SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) March 1, 1999
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Presidential Realty Corporation
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(Exact name of registrant as specified in charter)
DELAWARE 1-8594 13-1954619
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification Number)
180 South Broadway, White Plains, New York 10605
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (914) 948-1300
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No change since last Report
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(Former name or former address, if changed since
last report)
Item 5. Other Events.
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On February 22, 1999, Presidential Realty Corporation consummated
the sale of its First and Second Mortgage Notes (excluding a $4,000,000 portion
of the Second Mortgage Note, which it retained) secured by unsold condominium
units at Fairfield Towers Apartments in Brooklyn, New York. The press release
dated February 26, 1999 attached as Exhibit 99 describes the transaction.
As stated in the press release, Presidential received approximately
$10,275,000 from the transaction, after repayment of its loan from Fleet Bank
and expenses related to the transaction. Out of this amount, Presidential
expects to pay approximately $1,700,000 of tax on the capital gain resulting
from the sale and to invest the balance of approximately $8,575,000 in rental
apartment properties. In addition, Presidential will receive interest on its
$4,000,000 retained note in the amount of $385,000 per annum for the first three
years and $420,000 per annum for the remaining seven years of the term of the
Note.
During the nine months ended September 30, 1998 and the year ended
December 31, 1997, Presidential reported income (net of deductions of interest
and amortization of loan acquisition costs on the Fleet note payable) of
$750,939 and $1,000,695, respectively, from the First and Second Mortgage Notes.
On a cash flow basis, Presidential received in the nine months ended September
30, 1998 and in the year ended December 31, 1997, $561,498 and $753,758,
respectively, from this investment, net of the Fleet expenses.
Item 7. Financial Statements, Pro Forma Financial Information and
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Exhibits.
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(c) Exhibits:
99. Press Release of Presidential Realty Corporation dated
February 26, 1999.
Page 2 of 6 pages
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: March 1, 1999 PRESIDENTIAL REALTY CORPORATION
By: Jeffrey F. Joseph
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Jeffrey F. Joseph
President
Page 3 of 6 pages
INDEX OF EXHIBITS
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Exhibit 99 Press Release dated February 26, 1999 Page 5
Page 4 of 6 pages
Exhibit 99
PRESIDENTIAL FOR IMMEDIATE RELEASE
REALTY NEWS White Plains, New York
February 26, 1999
CORPORATION
180 South Broadway, White Plains, N.Y. 10605 - (914) 948-1300
Jeffrey Joseph, President of Presidential Realty Corporation, a real
estate investment trust whose shares are listed on the American Stock Exchange
(PDLA and PDLB), announced today that Presidential had completed the sale of
substantially all of its first and second mortgage notes receivable secured by
990 Sponsor owned condominium units at the Fairfield Towers apartment property
in Brooklyn, New York. The First Mortgage Note, which had an outstanding
principal balance of $17,002,695, was acquired by Presidential in October, 1996
at a discount of $3,500,000. The Second Mortgage Note, which had an outstanding
principal balance of $14,206,895, was obtained by Presidential when it sold the
Fairfield Towers apartment property in 1984. Presidential retained a $4,000,000
interest in the Second Mortgage Note.
The aggregate purchase price for the First Mortgage Note and the Second
Mortgage Note (excluding the $4,000,000 interest retained by Presidential) was
$21,350,000.
The Second Mortgage Note, which was in default, had approximately
$11,000,000 of interest and other charges which were deferred and payable out of
the proceeds of sales of condominium units, but only after the First Mortgage
was repaid in full. In addition, at the time of the sale, there were
approximately $3,000,000 of past due real estate taxes payable with respect to
the condominium units, which were paid by the purchaser.
In connection with this transaction, the $4,000,000 portion of the
Second Mortgage Note retained by Presidential was modified to provide for a
ten-year maturity date and interest at the rate of 9.625% for the first three
years and at 10.5% for the remaining seven years. To secure this obligation,
Presidential obtained subordinate security interests in three apartment
properties located in New Jersey (having an estimated equity value of
approximately $7,000,000) as collateral for the Note.
In connection with the sale, Presidential repaid the $10,195,442
outstanding principal balance of its note payable to Fleet Bank, which had been
secured by Presidential's interest in the First Mortgage Note.
As a result of the transaction, Presidential will, for financial
reporting purposes, recognize a gain on sale (before taxes) of approximately
$7,800,000.
Page 5 of 6 pages
Exhibit 99
After payment of the Fleet loan and expenses related to the
transaction, but before payment of any income tax on the capital gain,
Presidential will retain approximately $10,275,000 from the sale. Presidential
expects to pay approximately $1,700,000 of taxes on the retained capital gain
and invest the balance in rental apartment properties. In addition, Presidential
will receive interest on its $4,000,000 retained Note in the amount of $385,000
per annum for the first three years and $420,000 per annum for the remaining
seven years of the term.
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For further information contact:
Jeffrey F. Joseph, President
Presidential Realty Corporation
at the above address and telephone number
Page 6 of 6 pages
