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EX-32.1 - EXHIBIT 32.1 - BRT Apartments Corp.exhibit32193015.htm
EX-31.3 - EXHIBIT 31.3 - BRT Apartments Corp.exhibit31393015.htm
EX-31.2 - EXHIBIT 31.2 - BRT Apartments Corp.exhibit31293015.htm
EX-23.1 - EXHIBIT 23.1 - BRT Apartments Corp.exhibit23193015.htm
EX-32.3 - EXHIBIT 32.3 - BRT Apartments Corp.exhibit32393015.htm
EX-32.2 - EXHIBIT 32.2 - BRT Apartments Corp.exhibit32293015.htm
EX-31.1 - EXHIBIT 31.1 - BRT Apartments Corp.exhibit31193015.htm
EX-21.1 - EXHIBIT 21.1 - BRT Apartments Corp.exhibit21193015.htm
EX-12.1 - EXHIBIT 12.1 - BRT Apartments Corp.exhibit12193015.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



FORM 10-K
(Mark One)
 
 
ý
 
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 2015
Or
o
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 001-07172
BRT REALTY TRUST
(Exact name of registrant as specified in its charter)
Massachusetts
(State or other jurisdiction of
incorporation or organization)
 
13-2755856
(I.R.S. employer
identification no.)
60 Cutter Mill Road, Great Neck, New York
(Address of principal executive offices)
 
11021
(Zip Code)
516-466-3100
Registrant's telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Name of each exchange on which registered
Shares of Beneficial Interest, $3.00 Par Value
 
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
NONE
(Title of Class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o    No ý
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes o    No ý
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý    No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý    No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K o



Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer o
Accelerated filer ý
Non-accelerated filer o
 (Do not check if a
smaller reporting company)
Smaller reporting company o
Indicate by check mark whether registrant is a shell company (as defined in Exchange Act Rule 12b-2). Yes o    No ý
The aggregate market value of voting and non-voting common equity held by non-affiliates of the registrant was approximately $58.4 million based on the last sale price of the common equity on March 31, 2015, which is the last business day of the registrant's most recently completed second quarter.
As of December 1, 2015, the registrant had 14,101,056 Shares of Beneficial Interest outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the proxy statement for the annual meeting of shareholders of BRT Realty Trust to be filed not later than January 28, 2016 are incorporated by reference into Part III of this Form 10-K.





TABLE OF CONTENTS
Form 10-K
 
 
 
Item No.
 
Page(s)
PART I
 
1
1A.
1B.
2
3
4
PART II
 
5
6
7
7A.
8
9
9A.
9B.
PART III
 
10
11
12
13
14
PART IV
 
15



Forward-Looking Statements
This Annual Report on Form 10-K, together with other statements and information publicly disseminated by us, contains certain forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and include this statement for purposes of complying with these safe harbor provisions. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends concerning matters that are not historical facts. Forward looking statements are generally identifiable by use of words such as "may," "will," "will likely result," "shall," "should," "could," "believe," "expect," "intend," "anticipate," "estimate," "project" or similar expressions or variations thereof.
Forward-looking statements contained in this Annual Report on Form 10- K are based on our beliefs, assumptions and expectations of our future performance taking into account all information currently available to us. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to us or within our control, and which could materially affect actual results, performance or achievements. Factors which may cause actual results to vary from our forward-looking statements include, but are not limited to:
factors described in this Annual Report on Form 10-K, including those set forth under the captions "Risk Factors" and "Business";
our acquisition strategy, which may not produce the cash flows or income expected;
competition could adversely affect our ability to acquire properties;
competition could limit our ability to lease apartments or retail space or increase or maintain rental income;
losses from catastrophes may exceed all insurance coverage;
a limited number of multi-family property acquisition opportunities acceptable to us;
national and local economic and business conditions;
general and local real estate property conditions;
the condition of Fannie Mae or Freddie Mac, which could adversely impact us;
our failure to comply with laws, including those requiring access to our properties by disabled persons, which could result in substantial costs;
insufficient cash flows, which could limit our ability to make required payments on our debt obligations;
an inability to renew, repay, or refinance our outstanding debt;
limitation of credit by institutional lenders;
impairment in the value of real estate property we own;
failure of property managers to properly manage properties;
disagreements with, or misconduct by, joint venture partners;
changes in Federal government policies;
increases in real estate taxes at properties we acquire due to such acquisitions or otherwise;
changes in Federal, state and local governmental laws and regulations;
changes in interest rates; and
the availability of and costs associated with sources of capital and liquidity.
We caution you not to place undue reliance on forward-looking statements, which speak only as of the date of this Annual Report on Form 10-K. Except to the extent required by applicable law or regulation, we undertake no obligation to update these forward-looking statements to reflect events or circumstances after the date of the filing of this Annual Report on Form 10-K or to reflect the occurrence of unanticipated events.

1


PART I

Item l.    Business.
General
We are a real estate investment trust, also known as a REIT. During the past three years, we engaged in three principal business activities: the ownership, operation and development of multi-family properties; the ownership, operation and development of commercial, mixed use and other real estate assets; and real estate lending. Beginning in March 2012, we commenced and expanded our multi-family activities, and in 2014, we de-emphasized our real estate lending activities. As of November 1, 2014, we are no longer engaged in real estate lending and the financial information, including our consolidated financial statements included herein, have been reclassified to present our real estate lending activities as discontinued operations. See Note 1 to our consolidated financial statements.
Our multi-family property activities involve the ownership, operation and development, primarily through joint ventures in which we typically have an 80% equity interest, of such properties. We acquired five multi-family properties with 1,451 units in 2012, nine multi-family properties with 2,334 units in 2013, 13 multi-family properties with 4,184 units in 2014, four multi-family properties with 1,560 units in 2015 and, since October 1, 2015, two multi-family properties, with an aggregate of 507 units. During 2015, we sold three multi-family properties with an aggregate of 1,176 units for an aggregate gain of $14.3 million, of which $5.1 million was allocated to our joint venture partners. At September 30, 2015, we own 28 multi-family properties located in 11 states with an aggregate of 8,300 units and our equity investment in, and the net book value of, these properties is approximately $113.0 million and $604.9 million, respectively. At December 1, 2015, we own 30 multi-family properties (four of which are wholly owned) located in 11 states with an aggregate of 8,807 units.
We own, operate and develop various other real estate assets, the most significant of which are properties (including development properties) located in Newark, New Jersey. Since 2012, the joint venture that owns the Newark assets has obtained, through three financing phases, an aggregate of $93.1 million in debt financing and an aggregate of $31.4 million in New Markets Tax Credit proceeds to fund the construction of six buildings with an aggregate of 153,432 square feet of commercial space and 204 residential units. To date, four buildings have been completed, a fifth building is partially complete, 50% occupied and is expected to be completed in February 2016, and the sixth building is under construction and is expected to be completed by July 2016. At September 30, 2015, the net book value of the real property included in these other real estate assets was $152.0 million, including $141.4 million related to our Newark, New Jersey activities. See "Management's Discussion and Analysis of Financial Condition and Results of Operations-Other Developments" for information regarding the possible (i) sale by BRT of its equity interest in the Newark Joint Venture and (ii) repayment of $19.5 million in principal amount of secured mortgage debt owed to BRT eliminated in consolidation.
Our real estate lending activities decreased during the past three years (i.e., $0, $5.5 million and $70.3 million of loan originations in 2015, 2014 and 2013, respectively) and we are no longer engaged in lending activities.
Information regarding our multi-family property and other real estate assets segments is included in Note 12 to our consolidated financial statements and is incorporated herein by this reference.
We were organized as a business trust under the laws of the Commonwealth of Massachusetts in June 1972. Our address is 60 Cutter Mill Road, Suite 303, Great Neck, New York 11021, telephone number 516-466-3100. Our website can be accessed at www.brtrealty.com, where copies of our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other filings with the Securities and Exchange Commission, or SEC, can be obtained free of charge. These SEC filings are added to our website as soon as reasonably practicable.
Unless otherwise indicated or the context otherwise requires, all references to (i) "us", "we" or terms of like import refer to BRT Realty Trust and its consolidated subsidiaries and the term "BRT" refers to BRT Realty Trust and its wholly owned subsidiaries, (ii) a year (e.g., 2015) refer to the applicable fiscal year ended September 30th and (iii) the multi-family properties we owned or acquired in 2015 or thereafter and the residential units associated with such properties, include a development property in Greenville, SC, which contemplates the construction of 360 units (of which 190 units were completed as of December 1, 2015) and a development property in N. Charleston, SC, which contemplates the construction of 271 units, none of which, as of December 1, 2015, had been constructed.

2



Our Multi-Family Property Activities
Generally, our multifamily properties are garden apartment, mid rise or town home style properties that provide residents with amenities, such as a clubhouse, swimming pool, laundry facilities and cable television access. Residential leases are typically for a one year term and may require security deposits equal to one month's rent. Substantially all of the units at these properties are leased at market rates and are not subject to rent control or similar requirements. Set forth below is selected information regarding our multi-family properties. Except as otherwise indicated in the notes to the table below, all of these properties are owned by joint ventures in which we have an 80% equity interest and our joint venture partner has a 20% equity interest
Property Name and Location
 
Number
of Units
 
Age(1)
 
Investment
Date
 
Average
Monthly
Rental
Rate per
Occupied Unit 2015 (2)($)
 
Average Monthly Rental Rate per Occupied Unit 2014 (2)($)
 
 Average Physical Occupancy in 2015 (%) (2)
 
Average Physical Occupancy in 2014(%) (2)
The Fountains Apartments—Palm Beach Gardens, FL
 
542
 
44
 
3/22/2012
 
1,169
 
1,050
 
96.3
 
96.6
Waverly Place Apartments—Melbourne, FL
 
208
 
28
 
3/30/2012
 
798
 
722
 
94.0
 
95.9
Madison at Schilling Farms—Collierville, TN
 
324
 
15
 
6/20/2012
 
939
 
940
 
96.0
 
94.7
Silvana Oaks Apartments—N. Charleston, SC(3)
 
208
 
5
 
10/4/2012
 
998
 
970
 
93.6
 
93.4
Grove at Trinity Pointe—Cordova, TN
 
464
 
29
 
11/15/2012
 
738
 
716
 
95.1
 
95.4
Avondale Station—Decatur, GA(3)
 
212
 
61
 
11/19/2012
 
852
 
766
 
97.1
 
96.8
Spring Valley Apartments—Panama City, FL
 
160
 
28
 
1/11/2013
 
807
 
760
 
96.9
 
95.2
Stonecrossing Apartments—Houston, TX(3)
 
240
 
37
 
4/19/2013
 
884
 
856
 
93.5
 
94.3
Courtney Station—Pooler, GA
 
300
 
7
 
4/29/2013
 
971
 
935
 
94.9
 
93.4
Pathways—Houston, TX(3)
 
144
 
36
 
6/7/2013
 
886
 
823
 
92.6
 
93.7
Autumn Brook Apartments—Hixon, TN(3)
 
156
 
26
 
6/25/2013
 
756
 
746
 
95.1
 
95.4
Mountain Park Estates—Kennesaw, GA(3)
 
450
 
13-16
 
9/25/2013
 
996
 
918
 
94.2
 
93.6
Ashwood Park — Pasadena, TX(4)
 
144
 
31
 
10/15/2013
 
696
 
642
 
96.5
 
87
Meadowbrook Apartments—Humble, TX(4)
 
260
 
33
 
10/15/2013
 
705
 
641
 
95.0
 
94.2
Parkside Apartments—Humble, TX(4)
 
160
 
32
 
10/15/2013
 
734
 
669
 
95.5
 
93.8
Brixworth at Bridge Street—Huntsville, AL
 
208
 
30
 
10/18/2013
 
655
 
650
 
93.7
 
85.5
Newbridge Commons—Columbus, OH(3)
 
264
 
16
 
11/21/2013
 
729
 
691
 
95.4
 
90.6
Southridge—Greenville, SC(3)(5)
 
360
 
N/A
 
1/14/2014
 
N/A
 
N/A
 
N/A
 
N/A
Waterside at Castleton—Indianapolis, IN
 
400
 
32
 
1/21/2014
 
621
 
609
 
92.1
 
90.7
Crossings of Bellevue—Nashville, TN(4)
 
300
 
30
 
4/2/2014
 
955
 
907
 
97.1
 
97.7
Village Green—Little Rock, AK(4)
 
172
 
30
 
4/2/2014
 
552
 
552
 
94.1
 
96.7
Sundance—Wichita, KS(4)
 
496
 
16
 
4/2/2014
 
551
 
541
 
96.3
 
97
Sandtown Vista—Atlanta, GA
 
350
 
5
 
6/26/2014
 
847
 
817
 
95.4
 
92.8
Landmark at Kendall Manor—Houston, TX
 
272
 
34
 
7/8/2014
 
796
 
769
 
94.4
 
91.2
Avalon Apartments—Pensacola, FL(3)
 
276
 
7
 
12/22/2014
 
912
 
N/A
 
90.9
 
N/A
Apartments at Venue—Valley, AL(3)
 
618
 
4
 
7/27/2015
 
715
 
N/A
 
93.4
 
N/A
Parkway Falls—San Marcos, TX
 
192
 
1
 
9/10/2015
 
625
 
N/A
 
95.3
 
N/A
Cedar Lakes - Lake St. Louis, MO
 
420
 
29
 
9/25/2015
 
715
 
N/A
 
93.4
 
N/A
Factory at GARCO Park—N. Charleston, SC(6)
 
271
 
N/A
 
10/13/2015
 
N/A
 
N/A
 
N/A
 
N/A
Woodland Trails—LaGrange, GA
 
236
 
6
 
11/18/2015
 
849
 
N/A
 
96.2
 
N/A
Total
 
8,807

 
 
 
 
 
 
 
 
 
 
 
_______________________________________________________________________________

(1)Reflects the approximate age of the property based on the year original construction was completed.
(2)Gives effect to rent concessions. Average physical occupancy and monthly rental rate per unit reflects our period of
ownership.
(3)
We own a 91%, 91%, 75%, 50%, 74%, 98% and 61.3% equity interest in the joint ventures which own the Stonecrossing Apartments, Pathways, Autumn Brooks Apartments, Mountain Park Estates, Southridge, Avalon Apartments and

3


Apartments at Venue, respectively. We are the sole owner of Silvana Oaks Apartments, Avondale Station, Newbridge Commons and Woodland Trails.
(4)
Ashwood Park, Meadowbrook Apartments and Parkside Apartments are owned by one joint venture, Crossings of Bellevue, Village Green and Sundance are owned by one joint venture, Waverly Place Apartments and The Fountains Apartments are owned by one joint venture and Stonecrossing Apartments and Pathways are owned by one joint venture.
(5)
This joint venture is developing a 360 unit multi-family property with ground floor retail of approximately 10,000 square feet. As of December 1, 2015, 141 units are occupied and we anticipate the balance of the residential units and the retail space will be available for occupancy by late January 2016.
(6) This joint venture is developing a 271 unit multi-family property. We anticipate that this project will be completed in stages from December 2016 to July 2017.

The following table set forth certain information, presented by state, related to our properties as of December 1, 2015 (dollars in thousands):
State
 
Number of
Properties
 
Number of
Units
 
Estimated
2016 Revenue(1)
 
Percent of 2016
Estimated
Revenue
Texas
 
7

 
1,412

 
$
17,487

 
21
%
Georgia
 
5

 
1,548

 
14,488

 
17
%
Tennessee
 
4

 
1,244

 
12,881

 
15
%
Florida
 
4

 
1,186

 
11,743

 
14
%
Kansas
 
1

 
496

 
3,406

 
4
%
South Carolina(2)
 
3

 
839

 
6,979

 
8
%
Ohio
 
1

 
264

 
2,331

 
3
%
Indiana
 
1

 
400

 
2,988

 
3
%
Alabama
 
2

 
826

 
7,469

 
9
%
Missouri
 
1

 
420

 
4,393

 
5
%
Arkansas
 
1

 
172

 
1,122

 
1
%
Total
 
30

 
8,807

 
$
85,287

 
100
%
_______________________________________________________________________________

(1)
Reflects our estimate of the rental and other revenues to be generated in 2016 by our multi-family properties located in such state.
(2)
Includes our Greenville and N. Charleston, SC development projects.
Joint Venture Arrangements
The arrangements with our multi-family property joint venture partners are deal specific and vary from transaction to transaction. Generally, these arrangements provide for us and our partner to receive net cash flow available for distribution in the following order of priority (and in certain cases, we are entitled to these distributions on a senior or preferential basis):
a preferred return of 10% on each party's unreturned capital contributions, until such preferred return has been paid in full,
the return in full of each party's capital contribution,
35% to our partner, and the balance to us, until an internal rate of return of 15% has been achieved by us, and
thereafter, shared equally between us and our venture partner.
Though, as noted above, each joint venture operating agreement contains different terms, such agreements generally provide for a buy-sell procedure under specified circumstances (including (i) after the passage of time (e.g., two years after the acquisition), (ii) if the partners are unable to agree on major decisions, (iii) upon a change in control of our subsidiary owning the interest in the joint venture, or (iv) one or more of the foregoing). Further, these arrangements may also allow us, and in some cases, our joint venture partner, to force the sale of the property after it has been owned by the joint venture for a specified period (e.g., four to five years after the acquisition).
Our Acquisition Process and Underwriting Criteria
We identify multi-family property acquisition opportunities primarily through relationships developed over time by our officers with our former borrowers, current joint venture partners, real estate investors and brokers.

4


Our current goal is to acquire properties with cap rates ranging from 5.25% to 6.25% and that will provide stable risk adjusted total returns (i.e., operating income plus capital appreciation). In identifying opportunities that will achieve such goal, we seek acquisitions that will achieve an approximate 6% to 10% annual return on invested cash and an internal rate of return of approximately 9% to 20%. We have also focused, but have not limited ourselves, to acquiring properties located in the South and in particular, the Southeast and Southwest United States. Subject to the foregoing, we are opportunistic in pursuing multi-family property acquisitions and do not mandate any specific acquisition criteria, though we take the following into account in evaluating an acquisition opportunity: location, size of the target market, property quality, availability and terms and conditions of long term fixed rate mortgage debt, potential for capital appreciation or recurring income, extent and nature of contemplated capital improvements and property age. We generally acquire properties with a joint venture partner with knowledge and experience in owning and operating multi-family properties in the target market as this enhances our understanding of such market and assists us in managing our risk with respect to a particular acquisition.
Approvals of the acquisition of a multi-family property are based on a review of property information as well as other due diligence activities undertaken by us and, as applicable, our venture partner. Those activities include a consideration of economic, demographic and other factors with respect to the target market and sub-market (including the stability of its population and the potential for population growth, the economic and employment base, presence of and barriers to entry of alternative housing stock, market prices for comparable properties, the competitive positioning of the proposed acquisition and the regulatory environment (i.e. applicable rent regulation)), a review of an independent third party property condition report, a Phase I environmental report with respect to the property, a review of recent and projected results of operations for the property prepared by the seller, us or our joint venture partner, an assessment of our joint venture partner's knowledge and expertise with respect to the acquisition and operation of multi-family properties and the relevant market and sub-market, a site visit to the property and the surrounding area, an inspection of a sample of units at the property, the potential for rent increases and the possibility of enhancing the property and the costs thereof. To the extent a property to be acquired requires renovations or improvements, or if we and our joint venture partner believe that improving a property will generate greater rent, funds are generally set aside by us and our joint venture partner at the time of acquisition to provide the capital needed for such renovation and improvements. At September 30, 2015, we have approximately $6.5 million to fund improvements at our multi-family properties.
A key consideration in our acquisition process is the evaluation of the availability of mortgage debt to finance the acquisition (or the ability to assume the mortgage debt on the property) and the terms and conditions (e.g. interest rate, amortization and maturity) of such debt. Typically, approximately 25% to 35% of the purchase price is paid in cash and the balance is financed with mortgage debt. We believe that the use of leverage of up to 75% allows us the ability to earn a greater return on our investment than we would otherwise earn. Generally, the mortgage debt obtained in connection with an acquisition matures five to ten years thereafter, is interest only for one to three years after the acquisition, and provides for a fixed interest rate and for the amortization of the principal of such debt over 30 years.
Before a property is acquired, the acquisition must be reviewed and approved by our investment committee. Approval occurs after the assent of not less than four of the seven members of this committee, all of whom are our executive officers. The approval of our board of trustees is required for any single multi-family property acquisition in which our equity investment exceeds $15 million.
We are partners in two multi-family development opportunities with the same joint venture partner or its affiliates. We pursue these opportunities when we believe the potential higher returns justify the additional risks. The factors considered in pursuing these opportunities generally include the factors considered in evaluating a standard acquisition opportunity, and we place additional emphasis on our joint venture partner's ability to execute a development project. Though we may from time-to-time pursue other development activities, we do not anticipate they will constitute a significant part of our portfolio.
Property Sales
We monitor our portfolio to identify appropriate disposition candidates. Factors considered in deciding whether to dispose of a property generally include our evaluation of the current market price of such property compared to projected economics for such property and adverse changes in the factors considered in acquiring such property. In February 2015, we sold Water Vista Apartments, Lawrenceville, GA, recognizing a gain of $2.7 million, and in July 2015, we sold our Ivy Ridge Apartments, Marietta,GA, and The Palms on Westheimer Apartments, Houston, TX, recognizing gains of $7.8 million and $3.8 million, respectively. We have entered into a contract to sell Grove at Trinity Pointe and at September 30, 2015, this property is reflected on our consolidated balance sheet as held for sale. We estimate that the gain from such sale will be approximately $6.8 million. and the amount of such gain to be allocated to the non-controlling interest is $2.7 million



5


Property Management
The day-to-day management of our multi-family properties is overseen by property management companies operating in the market in which the property is located. Some of these management companies are owned by our joint venture partners or their affiliates. Generally, we can terminate these management companies upon specified notice or for cause, subject to the approval of the mortgage lender and, in some cases, our joint venture partner. We believe satisfactory replacements for property managers are available, if required.
Insurance
The multi-family properties are covered by all risk property insurance covering 100% of the replacement cost for each building and business interruption and rental loss insurance (covering up to twelve months of loss). On a case-by-case basis, based on an assessment of the likelihood of the risk, availability of insurance, cost of insurance and in accordance with standard market practice, we obtain earthquake, windstorm, flood, terrorism and boiler and machinery insurance. We carry comprehensive liability insurance and umbrella policies for each of our properties which provide no less than $5 million of coverage per incident. We request certain extension of coverage, valuation clauses, and deductibles in accordance with standard market practice and availability.
Although we may carry insurance for potential losses associated with our multi-family properties, we may still incur losses due to uninsured risks, deductibles, co-payments or losses in excess of applicable insurance coverage and those losses may be material. In addition, certain insurance coverage is part of blanket policies in which a loss on an unrelated property could affect the coverage limits on a joint venture property.
Mortgage Debt
The following table sets forth scheduled principal (including amortization) mortgage payments due for our multi-family properties as of September 30, 2015:
YEAR
 
PRINCIPAL
PAYMENTS DUE
(Amounts in
Thousands)
2016
 
$
5,635

2017
 
7,249

2018
 
8,027

2019
 
142,385

2020
 
43,169

Thereafter
 
267,181

Total
 
$
473,646

As of September 30, 2015, the weighted average annual interest rate of the mortgage debt on our 28 multi-family properties is 3.99% and the weighted average remaining term of such debt is approximately 6.5 years. The mortgage debt associated with our multi-family properties is generally non-recourse to (i) the joint venture that owns the property, subject to standard carve-outs and (ii) to us and our subsidiary acquiring the equity interest in such joint venture. We, at the parent entity level (i.e., BRT Realty Trust), are the standard carve-out guarantor with respect to the Avalon, Silvana Oaks,Woodland Trails, Stonecrossing, Pathway and Avondale properties. (The term "standard carve-outs" refers to recourse items to an otherwise non-recourse mortgage and are customary to mortgage financing. While carve-outs vary from lender to lender and transaction to transaction, the carve-outs may include, among other things, a voluntary bankruptcy filing, environmental liabilities, the sale, financing or encumbrance of the property in violation of loan documents, damage to property as a result of intentional misconduct or gross negligence, failure to pay valid taxes and other claims which could create a lien on a property and the conversion of security deposits, insurance proceeds or condemnation awards.) At September 30, 2015, the principal amount of mortgage debt outstanding with respect to the properties at which we are the carve-out guarantor is approximately $66 million.
Our Other Real Estate Assets and Activities
Newark Joint Venture
Other Developments
See "Management's Discussion and Analysis of Financial Condition and Results of Operations-Other Developments" for information regarding the possible sale by BRT of its equity interest in the Newark Joint Venture and the possible repayment of $19.5 million in principal amount of secured mortgage debt owed to BRT eliminated in consolidation.

6


Background
Two of our wholly-owned subsidiaries are members of a joint venture, which we refer to as the Newark Joint Venture, with two members that are not affiliated with us. The Newark Joint Venture owns several properties (including development sites) in downtown Newark, NJ. The properties are surrounded by a variety of governmental, educational, cultural and entertainment institutions and facilities. In close proximity to these properties are the Newark campus of Rutgers University, the New Jersey Institute of Technology, University of Medicine and Dentistry of New Jersey, Essex County College, Seton Hall Law School, the New Jersey Performing Arts Center, the Prudential Arena (home of the National Hockey League New Jersey Devils), the Essex County Court Complex, Newark's City Hall and a Federal Courthouse. These properties are within walking distance of Newark Penn Station, which provides access to Amtrak and New Jersey Transit trains and are accessible to local bus routes. The properties are served by various highways, including the Garden State Parkway, Interstate-95, Interstate-78 and Interstate-280.
In 2007, immediately prior to the formation of the Newark Joint Venture, we held loans aggregating approximately $38 million, secured by substantially all of the properties conveyed to the Newark Joint Venture by our borrowers. We entered into loan work-out negotiations with our borrowers and, as a result of such negotiations, entered into the Newark Joint Venture. In connection with the work-out of our loans and the formation of the Newark Joint Venture, our loans were converted into a consolidated mortgage loan of $27 million with the balance of our loans converted into a $6.9 million preferred capital account interest and a 50.1% membership interest in the Newark Joint Venture, providing us with a separate capital account of $3.9 million. The other members caused all the properties secured by our loans, and additional properties (unencumbered by our loans) and contract rights to acquire additional properties, all located in downtown Newark, NJ, to be contributed to the Newark Joint Venture for which the other members received a 49.9% membership interest in the Newark Joint Venture (with a separate capital account of $3.9 million).
The Newark Joint Venture is in the process of redeveloping the Teachers Village site and intends to redevelop all or a portion of the remaining sites, particularly the Market Street site, with personnel hired by the Newark Joint Venture, with other development partners (including adjacent property owners that may be interested in redeveloping several of such properties at the same time) or sell some of its sites to developers or end users. Although we own only a 50.1% membership interest in the Newark Joint Venture, in accordance with generally accepted accounting principles in the United States, the assets, liabilities and results of operations of the Newark Joint Venture are consolidated with our financial statements. Accordingly, our consolidated balance sheets at September 30, 2015, include, as real estate properties, $141.4 million net book value of real estate owned and being developed by the Newark Joint Venture and, as mortgages payable, mortgage debt of $110.4 million incurred by the Newark Joint Venture. BRT's $19.5 million mortgage loan to the Newark Joint Venture (which is secured by all of the real estate assets of the Newark Joint Venture other than the Teachers Village properties and the Broad Street properties), is eliminated in consolidation and is not recorded on our consolidated balance sheet.
The Newark Joint Venture believes that the properties owned by it have adequate insurance coverage for their current use.
Current Property Information
Except as otherwise noted below, the following table sets forth as of September 30, 2015, information regarding the properties owned by the Newark Joint Venture (dollars in thousands):
Assemblage or Property
 
Type of Property
 
Rentable
Square
Feet
 
Annual
Real
Estate
Taxes
 
Projected
2016
Contractual
Rental
Income(1)
 
Number of
Tenants
 
Percent
Leased(2)
 
Mortgage
Debt(3)
Market Street(4)
 
Office and retail
 
303,126

 
$
492

 
$
407

 
16

 
36
%
 
$
900

Teachers Village(5)
 
Mixed
 
143,358

(6)
334

 
1,565

(6)
7

(6)
66

(6)
103,964

Broad Street
 
School and retail
 
47,564

 
346

 
1,058

 
2

 
100

 
5,508

Beaver Street
 
Retail
 
8,160

 
11

 

 

 

 

Lincoln Park
 
Parking
 
79,063

 
55

 
21

 
2

 
100

 

_______________________________________________________________________________

(1)
Refers to the fixed rental payments payable pursuant to such leases in 2016.

(2)
Based on square footage.


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(3)
See note 5 of our consolidated financial statements. Excludes $19.5 million in principal amount mortgage debt payable to BRT by the Newark Joint Venture which is eliminated in consolidation. See "Management's Discussion and Analysis of Financial Condition and Results of Operations-Other Developments" for information about the possibility that such debt will be paid off.

(4)
Leases representing substantially all of the leased space of the Market Street development are month-to-month or have cancellation, relocation or demolition provisions. Many of these leases are at below market rental rates.

(5)
Includes five buildings - two buildings with an aggregate of 113,903 square feet of commercial space (25,070 and 88,833 square feet of retail space and school space, respectively) were completed in July 2013 as part of Phase I, two buildings (one completed in each of September 2014 and December 2014) with an aggregate of 61 residential units and 13,080 square feet of retail space,constructed as part of Phase II, and a partially completed building with an aggregate of 62 units (of which 30 units are occupied) and 16,375 square feet of retail space constructed as part of Phase II. See "—Information and Activities Relating to Development and Other Sites" for a description of Phases I through III of the Teachers Village project.

(6)
Excludes (i) the 123 residential units constructed and to be constructed as part of Phase II, (ii) the building to be constructed in Phase III and (iii) two parcels aggregating approximately 60,000 square feet that are currently used as parking lots and may be developed in the future.
The following table sets forth as of September 30, 2015, a schedule of the annual lease expirations of the Newark Joint Venture's commercial real estate assets and the anticipated contributions to 2016 contractual rental income, assuming that none of the tenants exercise renewal or cancellation options, if any (dollars in thousands):
Lease Expiration
Number of
Leases
Expiring(1)
 
Square
Footage of
Leases
Expiring
 
Percentage
of Total
Leased
Square
Feet
 
Projected
2016
Contractual
Rental
Income(1)
 
Projected %
of 2016
Contractual
Rental
Income(1)
Month-to-month
13

 
164,577

 
50
%
 
$
224

 
7
%
2016
2

 
7,890

 
2

 
43

 
2

2017
1

 
6,214

 
2

 
144

 
4

2018
1

 
5,260

 
2

 
48

 
2

2019

 

 

 

 

2020
1

 
5,260

 
2

 
68

 
2

2021
2

 
5,485

 
2

 
58

 
2

2022

 

 

 

 

2023

 

 

 

 

2024
1

 
1,800

 

 
54

 
2

2025 and thereafter
6

 
134,283

 
40

 
2,412

 
79

Total
27

 
330,769

 
100
%
 
$
3,051

 
100
%
_______________________________________________________________________________

(1)
Assumes all month-to-month tenants remain in occupancy for all of 2016.
Information and Activities Relating to Development and Other Sites
Set forth below is information regarding the Newark Joint Venture's most significant properties.
Teachers Village
The Teachers Village site encompasses an area bounded by Branford Street to the north, Treat Place to the east, Hill Street to the south and Washington Street to the west, and is adjacent to Halsey Street. From 2012 through 2014, the Newark Joint Venture obtained, in three phases, financing of approximately $93.1 million, which together with $31.4 million of New Markets Tax Credit net proceeds is, after payment of transaction expenses and payment of approximately $19.1 million of principal and accrued interest on debt, has and is being used to construct six buildings.

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The first financing phase, which we refer to as Phase I, was used to fund the construction of two buildings with an aggregate of 113,903 rentable square feet—these buildings were completed in August/September 2013. Approximately 88,833 square feet is leased to three charter schools and a day-care center.
The second financing phase, which we refer to as Phase II, will result in, upon completion of construction, three buildings containing approximately 123 residential rental units and approximately 29,140 square feet of retail space. One building containing 21 residential units and 3,980 square feet of retail space was completed in August 2014, and the second building, containing 40 residential units and 9,100 square feet of retail space, was completed in December 2014. (The retail space at these buildings require build-out. See "Management's Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources-Newark Joint Venture"). We anticipate the third building, which contains 62 residential units of which 30 are occupied, will be completed by February 2016.
The third financing phase, which we refer to as Phase III, contemplates the construction of an 82,547 square feet mixed-use space which will consist of a (i) 48,772 square foot commercial condominium unit including 10,453 square feet of retail space and 42 residential units, which we refer to as the Commercial Condo, and (ii) 33,775 square feet residential condominium unit including 39 residential units, which we refer to as the Residential Condo. The Residential Condo is owned by the Newark Joint Venture and the Commercial Condo is owned by certain indirect members of the Newark Joint Venture other than BRT; however, the owners of the Commercial Condo have agreed to distribute to the Newark Joint Venture any net distributable proceeds (i.e., cash flow and residual capital event proceeds after any necessary funds are expended on debt service, reserves and operating expenses) they receive as owners of the Commercial Condo. It is anticipated that this building will be completed by July 2016.
Residential Leasing Activity at Teachers Village
At December 1, 2015, the 91 available residential units constructed to date are occupied and we anticipate the remaining 32 units will be completed and leased by February 2016. We estimate that in 2016, the rental income from these 123 units will be approximately $1.9 million.
Commercial Leasing Activity at Teachers Village
At December 1, 2015, of the approximately 126,983 square feet of commercial space at the four completed buildings, approximately 95,218 square feet is leased to three charter schools, a day care center and and three retail tenants. In addition, the Newark Joint Venture has entered into leases with 11 tenants with respect to 18,466 square feet of retail space at these buildings; however, the tenants' obligations to take possession and pay rent is subject to the achievement of certain conditions, including the completion of landlord and tenant work and third party financing to fund a portion of such work. We can give no assurance that these conditions will be satisfied. If these conditions are not achieved by the dates specified in the applicable leases, certain tenants may be entitled to terminate their leases. See "Management's Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources-Newark Joint Venture".
Market Street
The Market Street site is an approximately 68,000 square foot site, currently representing approximately 303,000 rentable square feet. The site is bounded by Market Street, Campbell Street, Washington Street and University Avenue in downtown Newark, New Jersey. Potential redevelopment opportunities with respect to this site include an office complex with a retail component, a medical office complex containing offices, research laboratories and other medical related services, a retail center, a hotel, corporate headquarters, university offices, classrooms and/or dormitories, or a combination of one or more of these uses. The Newark Joint Venture may redevelop this site for its own account. Alternatively, the Newark Joint Venture may enter into a joint venture with a development partner or sell all or portions of the site. Although there have been discussions with various parties concerning the development of the Market Street area, the Newark Joint Venture has not entered into any material agreements concerning the redevelopment of all or any portion of the site and there is no assurance that it will be able to conclude any such arrangement or obtain the financing necessary to proceed with any arrangement which it may conclude.

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Mortgage Debt
The following table sets forth scheduled principal (including amortization) mortgage payments due for the Newark Joint Venture as of September 30, 2015:    
YEAR
 
PRINCIPAL PAYMENTS DUE
(Amounts in Thousands)
 
2016
 
$
1,892

 
2017
 
2,522

 
2018
 
2,710

(1
)
2019
 
23,845

 
2020
 
8,537

 
Thereafter
 
70,867

 
Total
 
$
110,373

 
_______________________________________________________________________________

(1)
Assumes that if the note holder of the Qualified School Construction Bonds exercises its right, beginning in 2018, to require the subsidiaries of the Newark Joint Venture to repurchase $22.7 million of principal amount of such debt, such subsidiaries would refinance such debt on terms substantially equivalent to the terms currently in effect.
At September 30, 2015, the $110.4 million of outstanding debt related to the Newark Joint Venture (of which approximately $104.0 million is related to Teachers Village), carries a weighted average effective interest rate (after giving effect to an annual subsidy of $1.0 million from the United States Department of Treasury), of approximately 4.53%, a weighted average remaining term of 10.5 years and is secured by the Teachers Village, Broad Street and Market Street properties. This debt is generally non-recourse to (i) BRT and (ii) except as otherwise indicated below, the Newark Joint Venture. In connection with Phases I through III, the Newark Joint Venture guaranteed, among other things, up to $27 million in principal amount of mortgage debt, which guarantees generally only expire after satisfaction of performance thresholds relating to the leasing and occupancy of these facilities within specified periods, losses incurred by the lenders by reason of the borrower's bad acts (e.g., fraud or misappropriation), the failure to complete construction of the six buildings to be constructed (four of which have been constructed) and the carrying costs with respect to certain properties. The Newark Joint Venture has also agreed to provide indemnity with respect to specified environmental matters, violations of the Americans with Disabilities Act and similar laws and to indemnify the beneficiaries of the New Markets Tax Credits for losses sustained if such credits are disallowed. We estimate that the New Markets Tax Credit indemnity obligation would not exceed $33 million (exclusive of interest and penalties) and is subject to reduction to the extent the credits are not disallowed.
Terms of the Newark Joint Venture Operating Agreement
The following is a summary of the material provisions of the amended and restated limited liability company operating agreement of the Newark Joint Venture:
Membership Interests.    We own 50.1% of the membership interests in the Newark Joint Venture, and the other members (collectively, the "Other Member") own 49.9% of the membership interests in the Newark Joint Venture.
Manager.    An affiliate of the Other Member is the manager of the Newark Joint Venture and is responsible for the day-to-day management activities of the Newark Joint Venture, but our consent is required for all major decisions affecting the Newark Joint Venture and its properties. Under specified circumstances, we may remove the manager immediately or upon six months advance written notice.
Mandatory Capital Calls.    Members are generally required to make pro rata capital contributions to the Newark Joint Venture for any projected budget shortfalls.
Buy-Sell.    During specified periods and circumstances, either member group may provide the other member group with written notice setting forth the amount they will pay to purchase all of the assets of the Newark Joint Venture. The member group which receives such notice has the option to (i) sell their membership interests in the Newark Joint Venture to the other members for their pro rata portion of the asset purchase price set forth in the written notice, or (ii) purchase the other members' membership interests in the Newark Joint Venture for their pro rata portion of the asset purchase price set forth in the written

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notice. If the acquirer is the Other Member, then the Other Member is required to, among other things, pay in full our mortgage and our preferred equity interest at closing.
Right of First Refusal and Tag-along Rights.    At any time, either member group may provide the other member group with written notice setting forth the sale price at which it desires to sell all or a portion of its membership interests. The member group which received such notice may purchase the offered membership interests at the price set forth in the notice. If they do not elect to purchase the membership interest in accordance with the terms of the notice, the offering members may secure another person to purchase its offered membership interests within 180 days. The group of members which received the sale notice may tag-along in a sale to such other person and sell their pro rata portion of the membership interests.
Distributions.    The Newark Joint Venture may not distribute any cash flow to its members until the $19.5 million balance due on our loan (eliminated in consolidation on our financial statements) has been fully repaid, including accrued interest. Once it has been fully repaid, the cash flow of the Newark Joint Venture will generally be distributed as follows: (i) first, to each member pro rata in an amount equal to their unreturned additional capital contributions, (ii) second, to us, until we receive a 10% return on our preferred capital contributions, (iii) third, to us until we receive an amount equal to our preferred capital contributions, (iv) fourth, to each member pro rata until such member receives a 10% return on their additional capital contributions, (v) fifth, to the members pro rata an amount equal to their common capital contributions, and (vi) the remainder shall be distributed as follows: (a) 10% to the managing member, and (b) 90% pro rata to the Other Members.
Manager of the Newark Joint Venture
The manager of the Newark Joint Venture is RBH Group LLC; its managing member and President is Ron Beit-Halachmy. Mr. Beit-Halachmy, 43 years of age, has over 20 years of experience in the real estate industry and has been involved for more than ten years in acquiring sites in Newark, New Jersey. He was the managing member of the entities which acquired all of the real property currently owned by the Newark Joint Venture. Mr. Beit-Halachmy earned a BA in Economics from the University of Wisconsin and a law degree from New York Law School. The Newark Joint Venture carries key man life insurance on Mr. Beit-Halachmy in the amount of $40 million.
Other Real Estate Assets
We also own the following properties with an aggregate net book value of $10.5 million at September 30, 2015:
an 8.7 acre vacant parcel of land in South Daytona Beach, Florida,

17 cooperative apartments, 15 of which are rent controlled or rent stabilized, in two buildings in upper
Manhattan, New York, and

a subordinated leasehold interest in a portion (approximately 29% of a 99,000 square foot facility) of a
shopping center in Yonkers, NY.
In addition, we have a 50% equity interest in an unconsolidated joint venture that owns an aggregate of 19 cooperative apartment units located in Lawrence, New York.
Our Real Estate Lending Activities
Though we are no longer engaged in real estate lending, we present, for historical purposes, the following information regarding such activities for the periods indicated:
 
 
Year Ended September 30,
(Dollars in Thousands)
 
2015
 
2014
 
2013
Loans originated
 
$

 
$
5,533

 
$
70,300

Loans repaid
 

 
34,045

 
76,900

Loan sold
 
2,000

 

 


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Corporate Level Financing Arrangement
Junior Subordinated Notes
As of September 30, 2015, $37.4 million in principal amount of our junior subordinated notes is outstanding. These notes mature in April 2036, are redeemable at any time at our option, contain limited covenants and bear interest at the rates set forth below:
 
 
 
Interest Period
 
Interest Rate
August 1, 2012 through April 29, 2016
 
4.9
%
April 30, 2016 through April 30, 2036
 
3 month LIBOR + 2.00%


Competition
We compete to acquire real estate assets and in particular, multi-family properties, with other owners and operators of such properties including other multi-family REITs, pension and investment funds, real estate developers and private real estate investors. Competition to acquire such properties is based on price and ability to secure financing on a timely basis and complete an acquisition. To the extent that a potential joint venture partner introduces us to a multi-family acquisition opportunity, we compete with other sources of equity capital to participate in such joint venture based on the financial returns we are willing to offer such potential partner and the other terms and conditions of the joint venture arrangement. We also compete for tenants at our multi-family properties—such competition depends upon various factors, including alternative housing options available in the applicable sub-market, rent, amenities provided and proximity to employment and quality of life venues.
The Newark Joint Venture competes for funding, and in particular, tax credit allocations and financing provided by governmental and quasi-governmental sources, with other real estate developers. It competes for commercial, retail, residential and educational tenants with landlords owning properties in Newark, New Jersey and the surrounding area and developers interested in developing facilities in Newark or the surrounding area.
Many of our competitors possess greater financial and other resources than we possess.

Environmental Regulation
We are subject to regulation at the federal, state and municipal levels and are exposed to potential liability should our properties or actions result in damage to the environment or to other persons or properties. These conditions include the presence or growth of mold, potential leakage of underground storage tanks, breakage or leaks from sewer lines and risks pertaining to waste handling. The potential costs of compliance, property damage restoration and other costs for which we could be liable or which could occur without regard to our fault or knowledge of such conditions, are unknown and could potentially be material.
In the course of acquiring and owning multi family properties, we or our joint venture partner engage an independent environmental consulting firm to perform a level 1 environmental assessment (and if appropriate, a level 2 assessment) to identify and mitigate these risks as part of the due diligence process. We believe these assessment reports provide a reasonable basis for discovery of potential hazardous conditions prior to acquisition. Should any potential environmental risks or conditions be discovered during our due diligence process, the potential costs of remediation will be assessed carefully and factored into the cost of acquisition, assuming the identified risks and factors are deemed to be manageable and within reason. Some risks or conditions may be identified that are significant enough to cause us to abandon the possibility of acquiring a given property. As of the date of this report, we have no knowledge of any material claims made or pending against us with regard to environmental damage for which we may be found liable, nor are we aware of any potential hazards to the environment related to any of our properties which could reasonably be expected to result in a material loss.

Our Structure
We share facilities, personnel and other resources with several affiliated entities including, among others, Gould Investors L.P., a master limited partnership involved primarily in the ownership and operation of a diversified portfolio of real estate assets, and One Liberty Properties, Inc., an NYSE listed equity REIT. Eight individuals (including Jeffrey A. Gould,

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Chief Executive Officer and President, Mitchell Gould, Executive Vice President and George Zweier, Chief Financial Officer), devote substantially all of their business time to our activities, while our other personnel (including several officers) share their services on a part-time basis with us and other affiliated entities that share our executive offices. (Including our full and part-time personnel , we estimate that we have the equivalent of 13 full time employees). The allocation of expenses for the shared facilities, personnel and other resources is computed in accordance with a Shared Services Agreement by and among us and the affiliated entities. The allocation is based on the estimated time devoted by executive, administrative and clerical personnel to the affairs of each entity that is a party to this agreement.
In addition, we are party to an Advisory Agreement, as amended, between us and REIT Management Corp., our advisor. REIT Management is wholly owned by Fredric H. Gould, a member of our Board of Trustees and the former chairman of such board, and he and certain of our executive officers, including our Chairman of the Board and Chief Executive Officer, receive compensation from REIT Management. Pursuant to this agreement, REIT Management furnishes advisory and administrative services with respect to our business, including, without limitation, developing and maintaining banking and financing relationships, participating in the analysis and approvals of multi-family property acquisitions, providing investment advice and providing assistance with building inspections.
The Advisory Agreement, as amended, provides that (i) it renews automatically on July 1st of each year, unless earlier terminated with or without cause, (ii) that the minimum and maximum fees payable in a fiscal year to REIT Management are $750,000 and $4 million, respectively, subject to adjustment for any fiscal year of less than twelve months, and (iii) we pay REIT Management the following annual fees, which are paid on a quarterly basis:
0.45% of the average book value of all real estate properties, excluding depreciation;
0.25% of the average amount of the fair market value of marketable securities;
1.0% of the average principal amount of earning loans;
0.35% of the average amount of the fair market value of non-earning loans;
0.15% of the average amount of cash and cash equivalents; and
to the extent loans or real estate are held by joint ventures or other arrangements in which we have an interest, varying fees based on, among other things, the nature of the asset (i.e. real estate or loans), the nature of our involvement (i.e. active or passive) and the extent of our equity interests in such arrangement.
We paid fees pursuant to this agreement of $2.4 million and $2 million in 2015 and 2014, respectively. Approximately $214,000 of the 2014 fees is included in discontinued operations.
Effective as of December 31, 2015, the Advisory Agreement will terminate. In lieu thereof, we will retain personnel, including related parties, to provide the services previously provided pursuant to such agreement.The aggregate fees in calendar 2016 for the provision of such services may not exceed $1.15 million.
Item 1A.    Risk Factors.
        Set forth below is a discussion of certain risks affecting our business. The categorization of risks set forth below is meant to help you better understand the risks facing our business and is not intended to limit your consideration of the possible effects of these risks to the listed categories. Any adverse effects arising from the realization of any of the risks discussed, including our financial condition and results of operation, may, and likely will, adversely affect many aspects of our business.
Risks Related to our Business
Our acquisition, development and property improvement activities are limited by available funds.
Our ability to acquire additional multi-family properties, to improve our multi-family properties and to develop our Newark Joint Venture properties, is limited by the funds available to us. At September 30, 2015, we had approximately $15.6 million of cash and cash equivalents and approximately $6.5 million and $13.3 million designated as restricted cash for multi-family property improvements and Newark Joint Venture development activities, respectively. Our multi-family acquisition and improvement activities and the Newark Joint Venture development activities are constrained by funds available to us which will limit growth in our revenues and operating results. See "Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources - Newark Joint Venture".

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It is unlikely that we will be required to declare any dividends in the next several years to maintain our status as a REIT.
We have not declared or paid any dividends since 2010. In order to qualify as a REIT, we are required to distribute 90% of our taxable income. At December 31, 2014, we had a tax loss carry-forward of approximately $65 million. Under current tax laws, we can offset our future taxable income against our tax loss carry-forward until 2029 or until the tax loss carry-forward has been fully used, whichever occurs first. As a result, it is unlikely that we will be required to pay a dividend for the next several years in order to maintain our REIT status. The non-payment of cash dividends may negatively impact the price of our common shares.
We may not be able to compete with competitors, many of which have greater financial and other resources than we possess.
We compete with many third parties engaged in the ownership and operation of multi-family properties, including other REITs, specialty finance companies, public and private investors, investment and pension funds and other entities. The Newark Joint Venture competes (i) with real estate developers for tax credit allocations and financing provided by governmental and quasi-governmental authorities, and (ii) for tenants, with landlords and developers with, or interested in developing, properties in Newark, New Jersey and the surrounding area. Many of these competitors have substantially greater financial and other resources than we do. Larger and more established competitors enjoy significant competitive advantages that result from, among other things, enhanced operating efficiencies and more extensive networks providing greater and more favorable access to capital, financing and tax credit allocations and more favorable lending and acquisition opportunities. Larger multi-family property operators have the ability and capacity to acquire a greater number of higher quality properties at more favorable locations and on more favorable terms and conditions.
We may incur impairment charges in 2016.
We evaluate on a quarterly basis our real estate portfolios for indicators of impairment. Impairment charges reflect management's judgment of the probability and severity of the decline in the value of real estate assets we own. These charges and provisions may be required in the future as a result of factors beyond our control, including, among other things, changes in the economic environment and market conditions affecting the value of real property assets. If we are required to take impairment charges, our results of operations will be adversely impacted.
Our revenues and the value of our portfolio may be negatively affected by casualty events occurring on our properties.
The joint ventures in which we are an equity participant carry all risk property insurance covering the property and any improvements to the property owned by the joint venture for the cost of replacement in the event of a casualty. Further, we carry insurance for such purpose on properties owned by us. However, the amount of insurance coverage maintained for any property may be insufficient to pay the full replacement cost following a casualty event. In addition, the rent loss coverage under a policy may not extend for the full period of time that a tenant or tenants may be entitled to a rent abatement that is a result of, or that may be required to complete restoration following, a casualty event. In addition, there are certain types of losses, such as those arising from earthquakes, floods, hurricanes and terrorist attacks, that may be uninsurable or that may not be economically feasible to insure. Changes in zoning, building codes and ordinances, environmental considerations and other factors may make it impossible for a joint venture or us, as the case may be, to use insurance proceeds to replace damaged or destroyed improvements at a property. If any of these or similar events occur, the amount of coverage may not be sufficient to replace a damaged or destroyed property. As a result, our returns and the value of our investment may be reduced.
Compliance or failure to comply with the Americans with Disabilities Act of 1990 or other safety regulations and requirements could result in substantial costs.

The Americans with Disabilities Act generally requires that public buildings, including our properties, be made accessible to disabled persons. Non-compliance could result in the imposition of fines by the federal government or the award of damages to private litigants. From time-to-time claims may be asserted against us with respect to some of our properties under the Americans with Disabilities Act. If, under the Americans with Disabilities Act, we are required to make substantial alterations and capital expenditures in one or more of our properties, including the removal of access barriers, it could adversely affect our financial condition and results of operations.

Our properties are subject to various federal, state and local regulatory requirements, such as state and local fire and life safety requirements. If we fail to comply with these requirements, we could incur fines or private damage awards. We do not know whether existing requirements will change or whether compliance with future requirements will require significant unanticipated expenditures that will affect our cash flow and results of operations.

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In order for real estate properties to generate positive cash flow or to make real estate properties suitable for sale, we may need to make significant capital improvements and incur deferred maintenance costs with respect to these properties.
Some of our properties, and in particular, our multi-family properties, face competition from newer, and updated properties. At September 30, 2015, the approximate weighted average age (based on the number of units) of our multi-family properties is approximately 25 years. To remain competitive and increase occupancy at these properties and/or make them attractive to potential tenants or purchasers, we may have to make significant capital improvements and/or incur deferred maintenance costs with respect to these properties. The cost of these improvements and deferred maintenance items may impair our financial condition and liquidity.
Our transactions with affiliated entities involve conflicts of interest.
Entities affiliated with us and with certain of our executive officers provide services to us and on our behalf. Although our policy is to obtain terms in transactions with affiliates that are at least as favorable as those that we would receive if the transactions were entered into with unaffiliated entities, these transactions raise the potential that we may not receive terms as favorable as those that we would receive if the transactions were entered into with unaffiliated entities.

Liability relating to environmental matters may impact the value of properties that we acquire.
We may be subject to environmental liabilities arising from the ownership of properties we acquire. Under various federal, state and local laws, an owner or operator of real property may become liable for the costs of removal of certain hazardous substances released on its property. These laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the release of such hazardous substances.
If we acquire properties, the presence of hazardous substances on a property may adversely affect our ability to finance or sell the property and we may incur substantial remediation costs. The discovery of material environmental liabilities attached to such properties could have a material adverse effect on our results of operations and financial condition.
The presence of hazardous substances may adversely affect our ability to sell real estate or borrow using the real estate as collateral.
Senior management and other key personnel are critical to our business and our future success may depend on our ability to retain them.
We depend on the services of Jeffrey A. Gould, our president and chief executive officer, and other members of senior management to carry out our business and investment strategies. Although Jeffrey A. Gould devotes substantially all of his business time to our affairs, he devotes a limited amount of his business time to entities affiliated with us. In addition to Jeffrey A. Gould, only two other executive officers, Mitchell Gould, our executive vice president, and George Zweier, a vice president and our chief financial officer, devote all or substantially all of their business time to us. The remainder of our executive management personnel share their services on a part-time basis with entities affiliated with us and located in the same executive offices pursuant to a shared services agreement. We rely on part-time executive officers to provide certain services to us, including legal and accounting services, since we do not employ full-time executive officers to handle these services. If the shared services agreement is terminated, we will have to obtain such services or hire employees to perform them. We may not be able to replace these services or hire such employees in a timely manner or on terms, including cost and level of expertise, that are as favorable as those we receive under the shared services agreement.
In addition, in the future we may need to attract and retain qualified senior management and other key personnel, both on a full-time and part-time basis. The loss of the services of any of our senior management or other key personnel or our inability to recruit and retain qualified personnel in the future, could impair our ability to carry out our business and our investment strategies.
We do not carry key man life insurance on members of our senior management.
Breaches of information technology systems could materially harm our business and reputation.

We, our joint venture partners and the property managers managing our properties collect and retain on information technology systems certain financial, personal and other sensitive information provided by third parties, including tenants, vendors and employees. Such persons also rely on information technology systems for the collection and distribution of funds. There can be no assurance that we, our joint venture partners or property managers will be able to prevent unauthorized access to sensitive information or the unauthorized distribution of funds. Any loss of this information or unauthorized distribution of funds as a result of a breach of information technology systems may result in loss of funds to which we are entitled, legal

15


liability and costs (including damages and penalties), as well as damage to our reputation, that could materially and adversely affect our business and financial performance.

We are subject to risks associated with real estate assets and the real estate industry, which could decrease revenues or increase costs and adversely affect the economic performance and value of our properties.
Our real estate assets are subject to general economic and market risks. As such, in a general economic decline or recessionary climate, our assets may not generate sufficient cash to pay expenses, service debt or cover maintenance, and, as a result, our financial condition, results of operations and cash flow may be adversely affected. Factors that may adversely affect the economic performance or value of our properties include, among others:
changes in the national, regional and local economic climate;
inflation;
national, regional and local unemployment rates;
local conditions such as an oversupply of space or a reduction in demand for real estate in the area;
favorable interest rate environments that may result in a significant number of potential residents of our multifamily apartment communities deciding to purchase homes instead of renting;
changes in tax, real estate, environmental and zoning laws;


Risks Related to our Multi-Family Activities
Unfavorable changes in market and economic conditions could adversely affect occupancy, rental rates, operating expenses, and the overall market value of multi-family properties we acquire.
Conditions in markets in which we acquire multi-family properties may significantly affect occupancy, rental rates and the operating performance of such assets. The risks that may adversely affect conditions in those markets include the following:
industry slowdowns, plant closings and other factors that adversely affect the local economy;
an oversupply of, or a reduced demand for, multi-family units;
a decline in household formation or employment or lack of employment growth;
the inability or unwillingness of residents to pay rent increases;
rent control or rent stabilization laws, or other laws regulating housing, that could prevent us from raising rents to offset increases in operating costs; and
economic conditions that could cause an increase in our operating expenses, such as increases in property taxes, utilities, and routine maintenance.
We may be unable to refinance our multi-family mortgage debt as it matures.
We are subject to the risks associated with mortgage financing, including the risk that our cash flow will be insufficient to meet required payments of principal and interest and that we will be unable to refinance our mortgage debt as it matures. At September 30, 2015, the weighted average annual interest rate on our multi-family mortgage debt is 3.99% and the weighted average remaining term on this mortgage debt is 6.5 years. Approximately $142.3 million in principal amount of mortgage debt, bearing annual interest rates ranging from approximately 3.7% to 4%, matures in 2019. As we will not have sufficient liquidity to make all these principal payments when due, we will need to refinance a significant portion, if not all, of our outstanding multi-family debt as it matures. We may not be able to refinance existing debt or, in the event of increased interest rates, refinance on terms as favorable as currently in effect; either of these outcomes could have a material adverse effect on our financial condition and results of operations.
We could be negatively impacted by changes in our relationship with Fannie Mae or Freddie Mac, changes in the condition of Fannie Mae or Freddie Mac and by changes in government support for multi-family housing.

Fannie Mae and Freddie Mac have been a major source of financing for multi-family real estate in the United States and we have used loan programs sponsored by these agencies to finance many of our acquisitions of multi-family properties. There has been ongoing discussion by the government with regard to the long term structure and viability of Fannie Mae and Freddie Mac, which could result in adjustments to guidelines for their loan products. Should these agencies have their

16


mandates changed or reduced, lose key personnel, be disbanded or reorganized by the government or otherwise discontinue providing liquidity for the multi-family sector, our ability to obtain financing through loan programs sponsored by the agencies could be negatively impacted. In addition, changes in our relationships with Fannie Mae and Freddie Mac, and the lenders that participate in these loan programs, with respect to our existing mortgage financing could impact our ability to obtain comparable financing for new acquisitions or refinancing for our existing multi-family real estate investments. Should our access to financing provided through Fannie Mae and Freddie Mac loan programs be reduced or impaired, it would significantly reduce our access to debt capital and/or increase borrowing costs and could significantly limit our ability to acquire properties on acceptable terms and reduce the values to be realized upon property sales.
Most of our multi-family properties are located in a limited number of markets, which makes us susceptible to adverse economic developments in such markets.
In addition to general, regional and national economic conditions, the operating performance of our multi-family residential properties is impacted by the economic conditions of the specific markets in which our properties are concentrated. Approximately 21%, 17%, 15% and 14% of our estimated 2016 revenues from multi-family properties are attributable to properties located in Texas, Georgia, Tennessee and Florida, respectively. Accordingly, adverse economic developments in such markets could adversely impact the operations of these properties and therefore our operating results and cash flow. The concentration of properties in a limited number of markets exposes us to risks of adverse economic developments which are greater than the risks of owning properties with a more geographically diverse portfolio.
We are subject to certain risks associated with selling multi-family properties, which could limit our operational and financial flexibility.

We may desire to dispose of  multifamily properties that no longer meet our objectives, but our ability to complete such sales may be limited by adverse market conditions, including conditions over which we have limited or no control, such as the availability of mortgage debt. These conditions may impact the price or the other terms of a contemplated sale and the time needed to find a purchaser and complete the sale. We may be required to expend funds to correct defects or to make improvements before a property can be sold. Further, federal tax laws limit our ability to profit on the sale of properties that we have owned for less than two years, and this limitation may prevent us from selling properties when market conditions are favorable. The foregoing conditions may limit our ability to dispose of properties in order to meet our objectives, which may in turn have a material adverse effect on our financial condition and the market value of our securities.
The failure of third party property management companies to properly manage our properties may result in a decrease in occupancy rates, rental rates or both, which could adversely impact our results of operations
We and our joint venture partners rely on third party property management companies to manage our properties. These management companies are responsible for, among other things, leasing and marketing rental units, selecting tenants (including an evaluation of the creditworthiness of tenants), collecting rent, paying operating expenses, and maintaining the property. If these property management companies do not perform their duties properly or we or our joint venture partners do not effectively supervise the activities of these companies, occupancy rates, rental rates or both may decline at such properties. One property manager and its affiliates manage nine properties, a second property manager and its affiliates manage four properties and nine other property managers manage three or fewer properties - the loss of our managers, and in particular, the property manager that manages nine properties, could result in a decrease in occupancy rates, rental rates or both. Further, some of management companies are owned by our joint venture partners or their affiliates. The termination of a management company may require the approval of the mortgagee, our joint venture partner or both. If we are unable to terminate a property manager not performing its duties, on a timely basis, our occupancy rates, rental rates or both, could be adversely impacted.
Increased competition and increased affordability of residential homes could limit our ability to retain our tenants or increase or maintain rents.
Our multi-family properties compete with numerous housing alternatives, including other multi-family and single-family rental homes, as well as owner occupied single and multi-family homes. Our ability to retain tenants and increase or maintain rents or occupancy levels could be adversely affected by the alternative housing in a particular area and, due to declining housing prices, mortgage interest rates and government programs to promote home ownership, the increasing affordability of owner occupied single and multi-family homes.
Risks involved in conducting real estate activity through joint ventures.
We have in the past and in the future intend to acquire properties in joint ventures with other persons or entities when we believe that circumstances warrant the use of such structure. Joint venture investments involve risks, including the possibility that our partner might become insolvent or otherwise refuse to make capital contributions or property distributions when due; that we may be responsible to our partner for indemnifiable losses; that our partner may not perform its property oversight

17


responsibilities; that our partner may have business goals which are inconsistent with ours; our partner may be in a position to take action or withhold consent contrary to our instructions or requests; and our partner might engage in unlawful or fraudulent conduct with respect to our jointly owned properties or other properties in which they have an ownership interest. We and our partner may each have the right to trigger a buy-sell arrangement, which could cause us to sell our interest, or acquire our partner's interest, at a time when we otherwise would not have initiated such a transaction.
In some instances, joint venture partners may have competing interests in our markets that could create conflicts of interest. Further, our joint venture partners may experience financial distress, including bankruptcy, and to the extent they do not meet their obligations to us or our joint venture with them, we may be adversely affected.
Five of our multi-family property joint ventures are owned with one joint venture partner or its affiliates and four of our multi-family property joint ventures are owned with a second joint venture partner or its affiliates. We may be adversely effected if we are unable to maintain a satisfactory working relationship with either of these joint venture partners or if either partner becomes financially distressed.

Risks Related to the Newark Joint Venture and Other Real Estate Operations.
The Newark Joint Venture likely will have an operating loss for the foreseeable future.
We anticipate that the Newark Joint Venture will operate at a loss in 2016 and for several years thereafter. If the Newark Joint Venture operates at a loss, we and our partners in the venture may be required to fund the operating losses and capital requirements by making additional capital contributions. No assurance can be given that we or our venture partners will have the resources or be willing to make such contribution and the failure to make the required contribution may have an adverse impact on us.
If we are unable to pay debt service as it becomes due, we may be forced to sell properties at disadvantageous terms or relinquish our rights to such properties, which would result in the loss of revenues and in a decline in the value of our real property portfolio.
At September 30, 2015, approximately $9.4 million of debt service relating to the Newark Joint Venture is payable prior to the end of 2016 and $17.4 million of debt service is payable from 2017 through 2018. The cash flow from the properties securing the mortgage debt may be insufficient to meet required debt service payments. In particular, the rental revenues from the current tenants at Teachers Village are insufficient to cover all of the Newark Joint Ventures debt service obligations from 2016 through 2018. If efforts to generate additional rental revenues from the Teachers Village site are unsuccessful (due to, among other things, the failure to complete the buildings under construction or contemplated to be constructed or to fully lease at satisfactory rates the residential and commercial space at the six buildings contemplated to comprise Teachers Village), the Newark Joint Venture may be unable to meet its debt service obligation with respect to the Teachers Village properties and such properties would require additional capital from the members of the venture or may be foreclosed on by the lenders. See "Management's Discussion and Analysis of Financial Condition and Results of Operations - Disclosure of Contractual Oblidgations".
The Newark Joint Venture is limited in its ability the Teachers Village facilities for purposes other than as contemplated by the applicable financing and tax credit transactions.
The terms and conditions of the financings and tax credits provided to the Newark Joint Venture limit the venture's ability to use the Teachers Village facilities in a manner other than as permitted to be used by the governing transaction documents. Among other things, the New Markets Tax Credits and related contractual obligations provide that if prior to the seven year recapture period, the facilities are used in a manner prohibited by such tax credit program, the credits may be disallowed. The qualified school construction bonds in principal amount of approximately $22.7 million at September 30, 2015 requires that certain portions of the facilities be used for at least 19 years as public school facilities and the annual $1 million interest reimbursement provided by the US Treasury is subject to recapture if such facilities are not used for educational purposes for specified periods. The New Jersey Urban Transit Hub tax credits program requires that certain portions of the facilities must be used for residential purposes for at least ten years and that at least 20% of the residential units be allocated for lower/middle income housing. If as a result of market or other conditions, it is determined that the contemplated uses of the facilities are not financially viable, the Newark Joint Venture will be limited in its ability to use these facilities in an alternative manner which may adversely impact our financial condition and results of operations.
We have limited experience in developing and operating development sites.
The principal assets of our Newark Joint Venture are several development sites located in downtown Newark, NJ. Since we have limited experience in real estate development, we are subject to risks that differ from those to which we have been

18


subject to historically. Although the principal of the managing member of the Newark Joint Venture (who is formerly the principal of our borrowers) is knowledgeable with respect to the local real estate market, he has limited experience in development projects. There can be no assurance that the Newark Joint Venture will be successful in developing and/or managing the redevelopment of the sites.
The success of our Newark Joint Venture depends, to a large extent, on the principal of the Newark Joint Venture's manager.
The principal of the manager of the Newark Joint Venture was responsible for acquiring all the properties owned by the Newark Joint Venture and is responsible for, among other things, overseeing the construction and leasing activities at Teachers Village and development activities with respect to Market Street and the other properties owned by the venture. We believe that the principal's continued involvement is important to the success of the Newark Joint Venture. The diminution or loss of his services due to disability, death or for any other reasons could have a material adverse effect on the Newark Joint Venture's business, which would result in a material adverse effect on our business.
The Newark Joint Venture carries key man life insurance on such principal in the amount of $40 million. There can be no assurance that the proceeds from such life insurance would be sufficient to compensate the Newark Joint Venture for the loss of his services, and these policies do not provide any benefits if he becomes disabled or is otherwise unable to render services to the Newark Joint Venture.
The Newark Joint Venture is subject to risks particular to real estate development activities.
The Newark Joint Venture is subject to the risks associated with development activities. These risks include:
The inability to complete the Phases II or III of the Teachers Village project because the funds available from the financing and New Markets Tax Credits transactions, due to cost overruns or under estimating the funds needed, may be insufficient for such purpose. We estimate that at least approximately $[ ]million to $[ ]million is needed to complete these phases of this project and we can provide no assurance tat such funds will be obtained. See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources-Newark Joint Venture"

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

Construction, financing and other costs of developing the properties owned by the Newark Joint Venture and in particular, Teachers Village, may exceed original estimates, possibly making such activities unprofitable;

The time required to complete the construction of Teachers Village or to lease up the completed project may be greater than originally anticipated, thereby adversely affecting the Newark Joint Venture's liquidity;

Occupancy rates and rents of a completed project may be insufficient to make such project profitable;

The inability to acquire all the properties needed to develop the project to its full potential; and

The inability to complete a development.

Failure of the Newark Joint Venture to comply with the requirements of the New Markets Tax Credit program may result in significant losses and impair our financial condition.
The Newark Joint Venture entered into various arrangements to obtain funding under the New Markets Tax Credit program for the Teachers Village project and in connection therewith received approximately $31 million of net tax credit proceeds. New Markets Tax Credits are subject to recapture for a period of seven years as provided in the Internal Revenue Code. The Newark Joint Venture is required to comply with various regulations and contractual provisions that apply to the these credits and has indemnified the beneficiaries thereof for any loss or recapture of the benefits of such credits until the obligation to deliver tax benefits is relieved. We estimate that such indemnity obligation would not exceed approximately $33 million (exclusive of interest and penalties) and is subject to reduction to the extent the credits are not disallowed. Non-compliance with applicable requirements could result in the tax benefits not being realized by the beneficiaries which would have an adverse effect on our financial position and results of operations.

19



Risks Related to our Industry
Compliance with REIT requirements may hinder our ability to maximize profits.
In order to qualify as a REIT for Federal income tax purposes, we must continually satisfy tests concerning, among other things, our sources of income, the amounts we distribute to our shareholders and the ownership of securities. We may also be required to make distributions to shareholders at disadvantageous times or when we do not have funds readily available for distribution. Accordingly, compliance with REIT requirements may hinder our ability to operate solely on the basis of maximizing profits.
In order to qualify as a REIT, we must also ensure that at the end of each calendar quarter at least 75% of the value of our assets consists of cash, cash items, government securities and qualified REIT real estate assets. The remainder of our investment in securities cannot include more than 10% of the outstanding voting securities of any one issuer or more than 10% of the total value of the outstanding securities of such issuer. In addition, no more than 5% of the value of our assets can consist of the securities of any one issuer, other than a qualified REIT security. If we fail to comply with these requirements, we must dispose of the portion of our assets in excess of such amounts within 30 days after the end of the calendar quarter in order to avoid losing our REIT status and suffering adverse tax consequences. This requirement could cause us to dispose of assets for consideration of less than their true value and could lead to a material adverse impact on our results of operations and financial condition.
Because Real Estate Investments Are Illiquid, We May Not Be Able to Sell Properties As Needed.
Real estate investments generally cannot be sold quickly. We may not be able to reconfigure our portfolio promptly in response to economic or other conditions. This inability to reallocate our capital promptly could adversely affect our financial condition and results of operations.
Item 1B.    Unresolved Staff Comments.
None.
Item 2.    Properties.
Our executive office is located at 60 Cutter Mill Road, Suite 303, Great Neck, New York. This office is located in a building that through December 31, 2014 was owned by a subsidiary of Gould Investors L.P. We believe that such facilities are satisfactory for our current and projected needs.
The information set forth under "Item 1—Business" is incorporated herein by this reference to the extent responsive to the information called for by this item.
Item 3.    Legal Proceedings.
None.
Item 4.    Mine Safety Disclosures.
Not applicable.
PART II
Item 5.    Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Our common shares of beneficial interest, or Common Shares, are listed on the New York Stock Exchange, or the NYSE, under the symbol "BRT." The following table shows for the periods indicated, the high and low sales prices of the Common

20


Shares as reported in the consolidated transaction reporting system.
 
 
Fiscal 2015
 
Fiscal 2014
Fiscal Quarters
 
High
 
Low
 
High
 
Low
First Quarter
 
$
7.50

 
$
6.91

 
$
7.24

 
$
6.85

Second Quarter
 
7.35

 
6.71

 
7.66

 
7.01

Third Quarter
 
7.30

 
6.74

 
7.57

 
7.05

Fourth Quarter
 
7.19

 
6.76

 
7.76

 
7.00

On December 1, 2015, the high and low sales prices of our Common Shares was $7.00 and $6.74, respectively.
As of December 1, 2015, there were approximately 917 holders of record of our Common Shares.
We have not paid any cash dividends since 2010. Our tax loss carry forward at December 31, 2014, was approximately $65.3 million; therefore, we are not currently required by Federal tax code provisions relating to REITs to pay cash dividends to maintain our status as a REIT.
Stock Performance Graph
This graph compares the performance of our shares with the Standard & Poor's 500 Stock Index, an index consisting of publicly traded mortgage REITs (i.e., FTSE NAREIT Mortgage REITs) and an index consisting of apartment REITs (i.e., FTSE NAREIT Equity Apartments). The graph assumes $100 invested on September 30, 2010 and assumes the reinvestment of dividends.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
_______________________________________________________________________________
*    $100 invested on 9/30/10 in stock or index, including reinvestment of dividends. Fiscal year ending September 30.    

21


 
 
9/10
 
9/11
 
9/12
 
9/13
 
9/14
 
9/15
BRT Realty Trust
 
$
100.00

 
$
97.34

 
$
101.72

 
$
112.21

 
$
117.37

 
$
110.95

S&P 500
 
100.00

 
101.14

 
131.69

 
157.17

 
188.18

 
187.02

FTSE NAREIT Mortgage REITs
 
100.00

 
103.11

 
137.33

 
125.81

 
141.98

 
136.79

FTSE NAREIT Equity Apartments
 
100.00

 
112.73

 
134.00

 
131.64

 
153.74

 
191.87

Issuer Purchases of Equity Securities
Our Board of Trustees has authorized us to repurchase up to $4 million of our common shares through September 30, 2017. At September 30, 2015, $1.6 million of such authorization remains available.

22


Item 6.    Selected Financial Data.
The following table, not covered by the report of the independent registered public accounting firm, sets forth selected historical financial data for each of the fiscal years indicated. This table should be read in conjunction with the detailed information and financial statements appearing elsewhere herein.
(Dollars in thousands, except per share amounts)
 
2015
 
2014
 
2013
 
2012
 
2011
Operating statement data:
 
 
 
 
 
 
 
 
 
 
Total revenues(1)
 
$
82,497

 
$
66,414

 
$
32,003

 
$
10,858

 
$
4,308

Total expenses(2)
 
99,107

 
83,980

 
44,951

 
17,390

 
7,479

Gain on sale of real estate
 
15,005

 

 

 

 

Gain on sale of available-for-sale securities
 

 

 
530

 
605

 
1,319

Gain on sale of partnership interest
 

 

 
5,481

 

 

(Loss) from continuing operations
 
(1,605
)
 
(17,566
)
 
(6,937
)
 
(5,927
)
 
(3,990
)
Income from discontinued operations
 

 
1,400

 
9,026

 
7,477

 
8,914

Net (loss) income attributable to common shareholders
 
(2,388
)
 
(9,454
)
 
5,013

 
4,430

 
6,374

Earnings (loss) per beneficial share:
 
 
 
 

 
 

 
 

 
 

(Loss) income from continuing operations
 
$
(0.17
)
 
$
(0.76
)
 
$
(0.28
)
 
$
(0.16
)
 
$
0.35

Income from discontinued operations
 

 
0.10

 
0.63

 
0.48

 
0.10

 

 

 

 

 

Basic and diluted (loss) earnings per share
 
$
(0.17
)
 
$
(0.66
)
 
$
0.35

 
$
0.32

 
$
0.45

Balance sheet data:
 
 

 
 

 
 

 
 

 
 

Total assets(3)
 
$
835,879

 
$
734,620

 
$
549,491

 
$
385,956

 
$
191,012

Real estate properties, net(4)
 
733,168

 
635,612

 
402,896

 
190,317

 
59,277

Cash and cash equivalents
 
15,556

 
23,181

 
56,905

 
78,245

 
44,025

Restricted cash-construction holdback/multi-family
 
19,795

 
32,390

 
32,369

 
55,252

 

Available-for-sale securities at fair value
 

 

 

 
1,249

 
2,766

Assets related to discontinued operations
 

 
2,017

 
30,589

 
37,057

 
67,333

Mortgages payable(5)
 
566,438

 
482,406

 
313,216

 
169,284

 
14,417

Junior subordinated notes
 
37,400

 
37,400

 
37,400

 
37,400

 
37,400

Total BRT Realty Trust shareholders' equity
 
122,655

 
130,140

 
138,791

 
133,449

 
129,063

_______________________________________________________________________________
(1)
The increases from 2012 through 2015 are due primarily to the operations of our multi-family properties.

(2)
The increases from 2012 through 2015 are due primarily to increased expenses (i.e., operating expense, interest expense and depreciation and amortization) related to our multi-family property activities. The increase in 2012 from 2011 is a result of, among other things, expenses associated with our multi-family property activities and interest expense associated with Phases I and II of the Newark Joint Venture financings.

(3)
The increases from 2012 through 2014 are due to our multi-family property acquisitions and the increase in 2012 from 2011 is due primarily to such acquisitions and the proceeds from the Newark Joint Venture financings and New Markets Tax Credits transactions.

(4)
The increases from 2012 through 2015 are due to our multi-family property acquisitions.

(5)
Approximately $154.6 million of the increase from 2013 to 2014 and approximately $141.9 million of the increase from 2012 to 2013 is due to the mortgage debt incurred in the multi-family property acquisitions. Of the increase from 2011 to 2012, approximately $89.7 million and $72.8 million is due to the multi-family mortgage debt and the Newark Joint Venture's financing transactions, respectively.

23



Funds from Operations; Adjusted Funds from Operations.
In view of our multi- family property activities, we disclose below funds from operations ("FFO") and adjusted funds from operations ("AFFO") because we believe that such metrics are a widely recognized and appropriate measure of the performance of an equity REIT.
We compute FFO in accordance with the "White Paper on Funds From Operations" issued by the National Association of Real Estate Investment Trusts ("NAREIT") and NAREIT's related guidance. FFO is defined in the White Paper as net income (loss) (computed in accordance with generally accepted accounting principles), excluding gains (or losses) from sales of property, plus depreciation and amortization, plus impairment write-downs of depreciable real estate and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect funds from operations on the same basis. In computing FFO, we do not add back to net income the amortization of costs in connection with our financing activities or depreciation of non-real estate assets. Since the NAREIT White Paper only provides guidelines for computing FFO, the computation of FFO may vary from one REIT to another. We compute AFFO by adjusting FFO for our straight-line rent accruals, restricted stock expense and deferred mortgage costs (including our share of our unconsolidated joint ventures).
We believe that FFO and AFFO are useful and standard supplemental measures of the operating performance for equity REITs and are used frequently by securities analysts, investors and other interested parties in evaluating equity REITs, many of which present FFO and AFFO when reporting their operating results. FFO and AFFO are intended to exclude GAAP historical cost depreciation and amortization of real estate assets, which assures that the value of real estate assets diminish predictability over time. In fact, real estate values have historically risen and fallen with market conditions. As a result, we believe that FFO and AFFO provide a performance measure that, when compared year over year, should reflect the impact to operations from trends in occupancy rates, rental rates, operating costs, interest costs and other matters without the inclusion of depreciation and amortization, providing a perspective that may not be necessarily apparent from net income. We also consider FFO and AFFO to be useful to us in evaluating potential property acquisitions.
FFO and AFFO do not represent net income or cash flows from operations as defined by GAAP. FFO and AFFO should not be considered to be an alternative to net income as a reliable measure of our operating performance; nor should FFO and AFFO be considered an alternative to cash flows from operating, investing or financing activities (as defined by GAAP) as measures of liquidity.
FFO and AFFO do not measure whether cash flow is sufficient to fund all of our cash needs, including principal amortization and capital improvements. FFO and AFFO do not represent cash flows from operating, investing or financing activities as defined by GAAP.
Management recognizes that there are limitations in the use of FFO and AFFO. In evaluating our performance, management is careful to examine GAAP measures such as net income (loss) and cash flows from operating, investing and financing activities. Management also reviews the reconciliation of net income (loss) to FFO and AFFO.

24


The table below provides a reconciliation of net income (loss) determined in accordance with GAAP to FFO and AFFO for each of the indicated years (amounts in thousands):
 
 
2015
 
2014
 
2013
 
2012
 
2011
Net (loss) income attributable to common shareholders
 
$
(2,388
)
 
$
(9,454
)
 
$
5,013

 
$
4,430

 
$
6,374

Add: depreciation of properties
 
20,681

 
15,562

 
7,076

 
1,992

 
705

Add: our share of depreciation in unconsolidated joint ventures
 
20

 
20

 
34

 
270

 
39

Add: impairment charges
 

 

 

 

 

Add: amortization of deferred leasing costs
 
71

 
62

 
64

 
59

 
48

Deduct: gain on sales of real estate
 
(15,005
)
 

 
(6,250
)
 
(792
)
 
(1,346
)
Adjustment for non-controlling interest
 
221

 
(4,012
)
 
(1,549
)
 
(600
)
 
(335
)
Funds from operations
 
3,600

 
2,178

 
4,388

 
5,359

 
5,485

Adjust for: straight-line rent accruals
 
(411
)
 
(542
)
 
(263
)
 
(23
)
 
(78
)
Add: restricted stock expense
 
906

 
805

 
691

 
757

 
847

Add: amortization of deferred mortgage costs
 
2,242

 
1,825

 
1,371

 
580

 
161

Adjustment for non-controlling interest
 
(703
)
 
(424
)
 
(463
)
 
(247
)
 
(35
)
   Adjusted funds from operations
 
$
5,634

 
$
3,842

 
$
5,724

 
$
6,426

 
$
6,380

The table below provides a reconciliation of net income (loss) per common share (on a diluted basis) determined in accordance with GAAP to FFO and AFFO.
 
 
2015
 
2014
 
2013
 
2012
 
2011
Net (loss) income attributable to common shareholders
 
$
(0.17
)
 
$
(0.66
)
 
$
0.35

 
$
0.32

 
$
0.45

Add: depreciation of properties
 
1.46

 
1.10

 
0.51

 
0.14

 
0.05

Add: our share of depreciation in unconsolidated joint ventures
 

 

 

 
0.02

 

Add: impairment charge
 

 

 

 

 

Add: amortization of deferred leasing costs
 

 

 

 

 

Deduct: gain on sales of real estate
 
(1.07
)
 

 
(0.44
)
 
(0.06
)
 
(0.1
)
Adjustment for non-controlling interest
 
0.02

 
(0.28
)
 
(0.11
)
 
(0.04
)
 
(0.02
)
Funds from operations
 
0.24

 
0.16

 
0.31

 
0.38

 
0.38

Adjustment for: straight-line rent accruals
 
(0.04
)
 
(0.04
)
 
(0.02
)
 

 
(0.01
)
Add: restricted stock expense
 
0.07

 
0.06

 
0.05

 
0.05

 
0.06

Add: amortization of deferred mortgage costs
 
0.16

 
0.13

 
0.1

 
0.04

 
0.01

Adjustment for non-controlling interest
 
(0.07
)
 
(0.03
)
 
(0.03
)
 
(0.04
)
 
(0.02
)
Adjusted funds from operations
 
$
0.36

 
$
0.28

 
$
0.40

 
$
0.44

 
$
0.42


Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations.
Overview
We are a REIT that during the past three years engaged in three principal business activities: the ownership, operation and development of multi-family properties; the ownership, operation and development of commercial and mixed use real estate assets; and real estate lending. During this period, we commenced and accelerated our multi-family property activities and de-emphasized and ultimately exited our real estate lending activities. As of November 1, 2014, we were no longer engaged in real estate lending and the financial information (including our consolidated financial statements) included herein reclassifies, for all periods presented, our real estate lending activities as discontinued operations. See note 1 to our consolidated financial statements.

25


Our multi-family activities derive revenue primarily from tenant rental payments. Generally, these activities involve our investment of 80% of the equity in a joint venture that acquires a multi-family property, with the balance of the equity contributed by our joint venture partner. We commenced these activities in 2012 and as of September 30, 2015, 2014, 2013 and 2012, we owned 28, 27, 14 and five multi-family properties, respectively, with 8,300, 7,609, 3,786 and 1,452 units, respectively. Since October 1, 2015, we acquired two multi-family properties with an aggregate of 507 units (including a development project which contemplates the construction of 271 units). At December 1, 2015, we own 30 multi-family properties with an aggregate of 8,807 units-four of these properties are wholly owned.
Our ownership, operation and development of commercial, mixed use and other real estate assets is comprised principally of the activities of the Newark Joint Venture and to a lesser extent, the ownership and operations of various real estate assets located in New York and Florida. The Newark Joint Venture is engaged in the development of properties in downtown Newark, NJ. The properties are being developed for educational, commercial, retail and residential uses. Currently, the Newark Joint Venture is developing a project known as "Teachers Village"—the project currently involves six buildings:
two buildings were completed in the summer of 2013 (i.e., Phase I of the project) and are currently tenanted by three charter schools and a day care center that occupy 78% of the available space ;

three buildings—one completed in September 2014, one completed in December 2014 and one anticipated to be fully completed by February 2016 — when the third building is completed, these buildings will provide approximately 29,140 square feet of retail space and 123 residential units (i.e., Phase II of the project); and

one building, with 10,074 square feet of retail space and 81 residential units, expected to be completed by July 2016 (i.e., Phase III of the project).
The venture, which contemplates developing certain of its other properties located in Newark (e.g., Market Street and some of the other land parcels at Teachers Village), generates negative cash flow and anticipates that it will continue to generate negative cash flow at least until the fifth and sixth buildings currently contemplated by the Teacher's Village project are completed and significant occupancy levels achieved. The venture estimates that it requires approximately $7 million to $10 million to cover cost overruns and the build out of retail space at the Phase II buildings. We can provide no assurance that sufficient funding will be available for the foregoing purposes or for any additional development activities (including development activities relating to the Market Street and other properties) and even if sufficient funding is obtained, that such activities will be profitable to us. See " -Other Developments" for information, among other things, regarding the possible sale by BRT of its equity interests in the Newark Joint Venture.
Our real estate lending activities involved originating and holding for investment short-term senior mortgage loans secured by commercial and multi-family real estate properties. Revenue was generated from interest income (i.e, the interest borrowers paid on our loans) and to a lesser extent, loan fee income generated on the origination and extension of loans, and investment income from securities transactions. These activities decreased during the two years ended September 30, 2014 due to, among other things, increased competition, and as of November 1, 2014, we were no longer engaged in real estate lending. Accordingly, these activities are presented as discontinued operations.
Highlights of 2015
The following summarizes certain of our activities in 2015 and our financial condition at year-end:
we acquired four multi-family properties with an aggregate of 1,506 units for an aggregate purchase price of $129.4 million, including aggregate mortgage debt of $74.1 million and $35 million of our equity;

we increased our ownership interest in joint ventures that own (i) Pathways and Stonecrossing Apartments from 80% to 91% by purchasing a partner's interest for $2 million; (ii)Avondale Station from 80% to 100% by purchasing a partner's interest for $ 1.9 million; and (iii) Silvana Oaks Apartments from 90% to 100% by purchasing a partner's interest for $790,000.

we sold three multi-family properties, which we refer to as the Properties Sold, with an aggregate of 1,175 units, for an aggregate sales price of $67.1 million and an aggregate gain of $14.3 million- $5.1 million of this gain was allocated to our joint venture partners;
 
we obtained $12.9 million in supplemental mortgage debt on three multi-family properties;


26


the Newark Joint Venture completed the second building and completed approximately 50% of the third building contemplated by Phase II, began construction on the building contemplated by Phase III and leased 91 residential units representing all currently available units; and

we have cash and cash equivalents of approximately $15.6 million and approximately $10.7 million, at September 30, 2015 and December 1, 2015, respectively.
Other Developments
BRT is negotiating the sale of all or substantially all of its equity interest in the Newark Joint Venture, which we refer to as the Equity Sale, and anticipates that it will recognize a gain if this transaction is consummated. In addition, the Newark Joint Venture is discussing with an institutional lender a possible repayment, which we refer to as the Repayment Transaction, of the $19.5 million in principal amount of secured mortgage debt owed to BRT eliminated in consolidation. If the Equity Sale is consummated, BRT will no longer be engaged in funding the capital resource and liquidity requirements of the Newark Joint Venture. Further, in the first full quarter immediately following such sale, BRT's consolidated financial statements will de-consolidate the assets, liabilities and operations of the Newark Joint Venture and the $19.5 million secured mortgage debt currently eliminated in consolidation will be reflected, until the consummation of the Repayment Transaction, on our consolidated balance sheet as a mortgage receivable.We can provide no assurance that the Equity Sale or Repayment Transaction will be consummated or if consummated, that such transactions will be consummated on terms favorable to BRT.

Subsequent to September 30, 2015, we acquired two multi-family properties with an aggregate of 507 units (including a development project that contemplates constructing 271 units) for $26.4 million, including mortgage debt of $16.1 million. We estimate that in 2016, the rental revenue from the operating property will be approximately $2.1 million and the operating expenses, interest expense and depreciation will aggregate approximately $2.1 million.

Gould Investors, a related party, has indicated that to facilitate our multi-family acquisitions, it would, through March 31, 2016, lend BRT up to $10 million on an unsecured basis, such loan to (i) mature on the earlier, and to the extent, of (a) six months from the date of funding and (b) the receipt of proceeds from the Equity Sale and/or the Repayment Transaction and (ii) bear interest at a rate of three month LIBOR plus 475 basis points. We refer to this loan as the Gould Loan. On December 11, 2015, BRT borrowed $8 million from Gould Investors.


Years Ended September 30, 2015 and 2014
Revenues
The following table compares our revenues for the years indicated:
(Dollars in thousands):
 
2015
 
2014
 
Increase
(Decrease)
 
% Change
Rental and other revenue from real estate properties
 
$
81,358

 
$
65,254

 
$
16,104

 
24.7
 %
Other income
 
1,139

 
1,160

 
(21
)
 
(1.8
)%
Total revenues
 
$
82,497

 
$
66,414

 
$
16,083

 
24.2
 %
Rental and other revenue from real estate properties.    The components of the increase are: (i) $11.6 million due primarily to the inclusion, for a full year, of 12 properties that were acquired in 2014 and, to a lesser extent, improved rental rates at several of these properties; (ii) $3.6 million from four multi-family properties acquired in 2015; (iii) $822,000 primarily from residential tenants that took possession of rental units at Teachers Village following completion of construction of two Phase II buildings in September and December 2014; and (iv) $2.1 million primarily due to rental rate increases at multi-family properties acquired prior to 2014, and in particular, demand driven rental rate increases at The Fountains Apartments and Mountain Park Estates, which account for approximately $1.1 million of the increase. Included in 2015 and 2014 are revenues of $6.8 million and $8.9 million from the Properties Sold.

27


Expenses
The following table compares our expenses for the periods indicated:
(Dollars in thousands)
 
2015
 
2014
 
Increase
(Decrease)
 
% Change
Real estate operating expenses—including $1,233,$1,120 and $426 to related parties
 
$
43,219

 
$
37,067

 
$
6,152

 
16.6
 %
Interest expense
 
24,177

 
20,670

 
3,507

 
17.0
 %
Advisor's fees, related party
 
2,448

 
1,801

 
647

 
35.9
 %
Property acquisition costs—including $1,293,$1,677 and $1,382 to related parties
 
1,885

 
2,542

 
(657
)
 
(25.8
)%
General and administrative
 
6,683

 
6,324

 
359

 
5.7
 %
Depreciation
 
20,695

 
15,576

 
5,119

 
32.9
 %
Total expenses
 
$
99,107

 
$
83,980

 
$
15,127

 
18.0
 %
Operating expenses related to real estate properties.    The components of the increase are: (i) $5.4 million, due to the inclusion, for a full year, of the operations at 12 multifamily properties acquired in 2014; (ii) $1.5 million from the operations at four multi-family properties acquired in 2015; and (iii) $526,000 from operating expenses at the Newark Joint Venture, which includes a $233,000 increase in management fees. The management fee increased because the fee paid in 2014 was only paid for a portion of such year. The other operating expenses at the venture increased primarily due to the commencement of operations at the two Phase II buildings completed in September and December 2014. Included in 2015 and 2014 are operating expenses of $4.4 million and $5.4 million from the Properties Sold.
Interest expense.    The components of the increase are: (i) $2.2 million, due to the inclusion, for a full year, of the mortgage debt incurred in connection with the 12 multifamily properties acquired in 2014; (ii) $910,000, due to the mortgage debt incurred in connection with the four multifamily properties acquired in 2015; (iii) $257,000 from supplemental financing obtained in 2015 at three properties; and (iv) $ 614,000 from the inclusion of a full year of interest expense associated with the Newark Joint Venture's September 2014 financing. Included in 2015 and 2014 is interest expense of $1.6 million and $2.1 million respectively, attributable to the mortgage debt of the Properties Sold. Capitalized interest was $2.6 million and $1.3 million in 2015 and 2014, respectively. The increase in capitalized interest is due to construction activities related to Phases II and III. Our junior subordinated notes in principal amount of $37.4 million bear interest at a fixed rate of 4.9% per annum and beginning April 2016, bear interest at a rate equal to three month LIBOR plus 200 basis points. Assuming that interest rates from April 2016 through the balance of the year are the same as in effect as of September 30, 2015, we estimate that the interest expense associated with such notes will decrease in 2016 by approximately $400,000 .
Advisor's fee, related party.    The fee, calculated based on invested assets, increased primarily due to the inclusion, for a full year, of the multi-family properties acquired in 2014. Approximately $214,000 of the fees paid to the advisor in 2014 is recorded in discontinued operations.The Advisory Agreement terminates December 31, 2015 and we anticipate realizing net savings of approximately $1 million in 2016 from such termination. See "Business-Our Structure."
Property acquisition costs.    The change is due to decreased acquisition activity in 2015. We acquired four properties in 2015 and 13 properties in 2014.
General and administrative expense. The increase is due primarily to the inclusion of $357,000 of expenses, which in 2014, had been included in discontinued operations. These continuing expenses, which had been borne by our loan and investment segment, were borne in 2015 by our multi-family and other real estate assets segments. There were also increases in professional fees of $138,000 primarily related to the buyout of our partners' interests in several joint ventures and a $100,000 increase in restricted stock expense due to the (i) higher stock price associated with the restricted stock awards granted in the past several years in comparison to the awards granted in 2010 that vested in 2015 and (ii) to a lesser extent, the increase in the number of such awards granted over the past several years. These increases were offset by a $138,000 reduction in state franchise tax expense resulting from a refund of prior years' taxes. General and administrative expense is allocated between our two segments in 2015 and 2014 in proportion to the estimated time spent by our full time personnel on such segments.
Depreciation.    The components of the increase are: (i) $1.9 million due to the inclusion, for the full year, of 12 multi-family properties acquired in 2014; (ii) $1.0 million from the four multi-family properties acquired in 2015; (iii) $1.4 million reflecting the net effect of purchase price allocation adjustments; and (iv) $611,000 due to the commencement of depreciation with respect to the two Phase II buildings completed in September and December 2014. Included in 2015 and 2014 is depreciation of $1.2 million and $1.1 million, respectively, related to the Properties Sold.

28




Other revenue and expense items
Gain on sale of property.    In 2015, we recognized an aggregate gain of $14.4 million from the Properties Sold. We also sold certain other residential properties, which are included in our other real estate asset segment, for an aggregate gain of $723,000. There were no corresponding gains in 2014.
Discontinued Operations
Discontinued operations reflects our real estate lending activities which ceased in October 2014. There is no income from discontinued operations in 2015, compared to $1.4 million of income from discontinued operations in 2014. The decrease is due to the termination of our real estate lending activities.
Net Income/Loss Attributable to Non-controlling Interests
The following table compares our net income/loss attributable to Non-controlling Interests for the reported periods by our reportable segments:
(Dollars in Thousands)
 
2015
 
2014
 
Increase/(decrease)
Multi- family
 
$
(4,878
)
 
$
759

 
$
(5,637
)
Other
 
4,095

 
5,953

 
(1,858
)
   Total
 
$
(783
)
 
$
6,712

 
$
(7,495
)
 
 
 
 
 
 
 
The change with respect to our multi-family activities primarily reflects the allocation to our joint venture partners of approximately $5.2 million, representing their share of the gain on the sale of three multi-family properties in 2015. The change with respect to our other real estate segment reflects primarily the allocation in 2014 to our partner in the Newark Joint Venture of such partner's share of certain interest expense. This expense related to a one time payment of deferred interest to BRT on debt eliminated in consolidation.
Years Ended September 30, 2014 and 2013
Revenues
The following table compares our revenues for the years indicated:
(Dollars in thousands):
 
2014
 
2013
 
Increase
(Decrease)
 
% Change
Rental and other revenue from real estate properties
 
$
65,254

 
$
30,592

 
$
34,662

 
113.30
 %
Other income
 
1,160

 
1,411

 
(251
)
 
(17.79
)%
Total revenues
 
66,414

 
32,003

 
$
34,590

 
108.08
 %
Rental and other revenue from real estate properties.    The components of the increase are: (i) approximately $20.6 million from 13 multi-family properties acquired in 2014; (ii) approximately $11.6 million due to the inclusion, for a full year, of nine properties that were owned for a portion of 2013; (iii) approximately $1.6 million primarily due to inclusion for a full year of rental income from commercial tenants at Teachers Village; and (iv) $925,000 primarily due to rental rate increases at multi-family properties acquired prior to 2013.

29



Expenses
The following table compares our expenses for the periods indicated:
(Dollars in thousands)
 
2014
 
2013
 
Increase
(Decrease)
 
% Change
Operating expenses related to real estate properties
 
$
37,067

 
$
16,409

 
$
20,658

 
125.9
 %
Interest expense
 
20,670

 
11,978

 
8,692

 
72.6
 %
Advisor's fee, related party
 
1,801

 
971

 
830

 
85.5
 %
Property acquisition costs
 
2,542

 
2,637

 
(95
)
 
(3.6
)%
General and administrative
 
6,324

 
5,862

 
462

 
7.9
 %
Depreciation
 
15,576

 
7,094

 
8,482

 
119.6
 %
Total expenses
 
$
83,980

 
$
44,951

 
$
39,029

 
86.8
 %
Operating expenses related to real estate properties.    The increase is due to (i) operating expenses of $10.7 million from 13 multi-family properties acquired in 2014, (ii) $6.8 million to the inclusion, for a full year, of operating expenses from nine multi-family properties acquired in 2013, and (iii) $1.9 million to an increase in operating expenses at the Newark Joint Venture. Approximately $1.1 million of the increase at the Newark Joint Venture is due to the commencement of operations at the two buildings completed in September 2013 and $801,000 is due to the resumption of regular management fees in 2014, after a one-time reduction in 2013.
Interest expense.    The components of the increase are as follows: (i) $7.8 million is due to mortgage interest expense on our multi-family properties (of which $4.7 million is due to mortgages on the 13 multi-family properties acquired in 2014 and $3.1 million to the inclusion, for a full year, of the expense associated with nine multi- family properties acquired in 2013); and (ii) $645,000 due to the decrease in capitalized interest as a result of the completion of the Phase I buildings in September 2013.
Advisor's fee, related party.    The fee, calculated based on invested assets, increased primarily due to the purchase of multi-family properties in 2014 and 2013. Approximately $215,000 and $831,000 of the fees paid to the advisor is recorded in discontinued operations for 2014 and 2013, respectively.
General and administrative expense.    The increase is due primarily to increased time spent by our full-time personnel on multi-family properties activities and the recording, particularly for 2013, of the expense related to our real estate lending activities in discontinued operations.
Depreciation.    The components of the increase are as follows: (i) $3.2 million is due to the 13 multi-family properties acquired in 2014, (ii) $4.4 million is due to the inclusion, for a full year, of nine multi-family properties acquired in 2013 and (iii) $781,000 is due to the commencement of depreciation with respect to the two Phase I buildings at Teachers Village completed in August/September 2013.
Other revenue and expense items
The following table compares other revenue and expense items for the years indicated:
Equity in earnings of unconsolidated joint ventures.    The decrease is primarily due to the inclusion in 2013 of the equity in earnings of a joint venture. We sold substantially all of our interest in this joint venture in 2013.
Gain on sale of available-for-sale securities.  The decrease is due to the inclusion in the prior year of gains from the sales of securities. There were no sales in 2014.
Gain on sale of partnership interest.    In July 2013, we sold substantially all of our interest in a joint venture that owns a leasehold interest in a property in Manhattan, NY, and recognized a gain of $5.5 million. There was no corresponding gain in 2014.
Discontinued Operations
Discontinued operations primarily reflects our real estate lending activities. Discontinued operations were $1.4 million in 2014 compared to approximately $9 million in 2013. The decrease is primarily due to significantly decreased real estate lending activities.

30



Disclosure of Contractual Obligations
The following table sets forth as of September 30, 2015 our known contractual obligations:
 
 
Payment due by Period
(Dollars in thousands)
 
Less than
1 Year
 
1 - 3
Years
 
3 - 5
Years
 
More than
5 Years
 
Total
Long-Term Debt Obligations(1)
 
$
34,069

 
$
71,218

 
$
256,780

 
$
458,331

 
$
820,398

Capital Lease Obligations
 

 

 

 

 

Operating Lease Obligation
 
202

 
261

 
116

 
232

 
811

Purchase Obligations(2)(3)(4)
 
4,545

 
8,372

 
8,372

 

 
21,289

Other Long-Term Liabilities Reflected on the Trust's Balance Sheet Under GAAP
 

 

 

 

 

Total
 
$
38,816

 
$
79,851

 
$
265,268

 
$
458,563

 
$
842,498

_______________________________________________________________________________

(1)
Includes payments of principal (including amortization payments) and interest. Assumes that the: (i) qualified school construction bonds ($22.7 million as of September 30, 2015) issued in connection with the Newark Joint Venture financing transactions will be refinanced in 2018 at an effective interest rate of 0.51% per annum, which is the rate currently in effect; and (ii) interest rate on the junior subordinated notes after April 30, 2016 will be 2.20% per annum.

(2)
Assumes that $107,000 will be paid annually for the next five years pursuant to the shared services agreement (i.e., the same amount paid in 2015 pursuant to this agreement), and $1.15 million will be paid annually through September 30, 2020, to personnel performing the services previously performed pursuant to the Advisory Agreement. See "Business—Our Structure."
(3)
Assumes that approximately $2.9 million of property management fees will be paid annually to the managers of our multi-family properties. Such sum reflects the amount we anticipate paying in 2016 on the 30 multi-family properties we own at December 1, 2015. These fees are typically charged based on a percentage of rental revenues from a property. No amount has been reflected as payable pursuant thereto after five years as such amount is not determinable.
(4)
Excludes the purchase obligations of the Newark Joint Venture relating to the construction and related costs of completing Phases II and III of the Teachers Village project. It is anticipated that such costs will be covered by the application of the $13.3 million reflected on our consolidated balance sheet as restricted cash—Newark. See also "—Liquidity and Capital Resources—Newark Joint Venture."

The following table sets forth as of September 30, 2015 information regarding the components of our long-term debt obligations:
 
 
Payment due by Period
(Dollars in thousands)
 
Less than
1 Year
 
1 - 3
Years
 
3 - 5
Years
 
More than
5 Years
 
Total
Multi-family properties
 
$
24,135

 
$
51,598

 
$
212,039

 
$
310,155

 
$
597,927

Newark Joint Venture
 
8,329

 
17,589

 
42,710

 
96,806

 
165,434

Junior subordinated notes
 
1,412

 
1,645

 
1,645

 
50,222

 
54,924

Other
 
193

 
386

 
386

 
1,148

 
2,113

Total
 
$
34,069

 
$
71,218

 
$
256,780

 
$
458,331

 
$
820,398


Liquidity and Capital Resources
We require funds to acquire properties (including investments in joint ventures that acquire properties), repay borrowings and pay operating expenses. In 2015, our primary sources of capital and liquidity were the operations of our multi-family properties (including distributions from the joint ventures that own such properties), our available cash (including restricted cash), mortgage debt financing (an aggregate of $144.0 million, of which $91.3 million was used to acquire four multi-family

31


properties) and $20.7 million of our share of the distributions from the sales of three multi-family properties. Our available cash (including restricted cash) at September 30, 2015 and December 1, 2015, is approximately $35.4 million and $29.7 million, respectively.
BRT's primary sources of liquidity and capital resources for 2016 are available cash and funds from multi-family property operations. Other potential liquidity and capital resources for 2016 include the Gould Loan, Equity Sale, Repayment Transaction and the sale of multi-family properties(e.g., Grove at Trinity Pointe). The Newark Joint Venture anticipates that its general operating requirements will be funded from operations and to the extent of any shortfall, capital contributions from the members of the venture, and that its capital expenditure requirements (including retail build out, cost overruns and Phase III construction) will be funded as described under "-Newark Joint Venture-Capital Expenditures" and by borrowings from the EB-5 Immigrant Investor Program, which we refer to as the EB-5 Program. Approximately $6 million was borrowed pursuant to the EB-5 Program subsequent to September 30, 2015. Such borrowings generally mature in five years and bear interest at a rate of 4% per annum.
We believe that available cash and distributions from multi family properties will provide us with sufficient funds to meet our operating expenses in 2016 and 2017 and to fund any capital contributions required by the general operations of Newark Joint Venture. Our ability to acquire additional multi-family properties is limited by our available cash, mortgage debt, funds from the Gould Loan and, if such transactions are consummated, as to which we can provide no assurance, funds from the Equity Sale, Repayment Transaction and multifamily property sales. We believe, though there is uncertainty, that the Newark Joint Venture has sufficient access to capital resources, as described under "-Newark Joint Venture", to complete Phase III and address the cost overruns and retail build out associated with Phase II.

Multi-Family Properties
We anticipate that the operating expenses will be funded from cash generated from the operations of these properties and that the $49.6 million of debt service (including $12.9 million of principal payments) payable from 2016 through 2017 will be funded from the cash generated from operations of these properties and supplemental financings. The mortgage debt with respect to these properties generally is non-recourse to us and our subsidiary holding our interest in the applicable joint venture. At September 30, 2015, approximately $6.5 million of restricted cash is available to fund improvements to these properties.
We anticipate that the construction and other costs associated with the Greenville and N. Charleston, SC development projects will be funded by capital previously contributed by our joint venture partner and us and in-place construction financing of up to $39.4 million.

Newark Joint Venture
The Newark Joint Venture's capital resource and liquidity requirements through September 30, 2017 are primarily operating expenses in excess of rental income, debt service associated with the Teachers Village project and construction and other costs related to this project.

Operating Expenses

The Newark Joint Venture anticipates that the debt service (including principal and sinking fund payments) and operating expenses of approximately $19 million to $21 million payable through September 2017 for the Teachers Village project will be funded by an aggregate of approximately (i) $10.7 million from an interest reserve, tax credit proceeds and the US Treasury interest subsidy on the qualified school construction bonds (collectively the "Reserve"), and (ii) $7.5 million from the operations of the currently completed buildings. The Newark Joint Venture believes that this approximate $800,000 to $2.8 million shortfall can be funded through leasing of substantially all of the residential units and at least 70% of the vacant (and/or to be built) commercial space units at the Phase II and III buildings-however, there is uncertainty as to whether this leasing activity can be completed on a timely basis, due , among other things, to the need, as described below, to obtain additional capital resources to fund change orders and the build out of retail space at the Phase II buildings, the timing of the receipt of such additional capital resources, the ability to complete the build out of the retail space and obtain tenants for the Phase II buildings on a timely basis, the ability of retail tenants to obtain third party financing to complete on a timely basis tenant work at the Phase II buildings and the ability to complete and lease the Phase III building on a timely basis. Additional financing from third parties and/or capital contributions from the members of the Newark Joint Venture (of which we are a 50.1% member), may be required if the Reserve, and funds generated from operations are insufficient to satisfy debt service and operating expenses. No assurance can be given that sufficient funds will be generated, provided or contributed to fund the debt service and operating expenses of the project.

32



Capital Expenditures

The Newark Joint Venture estimates that it will require approximately $24 million to $28 million to complete the Teachers Village project (i.e., the cost overruns and retail build out required with respect to Phase II and the costs associated with Phase III). It is anticipated that these capital expenditures will be funded in part by the (i) $13.3 million restricted cash-construction holdback reflected on our consolidated balance sheet, (ii) an aggregate of approximately $8.0 million from tax credit proceeds and committed but unfunded loans (which are not reflected on our consolidated balance sheet), and (iii) proceeds from the EB-5 Immigrant Investor Program. The venture expects that the foregoing sums will be released or funded, as the case may be, from time to time upon satisfaction of specified conditions (including budgeting, construction and permitting related conditions). The estimated additional $2.7 million to $6.7 million required over approximately the next nine months to complete this project will require additional equity investments and/or debt financing from third parties or the members of the Newark Joint Venture. Although discussions have taken place with lenders and members of the venture with respect to the additional funds required, there have been no commitments by any such party to provide the funding. Failure to obtain such funds and complete the project will have a material adverse effect on the Newark Joint Venture and BRT.

Statements of Cash Flows
As of September 30, 2015 and 2014, we had cash and cash equivalents of $ 15.6 million and $23.2 million, respectively. Our cash and cash equivalents were generated from the following activities (dollars in thousands):
 
For the Years ended September 30,
 
2015
 
2014
 
2013
Cash flow from operating activities
$
8,407

 
$
(4,835
)
 
$
766

Cash flow from investing activities
(67,388
)
 
(219,324
)
 
(179,444
)
Cash flow from financing activities
51,356

 
190,435

 
157,702

  Net decrease in cash and cash equivalents
(7,625
)
 
(33,724
)
 
(20,976
)
Cash and cash equivalents a beginning of year
23,181

 
56,905

 
77,881

Cash and cash equivalents at end of year
$
15,556

 
$
23,181

 
$
56,905

2015 compared to 2014
The increase in cash flow from operating activities in 2015 was primarily due to the inclusion in 2014 of a receivable from the September 2014 Newark Joint Venture financing and an increase in accounts payable and accrued liabilities.
The decrease in cash flow used in investing activities in 2015 is due to fewer property acquisitions (four purchases in 2015 compared to 13 purchases in 2014) and the decrease in collections from real estate loans due to the termination of real estate lending activities. The decrease was offset by the proceeds from the Properties Sold.
The decrease in cash flow from financing activities in 2015 is due primarily to reduced mortgage borrowing activity (i.e., fewer property acquisitions), and the payoff of mortgages on the Properties Sold.
2014 compared to 2013
The decrease in cash flow in 2014 from operating activities was due to the inclusion in 2014 of a receivable from the September 2014 Newark Joint Venture financing and a decrease in accounts payable and accrued liabilities.
The increase  in cash used in investing activities in 2014 compared to 2013  is due to increased property acquisitions in 2014 (13 purchases in 2014 compared to nine purchases in 2013), the use of restricted cash-Newark for Teachers Village construction activities and the increase in capitalized costs  associated with the Teachers Village construction activity.  This was offset by  a decrease  in net loan activity  (decreased collections and originations) resulting from the winding down of our real estate lending activities.
The increase in cash flow from financing activities in 2014 from 2103 is due primarily to increased mortgage borrowing activity from increased property acquisitions in 2014 and the consummation by the Newark Joint Venture of a financing transaction in September 2014.

33



Off Balance Sheet Arrangements
Not applicable.
Significant Accounting Estimates and Critical Accounting Policies
Our significant accounting policies are more fully described in Note 1 to our consolidated financial statements. The preparation of financial statements and related disclosure in conformity with accounting principles generally accepted in the United States requires management to make certain judgments and estimates that affect the amounts reported in the consolidated financial statements and accompanying notes. Certain of our accounting policies are particularly important to understand our financial position and results of operations and require the application of significant judgments and estimates by our management; as a result they are subject to a degree of uncertainty. These significant accounting policies include the following:
Principles of Consolidation
We have entered into, and may continue to enter into, various joint venture agreements with unrelated third parties to hold or develop real estate assets. We must determine for each of these joint ventures whether to consolidate the entity or account for our investment under the equity or cost basis of accounting. Investments acquired or created are continually evaluated based on the accounting guidance relating to variable interest entities ("VIEs"), which requires the consolidation of VIEs in which we are considered to be the primary beneficiary. If the investment is determined not to be a VIE, then the investment is evaluated for consolidation (primarily using a voting interest model) under the remaining consolidation guidance relating to real estate entities. If we are the manager of a limited liability company, we also consider the consolidation guidance relating to the rights of non-managing members to assess whether any rights held by such members overcome the presumption of control by us. We evaluate our accounting for investments on a quarterly basis or when a reconsideration event (as defined in GAAP) with respect to our investments occurs. The analysis required to identify VIEs and primary beneficiaries is complex and requires substantial management judgment.
Carrying Value of Real Estate Portfolio
We conduct a quarterly review of each real estate asset owned by us and our joint ventures. This review is conducted in order to determine if indicators of impairment are present on the real estate.
In reviewing the value of the real estate assets owned, whether by us or our joint ventures, if there is an indicator of impairment, we seek to arrive at the fair value of each real estate asset by using one or more valuation techniques, such as comparable sales, discounted cash flow analysis or replacement cost analysis. Our real estate assets and our joint ventures' real estate assets are evaluated for indicators of impairment. If the analysis suggests that the undiscounted cash flows to be generated by the property will be insufficient to recover the investment made by us or any joint venture, as the case may be, an impairment provision will be calculated based upon the excess of the carrying amount of the property over its fair value using a discounted cash flow model. Real estate assets are valued at the lower of the recorded cost or estimated fair value. Any impairment taken with respect to our real estate assets reduces our net income, assets and shareholders' equity to the extent of the amount of the allowance, but it will not affect our cash flow until such time as the property is sold. No such charges were taken in the past three years.
Revenue Recognition
Rental revenue from residential properties is recorded when due from residents and is recognized monthly as it is earned. Rental payments are due in advance. Leases on residential properties are generally for terms that do not exceed one year.
Rental revenue from commercial properties, including the base rent that each tenant is required to pay in accordance with the terms of their respective leases, net of any rent concessions and lease incentives, is reported on a straight-line basis over the non-cancellable term of the lease.
Purchase Price Allocations
We allocate the purchase price of properties to net tangible and identified intangible assets acquired based on their fair values. In making estimates of fair values for purposes of allocating purchase price, we use a number of sources, including independent appraisals that may be obtained in connection with the acquisition or financing of the respective property, our own analysis of recently acquired and existing comparable properties in our portfolio and other market data. We also consider information obtained about each property as a result of its pre-acquisition due diligence, marketing and leasing activities in estimating the fair value of the tangible and intangible assets acquired.

34


Cash Distribution Policy
We have elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended, since our organization. To qualify as a REIT, we must meet a number of organizational and operational requirements, including a requirement that we distribute currently (within the time frames prescribed by the Code and the applicable regulations) to our shareholders at least 90% of our adjusted ordinary taxable income. It is the current intention of our management to maintain our REIT status. As a REIT, we generally will not be subject to corporate Federal income tax on taxable income we distribute currently in accordance with the Code and applicable regulations to shareholders. If we fail to qualify as a REIT in any taxable year, we will be subject to Federal income taxes at regular corporate rates and may not be able to qualify as a REIT for four subsequent tax years. Even if we qualify for Federal taxation as a REIT, we may be subject to certain state and local taxes on our income and to Federal income and excise taxes on undistributed taxable income, i.e., taxable income not distributed in the amounts and in the time frames prescribed by the Code and applicable regulations thereunder.
We have not paid cash dividends since 2010. At December 31, 2014, we had a net operating loss carry-forward of approximately $65 million. Since we can offset our future taxable income, if any, against our tax loss carry-forward until the earlier of 2029 or the tax loss carry-forward has been fully used, it is unlikely that we will be required under the Internal Revenue Code to pay a dividend for the next several years to maintain our REIT status.
Item 7A.    Quantitative and Qualitative Disclosures About Market Risk.
Our junior subordinated notes bear interest at a fixed rate of 4.9% per year through April 2016 and thereafter, bear interest at the rate of three month LIBOR plus 200 basis points.Assuming that interest rates on such debt at the time it becomes floating is 2.33% per annum (the rate that would be in effect if such interest was determined as of September 30, 2015), a 100 basis point increase would have a negative effect of $152,000 and a 100 basis point decrease in such floating rate would have a positive effect of $52,000.
With the exception of four mortgages (one which is subject to an interest rate swap agreement), all of our mortgage debt is fixed rate. For the variable rate debt, an increase of 100 basis points in the interest rate would have a negative annual effect of approximately $518,000 and a decrease of 100 basis points in the interest rate would have a $172,000 positive effect on income before taxes.
As of September 30, 2015, we had one interest rate swap agreement outstanding. The fair value of our interest rate swap is dependent upon existing market interest rates and swap spreads, which change over time. At September 30, 2015, if there had been an increase of 100 basis points in forward interest rates, the fair market value of the interest rate swap and net unrealized loss on derivative instrument would have decreased by approximately $75,000. If there had been a decrease of 100 basis points in forward interest rates, the fair market value of the interest rate swap and net unrealized loss on derivative instrument would have increased by approximately $77,000. These changes would not have any material impact on our net income or cash.
Item 8.    Financial Statements and Supplementary Data.
The information required by this item appears in a separate section of this Report following Part IV.
Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
Not applicable.
Item 9A.    Controls and Procedures.
A review and evaluation was performed by our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Annual Report on Form 10-K. Based on that review and evaluation, the CEO and CFO have concluded that our current disclosure controls and procedures, as designed and implemented, were effective. There have been no changes in our internal controls that occurred during the three months ended September 30, 2015 that materially affected, or is reasonably likely to materially affect, our internal controls subsequent to the date of their evaluation. There were no material weaknesses identified in the course of such review and evaluation and, therefore, we took no corrective measures.

35



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

provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of a company are being made only in accordance with authorizations of management and directors of a company; and

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of a company's assets that could have a material effect on the financial transactions.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.
Our management assessed the effectiveness of our internal control over financial reporting as of September 30, 2015. In making this assessment, our management used criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control—Integrated Framework (2013).
Based on its assessment, our management believes that, as of September 30, 2015, our internal control over financial reporting was effective based on those criteria.
Our independent auditors, BDO USA, LLP, have issued an audit report on the effectiveness of internal control over financial reporting. This report appears on page F-1 of this Annual Report on Form 10-K.
Item 9B.    Other Information.
For information regarding the Gould Loan, see "Management's Discussion and Analysis of Financial Condition and Results of Operations-Other Developments".
The Advisory Agreement will terminate effective as of December 31, 2015. See"Business-Our Structure"

36



PART III
Item 10.    Directors, Executive Officers and Corporate Governance.
Apart from certain information concerning our executive officers which is set forth below in Part I of this report, the other information required by Item 10 is incorporated herein by reference to the applicable information to be in the proxy statement to be filed by January 28, 2016 for our 2016 Annual Meeting of Shareholders.
Executive Officers of Registrant
Set forth below is a list of our executive officers whose terms will expire at our 2016 annual Board of Trustees' meeting. The business history of officers who are also Trustees will be provided in our proxy statement to be filed not later than January 28, 2016. References to a particular year for these biographies refer to the calendar year.    
Name
 
Office
Israel Rosenzweig(1)
 
Chairman of the Board of Trustees
Jeffrey A. Gould(2)
 
President and Chief Executive Officer; Trustee
Mitchell K. Gould
 
Executive Vice President
Matthew J. Gould(2)
 
Senior Vice President; Trustee
Simeon Brinberg(3)
 
Senior Counsel
David W. Kalish(4)
 
Senior Vice President, Finance
Mark H. Lundy(3)
 
Senior Vice President and General Counsel
George E. Zweier
 
Vice President and Chief Financial Officer
Isaac Kalish(4)
 
Vice President and Treasurer
Steven Rosenzweig(1)
 
Vice President
_______________________________________________________________________________

(1)    Steven Rosenzweig is the son of Israel Rosenzweig.
(2)
Jeffrey A. Gould and Matthew J. Gould are sons of Fredric H. Gould, the former chairman of our board of trustees and currently, a trustee.
(3)    Mark H. Lundy is the son-in-law of Simeon Brinberg.
(4)    Isaac Kalish is the son of David W. Kalish.
Mitchell K. Gould (age 43), employed by us since 1998, has been a Vice President since 1999 and Executive Vice President since 2007.
Simeon Brinberg (age 81) served as our Secretary from 1983 through 2013, as a Senior Vice President from 1988 through 2013, and as Senior Counsel since 2006. Mr. Brinberg has been a Vice President of Georgetown Partners, Inc., the managing general partner of Gould Investors L.P., since 1988. Since 1989, Mr. Brinberg has been a Vice President, Senior Vice President or Senior Counsel of One Liberty Properties, Inc. Mr. Brinberg is a member of the New York Bar.
David W. Kalish (age 68), a certified public accountant, has been our Senior Vice President, Finance since 1998. Mr. Kalish was our Vice President and Chief Financial Officer from 1990 until 1998. He has been Chief Financial Officer of One Liberty Properties, Inc. and Georgetown Partners, Inc. since 1990.
Mark H. Lundy (age 53) has been our General Counsel since 2007, Senior Vice President since 2005 and from 1993 to 2005 he served as a Vice President. He served as a Vice President of One Liberty Properties from 2000 to 2006 and has been its Secretary and Senior Vice President since June 1993 and 2006, respectively. Since 2013, Mr. Lundy has served as President and Chief Operating Officer, and from 1990 through 2013 as a Vice President (including Senior Vice President), of Georgetown Partners, Inc. He is licensed to practice law in New York and Washington, D.C.
George E. Zweier (age 51), a certified public accountant, has served as our Chief Financial Officer and a Vice President since 1998.

37


Isaac Kalish (age 40), a certified public accountant, has been associated with us since 2004, served as Assistant Treasurer from 2007 through 2014 and as Vice President and Treasurer since 2013 and 2014, respectively. Mr. Kalish has served as Vice President and Assistant Treasurer of One Liberty Properties since 2013 and 2007, respectively, as Assistant Treasurer of Georgetown Partners, Inc. from 2012 through 2013, and as its Treasurer since 2013.
Steven Rosenzweig (age 40), has served as a Vice President since March 2015 and has been associated with us since February 2013. For more than five years prior thereto, he was affiliated with Willkie Farr & Gallagher LLP. He is licensed to practice law in New York.
Item 11.    Executive Compensation.
The information concerning our executive compensation required by Item 11 will be included in the proxy statement to be filed by January 28, 2016 with respect to our 2016 Annual Meeting of Shareholders, and is incorporated herein by reference.
Item 12.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
Except as set forth below, the information required by Item 12 will be included in the proxy statement to be filed by January 28, 2016 with respect to to our 2016 Annual Meeting of Shareholders, and is incorporated herein by reference.
Equity Compensation Plan Information
The table below provides information as of September 30, 2015 with respect to our Common Shares that may be issued upon exercise of outstanding options, warrants and rights:
 
Number of securities
to be issued upon
exercise
of outstanding
options,
warrants and rights
 
Weighted-average
exercise
price of outstanding
options,
warrants and rights
 
Number of securities
remaining available-for
future issuance under
equity compensation
plans—excluding
securities
reflected in column (a)
Equity compensation plans approved by security holders(1)
 
 
185,075
Equity compensation plans not approved by security holders
 
 
Total
 
 
185,075
_______________________________________________________________________________
(1)
Excludes 414,925 and 258,250 outstanding shares of unvested restricted stock issued to officers, directors, employees and consultants pursuant to the 2012 Incentive Plan and the 2009 Incentive Plan, respectively. These restricted shares generally vest five years from the effective date of the award, subject to acceleration as provided in the agreement and incentive plan governing same.
Item 13.    Certain Relationships and Related Transactions, and Director Independence.
The information concerning relationships and certain transactions required by Item 13 will be included in the proxy statement to be filed by January 28, 2016 with respect to our 2016 Annual Meeting of Shareholders, and is incorporated herein by reference.
Item 14.    Principal Accounting Fees and Services.
The information concerning our principal accounting fees required by Item 14 will be included in the proxy statement to be filed by January 28, 2016 with respect to our 2016 Annual Meeting of Shareholders, and is incorporated herein by reference.

38


PART IV
Item 15.    Exhibits, Financial Statement Schedules.
(a)
1.    All Financial Statements.
The response is submitted in a separate section of this report following Part IV.
2.    Financial Statement Schedules.
The response is submitted in a separate section of this report following Part IV.
3.    Exhibits:
In reviewing the agreements included as exhibits to this Annual Report on Form10-K, please remember they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about us or the other parties to the agreements. The agreements contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement and:
should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;

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

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

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

39






Exhibit
No.
 
Title of Exhibits
3.1

 
Third Amended and Restated Declaration of Trust (incorporated by reference to Exhibit 3.1 to our Form 10-K for the year ended September 30, 2005).
  
 
 
3.2

 
By-laws (incorporated by reference to Exhibit 3.2 to our Form 10-K for the year ended September 30, 2005).
  
 
 
3.3

 
Amendment to By-laws, dated December 10, 2007 (incorporated by reference to Exhibit 3.1 to our Form 8-K filed December 11, 2007).
  
 
 
4.1

 
Junior Subordinated Supplemental Indenture, dated as of March 15, 2011, between us and the Bank of New York Mellon (incorporated by reference to Exhibit 4.1 to our Form 8-K filed March 18, 2011).
  
 
 
4.2

 
Form of Certificate for Shares of Beneficial Interest (incorporated by reference to Exhibit 4.1 to Registration Statement on Form S-8 (Registration No. 333-104461) filed on April 11, 2003).
 
 
 
10.1

*
Amended and Restated Advisory Agreement, effective as of January 1, 2007, between us and REIT Management Corp. (incorporated by reference to Exhibit 10.1 to our Form 8-K filed November 27, 2006).
  
 
 
10.2

*
Amendment No. 1 dated as of December 8, 2011 to Amended and Restated Advisory Agreement between us and REIT Management (incorporated by reference to exhibit 10.2 to our Form 10-Q for the period ended December 31, 2011).
  
 
 
10.3

*
Amendment No. 2 dated as of March 12, 2014 and effective as of June 30, 2014 to Amended and Restated Advisory Agreement between us and REIT Management, as amended. (incorporated by reference to Exhibit 10.1 to our Form 10-Q for the period ended March 31, 2014)
  
 
 
10.4

*
Shared Services Agreement, dated as of January 1, 2002, by and among Gould Investors L.P., us, One Liberty Properties, Inc., Majestic Property Management Corp., Majestic Property Affiliates, Inc. and REIT Management Corp. (incorporated by reference to Exhibit 10.2 to our Form 10-K filed December 11, 2008).
  
 
 
10.5

 
Amended and Restated Limited Liability Company Operating Agreement by and among TRB Newark Assemblage LLC, TRB Newark TRS, LLC, RBH Capital, LLC and RBH Partners LLC (incorporated by reference to Exhibit 10.1 to our Form 8-K filed June 9, 2009).
  
 
 
10.6

*
Form of Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.5 to our Form 10-K for the year ended September 30, 2010).