Item 1. Business.
Watermark Investors Realty Trust (herein referred to as the "Trust" or "Watermark" or the "Registrant") was originally organized as Ryan Mortgage Investors pursuant to the Texas Real Estate Investment Trust Act under a Declaration of Trust dated October 13, 1971. On March 6, 1984, its name was changed to Arlington Realty Investors pursuant to an Amendment to the Declaration of Trust. On December 5, 1995, the Trust's name was changed to Watermark Investors Realty Trust pursuant to an Amendment to the Declaration of Trust. The Trust has elected to be treated as a Real Estate Investment Trust ("REIT") under Section 856 through 860 of the Internal Revenue Code of 1986, as amended. The Trust has, in the opinion of the Trust's management, qualified for federal taxation as a REIT for each fiscal year subsequent to December 31, 1971. Although not currently active, the Trust's primary business and only industry segment has been investing in equity interests in real estate and related real estate activities.
During March 1995, the Trust formed a wholly owned subsidiary, Watermark Texas 1, Inc., a Maryland corporation, and contributed its sole property to such subsidiary.
Item 2.
Item 2. Properties.
At December 31, 1999, the Trust's only significant asset was its ownership interest in its subsidiary, Watermark Texas 1, Inc., which owns a parcel of unimproved land consisting of approximately 4.5 acres located on Parker Road in Houston, Harris County, Texas. The Trust has held the Parker Road property for sale for several years, has listed the property with various brokers over that time period, and inquired of the City of Houston as to the desire of the City to acquire such property for a park site. Management presently intends to sell the Parker Road property at the first available opportunity. The anticipated carrying costs associated with the Parker Road property are currently limited to property taxes, insurance, and maintenance.
Item 3.
Item 3. Legal Proceedings.
At December 31, 1999, and thereafter through the date of this report, the Trust was not a party, nor was any property or assets of the Trust subject, to any material pending legal proceedings.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
PART II
Item 5.
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
The Trust's shares of Beneficial Interest (the "Shares") are traded on a sporadic basis. The Trust believes there has been no established independent trading market for the Shares since the Shares were delisted from NASDAQ in 1988. A limited number of Shares are believed to have been traded in privately negotiated transactions.
No regular dividends on Shares were paid in 1998 or 1999. As of March 25, 2000, 542,413 Shares were held by approximately 300 holders of record.
Item 6.
Item 6. Selected Financial Data.
The following table sets forth a summary of certain selected financial data of the Trust. This summary should be read in conjunction with the Notes to Financial Statements included at Item 8.
(dollars in thousands, except per share) For the Years Ended December 31, ----------------------------------------------------- 1999 1998 1997 1996 1995 ---- ---- ---- ---- ---- Statement of Operations - ----------------------- Data - ---- Rental Operations, net $ - $ - $ - $ - $ -
Real estate sales, net - - - - -
Interest Income - - - - -
Gain on Sale of Land - - - - 4
Net earnings (loss) (33) (31) (31) (31) (99)
Earnings (loss) per share $(.06) $(.06) $(.06) $(.06) $(.18)
Distributions per share $ - $ - $ - $ - $ -
Weighted average shares outstanding 542,413 542,413 542,413 542,413 542,413
Balance Sheet Data - ------------------ Total assets 1 11 1 12 1
Shareholders' equity (182) (149) (118) (87) (56) (deficit)
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operation.
Results of Operations
Watermark has had no revenues for the three years ended December 31, 1999. Watermark's sole real property consists of the Parker Road property. In February of 1995, Watermark sold a 4,429 square foot strip of the Parker Road property to the City of Houston, Texas, for $3,765. Watermark did not have any rental operations in 1997, 1998 or 1999.
Liquidity and Capital Resources
Management currently plans for the subsidiary to sell the Parker Road property at the first available opportunity. The anticipated carrying costs associated with the Parker Road property are currently limited to property taxes, insurance and maintenance. There are no other known material demands, commitments, events or uncertainties that will result in or that are reasonably likely to result in Watermark's liquidity increasing or decreasing in any material way. However, in order to meet corporate expenses and the carrying costs of the Parker Road property, Watermark will have to (i) raise additional funds (possibly by selling or leasing the Parker Road property) or (ii) generate additional funds (possibly by selling or leasing the Parker Road property). There are no material commitments for capital expenditures.
Inflationary Factors
In recent years, inflation has neither increased Watermark's revenues from operating assets nor beneficially affected the current value of its remaining real estate assets to any significant degree.
Item 7A.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Management does not believe the Company has any exposure to market risk other than the risks commonly associated with ownership of real property.
Item 8.
Item 8. Financial Statements and Supplementary Data.
Page
Report of Farmer, Fuqua, Hunt & Munselle, P.C. Independent Auditors......................................................6
Consolidated Balance Sheets as of December 31, 1999 and 1998................7
Consolidated Statements of Operations for the years ended December 31, 1999, 1998 and 1997............................................8
Consolidated Statements of Shareholders' Equity (Deficit) for the years ended December 31, 1999, 1998 and 1997........................9
Consolidated Statements of Cash Flows for the years ended December 31, 1999, 1998 and 1997...........................................10
Notes to Consolidated Financial Statements.................................11
Schedule III - Real Estate Investments and Accumulated Depreciation........14
All other schedules are omitted since they are not required, are not applicable, or the financial information required is included in the financial statements or the notes thereto.
INDEPENDENT AUDITORS' REPORT
To Board of Trustees and Shareholders Watermark Investors Realty Trust
We have audited the accompanying consolidated balance sheets of Watermark Investors Realty Trust and subsidiary as of December 31, 1999 and 1998, and the related consolidated statements of operations, shareholders' equity (deficit) and cash flows for the years ended December 31, 1999, 1998 and 1997. These consolidated financial statements are the responsibility of the Trust's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated 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 consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Watermark Investors Realty Trust and subsidiary as of December 31, 1999 and 1998 and the results of their operations and their cash flows for each of the years ended December 31, 1999, 1998 and 1997, in conformity with generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming that the Trust will continue as a going concern. As discussed in Note 9 to the consolidated financial statements, the Trust has no operating assets or revenues, and is dependent upon the financial support of its shareholders. These matters raise substantial doubt about the Trust's ability to continue as a going concern. Management's plans in regard to these matters are also discussed in Note 9. These consolidated financial statements do not include any adjustments that might result from this uncertainty.
As more fully described in Note 2, Watermark Investors Realty Trust was operating under a Plan of Complete Liquidation and Termination until June 30, 1994. The consolidated financial statements include adjustments to reflect assets at their net realizable value as determined by the Trust's management. The ultimate value of the assets will be determined at the time of sale and may differ significantly from the value as determined by the Trust's management.
Our audits were made for the purpose of forming an opinion on the basic consolidated financial statements taken as a whole. Schedule III is presented for the purpose of complying with the Securities and Exchange Commission's rules and is not a required part of the basic consolidated financial statements. This schedule has been subjected to the auditing procedures applied in the audits of the basic consolidated financial statements and, in our opinion, fairly states, in all material respects, the financial data required to be set forth therein in relation to the basic consolidated financial statements taken as a whole.
FARMER, FUQUA, HUNT & MUNSELLE, P.C. Dallas, Texas March 13, 2000
WATERMARK INVESTORS REALTY TRUST AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS December 31, 1999 and 1998
ASSETS
1999 1998 ---- ---- Real estate $ 168,588 $ 168,588 Less allowance for possible losses (168,588) (168,588) --------- --------- Cash 831 10,714 --------- --------- Total assets $ 831 $ 10,714 ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Liabilities
Note payable - related party $ 115,100 $ 105,100 Accounts payable and accrued liabilities 15,792 14,423 Accrued interest payable - related party 31,728 20,352 Unclaimed dividends 20,174 20,174 --------- --------- Total liabilities 182,794 160,049
Shareholders' Equity (Deficit) Preferred shares of beneficial interest; $.01 par value; authorized, 10,000,000 shares; -0- shares issued and outstanding at December 31, 1999 and 1998 --- ---
Common shares of beneficial interest; $1.00 par value; authorized, 10,000,000 shares; 542,413 shares issued and outstanding at December 31, 1999 and 1998 196,235 196,235
Additional paid-in capital 44,205 44,205
Accumulated deficit (422,403) (389,775) --------- --------- Total shareholders' equity (deficit) (181,963) (149,335) --------- --------- Total liabilities and shareholders' equity (deficit) $ 831 $ 10,714 ========= =========
The accompanying notes are an integral part of these statements.
WATERMARK INVESTORS REALTY TRUST AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS Years Ended December 31, 1999, 1998 and 1997
1999 1998 1997 ---- ---- ----
Revenues $ --- $ --- $ --- --------- --------- --------- --- --- --- --------- --------- --------- Expenses
Interest - related party 11,377 10,046 7,722
Property expenses 5,542 4,314 6,805
Legal and professional 15,709 16,741 16,241 --------- --------- --------- Total expenses 32,628 31,101 30,768 --------- --------- ---------
NET LOSS $ (32,628) $ (31,101) $ (30,768) ========= ========= ========= Loss per share (.06) (.06) (.06) ========= ========= ========= Distributions per share $ --- $ --- $ --- ========= ========= ========= Weighted average shares of beneficial interest used in computing loss per share 542,413 542,413 542,413 ========= ========= =========
The accompanying notes are an integral part of these statements.
WATERMARK INVESTORS REALTY TRUST AND SUBSIDIARY CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT) Years Ended December 31, 1999, 1998 and 1997
Shares of Additional Beneficial Paid-in Accumulated Interest Capital Deficit Total
Balance at January 1, 1997 $196,235 $ 44,205 $(327,906) $(87,466) ======== ========= ========== ========= Net loss for the year --- --- (30,768) (30,768) -------- --------- -------- -------- Balance at December 31, 1997 $196,235 $ 44,205 $(358,674) $(118,234) ======== ========= ========== ========== Net loss for the year --- --- (31,101) (31,101) -------- --------- -------- -------- Balance at December 31, 1998 $196,235 $ 44,205 $(389,775) $(149,335) ======== ========= ========== ========== Net loss for the year --- --- $(32,628) $(32,628) -------- --------- --------- --------- Balance at December 31, 1999 $196,235 $44,205 $(422,403) $(181,963) ======== ========= ========== ==========
The accompanying notes are an integral part of these statements.
WATERMARK INVESTORS REALTY TRUST AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended December 31, 1999, 1998 and 1997
1999 1998 1997 ---- ---- ---- Cash flows from operating activities
Net loss $(32,628) $(31,101) $(30,768)
Adjustments to reconcile net loss to net cash used for operating activities Gain on sale of real estate -- -- --
Increase (decrease) in accounts payable and accrued liabilities 12,745 6,991 8,340
Expenses paid directly by shareholder -- -- -- -------- -------- -------- Net cash used for operating activities (19,883) (24,110) (22,428)
Cash flows from financing activities Proceeds from loans 10,000 34,750 10,350 -------- -------- -------- Net cash provided by financing activities 10,000 34,750 10,350 -------- -------- -------- Increase (decrease) in cash (9,883) 10,640 (12,078)
Cash at beginning of year 10,714 74 12,152 -------- -------- -------- Cash at end of year $ 831 $ 10,714 $ 74 ======== ======== ======== Supplemental cash flow information Cash paid for interest $ -- $ -- $ -- -------- -------- -------- Cash paid for taxes $ -- $ -- $ -- -------- -------- --------
The accompanying notes are an integral part of these statements.
WATERMARK INVESTORS REALTY TRUST AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 1999, 1998 and 1997
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Nature of Operations
Watermark Investors Realty Trust (Watermark) was originally organized as Ryan Mortgage Investors pursuant to the Texas Real Estate Investment Trust Act under a Declaration of Trust dated October 13, 1971. On March 6, 1984, its name was changed to Arlington Realty Investors pursuant to an Amendment to the Declaration of Trust. On December 5, 1995, the Trust's name was changed to Watermark Investors Realty Trust pursuant to an Amendment to the Declaration of Trust. The Trust has elected to be treated as a Real Estate Investment Trust ("REIT") under Sections 856 through 860 of the Internal Revenue Code. The Trust has, in the opinion of the Trust's management, qualified for federal taxation as a REIT for each fiscal year subsequent to December 31, 1971. Although not currently active, the Trust's primary business and only industry segment has been investing in equity interests in real estate and related real estate activities. Under the Trust's Declaration of Trust and Bylaws, the Trustees, at their option, may terminate the Trust's status as a REIT for federal income tax purposes.
During March 1995, the Trust formed a wholly-owned subsidiary, Watermark Texas 1, Inc., a Maryland corporation, and contributed its sole property to such subsidiary.
Principles of Consolidation
The consolidated financial statements include the accounts of Watermark, and its wholly-owned subsidiary, Watermark Texas 1, Inc. All significant intercompany transactions and accounts have been eliminated.
Real Estate
Watermark carries real estate at the lower of cost or estimated net realizable value.
Allowance for Possible Losses
Watermark provides for possible losses on real estate when such amounts are considered necessary after making periodic reviews of the estimated net realizable values of the real estate.
Earnings (Loss) Per Share
Earnings (loss) per share (EPS) are calculated in accordance with Statement of Financial Accounting Standards No. 128, Earnings per Share (SFAS 128) which was adopted in 1997 for all years presented. Basic EPS is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted EPS does not apply to Watermark due to the absence of dilutive potential common shares. The adoption of SFAS 128 had no effect on previously reported EPS.
Consolidated Statements of Cash Flows
Watermark does not consider any of its assets to meet the definition of a cash equivalent.
WATERMARK INVESTORS REALTY TRUST AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued December 31, 1999, 1998 and 1997
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
Accounting Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent 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.
Legal and Other Expenses
Legal and other expenses incurred for 1999, 1998 and 1997 include legal expenses of approximately $7,200, $6,500 and $5,900, respectively.
Income Taxes
Watermark is qualified as a REIT. To retain its REIT qualification, Watermark must restrict its investments principally to rental properties or notes secured by real estate, and must not realize more than 30% of its gross income from gain on the sale of real estate assets held for less than four years. In addition, Watermark must pay out at least 95% of its taxable income, excluding capital gains, as dividends, provided that Watermark pays tax at corporate rates on capital gains not distributed. No distributions were required in 1999, 1998 or 1997, due to net operating losses.
NOTE 2 - PLAN OF LIQUIDATION AND TERMINATION
Watermark operated under a Plan of Complete Liquidation and Termination (the "Plan" or the "Watermark Plan") approved by the shareholders in 1985 until June 30, 1994.
NOTE 3 - REAL ESTATE
At December 31, 1999 and 1998, Watermark's only real estate asset was a parcel of unimproved land consisting of approximately 4.5 acres located on Parker Road in Houston, Harris County, Texas. During 1992, a provision was made to reduce the Parker Road land to its estimated net realizable value, which was determined to be zero at December 31, 1992. During March 1995, the Trust formed a wholly-owned subsidiary and contributed the Parker Road property to such subsidiary. At December 31, 1999 and 1998, the Trust's only significant asset was its ownership interest in such subsidiary.
NOTE 4 - NOTE PAYABLE
1999 1998 ---- ---- Note payable to Abbestate Holding, Inc., a related party that has a common shareholder with Watermark, with an interest rate of 12%, uncollateralized, with interest and principal due August 1, 2003. $ 115,100 $105,100 ========= ========
WATERMARK INVESTORS REALTY TRUST AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued December 31, 1999, 1998 and 1997
NOTE 5 - FEDERAL INCOME TAXES
No Federal income taxes have been provided for financial statement purposes because, as a REIT with no operating income, Watermark has no tax liability. At December 31, 1999, net operating loss carryforwards of approximately $523,651 were available for tax purposes which, if not utilized, will expire at various dates through 2013. Any deferred tax asset that would be associated with the net operating loss carryforward has been reduced to $-0- due to recurring net losses, no factors indicating that the trend of net losses will reverse and the fact that if the trend did reverse, the net income from a REIT is not taxable as long as specific REIT requirements have been met.
NOTE 6 - RELATED PARTY TRANSACTIONS
HPI Capital, LLC provides administrative and accounting services to the Trust under supervision of the Trust's officers (two of whom are also officers of HPI Capital, LLC). HPI Capital, LLC has not been compensated by the Trust for any services rendered to the Trust.
NOTE 7 - FINANCIAL INSTRUMENTS
The estimated fair values of Watermark's financial instruments at December 31, 1999 and 1998 follow:
1999 1998 ---- ---- Carrying Fair Carrying Fair amount value amount value -------- ----- -------- -----
Cash $ 831 $ 831 $ 10,714 $ 10,714
Note payable-related party 115,100 115,100 105,100 105,100
The fair value amounts for each of the financial instruments listed above approximate carrying amounts due to the short maturities of these instruments.
NOTE 8 - LIQUIDATING DISTRIBUTION
The recorded par value of the outstanding common shares of beneficial interest has been reduced by $346,178, which represents the amount of a 1993 liquidating distribution in excess of additional paid-in capital.
NOTE 9 - GOING CONCERN
The Trust has no operating assets or revenues. Its continuation as a going concern is dependent upon the Trust's ability to raise additional capital from its shareholders or from third parties. The shareholders anticipate that they will continue to provide such financial support to the Trust. However, there can be no assurances that the shareholders will continue to provide such support or that the Trust will be successful in raising additional capital from other sources. Further, there can be no assurance, assuming the Trust successfully obtains such support, that the Trust will achieve profitability or positive cash flow.
SCHEDULE III
A summary of activity in real estate and accumulated depreciation for the three years in the period ended December 31, 1999 is as follows:
REAL ESTATE 1999 1998 1997 - ----------- ---- ---- ---- Balance at beginning of year $168,588 $168,588 $168,588
Sales -- -- --
Foreclosure additions -- -- --
Improvements -- -- -- -------- -------- -------- Balance at end of year $168,588 $168,588 $168,588 ======== ======== ======== ACCUMULATED DEPRECIATION - ------------------------ Balance at beginning of year $ -- $ -- $ --
Sales -- -- --
Depreciation -- -- -- -------- -------- -------- Balance at end of year $ -- $ -- $ -- ======== ======== ========
Item 9.
Item 9. Changes and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
PART III
Item 10.
Item 10. Directors and Executive Officers of the Registrant.
The business affairs of the Trust are managed by, or under the direction of, the Board of Trustees. The Trustees are responsible for the general investment policies of the Trust and for such general supervision of the business of the Trust conducted by officers, agents, employees, investment advisors or independent contractors of the Trust as may be necessary to insure that such business conforms to the provisions of the Declaration of Trust. Pursuant to Article II, Section 2.1 of the Declaration of Trust, as amended, of the Trust, there shall not be less than two (2), nor more than fifteen (15), Trustees of the Trust. The number of Trustees shall be determined from time to time by resolution of the Trustees and the current number of Trustees is set at three (3). Trustees may succeed themselves in office and are required to be individuals at least 21 years old not under legal disability and at least a majority must be natural persons. Commencing with the 1996 annual meeting of shareholders, the Board of Trustees of the Trust has been divided into three classes, each class consists as nearly as possible
of one-third of the Trustees. The term of office of one class of Trustees expires each year. The Trustees of the class elected at each annual meeting of shareholders hold office for a term of three years.
The current Trustees of the Trust (two of whom are also the executive officers) are listed below, together with their ages, all positions and offices with the Trust and their principal occupations, business experience and directorships with other companies during the last five years or more.
David S. Givner, 55, has been Trustee, President and Treasurer of the Trust since December 5, 1995, and is also the President/Managing Director of HPI Capital, LLC. Since 1992, Mr. Givner has been President and Chief Operating Officer of various affiliates of HPI Capital, LLC. From 1987 until 1992, he was Senior Vice President/Director of Leasing and Consulting Services for Williams Real Estate Company based in New York, New York. Mr. Givner is also the sole shareholder and the President of DAGI Corporation, a Delaware corporation and the general partner of DAGI Limited Partnership, a Delaware limited partnership. Mr. Givner beneficially owns 59,655 Shares through DAGI Limited Partnership.
Simon Mizrachi, 51, has been Trustee of the Trust since December 5, 1995 and is also the President of Midatlantic Agency, Inc. a Florida corporation and financial consulting company. Mr. Mizrachi has served as President of Midatlantic Agency, Inc. since 1992. Mr. Mizrachi and Midatlantic Agency, Inc. are the sole partners of MIZ Investors Associates, a Delaware general partnership. Mr. Mizrachi has been a director and officer of PAZ Securities, Inc., an NASD broker/dealer firm, since 1978. Mr. Mizrachi is an officer with PAK Investors, Inc., Pudgie's Chicken, Inc., Topaz Securities, Inc., Topaz, Inc., Cal-Mar, Inc., TMT Hanes, Inc., and TMT Sales, Inc. Mr. Mizrachi is also an officer of various affiliates of MIZ Investors Associates and Midatlantic Agency, Inc. Mr. Mizrachi beneficially owns 59,655 Shares through MIZ Investors Associates.
Michael S. Verruto, 39, has been Trustee, Vice President and Secretary of the Trust since December 5, 1995 and is also the Vice President/Managing Director of HPI Capital, LLC, a North Carolina limited liability company that develops real estate. Since January 1990, Mr. Verruto has held various positions with various affiliates of HPI Capital, LLC, all of which are active in real estate development and management. Mr. Verruto is also the sole shareholder and the President and Treasurer of Fletcher Napolitano Styles and Verruto Holding Company, Inc., a Delaware corporation and the general partner of Fletcher Napolitano Styles and Verruto Family Property Partners, L.P., a Delaware limited partnership. Mr. Verruto beneficially owns 59,655 Shares through Fletcher Napolitano Styles and Verruto Family Property Partners, L.P.
Meetings and Committees of Trustees
The business affairs of the Trust are managed by, or under the direction of, the Board of Trustees. During the fiscal year ended December 31, 1999, the Board of Trustees held no formal meetings and no matters were handled by unanimous written consent. The Board of Trustees has no standing audit, nominating or compensation committee.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Under the securities laws of the United States, the Trust's trustees, executive officers, and any persons holding more than ten percent of the Trust's Shares are required to report their ownership of the Shares and any changes in that ownership to the Securities and Exchange Commission (the "Commission"). Specific due dates for these reports have been established under applicable law and the Trust is required to report any failure to file by these dates during 1999. To the best knowledge of the current officers of the Trust, all of these filing requirements were satisfied by its trustees and executive officers and ten percent holders.
Item 11.
Item 11. Executive Compensation.
Neither the trustees nor the officers of the Trust received salaries or other cash compensation from the Trust for acting in such capacities during the year ended December 31, 1999. The Trust has no retirement, annuity or pension plans covering its trustees or officers. Based upon the Trust's current operations, the Board of Trustees does not believe compensation will be paid or given in the near future.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
Security Ownership of Certain Beneficial Owners
According to the Share transfer records of the Trust and other information available to the Trust, the following persons were known to be the beneficial owners, as of March 25, 2000, of more than five percent (5%) of the outstanding Shares of the Trust:
Name and Address Amount of Percent of Shares of Beneficial Owner Beneficial Ownership Outstanding(1) ------------------- -------------------- -----------------
Fletcher Napolitano Styles and 59,665(2) 11.0(2) Verruto Family Property Partners, L.P.(3) Shares 227 W. Trade Street Suite 2320 Charlotte, NC 28202 Attn: Michael S. Verruto
MIZ Investors Associates(4) 59,665(2) 11.0(2) 6971 N. Federal Highway Shares Suite 203 Boca Raton, FL 33487 Attn: Simon and Joseph Mizrachi
DAGI Limited Partnership(5) 59,665(2) 11.0(2) 227 W. Trade Street Shares Suite 2320 Charlotte, NC 28202 Attn: David S. Givner
Antapolis N.V. 184,422(2) 34.0(2) c/o MeesPierson Trust Shares (Curacao) N.V. Number 6 Curacao Netherlands Antilles Attn: John B. Goisiraweg
- ------------------------
(1) Based on 542,413 Shares outstanding on March 25, 2000.
(2) Does not include shares owned by others in group that filed a Schedule 13D dated November 10, 1994. The group consists solely of the four entities listed above, which collectively own 363,417 Shares or 67.0% of the issued and outstanding Shares.
(3) Through his control of Fletcher Napolitano Styles and Verruto Family Property Partners, L.P., Michael S. Verruto is deemed the beneficial owner of 59,665 shares.
(4) Through their control of MIZ Investors Associates, Simon and Joseph Mizrachi are deemed to share beneficial ownership of 59,665 shares.
(5) Through his control of DAGI Limited Partnership, David S. Givner is deemed the beneficial owner of 59,665 shares.
Security Ownership of Management
According to the Share transfer records of the Trust and other information available to the Trust, as of March 25, 1999, the current trustees and executive officers of the trust beneficially owned the following Shares:
Name and Offices of Amount of Beneficial Owner Beneficial Ownership Percent of Class(1) ------------------- -------------------- -------------------
David S. Givner, Trustee,(3) 59,665(2) 11.0(2) President and Treasurer
Simon Mizrachi, Trustee(4) 59,665(2) 11.0(2)
Michael S. Verruto, Trustee,(5) 59,665(2) 11.0(2) Vice President and Secretary
All trustees and executive 178,995(2) 33.0(2) officers as a group
- ----------------------------
(1) Based on 542,413 Shares outstanding on March 25, 2000.
(2) Does not include shares owned by others in group that filed a Schedule 13D dated November 10, 1994. The group consists solely of the four entities listed above, which collectively own 363,417 Shares or 67.0% of the issued and outstanding Shares.
(3) Through his control of DAGI Limited Partnership, David S. Givner is deemed the beneficial owner of 59,665 shares.
(4) Through their control of MIZ Investors Associates, Simon and Joseph Mizrachi are deemed to share beneficial ownership of 59,665 shares.
(5) Through his control of Fletcher Napolitano Styles and Verruto Family Property Partners, L.P., Michael S. Verruto is deemed the beneficial owner of 59,665 shares.
Item 13.
Item 13. Certain Relationships and Related Transactions.
Since December 5, 1995, HPI Capital, LLC has provided administrative and accounting services to the Trust under the supervision of the Trust's officers (two of whom are also officers of HPI Capital, LLC). HPI Capital, LLC has not been compensated by the Trust for any services rendered to the Trust.
PART IV
Item 14.
Item 14. Exhibits, Financial Statements, Schedules and Reports on Form 8-K.
(a) The following documents are filed as part of this report:
1. Consolidated Financial Statements:
Balance Sheets as of December 31, 1999 and 1998.
Statements of Operations for the years ended December 31, 1999, 1998 and 1997.
Statements of Shareholders' Equity for the years ended December 31, 1999, 1998 and 1997.
Statements of Cash Flows for the years ended December 31, 1999, 1998 and 1997.
Notes to Financial Statements.
2. Schedules:
Schedule III - Real Estate Investments and Accumulated Depreciation.
All other schedules are omitted since they are not required, are not applicable, or the information required is included in the financial statements or the notes thereto.
3. Exhibits:
The following documents are filed as exhibits to this report:
Exhibit Number Description ------- ----------- 3.1 Declaration of Trust, as amended (Incorporated by reference to Exhibit 3.1 to Registrant's Form 10-K for the year ended December 31, 1995).
3.2 By-laws, as amended (Incorporated by reference to Exhibit 3.1 to Registrant's Form 10-K for the year ended December 31, 1995).
21 List of Subsidiaries. (Incorporated by reference to Exhibit 21 to Registrant's Form 10-K for the year ended December 31, 1996).
27 Financial Data Schedule
(b) Reports on Form 8-K.
During the last quarter of the period covered by this report, no reports on Form 8-K were filed.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on this the 30th day of March, 2000.
WATERMARK INVESTORS REALTY TRUST
By: /s/ David S. Givner ---------------------------------------- David S. Givner Trustee, President and Treasurer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.
Signature Title Date
/s/ David S. Givner Trustee, President and Treasurer March 30, 2000 - ----------------------- (Principal Executive Officer and David S. Givner Principal Financial and Accounting Officer)
/s/ Michael S. Verruto Trustee, Vice President and March 30, 2000 - ----------------------- Secretary Michael S. Verruto