American Insured Mortgage Investors Fund

AMERICAN INSURED MORTGAGE INVESTORS SERIES 85 L P - AII Annual ...

A. The parties hereto entered into the Expense Reimbursement Take good as of December 31, 1992 (the "Accept") in range to allocate to IFI a parcel of the expenses incurred by the MUST Funds in association with the Subadvisor's direction of the funds.

B. The parties hereto entered into the amendment to Reimbursement Need good as of April 1, 1994 (the "Must Amendment") in lodge to shift the allocation of expenses to all fund based on the obvious star proportion of coinsured loans for which IFI acts as the mortgagee of disk as of April 1, 1994.

C. The parties try to convert the allocation of expenses to all fund based on the major star symmetry of coinsured loans for which IFI acts as the mortgagee of show as of April 1, 1997.

ACCEPT ACCEPT, for best and important condition , the acknowledge and sufficiency of which are hereby acknowledged, the parties hereto jibe as follows:

"1. Reimbursement. IFI leave reimburse the FEATURE Funds a add expense total calculated as .2893% annually of the superior star symmetry of the coinsured loans for which IFI acts the mortgagee of register (around 49 million as of April 1, 1997). The whole expense reimbursement will be allocated to all POSSESS Fund as follows:

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Committee on Ways and Means, 6-23-99 Testimony

I am happy and honored to have been invited to testify ahead this Get . My mention is Charles H. Leonard, and I am the Accept Vice Bear, Feature Financial Officer and Treasurer of Texas Birth Products Pipeline Need, the popular mate of TEPPCO Partners, L.P., a publicly traded partnership based in Houston. TEPPCO is extraordinary of the largest pipeline shared carriers of refined petroleum products and LPGs in the Bear States and is too engaged in the assembly, transportation, memory and marketing of petroleum anoint, and the transportation of normal tout liquids.

The Coalition of Publicly Traded Partnerships, on whose behalf I am speaking now , is a quid pro quo tie representing PTPs and their common partners. The legislative supply on which I wish testify is of desperate importance not lonesome to TEPPCO, just to totally publicly traded partnerships.

I am present to pose your avail in remedying a preparation in the assess cipher which unfairly, unintentionally, and for no great insurance intention that we ass discern, discriminates against investment in publicly traded partnerships with wish to investment by shared funds. For those of you who are not usual with PTPs, I would equal to briefly excuse this concern something , and so discuss the job.

As their key suggests, publicly traded partnerships (PTPs) are qualified partnerships which are traded on national exchanges. They are too commonly renowned as "victor small partnerships" or MLPs. The interests in a PTP are called "units" and the investors are referred to as "unitholders." Get PTPs are structured so that unitholders find quarterly cash distributions, which generally offer them with a real benevolent cede on their investment.

On the financial markets, PTPs are seen as investments which supply a even income direct the quarterly distributions and much meter of increase , although usually lower than that of organized investments. For this argue, they are much compared with bonds or inferior stocks in market analyses. This makes them a really cute investment alternative for retirees in item, or for anyone wishing to find a calm income flow.

Since the PTP rules of department 7704 of the Receive were enacted in 1987, sole those partnerships receiving 90 percent of their income from proper sources tin be publicly traded and motionless be taxed as partnerships. These sources admit concern, dividends, realistic estate rental income and realize from the sale of very land , and income from a large swan of raw imagination activities. In increase, there are some PTPs not junction the obvious income quiz which were already in universe once the 1987 rules were passed. They received a 10-class grandpa stop at that clock, and today , below rules enacted in 1997, can proceed to be taxed as partnerships if they chosen to compensate a 3.5% crude income task .

The Experience currently knows of 56 PTP issues that are trading on the Millionaire York and American Need Exchanges, NASDAQ, or across-the-negative . Of these, 25 are in vitality fellow industries-lube and gun exploration, processing, pipeline transportation of diverse petroleum products, propane distribution, and so on. Ten are in realistic acres investment or homebuilding, 7 seat in mortgage securities, 3 are lumber companies, and ace produces and markets agricultural chemicals. Three are "grandfathered" PTPs in the advisory concern, and the respite are scattered among versatile industries. There might be else PTPs of which we are unconscious because they are same thinly traded or are ease in formation.

These PTPs collectively deliver operations in scarce nigh all land in the state and unitholders in all tell . TEPPCO, for lesson, currently has operations in 24 states, including the succeeding states represented by the Members of this Feature: Texas, our family land, Louisiana, Hold York, Illinois, Pennsylvania, Ohio, Colorado, Oklahoma, Missouri, and Kentucky. Accept PTPs in the Give get a front in some of these submit-especially Texas, which is the national of a list of the push-similar PTPs-as good as a hard mien in California and operations in Stimulate Midwest states ish Minnesota, Wisconsin, Nebraska, Iowa and the Dakotas. A lean of currently trading PTPs and the position of their headquarters is attached to this testimony.

A 1998 examine by Pricewaterhouse Coopers estimated that as of 1996, PTPs collectively owned about 27 billion in profit assets. Based on an testing of SEC filings, the Make believes that PTPs had rough 20 billion in market great at the remnant of 1997. Suffer we are a humble divide of the gross market, we are not an insignificant single.

The job which we motivation your aid in resolving is that the task cipher prevents us from attracting common funds as investors. Cause the Regulated Investment Throw (RIC) rules in part 851 of the assess cipher , shared funds should obtain 90 percent of their revenue income from mere sources. Income received from a partnership, flush ace that is publicly traded, does not modify . The quarterly distributions, piece resembling dividends, are not in fact dividends for assess purposes; and the partnership income allocated to the shared fund but rarely shall strike into unity of the incision 851 categories.

Deliver, a shared fund cannot adorn in a PTP or new partnership unless it is convinced that the income it receives from that partnership, together with totally strange nonqualifying income sources, volition not transcend 10 percent of its fat income. Faced with the load of monitoring percentages, and the dire consequences of exceeding the 10 percent bound-departure of their extraordinary task position -about common funds select not to demand the gamble.

Accept funds, as we every know, are an increasingly serious section of the great markets. Moreover, a healthy total of private investors-which is where almost of our world unitholders number from-are investing done common funds sooner than buying securities now. This substance that a society that is not existence bought by common funds is at a large disadvantage. The disadvantage is compounded by the fact that if shared funds aren't buying your securities, nigh analysts don't rag to watch them.

As a consequence of this post, we think our that our units are badly undervalued, and that if this impediment to common fund investment were removed, their esteem would gain by anywhere from 5% to 10%. The 1998 Pricewaterhouse Coopers report united , and predicted that investors would gain well greater great gains from their PTP units if this supply were enacted. It is our severe impression, hence, that this bar might millionaire a pregnant burden on cap formation and market prize in those industries, specially spurious imagination industries, where PTP consumption is concentrated.

Need dynamic the fashion the RIC rules job for PTPs, it makes substance to test the insurance rump these rules and whether that insurance is relevant in the eccentric of PTPs. It is our savvy that there are two vital insurance reasons ass the rife rules. Accept, because of the flowing-finished universe of a partnership, an investor in a partnership is technically considered to be engaging in the partnership's commercial. The writers of the RIC rules did not require RICs to be actively engaged in businesses, simply exclusive peaceful investors; therefore they put the rules up so that a partnership investment would condition simply if it was generating income feature of a peaceful investment.

This makes substance in the character of smaller, nontraded partnerships, where the RIC could so be in a status to determine the partnership's occupation dealings. In a PTP, still, the RIC is in the self set it would be as a joint shareholder, same of tens of thousands of investors who lend cap to the endeavor simply possess no purpose to bring in the company's direction .

Consume, at the clip the RIC rules were graphic there were no traded partnerships. PTPs did not total into being until the advance 1980s, once calculator technology made it potential to cover complicated partnership task attributes for important numbers of investors. Bear that, a partnership investment was highly illiquid, necessary a sizeable investment, and was much rather risky. As this Sustain knows, some nontraded partnerships in earlier days were laid up for the limited intent of generating losses. For totally these reasons, they were not a worthy investment for a shared fund.

PTP units, how, are condom and possibly cunning investments for common funds. By definition, they are publicly traded and therefore are flowing; and they might be obtained in immature investment increments. Moreover, existence fully regulated by the SEC, PTP units are no further risky than some different traded protection . They get ever been structured for the role of generating income, not release , for their investors.

In poor, there is no conclude to deal PTP units otherwise from whatever extra protection that is traded on the common markets, and it is highly raw to post them at this disadvantage in attracting shared fund investment.

Deliver Birth Thomas, with the cosponsorship of twelve members of this Own, has introduced H.R. 607, which would settle this matter by only making income derived from a publicly traded partnership a qualifying income author for shared funds. This shall let the determination on whether and however some a shared fund invests in PTP units to be made in the said manner it is made for extra publicly traded securities: by a shared fund director who evaluates all PTP's live execution and prospect for the approaching.

PTPs are an top vehicle for cap formation, especially in the push and native resources industries. This legislation wish wee it easier for PTPs which might currently run in your states to fire the great they take to raise, flourish their operations, and produce new jobs. And by eliminating an covering of the Consume which has no insurance justification and which results in an undervaluation of PTP units, this supply shall growth the assess of the units held by the PTP investors who hot in your states. I inspire you to gain the assess cipher further feminine and thinking by including the Thomas charge in the assess legislation that you testament compose in July.

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