<PAGE>   1
 
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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
 
                             ---------------------
 
                                   FORM 10-Q
 
<TABLE>
<C>               <S>
      [X]           QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                                SECURITIES EXCHANGE ACT OF 1934
                       FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998
                                               OR
      [  ]            TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                              THE SECURITIES EXCHANGE ACT OF 1934
                  FOR THE TRANSITION PERIOD FROM ____________ TO ____________.
</TABLE>
 
                         COMMISSION FILE NUMBER 0-22411
 
                             ---------------------
 
                      SUMMIT PROPERTIES PARTNERSHIP, L.P.
             (Exact name of registrant as specified in its charter)
 
<TABLE>
<S>                                            <C>
DELAWARE                                                        56-1857809
(State or other jurisdiction of                              (I.R.S. Employer
incorporation or organization)                              Identification No.)
</TABLE>
 
        212 S. TRYON STREET, SUITE 500, CHARLOTTE, NORTH CAROLINA 28281
              (Address of principal executive offices -- zip code)
 
                                 (704) 334-9905
              (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 whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.  Yes [X]     No [ ]
 
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<PAGE>   2
 
                      SUMMIT PROPERTIES PARTNERSHIP, L.P.
 
                                     INDEX
 
<TABLE>
<CAPTION>
                                                                              PAGE
                                                                              ----
<S>     <C>     <C>                                                           <C>
PART I          FINANCIAL INFORMATION
        Item 1  Financial Statements
                Consolidated Balance Sheets as of September 30, 1998
                  and December 31, 1997 (Unaudited).........................    3
                Consolidated Statements of Earnings for the three and
                  nine months ended September 30, 1998 and 1997
                  (Unaudited)...............................................    4
                Consolidated Statement of Partners' Equity for the nine
                  months ended September 30, 1998 (Unaudited)...............    5
                Consolidated Statements of Cash Flows for the nine months
                  ended September 30, 1998 and 1997 (Unaudited).............    6
                Notes to Consolidated Financial Statements..................    7
        Item 2  Management's Discussion and Analysis of Financial
                  Condition and Results of Operations.......................   12
PART II         OTHER INFORMATION
        Item 2  Changes in Securities.......................................   26
        Item 6  Exhibits and Reports on Form 8-K............................   27
        SIGNATURES..........................................................   28
</TABLE>
 
                                        2
<PAGE>   3
 
PART I.  FINANCIAL INFORMATION
 
ITEM 1.  FINANCIAL STATEMENTS
 
                      SUMMIT PROPERTIES PARTNERSHIP, L.P.
 
                          CONSOLIDATED BALANCE SHEETS
                             (DOLLARS IN THOUSANDS)
                                  (UNAUDITED)
 
<TABLE>
<CAPTION>
                                                              SEPTEMBER   DECEMBER 31,
                                                                1998          1997
                                                              ---------   ------------
<S>                                                           <C>         <C>
ASSETS
Real estate assets:
  Land and land improvements................................  $151,962      $133,316
  Buildings and improvements................................   732,246       643,812
  Furniture, fixtures and equipment.........................    61,295        53,573
                                                              --------      --------
                                                               945,503       830,701
  Less: accumulated depreciation............................  (121,631)     (105,979)
                                                              --------      --------
          Operating real estate assets......................   823,872       724,722
  Construction in progress..................................   140,604        82,332
                                                              --------      --------
          Net real estate assets............................   964,476       807,054
Cash and cash equivalents...................................     4,823         3,563
Restricted cash.............................................     7,702         3,180
Deferred financing costs, net...............................     7,501         7,378
Other assets................................................     5,498         4,520
                                                              --------      --------
Total assets................................................  $990,000      $825,695
                                                              ========      ========
LIABILITIES AND PARTNERS' EQUITY
Liabilities:
  Notes payable.............................................  $601,872      $474,673
  Accrued interest payable..................................     3,492         4,916
  Accounts payable and accrued expenses.....................    21,244        19,945
  Distributions payable.....................................    12,135        11,030
  Security deposits and prepaid rents.......................     4,134         3,561
                                                              --------      --------
          Total liabilities.................................   642,877       514,125
                                                              --------      --------
Commitments and contingencies
Partners' equity:
  Partnership units issued and outstanding 29,679,038 and
     27,339,016
     General partner -- outstanding 296,790 and 273,390.....     4,202         3,847
     Limited partners -- outstanding 29,382,248 and
      27,065,626............................................   342,921       307,723
                                                              --------      --------
          Total partners' equity............................   347,123       311,570
                                                              --------      --------
Total liabilities and partners' equity......................  $990,000      $825,695
                                                              ========      ========
</TABLE>
 
See notes to consolidated financial statements (unaudited).
 
                                        3
<PAGE>   4
 
                      SUMMIT PROPERTIES PARTNERSHIP, L.P.
 
                      CONSOLIDATED STATEMENTS OF EARNINGS
                (DOLLARS IN THOUSANDS EXCEPT FOR PER SHARE DATA)
                                  (UNAUDITED)
 
<TABLE>
<CAPTION>
                                                 THREE MONTHS ENDED           NINE MONTHS ENDED
                                                    SEPTEMBER 30,               SEPTEMBER 30,
                                              -------------------------   -------------------------
                                                 1998          1997          1998          1997
                                              -----------   -----------   -----------   -----------
<S>                                           <C>           <C>           <C>           <C>
Revenues:
  Rental....................................  $    35,251   $    28,240   $    99,047   $    80,348
  Other property income.....................        2,144         1,660         5,733         4,558
  Interest..................................          233            97           511           305
  Other income..............................          628            71           775           209
                                              -----------   -----------   -----------   -----------
          Total revenues....................       38,256        30,068       106,066        85,420
                                              -----------   -----------   -----------   -----------
Expenses:
  Property operating and maintenance:
     Personnel..............................        2,993         2,427         8,103         6,899
     Advertising and promotion..............          625           596         1,731         1,418
     Utilities..............................        1,619         1,312         4,502         3,623
     Building repairs and maintenance.......        2,738         2,326         7,216         6,382
     Real estate taxes and insurance........        3,381         2,573        10,251         8,111
     Depreciation...........................        7,373         5,852        20,774        16,463
     Property supervision...................          904           701         2,545         2,041
     Other operating expenses...............        1,011           797         2,851         2,356
                                              -----------   -----------   -----------   -----------
                                                   20,644        16,584        57,973        47,293
  Interest..................................        8,392         5,790        23,351        15,382
  General and administrative................        1,190           857         2,726         2,099
  Loss (income) in equity investments.......          138          (111)           95           (86)
                                              -----------   -----------   -----------   -----------
          Total expenses....................       30,364        23,120        84,145        64,688
                                              -----------   -----------   -----------   -----------
Income before gain on sale of real estate
  assets and extraordinary items............        7,892         6,948        21,921        20,732
Gain on real estate assets..................           --            --         8,731         4,366
                                              -----------   -----------   -----------   -----------
Income before extraordinary items...........        7,892         6,948        30,652        25,098
Extraordinary items.........................           --            --          (185)           --
                                              -----------   -----------   -----------   -----------
Net income..................................        7,892         6,948        30,467        25,098
Net income allocated to general partner.....          (79)          (70)         (305)         (251)
                                              ===========   ===========   ===========   ===========
Net income allocated to limited partners....  $     7,813   $     6,878   $    30,162   $    24,847
                                              ===========   ===========   ===========   ===========
Per unit data:
  Income before extraordinary items -- basic
     and diluted............................  $      0.27   $      0.25   $      1.06   $      0.92
                                              ===========   ===========   ===========   ===========
  Net income -- basic and diluted...........  $      0.27   $      0.25   $      1.06   $      0.92
                                              ===========   ===========   ===========   ===========
  Distributions declared....................  $      0.41   $      0.40   $      1.23   $      1.19
                                              ===========   ===========   ===========   ===========
  Weighted average units -- basic...........   29,462,433    27,334,464    28,808,330    27,220,199
                                              ===========   ===========   ===========   ===========
  Weighted average units -- diluted.........   29,468,032    27,369,316    28,825,095    27,252,718
                                              ===========   ===========   ===========   ===========
</TABLE>
 
See notes to consolidated financial statements (unaudited).
 
                                        4
<PAGE>   5
 
                      SUMMIT PROPERTIES PARTNERSHIP, L.P.
 
                   CONSOLIDATED STATEMENT OF PARTNERS' EQUITY
                             (DOLLARS IN THOUSANDS)
                                  (UNAUDITED)
 
<TABLE>
<CAPTION>
                                                              GENERAL   LIMITED
                                                              PARTNER   PARTNER     TOTAL
                                                              -------   --------   --------
<S>                                                           <C>       <C>        <C>
Balance, December 31, 1998..................................  $3,847    $307,723   $311,570
  Distributions.............................................    (358)    (35,396)   (35,754)
  Contributions from Summit Properties related to:
     Proceeds from dividend reinvestment and stock purchase
       plans................................................     370      36,631     37,001
     Exercise of stock options..............................       8         833        841
     Amortization of restricted stock grants................       3         302        305
  Issuance of units related to property acquisition.........      52       5,161      5,213
  Issuance of employee notes receivable.....................     (25)     (2,495)    (2,520)
  Net income................................................     305      30,162     30,467
                                                              ------    --------   --------
Balance, September 30, 1998.................................  $4,202    $342,921   $347,123
                                                              ======    ========   ========
</TABLE>
 
See notes to consolidated financial statements (unaudited).
 
                                        5
<PAGE>   6
 
                      SUMMIT PROPERTIES PARTNERSHIP, L.P.
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (DOLLARS IN THOUSANDS)
                                  (UNAUDITED)
 
<TABLE>
<CAPTION>
                                                                NINE MONTHS ENDED
                                                                  SEPTEMBER 30,
                                                              ----------------------
                                                                1998         1997
                                                              ---------    ---------
<S>                                                           <C>          <C>
Cash flows from operating activities:
  Net income................................................  $  30,467    $  25,098
  Adjustments to reconcile net income to net cash provided
     by operating activities:
  Extraordinary items.......................................        185           --
  (Gain) loss on equity method investments..................         95          (86)
  Gain on sale of real estate assets........................     (8,731)      (4,366)
  Depreciation and amortization.............................     21,778       17,336
  Increase in restricted cash...............................       (586)        (994)
  Increase in other assets..................................       (775)        (699)
  Increase (decrease) in accrued interest payable...........     (1,439)       1,262
  Increase in accounts payable and accrued expenses.........      6,156        4,484
  Increase in security deposits and prepaid rents...........        301         (104)
                                                              ---------    ---------
          Net cash provided by operating activities.........     47,451       41,931
                                                              ---------    ---------
Cash flows from investing activities:
  Construction of real estate assets, net of payables.......    (92,946)     (68,980)
  Purchase of Communities...................................    (73,654)     (57,749)
  Proceeds from sale of a Community.........................     19,996        9,271
  Capitalized interest......................................     (4,352)      (4,528)
  Recurring capital expenditures............................     (3,372)      (2,589)
  Non-recurring capital expenditures, net of payables.......     (3,279)      (3,317)
                                                              ---------    ---------
          Net cash used in investing activities.............   (157,607)    (127,892)
                                                              ---------    ---------
Cash flows from financing activities:
  Net borrowings on line of credit..........................    103,627       (8,340)
  Net borrowings on unsecured bonds.........................     29,510      121,627
  Repayments of mortgage debt...............................    (14,873)      (2,847)
  Repayments of tax exempt bonds............................       (945)        (910)
  Distributions to unitholders..............................    (34,724)     (32,104)
  Increase in employee notes................................     (2,520)          --
  Contributions from Summit Properties related to:
     Net proceeds from dividend reinvestment and stock
      purchase plans........................................     30,500        1,760
     Proceeds from public offerings.........................         --        6,813
     Costs of shelf registrations...........................         --         (511)
     Exercise of stock options..............................        841          738
                                                              ---------    ---------
          Net cash provided by financing activities.........    111,416       86,226
                                                              ---------    ---------
Net increase in cash and cash equivalents...................      1,260          265
Cash and cash equivalents, beginning of period..............      3,563        3,665
                                                              ---------    ---------
Cash and cash equivalents, end of period....................  $   4,823    $   3,930
                                                              =========    =========
Supplemental disclosure of cash flow information -- Cash
  paid for interest, net of capitalized interest............  $  24,066    $  13,359
                                                              =========    =========
</TABLE>
 
See notes to consolidated financial statements (unaudited).
 
                                        6
<PAGE>   7
 
SUMMIT PROPERTIES PARTNERSHIP, L.P.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------
 
1. BASIS OF PRESENTATION
 
The accompanying unaudited financial statements have been prepared by the
management of Summit Properties Partnership, L.P. (the "Operating Partnership")
in accordance with generally accepted accounting principles for interim
financial information and in conformity with the rules and regulations of the
Securities and Exchange Commission. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
(consisting only of normal recurring adjustments) considered necessary for a
fair presentation have been included. The results of operations for the nine
months ended September 30, 1998 are not necessarily indicative of the results
that may be expected for the full year. These financial statements should be
read in conjunction with the Operating Partnership's December 31, 1997 audited
financial statements and notes thereto included in the Operating Partnership's
Annual Report on Form 10-K.
 
The Operating Partnership conducts the business of developing, acquiring and
managing multi-family apartment communities for Summit Properties Inc. ("Summit
Properties"). Summit Properties is the sole general partner and majority owner
of the Operating Partnership. Summit Properties is a self-administered and
self-managed equity real estate investment trust ("REIT").
 
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 128 "Earnings Per Share." This pronouncement
specifies the computation, presentation and disclosure requirements for earnings
per share. The new standard had no impact on the Operating Partnership's
financial statements as the "basic" and "diluted" earnings per unit disclosure
required by the pronouncement were the same as "primary" earnings per unit
previously reported. The only difference in "basic" and "diluted" weighted
average units is the dilutive effect of Summit Properties' stock options
outstanding (5,599 and 34,852 units added to weighted units outstanding for the
three months ended September 30, 1998 and 1997, respectively, and 16,765 and
32,519 units added to weighted units outstanding for the nine months ended
September 30, 1998 and 1997, respectively).
 
2. ACQUISITIONS, DISPOSITIONS AND COMMITMENTS
 
During the nine month period ending September 30, 1998, the Operating
Partnership completed the acquisition of three communities located in Atlanta,
Georgia: Summit St. Clair, purchased effective March 1, 1998, Summit Club at
Dunwoody, purchased effective May 22, 1998, and Summit at Lenox, purchased
effective July 8, 1998 (the "1998 Acquisitions"). The 1998 Acquisitions added a
total of 1,092 apartment homes to the Operating Partnership's portfolio at an
aggregate purchase price of $88.3 million.
 
The 1998 Acquisitions were financed with the issuance of 259,871 units of
limited partnership interest ("Units") valued at $5.2 million and the assumption
of $8.8 million of mortgage debt. The balance of the purchase price was paid in
cash.
 
The following summary of selected unaudited pro forma results of operations
presents information as if the 1998 Acquisitions had occurred as of January 1,
1998 for the 1998 pro-forma information. Pro forma information for the nine
months ended September 30, 1997 presents information as if the Summit at Lenox
acquisition had occurred as of January 1, 1997. Pro forma information for 1997
has not been presented for Summit St. Clair and Summit Club at Dunwoody as they
were under construction during that period and had insignificant operations. The
pro forma information for the nine months ended September 30, 1998 and 1997 is
 
                                        7
<PAGE>   8
SUMMIT PROPERTIES PARTNERSHIP, L.P.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
--------------------------------------------------------------------------------
 
provided for informational purposes only and is not indicative of results that
would have occurred or which may occur in the future (dollars in thousands,
except per share amounts):
 
<TABLE>
<CAPTION>
                                                                   NINE MONTHS
                                                               ENDED SEPTEMBER 30,
                                                            --------------------------
                                                               1998           1997
                                                            -----------    -----------
<S>                                                         <C>            <C>
Total revenues............................................  $   110,234    $    88,683
                                                            ===========    ===========
Income before gain on sale of real estate assets and
  extraordinary items.....................................  $    21,192    $    19,812
                                                            ===========    ===========
Net income................................................  $    29,738    $    24,178
                                                            ===========    ===========
Net income per share -- basic and diluted.................  $      1.03    $      0.89
                                                            ===========    ===========
Weighted average units -- basic...........................   28,911,507     27,220,199
                                                            ===========    ===========
Weighted average units -- diluted.........................   28,928,272     27,252,718
                                                            ===========    ===========
</TABLE>
 
On May 18, 1998, the Operating Partnership sold a community in Brandon, Florida
formerly known as Summit Providence for net proceeds of $23.9 million. A gain on
the sale of $8.7 million was recognized in the second quarter of 1998. Proceeds
from the sale were used to partially fund the acquisition of Summit Club at
Dunwoody.
 
The Operating Partnership has nine development projects currently under
construction with a total estimated cost of $161.7 million. The estimated cost
to complete these projects is $51.0 million.
 
3. REAL ESTATE JOINT VENTURES
 
The Operating Partnership owns a 49% interest in each of two joint ventures.
Each joint venture is developing a apartment community which will be accounted
for under the equity method of accounting. The projects are both under
construction and had no operations as of September 30, 1998. The construction
costs will be funded primarily through individual loans to each joint venture
from unrelated third parties equal to 100% of the construction costs. During the
construction period, in lieu of contributing equity to each of the respective
joint ventures, the Operating Partnership has under certain circumstances,
subsequent to demand by the third party lenders, agreed to make contributions
which would reduce the respective construction loan by an amount not to exceed
25% of the total construction loan amount. Any such contribution would be deemed
to be all or a portion of the equity required to be contributed by the Operating
Partnership to the respective joint venture at the end of the construction and
lease up period. The Operating Partnership has the right to purchase it's joint
venture partner interest after the projects are complete. The following is a
condensed balance sheet for the projects at September 30, 1998:
 
<TABLE>
<S>                                                           <C>
Cash........................................................  $   16,098
Construction in progress....................................   4,234,571
                                                              ----------
          Total assets......................................  $4,250,669
                                                              ==========
Construction liabilities payable............................  $  628,694
Construction loan payable...................................   3,611,975
Partner's capital...........................................      10,000
                                                              ----------
          Total liabilities and partners' capital...........  $4,250,669
                                                              ==========
</TABLE>
 
                                        8
<PAGE>   9
SUMMIT PROPERTIES PARTNERSHIP, L.P.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
--------------------------------------------------------------------------------
 
4. NOTES PAYABLE
 
  Line of Credit
 
The Operating Partnership obtained a new syndicated unsecured line of credit
(the "Unsecured Credit Facility") in the amount of $175 million in March 1998
which replaced the existing $150 million credit facility. The Unsecured Credit
Facility provides funds for new development, acquisitions and general working
capital purposes. The Unsecured Credit Facility has a three year term with two
one-year extension options and will initially bear interest at LIBOR + 90 basis
points based upon the Operating Partnership's current credit rating of BBB- by
Standard & Poor's Rating Services and Baa3 by Moody's Investors Service. The
interest rate will be reduced in the event an upgrade of the Operating
Partnership's unsecured credit rating is obtained. The Unsecured Credit Facility
also provides a bid option sub-facility equal to a maximum of fifty percent of
the total facility ($87.5 million). This sub-facility provides the Operating
Partnership with the option to place borrowings in a fixed LIBOR contract up to
180 days.
 
  Mortgage Notes
 
On September 23, 1998, the Operating Partnership consolidated and renewed two
mortgage loans which had a $147.2 million balance. The original loans matured in
February 2001 ($118.3 million at 5.88%) and December 2005 ($28.9 million at
7.71%). The consolidation and renewal combined the two mortgage loans into one
loan at an interest rate equal to the weighted average interest rate of the two
previous mortgage loans (6.24%) up to February 2001. As of February 2001, the
rate of interest on the loan will increase to 6.76% until the loan matures in
October of 2008.
 
  Medium-Term Notes
 
The Operating Partnership has established a program for the sale of up to $95
million aggregate principal amount of Medium-Term Notes due nine months or more
from the date of issuance (the "MTN Program"). On July 28, 1998, the Operating
Partnership sold $30 million of notes under the MTN Program. Such notes are due
on July 30, 2001 and bear interest at 6.75% per year. On October 5, 1998, the
Operating Partnership sold $25 million of notes under the MTN Program. Such
notes are due on October 5, 2000 and bear interest at 6.71% per year. Proceeds
from the notes issued in both July and October of 1998 were used to reduce the
Unsecured Credit Facility.
 
5. RESTRICTED STOCK
 
In the nine months ended September 30, 1998 and 1997, Summit Properties granted
6,592 and 26,528 shares, respectively, of restricted stock to employees of the
Operating Partnership and subsidiaries under Summit Properties' 1994 Stock
Option and Incentive Plan. The market value of the restricted stock grants in
1998 and 1997 totaled $135,000 and $570,000, respectively. Unearned compensation
is being amortized to expense over the vesting period which ranges from three to
five years.
 
                                        9
<PAGE>   10
SUMMIT PROPERTIES PARTNERSHIP, L.P.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
--------------------------------------------------------------------------------
 
6. SUPPLEMENTAL CASH FLOW INFORMATION
 
Non-cash investing and financing activities for the nine months ended September
30, 1998 and 1997 are as follows:
 
     A. The Operating Partnership purchased the 1998 Acquisitions by issuing
     259,871 Units, assuming a mortgage note, assuming certain liabilities and
     the payment of cash. The recording of the purchase is summarized as follows
     (in thousands):
 
<TABLE>
<S>                                                           <C>
Fixed assets................................................  $88,298
Current liabilities assumed.................................     (681)
Value of Units issued.......................................   (5,213)
Mortgage note assumed.......................................   (8,750)
                                                              -------
          Cash invested.....................................  $73,654
                                                              =======
</TABLE>
 
     B. The Operating Partnership sold a community on May 18, 1998 for net
     proceeds of approximately $23.9 million. The proceeds of the sale were put
     in escrow in accordance with like-kind exchange rules and regulations. On
     May 22, 1998, $17.6 million of the escrow was used to fund the acquisition
     of an apartment community (see Note 2). On July 24, 1998, $2.4 million of
     the escrow was used to fund the acquisition of land for development. The
     remaining $3.9 million held in escrow is shown in the balance sheet caption
     "Restricted Cash" and will be used to fund the acquisition of other
     like-kind property.
 
     C. In the nine months ended September 30, 1997, the Operating Partnership
     purchased four communities (Summit Mayfaire, Summit Portofino, Summit Sand
     Lake and Summit Windsor II). The Operating Partnership completed the
     purchase of the four Communities by assuming debt, issuing 194,495 Units,
     issuing 243,608 Units to Summit Properties in exchange for Summit
     Properties issuing 243,608 shares of Common Stock, assuming certain
     liabilities and current assets, and the payment of cash. The recording of
     the purchase is summarized as follows (in thousands):
 
<TABLE>
<S>                                                           <C>
Fixed assets................................................  $82,898
Other assets................................................       30
Debt assumed................................................  (15,226)
Current liabilities assumed.................................   (1,081)
Value of Units issued.......................................   (3,939)
Value of Common Stock issued................................   (4,933)
                                                              -------
          Cash invested.....................................  $57,749
                                                              =======
</TABLE>
 
     D. The Operating Partnership accrued a dividend and distribution payable in
     the amount of $12.1 million and $10.9 million at September 30, 1998 and
     1997, respectively.
 
     E. Summit Properties issued 6,592 and 26,528 shares of restricted stock
     valued at $135,000 and $570,000 during the nine months ended September 30,
     1998 and 1997, respectively, to employees of the Operating Partnership and
     subsidiaries.
 
7. NOTES RECEIVABLE FROM EMPLOYEES
 
On September 8, 1997, the Board of Directors of Summit Properties approved a
Statement of Company Policy, which has subsequently been amended and restated by
the Board, on loans to executive officers and certain key employees relating to
purchases of Summit Properties Common Stock (the "Loan Program"). Pursuant to
the Loan Program, Summit Properties may lend amounts to certain of Summit
Properties' executive officers and certain of it's key employees of the
Operating Partnership and subsidiaries for one or more of the following
purposes: (i) to finance the purchase of Common Stock (a) by certain executive
officers on the open market at the then-current market prices and (b) by other
eligible employees through Summit
 
                                       10
<PAGE>   11
SUMMIT PROPERTIES PARTNERSHIP, L.P.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
--------------------------------------------------------------------------------
 
Properties 1996 Non-Qualified Employee Stock Purchase Plan; (ii) to finance an
executive officer's or key employee's payment of the exercise price of one or
more stock options to purchase shares of Common Stock granted to such employees
under Summit Properties 1994 Stock Option Plan; or (iii) to finance the annual
tax liability of certain executive officers related to the vesting of shares of
Common Stock which constitute a portion of a restricted stock award granted to
such employees under the 1994 Stock Option Plan. The maximum aggregate amount
Summit Properties may loan to an executive officer is determined on a case-by-
case basis by the Board of Directors or the Compensation Committee thereof, and
the maximum aggregate amount Summit Properties may loan to a qualified employee
is $100,000. Shares of Common Stock which are the subject of a loan serve as
collateral for the note until the note has been paid in full. Each note bears
interest at the applicable federal rate, as established by the Internal Revenue
Service in effect on the date of the note. The notes are payable through the
application to the outstanding loan balance of all dividends and distributions
related to the collateral stock, first to interest, with the remainder, if any,
to outstanding principal. Each note becomes due and payable in full on the tenth
anniversary of the respective note. As of September 30, 1998, Summit Properties
had issued loans in the net amount of $2,520,000.
 
8. EXTRAORDINARY ITEMS
 
The extraordinary items in the nine months ended September 30, 1998 resulted
from the write-off of deferred financing cost in conjunction with the
replacement by the Operating Partnership of its prior credit facility with the
Unsecured Credit Facility and prepayment penalties on four mortgage notes which
were repaid during the period.
 
9. SUBSEQUENT EVENTS
 
On October 23, 1998, the Operating Partnership sold a community in Atlanta,
Georgia formerly known as Summit Springs for $17.5 million. The Operating
Partnership will recognize a gain of approximately $6.0 million on the sale.
Proceeds from the sale will be used to fund future development.
 
On November 4, 1998, the Operating Partnership acquired a portfolio of
multifamily properties in Texas (the "Ewing Portfolio") through a merger with
Ewing Industries, a private developer of luxury apartment homes. The Ewing
Portfolio consists of 2,465 apartment homes in seven communities located in
Dallas, Austin and San Antonio. The acquisition of the Ewing Portfolio was
effected pursuant to an Agreement and Plan of Reorganization dated as of October
31, 1998 (the "Merger Agreement") among Summit Properties, affiliates of Summit
Properties (including the Operating Partnership), Ewing Industries, Inc., an
Ohio corporation ("Ewing Industries"), affiliates of Ewing, and their respective
partners, shareholders and members (together with Ewing Industries, "Ewing").
Pursuant to the Merger Agreement, the acquisition was funded through (i) the
issuance to Ewing of 1,008,987 shares of common stock of Summit Properties
(each, a "Share") and 141,921 units of limited partnership interest of the
Operating Partnership (each, a "Unit"), valued at $18.50 per Share and per Unit
(or $21,291,801 in the aggregate), (ii) the assumption of $79,851,773 in
long-term fixed-rate mortgage indebtedness, (iii) the payment of $50,598,397 in
cash and (iv) receipt of $2,516,868 of credit for customary prorations and
reserves. A portion of the consideration is deferred until stabilization of one
community which is currently in lease-up. The current estimate of the additional
consideration to be paid at such time is (i) 1,030,009 Shares and 36,629 Units
valued at $18.50 per Share and per Unit (or $19,732,803 in the aggregate), and
(ii) cash in the amount of $1,314,144. The Operating Partnership filed a Current
Report on Form 8-K with the Securities and Exchange Commission on November 13,
1998 in connection with the acquisition of the Ewing Portfolio.
 
On November 12, 1998, the Operating Partnership sold a community located in
Winston Salem, North Carolina formerly known as Summit Old Town for
approximately $7.5 million. The Operating Partnership expects to recognize a
gain on the sale. Proceeds from the sale will be used to fund future
development.
 
                                       11
<PAGE>   12
 
PART II.  OTHER INFORMATION
 
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS
 
This Form 10-Q contains certain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended (the "Securities Act"),
and Section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), including without limitation statements relating to the
operating performance of stabilized communities, to development activities of
the Operating Partnership and to the implementation of the Operating
Partnership's plan to address Year 2000 issues. The Operating Partnership
intends such forward-looking statements to be covered by the safe harbor
provisions for forward-looking statements contained in the Private Securities
Reform Act of 1995, and is including this statement for purposes of complying
with these safe harbor provisions. Forward-looking statements, which are based
on certain assumptions and describe future plans, strategies and expectations of
the Operating Partnership are generally identifiable by use of the words
"believe," "expect," "intend," "anticipate," "estimate," "project" or similar
expressions. The Operating Partnership's ability to predict results or the
actual effect of future plans or strategies is inherently uncertain. Although
the Operating Partnership believes that the expectations reflected in such
forward-looking statements are based on reasonable assumptions, the Operating
Partnership's actual results and performance of stabilized and development
Communities and the actual costs, progress and expenses with respect to its plan
to address Year 2000 issues could differ materially from those set forth in the
forward-looking statements. Factors which could have a material adverse effect
on the operations and future prospects of the Operating Partnership include, but
are not limited to, changes in: economic conditions generally and the real
estate market specifically, legislative/regulatory changes (including changes to
laws governing the taxation of real estate investment trusts ("REITs")),
availability of capital, interest rates, construction delays due to
unavailability of materials, weather conditions or other delays, competition,
supply and demand for apartment communities in the Operating Partnership's
current and proposed market areas, expenses of or delays in the identification
and upgrade or replacement by the Operating Partnership of its non-Year 2000
compliant computer information systems and computer systems that do not relate
to information technology, but include embedded technology, the Year 2000
compliance of vendors (including vendors of the Operating Partnership's computer
information systems) or third party service providers (including the Operating
Partnership's primary bank and payroll processor), generally accepted accounting
principles, policies and guidelines applicable to REITs, and those factors
discussed in the last paragraph under the heading "Operating Performance of the
Operating Partnership's Fully Stabilized Communities," in the section entitled
"Development Activity--Certain Factors Affecting the Performance of Development
Communities" and in the section entitled "Year 2000" on pages 14, 21 and 22
respectively, of this Form 10-Q. These risks and uncertainties should be
considered in evaluating forward-looking statements and undue reliance should
not be placed on such statements.
 
The following discussion should be read in conjunction with the Consolidated
Financial Statements of Summit Properties Partnership, L.P. and the Notes
thereto appearing elsewhere herein.
 
HISTORICAL RESULTS OF OPERATIONS
 
The Operating Partnership's net income is generated primarily from operations of
its apartment communities (the "Communities"). The changes in operating results
from period to period reflect changes in existing Community performance and
increases in the number of apartment homes due to development and acquisition of
new Communities. Where appropriate, comparisons are made on a "fully stabilized
Communities," "acquisition Communities," "stabilized development Communities"
and "Communities in lease-up" basis in order to adjust for changes in the number
of apartment homes. A Community is deemed to be "stabilized" when it has
attained a physical occupancy level of at least 93%. A Community is deemed
"fully stabilized" when stabilized for the two prior years as of the beginning
of the current year. A Community is deemed to be a "stabilized development" when
stabilized as of the beginning of the current year but not the entire two prior
years.
 
                                       12
<PAGE>   13
 
  Results of Operations for the Three and Nine Months Ended September 30, 1998
and 1997
 
For the three and nine months ended September 30, 1998, income before gain on
sale of real estate assets and extraordinary items increased $944,000 and
$1,189,000, respectively, to approximately $7.9 million and $21.9 million,
respectively, from the three and nine months ended September 30, 1997.
 
OPERATING PERFORMANCE OF THE OPERATING PARTNERSHIP'S PORTFOLIO OF COMMUNITIES
 
The operating performance of the Communities for the three and nine months ended
September 30, 1998 and 1997 is summarized below (dollars in thousands):
 
<TABLE>
<CAPTION>
                                       THREE MONTHS ENDED             NINE MONTHS ENDED
                                         SEPTEMBER 30,                  SEPTEMBER 30,
                                  ----------------------------   ----------------------------
                                   1998      1997     % CHANGE    1998      1997     % CHANGE
                                  -------   -------   --------   -------   -------   --------
<S>                               <C>       <C>       <C>        <C>       <C>       <C>
Property revenues:
  Stabilized communities........  $21,664   $20,839      4.0%    $63,240   $61,912       2.1%
  Acquisition communities.......    6,095     2,428    151.0      14,042     5,697     146.5
  Stabilized development
     communities................    5,564     5,170      7.6      16,401    13,647      20.2
  Communities in lease-up.......    4,072       611    566.4       9,725       640    1419.5
  Communities sold..............       --       852    100.0       1,372     3,010     (54.4)
                                  -------   -------              -------   -------
          Total property
            revenues............   37,395    29,900     25.1     104,780    84,906      23.4
                                  -------   -------              -------   -------
Property operating and
  maintenance expense:(1)
Stabilized communities..........    8,016     7,809      2.7      23,383    23,141       1.0
  Acquisition communities.......    2,135       835    155.7       4,684     1,893     147.4
  Stabilized development
     communities................    1,804     1,477     22.1       5,366     4,230      26.9
  Communities in lease-up.......    1,316       241    446.1       3,232       306     956.2
  Communities sold..............       --       370    100.0         534     1,260     (57.6)
                                  -------   -------              -------   -------
          Total property
            operating and
            maintenance
            expense.............   13,271    10,732     23.7      37,199    30,830      20.7
                                  -------   -------              -------   -------
Property operating income.......  $24,124   $19,168     25.9     $67,581   $54,076      25.0
                                  =======   =======              =======   =======
Apartment homes, end of
  period........................   16,695    14,734     13.3      16,695    14,734      13.3
                                  =======   =======              =======   =======
</TABLE>
 
---------------
 
(1) Before real estate depreciation expense.
 
A summary of the Operating Partnership's apartment homes for the nine months
ended September 30, 1998 and 1997 is as follows:
 
<TABLE>
<CAPTION>
                                                               1998     1997
                                                              ------   ------
<S>                                                           <C>      <C>
Apartment homes at the beginning of period..................  14,980   12,454
Acquisitions................................................   1,092    1,188
Developments which began rental operations during the
  period....................................................   1,067    1,306
Sale of apartment homes.....................................    (444)    (214)
                                                              ------   ------
Apartment homes at the end of the period....................  16,695   14,734
                                                              ======   ======
</TABLE>
 
                                       13
<PAGE>   14
 
OPERATING PERFORMANCE OF THE OPERATING PARTNERSHIP'S FULLY STABILIZED
COMMUNITIES
 
The operating performance of the 46 Communities stabilized since January 1, 1996
in each of the three and nine months ended September 30, 1998 and 1997,
respectively, are summarized below (dollars in thousands except average monthly
rental revenue):
 
<TABLE>
<CAPTION>
                                     THREE MONTHS ENDED             NINE MONTHS ENDED
                                       SEPTEMBER 30,                  SEPTEMBER 30,
                                ----------------------------   ----------------------------
                                 1998      1997     % CHANGE    1998      1997     % CHANGE
                                -------   -------   --------   -------   -------   --------
<S>                             <C>       <C>       <C>        <C>       <C>       <C>
Property revenues:
  Rental......................  $20,531   $19,855      3.4%    $60,022   $59,000      1.7%
  Other.......................    1,133       984     15.1       3,218     2,912     10.5
                                -------   -------              -------   -------
Total property revenues.......   21,664    20,839      4.0      63,240    61,912      2.1
                                -------   -------              -------   -------
Property operating and
  maintenance expense(1):
  Personnel...................    1,812     1,744      3.9       5,126     5,242     (2.2)
  Advertising and promotion...      323       319      1.3         929       830     11.9
  Utilities...................      969       945      2.5       2,824     2,713      4.1
  Building repairs and
     maintenance..............    1,850     1,817      1.8       5,070     5,136     (1.3)
  Real estate taxes and
     insurance................    1,916     1,896      1.1       6,030     5,927      1.7
  Property supervision........      532       518      2.7       1,563     1,548      1.0
  Other operating expense.....      614       570      7.7       1,841     1,745      5.5
                                -------   -------              -------   -------
Total property operating and
  maintenance expense.........    8,016     7,809      2.7      23,383    23,141      1.0
                                -------   -------              -------   -------
Property operating income.....  $13,648   $13,030      4.7     $39,857   $38,771      2.8
                                =======   =======              =======   =======
Average physical
  occupancy(2)................     94.6%     93.8%     0.8        93.0%     93.4%    (0.4)
                                =======   =======              =======   =======
Average monthly rental
  revenue(3)..................  $   757   $   729      3.9     $   750   $   726      3.4
                                =======   =======              =======   =======
Number of apartment homes.....    9,834     9,834                9,834     9,834
                                =======   =======              =======   =======
</TABLE>
 
---------------
 
(1) Before real estate depreciation expense.
 
(2) Average physical occupancy is defined as the number of apartment homes
    occupied divided by the total number of apartment homes contained in the
    Communities, expressed as a percentage. Average physical occupancy has been
    calculated using the average of the occupancy that existed on Sunday during
    each week of the period.
 
(3) Represents the average monthly net rental revenue per occupied apartment
    home.
 
The increase in rental revenue from fully stabilized Communities for the third
quarter and first nine months of 1998 compared to 1997 was primarily the result
of increases in average rental rates. As a percentage of total property revenue,
property operating and maintenance expenses decreased for the three month period
from 37.5% in 1997 to 37.0% in 1998 and for the nine month period from 37.4% in
1997 to 37.0% in 1998.
 
The 4.0% and 2.1 % rates of growth in property revenues were higher than the
1.4% and 1.8% rates of growth in property revenues achieved from the third
quarter of 1997 compared to third quarter 1996 the first nine months of 1997
compared to the first nine months of 1996, respectively. The property revenue
growth rates were higher primarily as a result of increasingly strong economies
in many of the markets in which the Operating Partnership operates. This higher
growth rate was especially noticeable in the Sarasota, Florida markets. The
Operating Partnership expects property revenue growth rates for the remainder of
1998 to be similar to the first nine months of 1998 due to the continued
strength of the local economies in which the Operating Partnership operates,
balanced by the continuing increase in the supply of new multi-family
communities. The Operating Partnership believes its expectations with respect to
property revenue growth are
 
                                       14
<PAGE>   15
 
based on reasonable assumptions as to future economic conditions and the
quantity of competitive multi-family communities in the markets in which the
Operating Partnership does business. However, there can be no assurance that
actual results will not differ from these assumptions, which could result in
lower property revenue.
 
OPERATING PERFORMANCE OF THE OPERATING PARTNERSHIP'S ACQUISITION COMMUNITIES
 
Acquisition Communities consist of Summit Fair Oaks, Summit Portofino, Summit
Sand Lake and Summit Windsor II acquired in 1997 (1,290 apartment homes) and
Summit St. Clair, Summit Club at Dunwoody and Summit at Lenox acquired in 1998
(1,092 apartment homes). Summit Portofino and Summit Sand Lake were acquired in
the first quarter of 1997 and Summit Windsor II and Summit Fair Oaks were
acquired in the third and fourth quarters of 1997, respectively. Summit St.
Clair, Summit Club at Dunwoody and Summit at Lenox were acquired in the first,
second and third quarters of 1998, respectively. Summit Mayfaire was purchased
effective January 1, 1997 and therefore is included in stabilized Communities.
The operations of these Communities for the three and nine months ended
September 30, 1998 and 1997 are summarized as follows (dollars in thousands
except average monthly rental revenue):
 
<TABLE>
<CAPTION>
                                                     THREE MONTHS
                                                         ENDED        NINE MONTHS ENDED
                                                     SEPTEMBER 30,      SEPTEMBER 30,
                                                    ---------------   ------------------
                                                     1998     1997      1998      1997
                                                    ------   ------   --------   -------
<S>                                                 <C>      <C>      <C>        <C>
Property revenues:
  Rental revenues.................................  $5,776   $2,236   $13,310    $5,279
  Other property revenue..........................     319      192       732       418
                                                    ------   ------   -------    ------
Total property revenues...........................   6,095    2,428    14,042     5,697
                                                    ------   ------   -------    ------
Property operating and maintenance expense(1).....   2,135      835     4,684     1,893
                                                    ------   ------   -------    ------
Property operating income.........................  $3,960   $1,593   $ 9,358    $3,804
                                                    ======   ======   =======    ======
Average physical occupancy(2).....................    95.2%    93.4%     94.9%     93.4%
                                                    ======   ======   =======    ======
Average monthly rental revenue(3).................  $  894   $  809   $   884    $  809
                                                    ======   ======   =======    ======
Number of apartment homes.........................   2,382    1,044     2,382     1,044
                                                    ======   ======   =======    ======
</TABLE>
 
---------------
 
(1) Before real estate depreciation expense.
 
(2) Average physical occupancy is defined as the number of apartment homes
    occupied divided by the total number of apartment homes contained in the
    Communities, expressed as a percentage. Average physical occupancy has been
    calculated using the average of the occupancy that existed on Sunday during
    each week of the period.
 
(3) Represents the average monthly net rental revenue per occupied apartment
    home.
 
The unleveraged yield on investment for the acquisition Communities, defined as
property operating income for the three and nine months ended September 30, 1998
on an annualized basis over total acquisition cost, was 9.14% and 9.12%,
respectively.
 
                                       15
<PAGE>   16
 
OPERATING PERFORMANCE OF THE OPERATING PARTNERSHIP'S STABILIZED DEVELOPMENT
COMMUNITIES
 
The Operating Partnership had seven development Communities (Summit Aventura,
Summit Hill II, Summit Green, Summit River Crossing, Summit Fairways, Summit on
the River and Summit Russett) which were stabilized during the entire three and
nine months ended September 30, 1998 but were stabilized subsequent to January
1, 1996. The operating performance of these seven Communities for the three and
nine months ended September 30, 1998 and 1997 is summarized below (dollars in
thousands except average monthly rental revenue):
 
<TABLE>
<CAPTION>
                                                    THREE MONTHS
                                                        ENDED        NINE MONTHS ENDED
                                                    SEPTEMBER 30,      SEPTEMBER 30,
                                                   ---------------   -----------------
                                                    1998     1997     1998      1997
                                                   ------   ------   -------   -------
<S>                                                <C>      <C>      <C>       <C>
Property revenues:
  Rental revenues................................  $5,139   $4,813   $15,301   $12,715
  Other property revenue.........................     425      357     1,100       932
                                                   ------   ------   -------   -------
          Total property revenues................   5,564    5,170    16,401    13,647
                                                   ------   ------   -------   -------
Property operating and maintenance expense(1)....   1,804    1,477     5,366     4,230
                                                   ------   ------   -------   -------
Property operating income........................  $3,760   $3,693   $11,035   $ 9,417
                                                   ======   ======   =======   =======
Average physical occupancy(2)....................    93.5%    88.7%     92.6%     78.9%
                                                   ======   ======   =======   =======
Average monthly rental revenue(3)................  $  897   $  865   $   890   $   864
                                                   ======   ======   =======   =======
Number of apartment homes........................   2,106    2,106     2,106     2,106
                                                   ======   ======   =======   =======
</TABLE>
 
---------------
 
(1) Before real estate depreciation expense.
 
(2) Average physical occupancy is defined as the number of apartment homes
    occupied divided by the total number of apartment homes contained in the
    Communities, expressed as a percentage. Average physical occupancy has been
    calculated using the average of the occupancy that existed on Sunday during
    each week of the period.
 
(3) Represents the average monthly net rental revenue per occupied apartment
    home.
 
The unleveraged yield on investment for the stabilized development Communities,
defined as property operating income for the three and nine months ended
September 30, 1998 on an annualized basis over total development cost, was
10.53% and 10.22%, respectively.
 
                                       16
<PAGE>   17
 
OPERATING PERFORMANCE OF THE OPERATING PARTNERSHIP'S COMMUNITIES IN LEASE-UP
 
The Operating Partnership had twelve Communities in lease-up during the nine
months ended September 30, 1998. A Community in lease-up is defined as one which
has commenced rental operations but was not stabilized as of the beginning of
the current year. A summary of the twelve Communities in lease-up as of
September 30, 1998 is as follows (dollars in thousands):
 
<TABLE>
<CAPTION>
                                         TOTAL       ACTUAL/                         HOMES                    % LEASED
                           NUMBER OF    ACTUAL/    ANTICIPATED       ACTUAL/       COMPLETED      Q3 1998       AS OF
                           APARTMENT   ESTIMATED   CONSTRUCTION    ANTICIPATED    AT SEPT. 30,    AVERAGE     SEPT. 30,
COMMUNITY                    HOMES       COST       COMPLETION    STABILIZATION       1998       OCCUPANCY      1998
---------                  ---------   ---------   ------------   -------------   ------------   ---------    ---------
<S>                        <C>         <C>         <C>            <C>             <C>            <C>          <C>
Summit Norcroft II              54     $  3,500      Q4 1997         Q1 1998           54          95.08%       96.30%
Summit Stonefield              216       19,650      Q1 1998         Q1 1998          216          98.50       100.00
Summit Ballantyne I            246       16,380      Q4 1997         Q3 1998          246          92.12        92.70
Summit Sedgebrook I            248       16,330      Q4 1997         Q3 1998          248          94.55        96.40
Summit Plantation II           240       21,240      Q4 1997         Q3 1998          240          96.16       100.00
Summit Lake I                  302       20,170      Q2 1998         Q3 1998          302          90.62        99.30
Summit Ballantyne II(1)        154       10,100      Q4 1998         Q1 1999          126          33.82        60.40
Summit Fair Lakes I(1)         370       32,900      Q1 1999         Q2 1999           92          15.12        42.20
Summit Governor's
  Village(1)                   242       16,700      Q1 1999         Q2 1999          125          22.02        43.40
Summit New Albany I(1)         301       22,600      Q1 1999         Q3 1999          135          17.51        42.20
Summit Doral(1)                260       22,800      Q2 1999         Q3 1999            6           0.00         0.00
Summit Westwood(1)             354       24,400      Q3 1999         Q4 1999           32           0.00         5.60
                             -----     --------
                             2,933     $223,270
                             =====     ========
</TABLE>
 
---------------
 
(1) These properties are included in the Construction in Progress category at
    September 30, 1998.
 
OPERATING PERFORMANCE OF SUMMIT MANAGEMENT COMPANY
 
The operating performance of Summit Management Company (the "Management
Company") and its wholly-owned subsidiary, Summit Apartment Builders Inc. (the
"Construction Company"), for the three and nine months ended September 30, 1998
and 1997 is summarized below (dollars in thousands):
 
<TABLE>
<CAPTION>
                                                  THREE MONTHS ENDED    NINE MONTHS ENDED
                                                    SEPTEMBER 30,         SEPTEMBER 30,
                                                  ------------------    ------------------
                                                   1998       1997       1998       1997
                                                  -------    -------    -------    -------
<S>                                               <C>        <C>        <C>        <C>
Revenue.......................................    $1,609     $1,604     $4,664     $4,502
Expenses:
  Operating...................................     1,539      1,292      4,140      3,821
  Depreciation................................        61         48        179        144
  Amortization................................        72         78        215        226
  Interest....................................        75         75        225        225
                                                  ------     ------     ------     ------
  Total expenses..............................     1,747      1,493      4,759      4,416
                                                  ------     ------     ------     ------
Net income (loss) of Summit Management
  Company.....................................    $ (138)    $  111     $  (95)    $   86
                                                  ======     ======     ======     ======
</TABLE>
 
The increase in revenue for the nine month period was primarily a result of
higher revenues from managing the Operating Partnership's communities offset by
lower revenues for managing third party communities.
 
Total average third party apartment homes under management were 2,965 and 4,769
at September 30, 1998 and 1997, respectively. The decrease was primarily due to
the termination of two of the Management Company's contracts which provided for
the management of six apartment communities. The contracts were terminated as a
result of a change in ownership of the apartment communities. Property
management fees include $276,000 and $415,000 of fees from third parties for the
three months ended September 30, 1998 and
 
                                       17
<PAGE>   18
 
1997, respectively, and $934,000 and $1.3 million of fees from third parties for
the nine months ended September 30, 1998 and 1997, respectively. Property
management fees from third parties as a percentage of total property management
revenues were 14.6% and 25.9% for the three months ended September 30, 1998 and
1997, respectively, and 18.6% and 28.9% for the nine months ended September 30,
1998 and 1997, respectively. The Operating Partnership expects third party
management revenue as a percentage of total property management revenues to
continue to decline as revenues from the Operating Partnership's Communities
continue to increase.
 
All of the Construction Company's revenues are from contracts with the Operating
Partnership.
 
OTHER INCOME AND EXPENSES
 
Interest expense, including amortization of deferred financing costs, increased
by $2.6 million and $8.0 million for the three and nine months ended September
30, 1998, respectively. This increase was primarily the result of an increase in
the Operating Partnership's average indebtedness outstanding. Average
indebtedness outstanding and effective interest cost increased $162.3 million
and .05% (6.74% to 6.79%) for the three months ended September 30, 1998 and
$149.8 million and .10% (6.64% to 6.74%) for the nine months ended September 30,
1998.
 
Other income increased from $71,000 to $628,000 for the three months ended
September 30, 1998 primarily as the result of an incentive fee earned in
connection with a property that the Operating Partnership had developed and
managed for a third party.
 
Depreciation expense increased $1.5 million and $4.3 million or 26.0% and 26.2%
for the three and nine months ended September 30, 1998, respectively, primarily
due to depreciation on recently acquired or developed Communities.
 
General and administrative expenses increased $333,000 and $627,000 or 38.9% and
29.9% for the three and nine months ended September 30, 1998, primarily due to
expenses related to the Operating Partnership's overall growth. As a percentage
of revenues, general and administrative expenses were 3.1% and 2.9% for the
three months ended September 30, 1998 and 1997, and 2.6% and 2.5% for the nine
months ended September 30, 1998 and 1997, respectively.
 
EXTRAORDINARY ITEMS
 
The extraordinary items in the nine months ended September 30, 1998 resulted
from the write-off of deferred financing cost in conjunction with the
replacement by the Operating Partnership of its prior credit facility with the
Unsecured Credit Facility (as hereafter defined) and prepayment penalties on
four mortgage notes which were repaid during the period.
 
LIQUIDITY AND CAPITAL RESOURCES
 
  Liquidity
 
The Operating Partnership's net cash provided by operating activities increased
from $41.9 million for the nine months ended September 30, 1997 to $47.5 million
for the same period in 1998, primarily due to a $13.5 million increase in
property operating income offset by a $10.7 million increase in interest paid.
The increase in interest paid was primarily due to an increase in the average
indebtedness outstanding.
 
Net cash used in investing activities increased from $127.9 million for the nine
months ended September 30, 1997 to $157.6 million for the same period in 1998
due to an increase in the acquisition of Communities, an increase in the
construction of Communities and higher recurring capital expenditures primarily
due to an increase in apartment homes owned, partially offset by higher proceeds
from the sale of a Community. In 1998 the Operating Partnership acquired three
apartment Communities containing 1,092 apartment homes for a total cost of $88.3
million which included the issuance of $5.2 million of Units and the assumption
of $8. million in mortgage debt. In addition, the Operating Partnership funded
$97.3 million in development costs and $6.7 million in capital improvements in
1998. The Operating Partnership had a total net cash proceeds of
 
                                       18
<PAGE>   19
 
$23.9 million from the sale of an apartment community, which was deposited with
a qualified intermediary. Approximately $20.0 million of these funds were used
to fund the purchase of a Community and land. The remaining $3.9 million in
proceeds from the sale were being held in escrow in accordance with like-kind
exchange rules and regulations.
 
Net cash provided by financing activities increased from $86.2 million for the
nine months ended September 30, 1997 to $111.4 million for the same period in
1998, primarily due to an increase in equity proceeds from Summit Properties'
dividend reinvestment and stock purchase plans and an increase in net borrowings
from the Operating Partnership's credit facility offset by a higher repayment of
debt, lower borrowings on unsecured bonds, the issuance of notes receivable from
employees, the payment of higher distributions to unitholders and a decrease in
Summit Properties stock issuance proceeds contributed to the Operating
Partnership. Financing activities in 1998 included $103.6 million in net
borrowings from the Operating Partnership's credit facility and $30.5 million in
net proceeds from Summit Properties' dividend reinvestment and stock purchase
plans. Dividend reinvestment and stock purchase proceeds increased from 1997
primarily due to the replacement of the prior dividend reinvestment plan with a
dividend reinvestment and stock purchase plan which allows direct stock
purchases by shareholders and non-shareholders. These cash inflows were offset
by $34.7 million of dividends and distributions and the repayment of mortgage
debt of $14.9 million. Mortgage debt repayment included $11.9 million for the
prepayment of four mortgage notes.
 
The ratio of earnings to fixed charges was 1.94 for the nine months ended
September 30, 1998 compared to 2.02 for the nine months ended September 30,
1997. The decrease is primarily due to increased interest charges as discussed
in "Historical Results of Operations -- Other Income and Expenses" above offset
by an increase in the gain on real estate assets.
 
The Operating Partnership's outstanding indebtedness at September 30, 1998
totaled $601.9 million. This amount includes approximately $198.8 million in
fixed rate conventional mortgages, $51.9 million of variable rate tax-exempt
bonds, $216.0 million of unsecured notes, $9.2 million of tax-exempt fixed rate
loans, and $126.0 million under the Unsecured Credit Facility (as hereinafter
defined).
 
The Operating Partnership repaid four mortgage notes with a balance of $11.9
million during the first quarter of 1998. The mortgage notes had an 8% interest
rate and were repaid from the borrowings under the Operating Partnership's
credit facility.
 
The Operating Partnership expects to meet its short-term liquidity requirements
(i.e., liquidity requirements arising within 12 months) including recurring
capital expenditures relating to maintaining its existing properties, generally
through its working capital, net cash provided by operating activities and
borrowings under its line of credit. The Operating Partnership considers its
cash provided by operating activities to be adequate to meet operating
requirements and Summit Properties dividend REIT requirements. The Operating
Partnership expects to meet its long-term liquidity requirements (i.e.,
liquidity requirements arising after 12 months), such as scheduled mortgage debt
maturities, property acquisitions, financing of construction and development
activities and other non-recurring capital improvements, through the issuance of
unsecured notes and equity securities of Summit Properties, from undistributed
Funds from Operations (see page 24), from proceeds received from the disposition
of certain properties, and in connection with the acquisition of land or
improved property, and through the issuance of units of limited partnership
interest units.
 
  Line of Credit
 
The Operating Partnership obtained a new syndicated unsecured line of credit
(the "Unsecured Credit Facility") in the amount of $175 million in March 1998
which replaced the existing $150 million credit facility. The Unsecured Credit
Facility provides funds for new development, acquisitions and general working
capital purposes. The Unsecured Credit Facility has a three year term with two
one-year extension options and will initially bear interest at LIBOR + 90 basis
points based upon the Operating Partnership's current credit rating of BBB- by
Standard & Poor's Rating Services and Baa3 by Moody's Investors Service. The
interest rate will be reduced in the event an upgrade of the Operating
Partnership's unsecured credit rating is obtained. The Unsecured Credit Facility
also provides a bid option sub-facility equal to a maximum of fifty percent of
 
                                       19
<PAGE>   20
 
the total facility ($87.5 million). This sub-facility provides the Operating
Partnership with the option to place borrowings in a fixed LIBOR contract up to
180 days.
 
  Mortgage Notes
 
On September 23, 1998, the Operating Partnership consolidated and renewed two
mortgage loans which had a $147.2 million balance. The original loans matured in
February 2001 ($118.3 million at 5.88%) and December 2005 ($28.9 million at
7.71%). The consolidation and renewal combined the two mortgage loans into one
loan at an interest rate equal to the weighted average interest rate of the two
previous mortgage loans (6.24%) up to February 2001. As of February 2001, the
rate of interest on the loan will increase to 6.76% until the loan matures in
October of 2008.
 
  Medium-Term Notes
 
The Operating Partnership has established a program for the sale of up to $95
million aggregate principal amount of Medium-Term Notes due nine months or more
from the date of issuance (the "MTN Program"). On July 28, 1998, the Operating
Partnership sold $30 million of notes under the MTN Program. Such notes are due
on July 30, 2001 and bear interest at 6.75% per year. On October 5, 1998, the
Operating Partnership sold $25 million of notes under the MTN Program. Such
notes are due on October 5, 2000 and bear interest at 6.71% per year. Proceeds
from the notes issued in both July and October of 1998 were used to reduce the
Unsecured Credit Facility.
 
ACQUISITIONS AND DISPOSITION
 
During the nine month period ending September 30, 1998, the Operating
Partnership completed the acquisition of three communities located in Atlanta,
Georgia: Summit St. Clair, purchased effective March 1, 1998, Summit Club at
Dunwoody, purchased on May 22, 1998, and Summit at Lenox (formerly Lenox
Forest), purchased effective July 8, 1998 (the "1998 Acquisitions"). The 1998
Acquisitions added a total of 1,092 apartment homes to the Operating
Partnership's portfolio at an aggregate purchase price of $88.3 million.
 
The 1998 Acquisitions were financed with the issuance of 259,871 Units valued at
$5.2 million and the assumption of $8.8 million of mortgage debt. The balance of
the purchase price was paid in cash.
 
On May 18, 1998, the Operating Partnership sold a community in Brandon, Florida
formerly known as Summit Providence for net proceeds of $23.9 million. A gain on
the sale of $8.7 million was recognized. Proceeds from the sale were used to
partially fund the acquisition of Summit Club at Dunwoody.
 
On October 23, 1998, the Operating Partnership sold a community in Atlanta,
Georgia formerly known as Summit Springs for $17.5 million. The Operating
Partnership will recognize a gain of approximately $6.0 million on the sale.
Proceeds from the sale will be used to fund future development.
 
On November 3, 1998, the Operating Partnership acquired a portfolio of
multifamily properties in Texas (the "Ewing Portfolio") through a merger with
Ewing Industries, a private developer of luxury apartment homes. The Ewing
Portfolio consists of 2,465 apartment homes in seven communities located in
Dallas, Austin and San Antonio. The acquisition of the Ewing Portfolio was
effected pursuant to an Agreement and Plan of Reorganization dated as of October
31, 1998 (the "Merger Agreement") among Summit Properties, affiliates of Summit
Properties (including the Operating Partnership), Ewing Industries, Inc., an
Ohio corporation ("Ewing Industries"), affiliates of Ewing, and their respective
partners, shareholders and members (together with Ewing Industries, "Ewing").
Pursuant to the Merger Agreement, the acquisition was funded through (i) the
issuance to Ewing of 1,008,987 shares of common stock of Summit Properties
(each, a "Share") and 141,921 units of limited partnership interest of the
Operating Partnership (each, a "Unit"), valued at $18.50 per Share and per Unit
(or $21,291,801 in the aggregate), (ii) the assumption of $79,851,773 in
long-term fixed-rate mortgage indebtedness, (iii) the payment of $50,598,397 in
cash and (iv) receipt of $2,516,868 of credit for customary prorations and
reserves. A portion of the consideration is deferred until stabilization of one
community which is currently in lease-up. The current estimate of the additional
consideration to be paid
 
                                       20
<PAGE>   21
 
at such time is (i) 1,030,009 Shares and 36,629 Units valued at $18.50 per Share
and per Unit (or $19,732,803 in the aggregate), and (ii) cash in the amount of
$1,314,144. The Operating Partnership filed a Current Report on Form 8-K with
the Securities and Exchange Commission on November 13, 1998 in connection with
the acquisition of the Ewing Portfolio.
 
On November 12, 1998, the Operating Partnership sold a community located in
Winston Salem, North Carolina formerly known as Summit Old Town for
approximately $7.5 million. The Operating Partnership expects to recognize a
gain on the sale. Proceeds from the sale will be used to fund future
development.
 
DEVELOPMENT ACTIVITY
 
The Operating Partnership's construction in progress at September 30, 1998 is
summarized as follows (dollars in thousands):
 
<TABLE>
<CAPTION>
                                                          TOTAL                ESTIMATED   ANTICIPATED
                                            APARTMENT   ESTIMATED   COST TO     COST TO    CONSTRUCTION
                COMMUNITY                     HOMES       COSTS       DATE     COMPLETE     COMPLETION
                ---------                   ---------   ---------   --------   ---------   ------------
<S>                                         <C>         <C>         <C>        <C>         <C>
Summit Doral -- Miami, FL(2)..............      260     $ 22,800    $ 11,564    $11,236      Q2 1999
Summit Westwood -- Raleigh, NC(2).........      354       24,400      13,574     10,826      Q3 1999
Summit Fair Lakes I -- Fairfax, VA(2).....      370       32,900      27,324      5,576      Q1 1999
Summit Fair Lakes II -- Fairfax, VA.......      160       14,200       5,519      8,681      Q3 1999
Summit New Albany I -- Columbus, OH(2)....      301       22,600      20,878      1,722      Q1 1999
Summit Governor's Village --
  Chapel Hill, NC(2)......................      242       16,700      15,435      1,265      Q1 1999
Summit Ballantyne II -- Charlotte,
  NC(2)...................................      154       10,100       9,576        524      Q4 1998
Summit Lake II -- Raleigh, NC.............      144       10,200       4,564      5,636      Q2 1999
Summit Sedgebrook II -- Charlotte, NC.....      120        7,800       2,167      5,633      Q3 1999
                                              -----     --------    --------    -------
                                              2,105     $161,700     110,601    $51,099
                                              =====     ========    ========    =======
Other development and construction
  costs(1)................................                            30,003
                                                                    --------
                                                                    $140,604
                                                                    ========
</TABLE>
 
---------------
 
(1) Consists primarily of land held for development and other predevelopment
    costs.
 
(2) These communities were in lease-up at September 30, 1998.
 
Estimated costs to complete the development communities represent all of the
Operating Partnership's material commitments for capital expenditures.
 
  Certain Factors Affecting the Performance of Development Communities
 
The Operating Partnership is optimistic about the operating prospects of the
Communities under construction even with the increased supply of newly
constructed apartment homes of comparable quality in many of its markets. As
with any development community, there are uncertainties and risks associated
with the development of the Communities described above. While the Operating
Partnership has prepared development budgets and has estimated completion and
stabilization target dates based on what it believes are reasonable assumptions
in light of current conditions, there can be no assurance that actual costs will
not exceed current budgets or that the Operating Partnership will not experience
construction delays due to the unavailability of materials, weather conditions
or other events.
 
Other development risks include the possibility of incurring additional cost or
liability resulting from defects in construction material and the possibility
that financing may not be available on favorable terms, or at all, to pursue or
complete development activities. Similarly, market conditions at the time these
Communities become available for leasing will affect the rental rates that may
be charged and the period of time necessary to achieve stabilization, which
could make one or more of the development Communities unprofitable or result in
achieving stabilization later than currently anticipated. In addition, the
Operating Partnership is conducting feasibility and other pre-development work
for eight Communities. The Operating Partnership
                                       21
<PAGE>   22
 
could abandon the development of any one or more of these potential Communities
in the event that it determines that market conditions do not support
development, financing is not available on favorable terms or other
circumstances prevent development. Similarly, there can be no assurance that if
the Operating Partnership does pursue one or more of these potential Communities
that it will be able to complete construction within the currently estimated
development budgets or that construction can be started at the time currently
anticipated.
 
YEAR 2000
 
The Securities and Exchange Commission has asked all public companies to provide
disclosure regarding their Year 2000 readiness. The term "Year 2000 issue" is a
general term used to describe various problems that may result from the improper
processing by computer systems of dates after 1999. These problems arise from
the inability of some hardware and software to distinguish dates before the year
2000 from dates in and after the year 2000. This could result in a system
failure or miscalculations causing disruptions of operations. The Year 2000
issue affects virtually all companies and all organizations.
 
The Operating Partnership's efforts to address its Year 2000 issues are focused
in the following three areas: (i) reviewing and taking any necessary steps to
attempt to correct the Operating Partnership's computer information systems
(i.e., software applications and hardware platforms), (ii) evaluating and making
any necessary modifications to other computer systems that do not relate to
information technology but include embedded technology, such as
telecommunications, security, HVAC, elevator, fire and safety systems, and (iii)
communicating with certain significant third-party service providers to
determine whether there will be any interruption in their systems that could
affect the Operating Partnership.
 
  The Operating Partnership's State of Readiness
 
The Operating Partnership has developed a four phase plan to address its Year
2000 issues (its "Year 2000 Plan"). The four phases are (i) Awareness, (ii)
Assessment, (iii) Remediation and (iv) Testing.
 
  Awareness
 
The Operating Partnership has made the relevant employees, including its
property managers, aware of the Year 2000 issue and collected information from
such employees regarding systems that the Operating Partnership anticipates may
be affected. Management will oversee the Operating Partnership's progress with
respect to the implementation of its Year 2000 Plan. In addition, the Year 2000
Plan will be subject to review of the Audit Committee of the Board of Directors
of Summit Properties'.
 
  Assessment
 
The Operating Partnership has substantially completed an assessment of its
standard computer information systems and is now taking the further necessary
steps to make its core computer information systems, in those situations in
which the Operating Partnership is required to do so, Year 2000 compliant. See
"Remediation" below. The Operating Partnership is in the process of attempting
to obtain written verification from vendors to the effect that the Operating
Partnership's other (i.e., non-core) standard computer information systems
acquired from such vendors correctly distinguish dates before the year 2000 from
dates in and after the year 2000. The Operating Partnership expects that it will
request such verifications, or a commitment from the relevant vendor to provide
a solution, by no later than December 31, 1998.
 
In addition, the Operating Partnership is currently evaluating and assessing its
other computer systems that do not relate to information technology but include
embedded technology, such as telecommunications, security, HVAC, elevator, fire
and safety systems, and expects that its assessment will be completed by the
second quarter of 1999. The Operating Partnership is aware that such systems
contain embedded chips that are difficult to identify and test and may require
complete replacement because they cannot be repaired. Failure of the Operating
Partnership to identify or remediate any embedded chips (either on an individual
or aggregate basis) on which significant business operations depend, such as
phone systems, could have a material adverse impact on the Operating
Partnership's business, financial condition and results of operations.
                                       22
<PAGE>   23
 
The Operating Partnership rents apartments in its Communities to individuals and
does not have a single customer or group of customers who rents a significant
number of apartments. The Operating Partnership's primary purchases are
building-related products (e.g., carpets, paint and blinds) and services (e.g.,
lawn care services), all of which are available from numerous suppliers. The
Operating Partnership's primary financial service providers are its primary bank
and payroll processor. The primary bank has provided written verification to the
Operating Partnership that it will be Year 2000 compliant and the payroll
processor has a Year 2000 upgrade available. The Operating Partnership will
implement this upgrade in the first quarter of 1999. For the foregoing reasons,
the Operating Partnership does not believe that there is a significant risk
related to the failure of residents, vendors or third-party goods or service
providers to prepare for the Year 2000; however, the costs and timing of
third-party Year 2000 compliance is not within the Operating Partnership's
control and no assurances can be given with respect to the cost or timing of
such efforts or the potential effects of any failure to comply.
 
  Remediation
 
The Operating Partnership's primary uses of software systems are its corporate
accounting and property on-site software. The Operating Partnership's corporate
accounting system is widely used in the real estate industry. A version upgrade,
installed in the second quarter of 1998, is designed to be Year 2000 compliant.
The Operating Partnership completed the replacement of its current property
on-site software in October 1998 with a new software system that is also
designed to be Year 2000 compliant. This new software is also widely used in the
real estate industry. The Operating Partnership has received written
verification from the vendors of each of the corporate accounting and on-site
systems that the relevant software is Year 2000 compliant. The Operating
Partnership had previously planned both the upgrade of the corporate accounting
system and implementation of the new property on-site system, and such changes
would have been undertaken without regard to Year 2000 remediation issues.
Accordingly, the Operating Partnership has not deferred any planned information
or software projects due to such Year 2000 projects, and the Operating
Partnership is not treating the costs of the above-referenced changes as Year
2000-related expenses.
 
  Testing
 
To attempt to confirm that its computer systems are Year 2000 compliant, the
Operating Partnership expects to perform limited testing of its computer
information systems and its other computer systems that do not relate to
information technology but include embedded technology; however, unless Year
2000 issues arise in the course of its limited testing, the Operating
Partnership will rely on the written verification received from each vendor of
its computer systems that the relevant system is Year 2000 compliant.
Nevertheless, there can be no assurance that the computer systems on which the
Operating Partnership's business relies will correctly distinguish dates before
the year 2000 from dates in and after the year 2000. Any such failures could
have a material adverse effect on the Operating Partnership's business,
financial condition and results of operations. The Operating Partnership
currently anticipates that testing will commence no later than November 1998 and
expects that its testing will be complete by March 31, 1999.
 
  Costs to Address the Operating Partnership's Year 2000 Issues
 
Based on current information from its review to date, the Operating Partnership
budgeted $500,000 for the cost of repairing, updating and replacing its standard
computer information systems. The primary component of the cost was replacing
the property on-site software. Because the Operating Partnership's Year 2000
assessment is ongoing and additional funds may be required as a result of future
findings, the Operating Partnership's current budget amounts may increase as a
result of unanticipated delays or preparedness issues. While the Operating
Partnership's efforts to address its Year 2000 issues will involve additional
costs, the Operating Partnership believes, based on available information, that
these costs will not have a material adverse effect on its business, financial
condition or results of operations. The Operating Partnership expects to fund
the costs of addressing the Year 2000 issue from cash flows resulting from
operations. While the Operating Partnership believes that it will be Year 2000
compliant by December 31, 1999, if these efforts are not completed on time, or
if the costs associated with updating or replacing the Operating Partnership's
 
                                       23
<PAGE>   24
 
computer systems exceeds the Operating Partnership's estimates, the Year 2000
issue could have a material adverse effect on the Operating Partnership's
business, financial condition and results of operations.
 
  Risks Presented by Year 2000 Issues
 
The Operating Partnership is still in the process of evaluating potential
disruptions or complications that might result from Year 2000-related problems;
however, at this time the Operating Partnership has not identified any specific
business functions that are likely to suffer material disruption as a result of
Year-2000 related events. It is possible, however, that the Operating
Partnership may identify business functions in the future that are specifically
at risk of Year 2000 disruption. The absence of any such determination as of the
date of this report represents only the Operating Partnership's current status
of evaluating potential Year-2000 related problems and facts presently known to
the Operating Partnership, and should not be construed to mean that here is no
risk of Year-2000 related disruption. Moreover, due to the unique and pervasive
nature of the Year 2000 issue, it is not possible to anticipate each of the wide
variety of Year 2000 events, particularly outside of the Operating Partnership,
that might arise in a worst case scenario which might have a material adverse
impact on the Operating Partnership's business, financial condition and results
of operations.
 
  The Operating Partnership's Contingency Plans
 
The Operating Partnership intends to develop contingency plans for significant
business risks identified by the Operating Partnership that might result from
Year-2000 related events. Because the Operating Partnership has not yet
identified any specific business function that will be materially at risk of
significant Year-2000 related disruptions, and because a full assessment of the
Operating Partnership's risk from potential Year 2000 failures is still in
process, the Operating Partnership has not yet developed detailed contingency
plans specific to Year 2000 problems. In the event that the Operating
Partnership concludes that one or more contingency plans are required,
development of such contingency plans is currently scheduled to occur no later
than June 30, 1999 or as otherwise appropriate.
 
  Year 2000 Information and Readiness Disclosure Act
 
The Operating Partnership supports the exchange of information relating to the
Year 2000 issue and designates the foregoing information as the Year 2000
Readiness Disclosure within the meaning of the Year 2000 Information and
Readiness Disclosure Act. Information set forth herein regarding the Year 2000
compliance of non-Operating Partnership products and services are
"republications" under the Year 2000 Information and Readiness Disclosure Act
and are based on information supplied by other companies about the products and
services they offer. The Operating Partnership has not independently verified
the contents of these republications and takes not responsibility for the
accuracy or completeness of information contained in such republications.
 
FUNDS FROM OPERATIONS
 
The White Paper on Funds from Operations approved by the Board of Governors of
NAREIT in March 1995 defines Funds from Operations as net income (loss)
(computed in accordance with generally accepted accounting principles ("GAAP")),
excluding gains (or losses) from debt restructuring and sales of property, plus
real estate related depreciation and amortization and after adjustments for
unconsolidated partnerships and joint ventures. The Operating Partnership
computes Funds from Operations in accordance with the standards established by
the White Paper, which may differ from the methodology for calculating Funds
from Operations utilized by other equity REITs, and, accordingly, may not be
comparable to such other REITs. Funds Available for Distribution is defined as
Funds from Operations less capital expenditures funded by operations (recurring
capital expenditures). The Operating Partnership's methodology for calculating
Funds Available for Distribution may differ from the methodology for calculating
Funds Available for Distribution utilized by other REITs, and accordingly, may
not be comparable to other REITs. Funds from Operations and Funds Available for
Distribution do not represent amounts available for management's discretionary
use because of needed capital replacement or expansion, debt service
obligations, property acquisitions, development, distributions or other
commitments and uncertainties. Funds from Operations and Funds
                                       24
<PAGE>   25
 
Available for Distribution should not be considered as alternatives to net
income (determined in accordance with GAAP) as an indication of the Operating
Partnership's financial performance or to cash flows from operating activities
(determined in accordance with GAAP) as a measure of the Operating Partnership's
liquidity, nor are they indicative of funds available to fund the Operating
Partnership's cash needs, including its ability to make distributions. The
Operating Partnership believes Funds from Operations and Funds Available for
Distribution are helpful to investors as measures of the performance of the
Operating Partnership because, along with cash flows from operating activities,
financing activities and investing activities, they provide investors with an
understanding of the ability of the Operating Partnership to incur and service
debt and make capital expenditures.
 
Funds from Operations and Funds Available for Distribution for the three and
nine months ended September 30, 1998 and 1997 are calculated as follows (dollars
in thousands):
 
<TABLE>
<CAPTION>
                                         THREE MONTHS ENDED           NINE MONTHS ENDED
                                            SEPTEMBER 30,               SEPTEMBER 30,
                                      -------------------------   -------------------------
                                         1998          1997          1998          1997
                                      -----------   -----------   -----------   -----------
<S>                                   <C>           <C>           <C>           <C>
Income before extraordinary items...  $     7,892   $     6,948   $    30,652   $    25,098
Gain on sale of real estate
  assets............................           --            --        (8,731)       (4,366)
Depreciation from real estate
  assets............................        7,338         5,843        20,701        16,436
                                      -----------   -----------   -----------   -----------
Funds from Operations...............       15,230        12,791        42,622        37,168
Recurring capital expenditures(1)...         (611)       (1,118)       (3,372)       (2,589)
                                      -----------   -----------   -----------   -----------
Funds Available for Distribution....  $    14,619   $    11,673   $    39,250   $    34,579
                                      ===========   ===========   ===========   ===========
Non-recurring Capital
  Expenditures(2)...................  $     1,792   $     1,170   $     3,279   $     3,317
                                      ===========   ===========   ===========   ===========
Cash Flow Provided By (Used In):
  Operating Activities..............  $    17,367   $    14,770   $    47,451   $    41,931
  Investing Activities..............      (62,499)      (41,356)     (157,607)     (127,892)
  Financing Activities..............       47,568        25,170       111,416        86,226
Weighted average units
  outstanding -- basic..............   29,462,433    27,334,464    28,808,330    27,220,199
                                      ===========   ===========   ===========   ===========
Weighted average units outstanding--
  diluted...........................   29,468,032    27,369,316    28,825,095    27,252,718
                                      ===========   ===========   ===========   ===========
</TABLE>
 
---------------
 
(1) Recurring capital expenditures are expected to be funded from operations and
    consist primarily of exterior painting, new appliances, vinyl, blinds, tile,
    and wallpaper. In contrast, non-recurring capital expenditures, such as
    major improvements, new garages and access gates, are expected to be funded
    by financing activities and are therefore not included in the calculation of
    Funds Available for Distribution. The increase in recurring capital
    expenditures for the nine months ended September 30, 1998 compared to 1997
    was primarily due to the increase in the number of apartment homes owned.
    Other changes are primarily due to the timing of capital improvement
    projects. The Operating Partnership expects capital expenditures for the
    year 1998 on a per unit basis to be equal to or less than 1997.
 
(2) Non-recurring capital expenditures include major renovations in the amount
    of $442,000 in 1998 and $2.6 million in 1997; $765,000 and $19,000 for water
    meters in 1998 and 1997, respectively; $21,000 and $71,000 for new signage
    in 1998 and 1997, respectively; $223,000 for fitness center and key controls
    in 1998; $421,000 and $203,000 for access gates and security fences in 1998
    and 1997, respectively; $170,000 and $233,000 for construction of garages in
    1998 and 1997, respectively and $191,000 for improvements at Summit Norcroft
    I done in conjunction with development of Summit Norcroft II in 1998.
 
                                       25
<PAGE>   26
 
PART II.  OTHER INFORMATION
 
ITEM 2.  CHANGES IN SECURITIES
 
During the three months ended September 30, 1998, the Operating Partnership has
issued Units in private placements in reliance on the exemption from
registration under section 4(2) of the Securities Act in the amounts and for the
consideration set forth below:
 
     A. Summit Properties Inc. ("Summit Properties") has issued an aggregate of
     673,656 shares of Common Stock pursuant to its Dividend Reinvestment and
     Stock Purchase Plan. Summit Properties has contributed the proceeds of
     these sales (approximately $12.4 million) to the Operating Partnership in
     consideration of an aggregate of 673,656 Units.
 
     B. Summit Properties has issued an aggregate of 18,000 shares of Common
     Stock pursuant to the exercise of stock options. Summit Properties has
     contributed the proceeds (approximately $342,000) of these options to the
     Operating Partnership in consideration of an aggregate 18,000 Units.
 
     C. Summit Properties has issued an aggregate of 47,016 shares of Common
     Stock pursuant to its Employee Stock Purchase Plan. Summit Properties has
     contributed the proceeds (approximately $890,000) of these sales to the
     Operating Partnership in consideration of an aggregate of 47,016 Units.
 
     D. Summit Properties has issued an aggregate of 1,500 shares of Common
     Stock in connection with restricted stock awards. Each time a share of
     Common Stock is issued in connection with such an award, the Operating
     Partnership issues a Unit to Summit Properties; consequently, 1,500 Units
     have been issued to Summit Properties.
 
In light of the circumstances under which such Units were issued and information
obtained by the Operating Partnership in connection with such transactions,
management of Summit Properties, in its capacity as general partner of the
Operating Partnership, believes that the Operating Partnership may rely on such
exemption.
 
                                       26
<PAGE>   27
 
ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K
 
(a) Exhibits
 
<TABLE>
<C>   <C>  <S>
 3.1   --  Amendment No. 13 to the Limited Partnership Agreement of
           Summit Properties Partnership, L.P. (Incorporated by
           reference to Exhibit 10.1 of Summit Properties Inc.'s
           Current Report on Form 8-K filed on November 13, 1998, File
           No. 1-12792).
10.1   --  6.71% Medium-Term Note due on October 5, 2000 in principal
           amount of $25,000,000 issued by Summit Properties
           Partnership, L.P. on October 5, 1998 (filed herewith).
10.2   --  Promissory Note, dated as of August 5, 1998, evidencing a
           loan of $961,000 to Steven R. LeBlanc for the purpose of
           purchasing shares of Common Stock of Summit Properties Inc.
           (Incorporated by reference to Exhibit 10.2 of Summit
           Properties Inc.'s Quarterly Report on Form 10-Q for the
           quarterly period ended September 30, 1998, File No.
           1-12792).
12.1   --  Statement Regarding Calculation of Ratio of Earnings to
           Fixed Charges for the Three and Nine Months ended September
           30, 1998 (filed herewith).
27.1   --  Financial Data Schedule -- Nine Months ended September 30,
           1998 (for SEC use only) (filed herewith).
27.2   --  Revised Financial Data Schedule -- Nine Months ended
           September 30, 1997 (for SEC use only) (filed herewith).
</TABLE>
 
(b) Reports on Form 8-K
 
The Operating Partnership filed a Current Report on Form 8-K with the Securities
and Exchange Commission on November 13, 1998 in connection with the purchase of
the Ewing portfolio on November 4, 1998. Financial statements were not included
in such Form 8-K; however, financial statements will be filed by amendment of
the Form 8-K as soon as practicable, but in no event later than 60 days after
the Form 8-K is filed.
 
                                       27
<PAGE>   28
 
                                   SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons in capacities and on the dates
indicated. Each of the persons set forth below has signed this report as an
officer of Summit Properties Inc., in its capacity as general partner of Summit
Properties Partnership, L.P.
 
<TABLE>
<S>                                                      <C>
                                                             SUMMIT PROPERTIES PARTNERSHIP, L.P.
 
November 13, 1998                                                   /s/ WILLIAM F. PAULSEN
-----------------------------------------------------    --------------------------------------------
(Date)                                                               William F. Paulsen,
                                                            President and Chief Executive Officer
 
November 13, 1998                                                   /s/ MICHAEL L. SCHWARZ
-----------------------------------------------------    --------------------------------------------
(Date)                                                               Michael L. Schwarz,
                                                                 Executive Vice President and
                                                                   Chief Financial Officer
</TABLE>
 
                                       28
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                                 EXHIBIT INDEX
 
<TABLE>
<C>   <C>  <S>
 3.1   --  Amendment No. 13 to the Limited Partnership Agreement of
           Summit Properties Partnership, L.P. (Incorporated by
           reference to Exhibit 10.1 of Summit Properties Inc.'s
           Current Report on Form 8-K filed on November 13, 1998, File
           No. 1-12792).
10.1   --  6.71% Medium-Term Note due on October 5, 2000 in principal
           amount of $25,000,000 issued by Summit Properties
           Partnership, L.P. on October 5, 1998 (filed herewith).
10.2   --  Promissory Note, dated as of August 5, 1998, evidencing a
           loan of $961,000 to Steven R. LeBlanc for the purpose of
           purchasing shares of Common Stock of Summit Properties Inc.
           (Incorporated by reference to Exhibit 10.2 of Summit
           Properties Inc.'s Quarterly Report on Form 10-Q for the
           quarterly period ended September 30, 1998, File No.
           1-12792).
12.1   --  Statement Regarding Calculation of Ratio of Earnings to
           Fixed Charges for the Three and Nine Months ended September
           30, 1998 (filed herewith).
27.1   --  Financial Data Schedule -- Nine Months ended September 30,
           1998 (for SEC use only) (filed herewith).
27.2   --  Revised Financial Data Schedule -- Nine Months ended
           September 30, 1997 (for SEC use only) (filed herewith).
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