SECURITIES AND EXCHANGE
COMMISSION


WASHINGTON,
D.C. 20549





____________________________________________________





FORM
10-Q


(Mark
One)





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





For the
quarterly period ended September 30, 2008.





or





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





For the
transition period from _______________ to _______________.





Commission
File No. 000-50675





Excellency
Investment Realty Trust, Inc.


(Exact
name of registrant as specified in its charter)








Maryland
              20-8635424(State
      or other jurisdiction of incorporation or organization)
              (I.R.S.
      Employer Identification No.)245
      Park Avenue, 39th
      Floor
                New
      York, New York
              10167(Address
      of principal executive offices)
              (Zip
      Code)





Registrant’s
telephone number, including area code: (212) 792-4040





Indicate
by check mark if 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 such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for the
past 90 days.  Yes x No  ̈





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




Large
      accelerated filer  ̈
              Accelerated
      filer  ̈Non-accelerated
      filer  ̈ (Do
      not check if a smaller reporting company)
              Smaller
      reporting company x




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





Indicate
the number of shares outstanding of each of the registrant’s classes of common
stock as of November 14, 2008: 43,761,537 shares of common stock, with a par
value of $0.01 per share.













TABLE OF CONTENTS





PART
      I – FINANCIAL INFORMATIONItem 1.
                                              
                                              Financial
      Statements.
                                              2Item 2.
                                              
                                              Management’s Discussion and
      Analysis of Financial Condition and Results of
      Operations.
                                              16Item 3.
                                              
                                              Quantitative and Qualitative
      Disclosures About Market Risk.
                                              29Item 4.
                                              
                                              Controls and
      Procedures.
                                              29Item 4(T).
                                              
                                              Controls and
      Procedures.
                                              29PART
      II – OTHER INFORMATIONItem 1.
                                              
                                              Legal
      Proceedings.
                                              30Item 1A.
                                              
                                              Risk
      Factors.
                                              30Item 2.
                                              
                                              Unregistered Sales of Equity
      Securities and Use of Proceeds.
                                              30Item 3.
                                              
                                              Defaults Upon Senior
      Securities.
                                              30Item 4.
                                              
                                              Submission of Matters to a Vote
      of Security Holders.
                                              30Item 5.
                                              
                                              Other
      Information.
                                              30Item 6.
                                              
                                              Exhibits.
                                              31





i
 Table of Contents





PART
I


Financial
Information





Item
      1.
            Financial
      Statements.





As used
herein, the term “Excellency” refers to Excellency Investment Realty Trust,
Inc., a Maryland corporation, and its subsidiaries and predecessors unless
otherwise indicated.  Unaudited, interim, condensed, consolidated
financial statements including a balance sheet for Excellency as of the period
September 30, 2008, and statements of operations, and statements of cash flows,
for interim periods up to the date of such balance sheet and the comparable
period of the preceding year are set forth below in this report.





2
 Table of Contents




EXCELLENCY
INVESTMENT REALTY TRUST, INC. AND SUBSIDIARIES


(FORMERLY
KNOWN AS GIFT LIQUIDATORS, INC.)


CONSOLIDATED
BALANCE SHEETS


As
of  September 30, 2008 and December 31, 2007


(Unaudited)





September
      30,
                  
                  
                  December
      31,ASSETS
                  
                  2008
                  
                  
                  2007Real
      EstateLand
                  
                  $
                  811,402
                  
                  
                  $
                  811,402Building
      and improvements
                  
                  
                  5,227,119
                  
                  
                  
                  5,227,1196,038,521
                  
                  
                  
                  6,038,521Less:
      accumulated depreciation
                  
                  
                  1,422,402
                  
                  
                  
                  1,318,1674,616,119
                  
                  
                  
                  4,720,354Cash
      and cash equivalents
                  
                  
                  62,511
                  
                  
                  
                  241,551Accounts
      receivable-tenants, net of allowance for doubtful accounts of $12,492 at
      9/30/08 and $81,723 at 12/31/07
                  
                  
                  40,179
                  
                  
                  
                  39,317Deferred
      financing costs, net of accumulated amortization of of $14,312.at 9/30/08
      and $28,624 at 12/31/07
                  
                  
                  142,578
                  
                  
                  
                  148,897Escrow
      account
                  
                  
                  37,974
                  
                  
                  
                  84,109Other
      assets
                  
                  
                  -
                  
                  
                  
                  11,136TOTAL
      ASSETS
                  
                  $
                  4,899,361
                  
                  
                  $
                  5,245,364LIABILITIES
      AND STOCKHOLDERS' DEFICITMortgage
      notes payable
                  
                  $
                  7,921,223
                  
                  
                  $
                  8,011,007Promissory
      notes payable-related party
                  
                  
                  2,322,666
                  
                  
                  
                  2,292,871Security
      deposits
                  
                  
                  113,237
                  
                  
                  
                  135,151Line
      of credit
                  
                  
                  9,718
                  
                  
                  
                  -Accounts
      payable and accrued expenses
                  
                  
                  274,359
                  
                  
                  
                  356,249Contingent
      Liability
                  
                  
                  4,071,921
                  
                  
                  
                  4,071,921TOTAL
      LIABILITIES
                  
                  
                  14,713,124
                  
                  
                  
                  14,867,199COMMITMENTS
      AND CONTINGENCIESSTOCKHOLDERS'
      DEFICIT:Preferred
      stock, $0.001 par value, 1,000,000 shares authorized;Series
      A Convertible Preferred Stock, par value $0.01, 10,000 shares authorized,
      10,000 issued and outstanding. Aggregate liquidation preference of $9,100
      ($0.91 per share)
                  
                  
                  100
                  
                  
                  
                  100Series
      B Preferred Stock, par value $0.01, 20,000 shares authorized, 0 shares
      issued and outstanding -
                  
                  
                  -
                  
                  
                  
                  -Common
      stock, par value $0.01, 200,000,000 shares authorized, 44,061,537 issued
      and 43,761,537 outstanding
                  
                  
                  437,615
                  
                  
                  
                  437,615Treasury
      stock, at cost- 2,469 shares
                  
                  
                  (34,168
                  )
                  
                  
                  (34,168
                  )Additional
      paid-in capital
                  
                  
                  2,073,801
                  
                  
                  
                  2,063,821Accumulated
      deficit
                  
                  
                  (12,291,111
                  )
                  
                  
                  (12,089,203
                  )TOTAL
      STOCKHOLDERS’ DEFICIT
                  
                  
                  (9,813,763
                  )
                  
                  
                  (9,621,835
                  )TOTAL
      LIABILITIES AND STOCKHOLDERS’ DEFICIT
                  
                  $
                  4,899,361
                  
                  
                  $
                  5,245,364







See
accompanying notes to consolidated financial statements.





3
 Table of Contents





EXCELLENCY
INVESTMENT REALTY TRUST, INC. AND SUBSIDIARIES


(FORMERLY
KNOWN AS GIFT LIQUIDATORS, INC.)


STATEMENTS
OF OPERATIONS


FOR THE
PERIODS ENDED SEPTEMBER  30, 2008 AND 2007


(unaudited)





For
      the Three Months Ended September 30, 2008
                                
                                
                                For
      the Three Months Ended September 30, 2007
                                
                                
                                Nine
      Months Ended September 30, 2008
                                
                                
                                Nine
      Months Ended September 30, 2007Rental
      revenue
                                
                                $
                                482,701
                                
                                
                                $
                                397,195
                                
                                
                                $
                                1,406,212
                                
                                
                                $
                                1,182,795Operating
      expenses:Property
      operating costs
                                
                                
                                296,725
                                
                                
                                
                                242,097
                                
                                
                                
                                792,223
                                
                                
                                
                                760,964General
      and administrative
                                
                                
                                78,383
                                
                                
                                
                                145,311
                                
                                
                                
                                250,615
                                
                                
                                
                                583,279Depreciation
      and amortization
                                
                                
                                33,908
                                
                                
                                
                                38,323
                                
                                
                                
                                110,554
                                
                                
                                
                                114,969-
                                
                                
                                
                                -Total
      operating expenses
                                
                                
                                409,016
                                
                                
                                
                                425,731
                                
                                
                                
                                1,153,392
                                
                                
                                
                                1,459,212Operating
      income
                                
                                
                                73,685
                                
                                
                                
                                (28,536
                                )
                                
                                
                                252,820
                                
                                
                                
                                (276,417
                                )Non-operating
      expenses and income:Interest
      expense
                                
                                
                                (152,415
                                )
                                
                                
                                (158,459
                                )
                                
                                
                                (455,267
                                )
                                
                                
                                (476,575
                                )Other
      income
                                
                                
                                94
                                
                                
                                
                                1,018
                                
                                
                                
                                538
                                
                                
                                
                                23,718Realized
      gain (loss) from sales of trading securities
                                
                                
                                -
                                
                                
                                
                                2,962
                                
                                
                                
                                -
                                
                                
                                
                                (165,786
                                )-
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -(Loss)gain
      on derivative instrument
                                
                                
                                -
                                
                                
                                
                                (540,000
                                )
                                
                                
                                -
                                
                                
                                
                                (720,000
                                )Total
      non-operating expenses
                                
                                
                                (152,321
                                )
                                
                                
                                (694,479
                                )
                                
                                
                                (454,729
                                )
                                
                                
                                (1,338,643
                                )Net
      Income (loss)
                                
                                
                                (78,636
                                )
                                
                                
                                (723,015
                                )
                                
                                
                                (201,909
                                )
                                
                                
                                (1,615,060
                                )Loss
      per share — basic and diluted
                                
                                
                                (0.00
                                )
                                
                                
                                (0.01
                                )
                                
                                
                                (0.00
                                )
                                
                                
                                (0.03
                                )Weighted
      average common shares outstanding basic and diluted
                                
                                
                                43,761,537
                                
                                
                                
                                73,761,537
                                
                                
                                
                                43,761,537
                                
                                
                                
                                57,903,314







See
accompanying notes to consolidated financial statements.





4
 Table of Contents





EXCELLENCY
INVESTMENT REALTY TRUST, INC. AND SUBSIDIARIES
 (FORMERLY
KNOWN AS GIFT LIQUIDATORS, INC.)
 STATEMENT
OF CHANGES IN STOCKHOLDERS' DEFICIT
 (unaudited)
 
 Preferred Stock-Series
      A Shares
                                  
                                  
                                  Amount
                                  
                                  
                                  Preferred Stock-Series
      C Shares
                                  
                                  
                                  Amount
                                  
                                  
                                  Common
      Stock Shares
                                  
                                  
                                  Amount
                                  
                                  
                                  Additional
      Paid-in Capital
                                  
                                  
                                  Accumulated
      Deficit
                                  
                                  
                                  Treasury
      Stock Shares at Cost
                                  
                                  
                                  TotalBalance
      at  January 1, 2004
                                  
                                  
                                  -
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  
                                  500
                                  
                                  
                                  $
                                  1,000
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  1,631,262
                                  
                                  
                                  
                                  
                                  
                                  $
                                  1,632,262-
                                  
                                  
                                  
                                  
                                  
                                  
                                  --
                                  
                                  
                                  
                                  
                                  
                                  
                                  -Net
      Income (loss)
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (502,660
                                  )
                                  
                                  
                                  
                                  
                                  
                                  (502,660
                                  )Balance
      at  January 1, 2005
                                  
                                  
                                  -
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  
                                  500
                                  
                                  
                                  $
                                  1,000
                                  
                                  
                                  
                                  -
                                  
                                  
                                  $
                                  1,128,602
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  
                                  1,129,602-Recapitalization
                                  
                                  
                                  11,000
                                  
                                  
                                  
                                  110
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  118,037
                                  
                                  
                                  
                                  185
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (5,203,100
                                  )
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (5,202,805
                                  )-
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  -Net
      loss
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  (1,660,639
                                  )
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (1,660,639
                                  )Balance
      ar December 31, 2005
                                  
                                  
                                  11,000
                                  
                                  
                                  
                                  110
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  118,537
                                  
                                  
                                  
                                  1,185
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (5,735,137
                                  )
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (5,733,842
                                  )--
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Preferred
      stock issued
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  43,500
                                  
                                  
                                  
                                  720,000
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  720,000Conversion
      of preferred stock
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  (43,500
                                  )
                                  
                                  
                                  (720,000
                                  )
                                  
                                  
                                  43,500,000
                                  
                                  
                                  
                                  435,000
                                  
                                  
                                  
                                  285,000
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Purchase
      of treasury stock
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (61,420
                                  )
                                  
                                  
                                  (61,420
                                  )Proceeds
      from sale of treasury stock
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  16,359
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  27,252
                                  
                                  
                                  
                                  43,611Contributed
      capital
                                  
                                  
                                  
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  1,534,000
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  1,534,000Net
      loss
                                  
                                  
                                  
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (2,395,036
                                  )
                                  
                                  
                                  
                                  
                                  
                                  
                                  (2,395,036
                                  )Balance
      at December 31, 2006
                                  
                                  
                                  11,000
                                  
                                  
                                  $
                                  110
                                  
                                  
                                  
                                  -
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  
                                  43,618,537
                                  
                                  
                                  $
                                  436,185
                                  
                                  
                                  $
                                  1,835,359
                                  
                                  
                                  $
                                  (8,130,173
                                  )
                                  
                                  $
                                  (34,168
                                  )
                                  
                                  $
                                  (5,892,687
                                  )Balance
      at January 1, 2006
                                  
                                  
                                  11,000
                                  
                                  
                                  $
                                  110
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  43,618,537
                                  
                                  
                                  $
                                  436,185
                                  
                                  
                                  $
                                  1,835,359
                                  
                                  
                                  $
                                  (8,130,173
                                  )
                                  
                                  $
                                  (34,168
                                  )
                                  
                                  $
                                  (5,892,687
                                  )FIN
      46 Consolidation
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  229,882
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  229,882Conversion
      of preferred stock
                                  
                                  
                                  (1,000
                                  )
                                  
                                  
                                  (10
                                  )
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  143,000
                                  
                                  
                                  
                                  1,430
                                  
                                  
                                  
                                  (1,420
                                  )
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Issuance
      of common stock
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  30,000,000
                                  
                                  
                                  
                                  300,000
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  (300,000
                                  )Common
      stock rescinded
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  (30,000,000
                                  )
                                  
                                  
                                  (300,000
                                  )
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  300,000Net
      loss
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (3,959,029
                                  )
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (3,959,029
                                  )-Balance
      at December 31, 2007
                                  
                                  
                                  10,000
                                  
                                  
                                  $
                                  100
                                  
                                  
                                  
                                  -
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  43,761,537
                                  
                                  
                                  $
                                  437,615
                                  
                                  
                                  $
                                  2,063,821
                                  
                                  
                                  $
                                  (12,089,202
                                  )
                                  
                                  $
                                  (34,168
                                  )
                                  
                                  $
                                  (9,621,834
                                  )Balance
      at January 1, 2008
                                  
                                  
                                  10,000
                                  
                                  
                                  $
                                  100
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  43,761,537
                                  
                                  
                                  $
                                  437,615
                                  
                                  
                                  $
                                  2,063,821
                                  
                                  
                                  $
                                  (12,089,202
                                  )
                                  
                                  $
                                  (34,168
                                  )
                                  
                                  $
                                  (9,621,834
                                  )Compensation
      Expense
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  4,500
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  4,500Capital
      Contributed
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  5,480
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  5,480Net
      (loss)  income
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (201,909
                                  )
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (201,909
                                  )-Balance
      at September 30, 2008
                                  
                                  $
                                  10,000
                                  
                                  
                                  $
                                  100
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  43,761,537
                                  
                                  
                                  $
                                  437,615
                                  
                                  
                                  $
                                  2,073,801
                                  
                                  
                                  $
                                  (12,291,111
                                  )
                                  
                                  $
                                  (34,168
                                  )
                                  
                                  $
                                  (9,813,763
                                  )




5
 Table of Contents





EXCELLENCY
INVESTMENT REALTY TRUST, INC. AND SUBSIDIARIES


(FORMERLY
KNOWN AS GIFT LIQUIDATORS, INC.)


STATEMENTS
OF CASH FLOWS


FOR THE
NINE MONTHS ENDED SEPTEMBER  30, 2008 AND 2007


(Unaudited)




2008
                        
                        
                        2007CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      (loss)
                        
                        $
                        (201,909
                        )
                        
                        $
                        (1,615,060
                        )Adjustments
      to reconcile net loss to net cash (used in) operating
      activities:Compensation
      Expense
                        
                        
                        4,500
                        
                        
                        
                        -Loss
      on sale of trading securities
                        
                        
                        -
                        
                        
                        
                        165,786Loss
      on derivative instrument
                        
                        
                        -
                        
                        
                        
                        720,000Depreciation
      and amortization
                        
                        
                        110,554
                        
                        
                        
                        125,703Changes
      in Operating Assets and Liabilities:Accounts
      receivable-tenants
                        
                        
                        (862
                        )
                        
                        
                        (30,527
                        )Escrow
                        
                        
                        46,134
                        
                        
                        
                        50,274Other
      assets
                        
                        
                        11,137
                        
                        
                        
                        36,573Security
      deposits
                        
                        
                        (21,914
                        )
                        
                        
                        26,173Accounts
      payable and accrued expenses
                        
                        
                        (81,890
                        )
                        
                        
                        209,182NET
      CASH USED IN OPERATING ACTIVITIES
                        
                        
                        (134,250
                        )
                        
                        
                        (311,896
                        )CASH
      FLOWS FROM INVESTING ACTIVITIESPurchase
      of trading securities
                        
                        
                        -
                        
                        
                        
                        (114,172
                        )NET
      CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
                        
                        
                        -
                        
                        
                        
                        (114,172
                        )CASH
      FLOWS FROM FINANCING ACTIVITIESBorrowings
      on related parties notes
                        
                        
                        180,929
                        
                        
                        
                        24,500Principal
      payments on related parties notes
                        
                        
                        (151,140
                        )
                        
                        
                        (354,749
                        )Contributions
      from shareholders
                        
                        
                        5,480
                        
                        
                        
                        -Proceeds
      from line of credit
                        
                        
                        9,718
                        
                        
                        
                        -Repayment
      of mortgage notes payable
                        
                        
                        (89,777
                        )
                        
                        
                        (84,884
                        )NET
      CASH (USED IN) FINANCING ACTIVITIES
                        
                        
                        (44,790
                        )
                        
                        
                        (415,133
                        )DECREASE
      IN CASH
                        
                        
                        (179,040
                        )
                        
                        
                        (841,201
                        )CASH-
      BEGINNING OF PERIOD
                        
                        
                        241,551
                        
                        
                        
                        1,070,493CASH-END
      OF PERIOD
                        
                        $
                        62,511
                        
                        
                        $
                        229,292Cash
      paid during the period during the period for interest
                        
                        $
                        455,267
                        
                        
                        $
                        476,575Cash
      paid during the period during the period for taxes
                        
                        
                        -
                        
                        
                        
                        -NON-CASH
      TRANSACTIONSConversion
      of preferred stock into common stock
                        
                        
                        -
                        
                        
                        
                        1,460







See
accompanying notes to consolidated financial statements.





6
 Table of Contents





EXCELLENCY
INVESTMENT REALTY TRUST, INC. AND SUBSIDIARIES


(FORMERLY
KNOWN AS GIFT LIQUIDATORS, INC.)





NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007





NOTE
1 - NATURE OF OPERATIONS, ORGANIZATION AND FINANCIAL STATEMENT
PRESENTATION


Unaudited Consolidated
Financial Statements





The
September, 2008 consolidated financial statements presented herein are
unaudited, and in the opinion of management, include all adjustments (consisting
only of normal recurring accruals) necessary for a fair presentation of
financial position, results of operations and cash flows. Such financial
statements do not include all of the information and footnote disclosures
normally included in financial statements prepared in accordance with accounting
principles generally accepted in the United States of America. This quarterly
report on Form 10-Q should be read in conjunction with Annual Report on Form
10-KSB for Excellency Investment Realty Trust, Inc. ("Excellency" and "the
Company") for the year ended December 31, 2007. The December 31, 2007
consolidated balance sheet is derived from the audited balance sheet included
therein.




Company
Background





Excellency
Investment Realty Trust, Inc. (f/k/a Gift Liquidators, Inc.) and its predecessor
companies were originally incorporated in 1963 as Dorsett Educational Systems,
Inc. ("Dorsett"). From 1963 through the mid-1980's, Dorsett was in the business
of developing and marketing educational material. During that same period, the
stock of Dorsett was publicly traded.





In 1990,
Dorsett acquired, in a stock for stock exchange, a privately owned business that
developed, marketed and distributed a diverse line of gift and novelty products,
and changed its name to Laid Back Enterprises, Inc. ("Laid Back"). From that
date, until December 2002, Laid Back continued its development, marketing and
distribution of gift products, seasonal retailing and closeout liquidation of
gift products.





On
December 20, 2002, Laid Back's shareholders voted to split-off its gift
inventory liquidation business from its gift design and merchandising business.
Pursuant to a Split-Off Agreement, dated December 20, 2002 (the "Split-Off
Agreement"), Laid Back distributed its gift design and merchandising business to
Max Colclasure and Ronald Hurt in exchange for a substantial portion of the
shares of Laid Back owned by Mr. Colclasure and Mr. Hurt. The shareholders also
voted to approve a change of name from Laid Back to Gift Liquidators,
Inc.





Prior to
the split-off, Mr. Colclasure and Mr. Hurt owned 64.72% and 6.42% of the stock
of Laid Back, respectively. Minority shareholders owned the remaining
outstanding stock. Subsequently, Mr. Colclasure and Mr. Hurt acquired all of the
remaining outstanding stock of the gift design and merchandising business,
thereafter known as Laid Back, and Mr. Colclasure acquired 25.78% of the gift
inventory liquidation business now known as Gift Liquidators, Inc. (hereinafter,
the "Company"), with the remaining shareholders owning 74.22% of the
Company.





Pursuant
to the Split-Off Agreement, on December 20, 2002, all of the assets, liabilities
and operations were transferred to Laid Back, except for gift liquidation
inventory valued at $400,019, which was retained by the Company. In addition,
all employees of the Company became employees of Laid Back. Since the Company
had no employees, it entered into an Administrative Services Agreement with Laid
Back, dated December 20, 2002 (the "Administrative Services Agreement"), to
share administrative functions and personnel. The administrative services, for
which the Company reimbursed Laid Back, included sales, marketing, accounting
and customer service. In addition, the Company entered into a Tax Sharing
Agreement with Laid Back, dated December 20, 2002 (the "Tax Sharing Agreement"),
pursuant to which the Company shared certain tax responsibilities with Laid
Back.





7
 Table of Contents





During
the third quarter of 2005, the Company's management determined that it would no
longer pursue its interests in the gift liquidation business. As of September
28, 2005 (the "Closing Date"), the Company entered into a Preferred Stock
Purchase Agreement with David Mladen, pursuant to which Mr. Mladen purchased
11,000 shares of the Company's Series A Convertible Preferred





Stock,
$0.01 par value per share ("Series A Preferred Stock"), for an aggregate
purchase price of $10,000 (the "Preferred Stock Purchase Transaction"). As of
the Closing Date, each share of the Company's Series A Preferred Stock was
convertible at any time, at the holder's option, into 5 shares of the Company's
common stock, $0.01 par value per share ("Common Stock"), subject to adjustment
for stock dividends, stock splits, reclassifications, and similar
events.





In
addition, as of the Closing Date, two of the Company's former stockholders,
including Mr. Colclasure, a former officer and director of the Company, sold an
aggregate of 33,761 shares of the Company's Common Stock to Mr. Mladen, which
amount represented 28.6% of the Company's issued and outstanding Common Stock,
for an aggregate purchase price of $325,000 (the "Common Stock Purchase
Transaction").





Further,
as of the Closing Date, the Company's existing officers and directors resigned,
and Mr. Mladen was appointed as the Company's sole officer and
director.





As a
result of the Preferred Stock Purchase Transaction and the Common Stock Purchase
Transaction (jointly, the "Purchase Transactions"), as of the Closing Date, Mr.
Mladen owned and/or controlled approximately 51% of the Company's voting power.
By virtue of (i) the percentage of the Company's Common Stock Mr. Mladen
acquired, (ii) the number of shares of Common Stock Mr. Mladen would receive
upon conversion of the shares of Preferred Stock he purchased, (iii) the
resignation of all of the Company's officers and directors, and (iv) the
appointment of Mr. Mladen as the Company's sole officer and director, there was
deemed to have been a "change in control" of the Company as of the Closing
Date.





As
of the Closing Date, the Company:





·
            terminated
      its Administrative Services Agreement with Laid
  Back;




·
            terminated
      its Tax Sharing Agreement with Laid Back;
and




·
            entered
      into an Asset Sale Agreement with Laid Back (the "Asset Sale
      Agreement").




Pursuant
to the Asset Sale Agreement, effective as of the Closing Date, the Company sold
all of its non-cash assets, including certain inventory, to Laid Back, in
exchange for the cancellation of the Company's indebtedness to Laid Back in the
aggregate amount of $50,485. As a result of the above transactions, the Company
became a "shell company", as defined by Securities Act Rule 405 and Exchange Act
Rule 12b-2 as a company other than an asset-backed issuer, with (a) no or
nominal operations, and (b) either (i) no or nominal assets; (ii) assets
consisting solely of cash and cash equivalents; or (iii) assets consisting of
any amount of cash and cash equivalents and other nominal assets.





FIN 46R,
which amended FIN 46, "Consolidation of Variable Interest Entities," an
interpretation of Accounting Research Bulletin No. 51, "Consolidated Financial
Statements," requires an existing unconsolidated variable interest entity to be
consolidated by its primary beneficiary if the entity does not effectively
disperse risk among all parties involved or if other parties do not have
significant capital to finance activities without subordinated financial support
from the primary beneficiary. White Knight Management, LLC is now considered a
VIE and the Company its primary beneficiary both as of September 30, 2008 and
2007.





8
 Table of Contents





NOTE
2 - BASIS OF PRESENTATION AND CHANGES IN OR NEW ACCOUNTING POLICIES




Principles of
Consolidation





The
accompanying consolidated financial statements include the accounts of
Excellency Investment Realty Trust, Inc., its controlled subsidiaries comprised
of certain Limited Partnerships (see Note 1), and Eternal Enterprise, Inc.
(wholly owned in the aggregate by the Limited Partnerships) (hereinafter
collectively referred to as the "Company"). As noted above, the historical
financial statements as presented reflect the operations of Eternal as a result
of the Reverse Merger. The Company records minority interest for the non-owned
portions of consolidated subsidiaries, however, these subsidiaries have not
generated any income to warrant the recording of such minority interests through
September 30, 2008. All significant inter-company transactions and accounts have
been eliminated in the consolidated financial statements.





The
accompanying consolidated financial statements include accounts of White Knight
Management, LLC. in which the Company has a controlling financial interest with
the exception of comparative September 30, 2007 information as management has
determined the effect to be immaterial. The usual condition for a controlling
financial interest is ownership of a majority of the voting interests of an
entity. However, a controlling financial interest may also exist in entities,
such a special purpose entity ("SPE"), through arrangements that do not involve
voting interest. The Company has determined that White Knight Management, LLC is
a VIE and that the Company is the primary beneficiary as of September 30, 2008
and 2007.




Going
Concern





The
Company has suffered recurring losses from operations. During the nine months
ended September 30, 2008, the Company had a net loss of ($201,909), net cash
used in operations of $134,250 and has a net accumulated deficit of $12,291,111
as of September 30, 2008, all of which raise substantial doubt about the
Company's ability to continue as a going concern. Management does plan to raise
capital through any combination of debt and equity financing. However, the
Company has no assurance that sufficient cash flow will be generated in the
future to meet its operating requirements. As a result of the above, the
accompanying consolidated financial statements have been prepared assuming that
the Company will continue as a going concern. The consolidated financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.




Accounts Receivable -
Tenants





Tenant
receivables are reported net of an allowance for doubtful accounts. Management's
estimate of the allowance is based on historical collection experience and a
review of the current status of specific tenant accounts receivable. The Company
reserves for fifty percent for tenants who have moved-out balances. After a six
month period, the Company charges-off the moved out balances for the previous
six months against accounts receivable. As of September 30, 2008, and December
31, 2007, the Company has recorded an allowance for doubtful accounts of $12,492
and $81,723, respectively.




Contingent
Liabilities





The
Company has previously accounted for registration rights agreements as a
separate freestanding instrument and accounted for liquidated damages provision
as a derivative liability in accordance with SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities," Emerging Issue Task Force
("EITF") 00-19, "Accounting for Derivative Financial Instruments Indexed to and
Potentially Settled in a Company's Own Stock," and EITF 05-04, "The Effect of a
Liquidating Damages Clause in a Free Standing Financial Instrument Subject to
EITF 00-19." Accordingly the liability was recorded at estimated fair value
based on an estimate of the probability and costs of cash penalties being
incurred and is revalued at each balance sheet date with changes in value
recorded as other non-operating income or expenses.





As of
January 1, 2007, the Company adopted EITF 00-19-2 which called for registration
rights agreement penalties to be assessed pursuant to FASB Statement Number 5.
After determining loss was probable, the Company, with the assistance of a
valuation expert, assessed the probability of an effective registration
statement and determined that based upon a probability analysis the contingent
liability was $4,071,921 as of December 31, 2007. The Company had not
anticipated an effective registration by September 30, 2008, and therefore the
amount is unchanged at September 30, 2008.





9
 Table of Contents





Loss Per Common
Share





Net loss
per common share is based on the weighted average number of shares of common
stock outstanding during the applicable period. Basic loss per share is computed
by dividing loss available to common stockholders by the weighted average number
of common shares outstanding during the period. The common stock equivalents for
the Company's preferred stock and treasury shares were not included in the
computation of diluted loss per share because that would have diluted earnings
per share that had a basic earnings per share of $0.00, for the nine month
period ended September 30, 2008.





For the
nine month period ended September 30, 2008 and 2007, common stock equivalents of
1,573,000 and 1,573,000, respectively, were not included in the calculation of
diluted loss per share as their effect would further dilute earnings per share
that had a basic earnings per share of $0.00 and $0.03,
respectively.




Recent Accounting
Pronouncements and Interpretations





In
September 2006, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standard ("SFAS") No. 157, "Fair Value
Measurement," which provides enhanced guidance for using fair value to measure
assets and liabilities. SFAS No. 157 provides a common definition of fair value
and establishes a framework to make the measurement of fair value in generally
accepted accounting principles more consistent and comparable. SFAS No. 157 also
requires expanded disclosures to provide information about the extent to which
fair value is used to measure assets and liabilities, the methods and
assumptions used to measure fair value, and the effect of fair value measure on
earnings. SFAS No. 157 is effective for financial statements issued in fiscal
years beginning after November 15, 2007, and to interim periods within those
fiscal years. The Company is currently in the process of evaluating the effect,
if any, the adoption of SFAS No. 157 will have on its consolidated results of
operations, financial position, or cash flows.





In
December 2006, the FASB issue Staff Position ("FSP")EITF-00-19-2, "Accounting
for Registration Payment Arrangement." This FSP specifies that the contingent
obligation to make future payments or otherwise transfer consideration under a
registration payment arrangement, whether issued as a separate agreement or
included as a provision of a financial instrument or other agreement, should be
separately recognized and measured in accordance with FASB Statement No. 5,
"Accounting for Contingencies." The guidance was effective for fiscal years
beginning December 15, 2006. We have adopted this pronouncement and reflected
the change in our previously classified derivative accordingly.





In
February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities-including an amendment of FASB
Statement No. 115." FAS 159 became effective for the Company on January 1, 2008.
This standard permits companies to choose to measure many financial instruments
and certain other items at fair value and report unrealized gains and losses in
earnings. Such accounting is optional and is generally to be applied instrument
by instrument. The Company does not anticipate that election, if any, of this
fair-value option will have a material effect on the consolidated results of
operations, financial position or cash flows.





In
December 2007, the FASB issued SFAS No. 141R, "Business Combinations, and SFAS
No.160, "Non-Controlling Interest in Consolidated Financial Statements." SFAS
No.141R requires an acquirer to measure the identifiable assets acquired, the
liabilities assumed, and any non-controlling interest in the acquire at their
fair values on the acquisition date, with goodwill being the excess value over
the net identifiable assets acquired. SFAS No. 160 clarifies that a
non-controlling interest in a subsidiary should be reported as equity in the
consolidated financial statements. The calculation of earnings per share will
continue to be based on income amounts attributable to the parent. SFAS No.141R
and SFAS No.160 are effective for financial statements issued for fiscal years
beginning after December 15, 2008. Early adoption is prohibited. We have not yet
determined the effect on our consolidated financial statements, if any, upon
adoption of SFAS No.141R or SFAS No.160. The implementation of the above
pronouncements is not expected to have a material effect on the Company's
consolidated financial statements or disclosures.





10
 Table of Contents





Financial Statement
Presentation





Because
the Company is engaged in the rental and sale of real estate, the operating
cycle may extend beyond one year. Accordingly, following the usual practice of
the real estate industry, the accompanying consolidated balance sheet is
unclassified.




Use of
Estimates





The
preparation of the Company's consolidated financial statements in conformity
with generally accepted accounting principles in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, disclosure of contingent assets and
liabilities at the date of the consolidated financial statements and the
reported amount of revenues and expenses during the reporting period. Management
makes these estimates using the best information available at the time the
estimates are made; however actual results could differ materially from those
estimates.





NOTE
3 - NOTES PAYABLE





Promissory Notes Payable -
Related Parties





On
November 4, 2005 (the "Loan Date"), the Pre-Acquisition Eternal Stockholders of
Eternal Enterprise, Inc., which were comprised of David Mladen, the Company's
majority shareholder and the then sole officer and director, and Mr. Mladen's
son, daughter-in-law, daughter, and son-in-law, exchanged, in the aggregate,
100% of the issued and outstanding shares of common stock of Eternal, for (i)
limited partnership interests representing 20% of the total partnership
interests in each of the Limited Partnerships, and (ii) unsecured promissory
notes payable to the Pre-Acquisition Eternal Stockholders in the aggregate
principal amount of $2,610,006 (the "LP Notes"), pursuant to Contribution
Agreements between the Pre-Acquisition Eternal Stockholders and the Limited
Partnerships. In consideration for the Company's ownership of 80% of the total
partnership interests of each of the Limited Partnerships, the Company agreed to
assume the LP Notes.





The
interest rate on the LP Notes is 7% per annum. The entire balance of principal
and interest of the LP Notes is due and payable on November 4, 2010. The LP
Notes may be prepaid without penalty. All payments shall be applied first toward
the payment of interest and the balance towards the reduction of
principal.





As of
September 30, 2008, and December 31, 2007, the LP Notes payable were $2,322,666
and $2,292,871, respectively.





Mortgage Notes
Payable





On
December 27, 2005, the Company borrowed an aggregate of $8,224,000 from Astoria
Federal Mortgage Corp. ("Astoria"), in connection with the refinancing of the
Properties, evidenced by eight notes payable (the "Mortgage Notes"). The initial
interest rate on the Mortgage Note of 5.625% will remain in effect for eighty
four (84) months. Thereafter, the Mortgage Notes bear interest at a rate equal
to the five (5) year "Fixed Rate Advance" as determined by the Federal Home Bank
of New York, plus two and one half percent (2.5%), rounded to the nearest
one-eighth of one percent (0.125%) and the interest rate will be adjusted every
sixty (60) months. The loans are repayable in monthly installments of principal
and interest (which total $47,343), due on the first day of each month,
commencing February 1, 2006. The principal and interest payments are based on a
360 month amortization. The Mortgage Notes mature on January 1, 2018, at which
time the entire unpaid principal balance, plus accrued interest thereon, shall
be due.





11
 Table of Contents





The
Mortgage Notes are collateralized by each respective Property.  David
Mladen, the Company's majority stockholder and an officer and director, has
guaranteed up to 5% of the outstanding balance of the principal with interest
for the life of the loan. The Company incurred approximately $178,000 of
deferred financing costs related to these loans, which is being amortized over
the life of the mortgage notes payable (twelve years). Amortization expense,
calculated using the effective interest method,  was $6,319 and
$10,734 for the nine months ended September 30, 2008 and 2007,
respectively.





The
following sets forth the amounts outstanding on each of the Notes as of
September 30, 2008, and the initial required monthly principal and interest
payments:





Location of Property
                      
                      Mortgage
      Note Amount
                      
                      
                      Initial
      Monthly Principal and Interest Payment270
      Laurel Street, Hartford, CT
                      
                      $
                      1,926,368
                      
                      
                      $
                      11,513117-145
      S. Marshal Street, Hartford, CT
                      
                      
                      1,379,279
                      
                      
                      
                      8,243154-160A
      Collins Street, Hartford, CT
                      
                      
                      1,255,992
                      
                      
                      
                      7,506243
      &255 Laurel Street, Hartford, CT
                      
                      
                      1,086,471
                      
                      
                      
                      6,49621
      Evergreen Avenue, Hartford, CT
                      
                      
                      678,081
                      
                      
                      
                      4,052360
      Laurel Street, Hartford, CT
                      
                      
                      570,205
                      
                      
                      
                      3,407252
      Laurel Street, Hartford CT
                      
                      
                      562,499
                      
                      
                      
                      3,36356 Webster Street, Hartford,
    CT
                      
                      
                      462,328
                      
                      
                      
                      2,763Total
                      
                      $
                      7,921,223
                      
                      
                      $
                      47,343





In
connection with the refinancing described above, the Company defeased its
existing mortgage with Credit Suisse First Boston Mortgage Capital, LLC. The
Company incurred approximately $654,000 in costs associated with the defeasance.
Additionally, the Company wrote-off the remaining deferred financing costs
related to the mortgage totaling approximately $110,000. The remaining funds
have been used to purchase all of the limited partnership interests of our
subsidiary Limited Partnerships owned by Goran Mladen, the son of the Company's
sole officer and director and majority stockholder, and for working capital
purposes.





Principal
payment maturities on the mortgage outstanding at September 30, 2008
are:





Fiscal Year
                                
                                Amount2008
                                
                                $
                                29,5362009
                                
                                
                                121,1852010
                                
                                
                                128,2802011
                                
                                
                                135,7912012
                                
                                
                                142,520Thereafter
                                
                                
                                7,363,911Total
                                
                                $
                                7,921,223








NOTE
4 - INVESTMENTS IN TRADING SECURITIES





The
Company's investments are comprised of equity securities of publicly traded
companies. During the nine months ended September 30, 2007, the Company sold its
investments for a realized loss of $165,786.  As of September 30,
2008, the Company no longer held any investments.





Between
July, 2006, and September, 2006, the Company purchased an aggregate of 4,969
shares of its common stock in the open market, through a brokerage account held
in the name of Excellency Investment Realty Trust I, L.P., a limited partnership
which is owned (i) 81% by the Company, and (ii) 19%, collectively, by David
Mladen, the Company's majority shareholder and sole officer and director, and
his son, daughter-in-law, daughter, and son-in-law. For accounting purposes,
these purchases were treated as treasury stock of which 2,500 of the purchased
shares were resold in the open market. The purchase price of these shares was
between $8.16 and $24.44, and the selling price per share was between $11.66 and
$24.26, or an average aggregate sales price of $17.44. The difference between
the purchased price and the sales price of $16,359 was recorded as additional
paid in capital in the accompanying consolidated financial statements. The
Company paid $34,168 or $13.83 per share for these 2,469 shares of stock, and
has recorded the acquisition of these shares as treasury stock shares at cost in
the accompanying consolidated financial statements. As of September 30, 2008,
2,469 shares of the Company's common stock are held in the Company's brokerage
account. The Company plans to hold and not sell the Treasury Stock.





12
 Table of Contents





NOTE
5 - RELATED PARTY TRANSACTIONS





Property
Management





Until
June 30, 2006, the Company's properties were managed by White Knight Management,
LLC ("White Knight"), a related party owned (i) 99.8% by Goran Mladen, the son
of David Mladen, the Company's majority shareholder and sole officer and
director, and (ii) 0.2% by Gorica Mladen, David Mladen's daughter. The
Properties were managed pursuant to an oral agreement between White Knight and
the Company, according to which White Knight collected the rents for all eight
of the Company's properties and paid the Company's operating expenses. In
consideration for such services, White Knight was entitled to retain a
management fee of approximately 4% of the rent revenues of the Company. For the
nine months ended September 30, 2007, the Company did not incur any management
fees. The Company did not incur any management fees in the nine months ended
September 30, 2008.





In 2006,
White Knight retained amounts of rent in excess of expenses paid (including
management fees) on behalf of the Company totaling $171,767. The Company has
written off such amounts due from White Knight as it has determined the amounts
are not collectible. As of December 31, 2007, White Knight did not hold any
rents.





As of
December 31, 2007, the Company has consolidated its financial statements with
White Knight Management, LLC. In accordance with the Financial Accounting
Standards Board ("FASB") Interpretation No. 46R, "Consolidation of Variable
Interest Entities" ("FIN 46R"), an Interpretation of Accounting Research
Bulletin No. 51, a VIE is to be consolidated by a company if that company is
subject to a majority of the risk of loss for the VIE or is entitled to receive
a majority of the VIE's residual returns. Due to immateriality, given that White
Knight is a small development stage company, the Company did not consolidate
White Knight at September 30, 2007.





Goran
Mladen and Gorica Mladen are employees of Eternal Enterprise, Inc., a company
which is owned 100%, in the aggregate, by limited partnerships that are 81%
owned by the Company. Gorica Mladen owns 0.2% of such limited
partnerships.





Rent-Free
Apartments





The
Company provided a rent-free apartment to David Mladen, its majority shareholder
and an officer and director. As a result, the Company has recorded compensation
expense to David Mladen in the aggregate amount of $4,500, for the nine months
ended September 30, 2008, which was the fair value of apartment
rental.





NOTE
6 - STOCKHOLDERS' DEFICIT





Liquidated
Damages





In
connection with David Mladen's purchase of 11,000 shares of the Company's Series
A Preferred Stock (the "Series A Preferred Stock"), the Company entered into a
Registration Rights Agreement with Mr. Mladen (the "Registration Rights
Agreement"), pursuant to which the Company agreed to prepare and, on or prior to
the sixtieth (60th) day following the date of such purchase, file with the
Securities and Exchange Commission ("SEC"), a Resale Registration Statement on
Form SB-2 (the "Resale Registration Statement"), to register all of the shares
of the Company's Common Stock underlying the Series A Preferred Stock (the
"Conversion Shares"). Further, pursuant to the Registration Rights Agreement,
the Company is required to use best efforts to (a) have the SEC declare the
Resale Registration Statement effective within ninety (90) days after filing the
Resale Registration Statement with the SEC (or one hundred and twenty (120) days
in the event any comments on the Registration Statement are received from the
SEC), and (b) maintain the effectiveness of the Resale Registration Statement
until all such common shares have been sold or may be sold without volume
restrictions pursuant to Rule 144(k) of the Securities Act of 1933, as
amended.





13
 Table of Contents





If the
Company (i) fails to file the Resale Registration Statement, or (ii) fails to
have the Registration Statement declared effective within the required period,
or (iii) if effectiveness is not maintained, the Registration Rights Agreement
requires the Company to make payments to Mr. Mladen in an aggregate amount equal
to two percent (2%) per month of $9,000,000 (assuming the sale of $9,000,000 of
the aggregate fair market value of the Conversion Shares) ("Outstanding
Principal Amount"), multiplied by the number of months (prorated for partial
months) until the failure is cured.





As of
June 30, 2006, the Resale Registration Statement had not been filed. At that
time, Mr. Mladen agreed to waive $1,174,000 of liquidated damages due to him,
and such amount was accounted for as a contribution of capital as of that
date.





On
October 24, 2006, the Resale Registration Statement had still not been filed. At
that time, Mr. Mladen agreed to waive an additional $720,000 in liquidated
damages, for the period between July 1, 2006, and October 31, 2006, in
consideration for 43,500 shares of the Company's Series C Preferred
Stock.





As of
December 31, 2006, $720,000 of these liquidated damages have been issued as
preferred stock and subsequently converted to common stock.





On
November 29, 2006, the Company filed a Registration Statement on Form SB-2 (the
"Resale Registration Statement") with the Securities and Exchange Commission
(the "Commission") to register (i) 5,000,000 shares of common stock issuable to
Dutchess Private Equities Fund, LP ("Dutchess") in connection with an Investment
Agreement between the Company and Dutchess and (ii) 1,573,000 shares of Common
Stock issuable upon conversion of shares of the Company's Series A Convertible
Preferred Stock held by David Mladen, the Company's sole officer, director and
majority shareholder.





On
February 2, 2007, the Company filed a request to withdraw the Registration
Statement with the Commission. Mr. Mladen had agreed to waive the liquidated
damages which were due to him through June 30, 2007, but as a result of the
withdrawal of the Registration Statement the contingent liability increased to
$4,071,921 as of December 31, 2007.





The
Company had adopted View C of EITF 05-4, "Effect of Liquidated Damages Clause on
a Freestanding Financial Instrument Subject to EITF 00-19" ("EITF 05-4").
Accordingly, the Company classified as liability instruments, the fair value of
registration rights agreements when such agreements (i) require it to file, and
cause to be declared effective under the Securities Act, a registration
statement with the SEC within contractually fixed time periods, and


(ii)
provide for the payment of liquidating damages in the event of its failure to
comply with such agreement.





Previously
under View C of EITF 05-4, (i) registration rights with these characteristics
were accounted for as derivative financial instruments at fair value and (ii)
contracts that are (a) indexed to and potentially settled in an issuer's own
stock and (b) permit gross physical or net share settlement with no net cash
settlement alternative were classified as equity instruments.





14
 Table of Contents





The
Company has adopted EITF 00-19-2 and as a result no longer classifies these
registration rights as a derivative instrument. Due to the probable loss, the
Company, with the help of a valuation specialist, determined the likely
settlement to be $4,071,921 at December 31, 2007. The analysis assumed an
effective registration would not be achieved by September 30, 2008, and as a
result the contingent liability remains unchanged.





NOTE
7 - CONTINGENCY





Periodic
Filings





Under a
2005 rule change, OTC Bulletin Board ("OTCBB") issuers that are cited for filing
delinquency three times in a 24-month period and those removed for failure to
file two times in a 24-month period will be ineligible for quotation by an NASD
member. Following removal under this new rule, an issuer's securities would
again become eligible for quotation on the OTCBB when the issuer has filed
periodic reports for one year in a timely manner.





In 2008
the Company has been late in two of its periodic filings with the Securities and
Exchange Commission ("SEC"). Accordingly, the Company may be ineligible for
quotation by an NASD member if it is delinquent one more time in its periodic
filings with the SEC during the applicable 24-month period.





15
 Table of Contents





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





Cautionary
Statement Concerning Forward-Looking Statements





This
report on Form 10-Q contains forward-looking statements, including, without
limitation, statements concerning our possible or assumed future results of
operations.  These statements are preceded by, followed by or include
the words “believes,” “could,” “expects,” “intends” “anticipates,” or similar
expressions.  Our actual results could differ materially from those
anticipated in the forward-looking statements for many reasons including: our
ability to continue as a going concern, adverse economic changes affecting
markets we serve; competition in our markets and industry segments; our timing
and the profitability of entering new markets; greater than expected costs,
customer acceptance of wireless networks or difficulties related to our
integration of the businesses we may acquire and other risks and uncertainties
as may be detailed from time to time in our public announcements and SEC
filings.  Although we believe the expectations reflected in the
forward-looking statements are reasonable, they relate only to events as of the
date on which the statements are made, and our future results, levels of
activity, performance or achievements may not meet these
expectations.  We do not intend to update any of the forward-looking
statements after the date of this document to conform these statements to actual
results or to changes in our expectations, except as required by
law.





The
discussion and financial statements contained herein are for the three months
ended September 30, 2008 and 2007.  The following discussion should be
read in conjunction with our financial statements and the notes thereto included
herewith.





Overview





On
September 4, 1963, we were incorporated in the State of Oklahoma as Dorsett
Educational Systems, Inc.  On December 20, 2002, we changed our name
to Gift Liquidators, Inc.





As of
September 28, 2005 (the "Closing Date"), we entered into a Preferred Stock
Purchase Agreement with David Mladen (the "Preferred Stock Purchase Agreement"),
pursuant to which Mr. Mladen purchased 11,000 shares of our Series A Convertible
Preferred Stock, $0.01 par value per share ("Series A Preferred Stock"), for an
aggregate purchase price of $10,000 (the "Preferred Stock Purchase
Transaction").  As of the Closing Date, each share of our Series A
Preferred Stock was convertible into 5 shares of our common stock, $0.01 par
value per share ("Common Stock"), subject to adjustment for stock dividends,
stock splits, reclassifications, and similar events.  Further, as of
the Closing Date, two of our former stockholders, one of whom was an officer and
director of ours, sold an aggregate of 33,761 shares of our Common Stock to Mr.
Mladen, which amount represented 28.6% of our issued and outstanding Common
Stock (the "Common Stock Purchase Transaction," and, together with the Preferred
Stock Purchase Transaction, the "Stock Purchase Transactions").





In
addition, as of the Closing Date, our existing officers and directors resigned,
and Mr. Mladen was appointed as our sole officer and director.





At the
time of the Preferred Stock Purchase Transaction and the Common Stock Purchase
Transaction, Mr. Mladen was also the majority stockholder and the sole officer
and director of Eternal Enterprise, Inc., a Connecticut Corporation ("Eternal"),
which owned the following residential real estate properties (collectively, the
"Properties") in Hartford, Connecticut:








·
            154-160A
      Collins Street, Hartford, CT;




·
            21
      Evergreen Avenue, Hartford, CT;




·
            243
      & 255 Laurel Street, Hartford,
CT;




·
            252
      Laurel Street, Hartford CT;




·
            270
      Laurel Street, Hartford, CT;





16
 Table of Contents





·
            360
      Laurel Street, Hartford, CT;




·
            117-145
      S. Marshall Street, Hartford, CT;
and




·
            56
      Webster Street, Hartford, CT.





Mr.
Mladen entered into the Stock Purchase Transactions with the specific intention
of taking control of our Company, and, subsequently, combining it with
Eternal.





Between
October 26, 2005 and October 31, 2005, we formed eight limited partnerships as
wholly-owned Delaware subsidiaries (the "Limited Partnerships").  At
the time of formation, we owned 100% of the partnership interests of each of the
Limited Partnerships.





As of November 4, 2005, the
pre-acquisition stockholders of Eternal, which consisted of David Mladen and
certain of his family members (the "Pre-Acquisition Eternal Stockholders"),
exchanged, in the aggregate, 100% of the issued and outstanding shares of common
stock of Eternal, for (i) limited partnership interests representing 20% of the
total partnership interests of each of the Limited Partnerships, and (b)
promissory notes in the aggregate principal amount of $2,610,006 (the "LP
Notes") (the "Eternal Acquisition").  The partnership interests of the
Limited Partnerships were exchanged for shares of common stock of Eternal based
upon the ratio which the value of each Property bears to the aggregate value of
all of the Properties.  As a result of the Eternal Acquisition, the
shares of common stock of Eternal are now 100% owned, in the aggregate, by the
Limited Partnerships.





In
consideration for our ownership of 80% of the total partnership interests of
each of the Limited Partnerships, we agreed to assume the LP
Notes.  The interest rate on the LP Notes is 7% per
annum.  The entire balance of principal and interest of the LP Notes
is due and payable on November 4, 2010.  The LP Notes may be prepaid
without penalty.  All payments shall be applied first toward the
payment of interest and the balance towards the reduction of
principal.





Pursuant
to the Partnership Agreements of the Limited Partnerships (the "Partnership
Agreements"), among other things, we (i) are the general partner of each of the
Limited Partnerships; and (ii) have the right to compel the limited partners
(i.e., the Pre-Acquisition Eternal Stockholders) to exchange 100% of their
limited partnership interests for shares of common stock of the
Company.





Since, at
the effective time of the Eternal Acquisition (and the Preferred Stock Purchase
Transaction and the Common Stock Purchase Transaction, consummated in
anticipation thereof): (i) the Pre-Acquisition Eternal Stockholders obtained a
majority of the shares of common stock of the combined entity after the
combination, (ii) Pre-Acquisition Eternal Stockholders obtained the ability to
elect and appoint a voting majority of the governing board of the combined
entity, and (iii) Eternal's officers and directors replaced ours as officers and
directors of the combined entity, the Eternal Acquisition was treated as a
reverse merger with Eternal as the accounting acquirer for financial reporting
purposes.





On
September 20, 2006, we reincorporated in the State of Maryland by virtue of our
merger with and into Excellency Investment Realty Trust, Inc., our Maryland
subsidiary (the "Maryland Subsidiary"), which had been organized for that
purpose (the "Reincorporation by Merger").  As a result of the
Reincorporation by Merger, among other things:








·
            The
      surviving company and successor filer is known as Excellency Investment
      Realty Trust, Inc.;




·
            Each
      share of our issued and outstanding common stock and preferred stock was
      converted into one share of the Maryland Subsidiary's common stock and
      preferred stock, respectively;




·
            The
      title to all of our property automatically vested in the Maryland
      Subsidiary;




·
            The
      Maryland Subsidiary assumed all of our
  liabilities;





17
 Table of Contents





·
            Corporate
      actions of the surviving entity are now governed by the Maryland
      Corporations and Associations Law and by the Maryland Subsidiary's
      Articles of Amendment and Restatement of Articles of Incorporation and
      Bylaws;




·
            David
      Mladen, who was our sole officer and director, continued to serve as the
      sole officer and director of the surviving
  entity;




·
            The
      trading symbol for the surviving entity's common stock, which is quoted on
      the over-the-counter bulletin board of the National Association of
      Securities Dealers, was changed to "EIVR";
and




·
            The
      total number of shares of stock which the surviving entity is authorized
      to issue has increased to 201,000,000 shares, of which 200,000,000 shares
      are common stock, $0.01 par value per share and 1,000,000 are preferred
      stock, par value $0.01.





While the
Reincorporation by Merger resulted in changes to our name and state of
incorporation, as well as the other changes listed above, it did not result in
any material changes to our business, management, assets, liabilities or net
worth.





We are
engaged in the business of acquiring, developing, holding for investment,
operating and selling apartment properties in metropolitan areas on the east
coast of the United States.  We intend to qualify as a real estate
investment trust, or REIT, under the Internal Revenue Code of 1986, as
amended.





Through
our subsidiaries, we own eight residential real estate Properties, consisting of
an aggregate of 273 apartment units, and comprising a total of approximately
221,839 square feet, all of which are leased to residential
tenants.  Each of the Properties is located in the metropolitan
Hartford area of Connecticut.





We
operate in the real estate industry segment.  We do not have any
foreign operations, and our business is not seasonal.  See the
Consolidated Financial Statements attached hereto and incorporated by reference
herein for financial information relating to our industry segment.





Trends
and Uncertainties





We are
not aware of any material trends or uncertainties, favorable or unfavorable,
other than national economic conditions affecting real estate generally, that
may be reasonably anticipated to have a material impact on either capital
resources or the revenues or income to be derived from the acquisition and
operation of the Properties, other than those identified below.





Increasing
Demand For Rental Apartments





Based on
certain demographic trends, in particular, the growth of the "Echo Boomer"
generation, we believe we are well-positioned to continue achieving our
objectives.  While there is no guarantee that individuals making up
this group will choose renting versus ownership, we believe the increase in this
age group will have a positive demand for the number of rental
households.  Echo Boomers are now entering into the age group having
the greatest propensity to rent.  The number of individuals between
the ages of 18-39 is expected to grow significantly over the next 20
years.





Strong
Demand Due To Restrictive Lending Environment





The
40-year historic lows reached on mortgage interest rates in recent years
provided some individuals with the opportunity to purchase homes at similar
costs to renting, particularly when utilizing short-term variable
mortgages.  However, with the more recent increases in credit criteria
and more restrictive lending practices, this attractive alternative may have
faded for some and the apartment sector is in a position to reap the
benefits.  If a restrictive lending environment continues, then the
number of individuals purchasing homes will typically decline.  As
rental apartments directly compete with the single-family home and condominium
sectors of the economy, the demand for new and existing rental apartment
communities may rise when demand for purchasing homes falls.  We
believe this will be beneficial for apartment owners as it should translate into
greater demand, higher occupancy rates, fewer concessions needed to attract
renters, and therefore increased profitability of our apartment
communities.





18
 Table of Contents





Consolidation
with White Knight Management, LLC





Until
June 30, 2006, our Properties were managed by White Knight Management, LLC
("White Knight"), a related party owned (i) 99% by Goran Mladen, the son of
David Mladen, our majority shareholder and sole officer and director, and (ii)
1% by Gorica Mladen, David Mladen's daughter.  The Properties were
managed pursuant to an oral agreement we had with White Knight, according to
which White Knight collected the rents for all eight of our Properties and paid
our operating expenses.  In consideration for such services, White
Knight was entitled to retain a management fee of approximately 4% of our rent
revenues.





Property
management Fees were $31,019 for the year ended December 31, 2006.  As
of December 31, 2006, White Knight had retained amounts of rent in excess of
expenses paid on our behalf totaling $171,767.  We wrote off such
amounts due from White Knight, as we determined the amounts were not
collectible.





Effective
July 1, 2006, we discontinued our arrangement with White Knight and assumed all
responsibilities for the management of our Properties.  Therefore,
there were no property management fees for the fiscal year ended December 31,
2007, or for the ninth month period ended September 30, 2008.





As of
December 31, 2007, we have consolidated our financial statements with White
Knight.  In accordance with the Financial Accounting Standards Board
("FASB") Interpretation No. 46R, "Consolidation of Variable Interest Entities"
("FIN 46R"), an interpretation of Accounting Research Bulletin No. 51, a
variable-interest entity ("VIE") is to be consolidated by a company if that
company is subject to a majority of the risk of loss for the VIE or is entitled
to receive a majority of the VIE's residual returns.  Due to
immateriality, White Knight was not consolidated at September 30,
2007.





Mortgage
Notes Payable to Astoria Federal Mortgage Corp.





As a
result of the Eternal Acquisition, we are the owner of eight Properties, all in
the metropolitan Hartford, Connecticut area.





As of
December 27, 2005, we borrowed an aggregate of $8,224,000 from Astoria Federal
Mortgage Corp., in connection with the refinancing of the Properties, evidenced
by eight notes payable (the "Mortgage Notes").  The Mortgage Notes
bear interest at a rate equal to the five (5) year "Fixed Rate Advance" as
determined by the Federal Home Bank of New York, plus 2.500%, rounded to the
nearest one-eighth of one percent (0.125%).  The initial interest rate
on the Mortgage Notes, of 5.625%, will remain in effect for 84
months.  Thereafter, the interest rate will be adjusted every sixty
(60) months.  The loans are repayable in monthly installments of
principal and interest, due on the first day of each month, commencing February
1, 2006.  The principal and interest payments will be based on a 360
month amortization.  The Mortgage Notes mature on January 1, 2018, at
which time the entire unpaid principal balance, plus accrued interest thereon,
shall be payable.  The Mortgage Notes are secured against each
respective Property.  David Mladen, our majority stockholder, and sole
officer and director, has guaranteed up to 5% of the outstanding balance of the
principal with interest for the life of the loan.





The
following sets forth certain material terms of each of the Notes as of September
30, 2008:





Location
      of Property
                            
                            Mortgage
      Note Amount (as of September 30, 2008)
                            
                            
                            Monthly
      Principal and Interest Payment154-160A
      Collins Street, Hartford, CT
                            
                            $
                            1,255,992
                            
                            
                            $
                            7,50621
      Evergreen Avenue, Hartford, CT
                            
                            $
                            678,081
                            
                            
                            $
                            4,052243
      & 255 Laurel Street, Hartford, CT
                            
                            $
                            1,086,471
                            
                            
                            $
                            6,496252
      Laurel Street, Hartford CT
                            
                            $
                            562,499
                            
                            
                            $
                            3,363270
      Laurel Street, Hartford, CT
                            
                            $
                            1,926,368
                            
                            
                            $
                            11,513360
      Laurel Street, Hartford, CT
                            
                            $
                            570,205
                            
                            
                            $
                            3,407117-145
      S. Marshall Street, Hartford, CT
                            
                            $
                            1,379,279
                            
                            
                            $
                            8,24356
      Webster Street, Hartford, CT
                            
                            $
                            462,328
                            
                            
                            $
                            2,763Total:
                            
                            $
                            7,921,223
                            
                            
                            $
                            47,343





19
 Table of Contents





We used
the amounts borrowed from Astoria Federal Mortgage Corp. to repay the aggregate
amount of $5,263,472 of principal and interest we owed under previous mortgages
with Credit Suisse First Boston Mortgage Capital, LLC.  In connection
with such refinancing, we incurred approximately $654,083 in pre-payment
penalties in fiscal 2005.  The remaining funds have been used to
purchase all of the limited partnership interests of our subsidiary Limited
Partnerships owned by Goran Mladen, the son of our majority stockholder and sole
officer and director, and for general working capital purposes.





Repayment
of Promissory Notes Payable - Related Party





As of
November 4, 2005 (the "Loan Date"), the Pre-Acquisition Eternal Stockholders of
Eternal Enterprise, Inc., which were comprised of David Mladen, our majority
shareholder and sole officer and director, and Mr. Mladen's son,
daughter-in-law, daughter, and son-in-law, exchanged, in the aggregate, 100% of
the issued and outstanding shares of common stock of Eternal, for (i) limited
partnership interests representing 20% of the total partnership interests in
each of the Limited Partnerships, and (ii) unsecured promissory notes payable to
the Pre-Acquisition Eternal Stockholders in the aggregate principal amount of
$2,610,006 (the "LP Notes').  In consideration for our ownership of
80% of the total partnership interests of each of the Limited Partnerships, we
agreed to assume the LP Notes.





The
interest rate on the LP Notes is 7% per annum.  The entire balance of
principal and interest of the LP Notes is due and payable on November 4,
2010.  The LP Notes may be prepaid without penalty.  All
payments shall be applied first toward the payment of interest and the balance
towards the reduction of principal.





As of
September 30, 2008, the total amount due under the LP Notes was
$2,322,666.





Liquidated
Damages





In
connection with David Mladen's purchase of 11,000 shares of our Series A
Preferred Stock (the "Preferred Stock") on September 29, 2005, we entered into a
Registration Rights Agreement with Mr. Mladen (the "Registration Rights
Agreement"), pursuant to which we agreed to prepare, and, on or prior to the
sixtieth (60th) day following the date of such purchase, file with the
Securities and Exchange Commission a resale Registration Statement on Form SB-2
(the "Resale Registration Statement"), to register all of the shares of our
Common Stock underlying the Preferred Stock.  Further, pursuant to
the





Registration
Rights Agreement, we are required to use best efforts to (a) have the SEC
declare the Resale Registration Statement effective within ninety (90) days
after filing the Resale Registration Statement with the SEC (or one hundred and
twenty (120) days if we receive any comments on the Registration Statement from
the SEC), and (b) maintain the effectiveness of the Resale Registration
Statement until all such common shares have been sold or may be sold without
volume restrictions pursuant to Rule 144(k) of the Securities Act of 1933, as
amended.





If we (i)
fail to file the Resale Registration Statement, or (ii) fail to have the
Registration Statement declared effective within required period, or (iii) if
effectiveness is not maintained, the Registration Rights Agreement requires us
to make payments to Mr. Mladen in an aggregate amount equal to two percent (2%)
per month of $9,000,000 (assuming the sale of $9,000,000 of the aggregate fair
market value of the Conversion Shares), multiplied by the number of months
(prorated for partial months) until the failure is cured.





20
 Table of Contents





We were
not able to file the Resale Registration Statement on or prior to the required
filing date and, as a result, began incurring liquidated damages equal to
$180,000 per month (the "Liquidated Damages").





As of
June 30, 2006, we had still failed to file the Resale Registration
Statement.  At that time, Mr. Mladen agreed to waive approximately
$1,174,000 of Liquidated Damages due to him pursuant to the Registration Rights
Agreement.  Such amount was accounted for in our financial statements
as a contribution of capital.





On
October 18, 2006, we issued 43,500 shares of our Series C convertible preferred
stock to Mr. Mladen, in consideration for his agreement to waive an additional
$720,000 of Liquidated Damages due to him for the period between July 1, 2006
and October 31, 2006.





The
Resale Registration Statement was filed on November 29,
2006.  However, on February 2, 2007, we filed a request to withdraw
the Registration Statement with the Commission.  Mr. Mladen had agreed
to waive the liquidated damages which were due to him through March 31, 2007,
but as a result of the withdrawal of the Registration Statement the contingent
liability increased to $4,071,921 as of December 31, 2007.





We had
adopted View C of EITF 05-4 "Effect of Liquidated Damages Clause on a
Freestanding Financial Instrument Subject to EITF 00-19" ("EITF
05-4").  Accordingly, we classified as liability instruments the fair
value of registration rights agreements when such agreements (i) require it to
file, and cause to be declared effective under the Securities Act, a
registration statement with the SEC within contractually fixed time periods, and
(ii) provide for the payment of liquidating damages in the event of its failure
to comply with such agreements.





Previously,
under View C of EITF 05-4, (i) registration rights with these characteristics
are accounted for as derivative financial instruments at fair value and (ii)
contracts that are (a) indexed to and potentially settled in an issuer's own
stock and (b) permit gross physical or net share settlement with no net cash
settlement alternative are classified as equity instruments.





We have
adopted EITF 00-19-2 and as a result no longer classify these registration
rights as a derivative instrument.  With the help of a valuation
specialist, we determined the likely settlement to be $4,071,921 as of December
31, 2007.  The analysis assumed an effective registration would not be
achieved by September 30, 2008 and as a result the contingent liability remains
unchanged.





Investment
Agreement with Dutchess Private Equities





On August
29, 2006, we entered into an Investment Agreement with Dutchess Private Equities
Fund, L.P.  ("Dutchess"), pursuant to which Dutchess committed to
purchase up to $25,000,000 of our Common Stock over the course of thirty six
(36) months.  The amount that we will be entitled to request from each
purchase ("Puts") shall be equal to, at our election, either (i) $250,000, or
(ii) 200% of the average daily volume (U.S. market only) of the Common Stock for
the 10 trading days prior to the applicable put notice date, multiplied by the
average of the 3 daily closing bid prices immediately preceding the put
date.  The put date shall be the date that Dutchess receives a put
notice of a draw down by us.  The purchase price shall be set at 93%
of the lowest closing Best Bid price of the Common Stock during the pricing
period.  The pricing period shall be the 5 consecutive trading days
immediately after the put notice date.  There are put restrictions
applied on days between the put date and the closing date with respect to that
particular Put.  During this time, we shall not be entitled to deliver
another put notice.  Further, we shall reserve the right to withdraw
that portion of the Put that is below 90% of the lowest closing bid prices for
the 10-trading day period immediately preceding each put notice.  As
of the date hereof, we have not requested any Puts under the Investment
Agreement.





The
Investment Agreement with Dutchess terminates either (a) when Dutchess has
purchased an aggregate of Twenty-Five Million dollars ($25,000,000) in shares of
Common Stock of the Company pursuant to the Investment Agreement, or (b)
thirty-six months after the effective date of the Investment
Agreement.





21
 Table of Contents





Dutchess
is not obligated to purchase any shares of the Common Stock, unless each of the
following conditions are satisfied at the time of purchase:




·
            a
      registration statement shall have been declared effective and shall remain
      effective and available for the resale of all the shares of Common Stock
      to be purchased by Dutchess;




·
            the
      Common Stock shall be listed, and shall not have been suspended from
      trading for a period of two (2) consecutive trading days, and the Company
      shall not have been notified of any pending or threatened proceeding or
      other action to suspend the trading of its Common
  Stock;




·
            the
      Company must have complied with its obligations and must not otherwise be
      in breach of or in default under the Investment Agreement, or other
      related transaction documents;




·
            no
      injunction shall have been issued and remain in force, or action commenced
      by a governmental authority, which has not been stayed or abandoned,
      prohibiting the purchase or the issuance of the shares of the Company's
      Common Stock to be purchased; and




·
            the
      issuance of the shares of Common Stock of the Company will not violate any
      shareholder approval requirements of the principal market or exchange on
      which the Common Stock is traded.





To date,
the Company has not delivered any Puts to Dutchess pursuant to the Investment
Agreement, and has no intention to do so in the foreseeable future.





Results
of Operations





As of
September 30, 2008 and 2007 we owned interests in eight
Properties.  Details on the Properties are as follows:





Occupancy
      Rate as of
                        
                        
                        Occupancy
      Rate as ofLocation
                        
                        Number
      of Units
                        
                        September
      30, 2008
                        
                        
                        September
      30, 2007154-160A
      Collins Street Hartford, CT
                        
                        41
      units
                        
                        
                        88
                        %
                        
                        
                        93
                        %21
      Evergreen Avenue Hartford, CT
                        
                        24
      units
                        
                        
                        85
                        %
                        
                        
                        100
                        %243
      & 255 Laurel Street Hartford, CT
                        
                        34
      units
                        
                        
                        95
                        %
                        
                        
                        94
                        %252
      Laurel Street Hartford, CT
                        
                        18
      units
                        
                        
                        95
                        %
                        
                        
                        94
                        %270
      Laurel Street Hartford, CT
                        
                        77
      units
                        
                        
                        90
                        %
                        
                        
                        96
                        %360
      Laurel Street Hartford, CT
                        
                        18
      units
                        
                        0%
                          under
      renovation
                        
                        
                        
                        78
                        %117-145
      S. Marshall Street Hartford, CT
                        
                        42
      units
                        
                        
                        100
                        %
                        
                        
                        93
                        %56
      Webster Street Hartford, CT
                        
                        16
      units
                        
                        
                        92
                        %
                        
                        
                        88
                        %





22
 Table of Contents





Comparison
Of Operations For The Three Months Ended September 30, 2008 To The Three Months
Ended September 30, 2007





The
following summarizes changes in our operations for the three-month periods ended
September 30, 2008 and 2007.  We had a net loss of $78,636 for the
three-month period ended September 30, 2008, compared to a net loss of $723,015
for the three-month period ended September 30, 2007.  One of the main
reasons for this reduction was a decrease in our general and administrative
expenses of $66,928.  In addition, in the three-month period ended
September 30, 2007, we incurred a loss on derivative instrument of
$540,000.  We did not have a similar loss in the comparable period of
fiscal 2008.





Rental
Revenue





Revenues
increased $85,506, to $482,701 from $397,195, or approximately 22%, in the
three-month period ended September 30, 2008, compared to the same period in the
prior year.  This increase was primarily related to a combination of
higher occupancy rates and higher rents at our Properties.





Property
Operating Costs





Property
operating costs increased $54,628, to $296,725 from $242,097, or approximately
23%, in the third quarter of 2008 as compared to the third quarter of
2007.  The increase was primarily related to increases in our supplies
and repair costs.





General
and Administrative





General
and administrative expense decreased $66,928, to $78,383 in the three-month
period ended September 30, 2008, from $145,311 in the three-month period ended
September 30, 2007, or approximately 46%.  The amount decreased
primarily due to a decrease in professional fees we incurred in the third
quarter of fiscal 2007, as compared to the prior year.





Depreciation
and Amortization





Depreciation
and amortization expense in the three-month period ended September 30, 2008 was
$33,908 as compared to  $38,323, for the prior
year.   This decrease was due to changes in amortization of our
deferred financing costs due to the effective interest method.





Interest
Expense





Interest
expense decreased $6,044, to $152,415 from $158,459, or approximately 4%, in the
three-month period ended September 30, 2008, as compared to 2007.  The
reason for this decrease was primarily related to decreased interest on
outstanding promissory notes.





Loss
on Derivative Instrument





In the
three-month period ended September 30, 2007, we had a loss on derivative
instrument of $540,000, resulting from our failure to satisfy certain
registration requirements, as further described in the "Liquidated Damages"
section above.  We did not have a similar loss in the comparable
period of fiscal 2008.





23
 Table of Contents





Comparison
Of Operations For The Nine Months Ended September 30, 2008 To The Nine Months
Ended September 30, 2007





The
following summarizes changes in our operations for the nine month periods ended
September 30, 2008 and 2007.  We had a net loss of $201,909 for the
nine month period ended September 30, 2008, compared to a net loss of $1,615,060
for the same period in 2007.  One of the main reasons for this
reduction in our net loss was an increase in our rental revenue of
$223,417.  In addition, general and administrative expenses decreased
by of $332,664 compared to the comparable period in the prior
year.  Further, in the nine month period ended September 30, 2007, we
incurred a loss on derivative instrument of $720,000 and a realized loss on
sales of trading securities of $165,786.  We did not have similar
losses in the comparable period of fiscal 2008.





Rental
Revenue





Revenues
increased $223,417 to $1,406,212 from $1,182,795, or approximately 18.9%, in the
nine month period ended September 30, 2008, compared to the same period in the
prior year.  This increase was primarily related to a combination of
higher occupancy rates and higher rents at our Properties.





Property
Operating Costs





Property
operating costs increased $31,259, to $792,223 from $760,964, or approximately
4%, in the nine month period ended September 30, 2008, compared to the same
period in the prior year.  The increase was primarily related to
increases in our supplies and repair costs.





General
and Administrative





General
and administrative expense decreased $332,664, to $250,615 in the nine month
period ended September 30, 2008, from $583,279 in the nine month period ended
September 30, 2007, or approximately 57%.  The amount decreased
primarily due to a decrease in professional fees that we incurred in the nine
month period ended September 30, 2008, compared to the same period in the prior
year.





Depreciation
and Amortization





Depreciation
and amortization expense in the nine month period ended September 30, 2008 was
$110,554 as compared to $114,969, for the prior year.   This
decrease was due to changes in amortization of our deferred financing costs due
to the effective interest method.





Interest
Expense





Interest
expense decreased $21,308, to $455,267 from $476,575, or approximately 4.47%, in
the nine month period ended September 30, 2008, compared to the same period in
the prior year.  The reason for this decrease was primarily related to
decreased interest on outstanding promissory notes.





Loss
on Derivative Instrument





In the
nine month period ended September 30, 2007, we had a loss on derivative
instrument of $720,000, resulting from our failure to satisfy certain
registration requirements, as further described in the "Liquidated Damages"
section above.  We did not have a similar loss in the comparable
period of fiscal 2008.





Realized
Loss from Sales of Trading Securities





In the
nine month period ended September 30, 2007, we had a realized loss on sales of
trading securities of $165,786.  During fiscal 2007, we discontinued
our practice of trading equity securities of publicly traded
companies.  Therefore we did not have a similar loss in the comparable
period of fiscal 2008.





Liquidity
and Capital Resources





24
 Table of Contents





As of
September 30, 2008, our cash and cash equivalents were $62,511.  This
represents a decrease of $179,040 from the beginning of our fiscal
year.  All cash and cash equivalents are held in money market or
checking accounts.





In
previous quarters we have suffered recurring losses from
operations.  As of September 30, 2008, we had a net stockholders'
deficit of $9,813,763.





We expect
that the rental income we receive from tenants of our Properties will be our
primary source of funds going forward.  In order to acquire additional
apartment properties, and, if necessary, to fund our operations, we may
determine to take out additional loans from financial institutions or raise
funds from one or a combination of debt offerings and equity
offerings.  Management plans to manage cash flows
carefully.  However, we have no assurance that sufficient cash flow
will be generated in the future to meet our operating
requirements.  This raises substantial doubt about our ability to
continue as a going concern.





Uses
of Capital





Net
Cash From Operations





During
the nine months ended September 30, 2008, $134,250 was used in operations,
compared to $311,896 used in operations during the same period in fiscal
2007.  The main reasons for this change were a $1,413,151 reduction in
our net loss for the nine month period ended September 30, 2008, as compared to
the same period in the previous year, partially offset by a reduction of
$291,072 in our accounts payable and accrued expenses for the period, combined
with our loss on sale of trading securities of $165,786 in the same period of
fiscal 2007, which was not repeated in the first half of fiscal
2008.





Net
Cash From Investing Activities





During
the nine month period ended September 30, 2008, $0 cash was provided by
investing activities, compared to $114,172 used in investing activities during
the same period of 2007.  The reason for this change, was our
discontinuance of our practice of trading equity securities of publicly traded
companies prior to fiscal 2008.





Net
Cash From Financing Activities





During
the nine month period ended September 30, 2008, we used $44,790 in financing
activities, compared to $415,133 used in financing activities during the same
period in 2007.





Critical
Accounting Policies





Principles
of Consolidation





The
consolidated financial statements found in Part I, Item 1 of this report include
the accounts of Excellency Investment Realty Trust, Inc. and its controlled
subsidiaries comprised of certain Limited Partnerships, and Eternal Enterprise,
Inc.  The historical financial statements as presented, reflect the
operations of Eternal as a result of the Reverse Merger.  We record
minority interest for the non-owned portions of consolidated subsidiaries,
however, these subsidiaries have not generated any income to warrant the
recording of such minority interests through September 30, 2008.  All
significant inter-company transactions and accounts have been eliminated in the
consolidated financial statements.





The
consolidated financial statements found in Part I, Item 1 of this report include
accounts of White Knight Management, LLC, in which we have a controlling
financial interest.  The usual condition for a controlling financial
interest is ownership of a majority of the voting interests of an
entity.  However, a controlling financial interest may also exist in
entities, such a special purpose entity ("SPE"), through arrangements that do
not involve voting interest.  We have determined that White Knight
Management, LLC is a VIE and that we are the primary beneficiary as of September
30, 2008 and 2007.





25
 Table of Contents





Going
Concern





We have
suffered recurring losses from operations.  During the nine month
period ended September 30, 2008, we had a net loss of $201,909, net cash used in
operations of $134,250, and a net accumulated deficit of $12,291,111, all of
which raise substantial doubt about our ability to continue as a going
concern.  Management plans to raise capital through any combination of
debt and equity financing.  However, we have no assurance that
sufficient cash flow will be generated in the future to meet its operating
requirements.  As a result of the above, the consolidated financial
statements found in Part I, Item 1 of this report have been prepared assuming
that we will continue as a going concern.  The consolidated financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.





Accounts
Receivable - Tenants





Tenant
receivables are reported net of an allowance for doubtful
accounts.  Management's estimate of the allowance is based on
historical collection experience and a review of the current status of specific
tenant accounts receivable.  We reserved for fifty percent for
moved-out balances.  After a nine month period, we charge-off the
moved out balances for the previous nine months against accounts
receivable.  As of September 30, 2008 and December 31, 2007 we had
recorded an allowance for doubtful accounts of $12,492 and $81,723,
respectively.





Contingent
Liabilities





We have
previously accounted for the registration rights agreements as a separate
freestanding instrument and accounted for the liquidated damages provision as a
derivative liability in accordance with SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," Emerging Issue Task Force ("EITF") 00-19,
"Accounting for Derivative Financial Instruments Indexed to and Potentially
Settled in a Company's Own Stock," and EITF 05-04, "The Effect of a Liquidating
Damages Clause in a Free Standing Financial Instrument Subject to EITF 00-19."
Accordingly the liability was recorded at estimated fair value based on an
estimate of the probability and costs of cash penalties being incurred and is
revalued at each balance sheet date with changes in value recorded as other
non-operating income or expenses.





As of
January 1, 2007, we adopted EITF 00-19-2 which called for registration rights
agreement penalties to be assessed pursuant to FASB statement number
5.  After determining loss was probable we, with the assistance of a
valuation expert, assessed the probability of an effective registration
statements and determined that based upon a probability analysis the contingent
liability was $4,071,921 as of December 31, 2007.  We had not
anticipated an effective registration by September 30, 2008 and therefore the
amount is unchanged at September 30, 2008.





Income
(loss) Per Common Share





Net
income (loss) per common share is based on the weighted average number of shares
of common stock outstanding during the applicable period.  Basic loss
per share is computing by diving loss available to common stockholders by the
weighted average number of common shares outstanding during the
period.  The common stock equivalents for our preferred stock and
treasury shares were not included in the computation of diluted loss per share
because to do so would have been anti-dilutive.





For the
nine month periods ended September 30, 2008 and 2007, common stock equivalents
of 1,573,000 and 1,573,000 respectively, were not included in the calculation of
diluted loss per share as their effect would be anti-dilutive.





Contractual
Obligations and Commercial Commitments





Our
contractual obligations, as of September 30, 2008, were as follows:





26
 Table of Contents




Total
                
                
                Less
      Than 1 year
                
                
                2-3 years
                
                
                4-5 years
                
                
                Over
      5 yearsMortgage
      notes payable
                
                
                7,921,723
                
                
                
                29,536
                
                
                
                249,465
                
                
                
                278,311
                
                
                
                7,363,911Promissory
      notes payable - related party
                
                
                2,188,370
                
                
                
                -
                
                
                
                2,188,370
                
                
                
                -
                
                
                
                -Line
      of Credit
                
                
                9,718
                
                
                
                9,718
                
                
                
                -
                
                
                
                -
                
                
                
                -





Critical
Accounting Policies





The
preparation of Excellency’s consolidated financial statements in conformity with
accounting principles generally accepted in the United States requires us to
make estimates and judgments that affect reported assets, liabilities, revenues,
and expenses, and the disclosure of contingent assets and
liabilities.  Excellency bases estimates and judgments on historical
experience and on various other assumptions management believes to be reasonable
under the circumstances.  Future events, however, may differ markedly
from current expectations and assumptions.  While there are a number
of significant accounting policies affecting Excellency’s consolidated financial
statements, management believes the following critical accounting policies
involve the most complex, difficult and subjective estimates and
judgments.





Recently
Issued Accounting Pronouncements





In
December 2007, the FASB issued Statement of Financial Accounting Standard No.
141 (R), Business Combinations(“SFAS 141 (R)”), which becomes effective for fiscal periods beginning
after December 15, 2008.  SFAS No. 141 (R) requires all business
combinations completed after the effective date to be accounted for by applying
the acquisition method (previously referred to as the purchase
method).  Companies applying this method will have to identify the
acquirer, determine the acquisition date and purchase price and recognize at
their acquisition date fair values of the identifiable assets acquired,
liabilities assumed, and any non-controlling interests in the
acquiree.  In the case of a bargain purchase the acquirer is required
to reevaluate the measurements of the recognized assets and liabilities at the
acquisition date and recognize a gain on that date if an excess
remains.  Excellency does not expect the adoption of this statement to
have a material impact on its financial statements.





In
December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements, an Amendment of ARB 51(“SFAS 160”)
which becomes effective for fiscal periods beginning after December 15,
2008.  This statement amends ARB 51 to establish accounting and
reporting standards for the non-controlling interest in a subsidiary and for the
deconsolidation of a subsidiary.  The statement requires ownership
interests in subsidiaries held by parties other than the parent be clearly
identified, labeled, and presented in the consolidated statement of financial
position within equity, but separate from the parent’s equity.  The
statement also requires consolidated net income to be reported at amounts that
include the amounts attributable to both the parent and the non-controlling
interest with disclosure on the face of the consolidated statement of income, of
the amounts of consolidated net income attributable to the parent and to the
non-controlling interest.  In addition, this statement establishes a
single method of accounting for changes in a parent’s ownership interest in a
subsidiary that do not result in deconsolidation and requires that a parent
recognize a gain or loss in net income when a subsidiary is
deconsolidated.  Excellency does not expect the adoption of this
statement to have a material impact on its financial statements.





In
February 2007, the FASB issued Statement No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities — Including an amendment to FASB
Statement No. 115.  This statement permits companies to choose
to measure many financial instruments and other items at fair
value.  The objective is to improve financial reporting by providing
entities with the opportunity to mitigate volatility in reported earnings caused
by measuring related assets and liabilities differently without having to apply
complex hedge accounting provisions.  This statement is expected to
expand the use of fair value measurement of accounting for financial
instruments.  This statement applies to all entities, including not
for profit.





27
 Table of Contents





The fair
value option established by this statement permits all entities to measure
eligible items at fair value at specified election dates.  This
statement is effective as of the beginning of an entity’s first fiscal year that
begins after November 15, 2007.





We are
currently assessing the impact adoption of SFAS No. 159 will have on our
financial statements.





In
September 2006, the FASB issued SFAS No. 157, Fair Value
Measurement.  This statement defines fair value, establishes a
framework for measuring fair value in generally accepted accounting principles,
and expands disclosures about fair value measurements.  This statement
applies under other accounting pronouncements that require or permit fair value
measurements.  SFAS No. 157 is effective for fiscal years beginning
after November 15, 2007.  We are currently assessing the impact of the
adoption of SFAS No. 157 will have on our financial statements.





In
December 2007, the FASB ratified EITF No. 07-1, Accounting for Collaborative
Arrangements.EITF 07-1 defines collaborative arrangements and
establishes reporting requirements for transactions between participants in a
collaborative arrangement and between participants in the arrangement and third
parties.  EITF 07-1 also establishes the appropriate income statement
presentation and classification for joint operating activities and payments
between participants, as well as the sufficiency of the disclosures related to
these arrangements.  EITF 07-1 is effective for fiscal years beginning
after December 15, 2008, and would be applied retrospectively as a change in
accounting principle for collaborative arrangements existing at the effective
date.  We are currently evaluating the potential impact, if any of
EITF 07-1 on our financial statements.





In March
of 2008 the FASB issued SFAS No. 161, Disclosures about Derivative
Instruments and Hedging Activities, an amendment of FASB No. 133Accounting for Derivative
Instruments and Hedging Activities.  The use and complexity of
derivative instruments and hedging activities have increased significantly over
the past several years.  Constituents have expressed concerns that the
existing disclosure requirements in FASB Statement No. 133, Accounting for Derivative
Instruments and Hedging Activities, do not provide adequate information
about how derivative and hedging activities affect an entity’s financial
position, financial performance, and cash flows.  Accordingly, this
Statement requires enhanced disclosures about an entity’s derivative and hedging
activities and thereby improves the transparency of financial
reporting.  This Statement is effective for financial statements
issued for fiscal years and interim periods beginning after November 15, 2008,
with early application encouraged.  This Statement encourages, but
does not require, comparative disclosures for earlier periods at initial
adoption.  We do not expect the adoption of this statement to have an
impact on our financial statements.





Off-Balance
Sheet Arrangements





We have
no off-balance sheet arrangements that have or are reasonably likely to have a
current or future effect on our financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity, capital
expenditures or capital resources that are material to investors.





28
 Table of Contents





Item3.
            Quantitative
      and Qualitative Disclosures About Market
Risk.





We are a
smaller reporting company as defined by Rule 12b-2 of the Securities Exchange
Act of 1934 and are not required to provide the information under this
item.





Item4.
            Controls
      and Procedures.





See Item
4(T) below.







Item
      4(T).
            Disclosure
      Controls and Procedures.





Our
management is responsible for establishing and maintaining disclosure controls
and procedures that are designed to ensure that information required to be
disclosed in our reports under the Securities Exchange Act of 1934 (the
“Exchange Act”) is recorded, processed, summarized and reported within the time
periods specified in the rules and forms of the Securities and Exchange
Commission (the “SEC”), and that such information is accumulated and
communicated to our management, including our Chief Executive Officer and Chief
Financial Officer, as appropriate, to allow timely decisions regarding required
disclosure based closely on the definition of “disclosure controls and
procedures” in Rule 15d-15(e) under the Exchange Act. In designing and
evaluating the disclosure controls and procedures, management recognized that
any controls and procedures, no matter how well designed and operated, can
provide only reasonable assurance of achieving the desired control objectives,
and management necessarily was required to apply its judgment in evaluating the
cost-benefit relationship of possible controls and procedures.





At the
end of the period covered by this Quarterly Report, we carried out an
evaluation, under the supervision and with the participation of our management,
including our Chief Executive Officer and Chief Financial Officer, of the
effectiveness of the design and operation of our disclosure controls and
procedures. Based upon the foregoing, our Chief Executive Officer and Chief
Financial Officer concluded that, as of September 30, 2008, the disclosure
controls and procedures of our Company were not effective to ensure that the
information required to be disclosed in our Exchange Act reports was recorded,
processed, summarized and reported on a timely basis.





During
our review of controls for the audited period ended December 31, 2007, and in
the process of preparing our Annual Report, our management discovered that there
are material weaknesses in our internal controls over financial reporting. A
material weakness is a deficiency, or a combination of deficiencies, in internal
control over financial reporting, such that there is a reasonable possibility
that a material misstatement of our annual or interim financial statements will
not be prevented or detected on a timely basis. The material weaknesses
identified during the preparation of the Annual Report were (i) insufficient
evidence of a robust corporate governance function; (ii) lack of sufficient
resources with SEC, generally accepted accounting principals (GAAP); (iii)
inadequate security over information technology and (iv) lack of evidence to
document compliance with the operation of internal accounting controls in
accordance with our policies and procedures. These control deficiencies could
result in a material misstatement of significant accounts or disclosures that
would result in a material misstatement to our interim or annual financial
statements that would not be prevented or detected. Accordingly, management has
determined that these control deficiencies constitute material
weaknesses.





Changes
in Internal Control Over Financial Reporting





There
were no changes in internal controls over financial reporting that occurred
during the quarter ended September 30, 2008, that have materially affected, or
are reasonably likely to materially affect, our internal control over financial
reporting.





This
report does not include an attestation report of our registered public
accounting firm regarding internal control over financial
reporting.





29
 Table of Contents





PART
II


Other
Information







Item1.
            Legal
      Proceedings.





Securities and Exchange Commission
v. Excellency Investment Realty Trust, Inc. and David D. Mladen, Case No.
308CV01583 filed in the United Stated District Court District of Connecticut on
October 16, 2008.  This case involves an alleged fraudulent market
manipulation scheme in which Defendants Excellency Investment Realty Trust, Inc.
and David D. Mladen, our president, chief executive officer and majority
shareholder, allegedly engaged in a number of transactions designed to
artificially inflate the price of our common stock.  Our attorneys
have been instructed to vigorously defend against this action.  It is
too early to ascertain a probable outcome.







Item
      1A.
            Risk
      Factors.





We are a
smaller reporting company as defined by Rule 12b-2 of the Securities Exchange
Act of 1934 and are not required to provide the information under this
item.







Item2.
            Unregistered
      Sales of Equity Securities and Use of
Proceeds.





In the
three-month period ended September 30, 2008, and subsequent period through the
date hereof, we did not issue any unregistered securities.







Item3.
            Defaults
      Upon Senior Securities.





During
the three-month period ended September 30, 2008, and subsequent period through
the date hereof, we did not default upon any senior securities.







Item4.
            Submission
      of Matters to a Vote of Security
Holders.





No
matters were submitted to a vote of our security holders during the three-month
period ended September 30, 2008, or subsequent period through the date
hereof.







Item5.
            Other
      Information.





There was
no information we were required to disclose in a report on Form 8-K during the
three-month period ended September 30, 2008, or subsequent period through the
date hereof, that we did not report.





30
 Table of Contents





Item6.
            Exhibits.







Exhibit No.
                  
                  Identification of
Exhibit31.1*
                  
                  Certification
      of David Mladen, Chief Executive Officer of Excellency Investment Realty
      Trust, Inc., pursuant to 18 U.S.C. §1350, as adopted pursuant to §302 of
      the Sarbanes-Oxley Act of 2002.31.2*
                  
                  Certification
      of Richard Pelletier, Chief Financial Officer of Excellency Investment
      Realty Trust, Inc., pursuant to 18 U.S.C. §1350, as adopted pursuant to
      §302 of the Sarbanes-Oxley Act of 2002.32.1*
                  
                  Certification
      of David Mladen, Chief Executive Officer of Excellency Investment Realty
      Trust, Inc., pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of
      the Sarbanes-Oxley Act of 2002.32.2*
                  
                  Certification
      of Richard Pelletier, Chief Financial Officer of Excellency Investment
      Realty Trust, Inc., pursuant to 18 U.S.C. §1350, as adopted pursuant to
      §906 of the Sarbanes-Oxley Act of
2002.





*      Filed
Herewith





SIGNATURES





In
accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.





EXCELLENCY
      INVESTMENT REALTY TRUST, INC.Date:
      November 14, 2008.By
              /s/ David MladenDavid
      Mladen, Chief Executive OfficerBy
              /s/ Richard PelletierRichard
      Pelletier, Chief Financial
Officer








Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, this
report has been signed by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.





Signature
                        
                        Title
                        
                        Date/s/ David Mladen
                        
                        President,
      Chief Executive Officer and Director
                        
                        November
      14, 2008/s/ Richard Pelletier
                        
                        Chief
      Financial Officer
                        
                        November
      14,
2008






31