UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C.  20549
 
 FORM
10-KSB
 
 x ANNUAL REPORT UNDER
SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 For
the fiscal year ended December 31, 2007
 
 o TRANSITION REPORT UNDER
SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934
 
 For
the transition period from _______________ to _______________
 
 Commission
file number 0-16508
 
 
 USA
REAL ESTATE INVESTMENT TRUST
 (Exact
Name of Small Business Issuer as specified in its Charter)
 
 California
              68-0420085(State
      or other jurisdiction of
              (I.R.S.
      Employer Identification No.)incorporation
      or organization)
 
 425
Fairgate Road, Sacramento, California  95825
 (Address
of principal executive offices)  (Zip Code)
 
 (916)
761-4992
 (Issuer's
telephone number, including area code)
 
 Securities
registered under Section 12(b) of the Exchange Act:
 
 Title
      of each class
              
              
              Name
      of each exchange on which registeredNone
 
 Securities
registered under Section 12(g) of the Exchange Act:
 
 Shares
      of Beneficial Interests(Title
      of class)(Title
      of class)
 
 Check
whether the issuer is not required to file reports pursuant to Section 13 or
15(d) of the Exchange Act.  o
 
 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.  Yesx
Noo
  
  
 
 Check
if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B 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
 
 Indicate
by check mark whether the Registrant is a shell company (as defined under Rule
12b-2 of the Securities Exchange Act of 1934).  Yeso  Nox
 
 The
Trust's revenues for the year ended December 31, 2007 were
$1,476,501.
 
 The
aggregate market  value of the voting shares of beneficial interest
(the "shares") held by nonaffiliates of the registrant outstanding at June 30,
2007, was $9,998,648.  This calculation is based on the book value
because there is no active public trading market for the shares.
 
 The
number of shares of beneficial interest outstanding at March 28, 2008 was
18,007.
 
 Documents
Incorporated by Reference:  None
 
 Transitional
Small Business Disclosure Format (Check One):  Yeso Nox
  - 2
-
  USA
REAL ESTATE INVESTMENT TRUST
 Table
of Contents
 
 
 
 
 PagePART
      I.ITEM
      1.
              Business
      ....................................................................................................
              4ITEM
      2.
              Description
      of Properties
      ..........................................................................
              6ITEM
      3.
              Legal
      Proceedings
      .....................................................................................
              6ITEM
      4.
              Submission
      of Matters to a Vote of Security Holders
      ..............................
              7PART
      II.ITEM
      5.
              Market
      for the Common Equity and Related Shareholder Mattersand
      Small Business Issuer Purchases of Equity Securities
............
              7ITEM
      6.
              Management's
      Discussion and Analysis
      ..................................................
              7ITEM
      7.
              Financial
      Statements
      ................................................................................
              9ITEM
      8.
              Changes
      in and Disagreements with Accountants on Accountingand
      Financial Disclosure
      ...................................................................
              17ITEM
      8A.
              Controls
      and Procedures
      ..........................................................................
              17ITEM
      8B.
              Other
      Information
      ....................................................................................
              17PART
      III.
              ITEM
      9.
              Directors,
      Executive Officers, Promoters and Control Persons;Compliance
      with Section 16(a) of the Exchange Act
    .......................
              17ITEM
      10.
              Executive
      Compensation
      .........................................................................
              19ITEM
      11.
              Security
      Ownership of Certain Beneficial Owners andManagement
      and Related Shareholder Matters
      ................................
              19ITEM
      12.
              Certain
      Relationships and Related Transactions andDirector
      Independence ......................................................
              20ITEM
      13.
              Exhibits
      ...................................................................................................
              20ITEM
      14.
              Principal
      Accountant Fees and Services
      .................................................
              20
 
  - 3
-
  PART
I.
 
 Forward-Looking
Statements
 
 This
Annual Report on Form 10-KSB, together with other statements and information
publicly disseminated by USA Real Estate Investment Trust (the "Trust"),
contains certain forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934.  Such statements are based on assumptions and expectations which
may not be realized and are inherently subject to risks, uncertainties and other
factors, many of which cannot be predicted with accuracy and some of which might
not even be anticipated.  Future events and actual results,
performance, transactions or achievements, financial and otherwise, may differ
materially from the results, performance, transactions or achievements expressed
or implied by the forward-looking statements.  Risks, uncertainties
and other factors that might cause such differences, some of which could be
material, include, but are not limited to: changes in the global political
environment; national and local economic, business and real estate and other
market conditions; the competitive environment in which the Trust operates;
property management risks; financing risks, such as the inability to obtain debt
or equity financing on favorable terms; possible future downgrades in the
Trust's credit rating; the level of volatility of interest rates; financial
stability of tenants, including the ability of tenants to pay rent, the decision
of tenants to close stores and the effect of bankruptcy laws; the rate of
revenue increases versus expense increases; the ability to maintain the Trust's
status as a real estate investment trust ("REIT") for federal income tax
purposes; governmental approvals, actions and initiatives; environmental/safety
requirements and costs; risks of real estate acquisition and development,
including the failure of acquisitions to close and pending developments and
redevelopments to be completed on time and within budget; risks of disposition
strategies, including the failure to complete sales on a timely basis and the
failure to reinvest sale proceeds in a manner that generates favorable returns;
risks of joint venture activities; as well as other risks identified in this
Annual Report on Form 10-KSB and, from time to time, in the other reports the
Trust files with the Securities and Exchange Commission or in other documents
that the Trust publicly disseminates.  The Trust undertakes no
obligation to publicly update or revise these forward-looking statements,
whether as a result of new information, future events or otherwise.
 
 
 
 ITEM
1.  BUSINESS.
 
 GENERAL
 
 The
Trust is a California business trust that was formed on October 7, 1986, for the
primary purpose of engaging in the business of acquiring, owning, operating and
financing real estate investments.  The Trust commenced operations on
October 19, 1987, upon the sale of the minimum offering amount of shares of
beneficial interest.
 
 The
purpose of the Trust is to provide investors with an opportunity to own, through
transferable shares, an interest in diversified real estate
investments.  Through such investments, the Trust seeks to provide
investors with an opportunity to participate in a portfolio of professionally
managed real estate investments in the same way a mutual fund affords investors
an opportunity to invest in a professionally managed portfolio of stocks, bonds
and other securities.
 
 The
Trust has operated and intends to continue to operate in a manner intended to
qualify as a REIT under Sections 856-860 of the Internal Revenue Code of 1986,
as amended (the "Code").  A qualified REIT is relieved, in part, from
federal income taxes on ordinary income and capital gains distributed to its
shareholders.  State tax benefits also may accrue to a qualified REIT.
Pursuant to Code requirements, the Trust distributes to its shareholders at
least 90 percent of its taxable income and 100 percent of the net capital gain
from the sale of Trust properties.
  - 4
-
  The
Trust will terminate 21 years after the death of the last survivor of persons
listed in the Trust's Declaration of Trust.  The Trust may also be
terminated at any time by the majority vote or written consent of
shareholders.
 
 The
office of the Trust is located at 425 Fairgate Road, in Sacramento,
California.
 
 INVESTMENT
OBJECTIVES
 
 The
Trust seeks to invest in real estate investments.
 
 At
December 31, 2007, the Trust held two real estate loans in order to produce
income. Subject to certain limitations, the Declaration of Trust gives the
Trustees discretion to allocate the Trust's investments without the prior
approval of shareholders.
 
 INVESTMENT
GUIDELINES
 
 Acquisition
Policies.  The Trustees have adopted investment guidelines for the
purpose of selecting the Trust's investments.  Pursuant to the
guidelines, the allocation of Trust assets depends principally upon the
following factors:
 
 1.  The
number of real estate investments available for acquisition which show current
income or potential for appreciation in value;
 
 2.  The
availability of funds for investment;
 
 3.  The
laws and regulations governing investment in and the subsequent sale of real
estate investments by a REIT; and
 
 4.  The
applicable federal and state income tax, securities, and real estate laws and
regulations.
 
 The
guidelines may vary from time to time, at the sole discretion of the Trustees,
in order to adapt to changes in real estate markets, federal income tax laws and
regulations and general economic conditions.  The Trustees also have
discretion to acquire an investment not meeting these guidelines if the Trustees
determine that other circumstances justify the acquisition in a particular
case.
 
 Portfolio
Turnover.  The Trustees have set general guidelines for the
disposition of properties in its portfolio which take into consideration certain
regulatory restrictions and federal income tax laws regarding REIT portfolio
turnover.  Income tax regulations preclude the Trust from holding any
property (other than foreclosure property) primarily for sale to customers in
the ordinary course of the Trust's trade or business, but provide a "safe
harbor" for property held for at least four years from the date of
acquisition.  Portfolio turnover policy also depends on whether a
favorable sales price can be realized by the Trust, primarily a function of the
capitalization rate  applied to similar types of property in similar
markets.  The Trust may elect to hold property as long as is
reasonably necessary to provide an attractive sales price.
 
 OTHER
INFORMATION
 
 The
Trust has no employees.  It is administered by its Trustees and by its
Chairman, and by independent contractors who work under the supervision thereof
as a self-administered real estate investment trust.
 
 The
Trust is involved in only one industry segment:  acquiring, operating,
holding for investment and disposing of real estate
investments.  Revenues, net income and assets from this industry
segment are included in the Trust's financial statements which appear at Item 7
of Part II.
  - 5
-
  
 The
Trust's results of operations will depend on the availability of suitable
opportunities for investment and the comparative yields available from time to
time on real estate and other investments, as well as market conditions
affecting leasing and sale of real estate in the areas in which the Trust's
investments are located.  These factors, in turn, are influenced to a
large extent by the type of investment involved, financing available for real
estate investment, the nature and geographic location of the property,
competition and other factors, none of which can be predicted with
certainty.
 
 The
real estate investment market is highly competitive.  The Trust
competes for acceptable investments with other financial institutions, including
banks, insurance companies, savings and loan associations, pension funds and
other real estate investment trusts and partnerships.  Many of these
competitors have greater resources than the Trust.  The number of such
competitors and funds available for investment in properties of the type
suitable for investment by the Trust may increase, resulting in increased
competition for such investments and possibly increased costs and thus reduced
income for the Trust.
 
 The
rules and regulations adopted by various agencies of federal, state or local
governments relating to environmental controls and the development and operation
of real property may operate to reduce the number of investment opportunities
available to the Trust or may adversely affect the properties currently owned by
it.  While the Trust does not believe environmental controls have had
a material impact on its activities, there can be no assurance that the Trust
will not be adversely affected thereby in the future.
 
 TAX
LEGISLATION
 
 The
Trust has elected to be treated as a real estate investment trust under Sections
856-860 of the Internal Revenue Code of 1986, as amended (the
"Code").  The Trust expects to operate and to invest in a manner that
will maintain its qualification for real estate investment trust
taxation.  The Code requirements for such qualification are
complex.  While no assurance can be given that the Trust qualified for
taxation as a real estate investment trust for past taxable years, the Trust
nevertheless believes that it has so qualified and will endeavor to continue to
qualify for its current year and future years.
 
 The
business of the Trust is uniquely sensitive to tax
legislation.  Changes in tax laws are made
frequently.  There is no way for the Trust to anticipate when or what
changes in the tax laws may be made in the future, or how such changes might
affect the Trust.
 
 The
Internal Revenue Service ("IRS") has not yet issued regulations to carry out
numerous provisions enacted as part of the tax legislation passed since
1986.  Nor has the IRS addressed the issues relating to the
application of some of the new tax rules to entities such as real estate
investment trusts.  Until such regulations are issued by the IRS, it
is difficult to predict what impact, if any, such new legislation may have on
entities such as a real estate investment trust.
 
 
 ITEM
2.  DESCRIPTION OF PROPERTIES.
 
 None.
 
 
 ITEM
3.  LEGAL PROCEEDINGS.
 
 None.
  - 6
-
  ITEM
4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
 
 The
Annual Meeting of Shareholders scheduled for December 8, 2007 did not receive a
quorum; therefore, the current trustees shall serve until the next election of
trustees.
 
 
 
 PART
II
 
 
 ITEM
      5.  MARKET FOR THE COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
      AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY
  SECURITIES.
 
 The
Trust has one class of authorized and outstanding equity consisting of shares of
beneficial interest with a par value of $1.00 per share.  The Trust
engaged in a continuous best efforts public offering from May 20, 1987 until May
20, 1992.  As of December 31, 2007, the Trust had 18,007 shares
outstanding to 2,133 shareholders of record.
 
 No
active public trading market presently exists for the shares of the
Trust.  The Trust does not anticipate that an active public trading
market will exist within the foreseeable future.  Occasional trades in
the shares of the Trust take place without the participation of the Trust on the
Over-the- Counter Bulletin Board (www.otcbb.com).
 
 
 ITEM
6.  MANAGEMENT'S DISCUSSION AND ANALYSIS.
 
 CRITICAL
ACCOUNTING ESTIMATES
 
 The
Trust carries its rental properties at cost less accumulated depreciation and
its real estate loans at their unpaid principal balances net of unamortized loan
fees unless they are determined to be impaired.  The Trust records
impairment losses on assets when events and circumstances indicate that these
assets might be impaired and the expected undiscounted cash flows estimated to
be generated by these assets is less than the related carrying
amounts.  If a rental property or real estate loan is determined to be
impaired, the impairment would be measured based upon the excess of the asset's
carrying value over the fair value.
 
 The
Trust reports each individual property as a component for determining
discontinued operations.  The operating results of properties that are
sold or classified as held for sale in the current period are reported as income
from discontinued operations and their respective results of operations from
prior periods are reclassified as discontinued operations.  Properties
that are classified as held for sale are shown on the balance sheet as real
estate held for sale and no further depreciation is recognized on these
properties.  The operating results of real estate sold or held for
sale and the gains or losses from real estate sold are included in discontinued
operations on the statements of income.
 
 RESULTS
OF OPERATIONS
 
 Interest
revenues were greater in 2007 compared to 2006 primarily due to higher average
real estate loan balances.
 
 Discontinued
operations for 2006 reflect the operating results of 19401 Parthenia Street in
Northridge, California that was sold in December 2006.
  - 7
-
  LIQUIDITY
AND CAPITAL RESOURCES
 
 The
Trust expects to meet its short-term liquidity requirements through cash on
hand, net cash provided by operations, collections on real estate loans and
borrowings collateralized by real estate loans.  The Trust expects it
will have sufficient liquidity and cash resources to meet its capital
requirements in 2008.
 
 
 
 IMPACT
OF INFLATION
 
 The
Trust's operations have not been materially affected by
inflation.  The rate of inflation has been relatively low since the
Trust commenced operations in October 1987.
  - 8
-
  ITEM
7.  FINANCIAL STATEMENTS
 
 
 PageReport
      of Independent Registered Public Accounting Firm
      .....................................
              10Balance
      SheetAs
      of December 31, 2007
      .....................................................................................
              11Statements
      of IncomeYears
      Ended December 31, 2007 and 2006
      ..........................................................
              12Statements
      of Changes in Shareholders' EquityYears
      Ended December 31, 2007 and 2006
      ..........................................................
              13Statements
      of Cash FlowsYears
      Ended December 31, 2007 and 2006
      ..........................................................
              14Notes
      to Financial Statements
      ....................................................................................
              15
  - 9
-
  REPORT
OF INDEPENDENT REGISTERED
 PUBLIC
ACCOUNTING FIRM
 
 
 
 
 To
the Trustees of
 USA
Real Estate Investment Trust
 
 
 
 
 We
have audited the accompanying balance sheet of USA Real Estate Investment Trust
as of December 31, 2007 and the related statements of income, changes in
shareholders' equity, and cash flows for each of the two years in the period
ended December 31, 2007.  These financial statements are the
responsibility of the Trust's management.  Our responsibility is to
express an opinion on these financial statements based on our
audits.
 
 We
conducted our audits in accordance with the auditing standards of
the  Public Company Accounting Oversight Board (United
States).   Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements.  An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation.  We believe
that our audits provide a reasonable basis for our opinion.
 
 In
our opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of USA Real Estate Investment Trust as
of December 31, 2007 and the results of its operations and its cash flows for
each of the two years in the period ended December 31, 2007 in conformity with
U.S. generally accepted accounting principles.
 
 
 Perry-Smith
LLP
 
 
 
 
 
 Sacramento,
California
 March
21, 2008
  - 10
-
  USA
REAL ESTATE INVESTMENT TRUST
 Balance
Sheet
 
 
 
 
 
 
 December
      31,2007AssetsReal
      estate loans, net
              
              $
              9,045,401Interest
      receivable
              
              
              969,428Cash
              
              
              116,682Other
      assets
              
              
              2,915Total
      assets
              
              $
              10,134,426Shareholders'
      EquityShareholders'
      Equity:Shares
      of beneficial interest, par value $1 per share;
                62,500
      shares authorized; 18,007 shares outstanding
              
              $
              18,007Additional
      paid-in capital
              
              
              26,355,335Distributions
      in excess of cumulative net income
              
              
              (16,238,916
              )Total
      shareholders' equity
              
              $
              10,134,426See notes to
      financial statements.
  - 11
-
  USA
REAL ESTATE INVESTMENT TRUST
 Statements
of Income
 Years
Ended December 31, 2007 and 2006
 
 
 
 
 
 
 
 2007
              
              
              2006Revenues:Interest
      income
              
              $
              1,476,501
              
              
              $
              435,733Expenses:General
      and administrative
              
              
              245,077
              
              
              
              180,734Income
      from continuing operationsbefore
      discontinued operations
              
              
              1,231,424
              
              
              
              254,999Discontinued
      operations
              
              
              --
              
              
              
              2,517,150Net
      income
              
              $
              1,231,424
              
              
              $
              2,772,149Earnings
      per share:Income
      from continuing operations
              
              $
              63.26
              
              
              $
              10.80Discontinued
      operations
              
              
              --
              
              
              
              106.60Net
      income per share
              
              $
              63.26
              
              
              $
              117.40Weighted-average
      number of shares
              
              
              19,465
              
              
              
              23,614Distributions
      per share
              
              $
              52.00
              
              
              $
              39.60See
      notes to financial statements.
 
  - 12
-
  USA
REAL ESTATE INVESTMENT TRUST
 Statements
of  Changes in Shareholders' Equity
 Years
Ended December 31, 2007 and 2006
 
 
 
 Shares
      of Beneficial
              
              
              Additional
              
              
              Distributions
              
              
              TotalInterest
              
              
              Paid-in
              
              
              in
      Excess of
              
              
              Shareholders'Number
              
              
              Amount
              
              
              Capital
              
              
              Net
      Income
              
              
              EquityJanuary
      1, 2006
              
              
              23,909
              
              
              $
              23,909
              
              
              $
              29,477,663
              
              
              $
              (18,344,808
              )
              
              $
              11,156,764Repurchasesof
      shares
              
              
              (540
              )
              
              
              (540
              )
              
              
              (242,670
              )
              
              
              
              
              
              
              (243,210
              )Net
      income
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              2,772,149
              
              
              
              2,772,149Distributions
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (936,993
              )
              
              
              (936,993
              )December
      31, 2006
              
              
              23,369
              
              
              
              23,369
              
              
              
              29,234,993
              
              
              
              (
      16,509,652
              )
              
              
              12,748,710Repurchasesof
      shares
              
              
              (5,362
              )
              
              
              (5,362
              )
              
              
              (2,879,658
              )
              
              
              
              
              
              
              (2,885,020
              )Net
      income
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              1,231,424
              
              
              
              1,231,424Distributions
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (960,688
              )
              
              
              (960,688
              )December
      31, 2007
              
              
              18,007
              
              
              $
              18,007
              
              
              $
              26,355,335
              
              
              $
              (16,238,916
              )
              
              $
              10,134,426See
      notes to financial statements.
 
  - 13
-
  USA
REAL ESTATE INVESTMENT TRUST
 Statements
of Cash Flows
 For
the Years Ended December 31, 2007 and 2006
 
 
 
 2007
              
              
              2006CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      income
              
              $
              1,231,424
              
              
              $
              2,772,149Adjustments
      to reconcile net income to net cash provided by operating
      activities:Amortization
      of loan fees
              
              
              (52,167
              )
              
              
              --Discontinued
      operations
              
              
              --
              
              
              
              (2,517,150
              )Changes
      in operating assets and liabilities:(Increase)
      decrease in interest receivable
              
              
              (
      969,428
              )
              
              
              46,349Decrease
      in rent receivable
              
              
              5,014
              
              
              
              14,230(Increase)
      decrease in other assets
              
              
              (2,915
              )
              
              
              156,738Decrease
      in liabilities
              
              
              (6,108
              )
              
              
              (118,892
              )Net
      cash provided by continuing operations
              
              
              205,820
              
              
              
              353,424Operating
      cash used in discontinued operations
              
              
              --
              
              
              
              (188,548
              )Net
      cash provided by operating activities
              
              
              205,820
              
              
              
              164,876CASH
      FLOWS FROM INVESTING ACTIVITIES:Investments
      in real estate loans
              
              
              (8,337,234
              )
              
              
              (750,000
              )Receipt
      of loan fees
              
              
              94,000
              
              
              
              --Collections
      on real estate loans
              
              
              --
              
              
              
              4,175,000Proceeds
      from sale of properties
              
              
              --
              
              
              
              8,589,874Net
      cash (used in) provided by investing activities
              
              
              (8,243,234
              )
              
              
              12,014,874CASH
      FLOWS FROM FINANCING ACTIVITIES:Redemption
      of shares
              
              
              (2,885,020
              )
              
              
              (243,210
              )Distributions
      paid
              
              
              (960,688
              )
              
              
              (936,993
              )Net
      cash used in financing activities
              
              
              (3,845,708
              )
              
              
              (1,180,203
              )NET
      (DECREASE) INCREASE IN CASH
              
              
              (11,883,122
              )
              
              
              10,999,547CASH
      AT BEGINNING OF PERIOD
              
              
              11,999,804
              
              
              
              1,000,257CASH
      AT END OF PERIOD
              
              $
              116,682
              
              
              $
              11,999,804See
      notes to financial statements.
  - 14
-
  USA
REAL ESTATE INVESTMENT TRUST
 Notes
to Financial Statements
 
 1.   ORGANIZATION
AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 GENERAL:  USA Real
Estate Investment Trust (the "Trust") was organized under the laws of the State
of California pursuant to a Declaration of Trust dated October 7,
1986.  The Trust commenced operations on October 19,1987, upon the
sale of the minimum offering amount of shares of beneficial
interest.  The Trust is a self-administered, self-managed, real estate
investment trust.
 
 USE OF
ESTIMATES:  The preparation of financial statements in
conformity with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect the
reported amount of assets, liabilities, revenues and expenses and the disclosure
of contingent assets and liabilities.  Actual results could differ
from those estimates.
 
 REAL ESTATE
INVESTMENTS:  The Trust carries its rental properties at cost
less accumulated depreciation and its real estate loans at their unpaid
principal balances net of unamortized loan fees unless they are determined to be
impaired.  The Trust records impairment losses on assets when events
and circumstances indicate that these assets might be impaired and the expected
undiscounted cash flows estimated to be generated by these assets is less than
the related carrying amounts.  If a rental property or real estate
loan is determined to be impaired, the impairment would be measured based upon
the excess of the asset's carrying value over the fair value.
 
 The
Trust reports each individual property as a component for determining
discontinued operations.  The operating results of properties that are
sold or classified as held for sale in the current period are reported as
discontinued operations and their respective results of operations from prior
periods are reclassified as discontinued operations.  Properties that
are classified as held for sale are shown on the balance sheet as real estate
held for sale and no further depreciation is recognized on these
properties.  The operating results of real estate sold or held for
sale and the gains or losses from real estate sold are included in discontinued
operations on the statements of income.
 
 CASH:  Cash consists
of demand deposits with financial institutions.  Cash balances in
individual banks exceed insurable amounts.
 
 DISTRIBUTIONS IN EXCESS OF NET
INCOME:  The Trust has a general policy of distributing cash to
its shareholders in an amount that approximates taxable income plus noncash
charges such as depreciation and amortization.  As a result,
distributions to shareholders exceed cumulative net income.
 
 REVENUE
RECOGNITION:Interest income is accrued on the outstanding
principal amounts of the real estate loans.  Loan fees are recognized
as interest income over the lives of the related real estate loans using the
straight-line method.
 
 INCOME TAXES:  The
Trust has elected to be taxed as a real estate investment
trust.  Accordingly, the Trust does not pay income tax on income
because income distributed to shareholders is at least equal to the greater of
90% of its taxable income or 100% of its capital gains.
 
 NET INCOME PER
SHARE:  Net income per share is computed based on the
weighted-average number of shares of 19,465 and 23,614 during 2007 and 2006,
respectively.
 
 RECLASSIFICATIONS:  Certain
items in the 2006 financial statements have been reclassified to conform to the
2007 presentation.
  - 15
-
  2.  REAL
ESTATE LOANS
 
 As
of December 31, 2007, the Trust had two real estate loans, net totaling
$9,045,401, which consist of gross real estate loans of $9,087,234 less
unamortized loan fees of $41,833.
 
 As
of December 31, 2007, $2,285,068 and $6,760,333 of the outstanding balance of
the Trust's real estate loans mature in 2008 and 2009,
respectively.
 
 As
of December 31, 2007, the real estate loans had a weighted-average interest rate
of 17.48%.  The contract rate and the pay rate on the $6,760,333 real
estate loan is 20.00% and 10.00%, respectively.  The accrued and
unpaid 10.00% is payable on the earlier of the payoff of the loan or March 1,
2009.  The 10.00% pay rate is payable quarterly.
 
 As
of December 31, 2007, 74.74% and 25.26% of the outstanding balance of the
Trust's real estate loans were collateralized by properties in Mississippi and
California, respectively.
 
 The
fair market value of the real estate loans approximated their carrying value at
December 31, 2007 due to current market rates of real estate loans and their
near term maturity.
 
 3.  DISTRIBUTIONS
 
 For
federal income tax purposes:  100% of the distributions paid in 2007
were ordinary income; and 100% of the distributions paid in 2006 were
nontaxable.
 
 4.  LINE
OF CREDIT
 
 At
December 31, 2007, the Trust had available a $1,000,000 line of
credit.  The line of credit expires on September 1, 2008 and is
secured by an interest in the $6,760,333 real estate loan.  Advances
under the line bear interest at prime plus 0.50% per annum.  At
December 31, 2007, there was no outstanding balance on the line of
credit.
 
 5.  DISCONTINUED
OPERATIONS
 
 The
operating results of 9401 Parthenia Street in Northridge, California that was
sold in December 2006 were reported as discontinued operations in
2006.  This classification had no impact on net income or net income
per share for 2006.
 
 The
following is a summary of the Trust's discontinued operations for the year ended
December 31, 2006.
 
 
 Rent
              
              $
              128,285Operating
      expenses
              
              
              136,395Property
      taxes
              
              
              127,638Property
      management fees
              
              
              52,800Gain
      on sale of real estate
              
              
              2,705,698Discontinued
      operations
              
              $
              2,517,150
 
  - 16
-
  ITEM
      8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
      AND FINANCIAL DISCLOSURE.
 
 None.
 
 ITEM
8A.  CONTROLS AND PROCEDURES.
 
 The
Trust's Chairman, Chief Executive Officer and Chief Financial Officer, Gregory
Crissman, conducted an evaluation of the effectiveness of the Trust's disclosure
controls and procedures.  Based on that valuation, he concluded that
the Trust's disclosure controls and procedures were effective as of December 31,
2007.  Additionally, there have been no significant changes in the
Trust's internal controls or in other factors that could significantly affect
these controls subsequent to December 31, 2007, including any corrective actions
with regard to significant deficiencies and material weaknesses.
 
 MANAGEMENT’S
REPORT ON INTERNAL CONTROL OVER
 FINANCIAL
REPORTING
 
 Management
of USA Real Estate Investment Trust is responsible for establishing and
maintaining adequate internal control over financial reporting.
 
 Management
assessed the effectiveness of the Trust’s internal control over financial
reporting based on criteria for effective internal control over financial
reporting described in Internal Control—Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission
(COSO).
 
 Based
on its assessment, management concluded that the Trust maintained effective
internal control over financial reporting as of December 31, 2007.
 
 This
annual report does not include an attestation report of the Trust’s registered
public accounting firm regarding internal control over financial
reporting.  Management’s report was not subject to attestation by the
Trust’s registered public accounting firm pursuant to temporary rules of the
Securities and Exchange Commission that permit the Trust to provide only
management’s report in this annual report.
 
 
 ITEM
8B.  OTHER INFORMATION.
 
 None.
 
 
 
 PART
III.
 
 
 ITEM
      9.   DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
      PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE
  ACT.
 
 GENERAL
 
 The
Trust has no employees.  It is administered by its Trustees and by its
Chairman, and by independent contractors who work under the supervision
thereof.
  - 17
-
  THE
TRUSTEES
 
 The
Trustees of the Trust are as follows:
 
 TrusteeName
              
              Age
              
              Since
              
              OfficeGregory
      E. Crissman
              
              56
              
              1986
              
              Trustee
      and Chairman, Chief ExecutiveOfficer
      and Chief Financial OfficerBenjamin
      A. Diaz
              
              74
              
              1988
              
              Trustee
      and SecretaryJoyce
      A. Marks
              
              73
              
              1986
              
              Trustee
 
 
 
 The
following is a brief description of the background and business experience of
each Trustee.
 
 GREGORY E.
CRISSMAN.  Mr. Crissman is the Chairman, Chief Executive
Officer and Chief Financial Officer of the Trust.  He has over 20
years of experience in real estate, accounting, auditing, and
taxation.  He also served as Chairman of the Board of California Real
Estate Investment Trust, a New York Stock Exchange listed real estate investment
trust, and was its Chief Financial Officer from 1989 until 1993.  Mr.
Crissman was an Executive Vice President of B&B Property Investment,
Development and Management Company, Inc. ("B&B") from 1983 until 1990 and
from 1992 until 1993.  In addition, Mr. Crissman was a director of
B&B and was President of B&B from 1990 until 1992.  From 1976
to 1979, Mr. Crissman worked at Bowman & Company, an accounting firm in
Stockton, California.  In 1976, Mr. Crissman received his BS degree
with honors from the California State University at Sacramento and is a
Certified Public Accountant.  Mr. Crissman is also a member of the
American Institute of Certified Public Accountants.
 
 BENJAMIN A.
DIAZ.  Mr. Diaz is the Secretary of the Trust.  Mr.
Diaz is a retired judge of the Superior Court of California.  He
served as a judge of the Sacramento County Superior Court from April 1976 to May
1986.  He has engaged in private practice in Sacramento, California,
as a partner in the law firm of Grossfield and Diaz from June 1986 to September
1987 and in the law firm of Diaz & Gebers, specializing in real estate
transactions, general practice, litigation, business law, and personal injury
matters from October 1987 to December 1991.  From January 1992 to the
present, Judge Diaz has been engaged in pro tem judging, arbitration, mediation
and consulting services.  Mr. Diaz received his Juris Doctor degree
from the University of Pacific, McGeorge School of Law, Sacramento, California
in 1966.  Prior to serving on the bench, Mr. Diaz had extensive tax
and auditing experience with the State of California Franchise Tax Board,
dealing with large corporate unitary tax audits, and with the California State
Board of Equalization.
 
 JOYCE A. MARKS.  Ms.
Marks was employed by Bank of America for more than forty
years.  During her career with Bank of America, Ms. Marks had
extensive experience with land development and subdivision financing, including
construction and take-out financing for commercial properties.  Ms.
Marks was for many years active in the Building Industry Association of
Sacramento and from 1976 to 1983 served as a board member of, and in 1983 as
President of, its Associate Counsel.  Ms. Marks received Bank of
America's Award for Excellence in 1985.  Her most recent positions
include Senior Sales Training Specialist, Marketing Officer, Branch Manager and
Credit Administrator at one of Bank of America's Regional
Headquarters.
 
 Trustees
of the Trust are elected annually by the Trust's shareholders and hold office
until their successors are duly elected and qualified.  No family
relationship exists between any Trustee and any other Trustee.  No
arrangement exists or existed between any Trustee and any other person or entity
pursuant to which the Trustee was selected as a Trustee or
nominee.
  - 18
-
  ITEM
10.  EXECUTIVE COMPENSATION.
 
 COMPENSATION
OF OFFICERS
 
 During
2007, the Trust was a self-administered, self-managed real estate investment
trust.  The Trust has the following officers:  Chairman,
Chief Executive Officer, Chief Financial Officer, and Secretary.  No
officer except Gregory E. Crissman is compensated by the Trust in his capacity
as an officer.  During 2007, none of the Trust's officers received
compensation in excess of $65,550.
 
 
 Total
              
              
              Long-TermName
      and
              
              
              
              Officer
              
              Annual
              
              
              and
      otherPrincipal
      Position
              
              Year
              
              Compensation
              
              Compensation
              
              
              CompensationGregory
      E. Crissman, Chairman
              
              2007
              
              $52,800
              
              $66,550
              (1)
              
              None(1)  Includes
      fees for each meeting of the Trustees attended for a total of
      $13,750.
 
 
 COMPENSATION
OF TRUSTEES
 
 Each
Trustee receives $1,375 for each Trustees' meeting attended plus reimbursement
of direct expenses incurred in connection with such attendance.  There
are currently no plans to alter this compensation schedule.  No
Trustee received compensation under any other arrangement during 2007 except
Gregory E. Crissman who received compensation as an officer for work
performed.  The Trustees do not maintain a nominating or compensation
committee or any other standing committee except for an audit
committee.  The audit committee consists of Benjamin A. Diaz who
serves without additional compensation.  The Trustees have authority
to establish committees and to compensate members as appropriate for their
service.  During 2007, the Trustees had ten regular
meetings.  All Trustees attended all meetings.
 
 
 ITEM
      11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
      MANAGEMENT AND RELATED SHAREHOLDER
MATTERS.
 
 The
following table sets forth as of December 31, 2007, the number of shares owned
by each person who is known by the Trust to own beneficially more than 5% of its
outstanding shares and the Trustees and officers of the Trust as a
group.  No Trustee beneficially owns any shares of the Trust except as
set forth below.  The Trust has been advised that all of such shares
are beneficially owned and the sole investment and voting power is held by the
persons named:
 
 
 Amount
      and Nature of
              
              PercentName
      and Address of Beneficial Owner
              
              Beneficial
      Ownership
              
              of
      ClassGregory
      E. Crissman, Chairman, Chief Executive Officer,Chief
      Financial Officer and Trustee
              
              46
              
              0.25551066
      Vanderbilt WaySacramento,
      CA  95825All
      Trustees and officers as a group
              
              46
              
              0.2555
  - 19
-
  During
2007, based upon a review of the Forms 3, 4 and 5 on file with the Trust, it
does not appear that any officer or Trustee failed to file such a required
report on a timely basis.
 
 
 ITEM
      12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
      INDEPENDENCE.
 
 None.
 
 
 ITEM
13.  EXHIBITS.
 
 3.1
              
              Amended
      and Restated Declaration of Trust of Commonwealth Equity Trust
      USA3.2
              
              Bylaws
      of the Trust3.3
              
              Amendments
      to Sections 2.3.1, 2.3.7, 2.3.8, 2.4.2 and 2.4.3 of the Amended and
      RestatedDeclaration
      of Trust of Commonwealth Equity Trust USA (adopted on August 29, 1988
      atthe1988
      Annual Meeting)4.1
              
              Article
      VIII of Exhibit 3.14.2
              
              Form
      of Share Certificate14.1
              
              Code
      of Ethics31.1
              
              Section
      302 Certifications as filed by the Chief Executive Officer and the Chief
      FinancialOfficer
      pursuant to SEC Release No. 33-8212 and 34-4755132.1
              
              Section
      906 Certifications as filed by the Chief Executive Officer and the Chief
      FinancialOfficer
      pursuant to SEC Release No. 33-8212 and
34-47551
 
 
 ITEM
14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES.
 
 The
following table represents aggregate fees billed to the Trust for 2007 and 2006
by Perry-Smith LLP, the Trust's principal accounting firm.
 
 
 2007
              
              
              2006Audit
      fees
              
              $
              40,700
              
              
              $
              37,600Audit
      related fees
              
              
              --
              
              
              
              --Tax
      fees
              
              
              --
              
              
              
              --$
              40,700
              
              
              $
              37,600
 
 
 
 Pre-Approval
Policy for Accounting Services.  In 2005, the Audit Committee and the
Trustees adopted a formal pre-approval policy for accounting services and
fees.  The policy requires that all audit services, audit related
services, tax fees and all other fees of the Trust's independent auditor be
pre-approved by the Audit Committee and the Trustees.  The Audit
Committee and the Trustees approved the audit and tax services and fees provided
by the independent auditor during 2007 and 2006.
  - 20
-
  USA
REAL ESTATE INVESTMENT TRUST
 Signatures
 
 
 
 Pursuant
to the requirements of Section 13 of 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.
 
 
 Dated:
              March
      28, 2008
              
              USA
      Real Estate Investment TrustDateBy:
              /s/  Gregory
      E. CrissmanGregory
      E. Crissman asChairman,
      Chief Executive Officerand
      Chief Financial 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 dates indicated:
 
 
 Dated:
              March
      28, 2008
              
              USA
      Real Estate Investment TrustDateBy:
              /s/  Gregory
      E. CrissmanGregory
      E. Crissman asChairman,
      Chief Executive Officerand
      Chief Financial OfficerDated:
              March
      28, 2008
              By:
              /s/  Benjamin
      DiazDate
              
              Benjamin
      Diaz,TrusteeDated:
              March
      28, 2008
              By:
              /s/
      Joyce A. MarksJoyce
      A. MarksTrustee
 
 
  - 21
-