SecProbe.io

CORRESP
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     Nelson Mullins Riley & Scarborough LLP

     Attorneys and Counselors at Law
     Neil E. Grayson

     104 South Main Street / Ninth Floor / Greenville, South Carolina 29601
     (Admitted in GA, SC & NY)

     Tel: 864.250.2300  Fax: 864.232.2925
     864.250.2235

     www.nelsonmullins.com
     Fax: 864.250.2359

     neil.grayson@nelsonmullins.com

November 14, 2005

Mr. Josh Forgione
United States Securities
and Exchange Commission
Division of Corporation Finance
Washington, DC 20549

        Re:
Palmetto Real Estate Trust
                   Form 10-KSB for the year ended December 31, 2004

                   Form 10-QSB for the quarterly period ended March 31, 2005

                   File No. 000-00179

Dear Mr. Forgione:

On behalf of Palmetto Real Estate
Trust we are responding to the Staff’s comment letter dated November 3, 2005
regarding on the filings listed above and the Trust’s response filed October 31,
2005. The paragraphs below respond to the Staff’s numbered comment.

Form 10-QSB For the
Quarterly Period Ended March 31, 2005

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

Results of Operations –
For the three months ended March 31, 2005 compared to the three months ended March 31,
2004, page 5

Comment #1

We note in your response to comment 6 that you did not recognize revenue for the
Haywood-Pelham Road lease on a straight-line basis in your historical financial
statements. Please confirm to us whether all other leases are accounted for on a
straight-line basis in accordance with FTB 85-3, as applicable.

Response:   Analysis
performed on behalf of the Trust identified three more leases which are impacted by FTB
85-3 in addition to the Haywood-Pelham Road lease. In the other three leases, the Trust
correctly adjusted billings in accordance with the lease terms. Following is a summary of
the analysis:

Mr. Josh Forgione
November
14, 2005
Page 2 of 4

Truegreen Chemlawn Lease

     Monthly

     Monthly
     FTB

     Rent, per
     85-3

     Lease
     S/L
     Monthly
     Aggregate

     Year
     Agreement
     Rent
     Difference
     Difference
     Asset

     November 1999 (inception) - October 2000

       7,475

       8,032

       557

       6,684

       6,684

           November 2000 - October 2001
       7,675

       8,032

       357

       4,284

       10,968

           November 2001 - October 2002
       7,875

       8,032

       157

       1,884

       12,852

           November 2002 - October 2003
       8,075

       8,032

       (43
        )
       (516
        )
       12,336

           November 2003 - October 2004
       8,275

       8,032

       (243
        )
       (2,916
        )
       9,420

           November 2004 - December 2004
       8,375

       8,032

       (343
        )
       (686
        )
       8,734

             January 2005 - June 2005
       8,375

       8,032

       (343
        )
       (2,058
        )
       6,676

Sunshine House, Mt.
Pleasant, SC

     Monthly

     Monthly
     FTB

     Rent, per
     85-3

     Lease
     S/L
     Monthly
     Aggregate

     Year
     Agreement
     Rent
     Difference
     Difference
     Asset

     April 2003 (inception)- December 2003

       10,726

       11,686

       960

       8,640

       8,640

            January -December 2004
       10,726

       11,686

       960

       11,520

       20,160

              January - June 2005
       10,726

       11,686

       960

       5,760

       25,920

Sunshine House,
Columbia, SC

     Monthly

     Monthly
     FTB

     Rent, per
     85-3

     Lease
     S/L
     Monthly
     Aggregate

     Year
     Agreement
     Rent
     Difference
     Difference
     Asset

     August 2001 (inception) - July 2002

       9,500

       10,847

       1,347

       16,164

       16,164

         August 2002 - January 2003
       10,000

       10,847

       847

       5,082

       21,246

        February 2003 - December 2004
       10,573

       10,847

       274

       6,302

       27,548

          January 2005 - June 2005
       10,573

       10,847

       274

       1,644

       29,192

Haywood-Pelham Road Lease (as presented
in our October 31, 2005 response letter)

     Monthly

     Monthly
     FTB

     Rent, per
     85-3

     Lease
     S/L
     Monthly
     Aggregate

     Year
     Agreement
     Rent
     Difference
     Difference
     Asset

     June 1993 (inception) - May 1998

     $    9,334

     $   10,267

     $      933

     $   55,980

     $   55,980

           June 1998- May 2003
     $   10,267

     $   10,267

     $     --

     $     --

     $   55,980

           June - December 2003
     $   11,200

     $   10,267

       ($   933
        )
       ($ 6,531
        )
     $   49,449

         January - December 2004
     $   11,200

     $   10,267

       ($   933
        )
       ($11,196
        )
     $   38,253

           January - June 2005
     $   11,200

     $   10,267

       ($   933
        )
       ($ 5,598
        )
     $   32,655

Mr. Josh Forgione
November
14, 2005
Page 3 of 4

The summarized lease asset to be
recorded based on the above is as follows:

     December 31, 2003

       $  94,199

     December 31, 2004
       94,695

     June 30, 2005
       94,443

Based on the above, the Trust has
revised the effect of errors to its financial statements for the years ended December 31,
2004 and 2003. Below is a summary and aggregation of these corrections and their impact on
the Trust’s previously filed financial statements (revised from out October 31, 2005
response).

     Statement of Income

     Increase / (Decrease)

     2004
     2003

     Net Income, as reported

     $   1,308,314

     $   1,834,088

     Amortization of intangibles, net of the

        related change in depreciation expense
       (24,828
        )
       (2,125
        )

     Historical basis of Timberlands
       (10,000
        )
       --

     Correction of lease payments - Haywood-

        Pelham Road ($933 x 12)
       11,196

       11,196

     Correction of lease payments

        Truegreen Chemlawn
       (3,116
        )
       (916
        )

        Sunshine House, Mt. Pleasant
       11,520

       8,640

        Sunshine House, Columbia
       3,288

       3,861

     Net Income, revised
     $   1,296,374

     $   1,854,744

     Earnings per share, as reported
     $        0.74

     $        1.04

     Earnings per share, revised
     $        0.73

     $        1.05

On behalf of the Trust, we believe,
individually and in the aggregate, that these amounts are immaterial to the Trusts
financial position and to the results of operations for the years ended December 31, 2004
and 2003. The trust plans to reflect all of these changes in its June 30, 2005 10-QSB
(which the Trust plans to file early next week) and on a going forward basis in future
filings.

On behalf of Palmetto Real Estate
Trust, we hereby acknowledge that:

•

Palmetto Real Estate Trust is responsible for the adequacy and accuracy of the
disclosure in the filings;

•

Staff comments or changes to disclosure in response to staff comments do not foreclose the
Commission from taking any action with respect to the filings; and

•

Palmetto Real Estate Trust May not assert staff comments as a defense in any proceeding
initiated by the Commission or any person under the federal securities laws of the United
States.

Mr. Josh Forgione
November
14, 2005
Page 4 of 4

Please acknowledge receipt of this
filing by means of EDGAR Postmaster. Please contact me at (864) 250-2235 if you have any
questions or any additional comments.

Very truly yours,

    /s/ Neil E. Grayson

Neil E. Grayson