ADVISOR'S COMPENSATION AND RELATED PARTY TRANSACTIONS

12 Months Ended

Sep. 30, 2012

ADVISOR'S COMPENSATION AND RELATED PARTY TRANSACTIONS

ADVISOR'S COMPENSATION AND RELATED PARTY TRANSACTIONS

NOTE 14—ADVISOR'S COMPENSATION AND RELATED PARTY TRANSACTIONS

        Certain of the Trust's officers and trustees are also officers and directors of REIT Management Corp. ("REIT Management") to which the Trust, pursuant to an amended and restated advisory agreement, paid advisory fees for administrative services and investment advice. Fredric H. Gould, chairman of the board, is the sole shareholder of REIT Management. Advisory fees were charged to operations at a rate of 0.6% on invested assets which consist primarily of real estate loans, real estate assets and investment securities.

        Effective January 1, 2012, the parties entered into an amendment to the amended and restated advisory agreement pursuant to which (i) the stated expiration date was extended to June 30, 2014, (ii) the minimum and maximum fees payable in a twelve month period to REIT Management were set at $750,000 and $4 million, respectively, subject to adjustment for any period of less than twelve months and (iii) the Trust is to pay REIT Management the following annual fees which are to be paid on a quarterly basis:

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  1.0% of the average principal amount of earning loans;

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  .35% of the average amount of the fair market value of non-earning loans;

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  .45% of the average book value of all real estate properties, excluding depreciation;

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  .25% of the average amount of the fair market value of marketable securities;

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  .15% of the average amount of cash and cash equivalents; and

        To the extent loans or real estate are held by joint ventures or other arrangements in which the Trust has an interest, fees vary based on, among other things, the nature of the asset (i.e. real estate or loans), the nature of the Trust's involvement (i.e. active or passive) and the extent of the Trust's equity interests in such arrangements.

        Advisory fees amounted to $1,104,000, $916,000 and $785,000 for the years ended September 30, 2012, 2011 and 2010, respectively.

        The Trust's borrowers also paid fees directly to REIT Management based on loan originations, which generally are one-time fees payable upon funding of a loan, in the amount of ¹/2 of 1% of the total loan. These fees were $145,000, $750,000 and $89,000 for the years ended September 30, 2012, 2011 and 2010, respectively. Effective January 1, 2012, all loan origination fees paid by borrowers were paid directly to the Trust.

        Management of certain properties owned by the Trust is provided by Majestic Property Management Corp., a corporation in which the chairman of the board is the sole shareholder, under renewable year-to-year agreements. Certain of the Trust's officers and Trustees are also officers and directors of Majestic Property Management Corp. Majestic Property Management Corp. provides real property management, real estate brokerage and construction supervision services to the Trust and these certain joint venture properties. For the years ended September 30, 2012, 2011 and 2010, fees for these services aggregated $74,000, $83,000 and $66,000, respectively.

        The chairman of the board of the Trust is also chairman of the board of One Liberty Properties, Inc., a related party, and certain of the Trust's officers and Trustees are also officers and directors of One Liberty Properties, Inc. In addition, the Chairman of the Board is an executive officer and sole shareholder of Georgetown Partners, Inc., the managing general partner of Gould Investors L.P. and the sole member of Gould General LLC, a general partner of Gould Investors L.P., a related party. Certain of the Trust's officers and Trustees are also officers and directors of Georgetown Partners, Inc. The allocation of expenses for the shared facilities, personnel and other resources is computed in accordance with a shared services agreement by and among the Trust and the affiliated entities and is included in general and administrative expense on the statement of operations. During the years ended September 30, 2012, 2011 and 2010, allocated general and administrative expenses reimbursed by the Trust to Gould Investors L.P. pursuant to the shared services agreement, aggregated $705,000, $847,000 and $822,000, respectively. At September 30, 2012, $44,000 remains unpaid and is included in accounts payable and accrued liabilities on the consolidated balance sheet.