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, 2001       Commission file number 1-12724


              AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88
              ----------------------------------------------------
             (Exact name of registrant as specified in its charter)


          Delaware                                               13-3398206
          --------                                               ----------
(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
                                      ----

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

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

     As of February 19, 2002,  8,802,091 depositary units of limited partnership
interest were  outstanding and the aggregate  market value of such units held by
non-affiliates of the Registrant on such date was $48,407,409.

                       Documents incorporated by Reference

                                      None

<PAGE>2

              AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88

                         2001 ANNUAL REPORT ON FORM 10-K

                                TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                     PART I
                                                                                                       Page
                                                                                                       ----
<S>               <C>                                                                                   <C>
Item 1.           Business.......................................................................        3
Item 2.           Properties.....................................................................        4
Item 3.           Legal Proceedings..............................................................        4
Item 4.           Submission of Matters to a Vote of Security Holders............................        4


                                     PART II

Item 5.           Market for Registrant's Securities and Related Security Holder Matters.........        5
Item 6.           Selected Financial Data........................................................        6
Item 7.           Management's Discussion and Analysis of Financial Condition and Results
                     of Operations...............................................................        6
Item 7A.          Qualitative and Quantitative Disclosures About Market Risk.....................       14
Item 8.           Financial Statements and Supplementary Data....................................       14
Item 9.           Changes in and Disagreements with Accountants on Accounting and
                     Financial Disclosure........................................................       14


                                    PART III

Item 10.          Directors and Executive Officers of the Registrant.............................       15
Item 11.          Executive Compensation.........................................................       17
Item 12.          Security Ownership of Certain Beneficial Owners and Management.................       17
Item 13.          Certain Relationships and Related Transactions.................................       18


                                     PART IV

Item 14.          Exhibits, Financial Statement Schedules and Reports on Form 8-K................       19

Signatures        ...............................................................................       22
</TABLE>

<PAGE>3
                                     PART I

ITEM 1.   BUSINESS

FORWARD-LOOKING  STATEMENTS.  When used in this Annual Report on Form 10-K,  the
words  "believes,"   "anticipates,"   "expects,"   "contemplates,"  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 future  filings by the
Partnership  with the  Securities  and Exchange  Commission  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 and (v) defaulted mortgages.  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
---------------------------------------

     Information  concerning the business of American Insured Mortgage Investors
L.P.-Series 88 (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  of the  Partnership
(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
Partnership's  Insured  Mortgages  (as defined  below) as of December  31, 2001,
which is hereby incorporated herein by reference.

Employees
---------

     The  Partnership  has no  employees.  The  business of the  Partnership  is
managed  by  CRIIMI,  Inc.  (the  "General  Partner"),  while its  portfolio  of
mortgages is managed by AIM Acquisition Partners,  L.P. (the "Advisor") pursuant
to an advisory  agreement (the "Advisory  Agreement").  The General Partner is a
wholly-owned subsidiary of CRIIMI MAE Inc. ("CRIIMI MAE").

     The general  partner of the Advisor is AIM  Acquisition  Corporation  ("AIM
Acquisition")  and the  limited  partners  include,  but are not limited to, AIM
Acquisition,  The Goldman  Sachs  Group,  L.P.,  Sun America  Investments,  Inc.
(successor to Broad, Inc.) and CRI/AIM Investment,  L.P., an affiliate of CRIIMI
MAE. AIM  Acquisition is a Delaware  corporation  that is primarily owned by Sun
America Investments, Inc. and The Goldman Sachs Group, L.P.

<PAGE>4

     Under the  Advisory  Agreement,  the Advisor  will  render  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  will be 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.  The  Advisor is  permitted  to
delegate the performance of services  pursuant to a sub-advisory  agreement (the
"Sub-Advisory Agreement").  The delegation of such services will not relieve the
Advisor of its obligation to perform such services.  CRIIMI MAE Services Limited
Partnership  ("CMSLP"),  an affiliate of CRIIMI MAE,  manages the  Partnership's
portfolio,  pursuant to the Sub-Advisory Agreement. The general partner of CMSLP
is CMSLP Management Company, Inc., a wholly-owned subsidiary of CRIIMI MAE.

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

     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 Federal
Housing Administration ("FHA") insured mortgages than the Partnership.

     CRIIMI MAE and its affiliates also may serve as general partners,  sponsors
or managers of real estate limited partnerships,  Real Estate Investments Trusts
("REIT") or other entities in the future. The Partnership may attempt to dispose
of mortgage  investments  at or about the same time that CRIIMI MAE, one or more
of the other "AIM Funds" [defined as the Partnership,  American Insured Mortgage
Investors  ("AIM 84"),  American  Insured  Mortgage  Investors - Series 85, L.P.
("AIM 85") and American Insured Mortgage Investors L.P. - Series 86 ("AIM 86")],
and/or other entities sponsored or managed by CRIIMI MAE, or its affiliates, are
attempting to dispose of mortgages.  As a result of market conditions that could
limit  dispositions,  CMSLP and its affiliates  could be faced with conflicts of
interest in determining which mortgages would be disposed of. Both CMSLP and the
General  Partner,  however,  are subject to their fiduciary duties in evaluating
the appropriate action to be taken when faced with such conflicts.


ITEM 2.   PROPERTIES

     Although the  Partnership  does not own the  underlying  real  estate,  the
mortgages  underlying the  Partnership's  mortgage  investments are non-recourse
first liens on the respective multifamily residential developments.


ITEM 3.   LEGAL PROCEEDINGS

     Reference is made to Note 5 of the Notes to Financial Statements.


ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     No matters were submitted to the security holders to be voted on during the
fourth quarter of 2001.


<PAGE>5
                                     PART II

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


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

     The Units are traded on the  American  Stock  Exchange  ("AMEX")  under the
trading symbol of "AIK." The high and low trade prices for the Units as reported
on AMEX and the distributions,  as applicable, for each quarterly period in 2001
and 2000 were as follows:

<TABLE>
<CAPTION>
                                                      2001
                                                      ----                    Amount of
                                                                            Distribution
   Quarter Ended                             High             Low             Per Unit
   --------------                           ------           -----            -------
   <S>                                      <C>               <C>             <C>
   March 31,                                $6.0500           $5.3300         $ 1.010(1)(2)(3)
   June 30,                                  5.6000            5.1600           0.105
   September 30,                             5.8000            5.2500           0.305(4)(5)
   December 31,                              5.8500            5.2000           0.625(6)(7)(8)
                                                                              -------
                                                                              $ 2.045
                                                                              =======
</TABLE>
<TABLE>
<CAPTION>
                                                      2000
                                                      ----                    Amount of
                                                                            Distribution
   Quarter Ended                             High             Low             Per Unit
   --------------                           ------           -----            --------
   <S>                                      <C>               <C>             <C>
   March 31,                                $6.8750           $6.1250         $ 0.37(9)
   June 30,                                  6.5000            6.0625           0.42(10)(11)
   September 30,                             6.5000            6.0000           0.15
   December 31,                              6.6250            5.8125           0.84(12)
                                                                              ------
                                                                              $ 1.78
                                                                              ======
</TABLE>

     The following disposition proceeds are included in the distributions listed
above:
<TABLE>
<CAPTION>
                                               Date                               Net
                                             Proceeds        Type of            Proceeds
          Complex Name                       received      Disposition          Per Unit
          ------------                       --------      -----------          --------
<C>       <C>                                <C>           <C>                  <C>
(1)       Silver Lake Plaza Apartments       Jan 2001      Prepayment           $ 0.56
(2)       Holton Manor                       Feb 2001      Prepayment             0.10
(3)       St. Charles Place-Phase II         Feb 2001      Coinsurance Claim      0.24
(4)       Water's Edge of New Jersey         Aug 2001      Assignment             0.09
(5)       Lorenzo Carolina Apartments        Aug 2001      Prepayment             0.11
(6)       Water's Edge of New Jersey         Oct 2001      Assignment             0.03
(7)       Beauvoir Manor Apartments          Oct 2001      Prepayment             0.14
(8)       Woodcrest Townhomes                Nov 2001      Prepayment             0.34
(9)       Linville Manor                     Mar 2000      Prepayment             0.22
(10)      Park Avenue Plaza                  May 2000      Prepayment             0.22
(11)      Kingsway Apartments                May 2000      Prepayment             0.05
(12)      Lioncrest Towers                   Nov 2000      Prepayment             0.70
</TABLE>

     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.

                                               Approximate Number of Unitholders
      Title of Class                                as of December 31, 2001
      --------------                                -----------------------
Depositary Units of Limited                                 6,000
   Partnership Interest

<PAGE>6
                                     PART II

ITEM 6.   SELECTED FINANCIAL DATA
          (Dollars in thousands, except per Unit amounts)
<TABLE>
<CAPTION>
                                                         For the Years Ended December 31,
                                           2001         2000           1999          1998          1997
                                        ----------    ----------    ----------    ----------    ----------
<S>                                     <C>           <C>           <C>           <C>           <C>
Income                                  $    4,388    $    5,501    $    7,294    $    9,998    $   12,167

Net gains (losses) on mortgage
  dispositions                                 910           387         1,072           756          (354)

Net earnings                                 4,551         4,738         7,053         9,179        10,097

Net earnings per Limited
  Partnership Unit - Basic (1)          $     0.49    $     0.51    $     0.76    $     0.99    $     1.09

Distributions per Limited
  Partnership Unit (1)(2)               $    2.045    $     1.78    $     5.06    $     4.34    $     2.33

                                                                As of December 31,
                                           2001          2000          1999          1998          1997
                                        ----------    ----------    ----------    ----------    ----------

Total assets                            $   54,129    $   71,288    $   83,455    $  116,464    $  150,616

Partners' equity                        $   48,215    $   63,131    $   73,702    $  114,442    $  146,977
</TABLE>

(1)  Calculated based upon the weighted average number of Units outstanding.
(2)  Includes  distributions  due the Unitholders for the  Partnership's  fiscal
     quarters ended December 31, 2001,  2000,  1999,  1998 and 1997,  which were
     paid  subsequent  to year end.  See Notes 7 and 8 of the Notes to Financial
     Statements.

     The selected  income  statement  data  presented  above for the years ended
December 31, 2001,  2000 and 1999,  and the  selected  balance  sheet data as of
December 31, 2001 and 2000, 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,
1998 and 1997, and the selected balance sheet data as of December 31, 1999, 1998
and 1997 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.


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.

     The Partnership was formed under the Uniform Limited Partnership Act of the
State of Delaware on February 13,  1987.  During the period from October 2, 1987
(the initial closing date of the  Partnership's  public offering)  through March
10, 1989 (the  termination date of the offering),  the Partnership,  pursuant to
its public offering of Units,  raised a total of $177,039,320 in gross proceeds.
In addition,  the initial limited partner  contributed  $2,500 to the capital of
the  Partnership  and  received  125 units of limited  partnership  interest  in
exchange therefor.

<PAGE>7
                                     PART II

     CRIIMI,  Inc. (the "General Partner") holds a partnership  interest of 4.9%
and is a wholly  owned  subsidiary  of  CRIIMI  MAE  Inc.  ("CRIIMI  MAE").  AIM
Acquisition  Partners,  L.P.  (the  "Advisor")  serves  as  the  advisor  to the
Partnership pursuant to an advisory agreement (the "Advisory Agreement").

     The general  partner of the Advisor is AIM  Acquisition  Corporation  ("AIM
Acquisition")  and the  limited  partners  include,  but are not limited to, AIM
Acquisition,  The Goldman  Sachs  Group,  L.P.,  Sun America  Investments,  Inc.
(successor to Broad, Inc.) and CRI/AIM Investment,  L.P., an affiliate of CRIIMI
MAE. AIM  Acquisition is a Delaware  corporation  that is primarily owned by Sun
America Investments, Inc. and The Goldman Sachs Group, L.P.

     Under the  Advisory  Agreement,  the Advisor  will  render  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  will be 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.  The  Advisor is  permitted  to
delegate the performance of services  pursuant to a sub-advisory  agreement (the
"Sub-Advisory Agreement").  The delegation of such services will not relieve the
Advisor of its obligation to perform such services.  CRIIMI MAE Services Limited
Partnership  ("CMSLP"),  an affiliate of CRIIMI MAE,  manages the  Partnership's
portfolio,  pursuant to the Sub-Advisory Agreement. The general partner of CMSLP
is CMSLP Management Company, a wholly-owned subsidiary of CRIIMI MAE.

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

     Prior  to  the  expiration  of the  Partnership's  reinvestment  period  in
December  1996,  the  Partnership  was engaged in the  business  of  originating
mortgage loans  ("Originated  Insured  Mortgages") and acquiring  mortgage loans
("Acquired Insured  Mortgages",  and together with Originated Insured Mortgages,
referred to herein as "Insured Mortgages").  In accordance with the terms of the
partnership  agreement,  the Partnership is no longer authorized to originate or
acquire Insured Mortgages and, consequently,  its primary objective is to manage
its portfolio of mortgage  investments,  all of which are insured or guaranteed,
in whole or in part, by the Federal Housing Administration ("FHA") under section
221(d)(4)  or section 231 of the National  Housing Act of 1937,  as amended (the
"National Housing Act"). The Partnership is a liquidating  partnership and as it
continues  to  liquidate  its  mortgage   investments   and  investors   receive
distributions of return of capital and taxable gains,  investors should expect a
reduction in earnings and distributions due to the decreasing mortgage base. The
partnership agreement states that the Partnership will terminate on December 31,
2021,  unless  previously  terminated  under the  provisions of the  partnership
agreement.

     As of  December  31,  2001,  the  Partnership  had  invested  in 16 Insured
Mortgages  with  aggregate   amortized  cost,  face  value  and  fair  value  of
approximately  $47  million,  $48  million  and $46  million,  respectively,  as
discussed below.

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 FHA programs
("FHA-Insured  Certificates"),  mortgage-backed  securities  guaranteed  by  the
Government   National  Mortgage   Association   ("GNMA")("GNMA   Mortgage-Backed
Securities") and FHA-insured mortgage loans ("FHA-Insured Loans"). The mortgages
underlying the FHA-Insured Certificates, the GNMA Mortgage-Backed Securities and
the FHA-Insured  Loans are non-recourse  first liens on multifamily  residential
developments or retirement homes.

<PAGE>8

     Payments  of  principal  and  interest  on  FHA-Insured   Certificates  and
FHA-Insured  Loans are insured by the United  States  Department  of Housing and
Urban  Development  ("HUD")  pursuant to Title 2 of the  National  Housing  Act.
Payments of  principal  and  interest  on GNMA  Mortgage-Backed  Securities  are
guaranteed by GNMA pursuant to Title 3 of the National Housing Act.

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

Fully Insured FHA-Insured Certificates and GNMA Mortgage-Backed Securities
--------------------------------------------------------------------------

     Listed below is the  Partnership's  aggregate  investment  in Fully Insured
Mortgages as of December 31, 2001 and 2000:
<TABLE>
<CAPTION>
                                                                            December 31,
                                                                   2001                     2000
                                                               ------------             ------------
<S>                                                            <C>                      <C>
Number of:
  GNMA Mortgage-Backed Securities(1)(2)(3)(4)(5)(6)(7)                   13                       18
  FHA-Insured Certificates                                                1                        1
Amortized Cost                                                 $ 33,196,354             $ 45,000,295
Face Value                                                       33,067,185               44,953,069
Fair Value                                                       32,300,617               44,649,442
</TABLE>

(1)  In January 2001, the mortgage on Silver Lake Plaza  Apartments was prepaid.
     The  Partnership  received net proceeds of  approximately  $5.2 million and
     recognized a gain of approximately  $83,000 for the year ended December 31,
     2001.  A  distribution  of  approximately  $0.56  per Unit  related  to the
     prepayment   of  this  mortgage  was  declared  in  February  and  paid  to
     Unitholders in May 2001.
(2)  In February 2001, the mortgage on Holton Manor was prepaid. The Partnership
     received net proceeds of  approximately  $1.0 million and recognized a gain
     of  approximately   $36,000  for  the  year  ended  December  31,  2001.  A
     distribution of  approximately  $0.10 per Unit related to the prepayment of
     this mortgage was declared in March and paid to Unitholders in May 2001.
(3)  In August 2001,  the mortgage on Lorenzo  Carolina  Apartments was prepaid.
     The  Partnership  received net proceeds of  approximately  $1.0 million and
     recognized a gain of approximately  $42,000 for the year ended December 31,
     2001.  A  distribution  of  approximately  $0.11  per Unit  related  to the
     prepayment  of  this  mortgage  was  declared  in  September  and  paid  to
     Unitholders in November 2001.
(4)  In October 2001, the mortgage on Beauvoir Manor Apartments was prepaid. The
     Partnership  received  net  proceeds  of  approximately  $1.3  million  and
     recognized a gain of approximately $108,000 for the year ended December 31,
     2001.  A  distribution  of  approximately  $0.14  per Unit  related  to the
     prepayment  of this  mortgage  was  declared  in  October  2001 and paid to
     Unitholders in February 2002.
(5)  In November  2001,  the mortgage on Woodcrest  Townhomes  was prepaid.  The
     Partnership  received  net  proceeds of  approximately  $3.2  million and a
     recognized a gain of approximately $134,000 for the year ended December 31,
     2001.  A  distribution  of  approximately  $0.34  per Unit  related  to the
     prepayment  of this  mortgage  was  declared in  December  2001 and paid to
     Unitholders in February 2002.
(6)  In January 2002, the mortgage on Orchard Creek Apartments was prepaid.  The
     Partnership received net proceeds of approximately $1.3 million and expects
     to recognize a gain of  approximately  $33,000 in 2002. A  distribution  of
     approximately $0.14 per Unit related to the prepayment of this mortgage was
     declared in February 2002 and is expected to be paid to  Unitholders in May
     2002.
(7)  In February 2002, the mortgage on Westview Terrace  Apartments was prepaid.
     The  Partnership  received net proceeds of  approximately  $1.2 million and
     expects  to  recognize  a  gain  of   approximately   $49,000  in  2002.  A
     distribution of  approximately  $0.12 per Unit related to the prepayment of
     this  mortgage  is  expected  to be  declared  in  March  2002  and paid to
     Unitholders in May 2002.

<PAGE>9

     As of  March 1,  2002,  all of the  Partnership's  fully  insured  mortgage
investments are current with respect to the payment of principal and interest.

     In February  1996,  the General  Partner  instructed  the  servicer for the
mortgage on Water's Edge of New Jersey,  a fully insured  acquired  construction
loan,  to file a Notice of Default and an Election to Assign the  mortgage  with
HUD. The property  underlying this  construction loan was a nursing home located
in Trenton,  New Jersey.  As of January 31, 1997, the  Partnership  had received
approximately  $10.2  million  of the  assignment  proceeds,  including  partial
repayment of the outstanding principal and accrued interest.  HUD had disallowed
approximately  $1.65  million  of the  assignment  claim.  The  General  Partner
retained  counsel  in this  matter  and  pursued  litigation  against  the  loan
servicer,  Greystone Servicing Corporation,  Inc. ("Greystone"),  for the amount
disallowed  by HUD.  On July  30,  1998,  the  Partnership  filed a  Motion  for
Judgement against  Greystone in the Circuit Court of Fauquier County,  Virginia.
On June 1,  2001,  a jury  rendered a verdict  in favor of the  Partnership  and
against Greystone in the amount of approximately  $780,000.  On August 17, 2001,
the  Partnership  received  this amount plus accrued  interest of  approximately
$9,000.  A distribution  of  approximately  $0.09 per Unit related to this court
order was declared in September  2001 and paid to  Unitholders in November 2001.
In September 2001, the Partnership and Greystone agreed on a final settlement of
approximately $238,000 for reimbursement of legal fees, to the Partnership. This
amount was received on October 4, 2001. A distribution  of  approximately  $0.03
per Unit related to the reimbursement of legal fees was declared in October 2001
and paid to  Unitholders  in February  2002.  During the year ended December 31,
2001, the Partnership incurred a loss of approximately  $315,000 related to this
litigation. This loss includes legal fees incurred from April 1 through December
31, 2001, of  approximately  $199,000.  As of December 31, 2001, the Partnership
has  recognized  aggregate  losses  of  approximately  $894,000  related  to the
disposition of the mortgage on Water's Edge of New Jersey, which includes losses
recognized in 1996, 1997 and 2001.

Coinsured FHA-Insured Certificate
---------------------------------

     Under the HUD coinsurance program,  both HUD and the coinsurance lender are
responsible  for  paying a portion  of the  insurance  benefits  if a  mortgagor
defaults and the sale of the development  collateralizing  the mortgage produces
insufficient net proceeds to repay the mortgage  obligation.  In such cases, the
coinsurance  lender will be liable to the Partnership for the first part of such
loss in an amount up to 5% of the outstanding  principal balance of the mortgage
as of the date foreclosure proceedings are instituted or the deed is acquired in
lieu of foreclosure.  For any loss greater than 5% of the outstanding  principal
balance, the responsibility for paying the insurance benefits will be borne on a
pro-rata basis, 85% by HUD and 15% by the coinsurance lender.

     While  the  Partnership  is due  payment  of all  amounts  owed  under  the
mortgage,  the  coinsurance  lender is  responsible  for the  timely  payment of
principal and interest to the Partnership.  The coinsurance lender is prohibited
from  entering  into any  workout  arrangement  with the  borrower  without  the
Partnership's  consent and must file a claim for coinsurance  benefits with HUD,
upon  default,  if the  Partnership  so  directs.  As an  ongoing  HUD  approved
coinsurance  lender,  and under the terms of the  participation  documents,  the
coinsurance lender is required to satisfy certain minimum net worth requirements
as set forth by HUD.  However,  it is  possible  that the  coinsurance  lender's
potential liability for loss on these developments, and others, could exceed its
HUD-required  minimum net worth.  In such case, the  Partnership  would bear the
risk of loss if the  coinsurance  lenders were unable to meet their  coinsurance
obligations.  In addition,  HUD's obligation for the payment of its share of the
loss  could be  diminished  under  certain  conditions,  such as the  lender not
adequately  pursuing  regulatory  violations  of the  borrower or the failure to
comply with other terms of the  mortgage.  However,  the General  Partner is not
aware of any  conditions  or actions  that would result in HUD  diminishing  its
insurance coverage.

<PAGE>10

     As of December 31, 2001 and 2000, the Partnership  held one investment in a
coinsured FHA-Insured Certificate secured by a coinsured mortgage. The remaining
single FHA-Insured Certificate is coinsured by Integrated Funding, Inc. ("IFI"),
an  affiliate  of  the  Partnership.  The  following  is  a  discussion  of  the
Partnership's coinsured mortgage investments.

Coinsured by affiliate
----------------------

     As of December 31, 2001 and 2000, the Partnership  held one investment in a
coinsured  FHA-Insured  Certificate secured by a coinsured  mortgage,  where the
coinsurance lender is IFI. This investment was made on behalf of the Partnership
by the former  managing  general  partner.  As structured by the former managing
general partner,  with respect to this mortgage,  the Partnership bears the risk
of loss upon default for IFI's portion of the coinsurance  loss on this mortgage
investment.
<TABLE>
<CAPTION>
                                          December 31, 2001                             December 31, 2000
                                Amortized       Face          Fair            Amortized       Face          Fair
                                  Cost          Value      Mkt. Value           Cost          Value      Mkt. Value
                               -----------   -----------   -----------       -----------   -----------   -----------
<S>                            <C>           <C>           <C>               <C>           <C>           <C>
Summerwind Apts.-Phase II      $ 7,747,039   $ 9,057,300   $ 8,473,167       $ 7,808,228   $ 9,148,110   $ 8,492,111
</TABLE>

     As of March 1, 2002,  the  mortgagor was current with respect to payment of
principal and interest on this mortgage.

     There was no loan loss  recognized for the years ended 2001, 2000 and 1999.
The cumulative loan loss recognized in prior years was $1,511,743 for Summerwind
Apartments - Phase II.

Coinsured by third party
------------------------

     The  previously  owned  mortgage  on St.  Charles  Place  - Phase  II,  was
coinsured by The Patrician Mortgage Company ("Patrician"), an unaffiliated third
party coinsurance lender under the HUD coinsurance program. On October 14, 1993,
Patrician filed a foreclosure  action on the property  underlying this coinsured
mortgage.  On November 2, 1993, the mortgagor filed for protection under chapter
11 of the U.S.  Bankruptcy  Code.  The  property  was  acquired  and vested with
Patrician in November 1998 and subsequently sold on October 12, 1999.  Patrician
filed a coinsurance  claim for insurance  benefits with HUD in October 1999, for
remaining  amounts due,  including  past due  interest.  In November  1999,  the
Partnership  received sales proceeds of approximately $3 million. A distribution
of  approximately  $0.32 per Unit  related to the sale was  declared in November
1999 and was paid to  Unitholders  in  February  2000.  In  February  2001,  the
Partnership received claim proceeds from Patrician of approximately $2.2 million
and recognized a gain of approximately  $822,000 for the year ended December 31,
2001.  The claim proceeds  represent the remaining  balance due on the mortgage,
including  interest  from  November  1,  1995  through  the date of  receipt.  A
distribution of  approximately  $0.24 per Unit related to the prepayment of this
mortgage was  declared in March 2001 and paid to  Unitholders  in May 2001.  The
amount  of  the  Partnership's  investment  in  this  mortgage  represented  the
Partnership's  approximate 55% ownership interest in the mortgage. The remaining
45% ownership interest was held by AIM 86, an affiliate of the Partnership.

<PAGE>11

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

     Listed below is the  Partnership's  aggregate  investment  in fully insured
Originated Insured Mortgages as of December 31, 2001 and 2000:

                                                        December 31,
                                               2001                     2000
                                           ------------             ------------
Number of Mortgages                                   1                        1
Amortized Cost                             $  5,573,879             $  5,627,149
Face Value                                    5,573,879                5,627,149
Fair Value                                    5,230,714                5,248,132

     As of March 1, 2002, the  Partnership's  FHA-Insured  Loan was current with
respect to payment of principal and interest.

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

2001 versus 2000
----------------

     Net earnings decreased slightly for 2001 as compared to 2000, primarily due
to a decrease  in mortgage  investment  income,  which was largely  offset by an
increase in net gains on mortgage  dispositions  and a decrease in expenses,  as
discussed below.

     Mortgage investment income decreased for 2001 as compared to 2000, due to a
reduction in the mortgage  base. The mortgage base decreased as a result of nine
mortgage  dispositions with an aggregate  principal balance of approximately $22
million,  representing  an approximate  31% decrease in the aggregate  principal
balance of the total mortgage portfolio since February 2000.

     Interest  and other  income  decreased  for 2001 as compared to 2000.  This
decrease was primarily due to the timing of the temporary investment of proceeds
from mortgage prepayments.

     Asset  management fee expense  decreased for 2001 as compared to 2000. This
decrease was due to the reduction in the mortgage base, as previously discussed.

     General and administrative expenses decreased for 2001 as compared to 2000,
primarily  due to a decrease in legal expense  related to the  litigation of the
mortgage on Water's Edge of New Jersey, which was settled in 2001.

     Realized gains on mortgage  dispositions  increased for 2001 as compared to
2000.  During 2001, the Partnership  recognized gains of approximately  $403,000
from the  prepayment  of the mortgages on Silver Lake Plaza  Apartments,  Holton
Manor,  Lorenzo  Carolina  Apartments,  Beauvoir Manor  Apartments and Woodcrest
Townhomes;  and a gain  of  approximately  $822,000  on the  disposition  of the
mortgage on St. Charles Place - Phase II, a delinquent  mortgage  coinsured by a
third  party,   Patrician.   This  compares  to  gains  recognized  in  2000  of
approximately  $387,000  related to the  prepayment of the mortgages on Linville
Manor, Park Avenue Plaza, Lioncrest Towers Apartments and Kingsway Apartments.

     Adjustment  to provision  for loss  increased for 2001 as compared to 2000.
The Partnership  recognized an additional loss of approximately  $315,000 on the
disposition  of the  mortgage  on  Water's  Edge of New  Jersey,  as  previously
discussed.

<PAGE>12

2000 versus 1999
----------------

     Net earnings  decreased  for 2000 as compared to 1999,  primarily  due to a
decrease in mortgage  investment  income caused by the reduction in the mortgage
asset base and a reduction in net gains on mortgage dispositions.

     Mortgage investment income decreased for 2000 as compared to 1999, due to a
reduction in the mortgage  base.  The mortgage base decreased as a result of ten
mortgage  dispositions with an aggregate  principal balance of approximately $47
million,  representing  an approximate  43% decrease in the aggregate  principal
balance of the total mortgage portfolio, since March 1999.

     Interest  and other  income  decreased  for 2000 as compared to 1999.  This
decrease was primarily due to the timing of the temporary investment of proceeds
from mortgage prepayments.

     Asset  management fee expense  decreased for 2000 as compared to 1999. This
decrease  was  due to the  reduction  in the  mortgage  base,  primarily  due to
mortgage prepayments as previously discussed.

     General and administrative expenses increased for 2000 as compared to 1999.
This  increase  was  primarily  due to the legal  fees  related  to the  ongoing
litigation related to Water's Edge of New Jersey as previously discussed.

     Net realized gains on mortgage dispositions  decreased for 2000 as compared
to 1999.  Gains or  losses on  mortgage  dispositions  are based on the  number,
carrying  amounts and  proceeds of mortgage  investments  disposed of during the
period. During 2000, the Partnership  recognized gains of approximately $387,000
related to the prepayment of the mortgages on Linville Manor, Park Avenue Plaza,
Lioncrest  Towers  Apartments  and Kingsway  Apartments.  This compares to gains
recognized in 1999 of  approximately $1 million related to the prepayment of the
mortgages  on Seven  Spring  Apartments,  The  Breakers at Golf Mill,  Oak Grove
Apartments, and Heather Ridge.

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

     On October 5, 1998,  CRIIMI  MAE,  the parent of the General  Partner,  and
CRIIMI  MAE  Management,  Inc.,  an  affiliate  of CRIIMI  MAE and  provider  of
personnel  and  administrative  services  to the  Partnership,  filed  voluntary
petitions for relief under chapter 11 of title 11 of the United States Code (the
"Bankruptcy Code"). On November 22, 2000, the United States Bankruptcy Court for
the  District of Maryland,  in  Greenbelt,  Maryland  (the  "Bankruptcy  Court")
confirmed CRIIMI MAE's and CRIIMI MAE Management, Inc.'s reorganization plan. On
April 17,  2001,  CRIIMI  MAE and  CRIIMI  MAE  Management,  Inc.  emerged  from
bankruptcy.

     The  Partnership's  operating  cash  receipts,  derived  from  payments  of
principal and interest on Insured Mortgages, plus cash receipts from interest on
short-term investments are the Partnership's principal sources of cash flows and
were sufficient  during the years ended December 31, 2001, 2000 and 1999 to meet
operating  requirements.  The  Partnership  anticipates  its  cash  flows  to be
sufficient to meet operating expense requirements for 2002.

     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 after paying all
expenses  of the  Partnership.  Although  the  Insured  Mortgages  yield a fixed
monthly  mortgage  payment once purchased,  the cash  distributions  paid to the
Unitholders will vary during each quarter

<PAGE>13

due to (1) the  fluctuating  yields in the  short-term  money  market  where 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 payment  receipts or mortgage  dispositions,  (3) variations in
the cash flow  attributable to the delinquency or default of Insured  Mortgages,
and  professional  fees and foreclosure  costs incurred in connection with those
Insured Mortgages and (4) variations in the Partnership's operating expenses.

     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 amount of the Insured  Mortgages,  which are prepaid,  sold or assigned
for insurance proceeds.

Cash flow - 2001 versus 2000
----------------------------

     Net cash provided by operating activities decreased for 2001 as compared to
2000.  This  decrease is  primarily  due to the decrease in mortgage  base.  The
change in accounts  payable and accrued expenses is primarily due to the payment
of legal  expenses  related to the  Water's  Edge of New Jersey  litigation,  as
discussed previously.

     Net cash provided by investing activities increased for 2001 as compared to
2000.  This increase is primarily due to: (1) proceeds  received from  Patrician
for the disposition of the delinquent  mortgage on St. Charles Place - Phase II;
(2) proceeds  received from  Greystone as a result of the  settlement of Water's
Edge of New Jersey  litigation;  and (3) an  increase in the receipt of proceeds
from mortgage  dispositions.  These increases were slightly offset by a decrease
in scheduled principal payments as a result of the reduction in mortgage base.

     Net cash used in  financing  activities  increased  for 2001 as compared to
2000, due to an increase in the amount of distributions  paid to partners during
2001, as compared to the same period in 2000. The increase in  distributions  is
due to an increase in investing activities, as discussed above.

Cash flow - 2000 versus 1999
----------------------------

     Net cash provided by operating activities decreased for 2000 as compared to
1999, primarily due to the decrease in mortgage base, as discussed previously.

     Net cash provided by investing activities decreased for 2000 as compared to
1999, primarily due to a reduction in proceeds from mortgage dispositions.

     Net cash used in  financing  activities  decreased  for 2000 as compared to
1999, due to a decrease in the amount of  distributions  paid to partners during
2000, as compared to the same period in 1999.



<PAGE>14

                                     PART II

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,  which  coupled with the related  spread to
treasury investors required for the Partnership's Insured Mortgages,  will cause
fluctuations in the market value of the Partnership's assets.

     The  table  below  provides  information  about the  Partnership's  Insured
Mortgages,  all of which were entered into for purposes other than trading.  The
table  presents  anticipated  principal  and interest  cash flows based upon the
assumptions  used in  determining  the fair  value of these  securities  and the
related weighted average interest rates by expected maturity.

<TABLE>
<CAPTION>
                                      2002        2003        2004        2005        2006     Thereafter      Total     Fair Value
                                      ----        ----        ----        ----        ----     ----------      -----     ----------
<S>                                  <C>         <C>         <C>         <C>         <C>          <C>          <C>         <C>
Insured Mortgages
(in millions)                        $ 7.3       $ 6.7       $ 7.8       $ 7.6       $ 6.9        $35.1        $71.4       $46.0

Average Interest Rate                  7.91%       7.92%       7.94%       7.91%       7.88%        8.10%        7.94%       --
</TABLE>


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 23.


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

          None.

<PAGE>15
                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         (a),(b),(c),(e)

     The Partnership has no officers or directors.  CRIIMI, Inc. holds a general
partnership  interest of 4.9%. The affairs of the Partnership are managed by the
General Partner, which is wholly owned by CRIIMI MAE, a corporation whose shares
are listed on the New York Stock Exchange.

     The  general  partner of the  Advisor is AIM  Acquisition  and the  limited
partners  include,  but are not limited to, AIM  Acquisition,  The Goldman Sachs
Group,  L.P.,  Sun America  Investments,  Inc.  (successor  to Broad,  Inc.) and
CRI/AIM  Investment,  L.P.,  an affiliate of CRIIMI MAE.  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 amendments to
the  partnership  agreement,  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.  CMSLP,  an
affiliate of CRIIMI MAE, manages the  Partnership's  portfolio,  pursuant to the
Sub-Advisory  Agreement.  The  general  partner  of CMSLP  is  CMSLP  Management
Company, Inc., a wholly-owned subsidiary of CRIIMI MAE.

     The General  Partner is also the general  partner of AIM 84, AIM 85 and AIM
86, limited  partnerships  with  investment  objectives  similar to those of the
Partnership.

     The  following  table  sets  forth  information  concerning  the  executive
officers  and  directors  of CRIIMI  MAE,  the sole  shareholder  of the General
Partner, as of February 19, 2002:

<TABLE>
<CAPTION>
 Name                                       Age                       Position
 ----                                       ---                       --------
<S>                                         <C>                  <C>
William B. Dockser                          64                   Chairman of the Board

H. William Willoughby                       55                   President, Secretary and Director

David B. Iannarone                          41                   Executive Vice President

Cynthia O. Azzara                           42                   Senior Vice President,
                                                                   Chief Financial Officer and
                                                                   Treasurer

Brian L. Hanson                             40                   Senior Vice President

John R. Cooper                              54                   Director

Alan M. Jacobs                              53                   Director

Robert J. Merrick                           56                   Director

Robert E. Woods                             54                   Director
</TABLE>

<PAGE>16

     William B.  Dockser  has  served as  Chairman  of the Board of the  General
Partner  since 1991.  Mr.  Dockser has been  Chairman of the Board of CRIIMI MAE
since 1989. Mr. Dockser is also the founder of C.R.I., Inc. ("CRI"),  serving as
its Chairman of the Board since 1974.

     H. William  Willoughby has served as President and Secretary of the General
Partner since 1991.  Mr.  Willoughby has been President of CRIIMI MAE since 1990
and a Director and Secretary of CRIIMI MAE since 1989. Mr. Willoughby has been a
director of CRI since 1974,  Secretary of CRI from 1974 to 1990 and President of
CRI since 1990.

     David B.  Iannarone has served as Executive  Vice  President of the General
Partner  since  December  2000.  Mr.  Iannarone  has  served as  Executive  Vice
President  of CRIIMI MAE since  December  2000;  as Senior  Vice  President  and
General  Counsel of CRIIMI MAE from March  1998 to  December  2000;  and as Vice
President and General Counsel of CRIIMI MAE from July 1996 to March 1998.

     Cynthia  O.  Azzara has served as Chief  Financial  Officer of the  General
Partner since 1994. Ms. Azzara has served as Chief  Financial  Officer of CRIIMI
MAE since 1994. She has also served as Senior Vice President of CRIIMI MAE since
1995 and Treasurer of CRIIMI MAE since 1997.

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

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

     Alan M. Jacobs has served as Director  of the General  Partner  since April
2001.  Mr.  Jacobs  has  served as  Director  of CRIIMI  MAE since  April  2001;
President of AMJ Advisors LLC, since  September  1999;  and founding  member and
Senior  Partner  of Ernst  and  Young  LLP's  restructuring  and  reorganization
practice  through  September  1999.  Mr.  Jacobs is the Plan  Administrator  and
Litigation Trust Trustee for T&W Financial  Corporation,  the Chapter 11 Trustee
for Apponline.com,  Inc., the Chapter 11 Trustee for Sharp International  Corp.,
the Chapter 7 Trustee for Edison  Brothers  Stores,  Inc.  and was  formerly the
co-chairman  and  co-chief   executive  officer  of  West  Coast   Entertainment
Corporation.  Mr. Jacobs serves as a director of The Singer Sewing Company.  Mr.
Jacobs was an executive officer of West Coast  Entertainment  Corporation at the
time such  corporation  filed a petition  under the federal  bankruptcy  laws in
March 2000.

     Robert J. Merrick has served as Director of the General Partner since 1997.
Mr.  Merrick  has served as  Director  of CRIIMI MAE since  1997;  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, also served as Chairman of the Credit Policy  Committee and member
of the Asset and Liability Committee and Management Committee.

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

<PAGE>17


     (d)  There  is no  family  relationship  between  any of the  officers  and
          directors of the General Partner.

     (f)  Involvement in certain legal proceedings.

          None.

     (g)  Promoters and control persons.

          Not applicable.

     (h)  Section 16(a) Beneficial Ownership Reporting Compliance - 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  5s  were  required  for  those  persons,  the
          Partnership believes that all reporting persons have filed on a timely
          basis Forms 3, 4 and 5 as  required in the fiscal year ended  December
          31, 2001.


ITEM 11.  EXECUTIVE COMPENSATION

     The  Partnership  does not  have any  directors  or  officers.  None of the
directors  or officers  of the General  Partner  receive  compensation  from the
Partnership,  and the General  Partner does not receive  reimbursement  from the
Partnership for any portion of their  salaries.  Other  information  required by
Item 11 is hereby  incorporated  by  reference  herein to Note 7 of the Notes to
Financial Statements of the Partnership.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

(a)  As of February 19, 2002, no person was known by the  Partnership  to be the
     beneficial owner of more than five percent (5%) of the outstanding Units of
     the Partnership.

(b)  The following table sets forth certain information regarding the beneficial
     ownership  of the  Partnership's  Units  as of  February  19,  2002 by 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
----                         ------------------                  -----------
William B. Dockser                 3,000                              *
CRIIMI MAE                           744                              *

* 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>18

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

(a)  Transactions with management and others.

     Note 7 of the  Notes  to  Financial  Statements  of the  Partnership  which
     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.

(c)  Indebtedness of management.

     None.

(d)  Transactions with promoters.

     Not applicable.

<PAGE>19
                                     PART IV

ITEM 14.  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, 2001 and 2000.............................................................25

Statements of Income and Comprehensive Income for the years ended December 31, 2001,
   2000 and 1999............................................................................................26

Statements of Changes in Partners' Equity for the years ended December 31, 2001, 2000
    and 1999................................................................................................27

Statements of Cash Flows for the years ended December 31, 2001, 2000 and 1999...............................28

Notes to Financial Statements...............................................................................29

          (a)(2) Financial Statement Schedules:

         IV - Mortgage Loans on Real Estate.................................................................40
</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:

     3.0  Certificate  of Limited  Partnership is  incorporated  by reference to
          Exhibit  4(a) to  Amendment  No. 1 to the  Partnership's  Registration
          Statement on Form S-11 (No.  33-12479)  filed with the  Commission  on
          June 10, 1987.

     4.0  Agreement of Limited Partnership, incorporated by reference to Exhibit
          3  to  the  Post-Effective   Amendment  No.  1  to  the  Partnership's
          Registration  Statement  on Form S-11 (No.  33-12479)  filed  with the
          Commission on March 8, 1988 (such Amendment is referred to hereinbelow
          as Post-Effective Amendment No.1).

     4.1  Material   Amendments   to  Agreement  of  Limited   Partnership   are
          incorporated by reference to Exhibit 3(a) to Post-Effective  Amendment
          No.1.

     4.2  Amendment to the Amended and Restated Agreement of Limited Partnership
          of the Partnership dated February 12, 1990.

    10.0  Escrow  Agreement is incorporated by reference to Exhibit 10(a) to the
          Partnership's  Annual Report on Form 10-K for the year ended  December
          31, 1987.

    10.1  Origination  and  Acquisition  Services  Agreement is  incorporated by
          reference to Exhibit 10(b) to the Partnership's  Annual Report on Form
          10-K for the year ended December 31, 1987.

    10.2  Management  Services Agreement is incorporated by reference to Exhibit
          10(c) to the  Partnership's  Annual  Report  on Form 10-K for the year
          ended December 31, 1987.

<PAGE>20

    10.3  Disposition Services Agreement is incorporated by reference to Exhibit
          10(d) to the  Partnership's  Annual  Report  on Form 10-K for the year
          ended December 31, 1987.

    10.4  Agreement  among the  former  managing  general  partner,  the  former
          associate   general   partner  and  Integrated   Resources,   Inc.  is
          incorporated by reference to Exhibit 10(e) to the Partnership's Annual
          Report on Form 10-K for the year ended December 31, 1987.

    10.5  Reinvestment  Plan is  incorporated  by reference to Exhibit  10(f) to
          Post- Effective Amendment No. 1.

    10.6  Mortgagor-Participant  Agreement,  Mortgage  Assignment  of Rents  and
          Security  Agreement  and  Mortgage  Note with  respect to The Breakers
          (sometimes also referred to as the Niles Senior  Lifestyle  Community)
          is  incorporated  by  reference  to  Exhibit  10(g) to  Post-Effective
          Amendment No. 1.

    10.7  Mortgagor-Mortgagee Agreement, Mortgage Note and Mortgage with respect
          to the Arlington  development is  incorporated by reference to Exhibit
          10(h) to Post-Effective Amendment No. 1.

    10.8  Pages  A-1  -  A-5  of  the   partnership   agreement  of  Registrant,
          incorporated  by reference to Exhibit 28 to the  Partnership's  Annual
          Report on Form 10-K for the year ended December 31, 1990.

    10.9  Purchase Agreement among AIM Acquisition,  the former managing general
          partner,  the former  corporate  general  partner,  IFI and Integrated
          dated  as  of  December  13,  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 March
          1,  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 Amendments   to   partnership   agreement   dated   August  13,  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.

    10.12 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(e) the Partnership's  Annual Report on Form 10-K for the
          year ended December 31, 1992.

    10.13 Expense  Reimbursement  Agreement by  Integrated  Funding Inc. and the
          AIM Funds,  effective December 31, 1992,  incorporated by reference to
          Exhibit 28(f) to the  Partnership's  Quarterly Report on Form 10-Q for
          the quarter ended June 30, 1993.

    10.14 Non-negotiable   promissory  note  from  American   Insured   Mortgage
          Investors L.P. - Series 85 in the amount of $319,074.67 dated April 1,
          1994,  incorporated by reference to Exhibit 10(p) to the Partnership's
          Annual Report on Form 10-K for the year ended December 31, 1994.

    10.15 Non-negotiable   promissory  note  from  American   Insured   Mortgage
          Investors L.P. - Series 86 in the amount of $478,612.00 dated April 1,
          1994,  incorporated by reference to Exhibit 10(q) to the Partnership's
          Annual Report on Form 10-K for the year ended December 31, 1994.

    10.16 Amendment to Reimbursement  Agreement by Integrated Funding,  Inc. and
          the AIM Funds,  effective April 1, 1994,  incorporated by reference to
          Exhibit 10(r) to the Partnership's  Annual Report on Form 10-K for the
          year ended December 31, 1994.
<PAGE>21

    10.17 Second  Amendment to  Reimbursement  Agreement by Integrated  Funding,
          Inc.  and the AIM  Funds,  effective  April 1, 1997,  incorporated  by
          reference to Exhibit 10.17 to the Partnership's  Annual Report on Form
          10-K for the year ended December 31, 1997.

    10.18 Non-negotiable   promissory  note  from  American   Insured   Mortgage
          Investors,  L.P. - Series 86, in the amount of $658,486 dated April 1,
          1997,  incorporated by reference to Exhibit 10.18 to the Partnership's
          Annual Report on Form 10-K for the year ended December 31, 1997.

    10.19 Amendment  No. 3 to  Reimbursement  Agreement by  Integrated  Funding,
          Inc. and the AIM Funds,  effective  January 1, 2000,  incorporated  by
          reference to exhibit 10.19 to the Partnership's  Annual Report on Form
          10-K for the year ended December 31, 2000.

    10.20 Amendment  No. 4 to  Reimbursement  Agreement by  Integrated  Funding,
          Inc. and the AIM Funds, effective January 1, 2001 (filed herewith).

    99.0  Letter to  Securities  and Exchange  Commission  from the  Partnership
          dated March 20,  2002  regarding  the  representations  received  from
          Arthur  Andersen LLP in performing  the audit of the December 31, 2001
          financial statements (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>22
                                   SIGNATURES

     KNOW ALL  PERSONS  BY THESE  PRESENTS,  that each  person  whose  signature
appears  below  constitutes  and  appoints  William B.  Dockser  and H.  William
Willoughby, jointly and severally, 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 L.P. - SERIES 88
                                               (Registrant)

                                               By:    CRIIMI, Inc.
                                                      General Partner

March 12, 2002                                 /s/ William B. Dockser
--------------                                 ---------------------------------
DATE                                           William B. Dockser
                                               Chairman of the Board

March 12, 2002                                 /s/ H. William Willoughby
--------------                                 ---------------------------------
DATE                                           H. William Willoughby
                                               President, Secretary and Director

March 15, 2002                                 /s/ Cynthia O. Azzara
--------------                                 ---------------------------------
DATE                                           Cynthia O. Azzara
                                               Senior Vice President,
                                               Chief Financial Officer and
                                               Treasurer

March 12, 2002                                 /s/ John R. Cooper
--------------                                 ---------------------------------
DATE                                           John R. Cooper
                                               Director

March 12, 2002                                 /s/ Alan M. Jacobs
--------------                                 ---------------------------------
DATE                                           Alan M. Jacobs
                                               Director

March 14, 2002                                 /s/ Robert J. Merrick
--------------                                 ---------------------------------
DATE                                           Robert J. Merrick
                                               Director

March 11, 2002                                 /s/ Robert E. Woods
--------------                                 ---------------------------------
DATE                                           Robert E. Woods
                                               Director


<PAGE>23
















              AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88



                              Financial Statements

                        as of December 31, 2001 and 2000


                             and for the Years Ended

                        December 31, 2001, 2000 and 1999


<PAGE>24


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To the Partners of American Insured Mortgage Investors L.P. - Series 88:

     We have  audited  the  accompanying  balance  sheets  of  American  Insured
Mortgage Investors L.P. - Series 88 (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



<PAGE>25

              AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88

                                 BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                   December 31,      December 31,
                                                                       2001              2000
                                                                   ------------      ------------
                                     ASSETS
<S>                                                                <C>               <C>
Investment in FHA-Insured Certificates and GNMA
   Mortgage-Backed Securities, at fair value:
      Acquired insured mortgages                                   $ 32,300,617      $ 44,649,442
      Originated insured mortgages                                    8,473,167         8,492,111
                                                                   ------------      ------------

                                                                     40,773,784        53,141,553

Investment in FHA-Insured Loans, at amortized cost,
   net of unamortized discount and premium:
      Originated insured mortgages                                    5,573,879         5,627,149

Cash and cash equivalents                                             5,626,184         7,605,734

Investment in affiliate                                               1,789,536         1,854,261

Receivables and other assets                                            365,767         3,059,412
                                                                   ------------      ------------

      Total assets                                                 $ 54,129,150      $ 71,288,109
                                                                   ============      ============



                LIABILITIES AND PARTNERS' EQUITY

Distributions payable                                              $  5,784,760      $  7,774,718

Accounts payable and accrued expenses                                   129,533           382,663
                                                                   ------------      ------------

      Total liabilities                                               5,914,293         8,157,381
                                                                   ------------      ------------

Partners' equity:
   Limited partners' equity, 15,000,000 Units authorized,
      8,802,091 Units issued and outstanding                         55,338,877        69,011,402
   General partner's deficit                                         (6,286,695)       (5,582,223)
   Less:  Repurchased Limited Partnership
      Units - 50,000 Units                                             (618,750)         (618,750)
  Accumulated other comprehensive (loss) income                        (218,575)          320,299
                                                                   ------------      ------------

      Total Partners' equity                                         48,214,857        63,130,728
                                                                   ------------      ------------

      Total liabilities and partners' equity                       $ 54,129,150      $ 71,288,109
                                                                   ============      ============
</TABLE>

                   The accompanying notes are an integral part
                         of these financial statements.
<PAGE>26

              AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88

                  STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

<TABLE>
<CAPTION>
                                                            For the years ended December 31,
                                                       2001                2000              1999
                                                    ----------          ----------        ----------
<S>                                                 <C>                 <C>               <C>
Income:
  Mortgage investment income                        $4,205,728          $5,276,523        $6,848,840
  Interest and other income                            182,126             224,751           444,944
                                                    ----------          ----------        ----------

                                                     4,387,854           5,501,274         7,293,784
                                                    ----------          ----------        ----------

Expenses:
  Asset management fee to related parties              565,368             712,869           942,910
  General and administrative                           181,816             437,036           369,751
                                                    ----------          ----------        ----------

                                                       747,184           1,149,905         1,312,661
                                                    ----------          ----------        ----------

Earnings before gains (losses) on
  mortgage dispositions                              3,640,670           4,351,369         5,981,123



Net gains on mortgage dispositions                   1,225,250             386,654         1,072,167
Adjustment to provision for loss                      (315,155)                  -                 -
                                                    ----------          ----------        ----------

Net earnings                                        $4,550,765          $4,738,023        $7,053,290
                                                    ==========          ==========        ==========

Other comprehensive (loss) income                     (538,874)          1,165,618          (960,003)
                                                    ----------          ----------        ----------

Comprehensive income                                $4,011,891          $5,903,641        $6,093,287
                                                    ==========          ==========        ==========

Net earnings allocated to:
  Limited partners - 95.1%                          $4,327,778          $4,505,860        $6,707,679
  General Partner -   4.9%                             222,987             232,163           345,611
                                                    ----------          ----------        ----------

                                                    $4,550,765          $4,738,023        $7,053,290
                                                    ==========          ==========        ==========

Net earnings per Limited Partnership
  Unit outstanding - Basic                          $     0.49          $     0.51        $     0.76
                                                    ==========          ==========        ==========
</TABLE>

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

<PAGE>27

              AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88

                    STATEMENTS OF CHANGES IN PARTNERS' EQUITY

              For the years ended December 31, 2001, 2000 and 1999

<TABLE>
<CAPTION>
                                                                                     Repurchased       Accumulated
                                                                                       Limited           Other            Total
                                                     General          Limited        Partnership      Comprehensive      Partners'
                                                     Partner          Partners          Units         Income(Loss)        Equity
                                                   ------------     ------------     ------------     ------------     ------------
<S>                                                <C>              <C>              <C>              <C>              <C>
Balance, January 1, 1999                           $ (3,057,885)    $118,004,167     $   (618,750)    $    114,684     $114,442,216

  Net Earnings                                          345,611        6,707,679                -                -        7,053,290
  Adjustment to unrealized gains (losses)
     on investments in insured mortgages                      -                -                -         (960,003)        (960,003)
  Distributions paid or accrued of $5.06
     per Unit, including return of capital
     of $4.30 per Unit                               (2,294,837)     (44,538,582)               -                -      (46,833,419)
                                                   ------------     ------------     ------------     ------------     ------------
Balance, December 31, 1999                           (5,007,111)      80,173,264         (618,750)        (845,319)      73,702,084

  Net Earnings                                          232,163        4,505,860                -                -        4,738,023
  Adjustment to unrealized gains (losses) on
     investments in insured mortgages                         -                -                -        1,165,618        1,165,618
  Distributions paid or accrued of $1.78
     per Unit, including return of capital of
     $1.27 per Unit                                    (807,275)     (15,667,722)               -                -      (16,474,997)
                                                   ------------     ------------     ------------     ------------     ------------
Balance, December 31, 2000                           (5,582,223)      69,011,402         (618,750)         320,299       63,130,728

  Net Earnings                                          222,987        4,327,778                -                -        4,550,765
  Adjustment to unrealized gains (losses) on
     investments in insured mortgages                         -                -                -         (538,874)        (538,874)
  Distributions paid or accrued of $2.045
     per Unit, including return of capital of
     $1.555 per Unit                                   (927,459)     (18,000,303)               -                -      (18,927,762)
                                                   ------------     ------------     ------------     ------------     ------------
Balance, December 31, 2001                         $ (6,286,695)    $ 55,338,877     $   (618,750)    $   (218,575)    $ 48,214,857
                                                   ============     ============     ============     ============     ============

Limited Partnership Units outstanding -
   basic, as of December 31, 2001, 2000,
   and 1999                                                            8,802,091
                                                                       =========
</TABLE>
                   The accompanying notes are an integral part
                         of these financial statements.


<PAGE>28


             AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88

                           STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                                          For the years ended December 31,
                                                                                         2001           2000           1999
                                                                                      -----------    -----------    -----------
<S>                                                                                   <C>            <C>            <C>
Cash flows from operating activities:
   Net earnings                                                                       $ 4,550,765    $ 4,738,023    $ 7,053,290
   Adjustments to reconcile net earnings to net cash
      provided by operating activities:
      Gain on mortgage dispositions                                                    (1,225,250)      (386,654)    (1,072,589)
      Adjustment to provision for loss                                                    315,155              -            422
      Changes in assets and liabilities:
         Decrease in investment in affiliate                                               28,489         42,360         63,125
         Decrease in receivables and other assets                                         109,205        154,071        132,524
         (Decrease) increase in accounts payable and accrued expenses                    (429,545)       256,015         48,919
                                                                                      -----------    -----------    -----------

         Net cash provided by operating activities                                      3,348,819      4,803,815      6,225,691
                                                                                      -----------    -----------    -----------

Cash flows provided by investing activities:
   Proceeds from dispositions of Insured mortgages                                     11,697,541     11,008,711     35,966,462
   Proceeds received from Greystone, related to the mortgage
      on Water's Edge of New Jersey                                                     1,026,921              -              -
   Proceeds received from Patrician, related to the mortgage
      on St. Charles Place-Phase II                                                     2,241,218              -              -
   Receipt of mortgage principal from scheduled payments                                  623,671        707,084        847,024
                                                                                      -----------    -----------    -----------

         Net cash provided by investing activities                                     15,589,351     11,715,795     36,813,486
                                                                                      -----------    -----------    -----------

Cash flows used in financing activities:
   Distributions paid to partners                                                     (20,917,720)   (18,326,120)   (39,151,257)
                                                                                      -----------    -----------    -----------

Net (decrease) increase in cash and cash equivalents                                   (1,979,550)    (1,806,510)     3,887,920

Cash and cash equivalents, beginning of year                                            7,605,734      9,412,244      5,524,324
                                                                                      -----------    -----------    -----------

Cash and cash equivalents, end of year                                                $ 5,626,184    $ 7,605,734    $ 9,412,244
                                                                                      ===========    ===========    ===========


Non cash investing activity:
Increased receivable due from Patrician as a result of the foreclosure and
   sale of the property underlying the mortgage on St. Charles Place-Phase II         $         -    $         -    $   706,765
                                                                                      ===========    ===========    ===========
</TABLE>
                   The accompanying notes are an integral part
                         of these financial statements.


<PAGE>29

              AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88

                          NOTES TO FINANCIAL STATEMENTS

1.   ORGANIZATION

     American  Insured Mortgage  Investors L.P. - Series 88 (the  "Partnership")
was formed under the Uniform Limited Partnership Act of the state of Delaware on
February 13, 1987.

     CRIIMI,  Inc. (the "General Partner") holds a partnership  interest of 4.9%
and is a wholly  owned  subsidiary  of  CRIIMI  MAE  Inc.  ("CRIIMI  MAE").  AIM
Acquisition  Partners,  L.P.  (the  "Advisor")  serves  as  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,
AIM Acquisition,  The Goldman Sachs Group, L.P., Sun America Investments,  Inc.,
(successor to Broad, Inc.) and CRI/AIM Investment,  L.P., an affiliate of CRIIMI
MAE. AIM  Acquisition is a Delaware  corporation  that is primarily owned by Sun
America Investments, Inc. and The Goldman Sachs Group, L.P.

     Under the  Advisory  Agreement,  the Advisor  will  render  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  will be 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.  The  Advisor is  permitted  to
delegate the performance of services  pursuant to a sub-advisory  agreement (the
"Sub-Advisory Agreement").  The delegation of such services will not relieve the
Advisor of its obligation to perform such services.  CRIIMI MAE Services Limited
Partnership  ("CMSLP"),  an affiliate of CRIIMI MAE,  manages the  Partnership's
portfolio,  pursuant to the Sub-Advisory Agreement. The general partner of CMSLP
is CMSLP Management Company, Inc., a wholly-owned subsidiary of CRIIMI MAE.

     Prior  to  the  expiration  of the  Partnership's  reinvestment  period  in
December  1996,  the  Partnership  was engaged in the  business  of  originating
mortgage loans  ("Originated  Insured  Mortgages") and acquiring  mortgage loans
("Acquired Insured  Mortgages",  and together with Originated Insured Mortgages,
referred to herein as "Insured Mortgages").  In accordance with the terms of the
partnership  agreement,  the Partnership is no longer authorized to originate or
acquire Insured Mortgages and, consequently,  its primary objective is to manage
its portfolio of mortgage  investments,  all of which are insured or guaranteed,
in whole or in part, by the Federal Housing Administration ("FHA") under section
221(d)(4)  or section 231 of the National  Housing Act of 1937,  as amended (the
"National Housing Act"). The Partnership is a liquidating  partnership and as it
continues  to  liquidate  its  mortgage   investments   and  investors   receive
distributions of return of capital and taxable gains,  investors should expect a
reduction in earnings and distributions due to the decreasing mortgage base. The
partnership agreement states that the Partnership will terminate on December 31,
2021,  unless  previously  terminated  under the  provisions of the  partnership
agreement.

     On October 5, 1998,  CRIIMI  MAE,  the parent of the General  Partner,  and
CRIIMI  MAE  Management,  Inc.,  an  affiliate  of CRIIMI  MAE and  provider  of
personnel  and  administrative  services  to the  Partnership,  filed  voluntary
petitions for relief under chapter 11 of title 11 of the United States Code (the
"Bankruptcy Code"). On November 22, 2000, the United States Bankruptcy Court for
the  District of Maryland,  in  Greenbelt,  Maryland  (the  "Bankruptcy  Court")
confirmed CRIIMI MAE's and CRIIMI MAE Management, Inc.'s reorganization plan. On
April 17,  2001,  CRIIMI  MAE and  CRIIMI  MAE  Management,  Inc.  emerged  from
bankruptcy.

<PAGE>30


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 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 FHA programs
("FHA-Insured  Certificates"),  mortgage-backed  securities  guaranteed  by GNMA
("GNMA Mortgage-Backed Securities") and FHA-insured mortgage loans ("FHA-Insured
Loans").   The  mortgages   underlying  the   FHA-Insured   Certificates,   GNMA
Mortgage-Backed Securities and FHA-Insured Loans are non-recourse first liens on
multifamily residential developments.

     Payments  of  principal  and  interest  on  FHA-Insured   Certificates  and
FHA-Insured  Loans are insured by the United  States  Department  of Housing and
Urban  Development  ("HUD")  pursuant to Title 2 of the  National  Housing  Act.
Payments of  principal  and  interest  on GNMA  Mortgage-Backed  Securities  are
guaranteed by GNMA pursuant to Title 3 of the National Housing Act.

     As of  December  31,  2001,  the  weighted  average  remaining  term of the
Partnership's  investments in GNMA  Mortgage-Backed  Securities and  FHA-Insured
Certificates is  approximately  25 years.  However,  the  partnership  agreement
states  that the  Partnership  will  terminate  in  approximately  20 years,  on
December 31, 2021,  unless  previously  terminated  under the  provisions of the
partnership  agreement.  As the Partnership is anticipated to terminate prior to
the weighted  average  remaining term of its investment in GNMA  Mortgage-Backed
Securities  and  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 investments in
GNMA Mortgage-Backed  Securities and FHA-Insured Certificates should be included
in the available for sale category.  Although the  Partnership's  investments in
GNMA Mortgage-Backed  Securities and FHA-Insured  Certificates are classified as
available for sale for financial  statement  purposes,  the General Partner does
not intend to  voluntarily  sell these assets other than those which may be sold
as a result of a default.

     In connection with this  classification,  as of December 31, 2001 and 2000,
the Partnership's investments in GNMA Mortgage-Backed Securities and FHA-Insured
Certificates  are  recorded at fair  value,  with the net  unrealized  gains and
losses on these assets  reported as other  comprehensive  income (loss) and as a
separate component of partners' equity. Subsequent increases or decreases in the
fair value of GNMA  Mortgage-Backed  Securities  and  FHA-Insured  Certificates,
classified as available for sale, will be included in other comprehensive income
(loss) and as a separate  component  of  partners'  equity.  Realized  gains and
losses  on  GNMA  Mortgage-Backed   Securities  and  FHA-Insured   Certificates,
classified as available for sale,  will continue to be reported in earnings.

     As of  December  31,  2001 and  2000,  Investment  in  FHA-Insured  Loan is
recorded at amortized cost.

<PAGE>31

     The amortized cost of the investments in GNMA  Mortgage-Backed  Securities,
FHA-Insured  Certificates  and FHA-Insured  Loan is adjusted for amortization of
discounts and premiums to maturity.  Such  amortization  is included in mortgage
investment income.

     Gains from  dispositions  of mortgage  investments  are recognized upon the
receipt of cash or HUD debentures.

     Losses on  dispositions  of mortgage  investments  are  recognized  when it
becomes  probable that a mortgage  will be disposed of and that the  disposition
will result in a loss.  In the case of Insured  Mortgages  fully insured by HUD,
the  Partnership's  maximum exposure for purposes of determining the loan losses
would generally be an assignment fee charged by HUD  representing  approximately
1% of the  unpaid  principal  balance  of the  Insured  Mortgage  at the date of
default, plus the unamortized balance of acquisition fees and closing costs paid
in  connection  with the  acquisition  of the Insured  Mortgage  and the loss of
approximately 30 days accrued interest.

Cash and Cash Equivalents
-------------------------

     Cash and cash  equivalents  consist of money market funds,  time and demand
deposits,  commercial paper, and repurchase  agreements with original maturities
of three months or less.

Investment in affiliate
-----------------------

     Investment in affiliate  represents  an  investment in Integrated  Funding,
Inc. ("IFI"), an affiliate of the Partnership.  This investment is accounted for
under the equity  method  which  results in the original  invested  amount being
increased  for  the  Partnership's   share  of  income  and  decreased  for  the
Partnership's share of losses and distributions.

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.

Statements of Cash Flows
------------------------

     No cash  payments  were made for  interest  expense  during the years ended
December  31,  2001,  2000,  and 1999.  Since the  statements  of cash flows are
intended to reflect only cash receipt and cash payment activity,  the statements
of cash flows do not reflect operating  activities that affect recognized assets
and liabilities while not resulting in cash receipts or cash payments.

Reclassifications
-----------------

     Certain  prior year amounts have been  reclassified  to conform to the 2001
presentation.

<PAGE>32


3.   FAIR VALUE OF FINANCIAL INSTRUMENTS

         The following estimated fair values of the Partnership's financial
instruments are presented in accordance with GAAP which define 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, 2001              As of December 31, 2000
                                         Amortized           Fair             Amortized           Fair
                                           Cost              Value              Cost              Value
                                        -----------       -----------        -----------       -----------
<S>                                     <C>               <C>                <C>               <C>
Investment in FHA-Insured
  Certificates and GNMA
  Mortgage-Backed Securities:
  Acquired Insured Mortgages            $33,196,354       $32,300,617        $45,000,295       $44,649,442
  Originated Insured Mortgages            7,747,039         8,473,167          7,808,228         8,492,111
                                        -----------       -----------        -----------       -----------

                                        $40,943,393       $40,773,784        $52,808,523       $53,141,553
                                        ===========       ===========        ===========       ===========

Investment in FHA-Insured Loan:
  Acquired Insured Mortgage             $ 5,573,879       $ 5,230,714        $ 5,627,149       $ 5,248,132
                                        ===========       ===========        ===========       ===========

Cash and cash equivalents               $ 5,626,184       $ 5,626,184        $ 7,605,734       $ 7,605,734

GNMA Mortgage-Backed Security
  contributed to affiliate              $ 1,807,729       $ 1,758,760        $ 1,838,504       $ 1,825,772
</TABLE>

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

Investment in FHA-Insured Certificates,
GNMA Mortgage-Backed Securities and FHA-Insured Loans
-----------------------------------------------------

     The  fair  value  of the  FHA-Insured  Certificates,  GNMA  Mortgage-Backed
Securities and FHA-Insured  Loans is priced  internally.  The Partnership used a
discounted cash flow methodology to estimate the fair value; 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.

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

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

<PAGE>33


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  accounted for as available for sale. The table
below breaks out 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  gain or loss related to those  investments
that were not disposed of during the period.

<TABLE>
<CAPTION>
                                                                  2001           2000            1999
                                                                  ----           ----            ----
<S>                                                           <C>            <C>             <C>
Reclassification adjustment for (gains) losses
  included in net income                                      $   (61,266)   $   187,450     $ 1,577,427
Unrealized holding (losses) gains arising during
  the period                                                     (477,608)       978,168      (2,537,430)
                                                              -----------    -----------     -----------

Net adjustment to unrealized (losses) gains on mortgages      $  (538,874)   $ 1,165,618     $  (960,003)
                                                              ===========    ===========     ===========
</TABLE>


5.   INVESTMENT IN FHA-INSURED CERTIFICATES AND GNMA MORTGAGE-BACKED SECURITIES

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

Fully Insured Originated Insured Mortgages and Acquired Insured Mortgages
-------------------------------------------------------------------------

     Listed below is the  Partnership's  aggregate  investment  in Fully Insured
Mortgages as of December 31, 2001 and 2000:

<TABLE>
<CAPTION>
                                                                   2001                     2000
                                                               ------------             ------------
<S>                                                            <C>                      <C>
Number of:
  GNMA Mortgage-Backed Securities(1)(2)(3)(4)(5)(6)(7)                   13                       18
  FHA-Insured Certificates                                                1                        1
Amortized Cost                                                 $ 33,196,354             $ 45,000,295
Face Value                                                       33,067,185               44,953,069
Fair Value                                                       32,300,617               44,649,442
</TABLE>

(1)  In January 2001, the mortgage on Silver Lake Plaza  Apartments was prepaid.
     The  Partnership  received net proceeds of  approximately  $5.2 million and
     recognized a gain of approximately  $83,000 for the year ended December 31,
     2001.  A  distribution  of  approximately  $0.56  per Unit  related  to the
     prepayment   of  this  mortgage  was  declared  in  February  and  paid  to
     Unitholders in May 2001.
(2)  In February 2001, the mortgage on Holton Manor was prepaid. The Partnership
     received net proceeds of  approximately  $1.0 million and recognized a gain
     of  approximately   $36,000  for  the  year  ended  December  31,  2001.  A
     distribution of  approximately  $0.10 per Unit related to the prepayment of
     this mortgage was declared in March and paid to Unitholders in May 2001.
(3)  In August 2001,  the mortgage on Lorenzo  Carolina  Apartments was prepaid.
     The  Partnership  received net proceeds of  approximately  $1.0 million and
     recognized a gain of approximately  $42,000 for the year ended December 31,
     2001.  A  distribution  of  approximately  $0.11  per Unit  related  to the
     prepayment  of  this  mortgage  was  declared  in  September  and  paid  to
     Unitholders in November 2001.
(4)  In October 2001, the mortgage on Beauvoir Manor Apartments was prepaid. The
     Partnership  received  net  proceeds  of  approximately  $1.3  million  and
     recognized a gain of approximately $108,000 for the year ended December 31,
     2001.  A  distribution  of  approximately  $0.14  per Unit  related  to the
     prepayment  of this  mortgage  was  declared  in  October  2001 and paid to
     Unitholders in February 2002.
(5)  In November  2001,  the mortgage on Woodcrest  Townhomes  was prepaid.  The
     Partnership  received  net  proceeds of  approximately  $3.2  million and a
     recognized a gain of approximately $134,000 for the year ended December 31,
     2001.  A  distribution  of  approximately  $0.34  per Unit  related  to the
     prepayment  of this  mortgage  was  declared in  December  2001 and paid to
     Unitholders in February 2002.
<PAGE>34

(6)  In January 2002, the mortgage on Orchard Creek Apartments was prepaid.  The
     Partnership received net proceeds of approximately $1.3 million and expects
     to recognize a gain of  approximately  $33,000 in 2002. A  distribution  of
     approximately $0.14 per Unit related to the prepayment of this mortgage was
     declared in February 2002 and is expected to be paid to  Unitholders in May
     2002.
(7)  In February 2002, the mortgage on Westview Terrace  Apartments was prepaid.
     The  Partnership  received net proceeds of  approximately  $1.2 million and
     expects  to  recognize  a  gain  of   approximately   $49,000  in  2002.  A
     distribution of  approximately  $0.12 per Unit related to the prepayment of
     this  mortgage  is  expected  to be  declared  in  March  2002  and paid to
     Unitholders in May 2002.

     As of  March 1,  2002,  all of the  Partnership's  fully  insured  mortgage
investments are current with respect to the payment of principal and interest.

     In February  1996,  the General  Partner  instructed  the  servicer for the
mortgage on Water's Edge of New Jersey,  a fully insured  acquired  construction
loan,  to file a Notice of Default and an Election to Assign the  mortgage  with
HUD. The property  underlying this  construction loan was a nursing home located
in Trenton,  New Jersey.  As of January 31, 1997, the  Partnership  had received
approximately  $10.2  million  of the  assignment  proceeds,  including  partial
repayment of the outstanding principal and accrued interest.  HUD had disallowed
approximately  $1.65  million  of the  assignment  claim.  The  General  Partner
retained  counsel  in this  matter  and  pursued  litigation  against  the  loan
servicer,  Greystone Servicing Corporation,  Inc. ("Greystone"),  for the amount
disallowed  by HUD.  On July  30,  1998,  the  Partnership  filed a  Motion  for
Judgement against  Greystone in the Circuit Court of Fauquier County,  Virginia.
On June 1,  2001,  a jury  rendered a verdict  in favor of the  Partnership  and
against Greystone in the amount of approximately  $780,000.  On August 17, 2001,
the  Partnership  received  this amount plus accrued  interest of  approximately
$9,000.  A distribution  of  approximately  $0.09 per Unit related to this court
order was declared in September  2001 and paid to  Unitholders in November 2001.
In September 2001, the Partnership and Greystone agreed on a final settlement of
approximately $238,000 for reimbursement of legal fees, to the Partnership. This
amount was received on October 4, 2001. A distribution  of  approximately  $0.03
per Unit related to the reimbursement of legal fees was declared in October 2001
and paid to  Unitholders  in February  2002.  During the year ended December 31,
2001, the Partnership incurred a loss of approximately  $315,000 related to this
litigation. This loss includes legal fees incurred from April 1 through December
31, 2001, of  approximately  $199,000.  As of December 31, 2001, the Partnership
has  recognized  aggregate  losses  of  approximately  $894,000  related  to the
disposition of the mortgage on Water's Edge of New Jersey, which includes losses
recognized in 1996, 1997 and 2001.

Coinsured FHA-Insured Certificate
---------------------------------

     Under the HUD coinsurance program,  both HUD and the coinsurance lender are
responsible  for  paying a portion  of the  insurance  benefits  if a  mortgagor
defaults and the sale of the development  collateralizing  the mortgage produces
insufficient net proceeds to repay the mortgage  obligation.  In such cases, the
coinsurance  lender will be liable to the Partnership for the first part of such
loss in an amount up to 5% of the outstanding  principal balance of the mortgage
as of the date foreclosure proceedings are instituted or the deed is acquired in
lieu of foreclosure.  For any loss greater than 5% of the outstanding  principal
balance, the responsibility for paying the insurance benefits will be borne on a
pro-rata basis, 85% by HUD and 15% by the coinsurance lender.

     While  the  Partnership  is due  payment  of all  amounts  owed  under  the
mortgage,  the  coinsurance  lender is  responsible  for the  timely  payment of
principal and interest to the Partnership.  The coinsurance lender is prohibited
from  entering  into any  workout  arrangement  with the  borrower  without  the
Partnership's  consent and must file a claim for coinsurance  benefits with HUD,
upon  default,  if the  Partnership  so  directs.  As an  ongoing  HUD  approved
coinsurance  lender,  and under the terms of the  participation  documents,  the
coinsurance lender is required to satisfy certain minimum net worth requirements
as set forth by HUD.  However,  it is  possible  that the  coinsurance  lender's
potential liability for loss on these developments, and others, could exceed its
HUD-required  minimum net worth.  In such case, the  Partnership  would bear the
risk of loss if the  coinsurance  lenders were unable to meet their  coinsurance
obligations.  In addition,  HUD's obligation for the payment of its share of the
loss could be diminished under certain


<PAGE>35

conditions,  such as the lender not adequately pursuing regulatory violations of
the borrower or the failure to comply with other terms of the mortgage. However,
the General  Partner is not aware of any conditions or actions that would result
in HUD diminishing its insurance coverage.

     As of December 31, 2001 and 2000, the Partnership  held one investment in a
coinsured FHA-Insured Certificate secured by a coinsured mortgage. The remaining
single  FHA-Insured  Certificate  is  coinsured  by  IFI,  an  affiliate  of the
Partnership.  The  following  is a  discussion  of the  Partnership's  coinsured
mortgage investments.

Coinsured by affiliate
----------------------

     As of December 31, 2001 and 2000, the Partnership  held one investment in a
coinsured  FHA-Insured  Certificate secured by a coinsured  mortgage,  where the
coinsurance lender is IFI. This investment was made on behalf of the Partnership
by the former  managing  general  partner.  As structured by the former managing
general partner,  with respect to this mortgage,  the Partnership bears the risk
of loss upon default for IFI's portion of the coinsurance  loss on this mortgage
investment.
<TABLE>
<CAPTION>
                                         December 31, 2001                       December 31, 2000
                              Amortized       Face          Fair          Amortized       Face          Fair
                                Cost          Value      Mkt. Value         Cost          Value      Mkt. Value
                              ----------   -----------   ----------       ----------   -----------   ----------
<S>                           <C>          <C>           <C>              <C>          <C>           <C>
Summerwind Apts. - Phase II   $7,747,039   $ 9,057,300   $8,473,167       $7,808,228   $ 9,148,110   $8,492,111
</TABLE>

     As of March 1, 2002,  the mortgagor was current with respect to payment
of principal and interest on this mortgage.

     There was no loan loss  recognized for the years ended 2001, 2000 and 1999.
The cumulative loan loss recognized in prior years was $1,511,743 for Summerwind
Apartments - Phase II.

Coinsured by third party
------------------------

     The  previously  owned  mortgage  on St.  Charles  Place  - Phase  II,  was
coinsured by The Patrician Mortgage Company ("Patrician"), an unaffiliated third
party coinsurance lender under the HUD coinsurance program. On October 14, 1993,
Patrician filed a foreclosure  action on the property  underlying this coinsured
mortgage.  On November 2, 1993, the mortgagor filed for protection under chapter
11 of the U.S.  Bankruptcy  Code.  The  property  was  acquired  and vested with
Patrician in November 1998 and subsequently sold on October 12, 1999.  Patrician
filed a coinsurance  claim for insurance  benefits with HUD in October 1999, for
remaining  amounts due,  including  past due  interest.  In November  1999,  the
Partnership  received sales proceeds of approximately $3 million. A distribution
of  approximately  $0.32 per Unit  related to the sale was  declared in November
1999 and was paid to  Unitholders  in  February  2000.  In  February  2001,  the
Partnership received claim proceeds from Patrician of approximately $2.2 million
and recognized a gain of approximately  $822,000 for the year ended December 31,
2001.  The claim proceeds  represent the remaining  balance due on the mortgage,
including  interest  from  November  1,  1995  through  the date of  receipt.  A
distribution of  approximately  $0.24 per Unit related to the prepayment of this
mortgage was  declared in March 2001 and paid to  Unitholders  in May 2001.  The
amount  of  the  Partnership's  investment  in  this  mortgage  represented  the
Partnership's  approximate 55% ownership interest in the mortgage. The remaining
45% ownership interest was held by AIM 86, an affiliate of the Partnership.

<PAGE>36


6.   INVESTMENT IN FHA-INSURED LOANS

     Listed below is the  Partnership's  aggregate  investment  in fully insured
Originated Insured Mortgages as of December 31, 2001 and 2000:
<TABLE>
<CAPTION>
                                               2001                     2000
                                           ------------             ------------
<S>                                        <C>                      <C>
Number of Mortgages                                   1                        1
Amortized Cost                             $  5,573,879             $  5,627,149
Face Value                                    5,573,879                5,627,149
Fair Value                                    5,230,714                5,248,132
</TABLE>

     As of March 1, 2002,  the  Partnership's  FHA-Insured  Loan was current
with respect to payment of principal and interest.


7.       TRANSACTIONS WITH RELATED PARTIES

     During the years  ended  December  31,  2001,  2000 and 1999,  the  General
Partner and certain  affiliated  entities  earned or  received  compensation  or
payments for services from the Partnership as follows:


                 COMPENSATION PAID OR ACCRUED TO RELATED PARTIES
<TABLE>
<CAPTION>
                               Capacity in Which                          For the years ended December 31,
Name of Recipient                 Served/Item                        2001               2000               1999
-----------------             ----------------------              ----------         ----------         ----------
<S>         <C>                                                   <C>                <C>                <C>
CRIIMI, Inc.(1)            General Partner/Distribution           $  927,459         $  807,275         $2,294,837

AIM Acquisition            Advisor/Asset Management Fee              565,368            712,869            942,910
  Partners, L.P.(2)

CRIIMI MAE                 Affiliate of General Partner/              48,892             46,164             45,757
  Management, Inc.           Expense Reimbursement
</TABLE>

(1)  The General Partner,  pursuant to amendments to the partnership  agreement,
     effective   September  6,  1991,   is  entitled  to  receive  4.9%  of  the
     Partnership's income, loss, capital and distributions,  including,  without
     limitation, the Partnership's adjusted cash from operations and proceeds of
     mortgage   prepayments,   sales  or  insurance  (both  as  defined  in  the
     partnership agreement).

(2)  The Advisor,  pursuant to the partnership agreement is entitled to an Asset
     Management Fee equal to 0.95% of Total  Invested  Assets (as defined in the
     partnership agreement). The Sub-advisor to the Partnership is entitled to a
     fee of 0.28% of Total  Invested  Assets of the Advisor's  Asset  Management
     Fee. Of the amounts paid to the Advisor,  CMSLP, the sub-advisor,  earned a
     fee equal to $166,617,  $210,081 and $277,888 for the years ended  December
     31, 2001, 2000 and 1999, respectively.  The general and limited partners of
     CMSLP are wholly-owned subsidiaries of CRIIMI MAE Inc.

<PAGE>37


8.   DISTRIBUTIONS TO UNITHOLDERS

     The  distributions  paid or accrued to  Unitholders on a per Unit basis for
the years ended December 31, 2001, 2000 and 1999 are as follows:
<TABLE>
<CAPTION>
                                              2001                  2000                1999
                                              ----                  ----                ----
<S>                                        <C>                   <C>                 <C>
Quarter ended March 31                     $    1.010(1)(2)(3)   $    0.37(9)        $    0.61(13)
Quarter ended June 30,                          0.105                 0.42(10)(11)        3.26(14)(15)(16)
Quarter ended September 30,                     0.305(4)(5)           0.15                0.15
Quarter ended December 31,                      0.625(6)(7)(8)        0.84(12)            1.04(17)(18)(19)
                                           ----------            ---------           ---------
                                           $    2.045            $    1.78           $    5.06
                                           ==========            =========           =========
</TABLE>

     The following disposition proceeds are included in the distributions listed
above:

<TABLE>
<CAPTION>
                                                          Date                               Net
                                                        Proceeds        Type of            Proceeds
                   Complex Name                         received      Disposition          Per Unit
                   ------------                         --------      -----------          --------
         <S>       <C>                                  <C>           <C>                    <C>
         (1)       Silver Lake Plaza Apartments         Jan 2001      Prepayment             $ 0.56
         (2)       Holton Manor                         Feb 2001      Prepayment               0.10
         (3)       St. Charles Place-Phase II           Feb 2001      Coinsurance Claim        0.24
         (4)       Water's Edge of New Jersey           Aug 2001      Assignment               0.09
         (5)       Lorenzo Carolina Apartments          Aug 2001      Prepayment               0.11
         (6)       Water's Edge of New Jersey           Oct 2001      Assignment               0.03
         (7)       Beauvoir Manor Apartments            Oct 2001      Prepayment               0.14
         (8)       Woodcrest Townhomes                  Nov 2001      Prepayment               0.34
         (9)       Linville Manor                       Mar 2000      Prepayment               0.22
         (10)      Park Avenue Plaza                    May 2000      Prepayment               0.22
         (11)      Kingsway Apartments                  May 2000      Prepayment               0.05
         (12)      Lioncrest Towers                     Nov 2000      Prepayment               0.70
         (13)      Olde Mill Apartments                 Dec 1998      Prepayment               0.37
         (14)      Seven Springs Apartments             Apr 1999      Prepayment               0.53
         (15)      Kon Tiki Apartments                  May 1999      Prepayment               0.06
         (16)      The Breakers at Golf Mill            May 1999      Prepayment               2.43
         (17)      Oak Grove Apartments                 Oct 1999      Prepayment               0.06
         (18)      Heather Ridge Apartments             Nov 1999      Prepayment               0.49
         (19)      St. Charles Place - Phase II         Nov 1999      Sale                     0.32
</TABLE>

     The basis for paying  distributions  to  Unitholders  is net proceeds  from
mortgage  dispositions  and cash flow from  operations,  which includes  regular
interest income and principal from Insured Mortgages. Although Insured Mortgages
yield a fixed monthly  mortgage payment once purchased,  the cash  distributions
paid to the Unitholders will vary during each quarter due to (1) the fluctuating
yields in the  short-term  money  market  where  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  and
professional  fees and  foreclosure  costs  incurred  in  connection  with those
Insured Mortgages and (4) variations in the Partnership's operating expenses.

<PAGE>38

9.   INVESTMENT IN AFFILIATE

     In addition to the related party transactions described in Note 7, in order
to capitalize  IFI with  sufficient  net worth under HUD  regulations,  in April
1994, the Partnership transferred a GNMA Mortgage-Backed  Security in the amount
of  approximately  $2.0 million to IFI. As of December  31, 2001 and 2000,  this
GNMA Mortgage-Backed Security had a face value and a fair value of approximately
$1.8  million.  The  Partnership's  interest in this security is included on the
balance  sheet  in  Investment  in  affiliate.  As of  December  31,  2001,  the
Partnership along with AIM 85 and AIM 86 equally own AIM Mortgage, Inc. In turn,
AIM Mortgage,  Inc. owns all of the outstanding preferred stock and common stock
of IFI.

     As part of the Partnership's transfer of the GNMA Mortgage-Backed  Security
to IFI, AIM 85 and AIM 86 each issued a demand note  payable to the  Partnership
and  recorded  an  investment  in IFI through  AIM  Mortgage,  Inc. at an amount
proportionate  to  each  entity's  coinsured  mortgages  for  which  IFI was the
mortgagee of record as of April 1, 1994. In April 1997, the GNMA Mortgage-Backed
Security was reallocated  between the Partnership and AIM 86 as AIM 85 no longer
held any mortgages coinsured by IFI. As a result, a new demand note payable from
AIM 86 was issued and the investment in IFI was reallocated.  As of December 31,
2000, the Partnership's  demand note receivable from AIM 86 was cancelled as AIM
86 no longer held mortgages  coinsured by IFI. As a result the investment in IFI
was reallocated. Interest income on this note was $0, $45,994 and $47,740 during
the years ended December 31, 2001, 2000 and 1999, respectively,  and is included
in  interest  and other  income on the  accompanying  statements  of income  and
comprehensive income.

     In connection with these transfers, the expense reimbursement agreement was
amended  as  of  April  1,  1997,  to  adjust  the  allocation  of  the  expense
reimbursement  to the AIM  Funds to an  amount  proportionate  to each  entity's
coinsured  mortgage  investments for which IFI was the mortgagee of record as of
April  1,  1997.  The  expense   reimbursement,   as  amended,  along  with  the
Partnership's  interest income from the notes receivable,  and the Partnership's
equity interest in IFI's net income or loss,  substantially  equals the mortgage
interest on the GNMA Mortgage-Backed Security transferred to IFI. In April 1997,
this  agreement  was amended to exclude AIM 85,  which no longer held  mortgages
coinsured by IFI. In December  2000,  this  agreement was amended to exclude AIM
86, which no longer held mortgages  coinsured by IFI. The  Partnership  received
expense  reimbursements of $130,470,  $89,336 and $92,656 during the years ended
December  31,  2001,  2000 and 1999,  respectively,  which  offset  general  and
administrative   expenses  on  the   accompanying   statements   of  income  and
comprehensive income.


10.  PARTNERS' EQUITY

     Depositary  Units  representing  economic  rights  in  limited  partnership
interests  ("Units")  were issued at a stated value of $20. A total of 8,851,966
Units were issued for an aggregate  capital  contribution  of  $177,039,320.  In
addition,  the initial limited partner  contributed $2,500 to the capital of the
Partnership and received 125 Units in exchange therefor,  and the former general
partners  contributed  a total of $1,000 to the  Partnership.  During 1994,  the
Partnership repurchased 50,000 Units.

<PAGE>39

11.  SUMMARY OF QUARTERLY RESULTS OF OPERATIONS
     (Dollars In Thousands, Except Per Unit Data)

     The following is a summary of unaudited quarterly results of operations for
the years ended December 31, 2001, 2000 and 1999:
<TABLE>
<CAPTION>
                                                                     2001
                                                                 Quarter ended
                                          March 31          June 30       September 30      December 31
                                        ------------     ------------     ------------     ------------
<S>                                     <C>              <C>              <C>              <C>
Income                                  $      1,209     $      1,106     $      1,065     $      1,008
Net earnings                                   1,927              450            1,103            1,071
Net gains (losses) from mortgage
  dispositions                                   941             (476)             210              235
Net earnings per
  Limited Partnership Unit - Basic              0.21             0.05             0.12             0.11
</TABLE>

<TABLE>
<CAPTION>
                                                                     2000
                                                                 Quarter ended
                                          March 31          June 30       September 30      December 31
                                        ------------     ------------     ------------     ------------
<S>                                     <C>              <C>              <C>              <C>
Income                                  $      1,464     $      1,383     $      1,339     $      1,315
Net earnings                                   1,329            1,252            1,117            1,040
Net gains from mortgage
  dispositions                                   107              100               --              180
Net earnings per
  Limited Partnership Unit - Basic              0.14             0.14             0.12             0.11
</TABLE>

<TABLE>
<CAPTION>
                                                                     1999
                                                                 Quarter ended
                                          March 31          June 30       September 30      December 31
                                        ------------     ------------     ------------     ------------
<S>                                     <C>              <C>              <C>              <C>
Income                                  $      2,091     $      2,004     $      1,671     $      1,528
Net earnings                                   1,657            2,550            1,398            1,448
Net gains from mortgage
  dispositions                                    --              877               --              195
Net earnings per
  Limited Partnership Unit - Basic              0.18             0.27             0.16             0.15
</TABLE>

<PAGE>40

              AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88
                   SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE
                                DECEMBER 31, 2001
<TABLE>
<CAPTION>
                                                                    Interest                                          Annual Payment
                                                                    Rate on            Face              Net          Principal and
                                                     Maturity       Mortgage         Value of       Carrying Value       Interest
Development Name/Location                              Date          (5)             Mortgage        (3)(7)(8)(10)        (5)(9)
-------------------------                            --------       --------         --------       -------------     --------------
<S>                                                    <C>           <C>           <C>               <C>                 <C>
ACQUIRED INSURED MORTGAGE:
FHA-Insured Certificate (carried at fair value)
-----------------------------------------------

Sylvan Manor, Silver Spring, MD                         5/21         7.500%        $  2,899,739      $  2,724,172        $284,523
                                                                                   ------------      ------------

GNMA Mortgage-Backed Securities (carried at fair value)
-------------------------------------------------------

Burlwood Apts., Portland, OR                            8/15         9.000%             554,907           540,770          62,435
Collin Care Centers, Plano, TX                          9/30         8.125%           1,647,852         1,602,036         144,319
Garden Terrace, Douglasville, GA                        1/20         7.125%           2,461,267         2,396,532         236,750
Greenview Garden, Butler, PA                            7/33         9.000%             864,332           857,756          78,324
Hewitt Gardens Apts., Wheaton, MD                      10/29         8.750%           4,331,773         4,299,858         405,174
Lamplighter Apts., Port Arthur, TX                     10/29         9.000%           2,167,165         2,151,127         207,272
Oaklawn Apts., Boise, ID                                8/24         9.000%             457,276           444,739          40,505
Oakwood Gardens, San Jose, CA                          10/23         7.750%           1,084,638         1,055,259          97,836
Orchard Creek Apts., Farmington Hills, MI               1/30         8.625%           1,244,273         1,245,153         113,264
San Jose South, San Jose, CA                           10/23         7.750%           7,756,059         7,545,975         699,608
Stoney Creek, Washington Township, MI                   2/29         7.500%           5,175,866         5,033,031         427,699
Tehama Estates, Sacramento, CA                          7/29         8.750%           1,309,998         1,300,369         122,802
Westview Terrace Apts., Tacoma, WA                      4/30         8.550%           1,112,040         1,103,840         101,144
                                                                                   ------------      ------------

   Total Investment in GNMA Mortgage-Backed Securities, carried at fair value        30,167,446        29,576,445
                                                                                   ------------      ------------

     Total Investment in Acquired Insured Mortgages, carried at fair value           33,067,185        32,300,617
                                                                                   ------------      ------------

ORIGINATED INSURED MORTGAGES:
Coinsured FHA-Insured Certificate (carried at fair value)
---------------------------------------------------------

Summerwind Apartments-Phase II, Naples, FL(1)(4)(6)     6/30         8.500%           9,057,300         8,473,167         865,175
                                                                                   ------------      ------------

     Total Investment in FHA-Insured Certificates and
       GNMA Mortgage-Backed Securities, carried at fair value                        42,124,485        40,773,784
                                                                                   ------------      ------------

Fully Insured FHA-Insured Loan (carried at amortized cost)(2)
-------------------------------------------------------------

The Turn at Gresham, Gresham, Oregon(1)                 8/29         8.000%           5,573,879         5,573,879(2)      501,516
                                                                                   ------------      ------------

TOTAL INVESTMENT IN INSURED MORTGAGES                                              $ 47,698,364      $ 46,347,663
                                                                                   ============      ============
</TABLE>

<PAGE>41

              AMERICAN INSURED MORTGAGE INVESTORS L.P. - SERIES 88
              NOTES TO SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE
                                DECEMBER 31, 2001

(1)  Two  Insured  Mortgages,  Summerwind  - Phase II and The  Turn at  Gresham,
     possess  a  special  assignment   option,   pursuant  to  certain  mortgage
     documents,  which allows the Partnership,  anytime after a certain date, to
     require payment of the unpaid principal  balance of the mortgages.  At such
     time, the borrowers must make payment to the Partnership or the Partnership
     may cancel the FHA insurance and institute foreclosure proceedings.

(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)  In connection  with  Summerwind  Apartments - Phase II, the Partnership has
     recorded a  cumulative  loan loss of  $1,511,743  in prior  years.  No loan
     losses were recognized for the years ended 2001 and 2000.

(5)  In addition,  the servicer or the  sub-servicer of the mortgage,  primarily
     unaffiliated third parties, is entitled to receive compensation for certain
     services rendered.

(6)  This  mortgage is insured  under the HUD  coinsurance  program.  IFI is the
     HUD-approved  coinsurance  lender and the Partnership bears the risk of any
     coinsurance loss, as previously discussed.

(7)  A reconciliation of the carrying value of the  Partnership's  investment in
     Insured  Mortgages,  for the years ended  December 31, 2001 and 2000, is as
     follows:
<TABLE>
<CAPTION>
                                                                  2001               2000
                                                              ------------       ------------
<S>                                                           <C>                <C>
Beginning balance                                             $ 58,768,702       $ 68,919,493

Principal receipts on mortgages                                   (623,671)          (707,084)

Proceeds from disposition of mortgages                         (11,697,541)       (11,008,711)

Net gains on mortgage prepayments                                  402,811            386,654

Net unrealized (losses) gains on investment in FHA-Insured
  Certificates and GNMA Mortgage-Backed Securities                (502,638)         1,178,350
                                                              ------------       ------------

Ending balance                                                $ 46,347,663       $ 58,768,702
                                                              ============       ============
</TABLE>

(8)  The mortgages  underlying  the  Partnership's  investments  in  FHA-Insured
     Certificates,  GNMA  Mortgage-Backed  Securities and FHA-Insured  Loans are
     primarily non-recourse first liens on multifamily residential  developments
     or retirement homes.

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

(10) As of December  31, 2001 and 2000,  the tax basis of the Insured  Mortgages
     was approximately $48 million and $60 million, respectively.