HMG COURTLAND PROPERTIES INC, 10KSB, 2000-03-30

HMG COURTLAND PROPERTIES INC
10KSB, 2000-03-30
REAL ESTATE INVESTMENT TRUSTS

Previous: PRE PAID LEGAL SERVICES INC, DEF 14A, 2000-03-30

Next: FLORIDA GAMING CORP, 10KSB40, 2000-03-30

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
(Mark One)

[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 1999
-----------------

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Commission file number: 1-7865

HMG/COURTLAND PROPERTIES, INC.
(Name of small business issuer in its charter)

DELAWARE 59-1914299
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)

1870 S. Bayshore Drive, 33133
Coconut Grove, Florida (Zip Code)
(Address of principal executive offices)

Issuer's telephone number, including area code: (305) 854-6803

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

Title of each class Name of each exchange
Share of Common Stock: on which registered:
Par value $1.00 per share American Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:
None
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 [ ]

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-K contained in this form and no disclosure will 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-KSB or any
amendment to this form 10-KSB. [ X ]

DOCUMENTS INCORPORATED BY REFERENCE: NONE
Total Number of Pages: 71 Exhibit Index: Page No.: 45

(continued)

<PAGE>
State the issuer's revenues for the most recent fiscal year: $5,391,140

State the aggregate market value of the voting stock held by non-affiliates of
the Registrant: $3,431,824 based on the closing price of the stock as traded on
the American Stock Exchange on March 24, 2000 (Excludes shares of voting stock
held by directors, executive officers and beneficial owners of more than 10% of
the Registrant's voting stock; however, this does not constitute an admission
that any such holder is an "affiliate" for any purpose.)

Indicate the number of shares outstanding of each of the Registrant's classes of
common stock as of the latest practicable date: 1,040,185 shares of common
stock, $1 par value, as of March 24, 2000.

Cautionary Statement. This Annual Report contains certain statements relating to
future results of the Company that are considered "forward-looking statements"
within the meaning of the Private Litigation Reform Act of 1995. Actual results
may differ materially from those expressed or implied as a result of certain
risks and uncertainties, including, but not limited to, changes in political and
economic conditions; interest rate fluctuation; competitive pricing pressures
within the Company's market; equity and fixed income market fluctuation;
technological change; changes in law; changes in fiscal, monetary, regulatory
and tax policies; monetary fluctuations as well as other risks and uncertainties
detailed elsewhere in this Annual Report or from time-to-time in the filings of
the Company with the Securities and Exchange Commission. Such forward-looking
statements speak only as of the date on which such statements are made, and the
Company undertakes no obligation to update any forward-looking statement to
reflect events or circumstances after the date on which such statement is made
or to reflect the occurrence of unanticipated events.

2
<PAGE>
Part I.
Item 1. Business.

HMG/Courtland Properties, Inc. (the "Company") invests in a portfolio of equity
interests in commercial real estate. The Company was organized in 1972 and
qualifies for taxation as a real estate investment trust ("REIT") under the
Internal Revenue Code. The Company's present investment policy is to invest
primarily in income-producing commercial properties.

To implement its investment policy, the Company directly and through its
subsidiaries has invested in improved properties and in the commercial
development of unimproved properties held in its portfolio or acquired for that
purpose.

The following table summarizes the Company's portfolio of real estate
investments as of December 31, 1999:

Percent of
Geographic Distribution Investments (1)
----------------------- -----------
Florida 77%
Texas 18%
Northeastern United States (2) 5%
------
100%

Type of Property (3)
----------------
Undeveloped land 19%
Hotel and club facility 45%
Individual retail stores 4%
Yacht slips 13%
Shopping center and other 19%
-----
100%

-----------------
(1) For each category, the aggregate of cost less accumulated
depreciation divided by the aggregate of such investments in all
real estate owned directly by the Company or by joint ventures in
which the Company has a majority interest. The Company's minority
interests in joint ventures are not included in the above.

(2) New York, Massachusetts, and Vermont.

(3) Based on predominant present or intended use.

Reference is made to Item 12. Certain Relationships and Related Transactions for
discussion of the Company's organizational structure and related party
transactions.

Consolidated Entities
Courtland Investments, Inc. ("CII"). The Company owns a 95% equity interest in
CII (all non-voting). The other 5% equity interest (which is 100% of the voting
interest) is held by Masscap Investment Company, Inc. ("MICI"), a wholly-owned
subsidiary of Transco Realty Trust ("Transco") which is a 46% shareholder of the
Company. The Company and MICI have had a continuing arrangement with regard to
the ongoing operations of CII, all of which provides the Company with complete
authority over all decision making relating to the business, operations and
financing of CII consistent with its status as a real estate investment trust.

CII owns equity interests in certain partnerships and corporations that are
passive (non-operating) in nature. CII also owns an interest in a partnership
which owns a 50 room hotel and private club (see discussion on Grove Isle

3
<PAGE>

Associates, Ltd. "GIA"), a corporation (Grove Isle Club Inc."GICI") which
formerly operated the hotel and club and a joint venture owning the marina
adjacent to the hotel and club (Grove Isle Yacht Club Associates "GIYCA"). The
properties are located in Coconut Grove, Florida, and a more detailed
description of each follows:

Grove Isle Associates, Ltd. ("GIA"). This limited partnership (owned 15% by CII
and 85% by the Company) owns a 50 room hotel and private club facility (the
"facility") located on 7 acres of a private island in Coconut Grove, Florida,
known as "Grove Isle". In addition to the 50 hotel rooms, the facility includes
public space, tennis courts, and a pool. The facility is encumbered by a
mortgage note payable with an outstanding balance of approximately $4.4 million
and $4.5 million as of December 31, 1999 and 1998, respectively.

In November 1996, GIA entered into a long-term lease with an unrelated tenant,
Westgroup Grove Isle Associates, Ltd. ("Westgroup") and a Master Agreement with
Westgroup whereby among other things Westgroup assumed the operations of the
Grove Isle hotel and club.

The initial term of the lease is ten years and calls for annual net base rent of
$880,000 before the 1999 Amendment (see below), plus real estate taxes and
property insurance, payable in monthly installments. In addition to the base
rent Westgroup shall also pay GIA participation rent consisting of a portion of
Westgroup's operating surplus, as defined in the lease agreement. Participation
rent is due at end of each lease year. No participation rent was due in 1999 or
1998. Furthermore, as previously reported, in consideration for GICI (see below)
relinquishment of its rights in and to the original lease with GIA, GIA agreed
to pay to GICI the sum of $200,000 for each year that the Westgroup lease is in
good standing and has also assigned to GICI the aforementioned participation
rent due from Westgroup. This sum is payable annually commencing in November
1997. This amount is eliminated in consolidation.

In December 1999, the lease was amended and restated in consideration of
Westgroup's substantial efforts in improving the facility and investing capital
beyond the amounts required by the lease. As of December 31, 1999, Westgroup has
invested approximately $5.2 million in the form of capital improvements to the
facility. GIA agreed to reduce the amount of base rent due by $480,000 ("Reduced
Rent"), which Reduced Rent will be taken over a period of 20 months beginning in
December 1999. After fully utilizing the Reduced Rent (by August 2001) annual
base rent will increase to $918,400. The lease amendment also calls for an
increase in base rent commencing January 1, 2002 in accordance with changes in
the Consumer Price Index ("CPI"). Concurrently, participation rent will be
reduced by the amount by which base rent increases solely as a result of CPI
increases for the lease year.

In 1997 and in conjunction with the aforementioned agreements, GIA advanced
$500,000 to the principal owner of Westgroup. GIA received a promissory note
bearing interest at 8% per annum with interest payments due quarterly beginning
on July 1, 1997 and all principal due at maturity in 2006. All interest payments
due have been received.

Grove Isle Club, Inc. ("GICI"). This corporation operated the aforementioned
hotel and club through November 18, 1996. Its primary sources of revenues are
presently from the aforementioned $200,000 annual payment from GIA. As of
December 31, 1999 and 1998 GICI has amounts due to GIA which are eliminated in
consolidation of approximately $1,651,000 and $1,758,000 respectively. This
promissory note bears interest at a fixed rate of 8% per annum and is due on
demand. GICI is wholly-owned by Grove Isle Investments, Inc. ("GII") which is a
wholly-owned subsidiary of CII.

Grove Isle Yacht Club Associates ("GIYCA"). This partnership was the developer
of the 85 boat slips located at Grove Isle. As of December 31, 1999, forty-four
slips remain unsold and are encumbered by the aforementioned $4.4 million
mortgage note payable by GIA. GIYCA (through a 100% owned subsidiary) operates
and maintains all aspects of the marina at Grove Isle in exchange for an annual

4
<PAGE>

maintenance fee from the slip owners to cover operational expenses. GIYCA is
owned 60% by GII and 40% by CII. In essence, it is wholly-owned by CII.

Courtland Key West, Inc. ("CKWI"). This wholly-owned subsidiary of CII was
formed in December 1999. Its sole asset is a 10% interest in Monty's Key West,
L. C., a limited liability company also formed in December 1999 to own and
operate a restaurant in Key West, Florida. In December 1999, CKWI invested
$500,000 in Monty's Key West, L.C.

HMG-Fieber Associates ("Fieber"). HMG-Fieber Associates, a joint venture owned
approximately 70% by the Company and 30% by NAF Associates (NAF), a Connecticut
general partnership, owns 9 retail stores. Eight of the stores are leased to
Grossman's, Inc., a chain of home improvements stores, under net leases. One
store is not leased at the present time. During 1999, one Fieber property was
sold. During 1998, there were no Fieber properties sold. All except one of the
remaining leases contain renewal options of at least five years.

In September 1999, Fieber sold it's property located in Houlton, Maine for
$65,000. The net gain to the Company was approximately $26,000.

Reference is made to Item 3. Legal Proceedings for further information regarding
the litigation with two former directors of the Company Lee Gray and Norman
Fieber. On July 12, 1999, the Court found that the defendants breached their
fiduciary duties of loyalty and care and defrauded the Company. In August 1999
the court issued a final order and judgement. In addition to the monetary award
to the Company of approximately $4.5 million, the Company was awarded additional
equity interest in HMG Fieber Associates increasing the Company's ownership from
65% to 70%.

260 River Corp. ("260"). On January 1, 1997, each partner in HMG-Fieber received
its pro rata interest in the ventures' property located in Vermont. The property
was transferred at book value and resulted in no gain or loss to the Company.
The Company's approximate 70% interest in this property is owned by 260 River
Corp., a wholly-owned subsidiary of the Company.

The Grove Towne Center - Texas, Ltd. ("TGTC"). The Grove Towne Center-Texas,
Ltd. is a limited partnership owned 75% by the Company (including a 1% general
partnership interest by a wholly-owned subsidiary of the Company). The remaining
25% partnership interest is held by an unrelated entity. As of December 31, 1999
TGTC owns approximately 19 acres of vacant land located in Houston, Texas.

In August 1999, TGTC sold approximately 1.2 acres for approximately $528,000 and
the Company recognized a net gain of approximately $251,000.

In June 1999, TGTC sold approximately .8 acres for approximately $350,000 and
the Company recognized a net gain of $168,000.

In March 1999, TGTC sold approximately 2.3 acres for approximately $557,000 and
the Company recognized a net gain of approximately $199,000.

On January 1, 1998 a 10% limited partner of TGTC assigned its partnership
interest to the Company in exchange for the cancellation of a $677,000
promissory note due to the Company. This assignment has no impact on the
Company's consolidated financial statements.

In January 1998, TGTC sold approximately 13.5 acres for $2.6 million. The net
gain on this sale to the Company was approximately $725,000.

5
<PAGE>

South Bayshore Associates ("SBA"). SBA is a joint venture, formed in 1986 in
which Transco Realty Trust (Transco) and the Company hold interests of 25% and
75%, respectively. The major asset of SBA is a demand note bearing interest at
the prime rate from Transco with an outstanding balance as of December 31, 1999
and 1998 of approximately $444,000 and $475,000, respectively, in principal and
accrued interest.

The Company holds a demand note (which is eliminated in consolidation) from SBA
bearing interest at the prime rate plus 1% with an outstanding balance including
accrued interest as of December 31, 1999 and 1998 of approximately $1,000,000
and $994,000, respectively, in principal and accrued interest.

HMG Fashion Square, Inc. This wholly-owned subsidiary has a 90% partnership
interest in Fashion Square Partnership (the "partnership") formed in 1992 for
the purpose of developing a shopping center located on approximately 11.5 acres
near Jacksonville, Florida. The shopping center presently consists of four
operating restaurants and a retail store. Three of the four restaurant operators
are leasing the property from the partnership and the fourth operator purchased
its site from the partnership.

Effective January 1, 2000, the Company purchased the interest of the
partnership's 10% minority partner for approximately $266,000. The purchase
price was paid by the cancellation of a promissory note payable from the
minority partner to the Company in the same amount.

In December of 1996, the partnership entered into a lease with a tenant which is
an operator of a restaurant. The leased premises, a 6,242 square foot
restaurant, was constructed in 1996 and the partnership contributed $200,000
towards the cost of the restaurant building. The initial term of the lease is
ten years and calls for annual base rent of $80,000 for years one through five
and $88,000 for years six through ten. The lease also calls for percentage rent
based on sales. No percentage rent was due in 1999 or 1998. The lease also
provides three five year renewal options for years eleven through twenty-five
with escalating base rent. This property is encumbered by a mortgage loan of
$350,000 which bears interest at a fixed rate of 9.75% and calls for monthly
interest-only payments with all principal due in November 2001.

In November, 1994, the partnership entered into a ground lease with a tenant
which is an operator of a restaurant. In 1995, this tenant completed
construction of a restaurant on the 3/4 acres of land covered by the ground
lease. The initial term of the lease is twenty years and calls for base rent of
$60,000 per year with 12.5% increase every five years.

In March 1994, the partnership entered into a ground lease with a tenant which
is an operator of a 7,000 square foot restaurant on the one acre parcel covered
by the ground lease. The partnership agreed to contribute approximately $100,000
in improvements to the leased site. The initial term of the lease is ten years
and calls for base rent of $60,000 per year with 1% increases each subsequent
year. This property is encumbered by a mortgage loan of $300,000 which bears
interest at a fixed rate of 9.75% and calls for monthly interest-only payments
with all principal due in February 2001.

HMG Sugargrove, Inc. This wholly-owned subsidiary sold its sole asset (eight
acres of land located in Houston, Texas) in June 1998 for approximately
$1,064,000. The net gain to the Company was approximately $621,000. This
subsidiary was dissolved in December 1999.

Insurance, Environmental Matters and Other.
In the opinion of management, all assets of the Company are adequately covered
by insurance and the cost and effects of complying with environmental laws do
not have a material impact on the Company's operations.

6
<PAGE>

Other Transactions and Investments.

(a) Reference is made to the above sections of Item 1. Business and Item 6.
Management's Discussion and Analysis or Plan of Operation for
information concerning sales of properties.

(b) Other Investments.

During 1999, the Company committed to invest approximately $4 million
in various privately-held limited partnerships whose purpose is to
invest in growth oriented enterprises. As of December 31,1999 the
Company has contributed approximately $1.2 towards these commitments.
During 1999, one of these partnerships distributed one of its
investments in a publicly-traded company which was subsequently sold
and resulted a net gain to the Company of approximately $2.5 million.

During 1999, the Company made additional investments in marketable
securities of approximately $3 million. No investment in a single
security exceeded $100,000.

Competition.
The Company competes for suitable opportunities for real estate investments with
other real estate investment trusts, foreign investors, pension funds, insurance
companies and other investors. The Company also competes with other real estate
investors and borrowers for available sources of financing.

In addition, to the extent the Company directly and through its subsidiaries
leases properties, it must compete for tenants with other lessors offering
similar facilities. Tenants sought by providing modern, well-maintained
facilities at competitive rentals. The Company has attempted to facilitate
successful leasing of its properties by investing in facilities that have been
developed according to the specifications of tenants and special local needs.

Employees.
The Company has no employees other than officers who are not compensated for
their services as such.

Advisory Agreement (the "Agreement").
Terms of the Agreement. Under the terms of the Agreement, HMG Advisory Corp.
(the "Advisor") serves as the Company's investment advisor and, under the
supervision of the directors of the Company, administers the day-to-day
operations of the Company. All officers of the Company who are officers of the
Advisor are compensated solely by the Advisor for their services. The Agreement
is renewable annually upon the approval of a majority of the directors of the
Company who are not affiliated with the Advisor and a majority of the Company's
shareholders. The contract may be terminated at any time on 120 days' written
notice by the Advisor or upon 60 days' written notice by a majority of the
unaffiliated directors of the Company or the holders of a majority of the
Company's outstanding shares.

Under the Agreement, the Advisor is entitled to receive a monthly fee of
$55,000. The Advisor is also entitled to an annual incentive compensation equal
to the sum of 10% of net realized capital gains and extraordinary items of
income for that year and 10% of the amount, if any, by which net profits of the
Company for such fiscal year exceeded 8% per annum of the Average Net Worth of
the Company, as defined. The Advisor also is entitled to a monthly fee of 20% of
the amount of any unrefunded commitment fees received by the Company with
respect to mortgage loans and other commitments which the Company was not
required to fund and which expired within the next preceding calendar month.

Advisory Fees. For the year ended December 31, 1999, the Company and its
subsidiaries paid the Advisor approximately $1,025,000 in fees, of which

7
<PAGE>

$660,000 represented regular compensation and approximately $365,000 represented
incentive compensation, including approximately $293,000 paid by CII to the
Advisor relating to capital gains realized by CII. In 1998, the advisor was paid
regular compensation of $660,000, and incentive compensation of approximately
$132,000, including approximately $39,000 paid by CII to the Advisor relating to
capital gains realized by CII. Also, in January 1998, the Company paid Courtland
Group, Inc. (the former advisor) approximately $80,000 in incentive fee
compensation relating to the sale of property substantially completed in 1997,
but did not close until January 1998. The Advisor is also the manager for
certain of the Company's affiliates and received management fees of
approximately $30,000 in 1999 and 1998 for such services.

Item 2. Description of Property.
Effective in November 1999, the principal executive offices of the Company and
the Advisor are located at 1870 South Bayshore Drive, Coconut Grove, Florida,
33133, in premises furnished by the Advisor pursuant to the terms of the
Agreement. The premises are owned by CII and leased to the Advisor pursuant to a
lease agreement dated December 1, 1999. The lease calls for base rent of $48,000
per year payable in equal monthly installments. Additionally, the tenant pays
the property insurance, utilities, maintenance and security expenses relating to
the leased premises. The lease term is five years.

Reference is made to Item 1. Business for a description of the Company's
properties.

Item 3. Legal Proceedings.
As previously reported, the Company made certain claims and took certain actions
against Lee Gray, a former officer and Director of the Company, Norman A.
Fieber, a former Director of the Company, and certain related parties. The
Company's claims and actions arose from the failure of Messrs. Gray and Fieber
to disclose Mr. Gray's and Mr. Gray's sister's interest in the Company's
HMG-Fieber Wallingford Associates and HMG-Fieber Associates joint ventures (the
"Joint Ventures") and the inquiry into Messrs. Gray's and Fieber's failure to
disclose Mr. Gray's and Mr. Gray's sister's interest in HMG-Fieber Associates by
a Special Committee appointed by the Board of Directors.

HMG Courtland Properties, Inc. v. Lee Gray et al (the "Delaware Litigation").
On July 2, 1997, the Company filed suit in the Court of Chancery of Delaware in
and for New Castle County against Lee Gray (individually and as a partner in
Martine Avenue Associates), Norman A. Fieber (individually and as a partner in
NAF Associates), Betsy Gray Saffell (Lee Gray's sister)(individually and as a
partner in Martine Avenue Associates), Martine Avenue Associates, (a New York
general partnership in which Mr. Gray and Mrs. Saffell are the general
partners)("Martine"), NAF Associates (a Connecticut general partnership in which
Mr. Fieber and Martine are general partners, and the Company's joint venture
partner in HMG-Fieber Associates ("NAF"), and The Jim Fieber Trust (a trust for
beneficiaries including Mr. Fieber and Martine, and the Company's joint venture
partner in HMG-Fieber Wallingford Associates, which has James A. Fieber, son of
Norman A. Fieber, as trustee (the "Trust"). NAF and the Trust were dismissed
from the case because the Delaware court determined that it did not have
personal jurisdiction over those two entities.

On July 12, 1999, the Delaware Court of Chancery found that Norman Fieber and
Lee Gray breached their fiduciary duties of loyalty and care and defrauded the
Company. On August 31, 1999 the Court issued a final order and judgment. The
monetary award to the Company was $4,538,294 of which Mr. Lee Gray, Mrs. Betsy
Gray Saffell and Mr. Norman Fieber are jointly and severally liable for
$3,340,776. Mr. Lee Gray is also liable for the balance of the award in the
amount of $1,197,518. Of the total amount of the award, approximately $4,159,000
has been collected (plus post judgement interest of approximately $76,000). HMG
is continuing in its efforts to collect the remaining balance of approximately
$380,000 (plus post judgement interest) which Lee Gray is solely liable pursuant
to the Court's order. Approximately $200,000 was paid to Transco pursuant to a
sharing agreement with the Company and is reflected as a reduction to income
from litigation.

The HMG-Fieber joint venture has been restructured in view of the divestiture of
Lee Gray's interest and the limitations on the ongoing participation of Norm
Fieber pursuant to the Order of the Court. HMG's interest in the joint venture

8
<PAGE>

was increased from 65% to approximately 70% and HMG is the managing
representative of the venture.

Lee Gray v. HMG/Courtland Properties, Inc. et al (the "Florida Litigation").
On January 7, 2000, this lawsuit was withdrawn against the Company and its
officers and directors. The following summarizes the lawsuit.

On May 22, 1997, Lee Gray, a former director and officer and a shareholder of
the Company and a former officer and director and a shareholder of Courtland
Group, Inc. ("CGI"), which served as the Company's advisor pursuant to an
advisory agreement which expired December 31, 1997, filed suit in the Circuit
Court of the 11th Judicial Circuit in and for Dade County, Florida against the
following defendants: (i) the Company; (ii) all of the directors and certain of
the officers of the Company and of CGI; (iii) CGI; and (iv) HMG Advisory Corp.,
a Delaware corporation that has served as the Company's advisor since January 1,
1998.

In his lawsuit, Mr. Gray, individually and derivatively as a shareholder of CGI,
alleged, among other things, that his removal as an officer of the Company, his
failure to be nominated for reelection as Director of the Company, his
subsequent removal as an officer and director of CGI and the Board of Directors'
decision not to renew the Company's former advisory agreement with CGI, were the
product of a conspiracy involving certain officers and Directors of the Company
and of CGI who wanted to force Mr. Gray out of the Company and CGI, and to
terminate the Company's advisory agreement with CGI, for their own financial
gain. Mr. Gray also alleged that he was libeled in the discussion of the inquiry
and the results thereof in certain documents, including documents filed with the
Securities and Exchange Commission. Mr. Gray sought money damages, punitive
damages, and temporary and permanent injunctive relief.

On July 10, 1997, the Company filed a motion to dismiss the portion of the
lawsuit directed against it and its directors. The motion to dismiss was granted
on November 18, 1997. On December 1, 1997, Mr. Gray filed an amended complaint
that sought to reinstate the libel claim against the Company. The Company moved
to dismiss the amended complaint and the motion was denied. The parties then
agreed to stay this suit pending the outcome of the Delaware litigation
described above.

Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year ended December 31, 1999.

9
<PAGE>

Part II.

Item 5. Market Price for Common Equity and Related Stockholder Matters.

The high and low per share sales prices of the Company's stock on the American
Stock Exchange (ticker symbol: HMG) for each quarter during the past two years
were as follows:
High Low
============= =============
March 31, 1998 4 5/8 4 1/4
June 30, 1998 5 1/2 4 1/4
September 30,1998 5 7/8 4 1/2
December 31, 1998 5 3 5/8

March 31, 1999 4 3/8 4 1/4
June 30, 1999 4 3/8 3 3/4
September 30, 1999 4 1/2 2 1/8
December 31, 1999 5 2

The Company has not paid dividends since the third quarter of 1990. The
Company's policy has been to pay such dividends as are necessary for it to
qualify for taxation as a REIT under the Internal Revenue Code. The Company
continues to meet all qualifications for taxation as a REIT.

As of March 24, 2000, there were 178 holders of record of the Company's common
stock.

Item 6. Management's Discussion and Analysis or Plan of Operation.

Discussion of Balance Sheet Items:

At December 31, 1999, the balance sheet reflected assets consisting primarily of
equity interests in real estate investment properties, investments in marketable
securities and other investments. Liabilities at December 31, 1999 consisted
primarily of mortgages on individual properties.

Significant changes and/or activity in specific balance sheet items between
December 31, 1999 and 1998 are described below:

Assets:
The carrying value of commercial properties decreased from approximately $3.3
million to approximately $3.1 million, a decrease of approximately $200,000 (or
6%). This was primarily the result of annual depreciation expense.

The carrying value of the hotel and club facility decreased from approximately
$6.5 million to approximately $5.9 million, a decrease of approximately $600,000
(or 9%). This was the result of annual depreciation expense.

Yacht Slips increased from approximately $1.5 million to $1.7 million, and
increase of approximately $192,000 (or 13%). This was primarily due to the
purchase of two yacht slips in 1999, net of annual depreciation expense.

Land held for development decreased from approximately $3.0 million to
approximately $2.5 million, a decrease of approximately $500,000 (or 17%). This
was primarily as the result of sales of land located in Houston, Texas.

10
<PAGE>

Investments in marketable securities increased from approximately $1.6 million
to $4.2 million, an increase of approximately $2.6 million (or 162%). This was
as a result of increased cash available for investment and increased unrealized
gains on these securities, net of sales of securities.

Other investments increased from approximately $4.6 million to approximately
$6.5 million, an increase of approximately $1.9 million (or 41%). This was
primarily as a result of additional investments (net of distributions) in
privately-held limited partnerships whose primary purpose is to make equity
investments in growth-oriented enterprises.

Cash restricted pending delivery of securities of approximately $2.3 million
represents cash in broker accounts from the sales of certain publicly traded
securities yet to be delivered to broker plus margin requirements. The Company
expects to receive (or has received subsequent to year end) these securities as
a distribution from its investments in one of the aforementioned privately-held
limited partnerships.

Loans, notes and other receivables increased from approximately $876,000 to $1.3
million, an increase of approximately $424,000 (or 48%). This was primarily as a
result of proceeds from the litigation received subsequent to year end of
approximately $358,000.

Liabilities:
Sales of securities pending delivery of approximately $1.2 million represents
sales of securities which are to be delivered to broker, as discussed above.

Income taxes payable of approximately $465,000 represents the provision for
income taxes due on current year taxable income.

Other liabilities increased from approximately $350,000 to $880,000, an increase
of approximately $530,000 (151%). This was primarily as a result of an increase
in broker margin balances outstanding at year end.

Results of Operations:
For the year ended December 31, 1999, the Company reported net income of
approximately $4.6 million (or $4.16 per share) compared with a net loss of
approximately $930,000 (or $.82 per share) for the year ended December 31, 1998.
Changes in specific revenues and expenses are discussed below.

Revenues:
1999 versus 1998:
Total revenues for the year ended December 31, 1999 as compared with that of
1998 increased by approximately $2.4 million (or 79%).

Rentals and related revenue decreased by approximately $67,000 (or 4%) for the
year ended December 31, 1999 as compared with 1998. This was primarily as a
result of decreased pass-through expenses (i.e. real estate taxes and property
insurance) relating to the Grove Isle lease. This decrease in revenue is
completely offset by a decrease in operating expenses of properties since
pass-through expenses are paid by the tenant.

Net gain from sale of marketable securities increased by approximately $2.4
million (or 681%) for the year ended December 31, 1999 as compared with 1998.
This was primarily as a result of the sale of one security which completed its
initial public offering in 1999 and was distributed to CII from its investment
in one of the aforementioned privately-held partnerships.

11
<PAGE>
Expenses:
1999 versus 1998:
Total expenses for the year ended December 31, 1999 as compared to that of 1998
decreased by approximately $414,000 (or 8%).

Operating expenses of rental properties and other decreased by approximately
$70,000 or (11%) for the year ended December 31, 1999 as compared to 1998. This
decrease was primarily due to lower operating expenses of hotel and club
facility of Grove Isle Associates, Ltd.

Marina operating expenses decreased by approximately $73,000 (or 14%) for the
year ended December 31, 1999 as compared to 1998. This decrease was primarily
the result of the closing of the marina store in March 1999.

General and administrative expenses decreased by approximately $148,000 or (39%)
for the year ended December 31, 1999 as compared to 1998. This decrease was
primarily due to a decrease in state and other taxes.

Professional fees increased by approximately $192,000 (or 17%) for year ended
December 31, 1999 as compared to 1998. This was primarily the result of
increased costs relating to the on-going litigation, as previously reported.

Depreciation and amortization decreased by approximately $165,000 (or 16%) for
the year ended December 31, 1999 as compared to 1998. This was primarily the
result of decreased depreciation expense relating to the furniture, fixtures and
equipment at the Grove Isle property most of which became fully depreciated in
1999.

Minority partner's interest in operating gains of consolidated entities
decreased by approximately $108,000 primarily due to increased gains from CII
Primarily as a result of increased net gain from sale of marketable securities.

Net gain on sale of real estate for the years ended December 31, 1999, and 1998
consisted of the following:

Net gain after
incentive fee and
minority interest
------------------------------
Property Sold 1999 1998
---------- ----------
Undeveloped land in Texas $ 618,000 $1,433,000
Undeveloped land in Rhode Island -- 86,000
HMG-Fieber retail store in Maine 26,000 --
---------- ----------
$ 644,000 $1,519,000
========== ==========

Income from litigation of approximately $4 million for the year ended December
31, 1999 relates to the judgement awarded to the Company, as previously
reported. Reference is made to Item 3. Legal Proceedings.

Projected Operating Results:
The Company's rental and related revenues and expenses in 2000 are expected to
remain consistent with those of 1999.

<PAGE>

Effect of Inflation:
Inflation affects the costs of operating and maintaining the Company's
investments and the availability and terms of financing. In addition, rentals
under certain leases are based in part on the lessee's sales and tend to
increase with inflation, and certain leases provide for periodic adjustments
according to changes in predetermined price indices.

Liquidity and Capital Resources:
The Company's material commitments primarily consist of maturities of debt
obligations of approximately $4.2 million in 2000. The funds necessary to meet
these obligations are expected from the proceeds of sales of properties,
refinancing, distributions from investments and available cash. Included in the
maturing debt obligations is a note payable by CII to T.G.I.F. of approximately
$3.4 million due on demand. CII intends to repay this obligation, when due, with
funds available from distributions from investments. In addition, the Company
intends to continue to seek opportunities for investment in income producing
properties.

The Company had net cash provided by operating activities of approximately $2.7
million for the year ended December 31, 1999 versus net cash used in operating
activities of approximately $1.4 million in 1998. The Company believes that
there will be sufficient cash flows in the next year to meet its operating
requirements.

Capital Expenditure Requirements
The Company does not presently anticipate any significant capital expenditures,
other than in the ordinary course of business.

Material Changes in Operating, Investing and Financing Cash Flows:
Discussion of 1999 Changes.
For the year ended December 31, 1999, net cash used in investing activities was
approximately $1 million. This consisted primarily of increased investments in
marketable securities of approximately $3 million, contributions to other
investments (net of distributions) of approximately $1.7 million, increased
restricted cash (net of sales of securities pending delivery) of approximately
$1 million, increase in mortgage loans, notes and other receivables of
approximately $490,000 and acquisitions and improvements of properties of
approximately $292,000. These uses of cash were partially offset by net proceeds
from sales and redemptions of securities of approximately $4.1 million and net
proceeds from disposals of properties of approximately $1.3 million.

For the year ended December 31, 1999, net cash used in financing activities was
approximately $45,000. This consisted of repayment of mortgages and notes
payable of approximately $478,000 and net distributions to minority partners of
approximately $237,000 and purchase of treasury stock of approximately $61,000.
These uses of cash were partially offset by additional borrowing of
approximately $731,000.

13
<PAGE>

Accounting Pronouncements:
SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities,"
establishes accounting and reporting standards for derivative instruments and
for hedging activities. It requires that an entity recognize all derivatives as
either assets or liabilities in the statement of financial position and measure
those instruments at fair value. The Statement, as amended, applies to all
entities and is effective for all fiscal quarters of the fiscal years beginning
after June 15, 2000. The Company does not believe the adoption of this statement
will have a material effect on its consolidated financial statements.

14
<PAGE>

Item 7. Consolidated Financial Statements

Report of Independent Certified Public Accountants.................16.

Consolidated balance sheets as of December 31, 1999 and 1998.......17.

Consolidated statements of operations for the
years ended December 31, 1999 and 1998..........................18.

Consolidated statements of stockholders' equity for
the years ended December 31, 1999 and 1998......................19.

Consolidated statements of cash flows for the
years ended December 31, 1999, and 1998.........................20.

Notes to consolidated financial statements.........................21.

15
<PAGE>

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders
of HMG/Courtland Properties, Inc.:

We have audited the accompanying consolidated balance sheets of HMG/Courtland
Properties, Inc. and subsidiaries (the "Company") as of December 31, 1999 and
1998, and the related consolidated statements of operations, stockholders'
equity and cash flows for the years then ended. These consolidated financial
statements are the responsibility of the Company'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
consolidated 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 financial position of the Company as of
December 31, 1999 and 1998, and the results of its operations and its cash flows
for the years then ended, in conformity with generally accepted accounting
principles.

BDO SEIDMAN, LLP

Miami, Florida
March 24, 2000

16
<PAGE>

HMG/COURTLAND PROPERTIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
==============================================================================================================================
December 31, December 31,
1999 1998
------------ ------------
ASSETS
Investment Properties, net of accumulated depreciation:
<S> <C> <C>
Commercial and Industrial $3,097,027 $3,267,582
Hotel and Club Facility 5,924,872 6,521,428
Yacht Slips 1,699,853 1,508,291
Land Held for Development 2,451,404 3,013,272
------------ ------------
Total investment properties, net 13,173,156 14,310,573

Investments in Marketable Securities 4,166,747 1,621,488
Other Investments 6,543,353 4,603,047
Cash and Cash Equivalents 3,410,476 1,834,365
Cash Restricted Pending Delivery of Securities 2,268,559
Loans, Notes and Other Receivables 1,319,420 875,614
Notes and Advances Due From Related Parties 925,130 719,937
Other Assets 355,643 402,674
------------ ------------
TOTAL ASSETS $32,162,484 $24,367,698
============ ============

LIABILITIES
Accounts Payable and Accrued Expenses $971,098 $1,058,959
Mortgages and Notes payable 9,808,478 9,555,129
Sales of Securities Pending Delivery 1,215,355
Income taxes payable 465,000
Other Liabilities 879,844 349,767
------------ ------------
TOTAL LIABILITIES 13,339,775 10,963,855

Commitments and Contingencies

Minority Interests 372,729 424,925
------------ ------------

STOCKHOLDERS' EQUITY
Preferred Stock, no par value; 2,000,000 shares
authorized; none issued
Common Stock, $1 par value; 1,500,000 shares authorized;
1,245,635 shares issued 1,245,635 1,245,635
Additional Paid-in Capital 26,283,222 26,283,222
Undistributed Gains From Sales of Real Estate, net of losses 37,314,284 36,670,311
Undistributed Losses From Operations (46,095,572) (50,015,668)
Accumulated other comprehensive income 1,084,775 116,555
------------ ------------
19,832,344 14,300,055
Less: Treasury Stock, at cost (165,000 and 145,400 shares as of
December 31, 1999 and 1998, respectively) (1,382,364) (1,321,137)

------------ ------------
TOTAL STOCKHOLDERS' EQUITY 18,449,980 12,978,918

------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $32,162,484 $24,367,698
============ ============
</TABLE>

See notes to consolidated financial statements

17
<PAGE>
HMG/COURTLAND PROPERTIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1999 AND 1998
=====================================================================

<TABLE>
<CAPTION>
REVENUES 1999 1998
---- ----
<S> <C> <C>
Rentals and related revenue $1,648,869 $1,715,704
Marina revenues 520,335 518,522
Net gain from sale of marketable securities 2,712,039 347,834
Gain from other investments 240,023 201,534
Interest and dividends from invested cash and other 269,874 219,425
------------------------------------------
Total revenues 5,391,140 3,003,019
------------------------------------------

EXPENSES
Operating expenses:
Rental Properties and other 585,603 655,167
Marina 434,647 507,255
Advisor's fee 660,000 660,000
General and administrative 233,925 382,314
Professional fees and expenses 1,302,270 1,110,142
Directors' fees and expenses 44,197 41,315
Depreciation and amortization 878,261 1,043,702
------------------------------------------
Total operating expenses 4,138,903 4,399,895

Interest expense 806,197 851,559
Minority partners' interests in operating
gains of consolidated entities 92,697 200,596
------------------------------------------
Total expenses 5,037,797 5,452,050
------------------------------------------

Income (loss) before sales of real estate, income from
litigation and taxes 353,343 (2,449,031)

Gain on sales of real estate, net 643,973 1,518,757

Income from litigation 4,031,753
------------------------------------------

Income (loss) before income taxes 5,029,069 (930,274)

Provision for income taxes (465,000)

------------------------------------------
Net income (loss) $4,564,069 ($930,274)
==========================================

Net Income (Loss) Per Common Share, Basic and Diluted
(Based on weighted average shares outstanding of 1,096,133
for the year ended December 31, 1999, and 1,130,707
for the year ended December 31, 1998) $4.16 ($0.82)
===== =======
</TABLE>

See notes to consolidated financial statements

<PAGE>
HMG/COURTLAND PROPERTIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
=================================================================================================
Undistributed
Gains from Sales Undistributed
Common Stock Additional of Real Estate, Losses from
Shares Amount Paid-In Capital Net of Losses Operations
<S> <C> <C> <C> <C> <C>
Balance as of January 1, 1998 1,245,635 $1,245,635 $26,283,222 $35,151,554 ($47,566,637)

Comprehensive income (loss)
Net income (loss) 1,518,757 (2,449,031)
Other comprehensive income
Unrealized gain on marketable securities
Comprehensive income (loss)

Purchased 66,600 shares of treasury stock

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

Balance as of December 31, 1998 1,245,635 1,245,635 26,283,222 36,670,311 (50,015,668)

Comprehensive income
Net income 643,973 3,920,096
Other comprehensive income
Unrealized gain on marketable securities
Comprehensive income

Purchased 19,600 shares of treasury stock

===============================================================================
Balance as of December 31, 1999 1,245,635 $1,245,635 $26,283,222 $37,314,284 ($46,095,572)
===============================================================================

Accumulated
Other Total
Comprehensive Comprehensive Treasury Stock Stockholders'
Income Income Shares Cost Equity

Balance as of January 1, 1998 78,800 ($996,462) $14,117,312

Comprehensive income (loss)
Net income (loss) ($930,274) (930,274)
Other comprehensive income
Unrealized gain on marketable securities 116,555 $116,555 116,555
--------------
Comprehensive income (loss) ($813,719)

Purchased 66,600 shares of treasury stock 66,600 (324,675) (324,675)

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

Balance as of December 31, 1998 116,555 145,400 (1,321,137) 12,978,918

Comprehensive income
Net income $4,564,069 4,564,069
Other comprehensive income
Unrealized gain on marketable securities 968,220 $968,220 968,220
--------------
Comprehensive income $5,532,289

Purchased 19,600 shares of treasury stock 19,600 (61,227) (61,227)

====================================================================================
Balance as of December 31, 1999 $1,084,775 165,000 ($1,382,364) $18,449,980
====================================================================================

</TABLE>

See notes to consolidated financial statements

19
<PAGE>
HMG/COURTLAND PROPERTIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------

1999 1998

CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income (loss) $4,564,069 ($930,274)
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities:
Depreciation and amortization 878,261 1,043,702
Gain from other investments (240,023) (201,534)
Gain on sales of real estate, net (643,973) (1,518,757)
Net gain from sales of marketable securities (2,712,039) (347,834)
Minority partners' interest in operating gains 92,697 200,596
Changes in assets and liabilities:
Decrease in other assets 18,778 314,565
Increase in due from affiliates (205,193) (64,025)
(Decrease) increase in accounts payable and accrued expenses (87,861) 170,613
Increase (decrease) in other liabilities 530,077 (41,097)
Increase in income taxes payable 465,000
----------- -----------
Total adjustments (1,904,276) (443,771)
----------- -----------
Net cash provided by (used in) operating activities 2,659,793 (1,374,045)
----------- -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
Aquisitions and improvements of properties (291,751) (406,816)
Net proceeds from disposals of properties 1,315,168 3,388,497
Increase in mortgage loans, notes and other loans receivable (489,812) (50,953)
Decrease in mortgage loans, notes and other loans receivable 46,006 70,274
Contributions to other investments, net of distributions (1,700,283) (262,577)
Net proceeds from sales and redemptions of securities 4,136,331 1,453,268
Increase in restricted cash from sales of securities pending delivery (1,053,204)
Increased investments in marketable securities (3,001,331) (2,507,989)
----------- -----------
Net cash (used in) provided by investing activities (1,038,876) 1,683,704
----------- -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of mortgages and notes payables (477,921) (5,245,830)
Additions to mortgages and notes payables 731,270 4,584,552
Purchase of treasury stock (61,227) (324,675)
Net (distributions to) contributions from minority partners (236,928) 18,600
----------- -----------
Net cash used in financing activities (44,806) (967,353)
----------- -----------

Net increase in cash and cash equivalents 1,576,111 (657,694)

Cash and cash equivalents at beginning of the period 1,834,365 2,492,059
----------- -----------

Cash and cash equivalents at end of the period $3,410,476 $1,834,365
=========== ===========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest $650,000 $790,000
=========== ===========
</TABLE>

See notes to consolidated financial statements

<PAGE>
HMG/COURTLAND PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 and 1998

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business and Consolidation. The consolidated financial statements include the
accounts of HMG/Courtland Properties, Inc. (the "Company") and entities in which
the Company owns a majority voting interest or controlling financial interest.
Investments in which the Company does not have a majority voting or financial
controlling interest are accounted for under the equity method of accounting ,
even though the Company may have a majority interest in profits and losses. The
Company invests in a portfolio of equity interests in commercial real estate.
The Company was organized in 1972 and qualifies for taxation as a real estate
investment trust ("REIT") under the Internal Revenue Code. The Company operates
in one business segment and its present investment policy is to invest primarily
in income-producing commercial properties. All material transactions with
consolidated and unconsolidated entities have been eliminated in consolidation
or as required under the equity method.

The Company's consolidated subsidiaries are described below:

Courtland Investments, Inc. ("CII"). A 95% owned corporation which owns 100% of
Grove Isle Yacht Club Associates, a 15% general partnership interest in Grove
Isle Associates, Ltd., and various investments in partnerships whose primary
purpose is to make equity investments in growth-oriented enterprises and real
estate, which are carried at cost since there is no readily available market
value.

As previously reported, the Company holds a 95% non-voting interest and Masscap
Investments Company, Inc. ("Masscap") holds a 5% voting interest in CII. The
Company and Masscap have had a continuing arrangement with regard to the ongoing
operations of CII, all of which provides the Company with complete authority
over all decision making relating to the business, operations and financing of
CII consistent with its status as a real estate investment trust.

Grove Isle Associates, Ltd. ("GIA"). This limited partnership owns a 50 room,
hotel and private club facility located on approximately 7 acres of a private
island in Coconut Grove, Florida known as Grove Isle. (See Note 9).

Grove Isle Club, Inc. ("GICI"). This corporation was the former operator of the
hotel and club of GIA. GICI's present revenues consists solely of the amounts
received from GIA in consideration for the relinquishment of its lease of the
Grove Isle property (See Note 9).

Grove Isle Yacht Club Associates ("GIYCA"). This partnership was the developer
of the 85 boat slips located at Grove Isle of which 44 remain unsold. GIYCA and
its wholly-owned subsidiary operate all aspects of the Grove Isle marina.

Courtland Key West, Inc. ("CKWI"). This Corporation was formed in December 1999
and is wholly-owned by CII. It's sole asset is a 10% interest in a limited
liability company that was also formed in December 1999 for the purpose of
owning and operating a restaurant in Key West, Florida.

The Grove Towne Center - Texas, Ltd. A 75% owned limited partnership having a
wholly-owned subsidiary of the Company as its sole general partner. This
partnership was formed in 1994 with its principal asset being a 41 acre site
located in suburban Houston, Texas, held for investment and development. After
various sales of parcels beginning in 1996, the partnership presently has
approximately 19 acres remaining.

South Bayshore Associates. A 75% owned venture of which the major asset is a
receivable from the Company's venture partner.

21
<PAGE>

HMG - Fieber Associates. A 70% owned venture of which the major assets are nine
commercial properties located in the northeastern United States. (See Note 4).

260 River Corp. A 100% subsidiary of the company which owns a 70% interest in
one property located in Montpelier, Vermont.

HMG Fashion Square, Inc. A wholly-owned Florida corporation of which the major
asset is a 90% partnership interest in Fashion Square Partnership which owns a
shopping center on an approximate 10 acre site in Jacksonville, Florida. As of
December 31, 1999, this shopping center has three tenants each operating
restaurants.

Unconsolidated entities are discussed in Note 3.

The following table summarizes the Company's portfolio of real estate
investments as of December 31, 1999:
Percent of
Geographic Distribution Investments (1)
-------------------------- -----------
Florida 77%
Texas 18%
Northeastern United States (2) 5%
------
100%

Type of Property (3)
----------------
Undeveloped land 19%
Hotel and club facility 45%
Individual retail stores 4%
Yacht slips 13%
Shopping center and other 19%
-----
100%

(2) New York, Massachusetts, and Vermont.

(3) Based on predominant present or intended use.

Preparation of Financial Statements.
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.

Income Taxes. The Company qualifies as a real estate investment trust and
distributes its taxable ordinary income to stockholders in conformity with
requirements of the Internal Revenue Code. In addition, net operating losses can
be carried forward to reduce future taxable income but cannot be carried back.
The Company intends to distribute any of its future taxable ordinary income and
is not taxed on the amounts distributed. Distributed capital gains on sales of
real estate are not subject to taxes; however, undistributed capital gains are
taxed as capital gains. State income taxes are not significant. Any benefit from

22
<PAGE>

or provisions for income taxes relates to the Company's undistributed capital
gains and taxable losses or income of CII which is not consolidated with the
Company for income tax purposes and accordingly files a separate tax return.
Refer to Note 7 for further disclosure on income taxes.

Depreciation and Amortization. Depreciation of properties held for investment is
computed using the straight-line method over the estimated useful lives of the
properties, which range up to 39.5 years. Deferred mortgage and leasing costs
are amortized over the shorter of the respective term of the related
indebtedness or life of the asset. Depreciation and amortization expense for the
years ended December 31, 1999 and 1998 was approximately $878,000 and $1
million, respectively. The GIYCA's yacht slips are being depreciated on a
straight-line basis over their estimated useful life of 20 years.

Fair Value of Financial Instruments. The carrying value of financial instruments
including other investments, notes and advances due from related parties,
accounts payable and accrued expenses and mortgages and notes payable
approximate their fair values at December 31, 1999 and 1998.

Marketable Securities. Investments in marketable securities have been designated
as available for sale. Those securities are reported at market value, with net
unrealized gains and losses included in equity. Unrealized losses that are other
than temporary are recognized in earnings. Realized gains and loses on
investments are determined using the average cost method. These securities from
time to time are pledged as collateral pursuant to broker margin requirements.

Comprehensive Income. During the third quarter of 1998, the Company implemented
Statement of Financial Accounting Standards ("SFAS") No. 130. "Reporting
Comprehensive Income" and has elected to report comprehensive income in the
consolidated statement of stockholders' equity. Comprehensive income is the
change in equity from transactions and other events from nonowner sources.
Comprehensive income includes net income and other comprehensive income. The
components and related activity of accumulated other comprehensive income,
resulting from net unrealized gain on available-for-sale investments are as
follows:

Accumulated Other Comprehensive Income:

Balance as of December 31, 1998........................... $116,555
Changes during the year................................... 968,220
----------
Balance as of December 31, 1999...........................$1,084,775
==========

Earnings (Loss) Per Common Share. Net income (loss) per common share (basic and
diluted) is based on the net income (loss) divided by the weighted average
number of common shares outstanding during each year. Common shares outstanding
includes issued shares less shares held in treasury.

The Company's potential issuable shares of common stock pursuant to outstanding
stock purchase options are excluded from the Company's diluted computation as
their effect would be anti-dilutive or immaterial to the Company's net income
(loss) per share.

Treasury Stock. In the fourth quarter of 1999, the Company purchased 19,600
shares of treasury stock at an average cost of approximately $61,000 or $3.11
per share which was the market value at the date of purchase.

In June 1998, the Company purchased 66,600 shares of treasury stock at a cost of
approximately $325,000 or $4.88 per share which was the market value at the date
of purchase.

Gain on Sales of Real Estate. Gain on sales of real estate has been reduced,
where applicable, by minority partners' interest in the gain (loss) of $92,000
and ($191,000) and advisor's incentive fees of $72,000 and $168,000 for the
years ended December 31, 1999 and 1998, respectively.

23
<PAGE>

Cash and Cash Equivalents. For purposes of the consolidated statements of cash
flows, the Company considers all highly liquid investments with a maturity of
three months or less to be cash and cash equivalent.

Reclassifications. Certain amounts in prior year's consolidated financial
statements have been reclassified to conform to the current year's presentation.

Minority Interest. Minority interest represents the minority partners'
proportionate share of the equity of the Company's majority owned subsidiaries.

<TABLE>
<CAPTION>
1999 1998
-------------- --------------
<S> <C> <C>
Minority interest balance at beginning of year $425,000 $397,000
Minority partners' interest in operating gains of consolidated 93,000 201,000
subsidiaries
Minority partners' interest in net gains (losses) on sales of real 92,000 (191,000)
estate of consolidated subsidiaries
Net (distributions to) contributions from minority partners (269,000) 6,000
Other 32,000 12,000
-------------- --------------
Minority interest balance at end of year $373,000 $425,000
============== ==============
</TABLE>
Stock-Based Compensation. The Company recognizes compensation expense for its
stock option plan using the intrinsic value method of accounting. Under the
terms of the intrinsic value method, compensation cost is the excess, if any, of
the quoted market price of the stock at the grant date, or other measurement
date, over the amount an employee must pay to acquire the stock.

Revenue Recognition. The Company is the lessor of various real estate. All of
the lease agreements are classified as operating leases and accordingly all
rental revenue is recognized as earned based upon total fixed cash flow over the
initial term of the lease, using the straight line method. Percentage rents are
based upon tenant sales levels for a specified period. Reimbursed expenses for
real estate taxes, common area maintenance, utilities and insurance are
recognized in the period in which the expenses are incurred, based upon the
provisions of the tenant's lease.

Asset Impairments. The Company periodically reviews the carrying value of
certain of its assets in relation to historical results, current business
conditions and trends to identify potential situations in which the carrying
value of assets may not be recoverable. If such reviews indicate that the
carrying value of such assets may not be recoverable, the Company would estimate
the undiscounted sum of the expected future cash flows of such assets or analyze
the fair value of the asset, to determine if such sum or fair value is less than
the carrying value of such assets to ascertain if a permanent impairment exists.
If a permanent impairment exists, the Company would determine the fair value by
using quoted market prices, if available, for such assets, or if quoted market
prices are not available, the Company would discount the expected future cash
flows of such assets and would adjust the carrying value of the asset to fair
value.

24
<PAGE>

25
<PAGE>

2. INVESTMENT PROPERTIES

The components of the Company's investment properties and the related
accumulated depreciation information follows:

<TABLE>
<CAPTION>
December 31, 1999
--------------------------------------------------
Accumulated
Cost Depreciation Net
Commercial and Industrial Properties
<S> <C> <C> <C>
Land $ 1,433,809 $ 1,433,809
Buildings and improvements 3,249,535 $ 1,586,317 1,663,218
----------- ----------- -----------
4,683,344 1,586,317 3,097,027
----------- ----------- -----------
Hotel and Club Facility
Land 1,338,518 1,338,518
Hotel/club facility and improvements 6,918,915 2,395,591 4,523,324
Furniture, fixtures & equipment 2,251,378 2,188,348 63,030
----------- ----------- -----------
10,508,811 4,583,939 5,924,872
----------- ----------- -----------

Yacht Slips 1,862,675 162,822 1,699,853
----------- ----------- -----------

Land Held for Development 2,451,404 2,451,404
----------- ----------- -----------

Total $19,506,234 $ 6,333,078 $13,173,156
=========== =========== ===========

December 31, 1998
--------------------------------------------------
Accumulated
Cost Depreciation Net
Commercial and Industrial Properties
Land $ 1,445,948 $ 1,445,948
Buildings and improvements 3,295,078 $ 1,473,444 1,821,634
----------- ----------- -----------
4,741,026 1,473,444 3,267,582
----------- ----------- -----------
Hotel and Club Facility
Land 1,338,518 1,338,518
Hotel/ club facility and improvements 6,918,914 1,984,754 4,934,160
Furniture, fixtures & equipment 2,234,643 1,985,893 248,750
----------- ----------- -----------
10,492,075 3,970,647 6,521,428
----------- ----------- -----------

Yacht Slips 1,587,675 79,384 1,508,291
----------- ----------- -----------

Land Held for Development 3,013,272 3,013,272
----------- ----------- -----------

Total $19,834,048 $ 5,523,475 $14,310,573
=========== =========== ===========
</TABLE>

26
<PAGE>

3. OTHER INVESTMENTS

The Company's other investments includes equity interests in various
partnerships whose purpose is to invest in growth oriented enterprises. No
single investment exceeds 5% of the Company's total assets. And the Company's
ownership interest in any one partnership does not exceed 3% of the total
partnership equity. The carrying value of these investments is the lower of cost
or fair value.

During 1999 the Company committed to contribute approximately $3.5 million to
these partnerships of which $1.2 million was funded in 1999. Subsequent to year
end, the Company has invested an additional $750,000 in a similar limited
partnership.

Also included in other investments is CII's 49% equity interest in T.G. I.F.
Texas, Inc. (T.G.I.F.). T.G.I.F. is a closely-held Texas Corporation which owns
one net leased property in Louisiana and holds promissory notes receivable from
it's shareholders, including CII and Maurice Wiener, the Chairman of the
Company. See Notes 4 and 6 for discussion on notes payable to T.G. I.F. and
notes payable by Mr. Wiener to T.G.I.F.

Carrying Values as of December 31,
----------------------------
Description 1999 1998
---------- ----------
Partnerships $3,251,988 $1,960,084
T.G.I.F. Texas, Inc. 2,551,365 2,392,963
Other 740,000 250,000
---------- ----------
Totals $6,543,353 $4,603,047
========== ==========

4. NOTES AND ADVANCES DUE FROM AND TRANSACTIONS WITH RELATED PARTIES AND
LITIGATION

The Company has an agreement (the "Agreement") with HMG Advisory Corp. (the
"Advisor") for its services as investment advisor and administrator of the
Company's affairs. All officers of the Company who are officers of the Advisor
are compensated solely by the Advisor for their services. The Agreement is
renewable annually upon the approval of a majority of the directors of the
Company who are not affiliated with the Advisor and a majority of the Company's
shareholders. The contract may be terminated at any time on 120 days written
notice by the Advisor or upon 60 days written notice by a majority of the
unaffiliated directors of the Company or the holders of a majority of the
Company's outstanding shares.

The Advisor is majority owned by Mr. Wiener with the remaining shares owned by
certain officers. The officers and directors of the Advisor are as follows:
Maurice Wiener, Chairman of the Board and Chief Executive Officer; Lawrence I.
Rothstein, President, Treasurer, Secretary and Director; Carlos Camarotti, Vice
President - Finance and Assistant Secretary; and Bernard Lerner, Vice President.

Under the Agreement, the Advisor is entitled to receive a monthly fee of $55,000
plus annual incentive compensation equal to the sum of 10% of net realized
capital gains and extraordinary items of income for that year and 10% of the
amount, if any, by which net profits of the Company for such fiscal year
exceeded 8% per annum of the Average Net Worth of the Company, as defined. The
Advisor is also entitled to a monthly fee of 20% of the amount of any unrefunded
commitment fees received by the Company with respect to mortgage loans and other
commitments which the Company was not required to fund and which expired within
the next preceding calendar month.

For the years ended December 31, 1999 and 1998, approximately $1,025,000 and
$792,000, respectively, was earned by the Advisor in fees of which approximately
$365,000 and $132,000, respectively, was for incentive compensation. The Advisor
also received management fees from certain affiliates and/or subsidiaries of the
Company in the amount of approximately $30,000 in 1999 and 1998.

27
<PAGE>

At December 31, 1999 and 1998 the Company had amounts due from the Advisor of
approximately $157,000 and $11,000, respectively. This amount bears interest at
prime plus 1% and is due on demand. At December 31, 1999 and 1998, the Company
had amounts due from Courtland Group, Inc. (the former advisor) of approximately
$253,000 and $233,000, respectively. This amount bears interest at Prime +1% and
is due on demand.

Effective December 1, 1999, the Advisor began leasing it's executive offices
from CII pursuant to a lease agreement. This lease agreement is at the going
market rate for similar property and calls for base rent of $48,000 per year
payable is equal monthly installments. Additionally, the Advisor is responsible
for all property insurance, utilities, maintenance and security expenses
relating to the leased premises. The lease term is five years.

The Company, via its 75% owned joint venture (SBA), has a note receivable from
Transco (a 46% shareholder of the Company) of $300,000 plus accrued interest of
approximately $144,000 and $175,000 as of December 1999 and 1998, respectively.
This note bears interest at the prime rate and is due on demand.

Mr. Wiener, Chairman of the Company, is an 18% shareholder and the chairman and
director of T.G.I.F. Texas, Inc., a 49% owned affiliate of CII (See Note 3). As
of December 31, 1999 and 1998, T.G.I.F. had amounts due from Mr. Wiener in the
amount of approximately $520,000 and $388,000, respectively. These amounts are
due on demand and bear interest at the prime rate. Furthermore, the Advisor
receives a management fee of $18,000 per year from T.G.I.F. CII has amounts due
to T.G.I.F. of approximately $3.4 million and $3.2 million as of December 31,
1999 and 1998, respectively. These amounts bear interest at the prime rate and
principal and interest are due on demand. T.G.I.F. owns 10,000 shares of the
Company's common stock purchased at market value in 1996.

As previously reported, the Company made certain claims and took certain actions
against Lee Gray, a former officer and Director of the Company, Norman A.
Fieber, a former Director of the Company, and certain related parties. The
Company's claims and actions arose from the failure of Messrs. Gray and Fieber
to disclose Mr. Gray's and Mr. Gray's sister's interest in the Company's
HMG-Fieber Wallingford Associates and HMG-Fieber Associates joint ventures (the
"Joint Ventures") and the inquiry into Messrs. Gray's and Fieber's failure to
disclose Mr. Gray's and Mr. Gray's sister's interest in HMG-Fieber Associates by
a Special Committee appointed by the Board of Directors.

28
<PAGE>

$380,000 (plus post judgement interest) which Lee Gray is solely liable pursuant
to the Court's order. Approximately $200,000 was paid to Transco pursuant to a
sharing agreement with the Company and is reflected as a reduction to income
from litigation.

5. INVESTMENTS IN MARKETABLE SECURITIES

Investments in marketable securities consist primarily of large capital
corporate equity securities in varying industries. These securities are
classified as available-for-sale and carried at fair value, based on quoted
market price. The value of any single security does not exceed 4% of the total
value of the portfolio. The net unrealized gains or losses on these investments
are reported as a separate component of stockholders' equity. Gross unrealized
gains on available-for-sale securities as of December 31, 1999 and 1998 were
approximately $1,280,000 and $161,000, respectively. Gross unrealized losses as
of December 31, 1999 and 1998 were approximately $195,000 and $45,000,
respectively.

Gross gains on sales of marketable securities of approximately $2,940,000 and
$423,000 were realized during the years ended December 31, 1999 and 1998,
respectively. Approximately $2.5 million of the 1999 gain was realized upon the
sale of one security received by CII from one of its privately held

29
<PAGE>

partnerships. Gross losses of approximately $228,000 and $75,000 were realized
during the years ended December 31, 1999 and 1998, respectively. Gross gains and
losses are based on the average cost method of determining cost.

As of December 31, 1999, the Company (through CII) has sold securities of two
publicly-traded companies for which the delivery of such securities was pending
at year end. These securities are held by one of the aforementioned
privately-held partnerships in which CII is a limited partner. CII has received
or expects to receive these securities in 2000. As a result of these sales the
Company has recorded a liability to deliver securities to its broker of
approximately $1.2 million and restricted cash of approximately $2.3 million
pending the delivery of the securities.

30
<PAGE>

6. MORTGAGES AND NOTES PAYABLES
<TABLE>
<CAPTION>
December 31,
------------------------------
1999 1998
---------- ----------
Collateralized by Investment Properties (Note 2)
- ------------------------------------------------
<S> <C> <C>
Land Held for Development:
Mortgage loan payable, interest at 1% over prime (9.5% at December
31, 1999) payable monthly. Principal payment of $213,000 due in
June 2000 with remaining balance due at maturity 2001 $ 381,310 $ 568,000

Mortgage loan payable, interest at prime plus 1.75% payable monthly
with all principal due June 1999 -- 221,340

Mortgage loan payable, interest at 1% over prime payable quarterly
with principal due on demand 500,000 --

Partnerships owning hotel and club facility and yacht slips:
Mortgage loan payable with interest fixed at 7.75% through September
30, 2003 Monthly payments of principal and interest based on
25-year amortization. All outstanding principal due at maturity on
September 30, 2008 4,429,265 4,490,411

Note payable to individual with interest rate fixed at 7%. Payment
of principal and interest annually, with maturity in July 2002 75,000 --

Partnership owning shopping center:
Mortgage loan payable with interest fixed at 9.75% payable monthly
with principal due at maturity in November 2001 300,000 300,000

Mortgage loan payable with interest fixed at 9.75% payable monthly
with principal due at maturity in February 2001 350,000 350,000

Office building:
Mortgage loan payable, interest at 9.25% for the first five years,
then fixed at the then prime rate plus 3/4%. Payment of principal
and interest monthly with maturity in August 2007 411,326 420,071

Other:
Note payable to affiliate (T.G.I.F.), interest at prime (8.50% at
December 31, 1999) payable annually in January. Principal outstanding
due on demand 3,361,577 3,205,307
---------- ----------
Totals $9,808,478 $9,555,129
========== ==========
</TABLE>

31
<PAGE>

A summary of scheduled principal repayments or reductions for all types of notes
and mortgages payable is as follows:

Year ending December 31, Amount
-----------------------------------------------------------
2000 $4,181,475
2001 930,696
2002 120,226
2003 103,065
2004 111,551
2005 and thereafter 4,361,465
----------
Total $9,808,478
==========

The 2000 principal repayments are expected to be satisfied with proceeds from
sales of real estate, distributions from investments, available cash or such
debt may be refinanced.

7. INCOME TAXES
The components of income before income taxes and the effect of adjustments to
tax computed at the federal statutory rate for the year ended December 31, 1999
were as follows:

Income before income taxes $5,029,000
---------------------------------------------------------------------
Computed tax at federal statutory rate of 34% 1,710,000
Change in valuation allowance from CII which files
separate tax return (see below) (869,000)
State taxes, net of federal income tax benefit 98,000
Utilization of net operating loss carryforward (514,000)
Other items, net 40,000
---------------------------------------------------------------------
Provision for income taxes $465,000
=====================================================================
Effective tax rate 9%
=====================================================================

Deferred taxes and current provision cannot be offset because the deferred taxes
relate to CII, which files a separate tax return. The provision for income taxes
relates to the Company (excluding CII), which qualifies as a real estate
investment trust and does not record deferred taxes due to its ability to
distribute taxable income to its shareholders..

Deferred tax assets and liabilities of CII reflect the impact of temporary
differences between amounts of assets and liabilities for financial reporting
purposes and the bases of such assets and liabilities as measured by income tax
law. A valuation allowance is recognized to reduce deferred tax assets to the
amounts more likely than not to be realized. As of December 31, 1999 and 1998,
the components of the deferred tax assets and liabilities are as follows:
<TABLE>
<CAPTION>
As of December 31, 1999 As of December 31, 1998
Deferred tax Deferred tax
----------------------------------------------------------------
Assets Liabilities Assets Liabilities
--------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Net operating loss carryforward $1,344,000 $2,100,000
Excess of book basis of 49%-owned
corporation over tax basis 441,000 382,000
Other 407,000 67,000 410,000 16,000
Valuation allowance (1,243,000) (2,112,000)
--------------- -------------- -------------- --------------
Totals $508,000 $508,000 $398,000 $398,000
=============== ============== ============== ==============
</TABLE>

The change in the valuation allowance between December 31, 1999 and 1998 was an
decrease of $869,000.

8. STOCK-BASED COMPENSATION

The Company has a fixed stock option plan which is described below. The Company
applies APB Opinion 25, Accounting for Stock Issued to Employees, and related
Interpretations in accounting for the plan. Under APB Opinion 25, if the
exercise price of the Company's employee stock options equals or exceeds the
market price of the underlying stock on the date of grant, no compensation is
recognized.

32
<PAGE>

In July 1991, the shareholders approved the 1990 Stock Option Plan (which
expires in November 2000) for the issuance of options to the officers and
directors of the Company. Under the 1990 Plan, options were authorized to be
granted to purchase 120,000 common shares at no less than 100% of the fair
market value at the date of grant. Options may be exercised at any time within
ten years from the date of grant and are not transferable. Options expire upon
termination of employment, except to a limited extent in the event of
retirement, disability or death of the optionee.

FASB Statement 123, Accounting for Stock-Based Compensation, requires the
Company to provide proforma information regarding net income and net income per
share as if compensation cost for the Company's stock option plan had been
determined in accordance with the fair value based method prescribed in FASB
Statement 123. There were no options granted during the years ended December 31,
1999 and 1998, and therefore, under the accounting provisions of FASB Statement
123, the Company's proforma net income (loss) and net income (loss) per share
would not differ.

A summary of the status of the Company's fixed stock option plan as of December
31, 1999 and 1998, and changes during the years ending on those dates are
presented below:
<TABLE>
<CAPTION>
As of December 31, 1999 As of December 31, 1998
----------------------------------------------------------------
Shares Weighted-Average Shares Weighted-Average
Exercise Exercise
Price Price
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Outstanding at beginning of year 70,000 $5.13 75,000 $5.12
Granted -- -- -- --
Exercised -- -- -- --
Forfeited -- -- (5,000) $5.00

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

Outstanding at end of year 70,000 $5.13 70,000 $5.13

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

Options exercisable at year-end 70,000 $5.13 70,000 $5.13
Weighted average fair value of -- -- -- -
options granted during the year
======================================================================================================
</TABLE>

33
<PAGE>

The following table summarizes information about fixed stock options outstanding
at December 31, 1999:

<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
- ------------------------------------------------------------------------ ---------------------------------
Weighted
Range -Average Weighted Number Weighted
of Number Remaining -Average Exercisable -Average
Exercise outstanding at Contractual Exercise at Exercise
Prices 12/31/99 Life Price 12/31/99 Price
================================================================================================================
<S> <C> <C> <C> <C> <C>
$3.75 - $5.50 70,000 .9 years $5.13 70,000 $5.13

</TABLE>

9. OPERATING LEASES AS LESSOR

Grove Isle Lease. In November 1996, GIA terminated its lease with GICI and
entered into a long-term lease with an unrelated tenant, Westgroup Grove Isle
Associates, Ltd. ("Westgroup"). GIA and GICI also entered into a Master
Agreement with Westgroup whereby among other things Westgroup assumed the
operations of the Grove Isle hotel and club.

The initial term of the lease is ten years and calls for annual net base rent
$880,000 before the 1999 Amendment (see below), plus real estate taxes and
property insurance, payable in monthly installments. In addition to the base
rent, Westgroup shall also pay GIA participation rent consisting of a portion of
Westgroup's operating surplus, as defined in the lease agreement. Participation
rent is due at end of each lease year. No participation rent was due in 1999 and
1998. Furthermore, also as previously reported, in consideration for GICI
relinquishment of its rights in and to the original lease with GIA, GIA agreed
to pay to GICI the sum of $200,000 for each year that the Westgroup lease is in
good standing and has also assigned to GICI the aforementioned participation
rent due from Westgroup. In November 1999 and 1998, GIA paid GICI $200,000 as
per agreement. This amount is eliminated in consolidation.

In December 1999, the lease was amended and restated in consideration of
Westgroup's substantial efforts in improving the facility and investing capital
beyond the amounts required by the lease. As of December 31, 1999, Westgroup has
invested approximately $5.2 million in the form of capital improvements to the
facility. GIA agreed to reduce the amount of base rent due by $480,000 ("Reduced
Rent"), which Reduced Rent will be taken over a period of 20 months beginning in
December 1999. After fully utilizing the Reduced Rent (by August 2001) annual
base rent will be $918,400. The lease amendment also calls for an increase in
base rent commencing January 1, 2002 in accordance with changes in the Consumer
Price Index ("CPI"). Concurrently, participation rent will be reduced by the
amount by which base rent increases solely as a result of CPI increases for the
lease year.

During 1997 and in conjunction with the aforementioned agreements, GIA advanced
$500,000 to the principal owner of the tenant of the Grove Isle property. GIA
received a promissory note bearing interest at 8% per annum with interest
payments due quarterly beginning on July 1, 1997 and all principal due at
maturity in 2006. All interest payments due in 1999 and 1998 have been received.

Minimum lease payments receivable. The Company leases its commercial and
industrial properties under agreements for which substantially all of the leases
specify a base rent and a rent based on tenant sales (or other benchmark)
exceeding a specified percentage. Such percentage rent approximated $32,000 and
$37,000 in 1999 and 1998, respectively.

34
<PAGE>

These leases are classified as operating leases and generally require the tenant
to pay all costs associated with the property. Minimum annual rentals on
noncancellable leases in effect at December 31, 1999, are as follows:

Year ending December 31, Amount
---------------------------------------------------- ------
2000 $1,321,000
2001 1,304,000
2002 1,217,000
2003 1,123,000
2004 1,126,000
Subsequent years 2,838,000
-------------
Total $8,929,000
==========

<PAGE>

Item 8. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.

Not applicable.

Part III.

Item 9. Directors, Executive Officers and Control Persons.
- -----------------------------------------------------------
Listed below is certain information relating to the executive officers and
directors of the Company:

Principal Occupation and Employment other than With
the Company During the Past Five
Name and Office Age Years - Other Directorships
<S> <C> <C>
Maurice Wiener; Chairman of the 58 Chairman of the Board and Chief Executive Officer of the Advisor;
Board of Directors and Chief Executive Trustee, Transco; Director, T.G.I.F. Texas, Inc.;
Executive Officer Chairman of the Board and Chief Executive Officer of Courtland
Group, Inc.

Lawrence I. Rothstein; Director, 47 Director, President and Secretary of the Advisor ; Trustee and Vice
President, Treasurer and Secretary President of Transco; Director, President and Secretary of
Courtland Group, Inc. Vice President and Secretary, T.G.I.F. Texas,
Inc.

Carlos Camarotti; Vice 39 Vice President - Finance and Assistant Secretary of the Advisor;
President-Finance and Assistant Vice President - Finance and Assistant Secretary of Courtland
Secretary Group, Inc.

Bernard Lerner; Vice President 57 Vice President of the Advisor; Vice President of Courtland Group,
Inc.

Walter Arader; Director 78 President, Arader, Herzig and Associates Inc. (financial management
consultants); Director, Pep Boys-Manny, Moe & Jack; Director,
Unitel Video; Former Secretary of Commerce, Commonwealth of
Pennsylvania.

Harvey Comita; Director 70 Business Consultant; Trustee of Transco Realty Trust; President and
Director of Pan-Optics, Inc. (1971-1991); Director of Mediq,
Incorporated (1981-1991);

John B. Bailey; Director 73 Real Estate Consultant; Retired CEO, Landauer Associates, Inc.
(Real Estate Consultants) (1977-1988).
</TABLE>

Except as previously discussed, all executive officers of the Company were
elected to their present positions to serve until their successors are elected
and qualified at the 1999 annual organizational meeting of directors immediately
following the annual meeting of shareholders. All directors of the Company were
elected to serve until the next annual meeting of shareholders and until the
election and qualification of their successors.

Item 10. Executive Compensation.

Executive officers received no cash compensation from the Company in their
capacity as executive officers. Reference is made to Item 1. Business and Item
6. Management's Discussion and Analysis or Plan of Operation for information
concerning fees paid to the Advisor.

Compensation of Directors. Each Director receives an annual fee of $5,000, plus

36
<PAGE>

expenses and $500 per each Board of Directors meeting attended.

Stock Options. In July 1991, the shareholders approved the 1990 Stock Option
Plan (the "Plan"). The Plan, which is non-qualified and expires in 2000, is
intended to provide incentives to the directors and employees (the "employees")
of the Company as well as to enable the Company to obtain and retain the
services of such employees. The Plan is administered by a Stock Option Committee
(the "Committee") appointed by the Board of Directors. The Committee selects
those key officers and employees of the Company to whom options for shares of
common stock of the Company shall be granted. The Committee determines the
purchase price of shares deliverable upon exercise of an option; such price may
not, however, be less than 100% of the fair market value of a share on the date
the option is granted. Payment of the purchase price may be made in cash,
Company stock, or by delivery of a promissory note, except that the par value of
the stock must be paid in cash or Company stock. Shares purchased by delivery of
a note must be pledged to the Company. Shares subject to an option may be
purchased by the optionee within ten years from the date of the grant of the
option. However, options automatically terminate if the optionee's employment
with the Company terminates other than by reason of death, disability or
retirement. Further, if, within one year following exercise of any option, an
optionee terminates his employment other than by reason of death, disability or
retirement, the shares acquired upon exercise of such option must be sold to the
Company at a price equal to the lesser of the purchase price of the shares or
their fair market value.

As of December 31, 1999, 70,000 options have been granted, of which none have
been exercised, and 15,000 options are reserved for issuance under the Plan, of
which none have been granted.

37
<PAGE>

Item 11. Security Ownership of Certain Beneficial Owners and Management.

Set forth below is certain information concerning common stock ownership by
directors, directors and officers as a group, and holders of more than 5% of the
outstanding common stock.
<TABLE>
<CAPTION>
Shares Held as of March 24, 2000
--------------------------------
Shares Owned by Additional Shares in Which
Named Persons & the named Person Has, or
Members of His Participates in, the Voting Total Shares &
Name Family(1) or Investment Power(2) Percent of Class
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Maurice Wiener 35,100 (4) 541,830 (3) 576,930 52%
Lawrence Rothstein 25,000 (4) 541,830 (3) 566,830 51%
Walter G. Arader 12,800 (4) 0 12,800 1%
John B. Bailey 7,100 (4) 0 7,100 *
Harvey Comita 5,000 (4) 477,300 (6) 482,300 43%
All 7 Directors and 95,000 (4) 541,830 (3) 636,830 57%
Officers as a Group

Emanuel Metz 59,500 0 59,500 5%
CIBC Oppenheimer Corp.
One World Financial Center
200 Liberty Street
New York, NY 10281

Transco Realty Trust 477,300 (5) 0 477,300 43%
1870 S. Bayshore Drive
Coconut Grove, FL 33133

* Less than 1 %

______________________
<FN>

(1) Unless otherwise indicated, beneficial ownership is based on sole voting
and investment power.

(2) Shares listed in this column represent shares held by entities with which
directors or officers are associated. Directors, officers and members of
their families have no ownership interest in these shares.

(3) This number includes the number of shares held by Transco Realty Trust
(477,300 shares), Courtland Group, Inc. (54,530 shares) and T.G.I.F. Texas,
Inc. (10,000 shares). Of those shares owned by Transco Realty Trust, 24,350
shares have been pledged to a brokerage firm pursuant to a margin
agreement. Several of the directors of the Company are directors, trustees,
officers or shareholders of certain of those firms.

(4) This number includes options granted under the 1990 Stock Option Plan, none
of which have been exercised. These options have been granted to Mr.
Wiener, 30,000; Mr. Rothstein ,15,000; 5,000 each to Mr. Arader, Mr.
Bailey, and Mr. Comita; and a total of 10,000 to two officers who are not
directors. Reference is made to Item 10. Executive Compensation for further
information about the 1990 Stock Option Plan.

(5) Mr. Wiener holds approximately 32% and 40% of the stock of Transco and
Courtland Group Inc., respectively, and may therefore be deemed to be the
beneficial owner of the shares of the Company held by Transco and Courtland
Group, Inc.
(6) This number represents the number of shares held by Transco Realty Trust,
of which Mr. Comita is a Trustee.
</FN>
</TABLE>

38
<PAGE>

Item 12. Certain Relationships and Related Transactions. The following
discussion describes the organizational structure of the Company's subsidiaries
and affiliates.

Transco Realty Trust ("Transco").
Transco is a publicly-held 46% shareholder of the Company.

HMG Advisory Corp. (the "Advisor").
The Advisor is majority owned by Maurice Wiener, its Chairman and CEO. As of
December 31, 1999 and 1998 the Advisor owed the Company approximately $157,000
and $11,000, respectively. Such sum bears interest at the prime rate plus 1% and
is due on demand.

Effective December 1, 1999, the Advisor began leasing it's executive offices
from CII pursuant to a lease agreement. This lease agreement is at the going
market rate for similar property and calls for base rent of $48,000 per year
payable in equal monthly installments. Additionally, the Advisor is responsible
for all property insurance, utilities, maintenance and security expenses
relating to the leased premises. The lease term is five years.

Courtland Group, Inc. ("CGI").
CGI served as the Company's investment Advisor until January 1, 1998 and owns
approximately 21% of Transco's stock and owns approximately 5% of the Company's
common stock. As of December 31, 1999 and 1998, CGI owed the Company
approximately $233,000 and $205,000, respectively. Such sums bear interest at
the prime rate plus 1% and are due on demand.

Courtland Investments, Inc. ("CII").
As previously reported, the Company holds a 95% non-voting interest and Masscap
Investment Company ("Masscap") holds a 5% voting interest in CII. In May 1998,
the Company and Masscap entered into a written agreement in order to confirm and
clarify the terms of their previous continuing arrangement with regard to the
ongoing operations of CII, all of which provide the Company with complete
authority over all decision making relating to the business, operation, and
financing of CII consistent with its status as a real estate investment trust.

CII and its wholly-owned subsidiary own 100% of Grove Isle Club, Inc., Grove
Isle Yacht Club Associates and Grove Isle Marina, Inc. CII also owns 15% of
Grove Isle Associates, Ltd., and the other 85% is owned by the Company.

HMG-Fieber Associates ("Fieber").
The Company owns approximately 70% interest in Fieber and the other 30% is owned
by NAF Associates ("NAF").

The following discussion describes all material transactions, receivables and
payables involving related parties. All of the transactions described below were
on terms as favorable to the Company as comparable transactions with
unaffiliated third parties.

The Advisor.
The day-to-day operations of the Company are handled by the Advisor, as
described above under Item 1. Business "Advisory Agreement." Reference is made
to Item 1. Business and Item 6. Management's Discussion and Analysis or Plan of
Operation for further information about the remuneration of the Advisor.

Transco. As of December 31, 1999, the Company has a note and accrued interest
receivable from Transco of $444,000 compared to $475,000 as of December 31,
1998. This note bears interest at the prime rate and is due on demand.(See Item
1. Business- South Bayshore Associates).

39
<PAGE>

CII - T.G.I.F. Texas, Inc.
CII owns approximately 49% of the outstanding shares of T.G.I.F. Texas, Inc.
("T.G.I.F."). Mr. Wiener is a director and chairman of T.G.I.F. and owns,
directly and indirectly, approximately 18% of the outstanding shares of T.G.I.F.
As of December 31, 1999 and 1998, T.G.I.F. had amounts due from Mr. Wiener of
approximately $520,000 and $388,000, respectively. These amounts are due on
demand and bear interest at the prime rate. Also, T.G.I.F. owns 10,000 shares of
the Company at $5 per share which was the market value at the time of purchase.
The Advisor receives a management fee of $18,000 per year from T.G.I.F.

As of December 31, 1999 and 1998, CII owed approximately of $3.4 million and
$3.2 million, respectively to T.G.I.F. All advances between CII and T.G.I.F. are
due on demand and bear interest at the prime rate plus 1%.

CII- Grove Isle.
In 1986, CII acquired from the Company the rights to develop the marina at Grove
Isle for a promissory note of $620,000 payable in 10 years at an annual interest
rate equal to the prime rate. The principal matures on January 2, 2001. Interest
payments are due each January 2. Because the Company consolidates CII, the note
payable and related interest income are eliminated in consolidation.

40
<PAGE>

Part IV.

Item 13. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

(a)

1. Financial Statements - See Item 7.
Index to Consolidated Financial Statements and Supplemental Data.

All other schedules omitted because of the absence of the conditions under which
they are required or because all information required to be reported is included
in the consolidated financial statements or notes thereto.

2. Exhibits listed in the Index to Exhibits.

(b) Reports on Form 8-K:

On October 8, 1999 the Company filed a report of Form 8-K relating
to the previously reported legal proceedings and the announcement
that the Company will invest up to $500,000 in HMG's common stock
through stock repurchases.

41
<PAGE>

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.

HMG/Courtland Properties, Inc.

March 24, 2000 By: /s/ Maurice Wiener
---------------------
Maurice Wiener
Chairman and Chief Executive Officer

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.

/s/ Maurice Wiener March 24, 2000
- -------------------------------
Maurice Wiener
Chairman of the Board
Chief Executive Officer

/s/ Lawrence I. Rothstein March 24, 2000
- -------------------------------
Lawrence I. Rothstein
Director, President, Treasurer & Secretary

/s/ Walter G. Arader March 24, 2000
- -------------------------------
Walter G. Arader, Director

/s/ John B. Bailey March 24, 2000
- -------------------------------
John B. Bailey, Director

/s/ Harvey Comita March 24, 2000
- -------------------------------
Harvey Comita, Director

/s/ Carlos Camarotti March 24, 2000
- -------------------------------
Carlos Camarotti
Vice President - Finance and Controller

42
<PAGE>

EXHIBIT INDEX
Description

<TABLE>
<CAPTION>
<S> <C> <C>
(3) (a) Restated Certificate of Incorporation Incorporated by reference to Exhibit 3(a) to
the Company's 1987 Report on Form 10-KSB (the
"1987 Form 10-KSB").
(b) By-laws Incorporated by reference to Exhibit 6.1 to
the Registration Statement of Hospital
Mortgage Group, Inc. on Form S-14, No. 2-64,
789, filed July 2, 1979.
(10) (a) 1990 Incentive Stock Option Plan of HMG/Courtland Incorporated by reference to Exhibit 10(j) to
Properties, Inc. the 1991 Form 10-KSB.

(b) Amended and restated lease agreement between Grove Isle Incorporated by reference to Exhibit 10(d) to
Associates, Ltd. and Westgroup Grove Isle Associates, Ltd. the 1996 Form 10-KSB.
dated November 19, 1996.

(c) Master agreement between Grove Isle Associates, Ltd. Grove Isle Incorporated by reference to Exhibit 10(e) to
Club. Inc., Grove Isle Investments, Inc. and Westgroup Grove Isle the 1996 Form 10-KSB.
Associates, Ltd. dated November 19, 1996.

(d) Agreement Re: Lease Termination between Grove Isle Associates, Incorporated by reference to Exhibit 10(f) to
Ltd. And Grove Isle Club, Inc. dated November 19, 1996. the 1996 Form 10-KSB.

(e) Advisory Agreement between the Company and HMG Advisory Corp. Incorporated by reference to Exhibit 10(h) to
effective January 1, 1998. the 1997 From 10-KSB.

(f) Amended and restated agreement between NAF Associates and the Filed herewith.
Company, dated August 31, 1999.

(g) Amendment to amended and restated lease agreement between Grove Filed herewith.
Isle Associates, Ltd. and Westgroup Grove Isle Associates, Ltd.
dated December 10, 1999.

(h) Lease agreement between Courtland Investments, Inc. and HMG Filed herewith.
Advisory Corp. dated December 1, 1999.
</TABLE>

43
<PAGE>

(22) Subsidiaries of the Company:

HMG-FIEBER ASSOCIATES, a Connecticut Joint Venture
SOUTH BAYSHORE ASSOCIATES, a Florida Joint Venture
HMG FASHION SQUARE, INC., a Florida Corporation
FASHION SQUARE PARTNERSHIP, a Florida Partnership
COURTLAND INVESTMENTS, INC., a Delaware Corporation
GROVE ISLE INVESTMENTS, INC., a Florida Corporation
GROVE ISLE YACHT CLUB ASSOCIATES., a Florida Joint Venture
GROVE ISLE ASSOCIATES, LTD., a Florida Limited Partnership
GROVE ISLE CLUB, INC., a Florida Corporation
HMG HOUSTON GROVE, INC., a Texas Corporation
THE GROVE TOWNE CENTER-TEXAS, LTD. , a Texas Limited Partnership
260 RIVER CORP., a Vermont Corporation
FASHION SQUARE OWNER'S ASSOCIATION, a Florida Corporation
COURTLAND KEY WEST, INC., a Florida Corporation

<PAGE>

Exhibit Index

Description Reference

Amended and restated agreement between NAF Associates Exhibit 10(f)
and the Company, dated August 31, 1999
Amendment to amended and restated lease agreement Exhibit 10(g)
between Grove Isle Associates, Ltd. and Westgroup Grove
Isle Associates, Ltd. dated December 10, 1999
Lease agreement between Courtland Investments, Inc. and Exhibit 10(h)
HMG Advisory Corp. dated December 1,1999.

AMENDED AND RESTATED
AGREEMENT
BETWEEN
NAF ASSOCIATES
AND
HMG/COURTLAND PROPERTIES, INC.

AMENDED AND RESTATED AGREEMENT dated as of the 31st day of August, 1999,
between NAF Associates, a Connecticut general partnership ("Fieber"), and
HMG/Courtland Properties, Inc., a Delaware Corporation ("HMG"), formerly HMG
Property Investors, Inc.

WHEREAS, HMG-Fieber Realty Trust (the "Trust") is the owner of those
present or former Grossman's stores listed on Schedule A attached hereto (the
"Real Estate"); and

WHEREAS, on or about June 30, 1986, HMG Property Investors Inc., acquired
100% of the beneficial ownership of the Trust from HMO Property Investors, Inc.
and Transco Realty Trust, as tenants in common; and

WHEREAS, on or about June 30, 1986, Fieber purchased 35% of the beneficial
interest of the Trust from HMG Property Investors, Inc.; and

WHEREAS, on or about June 30, 1986, HMG and Fieber entered into an
agreement (the "1986 Agreement") to provide, as between themselves, the terms
and conditions upon which they will operate and be responsible for the assets,
liabilities and obligations relating to the Real Estate, and any other property
or assets which may be acquired under this Venture;

<PAGE>

WHEREAS, HMG and Fieber desire to amend and restate the 1986 Agreement (as
amended and restated, the "Agreement"); and

WHEREAS, by this Amended and Restated Agreement, Fieber is transferring to
HMG an additional 4.557% interest in this Venture (as hereinafter defined);

NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and conditions herein set forth the parties hereto agree as follows:

ARTICLE I

Relationship of the Parties

1.1 Participation of the Parties. Except as specifically provided otherwise
herein, Fieber and HMG shall participate in the transactions contemplated by
this Agreement on the basis of 69.557% HMG and 30.443% Fieber (said transactions
and operations related thereto being referred to herein as the "Venture"). The
Venture shall be known as HMG-Fieber Associates or such other name as the
Representatives (as hereinafter defined) shall mutually determine.

1.2 Qualification. Each of the parties from time to time shall execute and
shall cause to be filed or recorded such certificates and other documents and
shall take such other action, as may be required for conducting the business of
the Venture in such jurisdiction as may be necessary or advisable.

1.3 Responsibility for Commitments of Another. Neither party shall be
responsible or liable for any indebtedness or obligation of the other party
incurred either before or after the execution of this Agreement except as to
those joint responsibilities, liabilities, indebtedness or

<PAGE>

obligations incurred pursuant to the terms of the 1986 Agreement and this
Agreement, nor shall the Venture be so responsible or liable.

1.4 No General Partnership. The relationship between the parties hereto
shall be limited to the holding, acquisition, development, exploitation and
disposition of the Real Estate and the liabilities and obligations incurred in
connection therewith and the future assets, liabilities and obligations of the
Venture. Nothing herein contained shall be construed to create a general
partnership between the parties or to authorize either party to act as an agent
for the other party in any respect except as expressly set forth herein.

1.5 Contracts and Commitments. No party hereto shall enter into any
contract, agreement, commitment or undertaking of any kind on behalf of the
other party or otherwise obligate the other party in any way, directly or
indirectly, except in accordance with the provisions of this Agreement.

ARTICLE II
Management

2.1 Appointment of Representatives. To facilitate the management of the
affairs of the Venture, the parties shall appoint representatives (individually
a "Representative" and collectively the "Representatives"). HMG shall appoint
two (2) Representatives and Fieber shall appoint one (1) Representative. Each of
the parties hereby appoints the individual(s) set forth opposite its name below
(one of the HMG Representatives (to be designated in writing from time to time
by HMG) shall be referred to herein as the "Managing Representative") to serve
as its representative in matters pertaining to the affairs of the Venture;
provided however, that in the

<PAGE>

event of the death, removal, resignation or incapacity of the Managing
Representative, HMG shall thereafter designate all future Managing
Representatives:

Fieber - James A. Fieber

HMG - Maurice Wiener and Lawrence I. Rothstein

A party may change its Representative(s) by written notice to the other party;
provided, however, that (a) at no time shall Norman A. Fieber be eligible for
appointment as a Representative, nor shall he be appointed a Representative, and
(b) any successor to James A. Fieber as Representative (i) shall have an
economic interest in the Venture and (ii) shall be a person succeeding (or
surviving) James A. Fieber on the Management Committee (or successor committee
or board functioning as the senior management body) of Fieber.

Each party agrees that it shall make its Representative(s) reasonably
available during business hours for executing documents and for taking such
other action as may be necessary or advisable. The compensation, if any, of a
Representative shall be borne by the party nominating the Representative, but
expenses of such Representatives relating to venture business shall be borne by
the Venture.

In addition, HMG shall have the sole power to appoint two (2) trustees of
the Trust and their successors (the "HMG Trustees") and Fieber shall have the
sole power to appoint one (1) trustee of the Trust and his or her successors
(the "Fieber Trustee").

2.2 Management. Except as expressly provided in Section 2.1 hereof, the
business and affairs of the Venture shall be managed by HMG through the Managing
Representative. In its management, HMG agrees to protect the interests of Fieber
to the same degree and extent as it would if such interests were solely its own
and shall keep Fieber informed regarding its

<PAGE>

management by, inter alia, providing the Fieber Representative with all
information provided to the other HMO Representative; provided, however, that
neither HMG nor the Managing Representative nor HMG's other Representative shall
be responsible to Fieber for any action taken or omitted by HMG or the Managing
Representative or the other HMG Representative in good faith in connection with
their management, and HMO and the Managing Representative and the other HMG
Representative shall be liable to Fieber only for their willful default or
willful misconduct.

2.3 Authority of Representatives. Each party agrees that its Representative
is and shall be empowered and authorized to act on behalf of, and bind that
party and that, in accordance with the terms of this Agreement, the Managing
Representative shall be authorized to act on behalf of and bind the Venture. In
all cases in which approval by the General Partners of Fieber or Board of
Directors of HMG, or other partnership or corporate action, is required in
accordance with any Partnership Agreement, Articles of Incorporation, By-Law, or
other such controlling regulations of each party, or otherwise as required by
law, each representative shall have responsibility for obtaining such approvals
or consents. Each party shall be entitled to rely on the representations and
actions of the other's Representative and, unless notified by a party in writing
to the contrary, on his having obtained such proper approvals and consents,
provided, however, that either Representative shall have the right to require
evidence of such approvals and consents. In all cases in which action by the
Trust is required, any two Trustees, acting together, shall have full power and
authority (subject to the directions and approval of the Beneficiaries) to
execute, acknowledge and deliver all contracts, deeds and other instruments
necessary or proper to put such transactions into effect; provided, however,
that the Fieber Trustee shall be provided

5
<PAGE>

with the opportunity to so act within the time period to be determined by the
Managing Representative.

2.4 Major Decisions. The following matters ("Major Decisions") shall be
undertaken by the Managing Representative on behalf of or in connection with the
Venture only after consultation and discussions with all Representatives and in
accordance with a majority vote of the Representatives:

(a) The mortgaging or encumbrance of any portion of the Real Estate or
Property (defined hereinafter), the giving of any guaranty, or the borrowing of
funds exceeding $25,000, including, but not limited to, the financing,
refinancing, whether short or long term, of any Real Estate or Property;
provided, however, that any mortgaging or encumbrance which provides recourse to
the Venture or the proceeds of which are not to be used for improving the
encumbered property, shall require the affirmative vote of the Fieber
Representative.

(b) The employment of any person;

(c) The development, material renovation or improvement, or disposition of
any Real Estate or Property except as provided pursuant to Section 3.4;

(d) The lease of any Real Estate or Property for a term of more than one
year and at an annual minimum rental of more than $10,000;

(e) The acquisition of any capital asset costing in excess of $25,000 or
with respect to a parcel of land in excess of $ 100,000;

(f) The entering into an contract with a term of more than one year or
requiring payments exceeding $25,000 in the aggregate (except contracts
retaining services of managing agents for Real Estate);

6
<PAGE>

(g) The loaning of funds of the Venture, except for loans not exceeding the
sum of $10,000 and loans required or permitted pursuant to agreements of the
Venture entered into by Representatives of each of Fieber and HMG or with their
consent;

(h) The reduction of the level of insurance coverages.

2.5 Management of Real Estate. The parties contemplate that each or all
parcels of the Real Estate will be operated by a Managing Contractor in
substantially the same manner as it was operated prior to its acquisition by the
parties hereto, without material renovation or improvement. If the
Representatives agree, by majority vote, that such parcel of Real Estate is to
be operated in such a manner, without material renovation or improvement, the
Representatives shall agree, by majority vote, on a Managing Contractor for such
parcel of Real Estate.

2.6 Compliance with REIT Provisions.

(a) Each of the parties acknowledges and agrees that HMG is an entity
qualifying as a real estate investment trust as defined in Section 856 of the
Internal Revenue Code and the regulations thereunder. In order to maintain such
qualifications HMG is limited as to the manner in which it may operate and
conduct its business.

(b) So long as HMG shall continue to qualify as a real estate investment
trust as defined in Section 856 of the Internal Revenue code and the regulations
thereunder, the parties hereto, in the conduct and management of the business
affairs contemplated hereunder shall not, without the consent of HMG perform any
act which will result in a violation of the provisions of the Code or the
regulations thereunder relating to real estate investment trusts.

2.7 Consent and Approval. In any instance under this Agreement in which the
consent or approval of a majority of Representatives is required, the Managing
Representative

7
<PAGE>

shall submit the matter in writing to the other Representatives together with
all relevant information relating thereto, and shall request the consent or
approval of a majority of the Representatives. The Managing Representative shall
be deemed to have given his consent or approval by having submitted the matter
to the other party. The other Representatives shall not unreasonably withhold or
delay or condition any consent or approval or denial so requested. Each of the
other Representatives shall be deemed to have given his respective consent or
approval unless within thirty (30) days after the receipt of such request he
shall have given written notice to the Managing Representative that he refuses
to give such consent or approval. Any such written notice of refusal shall
describe specifically and in detail the items to which the other Representative
specifically objects and shall specify the reason for such objections. If a
majority of the Representatives fail to approve the action requested by the
Managing Representative, the Managing Representative shall have the opportunity,
if he so desires, to make such modifications as shall be appropriate to remedy
any such objections and shall resubmit the matter, as so modified, to the other
Representatives for consent or approval in the manner prescribed in this
section. Following the consent to or approval of any matter by a majority of the
Representatives, no material change shall be made therein without the written
consent or approval of a majority of the Representatives.

2.8 Indemnity. Each of the parties shall indemnify and hold harmless the
other party, its partners or directors, officers and employees against any
claim, loss, (including reasonable attorney's fees), damage or liability which
the other party, its partners or directors, officers or employees may incur or
to which it or they may be subject by reason of a party, its partners or
directors, officers or employees having made a misrepresentation, except as
otherwise provided

<PAGE>

in section 2.2 hereof, having acted beyond the scope of its power or authority
under this Agreement or in violation of its obligations under this Agreement

2.9 Good Standing; Liens. Each party shall:

(a) at all times preserve and maintain in good standing its corporate or
other legal status in the jurisdiction under whose laws it is organized;

(b) pay all federal, state, and local taxes, assessments and governmental
charges imposed on it or its interest in the Real Estate or Property before any
such taxes, assessments or charges become a lien on its interest in the Real
Estate or Property, except to the extent said party is contesting such tax,
assessment or charge in good faith by appropriate action but only so long as
levy and execution thereon have been stayed and they do not, in the aggregate
materially detract from the value of the interest of the party, or materially
impair the use of the asset; and

(c) not suffer any other liens of any nature to be imposed or levied
against its interest in the Venture or any asset operated pursuant to the terms
of this Agreement except to the extent said party is contesting such lien in
good faith by appropriate action but only so long as levy and execution thereon
have been stayed and they do not, in the aggregate, materially detract from the
value of the interest of the party, or materially impair the use of the assets
and except for the pledge by HMO to Transco Realty Trust of its interest in the
Venture to secure its promissory note to Transco dated June 30, 1986.

If any unpermitted lien shall be imposed or levied, or if any execution,
attachment or other process shall be issued, against a party's interest in the
Venture or any asset operated pursuant to the terms of this Agreement and shall
not be discharged, dismissed, stayed or vacated within thirty (30) days after
the imposition, levy or issuance thereof, or if such levy, execution,

9
<PAGE>

attachment or other such process shall materially detract from the value of the
interest or asset or shall materially impair the use of the asset, the other
party shall have the right (but not the obligation) to pay and discharge the
same. All amounts so paid by such other party, together with costs and
reasonable attorneys' fees, shall be deemed to be a loan by such other party to
the defaulting party. Said loan shall bear interest at an annual rate of two
percent (2%) over the prime lending rate as published from time to time in The
Wall Street Journal from the date of such loan through the date to which payment
is made by the defaulting party to the lending party. Said loan shall be subject
to the provisions hereof regarding payment of distributions upon default and
shall be payable in full on ten (10) days notice by the lending party to the
defaulting party.

ARTICLE III

Property

3.1 Real Estate. Except as provided in this Article, the Real Estate shall
continue be held of record by the Trust and the beneficial ownership of the
Trust shall be held by the Venture.

3.2. Cash. After paying all expenses as hereinafter provided and
established such reserves as the Managing Representative deems necessary or
advisable, remaining cash shall (subject to Section 5.7) be forthwith disbursed
in relation to each party's interest in the Venture.

3.3 Other Property. Except as provided in this Article, all other property
("Property") acquired jointly by HMG and Fieber shall be held in accordance with
this Agreement.

10
<PAGE>

3.4 Development and Disposition of Assets.

(a) The parties, by majority vote of the Representatives, may hereafter
decide to develop or materially renovate or improve or dispose of any Real
Estate. If Fieber at any time disagrees with the proposal to dispose of a parcel
of Real Estate, as agreed upon by a majority vote of the Representatives, Fieber
may offer to purchase such parcel of real estate in accordance with the
provisions of the subsection (b) of this Section 3.4.

(b) Right of First Offer.

(i) If the parties, by majority vote of the Representatives, decide to
dispose of any parcel of Real Estate, the Managing Representative shall
give to Fieber a written notice (the "First Offer") offering to sell the
parcel of Real Estate to Fieber upon terms and conditions set forth in the
First Offer. The First Offer shall be irrevocable for a period (the "Offer
Period") ending at 11:59 p.m., Boston, Massachusetts time, on the fifteenth
(15th) day following the date of the First Offer.

(ii) At any time during the Offer Period, Fieber may accept the First
Offer by giving written notice ("Acceptance Notice") of such acceptance to
the Managing Representative at the office of HMG. If the Managing
Representative does not receive the Acceptance Notice within the Offer
Period, the First Offer shall be deemed to have been rejected.

(iii) In the event that the First Offer is accepted, the closing of
the sale of the parcel of Real Estate shall take place within thirty (30)
days after the First Offer is accepted. Fieber and the Representatives
shall execute such documents and instruments

11
<PAGE>

as may be necessary to effect the sale of such parcel of Real Estate
pursuant to the terms of the First Offer.

(iv) If the First Offer is not accepted in the manner hereinabove
provided, such parcel of Real Estate may be sold to another purchaser
within one hundred and eighty (180) days of the last day of the Offer
Period on substantially the same terms and at a price not less than ninety
(90%) percent of the price set forth in the First Offer (prior to deduction
of expenses relating to such Sale). In the event that such parcel of Real
Estate is not sold in accordance with the terms of the preceding sentence,
the disposition of such parcel of Real Estate shall again become subject to
all of the conditions and restrictions of this subsection (b).

(v) If the First Offer is accepted and if Fieber fails to perform its
obligations in accordance with the First Offer or subpart (iii) hereof, HMG
shall be entitled, at its election from time to time, to specific
performance of such obligations or to liquidated damages in an amount equal
to twenty (20%) percent of the purchase price set forth in the First Offer,
which sum the parties acknowledge is not a penalty but a reasonable
approximation of damages incurred by HMG due to the failure of Fieber to
perform its obligations. (c) If pursuant to (b) above, Fieber acquires the
interest of the Venture in a parcel of Real Estate or asset, such parcel or
asset shall not thereafter be subject to the terms of this Agreement.

12
<PAGE>

ARTICLE IV
Funding

4.1 General.

Except as provided in 4. 1 (b) below, all funds required to be paid by HMG
and Fieber pursuant to this Agreement or otherwise for the transaction therein
or herein contemplated shall be supplied 69.557% by HMG and 30.443% by Fieber.
All expenses in connection with the preparation of this Agreement and all
transactions contemplated by this Agreement shall be borne 69.557% by HMG and
30.443% by Fieber.

4.2 Failure to Contribute. In the event that a party hereto fails to supply
part or all of funds it is required to supply pursuant to the terms of this
Agreement at the time such funds are due to a third party, the other party
hereto, after ten (10) days' prior notice, may, but shall not be required to,
pay the deficiency, which payment shall be deemed a loan by the contributing
party to the defaulting party. Said loan shall bear interest at an annual rate
of two percent (2%) over the prime lending rate as from time to time published
in The Wall Street Journal from the date of such loan through the date to which
payment is made by the defaulting party to the lending party.

Said loan shall be subject to the provisions hereof regarding payment of
distributions upon default and shall be payable in fall on ten (10) days' notice
by the lending party to the defaulting party.

ARTICLE V

Accounting

5.1 Books and Records. The Managing Contractor shall keep complete and
accurate books of accounts for the Venture at its offices or at such offices as
it shall designate. Such

<PAGE>

books of account shall be kept in accordance with generally accepted accounting
principles and practices and shall include separate accounts to reflect each
party's contributions to funding, income, losses and distributions. Each party
and its authorized representatives at all reasonable times shall have access to,
and may inspect and make copies of, such books of account and any other records
of Venture.

5.2 Reports. Within thirty (30) days after the end of each calendar
quarter, the Managing Contractor shall cause to be prepared and shall furnish to
HMG and Fieber an unaudited financial statement, certified by the Managing
Contractor to be true and correct to the best of his knowledge and belief,
showing the operations of the Venture for such quarter. The Managing Contractor
shall exercise its best efforts to cause the independent certified public
accountants described in Section 5.1 to prepare and furnish to each party within
sixty (60) days after the end of each calendar year a balance sheet of the
Venture as of the end of the calendar year and a related statement of income or
loss for the Venture for such year, which shall be certified in the customary
manner by such accountants, and a statement setting forth in reasonable detail
each party's share of the income or loss of the Venture for such year and such
other information as may be reasonably necessary in order to prepare the tax
returns and Securities and Exchange Commission filings of each of the parties.

5.3 Taxes. The Managing Contractor shall cause to be prepared all tax
returns and reports, if any, which are required to be filed on behalf of the
Venture with any taxing authority and shall submit such returns and reports to
the Managing Representative for approval and, after such approval, shall make
timely filing thereof. Said tax returns and reports shall be signed as may be
required.

14
<PAGE>

5.4 Expenses. Out-of-pocket expenses incurred by the Managing Contractor in
connection with the preparation of books, records and reports pursuant to
Section 5.1, 5.2, 5.3 of the Agreement shall be expenses of the Venture.

5.5 Allocations and Determinations. For accounting and tax purposes, all
income, deductions, credits, gains and losses for the Venture shall be
allocated to the parties in the proportions of 69.557% to HMG and 30.443% to
Fieber. The Managing Representative (after consulting with the other
Representatives) shall make all determinations with respect to the depreciation
and accounting methods to be used and the treatment of the transactions with
respect to the Venture for all tax purposes.

5.6 Bank Accounts. All funds arising from the Venture shall be deposited in
the name of both of the parties in a joint account or accounts as the Managing
Representative may designate from time to time. Any withdrawals therefrom shall
be effected only by the signature of the Managing Representative or Managing
Contractor, which shall constitute sufficient authority on behalf of the
Venture.

5.7 Distributions. Except as otherwise provided herein, all receipts from
Real Estate and Property and any other receipts of the Venture shall be paid and
distributed as follows so long as there had been no default by a party with
respect to its payment obligations hereunder:

(a) First, all obligations for borrowed money shall be paid;

(b) Second, all expenses incurred in operating, developing and holding the
Real Estate shall be paid;

<PAGE>
(d) Fourth, all remaining funds which are not, in the opinion of a majority
of the Representatives, required for working capital, reserves or other purposes
of the Venture shall be distributed 69.557% to HMG and 30.443% to Fieber not
less frequently than semi-annually.

If a party has failed to pay its proportional share of any obligations,
liabilities or expenses as set forth in Article IV, or to make any other payment
which it is required to make hereunder, or shall be indebted to the other party
under Sections 2.9 or 4.2, all distributions to which said defaulting party
would otherwise be entitled under, subparagraph (d) above shall first be made to
the extent and in repayment of any outstanding loans made by the other party
plus interest then accrued and owing on such loans.

ARTICLE VI

Termination

6.1 Term. This Agreement shall be deemed to have become effective June 30,
1986. Unless earlier terminated by an agreement of both parties or pursuant to
Section 6.3, this Agreement shall remain in full force and effect until one of
the parties has sold or disposed of by deed, assignment or conveyance all of its
Interest in the Real Estate and Property and all of the other net assets of
the Venture have been distributed to the parties as herein provided.
Notwithstanding anything herein to the contrary, the obligation of each of the
parties for its proportionate share of the obligations and liabilities of the
Venture and the indemnification obligation set forth in Section 2.8 hereof shall
survive the termination of this Agreement.

6.2 Covenant Not to Dissolve or Partition. Each party agrees that it will
not, without the prior written consent of the other, terminate this Agreement
prior to the time set forth in Section 6.1, or take any action to dissolve the
Venture except as provided in section 6.3. Each

16
<PAGE>

party expressly waives all rights which it may have by statute or otherwise to
bring an action or suit for the partition or division of any of the Real Estate
or Property except upon a termination of this Agreement pursuant to Section 6.3.

6.3 Optional Termination. Upon the occurrence of any of the following
events with respect to either party:

(a) The failure of a party to repay in full a loan made by the other party
pursuant to Section 2.9 or Section 4.2 within ten (10) days after demand
therefor by the lending party to the defaulting party, or

(b) The imposition or levy of any lien for federal, state or local taxes,
assessments or other governmental charges on, or the issuance of any execution,
attachment or process against, its interest in the Venture or any assets
operated pursuant to the terms of this Agreement and the failure of the same to
be discharged, dismissed or vacated within sixty (60) days after the imposition,
levy or issuance thereof, or

(c) The change of control of a party, the other party may elect to
terminate this Agreement by giving notice to such effect to the party with
respect to which such event occurred (or to the legal representative of such
party) within one hundred fifty (150) days after the occurrence of such event.
Effective as of the date of the occurrence of any such event (whether or not the
other party shall elect to terminate this Agreement), the party with respect to
which such event occurred (the "Inactive Party") and its Representative shall no
longer have any night or authority to participate in the business and affairs of
the Venture and its consent or approval shall not be required with respect to
Major Decisions or any other matter relating to the Venture, and the other party
(the "Active Party") thereafter shall have the sole right and authority to give
all

17
<PAGE>

consents and approvals and to make all other determinations and decisions on
behalf of the parties hereto with respect to the Venture. Unless this Agreement
is terminated, the Inactive Party shall, nevertheless, be entitled to receive
its share of any cash and/or profits due it pursuant to this Agreement and shall
continue to be obligated to make all contributions of funds required to be made
under this Agreement and to perform under this Agreement at the time and in the
manner provided in this Agreement.

6.4 Bankruptcy. In the event of the filing by a party of a voluntary
petition in bankruptcy, the filing of an involuntary petition in bankruptcy
against a party, or the appointment of any receiver or trustee in any
bankruptcy or reorganization proceedings against a party, unless any such
involuntary proceedings are dismissed in within ninety (90) days, an
adjudication of a party as bankrupt or insolvent, the filing by a party, of any
petition or answer seeking relief under the present or any future bankruptcy act
or any other present or future law for the relief of debtors., or in the event a
party requests, consents to or acquiesces in, the appointment of any trustee,
receiver, conservator or liquidator of all or any substantial portion of its
property or its interest in the Venture, or in the event a party shall become
insolvent or generally fail to pay or admit its inability to pay its debts as
they become due or shall made an assignment for the benefit of its or any of its
creditors, the party with respect to which such event occurred shall be treated
as an Inactive Party and the other party shall, have all of the rights of an
Active Party, in accordance with Paragraph 6.3 herein, until the termination of
the Venture.

18
<PAGE>

ARTICLE VII
Miscellaneous

7.1 Further Covenants. Each of the parties hereto agrees to execute and
deliver all such other additional instruments and documents and take all such
other action and do such other things as may be necessary or advisable more
fully to effectuate this Agreement and the transactions contemplated hereby.

7.2 Notices. All notices hereunder shall be in writing and shall be deemed
to have been given or received if by hand, when delivered, and if by mail, when
mailed, by first class registered or certified mail, postage prepaid, addressed
as follows:

If to Fieber James A. Fieber
175 Drum Hill Road
Wilton, CT 06897

If to HMG: Mr. Maurice Wiener
HMG/Courtland Properties, Inc.
1870 South Bayshore Drive
Coconut Grove, Florida 33133

with a copy to: Posternak, Blankstein & Lund, L.L.P.
100 Charles River Plaza
Boston, MA 02114
Attn: Richard K. Blankstein, P.C.

7.3 Equitable Remedies. In the event of a breach or threatened breach of
this Agreement by either party, the remedy at law in favor of the other party
may be inadequate. Consequently, either party, in addition to all other rights
which may be available, shall have the right of specific performance in the
event of any breach or injunction in the event of any threatened breach of this
Agreement by the other party.

19
<PAGE>

7.4 Assignment. Except as specifically provided herein, neither this
Agreement not any interest of either of the parties hereto in the Venture or any
assets operated pursuant to the terms of this Agreement may be sold, assigned,
transferred, pledged, mortgaged or hypothecated, directly or indirectly, without
the prior written consent of the other party hereto, which consent may be
withheld for any reason or for no reason at all.

7.5 Successors. All the provisions of this Agreement shall inure to the
benefit of and be binding upon the successors and assigns of the parties hereto.

7.6 Entire Agreement. This Agreement constitutes the entire agreement of
the parties. All prior agreements between the parties, including, without
limitation, the 1986 Agreement, whether written or oral, are merged herein and
shall be of no force and effect. This Agreement may not be amended, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party against which enforcement of such amendment, waiver, discharge or
termination is sought.

7.7 Applicable Law. This Agreement shall be governed by the construed and
enforced in accordance with the substantive laws of the State of Connecticut.

7.8 Counterparts. This Agreement may be executed in one or more
counterparts, each of which for all purposes shall be deemed an original, and
all of such counterparts shall together constitute but one and the same
agreement.

<PAGE>

IN WITNESS WHEREOF, the parties here hereunto caused this Agreement to be
executed under seal by their duly authorized representatives as of the day and
year first above written.

NAF ASSOCIATES

By: /s/ James A. Fieber
James A. Fieber, General Partner

HMG/COURTLAND PROPERTIES, INC.

By: /s/ Lawrence Rothstein
Lawrence Rothstein
President

AMENDMENT
TO
AMENDED AND RESTATED LEASE AGREEMENT

THIS AMENDMENT is made as of the 10th day of December 1999 by and between
GROVE ISLE ASSOCIATES LTD., a Florida limited partnership ("Lessor") and
WESTGROUP GROVE ISLE ASSOCIATES LTD., a Florida limited partnership ("Lessee").

WHEREAS

A. Lessor and Lessee are the parties to that certain Amended and Restated
Lease Agreement (the "Lease") dated as of November 19, 1996. Any and all initial
capitalized terms used, but not defined herein, shall have the meanings given to
them in the Lease.

B, The parties now desire to amend the Lease in certain respects as more
particularly set forth below.

NOW, THEREFORE, in consideration of Ten and No/00 Dollars ($10.00) and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereby agree as follows:

1 . The foregoing recitals are true and correct and are incorporated herein
by this reference. This Amendment shall be deemed part of, but shall take
precedence over and supersede any provisions to the contrary contained in the
Lease. All initial capitalized terms used in this Amendment shall have the same
meaning as set forth in the Lease unless otherwise provided.

2. In consideration of Lessee's substantial efforts in improving the leased
premises and investing capital beyond the amounts required by this Lease, Lessor
agrees to reduce the amount of Base Rent due and payable by the amount of Four
Hundred Eighty Thousand Dollars ($480,000.00) ("Reduced Rent"), which Reduced
Rent shall result in reduction in the installments of Base Rent only over the
following periods of time:

(a) $100,000.00 Lessee shall be excused from making the December
1999 Base Rent payment in the amount of $73,333.33
and shall be allowed to reduce the January, 2000
Base Rent payment by the amount of $26,667.00.

(b) $20,000.00 Base Rent for each month from and including
February 2000 through and including August 2001
shall be reduced each month by $20,000.00 (19
months).

Amendment to Amended and
Restated Lease Agreement
122099

<PAGE>

Notwithstanding the foregoing, the agreement to afford Lessee the Reduced
Rent amount and for Lessor to accept rental payments offset by the Reduced Rent
shall automatically terminate in the event of any default by Lessee under the
terms of the Lease, and thereafter, Lessee shall be obligated to make payments
without any reduction for the Reduce Rent.

3. Lessee agrees that as Lessee avails itself of the Reduced Rent, Lessor's
Capital Investment increases. Inasmuch as Base Rent is determined based upon the
amount of Lessor's Capital Investment, Lessee agrees that Base Rent shall
increase with each increment of Reduced Rent. For example, after Lessee's use of
the initial $100,000.00 of the Reduced Rent (increasing Lessor's Capital
Investment by $100,000.00), annual Base Rent shall increase from $880,000.00 to
$888,000.00 (or from $73,333.33 to $74,000.00 per month). Notwithstanding
anything provided in the Lease, Base Rent shall be adjusted monthly to reflect
changes in Lessor's Capital Investment through the immediately preceding month.
Accordingly, after fully utilizing the Reduced Rent (increasing Lessor's Capital
Investment to $11,480,000.00), annual Base Rent will be $918,400.00 (subject to
adjustment in accordance with paragraph 4 below).

4. In addition to any other changes to Base Rent, commencing with the Lease
Year commencing January 1, 2002 [and during each Lease Year thereafter during
the remainder of the Term (and any extensions or renewals thereof)], annual Base
Rent shall be increased (but not decreased) in accordance with changes in the
Consumer Price Index-U.S. city average for urban wage earners and clerical
workers, 1982-84 equals 100, all items, as promulgated by the U.S. Department of
Labor, Bureau of Labor Statistics ("CPI"). The annual Base Rent shall be
increased each Lease Year by adding thereto an amount equal to the product of
(i) the then applicable annual Base Rent and (ii) a fraction, the numerator of
which is the CPI for the Calculation Date applicable to the affected Lease Year
(the "Applicable Calculation Date") minus the CPI for October 1, 1999 and the
denominator of which is the CPI for October 1, 1999. In no event shall the
annual Base Rent for the applicable Lease Year as adjusted pursuant to this
paragraph ever decrease below the annual Base Rent as adjusted pursuant to this
paragraph for the immediately prior Lease Year. In the event of an adjustment to
the annual Base Rent in accordance with a change in the CPI, Lessor shall notify
Lessee in writing of the increase to the annual Base Rent for the applicable
Lease Year and the increased amount of the new monthly installments due with
respect thereto. Within ten (10) days of receiving such written notice, Lessee
shall pay to Lessor all increases to the annual Base Rent owed for all months
which have elapsed in the then current Lease Year. If a substantial change is
made in the method of establishing the CPI or a change is made to the base year
used by the Bureau of Labor Statistics in computing the CPI, then the CPI shall
be adjusted to a figure as nearly equivalent as possible to the figure that
would have resulted had no change been made in the method of establishing the
CPI. In the event that the CPI (or a successor or substitute index) becomes
unavailable, then a comparable index published by a governmental or other
nonpartisan entity evaluating the same

Amendment to Amended and
Restated Lease Agreement
122099

<PAGE>

information theretofore used in establishing the CPI shall be used in lieu of
the CPI.

5. Commencing with the Lease Year commencing January 1, 2002 [and during
each Lease Year thereafter during the remainder of the Term (and any extensions
or renewals thereof)], the amount of Participation Rent payable to Lessor shall
be reduced by the amount by which Base Rent was increased solely as a result of
CPI increases for that Lease Year. The amount by which Participation Rent may be
reduced shall be reviewed on an annual basis, and to the extent that the CPI
increases for a year are greater than the amount of Participation Rent payable
during that Lease Year, Lessee shall be excused for payment of Participation
Rent for said year, but may not carry over any amount by which the CPI increase
exceeds Participation Rent. By way of example only, if annual Base Rent for 2002
increases as a result of CPI increases by $45,000.00 and Participation Rent
payable in 2002 is $30,000.00, then, in such event, Lessee shall be excused from
payment of Participation Rent in 2002 because the CPI increase for the Lease
Year exceeds the amount of Participation Rent otherwise payable. Lessee shall
not, however, be entitled to a credit in any other year for the additional
$15,000.00 of CPI increase in 2002 for which Lessee did not receive an offset
against Participation Rent for 2002. If instead, the annual CPI increase for
2002 was $20,000.00, then Lessee would be obligated for payment of Participation
Rent in 2002 of $10,000.00 (the $30,000.00 of Participation Rent that was
otherwise payable, less a credit for the $20,000.00 of CPI increase), payable as
provided in the Lease.

6. The second sentence of Section 5.1 of the Agreement is hereby amended to
read in its entirety as follows:

The Termination Payment" means fifty percent (50%) of the amount by
which the value of the Demised Premises on the Termination Date
exceeds $11,480,000.00.

7. Signatures of the parties hereto on copies of this instrument
transmitted by facsimile machine shall be deemed originals for all purposes
hereunder, and shall be binding upon the parties hereto. This instrument may be
executed in any number of counterparts and by the separate parties hereto in
separate counterparts, each of which when taken together shall be deemed to be
one and the same instrument.

8. Except as specifically modified hereby, all of the provisions of the
Lease which are not in conflict with the terms of this Amendment shall remain in
full force and effect.

THE REMAINDER OF THIS PAGE IS BLANK

Amendment to Amended and
Restated Lease Agreement
122099
<PAGE>

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first above written.

Witnessed by: LESSOR:

GROVE ISLE ASSOCIATES, LTD., a Florida
limited partnership

By: Courtland Investments, Inc., a Delaware
corporation its sole general partner

/s/ By: /s/ Larry Rothstein
Name: Larry Rothstein
/s/ Wanda Hemingway Title: President

(Corporate Seal)

LESSEE:

WESTGROUP GROVE ISLE ASSOCIATES,
LTD., a Florida limited partnership

/s/ By: /s/ Patrick R. Coler
Name: Patrick R. Coler
/s/ Christine Evens Title: President, Westgroup Partner, Inc.
ITS General Partner

Amendment to Amended and
Restated Lease Agreement
122099

Lease Agreement

This agreement between Courtland Investments, Inc. ("Landlord") and HMG
Advisory Corp. ("Tenant") is effective as of December 1, 1999.

The Landlord is the owner of 1870 South Bayshore Drive, Coconut Grove, FL
33133 ("Premises"). The premises do not include the pool house and adjacent
apartment. The Landlord hereby leases to Tenant the premises for a period of
five (5) years.

In consideration for the use of the premise's Tenant will pay Landlord Four
Thousand Dollars ($4,000.00) per month.

In addition to the monthly rent, the Tenant will pay property insurance,
utilities, maintenance and security expenses relating to the premises.

This agreement may be terminated by either Landlord or Tenant upon ninety
(90) days written notice.

Courtland Investments, Inc. HMG Advisory Corp
Landlord Tenant

/s/ Maurice Wiener /s/ Larry Rothstein
Maurice Wiener Larry Rothstein
Chairman President

<ARTICLE> 5
<CIK> 0000311817
<NAME> HMG/COURTLAND PROPERTIES, INC.

<S> <C>
<PERIOD-TYPE> Year
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 3,410,476
<SECURITIES> 4,166,747
<RECEIVABLES> 2,244,550
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 19,506,233
<DEPRECIATION> 6,333,077
<TOTAL-ASSETS> 32,162,484
<CURRENT-LIABILITIES> 0
<BONDS> 0
1,245,635
0
<COMMON> 0
<OTHER-SE> 17,204,345
<TOTAL-LIABILITY-AND-EQUITY> 32,162,484
<SALES> 5,391,140
<TOTAL-REVENUES> 5,391,140
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 4,231,600
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 806,197
<INCOME-PRETAX> 5,029,069
<INCOME-TAX> 465,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,564,069
<EPS-BASIC> 4.16
<EPS-DILUTED> 0

</TABLE>