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    June 30, 1998
                                ----------------

                                    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)              (Zip Code)

Registrant's telephone number, indicating 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
                                                     ------        ------

The number of shares outstanding of each of the issuer's classes of common stock
as of the close of  business  on August  7, 1998 was  478,940  shares of Class A
common and 3,116,697 shares of Class B common.


















              PRESIDENTIAL REALTY CORPORATION AND SUBSIDIARIES




                              Index to Form 10-Q

                          For the Six Months Ended

                                 June 30, 1998



Part I - Financial Information (Unaudited)


     Consolidated Balance Sheets

     Consolidated Statements of Operations

     Consolidated Statements of Cash Flows

     Notes to Consolidated Financial Statements

     Management's Discussion and Analysis of
       Financial Condition and Results of Operations

Part II - Other Information

     Item 6.  Exhibits and Reports on Form 8-K





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



Assets                                                                          June 30,               December 31,
                                                                                  1998                    1997
                                                                             ----------------        ----------------
<S>                                                                          <C>                     <C>
  Mortgage portfolio (Note 2):
    Sold properties, accrual                                                     $43,663,011             $43,871,400
    Related parties, accrual                                                       1,728,718               2,350,899
    Sold properties, impaired                                                     17,735,787              17,878,458
                                                                             ----------------        ----------------

    Total mortgage portfolio                                                      63,127,516              64,100,757
                                                                             ----------------        ----------------

  Less discounts:
    Sold properties, accrual                                                       4,552,520               5,055,574
    Related parties, accrual                                                         155,173                 160,735
    Sold properties, impaired                                                      7,636,926               7,675,111
                                                                             ----------------        ----------------

    Total discounts                                                               12,344,619              12,891,420
                                                                             ----------------        ----------------

  Less deferred gains:
    Sold properties, accrual                                                      12,546,661              12,550,333
    Related parties, accrual                                                         940,129               1,543,342
    Sold properties, impaired                                                      6,398,157               6,432,055
                                                                             ----------------        ----------------

    Total deferred gains                                                          19,884,947              20,525,730
                                                                             ----------------        ----------------

  Net mortgage portfolio (of which $773,699 in 1998
    and $756,751 in 1997 are due within one year)                                 30,897,950              30,683,607
                                                                             ----------------        ----------------


  Real estate (Note 3)                                                            27,891,032              27,690,535
    Less: accumulated depreciation                                                 6,783,508               6,404,797
                                                                             ----------------        ----------------

  Net real estate                                                                 21,107,524              21,285,738
                                                                             ----------------        ----------------


  Minority partners' interest (Note 4)                                             7,391,068               3,779,408
  Prepaid expenses and deposits in escrow                                          2,177,880               1,190,158
  Other receivables (net of valuation allowance of
    $145,258 in 1998 and $129,484 in 1997)                                           558,584                 715,407
  Other receivables (related party)                                                    8,065                   8,287
  Securities available for sale (Note 5)                                             274,503                 226,550
  Cash and cash equivalents                                                        4,855,637                 979,712
  Other assets                                                                     1,968,740               1,140,571
                                                                             ----------------        ----------------

  Total Assets                                                                   $69,239,951             $60,009,438
                                                                             ================        ================











  See notes to consolidated financial statements.
</TABLE>







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

Liabilities and Stockholders' Equity

                                                                                           June 30,                 December 31,
                                                                                             1998                       1997
                                                                                        ----------------           ----------------
<S>                                                                                     <C>                        <C>
     Liabilities:
       Mortgage debt (Note 6):
         Properties owned                                                                   $35,029,837                $26,271,093
         Wrap mortgage debt on sold properties                                                4,910,994                  5,149,217
                                                                                        ----------------           ----------------

       Total (of which $829,491 in 1998 and $1,133,721
         in 1997 are due within one year)                                                    39,940,831                 31,420,310

       Note payable to bank (of which $153,367 in 1998
         and $147,190 in 1997 are due within one year) (Note 7)                              10,470,469                 10,542,552
       Executive pension plan liability                                                       1,544,280                  1,601,411
       Accrued liabilities                                                                    2,519,399                  2,276,898
       Accrued postretirement costs                                                             570,100                    574,637
       Deferred income                                                                          265,383                    274,097
       Accounts payable                                                                         288,945                    481,248
       Other liabilities                                                                        691,840                    665,202
                                                                                        ----------------           ----------------

     Total Liabilities                                                                       56,291,247                 47,836,355
                                                                                        ----------------           ----------------


     Stockholders' Equity:
       Common stock; par value $.10 per share
         Class A, authorized 700,000 shares, issued and
           outstanding 478,940 shares                                                            47,894                     47,894
         Class B                   June 30, 1998         December 31, 1997                      312,779                    311,377
          -----------        --------------------        ----------------------
         Authorized:             10,000,000                10,000,000
         Issued:                  3,127,786                 3,113,773
         Treasury:                   11,224                    14,224

       Additional paid-in capital                                                             2,117,486                  2,043,653
       Retained earnings                                                                     10,596,679                  9,943,241
       Net unrealized gain on securities available for sale (Notes 5 and 9)                      25,833                     19,505
       Class B, treasury stock (at cost) (Note 10)                                             (151,967)                  (192,587)
                                                                                        ----------------           ----------------

     Total Stockholders' Equity                                                              12,948,704                 12,173,083
                                                                                        ----------------           ----------------

     Total Liabilities and Stockholders' Equity                                             $69,239,951                $60,009,438
                                                                                        ================           ================


















       See notes to consolidated financial statements.
</TABLE>










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





                                                                               SIX MONTHS ENDED JUNE 30,
                                                                           ----------------------------------

                                                                               1998                1997
                                                                           --------------     ---------------
Income:
<S>                                                                           <C>                 <C>       
  Rental                                                                      $4,709,588          $4,040,286
  Interest on mortgages - sold properties                                      1,896,418           2,182,126
  Interest on wrap mortgages                                                     641,496             652,233
  Interest on mortgages - related parties                                        263,564             115,357
  Investment income                                                               66,593              87,220
  Other                                                                           28,930              34,482
                                                                           --------------     ---------------

Total                                                                          7,606,589           7,111,704
                                                                           --------------     ---------------

Costs and Expenses:
  General and administrative                                                   1,401,101           1,129,095
  Interest on note payable and other                                             568,656             477,080
  Interest on wrap mortgage debt                                                 105,367             116,104
  Amortization of  loan acquisition costs                                         16,229              14,040
  Depreciation on non-rental property                                             11,777              13,083
  Rental property:
    Operating expenses                                                         2,043,870           2,017,307
    Interest on mortgages                                                      1,181,120           1,083,567
    Real estate taxes                                                            439,278             349,338
    Depreciation on real estate                                                  379,655             353,427
    Amortization of mortgage costs                                               161,359              67,476
    Minority interest share of partnership income                                214,179             215,656
                                                                           --------------     ---------------

Total                                                                          6,522,591           5,836,173
                                                                           --------------     ---------------


Income before net gain from sales of properties and securities                 1,083,998           1,275,531

Net gain from sales of properties and securities                                 681,218             507,873
                                                                           --------------     ---------------

Net Income                                                                    $1,765,216          $1,783,404
                                                                           ==============     ===============


Earnings per Common Share (Note 1-C):
  Income before net gain from sales of properties and securities                   $0.30               $0.36

  Net gain from sales of properties and securities                                  0.19                0.14
                                                                           --------------     ---------------

Net Income per Common Share                                                        $0.49               $0.50
                                                                           ==============     ===============

Cash Distributions per Common Share                                                $0.31               $0.30
                                                                           ==============     ===============

Weighted Average Number of Shares Outstanding                                  3,586,805           3,557,194
                                                                           ==============     ===============



See notes to consolidated financial statements.
</TABLE>



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





                                                                           THREE MONTHS ENDED JUNE 30,
                                                                           ----------------------------------

                                                                               1998                1997
                                                                           --------------     ---------------
Income:
<S>                                                                           <C>                 <C>       
  Rental                                                                      $2,342,122          $2,017,982
  Interest on mortgages - sold properties                                        952,817             892,497
  Interest on wrap mortgages                                                     320,064             306,708
  Interest on mortgages - related parties                                         98,564              57,571
  Investment income                                                               37,780              42,538
  Other                                                                           25,080              10,066
                                                                           --------------     ---------------

Total                                                                          3,776,427           3,327,362
                                                                           --------------     ---------------

Costs and Expenses:
  General and administrative                                                     738,676             539,541
  Interest on note payable and other                                             283,625             248,279
  Interest on wrap mortgage debt                                                  52,000              57,393
  Amortization of  loan acquisition costs                                          8,114               7,218
  Depreciation on non-rental property                                              6,574               6,344
  Rental property:
    Operating expenses                                                         1,005,908           1,029,964
    Interest on mortgages                                                        652,983             544,918
    Real estate taxes                                                            219,641             197,740
    Depreciation on real estate                                                  191,370             180,396
    Amortization of mortgage costs                                               124,067              33,738
    Minority interest share of partnership income                                 42,176              69,522
                                                                           --------------     ---------------

Total                                                                          3,325,134           2,915,053
                                                                           --------------     ---------------


Income before net gain from sales of properties and securities                   451,293             412,309

Net gain from sales of properties and securities                                 617,649              18,497
                                                                           --------------     ---------------

Net Income                                                                    $1,068,942            $430,806
                                                                           ==============     ===============


Earnings per Common Share (Note 1-C):
  Income before net gain from sales of properties and securities                   $0.12               $0.12

  Net gain from sales of properties and securities                                  0.18                0.00
                                                                           --------------     ---------------

Net Income per Common Share                                                        $0.30               $0.12
                                                                           ==============     ===============

Cash Distributions per Common Share                                                $0.16               $0.15
                                                                           ==============     ===============



See notes to consolidated financial statements.
</TABLE>






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


                                                                                            SIX MONTHS ENDED JUNE 30,
                                                                                  ---------------------------------------

                                                                                      1998                     1997
                                                                                  --------------           --------------
 Cash Flows from Operating Activities:
<S>                                                                                  <C>                      <C>       
   Cash received from rental properties                                              $4,602,224               $4,220,524
   Interest received                                                                  2,362,793                2,144,925
   Miscellaneous income                                                                  27,682                   47,569
   Interest paid on rental property mortgages                                        (1,171,692)              (1,059,614)
   Interest paid on wrap mortgage debt                                                 (105,367)                (116,104)
   Interest paid on note payable                                                       (466,545)                (369,510)
   Cash disbursed for rental property operations                                     (3,287,776)              (2,074,981)
   Cash disbursed for general and administrative costs                               (1,406,232)              (1,223,336)
                                                                                  --------------           --------------

 Net cash provided by operating activities                                              555,087                1,569,473
                                                                                  --------------           --------------


 Cash Flows from Investing Activities:
   Payments received on notes receivable                                              1,021,673                1,693,330
   Payments disbursed for investments in notes receivable                               (60,000)              (3,006,442)
   Payments disbursed for additions and improvements                                   (244,036)                (911,061)
   Proceeds from sale  of property                                                       74,550
   Purchase of property                                                                  (9,386)
   Proceeds from sales of securities                                                                             523,790
   Purchases of securities                                                              (41,625)                 (79,202)
   Purchase of 1% interest in partnership                                                                        (60,000)
                                                                                  --------------           --------------

 Net cash provided by (used in) investing activities                                    741,176               (1,839,585)
                                                                                  --------------           --------------

 Cash Flows from Financing Activities:
   Principal payments on mortgage debt:
     Properties owned                                                                  (252,431)                (288,305)
     Wrap mortgage debt on sold properties                                             (238,223)                (229,834)
   Mortgage debt payment from proceeds of mortgage refinancing                      (10,788,825)
   Mortgage proceeds                                                                 19,800,000
   Mortgage refinancing repairs and replacement escrows                                (558,730)
   Mortgage costs                                                                      (467,404)                (218,046)
   Note payable proceeds                                                                                       2,500,000
   Principal payments on note payable                                                   (72,083)                (294,275)
   Cash distributions on common stock                                                (1,111,778)              (1,067,098)
   Proceeds from dividend reinvestment and share purchase plan                           94,975                   82,180
   Distributions to minority partners                                                (3,825,839)                (244,241)
                                                                                  --------------           --------------

 Net cash provided by financing activities                                            2,579,662                  240,381
                                                                                  --------------           --------------


 Net Increase (Decrease) in Cash and Cash Equivalents                                 3,875,925                  (29,731)

 Cash and Cash Equivalents, Beginning of Period                                         979,712                1,392,135
                                                                                  --------------           --------------

 Cash and Cash Equivalents, End of Period                                            $4,855,637               $1,362,404
                                                                                  ==============           ==============



 See notes to consolidated financial statements.
</TABLE>
















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


                                                                                               SIX MONTHS ENDED JUNE 30,
                                                                                     -----------------------------------------

                                                                                          1998                      1997
                                                                                     ---------------           ---------------

<S>                                                                                  <C>                       <C>

Reconciliation of Net Income to Net Cash
  Provided by Operating Activities

Net Income                                                                               $1,765,216                $1,783,404
                                                                                     ---------------           ---------------


Adjustments  to  reconcile   net  income  to  net  
cash  provided  by  operating activities:
    Depreciation and amortization                                                           569,020                   448,026
    Gain from sales of properties and securities                                           (681,218)                 (507,873)
    Issuance of treasury stock                                                               10,440
    Amortization of discounts on notes and fees                                            (546,801)                 (870,078)
    Decrease in accounts receivable                                                         157,045                   112,368
    Increase (decrease) in accounts payable and accrued liabilities                         (11,470)                  357,175
    Increase (decrease) in deferred income                                                   (8,714)                    5,752
    Increase in prepaid expenses, deposits in escrow
      and deferred charges                                                                 (644,533)                  (55,414)
    Increase in security deposit restricted funds                                          (293,667)
    Increase in security deposit liabilities                                                 27,886                    67,370
    Miscellaneous                                                                            (2,296)                   13,087
    Minority share of partnership income                                                    214,179                   215,656
                                                                                     ---------------           ---------------

Total adjustments                                                                        (1,210,129)                 (213,931)
                                                                                     ---------------           ---------------


Net cash provided by operating activities                                                  $555,087                $1,569,473
                                                                                     ===============           ===============


Supplemental noncash disclosures:

    Property received in satisfaction of debt                                               $11,569                   $45,765
                                                                                     ===============           ===============

    Net carrying value of foreclosed properties
          reclassified to real estate                                                                                $588,683
                                                                                                               ===============







See notes to consolidated financial statements.
</TABLE>

















PRESIDENTIAL REALTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 1998

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. General - Presidential Realty Corporation  ("Presidential" or the "Company"),
a Real Estate Investment Trust ("REIT"),  is engaged  principally in the holding
of notes and  mortgages  secured by real estate and in the  ownership  of income
producing real estate.

B. Principles of Consolidation - The consolidated  financial  statements include
the  accounts  of   Presidential   Realty   Corporation  and  its  wholly  owned
subsidiaries.  Additionally,  the accompanying consolidated financial statements
include  100% of the  account  balances  of UTB  Associates  and PDL,  Inc.  and
Associates Limited Co-Partnership ("Home Mortgage Partnership" formerly known as
Metmor Plaza  Associates),  partnerships  in which  Presidential or PDL, Inc., a
wholly owned subsidiary of Presidential, is the General Partner.

All significant intercompany balances and transactions have been eliminated.

C. Net  Income  Per  Share - Basic net  income  per share  data is  computed  by
dividing the net income by the weighted  average number of shares of Class A and
Class B common  stock  outstanding  and common  stock  equivalents  during  each
period. Basic net income per share and diluted income per share are the
same for the six months  ended June 30, 1998 and 1997.  The  dilutive  effect of
stock options is calculated using the treasury stock method.

D. Basis of Presentation - The  accompanying  unaudited  consolidated  financial
statements have been prepared in accordance with generally  accepted  accounting
principles for interim financial information.  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 financial  statements and accompanying notes should be read in
conjunction with the Company's Form 10-K for the year ended December 31, 1997.

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


2. MORTGAGE PORTFOLIO

The Company's mortgage portfolio includes notes receivable - sold properties and
notes receivable - related parties and includes both accrual and impaired loans.

Notes receivable - sold properties consist of:

(1) Long-term purchase money notes from sales of properties  previously owned by
the Company or notes  purchased by the Company.  These purchase money notes have
varying interest rates with balloon payments due at maturity.

(2) Notes  receivable  from sales of cooperative  apartment  units.  These notes
generally  have market  interest  rates and the majority of these notes amortize
monthly with balloon payments due at maturity.



Notes receivable - related parties are all due from Ivy Properties, Ltd. or its
affiliates (collectively "Ivy") and consist of:

(1)  Purchase  money  notes  resulting  from sales of  property  or  partnership
interests to Ivy.

(2) Notes receivable  relating to loans made by the Company to Ivy in connection
with Ivy's cooperative conversion business.

The Woodland notes  receivable were modified in March,  1998, as a result of the
sale of the  property and the  assumption  of the notes by the  purchasers.  The
interest  rate on the notes was  increased  from 9% to 10% through 2001 and will
increase to 10.25% thereafter.

At June 30,  1998,  all of the notes in the  Company's  mortgage  portfolio  are
current with the exception of two sold properties  notes,  the Fairfield  Towers
Second  Mortgage  and the  Grant  House  wraparound  mortgage  note,  which  are
classified as impaired  loans.  These two loans are in the  aggregate  amount of
$17,735,787  and  have  a net  carrying  value  of  $3,700,704  after  deducting
discounts  of  $7,636,926  and  deferred  gains of  $6,398,157.  The Grant House
wraparound  mortgage note wraps around and is  subordinate  to a first  mortgage
with an outstanding  principal  balance of $2,295,940 at June 30, 1998, which is
equal to the net carrying value of the Grant House  wraparound note. At June 30,
1998,  all payments due on the first  mortgage  have been paid.  The Company has
determined  that no allowances for credit losses are required for these impaired
loans  because the net carrying  value of these loans is less than the estimated
fair value of the underlying collateral.

The Company recognizes income on the impaired loans only to the extent that such
income is actually received.  The average recorded  investment in impaired loans
during the six months ended June 30, 1998 and June 30, 1997 was  $17,807,401 and
$16,187,019, respectively.

There have been no significant changes in the status of the impaired loans since
December 31,  1997.  There were no  condominium  sales at the  Fairfield  Towers
property during the six months ended June 30, 1998.

The following table reflects the activity in impaired loans:







<TABLE>
IMPAIRED LOANS
--------------
<CAPTION>

                                                         Impaired                                      Impaired
                                                         Loan                   Additions              Loan
                                                         Balance                (Payments)             Balance
Loan Description                                         12/31/97               1998                   6/30/98
------------------------------------------------         -----------------      -----------------      -----------------
<S>                                                      <C>                    <C>                    <C>
Notes receivable-sold properties:
  Properties previously owned-
    Fairfield Towers Second Mortgage                          $14,488,337               ($72,083)           $14,416,254
    Grant House (1)                                             3,390,121                (70,588)             3,319,533
                                                         -----------------      -----------------      -----------------

Total                                                         $17,878,458              ($142,671)           $17,735,787
                                                         =================      =================      =================



                                                         Discount                                      Net
                                                         on                     Deferred               Carrying
                                                         Loans                  Gain                   Value
Loan Description                                         6/30/98                6/30/98                6/30/98
------------------------------------------------         -----------------      -----------------      -----------------

Notes receivable-sold properties:
  Properties previously owned-
    Fairfield Towers Second Mortgage                          ($7,636,926)           ($5,374,564)            $1,404,764
    Grant House (1)                                                                   (1,023,593)             2,295,940
                                                         -----------------      -----------------      -----------------

Total                                                         ($7,636,926)           ($6,398,157)            $3,700,704
                                                         =================      =================      =================






                                                                                  Six months ended June 30,
                                                                                ----------------------------------------

                                                                                      1998                   1997
                                                                                -----------------      -----------------

Reported Interest Income and
Amortization of Discount (Cash Basis)
---------------------------------------------------------


Fairfield Towers Second Mortgage - interest income                                        $8,237                $58,561
Fairfield Towers Second Mortgage - amortization of discount                               38,185                 38,582
Grant House - interest income (1)                                                         34,882
Overlook - interest income (2)                                                                                   47,077
Overlook - additional interest income (2)                                                                        11,987
                                                                                -----------------      -----------------

Total                                                                                    $81,304               $156,207
                                                                                =================      =================



Recognized Gain from Sale of Property
---------------------------------------------------------


Fairfield Towers Second Mortgage                                                         $33,898                $34,251
Overlook (2)                                                                                                     11,759
                                                                                -----------------      -----------------

Total                                                                                    $33,898                $46,010
                                                                                =================      =================



Nonreported Interest Income and Amortization of Discount
---------------------------------------------------------

The  following  additional  amounts  would have been reported if these loans had
been fully performing:

Fairfield Towers Second Mortgage - interest income                                      $487,323               $436,780
Fairfield Towers Second Mortgage - additional interest income                                                    43,213
Fairfield Towers Second Mortgage - amortization of discount                              634,236                532,380
Grant House - interest income (1)                                                         37,500
                                                                                -----------------      -----------------

Total                                                                                 $1,159,059             $1,012,373
                                                                                =================      =================



<FN>
(1)  Grant House was classified as an impaired loan at December 31, 1997 and, as
     a result, no amounts are listed for the 1997 period. The interest income of
     $34,882 reported for the 1998 period  represents  interest  received on the
     wraparound  first mortgage debt. The net carrying value of this  wraparound
     mortgage note is equal to the first  mortgage  debt of $2,295,940  which it
     wraps around.

(2) The Overlook loan was reclassified to accrual status at December 31, 1997.
</FN>
</TABLE>








3. REAL ESTATE

   Real estate is comprised of the following:

                                             June 30,       December 31,
                                              1998              1997
                                           -----------      -----------

Land                                       $ 3,774,549      $ 3,774,779
Buildings and leaseholds                    23,903,042       23,729,409
Furniture and equipment                        213,441          186,347
                                           -----------      -----------
Total real estate                          $27,891,032      $27,690,535
                                           ===========      ===========


4. MINORITY PARTNERS' INTEREST

Presidential  is the General  Partner of UTB  Associates and Pdl, Inc., a wholly
owned  subsidiary  of  Presidential,  is the  General  Partner of Home  Mortgage
Partnership. Presidential has a 66-2/3% interest in UTB Associates. Presidential
and PDL, Inc. have an aggregate  26% interest in Home Mortgage  Partnership.  As
the  General  Partner  of  these  partnerships,   Presidential  and  PDL,  Inc.,
respectively,   exercise   effective   control   over  the   business  of  these
partnerships,  and,  accordingly,  Presidential has included 100% of the account
balances of these  partnerships in the accompanying  financial  statements.  The
minority  partners'  interest  reflects  the  minority  partners'  equity in the
partnerships.

The minority partners'  interest in the Home Mortgage  Partnership is a negative
interest and therefore,  minority  partners' interest is a net receivable on the
Company's financial  statements.  The negative basis for each partner's interest
in the Home Mortgage  Partnership  is due to the  refinancing of the mortgage on
the property and the distribution of the proceeds to the partners.  The mortgage
debt, which is included in the Company's financial statements,  is substantially
in excess of the historical cost of the property and the estimated fair value of
the  property is  significantly  greater than the  mortgage  debt.  The minority
partners'  interest should be recovered if the partnership sold the property and
the partnership is liquidated.

Minority partners' interest is comprised of the following:

                                                    June 30,    December 31,
                                                     1998           1997
                                                 -----------    -----------

Home Mortgage Partnership                        $7,572,387      $3,963,378
UTB Associates                                     (181,319)       (183,970)
                                                 ----------      ----------
Total minority partners' interest                $7,391,068      $3,779,408
                                                 ==========      ==========










5. SECURITIES AVAILABLE FOR SALE

The cost and fair value of securities available for sale are as follows:

                                                   June 30,      December 31,
                                                    1998             1997
                                                  --------       -----------
Cost                                              $248,670        $207,045
Gross unrealized gains                              30,448          19,612
Gross unrealized losses                             (4,615)           (107)
                                                  --------        --------
Fair value                                        $274,503        $226,550
                                                  ========        ========

During the six months  ended June 30,  1998,  there were no sales of  securities
available for sale. During the six months ended June 30, 1997, the Company
sold securities available for sale for gross proceeds of $526,110 and a net loss
of $10,634.  The net loss of $10,634  included gross realized losses of $37,264,
offset by gross realized gains of $26,630.


6. MORTGAGE DEBT

In March,  1998,  the Company  obtained a  $2,300,000  mortgage on its  Fairlawn
Gardens  property  (formerly Kent  Terrace).  The mortgage bears interest at the
rate of 7.06% per annum,  requires monthly payments of principal and interest of
$15,395 and matures on April 1, 2008 with a  $2,012,668  balloon  payment due at
maturity.

In April,  1998,  the  Company  refinanced  the  mortgage  on the Home  Mortgage
property  (formerly  known as Metmor  Plaza).  The  prior  mortgage  balance  of
$10,788,825 was paid from the proceeds of the new $17,500,000 mortgage.  The new
mortgage  bears  interest at the rate of 7.38% per annum for the first ten years
and requires  monthly  payments of principal and interest of $120,928  until the
anticipated  repayment date of May 11, 2008, at which time the then  outstanding
principal balance of $15,445,099 is expected to be repaid. However, the maturity
date of the  mortgage is May 11, 2028 and if the mortgage is not repaid in 2008,
the  interest  rate will be increased by 2% and  additional  repayments  will be
required from the surplus cash flows from the operations of the property  (after
payment  of  operating  expenses)  which  will  be  applied  to the  outstanding
principal amount.


7. NOTE PAYABLE TO BANK

In connection with the Company's purchase of the Fairfield Towers First Mortgage
in 1996, the Company obtained a bank loan from Fleet Bank, N.A.  ("Fleet").  The
note,  which matures on October 30, 2001, is secured by a collateral  assignment
of the Fairfield Towers First Mortgage and is nonrecourse to Presidential except
for a limited guarantee, the amount of which reduces as the principal balance is
reduced.  This limited  guarantee was  $1,408,583 at June 30, 1998. The interest
rate is  variable  and is based at the  Company's  election on either the bank's
prime rate plus 1%, a cost of funds rate plus 3%, or  various  LIBOR  rates plus
3%. The note  amortizes  monthly  based on a 9.25%  interest  rate for a 25 year
term. In addition,  upon the sale of condominium  units, the Company is required
to make  principal  payments  to  Fleet in an  amount  equal  to the  amount  of
principal  payments  received  by the  Company  on the  Fairfield  Towers  First
Mortgage.  At June 30, 1998 payments on the Fleet note payable were current. The
outstanding  note balance at June 30, 1998 and December 31, 1997 was $10,470,469
and $10,542,552, respectively.

The  Company  obtained  an  unsecured  $250,000  line of  credit  from a lending
institution  in 1997.  The interest rate is 1% above the prime rate and the line
of credit expires in February,  1999.  Presidential pays a 1% annual fee for the
line of credit.  At June 30, 1998, no advances are  outstanding  on this line of
credit.


8. INCOME TAXES

Presidential  elected to qualify as a Real  Estate  Investment  Trust  effective
January 1, 1982 under Sections 856-860 of the Internal Revenue Code. Under those
sections,  a REIT which  distributes at least 95% 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.

For the year ended  December 31, 1997,  the Company had taxable  income  (before
distributions to  stockholders)  of  approximately  $2,633,000 ($.74 per share),
which included approximately  $1,480,000 ($.42 per share) of capital gains. This
amount will be reduced by  approximately  $557,000  ($.16 per share) of the 1997
distributions  that were not  utilized in reducing  the  Company's  1996 taxable
income and by any eligible 1998  distributions that the Company may elect (under
Section 858 of the Internal  Revenue Code) to utilize as a reduction of its 1997
taxable income.

As previously  stated, in order to retain REIT status,  Presidential is required
to distribute 95% of its REIT taxable income (exclusive of capital gains). As of
June 30, 1998,  Presidential  has  distributed the required 95% of its 1997 REIT
taxable  income.  In addition,  although no assurances  can be given,  it is the
Company's  present  intention to distribute  all of its 1997 taxable income and,
therefore, no provision for income taxes was made at December 31, 1997.

Furthermore,   the  Company  had  taxable   income  (before   distributions   to
stockholders) for the six months ended June 30, 1998 of approximately $1,233,000
($.34 per share),  which  included  approximately  $662,000  ($.18 per share) of
capital gains. This amount will be reduced by 1998  distributions  that were not
utilized in reducing the Company's  1997 taxable income and by any eligible 1999
distributions  that the Company may elect to utilize as a reduction  of its 1998
taxable income.

Presidential  intends to continue to  maintain  its REIT status and  although no
assurances can be given at this time, the Company  expects that it will not have
to pay  Federal  income  taxes for 1998  because  its  present  intention  is to
distribute  all of its 1998 taxable income during 1998 and 1999.  Therefore,  no
provision for income taxes has been made at June 30, 1998.

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


9. COMPREHENSIVE INCOME

The  Company  adopted  Statement  of  Financial  Accounting  Standards  No. 130,
"Reporting  Comprehensive  Income" in the first  quarter of 1998.  The Company's
only element of other comprehensive  income is the change in the unrealized gain
on the Company's  securities  available for sale.  Thus,  comprehensive  income,
which consists of net income plus or minus other  comprehensive  income, for the
six  months  ended  June  30,  1998  and 1997  was  $1,771,544  and  $1,774,948,
respectively.


10. TREASURY STOCK

In March, 1998, three directors of the Company were each given 1,000 shares of
the Company's Class B common stock as partial payment for directors fees for the
1998  year.  Such  shares  had  been  held in  treasury  at an  average  cost of
approximately  $13.54 per share. The average market value for the previous month
of the Class B common stock, on which the fees were based,  was $6.96 per share.
As a result of this  transaction,  the  Company  recorded  $20,880  for  prepaid
directors  fees (to be amortized  during 1998) based on the average market value
of the stock.  Treasury  stock was reduced by a cost of $40,620  and  additional
paid-in  capital was charged  $19,740 for the excess of the cost over the market
value.


11. COMMITMENTS AND CONTINGENCIES

The Company has incurred costs for  environmental  site  investigations  and the
related  response  action outcome for  potentially  hazardous drums found at one
site on its Mapletree Industrial Center property in Palmer, Massachusetts. As of
December 31, 1997, the site investigation work was completed and remedial action
was  in  progress   and  the  Company  had  a  balance  of  $35,600  in  accrued
environmental  costs.  At June 30, 1998,  there have been no changes to the 1997
estimated costs.  Actual costs incurred may vary from these estimates due to the
inherent uncertainties involved.









PRESIDENTIAL REALTY CORPORATION AND SUBSIDIARIES

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE SIX AND THREE MONTHS ENDED JUNE 30, 1998 AND 1997

Results of Operations

Financial Information for the six months ended June 30, 1998 and 1997:
-------------------------------------------------------------------------------

Revenue  increased by $494,885  from  $7,111,704  in 1997 to  $7,606,589 in 1998
primarily as a result of increases in rental  income and interest on  mortgages-
related  parties.  These  increases  were  offset by  decreases  in  interest on
mortgages-sold properties and investment income.

Rental  income  increased by $669,302  from  $4,040,286 in 1997 to $4,709,588 in
1998  primarily  as a result  of  increases  of  $250,236  at the Home  Mortgage
property (formerly Metmor Plaza),  increases of $263,993 at the Fairlawn Gardens
property  (formerly  Kent  Terrace)  and  increases at all other  properties  of
$155,073.

Interest on  mortgages-related  parties  increased by $148,207  from $115,357 in
1997 to $263,564 in 1998  primarily  as a result of increases in interest on the
Consolidated  Loans of $97,476 and increases in interest on the Overlook loan of
$57,570.

Interest on mortgages-sold  properties  decreased by $285,708 from $2,182,126 in
1997 to  $1,896,418  in  1998  primarily  due to the  $382,796  amortization  of
discount on the  Cedarbrooke  note which was recorded in 1997 as a result of the
prepayment of the Cedarbrooke note in 1997. In addition, there was a decrease of
$50,324 of interest  received on the  Fairfield  Towers Second  Mortgage.  These
decreases  were  offset by  increases  of $86,949 in  interest  income  from the
Fairfield  Towers First Mortgage and $67,956 from the  amortization of discounts
on the mortgage portfolio.

Investment  income  decreased by $20,627 from $87,220 in 1997 to $66,593 in 1998
primarily as a result of decreased  dividend income on securities  available for
sale.

Costs and expenses  increased by $686,418 from  $5,836,173 in 1997 to $6,522,591
in 1998 primarily due to increases in general and administrative expenses,
interest on note  payable  and other,  interest  on  mortgages,  real estate tax
expense, depreciation expense and amortization of mortgage costs.

General and administrative expenses increased by $272,006 from $1,129,095 in
1997 to $1,401,101  in 1998  primarily due to increases in franchise tax expense
of $159,872,  resulting  from the  partnership  distribution  received  from the
proceeds of the mortgage on the Home Mortgage property and the taxes thereon. In
addition,  there were  increases in salary  expense of $81,937 (of which $92,862
pertains to  increases in  executive  bonuses  offset by decreases of $10,925 in
salary expense), professional fees increased by $17,276, stationery and printing
expenses  increased  by $7,969 and there was an  increase in  directors  fees of
$6,070. In the 1998 period, three directors of the Company were each given 1,000
shares of the  Company's  Class B common stock as partial  payment for directors
fees.  Such shares had been held in  treasury  at an average  cost of $13.54 per
share.  The average market value of the Class B common stock,  on which the fees
were based,  was $6.96 per share. As a result,  the Company  recorded $20,880 in
prepaid directors fees based on the average market value of the stock,  treasury
stock was  reduced by a cost of  $40,620  and  additional  paid-in  capital  was
charged  $19,740 for the excess of the cost over the market  value.  At June 30,
1998, $10,440 of the prepaid directors fees were expensed.

Interest on note payable and other increased by $91,576 from $477,080 in 1997 to
$568,656 in 1998 primarily due to a $71,755  increase in interest expense on the
note payable as a result of the additional $2,500,000 loan advanced in 1997.

Mortgage  interest  expense  increased  by $97,553  from  $1,083,567  in 1997 to
$1,181,120  in 1998 as a result of the  refinancing  of the mortgage on the Home
Mortgage  property  in April  of  1998,  and the new  mortgage  obtained  on the
Fairlawn  Gardens  property  in  March of 1998.  Mortgage  interest  on the Home
Mortgage  property  increased by $76,718 and  mortgage  interest on the Fairlawn
Gardens property was $45,975.

Real estate tax expense  increased by $89,940 from  $349,338 in 1997 to $439,278
in 1998 primarily as a result of increases in real estate tax expense at the
Crown Court, Cambridge Green and Home Mortgage properties.  The 1997 real estate
tax  expense  included  refunds of $46,143 for prior  years'  taxes at the Crown
Court property.

Depreciation  on real  estate  increased  by $26,228  from  $353,427  in 1997 to
$379,655  in  1998  as a  result  of  improvements  and  additions  made  to the
properties in 1997.

Amortization  of mortgage  costs  increased  by $93,883  from $67,476 in 1997 to
$161,359 in 1998 as a result of the $107,412  write-off of unamortized  mortgage
costs  associated  with the prior  mortgage on the Home Mortgage  property.  The
mortgage on the Home Mortgage  property was  refinanced  in April,  1998 and the
prior mortgage was repaid from the proceeds of the new mortgage.

Net gain from sales of properties and securities are sporadic (as they depend on
the timing of sales or the receipt of  installments  or  prepayments on purchase
money notes).  In 1998, the net gain from sales of properties and securities was
$681,218  compared  with  $507,873  in 1997.  In the 1998  period,  the  Company
recognized a gain of $40,435 from the sale of a  cooperative  apartment  unit at
Sherwood House. In addition, the Company recognized deferred gains of $603,213
and $33,898,  respectively,  from principal  payments received on the Overlook
loan and the Fairfield Towers Second  Mortgage.  In the 1997 period, the 
Company  recognized  $472,497 of deferred gain from the sale of the  Cedarbrooke
property  as a result  of a  $1,074,200  principal  prepayment received on that 
note. In addition,  the Company  recognized  deferred  gains of $11,759 and  
$34,251,  respectively,  from  principal  payments  received on the Overlook 
loan and the Fairfield Towers Second Mortgage.

Financial Information for the three months ended June 30, 1998 and 1997:
-------------------------------------------------------------------------------

Revenue  increased by $449,065  from  $3,327,362  in 1997 to  $3,776,427 in 1998
primarily as a result of increases in rental income,  interest on mortgages-sold
properties, interest on mortgages-related parties and other income.

Rental income increased by $324,140 from $2,017,982 in 1997 to $2,342,122 in
1998  primarily  as a result  of  increases  of  $180,219  at the Home  Mortgage
property,  increases of $110,525 at the Fairlawn  Gardens property and increases
at all other properties of $33,396.

Interest on mortgages-sold properties increased by $60,320 from $892,497
in 1997 to $952,817 in 1998  primarily  due to  increases of $20,806 in interest
income  from  the  Fairfield   Towers  First   Mortgage  and  $33,688  from  the
amortization of discounts on the mortgage portfolio.

Interest on mortgages-related  parties increased by $40,993 from $57,571 in 1997
to  $98,564  in 1998  primarily  as a result of  increases  in  interest  on the
Consolidated Loans of $38,695.

Other income increased by $15,014 from $10,066 in 1997 to $25,080 in 1998 as a
result of a $20,000 fee received in 1998 in connection  with the  refinancing of
the Home Mortgage property mortgage.

Costs and expenses  increased by $410,081 from  $2,915,053 in 1997 to $3,325,134
in 1998 primarily due to increases in general and administrative expenses,
interest on note  payable  and other,  interest  on  mortgages,  real estate tax
expense and  amortization  of mortgage  costs.  These increases were offset by a
decrease in minority interest share of partnership income.

General and administrative expenses increased by $199,135 from $539,541 in
1997 to $738,676 in 1998  primarily  due to an increase of $157,372 in franchise
tax  expense  resulting  from the  partnership  distribution  received  from the
proceeds of the mortgage on the Home Mortgage property and the taxes thereon. In
addition,  there were  increases in salary  expense of $45,223 (of which $41,503
pertains to increases in executive bonuses).

Interest on note payable and other increased by $35,346 from $248,279 in 1997 to
$283,625 in 1998 primarily due to a $25,565  increase in interest expense on the
note payable as a result of the additional $2,500,000 loan advanced in 1997.

Mortgage  interest  expense  increased  by  $108,065  from  $544,918  in 1997 to
$652,983  in 1998 as a result of the  refinancing  of the  mortgage  on the Home
Mortgage  property in April,  1998 and the new mortgage obtained on the Fairlawn
Gardens property in March, 1998. Mortgage interest on the Home Mortgage property
increased by $81,072 and mortgage  interest on the Fairlawn Gardens property was
$40,562.

Real estate tax expense  increased by $21,901 from  $197,740 in 1997 to $219,641
in 1998  primarily  as a result of  increases  in real estate tax expense at the
Home Mortgage and Cambridge Green properties.

Amortization  of mortgage  costs  increased  by $90,329  from $33,738 in 1997 to
$124,067 in 1998 as a result of the $107,412  write-off of unamortized  mortgage
costs associated with the prior mortgage on the Home Mortgage property.

Minority interest share of partnership  income decreased by $27,346 from $69,522
in 1997 to $42,176 in 1998 as a result of a decrease  in  partnership  income on
the Home Mortgage property.

Net gain from sales of properties and securities are sporadic (as they depend on
the timing of sales or the receipt of  installments  or  prepayments on purchase
money notes). In 1998, the net gain from sales of properties and
securities was $617,649  compared with $18,497 in 1997. In the 1998 period,  the
Company recognized  deferred gains of $596,854 and $17,123,  respectively,  from
principal payments received on the Overlook loan and the Fairfield Towers Second
Mortgage.  In the 1997 period, the Company  recognized  deferred gains of $5,946
and $17,558, respectively, from principal payments received on the Overlook loan
and the Fairfield Towers Second Mortgage.


Balance Sheet

The  receivable for minority  partners'  interest  increased by $3,611,660  from
$3,779,408  at December 31, 1997 to  $7,391,068 at June 30, 1998, as a result of
the $3,670,400  distribution  made to the minority partners of the Home Mortgage
Partnership  from the proceeds from the  refinancing of the mortgage on the Home
Mortgage property.

Prepaid expenses and deposits in escrow increased by $987,722 from $1,190,158 at
December  31, 1997 to  $2,177,880  at June 30, 1998 as a result of  increases of
$150,866 in prepaid  franchise  taxes,  increases of $267,484 in mortgagee  real
estate tax and  insurance  escrows and an  increase  of $579,529 in  replacement
reserve  mortgagee escrow funds.  These increases were a result of the mortgages
obtained in 1998 on the Home Mortgage and Fairlawn Gardens properties.

Cash and cash equivalents  increased by $3,875,925 from $979,712 at December 31,
1997 to $4,855,637 at June 30, 1998 as a result of the $2,300,000
mortgage  obtained  from the  financing of the Fairlawn  Gardens  property.  The
Company also received a $1,006,276 partnership  distribution (net of taxes paid)
from  the  Home  Mortgage  Partnership  as a result  of the  refinancing  of the
mortgage on the Home Mortgage  property and principal  payments of $603,213 were
received on the Overlook loan.

Other  assets  increased  by $828,169  from  $1,140,571  at December 31, 1997 to
$1,968,740  at June 30,  1998  primarily  as a result of a $467,404  increase in
mortgage costs for the mortgages  obtained in 1998,  which were partially offset
by the  $177,588  amortization  of  mortgage  and  loan  acquisition  costs.  In
addition,  $274,814 of tenant  security  deposits at the Home Mortgage  property
were  transferred  from  cash and  cash  equivalents  to  restricted  funds,  in
accordance with the terms of the refinanced mortgage. Deferred charges increased
by $225,981 as a result of expenditures made for the proposed  acquisition of an
apartment  complex  in Miami,  Florida.  Home  office  furniture  and  equipment
increased by $30,481,  primarily for costs  associated  with the purchase of new
computer systems in preparation for the year 2000.

Mortgage debt on properties owned increased by $8,758,744 from $26,271,093 at
December 31, 1997 to $35,029,837 at June 30, 1998.  This increase was the result
of the refinancing of the Home Mortgage  property,  which increased the mortgage
debt on that  property by  $6,711,175,  and the new  $2,300,000  mortgage on the
Fairlawn Gardens property.  These increases were offset by principal payments of
$252,431.

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  which  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:  general  economic and business  conditions,  which will, among other
things,  affect the demand for retail space or retail  goods,  availability  and
creditworthiness  of  prospective  tenants,   lease  rents  and  the  terms  and
availability of financing; adverse changes in the real estate markets including,
among  other  things,  competition  with other  companies;  risks of real estate
development  and  acquisition;   governmental   actions  and  initiatives;   and
environment/safety requirements.

Liquidity and Capital Resources

Management  believes  that the  Company  has  sufficient  liquidity  and capital
resources  to  carry  on its  existing  business  and,  barring  any  unforeseen
circumstances,  to pay the  dividends  required to  maintain  REIT status in the
foreseeable  future.  The  Company is seeking  to expand its  portfolio  of real
estate equities and plans to utilize for this purpose a portion of its available
funds and  additional  funds that the Company may receive from balloon  payments
due on the Company's notes receivable as they mature,  as well as funds that may
be available from external sources.  However,  the Company's plans to expand its
portfolio of real estate  equities may be adversely  affected by  limitations on
its ability to obtain funds for investment on  satisfactory  terms from external
sources.  Except  as  discussed  herein,  management  is not  aware of any other
trends, events, commitments or uncertainties that will have a significant effect
on liquidity.

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,  and from repayments of its mortgage
portfolio.  The Company  also has at its disposal a $250,000  unsecured  line of
credit from a lending institution.

At June  30,  1998,  Presidential  had  $4,855,637  in  available  cash and cash
equivalents,  an increase of $3,875,925  from the $979,712 at December 31, 1997.
This increase in cash and cash equivalents was due to cash provided by operating
activities  of  $555,087,   investing   activities  of  $741,176  and  financing
activities of $2,579,662.

Operating Activities

Presidential's  principal  source  of cash  from  operating  activities  is from
interest  on its  mortgage  portfolio,  which  was  $1,790,881  in 1998,  net of
interest payments on wrap mortgage debt and note payable. In 1998, net cash
used for rental property  operations was $12,683,  which is net of distributions
from  partnership  operations  to minority  partners  but before  additions  and
improvements  and mortgage  amortization.  The net cash used for rental property
operations  includes  an  expenditure  of  $274,814  for the funding of security
deposits  for the Home  Mortgage  property in  accordance  with the terms of the
refinanced mortgage on that property.

Investing Activities

Presidential  holds a  portfolio  of mortgage  notes  receivable  which  consist
primarily of notes arising from sales of real properties previously owned by the
Company.  Some  of  these  notes  wrap  around  underlying  mortgage  debt  (the
"Underlying  Debt") which is paid by Presidential  only out of funds received on
its mortgage portfolio relating to the Underlying Debt. During 1998, the Company
received  principal  payments of $783,450 on its mortgage  portfolio (net of any
principal  payments  attributable  to the  Underlying  Debt),  of which $707,519
represented  prepayments,  which are  sporadic  and  cannot be relied  upon as a
regular source of liquidity.

During 1998, the Company invested  $244,036 in additions and improvements to its
properties. The Company sold one cooperative apartment at Sherwood House in Long
Beach, New York and received net proceeds of $74,550.

The Company also holds a portfolio of marketable equitable securities which
increased by $47,953 from  $226,550 at December 31, 1997 to $274,503 at June 30,
1998 as a result of the purchase of securities of $41,625 and an increase in the
fair value of securities of $6,328.

Financing Activities

The Company's  indebtedness at June 30, 1998,  includes  $39,940,831 of mortgage
debt (including $4,910,994 of underlying indebtedness on properties not owned by
the Company but on which the Company holds wraparound  mortgages).  The mortgage
debt, which is secured by individual  properties,  is nonrecourse to the Company
with the exception of the $278,177 Mapletree  Industrial Center mortgage,  which
is secured by the property and a guarantee  of  repayment  by  Presidential.  In
addition,  some of the Company's  mortgages  provide for personal  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  1998,  the Company made  $252,431 of principal  payments on
mortgage debt on properties which it owns.

The Company  obtained a $2,300,000  mortgage on its Fairlawn Gardens property in
March of 1998.  The mortgage  matures in April,  2008 with a balloon  payment of
$2,012,668 due at maturity.  The mortgage requires monthly payments of principal
and interest of $15,395 and has an interest rate of 7.06% per annum. In April of
1998, the Company completed the refinancing of the mortgage on the Home Mortgage
property  and the  prior  mortgage  balance  of  $10,788,825  was paid  from the
proceeds of the new $17,500,000 mortgage. The new mortgage bears interest at the
rate of 7.38% per annum for the first ten years,  requires  monthly  payments of
principal and interest of $120,928 until the  anticipated  repayment date of May
11, 2008 at which time the then outstanding  principal balance of $15,445,099 is
expected to be repaid.  However,  the  maturity  date of the mortgage is May 11,
2028 and if the  mortgage  is not  repaid  in 2008,  the  interest  rate will be
increased by 2% and additional repayments will be required from the surplus cash
flows from the operations of the property (after payment of operating  expenses)
which will be applied to the outstanding principal amount.

The mortgages on the Company's properties are self-liquidating at fixed rates of
interest  with  the  exception  of the  mortgages  on  Home  Mortgage,  Building
Industries Center, Fairlawn Gardens and Continental Gardens, which have
balloon payments due at maturity.

The Company's  indebtedness  at June 30, 1998  includes a $10,470,469  bank loan
payable to Fleet. The note, which matures on October 30, 2001, is nonrecourse to
Presidential except for a limited guarantee,  the amount of which reduces as the
principal balance is reduced and was limited to $1,408,583 at June 30, 1998. The
interest rate is variable and is based at the  Company's  election on either the
bank's prime rate plus 1%, a cost of funds rate plus 3%, or various  LIBOR rates
plus 3%. The note amortizes monthly based on a 9.25% interest rate for a 25 year
term with additional  principal payments due upon the sale of condominium units.
During 1998, the Company made principal payments of $72,083.

During 1998, Presidential declared and paid cash distributions of $1,111,778 to
its shareholders and received proceeds from its dividend  reinvestment and share
purchase plan of $94,975.

Fairfield Towers

The Company's  financial  performance and liquidity in 1998 and subsequent years
will be affected  by the  results of the  condominium  conversion  of  Fairfield
Towers  Apartments  in Brooklyn,  New York by the owner of that property and the
rental  operations  of the  unsold  condominium  units.  At June 30,  1998,  the
outstanding  principal  balances on the Fairfield  Towers First Mortgage and the
Fairfield Towers Second Mortgage were $17,176,884 and $14,416,254, respectively.
The Fairfield Towers First Mortgage provides for monthly interest payments of 1%
above the prime rate and principal repayments prior to maturity upon the sale of
individual  condominium  units.  Until the  Fairfield  Towers First  Mortgage is
repaid,  Presidential will receive basic interest on the Fairfield Towers Second
Mortgage  only out of net cash flow from  operations of the property and release
payments  upon the sale of each  condominium  unit in the  amount of $3,000  per
unit.  All unpaid basic  interest  and  additional  interest  (which is based on
percentages of gross sales  proceeds) will be deferred until after  repayment of
the Fairfield Towers First Mortgage.

Since the conversion of the property to  condominium  status in 1994, a total of
155 units had been sold and 997 units are owned by the sponsor,  the majority of
which are occupied as rental units.

Environmental Matters

At June 30, 1998, the Company is continuing with its  environmental  project for
the investigation  and removal of potentially  hazardous drums found at one site
on its Mapletree  Industrial Center property in Palmer,  Massachusetts.  Accrued
liabilities for environmental  matters have been recorded in operating  expenses
when it is probable  that a liability  has been  incurred  and the amount of the
liability can be reasonably  estimated.  These estimates are exclusive of claims
against third parties and have not been  discounted.  Actual costs  incurred may
vary from  these  estimates  due to the  inherent  uncertainties  involved.  The
Company  believes that any  additional  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 the cash flow of the
Company.  The site  investigation  at the Mapletree  Industrial  Center site was
completed and remedial action is in progress.  At December 31, 1997, the accrued
expense for the remedial  action was $35,600.  For the six months ended June 30,
1998, there were no environmental costs charged to operations.













PART II - OTHER INFORMATION



Item 6.  Exhibits and Reports on Form 8-K.

(a)    Exhibit 27.  Financial Data Schedule.

(b)    No reports on form 8-K have been filed during the quarter  ended June 30,
       1998.



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:  August 11, 1998               By:  /s/ Jeffrey F. Joseph
                                          ---------------------
                                          Jeffrey F. Joseph
                                          President



DATE:  August 11, 1998               By:  /s/ Elizabeth Delgado
                                          ---------------------
                                          Elizabeth Delgado
                                          Treasurer