An aggregate of 408,510 shares of restricted stock and 200,000 RSU's issued pursuant to our equity incentive plans were outstanding on April 9, 2012. The shares of restricted stock have a five year cliff-vesting requirement and accordingly, the outstanding restricted shares vest in approximately equal annual amounts through 2017. The 200,000 RSU's vest in 2017 only if and to the extent specified performance or market conditions are met. See "Outstanding Equity Awards at Fiscal Year End." There are 73,640 shares available to be awarded pursuant to our 2009 Incentive Plan (the "2009 Plan") and we propose the adoption of the 2012 Annual Meeting:
Plan pursuant to which up to 600,000 shares may be awarded. If stockholders adopt the 2012 Plan, no further awards will be made under the 2009 Plan. As of April 17, 2012, 14,787,152 shares of our common stock were outstanding. Generally, the awards granted each year have represented less than 1% of our outstanding shares at the time of grant.

        It is anticipated that awards will be granted under the Plan to: 14 full-time and part-time executive officers; seven independent directors; and approximately 33 full-time and part-time non-executive officers and employees. The following summary of major features of the Plan is qualified in its entirety by reference to the actual text of the Plan, attached as Annex A.

Shares Subject to the Plan

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OptionsDirectors

        Stock options entitle the holder to continuepurchase a specified number of shares at a specified exercise price subject to the terms and conditions of the option grant. The purchase price per share for each incentive stock option is determined by the compensation committee, but must be at least 100% of the fair market value per share on the date of grant. The aggregate fair market value of shares with respect to which incentive stock options are exercisable for the first time by an individual during any calendar year cannot exceed $100,000. To the extent that the fair market value of shares with respect to which incentive stock options become exercisable for the first time during any calendar year exceeds $100,000, the portion in officeexcess of $100,000 will be treated as a non-qualified option. Options granted under the Plan may be exercisable for a term up to ten years. If a participant owns more than 10% of the total voting power of all classes of our shares at the time the participant is granted an incentive stock option, the option price per share cannot be less than 110% of the fair market value per share on the date of grant and the term of the option cannot exceed five years.

        Non-qualified options may not be granted at an exercise price per share that is less than 100% of the fair market value per share on the date of the grant. The maximum aggregate number of shares underlying options that may be granted in one calendar year to an individual participant is 60,000.

        The closing price for our shares on the New York Stock Exchange on April 13, 2012 was $18.27 per share. There are no options outstanding under our equity inventive plans.

Restricted Stock and Restricted Stock Units

        Restricted stock are shares that may not be sold, transferred, gifted, bequeathed, pledged, assigned or otherwise disposed of until the 2013 Annual Meeting:
end of a specified restriction period. Restricted stock units and RSU's represent the right, upon satisfaction of specified conditions, to receive shares and are subject to the same restrictions on transferability applicable to restricted stock. RSU's and shares of restricted stock will be issued at the beginning of the restriction period and the compensation committee shall set restrictions and other conditions applicable to the vesting of such award, including restrictions based on the achievement of specific performance goals, time based restrictions or on any other basis determined by the compensation committee.

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PROPOSAL 2Amendment and Termination of the Plan

        No awards may be made under the Plan on or after the tenth anniversary of the Plan's effective date. Our board of directors may amend, suspend or terminate the Plan at any time for any reason. However, no amendment shall permit the repricing, replacing or regranting of an option in connection with the cancellation of the Option or by amending an Award Agreement to lower the exercise price of an option or the cancellation of any award in exchange for cash without stockholder approval. In addition, before the plan can be amended, modified or terminated, where such amendment, modification or termination would adversely affect a participant who has already been granted an award, such participant's consent must be obtained.

ADVISORY APPROVAL OF
COMPENSATION OF EXECUTIVESChange in Control

        Any awards granted under the Plan that are outstanding and not then exercisable or subject to restrictions at the time of a change in control (as defined in the Plan) shall, except as otherwise provided in the award agreement, become immediately exercisable and all restrictions shall be removed effective as of such change in control. The Plan defines a change in control as follows:

        (a)   the acquisition in one or more transactions by any person (as defined in Section 13(d) of the Securities Exchange Act of 1934) of the beneficial ownership (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934) of 25% or more of the outstanding shares or the combined voting power of the then outstanding securities entitled to vote in the election of directors (provided that this provision is not applicable to acquisitions made individually, or as a group, by Fredric H. Gould, Matthew J. Gould and Jeffrey A. Gould and their respective spouses, lineal descendants and affiliates);

        (b)   individuals who, at the date of the award, constitute our board of directors cease for any reason to constitute at least a majority of the board, provided an individual becoming a director subsequent to the date of an award whose election or nomination for election was approved by a vote of at least a majority of the directors then comprising the board shall be considered as though such individuals were a member of the board, but excluding any individual whose initial assumption of office occurs as a result either of an actual or threatened election contest or other actual or threatened solicitation of proxies or consent by and behalf of a person other than the board;

        (c)   the closing of a sale or other conveyance of all or substantially all of our assets;

        (d)   the effective time of any merger or other business combination involving us if immediately after such transactions persons who hold a majority of outstanding voting securities entitled to vote are not persons who immediately prior to such transaction held our voting stock.

Federal Income Tax Consequences

        The Dodd-Frank Wall Street Reformfederal tax rules applicable to awards under the Plan under the tax code are summarized below. This summary omits the tax laws of any municipality, state, or foreign country in which a participant resides.

        Stock option grants under the Plan may be intended to qualify as incentive stock options under Section 422 of the tax code or may be non-qualified stock options governed by Section 83 of the tax code. Generally, federal income tax is not due from a participant upon the grant of a stock option, and Consumer Protection Acta deduction is not taken by us. Under current tax laws, if a participant exercises a non-qualified stock option, he or she will have taxable income equal to the difference between the market price of 2010 (the "Dodd-Frank Act") requiresthe common stock on the exercise date and the stock option grant price. We are entitled to a corresponding deduction on our income tax return. A participant will not have any taxable income upon exercising an incentive stock option after the applicable holding periods have been satisfied

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(except that the alternative minimum tax may apply), and we seekwill not receive a non-binding advisory vote fromdeduction when an incentive stock option is exercised. The treatment for a participant of a disposition of shares acquired through the exercise of a stock option depends on how long the shares were held and whether the shares were acquired by exercising an incentive stock option or a non-qualified stock option. We may be entitled to a deduction in the case of a disposition of shares acquired under an incentive stock option before the applicable holding periods have been satisfied.

        Generally, taxes are not due when a restricted stock (unless the participant makes election under section 83(b) of the Code) or RSU award is initially made, but the award becomes taxable when it is no longer subject to a "substantial risk of forfeiture" (it becomes vested or transferable), in the case of restricted stock, or when shares are issuable in connection with vesting, in the case of an RSU. Income tax is paid on the value of the stock or units at ordinary rates when the restrictions lapse, and then at capital gain rates when the shares are sold.

        Section 409A of the tax code affects taxation of awards to employees but does not affect our stockholdersability to approvededuct deferred compensation. Section 409A applies to RSUs, performance units, and performance shares. Such grants are taxed at vesting but will be subject to new limits on plan terms governing when vesting may occur. If grants under such plans do not allow employees to elect further deferral on vesting or on distribution, under the regulations, a negative impact should not attach to the grants.

        Section 409A of the tax code does not apply to incentive stock options, non-qualified stock options (that are not discounted), and restricted stock, provided that there is no deferral of income beyond the vesting date.

        As described above, awards granted under the Plan may qualify as performance-based compensation under Section 162(m) of the tax code. To qualify, stock options and other awards must be granted under the Plan by a committee consisting solely of two or more outside directors (as defined under Section 162 regulations) and satisfy the Plan's limit on the total number of shares that may be awarded to our named executive officers as disclosed in this proxy statement. Althoughany one participant during any calendar year. In addition, for awards other than stock options to qualify, the advisory vote is non-binding, the Compensation Committee and the Board will review the resultsgrant, issuance, vesting, or retention of the vote and will consider our stockholders' concerns and take them into account in future determinations concerning our executive compensation program. The Directors recommends that you indicate your support foraward must be contingent upon satisfying one or more of the Company's compensation policies and procedures for its named executive officers, as outlinedperformance criteria set forth in the resolution below.Plan, as established and certified by a committee consisting solely of two or more outside directors.

New Plan Benefits Table

        We have not determined the type, amount or recipients of awards under the Plan. Accordingly, we provide the following resolution will be submitted for a stockholder vote attable which reflects the 2011 Annual Meeting:

        "RESOLVED, that the stockholders approve, on an advisory basis, the compensation of the individuals identifiedawards granted in the Summary Compensation Table, as disclosed in the One Liberty Properties, Inc. 2011 proxy statement pursuant to the compensation disclosure rules2009 Incentive

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Plan to the Securitiespersons and Exchange Commission (which disclosure includes the Compensation Discussion and Analysis and accompanying compensation tables and related information disclosedgroups indicated. All of such awards were in the Executive Compensation sectionform of such proxy statement)."restricted stock that vest on a "cliff-vesting" basis five years after grant.

THE BOARD OF DIRECTORS RECOMMENDS ATHAT STOCKHOLDERS VOTE IN FAVOR OF THE ADOPTION OF THIS RESOLUTION

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PROPOSAL 3

ADVISORY VOTE ONTO ADOPT THE FREQUENCY
AT WHICH WE WILL SEEK STOCKHOLDER ADVISORY
VOTES ON EXECUTIVE COMPENSATION

        In addition to requesting the stockholder 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 stockholders.

        The Board has determined that an advisory vote on executive compensation every three years is the best approach for the Company 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;



•

stockholders 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 Directors;"



•

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 stockholders.

ONE LIBERTY PROPERTIES, INC. 2012 INCENTIVE PLAN. PROXIES SOLICITED BY THE BOARD OF DIRECTORS RECOMMENDS A VOTEWILL BE VOTED IN FAVOR OF EVERY THREE YEARS FOR THE FREQUENCY AT WHICH WE WILL PRESENT TOPROPOSAL UNLESS STOCKHOLDERS AN ADVISORY VOTE ON COMPENSATION OF EXECUTIVESSPECIFY OTHERWISE.

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

(PROPOSAL 4)3)

General

        The audit committee and the board of directors is seeking ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2011.2012. A representative of Ernst & Young LLP is expected to be present at theour annual meeting and will have the opportunity to make a statement if he or she desires to do so and will be available to respond to appropriate questions.

        We are not required to have our stockholders ratify the selection of Ernst & Young LLP as our independent registered public accounting firm. We are doing so because we believe it is good corporate practice. If the stockholders do not ratify the selection, the audit committee will reconsider whether or not to retain Ernst & Young LLP, but may, in its discretion, 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 the best interests of the companyour and its stockholders.our stockholders' interests.

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2011.2012.

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Audit and Other Fees

        The following table presents the fees for professional audit services billed by Ernst & Young LLP for the audit of our annual consolidated financial statements for 2010services and 2009, and fees billed for other services rendered to us by Ernst & Young LLP for each of such years:years indicated:

(1)

Includes fees for the audit of our annual consolidated financial statements, for the review of our consolidated financial statements included in our quarterly reports on Form 10-Q and for services rendered in connection with our compliance with Section 404 of the Sarbanes-Oxley Act of 2002. The 2010 audit fees include (a) services rendered in connection with a contemplated public offering and a registration statement filed with the Securities and Exchange Commission, (b) the review of our long-term incentive plan and (c) purchase price allocations relating to property acquisitions in 2010.



(2)

Audit-related fees include fees for audits performed for significant property acquisitions.



(3)

Tax fees consist of fees for tax advice, tax compliance and tax planning.

        The audit committee has concluded that the provision of non-audit services listed above is compatible with maintaining the independence of Ernst & Young LLP.

Pre-Approval Policy for Audit and Non-Audit Services

        The audit committee must pre-approve all audit and non-audit services involving our independent registered public accounting firm.

        In addition to the audit work necessary for us to file required reports under the Securities Exchange Act of 1934, as amended (i.e., quarterly reports on Form 10-Q and annual reports on Form 10-K), our independent registered public accounting firm may perform non-audit services, other than those prohibited by the Sarbanes-Oxley Act of 2002, provided they are approved in advance by the audit committee. The audit committee approved all audit and non-audit services performed by our independent registered public accounting firm in 20102011 and 2009.2010.

Approval Process

        Annually, the audit committee reviews the audit scope for that year, including the proposed audit fee associated with the audit services in connection with our compliance with Section 404 of the Sarbanes-Oxley Act of 2002. The audit committee may, at the time it reviews the proposed audit fees or subsequently thereafter, approve the provision of tax and other non-audit related services and the maximum expenditure which may be incurred for such services for such year. Any fees for the audit in excess of those approved and any fees for non-audit related services in excess of the maximum established by the audit committee must receive the approval of the audit committee.

        Proposals for any other non-audit services to be performed by the independent registered public accounting firm must be approved by the audit committee.

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REPORT OF THE AUDIT COMMITTEE

        The audit committee of the board of directors is comprised of three independent directors and operates under a written charter adopted by the board of directors. The audit committee reviews the charter on an annual basis. The board of directors has reviewed Section 10A(m)(3) of the Securities Exchange Act of 1934, as amended, and the New York Stock Exchange listing standards definition of independence for audit committee members and has determined that each member of the audit committee was independent during his service on the committee.

        The role of the audit committee is to select and engage our independent registered public accounting firm and to oversee and monitor, among other things, our financial reporting process, the independence and performance of the independent registered public accounting firm and the functioning of our internal controls. It is the responsibility of management to prepare financial statements in accordance with generally accepted accounting principles and of the independent registered public accounting firm to perform an independent audit of the financial statements and to express an opinion on the conformity of those financial statements with generally accepted accounting principles.

        The audit committee met on six occasions in 2010. In performing its functions,duties, the audit committee:

•

met and held discussions with management, the independent registered public accounting firm and the accounting firm performing the internal control audit function on the company'sour 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 effect that the year-end consolidated financial statements were prepared in accordance with generally accepted accounting principles;



•

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



•

reviewed and discussed the year end consolidated financial statements with management and the independent registered public accounting firm;



•

discussed the Company'sour internal control procedures and their evaluation of the internal controls with management, the independent registered public accounting firm and the accounting firm performing the internal control audit function;



•

reviewed with management the process used for the certifications under the Sarbanes-Oxley Act of 2002 of our filings with the Securities and Exchange Commission;



•

reviewed the unaudited quarterly financial statements prior to filing each Form 10-Q with the Securities and Exchange Commission and reviewed the scope of quarterly earnings press release;



•

discussed with the independent registered public accounting firm matters required to be discussed by the statement on Auditing Standards No. 61, as amended (Communication with Audit Committee);



•

discussed with the independent registered public accounting firm, the registered public accounting firm's independence from the Company and management, and received the written disclosures and the letter from the independent registered public accounting firm required by Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees); and

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•

reviewed and approved the independent registered public accounting firm's fees, both for performing audit and non-audit services, and considered whether the provision of non-audit

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services by the independent registered public accounting firm was compatible with maintaining the independent registered public accounting firm's independence and concluded that it was compatible.

        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 company'sour financial reporting.

        Based on the reviews and discussions referred to above, the audit committee recommended that the audited financial statements for 20102011 be included in the Company's Annual Report on Form 10-K for the year ended December 31, 20102011 for filing with the Securities and Exchange Commission.

        The audit committee approved the retention of Ernst & Young LLP as independent registered public accounting firm for 20112012 after reviewing the firm's performance in 20102011 and its independence from us and management.

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EXECUTIVE COMPENSATION

Highlights

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

•

the compensation we pay our full-time named executive officers is generally related (though, with the exception of restricted stock units,the RSU's, not formulaically tied to) our performance. SpecificallyAmong other things,



-

our total revenues, funds from operations and net income in 2009 increased by approximately 14%, 67% and 301%, respectively from 2008. We took such results into account in increasing Messrs. Callan and Rickett's 2010Ricketts were awarded increases in base salary by 3.8%salaries effective as of January 1, 2011, reflecting, among other things, their efforts with respect to our acquisition of 14 properties for an aggregate of $72.3 million and 5%, respectively, andthe increase of more than 75% in increasing the cash bonus paid in 2010 to Mr. Callan (reflecting services performed in 2009) by 11.1% from 2009.our stock price during 2010.



-

in awarding Messrs. Callan and Ricketts a 10%were awarded bonuses of $65,000 and 16.7% increase, respectively, in their bonus$45,000 for 2010 (which are to be paid in 2011) we took into account,2011, reflecting, among other things, their efforts with respect to,



(i)

increasing revenues, net income per share, funds from operations per share and adjusted funds from operations per share from 2010 by more than $4.3 million, $0.15, $0.03 and $0.03, respectively,



(ii)

our public offering from which we received net proceeds of approximately $40.7 million, and



(iii)

the approximate 90% increase in our stock price in 2010 and the 14six properties we acquired in 20102011 for an aggregate of approximately $72.3$28 million.



•

total compensation for our full-time named executive officers decreased slightly in 2011 from 2010;



•

all of our executive officers are employees at will—none of our officers have employment agreements;



•

there are no severance or similar arrangements for our executive officers, other than the accelerated vesting of shares of restricted stock and restricted stock units ("RSU's")RSU's upon the occurrence of specified events (e.g. death, disability, retirement or a change of control;control);



•

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



•

the shares of restricted stock awarded to our executive officers vest (assuming continued service) approximately five years after the grant date on a "cliff-vesting" basis;



•

the RSU's awarded to our executive officers vest (assuming continued service) on a "cliff-vesting" basis approximately seven years after the grant date and only if, and to the extent that, performance or marketmetrics are satisfied—we believe that these conditions are satisfied;



•

establish challenging hurdles as only 50% of the sharesawards would have vested as of restricted stock awarded to our executive officers vest (assuming continued service) approximately five years after the grant date on a "cliff-vesting" basis;December 31, 2011; and



•

though we do not have a formal policy requiring a minimum level of stock ownership, our executive officers and directors own beneficially in the aggregate approximately 3.273.25 million shares or 22.7%22% of our outstanding shares.

Compensation Discussion and Analysis

        This compensation discussion and analysis describes our compensation objectives, policies and decisions as applied to the compensation provided by us in 20102011 to our named executive officers. This discussion and analysis focuses on the information contained in the compensation tables that follow this discussion and analysis, but also describes our historic compensation structure to enhance an understanding of our executive compensation disclosure. Our compensation committee oversees our

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compensation program, recommends the compensation of the executive officers employed by us on a full-time basis to our board of directors for its approval, recommends the annual fee paid by us to the chairman and vice chairman of our board of directors, and recommends the annual fees paid by us pursuant to a compensation and services agreement to Majestic Property Management Corp., an affiliated entity ("Majestic)Majestic"), which results in the payment by Majestic of compensation to our part-time officers, including Fredric H.

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Gould, David W. Kalish and Mark H. Lundy.Lundy, named executive officers. Majestic is wholly-owned by Fredric H. Gould, the chairman of our board.

Background

        We have two categories of officers: (i) officers who devote their full business time to our affairs; and (ii) officers who devote their business time to us on a part-time basis. TheOur full-time officers who devote their full business time to our affairsand employees are compensated directly and solely by us. Prior to 2007, the basic compensation (base salary, bonus, if any,us and perquisites) of certain of our part-time officers who primarily provided legal and accounting services to us, was allocatedemployees are compensated by Majestic which provides to us, pursuant to a shared services agreement, and certain officers received compensation from Majestic, whose gross revenues included fees paid by us for services (described below) performed on our behalf by Majestic. All of our full-time and part-time officers and other employees, including employees of affiliated companies who perform services for us on a part-time basis, receive annual restricted stock awards recommended by the compensation committee and approved by the board of directors.

        In 2006, in connection with a review of our allocation methods and our related party transactions, our audit committee recommended to our compensation committee and board of directors a change in the manner in which compensation is paid to those officers (and employees) who perform services for us on a part-time basis, as well as a change in the manner in which any affiliated entity, primarily Majestic, is compensated for services performed on our behalf. The services provided by Majestic to us include billing and collection of rent and additional rent, property management services, property acquisition review and analysis, tenant default issues, sales and lease consulting and brokerage services, consulting services with respect to mortgage financings and construction supervisory services. These changes to simplify our compensation structure were recommended to, limit the need for the audit committee, the internal auditor and the independent auditor to review the allocations and limit potential conflict issues which may arise as a result of related party transactions. The audit committee, the compensation committee and the board of directors were of the opinion that it was desirable for us to maintain the services of those officers who perform services for us on a part-time basis, as well as the services of Majestic.

        To effectuate our audit committee's recommendation, we entered into a compensation and services agreement, with Majestic, effective as of January 1, 2007, under which Majestic assumed our obligations to make payments under the shared services agreement and agreed to provide to us the services of allother personnel (including executive, administrative and legal, accounting and clerical personnel) that had previously been utilized by usperforming services on a part-time basis and for which we had paid, as reimbursement, an allocated portion of the payroll expenses of such personnel. Since Majestic now provides such personnel for us, we no longer incur any allocated payroll expense and the payroll expense of such executives and part-time employees is allocated to Majestic. Under the terms of the compensation and services agreement, Majestic also agreed to continue to provide to us the services that it provided to us in the past.our behalf. In consideration for providing services and the services of such personnel, we agreed to pay topaid Majestic a fee of $2,225,000$2,725,000 for 2010.2011. Majestic may earn a profit from payments made to it under the agreement. Majestic credits against the fee due to it from us and any management or other fees received by it from any of our joint ventures (except for fees paid by the tenant-in-common from us on a property located in Los Angeles, CA). In addition, under this agreement, we agreed to paypaid the chairman of our board $250,000 per annumin 2011 and to makemade an additional payment to Majestic of $175,000 in 20102011 for our share of all direct office expenses, including rent, telephone, computer services, internet usage and supplies. The amount of annual payments to be made by us to Majestic under the compensation and services agreement are negotiated annually by our audit committee and Majestic and at other times as may be determined by our audit committee. Historically,

        All of our full-time and part-time

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executive officers have also been granted equity awards. See "Executive Compensation—Analysis—Long-term Equityaffiliated companies who perform services for us on a part-time basis, receive annual restricted stock awards approved by the compensation committee and Equity Incentive Awards."the board of directors.

Named Executive Officers

        During 2010, ourOur named executive officers wereare Patrick J. Callan, Jr., president and chief executive officer and Lawrence G. Ricketts, Jr., executive vice president and chief operating officer, both of whom devote their full time to our affairs, and Fredric H. Gould, chairman of our board, David W. Kalish, a senior vice president and chief financial officer, and Mark H. Lundy, a senior vice president and secretary, who devote time to our affairs on a part-time basis.

Say-on-Pay

        In reviewing our compensation philosophy and practices and in approving base salaries for 2012 and bonuses paid for services rendered in 2011, the compensation committee was aware of the results of our June 2011 "say-on-pay" vote in which approximately 83% of the shares actually 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 Compensation Program

        A principal objective of our compensation program for full-time officers is to ensure that the total compensation paid to such officers is fair and competitive. The compensation committee believes that relying on this principle will permit us to retain and motivate these officers. With respect to our part-time executive officers, the compensation committee must be satisfied that such officers provide us with sufficient time and attention to fully meet our needs and fully perform their duties on our behalf. The compensation committee is of the opinion that our part-time executive officers perform valuable services on our behalf, devote sufficient time and attention to our business needs, are able to fully meet

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our needs and perform their duties effectively on our behalf.effectively. The compensation committee is also of the opinion that utilizing the services of various senior officers with diverse skills on a part-time basis enables us to benefit from a greater degree of executive experience and competence than an organization of our size could otherwise afford.

        We have historically experienced an extremely low level of officer and employee turnover. Fredric H. Gould, David W. Kalish and Mark H. Lundy each has been an officer with us for over 20 years and Lawrence G. Ricketts, Jr. has been employed by us for approximately twelvethirteen years. Patrick J. Callan, Jr. has been a member of our board of directors for seveneight years, our president for over fourfive years and our chief executive officer for over threefour years.

Compensation Setting Process

Full-time Officers

        Our compensation committee refers to the 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 officers to assist it in providing a fair and competitive compensation package to our full-time officers. Although there are many REITs engaged in the ownership and management of real estate, there are few equity REITs which have a market capitalization comparable to ours. As a result, the NAREIT compensation survey, although informative, does not provide information which is directly applicable to us.us, does provide informative data for the compensation committee to use in its deliberations. We determine compensation for our full-time named executive officers on a case-by-case basis and our compensation decisions are subjective. Other than with respect to the RSU's, which are performance based awards issued in 2010, we do not use formal performance targets. See "Grant of Plan Based Awards for 2010."

        In determining compensation for 2010,2011, the recommendations of Fredric H. Gould, chairman of our board, played a significant role in the compensation-compensation setting process since, as chairman of the board, he wasis aware of each officer's duties and responsibilities and was most qualified to assess the level of each officer's performance. The chairman of our board, prior to making recommendations to the compensation committee concerning each full-time officer's compensation, consulted with other senior executive officers, including our president and chief executive officer. During the process, our overall

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performance for the immediately preceding fiscal year, including total revenues, funds from operations, net income dividends paid to stockholders, performance of our common stock and acquisition and financing activities were taken into consideration. None of these measures of performance was given more weight than any other. The chairman of the board and other senior officers also assessed each individual's performance in such year, which assessment was highly subjective. During this process, the chairman of our board proposed to the compensation committee with respect to each full-time named executive officer, a base salary for the 2010 calendar year,2011, a bonus applicable to the 2009 calendar year2010 and payable in 2011 and the number of shares of restricted stock to be awarded to each full-time named executive officer. At its annual compensation committee meeting, the compensation committee reviewed these recommendations. The compensation committee has discretion to accept, reject or modify the recommendations. The final recommendations by the compensation committee on compensation matters with respect to all officers was reported to the board of directors, which approved the recommendations of the committee.

Part-time Officers

        We believe that using part-time officers pursuant to the compensation and services agreement enables us to benefit from access to, and the services of, a group of senior officers with experience and knowledge in real estate ownership, operations and management and finance, legal, accounting and tax matters that an organization our size could not otherwise afford. Our chairman, in consultation with certain of our part-time senior officers, determines the base compensation, bonus, if any, and

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perquisites to be paid in the aggregate to our part-time officers by all entities which are provided services by such officers.

        Pursuant to the compensation and services agreement, Majestic assumed our obligations under the shared services agreement. Accordingly, in 2010, the portion of our part-time officers' compensation which would have been allocated to us in 2010 was allocated to Majestic.        Our part-time officers, including our chairman, also receive compensation from other business entities, most of which are owned or controlled by our chairman, for services rendered to such entities. The compensation committee is advised of such compensation.

Compensation Consultant

        In October 2008, our compensation committee engaged an independent compensation consultant, FPL Associates L.P., a nationally recognized compensation consulting firm specializing in the real estate industry. In January, 2010, FPL Associates L.P. was engaged by the compensation committee to update certain of the information previously provided. The primary purpose of the initial engagement in October 2008 was for the compensation consultant to conduct a comprehensive benchmarking analysis for our senior executives. The purpose of the January 2010 retention was for the compensation consultant to update the benchmarking analysis for our president and chief executive officer and our executive vice president and chief operating officer. FPL Associates L.P. has no relationship with us or any of our affiliates, except that it was retained in 2008 and 2009 as the independent compensation consultant for BRT Realty Trust, which may be deemed an affiliate of ours.

        In connection with the benchmarking analysis, the compensation consultant and management discussed and agreed upon a methodology for determining the comparative peer groups. Based upon such discussions it was determined to use two peer groups as follows:

•

A Full-Time Peer Group; to be used for executives who dedicate all, or substantially all, of their business time to our affairs. The Full Time Peer Group includes public REITs active in the net lease space; public real estate companies comparable in size to us (measured by market and total capitalization); and/or public real estate companies located in New York. The Full Time

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Peer Group consists of eleven public real estate companies with a market capitalization which is generally larger than our capitalization. The compensation consultant noted in its report to the compensation committee that none of the specific peer group companies are a perfect match to us, due to our small size position among our most direct peers.

•

A 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 Shared Peer Group has characteristics similar to the Full Time Peer Group but also includes public REITs focused on the debt side of the real estate business and consists of six public equity REITs and six public debt REITs that are comparable to us in terms of focus, size and/or geographic location. The market capitalization of the peer group companies is generally larger than our capitalization.



•

The following is the full-time peer group companies used by the consultant:

•

The following is the shared peer group companies used by the consultant:

        Since the total compensation of part-time named executive officers declined in 2009, as compared to 2008, the compensation committee did not deem it necessary to engage the compensation consultant to update the benchmarking analysis for its part-time executive officers. However, it was deemed appropriate to go through the process as it relates to our full-time senior executives to determine if the compensation paid to them in 2009 and base salary established for 2010 was fair and reasonable and to determine if any adjustments were necessary. In reviewing the compensation paid to our president and chief executive officer and to our executive vice president and chief operating officer in 2009, the consultant focused on the 25^th percentile and the median as the appropriate market range. The consultant concluded that on an absolute compensation basis, and considering the "market range" used by it, the two senior full-time executives' compensation appears to be generally "in line" with market.

        The compensation consultant further advised that the compensation mix is weighted more heavily toward cash compensation compared to market and that the long-term incentive component lags the market. Effective July 1, 2010, the compensation committee and the Board of Directors adopted a long-term performance based equity incentive program which the committee believed was necessary in order for its executive compensation program to be competitive.

        The benchmarking analysis performed by the compensation consultant and the consultant's use of the 25^th percentile and the median as the market comparison in its findings is used by the compensation committee as a guide in its review and determination of base salaries, annual cash bonuses and restricted stock awards, but is only one input in the compensation process. The company's performance, both on an absolute basis and in comparison to its direct and indirect competition (taking into account economic and general business conditions), and each executive's performance, tenure and

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experience is taken into consideration in arriving at the executive's compensation, which may result in whether the executive is paid below, at, or above the percentile used by the compensation consultant in its benchmarking analysis.

Components of Executive Compensation

Full-time Officers

        The principal elements of our compensation program for our full-time officers are:

•

base salary;



•

annual bonus;



•

long-term equity in the form of restricted stock and long-term equity incentives in the form of RSU's; and



•

special benefits and perquisites (i.ee.g.., contributions to our defined contribution plan, additional disability insurance, an automobile allowance and automobile maintenance and repairs).

        Base salary and annual bonus are cash-based, while long-term equity and long-term equity incentives consists of restricted stock awards and RSU's.RSU's, respectively. In determining compensation, the compensation committee does not have a specific allocation goal between cash and equity-based compensation.

Part-time Officers

        In 2010,2011, except for the $250,000 annual compensation we paid to the chairman of our board pursuantand the $100,000 paid to the compensation and services agreement,vice chairman of our board, the only form of direct compensation we provided to our part-time officers was the granting of long-term equity in the form of restricted stock awards and long-term equity incentives in the form of RSU's.awards. For services rendered to us, our part-time officers are compensated by Majestic, which was paid a fee of $2,225,000$2,725,000 (excluding $175,000 as reimbursement for our share of direct office expenses) in 20102011 pursuant to the compensation and services agreement.

Base Salary

        Base salary is the basic, least variable form of compensation for the job an officer performs and provides each officer with a guaranteed monthly income.

        Full-time Officers:    Base salaries of full-time officers are targeted to be competitive with the salaries paid to officers at other REITs with a market capitalization similar to ours. Any increase in base salary is determined on a case by case basis, is not formula based and is based upon, among other considerations (i) our performance in the preceding year, (ii) such officer's current base salary, (iii) amounts paid by other REITs for officers performing substantially similar functions, (iv) years of service, (v) current job responsibilities, (vi) the individual's performance and (vii) the recommendation of the chairman of the board and other senior executive officers.

        Part-time Officers:    The portionbase salary of our part-time officers' base salary, which would have been allocated to us in 2010 pursuant to the shared services agreement, has been assumed by Majestic pursuant to the compensation and services agreement andofficers is paid by Majestic.Majestic and its affiliates. Since the annual fee paid to Majestic is approved by the audit and compensation committeecommittees and the board of directors, the compensation committee doesis not approveinvolved in determining the base salaries of our part-timethese officers.

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Bonus

        Full-time Officers:    We provide the opportunity for our full-time officers to earn an annual cash bonus. We provide this opportunity both to reward our personnel for past performance and to motivate and retain them. We recognize that annual bonuses are almost universally provided by other companies with which we might compete for talent. In view of the fact that only two of our named executive officers devote their full-time to our affairs, annual cash bonuses for such named executive officers are recommended on a case-by-case basis by ourthe Chairman of the Board to compensation committee. During the process, we consideredconsider our overall performance for the immediately preceding year, including rental revenues, funds from operations, net income dividends paid to stockholders and the performance of our common stock. None of these measures of performance is given more weight than any other and they are used to provide an overall view of our performance for the preceding year. Once it has determined the annual bonus to be paid to each named executive officer, the compensation committee presents its recommendations to the board of directors for theirits approval.

        Part-time Officers:    The annual bonus, if any, to be paid to any part-time officer is the responsibility of Majestic pursuant to the compensation and services agreement. Since the annual fee paid to Majestic is approved by the audit and compensation committeecommittees and the board of directors, the compensation committee doesis not reviewinvolved in determining the bonus, if any,bonuses paid to part-time officers.

Long-term Equity and Long-term Equity Incentive Awards

        We provide the opportunity for our full-time and part-time officers to receive long-term equity and long-term equity incentive awards. These compensation programs are designed to recognize responsibilities, reward performance, motivate future performance, align the interests of our officers with those of our stockholders and retain our officers. The compensation committee at its regularly scheduled annual meeting (usually held in December of each year) makes recommendations to our board of directors for the grant of equity awards for all our employees, including part-time officers and employees. In determining the long-term equity and long termlong-term equity incentive compensation components, the compensation committee considers all factors it deems to be relevant, including our performance and individual performance. Existing stock ownership levels are not a factor in award determinations. All outstanding equity awards arewere granted under either our stockholder approved 2003 Incentive Plan or 2009 Incentive Plan.

        In 2010, we issued RSU's for the first time. Each RSU entitles the recipient to one share of common stock upon vesting. The RSU's are not entitled to vote or to dividends until the underlying shares are issued. Assuming continued service, vesting occurs on June 30, 2017 if and to the extent pre-established market (i.ei.e.. total average annual stockholder return) or performance (i.ei.e.., average annual return on capital) conditions are met. See "Outstanding Equity Awards at Fiscal Year End." Further, at least 50% of the shares that are issued pursuant to vested RSU's must be retained until 2020 and the shares may be subject to a "clawback" in the event of a restatement of the financial statements. We initiated the use of RSU's as an element of our long-term equity compensation program with the expectation that in light of the long vesting period and the need to satisfy market and/or financial performance conditions, these awards would further align the interests of our executive officers with our stockholders and reward long-term market and financial performance. See "Grant of Plan—Based Awards During 2010" for further information regarding the RSU's.

        We do not have a formal policy with respect to whether equity compensation should be paid in the form of stock options, restricted stock or RSU's. We generally grant restricted stock awards which vest after five years of service and in 2010, also granted RSU's that vest after seven years of service if , and to the extent, specified performance or market conditions are met. The compensation committee generally believes that restricted stock awards and RSU's are more effective than options in achieving our compensation objectives. Restricted stock has a greater retention value than options because of its

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five-year cliff vesting requirement and, because before vesting, cash dividends are paid on all outstanding awards of restricted stock as an additional element of compensation. RSU's provide an additional incentive component to equity based awards in that the units only vest if, and to the extent,

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performance or market conditions are satisfied. Restricted stock and RSU's align the interests of our officers with our stockholders and because fewer shares are normally awarded than in connection with the grant of options, they are potentially less dilutive.

        Generally, our equity compensation grants are made in January or February of each year. We do not have a formal policy on timing equity compensationthese grants in connection with the release of material non-public information and in view of the five-year and seven-year "cliff" vesting requirements with respect to restricted stock awards and RSU's, respectively, we do not believe such a formal policy is necessary.

        Our compensation committee has reviewed our compensation policies and practices to ascertain if the risks arising from such policies or practices are reasonably likely to have a materially adverse effect on our company.us. The compensation committee concluded that while our compensation program takes into account the company'sour performance, the program does not encourage excessive or unnecessary risk-taking and our policies and practices achieve a balance between annual performance and long-term growth.

Executive Benefits and Perquisites

        Full-time Officers:    We provide our full-time officers with a competitive benefits and perquisites program. We recognize that similar benefits and perquisites are commonly provided at other companies with which we might compete for talent. We review our benefits and perquisites program periodically to ensure it remains fair to our officers and employees. For 2010,2011, the benefits and perquisites we provided to our officers were a small percentage of the compensation provided by us to them.

        Part-time Officers:    Our chairman of the board, in consultation with certain part-time senior officers, determines the perquisites of our part-time officers. The portion of our part-time officers' perquisites, which was previously allocated to us is paid by Majestic in accordance with the compensation and services agreement. Since the annual fee we paidpay to Majestic wasis approved by theour audit and compensation committeecommittees and theour board of directors, the compensation committee does not approve the perquisites of our part-time officers.

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

        None of our named executive officers or employees have employment or severance agreements with us. They are "at will" employees who serve at the pleasure of our board of directors.

        We do not provide for any post-employment benefits to our named executive officers or employees other than (i) their right to the vested portion of the pension or other similar plan in which they participate and (ii) the accelerated vesting of our restricted stock awards and RSU's.

        Generally, in the event of death, disability (i.ei.e.., the inability to engage in gainful activity due to a life threatening or long lasting mental or physical impairment) or retirement (with respect to restricted stock awarded pursuant to our 2009 Incentive Plan, having reached the age of 65 and worked for us for at least ten consecutive years), such person's shares of restricted stock vest fully and a pro-rata portion (giving effect to, among other things, the amount of time between the grant and the triggering event) of their RSU's will vest if and to the extent the applicable performance or market conditions are met as of June 30, 2017. In addition, upon a change of control, the (i) shares of restricted stock vest fully and (ii) the RSU's vest fully if such change occurs after June 30, 2015 and, if on or prior to June 30, 2015, a pro-rata portion (giving effect to, among other things, the amount of time between the grant and such event) vests, in each case, without regard to satisfaction of market or performance conditions. Subject to the specific terms and conditions of the applicable plan and award agreement, a change of control is generally deemed to occur if, (i) any person becomes the "beneficial owner" of securities representing 25% or more of the combined voting power of our then outstanding securities, (ii) the completion of a business

combination or sale of all or substantially all of our assets or (iii) there is a change in the composition of a majority of our board of directors, other than changes approved by incumbent directors.

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        We provide for the partial vesting of RSU's (subject to the satisfaction of performance or market conditions at June 30, 2017) and full vesting of restricted stock awards upon death and disability, because these events are completely outside of the control of our executives and in such circumstance, we believe that it would be unfair for our executives to forfeit the compensation and benefits that to which they otherwise would have been entitled. We provide for the partial vesting of RSU's (subject to the satisfaction of performance or market conditions at June 30, 2017) and full vesting of restricted stock awards upon retirement as we believe it runs contrary to the retention and reward of long-term equity and long term equity incentive awards to compel an executive to choose between retirement and the loss of all unvested awards. We differentiate between RSU's (i.ei.e.., partial vesting) and restricted stock awards (i.ei.e.. full vesting) because of the additional incentive component of the RSU's.

        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 with those of our stockholders, by motivating them to work towards the completion of the transaction. Because in a change of control it may be impossible to determine whether the market or performance vesting conditions applicable to RSU's are met as of June 30, 2017, we have instead applied a service based measure allowing for partial vesting if the change of control occurs before July 1, 2015 and for full vesting if it occurs after such date.

Chairman of the Board's Compensation

        The compensationIn 2011 we paid and services agreement provides thatin 2012 we intend to pay Fredric H. Gould, theour chairman of our board, annual compensation$250,000 for his services to us.serving in such capacity. Our chairman does not receive any additional direct compensation from us, other than any long-term equity and long-term equity incentive awards granted to him by our board of directors based upon our compensation committee's recommendation. Our chairman may also receivesreceive compensation from Majestic. In 2010, we paidMajestic and its affiliates. Effective April 1, 2012, the compensation and services agreement was amended to eliminate any obligation to compensate our chairman of $250,000 for serving inpursuant to such capacity.agreement. For additional information regarding compensation of our chairman, see "Summary Compensation Table".

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 2010,2011, all compensation paid to our full-time officers was deductible by us. The compensation committee intends to preserve the deductibility of compensation payments and benefits to the extent reasonably practicable. The compensation committee has not adopted a formal policy that requires all compensation paid to the officers to be fully deductible.

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Analysis

Base Salary and Bonus

        In accordance with the compensation setting process described above, the following base salaries and bonuses were approved as follows for our full-time named executive officers in 20102011 and 2009:2010:

        Based on the individual performance of Messrs. Callan and Ricketts in 20092010 and in light of, among other things, our acquisition of 14 properties for $72.3 million and the 14%, 67% and 301% increase of more than 75% in 2009 from 2008 in total revenues, funds from operations and net income, respectively,our stock price during 2010, the compensation committee concluded that an increase in base salary for 2011 was appropriate but that in light of the recessionary environment and its impact on the commercial real estate market, such increase should be limited.appropriate. In recommending bonuses for 20102011 (which are to bewere paid in 20112012 for services rendered during 2010)2011), the compensation committee viewed as positives the extensionestimated increases from the prior year of our credit line effective asapproximately $0.13 in net income per share, $0.03 per share in each of March 2010,funds from operations and adjusted funds from operations, the 14six properties acquired through mid-December 2010in 2011 for an aggregate of approximately $72.3$28 million and the approximate 90% increase in our stock price.follow on public offering from which we received net proceeds of approximately $40.7 million.

        In 2010,2011, the total compensation of Patrick J. Callan, Jr., our president and chief executive officer, was 77.6%80.8% greater than the total compensation of Lawrence G. Ricketts, Jr., our executive vice president and chief operating officer. We have not adopted a policy with regard to the relationship of compensation among our executive officers or other employees. Based upon their respective responsibilities and experience, it was concluded that the differential was appropriate.

Long-term Equity and Equity Incentive Awards

        We believe that our long-term equity and equity incentive compensation programs, using restricted stock awards with five-year cliff vesting and RSU's with seven-year cliff vesting, is an appropriate incentive for our officers and is a beneficial retention tool. We are mindful of the potential dilution and compensation cost associated with awarding shares of restricted stock and RSU's and, therefore our policy is to minimize dilution. In 2010,2011, we did not award anyawarded 74,040 shares of restricted stock to our named executive officers (other than the awards to Messrs. Callan, Fredric H. Gould, Kalish, Ricketts and Lundy of 8,400, 4,700, 4,700, 7,000 and 4,700 shares of restricted stock, respectively, effective as of February 26, 2010, which for financial statements purposes, are considered granted in December 2009 with an aggregate grant date fair value of $245,000),$1,198,708—such shares represented 0.51% of our issued and awarded 132,857 RSU's to our named executive officers with an aggregate grant date fair value of $577,795.outstanding shares at December 31, 2011. In the five years ended

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December 31, 2010,2011, we awarded an aggregate of 527,725551,715 shares of common stock (including 200,000 RSU's), representing an average of 0.82% per annum of our outstanding shares of common stock as of the respective year ends. We believe the cumulative effect of the awards is not overly dilutive and has created significant incentives for our officers and employees.

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        After reviewing the aggregate compensation received by our full-time named executive officers, our performance in 2009,2011, and the performance and responsibilities of each named executive officer, and taking into account our policy of minimizing stockholder dilution, in 20102012 we awarded 50,000 RSU's12,500 shares to Patrick J. Callan, Jr., 40,000 RSU's10,000 shares of restricted stock to Lawrence G. Ricketts, Jr., 14,285 RSU'sand 7,400 shares of restricted stock to each of David W. Kalish, and 14,286 RSU's to each of Fredric H. Gould and Mark H. Lundy. In awarding a numberGenerally, all of RSU's greater than the number ofsuch shares of restricted stock that we have historically awarded, we took into account the longer vesting period for RSU's and the requirement that specified performance or market conditions be satisfied for shares to be issued to these officers.vest in full, assuming continued employment, in 2017.

        We intend to continue to award restricted stock as we believe (i) restricted stock awards align management's interests and goals with stockholders' interests and goals and (ii) officers and employees are more desirous of participating in a restricted stock award program and, therefore, it is an excellent motivator and employee retention tool. We have not made any determination as to whether we will award any RSU's or stock options in the future.

Equity Compensation Policies

        We do not have any policy regarding ownership requirements for officers or directors. In view of the fact that all of our officers and directors own our shares of common stock (and many of our officers hold a significant number of shares of our common stock), we do not believe there is a need to adopt of a policy regarding ownership of shares of our common stock by our officers and directors.

Perquisites

        The perquisites we provide to our full-time officers account represent a small percentage of the compensation paid by us to these officers. We believe that such perquisites are competitive and appropriate.

Employment and Severance Agreements

        We do not enter into employment agreements or severance agreements with any of our officers or employees as we believe such agreements are not beneficial to us, and that we can provide sufficient motivation to officers by using other types of compensation.

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Post-Employment Benefit Programs

        The following table sets forth the value (based on our stock price of $16.70$16.50 per share as of December 31, 2010)30, 2011) of equity awards that would vest upon the occurrence of the specified events as of December 31, 2010:2011:

(1)

Of the named executive officers, only the restricted stock and RSU's owned by Fredric H.Mr. Gould would vest upon retirement as of December 31, 2010;2011; the market value of his restricted stock awards and RSU's would be $83,750 and $17,041, respectively.are reflected in the applicable column.

(2)

Assumes that the maximum level of market and performance conditions would be achieved at June 30, 2017. See "Executive Compensation—Components"Outstanding Equity Awards at Fiscal Year End."

(3)

See "Summary Compensation Table" for information regarding the amount accumulated for this individual pursuant to our tax qualified defined contribution plan.

Equity Ownership Policy

        We do not have any policy regarding ownership requirements for officers or directors. In view of Executive Compensation—Employmentthe fact that our executive officers and Severance Agreements; Post-Employment Benefits; Changedirectors as a group own approximately 3.25 million shares of Control"

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common stock representing 22% of our outstanding shares, we do not believe there is a need to adopt a policy regarding ownership of shares of our common stock by our officers and "Grant of Plan Based Awards During 2010".directors.

COMPENSATION COMMITTEE REPORT

EXECUTIVE COMPENSATION

        The compensation committee of the board of directors has reviewed the Compensation Discussion and Analysis set forth herein, and discussed it with management, and based on such review and discussions, recommends to the board of directors that the Compensation Discussion and Analysis be included in this Proxy Statement.

Respectfully submitted,

Eugene I. Zuriff
J. Robert Lovejoy
James J. Burns

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SUMMARY COMPENSATION TABLE

        The following table lists the annual compensation for 2010, 2009, and 2008the periods indicated of our CEO, CFO, and our three other named executive officers in 2010 (certain amounts for 2009 and 2008 have been reclassified to conform to the 2010 presentation):2011:

(1)

Reflects, for 2010, the aggregate grant date fair value of the RSU's, and for 20092011 and 2008,2009, the grant date fair value of restricted stock awards, in each case calculated in accordance with Accounting Standards Codification Topic 718—Stock Compensation, excluding the effect of estimated forfeitures. Generally, the aggregate grant date fair value is the amount that we expect to expense in our financial statements over the award's vesting schedule. These amounts reflect our accounting expense and do not correspond to the actual value that will be realized by the named executives. Grant date fair valuesvalue assumptions are consistent with those disclosed in Note 10—Stock Based Compensation, in the consolidated financial statements included in our 20102011 Annual Report on Form 10-K. For 2010, the maximum values of the portion of the RSU's subject to issuance upon satisfaction of our average annual return on capital criteria would bewere $389,000 $111,137, $111,145, $311,200$311,120 and $111,145, for Messrs. Callan, Kalish, F. Gould, Ricketts and Lundy, respectively. See "Grant of Plan—Based"Outstanding Equity Awards During 2010".at Fiscal Year End."

(2)

Majestic Property Management Corp., an affiliate, provided services to us and to other affiliated and non-affiliated entities. We accounted for approximately 48%55% of Majestic's revenues in 2010.2011. We have included in the "All Other Compensation" column for Fredric H. Gould, David W.Messrs. Kalish and Mark H. Lundy, 48%55% of the compensation each received from Majestic in 2010.2011. See "Certain Relationship and Related Transactions" for additional information.

(3)

All compensation received by Patrick J. Callan, Jr. and Lawrence J. Ricketts, Jr. is paid solely and directly by us. The salary and bonus amounts paid to Mr. Callan in 2010 and 2009 have been reclassified to conform to the presentation for 2011.

(4)

Includes a guaranteed minimum annual bonus of $175,000. Reflects bonuses paid or to be paidin 2012, 2011 and 2010 for services rendered in 2011, 2010 and 2009, for services rendered in 2010, 2009 and 2008, respectively.

(5)

Includes $36,750 of contributions to our defined contribution plan, dividends of $45,072$52,536 on his unvested restricted stock and perquisites aggregating $26,276,$28,249, of which $20,351$22,324 represents an automobile allowance and related insurance, maintenance and repairs and $5,925 represents the

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GRANT OF PLAN-BASEDPLAN BASED AWARDS DURING 20102011

        All of theThe following table summarizes information regarding restricted stock awards includedgranted in the table below reflect RSU's issued2011 pursuant to our 2009 Incentive Plan. There are two components to our RSU's: an RSU—Total Stockholder Return ("RSU—TSR") and an RSU—Return on Capital ("RSU—ROC"). The RSU's are not entitled to vote or to dividends untilPlan:

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