WATERMARK INVESTORS REALTY TRUST
10-Q, 1997-11-14
REAL ESTATE INVESTMENT TRUSTS
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                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

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

     For the quarterly period ended:  September 30, 1997

                                       OR

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

     For the transition period from _______ to _________

Commission file Number:   0-6103

                     WATERMARK INVESTORS REALTY TRUST
            (Exact name of registrant as specified in its charter.)

                Texas                                       75-1372785
     (State or other jurisdiction                        (I.R.S. Employer
         of incorporation or                            Identification No.)
            organization)

             227 West Trade Street, Suite 2320, Charlotte, NC 28202
                    (Address of principal executive offices)
                                   (Zip Code)

                                  (704)343-9334
              (Registrant's telephone number, including area code)

                 -----------------------------------------------
             (Former Name, Former Address and Former Fiscal Year, if
                                    changed)

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

                              YES [X]      NO [ ]

     Indicate the number of shares  outstanding of each of the issuer's  classes
of common stock, as of the latest practical date:

     As of July 31, 1997,  there were  outstanding  542,413 shares of beneficial
interest of the registrant.

<PAGE>	1

                         PART I. - FINANCIAL INFORMATION

ITEM I.  FINANCIAL STATEMENTS

     The accompanying  Financial Statements have not been audited by independent
accountants, but in the opinion of management, all adjustments (which consist of
normal  recurring  accruals)  necessary  for a fair  presentation  of results of
operations,  financial  position and cash flows at the dates and for the periods
indicated have been included.

                        WATERMARK INVESTORS REALTY TRUST

                CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)


                        THREE MONTHS ENDED              NINE MONTHS ENDED
                           SEPTEMBER 30,                  SEPTEMBER 30,
                         1997         1996            1997            1996
                    ----------------------------------------------------------
Gain on sale of
land                      ----         ----            ----            ----
                    ----------------------------------------------------------
Professional Fees       $1,666         $260         $15,037         $17,849
Property taxes            ----         ----            ----            ----
Interest Expense         2,075          769           5,625             769
Other Expenses           2,146        3,248           2,793           2,499
                    ----------------------------------------------------------
Total Expense            5,887        4,277          23,455          21,117
                    ----------------------------------------------------------
Net earnings(loss)     ($5,887)     ($4,277)       ($23,455)       ($21,117)
                    ==========================================================
Earnings (loss)
per share of
beneficial
interest                ($0.01)      ($0.01)         ($0.04)         ($0.04)
                    ==========================================================
Shares of
beneficial
interest used in
computing per
share amounts          542,413      542,413         542,413         542,413
                    ==========================================================

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


<PAGE>	2

                        WATERMARK INVESTORS REALTY TRUST

                           CONSOLIDATED BALANCE SHEETS


                                        SEPTMBER 30,              DECEMBER 31,
                                            1997                      1996
                                      ----------------------------------------
                                        (Unaudited)
ASSETS

   Real Estate                           $168,588                  $168,588

   Less allowance for
   estimated losses                      (168,588)                 (168,588)
                                      ----------------------------------------
                                                0                         0
                                      ----------------------------------------
   Cash                                     3,800                    12,152
                                      ----------------------------------------
TOTAL ASSETS                               $3,800                   $12,152
                                      ========================================
LIABILITIES AND SHAREHOLDERS'
DEFICIT

LIABILITIES

   Note payable-related party             $70,000                   $60,000

   Accrued liabilities                     24,548                    19,444

   Unclaimed dividends                     20,174                    20,174
                                      ----------------------------------------
                                         $114,722                   $99,618
                                      ----------------------------------------
SHAREHOLDERS' DEFICIT

   Shares of beneficial
   interest, $1.00 par value,
   authorized 10,000,00 shares
   with 542,413 issued and
   outstanding                            196,235                   196,235

   Additional paid-in capital              44,205                    44,205

   Accumulated deficit                   (351,362)                 (327,906)
                                      ----------------------------------------
                                        $(110,922)                 $(87,466)
                                      ----------------------------------------
TOTAL LIABILITIES AND
SHAREHOLDERS' DEFICIT                      $3,800                   $12,152
                                      ========================================

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

<PAGE>	3

                        WATERMARK INVESTORS REALTY TRUST

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996


                                                  NINE MONTHS ENDED
                                                    SEPTEMBER 30,
                                           1997                      1996
                                      ----------------------------------------
                                                     (unaudited)
Cash flow from operating activities:
   Net earnings (loss)                   ($23,456)                 ($21,117)

Adjustment to reconcile net cash
provided by (used in) operating
activities

   Net change in accrued liabilities        5,104                    (5,707)
                                      ----------------------------------------

Net cash used in Operations              ($18,351)                 ($26,824)
                                      ----------------------------------------
Cash flows from financing:
   Proceeds from note payable              10,000                    60,000
                                      ----------------------------------------

Increase (decrease) in cash                (8,352)                   33,176

Cash

   At beginning of period                  12,152                       880
                                      ----------------------------------------
   At end of period                        $3,800                   $34,056
                                      ========================================

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

<PAGE>	4

                        WATERMARK INVESTORS REALTY TRUST

                          NOTES TO FINANCIAL STATEMENTS
                                   (Unaudited)

                               SEPTEMBER 30, 1997

Note A - Basis of Presentation

     The  accompanying  unaudited  consolidated  financial  statements have been
prepared in accordance with generally accepted accounting principles for interim
financial  information and with the  instructions to Form 10-Q and Rule 10-01 of
Rule S-X. Accordingly,  they do not include all of the information and footnotes
required by generally  accepted  accounting  principles  for complete  financial
statements.  In the opinion of management,  all adjustments considered necessary
for a fair  presentation  have been  included.  All such  adjustments  were of a
normal  recurring  nature.  For  further  information  refer  to  the  financial
statements and footnotes  thereto  included as Item 14 to  Corporation's  annual
report on Form 10-K for the year ended December 31, 1996.

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

Liquidity  and Capital  Resources - At  September  30,  1997,  existing  current
liabilities exceed available cash by $111,000.

Balance  Sheet  Changes  - Assets  increased  by $800 for the  quarter.  Accrued
liabilities  decreased by $3,000. A $10,000 loan from a related party funded the
payment of liabilities.

<PAGE>	5

                           PART II - OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

          None.

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS

          None.

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

          a. Exhibits

          (27) Financial Data Schedule

          b. Reports on Form 8-K

          None.


<PAGE>	6

                        WATERMARK INVESTORS REALTY TRUST

                                   SIGNATURES

     Pursuant to the  requirements  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.

                                        WATERMARK INVESTORS REALTY TRUST


Date:  September 13, 1997               By:  /s/ Michael S. Verruto
					    ---------------------------------
                                        Michael S. Verruto
                                        Trustee, Vice President and Secretary
                                        (An Authorized Officer and
                                        Chief Accounting Officer)
<PAGE>	7


<TABLE> <S> <C>

<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the Company's
financial statements contained in its Report on Form 10-Q for the quarter ending
September 30, 1997 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
       
<S>                             <C>
<PERIOD-TYPE>                   9-MOS
<FISCAL-YEAR-END>                          DEC-31-1997
<PERIOD-END>                               SEP-30-1997
<CASH>                                           3,800
<SECURITIES>                                         0
<RECEIVABLES>                                        0
<ALLOWANCES>                                         0
<INVENTORY>                                          0
<CURRENT-ASSETS>                                 3,800
<PP&E>                                               0
<DEPRECIATION>                                       0
<TOTAL-ASSETS>                                   3,800
<CURRENT-LIABILITIES>                          114,722
<BONDS>                                              0
                                0
                                          0
<COMMON>                                       240,440
<OTHER-SE>                                   (351,362)
<TOTAL-LIABILITY-AND-EQUITY>                     3,800
<SALES>                                              0
<TOTAL-REVENUES>                                     0
<CGS>                                                0
<TOTAL-COSTS>                                        0
<OTHER-EXPENSES>                                23,455
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                                   0
<INCOME-PRETAX>                               (23,455)
<INCOME-TAX>                                         0
<INCOME-CONTINUING>                                  0
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                  (23,455)
<EPS-PRIMARY>                                   (0.04)
<EPS-DILUTED>                                   (0.04)
        

</TABLE>


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