UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   FORM 10-QSB

(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, 2005
                                    ------------------
                                             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 small business issuer 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)

Issuer's telephone number, including area code  914-948-1300
                                                ------------
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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             No     x
     --------       --------

The number of shares outstanding of each of the issuer's classes of common stock
as of the close of business on November 10, 2005 was 478,840 shares of Class A
common and 3,365,983 shares of Class B common.

Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act).     Yes        No  x
                                            ----      ----

Transitional Small Business Disclosure Format (check one):
Yes               No   x
    -----            ------




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


                              Index to Form 10-QSB
                            For the Nine Months Ended
                               September 30, 2005





Part I   Financial Information (Unaudited)

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

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

                  Quantitative and Qualitative Disclosures
                    about Market Risk

  Item 3.         Controls and Procedures

Part II  Other Information

  Item 5.         Other Information

  Item 6.         Exhibits





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



                                                                                    September 30,          December 31,
                                                                                         2005                 2004
                                                                                    --------------       --------------
Assets

<S>                                                                                 <C>                   <C>
  Real estate (Note 2)                                                                $10,344,034           $9,841,035
    Less: accumulated depreciation                                                      5,782,154            5,581,306
                                                                                    --------------       --------------

  Net real estate                                                                       4,561,880            4,259,729
                                                                                    --------------       --------------

  Mortgage portfolio (Note 3):
    Sold properties and other - net                                                     9,944,440           15,216,094
    Related parties - net                                                                 218,327              244,166
                                                                                    --------------       --------------

  Net mortgage portfolio (of which $150,604 in 2005
      and $6,091,625 in 2004 are due within one year)                                  10,162,767           15,460,260
                                                                                    --------------       --------------

  Assets related to discontinued operations (Note 4)                                            -           11,036,007
  Investments in and advances to joint ventures (Note 5)                               24,054,392           17,214,363
  Other investments (Note 6)                                                            1,415,000                    -
  Prepaid expenses and deposits in escrow                                                 565,249            1,109,988
  Prepaid defined benefit plan costs                                                    2,247,723            2,237,014
  Other receivables (net of valuation allowance of
    $186,000 in 2005 and $205,127 in 2004)                                                407,757              777,998
  Cash and cash equivalents                                                             3,012,610            2,085,767
  Other assets                                                                            323,986              322,346
                                                                                    --------------       --------------

Total Assets                                                                          $46,751,364          $54,503,472
                                                                                    ==============       ==============

Liabilities and Stockholders' Equity

  Liabilities:
    Mortgage debt (of which $180,952 in 2005 and
      $173,119 in 2004 are due within one year)                                        $6,609,022           $6,737,926
    Liabilities related to discontinued operations (Note 4)                                     -            9,852,922
    Contractual pension and postretirement benefits liabilities                         3,383,283            3,349,638
    Defined benefit plan liability                                                        348,875                    -
    Accrued liabilities                                                                 1,009,471            1,314,158
    Accounts payable                                                                      260,219              182,435
    Distributions from partnership in excess of investment and earnings (Note 7)        2,175,611            2,259,943
    Other liabilities                                                                     305,836              268,866
                                                                                    --------------       --------------

Total Liabilities                                                                      14,092,317           23,965,888
                                                                                    --------------       --------------


Minority Interest in Consolidated Partnership (Note 8)                                     48,559               51,160
                                                                                    --------------       --------------


  Stockholders' Equity:
     Common stock; par value $.10 per share
       Class A, authorized 700,000 shares, issued 478,940 shares
          and 100 shares held in treasury                                                  47,894               47,894
       Class B        September 30, 2005          December 31, 2004                       336,798              334,273
       -----------    ------------------         ------------------
      Authorized:       10,000,000                       10,000,000
      Issued:            3,367,983                        3,342,726
      Treasury:              2,000                            1,997

    Additional paid-in capital                                                          3,661,868            3,464,670
    Retained earnings                                                                  30,019,188           28,095,586
    Accumulated other comprehensive loss (Note 10)                                     (1,433,097)          (1,433,861)
    Treasury stock (at cost)                                                              (22,163)             (22,138)
                                                                                    --------------       --------------

Total Stockholders' Equity                                                             32,610,488           30,486,424
                                                                                    --------------       --------------

Total Liabilities and Stockholders' Equity                                            $46,751,364          $54,503,472
                                                                                    ==============       ==============



  See notes to consolidated financial statements.
</TABLE>






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




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

                                                                             2005          2004
                                                                          -----------   -----------
Revenues:
<S>                                                                       <C>           <C>
  Rental                                                                  $2,341,801    $2,278,713
  Interest on mortgages - sold properties and other                        1,153,471     2,193,087
  Interest on mortgages - related parties                                    303,676       489,635
  Other revenues                                                             432,171        23,692
                                                                          -----------   -----------

Total                                                                      4,231,119     4,985,127
                                                                          -----------   -----------

Costs and Expenses:
  General and administrative                                               2,854,339     2,706,355
  Depreciation on non-rental property                                         13,441        15,758
  Rental property:
    Operating expenses                                                     1,603,213     1,363,392
    Interest on mortgage debt                                                325,968       333,236
    Real estate taxes                                                        365,785       352,797
    Depreciation on real estate                                              207,329       192,282
    Amortization of mortgage costs                                             9,222         9,793
                                                                          -----------   -----------

Total                                                                      5,379,297     4,973,613
                                                                          -----------   -----------

Other Income (Loss):
  Investment income                                                          162,975        49,285
  Equity in the loss of joint ventures (Note 5)                             (681,664)            -
  Equity in income of partnership (Note 7)                                    46,253       258,702
                                                                          -----------   -----------

Income (loss) before minority interest and net gain
  from sales of properties                                                (1,620,614)      319,501

Minority interest                                                             (6,150)       (8,396)
                                                                          -----------   -----------

Income (loss) before net gain from sales of properties                    (1,626,764)      311,105

Recognition of deferred gain on sales of properties (Note 3)               3,241,540             -
                                                                          -----------   -----------

Income from continuing operations                                          1,614,776       311,105
                                                                          -----------   -----------

Discontinued Operations (Note 4):
  Loss from discontinued operations                                         (109,246)      (34,834)
  Net gain from sales of discontinued operations                           2,255,364    12,171,162
                                                                          -----------   -----------

Total income from discontinued operations                                  2,146,118    12,136,328
                                                                          -----------   -----------

Net Income                                                                $3,760,894    $12,447,433
                                                                          ===========   ===========


Earnings per Common Share (basic and diluted):
  Income (loss) before net gain from sales of properties                      ($0.43)        $0.08

  Recognition of deferred gain on sales of properties                           0.85             -
                                                                          -----------   -----------

  Income from continuing operations                                             0.42          0.08
                                                                          -----------   -----------

  Discontinued Operations:
    Loss from discontinued operations                                          (0.03)        (0.01)
    Net gain from sales of discontinued operations                              0.59          3.21
                                                                          -----------   -----------

  Total income from discontinued operations                                     0.56          3.20
                                                                          -----------   -----------

  Net Income per Common Share - basic                                          $0.98         $3.28
                                                                          ===========   ===========
                              - diluted                                        $0.98         $3.27
                                                                          ===========   ===========

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

Weighted Average Number of Shares Outstanding - basic                      3,827,933     3,795,030
                                                                          ===========   ===========
                                              - diluted                    3,839,128     3,806,170
                                                                          ===========   ===========

See notes to consolidated financial statements.



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




                                                                             THREE MONTHS ENDED
                                                                                SEPTEMBER 30,
                                                                          -------------------------
                                                                             2005          2004
                                                                          -----------   -----------
Revenues:
  Rental                                                                    $824,241      $760,689
  Interest on mortgages - sold properties and other                          345,792       731,658
  Interest on mortgages - related parties                                     80,873       204,703
  Other revenues                                                              38,726         7,141
                                                                          -----------   -----------

Total                                                                      1,289,632     1,704,191
                                                                          -----------   -----------

Costs and Expenses:
  General and administrative                                                 953,432       961,987
  Depreciation on non-rental property                                          4,481         5,253
  Rental property:
    Operating expenses                                                       603,086       454,716
    Interest on mortgage debt                                                108,478       110,375
    Real estate taxes                                                        131,698       127,379
    Depreciation on real estate                                               72,429        65,950
    Amortization of mortgage costs                                             2,515         3,291
                                                                          -----------   -----------

Total                                                                      1,876,119     1,728,951
                                                                          -----------   -----------

Other Income (Loss):
  Investment income                                                           60,004        27,834
  Equity in the loss of joint ventures (Note 5)                             (610,857)            -
  Equity in income (loss) of partnership (Note 7)                            (35,080)      100,990
                                                                          -----------   -----------

Income (loss) before minority interest and net gain
  from sales of properties                                                (1,172,420)      104,064

Minority interest                                                             (2,036)       (2,164)
                                                                          -----------   -----------

Income (loss) before net gain from sales of properties                    (1,174,456)      101,900

Recognition of deferred gain on sales of properties (Note 3)               1,941,661             -
                                                                          -----------   -----------

Income from continuing operations                                            767,205       101,900
                                                                          -----------   -----------

Discontinued Operations (Note 4):
  Loss from discontinued operations                                           (8,947)      (26,864)
  Net gain from sales of discontinued operations                                   -        20,384
                                                                          -----------   -----------

Total loss from discontinued operations                                       (8,947)       (6,480)
                                                                          -----------   -----------

Net Income                                                                  $758,258       $95,420
                                                                          ===========   ===========


Earnings per Common Share (basic and diluted):
  Income (loss) before net gain from sales of properties                      ($0.31)        $0.03

  Recognition of deferred gain on sales of properties                           0.51             -
                                                                          -----------   -----------

  Income from continuing operations                                             0.20          0.03
                                                                          -----------   -----------

  Discontinued Operations:
    Loss from discontinued operations                                              -         (0.01)
    Net gain from sales of discontinued operations                                 -          0.01
                                                                          -----------   -----------

  Total loss from discontinued operations                                          -             -
                                                                          -----------   -----------

  Net Income per Common Share - basic                                          $0.20         $0.03
                                                                          ===========   ===========
                              - diluted                                        $0.20         $0.03
                                                                          ===========   ===========

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

Weighted Average Number of Shares Outstanding - basic                      3,838,614     3,803,614
                                                                          ===========   ===========
                                              - diluted                    3,850,742     3,815,681
                                                                          ===========   ===========

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,
                                                                                   --------------------------------------------

                                                                                        2005                        2004
                                                                                   ----------------            ----------------
 Cash Flows from Operating Activities:
<S>                                                                                     <C>                         <C>
   Cash received from rental properties                                                 $2,725,678                  $5,210,513
   Interest received                                                                     1,738,097                   2,501,317
   Distributions received from partnership                                                  26,922                     168,600
   Distributions received from joint ventures                                            1,941,000                        -
   Miscellaneous income                                                                    439,517                      21,820
   Interest paid on rental property mortgage debt                                         (475,742)                 (1,418,317)
   Cash disbursed for rental property operations                                        (1,822,699)                 (3,478,739)
   Cash disbursed for general and administrative costs                                  (2,436,730)                 (3,126,719)
                                                                                   ----------------            ----------------

 Net cash provided by (used in) operating activities                                     2,136,043                    (121,525)
                                                                                   ----------------            ----------------

 Cash Flows from Investing Activities:
     Payments received on notes receivable                                               8,650,280                     302,666
     Payments disbursed for investments in notes receivable                             (9,500,000)                 (8,600,000)
     Net proceeds received from fire insurance settlement                                  707,588                        -
     Payments disbursed for additions and improvements                                    (480,021)                   (451,590)
     Proceeds from sales of properties held in discontinued operations                   4,911,146                  20,655,608
     Purchase of property                                                                     -                    (27,000,000)
     Payments disbursed for other investments                                           (1,415,000)                       -
     Purchase of additional interest in partnership                                        (65,000)                    (73,000)
     Other                                                                                   1,878                       6,003
                                                                                   ----------------            ----------------

 Net cash provided by (used in) investing activities                                     2,810,871                 (15,160,313)
                                                                                   ----------------            ----------------

 Cash Flows from Financing Activities:
     Principal payments on mortgage debt                                                  (145,303)                   (256,052)
     Principal payments on mortgage debt from insurance proceeds                          (707,588)                       -
     Repayment of mortgage debt from sale of property                                   (1,411,670)                 (7,543,612)
     Mortgage proceeds                                                                        -                     22,961,590
     Loan proceeds                                                                            -                      2,600,000
     Mortgage costs paid                                                                      -                         (8,346)
     Distributions to minority partners                                                     (8,751)                    (25,000)
     Cash distributions on common stock                                                 (1,837,292)                 (1,821,741)
     Cash received from loan repayments by officers                                           -                        367,500
     Proceeds from dividend reinvestment and share purchase plan                            90,533                     168,646
                                                                                   ----------------            ----------------

 Net cash (used in) provided by financing activities                                    (4,020,071)                 16,442,985
                                                                                   ----------------            ----------------

 Net Increase in Cash and Cash Equivalents                                                 926,843                   1,161,147

 Cash and Cash Equivalents, Beginning of Period                                          2,085,767                   1,372,818
                                                                                   ----------------            ----------------

 Cash and Cash Equivalents, End of Period                                               $3,012,610                  $2,533,965
                                                                                   ================            ================

 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,
                                                                                   ---------------------------------------------

                                                                                        2005                         2004
                                                                                   ----------------            -----------------
<S>                                                                                <C>                         <C>
Reconciliation of Net Income to Net Cash
  Provided by (Used in) Operating Activities

Net Income                                                                              $3,760,894                  $12,447,433
                                                                                   ----------------            -----------------

Adjustments to reconcile net income to net cash provided by (used in) operating
  activities:
    Recognition of deferred gain on sales of properties                                 (3,241,540)                        -
    Net gain from sales of discontinued operations                                      (2,255,364)                 (12,171,162)
    Equity in income of partnership                                                        (46,253)                    (258,702)
    Equity in the loss of joint ventures                                                   681,664                         -
    Depreciation and amortization                                                          229,992                      409,051
    Issuance of stock for fees and expenses                                                 27,828                       17,132
    Amortization of discounts on notes and fees                                           (118,495)                    (108,525)
    Minority interest                                                                        6,150                        8,396
    Distributions received from  partnership                                                26,922                      168,600
    Distributions received from joint ventures                                           1,941,000                         -

    Changes in assets and liabilities:
    Decrease (increase) in other receivables                                               370,241                     (191,845)
    Increase (decrease) in accounts payable and accrued liabilities                        148,606                     (636,747)
    Increase (decrease) in other liabilities                                                33,734                      (15,338)
    Decrease in prepaid expenses, deposits in escrow
      and deferred charges                                                                 558,672                      212,054
    Other                                                                                   11,992                       (1,872)
                                                                                   ----------------            -----------------

Total adjustments                                                                       (1,624,851)                 (12,568,958)
                                                                                   ----------------            -----------------

Net cash provided by (used in) operating activities                                     $2,136,043                    ($121,525)
                                                                                   ================            =================



SUPPLEMENTAL NONCASH DISCLOSURES:

  Satisfaction of mortgage debt as a result of assumption
    of the mortgage debt by the purchaser                                               $7,605,966
                                                                                   ================

  Satisfaction of mortgage debt as a  result of foreclosure sale                                                    $13,595,028
                                                                                                               =================

  Net carrying value of real estate written off as a result of foreclosure sale                                     $13,094,950
                                                                                                               =================


See notes to consolidated financial statements.
</TABLE>





PRESIDENTIAL REALTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 (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 UTB Associates, a partnership in which Presidential
is the general partner and owns a 75% interest. All significant intercompany
balances and transactions have been eliminated.

B. Net Income Per Share - Basic net income per share data is computed by
dividing net income 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 stock options
outstanding. The dilutive effect of stock options is calculated using the
treasury stock method.

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 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, 2004.

D. Management Estimates - In preparing the consolidated financial statements in
conformity with accounting principles generally accepted in the United States of
America, 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. Discontinued Operations - The Company complies with the provisions of
Statement of Financial Accounting Standards ("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.

F. Equity Method - The Company accounts for its investments in joint ventures
and partnerships using the equity method of accounting because it exercises
significant influence, but not control, over these investments.

G. New Accounting Pronouncements - In December of 2004, the Financial Accounting
Standards Board ("FASB") issued SFAS No. 153, "Exchanges of Nonmonetary Assets -
An Amendment of APB Opinion No. 29". The amendments made by SFAS No. 153 are
based on the principle that exchanges of nonmonetary assets should be measured
based on the fair value of the assets exchanged. Further, the amendments
eliminate the narrow exception for nonmonetary exchanges of similar productive
assets and replace it with a broader exception for exchanges of nonmonetary
assets that do not have commercial substance. SFAS No. 153 is effective for
nonmonetary asset exchanges occurring in fiscal periods beginning after June 15,
2005. The adoption of SFAS No. 153 had no impact on the Company's consolidated
financial statements.

In December of 2004, the FASB issued SFAS No. 123, (Revised 2004) - "Share-Based
Payment" ("SFAS No. 123R"). SFAS No. 123R replaces SFAS No. 123, which the
Company previously adopted. SFAS No. 123R requires that the compensation cost
relating to share-based payment transactions be recognized in financial
statements and be measured based on the fair value of the equity or liability
instruments issued. SFAS No. 123R is effective as of the first interim and
annual reporting period that begins after December 31,2005. The Company does
not believe that the adoption of SFAS No. 123R will have a material effect on
the Company's consolidated financial statements.

In May of 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error
Corrections - A Replacement of APB Opinion No. 20 and SFAS No. 3". SFAS No. 154
changes the requirements for the accounting and reporting of a change in
accounting principle by requiring retrospective application to prior periods'
financial statements of the change in accounting principle, unless it is
impracticable to do so. SFAS No. 154 also requires that a change in depreciation
or amortization for long-lived, non-financial assets be accounted for as a
change in accounting estimate effected by a change in accounting principle. SFAS
No. 154 is effective for accounting changes and corrections of errors made in
fiscal years beginning after December 15, 2005. The Company does not believe
that the adoption of SFAS No. 154 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,
                                        2005                      2004
                                    -------------              ------------

Land                                 $   603,969                $   603,969
Buildings                              9,599,139                  9,104,222
Furniture and equipment                  140,926                    132,844
                                     -----------                -----------
Total real estate                    $10,344,034                $ 9,841,035
                                     ===========                ===========




3. MORTGAGE PORTFOLIO

The components of the net mortgage portfolio are as follows:

                             Sold
                           Properties            Related
September 30, 2005          and Other            Parties         Total
------------------         -----------           --------      ----------

Notes receivable           $10,742,238           $281,495      $11,023,733
Less: Discounts                797,798             63,168          860,966
                           -----------           --------      -----------
Net mortgage portfolio     $ 9,944,440           $218,327      $10,162,767
                           ===========           ========      ===========
December 31, 2004
-----------------

Notes receivable           $19,373,812           $295,427      $19,669,239
Less: Discounts                916,178             51,261          967,439
      Deferred gains         3,241,540               -           3,241,540
                           -----------           --------      -----------
Net mortgage portfolio     $15,216,094           $244,166      $15,460,260
                           ===========           ========      ===========

At September 30, 2005, all of the notes in the Company's mortgage portfolio are
current in accordance with their terms, as modified.

On March 9, 2005, the Company received prepayment of its $8,550,000 Encore
Apartments note receivable which was due to mature on April 30, 2009. As a
result of the prepayment of this note, the Company recognized a $3,241,540 gain
from the sale of the property, which had previously been deferred. The long-term
capital gain for tax purposes, that was being recognized on the installment
method, was approximately $5,548,000.

At June 30, 2005, the Company expected to retain this capital gain and declare
an undistributed capital gain dividend. Accordingly, the Company recorded a
provision for Federal income taxes of $1,941,661. For financial reporting
purposes, the provision for income taxes of $1,941,661 reduced the $3,241,540
gain on sale, resulting in a net gain on sale of $1,299,879. During the quarter
ended September 30, 2005, the Company made the decision not to designate and
retain the $5,548,000 long-term capital gain. Therefore, the provision for
income taxes of $1,941,661 was reversed resulting in a net gain on sale of
$3,241,540 for financial reporting purposes (see Note 9).

In connection with the prepayment, the Company received an additional interest
payment of $171,000, a prepayment fee of $256,500 and other fees of $25,000.

4. DISCONTINUED OPERATIONS

For the periods ended September 30, 2005 and 2004, income (loss) from
discontinued operations includes the Farrington Apartments property, which was
sold in January, 2005, and the Fairlawn Gardens property, which was sold in
April, 2005. In addition, income (loss) from discontinued operations for the
periods ended September 30, 2004 included the Continental Gardens property, the
Preston Lake Apartments property and three cooperative apartments, which were
all sold during the year ended December 31, 2004.

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

                                     Nine Months Ended          Three Months Ended
                                        September 30,              September 30,
                                  --------------------------  --------------------------
                                      2005            2004         2005       2004
                                      ----            ----         ----       ----
Revenues:
<S>                               <C>             <C>           <C>         <C>
   Rental                         $  285,160      $ 3,030,648   $  -        $563,615
                                  ----------      -----------   -------     --------

Rental property expenses:
   Operating expenses                292,750        1,465,909     8,950      328,706
   Interest on mortgage debt          82,159        1,089,360      -         199,606
   Real estate taxes                  19,956          319,492      -          47,349
   Depreciation on real estate          -             177,849      -          12,993
   Amortization of mortgage costs       -              13,369      -           2,083
                                  ----------      -----------   -------     --------
Total                                394,865        3,065,979     8,950      590,737
                                  ----------      -----------   -------     --------

Other income:
   Investment income                     459              497         3          258
                                  ----------      -----------   -------      -------

Loss from discontinued
   operations                       (109,246)         (34,834)   (8,947)     (26,864)

Net gain from sales of
   discontinued operations         2,255,364       12,171,162       -         20,384
                                  ----------      ------------  -------     --------

Total income (loss) from
   discontinued operations        $2,146,118      $12,136,328   $(8,947)    $ (6,480)
                                  ==========      ===========   =======     ========
</TABLE>

On January 26, 2005, the Company completed the sale of its Farrington Apartments
property in Clearwater, Florida for a sales price of $9,325,966, of which
$1,720,000 was paid in cash and the $7,605,966 balance was paid by the
assumption by the purchaser of the first mortgage on the property. In connection
with the closing, Presidential gave the purchaser a $300,000 credit against the
purchase price for hurricane damage sustained by the property prior to closing
and retained the insurance proceeds of $260,405. The loss from the sale for
financial reporting purposes was $11,580.

On April 4, 2005, the Company consummated the sale of its Fairlawn Gardens
property in Martinsburg, West Virginia for a sales price of $3,500,000, pursuant
to a contract of sale, as amended, executed in February, 2005. The net cash
proceeds of sale, after repayment of the $1,411,670 outstanding principal
balance of the first mortgage, prepayment fees and other closing expenses, were
$1,906,896. The gain from the sale for financial reporting purposes was
$2,266,944. Prior to closing, on March 29, 2005, the Company utilized $707,588
of insurance proceeds that the Company had received as a result of fire damage
to sixteen apartments at the property to pay down a portion of the outstanding
balance of the first mortgage. The gain for Federal income tax purposes
resulting from this transaction is $2,269,014 and is being treated by the
Company as a gain resulting from an involuntary conversion of property under
Section 1033 of the Internal Revenue Code. Accordingly, the gain will be
deferred pursuant to the provisions of Section 1033.

Subsequent to September 30, 2005, the Company agreed to a settlement of its
claim for additional insurance recovery for the fire damage to sixteen
apartments at the Fairlawn Gardens property. The net proceeds of the settlement
will be approximately $167,000. When the settlement is finalized, the net
proceeds received from the settlement will increase the gain on the sale of the
Fairlawn Gardens property.

On June 29, 2004, the Company consummated the sale of its Continental Gardens
property in Miami, Florida for a sales price of $21,500,000. The net cash
proceeds of sale, after repayment of the $7,543,612 first mortgage loan and
prepayment penalty of $919,522, brokerage fees of $411,610 and other expenses of
sale of $498,639, were $12,126,617, all of which was used to purchase an
exchange property pursuant to a tax-free exchange under Section 1031 of the
Internal Revenue Code (see Note 5). The gain from sale for financial reporting
purposes was $11,008,520.

In February, 2004, as a result of continuing operating losses at Preston Lake
Apartments in Tucker, Georgia, the Company decided not to make the monthly
payment due February 1, 2004 on the first mortgage note secured by the property.
The outstanding principal balance of the mortgage debt on February 1, 2004 was
$13,595,028. The mortgage note was nonrecourse and the Company had no personal
liability for repayment of the indebtedness. The holder of the first mortgage
commenced foreclosure proceedings and Presidential consented to the appointment
of a receiver for the property and did not contest the foreclosure sale. On May
4, 2004, the property was sold in a foreclosure sale by the holder of the first
mortgage. The Company recorded a gain on the foreclosure sale for financial
reporting purposes of $248,697.

In the first quarter of 2004, the Company sold three cooperative apartment units
which were located in the New York metropolitan area. The gain from the sales of
those apartments for financial reporting purposes was $913,945 and the net cash
proceeds of the sales were $1,015,828.




The combined assets and liabilities of the Fairlawn Gardens and Farrington
Apartments properties at December 31, 2004, are segregated in the consolidated
balance sheet. The components are as follows:

                                                           December 31,
                                                               2004
                                                           ------------

Assets related to discontinued operations:
  Land                                                     $ 1,971,408
  Buildings                                                 10,243,952
  Furniture and equipment                                       39,825
  Less: accumulated depreciation                            (1,475,713)
                                                           -----------
  Net real estate                                           10,779,472
  Other assets                                                 256,535
                                                           -----------
Total                                                      $11,036,007
                                                           ===========

Liabilities related to discontinued operations:
  Mortgage debt                                            $ 9,741,622
  Other liabilities                                            111,300
                                                           -----------
Total                                                      $ 9,852,922
                                                           ===========


5. INVESTMENTS IN AND ADVANCES TO JOINT VENTURES

On September 24, 2004, the Company purchased the Martinsburg Mall, an enclosed
regional shopping mall containing gross leasable area of approximately 552,000
square feet, in Martinsburg, West Virginia. The purchase price for the
Martinsburg Mall was $27,000,000 and was paid by utilizing $12,365,000 of the
net cash proceeds generated by the sale of the Company's Continental Gardens
property in Miami, Florida and the proceeds of a first mortgage loan in the
amount of $14,635,000. Subsequent to closing, the Company obtained an additional
advance of $8,326,590 under the first mortgage loan and a mezzanine loan from
The Lightstone Group ("Lightstone") in the amount of $2,600,000 which is secured
by a pledge of the 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 will manage the Martinsburg Mall and received a 71%
ownership interest in the entity owning the Martinsburg Mall, leaving the
Company with a 29% ownership interest.

On September 28, 2004, Presidential made an $8,600,000 mezzanine loan to
Lightstone Member LLC ("Lightstone I") in connection with the acquisition by
Lightstone I of four shopping malls, namely the Shenango Valley Mall, an
enclosed regional mall located in Hermitage, Pennsylvania with 508,000 square
feet of gross leasable area; the West Manchester Mall, an enclosed regional mall
located in York, Pennsylvania with 733,000 square feet of gross leasable area;
the Bradley Square Mall, an enclosed mall located in Cleveland, Tennessee with
385,000 square feet of gross leasable area; and the Mount Berry Square Mall, an
enclosed regional mall located in Rome, Georgia with 475,000 square feet of
gross leasable area (the "Four Malls"). The loan is secured by the ownership
interests in the entities owning the Four Malls and Presidential obtained a 29%
ownership interest in the entities owning the Four Malls. The loan matures on
September 27, 2014 and the interest rate on the loan is 11% per annum.

The $22,961,590 first mortgage loan obtained by Presidential in connection with
its acquisition of the Martinsburg Mall is part of a $105,000,000 nonrecourse
first mortgage loan secured by the Martinsburg Mall and the Four Malls.

On December 23, 2004, Presidential made a $7,500,000 mezzanine loan to
Lightstone Member II LLC ("Lightstone II") in connection with the acquisition by
Lightstone II of two shopping malls, namely the Brazos Outlets Center Mall, an
enclosed single story regional mall located in Lake Jackson, Texas with 587,966
square feet of gross leasable area and the Shawnee Mall, an enclosed single
story regional mall located in Shawnee, Oklahoma with 445,657 square feet of
gross leasable area (the "Shawnee/Brazos Malls"). The loan is secured by the
ownership interests in the entities owning the Shawnee/Brazos Malls and
Presidential obtained a 29% ownership interest in the entities owning the
Shawnee/Brazos Malls. The loan matures on December 23, 2014 and the interest
rate on the loan is 11% per annum. The Shawnee/Brazos Malls are subject to a
$39,500,000 nonrecourse first mortgage loan.

On July 7, 2005, Presidential made a $9,500,000 mezzanine loan to Lightstone
Member III LLC ("Lightstone III") in connection with the acquisition by
Lightstone III of two shopping malls, namely the Macon Mall, an enclosed
two-story regional mall located in Macon, Georgia with 764,208 square feet of
gross leasable area (and an additional 682,160 square feet of department store
space in the mall area owned by four department stores), and the Burlington
Mall, an enclosed single story regional mall located in Burlington, North
Carolina with 416,442 square feet of gross leasable area (the "Macon/Burlington
Malls"). The loan is secured by the ownership interests in the entities owning
the Macon/Burlington Malls and Presidential obtained a 29% ownership interest in
the entities owning the Macon/Burlington Malls. The loan matures on July 6,
2015, and the interest rate on the loan is 11% per annum. The Macon/Burlington
Malls are subject to a nonrecourse first mortgage loan in the original principal
amount of $158,850,000.

The Company accounts for these investments using the equity method. Investments
in and advances to joint ventures are as follows:

                                      September 30,          December 31,
                                          2005                   2004
                                      -------------          ------------
      Martinsburg Mall                 $   936,728            $ 1,352,433
      Four Malls                         6,935,191              8,387,301
      Shawnee/Brazos Malls               6,944,115              7,474,629
      Macon/Burlington Malls             9,238,358                   -
                                       -----------            -----------
                                       $24,054,392            $17,214,363
                                       ===========            ===========



Equity in the (loss) income of joint ventures for the periods ended September
30, 2005 is as follows:

                                        Nine Months             Three Months
                                           Ended                   Ended
                                     September 30, 2005     September 30, 2005
                                     ------------------     ------------------

         Martinsburg Mall        (1)    $(325,956)              $(151,336)
         Four Malls              (2)     (467,665)               (336,522)
         Shawnee/Brazos Malls    (3)      173,736                 (61,220)
         Macon/Burlington Malls  (4)      (61,779)                (61,779)
                                        ---------               ---------
                                        $(681,664)              $(610,857)
                                        =========               =========

(1) The Company's share of the loss of joint ventures for the Martinsburg Mall
is determined after the deduction for the interest expense at the rate of 11%
per annum on the outstanding $2,600,000 loan from Lightstone.

(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 loss of joint ventures for the Four
Malls.

(3) The Company's share of the income of joint ventures for the Shawnee/Brazos
Malls includes interest income at the rate of 11% per annum on the outstanding
$7,500,000 loan from Presidential to Lightstone II.

(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 loss of joint ventures for the
Macon/Burlington Malls.

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 condensed combined information is as follows:



                                            September 30,        December 31,
                                                2005                  2004
                                            -------------        ------------
Condensed Combined Balance Sheets
  Net real estate                           $301,992,431         $146,103,060
  In place lease values and
   acquired lease rights                      24,306,242           17,578,322
  Deposits in escrow                          16,813,859            8,728,026
  Cash and cash equivalents                    1,779,992            1,635,000
  Deferred financing costs                     3,880,965            3,608,435
  Other assets                                 3,874,069            1,742,466
                                             ------------        ------------

  Total Assets                              $352,647,558         $179,395,309
                                            ============         ============

  Nonrecourse mortgage debt                 $303,350,000         $144,500,000
  Mezzanine notes payable                     28,200,000           18,700,000
  Other liabilities                           19,352,684           12,514,864
                                            ------------         ------------

  Total Liabilities                          350,902,684          175,714,864
  Members' Equity                              1,744,874            3,680,445
                                            ------------         ------------
  Total Liabilities and
   Members' Equity                          $352,647,558         $179,395,309
                                            ============         ============

                                  Nine Months Ended    Three Months Ended
                                 September 30, 2005    September 30, 2005
                                 ------------------    ------------------

Condensed Combined Statements
 of Operations
  Revenues                           $31,332,595          $ 14,503,473
  Interest on mortgage
    debt and other debt              (11,347,024)           (5,799,227)
  Depreciation and amortization       (9,378,342)           (4,260,782)
  Other expenses                     (16,640,151)           (8,196,027)
                                     -----------          ------------

  Net Loss                           $(6,032,922)         $ (3,752,563)
                                     ===========          ============

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 statement of operations for the nine months ended September 30,
2005 reflects 29% of the income (loss) of the joint ventures. The equity in the
loss of joint ventures of $681,664 for the nine month period ended September 30,
2005 is after deductions in the aggregate amount of $2,719,719 for the Company's
29% of noncash charges (depreciation of $1,500,228, amortization of deferred
financing costs of $343,997 and amortization of in-place lease values of
$875,494). Notwithstanding the income (loss) from the joint ventures, the
Company is entitled to receive its interest at the rate of 11% per annum on its
$25,600,000 of loans to the joint ventures. For the nine months ended September
30, 2005, the Company received distributions from the joint ventures in the
amount of $1,941,000, which included payments of interest in the amount of
$1,607,650 and return on investment in the amount of $333,350.

The Lightstone Group is controlled by David Lichtenstein. At September 30, 2005,
in addition to Presidential's investments of $24,054,392 in these joint ventures
with entities controlled by Mr. Lichtenstein, Presidential has three loans that
are due from entities that are controlled by Mr. Lichtenstein in the aggregate
outstanding principal amount of $9,875,000 with a net carrying value of
$9,083,443. Some, but not all, of these loans are guaranteed in whole or in part
by Mr. Lichtenstein and all of such loans are in good standing. While the
Company believes that all of these loans are adequately secured, a default on
some or all of these loans could have a material adverse effect on
Presidential's business and operating results.

The $33,137,835 net carrying value of investments in and advances to joint
ventures with entities controlled by Mr. Lichtenstein and loans outstanding to
entities controlled by Mr. Lichtenstein constitute 71% of the Company's total
assets at September 30, 2005.

6. OTHER INVESTMENTS

On May 24, 2005, the Company invested $1,000,000 with Broadway Real Estate
Partners, LLC ("Broadway Partners"), which money will be held in escrow pending
investment into Pickwick Preferred Equity Lender LLC ("Pickwick"). While the
money is being held in escrow, the Company will receive interest payments at the
following rates: 8% per annum from May 24, 2005 through May 31, 2005 and 11.43%
per annum thereafter until the funds are invested into Pickwick. The $1,000,000
is scheduled to be invested in Pickwick in late November, 2005.

When the investment in Pickwick is made, the Company will own a 12.05% interest
in a limited liability company whose sole asset is an $8,300,000 note receivable
secured by certain ownership interests in an office building in Greenwich,
Connecticut. Presidential is entitled to receive $9,525 of interest per month on
its investment and when the $8,300,000 loan is repaid, Presidential will receive
$974,335 in full liquidation of its investment.

Presidential also has agreed to invest $1,000,000 in Broadway Partners Parallel
Fund A, a blind pool of investment capital sponsored by Broadway Partners,
through redemption of its membership interest in Pickwick. Presidential's
commitment will be called on from time to time by Broadway Partners as it
requires funds to make real estate investments. However, Presidential has the
right, provided it gives written notice within seven days of such request, to
fund its obligations from other capital resources. At September 30, 2005,
Presidential had advanced $415,000 of its commitment from its own capital
resources and the balance of Presidential's commitment was $585,000.

7. DISTRIBUTIONS FROM PARTNERSHIP IN EXCESS OF INVESTMENT AND EARNINGS

PDL, Inc. (a wholly owned subsidiary of Presidential) is the general partner of
PDL, Inc. and Associates Limited Co-Partnership ("Home Mortgage Partnership").
The Home Mortgage Partnership owns and operates an office building in Hato Rey,
Puerto Rico. Presidential and PDL, Inc. had an aggregate 32% general and limited
partner interest in Home Mortgage Partnership at December 31, 2004 and purchased
an additional 1% interest on March 31, 2005 for a purchase price of $65,000. The
Company accounts for its investment in this partnership under the equity method
because it exercises significant influence, but not control, over the
partnership's affairs.

The Company's interest in the Home Mortgage Partnership has a negative basis and
therefore is classified as a liability on the Company's consolidated balance
sheets, under the caption "distributions from partnership in excess of
investment and earnings". The negative basis is solely due to the refinancing of
the mortgage on the property owned by the partnership and the distribution of
the proceeds to the partners in excess of their investment in prior years, and
not due to partnership operating losses.

<TABLE>
Summary financial information for Home Mortgage Partnership is as follows:
<CAPTION>

                                                              September 30,                December 31,
                                                                  2005                        2004
                                                              -------------                ------------
Condensed Balance Sheets
<S>                                                           <C>                         <C>
  Net real estate                                             $  3,920,111                $  4,063,811
  Prepaid expenses and deposits in
   escrow                                                          782,894                     826,083
  Cash and cash equivalents                                      1,038,211                     993,358
  Receivables and other assets                                     476,824                     479,145
                                                              ------------                ------------
  Total Assets                                                $  6,218,040                $  6,362,397
                                                              ============                ============

  Nonrecourse mortgage debt                                   $ 16,137,197                $ 16,313,668
  Other liabilities                                                634,928                     665,894
                                                              ------------                ------------
  Total Liabilities                                             16,772,125                  16,979,562
  Partners' Deficiency                                         (10,554,085)                (10,617,165)
                                                              ------------                ------------
  Total Liabilities and
   Partners' Deficiency                                       $  6,218,040                $  6,362,397
                                                              ============                ============
On the Company's Consolidated
  Balance Sheets:
  Distributions from partnership in
    excess of investment and earnings                         $  2,175,611                $  2,259,943
                                                              ============                ============




                                        Nine Months Ended              Three Months Ended
                                          September 30,                    September 30,
                                       2005           2004               2005           2004
                                    -----------    -----------        ----------      ---------
Condensed Statements
  of Operations
  Revenues                          $ 2,890,159    $ 3,439,540        $  818,659      $1,186,567
  Interest on
    mortgage debt                      (907,811)      (923,907)         (304,814)       (309,194)
  Depreciation and
    amortization                       (267,554)      (264,079)          (86,980)        (87,077)
  Other expenses                     (1,587,668)    (1,432,416)         (540,762)       (477,037)
  Investment income                      19,354          5,206             7,593           2,337
                                    -----------    -----------        ----------      ----------
  Net Income (Loss)                 $   146,480    $   824,344        $ (106,304)     $  315,596
                                    ===========    ===========        ==========      ==========

On the Company's
  Consolidated Statement
  of Operations:
  Equity in income (loss)
   of partnership                   $    46,253    $   258,702        $  (35,080)   $  100,990
                                    ===========    ===========        ==========    ==========
</TABLE>

8. MINORITY INTEREST IN CONSOLIDATED PARTNERSHIP

Presidential is the general partner of UTB Associates, a partnership in which
Presidential has a 75% interest. As the general partner of UTB Associates,
Presidential exercises 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 consolidates
this partnership in the accompanying consolidated financial statements. The
minority interest reflects the minority partners' equity in the partnership.

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.

Upon filing the Company's income tax return for the year ended December 31,
2004, Presidential applied all of its available 2004 stockholders' distributions
and further elected to apply (under Section 858 of the Internal Revenue Code)
approximately $131,000 of its year 2005 stockholders' distributions to reduce
its taxable income for 2004 to zero.

The Company had taxable income (before distributions to stockholders) for the
nine months ended September 30, 2005 of approximately $4,461,000 ($1.16 per
share), which is comprised of capital gains of approximately $6,102,000 ($1.59
per share) and an ordinary loss of approximately $1,641,000 ($.43 per share).
The Company intends to apply all of its available 2005 distributions and its
eligible 2006 distributions to its 2005 taxable income to reduce its 2005
taxable income to zero. Therefore, no provision for Federal income taxes has
been made at September 30, 2005.

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,
                                          2005                  2004
                                      --------------        ------------

Minimum pension liability             $(1,442,537)          $(1,442,537)
Net unrealized gain on
  securities available for sale             9,440                 8,676
                                      -----------           -----------

Total accumulated other
  comprehensive loss                  $(1,433,097)          $(1,433,861)
                                      ===========           ===========



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

                                        Nine Months Ended            Three Months Ended
                                          September 30,                 September 30,
                                        2005          2004            2005          2004
                                    -----------     -----------    -----------    -----------

<S>                                 <C>             <C>            <C>            <C>
Net income                          $ 3,760,894     $12,447,433    $   758,258    $    95,420

Other comprehensive
 income-
  Net unrealized
  gain (loss) on
  securities available
   for sale                                764             943            (333)           637
                                    -----------     -----------    -----------    -----------

Comprehensive income               $ 3,761,658     $12,448,376     $   757,925    $    96,057
                                    ===========    ============    ===========    ===========
</TABLE>


11. COMMITMENTS AND CONTINGENCIES

Presidential has a commitment to invest $585,000 in Broadway Partners Parallel
Fund A (see Note 6).

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 not aware of any environmental issues at any of its properties. The presence,
with or without the Company's knowledge, of hazardous substances at any of its
properties could have an adverse effect on the Company's operating results and
financial condition.

12. CONTRACTUAL PENSION AND POSTRETIREMENT BENEFITS

The following table sets forth the components of net periodic benefit costs for
contractual pension benefits:



                               Nine Months Ended   Three Months Ended
                                  September 30,       September 30,
                                2005     2004       2005      2004
                             --------  --------   --------  --------

Service cost                 $ 22,568  $ 31,108   $  7,522   $ 10,369
Interest cost                  99,915   113,475     33,305     37,825
Amortization of prior
  service cost                (18,520)  (18,520)    (6,173)    (6,173)
Recognized actuarial loss     220,343   185,113     73,448     61,704
                             --------  --------   --------   --------

Net periodic benefit cost    $324,306  $311,176   $108,102   $103,725
                             ========  ========   ========   ========


The following table sets forth the components of net periodic benefit costs for
contractual postretirement benefits:

                              Nine Months Ended      Three Months Ended
                                  September 30,         September 30,
                               2005       2004        2005        2004
                             --------   -------    -------    -------

Service cost                 $ 15,551   $ 9,817    $ 5,184    $ 3,272
Interest cost                  36,452    28,690     12,151      9,563
Amortization of prior
  service cost                 (7,209)   (7,209)    (2,403)    (2,403)
Recognized actuarial loss      68,401    14,326     22,799      4,775
                             --------   -------    -------    -------

Net periodic benefit cost    $113,195   $45,624    $37,731    $15,207
                             ========   =======    =======    =======

During the nine months ended September 30, 2005, the Company made contributions
of $355,402 and $48,453 for contractual pension benefits and postretirement
benefits, respectively. The Company anticipates additional contributions of
$118,435 and $15,500 for contractual pension benefits and postretirement
benefits, respectively, for the remainder of 2005.



13. DEFINED BENEFIT PLAN

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

                                     Nine Months Ended      Three Months Ended
                                       September 30,          September 30,
                                      2005       2004        2005        2004
                                    --------   --------    -------     --------

Service cost                        $367,523   $291,032   $122,508     $ 97,012
Interest cost                        279,066    257,129     93,022       85,709
Expected return on
  plan assets                       (367,695)  (231,392)  (122,565)     (77,131)
Amortization of prior
  service cost                         9,462      9,462      3,154        3,154
Amortization of
  accumulated loss                    60,519     47,223     20,173       15,741
                                    --------   --------   --------     --------

Net periodic
  benefit cost                      $348,875   $373,454   $116,292     $124,485
                                    ========   ========   ========     ========


During the nine months ended September 30, 2005, the Company did not make a
contribution to the defined benefit plan. The Company's funding policy for the
plan is based on contributions at the minimum and maximum amounts required by
law. The Company is not required to make any contributions in 2005, but may make
the maximum tax deductible contribution in 2005 of approximately $166,000.



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, 2005 AND 2004

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:

   o   general economic and business conditions, which will, among other
       things, affect the demand for apartments, mall space or other
       commercial space, availability and credit worthiness of prospective
       tenants, lease rents and the terms and availability of financing;
   o   adverse changes in the real estate markets including, among other things,
       competition with other companies;
   o   risks of real estate development,acquisition, ownership and operation;
   o   governmental actions and initiatives; and
   o   environment and safety requirements.

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 management's most
difficult, complex or subjective judgments. The Company's critical accounting
policies are described in its Form 10-KSB for the year ended December 31, 2004.
There have been no significant changes in the Company's critical accounting
policies since December 31, 2004.

Results of Operations

Financial Information for the nine months ended September 30, 2005 and 2004:
---------------------------------------------------------------------------

Continuing Operations:

Revenues decreased by $754,008 primarily as a result of decreases in interest
income on mortgages-sold properties and other and interest income on
mortgages-related parties. These decreases were partially offset by increases in
rental revenues and other revenues.

Rental revenues increased by $63,088 as a result of increases at all of the
rental properties, with the exception of Cambridge Green, which experienced a
decrease in rental revenues of $15,924.

Interest on mortgages-sold properties and other decreased by $1,039,616. As a
result of $17,550,000 in repayments on notes receivable in the fourth quarter of
2004 and the first quarter of 2005, interest income on those notes decreased by
$1,043,580 in the 2005 period.

Interest on mortgages-related parties decreased by $185,959 primarily as a
result of a decrease of $172,000 in payments of interest income received on the
Consolidated Loans (see below).

Other revenues increased by $408,479 primarily as a result of a $256,500
prepayment fee received on the repayment of the Encore Apartments note
receivable and an additional $25,000 fee in connection with the Encore
repayment. In addition, other revenues increased by $118,240 for fees earned by
the Company's management company for third party owned properties.

Costs and expenses increased by $405,684 primarily due to increases in general
and administrative expenses and rental property operating expenses.

General and administrative expenses increased by $147,984 primarily as a result
of a $173,321 increase in salary expense, of which $134,491 pertains to new
employees hired in connection with the property management company formed in
October, 2004 and $38,830 pertains to annual salary increases. In addition,
professional fees increased by $139,429, postretirement benefit costs increased
by $67,571 and insurance expense increased by $34,578. These increases were
partially offset by a decrease of $255,361 in bad debt expense. In 2004, the
Company wrote off to bad debt expense a $270,908 receivable due from an
unaffiliated property management company.

Rental property operating expenses increased by $239,821 primarily as a result
of increases of $283,359 in repairs and maintenance expenses, $20,962 in bad
debt expense and $10,352 in snow removal expenses. These increases were
partially offset by an $80,035 decrease in property management fees.

Other income decreased by $780,423 primarily as a result of the $681,664 of
equity in the loss of joint ventures in the 2005 period. The Company purchased
these investments in joint ventures in the third and fourth quarters of 2004 and
in the third quarter of 2005. In addition, equity in income of partnership
decreased by $212,449 due to lower earnings of the Home Mortgage Partnership.
These decreases were partially offset by a $113,690 increase in investment
income attributable to higher interest rates and higher cash balances.

Income from continuing operations before net gain from sales of properties
decreased by $1,937,869 from income of $311,105 in 2004 to a loss of $1,626,764
in 2005. This decrease was primarily a result of decreases in revenues of
$754,008, increases in general and administrative expenses of $147,984,
increases in rental property operating expenses of $239,821 and the equity in
the loss of joint ventures of $681,664 in the 2005 period.

Net gain from sales of properties consists of recognition of deferred gains from
sales in prior years. The recognition of deferred gains from sales in prior
years depends on the receipt of installments or prepayments of purchase money
notes. In 2005, the net gain from sales of properties was $3,241,540 compared to
zero in 2004:



Gain from sales recognized for the nine months
  ended September 30,                                2005            2004
                                                   --------        --------
  Deferred gains recognized upon receipt of
    principal payments on notes:
     Encore Apartments                            $3,241,540        $   -
                                                  ----------       --------

  Net gain                                        $3,241,540        $   -
                                                  ==========       ========


Discontinued Operations:

In 2005, the Company had two properties that were classified as discontinued
operations: the Farrington Apartments property in Clearwater, Florida, which was
sold in January of 2005, and the Fairlawn Gardens property in Martinsburg, West
Virginia, which was sold in April of 2005. (See Liquidity and Capital Resources
- Discontinued Operations below).

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

                                                     2005           2004
                                                  -----------    ----------

Income (loss) from discontinued operations:

Farrington Apartments, Clearwater, FL              $(135,096)    $  (156,587)
Fairlawn Gardens, Martinsburg, WV                     25,850          (1,232)
Continental Gardens, Miami, FL                          -            248,362
Preston Lake Apartments, Tucker, GA                     -           (121,046)
Three cooperative apartment units                       -             (4,331)
                                                    ---------    -----------

Loss from discontinued operations                    (109,246)       (34,834)
                                                    ---------    -----------

Net gain (loss) from sales of
 discontinued operations:
Continental Gardens                                     -         11,008,520
Preston Lake Apartments                                 -            248,697
Fairlawn Gardens                                    2,266,944           -
Farrington Apartments                                 (11,580)          -
Three cooperative apartment units                       -            913,945
                                                   ----------    -----------

Net gain from sales of
  discontinued operations                           2,255,364     12,171,162
                                                   ----------     ----------

Total income from
  discontinued operations                          $2,146,118    $12,136,328
                                                   ==========    ===========



Financial Information for the three months ended September 30, 2005 and 2004:
----------------------------------------------------------------------------

Revenues decreased by $414,559 primarily as a result of decreases in interest
income on mortgages-sold properties and other and interest income on
mortgages-related parties. These decreases were partially offset by increases in
rental revenues and other revenues.

Rental revenues increased by $63,552 primarily as a result of increases at most
of the rental properties especially an increase of $46,271 at the Mapletree
Industrial Center property.

Interest on mortgages-sold properties and other decreased by $385,866. As a
result of $17,550,000 in repayments on notes receivable in the fourth quarter of
2004 and the first quarter of 2005, interest income on those notes decreased by
$396,191 in the 2005 period.

Interest on mortgages-related parties decreased by $123,830 primarily as a
result of a decrease of $120,250 in payments of interest income received on the
Consolidated Loans.

Other revenues increased by $31,585 primarily as a result of $32,470 of fees
earned by the Company's management company for third party owned properties.

Costs and expenses increased by $147,168 primarily due to increases in rental
property operating expenses.

Rental property operating expenses increased by $148,370 primarily as a result
of increases of $144,472 in repairs and maintenance expenses and $31,749 in bad
debt expense. These increases were partially offset by a $25,282 decrease in
property management fees.

Other income decreased by $714,757 primarily as a result of the $610,857 of
equity in the loss of joint ventures in the 2005 period. In addition, equity in
income of partnership decreased by $136,070 due to lower earnings of the Home
Mortgage Partnership. These decreases were partially offset by a $32,170
increase in investment income attributable to higher interest rates and higher
cash balances.

Income from continuing operations before net gain from sales of properties
decreased by $1,276,356 from income of $101,900 in 2004 to a loss of $1,174,456
in 2005. This decrease was primarily a result of decreases in revenues of
$414,559, increases in rental property operating expenses of $148,370, the
decrease in the equity in income of partnership of $136,070 and the equity in
the loss of joint ventures of $610,857 in the 2005 period.

Net gain from sales of properties consists of recognition of deferred gains
from sales in prior years. The recognition of deferred gains from sales in
prior years depends on the receipt of installments or prepayments of purchase
money notes. In 2005, the net gain from sales of properties was $1,941,661
compared to zero in 2004. The $1,941,661 deferred gain recognized in the 2005
period resulted from the reversal of a provision for Federal income taxes on
the long-term capital gain of $5,548,000 relating to the $8,500,000
prepayment received on the Encore Apartments note receivable. During the 2005
period, the Company made the decision not to designate and retain the
$5,548,000 long-term capital gain. Therefore, in the third quarter of 2005,
the accrual for income taxes of $1,941,661 was reversed.

Discontinued Operations:

The following table compares the total income or loss from discontinued
operations for the three month periods ended September 30, for properties
included in discontinued operations:
                                                       2005           2004
                                                    -----------    -----------

Income (loss) from discontinued operations:

Farrington Apartments, Clearwater, FL                $(10,653)        $(26,263)
Fairlawn Gardens, Martinsburg, WV                       1,706            1,643
Continental Gardens, Miami, FL                           -              (2,816)
Preston Lake Apartments, Tucker, GA                      -                 572
                                                     --------         --------

Loss from discontinued operations                      (8,947)         (26,864)
                                                     --------         --------

Net gain from sales of discontinued operations:
Continental Gardens                                      -                 924
Preston Lake Apartments                                  -              19,460
                                                     --------         --------

Net gain from sales of
  discontinued operations                                -              20,384
                                                     --------         --------

Total loss from
  discontinued operations                            $ (8,947)        $ (6,480)
                                                     ========         ========


Funds from Operations

Funds from operations ("FFO") represents net income computed in accordance with
GAAP, excluding gains or losses from sales of properties (including properties
classified as discontinued operations), plus depreciation and amortization on
real estate. FFO is calculated in accordance with the National Association of
Real Estate Investment Trusts' ("NAREIT") definition. There are no material
legal or functional restrictions on the use of FFO. FFO should not be considered
as an alternative to net income as an indicator of the Company's operating
performance. Management considers FFO, a non-GAAP measure, a supplemental
measure of operating performance and uses FFO as a measure for comparing the
Company's operating performance between periods and among other REITs.



FFO is summarized in the following table:

                            Nine Months Ended         Three Months Ended
                               September 30,              September 30,
                            2005         2004           2005         2004
                         ------------ ------------   ----------  ------------
Net Income               $  3,760,894 $ 12,447,433   $  758,258  $    95,420
Net gain from sales
  of properties            (3,241,540)        -      (1,941,661)        -
Net gain from sales of
  discontinued
  operations               (2,255,364) (12,171,162)        -         (20,384)
Depreciation and
  amortization on:
  Real estate                 207,329      192,282       72,429       65,950
  Real estate of
    discontinued
    operations                   -         177,849         -          12,993
  Real estate of
    partnership                74,773       72,354       25,357       24,867
  Real estate of
    joint ventures          1,500,228         -         739,496         -
                         ------------  -----------   ----------   ----------
Funds From
  (Used In) Operations   $     46,320 $    718,756  $  (346,121)  $  178,846
                         ============ ============  ===========   ==========

Distributions paid
   to shareholders       $  1,837,292 $  1,821,741  $   614,490   $  608,771
                         ============ ============  ===========   ==========

FFO payout ratio (1)         3,966.5%       253.5%         -          340.4%
                         ============ ============  ===========   ==========


     (1)   In the first three quarters of 2005 and 2004, the Company decided to
           maintain its cash dividend at the quarterly rate of $.16 per share
           despite the fact the dividends paid exceeded funds from operations.
           As a result of balloon payments received on the Company's mortgage
           portfolio and proceeds from sales of properties, the Company had
           funds available to it for distribution to shareholders in addition
           to funds from operations. See Liquidity and Capital Resources below.

Balance Sheet

Net mortgage portfolio decreased by $5,297,493 as a result of the repayment of
the Encore Apartments note receivable. In March, 2005, the Company received
repayment of its $8,550,000 note secured by a mortgage on Encore Apartments in
New York, New York. As a result, mortgage receivables decreased by $8,550,000
and deferred gains on sale decreased by $3,241,540 (a net effect of $5,308,460
on the mortgage portfolio) and a deferred gain of $3,241,540 was recognized. In
connection with the prepayment of this note, the Company also received a
prepayment fee of $256,500, other fees of $25,000 and an additional interest
payment of $171,000.

Assets related to discontinued operations decreased from $11,036,007 at December
31, 2004 to zero at September 30, 2005 as a result of the sale of the Farrington
Apartments property in January of 2005 and the sale of the Fairlawn Gardens
property in April of 2005.

Investments in and advances to joint ventures increased by $6,840,029 primarily
as a result of the $9,500,000 investment made in the Macon and Burlington Malls
in July of 2005. This increase was partially offset by distributions of
$1,941,000 received by the Company (of which $1,607,650 was interest at the rate
of 11% on loans advanced to the joint ventures in the aggregate principal amount
of $25,600,000 and $333,350 was a return on investment) and $681,664 of equity
in the loss from the joint ventures.

In 2005, the Company invested $1,415,000 in other investments (see Liquidity and
Capital Resources below).

Prepaid expenses and deposits in escrow decreased by $544,739 primarily as a
result of decreases of $615,004 in deposits in escrow, partially offset by
increases of $70,265 in prepaid expenses.

Other receivables decreased by $370,241 primarily as a result of a decrease in
accrued interest receivable of $234,788, decreases in net tenant accounts
receivable of $56,982 and decreases of $78,471 in miscellaneous receivables.

Cash and cash equivalents increased by $926,843 primarily as a result of the
$9,002,500 cash received from the prepayment, additional interest and fees on
the Encore Apartments note receivable repayment. In addition, the Company
received net cash proceeds of $1,592,580 from the sale of the Farrington
Apartments property and $1,906,896 of net cash proceeds (after first mortgage
repayment of $1,411,670) from the sale of the Fairlawn Gardens property. This
increase was partially offset by disbursements of $9,500,000 for investment in
joint ventures, $1,415,000 for other investments, $480,021 for additions and
improvements and a $65,000 purchase of an additional 1% interest in the Home
Mortgage Plaza partnership.

Liabilities related to discontinued operations decreased from $9,852,922 at
December 31, 2004 to zero at September 30, 2005 as a result of the completion of
the sales of the Farrington Apartments property and the Fairlawn Gardens
property in the first and second quarters of 2005.

Accrued liabilities decreased by $304,687 primarily as a result of decreases in
accrued rental property expenses of $169,840 and decreases of $134,847 in
accrued general and administrative expenses.

Accounts payable increased by $77,784. This increase in accounts payable is a
result of payment scheduling and not from insufficient cash flows.

Other liabilities increased by $36,970 as a result of increases in deferred
income and tenant security deposits.

In July, 2005, three directors of the Company each received 1,000 shares of the
Company's Class B common stock as partial payment for directors' fees for the
2005 year. The shares were valued at $8.35 per share, which was the market value
of the Class B common stock at the grant date, and, accordingly, the Company
recorded $25,050 in prepaid directors' fees (to be amortized during 2005) 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
$24,750 to additional paid-in capital. In addition, in August, 2005, an
executive of the Company was awarded 11,000 shares of the Company's Class B
common stock, of which 10,000 were granted (subject to shareholder approval of a
proposed restricted stock plan which was obtained in June of 2005) and accrued
for in 2004 and 1,000 were granted in 2005. The 10,000 shares were valued at
$7.51 per share and the 1,000 shares were valued at $9.04 per share, which were
the respective market values of the Class B common stock at the grant date.
Accordingly, the Company recorded salary expense of $75,100 in 2004 and $9,040
in 2005. In 2005, the Company recorded additions to the Company's Class B common
stock of $1,100 at par value of $.10 per share and $83,040 to additional paid-in
capital.

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. 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 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,
2005, there was no outstanding balance due under the line of credit.

During 2004, 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 2004, pay
dividends in excess of its cash flow from operating activities if management
believes that the Company's liquidity and capital resources are sufficient to
pay such dividends.

The capital gains from sales of real properties previously owned by the Company
are recognized for income tax purposes on the installment method as principal
payments are received. To the extent that any such gain is recognized by
Presidential, or to the extent that Presidential incurs a capital gain from the
sale of a property, it may, as a REIT, either (i) elect to retain such gain, in
which event it will be required to pay Federal and State income tax on such
gain, (ii) distribute all or a portion of such gain to shareholders, in which
event Presidential will not be required to pay taxes on the gain to the extent
that it is distributed to shareholders or (iii) elect to retain such gain and
designate it as a retained capital gain dividend, in which event the Company
would pay the Federal tax on such gain, the shareholders would be taxed on their
share of the undistributed long-term capital gain and the shareholders would
receive a tax credit for their share of the Federal tax that the Company paid
and increase the tax basis of their stock for the difference between the
long-term capital gain and the tax credit.

At June 30, 2005, the Company expected to designate and retain the $5,548,000
long-term capital gain recognized upon the prepayment of the Encore Apartments
note receivable and had, accordingly, accrued $1,941,661 of income tax. During
the quarter ended September 30, 2005, the Company made the decision not
to designate and retain the $5,548,000 long-term capital gain. Therefore, in the
third quarter of 2005, the accrual for income taxes of $1,941,661 was reversed.

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 for additional investment, its historical dividend rate and its
ability to reduce taxes by paying dividends. While the Company expects to
maintain the annual $.64 dividend rate in 2005, no assurances can be given that
the present dividend rate will be maintained in the future.

At September 30, 2005, Presidential had $3,012,610 in available cash and cash
equivalents, an increase of $926,843 from the $2,085,767 at December 31, 2004.
This increase in cash and cash equivalents was due to cash provided by operating
activities of $2,136,043 and cash provided by investing activities of
$2,810,871, offset by cash used in financing activities of $4,020,071.

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 partnership and joint ventures. In 2005, cash received from
interest on the Company's mortgage portfolio was $1,738,097 and distributions
received from the partnership and joint ventures were $26,922 and $1,941,000,
respectively. Cash received from rental property operations was $418,486. Net
cash received from rental property operations is net of distributions to
minority partners but before additions and improvements and mortgage
amortization.

Investing Activities

Presidential holds a portfolio of mortgage notes receivable. During 2005, the
Company received principal payments of $8,650,280 on its mortgage portfolio of
which $8,615,302 represented prepayments and balloon payments.

In March, 2005, the Company received prepayment of its $8,550,000 Encore
Apartments note receivable which was due to mature on April 30, 2009. As a
result, the Company recognized a gain of $3,241,540 which had been previously
deferred. In connection with the prepayment, the Company received a prepayment
fee of $256,500, other fees of $25,000 and additional interest of $171,000.

Prepayments and balloon payments are sporadic and cannot be relied upon as a
regular source of liquidity.

In July, 2005, the Company advanced a $9,500,000 loan to Lightstone Member III
LLC ("Lightstone III") in connection with the acquisition by Lightstone III of
two shopping malls (see Investments in and Advances to Joint Ventures below).

In January, 2005, the Company received $707,588 of net proceeds from a fire
insurance settlement pertaining to the Fairlawn Gardens property.

During the first nine months of 2005, the Company invested $480,021 in additions
and improvements to its properties.

In January, 2005, the Company completed the sale of its Farrington Apartments
property in Clearwater, Florida, and the net proceeds of the sale were
$1,592,580 (see Discontinued Operations below).

In April, 2005, the Company completed the sale of its Fairlawn Gardens property
in Martinsburg, West Virginia and the net proceeds of the sale were $1,906,896
(see Discontinued Operations below).

On May 24, 2005, the Company invested $1,000,000 with Broadway Real Estate
Partners, LLC ("Broadway Partners"), which money will be held in escrow pending
investment into Pickwick Preferred Equity Lender LLC ("Pickwick"). While the
money is being held in escrow, the Company will receive interest payments at the
following rates: 8% per annum from May 24, 2005 through May 31, 2005 and 11.43%
per annum thereafter until the funds are invested into Pickwick. The $1,000,000
is scheduled to be invested in Pickwick in late November, 2005.

When the investment in Pickwick is made, the Company will own a 12.05% interest
in a limited liability company whose sole asset is an $8,300,000 note receivable
secured by certain ownership interests in an office building in Greenwich,
Connecticut. Presidential is entitled to receive $9,525 of interest per month on
its investment and when the $8,300,000 loan is repaid, Presidential will receive
$974,335 in full liquidation of its investment.

Presidential also has agreed to invest $1,000,000 in Broadway Partners Parallel
Fund A, a blind pool of investment capital sponsored by Broadway Partners,
through redemption of its membership interest in Pickwick. Presidential's
commitment will be called on from time to time by Broadway Partners as it
requires funds to make real estate investments. However, Presidential has the
right, provided it gives written notice within seven days of such request, to
fund its obligations from other capital resources. At September 30, 2005,
Presidential had advanced $415,000 of its commitment from its own capital
resources and the balance of Presidential's commitment was $585,000.

In March, 2005, the Company purchased an additional 1% interest in the Home
Mortgage Partnership for a purchase price of $65,000.


Financing Activities

The Company's indebtedness at September 30, 2005, consisted of $6,609,022 of
mortgage debt. The mortgage debt, which is collateralized by individual
properties, is nonrecourse to the Company with the exception of the $1,160,665
Building Industries Center mortgage and the $151,341 Mapletree Industrial Center
mortgage, which are collateralized by the properties and are recourse to
Presidential. 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
the first nine months of 2005, the Company made $145,303 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.

In March, 2005, the Company made a prepayment of $707,588 on the Fairlawn
Gardens first mortgage debt from the proceeds of the fire insurance settlement
and repaid the $1,411,670 outstanding balance in May, 2005 from the proceeds of
the sale.

During the first nine months of 2005, Presidential declared and paid cash
distributions of $1,837,292 to its shareholders and received proceeds from its
dividend reinvestment and share purchase plan of $90,553.

Discontinued Operations

On January 26, 2005, the Company completed the sale of its Farrington Apartments
property in Clearwater, Florida for a sales price of $9,325,966, of which
$1,720,000 was paid in cash and the $7,605,966 balance was paid by the
assumption by the purchaser of the first mortgage on the property. In connection
with the closing, Presidential gave the purchaser a $300,000 credit against the
purchase price for hurricane damage sustained by the property prior to closing
and retained the insurance proceeds of $260,405. The loss from the sale for
financial reporting purposes was $11,580.

On April 4, 2005, the Company consummated the sale of its Fairlawn Gardens
property in Martinsburg, West Virginia for a sales price of $3,500,000. The net
cash proceeds of sale, after repayment of the $1,411,670 outstanding principal
balance of the first mortgage, prepayment fees and other closing expenses, were
$1,906,896. In 2005, the Company received $707,588 of insurance proceeds
resulting from fire damage to sixteen apartments at the property in 2004 and
applied those proceeds to pay down a portion of the outstanding balance of the
first mortgage prior to the sale. The gain on sale for financial reporting
purposes was $2,266,944. The gain for Federal income tax purposes resulting from
this transaction is $2,269,014 and is being treated by the Company as a gain
resulting from an involuntary conversion of property under Section 1033 of the
Internal Revenue Code. Accordingly, the gain will be deferred pursuant to the
provisions of Section 1033.

Subsequent to September 30, 2005, the Company agreed to a settlement of its
claim for additional insurance recovery for the fire damage to sixteen
apartments at the Fairlawn Gardens property. The net proceeds of the settlement
will be approximately $167,000. When the settlement is finalized, the net
proceeds received from the settlement will increase the gain on the sale of the
Fairlawn Gardens property.

Investments in and Advances to Joint Ventures

During 2004 and 2005, the Company made investments in and loans to joint
ventures and received ownership interests in these joint ventures.

The Company purchased the Martinsburg Mall in Martinsburg, West Virginia for
$27,000,000 in September, 2004 and subsequent to closing, received a mezzanine
loan from The Lightstone Group ("Lightstone") in the amount of $2,600,000, which
is secured by a pledge of 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 Member LLC will manage the property and
received a 71% ownership interest in the entity owning the property, leaving the
Company with a 29% ownership interest.

In September, 2004, the Company made an $8,600,000 mezzanine loan to Lightstone
Member LLC in connection with the acquisition by Lightstone Member LLC of four
shopping malls, namely the Shenango Valley Mall in Hermitage, Pennsylvania; the
West Manchester Mall in York, Pennsylvania; the Bradley Square Mall in
Cleveland, Tennessee and the Mount Berry Square Mall in Rome, Georgia (the "Four
Malls"). The loan is secured by ownership interests in the entities that own the
Four Malls and the Company received a 29% ownership interest in these entities.
The loan matures on September 27, 2014 and the interest rate on the loan is 11%
per annum.

The Martinsburg Mall and the Four Malls are subject to a $105,000,000
nonrecourse first mortgage loan.

In December, 2004, the Company made a $7,500,000 mezzanine loan to Lightstone
Member II LLC in connection with the acquisition by Lightstone Member II LLC of
the Brazos Outlets Center Mall in Lake Jackson, Texas and the Shawnee Mall in
Shawnee, Oklahoma (the "Shawnee/Brazos Malls"). The loan is secured by ownership
interests in the entities that own the properties and the Company received a 29%
ownership interest in these entities. The loan matures on December 23, 2014 and
the interest rate on the loan is 11% per annum. The Shawnee/Brazos Malls are
subject to a $39,500,000 nonrecourse first mortgage loan.

On July 7, 2005, Presidential made a $9,500,000 mezzanine loan to Lightstone
Member III LLC ("Lightstone III") in connection with the acquisition by
Lightstone III of two shopping malls, namely the Macon Mall, an enclosed
two-story regional mall located in Macon, Georgia with 764,208 square feet of
gross leasable area (and an additional 682,160 square feet of department store
space in the mall area owned by four department stores), and the Burlington
Mall, an enclosed single story regional mall located in Burlington, North
Carolina with 416,442 square feet of gross leasable area (the "Macon/Burlington
Malls"). The loan is secured by the ownership interests in the entities owning
the Macon/Burlington Malls and Presidential obtained a 29% ownership interest in
the entities owning the Macon/Burlington Malls. The loan matures on July 6,
2015, and the interest rate on the loan is 11% per annum. The Macon/Burlington
Malls are subject to a nonrecourse first mortgage loan in the original principal
amount of $158,850,000.

The Company accounts for these investments using the equity method. At September
30, 2005, investments in and advances to joint ventures are as follows:

                  Martinsburg Mall                   $   936,728
                  Four Malls                           6,935,191
                  Shawnee/Brazos Malls                 6,944,115
                  Macon/Burlington Malls               9,238,358
                                                     -----------
                                                     $24,054,392
                                                     ===========




Equity in the (loss) income of joint ventures for the nine months ended
September 30, 2005 is as follows:

                  Martinsburg Mall                   $(325,956)
                  Four Malls                          (467,665)
                  Shawnee/Brazos Malls                 173,736
                  Macon/Burlington Malls               (61,779)
                                                     ---------
                                                     $(681,664)
                                                     =========


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 statement of operations for the nine months ended September 30,
2005 reflects 29% of the income (loss) of the joint ventures. The equity in the
loss of joint ventures of $681,664 for the nine month period ended September 30,
2005 is after deductions in the aggregate amount of $2,719,719 for the Company's
29% of noncash charges (depreciation of $1,500,228, amortization of deferred
financing costs of $343,997 and amortization of in-place lease values of
$875,494). Notwithstanding the income (loss) from the joint ventures, the
Company is entitled to receive its interest at the rate of 11% per annum on its
$25,600,000 of loans to the joint ventures. For the nine months ended September
30, 2005, the Company received distributions from the joint ventures in the
amount of $1,941,000, which included payments of interest in the amount of
$1,607,650 and return on investment in the amount of $333,350.

The Lightstone Group is controlled by David Lichtenstein. At September 30, 2005,
in addition to Presidential's investments of $24,054,392 in these joint ventures
with entities controlled by Mr. Lichtenstein, Presidential has three loans that
are due from entities that are controlled by Mr. Lichtenstein in the aggregate
outstanding principal amount of $9,875,000 with a net carrying value of
$9,083,443. Some, but not all, of these loans are guaranteed in whole or in part
by Mr. Lichtenstein and all of such loans are in good standing. While the
Company believes that all of these loans are adequately secured, a default on
some or all of these loans could have a material adverse effect on
Presidential's business and operating results.

The $33,137,835 net carrying value of investments in and advances to joint
ventures with entities controlled by Mr. Lichtenstein and loans outstanding to
entities controlled by Mr. Lichtenstein constitute 71% of the Company's total
assets at September 30, 2005.

Consolidated Loans

Presidential holds two nonrecourse loans (the "Consolidated Loans"), which were
collateralized by substantially all of the remaining assets of Ivy Properties,
Ltd. and its affiliates "(Ivy"). At September 30, 2005, the Consolidated Loans
have an outstanding principal balance of $4,770,050 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 who are officers of Presidential (Messrs. Baruch and Viertel) 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 could be
significant over the next several years. However, the continued profitability of
any 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, 2005 and 2004, the Company received payments of $279,500 and $451,500,
respectively, from Scorpio. The Consolidated Loans bear interest at a rate equal
to the Chase Prime rate and at September 30, 2005, the unpaid and unaccrued
interest was $3,079,632.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company's financial instruments consist primarily of mortgage 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 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. However, 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 because of the yield maintenance
requirements. The Company does not own any derivative financial instruments or
engage in hedging activities.

The $105,000,000 nonrecourse first mortgage loan secured by the Martinsburg Mall
and the Four Malls, and the $39,500,000 nonrecourse first mortgage loan secured
by the Shawnee/Brazos Malls (see Investments in and Advances to Joint Ventures
above), carry interest rates which change monthly based on the London Interbank
Offered Rate and mature in 2006 subject to the borrower's right to extend the
maturity dates for three additional one year terms. As a result, any material
increase in interest rates could adversely affect the operating results of the
joint ventures and their ability to make the required interest payments on the
Company's $8,600,000 and $7,500,000 mezzanine loans to those entities.


ITEM 3.  CONTROLS AND PROCEDURES

   a)    As of the end of the period covered by this quarterly report on Form
         10-QSB, 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 5.  Other Information

The Company is delinquent in its federal securities law filing obligations
because it has not filed the required financial information as an Exhibit to the
Company's Form 8-K with respect to its investment in five shopping mall
properties in September, 2004. The financial information relates to operations
of the properties for calendar year 2003 and the nine months ended September,
2004 prior to the Company's investment in the properties. The Company has been
unable to obtain the financial information from the seller of the properties
and, if it is not able to do so, will continue to be delinquent in its federal
securities law filing obligations until it is able to file audited financial
statements for the properties for the period from the acquisition of its
interests in the properties until December 31, 2005. During the continued period
of delinquency in its filing obligations, Presidential's dividend reinvestment
plan for its Class B Common Stock will continue pursuant to the terms of its
Dividend Reinvestment and Share Purchase Plan but shareholders will not be able
to make optional cash payments to acquire shares under the Plan.

Item 6.     Exhibits

     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 10, 2005        By: /s/ Jeffrey F. Joseph
                                      ---------------------
                                      Jeffrey F. Joseph
                                      President and Chief Executive Officer



DATE:    November 10, 2005        By: /s/ Elizabeth Delgado
                                      ---------------------
                                      Elizabeth Delgado
                                      Treasurer