<PAGE>
===============================================================================

                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549


                                   Form 10-Q

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

                 For the quarterly period ended March 31, 1999

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

                For the transition period from ________to_______
                        Commission file number   000-23463
                                               -------------

                       Philips International Realty Corp.
             (Exact name of registrant as specified in its charter)

        Maryland                                13-3963667
  (State or other jurisdiction                  (I.R.S. Employer
of incorporation or organization)               Identification No)

                      417 Fifth Avenue, New York, NY 10016
              (Address of principal executive offices - Zip Code)

                                 (212) 545-1100
              (Registrant's telephone number, including area code)

         Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes     X                  No
       ---                    ---

APPLICABLE ONLY TO CORPORATE ISSUERS:

         Indicate the number of shares outstanding of each of the issuer's
classes of common stock as of the latest practicable date.

         7,340,474 shares outstanding as of April 30, 1999.


===============================================================================

<PAGE>



                                     PART I

                              FINANCIAL INFORMATION


Item 1.   Financial Statements (Unaudited)


             Condensed Consolidated Balance Sheets as of March 31, 1999 and
             December 31, 1998

             Condensed Consolidated Statement of Income for the Three Months
             Ended March 31, 1999

             Condensed Consolidated Statement of Shareholders' Equity for the
             Three Months Ended March 31, 1999

             Condensed Consolidated Statement of Cash Flows for the Three
             Months  Ended March 31, 1999

             Condensed Consolidated Statement of Income for the Three Months
             Ended March 31, 1998

             Condensed Consolidated Statement of Shareholders' Equity for the
             Three Months Ended March 31, 1998

             Condensed Consolidated Statement of Cash Flows for the Three
             Months Ended March 31, 1998

             Notes to Condensed Consolidated Financial Statements.



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


Item 3.   Quantitative and Qualitative Disclosure of Market Risk

<PAGE>

                       PHILIPS INTERNATIONAL REALTY CORP.
                      CONDENSED CONSOLIDATED BALANCE SHEET


<TABLE>
<CAPTION>

                                                                                     3/31/99                  12/31/98
                                                                               ---------------------    ---------------------
                                                                                   (Unaudited)                (Note 2)
                            ASSETS

<S>                                                                            <C>                      <C>         
Rental properties - net                                                                $217,008,903             $208,914,386
Investments in real estate joint ventures                                                56,205,339               34,663,524
Cash and cash equivalents                                                                   886,082                9,116,070
Accounts receivable                                                                       6,250,166                5,986,763
Deferred charges and prepaid expenses                                                     4,798,683                3,879,574
Other assets                                                                              4,229,866                1,786,903
                                                                               ---------------------    ---------------------

Total Assets                                                                           $289,379,039             $264,347,220
                                                                               =====================    =====================

                       LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
       Mortgages and notes payable                                                     $161,714,227             $137,486,668
       Accounts payable and accrued expenses                                              3,779,896                2,350,799
       Dividends payable                                                                  2,771,031                2,477,412
       Other liabilities                                                                  1,916,580                1,715,335
                                                                               ---------------------    ---------------------

Total Liabilities                                                                       170,181,734              144,030,214
                                                                               ---------------------    ---------------------

Minority interests in Operating Partnership                                              30,698,022               30,919,150
                                                                               ---------------------    ---------------------

Shareholders' Equity
       Preferred Stock, $.01 par value; 30,000,000 shares authorized;                   -                        -
            no shares issued and outstanding
       Common Stock, $.01 par value; 150,000,000 shares authorized;                          73,405                   73,405
            7,340,474 shares issued and outstanding
       Additional paid in capital                                                        92,668,007               92,668,007
       Cumulative distributions in excess of net income                                  (3,384,837)              (2,435,222)
                                                                               ---------------------    ---------------------
                                                                                         89,356,575               90,306,190
       Stock purchase loans receivable                                                     (857,292)                (908,334)
                                                                               ---------------------    ---------------------

Total Shareholders' Equity                                                               88,499,283               89,397,856
                                                                               ---------------------    ---------------------

Total Liabilities and Shareholders' Equity                                             $289,379,039             $264,347,220
                                                                               =====================    =====================

</TABLE>

                             See accompanying notes.

<PAGE>

                       PHILIPS INTERNATIONAL REALTY CORP.
                   CONDENSED CONSOLIDATED STATEMENT OF INCOME
                    For the Three Months Ended March 31, 1999
                    -----------------------------------------

                                   (Unaudited)
<TABLE>
<S>                                                                                   <C>
Revenues from rental property                                                                     $9,211,727
                                                                                      -----------------------
Expenses:
  Operating expenses                                                                               1,157,002
  Real estate taxes                                                                                1,418,431
  Management fees to affiliates                                                                      275,974
  Interest expense                                                                                 1,807,018
  Depreciation and amortization                                                                    1,611,345
  General and administrative expenses                                                                613,599
                                                                                      -----------------------

                                                                                                   6,883,369
                                                                                      -----------------------

    Operating income                                                                               2,328,358

Equity in net income of real estate joint ventures                                                   613,631

Minority interests in income of Operating Partnership                                               (613,306)

Other income (expense), net                                                                         (507,267)
                                                                                      -----------------------

    Net income                                                                                    $1,821,416
                                                                                      =======================

Basic and diluted net income per common share                                                          $0.25
                                                                                      =======================
</TABLE>


                             See accompanying notes.


<PAGE>

                       PHILIPS INTERNATIONAL REALTY CORP.
            CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
                    For the Three Months Ended March 31, 1999
                    -----------------------------------------
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                                 Cumulative
                                               Common                                          Distributions
                                               Stock              Additional      Stock           in Excess         Total
                                          ------------------       Paid-In       Purchase          of Net        Shareholders'
                                          Shares      Amount       Capital        Loans             Income          Equity
                                          ------      ------       -------       --------      --------------    -------------

<S>                                      <C>          <C>         <C>            <C>            <C>               <C>        
Balance, December 31, 1998               7,340,474    $73,405     $92,668,007    ($908,334)     ($2,435,222)      $89,397,856
Net income                                                                                        1,821,416        $1,821,416
Dividends on common stock                                                                        (2,771,031)      ($2,771,031)
Amortization of stock purchase loan                                                 51,042                            $51,042

                                         ---------    -------     -----------    ---------      -----------       -----------
Balance, March 31, 1999                  7,340,474    $73,405     $92,668,007    ($857,292)     ($3,384,837)      $88,499,283
                                         =========    =======     ===========    =========      ===========       ===========

</TABLE>

                                                     See accompanying notes.

<PAGE>

                       PHILIPS INTERNATIONAL REALTY CORP.
                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                    For the THREE MONTHS ENDED MARCH 31, 1999
                    -----------------------------------------

                                   (Unaudited)


<TABLE>
<S>                                                                      <C>       
Cash flow provided by operating activities:                                          $3,731,511
                                                                         -----------------------

Cash flow from investing activities:
       Acquisitions of land, buildings and improvements                              (9,604,558)
       Investments in joint ventures                                                (21,522,654)
       Purchase of mortgage note, secured by real estate                             (1,750,000)
                                                                         -----------------------

       Net cash used in investing activities                                        (32,877,212)
                                                                         -----------------------

Cash flow from financing activities:

       Principal amortization of mortgage notes payable                                (247,441)
       Proceeds from debt financing                                                  24,475,000
       Dividends paid on common stock                                                (2,477,412)
       Distributions to minority interest                                              (834,434)
                                                                         -----------------------

       Net cash provided by financing activities                                     20,915,713
                                                                         -----------------------

       Net decrease in cash and cash equivalents                                     (8,229,988)
Cash and cash equivalents, beginning of period                                        9,116,070
                                                                         -----------------------

Cash and cash equivalents, end of period                                               $886,082
                                                                         =======================


Noncash financing activities:

       Dividends declared and paid in succeeding period                              $2,771,031
                                                                         =======================
</TABLE>

                             See accompanying notes.


<PAGE>

                       PHILIPS INTERNATIONAL REALTY CORP.
                   CONDENSED CONSOLIDATED STATEMENT OF INCOME
                    For the Three Months Ended March 31, 1998
                    -----------------------------------------
                                   (Unaudited)
                      (In thousands, except per share data)

<TABLE>
<S>                                                                                           <C>
Preferred units income allocation from Operating Partnership                                      $44
Equity in net income of Operating Partnership, as adjusted for the allocation of income
   to preferred units                                                                               4
Administrative expenses                                                                           (20)
                                                                                              -------
   Net income                                                                                     $28
                                                                                              =======
   Net loss applicable to common shares                                                          ($16)
                                                                                              =======

   Basic and diluted net loss per common share                                                 ($0.20)
                                                                                              =======
</TABLE>



                       PHILIPS INTERNATIONAL REALTY CORP.
            CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
                    For the Three Months Ended March 31, 1998
                    -----------------------------------------
                                   (Unaudited)
                      (In thousands, except share amounts)

<TABLE>
<CAPTION>
                                                                                               Cumulative
                                                                                              Distributions      
                                      Preferred               Common             Additional       in Excess          Total
                                        Stock                 Stock              Paid-In          of Net        Shareholders'
                                 Shares       Amount    Shares       Amount      Capital          Income           Equity
                                 ------       ------    ------       ------      -------          ------           ------

<S>                              <C>         <C>       <C>            <C>        <C>          <C>                 <C>   
Balance, December 31, 1997        1,940       $1,940    47,660         $0         $806         ($543)              $2,203
Net income                                                                                        28                   28
Dividends on preferred stock                                                                     (44)                 (44)

                                 ------       ------    ------       ------       ----         ------               -----
Balance, March 31, 1998           1,940       $1,940    47,660         $0         $806         ($559)              $2,187
                                 ======       ======    ======       ======       ====         ======               =====
</TABLE>



                       PHILIPS INTERNATIONAL REALTY CORP.
                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                    For the Three Months Ended March 31, 1998
                    -----------------------------------------
                                   (Unaudited)
                                 (In thousands)

Cash flow provided by operations                                   $44
Cash flow from financing activities:                               ---
   Preferred stock dividend                                        (44)
                                                                   ---
   Net cash flow used in financing activities                      (44)
                                                                   ---
   Change in cash and cash equivalents                               0
Cash and cash equivalents, beginning of period                       0
                                                                   ---
Cash and cash equivalents, end of period                            $0
                                                                   ===






                             See accompanying notes.


<PAGE>



                       PHILIPS INTERNATIONAL REALTY CORP.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                      (In thousands, except share amounts)

1. Formation Transactions

         Philips International Realty Corp. (the "Company"), a Maryland
corporation, and Philips International Realty, L.P. (the "Operating
Partnership"), a Delaware limited partnership, were formed in July 1997 for the
purpose of combining certain real estate properties which were owned by various
partnerships and limited liability companies (the "Contributing Companies") in
which Mr. Philip Pilevsky owned an interest.

         On December 31, 1997, the partners and members of the Contributing
Companies transferred their shopping center assets or, in certain instances,
their partnership or membership interests in the entities which hold title to
such shopping center assets, to certain newly-formed entities (the "Property
Partnerships") as designated by the Operating Partnership in exchange for
limited partnership interests ("Units") therein. Simultaneously, the Company
contributed its fee title interest in another shopping center property plus
$533 in cash to the Operating Partnership in exchange for a non-managing
general partnership interest therein. Philips International Realty, LLC (the
"Interim Managing General Partner"), a Delaware limited liability company whose
sole member was Mr. Pilevsky, made pro rata contributions to the Operating
Partnership and to each of the Property Partnerships in exchange for managing
general partner/member interests therein. Additionally, the Company capitalized
various wholly-owned subsidiaries so as to enable such entities to similarly
obtain general partner or managing member interests in each of the Property
Partnerships. The resultant effect of the foregoing, together with certain
other events constituting the Formation Transactions, was that the ownership of
(A) the Operating Partnership was comprised (i).001% by a managing general
partner interest held by the Interim Managing General Partner (ii) 6.1% by a
non-managing general partner interest held by the Company, and (iii) 93.899% by
limited partner interests held by the Unit holders and (B) the Property
Partnerships were each comprised (i).001% by a managing general partner/member
interest held by the Interim Managing General Partner (ii).01% by a nonmanaging
general partner/member interest held by subsidiaries of the Company, and (iii)
99.989% by a limited partner or member interest held by the Operating
Partnership.

         Upon completion of the public stock offering discussed in Note 3, the
Interim Managing General Partner withdrew from the Operating Partnership and
each of the Property Partnerships and the Company (directly or through its
subsidiaries) assumed in full the rights and responsibilities associated with
the management of the business and affairs of the Operating Partnership and
each of the Property Partnerships as sole general partner/managing member.
Prior to this time, the Company was required to account for its interests in
the Operating Partnership and the Property Partnerships on the equity method.

         Reference should be made to the Company's Annual Report on Form 10-K
for the year ended December 31, 1998, for further information with regard to
the Formation Transactions.

2. Interim Financial Statements

         The accompanying Condensed Consolidated Financial Statements include
the accounts of the Company and its subsidiaries, all of which are
wholly-owned, and the Operating Partnership and the Property Partnerships
effective as of May 13, 1998. See Note 3. All significant intercompany accounts
and balances have been eliminated in consolidation. The information furnished
is unaudited and reflects all adjustments which are, in the opinion of
management, necessary to reflect a fair presentation of the results for the
interim periods presented, and all such adjustments are of a normal recurring
nature. These Condensed Consolidated Financial Statements should be read in
conjunction with the financial statements included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1998.

         The balance sheet at December 31, 1998, has been derived from the
audited financial statements at that date but does not include all of the
information and footnote disclosure required by generally accepted accounting
principles for complete financial statements.

3. Stock Split and Public Stock Offering

         On April 14, 1998 the Company authorized a 1.7051 for 1 split of its
Common Stock which was effected immediately prior to the consummation of the
stock offering referred to below. As a result, the number of outstanding shares
of Common Stock prior to the stock offering increased to 81,265 shares from
47,660 shares.

         On May 13, 1998, the Company completed a primary public stock offering
of 7,200,000 shares of Common
<PAGE>



Stock at $17.50 per share. The proceeds from this sale of Common Stock, net of
related transaction costs of approximately $13,000, totaling approximately
$113,000, were used primarily to (i) repay certain mortgage loans and other
indebtedness (including accrued expenses incurred in connection with the
Formation Transactions) of the Operating Partnership and the Property
Partnerships, and (ii) to redeem the Series A Convertible Redeemed Preferred
Stock outstanding. As a consequence of this use of proceeds, the ownership of
the Operating Partnership is now comprised of a 74.8% general partner interest
held by the Company and a 25.2% limited partner interest held by the Unit
holders. Accordingly, the Company has accounted for its interests in the
Operating Partnership and the Property Partnerships on a consolidated basis
effective as of the completion of the stock offering. A total 9,812,869 shares
of Common Stock (7,340,474) and Units (2,472,395) have been outstanding since
completion of the stock offering.

4. Income (Loss) per Common Share

         Basic net income (loss) per share excludes the dilutive effects of any
outstanding options. Diluted net income (loss) per share includes the dilutive
(but not any anti-dilutive) effect of outstanding options calculated under the
treasury stock method.

         Basic and diluted net income per common share in the accompanying
Condensed Consolidated Statements of Income is based upon weighted average
numbers of 7,340,474 and 81,265 shares of Common Stock outstanding for the
three months ended March 31, 1999, and 1998, respectively.

5. Investments in Operating Partnership and Property Partnerships

         Prior to completion of the public stock offering referred to in Note
3, the Company and its subsidiaries held a 6.1% non-managing general
partnership interest in the Operating Partnership (which held a 99.989% limited
partner or member interest in each of the Property Partnerships) and .01%
non-managing general partner/member interests in the Property Partnerships,
respectively. Accordingly, the Company accounted for its investments in the
Operating Partnership and the Property Partnerships on the equity method.

         Condensed operating information for the Property Partnerships
(comprising thirteen shopping center properties) for the three months ended
March 31, 1998, follows. Certain balances have been reclassified to conform
with current year presentations.

                                                           Property
                                                         Partnerships
                                                         ------------

Revenues from rental property ...........................    $  8,343
                                                             --------
Expenses:
         Operating expenses .............................       1,017
         Real estate taxes ..............................       1,195
         Management fees to affiliates ..................         247
         Interest expense ...............................       3,678
         Depreciation and amortization ..................       1,352
         General and administrative expenses ............          50
                                                             --------
                                                                7,539
                                                             --------
                           Income from operations .......    $    804
                                                             ========

6.  Stock Dividends

         On March 1, 1999, the Board of Directors declared a common stock
dividend of $.3775 per share, which amount was paid on April 15, 1999, to
common shareholders of record on March 31, 1999. The $.3775 rate of dividend,
if annualized, would equal $1.51 per share.

         During March 1998 the Board of Directors of the Company declared a
dividend on the Series A Convertible Redeemable Preferred Stock at the rate of
$22.50 per share. This dividend was paid on March 31, 1998. The Series A
Convertible Redeemable Preferred Stock was redeemed in May 1998 in conjunction
with the stock offering discussed in Note 3.

7.  Segment Information

         Management considers the Company's various operating, investing and
financing activities to comprise a single business segment and evaluates real
estate performance and allocates resources based on net income.


<PAGE>



                                     PART I

                             FINANCIAL INFORMATION
                                  (Continued)


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

         The following discussion should be read in conjunction with the
accompanying Condensed Consolidated Financial Statements and Notes thereto, and
the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1998. These unaudited financial statements include all adjustments which are,
in the opinion of management, necessary to reflect a fair presentation of the
results for the interim periods presented, and all such adjustments are of a
normal recurring nature.

         When used in this Quarterly Report on Form 10-Q, the words "may",
"will", "expect", "anticipate", "continue", "estimate", "project", "intend" and
similar expressions are intended to identify forward-looking statements
regarding events, conditions and financial trends that may affect the Company's
future plans of operations, business strategy, results of operations and
financial position. Such forward-looking statements are not guarantees of
future performance and are subject to risks and uncertainties. Actual results
may differ materially from those included within the forwardlooking statements
as a result of various factors.

Results of Operations

         Prior to completion of the public stock offering referred to in Note 3
to the accompanying Condensed Consolidated Financial Statements, the Company
and its subsidiaries held a 6.1% non-managing general partnership interest in
the Operating Partnership (which held a 99.989% limited partner or member
interest in each of the Property Partnerships) and .01% non-managing general
partner/member interests in the Property Partnerships, respectively.
Accordingly, the Company accounted for its investments in the Operating
Partnership and the Property Partnerships on the equity method from January 1
through May 12, 1998.

         The following discussion compares the results of property operations
of the Company for the three months ended March 31, 1999, with the results of
property operations of The Property Partnerships for the three months ended
March 31, 1998, as more fully described in Note 5 to the accompanying Condensed
Consolidated Financial Statements.

Comparison of Three Months Ended 3/31/99 to Three Months Ended 3/31/98

         Revenues from rental property increased $869,000 or 10.4% to
$9,212,000 for the quarter ended March 31, 1999, as compared with $8,343,000
for the quarter ended March 31, 1998. This net increase includes growth in base
rental revenues associated with higher rent levels achieved on new and renewal
leases and the acquisition of the Palm Beach, FL, and Munsey Park, NY,
properties.

         Property operating expenses increased $140,000 from $1,017,000 for the
quarter ended March 31, 1998, to $1,157,000 for the quarter ended March 31,
1999. This net increase reflects moderate increases in certain seasonal
operating expenses and increased expenses associated with the acquisitions of
the Palm Beach, FL, and Munsey Park, NY, properties. Property real estate taxes
increased by approximately $223,000 to $1,418,000 for the quarter ended March
31, 1999, as compared with $1,195,000 for the corresponding period in 1998,
reflecting the acquisition of the Palm Beach, FL, and Munsey Park, NY,
properties, and the effect of increased assessments associated with property
expansions and renovations, offset by management's continuing efforts to secure
property tax reductions.

         Management fees remained constant at 3% of gross revenues for the
quarters ended March 31, 1999, and 1998, as provided for in the Management
Agreement.

         Interest charges decreased $1,871,000 or 50.9% to $1,807,000 for the
quarter ended March 31, 1999, as compared with $3,678,000 for the quarter ended
March 31, 1998, reflecting the repayment of indebtedness with proceeds of the
Company's initial public offering as discussed in Note 3, partially offset by
interest costs on borrowings to fund the acquisition of the Palm Beach, FL and
Munsey Park, NY properties.

         Depreciation and amortization expenses increased $259,000 to
$1,611,000 for the quarter ended March 31, 1999, as compared with $1,352,000
for the quarter ended March 31, 1998. This increase reflects the depreciation
and


<PAGE>



amortization of capital expenditures associated with the renovation and
retenanting of properties in the portfolio and the acquisition of the Palm
Beach, FL, and Munsey Park, NY, properties.

Liquidity and Capital Resources

         The Property Partnerships historically relied on fixed and floating
rate mortgage financing to fund acquisitions and refinance maturing debt.
Working capital and funds required for distributions, debt service and capital
expenditures were generally provided through net cash flows from operations
and, in certain instances, capital contributions of partners and/or additional
borrowing. The ability to refinance debt prior to maturity and to fund
acquisitions was generally dependent upon interest rates, the general
availability of both mortgage debt and private equity in the marketplace and
the cash flow and value of the asset to be financed or refinanced.
Distributions were generally made based upon 100% of excess cash over
identified, near-term requirements.

         The Company believes that its recent public stock offering improved
its financial position, principally through enabling the Company to
substantially reduce the outstanding indebtedness on its shopping center
portfolio. In connection with this offering, the Company utilized approximately
$109.3 million of the net proceeds to repay all of its then outstanding
floating-rate debt and certain secured, fixed-rate obligations. The secured,
fixed-rate debt then remaining, totaling approximately $71.5 million, had a
weighted average interest rate and term to maturity of 7.6% and 5.2 years,
respectively. The significant reduction in the Company's overall debt served to
reduce annual mortgage interest expense as a percentage of total revenue and
the cash from operations required to fund debt service requirements.

         Since completion of its initial public stock offering, the Company has
financed the acquisition of approximately $91 million in real estate interests,
with $77 million drawn under the Company's line of credit and assumed property
indebtedness of approximately $14 million. Indebtedness outstanding at March
31, 1999, totaled $161.7 million, comprised of $ 84.7 million fixed rate
mortgage debt with a weighted average interest rate and remaining term to
maturity of 7.6% and 5 years, respectively, and $77 million in borrowings under
the Company's line of credit. As of March 31, 1999, based upon the closing
price for the Company's common shares in trading on the NYSE of $14.19 per
share, the Company's ratio of total debt to total debt and equity market
capitalization was 53.7%.

         The combined aggregate principal maturities of mortgages and notes
payable outstanding as of March 31, 1999 are as follows:
<TABLE>
<CAPTION>

                                     Fixed Rate Obligations               Variable Rate Obligations
                                     ----------------------               -------------------------
                                       Rate      Amount                     Rate          Amount
                                       ----      ------                     ----          ------
                                                 (000's)                                  (000's)
<S>                                   <C>        <C>                     <C>              <C>   
             4/1/99-12/31/99 .......  7.71%      $   771                   -----          $ ------
             2000 ..................  7.71%        1,100                   6.19%            77,000
             2001 ..................  6.32%        2,438                   -----            ------
             2002 ..................  7.50%       12,803                   -----            ------
             2003 ..................  7.40%       25,249                   -----            ------
             Thereafter ............  7.91%       42,353                   -----            ------
</TABLE>

         The Company considers the availability of funds under its revolving
credit facility described below and its access to other sources of debt and
equity capital sufficient to pursue its identified growth strategies. The
Company intends to make regular quarterly distributions to the holders of its
Common Stock. The distribution for the period ended March 31, 1999, was $0.3775
per share (which, if annualized, would equal $1.51 per share), or an annual
yield of 10.6% based on the March 31, 1999, closing price per share of $14.19.

         The Company expects to invest temporarily available cash in
short-term, investment-grade interest bearing securities, such as securities of
the United States government or its agencies, high-grade commercial paper and
bank deposits.

         The Company expects to meet its short-term liquidity requirements
generally through net cash provided by operations. The Company believes that
its net cash provided by operations will be sufficient to allow the Company to
make distributions necessary to enable the Company to continue to qualify as a
REIT. The Company also believes that the foregoing sources of liquidity will be
sufficient to fund its short-term liquidity needs for the foreseeable future.

         The Company expects to meet its long-term liquidity requirements, such
as property acquisition and development, scheduled debt maturities,
renovations, expansions and other non-recurring capital improvements through
long-term secured and unsecured indebtedness and the issuance of additional
equity or debt securities. The Company also expects to use funds available
under its credit facility to finance acquisition and development activities and
capital improvements on an interim basis.


<PAGE>



         Upon consummation of its public stock offering, the Company entered
into a $100 million senior revolving credit facility with a financial services
institution to finance acquisition, redevelopment and development activities
and for general corporate purposes. Borrowings under the credit facility bear
interest at rates ranging from 1.25% to 1.75% over the 30-day London Interbank
Offered Rate ("LIBOR") based on the Company's total indebtedness outstanding
relative to total assets, as defined. The availability of funds under the
credit facility will be subject to the Company's compliance with a number of
customary financial and other covenants. Borrowings under the credit facility,
totaling $77,000 at March 31, 1999, are secured by certain shopping center
properties with recourse to the Company. The credit facility matures in May
2000, subject to extension upon mutual agreement of the parties.

Funds from Operations

         The White Paper on Funds from Operations approved by the Board of
Governors of NAREIT in March 1995 defines Funds from Operations as net income
(loss) (computed in accordance with GAAP), excluding gains (or losses) from
debt restructuring and sales of properties, plus real estate related
depreciation and amortization and after adjustments for unconsolidated
partnerships and joint ventures. The Company believes that Funds from
Operations is helpful to investors as a measure of the performance of an equity
REIT because, along with cash flow from operating activities, financing
activities and investing activities, it provides investors with an indication
of the ability of the Company to incur and service debt, to make capital
expenditures and to fund other cash requirements. The Company computes Funds
from Operations in accordance with standards established by NAREIT which may
not be comparable to Funds from Operations reported by other REITs that do not
define the term in accordance with the current NAREIT definition or that
interpret the current NAREIT definition differently than the Company. Funds
from Operations does not represent cash generated from operating activities in
accordance with GAAP and should not be considered as an alternative to net
income (determined in accordance with GAAP) as an indication of the Company's
financial performance or to cash flow from operating activities (determined in
accordance with GAAP) as a measure of the Company's liquidity, nor is it
indicative of funds available to fund the Company's cash requirements,
including its ability to make cash distributions.

         Funds from Operations (FFO) increased 15.8% to $4.29 million, or $.44
per share for the three months ended March 31, 1999, as compared to $3.73
million, or $.38 per share, on a pro forma basis for the three months ended
March 31, 1998. This first quarter 1999 performance of $.44 per share also
represents a 7.3% increase over the fourth quarter 1998 FFO of $.41 per share.
The pro forma FFO figure for the first quarter of 1998 gives retroactive effect
as of January 1, 1998 to the Company's IPO completed May 13, 1998, and reflects
adjustments consistent with those noted in the Company's IPO prospectus.

                      Calculation of Funds From Operations
                                 (In thousands)
                                                       Three Months Ended
                                                         March 31, 1999
                                                   ----------------------------
                                                   Amount         Per Share (2)
                                                   ------         -------------


Net income applicable to common shares             $1,821              $  .19

Minority interests in Operating Partnership           613                 .06

Depreciation and amortization                       1,611                 .17

Adjustment for unconsolidated joint ventures          244 (1)             .02
                                                   ------              -------

Funds from Operations                              $4,289              $  .44
                                                   ======              ======

Distributions                                      $3,704              $.3775
                                                   ======              ======

Payout ratio                                                             85.8%


(1) Company share of depreciation and amortization charges in unconsolidated
    real estate joint ventures. 
(2) Based upon a total 9,812,869 shares of Common Stock (7,340,474) and Units 
    (2,472,395) outstanding.






<PAGE>



Inflation

         Substantially all of the Company's leases contain provisions designed
to mitigate the adverse impact of inflation. Such provisions include clauses
enabling the Company to receive percentage rentals based on tenants' gross
sales, which generally increase as prices rise, and/or escalation clauses,
which generally increase rental rates during the terms of the leases. Such
escalation clauses are often related to increases in the consumer price index
or similar inflation indices. In addition, many of the Company's leases are for
terms of less than 10 years, which permits the Company to seek to increase
rents on re-rental at market rates. Most of the Company's leases require the
tenant to pay its share of operating expenses, including common area
maintenance, real estate taxes and insurance, thereby reducing the Company's
exposure to increase in costs and operating expenses resulting from inflation.

Computer Systems and Year 2000 Issues

         Potential Disruption in Operations Due to Year 2000 Problems. The Year
2000 issue concerns the potential exposures related to the automated generation
of business and financial misinformation resulting from the application of
computer programs which have been written using two digits, rather than four,
to define the applicable year of business transactions. The Company recognizes
the importance of minimizing the frequency and significance of any disruptions
in its business and financial affairs that may occur as a result of Year 2000,
and has adopted a comprehensive compliance program designed to achieve this
objective.

         The Company's program encompasses the following:

         o        the assessment and modification, as necessary, of its 
                  internal information technology systems that may be 
                  affected by the Year 2000 problem;

         o        the identification and interrogation of third parties,
                  including tenants, vendors, contractors and joint venture
                  partners, to enable the Company to evaluate and appropriately
                  respond to the state of preparedness by such parties to
                  address Year 2000 problems, and;

         o        the assessment of property operating systems to avert 
                  operational malfunctions associated with Year 2000.

         Internal Information Technology. We have completed a review of key
computer hardware and software and other equipment, and have modified, upgraded
or replaced all identified hardware and equipment in our offices that we
believe may be affected by problems associated with Year 2000. Such hardware
includes desktop and laptop computers, servers, printers, telecopier machines
and telephones. We, as part of our routine modernization efforts, have also
completed necessary upgrades to identified secondary software systems, such as
work processing, spreadsheet applications, telephone voicemail systems and
computer calendar programs. Consequently, we believe we have adequately
addressed Year 2000 concerns as they related to our internal information
technology and systems and we anticipate minimal, if any, disruption in the
future in this regard.

         Third Party Preparedness. While we believe the foregoing initiatives
will minimize Year 2000 problems as pertaining to our internal operations, we
may still be adversely impacted by Year 2000 issues as a result of problems
relating to the state of preparedness of third parties outside our control,
such as the inability of tenants to pay rent when due. In order to assess such
risk, we sent questionnaires to each of our tenants to determine their Year
2000 compliance status. The responses to these questionnaires continue to be
received, reviewed and evaluated. Based on the responses received, we do not
anticipate any material adverse impact on the orderly payment of monthly rent.
Therefore, while there can be no assurance that Year 2000 problems of tenants
will not have a material adverse effect on our operating results or financial
condition, the information available to us indicates such an occurrence is not
likely.

         The Company's principal property management systems are licensed from
and maintained by a third party software development company, which has
modified its real estate products to address the Year 2000 issue.

         Property Compliance. Our property managers are completing a building
by building survey of all of our properties to determine whether building
support systems such as heat, power, light, security and elevators will be
affected by the advent of the Year 2000. Most of such systems either are
already Year 2000 compliant or contain no computerized parts. However, our
property managers plan to timely modify, upgrade or replace non-compliant
building systems as may be required.




<PAGE>



         We have communicated with vendors of building systems or other
services to our building regarding their Year 2000 compliance. We intend to
rely on representations from these vendors regarding the Year 2000 compliance
of their product or service. We are also relying on assurances requested from
utility providers of their Year 2000 compliance and their continued ability to
provide uninterrupted service to our buildings.

         Compliance Costs. The Company's expenditures on its Year 2000 program
initiatives to date have been nominal, and the Company does not anticipate any
significant future costs with becoming Year 2000 compliant.

         Risks. The failure to correct material Year 2000 problems could result
in an interruption in, or a failure of, certain normal business activities or
operations. Such failures could materially and adversely affect the Company's
results of operations, liquidity and financial condition. Due to the general
uncertainty inherent in the Year 2000 problem, resulting in part from the
uncertainty of the Year 2000 readiness of third parties, the Company is unable
to determine at this time whether the consequences of failing to adequately
address all Year 2000 concerns will have a material impact on the Company's
results of operations, liquidity or financial condition. However, the Company
expects that its Year 2000 program will significantly reduce its level of
uncertainty about the Year 2000 problem. The Company anticipates that, with
appropriate modification of its information and operating systems and
completion of the program as scheduled, the possibility of significant
interruptions of normal operations should be reduced. The Company is not in a
position to assess or evaluate the impact of a worst case scenario.

         Certain statements in this Year 2000 issue discussion regarding the
Company's efforts to become Year 2000 compliant, the timing thereof and costs
associated therewith are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Although the Company believes
the statements and projections are based upon reasonable assumptions, actual
results may differ from those that the Company has projected.

Item 3.  Quantitative and Qualitative Disclosure of Market Risk

         See Management's Discussion and Analysis of Financial Condition and
Results of Operations - Liquidity and Capital Resources.



<PAGE>



                                    PART II

                               OTHER INFORMATION


Item 1. Legal Proceedings

         The Company is not presently involved in any litigation, nor to its
knowledge is any litigation threatened against the Company or its subsidiaries,
that in management's opinion, would result in any material adverse effect on
the Company's ownership, management or operation of its properties, or which is
not covered by the Company's liability insurance.

Item 2. Changes in Securities and Use of Proceeds

         During March, 1999, the Company adopted a Shareholder Rights Plan.
Under the Shareholder Rights Plan, rights to purchase shares of newly issued
Philips International Realty Corp. Series A Junior Participating Preferred
Stock are distributable to shareholders as a non-cash dividend at the rate of
one right for each share of Common Stock held as of the close of business on
March 31, 1999. Each of the rights, which expire on March 31, 2009, will
entitle shareholders to buy one one-thousandth of a share of Preferred Stock at
an exercise price of $55.00 if any person or group becomes the beneficial owner
of 15% or more of the Company's Common Stock. Each Preferred Stock interest,
excluding Preferred Stock interests owned by such person or group, will entitle
its holder to purchase shares of the Company's Common Stock having a value of
twice the right's then current exercise price.

Item 3. Defaults upon Senior Securities

         None

Item 4. Submission of Matters to a Vote of Security Holders

         None

Item 5. Other Information

         None.

Item 6. Exhibits and Reports on Form 8-K

         (a) Exhibits

             3.1  - Amended and Restated Articles of Incorporation of the
                    Company (filed as Exhibit 3.1 to the Company's Current
                    Report on Form 8-K dated December 31, 1997, and
                    incorporated herein by reference)
             3.2  - Second Amended and Restated By-Laws of the Company(filed as
                    Exhibit 3.3 to the Company's Registration Statement on Form
                    S-11, Registration No. 333-47975, and incorporated herein by
                    reference)
             4.1  - Shareholder Rights Agreement, dated as of March 31, 1999,
                    between the Company and BankBoston, N.A. (filed as Exhibit
                    4.1 to the Company's Annual Report on Form 10-K for the year
                    ended December 31, 1998, and incorporated herein by
                    reference)
             4.2  - Articles Supplementary for Series A Junior Participating 
                    Preferred Stock  (filed as Exhibit 4.2 to the Company's 
                    Annual Report on Form 10-K for the year ended December 
                    31, 1998, and incorporated herein by reference)
           10.1   - Amended and Restated Agreement of Limited Partnership of
                    the Operating Partnership (filed as Exhibit 10.1 to the
                    Company's Registration Statement on Form S-11, Registration
                    No. 333- 47975, and incorporated herein by reference)
           10.2   - First Amendment to the Amended and Restated Agreement of
                    Limited Partnership of the Operating Partnership (filed as
                    Exhibit 10.2 to the Company's Annual Report on Form 10-K for
                    the year ended December 31, 1998, and incorporated herein by
                    reference)



<PAGE>




           10.3   - Contribution and Exchange Agreement, dated August 11, 1997,
                    among National Properties Investment Trust, the Board of
                    Trustees, the Company, the Operating Partnership and
                    certain contributing partnerships or limited liability
                    companies associated with a private real estate firm
                    controlled by Philip Pilevsky and certain partners and
                    members thereof (filed as Exhibit 10.6 to the Company's
                    Registration Statement on Form S-4, Registration No.
                    333-41431, and incorporated herein by reference)

           10.4   - Amended and Restated Management Agreement, dated as of
                    March 30, 1998, among the Company, the Operating Partnership
                    and Philips International Management Corp. (Filed as 
                    Exhibit 10-8 to the Company's Form 10-K for the year ended 
                    December 31, 1997, and incorporated herein by reference)

            10.5  - Amended and Restated Non-Competition Agreement, dated as of
                    March 30, 1998, among the Company, the Operating
                    Partnership, Philip Pilevsky and Sheila Levine (filed as
                    Exhibit 10.9 to the Company's Form 10-K for the year ended
                    December 31, 1997, and incorporated herein by reference)
            10.6  - Amendment No. 1 to Contribution and Exchange Agreement,
                    dated as of December 29, 1997 (filed as Exhibit 10.13 to
                    the Company's Form 8-K dated December 31, 1997, and
                    incorporated herein by reference)
            10.7  - Credit Agreement among the Operating Partnership and
                    Prudential Securities Credit Corporation (filed as Exhibit
                    10.18 to the Company's Report on Form 10-Q for the period
                    ended March 31, 1998 and incorporated herein by reference)
           27.1*  - Financial Data Schedule

------------------
 * filed herewith

(b) Reports on Form 8-K

    None






<PAGE>



                                   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.



                            PHILIPS INTERNATIONAL REALTY CORP.



May 14, 1999                   /s/ Philip Pilevsky
------------------          --------------------------------------------------
(Date)                      Philip Pilevsky
                            Chairman of the Board and Chief Executive Officer



May 14, 1999                   /s/ Brian J. Gallagher
------------------          --------------------------------------------------
(Date)                      Brian J. Gallagher
                            Chief Financial Officer










<PAGE>



EXHIBIT INDEX

<TABLE>
<CAPTION>

 Exhibit
 Number           Description
 ------           -----------

<S>               <C> 
     3.1          mended and Restated Articles of Incorporation of the ompany (filed as Exhibit 3.1 to the Company's
                  Current eport on Form 8-K dated December 31, 1997, and ncorporated herein by reference)
     3.2          Second Amended and Restated By-Laws of the Company(filed as Exhibit 3.3 to the Company's
                  Registration Statement on Form S-11, Registration No. 333-47975, and incorporated herein by
                  reference)
     4.1          Shareholder Rights Agreement, dated as of March 31, 1999, between the Company and
                  BankBoston, N.A. (filed as Exhibit 4.1 to the Company's Annual Report on Form 10-K for the year
                  ended December 31, 1998, and incorporated herein by reference)
     4.2          Articles Supplementary for Series A Junior Participating Preferred Stock  (filed as Exhibit 4.2 to the
                  Company's Annual Report on Form 10-K for the year ended December 31, 1998, and incorporated
                  herein by reference)
    10.1          Amended and Restated Agreement of Limited Partnership of the Operating Partnership (filed as
                  Exhibit 10.1 to the Company's Registration Statement on Form S-11, Registration No. 333- 47975,
                  and incorporated herein by reference)
    10.2          First Amendment to the Amended and Restated Agreement of Limited Partnership of the
                  Operating Partnership  (filed as Exhibit 10.2 to the Company's Annual Report on Form 10-K for the
                  year ended December 31, 1998, and incorporated herein by reference)
    10.3          Contribution and Exchange Agreement, dated August 11, 1997, among National Properties Investment
                  Trust, the Board of Trustees, the Company, the Operating Partnership and certain contributing
                  partnerships or limited liability companies associated with a private real estate firm controlled by
                  Philip Pilevsky and certain partners and members thereof (filed as Exhibit 10.6 to the Company's
                  Registration Statement on Form S-4, Registration No. 333-41431, and incorporated herein by reference)
    10.4          Amended and Restated Management Agreement, dated as of March 30, 1998, among the Company, the
                  Operating Partnership and Philips International Management Corp. (Filed as Exhibit 10-8 to the
                  Company's Form 10-K for the year ended December 31, 1997, and incorporated herein by reference)
    10.5          Amended and Restated Non-Competition Agreement, dated as of March 30, 1998, among the
                  Company, the Operating Partnership, Philip Pilevsky and Sheila Levine (filed as Exhibit 10.9 to the
                  Company's Form 10-K for the year ended December 31, 1997, and incorporated herein by
                  reference)
    10.6          Amendment No. 1 to Contribution and Exchange Agreement, dated as of December 29, 1997 (filed
                  as Exhibit 10.13 to the Company's Form 8-K dated December 31, 1997, and incorporated herein
                  by reference)
    10.7          Credit Agreement among the Operating Partnership and Prudential Securities Credit Corporation
                  (filed as Exhibit 10.18 to the Company's Report on Form 10-Q for the period ended March 31,
                  1998 and incorporated herein by reference)
   27.1*          Financial Data Schedule
</TABLE>

                  -------------------
                  * filed herewith