UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM 10-Q
(Mark One)

  [x]             QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                  SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended      September 30, 2008
                                    ------------------
                                             OR
  [ ]             TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                 OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                    to

                  Commission file number    1-8594
                                            ------
                         PRESIDENTIAL REALTY CORPORATION
                       --------------------------------
           (Exact name of registrant as specified in its charter)

      Delaware                                  13-1954619
      --------                                  ----------
(State or other jurisdiction of             (I.R.S.  Employer
 incorporation or organization)              Identification No.)

180 South Broadway, White Plains, New York  10605
-------------------------------------------------
(Address of principal executive offices)

Registrant's telephone number, including area code  914-948-1300
                                                    ------------
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
                                        --------    --------

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.

   Large accelerated filer                      Accelerated filer
                           -------                                 -------
   Non-accelerated filer        (Do not check if a smaller reporting company)
                         ------
   Smaller reporting company    x
                              -----
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).     Yes        No   x
                                        ----        ----
The number of shares outstanding of each of the registrant's classes of common
stock as of the close of business on November 10, 2008 was 442,533 shares of
Class A common and 3,057,042 shares of Class B common.

                PRESIDENTIAL REALTY CORPORATION AND SUBSIDIARIES
                -------------------------------------------------

                               Index to Form 10-Q
                         For the Quarterly Period Ended
                               September 30, 2008






Part I   Financial Information (Unaudited)

  Item 1.         Financial Statements
                           Consolidated Balance Sheets (Unaudited)
                           Consolidated Statements
                             of Operations (Unaudited)
                           Consolidated Statement
                             of Stockholders' Equity (Unaudited)
                           Consolidated Statements
                             of Cash Flows (Unaudited)
                           Notes to Consolidated
                             Financial Statements (Unaudited)

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

  Item 3.         Quantitative and Qualitative Disclosures
                    about Market Risk
  Item 4.         Controls and Procedures


Part II  Other Information

  Item 2.         Unregistered Sales of Equity Securities
                    and Use of Proceeds

  Item 6.         Exhibits








<TABLE>
PRESIDENTIAL REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
<CAPTION>



                                                                                     September 30,             December 31,
                                                                                         2008                      2007
                                                                                   -----------------         -----------------
Assets
<S>                                                                                        <C>                       <C>
  Real estate (Note 2)                                                                  $17,619,975               $21,041,049
    Less: accumulated depreciation                                                        2,085,952                 4,834,757
                                                                                   -----------------         -----------------

  Net real estate                                                                        15,534,023                16,206,292
  Net mortgage portfolio (of which $226,288 in 2008
      and $455,827 in 2007 are due within one year) (Note 3)                              2,369,518                 7,659,225
  Investments in and advances to joint ventures (Note 4)                                  2,665,263                 4,923,201
  Other investments (Note 5)                                                              1,000,000                 1,000,000
  Assets related to discontinued operations (Note 6)                                        391,479                      -
  Prepaid expenses and deposits in escrow                                                 1,192,182                 1,213,162
  Prepaid defined benefit plan costs                                                        218,042                   371,942
  Other receivables (net of valuation allowance of
    $82,411 in 2008 and $147,065 in 2007)                                                   409,851                   370,004
  Cash and cash equivalents                                                               6,732,792                 2,343,497
  Other assets                                                                              693,333                   861,965
                                                                                   -----------------         -----------------

Total Assets                                                                            $31,206,483               $34,949,288
                                                                                   =================         =================

Liabilities and Stockholders' Equity

  Liabilities:
    Mortgage debt (of which $1,423,531 in 2008 and
      $445,130 in 2007 are due within one year)                                         $16,483,861               $18,868,690
    Liabilities related to discontinued operations (Note 6)                               2,103,545                      -
    Contractual pension and postretirement benefits liabilities                           1,949,105                 2,169,408
    Accrued liabilities                                                                   1,782,346                 2,431,698
    Accounts payable                                                                        572,516                   464,983
    Other liabilities                                                                       681,153                   755,770
                                                                                   -----------------         -----------------

Total Liabilities                                                                        23,572,526                24,690,549
                                                                                   -----------------         -----------------

  Stockholders' Equity:
     Common stock: par value $.10 per share
                        September 30, 2008           December 31, 2007
                        ------------------           -----------------
       Class A                                                                               47,894                    47,894
       -----------
      Authorized:                  700,000                     700,000
      Issued:                      478,940                     478,940
      Treasury:                     36,407                       5,375

       Class B                                                                              352,455                   352,155
       -----------
      Authorized:               10,000,000                  10,000,000
      Issued:                    3,524,547                   3,521,547
      Treasury:                    467,505                      29,633

    Additional paid-in capital                                                            4,566,093                 4,486,713
    Retained earnings                                                                     6,804,848                 6,959,104
    Accumulated other comprehensive loss (Note 10)                                       (1,242,031)               (1,331,097)
    Treasury stock (at cost) (Note 11)                                                   (2,895,302)                 (256,030)
                                                                                   -----------------         -----------------

Total Stockholders' Equity                                                                7,633,957                10,258,739
                                                                                   -----------------         -----------------

Total Liabilities and Stockholders' Equity                                              $31,206,483               $34,949,288
                                                                                   =================         =================

  See notes to consolidated financial statements.
</TABLE>





<TABLE>
PRESIDENTIAL REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
<CAPTION>




                                                                                    THREE MONTHS ENDED
                                                                                       SEPTEMBER 30,
                                                                                 --------------------------

                                                                                    2008          2007
                                                                                 -----------   ------------
Revenues:
<S>                                                                              <C>            <C>
  Rental                                                                         $1,384,783     $1,267,259
  Interest on mortgages - notes receivable                                          287,022        296,946
  Interest on mortgages - notes receivable - related parties                         19,250         31,857
  Other revenues                                                                      1,350          1,199
                                                                                 -----------   ------------

Total                                                                             1,692,405      1,597,261
                                                                                 -----------   ------------

Costs and Expenses:
  General and administrative (Note 12)                                              (60,746)     1,041,033
  Depreciation on non-rental property                                                11,942          9,266
  Rental property:
    Operating expenses                                                              766,551        582,590
    Interest on mortgage debt                                                       385,565        337,809
    Real estate taxes                                                               111,195        122,859
    Depreciation on real estate                                                     120,440        107,796
    Amortization of in-place lease values and mortgage costs                         31,194         68,293
                                                                                 -----------   ------------

Total                                                                             1,366,141      2,269,646
                                                                                 -----------   ------------

Other Income (Loss):
  Investment income                                                                  16,935        456,040
  Equity in the income (loss) from joint ventures (Note 4)                         (124,683)        44,605
                                                                                 -----------   ------------

Income (loss) before minority interest                                              218,516       (171,740)

Minority interest                                                                      -                28
                                                                                 -----------   ------------

Income (loss) from continuing operations                                            218,516       (171,712)
                                                                                 -----------   ------------

Discontinued Operations (Note 6):
  Income from discontinued operations                                                71,079         43,247
  Net gain from sales of discontinued operations                                  2,893,031            -
                                                                                 -----------   ------------

Total income from discontinued operations                                         2,964,110         43,247
                                                                                 -----------   ------------

Net Income (Loss)                                                                $3,182,626      ($128,465)
                                                                                 ===========   ============


Earnings per Common Share (basic and diluted) (Note 13):
  Income (loss) from continuing operations                                            $0.06         ($0.04)
                                                                                 -----------   ------------

  Discontinued Operations:
    Income from discontinued operations                                                0.02           0.01
    Net gain from sales of discontinued operations                                     0.83            -
                                                                                 -----------   ------------

  Total income from discontinued operations                                            0.85           0.01
                                                                                 -----------   ------------

  Net Income (Loss) per Common Share - basic                                          $0.91         ($0.03)
                                                                                 ===========   ============
                                     - diluted                                        $0.90         ($0.03)
                                                                                 ===========   ============

Cash Distributions per Common Share                                                   $0.16          $0.16
                                                                                 ===========   ============

Weighted Average Number of Shares Outstanding - basic                             3,501,921      3,905,698
                                                                                 ===========   ============
                                              - diluted                           3,533,118      3,905,698
                                                                                 ===========   ============


See notes to consolidated financial statements.


PRESIDENTIAL REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)




                                                                                      NINE MONTHS ENDED
                                                                                        SEPTEMBER 30,
                                                                                 --------------------------

                                                                                    2008          2007
                                                                                 -----------   ------------
Revenues:
  Rental                                                                         $4,047,163     $3,590,859
  Interest on mortgages - notes receivable                                          815,586        884,129
  Interest on mortgages - notes receivable - related parties                        146,750        253,846
  Other revenues                                                                      3,786          5,847
                                                                                 -----------   ------------

Total                                                                             5,013,285      4,734,681
                                                                                 -----------   ------------

Costs and Expenses:
  General and administrative (Note 12)                                            1,875,181      3,031,041
  Depreciation on non-rental property                                                29,676         23,489
  Rental property:
    Operating expenses                                                            2,142,125      1,906,420
    Interest on mortgage debt                                                     1,088,241      1,013,219
    Real estate taxes                                                               330,505        340,728
    Depreciation on real estate                                                     344,246        311,346
    Amortization of in-place lease values and mortgage costs                        130,883        306,468
                                                                                 -----------   ------------

Total                                                                             5,940,857      6,932,711
                                                                                 -----------   ------------

Other Income (Loss):
  Investment income                                                                  53,215        489,949
  Equity in the loss from joint ventures (Note 4)                                  (581,083)      (972,860)
                                                                                 -----------   ------------

Loss before minority interest                                                    (1,455,440)    (2,680,941)

Minority interest                                                                      -            (2,194)
                                                                                 -----------   ------------

Loss from continuing operations                                                  (1,455,440)    (2,683,135)
                                                                                 -----------   ------------

Discontinued Operations (Note 6):
  Income from discontinued operations                                               198,974         81,728
  Net gain from sales of discontinued operations                                  2,893,031        735,705
                                                                                 -----------   ------------

Total income from discontinued operations                                         3,092,005        817,433
                                                                                 -----------   ------------

Net Income (Loss)                                                                $1,636,565    ($1,865,702)
                                                                                 ===========   ============


Earnings per Common Share (basic and diluted) (Note 13):
  Loss from continuing operations                                                    ($0.39)        ($0.69)
                                                                                 -----------   ------------

  Discontinued Operations:
    Income from discontinued operations                                                0.05           0.03
    Net gain from sales of discontinued operations                                     0.77           0.18
                                                                                 -----------   ------------

  Total income from discontinued operations                                            0.82           0.21
                                                                                 -----------   ------------

  Net Income (Loss) per Common Share - basic                                          $0.43         ($0.48)
                                                                                 ===========   ============
                                     - diluted                                        $0.43         ($0.48)
                                                                                 ===========   ============

Cash Distributions per Common Share                                                   $0.48          $0.48
                                                                                 ===========   ============

Weighted Average Number of Shares Outstanding - basic                             3,770,895      3,902,203
                                                                                 ===========   ============
                                              - diluted                           3,770,895      3,902,203
                                                                                 ===========   ============


See notes to consolidated financial statements.
</TABLE>




<TABLE>
PRESIDENTIAL REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (Unaudited)
<CAPTION>

                                                                             Accumulated
                                                      Additional                Other                                  Total
                                            Common     Paid-in    Retained  Comprehensive  Treasury  Comprehensive  Stockholders'
                                           Stock       Capital    Earnings       Loss        Stock     Income          Equity
                                          ---------  ----------- --------- -------------- ---------- ------------   -------------
<S>                                       <C>        <C>         <C>           <C>             <C>                        <C>
Balance at January 1, 2008                $400,049   $4,486,713  $6,959,104  ($1,331,097)   ($256,030)               $10,258,739

Cash distributions ($.48 per share)             -            -   (1,790,821)         -             -                  (1,790,821)
Issuance and vesting of restricted stock       300       79,380          -           -             -                      79,680
Purchase of treasury stock                      -            -           -           -     (2,639,272)                (2,639,272)
Comprehensive income:
   Net income                                   -            -    1,636,565          -             -    $1,636,565     1,636,565
   Other comprehensive income -
      Net unrealized gain on
        securities available for sale           -            -           -           479           -           479           479
      Adjustment for contractual
        postretirement benefits                 -            -           -        88,587           -        88,587        88,587
                                                                                                       ------------
Comprehensive income                                                                                    $1,725,631
                                                                                                       ============

                                          ---------  ----------  ----------- ------------ ------------               ------------
Balance at September 30, 2008             $400,349   $4,566,093  $6,804,848  ($1,242,031) ($2,895,302)                $7,633,957
                                          =========  ==========  =========== ============ ============               ============


See notes to consolidated financial statements.
</TABLE>



<TABLE>
 PRESIDENTIAL REALTY CORPORATION AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
<CAPTION>


                                                                                         NINE MONTHS ENDED SEPTEMBER  30,
                                                                                  ----------------------------------------------

                                                                                       2008                          2007
                                                                                  ----------------             -----------------
<S>                                                                               <C>                           <C>
 Cash Flows from Operating Activities:
     Cash received from rental properties                                              $4,773,851                    $4,428,099
     Interest received                                                                    680,405                     1,050,648
     Distributions received from joint ventures                                         1,676,855                     2,481,859
     Distributions received from other investments                                            -                         442,047
     Miscellaneous income                                                                   2,732                        47,381
     Interest paid on rental property mortgage debt                                    (1,032,805)                   (1,100,998)
     Cash disbursed for rental property operations                                     (3,138,703)                   (3,292,029)
     Cash disbursed for general and administrative costs                               (2,333,587)                   (2,417,253)
                                                                                  ----------------             -----------------

 Net cash provided by operating activities                                                628,748                     1,639,754
                                                                                  ----------------             -----------------

 Cash Flows from Investing Activities:
     Payments received on notes receivable                                              5,638,903                       138,049
     Repayments received on other investments                                                 -                       1,000,000
     Payments disbursed for additions and improvements                                   (576,675)                     (628,243)
     Proceeds from sales of properties                                                  3,457,950                       582,004
     Purchase of additional interests in partnerships                                         -                         (96,202)
                                                                                  ---------------              -----------------

 Net cash provided by investing activities                                              8,520,178                       995,608
                                                                                  ----------------             -----------------

 Cash Flows from Financing Activities:
     Principal payments on mortgage debt                                                 (329,538)                     (318,197)
     Distributions to minority partners                                                       -                          (5,000)
     Cash distributions on common stock                                                (1,790,821)                   (1,892,086)
     Purchase of treasury stock                                                        (2,639,272)                     (233,867)
     Proceeds from dividend reinvestment plan                                                 -                         200,640
                                                                                  ----------------             -----------------

 Net cash used in financing activities                                                 (4,759,631)                   (2,248,510)
                                                                                  ----------------             -----------------

 Net Increase in Cash and Cash Equivalents                                              4,389,295                       386,852

 Cash and Cash Equivalents, Beginning of Period                                         2,343,497                     2,263,534
                                                                                  ----------------             -----------------

 Cash and Cash Equivalents, End of Period                                              $6,732,792                    $2,650,386
                                                                                  ================             =================

 See notes to consolidated financial statements.
</TABLE>



<TABLE>
PRESIDENTIAL REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
<CAPTION>




                                                                                          NINE MONTHS ENDED SEPTEMBER  30,
                                                                                  -----------------------------------------------

                                                                                        2008                          2007
                                                                                  -----------------             -----------------

<S>                                                                               <C>                           <C>
Reconciliation of Net Income (Loss) to Net Cash
  Provided by Operating Activities

Net Income (Loss)                                                                       $1,636,565                   ($1,865,702)
                                                                                  -----------------             -----------------

Adjustments to reconcile net income (loss) to net
  cash provided by operating activities:
    Net gain from sales of discontinued operations                                      (2,893,031)                     (735,705)
    Equity in the loss from joint ventures                                                 581,083                       972,860
    Depreciation and amortization                                                          539,981                       691,181
    Amortization of discount on mortgage payable                                            48,254                        81,311
    Net change in revenue related to acquired lease rights/obligations
       and deferred rent receivable                                                        (45,478)                      (69,761)
    Amortization of discounts on notes and fees                                           (349,195)                     (178,793)
    Minority interest                                                                          -                           2,194
    Issuance of stock to directors and officers                                             75,240                        75,386
    Distributions received from joint ventures                                           1,676,855                     2,481,859

    Changes in assets and liabilities:
    Decrease (increase) in other receivables                                               (19,453)                       27,438
    Decrease in accounts payable and accrued liabilities                                  (807,222)                     (114,271)
    Increase in other liabilities                                                            7,702                        44,927
    Decrease in prepaid expenses, deposits in escrow
      and deferred charges                                                                 179,320                       222,495
    Other                                                                                   (1,873)                        4,335
                                                                                  -----------------             -----------------

Total adjustments                                                                       (1,007,817)                    3,505,456
                                                                                  -----------------             -----------------

Net cash provided by operating activities                                                 $628,748                    $1,639,754
                                                                                  =================             =================



SUPPLEMENTAL NONCASH DISCLOSURES:

  Satisfaction of mortgage debt as a result of assumption
    of the mortgage debt by the purchaser                                                                             $2,856,452
                                                                                                                =================

  Note receivable from sale of property                                                                                 $200,000
                                                                                                                =================




See notes to consolidated financial statements.
</TABLE>







PRESIDENTIAL REALTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2008 (UNAUDITED)

Presidential Realty Corporation ("Presidential" or the "Company"), is operated
as a self-administrated, self-managed Real Estate Investment Trust ("REIT"). The
Company is engaged principally in the ownership of income producing real estate
and in the holding of notes and mortgages secured by real estate. Presidential
operates in a single business segment, investments in real estate related
assets.

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. Principles of Consolidation - The consolidated financial statements include
the accounts of Presidential Realty Corporation and its wholly owned
subsidiaries. Additionally, the consolidated financial statements include 100%
of the account balances of PDL, Inc. and Associates Limited Co-Partnership (the
"Hato Rey Partnership"). PDL, Inc. (a wholly owned subsidiary of Presidential
and the general partner of the Hato Rey Partnership) and Presidential own an
aggregate 60% general and limited partnership interest in the Hato Rey
Partnership (see Note 7). The consolidated financial statements for the nine
months ended September 30, 2007 also included 100% of the account balances of
another partnership, UTB Associates (which was liquidated on December 31, 2007).
Presidential was the general partner of UTB Associates and owned a 100% interest
(previously a 75% interest, see Note 8). All significant intercompany balances
and transactions have been eliminated.

B. Net Income (Loss) Per Share - Basic net income (loss) per share data is
computed by dividing net income (loss) by the weighted average number of shares
of Class A and Class B common stock outstanding during each period. Diluted net
income per share is computed by dividing net income by the weighted average
shares outstanding, including the dilutive effect, if any, of nonvested shares.
See Note 13.

C. Basis of Presentation - The accompanying unaudited consolidated financial
statements have been prepared in accordance with accounting principles generally
accepted in the United States of America ("GAAP") for interim financial
information. The results for such interim periods are not necessarily indicative
of the results to be expected for the year. In the opinion of management, all
adjustments (consisting of only normal recurring accruals) considered necessary
for a fair presentation of the results for the respective periods have been
reflected. These consolidated financial statements and accompanying notes should
be read in conjunction with the Company's Form 10-KSB for the year ended
December 31, 2007.

D. Management Estimates - In preparing the consolidated financial statements in
conformity with GAAP, management is required to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities as of the date of the consolidated balance
sheets and the reported amounts of income and expense for the reporting period.
Actual results could differ from those estimates.

E. Purchase Accounting - In 2006 and 2007, the Company acquired an additional
25% and 1% limited partnership interest in the Hato Rey Partnership,
respectively. The Company allocated the fair value of acquired tangible and
intangible assets and assumed liabilities based on their estimated fair values
in accordance with the provisions of Accounting Research Bulletin ("ARB") No.
51, "Consolidated Financial Statements", and the Statement of Financial
Accounting Standards ("SFAS") No. 141, "Business Combinations", as a partial
step acquisition. No gain or goodwill was recognized on the recording of the
acquisition of the additional interests in the Hato Rey Partnership. Building
and improvements are depreciated on the straight-line method over thirty-nine
years. In-place lease values are amortized to expense over the terms of the
related tenant leases. Above and below market lease values are amortized as a
reduction of, or an increase to, rental revenue over the remaining term of each
lease. Mortgage discount was amortized to mortgage interest expense over the
term of the mortgage (maturity was originally May, 2008) using the interest
method.

F. Discontinued Operations - The Company complies with the provisions of SFAS
No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets". This
statement requires that the results of operations, including impairment, gains
and losses related to the properties that have been sold or properties that are
intended to be sold, be presented as discontinued operations in the statements
of operations for all periods presented and the assets and liabilities of
properties intended to be sold are to be separately classified on the balance
sheet. Properties designated as held for sale are carried at the lower of cost
or fair value less costs to sell and are not depreciated.

G. Equity Method - The Company accounts for its investments in joint ventures
using the equity method of accounting.

H. Accounting for Uncertainty in Income Taxes - On January 1, 2007, the Company
adopted the Financial Accounting Standards Board ("FASB") Interpretation No. 48,
"Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement
No. 109" ("FIN 48"). If the Company's tax positions in relation to certain
transactions were examined and were not ultimately upheld, the Company would be
required to pay an income tax assessment and related interest, or a deficiency
dividend and related interest, for prior years. Should such an assessment
require the Company to pay a deficiency dividend in order to continue to qualify
as a REIT, the Company would pay the deficiency dividend to its shareholders and
the related interest assessment to the taxing authorities.

I. Recent Accounting Pronouncements - In September, 2006, the FASB issued SFAS
No. 157, "Fair Value Measurements", which defines fair value, establishes a
framework for measuring fair value in generally accepted accounting principles
and expands disclosures about fair value measurements. SFAS No. 157 is effective
for fiscal years beginning after November 15, 2007. The adoption of this
standard on January 1, 2008 did not have a material effect on the Company's
consolidated financial statements.

In September, 2006, the FASB issued SFAS No. 158, "Employers' Accounting for
Defined Benefit Pension and Other Postretirement Plans - An Amendment of FASB
Statements No. 87, 88, 106 and 132(R)". SFAS No. 158 requires an employer to (i)
recognize in its statement of financial position an asset for a plan's
overfunded status or a liability for a plan's underfunded status; (ii) measure a
plan's assets and its benefit obligations that determine its funded status as of
the end of the employer's fiscal year (with limited exceptions); and (iii)
recognize changes in the funded status of a defined benefit postretirement plan
in the year in which the changes occur. Those changes will be reported in
comprehensive income. The Company previously adopted in 2006 the requirement to
recognize the funded status of a benefit plan and the disclosure requirements.
The requirement to measure plan assets and benefit obligations to determine the
funded status as of the end of the fiscal year and to recognize changes in the
funded status in the year in which the changes occur is effective for fiscal
years ending after December 15, 2008. The adoption of the measurement date
provisions of this standard is not expected to have a material effect on the
Company's consolidated financial statements.

In February, 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities". SFAS No. 159 permits entities to
choose to measure many financial assets and financial liabilities at fair value.
Unrealized gains and losses on items for which the fair value option has been
elected are reported in earnings. SFAS No. 159 is effective for fiscal years
beginning after November 15, 2007. The Company is not electing to measure its
financial assets or liabilities at fair value pursuant to this statement.

In December, 2007, the FASB issued No. 141, (revised 2007) "Business
Combinations" ("SFAS No. 141R"). SFAS No. 141R replaces SFAS No. 141, which the
Company previously adopted. SFAS No. 141R revises the standards for accounting
and reporting of business combinations. In summary, SFAS No. 141R requires the
acquirer of a business combination to measure, at fair value, the assets
acquired, the liabilities assumed, and any noncontrolling interest in the
acquiree at the acquisition date, with limited exceptions. SFAS No. 141R applies
to all business combinations for which the acquisition date is on or after the
beginning of the first annual reporting period beginning on or after December
15, 2008. The Company does not believe that the adoption of this statement on
January 1, 2009 will have a material effect on the Company's consolidated
financial statements.

In December, 2007, the FASB issued SFAS No. 160, "Noncontrolling Interests in
Consolidated Financial Statements", which requires consolidated net income to be
reported at amounts that include the amounts attributable to both the parent and
noncontrolling interest. SFAS No. 160 is effective for fiscal years beginning on
or after December 15, 2008. The adoption of this standard is not expected to
have a material effect on the Company's consolidated financial statements.

In March, 2008, the FASB issued SFAS No. 161, "Disclosures about Derivative
Instruments and Hedging Activities". SFAS No. 161 changes the reporting
requirements for derivative instruments and hedging activities under SFAS No.
133, "Accounting for Derivatives and Hedging Activities", by requiring enhanced
disclosures about (a) how and why an entity uses derivative instruments, (b) how
derivative instruments are accounted for under SFAS No. 133 and (c) the effect
of derivative instruments and hedging activities on an entity's financial
position, financial performance and cash flows. SFAS No. 161 is effective for
fiscal years beginning after November 15, 2008. The Company does not believe
that the adoption of this statement will have a material effect on the Company's
consolidated financial statements.

In April, 2008, the FASB issued FASB Staff Position ("FSP") No. FAS 142-3,
"Determination of the Useful Life of Intangible Assets". FSP No. FAS 142-3
amends the factors that should be considered in developing renewal or extension
assumptions used to determine the useful life of a recognized intangible asset
under SFAS No. 142, "Goodwill and Other Intangible Assets". The objective of FSP
No. FAS 142-3 is to improve the consistency between the useful life of a
recognized intangible asset under SFAS No. 142 and the period of expected cash
flows used to measure the fair value of the asset under SFAS No. 141R and GAAP.
FSP FAS No. 142-3 is effective for financial statements issued for years
beginning after December 15, 2008, and interim periods within those years and
applied prospectively to intangible assets acquired after the effective date.
The Company does not believe that the adoption of FSP FAS No. 142-3 will have a
material effect on the Company's consolidated financial statements.

In June, 2008, the FASB issued FSP No. EITF 03-6-1, "Determining Whether
Instruments Granted in Share-Based Payment Transactions are Participating
Securities". FSP No. EITF 03-6-1 affects entities which accrue non-returnable
cash dividends on share-based payment awards during the awards' service period.
The FASB concluded unvested share-based payment awards which are entitled to
cash dividends, whether paid or unpaid, are participating securities any time
the common shareholders receive dividends. Because the awards are considered
participating securities, the issuing entity is required to apply the two-class
method of computing basic and diluted earnings per share. FSP No. EITF 03-6-1 is
effective for fiscal years beginning after December 15, 2008, and early adoption
is not permitted. The Company does not believe that the adoption of FSP No. EITF
03-6-1 will have a material effect on the Company's consolidated financial
statements.

2. REAL ESTATE

   Real estate is comprised of the following:

                                  September 30,            December 31,
                                      2008                     2007
                                  ------------             ------------

Land                              $ 2,059,856              $ 2,309,930
Buildings                          15,479,531               18,605,700
Furniture and equipment                80,588                  125,419
                                  -----------              -----------
Total real estate                 $17,619,975              $21,041,049
                                  ===========              ===========

3. MORTGAGE PORTFOLIO

The components of the net mortgage portfolio are as follows:

                                 September 30,             December 31,
                                     2008                      2007
                                 -------------             ------------

Notes receivable                   $2,410,262               $8,051,342
Less: Discounts                        40,744                  392,117
                                   ----------               ----------
Net mortgage portfolio             $2,369,518               $7,659,225
                                   ==========               ==========

At September 30, 2008, all of the notes in the Company's mortgage portfolio are
current in accordance with their terms, as modified.

During the nine months ended September 30, 2008, the Company received repayment
of its $1,500,000 loan receivable collateralized by ownership interests in
Reisterstown Square Associates, LLC, which owns Reisterstown Apartments in
Baltimore, Maryland, and repayment of its $3,875,000 Fairfield Towers note
receivable. In addition, the Company also received repayment of its $100,000
loan collateralized by the Pinewood property in Des Moines, Iowa and repayment
of its $110,000 Mark Terrace note receivable.

In March, 2007, the Company sold its Cambridge Green property in Council Bluffs,
Iowa. As part of the sales price, the Company received a $200,000 secured note
receivable which matured on March 20, 2008. The note receivable has an interest
rate of 7% per annum, payment of which is deferred until maturity. At December
31, 2007, the accrued deferred interest was $11,083. In March, 2008, the Company
agreed to extend the maturity of the loan to December 31, 2008 and received a
$25,000 payment for $13,917 of principal and $11,083 of accrued deferred
interest. At September 30, 2008, the accrued deferred interest was $10,122,
which was recorded in interest income, and the loan balance was $186,083.

The Company had a $3,875,000 note receivable, which was received by the Company
in connection with the sale of the Fairfield Towers mortgages in 1999 and which
was collateralized by security interests in the ownership interests in entities
that own various properties located in Maryland, New Jersey and Pennsylvania.
The loan was originally due in February, 2009, but the Company had the right to
require prepayment upon 90 days prior notice. On March 20, 2008, the Company
notified the borrower that the loan must be prepaid within 90 days from the date
of the notice. On June 3, 2008, the Company received a principal payment of
$1,079,239 on the loan and on July 11, 2008, the remaining loan balance of
$2,795,761 was paid. The Company recognized $337,496 of unamortized discount on
this loan during 2008.

4. INVESTMENTS IN AND ADVANCES TO JOINT VENTURES

The Company has investments in and loans to four joint ventures which own and
operate nine shopping malls located in seven states. These investments in and
advances to joint ventures were made to entities controlled by David
Lichtenstein, who also controls The Lightstone Group ("Lightstone"). The Company
accounts for these investments using the equity method.

The first investment, the Martinsburg Mall, was purchased by PRC Member LLC, a
limited liability company which was originally wholly owned by the Company, in
2004 and, subsequent to closing, PRC Member LLC obtained a mezzanine loan from
Lightstone in the amount of $2,600,000, which is secured by ownership interests
in the entity that owns the Martinsburg Mall. The loan matures on September 27,
2014, and the interest rate on the loan is 11% per annum. Lightstone manages the
Martinsburg Mall and David Lichtenstein received a 71% ownership interest in PRC
Member LLC, leaving the Company with a 29% ownership interest.

During 2004 and 2005, the Company made three mezzanine loans in the aggregate
principal amount of $25,600,000 to joint ventures controlled by David
Lichtenstein. These loans are secured by the ownership interests in the entities
that own the properties and the Company received a 29% ownership interest in
these entities. These loans mature in 2014 and 2015 and the interest rate on the
loans is 11% per annum. During 2006, the Company made an additional $335,000
mezzanine loan to Lightstone II, which loan was added to and has the same
interest rate and maturity date as the original Lightstone II loan. At September
30, 2008, the aggregate principal amount of loans to joint ventures controlled
by David Lichtenstein was $25,935,000.

<TABLE>
The following table summarizes information on the shopping mall properties and
the mezzanine loans with respect thereto:
<CAPTION>

                                                                Nonrecourse First Mortgage
Owning                                                              and Mezzanine Loans
Entity and                  Mezzanine Loans                         September 30, 2008
Property                      Advanced by   Approximate             Maturity   Interest
 Owned (1)                    the Company     Sq. Ft.     Balance     Date       Rate
----------                  --------------- -----------   -------   --------  --------
                                     (Amounts in thousands)
<S>                          <C>            <C>            <C>      <C>       <C>
PRC Member LLC (2)
Martinsburg Mall                               552        $ 29,840  July, 2016   (4)
----------------
  Martinsburg, WV

Lightstone I (2)
Four Malls                     $ 8,600
----------
Bradley Square Mall                            385        13,788  July, 2016     (4)
  Cleveland, TN

Mount Berry Square Mall                        478        22,458  July, 2016     (4)
  Rome, GA

Shenango Valley Mall                           508        14,727  July, 2016     (4)
  Hermitage, PA

West Manchester Mall                           733        24,600  June, 2009     (4)
  York, PA

Lightstone II
Shawnee/Brazos Malls             7,835                    39,061  Jan., 2009     (5)
--------------------
Brazos Mall                                    698
  Lake Jackson, TX

Shawnee Mall                                   444
  Shawnee, OK

Lightstone III (3)
Macon/Burlington Malls           9,500                   155,076  June, 2015     5.78%
----------------------
Burlington Mall                                412
  Burlington, NC

Macon Mall                                   1,446
  Macon, GA
                               -------        -----      --------
                               $25,935        5,656      $299,550
                               =======        =====      ========
</TABLE>

(1) Each individual owning entity is a single purpose entity that is prohibited
by its organizational documents from owning any assets other than the specified
shopping mall properties listed above.

(2) Lightstone I defaulted in payments of interest due September 1, 2008 and
subsequent thereto on the first mortgage secured by the Martinsburg Mall and
three of the Four Malls. It is unlikely that Lightstone I will be able to cure
the mortgage defaults or negotiate a modification of the terms of the mortgage
and the Company expects that the holder of the first mortgage will commence
foreclosure proceedings. Since management believes that the outstanding
principal balance of the first mortgage substantially exceeds the current value
of the mortgaged properties, the Company expects that its interest in these
properties as security for the Company's $8,600,000 mezzanine loan to Lightstone
I will be extinguished. The Company's $8,600,000 mezzanine loan is also secured
by interests in the West Manchester property but the Company believes that the
outstanding principal balance of the first mortgage on West Manchester, which is
not in default, exceeds the value of that property under current market
conditions. At September 30, 2008, the carrying value of the Company's
investments in PRC Member LLC and Lightstone I have been reduced to zero.

(3) Lightstone III defaulted in payments of interest due on the first mortgage
secured by these properties in February of 2008 and subsequent thereto and the
holder of the first mortgage commenced foreclosure proceedings with respect to
its mortgage. Management believes that the outstanding principal balance of the
first mortgage substantially exceeds the current value of the mortgaged
properties and the Company does not expect that its $9,500,000 mezzanine loan
secured by interests in these properties will be repaid. The carrying value of
the Company's investment in Lightstone III was reduced to zero at December 31,
2007.

(4) In June, 2006, the original $105,000,000 nonrecourse first mortgage loan
secured by the Martinsburg Mall and the Four Malls was refinanced with the
following mortgage loans: a $73,900,000 nonrecourse first mortgage loan with an
interest rate of 5.93% per annum, maturing on July 1, 2016, a $7,000,000
mezzanine loan with an interest rate of 12% per annum maturing on July 1, 2016
and a $29,600,000 nonrecourse first mortgage loan with an adjustable interest
rate based on the London Interbank Offered Rates ("LIBOR") plus 232 basis points
(approximately 4.79% at September 30, 2008), with a minimum interest rate of
7.89%. The $73,900,000 first mortgage loan and the $7,000,000 mezzanine loan,
with an aggregate outstanding balance of $80,813,000 at September 30, 2008, are
secured by the Martinsburg Mall and three of the Four Malls. The $29,600,000
first mortgage loan, with an outstanding balance of $24,600,000 at September 30,
2008, is secured by the West Manchester Mall and had an original maturity date
of June 8, 2008, which maturity date was extended until June 9, 2009 subject to
the right of the borrower to extend the maturity date until June 9, 2010 upon
making certain principal pay downs and meeting other conditions.

(5) The interest rate is at the 30 day LIBOR rate plus 280 basis points
(approximately 5.27% at September 30, 2008). The loan matures in January, 2009,
with an option to extend the loan for one year with an extension fee of .125% of
the outstanding principal. The borrower's right to extend the loan is subject to
the borrower's compliance with certain financial covenants and other conditions.

Under the equity method of accounting, the Company's investments in the joint
ventures, including the $25,935,000 of loans advanced to the joint ventures,
have been reduced by distributions received and losses recorded for the joint
ventures. Activity in investments in and advances to joint ventures for the
period ended September 30, 2008 is as follows:

                                                     Equity
                                                     in the
                                                     Income
                                                     (Loss)
                       Balance at                     from       Balance at
                      December 31,  Distributions     Joint     September 30,
                          2007         Received      Ventures       2008
                      ------------  ------------- -----------   -------------

Martinsburg Mall (1)  $     -       $  (134,052)  $ 134,052      $     -
Four Malls       (2)     688,735       (722,638)     33,903            -
Shawnee/Brazos
 Malls           (3)   4,234,466       (730,179)   (839,024)      2,665,263
Macon/Burlington
 Malls           (4)        -           (89,986)     89,986            -
                      ----------    -----------   ---------      ----------
                      $4,923,201    $(1,676,855)  $(581,083)     $2,665,263
                      ==========    ===========   =========      ==========

Equity in the income (loss) from joint ventures is as follows:

                           Three Months Ended         Nine Months Ended
                              September 30,             September 30,
                           2008         2007         2008         2007
                           ----         ----         ----         ----

Martinsburg Mall  (1)  $  13,625    $  80,431      $ 134,052   $  (2,953)
Four Malls        (2)    162,922     (262,129)        33,903    (678,806)
Shawnee/Brazos
 Malls            (3)   (301,230)    (344,228)      (839,024)   (628,729)
Macon/Burlington
 Malls            (4)       -         570,531         89,986     337,628
                       ---------    ---------      ---------   ---------
                       $(124,683)   $  44,605      $(581,083)  $(972,860)
                       =========    =========      =========   =========

(1) The Company's share of the income (loss) from joint ventures for the
Martinsburg Mall is determined after the deduction for interest expense at the
rate of 11% per annum on the outstanding $2,600,000 loan from Lightstone. In
2007, the Company's basis of its investment in the Martinsburg Mall was reduced
by distributions and losses to zero and, accordingly, the Company only recorded
its share of the loss to the extent of its basis. For the nine months ended
September 30, 2008, the Company recorded $134,052 of distributions received in
income from joint ventures.

(2) Interest income earned by the Company at the rate of 11% per annum on the
outstanding $8,600,000 loan from the Company to Lightstone I is included in the
calculation of the Company's share of the income (loss) from joint ventures for
the Four Malls. In the second quarter of 2008, the Company's basis of its
investment in the Four Malls was reduced by distributions and losses to zero
and, accordingly, the Company only recorded its share of the loss to the extent
of its basis. For the nine months ended September 30, 2008, the Company recorded
$33,903 of distributions received in income from joint ventures.

(3) Interest income earned by the Company at the rate of 11% per annum on the
outstanding $7,835,000 loan from the Company to Lightstone II is included in the
calculation of the Company's share of the loss from joint ventures for the
Shawnee/Brazos Malls.

(4) Interest income earned by the Company at the rate of 11% per annum on the
outstanding $9,500,000 loan from the Company to Lightstone III is included in
the calculation of the Company's share of the income (loss) from joint ventures
for the Macon/Burlington Malls. In the fourth quarter of 2007, the Company's
basis of its investment in the Macon/Burlington Malls was reduced by
distributions and losses to zero and, accordingly, the Company only recorded its
share of the loss to the extent of its basis. For the nine months ended
September 30, 2008, the Company recorded $89,986 of distributions received in
income from joint ventures.

The Company prepares the summary of the condensed combined financial information
for the Martinsburg Mall, the Four Malls, the Shawnee/Brazos Malls and the
Macon/Burlington Malls based on information provided by The Lightstone Group.
The summary financial information below includes information for all of the
joint ventures. The condensed combined information is as follows:


                                          September 30,        December 31,
                                             2008                 2007
                                          -------------        ------------
                                               (Amounts in thousands)
Condensed Combined Balance Sheets
  Net real estate                          $ 234,746             $235,595
  In-place lease values and
   acquired lease rights                       9,542               11,569
  Prepaid expenses and
   deposits in escrow                         18,921               18,145
  Cash and cash equivalents                    2,147                3,028
  Deferred financing costs                     1,949                2,505
  Other assets                                 2,669                7,307
                                           ---------             --------

  Total Assets                             $ 269,974             $278,149
                                           =========             ========

  Nonrecourse mortgage debt                $ 299,550             $306,131
  Mezzanine notes payable                     56,225               49,994
  Other liabilities                           28,828               29,278
                                           ---------             --------

  Total Liabilities                          384,603              385,403
  Members' Deficit                          (114,629)            (107,254)
                                           ---------             --------
  Total Liabilities and
   Members' Deficit                        $ 269,974             $278,149
                                           =========             ========






                          Three Months Ended             Nine Months Ended
                             September 30,                 September 30,
                          2008         2007           2008          2007
                       ----------   -----------    -----------   -----------
                                      (Amounts in thousands)
Condensed Statements
 of Operations
  Revenues            $ 9,502       $17,406        $ 33,556      $ 44,408
  Interest on
    mortgage debt
    and other debt     (3,867)       (6,489)        (16,552)      (18,842)
  Other expenses       (5,914)       (8,842)        (21,407)      (24,505)
                      -------       -------        --------      --------
  Income (loss) before
    depreciation
    and amortization     (279)        2,075          (4,403)        1,061

  Depreciation
    and amortization   (1,933)       (4,150)         (7,814)      (10,409)
                      -------       -------        --------      --------
   Net Loss           $(2,212)      $(2,075)       $(12,217)     $ (9,348)
                      =======       =======        ========      ========

As a result of the Company's use of the equity method of accounting with respect
to its investments in and advances to the joint ventures, the Company's
consolidated statements of operations reflect its proportionate share of the
income (loss) from the joint ventures. The Company's equity in the loss from
joint ventures of $581,083 for the nine months ended September 30, 2008, is
after deductions in the aggregate amount of $713,810 for the Company's
proportionate share of noncash charges (depreciation of $612,411 and
amortization of deferred financing costs, in-place lease values and other costs
of $101,399, all of which pertains to the Shawnee/Brazos Malls). Notwithstanding
the loss from the joint ventures, the Company is entitled to receive its
interest at the rate of 11% per annum on its $25,935,000 of loans to the joint
ventures. For the nine months ended September 30, 2008, the Company received
distributions from the joint ventures in the amount of $1,676,855 which included
interest payments of $1,542,803 on the outstanding loans to the joint ventures
and return on investment in the amount of $134,052.

During the quarter ended March 31, 2008, Lightstone III defaulted on its monthly
payments of interest on the Company's $9,500,000 mezzanine loan relating to the
Macon/Burlington Malls and also failed to make the payments due on the first
mortgage loan secured by Macon/Burlington. The holder of the first mortgage has
declared the mortgage in default and commenced foreclosure proceedings. Since
management believes that the outstanding principal balance of the first mortgage
substantially exceeds the current value of the mortgaged properties, the Company
does not expect to receive repayment of the principal amount of its $9,500,000
loan to Lightstone III or any further interest thereon. The carrying value of
this investment was reduced to zero at December 31, 2007.

During the quarter ended September 30, 2008, Lightstone I defaulted in payments
of interest due September 1, 2008 on the first mortgage secured by the
Martinsburg Mall and three of the Four Malls. Subsequent to September 30, 2008,
Lightstone I also defaulted in payments of interest due on the Company's
$8,600,000 mezzanine loan secured by interests in these properties. It is
unlikely that Lightstone I will be able to cure the defaults on the first
mortgage or negotiate a modification of the terms of the first mortgage and the
Company expects that the holder of the first mortgage will commence foreclosure
proceedings. Since management believes that the outstanding principal balance of
the first mortgage substantially exceeds the current value of the mortgaged
properties, the Company expects that its interest in these properties as
security for the Company's $8,600,000 mezzanine loan to Lightstone I will be
extinguished. The Company's $8,600,000 mezzanine loan is also secured by
interests in the West Manchester property but the Company believes that the
outstanding principal balance of the first mortgage on West Manchester, which is
not in default, exceeds the value of that property under current market
conditions. At September 30, 2008, the carrying value of the Company's
investments in PRC Member LLC and Lightstone I have been reduced to zero.

The Company's equity in the loss from joint ventures of $972,860 for the nine
months ended September 30, 2007, is after deductions in the aggregate amount of
$2,828,400 for the Company's proportionate share of noncash charges
(depreciation of $2,118,083 and amortization of deferred financing costs,
in-place lease values and other costs of $710,317). For the nine months ended
September 30, 2007, the Company received distributions from the joint ventures
in the amount of $2,481,859, which included interest payments of $2,321,991 on
the outstanding loans to the joint ventures and return on investment in the
amount of $159,868.

The Lightstone Group is controlled by David Lichtenstein. At September 30, 2008,
in addition to Presidential's investments of $2,665,263 in these joint ventures
with entities controlled by Mr. Lichtenstein, Presidential has a loan that is
due from an entity that is controlled by Mr. Lichtenstein in the outstanding
principal amount of $2,074,994. The loan is secured by interests in nine
apartment properties and is in good standing.

The $4,740,257 net carrying value of investments in and advances to joint
ventures with entities controlled by Mr. Lichtenstein and the loan outstanding
to an entity controlled by Mr. Lichtenstein constitute approximately 15% of the
Company's total assets at September 30, 2008.

5. OTHER INVESTMENTS

At September 30, 2008 and December 31, 2007, the Company had a $1,000,000
investment in Broadway Partners Feeder Fund A II, a blind pool of investment
capital sponsored by Broadway Real Estate Partners, LLC. The Company accounts
for this investment under the cost method.

6. DISCONTINUED OPERATIONS

For the periods ended September 30, 2008 and 2007, income from discontinued
operations includes the Crown Court property in New Haven, Connecticut (which
consists of 105 apartment units and 2,000 square feet of commercial space), 42
cooperative apartment units at the Towne House Apartments in New Rochelle, New
York and another cooperative apartment unit in New Haven, Connecticut. The Crown
Court property was designated as held for sale during the three months ended
September 30, 2008. The other properties were designated as held for sale during
the three months ended June 30, 2008 and sold during the three months ended
September 30, 2008. In addition, income from discontinued operations for the
periods ended September 30, 2007, included the Cambridge Green property, which
was sold in March, 2007, and another cooperative apartment unit which was sold
in June, 2007.

<TABLE>
The following table summarizes income for the properties sold or held for sale:
<CAPTION>

                                      Three Months Ended         Nine Months Ended
                                         September 30,              September 30,
                                       2008        2007         2008          2007
                                       ----        ----         ----          ----
<S>                                <C>          <C>         <C>            <C>
Revenues:
   Rental                          $  265,671   $251,013    $   805,137    $905,057
                                   ----------   --------    -----------    --------

Rental property expenses:
   Operating expenses                 104,288    108,169        321,088     467,871
   Interest on mortgage debt           36,954     38,591        112,114     148,626
   Real estate taxes                   49,349     44,360        138,070     159,210
   Depreciation on real estate          4,099     16,747         35,176      49,879
                                   ----------   --------    -----------    --------
Total                                 194,690    207,867        606,448     825,586
                                   ----------   --------    -----------    --------

Other income:
   Investment income                       98        101            285       2,257
                                   ----------   --------    -----------    --------

Income from
   discontinued operations             71,079     43,247        198,974      81,728

Net gain from sales of
   discontinued operations          2,893,031        -        2,893,031     735,705
                                   ----------   --------    -----------    --------

Total income from
   discontinued operations         $2,964,110   $ 43,247     $3,092,005    $817,433
                                   ==========   ========     ==========    ========
</TABLE>

The Crown Court property in New Haven, Connecticut is subject to a long-term net
lease with an option to purchase which is exercisable only in April, 2009. In
August, 2008, the lessee notified the Company that it is electing to exercise
this option in accordance with the terms of the net lease. The option purchase
price is $1,635,000 over the outstanding principal mortgage balance at the date
of the exercise of the option. The gain from sale for financial reporting
purposes is estimated to be approximately $3,261,000 and the estimated net
proceeds of sale will be approximately $1,615,000.

The Company owns a small portfolio of cooperative apartments located in New York
and Connecticut. These apartments are held for the production of rental income
and generally are not marketed for sale. However, from time to time, the Company
will receive purchase offers for some of these apartments or decide to market
specific apartments and will make sales if the purchase price is acceptable to
management.

In September, 2008, the Company sold a package of 42 cooperative apartment units
at Towne House located in New Rochelle, New York for a sales price of
$3,450,000. The net proceeds of sale were $3,343,960 and the gain from sale for
financial reporting purposes was $2,807,272.

In July, 2008, the Company sold one cooperative apartment unit located in New
Haven, Connecticut for a sales price of $122,000. The net proceeds of sale were
$113,990 and the gain from the sale for financial reporting purposes was
$85,759.

On March 21, 2007, the Company completed the sale of the Cambridge Green
property, a 201-unit apartment property in Council Bluffs, Iowa for a sales
price of $3,700,000. As part of the sales price, (i) the $2,856,452 outstanding
principal balance of the first mortgage debt was assumed by the buyer, (ii) the
Company received a $200,000 secured note receivable from the buyer, which
originally was due to mature on March 20, 2008 (see Note 3) and has an interest
rate of 7% per annum, and (iii) the balance of the sales price was paid in cash.
The net proceeds of sale were $664,780, which included the $200,000 note
receivable. The Company recognized a gain from the sale for financial reporting
purposes of $646,759 in March, 2007.

In June, 2007, the Company sold one cooperative apartment unit located in New
Haven, Connecticut for a sales price of $125,000. The net proceeds from the sale
were $117,224 and the Company recognized a gain from the sale for financial
reporting purposes of $88,946 in June, 2007.

The assets and liabilities of the Crown Court property are segregated in the
consolidated balance sheet at September 30, 2008. The components are as follows:

                                                          September 30,
                                                              2008
                                                          -------------

Assets related to discontinued operations:
  Land                                                    $  168,000
  Buildings                                                3,090,544
  Furniture and equipment                                     45,382
  Less: accumulated depreciation                          (2,912,447)
                                                          ----------
Total                                                     $  391,479
                                                          ==========

Liabilities related to discontinued operations:
  Mortgage debt                                           $2,103,545
                                                          ==========

7. HATO REY PARTNERSHIP

PDL, Inc. (a wholly owned subsidiary of Presidential) is the general partner of
the Hato Rey Partnership. Presidential and PDL, Inc. have an aggregate 60%
general and limited partner interest in the Hato Rey Partnership. The Company
exercises effective control over the partnership through its ability to manage
the affairs of the partnership in the ordinary course of business. Accordingly,
the Company consolidates the Hato Rey Partnership in the accompanying
consolidated financial statements.

The Hato Rey Partnership owns and operates the Hato Rey Center, an office
building, with 209,000 square feet of commercial space, located in Hato Rey,
Puerto Rico. During 2005 and 2006, three tenants at the building vacated a total
of 82,387 square feet of office space at the expiration of their leases. In
2006, the Hato Rey Partnership began a program of repairs and improvements to
the property and since that time has spent approximately $795,000 to upgrade the
physical condition and appearance of the property. The improvement program was
substantially completed by the end of 2007. In 2005, the Company agreed to lend
up to $2,000,000 to the Hato Rey Partnership to pay for the cost of improvements
to the building and fund any negative cash flows from the operation of the
property. The loan, which is advanced from time to time as funds are needed,
bore interest at the rate of 11% per annum until May 11, 2008, with interest and
principal to be paid out of the first positive cash flow from the property or
upon a refinancing of the first mortgage on the property. In September, 2007,
the Company agreed to lend an additional $500,000 to the Hato Rey Partnership
under the same terms as the original $2,000,000 loan, except that the interest
rate on the additional $500,000 loan is at the rate of 13% per annum and that
the interest rate on the entire loan is to be increased to 13% per annum to the
extent that the loan is not repaid on May 11, 2008. At September 30, 2008, the
Company had advanced $2,199,275 of the loan to the Hato Rey Partnership and
subsequent to September 30, 2008, the Company advanced an additional $20,000.
The $2,199,275 loan and accrued interest in the amount of $422,656 have been
eliminated in consolidation.

The first mortgage loan on the Hato Rey Center property is due on May 11, 2028
but the mortgage provides that if it was not repaid on or before May 11, 2008,
the interest rate on the loan would be increased by two percentage points (to
9.38% per annum, of which 2% per annum would be deferred until maturity) and all
cash flow from the property, after payment of all operating expenses, would be
applied to pay down the outstanding principal balance of the loan. The Company
did not repay the existing mortgage on May 11, 2008 and the mortgage provisions
described above became applicable. At September 30, 2008, the outstanding
principal balance of the loan was $15,323,327 and the deferred interest was
$123,969.

For the nine months ended September 30, 2008 and September 30, 2007, the Hato
Rey Partnership had a loss of $351,442 and $371,416, respectively. The minority
partners have no basis in their investment in the Hato Rey Partnership and, as a
result, the Company is required to record the minority partners' 40% share of
the loss which was $140,577 and $148,566, respectively. Therefore, the Company
recorded 100% of the loss from the partnership of $351,442 and $371,416 on the
Company's consolidated financial statements for the nine months ended September
30, 2008 and 2007, respectively. Future earnings of the Hato Rey Partnership,
should they materialize, will be recorded by the Company up to the amount of the
losses previously absorbed that were applicable to the minority partners.

8. MINORITY INTEREST IN CONSOLIDATED PARTNERSHIP

During 2007, Presidential was the general partner of UTB Associates, a
partnership, which held notes receivable and in which Presidential had a 75%
interest. As the general partner of UTB Associates, Presidential exercised
effective control over this partnership through its ability to manage the
affairs of the partnership in the ordinary course of business, including the
ability to approve the partnership's budgets, and through its significant equity
interest. Accordingly, Presidential consolidated this partnership in the
accompanying consolidated financial statements for the three months and nine
months ended September 30, 2007. The minority interest reflected the minority
partners' equity in the partnership.

In July, 2007, the Company purchased the remaining 25% limited partnership
interests for a purchase price of $42,508, which was effective as of June 30,
2007. As a result of the purchase, the Company owned 100% of UTB Associates. The
major asset of the partnership was a portfolio of notes receivable that amortize
monthly and have various interest rates. The Company liquidated the partnership
at December 31, 2007 and the remaining assets of the partnership were recorded
on the Company's consolidated balance sheet.

9. INCOME TAXES

Presidential has elected to qualify as a Real Estate Investment Trust under the
Internal Revenue Code. A REIT which distributes at least 90% of its real estate
investment trust taxable income to its shareholders each year by the end of the
following year and which meets certain other conditions will not be taxed on
that portion of its taxable income which is distributed to its shareholders.

The Company adopted FIN 48 on January 1, 2007. If the Company's tax positions in
relation to certain transactions were examined and were not ultimately upheld,
the Company would be required to pay an income tax assessment and related
interest, or a deficiency dividend and related interest, for prior years. Should
such an assessment require the Company to pay a deficiency dividend in order to
continue to qualify as a REIT, the Company would pay the deficiency dividend to
its shareholders and the related interest assessment to the taxing authorities.

Upon adoption of FIN 48 the Company recorded a reduction to the January 1, 2007
balance of retained earnings of $460,800 for accrued interest for prior years
related to the tax positions for which the Company may be required to pay a
deficiency dividend. In addition, the Company recorded interest expense of
$356,780 for the year ended December 31, 2007 and $147,526 for the six months
ended June 30, 2008 for the interest related to these matters. The Company
recognizes this interest expense in general and administrative expenses in its
consolidated statements of operations. As of June 30, 2008, the Company had
accrued $965,106 of interest related to these matters, which was included in
accrued liabilities in its consolidated balance sheet. During the three months
ended September 30, 2008, the tax years related to the FIN 48 interest accrual
expired and the Company reversed the $965,106 interest accrual. As of September
30, 2008, the tax years that remain open to examination by the federal, state
and local taxing authorities are the 2005 - 2007 tax years and those tax years
did not require any accrual pursuant to FIN 48.

Upon filing the Company's income tax return for the year ended December 31,
2007, Presidential applied approximately $584,000 of its 2006 net operating loss
carryforward of approximately $1,412,000 and then applied all of its available
2007 stockholders' distributions to reduce its taxable income for 2007 to zero.

The Company had taxable income (before distributions to stockholders) for the
nine months ended September 30, 2008, of approximately $4,416,000 ($1.26 per
share), which is comprised of capital gains of approximately $5,186,000 ($1.48
per share) and an ordinary loss of $770,000 ($.22 per share).

The Company intends to apply the $828,000 balance of its 2006 net operating loss
carryforward, all of its available 2008 distributions and, if required, any
eligible 2009 distributions to its 2008 taxable income to reduce its 2008
taxable income to zero. Therefore, no provision for Federal income taxes has
been made at September 30, 2008.

With respect to the Company's taxable income for the year ended December 31,
2008, the Company anticipates that the $9,500,000 mezzanine loan due from
Lightstone III will not be repaid as a result of a pending foreclosure by the
first mortgagee with respect to its mortgage on the Macon/Burlington Mall
properties. If the foreclosure sale of the property is completed in 2008, the
Company would have a tax write-off to bad debt for its $9,500,000 loan and would
have a tax loss for 2008. For financial reporting purposes, the $9,500,000 note
receivable was recorded as investments in and advances to joint ventures under
the equity method of accounting and at December 31, 2007, the carrying value of
this investment was reduced to zero.

Presidential has, for tax purposes, reported the gain from the sale of certain
of its properties using the installment method.

10. ACCUMULATED OTHER COMPREHENSIVE LOSS

The components of accumulated other comprehensive loss are as follows:

                                  September 30,      December 31,
                                     2008               2007
                                 -------------      -----------
Defined benefit plan liability   $(1,130,613)       $(1,130,613)
Contractual postretirement
 benefits liability                  (66,972)          (155,559)
Minimum contractual pension
 benefit liability                   (55,664)           (55,664)
Net unrealized gain on
 securities available
 for sale                             11,218             10,739
                                 -----------        -----------
Total accumulated other
 comprehensive loss              $(1,242,031)       $(1,331,097)
                                 ===========        ===========

<TABLE>
The Company's other comprehensive income (loss) consists of the changes in the
net unrealized gain (loss) on securities available for sale and the adjustments
to the pension liabilities and the postretirement benefits liability, if any.
Thus, comprehensive income (loss), which consists of net income (loss) plus or
minus other comprehensive income, is as follows:
<CAPTION>






                                       Three Months Ended         Nine Months Ended
                                           September 30,             September 30,
                                       2008          2007         2008          2007
                                    ----------     ---------    ----------   -----------

<S>                                 <C>            <C>          <C>          <C>
Net income (loss)                   $3,182,626     $(128,465)   $1,636,565   $(1,865,702)

Other comprehensive
 income (loss)-
  Net unrealized
   gain on securities
   available for sale                   2,489          3,762           479            13
  Adjustment for
   contractual
   postretirement
   benefits                            29,529           -           88,587      (120,484)
                                    ---------      ---------   -----------   -----------
Comprehensive
   income (loss)                   $3,214,644      $(124,703)   $1,725,631   $(1,986,173)
                                   ==========      =========    ==========   ===========
</TABLE>

11. TREASURY STOCK

Treasury stock consists of the following:

                             September 30, 2008         December 31, 2007
                             Number       Total         Number        Total
                            of Shares     Cost         of Shares      Cost
                           ---------   ---------      ---------      -----

Class A common stock         36,407    $  206,696       5,375     $ 36,136

Class B common stock        467,505     2,688,606      29,633      219,894
                            -------    ----------      ------     --------
Total                       503,912    $2,895,302      35,008     $256,030
                            =======    ==========      ======     ========

During the nine months ended September 30, 2008, the Company purchased 31,032
shares of its Class A common stock and 437,872 shares of its Class B common
stock as follows:






                               Number of           Number of
                                Class A  Price Per  Class B  Price Per  Total
Period      Purchased From       Shares    Share     Shares    Share    Paid
------   --------------------- --------- --------- --------- ---------  -----
May      Foundation controlled
          by a director and
          an officer of the
          Company          (1)     932    $5.375      4,072   $5.725  $   28,322

June     Private Investor  (2)  12,100     5.50     226,800    5.75    1,370,650

July     Private Investor        1,000     5.50       7,000    5.90       46,800

July     Private Investor  (2)  17,000     5.50     200,000    5.50    1,193,500
                                ------              -------           ----------

Total purchased during the
  nine months ended
  September 30, 2008            31,032              437,872           $2,639,272
                                ======              =======           ==========

(1) These shares were purchased at 1/8th of a point below market price.
(2) These shares were purchased pursuant to common stock repurchase agreements.

The Company has no specific plan or program to repurchase additional shares but
it may do so in the future.

12. GENERAL AND ADMINISTRATIVE EXPENSES

<TABLE>
General and administrative expenses include the following:
<CAPTION>

                                      Three Months Ended           Nine Months Ended
                                         September 30,                September 30,
                                        2008        2007          2008         2007
                                        ----        ----          ----         ----
<S>                                     <C>         <C>           <C>          <C>
FIN 48 interest
  expense (credit)                   $(965,106)   $   87,382  $ (817,580)  $  267,382
Other general and
  administrative expenses              904,360       953,651   2,692,761    2,763,659
                                     ---------    ----------  ----------   ----------

Net expense (credit)                 $ (60,746)   $1,041,033  $1,875,181   $3,031,041
                                     =========    ==========  ==========   ==========
</TABLE>

As previously discussed in Note 9, during the three months ended September 30,
2008, the tax years related to the FIN 48 interest expense accrual had expired
and the Company had reversed the $965,106 interest accrual. Such reversal
reduced general and administrative expenses by $965,106 and resulted in a credit
balance for total general and administrative expenses of $60,746 in the
Company's consolidated statement of operations for the three months ended
September 30, 2008.






13. EARNINGS PER COMMON SHARE

The following table sets forth the computation of basic and diluted income
(loss) per share:

                               Three Months Ended           Nine Months Ended
                                   September 30,              September 30,
                               2008           2007          2008          2007
                               ----           ----          ----          ----

Income (loss) from
 continuing operations      $  218,516  $  (171,712)  $(1,455,440) $(2,683,135)
                            ----------  -----------   -----------  -----------
Discontinued Operations:
 Income from
  discontinued operations       71,079       43,247       198,974       81,728
 Net gain from sales of
  discontinued operations    2,893,031         -        2,893,031      735,705
                             ---------   ----------     ----------  -----------
Total income from
 discontinued operations     2,964,110       43,247     3,092,005      817,433
                            ----------  -----------   -----------  ------------
Net Income (Loss)           $3,182,626  $  (128,465)  $ 1,636,565  $(1,865,702)
                            ==========  ===========   ===========  ============

Earnings per Common
Share basic:
 Income (loss) from
  continuing operations    $      0.06  $     (0.04)  $    (0.39)  $     (0.69)
                            ----------    -----------   ----------  -----------
 Discontinued Operations:
 Income from discontinued
  operations                      0.02         0.01         0.05          0.03
 Net gain from sales of
  discontinued operations         0.83          -           0.77          0.18
                            ----------   ----------   ----------    -----------
Total income from
 discontinued operations          0.85         0.01         0.82          0.21
                            ----------   -----------   ----------   -----------

Net Income (Loss) per
 Common Share - basic       $     0.91  $     (0.03)  $     0.43   $     (0.48)
                            ==========   ===========   ==========   ===========





Earnings per Common
Share diluted:
 Income (loss) from
   continuing operations  $    0.06      $    (0.04)   $    (0.39)   $    (0.69)
                          ---------      ----------    ----------    -----------
 Discontinued Operations:
  Income from
   discontinued operations     0.02            0.01          0.05          0.03
  Net gain from sales of
   discontinued operations     0.82             -            0.77          0.18
                          ---------      ----------    ----------    ----------

Total income from
 discontinued operations       0.84            0.01          0.82          0.21
                          ---------      ----------    ----------    ----------

Net Income (Loss) per
 Common Share - diluted   $    0.90      $    (0.03)   $     0.43    $    (0.48)
                          =========      ==========    ==========    ==========

Weighted average number
of shares outstanding:
  Basic                   3,501,921       3,905,698     3,770,895     3,902,203
  Effect of dilutive
   securities -
   restricted stock          31,197            -            -              -
                         ----------      ----------    ---------     ----------
Diluted                   3,533,118       3,905,698     3,770,895     3,902,203
                         ==========      ==========    ==========    ==========

For the nine months ended September 30, 2008, the weighted average shares
outstanding as used in the calculation for diluted loss per share does not
include 30,600 of restricted shares to be vested, as their inclusion would be
antidilutive.

For the three months and nine months ended September 30, 2007, the weighted
average shares outstanding as used in the calculation for diluted loss per share
does not include 31,100 of restricted shares to be vested, as their inclusion
would be antidilutive.

14. COMMITMENTS AND CONTINGENCIES

Presidential is not a party to any material legal proceedings. The Company may
from time to time be a party to routine litigation incidental to the ordinary
course of its business.

In the opinion of management, all of the Company's properties are adequately
covered by insurance in accordance with normal insurance practices.

The Company is involved in an environmental remediation process for contaminated
soil found on its Mapletree Industrial Center property in Palmer, Massachusetts.
The land area involved is approximately 1.25 acres and the depth of the
contamination is at this time undetermined. Since the most serious identified
threat on the site is to songbirds, the proposed remediation will consist of
removing all exposed materials and a layer of soil (the depth of which is yet to
be determined). The Company estimates that the costs of the cleanup will not
exceed $1,000,000. The remediation will comply with the requirements of the
Massachusetts Department of Environmental Protection ("MADEP"). The MADEP has
agreed that the Company may complete the remediation over the next fifteen
years, but the Company expects to complete the project over the next ten years.
In order to proceed with the remediation process, the Company has been waiting
for MADEP to adopt hazard waste regulation 310 CMR 30. During the quarter ended
June 30, 2008, this regulation was adopted and the Company is currently in the
process of adopting a remediation plan that complies with regulation 310 CMR 30.

In accordance with the provisions of SFAS No. 5, "Accounting for Contingencies",
in the fourth quarter of 2006, the Company accrued a $1,000,000 liability which
was discounted by $145,546 and charged $854,454 to expense. The discount rate
used was 4.625%, which was the interest rate on 10 year Treasury Bonds. At
September 30, 2008, the accrued liability balance was $932,010 and the discount
balance was $142,540.

Actual costs incurred may vary from these estimates due to the inherent
uncertainties involved. The Company believes that any liability in excess of
amounts provided which may result from the resolution of this matter will not
have a material adverse effect on the financial condition, liquidity or cash
flow of the Company.

For the nine months ended September 30, 2007, the Company incurred environmental
expenses of $41,493 for further excavation and testing of the site. These
expenses were in addition to the $1,000,000 previously accrued in 2006 for the
costs of the cleanup of the site. There were no such additional environmental
expenses for the nine months ended September 30, 2008.

15. CONTRACTUAL PENSION AND POSTRETIREMENT BENEFITS

The following tables set forth the components of net periodic benefit costs for
contractual pension benefits:

                                Three Months Ended     Nine Months Ended
                                   September 30,         September 30,
                                 2008       2007        2008        2007
                               --------   --------    --------   --------

Service cost                   $   -      $  4,354   $   -       $ 13,066
Interest cost                    19,399     31,109     58,195      93,322
Amortization of prior
  service cost                  (11,594)   (11,594)   (34,782)    (34,782)
Recognized actuarial loss          -       105,590       -        316,772
                               --------   --------   --------    --------

Net periodic benefit cost      $  7,805   $129,459   $ 23,413    $388,378
                               ========   ========   ========    ========






The following tables set forth the components of net periodic benefit costs for
contractual postretirement benefits:

                                Three Months Ended     Nine Months Ended
                                   September 30,          September 30,
                                 2008       2007          2008       2007
                               --------   --------      --------   --------

Service cost                    $   518    $   487       $ 1,554   $  1,460
Interest cost                     9,696     11,042        29,088     33,132
Amortization of prior
  service cost                      926     (2,944)        2,777     (8,834)
Recognized actuarial loss (gain)   (631)     5,446        (1,893)    16,337
                                -------    -------       -------   --------

Net periodic benefit cost       $10,509    $14,031       $31,526   $ 42,095
                                =======    =======       =======   ========

During the nine months ended September 30, 2008, the Company made contributions
of $162,495 and $24,160 for contractual pension benefits and postretirement
benefits, respectively. The Company anticipates additional contributions of
$54,165 and $10,840 for contractual pension benefits and postretirement
benefits, respectively, for the remainder of 2008.

16. DEFINED BENEFIT PLAN

The following table sets forth the components of net periodic benefit costs:

                                 Three Months Ended     Nine Months Ended
                                    September 30,         September 30,
                                 2008        2007       2008         2007
                               --------   ---------  ---------    ---------

Service cost                   $ 59,413   $  58,495  $ 178,241    $175,487
Interest cost                    76,200     107,812    228,598     323,437
Expected return on
  plan assets                   (91,988)   (142,128)  (275,966)   (426,388)
Amortization of prior
  service cost                    3,154       3,154      9,462       9,462
Amortization of
  accumulated loss                4,521       2,403     13,565       7,209
                               --------   ---------   --------    --------

Net periodic benefit cost      $ 51,300   $  29,736  $ 153,900    $ 89,207
                               ========   =========  =========    ========

The Company's funding policy for the defined benefit plan is based on
contributions that comply with the minimum and maximum amounts required by law.
During the nine months ended September 30, 2008, the Company did not make a
contribution to the defined benefit plan for the 2008 plan year. The Company is
not required to make any contributions in 2008, but may decide to do so.


PRESIDENTIAL REALTY CORPORATION AND SUBSIDIARIES

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
         AND RESULTS OF OPERATIONS
         FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007

Forward-Looking Statements

Certain statements made in this report may constitute "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
Such forward-looking statements include statements regarding the intent, belief
or current expectations of the Company and its management and involve known and
unknown risks, uncertainties and other factors that may cause the actual
results, performance or achievements of the Company to be materially different
from any future results, performance or achievements expressed or implied by
such forward-looking statements. Such factors include, among other things, the
following:

   o     generally adverse economic and business conditions, which may, among
         other things (a) affect the demand for retail and office space at
         properties owned by the Company or which are security for loans made by
         the Company, (b) affect the availability and creditworthiness of
         prospective tenants and the rental rates obtainable at the properties,
         and (c) affect consumer demand for the products offered by the tenants
         at the malls owned by the joint ventures in which the Company is a
         member, which adversely affects the operating results and valuations of
         such malls;

   o     adverse changes in the real estate markets, including a severe
         tightening of the availability of credit, which may adversely affect
         the ability of the Company or the joint ventures in which the Company
         is a member to sell, or refinance the mortgages on, their properties
         and which may also affect the ability of prospective tenants to rent
         space at these properties;

   o     general risks of real estate development, ownership and operation;

   o     governmental actions and initiatives; and

   o     environmental and safety requirements.

Summary

During the past year, the downturn in the economy, higher unemployment and lack
of consumer confidence have adversely affected the operating results of the
shopping mall properties in which the Company has invested. These conditions,
among others, have resulted in defaults in 2008 on two of the mezzanine loans
made by the Company to joint ventures owning seven shopping mall properties and
in defaults on the first mortgage loans secured by six of these properties (see
Liquidity and Capital Resources below).

In addition, the turmoil in the credit markets has made it very difficult for
the Company and its joint venture partners to obtain refinancing of the mortgage
loans on some of its properties on satisfactory terms. For example, the Company
was unable to refinance the existing first mortgage on its Hato Rey Center
office building in May, 2008 when the terms of the mortgage anticipated
repayment. As a result, while the mortgage is not in default, the interest rate
was increased by 200 basis points per annum (the payment of which is deferred
until maturity) and the mortgagee receives all net cash flow from the property
to reduce the outstanding principal balance, thus affecting the ability of the
Company to obtain cash from a refinancing of the mortgage or the operations of
the property. While the Company has been successful in increasing the occupancy
rate at the Hato Rey Center property from 69% at December 31, 2007 to 80% at
October 31, 2008 (including space leased but not yet in rent paying status), the
worsening economy may adversely affect the Company's ability to continue to
increase occupancy rates in the near future. (See Hato Rey Partnership below).

The restrictive credit market may also adversely affect the ability of the
Company and the joint ventures to sell properties owned by them on satisfactory
terms because of the inability of prospective purchasers to obtain financing on
satisfactory terms.

There are no current market indications of when the general U.S. economy will
rebound or when credit will become more easily available. The Company's Board of
Directors and management will continue to review the options available to the
Company.

Critical Accounting Policies

In preparing the consolidated financial statements in conformity with accounting
principles generally accepted in the United States of America ("GAAP"),
management is required to make estimates and assumptions that affect the
financial statements and disclosures. These estimates require difficult, complex
and subjective judgments. The Company's critical accounting policies are
described in its Form 10-KSB for the year ended December 31, 2007. There have
been no significant changes in the Company's critical accounting policies since
December 31, 2007.

Results of Operations

Financial Information for the three months ended September 30, 2008 and 2007:
----------------------------------------------------------------------------

Continuing Operations:

Revenues increased by $95,144 primarily as a result of increases in rental
revenues, partially offset by a decrease in interest income on mortgages-notes
receivable-related parties.

Rental revenues increased by $117,524 primarily due to increased occupancy rates
at the Hato Rey Center property, which increased rental revenues by $119,993.

Interest on mortgage-notes receivable-related parties decreased by $12,607
primarily as a result of a decrease of $10,857 in interest income and
amortization of discounts on the notes receivable held by UTB Associates, a
partnership in which the Company owned a 75% partnership interest. In 2007, the
Company purchased the remaining 25% limited partnership interests.

Costs and expenses decreased by $903,505 primarily due to decreases in general
and administrative expenses and amortization of in-place lease values and
mortgage costs. These decreases were partially offset by increases in rental
property operating expenses, interest on mortgage debt and depreciation expense.

General and administrative expenses decreased by $1,101,779 primarily as a
result of the reversal of the $965,106 interest expense previously accrued in
accordance with FIN 48, related to tax positions for which the Company may have
been required to pay a deficiency dividend. When the statute of limitations with
respect to these tax positions lapsed in September, 2008, the accrued liability
was reversed. This reversal resulted in a reduction of interest expense in the
three month period of $1,052,488. In addition, professional fees decreased by
$83,748 (primarily accounting fees) and contractual pension benefit expenses
decreased by $125,177 as a result of the deaths of two participants in 2007.
These decreases were partially offset by increases in salary expense of
$123,505. Salary expense increased primarily due to an amendment of an executive
employment agreement which would require payments upon the retirement of the
executive, which resulted in accrued salary expense of $135,514.

Rental property operating expenses increased by $183,961. This increase was
primarily a result of increases in utility expenses of $107,560 at the Hato Rey
Center property. In addition, at the Hato Rey Center property, advertising
expense increased by $11,674 and repairs and maintenance increased by $25,763.
Insurance expense at the Mapletree Industrial Center property increased by
$28,315 as a result of a $35,625 reversal in 2007 of an accrual for a workmen's
compensation audit that was settled in 2007.

Interest on mortgage debt increased by $47,756 primarily as a result of a
$74,751 increase in mortgage interest expense on the Hato Rey Center property
first mortgage. The terms of the existing first mortgage provided for a 2% per
annum increase in the interest rate on the mortgage beginning on May 12, 2008.
This increase was partially offset by a $25,412 decrease in the amortization of
discount on mortgage payable.

Depreciation on real estate increased by $12,644 primarily as a result of a
$12,754 increase in depreciation on the Hato Rey Center property.

Amortization of in-place lease values and mortgage costs decreased by $37,099 as
a result of a $37,181 decrease in the amortization of in-place lease values.
In-place lease values were recorded in connection with the partial step
acquisition of the Hato Rey Partnership in 2006 and 2007 and amortize over the
remaining terms of the leases.

Other income decreased by $608,393 as a result of a decrease in investment
income of $439,105 and a decrease in the equity in the income from joint
ventures of $169,288. Investment income decreased by $439,105 in the three month
period as a result of the nonrecurring $442,047 distribution received from the
proceeds of sale from Broadway Partners Parallel Fund A in September of 2007.
Equity in the income from joint ventures decreased by $169,288 from income of
$44,605 in 2007 to a loss of $124,683 in 2008 primarily because the Company's
basis in most of these investments has been reduced to zero. Losses on those
investments will only be recorded to the extent of their basis and thereafter
distributions received will be recorded as income. (See Liquidity and Capital
Resources - Investments in and Advances to Joint Ventures below.)

Loss from continuing operations decreased by $390,228 from a loss of $171,712 in
2007 to income of $218,516 in 2008. The $390,228 decrease in loss was primarily
a result of a decrease of $1,101,779 in general and administrative expenses and
a $95,144 increase in revenues, partially offset by the $608,393 decrease in
other income and a $183,961 increase in rental property operating expenses.

Discontinued Operations:

In 2008, the Company has three properties that were classified as discontinued
operations. The Crown Court property in New Haven, Connecticut, which consists
of 105 apartment units and 2,000 square feet of commercial space, is under a net
lease agreement with an option to purchase in April, 2009. During the quarter
ended September 30, 2008, the Company received notification from the lessee that
it has elected to exercise its purchase option and the property was designated
as held for sale in the quarter ended September 30, 2008. In addition, the Towne
House property in New Rochelle, New York, which consists of 42 cooperative
apartment units, and a cooperative apartment unit in New Haven, Connecticut were
designated as held for sale during the quarter ended June 30, 2008 and sold
during the quarter ended September 30, 2008. (See Liquidity and Capital
Resources - Discontinued Operations below).

In 2007, the Company had two properties that were classified as discontinued
operations: the Cambridge Green property in Council Bluffs, Iowa, which was sold
in March, 2007, and a cooperative apartment unit in New Haven, Connecticut,
which was sold in June, 2007.

The following table compares the total income from discontinued operations for
the three month periods ended September 30, for properties included in
discontinued operations:

                                                    2008              2007
                                                    ----              ----

Income (loss) from discontinued operations:

Cambridge Green, Council Bluffs, IA               $     -          $   845
Cooperative apartment units, New Haven, CT              (13)           (88)
Crown Court, New Haven, CT                           39,627         18,889
Towne House, New Rochelle, NY                        31,465         23,601
                                                 ----------        -------

Income from discontinued operations                  71,079         43,247
                                                 ----------        -------

Net gain from sales of
 discontinued operations:
Cooperative apartment units                          85,759           -
Towne House                                       2,807,272           -
                                                -----------        -------
Net gain from sales of
  discontinued operations                         2,893,031           -
                                                 ----------        -------

Total income from
  discontinued operations                        $2,964,110        $43,247
                                                 ==========        =======




Financial Information for the nine months ended September 30, 2008 and 2007:
---------------------------------------------------------------------------

Continuing Operations:

Revenues increased by $278,604 primarily as a result of increases in rental
revenues, partially offset by decreases in interest income on mortgages-notes
receivable and interest income on mortgages-notes receivable-related parties.

Rental revenues increased by $456,304 primarily due to increased occupancy rates
at the Hato Rey Center property, which increased rental revenues by $452,366.
The $452,366 increase in rental revenues at the Hato Rey Center property
includes lease termination fees in the amount of $56,122.

Interest on mortgages-notes receivable decreased by $68,543 primarily as a
result of repayments of $5,585,000 on notes receivable which were received in
2008. Interest income on those notes decreased by $74,156 in the 2008 period.

Interest on mortgages-notes receivable-related parties decreased by $107,096
primarily as a result of a decrease of $89,500 in payments of interest received
on the Consolidated Loans (see Liquidity and Capital Resources - Consolidated
Loans below).

Costs and expenses decreased by $991,854 primarily due to decreases in general
and administrative expenses and amortization of in-place lease values and
mortgage costs. These decreases were partially offset by increases in rental
property operating expenses, interest on mortgage debt and depreciation expense.

General and administrative expenses decreased by $1,155,860 primarily as a
result of the reversal of the $965,106 interest expense previously accrued in
accordance with FIN 48, related to certain tax positions for which the Company
may have been required to pay a deficiency dividend. When the statute of
limitations with respect to these tax positions lapsed in September, 2008, the
accrued liability was reversed. This reversal resulted in a reduction of
interest expense of $1,084,962. In addition, professional fees decreased by
$236,396 (primarily accounting fees) and contractual pension benefit expenses
decreased by $375,534 as a result of the deaths of two participants in 2007.
These decreases were partially offset by increases in salary expense of $490,288
and an increase in employee benefit plan expense of $64,693. Salary expense
increased primarily due to an amendment of an executive employment agreement
which would require payments upon the retirement of the executive, which
resulted in accrued salary expense of $403,596.

Rental property operating expenses increased by $235,705 primarily as a result
of increases in utility expenses of $214,109 and increases in bad debt expense
of $24,049 at the Hato Rey Center property.

Interest on mortgage debt increased by $75,022 primarily as a result of a
$111,319 increase in mortgage interest expense on the Hato Rey Center property
first mortgage. This increase was partially offset by a decrease of $33,057 in
the amortization of discount on mortgage payable.

Depreciation on real estate increased by $32,900 primarily as a result of a
$36,045 increase in depreciation on the Hato Rey Center property.

Amortization of in-place lease values and mortgage costs decreased by $175,585
as a result of a $155,087 decrease in the amortization of in-place lease values
and a $20,498 decrease in the amortization of mortgage costs. In-place lease
values were recorded in connection with the partial step acquisition of the Hato
Rey Partnership in 2006 and 2007 and amortize over the remaining terms of the
leases.

Other income decreased by $44,957 as a result of a decrease in investment income
of $436,734, offset by a decrease in the equity in the loss from joint ventures
of $391,777. Investment income decreased primarily due to the nonrecurring
$442,047 distribution received from the sales proceeds from Broadway Partners
Parallel Fund A in September, 2007. The loss from joint ventures decreased by
$391,777 from a loss of $972,860 in 2007 to a loss of $581,083 in 2008 primarily
because the Company's basis in most of these investments has been reduced to
zero. Losses on those investments will only be recorded to the extent of their
basis and thereafter distributions received will be recorded as income. (See
Liquidity and Capital Resources - Investments in and Advances to Joint Ventures
below.)

Loss from continuing operations decreased by $1,227,695 from a loss of
$2,683,135 in 2007 to a loss of $1,455,440 in 2008. The $1,227,695 decrease in
loss was primarily a result of a decrease of $1,155,860 in general and
administrative expenses.

Discontinued Operations:

The following table compares the total income from discontinued operations for
the nine month periods ended September 30, for properties included in
discontinued operations:






                                                         2008         2007
                                                         ----         ----

Income (loss) from discontinued operations:

Cambridge Green, Council Bluffs, IA                   $     -       $(95,593)
Cooperative apartment units, New Haven, CT                   866        (231)
Crown Court, New Haven, CT                               109,006     103,322
Towne House, New Rochelle, NY                             89,102      74,230
                                                     -----------    --------

Income from discontinued operations                      198,974      81,728
                                                      ----------    --------
Net gain from sales of discontinued operations:
Cambridge Green                                             -        646,759
Cooperative apartment units                               85,759      88,946
Towne House                                            2,807,272        -
                                                      ----------    --------

Net gain from sales of
  discontinued operations                              2,893,031     735,705
                                                      ----------    --------

Total income from
  discontinued operations                             $3,092,005    $817,433
                                                      ==========    ========


Balance Sheet

Net mortgage portfolio decreased by $5,289,707 primarily as a result of the
$5,638,903 of payments received on the Company's mortgage portfolio. In the
first quarter of 2008, the Company received repayment of its $1,500,000
mezzanine loan on the Reisterstown Apartments property and repayment of its
$100,000 note on the Pinewood property. In the second and third quarters of
2008, the Company received repayments of its $3,875,000 note receivable relating
to the sale of the Fairfield Towers mortgages in 1999 and its $110,000 Mark
Terrace note receivable. This decrease was partially offset by the $349,196 of
amortization of discounts on notes receivable.

Investments in and advances to joint ventures decreased by $2,257,938 as a
result of $1,676,855 of distributions received and $581,083 of equity in the
loss from the joint ventures.

Assets related to discontinued operations increased by $391,479. In the third
quarter of 2008, the Company classified the Crown Court property in New Haven,
Connecticut as discontinued operations.

Cash and cash equivalents increased by $4,389,295 primarily as a result of the
$5,638,903 of repayments received on the Company's mortgage portfolio and the
$3,457,950 of proceeds from the sales of properties. This increase was partially
offset by the distributions on common stock to shareholders of $1,790,821 and
the purchase of treasury stock of $2,639,272.

Other assets decreased by $168,632 primarily as a result of decreases of $99,140
of amortization of in-place lease values, $31,743 of amortization of mortgage
costs and $44,540 of tenant security deposits.

Mortgage debt decreased by $2,384,829 and liabilities related to discontinued
operations increased by $2,103,545. In the third quarter of 2008, the Company
reclassified the $2,103,545 Crown Court mortgage debt from mortgage debt to
liabilities related to discontinued operations.

Accrued liabilities decreased by $649,352 primarily as a result of the reversal
of the $817,580 interest accrual related to the FIN 48 interest accrued at
December 31, 2007.

In January, 2008, three independent directors of the Company each received 1,000
shares of the Company's Class B common stock as a partial payment of directors'
fees for the 2008 year. The shares were valued at $5.92 per share, which was the
market value of the Class B common stock at the grant date, and, accordingly,
the Company recorded $17,760 in prepaid directors' fees (to be amortized during
2008) based on the market value of the stock. The Company recorded additions to
the Company's Class B common stock of $300 at par value of $.10 per share and
$17,460 to additional paid-in capital.

Treasury stock increased by $2,639,272 as a result of the Company's purchase of
437,872 shares of its Class B common stock at an average cost of $5.64 per share
and 31,032 shares of its Class A common stock at an average cost of $5.50 per
share. (See Liquidity and Capital Resources - Treasury Stock below.)

Liquidity and Capital Resources

Presidential obtains funds for working capital and investment from its available
cash and cash equivalents, from operating activities, from refinancing of
mortgage loans on its real estate equities or from sales of such equities, and
from repayments on its mortgage portfolio. The Company also has at its disposal
a $250,000 unsecured line of credit from a lending institution. At September 30,
2008, there was no outstanding balance due under the line of credit.

At September 30, 2008, Presidential had $6,732,792 in available cash and cash
equivalents, an increase of $4,389,295 from the $2,343,497 at December 31, 2007.
This increase in cash and cash equivalents was due to cash provided by operating
activities of $628,748 and cash provided by investing activities of $8,520,178,
offset by cash used in financing activities of $4,759,631.

On November 13, 2008, the Company announced that it would reduce its dividend
for the fourth quarter of 2008 from $.16 per share to $.08 per share. The
decision of the Board of Directors of the Company to reduce the Company's
dividend at this time recognizes, among other things, the adverse economic
conditions currently affecting real estate markets, the existing defaults on two
of the Company's loans to affiliates of David Lichtenstein, the Company's
inability at the present time to refinance the Hato Rey Center office building
mortgage and the desirability of conserving the Company's cash resources under
these circumstances.

In February, 2008, Lightstone III defaulted on payments of interest due under
the Company's $9,500,000 loan related to the Macon/Burlington Malls (see
Investments in and Advances to Joint Ventures below). As a result, the Company
does not expect to receive approximately $1,060,000 of interest payments that
are contractually due to be received during 2008. The holder of the first
mortgage on the Macon/Burlington properties has commenced foreclosure
proceedings on its mortgage. Since management believes that the outstanding
principal balance of the first mortgage substantially exceeds the current value
of the mortgaged property, Presidential does not expect to recover any amounts
on its mezzanine loan.

Subsequent to September 30, 2008, Lightstone I defaulted on the payment of
interest due under the Company's $8,600,000 mezzanine loan relating to the Four
Malls and also did not make the customary payments of the return on the
Company's investment in the Martinsburg Mall. The payments of interest and
return on investment due October 1, 2008 and November 1, 2008 totaled $187,105.
Lightstone I has also defaulted on payments of interest due under the first
mortgage covering the Martinsburg Mall and three of the Four Malls (Bradley
Square, Mount Berry Square and Shenango Valley) on August 1, 2008 and subsequent
thereto. The Company has been informed by Lightstone I that it is attempting to
negotiate a modification of the first mortgage covering these properties but
that it is unlikely that it will be able to do so and that the holder of the
first mortgage has accelerated the outstanding principal balance of the loan and
will foreclose upon its security. The Company believes that the outstanding
principal balance of the first mortgage substantially exceeds the current value
of the mortgaged properties and that it is unlikely that the Company will be
able to recover any amount of its mezzanine loan in the amount of $8,600,000 and
investment in the amount of $1,438,410.

The Company's $7,835,000 mezzanine loan to Lightstone II secured by interests in
the Brazos Mall and Shawnee Mall remains in good standing. The first mortgage on
these properties also is in good standing but matures in January, 2009. The
first mortgage may be extended at the option of Lightstone II but only if
certain covenants and conditions are met. However, Lightstone II has advised the
Company that it is unlikely that these covenants and conditions will be met and
that Lightstone II will have to attempt to obtain a modification of the terms of
the first mortgage. Lightstone II is attempting to sell the Shawnee/Brazos
properties but under current market conditions it is impossible to determine
whether Lightstone II will be able to sell these properties or to modify or
refinance the first mortgage on them prior to its maturity date. If a sale is
accomplished, it is unlikely that the net sales proceeds will be sufficient to
repay the Company's mezzanine loan in full.

The Company believes that it may have certain legal claims with respect to the
defaults on the Company's joint ventures with and mezzanine loans to affiliates
of David Lichtenstein and it is discussing such claims with its attorneys and
the attorneys representing Mr. Lichtenstein.

The defaults in payment of the Company's $9,500,000 mezzanine loan to Lightstone
III and $8,600,000 mezzanine loan to Lightstone I have had (and any subsequent
default on the Company's $7,835,000 mezzanine loan with respect to Lightstone II
would have) a material adverse affect on the Company's business, financial
condition and results of operations and prospects. Notwithstanding the
foregoing, management believes that the Company has sufficient liquidity and
capital resources to carry on its existing business and, barring any unforeseen
circumstances, to pay any dividends required to maintain REIT status in the
foreseeable future.

During the nine months ended September 30, 2008, the Company received repayment
in full of a $3,875,000 note receivable from an affiliate of David Lichtenstein
and received net proceeds of $3,343,960 from the sale of 42 cooperative
apartment units at Towne House Apartments in New Rochelle, New York. At
September 30, 2008, the Company had a cash balance of $6,732,792.

The first mortgage on the Building Industries Center property in White Plains,
New York is due on January 1, 2009 with an outstanding principal balance of
$1,072,906. The Company is investigating the possibility of obtaining an
extension of the maturity date of the mortgage, but if it is not able to do so
on satisfactory terms, the Company expects to repay the mortgage on its maturity
date and that such repayment will not materially affect the Company's liquidity.

As described under "Hato Rey Partnership" below, commencing May 11, 2008, the
first mortgage on the Hato Rey Center property provides that all cash flow from
the property, after payment of all operating expenses, will be utilized to repay
the outstanding principal of the first mortgage loan on the property. In
addition, the Company has loaned the partnership which owns the Hato Rey Center
property a total of $2,199,275 (which loan may be increased to up to
$2,500,000), which loans bears interest at the rate of 13% per annum with such
interest and principal to be paid from the first positive cash flow from the
property or upon a refinancing of the first mortgage on the property. Since all
cash flow will be devoted to repayment of the first mortgage, the Company does
not expect to receive payment of any interest on the loan to the partnership
until the first mortgage is refinanced. While the property generates sufficient
cash flow to support a refinancing of the first mortgage, in light of the
current credit market, the Company does not expect to be able to refinance the
first mortgage in the near term.

During the first nine months of 2008, the Company paid cash distributions to
shareholders which exceeded cash flows from operating activities. Periodically
the Company receives balloon payments on its mortgage portfolio and net proceeds
from sales of discontinued operations and other properties. These payments are
available to the Company for distribution to its shareholders or the Company may
retain these payments for future investment. The Company may in the future, as
it did in the first nine months of 2008, pay dividends in excess of its cash
flow from operating activities if the Board of Directors believes that the
Company's liquidity and capital resources are sufficient to pay such dividends.
However, no assurances can be given with respect to any dividends for future
periods.

To the extent that payments received on its mortgage portfolio or payments
received from sales are taxable as capital gains, the Company has the option to
distribute the gain to its shareholders or to retain the gain and pay Federal
income tax on it. The Company does not have a specific policy as to the
retention or distribution of capital gains. The Company's dividend policy
regarding capital gains for future periods will be based upon many factors
including, but not limited to, the Company's present and projected liquidity,
its desire to retain funds available to pay operating expenses or for additional
investment, its historical dividend rate and its ability to reduce taxes by
paying dividends.

As discussed above, the tenant at the Crown Court Apartment property owned by
the Company has elected to exercise its option to purchase the property. The
closing is expected to take place in April of 2009 and the Company expects to
receive net proceeds of sale of approximately $1,615,000 at that time.

Except as discussed herein, management is not aware of any other trends, events,
commitments or uncertainties that will have a significant effect on the
Company's liquidity.

Operating Activities

Cash from operating activities includes interest on the Company's mortgage
portfolio, net cash received from rental property operations and distributions
received from joint ventures. In 2008, cash received from interest on the
Company's mortgage portfolio was $680,405 and distributions received from the
joint ventures were $1,676,855. Net cash received from rental property
operations was $602,343. Net cash received from rental property operations is
net of distributions to minority partners, if any, but is before additions and
improvements and mortgage amortization.

Investing Activities

Presidential holds a portfolio of mortgage notes receivable. During 2008, the
Company received principal payments of $5,638,903 on its mortgage portfolio, of
which $5,606,579 represented prepayments and balloon payments.

During the first nine months of 2008, the Company invested $576,675 in additions
and improvements to its properties.

Financing Activities

The Company's indebtedness at September 30, 2008, consisted of mortgage debt of
$16,483,861 for continuing operations and $2,103,545 for discontinued
operations. The mortgage debt is collateralized by individual properties. The
$15,323,327 mortgage on the Hato Rey Center property is nonrecourse to the
Company, whereas the $1,080,221 Building Industries Center mortgage and the
$80,313 Mapletree Industrial Center mortgage are recourse to Presidential. The
$2,103,545 mortgage on the Crown Court property, which is classified as a
discontinued operation, is nonrecourse to the Company. In addition, some of the
Company's mortgages provide for Company liability for damages resulting from
specified acts or circumstances, such as for environmental liabilities and
fraud. Generally, mortgage debt repayment is serviced with cash flow from the
operations of the individual properties. During 2008, the Company made $329,538
of principal payments on mortgage debt.

The mortgages on the Company's properties are at fixed rates of interest and
will fully amortize by periodic principal payments, with the exception of the
Building Industries Center mortgage, which has a balloon payment of $1,072,906
due at maturity in January, 2009, and the Hato Rey Center mortgage. The Company
expects to repay the $1,072,906 balloon payment due in January, 2009 on the
Building Industries Center mortgage, unless it is able to obtain an extension on
satisfactory terms. The $15,323,327 Hato Rey Center mortgage matures in May,
2028, and had a fixed rate of interest of 7.38% per annum until May, 2008;
thereafter the interest rate increased by 2% and additional repayments of
principal will be required from surplus cash flows from operations of the
property (see Hato Rey Partnership below).

During the first nine months of 2008, Presidential declared and paid cash
distributions of $1,790,821 to its shareholders.

Treasury Stock Purchase

During the period ended September 30, 2008, the Company purchased 31,032 shares
of its Class A common stock and 437,872 shares of its Class B common stock.
Details of these purchases are as follows:

                               Number of           Number of
                                Class A  Price Per  Class B  Price Per  Total
Period      Purchased From       Shares    Share     Shares    Share    Paid
------   --------------------- --------- --------- --------- ---------  -----
May      Foundation controlled
          by a director and
          an officer of the
          Company          (1)     932    $5.375    4,072     $5.725  $   28,322

June     Private Investor  (2)  12,100     5.50   226,800      5.75    1,370,650

July     Private Investor        1,000     5.50     7,000      5.90       46,800

July     Private Investor  (2)  17,000     5.50   200,000      5.50    1,193,500
                                ------            -------             ----------

Total                           31,032            437,872             $2,639,272
                                ======            =======             ==========

(1) These shares were purchased at 1/8th of a point below market price.
(2) These shares were purchased pursuant to common stock repurchase agreements.

The Company believes that the repurchase of the Company's shares at or about the
then current price for the Company's shares was an appropriate use of the
Company's cash available for investment and in the best interest of all of the
shareholders of the Company. However, the Company has no specific plan or
program to repurchase additional shares but it may do so in the future.

Investments in and Advances to Joint Ventures

Over the past several years the Company has made investments in and advances to
four joint ventures that own nine shopping malls. The Company has a 29%
ownership interest in these joint ventures and accounts for these investments
under the equity method. All of the investments in and advances to joint
ventures were made with various entities of the Lightstone Group ("Lightstone").
Each individual owning entity is a single purpose entity that is prohibited by
its organizational documents from owning any assets other than its related
shopping mall properties.

The Company's investments in three of the joint ventures were mezzanine loans to
the various joint venture owning entities. These loans mature in 2014 and 2015
and have an annual interest rate of 11% per annum. At September 30, 2008, these
loans have an aggregate outstanding principal balance of $25,935,000. The loans
are secured by the ownership interests in the entities that own the malls,
subject to the first mortgage liens. The Company is entitled to receive monthly
payments of interest on these loans from the joint ventures and records these
payments as distributions received to Investments in and advances to joint
ventures.

The Company's investment in the Martinsburg Mall is a capital contribution to
the owning joint venture in the original amount of $1,438,410. The Company is
entitled to receive a preferential return on its capital contribution at the
rate of 11% per annum. The Company's investment in the Martinsburg Mall is
reduced by distributions received from the joint venture and the Company's share
of losses recorded for the joint venture (and increased by any income recorded
for the joint venture).

In addition, the owning entity of the Martinsburg Mall has a $2,600,000
mezzanine loan payable to Lightstone. The loan matures in 2014 and the interest
rate on the loan is 11% per annum. This loan is secured by an assignment of the
ownership interest in the entity that owns the mall, subject to the first
mortgage lien.

Under the equity method of accounting, the Company's investments in the joint
ventures, including the $25,935,000 of loans advanced to the joint ventures,
have been reduced by distributions received and losses recorded for the joint
ventures. Activity in investments in and advances to joint ventures for the
period ended September 30, 2008 is as follows:

                                                     Equity
                                                     in the
                                                     Income
                                                     (Loss)
                       Balance at                     from       Balance at
                      December 31,  Distributions     Joint     September 30,
                          2007         Received      Ventures       2008
                      ------------  ------------- -----------   -------------

Martinsburg Mall (1)  $     -       $  (134,052)  $ 134,052      $     -
Four Malls       (2)     688,735       (722,638)     33,903            -
Shawnee/Brazos
 Malls           (3)   4,234,466       (730,179)   (839,024)      2,665,263
Macon/Burlington
 Malls           (4)        -           (89,986)     89,986            -
                      ----------    -----------   ---------      ----------
                      $4,923,201    $(1,676,855)  $(581,083)     $2,665,263
                      ==========    ===========   =========      ==========

Equity in the income (loss) from joint ventures is as follows:

                           Three Months Ended         Nine Months Ended
                             September 30,             September 30,
                           2008         2007         2008         2007
                           ----         ----         ----         ----

Martinsburg Mall  (1)  $  13,625    $  80,431      $ 134,052   $  (2,953)
Four Malls        (2)    162,922     (262,129)        33,903    (678,806)
Shawnee/Brazos
 Malls            (3)   (301,230)    (344,228)      (839,024)   (628,729)
Macon/Burlington
 Malls            (4)       -         570,531         89,986     337,628
                       ---------    ---------      ---------   ---------
                       $(124,683)   $  44,605      $(581,083)  $(972,860)
                       =========    =========      =========   =========

(1) The Company's share of the income (loss) from joint ventures for the
Martinsburg Mall is determined after the deduction for interest expense at the
rate of 11% per annum on the outstanding $2,600,000 loan from Lightstone. In
2007, the Company's basis of its investment in the Martinsburg Mall was reduced
by distributions and losses to zero and, accordingly, the Company only recorded
its share of the loss to the extent of its basis. For the nine months ended
September 30, 2008, the Company recorded $134,052 of distributions received in
income from joint ventures.

(2) Interest income earned by the Company at the rate of 11% per annum on the
outstanding $8,600,000 loan from the Company to Lightstone I is included in the
calculation of the Company's share of the income (loss) from joint ventures for
the Four Malls. In the second quarter of 2008, the Company's basis of its
investment in the Four Malls was reduced by distributions and losses to zero,
and, accordingly, the Company only recorded its share of the loss to the extent
of its basis. For the nine months ended September 30, 2008, the Company recorded
$33,903 of distributions received in income from joint ventures.

(3) Interest income earned by the Company at the rate of 11% per annum on the
outstanding $7,835,000 loan from the Company to Lightstone II is included in the
calculation of the Company's share of the loss from joint ventures for the
Shawnee/Brazos Malls.

(4) Interest income earned by the Company at the rate of 11% per annum on the
outstanding $9,500,000 loan from the Company to Lightstone III is included in
the calculation of the Company's share of the income (loss) from joint ventures
for the Macon/Burlington Malls. In the fourth quarter of 2007, the Company's
basis of its investment in the Macon/Burlington Malls was reduced by
distributions and losses to zero and, accordingly, the Company only recorded its
share of the loss to the extent of its basis. For the nine months ended
September 30, 2008, the Company recorded $89,986 of distributions received in
income from joint ventures.

As a result of the Company's use of the equity method of accounting with respect
to its investments in and advances to the joint ventures, the Company's
consolidated statements of operations reflect its proportionate share of the
income (loss) from the joint ventures. The Company's equity in the loss from
joint ventures of $581,083 for the nine months ended September 30, 2008 is after
deductions in the aggregate amount of $713,810 for the Company's proportionate
share of noncash charges (depreciation of $612,411 and amortization of deferred
financing costs, in-place lease values and other costs of $101,399, all of which
pertain to the Shawnee/Brazos Malls). Notwithstanding the loss from the joint
ventures, the Company is entitled to receive its interest at the rate of 11% per
annum on its $25,935,000 of loans to the joint ventures. For the nine months
ended September 30, 2008, the Company received distributions from the joint
ventures in the amount of $1,676,855, of which $1,542,803 were interest payments
received on the outstanding loans to the joint ventures and $134,052 was a
return on investment.

The Lightstone Group is controlled by David Lichtenstein. At September 30, 2008,
in addition to Presidential's investments of $2,665,263 in these joint ventures
with entities controlled by Mr. Lichtenstein, Presidential has a loan that is
due from an entity that is controlled by Mr. Lichtenstein in the outstanding
principal amount of $2,074,994. The loan is secured by interests in nine
apartment properties and is in good standing.

The $4,740,257 net carrying value of investments in and advances to joint
ventures with entities controlled by Mr. Lichtenstein and the loan outstanding
to an entity controlled by Mr. Lichtenstein constitute approximately 15% of the
Company's total assets at September 30, 2008.

Discontinued Operations

The Crown Court property in New Haven, Connecticut is subject to a long-term net
lease with an option to purchase which is exercisable only in April, 2009. In
August, 2008, the lessee notified the Company that it is electing to exercise
this option in accordance with the terms of the net lease. In the third quarter
of 2008, the Company classified this property as discontinued operations. At
September 30, 2008, assets related to discontinued operations were $391,479 and
liabilities related to discontinued operations were $2,103,545 (the balance of
the first mortgage debt). The option purchase price is $1,635,000 over the
outstanding principal mortgage balance at the date of the exercise of the
option. The Company estimates that the gain from sale for financial reporting
purposes will be approximately $3,261,000 and the estimated net proceeds of sale
will be approximately $1,615,000.

The Company owns a small portfolio of cooperative apartments located in New York
and Connecticut. These apartments are held for the production of rental income
and generally are not marketed for sale. However, from time to time, the Company
will receive purchase offers for some of these apartments or decide to market
specific apartments and will make sales if the purchase price is acceptable to
management.

In September, 2008, the Company sold a package of 42 cooperative apartment units
at Towne House located in New Rochelle, New York for a sales price of
$3,450,000. The net proceeds of sale were $3,343,960 and the gain from the sale
for financial reporting purposes was $2,807,272.

In July, 2008, the Company sold one cooperative apartment unit located in New
Haven, Connecticut for a sales price of $122,000. The net proceeds of sale were
$113,990 and the gain from the sale for financial reporting purposes was
$85,759.

Hato Rey Partnership

At September 30, 2008, the Company has an aggregate 60% general and limited
partnership interest in the Hato Rey Partnership. The Hato Rey Partnership owns
and operates the Hato Rey Center, an office building in Hato Rey, Puerto Rico.

Three tenants vacated a total of 82,387 square feet of space to occupy their own
newly constructed office buildings and, as a result, by March 31, 2006, the
vacancy rate at the building was approximately 48%. In 2005, Presidential and
its partners agreed to undertake a program of repairs and improvements to the
building, which program was substantially completed by the end of 2007 at a cost
of approximately $795,000. Presidential believes that the improvement program
has accomplished its goal of bringing the building (which was constructed in
1967) up to modern standards for office buildings in the area. In order to pay
for the cost of the improvements to the building and fund negative cash flow
from the operation of the property during the period of high vacancies, in 2005
Presidential agreed to lend the partnership a total of $2,000,000 (subsequently
increased to $2,500,000). Presidential's loan bears interest at the rate of 11%
per annum (13% after May 11, 2008), with interest and principal to be paid from
the first positive cash flow from the property or upon a refinancing of the
first mortgage on the property. At September 30, 2008, total advances under the
loan were $2,199,275 and accrued interest on the loan was $422,656, all of which
have been eliminated in consolidation. Subsequent to September 30, 2008, the
Company advanced an additional $20,000 to the Hato Rey Partnership.

At September 30, 2008, the vacancy rate at the Hato Rey Center had been reduced
to approximately 27%. However, in July, 2008, the Company executed a lease for
11,042 square feet (for November 15, 2008 occupancy), which lease will decrease
the vacancy rate at the building to approximately 20%.

The Company had expected to refinance the existing $15,323,327 first mortgage on
the building in the second quarter of 2008, when the terms of the existing
mortgage would be automatically modified to increase the interest rate, but the
combination of the slower than anticipated leasing of vacant space and the
turmoil in the lending markets made a refinancing unfeasible. The modification
of the terms of the existing mortgage provided for a 2% increase in the interest
rate (from 7.38% to 9.38%), which additional interest will be deferred until the
maturity date of the mortgage in 2028. In addition, the modification provides
that all cash flow from the property, after payment of all operating expenses,
will be utilized to repay the outstanding principal of the mortgage loan. The
Company intends to refinance this mortgage when occupancy rates at the property
have improved and lending markets have returned to a more normal state. However,
until the first mortgage is refinanced, the Company will not receive any cash
payments on its loan to the Hato Rey Partnership since principal and interest on
the Company's loan are payable only out of operating cash flow or refinancing
proceeds and under the terms of the modified mortgage, all net cash flow will be
utilized to reduce principal on the first mortgage.

Environmental Matters

Mapletree Industrial Center - Palmer, Massachusetts

The Company is involved in an environmental remediation process for contaminated
soil found on this property. The land area involved is approximately 1.25 acres
and the depth of the contamination is at this time undetermined. Since the most
serious identified threat on the site is to songbirds, the proposed remediation
will consist of removing all exposed materials and a layer of soil (the depth of
which is yet to be determined). The Company estimates that the costs of the
cleanup will not exceed $1,000,000. The remediation will comply with the
requirements of the Massachusetts Department of Environmental Protection
("MADEP"). The MADEP has agreed that the Company may complete the remediation
over the next fifteen years, but the Company expects to complete the project
over the next ten years. In order to proceed with the remediation process, the
Company was waiting for Massachusetts to complete the adoption of hazard waste
regulation 310 CMR 30. During the quarter ended June 30, 2008, this regulation
was adopted by the State of Massachusetts, and the Company is currently in the
process of working out the remediation plan.

In accordance with the provisions of SFAS No. 5, "Accounting for Contingencies",
in the fourth quarter of 2006, the Company accrued a $1,000,000 liability which
was discounted by $145,546 and charged $854,454 to expense. The discount rate
used was 4.625%, which was the interest rate on 10 year Treasury Bonds. At
September 30, 2008, the accrued liability balance was $932,010 and the discount
balance was $142,540.

Actual costs incurred may vary from these estimates due to the inherent
uncertainties involved. The Company believes that any liability in excess of
amounts provided which may result from the resolution of this matter will not
have a material adverse effect on the financial condition, liquidity or cash
flow of the Company.

Consolidated Loans

Presidential holds two nonrecourse loans (the "Consolidated Loans"), which it
received in 1991 from Ivy Properties, Ltd. and its affiliates "(Ivy"). At
September 30, 2008, the Consolidated Loans have an outstanding principal balance
of $4,770,500 and a net carrying value of zero. Pursuant to existing agreements,
the Company is entitled to receive, as payments of principal and interest on the
Consolidated Loans, 25% of the cash flow of Scorpio Entertainment, Inc.
("Scorpio"), a company owned by two of the Ivy principals (Steven Baruch who is
an executive officer and Director of Presidential and Thomas Viertel who is an
executive officer of Presidential) to carry on theatrical productions. Amounts
received by Presidential from Scorpio will be applied to unpaid and unaccrued
interest on the Consolidated Loans and recognized as income. The Company
anticipates that these amounts may be material from time to time. However, the
profitability of theatrical production is by its nature uncertain and management
believes that any estimate of payments from Scorpio on the Consolidated Loans
for future periods is too speculative to project. During the nine months ended
September 30, 2008 and 2007, the Company received payments of $146,750 and
$236,250, respectively, from Scorpio. The Consolidated Loans bear interest at a
rate equal to the JP Morgan Chase Prime rate, which was 5% at September 30,
2008. At September 30, 2008, the unpaid and unaccrued interest was $3,470,966
and such interest is not compounded.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

While the Company is not required as a smaller reporting company to comply with
this Item 3, it is providing the following general discussion of qualitative
market risk.

The Company's financial instruments consist primarily of notes receivable and
mortgage notes payable. Substantially all of these instruments bear interest at
fixed rates, so the Company's cash flows from them are not directly impacted by
changes in market rates of interest. Changes in market rates of interest impact
the fair values of these fixed rate assets and liabilities. However, because the
Company generally holds its notes receivable until maturity or prepayment and
repays its notes payable at maturity or upon sale of the related properties, any
fluctuations in values do not impact the Company's earnings, balance sheet or
cash flows. Nevertheless, since some of the Company's mortgage notes payable are
at fixed rates of interest and provide for yield maintenance payments upon
prepayment prior to maturity, if market interest rates are lower than the
interest rates on the mortgage notes payable, the Company's ability to sell the
properties securing the notes may be adversely affected and the net proceeds of
any sale may be reduced as a result of the yield maintenance requirements. The
Company does not own any derivative financial instruments or engage in hedging
activities.




ITEM 4.           CONTROLS AND PROCEDURES

   a)    As of the end of the period covered by this quarterly report on Form
         10-Q, the Company carried out an evaluation, under the supervision and
         with the participation of our Chief Executive Officer and Chief
         Financial Officer, of the effectiveness of the design and operation of
         its disclosure controls and procedures. Based on this evaluation, our
         Chief Executive Officer and Chief Financial Officer concluded that our
         disclosure controls and procedures are effective in timely alerting
         them to material information required to be included in this report.

   b)    There has been no change in the Company's internal control over
         financial reporting that occurred during the Company's most recent
         fiscal quarter that has materially affected or is reasonably likely to
         materially affect the Company's internal control over financial
         reporting.


PART II - OTHER INFORMATION

ITEM 2.  Unregistered Sales of Equity Securities and Use of Proceeds

(c) The following table sets forth the purchases by the Company of its equity
securities during the three months ended September 30, 2008. The Company does
not have a publicly announced plan or program for such purchases but it may
purchase additional shares in the future if it deems it appropriate under all
the circumstances. The table only lists the month when such purchases were made.
<TABLE>

              Small Business Issuer Purchases of Equity Securities
<CAPTION>

                                                                            (d)
                                                         (c)              Maximum
                                                     Total number        number (or
                                                      of shares          approximate
                                                      (or units)        dollar value)
                                     (b)             purchased as         of shares
                                   Average             part of           (or units)
                   (a)              price             publicly         that may yet be
              Total number of      paid per           announced        purchased under
             shares (or units)      share             plans or           the plans or
Period          purchased         (or unit)           programs            programs
------    --------------------    ---------        -------------      ---------------
<S>       <C>                     <C>              <C>                <C>
          Class A      Class B
          -------      -------
July        1,000                    $5.50              None             None
July                     7,000        5.90              None             None
July       17,000(1)                  5.50              None             None
July                   200,000(1)     5.50              None             None
           ------      -------
           18,000      207,000
           ======      =======

(1) These shares were purchased in a private transaction with a shareholder
pursuant to a common stock repurchase agreement.
</TABLE>




ITEM 6.           Exhibits

     10.1         Contract of Sale - Cooperative Apartment made as of June 30,
                  2008 between Presidential Realty Corporation and Latipac Corp.
                  and Assignment to 60-70 Locust LLC (incorporated herein by
                  reference to Exhibit 10.1 to the Company's Form 8-K/A as filed
                  on October 20, 2008, Commission File No. 1-8594).

     10.2         Amendment to First Amendment to Amended and Restated
                  Employment and Consulting Agreement dated October 13, 2008
                  between Presidential Realty Corporation and Jeffrey F. Joseph
                  (incorporated herein by reference to Exhibit 99.1 to the
                  Company's Form 8-K as filed on October 14, 2008, Commission
                  File No. 1-8594).

     10.3         Amendment to Amended and Restated Employment and Consulting
                  Agreement dated October 13, 2008 between Presidential Realty
                  Corporation and Steven Baruch (incorporated herein by
                  reference to Exhibit 99.2 to the Company's Form 8-K as filed
                  on October 14, 2008, Commission File No. 1-8594).

     10.4         Amendment to Amended and Restated Employment and Consulting
                  Agreement dated October 13, 2008 between Presidential Realty
                  Corporation and Thomas Viertel (incorporated herein by
                  reference to Exhibit 99.3 to the Company's Form 8-K as filed
                  on October 14, 2008, Commission File No. 1-8594).

     31.1         Certification of Chief Executive Officer of the Company
                  pursuant to Rule 13a-14(a) of the Securities Exchange Act of
                  1934, as amended.

     31.2         Certification of Chief Financial Officer of the Company
                  pursuant to Rule 13a-14(a) of the Securities Exchange Act of
                  1934, as amended.

     32.1         Certification of Chief Executive Officer of the Company
                  pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
                  Section 906 of the Sarbanes-Oxley Act of 2002.

     32.2         Certification of Chief Financial Officer of the Company
                  pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
                  Section 906 of the Sarbanes-Oxley Act of 2002.


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.

                                     PRESIDENTIAL REALTY CORPORATION
                                              (Registrant)



DATE:    November 13, 2008            By: /s/ Jeffrey F. Joseph
                                          -------------------------------------
                                          Jeffrey F. Joseph
                                          President and Chief Executive Officer



DATE:    November 13, 2008            By: /s/ Elizabeth Delgado
                                          -------------------------------------
                                          Elizabeth Delgado
                                          Treasurer