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, 2007
                                    ------------------
                                             OR
  [ ]             TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                                   OF THE EXCHANGE ACT

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     x        No
     --------        --------

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
Yes              No    x
     ----            ----
The number of shares outstanding of each of the issuer's classes of common stock
as of the close of business on November 6, 2007 was 473,565 shares of Class A
common and 3,476,068 shares of Class B common.

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



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


                              Index to Form 10-QSB
                         For the Quarterly Period Ended
                               September 30, 2007




Part I   Financial Information (Unaudited)

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

  Item 2.         Management's Discussion and Analysis or
                    Plan of Operation

                  Quantitative and Qualitative Disclosures
                    about Market Risk

  Item 3.         Controls and Procedures

Part II  Other Information

  Item 6.         Exhibits












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



                                                                                    September 30,          December 31,
                                                                                        2007                  2006
                                                                                    --------------        --------------
Assets

<S>                                                                                  <C>                   <C>
  Investments in and advances to joint ventures (Note 2)                              $14,605,030           $18,059,749
                                                                                    --------------        --------------

  Real estate (Note 3)                                                                 20,966,845            20,333,180
    Less: accumulated depreciation                                                      4,711,194             4,363,886
                                                                                    --------------        --------------

  Net real estate                                                                      16,255,651            15,969,294
                                                                                    --------------        --------------

  Mortgage portfolio (Note 4):
    Notes receivable - net                                                              7,500,780             7,234,239
    Notes receivable - related parties - net                                              133,019               148,216
                                                                                    --------------        --------------

  Net mortgage portfolio (of which $1,960,925 in 2007
      and $240,533 in 2006 are due within one year)                                     7,633,799             7,382,455
                                                                                    --------------        --------------

  Assets related to discontinued operations (Note 5)                                          -               2,922,493
  Other investments (Note 6)                                                            1,000,000             2,000,000
  Prepaid expenses and deposits in escrow                                               1,199,743             1,323,232
  Prepaid defined benefit plan costs                                                      493,187               582,394
  Other receivables (net of valuation allowance of
    $133,746 in 2007 and $274,303 in 2006)                                                392,340               382,393
  Cash and cash equivalents                                                             2,650,386             2,263,534
  Other assets                                                                            885,665             1,212,841
                                                                                    --------------        --------------

Total Assets                                                                          $45,115,801           $52,098,385
                                                                                    ==============        ==============

Liabilities and Stockholders' Equity

  Liabilities:
    Mortgage debt (of which $437,128 in 2007 and
      $417,167 in 2006 are due within one year)                                       $18,947,573           $19,176,330
    Liabilities related to discontinued operations (Note 5)                                   -               2,911,677
    Contractual pension and postretirement benefits liabilities                         3,409,678             3,256,861
    Accrued liabilities                                                                 2,277,274             1,851,953
    Accounts payable                                                                      440,400               525,029
    Other liabilities                                                                     749,293               757,947
                                                                                    --------------        --------------

Total Liabilities                                                                      25,824,218            28,479,797
                                                                                    --------------        --------------


Minority Interest in Consolidated Partnership (Note 8)                                        -                  35,318
                                                                                    --------------        --------------


  Stockholders' Equity:
     Common stock: par value $.10 per share
       Class A, authorized 700,000 shares, issued 478,940 shares,
          and 5,375 shares in 2007 and 100 shares in 2006 held in treasury                 47,894                47,894
       Class B        September 30, 2007                December 31, 2006                 350,570               346,232
       -----------    ------------------               -------------------
      Authorized:        10,000,000                            10,000,000
      Issued:             3,505,701                             3,462,316
      Treasury:              29,633                                 2,000

    Additional paid-in capital                                                          4,393,227             4,116,326
    Retained earnings                                                                  17,235,220            21,453,808
    Accumulated other comprehensive loss (Note 10)                                     (2,479,298)           (2,358,827)
    Treasury stock (at cost)                                                             (256,030)              (22,163)
                                                                                    --------------        --------------

Total Stockholders' Equity                                                             19,291,583            23,583,270
                                                                                    --------------        --------------

Total Liabilities and Stockholders' Equity                                            $45,115,801           $52,098,385
                                                                                    ==============        ==============



See notes to consolidated financial statements.
</TABLE>





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




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

                                                                            2007           2006
                                                                          ----------    -----------
Revenues:
<S>                                                                       <C>             <C>
  Rental                                                                 $1,518,052       $600,243
  Interest on mortgages - notes receivable                                  296,946        289,725
  Interest on mortgages - notes receivable - related parties                 31,857         84,712
  Other revenues                                                              1,199         38,351
                                                                          ----------    -----------

Total                                                                     1,848,054      1,013,031
                                                                          ----------    -----------

Costs and Expenses:
  General and administrative                                              1,041,033        821,330
  Depreciation on non-rental property                                         9,266          4,630
  Rental property:
    Operating expenses                                                      691,384        487,972
    Interest on mortgage debt                                               376,400         58,259
    Real estate taxes                                                       167,219         86,297
    Depreciation on real estate                                             124,116         34,235
    Amortization of in-place lease values and mortgage costs                 68,293          2,892
                                                                          ----------    -----------

Total                                                                     2,477,711      1,495,615
                                                                          ----------    -----------

Other Income (Loss):
  Investment income                                                         456,141        205,878
  Equity in the income (loss) from joint ventures (Note 2)                   44,605        (31,012)
  Equity in the loss from partnership (Note 7)                                 -           (51,701)
                                                                          ----------    -----------

Loss before minority interest                                              (128,911)      (359,419)

Minority interest                                                                28         (1,606)
                                                                          ----------    -----------
Loss from continuing operations                                            (128,883)      (361,025)

Income (loss) from discontinued operations (Note 5)                             418       (118,060)
                                                                          ----------    -----------

Net Loss                                                                  ($128,465)     ($479,085)
                                                                          ==========    ===========


Earnings per Common Share (basic and diluted):
  Loss from continuing operations                                            ($0.03)        ($0.09)

  Loss from discontinued operations                                               -          (0.03)
                                                                          ----------    -----------

  Net Loss per Common Share - basic and diluted                              ($0.03)        ($0.12)
                                                                          ==========    ===========

Cash Distributions Declared per Common Share                                  $0.16          $0.32
                                                                          ==========    ===========

Weighted Average Number of Shares Outstanding - basic and diluted         3,905,698      3,916,416
                                                                          ==========    ===========

See notes to consolidated financial statements.
</TABLE>



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




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

                                                                            2007           2006
                                                                          ----------    -----------
Revenues:
<S>                                                                       <C>           <C>
  Rental                                                                 $4,382,731     $1,655,447
  Interest on mortgages - notes receivable                                  884,129        922,762
  Interest on mortgages - notes receivable - related parties                253,846        191,816
  Other revenues                                                              5,847        122,896
                                                                         -----------    -----------

Total                                                                     5,526,553      2,892,921
                                                                         -----------    -----------

Costs and Expenses:
  General and administrative                                              3,031,041      2,800,243
  Depreciation on non-rental property                                        23,489         12,750
  Rental property:
    Operating expenses                                                    2,222,802      1,100,193
    Interest on mortgage debt                                             1,130,161        175,115
    Real estate taxes                                                       472,253        250,489
    Depreciation on real estate                                             360,238         98,256
    Amortization of in-place lease values and mortgage costs                306,468          8,611
                                                                         -----------    -----------

Total                                                                     7,546,452      4,445,657
                                                                         -----------    -----------

Other Income (Loss):
  Investment income                                                         490,205        305,762
  Equity in the loss from joint ventures (Note 2)                          (972,860)    (1,045,351)
  Equity in the loss from partnership (Note 7)                                 -          (158,063)
                                                                         -----------    -----------

Loss before minority interest                                             (2,502,554)   (2,450,388)

Minority interest                                                            (2,194)        (5,732)
                                                                         -----------    -----------

Loss from continuing operations                                          (2,504,748)    (2,456,120)
                                                                         -----------    -----------

Discontinued Operations (Note 5):
  Loss from discontinued operations                                         (96,659)      (217,421)
  Net gain from sales of discontinued operations                            735,705           -
                                                                         -----------    -----------

Total income (loss) from discontinued operations                            639,046       (217,421)
                                                                         -----------    -----------

Net Loss                                                                ($1,865,702)   ($2,673,541)
                                                                         ===========    ===========


Earnings per Common Share (basic and diluted):
  Loss from continuing operations                                            ($0.64)        ($0.63)
                                                                          ----------    -----------

  Discontinued Operations:
    Loss from discontinued operations                                         (0.02)         (0.05)
    Net gain from sales of discontinued operations                             0.18           -
                                                                          ----------    -----------

  Total income (loss) from discontinued operations                             0.16          (0.05)
                                                                          ----------    -----------

  Net Loss per Common Share - basic and diluted                              ($0.48)        ($0.68)
                                                                          ==========    ===========

Cash Distributions Declared per Common Share                                  $0.48          $0.64
                                                                          ==========    ===========

Weighted Average Number of Shares Outstanding - basic and diluted         3,902,203      3,906,072
                                                                          ==========    ===========

See notes to consolidated financial statements.
</TABLE>







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

                                                                               Accumulated
                                                       Additional                 Other                                   Total
                                              Common    Paid-in    Retained   Comprehensive  Treasury  Comprehensive   Stockholders'
                                              Stock     Capital    Earnings   (Loss) Income   Stock     (Loss) Income     Equity
                                            ---------  ---------  ----------  --------------  --------  -------------- ------------

<S>                <C>                      <C>        <C>        <C>          <C>            <C>                       <C>
Balance at January 1, 2007                  $394,126  $4,116,326  $21,453,808  ($2,358,827)   ($22,163)                 $23,583,270

Cumulative effect of adoption of FIN 48 (Note 9)  -           -      (460,800)          -           -                      (460,800)
Net proceeds from dividend
   reinvestment plan                           3,038     197,602           -            -           -                       200,640
Cash distributions ($.48 per share)               -           -    (1,892,086)          -           -                    (1,892,086)
Issuance of stock                              1,300      19,550           -            -           -                        20,850
Vesting of restricted stock                       -       59,749           -            -           -                        59,749
Purchase of treasury stock                        -           -            -            -     (233,867)                    (233,867)
Comprehensive loss:
   Net loss                                       -           -    (1,865,702)          -           -   ($1,865,702)     (1,865,702)
   Other comprehensive income (loss)-
    Net unrealized gain on
     securities available for sale                -           -            -            13          -            13              13
    Adjustment for contractual
     postretirement benefits                      -           -            -      (120,484)         -      (120,484)       (120,484)
                                                                                                        ------------
Comprehensive loss                                                                                      ($1,986,173)
                                                                                                        ============

                                            --------  ----------  -----------  ------------  ----------                 -----------
Balance at September 30, 2007               $398,464  $4,393,227  $17,235,220  ($2,479,298)  ($256,030)                 $19,291,583
                                            ========  ==========  ===========  ============  ==========                 ===========


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

                                                                                          2007                        2006
                                                                                   ----------------            ----------------
 Cash Flows from Operating Activities:
<S>                                                                                     <C>                         <C>
     Cash received from rental properties                                               $4,428,099                  $2,423,121
     Interest received                                                                   1,050,648                   1,349,133
     Distributions received from joint ventures                                          2,481,859                   2,722,252
     Distributions received from other investments                                         442,047                     145,076
     Miscellaneous income                                                                   47,381                     126,113
     Interest paid on rental property mortgage debt                                     (1,100,998)                   (320,186)
     Cash disbursed for rental property operations                                      (3,292,029)                 (2,062,936)
     Cash disbursed for general and administrative costs                                (2,417,253)                 (2,872,737)
                                                                                   ----------------            ----------------

 Net cash provided by operating activities                                               1,639,754                   1,509,836
                                                                                   ----------------            ----------------

 Cash Flows from Investing Activities:
     Payments received on notes receivable                                                 138,049                   2,765,430
     Loan advanced to partnership                                                             -                       (631,031)
     Loan advanced to joint venture                                                           -                       (335,000)
     Payments disbursed for additions and improvements                                    (628,243)                   (271,758)
     Proceeds from sales of properties                                                     582,004                        -
     Purchase of other investments                                                            -                       (517,000)
     Payments received on other investments                                              1,000,000                        -
     Deposit on purchase of additional interest in partnership                                -                       (977,503)
     Purchase of additional interests in partnerships                                      (96,202)                    (45,000)
                                                                                   ----------------            ----------------

 Net cash provided by (used in) investing activities                                       995,608                     (11,862)
                                                                                   ----------------            ----------------

 Cash Flows from Financing Activities:
     Principal payments on mortgage debt                                                  (318,197)                   (136,533)
     Distributions to minority partners                                                     (5,000)                    (16,250)
     Cash distributions on common stock                                                 (1,892,086)                 (1,875,253)
     Purchase of treasury stock                                                           (233,867)                        -
     Proceeds from dividend reinvestment plan                                              200,640                     154,890
                                                                                   ----------------            ----------------

 Net cash used in financing activities                                                  (2,248,510)                 (1,873,146)
                                                                                   ----------------            ----------------

 Net Increase (Decrease) in Cash and Cash Equivalents                                      386,852                    (375,172)

 Cash and Cash Equivalents, Beginning of Period                                          2,263,534                   2,878,237
                                                                                   ----------------            ----------------

 Cash and Cash Equivalents, End of Period                                               $2,650,386                  $2,503,065
                                                                                   ================            ================

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

                                                                                          2007                         2006
                                                                                   ----------------            -----------------


Reconciliation of Net Loss to Net Cash
  Provided by Operating Activities

<S>                                                                                    <C>                          <C>
Net Loss                                                                               ($1,865,702)                 ($2,673,541)
                                                                                   ----------------            -----------------

Adjustments to reconcile net loss to net cash provided by operating activities:
    Net gain from sales of discontinued operations                                        (735,705)                        -
    Equity in the loss from joint ventures                                                 972,860                    1,045,351
    Equity in the loss from partnership                                                       -                         158,063
    Depreciation and amortization                                                          691,181                      121,153
    Amortization of discount on mortgage payable                                            81,311                         -
    Net change in revenue related to acquired lease rights/obligations
       and deferred rent receivable                                                        (69,761)                        -
    Amortization of discounts on notes and fees                                           (178,793)                    (143,655)
    Minority interest                                                                        2,194                        5,732
    Issuance of stock to directors and officers                                             75,386                      183,690
    Distributions received from joint ventures                                           2,481,859                    2,722,252

    Changes in assets and liabilities:
    Decrease in other receivables                                                           27,438                      205,399
    Decrease in accounts payable and accrued liabilities                                  (114,271)                    (332,479)
    Increase in other liabilities                                                           44,927                       37,463
    Decrease in prepaid expenses, deposits in escrow
      and deferred charges                                                                 222,495                      194,462
    Other                                                                                    4,335                      (14,054)
                                                                                   ----------------            -----------------

Total adjustments                                                                        3,505,456                    4,183,377
                                                                                   ----------------            -----------------

Net cash provided by operating activities                                               $1,639,754                   $1,509,836
                                                                                   ================            =================



SUPPLEMENTAL NONCASH DISCLOSURES:

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

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




See notes to consolidated financial statements.
</TABLE>





PRESIDENTIAL REALTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007 (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 100% interest (previously a 75% interest, see
Note 8), and 100% of the account balances of PDL, Inc. and Associates Limited
Co-Partnership (the "Hato Rey Partnership"). PDL, Inc. (a wholly owned
subsidiary of Presidential and the general partner of the Hato Rey Partnership)
and Presidential own an aggregate 60% general and limited partnership interest
in the Hato Rey Partnership (see Note 7). All significant intercompany balances
and transactions have been eliminated.

B. Net Loss Per Share - Basic and diluted net loss per share data is computed by
dividing net loss by the weighted average number of shares of Class A and Class
B common stock outstanding during each period. Nonvested shares are excluded
from the basic net loss per share computation.

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, 2006.

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. Purchase Accounting - In 2006, the Company acquired an additional 25% limited
partnership interest in the Hato Rey Partnership, which increased its ownership
interest to 59% as of December 31, 2006, and, as a result, consolidated the Hato
Rey Partnership on the Company's consolidated balance sheet at December 31, 2006
(see Note 7).

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

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

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

H. Recent Accounting Pronouncements - In July, 2006, the Financial Accounting
Standards Board ("FASB") issued Interpretation No. 48, "Accounting for
Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109" ("FIN
48"). FIN 48 establishes new evaluation and measurement processes for all income
tax positions taken. FIN 48 also requires expanded disclosures of income tax
matters.

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

Upon adoption of FIN 48 the Company recorded a reduction to the January 1, 2007
balance of retained earnings of $460,800 for accrued interest for prior years
related to the tax positions for which the Company may be required to pay a
deficiency dividend. In addition, for the nine months ended September 30, 2007,
the Company recorded interest expense of $267,382 for the interest related to
these matters. As of September 30, 2007, the tax years that remain open to
examination by the federal, state and local taxing authorities are the 2004 -
2006 tax years.

In September, 2006, the FASB issued SFAS No. 157, "Fair Value Measurements".
SFAS No. 157 clarifies the definition of fair value, establishes a framework for
measuring fair value and expands disclosures about fair value measurements. This
statement is effective for fiscal years beginning after November 15, 2007. The
Company does not believe that the adoption of this standard on January 1, 2008
will have a material effect on the Company's consolidated financial statements.

In September, 2006, the FASB issued SFAS No. 158, "Employers' Accounting for
Defined Benefit Pension and Other Postretirement Plans - An Amendment of FASB
Statements No. 87, 88, 106 and 132(R)". SFAS No. 158 requires an employer to (i)
recognize in its statement of financial position an asset for a plan's
overfunded status or a liability for a plan's underfunded status; (ii) measure a
plan's assets and its benefit obligations that determine its funded status as of
the end of the employer's fiscal year (with limited exceptions); and (iii)
recognize changes in the funded status of a defined benefit postretirement plan
in the year in which the changes occur. Those changes will be reported in
comprehensive income. The adoption of the requirement to recognize the funded
status of a benefit plan and the disclosure requirements as of December 31, 2006
resulted in a $1,112,520 increase in accumulated other comprehensive loss on the
Company's consolidated balance sheet. The requirement to measure plan assets and
benefit obligations to determine the funded status as of the end of the fiscal
year and to recognize changes in the funded status in the year in which the
changes occur is effective for fiscal years ending after December 15, 2008. The
adoption of the measurement date provisions of this standard is not expected to
have a material effect on the Company's consolidated financial statements.

In February, 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities". SFAS No. 159 permits entities to
choose to measure many financial assets and financial liabilities at fair value.
Unrealized gains and losses on items for which the fair value option has been
elected are reported in earnings. SFAS No. 159 is effective for fiscal years
beginning after November 15, 2007. The Company is currently assessing the impact
of SFAS No. 159 on the Company's financial position and results of operations.

2. INVESTMENTS IN AND ADVANCES TO JOINT VENTURES

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

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

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

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

                                                             Nonrecourse First Mortgage
Owning                                                          and Mezzanine Loans
Entity and                  Mezzanine Loans                      September 30, 2007
Property                      Advanced by   Approximate                  Maturity   Interest
 Owned (1)                    the Company     Sq. Ft.          Balance     Date       Rate
----------                  --------------- -----------       --------  --------   --------
                                                        (Amounts in thousands)
<S>                                            <C>            <C>             <C>     <C>
PRC Member LLC
Martinsburg Mall                               552            $ 29,861  July, 2016    (2)
----------------
  Martinsburg, WV

Lightstone I
Four Malls                  $ 8,600
----------
Bradley Square Mall                            385             13,801  July, 2016    (2)
  Cleveland, TN

Mount Berry Square Mall                        478             22,477  July, 2016    (2)
  Rome, GA

Shenango Valley Mall                           508             14,746  July, 2016    (2)
  Hermitage, PA

West Manchester Mall                           733             29,600  June, 2008    (2)
  York, PA

Lightstone II
Shawnee/Brazos Malls          7,835                            39,500  Jan., 2008    (3)
--------------------
Brazos Outlets
  Center Mall                                 698
  Lake Jackson, TX

Shawnee Mall                                  444
  Shawnee, OK

Lightstone III
Macon/Burlington Malls        9,500                          156,651  June, 2015   5.78%
----------------------
Burlington Mall                               412
  Burlington, NC

Macon Mall                                  1,446
  Macon, GA
                            -------         -----           --------
                            $25,935         5,656           $306,636
                            =======         =====           ========
</TABLE>

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

(2) In June, 2006, the original $105,000,000 nonrecourse first mortgage loan
secured by the Martinsburg Mall and the Four Malls was refinanced with the
following mortgage loans: a $73,900,000 nonrecourse first mortgage loan with an
interest rate of 5.93% per annum, maturing on July 1, 2016; a $7,000,000
mezzanine loan with an interest rate of 12% per annum maturing on July 1, 2016
and a $29,600,000 nonrecourse first mortgage loan with an adjustable interest
rate based on the London Interbank Offered Rates ("LIBOR") plus 232 basis points
(approximately 8.63% at September 30, 2007), with a minimum interest rate of
7.89%, maturing on June 8, 2008. The $73,900,000 first mortgage loan and the
$7,000,000 mezzanine loan are secured by the Martinsburg Mall and three of the
Four Malls. The $29,600,000 first mortgage loan is secured by the West
Manchester Mall.

(3) The interest rate is at the 30 day LIBOR rate plus 280 basis points
(approximately 8.55% at September 30, 2007). The loan matures in January, 2008,
with two one-year options to extend the loan for an extension fee of .125% of
the outstanding principal.

Under the equity method of accounting, the Company's investments in the joint
ventures, including the $25,935,000 of loans advanced to the joint ventures,
have been reduced by distributions received and losses recorded for the joint
ventures (and increased by any income recorded for the joint ventures). Activity
in investments in and advances to joint ventures for the period ended September
30, 2007 is as follows:

                                                     Equity
                                                     in the
                                                     Income
                       Balance at                 (Loss) from    Balance at
                      December 31,  Distributions     Joint     September 30,
                          2006         Received      Ventures       2007
                      ------------  ------------- -----------   ------------

Martinsburg Mall (1)  $   162,821   $  (159,868)  $  (2,953)    $       -
Four Malls              4,534,578      (798,844)   (678,806)      3,056,928
Shawnee/Brazos
 Malls                  6,007,924      (727,786)   (628,729)      4,651,409
Macon/Burlington
 Malls                  7,354,426      (795,361)    337,628       6,896,693
                      -----------   -----------   ---------     -----------
                      $18,059,749   $(2,481,859)  $(972,860)    $14,605,030
                      ===========   ===========   =========     ===========




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

                             Three Months Ended        Nine Months Ended
                               September 30,              September 30,
                             2007         2006          2007         2006
                         ----------    ---------    -----------  -----------

Martinsburg Mall (1)     $  80,431     $ (23,302)   $  (2,953)   $  (309,268)
Four Malls (2)            (262,129)      213,829     (678,806)      (404,904)
Shawnee/Brazos Malls (3)  (344,228)     (170,022)    (628,729)      (269,079)
Macon/Burlington Malls (4) 570,531       (51,517)     337,628        (62,100)
                         ---------     ---------    ---------    -----------
                         $  44,605     $ (31,012)   $(972,860)   $(1,045,351)
                         =========     =========    =========    ===========

(1) The Company's share of the income (loss) from 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. In
the second quarter of 2007, the Company's basis of its investment in the
Martinsburg Mall was reduced by distributions and losses to zero and,
accordingly, the Company only recorded its share of the loss to the extent of
its basis. Future distributions to be received will be recorded in income from
the Martinsburg Mall.

(2) Interest income earned by the Company at the rate of 11% per annum on the
outstanding $8,600,000 loan from the Company to Lightstone I is included in the
calculation of the Company's share of the income (loss) from joint ventures for
the Four Malls.

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

(4) Interest income earned by the Company at the rate of 11% per annum on the
outstanding $9,500,000 loan from the Company to Lightstone III is included in
the calculation of the Company's share of the income (loss) from joint ventures
for the Macon/Burlington Malls. Equity in the income from the Macon/Burlington
Malls for the three months and the nine months ended September 30, 2007,
includes $1,202,450 for the Company's 29% share of a settlement payment received
from a former tenant at the Macon Mall relating to the amendment and termination
of the tenant's lease.

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



                                                     September 30,  December 31,
                                                         2007          2006
                                                     ------------- ------------
Condensed Combined Balance Sheets                      (Amounts in thousands)
  Net real estate                                    $308,467        $304,358
  In-place lease values and
   acquired lease rights                               12,575          16,147
  Prepaid expenses and
   deposits in escrow                                  22,696          14,844
  Cash and cash equivalents                             2,387           2,695
  Deferred financing costs                              1,922           1,766
  Other assets                                          5,368           7,255
                                                     --------         -------

  Total Assets                                       $353,415        $347,065
                                                     ========        ========

  Nonrecourse mortgage debt                          $306,636        $308,092
  Mezzanine notes payable                              28,535          31,670
  Other liabilities                                    45,031          24,610
                                                     --------        --------

  Total Liabilities                                   380,202         364,372
  Members' Deficit                                    (26,787)        (17,307)
                                                     --------        --------
  Total Liabilities and
   Members' Deficit                                  $353,415        $347,065
                                                     ========        ========


                       Three Months Ended          Nine Months Ended
                          September 30,                September 30,
                        2007         2006           2007          2006
                     ----------   -----------    -----------   -----------
                                      (Amounts in thousands)
Condensed Statements
 of Operations
  Revenues  (1)       $17,406       $14,743        $ 44,408       $ 44,194
  Interest on
    mortgage debt
    and other debt     (6,489)       (5,707)        (18,842)       (18,708)
  Other expenses       (8,842)       (7,330)        (24,505)       (22,059)
                      -------       -------        --------       --------
  Income (loss) before
    depreciation
    and amortization    2,075         1,706           1,061          3,427

  Depreciation
    and amortization   (4,150)       (3,526)        (10,409)       (12,068)
                      -------       -------        --------       --------

  Net Loss            $(2,075)      $(1,820)       $ (9,348)      $ (8,641)
                      =======       =======        ========       ========

(1) Revenues for the three months and the nine months ended September 30, 2007,
include a settlement payment received in the amount of $4,146,378 from a former
tenant at the Macon Mall relating to the amendment and termination of the
tenant's lease.

As a result of the Company's use of the equity method of accounting with respect
to its investments in and advances to the joint ventures, the Company's
consolidated statements of operations reflect 29% of the loss from the joint
ventures. The Company's equity in the loss from joint ventures of $972,860 for
the nine months ended September 30, 2007, is after deductions in the aggregate
amount of $2,828,400 for the Company's 29% of noncash charges (depreciation of
$2,118,083 and amortization of deferred financing costs, in-place lease values
and other costs of $710,317). Notwithstanding the loss from the joint ventures,
the Company is entitled to receive its interest at the rate of 11% per annum on
its $25,935,000 of loans to the joint ventures. For the nine months ended
September 30, 2007, the Company received distributions from the joint ventures
in the amount of $2,481,859, which included interest payments of $2,321,991 on
the outstanding loans to the joint ventures and return on investment in the
amount of $159,868.

The equity in the loss from joint ventures of $1,045,351 for the nine months
ended September 30, 2006, is after deductions in the aggregate amount of
$3,499,733 for the Company's 29% of noncash charges (depreciation of $2,046,673
and amortization of deferred financing costs, in-place lease values and other
costs of $1,453,060). For the nine months ended September 30, 2006, the Company
received distributions from the joint ventures in the amount of $2,722,252,
which included interest payments of $2,150,455 on the outstanding loans to the
joint ventures and return on investment in the amount of $571,797.

The Lightstone Group is controlled by David Lichtenstein. At September 30, 2007,
in addition to Presidential's investments of $14,605,030 in the 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 $7,449,994 with a net carrying value of
$7,055,914. Two of the loans in the outstanding principal amount of $5,375,000,
with a net carrying value of $4,980,920, are secured by interests in five
apartment properties and are also personally guaranteed by Mr. Lichtenstein up
to a maximum amount of $3,137,500. The Company believes that Mr. Lichtenstein
has sufficient net worth and liquidity to satisfy his obligations under these
personal guarantees. However, because of the substantial equity in the
properties securing the loans, it is unlikely that Presidential will have to
call upon these personal guarantees. The third loan in the outstanding principal
amount of $2,074,994 is secured by interests in nine apartment properties. All
of these loans are in good standing. While the Company believes that all of
these loans are adequately secured, a default on any or all of these loans could
have a material adverse effect on Presidential's business and operating results.

The $21,660,944 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 48% of the Company's total
assets at September 30, 2007.






3. REAL ESTATE

<TABLE>
         Real estate is comprised of the following:

<CAPTION>
                                                September 30,           December 31,
                                                   2007                    2006
                                                 -----------            ------------

<S>                                            <C>                     <C>
Land                                           $ 2,309,930             $ 2,304,009
Buildings                                       18,531,496              17,907,264
Furniture and equipment                            125,419                 121,907
                                               -----------             -----------
Total real estate                              $20,966,845             $20,333,180
                                               ===========             ===========
</TABLE>

4. MORTGAGE PORTFOLIO

The components of the net mortgage portfolio are as follows:

                                                        Notes
                                                      Receivable-
                                         Notes         Related
September 30, 2007                     Receivable      Parties      Total
------------------                    -----------    -----------  ----------

Notes receivable                      $7,899,766      $191,922    $8,091,688
Less: Discounts                          398,986        58,903       457,889
                                      -----------     --------    ----------
Net mortgage portfolio                $7,500,780      $133,019    $7,633,799
                                      ===========     ========    ==========

December 31, 2006
-----------------

Notes receivable                      $7,803,444      $195,001     $7,998,445
Less: Discounts                          569,205        46,785        615,990
                                      ----------      --------     ----------
Net mortgage portfolio                $7,234,239      $148,216     $7,382,455
                                      ==========      ========     ==========

At September 30, 2007, all of the notes in the Company's mortgage portfolio are
current in accordance with their terms, as modified.

In March, 2007, the Company sold its Cambridge Green property in Council Bluffs,
Iowa. As part of the sales price, the Company received a $200,000 secured note
receivable which matures on March 20, 2008. The note receivable has an interest
rate of 7% per annum, payment of which is deferred until maturity. At September
30, 2007, the accrued deferred interest was $7,506 which was recognized in
interest income.

5. DISCONTINUED OPERATIONS

For the periods ended September 30, 2007 and 2006, income (loss) from
discontinued operations is from the Cambridge Green property, which was sold in
March, 2007, and one cooperative apartment unit which was sold in June, 2007.

<TABLE>
The following table summarizes the income (loss) for the Cambridge Green
property and for the one cooperative apartment unit:
<CAPTION>

                                    Three Months Ended          Nine Months Ended
                                      September 30,               September 30,
                                   2007          2006         2007          2006
                                   ----          ----         ----          ----
Revenues:
<S>                                <C>         <C>          <C>           <C>
   Rental                          $ 220       $ 190,074    $113,185      $ 732,150
                                   -----       ---------    --------      ---------

Rental property expenses:
   Operating expenses               (625)        218,789     151,489        681,894
   Interest on mortgage debt          -           47,932      31,684        144,439
   Real estate taxes                  -           42,251      27,685        126,703
   Depreciation on real estate       427             512         987          1,536
                                   -----       ---------    --------      ---------
Total                               (198)        309,484     211,845        954,572
                                   -----       ---------    --------      ---------


Other income:
   Investment income                  -            1,350       2,001          5,001
                                    ----       ---------    --------       --------

Income (loss) from
   discontinued operations           418        (118,060)    (96,659)      (217,421)

Net gain from sales of
   discontinued operations            -             -        735,705           -
                                   -----       ---------    --------       --------

Total income (loss) from
   discontinued operations         $ 418       $(118,060)   $639,046      $(217,421)
                                   =====       =========    ========      =========
</TABLE>

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

The Company owns a small portfolio of cooperative apartments located in New York
and Connecticut. These apartments are held for the production of rental income
and generally are not marketed for sale. However, from time to time, the Company
will receive purchase offers for some of these apartments or decide to market
specific apartments and will make sales if the purchase price is acceptable to
management. In June, 2007, the Company sold one cooperative apartment unit
located in New Haven, Connecticut for a sales price of $125,000. The net
proceeds of sale were $117,224 and the Company recognized a gain from the sale
for financial reporting purposes of $88,946.

The assets and liabilities of the Cambridge Green property were segregated in
the consolidated balance sheet at December 31, 2006. The components were as
follows:

                                                            December 31,
                                                               2006
                                                           -----------

Assets related to discontinued operations:
  Land                                                     $  200,000
  Buildings                                                 4,214,988
  Furniture and equipment                                      39,851
  Less: accumulated depreciation                           (1,634,161)
                                                           ----------
  Net real estate                                           2,820,678
  Other assets                                                101,815
                                                          -----------
Total                                                      $2,922,493
                                                           ==========

Liabilities related to discontinued operations:
  Mortgage debt                                            $2,865,433
  Other liabilities                                            46,244
                                                           ----------
Total                                                      $2,911,677
                                                           ==========

6. OTHER INVESTMENTS

In 2005, the Company agreed to advance $1,000,000 from time to time to Broadway
Partners Parallel Fund A ("Broadway Fund A"), a blind pool of investment capital
sponsored by Broadway Real Estate Partners, LLC ("Broadway Partners"). In
connection with such agreement, the Company advanced $1,000,000 to Broadway
Partners and received interest on these funds at the rate of 11.43% per annum
through September 30, 2006 and 5% per annum thereafter until such funds were
used to fund the Company's commitment to Broadway Fund A. In 2006, the Company
made an additional commitment to fund an additional $1,000,000 to Broadway
Partners Feeder Fund A II ("Broadway Fund A II"), another blind pool of
investment capital sponsored by Broadway Partners. The Company retained the
right to fund its commitments to Broadway Fund A and Broadway Fund A II with the
$1,000,000 advanced to Broadway Partners or with other funds available to the
Company.

As of December 31, 2006, Presidential had advanced $890,000 of its $1,000,000
commitment to Broadway Fund A. In September, 2007, the $890,000 was returned to
Presidential together with a distribution from the proceeds of sales in the
amount of $442,047, which was recorded in investment income. Presidential has no
further commitment to Broadway Fund A.

Also in 2006, Presidential advanced $590,000 of its $1,000,000 commitment to
Broadway Fund A II. The remaining $410,000 balance of Presidential's commitment
to Broadway Fund A II was funded in January, 2007.

In September, 2007, Broadway Partners also returned $110,000 of the funds
previously advanced to it by Presidential. For the nine months ended September
30, 2007 and 2006, the Company earned interest income of $5,243 and $85,725,
respectively, on the funds held by Broadway Partners.

The Company accounts for these investments under the cost method. Other
investments are composed of:

                         September 30,         December 31,
                             2007                 2006
                        ------------          ------------
Broadway Partners        $     -              $  520,000
Broadway Fund A                -                 890,000
Broadway Fund A II        1,000,000              590,000
                         ----------           ----------
Total                    $1,000,000           $2,000,000
                         ==========           ==========


7. HATO REY PARTNERSHIP

PDL, Inc. (a wholly owned subsidiary of Presidential) is the general partner of
the Hato Rey Partnership. Presidential and PDL, Inc. had an aggregate 33%
general and limited partner interest in the Hato Rey Partnership at March 31,
2006. During the second quarter of 2006, the Company purchased an additional 1%
limited partnership interest. In addition, during 2006 the Company purchased an
additional 25% limited partnership interest, which purchase was effective as of
December 31, 2006. At December 31, 2006, Presidential and PDL, Inc. owned an
aggregate 59% general and limited partner interest.

In January, 2007, the Company purchased an additional 1% limited partnership
interest for a purchase price of $53,694. At September 30, 2007, Presidential
and PDL, Inc. owned an aggregate 60% general and limited partner interest in the
Hato Rey Partnership.

The Hato Rey Partnership owns and operates an office building, with 210,000
square feet of commercial space, located in Hato Rey, Puerto Rico (the "Hato Rey
Center").

Prior to the purchase of the additional 25% limited partnership interest, the
Company accounted for its investment in this partnership under the equity
method.

As a result of the purchase of the additional 25% limited partnership interest
at December 31, 2006, the Company owns the majority of the partnership interests
in the partnership, is the general partner of the partnership, and exercises
effective control over the partnership through its ability to manage the affairs
of the partnership in the ordinary course of business.

The purchase of the additional limited partnership interests were recorded as
partial step acquisitions in accordance with the provisions of ARB No. 51 and
SFAS No. 141.

At December 31, 2006, the Company consolidated the Hato Rey Partnership on the
Company's consolidated balance sheet. The results of operations of the Hato Rey
Partnership were not consolidated on the Company's consolidated statement of
operations because for the year ended December 31, 2006, the Company only had a
34% ownership interest in the partnership (33% at June 30, 2006), and
accordingly, the Company's share of the loss from the partnership for 2006 was
recorded in Equity in the loss from partnership, under the equity method of
accounting.

For the nine months ended September 30, 2007, the Company consolidated the
results of operations of the Hato Rey Partnership on the Company's consolidated
statement of operations.

Prior to 2007, the Company did not consolidate the operations of the Hato Rey
Partnership and recorded its share of the partnership's loss in Equity in the
loss from partnership.

Summary statements of operations information for the Hato Rey Partnership for
the three months and nine months ended September 30, 2006 and the amount
recorded by the Company in Equity in the loss from partnership are as follows:

                                 Three Months Ended       Nine Months Ended
                                   September 30,             September 30,
                                       2006                     2006
                                ------------------        ----------------

Condensed Statements
  of Operations
  Revenues                         $ 808,702                 $ 2,310,948
  Interest on
    mortgage debt                   (300,094)                   (894,062)
  Depreciation and
    amortization                     (94,756)                   (283,475)
  Other expenses                    (571,822)                 (1,626,594)
  Investment income                    5,909                      18,813
                                   ---------                 -----------

  Net Loss                         $(152,061)                $  (474,370)
                                   =========                 ===========

On the Company's
  Consolidated Statements
  of Operations:
  Equity in the loss
    from partnership               $ (51,701)                $  (158,063)
                                   =========                 ===========

During 2005 and 2006, three tenants at the building vacated a total of 82,387
square feet of office space at the expiration of their leases. In addition, in
2006, the Hato Rey Partnership undertook a program of repairs and improvements
to the building that is estimated to cost approximately $1,255,000, which
renovations are expected to be completed in 2007. In 2005, the Company agreed to
lend up to $2,000,000 to the Hato Rey Partnership to pay for the cost of
improvements to the building and fund any negative cash flows from the operation
of the property. The loan, which is advanced from time to time as funds are
needed, bears interest at the rate of 11% per annum, with interest and principal
to be paid out of the first positive cash flow from the property or upon a
refinancing of the first mortgage on the property. In September, 2007, the
Company agreed to lend an additional $500,000 to the Hato Rey Partnership under
the same terms as the original $2,000,000 agreement, except that the interest
rate on the additional $500,000 would be at the rate of 13% per annum. At
September 30, 2007, the Company had advanced $1,999,275 of the loan to the Hato
Rey Partnership. The $1,999,275 loan and accrued interest in the amount of
$179,037 have been eliminated in consolidation.

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

8. MINORITY INTEREST IN CONSOLIDATED PARTNERSHIP

Presidential is the general partner of UTB Associates, a partnership, which
holds notes receivable and in which Presidential had 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.

In July, 2007, the Company purchased the remaining 25% limited partnership
interests for a purchase price of $42,508, which was effective as of June 30,
2007. As a result of the purchase, the Company now owns 100% of UTB Associates.
The major asset of the partnership is a portfolio of notes receivable that
amortize monthly and have various interest rates. At June 30, 2007, the notes
had an outstanding principal balance of $142,757 and a net carrying value of
$114,889. The Company plans to liquidate the partnership in 2007.

9. INCOME TAXES

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

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

Upon adoption of FIN 48 the Company recorded a reduction to the January 1, 2007
balance of retained earnings of $460,800 for accrued interest for prior years
related to the tax positions for which the Company may be required to pay a
deficiency dividend. In addition, for the three months and nine months ended
September 30, 2007, the Company recorded interest expense of $87,382 and
$267,382, respectively, for the interest related to these matters. The Company
recognizes this interest expense in general and administrative expenses in its
consolidated statements of operations. As of September 30, 2007, the Company had
accrued $728,182 of interest related to these matters, which is included in
accrued liabilities in its consolidated balance sheet. As of September 30, 2007,
the tax years that remain open to examination by the federal, state and local
taxing authorities are the 2004 - 2006 tax years.

Upon filing the Company's income tax return for the year ended December 31,
2006, the Company reported a tax loss of approximately $1,412,000 ($.36 per
share), which is comprised of capital gains of approximately $225,000 ($.06 per
share) and an ordinary loss of approximately $1,637,000 ($.42 per share).

As previously stated, in order to maintain REIT status, Presidential is required
to distribute 90% of its REIT taxable income (exclusive of capital gains). As a
result of the ordinary tax loss of $.42 per share for 2006, the Company is not
required to make any distributions in 2007 in order to maintain its
qualification as a REIT. However, during the nine months ended September 30,
2007, the Company had declared and paid distributions of $.48 per share, which
distributions are available to be applied to any 2007 taxable income.

For the nine months ended September 30, 2007, the Company had taxable income of
approximately $942,000 ($.24 per share), which is comprised of capital gains of
approximately $1,234,000 ($.31 per share) and an ordinary loss of approximately
$292,000 ($.07 per share). The Company will apply its available 2007
distributions to reduce its 2007 taxable income to zero, therefore no provision
for income taxes was made at September 30, 2007.

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,
                                     2007               2006
                                 -------------      ------------
Minimum contractual pension
 benefit liability               $(1,260,101)       $(1,260,101)
Net unrealized gain on
 securities available
 for sale                             13,807             13,794
Adjustments for initial
 adoption of SFAS No. 158:
 Defined benefit plan             (1,039,101)        (1,039,101)
 Contractual postretirement
  benefits                           (73,419)           (73,419)
Adjustment for
 contractual postretirement
 benefits                           (120,484)              -
                                 -----------        -----------
Total accumulated other
 comprehensive loss              $(2,479,298)       $(2,358,827)
                                 ===========        ===========

The Company's other comprehensive income (loss) 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 (loss), which consists
of net loss plus or minus other comprehensive income, is as follows:

                            Three Months Ended       Nine Months Ended
                               September 30,           September 30,
                            2007         2006        2007         2006
                        -----------   ---------  -----------   -----------

Net loss                $(128,465)    $(479,085) $(1,865,702)  $(2,673,541)

Other comprehensive
 income (loss)-
Net unrealized
 gain (loss) on
 securities available
 for sale                   3,762         1,037           13        2,623
Adjustment for
 contractual
 postretirement
 benefits                    -             -        (120,484)          -
                        ---------     ---------  -----------   -----------

Comprehensive loss      $(124,703)    $(478,048) $(1,986,173)  $(2,670,918)
                        =========     =========  ===========   ===========

11. COMMITMENTS AND CONTINGENCIES

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

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

The Company is involved in an environmental remediation process for contaminated
soil found on its Mapletree Industrial Center property in Palmer, Massachusetts.
The land area involved is approximately 1.25 acres and the depth of the
contamination is at this time undetermined. Since the most serious identified
threat on the site is to songbirds, the proposed remediation will consist of
removing all exposed metals and a layer of soil (the depth of which is yet to be
determined). The Company estimates that the costs of the cleanup will not exceed
$1,000,000. The remediation will comply with the requirements of the
Massachusetts Department of Environmental Protection ("MADEP"). The MADEP has
agreed that the Company may complete the remediation over the next fifteen
years, but the Company expects to complete the project over the next ten years.

In accordance with the provisions of SFAS No. 5, "Accounting for Contingencies",
in the fourth quarter of 2006, the Company accrued a $1,000,000 liability which
was discounted by $145,546 and charged $854,454 to expense. The discount rate
used was 4.625%, which was the interest rate on 10 year Treasury Bonds. The
expected cash payments and undiscounted amount to be recognized in the Company's
consolidated financial statements are as follows:




                                            Estimated       Discount
                             Actual       Undiscounted       Amount
                              Cash           Amount       Recognized as
             Estimated      Payments          to be         Expense
                Cash      September 30,    Recognized     September 30,
      Year    Payments        2007         as Expense         2007
      ----    --------    -------------   ------------   -------------
      2007    $200,000       $32,789        $ 8,841          $1,449
      2008     200,000                       16,934
      2009     150,000                       18,277
      2010     100,000                       15,612
      2011     100,000                       18,781
  2012-2016    250,000                       67,101

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

For the nine months ended September 30, 2007, the Company incurred environmental
expenses of $41,493 for further excavation and testing of the site. These
expenses were in addition to the $1,000,000 previously accrued for the costs of
the cleanup of the site.

12. CONTRACTUAL PENSION AND POSTRETIREMENT BENEFITS

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

                                       Three Months Ended     Nine Months Ended
                                         September 30,          September 30,
                                       2007       2006        2007       2006
                                     --------   --------    --------   --------

Service cost                         $  4,354   $  4,120    $ 13,066   $ 12,360
Interest cost                          31,109     31,948      93,322     95,843
Amortization of prior
  service cost                        (11,594)   (11,594)    (34,782)   (34,782)
Recognized actuarial loss             105,590     96,085     316,772    288,255
                                     --------   --------    --------   --------

Net periodic benefit cost            $129,459   $120,559    $388,378   $361,676
                                     ========   ========    ========   ========

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




                              Three Months Ended    Nine Months Ended
                                 September 30,        September 30,
                              2007         2006     2007       2006
                             -------     --------  -------    -------

Service cost                 $   487     $  3,206  $ 1,460    $ 9,620
Interest cost                 11,042        9,328   33,132     27,983
Amortization of prior
  service cost                (2,944)     (12,712)  (8,834)   (38,136)
Recognized actuarial loss      5,446       13,288   16,337     39,865
                             -------     --------  -------   --------

Net periodic benefit cost    $14,031     $ 13,110  $42,095    $39,332
                             =======     ========  =======    =======

During the nine months ended September 30, 2007, the Company made contributions
of $351,483 and $46,657 for contractual pension benefits and postretirement
benefits, respectively. The Company anticipates additional contributions of
$118,093 and $19,743 for contractual pension benefits and postretirement
benefits, respectively, for the remainder of 2007.

13. DEFINED BENEFIT PLAN

<TABLE>
The following table sets forth the components of net periodic benefit costs:
<CAPTION>

                                        Three Months Ended     Nine Months Ended
                                          September 30,          September 30,
                                         2007      2006       2007         2006
                                      --------   ---------  ---------    ---------

<S>                                  <C>        <C>        <C>          <C>
Service cost                         $  58,495  $  94,994  $ 175,487    $ 284,979
Interest cost                          107,812     99,774    323,437      299,322
Expected return on
  plan assets                         (142,128)  (132,970)  (426,388)    (398,909)
Amortization of prior
  service cost                           3,154      3,154      9,462        9,462
Amortization of
  accumulated loss                       2,403     16,792      7,209       50,377
                                     ---------  ---------   --------     --------

Net periodic
  benefit cost                       $  29,736  $  81,744   $ 89,207    $ 245,231
                                     =========  =========   ========    =========
</TABLE>

The Company's policy is to fund the defined benefit plan with contributions that
comply with the minimum and maximum amounts required by law. During the nine
months ended September 30, 2007, the Company did not make a contribution to the
defined benefit plan for the 2007 plan year and the Company is not required to
make any contributions in 2007.




PRESIDENTIAL REALTY CORPORATION AND SUBSIDIARIES

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS
         OR PLAN OF OPERATION
         FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006

Forward-Looking Statements

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

        o 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, rental rates 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 environmental 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, 2006.
There have been no significant changes in the Company's critical accounting
policies since December 31, 2006.

New Accounting Standard

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

Upon adoption of FIN 48 the Company recorded a reduction to the January 1, 2007
balance of retained earnings of $460,800 for accrued interest for prior years
related to the tax positions for which the Company may be required to pay a
deficiency dividend. In addition, for the nine months ended September 30, 2007,
the Company recorded interest expense of $267,382 for the interest related to
these matters. The Company recognizes this interest expense in general and
administrative expenses in its consolidated statements of operations. As of
September 30, 2007, the Company had accrued $728,182 of interest related to
these matters, which is included in accrued liabilities in its consolidated
balance sheet. As of September 30, 2007, the tax years that remain open to
examination by the federal, state and local taxing authorities are the 2004 -
2006 tax years.

Results of Operations

Financial Information for the three months ended September 30, 2007 and 2006:
----------------------------------------------------------------------------

For the three months ended September 30, 2007, the Company consolidated 100% of
the results of operations of the Hato Rey Partnership. The table below is the
results of operations for the Company for the three months ended September 30,
2007 and 2006. For the three months ended September 30, 2006, the Hato Rey
Partnership was not consolidated on the Company's consolidated statement of
operations; the Company recorded its share of the loss from operations from the
Hato Rey Partnership under the equity method of accounting and, accordingly, the
loss was recorded in the equity in the loss from partnership. The table also
segregates for analysis purposes the results of operations of the Hato Rey
Partnership for the three months ended September 30, 2007.



<TABLE>
THREE MONTH PERIODS
<CAPTION>
                                                                 Net Loss
                                                                  Before
                                                               Consolidation
                                                               of the Hato   Rey Hato Rey   Eliminations     Total        Total
                                                               Partnership   Partnership        (1)        Net Loss     Net Loss
                                                               Three Months  Three Months  Three Months  Three Months  Three Months
                                                                   Ended        Ended         Ended          Ended        Ended
                                                               September 30, September 30, September 30, September 30, September 30,
                                                                    2007          2007          2007          2007         2006
                                                               -------------- ------------  ------------  ------------ ------------
Revenues:
<S>                                                                  <C>          <C>           <C>         <C>            <C>
  Rental                                                             $631,804     $937,605      ($51,357)   $1,518,052     $600,243
  Interest on mortgages - notes receivable                            296,946       -             -            296,946      289,725
  Interest on mortgages - notes receivable - related parties           31,857       -             -             31,857       84,712
  Other revenues                                                       70,276       -            (69,077)        1,199       38,351
                                                                -------------- ------------  ------------  ------------ ------------
Total                                                               1,030,883      937,605      (120,434)    1,848,054    1,013,031
                                                                -------------- ------------  ------------  ------------ ------------

Costs and Expenses:
  General and administrative                                        1,092,390       -            (51,357)    1,041,033      821,330
  Depreciation on non-rental property                                   9,266       -             -              9,266        4,630
  Rental property:
    Operating expenses                                                287,840      527,023      (123,479)      691,384      487,972
    Interest on mortgage debt                                          81,390      295,010        -            376,400       58,259
    Real estate taxes                                                  86,898       80,321        -            167,219       86,297
    Depreciation on real estate                                        27,823       96,293        -            124,116       34,235
    Amortization of in-place lease values and mortgage costs           56,471       11,822        -             68,293        2,892

                                                                -------------- ------------  ------------  ------------ ------------
Total                                                               1,642,078    1,010,469      (174,836)    2,477,711    1,495,615
                                                                -------------- ------------  ------------  ------------ ------------

Other Income (Loss):
  Investment income                                                   504,204        6,339       (54,402)      456,141      205,878
  Equity in the income (loss) from joint ventures                      44,605       -             -             44,605      (31,012)
  Equity in the loss from partnership                                     -         -             -             -           (51,701)
                                                                -------------- ------------  ------------  ------------ ------------

Loss before minority interest                                         (62,386)     (66,525)       -           (128,911)    (359,419)

Minority interest                                                          28       -             -                 28       (1,606)
                                                                -------------- ------------  ------------  ------------ ------------
Loss from continuing operations                                       (62,358)     (66,525)       -           (128,883)    (361,025)
                                                                -------------- ------------  ------------  ------------ ------------

Discontinued Operations:
Income (loss) from discontinued operations                                418       -             -                418     (118,060)
Net gain from sales of discontinued operations                            -         -             -                 -        -
                                                                -------------- ------------  ------------  ------------ ------------
Total income (loss) from discontinued operations                          418       -             -                418     (118,060)
                                                                -------------- ------------  ------------  ------------ ------------

Net Loss                                                             ($61,940)    ($66,525)   $   -          ($128,465)   ($479,085)
                                                                ============== ============  ============  ============ ============


(1) Represents intercompany transactions that are eliminated in consolidation.
</TABLE>




Continuing Operations:

Revenues increased by $835,023 primarily as a result of increases in rental
revenues, partially offset by decreases in interest income on mortgages-notes
receivable-related parties and other revenues.

Rental revenues increased by $917,809 primarily due to the consolidation of the
Hato Rey Partnership, which increased rental revenues by $922,170 (after the
elimination of $15,435 of intercompany revenues).

Interest on mortgages-notes receivable-related parties decreased by $52,855
primarily as a result of a decrease of $57,000 in payments of interest received
on the Consolidated Loans. Payments received on the Consolidated Loans fluctuate
because they are based on the cash flows of Scorpio Entertainment, Inc. (see
Liquidity and Capital Resources - Consolidated Loans below).

Other revenues decreased by $37,152 primarily as a result of reduced fees of
$32,106 earned by the Company's management company for third party owned
properties, including primarily the Hato Rey Partnership. As a result of the
consolidation of the Hato Rey Partnership in 2007, such fees were eliminated.

Costs and expenses increased by $982,096 primarily due to the consolidation of
the Hato Rey Partnership, which increased rental property expenses, and
increases in general and administrative expenses.

General and administrative expenses increased by $219,703 primarily due to an
increase in fees for professional services of $105,141 and interest expense of
$87,382 for the accrual of interest related to tax positions for which the
Company may be required to pay a deficiency dividend.

Rental property operating expenses increased by $203,412 primarily as a result
of the $423,313 operating expenses (after the elimination of $103,710 in
intercompany expenses) from the consolidation of the Hato Rey Partnership. This
increase was partially offset by decreases of $189,649 for environmental
expenses and $34,647 for insurance expense at the Mapletree Industrial Center
property. During the 2006 period, the Company incurred $190,326 for
environmental site testing and removal of soil at the Mapletree Industrial
Center property. The Company is currently involved in an environmental
remediation process which is discussed further below (see Liquidity and Capital
Resources - Environmental Matters).

Interest on mortgage debt increased by $318,141 primarily as a result of the
$295,010 interest expense from the consolidation of the Hato Rey Partnership
mortgage. In addition, the Company recorded amortization of discount on this
mortgage of $25,412.

Amortization of in-place lease values and mortgage costs increased by $65,401
primarily as a result of $53,494 of amortization of in-place lease values and
$11,822 of amortization of mortgage costs as a result of the consolidation of
the Hato Rey Partnership. The in-place lease values were recorded in connection
with the partial step acquisition of the Hato Rey Partnership in 2006.

Other income increased by $377,581 primarily as a result of an increase of
$250,263 in investment income and decreases of $75,617 in the equity in the loss
from the joint ventures and $51,701 in the equity in the loss from the Hato Rey
Partnership. Investment income increased primarily due to an increase of
$296,971 in distributions received from Broadway Partners Parallel Fund A
("Broadway Fund A").

Loss from continuing operations decreased by $232,142 from a loss of $361,025 in
2006 to a loss of $128,883 in 2007. This increase was primarily a result of the
increase in investment income of $250,263.

Discontinued Operations:

In 2007, the Company had two properties that were classified as discontinued
operations; the Cambridge Green property in Council Bluffs, Iowa, which was sold
in March, 2007, and a cooperative apartment unit in New Haven, Connecticut,
which was sold in June, 2007. (See Liquidity and Capital Resources -
Discontinued Operations below).

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

                                                      2007              2006
                                                     ------         -----------

Income (loss) from discontinued operations:

Cambridge Green, Council Bluffs, IA                   $845           $(116,095)
Cooperative apartment unit, New Haven, CT             (427)             (1,965)
                                                      ----           ---------

Income (loss) from discontinued operations            $418           $(118,060)
                                                      ====           =========

Results of Operations

Financial Information for the nine months ended September 30, 2007 and 2006:
---------------------------------------------------------------------------

For the nine months ended September 30, 2007, the Company consolidated 100% of
the results of operations of the Hato Rey Partnership. The table below is the
results of operations for the Company for the nine months ended September 30,
2007 and 2006. For the nine months ended September 30, 2006, the Hato Rey
Partnership was not consolidated on the Company's consolidated statement of
operations; the Company recorded its share of the loss from operations from the
Hato Rey Partnership under the equity method of accounting and, accordingly, the
loss was recorded in the equity in the loss from partnership. The table also
segregates for analysis purposes the results of operations of the Hato Rey
Partnership for the nine months ended September 30, 2007.



<TABLE>
NINE MONTH PERIODS
<CAPTION>
                                                                  Net Loss
                                                                   Before
                                                               Consolidation
                                                                of the Hato Rey  Hato Rey   Eliminations    Total        Total
                                                                 Partnership   Partnership      (1)       Net Loss      Net Loss
                                                                 Nine Months   Nine Months  Nine Months   Nine Months  Nine Months
                                                                   Ended         Ended         Ended        Ended        Ended
                                                                September 30, September 30, September 30,September 30, September 30,
                                                                    2007         2007          2007         2007          2006
                                                                ------------- ------------  ------------ ------------  -----------
Revenues:
<S>                                                                 <C>          <C>            <C>         <C>          <C>
  Rental                                                            $1,941,745   $2,559,165     ($118,179)  $4,382,731   $1,655,447
  Interest on mortgages - notes receivable                             884,129       -             -           884,129      922,762
  Interest on mortgages - notes receivable - related parties           253,846       -             -           253,846      191,816
  Other revenues                                                       202,760       -           (196,913)       5,847      122,896
                                                                  ------------- ------------  ------------ ------------  -----------
Total                                                                3,282,480    2,559,165      (315,092)   5,526,553    2,892,921
                                                                  ------------- ------------  ------------ ------------  -----------

Costs and Expenses:
  General and administrative                                         3,149,220       -           (118,179)   3,031,041    2,800,243
  Depreciation on non-rental property                                   23,489       -             -            23,489       12,750
  Rental property:
    Operating expenses                                               1,004,832    1,546,959      (328,989)   2,222,802    1,100,193
    Interest on mortgage debt                                          250,913      879,248        -         1,130,161      175,115
    Real estate taxes                                                  259,017      213,236        -           472,253      250,489
    Depreciation on real estate                                         94,079      266,159        -           360,238       98,256
    Amortization of in-place lease values and mortgage costs           263,094       43,374        -           306,468        8,611
                                                                  ------------- ------------  ------------ ------------  -----------
Total                                                                5,044,644    2,948,976      (447,168)   7,546,452    4,445,657
                                                                  ------------- ------------  ------------ ------------  -----------

Other Income (Loss):
  Investment income                                                    609,575       18,395      (137,765)     490,205      305,762
  Equity in the loss from joint ventures                              (972,860)      -             -          (972,860)  (1,045,351)
  Equity in the loss from partnership                                       -        -             -            -          (158,063)
                                                                  ------------- ------------  ------------ ------------  -----------

Loss before minority interest                                       (2,125,449)    (371,416)       (5,689)  (2,502,554)  (2,450,388)

Minority interest                                                       (2,194)      -             -            (2,194)      (5,732)
                                                                  ------------- ------------  ------------ ------------  -----------
Loss from continuing operations                                     (2,127,643)    (371,416)       (5,689)  (2,504,748)  (2,456,120)
                                                                  ------------- ------------  ------------ ------------  -----------

Discontinued Operations:
Loss from discontinued operations                                     (102,348)      -              5,689      (96,659)    (217,421)
Net gain from sales of discontinued operations                         735,705       -             -           735,705       -
                                                                  ------------- ------------  ------------ ------------  -----------
Total income (loss) from discontinued operations                       633,357       -              5,689      639,046     (217,421)
                                                                  ------------- ------------  ------------ ------------  -----------

Net Loss                                                           ($1,494,286)   ($371,416)   $   -       ($1,865,702) ($2,673,541)
                                                                  ============= ============  ============ ============  ===========


(1) Represents intercompany transactions that are eliminated in consolidation.
</TABLE>



Continuing Operations:

Revenues increased by $2,633,632 primarily as a result of increases in rental
revenues and in interest income on mortgages-notes receivable-related parties,
partially offset by decreases in other revenues.

Rental revenues increased by $2,727,284 primarily due to the consolidation of
the Hato Rey Partnership, which increased rental revenues by $2,543,730 (after
the elimination of $15,435 of intercompany revenues). In addition, rental
revenues increased at all of the other rental properties, including a $99,990
increase at the Mapletree Industrial Center property as a result of increased
occupancy rates.

Interest on mortgages-notes receivable-related parties increased by $62,030
primarily as a result of an increase of $60,250 in payments of interest received
on the Consolidated Loans (see Liquidity and Capital Resources - Consolidated
Loans below).

Other revenues decreased by $117,049 primarily as a result of reduced fees of
$94,807 earned by the Company's management company for third party owned
properties, including primarily the Hato Rey Partnership. As a result of the
consolidation of the Hato Rey Partnership in 2007, such fees were eliminated.

Costs and expenses increased by $3,100,795 primarily due to the consolidation of
the Hato Rey Partnership, which increased rental property expenses, and
increases in general and administrative expenses.

General and administrative expenses increased by $230,798 primarily due to
interest expense of $267,382 for the accrual of interest related to tax
positions for which the Company may be required to pay a deficiency dividend.

Rental property operating expenses increased by $1,122,609 primarily as a result
of the $1,276,080 operating expenses (after the elimination of $270,879 in
intercompany expenses) from the consolidation of the Hato Rey Partnership. This
increase was partially offset by a $164,023 decrease in environmental expenses
at the Mapletree Industrial Center property. During the 2006 period, the Company
incurred $206,966 for environmental site testing and removal of soil at the
Mapletree Industrial Center property. The Company is currently involved in an
environmental remediation process which is discussed further below (see
Liquidity and Capital Resources - Environmental Matters).

Interest on mortgage debt increased by $955,046 primarily as a result of the
$879,248 interest expense from the consolidation of the Hato Rey Partnership
mortgage. In addition, the Company recorded amortization of discount on this
mortgage of $81,311.

Amortization of in-place lease values and mortgage costs increased by $297,857
primarily as a result of $254,227 of amortization of in-place lease values and
$43,374 of amortization of mortgage costs as a result of the consolidation of
the Hato Rey Partnership. The in-place lease values were recorded in connection
with the partial step acquisition of the Hato Rey Partnership in 2006.

Other income increased by $414,997 primarily as a result of an increase of
$184,443 in investment income and decreases of $72,491 in the equity in the loss
from the joint ventures and $158,063 in the equity in the loss from the Hato Rey
Partnership. Investment income increased primarily due to an increase of
$296,971 in distributions received from Broadway Fund A, partially offset by a
decrease of $80,482 of interest income earned on other funds held by Broadway
Real Estate Partners, LLC ("Broadway Partners").

Loss from continuing operations increased by $48,628 from a loss of $2,456,120
in 2006 to a loss of $2,504,748 in 2007.

Discontinued Operations:

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

                                                  2007              2006
                                                --------          --------

Loss from discontinued operations:

Cambridge Green, Council Bluffs, IA             $(95,593)         $(214,829)
Cooperative apartment unit, New
  Haven, CT                                       (1,066)            (2,592)
                                                --------          ---------

Loss from discontinued operations                (96,659)          (217,421)
                                                --------          ---------

Net gain from sales of discontinued operations:
Cambridge Green                                  646,759             -
Cooperative apartment unit                        88,946             -
                                                --------          ---------

Net gain from sales of
  discontinued operations                        735,705             -
                                                --------          ---------

Total income (loss) from
   discontinued operations                      $639,046         $(217,421)
                                                ========         =========

Balance Sheet

Investments in and advances to joint ventures decreased by $3,454,719 as a
result of $2,481,859 of distributions received and $972,860 of equity in the
loss from the joint ventures.

Net mortgage portfolio increased by $251,344 primarily as a result of a $200,000
secured note receivable received in connection with the sale of the Cambridge
Green property in March, 2007.

Assets related to discontinued operations decreased by $2,922,493 as a result of
the sale of the Cambridge Green property.

Other investments decreased by $1,000,000 primarily as a result of the return of
the Company's $890,000 investment in Broadway Fund A and the return of $110,000
of other funds held by Broadway Partners (see Liquidity and Capital Resources -
Investing Activities below).

Prepaid expenses and deposits in escrow decreased by $123,489 primarily as a
result of the sale of the Cambridge Green property. At December 31, 2006,
prepaid expenses and deposits in escrow included $161,236 attributed to
Cambridge Green. This decrease was partially offset by a $44,653 increase at the
Hato Rey Center property.

Prepaid defined benefit plan costs decreased by $89,207 as a result of net
periodic benefit costs for 2007.

Cash and cash equivalents increased by $386,852 primarily as a result of the
cash proceeds received on the sale of the Cambridge Green property of $464,780.

Other assets decreased by $327,176 primarily as a result of $254,227 of
amortization of in-place lease values and $52,241 of amortization of mortgage
costs.

Liabilities related to discontinued operations decreased by $2,911,677 as a
result of the sale of the Cambridge Green property.

Accrued liabilities increased by $425,321 primarily as a result of the $728,182
accrual for interest related to tax positions for which the Company may be
required to pay a deficiency dividend, partially offset by a decrease in accrued
real estate taxes of $168,924 for the Cambridge Green property that was sold.

In January, 2007, three independent directors of the Company each received 1,000
fully vested shares of the Company's Class B common stock from its 2005
Restricted Stock Plan ("2005 Plan") as a partial payment of directors' fees for
the 2007 year. The shares were valued at $6.95 per share, which was the market
value of the Class B common stock at the grant date, and, accordingly, the
Company recorded $20,850 in prepaid directors' fees (to be amortized during
2007) 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
$20,550 to additional paid-in capital.

In addition, in May, 2007, an officer of the Company was awarded 10,000 shares
of the Company's Class B common stock from the 2005 Plan. The market price of
the shares at the grant date was $7.44 per share and the shares will vest at the
rate of 50% on January 1, 2008 and January 1, 2009. The Company recorded
additions to the Company's Class B common stock of $1,000 at par value of $.10
per share, with an offset to additional paid-in capital at the time of the
award. Through September 30, 2007, the Company recorded compensation costs and
additions to additional paid-in capital of $27,900 for the portion of the grant
based on the requisite service period that is deemed vested at September 30,
2007, based on the market value of the stock at the grant date.

Treasury stock increased by $233,867 as a result of the Company's purchase of
11,633 shares of its Class B common stock at an average cost of $7.86 per share,
16,000 shares of its Class B Common Stock from a director of the Company at an
average cost of $6.68 per share, and 5,275 shares of its Class A common stock at
an average cost of $6.73 per share.


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.

If the Company's tax positions in relation to certain transactions were examined
and were not ultimately upheld, the Company would be required to pay an income
tax assessment and related interest, or a deficiency dividend and related
interest, for prior years. Should such an assessment require the Company to pay
a deficiency dividend in order to continue to qualify as a REIT, the Company
would pay the deficiency dividend to its shareholders and the related interest
assessment to the taxing authorities. The Company would be required to pay such
deficiency dividend within ninety days of such determination. If the Company had
to pay a deficiency dividend and interest thereon, the Company may have to
borrow funds or sell assets to do so.

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,
2007, there was no outstanding balance due under the line of credit.

During the first nine months of 2007, the Company paid cash distributions to
shareholders which exceeded cash flows from operating activities. Periodically
the Company receives balloon payments on its mortgage portfolio and net proceeds
from sales of discontinued operations and other properties. These payments are
available to the Company for distribution to its shareholders or the Company may
retain these payments for future investment. The Company may in the future, as
it did in the first nine months of 2007, pay dividends in excess of its cash
flow from operating activities if the Board of Directors believes that the
Company's liquidity and capital resources are sufficient to pay such dividends.

To the extent that payments received on its mortgage portfolio or payments
received from sales are taxable as capital gains, the Company has the option to
distribute the gain to its shareholders or to retain the gain and pay Federal
income tax on it.

The Company does not have a specific policy as to the retention or distribution
of capital gains. The Company's dividend policy regarding capital gains for
future periods will be based upon many factors including, but not limited to,
the Company's present and projected liquidity, its desire to retain funds
available 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 2007, no assurances can be given that
the present dividend rate will be maintained in the future.

At September 30, 2007, Presidential had $2,650,386 in available cash and cash
equivalents, an increase of $386,852 from the $2,263,534 at December 31, 2006.
This increase in cash and cash equivalents was due to cash provided by operating
activities of $1,639,754 and cash provided by investing activities of $995,608,
offset by cash used in financing activities of $2,248,510.

Operating Activities

Cash from operating activities includes interest on the Company's mortgage
portfolio, net cash received from rental property operations and distributions
received from joint ventures and other investments. In 2007, cash received from
interest on the Company's mortgage portfolio was $1,050,648, distributions
received from the joint ventures were $2,481,859 and distributions received from
other investments were $442,047. Net cash disbursed for rental property
operations was $30,072. Net cash disbursed for rental property operations
includes distributions to minority partners but does not include additions and
improvements and mortgage amortization.

Investing Activities

Presidential holds a portfolio of mortgage notes receivable. During 2007, the
Company received principal payments of $138,049 on its mortgage portfolio of
which $112,886 represented prepayments.

During the first nine months of 2007, the Company invested $628,243 in additions
and improvements to its properties.

In March, 2007, the Company completed the sale of its Cambridge Green Apartments
in Council Bluffs, Iowa and the net proceeds of the sale were $664,780, which
included a $200,000 secured note receivable from the buyer that matures in one
year and has a 7% per annum interest rate. The net cash proceeds of sale were
$464,780 (see Discontinued Operations below).

In June, 2007, the Company sold a cooperative apartment unit located in New
Haven, Connecticut for a sales price of $125,000 and the net cash proceeds of
sale were $117,224 (see Discontinued Operations below).

In September, 2007, the Company received the repayment of its $890,000
investment in Broadway Fund A and repayment of $110,000 from Broadway Partners.
In addition, the Company received a distribution from Broadway Fund A from the
proceeds of sales in the amount of $442,047, which was recorded in investment
income.

In January, 2007, the Company purchased an additional 1% limited partnership
interest in the Hato Rey Partnership for a purchase price of $53,694.

In July, 2007, the Company purchased the remaining 25% limited partnership
interests in the UTB Associates partnership for a purchase price of $42,508,
which was effective as of June 30, 2007. As a result of the purchase, the
Company now owns 100% of UTB Associates. The major asset of the partnership is a
portfolio of notes receivable that amortize monthly and have various interest
rates. At June 30, 2007, the notes had an outstanding principal balance of
$142,757 and a net carrying value of $114,889. The Company plans to liquidate
the partnership in 2007.


Financing Activities

The Company's indebtedness at September 30, 2007, consisted of mortgage debt of
$18,947,573. The mortgage debt is collateralized by individual properties. The
$15,612,970 mortgage on the Hato Rey Center property and the $2,197,665 mortgage
on the Crown Court property are nonrecourse to the Company, whereas the
$1,108,506 Building Industries Center mortgage and the $105,697 Mapletree
Industrial Center mortgage 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 2007,
the Company made $318,197 of principal payments on mortgage debt.

The mortgages on the Company's properties are at fixed rates of interest and
will fully amortize by periodic principal payments, with the exception of the
Building Industries Center mortgage, which has a balloon payment of $1,072,906
due at maturity in January, 2009, and the Hato Rey Center mortgage. The
$15,612,970 Hato Rey Center mortgage matures in May, 2028, and has a fixed rate
of interest of 7.38% per annum until May, 2008; thereafter the interest rate
will increase by 2% and additional repayments of principal will be required from
surplus cash flows from operations of the property. The Company intends to
refinance the Hato Rey Center mortgage prior to May, 2008.

During the first nine months of 2007, Presidential declared and paid cash
distributions of $1,892,086 to its shareholders and received proceeds from its
dividend reinvestment plan of $200,640.

During the first nine months of 2007, the Company purchased 5,275 shares of its
Class A common stock and 11,633 shares of its Class B common stock from outside
shareholders for a purchase price of $126,967. In addition, in April, 2007 and
September, 2007, the Company purchased 10,000 shares and 6,000 shares of its
Class B common stock from a director of the Company for a purchase price of
$70,000 and $36,900, respectively. The Company has from time to time purchased
shares of its stock from individual shareholders who have approached the
Company. The Company has no specific plan or program to repurchase additional
shares but it may do so in the future.

Discontinued Operations

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

The Company owns a small portfolio of cooperative apartments located in New York
and Connecticut. These apartments are held for the production of rental income
and generally are not marketed for sale. However, from time to time, the Company
will receive purchase offers for some of these apartments or decide to market
specific apartments and will make sales if the purchase price is acceptable to
management. In June, 2007, the Company sold one cooperative apartment unit
located in New Haven, Connecticut for a sales price of $125,000. The net
proceeds of sale were $117,224 and the Company recognized a gain from the sale
for financial reporting purposes of $88,946.

Investments in and Advances to Joint Ventures

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

The Company's investments in three of the joint ventures were mezzanine loans to
the various joint venture owning entities in the aggregate principal balance of
$25,935,000. These loans mature in 2014 and 2015 and have an annual interest
rate of 11% per annum. The loans are secured by the ownership interests in the
entities that own the malls, subject to the first mortgage liens. The Company
receives monthly payments of interest on these loans from the joint ventures and
under the equity method of accounting records these payments to Investments in
and advances to joint ventures, as distributions received. The Company's
investments in the joint ventures are reduced by the distributions received from
the joint ventures and by the Company's share of losses recorded for the joint
ventures (and increased by any income recorded for the joint ventures).

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

As a result of accounting for these investments under the equity method of
accounting, the Company's investments in and advances to the joint ventures in
the total amount of $27,373,410 ($25,935,000 in loans and a $1,438,410 capital
contribution) has been reduced by distributions received from the joint ventures
and the Company's share of the losses from the joint ventures to $14,605,030 at
September 30, 2007.

At September 30, 2007, investments in and advances to joint ventures are as
follows:

                  Martinsburg Mall (1)               $      -
                  Four Malls                           3,056,928
                  Shawnee/Brazos Malls                 4,651,409
                  Macon/Burlington Malls               6,896,693
                                                     -----------
                                                     $14,605,030
                                                     ===========

Equity in the income (loss) from joint ventures for the nine months ended
September 30, 2007 is as follows:

                  Martinsburg Mall (1)               $  (2,953)
                  Four Malls                          (678,806)
                  Shawnee/Brazos Malls                (628,729)
                  Macon/Burlington Malls  (2)          337,628
                                                     ---------
                                                     $(972,860)
                                                     =========

(1) In the second quarter of 2007, the Company's basis of its investment in the
Martinsburg Mall was reduced by distributions and losses to zero and the Company
only recorded its share of the loss to the extent of its basis. Future
distributions to be received will be recorded in income from the Martinsburg
Mall.

(2) Equity in the income from the Macon/Burlington Malls includes $1,202,450 for
the Company's 29% share of a settlement payment received from a former tenant at
the Macon Mall relating to the amendment and termination of the tenant's lease.

As a result of the Company's use of the equity method of accounting with respect
to its investments in and advances to the joint ventures, the Company's
consolidated statements of operations reflect 29% of the loss from the joint
ventures. The Company's equity in the loss from joint ventures of $972,860 for
the nine months ended September 30, 2007 is after deductions in the aggregate
amount of $2,828,400 for the Company's 29% of noncash charges (depreciation of
$2,118,083 and amortization of deferred financing costs, in-place lease values
and other costs of $710,317). Notwithstanding the loss from the joint ventures,
the Company is entitled to receive its interest at the rate of 11% per annum on
its $25,935,000 of loans to the joint ventures. For the nine months ended
September 30, 2007, the Company received distributions from the joint ventures
in the amount of $2,481,859, of which $2,321,991 were interest payments received
on the outstanding loans to the joint ventures and $159,868 was a return on
investment.

The Lightstone Group is controlled by David Lichtenstein. At September 30, 2007,
in addition to Presidential's investments of $14,605,030 in the 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 $7,449,994 with a net carrying value of
$7,055,914. Two of the loans in the outstanding principal amount of $5,375,000,
with a net carrying value of $4,980,920, are secured by interests in five
apartment properties and are also personally guaranteed by Mr. Lichtenstein up
to a maximum amount of $3,137,500. The Company believes that Mr. Lichtenstein
has sufficient net worth and liquidity to satisfy his obligations under these
personal guarantees. However, because of the substantial equity in the
properties securing the loans, it is unlikely that Presidential will have to
call upon these personal guarantees. The third loan in the outstanding principal
amount of $2,074,994 is secured by interests in nine apartment properties. All
of these loans are in good standing. While the Company believes that all of
these loans are adequately secured, a default on any or all of these loans could
have a material adverse effect on Presidential's business and operating results.

The $21,660,944 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 approximately 48% of the
Company's total assets at September 30, 2007.

Hato Rey Partnership

At September 30, 2007, the Company has an aggregate 60% general and limited
partnership interest in the Hato Rey Partnership. The Hato Rey Partnership owns
and operates an office building in Hato Rey, Puerto Rico.

During 2005 and 2006, three tenants at the building vacated a total of 82,387
square feet of office space at the expiration of their leases in order to take
occupancy of their own newly constructed office buildings. As a result, at
December 31, 2006, the vacancy rate at the building was approximately 45% and at
September 30, 2007, the vacancy rate was approximately 32%. The Company expects
that it will take some time to find tenants for the vacant space and that until
a substantial portion of the vacant space is rented, the property will operate
at a loss. In addition, in 2006 the Hato Rey Partnership began a program of
repairs and improvements to the building that is estimated to cost approximately
$1,255,000. Management believes that the improvement program, when completed in
2007, will bring the building up to modern standards for office buildings in the
area, that renting will continue to progress and that the property will be
returned to its former profitable status. In 2005, the Company agreed to lend up
to $2,000,000 to the Hato Rey Partnership to pay for the cost of improvements to
the building and fund any negative cash flows from the operation of the
property. The loan, which is advanced from time to time as funds are needed,
bears interest at the rate of 11% per annum, with interest and principal to be
paid out of the first positive cash flow from the property or upon a refinancing
of the first mortgage on the property. In September, 2007, the Company agreed to
lend an additional $500,000 to the Hato Rey Partnership under the same terms as
the original $2,000,000 agreement, except that the interest rate on the
additional $500,000 would be at the rate of 13% per annum. At September 30,
2007, the Company had advanced $1,999,275 to the Hato Rey Partnership. The
$1,999,275 loan and the accrued interest of $179,037 have been eliminated in
consolidation.

Environmental Matters

Mapletree Industrial Center - Palmer, Massachusetts

The Company is involved in an environmental remediation process for contaminated
soil found on this property. The land area involved is approximately 1.25 acres
and the depth of the contamination is at this time undetermined. Since the most
serious identified threat on the site is to songbirds, the proposed remediation
will consist of removing all exposed metals and a layer of soil (the depth of
which is yet to be determined). The Company estimates that the costs of the
cleanup will not exceed $1,000,000. The remediation will comply with the
requirements of the Massachusetts Department of Environmental Protection
("MADEP"). The MADEP has agreed that the Company may complete the remediation
over the next fifteen years, but the Company expects to complete the project
over the next ten years.

In accordance with the provisions of SFAS No. 5, "Accounting for Contingencies",
in the fourth quarter of 2006, the Company accrued a $1,000,000 liability which
was discounted by $145,546 and charged $854,454 to expense. The discount rate
used was 4.625%, which was the interest rate on 10 year Treasury Bonds. The
expected cash payments and undiscounted amount to be recognized in the Company's
consolidated financial statements are as follows:
                                                               Discount
                                                Estimated       Amount
                                 Actual         Undiscounted   Recognized
                              Cash Payments     Amount to be   as Expense
                Estimated     September 30,     Recognized    September 30,
   Year       Cash Payments       2007          as Expense        2007
   ----      -------------    -------------    ------------   -------------
   2007         $200,000         $32,789           $ 8,841       $1,449
   2008          200,000                            16,934
   2009          150,000                            18,277
   2010          100,000                            15,612
   2011          100,000                            18,781
2012-2016        250,000                            67,101

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

For the nine months ended September 30, 2007, the Company incurred environmental
expenses of $41,493 for further excavation and testing of the site. These
expenses were in addition to the $1,000,000 previously accrued for the costs of
the cleanup of the site.

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, 2007, 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 (Steven Baruch who is an executive officer and Director of
Presidential and Thomas Viertel who is an executive officer of Presidential) to
carry on theatrical productions. Amounts received by Presidential from Scorpio
will be applied to unpaid and unaccrued interest on the Consolidated Loans and
recognized as income. The Company anticipates that these amounts may be material
from time to time. However, the profitability of theatrical production is by its
nature uncertain and management believes that any estimate of payments from
Scorpio on the Consolidated Loans for future periods is too speculative to
project. During the nine months ended September 30, 2007 and 2006, the Company
received payments of $236,250 and $176,000, respectively, from Scorpio. The
Consolidated Loans bear interest at a rate equal to the JP Morgan Chase Prime
rate, which was 7.75% at September 30, 2007. At September 30, 2007, the unpaid
and unaccrued interest was $3,353,580 and such interest is not compounded.



QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

The $29,600,000 nonrecourse first mortgage loan secured by the West Manchester
Mall and the $39,500,000 nonrecourse first mortgage loan secured by the
Shawnee/Brazos Malls carry interest rates that change monthly based on the
London Interbank Offered Rate and mature in June, 2008 and January, 2008,
respectively. The borrower has the right to extend the maturity date of the
Shawnee/Brazos Malls first mortgage for two additional one year terms. A
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 $7,835,000 mezzanine loans to those entities.
The interest rate on the first mortgage secured by the West Manchester Mall was
7.89% per annum at December 31, 2006 and 8.63% at September 30, 2007. The
interest rate on the first mortgages secured by the Shawnee/Brazos Malls was
7.93% per annum at December 31, 2006 and 8.55% per annum at September 30, 2007.
The Company believes that these first mortgages will either be extended in
accordance with their terms or refinanced prior to the maturity date.


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 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 7, 2007          By: /s/ Jeffrey F. Joseph
                                       ---------------------
                                       Jeffrey F. Joseph
                                       President and Chief Executive Officer



DATE:    November 7, 2007          By: /s/ Elizabeth Delgado
                                       ---------------------
                                       Elizabeth Delgado
                                       Treasurer