UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C.  20549





FORM 10-K





x ANNUAL REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934





For the fiscal year ended December 31, 2009





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)





641 Fulton Avenue, Suite 200, 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 Interest(Title of class)(Title of class)





Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.     Yeso Nox





Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.     Yeso Nox





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.     Yesx Noo








Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required
to submit and post such files).     Yeso Nox





Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not 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-K or any amendment to
this Form 10K.    x





Indicate by check mark if Registrant is a large accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.





Large accelerated filer o
Accelerated filer oNon-accelerated filer o (Do not check if a smaller reporting company)
Smaller reporting company 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 aggregate market value of the registrant’s voting shares held by non-affiliates:  no established market exists for the registrant’s shares of beneficial interest.





The number of shares of beneficial interest outstanding at February 16, 2010 was 18,007.





DOCUMENTS INCORPORATED BY REFERENCE





None.





Page - 2 -





USA REAL ESTATE INVESTMENT TRUST


Table of Contents














PagePART I.
ITEM 1.
Business ....................................................................................................
4ITEM 1A.
Risk Factors ..............................................................................................
5ITEM 1B.
Unresolved Staff Comments ....................................................................
5ITEM 2.
Properties ..................................................................................................
5ITEM 3.
Legal Proceedings .....................................................................................
5ITEM 4.
Submission of Matters to a Vote of Security Holders ..............................
6PART II.
ITEM 5.
Market for the Common Equity and Related Shareholder Matters andIssuer Purchases of Equity Securities ............................................
7ITEM 6.
Selected Financial Data ...........................................................................
7ITEM 7.
Management's Discussion and Analysis of Financial Condition andResults of Operations ........................................................................
7ITEM 7A.
Quantitative and Qualitative Disclosures About Market Risk ................
8ITEM 8.
Financial Statements and Supplementary Data ........................................
9ITEM 9.
Changes in and Disagreements with Accountants on Accountingand Financial Disclosure ...................................................................
18ITEM 9A(T).
Controls and Procedures ..........................................................................
18ITEM 9B.
Other Information ....................................................................................
18PART III.
ITEM 10.
Directors, Executive Officers and Corporate Governance ......................
19ITEM 11.
Executive Compensation .........................................................................
20ITEM 12.
Security Ownership of Certain Beneficial Owners andManagement and Related Shareholder Matters ................................
21ITEM 13.
Certain Relationships and Related Transactions andDirector Independence ......................................................
21ITEM 14.
Principal Accountant Fees and Services .................................................
21PART IV
ITEM 15.
Exhibits and Financial Statement Schedules ...........................................
22





Page - 3 -


PART I.





Forward-Looking Statements





This Annual Report on Form 10-K, 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.





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.


Page - 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 its shareholders.





The office of the Trust is located at 641 Fulton Avenue, Suite 200, in Sacramento, California.





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 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.





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.








ITEM 1A.  RISK FACTORS.





Not applicable to smaller reporting companies.








ITEM 1B.  UNRESOLVED STAFF COMMENTS.





Not applicable to smaller reporting companies.








ITEM 2.  PROPERTIES.





None.








ITEM 3.  LEGAL PROCEEDINGS.





USA Real Estate Investment Trust vs. Frank J. Ferris and Collie Christensen.  Superior Court of the State of California, County of Sacramento Case No. 34-2009-00067506





This action was filed on December 30, 2009, in the Superior Court of the State of California, County of Sacramento to enforce the guarantees of Frank J. Ferris and Collie Christensen of a loan made on February 28, 2007, to CFG, LLC, a Mississippi limited liability company, in the sum of Six Million Eight Hundred Thousand Dollars ($6,800,000).   The
loan was secured by a deed of trust on real property located in Wiggins, Mississippi, which was foreclosed on January 6, 2009.  The Trust foreclosed against the real property collateral bidding Two Million Five Hundred Thousand Dollars ($2,500,000) of the indebtedness.  The Trust seeks to recover the deficiency from the guarantors with interest thereon at the rate of 25% per annum from January 6, 2009, until paid. There are no known defenses to this action.







Page - 5 -


USA Real Estate Investment Trust v. The Security Title Guarantee Corporation of Baltimore, Patrick A. Sheehan, Esquire, John Does 1-10, and Corporations W, X, Y and Z.U.S.
District Court for the Southern District of Mississippi, Southern Division, CA #1:09cv684HSO-JMR





This action was filed on September 23, 2009, and involves several irregularities, inadequacies and negligent acts by the named defendants pertaining to the closing of a commercial real estate loan transaction by Patrick A. Sheehan wherein title insurance was issued by The Security Title Guarantee Corporation of Baltimore. The Trust is seeking
both compensatory and punitive damages from the defendants.







USA Real Estate Investment Trust vs. Robert A. Cook, John D. Chandler, Robert A. Leach and Lonnie C. Nielson.  Superior Court of the State of California, County of Sacramento Case No. 34-2009-00048163





This action was filed on June 30, 2009, in the Superior Court of the State of California, County of Sacramento to enforce the guarantees of Defendants Robert A. Cook, John D. Chandler, Robert A. Leach and Lonnie C. Nielson of a loan to Rivage Marina, LLC, a California limited liability company, under a promissory note, dated August 21, 2008,
for the original principal sum of Six Hundred Thousand Dollars ($600,000).  Rivage Marina, LLC is presently in bankruptcy.  Prior to Rivage Marina, LLC filing bankruptcy it transferred the collateral of the deed of trust related to the $600,000 promissory note to Captain’s Table Marina, LLC, a newly formed entity owned by the same persons who are the members of Rivage Marina, LLC.  The Trust is pursuing the guarantors independently from enforcing its rights against the collateral
in which the Trust retains its security rights.





Defendants admit that they owe the Trust unpaid principal and accrued interest as of September 30, 2009, in the sum of Six Hundred Thirty-Seven Thousand One Hundred Eighty-Four Dollars ($637,184), plus late charges, attorneys’ fees and costs.  In December, 2009, the Defendants paid Thirty Thousand Dollars ($30,000) under the
terms of a Conditional Settlement Agreement.  A second installment of One Hundred Thousand Dollars ($100,000) is due under the Conditional Settlement Agreement on or before February 28, 2010.  If the second installment is paid, the action will be dismissed without prejudice and the promissory note reinstated with the balance due on August 31, 2010.  If the second installment is not made, the litigation will resume.  There are no known defenses to this action.







Dale Britton vs. USA Real Estate Investment Trust and Night Hawke Security.  Superior Court of the State of California, County of Los Angeles Case No. PCO44475







This action was filed on January 15, 2009, in the Superior Court of the State of California, County of Los Angeles against the Trust and Night Hawke Security.  Dale Britton, a former tenant of the Trust at 19401 Parthenia Street in Northridge, California, alleges in the complaint that he was stopped from recovering possession of
personal property that he had abandoned when his tenancy was terminated and he was evicted from the premises he had occupied.  On June 22, 2009 the Trust filed an answer to the complaint denying the allegations of the complaint and denying liability to Dale Britton.  The Trust intends to vigorously contest this case.











ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.





The Trust had no meetings in the fourth quarter.


Page - 6 -


PART II








ITEM 5.  MARKET FOR THE COMMON EQUITY AND RELATED SHAREHOLDER MATTERS AND 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 per share.  The Trust engaged in a continuous best efforts public offering from May 20, 1987 until May 20, 1992.  As of February 16, 2010, the Trust had 18,007 shares outstanding to 2,064 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.





In 2009, the Trust paid one distribution of $8 per share to shareholders of record on March 1, 2009.  In 2008, the Trust paid four distributions of $16, $16, $16 and $8 per share to shareholders of record on March 1, 2008, June 1, 2008, September 1, 2008 and December 1, 2008, respectively.











ITEM 6.  SELECTED FINANCIAL DATA.





Not applicable to smaller reporting companies.











ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.





CRITICAL ACCOUNTING ESTIMATES





REAL ESTATE OWNED:  Real estate owned consists solely of the one hundred and twenty-one acres of land the Trust acquired through foreclosure on January 6, 2009.  Real estate owned is originally recorded at fair value less estimated selling costs.  Fair value
was derived from a recent appraisal of the property which was reviewed by the Trust.  The current market for comparable properties in southern Mississippi is weak and there are no recent sales of comparable properties.  These conditions are not indicative of an active market.  Appraised values in such markets are potentially subject to significant fluctuations if and when sales of comparable properties occur.  The Trust monitors valuations in this market through discussions
with developers and others, plus its own assessments of the highest and best use for real estate owned.





REAL ESTATE LOANS:  The Trust carries its real estate loans at their unpaid principal balances net of unamortized loan fees unless they are impaired.  A loan is considered impaired when the Trust determines that it is probable that it will be unable to collect all
amounts due according to the contractual terms of the loan agreement.  The Trust measures impairment of a loan based upon the fair value of the collateral.  If the measurement of impairment for the loan is less than the recorded investment in the loan, the shortfall is charged off with a corresponding charge to the provision for loan losses.








Page - 7 -











RESULTS OF OPERATIONS





Interest income was lower in 2009 compared to 2008 primarily due to lower average real estate loan balances.





General and administrative expenses increased in the 2009 compared to 2008 primarily due to increased legal and professional fees related to the acquisition of the one hundred and twenty-one acres in Wiggins, Mississippi and unsuccessful efforts to sell the property.





When the Trust acquired the one hundred and twenty-one acres in Wiggins, Mississippi through foreclosure on January 6, 2009 it transferred the related real estate loan balance to real estate owned.  All of the operating expenses for 2009 relate to this property.  The Trust had no real estate owned or operating expenses
in 2008.  During 2009, the Trust borrowed $300,000 secured by this property to fund the completion of a frontage road that is expected to eliminate erosion control issues and to make the property more marketable.  The construction of the frontage road was built under a cost sharing arrangement with the Mississippi Department of Transportation.  After the completion of the frontage road, the Trust intends to sell this property in whole and does not intend to incur additional capital
expenditures.





The Trust is working with the guarantors of the real estate loan to Rivage Marina, LLC. The parties have signed a conditional settlement agreement to reinstate the real estate loan with a $100,000 payment due on or before February 28, 2010 and the balance due on August 31, 2010.   The Trust has assessed the collectibility of
the real estate loan and unpaid interest of $40,800, and believes them to be fully collectible at December 31, 2009.





LIQUIDITY AND CAPITAL RESOURCES





The Trust’s short-term liquidity requirements are to cover general and administrative expense, operating expenses and fund completion of a frontage road adjacent to the Trust’s 121 acres in Wiggins, Mississippi.  The Trust expects to meet these short-term liquidity requirements from cash on hand, collections on its real
estate loan, borrowings collateralized by real estate owned and the sale of real estate owned.  The Trust expects a significant decrease in legal expenses in 2010 as a result of the decrease in legal proceedings.





Currently, the Trust has no substantial income, but continuing expenses.  As a result, the Trustees have suspended distributions at this time.





OFF-BALANCE SHEET ARRANGEMENTS





The Trust has no off-balance sheet arrangements.





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.











ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.





Not applicable to smaller reporting companies.


Page - 8 -


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.








PageReport of Independent Registered Public Accounting Firm .....................................
10Balance SheetAs of December 31, 2009 and 2008 .....................................................................
11Statements of OperationsYears Ended December 31, 2009 and 2008 ..........................................................
12Statements of Changes in Shareholders' EquityYears Ended December 31, 2009 and 2008 ..........................................................
13Statements of Cash FlowsYears Ended December 31, 2009 and 2008 ..........................................................
14Notes to Financial Statements ....................................................................................
15


Page - 9 -


REPORT OF INDEPENDENT REGISTERED


PUBLIC ACCOUNTING FIRM














To the Trustees of


USA Real Estate Investment Trust














We have audited the accompanying balance sheets of USA Real Estate Investment Trust (the “Trust”) as of December 31, 2009 and 2008 and the related statements of operations, changes in shareholders' equity, and cash flows for the years then ended.  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, 2009 and 2008 and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United
States of America.








Perry-Smith LLP

















Sacramento, California


February 8, 2010


Page - 10 -


USA REAL ESTATE INVESTMENT TRUST


Balance Sheets




















December 31,


December 31,2009


2008AssetsReal estate owned

$
5,971,336


$
--Real estate loans


600,000



6,302,980Interest receivable


40,800



7,134Cash


217,309



862,537Total assets

$
6,829,445


$
7,172,651Liabilities and Shareholders' EquityLiabilities:Accounts payable

$
122,791


$
83,636Note payable


300,000



--Total liabilities


422,791



83,636Shareholders' Equity:Shares of beneficial interest, par value $1 per share;
62,500 shares authorized; 18,007 shares outstanding

$
18,007


$
18,007Additional paid-in capital


26,355,335



26,355,335Distributions in excess of cumulative net income


( 19,966,688
)


(19,284,327
)Total shareholders' equity


6,406,654



7,089,015Total liabilities and shareholders' equity

$
6,829,445


$
7,172,651See notes to financial statements.


Page - 11 -


USA REAL ESTATE INVESTMENT TRUST


Statements of Operations


Years Ended December 31, 2009 and 2008























2009


2008Revenues:Interest income

$
78,449


$
272,068Expenses:General and administrative


409,757



293,705Impairment charge


--



2,015,364Operating expenses


206,995



--616,752



2,309,069Net loss

$
( 538,303
)

$
( 2,037,001
)Net loss per share

$
( 29.89
)

$
( 113.12
)Weighted-average number of shares


18,007



18,007Distributions per share

$
8.00


$
56.00See notes to financial statements.





Page - 12 -


USA REAL ESTATE INVESTMENT TRUST


Statements of Changes in Shareholders' Equity


Years Ended December 31, 2009 and 2008











Shares of Beneficial


Additional


Distributions


TotalInterest


Paid-in


in Excess of


Shareholders'Number


Amount


Capital


Net Income


EquityDecember 31, 2007


18,007



18,007



26,355,335



( 16,238,916
)


10,134,426Net loss














( 2,037,001
)


( 2,037,001
)Distributions














(1,008,410
)


(1,008,410
)December 31, 2008


18,007


$
18,007


$
26,355,335


$
( 19,284,327
)

$
7,089,015Net loss














( 538,303
)


( 538,303
)Distributions














( 144,058
)


( 144,058
)December 31, 2009


18,007


$
18,007


$
26,355,335


$
( 19,966,688
)

$
6,406,654See notes to financial statements.





Page - 13 -


USA REAL ESTATE INVESTMENT TRUST


Statements of Cash Flows


For the Years Ended December 31, 2009 and 2008











2009


2008CASH FLOWS FROM OPERATING ACTIVITIES:Net loss

$
( 538,303
)

$
( 2,037,001
)Adjustments to reconcile net loss to net cash (used in) provided by operating activities:Impairment charge


--



2,015,364Amortization of loan fees


--



(36,167
)Changes in operating assets and liabilities:(Increase) decrease in interest receivable


( 33,666
)


270,011Increase in accounts payable


39,155



83,636Net cash (used in) provided by operating activities


( 532,814
)


295,843CASH FLOWS FROM INVESTING ACTIVITIES:Investments in real estate loans


--



(535,654
)Collections on real estate loans


--



1,991,161Investments in real estate owned


( 268,356
)


--Net cash (used in) provided by investing activities


( 268,356
)


1,455,507CASH FLOWS FROM FINANCING ACTIVITIES:Distributions paid


( 144,058
)


(1,008,410
)Increase in notes payable


300,000



--Net cash provided by (used in) financing activities


155,942



(1,008,410
)NET (DECREASE) INCREASE IN CASH


( 645,228
)


742,940CASH AT BEGINNING OF PERIOD


862,537



119,597CASH AT END OF PERIOD

$
217,309


$
862,537During 2009, the Trust transferred $5,702,980 of real estate loans to real estate owned.See notes to financial statements.


Page - 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 OWNED:  Real estate owned consists solely of the one hundred and twenty-one acres of land the Trust acquired through foreclosure on January 6, 2009.  Real estate owned is originally recorded at fair value less estimated selling costs.  Fair value
was derived from a recent appraisal of the property which was reviewed by the Trust.  The current market for comparable properties in southern Mississippi is weak and there are no recent sales of comparable properties.  These conditions are not indicative of an active market.  Appraised values in such markets are potentially subject to significant fluctuations if and when sales of comparable properties occur.  The Trust monitors valuations in this market through discussions
with developers and others, plus its own assessments of the highest and best use for real estate owned.





REAL ESTATE LOANS:  The Trust carries its real estate loans at their unpaid principal balances net of unamortized loan fees unless they are impaired.  A loan is considered impaired when the Trust determines that it is probable that it will be unable to collect all
amounts due according to the contractual terms of the loan agreement.  The Trust measures impairment of a loan based upon the fair value of the collateral.  If the measurement of impairment for the loan is less than the recorded investment in the loan, the shortfall is charged off with a corresponding charge to the provision for loan losses.





CASH:  Cash consists of demand deposits with financial institutions.  Cash balances periodically exceeded the 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.





SEGMENT POLICY:The Trust operates in one business segment.  For 2009 and 2008, all material revenues have been derived from domestic operations.





REVENUE RECOGNITION:Interest income is accrued on the outstanding principal amounts of the real estate loans.  When the Trust determines that a loan is impaired, income recognition is suspended if full recovery of interest and principal appears uncertain.  Cash
receipts will be allocated to interest income except when the Trust believes the loan is not fully recoverable.  Loan fees are recognized as interest income over the lives of the related real estate loans using the straight-line method.  Sales of real estate are recognized at closing only when sufficient down payments have been obtained, possession and other attributes or ownership have been transferred to the buyer and the Trust has no significant continuing involvement.





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.


Page - 15 -





NET INCOME PER SHARE:  Net income per share is computed based on the weighted-average number of shares outstanding.





RECLASSIFICATIONS:  Certain items in the 2008 financial statements have been reclassified to conform to the 2009 presentation.





RECENTLY ADOPTED ACCOUNTING GUIDANCE:On September 30, 2009, the Trust adopted changes issued by the Financial Accounting Standards Board (FASB) to the authoritative hierarchy of GAAP. These changes establish the FASB Accounting Standards Codification TM (Codification)
as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with GAAP. Rules and interpretive releases of the Securities and Exchange Commission (SEC) under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. The FASB will no longer issue new standards in the form of Statements, FASB Staff Positions, or Emerging Issues Task Force Abstracts; instead the
FASB will issue Accounting Standards Updates. Accounting Standards Updates will not be authoritative in their own right as they will only serve to update the Codification. These changes and the Codification itself do not change GAAP. Other than the manner in which new accounting guidance is referenced, the adoption of these changes had no impact on the financial statements.





Fair Value Accounting. On June 30, 2009, the Trust adopted changes issued by the FASB to fair value disclosures of financial instruments. These changes require a publicly traded company to include disclosures about the fair value of its financial instruments whenever it issues summarized
financial information for interim reporting periods. Such disclosures include the fair value of all financial instruments, for which it is practicable to estimate that value, whether recognized or not recognized in the statement of financial position; the related carrying amount of these financial instruments; and the method(s) and significant assumptions used to estimate the fair value. Other than the required disclosures, the adoption of these changes had no impact on the financial statements.





On June 30, 2009, the Trust adopted changes issued by the FASB to fair value accounting. These changes provide additional guidance for estimating fair value when the volume and level of activity for an asset or liability have significantly decreased and includes guidance for identifying circumstances that indicate a transaction is not
orderly. This guidance is necessary to maintain the overall objective of fair value measurements, which is that fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. The adoption of these changes had no impact on the financial statements.





On June 30, 2009, the Trust adopted changes issued by the FASB to the recognition and presentation of other-than-temporary impairments. These changes amend existing other-than-temporary impairment guidance for debt securities to make the guidance more operational and to improve the presentation and disclosure of other-than-temporary
impairments on debt and equity securities. The adoption of these changes had no impact on the financial statements.





On January 1, 2009, the Trust adopted changes issued by the FASB to fair value accounting and reporting as it relates to nonfinancial assets and nonfinancial liabilities that are not recognized or disclosed at fair value in the financial statements on at least an annual basis. These changes define fair value, establish a framework for
measuring fair value in GAAP, and expand disclosures about fair value measurements. This guidance applies to other GAAP that require or permit fair value measurements and is to be applied prospectively with limited exceptions. The adoption of these changes, as it relates to nonfinancial assets and nonfinancial liabilities, had no impact on the financial statements. These provisions will be applied at such time a fair value measurement of a nonfinancial asset or nonfinancial liability is required, which may result
in a fair value that is materially different than would have been calculated prior to the adoption of these changes.


Page - 16 -





Other. On June 30, 2009, the Trust adopted changes issued by the FASB to accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued, otherwise known as “subsequent events.”
Specifically, these changes set forth the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements, and the disclosures that an entity should make about events or transactions that occurred after the balance sheet date.
The adoption of these changes had no impact on the financial statements because the Trust already followed a similar approach prior to the adoption of this new guidance.








2.  REAL ESTATE LOANS





As of December 31, 2009 the Trust had one $600,000 real estate loan collateralized by property in Sacramento, California and personally guaranteed by the principal members of the borrower.  The loan bears interest at 10% per annum, payable in monthly installments of interest only, with the $600,000 principal balance due in August
2010.





As of December 31, 2008 the Trust had two real estate loans totaling $6,302,980 which consisted of one $5,703,980 real estate loan and the $600,000 real estate loan described above.  The $5,703,980 real estate loan was impaired at December 31, 2008 and was subsequently foreclosed upon on January 6, 2009.





The fair value of the $600,000 real estate loan approximated its carrying value as of December 31, 2009 due to current market rates of real estate loans and its near term maturity.  The Trust has assessed the collectibility of the real estate loan and unpaid interest of $40,800, and believes them to be fully collectible at December
31, 2009.








3.  NOTE PAYABLE





The note payable is collateralized by a deed of trust on the one hundred and twenty-one acres in Wiggins, Mississippi.  The promissory note bears interest at 9% per annum with both the interest and principal due on January 31, 2012.  The aggregate fair value of the note approximates its carrying


value as of December 31, 2009.








4.  DISTRIBUTIONS





For federal income tax purposes:  100% of the distributions paid in 2009 were nontaxable.  51% of the distributions paid in 2008 were ordinary income and 49% were nontaxable.








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ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.





None.











ITEM 9A(T).  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 evaluation, they concluded that the Trust's disclosure controls and procedures were effective as of December 31, 2009.  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, 2009, 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, 2009.





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 independent 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 9B.  OTHER INFORMATION.





None.





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PART III.








ITEM 10.   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.





THE TRUSTEES





The Trustees of the Trust are as follows:





TrusteeName

Age

Since

OfficeGregory E. Crissman

58

1986

Trustee and Chairman, Chief ExecutiveOfficer and Chief Financial OfficerBenjamin A. Diaz

76

1988

Trustee and SecretaryJoyce A. Marks

75

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.


Page - 19 -





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.











ITEM 11.  EXECUTIVE COMPENSATION.





COMPENSATION OF OFFICERS





During 2009, 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
2009, none of the Trust's officers received compensation in excess of $66,650.








Total


Long-TermName and



Officer

Annual


and otherPrincipal Position

Year

Compensation

Compensation


CompensationGregory E. Crissman, Chairman

2009

$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 2009 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 2009, the Trustees had ten regular meetings.  All Trustees attended
all meetings.


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ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS.





As of February 16, 2010, no person known to the Trust owns beneficially more than 5% of its outstanding shares.  No Trustee beneficially owns any shares of the Trust except as set forth below:








Amount and Nature of

PercentName and Address of Beneficial Owner

Beneficial Ownership

of ClassGregory E. Crissman, Chairman, Chief Executive Officer,Chief Financial Officer, Principal Accounting Officer and Trustee

46

0.25551066 Vanderbilt WaySacramento, CA  95825All Trustees and officers as a group

46

0.2555








During 2009 no Forms 3, 4 or 5 were required to be filed.











ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE.





None.











ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES.





The following table represents aggregate fees billed to the Trust for 2009 and 2008 by Perry-Smith LLP, the Trust's principal accounting firm.








2009


2008Audit fees

$
37,000


$
42,000Audit related fees


--



--Tax fees


--



--All other fees


--



--$
37,000


$
42,000








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 audit related fees provided by the independent auditor during 2009 and 2008.


Page - 21 -


ITEM 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES





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


Page - 22 -


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:
February 16, 2010

USA Real Estate Investment TrustDateBy:
/s/  Gregory E. CrissmanGregory E. Crissman asChief Executive Officerand Principal 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:
February 16, 2010

USA Real Estate Investment TrustDateBy:
/s/  Gregory E. CrissmanGregory E. Crissman asChief Executive Officerand Principal Financial OfficerDated:
February 16, 2010
By:
/s/  Benjamin DiazDate

Benjamin Diaz,TrusteeDated:
February 16, 2010
By:
/s/ Joyce A. MarksJoyce A. MarksTrustee





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