UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549


                                    FORM 10-Q

[X]    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
       OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 1999

                                       OR

[  ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
       OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ___________

Commission file number: 1-9496


                          BODDIE-NOELL PROPERTIES, INC.
             (Exact name of Registrant as specified in its charter)

Maryland                                                   56-1574675
State or other jurisdiction of                           (I.R.S. Employer
incorporation or organization                           Identification No.)

              3850 One First Union Center, Charlotte, NC 28202-6032
               (Address of principal executive offices) (Zip Code)

                                  704/944-0100
                         (Registrant's telephone number)


      Indicate by check mark whether 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 for 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 ____

                      APPLICABLE ONLY TO CORPORATE ISSUERS:
      Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of October 29, 1999 (the latest practicable date).

Common Stock, $.01 par value                                 5,951,250
(Class)                                                      (Number of shares)


                                                Total number of pages:  21


<PAGE>


                                TABLE OF CONTENTS


  Item No.                                                              Page No.

              PART I - Financial Information
     1        Financial Statements                                          3
     2        Management's Discussion and Analysis of
              Financial Condition and Results of Operations                10
     3        Quantitative and Qualitative Disclosures
              About Market Risk                                            19

              PART II - Other Information
     6        Exhibits and Reports on Form 8-K                             20




                                       2
<PAGE>



                         PART I - Financial Information

Item 1. Financial Statements.

BODDIE-NOELL PROPERTIES, INC.
-------------------------------------------------------------------------------
Consolidated Balance Sheets

<TABLE>
<CAPTION>
                                                                         September 30        December 31
                                                                             1999               1998
                                                                       ------------------ ------------------
                                                                          (Unaudited)
<S>                                                                       <C>                <C>
Assets
Real estate investments at cost:
   Apartment properties                                                    $202,755,441       $188,538,645
   Restaurant properties                                                     40,544,741         43,205,075
                                                                       ------------------ ------------------
                                                                            243,300,182        231,743,720
   Less accumulated depreciation                                            (24,151,777)       (19,552,177)
                                                                       ------------------ ------------------
                                                                            219,148,405        212,191,543
Cash and cash equivalents                                                     1,243,113            489,694
Other current assets                                                          3,051,808          1,769,934
Investment in and advances to Management Company                                458,647            659,715
Notes receivable                                                                625,000          2,536,812
Intangible assets, net of accumulated amortization:
   Intangible related to acquisition of management operations                 2,029,038          2,333,688
   Deferred financing costs                                                   1,014,466          1,139,224
                                                                       ------------------ ------------------
         Total assets                                                      $227,570,477       $221,120,610
                                                                       ================== ==================

Liabilities and Shareholders' Equity
Mortgage and other notes payable                                           $148,549,444       $134,423,621
Notes payable to affiliates                                                           -          6,100,000
Accounts payable and accrued expenses                                         2,359,050            964,537
Escrowed security deposits and deferred revenue                                 497,868            352,049
Consideration due for acquisitions                                            1,300,000          1,849,990
Deferred credit for defeasance of interest,
   net of accumulated amortization                                              875,000                  -
                                                                       ------------------ ------------------
      Total liabilities                                                     153,581,362        143,690,197

Minority interest in Operating Partnership                                   20,348,761         20,681,152
Shareholders' equity:
Common stock, $.01 par value, 100,000,000 shares
   authorized; issued and outstanding shares--
   6,006,950 at September 30, 1999, and
   5,977,930 at December 31, 1998                                                60,069             59,779
Additional paid-in capital                                                   72,441,726         72,117,636
Dividend distributions in excess of net income                              (18,861,441)       (15,428,154)
                                                                       ------------------ ------------------
      Total shareholders' equity                                             53,640,354         56,749,261
                                                                       ------------------ ------------------
         Total liabilities and shareholders' equity                        $227,570,477       $221,120,610
                                                                       ================== ==================
</TABLE>


                                       3
<PAGE>



BODDIE-NOELL PROPERTIES, INC.
-------------------------------------------------------------------------------
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>

                                              Three months ended                  Nine months ended
                                                 September 30                       September 30
                                             1999             1998              1999             1998
                                       ----------------- ---------------- ----------------- ----------------
<S>                                        <C>               <C>             <C>               <C>
Revenues
Apartment rental income                     $7,097,103        $5,888,138      $21,456,542       $15,287,080
Restaurant rental income                     1,053,192         1,125,000        3,285,639         3,375,000
Interest and other income                      137,265           120,360          446,642           471,914
                                       ----------------- ---------------- ----------------- ----------------
                                             8,287,560         7,133,498       25,188,823        19,133,994
Expenses
Depreciation                                 1,717,891         1,727,695        5,181,524         3,748,726
Amortization of
   intangible assets                           143,136           132,890          429,408           391,718
Apartment operations                         2,473,921         1,875,927        7,432,042         4,915,954
Administrative                                 442,711           389,828        1,425,975         1,018,928
Interest                                     2,656,118         2,168,860        8,014,793         5,664,605
                                       ----------------- ---------------- ----------------- ----------------
                                             7,433,777         6,295,200       22,483,742        15,739,931
                                       ----------------- ---------------- ----------------- ----------------
Income before minority
   interest and
   extraordinary item                          853,783           838,298        2,705,081         3,394,063
Minority interest in
   Operating Partnership                       179,357           158,623          565,560           523,664
                                       ----------------- ---------------- ----------------- ----------------
Income before
   extraordinary item                          674,426           679,675        2,139,521         2,870,399
Extraordinary item - loss on
   early extinguishment of debt                      -                 -                -            51,335
                                       ----------------- ---------------- ----------------- ----------------
Net income                                  $  674,426        $  679,675      $ 2,139,521       $ 2,819,064
                                       ================= ================ ================= ================

Per share data:
Basic earnings per share -
   Income before
      extraordinary item                        $0.12             $0.11            $0.36             $0.49
   Extraordinary item                               -                 -                -             (0.01)
                                       ----------------- ---------------- ----------------- ----------------
   Net income                                   $0.12             $0.11            $0.36             $0.48
                                       ================= ================ ================= ================
Diluted earnings per share -
   Income before
      extraordinary item                        $0.12             $0.11            $0.36             $0.49
   Extraordinary item                               -                 -                -             (0.01)
                                       ----------------- ---------------- ----------------- ----------------
   Net income                                   $0.12             $0.11            $0.36             $0.48
                                       ================= ================ ================= ================
Dividends declared                              $0.31             $0.31            $0.93             $0.93
                                       ================= ================ ================= ================
Weighted average shares
   outstanding                               6,006,950         5,960,615        5,996,977         5,907,650
                                       ================= ================ ================= ================
</TABLE>


                                       4
<PAGE>


BODDIE-NOELL PROPERTIES, INC.
-------------------------------------------------------------------------------
Consolidated Statement of Shareholders' Equity
(Unaudited)
<TABLE>
<CAPTION>

                                                                                Dividends
                                                                Additional     Distributed
                                           Common Stock          paid-in       in excess of
                                       Shares       Amount       capital        net income        Total
                                     ------------ ----------- --------------- --------------- ---------------
<S>                                   <C>          <C>         <C>            <C>              <C>
Balance at December 31, 1998           5,977,930    $59,779     $72,117,636    $(15,428,154)    $56,749,261
Common stock issued, DRIP                 13,621        136         152,931               -         153,067
Dividends paid ($0.31)                         -          -               -      (1,853,159)     (1,853,159)
Net income                                     -          -               -         810,486         810,486
                                     ------------ ----------- --------------- --------------- ---------------
Balance at March 31, 1999              5,991,551     59,915      72,270,567     (16,470,827)     55,859,655
Common stock issued, DRIP                 15,399        154         171,159               -         171,313
Dividends paid ($0.31)                         -          -               -      (1,857,380)     (1,857,380)
Net income                                     -          -               -         654,609         654,609
                                     ------------ ----------- --------------- --------------- ---------------
Balance at June 30, 1999               6,006,950     60,069      72,441,726     (17,673,598)     54,828,197
Dividends paid ($0.31)                         -          -               -      (1,862,269)     (1,862,269)
Net income                                     -          -               -         674,426         674,426
                                     ------------ ----------- --------------- --------------- ---------------
Balance at September 30, 1999          6,006,950    $60,069     $72,441,726    $(18,861,441)    $53,640,354
                                     ============ =========== =============== =============== ===============

</TABLE>

                                       5
<PAGE>


BODDIE-NOELL PROPERTIES, INC.
-------------------------------------------------------------------------------
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>

                                                                                  Nine months ended
                                                                                    September 30
                                                                                1999             1998
                                                                          ----------------- ----------------
<S>                                                                           <C>               <C>
Operating activities:
Net income                                                                     $2,139,521        $2,819,064
Adjustments to reconcile net income to
   net cash provided by operations:
   Extraordinary item - early
      extinguishment of debt                                                            -            51,335
   Minority interest in Operating Partnership                                     565,560           523,664
   Equity in income of Management Company                                        (128,932)          (34,990)
   Depreciation and amortization                                                5,485,940         4,140,444
   Changes in operating assets and liabilities:
      Other current assets                                                     (1,217,943)       (1,078,798)
      Accounts payable and accrued expenses                                     1,394,513           656,341
      Security deposits and deferred revenue                                      152,182            (1,062)
                                                                          ----------------- ----------------
Net cash provided by operating activities                                       8,390,841         7,075,998

Investing activities:
Acquisitions of apartment properties                                           (1,796,746)      (41,051,647)
Additions to apartment properties                                              (1,799,344)         (955,044)
Sale of restaurant properties                                                   2,079,719                 -
Repayment from (advances to)
   Management Company                                                             330,000          (330,000)
Reduction (investment) in notes receivable                                      1,911,812          (361,951)
                                                                          ----------------- ----------------
Net cash provided by (used in)
   investing activities                                                           725,441       (42,698,642)

Financing activities:
Net proceeds from issue of common stock                                           324,380         2,972,667
Distributions to Operating Partnership
   minority unitholders                                                        (1,447,941)         (707,292)
Dividends paid to common shareholders                                          (5,572,808)       (5,490,880)
Proceeds from notes payable                                                     2,838,188        48,606,951
Principal payments on notes payable                                            (4,504,682)      (10,712,863)
Payment of deferred financing costs                                                     -          (409,325)
                                                                          ----------------- ----------------
Net cash (used in) provided by
   financing activities                                                        (8,362,863)       34,259,258
                                                                          ----------------- ----------------

Net  increase (decrease) in
   cash and cash equivalents                                                      753,419        (1,363,386)
Cash and cash equivalents at
   beginning of period                                                            489,694         2,458,565
                                                                          ----------------- ----------------

Cash and cash equivalents at end of period                                     $1,243,113        $1,095,179
                                                                          ================= ================
</TABLE>


                                       6
<PAGE>


BODDIE-NOELL PROPERTIES, INC.
-------------------------------------------------------------------------------
Notes to Consolidated Financial Statements - September 30, 1999
(Unaudited)

Note 1.  Interim financial statements

Our independent accountants have not audited the accompanying financial
statements of Boddie-Noell Properties, Inc., except for the balance sheet at
December 31, 1998. We derived the amounts in the balance sheet at December 31,
1998, from the financial statements included in our 1998 Annual Report on Form
10-K. We believe that we have included all adjustments (consisting of normal
recurring accruals) necessary for a fair presentation of the financial position
and results of operations for the periods presented.

We have condensed or omitted certain notes and other information from the
interim financial statements presented in this Quarterly Report on Form 10-Q.
You should read these financial statements in conjunction with our 1998 Annual
Report on Form 10-K.

Note 2.  Segment Reporting

In June 1997, the Financial Accounting Standards Board issued Statement No. 131,
Disclosures about Segments of an Enterprise and Related Information. Statement
131 uses a management approach to report financial and descriptive information
about a company's operating segments. Operating segments are revenue-producing
components for which separate financial information is produced internally for
the company's management. Under this definition, we operated, for all periods
presented, as a single segment (apartment operations).

Note 3.  Property Acquisitions and Sales

Effective January 1, 1999, we acquired Chason Ridge Apartments for a total
acquisition cost of approximately $12.5 million, including cash payments
totaling approximately $1.8 million.

In June 1999, we sold three restaurant properties to the lessee (who is an
affiliate) for their net carrying value of $2.1 million.

Note 4.  Notes payable

We funded cash payments for the acquisition of Chason Ridge with draws from our
line of credit totaling $1.75 million. In May 1999, we retired a $6.1 million
note payable to an affiliate with a $6.1 million draw from our line of credit.
In June 1999, we applied $2.1 million proceeds from the sale of three
restaurants to reduce our line of credit.

In conjunction with the acquisition of Chason Ridge Apartments in January 1999,
we assumed a HUD-insured loan in the amount of $9.7 million, payable in monthly
installments of $72,000 including principal and interest at 8.5%. In addition,
the note provides for payment of mortgage insurance with a premium of 0.5% of
the loan balance. A deed of trust on and assignment of rents of Chason Ridge
Apartments secure the loan. The interest rate on this loan exceeded current
market rates at that time, and the note may not be prepaid until January 2005.
Accordingly, the seller gave a $1.0 million credit for defeasance of
above-market interest, which we will apply to reduce recorded interest expense
monthly through 2004.

                                       7
<PAGE>

In February 1999, The Villages of Chapel Hill Limited Partnership reduced the
outstanding principal balance of its note payable to us to $625,000. We applied
the $1.9 million proceeds to reduce our variable-rate note payable to a bank to
$625,000.

Note 5.  Shareholders' Equity

We calculated basic and diluted earnings per share using the following amounts:
<TABLE>
<CAPTION>

                                              Three months ended                  Nine months ended
                                                 September 30                       September 30
                                             1999             1998              1999             1998
                                       ----------------- ---------------- ----------------- ----------------
<S>                                         <C>               <C>             <C>               <C>
Numerators:
For basic earnings per share -
   Income before
      extraordinary item                      $674,426          $679,675       $2,139,521        $2,870,399
  Extraordinary item                                 -                 -                -           (51,335)
                                       ----------------- ---------------- ----------------- ----------------
   Net income                                 $674,426          $679,675       $2,139,521        $2,819,064
                                       ================= ================ ================= ================

For diluted earnings per share -
   Income before
      extraordinary item (1)                  $853,783          $838,298       $2,705,081        $3,394,063
  Extraordinary item (1)                             -                 -                -           (59,682)
                                       ----------------- ---------------- ----------------- ----------------
   Net income (1)                             $853,783          $838,298       $2,705,081        $3,334,381
                                       ================= ================ ================= ================

Denominators:
Denominator for basic
   earnings per share -
   weighted average shares
   outstanding                               6,006,950         5,960,615        5,996,977         5,907,650
Effect of dilutive securities:
   Contingent stock, acquisition                     -                 -                -             2,387
   Convertible Operating
      Partnership units                      1,594,969         1,288,598        1,584,399         1,085,120
   Stock options (2)                                 -             9,012                -            26,120
                                       ----------------- ---------------- ----------------- ----------------
                                             1,594,969         1,297,610        1,584,399         1,113,627
                                       ----------------- ---------------- ----------------- ----------------
Denominator for diluted
   earnings per share - adjusted
   weighted average shares and
   assumed conversions                       7,601,919         7,258,225        7,581,376         7,021,227
                                       ================= ================ ================= ================

<FN>
(1) Assumes conversion of Operating Partnership units to common shares; minority
interest in income before extraordinary item and minority interest in
extraordinary item have been eliminated. (2) We excluded 430,000 options granted
in 1994 (exercise price $12.50), 1997 (exercise price $12.25), and 1998
(exercise price $13.125 and $11.25) from the 1999 calculations because they were
antidilutive at September 30, 1999. We also excluded 120,000 options granted in
1998 (exercise price $13.125) from the 1998 calculations because they were
antidilutive at September 30, 1998.
</FN>
</TABLE>

                                       8
<PAGE>

Note 6.  Subsequent events

During October 1999 we repurchased and retired 55,700 shares of our common stock
at a total cost of $538,466.

On October 20, 1999, we declared a regular quarterly cash dividend of $0.31 per
share, which we will pay on November 16, 1999, to shareholders of record on
November 1, 1999.


                                       9
<PAGE>

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

      The following discussion contains forward-looking statements within the
meaning of federal securities law. You can identify such statements by the use
of forward-looking terminology, such as "may," "will," "expect," "anticipate,"
"estimate," "continue" or other similar words. These statements discuss future
expectations, contain projections of results of operations or of financial
condition or state other "forward-looking" information. Although we believe that
our plans, intentions, and expectations reflected in or suggested by these
forward-looking statements are reasonable, we cannot assure you that we will
achieve our plans, intentions or expectations. 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, 1998. You should read the
following discussion in conjunction with the financial statements and notes
thereto included in this Quarterly Report and our Annual Report on Form 10-K.

Company Profile

      Boddie-Noell Properties, Inc. is a self-administered and self-managed real
estate investment trust that owns and operates apartment communities in North
Carolina and Virginia. We currently own and operate 15 apartment communities
containing 3,440 units and have the right to acquire one additional apartment
community containing 108 units. We also own 44 restaurant properties, which we
lease to a third party under a master lease on a triple-net basis. We manage
four other apartment communities and one shopping center through an
unconsolidated subsidiary. Our executive offices are located at 3850 One First
Union Center, Charlotte, North Carolina 28202-6032, telephone 704/944-0100.

      We are structured as an UPREIT, or umbrella partnership real estate
investment trust. The company is the sole general partner and owns a controlling
interest in Boddie-Noell Properties Limited Partnership, or the "Operating
Partnership," through which we conduct all of our operations.

Overview

      This discussion analyzes our operations for the third quarter and first
nine months of 1999 compared to the third quarter and first nine months of 1998.
In reading this discussion, it may help if you keep certain factors in mind:

o    Throughout the first five months of 1998, we owned and operated nine
     apartment communities containing 2,208 units.

o    During the period June 1 through September 9, 1998, we acquired five
     apartment communities containing 980 units. We issued Operating Partnership
     units in conjunction with these acquisitions. You should read our annual
     report on Form 10-K for the year ended December 31, 1998, for a detailed
     discussion of these acquisitions and related financing transactions.
     Effective January 1, 1999, we acquired one additional apartment community
     containing 252 units in a cash purchase.

o    Throughout the first nine months of 1999, we owned and operated 15
     apartment communities containing 3,440 units.

                                       10
<PAGE>

Results of Operations

Revenues

      Total revenue for the third quarter of 1999 was $8.3 million, a 16.2%
increase over the third quarter of 1998. For the first nine months of 1999,
total revenue was $25.2 million, a 31.6% increase over the first nine months of
1998. The increase in total revenue is attributable to a significant increase in
apartment rental income. We have two principal sources of revenue: apartment
rental income and restaurant rental income.

      Apartment rental income for the third quarter of 1999 was $7.1 million, a
20.5% increase over the third quarter of 1998. For the first nine months of
1999, apartment rental income was $21.5 million, a 40.4% increase over the first
nine months of 1998. This increase is principally due to the acquisition of six
apartment communities during 1998 and the first quarter of 1999.

      For the third quarter of 1999, overall average economic occupancy was
94.7%, with average monthly revenue per occupied unit of $726. For the first
nine months of 1999, overall average economic occupancy was 95.0%, with average
monthly revenue per occupied unit of $730.

      Rental income for the nine apartment communities we owned throughout the
first nine months of both 1999 and 1998 (apartment communities owned as of
January 1, 1998) totaled $4.6 million for the third quarter of 1999, a 1.4%
decrease compared to the third quarter of 1998. For this "same-unit" comparison,
rental income totaled $13.9 million for the first nine months of 1999, a 0.1%
decrease compared to the first nine months of 1998.

      For the third quarter of 1999, same-unit average economic occupancy
decreased 0.2%, while average monthly revenue per occupied unit decreased by
1.1%, compared to the third quarter of 1998. For the first nine months of 1999,
same-unit average economic occupancy increased 0.6%, while average monthly
revenue per occupied unit decreased by 0.5%, compared to the first nine months
of 1998.

      Summary amounts for our apartment communities' occupancy and revenue per
occupied unit for the third quarter and first nine months of 1999 follow:
<TABLE>
<CAPTION>

                                         Three months ended September 30      Nine months ended September 30
                                       ------------------------------------ ------------------------------------
                                                                 Average                             Average
                                                                 monthly                             monthly
                             Number                              revenue                              revenue
                               of        Average     Average       per        Average     Average       per
                           apartment    physical     economic    occupied    physical     economic    occupied
                             units      occupancy   occupancy      unit      occupancy   occupancy      unit
                           ----------- ------------ ----------- ----------- ------------ ----------- -----------
<S>                            <C>          <C>         <C>          <C>         <C>         <C>          <C>
Abbington Place                   360        89.3%       89.9%        $734        91.8%       93.0%        $755
Allerton Place (1)                228        94.8%       94.0%         782        95.1%       95.2%         782
Chason Ridge (2)                  252        95.7%       95.5%         653        95.5%       95.3%         665
Harris Hill                       184        96.4%       97.5%         732        96.3%       97.0%         735
Latitudes                         448        97.9%       98.1%         688        97.2%       97.8%         682
Madison Hall (3)                  128        94.9%       93.6%         632        93.0%       92.6%         647
Oakbrook                          162        95.7%       95.2%         783        95.1%       95.3%         780
Oak Hollow (4)                    220        96.6%       96.5%         726        95.2%       95.6%         720
Paces Commons                     336        93.9%       95.4%         714        95.1%       96.1%         708
Paces Village                     198        97.3%       95.8%         650        93.2%       92.5%         658
Pepperstone                       108        94.7%       95.5%         690        96.5%       96.6%         683

</TABLE>

                                       11
<PAGE>
<TABLE>
<CAPTION>


                                         Three months ended September 30      Nine months ended September 30
                                       ------------------------------------ ------------------------------------
                                                                 Average                             Average
                                                                 monthly                             monthly
                             Number                              revenue                              revenue
                               of        Average     Average       per        Average     Average       per
                           apartment    physical     economic    occupied    physical     economic    occupied
                             units      occupancy   occupancy      unit      occupancy   occupancy      unit
                           ----------- ------------ ----------- ----------- ------------ ----------- -----------
<S>                            <C>          <C>         <C>          <C>         <C>         <C>           <C>
Savannah Place                    172        92.9%       93.7%         764        93.6%       93.1%         774
Summerlyn Place (5)               140        92.1%       92.2%         789        92.2%       91.9%         811
Waterford Place                   240        95.1%       95.7%         845        94.2%       95.1%         848
Woods Edge (6)                    264        91.8%       91.5%         734        94.0%       94.2%         727

All apartments
   - 1999                       3,440        94.6%       94.7%         726        94.7%       95.0%         730

Same units (7)
   - 1999                       2,208        94.7%       95.1%         730        94.8%       95.3%         733
   - 1998                       2,208        95.4%       95.3%         738        94.6%       94.7%         737

<FN>
(1) Acquired September 1998.
(2) Acquired January 1999.
(3) Acquired August 1998.
(4) Acquired July 1998.
(5) Acquired September 1998.
(6) Acquired June 1998.
(7) Includes nine apartment communities owned as of January 1, 1998
</FN>
</TABLE>

      During the third quarter of 1999 we continued to experience some weakness
in the majority of our apartment markets. This weakness appears to be the result
of new apartment construction and robust home sales. While we have been able to
maintain high occupancy levels, we have not been able to achieve the rental
rates we would like. As a result, apartment rental income was lower for the
third quarter than expected.

      We have begun to see what we believe are signs of improving market
conditions, most notably in Greensboro, but we do not expect any significant
improvement in our apartment markets for the remainder of the year. In light of
this, we will continue to emphasize occupancy as a means of maximizing cash flow
from our properties. We will also strive to maintain our competitive position by
keeping the apartment communities in an excellent state of repair and by making
selective improvements. We have excellent properties in good locations, and we
believe we are well positioned to compete effectively in our markets.

      In June 1999, we sold three restaurants to Boddie-Noell Enterprises, the
lessee, under the non-economic clause of the restaurant master lease. Under the
terms of this clause, the lessee may close up to seven restaurants and buy them
back for no less than net carrying value. Following the sale of these
properties, the annual minimum rent on the remaining 44 restaurants will be
approximately $4.3 million in 1999, and $4.2 million per year thereafter,
compared to $4.5 million minimum rent on 47 restaurants in 1998. We applied the
$2.1 million proceeds from the sale to reduce our line of credit. We expect the
sale of these restaurants to reduce funds from operations for 1999 by
approximately $80,000.

                                       12
<PAGE>

      Restaurant rental income for the third quarter and first nine months of
both 1999 and 1998 was the minimum rent. The actual restaurant rental income for
the third quarter of 1999 declined by 6.4% compared to 1998, and by 2.6% for the
first nine months of 1999 compared to 1998, due to the sale of the three
restaurant properties in June 1999. Restaurant rental income is the greater of
the minimum rent or 9.875% of food sales. Sales at the 44 restaurant properties
that we owned throughout the first nine months of both 1999 and 1998 declined by
3.6% for the third quarter, and 2.6% for the first nine months, compared to 1998
amounts.

Expenses

      Total expense for the third quarter of 1999 was $7.4 million, an increase
of 18.1% over the third quarter of 1998. For the first nine months of 1999,
total expense was $22.5 million, an increase of 42.8% over the first nine months
of 1998. These increases are primarily attributable to the acquisition of six
apartment communities during 1998 and the first quarter of 1999.

      Apartment operations expense for the third quarter was $2.5 million, an
increase of 31.9% over the third quarter of 1998. For the first nine months of
1999, apartment operations expense was $7.4 million, an increase of 51.2% over
the first nine months of 1998. Apartment operations expense represented 34.9% of
related rental income for the third quarter of 1999 compared to 31.9% in the
third quarter of 1998. For the first nine months of 1999, apartment operations
expense represented 34.6% of related rental income, compared to 32.2% for the
first nine months of 1998.

      Apartment operations expense for the nine apartment communities we owned
throughout the first nine months of both 1999 and 1998 (apartment communities
owned as of January 1, 1998) totaled $1.6 million for the third quarter of 1999,
a 1.8% increase compared to the third quarter of 1998. For this same-unit
comparison, apartment operations expense totaled $4.7 million for the first nine
months of 1999, a 2.5% increase compared to the first nine months of 1998. For
these nine same-unit communities, apartment operations expense represented 34.4%
of related rental income for the third quarter of 1999 compared to 33.4% in the
third quarter of 1998. For the first nine months of 1999, same-unit apartment
operations expense represented 34.0% of related rental income compared to 33.1%
for the first nine months of 1998.

      Apartment operations expenses were generally in line with management's
expectations. The increase in apartment operations expense as a percent of
related income is primarily attributable to shortfalls in rental income.
Increases in non-executive compensation, taxes and insurance further increased
apartment operations expense as a percent of related income.

      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.

      The increases in depreciation and amortization expense are attributable to
the addition of apartment communities.

      Administrative costs increased by 13.6% for the third quarter of 1999 and
39.9% for the first nine months of 1999 compared to 1998. The increase in
administrative costs is generally attributable to additional corporate level
staff and overhead costs corresponding to the addition of six apartment
communities. In addition, legal and professional fees expense totaled $235,000
through the first nine months of 1999, compared to $146,000 through the first
nine months of 1998, reflecting the increased complexity and costs associated
with administration of our

                                       13
<PAGE>


UPREIT structure. We expect that administrative costs will continue to increase,
but at a slower rate, as and when we acquire additional apartment communities.

      Interest expense was $2.7 million for the third quarter of 1999, an
increase of 22.5% over the third quarter of 1998. For the first nine months of
1999, interest expense totaled $8.0 million, an increase of 41.5% compared to
the first nine months of 1998. These increases are attributable to long-term
debt issued in conjunction with apartment acquisitions. Weighted average
interest rates were 7.2% in the third quarter and first nine months of 1999
compared to 7.5% in the third quarter and first nine months of 1998.

Net income

      Net income available to common shareholders was $674,000 for the third
quarter of 1999, a decrease of 0.8% compared to the third quarter of 1998. For
the first nine months of 1999, net income available to common shareholders
totaled $2.1 million, a decrease of 24.1% compared to the first nine months of
1998. These variances are primarily attributable to the effect of non-cash
charges for depreciation and increases in minority interest in the Operating
Partnership.

Funds from Operations

      Funds from operations 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 debt
restructuring and sales of property, plus depreciation and amortization, and
after adjustments for unconsolidated partnerships and joint ventures."

      We calculate funds available for distribution as funds from operations
plus non-cash expense for amortization of loan costs, less recurring capital
expenditures.

      We consider funds from operations and funds available for distribution to
be useful in evaluating potential property acquisitions and measuring the
operating performance of an equity REIT. We believe that, together with net
income and cash flows, funds from operations and funds available for
distribution provide investors with additional measures to evaluate the ability
of the REIT to incur and service debt and to fund acquisitions and other capital
expenditures. 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 funds from operations or
funds available for distribution:

o     to be alternatives to net income as reliable measures of our operating
      performance, or
o     to be alternatives to cash flows 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.
Funds from operations and funds available for distribution do not represent cash
flows from operating, investing or financing activities as defined by generally
accepted accounting principles. Further, funds from operations and funds
available for distribution as disclosed by other REITs may not be comparable to
our calculation of funds from operations or funds available for distribution.

                                       14
<PAGE>

      Funds from operations of the Operating Partnership increased by 0.2% for
the third quarter and 10.0% for the first nine months of 1999 compared to 1998
amounts.

      We calculated funds from operations of the Operating Partnership as
follows (all amounts in thousands):
<TABLE>
<CAPTION>

                                                   Three months ended              Nine months ended
                                                      September 30                    September 30
                                                  1999            1998            1999            1998
                                             --------------- --------------- --------------- ---------------
<S>                                              <C>             <C>             <C>             <C>
Income before minority interest and
   extraordinary item                             $  854          $  838          $2,705          $3,394
Depreciation                                       1,718           1,728           5,182           3,749
Amortization of
   management intangible                             102             102             305             305
                                             --------------- --------------- --------------- ---------------
Funds from operations -
   Operating Partnership                          $2,673          $2,668          $8,191          $7,447
                                             =============== =============== =============== ===============
</TABLE>

      A reconciliation of funds from operations to funds available for
distribution follows (all amounts in thousands):
<TABLE>
<CAPTION>

                                                   Three months ended              Nine months ended
                                                      September 30                    September 30
                                                  1999            1998            1999            1998
                                             --------------- --------------- --------------- ---------------
<S>                                              <C>             <C>             <C>             <C>
Funds from operations -
   Operating Partnership                          $2,673          $2,668          $8,191          $7,447
Amortization of loan costs                            42              31             125              87
Recurring capital expenditures                      (339)           (258)           (859)           (569)
                                             --------------- --------------- --------------- ---------------
Funds available for distribution                  $2,376          $2,441          $7,457          $6,965
                                             =============== =============== =============== ===============
</TABLE>

      A further reconciliation of funds from operations of the Operating
Partnership to basic funds from operations available to common shareholders
follows (all amounts in thousands):
<TABLE>
<CAPTION>

                                                   Three months ended              Nine months ended
                                                      September 30                    September 30
                                                  1999            1998            1999            1998
                                             --------------- --------------- --------------- ---------------
<S>                                              <C>             <C>             <C>             <C>
Funds from operations -
   Operating Partnership                          $2,673          $2,668          $8,191          $7,447
Minority interest in
   funds from operations                            (561)           (468)         (1,713)         (1,151)
                                             --------------- --------------- --------------- ---------------
Basic funds from operations
   available to common shareholders               $2,112          $2,200          $6,479          $6,296
                                             =============== =============== =============== ===============
</TABLE>

                                       15
<PAGE>

      Other information about our historical cash flows follows (all amounts in
thousands):
<TABLE>
<CAPTION>

                                                   Three months ended              Nine months ended
                                                      September 30                    September 30
                                                  1999            1998            1999            1998
                                             --------------- --------------- --------------- ---------------
<S>                                             <C>            <C>             <C>             <C>
Net cash provided by (used in):
   Operating activities                          $ 2,575        $  2,492        $  8,391        $  7,076
   Investing activities                             (334)        (39,895)            725         (42,699)
   Financing activities                           (1,490)         36,775          (8,363)         34,259

Dividends and distributions paid to:
   Shareholders                                  $ 1,862        $  1,846        $  5,573        $  5,491
   Minority unitholders in
      Operating Partnership                          489             314           1,448             707

Scheduled debt principal payments                $   139        $    123        $    405        $    365
Non-recurring capital expenditures                   326             169             942             389

Weighted average common
   shares outstanding                              6,007           5,961           5,997           5,908
Weighted average Operating
   Partnership minority units
   outstanding                                     1,595           1,284           1,584           1,084
</TABLE>

      Effective with this Quarterly Report on Form 10-Q, we have revised our
calculation of funds available for distribution to conform to the prevalent
industry practice. We will no longer deduct scheduled debt principal payments
from funds from operations in calculating funds available for distribution.
Restated amounts for funds available for distribution follow:
<TABLE>
<CAPTION>

                                                        Amounts           Scheduled            Amounts
                                                          as                 Debt                as
                                                      Previously          Principal           Currently
                                                       Reported            Payments           Reported
                                                   ------------------ ------------------- ------------------
<S>                                                       <C>                   <C>              <C>
Three months ended June 30, 1999                           $2,215                $135             $2,350
Three months ended March 31, 1999                           2,600                 131              2,731
Three months ended September 30, 1998                       2,318                 123              2,441
Three months ended June 30, 1998                            2,119                 112              2,231
Three months ended March 31, 1998                           2,163                 129              2,292
</TABLE>


Capital Resources and Liquidity

Capital Resources

      Effective January 1, 1999, we acquired Chason Ridge Apartments, a 252-unit
community located in Fayetteville, North Carolina. The total acquisition cost
was approximately $12.5 million, including cash payments totaling approximately
$1.8 million. We funded cash payments for the acquisition of Chason Ridge with
draws from our line of credit totaling $1.75 million.

                                       16
<PAGE>

      In conjunction with the acquisition of Chason Ridge Apartments, we assumed
a HUD-insured loan in the amount of $9.7 million, payable in monthly
installments of $72,000 including principal and interest at 8.5%. In addition,
the note provides for payment of mortgage insurance with a premium of 0.5% of
the loan balance. A deed of trust on and assignment of rents of Chason Ridge
Apartments secure the loan. When we acquired Chason Ridge, the interest rate on
this loan exceeded current market rates, and the note may not be prepaid until
January 2005. Accordingly, the seller gave a $1.0 million credit to offset the
cost of the above-market interest rate, which we will apply to reduce recorded
interest expense monthly through 2004. We estimate the effective interest rate
on this note to be approximately 7.3%.

      In February 1999, The Villages of Chapel Hill Limited Partnership reduced
the outstanding principal balance of its note payable to us to $625,000. We
applied the $1.9 million proceeds to reduce our variable-rate note payable to a
bank to $625,000.

      In May 1999, we retired a $6.1 million note payable to an affiliate with a
$6.1 million draw from our line of credit. In June 1999, we applied $2.1 million
proceeds from the sale of three restaurants to reduce our line of credit.

      At September 30, 1999, total long-term debt was $148.5 million, including
$129.2 million of notes payable at fixed interest rates ranging from 6.345% to
8.55%, and $19.3 million at variable rates indexed on 30-day LIBOR rates. The
weighted average interest rate on debt outstanding was 7.2% at September 30,
1999, compared to 7.2% at December 31, 1998, and September 30, 1998. A 1%
fluctuation in variable interest rates would increase or decrease our annual
interest expense by approximately $196,000.

      A note payable secured by a deed of trust on Latitudes Apartments matures
in January 2000. The balance of this note at September 30, 1999, was $12.6
million, with interest at 8.45%. The note may be prepaid in the fourth quarter
of 1999 without penalty. We have a commitment to refinance this loan with an
$18.0 million line of credit, with interest at LIBOR plus 2.0% and principal
repayment due in five years. We expect to close on this refinancing before the
end of December 1999.

      In December 1998, we established a share buy-back program that authorized
the repurchase and retirement of up to 300,000 shares of our common stock.
During October 1999, we repurchased and retired approximately 56,000 shares of
our common stock at a cost of approximately $538,000.

Cash flows and liquidity

      Net cash flows from operating activities for the third quarter of 1999
were $2.6 million, compared to $2.5 million for the third quarter of 1998. Net
cash flows from operating activities were $8.4 million through the first nine
months of 1999, compared to $7.1 million through the first nine months of 1998.
These increases reflect our growth in apartment operations. Investing and
financing activities focused primarily on apartment acquisitions and
improvements, along with payments of dividends and distributions.

      We continue to produce sufficient cash flow to fund our regular dividend.
We have announced that the company will pay a regular quarterly dividend of
$0.31 per share on November 16, 1999, to shareholders of record on November 1,
1999.

                                       17
<PAGE>

      We capitalize our expenditures relating to acquiring new assets,
materially enhancing the value of existing assets, or substantially extending
the useful life of existing assets. All carpet and vinyl replacements are
capitalized. Additions to owned apartment communities are generally funded from
cash provided by operating activities. During the third quarter of 1999, we drew
$1.0 million from our line of credit to fund capital improvements projects.
These were primarily improvements that we planned as part of the acquisition of
six apartment communities during 1998 and early 1999.

      We generally expect to meet our short-term liquidity requirements through
net cash provided by operations and utilization of credit facilities. We believe
that net cash provided by operations is, and will continue to be, adequate to
meet the REIT operating requirements in both the short term and the long term.
We anticipate funding our future acquisition activities primarily by using
short-term credit facilities as an interim measure, to be replaced by funds from
equity offerings or long-term debt. We expect to meet our long-term liquidity
requirements, such as scheduled debt maturities and repayment of short-term
financing of possible property acquisitions, through long-term secured and
unsecured borrowings and the issuance of debt securities or additional equity
securities. We believe we have sufficient resources to meet our short-term
liquidity requirements.

      We do not believe that inflation poses a material risk to the company. The
leases at our apartment properties are short-term in nature. None are longer
than two years. The restaurant properties are leased on a triple-net basis,
which places the risk of rising operating and maintenance costs on the lessee.


Year 2000 Issues

      The Year 2000 issue refers to the inability of certain computer systems to
accurately store and use dates after 1999. If not corrected, this could result
in failure of the information technology systems that we use in our business
operations, such as computer programs related to property management, leasing,
financial reporting and employee benefits. In addition, computerized systems and
microprocessors are embedded in a variety of products used in our operations and
properties, such as HVAC controls, thermostats, elevators, alarms, smoke
detectors, sprinklers and phones.

      Our remediation plan has three phases:

o     Assessment (inventory and testing of computer systems and inquiries
      regarding Year 2000 readiness of significant vendors and suppliers);
o     Renovation (repairing or replacing non-compliant systems); and
o     Validation (testing of repaired or replaced systems).

      The following chart shows our progress with respect to our remediation
plan:

                             Information Technology           Other Systems
                           --------------------------- -------------------------
Assessment Phase
   % complete                                 100%                         100%
   Completion date                4th quarter 1998             1st quarter 1999

                                       18
<PAGE>


                             Information Technology           Other Systems
                           --------------------------- -------------------------

Renovation Phase
   % complete                                 100%               not applicable
   Completion date                4th quarter 1998               not applicable

Validation Phase
   % complete                                 100%               not applicable
   Completion date                4th quarter 1998               not applicable

      With respect to our material third-party relationships, i.e., our utility
providers, our significant vendors and suppliers and our restaurant tenant, we
made written inquiries of their Year 2000 readiness. To date, none have
indicated Year 2000 issues that could materially impact our operations.

      The cost of our remediation efforts to date and the estimated cost of our
future remediation efforts are not material.

      Based on our assessment of the Year 2000 readiness of our significant
vendors, suppliers and tenant, as well as the status of our remediation plan, we
do not expect Year 2000 issues to have a material impact on the company. As a
result, we have not created, and we do not expect to create, a contingency plan
for Year 2000 failures. Nevertheless, this assessment, which is a
forward-looking statement, depends on the accuracy of the information we have
received from third parties with respect to their Year 2000 readiness.

      Various of our disclosures and announcements concerning our Year 2000
programs are intended to constitute "Year 2000 Readiness Disclosures" as defined
in the recently enacted Year 2000 Information and Readiness Disclosure Act. The
Act provides added protection from liability for certain public and private
statements concerning an entity's Year 2000 readiness and the Year 2000
readiness of its products and services. The Act also potentially provides added
protection from liability for certain types of Year 2000 disclosures made after
January 1, 1996, and before the date of enactment of the Act.


Recently Issued Accounting Standards

      In June 1998, the Financial Accounting Standards Board issued Statement
No. 133, Accounting for Derivative Instruments and Hedging Activities. This
Statement, as amended by Statement No. 137, must be adopted in years beginning
after June 15, 2000. The Statement will require the recognition of all
derivatives on our consolidated balance sheet at fair value. We do not
anticipate that the adoption of this Statement will have a material impact on
our results of operations or financial position.


Item 3.  Quantitative and Qualitative Disclosures About Market Risk

      There have been no material changes in information that would be provided
under Item 305 of Regulation S-K since December 31, 1998.

                                       19
<PAGE>



                           PART II - Other Information


Item 6.  Exhibits and Reports on Form 8-K

a)       Exhibits

      Exhibit 27        Financial data schedule (electronic filing)

b) Reports on Form 8-K:

      None.


                                       20
<PAGE>


                                   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, thereunto duly authorized.

                                    BODDIE-NOELL PROPERTIES, INC.
                                    (Registrant)




November 10, 1999                   /s/ Philip S. Payne
                                    ---------------------------------------
                                    Philip S. Payne
                                    Executive Vice President and
                                    Chief Financial Officer
                                    (Duly authorized officer)



November 10, 1999                   /s/ Pamela B. Bruno
                                    ---------------------------------------
                                    Pamela B. Bruno
                                    Vice President, Controller and
                                    Chief Accounting Officer



                                       21
<PAGE>