BNP RESIDENTIAL PROPERTIES, INC. Exhibit 99.1 301 South College Street - Suite 3850 Charlotte, North Carolina 28202 Contact: Philip S. Payne Chairman Tel: (704) 944-0100 Fax: (704) 944-2039 PRESS RELEASE FOR IMMEDIATE RELEASE BNP RESIDENTIAL PROPERTIES, INC. ANNOUNCES OPERATING RESULTS FOR THE SECOND QUARTER OF 2005 Charlotte, North Carolina August 4, 2005 BNP Residential Properties, Inc. (AMEX: BNP) today announced operating results for the quarter ended June 30, 2005. Overview: BNP Residential Properties, Inc. is a real estate investment trust focused on owning and operating apartment communities. The Company currently owns and operates 33 apartment communities containing a total of 8,384 units, including 3 communities for which we are general partner of the entity that owns the property. In addition to the apartment properties, the Company owns 40 properties that are leased on a triple net basis to a restaurant operator. The Company currently operates in the states of North Carolina, South Carolina and Virginia. BNP Residential Properties, Inc. is structured as an UPREIT, or umbrella partnership real estate investment trust. The Company is the sole general partner and owns a controlling interest in BNP Residential Properties Limited Partnership, the operating partnership. All of the Company's operations are conducted through the operating partnership. Operating Results: See Tabular Information Below Results of Operations Results of operations for the second quarter and first six months of 2005, compared to the same periods in 2004, reflect significant growth in our company. We have acquired ten new apartment properties since May 2004, and the second quarter of 2005 includes operations of five new apartment properties we acquired since March 2005. In addition, two additional apartment properties are included in our consolidated financial statements beginning January 2005. Funds From Operations: Funds from operations of the operating partnership for the second quarter of 2005 increased by 50.7% to $4.0 million from $2.6 million in the second quarter of 2004. FFO per share was $0.34 per share compared to $0.29 per share in 2004. For the first six months of 2005, funds from operations for the operating partnership increased by 36.7% to $7.3 million from $5.3 million in 2004. On a per share basis, FFO for the first six months of 2005 was $0.65 compared to $0.62. (See also "Non-GAAP Information" below) Funds Available for Distribution: Funds available for distribution for the second quarter of 2005 totaled $3.4 million, an increase of 61.0% compared to 2004. For the first six months of 2005, funds available for distribution was $6.3 million, an increase of 37.8% over the same period in 2004. (See also "Non-GAAP Information" below) 3 Net Income/Loss: Net loss for the second quarter of 2005 was $406,000 compared to net income of $217,000 for the second quarter of 2004. Through the first six months of 2005, net loss was $6.4 million compared to net income of $590,000 in 2004. On a diluted basis, net loss attributed to common shareholders was a $0.06 loss per common share for the second quarter of 2005 compared to a $0.01 loss per common share in the second quarter of 2004. On a diluted basis, net loss attributed to common shareholders was a $0.75 loss per common share for the first six months of 2005 compared to net income of $0.01 per common share through the first six months in 2004. Revenues: Total revenues in the second quarter of 2005 were $18.5 million, an increase of 56.0% compared to 2004. Apartment related income (apartment rental income plus income from apartment management and investment activities) accounted for 94.8% of total revenue in the second quarter of 2005 compared to 91.9% in 2004. Restaurant rental income was 5.2% of total revenue in the second quarter of 2005 as compared to 8.1% in 2004. For the first six months of 2005, total revenue was $33.9 million, an increase of 46.8% compared to 2004. Apartments: Apartment rental income in the second quarter of 2005 was $17.5 million, an increase of 65.5% compared to 2004. This increase was primarily attributable to the acquisition of ten apartment communities in 2004 and 2005 and the inclusion of two additional apartment communities in our consolidated financial statements effective January 2005. In addition, we saw increases in rental income at our apartment communities. For the second quarter of 2005, average economic occupancy for all apartments was 95.5% and average monthly revenue per occupied unit was $732. For the first six months of 2005, average economic occupancy for all apartments was 94.9% and average monthly revenue per occupied unit was $739. On a same units basis, apartment revenue increased by 2.4% in the second quarter of 2005, reflecting improved apartment rental revenue. On a same units basis, average economic occupancy was 95.2% for the second quarter of 2005 compared to 95.1% in 2004. Average monthly revenue per occupied unit for the same units was $750 in the second quarter of 2005 compared to $732 in 2004. For the first six months, average economic occupancy was 94.9% compared to 95.0% in 2004. Average monthly revenue per occupied unit for the first six months was $747 in 2005 compared to $730 in 2004. On a same units basis, apartment NOI (apartment rental income less apartment operations expense) for the second quarter of 2005 increased by 7.2% compared to the second quarter of 2004. For the first six months of 2005, same units NOI increased by 4.8% compared to the first six months of 2004. Restaurants: Restaurant rental income in the second quarters of both 2005 and 2004 was $1.0 million, which is the minimum rent due from the lessee. For the first six months, restaurant rental income remained flat at $1.9 million. Same store sales at our restaurant properties decreased by 6.6% in the second quarter and by 5.0% for the first six months of 2005 compared to the same periods in 2004. Other Income: Management fee income for the second quarter of 2005 decreased to $11,000 from $208,000 in 2004. For the first six months, management fee income decreased to $127,000 from $405,000 in 2004. This decrease is attributable to the elimination of management fees for two properties whose operations are now consolidated, along with our acquisitions of previously managed properties during 2004 and 2005. Expenses: Total expenses, including non-cash charges for depreciation and amortization, were $19.1 million in the second quarter of 2005, an increase of 63.9% compared to 2004. Expenses for the first six months were $41.8 million, an increase of 86.0% compared to 2004. This increase is primarily attributable to growth in the size of our apartment operations, along with $7.6 million in charges for deficit distributions to a minority partner in a consolidated limited partnership (which had no economic effect or cost to us). We discuss this charge and its impact on our financial reporting in more detail in our Current Reports on Form 10-Q filed with the SEC. Apartment operations expense (the direct costs of on-site operations) was $6.9 million in the second quarter of 2005, an increase of 56.2% compared to 2004. Apartment operations expense was $12.3 million for the first six months of 2005, an increase of 49.0% over 2004. This increase is primarily attributable to the addition of ten apartment communities during 2004 and 2005. Apartment operations expense represented 39.1% of related apartment rental income for the second quarter and 38.9% for the first six months of 2005 as compared to 41.5% and 40.0% respectively, in 2004. On a same units basis, apartment operations expense decreased by 4.2% for the second quarter and 1.8% for the first six months of 2005 compared to 2004. 4 Apartment administrative expense (the costs associated with oversight, accounting and support of the company's apartment management activities for both owned and third party properties) was $738,000 in the second quarter of 2005 compared to $614,000 in 2004. For the first six months, apartment administrative expense was $1.4 million in 2005 compared to $1.0 million in 2004. Corporate administration expense was $637,000 in the second quarter of 2005 compared to $561,000 in 2004. For the first six months, corporate administration expense was $1.5 million in 2005 compared to $1.2 million in 2004. Operating expenses for restaurant properties are insignificant because the restaurant properties' triple-net lease arrangement requires the lessee to pay virtually all of the expenses associated with the restaurant properties. Non-cash charges for depreciation, amortization and write-offs of unamortized loan costs totaled $4.3 million in the second quarter of 2005, an increase of 59.1% compared to 2004. For the first six months, these non-cash charges totaled $8.1 million in 2005, an increase of 50.9% compared to 2004. This increase reflects the acquisition of ten properties during 2004 and 2005, along with write-offs of unamortized loan costs in conjunction with refinance of existing notes payable. Interest expense was $5.7 million in the second quarter of 2005, an increase of 72.0% compared to 2004. Interest expense (including $0.5 million in prepayment penalties paid by Marina Shores) totaled $10.8 million in the first six months of 2005, an increase of 64.7% compared to the first six months of 2004. Dividend: On July 21, 2005, the Board of Directors declared a regular quarterly dividend in the amount of $0.25 per share to be paid on August 15, 2005, to shareholders of record on August 1, 2005. The Board of Directors also declared a preferred quarterly dividend in the amount of $0.275 per share to be paid on August 15, 2005 to the preferred shareholder of record on August 1, 2005. Outlook: With good FFO growth and FFO comparisons we were pleased with the results for the second quarter. Our focus during the second quarter was on increasing same unit apartment revenue, which we were able to do with modest success. We entered the quarter with high occupancy at our apartment properties and knew that any increase in revenue would have to come as a result of an increase in rental rates, not occupancy. During the quarter, continued strength in single-family home sales, fueled in large part by low home mortgage rates, made it difficult to increase rents as fast as we would have liked. Despite this, however, we were able to increase same unit apartment rental revenue by 2.4%, all as the result of increases in rental rates. We continue to be optimistic about the outlook for our properties, our markets and the Company. We believe we will continue to see a slow strengthening in demand for the type of apartment property we operate and that we are well positioned to take advantage of this trend. Conference Call: Management will hold a conference call to discuss these earnings on Monday, August 8, 2005 at 2:00 p.m. Eastern Time. This call will be webcast by Shareholder.com and can be accessed through BNP's website at www.bnp-residential.com. Institutional investors may dial 1-800-406-5356 to access the call. Non-GAAP Information: 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 5 from - or "adds it back" to - GAAP net income. We consider FFO to be useful in evaluating potential property acquisitions and measuring operating performance. Funds available for distribution is frequently referred to as "FAD." We define FAD as FFO plus non-cash expense for amortization and write-off of unamortized loan costs, plus (less) gains (losses) from sales of property, less recurring capital expenditures. We believe that, together with net income and cash flows, FAD provides investors with an additional measure to evaluate the ability of the Operating Partnership to incur and service debt, to fund acquisitions and other capital expenditures, as well as to fund distributions to shareholders and minority unitholders. Funds from operations and funds available for distribution do not represent net income or cash flows from operations as defined by generally accepted accounting principles. You should not consider FFO or FAD to be alternatives to net income as reliable measures of the company's operating performance; nor should you consider FFO or FAD to be alternatives to cash flows from operations as measures of liquidity. Funds from operations and funds available for distribution do not measure whether cash flow is sufficient to fund all of our cash needs, including principal amortization, capital improvements and distributions to shareholders. FFO and FAD do not represent cash flows from operating, investing or financing activities as defined by generally accepted accounting principles. Further, FFO and FAD as disclosed by other REITs might not be comparable to our calculation of FFO or FAD. Additional Information: More information may be obtained by calling our corporate offices at (704) 944-0100 or on our web site at www.bnp-residential.com. Information requests may be e-mailed to the investor relations department at investor.relations@bnp-residential.com. Forward Looking Statement Disclosure: This press release includes forward-looking statements concerning the company's operations, economic performance and financial condition, including, in particular, forward-looking statements regarding future operations and performance. Such statements are subject to various risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors identified in our annual report on Form 10-K for the year ending December 31, 2004. 6 BNP Residential Properties, Inc. - ------------------------------------------------------------------------------- Consolidated Statements of Operations and Financial Results - Unaudited (all amounts in thousands except per share amounts) 3 months ended June 30 6 months ended June 30 2005 2004 2005 2004 ----------------------------- ---------------------------- Revenues Apartment rental income $ 17,508 $ 10,579 $ 31,600 $ 20,632 Restaurant rental income 957 957 1,915 1,915 Management fee income 11 208 127 405 Interest and other income 26 113 251 136 ------------ ------------ ------------ ------------ 18,502 11,858 33,892 23,089 Expenses Apartment operations 6,853 4,388 12,296 8,250 Apartment and corporate administration 1,375 1,175 2,934 2,267 Interest 5,728 3,330 10,818 6,570 Depreciation 4,157 2,690 7,678 5,230 Amortization of deferred loan costs 117 68 224 156 Write-off of unamortized loan costs at debt refinance 63 - 223 - Deficit distributions to minority partners 800 - 7,621 - ------------ ------------ ------------ ------------ 19,093 11,650 41,794 22,472 ------------ ------------ ------------ ------------ (Loss) income before minority interest (591) 208 (7,902) 616 Loss (income) attributed to minority interests - - Consolidated limited partnerships 14 - 76 - - Operating partnership 171 9 1,463 (27) ------------ ------------ ------------ ------------ Net (loss) income (406) 217 (6,363) 590 Less cumulative preferred dividend (250) (250) (500) (500) ------------ ------------ ------------ ------------ (Loss) income attributed to common shareholders $ (656) $ (33) $ (6,863) $ 90 ============ ============ ============ ============ (Loss) income before minority interest $ (591) $ 208 $ (7,902) $ 616 Less cumulative preferred dividend (250) (250) (500) (500) Add amortization of in-place lease intangible 74 - 74 - Add depreciation 4,157 2,690 7,678 5,230 Add deficit distributions to minority partners 800 - 7,621 - Less minority interest in FFO of consolidated limited partnerships (add if FFO is negative) (200) - 338 - ------------ ------------ ------------ ------------ Funds from operations $ 3,990 $ 2,648 $ 7,310 $ 5,346 ============ ============ ============ ============ Net cash provided by operating activities $ 4,371 $ 2,325 $ 7,048 $ 5,723 Less recurring capital expenditures (844) (626) (1,302) (901) Less cumulative preferred dividend (250) (250) (500) (500) Add (less) change in operating assets and liabilities, net 204 614 794 174 Less equity in loss of unconsolidated limited partnership (add if income) (0) - (0) - Add amortization of deferred interest defeasance 46 26 77 105 Add (less) minority interest in reconciling items arising from consolidated limited partnerships (162) - 221 - ------------ ------------ ------------ ------------ Funds available for distribution $ 3,364 $ 2,089 $ 6,338 $ 4,600 ============ ============ ============ ============ Earnings per common share - basic: Net (loss) income $ (0.04) $ 0.03 $ (0.70) $ 0.09 (Loss) income attributed to common shareholders (0.06) (0.01) (0.75) 0.01 Earnings per common share - diluted: Net (loss) income (0.04) 0.02 (0.70) 0.07 (Loss) income attributed to common shareholders (0.06) (0.01) (0.75) 0.01 Funds from operations 0.34 0.29 0.65 0.62 7 Consolidated Statements of Operations and Financial Results (unaudited) - continued (all amounts in thousands except per share amounts) 3 months ended June 30 6 months ended June 30 2005 2004 2005 2004 ----------------------------- ---------------------------- Weighted average shares and units outstanding: Preferred B shares and units 909 909 909 909 Common shares 9,239 7,119 9,111 6,763 Operating partnership minority units 2,408 1,850 2,141 1,846 We calculated basic and diluted per common share amounts using the following: Numerators: For basic per common share amounts - Net (loss) income $ (406) $ 217 $ (6,363) $ 590 Less cumulative preferred dividend (250) (250) (500) (500) ------------ ------------ ------------ ------------ (Loss) income attributed to common shareholders - basic $ (656) $ (33) $ (6,863) $ 90 ============ ============ ============ ============ For diluted per common share amounts - Net (loss) income $ (406) $ 217 $ (6,363) $ 590 Adjust for loss (income) attributed to minority interest in operating partnership na(1) (9) na(1) 27 ------------ ------------ ------------ ------------ (406) 208 (6,363) 616 Less cumulative preferred dividend (250) (250) (500) (500) ------------ ------------ ------------ ------------ (Loss) income attributed to common shareholders - diluted $ (656) $ (42) $ (6,863) $ 116 ============ ============ ============ ============ Denominators: For basic per common share income amounts - Weighted average common shares outstanding 9,239 7,119 9,111 6,763 Effect of potentially dilutive securities: Operating partnership minority units na(1) 1,850 na(1) 1,846 Dilutive stock options - 24 - 19 ------------ ------------ ------------ ------------ For diluted per share income amounts - Adjusted weighted average common shares and assumed conversions 9,239 8,994 9,111 8,628 ============ ============ ============ ============ For funds from operations per share: Weighted average common shares outstanding 9,239 7,119 9,111 6,763 Operating partnership minority units 2,408 1,850 2,141 1,846 Dilutive stock options - 24 - 19 ------------ ------------ ------------ ------------ Weighted average operating partnership common units and assumed conversions 11,647 8,994 11,252 8,628 ============ ============ ============ ============ (1) Operating partnership units are anti-dilutive at June 30, 2005 - excluded from calculation of diluted per share amounts for net income and income available to common shareholders. FFO is calculated at the operating partnership level; this calculation includes operating partnership minority units. 8 BNP Residential Properties, Inc. - ------------------------------------------------------------------------------- Supplemental Consolidating Summary Balance Sheets - Unaudited (all amounts in thousands) June 30 December 31 2005 2004 --------------------------------------------- --------------- Consol Owned (Owned Consol Elim LPs Properties Properties) --------------------------------------------- --------------- Assets Real estate investments at cost: $ 565,047 $ - $ 46,716 $ 518,331 $ 426,525 Less accumulated depreciation (80,120) - (6,711) (73,408) (66,454) --------------------------------------------- --------------- 484,927 - 40,004 444,923 360,071 Cash and cash equivalents 2,533 - 696 1,837 517 Prepaid expenses and other assets 8,209 (3,949) 1,141 11,018 4,516 Intangible assets 1,251 - - 1,251 1,115 Deferred financing costs, net 2,329 - 599 1,730 1,545 --------------------------------------------- --------------- Total assets $ 499,250 $(3,949) $ 42,439 $ 460,760 $ 367,764 ============================================= =============== Liabilities and Shareholders' Equity Deed of trust and other notes payable $ 410,480 $(1,914) $ 47,625 $ 364,769 $ 286,425 Accounts payable and accrued expenses 3,700 (73) 280 3,493 897 Accrued interest on notes payable 1,721 - 190 1,531 1,264 Consideration due for acquisitions 1,000 - - 1,000 - Deferred revenue and security deposits 2,089 - 133 1,956 1,787 --------------------------------------------- --------------- 418,989 (1,987) 48,228 372,748 290,373 Minority interests - - Consolidated limited partnerships 274 - 274 - - - Operating partnership 19,637 - - 19,637 14,394 Shareholders' equity 60,350 (1,962) (6,062) 68,375 62,997 --------------------------------------------- --------------- Total liabilities and shareholders' equity $ 499,250 $(3,949) $ 42,439 $ 460,760 $ 367,764 ============================================= =============== 9 BNP Residential Properties, Inc. - ------------------------------------------------------------------------------- Supplemental Consolidating Summary Statements of Operations - Unaudited (all amounts in thousands) Three months ended June 30 - 2005 2004 --------------------------------------------- --------------- Consol Owned (Owned Consol Elim LPs Properties Properties) --------------------------------------------- --------------- Revenues Apartment rental income $ 17,508 $ - $ 1,830 $ 15,678 $ 10,579 Restaurant rental income 957 - - 957 957 Management fee income 11 (92) - 103 208 Interest and other income 26 (44) 11 59 113 --------------------------------------------- --------------- 18,502 (136) 1,841 16,798 11,858 Expenses Apartment operations 6,853 (92) 745 6,200 4,388 Apartment and corporate administration 1,375 - - 1,375 1,175 Interest 5,728 (44) 637 5,135 3,330 Depreciation 4,157 - 197 3,960 2,690 Amortization of deferred loan costs 117 - 17 100 68 Write-off of unamortized loan costs at debt refinance 63 - - 63 - Deficit distributions to minority partners 800 - 800 - - --------------------------------------------- --------------- 19,093 (136) 2,396 16,833 11,650 --------------------------------------------- --------------- Income (loss) before minority interest (591) $ - $ (555) $ (35) 208 ================================= Loss (income) attributed to minority interests - - Consolidated LPs 14 - - Operating partnership 171 9 ------------ --------------- Net income (loss) (406) 217 Less cumulative preferred dividend (250) (250) ------------ --------------- Income (loss) attributed to common shareholders $ (656) $ (33) ============ =============== Calculation of FFO: Income (loss) before minority interest $ (591) $ - $ (555) $ (35) $ 208 Cumulative preferred dividend (250) - - (250) (250) Amortization of in-place lease intangible 74 - - 74 - Depreciation 4,157 - 197 3,960 2,690 Deficit distributions 800 - 800 - - --------------------------------------------- --------------- 4,190 $ - $ 442 $ 3,748 2,648 ================================= Minority interest in consolidated LPs (200) - ------------ --------------- FFO - Operating partnership $ 3,990 $ 2,648 ============ =============== 10 BNP Residential Properties, Inc. - ------------------------------------------------------------------------------- Supplemental Consolidating Summary Statements of Operations - Unaudited (all amounts in thousands) Six months ended June 30 - 2005 2004 --------------------------------------------- --------------- Consol Owned (Owned Consol Elim LPs Properties Properties) --------------------------------------------- --------------- Revenues Apartment rental income $ 31,600 $ - $ 3,013 $ 28,586 $ 20,632 Restaurant rental income 1,915 - - 1,915 1,915 Management fee income 127 (151) - 277 405 Interest and other income 251 (56) 5 302 136 --------------------------------------------- --------------- 33,892 (207) 3,018 31,081 23,089 Expenses Apartment operations 12,296 (151) 1,217 11,230 8,250 Apartment and corporate administration 2,934 - - 2,934 2,267 Interest 10,818 (56) 1,548 9,326 6,570 Depreciation 7,678 - 543 7,135 5,230 Amortization of deferred loan costs 224 - 29 196 156 Write-off of unamortized loan costs at debt refinance 223 - 160 63 - Deficit distributions to minority partners 7,621 - 7,621 - - --------------------------------------------- --------------- 41,794 (207) 11,119 30,882 22,472 --------------------------------------------- --------------- Income (loss) before minority interest (7,902) $ - $(8,100) $ 199 616 ================================= Loss (income) attributed to minority interests - - Consolidated LPs 76 - - Operating partnership 1,463 (27) ------------ --------------- Net income (loss) (6,363) 590 Less cumulative preferred dividend (500) (500) ------------ --------------- Income (loss) attributed to common shareholders $ (6,863) $ 90 ============ =============== Calculation of FFO: Income (loss) before minority interest $ (7,902) $ - $(8,100) $ 199 $ 616 Cumulative preferred dividend (500) - - (500) (500) Amortization of in-place lease intangible 74 - - 74 - Depreciation 7,678 - 543 7,135 5,230 Deficit distributions 7,621 - 7,621 - - --------------------------------------------- --------------- 6,971 $ - $ 64 $ 6,907 5,346 ================================= Minority interest in consolidated LPs 338 - ------------ --------------- FFO - Operating partnership $ 7,310 $ 5,346 ============ =============== 11