SCHEDULE R14A INFORAMTION
PROXY PURSUANT TO SECTION 14 (a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-
12
UNITED MORTGAGE TRUST
(Name of Registrant as Specified in Its Charter)
___________________________________________________________________
(Name of person(s) Filing Proxy Statement, if other than
Registrant)
Payment of Filing Fee (Check the appropriate box)
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price of other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid preciously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date
of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration No.:
(3) Filing Party:
(4) Date Filed:
====================================================================
This ameneded form is being filed to delete referenced to the
"Audit Committee" carried in the original filing. It is also being
filed to correct the record date referenced at times as May 20, 2005
and May 27, 2005. The correct date is May 27, 2005. In addition,
Mr. Etter's age was misstated as 53 when he is now 55 year old.
====================================================================
UNITED MORTGAGE TRUST
5740 Prospect Avenue, Suite 1000
Dallas TX 75206
(214) 237-9305
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of United Mortgage Trust:
You are cordially invited to attend the Annual Meeting of Shareholders
of United Mortgage Trust, a Maryland real estate investment trust, to be
held on June 27, 2005, at 10:00 a.m., CDT, at 1702 N Collins Blvd.,
Suite 100, Richardson TX 78080, for the following purposes:
1) The election of five Trustees to serve until our Annual Meeting of
Shareholders to be held in 2006 or until such Trustees' successors are
elected and qualified;
2) Ratification of the selection of Whitley Penn as our independent
public accountants for the fiscal year ending December 31, 2006; and
3) To transact such other business as may properly come before the
annual meeting or at any adjournments thereof.
A proxy statement describing the matters to be considered at the annual
meeting is attached to this notice. Only holders of record of our shares
of beneficial interest (the "Shares") at the close of business on May 27,
2005 are entitled to notice of and to vote at the meeting or any
adjournment or adjournments thereof. A list of all shareholders as of
May 27, 2005 will be open for inspection at the Annual Meeting.
Our Board of Trustees desire to have a maximum representation of
shareholders at the Annual Meeting. We may incur substantial
additional proxy solicitation costs if a sufficient number of proxies
are not returned in advance of the Annual Meeting. In order that your
Shares may be represented at the Annual Meeting, the Trustees
respectfully request that you date, execute and promptly mail the
enclosed proxy in the accompanying postage-paid envelope. A
shareholder may revoke a proxy by notice in writing to our President at
any time prior to its use, by presentation of a later-dated proxy, or
by attending the Annual Meeting and voting in person.
By Order of our Board of Trustees
Cricket Griffin, Chairman
Dallas, Texas
May 26, 2005
YOUR VOTE IS IMPORTANT. PLEASE PROMPTLY MARK, DATE, SIGN AND RETURN
YOUR PROXY IN THE ENCLOSED ENVELOPE
OR FAX IT TO US AT (214) 237-9304.
<page>
UNITED MORTGAGE TRUST
5740 Prospect Avenue, Suite 1000
Dallas TX 75206
(214) 237-9305
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD June 27, 2005
To Our Shareholders:
This Proxy Statement is furnished in connection with the
solicitation of proxies by our Board of Trustees for use at our
Annual Meeting of Shareholders (the "Annual Meeting") to be held on
the 27th day of June 2005 at 10:00 a.m., Central Daylight Time, at
1702 N Collins, Suite 100, Richardson TX 78080, and any
adjournments thereof. This Proxy Statement, the accompanying proxy
ballot card and the Notice of Annual Meeting are first being
provided to shareholders on May 27, 2005.
GENERAL INFORMATION
Solicitation Of Proxies
Our Board of Trustees solicits the enclosed proxy. The costs of
this solicitation, which represents the amounts normally expended
for solicitations relating to an uncontested election of directors,
will be borne by us. Proxy solicitations will be made by mail, and
also may be made by personal interview, telephone, facsimile
transmission and telegram on our behalf by our Trustees and
officers. Banks, brokerage houses, nominees and other fiduciaries
will be requested to forward the proxy soliciting material to the
beneficial owners and to obtain authorization for the execution of
proxies. We will, upon request, reimburse such parties for their
reasonable expenses in forwarding proxy materials to their
beneficial owners. We do not expect to engage an outside firm to
solicit votes.
Voting Rights
Holders of our shares of beneficial interest (the 'Shares') at the
close of business on May 27, 2005 (the 'Record Date'), are entitled
to notice of, and to vote at, the Annual Meeting. On the Record
Date 7,031,285 were outstanding. Each Share outstanding on the
Record Date is entitled to one vote on each matter presented at the
Annual Meeting.
Quorum And Vote Required
The presence, in person or by proxy, of shareholders representing
50% or more of the issued and outstanding Shares entitled to vote
constitutes a quorum for the transaction of business at the Annual
Meeting. If a quorum is present, (i) a plurality of the votes cast
at the Annual Meeting is required for election as a Trustee, and
(ii) the affirmative vote of the majority of the Shares present, in
person or by proxy, at the Annual Meeting and entitled to vote is
required for all other matters. Cumulative voting in the election
of Trustees is not permitted.
Effect Of Abstention
Abstentions are considered shares present and entitled to vote, and
therefore have the same legal effect as a vote against all matters
presented at the Annual Meeting other than the election of Trustees.
An abstention with respect to the election of the Company's Trustees
will not be counted either in favor of or against the election of
the nominees.
Revocability Of Proxy
The giving of the enclosed proxy does not preclude the right to vote
in person should the shareholder giving the proxy so desire. A
proxy may be revoked at any time prior to its exercise by delivering
a written statement to our Secretary that the proxy is revoked, by
presenting a later-dated proxy executing the prior proxy, or by
attending the Annual Meeting and voting in person.
Voting Of Proxies
Shares represented by all properly executed proxies received in time
for the Annual Meeting will be voted in accordance with the choices
specified in the proxies. Unless contrary instructions are
indicated on the proxy, the shares will be voted FOR the election of
the nominees named in this proxy statement as Trustees and FOR the
ratification of the appointment of Whitley Penn as our auditors.
PROPOSAL 1 - ELECTION OF TRUSTEES
Our Declaration of Trust provides for not less than three or more
than nine Trustees, a majority of whom must be Independent Trustees,
except for a period of 60 days after the death, removal or
resignation of an Independent Trustee. We currently have five
Trustees, three of whom are Independent Trustees. A total of five
Trustees are scheduled to be elected at the 2005 annual meeting to
serve for a one-year term and until their successors are elected and
duly qualified. The nominees for members of our Board of Trustees
are set forth below. Unless authorization is withheld, the persons
named as proxies will vote FOR the nominees for Trustees listed
below unless otherwise specified by the shareholder. In the event
any nominee is unable or declines to serve as a Trustee at the time
of the Annual Meeting, the proxies will be voted for any nominee who
shall be designated by the present Board of Trustees to fill the
vacancy. In the event that additional persons are nominated for
election as Trustees, the proxy holders intend to vote all proxies
received by them for the nominees listed below and against any other
nominees. As of the date of this Proxy Statement, our Board of
Trustees is not aware of any nominee who is unable or will decline
to serve as Trustee. All of the nominees listed below already are
serving as our Trustees and constitute all of our current Trustees.
The election to our Board of Trustees of each of the five nominees
identified in this Proxy Statement will require a plurality of the
votes cast, in person or by proxy, at the Annual Meeting. OUR BOARD
OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE
FIVE NOMINEES IDENTIFIED BELOW.
Nominees to Board of Trustees
The names and ages of the persons nominated for election as our
Trustees and the year in which each became a Trustee are set forth
below:
<Table>
<Caption>
First Became
A Trustee of
Name and Age the Company Position
- -------------------------------------------------------------------------------
Christine Griffin, 52 1996 Trustee, Chairman of the Board,
President and Treasurer
Douglas R. Evans, 60 1996 Independent Trustee and Secretary
Richard D. O'Connor, Jr., 50 1996 Independent Trustee
Paul R. Guernsey, 55 1996 Independent Trustee
Michele A. Cadwell, 53 1997 Trustee
</Table>
Business Experience Of Nominees
The following is a summary of the business experience of the
nominees for election as our Trustees.
Christine 'Cricket' Griffin has been our President and a Trustee
since July 1996 and is a member of the Audit Committee. From June
1995 until July 1996, Ms. Griffin served as Chief Financial Officer
of SCMI, a Texas based mortgage-banking firm that is an Affiliate of
our Advisor and that sells Mortgages and provides mortgage-servicing
services to us. Her responsibilities at SCMI included day-to-day
bookkeeping through financial statement preparation, mortgage
warehouse lines administration, and investor communications and
reporting. Additionally, Ms. Griffin was responsible for
researching and implementing a note servicing system for SCMI and
its subservicer. Before joining SCMI, Ms. Griffin was Vice
President of Woodbine Petroleum, Inc., a publicly traded oil and gas
company for 10 years, during which time her responsibilities
included regulatory reporting, shareholder relations, and audit
supervision. Ms. Griffin is a 1978 graduate of George Mason
University, Virginia with a Bachelor of Arts degree, summa cum
laude, in Politics and Government.
Richard D. O'Connor, Jr. is one of our Independent Trustees. He has
been a Trustee since July 1996. In 2000 Mr. O'Connor became a
partner of O'Connor & Jones, L.L.P., a Dallas law firm. From 1998 to
2000 Mr. O'Connor was a shareholder of Stollenwerck, Moore &
Silverberg, P.C., a Dallas law firm. From 1993 to 1998, Mr. O'Connor
practiced law as a sole practitioner specializing in the areas of
real estate, business and contract law. Between 1985 and 1993, Mr.
O'Connor was a partner with the Dallas law firm of Scoggins,
O'Connor and Blanscet. Between 1989 and 1993, Mr. O'Connor was an
attorney in the real estate department of J.C. Penney Company. Mr.
O'Connor received a Bachelor of Business Administration degree from
the University of Texas at Austin in 1976, and a J.D. degree from
the University of Houston in 1978. Mr. O'Connor has been Board
Certified in Commercial Real Estate law by the Texas Board of Legal
Specialization since 1987.
Paul R. Guernsey has been one of our Independent Trustees since July
1996 and is a member of the Audit Committee. Since 1993 Mr.
Guernsey has been a Partner and Chief Financial Officer of The
Hartnett Group, Ltd. and related companies. These companies invest
primarily in the financial markets, income and non-income producing
real estate, real estate development, and residential mortgage
loans. From 1991 through 1993 Mr. Guernsey was Chief Financial
Officer of American Financial Network, Inc. a public company that
operated a computerized loan origination network, seven residential
mortgage brokerage companies, and a wholesale mortgage brokerage
operation. From 1987 through 1991, he was Chief Financial Officer
and then Vice President of Operations for Discovery Learning
Centers, Inc., a chain of childcare centers. From 1986 to 1987, he
worked with James Grant & Associates, a Dallas based merchant
banking firm. From 1973 through 1985, he served in the audit, tax
and management services departments of both a regional CPA firm, and
as a partner of a local firm in Michigan. Mr. Guernsey graduated
with a Bachelors Degree in Business (Accounting) from Ferris State
University, Michigan in 1973 and is a member of the American
Institute of CPA's.
Douglas R. Evans has been one of our Independent Trustees since July
1996. Since February 1995, Mr. Evans has been a Principal of
PetroCap, Inc., a firm that provides investment and merchant banking
services to a variety of clients in the oil and gas industry. From
1987 until February 1995, Mr. Evans was President and Chief
Executive Officer of Woodbine Petroleum, Inc., which was a publicly
traded oil and gas company until it was taken private through a
merger in September 1992. As part of his responsibilities at
Woodbine, Mr. Evans managed and negotiated the sale of the parent
company's REIT portfolio including mortgages and real property.
Mr. Evans has been a licensed real estate broker in Texas since 1979
and a licensed real estate agent since 1976. Mr. Evans received an
MBA from Southern Methodist University in 1972 and a Bachelors of
Arts degree from the University of North Carolina in 1967.
Michele A. Cadwell is one of our affiliated Trustees. She is a fee
attorney affiliated with Commonwealth Land Title of Dallas, Texas.
From 1998 to 1999, Ms. Cadwell was Manager ' Onshore Land Operations
with EEX Corp. Her primary responsibilities include drafting and
negotiating exploration and marketing agreements, analysis of
legislation and regulatory proposals, researching complex mineral
titles, organization and management of non-core property
divestitures, settlement of land owner disputes and advising and
testifying on matters before the Oklahoma Corporation Commission.
From 1980 until 1998 she was employed with Enserch Exploration, Inc.
as Senior Land Representative. Ms. Cadwell is a 1974 graduate of
the University of Oklahoma with a Bachelors of Arts Degree in
English and a Juris Doctor Degree in 1978. She is admitted to both
the Oklahoma and Texas bars.
Board Committees And Meetings
We have an Independent Trustees Committee that was organized to
consider the proposed merger between UMT and UMT Holdings, L.P.
We have no audit, nominating or compensation committees of our
Board of Trustees. Nominations for Trustees are determined by the
full Board since the Board is relatively small and is comprised of
the majority of Independent Trustees. The nominees for trustee were
selected by the full Board. The Board does not have a formal policy
with regard to the consideration of any trustee candidates
recommended by security holders. The entire Board will
review any person nominated by shareholders that has experience in
our industry and who possesses good qualities in terms of his or her
background including education, job history, memberships, ethical
standards and reputation. We will consider nominations for trustees
made by our shareholders. If you wish to submit names of
prospective nominees for consideration by the Board you should do so
in writing addressed to the President accompanied by sufficient
biographical and other information to enable the Board to make an
informed decision.
The Board of Trustees held three regular meetings in 2004. All
trustees were in attendance at all meetings.
We do not have a formal policy regarding attendance by our trustees
at our Annual Meetings; however, we encourage such attendance. Last
year, two trustees attended our Annual Meeting.
Compensation Of Trustees
Trustees who are not Independent Trustees do not receive any
compensation for acting as Trustees. Independent Trustees are
entitled to receive the greater of $1,000 per meeting or $4,000 per
year. For each year in which they serve, each Independent Trustee
shall also receive 5-year options to purchase 2,500 Shares at an
exercise price of $20 per Share (not to exceed 12,500 shares per
Trustee). During 2004, the Independent Trustees each received $3,000
and waived their rights to additional fees and each Independent
Trustee who served during all of 2004 also received 5-year stock
options to purchase 2,500 Shares at an exercise price of $20 per
Share.
In addition to the foregoing, the Board of Trustees voted to provide
additional compensation to the three Independent Trustees serving on
the Independent Committee to review the merger proposal received from
UMT Holdings, L.P. For 2004, $51,000 was awarded to each of the
Independent Trustees for such service.
Code of Ethics
Our Board of Trustees has adopted a Code of Conduct and Business
Ethics that is applicable to all trustees, officers and employees of
the company. You may obtain a copy of this document free of charge by
mailing a written request to: Investor Relations, United Mortgage
Trust, 5740 Prospect Avenue, Suite 1000, Dallas TX 75206, or by
sending an email request to: griffin@unitedmortgagetrust.com.
Compensation Committee Interlocks and Insider Participation
We have no standing compensation committee. None of our executive
officers has served on the board or on the compensation committee of
any other entity which had officers who served on our Board of
Trustees.
We do not have a formal policy for communications with our Board of
Trustees. However, shareholders may communicate with the Board of
Trustees by writing to us at:
United Mortgage Trust
Board of Trustees
5740 Prospect Avenue, Suite 1000, Dallas TX 75206
EXECUTIVE COMPENSATION AND OTHER MATTERS
We do not have any employees. Our sole executive officer, Christine
Griffin, is employed by and is compensated by our Advisor. We pay
certain fees to our Advisor as set forth below.
Management
Executive Officer
Christine Griffin is our President and is our only executive officer.
She is President of our Advisor, and in her capacities as President,
Ms. Griffin manages our day-to-day operations, subject to the
supervision our Board of Trustees. Information about Ms. Griffin's
background is set forth above under 'Proposal 1' Election of
Trustees - Nominees to Board of Trustees.
Our Advisor
The Trustees have retained UMT Advisors, Inc., a Texas corporation
(the "Advisor") to manage the our day-to-day operations and to use
its best efforts to seek out and present us with, whether through its
own efforts or those of third parties retained by it, suitable and a
sufficient number of investment opportunities which are consistent
with our investment policies and objectives. The services of our
Advisor include managing our day-to-day operations, development of
investment guidelines, overseeing servicing, negotiating purchases of
loans and overseeing the acquisition or disposition of investments,
and managing our assets.
The directors and officers of our Advisor are set forth below. The
officers of our Advisor may also provide services to business not
affiliated with our Advisor or us. Our President is an employee of
the Advisor.
NAME AGE OFFICES HELD
- ----------------------------------------------------------------
Todd Etter 55 Chairman
Christine 'Cricket' Griffin 52 President
Timothy J. Kopacka 46 Vice President/Secretary
Melvin E. Horton, Jr. 60 Vice President - Marketing
Todd Etter has been Chairman of UMT Advisors, Inc. since its
formation in November 2000. He was President of Mortgage Trust
Advisors, Inc., our former Advisor since 1996. In 1992 Mr. Etter
formed and since that date has served as President of South Central
Mortgage, Inc., a Dallas, Texas-based mortgage banking firm. From
1980 through 1987 Mr. Etter served as a Principal of South Central
Securities, a NASD member firm. In 1982 he formed South Central
Financial Group, Inc., a Dallas, Texas based investment-banking firm
and continues to serve as its President. During the period 1980-1992
he sourced over $37 million in capital for cable television, real
estate and child care center investments. From 1974 through 1981, he
was Vice President of Crawford, Etter and Associates, a residential
development, marketing, finance and construction company. In total,
Crawford, Etter and Associates developed over 1,000 residential lots,
marketed over 800 single-family homes and constructed over 400 homes.
Mr. Etter received a Bachelors of Arts degree from Michigan State
University in 1972.
Christine 'Cricket' Griffin. Ms. Griffin has served as President of
UMT Advisors, Inc. since its inception. For Ms. Griffin's
biographical information, please see above under 'Trustees and
Officers.'
Timothy J. Kopacka has served as Vice-President of UMT Advisors, Inc.
since its formation in November 2000. Since 1996, Mr. Kopacka has
served as Vice President of Mortgage Trust Advisors, Inc., the
Company's former Advisor. Since 1984, he has been President of
Kopacka & Associates, Inc., dba Grosse Pointe Financial, a financial
advisory firm. From 1987 to 1990, he served as Vice President of
Marketing and Operations for Kemper Financial Services in their
retirement plans division. From 1980 to 1983, he was employed with
Deloitte, Haskins & Sells, an international accounting and consulting
firm. From 1983 through 1986, Mr. Kopacka was Chief Financial Officer
for Federal Tax Workshops, Inc., an educational and consulting firm
for CPA's. Mr. Kopacka, a Certified Public Accountant, received a
Bachelors of Arts degree in Accounting and Finance from Michigan
State University. He is a member of the Michigan Association of
CPA's, the Hawaii Association of Public Accountants and the American
Institute of CPA's.
Melvin E. Horton, Jr. has served as a Vice President of UMT Advisors,
Inc. since its inception. Since January 2000, Mr. Horton has been
President of AML Advisors, a firm engaged in providing consulting,
sales, and marketing advice to institutional and individual
investors. From January 1997 to January 2000 he was Senior Vice
President and Managing Director of the Private Client Group of
Southwest Securities, Inc. (NYSE). Mr. Horton managed The Horton
Company, a Registered Investment Advisor from January 1996 to January
1997. Between August 1982 and December 1988 and between May 1992 and
January 1996, he acted in sales and management positions for Salomon
Smith Barney and its predecessor firms including Shearson Lehman
Brothers and EF Hutton. He served as President of MBI Financial from
January 1989 to May 1992. Mr. Horton received a Bachelor's degree in
Business in Accounting and Finance in 1968 from Southern Methodist
University and was awarded an MBA from the Cox School at SMU in 1971.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Fees paid to the Advisor, a related party: On January 1, 2001, the
Company entered into an Advisory Agreement, which has been renewed
annually, with UMTA whereby the Advisor provides the Company with
day-to-day management and administrative services subject to the
supervision and review by the Trustees. In consideration for the
services, the Company paid the Advisors a trust administration fee
of $945,005 during 2004 The fee was calculated as 1/12th of 1/2 of
1% paid monthly of the first $50,000,000 of income producing assets
and 1/12th of 1% of income producing assets in excess of
$50,000,000, paid monthly.
Rent paid and received between related parties: As of January 1,
2001 the Company's obligation under the terms of its lease agreement
with SCMI was assumed by its Advisor and no rent has been paid by
the Company since 2000. During 2004, rent expense paid by the
Advisor and included as part of the trust administration fee was
$22,000.
Loan servicing fees paid to an affiliate: Under the terms of a
Mortgage Servicing Agreement with PSC, the Company incurred loan
servicing fees of $109,245 during 2004. The Company does not
normally retain the servicing rights to the loans it purchases,
however it is not prohibited from servicing its loans.
Purchasing Mortgage Investments from affiliates: The Company has
purchased residential mortgages and contracts for deed from SCMI. To
date, the aggregate amount is approximately $18,000,000. Below is a
table of interim mortgages purchased from affiliates and the line-
of-credit issued to an affiliate with outstanding balances of loans:
Affiliated Company During 2004
- ---------------------------------------
Capital Reserve Corp. $ 4,793,000
Ready America Funding $25,011,000
REO Property Company $ 1,910,000
Ready Mortgage Corp. $ 2,338,000
South Central Mortgage $ 150,000
Line-of-credit (UDF) $28,722,000
UMTH Lending $11,399,000
Salaries and wages now paid by the Advisor: Payroll expenses,
although paid by the Advisor and construed to be part of the trust
administration fees in 2004, were approximately $273,000.
Line-of-Credit Receivable, Affiliate: On January 1, 2005, but
effective September 30, 2004, the Company entered into a First
Amended and Restated Secured Line of Credit Promissory Note and an
Amended and Restated Security Agreement (collectively, the
'Amendment') with UDF. The Amendment amended the existing revolving
line of credit facility ('Loan') to extend the term an additional
five years and to increase the line of credit to $30 million. The
purpose of the Loan is to finance UDF's investments in real estate
development projects. The Amendment has two components: the Long
Term Investment portion ('LTI') and the Bridge-Loan Investment
portion ('BLI').
The Loan is secured by the pledge of all of UDF's land development
loans and equity investments. Those UDF loans may be first lien
loans or subordinate loans. The LTI portion may not exceed
$12,000,000 and bears interest at an annualized percentage rate of
15% with interest payable monthly. The BLI portion may not exceed
$18,000,000 and is secured by the assignment of first lien loans
made by UDF to developers for the acquisition of pre-development
residential real estate. The BLI portion is additionally secured by
the pledge of all of UDF's land development loans and equity
investments. The BLI portion bears interest at an annualized
percentage rate of 13.5% with interest payable monthly.
The Loan is subordinate to UDF Senior Debt which consists of a loan
guaranty to Colonial Bank in the amount of approximately $8,750,000
and a $10,000,000 line of credit provided by Coppermark Bank.
UDF may use the Loan proceeds to finance either: (a) indebtedness
associated with any real estate development project upon which
Borrower has a first priority lien to the extent such indebtedness,
including indebtedness financed by funds advanced hereunder and
indebtedness financed by funds advanced from any other source,
including without limitation Senior Debt, exceeds 85% of the
appraised value of such real estate development project; or (b)
indebtedness associated with any real estate development project
upon which Borrower has a junior priority lien to the extent such
indebtedness, including indebtedness financed by funds advanced
hereunder and indebtedness financed by funds advanced from any other
source, including without limitation Senior Debt, exceeds 80% of 85%
of the appraised value of such real estate development project.
The Amendment represents a further increase in the Company's loans
to UDF and in the land development loans made or to be made by UDF
representing approximately 25% of the Company's entire portfolio.
The Company's Trustees have approved this change in the Company's
investment policy represented by the increase in the Loan based upon
the changed interest rate environment which has resulted in lower
yields from the Company's traditional mortgage investments as well
as experience to date with loans made to UDF.
The Company monitors the line-of-credit for collectibility on a
continuing basis based on the affiliate's payment history. No
valuation allowance or charge to earnings was recorded for the year
ended December 31, 2004. The outstanding balance was $28,721,639 at
December 31, 2004.
PROPOSAL 2 - RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
Our Board of Trustees has selected the accounting firm of Whitley
Penn to audit the our financial statements for, and otherwise act as
our independent certified public accountants with respect to the
year ended December 31, 2005. Our Board of Trustees' selection of
Whitley Penn for the current fiscal year is being presented to
shareholders for ratification at the Annual Meeting. To our
knowledge, neither Whitley Penn nor any of its partners has any
direct financial interest or any material indirect financial
interest in us, or has had any connection since our inception in the
capacity of promoter, underwriter, Trustee, officer or employee. A
representative of Whitley Penn will be present at the Annual Meeting
and will have the opportunity to answer questions and make a
statement if they desire to do so.
Audit Fees
Whitley Penn has served as our principal accountant and independent
registered public accounting firm since July 2002, when Jackson
Rhodes, P.C., our prior auditors, was merged into Whitley Penn.
The Board of Trustees engaged Whitley Penn to serve as our
independent auditors for the fiscal years ending December 31,
2004, 2003 and 2002.
The following table reflects fees billed by Whitley Penn for
services rendered to us in 2004 and 2003:
Nature of Services 2004 2003
- -----------------------------------------------
Audit fees (1) $61,000 $50,879
Tax fees (2) $5,026 $7,065
All other fees (3) None None
(1) Audit Fees: This category consists of fees for the audit of
our annual financial statements, review of the financial statements
including in our quarterly reports on Form 10-Q and services that
are normally provided by the independent auditors in connection with
statutory and regulatory filings engagements for those fiscal years.
(2) Tax Fees: This category consists of professional services
rendered by Whitley Penn, P.C. for tax compliance and tax
planning. The services under this category include tax return
preparation and technical advice.
(3) All Other Fees: This category consists of all other
permissible non-audit services rendered by our independent auditors.
We did not incur any fees in this category in 2004.
The Board of Trustees accepts proposals from potential audit firms
during the first quarter of each year and before the annual proxy
statement is prepared. They revies proposals and fees and makes its
recommendation to shareholders in the annual proxy statement.
The Trustees approve 100% of the fees charged by auditors
and tax preparers.
OUR BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
FOR THE APPOINTMENT OF WHITLEY PENN, P.C. AS INDEPENDENT AUDITORS
FOR FISCAL YEAR 2005
SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT
As of the Record Date, we had 7,744,917 Shares issued, 7,031,285
Shares outstanding, and 713,632 Shares in treasury from the
repurchase of shares through our Share Repurchase Plan. The
following table sets forth certain information regarding the
beneficial ownership of the Shares as of the Record Date by (i) each
person known by us to be the beneficial owner of more than 5% of our
outstanding Shares, (ii) each of our Trustees and executive
officers, and (iii) all of our Trustees and executive officers as a
group. Except as indicated in the footnotes to this table, the
persons named in the table, based on information provided by such
persons, have sole voting and sole investment power with respect to
all Shares shown as beneficially owned by them, subject to community
property laws where applicable.
Number of Percent
Name and Address Shares (1) of Class
- --------------------------------------------------------
Christine "Cricket" Griffin (2) 2,500(3) 0.04%
Richard D. O'Connor, Jr. (2) 12,500(3) 0.18%
Paul R. Guernsey (2) 12,500(3) 0.18%
Douglas R. Evans (2) 12,500(3) 0.18%
Michele A. Cadwell (2) -- (3) --
All Trustees and Executive
Officers as a Group (5 persons) 40,000(4) 0.57%
(1) For purposes of this table, Shares indicated as being owned
beneficially include Shares not presently outstanding but which are
subject to exercise within 60 days through options, warrants, rights
or conversion privileges. For the purpose of computing the
percentage of the outstanding Shares owned by a shareholder, Shares
subject to such exercise are deemed to be outstanding securities of
the class owned by that shareholder but are not deemed to be
outstanding for the purpose of computing the percentage by any other
person.
(2) A trustee and/or executive officer of the Company. The address
of all trustees and executive officers of the Company is c/o the
Company, 5740 Prospect, Suite 1000, Dallas TX 75206.
(3) Includes Shares issuable upon the exercise of stock options at
an exercise price of $20.00 per Share.
(4) Includes the Shares described in footnote (3) above.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act requires a registrant's
executive officers, directors and ten percent shareholders to file
reports of ownership and changes in ownership with the SEC and to
furnish copies of those reports to the registrant. Based solely on
our review of such forms, we believe that all of our executive
officers and trustees (we do not believe that we have any ten
percent shareholders) complied with the applicable filing
requirements.
OTHER MATTERS
As of the date of this Proxy Statement, our Board of Trustees knows
of no other matters, which may properly be, or are likely to be,
brought before the meeting. To date, we have received no
shareholder proposals. However, if any proper matters are brought
before the meeting, the persons named in the enclosed Proxy will vote
them as our Board of Trustees may recommend.
At the Annual Meeting of Shareholders, in addition to the matters
described above, there will be an address by our President and a
general discussion period during which shareholders will have an
opportunity to ask questions about our business and operations.
Proposals for 2006 Annual Meeting
If a shareholder desires to submit a proposal for consideration at
the next Annual Shareholders Meeting and would like to have the
proposal submitted on our proxy statement and form of proxy, such
proposal must be received by us no later than 120 days before mailing
of the Proxy Statement for the next Annual Shareholders meeting,
whichever is later. We anticipate that we will hold our next Annual
Shareholder Meeting in June 2006.
Annual Report and Form 10-K
All Shareholders of record on the Record Date have been sent a copy
of our 2004 Annual Report to Shareholders contained herewith, which
contains our audited financial statements for the years ended
December 31, 2004, 2003 and 2002.
A copy of our annual report on Form 10-K for the fiscal year ended
December 31, 2004 that was filed with the Securities and Exchange
Commission (the 'SEC') may be obtained without charge (except for
exhibits to that Form 10-K, which will be furnished upon payment to
us of reasonable expenses in furnishing those exhibits). To obtain
a copy of that Form 10-K or any of those exhibits, please send a
written request to Christine Griffin, our President, at our offices
located at 5740 Prospect, Suite 1000, Dallas TX 75206 or from the
SEC's website located at www.sec.gov.
By Order of our Board of Trustees
Cricket Griffin, Chairman
Dallas, Texas
May 26, 2005