BRT REALTY TRUST 60 Cutter Mill Road Suite 303 Great Neck, New York 11021 (516) 466-3100 ------------------ Notice of Annual Meeting of Shareholders To Be March 23, 2000 The Annual Meeting of Shareholders of BRT Realty Trust will be held on Thursday, March 23, 2000, at 9:00 a.m., at the offices of BRT, 60 Cutter Mill Road, Suite 303, Great Neck, N.Y.: 1. To elect three Class I Trustees; 2. To ratify the selection by the Board of Trustees of Ernst & Young LLP as independent auditors for the current fiscal year; and 3. To transact any other business as may properly come before the meeting. Shareholders of record at the close of business on January 21, 2000 will be entitled to vote at the meeting. It is important that your shares be represented and voted at the meeting. You can vote your shares by completing and returning the proxy card sent to you. Most shareholders can also vote their shares over the internet or by telephone. If internet or telephone voting is available to you, voting instructions are printed on the proxy card sent to you. You can revoke a proxy at any time prior to its exercise at the meeting by following the instructions in the accompanying proxy statement. Simeon Brinberg Secretary January 26, 2000 BRT REALTY TRUST 60 Cutter Mill Road Suite 303 Great Neck, New York 11021 --------------- PROXY STATEMENT ANNUAL MEETING OF SHAREHOLDERS To be held March 23, 2000 We are providing this Proxy Statement in connection with the solicitation by the Board of Trustees of BRT Realty Trust ("BRT") of proxies to be voted at the Annual Meeting of Shareholders. The Annual Meeting will be held at the offices of BRT, 60 Cutter Mill Road, Suite 303, Great Neck, New York, at 9:00 A.M., on Thursday, March 23, 2000. The date of this Proxy Statement is January 26, 2000, the approximate date on which we are mailing this Proxy Statement and the accompanying form of proxy to shareholders. BRT's fiscal year begins on October 1st and ends on September 30th. References in the Proxy Statement to the year 1999 or fiscal 1999 refers to the twelve month period from October 1, 1998 to September 30, 1999. The executive offices of BRT are located at 60 Cutter Mill Road, Suite 303, Great Neck, New York, 11021. Our telephone number is (516) 466-3100. VOTING PROCEDURES Shareholders at the close of business on January 21, 2000, (the "Record Date") are entitled to notice of and to vote at the Annual Meeting. You are entitled to one vote for each share of Beneficial Interest you own on the Record Date. On the Record Date there were 7,165,263 shares of Beneficial Interest ("Shares") outstanding. A quorum (holders of a majority of the Shares present in person or represented by proxy) is required to hold the meeting. When a quorum is present, the voting of the holders of a majority of Shares present in person or by proxy is required to elect the three nominees for Class I Trustee and to approve any other matter. There is no cumulative voting in connection with the election of Trustees. Because many shareholders can not attend the meeting in person, it is necessary that a large number be represented by proxy. Most shareholders have a choice of voting over the internet, by using a toll-free telephone number or by completing a proxy card and mailing it in the postage paid envelope provided. Please refer to your proxy card or to the information provided by your bank, broker, or other holder of record to see which options are available to you. You should be aware that if you vote over the internet, you may incur costs, such as telephone and internet access charges for which you will be responsible. The internet and telephone voting facilities for shareholders of record will close at 12:01 a.m., E.S.T. on March 23, 2000. The internet and telephone voting procedures are designed to authenticate shareholders by use of a control number, and to allow you to confirm that your instructions have been properly recorded. You can revoke your proxy at any time before it is exercised. To revoke your proxy you may file a written revocation with BRT's Secretary, or you may deliver a properly executed proxy bearing a later date (including an internet or telephone vote). You may also revoke your proxy by attending the meeting and voting in person. Votes withheld from nominees for Trustee, abstentions on proposals and broker non-votes are counted as present and entitled to vote for purposes of determining whether a quorum has been reached. Votes withheld from nominees for Trustee and abstentions on proposals have the same effect as votes against them. Broker non-votes have no effect on the outcome of election of Trustees or other proposals. All shares entitled to vote and represented by properly completed proxies received prior to the meeting and not revoked will be voted at the meeting in accordance with your instructions. If no choice is indicated on the proxy card, the persons named as your proxies will vote the Shares "FOR" the nominees for Class I Trustee and "FOR" the appointment of Ernst & Young LLP as BRT's auditors for the current fiscal year. COST OF PROXY SOLICITATION BRT will pay the cost of soliciting proxies. In addition to the solicitation of proxies by mail and through its regular employees, BRT will request brokers, custodians, nominees and other record holders to forward copies of the proxy and other soliciting material to persons for whom they hold Shares and to request authority for the exercise of proxies; in such cases, BRT reimburses brokerage houses and others for forwarding proxies and proxy material to shareholders. ELECTION OF TRUSTEES The Board of Trustees is divided into three classes, each of which is elected for a staggered term of three years. The Declaration of Trust provides for the number of Trustees to be between five and fifteen, the exact number to be determined by the Board of Trustees. The Board has fixed the number of Trustees at eight. The Board may, following the Annual Meeting, increase the size of the Board and fill any resulting vacancy or vacancies. At the Annual Meeting, three Class I Trustees will be elected. Five other individuals serve as Trustees but are not standing for election because their terms extend past the Annual Meeting. The persons named in the proxy card intend to vote such proxy for the election as Class I Trustees of Patrick J. Callan, Jeffrey Gould and David G. Herold unless you indicate that your vote should be withheld. Proxies will not be voted for a greater number of persons than the number of nominees named in the Proxy Statement. We expect each nominee to be able to serve if elected. However, if any nominee is unable to serve as a Trustee, unless a shareholder withholds authority, the persons named in the proxy card may vote for any substitute nominee proposed by the Board of Trustees. Each Class I nominee, if elected, will serve until the Annual Meeting to be held in the year 2003. Each other Trustee will serve until the Annual Meeting to be held in the year set forth opposite his name. The Board of Trustees recommends a vote for Patrick J. Callan, Jeffrey Gould and David G. Herold for election as Class I Trustees. NOMINEES FOR TRUSTEE; REMAINING TRUSTEES The following table sets forth the name and age of each nominee for election to the Board of Trustees and each Trustee whose term of office will continue after the Annual Meeting, the principal occupation of each during the past five years and the period during which each has served as a Trustee. Each nominee is currently serving as a Trustee. Term Principal Trustee Name Age Expiring Occupation Since - ---- --- -------- ---------- ----- Class I (Nominees) Patrick J. Callan (1)(2) 63 2003 Principal of 1984 The RREEF Funds, pension fund real estate investments; Director of Manufacturers & Traders Bank Directors Advisory Council - New York City Division; Director of M & T Bank Corporation. Jeffrey A. Gould 34 2003 President and Chief 1997 Operating Officer of BRT since March 1996; Executive Vice President and Chief Operating Officer of BRT from March 1995 to March 1996; Vice President of BRT for more than three years prior thereto. David G. Herold 58 2003 Private Investor; 1997 President and Chief Executive Officer of Metro Bancshares, Inc., the savings and loan holding company for Bayside Federal Savings and Loan Association, from 1988 to 1994. Class II Arthur Hurand (1) 83 2001 Private Investor; 1989 Director of One Liberty Properties, Inc. Herbert C. Lust, II 73 2001 Private Investor; 1981 (1)(2) Director of Prime Hospitality, Inc. Marshall Rose (1) 63 2001 Real Estate Consultant; 1986 President of Georgetown Equities, Inc.; Director of One Liberty Properties, Inc.; Director of Estee Lauder, Inc.; Director of Golden Book Family Enter- tainment, Inc. Class III Fredric H. Gould (1) 64 2002 Chairman of the Board 1983 and Chief Executive Officer of BRT; Chairman of the Board of Georgetown Partners, Inc.; General Partner of Gould Investors L.P.; Chairman of the Board and Chief Executive Officer of One Liberty Properties, Inc.; President of REIT Management Corp.; Director of East Group Properties, Inc. Gary Hurand (2) 53 2002 President of Dawn Donut 1990 Systems, Inc.; Director of Republic Bancorp. - ----------------- (1) Member of the Executive Committee. (2) Member of the Audit and Compensation Committee. Fredric H. Gould is Jeffrey A. Gould's father and Arthur Hurand is the father of Gary Hurand. SHARE OWNERSHIP; HOLDINGS OF TRUSTEES AND OFFICERS The following sets forth information concerning share ownership of all persons known by BRT to own beneficially 5% or more of its Shares, all Trustees and nominees for Trustee and all Trustees and officers of the Trust as a group, based upon the number of outstanding Shares on January 21, 2000. There were 7,165,263 shares outstanding on January 21, 2000. Amount of Name of Beneficial Beneficial Percent Owner Ownership (1) of Class ----- ------------- -------- Gould Investors, L.P. (2) 1,871,319 25.7% Patrick J. Callan 42,500 * 55 East 52nd Street New York, NY 10055 (3)(4) Fredric H. Gould (2)(3)(5)(6) 2,448,678 33.6% Jeffrey A. Gould (2)(3)(7) 245,500 3.4% David G. Herold (3)(4) 16 Southdown Court Huntington, NY 11743 14,500 * Arthur Hurand (3) (4) 4182 Pier North Blvd., Suite D Flint, MI 48504 15,500 * Gary Hurand (3)(4)(8) 4182 Pier North Blvd., Suite D Flint, MI 48504 215,651 3.0% Herbert C. Lust, II (3)(4) 54 Porchuck Road Greenwich, CT 06830 72,500 * Marshall Rose (3)(9) 667 Madison Avenue New York, NY 10021 269,545 3.7% Henry Moskowitz and the 460,500 6.3% Argo Corporation 50 West 17th Street New York, NY 10011 (10) All Trustees and Officers as a group (17 in number)(11) 3,940,141 (12) 54.1% *Less than 1% - ----------------- (1) Securities are listed as beneficially owned by a person who directly or indirectly holds or shares the power to vote or to dispose of the securities, whether or not the person has an economic interest in the securities. In addition, a person is deemed a beneficial owner if he has the right to acquire beneficial ownership within 60 days, whether upon the exercise of a stock option or otherwise. (2) Address is 60 Cutter Mill Road, Great Neck, NY 11021. (3) A Trustee of BRT. (4) Includes 2,500 Shares which underlie unexercised stock options. (5) Includes 256,990 Shares owned by the pension and profit sharing trusts of BRT and REIT Management Corp. of which Fredric H. Gould and two non-Trustee officers are trustees, as to which shares Mr. Gould has shared voting and investment power. (6) Includes 34,762 Shares held by Mr. Gould as co-trustee for the children of his brother (as to which Shares Mr. Gould disclaims beneficial interest), 25,000 Shares owned by a trust in which Mr. Gould is a trustee, 4,790 Shares owned by Georgetown Group, Inc., of which Mr. Gould is a Vice President and 18,988 Shares owned by a partnership in which Mr. Gould is a general partner. Also includes 30,048 Shares owned by One Liberty Properties, Inc. ("OLP"), of which Mr. Gould is an officer and director and in which Gould Investors L.P. ("GLP") (an entity in which Mr. Gould is a general partner and a principal executive officer and sole shareholder of the managing general partner) is a controlling shareholder, and 1,913,219 Shares owned by GLP. Does not include 25,015 Shares owned by Mrs. Fredric H. Gould, as to which shares Mr. Gould disclaims beneficial interest and Mrs. Gould has sole voting and investment power. (7) Includes 22,252 Shares owned by Mr. Gould as custodian for his minor children (as to which Shares Mr. Gould disclaims beneficial interest), 25,000 Shares owned by a trust in which Mr. Gould is a trustee, and 17,625 Shares which underlie unexercised stock options. Does not include 6,000 Shares owned by Mrs. Jeffrey Gould as to which Shares Mr. Gould disclaims beneficial interest and Mrs. Gould has sole voting and investment power. (8) Includes 47,243 Shares owned by a partnership, in which Mr. Hurand is a partner, and 121,377 Shares owned by a corporation in which Mr. Hurand is an officer and shareholder. (9) Includes 4,790 Shares owned by Georgetown Group, Inc. in which Mr. Rose is an officer, 76,983 Shares owned by the pension and profit sharing trusts of Georgetown Group, Inc., of which Mr. Rose is trustee, 18,988 Shares owned by a partnership in which Mr. Rose is one of the general partners, 21,626 Shares owned by Jill and Marshall Rose Foundation, of which Mr. Rose is a trustee (as to which Shares Mr. Rose disclaims beneficial interest), 84,749 Shares owned by Mr. Rose for the benefit of others, (as to which Shares Mr. Rose disclaims beneficial interest)and 16,167 shares owned by a partnership of which Mr. Rose is general partner. (10) A Schedule 13G dated June 9, 1999 was filed with the Securities and Exchange Commission reporting that Henry Moskowitz, and Rose Moskowitz, as joint tenants, and the Argo Corporation have sole and/or shared voting and dispositive power over an aggregate of 460,500 Shares. (11) This total is qualified by notes (4) through (9). (12) Includes an aggregate of 103,000 Shares which underlie unexercised options. EXECUTIVE COMPENSATION Summary Compensation Table This table shows the compensation paid and accrued for services rendered in all capacities to BRT during the last three fiscal years for the Chief Executive Officer of BRT and the four other most highly compensated Executive Officers of BRT whose annual compensation exceeded $100,000 for the fiscal year ended September 30, 1999. Annual Compensation(2) Long Term Compensation Awards Other Securities/ Annual Restricted Underlying Payouts Name and Principal Salary Bonus Compen- Stock Options/ LTIP All Other Position Year(1) $ $ sation (3) Awards($) SARs(#) Payout($) Compensation (3) -------- ------- -------- ----- ---------- --------- --------- -------- ---------------- Fredric H. Gould 1999 0 0 0 0 0 0 0 Chairman of the 1998 0 0 0 0 0 0 0 Board and Chief 1997 0 0 0 0 0 0 0 Executive Officer (4) Jeffrey A. Gould 1999 $250,000 0 0 0 12,500 0 $24,000 President and 1998 $240,000 0 0 0 0 0 $24,000 Executive Vice 1997 $225,000 0 0 0 10,000 0 $24,000 President Israel Rosenzweig 1999 $250,000 0 0 0 12,500 0 24,000 Vice President and 1998 $125,000 0 0 0 10,000 0 18,750 President of BRT 1997 0 0 0 0 0 0 0 Funding Corp. (5) Mark H. Lundy 1999 0 0 $147,702 0 12,500 0 $3,800 Vice President (6) 1998 0 0 $148,185 0 0 0 $9,900 1997 0 0 $115,600 0 10,000 0 $5,300 David Heiden 1999 $120,186 $10,000 0 0 10,000 0 $19,500 Vice President and 1998 $49,231 0 0 0 10,000 0 $7,385 Vice President of 1997 0 0 0 0 0 0 0 BRT Funding Corp. (7) - --------------------------- (1)Fiscal years ending September 30. (2)The Trust does not have any profit sharing plan, but it does have Stock Option Plans, a Pension Plan and a Bonus Plan. See "Stock Option Plans" and "Pension Plan," below. (3)Represents annual contributions under BRT's Pension Plan for Messrs. Jeffrey Gould, Israel Rosenzweig and David Heiden. With respect to Mark H. Lundy, represents the amount reimbursed by BRT to Gould Investors L.P. for the allocated portion of the pension expense paid by Gould Investors L.P. for Mr. Lundy. The only other type of Other Annual Compensation for each of the named officers was in the form of perquisites and was less than the level required for reporting, (4)Fredric H. Gould does not receive any compensation directly from BRT. Reference is made to the caption "Interest of Management in Certain Transactions" for a discussion of fees paid to REIT Management Corp., BRT's Advisor. Mr. Gould is the President and sole shareholder of REIT Management Corp. (5)Israel Rosenzweig became President of BRT Funding Corp. effective April, 1998 and a Vice President of BRT in March, 1999. (6)Mark H. Lundy does not receive compensation directly from BRT; he receives compensation and fees directly from Gould Investors L.P.The amounts set forth represent the portion reimbursed by BRT for legal services rendered by Mr. Lundy to BRT. (7)David Heiden became an employee and officer of BRT Funding Corp. in April, 1998 and a Vice President of BRT in March, 1999. BRT Pension Plan BRT has a non-contributory defined contribution Pension Plan covering employees. The Pension Plan is administered by Fredric H. Gould, Simeon Brinberg and David W. Kalish(Messrs. Brinberg and Kalish being non-trustee officers of BRT). Annual contributions are based on 15% of an employees annual earnings, not to exceed $24,000 per employee (increasing to $25,500 in 2000). Partial vesting commences one year after employment, increasing annually until full vesting is achieved at the completion of five years of employment. The method of payment of benefits to participants upon retirement is determined solely by the participant, who may elect a lump sum payment or the purchase of an annuity, the amount of which is determined primarily by the amount of contributions. In 1999, $24,000, $24,000 and $19,500 was contributed for the benefit of Jeffrey A. Gould, Israel Rosenzweig and David Heiden, respectively. The aggregate amount accrued to date for Mr. Gould, Mr. Rosenzweig and Mr. Heiden is approximately $470,923, $885,508 and $32,253, respectively. The credited years of service for Mr. Gould, Mr. Rosenzweig and Mr. Heiden are 14, 15 and 1, respectively. Options Granted For The Fiscal Year Ended September 30, 1999 The table sets forth information concerning the grant of stock options in Fiscal 1999 to Named Executive Officers. Individual Grants(1) Potential Realizable % of Total Value At Assumed Options Annual Rates of Stock Granted Exercise or Price Appreciation For Options to Employees Base Price Option Term (2) Name Granted in Fiscal Year ($/sh) Expiration Date 5% 10% ---- ------- -------------- ---------------- ---------------- ---- ----- Jeffrey Gould 12,500 9.62% $5.94 12/04/08 $37,125 $74,250 Israel Rosenzweig 12,500 9.62% $5.94 12/04/08 $37,125 $74,250 Mark H. Lundy 12,500 9.62% $5.94 12/04/08 $37,125 $74,250 David Heiden 10,000 7.69% $5.94 12/04/08 $29,700 $59,400 (1) Options were granted on December 5, 1998. The exercise price equals the closing price of BRT Shares on the New York Stock Exchange on the date of grant. The options are exercisable in four equal annual installments, cumulatively, beginning two years after grant and expire ten years after grant. (2) These amounts, based on assumed appreciation rates of 5% and 10% prescribed by the Securities and Exchange Commission rules, are not intended to forecast possible appreciation of BRT's stock price. These numbers do not take into account certain provisions of the options and the related stock option plan providing for termination of options following termination of employment, non-transferability or phased-in vesting. BRT did not use an alternate formula for a grant date valuation as it is not aware of any formula which will determine with reasonable accuracy a present value based on future unknown or volatile factors. Future compensation resulting from option grants is based solely on the performance of the BRT's stock price. Option Exercises and Unexercised Options No options were exercised by any Named Executive Officer in Fiscal 1999. The table sets forth information concerning unexercised options at fiscal year end with respect to the Named Executive Officers: Number of Securities Underlying Value of Unexercised Unexercised In-the-Money Options Options at fiscal at Fiscal Year End (1) --------------------- Year end -------- Shares Acquired Value Exercisable/ Exercisable/ Name on Exercise Realized Unexercisable Unexercisable - ---- ----------- -------- ------------- ------------- Fredric H. Gould 0 0 0/0 $0/$0 Jeffrey A. Gould 0 0 17,625/15,000 $64,871/$42,000 Israel Rosenzweig 0 0 0/22,500 $0/$43,250 Mark H. Lundy 0 0 10,125/22,500 $44,246/$43,250 David Heiden 0 0 0/20,000 $0/$42,475 (1) Represents the difference between the exercise price of options and $8.75, the closing price of BRT's Shares on September 30, 1999. REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION The Compensation Committee is composed of three independent non-employee Trustees. The Committee is responsible for advising management and the Board of Trustees on matters pertaining to compensation arrangements for executive employees, as well as administration of BRT's stock option plans and bonus plan. Compensation Overview It is the view of the Compensation Committee that the annual compensation of executive officers is composed of three key elements: (i) an annual component made up of base salary; (ii) an annual bonus; and (iii) a long term incentive-based compensation for executive officers realized through the granting of stock options. Base Salary and Bonus Base salaries are targeted to be competitive with salaries paid to senior executives at other real estate investment trusts and take into account an individual's performance and BRT's operating performance in the most recently concluded fiscal year. The determination by the Committee of base compensation is subjective and is not based on any structured formula. In determining compensation for the 1999 fiscal year the Committee took into account the expertise which the executive officers demonstrated in managing the business of BRT; among other things the Committee gave consideration to the activity of the Trust in mortgage lending, and the activities of the executive officers in managing, financing and disposing of real estate assets taken back in foreclosure proceedings. BRT does not have a bonus plan in existence and it does not establish a bonus pool. Any bonuses granted are granted on a case by case basis, with the amount thereof being subjective. The committee takes into consideration, among other things, the base compensation of each officer, the performance of each officer during the most recently concluded fiscal year and the results of operations of BRT for such year. Long Term Compensation - Stock Options Stock options, which are purely discretionary and are not based on any formula, may be granted periodically to provide incentive for the creation of shareholder value over the long term, since the full benefit of the compensation provided for under stock options cannot be realized unless there is an appreciation in the price of BRT's Shares over a specified number of years. Under the existing stock option plans options are granted at an exercise price equal to the fair market value of the Shares of BRT on the date of grant and are exercisable over a number of years. Options granted in 1999 are exercisable commencing two years from the date of grant to the extent of 25% thereof, and thereafter in annual increments of 25%, on a cumulative basis, and expire ten years from the date of grant. Stock options are the only form of long term incentive currently used by BRT. CEO Compensation Fredric H. Gould, Chairman of the Board of Trustees and Chief Executive Officer does not receive any direct remuneration from the BRT, but is compensated by REIT Management Corp. the Trust's advisor (see "Interest of Management in Certain Transactions"). Respectfully submitted, Patrick J. Callan Gary Hurand Herbert C. Lust II COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN This graph compares the performance of BRT's Shares with the Standard & Poor's 500 Stock Index and a peer group index consisting of publicly traded mortgage REIT'S prepared by the National Association of Real Estate Investment Trusts. The graph assumes $100 invested on September 30, 1994 in BRT's Shares, the S & P 500 Index and the peer group index and assumes the reinvestment of dividends. PERFORMANCE GRAPH 9/94 9/95 9/96 9/97 9/98 9/99 BRT Realty Trust 100.00 94.00 137.00 209.00 136.00 204.00 S&P 500 Index 100.00 130.00 156.00 219.00 239.00 306.00 NAREIT Mortgage 100.00 127.00 179.00 239.00 188.00 119.00 TRUSTEE'S FEES AND OTHER COMPENSATION Each unaffiliated Trustee was paid an annual retainer of $12,500 for his services in the 1999 fiscal year. In addition, unaffiliated Trustees were paid $500 per meeting for each Trustee's meeting and each committee meeting attended. With respect to fees (charged to operations) paid and accrued during the fiscal year for REIT Management Corp. (the "Advisor") under the Advisory Agreement, see "Interest of Management in Certain Transactions." ADDITIONAL INFORMATION ABOUT THE BOARD OF TRUSTEES The Board of Trustees holds regular quarterly meetings. In addition special meetings may be called from time-to-time and, where appropriate, telephonic meetings are held or action is taken by unanimous consent. In 1999 the Board of Trustees held four meetings. For the 1999 fiscal year each Trustee attended at least 75% of the Board Meetings except that Messrs. Herold, Lust and Rose each missed two meetings. The Board of Trustees has appointed an Audit and Compensation Committee consisting of Patrick J. Callan, Gary Hurand and Herbert C. Lust II, all independent Trustees. The functions of the Audit and Compensation Committee include reviewing the scope and results of the annual audit, reviewing the adequacy of internal accounting and financial controls and recommending independent auditors to the Board of Trustees. The Audit and Compensation Committee is also responsible for setting and administering the policies which govern annual compensation of executive officers, bonuses paid to any officers and the stock options plans. The Audit and Compensation Committee held one meeting in the 1999 fiscal year. BRT has no nominating or any committee performing similar functions. INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS BRT and REIT Management Corp. ("REIT") are parties to an Advisory Agreement pursuant to which REIT furnishes administrative services with respect to BRT's assets and, subject to the supervision of the Trustees, advises BRT with respect to its investments. The Trust believes that the Advisory Agreement is on terms as favorable to BRT as would be available from an unaffiliated party. The term of the Advisory Agreement has been renewed by the Board of Trustees to December 31, 2003. Fredric H. Gould and two officers of BRT are directors of REIT and Fredric H. Gould is an officer of REIT. All of the outstanding shares of REIT are owned by Fredric H. Gould. For services performed by REIT under the Advisory Agreement, REIT receives an annual fee of 1/2 of 1% of Invested Assets other than mortgages receivable, subordinated land leases and investments in unconsolidated ventures, with a 1% fee payable on mortgages receivable, subordinated land leases and investments in unconsolidated ventures. The term "Invested Assets" is defined in the Advisory Agreement as the aggregate of all assets shown on the balance sheet of BRT without deduction for (i) mortgages and other security interests to which the assets are subject, (ii) depreciation, and (iii) amortization, but excluding (a) cash and cash items, (b) amounts due from managing agents, (c) rents and other receivables (not including mortgages receivable or other receivables arising from the sale of invested assets), (d) rent security, (e) prepaid expenses and deferred charges, and (f) obligations of municipal, state and federal governments and governmental agencies, other than securities of the Federal Housing Authority, the Veterans Administration and the Federal National Mortgage Association and securities issued by governmental agencies that are backed by a pool of mortgages. The fee to REIT is based on net assets and computations of the fee includes non-accruing mortgage receivables to the extent they exceed allowances for loan losses. The fee under the Advisory Agreement is computed and payable quarterly, subject to adjustment at year end based on the audited financial statements. During the fiscal year ended September 30, 1999 REIT earned $571,000 under the Advisory Agreement. Under the Advisory Agreement, BRT bears all expenses including interest, discount and other costs for borrowed money; taxes on income or property and license fees (including franchise taxes); rental paid for office space used by BRT; audit fees and expenses; legal fees; expenses of litigation; charges of transfer agents, registrars, brokers, underwriters and banks; expenses relating to meetings of trustees and shareholders; expenses connected with the acquisition, disposition or ownership of investment assets, including but not limited to, travel expenses, costs of appraisal, leasing, maintenance, repair, improvement and foreclosure of property and origination and mortgage servicing fees and real estate brokerage commissions; fees for the management of real estate owned by BRT; fees and expenses payable to Trustees, officers and employees (other than fees payable to Trustees, officers and employees who are directors, officers and employees of REIT, whose compensation is payable solely by REIT), independent contractors, consultants, managers, or agents; and indemnification required to be made under the Declaration of Trust. The Advisory Agreement provides that directors, officers, and employees of REIT may serve as Trustees, officers and employees of BRT, but such persons may not receive cash compensation from BRT for services rendered in the latter capacities. The Advisory Agreement is not assignable by REIT without the written consent of BRT. The Advisory Agreement is not assignable by BRT without the written consent of REIT, except to a successor to the business and assets of BRT. The Advisory Agreement has been renewed for a term ending December 31, 2003 and is renewable on an annual basis by the Board of Trustees, for a maximum five year period. Notwithstanding such renewal of the Advisory Agreement by the Board of Trustees, the shareholders have the right to rescind the renewal of the Advisory Agreement authorized at the preceding Board of Trustees Meeting, if at a special meeting of shareholders called by at least twenty percent of the outstanding shares specifically for such purpose a majority of the outstanding shares entitled to vote thereon determine that the Advisory Agreement shall not be renewed. In the event the Advisory Agreement is not renewed in any year by the Board of Trustees or such renewal is rescinded by a majority of the outstanding shares entitled to vote thereon at a special meeting called for such purpose, the Advisory Agreement will have a balance of four years remaining in the existing term. A borrower may pay fees directly to REIT for services rendered in arranging loans made by the Trust. These fees, which are permitted by the Advisory Agreement, amounted to $151,000 for fiscal 1999. BRT engages entities affiliated with REIT to manage properties acquired in foreclosure or deed in lieu of foreclosure. The management services include, among other things, rent billing and collection, leasing (including document preparation), maintenance, construction supervision, compliance with regulatory statutes and rules (i.e. New York City rent control and rent stabilization rules), property dispositions and mortgage financing and legal expenses. In fiscal 1999 BRT paid $746,000 to these entities. During the year ended September 30, 1999 Fredric H. Gould, Chairman and Chief Executive Officer, was an officer and director of the managing corporate general partner of Gould Investors L.P. ("GLP"), a limited partnership, and an individual general partner of GLP. BRT, GLP and other related entities occupy common office space, and share office services, equipment and personnel. In fiscal 1999, $422,000 of common general and administrative expenses were allocated to BRT, including the amounts reimbursed to GLP for legal services provided by Mark H. Lundy (See "Summary Compensation Table"). In addition commencing April 1, 1998, BRT Funding Corp., a subsidiary of BRT, leased space from GLP at an annual rental of $65,000. COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934 Section 16(a) of the Securities Exchange Act of 1934 ("Section 16(a)") requires our executive officers and directors, and persons who beneficially own more than 10% of the BRT's Shares, to file Initial Reports of Ownership and Reports of Changes in Ownership with the Securities and Exchange Commission ("SEC") and the New York Stock Exchange. Executive officers, Trustees and greater than 10% beneficial owners are required by SEC regulations to furnish BRT with copies of all Section 16(a) forms they file. BRT prepares and files the requisite forms on behalf of its executive officers and Trustees. Based on a review of information supplied to BRT by the executive officers and Trustees, BRT believes that all Section 16(a) filing requirements applicable to our executive officers and Trustees with respect to fiscal 1999 were met. Although Fredric H. Gould and Matthew Gould, as a general partner and as president of the managing general partner, respectively, of Gould Investos L.P. filed Form 4's for the month of November, 1999 reflecting the purchase by Gould Investors L.P. of shares of BRT, Gould Investors L.P., a holder of more than 10% of BRT's shares filed the Form 4 approximately thirty (30) days late due to inadvertence on the part of the Gould Investors L.P. staff. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS The Board of Trustees is seeking the ratification of the appointment of Ernst & Young LLP as independent auditors for BRT for the fiscal year ending September 30, 2000. Representatives of Ernst & Young LLP are expected to be present at the Annual Meeting and will have the opportunity to make a statement if they desire to do so and will be available to respond to questions. If the shareholders do not approve of the appointment of Ernst & Young LLP, the selection of independent auditors will be made by the Board of Trustees. The Board of Trustees recommends a vote "FOR" the appointment of Ernst & Young LLP as the Trust's independent auditors for the fiscal year ending September 30, 2000. SUBMISSION OF SHAREHOLDER PROPOSALS The annual meeting of BRT for the year ending September 30, 2000 is scheduled to be held in March 2001. In order to have any proposal presented by a shareholder at the meeting included in the proxy statement and form of proxy relating to the meeting, the proposal must be received by BRT not later than September 28, 2000. OTHER MATTERS The Board does not know of any matter other than those stated in this Proxy Statement which are to be presented at the Annual Meeting. If any other matter should properly come before the meeting, the persons named in the proxy card will vote the Shares represented by it in accordance with their best judgment. Discretionary authority to vote on other matters is included in the proxy. By order of the Board of Trustees Simeon Brinberg, Secretary Dated: January 26, 2000 ANNUAL MEETING OF SHAREHOLDERS OF BRT RREALTY TRUST March 23, 2000 TO VOTE BY MAIL Please date, sign and mail your proxy card in the envelope provided as soon as possible. TO VOTE BY TELEPHONE (TOUCH-TONE PHONE ONLY) Please call toll-free (1-800-PROXIES and follow the instructions). Have your control number and the proxy card available when you call. TO VOTE BY INTERNET Please access the web page at www.voteproxy.com and follow the on-screen instructions. Have your control number available when you access the web page. YOUR CONTROL NUMBER IS ________________ |_| Please mark your Votes as in this example. FOR ALL WITHHOLD NOMINEES ALL NOMINEES 1. Election of / / / / Nominees: Patrick J. Callan Class I Jeffrey Gould Trustees David G. Herold / / INSTRUCTIONS: To withhold authority to vote for any individual nominee, place an "X" in the box on the left and strike a line through the nominee's name listed at right. 2. Appointment of Ernst & Young / / / / / / LLP as independent auditors for the fiscal year ending September 30, 2000. 3. In their discretion,the proxies are authorized to vote upon such other business as may properly come before the meeting. This Proxy when properly executed will be voted in the manner directed hereby by the undersigned shareholder. PLEASE RETURN USING ENCLOSED ENVELOPE ------------------------------------- Date , 2000 Date , 2000 - --------------- ------- ------------------------- ---------- SIGNATURE SIGNATURE IF HELD JOINTLY Please sign exactly as name appears on the certificate or certificates representing shares to be voted by this proxy, as shown on the label above. When signing as executor, administrator, attorney, trustee, or guardian, please give full title as such. If a corporation, please sign full corporation name by president or other authorized officer. If a partnership, please sign in partnership name by authorized person(s). Proxy BRT REALTY TRUST PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS March 23, 2000 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES The undersigned hereby appoints Jeffrey A. Gould, Simeon Brinberg and David W. Kalish as Proxies each with the power to appoint his substitute, and hereby authorizes them to represent and to vote, as designated below, all the shares of Beneficial Interest, $3.00 par value of BRT Realty Trust held of record by the undersigned on January 21, 2000 at the Annual Meeting of Shareholders to be held on March 23, 2000 or any adjournments thereof. (To Be Signed on Reverse Side.)