Edgar Filing: BRE PROPERTIES INC /MD/

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For the quarterly period ended June 30, 2004

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q/A

AMENDMENT NO. 1 TO FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2004

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

Commission file number 1-14306

BRE PROPERTIES, INC.

(Exact Name of Registrant as Specified in Its Charter)


Maryland		94-1722214
*(State or Other Jurisdiction of* *Incorporation or Organization)*		*(I.R.S. Employer* *Identification No.)*

44 Montgomery Street 36^th Floor San Francisco, CA		94104-4809
*(Address of Principal Executive Offices)*		*(Zip Code)*

(415) 445-6530

(Registrant’s Telephone Number, Including Area Code)

N/A

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

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. x Yes ¨ No

Indicate by check mark X whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act. x Yes ¨ No

Number of shares of common stock

outstanding as of July 28, 2004

50,196,695

EXPLANATORY NOTE

This Amendment No. 1 on Form 10-Q/A to Form 10-Q of BRE Properties, Inc., for the quarter ended June 30, 2004 incorporates revisions to historical financial data and related descriptions. This amendment is not intended to update other information presented in this report as originally filed, except where specifically noted. We are not required to and we have not updated any forward-looking statements previously included in the Form 10-Q.

On January 31, 2005, the Company announced a restatement of previously issued financial statements to ensure that accrued payroll and certain other real estate costs and expenses were properly reflected at the end of each reporting period. During management’s review of the Company’s accounting policies and internal control over financial reporting, management determined that the Company should have recognized these costs as incurred, rather than as paid. Management has concluded that this control deficiency did not result in material misstatements in previously issued quarterly or annual financial statements, as the historical amounts by which expenses and liability balances were misstated were not material to our financial condition, results of operations, or cash flows. However, adjusting for the cumulative effect of the errors in the fourth quarter of 2004 would have been material to that quarter. Accordingly, the Company determined to restate the financial statements for the fiscal years ended December 31, 2000, through December 31, 2003 filed on Form 10-K, and the quarterly periods ended March 31, June 30, and September 30, 2004 and 2003, filed on Form 10-Q to adjust for these out of period items.

In addition, during the third quarter of 2004, BRE expensed $1,792,000 in litigation and consulting charges relating to the Red Hawk Ranch construction defect lawsuit. Portions of that charge (in the amounts of $850,000 and $515,000 respectively) were incurred in the first and second quarters and recognized as capitalized costs, however such costs should have been reflected as an expense in those periods. Management did not deem those portions of the charges to be material to the reported financial results for the first, second or third quarters of 2004, and accordingly did not restate the reported financial results for the first and second quarters of 2004 to expense the portions of the charges incurred during those periods. In connection with the restatement described above, management determined to expense in the first and second quarters of 2004 the portions of the charges incurred during those quarters and previously expensed during the third quarter of 2004.

This Amendment No. 1 is being filed to amend and restate the items described below contained in our Quarterly report on Form 10-Q filed with the Securities and Exchange Commission on July 30, 2004. This Amendment amends Part I, Financial Statements; Part I, Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations; Part I, Item 4, Controls and Procedures; and Part II, Item 1, Legal Proceedings, for the following purposes:

•

To amend Part I, Item 1, Financial Statements, to restate our unaudited consolidated financial statements and the related notes, as more fully described in Note A to our restated consolidated financial statements, and to separately classify Partnership income from Other income to comply with Rule 5-03 of Regulation S-X;

•

To amend Part I, Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations, to take into account the effects of the restatement;

•

To amend Part I, Item 4, Controls and Procedures, to reflect the matters discussed above;

•

To amend Part II, Item 1, Legal Proceedings, to provide additional information regarding the proceedings that gave rise to the expenses described in Note A to our consolidated financial statements;

•

To file a revised Exhibit 12 (Statement of Computations of Ratios of Earnings to Fixed Charges and Earnings to Fixed Charges and Preferred Stock Dividends) that reflects the restated financial statements; and

•

To file new certifications of our Chief Executive Officer and Chief Financial Officer.

BRE PROPERTIES, INC.

INDEX TO FORM 10-Q/A

June 30, 2004


		Page No.
PART I	FINANCIAL INFORMATION

	ITEM 1:
	Consolidated balance sheets – June 30, 2004 (unaudited) (restated) and December 31, 2003 (restated)	2

	Consolidated statements of income (unaudited) – three months ended June 30, 2004 (restated) and 2003 (restated)	3

	Consolidated statements of income (unaudited) – six months ended June 30, 2004 (restated) and 2003 (restated)	4

	Consolidated statements of cash flows (unaudited) – six months ended June 30, 2004 (restated) and 2003 (restated)	5

	Condensed notes to consolidated financial statements (unaudited)	6-11

	ITEM 2:
	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12-24

	ITEM 3:
	Quantitative and Qualitative Disclosures about Market Risk	25

	ITEM 4:
	Controls and Procedures	25-27

PART II	OTHER INFORMATION

	ITEM 1: Legal Proceedings	27-28
	ITEM 2: Changes in Securities and Use of Proceeds	28
	ITEM 3: Defaults Upon Senior Securities	28
	ITEM 4: Submission of Matters to a Vote of Security Holders	28
	ITEM 5: Other Information	28
	ITEM 6: Exhibits and Reports on Form 8-K	29

PART I FINANCIAL INFORMATION

ITEM 1 - Financial Statements

BRE Properties, Inc.

Consolidated Balance Sheets

(Dollar amounts in thousands, except per share data)


	June 30, 2004			December 31, 2003
	(Restated)			(Restated)
	(unaudited)
Assets

Real estate portfolio:
Direct investments in real estate:
Investments in rental properties	$	2,432,266		$	2,281,048
Construction in progress		95,777			104,531
Less: accumulated depreciation		(268,194	)		(239,810	)

		2,259,849			2,145,769

Equity interests in and advances to real estate joint ventures-
Investments in rental properties		10,325			10,391
Land under development		13,425			28,964

Total real estate portfolio		2,283,599			2,185,124

Cash		6,374			1,105
Other assets		48,752			47,212

Total assets	$	2,338,725		$	2,233,441

Liabilities and Shareholders’ Equity

Liabilities:
Unsecured senior notes	$	848,456		$	763,915
Unsecured line of credit		160,000			196,000
Secured line of credit		140,000			100,000
Mortgage loans payable		130,735			132,414
Accounts payable and accrued expenses		46,585			45,450

Total liabilities		1,325,776			1,237,779

Minority interests		33,798			38,859

Shareholders’ equity:
Preferred stock, $0.01 par value; 10,000,000 shares authorized:
2,150,000 shares 8.5% Series A Cumulative Redeemable issued and outstanding at December 31, 2003, $25 liquidation preference (non-voting)		—			53,750
3,000,000 shares 8.08% Series B Cumulative Redeemable issued and outstanding at June 30, 2004 and December 31, 2003, $25 liquidation preference (non-voting)		75,000			75,000
4,000,000 shares 6.75% Series C Cumulative Redeemable issued and outstanding at June 30, 2004, $25 liquidation preference (non-voting)		100,000			—

Common stock, $0.01 par value; 100,000,000 shares authorized. Shares issued and outstanding: 50,178,878 at June 30, 2004 and 49,992,198 at December 31, 2003.		502			500
Additional paid-in capital		813,743			814,366
Cumulative dividends in excess of accumulated net income		(8,080	)		16,023
Stock purchase loans to executives		(2,014	)		(2,836	)

Total shareholders’ equity		979,151			956,803

Total liabilities and shareholders’ equity	$	2,338,725		$	2,233,441

See condensed notes to unaudited consolidated financial statements.

Consolidated Statements of Income (unaudited)

(Amounts in thousands, except per share data)

Check alignment on all when accept changes – lines seem off


	For the Three Months Ended June 30,
	2004			2003
	(Restated)			(Restated)
Revenues
Rental income	$	71,254		$	64,693
Ancillary income		3,416			2,984

Total revenues		74,670			67,677

Expenses
Real estate		22,824			20,190
Provision for depreciation		15,094			12,981
Interest		16,591			15,306
General and administrative		3,088			3,099
Other expenses		515			7,305

Total expenses		58,112			58,881

Other income		211			169
Income before minority interests, partnership income and discontinued operations		16,769			8,965
Less minority interests in income		(613	)		(830	)
Partnership income		264			218

Income from continuing operations		16,420			8,353
Discontinued operations:
Gain on sale		—			13,511
Discontinued operations, net		—			229

Income from discontinued operations		—			13,740

Net income		16,420			22,093
Dividends attributable to preferred stock		3,203			2,657

Net income available to common shareholders	$	13,217		$	19,436

Basic earnings per share from continuing operations	$	0.26		$	0.12
Basic earnings per share from discontinued operations		—			0.30

Basic earnings per share	$	0.26		$	0.42

Diluted earnings per share from continuing operations	$	0.26		$	0.12
Diluted earnings per share from discontinued operations		—			0.30

Diluted earnings per share	$	0.26		$	0.42

Weighted average common shares outstanding – basic		50,130			46,100

Weighted average common shares outstanding – assuming dilution		50,560			46,460

Dividends declared and paid per common share	$	0.4875		$	0.4875

See condensed notes to unaudited consolidated financial statements.

Consolidated Statements of Income (unaudited)

(Amounts in thousands, except per share data)


	For the Six Months Ended June 30,
	2004			2003
	(Restated)			(Restated)
Revenues
Rental income	$	139,478		$	128,196
Ancillary income		6,645			5,841

Total revenues		146,123			134,037

Expenses
Real estate		45,897			39,361
Provision for depreciation		29,610			25,811
Interest		32,267			29,747
General and administrative		6,398			5,629
Other expenses		1,365			7,305

Total expenses		115,537			107,853

Other income		518			581

Income before minority interests, partnership income and discontinued operations		31,104			26,765
Less minority interests in income		(1,331	)		(1,654	)
Partnership income		429			551

Income from continuing operations		30,202			25,662
Discontinued operations:
Gain on sales		—			23,147
Discontinued operations, net		—			936

Income from discontinued operations		—			24,083

Net income		30,202			49,745
Dividends attributable to preferred stock		5,386			5,314

Net income available to common shareholders	$	24,816		$	44,431

Basic earnings per share from continuing operations	$	0.50		$	0.44
Basic earnings per share from discontinued operations		—			0.53

Basic earnings per share	$	0.50		$	0.97

Diluted earnings per share from continuing operations	$	0.49		$	0.44
Diluted earnings per share from discontinued operations		—			0.52

Diluted earnings per share	$	0.49		$	0.96

Weighted average common shares outstanding – basic		50,095			46,025

Weighted average common shares outstanding – assuming dilution		50,530			46,315

Dividends declared and paid per common share	$	0.975		$	0.975

See condensed notes to unaudited consolidated financial statements.

Consolidated Statements of Cash Flows (unaudited)

(Dollar amounts in thousands)


	For the Six Months Ended June 30,
	2004			2003
	(Restated)			(Restated)
Cash flows from operating activities:
Net income	$	30,202		$	49,745
Adjustments to reconcile net income to net cash flows generated by operating activities:
Gain on sales of discontinued operations		—			(23,147	)
Income from investments in unconsolidated entities		(429	)		(551	)
Provision for depreciation		29,610			25,811
Depreciation from discontinued operations		—			306
Minority interests in income from consolidated subsidiaries		1,331			1,654
Increase in other assets		(3,334	)		(348	)
Increase (decrease) in accounts payable and accrued expenses		1,970			4,553

Net cash flows generated by operating activities		59,350			58,023

Cash flows from investing activities:
Proceeds from sales of rental property, net		—			71,482
Multifamily communities purchased		(68,668	)		—
Capital expenditures		(5,382	)		(5,110	)
Rehabilitation expenditures and other		(4,964	)		(3,348	)
Additions to direct investment in real estate- construction in progress		(20,045	)		(25,636	)
Additions to land under development		(25,633	)		(1,567	)
Distributions from unconsolidated entities		948			643

Net cash flows (used in) generated by investing activities		(123,744	)		36,464

Cash flows from financing activities:
Issuance of unsecured senior notes, net		99,437			—
Principal payments on unsecured senior notes and mortgage loans		(16,072	)		(91,032	)
Lines of credit:
Advances		241,000			201,000
Repayments		(237,000	)		(157,000	)
Fees		(388	)		(4,011	)
Proceeds from preferred stock offering, net		96,436			—
Redemption of preferred stock		(53,750	)		—
Cash dividends paid to common shareholders		(48,919	)		(45,017	)
Cash dividends paid to preferred shareholders		(5,386	)		(5,314	)
Distributions to operating company unit holders		(948	)		(1,160	)
Distributions to other minority members		(398	)		(503	)
Redemption of minority member interest		(8,114	)		—
Repurchase of common shares		—			(724	)
Proceeds from exercises of stock options, net		3,765			8,480

Net cash flows generated by (used in) financing activities		69,663			(95,281	)

Increase (decrease) in cash		5,269			(794	)
Balance at beginning of period		1,105			893

Balance at end of period	$	6,374		$	99

Supplemental disclosure of non cash activities:
Transfers of direct investments in real estate-construction in progress to investments in rental properties	$	69,136		$	56,575

Transfer of land under development to direct investments in real estate – construction in progress	$	41,870		$	—

Change in accrued development costs for construction in progress and land under development		(835	)		230

Decrease in carrying value of other assets and debt attributed to hedging activities	$	(1,066	)	$	(62	)

Minority interest unit conversions to common shares	$	—		$	404

See condensed notes to unaudited consolidated financial statements.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

June 30, 2004

NOTE A - RESTATEMENT

The impact of the items described above on the prior balance sheets and statements of income included in these financial statements is set forth below.

Impact of Restatement on Consolidated Balance Sheets


	June 30, 2004				December 31, 2003
(amounts in thousands, except per share data)	As Previously Reported		As Restated		As Previously Reported		As Restated
Total real estate portfolio	$	2,281,578	$	2,283,599	$	2,180,903	$	2,185,124
Other assets	$	47,563	$	48,752	$	45,957	$	47,212
Total assets	$	2,335,515	$	2,338,725	$	2,227,965	$	2,233,441
Total liabilities	$	1,316,698	$	1,325,776	$	1,228,562	$	1,237,779
Total shareholders’ equity	$	985,019	$	979,151	$	960,544	$	956,803
Accounts payable and accrued expenses	$	37,507	$	46,585	$	36,233	$	45,450

The impact of the restatement resulted in a decrease in shareholders’ equity as of January 1, 2003 of $3,583.

Impact of Restatement on Consolidated Statements of Income


	For the Three Months Ended June 30, 2004				For the Three Months Ended June 30, 2003
(amounts in thousands, except per share data)	As Previously Reported		As Restated		As Previously Reported		As Restated
Real estate expenses	$	23,044	$	22,824	$	19,764	$	20,190
General and administrative expense	$	3,121	$	3,088	$	2,917	$	3,099
Other expenses		—	$	515	$	7,305	$	7,305
Net income available to common shareholders	$	13,479	$	13,217	$	20,044	$	19,436
Earnings per share:
Basic earnings from continuing operations	$	0.27	$	0.26	$	0.13	$	0.12
Basic earnings from discontinued operations		—		—		0.30		0.30

Basic earnings per share	$	0.27	$	0.26	$	0.43	$	0.42

Diluted earnings from continuing operations	$	0.27	$	0.26	$	0.13	$	0.12
Diluted earnings from discontinued operations		—		—		0.30		0.30

Diluted earnings per share	$	0.27	$	0.26	$	0.43	$	0.42


	For the Six Months Ended June 30, 2004				For the Six Months Ended June 30, 2003
(amounts in thousands, except per share data)	As Previously Reported		As Restated		As Previously Reported		As Restated
Real estate expenses	$	45,190	$	45,897	$	39,160	$	39,361
General and administrative expense	$	6,343	$	6,398	$	5,600	$	5,629
Other expenses		—	$	1,365	$	7,305	$	7,305
Net income available to common shareholders	$	26,943	$	24,816	$	44,661	$	44,431
Earnings per share:
Basic earnings from continuing operations	$	0.54	$	0.50	$	0.45	$	0.44
Basic earnings from discontinued operations		—		—		0.52		0.53

Basic earnings per share	$	0.54	$	0.50	$	0.97	$	0.97

Diluted earnings from continuing operations	$	0.53	$	0.49	$	0.44	$	0.44
Diluted earnings from discontinued operations		—		—		0.52		0.52

Diluted earnings per share	$	0.53	$	0.49	$	0.96	$	0.96

NOTE B - BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q. Accordingly, certain information and footnote disclosures normally included in consolidated financial statements have been omitted. The consolidated balance sheet at December 31, 2003 has been derived from the audited statements at that date, as restated, but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. These consolidated financial statements should be read in conjunction with the Annual Report on Form 10-Ks for the years ended December 31, 2003 and 2004 of BRE Properties, Inc. (the “Company” or “BRE”). In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of normal recurring adjustments only) necessary for a fair presentation of the Company’s consolidated financial statements for the interim periods presented.

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at the dates of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Certain reclassifications have been made from the prior period’s presentation to conform to the current period’s presentation.

NOTE C – REPORTABLE SEGMENTS AND CONCENTRATION RISK

Statement of Financial Accounting Standards (SFAS) No. 131, “Disclosures about Segments of an Enterprise and Related Information,” requires certain descriptive information to be provided about an enterprise’s reportable segments. BRE has determined that it has only one operating and reportable segment, multifamily communities, which comprised approximately 98% of BRE’s consolidated assets and substantially all of BRE’s consolidated revenues for the three and six months ended June 30, 2004 and 2003.

All multifamily communities owned by the Company are located in the Western United States, in three general markets that it defines as California, Pacific Northwest and Mountain/Desert States. All revenues are from external customers and there are no revenues from transactions with other segments. There are no residents that contributed 10% or more of BRE’s total consolidated revenues in the three and six months ended June 30, 2004 or 2003.

NOTE D – STOCK-BASED COMPENSATION

Effective January 1, 2003, BRE adopted the fair value recognition provisions of SFAS No. 123, “Accounting for Stock-Based Compensation” (SFAS 123), as amended by SFAS No. 148, “Accounting for Stock-Based Compensation - Transition and Disclosure” (SFAS 148). Under the fair value method, compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. BRE has adopted the prospective method as provided for in SFAS 148, under which the provisions of SFAS 123 will be applied prospectively to all awards granted, modified or settled after January 1, 2003. Therefore, the cost related to stock-based compensation included in the determination of consolidated net income for the quarters and six months ended June 30, 2004 and 2003 is less than that which would have been recognized if the fair value method had been applied to all awards in prior years. Prior to 2003, BRE accounted for stock-based compensation under the recognition and measurement provisions of Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees,” and related Interpretations. Awards under BRE’s option plans vest over periods ranging from one to five years.

The following table illustrates the pro forma effect on consolidated net income and earnings per share of all outstanding awards in each period.


	Three months ended June 30,
(amounts in thousands, except per share data)	2004			2003
	(Restated)			(Restated)
Net income available to common shareholders, as reported	$	13,217		$	19,436
Add: Stock-based compensation expense included in reported net income		226			100
Deduct: Total stock-based compensation expense determined under fair value based method for all awards		(455	)		(812	)

Pro forma net income	$	12,988		$	18,724

Earnings per share:
Basic-as reported	$	0.26		$	0.42
Basic-pro forma	$	0.26		$	0.41
Diluted-as reported	$	0.26		$	0.42
Diluted-pro forma	$	0.26		$	0.40


	Six months ended June 30,
(amounts in thousands, except per share data)	2004			2003
	(Restated)			(Restated)
Net income available to common shareholders, as reported	$	24,816		$	44,431
Add: Stock-based compensation expense included in reported net income		438			200
Deduct: Total stock-based compensation expense determined under fair value based method for all awards		(964	)		(2,214	)

Pro forma net income	$	24,290		$	42,417

Earnings per share:
Basic-as reported	$	0.50		$	0.97
Basic-pro forma	$	0.48		$	0.92
Diluted-as reported	$	0.49		$	0.96
Diluted-pro forma	$	0.48		$	0.92

The effect of pro forma application of SFAS 123 is not necessarily representative of the effect on consolidated net income for future periods.

NOTE E – DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

BRE has four interest rate swap agreements outstanding that attain a floating rate of interest on a portion of its fixed rate debt. BRE designated these derivative instruments to be utilized as fair value hedges in accordance with SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” (SFAS 133), as amended. Under SFAS 133, the resulting assets or liabilities attributed to these derivative instruments are carried on BRE’s consolidated financial statements at their estimated fair values. The hedges are perfectly effective and, therefore, changes in the derivative fair value and the change in fair value of the hedged items during the hedging period exactly offset with no valuation impact on BRE’s current earnings.

The notional amount at June 30, 2004 of the interest rate swaps utilized in the fair value hedges is $49,517,000. All four contracts and related debt will mature in 2005. The principal amount of debt being hedged equals the notional amount of the interest rate swaps. The fair value hedges convert the interest rate on debt with a weighted average fixed rate of 7.45% to a floating rate equal to LIBOR plus an average spread of 2.81%, which resulted in an effective rate of 3.91% for the six months ended June 30, 2004. The fair value of the interest rate swaps at June 30, 2004 was $1,194,000 and is recorded in other assets on the consolidated balance sheet. At June 30, 2004, offsetting amounts of $738,000 and $456,000 have been recorded as an increase to mortgage loans and unsecured senior notes, respectively. To determine the fair values of derivatives, BRE uses market valuations provided by a third party.

NOTE F – DISCONTINUED OPERATIONS

The results of operations for properties sold during the period or designated as held for sale at the end of the period are required to be classified as discontinued operations. The property-specific components of net earnings that are classified as discontinued operations include operating results, depreciation expense recognized prior to the classification as held for sale, and the net gain or loss on disposal. At June 30, 2004 and 2003, BRE had no operating apartment communities classified as held for sale under the provisions of SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (SFAS 144).

During the second quarter of 2003, BRE sold Brookdale Glen, with 354 units located in Portland, Oregon. Brookdale Glen was sold for approximately $26,000,000, resulting in a gain on sale of approximately $13,500,000. This community had been designated as held for sale at the end of first quarter 2003, thus no depreciation was taken during second quarter 2003. During the first quarter of 2003, BRE sold two operating communities with a total of 746 units: Newport Landing, with 480 units, located in the Phoenix metropolitan area of Glendale, Arizona and Berkshire Court, with 266 units, located in the Portland, Oregon metropolitan area of Wilsonville, Oregon. The communities were sold for an aggregate sales price of approximately $46,700,000, resulting in a gain on sales of $9,600,000.

The following is a breakdown of the gain on sales and the combined results of operations for the properties included in discontinued operations:


	For the Three Months ended June 30,					For the Six Months ended June 30,
(amounts in thousands)	2004		2003			2004		2003
Rental and ancillary income	$	—	$	245		$	—	$	1,984
Real estate expenses		—		(16	)		—		(742	)
Provision for depreciation		—		—			—		(306	)
Gain on sales		—		13,511			—		23,147

Total discontinued operations	$	—	$	13,740		$	—	$	24,083

NOTE G – LEGAL MATTERS

On April 14, 1997, BRE purchased Red Hawk Ranch Apartments, a 453-unit operating community in Fremont, California, from an unrelated third party developer. The community now requires extensive replacement work to correct damage BRE believes was caused by faulty workmanship during construction. On March 18, 2003, BRE filed suit in the Alameda County Superior Court against an unrelated third party builder to protect against statutes of limitation and commenced testing to determine the extent of the damage. Based upon the testing that has been performed to date, BRE has discovered that the exterior shell of each building at the community has been compromised. As a result, during second quarter 2004 the company expanded the size and scope of the lawsuit.

Litigation and consulting charges recognized totaled $515,000 (restated) and $1,365,000 (restated) for the quarter and six months ending June 30, 2004, respectively and are reported as Other expenses on the Consolidated Statements of Income. The charge reported in includes litigation costs and consulting fees incurred through June 30, 2004, as destructive testing was performed to determine the extent of the damage and required reconstruction.

Currently, BRE is working diligently to develop reasonable estimates for the costs associated with the replacement work, the expense of recovery through litigation and/or insurance claims, and the appropriate accounting treatment for such costs. There are considerable uncertainties that affect BRE’s ability to estimate the ultimate costs. Uncertainties include the exact nature and extent of the damage, the extent of required remediation, the varying costs of alternative legal strategies for addressing the issues, and the amount to be recovered, if any, through litigation and/or insurance claims.

BRE plans to commence replacement and repair work as soon as possible and expects to have the community restored during the next 24 to 27 months. BRE intends to pursue litigation against the third party contractor and certain related sub-contractors. BRE also plans to file insurance claims to cover costs associated with the damage caused by faulty workmanship.

While BRE’s management expects that costs of remediation will exceed $26 million, and legal costs may exceed $3 million, due to the preliminary nature of the damage assessment, claims and litigation, it is not possible to predict or determine the outcome of legal actions, nor is it reasonably possible to accurately estimate the range of loss associated with the matter at this time.

As of June 30, 2004, other than the legal matter referenced above regarding Red Hawk Ranch, there were no pending legal proceedings to which BRE is a party or of which any of BRE’s properties is the subject, the adverse determination of which management anticipates would have a material adverse effect upon BRE’s consolidated financial condition and results of operations.

NOTE G – SUBSEQUENT EVENTS

On July 30, 2004, BRE acquired Evergreen Park Apartments, with 226 units located in the Seattle suburb of Redmond, Washington, for approximately $31,000,000.

ITEM 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations

June 30, 2004

The Management’s Discussion and Analysis of Financial Condition and Results of Operations set forth in this Item 2 has been restated to reflect certain adjustments to our consolidated financial statements for the three and six months ended June 30, 2004 and 2003, contained in this Quarterly Report on Form 10-Q/A. See Note A to the condensed notes to consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q/A.

Forward-Looking Statements

In addition to historical information, we have made forward-looking statements in this Quarterly Report on Form 10-Q/A. These forward-looking statements pertain to, among other things, our capital resources, portfolio performance and results of operations. Forward-looking statements involve numerous risks and uncertainties. You should not rely on these statements as predictions of future events because there is no assurance that the events or circumstances reflected in the statements can be achieved or will occur. Forward-looking statements are identified by words such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “plans,” “pro forma,” “estimates” or “anticipates” or in their negative form or other variations, or by discussions of strategy, plans or intentions. Forward-looking statements are based on assumptions, data or methods that may be incorrect or imprecise or incapable of being realized. The following factors, among others, could affect actual results and future events: defaults or non-renewal of leases, illiquidity of real estate and reinvestment risk, our regional focus in the Western United States, insurance coverage, increased interest rates and operating costs, failure to obtain necessary outside financing, difficulties in identifying properties to acquire and in effecting acquisitions, failure to successfully integrate acquired properties and operations, risks and uncertainties affecting property development and construction (including construction delays, cost overruns, inability to obtain necessary permits and public opposition to such activities), failure to qualify as a real estate investment trust under the Internal Revenue Code as of 1986, as amended, environmental uncertainties, risks related to natural disasters, financial market fluctuations, changes in real estate and zoning laws and increases in real property tax rates. Our success also depends upon economic trends, including interest rates, income tax laws, governmental regulation, legislation, population changes and other factors. Do not rely solely on forward-looking statements, which only reflect management’s analysis. We assume no obligation to update forward-looking statements.

Executive Summary

We are a self-administered equity real estate investment trust, or “REIT”, focused on the acquisition, development and management of multifamily apartment communities in eight metropolitanpolitan markets of the Western United States. At June 30, 2004, our portfolio had real estate assets with a book value of approximately $2.3 billion that included 85 wholly or majority-owned apartment communities, aggregating 23,685 units; two multifamily communities owned in joint ventures, comprised of 488 apartment units; and seven wholly-owned apartment communities in various stages of construction and development, totaling 1,656 units.

During second quarter 2004, we completed construction of one community, Pinnacle at Fullerton, with 192 units located in the Los Angeles / Orange County metropolitan area. At the end of the quarter the community achieved stabilization, with a physical occupancy level of 95%. During the quarter, we also started construction on three communities in Southern California.

Our year-over-year operating results reflect increased rental and ancillary income from acquisitions completed during 2003 and the first quarter of 2004 and properties in the lease-up phase of development. The additional income from these “non same-store communities” was partially offset by property-level “same-store” performance and increased interest expense.

Results of Operations

Comparison of the Three Months Ended June 30, 2004 and 2003

Revenues

Total revenues were $75,145,000 for the three months ended June 30, 2004, compared to $68,064,000 for the same period in 2003, excluding revenues from discontinued operations. The increase in total revenues was primarily generated primarily from communities acquired, developed and stabilized after March 31, 2003, which we define as our “non same-store” communities. During the 15 months subsequent to March 31, 2003, we acquired seven communities, completed the construction of three wholly owned communities and commenced lease-up of two communities that are nearing completion of construction. Our same-store portfolio produced an increase of $649,000, or 1%, in revenues year-over-year.

A summary of the components of revenues for the quarters ended June 30, 2004 and 2003 follows (dollar amounts in thousands):


	Three months ended June 30, 2004				Three months ended June 30, 2003				% Change from 2003 to 2004
	Revenues		% of Total Revenues		Revenues		% of Total Revenues		% Change from 2003 to 2004
Same-store	$	65,375	87	%	$	64,726	95	%	1	%
Non same-store		9,295	12	%		2,950	4	%	215	%
Partnership and other income		475	1	%		388	1	%	22	%

Total revenues	$	75,145	100	%	$	68,064	100	%	10	%

Average physical occupancy rates for the quarters ended June 30, 2004 and 2003 were as follows:

Average physical occupancy for the portfolio is calculated by dividing the total occupied units by the total units in the portfolio. Apartment units are generally leased to residents for rental terms that do not exceed one year.

Expenses

Real Estate Expenses

For the quarter ended June 30, 2004, real estate expenses totaled $22,824,000 as compared with $20,190,000 for the quarter ended June 30, 2003, as restated, excluding real estate expenses from discontinued operations. The year-over-year increase in total real estate expenses was primarily attributable to the twelve “non same-store” communities referenced above. Additionally, “same-store” expenses increased $457,000 year-over-year. The increase in same-store expenses primarily related to timing associated with repair and maintenance costs and final property tax assessments for communities developed or acquired during the past two years.

A summary of the categories of real estate expense for the three months ended June 30, 2004 and 2003 follows (dollar amounts in thousands):


	Three months ended June 30, 2004				Three months ended June 30, 2003				% Change from 2003 to 2004
	Expense		% of Total Revenues		Expense		% of Total Revenues		% Change from 2003 to 2004
	(Restated)				(Restated)
Same-store	$	19,777			$	19,320			2	%
Non same-store		3,047				870			250	%

Total real estate expenses	$	22,824	30	%	$	20,190	30	%	13	%

Provision for Depreciation

The provision for depreciation increased to $15,094,000 for the three months ended June 30, 2004, from $12,981,000 for the same period in 2003. The $2,113,000 increase in 2004 resulted primarily from higher depreciable bases on new property acquisitions and development properties completed.

Interest Expense

Interest expense was $16,591,000 (net of interest capitalized to the cost of apartment communities under development of $1,504,000) for the quarter ended June 30, 2004, an increase of $1,285,000 or 8% from the comparable period in 2003. Interest expense was $15,306,000 for the same period in 2003 and was net of $2,094,000 of interest capitalized to the cost of apartment communities under construction. The increase in interest expense was due to higher average debt balances combined with reduced levels of capitalized interest based on the stage of our communities under development.

General and Administrative

General and administrative costs totaled $3,088,000, or approximately 4.1% of total revenues, for the second quarter of 2004, as restated. These costs are relatively comparable with the 2003 level of $3,099,000 or approximately 4.6% of total revenues, as restated.

Other Expenses

Other expenses recognized during the second quarter of 2004 totaled $515,000 (restated) and represent litigation and consulting costs incurred in connection with the construction defect litigation we are pursuing against the builder of our Red Hawk Ranch Community, located in Fremont, California. The charge includes costs incurred in connection with destructive testing performed to determine the extent of the damage and required reconstruction.

Other expenses in the second quarter of 2003 represent legal settlement charges related to the Pinnacle at MacArthur joint venture dispute and the class action suit related to application fees charged to residents. Subsequent to June 30, 2003, we reached an agreement to settle litigation with an unrelated third party regarding the Pinnacle at MacArthur Place joint venture agreement.

Under the terms of the settlement agreement, we paid the third party $6,500,000 and retained full ownership of the asset. Subsequent to June 30, 2003, we also reached a settlement agreement regarding a class action lawsuit brought against us with respect to application fees charged to residents from August 1998 to August 2003. Under the terms of the settlement, we agreed to establish a $200,000 fund to reimburse prior applicants up to $5.00 per applicant, and to pay certain related administration charges and legal expenses. The combined settlement amounts, legal fees and related expenses aggregate $7,305,000, and are reported as Other expenses on the consolidated income statement, as restated.

Minority Interests in Income

Minority interests in income totaled $613,000 and $830,000 for the quarters ended June 30, 2004 and 2003, respectively. Minority interests and consequently, minority interests in income, declined as operating company unit holders of BRE Property Investors LLC exchanged their units for shares of our common stock. Subsequent to June 30, 2003, a total of 218,083 operating company units have been converted to common shares. No operating company units were converted to common shares during the three months ended June 30, 2004 and 2003.

Discontinued operations

In October 2001, the Financial Accounting Standards Board, or FASB, issued Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (SFAS No. 144), which became effective on January 1, 2002. For properties accounted for under SFAS No. 144, the results of operations for properties sold during the period or designated as held for sale at the end of the period are classified as discontinued operations. The property-specific components of net earnings that are classified as discontinued operations include all property-related revenues and operating expenses, depreciation expense recognized prior to the classification as held for sale, and property-specific interest expense to the extent there is secured debt on the property. In addition, the net gain or loss on the eventual disposal of properties held for sale is reported as discontinued operations.

During the quarter ended June 30, 2003, we sold one operating community with a total of 354 units. The community was sold for $26,000,000, resulting in a gain on sale of approximately $13,500,000. No communities were sold or classified as held for sale during the quarter ended June 30, 2004.

Dividends Attributable to Preferred Stock

Dividends attributable to preferred stock for the second quarter of 2004 represent the dividends on our 8.08% Series B and 6.75% Series C Cumulative Redeemable Preferred Stock. Dividends attributable to preferred stock for the second quarter of 2003 represent the dividends on our 8.50% Series A and 8.08% Series B Redeemable Preferred Stock. On January 29, 2004, we redeemed all 2,150,000 outstanding shares of our 8.50% Series A Cumulative Redeemable Preferred Stock. On March 15, 2004, we closed the offering of 4,000,000 shares of 6.75% Series C Cumulative Redeemable Preferred Stock. All series of preferred stock have a $25.00 per share liquidation preference.

Net Income Available to Common Shareholders

As a result of the various factors mentioned above, net income available to common shareholders for the three months ended June 30, 2004 was $13,217,000, or $0.26 per diluted share, as compared with $19,436,000, or $0.42 per diluted share, for the comparable period in 2003, as restated.

Comparison of the Six Months Ended June 30, 2004 and 2003

Revenues

Total revenues were $147,070,000 for the six months ended June 30, 2004, compared to $135,169,000 for the same period in 2003, excluding revenues from discontinued operations. The increase in total revenues was primarily generated primarily from communities acquired, developed and stabilized after December 31, 2002, which we define as our “non same-store” communities. During the 18 months subsequent to December 31, 2002, we acquired seven communities, completed the construction of three wholly owned communities and commenced lease-up of two communities that are nearing completion of construction. Our same-store portfolio produced an increase in revenues of $800,000, or 1%, year-over-year.

A summary of the components of revenues for the six months ended June 30, 2004 and 2003 follows (dollar amounts in thousands):


	Six months ended June 30, 2004				Six months ended June 30, 2003				% Change from 2003 to 2004
	Revenues		% of Total Revenues		Revenues		% of Total Revenues		% Change from 2003 to 2004
Same-store	$	129,452	88	%	$	128,652	95	%	1	%
Non same-store		16,671	11	%		5,385	4	%	210	%
Partnership and other income		947	1	%		1,132	1	%	(16	)%

Total revenues	$	147,070	100	%	$	135,169	100	%	9	%

Expenses

Real Estate Expenses

Real estate expenses for multifamily properties for the six months ended June 30, 2004 increased 15% to $45,897,000 (restated) from $39,361,000 (restated) in the comparable period in 2003, excluding real expenses from discontinued operations. The total increase of $6,536,000 was primarily attributable to “non same-store” expenses, which increased $4,038,000. The increase in “same-store” expenses related to timing associated with repair and maintenance costs, property-level administrative costs, increased payroll costs and the timing of property tax assessments and related rebates.

A summary of the categories of real estate expense for the six months ended June 30, 2004 and 2003 follows (dollar amounts in thousands):


	Six months ended June 30, 2004				Six months ended June 30, 2003				% Change from 2003 to 2004
	Expense		% of Total Revenues		Expense		% of Total Revenues		% Change from 2003 to 2004
	(Restated)				(Restated)
Same-store	$	40,464			$	37,966			7	%
Non same-store		5,433				1,395			290	%

Total real estate expenses	$	45,897	31	%	$	39,361	29	%	17	%

Provision for Depreciation

The provision for depreciation increased to $29,610,000 for the six months ended June 30, 2004, from $25,811,000 for the same period in 2003, excluding depreciation on discontinued operations. The $3,799,000 increase in 2004 resulted primarily from higher depreciable bases on new property acquisitions and development properties completed.

Interest Expense

Interest expense was $32,267,000 (net of interest capitalized to the cost of apartment communities under development totaling $3,370,000) for the six months ended June 30, 2004, an increase of $2,520,000 or 8% from the comparable period in 2003. Interest expense was $29,747,000 for the same period in 2003 and was net of $5,176,000 of interest capitalized to the cost of apartment communities under construction. The increase in interest expense was primarily due to these reduced levels of capitalized interest based on the stage of our communities under development.

General and Administrative

General and administrative costs totaled $6,398,000, or approximately 4.4% of total revenues, for the six months ended June 30, 2004, compared to $5,629,000, or approximately 4.2% of total revenues, for the six months ended June 30, 2003, as restated. The increase in 2004 is primarily due to increases in compensation, professional fees and insurance costs.

Other Expenses

Other expenses recognized during the six months ended June 30, 2004 totaled $1,365,000 (restated) and represent litigation and consulting costs incurred in connection with the

construction defect litigation we are pursuing against the builder of our Red Hawk Ranch Community, located in Fremont, California. The charge includes litigation costs and consulting fees incurred through June 30, 2004, as destructive testing is performed, to determine the extent of the damage and required reconstruction.

Other expenses in the six months ended June 30, 2003 represent legal settlement charges related to the Pinnacle at MacArthur joint venture dispute and the class action suit related to application fees charged to residents. Subsequent to June 30, 2003, we settled litigation with an unrelated third party regarding the Pinnacle at MacArthur Place joint venture agreement. Under the terms of the settlement agreement, we paid the third party $6,500,000 and retained full ownership of the asset. Subsequent to June 30, 2003, we also reached a settlement agreement regarding a class action lawsuit brought against us with respect to application fees charged to residents from August 1998 to August 2003. Under the terms of the settlement, we agreed to establish a $200,000 fund to reimburse prior applicants up to $5.00 per applicant, and to pay certain related administration charges and legal expenses. The combined settlement amounts, legal fees and related expenses aggregate $7,305,000, and are reported as Other expenses on the consolidated income statement, as restated.

Minority Interests in Income

Minority interests in income totaled $1,331,000 and $1,654,000 for the six months ended June 30, 2004 and 2003, respectively. Minority interests and consequently, minority interests in income, declined as operating company unit holders of BRE Property Investors LLC exchanged their units for shares of our common stock. Subsequent to June 30, 2003, a total of 218,083 operating company units were converted to common shares. No operating company units were converted to common shares during the six months ended June 30, 2004. During the comparable period in 2003, 15,000 operating units were converted to common shares.

Discontinued operations

In October 2001, the Financial Accounting Standards Board, or FASB, issued Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” (SFAS No. 144), which became effective on January 1, 2002. For properties accounted for under SFAS No. 144, the results of operations for properties sold during the period or designated as held for sale at the end of the period are classified as discontinued operations. The property-specific components of net earnings that are classified as discontinued operations include all property-related revenues and operating expenses, depreciation expense recognized prior to the classification as held for sale, and property-specific interest expense to the extent there is secured debt on the property. In addition, the net gain or loss on the eventual disposal of properties held for sale is reported as discontinued operations.

During the first six months of 2003, we sold three operating communities with a total of 1,100 units. The communities were sold for $72,700,000, resulting in a gain on sales of approximately $23,100,000. No communities were sold or classified as held for sale during the six months ended June 30, 2004.

Dividends Attributable to Preferred Stock

Dividends attributable to preferred stock for the six months ended June 30,2004 represent the dividends on our 8.50% Series A, 8.08% Series B and 6.75% Series C Cumulative Redeemable Preferred Stock. On January 29, 2004, we redeemed all 2,150,000 outstanding shares of our 8.50% Series A Cumulative Redeemable Preferred Stock. On March 15, 2004, we closed the offering of 4,000,000 shares of 6.75% Series C Cumulative Redeemable Preferred Stock. All series of preferred stock have a $25.00 per share liquidation preference.

Net Income Available to Common Shareholders

As a result of the various factors mentioned above, net income available to common shareholders for the six months ended June 30, 2004 was $24,816,000, or $0.49 per diluted share, as compared with $44,431,000, or $0.96 per diluted share, for the comparable period in 2003, as restated.

Liquidity and Capital Resources

Depending upon the availability and cost of external capital, we anticipate making additional investments in multifamily apartment communities. These investments are expected to be funded through a variety of sources. These sources may include cash generated from operations, temporary borrowings under our unsecured line of credit, proceeds from asset sales, public and private offerings of debt and equity securities and in some cases the assumption of secured borrowings. To the extent that these additional investments are initially financed with temporary borrowings under our revolving unsecured line of credit, we anticipate that permanent financing will be provided through a combination of public and private offerings of debt and equity securities, proceeds from asset sales and secured debt. We believe our liquidity and various sources of available capital are sufficient to fund operations, meet debt service and dividend requirements and finance future investments.

On January 29, 2004, we redeemed all 2,150,000 shares of 8.50% Series A Cumulative Redeemable Preferred Stock at a redemption price of $25.17118 per share. The redemption price was equal to the original issuance price of $25.00 per share, plus accrued and unpaid dividends to the redemption date. We expensed the original preferred stock issuance costs during the fourth quarter of 2003, when we announced the redemption.

On March 15, 2004, we closed on an offering of 4,000,000 shares of 6.75% Series C Cumulative Redeemable Preferred Stock at $25 per share. Net proceeds from the offering—after all discounts, commissions and issuance costs—totaled approximately $96,436,000.

On March 17, 2004, we issued $100,000,000 of dual-tranche Medium-Term Notes under a medium term note program initiated in 2001. The offering included $50,000,000 of five-year notes with a coupon rate of 3.58%, and $50,000,000 of 10-year notes with a coupon rate of 4.70%.

Proceeds from both offerings will be used for general corporate purposes, including the repayment of debt, redemption of equity securities, funding for development activities and financing for acquisitions. Pending these uses, we used the proceeds from these offerings to reduce temporary borrowings under our revolving unsecured credit facility.

During the first quarter of 2004, we increased the size of our secured credit facility with Fannie Mae (serviced by Prudential Multifamily Mortgage, Inc.) from $100,000,000 to $140,000,000. Borrowings under the secured credit facility totaled $140,000,000 at June 30, 2004. The credit facility is secured by nine multifamily communities, which are held by a bankruptcy-remote special purpose consolidated subsidiary of BRE. Current borrowings under the facility bear interest at variable rates with maturities from one to nine months, plus a facility fee of 0.65%. Our borrowing cost, including interest, margin and fees, averaged 2.14% for the six months ended June 30, 2004. We also have the option to convert variable-rate borrowings to fixed-rate borrowings. Subject to the terms of the facility, we have the option to increase its size to $250,000,000. Drawings on the line of credit are available to fund our investment activities and for general corporate purposes, and the facility matures in 2008.

We have a revolving unsecured credit facility with a capacity of $350,000,000 that matures in April 2006, with an option to extend the term one year beyond the maturity date. The interest rate on the line of credit is currently LIBOR plus 0.70%, plus a fee of 0.20% payable on the unused portion of the credit facility. Our pricing spread above LIBOR is dependent upon our credit ratings and can range from 0.50% to 1.45%. Our average cost on the unsecured line of credit for the six months ended June 30, 2004 was 2.63%. Borrowings under our revolving unsecured line of credit totaled $160,000,000 at June 30, 2004, compared to $196,000,000 at December 31, 2003. Drawings on the revolving unsecured line of credit are available to fund our investment activities and general corporate purposes. We typically reduce our outstanding balance on the revolving unsecured line of credit with available cash balances.

We had a total of $848,000,000 in unsecured senior notes (excluding a basis adjustment of $456,000 from hedging activities) at June 30, 2004, consisting of the following:


Maturity	Unsecured Senior Note Balance		Interest Rate
July 2005	$	18,000,000	4.30	%
March 2007		150,000,000	5.95	%
June 2007		50,000,000	7.20	%
March 2009		50,000,000	3.58	%
September 2009		150,000,000	5.75	%
January 2011		250,000,000	7.45	%
February 2013		130,000,000	7.13	%
March 2014		50,000,000	4.70	%

Total / Average Interest Rate	$	848,000,000	6.36	%

In addition, at June 30, 2004, we had mortgage indebtedness totaling $129,997,000 (excluding a basis adjustment of $738,000 from hedging activities) at an average interest rate of 5.84%, and remaining terms of from less than one year to six years.

As of June 30, 2004, we had total outstanding debt balances of approximately $1,279,000,000 and total outstanding consolidated shareholders’ equity and minority interests of approximately $1,013,000,000, representing a debt to total book capitalization ratio of 56%.

Our indebtedness contains financial covenants as to minimum net worth, interest coverage ratios, maximum secured debt and total debt to capital, among others. We were in compliance with all such financial covenants during the three and six months ended June 30, 2004 and 2003.

We anticipate that we will continue to require outside sources of financing to meet our long-term liquidity needs beyond 2004, such as scheduled debt repayments, construction funding and property acquisitions. At June 30, 2004, we had an estimated cost of approximately $164,000,000 (restated) to complete existing construction in progress, with funding estimated from 2004 through 2007. Scheduled debt repayments through December 31, 2004 total approximately $1,153,000.

We manage joint venture investments that are recorded under the equity method of accounting with total assets of $41,996,000 as of June 30, 2004. These joint ventures carry debt totaling $19,100,000, none of which is guaranteed by us at June 30, 2004.

During the first quarter of 2004, we filed a new shelf registration statement with the Securities and Exchange Commission under which we may issue up to $700,000,000 of securities including debt, convertible debt, common stock and preferred stock. Depending upon market conditions, we may issue securities under this or under future shelf registration statements. Proceeds from these issuances may be used for general corporate purposes, including investing in additional

multifamily communities, funding development activities, capital expenditures, redemption of securities, increasing our working capital and repaying indebtedness. Pending the application of the net proceeds, we may invest the proceeds in investment-grade, interest-bearing securities or temporarily reduce borrowings under our revolving unsecured line of credit.

Our Board of Directors has authorized the repurchase of our common stock in an amount up to $60,000,000. The timing of repurchase activity is dependent upon the market price of our shares, and other market conditions and factors. As of June 30, 2004, we had cumulatively repurchased a total of approximately $51,100,000 of common stock, representing 1,785,600 shares at an average purchase price of $28.64 per share. No shares were repurchased during the six months ended June 30, 2004.

We continue to consider other sources of possible funding, including further joint ventures and additional secured construction debt. We own unencumbered real estate assets that could be sold, contributed to joint ventures or used as collateral for financing purposes (subject to certain lender restrictions). We also own encumbered assets with significant equity that could be further encumbered should other sources of capital not be available.

Critical Accounting Policies

We define critical accounting policies as those that require management’s most difficult, subjective or complex judgments. A summary of our critical accounting policies follows. Additional discussion of accounting policies that we consider significant, including further discussion of the critical accounting policies described below, can be found in the notes to our consolidated financial statements in our 2003 Annual Report on Form 10-K.

Restatement of Real Estate Expense, General and Administrative Expense and Construction in Progress

This Quarterly Report on Form 10-Q/A restates previously issued financial statements for the quarterly and year-to-dated periods ended June 30, 2004 and June 30, 2003, to properly reflect accruals of payroll and certain other real estate costs and expenses at the end of each reporting period. During management’s review of our accounting policies and internal control over financial reporting, management determined that we should have recognized these costs as incurred rather than as paid. Our management determined that the internal control deficiency that resulted in this restatement represents a material weakness, as defined by the Public Company Accounting Oversight Board’s Auditing Standard No. 2. In connection with correcting this error, management has taken appropriate action to modify our system of internal control over financial reporting to remediate this internal control deficiency. Going forward, management will estimate and record accruals for payroll and the other real estate expenses that were not previously accounted for in this manner, as well as for development and construction costs for services performed but not yet billed, at the end of each reporting period. A description of this control deficiency and the related remediation measures that have been undertaken by us is set forth in Part 1, Item 4, Controls and Procedures, of this Form 10-Q/A.

Investments in Rental Properties

Rental properties are recorded at cost, less accumulated depreciation, and less an adjustment, if any, for impairment. A land value is assigned based on the purchase price if land is acquired separately, or based on market research if acquired in a merger or in an operating community acquisition. We have a development group which manages the design, development and construction of our apartment communities. Projects under development are carried at cost, including direct and indirect costs incurred to ready the assets for their intended use and which

are specifically identifiable, including capitalized interest and property taxes until units are placed in service. Direct investment development projects are considered placed in service as certificates of occupancy are issued and the units become ready for occupancy. Depreciation begins as units are placed in service. Land acquired for development is capitalized and reported as “Land under development” until the development plan for the land is formalized. Once the development plan is determined and construction contracts are signed, the costs are transferred to the balance sheet line item “Construction in progress.” Costs of replacements, such as appliances, carpets and drapes, are expensed. Improvements and betterments that increase the value of the property or extend its useful life are capitalized.

Depreciation is computed on a straight-line basis over the estimated useful lives of the assets, which range from 35 to 45 years for buildings and three to ten years for other property. The determination as to whether expenditures should be capitalized or expensed, and the period over which depreciation is recognized, requires management’s judgment.

In accordance with SFAS No. 144, our investments in real estate are periodically evaluated for indicators of impairment. The evaluation of impairment and the determination of values are based on several factors, and future events could occur which would cause management to conclude that indicators of impairment exist and a reduction in carrying value to estimated fair value is warranted.

In the normal course of business, we will receive offers for sale of our properties, either solicited or unsolicited. For those offers that are accepted, the prospective buyer will usually require a due diligence period before consummation of the transaction. It is not unusual for matters to arise that result in the withdrawal or rejection of the offer during this process. We classify real estate as “held for sale” when all criteria under SFAS No. 144 have been met.

SFAS No. 144 also requires that the assets and liabilities and the results of operations of any communities that have been sold, or otherwise qualify as held for sale, be presented as discontinued operations in our consolidated financial statements in all periods presented. The community specific real estate classified as held for sale is stated at the lower of its carrying amount or estimated fair value less disposal costs. Depreciation is not recorded on assets classified as held for sale.

Derivatives and Hedging Activities

We use derivative financial instruments in the normal course of business with the objective of lowering our overall borrowing costs. As of June 30, 2004, we had four interest rate swap agreements with a notional value aggregating approximately $49,500,000, which are used to attain a floating rate of interest on a portion of our fixed rate debt, maturing in 2005. These derivatives qualify for hedge accounting. A third party values the instruments. The values of these derivatives will change over time as cash receipts and payments are made and as market conditions change.

Stock-Based Compensation

We apply the fair value recognition provisions of Statement of Accounting Standard (SFAS) No. 123, “Accounting for Stock-Based Compensation” (SFAS 123), as amended by SFAS 148, “Accounting for Stock Based Compensation-Transition and Disclosure” (SFAS 148). We adopted the prospective method as provided for in SFAS 148, under which the provisions of SFAS 123 will be applied prospectively to all awards granted, modified or settled after January 1, 2003. Prior to 2003, we accounted for stock-based compensation under the recognition and measurement provisions of APB Opinion No. 25, “Accounting for Stock Issued to Employees,” and related Interpretations, which resulted in no expense recognition. Under SFAS 123, we

include in general and administrative expense a charge based on the implied value of options granted subsequent to January 1, 2003 and vesting in the current period. The options are valued using the Black-Scholes option-pricing model.

Consolidation

In January 2003, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 46, “Consolidation of Variable Interest Entities- an interpretation of ARB No. 51,” which was revised in December 2003 (FIN 46). Under FIN 46, a variable interest entity (“VIE”) is created when (i) the equity investment at risk in the entity is not sufficient to permit the entity to finance its activities without additional subordinated financial support from other parties, or (ii) the entity’s equity holders as a group either: (a) lack direct or indirect ability to make decisions about the entity, (b) are not obligated to absorb expected losses of the entity if they occur or (c) do not have the right to receive expected residual returns of the entity if they occur. If an entity is deemed to be a VIE pursuant to FIN 46, the enterprise that is deemed to absorb a majority of the expected losses, receive a majority of the entity’s expected residual returns, or both, is considered the primary beneficiary and must consolidate the VIE. Expected losses and residual returns for VIEs are calculated based on the probability of estimated future cash flows as defined in FIN 46.

Under FIN 46, a non-refundable deposit paid to an entity is deemed to be a variable interest that will absorb some or all of the entity’s expected losses if they occur. Therefore, whenever we enter into a land option or purchase contract with an entity and make a non-refundable deposit, a VIE may have been created. We evaluate our land option and purchase contract investments to determine if a VIE has been created under the definition of FIN 46. When a VIE is deemed to exist, the identification of the primary beneficiary is determined through allocation of the VIE’s estimated expected losses and residual returns to the related variable interest holders. Any VIEs for which we are deemed the primary beneficiary are consolidated from the date of investment.

We consolidate entities not deemed as VIEs which we have the ability to control. Our consolidated financial statements include the accounts of the Company and other controlled subsidiaries. All significant intercompany balances and transactions are eliminated in consolidation.

Construction in progress and land under development

The following table provides data on our seven multifamily properties that are currently under various stages of development and construction. Completion of the development properties is subject to a number of risks and uncertainties, including construction delays and cost overruns. We cannot assure that these properties will be completed, or that they will be completed by the estimated dates, or for the estimated amounts, or will contain the number of proposed units shown in the table below.


COMMUNITIES	Proposed Number of Units	Cost Incurred to Date			Estimated Total Cost		Estimated Balance to Complete		Estimated Completion Date ⁽¹⁾
(Dollar amounts in millions)		(Restated)					(Restated)
Directly owned construction
Pinnacle Westridge Valencia, CA	234	$	40.5		$	43.3	$	2.8	3Q/2004
Pinnacle at Talega II San Clemente, CA	110		19.8			20.7		0.9	3Q/2004
Pinnacle at Chino Hills Chino Hills, CA	208		18.1			38.6		20.5	4Q/2005
Pinnacle Bridgeport Santa Clarita, CA	188		15.1			40.5		25.4	3Q/2006
Pinnacle Towngate Moreno Valley, CA	268		7.8			39.1		31.3	3Q/2006
Pinnacle Orange Orange, CA	460		19.5			102.4		82.9	1Q/2007

Total construction in progress	1,468	$	120.8	⁽²⁾	$	284.6	$	163.8


COMMUNITIES	Proposed Number of Units	Cost Incurred to Date		Estimated Total Cost		Estimated Construction Start
Land under development⁽³⁾
Pinnacle Pasadena Pasadena, CA	188	$	13.4	$	51.9	4Q/2004

Total land under development	188	$	13.4	$	51.9

(1)

“Completion” is defined as our estimate of when an entire project will have a final certificate of occupancy issued and be ready for occupancy. Completion dates have been updated to reflect our current estimates of receipt of final certificates of occupancy, which are dependent on several factors, including construction delays and the inability to obtain necessary public approvals.

(2)

Reflects all recorded costs incurred as of June 30, 2004, recorded on our consolidated balance sheet as “direct investments in real estate-construction in progress” and $25.0 million of costs for completed buildings located on properties listed above, reflected on our consolidated balance sheet as “direct investments in real estate—investments in rental properties.”

(3)

Land under development represents projects in various stages of predevelopment, development and initial construction, for which construction or supply contracts have not yet been finalized. As these contracts are finalized, projects are transferred to construction in progress on our consolidated balance sheet.

Dividends Paid to Common and Preferred Shareholders and Distributions to Minority Members

A cash dividend has been paid to common shareholders each quarter since our inception in 1970. Our 2004 annual dividend on our common shares was maintained at the 2003 level of $1.95 per share. Total dividends paid to common shareholders for the six months ended June 30, 2004 and 2003 were $48,919,000 and $45,017,000, respectively. In addition, we paid $5,386,000 and $5,314,000 in aggregate dividends on our 8.50% Series A, 8.08% Series B and 6.75% Series C Cumulative Redeemable Preferred Stock during the six months ended June 30, 2004 and 2003, respectively.

Total distributions to minority members of our consolidated subsidiaries were $1,346,000 and $1,663,000 for the six months ended June 30, 2004 and 2003, respectively.

ITEM 3—Quantitative and Qualitative Disclosures About Market Risk

Information concerning market risk is incorporated herein by reference to Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2003. There has been no material change in the quantitative and qualitative disclosure about market risk since December 31, 2003.

ITEM 4—Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Also, we have investments in certain unconsolidated entities. As we do not control these entities, our disclosure controls and procedures with respect to such entities are necessarily substantially more limited than those we maintain with respect to our consolidated subsidiaries.

2003 Matter

During the third quarter of 2003, but prior to the filing of our quarterly report on Form 10-Q for the quarter ended June 30, 2003, BRE and the other parties involved in a dispute regarding BRE’s investment in the Pinnacle at MacArthur joint venture and a class action application fee lawsuit reached verbal settlement agreements or other acknowledgements. Based upon management’s judgment of the relevant facts at that time, including the fact that no settlement documents had been prepared or negotiated, BRE determined that it would not be appropriate to record the approximately $7.3 million of settlement charges, including legal fees, in the second quarter. Following negotiation of the settlement for the class action suit and execution of the settlement documents for the Pinnacle at MacArthur litigation, BRE recorded the charges in the third quarter of 2003 as Other expenses.

During an interim review of our results of operations for the third quarter of 2004, our independent public accountants, Ernst & Young LLP, reviewed with us management’s decision to record the $7.3 million of settlement charges during the third quarter of 2003 rather than the second quarter of 2003. Following those discussions, management determined that pursuant to FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingencies (“FAS 5”), the charges could have been deemed probable and estimable prior to the filing of the second quarter 2003 Form 10-Q and thus should have been recorded in the quarterly financial results for the period ended June 30, 2003. Accordingly, on October 8, 2004, management concluded that our interim financial statements for the quarters ended June 30, 2003 and September 30, 2003 should be restated to record the charges in the second quarter of 2003 and we have filed amendments to our quarterly reports on Form 10-Q for the quarters ended June 30, 2003 and September 30, 2003 for that purpose.

In Auditing Standard No. 2, the Public Company Accounting Oversight Board has defined a “significant deficiency” in internal control over financial reporting as “a control deficiency, or combination of control deficiencies, that adversely affects the company’s ability to initiate, authorize, record, process, or report external financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the company’s annual or interim financial statements that is more than inconsequential will not be prevented or detected.” In the same auditing standard the Public Company Accounting Oversight Board has defined a “material weakness” in internal control over financial reporting as “a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected.” The Public Company Accounting Oversight Board has also stated that each of the restatement of previously issued financial statements to reflect the correction of a misstatement, and the identification by the auditor of a material misstatement in a financial statement in the current period that was not initially identified by the company’s internal control over financial reporting is a “significant deficiency” and a “strong indicator” of a material weakness. For the reasons described below, management has concluded that the control issues implicated in the decision initially to recognize the settlement-related charges in the third quarter of 2003 rather than the second quarter of 2003 constitute a significant deficiency but do not constitute a material weakness.

Under the provisions of FAS 5, a contingent liability must be recorded in the period when it is determined to be probable and estimable. Prior to the filing of our quarterly report on Form 10-Q for the second quarter 2003, management initially determined that liability under the class action suit was not estimable because the mediation hearing had not yet taken place. Prior to the filing of our quarterly report on Form 10-Q for the second quarter 2003, management initially determined that while a range of loss was estimable, settlement of the Pinnacle at MacArthur matter was only reasonably possible under FAS 5, meaning that the probability of the settlement being finalized was more than remote but less than likely. This determination was based on the acrimonious nature of the relationship between BRE and the opposing parties, as well as the uncertainty surrounding the terms and results of negotiation of final

settlement agreement since at the filing date of our quarterly report on Form 10-Q for the second quarter 2003, drafts of written settlement agreements had not been prepared. If negotiations regarding the written settlement agreements had not been successfully completed by mid-September as ordered in the dispute mediation process, the Pinnacle at MacArthur matter would have proceeded to trial, resulting in a different range of loss and period recognition.

Under FAS 5, when a contingency is determined to be reasonably possible, disclosure is required but recognition of the loss or expense in the financial statements is not required. Management gave extensive consideration to the question of whether to disclose or recognize the liabilities in the second quarter of 2003 and the ultimate decision to disclose the Pinnacle at MacArthur liability was subjected to various levels of internal review and approval prior to the filing of the quarterly report on Form 10-Q for the second quarter 2003. We made full disclosure of the relevant facts related to the Pinnacle at MacArthur matter in our second quarter 2003 Form 10-Q, which was filed August 13, 2003. The Pinnacle at MacArthur settlement agreement was negotiated during the third quarter of 2003 and executed on September 15, 2003, and we recorded the settlement expenses of approximately $6,630,000 in our third quarter 2003 financial statements. The class action fee suit was also settled during the third quarter, at which time the related expense of approximately $675,000 was recorded.

Upon subsequent review of this decision with Ernst & Young during the third quarter of 2004 in light of the provisions of FAS 5 and Statement of Auditing Standards No. 1, Section 560, management determined that both settlements could have been deemed estimable and probable, or likely to occur, prior to the filing of our quarterly report on Form 10-Q for the second quarter of 2003, and therefore the expenses should have been recognized in the second quarter 2003 financial statements. Management therefore determined to restate our interim financial statements to recognize the expenses in the second quarter 2003, rather than the third quarter 2003.

Due to the nature of the facts and circumstances involved, particularly the application of judgment in deciding when to recognize the settlement costs under FAS 5, and based upon the level of internal analysis, review and approval of the decision to recognize the settlement charges in the third quarter of 2003, our Chief Executive Officer and Chief Financial Officer concluded that the circumstances that led to the 2003 interim period restatement did not constitute a material weakness in our internal control structure.

Current Restatment

Historically, we analyzed our accounts payable and accrued expense accounts related to payroll and certain real estate costs and expenses by evaluating whether the corresponding expenses were fairly stated (e.g., by analyzing whether our operating results included 12 months of expenses for the yearly periods or three months of expenses for the quarterly periods). However, our procedures did not include a detailed review of ending liability balances for these specific costs and expenses, which resulted in these amounts being recorded when they were paid rather than incurred. During management’s testing of internal control over financial reporting in 2004 to support our year-end assessment, as required by Section 404 of the Sarbanes-Oxley Act of 2002, management determined that a control deficiency existed in that the expenses recorded in each period should have been recognized in the period they were incurred rather than the period they were paid.

In response to this determination, management re-examined year-end liability amounts for these costs and expenses for fiscal 2000, 2001, 2002 and 2003. Based upon the analyses, we have concluded that this control deficiency did not result in material misstatements to previously reported quarterly or annual financial statements, as the historical amounts by which expenses and liability balances were misstated were not material to our financial condition, results of operations, or cash flows. However, adjusting for the cumulative effect of the errors in the fourth quarter of 2004 would have been material to that quarter.

Accordingly, we restated in our Annual Report on Form 10-K the financial results for the fiscal years ended December 31, 2000, through December 31, 2003 filed on Form 10-K, and the quarterly periods ended March 31, June 30, and September 30, 2004, and 2003, filed on Form 10-Q to adjust for the misstatements caused by this control deficiency.

Under PCAOB Auditing Standard No. 2 (“PCAOB Std. No. 2), the Public Company Accounting Oversight Board (“PCAOB”) has defined a “material weakness” in internal control over financial reporting as “a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected.” The PCAOB has also stated that the restatement of

previously issued financial statements to reflect the correction of a misstatement is a “significant deficiency” and a “strong indicator” of a material weakness. Based on PCAOB Std. No. 2, management determined that the internal control deficiency regarding our policies, procedures and processes for accounts payable and accrued expenses, which led to the restatements, constituted a material weakness as of June 30, 2004.

As a result of the material weakness described above, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective at a reasonable assurance level as of June 30, 2004.

In response to the material weakness described above, management has revised its policies, procedures, and processes in order to strengthen controls relating to the accounting for accounts payable and accrued expenses. On January 27, 2005, management established formal policies and procedures related to the estimation of accounts payable and accrued expenses for payroll, and real estate costs and expenses that were previously recorded as paid rather than as incurred, to be performed at the end of each reporting period. These written procedures include preparation of detailed estimates of costs incurred but not billed or paid at the end of each reporting period, and management’s review of the estimates on a quarterly basis. Management has also changed the procedures for analyzing certain accrued expenses to include detailed analyses of accrued liability amounts in addition to analysis of the related expense balances. Management believes that the new policies and procedures are designed to avoid the reoccurrence of the circumstances that resulted in the restatement.

Management believes these measures have remediated the material weakness and that, as of March 14, 2005, there are no material weaknesses in the Company’s internal control over financial reporting. However, we cannot assure you that our internal control over financial reporting will be effective in accomplishing all control objectives all of the time.

There were no significant changes in our internal control over financial reporting during our fiscal quarter ended June 30, 2004 that materially affected, or was reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. Legal Proceedings.

On April 14, 1997, we purchased Red Hawk Ranch Apartments, a 453-unit operating community in Fremont, California, from an unrelated third party developer. The community now requires extensive replacement work to correct damage we believe was caused by faulty workmanship during construction. On March 18, 2003, we filed suit in the Alameda County Superior Court against the developer to protect against statutes of limitation. We then commenced testing to determine the extent of the damage. Based upon the testing that has been performed to date, we have discovered that the exterior shell of each building at the community has been compromised. As a result, during second quarter 2004 we expanded the size and scope of the lawsuit.

Currently, we are working diligently to develop reasonable estimates for the costs associated with the replacement work, the expense of recovery through litigation and / or insurance claims, and the appropriate accounting treatment for such costs. There are considerable uncertainties that affect our ability to estimate the ultimate costs. Uncertainties include the exact nature and extent of the damage, the extent of required remediation, the varying costs of alternative legal strategies for addressing the issues, and the amount to be recovered, if any, through litigation and/or insurance claims.

We plan to commence replacement and repair work during the first half of 2005 and expect to have the community restored during the next 24 to 27 months. We intend to pursue litigation against the third party contractor and certain related sub-contractors. We also plan to file insurance claims to cover costs associated with the damage caused by faulty workmanship.

While management expects that costs of remediation will exceed $26 million, and legal costs may exceed $3 million, due to the preliminary nature of the damage assessment, claims and litigation, it is not possible to predict or determine the outcome of legal actions, nor is it reasonably possible to accurately estimate the range of loss associated with the matter at this time.

As of June 30, 2004, other than the legal matter referenced above regarding Red Hawk Ranch, there were no pending legal proceedings to which we are a party or of which any of our properties is the subject, the adverse determination of which we anticipate would have a material adverse effect upon our consolidated financial condition and results of operations.

ITEM 2. Changes in Securities and Use of Proceeds

None

ITEM 3. Defaults Upon Senior Securities.

None

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

At the Annual Meeting of Shareholders held on May 20, 2004, the Shareholders approved the three proposals noted below by the following votes:


	FOR					AGAINST	WITHHELD/ ABSTAINED
	No. of Shares	% of shares Voted for this item		% of outstanding		No. of Shares	No. of Shares
Proposal No. I Amending the Company’s current Articles of Incorporation to provide for the Company’s moving from a staggered board structure toward the election of all Directors annually.
	45,562,664	98	%	91	%	681,142	161,697

Proposal No. II Election of Directors for a one-year term:
Robert A. Fiddaman	46,042,366	99	%	92	%		351,137
Roger P. Kuppinger	45,838,389	99	%	91	%		537,114
Jeanne R. Myerson	46,020,461	99	%	92	%		355,042

Proposal No. III Ratification of Ernst & Young LLP as auditors for the year ended December 31, 2004:
	45,173,744	97	%	90	%	1,093,223	108,536

ITEM 5. Other Information.

None

ITEM 6. Exhibits and Reports on Forms 8-K

(a)

Exhibits:

Statement Re: Computation of Per Share Earnings (Restated)

Statement of Computation of Ratios of Earnings to Fixed Charges and Earnings to Combined Fixed Charges and Preferred Stock Dividends (Restated)

31.1

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1

Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2

Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(b)

Reports on Form 8-K:

•

The registrant filed a Current Report on Form 8-K on April 15, 2004 with exhibits, pursuant to Items 12 and 7 of Form 8-K, in connection with its press release announcing its first quarter 2004 operating results.

•

The registrant filed a Current Report on Form 8-K on April 15, 2004, pursuant to Item 5 of Form 8-K, in connection with its first quarter 2004 operating results.

•

The registrant filed a Current Report on Form 8-K with exhibits on May 20, 2004, pursuant to Items 7 and 9 of Form 8-K, in connection with a slide show presentation to be presented at an industry conference.

•

The registrant filed a Current Report on Form 8-K with exhibits on May 24, 2004, pursuant to Item 5 of Form 8-K, in connection with the registrant’s first quarter dividend announcement.

•

The registrant filed a Current Report on Form 8-K with exhibits on June 7, 2004, pursuant to Items 7 and 9 of Form 8-K, in connection with a slide show presentation to be presented at an industry conference.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		BRE PROPERTIES, INC.
		(Registrant)

Dated: March 15, 2005		/s/ Edward F. Lange, Jr.
		Edward F. Lange, Jr.
		Executive Vice President,
		Chief Financial Officer and Secretary

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