SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549

FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended: December 31, 2004

Commission file number: 0-305

Name of registrant: NATIONAL PROPERTIES CORPORATION
I.R.S. Employer Identification Number: 42-0860581
Address: 4500 Merle Hay Road, Des Moines, Iowa 50310
Telephone number: (515) 278-1132

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, Par Value $1.00 (Title of Class)

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 _____

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (Sec.229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge in
definitive proxy or information statements incorporated by reference in Part
III of the Form 10-K or any amendment to this Form 10-K.  [X]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act).

Yes _____ No__X__

State the aggregate market value of the voting stock held by non-affiliates
of the Registrant.  The aggregate market value shall be computed by the
reference to the price at which the stock was sold, or the average bid and
asked prices of such stock as of a specified date within 60 days prior to
the date of filing.

$22,978,000 as of March 1, 2005

Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.

Common Stock, Par Value $1.00 - March 1, 2005 - 409,133 Shares

Documents Incorporated by Reference

  None

PART I
Item 1.   Business

(a)	General Development of Business.  The Registrant, (also referred to as
the "Company") organized under the Iowa Business Corporation Act, is engaged
principally in the development of commercial real estate for lease to tenants
under net lease arrangements.  The Registrant also derives revenues from its
portfolio of investment securities.

Sale of QuikTrip Property

In July 2004, the Company executed a 20-year lease with Git-N-Go Convenience
Stores, Inc. ("Git-N-Go") for one of its QuikTrip store properties located in
Des Moines, Iowa.  The lease with Git-N-Go was effective December 1, 2004.
On December 28, 2004, the Company sold this convenience store property along
with an office building at the same location that had been leased to
QuikTrip, for $1,250,000 realizing a gain of $1,030,000 on the sales.
Proceeds from the sale were placed in escrow with a qualified intermediary
pending an Internal Revenue Code Section 1031 tax-free exchange.

Termination of Pizza Hut Agreement

The Company reported in its third quarter 2004 Form 10-Q, that it had entered
into a sale-leaseback agreement in September 2004 with NPC International
("Pizza Hut"), pursuant to which the Company agreed to pay up to $600,000 for
a building constructed by Pizza Hut on the Company's one remaining lot in
Ankeny, Iowa.  Pizza Hut in turn would have leased the property from the
Company for an initial term of 20 years.  The agreement further provided that
if the building costs exceeded $600,000, Pizza Hut would have the option of
paying the excess costs or terminating the agreement.  In December 2005,
Pizza Hut decided to terminate the agreement when it received construction
cost estimates exceeding the $600,000 portion payable by the Company.

Merger

On January 14, 2005, the Company's board of directors gave approval and
adopted a definitive agreement and plan of merger for the Company to merge
with and into a wholly owned subsidiary of Commercial Net Lease Realty, Inc.
("Commercial").  Commercial invests in high quality, single-tenant retail and
office properties subject to long term, net leases with established tenants.
As of January 2005, Commercial owned 362 investment properties in 38 states
which were leased to 152 corporations in 56 industry classifications.

The merger agreement provides for shareholders of the Company to receive four
shares of Commercial common stock for each share of stock in the Company
owned by them.  Further, as a condition to Commercial's obligation to close
the merger, the Company must pay a dividend to its shareholders of $20.8
million, or approximately $50.84 per share.  This special dividend will be
paid out prior to closing only if all other conditions to the merger have
been satisfied or waived prior to the closing of the merger.

Completion of the merger is subject to customary closing conditions,
including the approval of the holders of a majority of the Company's
outstanding common stock.  Company shareholders holding approximately 53% of
the Company's outstanding common stock have entered into a shareholder
agreement with Commercial to vote in favor of the merger.  However,
Commercial may terminate the merger agreement if a majority of the Company's
shareholders who are not bound by the shareholders agreement do no approve
the merger.  The Company anticipates that the merger will be completed not
later than the second quarter of 2005.

Declaration and Payment of 2004 Dividend

At the Company's annual meeting of stockholders held May 21, 2004, the
Company declared a dividend of $0.18 per share to be paid July 31, 2004 to
stockholders of record on June 30, 2004.  The dividend totaled $73,644.

 (b)	Financial Information About Industry Segments.  The Company operates in
a single industry segment.

 (c)	Narrative Description of Business.

Real Estate Held For Investment

The Company seeks to acquire or develop improved real estate properties
suitable for lease to commercial tenants.  It is the Company's policy to
invest in properties that are fully leased to a single tenant which is
responsible for payment of real estate taxes, insurance, utilities and
repairs.  Under such circumstances, the Company has limited management
responsibilities for such properties once they are constructed and leased. In
most cases, properties are constructed by the tenant and conveyed to the
Company under a sale and leaseback arrangement.  It is not the policy of the
Company to invest in multiple-tenant office buildings or residential
facilities.  Primary factors considered by the Company in developing a
property for lease are the use to be made of the property, its location, the
nature and credit standing of the tenant, the rental income to be derived
under the lease, and the ability of the Company to utilize the property or
dispose of it upon termination of the lease.

All of the investment properties now owned by the Company are located in
Arizona, Colorado, Georgia, Iowa, Kansas, Missouri, Nebraska, North Carolina,
Oklahoma, South Dakota, Tennessee and Texas.  The Company has placed no
limitations, however, on the locations in which it is willing to own or
develop properties in the future.

The commercial real estate acquired by the Company is normally purchased with
funds drawn on the Company's line of credit. The Company gives careful
consideration to the rate of return which it will receive from an investment
based on the original cost thereof to the Company without regard to possible
mortgage financing.  While the rate of return varies, it has ranged generally
from 7.25% to 13%.

Real estate investments acquired or developed by the Company are not held for
resale, but are held as productive assets.  The Company may, however, dispose
of properties depending upon the circumstances then existing.

Virtually all of the Company's development activity is handled by its
President, including lease negotiations, site acquisitions, construction
activities, and financing.

The real estate investment activity engaged in by the Company is highly
competitive, with numerous investors seeking to develop properties for lease
to qualified tenants.  These competitors include numerous major national
financial institutions with resources and abilities to attract tenants which
are far greater than those of the Company, as well as many other types of
full-time and part-time real estate investors.

At December 31, 2004, the Company owned 40 leased properties having an
aggregate cost of $46,476,631.  The rental income for 2004 on these leased
properties amounted to $5,911,032.  Ten of the properties are leased to five
restaurant operators, and those ten properties account for 21.9% of rental
income.  Seventeen QuikTrip, two Gate Petroleum and one Kum & Go convenience
store properties account in the aggregate for 45.4% of rental income.  Two
office buildings, three retail sports buildings, and a Walgreen drug store
building account in the aggregate for 26.4% of rental income.  Two telephone
service center buildings and one Goodyear Tire Center building account for
4.3% of rental income.  Other properties held for future development account
for 2.0% of rental income.

As of December, 2004, the tenants of all 40 leased properties were in
compliance with the terms of their respective leases.

Leases of real property to QuikTrip Corporation represent, in the aggregate,
a significant portion of the Company's business in terms of revenues and real
estate portfolio.  The Company has done business with QuikTrip Corporation
since 1980, during which time QuikTrip Corporation has made all of its lease
payments to the Company on a timely basis.  QuikTrip Corporation is a private
company which operates convenience stores in seven southern and midwestern
states.  For its fiscal year ending April 25, 2004, the estimated revenues of
QuikTrip Corporation were $2,815,000,000, as reported in Forbes magazine.

Other Investments

The Company has a portion of its assets invested in marketable securities
which had a market value of $1,286,898 as of December 31, 2004.

Employees

The Company currently employs 6 persons: 3 full-time employees and 3 part-
time employees.

Item 2.   Properties

The following table sets forth by category the properties owned by the
Company, the identities of the tenants, the locations of the properties and
information concerning the properties and the lease terms pertaining to the
properties.



<table>
<caption>
                                                 Land    Bldgs. &
Accumulated     Rental     Lease    Renewal
                                                 Cost    Improve.
Depreciation  Income 2004  Expires   Options
                                            ---------  ----------  ----------
--  -----------  -------  --------

                                         <c>        <c>         <c>
<c>          <c>      <c>
A. RESTAURANT PROPERTIES
  Jack in the Box        Plano, TX            175,000   3,100,350
137,793      253,813     2021   4-5 Yr.
  IHOP                   Ankeny, IA            10,277   1,046,192
54,768      135,000     2027   3-5 Yr.
  Zio's Restaurant       Aurora, CO.          197,000   1,744,624
190,119      235,000     2015   2-5 Yr.
  Perkins  Restaurant    Des Moines, IA.      137,000     343,365
343,365       76,215     2026   4-5 Yr.
  Perkins  Restaurant    Des Moines, IA.      140,000     341,602
341,602       76,892     2026   4-5 Yr.
  Perkins  Restaurant    Des Moines, IA.      200,000     373,192
373,192       77,083     2026   4-5 Yr.
  Perkins  Restaurant    Newton, IA.          112,500     485,181
485,181       72,000     2024   4-5 Yr.
  Perkins  Restaurant    Des Moines, IA.      243,166     498,675
498,675      105,192     2025   4-5 Yr.
  Carl's Jr. Restaurant  a Chandler, AZ.      168,000     946,120
775,348      114,778     2025   4-5 Yr.
  Carl's Jr. Restaurant  a Tucson, AZ.         90,000     738,000
738,000      150,196     2005   6-5 Yr.
                                            ---------  ----------  ----------
--  -----------
    Total                                   1,472,943   9,617,301
3,938,043    1,296,169
                                            ---------  ----------  ----------
--  -----------
B. SERVICE CENTERS
  Quest                  Decorah,  IA.         20,000     230,999
172,076       22,966     2009   4-5 Yr.
  Quest                  Cedar Rapids, IA.     37,000     397,394
342,195       96,600     2006   1-5 Yr.
  Goodyear Service Ctr.  Wichita, KS.         100,000   1,040,716
487,378      136,950     2009   3-5 Yr.
                                            ---------  ----------  ----------
--  -----------
    Total                                    157,000    1,669,109
1,001,649      256,516
                                            ---------  ----------  ----------
--  -----------

C. CONVENIENCE STORES
  QuikTrip               a Des Moines, IA.    144,664     691,878
384,659      115,700     2010   2-5 Yr.
  QuikTrip/Sold 12/04    Des Moines, IA.
91,517
  QuikTrip               Olathe, KS.           23,120     248,798
42,157      217,164     2019   4-5 Yr.
  QuikTrip               Lee Summit, MO.       36,460     408,221
69,170      133,500     2019   4-5 Yr.
  QuikTrip               Wichita, KS.          53,500     436,637
203,041       58,081     2009   4-5 Yr.
  QuikTrip               Norcross, GA.         99,558     765,000
343,301      102,858     2014   4-5 Yr.
  QuikTrip               Wichita, KS.          60,000     514,000
237,288       67,445     2010   4-5 Yr.
  QuikTrip               Tulsa, OK.           155,000   1,340,000
611,539      175,662     2010   4-5 Yr.
  QuikTrip               a Des Moines, IA.     84,500     557,500
247,404       75,435     2010   4-5 Yr.
  QuikTrip               a Johnston, IA.       48,502     476,160
188,331       73,574     2012   4-5 Yr.
  QuikTrip               a St. Louis, MO.     152,000   1,575,433
622,482      231,781     2017   4-5 Yr.
  QuikTrip               a Des Moines, IA.    183,095     900,000
322,643      119,183     2013   4-5 Yr.
  QuikTrip               Norcross, GA.         92,500     834,000
229,012      100,371     2009   4-5 Yr.
  QuikTrip               Norcross, GA.         95,500     858,000
235,600      103,296     2009   4-5 Yr.
  QuikTrip               a Clive, IA.         325,605     393,814
96,355      130,874     2015   4-5 Yr.
  QuikTrip               Alpharetta, GA       148,585   1,324,000
358,587      154,620     2016   4-5 Yr.
  QuikTrip               Gainesville, GA.     122,927   1,227,923
295,043      157,500     2012   4-5 Yr.
  QuikTrip               Woodstock, GA.       151,800   1,328,200
304,378      155,400     2013   4-5 Yr.
  Kum & Go               Omaha, NE.            44,110     128,574
128,574       46,800     2003
  Gate Petroleum         Concord, NC          151,550   1,975,706
203,059      212,724     2021   4-5 Yr.
  Gate Petroleum         Rocky Mount, NC      132,202   1,480,210
168,578      161,220     2021   4-5 Yr.
                                            ---------  ----------  ----------
--  -----------
    Total                                   2,305,178  17,464,054
5,291,201    2,684,705
                                            ---------  ----------  ----------
--  -----------

D. Retail
  Academy Sports         Franklin, TN         458,500   3,749,612
365,018      386,386     2019   4-5 Yr.
  Academy Sports         a College Stn, TX    252,000   3,248,000
218,688      327,250     2022   4-5 Yr.
  Sportsman's Warehouse    Sioux Falls, SD    211,888   2,632,970
407,878      473,610     2018  10-5 Yr.
  Walgreens              Tulsa, OK            120,000   2,125,331
59,037      310,000     2028  10-5 Yr.
                                            ---------  ----------  ----------
--  -----------
    Total                                   1,042,388  11,755,913
1,050,621    1,497,246
                                            ---------  ----------  ----------
--  -----------

E. OFFICE BUILDINGS
  American Payday Loans  Des Moines, IA.       96,455     154,444
138,166       45,600     2011   1-7 Yr.
  Jacobson Industrial    Des Moines, IA.       61,692      60,695
52,955       19,200     2005   1-5 Yr.
  Corporate Headquarters b Des Moines, IA.     25,000     436,131
398,728       34,009
                                            ---------  ----------  ----------
--  -----------
    Total                                     183,147     651,270
589,849       98,809
                                            ---------  ----------  ----------
--  -----------
F. OTHER PROPERTIES                            35,576     122,752
103,751       77,587
                                            ---------  ----------  ----------
--  -----------

    Totals                                  5,196,232  41,280,399
11,975,114    5,911,032
                                            =========  ==========
============  ===========
</table>
a Mortgaged to Lender - See Note 4 of Notes to Financial Statements.
b 50% used by  Registrant; 50% held for lease but vacant 12-31-2004.


Other Properties

The following unencumbered properties are held for future development by the
Company.

(1)  Real Estate, S. E. Delaware and Oralabor Road, Ankeny, Iowa.

This commercially zoned property is located in Ankeny, Iowa, at the
Industrial Exit of Interstate 35.  It contains one platted lot totaling 1.5
acres.

(2)  Real Estate, 4745 - 2nd Avenue, Des Moines, Iowa.

106,000 sq. ft. of land and 3,200 sq. ft. building leased for $4,500 per
month, the lease expires July 1, 2010.  56,000 sq. ft. of the 106,000 sq. ft.
is unused land and available for development.

(3)  Real Estate, 845 Sixth Avenue, Des Moines, Iowa.

6,000 square foot concrete block building and lot. This building is rented
for $1,500 per month.  The lease expires May 1, 2005.

Item 3.   Legal Proceedings.

The Company is not engaged in any material legal proceedings.

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

Not Applicable

PART II

Item 5.   Market for Registrant's Common Equity, Related Stockholder Matters
          and Issuer Purchases of Equity Securities

The common stock of the Company (symbol NAPE) is traded on the over-the-
counter bulletin board (a product of the National Association of Security
Dealers, Inc., sponsored by market makers).  Quotations are inter-dealer
prices, without retail mark-up, or mark-down, or commission and may not
necessarily represent actual transactions.  The prices shown below are by
calendar quarters for 2004 and 2003.

<table>
<caption>

                                                2004               2003
                                            High     Low       High     Low

     
                                    <c>      <c>       <c>      <c>
     First Quarter                          54.75    53.50     47.45    47.10
     Second Quarter                         55.50    54.85     50.00    47.50
     Third Quarter                          58.10    55.30     51.10    49.10
     Forth Quarter                          58.55    58.10     53.15    50.50

<caption>

</table>

There was a cash dividend of eighteen cents a share paid in 2004.  Future
dividend declarations will be dependent upon the earnings of the Company, its
financial condition, its capital requirements and general business
conditions.

There were approximately 550 stockholders of record as of March 1, 2005.

<table>
<caption>
Item 6.   Selected Financial Data. (In thousands except for per share
amounts)

                                     Year ended December 31,
                             2004      2003      2002      2001      2000

                        <c>       <c>       <c>       <c>       <c>
Gross revenues (1)
  Lease rental income       6,004     5,580     5,364     4,796     4,353
  Interest and
    dividend income            35        43        44        69        79
  Gain on sale of
    securities                 75        31        36       121        10
  Gain on sale of
    property                1,030        40        -        490       300
Net income from
  continuing operations     2,471     2,220     2,048     2,059     1,639
Net income                  3,160     2,260     2,087     2,100     1,679

Total assets               37,788    37,288    34,025    31,220    24,680
Long-term debt              8,800    11,975    11,250    10,250     2,600
Book value-properties &
  equipment                34,528    35,629    32,721    29,220    22,206
Net unrealized gain on
  marketable securities       523       498       271       522       839
Stockholders' equity       26,614    23,502    21,188    19,504    17,835

Per weighted Common Share
Net income                   7.72      5.51      5.06      5.08      4.05
Cash dividends               0.18      0.17      0.15      0.15      0.14
Book value                  65.05     57.44     51.53     47.22     43.04
</table>

(1)  Gross revenues include revenues from the Company's continuing and
discontinued operations.  The Financial Accounting Standard Board issued
Statement of Financial Accounting Standards ("SFAS") Statement No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets".  This
Statement, effective for years beginning in 2002, addresses financial
accounting and reporting for the impairment or disposal of long-lived assets
and broadens the presentation of discontinued operations in the income
statement to include a component of an entity.  Accordingly, the results of
operations related to the properties sold by the Company in 2004 have been
reclassified to earnings from discontinued operations.

Item 7.   Management's Discussion and Analysis of Financial Condition and
          Results of Operations.

The following discussion should be read in conjunction with Item 1 (Business)
and the Company's Financial Statements and accompanying Notes thereto
included elsewhere herein.

The Company's primary business is leasing commercial real estate to tenants
under net lease arrangements.  The Company currently owns commercial real
estate in Arizona, Colorado, Georgia, Iowa, Kansas, Missouri, Nebraska, North
Carolina, Oklahoma, South Dakota, Tennessee and Texas.  The Company generates
most of its revenue in the form of rents from its tenants.  The Company also
generates some revenue from its portfolio of investment securities.

The Company policy is to invest in properties that are fully leased to a
single tenant, and the tenants to which the Company has leased its properties
have performed well in spite of the recent recession.  The Company believes
that its tenants will continue to perform well and will continue to comply
fully with the terms of their leases with the Company.  The Company will
continue to pursue relationships with tenants whose business is not heavily
dependent on the performance of the national economy as a whole.

Leases of real property to QuikTrip Corporation represent, in the aggregate,
a significant portion of the Company's business in terms of revenues and real
estate portfolio.  Each lease pertains to an individual convenience store.
Rent payments to be made by QuikTrip Corporation under the leases are payable
irrespective of the performance of the convenience store location under
lease, except that one of the leases provides for additional rent based on a
percentage of merchandise and fuel sales at that location in excess of a
fixed amount.  The terms of the leases are triple-net.  The leases have
expiration dates and renewal options as shown in the table included as part
of Item 2.  QuikTrip Corporation is a private company which operates
convenience stores in seven southern and midwestern states.  The percentage
of the Company's business conducted with QuikTrip Corporation has materially
increased in recent years.  Management considers this increased concentration
of the Company's business with QuikTrip Corporation to be a favorable
development and does not believe it represents an unacceptable risk.
Management considers QuikTrip Corporation to be a highly desirable commercial
tenant.  During the course of the Company's dealings with QuikTrip
Corporation over more than 20 years, QuikTrip Corporation has made all of its
lease payments to the Company on a timely basis.  Management has concluded,
following its review of the current audited financial statements of the
QuikTrip Corporation, that the financial position, operating results and cash
flows of QuikTrip Corporation continue to justify confidence in its ability
to meet all of its obligations under its leases with the Company.

Results of Operations 2004 vs. 2003
-----------------------------------
Net income in 2004 totaled $3,160,000 or $7.72 per share, an increase of
$900,000 from last year's, $2,260,000 or $5.51 per share.

Lease revenues in 2004 were $6,095,000, a net increase of $515,000 or 9.2%
over 2003.  The increase in the lease revenue relative to 2003 was
attributable to the net positive effect of the following factors: (1) the
acquisition of a restaurant-convenience store property in August 2003 and a
drug store property in November 2003, which in the aggregate increased lease
revenues by $445,000 in 2004; (2) a decrease in lease revenues of $119,000
due to the disposition of two garden center properties in 2003; (3) a decline
of $19,000 in contingent rents based on sales overages, (4) an increase in
lease revenues of $24,000 due to escalation clauses in the leases of several
tenants , and (5) an increase of $184,000 in accrued rental income.

The Company recorded an increase in gain on sale of securities of $44,000 in
2004 over 2003, while other investment income declined approximately $9,000
due mainly to the $16,000 of interest income earned on cash deposits in
escrow accounts in 2003 that was not repeated in 2004.  See Results of
Operations 2003 vs. 2002 for a discussion of interest income earned on such
cash deposits.

The Company recorded a gain of $1 million from the sale of a QuikTrip
property in 2004 compared to $40,000 earned in 2003 from the sale of a
property easement.

Operating expenses were $2,203,000 in 2004, an increase of $122,000 or 7.8%
from a total of $2,081,000 for 2003.  The increase was primarily the results
of increases in depreciation and professional fees expense.

Depreciation expense increased a net $83,000 in 2004 over 2003.  Property
acquisitions in 2003 and property improvements in 2004 increased depreciation
expense $126,000, while the combination of the disposition of the Company's
garden center property in 2003 and reduced depreciation on properties
reaching the end of their economic lives for depreciation purposes during
2004 reduced depreciation expense by $43,000.

Interest expense for 2004 increased slightly over 2003 as the interest rate
on the Company's bank line of credit increased from 3.25% to 4.5% in 2004 in
response to hikes in the prime rate by the Federal Reserve Board.  The
Company repaid $3,175,000 on its credit line in 2004 and had no new
borrowings.  The average outstanding loan balance in 2004 was $10,317,000
compared to $10,896,000 in 2003.  The average interest rate paid in 2004 was
3.64% compared to 3.44% in 2003.

Other general and administrative expenses (G & A) include personnel cost,
real estate taxes, repairs, and cost of corporate functions including legal,
accounting and directors.  G & A expenses increased $39,000 in 2004 and
primarily reflected increases over 2003 in professional fees, compensation
costs, and state franchise fees.  G & A expenses decreasing from their 2003
level included property taxes on the Company's Ankeny, Iowa land, insurance
and travel expenses.

The  effective income tax rate was 37.2% for 2004 and 37.5% in 2003.

Results of Operations 2003 vs. 2002
-----------------------------------

Net income in 2003 totaled $2,260,000 or $5.51 per share, an increase of 8.3%
from 2002's net income of $2,087,000 or $5.06 per share.  The increase in net
income resulted primarily from an increase in net lease rental income and a
decrease in interest expense and real estate taxes.

Lease revenues in 2003 were $5,580,000, a net increase of $216,000 or 4.0%
over 2002.  The increase in the lease revenue relative to 2002 was
attributable to: (1) the acquisition of a restaurant-convenience store
property in August 2003 and a drug store property in November 2003, and a
sporting goods store property and a restaurant property in 2002, which in the
aggregate added $369,000 to lease revenues in 2003; (2) a decrease in lease
revenues of $151,000 due to the disposition of two garden center properties
in 2003; (3) a decrease of $9,000 in contingent rents based on sales
overages, and (4) an increase in lease revenues of $7,000 due to escalation
clauses in the leases of several tenants.

The Company recorded gains of $31,000 from the sale of marketable securities
in 2003 compared to $36,000 in 2002.  Other investment income of $43,000 was
comparable to 2002 and included $27,000 from dividends on its marketable
securities portfolio and $16,000 in interest earned on deposits held in
escrow accounts of qualified intermediaries who handled the I.R.C. Section
1031 exchange of three properties for the Company in 2003.  (See discussion
of real estate exchange in Part I).

The Company recorded a gain of $40,000 in 2003 from the sale of an easement
on property adjacent to Company owned property in Arlington, Texas.

Operating expenses totaled $2,081,000 in 2003 compared to $2,116,000 in 2002,
a decline of $35,000.  The decrease was primarily the result of a decline in
interest cost and real estate taxes.

Interest expense decreased $47,000 in 2003 primarily due to a lower average
borrowing rate.  The Company borrowed $3,950,000 on its credit line and
repaid $3,225,000 during 2003 resulting in a $725,000 increase in outstanding
debt over 2002.  The average outstanding borrowing in 2003 was $10,896,000
compared to  $10,550,000 in 2002.  The higher average debt in 2003 was more
than offset by a decline in the interest rate on the Company's line of credit
from 3.5% to 3.25% on July 1, 2003.  The average interest rate paid by the
Company in 2003 was 3.44% compared to 3.99% for 2002.

Depreciation expense increased a net $22,000 in 2003 over 2002.  Depreciation
increased approximately $98,000 in 2003 from new property acquisitions in
2003 and 2002, and decreased approximately $76,000 from the disposition of
the Company's two garden centers in 2003 and as a result of other properties
becoming fully depreciated.

Other general and administrative expenses (G & A) include personnel cost,
real estate taxes, repairs and cost of corporate functions including legal,
accounting and directors.  G & A expenses declined $11,000 from 2002
primarily due to a decrease in real estate taxes on the Company's Ankeny,
Iowa property of $51,000 due to commencement of a lease with IHOP of one lot
in 2002 and exchanging one lot for another rental property in 2003.  The
Company experienced increases over 2002 in personnel cost, directors fees,
insurance and certain filing costs in states it conducts business.

The effective income tax rate was 37.5% in 2003 compared to 37.3% in 2002.
The increase was due to higher state income taxes resulting from increased
income.

Financial Condition, Liquidity and Capital Resource

The Company's cash position increased $1,212,000 in 2004 over its year end
position in 2003 as a result of selling two properties at the end of 2004
that netted the Company $1,245,000 cash.  The cash from the sales was placed
in escrow to be used for the purchase of another property in an Internal
Revenue Code Section 1031 tax-fee exchange.  Otherwise the Company continued
its practice of applying all cash in excess of current operating needs to
reduce bank debt.

The Company generated cash from operating activities of $3.5 million for
2004, $3.3 million for 2003 and $3.4 million in 2002.  The primary sources of
cash from operating activities have been net income, as adjusted to exclude
the effects of non-cash charges and changes in other current assets and
liabilities.

The Company generated $1.0 million of cash from investing activities in 2004
primarily from the sale of a QuikTrip property, while using $3.9 million of
cash in 2003 and $4.2 million in 2002.  Capital expenditures to acquire new
commercial properties for lease or make improvements to existing properties
were the primary use of such cash in 2003 and 2002.  Capital expenditures
were $0.3 million in 2004, $5.5 million in 2003 ($3.87 million in cash), and
$4.5 million in 2002.  Some property acquisitions involved an exchange of
property owned by the Company.  The following table summarizes the Company's
cost of commercial properties acquired during the three years ended December
31, 2004 and the lease income to be derived from those properties on an
annual basis.

<table>
<caption>
     
                        <c>          <c>           <c>
                                   2004         2003          2002

     Cost of property           $      -     $5,520,331    $4,546,192
     Annual rental income       $      -     $  563,812    $  462,250

</table>

The Company used $3.2 million cash in financing activities in 2004 while
generating cash of $0.5 million in 2003 and $0.8 million in 2002, primarily
due to bank borrowing, net of repayments on the Company's line of credit.
Borrowings on this line of credit are used to fund property acquisitions.

Other financing activities involved the Company repurchasing limited amounts
of its common stock and the payment of dividends.  Each year the Company has
reacquired a limited amount of its common stock in open market and negotiated
transactions with the exception of 2004 during which no Company shares were
repurchased.  In 2003, the Company repurchased 2,090 shares at a cost of
$103,242 and in 2002 repurchased 1,850 shares at a cost of $86,850.  In
addition to stock repurchases, the Company continued its long-standing
tradition of paying its stockholders a cash dividend.  Dividends paid during
the past three years were $73,644 in 2004; $69,765 in 2003 and $65,988 in
2002.

The Company's only source of outside financing is its $15 million long-term
bank line of credit with a local bank.  The Company has no off-balance sheet
arrangements.  At December 31, 2004, the Company's primary sources of
liquidity were $1,538,000 in cash; marketable securities with a market value
of approximately $1,287,000; and a $6,200,000 remaining loan balance
available on a $15,000,000 revolving line of credit with a local bank.  (See
Note 4 of the Notes to Financial Statements.)  In addition, the Company owns
unencumbered real estate having an aggregate depreciated cost of
approximately $27,000,000.  Management believes that its cash flow from
operations and these other potential sources of cash will be sufficient to
finance current and projected operations.

The company intends to obtain debt financing in order to fund the $20.8
million cash dividend contemplated in connection with the merger (see Item 1
- Merger).

Summary of Critical Accounting Policies

Management strives to report the financial results of the Company in a clear
and understandable manner, even though in some cases accounting and
disclosure rules are complex and require us to use technical terminology.  We
follow generally accepted accounting principles in the U.S. in preparing our
financial statements.  These principles require us to make certain estimates
and apply judgments that affect our financial position and results of
operations.  Management continually reviews its accounting policies, how they
are applied and how they are reported and disclosed in our financial
statements.  Following is a summary of our more significant accounting
policies and how they are applied in preparation of the financial statements.

Exchange of Nonmonetary Assets:  Real estate investments acquired or
developed by the Company are not held for resale, but are held as productive
assets.  When the Company disposes of a property, it will generally exchange
that property for another productive property.  The Company accounts for
these nonmonetary transactions in accordance with Accounting Principles Board
Opinion 29 "Accounting for Nonmonetary Transactions", by recording the
property received in the exchange at the recorded amount of the property
surrendered plus any cash paid in the transaction.  Therefore, no gain or
loss is recognized on the disposed property.  However, see New Accounting
Standard below, regarding an amendment to APB 29.

Impairment of Long-Lived Assets:  The Company evaluates its long-lived assets
for impairment whenever events or changes in circumstances indicate that the
carrying amount of such assets or intangibles may not be recoverable.
Recoverability of assets to be held and used is measured by a comparison of
the carrying amount of an asset to future net cash flows expected to be
generated by the asset.  If such asset is considered to be impaired, the
impairment to be recognized is measured by the amount by which the carrying
amount of the asset exceeds the fair value of the asset.  Assets to be
disposed of are reported at the lower of the carrying amount or fair value
less costs to sell.  During 2004 and 2003, the Company determined that none
of its long-lived assets had been impaired, and therefore the Company did not
adjust the carrying amounts of such assets.

Marketable Securities:  The Company classifies its existing marketable equity
securities as available-for-sale in accordance with the provisions of
Statement of Financial Standards No. 115, "Accounting for Certain Investments
in Debt and Equity Securities". These securities are carried at fair market
value, with the increase or decrease in unrealized gains and losses reported
as other comprehensive income or losses in the statement of income and
comprehensive income.  Gains or losses on securities sold are based on the
specific identification method.

Property and Equipment:  Property and equipment are recorded at cost and
depreciated on a straight-line basis over the estimated useful lives of 15 to
39 years for buildings and 5 to 7 years for equipment.

Lease Rentals - Commercial Real Estate:  Lease rentals received on commercial
real estate are accounted for under the operating method, under which
rentals, including contingent rents, are included in income as earned over
the term of the lease.  When scheduled rentals vary during the lease term,
income is recognized on a straight-line basis so as to produce a constant
periodic rent over the term of the lease.  Accrued rental income is the
aggregate difference between the scheduled rents which vary during the lease
term and the income recognized on a straight-line basis.

Estimates: The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period.  Actual results could vary from the estimates
that were used.

New Accounting Standard: In December 2004, the Financial Accounting Standards
Board issued Statement of Financial Accounting Standards (SFAS) Statement No.
153, Exchanges of Nonmonetary Assets-an amendment to APB Opinion 29.  SFAS
No. 153 eliminates the exception in APB 29 that permits the exchange of
productive assets not held for sale in the ordinary course of business to be
accounted for based on the recorded amount of the nonmonetary asset
relinquished rather than fair value.  Therefore, under APB 29, gain or loss
was generally not recognized on the exchange of productive assets.  Real
estate investments acquired by the Company are not held for resale but are
held as productive assets.  When the Company disposes of a property, it will
generally exchange that property for another productive property and
historically had accounted for such exchange in accordance with APB 29.
Although the provisions of SFAS Statement No. 153 are effective for years
beginning after June 15, 2005, earlier application is permitted from the date
of issuance.  The Company has adopted SFAS Statement No. 153 and applied its
provisions to the QuikTrip and Git-N-Go properties it sold in December 2004.
The provisions of SFAS No. 153 are to be applied prospectively.

Contractual Obligations

The Company's only contractual obligation at December 31, 2004, was under a
revolving credit facility with Wells Fargo Bank, N.A.  At December 31, 2004,
the Company had outstanding borrowings of $8,800,000 on the facility and
commitment to pay a user fee of 1/8 of 1% (payable quarterly) on the unused
portion of the $15,000,000 revolving credit line.  The credit facility has
been extended to mature April 30, 2006.


Off Balance Sheet Arrangements

  The Company has no off-balance sheet arrangements.

Earnings from Discontinued Operations

The Company has classified its sale of a QuikTrip and Git-n-Go property in
2004 as discontinued operations in accordance with SFAS No. 144, "Accounting
for the Impairment or Disposal of Long-lived Assets".  Accordingly, the
results of operations for 2004, 2003 and 2002 related to those properties
have been reclassified to earnings from discontinued operations.  During the
years ended December 31, 2004, 2003 and 2002, the Company recognized earnings
from discontinued operations of $688,964, $39,746 and $39,874 respectively.
The Company occasionally sells properties and will reinvest the proceeds of
the sales to purchase new properties.  The sale of a property easement in
2003 did not meet the criteria of SFAS No. 144 for classification as a
discontinued property.

Item 7A.	Quantitative and Qualitative Disclosure About Market Risk

The Company is exposed to price fluctuation on its available for sale
marketable equity securities portfolio.  These investments are generally in
companies with large capitalizations.  The Company does not attempt to reduce
or eliminate the market exposure on these securities.  The Company reports
the results of price fluctuations on its marketable equity securities
portfolio as unrealized holding gains and losses in its Statement of Income
and Comprehensive Income.

Item 8.   Financial Statements and Supplementary Data.

  Financial statements filed herewith:

    Report of Independent Auditors.

    Balance Sheets as of December 31, 2004 and December 31, 2003.

    Statements of Income and Comprehensive Income for the years ended
      December 31, 2004, December 31, 2003 and December 31, 2002.

    Statements of Stockholders' Equity for the years ended December 31, 2004,
      December 31, 2003 and December 31, 2002.

    Statements of Cash Flows for the years ended December 31, 2004,
      December 31, 2003 and December 31, 2002.

    Notes to Financial Statements.

Item 9.   Changes in and Disagreements with Accountants on Accounting and
           Financial Disclosures.

    None

Item 9A.   Controls and Procedures.

(a)  The Chief Executive Officer and the Secretary-Treasurer of the Company
have evaluated the effectiveness of the design and operation of the Company's
disclosure controls and procedures pursuant to Securities Exchange Act Rule
13a-15 as of the end of the period covered by this report.   Based on that
evaluation, the Chief Executive Officer and Secretary-Treasurer have
concluded that these disclosure controls and procedures are effective.

(b)  There were no changes in our internal control over financial reporting
during the quarter ended December 31, 2004 that have materially affected, or
are reasonably likely to materially affect, our internal controls over
financial reporting.

Item 9B.   Other Information

    None.

PART III

Item 10.   Directors and Executive Officers of the Registrant.

The following table sets forth information concerning the directors and
executive officers of the Registrant:

                                                 Director  Shares
Percentage
                                                  Since/   Benefi-
of
Name, Age                Principal Occupation     Term     cially
outstanding
and Position             During Past Five Years  Expires  Owned(1)
Shares
------------             ----------------------   -----   --------     ------
-

Raymond Di Paglia, 75    President of the Company  1960    217,000(2)
53.04%
 President                                         2006
 and Director(3)

Robert H. Jamerson, 72   Retired Architect         1965      1,460
0.36%
 Director(4)             Since June, 2001          2005

Kristine M. Fasano, 53   Vice President,           1979      3,000
0.73%
 Vice President,         Secretary, Treasurer      2005
 Secretary, Treasurer,   and Company Attorney
 Director(3)

Tim Lynch, 42            Private Law Practice,     2002        100
0.02%
 Director(4)             Des Moines, IA            2007
                         Since 1999, Lease Admin
                         US Cellular,
                         Cedar Rapids, IA

All executive officers and
directors as a group (4 persons)                           221,560
54.15%

(1)   As of March 1, 2005.

(2)   Includes 1,000 shares which were purchased and are owned by his wife,
and 85,000 shares which are held as trustee of a testamentary trust created
under his father's will. Mr. Di Paglia disclaims beneficial ownership and
control of these shares, except to the extent of his beneficial interest in
the testamentary trust.

(3)   Kristine M. Fasano is the daughter of Raymond Di Paglia.

(4)   Member of the Audit Committee of the Board of Directors.

In 2004, Robert H. Jamerson and Tim Lynch were members of the Audit
Committee.  Robert H. Jamerson served as Chairman of the committee.  The
Company's board of directors has determined that Audit Committee members have
no financial or personal ties to the Company (other than director
compensation and equity ownership as described above and are independent as
defined under the rules of the NASDAQ Stock Market.  The board of directors
has determined that neither director is an "audit committee financial
expert", as that term is defined in Item 401(h) of Regulation S-K for
purposes of current adopted Section 10A(m)(3) of the Securities Exchange Act
of 1934.  The two directors, an architect and an attorney, have extensive
experience in building and leasing properties.  In the view of the Company's
board of directors, the Company's operations and accounting do not justify a
financial expert on the audit committee.

The duties of the Audit Committee, which met three times during 2004, are to
recommend to the Board of Directors the selection of the independent
auditors; consult with the auditors prior to and at the conclusion of the
annual audit with respect to matters of interest to the Committee; review
with the auditors the adequacy of internal controls, accounting personnel and
proposed changes in accounting policies; review with the auditors and
management any comments or recommendations from the auditors with respect to
accounting procedures; and approve the type, scope and costs of services to
be performed by the auditors. During its 2004 meetings, the Audit Committee,
approved in accordance with its policy of pre-approving all such services,
the type, scope and costs of services to be performed by the auditors.  The
Board of Directors has not adopted a written charter for the Audit Committee.

The Registrant has adopted a Code of Ethics that applies to its executive
officers.  A copy of the Code of Ethics was filed as Exhibit 14 to the
Registrant's Form 10-K for the fiscal year ended December 31, 2003.

Item 11.   Executive Compensation.

The following table sets forth the annual compensation of the President and
Chief Executive Officer of the Registrant for each year of the 3-year period
ended December 31, 2003.

Summary Compensation Table

Name and Position    Year      Salary
-------------------  ----     -------
Raymond Di Paglia    2004    $156,113
President & Chief    2003     151,262
Executive Officer    2002     137,781


Mr. Di Paglia is employed by NAPE under an employment agreement entered into
and approved by NAPE's board of directors on November 20, 1998.  The
employment agreement has an effective date of January 1, 1999 and has a 10-
year term expiring on December 21, 2008; provided, however, that the 10-year
term is automatically extended for an additional year each December in the
absence of action to the contrary by the board of directors of NAPE.  As a
result, the employment agreement currently expires on December 31, 2014.
Pursuant to the employment agreement, Mr. Di Paglia's annual compensation is
subject to an increase equal to the greater of 3% or the increase in the
Consumer Price Index for All Urban Customers.  Under the agreement, in the
event NAPE should terminate Mr. Di Paglia's employment, other than for
disability or for cause, he shall be entitled to receive (without offset by
earnings of subsequent employment) his then-annual compensation (presently
$155,799) for each year in the unexpired term of the contract (presently
through December 31, 2014), payable at his election, monthly over such period
or in the lump sum discounted to present value (currently $1,210,000).  The
Company shall be deemed to have terminated the contract for the foregoing
purposes in the event of Mr. Di Paglia's determination made in good faith
that, as a result of a change of control of the Company, and a change in the
circumstances which thereafter significantly affect his position, he is
unable to carry out the authorities, powers and duties attached to this
position.   A change in control would be deemed to have occurred upon the
acquisition by a person (or group of persons acting in concert), other than
Mr. Di Paglia, of over 50% of the Common Stock of the Company, or a
significant change in the composition of the Board of Directors without the
concurrence of the present directors. A termination would also be deemed to
occur in the event a successor to the Company in a business combination did
not assume the employment contract.

The Company has a profit sharing plan qualified under Section 401 of the
Internal Revenue Code under which employees of the Company, including two
executive officers, may receive benefits upon retirement. Under the plan, the
Company contributes the lesser of 25% of the compensation of the
participating employees, or 5% of the pre-tax profits of the Company for such
year (excluding any capital gains or losses). All employees are eligible to
participate upon meeting certain requirements. Plan participants vest at the
rate of 10% annually for the first two years and 20% annually for the next
four years of service. Benefits are payable at normal retirement age 65 under
a variety of payment options upon disability, and upon termination of service
before normal retirement age in specified circumstances. For the year ended
December 31, 2004, the Company contributed $70,108 to the plan, of which
$39,028 was credited to Raymond Di Paglia, and $16,737 was credited to
Kristine M. Fasano. Because amounts contributed to the plan in the future
will be dependent upon future profits, it is not possible to presently
estimate the amount of benefits which may be payable to the executive
officers of the Company upon retirement.

Item 12.   Security Ownership of Certain Beneficial Owners and Management and
Related Shareholder Matters

To the Registrant's knowledge, the following persons owned or may be deemed
to have beneficial ownership or control of, by virtue of actual or attributed
voting rights or investment powers, more than 5% of the outstanding shares of
Common Stock of the Company:

                                    Number of Shares
                                    In which Voting
                                    Rights or
                        Number      Investment Power               Percentage
                        of Shares   May  Be Deemed       Total     of Shares
Name                    Owned       To Exist             Shares
Outstanding
----                    ----------  -----------------   --------   ----------
-

Raymond Di Paglia (2)
(as of March 1, 2005)     131,000       86,000(1)       217,000(1)
53.04%
4500 Merle Hay Road
Des Moines, Iowa 50310

Robert W. Guely
(as of March 1, 2005)      30,000(3)    30,000(3)        30,000(3)
7.33%
4320 Park Hill Cir.
Urbandale, Iowa 50322

I. Wistar Morris III
(as of May 24, 2005)       34,336(4)    34,336(4)        34,336(4)
8.39%
200 Four Falls Corp. Ctr,
Suite 208
W. Conshohocken, PA 19428

(1)   Includes 1,000 shares which were purchased and are owned by his wife,
and 85,000 shares which are held as trustee of a testamentary trust created
under his father's will. Mr. Di Paglia disclaims beneficial ownership and
control of these shares, except to the extent of his beneficial interest in
the testamentary trust.

(2)   Mr. Di Paglia may be deemed to be a controlling person of the Company.

(3)   These shares are held by two trusts of which Mr. Guely serves as
trustee and is a beneficiary.

(4)   As reported on Schedule 13D filed with the Securities and Exchange
Commission on May 24, 2004.

Item 13.   Certain Relationships and Related Transactions.

           Not Applicable.

Item 14.   Principal Accountant Fees and Services.

Audit Fees.  The aggregate audit fees billed for professional services
rendered by Northup, Haines, Kaduce, Schmid, Macklin, P.C. (the "Auditor")
for the fiscal years ending December 31, 2004 and 2003 were $44,500 and
$39,500.  This amount includes fees necessary to perform an audit and
quarterly reviews in accordance with generally accepted auditing standards
and services that generally only the independent auditor can reasonably
provide.

Tax Fees.  Fees of $4,000 and $3,200 were incurred for the professional tax
services rendered by the Auditor for the fiscal years ending December 31,
2004 and 2003.  More specifically, these services include the preparation of
Federal and State corporate income tax filings.  In addition, fees of $21,200
were incurred in 2004 for services performed by the Auditor in determining
the Company's earnings and profits income tax base for payment of a dividend
to its shareholders as a condition to the Company closing on its proposed
merger with Commercial Net Lease Realty, Inc.

The Registrant's Audit Committee has concluded that the non-audit services
performed for the Registrant are compatible with maintaining the Auditor's
independence.

All Other Fees.  There were no fees billed by Northup, Haines, Kaduce,
Schmid, Macklin, P.C. to the Registrant for 2004 or 2003 for any other
services rendered to the Company.

All tax fees and other fees described above were approved by the Registrant's
Audit Committee.

PART IV

Item 15.    Exhibits and Financial Statement Schedules.

(a)    The following documents are filed as part of this report:

      1.   Financial statements: See index to financial statements under Item
           8 on Page 13 of this report.

      2.   Financial statement schedules: See Schedule III on page 24 of this
           report.

      3.   Exhibits:

Exhibit
Number      Description

  10        Raymond Di Paglia's Employment Contracts:

  10.1      1985 Employment Contract.

  10.2      1991 Employment Contract.

  10.3      1999 Employment Contract.

  10.4      2002 Amendment No. 1 to Employment Contract.

  31.1      Certification of Chief Executive Officer pursuant to Section 302
            of The Sarbanes-Oxley Act.

  31.2      Certification of Secretary-Treasurer pursuant to Section 302 of
            the Sarbanes-Oxley Act.

  32.1      Certification of Chief Executive Officer and Secretary-Treasurer
            pursuant to Section 906 of The Sarbanes-Oxley Act.

  31.1      Certification of Chief Executive Officer pursuant to Section 302
            of The Sarbanes-Oxley Act.

  31.2      Certification of Secretary-Treasurer pursuant to Section 302 of
            The Sarbanes-Oxley Act.

  32.1      Certification of Chief Executive Officer and Secretary-Treasurer
            pursuant to Section 906 of The Sarbanes-Oxley Act.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.



___NATIONAL PROPERTIES CORPORATION___ (Registrant)


Date  __3/30/05__          By _____/S/__Raymond_Di_Paglia_________
                               Raymond Di Paglia, President and Chief
                               Executive Officer


Date  __3/30/05__          By _____/S/__Kristine_M._Fasano__________
                                Kristine M. Fasano, Vice President,
                                Secretary and Treasurer


Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the Company and in the capacities and on the dates
indicated.


DIRECTORS OF THE COMPANY

Date  __3/30/05__          By _____/S/__Raymond_Di_Paglia________
                               Raymond Di Paglia

Date  __3/30/05__          By _____/S/__Kristine_M._Fasano_______
                               Kristine M. Fasano

Date  __3/30/05__          By _____/S/__Robert_H._Jamerson_______
                               Robert H. Jamerson

Date  __3/30/05__          By _____/S/__Tim_Lynch________________
                               Tim Lynch

NORTHUP, HAINES, KADUCE, SCHMID, MACKLIN, P.C.
Certified Public Accountants

Board of Directors and Stockholders
National Properties Corporation


REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM


We have audited the accompanying balance sheets of National Properties
Corporation as of December 31, 2004 and 2003 and the related statements of
income and comprehensive income, stockholders' equity and cash flows for each
of the three years in the period ended December 31, 2004.  These financial
statements and the schedules referred to below are the responsibility of the
Company's management.  Our responsibility is to express an opinion on these
financial statements and schedules based on our audits.

We conducted our audits in accordance with the Standards of the Public
Company Accounting Oversight Board (United States).  Those standards require
that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatements.  An
audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements.  An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation.  We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of National Properties
Corporation as of December 31, 2004 and 2003, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 2004, in conformity with accounting principles generally
accepted in the United States of America.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole.  The schedules listed in Item 15(a)(2)
are presented for purposes of complying with the Securities and Exchange
Commission's rules and are not part of the basic financial statements.  These
schedules have been subjected to the auditing procedures applied in our
audits of the basic financial statements, and in our opinion, fairly state in
all material respects, the financial data required to be set forth therein in
relation to basic financial statements taken as whole.


/S/ NORTHUP, HAINES, KADUCE, SCHMID, MACKLIN, P.C.
NORTHUP, HAINES, KADUCE, SCHMID, MACKLIN, P.C.

West Des Moines, Iowa
January 10, 2005

<table>
<caption>
NATIONAL PROPERTIES CORPORATION BALANCE SHEETS
                                                               December 31,
                                                             2004        2003

                                                    <c>         <c>
ASSETS

CURRENT ASSETS
  Cash                                                  1,538,644     326,210
  Receivables                                             197,058      15,803
  Prepaid expense and other current assets                122,157      14,490
                                                       ----------  ----------
    Total current assets                                1,857,859     356,503
                                                       ----------  ----------

PROPERTY AND EQUIPMENT, AT COST - Notes 1 and 4
  Land                                                  5,196,232   5,411,232
  Buildings and improvements                           41,280,399  41,698,008
  Furniture and equipment                                 124,218     124,390
                                                       ----------  ----------
                                                       46,600,849  47,233,630
  Less-accumulated depreciation                        12,073,082  11,604,926
                                                       ----------  ----------
    Property and equipment-net                         34,527,767  35,628,704
                                                       ----------  ----------

OTHER ASSETS
  Marketable securities, at market value-Note 3         1,286,898   1,302,844
  Other intangible assets                                 115,000          -
                                                       ----------  ----------
    Total other assets                                  1,401,898   1,302,844
                                                       ----------  ----------
                                                       37,787,524  37,288,051
                                                       ==========  ==========

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
  Accounts payable                                         11,642      20,792
  Accrued liabilities                                     153,394     146,982
  Advance rents                                           300,015     280,504
  Federal and state income taxes                               -       60,777
                                                       ----------  ----------
    Total current liabilities                             465,051     509,055
                                                       ----------  ----------
LONG-TERM DEBT - Note 4                                 8,800,000  11,975,000
                                                       ----------  ----------
DEFERRED INCOME TAXES - Note 2                          1,908,803   1,301,727
                                                       ----------  ----------
STOCKHOLDERS' EQUITY
  Common stock - $1 par value
    Authorized - 5,000,000 shares
    Issued 409,133 shares                                 409,133     409,133
  Retained earnings                                    25,681,612  22,594,902
  Accumulated other comprehensive income                  522,925     498,234
                                                       ----------  ----------
    Total stockholders' equity                         26,613,670  23,502,269
                                                       ----------  ----------
                                                       37,787,524  37,288,051
                                                       ==========  ==========
</table>

See Notes to Financial Statements


<table>
<caption>
NATIONAL PROPERTIES CORPORATION
STATEMENTS OF INCOME AND C0MPREHENSIVE INCOME
For the years ended December 31, 2004, 2003 and 2002

                                                2004        2003        2002

                                         <c>         <c>         <c>
REVENUES
  Lease rental income                        6,003,660   5,489,928
5,273,667
  Dividend and interest income                  34,578      43,229
43,546
  Gain on sale of securities                    74,903      31,247
36,034
  Gain on sale of property                          -       40,000          -
                                            ----------  ----------  ---------
-
                                             6,113,141   5,604,404
5,353,247
                                            ----------  ----------  ---------
-


EXPENSES
  Depreciation                               1,127,413   1,041,982
1,019,724
  Interest                                     375,470     374,923
421,514
  Salaries and wages                           280,431     274,031
245,529
  Property, payroll and misc. taxes            102,322     101,629
146,870
  Other                                        292,645     261,098
255,120
                                            ----------  ----------  ---------
-
                                             2,178,281   2,053,663
2,088,757
                                            ----------  ----------  ---------
-
Income before income taxes                   3,934,860   3,550,741
3,264,490

INCOME TAXES-Note 2                          1,463,470   1,330,531
1,216,880
                                            ----------  ----------  ---------
-Net income from continuing operations        2,471,360   2,220,210
2,047,610
Net income from discontinued
  operations - Note 6                          688,964      39,746
39,874
                                           -----------  ----------  ---------
-
Net income                                   3,160,354   2,259,956
2,087,484
                                            ----------  ----------  ---------
-

Other comprehensive income:
  Unrealized holding gains (losses) on
   marketable securities arising during
   period                                    114,095     395,595
(358,136)
  Less reclassification adjustment for
   gains included in net income               74,903      31,247       36,034
  Less income tax (benefit) applicable to
   unrealized holding gains and (losses)      14,501     137,368
(143,478)
                                            ---------  ----------  ----------
Other comprehensive income (losses),
  net of tax                                  24,691     226,980
(250,692)
                                           ----------  ----------  ----------
Comprehensive income                       3,185,045   2,486,936    1,836,792
                                           ==========  ==========  ==========

Net income per share
  Continued operations                           6.04        5.41
4.96
  Discontinued operations                        1.68        0.10
0.10
                                           -----------  ----------  ---------
-
Net income per share                             7.72        5.51
5.06
                                           -----------  ----------  ---------
-
Weighted average common shares outstanding    409,133     409,898
412,250
</table>

See Notes to Financial Statements

<table>
<caption>
NATIONAL PROPERTIES CORPORATION
STATEMENTS OF STOCKHOLDERS' EQUITY
For the years ended December 31, 2004, 2003 and 2002


Accumulated
                                                                     Other
                                                Common  Retained
Comprehensive
                                                Stock   Earnings     Income
                                           ----------  ----------  ----------

                                       <c>        <c>         <c>
Balances December 31, 2001                    413,073  18,569,367     521,946
    Net income - 2002                              -    2,087,484          -
    Purchase and retirement of common stock    (1,850)    (85,000)         -
    Cash dividend - 16 cents per share             -      (65,988)         -
    Change in other comprehensive income           -           -
(250,692)
                                           ----------  ----------  ----------
Balances December 31, 2002                    411,223  20,505,863     271,254
    Net income - 2003                              -    2,259,956          -
    Purchase and retirement of common stock    (2,090)   (101,152)         -
    Cash dividend - 17 cents per share             -      (69,765)         -
    Change in other comprehensive income           -           -      226,980
                                           ----------  ----------  ----------
Balances December 31, 2003                    409,133  22,594,902     498,234
    Net income - 2004                              -    3,160,354          -
    Cash dividend - 18 cents per share             -      (73,644)         -
    Change in other comprehensive income           -           -       24,691
                                           ----------  ----------  ----------
Balances December 31, 2004                    409,133  25,681,612     522,925
                                           ==========  ==========  ==========

</table>

See Notes to Financial Statements

<table>
<caption>
NATIONAL PROPERTIES CORPORATION
STATEMENTS OF CASH FLOWS
For the years ended December 31, 2004, 2003 and 2002


                                               2004        2003        2002
                                           ----------  ----------  ----------

                                        c>         <c>       <c>
CASH FLOW FROM OPERATING ACTIVITIES
  Net income                               3,160,354   2,259,956   2,087,484
  Adjustments to reconcile net income to
   net cash provided by operating
   activities:
    Depreciation                           1,152,053   1,068,862   1,046,604
    Deferred income taxes                    592,575     118,643     126,716
    Gain on sale of securities               (74,903)    (31,247)    (36,034)
    Gain on sale of property              (1,030,199)    (40,000)         -
    Changes in operating assets and
      liabilities:
      Accounts receivable                   (181,255)     (2,074)        397
      Prepaid expenses                          (645)      1,671      (2,062)
      Accounts payable and accrued expenses   (2,738)    (30,224)     78,967
      Advance rents                           19,511      60,507     (63,757)
      Federal and state income taxes        (167,799)    (62,375)    158,888
                                          ----------  ----------  ----------
  Net cash provided by operations          3,466,954   3,343,719   3,397,203
                                          ----------  ----------  ----------

CASH FLOW FROM INVESTING ACTIVITIES
  Additions to property and equipment       (266,116) (3,976,182) (4,547,777)
  Payments received on mortgage notes             -           -      155,978
  Purchase of marketable securities               -      (57,769)         -
  Proceeds from sale of securities           130,041      77,366     153,724
  Proceeds from sale of property           1,245,199      40,000          -
  Payment for other intangible assets       (115,000)         -           -
                                          ----------  ----------  ----------
  Net cash provided by (used in)
   investing activities                      994,124  (3,916,585) (4,238,075)
                                          ----------  ----------  ----------

CASH FLOW FROM FINANCING ACTIVITIES
  Borrowings on credit lines                      -    3,950,000   4,425,000
  Repayments of credit line borrowings    (3,175,000) (3,225,000) (3,425,000)
  Dividends paid                             (73,644)    (69,765)    (65,988)
  Purchase of treasury stock                      -     (103,242)    (86,850)
                                          ----------  ----------  ----------
  Net cash provided by (used in)
   financing activities                   (3,248,644)    551,993     847,162
                                          ----------  ----------  ----------
Net increase (decrease) in cash            1,212,434     (20,873)      6,290
Cash at beginning of year                    326,210     347,083     340,793
                                          ----------  ----------  ----------
Cash at the end of year                    1,538,644     326,210     347,083
                                          ==========  ==========  ==========

SUPPLEMENTAL CASH FLOW INFORMATION
  Cash paid during the year for:
    Interest expense                         375,470     374,923     421,514
    Income tax payments                    1,446,804   1,288,111     954,996

NON-CASH INVESTING TRANSACTIONS
  Exchange of like kind real estate:
    Basis of properties received                  -    2,245,331         -
    Less cash paid                                -      594,936         -
                                          ----------  ----------  ----------
  Basis of properties given up                    -    1,650,395         -
                                          ==========  ==========  ==========

</table>

See Notes to Financial Statements

NOTES TO FINANCIAL STATEMENTS
SUMMARY OF ACCOUNTING POLICIES

The Company:  National Properties Corporation is a Lessor of commercial real
estate to tenants, under net lease arrangements.  The Company seeks to
acquire or develop real estate for lease to commercial tenants anywhere in
the United States.  The Company currently owns property located in Arizona,
Colorado, Georgia, Iowa, Kansas, Missouri, Nebraska, North Carolina,
Oklahoma, South Dakota, Tennessee, and Texas.

Marketable Securities:  The Company classifies its existing marketable equity
securities as available-for-sale in accordance with the provisions of
Statement of Financial Standards No. 115, "Accounting for Certain Investments
in Debt and Equity Securities". These securities are carried at fair market
value, with the increase or decrease in unrealized gains and losses reported
as other comprehensive income or losses in the statement of income and
comprehensive income.  Gains or losses on securities sold are based on the
specific identification method.

Property and Equipment:  Property and equipment are recorded at cost and
depreciated on a straight-line basis over the estimated useful lives of 15 to
39 years for buildings and 5 to 7 years for equipment.

Exchange of Nonmonetary Assets:  Real estate investments acquired or
developed by the Company are not held for resale, but are held as productive
assets.  When the Company disposes of a property, it will generally exchange
that property for another productive property.  The Company accounts for
these nonmonetary transactions in accordance with Accounting Principles Board
Opinion 29 "Accounting for Nonmonetary Transactions", by recording the
property received in the exchange at the recorded amount of the property
surrendered plus any cash paid in the transaction.  Therefore, no gain or
loss is recognized on the disposed property.  However, see New Accounting
Standard below, regarding an amendment to APB 29.

Impairment of Long-Lived Assets:  The Company evaluates its long-lived assets
for impairment whenever events or changes in circumstances indicate that the
carrying amount of such assets or intangibles may not be recoverable.
Recoverability of assets to be held and used is measured by a comparison of
the carrying amount of an asset to future net cash flows expected to be
generated by the asset.  If such asset is considered to be impaired, the
impairment to be recognized is measured by the amount by which the carrying
amount of the asset exceeds the fair value of the asset.  Assets to be
disposed of are reported at the lower of the carrying amount or fair value
less costs to sell.  During 2004 and 2003, the Company determined that none
of its long-lived assets had been impaired, and therefore the Company did not
adjust the carrying amounts of such assets.

Net Earnings Per Common Share:  Net earnings per share are based on the
weighted average number of shares outstanding of 409,133 in 2004, 409,898 in
2003 and 412,250 in 2002.

Profit-Sharing Plan:  The Company has a profit sharing plan adopted in 1965,
for eligible employees, under which it contributes a portion of its annual
earnings.  The plan and all of its amendments have been approved by the
Internal Revenue Service. The Company's contribution to the plan was $70,108
in 2004; $67,945 in 2003 and $61,382 in 2002.

Lease Rentals - Commercial Real Estate:  Lease rentals received on commercial
real estate are accounted for under the operating method, under which
rentals, including contingent rents, are included in income as earned over
the term of the lease.  When scheduled rentals vary during the lease term,
income is recognized on a straight-line basis so as to produce a constant
periodic rent over the term of the lease.  Accrued rental income is the
aggregate difference between the scheduled rents which vary during the lease
term and the income recognized on a straight-line basis.

Estimates: The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period.  Actual results could vary from the estimates
that were used.

Fair Value of Financial Instruments: The Company's financial instruments are
valued at their carrying amounts which are reasonable estimates of fair
value.

New Accounting Standard: In December 2004, the Financial Accounting Standards
Board issued Statement of Financial Accounting Standards (SFAS) Statement No.
153, Exchanges of Nonmonetary Assets-an amendment to APB Opinion 29.  SFAS
No. 153 eliminates the exception in APB 29 that permits the exchange of
productive assets not held for sale in the ordinary course of business to be
accounted for based on the recorded amount of the nonmonetary asset
relinquished rather than fair value.  Therefore, under APB 29, gain or loss
was generally not recognized on the exchange of productive assets.  Real
estate investments acquired by the Company are not held for resale but are
held as productive assets.  When the Company disposes of a property, it will
generally exchange that property for another productive property and
historically had accounted for such exchange in accordance with APB 29.
Although the provisions of SFAS Statement No. 153 are effective for years
beginning after June 15, 2005, earlier application is permitted from the date
of issuance.  The Company has adopted SFAS Statement No. 153 and applied its
provisions to the QuikTrip property it sold in December 2004.  The provisions
of SFAS No. 153 are to be applied prospectively.

NOTE 1 - PROPERTIES UNDER LEASE

The Company is the Lessor of commercial real estate under noncancelable
operating leases requiring fixed and contingent rentals through the year
2028.  Contingent rentals based on sales overages amounted to $43,672 in
2004; $62,550 in 2003 and $71,870 in 2002. The following is a schedule of
future minimum rentals at December 31, 2004, not including renewal options
and contingent rentals.

<table>
<caption>
     Year ended December 31,                        Amount
            
                                  <c>
            2005                                   5,796,728
            2006                                   5,678,072
            2007                                   5,694,095
            2008                                   5,701,174
            2009                                   5,440,428
            Subsequent years                      52,621,062
                                                  ----------
            Aggregate future minimum rentals      80,931,559
                                                  ==========

</table>

NOTE 2 - INCOME TAXES

<table>
Income tax expense for the years ended December 31, 2004, 2003 and 2002 is
comprised of the following:

<caption>

                                        <c>          <c>         <c>
                                                2004        2003        2002
                                           -----------  ----------  ---------
-
Current
  Federal                                  $1,096,173  $1,052,879   $
948,978
  States                                      182,834     182,857
164,906
                                           -----------  ----------  ---------
-
    Total current                           1,279,007   1,235,736
1,113,884
Deferred                                      592,575     118,643
126,716
                                           -----------  ----------  ---------
-
                                           $1,871,582  $1,354,379
$1,240,600
                                           ===========  ==========
==========

Deferred income taxes reflect the net tax effect of temporary differences
between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes.  Significant
components of the Company's net deferred tax liability in the balance sheets
as of December 31, 2004 and 2003 are related to the following:

                                                            2004        2003
                                                        ----------  ---------
-
Deferred tax liabilities:
  Buildings                                            $1,533,553
$1,009,113
  Marketable securities                                   307,115
292,614
  Accrued rental income                                    68,135           -
                                                        ----------  ---------
-
    Total deferred tax liabilities                     $1,908,803
$1,301,727
                                                        ==========
==========

A reconciliation of the Company's U.S. federal tax rate is as follows:

For the year ended December, 31:                 2004        2003        2002
                                            ----------  ----------  ---------
-

Statutory rate                                   34.0%       34.0%      34.0%
State taxes, net of federal tax benefit           3.4         3.4        3.3
Decreases resulting from:
  Dividend exclusion                             (0.2)       (0.3)      (0.3)
Other                                              -          0.4        0.3
                                            ----------  ----------  ---------
-
Effective rate                                   37.2%       37.5%      37.3%
                                            ==========  ==========
==========

</table>

NOTE 3 - MARKETABLE SECURITIES

The Company's marketable securities consist of equity securities and were
carried at fair market value.  At December 31, 2004, marketable securities
available-for-sale had an aggregate market value of $1,286,898 and a cost of
$456,858 resulting in an unrealized gain of $830,040.  At December 31, 2003,
marketable securities had an aggregate market value of $1,302,844 and a cost
of $511,996 for an unrealized gain of $790,848.  The increase or decrease in
unrealized holding gains each year is shown as other comprehensive income in
the statement of income and comprehensive income.

The Company had gross realized gains of $74,903 and no realized losses on the
sale of marketable securities in 2004.  In 2003, the Company had gross
realized gains of $31,247 and no realized losses.  In 2002, the Company had
gross realized gains of $52,712 and gross realized losses of $16,678.  Gains
on sales were based on the cost of the securities using the specific
identification method.

NOTE 4 - LONG-TERM DEBT

The Company has a revolving credit agreement dated February 8, 2001, with
Wells Fargo Bank, N.A (Bank).  The credit facility permits the Company to
borrow up to $15,000,000.  At December 31, 2004, $8,800,000 ($11,975,000 at
December 31, 2003) was outstanding under the agreement and matures on April
30, 2006.  The revolving period of the agreement provides for annual
extensions each April 30th at the mutual agreement of the Bank and the
Company.  It is the Company's intention to request an extension of the
revolving period, as provided by the agreement.  Advances under the credit
facility bear interest at 0.75% below the Bank's base rate.  At December 31,
2004, the outstanding balance accrued interest at 4.5%.  In addition, the
agreement requires the Company to pay an annual commitment fee of 1/8 of 1%
(payable quarterly) on the unused portion of the line of credit commitment.
The credit agreement contains various covenants, including limitations on
additional borrowings and maintaining a minimum free cash flow as defined in
the agreement of $1,800,000 per year measured as of the end of each fiscal
quarter on an annualized basis.  The Company was in compliance with all
covenants at December 31, 2004.  The line of credit is secured by first
mortgages on nine properties that had a net book value of $7,381,000 at
December 31, 2004.

NOTE 5 - CONCENTRATIONS

<table>
The following schedule shows the percentage of lease revenue obtained from
those companies that account for 10% or more of the Company's lease rental
income.
<caption>
                                                        Years ended
                                            2004            2003        2002
                                         ----------     ----------  ---------
-

                                   <c>               <c>         <c>
  QuikTrip Corporation                      38.2%           40.4%       42.0%
  Academy Sports                            10.8%           12.8%       11.0%

</table>

NOTE 6 - EARNINGS FROM DISCONTINUED OPERATIONS - REAL ESTATE HELD
         FOR INVESTMENT
<table>
<caption>
In accordance with Statement of Financial Accounting Standard No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets" (SFAS No.
144), the Company has classified the QuikTrip and Git-N-Go properties it sold
during 2004 as discontinued operations.  Accordingly, the results of
operations related to these properties for 2004, 2003 and 2002 have been
reclassified to earnings from discontinued operations.  The Company had no
property sales in either 2002 or 2003 that met the criteria under SFAS No.
144 for classification as discontinued operations.  The following is a
summary of earnings from discontinued operations.


                                        <c>          <c>         <c>
                                                   Year Ended December 31,
                                                2004        2003        2002
                                           -----------  ----------  ---------
-
Revenues
  Rental income                            $   91,517   $  90,474    $
90,474

Expenses
  Depreciation                                 24,640      26,880
26,880
                                           -----------  ----------  ---------
-

Gain of disposition of real estate          1,030,199          -            -
                                           -----------  ----------  ---------
-

Provision for income tax                      408,112      23,848
23,720
                                           -----------  ----------  ---------
-

 Net income from discontinued
  operations from real estate
  held for investment                      $  688,964  $   39,746   $
39,874
                                           ===========  ==========
==========

</table>

NOTE 7 - QUARTERLY OPERATING DATA (UNAUDITED)

<table>
The following is a summary of unaudited quarterly results of operations:

                                                  Quarter
                              First        Second         Third        Fourth
                         ----------    ----------    ----------    ----------
2004
  Revenues                1,533,169     1,483,602     1,483,357     2,734,729
  Net Income                602,163       586,920       598,818     1,372,453
  Per share                   $1.47         $1.43         $1.46         $3.36

                      <c>           <c>           <c>           <c>
2003
  Revenues                1,505,612     1,385,813     1,370,902     1,432,551
  Net Income                604,785       561,137       537,756       556,278
  Per share                   $1.47         $1.37         $1.31         $1.36


</table>

<table>
<caption>

NOTE 8 - SUBSEQUENT EVENT

On January 14, 2005, the Company's board of directors gave approval and
adopted a definitive agreement and plan of merger for the Company to merge
with and into a wholly owned subsidiary of Commercial Net Lease Realty Inc.
(Commercial).  Commercial invests in high quality, single-tenant retail and
office properties subject to long term, net leases with established tenants.
As of January 2005, Commercial owned 362 investment properties in 38 states
which were leased to 152 corporations in 56 industry classifications.  The
merger agreement provides for shareholders of the Company to receive four
shares of Commercial common stock for each share of Company stock they own.
Further, as a condition to Commercial's obligation to close the merger, the
Company must pay a dividend to its shareholders of $20.8 million, or
approximately $50.84 per share.  This special dividend will be paid out prior
to closing only if all other conditions to the merger have been satisfied or
waived prior to the closing of the merger.  Completion of the merger is
subject to customary closing conditions, including the approval of the
holders of a majority of the Company's outstanding common stock.  Company
shareholders holding approximately 53% of the Company's outstanding common
stock have entered into a shareholder agreement with Commercial to vote in
favor of the merger.  However, Commercial may terminate the merger agreement
if a majority of the Company's shareholders who are not bound by the
shareholders agreement do not approve the merger.   The Company anticipates
that the merger will be completed not later than the second quarter of 2005.


NATIONAL PROPERTIES CORPORATION

SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION


               <c>           <c>              <c>           <c>
<c>                <c>        <c>
Description         Encum-       Initial costs   Cost capi-     Gross
Accumulated     Date ac-    Life on
                    brances      to company      talized        amount at
depreciation    quired      which de-
                                                 subsequent     which car-
preciation
                                                 to acquis-     ried at
in latest in-
                                                 tion           close of
come state-
                                                                period
ment is

computed

               <c>           <c>              <c>           <c>
<c>                <c>        <c>
Academy Sports
  College Stn, TX  $    (1)      $ 3,248,000            -       $ 3,248,000
$   218,688         05/15/02   39
Academy Sports
  Nashville, TN          -         3,749,612            -         3,749,612
365,018         03/15/01   39
Sportsman's Warehouse
  Sioux Falls, SD        -         2,632,970            -         2,632,970
407,878         12/01/98   39
Jack in the Box
  Plano, TX              -         3,100,350            -         3,100,350
137,793         08/22/03   30
Other Properties     8,800,000    27,203,168      $1,346,299     28,549,467
10,845,737         1976/2003  15/39
                    ----------   -----------      ----------     ----------
----------
    Totals         $ 8,800,000   $39,934,100      $1,346,299    $41,280,399
$11,975,114
                    ==========   ===========      ==========    ===========
==========
                        (1)           (2)

<caption>

NOTE TO SCHEDULE III
                                                 Real  Estate
                                          Buildings and Improvements
                                     2004            2003            2002

                             <c>             <c>             <c>
Balance, Beginning of period     $41,698,008     $38,525,484     $34,231,292
  additions                          254,391       5,324,519       4,294,192
                                 -----------     -----------     -----------
                                  41,952,399      43,850,003      38,525,484
  Reductions                         672,000       2,151,995              -
                                 -----------     -----------     -----------
Balance, End of period           $41,280,399     $41,698,008     $38,525,484
                                 ===========     ===========     ===========

<caption>

                                           Accumulated Depreciation
                                          Buildings and Improvements
                                     2004            2003            2002
Balance, Beginning of period     $11,506,658     $11,236,103     $10,196,236
  additions                        1,140,456       1,058,854       1,039,867
                                 -----------     -----------     -----------
                                  12,647,114      12,294,957      11,236,103
  Reductions                         672,000         788,299              -
                                 -----------     -----------     -----------
Balance, End of period           $11,975,114     $11,506,658     $11,236,103
                                 ===========     ===========     ===========

(1)  Nine properties including Academy Sports property in College Station, TX
are pledged as security under the Company's $15,000,000 Wells Fargo line of
credit.

(2)  Land costs totaling $5,196,232 not included.

</table>

Exhibit 10.1
AMENDED AND RESTATED
EMPLOYMENT CONTRACT

THIS AGREEMENT made this 15th of March, 1985, between NATIONAL PROPERTIES
CORPORATION, hereinafter called the "Employer", and RAYMOND DI PAGLIA,
hereinafter called the "Employee".

1.  Employment.  The Employer hereby employs the Employee and the Employee
hereby accepts employment upon the terms and conditions hereinafter set
forth.

2.  Term and Extension.  Subject to the provisions for termination as
hereinafter provided, this Agreement shall be effective as of January 1,
1985, and, subject to the extension provisions set forth in this Section 2,
this Agreement shall terminate on December 31, 1994. The expiration date of
the initial ten year term provided by this Agreement shall automatically be
extended for one year on each and every January 1 commencing with January 1,
1986, without action on the part of any person; provided, however, that the
Board of Directors of Employer, may, by majority vote taken prior to the end
of any given year suspend the automatic one year renewal which otherwise
would be effective as of the following January 1; it being the intention of
the parties to provide for a continuous ten year term unless affirmative
action is taken by the Board of Directors each year to void the automatic one
year extension.

3.  Compensation. For all services rendered by the Employee under this
Agreement during the calendar year 1985, the Employer shall pay the Employee
"Basic Compensation" of $75,000.  Commencing with the calendar year 1985, the
compensation provided for herein shall be adjusted in the manner herein
specified. The 1985 Basic Compensation shall be increased, but not decreased,
to give effect to changes in cost of living levels, in the same proportion as
the Consumer Price Index ("CPI") published by the U.S. Department of Labor
shall increase during the calendar year 1985. The 1985 Basic Compensation
shall be paid in the same installments in which it is now being paid, and any
increase in compensation attributable to an increase in the CPI during the
calendar year 1985 shall be payable in a lump sum as soon as the amount is
determinable following December 31, 1985.

In the event that the aggregate compensation of the Employee shall be
increased for the year 1985 by reason of the foregoing provisions, the
aggregate compensation paid or accrued shall, for the year 1986, become the
Basic Compensation to be paid during such year, increased or decreased by
subsequent changes in the CPI during such year; and comparable adjustments,
made in like manner, shall be made in each ensuing year thereafter during the
term of this Agreement.  In the event of a reduction in the CPI during any
year, the Basic Compensation payable to the Employee for such year shall be
reduced in the same proportion as the reduction in the CPI (but not below
$75,000) and the Basic Compensation for the following year shall be the total
compensation paid the previous year, giving effect to such reduction.  In the
event that the Employee shall have been overpaid for any year (through
payment of installments of Basic Compensation), the amount of such
overpayment shall be offset against the next ensuing installments of Basic
Compensation payable following the determination of overpayment, or, at the
option of the Employee, shall be repaid by him in full in cash when so
determined.

4.  Duties.  The Employee is engaged as an executive to supervise and direct
the activities of the Employer in the conduct of its real estate investment
business, including the development, construction, financing, and promotion
of new investment opportunities, as well as operation of all facilities; and,
in addition, the Employee shall have general responsibilities and supervision
over the conduct of the business of any subsidiary of the Employer, whether
or not such subsidiary shall be engaged in the real estate investment
business.  In case the Employee shall be an officer of the Employer, or of a
subsidiary of the Employer, during the term of this Agreement, the Employee
shall have such duties in addition to the general statement thereof here made
as shall be prescribed by the Bylaws or the Board of Directors from time to
time.  In such event, Employee shall serve in such capacity or capacities
without further compensation.

5.  Extent of Service.  The Employee shall devote substantially his entire
time, attention, and energies to the business of the Employer, and shall not
during the term of this Agreement be engaged in any other business activity
to a material extent whether or not such business activity is pursued for
gain, profit, or other proprietary advantage; but this shall not be construed
as preventing the Employee from investing his assets in such form or manner
as will not require any substantial services on the part of the Employee in
the operation of such investments or in the affairs of the Companies in which
such investments are made.

6.  Corporate Opportunity.  The Employee acknowledges the value to the
Employer of his knowledge, contacts, and working relationships with present
and prospective customers, suppliers, lending institutions and other persons
dealing with the Employer in the various aspects of its real estate
investment activities.  Employee agrees to utilize all of such capabilities
solely for the full use and benefit of the Employer and to first offer to the
Employer any and all of those opportunities which shall come to his knowledge
and fall within the designated area of business which the Board of Directors
may, from time to time, designate as business of the Employer.

7.  Working Facilities.  The Employee shall be furnished with a private
office, stenographic help, the use of an automobile owned by the Employer,
and such other facilities and services, suitable to his position and adequate
for the performance of his duties.

8.  Expenses.  The Employee is authorized to incur reasonable expenses for
promoting the business of the Employer, including expenses for entertainment,
travel and similar items.  The Employer will reimburse the Employee for all
such expenses upon presentation by the Employee, from time to time, of an
itemized account of such expenses.

9.  Vacation.  The Employee shall be entitled each year to a vacation period
suitable to his position and subject to the over-sight of the Board of
Directors, during which time his compensation shall be paid in full.
Vacations may be taken at such times as the Employee may choose, but such
vacations shall not be timed in such a manner as to interfere with the
reasonable performance of his services to the Employer by the Employee.

10.  Additional Benefits.  Employer acknowledges the desirability of
developing additional benefits for its employees, and in particular its
executive employees.  Specifically, it recognizes the ultimate desirability
of developing a retirement program, a life insurance and disability insurance
program, and some form of bonus or profit sharing benefits based upon the
success of its operations.

Employer and Employee agree that the development of such programs is a time
consuming and complex task requiring consultation with counsel, accountants,
banks, insurance companies and agents, actuaries, and possibly others.  For
these reasons it is not now possible in connection with the execution of this
Agreement to extend to Employee any existing plan or benefit of the type
mentioned but which the Employer proposes to adopt in the future.

Employer agrees and represents to Employee that the Employer will undertake
the investigation and study of these additional benefits and will use its
best efforts to establish and implement a retirement program covering
Employee providing for pension payments upon retirement at age 65, a life
insurance and disability income program providing benefits to the Employee or
his beneficiaries in the event of his death or total disability while so
employed, and some form of incentive compensation such as a bonus plan or a
profit sharing plan to reward the Employee on the basis of the profitability
of the operations of Employer; all of which benefits to be commensurate with
benefits payable under like programs established by other companies engaged
in the same business of a like size and volume to executives holding similar
positions.

11.  Termination of Employment.

11.1  Death.  In the event of the death of the Employee during the term of
this Agreement, Basic Compensation shall be paid through the end of the month
in which death occurs in accordance with the Employer's regular practice.

11.2  Disability.  In the event the Employee's employment terminates due to
"Disability", the Employee shall be entitled to receive 100% of his Basic
Compensation at the rate in effect at the time of such termination, payable
in monthly installments, for a period of 12 months commencing with the month
following such termination, reduced however, by amounts received in respect
of the same period of time under other long-term disability programs provided
by the Employer or from workmen's compensation benefits.

"Disability", for purposes of this Agreement, shall mean the Employee's
permanent physical or mental disability so as to render him incapable of
carrying out his duties under this Agreement.  A determination of Disability
shall be subject to the certification of a qualified medical doctor agreed to
by the Employer and the Employee, or, in the event of the Employee's
incapacity to designate a doctor, the Employee's legal representative.  In
the absence of agreement between the Employer and the Employee, each party
shall nominate a qualified medical doctor and the two doctors shall select a
third doctor, who shall make the determination as to Disability.

11.3  Termination by the Employer Other Than for Disability or Cause.

  (a)  In the event the Employer terminates the Employee's employment for any
reason other than for Disability, as provided in Section 11.2 above, or for
Cause, as provided in Section 11.5 below, the Employer shall pay to the
Employee, or his beneficiary, in the event of his death prior to the
completion of such payments, an amount equal to his Basic Compensation at the
rate in effect at the time of such termination for each year (prorated for a
partial year) of the unexpired term of this Agreement.  Such amounts shall be
paid in monthly installments at the end of each month during such unexpired
term unless, at the election of the Employee filed in writing with the
Employer within 60 days following the effective date of termination, the
Employee elects to receive such payments in a lump sum, in which event the
Employer shall, within 60 days of the date of such election, pay such amount
in a lump sum, discounted, however, to present value at 10% annual interest.
This Section 11.3 shall in no way limit the Employee's rights to Employer
benefits, including, without limitation, maintenance of insurance and pension
benefits in the event the Employer terminates the Employee's employment.

  (b)  The word "termination", for the purpose of this Section 11.3, shall
mean, in addition to a termination by the Employer of the employment of the
Employee, as described in Section 11.3(a) above, the following:

     (i) a determination by the Employee made in good faith that as a result
of a change in control of the Employer and a change in circumstances
thereafter significantly affecting his position, he is unable to carry out
the authorities, powers and duties attached to his position.  A "change in
control of the Employer" shall be deemed to have occurred if (1) the
beneficial ownership of over 50% of the common stock of the Employer is held
directly or indirectly by any person or group of persons (excluding the
Employee) acting in concert so as to be reportable as such under the
Securities Exchange Act of 1934, or (2) a majority of the members of the
Board of Directors of the Employer cease to be persons now serving in such
capacity or persons nominated by or with the approval of the present majority
of the Board of Directors.

     (ii) the liquidation, dissolution, consolidation, or merger of the
Employer or the transfer to another entity or any other person of all or a
significant portion of its assets if such successor to the employer does not
agree to assume this Agreement.

An election by the Employee to terminate his employment given under the
provisions of this Section 11.3(b) shall not be deemed a voluntary
termination of employment by the Employee for the purpose of this Agreement
or any plan or practice of the Employer.  In the event the Employee is
terminated as described in Section 11.3, there will be no offset to any
benefits due him hereunder on account of any salary, bonus and continuing
benefits earned by him from employment elsewhere following his termination of
employment with the Employer.

11.4  Voluntary Termination.  In the event the Employee terminates his
employment on his own volition prior to his 62nd birthday, other than in the
case of a termination under Section 11.2 or 11.3 above, such termination
shall constitute a voluntary termination and in such event the Employee shall
be entitled the Compensation provided in Section 3 through the date of
termination.  Except as provided in this Section 11.4 below, the Employee
shall have no further rights or entitlements under this Agreement in the
event of a voluntary termination of employment as hereinabove defined.  This
Section 11.4 shall in no way limit the Employer's rights pursuant to this
Agreement in the event the Employee voluntarily terminates employment in
breach of this Agreement.

11.5  Termination for Cause.

  (a) The termination of the Employee's employment shall be deemed to have
been for Cause only if termination of his employment shall have been the
result of

     (i) any act or acts committed by the Employee constituting a felony, or

     (ii) The Employee's willful and gross negligence or willful and gross
neglect in carrying out his duties and authorities hereunder which results,
or which, if continued, might reasonably be expected to result, in material
harm to the Employer.

  (b)  In the event the Employee's employment is terminated for Cause as
provided in this Section 11.5, the Employee shall be entitled to the Basic
Compensation through the date of termination.

12.  Notices.  Any notice required or permitted to be given under this
Agreement shall be sufficient if given in writing and if sent by certified
mail to his residence in the case of the Employee, or to its principal office
in the case of the Employer.

13.  Waiver of Breach.  The waiver by the Employer of a breach of any
provision of this Agreement by the Employee shall not operate or be construed
as a waiver of any subsequent breach by the Employee.

14.  Assignment.  The performance of the duties of the Employee are
considered to be personal to the Employee and no assignment by the Employee
of this Agreement shall have any force or effect.

15.  Entire Agreement.  This instrument contains the entire agreement of the
parties.  It may not be changed orally but only by an agreement in writing
signed by the party against whom enforcement of any waiver, change,
modification, extension or discharge is sought.

IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first hereinabove set forth.

NATIONAL PROPERTIES CORPORATION

By: /S/ Robert W. Guely
       Vice President

ATTEST:

/S/ KRISTINE M. FASANO
SECRETARY

/S/RAYMOND DI PAGLIA
Raymond Di Paglia

This Amended and Restated Employment Agreement is acknowledged
and approved this 15th day of March, 1985, by the following members of the
Board of Directors.


Robert E. Combs

/S/ ROBERT H. JAMERSON
Robert H. Jamerson

/S/WILLIAM D. BUZARD
William D. Buzard

/S/KRISTINE M. FASANO
Kristin M. Fasano




Exhibit 10.2
1991 EMPLOYMENT CONTRACT


        THIS AGREEMENT is made as of January 1, 1991, between NATIONAL
PROPERTIES CORPORATION, hereinafter called the "Employer," and RAYMOND DI
PAGLIA, hereinafter called the "Employee."

R E C I T A L S

        A.   On March 15, 1985, the Employer and the Employee entered into an
agreement entitled "Amended and Restated Employment Contract" (the "Old
Contract") under which the Employee was employed by the Employer.

        B.   Effective December 31, 1990, by mutual agreement, the Employer and
the Employee terminated the "Old Contract."

        C.   Effective as of January 1, 1991, the Employer and the Employee
desire to enter into this 1991 Employment Contract (the "Agreement") under
which the Employer will employ the Employee on the terms and conditions
hereinafter set forth.

        NOW, THEREFORE, the Employer and the Employee hereby agree as follows:

1.   As a matter of convenience, the parties elect to adopt and incorporate
by reference herein each of the following Sections of the Old Contract as
fully and completely as though set forth herein in their entirety:  1.
Employment.  4. Duties.  5. Extent of Services.  6. Corporate Opportunity.
7. Working Facility.  8. Expenses.  9. Vacation.  10. Additional Benefits.
11.1. Death.
11.2. Disability.  11.3 Termination by the Employer Other Than for Disability
or Cause (including the amendments to Sections 11.3(a) and 11.3(b) (ii)
effective June 21, 1985).  11.4 Voluntary Termination.  11.4.A. Termination
Upon Liquidation or Dissolution (as added effective June 21, 1985).  11.5.
Termination for Cause.  12. Notices.  14. Assignment.  15. Entire Agreement.

        2.  Section 2 of the Agreement is set forth below:

        2.  Term and Extension. Subject to the provisions for termination as
hereinafter provided, this Agreement shall be effective as of January 1,
1991, and, subject to the extension provision set forth below in this Section
2, this Agreement shall terminate on December 3l, 2000. The expiration date
of the initial ten year term provided by this Agreement shall automatically
be extended for one year on each and every January 1 commencing January 1,
1992, without action on the part of any person; provided, however, that the
Board of Directors of the Employer, may, by majority vote taken prior to the
end of any given year, suspend the automatic one year renewal which otherwise
would be effective as of the following January 1; it being the intention of
the parties to provide for a continuous ten year term unless affirmative
action is taken by the Board of Directors each year to void the automatic one
year extension.

        3.  Section 3 of the Agreement is set forth below:

        3.  Compensation. For all services rendered by the Employee under this
Agreement during the calendar year 1991, the Employer shall pay the Employee
"Basic Compensation" of $91,243. That amount includes $86,898 as the "Basic
Compensation" for 1990 under the Old Contract, and $4,345 as the compensation
adjustment due for 1990 under the Old Contract. Commencing with the calendar
year 1991, the compensation provided for herein shall be adjusted in the
manner herein specified. The 1991 Basic Compensation shall be increased, but
not decreased, to give effect to changes in cost of living levels, in the
same proportion as the Consumer Price Index ("CPI") published by the U.S.
Department of Labor shall increase during the calendar year 1991. The 1991
Basic Compensation shall be paid in the same installments in which it was
being paid under the Old Agreement, and any increase in compensation
attributable to an increase in the CPI during the calendar year 1991 shall be
payable in a lump sum as soon as the amount is determinable following
December 31, 1991.

        The aggregate compensation of the Employee paid or accrued for the year
1991, including any increase which occurs by reason of the foregoing
provisions, shall become the Basic Compensation to be paid during the year
1992, increased, but not decreased, by subsequent changes in the CPI during
such year. Any increase shall be payable in a lump sum as soon as the amount
is determinable following December 31, 1992. Comparable adjustments, made in
like manner, shall be made in each ensuing year thereafter during the term of
this Agreement.

        IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first hereinabove set forth.

        NATIONAL PROPERTIES CORPORATION

        By____/S/ Robert W. Guely __________________
        Vice President

        ATTEST:

        _______/S/ Kristine M. Fasano________________
        Secretary

        _______/S/ Raymond Di Paglia _______________
        Raymond Di Paglia



        This 1991 Employment Contract is acknowledged and approved this  18th
day of January, 1991, by he following members of the Board of Directors:


/S/ Robert E. Combs
     Robert E. Combs

/S/ Robert H. Jamerson
     Robert H. Jamerson

/S/ William D. Buzard
     William D. Buzard

/S/ Kristine M. Fasano
     Kristine M. Fasano




Exhibit 10.3
1999 EMPLOYMENT CONTRACT


        THIS AGREEMENT is made November 20, 1998, between NATIONAL PROPERTIES
CORPORATION, hereinafter called the "Employer," and RAYMOND
DI PAGLIA, hereinafter called the "Employee."

R E C I T A L S

        A.  On March 15, 1985, the Employer and the Employee entered into an
agreement entitled "Amended and Restated Employment Contract" (the "Old
Contract") under which the Employee was employed by the Employer.

        B.  Effective December 31, 1990, by mutual agreement, the Employer and
the Employee terminated the "Old Contract."

        C.  On January 1, 1991, the Employer and the Employee entered into an
agreement entitled the "Agreement" under which the Employee was employed by
the Employer.

        D.  Effective December 31, 1998, by mutual agreement the Employer and
the Employee will terminate the 1991 "Agreement".

        E.  Effective January 1, 1999, the Employer and the Employee desire to
enter into this 1999 Employment Contract (the "1999 Contract") under which
the Employer will employ the Employee on the terms and conditions set forth:

        NOW, THEREFORE, the Employer and the Employee hereby agree as follows:

1.  As a matter of convenience, the parties elect to adopt and incorporate by
reference herein each of the following Sections of the Old Contract as fully
and completely as though set forth herein in their entirety:	1.
Employment.  4. Duties.  5. Extent of Services.  6. Corporate Opportunity.
7. Working Facility.  8. Expenses.  9. Vacation.  10. Additional Benefits.
11.1. Death.  11.2. Disability.  11.3 Termination by the Employer Other Than
for Disability or Cause (including the amendments to Sections 11.3(a) and
11.3(b) (ii) effective June 21, 1985).  11.4 Voluntary Termination.  11.4.A.
Termination Upon Liquidation or Dissolution (as added effective June 21,
1985).  11.5. Termination for Cause.  12. Notices.  14. Assignment.  15.
Entire Agreement.

2.  Section 2 of the Agreement is set forth below:

	2.  Term and Extension. It is the intention of the parties that unless
otherwise terminated in accordance with the provisions of this Agreement that
the term of this Agreement shall always be for ten (10) years.  To that end,
the initial term shall end on December 31, 2008 but, unless the Board of
Directors of the Employer shall by majority vote otherwise direct in December
of each year beginning in 1999, the term shall automatically be extended so
as to end on December 31st of the tenth year thereafter.  For instance,
unless the Board shall so act in December of 1999 to cancel this automatic
extension, the term shall be extended until December 31, 2009, and so on.
3.	Section 3 of the Agreement is set forth below:

	3.  Compensation. For all services rendered by the Employee under this
Agreement during the calendar year 1999, the Employer shall pay the Employee
"Basic Compensation" of $120,000.  Commencing with the calendar year 2000,
the compensation provided for herein shall be adjusted in the manner herein
specified. The 1999 Basic Compensation shall be increased, but not decreased
by the greater of 3% or any increase in the Cost of Living in the same
proportion as the All Urban Consumers Price Index ("CPI-U") published by the
U.S. Department of Labor shall increase during the calendar year 1999. The
1999 Basic Compensation shall be paid in the same installments in which it
was being paid under the 1991 Agreement, and any increase in compensation
attributable to an increase in the CPI during the calendar year 1999 shall be
payable in a lump sum as soon as the amount is determinable following
December 31, 1999.

        The aggregate compensation of the Employee paid or accrued for the year
1999, including any increase which occurs by reason of the foregoing
provisions, shall become the Basic Compensation to be paid during the year
2000, increased, but not decreased, by the greater of 3% or subsequent
changes in the CPI during such year. Any increase shall be payable in a lump
sum as soon as the amount is determinable following December 31, 2000.
Comparable adjustments, made in like manner, shall be made in each ensuing
year thereafter during the term of this Agreement.

        IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first herein above set forth.

NATIONAL PROPERTIES CORPORATION

By____/S/ Kristine M. Fasano_________________
Kristine M. Fasano, Vice President/Secretary

______/S/ Raymond Di Paglia _________________
Raymond Di Paglia

        This 1999 Employment Contract is acknowledged and approved this 20th
day of November, 1998, by the following members of the Board of Directors:


/S/ William D. Buzard
    William D. Buzard

/S/ Robert H. Jamerson
    Robert H. Jamerson

/S/Kristine M. Fasano
    Kristine M. Fasano




Exhibit 10.4

AMENDMENT NO. 1
TO EMPLOYMENT CONTRACT DATED NOVEMBER 20, 1998


   THIS AMENDMENT, dated as of November 15, 2002, is made to the Employment
Contract dated November 20, 1998, between NATIONAL PROPERTIES CORPORATION
(herein after called the "Employer") and RAYMOND DI PAGLIA, (hereinafter
called the "Employee"), and hereinafter called the "Agreement".

   WHEREAS,  it is the desire of the parties to alter the provisions of the
Agreement with respect to the compensation to be received by the Employee.

   NOW, THEREFORE, the parties agree to the following amendment to the
Agreement:

   1.  Section 3 of the Agreement is amended by deleting Section 3 and
substituting a new Section 3 as follows:

   3.  Compensation.  For all services rendered by Employee under this
Agreement, the Employer shall pay the Employee compensation as follows:

        (a)  Prior to 2003.  For all services rendered by the Employee under
this Agreement during the calendar year 1999, the Employer shall pay the
Employee "Basic Compensation" of $120,000.  Commencing with the calendar year
2000, the 1999 Basic Compensation shall be increased, but not decreased, by
the greater of 3 percent or any increase in the Cost of Living in the same
proportion as the All Urban Consumer Price Index ("CPI-U") published by the
U.S. Department of Labor shall increase during the calendar year 1999.  The
aggregate compensation of the Employee paid or accrued for the year 1999,
including any increase which occurs by reason of the foregoing provisions,
shall become the Basic Compensation to be paid during the year 2000,
increased, but not decreased, by the greater of 3 percent or subsequent
changes in the CPI-U during such year.  Comparable adjustments, made in like
manner, shall be made in each ensuing year thereafter through 2002.

        (b)  During and after 2003.  For all services rendered by the Employee
under this Agreement during the calendar year 2003, the Employer shall pay
the Employee "Basic Compensation" of $145,000.  Commencing with the calendar
year 2004, the 2003 Basic Compensation shall be increased, but not decreased,
by the greater of 3 percent or any increase in the Cost of Living in the same
proportion as the CPI-U shall increase during the calendar year 2003.  The
aggregate compensation of the Employee paid or accrued for the year 2003,
including any increase which occurs by reason of the foregoing provisions,
shall become the Basic Compensation to be paid during the year 2004,
increased, but not decreased, by the greater of 3 percent or subsequent
changes in the CPI-U during such year.  Comparable adjustments, made in like
manner, shall be made in each ensuing year thereafter during the term of this
Agreement.

        (c)  Payments in Installments.  All Basic Compensation under this
Agreement shall be payable in installments in accordance with past practice.

        (d)  Lump Sum Payments.  All increases in compensation attributed to
the greater of 3 percent or any increase in the CPI-U during any calendar
year shall be payable in a lump sum as soon as the amount is determinable
following the end of such calendar year.

	2.  In all other respects, the provisions of the November 20, 1998
Agreement shall remain in full force and effect.



   IN WITNESS WHEREOF, the parties have executed this Amendment No. 1 on the
date first herein above set forth.



By:/S/ Kristine M. Fasano
    Kristine M. Fasano, Secretary


/S/ Raymond Di Paglia
    Raymond Di Paglia

  This November 15, 2002 Amendment to the November 20, 1998 Employment
Contract is acknowledged and approved this 15th day of November, 2002 by the
following members of the Board of Directors:


/S/ Kristine M. Fasano
    Kristine M. Fasano


/S/ Robert H. Jamerson
    Robert H. Jamerson


/S/ Tim Lynch
    Tim Lynch

Exhibit 31.1
CERTIFICATION

I, Raymond Di Paglia, certify that:

1.    I have reviewed this annual report on Form 10-K of National Properties
      Corporation;

2.    Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this report;

3.    Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this report;

4.    The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e)) for the registrant and have:

(a)   Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during
the period in which this report is being prepared;

(b)   (Reserved)

(c)   Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this
report based on such evaluation; and

(d)   Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the
registrant's most recent fiscal quarter (the registrant's fourth
fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial
reporting; and

5.    The registrant's other certifying officer(s) and I have disclosed,
based on our most recent evaluation of internal controls over financial
reporting, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
function):

(a)   All significant deficiencies and material weaknesses in the
design or operation of internal controls over financial reporting
which are reasonably likely to adversely affect the registrant's
ability to record, process, summarize and report financial
information; and

(b)   Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.


Date  __3/30/05__          By _____/S/__Raymond_Di_Paglia_________
                               Raymond Di Paglia, President and Chief
                               Executive Officer

Exhibit 31.2
CERTIFICATION

I, Kristine M. Fasano, certify that:

1.    I have reviewed this annual report on Form 10-K of National Properties
      Corporation;

2.    Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this report;

3.    Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this report;

4.    The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e)) for the registrant and have:

(a)   Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during
the period in which this report is being prepared;

(b)   (Reserved)

(c)   Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this
report based on such evaluation; and

(d)   Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the
registrant's most recent fiscal quarter (the registrant's fourth
fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial
reporting; and

5.    The registrant's other certifying officer(s) and I have disclosed,
based on our most recent evaluation of internal controls over financial
reporting, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
function):

(a)   All significant deficiencies and material weaknesses in the
design or operation of internal controls over financial reporting
which are reasonably likely to adversely affect the registrant's
ability to record, process, summarize and report financial
information; and

(b)   Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.


Date  __3/30/05__          By _____/S/__Kristine_M._Fasano__________
                                Kristine M. Fasano, Vice President,
                                Secretary and Treasurer


Exhibit 32.1
CERTIFICATION


CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of National Properties Corporation (the
"Company") on Form 10-K for the year ended December 31, 2004 as filed with
the Securities and Exchange Commission on March 30, 2005 (the "Form 10-K"),
we, the undersigned officers of the Company, certify, pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that:

1.	The Annual Report on Form 10-K fully complies with the
requirements of Section 13(a) or 15 (d) of the Securities
Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

2.	The information contained in the Annual Report on Form 10-K
fairly presents, in all material respects, the financial
condition and results of operations of the Company.


Date    3/30/05

                            By _____/S/__Raymond_Di_Paglia_________
                               Raymond Di Paglia, President and Chief
                               Executive Officer

and

                            By _____/S/__Kristine_M._Fasano__________
                                Kristine M. Fasano, Vice President,
                                Secretary and Treasurer