UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------- FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of report (Date of earliest event reported) March 31, 2005 ------------------------------- BNP RESIDENTIAL PROPERTIES, INC. - ------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in Its Charter) Maryland 1-9496 56-1574675 - -------------------------------------------------------------------------------- (State or Other Jurisdiction (Commission File Number) (I.R.S. Employer of Incorporation) Identification No.) 301 S. College Street, Suite 3850 Charlotte, North Carolina 28202 - --------------------------------------------------------------- -------------- (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code (704) 944-0100 -------------------------- N/A - ------------------------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): ___ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) ___ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) ___ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) ___ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Total number of pages: 5 Item. 2.02 Results of Operations and Financial Condition In late January 2005, BNP Residential Properties, Inc. acquired Boddie Investment Company ("BIC") in exchange for shares of our common stock valued at $8.2 million. As a result of this acquisition, in addition to other significant assets, we acquired certain economic interests in three limited partnerships: o Marina Shores Associates One Limited Partnership ("Marina Shores Partnership") - - 50% interest as general partner; o The Villages of Chapel Hill Limited Partnership ("Villages Partnership") - 1% interest as general partner; and o The Villages of Chapel Hill - Phase 5 Limited Partnership ("Villages - Phase 5 Partnership") - 1% interest as general partner. We described this transaction, along with our accounting treatment for our general partner interests in each of these partnerships, in detail in our Current Report on Form 10-Q for the quarterly period ended March 31, 2005. You should read the following discussion in conjunction with our Current Report on Form 10-Q for the quarterly period ended March 31, 2005. Since release of our first quarter 2005 10-Q, we have received numerous requests from members of the investment community for additional information regarding the impact of including the accounts of the Marina Shores Partnership and the Villages Partnership in our consolidated financial statements for the first time in that report. We are providing the following supplemental summary consolidating information in response to those requests. Results of operations The following table provides consolidating information underlying our unaudited consolidated statements of operations included in our Current Report on Form 10-Q for the quarterly period ended March 31, 2005 (all amounts in table and accompanying footnotes in thousands): Three months ended March 31, ------------------------------------------------------------------------------ 2005 2004 ------------------------------------------------------------ -------------- Consolidated Wholly (Wholly Limited Owned Owned Consolidated Eliminations Partnerships(1) Properties Properties) -------------- --------------- -------------- -------------- -------------- Revenues Apartment rental income $ 14,092 $ - $ 1,183 $ 12,908 $ 10,053 Restaurant rental income 957 - - 957 957 Management fee income 115 (59) - 174 198 Equity in income (loss) of unconsolidated limited partnerships(2) - - - - - Interest and other income 225 (21) 3 243 23 -------------- --------------- -------------- -------------- -------------- 15,390 (80) 1,187 14,283 11,231 Expenses Apartment operations 5,443 (59) 472 5,030 3,862 Apartment administration 673 - - 673 426 Corporate administration 885 - - 885 666 Interest 4,574 (21) 405 4,191 3,240 Penalties paid at debt refinance 516 - 516 - - 2 Three months ended March 31, ------------------------------------------------------------------------------ 2005 2004 ------------------------------------------------------------ -------------- Consolidated Wholly (Wholly Limited Owned Owned Consolidated Eliminations Partnerships(1) Properties Properties) -------------- --------------- -------------- -------------- -------------- Depreciation 3,522 - 347 3,175 2,540 Amortization of deferred loan costs 107 - 11 96 88 Write-off of unamortized loan costs at debt refinance 160 - 160 - - Deficit distributions to minority partners of consolidated limited partnerships(3) 6,821 - 6,821 - - -------------- --------------- -------------- -------------- -------------- 22,701 (80) 8,732 14,050 10,823 -------------- --------------- -------------- -------------- -------------- (Loss) income before minority interest (7,311) $ - $(7,545) $ 234 408 =============== ============== ============== Loss (income) attributed to minority interests - - Consolidated limited partnerships 62 - - Operating partnership 1,292 (35) -------------- -------------- Net (loss) income (5,957) 373 Cumulative preferred dividend (250) (250) -------------- -------------- (Loss) income attributable to common shareholders $ (6,207) $ 123 ============== ============== <FN> (1) Effective January 26, 2005, we include the accounts of the Marina Shores Partnership and the Villages Partnership in our consolidated financial statements. (2) Effective January 26, 2005, we account for our interest in the Villages - Phase 5 Partnership by applying the equity method. Our 1% interest in the net loss recorded by this partnership for the period January 26 through March 31, 2005, totaled only $0.2. (3) In accordance with generally accepted accounting principles ("GAAP"), deficit distributions to minority partners are charges recognized in our statement of operations when cash is distributed to a non-controlling partner in a consolidated limited partnership in excess of the positive balance in such partner's capital account (which is classified as minority interest in our consolidated balance sheet). We are required to record these charges for GAAP purposes even though there is no economic effect or cost. </FN> Funds from Operations Funds from operations is frequently referred to as "FFO." FFO is defined by the National Association of Real Estate Investment Trusts ("NAREIT") as "net income (computed in accordance with generally accepted accounting principles), excluding gains (losses) from sales of property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures." Our calculation of FFO is consistent with FFO as defined by NAREIT. Because we hold all of our assets in and conduct all of our operations through the operating partnership, we measure FFO at the operating partnership level (i.e., before minority interest in the operating partnership). Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. In fact, real estate values have historically risen or fallen with market conditions. FFO is intended to be a standard supplemental measure of operating performance that excludes historical cost depreciation from - or "adds it back" to - GAAP net income. We consider FFO to be useful in evaluating potential property acquisitions and measuring operating performance. 3 Funds from operations does not represent net income as defined by generally accepted accounting principles. You should not consider FFO to be an alternative to net income as a reliable measure of the company's operating performance. Further, FFO as disclosed by other REITs might not be comparable to our calculation of FFO. The following table provides consolidating information underlying our calculation of FFO of the operating partnership included in our Current Report on Form 10-Q for the period ended March 31, 2005 (all amounts in table and accompanying footnotes in thousands): Three months ended March 31, ------------------------------------------------------------------------------- 2005 2004 ------------------------------------------------------------- -------------- Consolidated Wholly (Wholly Limited Owned Owned Consolidated Eliminations Partnerships(1) Properties Properties) -------------- --------------- -------------- --------------- -------------- (Loss) income before minority interest $ (7,311) $ - $ (7,545) $ 234 $ 408 Cumulative preferred dividend (250) - - (250) (250) Depreciation 3,522 - 347 3,175 2,540 Deficit distributions to minority partners of consolidated limited partnerships(2) 6,821 - 6,821 - - -------------- --------------- -------------- --------------- -------------- 2,782 - (377) 3,159 2,698 Minority interest in FFO of consolidated limited partnerships 538 - 538 - - -------------- --------------- -------------- --------------- -------------- Funds from operations $ 3,320 $ - $ 161 $ 3,159 $ 2,698 ============== =============== ============== =============== ============== <FN> (1) Effective January 26, 2005, we include the accounts of the Marina Shores Partnership and the Villages Partnership in our consolidated financial statements. (2) Deficit distributions to minority partners may occur when the fair value of the underlying real estate exceeds its depreciated net book value because the underlying real estate has appreciated or maintained its value. As a result, deficit distributions to minority partners represent, in substance, either our recognition of depreciation previously allocated to the non-controlling partner or a cost related to the non-controlling partner's share of real estate appreciation. Based on NAREIT guidance that requires that real estate depreciation and gains be excluded from FFO, we add back deficit distributions and subtract related recoveries in our reconciliation of net income to FFO. </FN> Balance sheet amounts The following table provides consolidating information underlying our unaudited consolidated balances sheets included in our Current Report on Form 10-Q for the period ended March 31, 2005 (all amounts in table and accompanying footnotes in thousands): March 31, ------------------------------------------------------------------------------ 2005 2004 ------------------------------------------------------------ -------------- Consolidated Wholly (Wholly Limited Owned Owned Consolidated Eliminations Partnerships(1) Properties Properties) --------------- --------------- --------------- ------------ -------------- Assets Real estate investments at cost: Apartment properties $ 489,729 $ - $ 46,643 $ 443,086 $ 389,119 Restaurant properties 37,405 - - 37,405 37,405 --------------- --------------- --------------- -------------- -------------- 527,134 - 46,643 480,492 426,525 Less accumulated depreciation (76,155) - (6,530) (69,625) (66,454) --------------- --------------- --------------- -------------- -------------- 450,979 - 40,112 410,867 360,071 4 March 31, ------------------------------------------------------------------------------ 2005 2004 ------------------------------------------------------------ -------------- Consolidated Wholly (Wholly Limited Owned Owned Consolidated Eliminations Partnerships(1) Properties Properties) --------------- --------------- --------------- ------------ -------------- Cash and cash equivalents 2,583 - 1,595 988 517 Prepaid expenses and other assets(2) 7,513 (4,260) 1,189 10,584 4,516 Intangible related to acquisition of management operations 1,115 - - 1,115 1,115 Deferred financing costs, net of accumulated amortization 2,690 - 616 2,074 1,545 --------------- --------------- --------------- -------------- -------------- $ 464,880 $ (4,260) $ 43,512 $ 425,628 $ 367,764 =============== =============== =============== ============== ============== Liabilities and Shareholders' Equity Deed of trust and other notes payable $ 373,269 $ - $ 45,893 $ 327,376 $ 286,425 Accounts payable and accrued expenses 3,347 (1,998) 2,241 3,104 897 Accrued interest on notes payable 1,660 - 190 1,470 1,264 Consideration due for acquisitions 1,000 - - 1,000 - Deferred revenue and security deposits 1,940 - 121 1,818 1,787 --------------- --------------- --------------- -------------- -------------- 381,216 (1,998) 48,446 334,768 290,373 Minority interests - - Consolidated limited partnerships 288 - 288 - - - Operating partnership 20,258 - - 20,258 14,394 Shareholders' equity 63,120 (2,262) (5,221) 70,603 62,997 --------------- --------------- --------------- -------------- -------------- $ 464,880 $ (4,260) $ 43,512 $ 425,628 $ 367,764 =============== =============== =============== ============== ============== <FN> (1) Effective January 26, 2005, we include the accounts of the Marina Shores Partnership and the Villages Partnership in our consolidated financial statements. (2) Effective January 26, 2005, we account for our interest in the Villages - Phase 5 Partnership by applying the equity method. Our equity investment in this partnership is $7, included in other assets. </FN> SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. BNP Residential Properties, Inc. (Registrant) June 23, 2005 /s/ Pamela B. Bruno ----------------------------------------- Pamela B. Bruno Vice President, Treasurer and Chief Accounting Officer 5