UNITED STATES

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, 2009

¨	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: (646) 719-2012

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 August 17,2009: 43,861,537 shares of common stock, with a par value of $0.01 per share.

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TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION		Page

Item 1.	Financial Statements	2
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23
Item 4.	Controls and Procedures	23

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	25
Item 1A.	Risk Factors	25
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25
Item 3.	Defaults Upon Senior Securities	25
Item 4.	Submission of Matters to a Vote of Security Holders	25
Item 5.	Other Information	26
Item 6.	Exhibits	26

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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 June 30, 2009, 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.

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EXCELLENCY INVESTMENT REALTY TRUST, INC.

CONSOLIDATED BALANCE SHEETS

As of June 30, 2009 and December 31, 2008

(unaudited)

	June 30,			December 31,
	2009			2008
ASSETS
Real Estate
Land	$	811,402		$	811,402
Building and improvements		5,001,053			5,001,053
		5,812,455			5,812,455
Less: accumulated depreciation		(1,657,444	)		(1,553,962	)
		4,155,011			4,258,493

Cash and cash equivalents		12,955			47,268
Accounts receivable-tenants, net of allowance for doubtful
accounts of $872,522 at 6/30/09 and $820,795 at 12/31/08		5,933			8,254
Deferred financing costs, net of accumulated amortization of
of $44,978 at 6/30/09 and $37,163 at 12/31/08		132,542			139,224
Escrow account		87,225			80,677
Other assets		-			95
TOTAL ASSETS	$	4,393,666		$	4,534,011

LIABILITIES AND STOCKHOLDERS' DEFICIT

Mortgage notes payable	$	7,823,871		$	7,890,446
Promissory notes payable-related party		2,022,426			2,166,698
Security deposits		106,030			116,136
Line of credit -White Knight Management		74,583			70,991
Accounts payable and accrued expenses		459,498			420,211
Accured interest payable - related party		280,440			216,522
Accrued Registration Rights Penalty and contingent portion		9,249,394			8,169,394
TOTAL LIABILITIES		20,016,242			19,050,398

Minority Interest		146,534			149,024

STOCKHOLDERS' 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, as of June 30, 2009 and December 31, 2008. Aggregate liquidation
preference of $9,100 ($0.91 per share)		100			100
Common stock, par value $0.01, 200,000,000 shares authorized, 43,861,537
issued and outstanding as of June 30, 2009 and December 31, 2008 respectively.		438,615			438,615
Treasury stock, at cost- 2,469 shares		(34,168	)		(34,168	)
Additional paid-in capital		1,849,939			1,846,939
Accumulated deficit		(18,023,596	)		(16,916,897	)
TOTAL STOCKHOLDERS’ DEFICIT		(15,769,110	)		(14,665,411	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	4,393,666		$	4,534,011

See accompanying notes to consolidated financial statements.

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EXCELLENCY INVESTMENT REALTY TRUST, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2009 AND 2008 (RESTATED)

(unaudited)

	Three Months			Three Months			Six Months			Six Months
	Ended			Ended			Ended			Ended
	June 30,			June 30,			June 30,			June 30,
	2009			2008			2009			2008
				(RESTATED)						(RESTATED)

Rental revenue	$	463,177		$	377,341		$	923,830		$	870,758

Operating expenses:
Property operating costs		157,257			242,769			353,454			516,069
General and administrative		93,714			67,023			206,441			173,880
Depreciation and amortization		55,115			52,741			110,166			105,484
Total operating expenses		306,086			362,533			670,061			795,433

Operating income		157,091			14,808			253,769			75,325

Non-operating (expenses) and income:
Interest expense		(145,075	)		(160,820	)		(283,265	)		(324,072	)
Other income		295			137			366			444
Loss on registration rights penalty		(540,000	)		-			(1,080,000	)		(1,833,473	)
Total non-operating expenses		(684,780	)		(160,683	)		(1,362,899	)		(2,157,101	)

Minority Interest		1,211			1,294			2,431			2,588

Net Loss	$	(526,478	)	$	(144,581	)	$	(1,106,699	)	$	(2,079,188	)

Loss per share — basic and diluted		(0.01	)		(0.00	)		(0.03	)		(0.05	)

Weighted average common shares outstanding basic and diluted		43,861,537			43,761,537			43,861,537			43,761,537

See accompanying notes to consolidated financial statements.

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EXCELLENCY INVESTMENT REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2009 AND 2008
(unaudited)

	Six Months			Six Months
	Ended			Ended
	June 30,			June 30,
	2009			2008
				(RESTATED)
CASH FLOWS FROM OPERATING ACTIVITIES

Net (loss)	$	(1,106,699	)	$	(2,079,188	)
Adjustments to reconcile net income to net cash
provided by (used in) operationing activities:
Minority Interest Expenses		(2,431	)		(2,588	)
Compensation expense added as paid in capital		3,000			3,000
Amortization of Deferred Financing Costs		6,682			7,004
Depreciation expense		103,484			98,480
Bad debt expense		51,727			113,938
Loss on registration rights penalty		1,080,000			1,833,473
Changes in operating assets and liabilities:
Accounts receivable		(49,408	)		(416,510	)
Escrow		(6,548	)		-
Other Assets		95			(2,514	)
Accounts payable and accrued expenses		39,228			35,841
Accrued interest payable - related party		63,918			78,085
Security Deposits		(10,106	)		(19,015	)
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		172,942			(349,994	)

CASH FLOWS FROM FINANCING ACTIVITIES
Conributions of capital		-			235,314
Borrowings on Related Party debt		-			155,798
Payments on Related Party debt		(144,272	)		(216,209	)
Borrowings on White Knight Management line of credit		3,592			48,177
Payments on Mortgage Notes Payable		(66,575	)		(59,435	)
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES		(207,255	)		163,645

NET DECREASE IN CASH		(34,313	)		(186,350	)

CASH AT BEGINNING OF YEAR		47,268			241,551

CASH AT YEAR END	$	12,955		$	55,201

NON-CASH TRANSACTIONS
Conversion of preferred into common stock		-			1,430

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for Interest		365,269			291,660
Cash paid for Income Taxes		-			-

See accompanying notes to consolidated financial statements.

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EXCELLENCY INVESTMENT REALTY TRUST, INC.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT

JANUARY 1, 2007 THROUGH JUNE 30, 2009

(unaudited)

	Preferred Stock
	Series A						Common Stock				Paid-in			Accumulated			Stock
	Shares			Amount			Shares		Amount		Capital			Deficit			at Cost			Total

Balance at January 1, 2007		11,000		$	110			43,618,537	$	436,185	$	1,835,359		$	(8,130,173	)	$	(34,168	)	$	(5,892,687	)

																					-
Conversion of preferred stock		(1,000	)		(10	)		143,000		1,430		(1,420	)		-			-			-
Net loss		-			-			-		-		-			(6,621,450	)		-			(6,621,450	)
																					-
Balance at December 31, 2007		10,000		$	100			43,761,537	$	437,615	$	1,833,939		$	(14,751,623	)	$	(34,168	)	$	(12,514,137	)


Compensation Expense												6,000									6,000
Shares issued for Services								100,000		1,000		7,000									8,000
Net (loss)		-			-			-		-		-			(2,165,274	)		-			(2,165,274	)
																					-
Balance at December 31, 2008		10,000		$	100			43,861,537	$	438,615	$	1,846,939		$	(16,916,897	)	$	(34,168	)	$	(14,665,411	)


Compensation Expense												3,000									3,000
Net (loss)															(1,106,699	)					(1,106,699	)

Balance at June 30, 2009		10,000		$	100			43,861,537	$	438,615	$	1,849,939		$	(18,023,596	)	$	(34,168	)	$	(15,769,110	)

See accompanying notes to consolidated financial statements.

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EXCELLENCY INVESTMENT REALTY TRUST, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2009 AND 2008

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

Unaudited Consolidated Financial Statements

The June 30, 2009 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-K for Excellency Investment Realty Trust, Inc. ("Excellency" and "the Company") for the year ended December 31, 2008. The December 31, 2008 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.

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.

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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 June 30, 2009 and 2008.

David D. Mladen (“Mr. Mladen”), a Director, President and the Chief Executive Officer of the Company resigned his positions as of August 13, 2009. Mr. Mladen voluntarily resigned in his capacities in keeping with the agreement reached in settlement of the civil litigation previously initiated by the U.S. Securities and Exchange Commission against the Company and Mr. Mladen, individually. Mr. Mladen’s agreement, as it relates to his inability to serve as an Officer or Director of the Company, which is to not serve as an Officer or a Director for a period of five (5) years, was approved by the United States District Court, District of Connecticut in SEC v. Excellency Investment Realty Trust, Inc. and David D. Mladen, Case No. 3:08-cv-0158-JBA, by Final Judgment dated July 15, 2009, which becomes non-appealable on August 17, 2009. There is no disagreement between Mr. Mladen and the Company regarding his voluntary resignation announced in this Form 8-K, as settlement of the SEC litigation by consenting to the five year bar that was included in the Final Judgment was believed to be in the Company’s and Mr. Mladen’s best interest.

Effective prior to the date and time of Mr. Mladen’s voluntary resignation as an Officer and Director of the Company, Gorica Adduci, who has worked in the real estate industry for quite some time, was appointed by the Directors of the Company as a replacement Director, President and the Interim Chief Executive Officer to replace those roles historically filled by Mr. Mladen until the next regularly scheduled meeting of shareholders where Directors stand for re-election.

Although the terms and conditions of Mr. Mladen’s consulting agreement entered into with the Company have not yet been finalized, Mr. Mladen has preliminarily agreed to remain available to the Company’s management as a consultant to provide consulting services that may be requested of him by the Company’s management from time-to-time.

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 June 30, 2009. 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. 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 June 30, 2009 and 2008.

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 loss per share of $0.03 and $0.05, for the six months ended June 30, 2009 and 2008, respectively.

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Recent Accounting Pronouncements and Interpretations

The Company does not expect any recently issued accounting pronouncements to have a material impact on its financial statements.

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 – GOING CONCERN

The Company has suffered recurring losses from operations. During the six months ended June 30, 2009, the Company had a net loss of ($1,106,699), and has a net accumulated deficit of $18,023,596 as of June 30, 2009, 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.

Note 4 – 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 June 30, 2009 and December 31, 2008, the LP Notes payable were $2,022,426 and $2,166,698, respectively.

Principal payment maturities on the related party notes outstanding at June 30, 2009 are:

Fiscal
Year	Amount
2009	$	-
2010		2,022,426
2011		-
2012		-
2013		-
Thereafter		-
Total	$	2,022,426

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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 $43,040), 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.

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 $6,682 and $7,004 for the six months ended June 30, 2009 and 2008, respectively.

The following sets forth the amounts outstanding on each of the Notes as of June 30, 2009, and the required monthly principal and interest payments:

	Monthly		Mortgage
	Principal &		Prin. Bal.
Property	Interest		6/30/2009

56 Webster		2,763		456,862
270 Laurel		11,513		1,903,594
252 Laurel		3,362		555,850
243 - 255 Laurel		6,493		1,073,627
21 Evergreen		4,053		670,065
117-145 S. Marshall		8,243		1,359,265
154-160A Collins		7,507		1,241,144
360 Laurel		3,408		563,464
		47,342		7,823,871

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 June 30, 2009 are:

Fiscal Year	Amount
2009	$	60,945
2010		134,881
2011		142,667
2012		150,903
2013		158,845
Thereafter		7,175,630
Total	$	7,823,871

Note 5 – RELATED PARTY TRANSACTIONS

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 $3,000, for the six months ended June 30, 2009 and 2008, which was the fair value of apartment rental.

See related party note disclosure in Note 4.

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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.

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.

As of December 31, 2007, the Resale Registration Statement had still not been filed, and the accrued liability of $2,264,000 had been recorded.

As of December 31, 2008, the Resale Registration Statement had still not been filed, and the accrued liability of $2,160,000 had been recorded, resulting in a balance of $4,424,000.

As of June 30, 2009, the Resale Registration Statement had still not been filed, and the accrued liability of $1,080,000 had been recorded, resulting in a balance of $5,504,000, which combined with a contingent liability of $3,745,394 totaled $9,249,394 as shown on the June 30, 2009 balance sheet.

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 accrued registration rights penalty increased to $8,169,394 as of December 31, 2008 and $9,249,394 as of June 30, 2009.

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. The Company has adopted EITF 00-19-2 and as a result no longer classifies these registration rights as a derivative instrument.

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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.

Litigation:

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. The case was filed by the SEC alleging that a 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 by making purchases and sales in the stock. After this case had been pending for a number of months, on July 14, 2009, a final judgment was filed in the US District Court of New Haven, CT. It was ordered that David D. Mladen is prohibited for five years following the date of the filing from acting as an officer or director of any issuer that has a class of securities registered pursuant to Section 12 of the Exchange Act. Additionally, Mr. Mladen was ordered to pay a disgorgement of $5,000, representing profits gained as a result of the conduct alleged in the original complaint, together with prejudgment interest of $254. Finally, Mr. Mladen was ordered to pay a civil penalty in the amount of $50,000.

David D. Mladen (“Mr. Mladen”), resigned his positions as of August 13, 2009. Mr. Mladen voluntarily resigned in his capacities in keeping with the agreement reached in settlement of the civil litigation previously initiated by the U.S. Securities and Exchange Commission against the Company and Mr. Mladen, individually. Mr. Mladen’s agreement, as it relates to his inability to serve as an Officer or Director of the Company, which is to not serve as an Officer or a Director for a period of five (5) years, was approved by the United States District Court, District of Connecticut in SEC v. Excellency Investment Realty Trust, Inc. and David D. Mladen, Case No. 3:08-cv-0158-JBA, by Final Judgment dated July 15, 2009, which becomes non-appealable on August 17, 2009. There is no disagreement between Mr. Mladen and the Company regarding his voluntary resignation announced in this Form 8-K, as settlement of the SEC litigation by consenting to the five year bar that was included in the Final Judgment was believed to be in the Company’s and Mr. Mladen’s best interest.

Note 8 – PROPERTY, PLANT AND EQUIPMENT

Property, Equipment, Land, Buildings and Improvements are recorded at cost. Buildings and Improvements are depreciated over 27.5 years using the straight line method of depreciation. Depreciation expense was $103,484 and $98,040 for the six months ended June 30, 2009 and 2008, respectively. Total accumulated depreciation was $1,657,444 and $1,553,962 as of June 30, 2009 and December 31, 2008 respectively. Expenditures for maintenance and repairs, which do not generally extend the useful life of the related assets, are charged to operations as incurred. Gains or losses on disposal of property and equipment are reflected in the statement of income in the year of disposal.

These assets serve as collateral for the mortgages notes that they are financed by.

Note 9 – CONSOLIDATED VARIABLE INTEREST ENTITY

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, 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.

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 2008.

As of January 1, 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.

Included in the balances consolidated are a line of credit with a balance of $74,583 and $70,991 as of June 30, 2009 and December 31, 2008, respectively. Also consolidated are cash balances of approximately $3,234 and $3,000 at June 30, 2009 and December 31, 2008, respectively. Since Excellency Investment Realty Trust does not own any interest in White Knight Management, the interest expense recorded on the line of credit is excluded from net income on the consolidated statement of operations.

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Note 10 – SUBSEQUENT EVENTS

As noted previously in Notes 7 above, David D. Mladen (“Mr. Mladen”), a Director, President and the Chief Executive Officer of the Company resigned his positions as of August 13, 2009. Mr. Mladen voluntarily resigned in his capacities in keeping with the agreement reached in settlement of the civil litigation previously initiated by the U.S. Securities and Exchange Commission against the Company and Mr. Mladen, individually. Mr. Mladen’s agreement, as it relates to his inability to serve as an Officer or Director of the Company, which is to not serve as an Officer or a Director for a period of five (5) years, was approved by the United States District Court, District of Connecticut in SEC v. Excellency Investment Realty Trust, Inc. and David D. Mladen, Case No. 3:08-cv-0158-JBA, by Final Judgment dated July 15, 2009, which becomes non-appealable on August 17, 2009. There is no disagreement between Mr. Mladen and the Company regarding his voluntary resignation announced in this Form 8-K, as settlement of the SEC litigation by consenting to the five year bar that was included in the Final Judgment was believed to be in the Company’s and Mr. Mladen’s best interest.

Note 11 – RESTATEMENT

The Company has restated its previously issued June 30, 2008 consolidated financial statements for matters related to the following previously reported items: asset impairment, improvements, accounts receivable, deferred financing costs, other assets, line of credit, accrued expenses, accrued registration rights penalty, minority interest, additional paid in capital, rental revenue, operating expenses, general and administrative expenses, depreciation, and interest expense. The accompanying financial statements for the three and six months ended June 30, 2008 have been restated to reflect the corrections in accordance with Statement of Financial Accounting Standards No. 154, “Accounting Change and Error Corrections”. This restatement is primarily due to the lack of adequate records to support the previously reported 2008 items. The loss per share increased to (0.05) per share as a result of these changes. The following is a summary of the restatements for June 30, 2008:

	Three Months			Three Months			Three Months			Six Months			Six Months
	Ended			Ended			Ended			Ended			Ended
	June 30,			June 30,			June 30,			June 30,			June 30,
	2008			2008			2008			2008			2008
				Restatements			(RESTATED)						Restatements

Rental revenue	$	403,718		$	(26,377	)	$	377,341		$	923,511		$	(52,753	)

Operating expenses:
Property operating costs		213,207			29,562			242,769			495,497			20,572
General and administrative		66,198			825			67,023			172,230			1,650
Depreciation and amortization		38,323			14,418			52,741			76,646			28,838
Total operating expenses		317,728			44,805			362,533			744,373			51,060

Operating income		85,990			(71,182	)		14,808			179,138			(103,813	)

Non-operating (expenses) and income:
Interest expense		(150,210	)		(10,610	)		(160,820	)		(302,852	)		(21,220	)
Other income		137						137			444			-
Loss on registration rights penalty		-			-			-			-			(1,833,473	)
Total non-operating expenses		(150,073	)#		(10,610	)		(160,683	)		(302,408	)		(1,854,693	)

Minority Interest		-			1,294			1,294			-			2,588

Net Loss	$	(64,083	)	$	(80,498	)	$	(144,581	)	$	(123,270	)	$	(1,955,918	)

Loss per share — basic and diluted		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.04	)

Weighted average common shares outstanding basic and diluted		43,761,537			43,761,537			43,761,537			43,761,537			43,761,537

See accompanying notes to consolidated financial statements.

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Description of Net Change:

Rental revenue was reduced to properly report rental revenue versus security deposits.

Property operating costs were increased mainly to reflect a more conservative calculation of bad debt expense, additional accrued property taxes, and additional accrued CNG utilities expense.

General and administrative expenses were increased due mainly to the accrual of additional insurance.

Depreciation and amortization was increased mainly due to the reduction of the number of years for depreciation, from 40 to 27.5, which was treated as a change in accounting estimate.

Interest expense was increased to reflect the proper calculation of accrued interest.

Loss on registration rights penalty increased due to a re-valuation by professional appraisers.

Minority Interest is newly reported to property reflect Company’s investment in White Knight Management, Inc.

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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 and six months ended June 30, 2009 and 2008. 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;

·	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.

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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;

·	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.

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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.

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.

As of June 30, 2009 and 2008, 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.

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.

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The following sets forth certain material terms of each of the Notes as of June 30, 2009:

	Monthly		Mortgage
	Principal &		Prin. Bal.
Property	Interest		6/30/2009

56 Webster		2,763		456,862
270 Laurel		11,513		1,903,594
252 Laurel		3,362		555,850
243 - 255 Laurel		6,493		1,073,627
21 Evergreen		4,053		670,065
117-145 S. Marshall		8,243		1,359,265
154-160A Collins		7,507		1,241,144
360 Laurel		3,408		563,464

		47,342		7,823,871

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.

As of June 30, 2009, the total amount due under the LP Notes was $2,022,426.

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.

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.

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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, 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 $8,169,394 as of December 31, 2008, and $9,249,394 as of June 30, 2009.

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 $8,169,394 as of December 31, 2008. The analysis assumed an effective registration would not be achieved by June 30, 2009, and additional accruals of $540,000 per quarter are incurred.

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.

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.

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Results of Operations

As of June 30, 2009 and 2008 we owned interests in eight Properties. Details on the Properties are as follows:

			June 30, 2009			June 30, 2008
Name of Property	Units		Occupancy %			Occupancy %

252 Laurel St		18		94	%		95	%
Hartford,06105

243 Laurel St		34		91	%		97	%
Hartford,06105
255 Laurel St
Hartford,06105

270 Laurel St		77		96	%		95	%
Hartford,06105

117-145 S.Marshall		43		100	%		92	%
Hartford,06105

154-160A Collins St		41		95	%		96	%
Hartford,06105

56 Webster St		16		88	%		95	%
Hartford, 06114

360 Laurel St		18		0	%		86	%
Hartford,CT	Under Renovation

21 Evergreen		24		96	%		96	%
Hartford, 06105

Comparison Of Operations For The Three Months Ended June 30, 2009 To The Three Months Ended June 30, 2008

The following summarizes changes in our operations for the three-month periods ended June 30, 2009 and 2008. We had a net loss of $526,478 for three month period ended June 30, 2009, compared to a net loss of $144,581 for the three-month period ended June 30, 2008. One of the main reasons for this reduction was an increase in rental revenue of $85,836 (23%); a decrease in our property operating costs of $85,512(35%); and in the three-month period ended June 30, 2009, we incurred a loss on registration rights penalty of $540,000, and $0 for the three month period ended June 30, 2008. The total penalty of $1,833,473 for 2008 was accounted for in the first quarter.

Rental Revenue

Revenues increased $85,836, to $463,177 from $377,341, or approximately 23%, in the three-month period ended June 30, 2009, compared to the same period in the prior year. This increase was primarily related to the higher average rental rates.

Property Operating Costs

Property operating costs decreased $85,512, to $157,257 from $242,769, or approximately 35%, in the second quarter of 2009 as compared to same period in 2008. The decrease was primarily related to a reduction in subcontract labor, and a reduction in our utilities costs.

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General and Administrative

General and administrative expense remained relatively constant for the three-month periods ended June 30, 2009 and 2008.

Depreciation and Amortization

Depreciation and amortization expense in the three-month period ended June 30, 2009 was $52,741 as compared to $55,115, for the prior year.

Interest Expense

Interest expense decreased $15,745, to $145,075 from $160,820, or approximately 10%, in the three-month period ended June 30, 2009, as compared to same period in 2008. The reason for this decrease was primarily related to decreased interest on outstanding promissory notes, due to principal repayments.

Loss on Registration Rights Penalty

In the three-month period ended June 30, 2009, we had a loss on registration rights penalty of $540,000, resulting from our failure to satisfy certain registration requirements, as further described in the "Liquidated Damages" section above. For the same period in 2008, the loss was $0 due to a revaluation of the penalty by professional appraisers, and the reporting of the entire 2008 loss in the quarter ended March 31, 2008.

Liquidity and Capital Resources

As of June 30, 2009, our cash and cash equivalents were $12,955. This represents a decrease of $34,313 from the beginning of our fiscal year. All cash and cash equivalents are held in money market or checking accounts.

As of June 30, 2009, we had a net stockholders' deficit of $15,769,110.

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.

Comparison Of Operations For The Six Months Ended June 30, 2009 To The Six Months Ended June 30, 2008

The following summarizes changes in our operations for the six month periods ended June 30, 2009 and 2008. We had a net loss of $1,106,699 for six month period ended June 30, 2009, compared to a net loss of $2,079,188 for the six month period ended June 30, 2008. The main reasons for this reduction was an increase in rental revenue of $53,072 (6%); a decrease in our property operating costs of $162,615(32%); and in the six month period ended June 30, 2009, we incurred a loss on registration rights penalty of $1,080,000, and $1,833,473 for the six month period ended June 30, 2008. The total penalty of $1,833,473 for 2008 was accounted for in the first quarter.

Rental Revenue

Revenues increased $53,072, to $923,830 from $870,758, or approximately 6%, in the six month period ended June 30, 2009, compared to the same period in the prior year. This increase was primarily related to the higher average rental rates.

Property Operating Costs

Property operating costs decreased $162,615, to $353,454 from $516,069, or approximately 32%, in the six month period ended June 30, 2009 as compared to same period in 2008. The decrease was primarily related to a reduction in subcontract labor, and a reduction in our utilities costs.

General and Administrative

General and administrative expense remained relative constant for the six month periods ended June 30, 2009 and 2008.

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Depreciation and Amortization

Depreciation and amortization expense in the six month period ended June 30, 2009 was $110,166 as compared to $105,484, for the prior year.

Interest Expense

Interest expense decreased $40,807, to $283,265 from $324,072, or approximately 13%, in the six month period ended June 30, 2009, as compared to same period in 2008. The reason for this decrease was primarily related to decreased interest on outstanding promissory notes, due to principal repayments.

Loss on Registration Rights Penalty

In the six month period ended June 30, 2009, we had a loss on registration rights penalty of $1,080,000, resulting from our failure to satisfy certain registration requirements, as further described in the "Liquidated Damages" section above. For the same period in 2008, the loss was $1,833,473 due to a revaluation of the penalty by professional appraisers.

Uses of Capital

Net Cash From Operations

During the six months ended June 30, 2009, $172,942 was provided by operations, compared to $349,994 used in operations during the same period in fiscal 2008. The main reasons for this change were a $972,489 reduction in our net loss for the six months ended June 30, 2009, as compared to the same period in the previous year, a decrease in our reserve for loss on registration rights penalty of $753,473, and a reduction of $367,102 in our accounts receivable for the period.

Net Cash From Financing Activities

During the six month period ended June 30, 2009, we used $207,255 in financing activities, compared to $163,645 provided by financing activities during the same period in 2008.

Critical Accounting Policies

Principles of Consolidation

Loss Per Common Share

Recent Accounting Pronouncements and Interpretations

The Company does not expect any recently issued accounting pronouncements to have a material impact on its financial statements.

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Financial Statement Presentation

Use of Estimates

Going Concern

Contractual Obligations and Commercial Commitments

Our contractual obligations, as of June 30, 2009, were as follows:

			Less Than						Over
	Total		1 year		2-3 years		4-5 years		5 years
Mortgage notes payable		7,823,871		60,945		277,548		309,748		7,175,630
Promissory notes payable - related party		2,022,426		-		2,022,426		-		-
Line of Credit		74,583		74,583		-		-		-

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.

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.

Item 3.

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.

Item 4.

Controls and Procedures

See Item 4(T) below.

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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 June 30, 2009, 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, 2008, 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, and still exist as of June 30, 2009.

Changes in Internal Control Over Financial Reporting

There were no changes in internal controls over financial reporting that occurred during the quarter ended June 30, 2009, 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.

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PART II

Other Information

Item 1.

Legal Proceedings

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.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

In the six month period ended June 30, 2009, and subsequent period through the date hereof, we did not issue any unregistered securities.

Item 3.

Defaults Upon Senior Securities

During the six month period ended June 30, 2009, and subsequent period through the date hereof, we did not default upon any senior securities.

Item 4.

Submission of Matters to a Vote of Security Holders

No matters were submitted to a vote of our security holders during the six month period ended June 30, 2009, or subsequent period through the date hereof.

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Item 5.

Other Information

There was no information we were required to disclose in a report on Form 8-K during the six month period ended June 30, 2009, or subsequent period through the date hereof, that we did not report.

Item 6.

Exhibits

Exhibit No.		Identification of Exhibit
31.1*		Certification of Gorica Adduci, 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 Gorica Adduci, 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

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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: August 19,2009

By /s/ Gorica Adduci

Gorica Adduci, Chief Executive Officer

By /s/ Richard Pelletier

Richard 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/ Gorica Adduci	President, Chief Executive Officer and Director	August 19, 2009
/s/ Richard Pelletier	Chief Financial Officer	August 19, 2009

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EXCELLENCY INVESTMENT REALTY TRUST, INC. 10-Q