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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-Q

Commission File Number 001-07172

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

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

        Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ý    No o

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

Yes o    No o

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

        Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o    No ý

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

14,070,949 Shares of Beneficial Interest,
$3 par value, outstanding on February 7, 2011

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Part 1—FINANCIAL INFORMATION

Item 1.    Financial Statements

BRT REALTY TRUST AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except share data)

See accompanying notes to consolidated financial statements.

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BRT REALTY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(Dollars in thousands, except share data)

See accompanying notes to consolidated financial statements.

2

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BRT REALTY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)

(Dollars in thousands, except share data)

See accompanying notes to consolidated financial statements.

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BRT REALTY TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars in Thousands)

See accompanying notes to consolidated financial statements.

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BRT REALTY TRUST AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 2010

Note 1—Organization and Background

        BRT Realty Trust is a business trust organized under the laws of the Commonwealth of Massachusetts. Our primary business is to originate and hold for investment senior mortgage loans secured by commercial and multi-family real estate property in the United States. The loans we originate generally have relatively high yields and are short term or bridge loans with a duration ranging from six months to one year. We generally lend at a floating rate of interest based on a spread over the prime rate and receive an origination fee for the loans we originate. We conduct our operations to qualify as a real estate investment trust, or REIT, for federal income tax purposes.

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

Note 2—Basis of Preparation

        The accompanying interim unaudited consolidated financial statements as of December 31, 2010 and for the three months ended December 31, 2010 and December 31, 2009 reflect all normal recurring adjustments which are, in the opinion of management, necessary for a fair presentation of the results for such interim periods. The results of operations for the three months ended December 31, 2010 are not necessarily indicative of the results for the full year. The balance sheet as of September 30, 2010 has been derived from the audited financial statements at that date but does not include all the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.

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

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

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

        RBH-TRB Newark Holdings LLC was determined to be a Variable Interest Entity ("VIE") because the Trust has voting rights that are not proportionate to its economic interests. The Trust was determined to be the primary beneficiary as it has the power to direct the activities that most significantly impact the economic performance and the obligation to absorb losses that could potentially be significant to this VIE. For these reasons, the Trust has consolidated the operations of this VIE in the Trust's consolidated financial statements.

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BRT REALTY TRUST AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

Note 2—Basis of Preparation (Continued)

        These statements should be read in conjunction with the consolidated financial statements and related notes which are included in BRT's Annual Report on Form 10-K for the year ended September 30, 2010.

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

Note 3—Equity

Common Share Dividend Distribution

        During the quarter ended December 31, 2010, the Trust did not declare a dividend to its shareholders.

Restricted Shares

        As of December 31, 2010, there were 480,140 restricted shares issued under the Trust's equity incentive plans. An aggregate of 850,000 shares was authorized for issuance under these plans. The shares issued vest five years from the date of issuance and under specified circumstances, including a change in control, may vest earlier. Since inception of the plans, 88,560 shares have vested. For accounting purposes, the restricted stock is not included in the outstanding shares shown on the consolidated balance sheet until they vest, but is included in the earnings per share computation. The estimated fair value of restricted stock at the date of grant is being amortized ratably into expense over the applicable vesting period. For the three months ended December 31, 2010 and 2009, the Trust recorded $208,000 and $218,000 of compensation expense, respectively, as a result of the outstanding restricted shares. At December 31, 2010, $1,445,000 has been deferred as unearned compensation and will be charged to expense over the remaining weighted average vesting period of approximately 2.74 years.

Per Share Data

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

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

        Basic and diluted shares outstanding for the three months ended December 31, 2010 and 2009 were 13,977,706 and 13,214,700, respectively.

        The impact of dilutive securities is not included in the computation of loss per share for the three months ended December 31, 2010 and 2009, as the inclusion of such common share equivalents would be anti-dilutive.

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BRT REALTY TRUST AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

Note 4—Real Estate Loans and Purchase Money Mortgages

        At December 31, 2010, information relating to real estate loans and purchase money mortgages, all of which are first mortgage loans, is summarized as follows (dollars in thousands):

        At December 31, 2010, three non-earning loans were outstanding to three separate, unrelated borrowers having an aggregate outstanding principal balance of $35,143,000, representing 45.4% of total real estate loans and 19% of total assets.

        The Trust recognized cash basis interest of $150,000 and $131,000 on non-earning loans in the three months ended December 31, 2010 and December 31, 2009 respectively.

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BRT REALTY TRUST AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

Note 4—Real Estate Loans and Purchase Money Mortgages (Continued)

        Information regarding these non-earning loans is set forth in the table below (dollars in thousands):

        At December 31, 2010, two separate, unaffiliated borrowers had loans outstanding in excess of 5% of total assets. Information regarding the loans outstanding, to each of these borrowers is set forth in the table below (dollars in thousands):

        The Trust's portfolio consists of senior mortgage loans, secured by residential and commercial property, 69% of which are located in New York, 12% in Michigan, 9% in Florida and 10% in four other states.

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BRT REALTY TRUST AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

Note 5—Allowance for Possible Loan Losses

        An analysis of the loan loss allowance at December 31, 2010 and December 31, 2009, respectively, is as follows (dollars in thousands):

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

        The allowance for possible losses applies to two loans aggregating $26,655,000 at December 31, 2010 and September 30, 2010, both of which are non-earning.

Note 6—Real Estate Properties

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

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BRT REALTY TRUST AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

Note 6—Real Estate Properties (Continued)

        The risks associated with our involvement in this VIE have not changed in the three months ended December 31, 2010. These risks are described in the 10-K for the fiscal year ended September 30, 2010.

        For the three months ended December 31, 2010 this VIE recorded revenues of $426,000 and operating expenses of $520,000, excluding interest expense and depreciation. The Trust made a capital contribution to this venture of $351,000 in the three months ended December 31, 2010.

Note 7—Investment in Unconsolidated Ventures

        The Trust is a partner in two unconsolidated ventures, each of which owns and operates one property. The Trust's share of the ventures' earnings was $49,000 and $75,000 for the three months ended December 31, 2010 and 2009, respectively. The Trust's equity in these unconsolidated ventures totaled $779,000 and $775,000 at December 31, 2010 and September 30, 2010, respectively.

Note 8—Available-For-Sale Securities

        At December 31, 2010, the Trust had available for sale securities which consisted of both debt securities and equity securities. Details regarding our available-for-sale securities at December 31, 2010 are presented in the table below (dollars in thousands):

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

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

        During the three months ended December 31, 2010, the Trust sold equity securities for $640,000 with a basis of $219,000, determined using average cost. Accordingly, the Trust recognized a gain of $421,000 from these sales. In the three months ended December 31, 2009, the Trust sold equity securities for $2,425,000 with a basis of $975,000, determined using average cost. Accordingly, the Trust recognized a gain of $1,450,000 from these sales.

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BRT REALTY TRUST AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

Note 8—Available-For-Sale Securities (Continued)

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

Note 9—Debt Obligations

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

Junior Subordinated Notes

        At December 31, 2010, the Trust's junior subordinated notes had an outstanding principal balance of $42,400,000 and a book balance of $40,965,000. The difference of $1,435,000, representing unamortized principal, is being accreted over the remaining term of the securities using the level yield method and will be charged to interest expense. The remaining unamortized fees, which total $837,000, are being amortized over the remaining term. Amortization of these fees totaled $8,000 in both the three months ended December 31, 2010 and 2009.

        The notes have a fixed rate of interest of 3.5% per annum, to be paid annually in advance through July 31, 2012. From August 1, 2012 to April 28, 2016, the notes have a blended fixed rate of interest of 8.37%, and commencing on April 29, 2016 until maturity in 2036, the interest rate on the notes will equal LIBOR plus 2.95%.

Mortgages Payable

        The Trust has five first mortgages and one second mortgage outstanding with an aggregate principal balance at December 31, 2010 of $12,547,000. One of these mortgages, with an outstanding balance at December 31, 2010 of $2,114,000, is secured by a long term leasehold position on a shopping center owned by a consolidated joint venture. The remaining five mortgages, with outstanding balances at December 31, 2010 of $10,433,000, are secured by individual parcels on two land assemblages in Newark, NJ owned by another consolidated joint venture. The Trust has guaranteed $473,000 of one of the mortgage obligations at December 31, 2010, based on the current outstanding balance. The guarantee will increase to $2,154,000 if the full amount of the $8,600,000 loan is drawn and outstanding.

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BRT REALTY TRUST AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

Note 10—Comprehensive Loss

        Comprehensive loss for the three month periods was as follows (dollars in thousands):

Note 11—Segment Reporting

        Management has determined that it operates in two reportable segments: (i) a loan and investment segment which includes the origination and servicing of our loan portfolio and investments; and (ii) a real estate segment which includes the operation and disposition of our real estate assets.

        The following table summarizes our segment reporting for the three months ended December 31, 2010 (dollars in thousands):

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BRT REALTY TRUST AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2010

Note 11—Segment Reporting (Continued)