UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

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

For the fiscal year ended December 31, 2001

                                       OR

[   ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
       OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from               to               .

                          Commission File Number 1-9496

                        BNP RESIDENTIAL PROPERTIES, INC.
             (Exact name of registrant as specified in its charter)

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

301 S. College St., Suite 3850,  Charlotte, NC                    28202-6032
    (Address of principal executive offices)                      (Zip Code)

Registrant's telephone number, including area code  704/944-0100

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

         Title of each class          Name of each exchange on which registered:

Common Stock, par value $.01 per share           American Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:  None

         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 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]

         The aggregate market value of the voting stock held by non-affiliates
of the Registrant at March 15, 2002, was approximately $62,600,000.
         The number of shares of Registrant's Common Stock outstanding on March
15, 2002, was 5,761,131.

                       DOCUMENTS INCORPORATED BY REFERENCE
         Portions of the 2002 Proxy Statement for the Registrant's Annual
Meeting of Shareholders, to be filed with the Securities and Exchange Commission
within 120 days after the end of the year covered by this Form 10-K, are
incorporated by reference in Part III, Items 10, 11, 12 and 13 of this Form
10-K.

                                                   Index to exhibits at page 51
<PAGE>



                        BNP RESIDENTIAL PROPERTIES, INC.
                                TABLE OF CONTENTS
<TABLE>
<CAPTION>


   Item No.             FINANCIAL INFORMATION                                                 Page No.
      <S>              <C>                                                                        <C>
                        PART I
          1             Business                                                                    3
          2             Properties                                                                  5
          3             Legal Proceedings                                                           9
          4             Submission of Matters to a Vote of Security Holders                         9
          X             Executive Officers of the Registrant                                        9

                        PART II
          5             Market for Registrant's Common Equity and Related Stockholder              10
                        Matters
          6             Selected Financial Data                                                    11
          7             Management's Discussion and Analysis of Financial Condition                13
                        and Results of Operations
          7A            Quantitative and Qualitative Disclosures About Market Risk                 24
          8             Financial Statements and Supplementary Data                                25
          9             Changes in and Disagreements With Accountants on Accounting                25
                        and Financial Disclosure

                        PART III
         10             Directors and Executive Officers of the Registrant                         25
         11             Executive Compensation                                                     25
         12             Security Ownership of Certain Beneficial Owners and Management             25
         13             Certain Relationships and Related Transactions                             26

                        PART IV
         14             Exhibits, Financial Statement Schedules, and Reports on Form               26
                        8-K

</TABLE>
<PAGE>


                                     PART I

ITEM 1.  BUSINESS

Company Profile

         BNP Residential Properties, Inc. is a self-administered and
self-managed real estate investment trust with operations in North Carolina,
South Carolina and Virginia. Our primary activity is the ownership and operation
of apartment communities. We currently manage 31 multi-family communities
containing 6,969 units. Of these, we own 15 apartment communities containing
3,681 units. Third parties own the remaining 16 communities, containing 3,288
units, and we manage them on a contract basis. In addition to our apartment
communities, we own 42 restaurant properties that we lease to a third party
under a master lease on a triple-net basis.

         BNP Residential Properties, Inc. is structured as an UpREIT, or
"umbrella partnership real estate investment trust." We are the sole general
partner and own a controlling interest in BNP Residential Properties Limited
Partnership, through which we conduct all of our operations. We refer to this
partnership as the Operating Partnership. We refer to the limited partners of
the Operating Partnership as "minority unitholders" or "minority interest." We
currently own approximately 77% of the outstanding Operating Partnership units.

         As of March 15, 2002, we have 5,761,131 shares of common stock and
1,705,897 Operating Partnership minority units outstanding. We have
approximately 1,500 shareholders of record. We estimate that there are
approximately 6,000 beneficial owners of our common stock. Our shares are listed
on the American Stock Exchange, trading under the symbol "BNP." We also have
227,273 shares of preferred stock outstanding, held by one investor.

         We have 185 employees, including management, accounting, legal,
acquisitions, development, property management, leasing, maintenance and
administrative personnel. Our executive offices are located at 301 South College
Street, Suite 3850, Charlotte, North Carolina 28202-6032, and our telephone
number is 704/944-0100.

History and Development of BNP Residential Properties, Inc.

         The company was originally incorporated in the state of Delaware in
1987. Beginning in 1987, we elected to be taxed as a REIT under the Internal
Revenue Code. As such, we generally are not, and will not be, subject to federal
or state income taxes on net income. As a REIT, we are subject to a number of
organizational and operational requirements, including a requirement that we
currently distribute at least 90% of our REIT taxable income as dividends.

         In 1987, we purchased 47 existing restaurant properties located in
North Carolina and Virginia for an aggregate purchase price of $43.2 million.
From 1987 through 1992, our assets primarily consisted of these 47 restaurant
properties. During this period we operated as an externally administered and
externally managed REIT. We leased the restaurants to Boddie-Noell Enterprises,
Inc. ("Enterprises"), a Hardee's franchisee, under a master lease on a
triple-net basis. A master lease is a single lease that covers multiple
properties, while a triple-net lease is one where the lessee pays all operating
expenses, maintenance, property insurance and real estate taxes.

         In 1993, we began to change our focus from restaurant properties to
apartment communities, with the objective of increasing funds from operations
and enhancing shareholder value. During 1993 through 1996, we acquired five
apartment communities. Four of these apartment communities are located in North
Carolina, and one is located in Virginia. In 1994 we acquired BT Venture
Corporation, an integrated real estate management, development and acquisition
company, and began operating as a self-administered and self-managed REIT.

                                       3
<PAGE>

         In 1997, we reincorporated in the state of Maryland and reorganized to
our present UpREIT structure. Through our UpREIT structure, we can acquire
properties in exchange for Operating Partnership units and trigger no immediate
tax obligation for certain sellers. We believe that our conversion to an UpREIT
enables us to acquire properties not otherwise available or at lower prices
because of the tax advantages to certain property sellers of receiving limited
partnership interests instead of cash as consideration. Minority unitholders
will generally be able to redeem their units for cash or, at our option as
general partner, for shares of common stock of the company on a one-for-one
basis. Distributions of cash from the Operating Partnership are allocated
between the REIT and the minority unitholders based on their respective unit
ownership.

         In December 1997, we completed a common stock offering and issued 2.7
million shares of common stock. We used proceeds of this offering to retire
long-term debt. This common stock offering almost doubled the number of the
company's common shares outstanding.

         During 1997 and 1998, we acquired nine apartment communities, located
in North Carolina, by issuing Operating Partnership units. In January 1999, we
acquired an apartment community, located in North Carolina, in a direct purchase
by paying cash and assuming long-term debt. In late December 2000, we acquired
one additional apartment community, located in North Carolina, in a direct
purchase. We combined this community with our Oak Hollow Apartments, and operate
the combined properties as one community

         Restaurant sales and restaurant rental income have been declining since
1992, reflecting the increased competition and widespread price discounting in
the fast food industry. In August 1997, CKE Restaurants, Inc. purchased Hardee's
Food Systems, Inc., the restaurant franchisor. CKE operates, franchises, or owns
interests in approximately 3,800 restaurants, including Hardee's and Carl's Jr.
restaurants. While the rate of decline in restaurant sales has slowed in recent
years, we have not seen improvement in restaurant sales to date. During 1999
through 2001, we sold five restaurants to Enterprises, the lessee, under an
agreement that allows Enterprises to close up to seven restaurants and buy them
back for no less than net carrying value.

         In April 2000, we changed the name of the company to BNP Residential
Properties, Inc. We believe the new name more clearly reflects our business
activities and eliminates the confusion that existed because of the similarity
of our former name to that of Boddie-Noell Enterprises.

Recent Developments

         Overall, the results for 2001 were quite positive. However, it is
important to note that, during the year, lower interest rates and a substantial
increase in fee income masked lackluster apartment performance. The impact of
over-building, a general economic slowdown, and surprisingly strong sales of
modestly priced homes all combined to put persistent pressure on our apartment
markets. While we were able to achieve small increases in rental rates during
2001, our economic occupancy declined from near 96% to slightly over 94%.

         During the fourth quarter of 2001, we expanded our third-party
management activities by entering into contracts to manage 12 multi-family
communities. On January 1, 2002, we added a contract to manage one additional
community.

         In late December 2001, we issued 227,273 shares of Series B Cumulative
Preferred Stock for proceeds of $2.5 million.

Business Strategy

         Our principal investment objectives are to provide our shareholders
with current income and to increase the value of the company's common stock. We
focus on increasing long term growth in funds from operations and funds
available for distribution per share, and on increasing the value of our
portfolio

                                       4
<PAGE>

through effective management, growth, financing, and investment strategies. We
expect to implement our strategies primarily through the acquisition, operation,
leasing and management of apartment communities.

         We seek to acquire apartment properties in areas within the
southeastern United States exhibiting substantial economic growth and an
expanding job base in which we can establish a significant market presence in
the apartment community marketplace. Through our UpREIT structure, we have the
ability to acquire apartment communities by issuing Operating Partnership units
in tax-deferred exchanges with owners of such properties. We expect that we will
finance future acquisitions of apartment communities principally with Operating
Partnership units as well as loans and funds from additional offerings of common
stock, preferred stock, or joint venture arrangements.

         We will selectively consider opportunities to develop new apartment
communities, to add additional units to existing communities, and to acquire and
rehabilitate older apartment communities. Members of our management team have
directed over $115 million of development or redevelopment projects, including
13 apartment communities containing over 2,500 apartment units. This development
and redevelopment experience will enable us to build additional apartment
communities and to rehabilitate existing communities when economic conditions
and available capital make such opportunities attractive.

         Our residents are typically mid- to high-end "residents by
necessity"--individuals or families with moderate to high incomes that live in
apartments by necessity. They include retirees, young professionals,
manager-level white-collar workers, medical personnel, teachers, members of the
military and young families.

         We strongly emphasize on-site property management. We seek
opportunities and have developed internal programs to increase average occupancy
rates, reduce resident turnover, raise rents and control costs. On-site
community managers report directly to regional managers who are locally based.
This flat organization provides for efficient staffing levels, reduces overhead
expenses, and enables us to respond to the needs of residents and on-site
employees. In an effort to reduce long-term operating costs, we regularly review
each apartment community and promptly attend to maintenance and recurring
capital needs. Our employees supervise all renovation and repair activities,
which are generally completed by outside contractors.

         We continue to seek additional sources of revenue at our existing
apartment communities. These include water submetering and marketing of cable
television, high-speed Internet service, and telephone services.

ITEM 2.  PROPERTIES

Apartment Communities

         Through the Operating Partnership, we own and operate 15 apartment
communities consisting of 3,681 apartment units. For the fourth quarter of 2001,
our average economic occupancy rate was 93.1%, and average monthly revenue per
occupied unit was $741. The average age of the apartment communities is
approximately 10.5 years. Our apartment communities are generally wood framed,
two and three story buildings, with exterior entrances, individually metered gas
and electric service, submetered water service, and individual heating and
cooling systems.

         Our apartment units are comprised of 35.4% one-bedroom units, 57.7%
two-bedroom units, and 6.9% three-bedroom units. The units average 986 square
feet in area and are well equipped with modern appliances and other
conveniences. Our communities generally include swimming pools, tennis courts
and clubrooms, and most have exercise facilities. The communities are held
subject to loans, discussed in the notes to the financial statements.

         The table on page 7 summarizes information about each of our apartment
communities.

                                       5
<PAGE>

Restaurant Properties

         We lease the 42 restaurant properties on a triple-net basis to
Enterprises under a master lease. The master lease, as amended in 1995, has a
primary term expiring in December 2007, but grants Enterprises three five-year
renewal options. Enterprises pays annual rent equal to the greater of the
specified minimum rent or 9.875% of food sales from the restaurants. Under
certain conditions, and subject to our approval, Enterprises has the right to
substitute another restaurant property for a property covered by the lease.
After December 31, 2007, Enterprises has the right to terminate the lease on up
to five restaurant properties per year by offering to purchase them under
specified terms. In addition, we entered into a separate agreement that allows
Enterprises to purchase, under specified terms, up to seven restaurant
properties deemed non-economic for no less than net carrying value.

         Since 1999, we have sold five restaurants deemed non-economic to
Enterprises. After the sale of the fifth such property in April 2001, the
minimum rent on the remaining 42 restaurants is approximately $4.0 million per
year.

         The average acquisition cost of the original 47 restaurant properties
was approximately $920,000 per property. At December 31, 2001, the net carrying
value of the 42 restaurant properties was $28.8 million (an average of $685,000
per property).

         The restaurant properties are operated by Enterprises as Hardee's
restaurants pursuant to franchise agreements with Hardee's Food Systems, Inc.
These agreements require that the properties conform to a standard design
specified by Hardee's. The current design consists of a one-story brick, stucco
or wood building that embodies a contemporary style with substantial plate glass
window areas. The buildings average 3,400 square feet and are located on sites
averaging 1.2 acres. The buildings are suitable for conversion to a number of
uses, but the exteriors would have to be substantially modified prior to their
use in non-restaurant applications. Hardee's owns a design patent on certain
elements of the building and requires franchisees to make certain exterior
modifications if the location is discontinued as a Hardee's restaurant.

         Enterprises is responsible for all aspects of the operation,
maintenance and upkeep of the restaurant properties. In addition, Enterprises is
responsible for the cost of any improvement, expansion, remodeling or
replacement required to keep the properties competitive or in conformity with
Hardee's building standards.

         The locations of our restaurant properties are listed on page 8 of this
Annual Report.

Property Insurance

         We carry insurance coverage on our properties of types and in amounts
that we believe are in line with coverage customarily obtained by owners of
similar properties. In addition, properties that we manage but do not own are
covered by insurance policies under which we are a named insured. Our restaurant
properties are subject to an indemnification agreement whereby Enterprises, the
lessee, is responsible for all claims, including those relating to environmental
matters, arising from a restaurant property. Enterprises is required to provide
insurance, which identifies the company as a named insured, on each restaurant
property.

         We believe all of our properties are adequately insured. There are
types of losses, however, such as from wars, acts of terrorism or catastrophic
acts of nature, for which we cannot obtain insurance at all or at a reasonable
cost. In the event of an uninsured loss or a loss in excess of our insurance
limits, we could lose both the revenues generated from the affected property and
the capital we have invested in the affected property. It is possible, depending
on the specific circumstances of the affected property, that we could be liable
for any mortgage indebtedness or other obligations related to the property. Any
such loss could materially and adversely affect our business and financial
condition and results of operations.

                                       6
<PAGE>


<TABLE>
<CAPTION>

                     INFORMATION ABOUT APARTMENT COMMUNITIES

                                                                              Total       Apartment      Weighted
                                      No. of                                Rentable      Unit Type       Average
                                       Apt.    Year      Date      Total      Area      1     2     3    Apt. Size

    Community           Location       Units   Compl   Acquired   Acreage   (Sq. Ft.)   BR    BR    BR   (Sq. Ft.)
------------------- ------------------ ------ -------- ---------- --------- ---------- ----- ----- ----- ----------

<S>                <C>                  <C>      <C>      <C>        <C>     <C>       <C>   <C>    <C>     <C>
Abbington Place     Greensboro, NC       360      1997     12/97      37.4    400,728    96   216    48      1,113
Allerton Place      Greensboro, NC       228      1998      9/98      19.2    241,842    54   126    48      1,061
Chason Ridge        Fayetteville, NC     252      1994      1/99      29.1    246,886    56   164    32        980
Harris Hill         Charlotte, NC        184      1988     12/94      18.4    167,920    67   117     -        912
Latitudes           Virginia Beach,      448      1989     10/94      24.9    358,700   269   159    20        800
                    VA
Madison Hall        Clemmons, NC         128      1997      8/98      10.5    110,352    42    86     -        862
Oak Hollow          Cary, NC             221      1983      7/98      30.0    215,960    56   165     -        982
Oak Hollow Ph 2     Cary, NC             240      1986     12/00      26.8    220,840   160    80     -        920
Oakbrook            Charlotte, NC        162      1985      6/94      16.4    178,668    32   120    10      1,100
Paces Commons       Charlotte, NC        336      1988      6/93      24.8    322,046   154   142    40        958
Paces Village       Greensboro, NC       198      1988      4/96      15.5    167,886    88   110     -        848
Pepperstone         Greensboro, NC       108      1992     12/97      10.1    113,076     -   108     -      1,047
Savannah Place      Winston-Salem, NC    172      1991     12/97      15.4    182,196    44   128     -      1,059
Summerlyn Place     Burlington, NC       140      1998      9/98      12.1    156,756    48    84     8      1,120
Waterford Place     Greensboro, NC       240      1997     12/97      20.6    277,296    72   120    48      1,155
Woods Edge          Durham, NC           264      1985      6/98      32.4    268,620    66   198     -      1,018

Chrysson Community under purchase option(2):
Brookford Place     Winston-Salem, NC    108      2000         -       6.3    103,392    36    72     -        957

<FN>
(1)      Average economic occupancy is calculated as gross potential rent less vacancy, divided by gross potential rent.
(2)      To be acquired upon attainment of certain performance targets.
</FN>
</TABLE>


<TABLE>
<CAPTION>

                     INFORMATION ABOUT APARTMENT COMMUNITIES

                                                Average
                      Average Economic      Monthly Revenue
                     Occupancy Percent     per Occupied Unit
                            (1)
    Community       2001    2000   1999   2001    2000   1999
------------------- ------ ------- ------ ------ ------- ------

<S>                 <C>     <C>    <C>    <C>     <C>    <C>
Abbington Place      95.9    96.3   92.9   $785    $764   $757
Allerton Place       95.4    95.3   94.9    773     778    788
Chason Ridge         96.0    96.2   95.8    682     659    659
Harris Hill          93.9    94.5   96.7    716     728    733
Latitudes            97.1    97.5   97.8    774     732    684

Madison Hall         92.9    94.4   92.6    605     612    645
Oak Hollow           89.2    96.6   95.5    732     722    717
Oak Hollow Ph 2      89.3       -      -    689       -      -
Oakbrook             92.3    95.6   95.3    783     783    779
Paces Commons        91.1    94.8   95.9    709     717    710
Paces Village        93.0    96.2   93.1    689     666    656
Pepperstone          97.3    96.5   96.9    695     681    681
Savannah Place       93.8    93.3   92.8    712     749    768
Summerlyn Place      93.6    96.1   93.2    803     798    804
Waterford Place      94.2    95.9   95.3    861     857    846
Woods Edge           95.3    97.2   94.4    776     751    731

Chrysson Community under purchase option(2):
Brookford Place                 -      -      -       -      -

<FN>
(1)      Average economic occupancy is calculated as gross potential rent less vacancy, divided by gross potential rent.
(2)      To be acquired upon attainment of certain performance targets.
</FN>
</TABLE>

                                       7
<PAGE>


                         RESTAURANT PROPERTIES LOCATIONS




Virginia
(28 properties)

Ashland
  106 North Washington

Blackstone
  North Main Street

Bluefield
  701 South College Street

Chester
  12401 Jefferson Davis Hwy.

Clarksville
  916 Virginia Avenue

Clintwood
  U.S. Highway 83

Dublin
  208 College Avenue

Franklin
  105 North Mechanic Street

Galax
  425 Main Street

Hopewell
  East City Point Road

Lebanon
  Route 1

Lynchburg
  8411 Timberlake Road
  2231 Langhorne road

Norfolk
  3908 Princess Anne Road


Orange
  200 Madison Road

Petersburg
  1865 Crater Road, South

Richmond
  921 Myers Street
  6850 Forest Hill Avenue
  7917 Midlothian Pike

Roanoke
  4407 Abenham Avenue SW
  3401 Hollins Road

Rocky Mount
  322 Tanyard Road, NE

Smithfield
  Smithfield Shopping Center

Staunton
  1201 Greenville Avenue

Verona
  160 East Route 612

Virginia Beach
  4261 Holland Road
  1951 Lynnhaven Parkway

Wise
  US Highway 23, Business


North Carolina
(14 properties)

Burlington
  2712 Alamance Road

Denver
  Route 1

Eden
  202 West Kings Highway

Fayetteville
  3505 Ramsey Street
  360 North Eastern Blvd.

Gastonia
  816 East Franklin Street

Hillsborough
  380 S. Churton Street

Kinston
  200 West Vernon Street
  1404 Richlands Street

Newton
  South Ashe & North "D"

Siler City
  Chatham Shopping Center

Spring Lake
  400 South Main Street

Thomasville
  1116 East Main Street
  Randolph Street

                                       8
<PAGE>



ITEM 3.  LEGAL PROCEEDINGS

         We are a party to a variety of legal proceedings arising in the
ordinary course of business. We do not expect any of these matters, individually
or in aggregate, to have a material adverse impact on the company.

         In the event a claim was successful, we believe that we are adequately
covered by insurance and indemnification agreements. We have insurance coverage
on each of our apartment communities. Our restaurant properties are subject to
an indemnification agreement whereby Enterprises, the lessee, is responsible for
all claims arising from a restaurant property. In addition, Enterprises is
required to provide insurance, which identifies the company as a named insured,
on each restaurant property. Each apartment property that we manage but do not
own is covered by an insurance policy under which we are a named insured.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         No matters were submitted to a vote of security holders during the
fourth quarter of fiscal year 2001.

ITEM X.  EXECUTIVE OFFICERS OF THE REGISTRANT

         We have set forth below a listing and brief biography of each of the
executive officers of the company.
<TABLE>
<CAPTION>

            Name                Age                         Position                       Officer Since
------------------------------ ------- --------------------------------------------------- ------------------
<S>                             <C>       <C>                                              <C>
D. Scott Wilkerson               44        Director, President and                          October 1994
                                           Chief Executive Officer
Philip S. Payne                  50        Director, Executive Vice President,              October 1994
                                           Treasurer and Chief Financial Officer
Pamela B. Bruno                  48        Vice President, Controller and                   October 1994
                                           Chief Accounting Officer
Douglas E. Anderson              54        Vice President, Secretary                        April 1987
</TABLE>

         D. Scott Wilkerson--Director, President and Chief Executive Officer.
Mr. Wilkerson joined BT Venture Corporation in 1987 and served in various
officer level positions, including Vice President of Administration and Finance
and Vice President for Acquisitions and Development, before becoming President
of BT Venture in January 1994. He was named our Chief Executive Officer in April
1995 and a Director in December 1997. From 1980 to 1986, Mr. Wilkerson was with
Arthur Andersen LLP, in Charlotte, North Carolina, serving as tax manager from
1985 to 1986. His specialization was in the representation of real estate
syndicators, developers and management companies. Mr. Wilkerson received a BS
degree in accounting from the University of North Carolina at Charlotte in 1980.
He is a licensed certified public accountant and licensed real estate broker. He
serves on the boards of directors of the National Multi Housing Council and the
Apartment Association of North Carolina, and he is a past president of the
Charlotte Apartment Association. He is active in various professional, civic and
charitable activities.

         Philip S. Payne--Director, Executive Vice President, Treasurer and
Chief Financial Officer. Mr. Payne joined BT Venture Corporation in 1990 as Vice
President of Capital Market Activities and became Executive Vice President and
Chief Financial Officer of BT Venture in January 1993. He was named our
Treasurer in April 1995 and a Director in December 1997. From 1987 to 1990, he
was a principal in Payne Knowles Investment Group, a financial planning firm.
From 1983 to 1987, he was a registered representative with Legg Mason Wood
Walker. From 1978 to 1983, Mr. Payne practiced law, and he currently maintains
his license to practice law in Virginia. He received a BS degree from the
College of

                                       9
<PAGE>

William and Mary in 1973 and a JD degree in 1978 from the same institution. He
serves on the board of directors of the National Multi Housing Council and is a
member of the Urban Land Institute.

         Pamela B. Bruno--Vice President, Controller and Chief Accounting
Officer. Ms. Bruno joined BT Venture Corporation in 1993 as Controller and
became our Vice President and Chief Accounting Officer in October 1994. From
1984 to 1993, Ms. Bruno was with Ernst & Young LLP, in Charlotte, North
Carolina, and Anchorage, Alaska, serving as audit manager from 1987 through
1993. She received a BS degree in accounting from the University of North
Carolina at Charlotte in 1984. She is a licensed certified public accountant,
and is a member of the North Carolina Association of Certified Public
Accountants.

         Douglas E. Anderson--Vice President and Secretary. Mr. Anderson has
served as Vice President and Secretary since our inception in 1987. He has been
with Enterprises since 1977 and is currently a director, executive vice
president and secretary of Enterprises. Mr. Anderson is also president of BNE
Land and Development Company, the real estate development division of
Enterprises. He serves as a director of Wachovia Bank of Rocky Mount, North
Carolina. In addition, he serves on the Board of Visitors of the Lineberger
Comprehensive Cancer Center in Chapel Hill, North Carolina. He received a BS
degree in finance and accounting from the University of North Carolina at Chapel
Hill in 1970.


                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market Information and Dividends

         Our common stock is traded on the American Stock Exchange under the
symbol "BNP." There were approximately 1,500 shareholders of record on March 15,
2002. The table below shows, for the periods indicated, the range of high, low,
and closing sale prices of our common stock as reported by the American Stock
Exchange and the dividends paid per share. As of March 15, 2002, the closing
price of the company's common stock was $11.40 per share.
<TABLE>
<CAPTION>

                                                                                               Dividends
                                                          Stock Price                             Paid
                                            High              Low              Close           Per Share
                                      ----------------- ----------------- ----------------- -----------------
<S>                                        <C>                <C>              <C>                <C>
2001
   Fourth quarter                           $10.88             $9.75            $10.31             $0.31
   Third quarter                             11.30              9.15             10.00              0.31
   Second quarter                            10.65              8.75             10.02              0.31
   First quarter                              9.95              7.75              9.10              0.31

2000
   Fourth quarter                           $ 8.75             $7.25            $ 7.50             $0.31
   Third quarter                              9.125             8.00              8.50              0.31
   Second quarter                             9.25              7.875             8.375             0.31
   First quarter                             10.625             7.75              7.75              0.31
</TABLE>

         We have paid regular quarterly dividends to holders of our common stock
since our inception, and we intend to continue to do so. We anticipate that we
will pay all dividends from current funds from operations. We expect
distributions to substantially exceed the 90% annual distribution requirement
for a REIT.

         We have a dividend reinvestment plan that is available to all
shareholders of record. Under this plan, as amended in July 1996, the plan
administrator, First Union National Bank of North Carolina,

                                       10
<PAGE>

reinvests dividends on behalf of plan participants in our common stock. First
Union will either issue new shares or purchase shares on the open market, at our
direction. In addition, shareholders who participate in the plan may elect to
make direct cash investments or supplement their reinvestment program with
additional cash investments of any amount from $25 to $10,000 per quarter.
Participants do not pay any commissions on stock purchased under the plan.

Sales of Unregistered Securities

         In December 2001, we issued 227,273 shares of our Series B Preferred
Stock to a single investor. These shares were issued pursuant to the exemption
from the registration requirements of the Securities Act of 1933 set forth in
Section 4(2) of the Act. The purchaser was an accredited investor, and offers
were not accompanied by any form of general solicitation.

ITEM 6.  SELECTED FINANCIAL DATA

         We present below selected financial information. We encourage you to
read the financial statements and the notes accompanying the financial
statements in this Annual Report. This information is not intended to be a
replacement for the financial statements.

         This financial information includes all apartment communities and
restaurant properties that we owned.
<TABLE>
<CAPTION>

                                                              Year ended December 31
                                          2001          2000           1999          1998           1997
                                      ------------- -------------- ------------- -------------- -------------
                                                (in thousands, except per share and property data)
<S>                                  <C>           <C>            <C>           <C>            <C>
Operating data:
Revenue:
  Apartment rental income             $   30,867    $   29,269     $   28,608    $   21,925     $   11,197
  Restaurant rental income                 4,053         4,162          4,339         4,500          4,500
  Equity and other income                  1,342           427            510           715            555
                                      ------------- -------------- ------------- -------------- -------------
Total revenue                             36,262        33,858         33,457        27,140         16,251
Expenses:
  Depreciation                             7,828         7,156          6,956         5,406          2,686
  Amortization                               596           579            569           531            580
  Apartment operations                    11,182         9,766          9,395         6,817          3,415
  Administrative costs                     2,956         2,391          2,380         1,697          1,131
  Costs of terminated
      equity transaction                       -           237              -             -              -
  Interest                                11,100        11,151         10,703         8,209          6,487
                                      ------------- -------------- ------------- -------------- -------------
Total expenses                            33,663        31,280         30,003        22,660         14,299
                                      ------------- -------------- ------------- -------------- -------------
Income before minority
  interest of Unitholders                  2,599         2,578          3,454         4,480          1,953
Minority interest in
  Operating Partnership                      597           595            728           742             39
                                      ------------- -------------- ------------- -------------- -------------
Income before
  extraordinary item                  $    2,002    $    1,983     $    2,726    $    3,738     $    1,913
                                      ============= ============== ============= ============== =============
Net income                            $    1,902    $    1,983     $    2,726    $    3,686     $    1,730
                                      ============= ============== ============= ============== =============
Income available to
  common shareholders                 $    1,900    $    1,983     $    2,726    $    3,686     $    1,730
                                      ============= ============== ============= ============== =============
Basic earnings per share              $     0.33    $     0.35     $     0.46    $     0.62     $     0.54
                                      ============= ============== ============= ============== =============
Diluted earnings per share            $     0.33    $     0.35     $     0.46    $     0.62     $     0.52
                                      ============= ============== ============= ============== =============
Dividends per share                   $     1.24    $     1.24     $     1.24    $     1.24     $     1.24
                                      ============= ============== ============= ============== =============
</TABLE>


                                       11
<PAGE>
<TABLE>
<CAPTION>

                                                              Year ended December 31
                                          2001          2000           1999          1998           1997
                                      ------------- -------------- ------------- -------------- -------------
                                                (in thousands, except per share and property data)
<S>                                  <C>           <C>            <C>           <C>            <C>
Balance Sheet data:
Real estate assets (before
  accumulated depreciation)
  Apartment communities               $  221,589    $  217,818     $  203,365    $  188,539     $  128,050
  Restaurant properties                   39,159        39,702         40,545        43,205         43,205
Real estate assets, net                  219,997       224,705        217,984       212,192        157,108
Total assets                             225,385       230,691        224,270       221,121        166,112
Total debt                               162,330       163,612        150,883       140,524         93,436
Minority interest                         18,174        19,737         21,317        20,681         12,346
Shareholders' equity                      42,034        44,548         49,896        56,749         55,785

Apartment Property data:
Apartment communities
  owned at year end                           15            15             15            14              9
Apartment units owned
  at year end                              3,681         3,680          3,440         3,188          2,208
Average apartment
  economic occupancy                        93.9%         95.9%          95.1%         94.7%          95.3%
Average monthly revenue
  per occupied unit                   $      744    $      737     $      729    $      737     $      698

Other data:
Earnings before interest, taxes,
   depreciation and
   amortization (1)                   $   22,123    $   21,463     $   21,682    $   18,626     $   11,706
Funds from operations (1)                 10,831        10,139         10,816        10,292          4,916
Funds available
  for distribution (1)                     9,696         9,243          9,868         9,660          4,844
Net cash provided by
  (used in):
  Operating activities                $   10,729    $   10,854     $   10,919    $    9,420     $    5,007
  Investing activities                    (2,401)      (13,407)           111       (43,862)       (48,095)
  Financing activities                    (7,966)        3,177        (11,089)       32,473         44,705
Weighted average number of
  common shares outstanding                5,717         5,708          5,973         5,924          3,180
Weighted average number of
  Operating Partnership minority
  units outstanding                        1,706         1,711          1,601         1,192             81
<FN>
(1)   Earnings before interest, taxes, depreciation and amortization, Funds from
      operations, and Funds available for distribution amounts reflect
      measurements for the Operating Partnership (before deduction for minority
      interest).

      Earnings before interest, taxes, depreciation and amortization is
      frequently referred to as "EBITDA." This measurement is derived directly
      from amounts included in the Statement of Operations. We consider EBITDA
      to be a useful measurement of operations performance before the impact of
      financial structure and significant non-cash charges.

      Funds from operations is frequently referred to as "FFO." FFO is defined
      by the National Association of Real Estate Investment Trusts ("NAREIT") as
      "net income (computed in accordance with generally accepted accounting
      principles), excluding gains (or losses) from sales of property, plus
      depreciation


                                       12
<PAGE>

      and amortization, and after adjustments for unconsolidated
      partnerships and joint ventures."

      Funds available for distribution is frequently referred to as "FAD." We
      calculate FAD as funds from operations plus non-cash expense for
      amortization of loan costs, less recurring capital expenditures.

      We consider funds from operations and funds available for distribution to
      be useful in evaluating potential property acquisitions and measuring the
      operating performance of an equity REIT. Together with net income and cash
      flows, FFO and FAD provide investors with additional measures to evaluate
      the ability of the REIT to incur and service debt, and to fund
      acquisitions and other capital expenditures. FFO and FAD do not represent
      net income or cash flows from operations as defined by generally accepted
      accounting principles. You should not consider funds from operations or
      funds available for distribution:

        o  to be alternatives to net income as reliable measures of the
           company's operating performance; or
        o  to be alternatives to cash flows as measures of liquidity.

      Funds from operations and funds available for distribution do not measure
      whether cash flow is sufficient to fund all of our cash needs, including
      principal amortization, capital improvements and distributions to
      shareholders. FFO and FAD do not represent cash flows from operating,
      investing or financing activities as defined by generally accepted
      accounting principles. Further, FFO and FAD as disclosed by other REITs
      might not be comparable to our calculation of FFO or FAD.
</FN>
</TABLE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

         This Annual Report contains forward-looking statements within the
meaning of federal securities law. You can identify such statements by the use
of forward-looking terminology, such as "may," "will," "expect," "anticipate,"
"estimate," "continue" or other similar words. These statements discuss future
expectations, contain projections of results of operations or of financial
condition or state other "forward-looking" information.

         Although we believe that our plans, intentions, and expectations
reflected in or suggested by these forward-looking statements are reasonable, we
cannot assure you that we will achieve our plans, intentions or expectations.
When you consider such forward-looking statements, you should keep in mind the
following important factors that could cause our actual results to differ
materially from those contained in any forward-looking statement:

o  our markets could suffer unexpected increases in the development of
   apartment, other rental, or competitive housing alternatives;
o  our markets could suffer unexpected declines in economic growth or an
   increase in unemployment rates;
o  general economic conditions could cause the financial condition of a large
   number of our tenants to deteriorate;
o  we may not be able to lease or re-lease apartments quickly or on as
   favorable terms as under existing leases;
o  we may have incorrectly assessed the environmental condition of our
   properties;
o  revenues from our third-party apartment property management activities
   could decline, or we could incur unexpected costs in performing these
   activities;
o  an unexpected increase in interest rates could increase our debt service
   costs;
o  we may not be able to meet our long-term liquidity requirements on
   favorable terms; and
o  we could lose key executive officers.

         Given these uncertainties, we caution you not to place undue reliance
on forward-looking statements. We undertake no obligation to publicly release
the results of any revision to these forward-

                                       13
<PAGE>

looking statements that may be made to reflect any future events or
circumstances or to reflect the occurrence of unanticipated events.

         You should read this discussion in conjunction with the financial
statements and notes thereto included in this Annual Report.

Results of Operations

2001 Compared to 2000

Revenues

         Total revenue in 2001 was $36.3 million, an increase of 7.1% compared
to 2000. Apartment rental income accounted for 85.1% of our total revenue in
2001 compared to 86.4% in 2000.

         Apartment rental income in 2001 was $30.9 million, an increase of 5.5%,
or $1.6 million, compared to 2000. This increase is attributable to $1.8 million
rental income at Oak Hollow Apartments Phase 2, which we acquired in December
2000. On a same units basis (for the 3,441 units that we owned throughout all of
both years), apartment rental income declined by 0.5% in 2001 compared to 2000.

         On a same units basis, average economic occupancy was 94.2% in 2001
compared to 95.9% in 2000, and average monthly revenue per occupied apartment
was $748 compared to $737 in 2000. Average economic occupancy for all apartments
(including Oak Hollow Apartments Phase 2, which we acquired in December 2000)
was 93.9% in 2001 compared to 95.9% in 2000, and average monthly revenue per
occupied apartment was $744 in 2001 compared to $737 in 2000.

         With the exception of Virginia Beach, Virginia, our apartment markets
weakened during 2001, and remain weak. Slight increases in revenue per occupied
apartment were insufficient to overcome the impact of declines in occupancy.
While we remain confident in the long-term prospects for our markets and our
properties, we do not foresee any significant improvement in apartment
operations over the near term. The weakness in the markets is largely the result
of overbuilding. While construction activity has slowed recently, it will take
some time for the excess supply of new apartments to be absorbed. Until then,
the competition for residents will remain intense.

         Declining interest rates and, more recently, a general economic
slowdown have also had an impact on apartment occupancy and rental rates. For
those with jobs, lower interest rates have made single-family home ownership far
more affordable. On the other hand, the general economic slowdown has led to
significant job losses. While the underlying explanation as to why declining
interest rates or a general economic slowdown impact apartment operations is
quite different, both have the effect of reducing the pool of potential
apartment residents, which, in turn, puts negative pressure on occupancy and
rental rates.

         Restaurant rental income in 2001 was $4.1 million, a decrease of 2.6%
compared to 2000. Restaurant rental income accounted for 11.2% of our total
revenue in 2001 compared to 12.3% in 2000. The decrease in restaurant rental
income is due to the sales of one restaurant property in April 2001 and one
restaurant property in June 2000. Through 2001, we have sold five of the
original 47 restaurants to Boddie-Noell Enterprises, Inc., the lessee, under the
non-economic clause of an agreement that allows Enterprises to close up to seven
restaurants and buy them back for no less than net carrying value.

         Restaurant rental income during both 2001 and 2000 was the minimum rent
specified in the lease agreement. Under our master lease with Enterprises,
restaurant rental income payments are the greater of specified minimum rent or
9.875% of food sales. Minimum rent is currently set at $335,000 per month, and
is reduced by approximately $8,000 per month, or $96,000 per year, for each
restaurant that is sold. "Same store" sales (for the 42 restaurants that were
open through all of both years) declined by 3.5% in 2001 compared to 2000. Sales
at these restaurants would have to increase by approximately 11% before we

                                       14
<PAGE>

would receive rent exceeding the minimum rent. We do not expect restaurant
rental income to exceed the minimum in 2002.

         As we discussed in the notes to our financial statements, effective
January 1, 2001, we acquired the minority interest in BNP Management, Inc. (the
"Management Company"). For 2001, we included the revenues from management
services for three third-party owned properties in our consolidated revenue
amounts. In 2000, we reported (net) equity income related to activities of the
Management Company. This change in basis of presentation has not had a
significant impact on our financial position, overall operating results or cash
flows.

         During the fourth quarter of 2001, we expanded our third-party
management activities by entering into contracts to manage 12 multi-family
communities. On January 1, 2002, we added a contract to manage one additional
community. We expect that third-party management contracts will generate
approximately $1 million in management fee income in 2002.

         Management fee income totaled $529,000 in 2001, including $123,000
generated from new contracts during the fourth quarter. If the former Management
Company activities had been reflected on a consolidated basis in our 2000
financial statements, equity income as reported would have been replaced with
management fee income of approximately $457,000 in 2000.

         Interest and other income includes approximately $562,000 non-routine
income in 2001. Recurring interest and other income was generally comparable to
2000 amounts. The non-routine income items in 2001 are as follows:

o    $351,000 shared appreciation related to our participating loan agreement
     with The Villages of Chapel Hill Limited Partnership, discussed below;
o    $70,000 fee income for arranging refinancing at The Villages of Chapel Hill
     and The Villages of Chapel Hill - Phase 5, two managed apartment
     properties; and
o    $141,000 miscellaneous income, for the refund of 1997 and 1998 state
     franchise taxes.

         Effective July 1, 2001, we modified our participating loan agreement
with The Villages of Chapel Hill Limited Partnership. This modification
established a $950,000 "fixed portion" of our participation in the increase in
value of the property and extended the period for our 25% participation in
increased rental revenue and increase in value of the property to the earlier of
July 2011 or sale or refinance of the property. We received an initial payment
of $325,883 of the fixed portion in July 2001, which we reflected in the
financial statements as other income. Required payment of the fixed portion is
subject to cash flow from The Villages property, calculated every six months, as
defined in the agreement. At December 31, 2001, payment of $25,681 was currently
due and was received in January 2002. Interest on the outstanding fixed portion
accrues at the greater of a prime rate or 8%, payable monthly. Because the
timing of payment of the remaining fixed portion is subject to cash flow and
therefore uncertain, we have provided a reserve for collection of this
receivable, and we will recognize revenue as it is realized.

Expenses

         Total expenses, including non-cash charges for depreciation and
amortization, in 2001 were $33.7 million, an increase of 7.6% compared to 2000.

         Apartment operations expense was $11.2 million in 2001, an increase of
14.5%, or $1.4 million, compared to 2000. This increase is attributable to the
addition of Oak Hollow Apartments Phase 2 ($760,000 in 2001), along with the
impact of higher costs for on-site compensation, property taxes and insurance,
and property administration and turnover costs.

         Apartment operations expense includes only direct costs of on-site
operations. Apartment operations expense in 2001 represented 36.2% of related
apartment rental income, compared to 33.4% in

                                       15
<PAGE>

2000. During the second half of 2001, we experienced a significant increase in
redecoration and turnover expense at our apartment communities. Intense
competition due to overbuilding, home purchases, and job losses due to the
current economic slowdown have all contributed to higher turnover of residents.
As a result, we have spent more in turnover and redecoration, as well as leasing
and promotion expense, in an effort to attract and retain residents. We expect
that these costs will remain at relatively high levels for as long as current
market conditions persist.

         We incur no operating expenses for restaurant properties, because the
triple-net lease arrangement requires the lessee to pay virtually all of the
costs and expenses associated with the restaurant properties.

         We are now able to identify and compare apartment administration
expenses for 2001 and 2000. These costs include our property management
activities as well as accounting and support activities directly related to
apartment management. Prior to 2001, these costs were included in our line item
for administrative expenses that included both apartment and corporate
administrative costs, and we have reclassified these amounts in the 2000 and
1999 financial statements to conform to the 2001 presentation. In addition, we
now include the expenses of our third-party management activities in these
consolidated expense amounts.

         Apartment administration expense totaled $1.1 million in 2001,
including approximately $86,000 in costs directly related to servicing
third-party management contracts acquired during the fourth quarter of the year.
If the activities of the Management Company had been reflected on a consolidated
basis in our 2000 financial statements, apartment administration expense would
have been approximately $910,000 in 2000. The increase in apartment
administration expense in 2001 is attributable to the impact of the increase in
the number of units under management, as well as increased property management
supervisory compensation and travel expenditures.

         Corporate administration expense totaled $1.8 million in 2001. If the
activities of the Management Company had been reflected on a consolidated basis
in our 2000 financial statements, corporate administration expense would have
been approximately $1.7 million in 2000. The increase in corporate
administration expense in 2001 is attributable to increased executive and
corporate office staff compensation.

         Depreciation expense totaled $7.8 million in 2001, an increase of 9.4%,
or $670,000, compared to 2000. This increase is attributable to the addition of
Oak Hollow Apartments Phase 2 ($402,000 in 2001) along with the impact of
additions and replacements at other apartment communities. We have generally
assigned shorter lives to these specifically identifiable assets than the
composite lives initially assigned at acquisitions. Amortization expense was
essentially the same in 2001 and 2000.

         Interest expense totaled $11.1 million in 2001, a decline of 0.5%
compared to 2000. This decline is primarily attributable to the decline in
interest rates during 2001. Overall, weighted average interest rates were 6.8%
in 2001, compared to 7.3% in 2000.

         In conjunction with a refinance of long-term debt in September 2001, we
wrote off unamortized loan costs of $129,000. We have reflected this write-off,
net of minority interests' share, with a charge of $100,000 as an extraordinary
item in the financial statements.

         In late December 2001, we issued 227,273 shares of Series B Cumulative
Convertible Preferred Stock. Because preferred shareholders have priority over
common shareholders for receipt of dividends, we deduct the amount of net income
that has been or will be paid to preferred shareholders in calculating net
income available to common shareholders. The cumulative preferred dividend, for
four days in the fourth quarter of 2001, totals $2,740. This amount will
increase in future periods; the dividend on the Series B shares is $1.10 per
share per year.

                                       16
<PAGE>

Net income

         Income available to common shareholders in 2001 was $1.9 million, a
decrease of 4.2% compared to 2000. Operating Partnership earnings before
non-cash charges for depreciation, amortization, and extraordinary item totaled
$11.0 million, a 6.9% increase compared to 2000. The minority interest in
Operating Partnership earnings in 2001 was $597,000, a 0.4% increase compared to
2000.

         Income available to common shareholders was $0.33 per share in 2001
compared to $0.35 in 2000. The $0.02 decline in per share amounts resulted from
a number of factors, including an increase in non-cash charges for depreciation
expense and a non-cash extraordinary charge for write-off of loan costs.
2000 Compared to 1999

Revenues

         Total revenue in 2000 was $33.9 million, an increase of 1.2% compared
to 1999. Apartment rental income accounted for 86.4% of our total revenue in
2000 compared to 85.5% in 1999.

         Apartment rental income in 2000 was $29.3 million, an increase of 2.3%
compared to 1999. This increase reflects improvements in both occupancy and
average rental rates in 2000. Average economic occupancy for all apartments was
95.9% in 2000 compared to 95.1% in 1999. Average monthly revenue per occupied
unit for all apartments was $737 in 2000 compared to $729 in 1999. These
comparisons reflect the results for all 3,440 apartments in operation through
the entire 12 months of both 2000 and 1999. (Our acquisition of Oak Hollow
Apartments Phase 2 took place in late December 2000.)

         Apartment rental income was consistent with our expectations in 2000.
Our apartment communities continued to show improved occupancy and rental rates
despite the fact that we operate in some of the most competitive apartment
markets in the United States. With the exception of Virginia Beach, Virginia,
significant new apartment construction over the past few years has resulted in
an oversupply of apartments in our markets.

         Restaurant rental income in 2000 was $4.2 million, a decrease of 4.1%
compared to 1999. Restaurant rental income accounted for 12.3% of our total
revenue in 2000 compared to 13.0% in 1999. The decrease in restaurant rental
income was due to the sales of three restaurant properties in June 1999 and one
restaurant property in June 2000. The four restaurants were sold to Boddie-Noell
Enterprises, the lessee, under the non-economic clause of an agreement that
allows the lessee to close up to seven restaurants and buy them back for no less
than net carrying value.

         Under the lease, restaurant rental payments are the greater of a
specified minimum rent or 9.875% of food sales. Prior to the sales of the four
restaurants, the minimum rent was $4,500,000 per year. The minimum rent is
reduced by approximately $96,000 per year for each restaurant that is sold.
Restaurant rental income in both 2000 and 1999 was the minimum rent specified in
the lease agreement.

         "Same store" sales (for our 43 restaurants that were open through the
entire 12 months of both 2000 and 1999) declined by 3.6% in 2000 compared to
1999.

         Interest and other income decreased by 23.7% to $296,000 in 2000 as
compared to 1999. This decrease is primarily attributable to a $47,000 reduction
in interest income due to repayment in February 2000 of $525,000 in principal on
a note receivable from a joint venture partnership. Our interest in the net
income of the Management Company was $131,000 in 2000 compared to $123,000 in
1999.

                                       17
<PAGE>

Expenses

         Total expenses, including non-cash charges for depreciation and
amortization, in 2000 were $31.3 million, an increase of 4.3% compared to 1999.
We have reclassified amounts for apartment operations, apartment administration,
and corporate administration expenses to conform to our 2001 presentation.

         Apartment operations expense was $9.8 million in 2000, an increase of
3.9% compared to 1999. Apartment operations expense represented 33.4% of related
apartment rental income, compared to 32.8% in 1999. This increase was primarily
attributable to higher costs for compensation of on-site staff, taxes, and
property insurance.

         Apartment administration expense was $801,000 in 2000, a decline of
7.6% compared to 1999. Corporate administration expense was $1.6 million in
2000, an increase of 5.1% compared to 1999. These costs were in line with
management's expectations.

         We incur no operating expenses for restaurant properties, because the
restaurant properties' triple-net lease arrangement requires the lessee to pay
virtually all of the costs and expenses associated with the restaurant
properties.

         During 2000, we entered into negotiations for a private equity
transaction. The company terminated those negotiations during the fourth quarter
of 2000, and we recorded a charge of $237,000 for those costs. Because this was
a significant and non-recurring charge, we have reported this charge as a
separate line item in our statement of operations.

         Depreciation and amortization totaled $7.7 million in 2000, an increase
of 2.8% compared to 1999. These increases reflect the impact of additions and
replacements at apartment communities.

         Interest expense was $11.2 million in 2000, an increase of 4.2%
compared to 1999. This increase was primarily attributable to the approximate
0.75% increase in variable interest rates during the first half of 2000.
Overall, weighted average interest rates were 7.3% in 2000 compared to 7.2% in
1999.

Net income

         Income available to common shareholders in 2000 was $2.0 million, a
decrease of 27.3% compared to 1999. Operating Partnership earnings before
depreciation and amortization in 2000 were $10.3 million, a decrease of 6.1%,
while non-cash charges for depreciation and amortization totaled $7.7 million,
an increase of 2.8%, compared to 1999. The minority interest in Operating
Partnership earnings in 2000 was $595,000, a decrease of 18.3% compared to 1999.

         Income available to common shareholders was $0.35 per share in 2000
compared to $0.46 in 1999. The decline in per share amounts was primarily due to
increases in interest expense, decrease in restaurant rental income, a
significant non-recurring charge for a terminated equity transaction, and
increases in non-cash charges for depreciation and amortization.

Funds from Operations

         Funds from operations and funds available for distribution are defined
in footnote 1 on pages 12 and 13. We calculated funds from operations as follows
(all amounts in thousands):
<TABLE>
<CAPTION>

                                                                     2001           2000           1999
                                                                --------------- -------------- --------------
<S>                                                              <C>             <C>            <C>
Income before minority interest
   and extraordinary item                                          $ 2,599         $ 2,578        $ 3,454
Cumulative preferred dividend                                           (3)              -              -
Depreciation                                                         7,828           7,156          6,956
</TABLE>

                                       18
<PAGE>



<TABLE>
<CAPTION>

                                                                     2001           2000           1999
                                                                --------------- -------------- --------------
<S>                                                              <C>             <C>            <C>
Amortization of management intangible                                  406             406            406
                                                                --------------- -------------- --------------
Funds from operations - Operating Partnership                      $10,831         $10,139        $10,816
                                                                =============== ============== ==============
</TABLE>

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

                                                                     2001           2000           1999
                                                                --------------- -------------- --------------
<S>                                                               <C>             <C>            <C>
Funds from operations - Operating Partnership                      $10,831         $10,139        $10,816
Amortization of loan costs                                             189             173            163
Recurring capital expenditures                                      (1,324)         (1,070)        (1,111)
                                                                --------------- -------------- --------------
Funds available for distribution                                   $ 9,696         $ 9,243        $ 9,868
                                                                =============== ============== ==============
</TABLE>

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

                                                                     2001           2000           1999
                                                                --------------- -------------- --------------
<S>                                                               <C>             <C>            <C>
Funds from operations - Operating Partnership                      $10,831         $10,139        $10,816
Minority interest in funds from operations                          (2,490)         (2,339)        (2,280)
                                                                --------------- -------------- --------------
Basic funds from operations
  available to common shareholders                                 $ 8,341         $ 7,801        $ 8,537
                                                                =============== ============== ==============
</TABLE>

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

                                                                     2001           2000           1999
                                                                --------------- -------------- --------------
<S>                                                             <C>             <C>            <C>
Net cash provided by (used in)
   Operating activities                                          $  10,729       $  10,854      $  10,919
   Investing activities                                             (2,401)        (13,407)           111
   Financing activities                                             (7,966)          3,177        (11,089)

Dividends and distributions paid to
   Common shareholders                                           $   7,082       $   7,077      $   7,421
   Minority unitholders in Operating Partnership                     2,116           2,102          1,942

Scheduled debt principal payments                                $     348       $     332      $     547
Non-recurring capital expenditures
   Acquisition improvements and replacements                           936             297            819
   Apartment property additions and betterments                        553             755            486

Weighted average common shares outstanding                           5,717           5,708          5,973
Weighted average Operating Partnership
   minority units outstanding                                        1,706           1,711          1,601
</TABLE>

         Funds from operations in 2001 (before deduction for minority interest)
totaled $10.8 million, an increase of 6.8% compared to $10.1 million in 2000.
The increase is primarily attributable to non-routine revenue received in 2001,
while operating results for the two years were essentially flat. Funds from
operations in 2000 (before deduction for minority interest) declined 6.3%
compared to $10.8 million in 1999. The modest increase in contribution from
apartment operations in 2000 was not adequate to offset the increase in interest
expense, the decrease in restaurant rental income, or the significant
non-recurring costs of a terminated equity transaction.

                                       19
<PAGE>

         Funds available for distribution totaled $9.7 million in 2001, an
increase of 4.9% compared to 2000. Funds available for distribution totaled $9.2
million in 2000, a decline of 6.3% compared to $9.9 million in 1999. The
variance in comparison of funds available for distribution and funds from
operations reflects the impact of recurring capital expenditures for major
capital maintenance costs at our older communities. Recurring capital
expenditures averaged $360 per apartment unit in 2001, $311 per apartment unit
in 2000, and $323 per unit in 1999.

Capital Resources and Liquidity

Capital Resources

         We intend to pursue our growth strategy through the utilization of our
flexible capital structure. This may include the issuance of Operating
Partnership units, common stock and/or preferred stock, additional debt, and
joint venture investments. We may use our lines of credit or fixed rate,
long-term debt to acquire apartment communities.

Long-term Debt

         As of December 31, 2001, all of our properties were encumbered by or
served as collateral for debt. As of December 31, 2001, total long-term debt was
$162.3 million, including $122.2 million of notes payable at fixed interest
rates ranging from 6.35% to 8.55%, and $40.1 million at variable rates indexed
on 30-day LIBOR rates. The weighted average interest rate on debt outstanding at
December 31, 2001, was 6.2%, compared to 7.5% at December 31, 2000. This
reduction is primarily due to declines in variable rates during 2001. At our
current level of variable-rate debt, a 1% fluctuation in variable interest rates
would increase or decrease our annual interest expense by approximately
$390,000.

         In November 2001, we modified our previously established revolving
lines of credit with a bank for lines secured by Latitudes Apartments and our
restaurant properties. These line of credit arrangements are now as follows:

o    $23.0 million, secured by a deed of trust and assignment of rents of
     Latitudes Apartments, due November 2004. Interest-only payments on the
     outstanding balance are due monthly at a variable interest rate of 30-day
     LIBOR plus 1.75%. At December 31, 2001, the outstanding balance on this
     line was $12.0 million. Of this line, $2.0 million is reserved, subject to
     available draws against a variable rate note payable, for acquisition
     improvements at Oak Hollow Apartments Phase 2, and approximately $9.0
     million is available under this revolving line of credit.

o    $18.0 million, secured by a deed of trust and assignment of rents of 42
     restaurant properties, due January 2004. Interest-only payments on the
     outstanding balance are due monthly at a variable interest rate of 30-day
     LIBOR plus 1.80%. The available line of credit declines to $17.2 million
     effective January 2003. At December 31, 2001, the outstanding balance on
     this line was $18.0 million.

         In September 2001, we issued a $16.25 million note payable, secured by
a deed of trust and assignment of rents of Paces Commons Apartments. The note
provides for interest at 6.96%, payable in monthly installments, with maturity
in October 2011. We applied approximately $10.1 million of these proceeds to
retire an existing 8.125% deed of trust note for the same property, and $5.0
million of proceeds to reduce our Latitudes line of credit. Paces Commons was
our first apartment community, acquired in June 1993 for an initial acquisition
cost of $14.3 million.

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

                                       20
<PAGE>

         In replacing the financing on Paces Commons and Oakbrook Apartments, we
were able to substantially increase loan amounts based on the lender's estimates
of the appreciated fair market values of the properties. We applied excess
proceeds of these fixed rate loans to reduce outstanding balances on our
variable rate lines of credit.

         We utilized long-term debt, along with draws on our lines of credit, to
finance acquisitions of apartment communities in 2000 and 1999 as follows:

o    In December 2000, we acquired Oak Hollow Apartments Phase 2 for a total
     cost of approximately $12.4 million. We financed this acquisition with a
     $9.7 million initial draw on an $11.7 million variable-rate loan secured by
     a deed of trust on the community and $2.7 million draws on our lines of
     credit. We have subsequently drawn approximately $400,000 against this
     loan, and approximately $1.6 million remains available to fund renovations
     at this community.

o    In January 1999, we acquired Chason Ridge Apartments for a total cost of
     approximately $12.5 million. We financed this acquisition by assuming
     long-term debt of $10.7 million and $1.8 million draws on our lines of
     credit.

         We have also utilized our lines of credit to repurchase and retire
approximately 300,000 shares of our common stock in 1999 and 2000, to retire a
$6.1 million note payable to an affiliate in 1999, and to fund capital
improvements at our apartment communities.

         A summary of scheduled principal payments on long-term debt is included
in Item 7A, Quantitative and Qualitative Disclosures about Market Risk, and the
notes to the financial statements in this Annual Report. Significant scheduled
balloon payments include maturities of:

o    our line of credit secured by deeds of trust and assignment of rents of
     42 restaurants, due January 2004 ($18.0 million outstanding at
     December 31, 2001);
o    our line of credit secured by a deed of trust and assignment of rents of
     Latitudes Apartments, due November 2004 (up to $23.0 million, $12.0 million
     outstanding at December 31, 2001);
o    our deed of trust loan for Oak Hollow Apartments Phase 2, due December 2004
     (up to $11.7 million for acquisition and renovation construction, $10.1
     million outstanding at December 31, 2001); and
o    our deed of trust loan for Harris Hill Apartments, due June 2005 ($5.9
     million outstanding at December 31, 2001).

Capital Stock and Operating Partnership Units

         At December 31, 2001, we had approximately 5.7 million common shares
and approximately 227,000 preferred shares outstanding. In addition, there were
approximately 1.7 million Operating Partnership units, or approximately 23%,
held by minority interest owners.

         In December 2001, our Board of Directors authorized the issuance of up
to 454,545 shares of Series B Cumulative Convertible Preferred Stock, and we
issued 227,273 shares to a single investor for proceeds of $2.5 million. We
utilized these proceeds to reduce the outstanding balance on our Latitudes line
of credit. Under the terms of the investment agreement for this placement, we
must issue the remaining 227,272 shares for an additional $2.5 million by
December 2002, and the offering may be expanded to $10.0 million on the same
terms and conditions through December 2002. The preferred shares have a purchase
price and liquidation preference of $11.00 per share, an initial dividend yield
of 10% through December 2009, and may be converted to our common stock on a
one-for-one basis after three years.

         During 1999 through 2001, we issued approximately 67,000 shares of our
common stock through our Dividend Reinvestment and Stock Purchase Plan. We
generally applied these proceeds to capital expenditures at apartment
communities.

                                       21
<PAGE>

         All of the Operating Partnership units held by minority interest owners
were issued in 1997 through 1999 in conjunction with acquisitions of apartment
communities. Holders of Operating Partnership units generally are able to redeem
their units for cash or, at our option, for shares of our common stock on a
one-for-one basis after one year from issuance.

Cash Flows and Liquidity

         Net cash flows from operating activities were $10.7 million in 2001,
and $10.9 million in 2000 and 1999. Investing and financing activities focused
primarily on apartment acquisitions and capital expenditures at apartment
communities, along with payments of dividends and distributions.

         We paid dividends of $0.31 per share per quarter in each quarter of
2001, 2000, and 1999. Our payout ratio (the ratio of dividends plus
distributions paid to Operating Partnership funds from operations) was 84.9% in
2001, 90.5% in 2000, and 86.6% in 1999. We intend to pay dividends quarterly,
expect that these dividends will substantially exceed the 90% distribution
requirement for REITs, and anticipate that all dividends will be paid from
current funds from operations.

         We continue to produce sufficient cash flow to fund our regular
dividend. However, any number of unforeseen events, or a combination of such
events (for example, a substantial decline in apartment operations, a
substantial increase in short-term interest rates, or the sale of the restaurant
properties or other assets), might necessitate a reduction in the current
dividend.

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

         We received approximately 11.2% of our revenue in 2001, compared to
12.3% in 2000 and 13.0% in 1999, from rent received from Boddie-Noell
Enterprises for the use of our restaurant properties. In addition, Enterprises
is responsible for all of the costs associated with the maintenance and
operations of these properties. Over time, we expect that restaurant rental
income will continue to represent a decreasing percentage of our total revenue.

         Under our current line of credit agreement, Enterprises has the right
to purchase, under specified terms, up to two additional restaurants deemed
"non-economic," for no less than net carrying value. The annual minimum rent
would be reduced by approximately $96,000 for each restaurant sold. We would
receive sale proceeds of the greater of net carrying value or fair value. As of
December 31, 2001, the average net book value of the restaurant properties was
approximately $685,000. As in the past, we would most likely apply sale proceeds
to reduce outstanding debt on our line of credit.

         Enterprises is a privately owned company with total assets exceeding
$224 million and net equity exceeding $73 million. Its principal line of
business is the operation of approximately 330 Hardee's restaurants. In addition
to its Hardee's operations, Enterprises is the owner of Texas Steakhouse and
Saloon, a casual dining concept with 26 restaurants. Enterprises also conducts
extensive real estate investment and development activities through BNE Land and
Development. These activities involve a full range of property types, including
land, commercial, retail, office, apartment and single-family properties. We
have had extensive discussions with management of Enterprises and have reviewed
their financial statements, cash flow analysis, restaurant contribution
analysis, sales trend analysis and projections. We

                                       22
<PAGE>

believe that Enterprises will have sufficient liquidity and capital resources to
meet its obligations under the master lease as well as its general corporate
operating needs.

Capital expenditures and depreciation

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

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

         We expense ordinary repairs and maintenance costs at apartment
communities.

         During 2001, we capitalized additions and replacements as follows (all
amounts in thousands):

                Recurring capital expenditures                      $1,324
                Acquisition improvements                               936
                Non-recurring additions and betterments                553

         Repairs and maintenance at our apartment communities totaled
approximately $4.1 million, including $1.5 million in compensation of service
staff and $2.6 million in payments for materials and contracted services.

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

Inflation

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

Environmental Matters

         Phase I environmental studies performed on the apartment communities
when we acquired each of them did not identify any problems that we believe
would have a material adverse effect on our results of operations, liquidity or
capital resources. Environmental transaction screens for each of the restaurant
properties in 1995 did not indicate existence of any environmental problems that
warranted further investigation. Enterprises has indemnified us under the master
lease for environmental problems associated with the restaurant properties.

Recently Issued Accounting Standards

         In June 2001, the Financial Accounting Standards Board issued
Statements of Financial Accounting Standards No. 141, Business Combinations, and
No. 142, Goodwill and Other Intangible Assets, effective for fiscal years
beginning after December 15, 2001. Under the new rules, goodwill and intangible
assets deemed to have indefinite lives will no longer be amortized but will be
subject to annual

                                       23
<PAGE>

impairment tests in accordance with the Statements. Other intangible assets will
continue to be amortized over their useful lives. We will apply the new rules on
accounting for goodwill and other intangible assets beginning in the first
quarter of 2002. We expect that application of the nonamortization provisions of
the Statements will result in an increase in net income of approximately
$400,000 per year. During 2002, we will perform the first of the required
impairments tests of the intangible related to acquisition of management
operations, as of January 1, 2002. We do not believe that the effect of these
tests will have a significant impact on the earnings and financial position of
the company.

         In August 2001, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets, effective for years beginning after
December 15, 2001. This Statement addresses financial accounting and reporting
for the impairment or disposal of long-lived assets and supersedes Statement No.
121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of, and the accounting and reporting provisions of APB
Opinion No. 30, Reporting the Results of Operations for a Disposal of a Segment
of a Business. We expect to adopt Statement No. 144 as of January 1, 2002, and
we do not expect this adoption to have a significant impact on our financial
position and results of operations.

Additional Information

         We provide the following information to analysts and other members of
the financial community for use in their detailed analysis. This information has
not been included in our Annual Report to Shareholders.

         A summary of capital expenditures, in aggregate and per apartment unit,
follows:
<TABLE>
<CAPTION>

                                              2001                   2000                   1999
                                       Total    Per unit      Total    Per unit      Total    Per unit
                                      --------- ----------- ---------- ------------ --------- ------------
                                      (000's)                (000's)                (000's)
<S>                                    <C>        <C>         <C>         <C>        <C>         <C>
Recurring capital expenditures:
  Floor coverings                       $  662     $180        $  464      $135       $  627      $182
  Appliances/HVAC                          197       54           164        48          165        48
  Exterior paint                             -        -             -         -           63        18
  Computer/support equipment                54       15            21         6            -         -
  Other                                    411      112           420       122          256        74
                                      --------- ----------- ---------- ------------ --------- ------------
                                        $1,324     $360        $1,070      $311       $1,111      $323
                                      ========= =========== ========== ============ ========= ============

Non-recurring capital
  expenditures:
  Acquisition improvements              $  936                 $  297                 $  819
  Additions and betterments                502                    754                    486
  Computer/support equipment                50                      -                      -
                                      ---------             ----------              ---------
                                        $1,489                 $1,052                 $1,305
                                      =========             ==========              =========
</TABLE>


ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         A summary of long-term debt as of December 31, 2001 and 2000 is
included in the notes to the financial statements in this Annual Report. At
December 31, 2001, adjusted to reflect the subsequent refinancing related to
Oakbrook Apartments, total long-term debt was $162.3 million, including $123.9
million notes payable at fixed interest rates ranging from 6.35% to 8.55%, and
$38.4 million at variable rates indexed on 30-day LIBOR rates. The weighted
average interest rate on debt outstanding was 6.2% at December 31, 2001, and
7.5% at December 31, 2000. At our current level of variable-rate debt, a 1%


                                       24
<PAGE>

change in variable interest rates would increase or decrease our annual interest
expense by approximately $390,000.

         The table below provides information about our long-term debt
instruments and presents expected principal maturities and related weighted
average interest rates on those instruments (all amounts in thousands):
<TABLE>
<CAPTION>

                                                       Expected maturity dates
                             2002        2003        2004        2005        2006       Later       Total
                          ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S>                      <C>         <C>         <C>         <C>         <C>         <C>         <C>
Fixed rate notes          $     248   $     409   $     441   $   5,899   $     365   $116,590    $123,952
   Average interest rate       7.69%       7.44%       7.45%       8.46%       7.06%       6.88%       6.96%

Variable rate notes              -         833      37,545           -           -           -      38,378
   Average interest rate                   3.71%       3.71%                                           3.71%
</TABLE>

         We estimate the fair value of fixed rate and variable rate notes using
discounted cash flow analysis, based on our current incremental borrowing rates
for similar types of borrowing arrangements. The fair value of our notes payable
at December 31, 2001, totaled approximately $161.8 million.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The financial statements and supplementary data are listed under Item
14(a) and filed as part of this Annual Report on the pages indicated.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

         None.


                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The section under the heading "Election of Directors" of the Proxy
Statement for Annual Meeting of Shareholders to be held May 23, 2002, (the
"Proxy Statement") is incorporated herein by reference for information on
Directors of the Registrant. See Item X in Part I of this Annual Report for
information regarding Executive Officers of the Registrant.

ITEM 11.  EXECUTIVE COMPENSATION

         The section under the heading "Election of Directors" entitled
"Compensation of Directors" of the Proxy Statement and the section entitled
"Executive Compensation" of the Proxy Statement are incorporated herein by
reference.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The section under the heading "Security Ownership of Certain Beneficial
Owners and Management" of the Proxy Statement is incorporated herein by
reference.

                                       25
<PAGE>

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The section entitled "Certain Relationships and Related Transactions"
of the Proxy Statement is incorporated herein by reference.


                                     PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K

(a) 1. and 2.  Financial Statements and Schedules

         The financial statements and schedules listed below are filed as part
of this Annual Report on the pages indicated.

                                       Index to Financial Statements
                                                                           Page

Financial Statements and Notes:
   Report of Independent Auditors                                           29
   Consolidated Balance Sheets as of December 31, 2001 and 2000             30
   Consolidated Statements of Operations for the Years Ended                31
      December 31, 2001, 2000, and 1999
   Consolidated Statements of Shareholders' Equity for the Years Ended      32
      December 31, 2001, 2000, and 1999
   Consolidated Statements of Cash Flows for the Years Ended                33
      December 31, 2001, 2000, and 1999
   Notes to Consolidated Financial Statements                               34
Schedules:
   Schedule III - Real Estate and Accumulated Depreciation                  47

         The financial statements and schedules are filed as part of this
report. All other schedules are omitted because they are not applicable or the
required information is included in the financial statements or notes thereto.

(a) 3.  Exhibits

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

 Exhibit No.

   2.1*  Master Agreement of Merger and Acquisition by and among BNP Residential
         Properties, Inc., BNP Residential Properties Limited Partnership,
         Paul G. Chrysson, James G. Chrysson, W. Michael Gilley, Matthew G.
         Gallins, James D. Yopp, and the partnerships and limited liability
         companies listed therein, dated September 22, 1997 (filed as Exhibit
         2.1 to Registration Statement No. 333-39803 on Form S-2, December 16,
         1997, and incorporated herein by reference)
   2.2*  Amendment to Master Agreement of Merger and Acquisition dated
         September 22, 1997, by and among BNP Residential Properties, Inc.,
         BNP Residential Properties Limited Partnership, Paul G. Chrysson,
         James G. Chrysson, W. Michael Gilley, Matthew G. Gallins, James D.
         Yopp, and the partnerships and limited liability companies listed
         therein, dated November 3, 1997 (filed as Exhibit 2.3 to BNP
         Residential Properties, Inc. Current Report

                                       26
<PAGE>

         on Form 8-K dated December 1, 1997, and incorporated herein
         by reference)
   3.1*  Articles of Incorporation (filed as Exhibit 3.1 to BNP Residential
         Properties, Inc., Current Report on Form 8-K dated March 17, 1999,
         and incorporated herein by reference)
   3.2*  Articles Supplementary, Classifying and Designating 909,090
         Shares of Series B Cumulative Convertible Preferred Stock, dated
         December 28, 2001 (filed as Exhibit 3.1 to BNP Residential
         Properties, Inc. Current Report on Form 8-K dated December 28,
         2001, and incorporated herein by reference)
   3.3*  Amended and Restated By-Laws (filed as Exhibit 3.2 to BNP Residential
         Properties, Inc., Current Report on Form 8-K dated December 28, 2001,
         and incorporated herein by reference)
   4.1*  Rights Agreement, dated March 18, 1999, between the Company and
         First Union National Bank (filed as Exhibit 4 to BNP Residential
         Properties, Inc. Current Report on Form 8-K dated March 17,
         1999, and incorporated herein by reference)
   4.2*  Registration Rights Agreement By and Among BNP Residential Properties,
         Inc. and Preferred Investment I, LLC, dated December 28, 2001 (filed
         as Exhibit 4 to BNP Residential Properties, Inc. Current Report on
         Form 8-K dated December 28, 2001, and incorporated herein by
         reference)
  10.1*  Amended and Restated Agreement of Limited Partnership of BNP
         Residential Properties Limited Partnership (filed as Exhibit 10.1 to
         BNP Residential Properties, Inc. Annual Report on Form 10-K dated
         December 31, 1998, and incorporated herein by reference)
  10.2*  Amendment to Second Amended and Restated Agreement of Limited
         Partnership of BNP Residential Properties Limited Partnership,
         dated December 28, 2001 (filed as Exhibit 10.1 to BNP
         Residential Properties, Inc. Current Report on Form 8-K dated
         December 28, 2001, and incorporated herein by reference)
  10.3*  Investment Agreement By and Between BNP Residential Properties, Inc.
         and Preferred Investment I, LLC, dated December 28, 2001 (filed as
         Exhibit 10.2 to BNP Residential Properties, Inc. Current Report on
         Form 8-K dated December 28, 2001, and incorporated herein by
         reference)
  10.4*  Amended and Restated Master Lease Agreement dated December 21, 1995,
         between BNP Residential Properties, Inc. and Boddie-Noell Enterprises,
         Inc. (filed as Exhibit 10.1 to BNP Residential Properties, Inc. Annual
         Report on Form 10-K dated December 31, 1995, and incorporated herein
         by reference)
  10.5*  BNP Residential Properties, Inc. 1994 Stock Option and Incentive
         Plan effective August 4, 1994, and amended effective May 15, 1998
         (filed as an exhibit in Schedule 14A of Proxy Statement dated April
         13, 1998, and incorporated herein by reference)
  10.6*  Form and description of Employment Agreements dated July 15,
         1997, between BNP Residential Properties, Inc. and certain
         officers (filed as Exhibit 10 to BNP Residential Properties,
         Inc. Quarterly Report on Form 10-Q for the quarter ended
         September 30, 1997, and incorporated herein by reference)
  21     Subsidiaries of the Registrant
  23     Consent of Ernst & Young LLP

* Incorporated herein by reference

(b) Reports on Form 8-K

We filed a Current Report on Form 8-K as of December 28, 2001, to report the
initial closing of an investment agreement to sell 454,545 shares of Series B
Cumulative Convertible Preferred Stock.

                                       27
<PAGE>


                                   SIGNATURES

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

                                          BNP RESIDENTIAL PROPERTIES, INC.
                                          (Registrant)



Date:  March 26, 2002                       /s/ Philip S. Payne
                                          Philip S. Payne
                                          Executive Vice President and
                                          Chief Financial Officer



Date:  March 26, 2002                       /s/ Pamela B. Bruno
                                          Pamela B. Bruno
                                          Vice President, Controller and
                                          Chief Accounting Officer


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>

Signature:                          Title:                                      Date:

<S>                                <C>                                         <C>
  /s/ D. Scott Wilkerson            President and Chief Executive               March 26, 2002
D. Scott Wilkerson                  Officer, Director

  /s/ Philip S. Payne               Executive Vice President, Treasurer         March 26, 2002
Philip S. Payne                     and Chief Financial Officer, Director

  /s/ Pamela B. Bruno               Vice President, Controller                  March 26, 2002
Pamela B. Bruno                     and Chief Accounting Officer

  /s/ B. Mayo Boddie                Chairman of the Board of Directors          March 26, 2002
B. Mayo Boddie

  /s/ Stephen R. Blank              Director                                    March 26, 2002
Stephen R. Blank

  /s/ Paul G. Chrysson              Director                                    March 26, 2002
Paul G. Chrysson

 /s/ W. Michael Gilley              Director                                    March 26, 2002
W. Michael Gilley

  /s/ Peter J. Weidhorn             Director                                    March 26, 2002
Peter J. Weidhorn
</TABLE>

                                       28
<PAGE>

                         Report of Independent Auditors


Board of Directors and Stockholders
BNP Residential Properties, Inc.


We have audited the accompanying consolidated balance sheets of BNP Residential
Properties, Inc. as of December 31, 2001 and 2000, and the related consolidated
statements of income, shareholders' equity, and cash flows for each of the three
years in the period ended December 31, 2001. Our audits also included the
financial statement schedule listed in the Index at Item 14(a). These financial
statements and schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the 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 misstatement. 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 consolidated financial position of BNP Residential
Properties, Inc. at December 31, 2001 and 2000, and the consolidated results of
its operations and its cash flows for each of the three years in the period
ended December 31, 2001, in conformity with accounting principles generally
accepted in the United States. Also, in our opinion, the related financial
statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.





                                           /s/  ERNST & YOUNG LLP


Raleigh, North Carolina January 8, 2002, except for Notes 3 and 11 as to which
the date is February 4, 2002


                                       29
<PAGE>



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

                                                                                             December 31
                                                                                       2001               2000
                                                                                ------------------- ------------------
<S>                                                                                <C>                 <C>
Assets
Real estate investments at cost:
   Apartment properties                                                             $221,218,864        $217,818,208
   Restaurant properties                                                              39,529,527          39,702,060
                                                                                ------------------- ------------------
                                                                                     260,748,391         257,520,268
   Less accumulated depreciation                                                     (40,751,890)        (32,815,205)
                                                                                ------------------- ------------------
                                                                                     219,996,501         224,705,063
Cash and cash equivalents                                                              1,417,616           1,056,052
Prepaid expenses and other current assets                                              1,693,374           1,510,541
Investment in and advances to Management Company                                               -             714,892
Notes receivable                                                                         100,000             100,000
Other assets, net of accumulated amortization:
   Intangible related to acquisition of management operations                          1,115,088           1,521,288
   Deferred financing costs                                                            1,062,069           1,083,560
                                                                                ------------------- ------------------
Total assets                                                                        $225,384,648        $230,691,396
                                                                                =================== ==================

Liabilities and Shareholders' Equity
Deed of trust and other notes payable                                               $162,330,222        $163,611,737
Accounts payable and accrued expenses                                                    237,182             149,412
Accrued interest on deed of trust and other notes payable                                760,586             794,836
Prepaid rents and security deposits                                                      648,831             383,626
Deferred cable equipment rental revenue                                                  700,324             800,000
Deferred credit for interest defeasance                                                  500,032             666,688
                                                                                ------------------- ------------------
                                                                                     165,177,177         166,406,299

Minority interest in Operating Partnership                                            18,173,557          19,737,035
Shareholders' equity:
Preferred stock, $.01 par value, 10,000,000 shares authorized,
   227,273 shares issued and outstanding at December 31, 2001                          2,500,000                   -
Common stock, $.01 par value, 100,000,000 shares authorized,
   5,744,873 shares issued and outstanding at December 31, 2001,
   5,706,950 shares issued and outstanding at December 31, 2000                           57,449              57,069
Additional paid-in capital                                                            69,872,958          69,707,155
Dividend distributions in excess of net income                                       (30,396,493)        (25,216,162)
                                                                                ------------------- ------------------
Total shareholders' equity                                                            42,033,914          44,548,062
                                                                                ------------------- ------------------
Total liabilities and shareholders' equity                                          $225,384,648        $230,691,396
                                                                                =================== ==================
</TABLE>


See accompanying notes.

                                       30
<PAGE>


BNP RESIDENTIAL PROPERTIES, INC.
Consolidated Statements of Operations
<TABLE>
<CAPTION>

                                                                                Years ended December 31
                                                                        2001              2000             1999
                                                                  ----------------- ----------------- ----------------
<S>                                                                  <C>               <C>               <C>
Revenues
Apartment rental income                                               $30,866,890       $29,269,100       $28,608,487
Restaurant rental income                                                4,053,192         4,161,968         4,338,830
Management fee income                                                     528,754                 -                 -
Equity in income of Management Company                                          -           131,295           122,774
Interest and other income                                                 812,937           295,602           387,392
                                                                  ----------------- ----------------- ----------------
                                                                       36,261,773        33,857,965        33,457,483

Expenses
Apartment operations                                                   11,182,449         9,766,085         9,395,272
Apartment administration                                                1,106,881           801,440           867,535
Corporate administration                                                1,849,273         1,589,989         1,512,361
Costs of terminated equity transaction                                          -           237,450                 -
Depreciation                                                            7,828,457         7,155,697         6,955,955
Amortization                                                              595,603           579,216           569,086
Interest on notes payable to affiliates                                         -                 -           131,599
Interest - other                                                       11,100,269        11,150,565        10,571,415
                                                                  ----------------- ----------------- ----------------
                                                                       33,662,932        31,280,442        30,003,223
                                                                  ----------------- ----------------- ----------------
Income before minority interest and extraordinary item                  2,598,841         2,577,523         3,454,260
Minority interest in Operating Partnership                                596,854           594,534           727,999
                                                                  ----------------- ----------------- ----------------
Income before extraordinary item                                        2,001,987         1,982,989         2,726,261
Extraordinary item - loss on early extinguishment of debt                  99,577                 -                 -
                                                                  ----------------- ----------------- ----------------
Net income                                                              1,902,410         1,982,989         2,726,261
Cumulative preferred dividend                                               2,740                 -                 -
                                                                  ----------------- ----------------- ----------------
Income available to Common Shareholders                               $ 1,899,670       $ 1,982,989       $ 2,726,261
                                                                  ================= ================= ================

Per share data:
Basic and diluted earnings per share --
   Income before extraordinary item                                        $0.35             $0.35             $0.46
   Extraordinary item                                                      (0.02)                -                 -
                                                                  ----------------- ----------------- ----------------
   Income available to common shareholders                                 $0.33             $0.35             $0.46
                                                                  ================= ================= ================
Dividends declared                                                         $1.24             $1.24             $1.24
                                                                  ================= ================= ================
Weighted average common shares outstanding                              5,716,811         5,707,561         5,972,576
                                                                  ================= ================= ================
</TABLE>


See accompanying notes.

                                       31
<PAGE>


BNP RESIDENTIAL PROPERTIES, INC.
Consolidated Statements of Shareholders' Equity
<TABLE>
<CAPTION>

                                                                                            Dividend
                                                                            Additional   distributions
                                Preferred Stock         Common Stock         paid-in      in excess of
                              Shares     Amount       Shares     Amount      capital       net income       Total
                             --------- ------------ ----------- ---------- ------------- --------------- ------------
<S>                           <C>      <C>         <C>          <C>       <C>           <C>             <C>
Balance December 31, 1998                           5,977,930    $59,779   $72,117,636   $(15,428,154)   $56,749,261
Common stock issued                                    29,020        290       324,090              -       324,380
Common stock retired                                 (272,044)    (2,720)   (2,480,101)             -    (2,482,821)
Dividends paid                                              -          -             -     (7,420,640)   (7,420,640)
Net income                                                  -          -             -      2,726,261     2,726,261
                                                    ----------- ---------- ------------- --------------- ------------
Balance December 31, 1999                           5,734,906     57,349    69,961,625    (20,122,533)   49,896,441
Common stock retired                                  (27,956)      (280)     (254,470)             -      (254,750)
Dividends paid                                              -          -             -     (7,076,618)   (7,076,618)
Net income                                                  -          -             -      1,982,989     1,982,989
                                                    ----------- ---------- ------------- --------------- ------------
Balance December 31, 2000                           5,706,950     57,069    69,707,155    (25,216,162)   44,548,062
Preferred stock issued         227,273  $2,500,000          -          -      (225,406)             -     2,274,594
Common stock issued                  -           -     37,923        380       391,209              -       391,589
Dividends paid                       -           -          -          -             -     (7,082,741)   (7,082,741)
Net income                           -           -          -          -             -      1,902,410     1,902,410
                             --------- ------------ ----------- ---------- ------------- --------------- ------------
Balance December 31, 2001      227,273  $2,500,000  5,744,873    $57,449   $69,872,958   $(30,396,493)   $42,033,914
                             ========= ============ =========== ========== ============= =============== ============

</TABLE>

See accompanying notes.



                                       32
<PAGE>

BNP RESIDENTIAL PROPERTIES, INC.
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>

                                                                                  Years ended December 31
                                                                          2001             2000             1999
                                                                     --------------- ----------------- ----------------
<S>                                                                  <C>             <C>               <C>
Operating activities
Net income                                                            $  1,902,410    $  1,982,989      $  2,726,261
Adjustments to reconcile net income to
   net cash provided by operating activities:
   Extraordinary item - loss on early extinguishment of debt                99,577               -                 -
   Minority interest in Operating Partnership                              596,854         594,534           727,999
   Equity in income of Management Company                                        -        (131,295)         (122,774)
   Depreciation and amortization of intangibles                          8,424,060       7,734,913         7,525,041
   Amortization of defeasance credit                                      (166,656)       (166,656)         (166,656)
   Changes in operating assets and liabilities:
      Prepaid expenses and other current assets                           (216,792)        170,854           180,487
      Accounts payable and accrued expenses                               (133,575)         18,004          (111,543)
      Deferred revenue, prepaid rent and security deposits                 222,729         651,028           160,538
                                                                     --------------- ----------------- ----------------
Net cash provided by operating activities                               10,728,607      10,854,371        10,919,353

Investing activities
Acquisitions of apartment properties                                      (370,606)    (12,324,599)       (1,796,746)
Additions to apartment communities                                      (2,809,343)     (2,119,917)       (2,413,597)
Sale of restaurant properties                                              405,860         643,598         2,079,719
Investment in and advances to Management Company                           372,939        (131,108)          330,000
Investment in notes receivable                                                   -         525,000         1,911,812
                                                                     --------------- ----------------- ----------------
Net cash (used in) provided by investing activities                     (2,401,150)    (13,407,026)          111,188

Financing activities
Net proceeds from issuance of preferred stock                            2,434,594               -                 -
Net proceeds from issuance of common stock                                 391,589               -           324,380
Redemption of Operating Partnership minority units                         (14,864)        (72,527)                -
Repurchase of common stock                                                       -        (254,750)       (2,482,821)
Distributions to Operating Partnership minority unitholders             (2,115,804)     (2,101,732)       (1,942,381)
Payment of dividends to shareholders                                    (7,082,741)     (7,076,618)       (7,420,640)
Proceeds from notes payable                                             22,024,087      13,686,984        17,807,519
Principal payments on notes payable                                    (23,305,602)       (958,595)      (17,140,109)
Payment of deferred financing costs                                       (297,152)        (45,586)         (234,652)
                                                                     --------------- ----------------- ----------------
Net cash (used in) provided by financing activities                     (7,965,893)      3,177,176       (11,088,704)
                                                                     --------------- ----------------- ----------------

Net increase (decrease) in cash and cash equivalents                       361,564         624,521           (58,163)
Cash and cash equivalents at beginning of year                           1,056,052         431,531           489,694
                                                                     --------------- ----------------- ----------------

Cash and cash equivalents at end of year                              $  1,417,616    $  1,056,052      $    431,531
                                                                     =============== ================= ================
</TABLE>


See accompanying notes.

                                       33
<PAGE>



BNP RESIDENTIAL PROPERTIES, INC.
Notes to Consolidated Financial Statements
December 31, 2001


Note 1.  Summary of Significant Accounting Policies

Basis of presentation
The consolidated financial statements include the accounts of BNP Residential
Properties, Inc. (the "company") and BNP Residential Properties Limited
Partnership (the "Operating Partnership"). All significant intercompany balances
and transactions have been eliminated in the consolidated financial statements.

We are a self-administered and self-managed real estate investment trust
("REIT") with operations in North Carolina, South Carolina and Virginia. Our
primary activity is the ownership and operation of apartment communities. We
currently manage 31 multi-family communities containing 6,969 units. Of these,
we own 15 apartment communities, containing 3,681 units. Third parties own the
remaining 16 communities, containing 3,288 units, and we manage them on a
contract basis. In addition to our apartment communities, we own 42 properties
that we lease to a third party under a master lease on a triple-net lease basis
(see Notes 5 and 7). The lessee operates these properties as restaurants and,
under the terms of the lease, is totally responsible for the operation and
maintenance of the properties.

Effective January 2001, the accounts of the Operating Partnership include BNP
Management, Inc. (the "Management Company"). Prior to January 2001, the
Operating Partnership had a 1% voting interest and 95% economic interest in the
Management Company, and used the equity method to account for this investment.

In January 2001, the Operating Partnership acquired the outstanding 99% voting
interest and 5% economic interest in the Management Company for approximately
$16,000. The impact of this change in basis of presentation on the balance sheet
was to increase cash by approximately $373,000 and computer and support
equipment, net of depreciation, by approximately $346,000, and to eliminate
approximately $715,000 investment in and advances to the Management Company
previously reflected on our balance sheet. In addition, we now reflect our
third-party management operations, including management fee income and related
apartment administration expenses, directly in our statements of operations and
cash flows rather than reporting equity in the net income of the Management
Company. We do not expect this change in basis of presentation to have a
significant impact on our financial position, operating results or cash flows.

UpREIT Structure
We are structured as an UpREIT, or umbrella partnership real estate investment
trust. The company is the general partner and owns a majority interest in the
Operating Partnership, through which we conduct all of our operations. We
currently own approximately 77% of the ownership units of the Operating
Partnership. We refer to the limited partners of the Operating Partnership as
minority unitholders or as the minority interest. Limited partners will
generally be able to redeem their units for cash or, at our option as general
partner, for shares of common stock of the company on a one-for-one basis.
UpREITs are generally structured so that distributions of cash from the
Operating Partnership are allocated between the REIT and the limited partners
based on their respective unit ownership.

Segment Reporting
Operating segments are revenue-producing components of the company for which
separate financial information is produced internally for our management. Under
this definition, we operated, for all periods presented, as a single segment
(apartment operations). Our apartment operating activities are located within a
relatively small geographic area, and our chief operating decision maker does
not receive or utilize financial information on the basis of geographic areas.
We evaluate each community's performance

                                       34
<PAGE>

individually; however, all of these communities are garden-style construction,
operate in the mid-market price range, share similar economic characteristics,
and provide similar services. We do not conduct any operating activities with
regard to restaurant rental income; the triple-net lease arrangement for these
properties requires the lessee to pay virtually all of the costs associated with
these properties.

Real Estate Investments
Real estate investments are stated at the lower of cost, less accumulated
depreciation, or fair value. For acquired properties, we compute depreciation
using the straight-line method over the estimated useful lives of the related
assets, generally 40 years for buildings, 20 years for land improvements, 10
years for fixtures and equipment, and five years for floor coverings. We expense
ordinary repairs and maintenance costs at apartment communities. We capitalize
non-recurring expenditures for additions and betterments to buildings and land
improvements. In addition, we generally capitalize recurring capital
expenditures for exterior painting, roofing, and other major maintenance
projects that substantially extend the useful life of existing assets. We
depreciate these additions and replacements on a straight-line basis over
estimated useful lives of five to 20 years. We capitalize all floor covering,
appliance, and HVAC replacements, and depreciate them using a straight-line,
group method over estimated useful lives of five to 10 years. Costs of repairs
and maintenance and capital improvements at restaurant properties are borne by
the lessee.

We evaluate our real estate assets from time to time, or upon occurrence of
significant adverse changes in operations, to assess whether any impairment
indicators are present that affect the recovery of the recorded value. If we
considered any real estate assets to be impaired, we would record a loss to
reduce the carrying value of the property to its estimated fair value. At
December 31, 2001 and 2000, none of our assets were considered impaired.

Cash and Cash Equivalents
We consider all highly liquid investments with maturities of three months or
less when purchased to be cash equivalents.

Deferred Costs
We amortize the intangible asset related to the 1994 acquisition of management
operations using the straight-line method over 10 years. Accumulated
amortization on this asset was approximately $2.6 million at December 31, 2001,
and $2.2 million at December 31, 2000.

We defer financing costs and amortize them using the straight-line method over
the terms of the related notes. If we pay down or pay off notes prior to their
maturity, we write off the related unamortized financing costs. Accumulated
amortization on these assets was $580,000 at December 31, 2001, and $430,000 at
December 31, 2000.

We defer costs incurred in connection with proposed acquisition of properties
and equity transactions until the proposed transactions are consummated. If we
determine that the proposed transaction is not probable, we charge these costs
to expense. During 2000, we recorded a charge of $237,000 for costs of an equity
transaction that was terminated by the company during the fourth quarter.

Fair Values of Financial Instruments
The carrying amount reported on the balance sheet for cash and cash equivalents
approximates fair value. We estimate the fair value of fixed rate notes and
variable rate notes payable using discounted cash flow analysis, based on our
current incremental borrowing rates for similar types of borrowing arrangements.
At December 31, 2001, the fair value of our mortgage and other notes payable
approximated the carrying value.

Use of Estimates
We are required to make estimates and assumptions that affect the amounts
reported in the financial statements and accompanying notes in order to prepare
them in accordance with generally accepted accounting principles. Depreciation
amounts included in these financial statements reflect our estimate of the life
and related depreciation rates for rental properties. In addition, the carrying
amount of the

                                       35
<PAGE>

intangible asset related to acquisition of management operations reflects our
evaluation of the continuing value and useful life of this asset. Actual results
could differ from these estimates.

Revenue Recognition
We record rental and other revenue as it is earned. Rental payments received
prior to the first of a given month are recorded as prepaid rent. Tenant
security deposits are held in trust in bank accounts separate from operating
cash. Tenant security deposits totaled $192,000 at December 31, 2001, and
$229,000 at December 31, 2000; related trust account balances are included in
the balance sheet in other current assets.

In December 2000, we received $800,000 advance payment under a contract for use
of our cable equipment at five apartment communities. This receipt, net of
approximately $20,000 related costs, was recorded as deferred revenue, and we
plan to recognize this rental revenue over the ten-year contract term beginning
in 2001.

Advertising Costs
We expense advertising costs as they are incurred. Advertising expense totaled
$342,000 in 2001, $296,000 in 2000, and $270,000 in 1999.

Stock-Based Compensation
We measure compensation cost for stock option plans in accordance with
Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees. Accordingly, no compensation cost has been recognized for our fixed
stock option plans.

Earnings Per Share
We calculate earnings per share based on the weighted average number of shares
outstanding during each year.

Comprehensive Income
Comprehensive income is defined as changes in shareholders' equity exclusive of
transactions with owners (such as capital contributions and dividends). We did
not have any comprehensive income items in 2001, 2000, or 1999, other than net
income as reported.

New Accounting Pronouncements
We adopted Financial Accounting Standards Board Statement No. 133, Accounting
for Derivative Instruments and Hedging Activities, as amended by Statements No.
137 and No. 138, effective January 2001. This Statement requires the recognition
of all derivatives on our consolidated balance sheet at fair value. This
adoption had no impact on our results of operations or financial position.

In June 2001, the Financial Accounting Standards Board issued Statements of
Financial Accounting Standards No. 141, Business Combinations, and No. 142,
Goodwill and Other Intangible Assets, effective for fiscal years beginning after
December 15, 2001. Under the new rules, goodwill and intangible assets deemed to
have indefinite lives will no longer be amortized but will be subject to annual
impairment tests in accordance with the Statements. Other intangible assets will
continue to be amortized over their useful lives. We will apply the new rules on
accounting for goodwill and other intangible assets beginning in the first
quarter of 2002. We expect that application of the nonamortization provisions of
the Statements will result in an increase in net income of approximately
$406,000 per year. During 2002, we will perform the first of the required
impairments tests of the intangible related to acquisition of management
operations as of January 1, 2002; we do not believe that the effect of these
tests will have a significant impact on the earnings and financial position of
the company.

In August 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets, effective for years beginning after December 15,
2001. This Statement addresses financial accounting and reporting for the
impairment or disposal of long-lived assets and supersedes Statement No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of, and the accounting and

                                       36
<PAGE>

reporting provisions of APB Opinion No. 30, Reporting the Results of Operations
for a Disposal of a Segment of a Business. We expect to adopt Statement No. 144
as of January 1, 2002, and we do not expect this adoption to have a significant
impact on our financial position and results of operations.

Reclassifications
Certain amounts in the 2000 and 1999 financial statements have been reclassified
to conform to the 2001 presentation. These reclassifications had no effect on
net income, shareholders' equity or cash flows as previously reported.

Note 2.  Real Estate Investments

Real estate investments consist of the following:

                                                  2001              2000
                                            ----------------- -----------------

Apartment properties
   Land                                      $  21,128,897     $  20,758,291
   Buildings and improvements                  199,741,313       197,038,755
   Computer and support equipment                  719,260            21,162
   Less accumulated depreciation               (30,374,050)      (23,008,923)
                                            ----------------- -----------------
                                               191,215,420       194,809,285
Restaurant properties
   Land                                         10,935,813        11,087,892
   Buildings and improvements                   28,223,108        28,614,168
   Less accumulated depreciation               (10,377,840)       (9,806,282)
                                            ----------------- -----------------
                                                28,781,081        29,895,778
                                            ----------------- -----------------
                                              $219,996,501      $224,705,063
                                            ================= =================

The results of operations of the following apartment communities are included in
the financial statements from the dates of acquisition, as follows:

2000 acquisition:
o    Oak Hollow Apartments Phase 2 (formerly known as Page Mill Apartments)
     acquired effective December 28, 2000, for a total cost of approximately
     $12.4 million, paid in cash.

1999 acquisition:
o    Chason Ridge Apartments acquired effective January 1, 1999, for a total
     cost of approximately $12.5 million, including cash payments totaling
     approximately $1.8 million and assumption of debt.

In October 2001, we purchased 7.2 acres of land adjacent to Chason Ridge
Apartments for a cost of approximately $370,000. This additional land purchase
compliments and provides additional buffer for the existing site, and may be
used for construction of additional apartment units in the future.

In April 2001, we sold one restaurant property to the lessee for its net
carrying value of approximately $406,000. In June 2000, we sold one restaurant
property to the lessee for its net carrying value of approximately $644,000. In
June 1999, we sold three restaurant properties to the lessee for their net
carrying value of approximately $2.1 million. We applied the proceeds from these
sales to improvements at apartment communities and to reduce our line of credit
that is secured by the restaurant properties.

                                       37
<PAGE>

Note 3.  Notes Payable

Notes payable at December 31 consist of the following:
<TABLE>
<CAPTION>

                                                                              2001               2000
                                                                        ------------------ ------------------

Revolving lines of credit with a bank:
<S>                                                                      <C>                <C>
Principal sum of up to $18.0 million, due January 2004 (as modified November
2001), secured by deeds of trust and assignment of rents of 42 restaurant
properties. Interest-only payments on the outstanding balance due monthly at a
variable interest rate of 30-day LIBOR plus 1.80% (3.71% at December 31, 2001).
Prior to the modification, the maximum was $23.3 million, with interest at
30-day LIBOR plus
1.75%.                                                                    $ 18,000,000       $ 23,329,787

Principal sum of up to $23.0 million, due November 2004 (as modified November
2001), secured by a deed of trust and assignment of rents of Latitudes
Apartments. Interest-only payments on the outstanding balance due monthly at a
variable interest rate of 30-day LIBOR plus 1.75 % (3.66% at December 31, 2001).
At December 31, 2001, with $2.0 million reserved subject to available draws
against a variable rate note payable to the same lender, $9.0 million of funds
were available under this revolving line of credit. Prior to the modification,
the maximum was $17.6 million, with interest at 30-day LIBOR plus
2.0%.                                                                       12,031,741         14,219,331

Principal sum of up to $2.0 million, secured by a deed of trust and assignment
of rents of Latitudes Apartments. Interest-only payments on the outstanding
balance due monthly at a variable interest rate of
30-day LIBOR plus 2.0%.  Expired January 2002.                                       -                  -

Variable rate notes payable:

Note payable to a bank in the principal amount of up to $11.7 million due
December 2004, secured by a deed of trust and assignment of rents of Oak Hollow
Apartments Phase 2. Interest-only payments on the outstanding principal balance
due monthly at a variable interest rate of 30-day LIBOR plus 1.85% (3.76% at
December 31, 2001). At December 31, 2001, $1.6 million is available to fund
renovations at this
community.                                                                  10,122,066          9,700,000

Fixed rate notes payable:

Notes payable comprised of four loans, payable in monthly installments totaling
approximately $273,000 including principal and interest at rates ranging from
7.66% to 8.55%, with maturities in 2005 through 2034. Secured by deeds of trust
and assignment of rents of four apartment communities. (One of these loans was
refinanced in
January 2002, discussed below.)                                             37,687,757         31,891,381

</TABLE>

                                       38
<PAGE>

<TABLE>
<CAPTION>

                                                                              2001               2000
                                                                        ------------------ ------------------

<S>                                                                      <C>                <C>
Notes payable comprised of 10 loans, interest rates ranging from 6.35% to 6.97%,
payable in interest-only monthly installments totaling approximately $478,000,
with maturities in 2007 and 2008. Secured by deeds of trust and assignment of
rents of 10 apartment
communities.                                                                84,365,500         84,365,500

Notes payable, comprised of 12 loans, payable in monthly installments totaling
approximately $3,000 including principal and interest at 7.90% to 7.99%, with
maturities in 2005 and 2006. Secured by 12
vehicles.                                                                      123,158            105,738
                                                                        ------------------ ------------------

                                                                          $162,330,222       $163,611,737
                                                                        ================== ==================
</TABLE>

We modified the revolving lines of credit with a bank in November 2001, as
described above. In conjunction with this modification, we paid and recorded
$152,000 in deferred loan costs.

In September 2001, we issued a $16.25 million note payable, secured by a deed of
trust and assignment of rents of Paces Common Apartments. The note provides for
interest at an effective rate of 6.96%. Interest-only payments of approximately
$97,000 are due monthly through October 2002. Beginning November 2002, monthly
payments of principal and interest total $106,600, with maturity in October
2011. In conjunction with this transaction, we paid and recorded deferred loan
costs of $144,000.

We applied approximately $10.1 million of the Paces Commons refinance proceeds
to retire an existing deed of trust note with interest at 8.125%. In conjunction
with this payoff, we wrote off unamortized loan costs of $129,000. We have
reflected this write-off, net of minority interests' share, in the financial
statements as an extraordinary item.

We financed the acquisition of Oak Hollow Apartments Phase 2 in December 2000
with a $9.7 million draw on a variable rate deed of trust loan for up to $11.7
million. The note is payable at maturity in December 2004, and provides for
monthly interest payments on the outstanding balance at 30-day LIBOR plus 1.85%.
Additional draws totaling $2.0 million are available through December 2002 to
fund renovations to the apartment community. In conjunction with this financing,
we paid and recorded $47,000 in deferred loan costs.

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

Interest payments were as follows:

                                    2001             2000            1999
                              ---------------- --------------- ---------------

Payments to affiliates          $                $               $   239,484
                                          -                -
Payments to other lenders        11,301,114       11,264,798      10,730,979
                              ---------------- --------------- ---------------
                                $11,301,114      $11,264,798     $10,970,463
                              ================ =============== ===============


                                       39
<PAGE>

The loan agreements related to the lines of credit include covenants and
restrictions relating to, among other things, specified levels of debt service
coverage, leverage and net worth. To date, we have met all applicable
requirements.

In January 2002, we applied a $6.0 million draw against our Latitudes line of
credit and operating cash to retire a $6.1 million fixed rate 7.66% note payable
secured by a deed of trust for Oakbrook Apartments. In February 2002, we issued
a $7.9 million note payable, secured by a deed of trust and assignment of rents
of Oakbrook Apartments. The note provides for interest at an effective rate of
7.09%, with monthly payments of principal and interest totaling $53,000, and
matures February 2012. We applied these proceeds to reduce our Latitudes line of
credit. In conjunction with these transactions, we wrote off unamortized loan
costs of approximately $95,000 and have recorded deferred costs of approximately
$80,000.

As of December 31, 2001, adjusted to reflect the subsequent refinancing related
to Oakbrook Apartments, scheduled principal payments were approximately as
follows: 2002, $248,000; 2003, $1,242,000; 2004, $37,986,000; 2005, $5,899,000;
2006, $365,000; and 2007 and thereafter, $116,590,000.

Note 4.  Shareholders' Equity

Authorized Capital Stock
Our bylaws and certificate of incorporation allow the Board of Directors to
authorize the issuance of up to 100 million shares of common stock and 10
million shares of preferred stock, issuable in series whose characteristics
would be set by the Board of Directors.

In December 2001, the Board of Directors authorized the issuance of up to
454,545 shares of Series B Cumulative Convertible Preferred Stock at a price of
$11.00 per share, and we issued 227,273 shares to a single investor for proceeds
of $2.5 million. Under the terms of the investment agreement for this placement,
we must issue the remaining 227,272 shares for $2.5 million by December 2002,
and the parties have the option of expanding the offering to $10 million on the
same terms and conditions through December 2002. The preferred shares have a
purchase price and liquidation preference of $11.00 per share. The agreement
provides for an initial dividend yield of 10% through December 2009, then 12%
for two years, and thereafter the greater of 14% or 900 basis points over the
5-year Treasury rate. The investor will have the right to convert each Series B
share into one share of the company's common stock after three years or in
certain circumstances, such as a change of control or if the company calls the
Series B stock for redemption. The holders of preferred shares are generally not
entitled to vote on matters submitted to shareholders. Dividends on preferred
shares are subject to declaration by the Board of Directors.

Approximately 2.9 million authorized shares of common stock are reserved for
future issuance under the company's Stock Option and Incentive Plan, Dividend
Reinvestment and Stock Purchase Plan, and for conversion of Series B Preferred
shares and Operating Partnership units.

Dividend Reinvestment and Stock Purchase Plan
Our Dividend Reinvestment and Stock Purchase Plan ("DRIP Plan") allows the
company, at its option, to issue shares directly to Plan participants. We issued
37,923 shares in 2001 and 29,020 shares in 1999 through the Plan.

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

                                                              2001              2000              1999
                                                        ----------------- ----------------- -----------------
<S>                                                       <C>               <C>               <C>
Numerators:
Numerator for basic earnings per share -
   Income before extraordinary item                        $2,001,987        $1,982,989        $2,726,261
   Extraordinary item                                         (99,577)                -                 -
</TABLE>



                                       40
<PAGE>
<TABLE>
<CAPTION>

                                                              2001              2000              1999
                                                        ----------------- ----------------- -----------------
<S>                                                       <C>               <C>               <C>
   Cumulative preferred dividend                               (2,740)                -                 -
                                                        ----------------- ----------------- -----------------
   Income available to common shareholders                 $1,899,670        $1,982,989        $2,726,261
                                                        ================= ================= =================
Numerator for diluted earnings per share -
   Income before extraordinary item (1)                    $2,598,841        $2,577,523        $3,454,260
   Extraordinary item (1)                                    (129,239)                -                 -
                                                        ----------------- ----------------- -----------------
   Income available to common shareholders (1)             $2,469,602        $2,577,523        $3,454,260
                                                        ================= ================= =================

Denominators:
Denominator for basic earnings per share -
   Weighted average common shares outstanding               5,716,811         5,707,561         5,972,576
Effect of dilutive securities:
   Convertible preferred shares                                 2,491                 -                 -
   Convertible Operating Partnership units                  1,706,361         1,710,788         1,600,780
   Stock options (2)                                            2,987                 -                 -
                                                        ----------------- ----------------- -----------------
   Dilutive potential common stock                          1,711,839         1,710,788         1,600,780
                                                        ----------------- ----------------- -----------------
Denominator for diluted earnings per share -
   Adjusted weighted average common shares and
   assumed conversions                                      7,428,650         7,418,349         7,573,356
                                                        ================= ================= =================
<FN>
(1) Assumes conversion of Series B Preferred shares and Operating Partnership
units to common shares; minority interest in income before extraordinary item
and minority interest in extraordinary item have been eliminated.
(2) We excluded options to purchase 140,000 shares of common stock at $12.50,
110,000 shares at $12.25, 120,000 shares at $13.125, and 60,000 shares at $11.25
from the calculation of diluted earnings per share for 2001. We did not include
any of the options outstanding during 2000 and 1999 in the calculation of
diluted earnings per share for these years. The exercise price of these options
was greater than the average market price of the common shares for these
periods, and the effect would be anti-dilutive.
</FN>
</TABLE>

Stock Option and Incentive Plan
We have reserved 570,000 shares of the company's common stock for issuance under
our employee Stock Option and Incentive Plan. Options have been granted to
employees at prices equal to the fair market value of the stock on the dates the
options were granted or repriced. Options are generally exercisable in four
annual installments beginning one year after the date of grant, and expire ten
years after the date of grant.

The following table summarizes information about stock options outstanding at
December 31, 2001.
<TABLE>
<CAPTION>

                                                        Weighted Average
                                                           Remaining
                                                          Contractual        Number of         Number of
                                                          Life (Years)        Options           Options
                                                                            Outstanding       Exercisable
                                                        ----------------- ----------------- -----------------
<S>                                                             <C>            <C>               <C>
Exercise price $9.25 per share                                   8.15            47,500            11,875
Exercise price $11.25 per share                                  6.83            60,000            45,000
Exercise price $13.125 per share                                 6.50           120,000            90,000
Exercise price $12.25 per share                                  5.33           110,000           110,000
Exercise price $12.50 per share                                  2.88           140,000           140,000
                                                                          ----------------- -----------------
   All options outstanding                                       5.37           477,500           396,875
                                                                          ================= =================
</TABLE>

                                       41
<PAGE>



We calculated the fair value of each option grant on the date of grant using the
Black-Scholes option-pricing model. No options were granted in 2001 or 1999. We
used the following assumptions to estimate the fair value of options granted in
2000:

Weighted average fair value                                 $  0.02
Weighted average exercise price                                9.25
Weighted average dividend yield                               13.41%
Expected volatility                                            0.163
Weighted average risk-free interest rate                       5.18%
Expected useful life                                            4 years

Had we determined compensation cost for our fixed stock option plans consistent
with the fair value method outlined in Financial Accounting Standards Board
Statement No. 123, the impact on our net income and earnings per share would not
have been material.

Changes in outstanding stock options were as follows:
<TABLE>
<CAPTION>

                                       2001                       2000                       1999
                             -------------------------- -------------------------- --------------------------
                                            Weighted                   Weighted                   Weighted
                                             Average                    Average                    Average
                                            Exercise                   Exercise                   Exercise
                                Shares        Price        Shares        Price        Shares        Price
                             ------------ ------------- ------------ ------------- ------------ -------------
<S>                            <C>            <C>         <C>            <C>         <C>            <C>
Beginning balance               477,500        $12.12      430,000        $12.44      430,000        $12.44
Granted                               -             -       47,500          9.25            -             -
Exercised                             -             -            -             -            -             -
Repurchased                           -             -            -             -            -             -
Forfeited                             -             -            -             -            -             -
                             ------------- ------------ ------------- ------------ ------------- ------------
Ending balance                  477,500        $12.12      477,500        $12.12      430,000        $12.44
                             ============= ============ ============= ============ ============= ============
Exercisable at the end of
the year                        396,875        $12.33      312,500        $12.43      240,000        $12.44
                             ============= ============ ============= ============ ============= ============
</TABLE>


Note 5.  Rental Operations

Apartment Properties
We lease our residential apartments under operating leases with monthly payments
due in advance. Terms of the apartment leases are generally one year or less,
with none longer than two years.

Restaurant Properties - Master Lease Agreement
The lease agreement with Boddie-Noell Enterprises ("Enterprises") has a primary
term expiring in December 2007, but grants Enterprises three five-year renewal
options. Enterprises pays annual rent equal to the greater of the specified
minimum rent or 9.875% of food sales from the restaurants. Under certain
conditions as defined in the agreement, both Enterprises and the company have
the right to substitute another restaurant property for a property covered by
the lease. After December 31, 2007, Enterprises has the right to terminate the
lease on up to five restaurant properties per year by offering to purchase them
under specified terms.

In addition, we entered into a separate agreement with Enterprises that, after
December 31, 1997, allows Enterprises to purchase, under specified terms, up to
seven restaurant properties deemed non-economic. In April 2001, we sold one
restaurant to Enterprises, the lessee, under the non-economic clause of the
restaurant master lease. We previously sold one restaurant in June 2000, and
three restaurants in June 1999, to Enterprises under this clause. Under the
terms of this clause, the lessee may close up to two additional restaurants and
buy them back for no less than net carrying value.

                                       42
<PAGE>

The lease requires Enterprises to pay monthly installments of minimum rent and
quarterly payments calculated based on the percentage rent, subject to an annual
calculation of the greater of minimum or percentage rent. We received the
minimum rent in 2001, 2000, and 1999. We expect annual minimum rent will be
approximately $4,021,000 in years 2002 through 2007.

Note 6.  Income Taxes

We operate as, and elect to be taxed as, a REIT under the Internal Revenue Code.
To qualify as a REIT, we must meet a number of organizational and operational
requirements, including a requirement that we currently distribute at least 90%
(95% in 2000 and 1999) of our adjusted taxable income to our common
shareholders. We intend to adhere to these requirements and maintain the
company's REIT status. As a REIT, we generally will not be subject to corporate
level federal or state income tax on taxable income we distribute currently to
our shareholders. If we fail to qualify as a REIT in any taxable year, we will
be subject to federal and state income taxes at regular corporate rates
(including any applicable alternative minimum tax) and may not be able to
qualify as a REIT for four subsequent taxable years. Even if we qualify for
taxation as a REIT, we may be subject to certain state and local taxes on income
and property, and to federal income and excise taxes on undistributed taxable
income. In addition, taxable income from non-REIT activities managed through
taxable REIT subsidiaries would be subject to federal, state and local income
taxes.

The following table reconciles our income as reflected in our financial
statements to REIT taxable income. Taxable income differs from income for
financial statement purposes, primarily due to differences for tax purposes in
the estimated useful lives and methods used to compute depreciation and the
carrying value (basis) of the investment in properties. For federal and state
income tax purposes, we reported real estate investments with a total cost basis
of $235.8 million and accumulated depreciation of $53.1 million as of December
31, 2001.
<TABLE>
<CAPTION>

                                                              2001              2000              1999
                                                            Estimate           Actual            Actual
                                                        ----------------- ----------------- -----------------
<S>                                                       <C>               <C>               <C>
Income before extraordinary item
   and minority interest                                   $2,598,841        $2,577,523        $3,454,260
Less extraordinary item (including minority share)           (126,240)                -                 -
Less cumulative preferred dividend                             (2,740)                -                 -
                                                        ----------------- ----------------- -----------------
Income subject to income tax
   (including minority share)                               2,469,861         2,577,523         3,454,260
Reconciling items:
   Add book depreciation                                    7,828,457         7,155,697         6,955,955
   Less regular tax depreciation                           (7,156,000)       (6,718,225)       (6,879,372)
   Add amortization of intangible related to
      acquisition of management operations                    406,200           406,200           406,200
   Other book/tax differences, net                            251,482           173,263           240,470
                                                        ----------------- ----------------- -----------------
Adjusted taxable income of the Operating
   Partnership (including minority share)                   3,800,000         3,594,458         4,177,513
Less minority share of taxable income                        (874,000)         (783,904)         (996,352)
                                                        ----------------- ----------------- -----------------
Taxable income subject to dividend requirement             $2,926,000        $2,810,554        $3,181,161
                                                        ================= ================= =================
Minimum dividend required (90% in 2001,
   95% in 2000 and 1999)                                   $2,633,400        $2,670,026        $3,022,103
                                                        ================= ================= =================
</TABLE>


The actual tax deduction for dividends that we take, and the taxability of
dividends to shareholders, is based on a measurement of "earnings and profits"
as defined by the Internal Revenue Code. Earnings and profits differ from
regular taxable income, primarily due to further differences in the estimated
useful lives and methods used to compute depreciation. The following table
reconciles cash dividends paid with the dividends paid deduction taken by the
company on its tax returns.

                                       43
<PAGE>

<TABLE>
<CAPTION>


                                                              2001              2000              1999
                                                            Estimate           Actual            Actual
                                                        ----------------- ----------------- -----------------
<S>                                                       <C>               <C>               <C>
Cash dividends paid                                        $7,082,741        $7,076,618        $7,420,640
Less portion designated return of capital                  (3,769,846)       (3,714,410)       (3,554,103)
                                                        ----------------- ----------------- -----------------
Dividends paid deduction                                   $3,312,895        $3,362,208        $3,866,537
                                                        ================= ================= =================
</TABLE>


We paid dividend distributions totaling $1.24 per share to common shareholders
each year during 2001, 2000, and 1999. In early January following each year end,
we must make an estimate of earnings and profits, and publish an allocation
between ordinary dividend income and non-taxable return of capital to common
shareholders. The allocation between ordinary dividend income and non-taxable
return of capital to common shareholders was as follows:
<TABLE>
<CAPTION>

                                              2001                     2000                    1999
                                         $            %           $           %           $           %
                                     ----------- ------------ ----------- ----------- ----------- -----------
<S>                                     <C>        <C>           <C>        <C>          <C>         <C>
Ordinary income                          $0.58       46.8%        $0.62       49.9%       $0.62        50.3%
Return of capital                         0.66       53.2%         0.62       50.1%        0.62        49.7%
                                     ----------- ------------ ----------- ----------- ----------- -----------
                                         $1.24      100.0%        $1.24      100.0%       $1.24       100.0%
                                     =========== ============ =========== =========== =========== ===========
</TABLE>


Note 7.  Related Party Transactions

Certain directors and officers of the company hold similar positions with
Enterprises and Boddie Investment Company. We purchased 47 restaurant properties
from BNE Realty Partners, Limited Partnership (an affiliate of Enterprises) for
$43.2 million in 1987. We derived approximately 11.2% of our revenue in 2001
from payment of rent from Enterprises for the use of our restaurant properties.
In addition, Enterprises is responsible for all taxes, utilities, renovations,
insurance and maintenance expenses relating to the operation of the restaurant
properties.

Certain current and former directors of the company were the sole shareholders
and directors of BT Venture Corporation, which we acquired in 1994.

In connection with the acquisition of BT Venture Corporation, we assumed a note
payable to Enterprises in the amount of $6,100,000 and a note payable to Boddie
Investment Company in the amount of $956,000. In May 1998, we issued 65,648
shares of our common stock to retire the note payable to Boddie Investment
Company. In May 1999, we retired the note payable to Enterprises with a cash
payment.

In September 1997, we signed an agreement to acquire a portfolio of seven
apartment communities. We refer to these acquisitions as the "Chrysson
acquisitions" and to the former owners as the "Chrysson Parties." Certain
current directors of the company were shareholders and officers in the Chrysson
Parties. We have issued 1,349,954 Operating Partnership units through December
31, 2000, in conjunction with acquisitions of six of the apartment communities.
We will issue up to 139,000 units to acquire one remaining Chrysson apartment
community when it has reached certain performance standards specified in the
agreement.

In February 1997, we signed a participating loan agreement with The Villages of
Chapel Hill Limited Partnership, a limited partnership whose general partner is
Boddie Investment Company. We made a loan to The Villages of $2.5 million to
fund a substantial rehabilitation of its apartment community and guaranteed a
$1.5 million bank loan. In exchange, we receive minimum interest on our loan at
the greater of 12.5% or the 30-day LIBOR rate plus 6.125% and an annual loan
guarantee fee. We also receive 25% participation in increased rental revenue and
25% participation in the increase in value of the property. The Villages
subsequently reduced the outstanding principal balance of its note payable to us
to $100,000,

                                       44
<PAGE>

which has been outstanding since February 2000. In July 2001, we modified the
participating loan agreement to establish a $950,000 "fixed portion" of our
participation in the increase in value of the property and extend the period for
our 25% participation in increased rental revenue and increase in value of the
property to the earlier of July 2011 or sale or refinance of the property.
Required payment of the fixed portion is subject to cash flow from The Villages
property, as defined in the agreement. Interest on the outstanding fixed portion
accrues at the greater of a prime rate or 8%, payable monthly.

We received interest and participation income of $85,000 in 2001, $103,000 in
2000, and $151,000 in 1999. In addition, we received guarantee fees of $37,500
in 2001, 2000, and 1999. We received $325,883 of the fixed portion in July 2001.
At December 31, 2001, $25,681 of the fixed portion was currently due, received
in January 2002. Because the collectibility of the remaining fixed portion is
subject to cash flow and therefore uncertain, we have provided a reserve for
collection of this receivable. At December 31, 2001, we have reflected the
principal portion of notes receivable from The Villages of Chapel Hill Limited
Partnership as follows:

Advances receivable, due February 2004                           $100,000
Fixed portion of shared appreciation                              598,436
   Less reserve for collection of fixed portion                  (598,436)
                                                             ----------------
                                                                 $100,000
                                                             ================

We have made loans totaling $180,000 to certain officers of the company. In
addition, the company has guaranteed a note payable to a bank by one officer by
agreeing to redeem up to 39,570 shares of our common stock at an imputed value
of approximately $435,000 in the event of a default.

Certain officers of the company are also officers of the Management Company and
owned a 5% economic interest and a 99% voting interest in it. We acquired their
interests in the Management Company for payment of $16,000 in January 2001.

Note 8.  Profit Sharing Plan

The employees of the company are participants in a profit sharing plan pursuant
to Section 401 of the Internal Revenue Code. We make limited matching
contributions based on the level of employee participation as defined in the
plan. We made contributions to the plan totaling $68,000 in 2001, $48,000 in
2000, and $44,000 in 1999.

Note 9.  Commitments and Contingencies

We currently lease approximately 6,500 square feet of office space in downtown
Charlotte, North Carolina, for our corporate and administrative offices. Rent
expense totaled approximately $166,000 in 2001. The lease provides for monthly
rental of approximately $14,000 and expires December 2002.

We have agreements with three of our executive officers that provide for cash
compensation and other benefits if we terminate them without cause or if a
change in control of the company occurs.

The company is a party to a variety of legal proceedings arising in the ordinary
course of its business. We believe that such matters will not have a material
effect on the financial position of the company.

Note 10.  Quarterly Financial Data (Unaudited)

We present below selected financial data (unaudited) for the years ended
December 31, 2001 and 2000:

                                       45
<PAGE>


<TABLE>
<CAPTION>

                                                                  Income before
                                                                Extraordinary Item
                                          Revenues           Total         Per Share (1)       Net Income
                                      ----------------- ----------------- ----------------- -----------------
<S>                                     <C>               <C>                    <C>          <C>
2001
First quarter                            $ 8,957,270       $  470,159             $0.08        $  470,159
Second quarter                             9,239,333          481,480              0.09           481,480
Third quarter (2)                          9,152,535          595,851              0.10           496,274
Fourth quarter                             8,912,635          454,497              0.08           454,497
                                      ----------------- ----------------- ----------------- -----------------
                                         $36,261,773       $2,001,987             $0.35        $1,902,410
                                      ================= ================= ================= =================

2000
First quarter                            $ 8,480,489       $  690,789             $0.12        $  690,789
Second quarter                             8,456,528          379,653              0.07           379,653
Third quarter                              8,454,495          566,749              0.10           566,749
Fourth quarter (3)                         8,466,453          345,798              0.06           345,798
                                      ----------------- ----------------- ----------------- -----------------
                                         $33,857,965       $1,982,989             $0.35        $1,982,989
                                      ================= ================= ================= =================

<FN>
(1) Amounts for both basic and diluted earnings per share before effect of
extraordinary item.
(2) During the third quarter of 2001, we recorded an extraordinary charge of
$99,000, net of minority share, for write-off of unamortized loan costs in
conjunction with a refinancing of long-term debt.
(3) During the fourth quarter of 2000, we recorded a charge of $237,000 for
costs of an equity transaction that was terminated by the company during this
quarter.
</FN>
</TABLE>

Note 11.  Subsequent Events

The Board of Directors declared a regular quarterly dividend of $0.31 per share
on January 18, 2002, payable on February 15, 2002, to shareholders of record on
February 1, 2002. The Board of Directors also authorized the payment of
dividends totaling $2,740 to Series B Preferred shareholders in accordance with
the investment agreement for those shares.

During the first quarter of 2002, we refinanced long-term debt secured by deeds
of trust and assignment of rents of Oakbrook Apartments, discussed in Note 3.

                                       46
<PAGE>


BNP RESIDENTIAL PROPERTIES, INC.
-------------------------------------------------------------------------------
Schedule III - Real Estate and Accumulated Depreciation
Year ended December 31, 2001
<TABLE>
<CAPTION>


           Description                 Encumb.              Initial Costs              Costs
           -----------                 -------              -------------           Capitalized
                                                                    Buildings &      Subsequent
                                                        Land        Improvem'ts    to Acquisition
<S>                                    <C>            <C>            <C>               <C>
Apartment Properties:
North Carolina:
Abbington Place, Greensboro             $15,785,250    $2,302,000     $23,598,676         $601,704
Allerton Place, Greensboro               10,270,000     1,384,000      14,650,428          226,575
Chason Ridge, Fayetteville                9,552,805       624,000      11,790,472          710,576
Harris Hill, Charlotte                    5,790,554     1,003,298       7,867,857          924,989
Madison Hall, Clemmons                    4,245,000       303,000       6,054,307          218,503
Oak Hollow, Cary                          8,385,000     1,480,000      10,808,689          513,593
Oak Hollow - Phase 2, Cary               10,122,066     1,914,000      10,485,239          993,710
Oakbrook, Charlotte                       6,094,398       848,835       8,523,384          899,773
Paces Commons, Charlotte                 16,250,000     1,430,158      12,871,424        1,330,792
Paces Village, Greensboro                 7,000,000     1,250,000       9,416,580          573,619
Pepperstone, Greensboro                   3,883,750       552,000       5,015,153          334,069
Savannah Place, Winston-Salem             7,312,500       790,000      10,032,721          395,034
Summerlyn Place, Burlington               6,645,000       837,000       9,559,115          124,008
Waterford Place, Greensboro              11,089,000     1,686,000      16,745,972          262,812
Woods Edge, Durham                        9,750,000       994,000      13,061,195        1,397,493
Computer and support equipment              123,158             -               -          719,260
                                   ------------------------------------------------------------------
                                        132,298,481    17,398,291     170,481,211       10,226,511
Virginia:
Latitudes, Virginia Beach                12,031,741     3,360,000      18,606,667        1,521,268
                                   ------------------------------------------------------------------
Total Apartment Properties              144,330,222    20,758,291     189,087,878       11,747,779

Restaurant Properties:
North Carolina:
Bessemer City                                             152,079         391,060                -
Burlington                               (1)              162,411         417,629                -
Denver                                   (1)              275,484         708,387                -
Eden                                     (1)              253,282         651,296                -
Fayetteville (Ramsey)                    (1)              260,135         668,919                -
Fayetteville (N.Eastern)                 (1)              308,271         792,696                -
Gastonia (E. Franklin)                   (1)              230,421         592,511                -
Hillsborough                             (1)              290,868         747,948                -
</TABLE>

<TABLE>
<CAPTION>

                                               Gross Amount at Which
           Description                    Carried at Close of Period (2)
           -----------                   -------------------------------
                                                   Buildings &                      Accumulated    Date of     Date       Life
                                       Land        Improvem'ts        Total         Depreciation   Constr.   Acquired   (Years)
<S>                                  <C>            <C>              <C>               <C>            <C>       <C>          <C>
Apartment Properties:
North Carolina:
Abbington Place, Greensboro           $2,302,000     $24,200,380     $26,502,380       $3,834,403      1997      Dec-97       40
Allerton Place, Greensboro             1,384,000      14,877,003      16,261,003        1,735,724      1998      Sep-98       40
Chason Ridge, Fayetteville               994,606      12,130,442      13,125,048        1,147,572      1994      Jan-99       40
Harris Hill, Charlotte                 1,003,298       8,792,846       9,796,144        1,897,495      1988      Dec-94       40
Madison Hall, Clemmons                   303,000       6,272,810       6,575,810          674,516      1997      Aug-98       40
Oak Hollow, Cary                       1,480,000      11,322,282      12,802,282        1,143,956      1983      Jul-98       40
Oak Hollow - Phase 2, Cary             1,914,000      11,478,949      13,392,949          402,238      1986      Dec-00       40
Oakbrook, Charlotte                      848,835       9,421,498      10,270,333        2,028,437      1985      Jun-94       40
Paces Commons, Charlotte               1,430,158      14,202,216      15,632,374        3,425,878      1988      Jun-93       40
Paces Village, Greensboro              1,250,000       9,990,199      11,240,199        1,756,203      1988      Apr-96       40
Pepperstone, Greensboro                  552,000       5,349,222       5,901,222          800,394      1992      Dec-97       40
Savannah Place, Winston-Salem            790,000      10,427,755      11,217,755        1,490,129      1991      Dec-97       40
Summerlyn Place, Burlington              837,000       9,683,123      10,520,123        1,015,160      1998      Sep-98       40
Waterford Place, Greensboro            1,686,000      17,008,784      18,694,784        2,661,940      1997      Dec-97       40
Woods Edge, Durham                       994,000      14,458,688      15,452,688        1,551,139      1985      Jun-98       40
Computer and support equipment                 -         719,260         719,260          353,980
                                   ---------------------------------------------------------------
                                      17,768,897     180,335,457     198,104,354       25,919,164
Virginia:
Latitudes, Virginia Beach              3,360,000      20,125,116      23,485,116        4,454,886      1989      Oct-94       38
                                   ---------------------------------------------------------------
Total Apartment Properties            21,128,897     200,460,573     221,589,470       30,374,050

Restaurant Properties:
North Carolina:
Bessemer City                                  -               -               -                -    Nov-77      Apr-87       40
Burlington                               162,411         417,629         580,040          153,565    Oct-85      Apr-87       40
Denver                                   275,484         708,387         983,871          260,479    Jul-83      Apr-87       40
Eden                                     253,282         651,296         904,578          239,486    Jun-73      Apr-87       40
Fayetteville (Ramsey)                    260,135         668,919         929,054          245,967    Oct-73      Apr-87       40
Fayetteville (N.Eastern)                 308,271         792,696       1,100,967          291,480    Sep-83      Apr-87       40
Gastonia (E. Franklin)                   230,421         592,511         822,932          217,870    Apr-63      Apr-87       40
Hillsborough                             290,868         747,948       1,038,816          275,025    Mar-78      Apr-87       40
</TABLE>

                                       47
<PAGE>



<TABLE>
<CAPTION>


           Description                 Encumb.              Initial Costs              Costs
           -----------                 -------              -------------           Capitalized
                                                                    Buildings &      Subsequent
                                                        Land        Improvem'ts    to Acquisition
<S>                                    <C>            <C>            <C>               <C>
Kinston (W. Vernon)                      (1)              237,135         609,777                -
Kinston (Richlands)                      (1)              231,678         595,743                -
Newton                                   (1)              223,453         574,594                -
Siler City                               (1)              268,312         689,945                -
Spring Lake                              (1)              218,925         562,949                -
Thomasville (E. Main)                    (1)              253,716         652,411                -
Thomasville (Randolph)                   (1)              327,727         842,726                -
                                                    --------------------------------------------------
                                                        3,693,897       9,498,591                -
Virginia:
Ashland                                  (1)              296,509         762,452                -
Blackstone                               (1)              275,565         708,596                -
Bluefield                                (1)              205,700         528,947                -
Chester                                  (1)              300,165         771,852                -
Clarksville                              (1)              211,545         543,972                -
Clintwood                                (1)              222,673         572,588                -
Dublin                                   (1)              364,065         936,168                -
Franklin                                 (1)              287,867         740,230                -
Galax                                    (1)              309,578         796,057                -
Hopewell                                 (1)              263,939         678,701                -
Lebanon                                  (1)              266,340         684,876                -
Lynchburg (Langhorne)                    (1)              249,865         642,509                -
Lynchburg (Timberlake)                   (1)              276,153         710,107                -
Norfolk                                  (1)              325,822         837,829                -
Orange                                   (1)              244,883         629,699                -
Petersburg                               (1)              357,984         920,531                -
Richmond (Forest Hill)                   (1)              196,084         504,216                -
Richmond (Midlothian)                    (1)              270,736         696,179                -
Richmond (Myers)                         (1)              321,946         827,861                -
Roanoke (Hollins)                        (1)              257,863         663,076                -
Roanoke (Abenham)                        (1)              235,864         606,507                -
Rocky Mount                              (1)              248,434         638,829                -
Smithfield                               (1)              223,070         573,608                -
Staunton                                 (1)              260,569         670,035                -
Verona                                   (1)              191,631         492,765                -
</TABLE>


<TABLE>
<CAPTION>

                                                Gross Amount at Which
           Description                     Carried at Close of Period (2)
           -----------                    -------------------------------
                                                    Buildings &                      Accumulated    Date of     Date       Life
                                        Land        Improvem'ts        Total         Depreciation   Constr.   Acquired   (Years)
<S>                                  <C>            <C>              <C>               <C>            <C>       <C>          <C>
Kinston (W. Vernon)                       237,135         609,777         846,912          224,219    Jul-62      Apr-87       40
Kinston (Richlands)                       231,678         595,743         827,421          219,059    Dec-81      Apr-87       40
Newton                                    223,453         574,594         798,047          211,283    Mar-76      Apr-87       40
Siler City                                268,312         689,945         958,257          253,698    May-79      Apr-87       40
Spring Lake                               218,925         562,949         781,874          207,001    Mar-76      Apr-87       40
Thomasville (E. Main)                     253,716         652,411         906,127          239,896    Feb-66      Apr-87       40
Thomasville (Randolph)                    327,727         842,726       1,170,453          309,876    Apr-74      Apr-87       40
                                   ----------------------------------------------------------------
                                        3,541,818       9,107,531      12,649,349        3,348,904
Virginia:
Ashland                                   296,509         762,452       1,058,961          280,360    Apr-87      Apr-87       40
Blackstone                                275,565         708,596         984,161          260,556    Sep-79      Apr-87       40
Bluefield                                 205,700         528,947         734,647          194,497    Feb-85      Apr-87       40
Chester                                   300,165         771,852       1,072,017          283,816    May-73      Apr-87       40
Clarksville                               211,545         543,972         755,517          200,023    Oct-85      Apr-87       40
Clintwood                                 222,673         572,588         795,261          210,545    Jan-81      Apr-87       40
Dublin                                    364,065         936,168       1,300,233          344,236    Jul-83      Apr-87       40
Franklin                                  287,867         740,230       1,028,097          272,188    Feb-75      Apr-87       40
Galax                                     309,578         796,057       1,105,635          292,715    Jun-74      Apr-87       40
Hopewell                                  263,939         678,701         942,640          249,564    Jun-78      Apr-87       40
Lebanon                                   266,340         684,876         951,216          251,835    Jun-83      Apr-87       40
Lynchburg (Langhorne)                     249,865         642,509         892,374          236,255    Sep-82      Apr-87       40
Lynchburg (Timberlake)                    276,153         710,107         986,260          261,111    Aug-83      Apr-87       40
Norfolk                                   325,822         837,829       1,163,651          308,076    Aug-84      Apr-87       40
Orange                                    244,883         629,699         874,582          231,544    Aug-74      Apr-87       40
Petersburg                                357,984         920,531       1,278,515          338,486    Mar-74      Apr-87       40
Richmond (Forest Hill)                    196,084         504,216         700,300          185,404    Nov-74      Apr-87       40
Richmond (Midlothian)                     270,736         696,179         966,915          255,989    Jan-74      Apr-87       40
Richmond (Myers)                          321,946         827,861       1,149,807          304,411    Apr-83      Apr-87       40
Roanoke (Hollins)                         257,863         663,076         920,939          243,819    Feb-73      Apr-87       40
Roanoke (Abenham)                         235,864         606,507         842,371          223,017    Nov-82      Apr-87       40
Rocky Mount                               248,434         638,829         887,263          234,902    May-80      Apr-87       40
Smithfield                                223,070         573,608         796,678          210,920    Apr-77      Apr-87       40
Staunton                                  260,569         670,035         930,604          246,377    Sep-83      Apr-87       40
Verona                                    191,631         492,765         684,396          181,193    Jan-85      Apr-87       40
</TABLE>


                                       48
<PAGE>


<TABLE>
<CAPTION>


           Description                 Encumb.              Initial Costs              Costs
           -----------                 -------              -------------           Capitalized
                                                                    Buildings &      Subsequent
                                                        Land        Improvem'ts    to Acquisition
<S>                                    <C>            <C>            <C>               <C>
Virginia Beach (Lynnhaven)               (1)              271,570         698,322                -
Virginia Beach (Holland)                 (1)              277,943         714,710                -
Wise                                     (1)              219,471         564,355                -
                                                        7,433,834      19,115,577                -
                                                    -------------------------------------------------
       Total Restaurant Properties       18,000,000    11,127,731      28,614,168                -
                                   ------------------------------------------------------------------
 Total Real Estate                     $162,330,222   $31,886,022    $217,702,046      $11,747,779
                                   ==================================================================
</TABLE>

<TABLE>
<CAPTION>

                                               Gross Amount at Which
           Description                    Carried at Close of Period (2)
           -----------                   -------------------------------
                                                   Buildings &                      Accumulated    Date of     Date       Life
                                       Land        Improvem'ts        Total         Depreciation   Constr.   Acquired   (Years)
<S>                                 <C>            <C>              <C>               <C>            <C>       <C>          <C>
Virginia Beach (Lynnhaven)               231,731         698,322         930,053          256,778    Jun-80      Apr-87       40
Virginia Beach (Holland)                 277,943         714,710         992,653          262,804    Aug-83      Apr-87       40
Wise                                     219,471         564,355         783,826          207,515    Jun-80      Apr-87       40
                                       7,393,995      19,115,577      26,509,572        7,028,936
                                   ---------------------------------------------------------------
       Total Restaurant Properties    10,935,813      28,223,108      39,158,921       10,377,840
                                   ---------------------------------------------------------------
 Total Real Estate                   $32,064,710    $228,683,681    $260,748,391      $40,751,890
                                   ===============================================================

<FN>
(1) Indicates the restaurants encumbered by a revolving line of credit with a
bank for up to $18,000,000, outstanding at 12/31/01.

(2) Aggregate cost at December 31, 2001, for federal income tax purposes was
approximately $236.0 million.
</FN>
</TABLE>


                                       49
<PAGE>



 BNP RESIDENTIAL PROPERTIES, INC.
-------------------------------------------------------------------------------
 Schedule III - Real Estate and Accumulated Depreciation
<TABLE>
<CAPTION>

                                                     2001                   2000                   1999
                                             -------------------------------------------------------------------
<S>                                               <C>                    <C>                    <C>
 Real estate investments:
      Balance at beginning of year                 $  257,520,268         $  243,910,146         $  231,743,720
      Additions during year
         Acquisitions by merger                                 -                      -                      -
         Other acquisitions                               370,605             12,399,239             12,414,472
         Effect of consolidation (1)                      593,833                      -                      -
         Improvements, etc.                             2,809,344              2,121,154              2,415,495
      Deductions during year                             (545,659)              (910,271)            (2,663,541)
                                             ---------------------  ---------------------  ---------------------
      Balance at close of year                     $  260,748,391         $  257,520,268         $  243,910,146
                                             =====================  =====================  =====================


 Accumulated depreciation:
      Balance at beginning of year                 $   25,926,208         $   19,552,177         $   32,815,205
      Effect of consolidation (1)                         248,026
      Provision for depreciation                        7,828,457              7,155,697              6,955,955
      Deductions during year                             (139,798)              (266,700)              (581,924)
                                             ---------------------  ---------------------  ---------------------
      Balance at close of year                     $   40,751,890         $   32,815,205         $   25,926,208
                                             =====================  =====================  =====================

<FN>
 (1)Effective January 2001, the consolidated accounts of BNP Residential
    Properties Limited Partnership include the assets of BNP Management, Inc.
</FN>

                                       50
<PAGE>
</TABLE>





                                INDEX TO EXHIBITS

<TABLE>
<CAPTION>

Exhibit No.
                                                                                                     Page
   <S>       <C>                                                                                       <C>
     2.1*     Master Agreement of Merger and Acquisition by and among BNP Residential Properties,        -
              Inc., BNP Residential Properties Limited Partnership, Paul G. Chrysson, James G.
              Chrysson, W. Michael Gilley, Matthew G. Gallins, James D. Yopp, and the partnerships
              and limited liability companies listed therein, dated September 22, 1997 (filed as
              Exhibit 2.1 to Registration Statement No. 333-39803 on Form S-2, December 16, 1997,
              and incorporated herein by reference)
     2.2*     Amendment to Master Agreement of Merger and Acquisition dated September 22, 1997, by       -
              and among BNP Residential Properties, Inc., BNP Residential Properties Limited
              Partnership, Paul G. Chrysson, James G. Chrysson, W. Michael Gilley, Matthew G.
              Gallins, James D. Yopp, and the partnerships and limited liability companies listed
              therein, dated November 3, 1997 (filed as Exhibit 2.3 to BNP Residential Properties,
              Inc. Current Report on Form 8-K dated December 1, 1997, and incorporated herein by
              reference)
     3.1*     Articles of Incorporation (filed as Exhibit 3.1 to BNP Residential Properties, Inc.,       -
              Current Report on Form 8-K dated March 17, 1999, and incorporated herein by
              reference)
     3.2*     Articles Supplementary, Classifying and Designating 909,090 Shares of Series B             -
              Cumulative Convertible Preferred Stock, dated December 28, 2001 (filed as Exhibit
              3.1 to BNP Residential Properties, Inc. Current Report on Form 8-K dated December
              28, 2001, and incorporated herein by reference)
     3.3*     Amended and Restated By-Laws (filed as Exhibit 3.2 to BNP Residential Properties,          -
              Inc., Current Report on Form 8-K dated December 28, 2001, and incorporated herein by
              reference)
     4.1*     Rights Agreement, dated March 18, 1999, between the Company and First Union National       -
              Bank (filed as Exhibit 4 to BNP Residential Properties, Inc. Current Report on Form
              8-K dated March 17, 1999, and incorporated herein by reference)
     4.2*     Registration Rights Agreement By and Among BNP Residential Properties, Inc. and            -
              Preferred Investment I, LLC, dated December 28, 2001 (filed as Exhibit 4 to BNP
              Residential Properties, Inc. Current Report on Form 8-K dated December 28, 2001, and
              incorporated herein by reference)
    10.1*     Amended and Restated Agreement of Limited Partnership of BNP Residential Properties        -
              Limited Partnership (filed as Exhibit 10.1 to BNP Residential Properties, Inc.
              Annual Report on Form 10-K dated December 31, 1998, and incorporated herein by
              reference)
    10.2*     Amendment to Second Amended and Restated Agreement of Limited Partnership of BNP           -
              Residential Properties Limited Partnership, dated December 28, 2001 (filed as
              Exhibit 10.1 to BNP Residential Properties, Inc. Current Report on Form 8-K dated
              December 28, 2001, and incorporated herein by reference)
    10.3*     Investment Agreement By and Between BNP Residential Properties, Inc. and Preferred         -
              Investment I, LLC, dated December 28, 2001 (filed as Exhibit 10.2 to BNP Residential
              Properties, Inc. Current Report on Form 8-K dated December 28, 2001, and
              incorporated herein by reference)
    10.4*     Amended and Restated Master Lease Agreement dated December 21, 1995, between BNP           -
              Residential Properties, Inc. and Boddie-Noell Enterprises, Inc. (filed as Exhibit
              10.1 to BNP Residential Properties, Inc. Annual Report on Form 10-K dated December
              31, 1995, and incorporated herein by reference)
    10.5*     BNP Residential Properties, Inc. 1994 Stock Option and Incentive Plan effective            -
              August 4, 1994, and amended effective May 15, 1998 (filed as an exhibit in Schedule
              14A of Proxy Statement dated April 13, 1998, and incorporated herein by reference)


                                       51
<PAGE>

    10.6*     Form and description of Employment Agreements dated July 15, 1997, between BNP             -
              Residential Properties, Inc. and certain officers (filed as Exhibit 10 to BNP
              Residential Properties, Inc. Quarterly Report on Form 10-Q for the quarter ended
              September 30, 1997, and incorporated herein by reference)
    21        Subsidiaries of the Registrant                                                            53
    23        Consent of Ernst & Young LLP                                                              54

</TABLE>

* Incorporated herein by reference


                                       52
<PAGE>