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 June 30, 2002
                               -------------

                                       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
                        ------


                        BNP RESIDENTIAL 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.)

           301 S. College Street, Suite 3850, 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 August 5, 2002 (the latest practicable date).

Common Stock, $.01 par value                         5,787,545
----------------------------                         -----------------------
(Class)                                              (Number of shares)





                                                        Exhibit index:  Page 26

<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                                         12
 3         Quantitative and Qualitative Disclosures
           About Market Risk                                                 22

           PART II - Other Information
 4         Submission of Matters to a Vote of Security Holders               22
 5         Other Information                                                 23
 6         Exhibits and Reports on Form 8-K                                  23





                                       2
<PAGE>


                         PART I - Financial Information

Item 1. Financial Statements.

BNP RESIDENTIAL PROPERTIES, INC.
-------------------------------------------------------------------------------
Consolidated Balance Sheets
<TABLE>
<CAPTION>

                                                                            June 30          December 31
                                                                             2002               2001
                                                                       ------------------ ------------------
                                                                          (Unaudited)
<S>                                                                       <C>                <C>
Assets
Real estate investments at cost:
   Apartment properties                                                    $254,678,175       $221,218,864
   Restaurant properties                                                     39,529,527         39,529,527
                                                                       ------------------ ------------------
                                                                            294,207,702        260,748,391
   Less accumulated depreciation                                            (44,717,132)       (40,751,890)
                                                                       ------------------ ------------------
                                                                            249,490,570        219,996,501
Cash and cash equivalents                                                       404,022          1,417,616
Other current assets                                                          3,577,325          1,693,374
Notes receivable, net of reserve                                                131,002            100,000
Intangible assets, net of accumulated amortization:
   Intangible related to acquisition of management operations                 1,115,088          1,115,088
   Deferred financing costs                                                   1,182,707          1,062,069
                                                                       ------------------ ------------------
         Total assets                                                      $255,900,714       $225,384,648
                                                                       ================== ==================

Liabilities and Shareholders' Equity
Deed of trust and other notes payable                                      $193,068,348       $162,330,222
Accounts payable and accrued expenses                                         2,260,844            997,768
Deferred revenue and security deposits                                        1,198,015          1,349,155
Deferred credit for defeasance of interest,
   net of accumulated amortization                                              416,704            500,032
                                                                       ------------------ ------------------
      Total liabilities                                                     196,943,911        165,177,177

Minority interest in Operating Partnership                                   19,083,483         18,173,557
Shareholders' equity:
Preferred stock, $.01 par value, 10,000,000 shares
   authorized, 227,273 shares issued and outstanding                          2,500,000          2,500,000
Common stock, $.01 par value, 100,000,000 shares
   authorized; issued and outstanding shares--
   5,784,510 at June 30, 2002,
   5,744,873 at December 31, 2001                                                57,845             57,449
Additional paid-in capital                                                   70,334,435         69,872,958
Dividend distributions in excess of net income                              (33,018,960)       (30,396,493)
                                                                       ------------------ ------------------
      Total shareholders' equity                                             39,873,320         42,033,914
                                                                       ------------------ ------------------
         Total liabilities and shareholders' equity                        $255,900,714       $225,384,648
                                                                       ================== ==================
</TABLE>

                                       3
<PAGE>




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

                                              Three months ended                  Six months ended
                                                    June 30                            June 30
                                             2002             2001              2002             2001
                                       ----------------- ---------------- ----------------- ----------------
                                                            (Adjusted)                         (Adjusted)
<S>                                       <C>               <C>              <C>               <C>
Revenues
Apartment rental income                    $ 7,855,562       $ 7,814,957      $15,344,858       $15,555,937
Restaurant rental income                     1,005,319         1,013,298        2,010,638         2,042,553
Management fee income                          286,606           104,380          580,794           217,097
Interest and other income                       68,995           306,698          106,194           381,016
                                       ----------------- ---------------- ----------------- ----------------
                                             9,216,482         9,239,333       18,042,484        18,196,603
Expenses
Apartment operations                         3,043,455         2,887,312        5,735,731         5,459,903
Apartment administration                       293,986           296,431          619,420           511,651
Corporate administration                       495,766           492,260        1,089,160         1,016,166
Depreciation                                 2,020,606         1,974,179        3,967,140         3,880,817
Amortization of intangibles                     50,025            49,093           97,950            92,301
Interest                                     2,657,075         2,813,069        5,162,072         5,796,399
                                       ----------------- ---------------- ----------------- ----------------
                                             8,560,913         8,512,344       16,671,473        16,757,237
                                       ----------------- ---------------- ----------------- ----------------
Income before
   minority interest and
   extraordinary item                          655,569           726,989        1,371,011         1,439,366
Minority interest in
   Operating Partnership                       137,641           167,332          287,211           331,386
                                       ----------------- ---------------- ----------------- ----------------
Income before
   extraordinary item                          517,928           559,657        1,083,800         1,107,980
Extraordinary item - loss on
   early extinguishment
   of debt                                           -                 -           73,297                 -
                                       ----------------- ---------------- ----------------- ----------------
Net income                                     517,928           559,657        1,010,503         1,107,980
Cumulative preferred dividend                   62,329                 -          123,973                 -
                                       ----------------- ---------------- ----------------- ----------------
Income available to
   common shareholders                     $   455,599       $   559,657      $   886,530       $ 1,107,980
                                       ================= ================ ================= ================

Per common share:
Basic earnings per share -
   Before extraordinary item                    $0.09             $0.09            $0.19             $0.19
   Extraordinary item                            -                 -               (0.01)             -
   Available to shareholders                     0.07              0.09             0.15              0.19
Diluted earnings per share -
   Before extraordinary item                    $0.09             $0.09            $0.18             $0.19
   Extraordinary item                            -                 -               (0.01)             -
   Available to shareholders                     0.09              0.09             0.17              0.19
Dividends declared                               0.31              0.31             0.62              0.62
Weighted average common
   shares outstanding                        5,775,895         5,706,950        5,765,464         5,706,950

</TABLE>

                                       4
<PAGE>

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

                                                                                            Dividend
                                                                            Additional   distributions
                                Preferred Stock         Common Stock         paid-in      in excess of
                              Shares     Amount       Shares     Amount      capital       net income       Total
                             --------- ------------ ----------- ---------- ------------- --------------- ------------
<S>                           <C>      <C>         <C>          <C>       <C>           <C>             <C>
Balance December 31, 2001      227,273  $2,500,000  5,744,873    $57,449   $69,872,958   $(30,396,493)   $42,033,914
Common stock issued                  -           -     21,820        218       251,556              -        251,774
Costs of preferred stock             -           -          -          -        (5,313)             -         (5,313)
issue
Dividends paid - preferred           -           -          -          -             -         (2,740)        (2,740)
Dividends paid - common              -           -          -          -             -     (1,780,911)    (1,780,911)
Net income                           -           -          -          -             -        492,575        492,575
                             --------- ------------ ----------- ---------- ------------- --------------- ------------
Balance March 31, 2002        227,273    2,500,000  5,766,693     57,667    70,119,201    (31,687,569)    40,989,299

Common stock issued                 -            -     17,817        178       215,234              -        215,412
Dividends paid - preferred          -            -          -          -             -        (61,644)       (61,644)
Dividends paid - common             -            -          -          -             -     (1,787,675)    (1,787,675)
Net income                          -            -          -          -             -        517,928        517,928
                             --------- ------------ ----------- ---------- ------------- --------------- ------------
Balance June 30, 2002         227,273   $2,500,000  5,784,510    $57,845   $70,334,435   $(33,018,960)   $39,873,320
                             ========= ============ =========== ========== ============= =============== ============

</TABLE>

                                       5
<PAGE>



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

                                                                                  Six months ended
                                                                                       June 30
                                                                                2002             2001
                                                                          ----------------- ----------------
                                                                                              (Adjusted)
<S>                                                                         <C>               <C>
Operating activities:
Net income                                                                   $  1,010,503      $  1,107,980
Adjustments to reconcile net income to
   net cash provided by operations:
   Extraordinary item - loss on early extinguishment of debt                       73,297                 -
   Minority interest in Operating Partnership                                     287,211           331,386
   Depreciation and amortization of intangibles                                 4,065,090         3,973,118
   Amortization of defeasance credit                                              (83,328)          (83,328)
   Changes in operating assets and liabilities:
      Prepaid expenses and other current assets                                (1,574,877)       (1,038,447)
      Accounts payable and accrued expenses                                       841,129           972,033
      Deferred revenue and security deposits                                     (200,283)           25,259
                                                                          ----------------- ----------------
Net cash provided by operating activities                                       4,418,742         5,288,001

Investing activities:
Acquisition of apartment properties                                            (9,989,369)                -
Additions to apartment properties, net                                         (1,243,939)       (1,291,992)
Sale of restaurant property                                                             -           405,860
Acquisition of minority interest in Management Company                                  -           372,939
                                                                          ----------------- ----------------
Net cash used in investing activities                                         (11,233,308)         (513,193)

Financing activities:
Costs of issuance of preferred stock                                               (5,313)                -
Issuance of common stock                                                          404,001                 -
Redemption of Operating Partnership minority units                                      -           (14,864)
Distributions to Operating Partnership minority unitholders                    (1,055,931)       (1,058,149)
Dividends paid to preferred shareholder                                           (64,384)                -
Dividends paid to common shareholders                                          (3,568,586)       (3,538,309)
Proceeds from notes payable                                                    24,533,114           176,304
Principal payments on notes payable                                           (14,128,310)         (729,727)
Payment of deferred financing costs                                              (313,619)             (792)
                                                                          ----------------- ----------------
Net cash provided by (used in)
   financing activities                                                         5,800,972        (5,165,537)
                                                                          ----------------- ----------------

Net decrease in cash and cash equivalents                                      (1,013,594)         (390,729)
Cash and cash equivalents at beginning of period                                1,417,616         1,056,052
                                                                          ----------------- ----------------

Cash and cash equivalents at end of period                                   $    404,022      $    665,323
                                                                          ================= ================
</TABLE>

                                       6
<PAGE>


BNP RESIDENTIAL PROPERTIES, INC.
-------------------------------------------------------------------------------
Notes to Consolidated Financial Statements - June 30, 2002
(Unaudited)

Note 1.  Interim financial statements

Our independent accountants have not audited the accompanying financial
statements of BNP Residential Properties, Inc., except for the balance sheet at
December 31, 2001. We derived the amounts in the balance sheet at December 31,
2001, from the financial statements included in our 2001 Annual Report on Form
10-K. We believe that we have included all adjustments (consisting of normal
recurring accruals, except as discussed below) 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 2001 Annual
Report on Form 10-K.

We adopted Statement of Financial Accounting Standards No. 142, Goodwill and
Other Intangible Assets, effective January 1, 2002. Under the new rules,
goodwill and intangible assets deemed to have indefinite lives are no longer
amortized after December 31, 2001, but are subject to annual impairment tests in
accordance with the Statement. We determined that the intangible related to our
1994 acquisition of management operations, net of accumulated amortization, as
of January 1, 2002, is not impaired, and we plan to perform future annual tests
as of October 1 of each year. We have adjusted the 2001 comparative amounts in
our consolidated financial statements to exclude this amortization expense and
conform to the 2002 presentation as follows:
<TABLE>
<CAPTION>

                                                            2001 as                             2001 as
                                                           Currently                           Previously
                                                           Presented        Adjustments         Reported
                                                        ----------------- ----------------- -----------------
<S>                                                         <C>              <C>                <C>
Three months ended June 30, 2001
Revenues                                                     $9,239,333       $         -        $9,239,333
Expenses                                                      8,512,344          (101,550)        8,613,894
                                                        ----------------- ----------------- -----------------
Income before minority interest and
   extraordinary item                                           726,989           101,550           625,439
Minority interest in Operating Partnership                      167,332            23,373           143,959
                                                        ----------------- ----------------- -----------------
Income before extraordinary item                                559,657            78,177           481,480
Extraordinary item - loss on early
   extinguishment of debt                                             -                 -                 -
                                                        ----------------- ----------------- -----------------
Net income                                                   $  559,657       $    78,177       $   481,480
                                                        ================= ================= =================
</TABLE>



                                       7
<PAGE>
<TABLE>
<CAPTION>

                                                            2001 as                             2001 as
                                                           Currently                           Previously
                                                           Presented        Adjustments         Reported
                                                        ----------------- ----------------- -----------------
<S>                                                         <C>              <C>                <C>
Six months ended June 30, 2001
Revenues                                                    $18,196,603       $         -       $18,196,603
Expenses                                                     16,757,237          (203,100)       16,960,337
                                                        ----------------- ----------------- -----------------
Income before minority interest and
   extraordinary item                                         1,439,366           203,100         1,236,266
Minority interest in Operating Partnership                      331,386            46,759           284,627
                                                        ----------------- ----------------- -----------------
Income before extraordinary item                              1,107,980           156,341           951,639
Extraordinary item - loss on early
   extinguishment of debt                                             -                 -                 -
                                                        ----------------- ----------------- -----------------
Net income                                                  $ 1,107,980       $   156,341        $  951,639
                                                        ================= ================= =================
</TABLE>


Note 2.  Basis of Presentation

The consolidated financial statements include the accounts of BNP Residential
Properties, Inc. (the "company") and BNP Residential Properties Limited
Partnership (the "Operating Partnership"). The company is the general partner
and owns a majority interest in the Operating Partnership. All significant
intercompany balances and transactions have been eliminated in the consolidated
financial statements.

Effective January 2001, the accounts of the Operating Partnership include BNP
Management, Inc. (the "Management Company"). Prior to January 2001, the
Operating Partnership had a 1% voting interest and 95% economic interest in the
Management Company, and used the equity method to account for this investment.
In January 2001, the Operating Partnership acquired the outstanding 99% voting
interest and 5% economic interest in the Management Company. This transaction
resulted in a net increase in cash included on our consolidated balance sheet of
approximately $373,000.

Note 3.  Apartment properties acquisition

Effective May 31, 2002, we acquired Barrington Place Apartments and Brookford
Place Apartments for a contract price of approximately $32.1 million.
Preliminary consideration for this acquisition has been set as follows:

o    We assumed a first deed of trust loan secured by the assets and assignment
     of rents of Barrington Place Apartments with a balance of approximately
     $20.3 million.
o    We assumed and retired existing liabilities of the former owners totaling
     approximately $10.0 million.
o    We issued approximately 147,000 Operating Partnership units with an
     imputed value of $12.00 per unit, or approximately $1.8 million.

Through June 30, 2002, we have incurred and capitalized other direct costs of
approximately $77,000 related to this acquisition.

The number of Operating Partnership units issued is subject to adjustment based
on a final accounting of property-level operations and related liabilities
assumed. We do not expect any

                                       8
<PAGE>

material change in the components of consideration or other direct costs of the
acquisition described above.

Barrington Place Apartments is located in Charlotte, North Carolina and contains
348 one-, two- and three-bedroom apartments. Brookford Place Apartments is
located in Winston-Salem, North Carolina and contains 108 one- and two-bedroom
apartments.

We acquired these properties from a private investment group. Brookford Place
Apartments was the last of seven properties to be acquired under our 1997
agreement with this group, which we refer to as the Chrysson Parties. Two
members of the selling group currently serve on the Company's board of
directors. Prior to this transaction, we managed both of the acquired properties
under third-party management contracts.

Note 4.  Long-term debt transactions

In conjunction with the acquisition of Barrington Place Apartments and Brookford
Place Apartments, we assumed a first deed of trust loan secured by the assets
and assignment of rents of Barrington Place Apartments with a balance of
approximately $20.3 million. This loan provides for interest at an effective
rate of approximately 7.0% and monthly payments including principal and interest
of approximately $136,000, with maturity in November 2010. We paid and recorded
deferred loan costs of approximately $161,000 related to this loan assumption.

On June 6, 2002, we applied $4.9 million proceeds from a fixed-rate loan to
retire existing loan obligations of the former owners of Barrington Place
Apartments and Brookford Place Apartments. A deed of trust and assignment of
rents of Brookford Place Apartments secure this loan. This loan provides for
interest at an effective rate of approximately 7.1% and monthly payments
including principal and interest of approximately $32,000, with maturity in
August 2012. We paid and recorded deferred loan costs of approximately $61,000
related to this loan transaction.

The balance of funds required for the acquisition of Barrington Place and
Brookford Place came from operating cash and a $5.0 million draw on our
revolving line of credit secured by Latitudes Apartments. We also drew an
additional $500,000 on this revolving line of credit during May to fund other
direct costs of the acquisition, loan fees, and improvements at apartment
properties.

In January 2002, we applied a $6.0 million draw on our line of credit secured by
Latitudes Apartments to retire a note payable in the amount of $6,094,000,
secured by a deed of trust and assignment of rents of Oakbrook Apartments. In
February 2002, we subsequently issued a note payable in the amount of $7,870,000
secured by a deed of trust and assignment of rents of Oakbrook Apartments. The
note provides for interest at an effective rate of approximately 7.1% and
monthly payments including principal and interest of approximately $52,000, with
maturity in February 2012. We applied the proceeds of the Oakbrook note to
reduce our Latitudes line of credit. In conjunction with the February refinance
transaction, we paid and recorded deferred loan costs of approximately $90,000.

In conjunction with the January retirement, we wrote off unamortized loan costs
of approximately $95,000. We have reflected this write-off, net of minority
interests' share, in the financial statements as an extraordinary item.

                                       9
<PAGE>

Note 5.  Shareholders' Equity

In May 2002, we issued 17,817 shares of our common stock through our Dividend
Reinvestment and Stock Purchase Plan for proceeds of approximately $215,000.

In February 2002, we issued 16,258 shares of our common stock through our
Dividend Reinvestment and Stock Purchase Plan for proceeds of approximately
$189,000. In addition, we issued 5,562 shares of our common stock, in a non-cash
transaction, to acquire the same number of Operating Partnership units from a
former minority unitholder.

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

                                               Three months ended                   Six months ended
                                                     June 30                            June 30
                                              2002             2001              2002              2001
                                        ----------------- ---------------- ----------------- -----------------
                                                            (Adjusted)                          (Adjusted)
<S>                                           <C>               <C>            <C>               <C>
Numerators:
Numerator for basic
  earnings per share -
  Income before
     extraordinary item                        $517,928          $559,657       $1,083,800        $1,107,980
  Extraordinary item                                  -                 -          (73,297)                -
  Cumulative preferred dividend                 (62,329)                -         (123,973)                -
                                        ----------------- ---------------- ----------------- -----------------
  Income available to
     common shareholders                       $455,599          $559,657         $886,530        $1,107,980
                                        ================= ================ ================= =================

Numerator for diluted
  earnings per share -
  Income before
     extraordinary item (1)                    $655,569          $726,989       $1,371,011        $1,439,366
  Extraordinary item (1)                              -                 -          (95,032)                -
                                        ----------------- ---------------- ----------------- -----------------
  Income available to
    common shareholders (1)                    $655,569          $726,989       $1,275,979        $1,439,366
                                        ================= ================ ================= =================

Denominators:
Denominator for basic
  earnings per share -
  weighted average shares
  outstanding                                 5,775,895         5,706,950        5,765,464         5,706,950
Effect of dilutive securities:
  Convertible preferred shares                  227,273                 -          227,273                 -
  Convertible Operating
     Partnership units                        1,748,785         1,706,193        1,726,507         1,706,833
  Stock options (2)                              17,096             3,060           13,274             1,347
                                        ----------------- ---------------- ----------------- -----------------
Denominator for diluted
  earnings per share - adjusted
  weighted average shares and
  assumed conversions                         7,769,049         7,461,203        7,732,518         7,415,130
                                        ================= ================ ================= =================
</TABLE>


                                       10
<PAGE>

(1)  Assumes conversion of Series B Preferred shares and 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 options to purchase 140,000 shares of common stock at $12.50,
     110,000 shares at $12.25, and 120,000 shares at $13.125 from the
     calculation of diluted earnings per share for 2002 and 2001. We also
     excluded additional options to purchase 60,000 shares of common stock at
     $11.25 from the calculation of diluted earnings per share for 2001. The
     exercise price of these options was greater than the average market price
     of the common shares for these periods, and the effect would be
     anti-dilutive.

Note 6.  Subsequent events

On July 18, 2002, the Board of Directors declared a regular quarterly cash
dividend of $0.31 per share to be paid on August 15, 2002, to shareholders of
record on August 1, 2002. The Board of Directors also authorized the payment of
dividends totaling $62,329 to Series B Preferred shareholders in accordance with
the investment agreement for those shares.



                                       11
<PAGE>






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

         This Quarterly Report 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.
When you consider such forward-looking statements, you should keep in mind the
following important factors that could cause our actual results to differ
materially from those contained in any forward-looking statement:

o Our markets could suffer unexpected increases in the development of apartment,
other rental, or competitive housing alternatives;

o our markets could suffer unexpected declines in economic growth or an increase
in unemployment rates;

o general economic conditions could cause the financial condition of a large
number of our tenants to deteriorate;

o we may not be able to lease or re-lease apartments quickly or on as favorable
terms as under existing leases;

o revenues from our third-party apartment property management activities could
decline, or we could incur unexpected costs in performing these activities;

o we may have incorrectly assessed the environmental condition of our
properties;

o an unexpected increase in interest rates could increase our debt service
costs;

o we may not be able to meet our long-term liquidity requirements on favorable
terms; and

o we could lose key executive officers.

         Given these uncertainties, we caution you not to place undue reliance
on forward-looking statements. We undertake no obligation to publicly release
the results of any revision to these forward-looking statements that may be made
to reflect any future events or circumstances or to reflect the occurrence of
unanticipated events.

         You should read the 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

         BNP Residential Properties, Inc. is a self-administered and
self-managed real estate investment trust with operations in North Carolina,
South Carolina and Virginia. Our primary activity is the ownership and operation
of apartment communities. We currently manage 32 multi-family communities
containing 7,303 units. Of these, we own 17 apartment communities containing
4,137 units. Third parties own the remaining 15 communities, containing 3,166
units, and we manage them on a contract basis. In addition to our apartment
communities, we own 42 restaurant properties that we lease to a third party
under a master lease on a triple-net basis.

                                       12
<PAGE>

         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 BNP Residential Properties Limited Partnership, through which we
conduct all of our operations. We refer to this partnership as the Operating
Partnership. We refer to the limited partners of the Operating Partnership as
minority unitholders or as the minority interest.

         Our executive offices are located at 301 South College Street, Suite
3850, Charlotte, North Carolina 28202-6032, telephone 704/944-0100.

Results of Operations

Revenues

         Total revenues in the second quarter of 2002 were $9.2 million,
essentially flat compared to the second quarter of 2002. Total revenues through
the first six months of 2002 were $18.0 million, a decrease of 0.8% compared to
the first six months of 2001. Apartment related income (apartment rental income
plus income from apartment management and investment activities) accounted for
approximately 89% in the second quarters and through the first six months of
both 2002 and 2001.

         Apartment rental income totaled $7.9 million in the second quarter of
2002, an increase of 0.5% compared to the second quarter of 2001. Through the
first six months of 2002, apartment rental income totaled $15.3 million, a
decrease of 1.4% compared to the first six months of 2001. These amounts include
approximately $328,000 apartment rental income at Barrington Place and Brookford
Place, which we acquired effective May 31, 2002. On a "same units" basis (those
apartment units that we owned throughout the first six months of both years),
apartment rental income decreased by 3.7% for the second quarter of 2002
compared to the second quarter of 2001, and by 3.5% for the first six months of
2002 compared to the first six months of 2001. These decreases were the result
of slight declines in both occupancy and revenue per occupied unit.

         For the second quarter of 2002, overall average economic occupancy
declined by 1.3% while average revenue per occupied unit declined by 2.1%,
compared to the second quarter of 2001. For the first six months of 2002,
overall average economic occupancy declined by 2.2% while average revenue per
occupied unit declined by 1.1%, compared to the first six months of 2001. These
comparisons are generally consistent between overall results and same units
results. For the second quarter of 2002, same units average economic occupancy
declined by 1.2%, while average revenue per occupied unit declined by 2.4%,
compared to the second quarter of 2001. For the first six months of 2002, same
units average economic occupancy declined by 2.1%, while average revenue per
occupied unit declined by 1.2%, compared to the first six months of 2001.

         Overbuilding of apartment properties, a weak economy and extremely low
home mortgage rates have led to intense competition for residents in our
apartment markets. As a result, we have experienced declines in both occupancy
and rental rates. While we remain committed to our apartment communities and
markets over the long term, we do not expect a material improvement in our
apartment operations until the economy strengthens sufficiently to promote job
growth and increase demand for apartments. Exactly when that will occur is
outside of our control and ability to predict. In the meantime, we will continue
to focus on maximizing occupancy and improving efficiencies at both our
apartment communities and corporate offices.

                                       13
<PAGE>

         Summary amounts for our apartment communities' occupancy and revenue
per occupied unit for the second quarter and first six months of 2002 follow:
<TABLE>
<CAPTION>


                                        Three months ended June 30            Six months ended June 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        92.1%       92.1%        $782       92.2%       92.3%        $783
Allerton Place                 228        90.9%       91.0%         767       92.3%       92.1%         770
Barrington Place*              348        91.9%       90.9%         819
Brookford Place*               108        92.4%       91.0%         706
Chason Ridge                   252        95.8%       96.9%         701       96.3%       96.5%         702
Harris Hill                    184        91.0%       92.3%         695       90.1%       91.6%         696
Latitudes                      448        97.3%       97.8%         811       96.7%       97.1%         806
Madison Hall                   128        95.5%       96.4%         601       94.4%       95.8%         592
Oakbrook                       162        91.8%       92.2%         776       92.3%       92.3%         781
Oak Hollow                     461        92.9%       93.3%         626       91.6%       91.9%         630
Paces Commons                  336        89.7%       89.6%         679       88.6%       88.7%         680
Paces Village                  198        88.7%       87.5%         668       86.5%       86.3%         675
Pepperstone                    108        93.5%       95.1%         677       93.0%       93.8%         686
Savannah Place                 172        90.2%       90.7%         721       92.2%       92.3%         719
Summerlyn Place                140        94.3%       95.0%         796       94.9%       95.5%         795
Waterford Place                240        95.6%       95.5%         844       93.8%       94.0%         851
Woods Edge                     264        92.7%       93.0%         758       92.5%       92.3%         766

All apartments               4,137
   - 2002                                 92.9%       93.2%         733       92.5%       92.7%         734
   - 2001                                 93.5%       94.5%         749       93.8%       94.9%         742

Same units                   3,681
   - 2002                                 93.0%       93.3%         731       92.6%       92.8%         733
   - 2001                                 93.5%       94.5%         749       93.8%       94.9%         742
</TABLE>

*Acquired May 31, 2002

         Restaurant rental income was $1.0 million in the second quarter of
2002, a 0.8% decrease compared to the second quarter of 2001. Through the first
six months of 2002, restaurant rental income was $2.0 million, a 1.6% decrease
compared to the first six months of 2001. This decrease was the result of the
sale of one restaurant property in the second quarter of 2001. Restaurant rental
income for both 2002 and 2001 was the minimum rent. "Same store" (those
restaurant properties that operated throughout the first six months of both 2002
and 2001) sales at our restaurant properties increased by 0.5% for the second
quarter, and decreased by 1.0% for the first six months, of 2002 compared to
2001.

         Through June 30, 2002, we have sold five of the original 47 restaurants
to Boddie-Noell Enterprises, Inc. ("Enterprises"), the lessee, under the
non-economic clause of the agreement which allows Enterprises to close up to
seven restaurants and buy them back for no less than net carrying value. Under
our master lease with Enterprises, restaurant rental income payments are the
greater of a specified minimum rent or 9.875% of food sales. The minimum rent is
reduced by approximately $8,000 per month, or $96,000 per year, for each
restaurant that is sold.

                                       14
<PAGE>

         Management fee income totaled $287,000 in the second quarter of 2002
compared to $105,000 in the second quarter of 2001. Through the first six months
of 2002, management fee income totaled $581,000, compared to $217,000 through
the first six months of 2001. This increase is primarily attributable to the
addition of 15 managed properties in the fourth quarter and first half of 2002.
We expect these comparisons to decline slightly with our acquisition of
Barrington Place and Brookford Place, which we previously managed under
third-party management contracts from October 2001 through May 2002. Management
fee income related to these two properties totaled $25,000 for the second
quarter of 2002 (two months) and $68,000 through the first five months of 2002.

         Interest and other income totaled $69,000 in the second quarter of 2002
compared to $307,000 in the second quarter of 2001. Through the first six months
of 2002, interest and other income totaled $106,000, compared to $381,000
through the first six months of 2001. These comparisons reflect the impact of
non-routine income totaling approximately $210,000 in June 2001, as well as a
decline in interest income.

Expenses

         Total expenses, including non-cash charges for depreciation and
amortization, were $8.6 million in the second quarter of 2002, an increase of
0.6% compared to the second quarter of 2001. Through the first six months of
2002, total expenses were $16.7 million, a 0.5% decrease compared to the first
six months of 2001.

         Effective January 1, 2002, in accordance with current accounting
guidance, we no longer amortize the intangible related to our 1994 acquisition
of management operations. We have adjusted the 2001 comparative amounts to
exclude this amortization expense and conform to the 2002 presentation in our
financial statements. This adjustment decreases our amortization expense by
approximately $102,000 for the second quarter of 2001and $203,000 for the first
six months of 2001 from the amounts that we previously reported.

         Apartment operations expense (the direct costs of on-site operations at
our apartment communities) in the second quarter of 2002 totaled $3.0 million, a
5.4% increase compared to the second quarter of 2001. For the first six months
of 2002, apartment operations expense was $5.7 million, a 5.1% increase compared
to the first six months of 2001. These amounts include approximately $63,000 in
apartment operations expenses for Barrington Place and Brookford Place, which we
acquired May 31, 2002. On a same units basis, apartment operations expense
increased 3.2% in the second quarter and 3.9% in the first six months of 2002
compared to 2001. These increases reflect a significant increase in property
insurance expense, as well as higher costs associated with marketing,
maintenance and resident turnover. Apartment operations expense represented
38.7% of related apartment rental income in the second quarter, and 37.4% of
related apartment rental income through the first six months, of 2002, compared
to 36.9% in the second quarter of 2001 and 35.1% through the first six months of
2001.

         Operating expenses for restaurant properties are insignificant because
the triple-net lease arrangement requires the lessee to pay virtually all of the
expenses associated with the restaurant properties.

         Apartment administration expense (the costs associated with oversight,
accounting and support of our apartment management activities for both owned and
third party properties) was $294,000 in the second quarter of 2002, a 0.8%
decrease compared to the second quarter of 2001.



                                       15
<PAGE>

Through the first six months of 2002, apartment administration expense was
$619,000, a 21.1% increase compared to the first six months of 2001. These
comparisons reflect the initial impact of the addition of 15 managed properties
to our management portfolio in the fourth quarter of 2001 and early 2002, as
well as efficiencies gained during the second quarter of 2002.

         Corporate administration expense was $496,000 in the second quarter of
2002, an increase of 0.7% compared to the second quarter of 2001. Through the
first six months of 2002, corporate administration expense was $1.1 million, a
7.2% increase compared to the first six months of 2001. This increase was
primarily attributable to a non-recurring expense of $40,000 for outside
consulting services.

         Depreciation expense totaled $2.0 million in the second quarter of
2002, a 2.4% increase compared to the second quarter of 2001. Through the first
six months of 2002, depreciation expense totaled $4.0 million, a 2.2% increase
compared to the first six months of 2002. These increases are attributable to
the addition of two communities (approximately $75,000), as well as the impact
of additions and replacements at other apartment communities.

         Amortization expense (of deferred loan costs) was $50,000 in the second
quarter, and $98,000 through the first six months, of 2002, essentially flat
compared to 2001 amounts. As discussed above, we no longer amortize the
intangible related to acquisition of management operations, and we have adjusted
the 2001 comparative financial statements to exclude this amortization.

         Interest expense totaled $2.7 million in the second quarter of 2002, a
5.5% decrease compared to the second quarter of 2001. For the first six months
of 2002, interest expense was $5.2 million, a 10.9% decrease compared to the
first six months of 2001. These amounts include approximately $125,000 interest
expense in June 2002 for first deed of trust loans related to Barrington Place
and Brookford Place, which we acquired effective May 31, 2002. The decrease in
interest expense was the result of the combined effect of lower interest rates
on our lines of credit and the impact of refinancing two fixed-rate loans at
lower rates during 2001 and early 2002. Variable interest rates have declined
approximately 2.1% since June 2001. Overall, weighted average interest rates
were 6.2% for the second quarter and first six months of 2002, compared to 6.9%
for the second quarter of 2001 and 7.1% for the first six months of 2001.

         During the first quarter of 2002, we refinanced long-term debt related
to Oakbrook Apartments. This refinance is described below in our discussion of
Capital Resources and Liquidity. In conjunction with this transaction, we wrote
off unamortized loan costs of $95,000. We have reflected this write-off, net of
minority interests' share, with a charge of $73,000 as an extraordinary item in
the financial statements.

         In late December 2001, we issued 227,273 shares of Series B Cumulative
Convertible Preferred Stock. Because preferred shareholders have priority over
common shareholders for receipt of dividends, we deduct the amount of net income
that will be paid to preferred shareholders in calculating net income available
to common shareholders. The dividend on the Series B shares is $1.10 per year
per share. The cumulative preferred dividend totals approximately $62,000 for
the second quarter of 2002, and approximately $124,000 for the first six months
of 2002.

                                       16
<PAGE>

Net income

         Income available to common shareholders, after the cumulative preferred
dividend, was $456,000 for the second quarter of 2002, a decrease of 18.6%
compared to the second quarter of 2001. For the first six months of 2002, income
available to common shareholders, after the extraordinary item recorded in the
first quarter and cumulative preferred dividend for two quarters, was $887,000,
a 20.0% decrease compared to the first six months of 2001.

         Income before the cumulative preferred dividend was $518,000 for the
second quarter of 2002, a 7.5% decrease compared to the second quarter of 2002.
For the first six months of 2002, income before the extraordinary item (that was
recorded in the first quarter) and cumulative preferred dividend for two
quarters was $1.1 million, a 2.2% decrease compared to the first six months of
2001.

         These comparisons reflect the favorable impact of lower interest rates,
offset by the effect of declines in apartment operations, the extraordinary
charge to earnings, and the cumulative preferred dividend. Operating Partnership
earnings before interest, depreciation and amortization, and the extraordinary
item decreased by 3.2% in the second quarter of 2002 and 5.4% through the first
six months of 2002 compared to 2001.


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 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 might not be comparable
to our calculation of funds from operations or funds available for distribution.

                                       17
<PAGE>

         Funds from operations of the Operating Partnership totaled $2.6 million
for the second quarter of 2002, a 3.2% decrease compared to the second quarter
of 2001. For the first six months of 2002, funds from operations of the
Operating Partnership totaled $5.2 million, a 2.0% decrease compared to the
first six months of 2001. These comparisons reflect the favorable impact of
lower interest rates, offset by the effect of declines in apartment operations
and the cumulative preferred dividend.

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

                                                   Three months ended               Six months ended
                                                        June 30                         June 30
                                                  2002            2001            2002            2001
                                             --------------- --------------- --------------  ---------------
                                                              (Adjusted)                      (Adjusted)
<S>                                             <C>              <C>             <C>             <C>
Income before minority interest
   and extraordinary item                         $  656          $  727          $1,371          $1,439
Cumulative preferred dividend                        (62)              -            (124)              -
Depreciation                                       2,021           1,974           3,967           3,881
                                             --------------- --------------- --------------- ---------------
Funds from operations -
   Operating Partnership                          $2,614          $2,701          $5,214          $5,320
                                             =============== =============== =============== ===============
</TABLE>

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

                                                   Three months ended               Six months ended
                                                        June 30                         June 30
                                                  2002            2001            2002            2001
                                             --------------- --------------- --------------- ---------------
<S>                                              <C>             <C>             <C>             <C>
Funds from operations -
   Operating Partnership                          $2,614          $2,701          $5,214          $5,320
Amortization of loan costs                            50              49              98              92
Recurring capital expenditures                      (452)           (303)           (735)           (554)
                                             --------------- --------------- --------------- ---------------
Funds available for distribution                  $2,212          $2,447          $4,577          $4,859
                                             =============== =============== =============== ===============
</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               Six months ended
                                                        June 30                         June 30
                                                  2002            2001            2002            2001
                                             --------------- --------------- --------------- ---------------
<S>                                              <C>             <C>             <C>             <C>
Funds from operations -
   Operating Partnership                          $2,614          $2,701          $5,214          $5,320
Minority interest in
   funds from operations                            (608)           (622)         (1,202)         (1,225)
                                             --------------- --------------- --------------- ---------------
Basic funds from operations
   available to common shareholders               $2,006          $2,079          $4,013          $4,095
                                             =============== =============== =============== ===============
</TABLE>

                                       18
<PAGE>

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

                                                   Three months ended               Six months ended
                                                        June 30                         June 30
                                                  2002            2001            2002            2001
                                             --------------- --------------- --------------- ---------------
<S>                                             <C>              <C>            <C>              <C>
Net cash provided by (used in):
   Operating activities                           $2,338          $2,578          $4,419          $5,288
   Investing activities                          (10,689)           (264)        (11,233)           (513)
   Financing activities                            8,207          (2,815)          5,801          (5,166)

Dividends and distributions paid to:
   Preferred shareholders                         $   62          $    -          $   64          $    -
   Common shareholders                             1,788           1,769           3,569           3,538
   Minority unitholders in
      Operating Partnership                          527             529           1,056           1,058

Scheduled debt principal payments                 $   72          $   96          $  120          $  187
Non-recurring capital expenditures                   247             370             509             741

Weighted average shares outstanding
   Preferred shares                                  227               -             227               -
   Common shares                                   5,776           5,707           5,765           5,707
Weighted average Operating
   Partnership minority units
   outstanding                                     1,749           1,706           1,727           1,707
</TABLE>


Capital Resources and Liquidity

Capital Resources

         Effective May 31, 2002, we acquired Barrington Place Apartments and
Brookford Place Apartments for a contract price of approximately $32.1 million.
This acquisition is described in detail in the notes to the financial statements
included in this Quarterly Report as well as in a Form 8-K/A report that we
filed with the Securities and Exchange Commission in late July. A summary of
funding for this acquisition is as follows:

o        We assumed a first deed of trust loan secured by the assets and
         assignment of rents of Barrington Place Apartments with a balance of
         approximately $20.3 million. This fixed-rate loan provides for interest
         at an effective rate of approximately 7.0% and monthly payments
         including principal and interest of approximately $136,000, with a
         balloon payment of approximately $18.0 million due in November 2010.
o        We applied approximately $4.9 million proceeds from a fixed-rate loan
         to retire existing obligations of the former owners. A deed of trust
         and assignment of rents of Brookford Place Apartments secure this loan.
         The loan provides for interest at an effective rate of approximately
         7.1% and monthly payments including principal and interest of
         approximately $32,000, with a balloon payment of approximately $4.2
         million due in August 2012.

                                       19
<PAGE>


o        We applied a $5.0 million draw on our revolving line of credit secured
         by Latitudes Apartments and approximately $100,000 operating cash to
         retire existing obligations of the former owners.
o        We tentatively issued approximately 147,000 Operating Partnership units
         with an imputed value of $12.00 per unit, or approximately $1.8
         million. The number of units issued is subject to adjustment based on a
         final accounting of property-level operations and related liabilities
         assumed.

         To date we have incurred other direct costs of approximately $77,000
related to this acquisition. In addition, we paid and recorded deferred loan
costs of approximately $222,000 related to the loans for Barrington Place and
Brookford Place. We drew an additional $500,000 on our revolving line of credit
secured by Latitudes Apartments during May to fund these payments as well as
improvements at apartment properties.

         In February 2002, we completed refinancing for Oakbrook Apartments,
with a $7.9 million note payable with interest at 7.1% and maturity in February
2012. This deed of trust replaced an existing 7.7% note with a balance of $6.1
million, with the balance of proceeds applied to reduce our line of credit
secured by Latitudes Apartments. Oakbrook was our second apartment community,
acquired in June 1994 for an initial acquisition cost of $9.4 million.

         As of June 30, 2002, total long-term debt was $193.1 million, including
$149.0 million of notes payable at fixed interest rates ranging from 6.35% to
8.55%, and $44.1 million at variable rates indexed on 30-day LIBOR rates. The
weighted average interest rate on debt outstanding was 6.2% at June 30, 2002,
and December 31, 2001, and 6.7% at June 30, 2001. At our current level of
variable-rate debt, a 1% fluctuation in variable interest rates would increase
or decrease our annual interest expense by approximately $450,000.

         In May 2002, we issued 17,817 shares of our common stock through our
Dividend Reinvestment and Stock Purchase Plan for proceeds of approximately
$215,000. In February 2002, we issued 16,258 shares of our common stock through
this Plan for proceeds of approximately $189,000. In addition, we issued 5,562
shares of our common stock, in a non-cash transaction, to acquire the same
number of Operating Partnership units from a former minority unitholder.

Cash flows and liquidity

         Net cash flows from operating activities were $2.3 million in the
second quarter of 2002, compared to $2.6 million in the second quarter of 2001.
Through the first six months of 2002, net cash flows from operating activities
were $4.4 million, compared to $5.3 million in the first six months of 2001.

         We have announced that the company will pay a regular quarterly
dividend of $0.31 per share on August 15, 2002, to shareholders of record on
August 1, 2002. We remain committed to paying the highest dividend that is
reasonably prudent. However, any number of unforeseen events or circumstances
(for example, a substantial decline in apartment operations, a substantial
increase in short-term interest rates, or the sale of the restaurant properties
or other assets) could necessitate a reduction in dividend. While we generate a
substantial amount of cash flow after expenses, we currently pay out virtually
all of it as dividends. The amount of dividend paid is determined by currently
available cash flow and the outlook for future cash flow. Ultimately, the
decision as to the amount of dividend paid is a judgment call in which we
attempt to balance our

                                       20
<PAGE>

desire to maximize the dividends paid to our shareholders with the cash needed
to properly operate the company.

         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, long-term debt, or joint venture investments. 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.

Critical Accounting Policies - Capital expenditures and depreciation

         In general, for acquired apartment properties, we compute depreciation
using the straight-line method over composite estimated useful lives of the
related assets, generally 40 years for buildings, 20 years for land
improvements, 10 years for fixtures and equipment, and five years for floor
coverings.

         For the acquisition of Barrington and Brookford, we performed a
detailed analysis of components of the real estate assets acquired. For these
properties, we assigned estimated useful lives as follows: land improvements,
7-20 years; short-lived building components, 5-20 years; base building
structure, 60 years; and fixtures, equipment and floor coverings, 5-10 years.

         We generally complete and capitalize acquisition improvements
(expenditures that have been identified at the time the property is acquired,
and which are intended to position the property consistent with our physical
standards) within one to two years of acquisition. We capitalize non-recurring
expenditures for additions and betterments to buildings and land improvements.
In addition, we generally capitalize recurring capital expenditures for exterior
painting, roofing, and other major maintenance projects that substantially
extend the useful life of existing assets. For financial reporting purposes, we
depreciate these additions and replacements on a straight-line basis over
estimated useful lives of 5-20 years. We capitalize all floor covering,
appliance, and HVAC replacements, and depreciate them using a straight-line,
group method over estimated useful lives of 5-10 years. We expense ordinary
repairs and maintenance costs at apartment communities.

         Through June 30, 2002, repairs and maintenance at our apartment
communities totaled approximately $2.1 million, including $764,000 in
compensation of service staff and $1,309,000 in payments for materials and
contracted services.

         A summary of capital expenditures at our apartment communities through
June 30, 2002, in aggregate and per apartment unit, follows:

                                                  Total            Per unit
                                           ----------------- ------------------
                                                 (000's)

Recurring capital expenditures:
   Floor coverings                                    $294               $ 80
   Appliances/HVAC                                      97                 26


                                       21
<PAGE>

                                                  Total            Per unit
                                           ----------------- ------------------
                                                 (000's)

   Exterior paint                                      108                 29
   Computer/support equipment                           12                  3
   Other                                               224                 61
                                            ----------------- ------------------
                                                      $735               $200
                                            ================= ==================

Non-recurring capital expenditures:
   Acquisition improvements                           $344
   Additions and betterments                           135
   Computer/support equipment                           30
                                            -----------------
                                                      $509
                                            =================

         Costs of repairs, maintenance, and capital replacements and
improvements at restaurant properties are borne by the lessee.

Recently Issued Accounting Standards

         In April 2002, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 145, "Rescission of FASB
Statements No. 4, 44, and 62, Amendment of FASB Statement No. 13, and Technical
Corrections." Statement 145 will generally require gains and losses on
extinguishments of debt to be classified as income or loss from continuing
operations, rather than as extraordinary items as previously required under
Statement 4. We plan to adopt Statement 145 effective January 1, 2003. Upon
adoption, the extraordinary items for loss on early extinguishment of debt that
we have reported in 2002 and earlier will be reclassified to conform to
Statement 145. While adoption of Statement 145 will have no impact on net
income, it will tend to reduce funds from operations and income before
extraordinary items and eliminate extraordinary items as previously reported.


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, 2001. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Capital Resources and Liquidity" above.


                           Part II - Other Information

Item 4.  Submission of Matters to a Vote of Security Holders

         We held our Annual Meeting of Shareholders on May 23, 2003. Of the
5,766,693 shares of common stock issued, outstanding, and entitled to vote at
this meeting, 5,364,373, or 93.0%, were present in person or by proxy. The
following proposal was approved:

                                       22
<PAGE>
<TABLE>
<CAPTION>

                                                                                  Withheld/       Broker
                                                      For          Against        Abstained      Non-votes
                                                 -------------- --------------- -------------- --------------
<S>                                               <C>                 <C>           <C>           <C>
Election of directors to serve until the 2005 annual meeting:
     D. Scott Wilkerson                            5,272,673             -0-         91,700        103,181
     Paul G. Chrysson                              5,281,309             -0-         83,064        103,181

Election of a director to serve until the 2003 annual meeting:
     B. Mayo Boddie                                5,278,923             -0-         85,449        103,181

Election of a Series B director to serve until
     the 2003 annual meeting:
     Peter J. Weidhorn (elected by the holders
     of Series B Cumulative Preferred Stock)
                                                     227,273             -0-             -0-            -0-
</TABLE>

         Other directors, whose terms of office as directors continue after the
meeting are as follows:

Serving until the 2003 annual meeting:
     W. Michael Gilley

     Serving until the 2004 annual meeting:
     Stephen R. Blank
     Philip S. Payne


Item 5.  Other Information

Re-appointment of officers

         The Company has announced the re-appointment of the following officers:

D. Scott Wilkerson       President and Chief Executive Officer
Philip S. Payne          Executive Vice President, Chief Financial Officer,
                         Treasurer, and Assistant Secretary
Pamela B. Bruno          Vice President, Chief Accounting Officer, and
                         Assistant Secretary
Douglas E. Anderson      Vice President and Secretary
Teresa Sandman           Vice President - Property Management


Item 6.  Exhibits and Reports on Form 8-K

a)    Exhibits:

           The Registrant agrees to furnish a copy of all agreements related to
long-term debt upon request of the Commission.

                                       23
<PAGE>

 Exhibit No.

    99.1        Section 906 Certification by Chief Executive Officer
    99.2        Section 906 Certification by Chief Financial Officer

b)    Reports on Form 8-K:

      We filed a Current Report on Form 8-K in early June to report the
acquisition of Barrington Place and Brookford Place Apartments as of May 31,
2002. We subsequently filed an amendment to this Current Report on Form 8-K/A in
late July to provide required audited financial statements and pro forma
financial information for this acquisition.


                                       24
<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.

                                  BNP RESIDENTIAL PROPERTIES, INC.
                                  (Registrant)




August 12, 2002                        /s/ Philip S. Payne
                                  --------------------------------------
                                  Philip S. Payne
                                  Executive Vice President and
                                  Chief Financial Officer
                                  (Duly authorized officer)



August 12, 2002                        /s/ Pamela B. Bruno
                                  --------------------------------------
                                  Pamela B. Bruno
                                  Vice President, Controller and
                                  Chief Accounting Officer





                                       25
<PAGE>




                                INDEX TO EXHIBITS


Exhibit No.
                                                                        Page

    99.1      Section 906 Certification by Chief Executive Officer         27
    99.2      Section 906 Certification by Chief Financial Officer         28



                                       26
<PAGE>