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 June 30, 1999
----------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-8594
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PRESIDENTIAL REALTY CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 13-1954619
--------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
180 South Broadway, White Plains, New York 10605
------------------------------------------ ------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, indicating area code 914-948-1300
------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes x No
------ ------
The number of shares outstanding of each of the issuer's classes of common stock
as of the close of business on August 6, 1999 was 478,940 shares of Class A
common and 3,142,418 shares of Class B common.
PRESIDENTIAL REALTY CORPORATION AND SUBSIDIARIES
Index to Form 10-Q
For the Six Months Ended
June 30, 1999
Part I - Financial Information (Unaudited)
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K
<TABLE>
PRESIDENTIAL REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
<CAPTION>
Assets June 30, December 31,
1999 1998
------------------ ------------------
<S> <C> <C>
Mortgage portfolio (Note 2):
Sold properties, accrual $28,762,713 $43,440,675
Related parties, accrual 1,618,101 1,698,982
Sold properties, impaired 17,589,027
------------------ ------------------
Total mortgage portfolio 30,380,814 62,728,684
------------------ ------------------
Less discounts:
Sold properties, accrual 2,077,083 4,049,630
Related parties, accrual 138,646 149,685
Sold properties, impaired 7,597,138
------------------ ------------------
Total discounts 2,215,729 11,796,453
------------------ ------------------
Less deferred gains:
Sold properties, accrual 11,320,373 12,538,907
Related parties, accrual 919,470 930,057
Sold properties, impaired 6,362,838
------------------ ------------------
Total deferred gains 12,239,843 19,831,802
------------------ ------------------
Net mortgage portfolio (of which $277,244 in 1999
and $931,393 in 1998 are due within one year) 15,925,242 31,100,429
------------------ ------------------
Real estate (Note 3) 35,173,585 34,703,657
Less: accumulated depreciation 7,715,051 7,231,639
------------------ ------------------
Net real estate 27,458,534 27,472,018
------------------ ------------------
Minority partners' interest (Note 4) 7,700,968 7,552,743
Prepaid expenses and deposits in escrow 2,225,946 2,130,214
Other receivables (net of valuation allowance of
$124,469 in 1999 and $120,102 in 1998) 725,161 623,521
Securities available for sale (Note 5) 8,845,074 1,274,734
Cash and cash equivalents 1,642,598 1,764,465
Other assets 1,656,619 1,988,121
------------------ ------------------
Total Assets $66,180,142 $73,906,245
================== ==================
See notes to consolidated financial statements.
</TABLE>
<TABLE>
PRESIDENTIAL REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
<CAPTION>
Liabilities and Stockholders' Equity
June 30, December 31,
1999 1998
---------------- ------------------
<S> <C> <C>
Liabilities:
Mortgage debt (Note 6):
Properties owned $39,597,251 $39,728,031
Wrap mortgage debt on sold properties 4,668,462
----------------- ------------------
Total (of which $1,335,642 in 1999 and $905,305
in 1998 are due within one year) 39,597,251 44,396,493
Note payable to bank (Note 7) 10,395,361
Executive pension plan liability 1,488,539 1,496,357
Accrued liabilities 1,646,038 2,630,564
Accrued taxes payable (Note 8) 1,566,474
Accrued postretirement costs 554,828 562,167
Deferred income 151,988 565,713
Accounts payable 341,327 235,807
Other liabilities 789,254 772,949
------------------ ------------------
Total Liabilities 46,135,699 61,055,411
------------------ ------------------
Stockholders' Equity:
Common stock; par value $.10 per share
Class A, authorized 700,000 shares, issued and
outstanding 478,940 shares 47,894 47,894
Class B June 30, 1999 December 31, 1998 314,291 313,609
----------- -------------------- -----------------
Authorized: 10,000,000 10,000,000
Issued: 3,142,907 3,136,092
Treasury: 1,258 11,224
Additional paid-in capital 2,153,031 2,172,368
Retained earnings 17,955,776 10,453,253
Net unrealized gain (loss) on securities available for sale (Notes 5 and 9) (409,721) 15,677
Class B, treasury stock (at cost) (Note 10) (16,828) (151,967)
------------------ ------------------
Total Stockholders' Equity 20,044,443 12,850,834
------------------ ------------------
Total Liabilities and Stockholders' Equity $66,180,142 $73,906,245
================== ==================
See notes to consolidated financial statements.
</TABLE>
<TABLE>
PRESIDENTIAL REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
<CAPTION>
SIX MONTHS ENDED JUNE 30,
---------------------------------------
1999 1998
----------------- -----------------
Income:
<S> <C> <C>
Rental $5,216,605 $4,709,588
Interest on mortgages - sold properties 1,423,048 1,896,418
Interest on wrap mortgages 528,173 641,496
Interest on mortgages - related parties 144,987 263,564
Investment income 338,052 66,593
Other 53,468 28,930
----------------- -----------------
Total 7,704,333 7,606,589
----------------- -----------------
Costs and Expenses:
General and administrative 1,365,350 1,401,101
Interest on note payable and other 215,090 568,656
Interest on wrap mortgage debt 54,586 105,367
Amortization of loan acquisition costs 3,128 16,229
Depreciation on non-rental property 12,723 11,777
Rental property:
Operating expenses 2,291,040 2,043,870
Interest on mortgages 1,483,639 1,181,120
Real estate taxes 430,726 439,278
Depreciation on real estate 491,622 379,655
Amortization of mortgage costs 239,970 161,359
Minority interest share of partnership income 257,449 214,179
----------------- -----------------
Total 6,845,323 6,522,591
----------------- -----------------
Income before net gain from sales of properties, notes and securities 859,010 1,083,998
Net gain from sales of properties, notes and securities (includes a provision
for Federal and State taxes of $1,566,474 in 1999) (Notes 2 and 8) 7,798,999 681,218
----------------- -----------------
Net Income $8,658,009 $1,765,216
================= =================
Earnings per Common Share (basic and diluted) (Note 1-C):
Income before net gain from sales of properties, notes and securities $0.24 $0.30
Net gain from sales of properties, notes and securities 2.16 0.19
----------------- -----------------
Net Income per Common Share $2.40 $0.49
================= =================
Cash Distributions per Common Share $0.32 $0.31
================= =================
Weighted Average Number of Shares Outstanding 3,612,942 3,586,805
================= =================
See notes to consolidated financial statements.
</TABLE>
<TABLE>
PRESIDENTIAL REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
<CAPTION>
THREE MONTHS ENDED JUNE 30,
---------------------------------------
1999 1998
----------------- -----------------
Income:
<S> <C> <C>
Rental $2,612,844 $2,342,122
Interest on mortgages - sold properties 581,995 952,817
Interest on wrap mortgages 228,786 320,064
Interest on mortgages - related parties 89,535 98,564
Investment income 226,645 37,780
Other 42,770 25,080
----------------- -----------------
Total 3,782,575 3,776,427
----------------- -----------------
Costs and Expenses:
General and administrative 698,483 738,676
Interest on note payable and other 29,241 283,625
Interest on wrap mortgage debt 23,264 52,000
Amortization of loan acquisition costs 8,114
Depreciation on non-rental property 6,468 6,574
Rental property:
Operating expenses 1,122,281 1,005,908
Interest on mortgages 737,334 652,983
Real estate taxes 209,151 219,641
Depreciation on real estate 248,181 191,370
Amortization of mortgage costs 18,199 124,067
Minority interest share of partnership income 128,796 42,176
----------------- -----------------
Total 3,221,398 3,325,134
----------------- -----------------
Income before net gain from sales of properties, notes and securities 561,177 451,293
Net gain from sales of properties, notes and securities 1,080,031 617,649
----------------- -----------------
Net Income $1,641,208 $1,068,942
================= =================
Earnings per Common Share (basic and diluted) (Note 1-C):
Income before net gain from sales of properties, notes and securities $0.16 $0.12
Net gain from sales of properties, notes and securities 0.30 0.18
----------------- -----------------
Net Income per Common Share $0.46 $0.30
================= =================
Cash Distributions per Common Share $0.16 $0.16
================= =================
See notes to consolidated financial statements.
</TABLE>
<TABLE>
PRESIDENTIAL REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
<CAPTION>
SIX MONTHS ENDED JUNE 30,
--------------------------------------------
1999 1998
---------------- ----------------
<S> <C> <C>
Cash Flows from Operating Activities:
Cash received from rental properties $5,268,840 $4,602,224
Interest received 2,118,885 2,362,793
Miscellaneous income 55,448 27,682
Interest paid on rental property mortgages (1,493,243) (1,171,692)
Interest paid on wrap mortgage debt (54,586) (105,367)
Interest paid on note payable and other (200,609) (466,545)
Cash disbursed for rental property operations (2,522,018) (3,287,776)
Cash disbursed for general and administrative costs (1,506,057) (1,406,232)
---------------- ----------------
Net cash provided by operating activities 1,666,660 555,087
---------------- ----------------
Cash Flows from Investing Activities:
Payments received on notes receivable 1,897,826 1,021,673
Payments disbursed for investments in notes receivable (60,000)
Payments disbursed for deferred sales commission (1,000,000)
Proceeds from sale of notes receivable (net of a $400,000
deposit on sale received in 1998) 20,331,599
Payments disbursed for additions and improvements (533,114) (253,422)
Proceeds from sale of property 91,452 74,550
Purchases of securities (7,995,738) (41,625)
---------------- ----------------
Net cash provided by investing activities 12,792,025 741,176
---------------- ----------------
Cash Flows from Financing Activities:
Principal payments on mortgage debt:
Properties owned (206,090) (252,431)
Wrap mortgage debt on sold properties (156,222) (238,223)
Mortgage debt payment from proceeds of mortgage refinancing (3,120,190) (10,788,825)
Mortgage proceeds 3,195,500 19,800,000
Repayment of wrap mortgage debt (2,300,000)
Mortgage refinancing repairs and replacement escrows (558,730)
Mortgage costs (82,824) (467,404)
Principal payments on note payable (10,395,361) (72,083)
Cash distributions on common stock (1,155,486) (1,111,778)
Proceeds from dividend reinvestment and share purchase plan 45,795 94,975
Distributions to minority partners (405,674) (3,825,839)
---------------- ----------------
Net cash (used in) provided by financing activities (14,580,552) 2,579,662
---------------- ----------------
Net (Decrease) Increase in Cash and Cash Equivalents (121,867) 3,875,925
Cash and Cash Equivalents, Beginning of Period 1,764,465 979,712
---------------- ----------------
Cash and Cash Equivalents, End of Period $1,642,598 $4,855,637
================ ================
See notes to consolidated financial statements.
</TABLE>
<TABLE>
PRESIDENTIAL REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
<CAPTION>
SIX MONTHS ENDED JUNE 30,
--------------------------------------------
1999 1998
---------------- ----------------
<S> <C> <C>
Reconciliation of Net Income to Net Cash
Provided by Operating Activities
Net Income $8,658,009 $1,765,216
---------------- ----------------
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 747,443 569,020
Gain from sales of properties, notes and securities (includes a provision
for Federal and State taxes of $1,566,474 in 1999) (7,798,999) (681,218)
Issuance of treasury stock 10,755 10,440
Amortization of discounts on notes and fees (455,484) (546,801)
Minority share of partnership income 257,449 214,179
Changes in assets and liabilities:
Decrease (increase) in accounts receivable (101,640) 157,045
Increase (decrease) in accounts payable and accrued liabilities 344,926 (11,470)
Decrease in deferred income (13,725) (8,714)
Decrease (increase) in prepaid expenses, deposits in escrow
and deferred charges 17,682 (644,533)
Increase in security deposit restricted funds (293,667)
Increase (decrease) in security deposit liabilities (1,478) 27,886
Other 1,722 (2,296)
---------------- ----------------
Total adjustments (6,991,349) (1,210,129)
---------------- ----------------
Net cash provided by operating activities $1,666,660 $555,087
================ ================
Supplemental noncash disclosures:
Property received in satisfaction of debt $11,569
================
See notes to consolidated financial statements.
</TABLE>
PRESIDENTIAL REALTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 1999
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. General - Presidential Realty Corporation ("Presidential" or the "Company"),
a Real Estate Investment Trust ("REIT"), is engaged principally in the holding
of notes and mortgages secured by real estate and in the ownership of income
producing real estate. Presidential operates in a single business segment,
investments in real estate related assets.
B. Principles of Consolidation - The consolidated financial statements include
the accounts of Presidential Realty Corporation and its wholly owned
subsidiaries. Additionally, the consolidated financial statements include 100%
of the account balances of UTB Associates and PDL, Inc. and Associates Limited
Co-Partnership ("Home Mortgage Partnership"), partnerships in which Presidential
or PDL, Inc., a wholly owned subsidiary of Presidential, is the General Partner.
All significant intercompany balances and transactions have been eliminated.
C. Net Income Per Share - Basic net income per share data is computed by
dividing the net income by the weighted average number of shares of Class A and
Class B common stock outstanding during each period. Basic net income per share
and diluted income per share are the same for the six months ended June 30, 1999
and 1998. The dilutive effect of stock options is calculated using the treasury
stock method.
D. Basis of Presentation - The accompanying unaudited consolidated financial
statements have been prepared in accordance with generally accepted accounting
principles for interim financial information. In the opinion of management, all
adjustments (consisting of only normal recurring accruals) considered necessary
for a fair presentation of the results for the respective periods have been
reflected. These financial statements and accompanying notes should be read in
conjunction with the Company's Form 10-K for the year ended December 31, 1998.
E. Management Estimates - In preparing the consolidated financial statements in
conformity with generally accepted accounting principles, management is required
to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities as of the date
of the consolidated balance sheets and the reported amounts of income and
expense for the reporting period. Actual results could differ from those
estimates.
2. MORTGAGE PORTFOLIO
The Company's mortgage portfolio includes notes receivable - sold properties and
notes receivable - related parties.
Notes receivable - sold properties consist of:
(1) Long-term purchase money notes from sales of properties previously owned by
the Company or notes purchased by the Company. These purchase money notes have
varying interest rates with balloon payments due at maturity.
(2) Notes receivable from sales of cooperative apartment units. These notes
generally have market interest rates and the majority of these notes amortize
monthly with balloon payments due at maturity.
Notes receivable - related parties are all due from Ivy Properties, Ltd. or its
affiliates (collectively "Ivy") and consist of:
(1) Purchase money notes resulting from sales of property or partnership
interests to Ivy.
(2) Notes receivable relating to loans made by the Company to Ivy in connection
with Ivy's cooperative conversion business.
During the six months ended June 30, 1999, the Company sold the Fairfield Towers
First Mortgage Note and substantially all of the Fairfield Towers Second
Mortgage Note (the Fairfield Towers Second Mortgage Note had been classified as
an impaired loan). The Company also sold the Grant House wraparound mortgage
note which had been classified as an impaired loan and the Company received a
$317,662 prepayment on its Pinewood mortgage note. In addition, the $13,300,000
Crown Tower and Madison Towers wraparound mortgage notes were modified and
extended. In connection with the modification, Presidential received a
$1,000,000 payment on the mortgage notes, paid a deferred brokerage commission
of $1,000,000 and repaid the $2,300,000 first mortgage debt on the properties.
Fairfield Towers
On February 22, 1999, Presidential consummated the sale of its Fairfield Towers
First and Second Mortgage Notes (excluding a $4,000,000 portion of the Second
Mortgage Note, which it retained). At the date of the sale, the Fairfield Towers
First Mortgage Note had an outstanding principal balance of $17,002,695 and a
net carrying value of $13,957,284 after deducting a discount of $3,045,411. The
Fairfield Towers Second Mortgage Note, which was classified as an impaired loan,
had an outstanding principal balance of $14,206,895 and a net carrying value of
$1,311,908 after deducting discount and deferred gain of $12,894,987.
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.
In connection with this transaction, the $4,000,000 portion of the Second
Mortgage Note retained by Presidential was modified to provide for interest at
the rate of 9.625% per annum for the first three years and at the rate of 10.5%
per annum for the remaining seven years. The $4,000,000 outstanding principal
balance is due at maturity on February 18, 2009. To secure this obligation,
Presidential obtained subordinate security interests in three apartment
properties located in New Jersey as collateral for the Note.
As a result of this transaction, 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. Presidential recognized a
gain on sale (before taxes) of $7,617,214 and a net gain on sale of $6,050,740
after accrued taxes of $1,566,474.
Grant House
On January 28, 1999, the Company sold its equity interest in the $3,235,833
Grant House wraparound mortgage note, which had been classified as an impaired
loan. The Company's underlying second mortgage in the outstanding principal
amount of $1,023,593 was sold to the purchaser for a purchase price of $500,000.
The nonrecourse first mortgage which Presidential's second mortgage wrapped
around was assigned to the purchaser. As a result of this transaction,
Presidential wrote off the $2,212,240 balance on the first mortgage and the
related $2,212,240 mortgage debt, $75,000 of the sales proceeds was applied to
accrued and unpaid interest and the Company recognized a gain on sale of
$425,000.
Pinewood
In January, 1999, the Company received a $317,662 principal prepayment on its
$417,662 mortgage note which is secured by 316 apartment units at Pinewood in
Des Moines, Iowa. As a result of the $317,662 prepayment, the Company recognized
a deferred gain on sale of $218,534.
Crown Tower and Madison Towers
The Crown Tower and Madison Towers wraparound mortgage notes in the outstanding
principal amount of $13,300,000, which were secured by the Crown Tower and
Madison Towers properties in New Haven, Connecticut, were modified in June of
1999. In connection with the modification, the Company repaid the $2,300,000
first mortgage debt on these properties (wrap mortgage debt on sold properties)
and consolidated the $13,300,000 outstanding principal balance of the wraparound
mortgage notes into one consolidated note (the "New Haven note"). The Company
received a $1,000,000 principal payment on the New Haven note and paid a
$1,000,000 deferred brokerage commission (which had been deferred from the sale
of the New Haven properties in 1984). As a result of these transactions, the
Company received a $30,750 loan modification fee and recognized a deferred gain
on sale of $1,000,000.
The New Haven note in the outstanding principal balance of $12,300,000 is due at
maturity on June 29, 2002. The note provides for an interest rate of 10% per
annum, with a 1/2 percent annual rate increase and additional interest of
$369,000 due at maturity. The New Haven note is secured by a second mortgage on
the Encore Apartments and commercial space located in New York, New York and by
a limited guarantee of $2,500,000 from one of the owners of the property.
At June 30, 1999, all of the notes in the Company's mortgage portfolio are
current.
3. REAL ESTATE
Real estate is comprised of the following:
June 30, December 31,
1999 1998
----------- -----------
Land $ 5,453,208 $ 5,454,549
Buildings and leaseholds 29,456,380 29,008,677
Furniture and equipment 263,997 240,431
----------- -----------
Total real estate $35,173,585 $34,703,657
=========== ===========
4. MINORITY PARTNERS' INTEREST
Presidential is the General Partner of UTB Associates and PDL, Inc., a wholly
owned subsidiary of Presidential, is the General Partner of Home Mortgage
Partnership. Presidential has a 66-2/3% interest in UTB Associates, and
Presidential and PDL, Inc. have an aggregate 26% interest in Home Mortgage
Partnership. As the General Partner of these partnerships, Presidential and PDL,
Inc., respectively, exercise effective control over the business of these
partnerships, and, accordingly, Presidential consolidates these partnerships in
the accompanying financial statements. The minority partners' interest reflects
the minority partners' equity in the partnerships.
The minority partners' interest in the Home Mortgage Partnership is a negative
interest and therefore, minority partners' interest is a net asset on the
Company's financial statements. The negative basis for each partner's interest
in the Home Mortgage Partnership is due to the refinancing of the mortgage on
the property and the distribution of the proceeds to the partners. The mortgage
debt, which is included in the Company's financial statements, is substantially
in excess of the net carrying amount of the property, but the estimated fair
value of the property is significantly greater than the mortgage debt. Thus, the
asset recorded as minority partners' interest should be realized upon sale of
the property.
Minority partners' interest is comprised of the following:
June 30, December 31,
1999 1998
---------- ------------
Home Mortgage Partnership $7,881,341 $7,735,342
UTB Associates (180,373) (182,599)
---------- ------------
Total minority partners' interest $7,700,968 $7,552,743
========== ============
5. SECURITIES AVAILABLE FOR SALE
The cost and fair value of securities available for sale are as follows:
June 30, December 31,
1999 1998
----------- ------------
Cost $9,254,795 $1,259,057
Gross unrealized gains 6,243 23,433
Gross unrealized losses (415,964) (7,756)
----------- ------------
Fair value $8,845,074 $1,274,734
=========== ============
During the six months ended June 30, 1999 and 1998, there were no sales
of securities available for sale.
6. MORTGAGE DEBT
In January, 1999, the Company refinanced the mortgage on its Cambridge Green
property. The existing mortgage balance of $3,120,190 was paid from the proceeds
of the new $3,195,500 mortgage. The new mortgage bears interest at the rate of
6.65% per annum, requires monthly payments of principal and interest of $20,358,
and matures on October 1, 2029.
As a result of the refinancing of this mortgage, the Company wrote off $166,756
of unamortized mortgage costs and paid a prepayment penalty fee of $31,200
relating to the prior mortgage.
As described in Note 2 above, during the six months ended June 30, 1999, the
Company sold the Grant House wraparound mortgage and repaid the Crown Tower
and Madison Towers first mortgage debt (the wrap mortgage debt). As a result of
these transactions, wrap mortgage debt was reduced from $4,668,462 at December
31, 1998 to $0 at June 30, 1999.
7. NOTE PAYABLE TO BANK
In connection with the Company's purchase of the Fairfield Towers First Mortgage
in 1996, the Company obtained a bank loan from Fleet Bank, N.A. The note, which
was due to mature on October 30, 2001, was secured by a collateral assignment of
the Fairfield Towers First Mortgage and was nonrecourse to Presidential except
for a limited guarantee.
Presidential sold the Fairfield Towers First Mortgage in February, 1999 and
repaid the outstanding principal balance of the note to Fleet Bank from the
proceeds of the sale. The outstanding principal balance at the date of the sale
was $10,195,442.
The Company has an unsecured $250,000 line of credit from a lending institution.
The interest rate is 1% above the prime rate and the line of credit expires in
February, 2000. Presidential pays a 1% annual fee for the line of credit. At
June 30, 1999, no advances are outstanding on this line of credit.
8. INCOME TAXES
Presidential has elected to qualify as a Real Estate Investment Trust under the
Internal Revenue Code. A REIT which distributes at least 95% of its real estate
investment trust taxable income to its shareholders each year by the end of the
following year and which meets certain other conditions will not be taxed on
that portion of its taxable income which is distributed to its shareholders.
For the year ended December 31, 1998, the Company had taxable income (before
distributions to stockholders) of approximately $1,738,000 ($.48 per share),
which included approximately $777,000 ($.21 per share) of capital gains. This
amount will be reduced by approximately $199,000 ($.06 per share) of the 1998
distributions that were not utilized in reducing the Company's 1997 taxable
income and by any eligible 1999 distributions that the Company may elect to
utilize as a reduction of its 1998 taxable income.
As previously stated, in order to retain REIT status, Presidential is required
to distribute 95% of its REIT taxable income (exclusive of capital gains). As
of June 30, 1999, Presidential has distributed the required 95% of its 1998 REIT
taxable income. In addition, although no assurances can be given, it is the
Company's present intention to distribute all of its 1998 taxable income and,
therefore, no provision for income taxes was made at December 31, 1998.
Furthermore, the Company had taxable income (before distributions to
stockholders) for the six months ended June 30, 1999 of approximately
$4,580,000 ($1.26 per share), which included approximately $4,273,000 ($1.18 per
share) of capital gains. This amount will be reduced by 1999 distributions that
were not utilized in reducing the Company's 1998 taxable income and by any
eligible 2000 distributions that the Company may elect to utilize as a reduction
of its 1999 taxable income.
Presidential intends to continue to maintain its REIT status. The Company
intends to retain the $3,560,000 capital gain from the sale of the Fairfield
Towers Mortgage Notes and, accordingly, has accrued $1,566,474 for Federal and
State income taxes. Retaining this capital gain will not affect Presidential's
REIT status.
Presidential has, for tax purposes, reported the gain from the sale of certain
of its properties using the installment method.
9. COMPREHENSIVE INCOME
The Company's only element of other comprehensive income is the change in the
unrealized gain (loss) on the Company's securities available for sale. Thus,
comprehensive income, which consists of net income plus or minus other
comprehensive income, for the six months ended June 30, 1999 and 1998 was
$8,232,611 and $1,771,544, respectively.
10. TREASURY STOCK
In March, 1999, three directors of the Company were each given 1,000 shares of
the Company's Class B common stock as partial payment for directors fees for the
1999 year. Such shares had been held in treasury at an average cost of
approximately $13.54 per share. The average market value for the previous month
of the Class B common stock, on which the fees were based, was $7.17 per share.
As a result of this transaction, the Company recorded $21,510 in prepaid
directors fees (to be amortized during 1999) based on the average market value
of the stock. Treasury stock was reduced by a cost of $40,618 and additional
paid-in capital was charged $19,108 for the excess of the cost over the market
value. In addition, on March 24, 1999, an executive of the Company was given
7,000 shares of the Company's Class B common stock at a market price of $7.0625
per share (the closing price of the stock on the date of issuance). The Company
recorded a salary expense of $49,438, reduced treasury stock by a cost of
$94,780 and charged additional paid-in capital $45,342 for the excess of the
cost over the market value.
11. COMMITMENTS AND CONTINGENCIES
Presidential is not a party to any material legal proceedings. The Company may
be a party to routine litigation incidental to the ordinary course of its
business. In the opinion of management, all of the Company's properties are
adequately covered by insurance in accordance with normal insurance practices.
The Company is not aware of any environmental issues at any of its properties,
with the exception of the environmental expenses incurred in prior years at its
Mapletree Industrial Center property in Palmer, Massachusetts. The presence,
with or without the Company's knowledge, of hazardous substances at any of its
properties could have an adverse effect on the Company's operating results and
financial condition.
PRESIDENTIAL REALTY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE SIX AND THREE MONTHS ENDED JUNE 30, 1999 AND 1998
Results of Operations
Financial Information for the six months ended June 30, 1999 and 1998:
- ----------------------------------------------------------------------------
Revenue increased by $97,744 primarily as a result of increases in rental
income, investment income and other income. These increases were offset by
decreases in interest on mortgages-sold properties, interest on wrap mortgages
and interest on mortgages-related parties.
Rental income increased by $507,017 primarily as a result of rental income of
$488,180 at the Sunwood Apartments property, which was purchased in August
of 1998. In addition, rental income increased by $81,994 at the Home Mortgage
Plaza and Continental Gardens properties. These increases were offset by a
decrease of $69,690 at the Fairlawn Gardens property.
Interest on mortgages-sold properties decreased by $473,370 primarily due to the
sale of the Fairfield Towers First Mortgage in February of 1999, which decreased
interest income by $595,780. In addition, the amortization of discounts on notes
receivable decreased by $87,922. Amortization of discounts on notes receivable
decrease as notes mature or are sold. These decreases were partially offset by
the $136,889 of interest received on the $4,000,000 unsold portion of the
Fairfield Towers Second Mortgage and interest of $78,925 received on the
modified New Haven note (see below).
Interest on wrap mortgages decreased by $113,323 primarily as a result of the
Company's repayment in June, 1999 of the first mortgage debt on the Crown Tower
and Madison Towers properties. The Crown Tower and Madison Towers wraparound
mortgage notes were modified into one consolidated note (the "New Haven note").
As a result of these transactions, wrap mortgage interest decreased by $78,441
because the modified New Haven note is not a wraparound mortgage note. In
addition, the sale of the Grant House wraparound mortgage note in January, 1999
decreased interest by $34,882.
Interest on mortgages-related parties decreased by $118,577 primarily as a
result of decreases in interest on the Consolidated Loans of $49,324 and
decreases in interest on the Overlook loan of $67,851. The decrease in interest
on the Overlook loan is a result of principal prepayments received in 1998.
Investment income increased by $271,459 primarily as a result of increased
dividend income on securities available for sale.
Other income increased by $24,538 primarily as a result of a $30,750 fee
received on the modification of the New Haven note.
Costs and expenses increased by $322,732 primarily due to increases in rental
property operating expenses, interest on mortgages, depreciation on real estate
and amortization of mortgage costs. These increases were partially offset by a
decrease in interest expense on note payable and a decrease in interest on wrap
mortgage debt.
Rental property operating expenses increased by $247,170 primarily as a result
of the acquisition in August, 1998, of the Sunwood Apartments property which
increased operating expenses by $160,211. In addition, operating expenses at the
Cambridge Green property increased by $116,393. These increases were offset by a
$30,628 decrease in operating expenses at the Home Mortgage Plaza property.
Interest on mortgages increased by $302,519 as a result of a $131,142 increase
in mortgage interest expense on the Home Mortgage Plaza property mortgage. In
April, 1998 the Company refinanced the $10,788,825 mortgage for a new
$17,500,000 mortgage. In addition, the acquisition of the Sunwood Apartments
property increased mortgage interest expense by $158,712 and the new mortgage on
the Fairlawn Gardens property which was obtained in March, 1998, increased
mortgage interest expense by $34,966. These increases were offset by a decrease
of $16,379 on the Cambridge Green mortgage which was refinanced in January,
1999.
Depreciation expense on real estate increased by $111,967 primarily as a result
of $83,272 of depreciation expense on the Sunwood Apartments property and
increases in depreciation expense on a number of properties as a result of
additions and improvements.
Amortization of mortgage costs increased by $78,611 primarily as a result of the
write-off of unamortized mortgage costs of $166,756 and the $31,200 prepayment
penalty fee resulting from the refinancing of the mortgage on the Cambridge
Green property in January, 1999. This increase was offset by a decrease of
$125,618 in amortization of mortgage costs on the Home Mortgage Plaza property.
In 1998, the Company had written off $107,412 of unamortized mortgage costs in
connection with the refinancing of the mortgage on the Home Mortgage Plaza
property.
Interest on note payable and other decreased by $353,566 primarily as a result
of the repayment of the note payable in February, 1999.
Interest on wrap mortgage debt decreased by $50,781 as a result of the repayment
of the first mortgage debt on the Crown Tower and Madison Towers properties
in June of 1999. In addition, in January, 1999, the Company sold the Grant House
wraparound mortgage note and the related first mortgage debt on the property was
assigned to the purchaser.
Net gain from sales of properties, notes and securities are sporadic (as they
depend on the timing of sales or the receipt of installments or prepayments on
purchase money notes). In 1999, the net gain from sales of properties, notes and
securities was $7,798,999 compared with $681,218 in 1998:
Gain from sales recognized at June 30, 1999 1998
Sales of mortgage notes: ---- ----
Fairfield Towers First and Second Mortgages
(net of taxes of $1,566,474) sold in 1999 $6,050,740
Grant House wraparound mortgage note sold in 1999 425,000
Deferred gains recognized upon receipt of
principal payments on notes:
New Haven - $1,000,000 principal payment
received in 1999 1,000,000
Pinewood - $317,662 principal prepayment
received in 1999 218,534
Overlook 10,587 $603,213
Fairfield Towers Second Mortgage 19,466 33,898
Towne House 3,672
Sales of property:
Sherwood House 74,672 40,435
---------- --------
$7,798,999 $681,218
========== ========
Financial Information for the three months ended June 30, 1999 and 1998:
- ----------------------------------------------------------------------------
Revenue increased by $6,148 primarily as a result of increases in rental income
and investment income. These increases were offset by decreases in interest on
mortgages-sold properties and interest on wrap mortgages.
Rental income increased by $270,722 primarily as a result of rental income of
$250,551 at the Sunwood Apartments property and increases of $47,725 at the
Continental Gardens and the University Towers Professional Space properties.
These increases were offset by a $27,247 decrease in rental income at the
Cambridge Green property.
Investment income increased by $188,865 primarily as a result of increased
dividend income on securities available for sale.
Interest on mortgages-sold properties decreased by $370,822 primarily due to the
sale of the Fairfield Towers First Mortgage in February of 1999, which decreased
interest income by $412,484. In addition, the amortization of discount on notes
receivable decreased by $113,241. These decreases were partially offset by the
$97,320 of interest received on the $4,000,000 unsold portion of the Fairfield
Towers Second Mortgage and interest of $78,925 received on the New Haven note.
Interest on wrap mortgages decreased by $91,278 primarily as a result of the
modification of the Crown Tower and Madison Towers wraparound mortgage notes in
June of 1999 which decreased interest on wrap mortgages by $73,970. In addition,
the sale of the Grant House wraparound mortgage note decreased interest by
$17,308.
Costs and expenses decreased by $103,736 primarily due to decreases in general
and administrative expense, interest expense on note payable, interest expense
on wrap mortgage debt and a decrease in amortization of mortgage costs. These
decreases were offset by increases in rental property operating expenses,
interest on mortgages, depreciation expense on real estate and an increase in
minority interest share of partnership income.
General and administrative expenses decreased by $40,193 primarily as a result
of decreases of $148,541 in franchise tax expense resulting from the partnership
distribution received in 1998 from the proceeds of the mortgage on Home Mortgage
Plaza. This decrease was offset by increases in salary expense of $28,956 (of
which $16,117 relates to executive bonuses), increases in payroll tax expense of
$14,252, increases in professional and directors fees of $38,486 and an increase
in executive pension plan expense of $25,463.
Interest on note payable and other decreased by $254,384 as a result of the
repayment of the note payable in February, 1999.
Interest on wrap mortgage debt decreased by $28,736 as a result of the repayment
of the first mortgage debt on the Crown Tower and Madison Towers properties and
the sale of the Grant House wraparound mortgage note.
Rental property operating expenses increased by $116,373 primarily as a result
of the addition of the Sunwood Apartments property which increased operating
expenses by $83,254. In addition, operating expenses at the Cambridge Green
property increased by $61,633. These increases were offset by a decrease in
operating expenses of $35,440 at the Home Mortgage Plaza property.
Interest on mortgages increased by $84,351 primarily as a result of the addition
of the Sunwood Apartments property which increased mortgage interest expense by
$79,245.
Depreciation on real estate increased by $56,811 primarily as a result of the
addition of the Sunwood Apartments property which increased depreciation expense
by $41,698. In addition, additions and improvements to other properties
increased depreciation expense by $15,113.
Amortization of mortgage costs decreased by $105,868 primarily as a result of
the decrease of $107,914 in amortization of mortgage costs on the Home Mortgage
Plaza property. In 1998, the mortgage on the Home Mortgage Plaza property was
refinanced and the mortgage costs pertaining to the prior mortgage were written
off.
Minority interest share of partnership income increased by $86,620 as a result
of an increase in partnership income on the Home Mortgage Plaza property.
Net gain from sales of properties, notes and securities are sporadic (as they
depend on the timing of sales or the receipt of installments or prepayments on
purchase money notes). In 1999, the net gain from sales of properties, notes and
securities was $1,080,031 compared with $617,649 in 1998:
Gain from sales recognized at June 30, 1999 1998
Deferred gains recognized upon receipt of ---- ----
principal payments on notes:
New Haven - $1,000,000 principal payment
received in 1999 $1,000,000
Overlook 5,359 $596,854
Fairfield Towers Second Mortgage 17,123
Towne House 3,672
Sale of property:
Sherwood House 74,672
----------- ---------
$1,080,031 $617,649
=========== =========
Balance Sheet
Net mortgage portfolio decreased by $15,175,187 primarily as a result of the
sale of the Fairfield Towers First and Second Mortgage Notes, the sale of the
Grant House wraparound mortgage note and the principal prepayment received on
the Pinewood note receivable. The sale of the Fairfield Towers First and Second
Mortgages resulted in a net decrease of $12,980,517, the sale of the Grant House
wraparound mortgage note resulted in a net decrease of $2,224,287 and the
principal prepayment of $317,662 received on the Pinewood note receivable
resulted in a net decrease of $99,128 after recognizing a deferred gain of
$218,534. In addition, although the effect on net mortgage portfolio is zero,
the Company received a $1,000,000 principal payment on the New Haven note and
recognized a deferred gain on sale of $1,000,000.
Securities available for sale increased by $7,570,340 as a result of purchases
of $7,995,738 in marketable equity securities, primarily interest-bearing
corporate preferred stocks, offset by a $425,398 decline in the fair value of
securities available for sale.
Wrap mortgage debt on sold properties decreased by $4,668,462 primarily due to
the repayment of the $2,300,000 Crown Tower and Madison Towers wrap mortgage
debt by the Company in June, 1999 and the sale of the Grant House wraparound
mortgage note in January, 1999.
Note payable to bank decreased by $10,395,361 primarily as a result of the sale
of the Fairfield Towers First and Second Mortgages. The note payable, which had
been secured by Presidential's interest in the First Mortgage Note, was repaid
from the proceeds of the sale of the Fairfield Towers First and Second
Mortgages.
Accrued liabilities decreased by $984,526 primarily as a result of the payment
of a $1,000,000 deferred brokerage commission, which arose from the sale of the
New Haven properties in 1984.
Net unrealized gain (loss) on securities available for sale decreased by
$425,398 as a result of the decrease in the fair value of securities available
for sale.
Treasury stock decreased by $135,139. In March, 1999, three directors of the
Company were each given 1,000 shares of the Company's Class B common stock as
partial payment for 1999 directors fees. In addition, an officer of the Company
was given 7,000 shares of the Company's Class B common stock as additional
compensation. Such shares had been held in treasury at an average cost of $13.54
per share.
Year 2000 Compliance
The Company has completed its assessments of its information technology systems
("IT") and its non-information technology systems ("NIT") for Year 2000
compliance. All Year 2000 sensitive systems have been updated and date
sensitivity testing is in progress, with a target completion date of September,
1999. Requests have been sent and responses have been received for Year 2000
compliance confirmations from tenants, mortgagors, third party vendors and the
Company's property management company. All responses that have been received by
the Company have verified Year 2000 compliance or completion of compliance in a
timely manner.
At June 30, 1999, there were no additional costs to be incurred in relation to
the Year 2000 compliance. At December 31, 1998, the Company had capitalized
$32,393 for replacement of equipment and had expensed $4,789 for the upgrading
of its systems. The estimated costs to complete date sensitivity testing and
further assessments of third party vendors are minimal.
The Company does not anticipate any problems in the testing of its IT systems
and will be Year 2000 compliant. The responses that the Company has received
indicate that the financial institutions, utility companies and major suppliers
of services which are utilized by the Company are or will be Year 2000
compliant. However, the Company's business operations could be affected if these
third party vendors fail to become Year 2000 compliant. The effect of
non-compliance by these third party vendors is not determinable at this time. If
a supplier of goods or services were to fail to become Year 2000 compliant, the
Company would obtain these goods or services from another source. However, the
failure of utility companies (electric, gas, water and telephone) to become Year
2000 compliant could have an adverse effect on the operations of the Company's
properties. These services are not readily available from other sources but
should be available in some form. The Company does not anticipate that the Year
2000 issue will have an adverse effect on the ability of its mortgagors or
tenants to make payments due to the Company in a timely fashion.
As a result of the Company's evaluation of its systems and third party
vendor systems, no formal contingency plan is required.
Forward-Looking Statements
Certain statements made in this report may constitute "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended and Section 21E of the Securities Exchange Act of 1934, as amended. Such
forward-looking statements include statements regarding the intent, belief or
current expectations of the Company and its management and involve known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Company to be materially different
from any future results, performance or achievements expressed or implied by
such forward-looking statements. Such factors include, among other things, the
following: general economic and business conditions, which will, among other
things affect the demand for apartments or commercial space, availability and
creditworthiness of prospective tenants, lease rents and the terms and
availability of financing; adverse changes in the real estate markets including,
among other things, competition with other companies; risks of real estate
development and acquisition; governmental actions and initiatives; and
environment/safety requirements.
Liquidity and Capital Resources
Management believes that the Company has sufficient liquidity and capital
resources to carry on its existing business and, barring any unforeseen
circumstances, to pay the dividends required to maintain REIT status in the
foreseeable future. The Company is seeking to expand its portfolio of real
estate equities and plans to utilize for this purpose a portion of its available
funds, funds received from sales of securities and additional funds that the
Company may receive from balloon payments due on the Company's notes receivable
as they mature, as well as funds that may be available from external sources.
However, the Company's plans to expand its portfolio of real estate equities may
be adversely affected by limitations on its ability to obtain funds for
investment on satisfactory terms from external sources. Except as discussed
herein, management is not aware of any other trends, events, commitments or
uncertainties that will have a significant effect on liquidity.
Presidential obtains funds for working capital and investment from its
available cash and cash equivalents, from securities available for sale, from
operating activities, from refinancing of mortgage loans on its real estate
equities, and from the sales of or repayments on its mortgage portfolio. The
Company also has at its disposal a $250,000 unsecured line of credit from a
lending institution.
At June 30, 1999, Presidential had $1,642,598 in available cash and cash
equivalents, a decrease of $121,867 from the $1,764,465 at December 31, 1998.
This decrease in cash and cash equivalents was due to cash used in financing
activities of $14,580,552 offset by cash provided by operating activities of
$1,666,660 and investing activities of $12,792,025.
Operating Activities
Presidential's principal source of cash from operating activities is from
interest on its mortgage portfolio, which was $1,863,690 in 1999, net of
interest payments on wrap mortgage debt and note payable. In 1999, net cash
received from rental property operations was $995,905, which is net of
distributions from partnership operations to minority partners but before
additions and improvements and mortgage amortization.
Investing Activities
Presidential holds a portfolio of mortgage notes receivable, which consist
primarily of notes arising from sales of real properties previously owned by the
Company. Some of these notes wrap around underlying mortgage debt (the
"Underlying Debt") which is paid by Presidential only out of funds received on
its mortgage portfolio relating to the Underlying Debt. During 1999, the Company
received principal payments of $1,741,604 on its mortgage portfolio (net of any
principal payments attributable to the Underlying Debt), of which $1,667,427
represented prepayments, which are sporadic and cannot be relied upon as a
regular source of liquidity.
On February 22, 1999, Presidential consummated the sale of its Fairfield Towers
First and Second Mortgage Notes (excluding a $4,000,000 portion of the Second
Mortgage Note, which it retained).
The First Mortgage Note, which had an outstanding principal balance at the
date of sale 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 at the date of sale of $14,206,895, was obtained
by Presidential when it sold the Fairfield Towers apartment property in 1984.
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. In connection with this transaction, the $4,000,000 portion of the
Second Mortgage Note retained by Presidential was modified to provide for
interest payments at the rate of 9.625% ($385,000) per annum for the first three
years and at 10.5% ($420,000) per annum for the remaining seven years. The
outstanding principal balance of $4,000,000 is due at maturity in 2009. To
secure this obligation, Presidential obtained subordinate security interests in
three apartment properties located in New Jersey as collateral for the Note.
Presidential repaid the $10,195,442 outstanding principal balance of its bank
note payable, which had been secured by Presidential's interest in the First
Mortgage Note. After payment of the bank loan and expenses related to the
transaction, but before payment of any income tax on the capital gain,
Presidential retained approximately $10,111,000 from the sale. Presidential
expects to pay approximately $1,567,000 of taxes on the retained capital gain
and invest the balance of approximately $8,544,000 in rental apartment
properties. Presidential recognized a gain on sale of $7,617,214 (before accrued
taxes of $1,566,474).
In January, 1999, the Company sold its equity portion in the $3,235,833
wraparound mortgage note secured by the Grant House apartment building located
in White Plains, New York. Presidential assigned the $2,212,240 nonrecourse
first mortgage note to the purchaser and received $500,000 for the sale of its
$1,023,593 equity portion of the wraparound mortgage note. As a result of this
transaction, the Company wrote off the $2,212,240 outstanding balance on the
first mortgage and the related $2,212,240 mortgage debt, and recognized a gain
on sale of $425,000.
In June, 1999, the Company modified its $13,300,000 wraparound mortgage notes
secured by the Crown Tower and Madison Towers properties in New Haven,
Connecticut. In connection with the modification, the Company repaid the
$2,300,000 first mortgage debt on these properties (wrap mortgage debt on sold
properties) and consolidated the $13,300,000 outstanding principal balance of
the wraparound mortgage notes into the New Haven note. The Company received a
$1,000,000 principal payment on the New Haven note and paid a $1,000,000
deferred brokerage commission (which had been deferred from the original sale of
the New Haven properties). In connection with the modification Presidential also
received a fee of $30,750.
The note matures on June 29, 2002, provides for an interest rate of 10% per
annum with a 1/2 percent rate increase annually and a $369,000 payment of
additional interest due at maturity. The New Haven note is secured by a second
mortgage on the Encore Apartments and commercial space located in New York, New
York and by a limited guarantee of $2,500,000 from one of the owners of the
property.
During 1999, the Company invested $533,114 in additions and improvements to its
properties.
The Company also holds a portfolio of marketable equitable securities which
increased by $7,570,340, primarily as a result of the $7,995,738 purchase of
interest-bearing corporate preferred stocks, offset by a decrease in the fair
value of securities of $425,398.
Financing Activities
The Company's indebtedness at June 30, 1999, consisted of $39,597,251 of
mortgages. The mortgage debt, which is secured by individual properties, is
nonrecourse to the Company with the exception of the $265,929 Mapletree
Industrial Center mortgage, which is secured by the property and a guarantee of
repayment by Presidential. In addition, some of the Company's mortgages provide
for personal liability for damages resulting from specified acts or
circumstances, such as for environmental liabilities and fraud. Generally,
mortgage debt repayment is serviced with cash flow from the operations of the
individual properties. During 1999, the Company made $206,090 of principal
payments on mortgage debt on properties which it owns.
In January, 1999, Presidential refinanced the mortgage on its Cambridge Green
property. The existing $3,120,190 mortgage was paid from the proceeds of the new
$3,195,500 mortgage. The new mortgage bears interest at the rate of 6.65% per
annum, requires monthly payments of principal and interest of $20,358, and
matures on October 1, 2029.
The mortgages on the Company's properties are self-liquidating at fixed rates of
interest with the exception of the mortgages on Fairlawn Gardens, Home Mortgage
Plaza, Building Industries Center, Sunwood Apartments and Continental Gardens.
During 1999, Presidential declared and paid cash distributions of $1,155,486 to
its shareholders and received proceeds from its dividend reinvestment and share
purchase plan of $45,795.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibit 27. Financial Data Schedule.
(b) No reports on Form 8-K were filed during the quarter ended June 30, 1999.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PRESIDENTIAL REALTY CORPORATION
(Registrant)
DATE: August 10, 1999 By: /s/ Jeffrey F. Joseph
---------------------
Jeffrey F. Joseph
President
DATE: August 10, 1999 By: /s/ Elizabeth Delgado
---------------------
Elizabeth Delgado
Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 1,642,598
<SECURITIES> 8,845,074
<RECEIVABLES> 16,774,872
<ALLOWANCES> 124,469
<INVENTORY> 0
<CURRENT-ASSETS> 13,716,023
<PP&E> 35,173,585
<DEPRECIATION> 7,715,051
<TOTAL-ASSETS> 66,180,142
<CURRENT-LIABILITIES> 5,041,469
<BONDS> 38,261,609
0
0
<COMMON> 362,185
<OTHER-SE> 19,682,258
<TOTAL-LIABILITY-AND-EQUITY> 66,180,142
<SALES> 0
<TOTAL-REVENUES> 7,704,333
<CGS> 0
<TOTAL-COSTS> 3,710,807
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,753,315
<INCOME-PRETAX> 10,224,483
<INCOME-TAX> 1,566,474
<INCOME-CONTINUING> 8,658,009
<DISCONTINUED> 0
<EXTRAORDINARY> 0
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<NET-INCOME> 8,658,009
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