BNP Residential Properties Announces Operating Results for the Third Quarter of 2006.

CHARLOTTE, N.C. -- BNP Residential Properties, Inc. (AMEX: BNP) today announced operating results for the quarter ended September 30, 2006.

Overview: BNP Residential Properties, Inc. is a real estate investment trust focused on owning and operating apartment communities. The Company currently owns and operates 32 apartment communities containing a total of 8,180 units, and serves as general partner of partnerships that own 3 communities containing 713 units. In addition to the apartment properties, the Company owns 40 properties that are leased on a triple net basis to a restaurant operator. The Company currently operates in the states of North Carolina, South Carolina and Virginia.

BNP Residential Properties, Inc. is structured as an UPREIT, or umbrella partnership real estate investment trust. The Company is the sole general partner and owns a controlling interest in BNP Residential Properties Limited Partnership, the operating partnership. All of the Company's operations are conducted through the operating partnership.

In August 2006 we entered into an agreement and plan of merger pursuant to which an affiliate of international investment and advisory firm Babcock & Brown Limited will acquire BNP through the mergers of the Company and the operating partnership with subsidiaries of Babcock & Brown. We intend to complete the mergers as soon as practicable following approval by our shareholders (for which we expect to schedule a special meeting in December 2006) and receipt of consents to the merger transactions, satisfactory to Babcock & Brown, from certain of our lenders. Accordingly, any delay in receiving such consents could result in a delay between the approval of the mergers and the effective date of the mergers until as late as June 30, 2007.

Operating Results:

See Tabular Information Below

Results of Operations:

We were pleased with the results of the third quarter of 2006. The operating results reflect the growth in our apartment portfolio and continued improvement in our apartment operations and apartment markets. Demand for our apartments remained strong, and we saw increases in both occupancy and revenue per apartment unit. Meanwhile, apartment expenses have been consistent with our expectations.

Funds from Operations: Funds from operations of the operating partnership for the third quarter of 2006 decreased by 11.9% to $3.4 million from $3.9 million in the third quarter of 2005. On a diluted basis, FFO per share was $0.26 per share compared to $0.33 per share in 2006. For the first nine months of 2006, funds from operations for the operating partnership increased by 8.8% to $12.2 million from $11.2 million in 2005. On a diluted basis, FFO per share for the first nine months of 2006 was $0.95 compared to $0.98. These comparisons reflect the positive impact of apartment additions and continued improvement in apartment operating results, which have been offset or reduced by a $1.3 million charge in the third quarter of 2006 for costs related to the pending merger transaction. If the merger transaction costs had not been incurred, FFO would have been $4.7 million in the third quarter and $13.5 million in the first nine months of 2006. (See also "Non-GAAP Information" below.)

Funds Available for Distribution: Funds available for distribution for the third quarter of 2006 totaled $2.7 million, a decrease of 14.4% compared to the same period in 2005. For the first nine months of 2006, funds available for distribution was $10.1 million, an increase of 8.0% over the same period in 2005. (See also "Non-GAAP Information" below)

Net Income/Loss: Net loss for the third quarter of 2006 was $1.3 million compared to $150,000 for the third quarter of 2005. Through the first nine months of 2006, net loss was $1.7 million compared to $6.5 million in the same period in 2005. On a diluted basis, net loss attributable to common shareholders for the third quarter of 2006 was $0.13 per common share compared to $0.04 per common share for the third quarter of 2005. On a diluted basis, net loss attributable to common shareholders was $0.17 per common share for the first nine months of 2006 compared to $0.79 per common share through the first nine months in 2005.

Revenue: Total revenue in the third quarter of 2006 was $21.3 million, an increase of 12.8% compared to 2005. Apartment related income (apartment rental income plus income from apartment management and investment activities) accounted for 95.5% of total revenue in the third quarter of 2006 compared to 94.9% in 2005. Restaurant rental income was 4.5% of total revenue in the third quarter of 2006 compared to 5.1% in 2005. For the first nine months of 2006, total revenue was $62.2 million, an increase of 19.3% compared to 2005.

Apartments: Apartment rental income in the third quarter of 2006 was $20.3 million, an increase of 14.8% compared to 2005. For the first nine months of 2006, apartment rental income was $59.1 million, an increase of 21.4% compared to 2005. These increases were primarily attributable to apartment communities acquired in 2005 and 2006 (eight communities in 2005 and two communities in the first nine months of 2006). In addition, we saw continued increases in rental income at our existing apartment communities. For the third quarter of 2006, average economic occupancy for all owned apartments was 95.6% and average monthly revenue per occupied unit was $783. For the first nine months of 2006, average economic occupancy for all owned apartments was 95.1% and average monthly revenue per occupied unit was $770.

On a same-units basis, apartment revenue increased by 6.1% in the third quarter of 2006 as compared to the same period in 2005, reflecting increases in both average economic occupancy and revenue per occupied unit. On a same-units basis, average economic occupancy was 95.7% for the third quarter of 2006 compared to 94.7% in 2005. Average monthly revenue per occupied unit for the same units was $797 in the third quarter of 2006 compared to $759 in 2005. For the first nine months of 2006, apartment revenue increased by 4.9% as compared to the same period in 2005. For the first nine months of 2006, average economic occupancy was 95.3% compared to 94.8% in 2005, and average monthly revenue per occupied unit was $784 compared to $751 in 2005.

On a same-units basis, apartments NOI (apartment rental income less apartment operating expenses) for the third quarter of 2006 increased by 7.1% compared to the third quarter of 2005. For the first nine months of 2006, same-units NOI increased by 5.7% compared to the first nine months of 2005.

Restaurants: Restaurant rental income was $957,000 in the third quarter, and $2.9 million through the first nine months of both 2006 and 2005. We received the minimum rent specified in the lease agreement in the first three quarters of both 2006 and 2005. Same store sales at our restaurant properties decreased by 0.4% in the third quarter and increased by 3.1% for the first nine months of 2006 compared to the same periods in 2005.

Expenses: Total expenses, including non-cash charges for depreciation and amortization, were $22.9 million in the third quarter of 2006, an increase of 18.3% compared to 2005. Expenses for the first nine months were $64.3 million, an increase of 6.1% compared to 2005. In addition to increases in both operating and financing expenses attributable to growth in the size of our apartment operations, the 2006 amounts include $1.3 million in costs related to the pending merger transaction. However, 2005 amounts include charges related to loan refinance transactions as well as one-time distributions to a minority partner from refinance proceeds.

Apartment operations expense (the direct costs of on-site operations) was $8.0 million in the third quarter of 2006, an increase of 12.5% compared to 2005. Apartment operations expense was $22.8 million for the first nine months of 2006, an increase of 19.7% over 2005. These increases were primarily attributable to apartment communities acquired in 2005 and 2006, along with the consolidation of three additional communities. Apartment operations expense represented 39.2% of related apartment rental income for the third quarter and 38.5% for the first nine months of 2006 as compared to 39.9% and 39.0% respectively, in 2005. On a same-units basis, apartment operations expense increased by 4.5% for the third quarter and by 3.8% for the first nine months of 2006.

Apartment administrative expense (the costs associated with oversight, accounting and support of the company's apartment management activities for both owned and third party properties) was $0.9 million in the third quarter of 2006 compared to $0.8 million in 2005. For the first nine months, apartment administrative expense was $2.7 million compared to $2.2 million in 2005. Corporate administration expense was $0.7 million in the third quarters of both 2006 and 2005. For the first nine months, corporate administration expense increased to $2.6 million from $2.2 million in 2005.

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

Depreciation and amortization totaled $5.2 million in the third quarter of 2006, an increase of 11.6% compared to 2005. For the first nine months, depreciation and amortization totaled $15.0 million, an increase of 20.5% compared to 2005. This increase reflects apartment acquisitions in 2006 and 2005, as well as additions and replacements at other communities.

Interest expense was $6.7 million in the third quarter of 2006, an increase of 11.6% compared to 2005. For the first nine months, interest expense was $19.7 million, an increase of 21.4% compared to 2005. These increases are attributable to the impact of new debt issued in conjunction with acquisitions of apartment properties, the inclusion of interest on debt of the three additional limited partnerships included in our consolidation, and increases in variable interest rates.

Dividend: On October 16, 2006, the Board of Directors declared a regular quarterly dividend in the amount of $0.26 per share to be paid on November 15, 2006, to shareholders of record on November 1, 2006. During the first nine months, the company paid common dividend distributions totaling $0.78 per share in 2006 and $0.75 in 2005.

Non-GAAP Information: Funds from operations is frequently referred to as "FFO." FFO is defined by the National Association of Real Estate Investment Trusts ("NAREIT") as "net income (computed in accordance with generally accepted accounting principles), excluding gains (losses) from sales of property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures." Our calculation of FFO is consistent with FFO as defined by NAREIT. Because we hold all of our assets in and conduct all of our operations through the operating partnership, we measure FFO at the operating partnership level (i.e., before minority interest in the operating partnership).

Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. In fact, real estate values have historically risen or fallen with market conditions. FFO is intended to be a standard supplemental measure of operating performance that excludes historical cost depreciation from - or "adds it back" to - GAAP net income. We consider FFO to be useful in evaluating potential property acquisitions and measuring operating performance.

Funds available for distribution is frequently referred to as "FAD." We define FAD as FFO plus non-cash expense for amortization and write-off of unamortized loan costs, plus (less) gains (losses) from sales of property, less recurring capital expenditures. We believe that, together with net income and cash flows, FAD provides investors with an additional measure to evaluate the ability of the Operating Partnership to incur and service debt, to fund acquisitions and other capital expenditures, as well as to fund distributions to shareholders and minority unitholders.

Funds from operations and funds available for distribution do not represent net income or cash flows from operations as defined by generally accepted accounting principles. You should not consider FFO or FAD to be alternatives to net income as reliable measures of the company's operating performance; nor should you consider FFO or FAD to be alternatives to cash flows from operations 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.

Forward Looking Statement Disclosure: This press release includes forward-looking statements concerning the company's operations, economic performance and financial condition, including, in particular, forward-looking statements regarding future operations and performance. Such statements are subject to various risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors identified in our annual report on Form 10-K for the year ending December 31, 2005.

Information Requests: More information may be obtained by calling our Corporate Offices at [phone] or on the Internet through our website at www.bnp-residential.com. You may also e-mail information requests to our investor relations department at [e-mail].

[TABLE OMITTED]
[TABLE OMITTED]
[TABLE OMITTED]
[TABLE OMITTED]