Presidential Realty Corporation

Real Estate Investment Trust

History

Presidential Realty Corporation is a Delaware corporation organized in 1983 that elected to be treated as a real estate investment trust for Federal and State income tax purposes.

Presidential Realty Corporation was founded in 1909. The company began as a contractor that specialized in building theaters and movie houses in New York City. The company operated as M. Shapiro and Son during this period and built more than eighty cinema houses from 1911-1929. During the 1930’s, Presidential moved into the construction of institutional buildings and worked on such prominent projects as the American Museum of Natural History in New York.

In the 1940’s the company began its move into residential housing, first by becoming a major builder of public housing projects after World War II and then as a developer of thousands of apartment units. Ownership and operation of rental housing became the prime activity of the firm in the 1950’s. Presidential had its IPO in 1961 and was listed on the American Stock Exchange. By 1973, Presidential owned property in twelve states and Puerto Rico, and had total assets in excess of $100 million.

Over its history the company had interests in over 10,000 apartments units, in addition to ownership interests in office buildings, industrial properties and shopping centers.

The Company's Class A and Class B common stock currently trade in the over-the-counter market under the symbols PDNLA, and PDNLB, respectively.

Presidential Overview

In November of 2011, a new management team took over the operations of Presidential REIT and made a strategic investment in the company.  The new team was led by Nickolas Jekogian, CEO of Signature Group Investments.  The team set in place a strategic plan to reduce operating costs and to implement a growth strategy that focuses on the acquisition and UPREIT of class B multifamily apartment units across the country.  The ultimate goal is to grow Presidential into a major owner of multifamily apartment units. The company is currently seeking out owners of apartment portfolios in secondary and tertiary markets to discuss the potential contribution of units into the REIT.

National Expansion Plan

Presidential Realty Corporation, a publicly traded real estate investment trust, is working to develop a multifamily REIT with a core focus on class B apartment assets across the nation. We are looking for real estate private equity funds and owner/operators of multifamily portfolios that would be interested in discussing their holdings and the potential merits of contributing them into the REIT in exchange for shares in an UPREIT structure.

Presidential Realty Corporation primarily focuses on the acquisition of multi-family apartments. We typically seek communities of 500 apartment units or more. We are seeking partnerships with reputable operators to grow our portfolio throughout the United States.

For acquisitions please email
acquisitions@presrealty.com

UPREIT Overview

  • Umbrella partnership real estate investment trusts (“UPREIT”) are the primary vehicle for an owner of real property to convert ownership of one or more specific properties into an interest which can be converted into a publicly-traded security.

  • In the basic UPREIT structure properties are acquired and owned directly or indirectly by the umbrella partnership. The umbrella partnership is the entity through which the REIT operates and collects all income from the properties. The REIT does not directly own any real estate properties in the UPREIT structure‚ rather it owns interests in the operating partnership by being both its sole general partner and one of its limited partners.

  • In an UPREIT transaction‚ property owners contribute their properties in exchange for ownership units in the operating partnership (“OP Units”). Conversion from OP Units to REIT shares is considered a taxable event‚ so the investor may choose to convert over time‚ which enables the investor to incur any tax liability in smaller increments.

UPREIT Structure

upreit structure

UPREIT Benefits

  • Taxes: The owner does not recognize immediate gain on the transaction because the owner does not acquire publicly-traded stock in the REIT, but rather receives units in the operating partnership (“OP Units”). If the OP Units received from the operating partnership end up in the owner's estate, the ultimate recipients of the units will receive a stepped up basis equal to the value at death or the alternate valuation date and the inherent gain resulting from the UPREIT transaction will not be subject to capital gains or income tax. The tax deferral or avoidance, as the case may be, gives UPREITs a large advantage over cash purchasers. This is particularly true for individuals or entities which have a low tax basis and therefore the potential gain is substantial.

  • Diversification: A transaction can be structured which enables the property owner to convert an interest in one or more specific properties into an interest in a larger and more balanced portfolio of properties held by the UPREIT. The portfolio is often diversified as to property type and geography and usually benefits from the economies of scale and management that a larger entity can offer.

  • Liquidity: The UPREIT structure allows an interest in illiquid individual properties to become more easily saleable.

  • Stock Appreciation: There is the potential for the stock in the REIT to appreciate beyond the value of the owners’ real estate contribution. This could potentially deliver higher returns than those achievable from the ownership of one or more specific properties.

12/23/2013 - Presidential Realty Corporation Announces The Settlement Of All Claims Against The Company Related To Its Puerto Rico Property And Its Plan To Grow The Company In 2014 By The Acquisition Of Class B Multifamily Apartments

Full Press Release
Presidential Realty Corporation
1430 Broadway, Suite 503
New York, NY 10018
(914) 948-1300

To contact Presidential Realty Corporation please email us at
investorrelations@presrealty.com