10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)
ý	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 2011
Or
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 001-07172

BRT REALTY TRUST
(Exact name of registrant as specified in its charter)

Massachusetts (State or other jurisdiction of incorporation or organization)	13-2755856 (I.R.S. employer identification no.)
60 Cutter Mill Road, Great Neck, New York (Address of principal executive offices)	11021 (Zip Code)

516-466-3100
Registrant's telephone number, including area code

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

Title of each class	Name of each exchange on which registered
Shares of Beneficial Interest, $3.00 Par Value	New York Stock Exchange

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

NONE
(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. Yes o No ý

         Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes o No ý

         Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

         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). Yes ý No o

         Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Section 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 10-K o

         Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated filer ý Non-accelerated filer o Smaller reporting company o

         Indicate by check mark whether registrant is a shell company (as defined in Exchange Act Rule 12b-2). Yes o No ý

         The aggregate market value of voting and non-voting common equity held by non-affiliates of the registrant was approximately $53.8 million based on the last sale price of the common equity on March 31, 2011, which is the last business day of the registrant's most recently completed second quarter.

         As of November 30, 2011, the registrant had 13,940,523 Shares of Beneficial Interest outstanding, excluding treasury shares.

DOCUMENTS INCORPORATED BY REFERENCE

         Portions of the proxy statement for the annual meeting of shareholders of BRT Realty Trust to be filed not later than January 28, 2012 are incorporated by reference into Part III of this Form 10-K.

TABLE OF CONTENTS

Form 10-K

Item No.			Page(s)
PART I			2
	1.	Business	2
	1A.	Risk Factors	15
	1B.	Unresolved Staff Comments	21
	2.	Properties	23
	3.	Legal Proceedings	23
	4.	Removed and Reserved	23
PART II			24
	5.	Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	24
	6.	Selected Financial Data	26
	7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	27
	7A.	Quantitative and Qualitative Disclosures About Market Risk	36
	8.	Financial Statements and Supplementary Data	36
	9.	Changes In and Disagreements With Accountants on Accounting and Financial Disclosure	36
	9A.	Controls and Procedures	36
	9B.	Other Information	37
PART III			38
	10.	Directors and Executive Officers of the Registrant	38
	11.	Executive Compensation	38
	12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	38
	13.	Certain Relationships and Related Transactions, and Director Independence	38
	14.	Principal Accountant Fees and Services	39
PART IV			39
	15.	Exhibits and Financial Statement Schedules	39
Signatures			42

i

Forward-Looking Statements

        This Annual Report on Form 10-K, together with other statements and information publicly disseminated by us, contains certain forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and include this statement for purposes of complying with these safe harbor provisions. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends concerning matters that are not historical facts. Forward looking statements are generally identifiable by use of words such as "may," "will," "will likely result," "shall," "should," "could," "believe," "expect," "intend," "anticipate," "estimate," "project" or similar expressions or variations thereof.

        Forward-looking statements contained in this Annual Report on Form 10-K are based on our beliefs, assumptions and expectations of our future performance taking into account all information currently available to us. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to us or within our control, and which could materially affect actual results, performance or achievements. Factors which may cause actual results to vary from our forward-looking statements include, but are not limited to:

•

factors described in this Annual Report on Form 10-K, including those set forth under the captions "Risk Factors" and "Business";

•

availability of mortgage origination opportunities acceptable to us;

•

national and local economic and business conditions;

•

general and local commercial real estate property conditions;

•

defaults by borrowers in paying debt service on outstanding loans;

•

limitation of credit by institutional lenders;

•

impairment in the value of real estate property we own and real estate property securing our loans;

•

changes in Federal government policies;

•

changes in Federal, state and local governmental laws and regulations;

•

increased competition from entities engaged in mortgage lending;

•

changes in interest rates; and

•

the availability of and costs associated with sources of liquidity.

        We caution you not to place undue reliance on forward-looking statements, which speak only as of the date of this Annual Report on Form 10-K. Except to the extent required by applicable law or regulation, we undertake no obligation to update these forward-looking statements to reflect events or circumstances after the date of the filing of this Annual Report on Form 10-K or to reflect the occurrence of unanticipated events.

1

PART I

Item l.    Business.

General

        Our primary business is to originate and hold for investment senior mortgage loans secured by commercial and multi-family real estate property in the United States. This includes originating loans to persons purchasing their own or third party mortgage debt, at a discount to the principal amount thereof. The loans we originate generally have relatively high yields and are short-term or bridge loans with a duration ranging from six months to one year. We receive an origination fee for the loans we originate. We conduct our operations to qualify as a real estate investment trust, or REIT, for federal income tax purposes.

        The unprecedented disruptions in the credit markets and the economic recession from the latter part of 2007 through 2010 caused significant declines in the value of real estate property assets and loss of liquidity, both long and short term, from the capital markets. These conditions had an adverse effect on our business, requiring us, from the latter part of fiscal 2008 through a substantial portion of fiscal 2010, to refocus our business activities from originating loans to servicing our loan portfolio. As we resolved a substantial portion of the problems in our loan portfolio, we began, in the second half of fiscal 2010 as the economy improved, to shift our emphasis back to our primary lending business. As a result, in fiscal 2011, we originated $131.3 million in loans, generated $17.9 million in revenue (of which $10.3 million was from interest on loans and loan fee income) and earned net income attributable to common shareholders of $6.4 million, compared to, in fiscal 2010, $17.4 million of loan originations, $8.1 million of revenues (of which $3.9 million was from interest on loans and loan fee income) and a net loss attributable to common shareholders of $8 million. In fiscal 2011, we also:

•

entered into a revolving credit facility with availability of up to $25 million; and

•

restructured our junior subordinated notes by repaying $5.0 million of the principal amount outstanding and obtaining an interest rate reduction. We estimate that this will reduce the interest costs associated with these notes by approximately $588,000 and $1.72 million in fiscal 2012 and 2013, respectively.

        We also own and operate various real estate assets. Information regarding our loan origination and real estate segments is included in Note 14 to our Consolidated Financial Statements and is incorporated herein by this reference.

        We were organized as a business trust under the laws of the Commonwealth of Massachusetts in June 1972. Our address is 60 Cutter Mill Road, Suite 303, Great Neck, New York 11021, telephone number 516-466-3100. Our website can be accessed at www.brtrealty.com, where copies of our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on 8-K and other filings with the Securities and Exchange Commission ("SEC") can be obtained free of charge. These SEC filings are added to the website as soon as reasonably practicable.

2

Our Loan Portfolio

        The following summarizes certain characteristics of our loan portfolio as of the dates indicated:

	September 30,
(Dollars in Thousands)	2011	2010
Number of senior loans outstanding	13	12
Principal amount of loans earning interest	$67,266	$17,263
Principal amount of purchase money mortgage loans(1)	—	$5,340
Principal amount of non-interest earning loans	—	$35,143
Real estate loan held for sale(2)	$8,446	—
Percent of loans secured by New York area properties	71%	70%
Weighted average contractual interest rate	11.5%	9.5%
Percentage of loan portfolio not earning interest	—	61%
Weighted average term to maturity(3)	4.75 months	4.5 months

(1)

We provided such loans to facilitate the sale of real estate properties acquired in foreclosure proceedings.

(2)

This loan, net of deferred fees, represented a 50% interest in a loan with a principal balance of approximately $17 million. In October 2011, pursuant to a Federal Bankruptcy Court approved joint plan of reorganization, we and our loan participant sold our rights to the loan for net proceeds of approximately $23.5 million. At the same time, we provided $15 million of financing in connection with the sale, which financing was repaid in December 2011.

(3)

Without giving effect to extension options.

        In fiscal 2011, we originated $131.3 million of new loans and an aggregate of $66.1 million loans were repaid. We also sold $46.1 million in loans. Interest on our loans is payable to us monthly. Our loans frequently require that our borrowers pay us monthly escrow amounts that are adequate to pay, when due, real estate tax installments on the properties securing our loans. We may also require and hold funds in escrow for the payment of casualty insurance premiums. At September 30, 2011, our three largest loans outstanding of approximately $22.8 million (which was repaid in November 2011), $11.9 million and $9.5 million represented approximately 11.9%, 6.2% and 5.0%, respectively, of our total assets. There were no other loans in our portfolio that, at such date, represented more than 4.5% of our total assets.

        With respect to certain loans originated by us, the borrower funds an interest reserve out of the loan proceeds, from which all or a portion of the interest payments due to us are made for a specified period of time. It is our policy to lend at a floating rate of interest based on a spread over the prime rate, with a stated minimum interest rate, though we originate fixed rate loans as circumstances dictate. At September 30, 2011, approximately 82% of the principal amount of our outstanding loans had a floating rate of interest and the balance were fixed rate mortgages. At September 30, 2010, approximately 43% of the principal amount of our outstanding loans had a floating rate of interest and 57% were fixed rate mortgages. There was a higher percentage of fixed rate loans at September 30, 2010 because in fiscal 2009 we provided senior purchase money mortgages with a fixed rate of interest to facilitate the sale of properties acquired by us in foreclosure and, in certain loan work-out situations in fiscal 2009 and 2010, we converted existing floating interest rate loans to fixed rate loans to reduce the risk of borrower defaults.

3

        The following table sets forth information regarding mortgage loans outstanding at September 30, 2011, all of which are earning interest (excluding loan held for sale):

(Dollars in thousands)	NUMBER OF LOANS		EARNING INTEREST		PERCENTAGE
Multi-family residential		7	$	26,300		39.2	%
Office		2		24,975		37.1	%
Industrial		1		11,874		17.6	%
Retail		2		4,117		6.1	%
Total		12	$	67,266		100	%

Loan Default

        In the event of a default by a borrower on a loan, we will, in substantially all cases, foreclose on the loan or other collateral held by us and may seek to protect our investment by, among other things, enforcing our rights against any guarantor(s) of such loan or through negotiations with the borrower or other interested parties. Once a loan becomes non-performing, we generally do not receive interest payments, thereby reducing our revenues, cash flow, net income and taxable income. Foreclosure proceedings in certain jurisdictions can take considerable time, and may extend for as long as two years. In addition, if a borrower files for protection under the United States bankruptcy laws during the foreclosure process, the delays may be longer. In a foreclosure proceeding, we will typically seek to have a receiver appointed by the court or an independent third party property manager appointed with the borrower's consent in order to preserve the property's income stream and provide for the maintenance of the property. From time-to-time, we make cash advances to the borrower, a court appointed receiver or an independent third-party manager for emergency repair items and for real estate taxes. At the conclusion of the foreclosure or negotiated workout process, the rents collected by the receiver or the third party manager, as the case may be, less costs and expenses of operating the property and the receiver's or manager's fees are remitted to us.

Financing Arrangements

Joint Venture/Participation Arrangements

        In June 2011, our wholly-owned subsidiary entered into a joint venture with an affiliate of Torchlight Investors, LLC. The joint venture was organized to purchase loans we originated and through September 30, 2011, the venture had purchased $20.2 million of such loans. As of September 30, 2011, the joint venture held $15.4 million in principal amount of such loans, of which $3.1 million or 20% constituted our interest in the venture. In November 2011, the parties to the joint venture terminated our obligation to sell loans to this venture.

        In December 2011, we entered into an arrangement with 512 Lending, LLC pursuant to which each of us, with specified exceptions, must present to the other the opportunity (but not the obligation) to participate in loans such party originates. The arrangement expires in December 2014, subject to earlier termination by either party on not less than 60 days' notice for any reason. It is generally anticipated that:

•

512 Lending will fund between 50% to 80% of the principal amount of loans we originate and in which they elect to participate and we will fund up to 20% of the principal amount of loans they originate and in which we elect to participate.

•

The originating lender will be entitled to retain an annual servicing fee of 0.5% of the principal amount of performing loans and 1.0% of the principal amount of non-performing loans.

4

•

The originating lender takes the first half point of any origination fee and the balance of such fee is shared by the parties based on their percentage participation in the loan.

•

Each of the originating lender and the non-originating lender shall receive on an applicable loan, distributions of monies on a pro-rata basis based upon their applicable participation percentages until such time as the non-originating lender receives an internal rate of return of 10% per year compounded quarterly, at which time the non-originating lender shall receive further distributions based upon 75% of its participation percentage and the originating lender will receive the balance of sums to be distributed with respect to such loan.

Credit Facility

        A subsidiary of ours is able to borrow funds to originate loans and for its general corporate purposes through a senior secured revolving credit facility with Capital One, National Association. The maximum amount that may be borrowed is the lesser of $25 million and the borrowing base. The borrowing base is generally equal to 40% to 65% (depending on, among other things, the type of property secured by the eligible mortgage receivables pledged to the lender and the operating income of the related property) of such receivables. Interest accrues on the outstanding balance at the greater of (i) 4% plus LIBOR and (ii) 5.50%. The facility matures in June 2014 and, subject to the satisfaction of specified conditions, the outstanding balance may be converted at our option into an 18 month term loan. We paid, and in each of June 2012 and 2013 will pay, an $82,500 fee to maintain this facility. We have guaranteed our subsidiary's obligations under this facility and at November 30, 2011, no amount was outstanding thereunder.

Our Real Estate Assets

        At September 30, 2011, we owned real estate properties having a book value of $59.3 million. These properties primarily represent assemblage sites and additional properties located in downtown Newark, NJ (vacant land, vacant buildings, retail, office and parking) owned by a consolidated joint venture in which we have a 50.1% interest. See "—Newark Joint Venture."

        Generally, our policy is to sell properties we acquire in foreclosure proceedings after completing necessary repairs and maintenance and engaging in leasing activities, if required. We may retain a property if we determine that holding it will result in a substantial increase in its market value. We may provide senior purchase money mortgage loans at competitive fixed interest rates, if necessary, in order to consummate a sale which we deem to be beneficial to us. In fiscal 2011 and 2010, we did not provide any senior purchase money mortgage financing. In fiscal 2009 and early fiscal 2012 we provided $17.8 million and $15 million of such financing, respectively.

        Although we experienced a significant increase in our origination activity in fiscal 2011, the recovery in the economy and commercial real estate activity has not resulted in our origination levels approaching the levels we experienced in fiscal 2007 and 2008. This has resulted in a significant increase in our cash availability to approximately $80.5 million at December 5, 2011. Accordingly, we are considering using a portion of our available cash to acquire, with joint venture partners, multi-family residential properties located throughout the United States or other real estate assets in the New York metropolitan area. We believe this activity will provide stable and acceptable yields. We have not acquired any such properties to date and there is no assurance that any such acquisition will positively affect our operations.

5

Newark Joint Venture

Background

        Two of our wholly-owned subsidiaries are members of a joint venture (which we refer to as the Newark Joint Venture) with two members that are not affiliated with us. The Newark Joint Venture owns two assemblage sites (i.e., Market Street and Teachers Village) and additional properties located in downtown Newark, NJ. The assemblage sites are surrounded by a variety of governmental, educational, cultural and entertainment institutions and facilities. In close proximity to both assemblage sites is Rutgers University, the New Jersey Institute of Technology, University of Medicine and Dentistry of New Jersey, Essex County College, Seton Hall Law School, the New Jersey Performing Arts Center, the Prudential Arena (home of the National Hockey League New Jersey Devils and temporary home of the National Basketball Association New Jersey Nets), the Essex County Court Complex, Newark's City Hall and a Federal Courthouse. Both assemblage sites are within walking distance of Newark Penn Station, which provides access to Amtrak and New Jersey Transit trains and are accessible to local bus routes. The assemblage sites are served by various highways, including the Garden State Parkway, Interstate-95, Interstate-78 and Interstate-280.

        The Newark Joint Venture intends to redevelop all or a portion of the sites, particularly the assemblage sites, with personnel hired by the Newark Joint Venture or with development partners or sell some of its sites to developers or end users. The assets, liabilities and results of operations of the Newark Joint Venture are consolidated with our financial statements. Accordingly, the assets of the Newark Joint Venture are included in our real estate properties, and our two loans aggregating $27 million to the Newark Joint Venture (which are secured by substantially all of the real estate assets of the Newark Joint Venture), are eliminated in consolidation and are not included in our outstanding loans. The properties owned by the Newark Joint Venture have adequate insurance coverage for their current use.

        Immediately prior to the formation of the Newark Joint Venture, we held loans aggregating approximately $38 million, secured by substantially all of the properties conveyed to the Newark Joint Venture by our borrowers. We entered into loan work-out negotiations with our borrowers and, as a result of such negotiations, entered into the Newark Joint Venture. In connection with the work-out of our loans and the formation of the Newark Joint Venture, our loans were refinanced with a mortgage loan of $27 million (which we currently, as described below, hold as two separate mortgage loans), with the balance of our loans converted into a $6.9 million preferred capital account interest and a 50.1% membership interest in the Newark Joint Venture, providing us with a separate capital account of $3.9 million. The other members caused all the properties secured by our loans, and additional properties (unencumbered by our loans) and contract rights to acquire additional properties, all located in downtown Newark, NJ, to be contributed to the Newark Joint Venture for which the other members received a 49.9% membership interest in the Newark Joint Venture (with a separate capital account of $3.9 million). Our loans are the senior mortgage loans with respect to a majority of the properties owned by the Newark Joint Venture.

        In connection with an $8.6 million financing facility (of which $4.0 million is outstanding) provided by an institutional lender with respect to the Teachers Village project, our $27 million mortgage loan was bi-furcated into a $7.5 million loan secured by most of the Teachers Village properties and a $19.5 million loan secured by substantially all of the other properties owned by the Newark Joint Venture. The $7.5 million loan matured in September 2011 and is in the process of being extended until March 2012. The $19.5 million loan matures on June 3, 2014, with a two-year extension option. These loans provide for an interest rate of 11% per annum, of which 6% is paid currently and 5% accrues and is to be paid at maturity. See "—Information and Activities Relating to Assemblage Sites" for a summary of the material terms of the financing provided by an institutional lender.

6

Current Property Information

        The following table sets forth, as of September 30, 2011, information regarding the properties owned in fee by the Newark Joint Venture:

ASSEMBLAGE OR PROPERTY	NUMBER OF PROPERTIES			TYPE OF PROPERTY	RENTABLE SQUARE FEET(1)			ANNUAL REAL ESTATE TAXES		NUMBER OF TENANTS			PERCENT LEASED			PRINCIPAL TENANTS
Market Street		13	(2)	Office and retail		303,406	(2)	$	404,784		19	(3)		47	%	None
Teachers Village		10	(4)	Retail, office and parking(5)		227,571		$	420,762		4			34	%	(6)
Beaver Street Property		1		Retail		8,160		$	11,933		1			25	%	None
Lincoln Park Property		2		Retail, office and parking		97,493		$	101,955		3			83	%	(7)

(1)

Rentable square feet includes 418,818 square feet of retail and office space and 217,812 square feet of land used for parking.

(2)

Two of the Market Street properties are subject to third party mortgages. One mortgage, which is secured by a property which contains approximately 11% of the rentable square feet of this assemblage, has an outstanding principal balance of approximately $900,000, provides for interest only payments of 7% per annum and matures in January 2015. The other mortgage is secured by a property which contains approximately 3% of the rentable square feet of this assemblage, has an outstanding principal balance of approximately $1.2 million, provides for interest only payments of 7% per annum and matures in April 2012.

(3)

Leases representing 93% of the leased space of the Market Street assemblage are month-to-month or have cancellation, relocation or demolition provisions. Many of these leases are at below market rentals.

(4)

One of the properties at the Teachers Village assemblage is subject to two third party mortgages. These mortgages are secured by a property which contains 53,781 square feet of rentable space (including 6,217 square feet of basement space) and is leased to a charter school and two retail tenants. Further, such mortgages have an outstanding principal balance aggregating approximately $6.3 million, provide for an interest rate of 6% per annum rate, are being amortized over the term of the charter school lease and mature in 2030. A third mortgage is secured by the balance of the properties at this assemblage, has an outstanding principal balance of $4.0 million (which may increase up to $8.6 million), provides for an interest rate of 17% per annum and matures in March 2012.

(5)

The Newark Joint Venture is in the process of attempting to redevelop the Teachers Village, with charter schools and residences for teachers and ground floor retail space. As part of its redevelopment plan, the Newark Joint Venture leased 35,848 rentable square feet of space at this assemblage site to a charter school pursuant to a 20 year lease. The lease commenced on October 1, 2009. The charter school is currently in operation. See "—Information and Activities Relating to Assemblage Sites."

(6)

Friends of Team Academy Charter School.

(7)

The two principal tenants are LA Parking Corp., the manager of an approximately 38,000 square foot parking lot and Newark Teachers' Union which occupies a parking lot of approximately 41,000 square feet.

7

        The following table sets forth as of September 30, 2011, a schedule of the annual lease expirations of the Newark Joint Venture's real estate assets and the contributions to 2012 contractual rental income provided by such leases (assumes that none of the tenants exercise renewal or cancellation options, if any):

LEASE EXPIRATION	NUMBER OF LEASES EXPIRING(1)		SQUARE FOOTAGE OF LEASES EXPIRING		PERCENTAGE OF TOTAL LEASED SQUARE FEET			PROJECTED 2012 RENTAL INCOME(2)		PROJECTED % OF 2012 RENTAL INCOME(2)
Month-to-month		9		170,622		56	%	$	169,188		10	%
2012		6		17,182		6	%		221,816		14	%
2013		3		21,435		7	%		106,752		7	%
2014		—		—		—			—		—
2015		1		5,260		2	%		62,400		4	%
2016		1		5,260		2	%		24,860		2	%
2017		5		45,970		15	%		344,748		21	%
2018		—		—		—			—		—
2019		1		1,460		—			31,800		2	%
2020		—		—		—			—		—
2021 and thereafter		1		35,848		12	%		666,928		40	%
TOTAL		27		303,037		100	%	$	1,628,492		100	%

(1)

With respect to the assemblage sites, there are nine leases which are month-to-month and 13 leases which contain cancellation, relocation or demolition provisions.

(2)

Assumes all month-to-month tenants remain in occupancy for the entire 2012 calendar year.

Information and Activities Relating to Assemblage Sites

        The Market Street assemblage is an approximately 68,000 square foot site, representing approximately 303,400 rentable square feet. The site is bounded by Market Street, Campbell Street, Washington Street and University Avenue in downtown Newark, New Jersey. Potential redevelopment opportunities with respect to this site include an office complex with a retail component, a medical office complex containing offices, research laboratories and other medical related services, a retail center, corporate headquarters, university offices, classrooms and/or dormitories, or a combination of one or more of these uses. The Newark Joint Venture may redevelop this site for its own account, but will only do so if it has entered into long-term lease transactions with credit worthy lessees and has obtained satisfactory assurances that it will obtain necessary construction financing. Alternatively, the Newark Joint Venture may enter into a joint venture with a development partner or sell all or portions of the site. Although the Newark Joint Venture has conducted discussions and responded to requests for bid proposals with various parties concerning the development of portions of the site, which have included build to suit construction for potential users on a sale/leaseback or long-term lease basis and the sale of portions of the property to end users and/or developers, the Newark Joint Venture has not entered into any understandings or agreements concerning the redevelopment of all or any portion of the site and there is no assurance that it will be able to conclude any such arrangement or obtain the financing necessary to proceed with any arrangement which it may conclude.

        The Teachers Village assemblage encompasses an area bounded by Branford Street to the north, Treat Place to the east, Hill Street to the south and Washington Street to the west, and is adjacent to Halsey Street. The Teachers Village site aggregates approximately 228,000 square feet, of which approximately 179,500 square feet is comprised of existing parking lots and vacant buildings to be demolished or rehabilitated and the balance is comprised of existing structures under lease. The project

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contemplates a mix of residential, educational and retail facilitates and will include both the renovation of an existing nine story structure and the construction of approximately six additional buildings. Two of the buildings are being designed for occupancy by three charter schools and the remaining buildings are being designed to provide approximately 200 residential rental units. It is contemplated that the ground floor level of the charter school buildings and the residential buildings will provide for approximately 65,000 square feet of retail space. The project can be constructed and financed in stages.

        The cost of the entire Teachers Village project was, in September 2011, estimated by the Newark Joint Venture to be approximately $150 million. The Newark Joint Venture is proceeding with the project on the assumption that it will develop the site for its account, although it may in the future elect to partner with a developer or developers for all or a portion of the project. If it proceeds with the development on its own, the Newark Joint Venture contemplates that the project will be financed by a combination of public (federal, state and local) and private sources. Potential public financing sources include, without limitation, New Market Tax Credits, Urban Transit Hub Tax Credits and Economic Recovery Growth Grants. Private financing would be provided by conventional construction financing, if available. An institutional lender has agreed to provide the Newark Joint Venture with up to $8.6 million in financing secured by a pledge of 100% of the equity interests of the borrowing entity and a subordinate mortgage encumbering the Teachers Village properties. The loan bears interest at the rate of 17% per annum and matures in March 2012, subject to the right to extend to March 2012 upon satisfaction of specified conditions. The loan proceeds can only be used for the project's "soft costs" (including, without limitation, the cost of architects, engineers, specified consultants, permits and legal and accounting fees). Through September 30, 2011, the Newark Joint Venture has drawn down $4.0 million of the committed amount. The balance of the funds may be drawn in two tranches upon satisfaction of specified conditions applicable to the particular tranche, including without limitation, conditions relating to the Newark Joint Venture having obtained governmental approvals with respect to specified financing and grant arrangements, guaranties as to rental payments from tenants or prospective tenants (or their affiliates) of the contemplated structures and the receipt of term sheets and/or commitments with respect to construction financing for the project. The Trust and its joint venture partners each have severally guaranteed up to 25% of any amount drawn down under this facility and the amount drawn down under this facility is subordinate to the Trust's mortgage of $7.5 million applicable to the Teachers Village properties.

        No assurance can be given that sufficient financing will be obtained to complete the Teachers Village project or any portion thereof, that our $7.5 million loan with respect to the Teachers Village project will be repaid or that the Teachers Village will be profitable for us. In addition, since it is contemplated that a substantial portion of the financing required for the project will be debt financing, the profit which the joint venture partners receives, if any, will only be received after completion of the construction and repayment of all the debt, which will be a significant period of time from the present.

Terms of the Newark Joint Venture Operating Agreement

        The following is a summary of the material provisions of the amended and restated limited liability company operating agreement of the Newark Joint Venture:

        Membership Interests.    We own 50.1% of the membership interests in the Newark Joint Venture, and the other members (collectively, the "Other Member") own 49.9% of the membership interests in the Newark Joint Venture.

        Manager.    An affiliate of the other members is the manager of the Newark Joint Venture and is responsible for the day to day management activities of the Newark Joint Venture, but our consent is required for all major decisions affecting the Newark Joint Venture and its properties. We may remove the manager upon six months advance written notice or immediately upon the occurrence of certain significant events.

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        Fees to the Manager.    Until such time as the current manager is no longer the manager of the Newark Joint Venture, the Newark Joint Venture shall pay to the current manager an asset management fee and a property management fee aggregating $890,000 per annum, payable monthly in advance.

        Mandatory Capital Calls.    Members are required to make pro rata capital contributions to the Newark Joint Venture for any projected budget shortfalls.

        Buy-Sell.    Commencing on December 3, 2013 or, under specified circumstances, December 3, 2015, either member group may provide the other member group with written notice setting forth the amount they will pay to purchase all of the assets of the Newark Joint Venture. The member group which receives such notice has the option to (i) sell their membership interests in the Newark Joint Venture to the other members for their pro rata portion of the asset purchase price set forth in the written notice, or (ii) purchase the other members' membership interests in the Newark Joint Venture for their pro rata portion of the asset purchase price set forth in the written notice. If the acquirer is the Other Member, then the Other Member is required to, among other things, pay in full our mortgage and our preferred equity interest at closing.

        Right of First Refusal and Tag-along Rights.    At any time, either member group may provide the other member group with written notice setting forth the sale price at which it desires to sell all or a portion of its membership interests. The member group which received such notice may purchase the offered membership interests at the price set forth in the notice. If they do not elect to purchase the membership interest in accordance with the terms of the notice, the offering members may secure another person to purchase its offered membership interests within 180 days. The group of members which received the sale notice may tag-along in a sale to such other person and sell their pro rata portion of the membership interests.

        Distributions.    The Newark Joint Venture may not distribute any cash flow to its members until our $27 million loan (which has been eliminated in consolidation) has been fully repaid, including accrued interest. Once it has been fully repaid, the cash flow of the Newark Joint Venture will generally be distributed as follows: (i) first, to each member pro rata in an amount equal to their unreturned additional capital contributions, (ii) second, to our members until we receive a 10% return on our preferred capital contributions, (iii) third, to our members until we receive an amount equal to our preferred capital contributions, and (iv) fourth, to each member pro rata until such members receive a 10% return on their additional capital contributions, (v) fifth, to the members pro rata an amount equal to their common capital contributions, and (vi) the remainder shall be distributed as follows: (a) 10% to the managing member, and (b) 90% pro rata to the other members pro rata.

Manager of the Newark Joint Venture

        The manager of the Newark Joint Venture is RBH Group LLC; its managing member and President is Ron Beit-Halachmy. Mr. Beit-Halachmy, 39 years of age, has over 17 years of experience in the real estate industry and has been involved for more than ten years in acquiring sites in Newark, New Jersey. He was the managing member of the entities which acquired all of the real property currently owned by the Newark Joint Venture. Mr. Beit-Halachmy earned a BA in Economics from the University of Wisconsin and a law degree from New York Law School.

Our Investment Strategy

        Our long-term objective is to provide our shareholders with returns over time, including capital appreciation and cash distributions, by originating loans secured by a diversified portfolio of commercial and multi-family real property. Inasmuch as we had, at December 31, 2010, approximately

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$70 million in net loss operating carry forwards, we do not anticipate paying cash dividends until we have fully used these loss carry forwards.

        Our loan originations in fiscal 2011, 2010 and 2009 were $131.3 million, $17.4 million and, $12.7 million, respectively. Our originations in fiscal 2011 were higher than in fiscal 2010 and 2009 due to increased demand for our short term bridge loans which we believe was due to a more favorable economic climate in the most recent fiscal year. In light of the economic uncertainty and the decline in our loan originations in the last six months of fiscal 2011 from the prior six months, no assurance can be given that we will be able to maintain in the future the levels of loan originations we achieved in fiscal 2011.

        We pursue lending opportunities with purchasers and prospective purchasers of commercial and multi-family real estate properties and property owners who require short-term financing for renovation or repositioning of a real estate asset. We also originate loans to persons purchasing their own mortgage debt or purchasing third party mortgage debt, in each case at a discount to the principal amount thereof. The purchase of third party mortgage debt is generally structured as a repurchase agreement pursuant to which we purchase the mortgage and our counterparty is obligated to repurchase such mortgage within a specified period.

        Our investment policy emphasizes the origination of short-term real estate loans secured by senior liens on real property. As of September 30, 2011, other than one mezzanine loan in principal amount of $2 million, our loan portfolio only consisted of first mortgage loans or pari passu participations in first mortgage loans. Our lending activities focus on operating properties such as multi-family residential properties, residential properties being converted to condominium ownership, office buildings, retail, shopping centers, mixed use buildings, hotels/motels, and industrial buildings.

        We also will, on a limited basis, provide senior loans secured by unimproved land, but generally require that the unimproved land collateralizing our loan has proper entitlements and that zoning is in place for the intended purpose. We also originate and hold for investment loans secured by improved commercial or multi-family residential property which is vacant, pending renovation or repositioning and sale or leasing of the property. Pursuant to, among other things, our arrangement with 512 Lending, we may sell senior, junior or pari passu participation in loans we originate and acquire senior, junior or pari passu participations in loans originated by others. We also invest in the securities of other REITs.

        From time-to-time we originate junior commercial loans, invest in loans as a junior participant or sell senior participations in loans we originate. When we invest in junior loans or hold junior participations, the collateral securing our loan is subordinate to the liens of senior loans or senior participations. It is possible that the amount which may be recovered by us in cases in which we hold a junior position may be less, or significantly less, than our total investment.

        We have historically solicited loans secured by real estate property located within the continental United States. We may expand our lending activities to include loans secured by properties located in Canada and Puerto Rico.

Our Origination Process and Underwriting Criteria

        We originate loans in a number of ways. We primarily rely on relationships developed by our officers and loan originators with real estate investors, commercial real estate brokers, mortgage brokers and bankers. We also advertise, use the internet and attend trade shows in order to develop relationships with potential borrowers and real estate brokers, mortgage brokers and bankers.

        When underwriting a loan, the primary focus of our analysis is the value of a property, which we evaluate by considering a number of factors, including location, current use and potential for alternative use, current and potential net operating income, if any, the local market for condominium

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conversion, if conversion to condominium ownership is contemplated, comparable sales prices, existing zoning regulations and intended use, if the loan is to be secured by undeveloped land, and local demographics. We also examine the experience of our potential borrower's principals in real estate ownership and management and, if applicable, real estate development.

        Loan approvals are based on a review of property information as well as other due diligence activities undertaken by us. Those activities may include a site visit to the property, an in-house property valuation, a review of the results of operations of the property (historical and projected, if any) or, in the case of an acquisition of the property by our prospective borrower, a review of projected results of operations for the property, and a review of the financial condition and a credit report and background check of the principals of the prospective borrower. We do not obtain independent property appraisals, but instead rely on our in-house activities described above. If management determines that an environmental assessment of the underlying property is necessary, then such an assessment is conducted by an experienced third-party service provider. Before a loan commitment is issued, the loan must be reviewed and approved by our loan committee. Loan approval occurs after the assent of not less than four of the seven members of our loan committee, all of whom are executive officers of ours. We generally obtain a non-refundable cash deposit for legal, travel, and other expenses from a prospective borrower prior to or at the time of issuing a loan commitment, and our loan commitments are generally issued subject to receipt by us of title documentation and title insurance, in a form satisfactory to us, for the underlying property. The approval of our board of trustees is required for each loan which exceeds $20,000,000 in principal amount, and the approval of our board of trustees is also required where loans by us to one borrower exceed $50,000,000, in the aggregate.

        We require either a personal guarantee or a "walk-away guarantee" from the principal or principals of the borrower, in substantially all of the loans originated by us. A "walk-away guarantee" generally provides that the full guarantee of the principal or principals of the borrower terminates if the borrower conveys title to the property to us within a negotiated period of time after a loan default if the payment of mortgage interest to us, real estate taxes and other operating expenses are current. The "walk-away guarantee" is intended to provide an incentive to the principals of a borrower, in a situation where our borrower has defaulted, to have the collateral deeded to us in lieu of foreclosure, thereby reducing the cost of foreclosure proceedings. By complying with the terms of the "walk-away guarantee," the principals of the borrower can avoid the risk of being personally responsible for any difference between the amount owed to us and the amount we recover in a foreclosure proceeding. If we make more than one loan to a borrower, we may require that all or some of the outstanding loans to that borrower be cross-collateralized. In our judgment, the "walk-away guarantees" we have secured upon the origination of certain loans have provided us with leverage in negotiating loan paydowns from "walk away guarantors" and assisted in expediting the foreclosure process.

Junior Subordinated Notes

        On March 15, 2011, we entered into certain arrangements with respect to our junior subordinated notes due 2036, pursuant to which we, among other things, redeemed $5,000,000 of the outstanding notes at 100% of their principal amount and reduced the interest rate thereon as set forth below:

Interest Period	Prior Interest Rate	New Interest Rate
March 15, 2011 through July 31, 2012	3.50%	3.00%
August 1, 2012 through April 29, 2016	8.37%	4.90%
April 30, 2016 through April 30, 2036	LIBOR + 2.95%	LIBOR + 2.00%

        As of September 30, 2011, $37.4 million in principal amount of these notes were outstanding. These notes are redeemable at any time at our option.

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        Pursuant to the governing agreements, at all times prior to August 1, 2012, we will be permitted to make distributions to our shareholders for taxable years after 2009 to the extent necessary to satisfy REIT requirements or pay capital gains, if any, provided such distributions are paid in the form of common shares to the maximum extent permissible under the IRS regulations in effect at the time of such distributions, with the balance payable in cash.

Competition

        With respect to our real estate lending activities, we compete, in the current economic environment, for first mortgage loans with other entities, including other mortgage REITs, specialty finance companies, public and private lending companies, investment funds and others. Many of our competitors possess greater financial and other resources than we possess. Mortgage lending has been historically competitive, but in the current economic environment it is difficult to determine our direct and indirect competitors or the extent of the competition.

        Competitive variables in our lending activities include market visibility, size of loans offered, rate, fees, term and underwriting standards. To the extent a competitor offers a lower rate, is willing to risk more capital in a particular transaction, and/or employs more liberal underwriting standards, our origination volume and profit margins would be adversely impacted. We compete by offering rapid response time in terms of approval and closing and by offering "no prepayment penalty" loans. In order to supplement our marketing activities, we engage in a national advertising program.

        With respect to the purchase or sale by us of real estate assets, we compete with any entity seeking to acquire or dispose of similar properties, including other REITs, banks, pension funds, hedge funds, real estate developers and private real estate investors. Competition is primarily dependent on price and the ability to secure financing. Other competitive factors which a potential competitor may take into account are location and physical condition of the property.

Our Structure

        We share facilities, personnel and other resources with several affiliated entities including, among others, Gould Investors L.P., a master limited partnership involved in the ownership and operation of a diversified portfolio of real estate, and One Liberty Properties, Inc., a publicly-traded equity REIT. Jeffrey A. Gould, our President and Chief Executive Officer, George Zweier, our Vice President and Chief Financial Officer, two other officers engaged in loan origination, underwriting and servicing activities, and four others engaged in underwriting and servicing activities devote substantially all of their business time to us, while our other personnel (including several officers) share their services on a part-time basis with us and other affiliated entities that share our executive offices. The allocation of expenses for the shared facilities, personnel and other resources is computed in accordance with a shared services agreement by and among us and the affiliated entities. The allocation is based on the estimated time devoted by executive, administrative and clerical personnel to the affairs of each entity that is a party to the Shared Services Agreement.

        In addition, we are party to an Advisory Agreement, between us and REIT Management Corp., our advisor. REIT Management is wholly owned by the chairman of our Board of Trustees and he and certain of our executive officers, including our President and Chief Executive Officer, receive compensation from REIT Management Corp. Pursuant to this agreement, REIT Management furnishes advisory and administrative services with respect to our business, including, without limitation, arranging and negotiating credit facilities, participating in our loan analysis and approvals, providing investment advice, providing assistance with building inspections and litigation strategy and support. In addition, in connection with non-performing loans, REIT Management, among other activities, engages in negotiations with borrowers, guarantors, and their advisors related to workouts, participates in

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strategic decisions relating to workouts and foreclosures and may interface with receivers, managing agents and court appointed trustees with respect to specific collateral securing our loans.

        Through December 31, 2011, for the services performed by REIT Management pursuant to the Advisory Agreement, it receives an asset management fee equal to 0.6% of our invested assets and an incentive fee from borrowers of 0.5% of the total commitment amount, payable upon funding a loan commitment, provided that we have received at least a loan commitment fee of 1% from the borrower in any such transaction and any loan commitment fee in excess of 1.5% of the total commitment amount is retained by us.

        The parties entered into an amendment to the Advisory Agreement effective as of January 1, 2012, pursuant to which (i) the stated termination date was extended until June 30, 2014, (ii) the minimum and maximum fees payable in a fiscal year to REIT Management were set at $750,000 and $4 million, respectively, subject to adjustment for any fiscal year of less than twelve months, and (iii) we are to pay REIT Management the following annual fees, which are to be paid on a quarterly basis:

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1.0% of the average principal amount of earning loans;

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0.35% of the average amount of the fair market value of non-earning loans;

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0.45% of the average book value of all real estate properties, excluding depreciation;

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0. 25% of the average amount of the fair market value of marketable securities;

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0.15% of the average amount of cash and cash equivalents; and

•

to the extent loans or real estate are held by joint ventures or other arrangements in which we have an interest, fees varying based on, among other things, the nature of the asset (i.e. real estate or loans), the nature of our involvement (i.e. active or passive) and the extent of our equity interests in such arrangement.

        We believe that the Shared Services Agreement and the Advisory Agreement allow us to benefit from access to, and from the services of, a group of senior executives with significant real estate knowledge and experience.

        We also engage affiliated entities in management activities with respect to some of the properties acquired by us in foreclosure proceedings and some of the properties owned by joint ventures in which we are an equity participant. These management activities include, among other things, rent billing and collection, property repair, maintenance and improvement, contractor negotiation, construction management and sales and leasing activities. In management's judgment, the fees paid by us to these affiliated entities are competitive with fees that would be charged for comparable services by unrelated entities.

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Item 1A.    Risk Factors.

Set forth below is a discussion of certain risks affecting our business. The categorization of risks set forth below is meant to help you better understand the risks facing our business and is not intended to limit your consideration of the possible effects of these risks to the listed categories. Any adverse effects arising from the realization of any of the risks discussed, including our financial condition and results of operation, may, and likely will, adversely affect many aspects of our business.

Risks Related to our Business

The continuing economic uncertainty may result in decreased loan originations adversely affecting our business.

        In the current uncertain economic environment, the demand for our bridge loans has fluctuated. As a result, we originated $88.8 million and $42.5 million in loans in the first and second half of fiscal 2011, respectively. Until there are sustained positive changes in the economy (including the credit and real estate markets) and an increased demand for bridge loans, our loan originations may be at a reduced level which would negatively affect our revenues, net income and cash flow.

Defaults on our loans may cause declines in revenues and net income.

        Continuing uncertainty in the credit markets and an uncertain economic environment may result in defaults by our borrowers in the future. Loan defaults result in a decrease in interest income and may require the establishment of, or an increase in, loan loss reserves. The decrease in interest income resulting from loan defaults may be for a prolonged period of time as we seek to recover, primarily through legal proceedings, the outstanding principal balance and accrued interest due on a defaulted loan, plus the legal costs incurred in pursuing our legal remedies. Legal proceedings, which may include foreclosure actions and bankruptcy proceedings, are expensive and time consuming. The decrease in interest income, and the costs involved in pursuing our legal remedies will reduce the amount of cash available to meet our expenses. In addition, the decrease in interest income, the costs incurred by us in a defaulted loan situation and increases in loan loss reserves will have an adverse impact on our net income, taxable income and cash flow.

Our loan origination activities may be limited by the funds available to us.

        At December 5, 2011, we had approximately $80.5 million of cash and cash equivalents available for originations and operations. If demand for our bridge loan increases significantly, as to which no assurance can be given, our ability to originate loans may be limited by the funds available to us. Further, our credit facility requires us to maintain certain financial ratios, including net worth, debt service coverage ratios, and limits our ability to incur debt. These factors may limit the amount of mortgage loans we can originate, which will limit our revenues and operating results.

We may incur loan loss provisions and impairment charges in fiscal 2012.

        We evaluate on a quarterly basis our loan and real estate portfolios for indicators of impairment. Loan loss provisions and impairment charges reflect management's judgment of the probability and severity of loan losses and the decline in the value of real estate property assets. The valuation process, which is inherently difficult, is particularly difficult during a recessionary period in which the availability of credit is limited and commercial real estate transactions have significantly decreased.

        Loan loss provisions and impairment charges may be required in the future as a result of factors beyond our control, including, among other things, the continuation or downward acceleration of the economic environment and changes in market conditions affecting the value of loan collateral and real

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property assets. If our loan loss provisions or impairment charges prove inadequate to cover actual losses, we could suffer additional losses.

        If we are required to take loan loss provisions or impairment charges in the future, our results of operations would be adversely impacted.

It is highly unlikely that we will declare any dividends in the next few years.

        In December 2008, our board of trustees suspended the payment of regular quarterly dividends and we have not declared or paid any dividends since fiscal 2010.

        In order to qualify as a REIT, we are required to distribute 90% of our taxable income. At December 31, 2010, we had a tax loss carry-forward of $70.5 million. Under current tax laws, we can offset our future taxable income against our tax loss carry-forward for twenty years or until the tax loss carry-forward has been fully used, whichever occurs first. As a result, we do not expect to pay a dividend in calendar 2012 and it is unlikely that we will be required to pay a dividend for many years thereafter in order to maintain our REIT status. The non-payment of cash dividends may negatively impact the price of our common shares.

The increased risk of loans secured by unimproved land may harm our results of operations.

        From time-to-time, we provide loans that are secured by unimproved land. Land loans are subject to a higher risk of default because such properties are not income producing properties. In addition, the market value of such properties is volatile. Although we only make loans on undeveloped land if entitlements and zoning is in place for the intended use, there is always the risk that entitlements and zoning may be changed or lapse. Consequently, in the event of a default and foreclosure, we may not be able to sell undeveloped land for an amount equal to our investment and we may lose a significant portion of our investment. In the event of our acquisition of undeveloped land in foreclosure proceedings, we may elect to hold the property until the market becomes more favorable. In such case during the holding period, which could be for a number of years, we will not receive any income from this property and we will be required to pay the costs of carrying the property, primarily real estate taxes and insurance, which could adversely affect our net income and shareholders' equity.

Risks Related to the Newark Joint Venture and Real Estate Operations.

The Newark Joint Venture may have an operating loss for the foreseeable future.

        Our real estate assets include the properties owned by the Newark Joint Venture, which properties had, at September 30, 2011, an aggregate book value of $48.1 million. At September 30, 2011, the Newark Joint Venture properties represented 81.2% and 25.1%, respectively, of our real property assets and total assets. We anticipate that the Newark Joint Venture will operate at a loss in fiscal 2012 and for several years thereafter. If the Newark Joint Venture operates at a loss, we and our Newark Joint Venture partners will be required to fund the losses by making additional capital contributions, on a pro rata basis. Although it is possible that the need to make additional contributions will be mitigated by the sale of some of the Newark Joint Venture properties or financing secured by the Newark Joint Venture for the operation and/or development of its properties, currently, there is no assurance that we will be able to sell any of such properties on satisfactory terms or that we will obtain the financing (other than the soft-cost financing of up to $8.6 million which is already committed) to fund development and construction activities. The operations of the Newark Joint Venture could have an adverse effect on our results of operations, financial condition and liquidity for several years.

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We have limited experience in developing and operating assemblage sites.

        The principal assets of our Newark Joint Venture are two assemblage sites and two additional properties located in downtown Newark, NJ. Since we have not previously engaged in the real estate development business, we are subject to risks that differ from those to which we have been subject to historically. Although the principal of the managing member of the Newark Joint Venture (who is formerly the principal of our borrowers) is knowledgeable with respect to the local real estate market and has experience in the development of gut rehabilitation properties, this experience may not necessarily be relevant to a particular redevelopment project. As a result, to redevelop the assemblage sites, the Newark Joint Venture will have to hire personnel knowledgeable in real estate development to assist in its development, become involved with a development partner, or sell some or all of the sites to developers or potential users. There can be no assurance that the Newark Joint Venture will be successful in hiring experienced personnel, finding a development partner with skills needed to develop and/or manage the redevelopment of the sites, or that we will be able to sell some or all of the properties to developers or potential users.

The success of our Newark Joint Venture depends, to a large extent, on the principal of the Newark Joint Venture's manager.

        The principal of the manager of the Newark Joint Venture was responsible for acquiring all the properties owned by the Newark Joint Venture. We believe that the principal's continued involvement is important to the success of the Newark Joint Venture. The diminution or loss of his services due to disability, death or for any other reasons could have a material adverse effect on the Newark Joint Venture's business, which would result in a material adverse effect on our business.

        The Newark Joint Venture carries key man life insurance on the principal of the manager of the Newark Joint Venture in the amount of $20 million. There can be no assurance that the proceeds from such life insurance would be sufficient to compensate the Newark Joint Venture for the loss of his services, and these policies do not provide any benefits if he becomes disabled or is otherwise unable to render services to the Newark Joint Venture.

Our Newark Joint Venture is subject to risks particular to real estate development activities.

        Our Newark Joint Venture is subject to the risks associated with development activities. These risks include:

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The inability to obtain the $150 million or more needed to fund the Teachers Village development project.

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The failure to obtain governmental and other approvals on a timely basis;

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Construction, financing and other costs of developing the properties owned by the Newark Joint Venture and in particular, Teachers Village, may not be obtained or if obtained may exceed original estimates, possibly making such activities unprofitable;

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Time required to complete the construction of Teachers Village or to lease up the completed project may be greater than originally anticipated, thereby adversely affecting our cash flow and liquidity;

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Occupancy rates and rents of a completed project may not be sufficient to make such project profitable; and

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Acquire all the properties needed to develop the project to its full potential.

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We may be unable to renew leases or relet space and are exposed to the risks of defaults by tenants.

        In fiscal 2011, approximately 62.1% of our rental income was generated from properties at the Newark Joint Venture. The leases at the properties owned by the Newark Joint Venture are generally short-term in nature. If our tenants decide not to renew their leases upon their expiration, we may not be able to relet the space. Even if our tenants do renew or we are able to relet the space, the terms of renewal or reletting may be less favorable than current lease terms. If we are unable to promptly renew the leases or relet the space, or if the rental rates upon such renewal or reletting are significantly lower than current rates, our income would be adversely affected.

        Friends of Team Academy, a charter school located at the Teacher's Village assemblage, Petco Animal Supplies, Inc. and Calidad Furniture Corp. VII accounted for approximately 23%, 14% and 14%, respectively, of our rental income in fiscal 2011. The default, financial distress or bankruptcy of any of these tenants could cause interruptions in the receipt of, or the loss of, a significant amount of rental revenue and we could incur substantial costs in enforcing our rights as landlord. Our rental income could be adversely affected if these tenants become unable to meet their obligations to us.

Unfavorable changes in market and economic conditions could adversely affect occupancy, rental rates, operating expenses, and the overall market value of real estate assets we may acquire.

        Conditions in markets in which we may acquire multi-family real estate assets may significantly affect occupancy, rental rates and the operating performance of such assets. The risks that may adversely affect conditions in those markets include the following:

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industry slowdowns, plant closings and other factors that adversely affect the local economy;

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an oversupply of, or a reduced demand for, multi-family units;

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a decline in household formation or employment or lack of employment growth;

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the inability or unwillingness of residents to pay rent increases;

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rent control or rent stabilization laws, or other laws regulating housing, that could prevent us from raising rents to offset increases in operating costs; and

•

economic conditions that could cause an increase in our operating expenses, such as increases in property taxes, utilities, and routine maintenance.

Risks Related to our Industry

The geographic concentration of our assets may make our revenues and the value of our assets vulnerable to adverse changes in economic conditions in the New York metropolitan area.

        At September 30, 2011, 71.2% of our outstanding loans are secured by properties located in the New York metropolitan area and 81.2% of our real estate assets are located in Newark, NJ. A lack of geographical diversification makes our mortgage portfolio and real estate property holdings more sensitive to local or regional economic conditions. A significant decline in the economy of the New York metropolitan area (including Newark, NJ), could result in a greater risk of default under our loans compared with the default rate for loans secured by properties in other geographic locations and a greater risk of a decrease in the value of our real estate assets compared with a decrease in value of properties located in other geographic locations. This could result in a reduction of our revenues and provision for loan loss allowances and impairment charges, which might not be as acute if our portfolio were more geographically diverse.

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In order for real estate properties to generate positive cash flow or to make real estate properties suitable for sale, we may need to make significant capital improvements and incur deferred maintenance costs to these properties.

        Some of the properties we acquire, including properties acquired through foreclosure proceedings, may face competition from newer, more updated properties. In order to remain competitive and increase occupancy at these properties and/or make them attractive to potential purchasers, we may have to make significant capital improvements and/or incur deferred maintenance costs with respect to these properties. The cost of these improvements and deferred maintenance items may impair our financial performance and our liquidity.

Financing with high loan-to-value ratios involves increased risk of loss and may adversely affect us.

        Our primary source of recovery in the event of a loan default is the real estate underlying a defaulted loan. Therefore, the value of our loan depends upon the value of the underlying real estate. The value of the underlying property is dependent on numerous factors outside of our control, including national, regional and local business and economic conditions, inflation, government economic policies and the availability of credit. A loan-to-value ratio is the ratio of the amount of our loan to the estimated market value of the property underlying a loan, as determined by our internal valuation process. The higher the loan to value ratio, the greater the risk that the amount obtainable from sale of a property will be insufficient to repay the loan in full upon default.

We are subject to the risks associated with loan participations, such as lack of full control rights.

        Some of our investments are participating interests in loans in which we share the rights, obligations and benefits of the loan with participating lenders pursuant to a participation agreement. We may need the consent of these parties to exercise our rights under such loans, including rights with respect to amendment of loan documentation, the institution of, and control over, foreclosure actions, entering into forbearance agreements with borrowers, and sale of the underlying property upon acquisition in foreclosure. Our participant may have interests and goals that are different from ours and may desire an action or position which we oppose. As a result, we could become engaged in a dispute with a participant which may affect our ability to take action with respect to defaulted loan or disposition of the property, to our detriment.

We may have less control of our investment when we invest in joint ventures.

        From time-to-time, we have entered into joint venture agreements. Our co-venturers may have different interests or goals than we do and our co-venturers may not be able or willing to take an action that is desired by us. A disagreement with respect to the activities of the joint venture could result in a substantial diversion of time and effort by our management and could result in our exercise, or the exercise by our co-venturer, of the buy/sell provision often contained in our joint venture organizational documents. In addition, there is no limitation under our charter documents as to the amount of funds that we may invest in joint ventures. Accordingly, we could invest a substantial amount of our funds in joint ventures which ultimately may not be profitable as a result of disagreements with and among our co-venturers.

Liability relating to environmental matters may impact the value of properties that we may acquire or the properties securing our loans.

        We may be subject to environmental liabilities arising from the ownership of properties we acquire. Under various federal, state and local laws, an owner or operator of real property may become liable for the costs of removal of certain hazardous substances released on its property. These laws often

19

impose liability without regard to whether the owner or operator knew of, or was responsible for, the release of such hazardous substances.

        The presence of hazardous substances may adversely affect an owner's ability to sell real estate or borrow using real estate as collateral. To the extent that an owner of a property underlying one of our loans becomes liable for removal costs, the ability of the owner to make payments to us may be reduced, which in turn may adversely affect the value of the relevant mortgage asset held by us.

        If we acquire properties, including properties acquired through foreclosure proceedings, the presence of hazardous substances on a property may adversely affect our ability to sell the property and we may incur substantial remediation costs. The discovery of material environmental liabilities attached to such properties could have a material adverse effect on our results of operations and financial condition.

We operate in a highly competitive market.

        We compete with many third parties engaged in finance and real estate investment activities, including other REITs, specialty finance companies, public and private lending companies, investment funds and other entities. Some of these competitors have substantially greater financial resources than we do and generally may be able to accept more risk. As such, they have the ability to make larger loans and to reduce the risk of loss from any one loan by having a more diversified loan portfolio. They may also enjoy significant competitive advantages that result from, among other things, enhanced operating efficiencies. An increase in the availability of funds to lenders, or a decrease in the amount of borrowing activity, may increase competition for making loans and may reduce obtainable yields or increase the credit risk inherent in the available loans.

Our revenues and the value of our portfolio may be negatively affected by casualty events occurring on properties securing our loans.

        We require our borrowers to obtain, for our benefit, comprehensive insurance covering the property and any improvements to the property collateralizing our loan in an amount intended to be sufficient to provide for the cost of replacement in the event of casualty. In addition, joint ventures in which we are an equity participant carry comprehensive insurance covering the property and any improvements to the property owned by the joint venture for the cost of replacement in the event of a casualty. Further, we carry insurance for such purpose on properties owned by us. However, the amount of insurance coverage maintained for any property may not be sufficient to pay the full replacement cost following a casualty event. In addition, the rent loss coverage under a policy may not extend for the full period of time that a tenant may be entitled to a rent abatement that is a result of, or that may be required to complete restoration following a casualty event. In addition, there are certain types of losses, such as those arising from earthquakes, floods, hurricanes and terrorist attacks, that may be uninsurable or that may not be economically insurable. Changes in zoning, building codes and ordinances, environmental considerations and other factors may make it impossible for our borrower, a joint venture or us, as the case may be, to use insurance proceeds to replace damaged or destroyed improvements at a property. If any of these or similar events occur, the amount of coverage may not be sufficient to replace a damaged or destroyed property and/or to repay in full the amount due on all loans collateralized by such property. As a result, our returns and the value of our investment may be reduced.

Senior management and other key personnel are critical to our business and our future success may depend on our ability to retain them.

        We depend on the services of Fredric H. Gould, chairman of our board of trustees, Jeffrey A. Gould, our president and chief executive officer, and other members of senior management to carry

20

out our business and investment strategies. Although Jeffrey A. Gould devotes substantially all of his business time to our affairs, he devotes a limited amount of his business time to entities affiliated with us. In addition to Jeffrey A. Gould, only three other executive officers, Mitchell Gould, our executive vice president, Lonnie Halpern, a vice president, and George Zweier, our vice president and chief financial officer, devote all or substantially all of their business time to us. The remainder of our executive management personnel share their services on a part-time basis with entities affiliated with us and located in the same executive offices pursuant to a shared services agreement. We rely on part-time executive officers to provide certain services to us, including legal, accounting and computer services, since we do not employ full-time executive officers to handle these services. If the shared services agreement is terminated, we will have to obtain such services or hire employees to perform them. We may not be able to replace these services or hire such employees in a timely manner or on terms, including cost and level of expertise, that are as favorable as those we receive under the shared services agreement.

        In addition, in the future we may need to attract and retain qualified senior management and other key personnel, both on a full-time and part-time basis. The loss of the services of any of our senior management or other key personnel or our inability to recruit and retain qualified personnel in the future, could impair our ability to carry out our business and our investment strategies.

        We do not carry key man life insurance on members of our senior management.

Our transactions with affiliated entities involve conflicts of interest.

        Entities affiliated with us and with certain of our executive officers provide services to us and on our behalf. Although our policy is to obtain terms in transactions with affiliates that are at least as favorable as those that we would receive if the transactions were entered into with unaffiliated entities, these transactions raise the potential that we may not receive terms as favorable as those that we would receive if the transactions were entered into with unaffiliated entities.

Compliance with REIT requirements may hinder our ability to maximize profits.

        In order to qualify as a REIT for Federal income tax purposes, we must continually satisfy tests concerning among other things, our sources of income, the amounts we distribute to our shareholders and the ownership of securities. We may also be required to make distributions to shareholders at disadvantageous times or when we do not have funds readily available for distribution. Accordingly, compliance with REIT requirements may hinder our ability to operate solely on the basis of maximizing profits.

        In order to qualify as a REIT, we must also ensure that at the end of each calendar quarter at least 75% of the value of our assets consists of cash, cash items, government securities and qualified REIT real estate assets. The remainder of our investment in securities cannot include more than 10% of the outstanding voting securities of any one issuer or more than 10% of the total value of the outstanding securities of such issuer. In addition, no more than 5% of the value of our assets can consist of the securities of any one issuer, other than a qualified REIT security. If we fail to comply with these requirements, we must dispose of the portion of our assets in excess of such amounts within 30 days after the end of the calendar quarter in order to avoid losing our REIT status and suffering adverse tax consequences. This requirement could cause us to dispose of assets for consideration of less than their true value and could lead to a material adverse impact on our results of operations and financial condition.

Item 1B.    Unresolved Staff Comments.

        None.

21

Executive Officers of Registrant

        Set forth below is a list of our executive officers whose terms will expire at our 2012 annual Board of Trustees' meeting. The business history of officers who are also Trustees will be provided in our proxy statement to be filed pursuant to Regulation 14A not later than January 28, 2012.

Name	Office
Fredric H. Gould*	Chairman of the Board of Trustees
Jeffrey A. Gould*	President and Chief Executive Officer; Trustee
Mitchell K. Gould	Executive Vice President
Matthew J. Gould*	Senior Vice President; Trustee
Simeon Brinberg**	Senior Vice President; Senior Counsel; and Secretary
David W. Kalish	Senior Vice President, Finance
Israel Rosenzweig	Senior Vice President
Mark H. Lundy**	Senior Vice President and General Counsel
George E. Zweier	Vice President, Chief Financial Officer
Lonnie Halpern	Vice President

*

Fredric H. Gould is the father of Jeffrey A. and Matthew J. Gould.

**

Simeon Brinberg is the father-in-law of Mark H. Lundy.

        Mitchell K. Gould (age 39), employed by us since May 1998, has been a Vice President since March 1999 and Executive Vice President since March 2007. From January 1998 until May 1998, Mr. Gould was employed by Bear Stearns Companies, Inc. where he was engaged in originating and underwriting commercial real estate loans for securitization.

        Simeon Brinberg (age 77) has been our Secretary since 1983, a Senior Vice President since 1988, and Senior Counsel since March 2006. Mr. Brinberg has been a Vice President of Georgetown Partners, Inc., the managing general partner of Gould Investors L.P., since October 1988. Gould Investors L.P. is primarily engaged in the ownership and operation of real estate properties held for investment. Since June 1989, Mr. Brinberg has been a Vice President of One Liberty Properties, Inc. (currently a Senior Vice President), a REIT engaged in the ownership of income producing real properties leased to tenants under long term leases. Mr. Brinberg is a member of the New York Bar and was engaged in the private practice of law for approximately 30 years prior to 1988.

        David W. Kalish (age 64) has been our Senior Vice President, Finance since August 1998. Mr. Kalish was our Vice President and Chief Financial Officer from June 1990 until August 1998. He has been Chief Financial Officer of One Liberty Properties, Inc. and Georgetown Partners, Inc. since June 1990. For more than five years prior to June 1990, Mr. Kalish, a certified public accountant, was a partner of Buchbinder Tunick & Company LLP and its predecessors.

        Israel Rosenzweig (age 64) has been a Senior Vice President since April 1998. Mr. Rosenzweig has been a Vice President of Georgetown Partners, Inc. since May 1997 and from 2000 to March 2009 was President of GP Partners, Inc., an affiliate of Gould Investors L.P. which provided advisory services in the real estate and financial services industries to an investment advisor. He also has been a Senior Vice President of One Liberty Properties, Inc. since May 1997.

22

        Mark H. Lundy (age 49) has been our General Counsel since March 2007 and a Senior Vice President since March 2005. From 1993 to March 2005 he was a Vice President. He has been the Secretary of One Liberty Properties, Inc. since June 1993 and he also serves as a Senior Vice President of One Liberty Properties, Inc. Mr. Lundy has been a Vice President of Georgetown Partners, Inc. (currently Senior Vice President) since July 1990. He is a member of the bars of New York and Washington, D.C.

        George E. Zweier (age 47) has been employed by us since June 1998 and was elected Vice President, Chief Financial Officer in August 1998. For approximately five years prior to joining us, Mr. Zweier, a certified public accountant, was an accounting officer with the Bank of Tokyo-Mitsubishi Limited in its New York office.

        Lonnie Halpern (age 36) has been employed by us since August 2005 and was elected a Vice President in March 2007. Mr. Halpern is a member of the bars of New York and Massachusetts, and was an associate at Goodwin Procter LLP, New York, N.Y. from September 2001 to March 2004 and Hogan & Hartson LLP, New York, N.Y. from April 2004 to July 2005.

Item 2.    Properties.

        Our executive offices are located at 60 Cutter Mill Road, Great Neck, New York, where we currently occupy approximately 12,000 square feet with Gould Investors L.P., REIT Management Corp., One Liberty Properties, Inc. and other related entities. The building in which our executive offices are located is owned by a subsidiary of Gould Investors L.P. For fiscal 2011, we contributed $87,000 to the annual rent of $473,000 paid by Gould Investors L.P., REIT Management Corp., One Liberty Properties, Inc., and related entities. We also lease, under a direct lease with the Gould Investors L.P. subsidiary, an additional 1,800 square feet directly adjacent to the 12,000 square feet at an annual rental of $61,000.

        At September 30, 2011, we owned four real estate properties, with an aggregate book value of $59.3 million, of which two properties with a book value of $8 million were acquired in foreclosure proceedings. The properties owned by our Newark Joint Venture, with a book value of $48.1 million as of September 30, 2011, represent 25.1% of our total assets as of September 30, 2011. No other real estate property owned by us represents 5% of our total assets as of September 30, 2011. See "Item 1. Business—Our Real Estate Assets" and "Item 1. Business—Newark Joint Venture" for a schedule of the real property assets acquired by us in foreclosure proceedings and owned at September 30, 2011 and information relating to the Newark Joint Venture.

Item 3.    Legal Proceedings.

        None.

Item 4.    [Removed and Reserved]

23

PART II

Item 5.    Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

        Our common shares of beneficial interest, or Common Shares, are listed on the New York Stock Exchange, or the NYSE, under the symbol "BRT." The following table shows for the periods indicated, the high and low sales prices of the Common Shares as reported in the consolidated transaction reporting system.

	Fiscal 2011				Fiscal 2010
Quarter Ended	High		Low		High		Low
December 31	$	7.40	$	6.28	$	5.84	$	4.35
March 31		7.46		6.25		6.79		4.36
June 30		6.67		6.23		7.25		5.18
September 30		6.48		5.90		6.50		4.84

        On November 30, 2011, the high and low sales prices of our Common Shares on the NYSE was $6.28 and $6.20, respectively.

        As of November 30, 2011, there were approximately 1,109 holders of record of our Common Shares.

        We did not pay any cash dividends in fiscal 2011 or 2010. Our tax loss carry forward at December 31, 2010, was approximately $70 million; therefore, we do not anticipate paying cash dividends in the near future.

24

Stock Performance Graph

        This graph compares the performance of our shares with the Standard & Poor's 500 Stock Index and a peer group index consisting of publicly traded mortgage REITs. The graph assumes $100 invested on September 30, 2006 and assumes the reinvestment of dividends.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among BRT Realty Trust, the S&P 500 Index
and the FTSE NAREIT Mortgage REITs Index

*

$100 invested on 9/30/06 in stock or index, including reinvestment of dividends. Fiscal year ending September 30.

Copyright© 2011 S&P, a division of The McGraw-Hill Companies Inc. All rights reserved.

	9/06		9/07		9/08		9/09		9/10		9/11
BRT Realty Trust		100.00		67.03		41.17		32.71		36.66		35.69
S&P 500		100.00		116.44		90.85		84.58		93.17		94.24
FTSE NAREIT Mortgage REITs		100.00		61.39		42.47		53.35		58.80		60.63

Issuer Purchases of Equity Securities

        In September 2011, we announced that our Board of Trustees had authorized a share buyback plan pursuant to which we may, through September 30, 2013, expend up to $2 million to repurchase our common shares. The following table provides information about the purchases we made in the indicated period (no purchases were effected in July and August 2011):

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
September 2011		7,305	$	6.35		7,305	$	1,953,600

25

Item 6.    Selected Financial Information.

        The following table, not covered by the report of the independent registered public accounting firm, sets forth selected historical financial data for each of the fiscal years indicated. This table should be read in conjunction with the detailed information and financial statements appearing elsewhere herein.

		2011			2010			2009			2008			2007
(Dollars in thousands, except per share amounts)
Operating statement data:
Total revenues		$	17,881		$	8,135		$	12,154		$	21,990		$	42,900
Total expenses(1)(2)			13,834			19,844			36,329			35,554			30,570
Gain on sale of available-for-sale securities			1,319			1,586			1,016			19,940			19,455
Loss (gain) on extinguishment of debt			(2,138	)		—			6,443			—			—
Income (loss) from continuing operations			3,578			(9,927	)		(19,236	)		7,734			34,702
Income (loss) from discontinued operations(3)			1,346			590			(29,124	)		(7,855	)		368
Net income (loss) attributable to common shareholders			6,374			(8,015	)		(47,755	)		(260	)		35,070
Earnings (loss) per beneficial share:
Income (loss) from continuing operations		$	.35		$	(.62	)	$	(2.50	)	$	.65		$	3.30
Income (loss) from discontinued operations			.10			.04			(1.60	)		(.67	)		.04
	Basic earnings (loss) per share	$	.45		$	(.58	)	$	(4.10	)	$	(.02	)	$	3.34
Income (loss) from continuing operations		$	.35		$	(.62	)	$	(2.50	)	$	.65		$	3.29
Income (loss) from discontinued operations			.10			.04			(1.60	)		(.67	)		.04
Diluted earnings (loss) per share		$	.45		$	(.58	)	$	(4.10	)	$	(.02	)	$	3.33
Distribution per common share(4)			—			—		$	1.15		$	3.19		$	2.44
Balance sheet data:
Total assets		$	191,012		$	186,266		$	193,333		$	270,020		$	328,109
Earning real estate loans(5)			67,266			17,263			44,677			95,228			185,899
Non-earning real estate loans(5)			—			35,143			2,836			18,407			63,627
Purchase money mortgage loans			—			5,340			16,804			—			—
Real estate loans held for sale			8,446			—			16,915			—			—
Real estate properties, net			59,277			55,843			55,544			14,154			3,336
Cash and cash equivalents			44,025			58,497			25,708			35,765			17,103
Available-for-sale securities at market			2,766			10,270			8,963			10,482			34,936
Real estate properties held for sale			—			—			14,204			62,858			9,355
Junior subordinated notes			37,400			40,815			40,234			56,702			56,702
Mortgages payable			14,417			12,557			9,460			2,315			2,395
Total BRT Realty Trust shareholders' equity			129,063			124,554			121,227			186,772			235,175

(1)

Includes $3,165, $17,110, $15,260 and $9,300 of provision for loan losses for fiscal 2010, 2009, 2008 and 2007, respectively.

(2)

Includes $2,625, $1,272 and $1,050 of impairment charges in fiscal 2010, 2009 and 2008, respectively.

(3)

Includes $745, $29,774 and $8,165 of impairment charges for fiscal 2010, 2009 and 2008, respectively.

(4)

The distributions in fiscal 2008, 2007 and 2006 were paid wholly in cash. In September 2009, a distribution of $1.15 per share was declared and in October 2009 was paid in a combination of an

26

aggregate of $13,308 in cash, representing 10% of this distribution, and the balance in our common shares. The cash amount was allocated pro rata among all shareholders who elected to receive cash. Since any shareholder electing to receive cash could not receive the entire dividend in cash, the remainder of the dividend was paid to shareholders electing to receive cash in our common shares. Shareholders who did not elect cash received the entire dividend in our common shares.

(5)

Earning and non-earning loans, which exclude loans held for sale, are presented without deduction of the related allowance for possible losses and deferred fee income.

Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations.

Overview

        We are a real estate investment trust, also known as a REIT. Our primary business is to originate and hold for investment senior mortgage loans secured by commercial and multi-family real estate property in the United States. We also originate loans to persons purchasing their own or third party mortgage debt, at a discount to the principal amount thereof. Our primary source of revenue has generally been interest income, which is the interest our borrowers pay on our loans, and to a lesser extent, loan fee income generated on the origination and extension of loans, rental revenue from real properties and investment income.

        The following highlights our results of operations for fiscal 2011 and our financial condition at fiscal year-end:

•

we originated $131.3 million of mortgage loans in fiscal 2011 ($28.3 million, $60.5 million, $23.6 million and $18.9 million in the first, second, third and fourth fiscal quarters, respectively) compared to $17.9 million in fiscal 2010 and $12.7 million in fiscal 2009;

•

we have cash and cash equivalents and available-for-sale securities of approximately $46.8 million and $84.3 million, at September 30, 2011 and December 5, 2011, respectively;

•

our performing loan portfolio increased 290% from $17.3 million at September 30, 2010 to $67.3 million at September 30, 2011;

•

our non-performing loan portfolio decreased from $35.1 million at September 30, 2010 to zero at September 30, 2011;

•

interest and fee income in fiscal 2011 increased $6.5 million or 166% from fiscal 2010;

•

in fiscal 2011, we entered into a revolving credit facility to provide additional liquidity and lending capacity; and

•

we restructured our junior subordinated notes in March 2011 by repaying at par $5.0 million of the principal amount outstanding and obtaining an interest rate reduction; and as a result we estimate a reduction in our interest costs associated with these notes by approximately $588,000 and $1.72 million in fiscal 2012 and 2013, respectively.

        We cannot predict with any certainty the potential impact the current economic uncertainty will have on our future financial performance. Until there is consistent and considerable improvement in the overall economy, we could experience (i) limited origination activity, (ii) borrower defaults, (iii) loan loss provisions and impairment charges, (iv) foreclosure actions (with an increase in expenses incurred in pursuing such actions), (v) the acquisition of additional properties in foreclosure proceedings, (vi) significant expenses for stabilizing, repairing and operating properties acquired in foreclosure proceedings, and (vii) reduced access to capital and increased cost of financing, all of which could result in a decline in our revenues and generate operating losses.

27

Year Ended September 30, 2011 Compared to Year Ended September 30, 2010

Revenues

        The following table compares our revenues for the periods indicated:

		Fiscal
						Increase (Decrease)
(Dollars in thousands):		2011		2010					% Change
Interest on real estate loans		$	8,234	$	2,412	$	5,822			241	%
Interest on purchase money mortgage loans			266		1,212		(946	)		(78	)%
Loan fee income			1,828		253		1,575			623	%
Rental revenue from real estate properties			3,456		3,422		34			1	%
Recovery of previously provided allowance			3,595		365		3,230			885	%
Other, primarily investment income			502		471		31			7
	Total revenues	$	17,881	$	8,135	$	9,746			120	%

        Interest on real estate loans.    The increase is primarily due to a $48.3 million increase in the average balance of earning loans outstanding attributable to additional loan originations, which we believe is the result of improved economic conditions. The weighted average interest rate on performing loans was 12.17% in both fiscal 2011 and 2010. Continuing economic uncertainty in fiscal 2012 may result in reduced loan originations and reduced interest on real estate loans and loan fee income.

        Interest on purchase money mortgages.    The decrease is attributable to a reduction in the average balance of these outstanding mortgages as loans with an aggregate principal balance of $5.34 million were paid off since the fourth quarter of fiscal 2010. We had originated purchase money mortgages in fiscal 2009 to facilitate the sale of properties we acquired in foreclosure.

        Loan fee income.    The increase is due to the amortization of loan fees received on the increase in loans originated during fiscal 2011.

        Recovery of previously provided allowance.    The increase reflects the reversal of a previously provided loan loss allowance of $2.5 million allocated to a non-performing loan that was sold in the quarter ended March 31, 2011 and the recovery of $1 million on a loan charged off in a prior year.

Expenses

        The following table compares our expenses for the periods indicated:

		Fiscal
						Increase (Decrease)
(Dollars in thousands)		2011		2010					% Change
Interest on borrowed funds		$	2,112	$	2,584	$	(472	)		(18.3	)%
Advisor's fee, related party			916		785		131			16.7	%
Provision for loan loss			—		3,165		(3,165	)		NM*
Impairment charges			—		2,625		(2,625	)		NM*
Foreclosure related professional fees			579		673		(94	)		(13.9	)%
General and administrative			6,149		6,063		86			1.4	%
Operating expenses related to real estate properties			3,340		3,216		124			3.9	%
Amortization and depreciation			738		733		5			1	%
	Total expenses	$	13,834	$	19,844	$	(6,010	)		(30.3	)%

*

Not meaningful.

28

        Interest on borrowed funds.    Approximately $508,000 of the decrease is attributable to the restructuring of the junior subordinated notes in March 2011 (of which $433,000 is due to the reduction of the interest rate and $75,000 is due to the decrease in the principal amount outstanding) and approximately $449,000 is due to the capitalization of interest with respect to a Newark, NJ assemblage site currently under development. The decrease was partially offset by a $448,000 increase in mortgage interest due to the aggregate net increase of $1.86 million in mortgage debt outstanding. This debt increased due to the borrowing with respect to the $8.6 million financing facility for the Newark Joint Venture. The $4 million outstanding at September 30, 2011 under this facility bears interest at the rate of 17% per year.

        Advisor's fee, related party.    The fee is calculated based on invested assets and increased because of the increase in our portfolio of loans and real estate assets due to increased originations in fiscal 2011.

        Provision for loan losses.    In fiscal 2010, we recorded $3,165,000 of loan loss provisions. There were no such provisions in fiscal 2011.

        Impairment Charges.    In fiscal 2010, we recorded $2,625,000 of impairment charges. There were no such charges in fiscal 2011.

        Foreclosure related professional fees.    Fees decreased primarily due to the resolution in fiscal 2011 of substantially all of the bankruptcy, foreclosure and related proceedings in which we were involved.

        General and administrative expense.    This increase is attributable primarily to an increase of $440,000 in payroll related costs reflecting higher salaries, commissions, pension and medical expenses, partially offset by an aggregate approximately $412,000 decline in professional fees, travel related, public company and various miscellaneous expenses.

        Operating expenses related to real estate owned.    This increase is attributable primarily to increases in maintenance, insurance and professional fees on our Newark property partially offset by a $134,000 decline in real estate tax expense on a land parcel we own in Daytona, FL.

Other revenue and expense items

        The following table compares other revenue and expense items for the years indicated:

	Fiscal
						Increase (Decrease)
(Dollars in thousands)	2011			2010					% Change
Equity in earnings of unconsolidated ventures	$	350		$	196	$	154			78.4	%
Gain on sale of available-for-sale securities		1,319			1,586		(267	)		(16.8	)%
Loss on extinguishment of debt		(2,138	)		—		(2,138	)		NM

        Equity in earnings of unconsolidated ventures.    The increase is attributable to $99,000 of income generated with respect to the activities of the Torchlight joint venture and $54,000 attributable to increased rental income at one of our other ventures properties.

        Gain on sale of available-for-sale securities.    During fiscal 2011, we sold available-for-sale securities with a cost basis of $6.3 million for $7.6 million, recognizing a gain of $1.3 million. During fiscal 2010, we sold available-for-sale securities with a cost basis of $1.8 million for $3.4 million recognizing a gain of $1.6 million.

        Loss on extinguishment of debt.    In March 2011, we restructured our outstanding junior subordinated notes. Pursuant to the restructuring, we repaid $5.0 million of the notes at par and reduced the interest rate on the remaining outstanding notes through the April 2036 maturity date. For accounting purposes this restructuring was treated as an extinguishment of debt, and accordingly, we recognized a loss of $2.1 million which represented the unaccreted principal balance of the notes and the related unamortized costs.

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Discontinued operations

        In fiscal 2011, we had income from discontinued operations of $1.3 million due to the sale of two cooperative apartment units in New York and the payoff of a loan which was classified as real estate for accounting purposes. In fiscal 2010, discontinued operations represented the loss from operations of $602,000 primarily from two multi-family garden apartment properties and a hotel property, an impairment charge of $745,000 which related to a multi-family garden apartment property and gains of $1,937,000 from the sale of two multi-family properties, a hotel property and coop and condominium units.

Year Ended September 30, 2010 Compared to Year Ended September 30, 2009

Revenues

        The following table compares our revenues for the periods indicated:

		Fiscal
						Increase (Decrease)
(Dollars in thousands):		2010		2009					% Change
Interest on real estate loans		$	2,412	$	8,577	$	(6,165	)		(71.9	)%
Interest on purchase money mortgage loans			1,212		246		966			392.7	%
Loan fee income			253		887		(634	)		(71.5	)%
Rental revenue from real estate properties			3,422		1,718		1,704			99.2	%
Recovery of previously provided allowance			365		—		365			NM
Other, primarily investment income			471		726		(255	)		(35.1	)%
	Total revenues	$	8,135	$	12,154	$	(4,019	)		(33.1	)%

        Interest on real estate loans.    The decrease is primarily due to the $57.6 million decrease from fiscal 2009 in the average balance of earning loans outstanding. The decrease in such balance is attributable to the increase in non-performing loans (which increased because two loans in the aggregate principal amount of $34.6 million became non-performing in the first quarter of fiscal 2010) and payoffs and sales of $39.3 million of outstanding loans. Partially offsetting this decrease was an increase of approximately $449,000 of interest income attributable to the increase from 11.48% to 12.17% in the interest rate earned on the performing loans and interest income of $486,000, of which $359,000 is attributable to payments received in connection with the settlement of a lawsuit relating to a series of loans to one borrower and $90,000 is attributable to the receipt of interest on non-performing loans.

        Interest on purchase money mortgages.    The increase is attributable to the inclusion for a full fiscal year of interest on such mortgages. We began to originate such loans in the third quarter of fiscal 2009 to facilitate the sale of our owned real estate.

        Rental revenue from real estate properties.    The increase is due to the inclusion for a full fiscal year of rental revenues earned from the properties owned by our Newark Joint Venture, including $465,000 derived from a lease entered into in the first quarter of fiscal 2010. We entered into the Newark Joint Venture in the fourth quarter of fiscal 2009 and accordingly, rental revenues for fiscal 2009 only includes revenues from such venture for the fourth quarter.

        Recovery of previously provided allowance.    In fiscal 2010, we recognized a $365,000 recovery in previously provided loan loss allowances from two loans that were previously impaired and were paid off for amounts greater than their net carrying value. There was no comparable revenue in fiscal 2009.

        Other, primarily investment income.    The net decrease is attributable to the decrease in dividend income due to the sale of dividend paying securities and to a lesser extent to lower rates earned on short-term investments.

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Expenses

        The following table compares expenses for the periods indicated:

		Fiscal
						Increase (Decrease)
(Dollars in thousands)		2010		2009					% Change
Interest on borrowed funds		$	2,584	$	4,719	$	(2,135	)		(45.3	)%
Advisor's fee, related party			785		1,173		(387	)		(33.0	)%
Provision for loan loss			3,165		17,110		(13,945	)		(81.5	)%
Impairment charges			2,625		1,272		1,353			106.4	%
Foreclosure related professional fees			673		908		(235	)		(25.9	)%
Debt restructuring charges			—		685		(685	)		NM
General and administrative			6,063		7,045		(982	)		(13.9	)%
Operating expenses related to real estate properties			3,216		2,133		1,079			50.1	%
Amortization and depreciation			733		1,284		(551	)		(43.0	)%
	Total expenses	$	19,844	$	36,329	$	(16,485	)		(45.4	)%

        Interest on borrowed funds.    The components of the decrease are as follows: (a) $1.09 million is due to the restructuring effected in fiscal 2009 of our junior subordinated notes; (b) $787,000 is attributable to the $15.5 million decrease in the average outstanding balance of our junior subordinated notes which decrease in turn is attributable to our partial repayment of these notes at the end of the fourth quarter of fiscal 2009; (c) $146,000 is due to the reduction of amounts borrowed due to our termination of the credit facility in the third quarter of fiscal 2009; (d) $311,000 is attributable to the reduction in amortization of deferred borrowing costs resulting primarily from our termination of the credit facility; (e) $527,000 is attributable to increased balances of mortgages outstanding on our Newark properties; and (f) $328,000 is due to the capitalization of interest expense allocated to the development of one of the Newark, NJ Assemblages.

        Advisor's fee, related party.    The fee is calculated based on invested assets and decreased because of the decrease in our portfolio of loans and real estate assets. These assets decreased because of our foreclosure of defaulted mortgage loans and the subsequent sale of the underlying real estate.

        Provision for loan losses.    In fiscal 2010 we took loan loss provisions against two loans with an aggregate outstanding balance of $26.7 million. In fiscal 2009, the loan loss provision was taken against 22 loans with an aggregate principal balance $65.8 million.

        Impairment charges.    The impairments in fiscal 2010 were taken against two properties, of which $2.5 million relates to a parcel of unimproved land located in South Daytona Beach, Florida and the $125,000 balance was taken against six individual condominium units located in Apopka, Florida. In fiscal 2009, we took an impairment charge against one property in our real estate portfolio located in Manhattan, New York.

        Foreclosure related professional fees.    Fees decreased due to the decrease in foreclosure actions and workout activity as many of the foreclosure actions pending in fiscal 2009 were concluded in fiscal 2009 or early fiscal 2010.

        Debt restructuring charges.    This represents legal expenses and third party costs incurred in fiscal 2009 in connection with the restructuring of our trust preferred securities. There was no comparable expense in fiscal 2010.

        General and administrative expense.    The decrease is attributable primarily to net decreases of $595,000 in professional fees and $367,000 in salary, benefits and expenses allocated pursuant to our shared services agreement. Professional fees decreased primarily because fiscal 2009 included expenses incurred in connection with the workout and the resulting joint venture agreement that was entered into in the fourth quarter of fiscal 2009 with respect to the Newark Joint Venture. There was no

31

comparable expense in fiscal 2010. Professional fees also decreased because fiscal 2009 includes additional audit and internal control fees incurred in connection with workout and foreclosure activity. Salary, benefits and allocated expenses decreased on a net basis primarily due to reduced bonuses and the reduction in our level of workout and foreclosure activity. There were also decreases in taxes and travel and entertainment expenses which were partially offset by increases in advertising/promotional fees and exchange listing and other public company expenses.

        Operating expenses related to real estate properties.    The increase is attributable to the inclusion, for a full fiscal year, of the operating expenses related to our Newark Joint Venture properties. In fiscal 2009, such expenses were only incurred in the fourth fiscal quarter.

        Amortization and depreciation.    The decrease is attributable to reclassification of real estate to real estate held for sale as depreciation is not recorded on properties held for sale.

Other revenue and expense items

        Equity in earnings (loss) of unconsolidated ventures.    In fiscal 2010, we had a gain of $196,000 compared to a loss of $2.8 million in fiscal 2009. The change is attributable primarily to the inclusion in fiscal 2009 of a $2.8 million loss reflecting our proportionate share of the loss sustained by our joint venture with the CIT Capital USA, Inc. and the write off of the balance of the unamortized fee we paid to an investment banker for obtaining capital from CIT Capital USA. The principal reason for the loss recorded by the joint venture was a loan loss provision taken to reflect a decrease in the value of the real estate underlying a non-performing loan.

        Gain on early extinguishment of debt.    In fiscal 2009, we retired $15.9 million face value of junior subordinated notes for $7.95 million. We incurred legal and other fees of $365,000 related to the transaction. The carrying value at the time of the redemption was $14.8 million, which included $329,000 of deferred fees. We recorded a gain of $6.44 million on the transaction. There was no comparable gain in fiscal 2010.

Discontinued operations

        The following table compares the components of our discontinued operations for the periods indicated:

	Fiscal
							Increase (Decrease)
(Dollars in thousands)	2010			2009						% Change
Loss from operations	$	(602	)	$	(1,549	)	$	947			61.1	%
Impairment charges		(745	)		(29,774	)		29,029			97.5	%
Gain on sale of real estate assets		1,937			2,199			(262	)		(11.9	)%
Income (loss) from discontinued operations	$	590		$	(29,124	)	$	29,714			102.0	%

        Loss from operations.    The decrease is attributable to the sale in late fiscal 2009 and early fiscal 2010 of real estate assets that we acquired through foreclosures in fiscal 2009 that were classified in fiscal 2009 as held for sale.

        Impairment charges.    These charges decreased as we sold most of the properties acquired by foreclosure in fiscal 2009 and the beginning of fiscal 2010. In fiscal 2010, the impairment charges were taken against two properties and in fiscal 2009 were taken against thirteen properties.

        Gain on sale of real estate assets.    We recorded gains on the sale of five properties in fiscal 2010 and on the sale of six properties in fiscal 2009.

Liquidity and Capital Resources

        Liquidity is a measurement of our ability to meet cash requirements, including to fund loan originations, pay operating expenses, repay borrowings, and other general business needs. We require

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capital to fund loan originations, acquire properties and pay operating expenses. Our current sources of capital and liquidity primarily consist of our cash, marketable securities, revolving credit facility and effective November 2012, our participation arrangement with 512 Lending. Our total available liquidity at September 30, 2011 and December 5, 2011, without giving effect to this participation arrangement, was approximately $60.3 million and $84.3 million, respectively.

        We believe we have sufficient capital to meet our operating expenses in fiscal 2012, and to fund any capital contributions required by the Newark Joint Venture. We also have funds available to engage in our primary lending business and to make property acquisitions.

        The Newark Joint Venture may borrow up to $8.6 million (of which $4.0 million had been borrowed at September 30, 2011) to fund specified development activities with respect to the Teachers Village project. While it is currently seeking up to $150 million in financing from public and private sources to fund the further development and construction of this project, no assurance can be given that the Newark Joint Venture will obtain the necessary financing on acceptable terms or if such financing is obtained, that such project will be profitable for us.

Participation Arrangement

        In November 2011, we entered into an arrangement with 512 Lending, LLC pursuant to which each of us, with specified exceptions, must present to the other the opportunity (but not the obligation) to participate in loans such party originates. The arrangement expires in December 2014, subject to earlier termination by either party on not less than 60 days' notice for any reason. It is generally anticipated that 512 Lending will fund between 50% to 80% of the principal amount of loans we originate and in which they elect to participate and that we will fund up to 20% of the principal amount of loans they originate and in which we elect to participate.

Credit Facility

        A subsidiary of ours is able to borrow funds to originate loans and for its general corporate purposes through a senior secured revolving credit facility with Capital One, National Association. The maximum amount that may be borrowed is the lesser of $25 million and the borrowing base. The borrowing base is generally equal to 40% to 65% (depending on, among other things, the type of property secured by the eligible mortgage receivables pledged to the lender and the operating income of the related property) of such receivables. Interest accrues on the outstanding balance at the greater of (i) 4% plus LIBOR and (ii) 5.50%. The facility matures June 21, 2014 and, subject to the satisfaction of specified conditions, the outstanding balance may be converted at our option into an 18 month term loan. We have guaranteed the payment and performance of our subsidiary's obligations under the facility. At September 30, 2011 and November 30, 2011, no amount was outstanding thereunder.

        The loan documents, among other things, require:

•

(i) us to maintain on a quarterly basis and on a consolidated basis, net worth of not less than $100 million and liquidity of not less than $7.5 million, and (ii) prohibits us from incurring debt, with specified exceptions, in excess of five percent of our net worth; and

•

(i) our subsidiary to maintain a debt service coverage ratio and a collateral coverage ratio of not less than 1.5 to 1.0, and (ii) prohibits the subsidiary, with specified exceptions, from incurring debt.

Off Balance Sheet Arrangements

        We are not a party to any off balance sheet arrangements.

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Disclosure of Contractual Obligations

        The following table sets forth as of September 30, 2011 our known contractual obligations:

	Payment due by Period
(Dollars in thousands)	Less than 1 Year		1 - 3 Years		3 - 5 Years		More than 5 Years		Total
Long-Term Debt Obligations	$	7,385	$	403	$	1,354	$	42,675	$	51,817
Capital Lease Obligations		—		—		—		—		—
Operating Lease Obligation(1)		113		222		222		477		1,034
Purchase Obligations(2)		1,410		3,007		1,694		—		6,111
Other Long-Term Liabilities Reflected on the Trust's Balance Sheet Under GAAP		—		—		—		—		—
Total	$	8,908	$	3,632	$	3,270	$	43,152	$	58,962

(1)

Includes $53,000 per annum estimated to be payable pursuant to a five year lease to be entered into with our affiliate.

(2)

Reflects the minimum payment of $750,000 payable commencing January 1, 2012 for every twelve month period pursuant to our Advisory Agreement, as amended, with REIT Management. This agreement terminates June 30, 2014. Also includes an estimated $847,000 payable annually pursuant to the Shared Services Agreement. This estimate reflects the amount paid in fiscal 2011 pursuant to the Shared Services Agreement. No amount has been reflected as payable pursuant to such agreement after five years as such amount is not determinable. See "Business—Our Structure."

Significant Accounting Estimates and Critical Accounting Policies

        Our significant accounting policies are more fully described in Note 1 to our consolidated financial statements. The preparation of financial statements and related disclosure in conformity with accounting principles generally accepted in the United States requires management to make certain judgments and estimates that affect the amounts reported in the consolidated financial statements and accompanying notes. Certain of our accounting policies are particularly important to understand our financial position and results of operations and require the application of significant judgments and estimates by our management; as a result they are subject to a degree of uncertainty. These significant accounting policies include the following:

Allowance for Possible Losses and Impairment Charges

        We conduct a quarterly review of (i) each loan in our mortgage portfolio, including the real estate securing each loan, (ii) each of our real estate assets, and (iii) each real estate asset owned by our joint ventures. This review is conducted in order to determine if there is uncertainty that the borrower has sufficient funds to repay the loan or if indicators of impairment are present on the real estate.

        In reviewing the value of the collateral underlying a loan and the real estate assets owned, whether by us or our joint ventures, if there is an indicator of impairment, we seek to arrive at the fair value of each piece of collateral and each real estate asset by using one or more valuation techniques, such as comparable sales, discounted cash flow analysis or replacement cost analysis. Determination of the fair value of the collateral securing a loan requires significant judgment, estimates and discretion by management. Our real estate assets (other than real estate held for sale) and our joint ventures' real estate assets are evaluated for indicators of impairment using an undiscounted cash flow analysis. If the analysis suggests that the undiscounted cash flows to be generated by the property will be insufficient to recover the investment made by us or any joint venture, as the case may be, an impairment provision will be calculated based upon the excess of the carrying amount of the property over its fair value using a discounted cash flow model. Real estate assets are valued at the lower of the recorded cost or

34

estimated fair value. We do not obtain any third party appraisals regarding the value of the property securing loans made by us or our joint ventures, or the real estate assets owned by us or our joint ventures. Instead, we rely on our own "in-house" valuations. Any valuation allowances taken with respect to our loan portfolio or real estate assets reduces our net income, assets and shareholders' equity to the extent of the amount of the valuation allowance, but it will not affect our cash flow until such time as the property is sold. For fiscal 2010, $3.17 million of loan loss provisions were recorded against our mortgage portfolio and $3.37 million of impairment charges were taken with respect to our real estate assets (including real estate properties held for sale). In fiscal 2011, no such provisions or changes were taken.

Revenue Recognition

        We recognize interest income and rental income on an accrual basis, unless we make a judgment that impairment of a loan or of real estate owned renders doubtful collection of interest or rent in accordance with the applicable loan documents or lease. In making a judgment as to the collectability of interest or rent, we consider, among other factors, the status of the loan or property, the borrower's or tenant's financial condition, payment history and anticipated events in the future. Income recognition is suspended for loans when, in the opinion of management, a full recovery of income and principal becomes doubtful. Income recognition is resumed when the loan becomes contractually current and continued performance is demonstrated. Accordingly, management must make a significant judgment as to whether to treat a loan or real estate owned as impaired. If we make a decision to treat a "problem" loan or real estate asset as not impaired and therefore continue to recognize the interest and rent as income on an accrual basis, we could overstate income by recognizing income that will not be collected and the uncollectible amount will ultimately have to be written off. The period in which the uncollectible amount is written off could adversely affect taxable income for a specific year.

Cash Distribution Policy

        We have elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended, since our organization. To qualify as a REIT, we must meet a number of organizational and operational requirements, including a requirement that we distribute currently (within the time frames prescribed by the Code and the applicable regulations) to our shareholders at least 90% of our adjusted ordinary taxable income. It is the current intention of our management to maintain our REIT status. As a REIT, we generally will not be subject to corporate Federal income tax on taxable income we distribute currently in accordance with the Code and applicable regulations to shareholders. If we fail to qualify as a REIT in any taxable year, we will be subject to Federal income taxes at regular corporate rates and may not be able to qualify as a REIT for four subsequent tax years. Even if we qualify for Federal taxation as a REIT, we may be subject to certain state and local taxes on our income and to Federal income and excise taxes on undistributed taxable income, i.e., taxable income not distributed in the amounts and in the time frames prescribed by the Code and applicable regulations thereunder.

        In December 2008, our board of trustees suspended the payment of regular quarterly dividends. No dividends were paid in fiscal 2011 or 2010. At December 31, 2010, we had a net operating loss carry-forward of $70.5 million and we anticipate utilizing approximately $8.2 million in calendar 2011. Since we can offset our future taxable income against our tax loss carry-forward until the earlier of 2028 or the tax loss carry-forward has been fully used, we do not expect to pay a dividend in calendar 2012 and it is unlikely that we will be required to pay a dividend for several years thereafter to maintain our REIT status. Although our board of trustees reviews the payment of dividends periodically, there is no expectation that a dividend will be paid in the 2012 calendar year and for several years thereafter.

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Item 7A.    Quantitative and Qualitative Disclosure About Market Risk.

        Our primary component of market risk is interest rate sensitivity. Our interest income is subject to changes in interest rates. We seek to minimize these risks by originating loans that are indexed to the prime rate, with a stated minimum interest rate. At September 30, 2011, approximately 82% of the principal amount of our outstanding mortgage loans were comprised of variable rate loans tied to the prime rate and with a stated minimum rate. When determining interest rate sensitivity, we assume that any change in interest rates is immediate and that the interest rate sensitive assets and liabilities existing at the beginning of the period remain constant over the period being measured. We assessed the market risk for our variable rate mortgage receivables as of September 30, 2011 and believe that a one percent increase in interest rates would cause an increase in income before taxes of $513,000 and a one percent decline in interest rates would not cause a decrease in income before taxes because all of our variable rate loans have a stated minimum rate. As of September 30, 2011, 71% of our loan portfolio was secured by properties located in the New York metropolitan area, and we are therefore subject to risks associated with the New York economy.

Item 8.    Financial Statements and Supplementary Data.

        The information required by this item appears in a separate section of this Report following Part IV.

Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

        Not applicable.

Item 9A.    Controls and Procedures.

        A review and evaluation was performed by our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Annual Report on Form 10-K. Based on that review and evaluation, the CEO and CFO have concluded that our current disclosure controls and procedures, as designed and implemented, were effective. There have been no significant changes in our internal controls or in other factors that could significantly affect our internal controls subsequent to the date of their evaluation. There were no material weaknesses identified in the course of such review and evaluation and, therefore, we took no corrective measures.

Management Report on Internal Control Over Financial Reporting

        Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Securities Exchange Act of 1934, as amended, as a process designed by, or under the supervision of, a company's principal executive and principal financial officers and effected by a company's board, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and includes those policies and procedures that:

•

pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of a company;

•

provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of a

36

company are being made only in accordance with authorizations of management and directors of a company; and

•

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of a company's assets that could have a material effect on the financial transactions.

        Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

        Our management assessed the effectiveness of our internal control over financial reporting as of September 30, 2011. In making this assessment, our management used criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework.

        Based on its assessment, our management believes that, as of September 30, 2011, our internal control over financial reporting was effective based on those criteria.

        Our independent auditors, BDO USA, LLP, have issued an audit report on the effectiveness of internal control over financial reporting. This report appears on page F-1 of this Annual Report on Form 10-K.

Item 9B.    Other Information.

        On December 8, 2011, the Board of Trustees adopted, subject to shareholder approval, the Trust's 2012 Incentive Plan. This plan provides for the grant of up to 600,000 common shares pursuant to stock options, restricted stock, restricted stock units and performance share awards. Directors, officers, employees and consultants are entitled to participate in the Plan. Awards to be granted under the plan are subject to the terms and conditions imposed by the plan and by the plan administrators. Subject to earlier termination at the discretion of the plan administrators, the plan terminates ten years after its adoption by shareholders.

        On December 8, 2011, the Board of Trustees approved an amendment to the Advisory Agreement between us and REIT Management, which amendment is effective as of January 1, 2011. See "Business-Our Structure" for further information regarding this amendment.

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PART III

Item 10.    Directors, Executive Officers and Corporate Governance.

        Apart from certain information concerning our executive officers which is set forth in Part I of this report, the other information required by Item 10 is incorporated herein by reference to the applicable information to be in the proxy statement to be filed for our 2012 Annual Meeting of Shareholders.

Item 11.    Executive Compensation.

        The information concerning our executive compensation required by Item 11 will be included in the proxy statement to be filed relating to our 2012 Annual Meeting of Shareholders and is incorporated herein by reference.

Item 12.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

        Except as set forth below, the information required by Item 12 will be included in the proxy statement to be filed relating to our 2012 Annual Meeting of Shareholders and is incorporated herein by reference.

Equity Compensation Plan Information

        The table below provides information as of September 30, 2011 with respect to our Common Shares that may be issued upon exercise of outstanding options, warrants and rights:

	Number of securities to be issued upon exercise of outstanding options, warrants and rights			Weighted-average exercise price of outstanding options, warrants and rights		Number of securities remaining available-for future issuance under equity compensation plans— excluding securities reflected in column (a)
Equity compensation plans approved by security holders		11,000	(1)	$	8.25		229,560
Equity compensation plans not approved by security holders		100,000		$	9.00		—
Total		111,000	(2)		—		229,560

(1)

Excludes 491,705 shares of restricted stock issued to officers, directors, employees and consultants. These restricted shares generally vest five years from the effective date of the award, subject to acceleration as provided in the agreement and incentive plan governing same. These shares vest as follows: 40,925 shares in 2012; 62,780 shares in 2013; 125,350 shares in 2014; 124,550 shares in 2015 and 138,100 shares in 2016.

(2)

Represents warrants to acquire up to 100,000 common shares at an exercise price of $9.00 per share, subject to adjustment as provided for therein. These warrants were issued to an affiliate of Torchlight Investors in connection with our joint venture and expire in May 2012.

Item 13.    Certain Relationships and Related Transactions.

        The information concerning relationships and certain transactions required by Item 13 will be included in the proxy statement to be filed relating to our 2012 Annual Meeting of Shareholders and is incorporated herein by reference.

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Item 14.    Principal Accounting Fees and Services.

        The information concerning our principal accounting fees required by Item 14 will be included in the proxy statement to be filed relating to our 2012 Annual Meeting of Shareholders and is incorporated herein by reference.

PART IV

Item 15.    Exhibits, Financial Statement Schedules.

(a)

1.

All Financial Statements.

The response is submitted in a separate section of this report following Part IV.

2.

Financial Statement Schedules.

The response is submitted in a separate section of this report following Part IV.

3.

Exhibits:

In reviewing the agreements included as exhibits to this Annual Report on Form10-K, please remember they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about us or the other parties to the agreements. The agreements contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement and:

•

should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;

•

have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement;

•

may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and

•

were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments. Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time.

Exhibit No.	Title of Exhibits
3.1	Third Amended and Restated Declaration of Trust (incorporated by reference to Exhibit 3.1 to our Form 10-K for the year ended September 30, 2005).
3.2	By-laws (incorporated by reference to Exhibit 3.2 to our Form 10-K for the year ended September 30, 2005).
3.3	Amendment to By-laws, dated December 10, 2007 (incorporated by reference to Exhibit 3.1 to our Form 8-K filed December 11, 2007).
4.1	Junior Subordinated Supplemental Indenture, dated as of March 15, 2011, between us and the Bank of New York Mellon (incorporated by reference to Exhibit 4.1 to our Form 8-K filed March 18, 2011).

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Exhibit No.	Title of Exhibits
4.2	Warrant to purchase 100,000 shares of beneficial interest of BRT Realty Trust (incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K filed June 7, 2011).
10.1*	Amended and Restated Advisory Agreement, effective as of January 1, 2007, between us and REIT Management Corp. (incorporated by reference to Exhibit 10.1 to our Form 8-K filed November 27, 2006).
10.2*	Shared Services Agreement, dated as of January 1, 2002, by and among Gould Investors L.P., us, One Liberty Properties, Inc., Majestic Property Management Corp., Majestic Property Affiliates,  Inc. and REIT Management Corp. (incorporated by reference to Exhibit 10.2 to our Form 10-K filed December 11, 2008).
10.3	Amended and Restated Limited Liability Company Operating Agreement by and among TRB Newark Assemblage LLC, TRB Newark TRS, LLC, RBH Capital, LLC and RBH Partners LLC (incorporated by reference to Exhibit 10.1 to our Form 8-K filed June 9, 2009).
10.4*	Form of Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.5 to our Form 10-K for the year ended September 30, 2010).
10.5	Loan and Security Agreement, dated as of June 22, 2011, among BRT RLOC LLC, as borrower, BRT Realty Trust, as guarantor, BRT Realty Trust, as servicer, Capital One, National Association, as agent, Capital One, National Association, as custodian, and the lenders from time-to-time party thereto (incorporated by reference to Exhibit 10.1 to our Form 8-K filed on June 23, 2011).
10.6	Guaranty dated as of June 22, 2011, by us in favor of Capital One, National Association (incorporated by reference to Exhibit 10.2 to our Form 8-K filed on June 23, 2011).
10.7	Account Control Agreement dated as of June 22, 2011 among Capital One, National Association, BRT RLOC LLC, and Capital One, National Association, as Agent (incorporated by reference to Exhibit 10.3 to our Form 8-K filed on June 23, 2011).
10.8	Revolving Loan Note dated as of June 22, 2011 (incorporated by reference to Exhibit 10.4 to our Form 8-K filed on June 23, 2011).
10.9	Servicing and Asset Management Agreement between us and BRT RLOC, LLC. (incorporated by reference to Exhibit 10.5 to our Form 8-K filed on June 23, 2011).
10.10	Custodial Agreement, dated as of June 22, 2011, among Capital One, National Association, as custodian, BRT RLOC LLC, us, as servicer and Capital One, National Association, as agent (incorporated by reference to Exhibit 10.6 to our Form 8-K filed on June 23, 2011).
10.11	Limited Liability Company Agreement of BRTL LLC dated as of June 2, 2011 by and among BRTL LLC, Debt Opportunity Fund III, LLC and BRT Torch Member LLC (incorporated by reference to exhibit 10.1 to our Form 8-K filed on June 7, 2011).
10.12	Servicing and Asset Management Agreement made as of June 2, 2011 between BRT Realty Trust and BRTL LLC (incorporated by reference to exhibit 10.2 to our Form 8-K filed on June 7, 2011).
10.13	Pledge and Security Agreement dated as of June 2, 2011 made by BRT Torch Member LLC in favor of Debt Opportunity Fund III, LLC (incorporated by reference to exhibit 10.3 to our Form 8-K filed on June 7, 2011).

40

Exhibit No.	Title of Exhibits
10.14*	2009 Incentive Plan
10.15*	Amendment No. 1 dated as of December 8, 2011 to Amended and Restated Advisory Agreement between us and REIT Management.
14.1	Revised Code of Business Conduct and Ethics of BRT Realty Trust, adopted June 12, 2006 (incorporated by reference to Exhibit 14.1 to the Form 8-K of BRT Realty Trust filed June 14, 2006).
21.1	Subsidiaries
23.1	Consent of BDO USA LLP
23.2	Consent of Ernst & Young, LLP
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (the "Act")
31.2	Certification of Senior Vice President—Finance pursuant to Section 302 of the Act.
31.3	Certification of Chief Financial Officer pursuant to Section 302 of the Act
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Act
32.2	Certification of Senior Vice President—Finance pursuant to Section 906 of the Act
32.3	Certification of Chief Financial Officer pursuant to Section 906 of the Act
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Definition Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

*

Indicates management contract or compensatory plan or arrangement.

(b)

Exhibits.

See Item 15(a)(3) above. The file number for all the exhibits incorporated by reference is: 001-07172.

(c)

Financial Statements.

See Item 15(a)(2) above.

41

SIGNATURES

        Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	BRT REALTY TRUST
Date: December 8, 2011	By:	/s/ JEFFREY A. GOULD Jeffrey A. Gould Chief Executive Officer and President

        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 capacity and on the dates indicated.

Signature	Title	Date
/s/ FREDRIC H. GOULD Fredric H. Gould	Chairman of the Board	December 8, 2011
/s/ JEFFREY A. GOULD Jeffrey A. Gould	Chief Executive Officer, President and Trustee (Principal Executive Officer)	December 8, 2011
/s/ KENNETH BERNSTEIN Kenneth Bernstein	Trustee	December 8, 2011
/s/ ALAN GINSBURG Alan Ginsburg	Trustee	December 8, 2011
/s/ MATTHEW J. GOULD Matthew J. Gould	Trustee	December 8, 2011
/s/ LOUIS C. GRASSI Louis C. Grassi	Trustee	December 8, 2011
/s/ GARY HURAND Gary Hurand	Trustee	December 8, 2011
/s/ JEFFREY RUBIN Jeffrey Rubin	Trustee	December 8, 2011
/s/ JONATHAN SIMON Jonathan Simon	Trustee	December 8, 2011
/s/ ELIE WEISS Elie Weiss	Trustee	December 8, 2011
/s/ GEORGE E. ZWEIER George E. Zweier	Chief Financial Officer, Vice President (Principal Financial and Accounting Officer)	December 8, 2011

42

Item 8, Item 15(a)(1) and (2)

        Index to Consolidated Financial Statements and Consolidated Financial Statement Schedules

		Page No.
Reports of Independent Registered Public Accounting Firms			F-1
Consolidated Balance Sheets as of September 30, 2011 and 2010			F-4
Consolidated Statements of Operations for the years ended September 30, 2011, 2010 and 2009			F-5
Consolidated Statements of Equity for the years ended September 30, 2011, 2010 and 2009			F-6
Consolidated Statements of Cash Flows for the years ended September 30, 2011, 2010 and 2009			F-7
Notes to Consolidated Financial Statements			F-9
Consolidated Financial Statement Schedules for the year ended September 30, 2011:
	III—Real Estate Properties and Accumulated Depreciation		F-33
	IV—Mortgage Loans on Real Estate		F-35

        All other schedules are omitted because they are not applicable or the required information is shown in the consolidated financial statements or the notes thereto.

43

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Trustees and Shareholders of
BRT Realty Trust and Subsidiaries

        We have audited BRT Realty Trust and Subsidiaries' (the "Trust") internal control over financial reporting as of September 30, 2011, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). The Trust's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Item 9A. Controls and Procedures—Management Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Trust's internal control over financial reporting based on our audit.

        We conducted our audit in accordance with the 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 effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

        A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

        Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

        In our opinion, BRT Realty Trust and Subsidiaries maintained, in all material respects, effective internal control over financial reporting as of September 30, 2011, based on the COSO criteria.

        We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of BRT Realty Trust and Subsidiaries as of September 30, 2011, and the related consolidated statement of operations, shareholders' equity, and cash flows for the year then ended and our report dated December 12, 2011 expressed an unqualified opinion thereon.

	/s/ BDO USA LLP
New York, New York December 12, 2011

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Trustees and Shareholders of
BRT Realty Trust and Subsidiaries

        We have audited the accompanying consolidated balance sheet of BRT Realty Trust and Subsidiaries (the "Trust") as of September 30, 2011 and the related consolidated statement of operations, shareholders' equity, and cash flows for the year then ended. In connection with our audit of the financial statements, we have also audited the financial statement schedules listed in the Index at Item 15(a). These financial statements and schedules are the responsibility of the Trust's management. Our responsibility is to express an opinion on these financial statements and schedules based on our audit.

        We conducted our audit in accordance with 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, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and schedules. We believe that our audit provides a reasonable basis for our opinion.

        In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of BRT Realty Trust and Subsidiaries at September 30, 2011 and the results of their operations and their cash flows for the year then ended, in conformity with U.S. generally accepted accounting principles.

        Also, in our opinion, the financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.

        We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), BRT Realty Trust and Subsidiaries' internal control over financial reporting as of September 30, 2011, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated December 12, 2011 expressed an unqualified opinion thereon.

	/s/ BDO USA LLP
New York, New York December 12, 2011

F-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Trustees and Shareholders of
BRT Realty Trust and Subsidiaries

        We have audited the accompanying consolidated balance sheet of BRT Realty Trust and Subsidiaries (the "Trust") as of September 30, 2010 and the related consolidated statements of operations, equity, and cash flows for the years ended September 30, 2010 and 2009. These financial statements are the responsibility of the Trust's management. Our responsibility is to express an opinion on these financial statements and schedules based on our audits.

        We conducted our audits in accordance with the 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 consolidated financial position of BRT Realty Trust and Subsidiaries at September 30, 2010, and the consolidated results of their operations and their cash flows for the years ended September 30, 2010 and 2009, in conformity with U.S. generally accepted accounting principles.

	/s/ Ernst & Young LLP
New York, New York December 13, 2010

F-3

BRT REALTY TRUST AND SUBSIDIARIES

Consolidated Balance Sheets

(Amounts in thousands, except per share data)

				September 30,
				2011			2010
ASSETS
Real estate loans
	Earning interest			$	67,266		$	17,263
	Non-earning interest				—			35,143
					67,266			52,406
	Deferred fee income				(576	)		(245	)
	Allowance for possible losses				—			(3,165	)
					66,690			48,996
Purchase money mortgage loans					—			5,340
Real estate loan held for sale					8,446			—
Real estate properties net of accumulated depreciation of $2,511 and $1,806					59,277			55,843
Investment in unconsolidated ventures					4,247			775
Cash and cash equivalents					44,025			58,497
Available-for-sale securities at market					2,766			10,270
Other assets					5,561			6,545
		Total Assets		$	191,012		$	186,266
LIABILITIES AND EQUITY
Liabilities:
	Junior subordinated notes			$	37,400		$	40,815
	Mortgages payable				14,417			12,557
	Accounts payable and accrued liabilities				948			1,332
	Deposits payable				2,518			1,723
		Total Liabilities			55,283			56,427
Commitments and contingencies					—			—
Equity:
BRT Realty Trust shareholders' equity:
	Preferred shares, $1 par value:
		Authorized 10,000 shares, none issued			—			—
	Shares of beneficial interest, $3 par value:
		Authorized number of shares, unlimited, 14,994 and 15,148 issued			44,981			45,445
	Additional paid-in capital				171,889			172,268
	Accumulated other comprehensive income—net unrealized gain on available-for-sale securities				278			1,594
	Accumulated deficit				(77,015	)		(83,389	)
	Cost of 1,422 and 1,460 treasury shares of beneficial interest				(11,070	)		(11,364	)
		Total BRT Realty Trust shareholders' equity			129,063			124,554
Non-controlling interests					6,666			5,285
		Total Equity			135,729			129,839
			Total Liabilities and Equity	$	191,012		$	186,266

See accompanying notes to consolidated financial statements.

F-4

BRT REALTY TRUST AND SUBSIDIARIES

Consolidated Statements of Operations

(Dollars in thousands, except share data)

		Year Ended September 30,
		2011			2010			2009
Revenues:
	Interest on real estate loans	$	8,234		$	2,412		$	8,577
	Interest on purchase money mortgage loans		266			1,212			246
	Loan fee income		1,828			253			887
	Rental revenue from real estate properties		3,456			3,422			1,718
	Recovery of previously provided allowances		3,595			365			—
	Other, primarily investment income		502			471			726
	Total revenues		17,881			8,135			12,154
Expenses:
	Interest on borrowed funds		2,112			2,584			4,719
	Advisor's fees, related party		916			785			1,173
	Provision for loan losses		—			3,165			17,110
	Impairment charges		—			2,625			1,272
	Foreclosure related professional fees		579			673			908
	Debt restructuring charges		—			—			685
	General and administrative—including $847, $822 and $1,002 to related party		6,149			6,063			7,045
	Operating expenses relating to real estate properties		3,340			3,216			2,133
	Amortization and depreciation		738			733			1,284
	Total expenses		13,834			19,844			36,329
Total revenues less total expenses			4,047			(11,709	)		(24,175	)
Equity in earnings (loss) of unconsolidated ventures			350			196			(2,791	)
Gain on sale of joint venture interest			—			—			271
Gain on sale of available-for-sale securities			1,319			1,586			1,016
(Loss) gain on extinguishment of debt			(2,138	)		—			6,443
Income (loss) from continuing operations			3,578			(9,927	)		(19,236	)
Discontinued operations:
	Loss from operations		—			(602	)		(1,549	)
	Impairment charges		—			(745	)		(29,774	)
	Gain on sale of real estate assets		1,346			1,937			2,199
	Discontinued operations		1,346			590			(29,124	)
Net income (loss)			4,924			(9,337	)		(48,360	)
Plus: net loss attributable to non-controlling interests			1,450			1,322			605
	Net income (loss) attributable to common shareholders	$	6,374		$	(8,015	)	$	(47,755	)
Basic and diluted per share amounts attributable to common shareholders:
Income (loss) from continuing operations		$	.35		$	(.62	)	$	(2.50	)
Discontinued operations			.10			.04			(1.60	)
	Basic and diluted earnings (loss) per share	$	.45		$	(.58	)	$	(4.10	)
Amounts attributable to BRT Realty Trust:
	Income (loss) from continuing operations	$	5,028		$	(8,605	)	$	(18,631	)
	Discontinued operations		1,346			590			(29,124	)
Net income (loss)		$	6,374		$	(8,015	)	$	(47,755	)
Weighted average number of common shares outstanding:
Basic and diluted			14,041,569			13,871,668			11,643,972

See accompanying notes to consolidated financial statements.

F-5

BRT REALTY TRUST AND SUBSIDIARIES

Consolidated Statements of Equity

Years Ended September 30, 2011, 2010 and 2009

(Dollars in thousands, except share data)

	Shares of Beneficial Interest			Additional Paid-In Capital			Accumulated Other Comprehensive Income			(Accumulated Deficit)			Treasury Shares			Non Controlling Interests			Total
Balances, September 30, 2008	$	38,133		$	166,402		$	7,126		$	(14,311	)	$	(10,578	)	$	121		$	186,893
Distributions—common share ($1.15 per share)		—			—			—			(13,308	)		—			—			(13,308	)
Restricted stock vesting		—			(205	)		—			—			205			—			—
Compensation expense—restricted stock		—			876			—			—			—			—			876
Contributions from non-controlling interests		—			—			—			—			—			5,534			5,534
Distributions to non-controlling interests		—			—			—			—			—			(60	)		(60	)
Shares repurchased (256,110 shares)		—			—			—			—			(943	)		—			(943	)
Net loss		—			—			—			(47,755	)		—			(605	)		(48,360	)
Other comprehensive loss—net unrealized loss on available-for-sale securities (net of reclassification adjustment for gains of $1,014 included in net loss)		—			—			(4,415	)		—			—			—			(4,415	)
Comprehensive loss		—			—			—			—			—			—			(52,775	)
Balances, September 30, 2009		38,133			167,073			2,711			(75,374	)		(11,316	)		4,990			126,217
Shares issued—stock dividend (2,437,352 shares)		7,312			4,604			—			—			—			—			11,916
Restricted stock vesting		—			(242	)		—			—			242			—			—
Compensation expense—restricted stock		—			833			—			—			—			—			833
Contributions from non-controlling interests		—			—			—			—			—			1,846			1,846
Distributions to non-controlling interests		—			—			—			—			—			(229	)		(229	)
Shares repurchased (52,403 shares)		—			—			—			—			(290	)		—			(290	)
Net loss		—			—			—			(8,015	)		—			(1,322	)		(9,337	)
Other comprehensive loss—net unrealized loss on available-for-sale securities (net of reclassification adjustment for gains of $1,557 included in net loss)		—			—			(1,117	)		—			—			—			(1,117	)
Comprehensive loss		—			—			—			—			—			—			(10,454	)
Balances, September 30, 2010		45,445			172,268			1,594			(83,389	)		(11,364	)		5,285			129,839
Restricted stock vesting		—			(294	)		—			—			294			—			—
Compensation expense—restricted stock		—			845			—			—			—			—			845
Issuance of warrants in connection with joint venture agreement		—			259			—			—			—			—			259
Contributions from non-controlling interests		—			—			—			—			—			3,181			3,181
Distributions to non-controlling interests		—			—			—			—			—			(66	)		(66	)
Purchase of minority interest		—			(429	)		—			—			—			(284	)		(713	)
Shares repurchased (154,692 shares)		(464	)		(760	)		—			—			—			—			(1,224	)
Net income (loss)		—			—			—			6,374			—			(1,450	)		4,924
Other comprehensive loss—net unrealized loss on available-for-sale securities (net of reclassification adjustment for gains of $462 included in net loss)		—			—			(1,316	)		—			—			—			(1,316	)
Comprehensive income		—			—			—			—			—			—			3,608
Balances, September 30, 2011	$	44,981		$	171,889		$	278		$	(77,015	)	$	(11,070	)	$	6,666		$	135,729

See accompanying notes to consolidated financial statements.

F-6

BRT REALTY TRUST AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(Dollars in Thousands)

			Year Ended September 30,
			2011			2010			2009
Cash flows from operating activities:
	Net income (loss)		$	4,924		$	(9,337	)	$	(48,360	)
		Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
		Provision for loan loss		—			3,165			17,110
		Recovery of previously provided allowances		(3,595	)		(365	)		—
		Impairment charges		—			3,370			31,046
		Amortization and depreciation		963			927			1,686
		Amortization of deferred fee income		(1,777	)		(219	)		(897	)
		Accretion of junior subordinated notes principal		277			581			322
		Amortization of securities discount		(28	)		(69	)		(28	)
		Amortization of restricted stock		845			833			876
		Gain on sale of real estate assets from discontinued operations		(1,346	)		(1,937	)		(2,199	)
		Gain on sale of available-for-sale securities		(1,319	)		(1,586	)		(1,016	)
		Loss (gain) on extinguishment of debt		2,138			—			(6,443	)
		Equity in (earnings) loss of unconsolidated joint ventures		(350	)		(196	)		2,791
		Gain on sale of joint venture interest		—			—			(271	)
		Distribution of earnings of unconsolidated joint ventures		210			193			185
		Increase in straight line rent		(54	)		(330	)		(16	)
	Increases and decreases from changes in other assets and liabilities:
		(Increase) decrease in interest and dividends receivable		(410	)		398			754
		Decrease (increase) in prepaid expenses		451			115			(1,876	)
		Increase (decrease) in accounts payable and accrued liabilities		375			(960	)		(1,431	)
		Increase in deferred costs		(142	)		—			—
		(Increase) decrease in security deposits and other receivable		153			(270	)		60
		Other		127			(27	)		280
Net cash provided by (used in) operating activities				1,442			(5,714	)		(7,427	)
Cash flows from investing activities:
	Collections from real estate loans			66,072			22,475			20,207
	Additions to real estate loans			(131,255	)		(17,384	)		(12,704	)
	Proceeds from the sale of loans and loan participations			46,147			16,815			—
	Loan loss recoveries			1,039			227			2,417
	Net costs capitalized to real estate owned			(3,605	)		(4,120	)		(4,721	)
	Collection of loan fees			2,465			419			557
	Additions to real estate			(2,421	)		—			(15,718	)
	Proceeds from sale of real estate owned			4,035			15,930			25,152
	Proceeds from sale of available-for-sale securities			7,590			3,425			2,668
	Purchase of available-for-sale securities			(55	)		(4,194	)		(4,520	)
	Proceeds from maturity of held-to-maturity security			—			1,000			—
	Distributions of capital of unconsolidated joint ventures			1,010			1,701			4,111
	Contributions to unconsolidated joint ventures			(4,045	)		—			(781	)
	Proceeds from the sale of joint venture interests			—			—			1,350
	Purchase of interest from non-controlling partner			(713	)		—			—
Net cash (used in) provided by investing activities				(13,736	)		36,294			18,018

F-7

BRT REALTY TRUST AND SUBSIDIARIES

Consolidated Statements of Cash Flows (Continued)

(Dollars in Thousands)

		Year Ended September 30,
		2011			2010			2009
Cash flows from financing activities:
	Proceeds from borrowed funds		—			—			6,000
	Repayment of borrowed funds		—			—			(9,000	)
	Repayment of junior subordinated notes		(5,000	)		—			(8,316	)
	Proceeds from mortgages payable		2,130			3,202			5,131
	Mortgage principal payments		(270	)		(105	)		(86	)
	Increase in deferred borrowing costs		(926	)		(821	)		(987	)
	Cash distribution—common shares		—			(1,334	)		(15,564	)
	Expenses associated with stock issuance		—			(60	)		—
	Capital contributions from non-controlling interests		3,181			1,846			3,117
	Capital distributions to non-controlling interests		(68	)		(229	)		—
	Repurchase of shares of beneficial interest		(1,225	)		(290	)		(943	)
Net cash (used in) provided by financing activities			(2,178	)		2,209			(20,648	)
	Net (decrease) increase in cash and cash equivalents		(14,472	)		32,789			(10,057	)
	Cash and cash equivalents at beginning of year		58,497			25,708			35,765
	Cash and cash equivalents at end of year	$	44,025		$	58,497		$	25,708
Supplemental disclosures of cash flow information:
	Cash paid during the year for interest expense, including capitalized interest of $775 and $328 in 2011 and 2010	$	1,791		$	2,120		$	5,841
	Cash paid during the year for income and excise taxes	$	8		$	17		$	145
Non cash investing and financing activities:
	Common stock dividend—portion paid in the Trust's common shares		—		$	11,916			—
	Reclassification of loans to real estate and real estate held for sale upon foreclosure		—			—		$	43,329
	Accrued distributions		—			—		$	13,308
	Junior subordinated notes redeemed to cancel statutory trust common securities		—			—		$	1,702
	Issuance of warrants in connection with joint venture agreement	$	259
	Seller financing provided for sale of real estate		—			—		$	17,777
	Reclassification of real estate properties to/from real estate held for sale		—		$	8,552		$	6,801
	Assumption of mortgages of consolidated joint venture		—			—		$	2,100
	Reclassification of real estate loans to real estate loans held for sale	$	8,446			—		$	16,915

See accompanying notes to consolidated financial statements.

F-8

BRT REALTY TRUST AND SUBSIDIARIES

Notes to Consolidated Financial Statements

September 30, 2011

NOTE 1—ORGANIZATION, BACKGROUND AND SIGNIFICANT ACCOUNTING POLICIES

Organization and Background

        BRT Realty Trust is a business trust organized in Massachusetts. Our primary business is to originate and hold for investment senior mortgage loans secured by commercial and multi-family real estate property in the United States. This includes originating loans to persons purchasing their own or third party mortgage debt, at a discount to the principal amount thereof. Generally, in such transactions, we purchase the mortgage and our counterparty is obligated to repurchase such mortgage within a specified period. The loans we originate generally have relatively high yields and are short-term or bridge loans with a duration ranging from six months to one year. It is our policy to lend at a floating rate of interest based on a spread over the prime rate, with a stated minimum rate, though we originate fixed rate loans as circumstances dictate. We receive an origination fee for the loans we originate. We conduct our operations to qualify as a real estate investment trust, or REIT, for Federal income tax purposes.

        From time-to-time we originate junior commercial and multi-family mortgage loans, participate as an equity investor in, and mortgage lender to, joint ventures which acquire income producing real estate property, and purchase securities of other REITs.

Principles of Consolidation; Basis of Preparation

        Certain items on the consolidated financial statements for the preceding periods have been reclassified in the accompanying consolidated financial statements to conform to the current year's presentation.

        The consolidated financial statements include the accounts and operations of BRT Realty Trust, its wholly owned subsidiaries, and its majority-owned or controlled real estate entities and its interests in variable interest entities in which it is the primary beneficiary. Material intercompany items and transactions have been eliminated. BRT Realty Trust and its subsidiaries are hereinafter referred to as "BRT" or the "Trust."

        With respect to its unconsolidated joint ventures, as (i) the Trust is primarily the managing member but does not exercise substantial operating control over these entities or the Trust is not the managing member and (ii) such entities are not variable-interest entities, the Trust has determined that such joint ventures should be accounted for under the equity method of accounting for financial statement purposes.

        RBH-TRB Newark Holdings LLC was determined to be a Variable Interest Entity ("VIE") because the total equity investment at risk is not sufficient to permit it to finance its activities without additional subordinated financial support by its equity holders. The Trust was determined to be the primary beneficiary as it has a controlling financial interest in the VIE as it has the obligation to absorb a majority of the VIE's expected losses. For these reasons, the Trust has consolidated the operations and assets of this VIE in the Trust's consolidated financial statements.

F-9

BRT REALTY TRUST AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

September 30, 2011

NOTE 1—ORGANIZATION, BACKGROUND AND SIGNIFICANT ACCOUNTING POLICIES (Continued)

Income Tax Status

        The Trust qualifies as a real estate investment trust under Sections 856-860 of the Internal Revenue Code of 1986, as amended. The Trustees may, at their option, elect to operate the Trust as a business trust not qualifying as a real estate investment trust.

Income Recognition

        Income and expenses are recorded on the accrual basis of accounting for financial reporting purposes. The Trust does not accrue interest on impaired loans where, in the judgment of management, collection of interest according to the contractual terms of the loan documents is considered doubtful. Among the factors the Trust considers in making an evaluation of the amount of interest that is collectable, are the financial condition of the borrower, the status of the underlying collateral and anticipated future events. The Trust accrues interest on performing impaired loans and records cash receipts as a reduction of interest receivable. For impaired non-accrual loans, interest is recognized on a cash basis. The Trust will resume the accrual of interest if it determines the collection of interest according to the contractual terms of the loan is probable.

        Loan commitment, origination and extension fee income on loans held in our portfolio is deferred and recorded as loan fee income over the life of the commitment and loan. Commitment fees are generally non-refundable. When a commitment expires or the Trust no longer has any other obligation to perform, the remaining fee is recognized into income.

        Rental revenue from real estate properties includes the base rent that each tenant is required to pay in accordance with the terms of their respective leases reported on a straight line basis over the initial term of the lease.

        The basis on which cost was determined in computing the realized gain or loss on available-for-sale securities is specific cost.

Allowance for Possible Losses

        A loan evaluated for impairment is deemed to be impaired when based on current information and events, it is probable, in the judgment of management, that the Trust will not be able to collect all amounts due according to the contractual terms of the loan documents. When making this evaluation various factors are considered, as appropriate, including, market evaluations of the underlying collateral, estimated operating cash flow from the property during the projected holding period, and estimated sales value computed by applying an estimated capitalization rate to the projected stabilized net operating income of the specific property, less selling costs, discounted at market discount rates. If upon completion of the evaluation, the value of the collateral securing the loan is less than the recorded investment in the loan, an allowance is created with a corresponding charge to expense. The fair values related to the collateral securing impaired loans based on discounted cash flow models are considered to be level 3 valuations within the fair value hierarchy. When the Trust acquires title to the property, the loan loss allowance is adjusted by charging off all amounts related to the loan and recording the property at its adjusted carrying value.

F-10

BRT REALTY TRUST AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

September 30, 2011

NOTE 1—ORGANIZATION, BACKGROUND AND SIGNIFICANT ACCOUNTING POLICIES (Continued)

Real Estate Properties, Real Estate Properties Held For Sale and Loan Held For Sale

        Real estate properties are shown net of accumulated depreciation and includes real property acquired by foreclosure and similar proceedings.

        When real estate is acquired by foreclosure proceedings, it is recorded at the lower of the recorded investment of the loan or estimated fair value of the property at the time of foreclosure or delivery of a deed in lieu of foreclosure. The recorded investment is the face amount of the loan that has been decreased by any deferred fees, loan loss allowances and any valuation adjustments. Real estate assets, including assets acquired by foreclosure proceedings, that are operated for the production of income are depreciated over their estimated useful lives. Costs incurred in connection with the foreclosure of the properties collateralizing the real estate loans are expensed as incurred.

        Real estate and real estate loans are classified as held for sale when management has determined that it has met the appropriate criteria in Accounting Standards Codification (ASC) 360. Real estate properties which are held for sale are not depreciated and their operations are shown in discontinued operations. Real estate assets and loans that are expected to be disposed of are valued at the lower of their carrying amount or their fair value less costs to sell on an individual asset basis.

        The Trust accounts for the sale of real estate when title passes to the buyer, sufficient equity payments have been received, there is no continuing involvement by the Trust and there is reasonable assurance that the remaining receivable, if any, will be collected.

Real Estate Asset Impairments

        The Trust reviews each real estate asset owned, including investments in real estate ventures to determine if there are indicators of impairment. If such indicators are present, the Trust determines whether the carrying amount of the asset can be recovered. Recognition of impairment is required if the undiscounted cash flows estimated to be generated by the assets are less than the assets' carrying amount. Measurement of impairment is based upon the estimated fair value of the asset. In evaluating a property for impairment, various factors are considered, including estimated current and expected operating cash flow from the property during the projected holding period, costs necessary to extend the life or improve the asset, expected capitalization rates, projected stabilized net operating income, selling costs, and the ability to hold and dispose of such real estate owned in the ordinary course of business. Valuation adjustments may be necessary in the event that effective interest rates, rent-up periods, future economic conditions, and other relevant factors vary significantly from those assumed in valuing the property. If future evaluations result in a diminution in the value of the property, the reduction will be recognized as an impairment charge. The fair values related to the impaired real estate are considered to be a level 3 valuation within the fair value hierarchy.

Fixed Asset Capitalization

        A variety of costs may be incurred in the development of our properties. After a determination is made to capitalize a cost, it is allocated to the specific project that is benefited. The costs of land and building under development include specifically identifiable costs. The capitalized costs include pre-construction costs essential to the development of the property, development costs, construction

F-11

BRT REALTY TRUST AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

September 30, 2011

NOTE 1—ORGANIZATION, BACKGROUND AND SIGNIFICANT ACCOUNTING POLICIES (Continued)

costs, interest costs, real estate taxes, and other costs incurred during the period of development. We consider a construction project as substantially completed when it is available for occupancy, but no later than one year from cessation of major construction activity. We cease capitalization when the project is available for occupancy.

Equity Based Compensation

        The Trust's compensation expense for restricted stock awards is amortized over the vesting period of such awards, based upon the estimated fair value of such restricted stock at the grant date. For accounting purposes, the restricted shares are not included in the outstanding shares shown on the consolidated balance sheets until they vest, however, they are included in the calculation of both basic and diluted earnings per share as they participate in the earnings of the Trust.

Per Share Data

        Basic earnings (loss) per share was determined by dividing net income (loss) applicable to common shareholders for each year by the weighted average number of shares of beneficial interest outstanding during each year. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue shares of beneficial interest were exercised or converted into shares of beneficial interest or resulted in the issuance of shares of beneficial interest that share in the earnings of the Trust. Diluted earnings per share was determined by dividing net income applicable to common shareholders for each year by the total of the weighted average number of shares of beneficial interest outstanding plus the dilutive effect of the Trust's unvested restricted stock and outstanding options and warrants using the treasury stock method.

Cash Equivalents

        Cash equivalents consist of highly liquid investments, primarily direct United States treasury obligations with maturities of three months or less when purchased.

Use of Estimates

        The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Segment Reporting

        Management has determined that it operates in two reportable segments: a loan and investment segment and a real estate segment. The loan and investment segment includes all activities related to the origination and servicing of our loan portfolio and other investments and the real estate segment includes all activities related to the development, operation and disposition of the Trusts real estate assets. These two lines of business require different support infrastructures.

F-12

BRT REALTY TRUST AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

September 30, 2011

NOTE 1—ORGANIZATION, BACKGROUND AND SIGNIFICANT ACCOUNTING POLICIES (Continued)

New Accounting Pronouncements

        In June 2009, the FASB issued updated guidance, which amends guidance for determining whether an entity is a variable interest entity, or VIE, and requires the performance of a qualitative rather than a quantitative analysis to determine the primary beneficiary of a VIE. Under this guidance, an entity would be required to consolidate a VIE if it has (i) the power to direct the activities that most significantly impact the entity's economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could be significant to the VIE. This guidance was effective for the first annual reporting period that began after November 15, 2009. The Trust adopted this guidance on October 1, 2010 and the adoption did not have a material impact on the consolidated financial statements.

        In July 2010, the FASB issued updated guidance on disclosures about the credit quality of financing receivables and the allowance for credit losses which will require a greater level of information disclosed about the credit quality of loans and allowance for loan losses, as well as additional information related to credit quality indicators, past due information, and information related to loans modified in a troubled debt restructuring. This guidance became effective for public entities for interim and annual reporting periods ending on or after December 15, 2010. The Trust adopted this guidance on January 1, 2011 and the adoption did not have a material impact on the consolidated financial statements.

        In April 2011, the FASB issued Accounting Standard Unit (ASU) No. 2011-02 which is included in Accounting Standards Codification (ASC) 320, Receivables. This update requires a creditor to evaluate whether a restructuring constitutes a troubled debt restructuring by concluding that the restructuring constitutes a concession and that the debtor is experiencing financial difficulties. This guidance was effective for the Trust interim reporting beginning July 1, 2011. This guidance did not have a material impact on its financial condition, results of operations or disclosures.

        In May 2011, the FASB issued ASU No. 2011-04, which is included in ASC 820, Fair Value Measurement: Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S GAAP and IFRS. This update defines fair value, clarifies a framework to measure fair value, and requires specific disclosures of fair value measurements. The guidance will be effective for the Trust's interim and annual reporting periods beginning October 1, 2011, and applied prospectively. The Trust does not expect adoption of this guidance to have a material impact on its financial condition, results of operations, or disclosures.

        In June 2011, the FASB issued ASU No. 2011-05, which is included in ASC 220, Presentation of Comprehensive Income. This update improves the comparability, consistency, and transparency of financial reporting and increases the prominence of items reported in other comprehensive income. The guidance requires all non-owner changes in shareholders' equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The guidance will be effective for the Trust's interim and annual reporting periods beginning January 1, 2012, and applied retrospectively. The Trust does not expect adoption of this guidance to have a material impact on its financial condition, results of operations, or disclosures.

F-13

BRT REALTY TRUST AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

September 30, 2011

NOTE 2—REAL ESTATE LOANS AND PURCHASE MONEY MORTGAGES

        At September 30, 2011, information as to real estate loans (excluding a real estate loan held for sale), all of which are earning, is summarized as follows (dollars in thousands):

		Real Estate Loans, Net			Percent
Multi-family residential		$	26,300			39.2
Office			24,975			37.1
Industrial			11,874			17.6
Retail			4,117			6.1
			67,266			100	%
Deferred fee income			(576	)
	Real estate loans, net	$	66,690

        A summary of the changes in non-earning loans before allowance for possible losses of $3,165,000 and $1,618,000 for the years ended September 30, 2010 and 2009 respectively, is as follows (dollars in thousands):

	2011			2010			2009
Beginning principal balance	$	35,143		$	2,836		$	18,407
Additions		—			34,563			68,184
Protective advances		—			—			93
Total additions		—			34,563			68,277
Payoffs and paydowns					(2,256	)		(883	)
Sale of loan		(26,655	)		—			—
Reclassified to performing		—			—			(1,250	)
Reclassified to real estate loan held for sale		(8,488	)		—			(22,967	)
Transferred to owned real estate		—			—			(56,448	)
Direct charge off		—			—			(2,300	)
Total reductions		(35,143	)		(2,256	)		(83,848	)
Ending principal balance	$	—		$	35,143		$	2,836

        There was no allowance for possible losses at September 30, 2011.

        At September 30, 2011, 2010 and 2009, no earning loans were deemed impaired and accordingly no loan loss allowances have been established against our earning portfolio. During the years ended September 30, 2011, 2010 and 2009, respectively, an average of $7,758,000, $23,526,000 and $34,932,000, respectively, of real estate loans were deemed impaired, and no interest income was recognized in any period relating to these loans.

        The Trust recognized cash basis interest of $621,000, $571,000 and $481,000 on non-earning loans in the years ended September 30, 2011, 2010 and 2009, respectively.

F-14

BRT REALTY TRUST AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

September 30, 2011

NOTE 2—REAL ESTATE LOANS AND PURCHASE MONEY MORTGAGES (Continued)

        At September 30, 2010 information as to real estate loans and purchase money mortgages, all of which are first mortgage loans, is summarized as follows (dollars in thousands):

			Earning Interest			Non-Earning Interest			Total			Allowance For Possible Losses			Real Estate Loans, Net
Real estate loans:
	Condominium units (existing multi-family)			—		$	8,488		$	8,488			—		$	8,488
	Vacant loft building with retail			—			26,075			26,075		$	(2,985	)		23,090
	Multi-family residential		$	14,097			580			14,677			(180	)		14,497
	Retail			3,166			—			3,166			—			3,166
				17,263			35,143			52,406			(3,165	)		49,241
	Deferred fee income			(159	)		(86	)		(245	)					(245	)
		Real estate loans, net		17,104			35,057			52,161			(3,165	)		48,996
Purchase money mortgage loans:
	Multi-family residential			5,340			—			5,340			—			5,340
		Real estate and purchase money mortgage loans, net	$	22,444		$	35,057		$	57,501		$	(3,165	)	$	54,336

        Loans originated by the Trust generally provide for interest rates indexed to the prime rate with a stated minimum. However in 2011, we also originated loans where the interest rate is fixed for the initial term, and converts to a floating rate loan if the extension option if any, is exercised. In 2010 the Trust also provided fixed rate financing to facilitate the sale of real estate that it owned.

        At September 30, 2011, two separate, unaffiliated borrowers had loans outstanding in excess of 5% of total assets. Information regarding these loans is set forth in the table below (dollars in thousands):

	Gross Loan Balance		# of Loans		% of Gross Loans			% of Assets			State	Status
Office building(a)	$	22,800		1		30.1	%		11.9	%	NY	Performing
Industrial	$	11,874		1		15.7	%		6.2	%	MD	Performing

(a)

This loan was paid in full on November 10, 2011.

The Trust's portfolio consists of senior mortgage loans, secured by residential or commercial property, 71% of which are located in New York, 16% in Maryland, 7% in New Jersey and 6% in two other states.

F-15

BRT REALTY TRUST AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

September 30, 2011

NOTE 2—REAL ESTATE LOANS AND PURCHASE MONEY MORTGAGES (Continued)

        Annual maturities of real estate loans (excluding real estate loan held for sale) during the next five years and thereafter are summarized as follows (dollars in thousands):

Year Ending September 30,	Amount
2012	$	55,393
2013		11,873
2014 and thereafter		—
Total	$	67,266

        If a loan is not repaid at maturity, the Trust may either extend the loan or may commence foreclosure proceedings. The Trust analyzes each loan separately to determine the appropriate course of action. In analyzing each situation, management examines various aspects of the loan receivable, including the value of the collateral, the financial strength of the borrower, past payment history and plans of the owner of the property. Of the $52,701,000 of real estate loans receivable that were scheduled to mature in fiscal 2011, $3,066,000 were extended, $41,147,000 were paid off or sold, and $8,488,000 was the subject of a bankruptcy proceeding.

        At September 30, 2011, the three largest real estate loans had principal balances outstanding of approximately $22,800,000, $11,874,000 and $9,516,000. These three loans accounted for 17.5%, 5.5% and 4.3% of the total interest and fees earned on our loan portfolio in the year ended September 30, 2011.

NOTE 3—REAL ESTATE LOAN HELD FOR SALE

        At September 30, 2011, the Trust had one loan outstanding, which is classified as held for sale. The loan, which represented a pari passu interest in a loan with a principal balance of approximately $17 million, had a carrying value of approximately $8.5 million, and represented 11.2% of total real estate loans and 4.4% of total assets at September 30, 2011. In October 2011, pursuant to a Federal Bankruptcy Court approved joint plan of reorganization, the Trust and its loan participant sold the rights to the loan for net proceeds of approximately $23.5 million. The Trust provided $15 million of financing for the purchase. This loan paid off on December 5, 2011.

NOTE 4—ALLOWANCE FOR POSSIBLE LOAN LOSSES

        The following is an analysis of the allowance for possible loan losses (dollars in thousands):

	Year Ended September 30,
	2011			2010			2009
Balance at beginning of year	$	3,165		$	1,618		$	6,710
Provision for loan loss		—			3,165			17,110
Recovery of previously provided allowance		(3,595	)		(365	)		—
Charge-offs		(609	)		(1,480	)		(24,619	)
Recoveries		1,039			227			2,417
Balance at end of year	$	—		$	3,165		$	1,618

F-16

BRT REALTY TRUST AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

September 30, 2011

NOTE 4—ALLOWANCE FOR POSSIBLE LOAN LOSSES (Continued)

        The allowance for possible losses applies to two loans aggregating $26,655,000 at September 30, 2010, and one loan of $2,256,000 at September 30, 2009.

NOTE 5—REAL ESTATE PROPERTIES

        A summary of the change in real estate properties for the year ended September 30, 2011 is as follows (dollars in thousands):

	September 30, 2010 Balance			Costs Capitalized		Depreciation, Amortization and Paydowns			September 30, 2011 Balance
Shopping centers/retail	$	2,957	(a)		—	$	(104	)	$	2,853
Multi-family		2,969			—		(2,654	)		315
Commercial		41,945	(b)	$	6,793		(601	)		48,137
Land		7,972	(c)		—		—			7,972
Total real estate properties	$	55,843		$	6,793	$	(3,359	)	$	59,277

(a)

The Trust holds, with a minority partner, a leasehold interest in a portion of a retail shopping center located in Yonkers, New York. The leasehold interest is for approximately 28,500 square feet and, including all option periods, expires in 2045. The non-controlling interest was 15%, or $(120,000) at September 30, 2011 and 30% or $152,000 at September 30, 2010.            These amounts are included as a component of non-controlling interests on the consolidated balance sheets.

(b)

Represents the real estate assets of RBH-TRB Newark Holdings LLC, a consolidated VIE which owns 26 operating and development properties in Newark, New Jersey. These properties contain a mix of office, retail space and surface parking, totaling approximately 637,000 square feet. These assets are subject to blanket mortgages in the aggregate principal balance of $27,000,000 held by the Trust, which are eliminated in consolidation. Several of the assets are also encumbered by other mortgages which are discussed in Note 9—Debt Obligations—Mortgages Payable. The risks associated with our involvement in this VIE have not changed in the year ended September 30, 2011.

For the years ended September 30, 2011 and 2010, this VIE had revenues of $2,034,000 and $2,026,000, respectively, and operating expenses of $2,486,000 and $2,635,000, respectively, excluding interest and depreciation expense. The Trust made capital contributions of $3,194,000 and $1,858,000 to this venture in the years ended September 30, 2011 and 2010, respectively, representing its proportionate share of capital required to fund the operations of the venture for its next fiscal year. The contributions made in 2011 also include $928,000 to purchase additional land parcels. The minority partner also made its proportionate share of the capital contribution which totaled $3,181,000 and $1,851,000 in the years ended September 30, 2011 and 2010, respectively.

(c)

Land is composed of an 8.9 acre development parcel located in Daytona Beach, Florida, previously acquired in foreclosure.

F-17

BRT REALTY TRUST AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

September 30, 2011

NOTE 5—REAL ESTATE PROPERTIES (Continued)

        Future minimum rentals to be received by the Trust pursuant to non-cancellable operating leases with terms in excess of one year, from properties on which the Trust holds title at September 30, 2011, are as follows (dollars in thousands):

Year Ending September 30,	Amount
2012	$	2,481
2013		2,221
2014		2,172
2015		2,185
2016		2,066
Thereafter		10,944
Total	$	22,069

NOTE 6—IMPAIRMENT CHARGES

        The Trust reviews each real estate asset owned, including investments in unconsolidated joint ventures, for which indicators of impairment are present to determine whether the carrying amount of the asset can be recovered. If indicators of impairment are present, measurement is then based upon the fair value of the asset. Real estate assets held for sale are valued at the lower of cost or fair value, less costs to sell on an individual asset basis.

        As a result of the credit crisis and the deterioration in the value of real estate in locations where the Trust owned properties, the Trust took impairment charges of $3,370,000 and $31,046,000 for the fiscal years ended September 30, 2010 and 2009, respectively, as follows (dollars in thousands):

		September 30,
		2010		2009
Real estate properties		$	2,625	$	1,272
Real estate properties held for sale			745		29,774
	Total impairment charges	$	3,370	$	31,046

        There were no impairment charges taken in Fiscal 2011.

NOTE 7—INVESTMENT IN UNCONSOLIDATED VENTURES

        On June 2, 2011, a wholly owned subsidiary of the Trust entered into a joint venture with an affiliate of Torchlight Investors ("Torchlight"). The joint venture has the right, but not the obligation, to acquire all whole loans originated by the Trust. The BRT member is the managing member of the joint venture. The joint venture may be capitalized with up to $100 million of which 20% will be funded by the BRT member and 80% will be funded by Torchlight as and when loans are acquired. Subsequent to year end, the parties to the venture terminated the Trust's obligation to sell loans to this venture.

        In the fiscal year ended September 30, 2011, the Trust's share of the venture's earnings was $99,000. The Trust's equity investment in this joint venture totaled $3,431,000 at September 30, 2011.

F-18

BRT REALTY TRUST AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

September 30, 2011

NOTE 7—INVESTMENT IN UNCONSOLIDATED VENTURES (Continued)

        The Trust is also a partner in two unconsolidated joint ventures, each of which owns and operates one property. The Trust was also a partner in an unconsolidated joint venture that engaged in short term lending. That venture ceased operations in November 2009. These ventures generated $251,000, $196,000 and ($2,791,000) in equity earnings (loss) for the years ended September 30, 2011, 2010 and 2009, respectively. The Trust's equity investment in these unconsolidated joint ventures totaled $816,000 and $775,000 at September 30, 2011 and 2010, respectively.

NOTE 8—AVAILABLE-FOR-SALE SECURITIES

        At September 30, 2011, the Trust had available for sale securities which consisted solely of equity securities. Details regarding these available-for-sale securities are presented below (dollars in thousands):

	Cost basis		Unrealized gains		Unrealized losses			Market value
Equity Securities	$	2,488	$	406	$	(128	)	$	2,766

        Unrealized gains and losses are reflected as accumulated other comprehensive income-net unrealized gain on available-for-sale securities in the accompanying consolidated balance sheets.

        The Trust's available-for-sale equity securities were determined to be Level 1 financial assets within the valuation hierarchy established by current accounting guidance, and the valuation is based on current market quotes received from financial sources that trade such securities. All of the available-for-sale securities in an unrealized loss position are equity securities and amounts are not considered to be other than temporarily impaired because the Company expects the value of these securities to recover and plans on holding them until at least such recovery.

        During the year ended September 30, 2011, the Trust sold equity securities for $4,173,000 with a cost basis of $3,346,000, determined using specific identification. Accordingly, the Trust recognized a gain of $827,000 from these sales. The Trust also sold available-for-sale debt securities for $3,417,000 which had a basis of $2,925,000 determined using specific identification. Accordingly the Trust recognized a gain of $492,000 from these sales.

        At September 30, 2010, the Trust had available for sale securities which consisted of debt and equity securities. Details regarding these available-for-sale securities are presented below (dollars in thousands):

	Cost basis		Unrealized gains		Unrealized losses		Market value
Debt Securities	$	2,897	$	611		—	$	3,508
Equity Securities		5,779		1,056	$	73		6,762
	$	8,676	$	1,667	$	73	$	10,270

        The Trust's available-for-sale debt securities were determined to be Level 2 financial assets within the valuation hierarchy established by current accounting guidance, and the valuation is based on market quotes from inactive markets received from financial sources that trade such securities.

F-19

BRT REALTY TRUST AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

September 30, 2011

NOTE 8—AVAILABLE-FOR-SALE SECURITIES (Continued)

        During the year ended September 30, 2010, the Trust sold available-for-sale equity securities for $2,425,000. The cost basis of these securities was $975,000, determined using specific identification. Accordingly, the Trust recognized a gain of $1,450,000 from these sales. The Trust also sold an available-for-sale debt security for $1,000,000. The cost basis of this security was $864,000 and was determined using specific identification. Accordingly, the Trust recognized a gain of $136,000 on this sale.

NOTE 9—DEBT OBLIGATIONS

        Debt obligations consist of the following (dollars in thousands):

		September 30,
		2011		2010
Line of credit			—		—
Junior subordinated notes		$	37,400	$	40,815
Mortgages payable			14,417		12,557
	Total debt obligations	$	51,817	$	53,372

Line of credit

        On June 22, 2011, the Trust, through a wholly owned subsidiary, entered into a senior secured revolving credit facility with Capital One, N.A. The maximum amount that may be borrowed under the facility is the lesser of $25 million and the borrowing base. The borrowing base is generally equal to 40% to 65% (depending on, among other things, the type of property secured by the eligible mortgage receivables pledged to the lender and the operating income of the related property) of such receivables. Interest accrues on the outstanding balance at the greater of (i) 4% plus LIBOR and (ii) 5.50%. The facility matures June 21, 2014 and, subject to the satisfaction of specified conditions, the outstanding balance may be converted at the Trust's option into an 18 month term loan. The Trust has guaranteed the payment and performance of its subsidiary's obligations under the facility.

        The loan documents, among other things, require (A) the Trust (i) to maintain on a quarterly basis and on a consolidated basis, net worth of not less than $100 million and liquidity of not less than $7.5 million, and (ii) prohibits the Trust from incurring debt, with specified exceptions, in excess of five percent of its net worth and (B) the subsidiary (i) to maintain a debt service coverage ratio and a collateral coverage ratio of not less than 1.5 to 1.0, and (iii) prohibits the subsidiary, with specified exceptions, from incurring debt.

        We paid, and in each of June 2012 and 2013 will pay, an $82,500 fee in connection with this facility.

        At September 30, 2011 there was no outstanding balance on the facility.

Junior Subordinated Notes

        On March 15, 2011, the Trust restructured its existing junior subordinated notes resulting in the repayment of $5,000,000 of the outstanding notes at par and the reduction of the interest rates on the remaining outstanding notes as set forth in the table below:

Interest period	Prior Interest Rate		New Interest Rate
March 15, 2011 through July 31, 2012		3.50%		3.00%
August 1, 2012 through April 29, 2016		8.37%		4.90%
April 30, 2016 through April 30, 2036		LIBOR + 2.95%		LIBOR + 2.00%

F-20

BRT REALTY TRUST AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

September 30, 2011

NOTE 9—DEBT OBLIGATIONS (Continued)

        The Trust accounted for the restructuring of this debt as an extinguishment of debt. For the year ended September 30, 2011, the Trust recognized a loss on the extinguishment of the debt of $2,138,000, which represented the unamortized principal of $1,308,000 and unamortized costs of $830,000. The Trust also incurred third party costs of $512,000 which were deferred and will be amortized over the remaining life of the notes.

        Interest expense relating to the junior subordinated notes for the years ended September 30, 2011, 2010 and 2009 was $1,564,000, $2,065,000 and $3,941,000, respectively. Amortization of the deferred costs which is a component of interest expense on borrowed funds was $261,000, $33,000 and $110,000 for the years ended September 30, 2011, 2010 and 2009, respectively.

Mortgages Payable

        The Trust has five first mortgages and one second mortgage outstanding with an aggregate principal balance at September 30, 2011 of $14,417,000. One of these mortgages, with an outstanding balance of $2,041,000, is secured by a long term leasehold position on a shopping center owned by a consolidated joint venture. The remaining five mortgages, with aggregate outstanding balances of $12,376,000, are secured by individual parcels of two land assemblages in Newark, NJ owned by another consolidated joint venture.

        Interest expense relating to the mortgages payable including amortized mortgage costs for the years ended September 30, 2011, 2010 and 2009 was $1,259,000, $811,000 and $284,000, respectively.

        During the years ended September 30, 2011 and 2010, the Trust capitalized interest expense of $775,000 and $326,000, respectively. This interest is being capitalized in connection with the development of a portion of the Trust's Newark Joint Venture's properties.

        Details pertaining to the outstanding mortgages payable at September 30, 2011 are as follows (dollars in thousands):

Location	Balance		Amortizing	Rate			Maturity Date
Yonkers, NY	$	2,041	Yes		6.25	%	December 31, 2011
Market Street, Newark, NJ		1,200	No		7.00	%	April 20, 2012
Market Street, Newark, NJ		900	No		7.00	%	January 18, 2015
Broad Street, Newark, NJ		5,828	Yes		6.00	%	August 1, 2030
Broad Street, Newark, NJ		486	Yes		6.00	%	August 1, 2030
Teachers Village, Newark, NJ(a)		3,962	No		17.00	%	March 14, 2012
	$	14,417

(a)

This mortgage is subordinate to a first mortgage in the amount of $7,500,000 held directly by the Trust that is eliminated in consolidation. The Trust has guaranteed $993,000 of the mortgage obligation at September 30, 2011, based on the current outstanding balance. The guarantee amount will increase to $2,154,000 if the full amount of the $8,600,000 loan is drawn and outstanding.

F-21

BRT REALTY TRUST AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

September 30, 2011

NOTE 9—DEBT OBLIGATIONS (Continued)

        Scheduled principal repayments on these mortgages are as follows (dollars in thousands):

Years Ending September 30,	Amount
2012	$	7,386
2013		195
2014		208
2015		1,120
2016		233
Thereafter		5,275
	$	14,417

NOTE 10—COMPREHENSIVE INCOME (LOSS)

        Comprehensive income (loss) for the years ended was as follows (dollars in thousands):

	September 30,
	2011			2010			2009
Net income (loss)	$	4,924		$	(9,337	)	$	(48,360	)
Other comprehensive loss-unrealized loss on available-for-sale securities		(1,316	)		(1,117	)		(4,415	)
Comprehensive income (loss)		3,608			(10,454	)		(52,775	)
Plus: net loss attributable to non-controlling interests		1,450			1,322			605
Comprehensive income (loss) attributable to common shareholders	$	5,058		$	(9,132	)	$	(52,170	)

NOTE 11—INCOME TAXES

        The Trust has elected to be taxed as a real estate investment trust ("REIT"), as defined under the Internal Revenue Code of 1986, as amended. As a REIT, the Trust will generally not be subject to Federal income taxes at the corporate level if it distributes 100% of its REIT taxable income, as defined, to its shareholders. To maintain its REIT status, the Trust must distribute at least 90% of its taxable income; however if it does not distribute 100% of its taxable income, it will be taxed on undistributed income. There are a number of organizational and operational requirements the Trust must meet to remain a REIT. If the Trust fails to qualify as a REIT in any taxable year, its taxable income will be subject to Federal income tax at regular corporate tax rates and it may not be able to qualify as a REIT for four subsequent tax years. Even if it is qualified as a REIT, the Trust is subject to certain state and local income taxes and to Federal income and excise taxes on the undistributed taxable income. For income tax purposes the Trust reports on a calendar year.

        During the years ended September 30, 2011, 2010 and 2009, the Trust recorded $20,000, $6,000 and $53,000, respectively, of state franchise tax, net of refunds, relating to the 2011, 2010 and 2009 tax years.

        Earnings and profits, which determine the taxability of dividends to shareholders, differs from net income reported for financial statement purposes due to various items including timing differences related to loan loss provision, impairment charges, depreciation methods and carrying values.

F-22

BRT REALTY TRUST AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

September 30, 2011

NOTE 11—INCOME TAXES (Continued)

        The financial statement income is expected to be approximately $2,300,000 higher than the income for tax purposes for calendar 2011, primarily due to the reversal of loan loss provision taken for book purposes in the current calendar year that is not reportable for tax purposes in the current tax year.

        At December 31, 2010, the Trust had a tax loss carry forward of $70,510,000. These net operating losses can be used in future years to reduce taxable income when it is generated. These tax loss carry forwards begin to expire in 2028.

NOTE 12—SHAREHOLDERS' EQUITY

Distributions

        During the year ended September 30, 2011, the Trust did not declare or pay any dividends.

Stock Options

        At September 30, 2011 there were 11,000 options outstanding that were issued pursuant to the BRT 1996 Stock Option Plan, all of which are currently exercisable. These options have an exercise price of $8.25 and expire December 2011. No further grants can be made under this Plan.

        Changes in the number of shares under all option arrangements are summarized as follows:

	Year Ended September 30,
	2011			2010		2009
Outstanding at beginning of period		22,500			22,500		22,500
Expired		(11,500	)		—		—
Outstanding at end of period		11,000			22,500		22,500
Exercisable at end of period		11,000			22,500		22,500
Option prices per share outstanding (a)	$	8.25		$	6.12 - $8.25	$	7.75 - $10.45
Weighted average remaining contractual life (years)		.2			.6		1.6
Weighted average exercise price		8.75			7.16		9.07

(a)

The exercise price of these options have been adjusted for the fiscal year ended September 30, 2011 and 2010 to give effect to the stock dividend that took place in October 2009.

Restricted Shares

        An aggregate of 850,000 shares have been authorized for issuance under the Trust's equity incentive plans, of which 229,560 shares remain available for future grants at September 30, 2011. The restricted shares issued vest five years from the date of grant and under specified circumstances, including a change in control, may vest earlier. Since inception of the plans, 126,410 shares have vested and 491,705 shares have been granted and have not yet vested.

        During the fiscal years ended September 30, 2011, 2010 and 2009, the Trust issued 138,150, 125,150 and 126,450 restricted shares, respectively, under the Trusts equity incentive plans. For accounting purposes, the restricted shares are not included in the outstanding shares shown on the consolidated balance sheets until they vest. The estimated fair value of restricted stock at the date of grant is being amortized ratably into expense over the applicable vesting period. For the years ended September 30,

F-23

BRT REALTY TRUST AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

September 30, 2011

NOTE 12—SHAREHOLDERS' EQUITY (Continued)

2011, 2010 and 2009, the Trust recognized $845,000, $833,000 and $876,000 of compensation expense, respectively. At September 30, 2011, $1,801,000 has been deferred as unearned compensation and will be charged to expense over the remaining vesting periods. The weighted average vesting period is 2.85 years.

        Changes in number of shares outstanding under the 2009 and 2003 BRT Incentive Plans are shown below:

	Years Ended September 30,
	2011			2010			2009
Outstanding at beginning of the year		391,580			299,280			197,540
Issued		138,150			125,150			126,450
Cancelled		(175	)		(2,050	)		(750	)
Vested		(37,850	)		(30,800	)		(23,960	)
Outstanding at the end of the year		491,705			391,580			299,280

Warrant

        On June 2, 2011, in connection with entering into a joint venture with an affiliate of Torchlight Investors ("Torchlight"), the Trust issued a warrant to purchase 100,000 shares of beneficial interest of the Trust. The warrant is exercisable until May 30, 2012. The exercise price of the warrant is $9.00 per share and includes anti-dilution adjustments in the event of stock splits, stock dividends and issuances of securities. The warrant's fair value of $259,000 as of the issue date was determined by a third party appraiser using a Monte Carlo simulation model and was recorded as a component of the Trust's investment in the joint venture.

Earnings (Loss) Per Share

        The following table sets forth the computation of basic and diluted earnings (loss) per share (dollars in thousands):

	2011		2010			2009
Numerator for basic and diluted earnings (loss) per share attributable to common shareholders:
Net income (loss)	$	6,374	$	(8,015	)	$	(47,755	)
Denominator:
Denominator for basic earnings (loss) per share—weighted average shares(1)		14,041,569		13,871,668			11,643,972
Effect of dilutive securities:
Employee stock options		—		298			—
Stock dividend payable		—		—			2,437,352
Denominator for diluted earnings (loss) per share—adjusted weighted average shares and assumed conversions(1)		14,041,569		13,871,668			11,643,972
Basic earnings (loss) per share	$	.45	$	(.58	)	$	(4.10	)
Diluted earnings (loss) per share	$	.45	$	(.58	)	$	(4.10	)

(1)

Outstanding shares for 2010 and 2009 are the same for basic and diluted as the effect of dilutive shares in the computation of earnings per share would have been antidilutive.

F-24

BRT REALTY TRUST AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

September 30, 2011

NOTE 12—SHAREHOLDERS' EQUITY (Continued)

Share Buyback and Treasury Shares

        In September 2011, the Board of Trustees approved a share repurchase program pursuant to which the Trust may spend up to $2,000,000 to repurchase its shares of beneficial interest. Shares repurchased under this program will be retired. As of September 30, 2011, the Trust had repurchased 7,305 shares at an average cost of $6.35 per share. During the fiscal years ended September 30, 2010 and 2009 the Trust repurchased 52,403 and 256,110 shares, respectively, at an average cost of $5.55 and $3.68 per share, respectively.

        During the years ended September 30, 2011, 2010 and 2009, 37,850, 30,800 and 23,960 treasury shares, respectively, were issued in connection with the vesting of restricted stock under the Trust's incentive plans. As of September 30, 2011, the Trust owns 1,422,000 treasury shares of beneficial interest at an aggregate cost of $11,070,000.

Tender Offer

        On October 27, 2010, 147,388 shares of beneficial interest were tendered pursuant to a previously announced tender offer. The total purchase price of these shares was $6.30 per share, aggregating $929,000.

NOTE 13—ADVISOR'S COMPENSATION AND RELATED PARTY TRANSACTIONS

        Certain of the Trust's officers and trustees are also officers and directors of REIT Management Corp. ("REIT Management") to which the Trust pays advisory fees for administrative services and investment advice. Fredric H. Gould, chairman of the board, is the sole shareholder of REIT Management. The amended and restated agreement, expired on December 31, 2010 and was extended to December 31, 2011. Advisory fees are currently charged to operations at a rate of 0.6% on invested assets which consist primarily of real estate loans, real estate assets and investment securities. Advisory fees amounted to $916,000, $785,000 and $1,173,000 for the years ended September 30, 2011, 2010 and 2009, respectively. The parties entered into an amendment to the Advisory Agreement effective January 1, 2012, pursuant to which (i) the stated termination date was extended until June 30, 2014, (ii) the minimum and maximum fees payable in a twelve month period to REIT Management were set at $750,000 and $4 million, respectively, subject to adjustment for any period of less than twelve months and (iii) the Trust is to pay REIT Management the following annual fees which are to be paid on a quarterly basis.

•

1.0% of the average principal amount of earning loans;

•

.35% of the average amount of the fair market value of non-earning loans;

•

.45% of the average book value of all real estate properties, excluding depreciation;

•

.25% of the average amount of the fair market value of marketable securities;

•

.15% of the average amount of cash and cash equivalents; and

•

To the extent loans or real estate are held by joint ventures or other arrangements in which the Trust has an interest, fees vary based on, among other things, the nature of the asset (i.e. real estate or loans), the nature of our involvement (i.e. active or passive) and the extent of our equity interests in such arrangements.

F-25

BRT REALTY TRUST AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

September 30, 2011

NOTE 13—ADVISOR'S COMPENSATION AND RELATED PARTY TRANSACTIONS (Continued)

        The Trust's borrowers also pay fees directly to REIT Management based on loan originations, which generally are one-time fees payable upon funding of a loan, in the amount of ¹/2 of 1% of the total loan. These fees were $750,000, $89,000 and $44,000 for the years ended September 30, 2011, 2010 and 2009, respectively. Effective January 1, 2012, borrowers will no longer pay any loan origination fees to REIT Management.

        Management of certain properties for the Trust is provided by Majestic Property Management Corp., a corporation in which the chairman of the board is the sole shareholder, under renewable year-to-year agreements. Certain of the Trust's officers and Trustees are also officers and directors of Majestic Property Management Corp. Majestic Property Management Corp. provides real property management, real estate brokerage and construction supervision services to the Trust and its joint venture properties. For the years ended September 30, 2011, 2010 and 2009, fees for these services aggregated $83,000, $66,000 and $175,000, respectively.

        The chairman of the board is also chairman of the board of One Liberty Properties, Inc., a related party, and certain of the Trust's officers and Trustees are also officers and directors of One Liberty Properties, Inc. In addition, the Chairman of the Board is an executive officer and sole shareholder of Georgetown Partners, Inc., the managing general partner of Gould Investors L.P. and the sole member of Gould General LLC, a general partner of Gould Investors L.P., a related party. Certain of the Trust's officers and Trustees are also officers and directors of Georgetown Partners, Inc. The allocation of expenses for the shared facilities, personnel and other resources is computed in accordance with a shared services agreement by and among the Trust and the affiliated entities. During the years ended September 30, 2011, 2010 and 2009, allocated general and administrative expenses reimbursed by the Trust to Gould Investors L.P. pursuant to the shared services agreement, aggregated $847,000, $822,000 and $1,002,000, respectively. At September 30, 2011, $100,000 remains unpaid and is included in accounts payable and accrued liabilities on the consolidated balance sheet.

F-26

BRT REALTY TRUST AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

September 30, 2011

NOTE 14—SEGMENT REPORTING

        Management has determined that the Trust operates in two reportable segments, a loan and investment segment which includes the origination and servicing of our loan portfolio and our investments and a real estate segment which includes the operation and disposition of our real estate assets.

        The following table summarizes the Trust's segment reporting for the year ended September 30, 2011 (dollars in thousands):

	Loan and Investment			Real Estate			Total
Revenues	$	14,425		$	3,456		$	17,881
Interest expense		1,082			1,030			2,112
Operating expenses related to real estate properties		—			3,340			3,340
Other expenses		5,273			2,371			7,644
Amortization and depreciation		—			738			738
Total expenses		6,355			7,479			13,834
Total revenues less total expenses		8,070			(4,023	)		4,047
Equity in earnings of unconsolidated ventures		99			251			350
Gain on sale of available-for-sale securities		1,319			—			1,319
Loss on extinguishment of debt		(1,420	)		(718	)		(2,138	)
Income (loss) from continuing operations		8,068			(4,490	)		3,578
Discontinued operations:
Gain on sale of real estate assets		—			1,346			1,346
Income from discontinued operations		—			1,346			1,346
Net income (loss)		8,068			(3,144	)		4,924
Plus: net loss attributable to non- controlling interests		—			1,450			1,450
Net income (loss) attributable to common shareholders	$	8,068		$	(1,694	)	$	6,374
Segment assets at September 30, 2011	$	126,916		$	64,096		$	191,012

F-27

BRT REALTY TRUST AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

September 30, 2011

NOTE 14—SEGMENT REPORTING (Continued)

        The following table summarizes the Trust's segment reporting for the year ended September 30, 2010 (dollars in thousands):

	Loan and Investment			Real Estate			Total
Revenues	$	4,713		$	3,422		$	8,135
Interest expense		1,181			1,403			2,584
Operating expenses related to real estate properties		—			3,216			3,216
Provision for loan loss		3,165			—			3,165
Impairment charges		—			2,625			2,625
Other expenses		5,233			2,288			7,521
Amortization and depreciation		—			733			733
Total expenses		9,579			10,265			19,844
Total revenues less total expenses		(4,866	)		(6,843	)		(11,709	)
Equity in earnings of unconsolidated ventures		28			168			196
Gain on sale of available-for-sale securities		1,586			—			1,586
Loss from continuing operations		(3,252	)		(6,675	)		(9,927	)
Discontinued operations:
Loss from operations		—			(602	)		(602	)
Impairment charges		—			(745	)		(745	)
Gain on sale of real estate assets		—			1,937			1,937
Income from discontinued operations		—			590			590
Net loss		(3,252	)		(6,085	)		(9,337	)
Plus: net loss attributable to non- controlling interests		—			1,322			1,322
Net loss attributable to common shareholders	$	(3,252	)	$	(4,763	)	$	(8,015	)
Segment assets at September 30, 2010	$	124,928		$	61,338		$	186,266

F-28

BRT REALTY TRUST AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

September 30, 2011

NOTE 14—SEGMENT REPORTING (Continued)

        The following table summarizes the Trust's segment reporting for the year ended September 30, 2009 (dollars in thousands):

	Loan and Investment			Real Estate			Total
Revenues	$	10,436		$	1,718		$	12,154
Interest expense		2,887			1,832			4,719
Operating expenses related to real estate properties		—			2,133			2,133
Provision for loan loss		17,110			—			17,110
Impairment charges		—			1,272			1,272
Other expenses		6,943			2,868			9,811
Amortization and depreciation		—			1,284			1,284
Total expenses		26,940			9,389			36,329
Loss before other revenue and expense items		(16,504	)		(7,671	)		(24,175	)
Equity in loss of unconsolidated ventures		(2,261	)		(530	)		(2,791	)
Gain on sale of joint venture interest		—			271			271
Gain on sale of available-for-sale securities		1,016			—			1,016
Gain on early extinguishment of debt		4,194			2,249			6,443
Loss from continuing operations		(13,555	)		(5,681	)		(19,236	)
Discontinued operations:
Income (loss) from operations		824			(2,373	)		(1,549	)
Impairment charges		—			(29,774	)		(29,774	)
Gain on sale of real estate assets		—			2,199			2,199
Income (loss) from discontinued operations		824			(29,948	)		(29,124	)
Net loss		(12,731	)		(35,629	)		(48,360	)
Plus: net loss attributable to non- controlling interests		—			605			605
Net loss attributable to common shareholders	$	(12,731	)	$	(35,024	)	$	(47,755	)
Segment assets at September 30, 2009	$	122,785		$	70,548		$	193,333

F-29

BRT REALTY TRUST AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

September 30, 2011

NOTE 15—FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial Instruments Not Measured at Fair Value

        The following methods and assumptions were used to estimate the fair value of each class of financial instruments that are not reported at fair value on the consolidated balance sheets:

        Cash and cash equivalents, accounts receivable (included in other assets), accounts payable and accrued liabilities: The carrying amounts reported in the balance sheet for these instruments approximate their fair value due to the short term nature of these accounts.

        Real estate loans: The earning mortgage loans of the Trust, which have variable rate provisions which are based upon a margin over prime rate, have an estimated fair value which is equal to their carrying value, assuming market rates of interest between 12% and 12.5%. The earning mortgage loans of the Trust, which have fixed rate provisions, have an estimated fair value $48,000 greater than their carrying value assuming a market rate of interest of 11% which reflects institutional lender yield requirement.

        Real estate loan held for sale: The real estate loan held for sale has an estimated fair value of $3,100,000 greater than its carrying value at September 30, 2011. This is based on a contract to sell the rights to this loan.

        Junior subordinated notes: At September 30, 2011, the estimated fair value of the Trust's junior subordinated notes is less than their carrying value by approximately $357,000, based on a market rate of 3.85%.

        Mortgages payable: At September 30, 2011, the estimated fair value of the Trust's mortgages payable is greater than their carrying value by approximately $693,000 assuming market interest rates between 4.71% and 17%. Market interest rates were determined using current financing transactions provided by third party institutions.

        Considerable judgment is necessary to interpret market data and develop estimated fair value. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value assumptions.

Financial Instruments Measured at Fair Value

        The Trust's fair value measurements are based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, there is a fair value hierarchy that distinguishes between markets participant assumptions based on market data obtained from sources independent of the reporting entity and the reporting entity's own assumptions about market participant assumptions. Level 1 assets/liabilities are valued based on quoted prices for identical instruments in active markets, Level 2 assets/liabilities are valued based on quoted prices in active markets for similar instruments, on quoted prices in less active or inactive markets, or on other "observable" market inputs and Level 3 assets/liabilities are valued based significantly on "unobservable" market inputs. The Trust does not currently own any financial

F-30

BRT REALTY TRUST AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

September 30, 2011

NOTE 15—FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

instruments that are classified as Level 3. The following table lists the Trust's available for securities and their fair value by level (dollars in thousands):

	Carrying and Fair Value		Maturity Date		Fair Value Using Fair		Measurements Value Hierarchy
					Level 1		Level 2
Financial assets:
Available-for-sale securities:
Corporate equity securities	$	2,766		—	$	2,776		—

NOTE 16—COMMITMENT

        The Trust maintains a non-contributory defined contribution pension plan covering eligible employees and officers. Contributions by the Trust are made through a money purchase plan, based upon a percent of qualified employees' total salary as defined therein. Pension expense approximated $315,000, $287,000 and $303,000 during the years ended September 30, 2011, 2010 and 2009, respectively. At September 30, 2011, $28,000 remains unpaid and is included in accounts payable and accrued liabilities on the consolidated balance sheet.

NOTE 17—QUARTERLY FINANCIAL DATA (Unaudited)

			2011
			1st Quarter Oct.-Dec			2nd Quarter Jan.-March			3rd Quarter April-June		4th Quarter July-Sept.		Total For Year
Revenues			$	2,452		$	5,697		$	5,344	$	4,388	$	17,881
Gain on sale of available-for-sale securities				421			593			176		129		1,319
Loss on extinguishment of debt				—			(2,138	)		—		—		(2,138	)
(Loss) income from continuing operations				(681	)		625			2,072		1,562		3,578
	Discontinued operations			—			697			645		4		1,346
Net (loss) income				(681	)		1,322			2,717		1,566		4,924
Plus: net loss attributable to non- controlling interests				173			525			455		297		1,450
Net (loss) income attributable to common shareholders				(508	)		1,847			3,172		1,863		6,374
(Loss) income per beneficial share
		Continuing operations	$	(.04	)	$	.08		$	.18	$	.13	$	.35
		Discontinued operations		—			.05			.05		—		.10
		Basic earnings (loss) per share	$	(.04	)	$	.13		$	.23	$	.13	$	.45

F-31

BRT REALTY TRUST AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

September 30, 2011

NOTE 17—QUARTERLY FINANCIAL DATA (Unaudited) (Continued)

			2010
			1st Quarter Oct.-Dec			2nd Quarter Jan.-March			3rd Quarter April-June			4th Quarter July-Sept.			Total For Year
Revenues			$	1,881		$	2,027		$	2,345		$	1,882		$	8,135
Provision for loan loss				3,165			—			—			—			3,165
Impairment charges				—			—			2,625			—			2,625
Gain on sale of available-for-sale securities				1,586			—			—			—			1,586
Loss from continuing operations				(2,990	)		(1,613	)		(3,989	)		(1,335	)		(9,927	)
	Discontinued operations(a)			102			(114	)		589			13			590
Net loss				(2,888	)		(1,727	)		(3,400	)		(1,322	)		(9,337	)
Plus: net loss attributable to non-controlling interests				367			370			429			156			1,322
Net loss attributable to common shareholders				(2,521	)		(1,357	)		(2,971	)		(1,166	)		(8,015	)
(Loss) income per beneficial share
		Continuing operations	$	(.20	)	$	(.09	)	$	(.25	)	$	(.08	)	$	(.62	)
		Discontinued operations		.01			(.01	)		.04			—			.04
		Basic earnings (loss) per share	$	(.19	)	$	(.10	)	$	(.21	)	$	(.08	)	$	(.58	)

(a)

Includes impairment charges of $745,000 in the 1^st quarter of 2010.

NOTE 18—SUBSEQUENT EVENTS

        Subsequent events have been evaluated and any significant events, relative to our consolidated financial statements as of September 30, 2011 that warrant additional disclosure have been included in the notes to the consolidated financial statements.

F-32

BRT REALTY TRUST AND SUBSIDIARIES

SCHEDULE III—REAL ESTATE PROPERTIES AND ACCUMULATED DEPRECIATION

SEPTEMBER 30, 2011

(Dollars in thousands)

			Initial Cost to Company				Costs Capitalized Subsequent to Acquisition						Gross Amount At Which Carried at September 30, 2011
																									Depreciation Life For Latest Income Statement
Description	Encumbrances		Land		Buildings and Improvements		Land		Improvements		Carrying Costs		Land		Buildings and Improvements		Total		Accumulated Amortization		Date of Construction		Date Acquired
Commercial
Yonkers, NY.	$	2,041		—	$	4,000		—	$	53		—		—	$	4,053	$	4,053	$	1,200				Aug-2000		39 years
South Daytona, FL.		—	$	10,437		—		—		—		—	$	7,972		—		7,972		—				Feb-2008		N/A
Newark, NJ		12,376		17,088		19,033	$	2,315		8,897	$	2,115		19,403		30,045		49,448		1,311				June-2008		39 years
Residential
Manhattan, NY		—		—		—				35		—		—		35		35		—				—		27.5 years
Misc.(1)		—		—		—				—		—		—		280		280		—
Total	$	14,417	$	27,525	$	23,033	$	2,315	$	8,985	$	2,115	$	27,375	$	34,413	$	61,788	$	2,511		—
																		(a)		(b)		(c)

(1)

Represents loans which are reported as real estate because they do not qualify for sale treatment under current accounting guidance.

F-33

BRT REALTY TRUST AND SUBSIDIARIES

SCHEDULE III—REAL ESTATE PROPERTIES
AND ACCUMULATED DEPRECIATION (Continued)

SEPTEMBER 30, 2011

(Dollars in thousands)

Notes to the schedule:

(a)	Total real estate properties	$	61,788
	Less: Accumulated depreciation and amortization		2,511
	Net real estate properties	$	59,277
(b)	Amortization of the Trust's leasehold interests is over the shorter of estimated useful life or the term of the respective land lease.
(c)	Information not readily obtainable.

        A reconciliation of real estate properties is as follows:

	Year Ended September 30,
	2011		2010		2009
Balance at beginning of year	$	55,843	$	69,748	$	77,012
Additions:
Acquisitions through foreclosure		—		—		60,304
Other acquisitions		2,315		—		—
Capital improvements		141		1,741		4,722
Capitalized development expenses and carrying costs		4,371		2,379		—
		6,827		4,120		65,026
Deductions:
Sales		2,561		13,775		40,035
Depreciation/amortization/paydowns		832		880		1,209
Impairment charges		—		3,370		31,046
		3,393		18,025		72,290
Balance at end of year	$	59,277	$	55,843	$	69,748

        The aggregate cost of investments in real estate assets for Federal income tax purposes is approximately $2,625 higher than book value.

F-34

BRT REALTY TRUST AND SUBSIDIARIES

SCHEDULE IV—MORTGAGE LOANS ON REAL ESTATE
(INCLUDING MORTGAGE LOAN HELD FOR SALE)

SEPTEMBER 30, 2011

(Dollars in thousands)

Description		# of Loans		Interest Rate	Final Maturity Date	Periodic Payment Terms	Prior Liens		Face Amount of Mortgages		Carrying Value Of Mortgages(a)		Principal Amount of Loans subject to delinquent principal or interest
First Mortgage Loans
Office Building, NY, NY			1	Prime+8.75%	Nov.2011	Interest monthly, principal at maturity		—	$	22,800	$	22,800
Industrial, Baltimore, MD			1	Prime+8.75%	Oct. 2012	Interest monthly, principal at maturity				11,874		11,672		—
Multi-family, Westchester, NY			1	Prime+8.75%	July 2012	Interest monthly, principal at maturity				9,516		9,233
Multi-family/Condo Brooklyn, New York			1	Prime+7%	Demand	Interest monthly, principal at maturity		—		8,488		8,446	$	8,488
Multi-family, New York, NY			1	10.5%	Dec. 2011	Interest monthly, principal at maturity		—		6,887		6,858		—
Multi-family, Cape Canaveral, FL			1	12%	Mar. 2012	Interest monthly, principal at maturity		—		2,800		2,780		—
Multi-family, Plainfield, NJ			1	Prime+8.75	Sept. 2012	Interest monthly, principal at maturity		—		2,800		2,800		—
	$0 - 1,500		1	Various	Various	Interest monthly, principal at maturity		—		395		395		—
	$1,500 - 2,500		4	Various	Various	Interest monthly, principal at maturity		—		8,194		8,155		—
Mezzanine Loan
	$1,500 - 2,500		1	12%	May 2012	Interest monthly, principal at maturity	$	13,832		2,000		1,997		—
Total			13				$	13,832	$	75,754	$	75,136	$	8,488

F-35

BRT REALTY TRUST AND SUBSIDIARIES

SCHEDULE IV—MORTGAGE LOANS ON REAL ESTATE
(INCLUDING REAL ESTATE LOAN HELD FOR SALE) (Continued)

SEPTEMBER 30, 2011

(Dollars in thousands)

Notes to the schedule:

(a)

The following summary reconciles mortgage loans at their carrying values:

	Year Ended September 30,
	2011		2010		2009
Balance at beginning of year	$	54,336	$	79,570	$	128,843
Additions:
Advances under real estate loans		131,255		17,384		30,481
Amortization of deferred fee income		1,777		219		897
Recovery of previously provided allowances		3,595		365		—
		136,627		17,968		31,378
Deductions:
Collections of principal		66,072		22,475		20,207
Sale of loans		46,251		16,916		—
Provision for loan loss		—		3,165		17,110
Collection of loan fees		2,465		419		557
Loan loss recoveries		1,039		227		2,417
Transfer to real estate upon foreclosure, net of charge offs and unamortized fees		—		—		40,360
		115,827		43,202		80,651
Balance at end of year	$	75,136	$	54,336	$	79,570

•

Carrying value of mortgage loans is net of allowances for loan losses in the amount of $0, $3,165 and $1,618 in 2011, 2010 and 2009, respectively.

•

Carrying value of mortgage loans is net of deferred fee income in the amount of $618, $245 and $44 in 2011, 2010 and 2009, respectively.

•

The aggregate cost of investments in mortgage loans is the same for financial reporting purposes and Federal income tax purposes.

F-36

EX-10.14

Exhibit 10.14

BRT REALTY TRUST

2009 INCENTIVE PLAN

1. Purpose.

The purpose of the BRT Realty Trust 2009 Incentive Plan is to advance the interests and promote the success of BRT Realty Trust by providing an opportunity to officers, trustees, selected employees, and consultants of the Trust to purchase shares of beneficial interest $3.00 par value, of the Trust and/or to receive stock awards provided for in the Plan. By encouraging such share ownership, the Trust seeks to attract, retain and motivate officers, trustees, employees and consultants of experience and ability. It is intended that this purpose will be effected by the granting of the following share-based incentives: (a) Non-statutory Stock Options; (b) Incentive Stock Options intended to qualify under Section 422 of the Internal Revenue Code of 1986, as amended; and (c) Restricted Shares.

2. Definitions.

Capitalized terms not defined elsewhere in the Plan shall have the following meanings (whether used in the singular or plural).

“Affiliate” of the Trust means any corporation, partnership, or other business association that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with the Trust.

“Agreement” means a stock option agreement, Restricted Shares agreement, or an agreement evidencing more than one type of Award, as any such Agreement may be supplemented or amended from time to time.

“Approved Transaction” means any transaction in which the Board (or, if approval of the Board is not required as a matter of law, the shareholders of the Trust) shall approve (i) any consolidation or merger of the Trust, or binding share exchange, pursuant to which Beneficial Shares would be changed or converted into or exchanged for cash, securities, or other property, other than any such transaction in which the holders of Beneficial Shares of the Trust immediately prior to such transaction have the same proportionate ownership of the common stock of, and voting power with respect to, the surviving entity immediately after such transaction, (ii) any merger, consolidation, or binding share exchange to which the Trust is a party as a result of which the Persons who are holders of Beneficial Shares of the Trust immediately prior thereto have less than a majority of the combining voting power of the outstanding capital stock of the surviving entity ordinarily (and apart from the rights accruing under special circumstances) having the right to vote in the election of Trustees (directors) immediately following such merger, consolidation, or binding share exchange, (iii) the adoption of any plan or proposal for the liquidation or dissolution of the Trust, or (iv) any sale, lease, exchange, or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Trust.

“Award” means a grant of Options and/or Restricted Shares under this Plan.

“Beneficial Shares” means shares of beneficial interest, $3.00 par value of the Trust.

“Board” means the Board of Trustees of the Trust.

“Board Change” means, during any period of two consecutive years, individuals who at the beginning of such period constituted the entire Board cease for any reason to constitute a majority thereof unless the election, or the nomination for election, of each new director was approved by a vote of at least two-thirds of the Trustees then still in office who were Trustees at the beginning of the period.

“Code” means the Internal Revenue Code of 1986, as amended from time to time, or any successor statute or statutes thereto. Reference to any specific Code section shall include any successor section.

“Committee” means the committee of the Board appointed to administer the Plan.

“Control Purchase” means any transaction (or series of related transactions) in which (i) any person (as such term is defined in Sections 13(d)(3) and 14(d)(2) of the Exchange Act), corporation, or other entity (other than the Trust, any Subsidiary of the Trust, or any employee benefit plan sponsored by the Trust or any Subsidiary of the Trust) shall purchase any Beneficial Shares of the Trust (or securities convertible into Beneficial Shares of the Trust) for cash, securities, or any other consideration pursuant to a tender offer or exchange offer, without the prior consent of the Board, or (ii) any person (as such term is so defined), corporation, or other entity (other than the Trust, any Subsidiary of the Trust, any employee benefit plan sponsored by the Trust or any Subsidiary of the Trust or any Exempt Person (as defined below)) shall become the “beneficial owner” (as such term is defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Trust representing 20% or more of the combined voting power of the then outstanding securities of the Trust ordinarily (and apart from the rights accruing under special circumstances) having the right to vote in the election of Trustees (calculated as provided in Rule 13d-3(d) under the Exchange Act in the case of rights to acquire the Trust’s securities), other than in a transaction (or series of related transactions) approved by the Board. For purposes of this definition, “Exempt Person” means each of Fredric H. Gould, Jeffrey A. Gould, Matthew J. Gould, and their respective family members, estates, and heirs of an Exempt Person and any trust or other investment vehicle for the primary benefit of any Exempt Person or their family members or heirs. As used with respect to any Person, the term “family member” means the spouse, siblings, and lineal descendants of such Person and lineal descendants of siblings.

“Disability” means the inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months.

“Domestic Relations Order” means a domestic relations order as defined by the Code or Title I of the Employee Retirement Income Security Act, or the rules thereunder.

“Effective Date” means the date the Plan is approved by the Trust’s shareholders. The Plan shall become effective immediately upon such approval.

“Equity Security” shall have the meaning ascribed to such term in Section 3(a)(11) of the Exchange Act, and an equity security of an issuer shall have the meaning ascribed thereto in Rule 16a-1 promulgated under the Exchange Act, or any successor Rule.

“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, or any successor statute or statutes thereto. Reference to any specific Exchange Act section shall include any successor section.

“Fair Market Value” of Beneficial Shares on any day means the last sale price (or, if no last sale price is reported, the average of the high bid and low asked prices) for a Beneficial Share on such day (or, if such day is not a trading day, on the next preceding trading day) as reported on the principal national securities exchange on which Beneficial Shares are listed on such day or if such shares are not then listed on a national securities exchange, then as reported on Nasdaq or, if such shares are not then listed or quoted on Nasdaq, then as quoted by the National Quotation Bureau Incorporated. If for any day the Fair Market Value of a Beneficial Share is not determinable by any of the foregoing means, then the Fair Market Value for such day shall be determined in good faith by the Committee on the basis of such quotations and other considerations as the Committee deems appropriate.

“Holder” means a Person who has received an Award under this Plan.

2

“Incentive Stock Option” means an Option intended to meet the requirements of Section 422 of the Code.

“Nasdaq” means The Nasdaq Stock Market

“Non-statutory Stock Option” mean an option not intended to meet the requirements of Section 422 of the Code.

“Option” means either Incentive Stock Options meeting the requirements of Section 422 of the Code or Non-statutory Stock Options which are not intended to meet the requirements of Section 422 of the Code.

“Person” means an individual, corporation, limited liability company, partnership, trust, incorporated or unincorporated association, joint venture or other entity of any kind.

“Plan” means this BRT Realty Trust 2009 Incentive Plan.

“Restricted Shares” means Beneficial Shares awarded pursuant to paragraph 9 which are subject to a Restriction Period.

“Restriction Period” means a period of time beginning on the date of each Award of Restricted Shares and ending on the Vesting Date with respect to such Award.

“Subsidiary” of a Person means any present or future subsidiary (as defined in Section 424(f) of the Code) of such Person or any business entity in which such Person owns, directly or indirectly, 50% or more of the voting, capital, or profits interests. An entity shall be deemed a subsidiary of a Person for purposes of this definition only for such periods as the requisite ownership or control relationship is maintained.

“Trust” means BRT Realty Trust, a Massachusetts Business Trust.

“Vesting Date”, with respect to any Restricted Shares awarded hereunder, means the date on which such Restricted Shares cease to be subject to a risk of forfeiture, as designated in or determined in accordance with the Agreement with respect to such award of Restricted Shares. If more than one Vesting Date is designated for an award of Restricted Shares, reference in the Plan to a Vesting Date in respect of such Award shall be deemed to refer to each part of such Award and the Vesting Date for such part.

3. Shares Subject to the Plan.

(a)The maximum number of Beneficial Shares with respect to which Awards may be granted under the Plan shall not exceed 500,000 Beneficial Shares, subject to adjustment as provided in paragraph 3(b) hereof. Any Beneficial Share subject to an Award which for any reason (i) expires, is cancelled or is forfeited prior to becoming vested, or (ii) is terminated unexercised, shall again be available for purposes of the Plan. The Beneficial Shares delivered pursuant to Awards granted under the Plan may, in whole or in part, be authorized but unissued shares, treasury shares, or any other issued shares subsequently reacquired by the Trust, including shares purchased in the open market.

(b)If the Trust subdivides its outstanding Beneficial Shares into a greater number of Beneficial Shares (by stock dividend, stock split, reclassification, or otherwise) or combines its outstanding Beneficial Shares into a smaller number of Beneficial Shares (by reverse stock split, reclassification, or otherwise) or if the Committee determines that any stock dividend, extraordinary cash dividend, reclassification, recapitalization, reorganization, split-up, spin-off, combination, exchange of shares, warrants or rights offering to purchase Beneficial Shares, or other similar corporate event (including mergers or consolidations other than those which constitute Approved Transactions, adjustments with respect to which shall be governed by paragraph 10(b)) affects any Beneficial Shares so that an adjustment is required to preserve the benefits or potential benefits intended to be made available

3

under this Plan, then the Committee, in its sole discretion and in such manner as the Committee may deem equitable and appropriate, may make such adjustments to any or all of (i) the number and kind of shares of stock which thereafter may be awarded, optioned, or otherwise made subject to the benefits contemplated by the Plan, (ii) the number and kind of shares of stock subject to outstanding Awards, and (iii) the purchase or exercise price with respect to any of the foregoing, provided, however, that the number of shares subject to any Award shall always be a whole number. Notwithstanding the foregoing, if all Beneficial Shares are redeemed, then each outstanding Award shall be adjusted to substitute for the shares subject thereto the kind and amount of cash, securities or other assets issued or paid in the redemption of the equivalent number of Beneficial Shares and otherwise the terms of such Award, including in the case of Options or similar rights, the total exercise price shall remain constant before and after the substitution (unless otherwise determined by the Committee and provided in the applicable Agreement). The Committee may, if deemed appropriate, provide for a cash payment to any Holder of an Award in connection with any adjustment made pursuant to this paragraph 3(b).

4. Administration.

The Plan shall be administered by the Compensation Committee of the Board unless a different committee is appointed by the Board. The Board may from time to time appoint members of the Committee in substitution for and in addition to members previously appointed and may fill vacancies and may remove members of the Committee. All of the members of the Committee must be Trustees of the Trust. Notwithstanding the foregoing, the Board may at any time exercise all rights, duties and responsibilities of the Committee, but excluding matters which under any applicable law, rule or regulation, including Rule 16b-3 under the Exchange Act or Section 162(m) of the Code (to the extent the Committee intends that such matter qualify thereunder), are required to be determined in the sole discretion of the Committee. Subject to the provisions of the Plan, the Committee shall have full power and discretion to construe and interpret the Plan and any Agreement or instrument entered into under the Plan, and to establish, amend and rescind rules and regulations for its administration; to accelerate the vesting or exercisability of any Award; to amend the terms and conditions of any outstanding Award (subject to the provisions of paragraph 10(j); or to offer to buy out an Award previously granted, based on such terms and conditions as the Committee shall establish and communicate to the participant at the time such offer is made. Any decisions made by the Committee pursuant to the authority granted to it hereunder shall be final and binding on the Trust, the participants and all other persons. The Committee shall have the power and authority to grant to eligible Persons under paragraph 5 of the Plan Options and/or Restricted Shares, to determine, the terms and conditions of all Awards so granted (which need not be identical), including, the Persons to whom Awards shall be granted, and the timing, pricing and amount of any such Award, subject only to the express provisions of the Plan. In making determinations hereunder, the Committee shall take into account the nature of the services rendered by the officers, trustees, employees or consultants, their present and potential contributions to the success of the Trust and its Subsidiaries, and such other factors as the Committee in its discretion deems relevant.

5. Eligible Persons.

In its sole discretion, the Committee may grant (i) Incentive Stock Options, Non-statutory Stock Options and Restricted Shares, or any combination of the foregoing, to such officers, Trustees, employees and consultants providing services to the Trust or its Subsidiaries as are selected by the Committee. The maximum number of Beneficial Shares with respect to which Options may be granted to any otherwise eligible Person under this Plan during any calendar year shall be 40,000 Beneficial Shares, and the maximum number of Beneficial Shares with respect to which all other Awards may be granted to any otherwise eligible Person under this Plan during any calendar year shall be 30,000, in each case, subject to adjustment as provided in Paragraph 3(b) hereof.

4

6. Duration of the Plan.

The Plan shall terminate when all Beneficial Shares that may be made subject to Awards under the Plan have been acquired and, in the case of Incentive Stock Options only, ten years from the effective date of this Plan, if earlier, unless terminated earlier pursuant to paragraph 10(j) hereof, and no Awards may be granted thereafter.

7. Stock Options.

(a)Subject to the limitations of the Plan, the Committee shall designate from time to time those eligible Persons to be granted Options, the time when each Option shall be granted to such eligible Persons, the number of Beneficial Shares subject to such Options, and, subject to paragraph 7(b), the purchase price of the Beneficial Shares subject to such Option.

(b)The price at which shares may be purchased upon exercise of an Option shall be fixed by the Committee and subject to paragraph 8 hereof may be more than or equal to the Fair Market Value of the Beneficial Shares subject to the Option as of the date the Option is granted.

(c)Subject to the provisions of the Plan with respect to death, retirement, and termination of employment and subject to paragraph 8 hereof, the term of each Option shall be for such period as the Committee shall determine as set forth in the applicable Agreement.

(d)An Option granted under the Plan shall become (and remain) exercisable during the term of the Option to the extent provided in the applicable Agreement and this Plan and, unless the Agreement otherwise provides, may be exercised to the extent exercisable, in whole or in part, at any time and from time to time during such term; provided, however, that subsequent to the grant of an Option, the Committee, at any time before complete termination of such Option, may accelerate the time or times at which such Option may be exercised in whole or in part (without reducing the term of such Option).

(e)(i)            An Option shall be exercised by written notice to the Trust upon such terms and conditions as the Agreement may provide and in accordance with such other procedures for the exercise of Options as the Committee may establish from time to time. The method or methods of payment of the purchase price for the shares to be purchased upon exercise of an Option and of any amounts required by paragraph 10(l) shall be determined by the Committee and may consist of (A) cash, (B) check, (C) whole Beneficial Shares, or (D) any combination of the foregoing methods of payment. The permitted method or methods of payment of the amounts payable upon exercise of an Option, if other than in cash, shall be set forth in the applicable Agreement and may be subject to such conditions as the Committee deems appropriate.

(ii)Unless otherwise determined by the Committee and provided in the applicable Agreement, any Beneficial Shares delivered in payment of all or any part of the amounts payable in connection with the exercise of an Option, and Beneficial Shares withheld for payment, shall be valued for such purpose at their Fair Market Value as of the exercise date.

(iii)The Trust shall effect the issuance or transfer of the Beneficial Shares purchased under the Option as soon as practicable after the exercise thereof and payment in full of the purchase price thereof and of any amounts required by paragraph 10(l), and within a reasonable time thereafter, such issuance or transfer shall be evidenced on the books of the Trust. Unless otherwise determined by the Committee and provided in the applicable Agreement, (A) no Holder or other Person exercising an Option shall have any of the rights of a shareholder of the Trust with respect to shares subject to an Option granted under the Plan until due exercise and full payment has been made, and (B) no adjustment shall be made for cash dividends or other rights for which the record date is prior to the date of such due exercise and full payment.

5

(f)Unless otherwise determined by the Committee and provided in the applicable Agreement, Options shall not be transferable other than by will or the laws of descent and distribution or pursuant to a Domestic Relations Order, and, except as otherwise required pursuant to a Domestic Relations Order, Options may be exercised during the lifetime of the Holder thereof only by such Holder (or his or her court-appointed legal representative).

8. Restrictions on Options.

(a)The aggregate Fair Market Value of the Beneficial Shares with respect to which Incentive Stock Options are exercisable for the first time by an individual during any calendar year shall not exceed $100,000. If an Incentive Stock Option is granted pursuant to which the aggregate Fair Market Value of shares with respect to which it first becomes exercisable in any calendar year by an individual exceeds the aforementioned $100,000 limitation, the portion of such option which is in excess of the $100,000 limitation shall be treated as a Non-statutory Stock Option pursuant to Section 422(d)(1) of the Code. In the event that an individual is eligible to participate in any other share option plan of the Trust or any parent or Subsidiary of the Trust which is also intended to comply with the provisions of Section 422 of the Code, the $100,000 limitation shall, to the extent provided under Section 422 of the Code, apply to the aggregate number of shares for which Incentive Stock Options may be granted under all such plans.

(b)Subject to the conditions in paragraph 8(c) hereof, if applicable, the purchase price per share payable upon the exercise of each Incentive Stock Option granted hereunder shall be as determined by the Committee in its discretion, but shall be at least 100% of the Fair Market Value on the date of grant.

(c)If any participant is on the date of grant the owner of shares (as determined under Sections 422(b)(6) and 424(d) of the Code) possessing more than 10% of the total combined voting power of all classes of shares of the Trust or any parent or Subsidiary of the Trust, then the option price per share subject to such Incentive Stock Option shall not be less than 110% of the Fair Market Value, and the term of the option shall not exceed five years after the date of such grant.

(d)The purchase price per share payable upon the exercise of each non-statutory Option granted hereunder shall be determined by the Committee in its discretion, and shall be at least 85% of the Fair Market Value on the date of grant.

9. Restricted Shares.

(a)Subject to the limitations of the Plan, the Committee shall designate those eligible Persons to be granted awards of Restricted Shares, and shall determine the time when each such Award shall be granted. Beneficial Shares covered by awards of Restricted Shares will be issued at the beginning of the Restriction Period. The Committee shall designate the Vesting Date or Vesting Dates for each award of Restricted Shares, and may prescribe other restrictions, terms, and conditions applicable to the vesting of such Restricted Shares in addition to those provided in the Plan. The Committee shall determine the price, if any, to be paid by the Holder for the Restricted Shares; provided, however, that the issuance of Restricted Shares shall be made for at least the minimum consideration necessary to permit such Restricted Shares to be deemed fully paid and nonassessable. All determinations made by the Committee pursuant to this paragraph 9(a) shall be specified in the Agreement.

(b)The stock certificate or certificates representing Restricted Shares shall be registered in the name of the Holder to whom such Restricted Shares shall have been awarded. During the Restriction Period, certificates representing the Restricted Shares shall bear a restrictive legend to the effect that ownership of the Restricted Shares, and the enjoyment of all rights appurtenant thereto, are subject to the restrictions, terms, and conditions provided in the Plan and the applicable Agreement. Such certificates shall remain in the custody of the Trust or its designee, and the Holder shall deposit with

6

the custodian stock powers or other instruments of assignment, each endorsed in blank, so as to permit retransfer to the Trust of all or any portion of the Restricted Shares that shall be forfeited or otherwise not become vested in accordance with the Plan and the applicable Agreement.

(c)Restricted Shares shall constitute issued and outstanding Beneficial Shares for all corporate purposes. The Holder will have the right to vote such Restricted Shares, to receive and retain cash dividends and cash distributions, paid or distributed on such Restricted Shares, and to exercise all other rights, powers, and privileges of a Holder of Beneficial Shares with respect to such Restricted Shares; except, that, unless otherwise determined by the Committee and provided in the applicable Agreement, (i) the Holder will not be entitled to delivery of the stock certificate or certificates representing such Restricted Shares until the Restriction Period shall have expired and unless all other vesting requirements with respect thereto shall have been fulfilled or waived; (ii) the Trust or its designee will retain custody of the stock certificate or certificates representing the Restricted Shares during the Restriction Period as provided in paragraph 9(b) above; (iii) other than cash dividends and cash distributions as provided in this paragraph 9(c) above and as the Committee may designate, the Trust or its designee will retain custody of all distributions (“Retained Distributions”) made or declared with respect to the Restricted Shares (and such Retained Distributions will be subject to the same restrictions, terms and vesting, and other conditions as are applicable to the Restricted Shares) until such time, if ever, as the Restricted Shares with respect to which such Retained Distributions shall have been made, paid, or declared shall have become vested, and such Retained Distributions shall not bear interest or be segregated in a separate account; (iv) the Holder may not sell, assign, transfer, pledge, exchange, encumber, or dispose of the Restricted Shares or any Retained Distributions or his interest in any of them during the Restriction Period; and (v) a breach of any restrictions, terms, or conditions provided in the plan or established by the Committee with respect to any Restricted Shares or Retained Distributions will cause a forfeiture of such Restricted Shares and any Retained Distributions with respect thereto.

(d)On the Vesting Date with respect to each award of Restricted Shares and the satisfaction of any other applicable restrictions, terms, and conditions, (i) all or the applicable portion of such Restricted Shares shall become vested, and (ii) any Retained Distributions with respect to such Restricted Shares shall become vested to the extent that the Restricted Shares related thereto shall have become vested, all in accordance with the terms of the applicable Agreement. Any such Restricted Shares, and Retained Distributions, that shall not become vested shall be forfeited to the Trust, and the Holder shall not thereafter have any rights (including dividend and voting rights) with respect to such Restricted Shares and Retained Distributions, that shall have been so forfeited.

10. General Provisions.

(a)If a Holder’s employment or other relationship with the Trust shall terminate by reason of death or Disability, notwithstanding any contrary waiting period, installment period, vesting schedule, or Restriction Period in any Agreement or in the Plan, unless the applicable Agreement provides otherwise: (i) in the case of an Option, each outstanding Option granted under the Plan shall immediately become exercisable in full in respect of the aggregate number of shares covered thereby; (ii) in the case of Restricted Shares, the Restriction Period applicable to each such Award of Restricted Shares shall be deemed to have expired and all such Restricted Shares and any related Retained Distributions shall become vested.

(b)In the event of any Approved Transaction, Board Change or Control Purchase, notwithstanding any contrary waiting period, installment period, vesting schedule, or Restriction Period in any Agreement or in the Plan, unless the applicable Agreement provides otherwise: (i) in the case of an Option, each such outstanding Option granted under the Plan shall become exercisable in full in respect of the aggregate number of shares covered thereby; and (ii) in the case of Restricted Shares, the Restriction Period applicable to each such Award of Restricted Shares shall be deemed to have

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expired and all such Restricted Shares and any related Retained Distributions shall become vested. Notwithstanding the foregoing, unless otherwise provided in the applicable Agreement, the Committee may, in its discretion, determine that any or all outstanding Awards of any or all types granted pursuant to the Plan will not vest or become exercisable on an accelerated basis in connection with an Approved Transaction if effective provision has been made for the taking of such action which, in the opinion of the Committee, is equitable and appropriate to substitute a new Award for such Award or to assume such Award and to make such new or assumed Award, as nearly as may be practicable, equivalent to the old Award (before giving effect to any acceleration of the vesting or exercisability thereof), taking into account, to the extent applicable, the kind and amount of securities, cash, or other assets into or for which the Beneficial Shares may be changed, converted, or exchanged in connection with the Approved Transaction.

(c)If a Holder’s employment shall terminate prior to the complete exercise of an Option or during the Restriction Period with respect to any Restricted Shares, then such Option shall thereafter be exercisable, and the Holder’s rights to any unvested Restricted Shares and Retained Distributions, shall thereafter vest, in each case solely to the extent provided in the applicable Agreement; provided, however, that, unless otherwise determined by the Committee and provided in the applicable Agreement, (i) no Option may be exercised after the scheduled expiration date thereof; (ii) the Option shall remain exercisable for a period of at least one year following such termination (but not later than the scheduled expiration of such Option); and (iii) any termination of the Holder’s employment for cause will be treated in accordance with the provisions of paragraph 10(d).

(d)If a Holder’s employment with the Trust or a Subsidiary of the Trust shall be terminated by the Trust or such Subsidiary during the Restriction Period with respect to any Restricted Shares, or prior to the exercise of any Option for cause (for these purposes, cause shall have the meaning ascribed thereto in any employment agreement to which such Holder is a party or, in the absence thereof, shall include, but not limited to, insubordination, dishonesty, incompetence, moral turpitude, other misconduct of any kind, and the refusal to perform his duties and responsibilities for any reason other than illness or incapacity; provided, however, that if such termination occurs within 12 months after an Approved Transaction or Control Purchase or Board Change, termination for cause shall mean only a felony conviction for fraud, misappropriation, or embezzlement), then, unless otherwise determined by the Committee and provided in the applicable Agreement, (i) all Options shall immediately terminate and (ii) such Holder’s rights to all Restricted Shares and Retained Distributions, shall be forfeited immediately.

(e)Unless otherwise determined by the Committee and provided in the applicable Agreement, Awards made under the Plan shall not be affected by any change of employment so long as the Holder continues to be an employee of the Trust or any Subsidiary of the Trust.

(f)Nothing contained in the Plan or in any Award, and no action of the Trust or the Committee with respect thereto, shall confer or be construed to confer on any Holder any right to continue in the employ of the Trust or any of its Subsidiaries or interfere in any way with the right of the Trust or any Subsidiary of the Trust to terminate the employment of the Holder at any time, with or without cause, subject, however, to the provisions of any employment agreement between the Holder and the Trust or any Subsidiary of the Trust.

(g)Except as set forth herein, no right or benefit under the Plan shall be subject to anticipation, alienation, sale, assignment, hypothecation, pledge, exchange, transfer, encumbrance, or charge, and any attempt to anticipate, alienate, sell, assign, hypothecate, pledge, exchange, transfer, encumber or charge the same shall be void. No right or benefit hereunder shall in any manner be liable for or subject to the debts, contracts, liabilities, or torts of the Person entitled to such benefits.

(h)Each grant of an Option under the Plan shall be evidenced by a stock option agreement; and each award of Restricted Shares shall be evidenced by a restricted shares agreement; each in such form

8

and containing such terms and provisions not inconsistent with the provisions of the Plan as the Committee from time to time shall approve; provided, however, that if more than one type of Award is made to the same Holder, such Awards may be evidenced by a single Agreement with such Holder. Each grantee of an Option or Restricted Shares shall be notified promptly of such grant, and a written Agreement shall be promptly executed and delivered by the Trust. Any such written Agreement may contain (but shall not be required to contain) such provisions as the Committee deems appropriate (i) to insure that the penalty provisions of Section 4999 of the Code will not apply to any stock or cash received by the Holder from the Trust or (ii) to provide cash payments to the Holder to mitigate the impact of such penalty provisions upon the Holder. Any such Agreement may be supplemented or amended from time to time as approved by the Committee as contemplated by paragraph 10 (j) (ii).

(i)Each Person who shall be granted an Award under the Plan may designate a beneficiary or beneficiaries and may change such designation from time to time by filing a written designation of beneficiary or beneficiaries with the Committee on a form to be prescribed by it, provided that no such designation shall be effective unless so filed prior to the death of such Person.

(j)(i)Unless the Plan shall theretofore have been terminated as hereinafter provided, no Awards may be made under the Plan on or after the tenth anniversary of the Effective Date. The Plan may be terminated at any time prior to the tenth anniversary of the Effective Date and may, from time to time, be suspended or discontinued or modified or amended if such action is deemed advisable by the Committee.

(ii)No termination, modification or amendment of the Plan may, without the consent of the Person to whom any Award shall theretofore have been granted, adversely affect the rights of such Person with respect to such Award. No modification, extension, renewal, or other change in any Award granted under the Plan shall be made after the grant of such Award, unless the same is consistent with the provisions of the Plan. With the consent of the Holder and subject to the terms and conditions of the Plan, the Committee may amend outstanding Agreements with any Holder, including, without limitation, any amendment which would (A) accelerate the time or times at which the Award may be exercised and/or (B) extend the scheduled expiration date of the Award. Without limiting the generality of the foregoing, the Committee may, but solely with the Holder’s consent unless otherwise provided in the Agreement, agree to cancel any Award under the Plan and grant a new Award in substitution therefore, provided that the Award so substituted shall satisfy all of the requirements of the Plan as of the date such new Award is made. Nothing contained in the foregoing provisions of this paragraph 10(j)(ii) shall be construed to prevent the Committee from providing in any Agreement that the rights of the Holder with respect to the Award evidenced thereby shall be subject to such rules and regulations as the Committee may, subject to the express provisions of the Plan, adopt from time to time or impair the enforceability of any such provision.

(k)The obligation of the Trust with respect to Awards shall be subject to all applicable laws, rules, and regulations and such approvals by any governmental agencies as may be required, including, without limitation, the effectiveness of any registration statement required under the Securities Act of 1933, and the rules and regulations of any securities exchange or association on which the Beneficial Shares may be listed or quoted. For so long as any Beneficial Shares are registered under the Exchange Act, the Company shall use its reasonable efforts to comply with any legal requirements (i) to maintain a registration statement in effect under the Securities Act of 1933 with respect to all Beneficial Shares that may be issued to Holders under the Plan and (ii) to file in a timely manner all reports required to be filed by it under the Exchange Act.

(l)The Trust’s obligation to deliver Beneficial Shares or pay cash in respect of any Award under the Plan shall be subject to applicable federal, state, and local tax withholding requirements. Federal, state, and local withholding tax due at the time of an Award, upon the exercise of any Option or upon

9

the vesting of, or expiration of restrictions with respect to, Restricted Shares may, in the discretion of the Committee, be paid in Beneficial Shares already owned by the Holder or through the withholding of shares otherwise issuable to such Holder, upon such terms and conditions as the Committee shall determine. If the Holder shall fail to pay, or make arrangements satisfactory to the Committee for the payment to the Trust of, all such federal, state and local taxes required to be withheld by the Trust, then the Trust shall, to the extent permitted by law, have the right to deduct from any payment of any kind otherwise due to such Holder an amount equal to any federal, state, or local taxes of any kind required to be withheld by the Trust with respect to such Award.

(m)The adoption of the Plan by the Board shall not be construed as creating any limitations on the power of the Board to adopt such other incentive arrangements as it may deem desirable, including, without limitation, the granting of stock options and the awarding of stock and cash otherwise than under the Plan, and such arrangements may be either generally applicable or applicable only in specific cases.

(n)By acceptance of an Award, unless otherwise provided in the applicable Agreement, each Holder shall be deemed to have agreed that such Award is special incentive compensation that will not be taken into account, in any manner, as salary, compensation, or bonus in determining the amount of any payment under any pension, retirement, or other employee benefit plan, program, or policy of the Trust or any Subsidiary of the Trust. In addition, each beneficiary of a deceased Holder shall be deemed to have agreed that such Award will not affect the amount of any life insurance coverage, if any, provided by the Trust on the life of the Holder which is payable to such beneficiary under any life insurance plan covering employees of the Trust or any Subsidiary of the Trust.

(o)Neither the Trust nor any Subsidiary of the Trust shall be required to segregate any cash or any Beneficial Shares which may at any time be represented by Awards, and the Plan shall constitute an “unfunded” plan of the Trust. Neither the Trust nor any Subsidiary of the Trust shall, by any provisions of the Plan, be deemed to be a trustee of any Beneficial Shares or any other property, and the liabilities of the Trust and any Subsidiary of the Trust to any employee pursuant to the Plan shall be those of a debtor pursuant to such contract obligations as are created by or pursuant to the Plan, and the rights of any employee, former employee, or beneficiary under the Plan shall be limited to those of a general creditor of the Trust or the applicable Subsidiary of the Trust as the case may be. In its sole discretion, the Board may authorize the creation of trusts or other arrangements to meet the obligations of the Trust under the Plan, provided, however, that the existence of such trusts or other arrangements is consistent with the unfunded status of the Plan.

(p)The Plan shall be governed by, and construed in accordance with, the laws of the Commonwealth of Massachusettes.

(q)The delivery of any Beneficial Shares and the payment of any amount in respect of an Award shall be for the account of the Trust or the applicable Subsidiary of the Trust, as the case may be, and any such delivery or payments shall not be made until the recipient shall have paid or made satisfactory arrangements for the payment of any applicable withholding taxes as provided in Paragraph 10(l).

(r)Each certificate evidencing Beneficial Shares subject to an Award shall bear such legends as the Committee deems necessary or appropriate to reflect or refer to any terms, conditions, or restrictions of the Award applicable to such shares, including, without limitation, any to the effect that the shares represented thereby may not be disposed of unless the rust has received an opinion of counsel, acceptable to the Trust, that such disposition will not violate any federal or state securities laws.

(s)The grant of Awards pursuant to the Plan shall not affect in any way the right of power of the Trust to make reclassifications, reorganizations, or other changes of or to its capital or business structure or to merge, consolidate, liquidate, sell, or otherwise dispose of all or any part of its business or assets.

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EX-10.15

Exhibit 10.15

AMENDMENT NO. 1 TO AMENDED AND

RESTATED ADVISORY AGREEMENT

Amendment No. 1 (the “Amendment”) dated as of December 8, 2011 and effective as of January 1, 2012 to the Amended and Restated Advisory Agreement dated as of January 1, 2007, by and between BRT Realty Trust and REIT Management Corp. (the “Agreement”).

WHEREAS, effective as of January 1, 2007, BRT Realty Trust and REIT Management Corp. entered into the Agreement,

WHEREAS, the Agreement has been extended from time to time so that it terminates on December 31, 2011, and

WHEREAS, the parties desire to amend the Agreement as provided for in this Amendment (capitalized terms used without being defined herein shall have the meaning ascribed to such term by the Agreement):

NOW, THEREFORE, in consideration of the mutual covenants herein contained, the parties hereto do hereby agree as follows:

1.   (a) Section 1 of the Agreement is amended by:

(a) deleting the following defined terms: “Base Fees”, “Fiscal Year”,  “Invested Assets,” and “Loan Origination Fee”; and

(b) adding the following defined terms:

“BVRE” shall mean the average book value of applicable real estate properties, excluding depreciation.

“2012” shall mean the twelve months beginning January 1, 2012.

“2013” shall mean the twelve months beginning January 1, 2013.

“Earning Loan” shall have the meaning ascribed to such term by Section 10(a)(i).

“Fiscal 2014” shall mean the six months beginning January 1, 2014.

“Investor’s Percentage Interest” shall mean all the equity interests, expressed as a percentage, of all persons, other than the Trust and its wholly-owned subsidiaries, in a JV/Participation.

“JV/Participation” shall mean an entity (including, without limitation, a joint venture, partnership or limited partnership) or arrangement (including, without limitation, a participation agreement) pursuant to which the benefits of ownership of an asset is shared by the Trust or its wholly-owned subsidiaries with another person or entity.

“Managed Loans” shall mean loans held or owned by a JV/Participation in which the Trust or its wholly-owned direct or indirect subsidiaries is receiving compensation (including without limitation, origination or servicing fees) for administering or managing the JV/Participation or such loans.

“Managed Real Estate” shall mean real property held by a JV/Participation in which the Trust or its wholly-owned direct or indirect subsidiaries is receiving compensation

(including without limitation, management fees) for administering or managing such JV/Participation or such real property.

“Non-Earning Loan” shall have the meaning ascribed to such term by Section 10(a)(ii).

“Passive Loans” shall mean loans held by a JV/Participation in which the Trust or its wholly-owned direct or indirect subsidiaries is not compensated for administering or managing the JV/Participation or such loans.

“Passive Real Estate” shall mean real property held by a JV/Participation in which the Trust is not compensated for administering or managing the JV/Participation or such real property.

“Periodic Report” shall mean the applicable quarterly or annual report filed by BRT with the Securities and Exchange Commission pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934, as amended, and the financial information and/or work papers supporting the preparation of such quarterly or annual report.

“Trust’s Percentage Interest” shall mean all the equity interests, expressed as a percentage, held by the Trust and its direct and indirect wholly-owned subsidiaries, in a JV/Participation.

2.Section 3(j) of the Agreement is hereby amended to read as follows:

“(j)          perform such other services of a managerial or advisory nature (including without limitation, the oversight of JV/Participations entered into by the Trust or its direct or indirect wholly-owned subsidiaries) as the Trustees may deem to be in the best interests of the Trust and to the extent not inconsistent with the nature of the services provided by the Advisor prior to December 8, 2011.”

3.Section 9 of the Agreement is hereby amended to read as follows:

“9.   Minimum and Maximum Fees.

The minimum amount of Incentive Fees payable hereunder shall be $750,000, $750,000 and $375,000 for 2012, 2013 and Fiscal 2014, respectively, and the maximum amount of Incentive Fees payable hereunder shall be $4,000,000, $4,000,000 and $2,000,000 for 2012, 2013 and Fiscal 2014, respectively.

4.Section 10 of the Agreement is hereby amended to read as follows:

“10. Incentive Fees.  (a) Subject to the minimum and maximum fees payable pursuant to Section 9, the Trust shall pay the Advisor on a quarterly basis in arrears the fee indicated with respect to each of the following items (excluding, however, Managed Loans, Passive Loans, Managed Real Estate and Passive Real Estate):

(i) 0.25% of the average principal amount of earning loans (“Earning Loan”);

(ii) 0.0875% of the average amount of the fair market value of non-earning loans (“Non-Earning Loan”);

(iii) 0.1125% of BVRE;

(iv) 0.0625% of the average amount of the fair market value of marketable securities; and

(v) 0.0375% of the average amount of cash and cash equivalents.

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(b) Subject to the minimum and maximum fees payable pursuant to Section 9, the Trust shall pay the Advisor on a quarterly basis in arrears the fee indicated with respect to each of the following items:

(i) with respect to Managed Real Estate: (0.1125% x the Trust’s Percentage Interest x BVRE) + (0.1% x Investor’s Percentage Interest x BVRE); and

(ii) with respect to Passive Real Estate: (0.1125% x the Trust’s Percentage Interest x BVRE).

(c) Subject to the minimum and maximum fees payable pursuant to Section 9, the Trust shall pay the Advisor on a quarterly basis in arrears, the fee indicated with respect to each of the following items:

(i)  with respect to each Managed Loan that is an Earning Loan: (0.25% x the Trust’s Percentage Interest x Earning Loan) + (0.1% x Investor’s Percentage Interest x Earning Loan);

(ii)  with respect to each Managed Loan that is a Non-Earning Loan: (0.0875% x Non-Earning Loan) + (0.0875% x Investor’s Percentage Interest x Non-Earning Loan);

(iii) with respect to each Passive Loan that is an Earning Loan: (0.25% x the Trust’s Percentage Interest x Earning Loan); and

(iv) with respect to each Passive Loan that is a Non-Earning Loan: (0.0875% x the Trust’s Percentage Interest x Non-Earning Loan).

(d) The average amount for these items shall be calculated by comparing the amount reflected for such item in the Periodic Report for the quarterly period for which such fees are being calculated to the Periodic Report filed for the immediately preceding quarter.  The Incentive Fees shall be computed by the Trust and shall be paid to the Advisor within ten days of the filing of the Periodic Report with respect to the period for which the Incentive Fees are being calculated (but in no event later than 55 days after the end of the Trust’s fiscal quarter or 85 days after the end of the Trust’s fiscal year).

(e) Within 90 days after the end of each of 2012, 2013 and Fiscal 2014 or, if this Agreement is terminated prior to June 30, 2014, within ninety (90) days after the termination of this Agreement, the Trust shall recalculate all the payments made hereunder (as if such payments had been made on a twelve month basis rather than a quarterly basis) to determine whether the Trust has paid the Advisor the amount it is obligated to pay the Advisor hereunder for the applicable twelve months.  In the event that it is determined that the Advisor has received more or less than the amount to which it is entitled to hereunder, within thirty (30) days of such determination, the Trust, in the case of an underpayment, or the Advisor, in the case of an overpayment, shall remit to the other the amount of such underpayment or overpayment, as the case may be.  In the event of the termination of this Agreement other than on the last day of 2012, 2013 or Fiscal 2014, or as may otherwise be appropriate with respect to a period of less than twelve months, appropriate pro rata adjustments shall be made to the calculation of Incentive Fees payable pursuant to the Agreement.

(f)    Notwithstanding anything to the contrary herein, the amounts payable pursuant to Section 10(b) and 10(c) with respect to a particular loan or real estate asset shall not exceed on a quarterly basis, the amount received by the Trust for servicing or managing such loan, real estate or the related JV/Participation during such period.

5.     Section 15 of the Agreement is hereby amended to read as follows:

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“15. Term. This Agreement shall continue in force until June 30, 2014 unless terminated by BRT or the Advisor as provided herein.”

6.The provision of this Amendment shall be construed and interpreted in accordance with the laws of the State of New York as at the time in effect.

7.This Amendment is effective as of January 1, 2012. The provisions of this Amendment are severable, and if any clause or provision shall be held invalid or unenforceable in whole or in part in any jurisdiction, then such invalidity or unenforceability shall affect only such clause or provision, or part thereof, in such jurisdiction and shall not in any manner affect such clause or provision in any other jurisdiction, or any other clause or provision in the Amendment in any jurisdiction.

8.This Amendment shall be binding upon any successors or permitted assigns of the parties hereto as provided in the Agreement subject to the provisions of Section 16 thereof.

9.All terms and conditions of the Agreement, except as modified by this Amendment, are hereby affirmed and ratified.

BRT REALTY TRUST
By:	/s/ Jeffrey A. Gould
	Jeffrey A. Gould,
	President and Chief Executive Officer
REIT MANAGEMENT CORP.
By:	/s/David W. Kalish
	David W. Kalish, Vice President

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EX-21.1

EXHIBIT 21.1

SUBSIDIARIES

COMPANY	STATE OF ORGANIZATION
TRB No. 1 Corp.	New York
TRB 69th Street Corp.	New York
TRB Lawrence Realty Corp.	New York
TRB Yonkers Corp.	New York
RIPCO-TRB Venture I LLC	New York
BRT Joint Venture No. 1 LLC	Delaware
TRB West 15th Street LLC	New York
TRB Fort Wayne LLC	Indiana
TRB Apopka LLC	Florida
TRB Miami Beach LLC	Florida
TRB West Palm Beach II LLC	Florida
TRB Daytona LLC	Florida
TRB Chelsea LLC	New York
TRB Newark Assemblage LLC	New Jersey
RBH-TRB Newark Assemblage LLC	Delaware
TRB Newark TRS LLC	New Jersey
TRB Fort Wayne Inn LLC	Indiana
BRT Repo LLC	New York
Gould Realty Advisors LLC	New York
HWH Uptown LLC	New York
BRT Torch Member LLC	Delaware
BRT RLOC LLC	New York
TRB Palms East LLC	New York
TRB Plainfield LLC	New York
TRB Altamonte LLC	New York
TRB Bayard Street LLC	New York
TRB Fort Worth Realty LLC	Texas

EX-23.1

EXHIBIT 23.1

Consent of Independent Registered Public Accounting Firm

BRT Realty Trust

Great Neck, New York

We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (Nos. 333-128458, 333-118915, and 333-160569) and Form S-8 (Nos. 333-101681, 333-104461, and 333-159903) of BRT Realty Trust and Subsidiaries of our reports dated December 12, 2011, relating to the consolidated financial statements and financial statement schedules, and the effectiveness of BRT Realty Trust and Subsidiaries’ internal control over financial reporting, which appear in this Form 10-K

BDO USA, LLP

New York, New York

December 12, 2011

EX-23.2

EXHIBIT 23.2

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the following Registration Statements:

(1)Form S-3 (No. 333-128458) and the related Prospectuses regarding BRT Realty Trust’s Shelf Registration Statement,

(2)Form S-3 (No. 333-118915) regarding BRT Realty Trust’s Dividend Reinvestment and Share Purchase Plan,

(3)Form S-3 (No. 333-160569) and the related Prospectuses regarding BRT Realty Trust’s Shelf Registration Statement,

(4)Form S-8 (No. 333-101681) regarding BRT Realty Trust’s 1996 Stock Option Plan,

(5)Form S-8 (No. 333-104461) regarding BRT Realty Trust’s 2003 Incentive Plan, and

(6)Form S-8 (No. 333-159903) regarding BRT Realty Trust’s 2009 Incentive Plan;

of our report dated December 13, 2010, relating to our audits of the consolidated financial statements at September 30, 2010 and for the years ended September 30, 2010 and 2009 of BRT Realty Trust and Subsidiaries, included in this Annual Report (Form 10-K) for the year ended September 30, 2011.

	/s/ Ernst & Young LLP
New York, New York
December 12, 2011

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Jeffrey A. Gould, certify that:

1.I have reviewed this Annual Report on Form 10-K for the fiscal year ended September 30, 2011 of BRT Realty Trust;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)   Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures,  as of the end of the period covered by this report based on such evaluation; and

(d)   Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal controls over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: December 12, 2011
	/s/ Jeffrey A. Gould
	Jeffrey A. Gould
	President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, David W. Kalish, certify that:

1.I have reviewed this Annual Report on Form 10-K for the fiscal year ended September 30, 2011 of BRT Realty Trust;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)   Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)   Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal controls over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: December 12, 2011
	/s/ David W. Kalish
	David W. Kalish
	Senior Vice President-Finance

EX-31.3

EXHIBIT 31.3

CERTIFICATION

I, George Zweier, certify that:

1.I have reviewed this Annual Report on Form 10-K for the fiscal year ended September 30, 2011 of BRT Realty Trust;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)   Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)   Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal controls over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: December 12, 2011
	/s/ George Zweier
	George Zweier
	Vice President and Chief Accounting Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350

(SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002)

The undersigned, Jeffrey A. Gould, does hereby certify to his knowledge, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that based upon a review of the Annual Report on Form 10-K for the year ended September 30, 2011 of the registrant:

(1)   The report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)   The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the registrant.

Date: December 12, 2011
	/s/ Jeffrey A. Gould
	Jeffrey A. Gould
	President and Chief Executive Officer

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF SENIOR VICE PRESIDENT-FINANCE

PURSUANT TO 18 U.S.C. SECTION 1350

(SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002)

The undersigned, David W. Kalish, does hereby certify to his knowledge, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that based upon a review of the Annual Report on Form 10-K for the year ended September 30, 2011 of the registrant:

(1)   The report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)   The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the registrant.

Date: December 12, 2011
	/s/ David W. Kalish
	David W. Kalish
	Senior Vice President-Finance

EX-32.3

EXHIBIT 32.3

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350

(SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002)

The undersigned, George Zweier, does hereby certify to his knowledge, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that based upon a review of the Annual Report on Form 10-K for the year ended September 30, 2011 of the registrant:

(1)   The report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)   The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the registrant.

Date: December 12, 2011
	/s/ George Zweier
	George Zweier
	Vice President and Chief Accounting Officer

XML

QUARTERLY FINANCIAL DATA (Unaudited)

12 Months Ended

Sep. 30, 2011

QUARTERLY FINANCIAL DATA (Unaudited)

QUARTERLY FINANCIAL DATA (Unaudited)

NOTE 17—QUARTERLY FINANCIAL DATA (Unaudited)

			2011
			1st Quarter Oct.-Dec			2nd Quarter Jan.-March			3rd Quarter April-June		4th Quarter July-Sept.		Total For Year
Revenues			$	2,452		$	5,697		$	5,344	$	4,388	$	17,881
Gain on sale of available-for-sale securities				421			593			176		129		1,319
Loss on extinguishment of debt				—			(2,138	)		—		—		(2,138	)
(Loss) income from continuing operations				(681	)		625			2,072		1,562		3,578
	Discontinued operations			—			697			645		4		1,346
Net (loss) income				(681	)		1,322			2,717		1,566		4,924
Plus: net loss attributable to non- controlling interests				173			525			455		297		1,450
Net (loss) income attributable to common shareholders				(508	)		1,847			3,172		1,863		6,374
(Loss) income per beneficial share
		Continuing operations	$	(.04	)	$	.08		$	.18	$	.13	$	.35
		Discontinued operations		—			.05			.05		—		.10
		Basic earnings (loss) per share	$	(.04	)	$	.13		$	.23	$	.13	$	.45

			2010
			1st Quarter Oct.-Dec			2nd Quarter Jan.-March			3rd Quarter April-June			4th Quarter July-Sept.			Total For Year
Revenues			$	1,881		$	2,027		$	2,345		$	1,882		$	8,135
Provision for loan loss				3,165			—			—			—			3,165
Impairment charges				—			—			2,625			—			2,625
Gain on sale of available-for-sale securities				1,586			—			—			—			1,586
Loss from continuing operations				(2,990	)		(1,613	)		(3,989	)		(1,335	)		(9,927	)
	Discontinued operations(a)			102			(114	)		589			13			590
Net loss				(2,888	)		(1,727	)		(3,400	)		(1,322	)		(9,337	)
Plus: net loss attributable to non-controlling interests				367			370			429			156			1,322
Net loss attributable to common shareholders				(2,521	)		(1,357	)		(2,971	)		(1,166	)		(8,015	)
(Loss) income per beneficial share
		Continuing operations	$	(.20	)	$	(.09	)	$	(.25	)	$	(.08	)	$	(.62	)
		Discontinued operations		.01			(.01	)		.04			—			.04
		Basic earnings (loss) per share	$	(.19	)	$	(.10	)	$	(.21	)	$	(.08	)	$	(.58	)

(a)

Includes impairment charges of $745,000 in the 1^st quarter of 2010.

XML

ORGANIZATION, BACKGROUND AND SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Sep. 30, 2011

ORGANIZATION, BACKGROUND AND SIGNIFICANT ACCOUNTING POLICIES.

ORGANIZATION, BACKGROUND AND SIGNIFICANT ACCOUNTING POLICIES

NOTE 1—ORGANIZATION, BACKGROUND AND SIGNIFICANT ACCOUNTING POLICIES

Organization and Background

        BRT Realty Trust is a business trust organized in Massachusetts. Our primary business is to originate and hold for investment senior mortgage loans secured by commercial and multi-family real estate property in the United States. This includes originating loans to persons purchasing their own or third party mortgage debt, at a discount to the principal amount thereof. Generally, in such transactions, we purchase the mortgage and our counterparty is obligated to repurchase such mortgage within a specified period. The loans we originate generally have relatively high yields and are short-term or bridge loans with a duration ranging from six months to one year. It is our policy to lend at a floating rate of interest based on a spread over the prime rate, with a stated minimum rate, though we originate fixed rate loans as circumstances dictate. We receive an origination fee for the loans we originate. We conduct our operations to qualify as a real estate investment trust, or REIT, for Federal income tax purposes.

        From time-to-time we originate junior commercial and multi-family mortgage loans, participate as an equity investor in, and mortgage lender to, joint ventures which acquire income producing real estate property, and purchase securities of other REITs.

Principles of Consolidation; Basis of Preparation

        Certain items on the consolidated financial statements for the preceding periods have been reclassified in the accompanying consolidated financial statements to conform to the current year's presentation.

        The consolidated financial statements include the accounts and operations of BRT Realty Trust, its wholly owned subsidiaries, and its majority-owned or controlled real estate entities and its interests in variable interest entities in which it is the primary beneficiary. Material intercompany items and transactions have been eliminated. BRT Realty Trust and its subsidiaries are hereinafter referred to as "BRT" or the "Trust."

        With respect to its unconsolidated joint ventures, as (i) the Trust is primarily the managing member but does not exercise substantial operating control over these entities or the Trust is not the managing member and (ii) such entities are not variable-interest entities, the Trust has determined that such joint ventures should be accounted for under the equity method of accounting for financial statement purposes.

        RBH-TRB Newark Holdings LLC was determined to be a Variable Interest Entity ("VIE") because the total equity investment at risk is not sufficient to permit it to finance its activities without additional subordinated financial support by its equity holders. The Trust was determined to be the primary beneficiary as it has a controlling financial interest in the VIE as it has the obligation to absorb a majority of the VIE's expected losses. For these reasons, the Trust has consolidated the operations and assets of this VIE in the Trust's consolidated financial statements.

Income Tax Status

        The Trust qualifies as a real estate investment trust under Sections 856-860 of the Internal Revenue Code of 1986, as amended. The Trustees may, at their option, elect to operate the Trust as a business trust not qualifying as a real estate investment trust.

Income Recognition

        Income and expenses are recorded on the accrual basis of accounting for financial reporting purposes. The Trust does not accrue interest on impaired loans where, in the judgment of management, collection of interest according to the contractual terms of the loan documents is considered doubtful. Among the factors the Trust considers in making an evaluation of the amount of interest that is collectable, are the financial condition of the borrower, the status of the underlying collateral and anticipated future events. The Trust accrues interest on performing impaired loans and records cash receipts as a reduction of interest receivable. For impaired non-accrual loans, interest is recognized on a cash basis. The Trust will resume the accrual of interest if it determines the collection of interest according to the contractual terms of the loan is probable.

        Loan commitment, origination and extension fee income on loans held in our portfolio is deferred and recorded as loan fee income over the life of the commitment and loan. Commitment fees are generally non-refundable. When a commitment expires or the Trust no longer has any other obligation to perform, the remaining fee is recognized into income.

        Rental revenue from real estate properties includes the base rent that each tenant is required to pay in accordance with the terms of their respective leases reported on a straight line basis over the initial term of the lease.

        The basis on which cost was determined in computing the realized gain or loss on available-for-sale securities is specific cost.

Allowance for Possible Losses

        A loan evaluated for impairment is deemed to be impaired when based on current information and events, it is probable, in the judgment of management, that the Trust will not be able to collect all amounts due according to the contractual terms of the loan documents. When making this evaluation various factors are considered, as appropriate, including, market evaluations of the underlying collateral, estimated operating cash flow from the property during the projected holding period, and estimated sales value computed by applying an estimated capitalization rate to the projected stabilized net operating income of the specific property, less selling costs, discounted at market discount rates. If upon completion of the evaluation, the value of the collateral securing the loan is less than the recorded investment in the loan, an allowance is created with a corresponding charge to expense. The fair values related to the collateral securing impaired loans based on discounted cash flow models are considered to be level 3 valuations within the fair value hierarchy. When the Trust acquires title to the property, the loan loss allowance is adjusted by charging off all amounts related to the loan and recording the property at its adjusted carrying value.

Real Estate Properties, Real Estate Properties Held For Sale and Loan Held For Sale

        Real estate properties are shown net of accumulated depreciation and includes real property acquired by foreclosure and similar proceedings.

        When real estate is acquired by foreclosure proceedings, it is recorded at the lower of the recorded investment of the loan or estimated fair value of the property at the time of foreclosure or delivery of a deed in lieu of foreclosure. The recorded investment is the face amount of the loan that has been decreased by any deferred fees, loan loss allowances and any valuation adjustments. Real estate assets, including assets acquired by foreclosure proceedings, that are operated for the production of income are depreciated over their estimated useful lives. Costs incurred in connection with the foreclosure of the properties collateralizing the real estate loans are expensed as incurred.

        Real estate and real estate loans are classified as held for sale when management has determined that it has met the appropriate criteria in Accounting Standards Codification (ASC) 360. Real estate properties which are held for sale are not depreciated and their operations are shown in discontinued operations. Real estate assets and loans that are expected to be disposed of are valued at the lower of their carrying amount or their fair value less costs to sell on an individual asset basis.

        The Trust accounts for the sale of real estate when title passes to the buyer, sufficient equity payments have been received, there is no continuing involvement by the Trust and there is reasonable assurance that the remaining receivable, if any, will be collected.

Real Estate Asset Impairments

        The Trust reviews each real estate asset owned, including investments in real estate ventures to determine if there are indicators of impairment. If such indicators are present, the Trust determines whether the carrying amount of the asset can be recovered. Recognition of impairment is required if the undiscounted cash flows estimated to be generated by the assets are less than the assets' carrying amount. Measurement of impairment is based upon the estimated fair value of the asset. In evaluating a property for impairment, various factors are considered, including estimated current and expected operating cash flow from the property during the projected holding period, costs necessary to extend the life or improve the asset, expected capitalization rates, projected stabilized net operating income, selling costs, and the ability to hold and dispose of such real estate owned in the ordinary course of business. Valuation adjustments may be necessary in the event that effective interest rates, rent-up periods, future economic conditions, and other relevant factors vary significantly from those assumed in valuing the property. If future evaluations result in a diminution in the value of the property, the reduction will be recognized as an impairment charge. The fair values related to the impaired real estate are considered to be a level 3 valuation within the fair value hierarchy.

Fixed Asset Capitalization

        A variety of costs may be incurred in the development of our properties. After a determination is made to capitalize a cost, it is allocated to the specific project that is benefited. The costs of land and building under development include specifically identifiable costs. The capitalized costs include pre-construction costs essential to the development of the property, development costs, construction costs, interest costs, real estate taxes, and other costs incurred during the period of development. We consider a construction project as substantially completed when it is available for occupancy, but no later than one year from cessation of major construction activity. We cease capitalization when the project is available for occupancy.

Equity Based Compensation

        The Trust's compensation expense for restricted stock awards is amortized over the vesting period of such awards, based upon the estimated fair value of such restricted stock at the grant date. For accounting purposes, the restricted shares are not included in the outstanding shares shown on the consolidated balance sheets until they vest, however, they are included in the calculation of both basic and diluted earnings per share as they participate in the earnings of the Trust.

Per Share Data

        Basic earnings (loss) per share was determined by dividing net income (loss) applicable to common shareholders for each year by the weighted average number of shares of beneficial interest outstanding during each year. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue shares of beneficial interest were exercised or converted into shares of beneficial interest or resulted in the issuance of shares of beneficial interest that share in the earnings of the Trust. Diluted earnings per share was determined by dividing net income applicable to common shareholders for each year by the total of the weighted average number of shares of beneficial interest outstanding plus the dilutive effect of the Trust's unvested restricted stock and outstanding options and warrants using the treasury stock method.

Cash Equivalents

        Cash equivalents consist of highly liquid investments, primarily direct United States treasury obligations with maturities of three months or less when purchased.

Use of Estimates

        The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Segment Reporting

        Management has determined that it operates in two reportable segments: a loan and investment segment and a real estate segment. The loan and investment segment includes all activities related to the origination and servicing of our loan portfolio and other investments and the real estate segment includes all activities related to the development, operation and disposition of the Trusts real estate assets. These two lines of business require different support infrastructures.

New Accounting Pronouncements

        In June 2009, the FASB issued updated guidance, which amends guidance for determining whether an entity is a variable interest entity, or VIE, and requires the performance of a qualitative rather than a quantitative analysis to determine the primary beneficiary of a VIE. Under this guidance, an entity would be required to consolidate a VIE if it has (i) the power to direct the activities that most significantly impact the entity's economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could be significant to the VIE. This guidance was effective for the first annual reporting period that began after November 15, 2009. The Trust adopted this guidance on October 1, 2010 and the adoption did not have a material impact on the consolidated financial statements.

        In July 2010, the FASB issued updated guidance on disclosures about the credit quality of financing receivables and the allowance for credit losses which will require a greater level of information disclosed about the credit quality of loans and allowance for loan losses, as well as additional information related to credit quality indicators, past due information, and information related to loans modified in a troubled debt restructuring. This guidance became effective for public entities for interim and annual reporting periods ending on or after December 15, 2010. The Trust adopted this guidance on January 1, 2011 and the adoption did not have a material impact on the consolidated financial statements.

        In April 2011, the FASB issued Accounting Standard Unit (ASU) No. 2011-02 which is included in Accounting Standards Codification (ASC) 320, Receivables. This update requires a creditor to evaluate whether a restructuring constitutes a troubled debt restructuring by concluding that the restructuring constitutes a concession and that the debtor is experiencing financial difficulties. This guidance was effective for the Trust interim reporting beginning July 1, 2011. This guidance did not have a material impact on its financial condition, results of operations or disclosures.

        In May 2011, the FASB issued ASU No. 2011-04, which is included in ASC 820, Fair Value Measurement: Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S GAAP and IFRS. This update defines fair value, clarifies a framework to measure fair value, and requires specific disclosures of fair value measurements. The guidance will be effective for the Trust's interim and annual reporting periods beginning October 1, 2011, and applied prospectively. The Trust does not expect adoption of this guidance to have a material impact on its financial condition, results of operations, or disclosures.

        In June 2011, the FASB issued ASU No. 2011-05, which is included in ASC 220, Presentation of Comprehensive Income. This update improves the comparability, consistency, and transparency of financial reporting and increases the prominence of items reported in other comprehensive income. The guidance requires all non-owner changes in shareholders' equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The guidance will be effective for the Trust's interim and annual reporting periods beginning January 1, 2012, and applied retrospectively. The Trust does not expect adoption of this guidance to have a material impact on its financial condition, results of operations, or disclosures.

XML

Document and Entity Information (USD $) In Millions, except Share data, unless otherwise specified	12 Months Ended
	Sep. 30, 2011	Nov. 30, 2011	Mar. 31, 2011
Document and Entity Information
Entity Registrant Name	BRT REALTY TRUST
Entity Central Index Key	0000014846
Document Type	10-K
Document Period End Date	Sep. 30, 2011
Amendment Flag	false
Current Fiscal Year End Date	--09-30
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Public Float			$ 53.8
Entity Common Stock, Shares Outstanding		13,940,523
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	FY

XML

SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE (INCLUDING MORTGAGE LOAN HELD FOR RESALE)

12 Months Ended

Sep. 30, 2011

SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE (INCLUDING MORTGAGE LOAN HELD FOR RESALE)

SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE (INCLUDING MORTGAGE LOAN HELD FOR RESALE)

SCHEDULE IV—MORTGAGE LOANS ON REAL ESTATE
(INCLUDING MORTGAGE LOAN HELD FOR SALE)

SEPTEMBER 30, 2011

(Dollars in thousands)

Description		# of Loans		Interest Rate	Final Maturity Date	Periodic Payment Terms	Prior Liens		Face Amount of Mortgages		Carrying Value Of Mortgages(a)		Principal Amount of Loans subject to delinquent principal or interest
First Mortgage Loans
Office Building, NY, NY			1	Prime+8.75%	Nov.2011	Interest monthly, principal at maturity		—	$	22,800	$	22,800
Industrial, Baltimore, MD			1	Prime+8.75%	Oct. 2012	Interest monthly, principal at maturity				11,874		11,672		—
Multi-family, Westchester, NY			1	Prime+8.75%	July 2012	Interest monthly, principal at maturity				9,516		9,233
Multi-family/Condo Brooklyn, New York			1	Prime+7%	Demand	Interest monthly, principal at maturity		—		8,488		8,446	$	8,488
Multi-family, New York, NY			1	10.5%	Dec. 2011	Interest monthly, principal at maturity		—		6,887		6,858		—
Multi-family, Cape Canaveral, FL			1	12%	Mar. 2012	Interest monthly, principal at maturity		—		2,800		2,780		—
Multi-family, Plainfield, NJ			1	Prime+8.75	Sept. 2012	Interest monthly, principal at maturity		—		2,800		2,800		—
	$0 - 1,500		1	Various	Various	Interest monthly, principal at maturity		—		395		395		—
	$1,500 - 2,500		4	Various	Various	Interest monthly, principal at maturity		—		8,194		8,155		—
Mezzanine Loan
	$1,500 - 2,500		1	12%	May 2012	Interest monthly, principal at maturity	$	13,832		2,000		1,997		—
Total			13				$	13,832	$	75,754	$	75,136	$	8,488

Notes to the schedule:

(a)

The following summary reconciles mortgage loans at their carrying values:

	Year Ended September 30,
	2011		2010		2009
Balance at beginning of year	$	54,336	$	79,570	$	128,843
Additions:
Advances under real estate loans		131,255		17,384		30,481
Amortization of deferred fee income		1,777		219		897
Recovery of previously provided allowances		3,595		365		—
		136,627		17,968		31,378
Deductions:
Collections of principal		66,072		22,475		20,207
Sale of loans		46,251		16,916		—
Provision for loan loss		—		3,165		17,110
Collection of loan fees		2,465		419		557
Loan loss recoveries		1,039		227		2,417
Transfer to real estate upon foreclosure, net of charge offs and unamortized fees		—		—		40,360
		115,827		43,202		80,651
Balance at end of year	$	75,136	$	54,336	$	79,570

• •

  Carrying value of mortgage loans is net of allowances for loan losses in the amount of $0, $3,165 and $1,618 in 2011, 2010 and 2009, respectively.

  •

  Carrying value of mortgage loans is net of deferred fee income in the amount of $618, $245 and $44 in 2011, 2010 and 2009, respectively.

  •

  The aggregate cost of investments in mortgage loans is the same for financial reporting purposes and Federal income tax purposes.

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CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Sep. 30, 2011	Sep. 30, 2010
CONSOLIDATED STATEMENTS OF CASH FLOWS
Capitalized Interest	$ 775	$ 328

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CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) In Thousands, except Per Share data, unless otherwise specified	Sep. 30, 2011	Sep. 30, 2010
CONSOLIDATED BALANCE SHEETS
Real estate properties, accumulated depreciation (in dollars)	$ 2,511	$ 1,806
Preferred shares, par value (in dollars per share)	$ 1	$ 1
Preferred shares, Authorized shares	10,000	10,000
Preferred shares, issued shares	0	0
Shares of beneficial interest, par value (in dollars per share)	$ 3	$ 3
Shares of beneficial interest, issued shares	14,994	15,148
Treasury shares of beneficial interest, shares	1,422	1,460

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CONSOLIDATED STATEMENTS OF EQUITY (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2009
CONSOLIDATED STATEMENTS OF EQUITY
Distributions - common share per share (in dollars per share)			$ 1.15
Shares repurchased (in shares)	154,692	52,403	256,110
Other comprehensive loss, reclassification adjustment for gains included in net income	$ 462	$ 1,557	$ 1,014
Stock dividend (in shares)		2,437,352

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SEGMENT REPORTING

12 Months Ended

Sep. 30, 2011

SEGMENT REPORTING

SEGMENT REPORTING

NOTE 14—SEGMENT REPORTING

        Management has determined that the Trust operates in two reportable segments, a loan and investment segment which includes the origination and servicing of our loan portfolio and our investments and a real estate segment which includes the operation and disposition of our real estate assets.

        The following table summarizes the Trust's segment reporting for the year ended September 30, 2011 (dollars in thousands):

	Loan and Investment			Real Estate			Total
Revenues	$	14,425		$	3,456		$	17,881
Interest expense		1,082			1,030			2,112
Operating expenses related to real estate properties		—			3,340			3,340
Other expenses		5,273			2,371			7,644
Amortization and depreciation		—			738			738
Total expenses		6,355			7,479			13,834
Total revenues less total expenses		8,070			(4,023	)		4,047
Equity in earnings of unconsolidated ventures		99			251			350
Gain on sale of available-for-sale securities		1,319			—			1,319
Loss on extinguishment of debt		(1,420	)		(718	)		(2,138	)
Income (loss) from continuing operations		8,068			(4,490	)		3,578
Discontinued operations:
Gain on sale of real estate assets		—			1,346			1,346
Income from discontinued operations		—			1,346			1,346
Net income (loss)		8,068			(3,144	)		4,924
Plus: net loss attributable to non- controlling interests		—			1,450			1,450
Net income (loss) attributable to common shareholders	$	8,068		$	(1,694	)	$	6,374
Segment assets at September 30, 2011	$	126,916		$	64,096		$	191,012

        The following table summarizes the Trust's segment reporting for the year ended September 30, 2010 (dollars in thousands):

	Loan and Investment			Real Estate			Total
Revenues	$	4,713		$	3,422		$	8,135
Interest expense		1,181			1,403			2,584
Operating expenses related to real estate properties		—			3,216			3,216
Provision for loan loss		3,165			—			3,165
Impairment charges		—			2,625			2,625
Other expenses		5,233			2,288			7,521
Amortization and depreciation		—			733			733
Total expenses		9,579			10,265			19,844
Total revenues less total expenses		(4,866	)		(6,843	)		(11,709	)
Equity in earnings of unconsolidated ventures		28			168			196
Gain on sale of available-for-sale securities		1,586			—			1,586
Loss from continuing operations		(3,252	)		(6,675	)		(9,927	)
Discontinued operations:
Loss from operations		—			(602	)		(602	)
Impairment charges		—			(745	)		(745	)
Gain on sale of real estate assets		—			1,937			1,937
Income from discontinued operations		—			590			590
Net loss		(3,252	)		(6,085	)		(9,337	)
Plus: net loss attributable to non- controlling interests		—			1,322			1,322
Net loss attributable to common shareholders	$	(3,252	)	$	(4,763	)	$	(8,015	)
Segment assets at September 30, 2010	$	124,928		$	61,338		$	186,266

        The following table summarizes the Trust's segment reporting for the year ended September 30, 2009 (dollars in thousands):

	Loan and Investment			Real Estate			Total
Revenues	$	10,436		$	1,718		$	12,154
Interest expense		2,887			1,832			4,719
Operating expenses related to real estate properties		—			2,133			2,133
Provision for loan loss		17,110			—			17,110
Impairment charges		—			1,272			1,272
Other expenses		6,943			2,868			9,811
Amortization and depreciation		—			1,284			1,284
Total expenses		26,940			9,389			36,329
Loss before other revenue and expense items		(16,504	)		(7,671	)		(24,175	)
Equity in loss of unconsolidated ventures		(2,261	)		(530	)		(2,791	)
Gain on sale of joint venture interest		—			271			271
Gain on sale of available-for-sale securities		1,016			—			1,016
Gain on early extinguishment of debt		4,194			2,249			6,443
Loss from continuing operations		(13,555	)		(5,681	)		(19,236	)
Discontinued operations:
Income (loss) from operations		824			(2,373	)		(1,549	)
Impairment charges		—			(29,774	)		(29,774	)
Gain on sale of real estate assets		—			2,199			2,199
Income (loss) from discontinued operations		824			(29,948	)		(29,124	)
Net loss		(12,731	)		(35,629	)		(48,360	)
Plus: net loss attributable to non- controlling interests		—			605			605
Net loss attributable to common shareholders	$	(12,731	)	$	(35,024	)	$	(47,755	)
Segment assets at September 30, 2009	$	122,785		$	70,548		$	193,333

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COMMITMENT

12 Months Ended

Sep. 30, 2011

COMMITMENT

COMMITMENT

NOTE 16—COMMITMENT

        The Trust maintains a non-contributory defined contribution pension plan covering eligible employees and officers. Contributions by the Trust are made through a money purchase plan, based upon a percent of qualified employees' total salary as defined therein. Pension expense approximated $315,000, $287,000 and $303,000 during the years ended September 30, 2011, 2010 and 2009, respectively. At September 30, 2011, $28,000 remains unpaid and is included in accounts payable and accrued liabilities on the consolidated balance sheet.

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2009
Cash flows from operating activities:
Net income (loss)	$ 4,924	$ (9,337)	$ (48,360)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Provision for loan losses		3,165	17,110
Recovery of previously provided allowances	(3,595)	(365)
Impairment charges		3,370	31,046
Amortization and depreciation	963	927	1,686
Amortization of deferred fee income	(1,777)	(219)	(897)
Accretion of junior subordinated notes principal	277	581	322
Amortization of securities discount	(28)	(69)	(28)
Amortization of restricted stock	845	833	876
Gain on sale of real estate assets from discontinued operations	(1,346)	(1,937)	(2,199)
Gain on sale of available-for-sale securities	(1,319)	(1,586)	(1,016)
Loss (gain) on extinguishment of debt	2,138		(6,443)
Equity in (earnings) loss of unconsolidated joint ventures	(350)	(196)	2,791
Gain on sale of joint venture interest			(271)
Distribution of earnings of unconsolidated joint ventures	210	193	185
Increase in straight line rent	(54)	(330)	(16)
Increases and decreases from changes in other assets and liabilities:
(Increase) decrease in interest and dividends receivable	(410)	398	754
Decrease (increase) in prepaid expenses	451	115	(1,876)
Increase (decrease) in accounts payable and accrued liabilities	375	(960)	(1,431)
Increase in deferred costs	(142)
(Increase) decrease in security deposits and other receivable	153	(270)	60
Other	127	(27)	280
Net cash provided by (used in) operating activities	1,442	(5,714)	(7,427)
Cash flows from investing activities:
Collections from real estate loans	66,072	22,475	20,207
Additions to real estate loans	(131,255)	(17,384)	(12,704)
Proceeds from the sale of loans and loan participations	46,147	16,815
Loan loss recoveries	1,039	227	2,417
Net costs capitalized to real estate owned	(3,605)	(4,120)	(4,721)
Collection of loan fees	2,465	419	557
Additions to real estate	(2,421)		(15,718)
Proceeds from sale of real estate owned	4,035	15,930	25,152
Proceeds from sale of available-for-sale securities	7,590	3,425	2,668
Purchase of available-for-sale securities	(55)	(4,194)	(4,520)
Proceeds from maturity of held-to-maturity security		1,000
Distributions of capital of unconsolidated joint ventures	1,010	1,701	4,111
Contributions to unconsolidated joint ventures	(4,045)		(781)
Proceeds from the sale of joint venture interests			1,350
Purchase of interest from non-controlling partner	(713)
Net cash (used in) provided by investing activities	(13,736)	36,294	18,018
Cash flows from financing activities:
Proceeds from borrowed funds			6,000
Repayment of borrowed funds			(9,000)
Repayment of junior subordinated notes	(5,000)		(8,316)
Proceeds from mortgages payable	2,130	3,202	5,131
Mortgage principal payments	(270)	(105)	(86)
Increase in deferred borrowing costs	(926)	(821)	(987)
Cash distribution - common shares		(1,334)	(15,564)
Expenses associated with stock issuance		(60)
Capital contributions from non-controlling interests	3,181	1,846	3,117
Capital distributions to non-controlling interests	(68)	(229)
Repurchase of shares of beneficial interest	(1,225)	(290)	(943)
Net cash (used in) provided by financing activities	(2,178)	2,209	(20,648)
Net (decrease) increase in cash and cash equivalents	(14,472)	32,789	(10,057)
Cash and cash equivalents at beginning of year	58,497	25,708	35,765
Cash and cash equivalents at end of year	44,025	58,497	25,708
Supplemental disclosures of cash flow information:
Cash paid during the year for interest expense, including capitalized interest of $775 and $328 in 2011 and 2010	1,791	2,120	5,841
Cash paid during the year for income and excise taxes	8	17	145
Non cash investing and financing activities:
Common stock dividend - portion paid in the Trust's common shares		11,916
Reclassification of loans to real estate and real estate held for sale upon foreclosure			43,329
Accrued distributions			13,308
Junior subordinated notes redeemed to cancel statutory trust common securities			1,702
Issuance of warrants in connection with joint venture agreement	259
Seller financing provided for sale of real estate			17,777
Reclassification of real estate properties to/from real estate held for sale		8,552	6,801
Assumption of mortgages of consolidated joint venture			2,100
Reclassification of real estate loans to real estate loans held for sale	$ 8,446		$ 16,915

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CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2009
Revenues:
Interest on real estate loans	$ 8,234	$ 2,412	$ 8,577
Interest on purchase money mortgage loans	266	1,212	246
Loan fee income	1,828	253	887
Rental revenue from real estate properties	3,456	3,422	1,718
Recovery of previously provided allowances	3,595	365
Other, primarily investment income	502	471	726
Total revenues	17,881	8,135	12,154
Expenses:
Interest on borrowed funds	2,112	2,584	4,719
Advisor's fees, related party	916	785	1,173
Provision for loan losses		3,165	17,110
Impairment charges		2,625	1,272
Foreclosure related professional fees	579	673	908
Debt restructuring charges			685
General and administrative-including $847, $822 and $1,002 to related party	6,149	6,063	7,045
Operating expenses relating to real estate properties	3,340	3,216	2,133
Amortization and depreciation	738	733	1,284
Total expenses	13,834	19,844	36,329
Total revenues less total expenses	4,047	(11,709)	(24,175)
Equity in earnings (loss) of unconsolidated ventures	350	196	(2,791)
Gain on sale of joint venture interest			271
Gain on sale of available-for-sale securities	1,319	1,586	1,016
(Loss) gain on extinguishment of debt	(2,138)		6,443
Income (loss) from continuing operations	3,578	(9,927)	(19,236)
Discontinued operations:
Loss from operations		(602)	(1,549)
Impairment charges		(745)	(29,774)
Gain on sale of real estate assets	1,346	1,937	2,199
Discontinued operations	1,346	590	(29,124)
Net income (loss)	4,924	(9,337)	(48,360)
Plus: net loss attributable to non-controlling interests	1,450	1,322	605
Net income (loss) attributable to common shareholders	6,374	(8,015)	(47,755)
Basic and diluted per share amounts attributable to common shareholders:
Income (loss) from continuing operations (in dollars per share)	$ 0.35	$ (0.62)	$ (2.50)
Discontinued operations (in dollars per share)	$ 0.10	$ 0.04	$ (1.60)
Basic and diluted earnings (loss) per share (in dollars per share)	$ 0.45	$ (0.58)	$ (4.10)
Amounts attributable to BRT Realty Trust:
Income (loss) from continuing operations	5,028	(8,605)	(18,631)
Discontinued operations	1,346	590	(29,124)
Net income (loss) attributable to common shareholders	$ 6,374	$ (8,015)	$ (47,755)
Weighted average number of common shares outstanding:
Basic (in shares)	14,041,569	13,871,668	11,643,972
Diluted (in shares)	14,041,569	13,871,668	11,643,972

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DEBT OBLIGATIONS

12 Months Ended

Sep. 30, 2011

DEBT OBLIGATIONS

DEBT OBLIGATIONS

NOTE 9—DEBT OBLIGATIONS

        Debt obligations consist of the following (dollars in thousands):

		September 30,
		2011		2010
Line of credit			—		—
Junior subordinated notes		$	37,400	$	40,815
Mortgages payable			14,417		12,557
	Total debt obligations	$	51,817	$	53,372

Line of credit

        On June 22, 2011, the Trust, through a wholly owned subsidiary, entered into a senior secured revolving credit facility with Capital One, N.A. The maximum amount that may be borrowed under the facility is the lesser of $25 million and the borrowing base. The borrowing base is generally equal to 40% to 65% (depending on, among other things, the type of property secured by the eligible mortgage receivables pledged to the lender and the operating income of the related property) of such receivables. Interest accrues on the outstanding balance at the greater of (i) 4% plus LIBOR and (ii) 5.50%. The facility matures June 21, 2014 and, subject to the satisfaction of specified conditions, the outstanding balance may be converted at the Trust's option into an 18 month term loan. The Trust has guaranteed the payment and performance of its subsidiary's obligations under the facility.

        The loan documents, among other things, require (A) the Trust (i) to maintain on a quarterly basis and on a consolidated basis, net worth of not less than $100 million and liquidity of not less than $7.5 million, and (ii) prohibits the Trust from incurring debt, with specified exceptions, in excess of five percent of its net worth and (B) the subsidiary (i) to maintain a debt service coverage ratio and a collateral coverage ratio of not less than 1.5 to 1.0, and (iii) prohibits the subsidiary, with specified exceptions, from incurring debt.

        We paid, and in each of June 2012 and 2013 will pay, an $82,500 fee in connection with this facility.

        At September 30, 2011 there was no outstanding balance on the facility.

Junior Subordinated Notes

        On March 15, 2011, the Trust restructured its existing junior subordinated notes resulting in the repayment of $5,000,000 of the outstanding notes at par and the reduction of the interest rates on the remaining outstanding notes as set forth in the table below:

Interest period	Prior Interest Rate		New Interest Rate
March 15, 2011 through July 31, 2012		3.50%		3.00%
August 1, 2012 through April 29, 2016		8.37%		4.90%
April 30, 2016 through April 30, 2036		LIBOR + 2.95%		LIBOR + 2.00%

        The Trust accounted for the restructuring of this debt as an extinguishment of debt. For the year ended September 30, 2011, the Trust recognized a loss on the extinguishment of the debt of $2,138,000, which represented the unamortized principal of $1,308,000 and unamortized costs of $830,000. The Trust also incurred third party costs of $512,000 which were deferred and will be amortized over the remaining life of the notes.

        Interest expense relating to the junior subordinated notes for the years ended September 30, 2011, 2010 and 2009 was $1,564,000, $2,065,000 and $3,941,000, respectively. Amortization of the deferred costs which is a component of interest expense on borrowed funds was $261,000, $33,000 and $110,000 for the years ended September 30, 2011, 2010 and 2009, respectively.

Mortgages Payable

        The Trust has five first mortgages and one second mortgage outstanding with an aggregate principal balance at September 30, 2011 of $14,417,000. One of these mortgages, with an outstanding balance of $2,041,000, is secured by a long term leasehold position on a shopping center owned by a consolidated joint venture. The remaining five mortgages, with aggregate outstanding balances of $12,376,000, are secured by individual parcels of two land assemblages in Newark, NJ owned by another consolidated joint venture.

        Interest expense relating to the mortgages payable including amortized mortgage costs for the years ended September 30, 2011, 2010 and 2009 was $1,259,000, $811,000 and $284,000, respectively.

        During the years ended September 30, 2011 and 2010, the Trust capitalized interest expense of $775,000 and $326,000, respectively. This interest is being capitalized in connection with the development of a portion of the Trust's Newark Joint Venture's properties.

        Details pertaining to the outstanding mortgages payable at September 30, 2011 are as follows (dollars in thousands):

Location	Balance		Amortizing	Rate			Maturity Date
Yonkers, NY	$	2,041	Yes		6.25	%	December 31, 2011
Market Street, Newark, NJ		1,200	No		7.00	%	April 20, 2012
Market Street, Newark, NJ		900	No		7.00	%	January 18, 2015
Broad Street, Newark, NJ		5,828	Yes		6.00	%	August 1, 2030
Broad Street, Newark, NJ		486	Yes		6.00	%	August 1, 2030
Teachers Village, Newark, NJ(a)		3,962	No		17.00	%	March 14, 2012
	$	14,417

(a)

This mortgage is subordinate to a first mortgage in the amount of $7,500,000 held directly by the Trust that is eliminated in consolidation. The Trust has guaranteed $993,000 of the mortgage obligation at September 30, 2011, based on the current outstanding balance. The guarantee amount will increase to $2,154,000 if the full amount of the $8,600,000 loan is drawn and outstanding.

        Scheduled principal repayments on these mortgages are as follows (dollars in thousands):

Years Ending September 30,	Amount
2012	$	7,386
2013		195
2014		208
2015		1,120
2016		233
Thereafter		5,275
	$	14,417

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CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Sep. 30, 2011	Sep. 30, 2010
Real estate loans
Earning interest	$ 67,266	$ 17,263
Non-earning interest		35,143
Real estate loans, gross	67,266	52,406
Deferred fee income	(576)	(245)
Allowance for possible losses		(3,165)
Real estate loans, net	66,690	48,996
Purchase money mortgage loans		5,340
Real estate loan held for sale	8,446
Real estate properties net of accumulated depreciation of $2,511 and $1,806	59,277	55,843
Investment in unconsolidated ventures	4,247	775
Cash and cash equivalents	44,025	58,497
Available-for-sale securities at market	2,766	10,270
Other assets	5,561	6,545
Total Assets	191,012	186,266
Liabilities:
Junior subordinated notes	37,400	40,815
Mortgages payable	14,417	12,557
Accounts payable and accrued liabilities	948	1,332
Deposits payable	2,518	1,723
Total Liabilities	55,283	56,427
Commitments and contingencies
BRT Realty Trust shareholders' equity:
Preferred shares, $1 par value: Authorized 10,000 shares, none issued
Shares of beneficial interest, $3 par value: Authorized number of shares, unlimited, 14,994 and 15,148 issued	44,981	45,445
Additional paid-in capital	171,889	172,268
Accumulated other comprehensive income-net unrealized gain on available-for-sale securities	278	1,594
Accumulated deficit	(77,015)	(83,389)
Cost of 1,422 and 1,460 treasury shares of beneficial interest	(11,070)	(11,364)
Total BRT Realty Trust shareholders' equity	129,063	124,554
Non-controlling interests	6,666	5,285
Total Equity	135,729	129,839
Total Liabilities and Equity	$ 191,012	$ 186,266

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COMPREHENSIVE INCOME (LOSS)

12 Months Ended

Sep. 30, 2011

COMPREHENSIVE INCOME (LOSS)

COMPREHENSIVE INCOME (LOSS)

NOTE 10—COMPREHENSIVE INCOME (LOSS)

        Comprehensive income (loss) for the years ended was as follows (dollars in thousands):

	September 30,
	2011			2010			2009
Net income (loss)	$	4,924		$	(9,337	)	$	(48,360	)
Other comprehensive loss-unrealized loss on available-for-sale securities		(1,316	)		(1,117	)		(4,415	)
Comprehensive income (loss)		3,608			(10,454	)		(52,775	)
Plus: net loss attributable to non-controlling interests		1,450			1,322			605
Comprehensive income (loss) attributable to common shareholders	$	5,058		$	(9,132	)	$	(52,170	)

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CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2009
CONSOLIDATED STATEMENTS OF OPERATIONS
General and administrative, related party	$ 847	$ 822	$ 1,002

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ALLOWANCE FOR POSSIBLE LOAN LOSSES

12 Months Ended

Sep. 30, 2011

ALLOWANCE FOR POSSIBLE LOAN LOSSES

ALLOWANCE FOR POSSIBLE LOAN LOSSES

NOTE 4—ALLOWANCE FOR POSSIBLE LOAN LOSSES

        The following is an analysis of the allowance for possible loan losses (dollars in thousands):

	Year Ended September 30,
	2011			2010			2009
Balance at beginning of year	$	3,165		$	1,618		$	6,710
Provision for loan loss		—			3,165			17,110
Recovery of previously provided allowance		(3,595	)		(365	)		—
Charge-offs		(609	)		(1,480	)		(24,619	)
Recoveries		1,039			227			2,417
Balance at end of year	$	—		$	3,165		$	1,618

        The allowance for possible losses applies to two loans aggregating $26,655,000 at September 30, 2010, and one loan of $2,256,000 at September 30, 2009.

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REAL ESTATE LOAN HELD FOR SALE

12 Months Ended

Sep. 30, 2011

REAL ESTATE LOAN HELD FOR SALE

REAL ESTATE LOAN HELD FOR SALE

NOTE 3—REAL ESTATE LOAN HELD FOR SALE

        At September 30, 2011, the Trust had one loan outstanding, which is classified as held for sale. The loan, which represented a pari passu interest in a loan with a principal balance of approximately $17 million, had a carrying value of approximately $8.5 million, and represented 11.2% of total real estate loans and 4.4% of total assets at September 30, 2011. In October 2011, pursuant to a Federal Bankruptcy Court approved joint plan of reorganization, the Trust and its loan participant sold the rights to the loan for net proceeds of approximately $23.5 million. The Trust provided $15 million of financing for the purchase. This loan paid off on December 5, 2011.

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FAIR VALUE OF FINANCIAL INSTRUMENTS

12 Months Ended

Sep. 30, 2011

FAIR VALUE OF FINANCIAL INSTRUMENTS

FAIR VALUE OF FINANCIAL INSTRUMENTS

NOTE 15—FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial Instruments Not Measured at Fair Value

        The following methods and assumptions were used to estimate the fair value of each class of financial instruments that are not reported at fair value on the consolidated balance sheets:

        Cash and cash equivalents, accounts receivable (included in other assets), accounts payable and accrued liabilities: The carrying amounts reported in the balance sheet for these instruments approximate their fair value due to the short term nature of these accounts.

        Real estate loans: The earning mortgage loans of the Trust, which have variable rate provisions which are based upon a margin over prime rate, have an estimated fair value which is equal to their carrying value, assuming market rates of interest between 12% and 12.5%. The earning mortgage loans of the Trust, which have fixed rate provisions, have an estimated fair value $48,000 greater than their carrying value assuming a market rate of interest of 11% which reflects institutional lender yield requirement.

        Real estate loan held for sale: The real estate loan held for sale has an estimated fair value of $3,100,000 greater than its carrying value at September 30, 2011. This is based on a contract to sell the rights to this loan.

        Junior subordinated notes: At September 30, 2011, the estimated fair value of the Trust's junior subordinated notes is less than their carrying value by approximately $357,000, based on a market rate of 3.85%.

        Mortgages payable: At September 30, 2011, the estimated fair value of the Trust's mortgages payable is greater than their carrying value by approximately $693,000 assuming market interest rates between 4.71% and 17%. Market interest rates were determined using current financing transactions provided by third party institutions.

        Considerable judgment is necessary to interpret market data and develop estimated fair value. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value assumptions.

Financial Instruments Measured at Fair Value

        The Trust's fair value measurements are based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, there is a fair value hierarchy that distinguishes between markets participant assumptions based on market data obtained from sources independent of the reporting entity and the reporting entity's own assumptions about market participant assumptions. Level 1 assets/liabilities are valued based on quoted prices for identical instruments in active markets, Level 2 assets/liabilities are valued based on quoted prices in active markets for similar instruments, on quoted prices in less active or inactive markets, or on other "observable" market inputs and Level 3 assets/liabilities are valued based significantly on "unobservable" market inputs. The Trust does not currently own any financial instruments that are classified as Level 3. The following table lists the Trust's available for securities and their fair value by level (dollars in thousands):

	Carrying and Fair Value		Maturity Date		Fair Value Using Fair		Measurements Value Hierarchy
					Level 1		Level 2
Financial assets:
Available-for-sale securities:
Corporate equity securities	$	2,766		—	$	2,776		—

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INCOME TAXES

12 Months Ended

Sep. 30, 2011

INCOME TAXES

INCOME TAXES

NOTE 11—INCOME TAXES

        The Trust has elected to be taxed as a real estate investment trust ("REIT"), as defined under the Internal Revenue Code of 1986, as amended. As a REIT, the Trust will generally not be subject to Federal income taxes at the corporate level if it distributes 100% of its REIT taxable income, as defined, to its shareholders. To maintain its REIT status, the Trust must distribute at least 90% of its taxable income; however if it does not distribute 100% of its taxable income, it will be taxed on undistributed income. There are a number of organizational and operational requirements the Trust must meet to remain a REIT. If the Trust fails to qualify as a REIT in any taxable year, its taxable income will be subject to Federal income tax at regular corporate tax rates and it may not be able to qualify as a REIT for four subsequent tax years. Even if it is qualified as a REIT, the Trust is subject to certain state and local income taxes and to Federal income and excise taxes on the undistributed taxable income. For income tax purposes the Trust reports on a calendar year.

        During the years ended September 30, 2011, 2010 and 2009, the Trust recorded $20,000, $6,000 and $53,000, respectively, of state franchise tax, net of refunds, relating to the 2011, 2010 and 2009 tax years.

        Earnings and profits, which determine the taxability of dividends to shareholders, differs from net income reported for financial statement purposes due to various items including timing differences related to loan loss provision, impairment charges, depreciation methods and carrying values.

        The financial statement income is expected to be approximately $2,300,000 higher than the income for tax purposes for calendar 2011, primarily due to the reversal of loan loss provision taken for book purposes in the current calendar year that is not reportable for tax purposes in the current tax year.

        At December 31, 2010, the Trust had a tax loss carry forward of $70,510,000. These net operating losses can be used in future years to reduce taxable income when it is generated. These tax loss carry forwards begin to expire in 2028.

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INVESTMENT IN UNCONSOLIDATED VENTURES

12 Months Ended

Sep. 30, 2011

INVESTMENT IN UNCONSOLIDATED VENTURES

INVESTMENT IN UNCONSOLIDATED VENTURES

NOTE 7—INVESTMENT IN UNCONSOLIDATED VENTURES

        On June 2, 2011, a wholly owned subsidiary of the Trust entered into a joint venture with an affiliate of Torchlight Investors ("Torchlight"). The joint venture has the right, but not the obligation, to acquire all whole loans originated by the Trust. The BRT member is the managing member of the joint venture. The joint venture may be capitalized with up to $100 million of which 20% will be funded by the BRT member and 80% will be funded by Torchlight as and when loans are acquired. Subsequent to year end, the parties to the venture terminated the Trust's obligation to sell loans to this venture.

        In the fiscal year ended September 30, 2011, the Trust's share of the venture's earnings was $99,000. The Trust's equity investment in this joint venture totaled $3,431,000 at September 30, 2011.

        The Trust is also a partner in two unconsolidated joint ventures, each of which owns and operates one property. The Trust was also a partner in an unconsolidated joint venture that engaged in short term lending. That venture ceased operations in November 2009. These ventures generated $251,000, $196,000 and ($2,791,000) in equity earnings (loss) for the years ended September 30, 2011, 2010 and 2009, respectively. The Trust's equity investment in these unconsolidated joint ventures totaled $816,000 and $775,000 at September 30, 2011 and 2010, respectively.

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REAL ESTATE PROPERTIES

12 Months Ended

Sep. 30, 2011

REAL ESTATE PROPERTIES

REAL ESTATE PROPERTIES

NOTE 5—REAL ESTATE PROPERTIES

        A summary of the change in real estate properties for the year ended September 30, 2011 is as follows (dollars in thousands):

	September 30, 2010 Balance			Costs Capitalized		Depreciation, Amortization and Paydowns			September 30, 2011 Balance
Shopping centers/retail	$	2,957	(a)		—	$	(104	)	$	2,853
Multi-family		2,969			—		(2,654	)		315
Commercial		41,945	(b)	$	6,793		(601	)		48,137
Land		7,972	(c)		—		—			7,972
Total real estate properties	$	55,843		$	6,793	$	(3,359	)	$	59,277

(a)

The Trust holds, with a minority partner, a leasehold interest in a portion of a retail shopping center located in Yonkers, New York. The leasehold interest is for approximately 28,500 square feet and, including all option periods, expires in 2045. The non-controlling interest was 15%, or $(120,000) at September 30, 2011 and 30% or $152,000 at September 30, 2010.            These amounts are included as a component of non-controlling interests on the consolidated balance sheets.

(b)

Represents the real estate assets of RBH-TRB Newark Holdings LLC, a consolidated VIE which owns 26 operating and development properties in Newark, New Jersey. These properties contain a mix of office, retail space and surface parking, totaling approximately 637,000 square feet. These assets are subject to blanket mortgages in the aggregate principal balance of $27,000,000 held by the Trust, which are eliminated in consolidation. Several of the assets are also encumbered by other mortgages which are discussed in Note 9—Debt Obligations—Mortgages Payable. The risks associated with our involvement in this VIE have not changed in the year ended September 30, 2011.

For the years ended September 30, 2011 and 2010, this VIE had revenues of $2,034,000 and $2,026,000, respectively, and operating expenses of $2,486,000 and $2,635,000, respectively, excluding interest and depreciation expense. The Trust made capital contributions of $3,194,000 and $1,858,000 to this venture in the years ended September 30, 2011 and 2010, respectively, representing its proportionate share of capital required to fund the operations of the venture for its next fiscal year. The contributions made in 2011 also include $928,000 to purchase additional land parcels. The minority partner also made its proportionate share of the capital contribution which totaled $3,181,000 and $1,851,000 in the years ended September 30, 2011 and 2010, respectively.

(c)

Land is composed of an 8.9 acre development parcel located in Daytona Beach, Florida, previously acquired in foreclosure.

        Future minimum rentals to be received by the Trust pursuant to non-cancellable operating leases with terms in excess of one year, from properties on which the Trust holds title at September 30, 2011, are as follows (dollars in thousands):

Year Ending September 30,	Amount
2012	$	2,481
2013		2,221
2014		2,172
2015		2,185
2016		2,066
Thereafter		10,944
Total	$	22,069

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IMPAIRMENT CHARGES

12 Months Ended

Sep. 30, 2011

IMPAIRMENT CHARGES

IMPAIRMENT CHARGES

NOTE 6—IMPAIRMENT CHARGES

        The Trust reviews each real estate asset owned, including investments in unconsolidated joint ventures, for which indicators of impairment are present to determine whether the carrying amount of the asset can be recovered. If indicators of impairment are present, measurement is then based upon the fair value of the asset. Real estate assets held for sale are valued at the lower of cost or fair value, less costs to sell on an individual asset basis.

        As a result of the credit crisis and the deterioration in the value of real estate in locations where the Trust owned properties, the Trust took impairment charges of $3,370,000 and $31,046,000 for the fiscal years ended September 30, 2010 and 2009, respectively, as follows (dollars in thousands):

		September 30,
		2010		2009
Real estate properties		$	2,625	$	1,272
Real estate properties held for sale			745		29,774
	Total impairment charges	$	3,370	$	31,046

        There were no impairment charges taken in Fiscal 2011.

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AVAILABLE-FOR-SALE SECURITIES

12 Months Ended

Sep. 30, 2011

AVAILABLE-FOR-SALE SECURITIES.

AVAILABLE-FOR-SALE SECURITIES

NOTE 8—AVAILABLE-FOR-SALE SECURITIES

        At September 30, 2011, the Trust had available for sale securities which consisted solely of equity securities. Details regarding these available-for-sale securities are presented below (dollars in thousands):

	Cost basis		Unrealized gains		Unrealized losses			Market value
Equity Securities	$	2,488	$	406	$	(128	)	$	2,766

        Unrealized gains and losses are reflected as accumulated other comprehensive income-net unrealized gain on available-for-sale securities in the accompanying consolidated balance sheets.

        The Trust's available-for-sale equity securities were determined to be Level 1 financial assets within the valuation hierarchy established by current accounting guidance, and the valuation is based on current market quotes received from financial sources that trade such securities. All of the available-for-sale securities in an unrealized loss position are equity securities and amounts are not considered to be other than temporarily impaired because the Company expects the value of these securities to recover and plans on holding them until at least such recovery.

        During the year ended September 30, 2011, the Trust sold equity securities for $4,173,000 with a cost basis of $3,346,000, determined using specific identification. Accordingly, the Trust recognized a gain of $827,000 from these sales. The Trust also sold available-for-sale debt securities for $3,417,000 which had a basis of $2,925,000 determined using specific identification. Accordingly the Trust recognized a gain of $492,000 from these sales.

        At September 30, 2010, the Trust had available for sale securities which consisted of debt and equity securities. Details regarding these available-for-sale securities are presented below (dollars in thousands):

	Cost basis		Unrealized gains		Unrealized losses		Market value
Debt Securities	$	2,897	$	611		—	$	3,508
Equity Securities		5,779		1,056	$	73		6,762
	$	8,676	$	1,667	$	73	$	10,270

        The Trust's available-for-sale debt securities were determined to be Level 2 financial assets within the valuation hierarchy established by current accounting guidance, and the valuation is based on market quotes from inactive markets received from financial sources that trade such securities.

        During the year ended September 30, 2010, the Trust sold available-for-sale equity securities for $2,425,000. The cost basis of these securities was $975,000, determined using specific identification. Accordingly, the Trust recognized a gain of $1,450,000 from these sales. The Trust also sold an available-for-sale debt security for $1,000,000. The cost basis of this security was $864,000 and was determined using specific identification. Accordingly, the Trust recognized a gain of $136,000 on this sale.

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ADVISOR'S COMPENSATION AND RELATED PARTY TRANSACTIONS

12 Months Ended

Sep. 30, 2011

ADVISOR'S COMPENSATION AND RELATED PARTY TRANSACTIONS

ADVISOR'S COMPENSATION AND RELATED PARTY TRANSACTIONS

NOTE 13—ADVISOR'S COMPENSATION AND RELATED PARTY TRANSACTIONS

        Certain of the Trust's officers and trustees are also officers and directors of REIT Management Corp. ("REIT Management") to which the Trust pays advisory fees for administrative services and investment advice. Fredric H. Gould, chairman of the board, is the sole shareholder of REIT Management. The amended and restated agreement, expired on December 31, 2010 and was extended to December 31, 2011. Advisory fees are currently charged to operations at a rate of 0.6% on invested assets which consist primarily of real estate loans, real estate assets and investment securities. Advisory fees amounted to $916,000, $785,000 and $1,173,000 for the years ended September 30, 2011, 2010 and 2009, respectively. The parties entered into an amendment to the Advisory Agreement effective January 1, 2012, pursuant to which (i) the stated termination date was extended until June 30, 2014, (ii) the minimum and maximum fees payable in a twelve month period to REIT Management were set at $750,000 and $4 million, respectively, subject to adjustment for any period of less than twelve months and (iii) the Trust is to pay REIT Management the following annual fees which are to be paid on a quarterly basis.

• •

  1.0% of the average principal amount of earning loans;

  •

  .35% of the average amount of the fair market value of non-earning loans;

  •

  .45% of the average book value of all real estate properties, excluding depreciation;

  •

  .25% of the average amount of the fair market value of marketable securities;

  •

  .15% of the average amount of cash and cash equivalents; and

  •

  To the extent loans or real estate are held by joint ventures or other arrangements in which the Trust has an interest, fees vary based on, among other things, the nature of the asset (i.e. real estate or loans), the nature of our involvement (i.e. active or passive) and the extent of our equity interests in such arrangements.

        The Trust's borrowers also pay fees directly to REIT Management based on loan originations, which generally are one-time fees payable upon funding of a loan, in the amount of ¹/2 of 1% of the total loan. These fees were $750,000, $89,000 and $44,000 for the years ended September 30, 2011, 2010 and 2009, respectively. Effective January 1, 2012, borrowers will no longer pay any loan origination fees to REIT Management.

        Management of certain properties for the Trust is provided by Majestic Property Management Corp., a corporation in which the chairman of the board is the sole shareholder, under renewable year-to-year agreements. Certain of the Trust's officers and Trustees are also officers and directors of Majestic Property Management Corp. Majestic Property Management Corp. provides real property management, real estate brokerage and construction supervision services to the Trust and its joint venture properties. For the years ended September 30, 2011, 2010 and 2009, fees for these services aggregated $83,000, $66,000 and $175,000, respectively.

        The chairman of the board is also chairman of the board of One Liberty Properties, Inc., a related party, and certain of the Trust's officers and Trustees are also officers and directors of One Liberty Properties, Inc. In addition, the Chairman of the Board is an executive officer and sole shareholder of Georgetown Partners, Inc., the managing general partner of Gould Investors L.P. and the sole member of Gould General LLC, a general partner of Gould Investors L.P., a related party. Certain of the Trust's officers and Trustees are also officers and directors of Georgetown Partners, Inc. The allocation of expenses for the shared facilities, personnel and other resources is computed in accordance with a shared services agreement by and among the Trust and the affiliated entities. During the years ended September 30, 2011, 2010 and 2009, allocated general and administrative expenses reimbursed by the Trust to Gould Investors L.P. pursuant to the shared services agreement, aggregated $847,000, $822,000 and $1,002,000, respectively. At September 30, 2011, $100,000 remains unpaid and is included in accounts payable and accrued liabilities on the consolidated balance sheet.

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SUBSEQUENT EVENTS

12 Months Ended

Sep. 30, 2011

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

NOTE 18—SUBSEQUENT EVENTS

        Subsequent events have been evaluated and any significant events, relative to our consolidated financial statements as of September 30, 2011 that warrant additional disclosure have been included in the notes to the consolidated financial statements.

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CONSOLIDATED STATEMENTS OF EQUITY (USD $) In Thousands, unless otherwise specified	Total	Shares of Beneficial Interest	Additional Paid-In Capital	Accumulated Other Comprehensive Income	Accumulated Deficit	Treasury Shares	Non Controlling Interests	Comprehensive Income
Balances at Sep. 30, 2008	$ 186,893	$ 38,133	$ 166,402	$ 7,126	$ (14,311)	$ (10,578)	$ 121
Increase (Decrease) in Stockholders' Equity
Distributions - common share ($1.15 per share)	(13,308)				(13,308)
Restricted stock vesting			(205)			205
Compensation expense - restricted stock	876		876
Contributions from non-controlling interests	5,534						5,534
Distributions to non-controlling interests	(60)						(60)
Shares repurchased (154,692, 52,403 and 256,110 shares for year ended 2011, 2010 and 2009 respectively)	(943)					(943)
Net income (loss)	(48,360)				(47,755)		(605)	(48,360)
Other comprehensive loss - net unrealized loss on available-for-sale securities (net of reclassification adjustment for gains of $462, $1,557 and $1,014 respectively for year ended 2011, 2010 and 2009 included in net loss)	(4,415)			(4,415)				(4,415)
Comprehensive income (loss)	(52,775)							(52,775)
Balances at Sep. 30, 2009	126,217	38,133	167,073	2,711	(75,374)	(11,316)	4,990
Increase (Decrease) in Stockholders' Equity
Shares issued - stock dividend (2,437,352 shares)	11,916	7,312	4,604
Restricted stock vesting			(242)			242
Compensation expense - restricted stock	833		833
Contributions from non-controlling interests	1,846						1,846
Distributions to non-controlling interests	(229)						(229)
Shares repurchased (154,692, 52,403 and 256,110 shares for year ended 2011, 2010 and 2009 respectively)	(290)					(290)
Net income (loss)	(9,337)				(8,015)		(1,322)	(9,337)
Other comprehensive loss - net unrealized loss on available-for-sale securities (net of reclassification adjustment for gains of $462, $1,557 and $1,014 respectively for year ended 2011, 2010 and 2009 included in net loss)	(1,117)			(1,117)				(1,117)
Comprehensive income (loss)	(10,454)							(10,454)
Balances at Sep. 30, 2010	129,839	45,445	172,268	1,594	(83,389)	(11,364)	5,285
Increase (Decrease) in Stockholders' Equity
Restricted stock vesting			(294)			294
Compensation expense - restricted stock	845		845
Issuance of warrants in connection with joint venture agreement	259		259
Contributions from non-controlling interests	3,181						3,181
Distributions to non-controlling interests	(66)						(66)
Purchase of minority interest	(713)		(429)				(284)
Shares repurchased (154,692, 52,403 and 256,110 shares for year ended 2011, 2010 and 2009 respectively)	(1,224)	(464)	(760)
Net income (loss)	4,924				6,374		(1,450)	4,924
Other comprehensive loss - net unrealized loss on available-for-sale securities (net of reclassification adjustment for gains of $462, $1,557 and $1,014 respectively for year ended 2011, 2010 and 2009 included in net loss)	(1,316)			(1,316)				(1,316)
Comprehensive income (loss)	3,608							3,608
Balances at Sep. 30, 2011	$ 135,729	$ 44,981	$ 171,889	$ 278	$ (77,015)	$ (11,070)	$ 6,666

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REAL ESTATE LOANS AND PURCHASE MONEY MORTGAGES

12 Months Ended

Sep. 30, 2011

REAL ESTATE LOANS AND PURCHASE MONEY MORTGAGES

REAL ESTATE LOANS AND PURCHASE MONEY MORTGAGES

NOTE 2—REAL ESTATE LOANS AND PURCHASE MONEY MORTGAGES

        At September 30, 2011, information as to real estate loans (excluding a real estate loan held for sale), all of which are earning, is summarized as follows (dollars in thousands):

		Real Estate Loans, Net			Percent
Multi-family residential		$	26,300			39.2
Office			24,975			37.1
Industrial			11,874			17.6
Retail			4,117			6.1
			67,266			100	%
Deferred fee income			(576	)
	Real estate loans, net	$	66,690

        A summary of the changes in non-earning loans before allowance for possible losses of $3,165,000 and $1,618,000 for the years ended September 30, 2010 and 2009 respectively, is as follows (dollars in thousands):

	2011			2010			2009
Beginning principal balance	$	35,143		$	2,836		$	18,407
Additions		—			34,563			68,184
Protective advances		—			—			93
Total additions		—			34,563			68,277
Payoffs and paydowns					(2,256	)		(883	)
Sale of loan		(26,655	)		—			—
Reclassified to performing		—			—			(1,250	)
Reclassified to real estate loan held for sale		(8,488	)		—			(22,967	)
Transferred to owned real estate		—			—			(56,448	)
Direct charge off		—			—			(2,300	)
Total reductions		(35,143	)		(2,256	)		(83,848	)
Ending principal balance	$	—		$	35,143		$	2,836

        There was no allowance for possible losses at September 30, 2011.

        At September 30, 2011, 2010 and 2009, no earning loans were deemed impaired and accordingly no loan loss allowances have been established against our earning portfolio. During the years ended September 30, 2011, 2010 and 2009, respectively, an average of $7,758,000, $23,526,000 and $34,932,000, respectively, of real estate loans were deemed impaired, and no interest income was recognized in any period relating to these loans.

        The Trust recognized cash basis interest of $621,000, $571,000 and $481,000 on non-earning loans in the years ended September 30, 2011, 2010 and 2009, respectively.

        At September 30, 2010 information as to real estate loans and purchase money mortgages, all of which are first mortgage loans, is summarized as follows (dollars in thousands):

			Earning Interest			Non-Earning Interest			Total			Allowance For Possible Losses			Real Estate Loans, Net
Real estate loans:
	Condominium units (existing multi-family)			—		$	8,488		$	8,488			—		$	8,488
	Vacant loft building with retail			—			26,075			26,075		$	(2,985	)		23,090
	Multi-family residential		$	14,097			580			14,677			(180	)		14,497
	Retail			3,166			—			3,166			—			3,166
				17,263			35,143			52,406			(3,165	)		49,241
	Deferred fee income			(159	)		(86	)		(245	)					(245	)
		Real estate loans, net		17,104			35,057			52,161			(3,165	)		48,996
Purchase money mortgage loans:
	Multi-family residential			5,340			—			5,340			—			5,340
		Real estate and purchase money mortgage loans, net	$	22,444		$	35,057		$	57,501		$	(3,165	)	$	54,336

        Loans originated by the Trust generally provide for interest rates indexed to the prime rate with a stated minimum. However in 2011, we also originated loans where the interest rate is fixed for the initial term, and converts to a floating rate loan if the extension option if any, is exercised. In 2010 the Trust also provided fixed rate financing to facilitate the sale of real estate that it owned.

        At September 30, 2011, two separate, unaffiliated borrowers had loans outstanding in excess of 5% of total assets. Information regarding these loans is set forth in the table below (dollars in thousands):

	Gross Loan Balance		# of Loans		% of Gross Loans			% of Assets			State	Status
Office building(a)	$	22,800		1		30.1	%		11.9	%	NY	Performing
Industrial	$	11,874		1		15.7	%		6.2	%	MD	Performing

(a)

This loan was paid in full on November 10, 2011.

The Trust's portfolio consists of senior mortgage loans, secured by residential or commercial property, 71% of which are located in New York, 16% in Maryland, 7% in New Jersey and 6% in two other states.

        Annual maturities of real estate loans (excluding real estate loan held for sale) during the next five years and thereafter are summarized as follows (dollars in thousands):

Year Ending September 30,	Amount
2012	$	55,393
2013		11,873
2014 and thereafter		—
Total	$	67,266

        If a loan is not repaid at maturity, the Trust may either extend the loan or may commence foreclosure proceedings. The Trust analyzes each loan separately to determine the appropriate course of action. In analyzing each situation, management examines various aspects of the loan receivable, including the value of the collateral, the financial strength of the borrower, past payment history and plans of the owner of the property. Of the $52,701,000 of real estate loans receivable that were scheduled to mature in fiscal 2011, $3,066,000 were extended, $41,147,000 were paid off or sold, and $8,488,000 was the subject of a bankruptcy proceeding.

        At September 30, 2011, the three largest real estate loans had principal balances outstanding of approximately $22,800,000, $11,874,000 and $9,516,000. These three loans accounted for 17.5%, 5.5% and 4.3% of the total interest and fees earned on our loan portfolio in the year ended September 30, 2011.

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SCHEDULE III - REAL ESTATE PROPERTIES AND ACCUMULATED DEPRECIATION

12 Months Ended

Sep. 30, 2011

SCHEDULE III - REAL ESTATE PROPERTIES AND ACCUMULATED DEPRECIATION

SCHEDULE III - REAL ESTATE PROPERTIES AND ACCUMULATED DEPRECIATION

SCHEDULE III—REAL ESTATE PROPERTIES AND ACCUMULATED DEPRECIATION

SEPTEMBER 30, 2011

(Dollars in thousands)

			Initial Cost to Company				Costs Capitalized Subsequent to Acquisition						Gross Amount At Which Carried at September 30, 2011
																									Depreciation Life For Latest Income Statement
Description	Encumbrances		Land		Buildings and Improvements		Land		Improvements		Carrying Costs		Land		Buildings and Improvements		Total		Accumulated Amortization		Date of Construction		Date Acquired
Commercial
Yonkers, NY.	$	2,041		—	$	4,000		—	$	53		—		—	$	4,053	$	4,053	$	1,200				Aug-2000		39 years
South Daytona, FL.		—	$	10,437		—		—		—		—	$	7,972		—		7,972		—				Feb-2008		N/A
Newark, NJ		12,376		17,088		19,033	$	2,315		8,897	$	2,115		19,403		30,045		49,448		1,311				June-2008		39 years
Residential
Manhattan, NY		—		—		—				35		—		—		35		35		—				—		27.5 years
Misc.(1)		—		—		—				—		—		—		280		280		—
Total	$	14,417	$	27,525	$	23,033	$	2,315	$	8,985	$	2,115	$	27,375	$	34,413	$	61,788	$	2,511		—
																		(a)		(b)		(c)

(1)

Represents loans which are reported as real estate because they do not qualify for sale treatment under current accounting guidance.

Notes to the schedule:

(a)	Total real estate properties	$	61,788
	Less: Accumulated depreciation and amortization		2,511
	Net real estate properties	$	59,277
(b)	Amortization of the Trust's leasehold interests is over the shorter of estimated useful life or the term of the respective land lease.
(c)	Information not readily obtainable.

        A reconciliation of real estate properties is as follows:

	Year Ended September 30,
	2011		2010		2009
Balance at beginning of year	$	55,843	$	69,748	$	77,012
Additions:
Acquisitions through foreclosure		—		—		60,304
Other acquisitions		2,315		—		—
Capital improvements		141		1,741		4,722
Capitalized development expenses and carrying costs		4,371		2,379		—
		6,827		4,120		65,026
Deductions:
Sales		2,561		13,775		40,035
Depreciation/amortization/paydowns		832		880		1,209
Impairment charges		—		3,370		31,046
		3,393		18,025		72,290
Balance at end of year	$	59,277	$	55,843	$	69,748

        The aggregate cost of investments in real estate assets for Federal income tax purposes is approximately $2,625 higher than book value.

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SHAREHOLDERS' EQUITY

12 Months Ended

Sep. 30, 2011

SHAREHOLDERS' EQUITY

SHAREHOLDERS' EQUITY

NOTE 12—SHAREHOLDERS' EQUITY

Distributions

        During the year ended September 30, 2011, the Trust did not declare or pay any dividends.

Stock Options

        At September 30, 2011 there were 11,000 options outstanding that were issued pursuant to the BRT 1996 Stock Option Plan, all of which are currently exercisable. These options have an exercise price of $8.25 and expire December 2011. No further grants can be made under this Plan.

        Changes in the number of shares under all option arrangements are summarized as follows:

	Year Ended September 30,
	2011			2010		2009
Outstanding at beginning of period		22,500			22,500		22,500
Expired		(11,500	)		—		—
Outstanding at end of period		11,000			22,500		22,500
Exercisable at end of period		11,000			22,500		22,500
Option prices per share outstanding (a)	$	8.25		$	6.12 - $8.25	$	7.75 - $10.45
Weighted average remaining contractual life (years)		.2			.6		1.6
Weighted average exercise price		8.75			7.16		9.07

(a)

The exercise price of these options have been adjusted for the fiscal year ended September 30, 2011 and 2010 to give effect to the stock dividend that took place in October 2009.

Restricted Shares

        An aggregate of 850,000 shares have been authorized for issuance under the Trust's equity incentive plans, of which 229,560 shares remain available for future grants at September 30, 2011. The restricted shares issued vest five years from the date of grant and under specified circumstances, including a change in control, may vest earlier. Since inception of the plans, 126,410 shares have vested and 491,705 shares have been granted and have not yet vested.

        During the fiscal years ended September 30, 2011, 2010 and 2009, the Trust issued 138,150, 125,150 and 126,450 restricted shares, respectively, under the Trusts equity incentive plans. For accounting purposes, the restricted shares are not included in the outstanding shares shown on the consolidated balance sheets until they vest. The estimated fair value of restricted stock at the date of grant is being amortized ratably into expense over the applicable vesting period. For the years ended September 30, 2011, 2010 and 2009, the Trust recognized $845,000, $833,000 and $876,000 of compensation expense, respectively. At September 30, 2011, $1,801,000 has been deferred as unearned compensation and will be charged to expense over the remaining vesting periods. The weighted average vesting period is 2.85 years.

        Changes in number of shares outstanding under the 2009 and 2003 BRT Incentive Plans are shown below:

	Years Ended September 30,
	2011			2010			2009
Outstanding at beginning of the year		391,580			299,280			197,540
Issued		138,150			125,150			126,450
Cancelled		(175	)		(2,050	)		(750	)
Vested		(37,850	)		(30,800	)		(23,960	)
Outstanding at the end of the year		491,705			391,580			299,280

Warrant

        On June 2, 2011, in connection with entering into a joint venture with an affiliate of Torchlight Investors ("Torchlight"), the Trust issued a warrant to purchase 100,000 shares of beneficial interest of the Trust. The warrant is exercisable until May 30, 2012. The exercise price of the warrant is $9.00 per share and includes anti-dilution adjustments in the event of stock splits, stock dividends and issuances of securities. The warrant's fair value of $259,000 as of the issue date was determined by a third party appraiser using a Monte Carlo simulation model and was recorded as a component of the Trust's investment in the joint venture.

Earnings (Loss) Per Share

        The following table sets forth the computation of basic and diluted earnings (loss) per share (dollars in thousands):

	2011		2010			2009
Numerator for basic and diluted earnings (loss) per share attributable to common shareholders:
Net income (loss)	$	6,374	$	(8,015	)	$	(47,755	)
Denominator:
Denominator for basic earnings (loss) per share—weighted average shares(1)		14,041,569		13,871,668			11,643,972
Effect of dilutive securities:
Employee stock options		—		298			—
Stock dividend payable		—		—			2,437,352
Denominator for diluted earnings (loss) per share—adjusted weighted average shares and assumed conversions(1)		14,041,569		13,871,668			11,643,972
Basic earnings (loss) per share	$	.45	$	(.58	)	$	(4.10	)
Diluted earnings (loss) per share	$	.45	$	(.58	)	$	(4.10	)

(1)

Outstanding shares for 2010 and 2009 are the same for basic and diluted as the effect of dilutive shares in the computation of earnings per share would have been antidilutive.

Share Buyback and Treasury Shares

        In September 2011, the Board of Trustees approved a share repurchase program pursuant to which the Trust may spend up to $2,000,000 to repurchase its shares of beneficial interest. Shares repurchased under this program will be retired. As of September 30, 2011, the Trust had repurchased 7,305 shares at an average cost of $6.35 per share. During the fiscal years ended September 30, 2010 and 2009 the Trust repurchased 52,403 and 256,110 shares, respectively, at an average cost of $5.55 and $3.68 per share, respectively.

        During the years ended September 30, 2011, 2010 and 2009, 37,850, 30,800 and 23,960 treasury shares, respectively, were issued in connection with the vesting of restricted stock under the Trust's incentive plans. As of September 30, 2011, the Trust owns 1,422,000 treasury shares of beneficial interest at an aggregate cost of $11,070,000.

Tender Offer

        On October 27, 2010, 147,388 shares of beneficial interest were tendered pursuant to a previously announced tender offer. The total purchase price of these shares was $6.30 per share, aggregating $929,000.