2014 proxy statement pursuant to the compensation disclosure rules of the Securities and Exchange Commission (which disclosure includes the Compensation Discussion and Analysis and accompanying compensation tables and related information disclosed in the Executive Compensation section of such proxy statement)."

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

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

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

        The Board has determined that an advisory vote on executive compensation every three years is the best approach for the Trust based on a number of considerations, including the following:

•

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



•

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



•

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



•

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

        Although the vote on this Proposal is advisory and non-binding, the Board will carefully consider the voting results. The alternative (i.e., one year, two years, or three years) that receives the most votes will be deemed approved by the shareholders.

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

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
(Proposal 4)3)

General

        The audit committee and the board of trustees is seeking ratification of the appointment of BDO USA, LLP ("BDO") as our independent registered public accounting firm for the fiscal year ending September 30, 2011.2014. Representatives of BDO, and Ernst & Young LLP, our auditors for more than the past three fiscal years,2013, are expected to be present at the annual meeting and will have the opportunity

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

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

        The affirmative voteTable of the holders of a majority of outstanding common shares present at the meeting, in person or by proxy, is required to ratify the appointment of BDO as our independent registered public accounting firm for fiscal 2011.Contents

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

Change in Auditors

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

        Ernst & Young's reports on our consolidated financial statements for the fiscal years ended SeptemberTHE YEAR ENDING SEPTEMBER 30, 2010 and 2009 did not contain an adverse opinion or a disclaimer of opinion, nor were such reports qualified or modified as to uncertainty, audit scope or accounting principles. During the fiscal years ended September 30, 2010 and 2009 and through December 14, 2010, (i) there were no disagreements with Ernst & Young on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if not resolved to the satisfaction of Ernst & Young, would have caused Ernst & Young to make a reference thereto in its reports on our consolidated financial statements for such periods and (ii) there have been no "reportable events" as defined in Item 304(a)(1)(v) of Regulation S-K.

        On December 28, 2010, the audit committee of our board of trustees engaged BDO as our independent registered public accountants, as of and for the fiscal year ending September 30, 2011 and the interim periods prior to such year-end. During our two most recent fiscal years and through December 28, 2010, we did not consult with BDO regarding the application of accounting principles to a specific transaction, either completed or proposed, or the type of audit opinion that might be rendered on our financial statements, nor did BDO provide advice to us, either written or oral, that was an important factor considered by us in reaching a decision as to an accounting, auditing or financial reporting issue. Further, during our two most recent fiscal years and through December 28, 2010, we did not consult with BDO on any matter described in Item 304(a)(2)(i) or (ii) of Regulation S-K.

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Audit and Other Fees

        The following table presents, except as otherwise indicated, BDO's fees (including expenses) for the services indicated for 2013 and 2012:

Approval Policy for Audit and Non-Audit Services

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

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

        For fiscal 2010,2013, the audit committee pre-approved all of the audit, tax and non-audit services rendered by our independent registered public accounting firm.firm, other than certain Rule 3-14 audits required with respect to certain properties we acquired, which audits were approved by the chairman of the audit committee pursuant to delegated authority and which were reported to the full audit committee at its next meeting following such engagement.

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REPORT OF THE AUDIT COMMITTEE

        The audit committee of the board of trustees is comprised of three independent trustees and operates under a written charter adopted by the board of trustees. The board of trustees has determined that each member of the audit committee is "independent," as required by Section 10A(m)(3)was independent during his service on the committee.

        The role of the Exchange Act and the rules and regulations promulgated thereunder and by the listing standards of the New York Stock Exchange.

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

        In this context,performing its duties, the audit committee committee:

•

met on five occasions in fiscal 2010 and held discussions with management, and the independent registered public accounting firm. Management representedfirm and the accounting firm performing the internal control audit function on our behalf;



•

discussed with the independent registered public accounting firm the overall scope and plan for its activities and reviewed with the accounting firm performing the internal control function its work plan and the scope of its activities;



•

obtained representations from management to the audit committeeeffect that the fiscal 2010 year endyear-end consolidated financial statements were prepared in accordance with generally accepted accounting principles, andprinciples;



•

was advised by the audit committee independent registered public accounting firm that it would render an unqualified opinion with respect to the year-end consolidated financial statements;



•

reviewed and discussed the auditedyear end consolidated financial statements with management and the independent registered public accounting firm. The audit committee also reviewedfirm;



•

discussed and discussed the Trust'sevaluated our internal control procedures with management, the independent registered public accounting firm and the accounting firm performing the internal control audit function on behalf offunction;



•

reviewed with management the Trust. In addition, the audit committee reviewed the activities of management's disclosure controls and procedures committee and confirmed prior to approving each quarterly filing and the annual filing with the Securities and Exchange Commission that the requisite officers of the Trust were in accord withprocess used for the certifications required under the Sarbanes-Oxley Act of 2002 of our filings with the Securities and would execute and deliver such certifications. In fiscal 2010, the audit committee Exchange Commission;



•

reviewed the unaudited quarterly financial statements prior to the filing of each Quarterly Report on Form 10-Q with the Securities and Exchange Commission and eachreviewed the related quarterly earnings press releasereleases prior to issuance. The audit committee issuance of same;



•

discussed with the independent registered public accounting firm matters required to be discussed by Statement onthe PCAOB Auditing StandardsStandard No. 61 (Communication With16,Communications with Audit Committee).

        In addition, the audit committee Committee;



•

discussed with the independent registered public accounting firm such firm's independence from the auditor's independence,Trust and management, and received the written disclosures and the letter from such firm required by PCAOB Ethics and Independence Rule 3526 (Communication with Audit Committees Concerning Independence); and



•

reviewed and approved the independent registered public accounting firm required by Independence Standards Board Standard No. 1 (Independence Discussions With Audit Committees). Further, the audit committee reviewed and approved the auditors'firm's fees, both for performing audit and non-audit services. The committee alsoservices, and considered whether the provision of non-audit services by the independent registered public accounting firm was compatible with maintaining the auditor'sindependent registered public accounting firm's independence and concluded that it was compatible with maintaining its independence.

compatible.

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

        The audit committee meets with the independent registered public accounting firm and the accounting firm performing the internal control audit function, with and without management present, to discuss the results of their examinations, their evaluations of the internal controls, and the overall quality of the Trust'sour financial reporting. In fiscal 2010, the audit committee reviewed and discussed with the independent registered public accounting firm, the accounting firm performing the Trust's internal audit function and management, the Trust's compliance with Section 404 of the Sarbanes-Oxley Act of 2002 regarding the audit of internal controls over financial reporting.

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        Based on the reviews and discussions referred to above, the audit committee recommended that the Trust's audited consolidated financial statements for the year ended September 30, 20102013 be included in the Trust's Annual Report on Form 10-K for the year ended September 30, 20102013 for filing with the Securities and Exchange Commission.

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EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Highlights

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

•

all of our named executive officers (as defined herein) are employees at will—none of these officers have employment agreements with us;



•

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



•

there are no severance or similar arrangements for our named executive officers, other than the accelerated vesting of restricted share awards upon a changethe occurrence of controlspecified events as described herein;herein and the amounts which have vested under qualified defined contribution plans.



•

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



•

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



•

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



•

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



•

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



•

the total compensation paid to our named executive officers and trustees beneficially own in fiscal 2010 was significantly less than the compensation paid to suchaggregate approximately 5.7 million shares or 39.7% of our outstanding shares, we do not have and do not believe a formal policy requiring a minimum level of ownership of our shares by our executive officers in fiscal 2008.

and trustees is necessary.

General

        This compensation discussion and analysis describes our compensation objectives and policies as applied to our namedchief executive officer, chief financial officer and our three other most highly compensated officers (collectively, the "named executive officers") in fiscal 2010.2013. This discussion and analysis focuses on the information contained in the compensation tables that follow this discussion and analysis. We also describe compensation actions taken historically to the extent it enhances an understanding of our executive compensation disclosure. OurGenerally, our compensation committee oversees our compensation program, recommends the compensation of executive officers employed by us on a full-time basis to our board of

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

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

•

executive officers who devote all, or substantially all, their business time to our affairs are compensated directly by us. The named executive officers who fit into this category are Jeffrey A. Gould, our president and chief executive officer, Mitchell Gould, our executive vice president and George Zweier, our vice president and chief financial officer. These named executive officers are primarily involved to varying degrees in our multi-family property activities, related tomanagement of our basicreal estate assets (including the Newark Joint Venture), real estate lending business including loan originations, loan underwriting, due diligence activities, loan portfolio management, loan workout and enforcement, and financial reporting;

        In reviewing our compensation philosophy and practices and in approving base salaries for calendar 2013 and bonuses paid for services rendered in 2013, the compensation committee was aware of Contentsthe results of our March 2011 "say-on-pay" vote in which approximately 96% of the shares that voted on such proposal voted to approve our executive compensation practices, and viewed such results as generally supportive of our compensation philosophy, practices and determinations.

Objectives of our Executive Compensation Program

        TheA principal objective of our compensation program with respect to executivefor full-time officers who devote their full-time to our affairs is to ensure that the total compensation paid to such officersthem is fair and competitive. The compensation committee believes that relying on this principle will permitpermits us to retain and motivate our executivethese officers. We have historically experienced a low level of employee (including executive) turn-over. In the event that a senior executive officer is added to our staff, the compensation of such officer is negotiated on a case-by-case basis, with the goal being to provide a competitive salary and an equity interest sufficient to motivate the executive and align his interests with those of our shareholders.

        With respect to senior executive officers whose compensation is allocated to us under the shared services agreement (i.e., part-time officers) it is our objective that each of these executive officers receives compensation which, as allocated to us, is reasonable for the services they perform on our behalf. In addition, the compensation committee must be satisfiedbehalf, and that those executives who devote their time to us on a part-time basis provide us with sufficient time and attention to fully meet our needs and to fully perform their duties on our behalf. The compensation committee is of the opinion that believes that:

•

our part-time executive officers perform valuable services on our behalf, devote sufficient time and attention to our business needs, are not distracted by their activities on behalf of affiliated entitiesable to fully meet our needs and performance of activities on behalf of affiliated entities does not adversely affect their ability to perform their duties on our behalf.

        Our compensation committee believes effectively; and



•

that utilizing part-time executive officers pursuant to the shared services agreement and the advisory agreement enables us to benefit from access to, and the services of, a group of senior executives with experience and knowledge in real estate acquisitions, lending, real estate

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management, finance, banking, legal (including SEC reporting), accounting and tax matters that an organization our size could not otherwise afford. The Committee is currently conducting a review of our organization structure and compensation practices.

Compensation Setting Process

Full-time ExecutiveFull-Time Officers

        To establish compensation for our executive officers for fiscal 2010, the compensation committee reviewed the annual compensation survey prepared for the National Association of Real Estate Investment Trusts (NAREIT) to understand the base salary, bonus, long-term incentives and total compensation paid by other REITs to their executive officers to assist us in providing a fair and competitive compensation package to our full-time executive officers. Although there are many companies engaged in real estate lending, there are few companies which engage in the short-term, bridge lending business in which we engage or have a market capitalization comparable to ours. As a result, the NAREIT compensation survey, although helpful, does not provide information which is directly applicable to us. Accordingly, and sinceSince we have only tenseven full-time employees, we determine compensation for our full-time employees, including our executive officers, on a case-by-case basis and our compensation decisions are subjective. We dohave not utilizeto date used specific performance targets.targets though it is anticipated that performance goals will be established in connection with the grant in the future of performance based awards to our senior executives.

        For our full-time executive officers, other than the president and chief executive officer, the recommendations of our president and chief executive officer plays a significant role in the compensation-setting process, since the president and chief executive officer is aware of each executive officer's duties and responsibilities and is most qualified to assess the level of each officer's performance in carrying out his duties and responsibilities. The president and chief executive officer, prior to making recommendations to the compensation committee concerning each executive officer's compensation, consults with the chairman of our board of trustees and other senior executive officers. During this process, they considerthe compensation committee considers our overall performance for the immediately preceding fiscal year including, without limitation, the progress of our business in general, our multi-family property acquisition activities, progress made at the Teachers Village project, our revenues, results from operations. In fiscal 2010, which was a difficult year for our company due to the continuing impact of the recessionary environmentoperations and the challenges faced in the credit markets and in commercialmanagement of our real estate consideration was given to an executive's activities in

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workouts and foreclosures, property operations and sale of properties after acquisition in foreclosure as well as loan origination activities.portfolios. Since executive officers have different responsibilities, no performance criteria is given more weight than any other. In considering base compensation, the president and chief executive officer, chairman of the board and other senior executive officers assessesassess an individual's performance, which assessment is highly subjective. After this process, the president and chief executive officer proposes to the compensation committee with respect to each full-time executive officer, a base salary for the next year, a cash bonus applicable to the preceding fiscal year (which is paid in the following calendar year), and the number of shares of restricted stock to be awarded to each individual executive officer. At its annual compensation committee meeting, the compensation committee reviews these recommendations. The compensation committee has discretion to accept, reject or modify the recommendations. The final decision by the compensation committee on compensation matters related to executive officers other then with respect to the president and chief executive officer, is reported to the board of trustees, which, except as may be otherwise appropriate under applicable law, can approve or modify the action of the committee.

        With respect to our president and chief executive officer, after the compensation committee has reviewed the NAREIT compensation survey for any helpful information, andconsidered our overall performance for the preceding fiscal year, the chairman of the committee meets with the president and chief executive officer to discuss and review his total compensation, including the compensation he receives from our advisor and from the other parties to the shared services agreement. The compensation committee then determines annual base compensation, and bonus, if any, for the president and chief executive officer and reports its determinations to the board of trustees. The number of shares of restricted stock to be awarded to the president and chief executive officer is considered and determined by the committee annually, at the same time the committee considers and approves all restricted stock awards to be made for that year.

"Part-Time" ExecutivePart-Time Officers

        OurFredric H. Gould, the former chairman of theour board, is a principal executive and/or sole owner of each entity which participates with us in the shared services agreement. In such capacity, our chairman,he, in consultation with our president and chief executive officer and others, determines the annual base compensation of our part-time executive officers to be paid in the aggregate by one or more of the entities which are parties to the shared services agreement. The annual base compensation, bonus, if

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any, pension contribution, and perquisites of certain of our part-time executive officers (primarily those engaged in legal and accounting functions) is allocated to us and other parties to the shared services agreement, pursuant to the shared services agreement. The shared services agreement, as approved by our board of trustees, was finalized in January 2002. Our audit committee reviews the allocations made under the shared services agreement to determine that the allocations, including the payroll allocations have been made in accordance with the terms of the shared services agreement.

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

Compensation Consultant

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

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        The primary purpose of our compensation committee's initial engagement of the compensation consultant was for the consultant to conduct a comprehensive benchmarking analysis for our senior executives, to enable our compensation committee to determine if the compensation of our senior executive officers was fair and reasonable and to assist our compensation committee in making any necessary adjustments to the compensation components. In January 2010, our compensation committee engaged FPL Associates L.P. to update its benchmarking analysis. In January 2010, the compensation consultant reviewed the compensation of our named executive officers. We did not retain a compensation consultant in connection with determining compensation for fiscal 2011.

        In connection with its initial benchmarking analysis, the compensation consultant and management agreed upon a methodology to determine comparative peer groups, as follows:

•

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



•

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

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

•

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

        The following are the full-time peer group companies used by the compensation consultant in its updated benchmark analysis:

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•

Shared Peer Group: This peer group consists of six public equity REITs and six public debt REITs that are comparable to our company, plus our related companies, in terms of focus, size and/or geographic location. The compensation consultant also reviewed the market practices of several commercial banks typically active in commercial real estate lending, as well as private debt/investment companies, as appropriate. The compensation consultant based the methodology and composition of the peer group on the previous benchmarking analysis it conducted for us, and did not make modifications to this peer group. The following are the shared peer group companies used by the compensation consultant:

        The compensation consultant used the 25^th percentile as the market comparison in its conclusions because of our relatively smaller size compared to the peer group. The compensation consultant also used a plus/minus 15% threshold to define "in line" (competitive) with the market. Based on its benchmarking analysis, the compensation consultant advised that: (i) the compensation paid by us to Jeffrey A. Gould, our president and chief executive officer, is in line with market, and the compensation paid by us to Mitchell Gould, our executive vice president, and George Zweier, our chief financial officer, is in line with or slightly below market, (ii) the compensation of shared senior executives (David W. Kalish, senior vice president, finance and Mark H. Lundy, a senior vice president and general counsel) allocated to us is below 25^th percentile market practices, (iii) the total compensation paid to Jeffrey A. Gould (including all compensation paid to Jeffrey Gould by affiliated companies) is above market, (iv) the total compensation paid to shared senior executives by us and affiliated companies (David W. Kalish and Mark H. Lundy) is above their peers, and (v) the equity awards are a smaller portion of total compensation compared to peers.

Components of Executive Compensation

        The principal elements of our compensation program for executive officers in 20102013 were:

•

base salary;salaries;



•

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



•

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



•

long-term incentiveequity based compensation in the form of restricted stock; and



•

special benefits and perquisites.

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

•

additional disability insurance;



•

education benefits;



•

long term care insurance; and



•

an automobile allowance or payment of automobile maintenance and repairs.

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In determining 20102013 compensation, the compensation committee did not have a specific allocation goal between cash and equity-based compensation.

Base Salary

Full-Time Executive Officers

        Base salary is the basic, least variable form of compensation for the job an executive officer performs and provides each full-time executive officer with a guaranteed annual income. Base salaries of executive officers compensated by us directly are generally targeted to be competitive with the salaries paid to executives performing substantially similar functions at other REITs with a market capitalization similar to ours.ours, taking into consideration the region in which our executive officers are located. Any increase in base salary is determined on a case by case basis, is not based upon a structured formula and is based upon, among other considerations, (i) our performance in the preceding fiscal year (net income or loss, cash distributions, if any, paid to shareholders, stock price performance), (ii) such executive's current base salary, (iii) amounts paid by peer group companies for executive's performing substantially similar functions, (iv) years of service, (v) current job responsibilities, (vi) the individual's performance, and (vii)(ii) the recommendation of the president and chief executive officer and other senior executive officers.

        Our chairmanofficers, (iii) our performance in the preceding year (e.g., acquisition and loan activity, revenues, net income and share price performance), (iv) the individual's performance, (v) years of the board, in consultation with our presidentservice, and chief executive officer and others, determines the annual base salary to be paid to each part-time senior executive officer by all the entities which are parties to the shared services agreement.(vi) job responsibilities.

Part-Time Executive Officers

        In setting the annual base salary thefor these officers, Fredric H. Gould, our former chairman of the board considers primarily the executive's responsibilities to all parties to the shared services agreement, the executive's performance, years of service, current annual base salary and the performance of the companies which participate in the shared services agreement in the preceding fiscal year.agreement. The annual base salary is allocated to the entities which are parties to the shared services agreement, including us, based on the estimated time devoted to each of the entities. The compensation committee is apprised

Table of the allocations to the Trust of the payroll relating to our executive officers and of the compensation received by our executive officers from our advisor and the other entities which are parties to the shared services agreement. The compensation committee does not approve the payments made by us to the advisor since all such payments are made pursuant to the advisory agreement, which was approved by our board of trustees, and does not approve the payments made by the advisor to the part-time executive officers.

        Our audit committee reviews annually the allocation process under the shared services agreement pursuant to which the base salary, bonus, if any, pension contributions and perquisites of our part-time executive officers is allocated to us, to determine if the allocation process was carried out in accordance with the shared services agreement. The compensation committee reviewed the part-time executive officers' compensation allocated to us and taking into consideration the services rendered to us by each such part-time executive officer determined that such amounts were reasonable.Contents

Commissions

        We provide the opportunity for some of our full-time executive officers involved primarily in loan origination activities to earn a commission on each loan we originate. The commission is provided to motivateincentivize our executives engaged in loan origination group.activities. The commission, which is currently an aggregate of 10-basis12-basis points of the loans originated, is divided among some of our full-time executive officers and employees engaged primarily in those activities. Fifty percent of the commission is paid at the time the loan origination activities. Mitchell Gould is our only named executive officer who engages primarily inoriginated and the balance is paid at loan origination activities.

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Bonus

        We provide the opportunity for our full-time executive officers and other full-time employees to earn an annual cash bonus. We provide this opportunity both to reward our officers and employees for past performance and to motivate and retain talented people. We recognize that annual bonuses are almost universally provided by other companies with which we might compete for talent. Annual cash bonuses for our executive officers (including the three named executive officers who devote all, or substantially all of their business time to our affairs) are determined on a case-by-case basis and are determined subjectively. In arriving at thedetermining annual cash bonuses, consideration is given to both an executive's performance and to our performance.overall performance in the applicable year. Once our compensation committee has approved the annual bonus to be paid to each executive officer, the compensation committee presents its recommendations to the board of trustees for their approval. Based on our present structure and theour small number of full-time executive officers, our compensation committee has not established formulas or performance goals to determine cash bonuses for our executive officers.

Long-termLong-Term Equity Awards

        We provide the opportunity for our executive officers to receive long-term equity incentive awards. Our long-term equity incentive compensation program is designed to recognize responsibilities, reward performance, motivate future performance, align the interests of our executive officers with our shareholders' and retain our executive officers. The compensation committee reviews annually management's recommendations for long-term equity incentivesawards for all our officers, trustees and employees annually and makes recommendations to our board of trustees for the grant of equity awards. In determining the long-term equity compensation component, the compensation committee considers allthe factors it considers relevant, factors, including our performance and individual performance. Existing ownership levels are not a factor in award determinations.

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

        All the outstanding restricted stock awards made to date provide for a five-year "cliff" vesting. The compensation committee believes that restricted stock awards with five-year "cliff" vesting provide a strong retention incentive for executives, and aligns the interests of our executive officers with our shareholders. We view our capital stock as a valuable asset that should be awarded judiciously. For that reason, it has been our policy that the aggregate equity incentivesrestricted stock awards granted each year to our executive officers, employees, trustees and consultants should benot exceed approximately 1% of our issued and outstanding common shares.

        We do not have a formal policy on timing equity compensation grants in connection with the release of material non-public information. Generally, our compensation committee recommends and our board of trustees approves the granting of equity awards to be effectiveare granted in January of each

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year. EffectiveIn January 15, 2011,2014, we awarded 138,200140,600 shares of restricted stock (including an aggregate of 21,70022,750 shares awarded to non-management trustees and an aggregate of 43,20056,075 shares to our named executive officers). The aggregate restricted stock authorized for awards by us on such date isrepresents approximately .99% shares0.99% of our issued and outstanding common shares.

Table        Our compensation committee retained FPL Associates to assist with implementing a new performance-based long-term incentive program. Although the new program has not yet been finalized, it is currently contemplated that it will contain a five to seven-year performance period, with one or more interim measurement periods during the performance period. The performance measures may consist of Contentsan FFO-based metric, a total shareholder return and metrics relating to the achievement of objectives relating to our multi-family property activities. We contemplate that performance based awards will be granted in 2014. The maximum number of shares with respect to which any participant may be granted performance based awards in any calendar year is 60,000 shares.

Executive Benefits and Perquisites

        We provide our executive officers and our employees with a competitive benefits and perquisites program. We review our executive benefits and perquisites program periodically to ensure it remains reasonable and supportable to our shareholders. For 2010,2013, the executive benefits and perquisites we provided to executive officers accounted for a small percentage of the compensation provided by, or allocated to, us for our executive officers. The executive benefits and perquisites we provided to certain of our full-time executive officers, in addition to the benefits and perquisites we provided to all our full-time employees, consisted of an automobile allowance orallowances (including payments for automobile maintenance and repairs,repairs), the payment of certain educational expenses and the payment of the premiums for additional disability insurance and payment of the premiums forand/or long-term care insurance. With respectThe cost of the executive benefits and perquisites provided to our part-time executive officers, the cost of theirwhich benefits are similar to those provided to our full-time executive benefits and perquisites, which also consisted of an automobile allowance or payments for automobile maintenance and repairs, the payment of certain educational expenses, the payment of the premiums for additional disability insurance and payment of premiums for long-term care insurance,officers, was allocated among us and other entities pursuant to the shared services agreement.

Employment and Severance andAgreements; Post-Employment Benefits; Change of Control Agreements

        NeitherNone of our named executive officers nor our employees havehas employment or severance agreements with us. They are "at will" employees who serve at the pleasure of our board of trustees and management, respectively.trustees.

        Except for provisions for accelerated vesting of awards of our restricted stock in a "change of control" transaction, weWe do not provide for any post-employment benefits to our named executive officers other than their right to the vested portion of the defined contribution plan in which they participate and accelerated vesting of our restricted stock awards.

        Generally, in the event of death, disability (i.e., the inability to engage in gainful activity due to a life threatening or long lasting mental or physical impairment), retirement (having reached the age of 65 and worked for us for at least ten consecutive years) or a change of control protection for our executive officers, trustees or employees. Under(as described below), such person's shares of restricted stock vest fully. Subject to the specific terms and conditions of each restricted share awardsthe applicable plan and award agreement, accelerated vesting occurs with respecta change of control is generally deemed to each person who has been awarded sharesoccur if (i) any person, corporation or other entity purchases our shares of stock for cash, securities or other consideration pursuant to a tender offer or an exchange offer, without the prior consent of our board, or (ii) any person, corporation or other entity shall becomewith specified exceptions, becomes the "beneficial owner" (as such term is defined in Rule 13d-3 under the Exchange Act), directly or indirectly of our securities representing 20% or more of the combined voting power of our then outstanding securities, ordinarily having the right to vote(ii) a business combination or sale of all or substantially all of our assets is completed or (iii) there is a change in the electioncomposition of a majority of our board of trustees, other than changes approved by incumbent trustees.

        We provide for accelerated vesting upon a change in control (on a single trigger basis) because, depending on the structure of the transaction, continuing such awards may unnecessarily complicate a potentially beneficial transaction. Among other things, it may not be possible to replace these awards with comparable awards of the acquiring company's stock and it would not be fair to our executives to lose the benefit of these awards. In addition, the acceleration of vesting aligns the interests of executives in a potential change in control transaction approvedwith those of our shareholders, by motivating them to work towards the completion of the transaction.

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Chairman of the Board's Compensation

        We pay our chairman of the board an annual fee of $200,000, payable in quarterly installments. Our chairman does not receive any additional direct compensation from us, other than any long-term equity awards granted to him by our board of trustees.trustees based upon our compensation committee's recommendation. Our chairman may also receive compensation from Majestic and its affiliates. Each of Messrs. Fredric H. Gould and Rosenzweig served as chairman for part of 2013 and received a pro-rata share of such fee based on their respective periods of service. For additional information regarding payments to our chairman, see "Certain Relationships and Related Transactions."

Deductibility of Executive Compensation

        Section 162(m) of the Internal Revenue Code of 1986, as amended, imposes a limitation on the deductibility of certain non-cash compensation in excess of $1 million earned by each of the chief executive officer and the four other most highly compensated officers of publicly held companies. In 2010,2013, all compensation paid to our full-time executives wasis deductible by us. The compensation committee generally intends to preserve the deductibility of compensation payments and benefits to the extent reasonably practicable. The compensation committeepracticable but has not adopted a formal policy that requires all such compensation paid to the executive officers to be fully deductible.

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Analysis

Base Salary and Bonus

Full-Time Executive Officers

        In accordance with the compensation setting process described above, base salary and cash bonuses for 20102013 were approved as follows for the named executive officers who are compensated directly by us:

        In setting Jeffrey A. Gould's base salary for 2013, the compensation committee took into account our profitability in 2012 and that his base salary for 2013 represented a 3.6% increase from his 2012 base salary. In determining his 2013 bonus, the compensation committee considered Mr. Gould's efforts with respect to our multi-family property activities (particularly, our acquisition of 15 properties with an aggregate of 4,168 units for an aggregate purchase price of $266.5 million) and the activities of the Newark Joint Venture (in particular, its construction on a timely basis of two buildings at the Teachers Village site and the commencement of construction of an additional three buildings at this site). The increases in 2013 base salary for Messrs. Mitchell Gould and George Zweier are attributable to our

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profitability in 2012 and their individual performances. Mitchell Gould's 2013 bonus was based on his performance and in particular, his efforts with respect to our multi-family property activities. George Zweier's bonus for 2013 was based on his individual performance and in particular, his increased responsibilities with respect to financial and accounting matters relating to our multi-family property acquisitions and the Newark Joint Venture.

        The base salary and bonus of Jeffrey A. Gould, our president and chief executive officer, has been maintained in 2010 at approximately the level fixed effective January 1, 2006. With respect2013 was equal to 1.22x Mitchell Gould's base salary and bonus and 2.06x George Zweier's base salary and bonus. We have not adopted a policy with regard to the 2010 bonus for our chiefrelationship of compensation among named executive officer, theofficers or other employees. The compensation committee considered both his handlingwas aware of the problems which were encountered by us as a result ofdifferential in compensation among these executive officers and concluded that the credit and real estate crisis and his activities in redirecting our focus to our basic lending business. The base salary ofdifferential was appropriate because, among other things, both Mitchell Gould in 2010, as comparedand George Zweier have responsibilities primarily related to 2009 (excluding commissions), was based on his overall performance as executive vice president,a specific activity, whereas Jeffrey A. Gould's responsibilities cover all our business activities including, administrative duties, loan workout negotiations and origination activities (which were at an increased level in 2010). The bonus of Mitchell Gould in 2010, including commissions, increased by 1.5% year-over-year due to increased commissions, based on increasedamong other things, property acquisitions, loan originations, in 2010. The base salary of George Zweier, our chief financial officer, as well as his bonus applicable to 2010, was increased to recognize his individual performance.negotiating joint venture agreements, property sales, capital raising and investor relations.

Part-Time Executive Officers

        Mark H. Lundy serves as our senior vice president and general counsel. He is responsible forpresident. His responsibilities include legal matters relating to multi-family property acquisitions, our joint ventures (and in particular, our Newark Joint Venture) loan origination and lending documentation, foreclosure activities,litigation, bankruptcy claims, and issues, credit line documentation and other agreements entered into by us. In addition, he reviews, as necessary, our filings under the Securities Exchange Act of 1934, as amended, and our public disclosures. David W. Kalish serves as our senior vice president, finance. He has overall responsibility for implementation and enforcement of our internal controls, performs oversight and guidance in connection with our annual audit and our quarterly reports, performs oversight and guidance related to tax matters, is involved in banking relationships, chairs our disclosure controls and procedures committee and participates in the preparation and review of our disclosures under the Securities Exchange Act of 1934, as amended, and press releases. The compensation committee determined that based on the value of hissuch person's services on our behalf, the compensation of Messrs. Lundy and Kalish, which is allocated to us, was reasonable.

        The base salary and bonus of Jeffrey A. Gould, our president and chief executive officer, in 2010 is 68% greater than the compensation of Mitchell Gould, our executive vice president, and 120% greater than the compensation of George Zweier, our chief financial officer. We have not adopted a policy with regard to the relationship of compensation among named executive officers or other employees. The compensation committee was aware of the differential in compensation between Jeffrey A. Gould and Mitchell Gould and George Zweier and concluded that the differential was appropriate. Both Mitchell Gould and George Zweier have responsibilities primarily related to a specific activity, whereas Jeffrey A. Gould's responsibilities cover all our business activities including, among other things, loan originations and underwriting, negotiating joint venture agreements, loan enforcement, property sales, capital raising and investor relations.

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Long-termLong-Term Equity Awards

        We believe that our long-term equity compensation program, using restricted stock awards with five-year cliff vesting provides motivation for our executives and employees and is a beneficial retention tool. We are mindful of the potential dilution and compensation cost associated with awarding shares of restricted stock. Our policy remains to limit dilution and compensation costs. OnIn January 15, 20112014 and 2013 we issued 138,200140,100 and 138,525 restricted share awards, respectively, representing approximately 0.99% and 0.99% of our outstanding shares.shares, respectively. In the past five years, we have awarded an average of 80,531135,715 shares each year, representing an average of 0.67%0.97% per annum of our outstanding shares.

        Our compensation committee has commenced the process for establishing performance goals for the grant of performance based awards to senior executives, including our president and chief executive officer. We anticipate that performance based awards will be granted in 2011, at the discretion of our compensation committee. Vesting of performance based awards will be contingent on the attainment, prior to the end of a performance cycle, of the performance goal(s) that our compensation committee establishes. The minimum period with respect to which performance goals are to be measured is one year, but our compensation committee intends to establish a minimum performance cycle of five years. The number of shares with respect to which any participant may be granted performance based awards in any calendar year is 40,000 shares.

Advisor Fees

        Fees paid to        We and our advisor, under theREIT Management Corp., are parties to an amended and restated advisory agreement, as amended, are based on a percentagepursuant to which our advisor performs the services described under "Executive Compensation—Compensation Discussion and Analysis—General" and for which we paid the advisor the fees described below. Our advisor in turn compensates certain of our assetsexecutive officers. See "Certain Relationships and a portion of our loan origination fees. Our main assets are real estate loans and real estate acquired in foreclosure proceedings, which generates interest and fee and rental income.Related Transactions." Fredric H. Gould, the former chairman of our board, is the sole shareholder of our advisor. The advisory

        The agreement further provides: (i) that the minimum and maximum fees payable in a fiscal year to our advisor is based from 1% (in most instances)$750,000 and $4 million, respectively, subject to⁶/10 adjustment for any fiscal year of 1%less than twelve months; and (ii) a change in the origination fee payments to the advisor by our borrowers from 1% to¹/2stated termination date of 1%, with the proviso that no origination fee is to be paid to the advisor unless we receive an origination fee of at least 1%. The advisory agreement, which was to terminate on December 31, 2010, has been extended to AprilJune 30, 2011. During this extension period, certain of our independent trustees will be discussing and examining various alternatives for compensating our full-tine and part-time executive officers and employees.2014.

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

        Three of our named executive officers (Jeffrey A. Gould, David W. Kalish and Mark H. Lundy) receive compensation from our advisor. The compensation committee is advised of such payments. The compensation committee has determined that if the compensation paid by us to our executive officers is reasonable, then the amounts paid to them by the advisor should not be considered as a factor in the determination of compensation relating to such executive's performance for us as long as these persons are satisfactorily performing their duties on our behalf. The compensation committee has determined that all persons who receive compensation from us and also from our advisor satisfactorily performed their duties on our behalf.

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Stock Ownership Policy

        We do not have any policy regarding ownership requirements for officers or trustees. In view of the fact that all of our executive officers and trustees beneficially own somein the aggregate approximately 40% of our common shares, (and many of our officers hold a significant number of common shares), and none of the current trustees or named executive officers has sold any shares during more than the past five years, we do not have nor do we believe there is a need to adopt a policy regarding ownership of our common shares by executive officers and trustees.trustees since their extensive ownership interest aligns their interest with the interests of our shareholders.

Perquisites

        The perquisites we provide to our executive officers, which are in addition to the benefits we provide to all our employees, account for a small percentage of the compensation paid by us to or allocated to us for our executive officers. We believe that such perquisites are competitive and appropriate.

Severance and Change of Control AgreementsPost-Employment Benefits Program

        Except for provisions for accelerated vesting of awards of our restricted stock in a "change of control" transaction, we do not provide for any severance, termination or change of control payment or protection to our officers, trustees or employees. Accordingly, upon a change of control, the restricted stock issued to our officers, trustees, employees and consultants would automatically vest. This is the only automatic compensation benefit our officers would receive in a change of control transaction. In the event that a change of control occurred as of September 30, 2010, the restricted stock held by our named executives officers would have automatically vested andThe following table sets forth the value of each such officer's restricted stock, based(based on the closing price of our stock on September 30, 20102013 of $6.39$7.17 per share,share) and the number of shares subject to restricted stock awards held by our named executive officers that would have beenvest upon death, disability or a change in control as follows:of September 30, 2013:

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Summary Compensation Table

        The following summary compensation table discloses the compensation paid and accrued for services rendered in all capacities to us during the 2010, 2009 and 2008 fiscal years indicated for our chiefnamed executive officer, chief financial officer and the three other most highly compensated executive officers other than our chief executive officer and chief financial officer:officers:

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Grant of Plan-Based Awards

        The following table discloses the grants of plan-based awards during the 2010 fiscal year for our chief executive officer, chief financial officer and the three other most highly compensated executive officers other than our chief executive officer and chief financial officer:

Outstanding Equity Awards at Fiscal Year-End

        The following table discloses the outstanding equity awards at September 30, 2010 for our chief executive officer, chief financial officer and the three other most highly compensated executive officers other than our chief executive officer and chief financial officer: