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Proc-Type: 2001,MIC-CLEAR
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<SEC-DOCUMENT>0000014846-02-000004.txt : 20020414
<SEC-HEADER>0000014846-02-000004.hdr.sgml : 20020414
ACCESSION NUMBER:		0000014846-02-000004
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		1
CONFORMED PERIOD OF REPORT:	20011231
FILED AS OF DATE:		20020214

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			BRT REALTY TRUST
		CENTRAL INDEX KEY:			0000014846
		STANDARD INDUSTRIAL CLASSIFICATION:	REAL ESTATE INVESTMENT TRUSTS [6798]
		IRS NUMBER:				132755856
		STATE OF INCORPORATION:			MA
		FISCAL YEAR END:			0930

	FILING VALUES:
		FORM TYPE:		10-Q
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-07172
		FILM NUMBER:		02548546

	BUSINESS ADDRESS:	
		STREET 1:		60 CUTTER MILL RD
		STREET 2:		SUITE 303
		CITY:			GREAT NECK
		STATE:			NY
		ZIP:			11021-3190
		BUSINESS PHONE:		5164663100

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	BERG ENTERPRISES REALTY GROUP
		DATE OF NAME CHANGE:	19750724
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>form10q-123101.txt
<TEXT>
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549
                                    FORM 10-Q

             [X] Quarterly Report Pursuant to Section 13 or 15(d) of
                       the Securities Exchange Act of 1934

                For the quarterly period ended December 31, 2001

                                       OR

            [ ] Transition Report Pursuant to Section 13 or 15(d) of
                       the Securities Exchange Act of 1934

                          Commission File Number 1-7172


                                BRT REALTY TRUST
             (Exact name of registrant as specified in its charter)

                            Massachusetts 13-2755856
                (State or other jurisdiction of (I.R.S. Employer
               incorporation or organization) Identification No.)

                    60 Cutter Mill Road, Great Neck, NY 11021
               (Address of principal executive offices) (Zip Code)

        Registrant's telephone number, including area code (516) 466-3100

Indicate the number of shares outstanding of each of the issuer's classes of
stock, as of the latest practicable date.

                    7,379,639 Shares of Beneficial Interest,
                 $3 par value, outstanding on February 10, 2002

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                         Yes   X        No
                              ---           ---

<PAGE>
Part 1 - FINANCIAL INFORMATION
Item 1. Financial Statements

<TABLE>
<CAPTION>

                        BRT REALTY TRUST AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                             (Amounts In Thousands)

                                                                             December 31,        September 30,
                                                                                 2001                2001
                                                                                 ----                ----
                                                                             (Unaudited)          (Audited)
                                                            ASSETS
<S>                                                                           <C>                  <C>

Real estate loans - Note 3:
    Earning interest, including $3,425
      from related parties at each date                                       $ 57,442             $ 67,513
    Not earning interest                                                           415                  415
                                                                                   ---                  ---
                                                                                57,857               67,928
   Allowance for possible losses                                                (1,381)              (1,381)
                                                                                ------               ------
                                                                                56,476               66,547
Real estate assets:
    Real estate properties net                                                   6,727                6,777
    Investment in unconsolidated real
      estate ventures at equity                                                  7,134                6,931
                                                                                 -----                -----
                                                                                13,861               13,708
 Valuation allowance                                                              (325)                (325)
                                                                                  ----                 ----
                                                                                13,536               13,383
                                                                                ------               ------
Cash and cash equivalents                                                       11,070                4,106
Securities available-for-sale at market - Note 4                                27,383               24,030
Real estate loans held for sale - Note 3                                         4,110                    -
Other assets                                                                     2,011                1,950
                                                                                 -----                -----
          Total Assets                                                        $114,586             $110,016
                                                                              ========             ========

                                                 LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
    Borrowed funds - Note 5                                                   $      -             $  2,101
    Mortgage payable                                                             2,790                2,804
    Accounts payable and accrued liabilities,
      including deposits of $1,208 and $1,620                                    2,826                3,239
    Dividend payable                                                             1,771                    -
                                                                                 -----                -----
         Total Liabilities                                                       7,387                8,144
                                                                                 -----                -----

Shareholders' Equity - Note 2:
   Preferred shares, $1 par value:
    Authorized 10,000 shares, none issued                                            -                    -
   Shares of beneficial interest, $3 par value:
    Authorized number of shares - unlimited,
     issued - 8,883  shares at each date                                        26,650               26,650
   Additional paid-in capital                                                   80,878               81,008
   Accumulated other comprehensive income - net
     unrealized gain on available-for-sale securities                            8,631                5,278
   Retained earnings                                                             3,998                2,313
                                                                                 -----                -----
                                                                               120,157              115,249
Cost of 1,504 and 1,552 treasury shares of
  beneficial interest at each date                                             (12,958)             (13,377)
                                                                               -------              -------
            Total Shareholders' Equity                                         107,199              101,872

            Total Liabilities and Shareholders' Equity                        $114,586             $110,016
                                                                              ========             ========

          See Accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>

<TABLE>
<CAPTION>

                        BRT REALTY TRUST AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (Unaudited)
                (Amounts In Thousands except for Per Share Data)


                                                                                    Three Months Ended
                                                                                        December 31,
                                                                                2001                    2000
                                                                                ----                    ----
<S>                                                                          <C>                    <C>
Revenues:
    Interest and fees on real estate loans
      including $97 and $24 from related parties                             $   3,515              $   2,732
    Operating income from real estate properties                                   531                    307
    Equity in earnings of unconsolidated ventures                                  292                    162
    Other, primarily investment income                                             647                  1,267
                                                                                   ---                  -----
          Total Revenues                                                         4,985                  4,468
                                                                                 -----                  -----

Expenses:
    Interest-notes payable and loans payable                                        20                     17
    Advisor's fee                                                                  211                    168
    General and administrative                                                     756                    790
    Other taxes                                                                    151                     60
    Operating expenses relating to real estate
    properties including interest on mortgages
     of $67 and $59                                                                297                    208
    Amortization and depreciation                                                   84                    139
                                                                                    --                    ---
           Total Expenses                                                        1,519                  1,382
                                                                                 -----                  -----

Income  before gain on sale of real estate
   loans and real estate properties and
   available-for-sale securities                                                 3,466                  3,086
Net realized gain on available-for-sale securities                                   -                     15
                                                                                 -----                   ----
Income before minority interest                                                  3,466                  3,101
Minority interest                                                                  (10)                     -
                                                                                   ---                   ----

Net Income                                                                  $    3,456              $   3,101
                                                                            ==========              =========

Income per share of Beneficial Interest:
  Basic earnings per share                                                  $      .47              $     .43
                                                                            ==========              =========
  Diluted earnings per share                                                $      .46              $     .43
                                                                            ==========              =========

Cash distributions per common share                                         $      .24              $       -
                                                                            ==========              =========










           See Accompanying Notes to Consolidated Financial Statements.

</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                        BRT REALTY TRUST AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                                   (Unaudited)
                             (Amounts In Thousands)




                                                                             Accumulated
                                               Shares of        Additional    Other Com-
                                               Beneficial        Paid-In      prehensive    Retained      Treasury
                                                Interest         Capital        Income      Earnings       Shares        Total
                                                --------         -------        ------      --------       ------        -----
<S>                                             <C>              <C>            <C>          <C>          <C>           <C>

Balances, September 30, 2001                    $26,650          $81,008        $5,278       $2,313       $(13,377)     $101,872

Distributions - common share
      ($.24 per share)                                -                -             -       (1,771)             -        (1,771)

Exercise of stock options                             -             (130)            -            -            419           289

Net income                                            -                -             -        3,456              -         3,456
    Other comprehensive income -
    net unrealized gain on
    available-for-sale securities                    -                -         3,353            -              -         3,353
                                                                                                                           -----
Comprehensive income                                  -                -             -            -              -         6,809
                                               ---------------------------------------------------------------------------------

Balances, December 31, 2001                     $26,650          $80,878       $ 8,631       $3,998       $(12,958)     $107,199
                                               =================================================================================





            See Accompanying Notes to Consolidated Financial Statements.
</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                        BRT REALTY TRUST AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                             (Amounts In Thousands)


                                                                                          Three Months Ended
                                                                                              December 31,
                                                                                         2001             2000
                                                                                         ----             ----
<S>                                                                                 <C>                <C>

Cash flow from operating activities:
  Net income                                                                         $  3,456          $  3,101
    Adjustments to reconcile net income to net cash
     provided by operating activities:
     Amortization and depreciation                                                         84               139
     Gain on sale of available-for-sale securities                                          -               (15)
     Equity in earnings of unconsolidated ventures                                       (292)             (162)
     Increase in interest and dividends receivable                                        (27)             (172)
     Decrease (Increase) in prepaid expenses                                               11               (93)
     (Increase) Decrease in accounts payable
       and accrued liabilities                                                            (44)              143
     (Decrease) Increase in deferred revenues                                            (111)              189
     (Decrease) Increase in escrow deposits                                              (251)              135
     Increase in deferred costs                                                             -               (59)
     Other                                                                                (65)              (45)
                                                                                          ---               ---
Net cash provided by operating activities                                               2,761             3,161
                                                                                        -----             -----

Cash flows from investing activities:
  Collections from real estate loans                                                   13,711            10,335
  Additions to real estate loans                                                       (7,750)          (18,470)
   Net costs capitalized to real estate assets                                             (8)               (1)
   (Decrease)  Increase in deposits payable                                               (12)              129
   Sales of marketable securities                                                           -               495
   Partnership distributions                                                               88                40
                                                                                           --                --
Net cash provided by (used in) investing activities                                     6,029            (7,472)
                                                                                        -----            ------

Cash flow from financing activities:
   Increase in mortgage payable                                                             -             2,850
   Decrease in borrowed funds                                                          (2,101)               -
   Payoff/paydown of loan and mortgages payable                                           (14)               (4)
  Proceeds from note payable - credit facility                                              -                17
   Exercise of stock options                                                              289                60
                                                                                          ---                --
   Net cash (used in) provided by financing activities                                 (1,826)            2,923
                                                                                       ------             -----

   Net increase (decrease) in cash and cash equivalents                                 6,964            (1,388)
   Cash and cash equivalents at beginning of period                                     4,106            16,221
                                                                                        -----            ------
   Cash and cash equivalents at end of period                                       $  11,070         $  14,833
                                                                                    =========         =========

Supplemental disclosure of cash flow information:
    Cash paid during the period for interest expense                                $      84         $      31
                                                                                    =========         =========


  See Accompanying Notes to Consolidated Financial Statements.

</TABLE>

<PAGE>
                        BRT REALTY TRUST AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements



Note 1 - Basis of Preparation

The  accompanying  interim  unaudited  consolidated  financial  statements as of
December  31, 2001 and for the three  months  ended  December  31, 2001 and 2000
reflect  all  normal  recurring   adjustments  which  are,  in  the  opinion  of
management,  necessary  for a fair  statement  of the results  for such  interim
periods.  The results of operations for the three months ended December 31, 2001
are not necessarily indicative of the results for the full year.

Certain items on the consolidated financial statements for the preceding periods
have been  reclassified  to  conform  with the  current  consolidated  financial
statements.

The consolidated  financial statements include the accounts of BRT Realty Trust,
its wholly owned subsidiaries,  and its majority-owned or controlled real estate
entities.  Investments in less than majority-owned  entities have been accounted
for using the equity method.  Material  intercompany items and transactions have
been eliminated.  BRT Realty Trust and its subsidiaries are hereinafter referred
to as "BRT" or the "Trust".

These statements  should be read in conjunction with the consolidated  financial
statements  and related  notes which are included in BRT's Annual Report on Form
10-K for the year ended September 30, 2001.

The  preparation  of the  financial  statements in  conformity  with  accounting
principles  generally accepted in the United States requires  management to make
estimates  and  assumptions  that affect the amounts  reported in the  financial
statements. Actual results could differ from those estimates.

Note 2 - Shareholders' Equity

Distributions

During the quarter ended December 31, 2001 BRT declared a cash  distribution  to
shareholders of $.24 per share.  This  distribution  totaled  $1,771,000 and was
payable January 3, 2002.

Stock Options

During the quarter ended  December 31, 2001,  48,625  previously  issued options
were exercised. Proceeds from these options totaled $289,000.

Note 2 - Shareholders' Equity (Continued)

Per Share Data

Basic  earnings per share were  determined by dividing net income for the period
by the weighted average number of shares of common stock outstanding during each
period which was  7,341,332  and  7,170,698  for the three month  periods  ended
December 31, 2001 and 2000,  respectively.  Diluted  earnings per share reflects
the potential  dilution  that could occur if  securities  or other  contracts to
issue common stock were  exercised or converted into common stock or resulted in
the  issuance of common  stock that then shared in the  earnings of BRT. For the
three  months ended  December  31, 2001 and 2000 diluted  earnings per share was
determined  by dividing  net income for the period by the total of the  weighted
average number of shares of common stock outstanding plus the dilutive effect of
the BRT's  outstanding  options using the treasury stock method which aggregated
7,445,042 and 7,255,542 respectively.

Note 3 - Real Estate Loans

If  all  loans   classified  as  non-earning  were  earning  interest  at  their
contractual  rates  for the  three  months  ended  December  31,  2001 and 2000,
interest income would have increased by approximately $11,000 in each period. At
December 31, 2001 BRT had outstanding  $3,425,000 in loans to joint ventures. In
each of  these  ventures  BRT and its  joint  venture  partner  each  have a 50%
interest.  As part of these venture agreements BRT makes a capital  contribution
in addition to making a mortgage  loan.  For the three months ended December 31,
2001 and 2000 interest income on these loans was $97,000 and $24,000.

Real estate  loans held for sale are  carried at the lower of cost or  estimated
fair  value.  At  December  31,  2001 real  estate  loans held for sale  totaled
$4,110,000.  The cost of these loans  approximated  estimated  fair value.  Fair
value was  determined  based on  contractual  commitments  from third parties to
purchase the loans.  During January 2002,  loans with a fair value of $2,213,000
were sold to a financial institution and $1,897,000 remain available for sale.

Profits and losses relating to the sale of real estate loans are recognized when
all  indications  of legal  control  pass to the buyer  and the  sales  price is
collected.
<PAGE>
Note 4 - Available-For-Sale Securities

Included in available-for-sale  securities are 1,355,600 shares of Entertainment
Properties Trust  (NYSE:EPR),  which have a cost basis of $17,806,000 and a fair
value  at  December  31,  2001 of  $26,231,000.  The  shares  held by the  Trust
represent  approximately  9.16%  of  the  outstanding  shares  of  Entertainment
Properties Trust as of December 31, 2001.

Note 5 -Borrowed Funds

On July 25, 2001 BRT entered into a revolving  credit  agreement with North Fork
Bank.  Borrowings under the facility are secured by specific receivables and the
agreement  provides  that that the  amount  borrowed  will not exceed 60% of the
collateral  pledged.  As of December  31, 2001 BRT had provided  collateral,  as
defined,  that would permit BRT to borrow up to approximately  $10,300,000 under
the facility.  Interest is charged on the outstanding balance at prime plus 1/4%
or under  certain  circumstances  at prime.  At  December  31, 2001 there was no
outstanding balance on this facility.

In addition to its credit facility,  BRT has the ability to borrow funds through
a margin  account.  At  December  31,  2001  there was no  outstanding  balance.
Marketable  securities  with  a  fair  value  of  $26,231,000  were  pledged  as
collateral.

Note 6 - Comprehensive Income

Statement No. 130 establishes  standards for reporting  comprehensive income and
its  components  in a  full  set of  general-purpose  financial  statements  and
requires that all components of comprehensive  income be reported in a financial
statement  that is  displayed  with  the  same  prominence  as  other  financial
statements.  During the three months ended December 31, 2001  accumulated  other
comprehensive  income,  which is solely  comprised of the net unrealized gain on
available-for-sale securities,  increased to $8,631,000 from $5,278,000. For the
three month  period  ended  December 31, 2000  accumulated  other  comprehensive
income,  which is  comprised  solely of  unrealized  loss on  available-for-sale
securities decreased to $2,672,000 from $3,133,000.

Note 7 - Segment Reporting

Effective October 1, 1998, the Trust adopted the Financial  Accounting Standards
Board's Statement of Financial  Accounting  Standards No. 131,  Disclosure About
Segments of an Enterprise and Related Information. Statement 131 superseded FASB
Statement  No. 14 Financial  Reporting  for  Segments of a Business  Enterprise.
Statement  No.  131  establishes  standards  for the way  that  public  business
enterprises  report  information  about operating  segments in annual  financial
statements and requires that those enterprises report selected information about
operating  segments  in  interim  financial  reports.  Statement  No.  131  also
establishes  standards  for related  disclosures  about  products and  services,
geographical  areas, and major customers.  The adoption of Statement No. 131 did
not affect  results of operations or financial  position.  As the Trust operates
predominantly  in one  industry  segment,  it has  determined  that  it has  one
reportable segment and operates primarily in one geographic location. Management
believes it is in  compliance  with the standards  established  by Statement No.
131.

Item 2.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations


Liquidity and Capital Resources

BRT's primary business activity is originating and holding for investment senior
real estate mortgages,  secured by income producing property. To a lesser extent
BRT  originates  and holds for  investment  junior  real estate  mortgage  loans
secured by income  producing  property  and  senior  mortgage  loans  secured by
unimproved real property.  Its investment policy emphasizes  short-term mortgage
loans.  Repayments  of real estate  loans in the amount of  $42,508,000  are due
during the twelve months ending December 31, 2002,  including  $4,059,000 due on
demand.  The availability of mortgage financing secured by real property and the
market for selling real estate is cyclical.  Accordingly, BRT cannot project the
portion of loans  maturing  during the next twelve  months which will be paid or
the portion of loans  which will be  extended  for a fixed term or on a month to
month basis.

On July 25, 2001 BRT entered into a revolving  credit  agreement with North Fork
Bank.  Borrowings under the facility are secured by specific receivables and the
agreement  provides  that  the  amount  borrowed  will  not  exceed  60%  of the
collateral  pledged.  As of December  31, 2001 BRT had provided  collateral,  as
defined,  that would permit BRT to borrow up to approximately  $10,300,000 under
the facility.  At the end of January,  2002 BRT sold several loans which reduced
the amount of collateral  pledged,  thereby reducing the availability  under the
facility to $8,500,000.  Interest is charged on the outstanding balance at prime
plus 1/4% or under certain  circumstances  at prime. The facility matures August
1, 2004 and may be extended  for two one year terms.  At December 31, 2001 there
was no outstanding balance on this facility.

<PAGE>
During the three months ended  December 31, 2001,  the Trust  generated  cash of
$2,761,000  from operations and $13,711,000  from  collections  from real estate
loans.  These funds,  in addition to cash on hand,  were used  primarily to fund
real estate loan  originations of $7,750,000 and to repay  outstanding  borrowed
funds of  $2,101,000.  BRT's  cash  and cash  equivalents  were  $11,070,000  at
December 31, 2001.

BRT will satisfy its liquidity  needs from cash and liquid  investments on hand,
the  credit  facility  with North Fork Bank,  interest  and  principal  payments
received on  outstanding  real estate loans and net cash flow generated from the
operation and sale of real estate  loans.  BRT also has the ability to borrow on
margin,  using  the  shares  it  owns  in  Entertainment   Properties  Trust  as
collateral.  As of December 31, 2001  marketable  securities  with a fair market
value of $26,231,000 were pledged as collateral,  permitting the Trust to borrow
approximately $10,000,000.

Results of Operations

Interest  and fees on loans  increased by $783,000 to  $3,515,000  for the three
months ended  December 31, 2001 as compared to  $2,732,000  for the three months
ended December 31, 2000. During the current quarter two participating loans were
paid off resulting in additional  interest and fees of  $1,182,000.  The average
balance of loans outstanding  increased $18,000,000 from the prior years quarter
resulting  in an  increase  in  interest  income of  $551,000  and  $117,000  of
additional fee income. These increases were offset by a 35 basis point reduction
in the interest rate earned on the portfolio from 12.55% to 12.20%, which caused
a reduction in interest of $45,000.  The prior years quarter contained  $844,000
of additional interest,  recognized from a loan that was paid off, in addition a
loan that was previously  non-performing  was returned to performing  status and
$170,000 of delinquent interest was recorded.

Operating  income on real estate  properties  increased to $531,000 in the three
months ended  December 31, 2001 from $307,000 in the quarter ended  December 31,
2000,   an  increase  of  $224,000.   The  increase  of  $124,000  is  primarily
attributable  to  rents  generated  from a  leasehold  interest  purchased  by a
consolidated joint venture in the prior year.

Equity in earnings of unconsolidated  ventures increased $130,000 in the quarter
ended  December 31, 2001 to $292,000 from $162,000 in the quarter ended December
31, 2000. During the current quarter,  one of the joint ventures recorded a gain
on the sale of a parcel of land.  This accounted for  approximately  $193,000 of
the increase in earnings.  This was offset by a loss of $95,000  recorded on the
operations  of a joint  venture  that was entered into during the second half of
the prior fiscal year. The remaining  $32,000 was  attributable  to increases in
income of the remaining ventures.

Other revenues, primarily investment income decreased to $647,000 in the quarter
ended December 31, 2001, from $1,267,000 in the same quarter in 2000, a decrease
of  $620,000.  During the prior  years  quarter  BRT  received  $438,000  from a
residual  interest it holds in a venture.  This residual  interest resulted from
the sale of a partnership  interest in a prior year.  The remaining  decrease of
$182,000 is the result of a decrease in invested  balances and  decreased  rates
earned on those  balances.  The  average  balance of invested  assets  decreased
$3,200,000 causing interest to decrease $105,000.  The remaining $77,000 was the
result of reduced rates being earned on the invested balances.  The average rate
on invested balances declined from 10.29% in the prior years quarter to 8.93% in
the current quarter.

The Advisor's  fee,  which is  calculated  based on invested  assets,  increased
$43,000 in the quarter ended  December 31, 2001 to $211,000 from $168,000 in the
quarter ended December 31, 2000. In the current quarter the Trust  experienced a
higher outstanding balance of invested assets,  primarily loans, thereby causing
an increase in the fee.

Other taxes  increased  $91,000 from $60,000 in the quarter  ended  December 31,
2000 to $151,000 in the quarter ended December 31, 2001. The prior years expense
represents  the payment of federal  alternative  minimum tax. The current  years
expense is the payment of federal excise taxes.

Operating  expenses  relating  to real estate  increased  $89,000 in the quarter
ended  December 31, 2001 to $297,000 from $208,000 in the quarter ended December
31,  2000.  BRT  recognized  increased  expenses  related to its  purchase  of a
leasehold interest in the prior year and its other operating  properties.  These
increases were partially  offset by a reduction in legal and other  professional
expenses  that were  incurred  in  connection  with a  litigation  related  to a
property sold by BRT in which BRT was involved as a defendant.

Amortization  and  depreciation  decreased  from  $139,000 in the quarter  ended
December  31, 2000 to $84,000 in the  quarter  ended  December  31,  2001.  This
decrease of $55,000 is the result of reduced  amortization on deferred  expenses
associated with BRT's current facility.

<PAGE>
Item 3.  Quantitative and Qualitative Disclosures About Market Risks

BRT's  primary  component  of market risk is interest  rate  sensitivity.  BRT's
interest  income and to a lesser  extent its  interest  expense  are  subject to
changes in  interest  rates.  BRT seeks to minimize  these risks by  originating
loans that are indexed to the prime rate,  with a stated minimum  interest rate,
and  borrowing,  when  necessary,  from its available  credit line which is also
indexed  to the prime  rate.  At  December  31,  2001  approximately  63% of the
portfolio  was variable rate based  primarily on the prime rate.  Any changes in
the prime  interest  rate could have a positive  or  negative  effect on the net
interest income of BRT. When  determining  interest rate sensitivity BRT assumes
that any  change in  interest  rates is  immediate  and that the  interest  rate
sensitive assets and liabilities  existing at the beginning of the period remain
constant  over the period being  measured.  BRT has assessed the market risk for
its variable rate mortgage  receivables and variable rate debt and believes that
a one percent  increase in interest  rates would have  approximately  a $390,000
positive  effect on income  before  taxes and a one percent  decline in interest
rates  would have  approximately  a $155,000  negative  effect on income  before
taxes. In addition,  BRT originates  loans with short maturities and maintains a
strong capital position. At December 31, 2001 BRT's loan portfolio was primarily
secured by properties  located in the New York metropolitan area, New Jersey and
Connecticut and in Florida and it is therefore  subject to risks associated with
the economies of these localities.

                            PART II - OTHER INFORMATION


Item 6.  Exhibits and Reports on Form 8-K

None


                                  SIGNATURES


Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


                                BRT REALTY TRUST
                                  Registrant




February 14,  2001                               /s/ Jeffrey Gould
- ------------------                               -----------------
Date                                             Jeffrey Gould, President




February 14, 2001                               /s/ George Zweier
- -----------------                               -----------------
Date                                            George Zweier, Vice President
                                                and Chief Financial Officer








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