,  based
upon, in general, but not limited to, (i) the interest rates on mortgages,  (ii)
the  interest  rates on  debentures  issued by HUD and (iii) the costs and risks
associated with continuing to hold the Insured Mortgages.

     Once the  servicer  of an Insured  Mortgage  has filed an  application  for
insurance  benefits  ("HUD put date") under the Section 221 program on behalf of
the Partnership,  the Partnership  will no longer receive the monthly  principal
and interest on the applicable  mortgage,  and instead, HUD will begin receiving
the  monthly  principal  and  interest.  HUD issues  debentures  at the time the
mortgage  is  assigned  to HUD  (approximately  30 days after the HUD put date);
however, the debentures are not transferred to the mortgagee until HUD completes
its assignment  process of the Insured Mortgage.  Based on the General Partner's
experience,  HUD's assignment process is generally six to eighteen months. After
HUD completes its assignment process for the Insured Mortgage,  HUD transfers to
the mortgagee (i) HUD debentures, as discussed above, (ii) plus cash for accrued
interest  on the  debentures  at the  going  Federal  rate,  from the  Debenture
Issuance  Date to the  most  current  interest  payment  date.  Thereafter,  the
mortgagee  receives interest on the debentures on the semi-annual  payment dates
of January 1 and July 1. The going Federal rate for HUD debentures  issued under
the  Section  221  Program  for the period  January 1 through  June 30, 2002 was
6.375%;  for the period July 1 through December 31, 2002 it was 6.625%;  and for
the period  January 1 through June 30, 2003 it is 5.75%.  The  Partnership  will
recognize a gain on a mortgage  assignment at the time it receives  notification
that the assignment has been approved.  HUD assignment approval generally occurs
when HUD transfers the debentures to the mortgagee  and/or when the  Partnership
receives  cash for the  accrued  interest  on the  debentures.  The  Partnership
recognizes a loss on a mortgage  assignment when it becomes probable that a loss
will be incurred.  The gain or loss  recognized  is generally  equal to proceeds
received from HUD, as discussed  above,  less the amortized  cost of the Insured
Mortgage.

     Pursuant to the terms of the Partnership  Agreement,  the Partnership  must
terminate  and  dissolve  after  disposition  of all Insured  Mortgages  and HUD
debentures  held in its portfolio,  but no later than December 31, 2008. Most of
the  Insured  Mortgages  held by the  Partnership  have  been  put to HUD by the
respective servicers,  as discussed below. The Partnership expects to dispose of
any  remaining  mortgages  and HUD  debentures  prior to the  December  31, 2008
partnership termination date. Early prepayment by HUD of all HUD debentures held
by the  Partnership  may  effect an early  termination  and  dissolution  of the
Partnership  before the stated  termination  date of  December  31,  2008.  As a
result,  Unitholders'  yield to maturity on their respective  investments in the
Partnership  may  be  adversely  affected  by  such  early  termination  of  the
Partnership.

     As of  December  31,  2002 and 2001,  Investment  in  FHA-Insured  Loans is
recorded at amortized cost.

     The amortized cost of FHA-Insured  Certificates  and  FHA-Insured  Loans is
adjusted  for  amortization  of  discounts to  maturity.  Such  amortization  is
included in mortgage investment income.

     Mortgage  investment  income  consists of  amortization  of the discount or
premiums plus the stated mortgage  interest  payments  received or accrued.  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.

<PAGE>37

Due from Affiliate
------------------

     The Partnership may receive  debentures by assigning  current  mortgages to
HUD under the  Section  221  Program,  as  discussed  above.  In  addition,  the
Partnership may receive  debentures by assigning a defaulted  mortgage to HUD in
order to collect the amount of delinquent principal and interest (collectively a
"Default  Assignment").  In the case of a default assignment,  the mortgagee may
elect to have the  claim  settled  in cash or by the  issuance  of a  debenture.
Debentures   are   obligations   of  the  mortgage   insurance   funds  and  are
unconditionally  guaranteed by the United States.  The term of these  debentures
are  usually  more than 7 years  and the  interest  rate is set  based  upon the
interest rate in effect at the  commitment  date to provide  insurance or at the
final endorsement  date,  whichever is greater.  The Partnership  classifies its
investment  in debenture as an available for sale debt security with changes
in fair  value  recorded  as an  adjustment  to equity  and other  comprehensive
income. The Partnership's investment in debenture is included on the balance
sheet in Due from affiliate, as discussed in Note 7.

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 in the
accompanying  statements of income and  comprehensive  income since they are the
responsibility of the Unitholders.

Recent Accounting Pronouncements
--------------------------------

     In January  2003,  the FASB  issued  FASB  Interpretation  (or FIN) No. 46,
"Consolidation of Variable Interest  Entities",  an interpretation of Accounting
Research  Bulletin  No.  51,  "Consolidated  Financial  Statements."  FIN No. 46
explains  how to  identify  variable  interest  entities  and how an  enterprise
assesses  its  interests  in a  variable  interest  entity to decide  whether to
consolidate that entity.  This Interpretation  requires existing  unconsolidated
variable interest entities to be consolidated by their primary  beneficiaries if
the entities do not effectively  disperse risks among parties involved.  FIN No.
46 is effective immediately for variable interest entities created after January
31, 2003, and to variable  interest  entities in which an enterprise  obtains an
interest after that date. The Interpretation applies in the first fiscal year or
interim period beginning after June 15, 2003, to variable  interest  entities in
which an enterprise  holds a variable  interest that it acquired before February
1, 2003.  The  Partnership  does not expect the adoption of FIN No. 46 to have a
material effect on its financial position or results of operations.

<PAGE>38

3.   FAIR VALUE OF FINANCIAL INSTRUMENTS

     The  following  estimated  fair  values  of  the  Partnership's   financial
instruments  are presented in  accordance  with GAAP which defines fair value as
the  amount at which a  financial  instrument  could be  exchanged  in a current
transaction between willing parties, other than in a forced or liquidation sale.
These estimated fair values,  however, do not represent the liquidation value or
the market value of the Partnership.
<TABLE>
<CAPTION>
                                              As of December 31, 2002               As of December 31, 2001
                                          Amortized Cost      Fair Value        Amortized Cost      Fair Value
                                          --------------    --------------      --------------    --------------
<S>                                       <C>               <C>                 <C>               <C>
Investment in FHA-Insured
   Loans:
   Originated Insured Mortgage            $            -    $            -      $    4,806,675    $    4,520,916
   Acquired Insured Mortgages                  7,507,672         9,419,737           7,621,126         9,325,365
                                          --------------    --------------      --------------    --------------

                                          $    7,507,672    $    9,419,737      $   12,427,801    $   13,846,281
                                          ==============    ==============      ==============    ==============

Investment in FHA-Insured
   Certificates                           $    6,685,273    $    7,966,438      $    8,415,866    $    9,727,346

Debenture due from affiliate              $            -    $            -      $    1,192,617    $    1,192,617

Cash and cash equivalents                 $    2,252,969    $    2,252,969      $      534,890    $      534,890
</TABLE>

      The following methods and assumptions were used to estimate the fair value
of each class of financial instrument:

Investment in FHA-Insured Certificates,
FHA-Insured Loans and Debenture due from affiliate
--------------------------------------------------

     The fair  values  of the  FHA-Insured  Certificates,  GNMA  Mortgage-Backed
Securities and FHA-Insured Loans are priced  internally.  The Partnership used a
discounted  cash flow  methodology  to estimate the fair values;  the cash flows
were  discounted  using a discount rate that,  in the  Partnership's  view,  was
commensurate  with the market's  perception of risk and value.  The  Partnership
used a variety  of  sources  to  determine  its  discount  rate  including:  (i)
institutionally-available research reports, and (ii) communications with dealers
and active  insured  mortgage  security  investors  regarding  the  valuation of
comparable securities. The fair value of a debenture is based upon the prices of
other  comparable  securities  that  trade in the  market.  The fair  value of a
debenture with a short term call date from HUD is equal to its face value.

Cash and cash equivalents
-------------------------

     The carrying amount  approximates  fair value because of the short maturity
of these instruments.

<PAGE>39
                       AMERICAN INSURED MORTGAGE INVESTORS

                          NOTES TO FINANCIAL STATEMENTS

4.   COMPREHENSIVE INCOME

     Comprehensive  income  includes net  earnings as currently  reported by the
Partnership adjusted for other comprehensive  income. Other comprehensive income
for the Partnership  consists of changes in unrealized  gains and losses related
to the  Partnership's  mortgages  and  debenture  accounted for as available for
sale.  The table  below  details  other  comprehensive  income  for the  periods
presented into the following two categories:  (1) the change to unrealized gains
and losses that  relate to  mortgages  which were  disposed of during the period
with  the   resulting   realized   gain  or  loss   reflected  in  net  earnings
(reclassification  adjustments)  and (2) the change in the  unrealized  gains or
losses related to those investments that were not disposed of during the period.

<TABLE>
<CAPTION>
                                                         2002               2001            2000
                                                         ----               ----            ----
<S>                                                  <C>               <C>              <C>
Reclassification adjustment for gains
   included in net income                            $ (243,802)       $  (177,352)     $ (161,707)
Unrealized holding gains (losses) arising
   during the period                                    213,487           (221,909)         59,545
                                                     ----------        -----------      ----------

Net adjustment to unrealized gains                   $  (30,315)       $  (399,261)     $ (102,162)
                                                     ==========        ===========      ==========
</TABLE>


5.   INVESTMENT IN FHA-INSURED LOANS

     Listed below is the Partnership's aggregate investment in FHA-Insured Loans
as of December 31, 2002 and 2001:
<TABLE>
<CAPTION>
                                                                            December 31,
                                                                   2002                     2001
                                                                   ----                     ----

<S>                                                            <C>                      <C>
Number of
  Acquired Insured Mortgages                                              3                        3
  Originated Insured Mortgage (1)                                         -                        1
Amortized Cost                                                 $  7,507,672             $ 12,427,801
Face Value                                                        9,407,103               14,428,107
Fair Value                                                        9,419,737               13,846,281
</TABLE>


(1)  In July 2002, the mortgage on Creekside Village Apartments was prepaid. The
     Partnership  received  net  proceeds  of  approximately  $4.9  million  and
     recognized a gain of  approximately  $96,000 during the year ended December
     31, 2002. A  distribution  of  approximately  $0.47 per Unit related to the
     prepayment  of this  mortgage was  declared in  September  2002 and paid to
     Unitholders in November 2002.

     As of March 1, 2003, all of the FHA-Insured  Loans are current with respect
to payment of  principal  and  interest,  except for the  mortgage  on Town Park
Apartments,  which is  delinquent  with respect to the February  2003 payment of
principal and interest.  This mortgage is eligible under the Section 221 Program
with an anniversary date in October 2002. The Partnership  expects this mortgage
to be put to HUD, if not otherwise  disposed,  by the servicer during the second
quarter of 2003.

The mortgages discussed below are included in the table above.

     The Section 221 Program
     -----------------------

     a. Issuance of Debenture
        ---------------------

     In February 2003, HUD transferred assignment proceeds to the Partnership in
the  form of a  6.375%  debenture  in  exchange  for the  mortgage  on  Eastdale

<PAGE>39

Apartments.  The servicer of this mortgage  filed an  application  for insurance
benefits under the Section 221 Program in June 2002. The debenture,  with a face
value of approximately  $6.1 million,  pays interest  semi-annually on January 1
and July 1 with a maturity  date of June 26, 2012.  The  debenture may be called
prior to its maturity date. A distribution  will be declared after the debenture
proceeds are received. In February 2003, the Partnership received  approximately
$201,000 in cash of accrued interest on this debenture.  The Partnership expects
to recognize a gain of  approximately  $1.2 million  during the first quarter of
2003. The amortized  cost of the mortgage on Eastdale  Apartments is included in
Investment  in  FHA-Insured  Loans  on the  Partnership's  balance  sheet  as of
December 31, 2002.

     b. Mortgages in the HUD assignment process
        ---------------------------------------

     The  mortgage  on North  River  Place was put to HUD under the  Section 221
Program by the servicer in June 2002.  The aggregate face value of this mortgage
was approximately $2.8 million as of the HUD put date. The Partnership no longer
receives monthly principal and interest from mortgages that are put to HUD under
the Section 221 Program. HUD receives the monthly principal and interest and the
Partnership earns semi-annual interest on debentures issued by HUD, as discussed
above. The Partnership has not received approval for this assignment as of March
1,  2003,  and will  continue  to  accrue  interest  on the  mortgage  until the
debenture is transferred to the mortgagee and the Partnership  begins  receiving
the  debenture  interest.  The  amortized  cost of this  mortgage is included in
Investment  in  FHA-Insured  Loans  on the  Partnership's  balance  sheet  as of
December 31, 2002.


6.   INVESTMENT IN FHA-INSURED CERTIFICATES

     Listed  below is the  Partnership's  aggregate  investment  in  FHA-Insured
Certificates as of December 31, 2002 and 2001:
<TABLE>
<CAPTION>
                                                                             December 31,
                                                                    2002                    2001
                                                                    ----                    ----
<S>                                                             <C>                     <C>
Number of mortgages (1)(2)                                                5                        6
Amortized Cost                                                  $ 6,685,273             $  8,415,866
Face Value                                                        7,936,376               10,037,064
Fair Value                                                        7,966,438                9,727,346
</TABLE>

(1)  In December  2002, the mortgage on Bay Pointe  Apartments was prepaid.  The
     Partnership  received  net  proceeds  of  approximately  $1.9  million  and
     recognized a gain of approximately  $290,000 during the year ended December
     31, 2002. A  distribution  of  approximately  $0.18 per Unit related to the
     prepayment  of this  mortgage was declared in December 2002 and was paid to
     Unitholders in February 2003.
(2)  In January 2003, the Partnership  received assignment proceeds from HUD for
     the mortgage on Westbrook Apartments. The servicer of this mortgage filed a
     Notice of Election to Assign in  November  2002 due to its default  status.
     The Partnership received net proceeds of approximately $1.5 million,  which
     included  90% of the  unpaid  principal  balance  of  this  mortgage,  plus
     interest  at the  debenture  rate of 9.875%  from  September  2002  through
     January 2003. The remaining amount due from HUD is  approximately  $150,000
     (representing  9% of the unpaid  principal  balance)  and is expected to be
     received during the next 12 months. The Partnership  expects to recognize a
     gain of approximately  $228,000 for the first quarter 2003. The Partnership
     expects to declare a distribution of  approximately  $0.14 per Unit related
     to this  assignment in March 2003 and expects to pay to  Unitholders in May
     2003.

     As of March 1, 2003, all of the Partnership's FHA-Insured Certificates were
current with respect to the payment of principal and interest.

The mortgages discussed below are included in the table above.

<PAGE>41

     The Section 221 Program
     -----------------------

     a. Issuance of debenture
        ---------------------

     In February 2003, HUD transferred assignment proceeds to AIM 85 in the form
of a 6.375%  debenture  in  exchange  for the  mortgage  on  Baypoint  Shoreline
Apartments. The mortgage on Baypoint Shoreline Apartments was beneficially owned
50% by the Partnership and 50% by AIM 85. The servicer of this mortgage filed an
application  for insurance  benefits under the Section 221 Program in June 2002.
The debenture,  with a face value of approximately  $1.8 million,  pays interest
semi-annually on January 1 and July 1 with a maturity date of June 27, 2012. The
debenture  may be called prior to its  maturity  date.  A  distribution  will be
declared  after the  debenture  proceeds  are  received.  Since the  mortgage on
Baypoint  Shoreline  Apartments was owned 50% by the  Partnership and 50% by AIM
85, approximately  $906,000 of the debenture face is due to the Partnership.  In
February 2003, the Partnership received approximately $29,000 in cash of accrued
interest on this debenture from AIM 85. The  Partnership  expects to recognize a
gain of approximately  $131,000 during the first quarter of 2003. The fair value
of the mortgage on Baypoint  Shoreline  Apartments  is included in Investment in
FHA-Insured  Certificates on the Partnership's  balance sheet as of December 31,
2002.

     b. Mortgages in the HUD assignment process
        ---------------------------------------

     The mortgages on Brougham  Estates and College Green Apartments were put to
HUD under the Section 221 Program by the respective  servicers in February 2003.
The aggregate face value of these mortgages was approximately $3.7 million as of
the HUD put date.  The  Partnership  no longer  receives  monthly  principal and
interest from mortgages  that are put to HUD under the Section 221 Program.  HUD
receives  the  monthly   principal  and  interest  and  the  Partnership   earns
semi-annual  interest on  debentures  issued by HUD,  as  discussed  above.  The
Partnership has not received approval for these assignments as of March 1, 2003,
and will continue to accrue interest on these mortgages until the debentures are
transferred to the mortgagee and the Partnership  begins receiving the debenture
interest.  The fair  value of these  mortgages  is  included  in  Investment  in
FHA-Insured  Certificates on the Partnership's  balance sheet as of December 31,
2002.

     c. Remaining mortgages eligible for assignment
        -------------------------------------------

     The Partnership's mortgage portfolio includes one FHA-Insured  Certificate,
Kaynorth Apartments,  eligible under the Section 221 Program with an anniversary
date in September 2002. The Partnership  expects this mortgage to be put to HUD,
if not otherwise disposed, by the servicer during the second quarter of 2003.


7. DUE FROM AFFILIATE

     The  mortgage  on Fox Run  Apartments  was  beneficially  owned  50% by the
Partnership  and  50% by AIM  85.  A  7.125%  debenture,  with a face  value  of
approximately  $2.4  million,  was issued by HUD to AIM 85 in December 2000 with
interest  payable  semi-annually  on January 1 and July 1. In January 2002,  the
debenture was liquidated at par value.  The Partnership  received  approximately
$1.2  million for its share of the  debenture  proceeds,  including  interest of
approximately $42,000. A distribution of approximately $0.11 per Unit related to
the receipt of these proceeds was declared in March 2002 and paid to Unitholders
in May 2002.

<PAGE>42

8.   TRANSACTIONS WITH RELATED PARTIES

     The principal  officers of the General Partner for the years ended December
31,  2002,  2001 and 2000 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, CMSLP and certain affiliated entities have, during the
years ended December 31, 2002, 2001 and 2000, earned or received compensation or
payments for services from the Partnership as follows:

                         COMPENSATION PAID OR ACCRUED TO RELATED PARTIES
<TABLE>
<CAPTION>
                                                                             For the year ended December 31,
    Name of Recipient                Capacity in Which Served/Item            2002        2001         2000
    -----------------                -----------------------------            ----        ----         ----
<S>                                  <C>                                   <C>         <C>          <C>
CRIIMI, Inc. (1)                     General Partner/Distribution          $ 256,852   $  95,573    $  59,733

AIM Acquisition Partners,L.P.(2)     Advisor/Asset Management Fee            195,466     224,202      237,264

CRIIMI MAE Management, Inc. (3)      Affiliate of General Partner/Expense     48,979      40,866       38,782
</TABLE>


(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 partnership  agreement,  effective October 1,
     1991,  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  equal  to  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 $57,606,  $66,078, and $69,924 during the years ended
     December 31, 2002,  2001 and 2000,  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.

<PAGE>43

9.   DISTRIBUTIONS TO UNITHOLDERS

     The  distributions  paid or accrued to  Unitholders on a per Unit basis for
the years ended December 31, 2002, 2001 and 2000 are as follows:

Quarter Ended               2002             2001               2000
-------------              ------           ------             ------
March 31                   $ 0.16 (1)       $ 0.05             $ 0.05
June 30                      0.05             0.05               0.05
September 30                 0.47 (2)         0.17 (4)           0.05
December 31                  0.18 (3)         0.05               0.05
                           ------           ------             ------
                           $ 0.86           $ 0.32             $ 0.20
                           ======           ======             ======

(1)  This amount includes  approximately $0.11 per Unit due to the redemption of
     the  HUD  debenture  received  from  the  assignment  to HUD of the Fox Run
     Apartments  mortgage.  This amount was received  from AIM 85. The debenture
     was  issued  to AIM 85 as the  record  owner  of  the  Fox  Run  Apartments
     mortgage.  The  Partnership  was a 50%  beneficial  owner  of the  Fox  Run
     Apartments mortgage.
(2)  This amount includes approximately $0.47 per unit representing net proceeds
     from the prepayment of the mortgage on Creekside Village Apartments.
(3)  This amount includes approximately $0.18 per Unit representing net proceeds
     from the prepayment of the mortgage on Bay Pointe Apartments.
(4)  This amount includes approximately $0.12 per Unit representing net proceeds
     from the prepayment of the mortgage on Berryhill Apartments.

     The Partnership's  remaining Insured Mortgages may be put to HUD by October
2003, if not otherwise disposed, as previously discussed. As these mortgages are
put to HUD, the Partnership's net cash flows could be significantly  reduced for
several  months.  As a  result,  net cash flow  distributions  for the third and
fourth  quarters of 2002 were  temporarily  retained  to fund the  Partnership's
operating  expenses during the period of reduced cash flows.  Quarterly net cash
flow distributions are expected to resume in the first quarter of 2003. Proceeds
from mortgage dispositions and debenture redemptions, if any, are expected to be
distributed  to  investors  as usual in the quarter in which such  proceeds  are
received.

     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
Partnership's  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 in which the  monthly
mortgage  payment  receipts  are  temporarily  invested  prior to the payment of
quarterly  distributions,  (2) the  reduction in the asset base  resulting  from
monthly mortgage payments received or mortgage  dispositions,  (3) variations in
the cash flow  attributable to the delinquency or default of Insured  Mortgages,
the  timing of  receipt of  debentures,  the  interest  rate on  debentures  and
debenture redemptions,  and (4) changes 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.


10.  PARTNERS' EQUITY

     Depositary  Units  representing  economic  rights  in  limited  partnership
interests  ("Units") were issued at a stated value of $20. A total of 10,000,000
Units were issued prior to August 1983 for an aggregate capital  contribution of
$200,000,000. In addition, the initial limited partner contributed $2,500 to the
capital of the Partnership in exchange for 125 Units.

<PAGE>44


11.  SUMMARY OF QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

     The following is a summary of unaudited quarterly results of operations for
the years ended December 31, 2002, 2001 and 2000:

     (In Thousands, Except Per Unit Data)
<TABLE>
<CAPTION>
                                                                             2002
                                                                         Quarter ended
                                                    March 31         June 30      September 30     December 31
                                                    --------         -------      ------------     -----------

<S>                                                <C>              <C>            <C>              <C>
Income                                             $      511       $      507     $      433       $      406
Net earnings                                              396              408            429              616
Gains on mortgage dispositions                             --               --             96              290
Net earnings per Limited Partnership Unit - Basic  $     0.04       $     0.04     $     0.04       $     0.06





                                                                             2001
                                                                         Quarter ended
                                                    March 31         June 30      September 30     December 31
                                                    --------         -------      ------------     -----------

Income                                             $      565       $      562     $      554       $      534
Net earnings                                              451              444            637              423
Gains on mortgage dispositions                             --               --            190               --
Net earnings per Limited Partnership Unit - Basic  $     0.04       $     0.04     $     0.06       $     0.05




                                                                             2000
                                                                         Quarter ended
                                                    March 31         June 30      September 30     December 31
                                                    --------         -------      ------------     -----------

Income                                             $      574       $      571     $      569       $      565
Net earnings                                              453              452            456              650
Gains on mortgage dispositions                             --               --             --              188
Net earnings per Limited Partnership Unit - Basic  $     0.04       $     0.04     $     0.04       $     0.08
</TABLE>

<PAGE>45

                       AMERICAN INSURED MORTGAGE INVESTORS
                   SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE
                                DECEMBER 31, 2002
<TABLE>
<CAPTION>
                                                                       Interest      Face              Net          AnnualPayment
                                                 Maturity      Put     Rate on     Amount of       Carrying Value  (Principal and
Development Name/Location                          Date       Date(1) Mortgage(5)  Mortgage(3)      (3)(6)(8)(9)   Interest)(5)(7)
-------------------------                          ----      -------  -----------  -----------      ------------   ---------------
<S>                                                <C>        <C>       <C>        <C>              <C>            <C>
ACQUIRED INSURED MORTGAGES
Investment in FHA-Insured Loans (carried at amortized cost)(2)
--------------------------------------------------------------

    Eastdale Apts., Montgomery, AL (10)             3/23      10/01      7.5%      $ 6,014,219      $ 4,778,440    $   592,406
    North River Place, Chillecothe, OH             10/21      12/01      7.5%        2,809,498        2,238,232        279,509
    Town Park Apts., Rockingham, NC                10/22      10/02      7.5%          583,386(4)       491,000         56,755(4)
                                                                                   -----------      -----------

Total Investment in FHA-Insured Loans -
  Acquired Insured Mortgages                                                         9,407,103        7,507,672
                                                                                   -----------      -----------

ACQUIRED INSURED MORTGAGES
Investment in FHA-Insured Certificates (carried at fair value)
--------------------------------------------------------------

    Baypoint Shoreline Apts, Duluth, MN (10)        1/22      10/01      7.5%          889,548(4)       891,308         87,967(4)
    Brougham Estates II, Kansas City, KS           11/22       3/02      7.5%        2,379,451(4)     2,383,791        230,860(4)
    College Green Apts., Wilmington, NC             3/23       2/02      7.5%        1,281,638(4)     1,283,902        123,455(4)
    Kaynorth Apts., Lansing, MI                     4/23       9/02      7.5%        1,740,061(4)     1,774,957        167,318(4)
    Westbrook Apts., Kokomo, IN (10)               11/22       9/02      7.5%        1,645,678(4)     1,632,480        163,177(4)
                                                                                   -----------      -----------    -----------

  Total Investment in FHA-Insured Certificates                                       7,936,376        7,966,438
                                                                                   -----------      -----------

    TOTAL INVESTMENT IN INSURED MORTGAGES                                          $17,343,479      $15,474,110
                                                                                   ===========      ===========

    TOTAL ANNUAL PRINCIPAL AND INTEREST                                                                            $ 1,701,447
                                                                                                                   ===========

See notes to Schedule IV - Mortgage Loans on Real Estate
</TABLE>
<PAGE>46

                       AMERICAN INSURED MORTGAGE INVESTORS

              NOTES TO SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE

                                DECEMBER 31, 2002


(1)  As of March 1, 2003, all of the Insured  Mortgages held by the  Partnership
     are eligible  for  assignment  to HUD pursuant to Section  221(g)(4) of the
     National  Housing Act (the  "Section 221  Program").  Under the Section 221
     Program,  a  mortgagee  has the right to assign a  mortgage  ("put") to the
     United States  Department of Housing and Urban  Development  ("HUD") at the
     expiration  of 20 years  from the date of final  endorsement  ("Anniversary
     Date") if the mortgage is not in default at such time.  The  mortgagee  may
     exercise  its option to put the  mortgage to HUD during the one year period
     subsequent to the Anniversary Date. This assignment procedure is applicable
     to an Insured Mortgage,  which had a firm or conditional commitment for HUD
     insurance  benefits on or before November 30, 1983. Any mortgagee  electing
     to assign an Insured Mortgage to HUD receives,  in exchange  therefor,  HUD
     debentures  having a total  face  value  equal to (i) the then  outstanding
     principal balance of the Insured Mortgage (ii) plus accrued interest on the
     mortgage to the date of assignment  ("Debenture  Issuance Date"). These HUD
     debentures  generally  mature 10 years from the date of assignment and bear
     interest at a rate announced  semi-annually  by HUD in the Federal Register
     ("going Federal rate") at such date. Generally,  the Partnership is not the
     named  mortgagee  for the  FHA-Insured  Certificates.  An  affiliate of the
     Partnership,  American Insured  Mortgage  Investors - Series 85, L.P. ("AIM
     85") is the named mortgagee for the Partnership's FHA-Insured Certificates.
     AIM 85 is responsible  for  transferring to the Partnership the related HUD
     insurance  claim  proceeds.  Debenture  interest is expected be paid to the
     Partnership in the month it is received by AIM 85.  Debenture  proceeds are
     expected  to be paid to the  Partnership  in the  month  the  debenture  is
     redeemed by HUD or sold by AIM 85.  Based on the  recommendation  of CMSLP,
     the  sub-advisor,  and consent of the Advisor the General Partner may elect
     to put Insured  Mortgages to HUD,  based upon, in general,  but not limited
     to,  (i) the  interest  rates  on  mortgages,  (ii) the  interest  rates on
     debentures  issued by HUD and (iii)  the  costs and risks  associated  with
     continuing to hold the Insured Mortgages.

(2)  Inclusive of closing costs and acquisition fees.

(3)  Prepayment  of these  insured  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 insured
     mortgages.  The  remaining  50% interest  was acquired by American  Insured
     Mortgage Investors - Series 85, L.P. ("AIM 85").

(5)  In addition, the servicer of the insured mortgages (primarily  unaffiliated
     third  parties) is entitled to receive  compensation  for certain  services
     rendered  in an  amount  up to ten  basis  points  (0.10%)  of  the  unpaid
     principal balance of the insured mortgages.

(6)  The  mortgages  underlying  the  Partnership's  investment  in  FHA-Insured
     Certificates  and  FHA-Insured  Loans  are  non-recourse   first  liens  on
     multifamily residential developments.

(7)  Principal  and interest  are payable at level  amounts over the life of the
     Insured Mortgages.


<PAGE>47


(8)  A reconciliation of the carrying value of Insured Mortgages,  for the years
     ended December 31, 2002 and 2001, is as follows:
<TABLE>
<CAPTION>
                                                                2002                        2001
                                                                ----                        ----
<S>                                                         <C>                         <C>
Beginning balance                                           $22,155,147                 $23,855,773

  Gains on mortgage dispositions                                385,829                     190,206
  Proceeds from disposition of mortgages                     (6,769,063)                 (1,184,199)
  Principal receipts on Insured Mortgages                      (267,488)                   (295,445)
  Adjustment to unrealized gains on
    investment in Insured Mortgages                             (30,315)                   (411,188)
                                                            -----------                 -----------

Ending balance                                              $15,474,110                 $22,155,147
                                                            ===========                 ===========
</TABLE>


(9)  The tax basis of the Insured Mortgages was approximately  $13.0 million and
     $19.6 million as of December 31, 2002 and 2001, respectively.

(10) The  Partnership  received  HUD  assignment  proceeds  for these  mortgages
     subsequent to December 31, 2002. Detail  information is included in Notes 5
     and 6 of the Notes to Financial Statements.