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
============== ==============
(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.
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
============== =============== ============== =============== ==============
(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.
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
=============== =============== =============== ============== ==============
(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.
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