BRT REALTY TRUST
60 Cutter Mill Road
Suite 303
Great Neck, New York 11021
------------------
Notice of Annual Meeting of Shareholders
March 23, 1998
To the Shareholders of BRT Realty Trust:
Notice is hereby given that the Annual Meeting of Shareholders (the "Annual
Meeting") of BRT Realty Trust (the "Trust") will be held at the offices of the
Trust, 60 Cutter Mill Road, Great Neck, N.Y., Suite 303, at 9:00 A.M., local
time, on March 23, 1998 for the following purposes:
1. To elect three Class II Trustees to the Board of Trustees;
2. To appoint Ernst & Young LLP as the Trust's independent auditors for the
fiscal year ending September 30, 1998; and
3. To act on such other business as may properly come before the Meeting or
any adjournment thereof.
The close of business on January 15, 1998 has been fixed as the record date
for the determination of shareholders entitled to notice of, and to vote at, the
Annual Meeting. The stock transfer books of the Trust will not be closed.
By order of the Board of Trustees
Simeon Brinberg, Secretary
January 26, 1998
<PAGE>
All Shareholders are cordially invited to attend the Annual Meeting.
Whether or not you expect to attend, you are requested to sign, date and return
the enclosed proxy promptly. Your vote is important and it will not be counted
unless you return the proxy or attend the Annual Meeting. If you attend the
Annual Meeting, you may withdraw the proxy and vote your own shares. A return
envelope, which requires no postage if mailed in the United States, is enclosed
for your convenience.
SHAREHOLDERS ARE URGED TO DATE, SIGN AND
RETURN THEIR PROXIES PROMPTLY
<PAGE>
BRT REALTY TRUST
60 Cutter Mill Road
Suite 303
Great Neck, New York 11021
(516)466-3100
---------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
---------------
This Proxy Statement is furnished in connection with the solicitation by
the Board of Trustees of BRT Realty Trust (the"Trust") of proxies in the
enclosed form for the Annual Meeting of Shareholders ("Annual Meeting") to be
held at the offices of the Trust, 60 Cutter Mill Road, Suite 303, Great Neck,
New York, at 9:00 A.M., local time on March 23, 1998, and for any adjournments
thereof, for the purposes set forth in the accompanying Notice of Annual Meeting
of Shareholders. Any shareholder giving a proxy has the power to revoke the
proxy at any time before it is voted. Written notice of such revocation should
be forwarded directly to the Secretary of the Trust. Proxies may also be revoked
by attending the Annual Meeting and voting in person or submitting a proxy
bearing a later date.
The principal executive offices of the Trust are located at 60 Cutter Mill
Road, Suite 303, Great Neck, New York, 11021. The approximate date on which this
Proxy Statement and the form of proxy included herewith are being first sent to
shareholders is January 26, 1998.
VOTING SECURITIES
Only holders of shares of beneficial interest, par value $3.00 per share
("Beneficial Shares") of record as at the close of business on January 15, 1998,
are entitled to vote at the meeting. On the record date there were issued and
outstanding 8,124,550 Beneficial Shares (excluding treasury shares and shares
which have been reserved for issuance in connection with a previous
acquisition). Each outstanding Beneficial Share is entitled to one vote. The
holders of a majority of the outstanding Beneficial Shares will constitute a
quorum.
If the enclosed form of proxy is properly executed and returned, the
Beneficial Shares represented thereby will be voted in accordance with the
instructions thereon. If no instructions are indicated thereon, such Beneficial
Shares will be voted (i) for the election, as Class II Trustees, of the nominees
set forth under the caption "Election of Trustees", and (ii) for approval of the
appointment of Ernst & Young LLP as the Trust's independent auditors for the
fiscal year ending September 30, 1998. Approval of each of the above items
requires the affirmative vote of the holders of a majority of the Beneficial
Shares, present in person or by proxy. If a shareholder, present in person or by
proxy, abstains on either matter, the shareholder's shares will not be voted on
such matter. Thus, an abstention from voting has the same legal effect as a vote
"against" the matter, even though the shareholder may interpret such action
differently.
The cost of soliciting proxies in the accompanying form has been, or will
be, paid by the Trust. In addition to the solicitation of proxies by use of the
mails, certain officers and employees (who will receive no additional
compensation therefor) may be used to solicit proxies personally and by
telephone and telegraph. In addition, banks, brokers and other custodians,
nominees and fiduciaries will be requested to forward copies of the proxy
material to their principals and to request authority for the execution of
proxies. The Trust will reimburse such persons for their expenses in so doing.
BENEFICIAL OWNERSHIP BY TRUSTEES AND OFFICERS
Set forth below is information concerning stock ownership of all persons
known by the Trust to own beneficially 5% or more of the Beneficial Shares, all
Trustees and nominees for Trustee and all Trustees and officers of the Trust as
a group, based upon the number of outstanding Beneficial Shares as of January
15, 1998.
Amount of
Name of Beneficial Beneficial Percent
Owner (1) Ownership (2) of Class
--------- ------------- --------
Patrick J. Callan 40,000 *
55 East 52nd Street
New York, NY 10055
Fredric H. Gould (3)(4)(5) 2,088,073 25.55%
Jeffrey A. Gould (3)(6) 203,912 2.50%
David G. Herold
16 Southdown Court
Huntington, NY 11743 12,000 *
Arthur Hurand
4182 Pier North Blvd., Suite D
Flint, MI 48504 10,000 *
Gary Hurand (7)
4182 Pier North Blvd., Suite D
Flint, MI 48504 173,227 2.12%
Nathan Kupin (3) 20,512 *
Herbert C. Lust, II
54 Porchuck Road
Greenwich, CT 06830 70,000 *
Marshall Rose (8)
667 Madison Avenue
New York, NY 10021 265,212 3.25%
All Trustees and Officers
as a group
(18 in number)(9) 3,159,177 (10) 38.66%
*Less than 1%
- -----------------
(1) Each individual listed is a Trustee.
(2) Securities are listed as beneficially owned by a person who directly or
indirectly holds or shares the power to vote or to dispose of the
securities, whether or not the person has an economic interest in the
securities. In addition, a person is deemed a beneficial owner if he
has the right to acquire beneficial ownership within 60 days, whether
upon the exercise of a stock option or otherwise.
(3) Address is 60 Cutter Mill Road, Great Neck, NY 11021.
(4) Includes 280,463 Beneficial Shares owned by the pension and profit
sharing trusts of BRT Realty Trust and REIT Management Corp. of which
Fredric H. Gould and two non-Trustee officers are trustees, as to which
Beneficial Shares Mr. Gould has shared voting and investment power.
(5) Includes 34,762 Beneficial Shares held by Mr. Gould as joint custodian
for the children of his brother, 4,790 Beneficial Shares owned by
Georgetown Group, Inc., of which Mr. Gould is a Vice President and
18,988 Beneficial Shares owned by a partnership in which Mr. Gould is a
general partner. Also includes 30,048 Beneficial Shares owned by One
Liberty Properties, Inc. ("OLP"), of which Mr. Gould is an officer and
director and in which Gould Investors L.P. ("GLP") (an entity in which
Mr. Gould is a general partner and a principal executive officer and
sole shareholder of the managing general partner) owns approximately
25% of the voting shares, and 1,512,241 Beneficial Shares owned by GLP.
Does not include 25,015 Beneficial Shares owned by Mrs. Fredric H.
Gould, as to which Beneficial Shares Mr. Gould disclaims beneficial
interest and Mrs. Gould has sole voting and investment power.
(6) Includes 19,235 Beneficial Shares owned by Mr. Gould as custodian for
his minor children and 7,562 Beneficial Shares which underlie
unexercised stock options. Does not include 6,000 Beneficial Shares
owned by Mrs. Jeffrey A. Gould as to which Beneficial Shares Mr. Gould
disclaims beneficial interest and Mrs. Gould has sole voting and
investment power.
<PAGE>
(7) Includes 47,243 Beneficial Shares owned by a partnership, in which
entity Mr. Hurand is a partner, and 117,288 Beneficial Shares owned by
a corporation in which Mr. Hurand is an officer and shareholder.
(8) Includes 4,790 Beneficial Shares owned by Georgetown Group, Inc. in
which Mr. Rose is an officer, 76,983 Beneficial Shares owned by the
pension and profit sharing trusts of Georgetown Group, Inc. of which
Mr. Rose is trustee, 18,988 Beneficial Shares owned by a partnership in
which Mr. Rose is a general partner, 8,644 Beneficial Shares owned by
Jill and Marshall Rose Foundation of which Mr. Rose is a trustee,
56,070 Beneficial Shares owned by Mr. Rose for the benefit of others,
30,048 Beneficial Shares owned by OLP, of which Mr. Rose is an officer
and director and 23,447 Beneficial Shares owned by Mr. Rose as trustee
for his child.
(9) This total is qualified by notes (4) through (8).
(10) Includes an aggregate of 47,124 Beneficial Shares which underlie
unexercised options.
ELECTION OF TRUSTEES
Pursuant to the Declaration of Trust, the Board of Trustees is divided into
three classes each of which is elected for a term of three years. The
Declaration of Trust provides for the number of Trustees to be between five and
fifteen, the exact number to be determined by resolution adopted by a majority
of the entire Board of Trustees. The Board of Trustees has fixed the number of
Trustees at nine (9).
At the meeting, three Class II Trustees will be elected by shareholders.
Six other individuals serve as Trustees but are not standing for reelection
because their terms as Trustees extend past the Annual Meeting. The accompanying
form of proxy will be voted for the election as Class II Trustees of Arthur
Hurand, Herbert C. Lust, II and Marshall Rose unless the proxy contains contrary
instructions. Proxies cannot be voted for a greater number of persons than the
number of nominees named in the Proxy Statement. Management has no reason to
believe that any of the nominees will become unable or unwilling to serve.
However, in the event that any nominee should become unable or unwilling to
serve as a Trustee, unless a shareholder WITHHOLDS AUTHORITY, the proxy will be
voted for the election of such person or persons as shall be designated by the
Board of Trustees.
<PAGE>
The Company's Board of Trustees schedules quarterly meetings. In addition
special meetings may be called from time to time and where appropriate Trustees
take action by unanimous consent. In 1997, the Board of Trustees held four
meetings. Marshall Rose missed one meeting and Nathan Kupin missed two meetings.
The other Trustees attended 100% of the meetings held.
The Board of Trustees has appointed an Audit and Compensation Committee
consisting of Gary Hurand, Herbert C. Lust, II and Patrick J. Callan. The Audit
and Compensation Committee consists entirely of independent outside Trustees.
The functions of the Audit and Compensation Committee include reviewing the
scope and results of the annual audit, reviewing the adequacy of accounting and
financial controls, and recommending independent auditors to the Board of
Trustees. The Audit and Compensation Committee is also responsible for setting
and administering the policies which govern both annual compensation of
executive officers and the Trust's Stock Option Plans. The Audit and
Compensation Committee held one meeting in the 1997 fiscal year.
The Trust has no Nominating Committee or any committee performing similar
functions.
Each Class II nominee, if elected will serve until the annual meeting to be
held in the year 2001 and until his successor is elected and qualifies. Each
other Trustee will serve until the annual meeting to be held in the year set
forth opposite his name and until his successor is elected and qualifies.
The Board of Trustees of the Trust recommends a vote "FOR" the election of
the three nominees. Proxies solicited by the Board of Trustees will be so voted
unless shareholders specify in their proxies a contrary choice.
<PAGE>
The following table sets forth certain information concerning the Trustees,
including the three nominees:
Principal
Term Occupation Trustee
Name Age Expiring (1) Since
- ---- --- -------- ---------- ------
Class I
Patrick J. Callan
(2)(3) 61 2000 Principal of 1984
The RREEF Funds,
pension fund real
estate investments;
Director of
Manufacturers & Traders
Bank Directors Advisory
Council -New York City
Division; Director of
First Empire State
Corporation.
Jeffrey A. Gould 33 2000 President of the 1997
Trust since March
1996; Executive Vice
President and Chief
Operating Officer of
the Trust from March
1995 to March 1996;
Vice President of the
Trust for more than
three years prior
thereto.
David G. Herold 56 2000 Private Investor; 1997
President and Chief
Executive Officer
of Metro Bancshares,
Inc., the savings and
loan holding company for
Bayside Federal Savings
and Loan Association,
from 1988 to 1994;
President of Bayside
Federal Savings and Loan
Association for approximately
fourteen years prior thereto.
<PAGE>
Class II
Arthur Hurand
(2) (4) 81 2001 Private Investor; 1989
Director of One Liberty
Properties, Inc.
Herbert C. Lust, II 71 2001 Private Investor; 1981
(2)(3) (4) Director of Prime
Hospitality, Inc.
Marshall Rose 61 2001 Private Investor; 1986
(2) (4) Vice Chairman of the Board
of One Liberty Properties,
Inc.; President of
Georgetown Equities, Inc.;
Director of Estee
Lauder, Inc.; Director
of Golden Book Family
Entertainment, Inc.
Class III
Fredric H. Gould 62 1999 Chairman of the Board 1983
(2) of Trustees and Chief
Executive Officer of
the Trust; Chairman of
the Board of
Georgetown Partners,Inc.;
General Partner of Gould
Investors L.P.; Chairman
of Board of One Liberty
Properties, Inc.;
President of REIT Management
Corp.; Director of Sunstone
Hotel Investors, Inc.
Nathan Kupin 83 1999 Senior Vice President 1983
of the Trust; Director
of REIT Management Corp.;
Senior Vice President of
One Liberty Properties,
Inc.
Gary Hurand 51 1999 President of Dawn Donut 1990
(3) Systems, Inc.; Director
of Republic Bancorp.
- -----------------
(1) Each Trustee has been engaged in the principal occupation indicated for
at least the past five years, except as noted.
(2) Member of the Executive Committee.
(3) Member of the Audit and Compensation Committee.
(4) If elected at the meeting.
Fredric H. Gould is Jeffrey A. Gould's father and Arthur Hurand is the
father of Gary Hurand.
TRUSTEE'S FEES AND OTHER COMPENSATION
Each unaffiliated Trustee was paid an annual retainer of $12,500 for
services as a Trustee in the 1997 fiscal year. In addition, unaffiliated
Trustees were paid $500 per meeting for each Trustee's meeting and each
committee meeting attended. With respect to fees (charged to operations) paid
and accrued during the fiscal year for REIT Management Corp. (the "Advisor")
under the Advisory Agreement, see "Interest of Management in Certain
Transactions."
Compliance with Section 16(a) of the Securities Exchange Act of 1934
<PAGE>
Section 16(a) of the Securities Exchange Act of 1934 ("Section 16(a)")
requires executive officers and directors, and persons who beneficially own more
than 10% of the Trust's shares, to file Initial Reports of Ownership and Reports
of Changes in Ownership with the Securities and Exchange Commission ("SEC") and
the New York Stock Exchange. Executive officers, Trustees and greater than 10%
beneficial owners are required by SEC regulations to furnish the Trust with
copies of all Section 16(a) forms they file. The Trust prepares and files the
requisite forms on behalf of its executive officers and Trustees. Based on a
review of information supplied to the Trust by the executive officers and
Trustees, the Trust believes that all Section 16(a) filing requirements
applicable to its executive officers, Trustees and greater than 10% beneficial
owners were complied with, except that a Form 3 was inadvertently filed
approximately 30 days late for John Ardouny, a Vice President of the Trust.
<PAGE>
EXECUTIVE COMPENSATION
Report of the Audit and Compensation Committee on Executive Compensation
The Audit and Compensation Committee is composed of three independent
non-employee Trustees. The Committee is responsible for advising management and
the Board of Trustees on matters pertaining to compensation arrangements for
executive employees, as well as administration of the Trust's stock option plans
and bonus plan.
Compensation Overview
It is the view of the Audit and Compensation Committee that the annual
compensation of executive officers is composed of two key elements: (i) an
Annual Component made up of base salary and annual bonus; and (ii) a longer term
component, i.e. stock options.
Annual Component; Base Salary and Bonus
Base salaries are intended to be competitive with those paid to senior
executives at other real estate investment trusts and are determined in a
fashion that takes into account an individual's performance and contributions to
the Trust and the Trust's operating performance. The determination by the
Committee of base compensation is subjective in nature and is not based on any
structured formula. In determining compensation for the 1997 fiscal year the
Committee took into account the expertise which the executive officers
demonstrated in managing the business of the Trust; among other things the
Committee gave consideration to the activity of the Trust in mortgage lending,
an area which became active again in fiscal 1997, and the activities of the
executive officers in managing and disposing of real estate assets taken back in
foreclosure proceedings.
<PAGE>
The concept of the annual bonus is to link a portion of the compensation of
executives to the performance of the Trust. Under the Trust's bonus plan the
Trust must produce a minimum return to shareholders before any bonuses are
awarded. Under the plan a bonus pool is to be established in each fiscal year in
an amount equal to 15% of the amount by which the net income of the Trust in any
fiscal year exceeds stockholders' equity multiplied by the average prime rate of
interest plus 1%. Accordingly, the Trust must have a degree of success before
bonuses are paid to executive officers. However, the Committee deems it
advisable to recognize significant individual contributions by key employees in
any particular fiscal year even if, pursuant to the bonus plan, there are not
sufficient earnings to establish, under the terms of the plan, a bonus pool.
Accordingly, under the existing bonus plan up to $50,000 in the aggregate may be
used to pay bonuses to officers and employees (other than the Chief Executive
Officer) if an individual made a significant contribution to the Trust during
the year.
Long Term Compensation - Stock Options
Stock options, which are purely discretionary and are not based on any
formula, may be granted periodically to provide incentive for the creation of
shareholder value over the long term, since the full benefit of the compensation
provided for under stock options cannot be realized unless there is an
appreciation in the price of the Trust's shares over a specified number of
years. Under the existing stock option plans options are granted at an exercise
price equal to the fair market value of the stock of the Trust on the date of
grant and are exercisable over a number of years (generally five years), in
increments ranging between 20% and 25% per year on a cumulative basis. Stock
options are the only form of long term incentive currently used by the Trust.
At the present time there are options outstanding which have been granted
to executive officers and other key personnel of the Trust which have exercise
prices of $4.375 and $6 per share. With respect to the named executive officers
of the Trust, Messrs. Jeffrey A. Gould, David W. Kalish and Mark H. Lundy were
each granted options to purchase 10,125 Beneficial Shares exercisable at $4.375
per share under the Trust's 1988 stock option plan and options to purchase
10,000 Beneficial Shares exercisable at $6.00 per share under the Trust's 1996
stock option plan. Joshua D. Gleiber was also granted options to purchase 10,000
Beneficial Shares exercisable at $6 per share under the Trust's 1996 stock
option plan.
CEO Compensation
Fredric H. Gould, Chairman of the Board of Trustees and Chief Executive
Officer of the Trust does not receive any direct remuneration from the Trust,
but is compensated by REIT Management Corp. the Trust's advisor (see "Interest
of Management in Certain Transactions").
Respectfully submitted,
Patrick J. Callan
Gary Hurand
Herbert C. Lust, II
<PAGE>
Annual Compensation
The following Summary Compensation Table includes information with respect
to compensation paid and accrued by the Trust for services rendered in all
capacities to the Trust during the fiscal years ended September 30, 1995, 1996
and 1997, for the Chief Executive Officer of the Trust and the next four highest
executive officers of the Trust whose annual compensation from the Trust
exceeded $100,000 for the fiscal year ended September 30, 1997:
<TABLE>
Summary Compensation Table
<CAPTION>
Annual Compensation(2) Long Term Compensation
Awards
Other Securities/
Annual Restricted Underlying Payouts
Name and Principal Salary Bonus Compen- Stock Options/ LTIP All Other
Position Year(1) $ $ sation(3) Awards($) SARs(#) Payout($) Compensation (4)
-------- ------- - - --------- --------- ------- --------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fredric H. Gould 1997 0 0 0 0 0 0 0
Chairman of the 1996 0 0 0 0 0 0 0
Board and Chief 1995 0 0 0 0 0 0 0
Executive Officer(5)
Jeffrey A. Gould 1997 $225,000 0 0 0 10,000 0 $24,000
President and 1996 $210,000 0 0 0 10,125 0 $22,500
Executive Vice 1995 $190,000 0 0 0 0 0 $22,500
President (6)
David W. Kalish 1997 0 0 $97,200 0 10,000 0 $7,200
Vice President, 1996 0 0 $98,400 0 10,125 0 $7,500
Chief Financial 1995 0 0 $115,200 0 0 0 $10,100
Officer (7)
Mark H. Lundy 1997 0 0 $115,600 0 10,000 0 $5,300
Vice President (7) 1996 0 0 $ 75,900 0 10,125 0 $ 6,000
1995 0 0 $129,400 0 0 0 $12,900
Joshua D. Gleiber 1997 $103,200 0 0 0 10,000 0 $15,500
Vice President (8) 1996 $41,900 0 0 0 0 0 $6,300
<FN>
- ---------------------------
(1)Fiscal years ending September 30.
(2)The Trust does not have any profit sharing plan, but it does have Stock
Option Plans, a Pension Plan and a Bonus Plan. See "Stock Option Plans" and
"Pension Plan," below.
(3)Amounts represent payment of fees. The only other type of Other Annual
Compensation for each of the named officers was in the form of perquisites
and was less than the level required for reporting.
(4)Represents annual contributions under the Trust's Pension Plan for Messrs.
Jeffrey Gould and Gleiber. With respect to Messrs. Kalish and Lundy,
represents the amounts reimbursed by the Trust to Gould Investors L.P. for
the allocated portion of the pension expense paid by Gould Investors L.P. for
Messrs. Kalish and Lundy.
(5)Fredric H. Gould has served as Chairman of the Board and Chief Executive
Officer since March, 1995. Mr. Gould does not receive any compensation
directly from the Trust. Reference is made to the caption "Interest of
Management in Certain Transactions" for a discussion of fees paid to REIT
Management Corp., the Trust's Advisor. Mr. Gould is the President and sole
shareholder of REIT Management Corp.
(6)Jeffrey A. Gould has served as President of the Trust since March 1996.
(7)Messrs. Kalish and Lundy do not receive compensation directly from the
Trust; they receive compensation and fees directly from Gould Investors L.P.
and related entities. The amounts set forth represent the portion reimbursed
by the Trust for accounting and legal services rendered by Messrs. Kalish and
Lundy, respectively, to the Trust.
(8)Joshua D. Gleiber joined the Trust as a Vice President in March 1996.
</FN>
</TABLE>
<PAGE>
Pension Plan
The Trust has a non-contributory defined contribution pension plan covering
employees. The Pension Plan is administered by Fredric H. Gould, Simeon Brinberg
and David W. Kalish. Annual contributions of the Trust are based on 15% of an
employee's annual earnings, not to exceed $24,000 per employee. Partial vesting
starts one year after employment, increasing annually until full vesting is
achieved at the completion of five years of employment. The method of payment of
benefits to participants upon retirement is determined by the participant, who
may elect a lump sum payment or the purchase of an annuity, the amount of which
is determined primarily by the amount of contributions. In fiscal 1997, $24,000
and $15,500 was contributed for the benefit of Jeffrey A. Gould and Joshua D.
Gleiber, respectively. The aggregate amount accrued to date for Mr. Gould and
Mr. Gleiber is approximately $307,000 and $23,000 respectively. The estimated
credited years of service for Mr. Gould and Mr.
Gleiber is 11 and 2.
Stock Option Plans
On August 19, 1988 the Board of Trustees adopted a Stock Option Plan (the
"1988 Plan"). The 1988 Plan was approved by the shareholders of the Trust on
March 2, 1989. The 1988 Plan provides for the issuance of up to 500,000
Beneficial Shares to officers, trustees and employees of the Trust. The options
granted may be either incentive stock options or options which do not qualify as
incentive stock options. The exercise price of any option granted under the 1988
Plan must be not less than 100% of the fair market value of the Beneficial
Shares on the date of grant. The 1988 Plan does not provide for the issuance of
stock appreciation rights. At September 30, 1997, 46,300 shares remain available
for grant and options to purchase 53,000 shares are outstanding of which 26,500
shares are exercisable.
On December 6, 1996, the Board of Trustees adopted the BRT 1996 Stock
Option Plan (the "1996 Plan"). The 1996 Plan was approved by the shareholders of
the Trust on March 21, 1997. The 1996 Plan provides for the issuance of up to
450,000 Beneficial Shares to officers, employees, trustees and consultants or
advisors to the Trust. The options granted may be either incentive stock options
or options which do not qualify as incentive stock options. The exercise price
per share of incentive stock options must be at least equal to the fair market
value on the date of grant. With respect to nonstatutory stock options, the
exercise price may be determined by the Board of Trustees. The 1996 Plan does
not provide for the issuance of stock appreciation rights. At September 30,
1997, 367,500 shares remain available for grant and options to purchase 82,500
shares are outstanding of which 20,600 shares are exercisable.
<PAGE>
Option Grants in Fiscal 1997
The following table sets forth information concerning the grant of stock
options in fiscal 1997 to the named executive officers:
<TABLE>
Individual Grants(1)
<CAPTION>
Potential Realizable
% of Total Value At Assumed
Options Annual Rates of Stock
Granted Exercise or Price Appreciation For
Options to Employees Base Price Option Term (2)
Name Granted in Fiscal Year ($/sh) Expiration Date 5% 10%
- ---- ------- -------------- ---------- --------------- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Fredric H. Gould - - - - -
Jeffrey A. Gould 10,000 12% $6.00 12/6/01 $16,577 $36,631
David W. Kalish 10,000 12% $6.00 12/6/01 $16,577 $36,631
Mark H. Lundy 10,000 12% $6.00 12/6/01 $16,577 $36,631
Joshua D. Gleiber 10,000 12% $6.00 12/6/01 $16,577 $36,631
<FN>
(1) Options were granted on December 6, 1996.
(2) These amounts, based on assumed appreciation rates of 5% and 10% prescribed
by the Securities and Exchange Commission rules, are not intended to forecast
possible appreciation of any of the Trust's stock price. These numbers do not
take into account certain provisions of options providing for termination of the
option following termination of employment, non-transferability or phased-in
vesting. The Trust did not use an alternate formula for a grant date valuation
as it is not aware of any formula which will determine with reasonable accuracy
a present value based on future unknown or volatile factors. Future compensation
resulting from option grants is based solely on the performance of the Trust's
stock price.
</FN>
</TABLE>
Option Exercises and Unexercised Options
No options were exercised in Fiscal 1997. The following table sets forth
information concerning unexercised options at fiscal year end with respect to
the named executive officers:
<TABLE>
<CAPTION>
Number of
Unexercised Value of Unexercised
Options at fiscal In-the-Money Options
Year end at Fiscal Year End (1)
-------- -----------------
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise Realized Unexercisable Unexercisable
- ---- ----------- -------- ------------- -------------
<S> <C> <C> <C> <C>
Fredric H. Gould - - None $0/$0
Jeffrey A. Gould - - 7,562/12,563 $31,859/$47,486
David W. Kalish - - 7,562/12,563 $31,859/$47,486
Mark H. Lundy - - 7,562/12,563 $31,859/$47,486
Joshua D. Gleiber - - 2,500/7,500 $ 7,813/$23,438
(1) Represents the difference between the exercise price of options and $9.125,
the closing price of the Trust's Beneficial Shares on
September 30, 1997.
</TABLE>
<PAGE>
Comparison of Five Year Cumulative Total Return
The following graph compares the performance of the Trust's Beneficial
Shares with the Standard & Poor's 500 Stock Index and a peer group index
consisting of publicly traded mortgage REIT'S prepared by the National
Association of Real Estate Investment Trusts. The graph assumes $100 invested on
September 30, 1992 in the Trust's Beneficial Shares, the S & P 500 Index and the
peer group index and assumes the reinvestment of dividends. The comparisons in
this table are not intended to forecast or be indicative of any future
performance of the Trust's Beneficial Shares.
INSERT - PERFORMANCE GRAPH
9/92 9/93 9/94 9/95 9/96 9/97
BRT Realty Trust 100 174 184 174 253 384
All Mortgage REITs 100 114 102 129 182 244
S&P 500 Index 100 113 117 152 183 257
<PAGE>
INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS
The Trust and REIT Management Corp. ("REIT" or "Advisor") are parties
to an Advisory Agreement pursuant to which REIT furnishes administrative
services with respect to the Trust's assets and, subject to the supervision of
the Trustees, advises the Trust with respect to its investments. The Trust
believes that the Advisory Agreement is on terms as favorable to the Trust as
would be available from an unaffiliated party. The term of the Advisory
Agreement has been renewed by the Board of Trustees to December 31, 2001.
Fredric H. Gould and two officers of the Trust are directors of REIT and Fredric
H. Gould is an officer of REIT. All of the outstanding shares of REIT are owned
by Fredric H. Gould.
For services performed by REIT under the Advisory Agreement, REIT
receives an annual fee of 1/2 of 1% of the Invested Assets of the Trust other
than mortgages receivable, subordinated land leases and investments in
unconsolidated ventures, with a 1% fee payable on mortgages receivable,
subordinated land leases and investments in unconsolidated ventures. The term
"Invested Assets" is defined in the Advisory Agreement as the aggregate of all
assets of the Trust as shown on the balance sheet of the Trust without deduction
for (i) mortgages and other security interests to which the assets are subject,
(ii) depreciation, and (iii) amortization, but excluding (a) cash and cash
items, (b) amounts due from managing agents, (c) rents and other receivables
(not including mortgages receivable or other receivables arising from the sale
of invested assets), (d) rent security, (e) prepaid expenses and deferred
charges, and (f) obligations of municipal, state and federal governments and
governmental agencies, other than securities of the Federal Housing Authority,
the Veterans Administration and the Federal National Mortgage Association and
securities issued by governmental agencies that are backed by a pool of
mortgages.
The fee to REIT is based on net assets and computations of the fee
includes non-accruing mortgage receivables to the extent they exceed allowances
for loan losses. The fee under the Advisory Agreement is computed and payable
quarterly, subject to adjustment at year end based on the Trust's audited
financial statements. During the fiscal year ended September 30, 1997 REIT
earned $559,000 from the Trust under the Advisory Agreement, compared to
$615,000 earned in fiscal 1996.
<PAGE>
Under the Advisory Agreement, the Trust bears all expenses including
interest, discount and other costs for borrowed money; taxes on income or
property and license fees (including franchise taxes); rental paid for office
space used by the Trust; audit fees and expenses; legal fees; expenses of
litigation involving the Trust; charges of custodians, transfer agents,
registrars, warrant agents, dividend disbursing agent, brokers, underwriters and
banks; expenses relating to meetings of trustees and shareholders; expenses
connected with the acquisition, disposition or ownership of investment assets,
including but not limited to, travel expenses, costs of appraisal, leasing,
maintenance, repair, improvement and foreclosure of property and origination and
mortgage servicing fees and real estate brokerage commissions; fees for the
management of real estate owned by the Trust; fees and expenses payable to
trustees, officers and employees (other than fees payable to Trustees, officers
and employees who are directors, officers and employees of REIT, whose
compensation is payable solely by REIT), independent contractors, consultants,
managers, or agents; the expenses of revising, amending, modifying or
terminating the Trust; and indemnification required to be made by the Trust
under the Declaration of Trust.
The Advisory Agreement provides that directors, officers, and employees
of REIT may serve as trustees, officers and employees of the Trust, but such
persons may not receive cash compensation from the Trust for services rendered
in the latter capacities.
The Advisory Agreement is not assignable by REIT without the written
consent of the Trust. The Advisory Agreement is not assignable by the Trust
without the written consent of REIT, except to a successor to the business and
assets of the Trust. The Advisory Agreement has been renewed for a term ending
December 31, 2001 and may be renewed on an annual basis by the Board of
Trustees, for a maximum five year period. Notwithstanding such renewal of the
Advisory Agreement by the Board of Trustees, the shareholders have the right to
rescind the renewal of the Advisory Agreement authorized at the preceding Board
of Trustees Meeting, if at a special meeting of shareholders called by at least
twenty percent of the outstanding Beneficial Shares specifically for such
purpose a majority of the outstanding Beneficial Shares entitled to vote thereon
shall determine that the Advisory Agreement shall not be renewed. In the event
the Advisory Agreement is not renewed in any year by the Board of Trustees or
such renewal is rescinded by a majority of the outstanding Beneficial Shares
entitled to vote thereon at a special meeting called for such purpose, the
Advisory Agreement will have a balance of four years remaining in the exiting
term. A borrower may pay fees directly REIT for services rendered in arranging
loans made by the Trust. These fees, which are permitted by the Advisory
Agreement, amounted to $155,000 for fiscal 1997. There were no such fees paid to
REIT during fiscal 1996.
The Trust engages entities affiliated with REIT to manage properties
acquired by the Trust in foreclosure or deed in lieu of foreclosure. The
management services include, among other things, rent billing and collection,
leasing (including document preparation), maintenance, construction supervision,
compliance with regulatory statutes and rules (i.e. New York City rent control
and rent stabilization rules), property dispositions and mortgage financing. In
fiscal 1997 the Trust paid $638,000 to these entities for management and
construction supervision fees, leasing and selling fees compared to $755,000
paid to these entities in fiscal 1996.
During the year ended September 30, 1997 Fredric H. Gould and Marshall
Rose, Chairman and Chief Executive Officer, and a trustee, respectively, were
officers and directors of the managing corporate general partner of Gould
Investors L.P. ("GLP"), a public master limited partnership, and individual
general partners of GLP. The Trust, GLP and other related entities occupy common
office space, and share office services, equipment and personnel. In fiscal
1997, $979,000 of common general and administrative expenses were allocated to
the Trust, including the amounts reimbursed to GLP for legal and accounting
services provided by Messrs. Kalish and Lundy (See "Summary and Compensation
Table"), compared to $1,161,000 in fiscal 1996.
In August, 1996 the Trust purchased common stock of publicly traded savings
and loan holding company from GLP. The Trust purchased these shares at GLP's
cost, which approximated market and executed a note payable ("Note") to GLP for
the full amount of the purchase price of $1,030,000. The Note, which bore
interest at prime, was paid in full in November, 1996. Interest expense on the
Note was paid in full in November, 1996. Interest expense on the Note was
$10,000 and $16,000 for fiscal 1997 and fiscal 1996, respectively.
During the year ended September 30, 1997 a law firm in which Simeon
Brinberg and Mark Lundy, officers of the Trust, are Partners, received an
aggregate of approximately $17,000 directly from borrowers of the Trust, for
services rendered in transactions involving such borrowers and the Trust.
APPOINTMENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Trustees is seeking the appointment of Ernst & Young LLP
as independent auditors to audit the books, records and accounts of the Trust
for the fiscal year ending September 30, 1998. Representatives of Ernst & Young
LLP are expected to be present at the Annual Meeting and will have the
opportunity to make a statement if they desire to do so and will be available to
respond to questions of the Trust's shareholders.
If the Trust's shareholders do not approve of the appointment of Ernst
& Young LLP, the selection of independent auditors will be made by the Board of
Trustees.
The Board of Trustees recommends a vote "FOR" the appointment of Ernst
& Young LLP as the Trust's independent auditors for the fiscal year ending
September 30, 1998.
<PAGE>
GENERAL
Management of the Trust does not know of any matters other than those
stated in this Proxy Statement which are to be presented for action at the
Annual Meeting. If any other matters should properly come before the Annual
Meeting, it is intended that proxies in the accompanying form will be voted on
any such other matters in accordance with the judgment of the persons voting
such proxies. Discretionary authority to vote on such voting matters is
conferred by such proxies upon the persons voting them. The expenses in
connection with the solicitation of the accompanying form of proxy, including
the cost of preparing, printing and mailing the notice of meeting, form or proxy
and Proxy Statement, have been or will be borne by the Trust.
SHAREHOLDER PROPOSALS
The annual meeting of the Trust for the year ending September 30, 1998
is scheduled to be held in March 1999. In order to have any proposal to be
presented by a shareholder at such meeting included in the Trust's proxy
statement and form or proxy relating to the meeting, the proposal must be
received by the Trust not later than September 30, 1998.
By order of the Board of Trustees
Simeon Brinberg, Secretary
Dated: January 26, 1998
BRT REALTY TRUST
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS
MARCH 23, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints FREDRIC H. GOULD, JEFFREY A. GOULD and SIMEON
BRINBERG, as Proxies each with the power to appoint his substitute, and hereby
authorizes them to represent and to vote, as designated below, all the shares of
Beneficial Interest, $3.00 par value per share of BRT Realty Trust held of
record by the undersigned on January 15, 1998 at the Annual Meeting of
Shareholders to be held on March 23, 1998 or any adjournments thereof.
1. Election of Class II Trustees
/ / FOR ALL NOMINEES / / WITHHOLD ALL NOMINEES
Nominees: Arthur Hurand, Herbert C.Lust III,
Marshall Rose
/ / INSTRUCTIONS: To withhold authority to
vote for any individual nominee, place an
"X" in the box on the left and strike a line
through the nominee's name listed above.
FOR AGAINST ABSTAIN
/ / / / / / 2. Appointment of Ernst & Young LLP as independent
auditors for the fiscal year ending September
30, 1998.
3. In their discretion, the proxies are authorized
to vote upon such other business as may properly
come before the meeting.
This Proxy when properly executed will be voted in the manner directed hereby by
the undersigned shareholder.
PLEASE DATE, SIGN AND RETURN THIS PROXY IN THE ENCLOSED ENVELOPE
DATED:_______________________________, 1998
_____________________________________ L.S.
_____________________________________ L.S.
(NOTE: PLEASE SIGN EXACTLY AS YOUR NAME
APPEARS HEREON. EXECUTORS,
ADMINISTRATORS, TRUSTEES, ETC. SHOULD
INDICATE WHEN SIGNING,GIVING FULL TITLE
AS SUCH. IF SIGNER IS A CORPORATION,
EXECUTE IN FULL CORPORATE NAME BY
AUTHORIZED OFFICER. IF SHARES HELD IN
THE NAME OF TWO OR MORE PERSONS, ALL
SHOULD SIGN.)
