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

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.          )

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BRT REALTY TRUST
60 Cutter Mill Road
Suite 303
Great Neck, New York 11021
(516) 466-3100

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
March 10, 20087, 2011

        The Annual Meeting of Shareholders of BRT Realty Trust will be held on Monday, March 10, 2008,7, 2011, at 9:00 a.m. local time, at the offices of BRT Realty Trust, 60 Cutter Mill Road, Suite 303, Great Neck, New York 11020, for the following purposes:

1.

To elect four Class III Trustees to serve until the 20112014 Annual Meeting of Shareholders;



2.

To approve, by non-binding vote, executive compensation;



3.

To recommend, by non-binding vote, the frequency of future non-binding votes on executive compensation;



4.

To ratify the appointment of BDO USA, LLP as our independent registered public accounting firm for fiscal 2011; and



2.5.

To transact any other business as may properly come before the meeting.

        Shareholders of record at the close of business on January 23, 200817, 2011 will be entitled to notice of and to vote at our annual meeting. It is important that your common shares of beneficial interest be represented and voted at the meeting. You can vote your common shares of beneficial interest by completing and returning the proxy card. Certain shareholders can also vote their common shares of beneficial interest over the internet or by telephone. If internet or telephone voting is available to you, voting instructions are printed on the proxy card sent to you. You can revoke a proxy at any time prior to its exercise at the meeting by following the instructions in the accompanying proxy statement.

		Simeon Brinberg
		Secretary

Great Neck, New York
January 28, 20082011

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BRT REALTY TRUST

20082011 ANNUAL MEETING
PROXY STATEMENT

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PROXY STATEMENT

GENERAL

        Our board of trustees is furnishing you with this proxy statement to solicit proxies on its behalf to be voted at the 20082011 annual meeting of shareholders of BRT Realty Trust. In this proxy statement we refer to BRT Realty Trust as "BRT," "we," "our," "us," "our company," or the "Trust." The meeting will be held at our offices, 60 Cutter Mill Road, Suite 303, Great Neck, New York, at 9:00 a.m., local time, on Monday, March 10, 2008.7, 2011.

        The date of this proxy statement is January 28, 2008,2011, the approximate date on which we are mailing this proxy statement and the accompanying form of proxy to our shareholders. Our fiscal year begins on October 1^st and ends on September 30^th. References in this proxy statement to the "year 2007"2010" or "fiscal 2007"2010" refers to the twelve month periodmonths from October 1, 20062009 through September 30, 2007.2010.

        Our executive offices are located at 60 Cutter Mill Road, Suite 303, Great Neck, New York 11021. Our telephone number is (516) 466-3100.

VOTING PROCEDURES

        Shareholders of record at the close of business on January 23, 200817, 2011 are entitled to notice of and to vote at the annual meeting of shareholders. The record date was established by our board of trustees. You are entitled to one vote for each common share of beneficial interest you own on January 23, 200817, 2011 and do not have the right to vote cumulatively in the election of trustees. Our common shares of beneficial interest, (hereafter theor "common shares")shares," constitute our only outstanding class of voting securities outstanding and will vote as a single class on all matters to be considered at the annual meeting. On the record date there were 11,612,72513,932,799 common shares outstanding and entitled to vote. In order to carry on the business at the meeting, we must have a quorum present in person or by proxy. This means that at least a majority of the outstanding6,966,400 common shares must be represented at the meeting, either in person or by proxy, regardless of whether you vote your common shares.to constitute a quorum. The affirmative vote of a pluralitymajority of the outstanding common shares present and voting at the meeting, in person or by proxy, is required to elect the four nominees as Class III Trustees.Trustees, to approve the advisory vote on executive compensation, to ratify the appointment of BDO USA, LLP as our independent registered public accounting firm for fiscal 2011 and to act on any other matters properly brought before the meeting. The frequency of the non-binding votes on executive compensation receiving the greatest number of votes (every one, two or three years) will be considered the frequency recommended by shareholders.

        Because many shareholders cannot attend the meeting in person, it is necessary that a large number of common shares be represented by proxy. Most shareholders have a choice of voting over the internet, by using a toll-free telephone number or by completing a proxy card and mailing it in the postage paid envelope provided. Please refer to your proxy card or to the information provided by your bank, broker, or other holder of record to see which options are available to you. You should be aware that if you vote over the internet, you may incur costs, such as telephone and internet access charges, for which you will be responsible. The internet and telephone voting facilities for shareholders of record will close at 11:59 p.m., E.S.T. on March 9, 2008.6, 2011. If you vote by telephone or via the internet, it is not necessary to return a proxy card. The internet and telephone voting procedures are designed to authenticate shareholders by use of a control number, and to allow you to confirm that your instructions have been properly recorded.

        If you wish to name as a proxy someone other than the proxies named on the proxy card, you may do so by crossing out the name of the designated proxies and inserting the name of another person. In that case, you should sign the proxy card and deliver it to the person so named, and the person so

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named must then be present to vote at the meeting. Proxy cards so marked should not be mailed to us or to our transfer agent, American Stock Transfer and Trust Company.Company, LLC.

        You can revoke your proxy at any time before it is exercised. To revoke your proxy you may file a written revocation with our Secretary, or you may deliver a properly executed proxy bearing a later date. If you vote by telephone or internet you may also revoke your proxy with a timely and valid later telephone or internet vote, as the case may be. You may also revoke your proxy by attending the meeting and voting in person. If not so revoked, the common shares represented by such proxy will be voted.

        Votes withheldUnder New York Stock Exchange Rules, the proposal to ratify the appointment of BDO USA, LLP as independent auditors for the 2011 fiscal year is considered a "discretionary" item. This means that brokerage firms may vote in their discretion on this proposal on behalf of clients who have not furnished voting instructions at least ten days before the date of the meeting. In contrast, the election of trustees and the advisory votes on executive compensation and the frequency of the advisory votes on executive compensation are non-discretionary items. This means that brokerage firms that have not received voting instructions from nominees for trustee and brokertheir clients on these proposals may not vote on them. The so called "broker non-votes, are counted" as present and entitledwell as abstentions to vote on these proposals, will be included in the calculation of the number of votes considered to be present at the meeting for purposes of determining whether a quorum has been reached. Votes withheld from nominees for trusteequorum. Abstentions and broker non-votes will have the same effect of a vote against Proposal 1 (the election of the nominees as trustees), Proposal 2 (the approval, by non-binding vote, of executive compensation) and Proposal 4 (to ratify the appointment of BDO USA, LLP as our independent auditors for fiscal 2011). The frequency of the advisory vote on executive compensation (Proposal 3) receiving the greatest number of votes against. A "broker non-vote" occurs if a(every one, two or three years) will be considered the frequency recommended by shareholders. Abstentions and broker or other nominee who is entitled to vote your common shares has not received instructions from you with respect to a particular matter to be voted on, and the broker or other nominee does not otherwise have discretionary authority to vote your shares on that matter. Broker non-votes will therefore have no effect on the outcome of the election of trustees.

        If you hold your common shares through a broker, your shares may be voted even if you do not vote or attend the meeting. Under the rules of the New York Stock Exchange, if you hold your common shares through a broker, your broker is permitted to vote your common shares on the election of trustees even if the broker does not receive instructions from you, but may not vote your shares on non-discretionary items without voting instructions from you.such vote.

        All common shares entitled to vote and represented by properly completed proxies received prior to the meeting and not revoked will be voted at the meeting in accordance with your instructions. If no choice is indicated on the proxy card received from a registered holder, the persons named as your proxies will vote the common shares "FOR" the four nominees (Kenneth F. Bernstein, Fredric H. Gould, Gary Hurand and Elie Weiss) for Class III Trustee, "FOR" the approval of the non-binding vote on executive compensation, "FOR" three years with respect to frequency of the non-binding vote on executive compensation, and "FOR" ratification of the appointment of BDO USA, LLP as independent auditors for fiscal 2011, and as the proxy holders may determine, in their discretion, with respect to other matters that properly come before the meeting. The board of trustees is not currently aware of any business to be acted upon at the meeting other than that which is described in this proxy statement. A representative of American Stock Transfer and Trust Company, LLC will tabulate the votes and act as inspector of elections.

COST OF PROXY SOLICITATION

        We are soliciting proxies and will pay the entire cost of soliciting proxies, including preparing and mailing this proxy statement. In addition to the solicitation of proxies by mail and through our regular employees, we will request banks, brokers, custodians, nominees and other record holders to forward copies of the proxy statement and other soliciting materials to persons for whom they hold common shares and to request authority forinstruction on how to vote the exercise of proxies.shares. We will reimburse such record holders for their reasonable out-of-pocket expenses in forwarding proxies and proxy materials to shareholders. We have retained Phoenix Advisory Partners for a fee of $4,500, plus reasonable out of pocket expenses, to aid in the solicitation of proxies from our shareholders. To the extent necessary in order to ensure sufficient representation at the meeting, we or our proxy solicitor may solicit the return of proxies by personal interview, mail, telephone, facsimile, Internet or other means of communication or electronic transmission. The extent to which this will be necessary depends upon how promptly proxies are returned. We urge you to send in your proxy without delay.

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GOVERNANCE OF OUR COMPANY

General

        We are governed by a board of trustees and by the committees of the board. Members of the board are kept informed about our business through discussions with our chairman, our president and chief executive officer and our other officers, by reviewing materials provided to them and by participating in meetings of the board and its committees. During fiscal 2007,2010, the board held sixfour meetings and enacted resolutions by unanimous consent on three occasions. Eachother than Kenneth F. Bernstein (who missed a meeting due to the death of an immediate family member), each trustee attended at least 75% of the aggregate number of board and applicable committee meetingsmeetings. We typically schedule a board meeting in fiscal 2007.conjunction with our annual meeting and encourage our trustees to attend the annual meeting of shareholders. Eight of the ten individuals serving as trustees attended our 2010 annual meeting of shareholders.

        Our board of trustees has three committees: an Audit Committee,audit committee, a Compensation Committeecompensation committee and a Nominatingnominating and Corporate Governance Committee.corporate governance committee. The board has affirmatively determined that each of Kenneth F. Bernstein, Alan H. Ginsburg, Louis C. Grassi, Gary Hurand, Jeffrey Rubin, Jonathan H. Simon and Elie Weiss, a majority of our trustees, is "independent" for the purposes of Section 303A of the Listed Company Manual of the New York Stock Exchange, and all of the members of each of the Audit Committee,audit committee, the Compensation Committeecompensation committee and the Nominatingnominating and Corporate Governance Committee iscorporate governance committee are independent for the purposes of Section 303A. Messrs. Fredric H. Gould, Jeffrey A. Gould and Matthew J. Gould are not independent under New York Stock Exchange Rules because, among other reasons, they serve as our executive officers.officers of the Trust. The board based these determinations primarily on a review of the responses of our trustees to questions regarding employment and compensation history, affiliations and family and other relationships, discussions with trustees and relevant facts and circumstances provided byto management of any relationships bearing on the independence of a trustee.

        In determining the independence of each of the foregoing trustees, the board considered that (i) Gary Hurand holds approximately a 40% beneficial interest in a family entity which owns a preferred limited partnership interest in Gould Investors L.P. (an affiliate of our company—see "Certain Relationships and Related Transactions);Transactions"), the preferred limited partnership interest owned by the Hurand family entity has a deemed value of $14,678,000 (the redemption price of the interest) and very limited voting rights, and no member of the Hurand family, including GaryMr. Hurand, has any management involvement in Gould Investors L.P.;, and the board concluded that the Hurand family entity's passive investment in Gould Investors L.P. did not disqualify GaryMr. Hurand from being independent; (ii) Gould Investors L.P. and an entity affiliated with Gould Investors L.P. owns less than 2% of the outstanding shares of Newtek Business Services, Inc., a public company in which Jeffrey Rubin iswas a director and an executive officer until March 2009, and the board concluded that such investment by Gould Investors L.P. and an affiliated entity in Newtek Business Services, Inc. did not adversely affect Jeffrey Rubin's independence; (iii) an entity in which Jonathan H. Simon is a control person entered into a contingent contract to acquire a property located in Manhattan, New York for $17 million from Gould Investors L.P., equal to the high offer in a broadly offered sale process, and based on the facts of this transaction Jonathan Simon was not disqualifieddisqualify Mr. Rubin from being independent; and (iv)(iii) Elie Weiss who was elected to the Board of Trustees at the December 10, 2007 board meeting was determined to be independent after the Board considered that he is the son-in-law of Gary Hurand, an independent trustee, and that an entity controlled by him participated on a pari passu basis as a 25% participant in a $2 million mortgage loan originated by us in February 2007 (prior to Mr. Weiss joining the Board), which was paid off in January 2009, and the board concluded that such relationships did not disqualify ElieMr. Weiss from being independent; and (iv) an entity in which Jonathan H. Simon is a control person entered into a contingent contract to acquire a development site in Manhattan, New York from Gould Investors L.P. for approximately $17 million (this entity's purchase price offer was competitive with the best offers received). Due to the crisis in the real estate and credit markets, this entity terminated the contract and made a termination payment to Gould Investors L.P. in December, 2008, and the board concluded that the transaction between Gould Investors L.P. and the entity controlled by Mr. Simon did not disqualify Mr. Simon from being independent.

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        The board has adopted a charter for each committee, as well as corporate governance guidelines that address the make-up and functioning of the board. You can find each charter and the corporate governance guidelines by accessing the corporate governance section of our website atwww.brtrealty.com. Copies of these charters and the corporate governance guidelines may be obtained by writing to us at 60 Cutter Mill Road, Suite 303, Great Neck, New York 11021, Attention: Secretary.

Code of Business Conduct and Ethics

        We have also adopted a code of business conduct and ethics that applies to all trustees, officers, employees, agents and consultants, including our chief executive officer, principal financial officer, principal accounting officer or controller or person performing similar functions. The code of business conduct and ethics covers a variety of topics, including those required by the Securities and Exchange Commission and the New York Stock Exchange. Topics covered include, but are not limited to, conflicts of interest, confidentiality of information, and compliance with laws and regulations. The code of business conduct and ethics, as amended and restated, is available at the corporate governance section of our website atwww.brtrealty.com and may be obtained by writing to us at 60 Cutter Mill

Road, Suite 303, Great Neck, New York 11021, Attention: Secretary. During fiscal 2007,2010, there were no waivers of the provisions of the code of business conduct and ethics with respect to any of our trustees, officers, employees, agents or consultants. We will post any amendments to, or waivers of, our code of business conduct and ethics, as amended and restated, on our website.

Risk Oversight

        Management is responsible for the day-to-day management of risks we face. Our board of trustees has overall responsibility for overseeing risk management with a focus on the more significant risks facing us. Our audit committee oversees risk policies and processes related to our financial statements, financial reporting processes and liquidity risks, our nominating and corporate governance committee oversees corporate governance risks and our compensation committee oversees risks relating to remuneration of our officers and employees. The compensation committee does not believe that the compensation programs which are in place give rise to any risk that is reasonably likely to have a material adverse effect on us.

        At each quarterly meeting of the audit committee, a portion of the meeting is devoted to reviewing material credit risks, our loan portfolio, status of foreclosure and similar proceedings, status of the properties in our real estate portfolio and other matters which might have a material adverse impact on current or future operations, and, as required, the audit committee reviews risks arising from related party transactions. In addition, at each meeting of the audit committee, our chief financial officer, as well as the independent accounting firm reviewing or auditing, as the case may be, our financial statements, reports to the committee with respect to compliance by our employees with our internal control policies in order to ascertain that no failures of a material nature have occurred. This process assists the audit committee in overseeing the risks related to our financial statements and the financial reporting process.

        At each meeting of the board of trustees, a portion of the meeting is dedicated to reviewing and discussing significant risk issues reviewed by the audit committee.

Leadership Structure

        Our company is led by Fredric H. Gould, chairman of our board, and Jeffery A. Gould, president and chief executive officer. The board of trustees believes that: (i) separating the role of chairman and chief executive officer is the most appropriate structure at this time because it makes the best use of the abilities of Fredric H. Gould and Jeffery A. Gould; and (ii) its risk oversight activities does not have any effect on the board's leadership structure.

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Committees of the Board of Trustees

Audit Committee

        Our board of trustees has adopted an Audit Committee Charteraudit committee charter delineating the composition and responsibilities of the Audit Committee. A copy of the Audit Committee Charter is attached to this proxy statement as Exhibit A.

audit committee. The Audit Committee Charteraudit committee charter requires that the Audit Committeeaudit committee be comprised of at least three members, all of whom are independent trustees and at least one of whom is an "audit committee financial expert." Our board of trustees has determined that all of the members of our Audit Committeeaudit committee are independent for the purposes of Section 10A(m)(3) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and Section 303.01 of the Listed Company Manual of the New York Stock Exchange, and that Louis C. Grassi, chairman of the Audit Committee,audit committee, qualifies as anthe "audit committee financial expert,expert." as that term is defined in Item 407(d) of Regulation S-K promulgated pursuant to the Securities Exchange Act of 1934, as amended.

        The Audit Committee,audit committee, which is comprised of Gary Hurand, Alan H. Ginsburg and Louis C. Grassi (Chairman), Gary Hurand and Elie Weiss, met five times during fiscal 2007. The Audit Committee2010. (Elie Weiss joined the committee in March 2010 in connection with the annual board meeting in place of Alan H. Ginsburg). Among other things, the audit committee is responsible for assisting the board in its oversight of (i) the quality and integrity of our financial statements, and internal controls, (ii) our compliance with legal and regulatory requirements, (iii) our independent registered public accounting firm's qualification and independence, and (iv) the performance of our internal audit function and of our independent registered public accounting firm, and (v)for the preparation of the audit committee report required by the Securities and Exchange Commission for inclusion in this proxy statement. The board has determined that each member of the Audit Committeeaudit committee satisfies the financial literacy requirements of the New York Stock Exchange.

Compensation Committee

        The Compensation Committee,compensation committee, which is comprised of Jeffrey Rubin (chairman), Alan H. Ginsburg Jeffrey Rubin and Jonathan H. Simon, all of whom are independent, met fourthree times during fiscal 2007.2010. The Compensation Committeecompensation committee reviews and makes recommendations to the board with respect to the salaries, bonuses and stock incentive awards of our executive officers and key employees. The Compensation Committee also oversees administration of our equity incentive plans and approves and authorizes grants of equity compensation awards under the BRT Realty Trust 2003 Incentive Plan.

Nominating and Corporate Governance Committee

        The Nominatingnominating and Corporate Governance Committee,corporate governance committee, which is comprised of Gary Hurand (chairman), Louis C. Grassi and Jonathan H. Simon,Elie Weiss, all of whom are independent, met two timesonce in fiscal 2007.2010. The principal responsibilities of the Nominating and Corporate Governance Committeethis committee include proposing to the Boardboard of Trusteestrustees a slate of trusteesnominees for election to the board of trustees at the annual meeting of shareholders, identificationmaking a recommendation to the board of trustees with respect to the independence of each trustee, identifying and recommendation ofrecommending candidates to fill vacancies on the board of trustees or committees thereof between annual meetings of shareholders, proposing a slate of officers to the trustees for election at the annual meeting of the board and monitoring corporate governance matters, including overseeing our corporate governance guidelines, code of business conduct and ethics and reviewing the independence of non-management trustees on an annual basis and more often, if necessary.guidelines.

        The board believes that it should be comprised of trustees with complementary backgrounds, and that trustees should, at a minimum, have expertise that may be useful to us. TrusteesOur nominating and corporate governance committee has not adopted a formal diversity policy in connection with the consideration of trustee nominations or the selection of nominees. It considers the personal and professional attributes and the business experience of each trustee candidate to promote diversity of expertise and experience among our trustees. Additionally, trustees should possess the highest personal and professional ethics and should be willing and able to devote the required amount of time to our business.

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        When considering candidates for trustee, the Nominatingnominating and Corporate Governance Committeecorporate governance committee will take into account a number of factors, including the following:

•

Independence from management;



•

Whether the candidate has relevant business experience;



•

Judgment, skill, integrity and reputation;



•

Financial and accounting background, to enable the committee to determine whether the candidate would be suitable for Audit Committeeaudit committee membership;



•

Executive compensation background, to enable the committee to determine whether the candidate would be suitable for Compensation Committeecompensation committee membership; and



•

The size and composition of the existing board.

        The Nominatingnominating and Corporate Governance Committeecorporate governance committee will consider candidates for trustee suggested by shareholders, applying the criteria for candidates described above, considering the additional information referred to below and evaluating such nominees in the same manner as other candidates. Shareholders wishing to suggest a candidate for trustee should write to our Secretary and include:

•

A statement that the writer is a shareholder and is proposing a candidate for consideration by the committee;



•

The name of and contact information for the candidate;



•

A statement of the candidate's business and educational experience;



•

Information regarding each of the factors listed above sufficient to enable the committee to evaluate the candidate;



•

A statement detailing any relationship between the candidate and any competitor of the Trust;



•

Detailed information about any relationship or understanding between the proposing shareholder and the candidate; and



•

A statement that the candidate is willing to be considered and willing to serve as a trustee if nominated and elected.

Before nominating a sitting trustee for re-election at an annual meeting of shareholders, the Nominatingnominating and Corporate Governance Committeecorporate governance committee will consider:

•

The trustee's performance on the board; and



•

Whether the trustee's re-election would be consistent with our corporate governance guidelines.

        When seeking candidates for trustee, the Nominatingnominating and Corporate Governance Committeecorporate governance committee may solicit suggestions from management, incumbent trustees or others. The Nominatingnominating and Corporate Governance Committeecorporate governance committee will interview a candidate if it believes the candidate might be suitable to be a trustee. The Nominatingnominating and Corporate Governance Committeecorporate governance committee may also ask the candidate to meet with management. If the Nominatingnominating and Corporate Governance Committeecorporate governance committee believes a candidate would be a valuable addition to the board, it will recommend the candidate's election to the full board.

Independence of Trustees

        The following standards for "director" independence are applicable to us in accordance with the New York Stock Exchange corporate governance listing standards:

•

No trustee qualifies as "independent" unless the board affirmatively determines that the trustee has no material relationship with us or any of our subsidiaries (either directly or as a partner,

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shareholder or officer of an organization that has a relationship with us or any of our subsidiaries);



•

A trustee who is an employee, or whose immediate family member is an executive officer, of ours or any of our subsidiaries is not independent until three years after the end of such employment relationship;



•

A trustee who received, or whose immediate family member received, during any twelve-month period within the last three years, more than $100,000$120,000 in direct compensation from us or any of our subsidiaries, other than director and committee fees and pension or other forms of deferred compensation for prior services (provided such compensation is not contingent in any way on continued service), is not independent until three years after he or she ceases to receive more than $100,000$120,000 in any twelve-month period;



•

A trustee who is, or who has an immediate family member who is, a current partner of our internal or external auditor, a trustee who is a current employee of our internal or external auditor, a trustee who has an immediate family member who is a current employee of our internal or external auditor and who participates in our audit, assurance or tax compliance (but not tax planning) practice, or a trustee who was, or whose immediate family member was, within the last three years (but is no longer) a partner or employee of our internal or external auditor and personally worked on our audit within that time, can not be considered independent;



•

A trustee who is employed, or whose immediate family member is employed, as an executive officer of another company where any of our or any of our subsidiaries' present executives serve on that company's compensation committee is not "independent" until three years after the end of such service or the employment relationship; and



•

A trustee who is a current employee, or whose immediate family member is a current executive officer, of a company that has made payments to, or received payments from, us or any of our subsidiaries for property or services in an amount which, in any single fiscal year, exceeds the greater of $1 million, or 2% of such other company's consolidated gross revenues, is not "independent" until the commencement of the third fiscal year following the fiscal year in which such payments fall below such threshold.

        Under the "director" independence standards, the Boardboard must affirmatively determine that a trustee has no relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a trustee. The Boardboard has not adopted any requirements or standards for "director" independence beyond the New York Stock Exchange corporate governance listing standards.

Compensation Committee Interlocks and Insider Participation

        The members of the Compensation Committeecompensation committee are Jeffrey Rubin (Chairman), Alan H. Ginsburg Jeffrey Rubin and Jonathan H. Simon. None of the members of the Compensation Committeecompensation committee has ever been an officer or employee of our company or any of our subsidiaries or has had any relationship with the Trust that would require disclosure under Item 404 of Regulation S-K (Certain Relationships and Related Party Transactions) and no "compensation committee interlocks" existed during fiscal 2007.2010.

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Compensation of Trustees

        Non-management members of our board of trustees are paid an annual retainer of $20,000. In addition, each member of the Audit Committeeaudit committee is paid an annual retainer of $5,000, the Chairmanchairman of the Audit Committeeaudit committee is paid an additional annual retainer of $10,000, each member of the Compensation Committeecompensation committee is paid an annual retainer of $4,000, the Chairmanchairman of the Compensation Committeecompensation committee is paid an additional annual retainer of $8,000, each member of the Nominatingnominating and Corporate Governance Committeecorporate governance committee is paid an annual retainer of $3,000 and the Chairmanchairman of the Nominatingnominating and Corporate Governance Committeecorporate governance committee is paid an additional annual retainer of $4,000. Each non-management member of our board of trustees is also paid $1,200 for each board meeting and $1,000 for each committee meeting attended in person and $750 for each board meeting attended by telephone conference, and each non-management trustee is paid $1,000 for each Committee meeting attended in person and $750 for each committee meeting attended by telephone conference. In fiscal 2007,2010, each non-management member of our board of trustees was also awarded 1,2503,000 restricted common shares under the BRT Realty Trust 20032009 Incentive Plan. The restricted shares have a five year vesting period during which period the registered owner is entitled to vote and receive cash distributions on such shares. Non-management trustees who reside outside of the local area in which our executive office is located also receive reimbursement for travel expenses incurred in attending board and committee meetings.

Compensation        The following table sets forth the cash and non-cash compensation of Trustees
trustees for the fiscal year ended September 30, 2010:

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(3)(4)

Sets forth the cashExcludes dividends declared in fiscal 2009 and paid to trustees in 2007fiscal 2010 on unvested restricted shares awarded underinasmuch as such dividends were reflected in the BRT Realty Trust 2003 Incentive Plan.



(4)

On June 30, 2004, we awarded 1,000 restricted shares, with a grant date fair valuecompensation paid to trustees in our proxy statement for our 2010 annual meeting of $19,500. On January 31, 2005, we awarded 1,000 restricted shares, with a grant date fair value of $23,550. On January 31, 2006, we awarded 1,000 restricted shares, with a grant date fair value of $25,130. On January 31, 2007, we awarded 1,250 restricted shares, with a grant date fair value of $35,688. Each share of restricted stock vests five years after the date of grant.shareholders.



(5)

On January 31, 2006, we awarded 1,000 restricted shares, with a grant date fair value of $25,130. On January 31, 2007, we awarded 1,250 restricted shares, with a grant date fair value of $35,688. On January 31, 2008, we awarded 1,500 restricted shares, with a grant date fair value of $23,535. On February 2, 2009, we awarded 3,000 restricted shares, with a grant date fair value of $12,150. On January 29, 2010, we awarded 3,000 restricted shares with a grant date fair value of $13,320. Each share of restricted stock vests five years after the date of grant.



(6)

On September 8, 2003,January 31, 2006, we awarded 7502,800 restricted shares, with a grant date fair value of $14,070.$70,364. On February 10, 2004,January 31, 2007, we awarded 1,0002,800 restricted shares, with a grant date fair value of $23,390.$79,940. On January 31, 2005,2008, we awarded 1,0004,000 restricted shares, with a grant date fair value of $23,550.$62,760. On January 31, 2006,February 2, 2009, we awarded 1,0008,000 restricted shares, with a grant date fair value of $25,130.$32,400. On January 31, 2007,29, 2010, we awarded 1,2508,000 restricted shares, with a grant date fair value of $35,688.$35,520. Each share of restricted stock vests five years after the date of grant.



(7)

The table does not include the compensation paid to such person in fiscal 2010 by REIT Management Corp., advisor to our company. See "Certain Relationships and Related Transactions" for a discussion of the compensation paid to such person by our advisor in fiscal 2010.



(8)

On May 5, 2003,January 31, 2008, we awarded 7501,500 restricted shares, with a grant date fair value of $11,438.$23,535. On February 10, 2004,2, 2009, we awarded 1,0003,000 restricted shares, with a grant date fair value of $23,390.$12,150. On January 31, 2005,29, 2010, we awarded 1,0003,000 restricted shares, with a grant date fair value of $23,550. On January 31, 2006, we awarded 1,000 restricted shares, with a grant date fair value of $25,130. On January 31, 2007, we awarded 1,250 restricted shares, with a grant date fair value of $35,688. Each share of restricted stock vests five years after the date of grant.



(8)

On June 14, 2004, we awarded 1,000 restricted shares, with a grant date fair value of $20,400. On January 31, 2005, we awarded 1,000 restricted shares, with a grant date fair value of $23,550. On January 31, 2006, we awarded 1,000 restricted shares, with a grant date fair value of $25,130. On January 31, 2007, we awarded 1,250 restricted shares, with a grant date fair value of $35,688.$13,320. Each share of restricted stock vests five years after the date of grant.

Non-Management Trustee Executive Sessions

        In accordance with New York Stock Exchange listing standards, our non-management trustees meet regularly in executive sessions without management. "Non-management" trustees are all those trustees who are not employees or officers of our company and include trustees, if any, who are not employees or officers but who were not determined to be "independent" by our board of trustees. The board has not designated a "Lead Director" or a single trustee to preside at executive sessions. The person who presides over executive sessions of non-management trustees is one of the committee chairman andchairmen. To the extent practicable, the presiding trustee at the executive sessions is rotated among the chairmen of the board's committees.

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Communications with Trustees

        Shareholders and interested persons who want to communicate with our board or any individual trustee can write to:

BRT Realty Trust
Suite 303
60 Cutter Mill Road, Suite 303
Great Neck, NY 11021
Attention: Secretary

        Your letter should indicate that you are a shareholder of BRT Realty Trust. Depending on the subject matter, the Secretary will:

•

Forward the communication to the trustee or trustees to whom it is addressed;



•

Attempt to handle the inquiry directly; for example where it is a request for information about our company or it is a stock-related matter; or



•

Not forward the communication if it is primarily commercial in nature or if it relates to an improper or irrelevant topic.

        At each board meeting, the Secretary will present a summary of communications received, if any, since the last meeting that were not forwarded and make those communications available to the trustees on request.

        In the event that a shareholder, employee or other interested person would like to communicate with our non-management trustees confidentially, they may do so by sending a letter to "Non-Management Trustees" at the address set forth above. Please note that the envelope should contain a clear notation that it is confidential.

Trustee Attendance at Annual Meetings

        We typically schedule a board meeting immediately following our annual meeting of shareholders and expect that, absent a valid reason, our trustees will attend our annual meeting of shareholders. At the annual meeting of shareholders held in March 2007, all trustees, except for Gary Hurand, were in attendance.

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INFORMATION REGARDING BENEFICIAL OWNERSHIP OF PRINCIPAL
SHAREHOLDERS, TRUSTEES AND MANAGEMENT

        The following table sets forth information concerning our common shares owned as of January 17, 2011 by (i) all persons known to owneach person beneficially 5%owning five percent or more of our outstanding common shares, (ii) all trustees and nominees foreach trustee, (iii)(ii) each executive officer named in the Summary Compensation Table, and (iv)(iii) all trustees and executive officers as a group:group.

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ELECTION OF TRUSTEES

(Proposal 1)

        The board of trustees is divided into three classes, each of which is elected for a staggered term of three years. Our Third Amended and Restated Declaration of Trust provides for the number of trustees to be between five and fifteen, the exact number to be determined by our board of trustees. The board has fixed the number of trustees at ten. The board may, following the meeting, increase or decrease the size of the board and fill any resulting vacancy or vacancies.

        At the annual meeting of shareholders, four Class III Trustees (Kenneth F. Bernstein, Fredric H. Gould, Gary Hurand and Elie Weiss) are standing for election to our board of trustees. Each nominee has been recommended to our board of trustees by the Nominatingnominating and Corporate Governance Committeecorporate governance committee for election at the annual meeting and each nominee has been nominated by our board of trustees to stand for election at the annual meeting, to hold office until our 20112014 annual meeting and until his successor is elected and qualified. Class I Trustees will be considered for election at our 20092012 annual meeting and Class II Trustees will be considered for election at our 20102013 annual meeting. Proxies will not be voted for a greater number of persons than the number of nominees named in the proxy statement.

        We expect each nominee to be able to serve if elected. However, if any nominee is unable to serve as a trustee, unless a shareholder withholds authority, the persons named in the proxy card may vote for any substitute nominee proposed by the board of trustees. Each nominee, if elected, will serve until the annual meeting of shareholders to be held in 2011.2014. Each other trustee whose current term will continue after the date of our 20082011 annual meeting will serve until the annual meeting of shareholders to be held in 20092012 with respect to the Class I Trustees, and 20102013 with respect to the Class II Trustees.

        The following table sets forth certain information regarding each nominee for election to the board of trustees:

NOMINEES FOR ELECTION AS CLASSNominees for Election As Class III TRUSTEES WHOSE TERM WILL EXPIRE IN 2011Trustees Whose Term Expires in 2014

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Vote Required for Approval of Proposal 1

        The affirmative vote of a pluralitymajority of the voting power of shareholders present in person or represented by proxy at the meetingoutstanding common shares is required for the election of each nominee for trustee.

        THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR THE ELECTION OF KENNETH F. BERNSTEIN, FREDRIC H. GOULD, GARY HURAND AND ELIE WEISS AS CLASS III TRUSTEES. THE PERSONS NAMED IN THE PROXY CARD INTEND TO VOTE SUCH PROXY FOR THE ELECTION AS TRUSTEES OF KENNETH F. BERNSTEIN, FREDRIC H. GOULD, GARY HURAND AND ELIE WEISS, UNLESS YOU INDICATE THAT YOUR VOTE SHOULD BE WITHHELD.WEISS.

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        The following tables set forth information regarding trustees whose terms will continue after the date of the annual meeting:

CLASSClass I TRUSTEES WHOSE TERM EXPIRES IN 2009Trustees Whose Term Expires in 2012

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CLASSClass II TRUSTEES WHOSE TERM EXPIRES IN 2010Trustees Whose Term Will Expire in 2013

PROPOSAL 2
ADVISORY APPROVAL OF
COMPENSATION OF EXECUTIVES

        The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the "Dodd-Frank Act") requires that we seek a non-binding advisory vote from our shareholders to approve the compensation awarded to our named executive officers as disclosed in this proxy statement. Although the advisory vote is non-binding, the Compensation Committee and the Board will review the results of the vote and will consider our shareholders' concerns and take them into account in future determinations concerning our executive compensation program. The Board of Trustees recommends that you indicate your support for the Company's compensation policies and procedures for its named executive officers, as outlined in the resolution below. Accordingly, the following resolution will be submitted for a shareholder vote at the 2011 Annual Meeting:

        "RESOLVED, that the shareholders approve, on an advisory basis, the compensation of the individuals identified in the Summary Compensation Table, as disclosed in the BRT Realty Trust 2011

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proxy statement pursuant to the compensation disclosure rules of the Securities and Exchange Commission (which disclosure includes the Compensation Discussion and Analysis and accompanying compensation tables and related information disclosed in the Executive Compensation section of such proxy statement)."

THE BOARD OF TRUSTEES RECOMMENDS
A VOTE IN FAVOR OF THE ADOPTION OF THIS RESOLUTION

PROPOSAL 3
ADVISORY VOTE ON THE FREQUENCY
AT WHICH WE WILL SEEK SHAREHOLDER ADVISORY
VOTES ON EXECUTIVE COMPENSATION

        In addition to requesting the shareholder advisory approval of the executive compensation program, the Dodd-Frank Act also requires that once every six years we seek shareholder approval of how often we will seek advisory approval of executive compensation. The Dodd-Frank Act requires that we present every one, two or three years, or abstain as alternatives for shareholders.

        The Board has determined that an advisory vote on executive compensation every three years is the fatherbest approach for the Trust based on a number of Matthew J. Gouldconsiderations, including the following:

•

the elements of our executive compensation program should not change in a significant manner from year to year;



•

shareholders have various methods of providing feedback on executive compensation matters even in years in which there is no advisory vote on executive compensation—for example, by communicating directly with the Board, as discussed under "Governance of our Company—Communications with Trustees;"



•

a three-year vote cycle gives the Board sufficient time to thoughtfully consider the results of the advisory vote and Jeffrey A. Gould.to implement any desired changes to our executive compensation policies and procedures; and



(2)•

Gary Huranda three-year cycle will provide investors sufficient time to evaluate the effectiveness of our short- and long-term compensation programs.

        Although the vote on this Proposal is advisory and non-binding, the father-in-law of Elie Weiss.

THE BOARD OF TRUSTEES RECOMMENDS
A VOTE OF EVERY THREE YEARS FOR THE FREQUENCY
AT WHICH WE WILL PRESENT TO
SHAREHOLDERS AN ADVISORY VOTE ON COMPENSATION OF EXECUTIVES

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
(Proposal 4)

General

        The audit committee and the board of trustees is seeking ratification of the appointment of BDO USA, LLP ("BDO") as our independent registered public accounting firm for the fiscal year ending September 30, 2011. Representatives of BDO and Ernst & Young LLP, wasour auditors for more than the Trust'spast three fiscal years, are expected to be present at the annual meeting and will have the opportunity

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to make a statement if such representatives desire to do so and will be available to respond to appropriate questions.

        We are not required to have our shareholders ratify the selection of BDO as our independent registered public accounting firm. We are doing so because we believe it is good corporate practice. If our shareholders do not ratify the selection, the audit committee will reconsider whether or not to retain BDO, but may, after reconsidering, still decide to retain such independent registered public accounting firm. Even if the selection is ratified, the audit committee, in its discretion, may change the appointment at any time during the year if it determines that such a change would be in our best interests.

        The affirmative vote of the holders of a majority of outstanding common shares present at the meeting, in person or by proxy, is required to ratify the appointment of BDO as our independent registered public accounting firm for fiscal 2007 and throughout2011.

THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS VOTE FOR RATIFICATION OF THE APPOINTMENT OF BDO AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL 2011.

Change in Auditors

        On December 14, 2010, the periods covered by theaudit committee of our board of trustees dismissed Ernst & Young LLP as our independent registered public accounting firm.

        Ernst & Young's reports on our consolidated financial statements for the fiscal 2007. A representativeyears ended September 30, 2010 and 2009 did not contain an adverse opinion or a disclaimer of opinion, nor were such reports qualified or modified as to uncertainty, audit scope or accounting principles. During the fiscal years ended September 30, 2010 and 2009 and through December 14, 2010, (i) there were no disagreements with Ernst & Young on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if not resolved to the satisfaction of Ernst & Young, LLP is expected to attend our annual meeting and will be available to respond to questions from shareholders, and may make a statement if such representative desires to do so. The Audit Committee has retainedwould have caused Ernst & Young LLP to make a reference thereto in its reports on our consolidated financial statements for such periods and (ii) there have been no "reportable events" as defined in Item 304(a)(1)(v) of Regulation S-K.

        On December 28, 2010, the audit committee of our board of trustees engaged BDO as our independent registered public accountants, as of and for the fiscal year ending September 30, 2011 and the interim periods prior to such year-end. During our two most recent fiscal years and through December 28, 2010, we did not consult with BDO regarding the application of accounting principles to a specific transaction, either completed or proposed, or the type of audit opinion that might be rendered on our financial statements, fornor did BDO provide advice to us, either written or oral, that was an important factor considered by us in reaching a decision as to an accounting, auditing or financial reporting issue. Further, during our two most recent fiscal 2008.years and through December 28, 2010, we did not consult with BDO on any matter described in Item 304(a)(2)(i) or (ii) of Regulation S-K.

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Audit Fees and Other Fees

        The following table presents the fees for professional audit services billed by Ernst & Young LLP for the audit of our annual consolidated financial statements for the years ended September 30, 20062010 and 20072009 and the audit of internal control over financial reporting for the years ended September 30, 20062010 and 20072009 and fees billed for other services rendered to us by Ernst & Young LLP for each of such years:

Pre-Approval
Approval Policy for Audit and Non-Audit Services

        The Audit Committee pre-approves all audit tax and non-audit services involving our independent registered public accounting firm.

        In addition to the audit work necessary for us to file required reports under the Securities Exchange Act of 1934, as amended (i.e., quarterly reports on Form 10-Q and the annual report on Form 10-K), our independent registered public accounting firm may perform non-audit services, other than those prohibited by the Sarbanes-Oxley Act of 2002, provided they are pre-approved by the Audit Committee. The Audit Committee approved all non-audit services and related fees (which are set forth in the table above) performed by our independent registered public accounting firm in fiscal 2007.

        Our independent registered public accounting firm is prohibited from providing the following types of services:

•

bookkeeping or other services related to our accounting records or financial statements;



•

financial information systems, design and implementation;

•

appraisal or valuation services, fairness opinions or contribution-in kind-reports;



•

actuarial services;



•

internal outsourcing services;



•

management functions or human resources;



•

broker or dealer, investment adviser or investment banking services; and



•

legal services and expert services related to the audit.

Approval Process

        The Audit Committeecommittee annually reviews and approves the retention of the Trust'sour independent registered public accounting firm for each fiscal year and the audit of our financial statements for such fiscal year, including the fee associated with the audit. In addition, the Audit Committeeaudit committee approves the provision of tax related and other non-audit services. Any fees for the audit and any fees for non-audit services in excess of those approved by the Audit Committeeaudit committee must receive the prior approval of the Audit Committee.audit committee.

        Proposals for any non-audit services to be performed by our independent registered public accounting firm must be approved by the Audit Committeeaudit committee in advance at a regularly scheduled meeting, by unanimous consent or at a meeting held by telephone conference.

        For fiscal 2010, the audit committee pre-approved all of the audit, tax and non-audit services rendered by our independent registered public accounting firm.

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REPORT OF THE AUDIT COMMITTEE

        The Audit Committee is comprised of three independent trustees and operates under a written charter adopted by the Committee and the board of trustees a copy of which is attached to this proxy statement as Exhibit A. The Audit Committee reviewed and revised the charter in fiscal 2007. The board of trustees has reviewed Section 10A(m)(3) of the Securities Exchange Act of 1934, as amended, and the New York Stock Exchange listing standards independence requirements for Audit Committee members and has determined that each member of the Audit Committeeaudit committee is "independent," as required by Section 10A(m)(3) of the Exchange Act and the rules and regulations promulgated thereunder and by the listing standards of the New York Stock Exchange.

        The Audit Committeeaudit committee is appointed by the board of trustees to oversee and monitor, among other things, the financial reporting process, the independence and performance of the independent registered public accounting firm, and the Trust's internal controls.controls and the performance of the accounting firm performing the internal audit function on behalf of the Trust. It is the responsibility of executive management to prepare the Trust's financial statements in accordance with generally accepted accounting principles, and it is the responsibility of the independent registered public accounting firm to perform an independent audit of the Trust's financial statements and to express an opinion on the conformity of those financial statements with generally accepted accounting principles.

        In this context, the Audit Committeeaudit committee met on five occasions in fiscal 20072010 and held discussions with management and the independent registered public accounting firm. Management represented to the Audit Committeeaudit committee that the fiscal 20072010 year end consolidated financial statements were prepared in accordance with generally accepted accounting principles, and the Audit Committeeaudit committee reviewed and discussed the audited consolidated financial statements with management and the independent registered public accounting firm. The Audit Committeeaudit committee also reviewed and discussed the Trust's internal control procedures with management, the independent registered public accounting firm and the accounting firm performing the internal audit function.function on behalf of the Trust. In addition, the Audit Committeeaudit committee reviewed the activities of management's Disclosure Controlsdisclosure controls and Procedures Committeeprocedures committee and confirmed prior to approving each quarterly filing and the annual filing with the Securities and Exchange Commission that the requisite officers of the Trust were in accord with the certifications required under the Sarbanes-Oxley Act of 2002 and would execute and deliver such certifications. In fiscal 2007,2010, the Audit Committeeaudit committee reviewed the unaudited quarterly financial statements prior to the filing of each Quarterly Report on Form 10-Q with the Securities and Exchange Commission and each earnings press release.release prior to issuance. The Audit Committeeaudit committee discussed with the independent registered public accounting firm matters required to be discussed by Statement on Auditing Standards No. 61 (Communication With Audit Committee).

        In addition, the Audit Committeeaudit committee discussed with the independent registered public accounting firm the auditor's independence, and has received the written disclosures and the letter from the independent registered public accounting firm required by Independence Standards Board Standard No. 1 (Independence Discussions With Audit Committees). Further, the Audit Committeeaudit committee reviewed and approved the auditors' fees, both for performing audit and non-audit services. The Committeecommittee also considered whether the provision of non-audit services by the independent registered public accounting firm was compatible with maintaining the auditor's independence and concluded that it was compatible with maintaining its independence.

        The Audit Committeeaudit committee was provided with a report by the independent registered public accounting firm that included a description of material issues raised by its most recent "peer review" and any inquiry or investigation by governmental or professional authorities within the past few years respecting one or more independent audits carried out by the independent registered public accounting firm.

        The Audit Committeeaudit committee meets with the independent registered public accounting firm and the accounting firm performing the internal audit function, with and without management present, to discuss the results of their examinations, their evaluations of the internal controls, and the overall

quality of the Trust's financial reporting. In fiscal 2007,2010, the Audit Committeeaudit committee reviewed and discussed with the independent registered public accounting firm, the accounting firm perfomingperforming the Trust's internal audit function and management, the Trust's compliance with Section 404 of the Sarbanes-Oxley Act of 2002 regarding the audit of internal controls over financial reporting.

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        Based on the reviews and discussions referred to above, the Audit Committeeaudit committee recommended that the Trust's audited consolidated financial statements for the year ended September 30, 20072010 be included in the Trust's Annual Report on Form 10-K for the year ended September 30, 20072010 for filing with the Securities and Exchange Commission.

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EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Highlights

        The following are highlights of our compensation practices; we encourage you to read the more detailed information set forth herein:

•

all of our named executive officers are employees at will—none of these officers have employment agreements with us;



•

though we do not have a formal policy requiring a minimum level of ownership of our shares by our named executive officers, these officers own beneficially in the aggregate approximately 1,072,130 shares or 7.7% of our outstanding shares and none of such officers has sold any of their shares in more than the past five years;



•

there are no severance or similar arrangements for our named executive officers, other than the accelerated vesting of restricted share awards upon a change of control as described herein;



•

there are no excise tax gross ups or similar arrangements for our executive officers;



•

the restricted shares awarded to our named executive officers vest five years after the grant date on a "cliff-vesting" basis—the shares do not vest incrementally on a quarterly or annual basis;



•

the compensation we pay our named executive officers is generally related (though not formulaically tied to) to our financial performance. Specifically,



•

when our net loss attributable to common shareholders increased to $47.8 million in fiscal 2009 from a net loss attributable to common shareholders of $260,000 in fiscal 2008, the aggregate of the cash bonus and value of stock awards granted to Jeffrey A. Gould, George Zweier and Mitchell Gould(i.e., our full-time named executive officers) for fiscal 2009 decreased by $77,160 (62.9%), $23,070 (44.9%) and $32,515 (42.3%), respectively, from fiscal 2008 and the total compensation of Jeffrey A. Gould, George Zweier and Mitchell Gould decreased from fiscal 2009 by $261,044 (27.3%), $13,574 (4.9%) and $53,434 (13.3%), respectively, from their total compensation in fiscal 2008.



•

in fiscal 2010, our net loss attributable to common shareholders decreased to $8 million from a net loss attributable to common shareholders of $47.8 million in fiscal 2009. The aggregate of the cash bonus and value of stock awards granted to Jeffrey A. Gould, George Zweier and Mitchell Gould for fiscal 2010 increased by $6,920 (15.2%), $4,338 (15.3%) and $4,120 (9.3%), respectively, and the total compensation payable to Jeffrey A. Gould and Mitchell Gould, increased by $20,413 (2.9%), and $5,276 (1.5%), respectively, from their total compensation in fiscal 2009. Mr. Zweier's total compensation in fiscal 2010 decreased slightly from his total compensation in fiscal 2009.



•

the total compensation paid to our named executive officers in fiscal 2010 was significantly less than the compensation paid to such officers in fiscal 2008.

General

        This compensation discussion and analysis describes our compensation objectives and policies as applied to our named executive officers in fiscal 2007.2010. This discussion and analysis focuses on the information contained in the compensation tables that follow this discussion and analysis, but weanalysis. We also describe compensation actions taken historically to the extent it enhances an understanding of our executive compensation disclosure. Our compensation committee oversees our compensation program, recommends the compensation of executive officers employed by us on a full-time basis to our board of

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trustees for its approval, and reviews, along with our audit committee reviews the appropriateness of the allocation to us under a shared services agreement of the compensation of executive officers who perform services for us on a part time basis. Another element of our compensation program is the fee paid by us to our advisor, REIT Management Corp., which results inpursuant to an amended and restated advisory agreement, and the related payment by our advisor of compensation to certain of our executive officers, including certain of our named executive officers.

        Historically, we have used the following compensation structure with respect to the compensation paid by us to our executive officers:

•

executive officers who devote all, or substantially all, their business time to our affairs are compensated directly by us. The named executive officers who fit into this category are Jeffrey A. Gould, our president and chief executive officer, Mitchell Gould, our executive vice president and George Zweier, our vice president and chief financial officer. These named executive officers are primarily involved in activities related to our basic lending business, including loan originations, loan underwriting, due diligence activities, loan portfolio management, new business, loan workout and enforcement, capital raising and financial reporting;



•

executive officers who devote their time to us on a part-time basis, whose basic annual compensation (base salary, bonus, if any, and perquisites) is allocated to us under a shared services agreement based upon the estimated time each devotes to us and to the other entities which are parties to the shared services agreement. These executive officers perform services to us related primarily to legal, accounting and tax matters, corporate governance, Securities and Exchange Commission and New York Stock Exchange reporting and other regulatory matters, and consult with our executives and employees in areas involving loan originations, loan workouts, litigation (including foreclosure actions) and capital raising. David W. Kalish and Mark H. Lundy, asenior vice presidents, who also serve as our senior vice president, finance and our general counsel, isrespectively, are the only named executive officerofficers who is infit into this category;



•

executive officers who devote their time to us on a part-time basis, who receive compensation from our advisor, but do not receive basic annual compensation from us and whose basic annual compensation is not allocated to us.us under the shared services agreement. We pay a fee to our advisor for the services it performs for us pursuant to an advisory agreement.agreement, as amended. The advisor compensates these executive officers for the services they perform for our advisor for our benefit. The advisory agreement was entered into in 1983, and was amended and restated effective as of January 1, 2007. TheThis agreement, which was to expire on December 31, 2010, was extended until April 30, 2011. None of our named executive officers who fit into this category are Fredric H. Gould, the chairman of our board, and Matthew J. Gould, a senior vice president.in fiscal 2010. Jeffrey A. Gould, David W. Kalish and Mark H. Lundy, are named executive officers, who also receive compensation from our advisor in the form of consulting fees. The services which the advisor performs for us include, among other services, arranging and negotiating credit lines and mortgage financing for us and our joint ventures, interfacing with our lending banks,lenders, participating in our loan analysis and approvals (which includes its executives who serveserving on our loan committee), providing investment advisory advice, building inspections in connection with loan originationsworkout and construction draws, litigation strategy (including foreclosure actions and support,borrower bankruptcies), and consultationconsulting with our executives and employees in allmany other aspects of our business.business, as required. Of the named executive officers who receive compensation from the advisor, Jeffrey A. Gould is the only one who receivereceives direct compensation from usus. The basic annual compensation of David W. Kalish and Mark H. Lundy, both of whom receive compensation from our advisor, is allocated to us under the only oneshared services agreement.

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Objectives of our Executive Compensation Program

        The objective of our compensation program with respect to executive officers who devote their full-time to our affairs is to ensure that the total compensation paid to such officers is fair and competitive. The compensation committee believes that relying on this principle will permit us to retain and motivate our executive officers. We have historically experienced a low level of employee (including executive) turn-over. In the event that a senior executive officer is added to our staff, the compensation of such officer is negotiated on a case-by-case basis, with the goal being to provide a competitive salary and an equity interest sufficient to motivate the executive and align his interests with those of our shareholders. With respect to senior executive officers whose basic annual compensation is allocated to us under the shared services agreement. Neither Fredric H. Gould nor Matthew J. Gouldagreement, it is our objective that each of these executive officers receives basic annual compensation fromwhich is reasonable for the services they perform on our behalf. In addition, the compensation committee must be satisfied that those executives who devote their time to us noron a part-time basis provide us with sufficient time and attention to fully meet our needs and to fully perform their duties on our behalf. The compensation committee is of the opinion that our part-time executive officers are not distracted by their activities on behalf of affiliated entities and performance of activities on behalf of affiliated entities does either allocate his basic annualnot adversely affect their ability to perform their duties on our behalf.

        Our compensation to us.

        We believecommittee believes that utilizing part-time executive officers pursuant to the shared services agreement and the advisory agreement enables us to benefit from access to, and the services of, a group of senior executives with experience and knowledge in real estate lending, real estate management, finance, banking, legal, accounting and tax matters that an organization our size could not otherwise afford.

Objectives The Committee is currently conducting a review of our Executive Compensation Program

        The goal of our executive officerorganization structure and compensation program is to motivate and retain individuals with experience and knowledge in real estate lending and real estate management, finance, banking, law and accounting who can contribute to our growth, with the objective of improving shareholder value over the long term. Each of the senior members of our management team, other than Mitchell Gould and George Zweier, has been an executive with us for 17 years or more and each of Mitchell Gould and George Zweier has been employed by us for approximately nine years.practices.

Compensation Setting Process

Full-time Executive Officers

        We reviewTo establish compensation for our executive officers for fiscal 2010, the compensation committee reviewed the annual compensation survey prepared for the National Association of Real Estate Investment Trusts (NAREIT) to understand the base salary, bonus, long-term incentives and total compensation paid by other mortgage and equity REIT'sREITs to their executive officers to assist us in providing a fair reasonable and competitive compensation package to our full-time executive officers. Although there are many companies engaged in real estate lending, there are few companies which engage in the short-term, bridge lending business in which we engage in or have a market capitalization comparable to ours. As a result, the NAREIT compensation survey, although helpful, does not provide information which is directly applicable to us. Accordingly, and since we have only nineten full-time employees, we determine compensation for our full-time employees, including our executives,executive officers, on a case-by-case basis.basis and our compensation decisions are subjective. We do not utilize specific performance targets.

        For our full-time executive officers, other than the president and chief executive officer, the recommendations of our president and chief executive officer plays a significant role in the compensation-setting process, since the president and chief executive officer is keenly aware of each executive officer's duties and responsibilities and is most qualified to assess the level of each officer's performance in carrying out his duties and responsibilities. The president and chief executive officer, prior to making recommendations to the compensation committee concerning each executive officer's compensation, consults with the chairman of theour board of trustees and other senior executive officers. During thethis process, they consider our overall performance for the immediately preceding fiscal year, including, without limitation, totalour results from operations. In fiscal 2010, which was a difficult year for our company due to the continuing impact of the recessionary environment and the challenges faced in the credit markets and in commercial real estate, consideration was given to an executive's activities in

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workouts and foreclosures, property operations and sale of properties after acquisition in foreclosure as well as loan originations, income from continuing operations, net income and cash distributions paid to shareholders. No one of these measures oforigination activities. Since executive officers have different responsibilities, no performance criteria is given more weight than another and they are used to provide an overall view of our performance forany other. In considering base compensation, the preceding year. The president and chief executive officer, chairman of the board and other senior executive officers also assessassesses an individual's performance, in such year, which assessment is highly subjective. After this process, the president and chief executive officer proposes to the compensation committee with respect to each full-time executive officer, a base salary for the next calendar year, a bonus applicable to the preceding fiscal year (which is paid in the following year), and the number of shares of restricted stock to be awarded to each individual executive officer. At its annual compensation committee meeting, held in December of each year, the compensation committee reviews these recommendations. The compensation committee has discretion to accept, reject or modify the recommendations. The final decision by the compensation committee on compensation matters related to all executive officers, other then with respect to the president and chief executive officer, is reported to the board of trustees, which approvescan approve or modifiesmodify the action of the committee.

        With respect to our president and chief executive officer, after the compensation committee has reviewed the NAREIT compensation survey for any helpful information, and our overall performance

for the preceding fiscal year, the chairman of the committee meets with the president and chief executive officer to discuss and review his total compensation, including the compensation he receives from any ofour advisor and from the other parties to the shared services agreement and compensation paid to him by our advisor.agreement. The compensation committee then determines annual base compensation, and bonus, if any, for the president and chief executive officer and reports its determinations to the board of trustees, which approves or modifies the determination of the committee.trustees. The number of shares of restricted stock to be awarded to himthe president and chief executive officer is considered and determined by the committee annually, at its annualthe same time the committee meeting, along with its approval ofconsiders and approves all restricted stock awards to be made for that year.

"Part-Time" Executive Officers

        Our chairman of the board is ana principal executive and/or sole owner of each entity which participates with us in the shared services agreement. In such capacity, our chairman, in consultation with our president and chief executive officer and others, determines the annual base compensation of our part-time executive officers to be paid in the aggregate by one or more of the entities which are parties to the shared services agreement. The annual base compensation, bonus, if any, pension contribution, and perquisites of certain of our part-time executive officers (primarily those engaged in legal and accounting functions) is allocated to us and other parties to the shared services agreement, pursuant to the shared services agreement. The shared services agreement, as approved by our board of trustees, was finalized in January 2002. The compensationOur audit committee reviews annually the amount of a part-time executive officers' base annual salary and bonus, if any, that is allocated to us forallocations made under the yearshared services agreement to determine ifthat the allocation is fair and reasonable. The compensation committee may accept, reject or modify such allocations.allocations, including the payroll allocations, have been made in accordance with the terms of the shared services agreement.

        The compensation committee is apprised of but does not take any action with respect to, the compensation paid to our advisor or the compensation paid by the advisor to part-time executive officers, sinceadvisor. Since the compensation we pay the advisor is pursuant to an agreement, as amended, which expires on April 30, 2011 and was approved by our board of trustees.trustees, the compensation committee does not approve the fairness of any such compensation. In addition, our compensation committee is apprised of the compensation paid by our advisor and other affiliates to each of our part-time executive officers.

Compensation Consultant

        In 2007,October 2008, our compensation committee engaged an independentFPL Associates L.P., a nationally recognized compensation consulting firm specializing in the real estate industry. FPL Associates L.P. does not perform any services for us except as a compensation consultant Independent Compensation Committee Adviser, LLC.performing services expressly set forth in an engagement letter. Prior to our engagement of FPL Associates L.P. in October 2008, it had never performed any services on our behalf or on behalf of any of our affiliates. Subsequent to the retention of FPL Associates L.P. by us in October 2008, it was retained as a compensation consultant by the compensation committee of One Liberty Properties, Inc. One Liberty Properties, Inc. may be deemed an affiliate of ours.

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        The primary purpose of our compensation committee's initial engagement of the engagementcompensation consultant was for the compensation consultant to conduct a comprehensive benchmarking analysis for our senior executives, to enable our compensation committee to determine if the compensation of our senior executive officers was fair and reasonable and to assist theour compensation committee in assessingmaking any necessary adjustments to the relative rangecompensation components. In January 2010, our compensation committee engaged FPL Associates L.P. to update its benchmarking analysis. In January 2010, the compensation consultant reviewed the compensation of competitive practices for base salaries, annual bonuses, total annualour named executive officers. We did not retain a compensation and potential equity/long-term incentiveconsultant in connection with determining compensation for eight of our executive officers including all named executive officers other than Fredric H. Gould and Matthew J. Gould.fiscal 2011.

        In performingconnection with its initial benchmarking analysis, the compensation consultant reviewed compensation data from two surveys: the 2006 NAREIT Compensation and Benefits Survey Report and the 2005/2006 Watson Wyatt ECS Top Management Survey. management agreed upon a methodology to determine comparative peer groups, as follows:

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The 2006 NAREIT Compensation and Benefits Survey ReportFull-Time Peer Group; to be used for executives who dedicate all, or substantially all, of their business time to our affairs. The companies in this peer group could include public REITs focused on 95the debt side of the real estate business, debt companies which focus on similar loan size and emphasize senior lending and/or debt investment companies located in New York. The compensation consultant noted in its report to the compensation committee that the specific peer group companies are not a perfect match, due to our unique position among our peers. We are smaller than most of our peers and our primary business is to provide short-term senior financing secured by real property, whereas many of our peers engaged in mortgage lending, provide junior/mezzanine financing.



•

The Shared Peer Group; to be used for executives who dedicate a portion of their business time to our affairs and who also dedicate time to affiliated companies. The companies in this peer group may have similar characteristics as the REITfull time peer group companies and REOC industries, withalso includes public equity REITs specializing in net leased properties (in view of the fact that one of the more significant companies which participates in the shared services agreement is primarily engaged in owning and operating net leased properties) and public real estate companies comparable in size to us plus our related companies (measured by market capitalization from under $1 billionand total capitalization) but that may vary in terms of property focus.

        The peer groups used by the compensation consultant in January 2010, for its updated benchmarking analysis, are as follows:

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Full-Time Peer Group: This peer group consists of ten public REITs that are comparable to over $6 billion. The 2005/2006 Watson Wyatt ECS Top Management Survey reported data on approximately 2,400 companies across general industry, with market capitalizations from less than $100 million to over $5 billion.

us in terms of primary focus (debt REITs), size and/or geographic location. The compensation consultant also reviewed the market practices of commercial banks typically active in commercial real estate lending, as well as private debt/investment companies, as appropriate. The compensation data from aconsultant based the methodology and composition of the peer group of fourteen publicon the initial benchmarking analysis it conducted for us. The compensation consultant made modifications to the peer group, as appropriate, to reflect the current economic environment. For example, Hanover Capital Mortgage Holdings, Inc. and CapitalSource Inc., which were included in the initial peer group, were removed from the updated peer group since Hanover Capital Mortgage Holdings, Inc. merged with another entity and CapitalSource Inc. is no longer a REIT.

        The following are the full-time peer group companies selectedused by the compensation consultant after reviewing thein its updated benchmark analysis:

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•

Shared Peer Group: This peer group withconsists of six public equity REITs and six public debt REITs that are comparable to our management, whichcompany, plus our related companies, the independent consultant determined were most comparable with us in terms of focus, size lines of business and/or business models.geographic location. The compensation consultant noted that finding appropriately sized publicly tradedalso reviewed the market practices of several commercial banks typically active in commercial real estate lending, as well as private debt/investment companies, whose lines of business and business models match up with ours was difficult. The peer group companies selected were Agree Realty Corp., Alesco Financial Inc., American Mortgage Acceptance Co., Arbor Realty Trust, Capital Lease Funding Inc., Consolidated Tomoka Land Co., Dynex Capital Inc., Gramercy Capital Corp., LTC Properties Inc., Monmouth Real Estate Investment Trust, Mortgageit Holdings Inc., Northstar Realty, One Liberty Properties, Inc. (which is affiliated with BRT Realty Trust) and Winston Hotels Inc.




as appropriate. The compensation consultant concluded thatbased the compensation provided by us (whether paid directly by us or allocated to us, but without taking into any account any payments made to executive officers, if any, by our advisor or other parties to the shared services agreement) for three of our named executive officers (including our presidentmethodology and chief executive officer) were in the lower halfcomposition of the peer group on the previous benchmarking analysis it conducted for us, and onedid not make modifications to this peer group. The following are the shared peer group companies used by the compensation consultant:

        The compensation consultant used the 25^th percentile as the market comparison in its conclusions because of our named executive officers received competitive compensation vis-à-visrelatively smaller size compared to the peer group. In thisThe compensation consultant also used a plus/minus 15% threshold to define "in line" (competitive) with the market. Based on its benchmarking analysis, the compensation consultant was not requested to examineadvised that: (i) the compensation receivedpaid by Fredric H.us to Jeffrey A. Gould, or Matthew J. Gould. The compensation consultant in its report advised that because of the allocation of salaries under the shared services agreement and the dearth of comparably sized companies whose lines of business match up with ours, determining the range of competitive practices with confidence was difficult.

        In addition, the compensation consultant selected a different peer group of 16 companies for us and for the other parties to the shared services agreement (the peer group was not listed in the consultant's report) and considering us and the other entities which are parties to the shared services agreement (a number of such companies are private) as one business enterprise, determined an aggregate market capitalization for the one business enterprise. The consultant then evaluated whether the aggregate compensation received by our president and chief executive officer, is in line with market, and the compensation paid by us to Mitchell Gould, our part-time officers from all entities which are parties toexecutive vice president, and George Zweier, our chief financial officer, is in line with or slightly below market, (ii) the shared services agreement (including us) was competitive. The compensation consultants' report advised that based upon its brief investigation, the aggregate compensation of shared senior executives (David W. Kalish, senior vice president, finance and Mark H. Lundy, a senior vice president and general counsel) allocated to us is below 25^th percentile market practices, (iii) the executive officerstotal compensation paid to which this analysis was applicable (including Jeffrey A. Gould (including all compensation paid to Jeffrey Gould by affiliated companies) is above market, (iv) the total compensation paid to shared senior executives by us and affiliated companies (David W. Kalish and Mark H. Lundy) is inabove their peers, and (v) the highest quartileequity awards are a smaller portion of the peer group used.total compensation compared to peers.

Components of Executive Compensation

        The principal elements of our compensation program for executive officers in 20072010 were:

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base salary;



•

commissions, which is only provided to full-time executive officers and employees primarily involved in loan origination activities;



•

annual cash bonus,incentive, which is available only to full-time executive officers;officers and is provided in the form of a cash bonus;



•

long-term equity incentive compensation in the form of restricted stock; and



•

special benefits and perquisites.

        The special benefits and perquisites which were provided to some, but not all, of our executive officers in 2007,2010, consisted of:

•

additional disability insurance;



•

education benefits;



•

long term care insurance; and



•

an automobile allowance; and



•

allowance or payment of automobile maintenance and repairs.

        Base salary, commissions and annual bonus are cash-based while long-term incentives consistTable of restricted stock awards.Contents

        In determining 20072010 compensation, the compensation committee did not have a specific allocation goal between cash and equity-based compensation.

Base Salary

        Base salary is the basic, least variable form of compensation for the job an executive officer performs and provides each full-time executive officer with a guaranteed monthlyannual income. Base salaries of executive officers compensated directly by us directly are targeted to be competitive with the salaries paid to executives performing substantially similar functions at other REIT'sREITs with a market capitalization similar to ours. Any increasesincrease in base salary areis determined on a case by case basis, areis not based upon a structured formula and areis based upon, among other considerations (i) our performance in the preceding fiscal year (loan originations,(net income

from continuing operations, net income, or loss, cash distributions, if any, paid to shareholders)shareholders, stock price performance), (ii) such executive's current base salary, (iii) amounts paid by peer group companies for executive's performing substantially similar functions, (iv) years of service, (v) current job responsibilities, (vi) the individual's performance, and (vii) the recommendation of the president and chief executive officer.officer and other senior executive officers.

        Our chairman of the board, in consultation with our president and chief executive officer and others, determines the annual base salary to be paid to each part-time senior executive officer by one or more ofall the entities which are parties to the shared services agreement. In setting the annual base salary, the chairman of the board considers primarily the executive's responsibilities to all parties to the shared services agreement, the executive's performance, years of service, current annual base salary and the performance of the companies which participate in the shared services agreement in the preceding fiscal year. The compensation committee reviewsannual base salary is allocated to the entities which are parties to the shared services agreement, including us, based on an annual basis, the amounts allocated byestimated time devoted to each of the part-time executive officers' to us to determine if they are fair and reasonable and may accept, reject or modify such allocations.entities. The compensation committee is also apprised of the allocations to the Trust of the payroll relating to our executive officers and of the compensation received by our executive officers from our advisor and the other entities which are parties to the shared services agreement. The compensation committee does not reviewapprove the payments made by us to the advisor or thesince all such payments are made pursuant to our executive officers by the advisor since the advisory agreement, which was approved by our board of trustees, and has a term expiring 2010.does not approve the payments made by the advisor to the part-time executive officers.

        In 2007, theOur audit committee of the board of trustees reviewedreviews annually the allocation process under the shared services agreement pursuant to which we are allocated the base salary, bonus, if any, pension contributions and perquisites of our part-time executive officers and determined thatis allocated to us, to determine if the allocation process was carried out in accordance with the shared services agreement. The compensation committee reviewed the part-time executive officers' compensation allocated to us and taking into consideration the services rendered to us by each such part-time executive officer and the report provided by the compensation consultant, determined that such amounts were fair and reasonable.

Commissions

        We provide the opportunity for executive officers involved primarily in loan origination activities to earn a commission on each loan we originate. The commission is provided to motivate our loan origination group. The commission, which is currently an aggregate of 10-basis points of the loans originated, is divided among our full-time executive officers and employees engaged primarily in loan origination activities. The commission is provided to motivate our loan origination group. Mitchell Gould is our only named executive officer who is engagedengages primarily in loan origination activities. At its meetings in December 2006 and 2007, upon the recommendation

Table of our president and chief executive officer, the compensation committee approved the continuation of our commission policy as it believes it is a motivational device that assists in securing our overall objective of enhancing shareholder value.Contents

Bonus

        We provide the opportunity for our full-time executive officers and other full-time employees to earn an annual cash bonus. We provide this opportunity both to reward our personnelofficers and employees for past performance and to motivate and retain talented people. We recognize that annual bonuses are almost universally provided by other companies with which we might compete for talent. Our presidentAnnual cash bonuses for our executive officers (including the three named executive officers who devote all, or substantially all, their business time to our affairs) are determined on a case-by-case basis and chief executive officer provides his recommendation toare determined subjectively. In arriving at the compensation committee with respect to annual cash bonuses, after consulting withconsideration is given to both an executive's performance and to our chairman of the board and others. Theperformance. Once our compensation committee has discretion to accept, reject or modify the recommendations. Once it has approved the annual bonus to be paid to each executive officer, the compensation committee presents its recommendations to the board of trustees for their approval.

        The compensation committee will adopt guidelines, effective for 2008 cash bonuses, which will provide that with respect to all Based on our present structure and the small number of full-time executive officers, other than the president and chief executive officer, a percentage of the annual cash bonus will be based on our performance and a percentage on individual performance. The compensation committee is examining historical compensation information as part of its processhas not established formulas or performance goals to determine such percentages. Similarly, commencing in 2008, 65% of the annual cash bonus ofbonuses for our president and chief executive officer will be based upon our performance and 45%

upon his performance, and his annual cash bonus, along with annual long-term equity incentives, will not exceed 50% of his base salary for such year.

        To recognize individual performance, the compensation committee may increase the percentage of an executive officer's annual cash bonus allocated to such executive officer's performance and decrease the percentage allocated to our performance. Such percentage changes will be effectuated in order to recognize an executive officer's superior individual performance in cases where his performance would not otherwise be adequately rewarded. This may result in an executive officer receiving a larger payout in a year when our performance is not satisfactory in comparison to prior years.officers.

Long-term Equity Awards

        We provide the opportunity for our executive officers to receive long-term equity incentive awards. Our long-term equity incentive compensation program is designed to recognize responsibilities, reward performance, motivate future performance, align the interests of our executive officers with our shareholders' and retain our executive officers. The compensation committee reviews long-term equity incentives for all our officers, trustees and employees annually at its regularly scheduled meeting in December and makes recommendations to our board of trustees for the grant of equity awards. In determining the long-term equity compensation component, the compensation committee considers all relevant factors, including our performance and individual performance. Existing ownership levels are not a factor in award determination. All equity awards are granted under our shareholder approved BRT Realty Trust 2003 Incentive Plan.determinations.

        We do not have a formal policy with respect to whether equity compensation should be paid in the form of stock options or restricted stock. Prior to 2003, we awarded stock options rather than restricted stock, but instock. In 2003 a determination was made to only grantaward restricted stock. The compensation committee believes restricted stock awards are more effective in achieving our compensation objectives, as restricted stock has a greater retention value and,value. In addition, because fewer shares are normally awarded, it is potentially less dilutive. Executive officers realize immediate value upon the vesting of the restricted stock, with the value potentially increasing if our stock performance increases. Additionally, beforeBefore vesting, cash dividends to shareholders, if any, are paid on all outstanding awards of restricted stock as an additional element of compensation.

        All the restricted stock awards made to date containprovide for a five-year "cliff" vesting requirement.vesting. The compensation committee believes that restricted stock awards with five-year "cliff" vesting provide a strong retention incentive for executives, and better aligns the interests of our executive officers with our shareholders. We view our capital stock as a valuable asset that should be awarded judiciously. For that reason, it ishas been our policy that the aggregate equity incentives granted each year to our executive officers, employees, trustees and consultants should not exceedbe approximately 1% of our issued and outstanding capital stock.common shares.

        We do not have a formal policy on timing equity compensation grants in connection with the release of material non-public information. In December,Generally our compensation committee recommends and our board of trustees upon the compensation committee's recommendation, generally approves the granting of equity awards to be effective on or aboutin January 31^stof the followingeach year. In December 2006, the board of trustees, upon the compensation committee's recommendation, set the grant date for our restricted stock incentive awards asEffective January 31, 2007.

        The amount15, 2011, we awarded 138,200 shares of restricted stock recommended by the compensation committee for approval by the board(including an aggregate of 21,700 shares awarded to non-management trustees in December 2006 was relatedand an aggregate of 43,200 shares to the number of our common shares which were issued and outstanding at the time the awards were approved by our compensation committee.named executive officers). The aggregate restricted stock authorized in December 2006 and awardedfor awards by us in January 2007 was 0.41%on such date is approximately .99% shares of our issued and outstanding common shares.

Equity Compensation PoliciesTable of Contents

        We do not have any policy regarding ownership requirements for executive officers or trustees. However, all of our executive officers and trustees hold common shares and many have been executive officers of ours for a number of years and hold a significant number of our common shares.

Executive Benefits and Perquisites

        We provide our executive officers and our employees with a competitive benefits and perquisites program. We recognize that similar benefits and perquisites are commonly provided at other companies that we might compete with for talent. We review our executive benefits and perquisites program periodically to ensure it remains fair to our executives and employeesreasonable and supportable to our shareholders. For 2007,2010, the executive benefits and perquisites we provided to executive officers accounted for a small percentage of the compensation provided by, us or allocated to, us for our executive officers. The executive benefits and perquisites we provided to certain of our full-time executive officers, in addition to the benefits and perquisites we provided to all our full-time employees, consisted of an automobile allowance or payments for automobile maintenance and repairs, the payment of certain educational expenses, the payment of the premiums for additional disability insurance and payment of the premiums for long-term care insurance. With respect to our part-time executive officers, the cost of their executive benefits and perquisites, which also consisted of an automobile allowance or payments for automobile maintenance and repairs, the payment of certain educational expenses, the payment of the premiums for additional disability insurance and payment of premiums for long-term care insurance, was allocated among us and other entities pursuant to the shared services agreement.

Severance and Change of Control Agreements

        OurNeither our executive officers andnor our employees do not have employment or severance agreements with us. They are "at will" employees who serve at the pleasure of our board of trustees.trustees and management, respectively.

        Except for provisions for accelerated vesting of awards of our restricted stock in a "change of control" transaction, we do not provide for any change of control protection tofor our executive officers, trustees or employees. Under the terms of each restricted share awards agreement, accelerated vesting occurs with respect to each person who has been awarded shares if (i) any person, corporation or other entity purchases our shares of stock for cash, securities or other consideration pursuant to a tender offer or an exchange offer, without the prior consent of our board, or (ii) any person, corporation or other entity shall become the "beneficial owner" (as such term is defined in Rule 13-d-313d-3 under the Securities and Exchange Act of 1934, as amended)Act), directly or indirectly of our securities representing 20% or more of the combined voting power of our then outstanding securities ordinarily having the right to vote in the election of trustees, other than in a transaction approved by our board of trustees.

Deductibility of Executive Compensation

        Section 162(m) of the Internal Revenue Code of 1986, as amended, imposes a limitation on the deductibility of certain non-cash compensation in excess of $1 million earned by each of the chief executive officer and the four other most highly compensated officers of publicly held companies. In 2007,2010, all compensation paid to our full-time executives was deductible toby us. The compensation committee intends to preserve the deductibility of compensation payments and benefits to the extent reasonably practicable. The compensation committee has not adopted a formal policy that requires all compensation paid to the executive officers to be fully deductible.

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Analysis

Base Salary and Bonus

        In accordance with the compensation setting process described above, base salary increases and bonuses for 2010 were approved as follows for named executive officers who are compensated directly by us:

The compensation committee has not yet determined the bonus, if any, for the 2007 performancebase salary of Jeffrey A. Gould.

        The increase in base salary for Jeffrey A. Gould in 2007 and the bonus paid to him was due to increases in revenues (14%), income from continuing operations (80%), net income (75%) and cash distributions to shareholders (9%) in 2006 compared to 2005. The 15.2% increase inof George Zweier's base salary was intended to increase his base salary to a level more in line with base salaries received byZweier, our chief financial officers of other REIT's with market capitalizations similarofficer, as well as his bonus applicable to ours and2010, was increased to recognize his individual performance in 2006. Mitchell Gould's annual base salary was increased from 2006 to 2007 due to increases in revenues, income from continuing operations, net income and cash distributions to shareholders, but his total base salary, including commissions, decreased by approximately 7.49% in 2007 from 2006 because of the decrease in our loan originations in 2007 compared to 2006.

        As noted above, Jeffrey A. Gould's bonus, if any, has not yet been determined for 2007. The $60,000 bonus reflected in the Summary Compensation Table was based on 2006 performance and paid in 2007. The bonus for both Mitchell Gould and George Zweier for 2007 was 92% and 71% greater, respectively, than for the prior year in recognition of our positive financial performance in 2007 and their outstanding efforts in connection with loan portfolio management and loan enforcement activities relating to non-earning loans in the second half of the 2007 fiscal year.performance.

        Mark H. Lundy serves as our senior vice president and general counsel. As such, heHe is responsible for legal matters relating to loan origination and lending documentation, foreclosure activities, bankruptcy claims and issues, credit line documentation and other agreements entered into by us. In addition, he reviews our filings under the Securities Exchange Act of 1934, as amended, and our public disclosures. David W. Kalish serves as our senior vice president, finance. He allocated approximately 32%has overall responsibility for implementation and enforcement of his timeour internal controls, performs oversight and guidance in fiscal 2007connection with our annual audit and our quarterly reports, performs oversight and guidance related to tax matters, is involved in banking relationships, chairs our activities, which resulteddisclosure controls and procedures committee and participates in $146,724the preparation and review of his base annual compensation being allocated to us.our disclosures under the Securities Exchange Act of 1934, as amended, and press releases. The compensation committee determined that the base annual salary allocated to us andbased on the value of his services on our behalf, were fairthe compensation of Messrs. Lundy and Kalish, which is allocated to us, was reasonable.

        The base salary and bonus of Jeffrey A. Gould, our president and chief executive officer, in 2010 is 295%68% greater than the compensation of Mitchell Gould, our executive vice president, and 260%120% greater than the compensation of George Zweier, our chief financial officer. We have not adopted a policy with regard to the relationship of compensation among named executive officers or other employees. The compensation committee discussedwas aware of the differential in compensation between Jeffrey A. Gould and

Mitchell Gould and George Zweier and concluded that the differential was appropriate. Both Mitchell Gould and George Zweier have responsibilities primarily related to a specific activity.activity, whereas Jeffrey A. Gould's responsibilities and activities cover all our business activities including, among other things, generating new business, loan originations and underwriting, negotiating joint venture agreements, loan enforcement, property sales, capital raising reviewand investor relations.

Table of all filings under the Securities Exchange Act of 1934, as amended, review of all public announcements and other investor relations matters.Contents

Long-term Equity Awards

        We believe that our long-term equity compensation program, using restricted stock awards with five-year cliff vesting provides motivation for our executives and employees and is a beneficial retention tool. We are mindful of the potential dilution and compensation cost associated with awarding shares of restricted stock. Our policy isremains to minimizelimit dilution and compensation costs by grantingcosts. On January 15, 2011 we issued 138,200 restricted share awards of less than 1%representing 0.99% of our outstanding shares in each year. In fiscal 2007 we awarded 45,175 shares, representing 0.41% of our issued and outstanding shares. In the past five years, we have awarded a totalan average of 183,60580,531 shares each year, representing an average of 0.47%0.67% per annum of our outstanding shares. The cumulative effect

        Our compensation committee has commenced the process for establishing performance goals for the grant of performance based awards to senior executives, including our president and chief executive officer. We anticipate that performance based awards will be granted in 2011, at the discretion of our compensation committee. Vesting of performance based awards will be contingent on the attainment, prior to the end of a performance cycle, of the performance goal(s) that our compensation committee establishes. The minimum period with respect to which performance goals are to be measured is one year, but our compensation committee intends to establish a minimum performance cycle of five years. The number of shares with respect to which any participant may be granted performance based awards in any calendar year is not overly dilutive and has created significant incentive for our executives and employees.

        We intend to continue to award restricted stock as we believe (1) restricted stock awards align management's interests and goals with stockholders interests and goals and (2) executives and employees are more desirous of participating in a restricted stock award program and, therefore, it is an excellent motivator and employee retention tool.40,000 shares.

Advisor Fees

        Fees paid to our advisor under the advisory agreement, as amended, are based to a large extent, on a percentage of our assets.assets and a portion of our loan origination fees. Our main asset is ourassets are real estate loans and real estate acquired in foreclosure proceedings, which generates interest and fee income, our primary income source. Accordingly, the advisor's fee is directly related to our loan production and therefore, aligns the fee to the advisor with our results of operations.

rental income. Fredric H. Gould, chairman of our board, is the sole shareholder of our advisor. The advisory agreement was renegotiated between the independent trustees and management in November and December 2006 and amended effective January 1, 2007. At that time, there were four years remaining on the term of the existing agreement. The two basic changes made in the amended agreement were (i) a reduction of the percentage of assets on which the fee is based from 1% (in most instances) to⁶/10 of 1% and (ii) a change in the origination fee payments to the advisor by our borrowers from 1% to¹/2 of 1%, with the proviso that no origination fee is to be paid to the advisor unless we receive an origination fee of at least 1%. The advisory agreement, which was to terminate on December 31, 2010, has been extended to April 30, 2011. During this extension period, certain of our independent trustees will be discussing and examining various alternatives for compensating our full-tine and part-time executive officers and employees.

        Since the fee paid by us to the advisor under the advisory agreement is based on an agreement which was approved by our board of trustees, the compensation committee does not review the fee nor the determinations made by Fredric H. Gould as to the payment of compensation by the advisor to any of our senior executive officers.

        In addition to the compensation paid by the advisor to fourThree of our named executive officers such named executive officers also(Jeffrey A. Gould, David W. Kalish and Mark H. Lundy) receive compensation from other private service companies which are wholly owned by Fredric H. Gould.our advisor. The compensation committee is advised of all such payments. The compensation committee has determined that if the compensation paid by us to our named executive officers is fair and reasonable, then the amounts paid to them by other entities which are partiesthe advisor should not be considered as a factor in the determination of compensation relating to the shared services agreement is not a concernsuch executive's performance for us as long as these persons are satisfactorily performing their duties on our behalf. The compensation committee has determined that all persons who receive compensation from us and also from the private service companiesour advisor satisfactorily performed their duties on our behalf.