10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC  20549

FORM 10-Q

x  Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended December 31, 2012

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	13-2755856
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

60 Cutter Mill Road, Great Neck, NY	11021
(Address of principal executive offices)	(Zip Code)

516-466-3100

(Registrant’s telephone number, including area code)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Date File required to be submitted and posted pursuant to Rule 405 of Regulations 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  x  No  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 definition of “large accelerated filer,” “accelerated filer” and “small reporting company” in Rule 12b-2 of the Exchange Act.  (Check one):

Large accelerated filer o	Accelerated filer x
Non-accelerated filer o	Smaller reporting company o
(Do not check if a smaller reporting company)

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

Indicate the number of shares outstanding of each of the issuer’s classes of stock, as of the latest practicable date.

14,191,887 Shares of Beneficial Interest,

$3 par value, outstanding on February 5, 2013

BRT REALTY TRUST AND SUBSIDIARIES

Table of Contents

		Page No.
Part I - Financial Information
Item 1.	Financial Statements
	Consolidated Balance Sheets — December  31, 2012 and September 30, 2012	1
	Consolidated Statements of Operations — Three months ended December 31, 2012 and 2011	2
	Consolidated Statements of Comprehensive (Loss) Income — Three months ended December 31, 2012 and 2011	3
	Consolidated Statement of Equity — Three months ended December 31, 2012	4
	Consolidated Statements of Cash Flows — Three months ended December 31, 2012 and 2011	5
	Notes to Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risks	26
Item 4.	Controls and Procedures	26
Part II — Other Information
Item 2.	Unregistered sales of equity securities and use of proceeds	27
Item 6.	Exhibits	28

Part 1 - FINANCIAL INFORMATION

Item 1. Financial Statements

BRT REALTY TRUST AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except share data)

	December 31, 2012 (Unaudited)			September 30, 2012
ASSETS
Real estate properties net of accumulated depreciation and amortization of $6,072 and $4,787	$	255,422		$	190,317
Real estate loans, all earning interest	71,257			37,096
Deferred fee income	(1,056		)	(512		)
Real estate loans, net	70,201			36,584
Cash and cash equivalents	32,613			78,245
Restricted cash — construction holdbacks	49,597			55,252
Available-for-sale securities at fair value	1,226			1,249
Deferred costs, net	12,449			12,337
Prepaid expenses	5,110			5,978
Other assets	5,725			5,994
Total Assets	$	432,343		$	385,956
LIABILITIES AND EQUITY
Liabilities:
Mortgages payable	$	214,810		$	169,284
Junior subordinated notes	37,400			37,400
Accounts payable and accrued liabilities	4,611			4,298
Deposits payable	2,160			2,108
Deferred income	25,848			25,848
Total Liabilities	284,829			238,938
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, 13,473 issued in both periods	40,420			40,420
Additional paid-in capital	165,451			165,258
Accumulated other comprehensive income	344			356
Accumulated deficit	(73,889		)	(72,585		)
Total BRT Realty Trust shareholders’ equity	132,326			133,449
Non-controlling interests	15,188			13,569
Total Equity	147,514			147,018
Total Liabilities and Equity	$	432,343		$	385,956

See accompanying notes to consolidated financial statements.

1

BRT REALTY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(Dollars in thousands, except share data)

	Three Months Ended
	December 31,
	2012			2011
Revenues:
Rental and other revenue from real estate properties	$	5,640		$	768
Interest and fees on real estate loans	1,879			2,252
Recovery of previously provided allowances	422			7
Other income	310			127
Total revenues	8,251			3,154
Expenses:
Interest expense	2,946			467
Advisor’s fees, related party	374			171
General and administrative—including $205 and $279 to related party	1,863			1,674
Property acquisition costs	878			—
Operating expenses relating to real estate properties	3,146			786
Depreciation and amortization	1,287			184
Total expenses	10,494			3,282
Total revenues less total expenses	(2,243		)	(128		)
Equity in earnings (loss) of unconsolidated ventures	61			(75		)
Loss on sale of available-for-sale securities	—			(18		)
Gain on sale of loan	—			3,192
(Loss) income from continuing operations	(2,182		)	2,971
Discontinued operations:
Gain on sale of real estate assets	—			490
Net (loss) income	(2,182		)	3,461
Plus: net loss attributable to non- controlling interests	878			413
Net (loss) income attributable to common shareholders	$	(1,304	)	$	3,874
Basic and diluted per share amounts attributable to common shareholders:
(Loss) income from continuing operations	$	(.09	)	$	.24
Discontinued operations	—			.04
Basic and diluted (loss) income per share	$	(.09	)	$	.28
Amounts attributable to BRT Realty Trust:
(Loss) income from continuing operations	$	(1,304	)	$	3,384
Discontinued operations	—			490
Net (loss) income	$	(1,304	)	$	3,874
Weighted average number of common shares outstanding:
Basic and diluted	14,053,362			13,982,164

See accompanying notes to consolidated financial statements.

2

BRT REALTY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(Unaudited)

(Dollars in thousands)

	Three Months Ended
	December 31,
	2012			2011
Net (loss) income	$	(2,182	)	$	3,461
Other comprehensive income:
Net unrealized (loss) gain on available-for-sale securities	(23		)	377
Unrealized gain on derivative instruments	11			—
Other comprehensive (loss) income	(12		)	377
Comprehensive (loss) income	(2,194		)	3,838
Comprehensive income (loss) attributable to non-controlling interests	2			—
Comprehensive (loss) income attributable to common shareholders	$	(2,192	)	$	3,838

See accompanying notes to consolidated financial statements.

3

BRT REALTY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF EQUITY

Three Months Ended December 31, 2012

 (Unaudited)

(Dollars in thousands, except share data)

	Shares of Beneficial Interest		Additional Paid-In Capital		Accumulated Other Comprehensive Income			Accumulated Deficit			Non- Controlling Interest			Total
Balances, September 30, 2012	$	40,420	$	165,258	$	356		$	(72,585	)	$	13,569		$	147,018
Restricted stock vesting
Compensation expense — restricted stock			193											193
Contributions from non-controlling interests											2,894			2,894
Distributions to non-controlling interests											(397		)	(397		)
Net loss								(1,304		)	(878		)	(2,182		)
Other comprehensive loss					(12		)							(12		)
Comprehensive loss														(2,194		)
Balances, December 31, 2012	$	40,420	$	165,451	$	344		$	(73,889	)	$	15,188		$	147,514

See accompanying notes to consolidated financial statements.

4

BRT REALTY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars in Thousands)

	Three Months Ended December 31,
	2012			2011
Cash flows from operating activities:
Net (loss) income	$	(2,182	)	$	3,461
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Recovery of previously provided allowances	(422		)	(7		)
Amortization and depreciation	1,683			264
Amortization of deferred fee income	(333		)	(320		)
Amortization of restricted stock	193			210
Gain on sale of real estate assets from discontinued operations	—			(490		)
Gain on sale of available-for-sale securities	—			18
Gain on sale of loan	—			(3,192		)
Equity in (loss) earnings of unconsolidated joint ventures	(61		)	75
Distribution of earnings of unconsolidated joint ventures	45			123
Change in straight-line rent	3			12
Increases and decreases from changes in other assets and liabilities:
(Increase) decrease in interest and dividends receivable	(44		)	243
(Increase) decrease in prepaid expenses	(406		)	178
Decrease in prepaid interest	814			—
Increase (decrease) in accounts payable and accrued liabilities	376			(204		)
(Increase) decrease in deferred costs	(152		)	13
Increase (decrease) in security deposits and other receivable	567			(15		)
Other	214			(2		)
Net cash provided by operating activities	295			367
Cash flows from investing activities:
Collections from real estate loans	8,657			51,682
Additions to real estate loans	(42,818		)	(25,457		)
Loan loss recoveries	422			7
Additions to real estate properties	(57,400		)	—
Net costs capitalized to real estate owned	(8,791		)	(792		)
Net change in restricted cash – construction holdbacks	5,655			—
Collection of loan fees	877			625
Proceeds from sale of real estate owned	6			507
Proceeds from sale of available-for-sale securities	—			556
Purchase of available for sale securities	—			(1,030		)
Distributions of capital from unconsolidated joint ventures	—			3,035
Net cash (used in) provided by investing activities	(93,392		)	29,133

5

BRT REALTY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(Unaudited)

(Dollars in Thousands)

	Three Months Ended December 31,
	2012			2011
Cash flows from financing activities:
Increase in mortgages payable	46,010			4,282
Mortgage principal payments	(484		)	(70		)
Increase in deferred borrowing costs	(558		)	(381		)
Capital contributions from non-controlling interests	2,894			—
Capital distribution to non-controlling interests	(397		)	—
Repurchase of shares of beneficial interest	—			(767		)
Net cash provided by financing activities	47,465			3,064
Net (decrease) increase in cash and cash equivalents	(45,632		)	32,564
Cash and cash equivalents at beginning of period	78,245			44,025
Cash and cash equivalents at end of period	$	32,613		$	76,589
Supplemental disclosure of cash flow information:
Cash paid during the period for interest	$	2,316		$	109
Taxes paid	$	3		$	—

See accompanying notes to consolidated financial statements.

6

BRT REALTY TRUST AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 2012

Note 1 — Organization and Background

BRT Realty Trust (“BRT” or the “Trust”) is a business trust organized in Massachusetts.  BRT (i) originates and holds for investment senior mortgage loans secured by commercial and multi-family real estate property in the United States, (ii) began participating, in fiscal 2012, as an equity investor in joint ventures that own and operate multi-family properties and (iii) owns and operates commercial and mixed use real estate assets, and in particular, development properties located in Newark, New Jersey.

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, with up to a one year extension in certain cases. Our policy is 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.

The Trust generally contributes 80% of the equity in each multi-family property acquisition.

The Trust conducts its operations to qualify as a real estate investment trust, or REIT, for federal income tax purposes.

Note 2 - Basis of Preparation

The accompanying interim unaudited consolidated financial statements as of December 31, 2012 and for the three months ended December 31, 2012 and 2011 reflect all normal recurring adjustments which are, in the opinion of management, necessary for a fair presentation of the results for such interim periods. The results of operations for the three months ended December 31, 2012 are not necessarily indicative of the results for the full year.  The balance sheet as of September 30, 2012 has been derived from the audited financial statements at that date but does not include all the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.

Certain items on the consolidated financial statements for the preceding period have been reclassified to conform with the current period’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 the Trust is determined to be the primary beneficiary. Material intercompany balances and transactions have been eliminated.

RBH-TRB Newark Holdings LLC, referred to herein as the Newark Joint Venture, 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 of this joint venture because it has a controlling interest in that it has the power to direct the activities of the VIE that most significantly impact the entity’s economic performance and it has the obligation to absorb losses of the entity and the right to receive benefits from the entity that could potentially be significant to the VIE.

7

Note 2 - Basis of Preparation (Continued)

The Trust’s consolidated joint ventures that own multi-family properties were determined to be VIE’s because the voting rights of some equity investors are not proportional to their obligations to absorb the expected losses of the entity and their right to receive the expected residual returns. In addition, substantially all of the entity’s activities either involve or are conducted on behalf of the investor that has disproportionately few voting rights.

The Trust was determined to be the primary beneficiary of these joint ventures because it has a controlling interest in that it has the power to direct the activities of the VIE that most significantly impact the entity’s economic performance and it has the obligation to absorb losses of the entity and the right to receive benefits from the entity that could potentially be significant to the VIE.

With respect to its unconsolidated joint ventures, in which (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 VIE’s, the Trust has determined that such joint ventures should be accounted for under the equity method of accounting for financial statement purposes.

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 consolidated financial statements. Actual results could differ from those estimates.

Note 3 - Equity

Common Share Dividend Distribution

During the quarter ended December 31, 2012, the Trust did not declare a dividend on its shares.

Restricted Shares

The Trust’s 2012 Incentive Plan, approved by its shareholders in January 2012, permits the Trust to grant stock options, restricted stock, restricted stock units, performance shares awards and any one or more of the foregoing.  A maximum of 600,000 shares may be issued pursuant to such plan.  An aggregate of 580,180 shares of restricted stock have been granted pursuant to the Trust’s 2003 and 2009 equity incentive plans (collectively, the “Prior Plans”) and had not vested as of December 31, 2012.  No awards had been granted under the 2012 Plan as of December 31, 2012, and no additional awards may be granted under the Prior Plans.  The restricted shares that have been granted under the Prior Plans vest five years from the date of grant and under specified circumstances, including a change in control, may vest earlier. For accounting purposes, the restricted shares are not included in the outstanding shares shown on the consolidated balance sheet until they vest, but are included in the earnings per share computation.   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 three months ended December 31, 2012 and 2011 the Trust recorded $193,000 and $210,000 of compensation expense respectively.  At December 31, 2012, $1,677,000 has been deferred as unearned compensation and will be charged to expense over the remaining weighted average vesting period of approximately 2.5 years.

8

Note 3 — Equity (Continued)

Per Share Data

Basic (loss) earnings per share attributable to holders of shares of beneficial interest was determined by dividing net (loss) income for the period by the weighted average number of common shares outstanding during each period.

Diluted (loss) earnings per share attributable to holders of shares of beneficial interest reflects the potential dilution that could occur if securities or other contracts to issue common shares were exercised or converted into common shares or resulted in the issuance of common shares that shared in the earnings of the Trust.

Basic and diluted shares outstanding for the three months ended December 31, 2012 and 2011 were 14,053,362 and 13,982,164, respectively.

Note 4 - Real Estate Properties

A summary of real estate properties owned is as follows (dollars in thousands):

	September 30, 2012 Balance		Additions		Costs Capitalized and Improvements		Depreciation, Amortization and other reductions			December 31, 2012 Balance
Shopping centers/Retail	$	2,749	—		—		$	(26	)	$	2,723
Coop condo apartments	250		—		—		(7		)	243
Commercial / mixed use (a)	61,808		—		$	7,997	(153		)	69,652
Multi Family (b)	117,538		$	57,400	998		(1,104		)	174,832
Land	7,972		—		—		—			7,972
Total real estate properties	$	190,317	$	57,400	$	8,995	$	(1,290	)	$	255,422

a)  Represents the real estate assets of the Newark Joint Venture, a consolidated VIE which owns operating and development properties in Newark, NJ.  These properties contain a mix of office, retail space, charter schools and surface parking.  Certain of these assets are subject to  blanket  mortgages  aggregating $20,100,000,  held  by  the  Trust,  which  are  eliminated  in consolidation.  Several of the assets are also encumbered by other mortgages which are discussed in Note 8 Debt Obligations — Mortgages Payable.

b)  In the quarter ended December 31, 2012, the Trust purchased through consolidated joint ventures in which the Trust has an 80% or 90% equity interest, the following multi-family properties (dollars in thousands):

Location	Purchase Date	Number of Units	Contract Purchase Price		Acquisition Mortgage Debt		BRT Equity		Property AcquisitionCosts
North Charleston, SC	10/4/12	208	$	21,500	$	17,716	$	4,410	$	213
Cordova, TN	11/15/12	464	25,450		19,248		6,220		386
Decatur, GA	11/19/12	212	10,450		8,046		3,396		231
		884	$	57,400	$	45,010	$	14,026	$	830

9

Note 5 - Real Estate Loans

Information relating to real estate loans, all of which are earning interest, is summarized as follows (dollars in thousands):

	December 31, 2012					September 30, 2012
Property Type	Real EstateLoans			Percent		Real EstateLoans			Percent
Multi-family residential	$	31,283		45	%	$	35,096		95	%
Hotel	15,695			22	%	—			—
Parking facility	14,269			20	%	—			—
Retail	10,010			13	%	2,000			5
	71,257			100	%	37,096			100	%
Deferred fee income	(1,056		)			(512		)
Real estate loans, net	$	70,201				$	36,584

At December 31, 2012, three separate borrowers had three loans outstanding that in the aggregate were in excess of 10% of total loans. Information regarding these loans are set forth in the table below (dollars in thousands):

Property Type	Gross Loan Balance		% of Gross Loans		% of Assets		State	Status
Multi-Family	$	14,734	20.7	%	3.4	%	GA	Performing
Parking Facility	$	14,269	20.0	%	3.3	%	NY	Performing
Hotels	$	14,100	19.8	%	3.3	%	NY	Performing

Substantially all of the Trust’s loan portfolio consists of senior mortgage loans secured by real properties, 57% of which are located in New York, 21% in Georgia, 10% in Maryland, and 12% in three other states.

On December 5, 2012, the Trust originated a loan in the amount of $21,174,000.  Gould Investors L.P., a related party, participated in this loan on a pari passu basis and holds a $6,905,000 interest in this loan.  The Trust retained a $14,269,000 interest in this loan.

Note 6 - Allowance for Possible Losses

At December 31, 2012 and September 30, 2012 the Trust did not have an allowance for possible loan losses.

Note 7 — Available-For-Sale Securities

Information regarding our available-for-sale securities is set forth in the table below (dollars in thousands):

	December 31, 2012			September 30, 2012
Cost basis	$	789		$	789
Unrealized gains	477			499
Unrealized losses	(40		)	(39		)
Market value	$	1,226		$	1,249

10

Note 7 — Available-For-Sale Securities (Continued)

Unrealized gains and losses are reflected as accumulated other comprehensive income 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 not considered impaired on an other than temporary basis because the Trust expects the value of these securities to recover and plans on holding them until at least such recovery.

Note 8 — Debt Obligations

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

	December 31, 2012		September 30, 2012
Line of credit	—		—
Junior subordinated notes	$	37,400	$	37,400
Mortgages payable	214,810		169,284
Total debt obligations	$	252,210	$	206,684

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, National Association.  The maximum amount that may be borrowed under the facility is the lesser of $25 million and the borrowing base.  The borrowing base ranges from 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 eligible mortgage 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.

On April 17, 2012, the facility was amended to allow the subsidiary to borrow for up to 90 days on an unsecured basis, a maximum of $10,000,000.

The facility, requires the Trust and the subsidiary to maintain or comply with, among other things, net worth and liquidity covenants, debt service and collateral coverage ratios and limits, with specified exceptions, and the incurrence of debt.

For the three months ended December 31, 2012 and 2011, interest expense, which includes fee amortization with respect to the facility, was $38,000 and $37,000, respectively.  At December 31, 2012 and September 30, 2012, there were no outstanding balances on this facility.

11

Note 8 — Debt Obligations (Continued)

Junior Subordinated Notes

At December 31, 2012 and September 30, 2012, the Trust’s junior subordinated notes had an outstanding principal balance of $37,400,000.  The interest rates on the outstanding notes is set forth in the table below:

Interest Period	Interest Rate
March 15, 2011 through July 31, 2012	3.00	%
August 1, 2012 through April 29, 2016	4.90	%
April 30, 2016 through April 30, 2036	Libor + 2.00	%

Interest expense relating to the junior subordinated notes for the three months ended December 31, 2012 and 2011 was $458,000 and $281,000, respectively.  Amortization of the deferred costs, which is a component of interest expense on borrowed funds, was $5,000 for both the three months ended December 31, 2012 and 2011.

Mortgages Payable

The Trust had the following obligations outstanding as of the dates indicated all of which are secured by the underlying real property (dollars in thousands):

Property	December 31,2012		September 30, 2012		Rate		Maturity
Yonkers, NY	$	1,932	$	1,954	5.25	%	April 2022
Palm Beach Gardens, FL	45,200		45,200		3.78	%	April 2019
Melboune, FL	7,680		7,680		3.98	%	April 2019
Marietta, GA	7,443		6,462		6.50	%	February 2015
Lawrenceville, GA	4,687		4,687		4.49	%	March 2022
Collierville, TN	25,680		25,680		3.91	%	July 2022
North Charleston, SC	17,716		—		3.79	%	November 2022
Cordova, TN	19,248		—		3.71	%	December 2022
Decatur, GA	8,046		—		3.74	%	December 2022
65 Market St—Newark, NJ	900		900		7.00	%	January 2015
909 Broad St—Newark, NJ	6,084		6,132		6.00	%	August 2030
Teachers Village—Newark, NJ(1)	2,738		2,738		17	%	March 2013
Teachers Village—Newark, NJ(2)	22,748		22,748		5.50	%	December 2030
Teachers Village—Newark, NJ	4,250		4,250		3.46	%	February 2032
Teachers Village—Newark, NJ	979		988		2.00	%	February 2022
Teachers Village—Newark, NJ	994		1,380		2.50	%	February 2014
Teachers Village—Newark, NJ	1,832		1,832			(3)	February 2034
Teachers Village—Newark, NJ	15,700		15,700		Libor + 3.00	%	August 2019
Teachers Village—Newark, NJ	5,250		5,250		3.28	%	September 2042
Teachers Village—Newark, NJ	13,491		13,491		8.65	%	December 2023
Teachers Village—Newark, NJ	2,212		2,212			(4)	August 2034
	$	214,810	$	169,284

12

Note 8 — Debt Obligations (Continued)

(1)As of December 31, 2012 and September 30, 2012, respectively, the Trust had guaranteed $685,000 of this mortgage obligation.

(2)TD Bank has the right, in 2018, to require subsidiaries of the Newark Joint Venture to repurchase such debt. If such right is exercised, such subsidiaries will be required to refinance such debt. The stated interest rate is 5.5% per year; however, the United States Treasury Department is reimbursing the interest at the rate of 4.99% per year under the Qualified School Construction Bond program and accordingly, the effective rate of interest thereon until 2018 is 0.51% per year.

(3)The debt is to be serviced in full by annual payment-in-lieu of taxes (“PILOT”) of $256,000 in 2013 increasing to approximately $281,000 at maturity. This obligation is not secured by real property.

(4)The debt is to be serviced in full by annual PILOT payments of $311,000 in 2013 increasing to approximately $344,000 at maturity.

Note 9 — Deferred Income (New Markets Tax Credit Transaction)

On September 11, 2012 and February 3, 2012 special purpose subsidiaries of the Newark Joint Venture entered into transactions with affiliates of Goldman Sachs (“Goldman”) related to the Teacher’s Village project and received proceeds related to NMTC’s the project qualified for. The NMTC program was enacted by Congress to serve low-income and distressed communities by providing investors with tax credit incentives to make capital investments in those communities. The program permits taxpayers to claim credits against their Federal income tax for up to 39% of qualified investments.

Goldman contributed $16,400,000 and $11,200,000 to the projects through special-purpose entities created to effect the financing transaction and is entitled to receive tax credits against its qualified investment in the project over the next seven years. At the end of the seven years, the Newark Joint Venture subsidiaries have the option to acquire the special purpose entities for a nominal fee and it is anticipated that they will exercise this option.

Included in deferred income on the Trust’s consolidated balance sheet at December 31, 2012 and September 30, 2012 is $25,848,000 of the Goldman contribution, which is net of fees. This amount will be recognized into income when the obligation to comply with the requirements of the NMTC program as set forth in the applicable provisions of the Internal Revenue Code of 1986, as amended (the “Code”), is eliminated. Risks of non-compliance include recapture (i.e. reversal of the benefit of the tax credit and the related indemnity obligation of the Newark Joint Venture). The tax credits are subject to recapture for a seven year period as provided in the Code.

Costs incurred in structuring these transactions are deferred and will be recognized as an expense based on the maturities of the various mortgage financings related to the NMTC transaction.  At December 31, 2012 and September 30, 2012 these costs totaled $9.8 million and $10.1 million, respectively.

The Trust determined that these special purpose entities are VIE’s. The VIE’s ongoing activities, which include collecting and remitting interest and fees and NMTC compliance, were all considered in the design of the special purpose entities and are not anticipated to affect the economic performance during the life of the VIE’s.

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Note 9 — Deferred Income (New Markets Tax Credit Transaction) (Continued)

Management considered the obligation to deliver tax benefits and provide guarantees to Goldman and the Trust’s obligations to absorb the losses of the VIE. Management also considered Goldman’s lack of a material interest in the underlying economics of the project. Management concluded that the Trust is the primary beneficiary and has therefore consolidated the VIE’s.

Note 10 - Segment Reporting

Management has determined that it operates in three reportable segments: (i) a loan and investment segment which includes the origination and servicing of our loan portfolio and its investments, (ii) a multi-family property segment which includes the ownership and operation of its multi-family properties; and (iii) a commercial and mixed use real estate segment which includes the operation and disposition of the Trust’s other real estate assets and in particular, the Newark Joint Venture.  Due to the addition of the multi-family properties in fiscal 2012 and 2013, the Trust changed the manner in which general and administrative expenses and general corporate debt is allocated to the segments.  Management determined it would be more appropriate to allocate these expenses based on the amount of equity invested rather than on the total assets of each segment as was previously done.  The prior period has been changed to reflect the new allocation of these expenses.

The following table summarizes our segment reporting for the periods indicated (dollars in thousands):

	Three Months Ended December 31, 2012
	Loan and Investment		Multi- Family Real Estate			Other Real Estate			Total
Rental and other revenues from real estate properties	—		$	4,950		$	690		$	5,640
Interest and loan fee income	$	1,879	––			––			1,879
Other income	442					290			732
Total revenues	2,321		4,950			980			8,251
Interest expense	357		1,487			1,102			2,946
Advisors fee, related party	186		134			54			374
General and administrative expenses	1,285		396			182			1,863
Property acquisition costs	—		878			—			878
Operating expenses relating to real estate properties	—		2,300			846			3,146
Depreciation and amortization	—		1,104			183			1,287
Total expenses	1,828		6,299			2,367			10,494
Total revenues less total expenses	493		(1,349		)	(1,387		)	(2,243		)
Equity in earnings of unconsolidated ventures	—		—			61			61
Income (loss) from continuing operations	493		(1,349		)	(1,326		)	(2,182		)
Plus: net loss attributable to non-controlling interests	—		111			767			878
Net income (loss) attributable to common shareholders	$	493	$	(1,238	)	$	(559	)	$	(1,304	)
Segment assets at December 31, 2012	$	102,255	$	183,485		$	146,603		$	432,343

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Note 10 -Segment Reporting (Continued)

The following table summarizes our segment reporting for the periods indicated (dollars in thousands):

	Three Months Ended December 31, 2011
	Loan and Investment			Real Estate			Total
Interest and loan fee income	$	2,252		—			$	2,252
Rental and other revenues from real estate properties	––			$	768		768
Other income	134			––			134
Total revenues	2,386			768			3,154
Interest expense	275			192			467
Advisors fees, related party	84			87			171
General and administrative and other expenses	1,426			248			1,674
Operating expenses related to real estate properties	—			786			786
Depreciation and amortization	—			184			184
Total expenses	1,785			1,497			3,282
Total revenues less total expenses	601			(729		)	(128		)
Equity in (loss) earnings of unconsolidated ventures	(142		)	67			(75		)
Loss on sale of available-for-sale securities	(18		)				(18		)
Gain on sale of loan	3,192			—			3,192
Income (loss) from continuing operations	3,633			(662		)	2,971
Discontinued operations:
Gain on sale of real estate assets	—			490			490
Net income (loss)	3,633			(172		)	3,461
Plus net loss attributable to non-controlling interests				413			413
Net income attributable to common shareholders	3,633			241			3,874
Segment assets at December 31, 2011	$	129,867		$	68,435		$	198,302

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Note 11 — 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 recorded at fair value on the consolidated balance sheets:

Cash and cash equivalents, restricted cash, accounts receivable (included in other assets), accounts payable and accrued liabilities:  The carrying amounts reported in the consolidated balance sheets 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, based upon a margin over prime rate, have an estimated fair value which is equal to their carrying value assuming market interest rates between 12% and 12.5%.  The earning mortgage loans of the Trust which have fixed rate provisions have an estimated fair value of $11,000 greater than their carrying value assuming a market rate of interest of 12% which we believe reflect institutional lender yield requirements.

Junior subordinated notes: At December 31, 2012, the estimated fair value of the Trust’s junior subordinated notes is lower than their carrying value by approximately $20,300,000 based on a market interest rate of 6.30%.

Mortgages payable:  At December 31, 2012, the estimated fair value of the Trust’s mortgages payable is greater than their carrying value by approximately $2,530,000 assuming market interest rates between 3.12% and 17%.  Market interest rates were determined using rates which we believe reflect institutional lender yields requirements.

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 market 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.

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Note 11 — Fair Value of Financial Instruments (Continued)

Set forth below is information regarding the Trust’s financial assets measured at fair value as of December 31, 2012 (dollars in thousands):

	Carrying and		Fair Value Measurements Using Fair Value Hierarchy
	Fair Value		Level 1		Level 2
Financial Assets:
Available-for-sale equity securities	$	1,226	$	1,226	—
Interest rate cap	5		—		$	5
Financial Liabilities:
Interest rate swap	$	93	—		$	93

Available-for-sale securities:  Fair values are approximated based on current market quotes from financial sources that track such securities. All of the available-for-sale securities in an unrealized loss position are equity securities and amounts are not considered to be impairment on an other than temporary basis because the Trust expects the value of these securities to recover and plans on holding them until at least such recovery occurs.

Derivative financial instrument:  Fair values are approximated using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of the derivatives. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves, foreign exchange rates, and implied volatilities.  At December 31, 2012, this derivative is included in accounts payable and accrued liabilities on the consolidated balance sheet.

Although the Trust has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with it utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparty.  As of December 31, 2012, the Trust assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives.  As a result, the Trust determined that its derivative valuation is classified in Level 2 of the fair value hierarchy.

Note 12 — Derivative Financial Instruments

Cash Flow Hedges of Interest Rate Risk

The Trust’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements.  To accomplish this objective, the Trust primarily uses interest rate swaps as part of its interest rate risk management strategy.  Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Trust making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.

The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income on our consolidated balance sheets and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings.  In March 2012, the Trust entered into an interest rate swap agreement used to hedge the variable cash flows associated with existing variable-rate debt.

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Note 12 — Derivative Financial Instruments (Continued)

Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Trust’s variable-rate debt.

As of December 31, 2012, the Trust had the following outstanding interest rate derivative that was designated as a cash flow hedge of interest rate risk (dollars in thousands):

Interest Rate Derivative	Notional		Rate		Maturity
Interest Rate Swap	$	1,954	5.25	%	April 1, 2022

The table below presents the fair value of the Trust’s derivative financial instrument as well as its classification on the consolidated balance sheets as of the dates indicated (amounts in thousands):

Liability Derivatives as of:

December 31, 2012			September 30, 2012
Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Other Assets	$	5	Other assets	$	10
Accounts payable and accrued liabilities	$	93	Accounts payable and accrued liabilities	$	104

The following table presents the effect of the Trust’s derivative financial instrument on the consolidated statements of comprehensive (loss) income for the three months ended December 31, 2012 (dollars in thousands):

	Three Months Ended December 31, 2012
Amount of gain recognized on derivative in Other Comprehensive Income	$	2
Amount of loss reclassified from Accumulated Other Comprehensive Income into Interest Expense	$	(9	)

No gain or loss was recognized related to hedge ineffectiveness or to amounts excluded from effectiveness testing on the Trust’s cash flow hedges during the three months ended December 31, 2012.  During the twelve months ending December 31, 2013, the Trust estimates an additional $36,000 will be reclassified from other comprehensive income as an increase to interest expense.

Credit-risk-related Contingent Features

The agreement between the Trust and its derivatives counterparty provides that if the Trust defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, the Trust could be declared in default on its derivative obligation.

As of December 31, 2012, the fair value of the derivative in a net liability position, which includes accrued interest, but excludes any adjustment for nonperformance risk related to this agreement, was $93,000.  As of December 31, 2012, the Trust has not posted any collateral related to this agreement.  If the Trust had been in breach of this agreement at December 31, 2012, it could have been required to settle it obligations thereunder at its termination value of $93,000.

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Note 13 — New Accounting Pronouncements

In May 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASC”) No. 2011-04, “Fair Value Measurements (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS.” This update provides a uniform framework for fair value measurements and related disclosures between GAAP and International Financial Reporting Standards (“IFRS”) and requires additional disclosures, including: (i) quantitative information about unobservable inputs used, a description of the valuation processes used, and a qualitative discussion about the sensitivity of the measurements to changes in the unobservable inputs, for Level 3 fair value measurements; (ii) fair value of financial instruments not measured at fair value but for which disclosure of fair value is required, based on their levels in the fair value hierarchy; and (iii) transfers between Level 1 and Level 2 of the fair value hierarchy. This update was effective for the Trust’s interim and annual reporting beginning January 1, 2012 and did not have a material impact on its financial condition, results of operations, or disclosures.

In June 2011, the FASB issued ASC No. 2011-05, “Comprehensive Income (Topic 220): Presentation of Comprehensive Income.” This update requires the presentation of net income and other comprehensive income in one continuous statement or in two separate but consecutive statements. This update was effective for the Trust’s interim and annual reporting beginning on January 1, 2012, and did not have a material impact on its financial condition, results of operations, or disclosures.

Note 14 — Subsequent Events

Subsequent events have been evaluated and any significant events, relative to our consolidated financial statements as of December 31, 2012 that warrant additional disclosure, have been included in the notes to the consolidated financial statements

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Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

With the exception of historical information, this report on Form 10-Q contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended.  We intend such forward-looking statements to be covered by the safe harbor provision 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, which are based on certain assumptions and describe our future plans, strategies and expectations, are generally identifiable by use of the words “may”, “will”, “believe”, “expect”, “intend”, “anticipate”, “estimate”, “project”, or similar expressions or variations thereof.  Forward-looking statements involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could materially affect actual results, performance or achievements.  Investors are cautioned not to place undue reliance on any forward-looking statements and are urged to read “item 1A Risk Factors” in our Annual Report on Form 10-K for the year ended September 30, 2012.

Overview

We are a real estate investment trust, also known as a REIT. We operate in three business segments: real estate lending, ownership and operation of multi-family properties, and ownership and operation of other real estate assets.

Our lending activities involve originating and holding for investment senior mortgage loans secured by commercial and multi-family real estate property in the United States. Revenues are generated from the interest income (i.e., the interest borrowers pay on our loans) and to a lesser extent, loan fee income generated on the origination and extension of loans and investment income from securities transactions.

Our multi-family activities derive revenues primarily from tenant rental payments. We commenced these activities in 2012 as we identified a demand for equity capital in this sector. Generally, these activities involve our investment of 80% of the equity in a joint venture that acquires a multi-family property. Our multi-family property activities are complementary to our loan origination activities in that we address the funding needs of multi-family real estate investors by providing them with access to both equity capital and debt financing.

Our ownership and operation of other real estate assets is comprised principally of the activities of the Newark Joint Venture and to a lesser extent, the ownership and operations of various real estate assets located in New York and Florida. The Newark Joint Venture is engaged in the development of properties in downtown Newark, NJ. The properties are to be developed for educational, commercial, retail and residential use. The Newark Joint Venture is currently developing a project known as “Teachers Village”—the project currently involves five buildings, in various stages of construction and pre-construction, which are to be used for charter schools, retail space and residential units. The venture is currently unprofitable and it is anticipated that the activities will continue to be unprofitable at least until the Teacher’s Village is constructed and reasonable occupancy levels achieved. The venture requires substantial third party funding (including tax credits and financing provided by governmental authorities) for its development activities—no assurance can be given that sufficient funding will be available and even if sufficient funding is obtained and construction completed, that such development activities will ever by profitable to us.

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The following table sets forth (i) the impact of these lines of business on our total revenues and net income attributable to common shareholders for the periods indicated and (ii) our total assets applicable to each segment for the periods indicated (dollars in thousands):

	Three Months Ended December 31,
	2012					2011
			Net Income (Loss) Attributable					Net Income (Loss) Attributable		Segment Assets at
	Total		to Common			Total		to Common		December 31,
	Revenues		Shareholders			Revenues		Shareholders		2012		2011
Loan and investment	$	2,321	$	493		$	2,386	$	3,633	$	102,252	$	129,867
Multi-family real estate	4,950		(1,238		)	—		—		183,485		—
Other real estate	980		(559		)	768		241		146,603		68,435

Net income attributable to common shareholders decreased by $5.2 million or 133.7% from $3.9 million in the three months ended December 31, 2011 to a loss of $1.3 million in the three months ended December 31, 2012. The decrease is due primarily to the inclusion (i) in the quarter ended December 31, 2011 of a $3.2 million gain on the sale of a loan in our loan and investment segment and a $490,000 gain on the sale of a property in our other real estate segment and (ii) in the quarter ended December 31, 2012,  a $1.24 million loss sustained in our multi- family property segment.

Contributing to the net loss sustained in our multi-family activities were, among other things, property acquisition costs of $878,000  with respect to the three multi-family properties acquired in the current fiscal quarter and a fourth property which has not yet closed and $1.1 million of non-cash depreciation and amortization expense. Depreciation and amortization expense will continue to negatively impact the operating results of our multi-family property segment.

The following highlights our activities during the three months ended December 31, 2012 and our financial condition as of such date:

·we acquired three multi-family properties with an aggregate of 884 units for an aggregate purchase price of $57.4 million (excluding acquisition costs of $830,000 and including an aggregate of $45.5 million of mortgage debt);

·we originated $42.8 million of mortgage loans in the first three months of fiscal 2013 compared to $25.5 million in the first three months of fiscal 2012;

·at December 31, 2012, our net loan portfolio totaled $70.2 million - all of the loans in the portfolio are performing; and

·at December 31, 2012 we had cash and cash equivalents and available-for-sale securities of $33.8 million.

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Results of Operations — Three months ended December 31, 2012 compared to the three months ended December 31, 2011

Revenues

The following table compares our revenues for the periods indicated:

	Three Months Ended
	December 31,				Increase			%
(Dollars in thousands):	2012		2011		(Decrease)			Change
Interest and fees on real estate loans	$	1,879	$	2,252	$	(373	)	16.6	%
Rental and other revenue from real estate properties	5,640		768		4,872			634.9	%
Recovery of previously provided allowances	422		7		415			N/A
Other income	310		127		183			145.4	%
Total revenues	$	8,251	$	3,154	$	5,097		161.5	%

Interest and fees on real estate loans.  The decrease is due to a $20.2 million decrease in the weighted average balance of earning loans outstanding which resulted in a decline of $631,000 in interest income.  Though we originated in excess of $42 million of new loans in the first quarter of 2013, the average weighted balance of our loan portfolio declined primarily because such loans were originated towards the end of the quarter.  The decrease was partially offset by a $179,000 increase in interest income resulting from an increase in the weighted average interest rate on the portfolio from 11.46% to 12.67% and a $78,000 net increase in loan fee income.  The increase in the interest rate on the portfolio was due to the payoff of a lower interest rate loan.  Loan fees increased due to amortization of loan fees resulting from a larger loan portfolio and fees recognized on expired commitments; the loan fee increase was partially offset by a decline in extension and other fees.

Rental and other revenue from real estate properties.  The increase is primarily due to the inclusion of $3.68 million of rental revenue from five multi-family residential properties we acquired in fiscal 2012 and $1.27 million of rental revenue from three multi-family properties acquired in the first quarter of fiscal 2013.  The increase was partially offset by an approximate $68,000 decline in rental revenue from reduced occupancy at our Newark Joint Venture properties.  These are developments sites and accordingly, leasing space at such properties is difficult.

Recovery of previously provided allowances. The increase is due to the inclusion of $419,000 recovery relating to a loan charged off in a prior period.

Other income. The increase is the result of a U.S. Treasury subsidy which covers approximately 90% of the interest payments with respect to qualified school construction bonds (“QSCB’s”) with a principal amount of approximately $22.7 million issued by the Newark Joint Venture. We anticipate this subsidy, in the annual amount of approximately $1.2 million, will continue until at least 2018.

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Expenses

The following table compares our expenses for the periods indicated:

	Three Months Ended December 31,				Increase		%
(Dollars in thousands)	2012		2011		(Decrease)		Change
Interest expense	$	2,946	$	467	$	2,479	530.6	%
Advisor’s fees, related party	374		171		203		118.4	%
General and administrative	1,863		1,674		189		11.2	%
Property acquisition costs	878		—		878		N/A
Operating expenses relating to real estate properties	3,146		786		2,360		300.3	%
Depreciation and amortization	1,287		184		1,103		601.2	%
Total expenses	$	10,494	$	3,282	$	7,212	219.7	%

Interest expense. The increase is primarily attributable to the following factors: (i) $1.0 million is due to mortgages on the five multi-family residential properties acquired in fiscal 2012 and $297,000 on three properties acquired in the first quarter of fiscal 2013; (ii) $918,000 is due to the Newark Joint Venture’s financing transactions; and (iii) $178,000 is due to the increase in August 2012 of the interest rate on the junior subordinated notes from 3% to 4.9%.  We estimate that interest expense in fiscal 2013 attributable to our eight multi-family properties, the Newark Joint Venture’s 2012 financings and the junior subordinated notes, will be approximately  $12.2 million. Capitalized interest was $604,000 and $311,000 for the periods ended December 31, 2012 and 2011, respectively.

Advisor’s fees, related party.  The fee is calculated based on invested assets which increased primarily due to the purchase of eight multi-family properties over the last twelve months.

Property acquisition costs. The costs are primarily associated with the purchase of three multi-family properties in the quarter ended December 31, 2012. Such costs included acquisition fees to our joint venture partners, brokerage fees, and legal, due diligence and other transactional costs and expenses.

General and administrative.  The increase is due primarily to increased professional fees associated with recent joint venture activities, litigation relating to the recovery of funds on a loan that was charged off in a prior fiscal year and to the inclusion of the $50,000 fee payable quarterly to the chairman of our board of trustees.

Operating expenses relating to real estate properties.  The increase is due primarily to the acquisition, in the previous twelve months, of eight multi-family residential properties.

Depreciation and amortization.  The increase is due primarily to the acquisition in the previous twelve months.

Other revenue and expense items

Equity in earnings (loss) of unconsolidated ventures.  The increase is due primarily to the inclusion of  a loss in the quarter ended December 31, 2011 from the write off of capitalized costs related to a joint venture that ceased operations in November 2011.

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Gain on sale of loan. In October 2011, pursuant to a federal bankruptcy court approved plan of reorganization, we and our loan participant sold the rights to a loan, for net proceeds of approximately $23.5 million.  We recognized a $3.2 million gain on the sale, representing our 50% interest in this loan.

Discontinued operations

In the three months ended September 30, 2011, discontinued operations consisted of gain on the sale of one vacant cooperative apartment in New York City.  There were no discontinued operations in the quarter ended December 31, 2012.

Liquidity and Capital Resources

We require funds to acquire properties, fund loan originations, repay borrowings, pay operating expenses, and with respect to the Newark Joint Venture, to fund operating losses and a third development phase.  Our current sources of liquidity consist primarily of our cash and up to $10 million that we may borrow on an unsecured basis for up to 90 days pursuant to our credit facility. At December 31, 2012, our liquidity (excluding $49.6 million in restricted cash-construction holdback which is to be used by the Newark Joint Venture) was approximately $42.6 million.  At January 31, 2012 our liquidity was approximately $31 million, which consisted of $21 million of cash and $10 million available on the credit facility.

Multi-Family Residential Properties

We anticipate that the debt service that becomes payable during 2013 through 2015 for our eight multi-family properties and the operating expenses of these properties will be funded from the rental revenues generated therefrom. The mortgage debt with respect to these properties is non-recourse to (i) the joint venture that owns the property, subject to standard carve-outs and (ii) us and our subsidiary holding our interest in the joint venture.

Newark Joint Venture

The Newark Joint’s Venture’s current capital resource and liquidity requirements through September 2015 are primarily construction and related costs and debt service associated with the first and second phases of the Teacher’s Village project which contemplate the construction of five buildings. We anticipate that the construction and associated costs for these phases of the Teachers Village project will be funded by the $49.6 million reflected as restricted cash-construction holdback on our consolidated balance sheet, which funds are to be released to the venture from time to time upon satisfaction of specified construction and permitting related conditions.

We anticipate that the debt service payable from 2013 through 2015 and the estimated operating expenses for such years for the first and second phase of the Teacher’s Village project, will be paid from existing interest reserves, a US Treasury interest subsidy on the qualified school construction bonds, New Jersey tax credits, the refinancing of approximately $ 3.6 million of short term debt, funds generated from the operations of such properties and capital contributions from the members of the Newark Joint Venture.  After giving effect to the $2.4 million of rental revenues to be generated from the in-place lease agreements with the three charter schools and a day-care center, the Newark Joint Venture estimates that it will require at least an additional $7 million in rental payments from retail tenants and residential tenants at the Teachers Village buildings to cover debt service and operating expenses for 2014 and 2015. While the Newark Joint Venture has commenced marketing the retail space at these buildings, there is no assurance that the venture will be able to lease such space and that if leased, the rental payments therefrom and from rental revenues from the residential units (for which marketing has not commenced) will be sufficient to cover debt service and operating expenses.

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The Newark Joint Venture is currently seeking up to $30 million in financing from public and private sources to fund the third phase of the Teachers Village project.   This third phase contemplates the construction of up to three additional buildings containing a mix of residential and retail space.  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.

We believe we have sufficient funds to meet our operating expenses in 2013 and to fund any capital contributions required by the general operations of Newark Joint Venture and our multi-family properties. We also have funds available to engage in our lending business and to make property acquisitions. The extent of our ability to engage such activities is limited by our available cash and, in the case of loan origination activities, by our (i) ability to sell participating interests in such loans and (ii) ability or willingness to use our credit facility, and in the case of our multi-family property activities, the availability of mortgage debt to finance such acquisitions

Credit Facility

A subsidiary of ours is able, pursuant to a senior secured revolving credit facility, to borrow up to an aggregate of $25 million to originate loans. The subsidiary may borrow (i) on an unsecured basis, $10 million for up to 90 days and (ii) on a secured basis, up to 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 eligible mortgage receivables acceptable to the lender as collateral 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. The credit facility, among other things, requires us to maintain specified net worth and liquidity levels, requires the subsidiary to maintain specified debt service coverage and collateral coverage ratios, and limits our and our subsidiary’s ability to incur debt.

At each of December 31, 2012 and January 31, 2013, no amount was outstanding under the facility and the maximum amount we could borrow was $10 million for 90 days.

Cash Distribution Policy

At December 31, 2012, we had approximately $56 million of net operating loss carry forwards available to offset future income. It therefore is highly unlikely that we will pay or, to maintain our REIT status, be required to pay any dividend in 2013 and for several years thereafter.

Off Balance Sheet Arrangements

None.

25

Item 3.  Quantitative and Qualitative Disclosures About Market Risks

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 December 31, 2012, approximately 86% the principal amount of our outstanding mortgage loans were comprised of variable rate based loans tied to  the prime rate and with a stated minimum interest 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 December 31, 2012 and believe that a one percent increase in interest rates would have a positive annual effect of approximately $430,000 on income before taxes and a one percent decline in interest rates would have no annual effect on income before taxes because all of our variable rate loans have a stated minimum rate.

As of December 31, 2012, we had one interest rate swap agreement outstanding. The fair value of our interest rate swap is dependent upon existing market interest rates and swap spreads, which change over time. At December 31, 2012, if there had been a 1% increase in forward interest rates, the fair market value of the interest rate swap and net unrealized loss on derivative instrument would have increased by approximately $123,000. If there had been a 1% decrease in forward interest rates, the fair market value of the interest rate swap and net unrealized loss on derivative instrument would have decreased by approximately $120,000. These changes would not have any impact on our net income or cash.

Our mortgage debt (excluding a mortgage subject to an interest rate swap agreement) and our junior subordinated notes, bears interest at fixed rates and accordingly, the effect of changes in interest rates would not impact the amount of interest expense that we incur under such indebtedness.

As of December 31, 2012, 57% of our loan portfolio was secured by properties located in the New York metropolitan area, 21% in Georgia, 10% in Michigan and 12% in other states and we are therefore subject to risks associated with the economics in these areas.

Item 4.  Controls and Procedures

As required under Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, we carried out an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer, Senior Vice President-Finance and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2012.  Based upon that evaluation, the Chief Executive Officer, Senior Vice President-Finance and Chief Financial Officer concluded that our disclosure controls and procedures as of December 31, 2012 are effective.

There have been no changes in our internal control over financial reporting during the quarter ended December 31, 2012 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

26

Part II

Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds.

In September 2011, we announced that our Board of Trustees had authorized a share buyback plan pursuant to which we may, through September 2013, expend up to $2,000,000 to acquire our common shares.  There were no share purchases effected in the quarter ended December 31, 2012.

27

Item 6.  Exhibits

Exhibit  No.	Title of Exhibits
31.1	Certification of President and Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Senior Vice President—Finance pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.3	Certification of Vice President and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of President and Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Senior Vice President—Finance pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.3	Certification of Vice President and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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

28

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

BRT REALTY TRUST

(Registrant)

February 7, 2013	/s/ Jeffrey A. Gould
	Jeffrey A. Gould, President and
	Chief Executive Officer
February 7, 2013	/s/ George Zweier
	George Zweier, Vice President
	and Chief Financial Officer
	(principal financial officer)

29

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Jeffrey A. Gould, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q for the quarter ended December 31, 2012 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 control over financial reporting, to the registrant’s auditors and the audit committee of 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:  February 7, 2013
	/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 Quarterly Report on Form 10-Q for the quarter ended December 31, 2012 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 control over financial reporting, to the registrant’s auditors and the audit committee of 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:  February 7, 2013	/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 Quarterly Report on Form 10-Q for the quarter ended December 31, 2012 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 control over financial reporting, to the registrant’s auditors and the audit committee of 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:  February 7, 2013
	/s/ George Zweier
	George Zweier
	Vice President and
	Chief Financial 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)

I, Jeffrey A. Gould, do hereby certify, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge, based upon a review of the Quarterly Report on Form 10-Q for the quarter ended December 31, 2012 of BRT Realty Trust (“the Registrant”), as filed with the Securities and Exchange Commission on the date hereof (the “Report”):

(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:  February 7, 2013	/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)

I, David W. Kalish, do hereby certify, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge, based upon a review of the Quarterly Report on Form 10-Q for the quarter ended December 31, 2012 of BRT Realty Trust (“the Registrant”), as filed with the Securities and Exchange Commission on the date hereof (the “Report”):

(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:  February 7, 2013	/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)

I, George Zweier, do hereby certify, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge, based upon a review of the Quarterly Report on Form 10-Q for the quarter ended December 31, 2012 of BRT Realty Trust (“the Registrant”), as filed with the Securities and Exchange Commission on the date hereof (the “Report”):

(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:  February 7, 2013	/s/ George Zweier
	George Zweier
	Vice President and
	Chief Financial Officer

XML

Debt Obligations (Details2) (USD $)	3 Months Ended
	Dec. 31, 2012	Sep. 30, 2012
Debt Obligations
Total debt obligations	$ 252,210,000	$ 206,684,000
Mortgages Payable
Debt Obligations
Total debt obligations	214,810,000	169,284,000
Mortgages payable maturing in April 2022 | Yonkers, NY
Debt Obligations
Total debt obligations	1,932,000	1,954,000
Interest rate (as a percent)	5.25%
Mortgages payable maturing in April 2019 | Palm Beach Gardens, FL
Debt Obligations
Total debt obligations	45,200,000	45,200,000
Interest rate (as a percent)	3.78%
Mortgages payable maturing in April 2019 | Melbourne, FL
Debt Obligations
Total debt obligations	7,680,000	7,680,000
Interest rate (as a percent)	3.98%
Mortgages payable maturing in February 2015 | Marietta, GA
Debt Obligations
Total debt obligations	7,443,000	6,462,000
Interest rate (as a percent)	6.50%
Mortgages payable maturing in March 2022 | Lawrenceville, GA
Debt Obligations
Total debt obligations	4,687,000	4,687,000
Interest rate (as a percent)	4.49%
Mortgages payable maturing in July 2022 | Collierville, TN
Debt Obligations
Total debt obligations	25,680,000	25,680,000
Interest rate (as a percent)	3.91%
Mortgages payable maturing in November 2022 | North Charleston, SC
Debt Obligations
Total debt obligations	17,716,000
Interest rate (as a percent)	3.79%
Mortgages payable maturing in December 2022 | Cordova, TN
Debt Obligations
Total debt obligations	19,248,000
Interest rate (as a percent)	3.71%
Mortgages payable maturing in December 2022 | Decatur, GA
Debt Obligations
Total debt obligations	8,046,000
Interest rate (as a percent)	3.74%
Mortgages payable maturing in January 2015 | 65 Market St - Newark, NJ
Debt Obligations
Total debt obligations	900,000	900,000
Interest rate (as a percent)	7.00%
Mortgages payable maturing in August 2030 | 909 Broad St - Newark, NJ
Debt Obligations
Total debt obligations	6,084,000	6,132,000
Interest rate (as a percent)	6.00%
Mortgages payable maturing in December 2030 | Teachers Village - Newark, NJ
Debt Obligations
Total debt obligations	22,748,000	22,748,000
Interest rate (as a percent)	5.50%
Mortgages payable maturing in December 2030 | Teachers Village - Newark, NJ | Primary beneficiary | RBH-TRB Newark Holdings LLC | Subsidiaries
Debt Obligations
Interest rate (as a percent)	5.50%
Interest covered by United States Treasury Department (as a percent)	4.99%
Effective interest rate (as a percent)	0.51%
Mortgages payable maturing in February 2032 | Teachers Village - Newark, NJ
Debt Obligations
Total debt obligations	4,250,000	4,250,000
Interest rate (as a percent)	3.46%
Mortgages payable maturing in February 2022 | Teachers Village - Newark, NJ
Debt Obligations
Total debt obligations	979,000	988,000
Interest rate (as a percent)	2.00%
Mortgages payable maturing in February 2014 | Teachers Village - Newark, NJ
Debt Obligations
Total debt obligations	994,000	1,380,000
Interest rate (as a percent)	2.50%
Mortgages payable maturing in February 2034 | Teachers Village - Newark, NJ
Debt Obligations
Total debt obligations	1,832,000	1,832,000
Mortgages payable maturing in February 2034 | Teachers Village - Newark, NJ | Primary beneficiary | RBH-TRB Newark Holdings LLC | Subsidiaries
Debt Obligations
Bonds serviced in full by annual PILOT	256,000
Bonds serviced in full by annual PILOT at maturity	281,000
Mortgages payable maturing in March 2013 | Teachers Village - Newark, NJ
Debt Obligations
Total debt obligations	2,738,000	2,738,000
Interest rate (as a percent)	17.00%
Mortgages payable maturing in March 2013 | Teachers Village - Newark, NJ | Primary beneficiary | RBH-TRB Newark Holdings LLC | Subsidiaries | Guarantee
Debt Obligations
Guaranteed obligations		685,000
Mortgages payable maturing in August 2019 | Teachers Village - Newark, NJ
Debt Obligations
Total debt obligations	15,700,000	15,700,000
Reference rate	LIBOR
Margin interest above reference rate (as a percent)	3.00%
Mortgages payable maturing in September 2042 | Teachers Village - Newark, NJ
Debt Obligations
Total debt obligations	5,250,000	5,250,000
Interest rate (as a percent)	3.28%
Mortgages payable maturing in December 2023 | Teachers Village - Newark, NJ
Debt Obligations
Total debt obligations	13,491,000	13,491,000
Interest rate (as a percent)	8.65%
Mortgages payable maturing in August 2034 | Teachers Village - Newark, NJ
Debt Obligations
Total debt obligations	2,212,000	2,212,000
Mortgages payable maturing in August 2034 | Teachers Village - Newark, NJ | Primary beneficiary | RBH-TRB Newark Holdings LLC | Subsidiaries
Debt Obligations
Bonds serviced in full by annual PILOT	311,000
Bonds serviced in full by annual PILOT at maturity	$ 344,000

XML

Real Estate Properties (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Dec. 31, 2012	Dec. 31, 2012 Shopping centers/Retail	Dec. 31, 2012 Coop condo Apts	Dec. 31, 2012 Commercial / mixed use Primary beneficiary RBH-TRB Newark Holdings LLC	Dec. 31, 2012 Multi Family	Dec. 31, 2012 Land	Sep. 30, 2012 Land
Movement in real estate properties owned
Balance at the beginning of the period	$ 190,317	$ 2,749	$ 250	$ 61,808	$ 117,538	$ 7,972	$ 7,972
Additions	57,400				57,400
Costs Capitalized and Improvements	8,995			7,997	998
Depreciation, Amortization and other Reductions	(1,290)	(26)	(7)	(153)	(1,104)
Balance at the end of the period	$ 255,422	$ 2,723	$ 243	$ 69,652	$ 174,832	$ 7,972	$ 7,972

XML

Real Estate Loans (Tables)

3 Months Ended

Dec. 31, 2012

Real Estate Loans

Schedule of real estate loans earning interest

Information relating to real estate loans, all of which are earning interest, is summarized as follows (dollars in thousands):

	December 31, 2012					September 30, 2012
Property Type	Real EstateLoans			Percent		Real EstateLoans			Percent
Multi-family residential	$	31,283		45	%	$	35,096		95	%
Hotel	15,695			22	%	—			—
Parking facility	14,269			20	%	—			—
Retail	10,010			13	%	2,000			5
	71,257			100	%	37,096			100	%
Deferred fee income	(1,056		)			(512		)
Real estate loans, net	$	70,201				$	36,584

Schedule of loans outstanding in excess of 10% of total assets

At December 31, 2012, three separate borrowers had three loans outstanding that in the aggregate were in excess of 10% of total loans. Information regarding these loans are set forth in the table below (dollars in thousands):

Property Type	Gross Loan Balance		% of Gross Loans		% of Assets		State	Status
Multi-Family	$	14,734	20.7	%	3.4	%	GA	Performing
Parking Facility	$	14,269	20.0	%	3.3	%	NY	Performing
Hotels	$	14,100	19.8	%	3.3	%	NY	Performing

XML

Fair Value of Financial Instruments (Details) (USD $)	0 Months Ended
	Dec. 31, 2012
Market valuation | Real estate loans
Financial Instruments Not Measured at Fair Value
Fixed market rate of interest (as a percent)	12.00%
Market valuation | Real estate loans | Minimum
Financial Instruments Not Measured at Fair Value
Variable market interest rate (as a percent)	12.00%
Market valuation | Real estate loans | Maximum
Financial Instruments Not Measured at Fair Value
Variable market interest rate (as a percent)	12.50%
Market valuation | Junior subordinated notes
Financial Instruments Not Measured at Fair Value
Market interest rate (as a percent)	6.30%
Market valuation | Mortgages Payable | Minimum
Financial Instruments Not Measured at Fair Value
Market interest rate (as a percent)	3.12%
Market valuation | Mortgages Payable | Maximum
Financial Instruments Not Measured at Fair Value
Market interest rate (as a percent)	17.00%
Estimated fair value | Real estate loans
Financial Instruments Not Measured at Fair Value
Estimated fair value greater than carrying value	$ 11,000
Estimated fair value | Junior subordinated notes
Financial Instruments Not Measured at Fair Value
Estimated fair value higher (lower) than carrying value	20,300,000
Estimated fair value | Mortgages Payable
Financial Instruments Not Measured at Fair Value
Estimated fair value higher (lower) than carrying value	$ 2,530,000

XML

Available-For-Sale Securities (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Sep. 30, 2012
Available-for-sale securities
Market value	$ 1,226	$ 1,249
Equity securities
Available-for-sale securities
Cost basis	789	789
Unrealized gains	477	499
Unrealized losses	(40)	(39)
Fair value on a recurring basis | Level 1 | Equity securities
Available-for-sale securities
Market value	$ 1,226	$ 1,249

XML

Organization and Background

3 Months Ended

Dec. 31, 2012

Organization and Background

Organization and Background

Note 1 — Organization and Background

BRT Realty Trust (“BRT” or the “Trust”) is a business trust organized in Massachusetts.  BRT (i) originates and holds for investment senior mortgage loans secured by commercial and multi-family real estate property in the United States, (ii) began participating, in fiscal 2012, as an equity investor in joint ventures that own and operate multi-family properties and (iii) owns and operates commercial and mixed use real estate assets, and in particular, development properties located in Newark, New Jersey.

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, with up to a one year extension in certain cases. Our policy is 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.

The Trust generally contributes 80% of the equity in each multi-family property acquisition.

The Trust conducts its operations to qualify as a real estate investment trust, or REIT, for federal income tax purposes.

XML

Fair Value of Financial Instruments (Details 2) (Fair value on a recurring basis, USD $) In Thousands, unless otherwise specified	Dec. 31, 2012
Carrying and Fair Value | Interest rate cap
Financial Instruments Measured at Fair Value: Available-for-sale securities - (Corporate equity securities)
Derivative financial instruments	$ 5
Carrying and Fair Value | Interest rate swap
Financial Instruments Measured at Fair Value: Available-for-sale securities - (Corporate equity securities)
Derivative financial instruments	93
Carrying and Fair Value | Corporate equity securities
Financial Instruments Measured at Fair Value: Available-for-sale securities - (Corporate equity securities)
Available-for-sale securities	1,226
Level 1 | Corporate equity securities
Financial Instruments Measured at Fair Value: Available-for-sale securities - (Corporate equity securities)
Available-for-sale securities	1,226
Level 2 | Interest rate cap
Financial Instruments Measured at Fair Value: Available-for-sale securities - (Corporate equity securities)
Derivative financial instruments	5
Level 2 | Interest rate swap
Financial Instruments Measured at Fair Value: Available-for-sale securities - (Corporate equity securities)
Derivative financial instruments	$ 93

XML

Fair Value of Financial Instruments (Tables)

3 Months Ended

Dec. 31, 2012

Fair Value of Financial Instruments

Schedule of financial assets measured at fair value

Set forth below is information regarding the Trust’s financial assets measured at fair value as of December 31, 2012 (dollars in thousands):

	Carrying and		Fair Value Measurements Using Fair Value Hierarchy
	Fair Value		Level 1		Level 2
Financial Assets:
Available-for-sale equity securities	$	1,226	$	1,226	—
Interest rate cap	5		—		$	5
Financial Liabilities:
Interest rate swap	$	93	—		$	93

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Segment Reporting (Tables)

3 Months Ended

Dec. 31, 2012

Segment Reporting

Schedule of segment reporting

The following table summarizes our segment reporting for the periods indicated (dollars in thousands):

	Three Months Ended December 31, 2012
	Loan and Investment		Multi- Family Real Estate			Other Real Estate			Total
Rental and other revenues from real estate properties	—		$	4,950		$	690		$	5,640
Interest and loan fee income	$	1,879	––			––			1,879
Other income	442					290			732
Total revenues	2,321		4,950			980			8,251
Interest expense	357		1,487			1,102			2,946
Advisors fee, related party	186		134			54			374
General and administrative expenses	1,285		396			182			1,863
Property acquisition costs	—		878			—			878
Operating expenses relating to real estate properties	—		2,300			846			3,146
Depreciation and amortization	—		1,104			183			1,287
Total expenses	1,828		6,299			2,367			10,494
Total revenues less total expenses	493		(1,349		)	(1,387		)	(2,243		)
Equity in earnings of unconsolidated ventures	—		—			61			61
Income (loss) from continuing operations	493		(1,349		)	(1,326		)	(2,182		)
Plus: net loss attributable to non-controlling interests	—		111			767			878
Net income (loss) attributable to common shareholders	$	493	$	(1,238	)	$	(559	)	$	(1,304	)
Segment assets at December 31, 2012	$	102,255	$	183,485		$	146,603		$	432,343

The following table summarizes our segment reporting for the periods indicated (dollars in thousands):

	Three Months Ended December 31, 2011
	Loan and Investment			Real Estate			Total
Interest and loan fee income	$	2,252		—			$	2,252
Rental and other revenues from real estate properties	––			$	768		768
Other income	134			––			134
Total revenues	2,386			768			3,154
Interest expense	275			192			467
Advisors fees, related party	84			87			171
General and administrative and other expenses	1,426			248			1,674
Operating expenses related to real estate properties	—			786			786
Depreciation and amortization	—			184			184
Total expenses	1,785			1,497			3,282
Total revenues less total expenses	601			(729		)	(128		)
Equity in (loss) earnings of unconsolidated ventures	(142		)	67			(75		)
Loss on sale of available-for-sale securities	(18		)				(18		)
Gain on sale of loan	3,192			—			3,192
Income (loss) from continuing operations	3,633			(662		)	2,971
Discontinued operations:
Gain on sale of real estate assets	—			490			490
Net income (loss)	3,633			(172		)	3,461
Plus net loss attributable to non-controlling interests				413			413
Net income attributable to common shareholders	3,633			241			3,874
Segment assets at December 31, 2011	$	129,867		$	68,435		$	198,302

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Derivative Financial Instruments (Details) (USD $)	3 Months Ended
	Dec. 31, 2012	Dec. 31, 2012 Interest Rate Swap	Dec. 31, 2012 Derivative designated as a cash flow hedge Interest Rate Swap	Sep. 30, 2012 Derivative designated as a cash flow hedge Interest Rate Swap
Interest rate derivative that designated as a cash flow hedge of interest rate risk
Notional amount		$ 1,954,000
Rate (as a percent)		5.25%
Fair value of derivative financial instrument
Other Assets			5,000	10,000
Accounts payable and accrued liabilities			93,000	104,000
Effect of derivative financial instrument on the consolidated statements of comprehensive (loss) income
Amount of gain recognized on derivative in other comprehensive income	2,000
Amount of loss reclassified from Accumulated Other Comprehensive Income into Interest Expense	(9,000)
Estimated amount to be reclassified from other comprehensive income as an increase to interest expense	36,000
Credit-risk-related Contingent Features
Fair value of the derivative in a net liability position	93,000
Termination value for settlement of obligation	$ 93,000

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Derivative Financial Instruments (Tables)

3 Months Ended

Dec. 31, 2012

Derivative Financial Instruments

Schedule of outstanding interest rate derivative that designated as a cash flow hedge of interest rate risk

As of December 31, 2012, the Trust had the following outstanding interest rate derivative that was designated as a cash flow hedge of interest rate risk (dollars in thousands):

Interest Rate Derivative	Notional		Rate		Maturity
Interest Rate Swap	$	1,954	5.25	%	April 1, 2022

Schedule of fair value of derivative financial instrument as well as its classification on the consolidated balance sheets

The table below presents the fair value of the Trust’s derivative financial instrument as well as its classification on the consolidated balance sheets as of the dates indicated (amounts in thousands):

Liability Derivatives as of:

December 31, 2012			September 30, 2012
Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Other Assets	$	5	Other assets	$	10
Accounts payable and accrued liabilities	$	93	Accounts payable and accrued liabilities	$	104

Schedule of effect of derivative financial instrument on the consolidated statements of comprehensive income (loss)

The following table presents the effect of the Trust’s derivative financial instrument on the consolidated statements of comprehensive (loss) income for the three months ended December 31, 2012 (dollars in thousands):

	Three Months Ended December 31, 2012
Amount of gain recognized on derivative in Other Comprehensive Income	$	2
Amount of loss reclassified from Accumulated Other Comprehensive Income into Interest Expense	$	(9	)

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Organization and Background (Details)	3 Months Ended
	Dec. 31, 2012
Minimum
Organization, background and significant accounting policies
Duration of short-term or bridge loans originated	6 months
Maximum
Organization, background and significant accounting policies
Duration of short-term or bridge loans originated	1 year
Extended duration of short-term or bridge loans originated	1 year
Multi Family | Purchase of properties
Organization, background and significant accounting policies
Equity contribution in multi-family residential real estate joint ventures (as a percent)	80.00%

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Cash flows from operating activities:
Net (loss) income	$ (2,182)	$ 3,461
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Recovery of previously provided allowances	(422)	(7)
Amortization and depreciation	1,683	264
Amortization of deferred fee income	(333)	(320)
Amortization of restricted stock	193	210
Gain on sale of real estate assets from discontinued operations		(490)
Gain on sale of available-for-sale securities		18
Gain on sale of loan		(3,192)
Equity in (loss) earnings of unconsolidated joint ventures	(61)	75
Distribution of earnings of unconsolidated joint ventures	45	123
Change in straight-line rent	3	12
Increases and decreases from changes in other assets and liabilities:
(Increase) decrease in interest and dividends receivable	(44)	243
(Increase) decrease in prepaid expenses	(406)	178
Decrease in prepaid interest	814
Increase (decrease) in accounts payable and accrued liabilities	376	(204)
(Increase) decrease in deferred costs	(152)	13
Increase (decrease) in security deposits and other receivable	567	(15)
Other	214	(2)
Net cash provided by operating activities	295	367
Cash flows from investing activities:
Collections from real estate loans	8,657	51,682
Additions to real estate loans	(42,818)	(25,457)
Loan loss recoveries	422	7
Additions to real estate properties	(57,400)
Net costs capitalized to real estate owned	(8,791)	(792)
Net change in restricted cash - construction holdbacks	5,655
Collection of loan fees	877	625
Proceeds from sale of real estate owned	6	507
Proceeds from sale of available-for-sale securities		556
Purchase of available for sale securities		(1,030)
Distributions of capital from unconsolidated joint ventures		3,035
Net cash (used in) provided by investing activities	(93,392)	29,133
Cash flows from financing activities:
Increase in mortgages payable	46,010	4,282
Mortgage principal payments	(484)	(70)
Increase in deferred borrowing costs	(558)	(381)
Capital contributions from non-controlling interests	2,894
Capital distribution to non-controlling interests	(397)
Repurchase of shares of beneficial interest		(767)
Net cash provided by financing activities	47,465	3,064
Net (decrease) increase in cash and cash equivalents	(45,632)	32,564
Cash and cash equivalents at beginning of period	78,245	44,025
Cash and cash equivalents at end of period	32,613	76,589
Supplemental disclosure of cash flow information:
Cash paid during the period for interest	2,316	109
Taxes paid	$ 3

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Equity (Details) (USD $)	3 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Per Share Data
Basic and diluted shares outstanding	14,053,362	13,982,164
Restricted Shares
Restricted Shares
Compensation expense	193,000	210,000
Unearned compensation	1,677,000
Remaining weighted average vesting period	2 years 6 months
2012 Incentive Plan
Restricted Shares
Maximum number of shares which may be issued	600,000
Prior Plans | Restricted Shares
Restricted Shares
Number of shares granted	580,180
Vesting period for shares issued	5 years

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Deferred Income (New Markets Tax Credit Transaction) (Details) (USD $)			12 Months Ended				1 Months Ended		12 Months Ended			12 Months Ended
	Dec. 31, 2012	Sep. 30, 2012	Sep. 30, 2012 New Markets Tax Credit Transaction	Dec. 31, 2012 New Markets Tax Credit Transaction	Dec. 31, 2012 Primary beneficiary NMTC program special-purpose entity New Markets Tax Credit Transaction	Sep. 30, 2012 Primary beneficiary NMTC program special-purpose entity New Markets Tax Credit Transaction	Sep. 30, 2012 Primary beneficiary Investor NMTC program special-purpose entity New Markets Tax Credit Transaction	Feb. 29, 2012 Primary beneficiary Investor NMTC program special-purpose entity New Markets Tax Credit Transaction	Sep. 30, 2012 Primary beneficiary Investor NMTC program special-purpose entity New Markets Tax Credit Transaction	Dec. 31, 2012 Primary beneficiary RBH-TRB Newark Holdings LLC Subsidiaries New Markets Tax Credit Transaction	Sep. 30, 2012 Primary beneficiary RBH-TRB Newark Holdings LLC Subsidiaries New Markets Tax Credit Transaction	Sep. 30, 2012 Primary beneficiary RBH-TRB Newark Holdings LLC Subsidiaries NMTC program special-purpose entity
Deferred Income (New Markets Tax Credit Transaction)
Maximum percentage of qualified investment permitted in NMTC to claim credits against Federal income tax				39.00%
Amount contributed to effect financing transaction							$ 16,400,000	$ 11,200,000
Period over which tax credits is receivable									7 years
Period after which option to acquire special purpose entity may be exercised												7 years
Deferred income	25,848,000	25,848,000			25,848,000	25,848,000
Recapture period			7 years
Deferred costs, net	$ 12,449,000	$ 12,337,000								$ 9,800,000	$ 10,100,000

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CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Sep. 30, 2012
ASSETS
Real estate properties net of accumulated depreciation and amortization of $6,072 and $4,787	$ 255,422	$ 190,317
Real estate loans, all earning interest	71,257	37,096
Deferred fee income	(1,056)	(512)
Real estate loans, net	70,201	36,584
Cash and cash equivalents	32,613	78,245
Restricted cash - construction holdbacks	49,597	55,252
Available-for-sale securities at fair value	1,226	1,249
Deferred costs, net	12,449	12,337
Prepaid expenses	5,110	5,978
Other assets	5,725	5,994
Total Assets	432,343	385,956
Liabilities:
Mortgages payable	214,810	169,284
Junior subordinated notes	37,400	37,400
Accounts payable and accrued liabilities	4,611	4,298
Deposits payable	2,160	2,108
Deferred income	25,848	25,848
Total Liabilities	284,829	238,938
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, 13,473 issued in both periods	40,420	40,420
Additional paid-in capital	165,451	165,258
Accumulated other comprehensive income	344	356
Accumulated deficit	(73,889)	(72,585)
Total BRT Realty Trust shareholders' equity	132,326	133,449
Non-controlling interests	15,188	13,569
Total Equity	147,514	147,018
Total Liabilities and Equity	$ 432,343	$ 385,956

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
Net (loss) income	$ (2,182)	$ 3,461
Other comprehensive income:
Net unrealized (loss) gain on available-for-sale securities	(23)	377
Unrealized gain on derivative instruments	11
Other comprehensive (loss) income	(12)	377
Comprehensive loss	(2,194)	3,838
Comprehensive income (loss) attributable to non-controlling interests	2
Comprehensive (loss) income attributable to common shareholders	$ (2,192)	$ 3,838

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Real Estate Loans (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Sep. 30, 2012
Real Estate Loans
Real Estate Loans, gross	$ 71,257	$ 37,096
Deferred fee income	(1,056)	(512)
Real estate loans, net	70,201	36,584
Percentage of real estate loans, all earning interest	100.00%	100.00%
Multi-family residential
Real Estate Loans
Real Estate Loans, gross	31,283	35,096
Percentage of real estate loans, all earning interest	45.00%	95.00%
Hotel
Real Estate Loans
Real Estate Loans, gross	15,695
Percentage of real estate loans, all earning interest	22.00%
Parking facility
Real Estate Loans
Real Estate Loans, gross	14,269
Percentage of real estate loans, all earning interest	20.00%
Retail
Real Estate Loans
Real Estate Loans, gross	$ 10,010	$ 2,000
Percentage of real estate loans, all earning interest	13.00%	5.00%

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Subsequent Events

3 Months Ended

Dec. 31, 2012

Subsequent Events

Subsequent Events

Note 14 — Subsequent Events

Subsequent events have been evaluated and any significant events, relative to our consolidated financial statements as of December 31, 2012 that warrant additional disclosure, have been included in the notes to the consolidated financial statements

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Real Estate Loans (Details 2) (USD $)										3 Months Ended
	Dec. 31, 2012	Sep. 30, 2012	Dec. 31, 2012 First Mortgage Loans	Dec. 05, 2012 First Mortgage Loans	Dec. 31, 2012 First Mortgage Loans Gould Investors	Dec. 31, 2012 Multi Family	Sep. 30, 2012 Multi Family	Dec. 31, 2012 Hotel	Dec. 31, 2012 Parking facility	Dec. 31, 2012 Real estate loan concentration Multi Family Georgia Performing	Dec. 31, 2012 Real estate loan concentration Hotel New York Performing	Dec. 31, 2012 Real estate loan concentration Parking facility New York Performing	Dec. 31, 2012 Geographic concentration Multi Family Georgia Performing	Dec. 31, 2012 Geographic concentration Hotel New York Performing	Dec. 31, 2012 Geographic concentration Parking facility New York Performing	Dec. 31, 2012 Total assets Real estate loan concentration item	Dec. 31, 2012 Real properties Geographic concentration Georgia Senior mortgage loans	Dec. 31, 2012 Real properties Geographic concentration New York Senior mortgage loans	Dec. 31, 2012 Real properties Geographic concentration Maryland Senior mortgage loans	Dec. 31, 2012 Real properties Geographic concentration Other states Senior mortgage loans item
Loans outstanding in excess of 10%
Number of borrowers with loans outstanding in excess of 10% of total loans																3
Number of loans outstanding in excess of 10% of total assets																3
Threshold For Disclosure Percentage																10.00%
Gross Loan Balance	$ 71,257,000	$ 37,096,000				$ 31,283,000	$ 35,096,000	$ 15,695,000	$ 14,269,000	$ 14,734,000	$ 14,100,000	$ 14,269,000
Percentage of total loans										20.70%	19.80%	20.00%	3.40%	3.30%	3.30%		21.00%	57.00%	10.00%	12.00%
Number of other states in which loans secured by real properties were located																				3
Gross amount of loan originated				21,174,000
Purchased pari passu participation in the loan by related party					6,905,000
Interest retained			$ 14,269,000

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Real Estate Properties (Tables)

3 Months Ended

Dec. 31, 2012

Real Estate Properties

Schedule of real estate properties owned

A summary of real estate properties owned is as follows (dollars in thousands):

	September 30, 2012 Balance		Additions		Costs Capitalized and Improvements		Depreciation, Amortization and other reductions			December 31, 2012 Balance
Shopping centers/Retail	$	2,749	—		—		$	(26	)	$	2,723
Coop condo apartments	250		—		—		(7		)	243
Commercial / mixed use (a)	61,808		—		$	7,997	(153		)	69,652
Multi Family (b)	117,538		$	57,400	998		(1,104		)	174,832
Land	7,972		—		—		—			7,972
Total real estate properties	$	190,317	$	57,400	$	8,995	$	(1,290	)	$	255,422

a)  Represents the real estate assets of the Newark Joint Venture, a consolidated VIE which owns operating and development properties in Newark, NJ.  These properties contain a mix of office, retail space, charter schools and surface parking.  Certain of these assets are subject to  blanket  mortgages  aggregating $20,100,000,  held  by  the  Trust,  which  are  eliminated  in consolidation.  Several of the assets are also encumbered by other mortgages which are discussed in Note 8 Debt Obligations — Mortgages Payable.

b)  In the quarter ended December 31, 2012, the Trust purchased through consolidated joint ventures in which the Trust has an 80% or 90% equity interest, the following multi-family properties (dollars in thousands):

Location	Purchase Date	Number of Units	Contract Purchase Price		Acquisition Mortgage Debt		BRT Equity		Property AcquisitionCosts
North Charleston, SC	10/4/12	208	$	21,500	$	17,716	$	4,410	$	213
Cordova, TN	11/15/12	464	25,450		19,248		6,220		386
Decatur, GA	11/19/12	212	10,450		8,046		3,396		231
		884	$	57,400	$	45,010	$	14,026	$	830

Schedule of information regarding the Trust purchased joint ventures in which the Trust has an 80 to 90% equity interest

In the quarter ended December 31, 2012, the Trust purchased through consolidated joint ventures in which the Trust has an 80% or 90% equity interest, the following multi-family properties (dollars in thousands):

Location	Purchase Date	Number of Units	Contract Purchase Price		Acquisition Mortgage Debt		BRT Equity		Property AcquisitionCosts
North Charleston, SC	10/4/12	208	$	21,500	$	17,716	$	4,410	$	213
Cordova, TN	11/15/12	464	25,450		19,248		6,220		386
Decatur, GA	11/19/12	212	10,450		8,046		3,396		231
		884	$	57,400	$	45,010	$	14,026	$	830

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CONSOLIDATED STATEMENT OF EQUITY (USD $) In Thousands, unless otherwise specified	Total	Shares of Beneficial Interest	Additional Paid-In Capital	Accumulated Other Comprehensive Income	Accumulated Deficit	Non-Controlling Interest	Comprehensive Ioss
Balances at Sep. 30, 2012	$ 147,018	$ 40,420	$ 165,258	$ 356	$ (72,585)	$ 13,569
Increase (Decrease) in Stockholders' Equity
Compensation expense - restricted stock	193		193
Contributions from non-controlling interests	2,894					2,894
Distributions to non-controlling interests	(397)					(397)
Net loss	(2,182)				(1,304)	(878)	(2,182)
Other comprehensive loss	(12)			(12)			(12)
Comprehensive loss	(2,194)						(2,194)
Balances at Dec. 31, 2012	$ 147,514	$ 40,420	$ 165,451	$ 344	$ (73,889)	$ 15,188

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CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Dec. 31, 2012	Sep. 30, 2012
CONSOLIDATED BALANCE SHEETS
Real estate properties, accumulated depreciation (in dollars)	$ 6,072	$ 4,787
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	13,473	13,473

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Deferred Income (New Markets Tax Credit Transaction)

3 Months Ended

Dec. 31, 2012

Deferred Income (New Markets Tax Credit Transaction)

Deferred Income (New Markets Tax Credit Transaction)

Note 9 — Deferred Income (New Markets Tax Credit Transaction)

On September 11, 2012 and February 3, 2012 special purpose subsidiaries of the Newark Joint Venture entered into transactions with affiliates of Goldman Sachs (“Goldman”) related to the Teacher’s Village project and received proceeds related to NMTC’s the project qualified for. The NMTC program was enacted by Congress to serve low-income and distressed communities by providing investors with tax credit incentives to make capital investments in those communities. The program permits taxpayers to claim credits against their Federal income tax for up to 39% of qualified investments.

Goldman contributed $16,400,000 and $11,200,000 to the projects through special-purpose entities created to effect the financing transaction and is entitled to receive tax credits against its qualified investment in the project over the next seven years. At the end of the seven years, the Newark Joint Venture subsidiaries have the option to acquire the special purpose entities for a nominal fee and it is anticipated that they will exercise this option.

Included in deferred income on the Trust’s consolidated balance sheet at December 31, 2012 and September 30, 2012 is $25,848,000 of the Goldman contribution, which is net of fees. This amount will be recognized into income when the obligation to comply with the requirements of the NMTC program as set forth in the applicable provisions of the Internal Revenue Code of 1986, as amended (the “Code”), is eliminated. Risks of non-compliance include recapture (i.e. reversal of the benefit of the tax credit and the related indemnity obligation of the Newark Joint Venture). The tax credits are subject to recapture for a seven year period as provided in the Code.

Costs incurred in structuring these transactions are deferred and will be recognized as an expense based on the maturities of the various mortgage financings related to the NMTC transaction.  At December 31, 2012 and September 30, 2012 these costs totaled $9.8 million and $10.1 million, respectively.

The Trust determined that these special purpose entities are VIE’s. The VIE’s ongoing activities, which include collecting and remitting interest and fees and NMTC compliance, were all considered in the design of the special purpose entities and are not anticipated to affect the economic performance during the life of the VIE’s.

Management considered the obligation to deliver tax benefits and provide guarantees to Goldman and the Trust’s obligations to absorb the losses of the VIE. Management also considered Goldman’s lack of a material interest in the underlying economics of the project. Management concluded that the Trust is the primary beneficiary and has therefore consolidated the VIE’s.

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Document and Entity Information	3 Months Ended
	Dec. 31, 2012	Feb. 05, 2013
Document and Entity Information
Entity Registrant Name	BRT REALTY TRUST
Entity Central Index Key	0000014846
Document Type	10-Q
Document Period End Date	Dec. 31, 2012
Amendment Flag	false
Current Fiscal Year End Date	--09-30
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		14,191,887
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q1

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Segment Reporting

3 Months Ended

Dec. 31, 2012

Segment Reporting

Segment Reporting

Note 10 - Segment Reporting

Management has determined that it operates in three reportable segments: (i) a loan and investment segment which includes the origination and servicing of our loan portfolio and its investments, (ii) a multi-family property segment which includes the ownership and operation of its multi-family properties; and (iii) a commercial and mixed use real estate segment which includes the operation and disposition of the Trust’s other real estate assets and in particular, the Newark Joint Venture.  Due to the addition of the multi-family properties in fiscal 2012 and 2013, the Trust changed the manner in which general and administrative expenses and general corporate debt is allocated to the segments.  Management determined it would be more appropriate to allocate these expenses based on the amount of equity invested rather than on the total assets of each segment as was previously done.  The prior period has been changed to reflect the new allocation of these expenses.

The following table summarizes our segment reporting for the periods indicated (dollars in thousands):

	Three Months Ended December 31, 2012
	Loan and Investment		Multi- Family Real Estate			Other Real Estate			Total
Rental and other revenues from real estate properties	—		$	4,950		$	690		$	5,640
Interest and loan fee income	$	1,879	––			––			1,879
Other income	442					290			732
Total revenues	2,321		4,950			980			8,251
Interest expense	357		1,487			1,102			2,946
Advisors fee, related party	186		134			54			374
General and administrative expenses	1,285		396			182			1,863
Property acquisition costs	—		878			—			878
Operating expenses relating to real estate properties	—		2,300			846			3,146
Depreciation and amortization	—		1,104			183			1,287
Total expenses	1,828		6,299			2,367			10,494
Total revenues less total expenses	493		(1,349		)	(1,387		)	(2,243		)
Equity in earnings of unconsolidated ventures	—		—			61			61
Income (loss) from continuing operations	493		(1,349		)	(1,326		)	(2,182		)
Plus: net loss attributable to non-controlling interests	—		111			767			878
Net income (loss) attributable to common shareholders	$	493	$	(1,238	)	$	(559	)	$	(1,304	)
Segment assets at December 31, 2012	$	102,255	$	183,485		$	146,603		$	432,343

The following table summarizes our segment reporting for the periods indicated (dollars in thousands):

	Three Months Ended December 31, 2011
	Loan and Investment			Real Estate			Total
Interest and loan fee income	$	2,252		—			$	2,252
Rental and other revenues from real estate properties	––			$	768		768
Other income	134			––			134
Total revenues	2,386			768			3,154
Interest expense	275			192			467
Advisors fees, related party	84			87			171
General and administrative and other expenses	1,426			248			1,674
Operating expenses related to real estate properties	—			786			786
Depreciation and amortization	—			184			184
Total expenses	1,785			1,497			3,282
Total revenues less total expenses	601			(729		)	(128		)
Equity in (loss) earnings of unconsolidated ventures	(142		)	67			(75		)
Loss on sale of available-for-sale securities	(18		)				(18		)
Gain on sale of loan	3,192			—			3,192
Income (loss) from continuing operations	3,633			(662		)	2,971
Discontinued operations:
Gain on sale of real estate assets	—			490			490
Net income (loss)	3,633			(172		)	3,461
Plus net loss attributable to non-controlling interests				413			413
Net income attributable to common shareholders	3,633			241			3,874
Segment assets at December 31, 2011	$	129,867		$	68,435		$	198,302

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CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Revenues:
Rental and other revenue from real estate properties	$ 5,640	$ 768
Interest and fees on real estate loans	1,879	2,252
Recovery of previously provided allowances	422	7
Other income	310	127
Total revenues	8,251	3,154
Expenses:
Interest expense	2,946	467
Advisor's fees, related party	374	171
General and administrative-including $205 and $279 to related party	1,863	1,674
Property acquisition costs	878
Operating expenses relating to real estate properties	3,146	786
Depreciation and amortization	1,287	184
Total expenses	10,494	3,282
Total revenues less total expenses	(2,243)	(128)
Equity in earnings (loss) of unconsolidated ventures	61	(75)
Loss on sale of available-for-sale securities		(18)
Gain on sale of loan		3,192
(Loss) income from continuing operations	(2,182)	2,971
Discontinued operations:
Gain on sale of real estate assets		490
Net (loss) income	(2,182)	3,461
Plus: net loss attributable to non controlling interests	878	413
Net (loss) income attributable to common shareholders	(1,304)	3,874
Basic and diluted per share amounts attributable to common shareholders:
(Loss) income from continuing operations (in dollars per share)	$ (0.09)	$ 0.24
Discontinued operations (in dollars per share)		$ 0.04
Basic and diluted (loss) income per share (in dollars per share)	$ (0.09)	$ 0.28
Amounts attributable to BRT Realty Trust:
(Loss) income from continuing operations	(1,304)	3,384
Discontinued operations		490
Net (loss) income	$ (1,304)	$ 3,874
Weighted average number of common shares outstanding:
Basic (in shares)	14,053,362	13,982,164
Diluted (in shares)	14,053,362	13,982,164

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Real Estate Properties

3 Months Ended

Dec. 31, 2012

Real Estate Properties

Real Estate Properties

Note 4 - Real Estate Properties

A summary of real estate properties owned is as follows (dollars in thousands):

	September 30, 2012 Balance		Additions		Costs Capitalized and Improvements		Depreciation, Amortization and other reductions			December 31, 2012 Balance
Shopping centers/Retail	$	2,749	—		—		$	(26	)	$	2,723
Coop condo apartments	250		—		—		(7		)	243
Commercial / mixed use (a)	61,808		—		$	7,997	(153		)	69,652
Multi Family (b)	117,538		$	57,400	998		(1,104		)	174,832
Land	7,972		—		—		—			7,972
Total real estate properties	$	190,317	$	57,400	$	8,995	$	(1,290	)	$	255,422

a)  Represents the real estate assets of the Newark Joint Venture, a consolidated VIE which owns operating and development properties in Newark, NJ.  These properties contain a mix of office, retail space, charter schools and surface parking.  Certain of these assets are subject to  blanket  mortgages  aggregating $20,100,000,  held  by  the  Trust,  which  are  eliminated  in consolidation.  Several of the assets are also encumbered by other mortgages which are discussed in Note 8 Debt Obligations — Mortgages Payable.

b)  In the quarter ended December 31, 2012, the Trust purchased through consolidated joint ventures in which the Trust has an 80% or 90% equity interest, the following multi-family properties (dollars in thousands):

Location	Purchase Date	Number of Units	Contract Purchase Price		Acquisition Mortgage Debt		BRT Equity		Property AcquisitionCosts
North Charleston, SC	10/4/12	208	$	21,500	$	17,716	$	4,410	$	213
Cordova, TN	11/15/12	464	25,450		19,248		6,220		386
Decatur, GA	11/19/12	212	10,450		8,046		3,396		231
		884	$	57,400	$	45,010	$	14,026	$	830

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Equity

3 Months Ended

Dec. 31, 2012

Equity

Equity

Note 3 - Equity

Common Share Dividend Distribution

During the quarter ended December 31, 2012, the Trust did not declare a dividend on its shares.

Restricted Shares

The Trust’s 2012 Incentive Plan, approved by its shareholders in January 2012, permits the Trust to grant stock options, restricted stock, restricted stock units, performance shares awards and any one or more of the foregoing.  A maximum of 600,000 shares may be issued pursuant to such plan.  An aggregate of 580,180 shares of restricted stock have been granted pursuant to the Trust’s 2003 and 2009 equity incentive plans (collectively, the “Prior Plans”) and had not vested as of December 31, 2012.  No awards had been granted under the 2012 Plan as of December 31, 2012, and no additional awards may be granted under the Prior Plans.  The restricted shares that have been granted under the Prior Plans vest five years from the date of grant and under specified circumstances, including a change in control, may vest earlier. For accounting purposes, the restricted shares are not included in the outstanding shares shown on the consolidated balance sheet until they vest, but are included in the earnings per share computation.   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 three months ended December 31, 2012 and 2011 the Trust recorded $193,000 and $210,000 of compensation expense respectively.  At December 31, 2012, $1,677,000 has been deferred as unearned compensation and will be charged to expense over the remaining weighted average vesting period of approximately 2.5 years.

Per Share Data

Basic (loss) earnings per share attributable to holders of shares of beneficial interest was determined by dividing net (loss) income for the period by the weighted average number of common shares outstanding during each period.

Diluted (loss) earnings per share attributable to holders of shares of beneficial interest reflects the potential dilution that could occur if securities or other contracts to issue common shares were exercised or converted into common shares or resulted in the issuance of common shares that shared in the earnings of the Trust.

Basic and diluted shares outstanding for the three months ended December 31, 2012 and 2011 were 14,053,362 and 13,982,164, respectively.

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Basis of Preparation (Policies)

3 Months Ended

Dec. 31, 2012

Basis of Preparation

Basis of Preparation

The accompanying interim unaudited consolidated financial statements as of December 31, 2012 and for the three months ended December 31, 2012 and 2011 reflect all normal recurring adjustments which are, in the opinion of management, necessary for a fair presentation of the results for such interim periods. The results of operations for the three months ended December 31, 2012 are not necessarily indicative of the results for the full year.  The balance sheet as of September 30, 2012 has been derived from the audited financial statements at that date but does not include all the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.

Reclassification Items

Certain items on the consolidated financial statements for the preceding period have been reclassified to conform with the current period’s presentation.

Consolidated Financial Statements and Variable Interest Entities

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 the Trust is determined to be the primary beneficiary. Material intercompany balances and transactions have been eliminated.

RBH-TRB Newark Holdings LLC, referred to herein as the Newark Joint Venture, 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 of this joint venture because it has a controlling interest in that it has the power to direct the activities of the VIE that most significantly impact the entity’s economic performance and it has the obligation to absorb losses of the entity and the right to receive benefits from the entity that could potentially be significant to the VIE.

The Trust’s consolidated joint ventures that own multi-family properties were determined to be VIE’s because the voting rights of some equity investors are not proportional to their obligations to absorb the expected losses of the entity and their right to receive the expected residual returns. In addition, substantially all of the entity’s activities either involve or are conducted on behalf of the investor that has disproportionately few voting rights.

The Trust was determined to be the primary beneficiary of these joint ventures because it has a controlling interest in that it has the power to direct the activities of the VIE that most significantly impact the entity’s economic performance and it has the obligation to absorb losses of the entity and the right to receive benefits from the entity that could potentially be significant to the VIE.

With respect to its unconsolidated joint ventures, in which (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 VIE’s, the Trust has determined that such joint ventures should be accounted for under the equity method of accounting for financial statement purposes.

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 consolidated financial statements. Actual results could differ from those estimates.

New Accounting Pronouncements

In May 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASC”) No. 2011-04, “Fair Value Measurements (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS.” This update provides a uniform framework for fair value measurements and related disclosures between GAAP and International Financial Reporting Standards (“IFRS”) and requires additional disclosures, including: (i) quantitative information about unobservable inputs used, a description of the valuation processes used, and a qualitative discussion about the sensitivity of the measurements to changes in the unobservable inputs, for Level 3 fair value measurements; (ii) fair value of financial instruments not measured at fair value but for which disclosure of fair value is required, based on their levels in the fair value hierarchy; and (iii) transfers between Level 1 and Level 2 of the fair value hierarchy. This update was effective for the Trust’s interim and annual reporting beginning January 1, 2012 and did not have a material impact on its financial condition, results of operations, or disclosures.

In June 2011, the FASB issued ASC No. 2011-05, “Comprehensive Income (Topic 220): Presentation of Comprehensive Income.” This update requires the presentation of net income and other comprehensive income in one continuous statement or in two separate but consecutive statements. This update was effective for the Trust’s interim and annual reporting beginning on January 1, 2012, and did not have a material impact on its financial condition, results of operations, or disclosures.

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Fair Value of Financial Instruments

3 Months Ended

Dec. 31, 2012

Fair Value of Financial Instruments

Fair Value of Financial Instruments

Note 11 — 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 recorded at fair value on the consolidated balance sheets:

Cash and cash equivalents, restricted cash, accounts receivable (included in other assets), accounts payable and accrued liabilities:  The carrying amounts reported in the consolidated balance sheets 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, based upon a margin over prime rate, have an estimated fair value which is equal to their carrying value assuming market interest rates between 12% and 12.5%.  The earning mortgage loans of the Trust which have fixed rate provisions have an estimated fair value of $11,000 greater than their carrying value assuming a market rate of interest of 12% which we believe reflect institutional lender yield requirements.

Junior subordinated notes: At December 31, 2012, the estimated fair value of the Trust’s junior subordinated notes is lower than their carrying value by approximately $20,300,000 based on a market interest rate of 6.30%.

Mortgages payable:  At December 31, 2012, the estimated fair value of the Trust’s mortgages payable is greater than their carrying value by approximately $2,530,000 assuming market interest rates between 3.12% and 17%.  Market interest rates were determined using rates which we believe reflect institutional lender yields requirements.

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 market 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.

Set forth below is information regarding the Trust’s financial assets measured at fair value as of December 31, 2012 (dollars in thousands):

	Carrying and		Fair Value Measurements Using Fair Value Hierarchy
	Fair Value		Level 1		Level 2
Financial Assets:
Available-for-sale equity securities	$	1,226	$	1,226	—
Interest rate cap	5		—		$	5
Financial Liabilities:
Interest rate swap	$	93	—		$	93

Available-for-sale securities:  Fair values are approximated based on current market quotes from financial sources that track such securities. All of the available-for-sale securities in an unrealized loss position are equity securities and amounts are not considered to be impairment on an other than temporary basis because the Trust expects the value of these securities to recover and plans on holding them until at least such recovery occurs.

Derivative financial instrument:  Fair values are approximated using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of the derivatives. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves, foreign exchange rates, and implied volatilities.  At December 31, 2012, this derivative is included in accounts payable and accrued liabilities on the consolidated balance sheet.

Although the Trust has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with it utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparty.  As of December 31, 2012, the Trust assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives.  As a result, the Trust determined that its derivative valuation is classified in Level 2 of the fair value hierarchy.

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Available-For-Sale Securities

3 Months Ended

Dec. 31, 2012

Available-For-Sale Securities

Available-For-Sale Securities

Note 7 — Available-For-Sale Securities

Information regarding our available-for-sale securities is set forth in the table below (dollars in thousands):

	December 31, 2012			September 30, 2012
Cost basis	$	789		$	789
Unrealized gains	477			499
Unrealized losses	(40		)	(39		)
Market value	$	1,226		$	1,249

Unrealized gains and losses are reflected as accumulated other comprehensive income 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 not considered impaired on an other than temporary basis because the Trust expects the value of these securities to recover and plans on holding them until at least such recovery.

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Real Estate Loans

3 Months Ended

Dec. 31, 2012

Real Estate Loans

Real Estate Loans

Note 5 - Real Estate Loans

Information relating to real estate loans, all of which are earning interest, is summarized as follows (dollars in thousands):

	December 31, 2012					September 30, 2012
Property Type	Real EstateLoans			Percent		Real EstateLoans			Percent
Multi-family residential	$	31,283		45	%	$	35,096		95	%
Hotel	15,695			22	%	—			—
Parking facility	14,269			20	%	—			—
Retail	10,010			13	%	2,000			5
	71,257			100	%	37,096			100	%
Deferred fee income	(1,056		)			(512		)
Real estate loans, net	$	70,201				$	36,584

At December 31, 2012, three separate borrowers had three loans outstanding that in the aggregate were in excess of 10% of total loans. Information regarding these loans are set forth in the table below (dollars in thousands):

Property Type	Gross Loan Balance		% of Gross Loans		% of Assets		State	Status
Multi-Family	$	14,734	20.7	%	3.4	%	GA	Performing
Parking Facility	$	14,269	20.0	%	3.3	%	NY	Performing
Hotels	$	14,100	19.8	%	3.3	%	NY	Performing

Substantially all of the Trust’s loan portfolio consists of senior mortgage loans secured by real properties, 57% of which are located in New York, 21% in Georgia, 10% in Maryland, and 12% in three other states.

On December 5, 2012, the Trust originated a loan in the amount of $21,174,000.  Gould Investors L.P., a related party, participated in this loan on a pari passu basis and holds a $6,905,000 interest in this loan.  The Trust retained a $14,269,000 interest in this loan.

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Allowance for Possible Losses

3 Months Ended

Dec. 31, 2012

Allowance for Possible Losses

Allowance for Possible Losses

Note 6 - Allowance for Possible Losses

At December 31, 2012 and September 30, 2012 the Trust did not have an allowance for possible loan losses.

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Debt Obligations

3 Months Ended

Dec. 31, 2012

Debt Obligations

Debt Obligations

Note 8 — Debt Obligations

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

	December 31, 2012		September 30, 2012
Line of credit	—		—
Junior subordinated notes	$	37,400	$	37,400
Mortgages payable	214,810		169,284
Total debt obligations	$	252,210	$	206,684

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, National Association.  The maximum amount that may be borrowed under the facility is the lesser of $25 million and the borrowing base.  The borrowing base ranges from 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 eligible mortgage 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.

On April 17, 2012, the facility was amended to allow the subsidiary to borrow for up to 90 days on an unsecured basis, a maximum of $10,000,000.

The facility, requires the Trust and the subsidiary to maintain or comply with, among other things, net worth and liquidity covenants, debt service and collateral coverage ratios and limits, with specified exceptions, and the incurrence of debt.

For the three months ended December 31, 2012 and 2011, interest expense, which includes fee amortization with respect to the facility, was $38,000 and $37,000, respectively.  At December 31, 2012 and September 30, 2012, there were no outstanding balances on this facility.

Junior Subordinated Notes

At December 31, 2012 and September 30, 2012, the Trust’s junior subordinated notes had an outstanding principal balance of $37,400,000.  The interest rates on the outstanding notes is set forth in the table below:

Interest Period	Interest Rate
March 15, 2011 through July 31, 2012	3.00	%
August 1, 2012 through April 29, 2016	4.90	%
April 30, 2016 through April 30, 2036	Libor + 2.00	%

Interest expense relating to the junior subordinated notes for the three months ended December 31, 2012 and 2011 was $458,000 and $281,000, respectively.  Amortization of the deferred costs, which is a component of interest expense on borrowed funds, was $5,000 for both the three months ended December 31, 2012 and 2011.

Mortgages Payable

The Trust had the following obligations outstanding as of the dates indicated all of which are secured by the underlying real property (dollars in thousands):

Property	December 31,2012		September 30, 2012		Rate		Maturity
Yonkers, NY	$	1,932	$	1,954	5.25	%	April 2022
Palm Beach Gardens, FL	45,200		45,200		3.78	%	April 2019
Melboune, FL	7,680		7,680		3.98	%	April 2019
Marietta, GA	7,443		6,462		6.50	%	February 2015
Lawrenceville, GA	4,687		4,687		4.49	%	March 2022
Collierville, TN	25,680		25,680		3.91	%	July 2022
North Charleston, SC	17,716		—		3.79	%	November 2022
Cordova, TN	19,248		—		3.71	%	December 2022
Decatur, GA	8,046		—		3.74	%	December 2022
65 Market St—Newark, NJ	900		900		7.00	%	January 2015
909 Broad St—Newark, NJ	6,084		6,132		6.00	%	August 2030
Teachers Village—Newark, NJ(1)	2,738		2,738		17	%	March 2013
Teachers Village—Newark, NJ(2)	22,748		22,748		5.50	%	December 2030
Teachers Village—Newark, NJ	4,250		4,250		3.46	%	February 2032
Teachers Village—Newark, NJ	979		988		2.00	%	February 2022
Teachers Village—Newark, NJ	994		1,380		2.50	%	February 2014
Teachers Village—Newark, NJ	1,832		1,832			(3)	February 2034
Teachers Village—Newark, NJ	15,700		15,700		Libor + 3.00	%	August 2019
Teachers Village—Newark, NJ	5,250		5,250		3.28	%	September 2042
Teachers Village—Newark, NJ	13,491		13,491		8.65	%	December 2023
Teachers Village—Newark, NJ	2,212		2,212			(4)	August 2034
	$	214,810	$	169,284

(1) As of December 31, 2012 and September 30, 2012, respectively, the Trust had guaranteed $685,000 of this mortgage obligation.

(2) TD Bank has the right, in 2018, to require subsidiaries of the Newark Joint Venture to repurchase such debt. If such right is exercised, such subsidiaries will be required to refinance such debt. The stated interest rate is 5.5% per year; however, the United States Treasury Department is reimbursing the interest at the rate of 4.99% per year under the Qualified School Construction Bond program and accordingly, the effective rate of interest thereon until 2018 is 0.51% per year.

(3) The debt is to be serviced in full by annual payment-in-lieu of taxes (“PILOT”) of $256,000 in 2013 increasing to approximately $281,000 at maturity. This obligation is not secured by real property.

(4) The debt is to be serviced in full by annual PILOT payments of $311,000 in 2013 increasing to approximately $344,000 at maturity.

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Real Estate Properties (Details 2) (USD $)	3 Months Ended		3 Months Ended				0 Months Ended
	Dec. 31, 2012	Sep. 30, 2012 Commercial / mixed use Primary beneficiary RBH-TRB Newark Holdings LLC Mortgages Payable	Dec. 31, 2012 Multi Family	Dec. 31, 2012 Multi Family Primary beneficiary Purchase of properties item	Dec. 31, 2012 Multi Family Primary beneficiary Minimum Purchase of properties	Dec. 31, 2012 Multi Family Primary beneficiary Maximum Purchase of properties	Oct. 04, 2012 Multi Family Primary beneficiary North Charleston, SC Purchase of properties item	Nov. 15, 2012 Multi Family Primary beneficiary Cordova, TN Purchase of properties item	Nov. 19, 2012 Multi Family Primary beneficiary Decatur, GA Purchase of properties item
Real Estate Properties
Blanket mortgage on assets		$ 20,100,000
BRT Equity				14,026,000			4,410,000	6,220,000	3,396,000
Number of units in multi-family residential property				884			208	464	212
Contract Purchase price	57,400,000		57,400,000	57,400,000			21,500,000	25,450,000	10,450,000
Interest in joint venture (as a percent)					80.00%	90.00%
Acquisition Mortgage debt				45,010,000			17,716,000	19,248,000	8,046,000
Property acquisition costs	$ 878,000			$ 830,000			$ 213,000	$ 386,000	$ 231,000

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New Accounting Pronouncements

3 Months Ended

Dec. 31, 2012

New Accounting Pronouncements

New Accounting Pronouncements

Note 13 — New Accounting Pronouncements

In May 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASC”) No. 2011-04, “Fair Value Measurements (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS.” This update provides a uniform framework for fair value measurements and related disclosures between GAAP and International Financial Reporting Standards (“IFRS”) and requires additional disclosures, including: (i) quantitative information about unobservable inputs used, a description of the valuation processes used, and a qualitative discussion about the sensitivity of the measurements to changes in the unobservable inputs, for Level 3 fair value measurements; (ii) fair value of financial instruments not measured at fair value but for which disclosure of fair value is required, based on their levels in the fair value hierarchy; and (iii) transfers between Level 1 and Level 2 of the fair value hierarchy. This update was effective for the Trust’s interim and annual reporting beginning January 1, 2012 and did not have a material impact on its financial condition, results of operations, or disclosures.

In June 2011, the FASB issued ASC No. 2011-05, “Comprehensive Income (Topic 220): Presentation of Comprehensive Income.” This update requires the presentation of net income and other comprehensive income in one continuous statement or in two separate but consecutive statements. This update was effective for the Trust’s interim and annual reporting beginning on January 1, 2012, and did not have a material impact on its financial condition, results of operations, or disclosures.

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Available-For-Sale Securities (Tables)

3 Months Ended

Dec. 31, 2012

Available-For-Sale Securities

Schedule of available-for-sale securities

Information regarding our available-for-sale securities is set forth in the table below (dollars in thousands):

	December 31, 2012			September 30, 2012
Cost basis	$	789		$	789
Unrealized gains	477			499
Unrealized losses	(40		)	(39		)
Market value	$	1,226		$	1,249

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Segment Reporting (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Dec. 31, 2012 item	Dec. 31, 2011	Sep. 30, 2012
Segment Reporting
Number of reportable segments	3
Revenues:
Rental and other revenues from real estate properties	$ 5,640	$ 768
Interest and loan fee income	1,879	2,252
Other income	732	134
Total revenues	8,251	3,154
Expenses:
Interest expense	2,946	467
Advisor's fees, related party	374	171
General and administrative expenses	1,863	1,674
Property acquisition costs	878
Operating expenses relating to real estate properties	3,146	786
Depreciation and amortization	1,287	184
Total expenses	10,494	3,282
Total revenues less total expenses	(2,243)	(128)
Equity in earnings (loss) of unconsolidated ventures	61	(75)
Loss on sale of available-for-sale securities		(18)
Gain on sale of loan		3,192
(Loss) income from continuing operations	(2,182)	2,971
Discontinued operations:
Gain on sale of real estate assets		490
Net (loss) income	(2,182)	3,461
Plus: net loss attributable to non-controlling interests	878	413
Net (loss) income attributable to common shareholders	(1,304)	3,874
Segment assets	432,343	198,302	385,956
Loan and Investment
Revenues:
Interest and loan fee income	1,879	2,252
Other income	442	134
Total revenues	2,321	2,386
Expenses:
Interest expense	357	275
Advisor's fees, related party	186	84
General and administrative expenses	1,285	1,426
Total expenses	1,828	1,785
Total revenues less total expenses	493	601
Equity in earnings (loss) of unconsolidated ventures		(142)
Loss on sale of available-for-sale securities		(18)
Gain on sale of loan		3,192
(Loss) income from continuing operations	493	3,633
Discontinued operations:
Net (loss) income		3,633
Net (loss) income attributable to common shareholders	493	3,633
Segment assets	102,255	129,867
Real Estate
Revenues:
Rental and other revenues from real estate properties		768
Total revenues		768
Expenses:
Interest expense		192
Advisor's fees, related party		87
General and administrative expenses		248
Operating expenses relating to real estate properties		786
Depreciation and amortization		184
Total expenses		1,497
Total revenues less total expenses		(729)
Equity in earnings (loss) of unconsolidated ventures		67
(Loss) income from continuing operations		(662)
Discontinued operations:
Gain on sale of real estate assets		490
Net (loss) income		(172)
Plus: net loss attributable to non-controlling interests		413
Net (loss) income attributable to common shareholders		241
Segment assets		68,435
Multi-Family Real Estate
Revenues:
Rental and other revenues from real estate properties	4,950
Total revenues	4,950
Expenses:
Interest expense	1,487
Advisor's fees, related party	134
General and administrative expenses	396
Property acquisition costs	878
Operating expenses relating to real estate properties	2,300
Depreciation and amortization	1,104
Total expenses	6,299
Total revenues less total expenses	(1,349)
(Loss) income from continuing operations	(1,349)
Discontinued operations:
Plus: net loss attributable to non-controlling interests	111
Net (loss) income attributable to common shareholders	(1,238)
Segment assets	183,485
Other Real Estate
Revenues:
Rental and other revenues from real estate properties	690
Other income	290
Total revenues	980
Expenses:
Interest expense	1,102
Advisor's fees, related party	54
General and administrative expenses	182
Operating expenses relating to real estate properties	846
Depreciation and amortization	183
Total expenses	2,367
Total revenues less total expenses	(1,387)
Equity in earnings (loss) of unconsolidated ventures	61
(Loss) income from continuing operations	(1,326)
Discontinued operations:
Plus: net loss attributable to non-controlling interests	767
Net (loss) income attributable to common shareholders	(559)
Segment assets	$ 146,603

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CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
CONSOLIDATED STATEMENTS OF OPERATIONS
General and administrative, related party	$ 205	$ 279

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Basis of Preparation

3 Months Ended

Dec. 31, 2012

Basis of Preparation

Basis of Preparation

Note 2 - Basis of Preparation

The accompanying interim unaudited consolidated financial statements as of December 31, 2012 and for the three months ended December 31, 2012 and 2011 reflect all normal recurring adjustments which are, in the opinion of management, necessary for a fair presentation of the results for such interim periods. The results of operations for the three months ended December 31, 2012 are not necessarily indicative of the results for the full year.  The balance sheet as of September 30, 2012 has been derived from the audited financial statements at that date but does not include all the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.

Certain items on the consolidated financial statements for the preceding period have been reclassified to conform with the current period’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 the Trust is determined to be the primary beneficiary. Material intercompany balances and transactions have been eliminated.

RBH-TRB Newark Holdings LLC, referred to herein as the Newark Joint Venture, 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 of this joint venture because it has a controlling interest in that it has the power to direct the activities of the VIE that most significantly impact the entity’s economic performance and it has the obligation to absorb losses of the entity and the right to receive benefits from the entity that could potentially be significant to the VIE.

The Trust’s consolidated joint ventures that own multi-family properties were determined to be VIE’s because the voting rights of some equity investors are not proportional to their obligations to absorb the expected losses of the entity and their right to receive the expected residual returns. In addition, substantially all of the entity’s activities either involve or are conducted on behalf of the investor that has disproportionately few voting rights.

The Trust was determined to be the primary beneficiary of these joint ventures because it has a controlling interest in that it has the power to direct the activities of the VIE that most significantly impact the entity’s economic performance and it has the obligation to absorb losses of the entity and the right to receive benefits from the entity that could potentially be significant to the VIE.

With respect to its unconsolidated joint ventures, in which (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 VIE’s, the Trust has determined that such joint ventures should be accounted for under the equity method of accounting for financial statement purposes.

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 consolidated financial statements. Actual results could differ from those estimates.

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Debt Obligations (Tables)

3 Months Ended

Dec. 31, 2012

Debt Obligations

Schedule of debt obligations

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

	December 31, 2012		September 30, 2012
Line of credit	—		—
Junior subordinated notes	$	37,400	$	37,400
Mortgages payable	214,810		169,284
Total debt obligations	$	252,210	$	206,684

Schedule of interest rates on outstanding notes

Interest Period	Interest Rate
March 15, 2011 through July 31, 2012	3.00	%
August 1, 2012 through April 29, 2016	4.90	%
April 30, 2016 through April 30, 2036	Libor + 2.00	%

Schedule of outstanding mortgages payable

The Trust had the following obligations outstanding as of the dates indicated all of which are secured by the underlying real property (dollars in thousands):

Property	December 31,2012		September 30, 2012		Rate		Maturity
Yonkers, NY	$	1,932	$	1,954	5.25	%	April 2022
Palm Beach Gardens, FL	45,200		45,200		3.78	%	April 2019
Melboune, FL	7,680		7,680		3.98	%	April 2019
Marietta, GA	7,443		6,462		6.50	%	February 2015
Lawrenceville, GA	4,687		4,687		4.49	%	March 2022
Collierville, TN	25,680		25,680		3.91	%	July 2022
North Charleston, SC	17,716		—		3.79	%	November 2022
Cordova, TN	19,248		—		3.71	%	December 2022
Decatur, GA	8,046		—		3.74	%	December 2022
65 Market St—Newark, NJ	900		900		7.00	%	January 2015
909 Broad St—Newark, NJ	6,084		6,132		6.00	%	August 2030
Teachers Village—Newark, NJ(1)	2,738		2,738		17	%	March 2013
Teachers Village—Newark, NJ(2)	22,748		22,748		5.50	%	December 2030
Teachers Village—Newark, NJ	4,250		4,250		3.46	%	February 2032
Teachers Village—Newark, NJ	979		988		2.00	%	February 2022
Teachers Village—Newark, NJ	994		1,380		2.50	%	February 2014
Teachers Village—Newark, NJ	1,832		1,832			(3)	February 2034
Teachers Village—Newark, NJ	15,700		15,700		Libor + 3.00	%	August 2019
Teachers Village—Newark, NJ	5,250		5,250		3.28	%	September 2042
Teachers Village—Newark, NJ	13,491		13,491		8.65	%	December 2023
Teachers Village—Newark, NJ	2,212		2,212			(4)	August 2034
	$	214,810	$	169,284

(1) As of December 31, 2012 and September 30, 2012, respectively, the Trust had guaranteed $685,000 of this mortgage obligation.

(2) TD Bank has the right, in 2018, to require subsidiaries of the Newark Joint Venture to repurchase such debt. If such right is exercised, such subsidiaries will be required to refinance such debt. The stated interest rate is 5.5% per year; however, the United States Treasury Department is reimbursing the interest at the rate of 4.99% per year under the Qualified School Construction Bond program and accordingly, the effective rate of interest thereon until 2018 is 0.51% per year.

(3) The debt is to be serviced in full by annual payment-in-lieu of taxes (“PILOT”) of $256,000 in 2013 increasing to approximately $281,000 at maturity. This obligation is not secured by real property.

(4) The debt is to be serviced in full by annual PILOT payments of $311,000 in 2013 increasing to approximately $344,000 at maturity.

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Debt Obligations (Details) (USD $)			3 Months Ended						3 Months Ended			3 Months Ended							0 Months Ended
	Dec. 31, 2012	Sep. 30, 2012	Dec. 31, 2012 Junior subordinated notes	Dec. 31, 2011 Junior subordinated notes	Sep. 30, 2012 Junior subordinated notes	Jun. 30, 2012 Junior subordinated notes	Dec. 31, 2012 Junior subordinated notes March 15, 2011 through July 31, 2012	Dec. 31, 2012 Junior subordinated notes August 1, 2012 through April 29, 2016	Dec. 31, 2012 Junior subordinated notes April 30, 2016 through April 30, 2036	Dec. 31, 2012 Mortgages payable	Sep. 30, 2012 Mortgages payable	Dec. 31, 2012 Wholly-owned subsidiary Line of credit	Dec. 31, 2011 Wholly-owned subsidiary Line of credit	Dec. 31, 2012 Wholly-owned subsidiary Line of credit Secured borrowings	Jun. 22, 2011 Wholly-owned subsidiary Line of credit Secured borrowings	Dec. 31, 2012 Wholly-owned subsidiary Line of credit Secured borrowings Minimum	Dec. 31, 2012 Wholly-owned subsidiary Line of credit Secured borrowings Maximum	Apr. 17, 2012 Wholly-owned subsidiary Line of credit Unsecured borrowings	Apr. 17, 2012 Wholly-owned subsidiary Line of credit Unsecured borrowings Maximum
Debt Obligations
Total debt obligations	$ 252,210,000	$ 206,684,000	$ 37,400,000		$ 37,400,000	$ 37,400,000				$ 214,810,000	$ 169,284,000
Maximum amount that may be borrowed under the facility															25,000,000			10,000,000
Borrowing base as a percent of receivables																40.00%	65.00%
Interest Rate (as a percent)							3.00%	4.90%								5.50%
Reference rate									LIBOR					LIBOR
Margin interest above reference rate (as a percent)									2.00%					4.00%
Conversion of secured line of credit at maturity, period of term loan														18 months
Borrowing period																			90 days
Other disclosures
Interest expense			458,000	281,000								38,000	37,000
Amortization of deferred costs included in interest expense			$ 5,000	$ 5,000

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Derivative Financial Instruments

3 Months Ended

Dec. 31, 2012

Derivative Financial Instruments

Derivative Financial Instruments

Note 12 — Derivative Financial Instruments

Cash Flow Hedges of Interest Rate Risk

The Trust’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements.  To accomplish this objective, the Trust primarily uses interest rate swaps as part of its interest rate risk management strategy.  Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Trust making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.

The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income on our consolidated balance sheets and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings.  In March 2012, the Trust entered into an interest rate swap agreement used to hedge the variable cash flows associated with existing variable-rate debt.

Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Trust’s variable-rate debt.

As of December 31, 2012, the Trust had the following outstanding interest rate derivative that was designated as a cash flow hedge of interest rate risk (dollars in thousands):

Interest Rate Derivative	Notional		Rate		Maturity
Interest Rate Swap	$	1,954	5.25	%	April 1, 2022

The table below presents the fair value of the Trust’s derivative financial instrument as well as its classification on the consolidated balance sheets as of the dates indicated (amounts in thousands):

Liability Derivatives as of:

December 31, 2012			September 30, 2012
Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Other Assets	$	5	Other assets	$	10
Accounts payable and accrued liabilities	$	93	Accounts payable and accrued liabilities	$	104

The following table presents the effect of the Trust’s derivative financial instrument on the consolidated statements of comprehensive (loss) income for the three months ended December 31, 2012 (dollars in thousands):

	Three Months Ended December 31, 2012
Amount of gain recognized on derivative in Other Comprehensive Income	$	2
Amount of loss reclassified from Accumulated Other Comprehensive Income into Interest Expense	$	(9	)

No gain or loss was recognized related to hedge ineffectiveness or to amounts excluded from effectiveness testing on the Trust’s cash flow hedges during the three months ended December 31, 2012.  During the twelve months ending December 31, 2013, the Trust estimates an additional $36,000 will be reclassified from other comprehensive income as an increase to interest expense.

Credit-risk-related Contingent Features

The agreement between the Trust and its derivatives counterparty provides that if the Trust defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, the Trust could be declared in default on its derivative obligation.

As of December 31, 2012, the fair value of the derivative in a net liability position, which includes accrued interest, but excludes any adjustment for nonperformance risk related to this agreement, was $93,000.  As of December 31, 2012, the Trust has not posted any collateral related to this agreement.  If the Trust had been in breach of this agreement at December 31, 2012, it could have been required to settle it obligations thereunder at its termination value of $93,000.