##### 









SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549


FORM 10-Q

|     |  |                                                                                             
|---- |  | --------------------------------------------------------------------------------------------
|[X]  |  | QUARTERLY REPORT PURSUANT TO SECTION 13
    OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
|     |  | For the quarterly period ended March 31, 2003                                               
|     |  | OR                                                                                          
|[  ] |  | TRANSITION REPORT PURSUANT TO SECTION 13
    OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|     |  | For the transition period
    from                to                                        

Commission file number 0-22411

SUMMIT PROPERTIES PARTNERSHIP, L.P.

(Exact name of registrant as specified in its
charter)


|                                                                                                               |  |                                                   
|-------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------
|Delaware(State or other jurisdiction of
    incorporation or organization)                                     |  | 56-1857809(I.R.S. Employer
    Identification No.)
|                                                                                                              
|309 E. Morehead Street
    Suite 200
    Charlotte, North Carolina(Address of principal executive
    offices) |  | 28202(Zip code)                                   

(704) 334-3000

(Registrants telephone number, including
area code)


N/A

(Former name, former address and former fiscal
year, if changed since last report)


Indicate by check mark whether the registrant:
(1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the
past
90 days. Yes [X]     No [ ]

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



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##### 



SUMMIT PROPERTIES PARTNERSHIP, L.P.

INDEX


|        |  |                                                                                                          |  |          |    | 
|------- |  | -------------------------------------------------------------------------------------------------------- |  | -------- | -- | 
|        |  |                                                                                                          |  | Page No.
|        |  |                                                                                                          |  |         
|PART I  |  | Financial Information                                                                                    |  |          |    | 
|Item 1  |  | Financial Statements                                                                                     |  |          |    | 
|        |  | Consolidated Balance Sheets as of March 31,
    2003 and December 31, 2002 (Unaudited)                   |  |          | 3  | 
|        |  | Consolidated Statements of Earnings for the three
    months ended March 31, 2003 and 2002 (Unaudited)   |  |          | 4  | 
|        |  | Consolidated Statement of Partners Equity
    for the three months ended March 31, 2003 (Unaudited)     |  |          | 6  | 
|        |  | Consolidated Statements of Cash Flows for the
    three months ended March 31, 2003 and 2002 (Unaudited) |  |          | 7  | 
|        |  | Notes to Consolidated Financial Statements
    (Unaudited)                                               |  |          | 8  | 
|Item 2  |  | Managements Discussion and Analysis of
    Financial Condition and Results of Operations                |  |          | 18 | 
|Item 3  |  | Quantitative and Qualitative Disclosures about
    Market Risk                                           |  |          | 34 | 
|Item 4  |  | Controls and Procedures                                                                                  |  |          | 34 | 
|PART II |  | Other Information                                                                                        |  |          |    | 
|Item 2  |  | Changes in Securities                                                                                    |  |          | 35 | 
|Item 6  |  | Exhibits and Reports on Form 8-K                                                                         |  |          | 35 | 
|        |  | Signatures                                                                                               |  |          | 36 | 
|        |  | Certifications                                                                                           |  |          | 37 | 

2



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##### 



PART I.     FINANCIAL
INFORMATION



ITEM 1.     FINANCIAL
STATEMENTS


SUMMIT PROPERTIES PARTNERSHIP, L.P.

CONSOLIDATED BALANCE SHEETS


(Dollars in thousands, except per unit
data)


(Unaudited)


|                                                                                                   |                                                                                       |                                                              |                                  |              |         |           |           |          |         |           | 
|-------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------- | ------------------------------------------------------------ | -------------------------------- | ------------ | ------- | --------- | --------- | -------- | ------- | --------- | 
|                                                                                                   |                                                                                       | March 31,                                                    |                                  | December 31,
|                                                                                                   |                                                                                       | 2003                                                         |                                  | 2002        
|                                                                                                   |                                                                                       |                                                              |                                  |             
|ASSETS                                                                                             |                                                                                       |                                                              |                                  |              |         |           |           |         
|Real estate assets:                                                                                |                                                                                       |                                                              |                                  |              |         |           |           |         
|                                                                                                   | Land and land improvements                                                            |                                                              | $                                | 190,713      |         |           | $         | 177,166  |        
|                                                                                                   | Buildings and improvements                                                            |                                                              |                                  | 928,746      |         |           |           | 896,503  |        
|                                                                                                   | Furniture, fixtures and equipment                                                     |                                                              |                                  | 71,814       |         |           |           | 70,429   |        
|                                                                                                   |                                                                                       |                                                              |                                  |              |         |           |           |         
|                                                                                                   |                                                                                       |                                                              | Total real estate assets         |              |         | 1,191,273 |           |          |         | 1,144,098 | 
|                                                                                                   | Less: accumulated depreciation                                                        |                                                              |                                  | (154,843     | )       |           |           | (145,922 | )      
|                                                                                                   |                                                                                       |                                                              |                                  |              |         |           |           |         
|                                                                                                   |                                                                                       |                                                              | Net operating real estate assets |              |         | 1,036,430 |           |          |         | 998,176   | 
|Net real estate assets  assets held
    for sale                                                  |                                                                                       |                                                              | 90,558                           |              |         |           | 106,096   |         
|                                                                                                   | Construction in progress                                                              |                                                              |                                  | 111,880      |         |           |           | 139,263  |        
|                                                                                                   |                                                                                       |                                                              |                                  |              |         |           |           |         
|                                                                                                   |                                                                                       |                                                              | Net real estate assets           |              |         | 1,238,868 |           |          |         | 1,243,535 | 
|Cash and cash equivalents                                                                          |                                                                                       |                                                              | 2,265                            |              |         |           | 2,353     |         
|Restricted cash                                                                                    |                                                                                       |                                                              | 50,119                           |              |         |           | 62,326    |         
|Investments in Summit Management Company and real
    estate joint ventures                        |                                                                                       |                                                              | 11,505                           |              |         |           | 5,392     |         
|Deferred financing costs, net of accumulated
    amortization of $7,555 in 2003 and $7,173 in 2002 |                                                                                       |                                                              | 6,157                            |              |         |           | 6,008     |         
|Other assets                                                                                       |                                                                                       |                                                              | 21,654                           |              |         |           | 20,130    |         
|Other assets  assets held for sale                                                                |                                                                                       |                                                              | 499                              |              |         |           | 742       |         
|                                                                                                   |                                                                                       |                                                              |                                  |              |         |           |           |         
|Total assets                                                                                       |                                                                                       | $                                                            | 1,331,067                        |              |         | $         | 1,340,486 |         
|                                                                                                   |                                                                                       |                                                              |                                  |              |         |           |           |         
|LIABILITIES AND PARTNERS
    EQUITY                                                               |                                                                                       |                                                              |                                  |              |         |           |           |         
|Liabilities:                                                                                       |                                                                                       |                                                              |                                  |              |         |           |           |         
|                                                                                                   | Notes payable                                                                         |                                                              | $                                | 657,138      |         |           | $         | 652,288  |        
|                                                                                                   | Notes payable  assets held for sale                                                  |                                                              |                                  | 49,903       |         |           |           | 50,168   |        
|                                                                                                   | Accrued interest payable                                                              |                                                              |                                  | 5,775        |         |           |           | 4,937    |        
|                                                                                                   | Accounts payable and accrued expenses                                                 |                                                              |                                  | 32,488       |         |           |           | 35,713   |        
|                                                                                                   | Distributions payable                                                                 |                                                              |                                  | 10,323       |         |           |           | 10,456   |        
|                                                                                                   | Security deposits and prepaid rents                                                   |                                                              |                                  | 2,218        |         |           |           | 2,265    |        
|                                                                                                   | Other liabilities  assets held for sale                                              |                                                              |                                  | 184          |         |           |           | 248      |        
|                                                                                                   |                                                                                       |                                                              |                                  |              |         |           |           |         
|                                                                                                   |                                                                                       |                                                              | Total liabilities                |              |         | 758,029   |           |          |         | 756,075   | 
|                                                                                                   |                                                                                       |                                                              |                                  |              |         |           |           |         
|Partners common and preferred equity:                                                             |                                                                                       |                                                              |                                  |              |         |           |           |         
|                                                                                                   | Series B preferred units 
    3,400,000 issued and outstanding                       |                                                              |                                  | 82,713       |         |           |           | 82,713   |        
|                                                                                                   | Series C preferred units 
    2,200,000 issued and outstanding                       |                                                              |                                  | 53,547       |         |           |           | 53,547   |        
|                                                                                                   | Partnership common units  30,566,319
    and 30,980,526 units issued and outstanding |                                                              |                                  |              |         |           |           |          |        
|                                                                                                   |                                                                                       | General partner  305,663 and 309,805
    outstanding        |                                  |              | 5,099   |           |           |          | 5,213   |          
|                                                                                                   |                                                                                       | Limited partners  30,260,656 and
    30,670,721 outstanding |                                  |              | 431,679 |           |           |          | 442,938 |          
|                                                                                                   |                                                                                       |                                                              |                                  |              |         |           |           |         
|                                                                                                   |                                                                                       |                                                              | Total partners equity           |              |         | 573,038   |           |          |         | 584,411   | 
|                                                                                                   |                                                                                       |                                                              |                                  |              |         |           |           |         
|Total liabilities and partners equity                                                             |                                                                                       | $                                                            | 1,331,067                        |              |         | $         | 1,340,486 |         
|                                                                                                   |                                                                                       |                                                              |                                  |              |         |           |           |         

See notes to consolidated financial statements.

3



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##### 



SUMMIT PROPERTIES PARTNERSHIP, L.P.

CONSOLIDATED STATEMENTS OF EARNINGS


(Dollars in thousands, except per unit
data)


(Unaudited)


|                                                                                 |                                                         |                                     |                                                   |        |       |        |        |        |       |        | 
|-------------------------------------------------------------------------------- | ------------------------------------------------------- | ----------------------------------- | ------------------------------------------------- | ------ | ----- | ------ | ------ | ------ | ----- | ------ | 
|                                                                                 |                                                         |                                    
|                                                                                 |                                                         | Three Months Ended                 
|                                                                                 |                                                         | March 31,                          
|                                                                                 |                                                         |                                    
|                                                                                 |                                                         | 2003                                |                                                   | 2002  
|                                                                                 |                                                         |                                     |                                                   |       
|Revenues:                                                                        |                                                         |                                     |                                                   |        |       |        |        |       
|                                                                                 | Rental                                                  |                                     | $                                                 | 33,788 |       |        | $      | 32,810 |      
|                                                                                 | Other property income                                   |                                     |                                                   | 2,286  |       |        |        | 2,462  |      
|                                                                                 | Interest                                                |                                     |                                                   | 716    |       |        |        | 507    |      
|                                                                                 | Other income                                            |                                     |                                                   | 291    |       |        |        | 132    |      
|                                                                                 | Gain and interest income on compensation plans          |                                     |                                                   | 188    |       |        |        | 178    |      
|                                                                                 |                                                         |                                     |                                                   |        |       |        |        |       
|                                                                                 |                                                         |                                     | Total revenues                                    |        |       | 37,269 |        |        |       | 36,089 | 
|                                                                                 |                                                         |                                     |                                                   |        |       |        |        |       
|Expenses:                                                                        |                                                         |                                     |                                                   |        |       |        |        |       
|                                                                                 | Property operating and maintenance expenses:            |                                     |                                                   |        |       |        |        |        |      
|                                                                                 |                                                         | Personnel                           |                                                   |        | 2,892 |        |        |        | 2,708 |       
|                                                                                 |                                                         | Advertising and promotion           |                                                   |        | 615   |        |        |        | 503   |       
|                                                                                 |                                                         | Utilities                           |                                                   |        | 1,921 |        |        |        | 1,710 |       
|                                                                                 |                                                         | Building repairs and maintenance    |                                                   |        | 1,606 |        |        |        | 1,455 |       
|                                                                                 |                                                         | Real estate taxes and insurance     |                                                   |        | 4,727 |        |        |        | 4,076 |       
|                                                                                 |                                                         | Depreciation                        |                                                   |        | 8,934 |        |        |        | 7,794 |       
|                                                                                 |                                                         | Property supervision                |                                                   |        | 1,214 |        |        |        | 1,031 |       
|                                                                                 |                                                         | Other operating expenses            |                                                   |        | 465   |        |        |        | 562   |       
|                                                                                 |                                                         |                                     |                                                   |        |       |        |        |       
|                                                                                 |                                                         |                                     | Total property operating and maintenance expenses |        |       | 22,374 |        |        |       | 19,839 | 
|                                                                                 | Interest                                                |                                     |                                                   | 6,903  |       |        |        | 7,864  |      
|                                                                                 | Amortization                                            |                                     |                                                   | 382    |       |        |        | 305    |      
|                                                                                 | General and administrative                              |                                     |                                                   | 1,600  |       |        |        | 1,757  |      
|                                                                                 | Liability adjustment and gain on compensation
    plans |                                     |                                                   | 188    |       |        |        | 178    |      
|                                                                                 |                                                         |                                     |                                                   |        |       |        |        |       
|                                                                                 |                                                         |                                     | Total expenses                                    |        |       | 31,447 |        |        |       | 29,943 | 
|                                                                                 |                                                         |                                     |                                                   |        |       |        |        |       
|Income from continuing operations before income
    (loss) on equity investments |                                                         |                                     | 5,822                                             |        |       |        | 6,146  |       
|                                                                                 |                                                         |                                     |                                                   |        |       |        |        |       
|Income (loss) on equity investments:                                             |                                                         |                                     |                                                   |        |       |        |        |       
|                                                                                 | Summit Management Company                               |                                     |                                                   | (265   | )     |        |        | 21     |      
|                                                                                 | Real estate joint ventures                              |                                     |                                                   | (89    | )     |        |        | 64     |      
|                                                                                 |                                                         |                                     |                                                   |        |       |        |        |       
|                                                                                 |                                                         |                                     | Total income (loss) on equity investments         |        |       | (354   | )      |        |       | 85     | 
|                                                                                 |                                                         |                                     |                                                   |        |       |        |        |       
|Income from continuing operations                                                |                                                         |                                     | 5,468                                             |        |       |        | 6,231  |       
|Discontinued operations:                                                         |                                                         |                                     |                                                   |        |       |        |        |       
|                                                                                 | Income from discontinued operations                     |                                     |                                                   | 366    |       |        |        | 2,904  |      
|                                                                                 | Gain on disposition of discontinued operations          |                                     |                                                   | 3,136  |       |        |        |       |      
|                                                                                 |                                                         |                                     |                                                   |        |       |        |        |       
|                                                                                 |                                                         | Income from discontinued operations |                                                   |        | 3,502 |        |        |        | 2,904 |       
|                                                                                 |                                                         |                                     |                                                   |        |       |        |        |       
|Net income                                                                       |                                                         |                                     | 8,970                                             |        |       |        | 9,135  |       
|Distributions to Series B preferred
    unitholders                              |                                                         |                                     | (1,902                                            | )      |       |        | (1,902 | )     
|Distributions to Series C preferred
    unitholders                              |                                                         |                                     | (1,203                                            | )      |       |        | (1,203 | )     
|                                                                                 |                                                         |                                     |                                                   |        |       |        |        |       

4



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##### 



SUMMIT PROPERTIES PARTNERSHIP, L.P.


CONSOLIDATED STATEMENTS OF
EARNINGS  (Continued)


(Dollars in thousands, except per unit
data)


(Unaudited)


|                                                                         |                                                                         |                    |       |            |   |   |       |            |  
|------------------------------------------------------------------------ | ----------------------------------------------------------------------- | ------------------ | ----- | ---------- | - | - | ----- | ---------- | -
|                                                                         |                                                                         |                   
|                                                                         |                                                                         | Three Months Ended
|                                                                         |                                                                         | March 31,         
|                                                                         |                                                                         |                   
|                                                                         |                                                                         | 2003               |       | 2002      
|                                                                         |                                                                         |                    |       |           
|Income available to common unitholders                                   |                                                                         |                    | 5,865 |            |   |   | 6,030 |           
|Income available to common unitholders allocated
    to general partner  |                                                                         |                    | (59   | )          |   |   | (60   | )         
|                                                                         |                                                                         |                    |       |            |   |   |       |           
|Income available to common unitholders allocated
    to limited partners |                                                                         | $                  | 5,806 |            |   | $ | 5,970 |           
|                                                                         |                                                                         |                    |       |            |   |   |       |           
|Per unit data:                                                           |                                                                         |                    |       |            |   |   |       |           
|                                                                         | Income from continuing operations 
    basic and diluted               |                    | $     | 0.18       |   |   | $     | 0.20       |  
|                                                                         |                                                                         |                    |       |            |   |   |       |           
|                                                                         | Income from discontinued operations 
    basic and diluted             |                    | $     | 0.11       |   |   | $     | 0.09       |  
|                                                                         |                                                                         |                    |       |            |   |   |       |           
|                                                                         | Net income  basic and diluted                                          |                    | $     | 0.29       |   |   | $     | 0.30       |  
|                                                                         |                                                                         |                    |       |            |   |   |       |           
|                                                                         | Distributions to Series B preferred
    unitholders  basic and diluted |                    | $     | (0.06      | ) |   | $     | (0.06      | )
|                                                                         |                                                                         |                    |       |            |   |   |       |           
|                                                                         | Distributions to Series C preferred
    unitholders  basic and diluted |                    | $     | (0.04      | ) |   | $     | (0.04      | )
|                                                                         |                                                                         |                    |       |            |   |   |       |           
|                                                                         | Income available to common
    unitholders  basic                      |                    | $     | 0.19       |   |   | $     | 0.20       |  
|                                                                         |                                                                         |                    |       |            |   |   |       |           
|                                                                         | Income available to common
    unitholders  diluted                    |                    | $     | 0.19       |   |   | $     | 0.19       |  
|                                                                         |                                                                         |                    |       |            |   |   |       |           
|                                                                         | Distributions declared                                                  |                    | $     | 0.34       |   |   | $     | 0.48       |  
|                                                                         |                                                                         |                    |       |            |   |   |       |           
|                                                                         | Weighted average units  basic                                          |                    |       | 30,755,631 |   |   |       | 30,681,527 |  
|                                                                         |                                                                         |                    |       |            |   |   |       |           
|                                                                         | Weighted average units  diluted                                        |                    |       | 30,777,361 |   |   |       | 30,948,671 |  
|                                                                         |                                                                         |                    |       |            |   |   |       |           

See notes to consolidated financial statements.

5



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##### 



SUMMIT PROPERTIES PARTNERSHIP, L.P.

CONSOLIDATED STATEMENT OF PARTNERS
EQUITY


(Dollars in thousands)


(Unaudited)


|                             |                                                  |                                         |        |           |   |         |        |         |   |           |       |      |     |   |         |         |        |   |         |         |        |  
|---------------------------- | ------------------------------------------------ | --------------------------------------- | ------ | --------- | - | ------- | ------ | ------- | - | --------- | ----- | ---- | --- | - | ------- | ------- | ------ | - | ------- | ------- | ------ | -
|                             |                                                  | Series B                                |        | Series C  |   |         |        |         |   | Total    
|                             |                                                  | Preferred                               |        | Preferred |   | General |        | Limited |   | Partners
|                             |                                                  | Units                                   |        | Units     |   | Partner |        | Partner |   | Equity   
|                             |                                                  |                                         |        |           |   |         |        |         |   |          
|Balance at December 31, 2002 |                                                  | $                                       | 82,713 |           |   | $       | 53,547 |         |   | $         | 5,213 |      |     | $ | 442,938 |         |        | $ | 584,411 |        
|                             | Distributions to common unitholders              |                                         |        |          |   |         |        |        |   |           |       | (103 | )   |   |         | (10,213 | )      |   |         | (10,316 | )     
|                             | Contributions from Summit Properties related to: |                                         |        |           |   |         |        |         |   |           |       |      |     |   |         |         |        |   |         |         |       
|                             |                                                  | Repurchase of Summits common stock     |        |           |  |         |        |         |  |           |       |      | (75 | ) |         |         | (7,396 | ) |         |         | (7,471 | )
|                             |                                                  | Issuance of restricted stock grants     |        |           |  |         |        |         |  |           |       |      | 7   |   |         |         | 653    |   |         |         | 660    |  
|                             |                                                  | Netdown of restricted stock grants      |        |           |  |         |        |         |  |           |       |      | (5  | ) |         |         | (455   | ) |         |         | (460   | )
|                             |                                                  | Amortization of restricted stock grants |        |           |  |         |        |         |  |           |       |      |    |   |         |         | 39     |   |         |         | 39     |  
|                             | Interest earned on employee notes receivable     |                                         |        |          |   |         |        |        |   |           |       | (3   | )   |   |         | (249    | )      |   |         | (252    | )     
|                             | Repayment of employee notes receivable           |                                         |        |          |   |         |        |        |   |           |       | 6    |     |   |         | 556     |        |   |         | 562     |       
|                             | Distributions to preferred unitholders           |                                         |        |           |   |         |        |         |   |           |       | (31  | )   |   |         | (3,074  | )      |   |         | (3,105  | )     
|                             | Net income                                       |                                         |        |          |   |         |        |        |   |           |       | 90   |     |   |         | 8,880   |        |   |         | 8,970   |       
|                             |                                                  |                                         |        |           |   |         |        |         |   |           |       |      |     |   |         |         |        |   |         |        
|Balance at March 31, 2003    |                                                  | $                                       | 82,713 |           |   | $       | 53,547 |         |   | $         | 5,099 |      |     | $ | 431,679 |         |        | $ | 573,038 |        
|                             |                                                  |                                         |        |           |   |         |        |         |   |           |       |      |     |   |         |         |        |   |         |        

See notes to consolidated financial statements.

6



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##### 



SUMMIT PROPERTIES PARTNERSHIP, L.P.

CONSOLIDATED STATEMENTS OF CASH
FLOWS


(Dollars in thousands)


(Unaudited)


|                                                                                      |                                                                                                    |                                                         |       |         |         |   |       |         |         |  
|------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------- | ------------------------------------------------------- | ----- | ------- | ------- | - | ----- | ------- | ------- | -
|                                                                                      |                                                                                                    |                                                        
|                                                                                      |                                                                                                    | Three Months Ended                                     
|                                                                                      |                                                                                                    | March 31,                                              
|                                                                                      |                                                                                                    |                                                        
|                                                                                      |                                                                                                    | 2003                                                    |       | 2002   
|                                                                                      |                                                                                                    |                                                         |       |        
|Cash flows from operating activities:                                                 |                                                                                                    |                                                         |       |         |         |   |       |        
|Net income                                                                            |                                                                                                    | $                                                       | 8,970 |         |         | $ | 9,135 |        
|Adjustments to reconcile net income to net cash
    provided by operating activities: |                                                                                                    |                                                         |       |         |         |   |       |        
|                                                                                      | Loss (income) on equity investments                                                                |                                                         |       | 354     |         |   |       | (85     | )      
|                                                                                      | Gain on sale of real estate assets 
    discontinued operations                                   |                                                         |       | (3,136  | )       |   |       |        |        
|                                                                                      | Depreciation and amortization                                                                      |                                                         |       | 10,084  |         |   |       | 10,437  |        
|                                                                                      | Amortization of deferred settlement on interest
    rate swap                                      |                                                         |       | (252    | )       |   |       |        |        
|                                                                                      | Decrease (increase) in restricted cash                                                             |                                                         |       | 759     |         |   |       | (227    | )      
|                                                                                      | (Increase) decrease in other assets                                                                |                                                         |       | (1,331  | )       |   |       | 669     |        
|                                                                                      | Increase (decrease) in accrued interest payable                                                    |                                                         |       | 838     |         |   |       | (919    | )      
|                                                                                      | Decrease in accounts payable and accrued expenses                                                  |                                                         |       | (3,796  | )       |   |       | (3,040  | )      
|                                                                                      | Decrease in security deposits and prepaid rents                                                    |                                                         |       | (110    | )       |   |       | (233    | )      
|                                                                                      |                                                                                                    |                                                         |       |         |         |   |       |        
|                                                                                      |                                                                                                    | Net cash provided by operating activities               |       |         | 12,380  |   |       |         | 15,737  |  
|                                                                                      |                                                                                                    |                                                         |       |         |         |   |       |        
|Cash flows from investing activities:                                                 |                                                                                                    |                                                         |       |         |         |   |       |        
|                                                                                      | Construction of real estate assets and land
    acquisitions                                       |                                                         |       | (17,160 | )       |   |       | (25,820 | )      
|                                                                                      | Proceeds from sale of real estate assets                                                           |                                                         |       | 30,009  |         |   |       | 10,307  |        
|                                                                                      | Capitalized interest                                                                               |                                                         |       | (2,603  | )       |   |       | (2,455  | )      
|                                                                                      | Investment in real estate joint venture                                                            |                                                         |       | (6,204  | )       |   |       | (6,864  | )      
|                                                                                      | Distribution from real estate joint venture                                                        |                                                         |       |        |         |   |       | 329     |        
|                                                                                      | Recurring capital expenditures                                                                     |                                                         |       | (799    | )       |   |       | (994    | )      
|                                                                                      | Non-recurring capital expenditures                                                                 |                                                         |       | (220    | )       |   |       | (754    | )      
|                                                                                      | Corporate and other asset additions and office
    tenant improvements                             |                                                         |       | (44     | )       |   |       | (151    | )      
|                                                                                      | Decrease in notes receivable                                                                       |                                                         |       | 1       |         |   |       | 30      |        
|                                                                                      |                                                                                                    |                                                         |       |         |         |   |       |        
|                                                                                      |                                                                                                    | Net cash provided by (used in) investing
    activities |       |         | 2,980   |   |       |         | (26,372 | )
|                                                                                      |                                                                                                    |                                                         |       |         |         |   |       |        
|Cash flows from financing activities:                                                 |                                                                                                    |                                                         |       |         |         |   |       |        
|                                                                                      | Net (repayments) borrowings on line of credit                                                      |                                                         |       | (24,000 | )       |   |       | 27,000  |        
|                                                                                      | Proceeds from issuance of mortgage debt                                                            |                                                         |       | 31,240  |         |   |       |        |        
|                                                                                      | Repayments of mortgage debt                                                                        |                                                         |       | (1,369  | )       |   |       | (1,427  | )      
|                                                                                      | Repayments of tax exempt bonds                                                                     |                                                         |       | (220    | )       |   |       | (280    | )      
|                                                                                      | Payment of deferred financing costs                                                                |                                                         |       | (585    | )       |   |       | (46     | )      
|                                                                                      | Distributions to common unitholders                                                                |                                                         |       | (10,448 | )       |   |       | (14,161 | )      
|                                                                                      | Distributions to Series B preferred
    unitholders                                                |                                                         |       | (1,902  | )       |   |       | (1,902  | )      
|                                                                                      | Distributions to Series C preferred
    unitholders                                                |                                                         |       | (1,203  | )       |   |       | (1,203  | )      
|                                                                                      | Repayments of employee notes receivable                                                            |                                                         |       | 562     |         |   |       | 363     |        
|                                                                                      | Increase in and interest on employee notes
    receivable                                          |                                                         |       | (252    | )       |   |       | (227    | )      
|                                                                                      | Contributions from Summit Properties related to:                                                   |                                                         |       |         |         |   |       |         |        
|                                                                                      | Net proceeds from dividend reinvestment and stock
    purchase plans and exercise of stock options |                                                         |       |        |         |   |       | 2,965   |        
|                                                                                      | Repurchase of common stock                                                                         |                                                         |       | (7,471  | )       |   |       |        |        
|                                                                                      | Issuance of restricted stock awards                                                                |                                                         |       | 200     |         |   |       |        |        
|                                                                                      |                                                                                                    |                                                         |       |         |         |   |       |        
|                                                                                      |                                                                                                    | Net cash (used in) provided by financing
    activities |       |         | (15,448 | ) |       |         | 11,082  |  
|                                                                                      |                                                                                                    |                                                         |       |         |         |   |       |        
|Net (decrease) increase in cash and cash
    equivalents                              |                                                                                                    |                                                         | (88   | )       |         |   | 447   |        
|Cash and cash equivalents at beginning of period                                      |                                                                                                    |                                                         | 2,353 |         |         |   | 1,814 |        
|                                                                                      |                                                                                                    |                                                         |       |         |         |   |       |        
|Cash and cash equivalents at end of period                                            |                                                                                                    | $                                                       | 2,265 |         |         | $ | 2,261 |        
|                                                                                      |                                                                                                    |                                                         |       |         |         |   |       |        
|Supplemental disclosure of cash flow information:                                     |                                                                                                    |                                                         |       |         |         |   |       |        
|                                                                                      | Cash paid for interest, net of capitalized
    interest                                            |                                                         | $     | 6,909   |         |   | $     | 9,974   |        
|                                                                                      |                                                                                                    |                                                         |       |         |         |   |       |        

See notes to consolidated financial statements.

7



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##### 



SUMMIT PROPERTIES PARTNERSHIP, L.P.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)





Unless the context otherwise requires, all
references to we, our or us
in this report refer collectively to Summit Properties
Partnership, L.P., a Delaware limited partnership (the
Operating Partnership), and its subsidiaries. All
references to Summit in this report refer to Summit
Properties Inc., a Maryland corporation and the sole general
partner of the Operating Partnership.



|   |                      
|-- | ---------------------
|1. | BASIS OF PRESENTATION

Summit conducts all of its business through the
Operating Partnership and its subsidiaries. As of March 31,
2003, Summit held 88.4% of our outstanding partnership
interests, consisting of a 1% general partner interest and an
87.4% limited partner interest. Each common unit may be redeemed
by the holder for cash equal to the fair value of a share of
Summits common stock or, at our option, one share of
common stock (subject to adjustment). We presently determine on
a case-by-case basis whether we will cause Summit to issue
shares of common stock in connection with a redemption of common
units rather than paying cash. With each redemption of common
units for common stock, Summits percentage ownership
interest in the Operating Partnership will increase. Similarly,
when Summit acquires a share of common stock under its common
stock repurchase program or otherwise, it simultaneously
disposes of one of our common units. In addition, whenever
Summit issues shares of common stock for cash, Summit will
contribute any resulting net proceeds to us and we will issue an
equivalent number of common units to Summit.

Distributions to holders of common units are made
to enable distributions to be made to Summit stockholders under
Summits dividend policy. Federal income tax laws require
Summit, as a REIT, to distribute 90% of its ordinary taxable
income. We make distributions to Summit to enable it to satisfy
this requirement.

We have prepared the accompanying unaudited
consolidated financial statements in accordance with accounting
principles generally accepted in the United States of America
(GAAP) 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 GAAP for complete
financial statements. We have included all material adjustments
(consisting only of normal recurring adjustments) necessary for
a fair presentation. The results of operations for the three
months ended March 31, 2003 are not necessarily indicative
of the results that may be expected for the full year. You
should read our December 31, 2002 audited financial
statements and notes included in our Annual Report on
Form 10-K in conjunction with these interim statements.
Certain reclassifications have been made to the 2002 financial
statements to conform to the 2003 presentation.

Recently Adopted Accounting
Pronouncements In
December 2002, the Financial Accounting Standards Board
(FASB) issued Statement of Financial Accounting
Standards (SFAS) No. 148, Accounting for
Stock-Based Compensation  Transition and
Disclosure. This statement amends SFAS No. 123,
Accounting for Stock-Based Compensation, to provide
alternative methods of transition for a voluntary change to the
fair value based method of accounting for stock-based employee
compensation. In addition, this statement amends the disclosure
requirements of SFAS No. 123 to require prominent
disclosures in both annual and interim financial statements
about the method of accounting for stock-based employee
compensation and the effect of the method used on reported
results. Effective January 1, 2003, we adopted the fair
value recognition provisions of SFAS No. 123
prospectively to all of Summits stock options granted,
modified, or settled after January 1, 2003, as allowed by
SFAS No. 148. The adoption of SFAS No. 148
did not have a material effect on our financial position or
results of operations.

In November 2002, the FASB issued FASB
Interpretation No. 45, Guarantors Accounting
and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others. This Interpretation
elaborates on the disclosures to be made by a guarantor in its
interim and annual financial statements about its obligations
under certain guarantees that it has issued. It also clarifies
that a guarantor is required to recognize, at the inception of a
guarantee entered into after January 1, 2003, a liability
for the fair value of the obligation undertaken in issuing
certain guarantees. The disclosure requirements, initial
recognition and initial

8



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##### 



SUMMIT PROPERTIES PARTNERSHIP, L.P.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)  (Continued)




measurement provisions of this Interpretation are
currently effective and did not affect our financial position
and results of operations for the three months ended
March 31, 2003.

In January 2003, the FASB issued FASB
Interpretation No. 46, Consolidation of Variable
Interest Entities (FIN 46). This
Interpretation requires that variable interest entities created
after January 31, 2003, and variable interest entities in
which an interest is obtained after that date, be evaluated for
consolidation into an entitys financial statements. This
interpretation also applies, beginning July 1, 2003 for us,
to all variable interest entities in which we hold an interest
that was acquired before February 1, 2003. The adoption of
the currently applicable provisions of FIN 46 did not
affect our financial position or results of operations for the
three months ended March 31, 2003 and we are still
evaluating the impact of those provisions not yet applicable.

In April 2003, the FASB issued
SFAS No. 149 Amendment of Statement 133 on
Derivative Instruments and Hedging Activities.
SFAS No. 133 Accounting for Derivative
Instruments and Hedging Activities and No. 138,
Accounting for Certain Derivative Instruments and Certain
Hedging Activities, establish accounting and reporting
standards for derivative instruments including derivatives
embedded in other contracts and for hedging activities.
SFAS No. 149 amends SFAS No. 133 for certain
decisions made by the Board as part of the Derivatives
Implementation Group process. This Statement also contains
amendments relating to FASB Concepts Statement No. 7,
Using Cash Flow Information and Present Value in
Accounting Measurements, and SFAS No. 65,
Accounting for Certain Mortgage Banking Activities,
SFAS No. 91 Accounting for Nonrefundable Fees
and Costs Associated with Originating or Acquiring Loans and
Initial Direct Costs of Leases, SFAS No. 95,
Statement of Cash Flows, and SFAS No. 126,
Exemption from Certain Required Disclosures about
Financial Instruments for Certain Nonpublic Entities. We
are currently evaluating the effect of this pronouncement on our
financial position and results of operations.

Per Unit
Data Basic earnings
per common unit is computed based upon the weighted average
number of common units outstanding during the respective period.
The difference between basic and diluted
weighted average common units is the dilutive effect of
Summits stock-based compensation outstanding. There were
21,730 and 267,144 units added to basic weighted average
common units outstanding for the three months ended
March 31, 2003 and 2002, respectively. Dilution caused by
this stock-based compensation had no effect on income available
to common unitholders per unit for the three months ended
March 31, 2003 and decreased income available to common
unitholders per unit by $0.01 for the three months ended
March 31, 2002.

Stock-Based
Compensation Summit
has a Stock Option and Incentive Plan and an Employee Stock
Purchase Plan (ESPP) which are described more fully
in Note 11 to our consolidated financial statements
included in our Annual Report on Form 10-K for the year
ended December 31, 2002. Through December 31, 2002, we
applied APB No. 25 and related interpretations in
accounting for Summits stock options and ESPP.
Accordingly, no compensation cost has been recognized for
Summits stock options granted or shares issued under the
ESPP during the three months ended March 31, 2002. The ESPP
was suspended effective July 2, 2002. Effective
January 1, 2003, we adopted the fair value recognition
provisions of SFAS No. 123 prospectively to all stock
options granted, modified or settled after January 1, 2003
as allowed by

9



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##### 



SUMMIT PROPERTIES PARTNERSHIP, L.P.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)  (Continued)




SFAS No. 148. The following table
reflects the effect on net income and earnings per share had the
fair value based method been applied to all options granted in
each year (in thousands, expect per share amounts):

|                                                                      |  |      |       |      |  |   |       | 
|--------------------------------------------------------------------- |  | ---- | ----- | ---- |  | - | ----- | 
|                                                                      |  | 2003 |       | 2002
|                                                                      |  |      |       |     
|Net income as reported                                                |  | $    | 8,970 |      |  | $ | 9,135 | 
|Stock-based compensation determined under fair
    value based method |  |      |      |      |  |   | 1,381 | 
|                                                                      |  |      |       |      |  |   |       | 
|Pro forma net income                                                  |  | $    | 8,970 |      |  | $ | 7,754 | 
|                                                                      |  |      |       |      |  |   |       | 
|Net income per share as reported 
    basic and diluted              |  | $    | 0.29  |      |  | $ | 0.30  | 
|Pro forma net income per share  basic
    and diluted                |  | $    | 0.29  |      |  | $ | 0.25  | 



|   |                           
|-- | --------------------------
|2. | REAL ESTATE JOINT VENTURES

We own a 25% equity interest in a joint venture
named Station Hill, LLC (Station Hill), in which we
and Hollow Creek, LLC, a subsidiary of a major financial
services company, are members. Station Hill currently owns four
communities and is accounted for under the equity method of
accounting and, therefore, our 25% equity interest is presented
in Income (loss) on equity investments: Real estate joint
ventures in our consolidated statements of earnings.

The following are condensed balance sheets as of
March 31, 2003 and December 31, 2002 and statements of
earnings for the three months ended March 31, 2003 and 2002
for Station Hill. The balance sheets and statements of earnings
set forth below reflect the financial position and operations of
Station Hill in its entirety, not just our interest in the joint
venture (in thousands).

|                          |                                         |                |        |              |  |   |        |        | 
|------------------------- | --------------------------------------- | -------------- | ------ | ------------ |  | - | ------ | ------ | 
|                          |                                         |               
|                          |                                         | Balance Sheets
|                          |                                         |               
|                          |                                         | March 31,      |        | December 31,
|                          |                                         | 2003           |        | 2002        
|                          |                                         |                |        |             
|Real estate assets, net   |                                         | $              | 71,576 |              |  | $ | 72,255 |       
|Cash and cash equivalents |                                         |                | 830    |              |  |   | 370    |       
|Other assets              |                                         |                | 299    |              |  |   | 373    |       
|                          |                                         |                |        |              |  |   |        |       
|                          | Total assets                            |                | $      | 72,705       |  |   | $      | 72,998 | 
|                          |                                         |                |        |              |  |   |        |       
|Mortgages payable         |                                         | $              | 58,521 |              |  | $ | 58,731 |       
|Other liabilities         |                                         |                | 816    |              |  |   | 580    |       
|Partners capital         |                                         |                | 13,368 |              |  |   | 13,687 |       
|                          |                                         |                |        |              |  |   |        |       
|                          | Total liabilities and partners capital |                | $      | 72,705       |  |   | $      | 72,998 | 
|                          |                                         |                |        |              |  |   |        |       

|          |                               |                        |       |      |       |   |       |     |       | 
|--------- | ----------------------------- | ---------------------- | ----- | ---- | ----- | - | ----- | --- | ----- | 
|          |                               |                       
|          |                               | Statements of Earnings
|          |                               |                       
|          |                               |                       
|          |                               | Three Months Ended    
|          |                               | March 31,             
|          |                               |                       
|          |                               | 2003                   |       | 2002
|          |                               |                        |       |     
|Revenues  |                               | $                      | 2,369 |      |       | $ | 2,554 |    
|          |                               |                        |       |      |       |   |       |    
|Expenses: |                               |                        |       |      |       |   |       |    
|          | Property operating            |                        |       | 953  |       |   |       | 916 |      
|          | Depreciation and amortization |                        |       | 765  |       |   |       | 731 |      
|          | Interest                      |                        |       | 981  |       |   |       | 995 |      
|          |                               |                        |       |      |       |   |       |    
|          |                               | Total expenses         |       |      | 2,699 |   |       |     | 2,642 | 
|          |                               |                        |       |      |       |   |       |    
|Net loss  |                               | $                      | (330  | )    |       | $ | (88   | )  
|          |                               |                        |       |      |       |   |       |    

10



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##### 



SUMMIT PROPERTIES PARTNERSHIP, L.P.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)  (Continued)




We formerly owned a 50% interest in a joint
venture which developed and operated an apartment community
located in Atlanta, Georgia known as The Heights at Cheshire
Bridge. This joint venture was accounted for under the equity
method of accounting and its operating results are presented in
Loss (income) on equity investments: Real estate joint
ventures in our consolidated statements of earnings. We
had the right to purchase our joint venture partners
interest in the joint venture, but decided subsequent to
December 31, 2001 not to exercise this option which expired
on January 17, 2002. Due to our decision not to purchase
our joint venture partners interest, we were required to
make a capital contribution of $6.8 million, which
represented 25% of the joint ventures total construction
loan amount. We made our contribution on February 15, 2002.
This contribution did not change our equity interest in the
joint venture. On September 27, 2002, the joint venture
sold The Heights at Cheshire Bridge to an unrelated third party
and the joint venture was dissolved. We received a preferred
return on our capital contribution in the amount of 9% per
year compounded annually through the sale date. We were entitled
to 50% of the income based on our equity interest, after all
preferred return payments were made. Upon dissolution, we
recognized a gain of $5.0 million on the sale of the joint
ventures assets.

On May 25, 2001, we contributed
$4.2 million for a 29.78% interest in a joint venture named
SZF, LLC, which owns substantially all of the interests in a
limited liability company that is developing, through a
third-party contractor, an apartment community in Miami,
Florida. The community will consist of 323 apartment homes and
approximately 17,500 square feet of office/retail space.
The limited liability company has also acquired an adjacent
piece of land. The construction costs are being funded through
the equity that the joint venture contributed to the limited
liability company and by a loan to that company from an
unrelated third party. In the event that construction costs
exceed the construction loan amount, we have agreed to advance
the amount required to fund such costs in excess of the
construction loan. These advances accrue a preferential return
at the rate of eleven percent (11%) per year to be paid from the
distributions from the joint venture. The preferred return will
not be recognized until the community has earnings or gains to
fund such a return. As of March 31, 2003, we had advanced
$8.4 million to SZF, LLC. This joint venture is accounted
for under the equity method of accounting. The balance sheet and
income statement information for SZF, LLC is not material to our
consolidated financial statements taken as a whole.

In 2002, we entered into two separate joint
ventures with a major financial services institution (the
investor member) to redevelop Summit Roosevelt,
formerly the Hadleigh apartment hotel and Summit Grand Parc,
formerly the United Mine Workers Building, both located in
Washington, D.C., in a manner to permit the use of federal
rehabilitation income tax credits. The investor member will
contribute approximately $6.6 million for Summit Roosevelt
and approximately $2.2 million for Summit Grand Parc in
equity to fund a portion of the total estimated costs for the
respective communities and will receive a preferred return on
these capital investments and an annual asset management fee
with respect to each community. As of March 31, 2003, the
investor member had contributed $400,000 for Summit Roosevelt
and $200,000 for Summit Grand Parc. The investor member is
obligated to fund the balance of its investment in each joint
venture after such events as completion of the redevelopment and
final certification of the historic renovations by the National
park Service with respect to the related community. If the
certifications are not completed to the satisfaction of the
investor member, then the investor member will be released from
its obligations to fund its remaining investment in that joint
venture and would be entitled to a refund of any funds
previously invested in that joint venture, as well as an agreed
upon return of such previously invested funds. In such an event,
we would expect to replace either of these equity investments
with funds from other financing sources. The investor
members interests in the joint ventures are subject to
put/call rights during the sixth and seventh years after the
respective communities are placed in service. These joint
ventures are consolidated into our financial statements.

11



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##### 



SUMMIT PROPERTIES PARTNERSHIP, L.P.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)  (Continued)






|   |                       
|-- | ----------------------
|3. | COMMUNITY DISPOSITIONS

On March 5, 2003, we sold an apartment
community formerly known as Summit Fairways (240 apartment
homes) located in Orlando, Florida for $18.8 million as
part of our strategy to exit our non-core markets. The
disposition of Summit Fairways resulted in the recognition of a
gain on sale of $3.1 million. The net proceeds of
$18.3 million were used to reduce amounts outstanding under
our unsecured credit facility.

Subsequent to March 31, 2003, on
April 15, 2003, we sold an apartment community formerly
known as Summit Turtle Rock (see Note 14).

In accordance with SFAS No. 144,
Accounting for the Impairment or Disposal of Long-Lived
Assets, net income and gain (loss) on disposition of real
estate for communities sold or considered held for sale after
December 31, 2001 are reflected in our consolidated
statements of earnings as discontinued operations
for all periods presented. In addition, we have separately
reflected the assets and liabilities of these communities as
Net real estate assets  assets held for
sale, Other assets  assets held for
sale, Notes payable  assets held for
sale, and Other liabilities  assets held
for sale in the balance sheets for all periods presented.
As of March 31, 2003, in addition to the former Summit
Turtle Rock, two other communities, Summit Camino Real and
Summit Buena Vista (a total of 1,179 apartment homes located in
Dallas, Texas), met the criteria outlined in
SFAS No. 144 for classification as held for sale. The
revenues and net income (excluding allocation of corporate
overhead) of these three communities represented 7.6% and 2.2%,
respectively, of total revenues and net income for the three
months ended March 31, 2003.

Below is a summary of discontinued operations for
Summit Fairways, Summit Turtle Rock, Summit Camino Real and
Summit Buena Vista. The information for the three months ended
March 31, 2002 includes the four communities to which
reference is made above as well as seven of the eight
communities sold during the year ended December 31, 2002
(in thousands). The eighth community was considered held for
sale prior to December 31, 2001 and, therefore, is included
in income from continuing operations in accordance with
SFAS No. 144.

|                                                                                                  |                        |                 |       |       |  |   |       |       | 
|------------------------------------------------------------------------------------------------- | ---------------------- | --------------- | ----- | ----- |  | - | ----- | ----- | 
|                                                                                                  |                        |                
|                                                                                                  |                        | Three Months   
|                                                                                                  |                        | Ended March 31,
|                                                                                                  |                        |                
|                                                                                                  |                        | 2003            |       | 2002 
|                                                                                                  |                        |                 |       |      
|Property revenues:                                                                                |                        |                 |       |       |  |   |       |      
|                                                                                                  | Rental revenues        |                 | $     | 3,318 |  |   | $     | 8,985 | 
|                                                                                                  | Other property revenue |                 |       | 206   |  |   |       | 609   | 
|                                                                                                  |                        |                 |       |       |  |   |       |      
|Total property revenues                                                                           |                        |                 | 3,524 |       |  |   | 9,594 |      
|Property operating and maintenance expenses                                                       |                        |                 | 1,562 |       |  |   | 3,512 |      
|Depreciation                                                                                      |                        |                 | 752   |       |  |   | 1,983 |      
|Interest and amortization                                                                         |                        |                 | 844   |       |  |   | 1,195 |      
|                                                                                                  |                        |                 |       |       |  |   |       |      
|Income from discontinued operations before net
    gain on disposition of discontinued operations |                        |                 | 366   |       |  |   | 2,904 |      
|Gain on disposition of discontinued operations                                                    |                        |                 | 3,136 |       |  |   |      |      
|                                                                                                  |                        |                 |       |       |  |   |       |      
|Income from discontinued operations                                                               |                        | $               | 3,502 |       |  | $ | 2,940 |      
|                                                                                                  |                        |                 |       |       |  |   |       |      

12



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##### 



SUMMIT PROPERTIES PARTNERSHIP, L.P.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)  (Continued)






|   |              
|-- | -------------
|4. | NOTES PAYABLE

As of March 31, 2003, the outstanding
balance of our $225.0 million credit facility was
$120.0 million.

On March 31, 2003, we obtained a
$31.2 million fixed rate mortgage note collateralized by
Summit Doral. This mortgage note bears interest at 5.17% and
matures on April 1, 2013. This loan requires monthly
principal and interest payments on a 30-year amortization
schedule with a balloon payment due at maturity.



|   |                                 
|-- | --------------------------------
|5. | DERIVATIVE FINANCIAL INSTRUMENTS

We are exposed to capital market risk, such as
changes in interest rates. To manage the volatility relating to
interest rate risk, we may enter into interest rate hedging
arrangements from time to time. We generally do not utilize
derivative financial instruments for trading or speculative
purposes.

On June 13, 2002, we terminated an interest
rate swap with a $30.0 million notional amount. Under
SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities, as amended, as a
result of the termination, we de-designated the
$30.0 million swap as a fair value hedge against certain
fixed rate debt. We will amortize as a reduction of interest
expense $1.5 million, which represents the difference
between the par value and carrying amount of the fixed-rate debt
obligation, over the remaining term of the debt obligation,
which matures on December 15, 2003.

On June 14, 2002, we entered into an
interest rate swap with a notional amount of $50.0 million,
relating to $50.0 million of 7.20% fixed rate notes issued
under our MTN program. Under the interest rate swap agreement,
through the maturity date of August 15, 2007, (a) we
have agreed to pay to the counterparty the interest on a
$50.0 million notional amount at a floating interest rate
of three-month LIBOR plus 241.75 basis points, and
(b) the counterparty has agreed to pay to us the interest
on the same notional amount at the fixed rate of the underlying
debt obligation. The floating rate as of March 31, 2003 was
3.7575%. The fair value of the interest rate swap was an asset
of $3.9 million as of March 31, 2003. The swap has
been designated as a fair value hedge of the underlying fixed
rate debt obligation and has been recorded in Other
assets in the accompanying balance sheets. We assume no
ineffectiveness as the interest rate swap meets the short-cut
method conditions required under SFAS No. 133 for fair
value hedges of debt instruments. Accordingly, no gains or
losses were recorded in income relative to our underlying debt
and interest rate swap.



|   |                 
|-- | ----------------
|6. | RESTRICTED STOCK

During the three months ended March 31,
2003, Summit issued 33,342 shares of unrestricted stock
valued at $660,000 to employees under its 1994 Stock Option and
Incentive Plan. These shares were issued pursuant to stock award
agreements entered into with certain of Summits employees
dated February 6, 2002 (the 2002 Stock Grants)
and represent 15% of the total 222,280 shares of common
stock that may be received by these employees under the stock
award agreements. The remaining shares will be issued based on
the following schedule of dates and percentages: an additional
20% on each of March 1, 2004, 2005 and 2006 and the final
25% on March 1, 2007. The respective employee will receive
the applicable number of shares on each date if he or she
continues to be employed by Summit on such date, or earlier upon
his or her death or disability or upon a change of
control of Summit. Employees surrendered
12,589 shares of stock during the three months ended
March 31, 2003 to satisfy the income tax liability related
to the 2002 Stock Grants. Employees surrendered an additional
12,772 shares during the three months ended March 31,
2003 to satisfy the income tax liability related to shares of
restricted stock granted prior to January 1, 2003 which
vested during the current period.

13



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##### 



SUMMIT PROPERTIES PARTNERSHIP, L.P.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)  (Continued)






|   |                                   
|-- | ----------------------------------
|7. | SUPPLEMENTAL CASH FLOW INFORMATION

Non-cash investing and financing activities for
the three months ended March 31, 2003 and 2002 were as
follows:



| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | A. | We accrued distributions payable in the amounts
    of $10.3 million as of March 31, 2003 and
    $14.6 million as of March 31, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| | B. | Summit issued 33,342 shares of unrestricted
    stock valued at $660,000 under its 1994 Stock Option and
    Incentive Plan during the three months ended March 31,
    2003. Summit issued 442 shares of restricted stock valued
    at $10,000 during the three months ended March 31, 2002
    under this plan. During the three months ended March 31,
    2003, employees surrendered 25,361 shares valued at
    $460,000 to satisfy the income tax liability related to the
    issuance of shares of unrestricted stock and vesting of
    restricted stock. During the three months ended March 31,
    2002, employees surrendered 13,793 shares valued at
    $326,000 to satisfy the income tax liability related to the
    vesting of restricted stock.
|
| | C. | Summit issued 2,842 shares of common stock
    in exchange for 2,842 common units of limited partnership
    interest in the Operating Partnership valued at $62,000 during
    the three months ended March 31, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               



|   |                              
|-- | -----------------------------
|8. | COMMITMENTS AND CONTINGENCIES

As of March 31, 2003, we were party to a
real estate purchase agreement with a third-party real estate
developer. Under the terms of the agreement, we agreed to
purchase upon completion a Class A mixed-use
community, which is called Summit Brickell, and is located in
Miami, Florida. Summit Brickell has 405 apartment homes and
approximately 18,000 square feet of retail space. We
purchased Summit Brickell on May 6, 2003 (see Note 14).

During 2002, we completed the development of
Summit Brookwood, a 359-unit apartment community located in
Atlanta, Georgia. As of March 31, 2003, we are the lessee
under a land lease related to the land on which Summit Brookwood
was constructed. We have exercised our purchase option under the
land lease to purchase the related land for $10.6 million.
We expect to finalize the purchase of the land at Summit
Brookwood during 2003 using cash as consideration.

The estimated cost to complete the four
development projects currently under construction was
$63.6 million as of March 31, 2003. Anticipated
construction completion dates of the projects range from the
third quarter of 2003 to the third quarter of 2005.

As collateral for performance on contracts and as
credit guarantees to banks and insurers, we were contingently
liable under standby letters of credit in the aggregate amount
of $20.2 million as of March 31, 2003. Upon the
purchase of Summit Brickell on May 6, 2003 (see
Note 14), the related $13.0 million letter of credit
was released.

We have agreed to advance the amount required to
fund costs in excess of the construction loan related to the
community which is being developed by SZF, LLC, a joint venture
in which we own a 29.78% interest (see Note 2). As of
March 31, 2003, we had funded $8.4 million to SZF, LLC.

As of March 31, 2003, we carried terrorism
insurance on all communities that serve as collateral for
mortgage debt, as well as on two communities which do not serve
as collateral for mortgage debt, but which are located in
Washington, D.C. As of May 1, 2003, we carry terrorism
insurance on all communities. The terrorism insurance is subject
to coverage limitations, which we believe are commercially
reasonable. No assurance can be given that material losses in
excess of insurance proceeds will not occur in the future, or
that insurance coverage for acts of terrorism will be available
in the future.

14



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##### 



SUMMIT PROPERTIES PARTNERSHIP, L.P.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)  (Continued)




Summit has employment agreements with two of its
former executive officers, both of whom resigned from such
executive positions, but who remain as employees and have agreed
to provide various services to us from time to time through
December 31, 2011. Each employment agreement requires that
Summit pay to the former officers a base salary aggregating up
to $2.1 million over the period from July 1, 2001 to
December 31, 2011 (beginning with calendar year 2002, up to
$200,000 on an annual basis). Each employment agreement also
requires that Summit provide participation in Summits life
insurance plan, office space, information systems support and
administrative support for the remainder of each employees
life, and participation in Summits health and dental
insurance plans until the last to die of the employee or such
employees spouse. Either party can terminate the
employment agreements, effective 20 business days after written
notice is given. The full base salary amount due shall be
payable through 2011 whether or not the agreements are
terminated earlier in accordance with their terms.

We are subject to a variety of claims and suits
that arise in the ordinary course of business, including actions
with respect to contracts and cases in which claims have been
brought against us by current and former employees, residents,
independent contractors and vendors. While the resolution of
these matters cannot be predicted with certainty, we believe
that the final outcome of such matters will not be material to
our financial position or results of operations. If we determine
that a loss is probable to occur, the estimated amount of that
loss would be recorded in the financial statements.

We are a party to a number of agreements and
contracts to which we may be obligated to indemnify the other
party with respect to certain matters. Typically, these
obligations arise in contracts into which we enter, under which
we customarily agree to hold the other party harmless against
certain losses arising from breaches of representations,
warranties and/or covenants related to such matters as, among
others, title to assets, specified environmental matters,
qualification to do business, due organization, non-compliance
with restrictive covenants, laws, rules and regulations,
maintenance of insurance and payment of tax bills due and owing.
Additionally, with respect to retail and office lease agreements
we enter into as landlord, we may also indemnify the other party
against damages caused by our willful misconduct or negligence
associated with the operation and management of the building.
These indemnities are typical in the industry and are in
accordance with general customs. We believe that if we were to
incur a loss in any of these matters, such loss should not have
a material effect on our financial condition or results of
operations. Historically, payments made with regard to these
agreements have not had a material effect on our financial
condition or results of operations.



|   |                  
|-- | -----------------
|9. | BUSINESS SEGMENTS

We develop, operate and acquire primarily
Class A luxury apartment communities primarily
located in markets which we believe have high growth potential.
All of our communities target middle to upper income,
prestige-conscious residents who expect outstanding service and
the latest in apartment design technology, as well as
convenience. Our communities provide amenities such as swimming
pools, clubhouses, exercise rooms and Peak Services.
Peak Services may include, but are not limited to, Same Day
Maintenance Service and Emergency Maintenance available
24 hours a day, business services, package acceptance and
delivery, a video library and loaner living accessories. All of
our communities market themselves through media advertising. Due
to the similarities of our communities and their similar
economic characteristics as exhibited through similar long-term
financial performance, our communities have been aggregated into
one reportable segment as allowed in accordance with
SFAS No. 131, Disclosures about Segments of an
Enterprise and Related Information.



|    |                
|--- | ---------------
|10. | PREFERRED UNITS

As of March 31, 2003, we had outstanding
3.4 million preferred units of limited partnership interest
designated as 8.95% Series B Cumulative Redeemable
Perpetual Preferred Units. We may redeem these preferred units
on or after April 29, 2004 for cash at a redemption price
equal to the holders capital account,

15



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##### 



SUMMIT PROPERTIES PARTNERSHIP, L.P.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)  (Continued)




or at our option, shares of Summits 8.95%
Series B Cumulative Redeemable Perpetual Preferred Stock,
or a combination of cash and shares of Summits 8.95%
Series B Cumulative Redeemable Perpetual Preferred Stock.
Holders of the Series B preferred units have the right to
exchange these preferred units for shares of Summits
Series B preferred stock on a one-for-one basis, subject to
adjustment: (a) on or after April 29, 2009,
(b) if full quarterly distributions are not made for six
quarters, or (c) upon the occurrence of specified events
related to our treatment or the treatment of the preferred units
for federal income tax purposes. Distributions on the
Series B preferred units are cumulative from the date of
original issuance and are payable quarterly at the rate of
8.95% per year of the $25.00 original capital contribution.
We made distributions to the holders of the Series B
preferred units in the aggregate amount of $1.9 million
during each of the three months ended March 31, 2003 and
2002.

As of March 31, 2003, we had outstanding
2.2 million preferred units of limited partnership interest
designated as 8.75% Series C Cumulative Redeemable
Perpetual Preferred Units. We may redeem the preferred units on
or after September 3, 2004 for cash at a redemption price
equal to the holders capital account. The holder of the
Series C preferred units have the right to exchange these
preferred units for shares of Summits Series C
preferred stock on a one-for-one basis, subject to adjustment:
(a) on or after September 3, 2009, (b) if full
quarterly distributions are not made for six quarters,
(c) upon the occurrence of specified events related to our
treatment or the treatment of the preferred units for federal
income tax purposes, or (d) if the holdings in the
Operating Partnership of the Series C unitholder exceed 18%
of the total profits of or capital interest in the Operating
Partnership for a taxable year. Distributions on the
Series C preferred units are cumulative from the date of
original issuance and are payable quarterly at the rate of
8.75% per year of the $25.00 original capital contribution.
We made distributions to the holder of the Series C
preferred units in the aggregate amount of $1.2 million
during each of the three months ended March 31, 2003 and
2002.



|    |                                
|--- | -------------------------------
|11. | COMMON STOCK REPURCHASE PROGRAM

Summit has a common stock repurchase program,
originally approved by its Board of Directors in March of 2000,
pursuant to which Summit is authorized to purchase up to an
aggregate of $56.0 million of currently issued and
outstanding shares of its common stock. All repurchases have
been, and will be, made on the open market at prevailing prices
or in privately negotiated transactions. This authority may be
exercised from time to time and in such amounts as market
conditions warrant. The following is a summary of stock
repurchases under the common stock repurchase program (dollars
in thousands, except per share amounts):

|                                  |                            |             |         |             |  |               |       |        |  |   |       |       | 
|--------------------------------- | -------------------------- | ----------- | ------- | ----------- |  | ------------- | ----- | ------ |  | - | ----- | ----- | 
|                                  |                            | Number of   |         | Value of    |  | Average Price
|                                  |                            | Shares      |         | Shares      |  | of Shares    
|                                  |                            | Repurchased |         | Repurchased |  | Repurchased  
|                                  |                            |             |         |             |  |              
|Year ended December 31, 2000      |                            |             | 279,400 |             |  | $             | 5,533 |        |  | $ | 19.80 |      
|Year ended December 31, 2001      |                            |             | 8,800   |             |  |               | 197   |        |  |   | 22.39 |      
|Year ended December 31, 2002      |                            |             | 151,300 |             |  |               | 2,666 |        |  |   | 17.62 |      
|Three months ended March 31, 2003 |                            |             | 422,200 |             |  |               | 7,471 |        |  |   | 17.70 |      
|                                  |                            |             |         |             |  |               |       |        |  |   |       |      
|                                  | Total as of March 31, 2003 |             |         | 861,700     |  |               | $     | 15,867 |  |   | $     | 18.41 | 
|                                  |                            |             |         |             |  |               |       |        |  |   |       |      

Summit had $40.1 million of remaining
availability for repurchases under the program as of
March 31, 2003.



|    |                      
|--- | ---------------------
|12. | EMPLOYEE LOAN PROGRAM

Summit has a loan program under which it loaned
amounts to certain of its executive officers and other qualified
employees to (a) finance the purchase of Summits
common stock on the open market at then-current market prices,
(b) finance the payment of the exercise price of one or
more stock options to purchase shares of Summits common
stock, or (c) finance the annual tax liability or other
expenses of an executive

16



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##### 



SUMMIT PROPERTIES PARTNERSHIP, L.P.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)  (Continued)




officer related to the vesting of shares of
common stock which constitute a portion of a restricted stock
award granted to the executive officer. As a result of recent
legislation, Summit is no longer permitted to make loans to its
executive officers and, therefore, new issuances under the loan
program have been terminated. The relevant officer or employee
has executed a promissory note and security agreement related to
each loan extended. Each outstanding note bears interest at a
rate established on the date of the note, is full recourse to
the officers and employees and is collateralized by the shares
of Summits common stock which are the subject of the
loans. If the market price of Summits common stock falls
materially below the price at which the shares of stock were
purchased, the proceeds of the sale of the common stock may not
be sufficient to repay the loan. The closing market price of
Summits common stock was $18.50 per share on
March 31, 2003. At that share price, the proceeds from the
shares that serve as collateral for the loans are not sufficient
to repay the loans in full. As of March 31, 2003, we had
loans receivable in the net amount of $19.2 million which
were collateralized by 933,000 shares of Summits
common stock valued at $17.3 million. However, since the
loans are full recourse, we have the right to collect any
additional amount owed directly from the officer or employee to
the extent such officer or employee is able to pay such amount.



|    |                           
|--- | --------------------------
|13. | DIVIDEND REINVESTMENT PLAN

Summit has a dividend reinvestment and direct
stock purchase plan (DRIP). Direct stock purchases
under the DRIP were suspended effective October 31, 2002
and dividend reinvestment under the DRIP was suspended effective
November 15, 2002. The DRIP provided both new investors and
existing shareholders of Summits stock with a method to
purchase shares of common stock and/or the ability for those
shareholders to designate all, a portion or none of the cash
dividends on shares of Summits common stock owned for
reinvestment in more shares of common stock. On May 1,
2003, Summit filed a registration statement under which it
registered an additional 4.0 million shares that may be
issued under the DRIP when Summit resumes operation of the plan.



|    |                  
|--- | -----------------
|14. | SUBSEQUENT EVENTS

On April 15, 2003, we sold an apartment
community formerly known as Summit Turtle Rock (250 apartment
homes) located in San Antonio, Texas for $18.3 million
as part of our strategy to exit our non-core markets. The net
proceeds of $8.0 million (net of a prepayment penalty on
early extinguishment of debt) were placed into escrow in
accordance with like-kind exchange rules and regulations and are
expected to be used to fund development and/or acquisition
activities. We expect to recognize a gain on the disposition of
Summit Turtle Rock.

On May 6, 2003, we purchased certain assets
of Brickell Grand Inc. including the community known as Summit
Brickell, certain real estate assets and a note receivable from
the developer, for $59.4 million using a combination of
proceeds from the sale of communities which were held in escrow
with a qualified intermediary in accordance with like-kind
exchange income tax rules and regulations, and borrowings under
our unsecured credit facility. The developer is entitled to
receive bonus payments based on the operating performance of the
community during any period of six months selected by the seller
and ending no later than December 31, 2005. Such bonus
payments will be applied to the note receivable and any unpaid
amounts under the note receivable are due and payable on
February 15, 2006. At the time of purchase, Summit Brickell
was subject to a claim of lien in the amount of $4.1 million
filed by the general contractor. Brickell Grand Inc. has
assigned all of its potential counterclaims against the general
contractor to us. We expect to negotiate a final settlement of
the lien and any counterclaims with the general contractor. No
assurance can be given that a resolution will be reached in a
timely manner. Once resolved, we expect to satisfy the lien
obligation, if any, using borrowings under our unsecured credit
facility.

17



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##### 





|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Unless the context otherwise requires, all
references to we, our or us
in this report refer collectively to Summit Properties
Partnership, L.P., a Delaware limited partnership (the
Operating Partnership), and its subsidiaries. All
references to Summit in this report refer to Summit
Properties Inc., a Maryland corporation and the sole general
partner of the Operating Partnership.

FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements
within the meaning of Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. You can identify
forward-looking statements by the use of the words
believe, expect, anticipate,
intend, estimate, may,
assume and other similar expressions which predict
or indicate future events and trends and which do not relate to
historical matters. In addition, information concerning the
following are forward-looking statements:



|  |                                                                                                                                                                                                       
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | the future operating performance of stabilized
    communities;                                                                                                                                       
| 
| | expected national and regional economic and real
    estate market conditions;                                                                                                                        
| 
| | the proposed development, acquisition or
    disposition of communities, including our strategy to exit our
    Texas markets and increase our presence in Washington, D.C.
    and Southeast Florida;
| 
| | anticipated construction commencement,
    completion, lease-up and stabilization dates; and                                                                                                          
| 
| | estimated development costs.                                                                                                                                                                          

You should not rely on forward-looking statements
because they involve known and unknown risks, uncertainties and
other factors, some of which are beyond our control. These
risks, uncertainties and other factors may cause our actual
results, performance or achievements to be materially different
from the anticipated future results, performance or achievements
expressed or implied by the forward-looking statements. Factors
which could have a material adverse effect on our operations and
future prospects include, but are not limited to:



|  |                                                                                                                                                                                                                                                                                                                                       
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | economic conditions generally and the real estate
    market specifically, including changes in occupancy rates,
    market rents and rental rate concessions, the continuing
    deceleration of economic conditions in our markets, and the
    failure of national and local economic conditions to rebound in
    a timely manner;
| 
| | changes in job growth, household formation and
    population growth in our markets;                                                                                                                                                                                                                                                  
| 
| | uncertainties associated with our development
    activities, including the failure to obtain zoning and other
    approvals, actual costs exceeding our budgets, construction
    material defects and increases in construction costs;                                                                                              
| 
| | the failure of investments to yield expected
    results;                                                                                                                                                                                                                                                                             
| 
| | the failure to sell communities marketed for
    sale, including our Texas communities, or to sell these
    communities in a timely manner or on favorable terms;                                                                                                                                                                    
| 
| | the failure to locate favorable opportunities for
    investment in our core markets;                                                                                                                                                                                                                                                 
| 
| | construction delays due to the unavailability of
    materials, weather conditions or other delays;                                                                                                                                                                                                                                   
| 
| | potential environmental liabilities and related
    property damages, costs of investigation and remediation, and
    liability to third parties;                                                                                                                                                                                     
| 
| | competition, which could limit our ability to
    secure attractive investment opportunities, lease apartment
    homes, or increase or maintain rents;                                                                                                                                                                               
| 
| | supply and demand for apartment communities in
    our current market areas, especially our core markets described
    below;                                                                                                                                                                                                         

18



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##### 





|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | availability and cost of financing and access to
    cost-effective capital;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| 
| | the inability to refinance existing indebtedness
    or to refinance existing indebtedness on favorable terms;                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| 
| | changes in interest rates;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| 
| | legislative and regulatory changes, including
    changes to laws governing the taxation of real estate investment
    trusts (REITs);                                                                                                                                                                                                                                                                                                                                                                                                                                      
| 
| | changes in accounting principles generally
    accepted in the United States of America (GAAP), or
    policies and guidelines applicable to REITs; and                                                                                                                                                                                                                                                                                                                                                                                                                     
| 
| | those factors discussed below and in the sections
    entitled Results of Operations for the Three Months Ended
    March 31, 2003 and 2002 on page 21 of this
    report, Operating Performance of Our Same-Property
    Communities beginning on page 23 of this report,
    Operating Performance of Our Communities in Lease-up
    beginning on page 25 of this report, Factors
    Affecting the Performance of Our Development Communities
    beginning on page 30 of this report and Commitments
    and Contingencies beginning on page 31 of this report.

You should consider these risks and uncertainties
in evaluating forward-looking statements and you should not
place undue reliance on forward-looking statements. These
forward-looking statements represent our estimates and
assumptions only as of the date of this report. We do not
undertake to update these forward-looking statements. You should
read the following discussion in conjunction with our unaudited
consolidated financial statements and notes, which accompany
this report, and our audited financial statements for the year
ended December 31, 2002 and the related notes included in
our Annual Report on Form 10-K.

We focus on the operation, development and
acquisition of primarily Class A luxury
apartment communities located throughout the Southeast and
Mid-Atlantic United States, as well as in Texas. We focus our
efforts in five core markets consisting of Atlanta, Charlotte,
Raleigh, Southeast Florida and Washington, D.C. While we
currently operate in Texas as well, we intend to exit our Texas
markets and use the sales proceeds from those communities
primarily to increase our presence in the Southeast Florida and
Washington, D.C. markets. Because we focus on five core
markets, changes in local economic and market conditions in
these markets may significantly affect our current operations
and future prospects.

CRITICAL ACCOUNTING POLICIES

We prepare our financial statements in accordance
with GAAP. A summary of our significant accounting policies is
disclosed in Note 3 to our consolidated financial
statements included in our Annual Report on Form 10-K for
the year ended December 31, 2002. The preparation of
financial statements in conformity with GAAP requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those
estimates. As an owner, operator and developer of apartment
communities, our critical accounting policies are related to
rental revenue recognition, cost capitalization and asset
impairment evaluation.

We lease our residential properties under
operating leases with terms of generally one year or less.
Rental revenue is recognized on the accrual method of accounting
as earned, which is not materially different from revenue
recognition on a straight-line basis. We lease our office and
retail space under operating leases with terms ranging from two
to ten years. Rental revenue for office and retail space is
recognized on a straight-line basis over the lives of the
respective leases. It is our policy to reduce rental revenue by
the amount of rent receivable from those residents whose
payments are more than 30-days past due following move-out. We
have recorded an allowance for uncollectible rent in the
accompanying balance sheets for such items.

Expenditures directly related to the acquisition,
development and improvement of real estate assets are
capitalized at cost as land, buildings and improvements.
Improvements are categorized as either non-recurring or
recurring capitalized expenditures. Non-recurring capitalized
expenditures primarily consist of the cost of improvements such
as new garages, water submeters, gated security access and
improvements made in conjunction with renovations of apartment
homes. Excluding rehabilitations, recurring capitalized

19



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##### 



expenditures consist primarily of floor
coverings, furniture, appliances and equipment, and exterior
paint and carpentry. Repairs and maintenance, such as
landscaping maintenance, interior painting and cleaning and
supplies used in such activities, are expensed as incurred and
we do not accrue for such costs in advance.


We capitalize interest, the cost of our
development efforts directly related to apartment construction,
and certain operational costs for communities under construction
and in lease-up. Interest costs are capitalized in accordance
with Statement of Financial Accounting Standards
(SFAS) No. 34, Capitalization of Interest
Cost, based on the ratio of those units available for
rental to the total number of units in the community and
depreciated over the lives of the constructed assets. We
capitalize the cost of our development department efforts to
projects currently under construction, currently at a rate of
3.0% of such construction assets. Such costs are then
depreciated over the lives of the constructed assets upon their
completion. We treat each unit in an apartment community
separately for capitalization and expense recognition purposes.
This results in a proration of interest and operational costs in
a development community between costs that are capitalized or
expensed. As units become available for their intended use, we
cease capitalization of interest and operational costs on those
units based on the ratio of those available for rental to the
total number of units in the community.

We capitalize pre-development costs incurred in
pursuit of development opportunities. These fees primarily
include legal and design fees and related overhead costs. In the
event that our team of executive officers comprising the Asset
Allocation Committee determines that it is not probable that we
will proceed with the pursuit of a particular development
project, we record a charge to expense to write down the project
to its estimated recoverable amount, if any.

We record our real estate assets at cost less
accumulated depreciation and, if there are indications that
impairment exists, adjust the carrying value of those assets in
accordance with SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets. Assets to be
disposed of are recorded at the lower of carrying amount or fair
value less cost to sell.

HISTORICAL RESULTS OF OPERATIONS

Our income from continuing operations is
generated primarily from operations of our apartment
communities. The changes in operating results from period to
period reflect changes in existing community performance and
changes in the number of apartment homes due to development,
acquisition, or disposition of communities. Where appropriate,
comparisons are made on a same-property communities
(which we formerly referred to as fully stabilized
communities), acquisition communities,
stabilized development communities,
communities in lease-up and disposition
communities basis in order to adjust for changes in the
number of apartment homes.

A community that we have acquired is deemed
same-property when we have owned it for one year or
more as of the beginning of the current year. A community that
we have developed is deemed same-property when
stabilized for at least one year as of the beginning of the
current year. A community is deemed to be a stabilized
development community when stabilized as of the beginning
of the current year but not the entire prior year. We consider a
community to be stabilized when it has attained a
physical occupancy level of at least 93%. An acquisition
community is one that was acquired less than twelve months
before the beginning of the current year. A community in
lease-up is defined as one that has commenced rental
operations but was not stabilized as of the beginning of the
current year.

A communitys average physical occupancy is
defined as the number of apartment homes occupied divided by the
total number of apartment homes contained in the community,
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. Average rent per occupied
apartment home represents collected rent per occupied apartment
home. Our methodology for calculating average physical occupancy
and average rent per occupied apartment home may differ from the
methodology used by other apartment companies and, accordingly,
may not be comparable to other apartment companies.

20



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##### 





| |                                                                             
| | ----------------------------------------------------------------------------
| | Results of Operations for the Three Months
    Ended March 31, 2003 and 2002

We have experienced weakening apartment
fundamentals due to the downturn in the national economy as well
as declining economic conditions in our core markets. Local
demand for apartment homes has deteriorated due to lower job
growth and/or more job losses, primary drivers of apartment
demand. This decrease in demand has led to lower rental rates
and higher concessions. Additionally, the favorable interest
rate environment has produced record home sales which, when
combined with the slowing economy, has depleted the number of
prospective residents. The favorable interest rate environment
has also provided the opportunity for developers to continue to
add to the supply of apartments in our core markets. Although
the current economic environment is unpredictable, we expect
these trends to continue throughout 2003.

Net income decreased to $9.0 million for the
three months ended March 31, 2003 to $9.1 million for the
three months ended March 31, 2002. Income from continuing
operations decreased to $5.5 million for the three months
ended March 31, 2003 from $6.2 million for the three
months ended March 31, 2002. The decrease is primarily due
to a reduction in property operating income from continuing
operations of $593,000. Property operating income is defined as
rental and other property revenues less property operating and
maintenance expense.

We believe that property operating income is a
meaningful measure for an investors analysis of community
performance as it represents the most consistent, comparable
operating performance among our communities. Depreciation is a
fixed cost not controllable by our property management staff and
not all communities are encumbered by financing instruments.
Therefore, all property operating and maintenance expense
amounts in this Managements Discussion and Analysis
section are presented before depreciation, interest and
amortization. You should not consider property operating income
as an alternative to net income (determined in accordance with
GAAP) as an indication of our financial performance or as an
alternative to cash flows from operating activities (determined
in accordance with GAAP) as a measure of our liquidity. Our
calculation of property operating income may differ from the
methodology and definition used by other apartment companies
and, accordingly, may not be comparable to similarly entitled
measures used by other apartment companies.

Operating Performance of Our Portfolio of
Communities

A summary of our apartment homes (excluding
unconsolidated joint ventures) for the three months ended
March 31, 2003 and 2002 is as follows:

|                                                                 |  |      |        |      |  |  |        | 
|---------------------------------------------------------------- |  | ---- | ------ | ---- |  |  | ------ | 
|                                                                 |  | 2003 |        | 2002
|                                                                 |  |      |        |     
|Apartment homes at January 1 of the year                         |  |      | 15,428 |      |  |  | 16,739 | 
|Apartment homes sold during the period                           |  |      | (240   | )    |  |  |       | 
|Developments which began rental operations during
    the period |  |      | 502    |      |  |  | 761    | 
|                                                                 |  |      |        |      |  |  |        | 
|Apartment homes at March 31 of the year                          |  |      | 15,690 |      |  |  | 17,500 | 
|                                                                 |  |      |        |      |  |  |        | 

21



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##### 



The operating performance of our communities
(inclusive of continuing and discontinued operations and
excluding unconsolidated joint ventures) for the three months
ended March 31, 2003 and 2002 and a reconciliation of
property operating income to net income is summarized below
(dollars in thousands):

|                                                                               |                                    |                              |        |        |  |          |        |        |   |  |        |        |  
|------------------------------------------------------------------------------ | ---------------------------------- | ---------------------------- | ------ | ------ |  | -------- | ------ | ------ | - |  | ------ | ------ | -
|                                                                               |                                    |                             
|                                                                               |                                    | Three Months Ended March 31,
|                                                                               |                                    |                             
|                                                                               |                                    | 2003                         |        | 2002   |  | % Change
|                                                                               |                                    |                              |        |        |  |         
|Property revenues:                                                             |                                    |                              |        |        |  |          |        |        |   |  |        |       
|                                                                               | Same-property communities          |                              | $      | 33,507 |  |          | $      | 35,595 |   |  |        | -5.9   | %
|                                                                               | Acquisition communities            |                              |        | 584    |  |          |        |       |   |  |        | 100.0  | %
|                                                                               | Stabilized development communities |                              |        | 3,258  |  |          |        | 2,308  |   |  |        | 41.2   | %
|                                                                               | Communities in lease-up            |                              |        | 1,822  |  |          |        | 40     |   |  |        | 4455.0 | %
|                                                                               | Disposition communities            |                              |        | 427    |  |          |        | 6,923  |   |  |        | -93.8  | %
|                                                                               |                                    |                              |        |        |  |          |        |        |   |  |        |       
|Total property revenues                                                        |                                    |                              | 39,598 |        |  |          | 44,866 |        |   |  | -11.7  | %     
|                                                                               |                                    |                              |        |        |  |          |        |        |   |  |        |       
|Property operating and maintenance expenses:                                   |                                    |                              |        |        |  |          |        |        |   |  |        |       
|                                                                               | Same-property communities          |                              |        | 12,733 |  |          |        | 12,140 |   |  |        | 4.9    | %
|                                                                               | Acquisition communities            |                              |        | 250    |  |          |        |       |   |  |        | 100.0  | %
|                                                                               | Stabilized development communities |                              |        | 1,057  |  |          |        | 977    |   |  |        | 8.2    | %
|                                                                               | Communities in lease-up            |                              |        | 788    |  |          |        | 90     |   |  |        | 775.6  | %
|                                                                               | Disposition communities            |                              |        | 174    |  |          |        | 2,350  |   |  |        | -92.6  | %
|                                                                               |                                    |                              |        |        |  |          |        |        |   |  |        |       
|Total property operating and maintenance expense                               |                                    |                              | 15,002 |        |  |          | 15,557 |        |   |  | -3.6   | %     
|                                                                               |                                    |                              |        |        |  |          |        |        |   |  |        |       
|Property operating income (loss):                                              |                                    |                              |        |        |  |          |        |        |   |  |        |       
|                                                                               | Same-property communities          |                              |        | 20,774 |  |          |        | 23,455 |   |  |        | -11.4  | %
|                                                                               | Acquisition communities            |                              |        | 334    |  |          |        |       |   |  |        | 100.0  | %
|                                                                               | Stabilized development communities |                              |        | 2,201  |  |          |        | 1,331  |   |  |        | 65.4   | %
|                                                                               | Communities in lease-up            |                              |        | 1,034  |  |          |        | (50    | ) |  |        | 2168.0 | %
|                                                                               | Disposition communities            |                              |        | 253    |  |          |        | 4,573  |   |  |        | -94.5  | %
|                                                                               |                                    |                              |        |        |  |          |        |        |   |  |        |       
|Total property operating income                                                |                                    |                              | 24,596 |        |  |          | 29,309 |        |   |  | -16.1  | %     
|Interest and other income                                                      |                                    |                              | 1,007  |        |  |          | 639    |        |   |  | 57.6   | %     
|Depreciation expense (continuing and discontinued
    operations)              |                                    |                              | (9,686 | )      |  |          | (9,777 | )      |   |  | -0.9   | %     
|Interest and amortization expense (continuing and
    discontinued operations) |                                    |                              | (8,129 | )      |  |          | (9,364 | )      |   |  | -13.2  | %     
|General and administrative expense                                             |                                    |                              | (1,600 | )      |  |          | (1,757 | )      |   |  | -8.9   | %     
|(Loss) income on equity investments                                            |                                    |                              | (354   | )      |  |          | 85     |        |   |  | -516.5 | %     
|Gain on sale of real estate assets                                             |                                    |                              | 3,136  |        |  |          |       |        |   |  | 100.0  | %     
|                                                                               |                                    |                              |        |        |  |          |        |        |   |  |        |       
|Net income                                                                     |                                    | $                            | 8,970  |        |  | $        | 9,135  |        |   |  | -1.8   | %     
|                                                                               |                                    |                              |        |        |  |          |        |        |   |  |        |       

22



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##### 



Operating Performance of Our Same-Property
Communities

The operating performance of our same-property
communities for the three months ended March 31, 2003 and
2002 is summarized below (dollars in thousands, except average
rent per occupied apartment home):

|                                                  |                                  |                              |        |        |  |          |        |        |  |  |       |       |  
|------------------------------------------------- | -------------------------------- | ---------------------------- | ------ | ------ |  | -------- | ------ | ------ |  |  | ----- | ----- | -
|                                                  |                                  |                             
|                                                  |                                  | Three Months Ended March 31,
|                                                  |                                  |                             
|                                                  |                                  | 2003                         |        | 2002   |  | % Change
|                                                  |                                  |                              |        |        |  |         
|Property revenues:                                |                                  |                              |        |        |  |          |        |        |  |  |       |      
|                                                  | Rental                           |                              | $      | 31,361 |  |          | $      | 33,183 |  |  |       | -5.5  | %
|                                                  | Other                            |                              |        | 2,146  |  |          |        | 2,412  |  |  |       | -11.0 | %
|                                                  |                                  |                              |        |        |  |          |        |        |  |  |       |      
|Total property revenues                           |                                  |                              | 33,507 |        |  |          | 35,595 |        |  |  | -5.9  | %    
|                                                  |                                  |                              |        |        |  |          |        |        |  |  |       |      
|Property operating and maintenance expenses:      |                                  |                              |        |        |  |          |        |        |  |  |       |      
|                                                  | Personnel                        |                              |        | 2,714  |  |          |        | 2,633  |  |  |       | 3.1   | %
|                                                  | Advertising and promotion        |                              |        | 458    |  |          |        | 450    |  |  |       | 1.8   | %
|                                                  | Utilities                        |                              |        | 1,776  |  |          |        | 1,690  |  |  |       | 5.1   | %
|                                                  | Building repairs and maintenance |                              |        | 1,599  |  |          |        | 1,477  |  |  |       | 8.2   | %
|                                                  | Real estate taxes and insurance  |                              |        | 4,634  |  |          |        | 4,347  |  |  |       | 6.6   | %
|Property supervision                              |                                  |                              | 1,078  |        |  |          | 992    |        |  |  | 8.7   | %    
|                                                  | Other operating expense          |                              |        | 474    |  |          |        | 551    |  |  |       | -13.9 | %
|                                                  |                                  |                              |        |        |  |          |        |        |  |  |       |      
|Total property operating and maintenance expenses |                                  |                              | 12,733 |        |  |          | 12,140 |        |  |  | 4.9   | %    
|                                                  |                                  |                              |        |        |  |          |        |        |  |  |       |      
|Property operating income                         |                                  | $                            | 20,774 |        |  | $        | 23,455 |        |  |  | -11.4 | %    
|                                                  |                                  |                              |        |        |  |          |        |        |  |  |       |      
|Average physical occupancy                        |                                  |                              | 94.4   | %      |  |          | 93.4   | %      |  |  | 1.0   | %    
|                                                  |                                  |                              |        |        |  |          |        |        |  |  |       |      
|Average rent per occupied apartment home          |                                  | $                            | 892    |        |  | $        | 948    |        |  |  | -5.9  | %    
|                                                  |                                  |                              |        |        |  |          |        |        |  |  |       |      
|Number of apartment homes                         |                                  |                              | 12,761 |        |  |          | 12,761 |        |  |  |       |      
|                                                  |                                  |                              |        |        |  |          |        |        |  |  |       |      
|Number of apartment communities                   |                                  |                              | 41     |        |  |          | 41     |        |  |  |       |      
|                                                  |                                  |                              |        |        |  |          |        |        |  |  |       |      

For the three-month period ended March 31,
2003, property revenues declined due to weakening fundamentals
in our markets primarily driven by (a) a decline in job
growth and/or an increase in job losses, (b) the growth of
the single family home market in the low interest rate
environment causing apartments to re-price at lower rates to
remain competitive, (c) residents leaving our communities
to purchase homes in the low interest rate environment, and
(d) new supply of apartment homes added to our core markets
by builders benefiting from low interest rates. Concessions at
our same-property communities increased by $1.2 million, or
32.0% in 2003 when compared to 2002. The current level of
concessions offered to residents in our markets during the
quarter ranged from zero to three months of free rent, and we
expect concessions to continue throughout 2003.

Repairs and maintenance expenses increased
$122,000, or 8.2%, and utility costs increased by $86,000, or
5.1% in 2003 when compared to 2002 primarily due to winter
weather related repair and cleanup costs. Insurance costs
increased by $266,000, or 89.7% during the three months ended
March 31, 2003 when compared to the same period in 2002 due
to an increase in insurance rates with our May 2002 renewal as
well as obtaining terrorism insurance on certain of our
communities. As a percentage of total property revenue, total
property operating and maintenance expenses increased to 38.0%
for the three months ended March 31, 2003 from 34.1% for
the three months ended March 31, 2002. We expect that
property operating income for our same-property pool of
communities may continue to decline for the remainder of 2003
based on what we believe to be reasonable assumptions as to
future economic conditions and the quantity of competitive
supply expected in our markets. However, there can be no
assurance that actual results will not differ from this
assumption, especially due to the unpredictable nature of the
current economy.

23



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##### 



Operating Performance of Our Acquisition
Community

On July 1, 2002, we acquired a stabilized,
luxury apartment community in the Galleria sub-market of Dallas,
Texas for cash in the amount of $17.7 million. The
community, known as Summit San Raphael, was constructed in
1999. The operating performance of Summit San Raphael for
the three months ended March 31, 2003 and 2002 is
summarized below (dollars in thousands, except average rent per
occupied apartment home):

|                                            |        |              |      |      |  |   |   |   | 
|------------------------------------------- | ------ | ------------ | ---- | ---- |  | - | - | - | 
|                                            |        |             
|                                            |        | Three Months
|                                            |        | Ended       
|                                            |        | March 31,   
|                                            |        |             
|                                            |        | 2003         |      | 2002
|                                            |        |              |      |     
|Property revenues:                          |        |              |      |      |  |   |   |  
|                                            | Rental |              | $    | 559  |  |   | $ |  | 
|                                            | Other  |              |      | 25   |  |   |   |  | 
|                                            |        |              |      |      |  |   |   |  
|Total property revenues                     |        |              | 584  |      |  |   |  |  
|Property operating and maintenance expenses |        |              | 250  |      |  |   |  |  
|                                            |        |              |      |      |  |   |   |  
|Property operating income                   |        | $            | 334  |      |  | $ |  |  
|                                            |        |              |      |      |  |   |   |  
|Average physical occupancy                  |        |              | 98.5 | %    |  |   |  |  
|                                            |        |              |      |      |  |   |   |  
|Average rent per occupied apartment home    |        | $            | 858  |      |  |   |  |  
|                                            |        |              |      |      |  |   |   |  
|Number of apartment homes                   |        |              | 222  |      |  |   |  |  
|                                            |        |              |      |      |  |   |   |  

Operating Performance of Our Stabilized
Development Communities

Summit Crest, Summit Overlook, Summit Peachtree
and Summit Shiloh are considered stabilized development
communities as of March 31, 2003. The operating performance
of these four communities for the three months ended
March 31, 2003 and 2002 is summarized below (dollars in
thousands, except average rent per occupied apartment home):

|                                            |        |                 |       |       |  |   |       |       | 
|------------------------------------------- | ------ | --------------- | ----- | ----- |  | - | ----- | ----- | 
|                                            |        |                
|                                            |        | Three Months   
|                                            |        | Ended March 31,
|                                            |        |                
|                                            |        | 2003            |       | 2002 
|                                            |        |                 |       |      
|Property revenues:                          |        |                 |       |       |  |   |       |      
|                                            | Rental |                 | $     | 3,088 |  |   | $     | 2,143 | 
|                                            | Other  |                 |       | 170   |  |   |       | 165   | 
|                                            |        |                 |       |       |  |   |       |      
|Total property revenues                     |        |                 | 3,258 |       |  |   | 2,308 |      
|Property operating and maintenance expenses |        |                 | 1,057 |       |  |   | 977   |      
|                                            |        |                 |       |       |  |   |       |      
|Property operating income                   |        | $               | 2,201 |       |  | $ | 1,331 |      
|                                            |        |                 |       |       |  |   |       |      
|Average physical occupancy                  |        |                 | 95.4  | %     |  |   | 64.4  | %    
|                                            |        |                 |       |       |  |   |       |      
|Average rent per occupied apartment home    |        | $               | 780   |       |  | $ | 813   |      
|                                            |        |                 |       |       |  |   |       |      
|Number of apartment homes                   |        |                 | 1,389 |       |  |   | 1,389 |      
|                                            |        |                 |       |       |  |   |       |      

24



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##### 



Operating Performance of Our Communities in
Lease-up

A summary of the five communities in lease-up
during the three months ended March 31, 2003 is as follows
(dollars in thousands):

|                                            |  |           |       |           |  |              |         |               |  |           |         |           |  |  |         |  |  |  |       |  |  |  |       | 
|------------------------------------------- |  | --------- | ----- | --------- |  | ------------ | ------- | ------------- |  | --------- | ------- | --------- |  |  | ------- |  |  |  | ----- |  |  |  | ----- | 
|                                            |  |           |       |           |  |              |         |               |  | First     |         |          
|                                            |  |           |       |           |  |              |         |               |  | Quarter   |         |          
|                                            |  |           |       | Total     |  | Actual/      |         |               |  | 2003      |         | % Leased 
|                                            |  | Number of |       | Actual/   |  | Anticipated  |         |               |  | Average   |         | as of    
|                                            |  | Apartment |       | Estimated |  | Construction |         | Anticipated   |  | Physical  |         | March 31,
|Community                                   |  | Homes     |       | Cost      |  | Completion   |         | Stabilization |  | Occupancy |         | 2003     
|                                            |  |           |       |           |  |              |         |               |  |           |         |          
|Summit Brookwood  Atlanta, GA              |  |           | 359   |           |  | $            | 44,536  |               |  |           | Q4 2002 |           |  |  | Q3 2003 |  |  |  | 62.0% |  |  |  | 76.6% | 
|Summit Grand Parc 
    Washington, D.C.(1) |  |           | 105   |           |  |              | 43,508  |               |  |           | Q4 2002 |           |  |  | Q3 2003 |  |  |  | 12.7% |  |  |  | 30.5% | 
|Summit Valleybrook  Philadelphia, PA       |  |           | 352   |           |  |              | 37,579  |               |  |           | Q4 2002 |           |  |  | Q3 2003 |  |  |  | 61.0% |  |  |  | 70.7% | 
|Summit Roosevelt  Washington,
    D.C.     |  |           | 198   |           |  |              | 46,254  |               |  |           | Q1 2003 |           |  |  | Q1 2004 |  |  |  | 10.3% |  |  |  | 24.2% | 
|Summit Stockbridge  Atlanta, GA(2)         |  |           | 304   |           |  |              | 23,600  |               |  |           | Q3 2003 |           |  |  | Q2 2004 |  |  |  | 18.7% |  |  |  | 35.0% | 
|                                            |  |           |       |           |  |              |         |               |  |           |         |           |  |  |         |  |  |  |       |  |  |  |       | 
|                                            |  |           | 1,318 |           |  | $            | 195,477 |               |  |           |         |           |  |  |         |  |  |  |       |  |  |  |       | 
|                                            |  |           |       |           |  |              |         |               |  |           |         |           |  |  |         |  |  |  |       |  |  |  |       | 



---



|    |                                                                                                                                                                                                                                                                                                                                  
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Summit Grand Parc was completed during the fourth
    quarter of 2002. Stabilization, occupancy and percent leased
    information in the table above represents data for the apartment
    homes only. The 12,500 square feet of commercial space at
    Summit Grand Parc was 86% leased and occupied as of
    March 31, 2003.
|   
|(2) | The related assets of this property are included
    in the Construction in progress category as of
    March 31, 2003.                                                                                                                                                                                                        

The actual stabilization dates for our
communities in lease-up may be later than anticipated if
economic conditions in the relevant markets continue to decline
or do not recover in a timely manner. The rental rates that we
charge may also be less than expected, and we may need to
continue to offer rent concessions to residents.

The operating performance of our lease-up
communities for the three months ended March 31, 2003 and
2002 is summarized below (dollars in thousands):

|                                            |        |                 |       |       |  |   |       |    | 
|------------------------------------------- | ------ | --------------- | ----- | ----- |  | - | ----- | -- | 
|                                            |        |                
|                                            |        | Three Months   
|                                            |        | Ended March 31,
|                                            |        |                
|                                            |        | 2003            |       | 2002 
|                                            |        |                 |       |      
|Property revenues:                          |        |                 |       |       |  |   |       |   
|                                            | Rental |                 | $     | 1,709 |  |   | $     | 12 | 
|                                            | Other  |                 |       | 113   |  |   |       | 28 | 
|                                            |        |                 |       |       |  |   |       |   
|Total property revenues                     |        |                 | 1,822 |       |  |   | 40    |   
|Property operating and maintenance expenses |        |                 | 788   |       |  |   | 90    |   
|                                            |        |                 |       |       |  |   |       |   
|Property operating income (loss)            |        | $               | 1,034 |       |  | $ | (50   | ) 
|                                            |        |                 |       |       |  |   |       |   
|Number of apartment homes                   |        |                 | 1,318 |       |  |   | 1,318 |   
|                                            |        |                 |       |       |  |   |       |   

Operating Performance of Our Disposition
Communities

During the three months ended March 31,
2003, we sold one apartment community formerly known as Summit
Fairways (240 apartment homes) located in Orlando, Florida
for $18.8 million. The information in the table below
represents operating results for the three months ended
March 31, 2003 and 2002 for the former Summit Fairways. The
information in the table below for the three months ended
March 31, 2002 also represents operating results for the
former Summit Breckenridge, Summit New Albany, Summit Pike Creek,

25



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##### 



Summit Mayfaire, Summit Stonefield, Summit
Meadow, Summit Sand Lake and Summit Windsor communities, all of
which were sold during 2002 (dollars in thousands).


|                                            |                        |                 |     |      |  |   |       |       | 
|------------------------------------------- | ---------------------- | --------------- | --- | ---- |  | - | ----- | ----- | 
|                                            |                        |                
|                                            |                        | Three Months   
|                                            |                        | Ended March 31,
|                                            |                        |                
|                                            |                        | 2003            |     | 2002
|                                            |                        |                 |     |     
|Property revenues:                          |                        |                 |     |      |  |   |       |      
|                                            | Rental revenues        |                 | $   | 389  |  |   | $     | 6,457 | 
|                                            | Other property revenue |                 |     | 38   |  |   |       | 466   | 
|                                            |                        |                 |     |      |  |   |       |      
|Total property revenues                     |                        |                 | 427 |      |  |   | 6,923 |      
|Property operating and maintenance expenses |                        |                 | 174 |      |  |   | 2,350 |      
|                                            |                        |                 |     |      |  |   |       |      
|Property operating income                   |                        | $               | 253 |      |  | $ | 4,573 |      
|                                            |                        |                 |     |      |  |   |       |      
|Number of apartment homes                   |                        |                 | 240 |      |  |   | 2,639 |      
|                                            |                        |                 |     |      |  |   |       |      

On April 15, 2003, we sold an apartment
community formerly known as Summit Turtle Rock (250 apartment
homes) located in San Antonio, Texas for $18.3 million
as part of our strategy to exit our non-core markets. The net
proceeds of $8.0 million (net of a prepayment penalty on
early extinguishment of debt) were placed into escrow in
accordance with like-kind exchange rules and regulations and are
expected to be used to fund development and/or acquisition
activities. We expect to recognize a gain on the disposition of
Summit Turtle Rock.

Operating Performance of Summit Management
Company

We own 1% of the voting stock and 99% of the
non-voting stock of Summit Management Company (the
Management Company). The remaining 99% of voting
stock and 1% of non-voting stock are held by one of the
Co-Chairmen of Summits Board of Directors. As a result of
this stock ownership, we have a 99% economic interest and the
Co-Chairman has a 1% economic interest in the Management
Company. Because of our ability to exercise significant
influence, the Management Company is accounted for under the
equity method of accounting.

The operating performance of the Management
Company and its wholly-owned subsidiary, Summit Apartment
Builders, Inc., for the three months ended March 31, 2003
and 2002 is summarized below (in thousands):

|                  |                                                           |                              |      |       |       |          |    |       |       |  |          |        |       | 
|----------------- | --------------------------------------------------------- | ---------------------------- | ---- | ----- | ----- | -------- | -- | ----- | ----- |  | -------- | ------ | ----- | 
|                  |                                                           |                             
|                  |                                                           | Three Months Ended March 31,
|                  |                                                           |                             
|                  |                                                           | 2003                         |      | 2002  |       | % Change
|                  |                                                           |                              |      |       |       |         
|Revenues:         |                                                           |                              |      |       |       |          |    |       |       |  |          |       
|                  | Management fees charged to Operating Partnership          |                              | $    | 1,390 |       |          | $  | 1,520 |       |  |          | -8.6%  |      
|                  | Third-party management fee revenue                        |                              |      | 170   |       |          |    | 210   |       |  |          | -19.0% |      
|                  | Construction revenue charged to Operating
    Partnership |                              |      | 442   |       |          |    | 502   |       |  |          | -12.0% |      
|                  | Other revenue                                             |                              |      | 137   |       |          |    | 75    |       |  |          | 82.7%  |      
|                  |                                                           |                              |      |       |       |          |    |       |       |  |          |       
|                  |                                                           | Total revenue                |      |       | 2,139 |          |    |       | 2,307 |  |          |        | -7.3% | 
|                  |                                                           |                              |      |       |       |          |    |       |       |  |          |       
|Expenses:         |                                                           |                              |      |       |       |          |    |       |       |  |          |       
|                  | Operating                                                 |                              |      | 2,104 |       |          |    | 2,061 |       |  |          | 2.1%   |      
|                  | Depreciation                                              |                              |      | 163   |       |          |    | 77    |       |  |          | 111.7% |      
|                  | Amortization                                              |                              |      | 62    |       |          |    | 73    |       |  |          | -15.1% |      
|                  | Interest                                                  |                              |      | 75    |       |          |    | 75    |       |  |          | 0.0%   |      
|                  |                                                           |                              |      |       |       |          |    |       |       |  |          |       
|                  |                                                           | Total expenses               |      |       | 2,402 |          |    |       | 2,286 |  |          |        | 5.2%  | 
|                  |                                                           |                              |      |       |       |          |    |       |       |  |          |       
|Net (loss) income |                                                           | $                            | (265 | )     |       | $        | 21 |       |       |  | -1361.9% |       
|                  |                                                           |                              |      |       |       |          |    |       |       |  |          |       

26



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##### 



The decrease in management fees charged to our
communities is primarily due to the absence in 2003 of
management fees earned from communities disposed during 2002 of
$178,000 offset by an increase in the amount charged to our
communities for management fees from 2.75% to the greater of
3.0% of community collections or $25 per unit per month,
resulting in an approximate $49,000 increase in management fees.
All of the construction revenue during the three months ended
March 31, 2003 and 2002 was from contracts with us.
Construction revenue declined for the three months ended
March 31, 2003 when compared to the same period in 2002 due
to a reduction in our development activity. We have curtailed,
and may continue to curtail, our development efforts to increase
our financial flexibility in the current economic environment.

Property management fees from third parties as a
percentage of total property management revenues were 10.9% and
12.1% for the three months ended March 31, 2003 and 2002.
The decrease is due to a decrease in the number of third party
apartment homes managed during the three months ended
March 31, 2003 when compared to the three months ended
March 31, 2002.

Other Income and Expenses

Interest income increased by $209,000, or 41.2%,
to $716,000 for the three months ended March 31, 2003 when
compared to the same period in 2002 primarily due to an increase
in interest earned on cash balances held with qualified
intermediaries in accordance with like-kind exchange income tax
rules and regulations.

Other income increased by $159,000, or 120.4%, to
$291,000 for the three months ended March 31, 2003 when
compared to the same period in 2002 primarily due to a
settlement received in connection with a pursuit opportunity
which did not come to fruition.

Interest expense decreased by $961,000, or 12.2%,
to $6.9 million for the three months ended March 31,
2003 when compared with the same period in 2002. This decrease
was primarily due to a decrease of 0.58% in our average interest
rate and a decrease of $21.8 million in average
indebtedness outstanding for the three months ended
March 31, 2003 when compared to the same period in 2002.

General and administrative expenses decreased by
$157,000, or 8.9%, to $1.6 million for the three months
ended March 31, 2003 as compared to the same period in
2002. The decrease was primarily the result of a decrease in the
amount recorded for abandoned pursuit projects of $242,000
during the three months ended March 31, 2003 when compared
to the same period in 2002. This decrease in abandoned pursuit
project costs is due to the fact that we are curtailing, and may
continue to curtail, our development efforts to increase our
financial flexibility in the current economic environment. As a
percentage of revenues, general and administrative expenses were
3.9% and 3.8% for the three months ended March 31, 2003 and
2002.

Liquidity and Capital Resources



| |          
| | ---------
| | Liquidity

Our net cash provided by operating activities
decreased to $12.4 million for the three months ended
March 31, 2003 from $15.7 million for the same period
in 2002 primarily due to a $763,000 decrease in income from
continuing operations and an increase in the amount of cash used
for payment of other asset items of $2.0 million.

Net cash provided by investing activities was
$3.0 million during the three months ended March 31,
2003 and cash used in investing activities was
$26.4 million for the three months ended March 31,
2002. The increase in cash provided by investing activities is
primarily due to a decrease in cash used for the construction of
real estate assets and land acquisitions of $8.7 million
and an increase in proceeds from the sale of real estate
communities of $19.7 million. Sale proceeds from certain of
the communities sold during 2002 were placed in escrow in
accordance with like-kind exchange income tax rules and
regulations. In addition to cash proceeds received in connection
with the 2003 disposition which were not placed in escrow in
accordance with like-kind exchange income tax rules and
regulations, proceeds from the sale of communities represent
funds expended from these like-kind exchange escrows. In the
event proceeds from these property sales are not fully invested
in qualified like-kind property during the required time period,
a special distribution may be made or company-level tax may be
incurred.

27



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##### 



Net cash used in financing activities was
$15.4 million for the three months ended March 31,
2003. Net cash provided by financing activities was
$11.1 million for the three months ended March 31,
2002. The increase in cash used in financing activities is
primarily the result of a reduction in net borrowings on our
unsecured credit facility of $51.0 million and a
$7.5 million increase in cash used to repurchase shares of
Summits common stock offset by an increase in proceeds
from the issuance of mortgage debt of $31.2 million.

Our outstanding indebtedness as of March 31,
2003 totaled $707.0 million. This amount included
$298.1 million of fixed rate conventional mortgages,
$267.0 million of fixed rate unsecured notes,
$120.0 million under our unsecured credit facility,
$10.3 million of variable rate tax-exempt bonds,
$6.9 million of variable rate mortgages, and
$4.7 million of fair value adjustments of hedged debt
instruments.

We expect to meet our liquidity requirements over
the next twelve months, including payments of dividends and
distributions as well as recurring capital expenditures relating
to maintaining our existing communities, primarily through our
working capital, net cash provided by operating activities,
proceeds from the disposition of certain communities and
borrowings under our unsecured credit facility.

We expect to meet our long-term liquidity
requirements, such as scheduled mortgage debt maturities,
property acquisitions, financing of development activities and
other non-recurring capital improvements, through the issuance
of unsecured notes and equity securities, from undistributed
cash flow, from borrowings under our unsecured credit facility,
from proceeds received from the disposition of certain
communities and, in connection with the acquisition of land or
improved property, through the issuance of common units. We
believe that we have adequate borrowing capacity and
accessibility to attractive disposition opportunities to fund
our long-term liquidity requirements.



| |                
| | ---------------
| | Credit Facility

We have a syndicated unsecured line of credit in
the amount of $225.0 million, which matures on
September 26, 2004. The credit facility provides funds for
new development, acquisitions and general working capital
purposes. Loans under the credit facility bear interest at LIBOR
plus 100 basis points. The spread component of the
aggregate interest rate will change in the event of an upgrade
or downgrade of our unsecured credit rating of BBB- by
Standard & Poors Rating Services and Baa3 by
Moodys Investors Service. Amounts are borrowed for thirty,
sixty or ninety day increments at the appropriate interest rates
for such time period. Therefore, amounts are borrowed and repaid
within those thirty, sixty or ninety day periods. The credit
facility is repayable monthly on an interest only basis with
principal due at maturity of each thirty, sixty or ninety day
increment. As of March 31, 2003, the outstanding balance of
the credit facility was $120.0 million.

The credit facility also provides a bid
sub-facility equal to a maximum of fifty percent of the total
facility ($112.5 million). This sub-facility provides us
with the choice to place borrowings in fixed LIBOR contract
periods of thirty, sixty, ninety and one hundred eighty days. We
may have up to seven fixed LIBOR contracts outstanding at any
one time. Upon proper notifications, all lenders participating
in the credit facility may, but are not obligated to,
participate in a competitive bid auction for these fixed LIBOR
contracts.

The credit agreement related to the credit
facility requires that we meet certain financial covenants at
the end of each fiscal quarter. We were in compliance with these
covenants as of March 31, 2003.



| |                  
| | -----------------
| | Medium-Term Notes

On April 20, 2000, we commenced a program
for the sale of up to $250.0 million aggregate principal
amount of medium-term notes (MTN) due nine months or more from
the date of issuance. We had MTNs with an aggregate principal
amount of $112.0 million outstanding in connection with the
MTN program as of March 31, 2003.

On May 29, 1998, we established a program
for the sale of up to $95.0 million aggregate principal
amount of medium-term notes due nine months or more from the
date of issuance. We had MTNs with an aggregate principal amount
of $25.0 million outstanding in connection with this MTN
program as of March 31, 2003. As a result of the
commencement of the $250.0 million MTN program, we cannot
issue any additional notes under the $95.0 million MTN
program.

28



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##### 





| |             
| | ------------
| | New Mortgage

On March 31, 2003, we obtained a
$31.2 million fixed rate mortgage note collateralized by
Summit Doral. This mortgage note bears interest at 5.17% and
matures on April 1, 2013. This loan requires monthly
principal and interest payments on a 30-year amortization
schedule with a balloon payment due at maturity.



| |                                 
| | --------------------------------
| | Derivative Financial Instruments

We are exposed to capital market risk, such as
changes in interest rates. To manage the volatility relating to
interest rate risk, we may enter into interest rate hedging
arrangements from time to time. We generally do not utilize
derivative financial instruments for trading or speculative
purposes.

On June 13, 2002, we terminated an interest
rate swap with a $30.0 million notional amount. Under
SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities, as amended, as a
result of the termination, we de-designated the
$30.0 million swap as a fair value hedge against certain
fixed rate debt. We will amortize as a reduction of interest
expense $1.5 million, which represents the difference
between the par value and carrying amount of the fixed-rate debt
obligation, over the remaining term of the debt obligation,
which matures on December 15, 2003.

On June 14, 2002, we entered into an
interest rate swap with a notional amount of $50.0 million,
relating to $50.0 million of 7.20% fixed rate notes issued
under our MTN program. Under the interest rate swap agreement,
through the maturity date of August 15, 2007, (a) we
have agreed to pay to the counterparty the interest on a
$50.0 million notional amount at a floating interest rate
of three-month LIBOR plus 241.75 basis points, and
(b) the counterparty has agreed to pay to us the interest
on the same notional amount at the fixed rate of the underlying
debt obligation. The floating rate as of March 31, 2003 was
3.7575%. The fair value of the interest rate swap was an asset
of $3.9 million as of March 31, 2003. The swap has
been designated as a fair value hedge of the underlying fixed
rate debt obligation and has been recorded in Other
assets in the accompanying balance sheets. We assume no
ineffectiveness as the interest rate swap meets the short-cut
method conditions required under SFAS No. 133 for fair
value hedges of debt instruments. Accordingly, no gains or
losses were recorded in income relative to our underlying debt
and interest rate swap.



| |                                
| | -------------------------------
| | Common Stock Repurchase Program

Summit has a common stock repurchase program,
originally approved by its Board of Directors in March 2000,
pursuant to which Summit is authorized to purchase up to
$56.0 million of currently issued and outstanding shares of
its common stock. All repurchases have been, and will be, made
on the open market at prevailing prices or in privately
negotiated transactions. This authority may be exercised from
time to time and in such amounts as market conditions warrant.
The following is a summary of stock repurchases under the common
stock repurchase program (dollars in thousands, except per share
amounts):

|                                  |                            |             |         |             |  |               |       |        |  |   |       |       | 
|--------------------------------- | -------------------------- | ----------- | ------- | ----------- |  | ------------- | ----- | ------ |  | - | ----- | ----- | 
|                                  |                            | Number of   |         | Value of    |  | Average Price
|                                  |                            | Shares      |         | Shares      |  | of Shares    
|                                  |                            | Repurchased |         | Repurchased |  | Repurchased  
|                                  |                            |             |         |             |  |              
|Year ended December 31, 2000      |                            |             | 279,400 |             |  | $             | 5,533 |        |  | $ | 19.80 |      
|Year ended December 31, 2001      |                            |             | 8,800   |             |  |               | 197   |        |  |   | 22.39 |      
|Year ended December 31, 2002      |                            |             | 151,300 |             |  |               | 2,666 |        |  |   | 17.62 |      
|Three months ended March 31, 2003 |                            |             | 422,200 |             |  |               | 7,471 |        |  |   | 17.70 |      
|                                  |                            |             |         |             |  |               |       |        |  |   |       |      
|                                  | Total as of March 31, 2003 |             |         | 861,700     |  |               | $     | 15,867 |  |   | $     | 18.41 | 
|                                  |                            |             |         |             |  |               |       |        |  |   |       |      

Summit had $40.1 million of remaining
availability for repurchases under the program as of
March 31, 2003.

Communities Sold or Held for Sale

In accordance with SFAS No. 144, net
income and gain (loss) on disposition of real estate for
communities sold or considered held for sale after
December 31, 2001 are reflected in our statements of
operations as discontinued operations for all
periods presented. Below is a summary of discontinued operations
for

29



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##### 



Summit Fairways, Summit Turtle Rock and two other
assets, Summit Camino Real and Summit Buena Vista (both located
in Dallas, Texas), which qualify for held for sale treatment
under SFAS No. 144 as of March 31, 2003.


The information for 2002 below includes the four
communities to which reference is made above as well as seven of
the eight communities sold during 2002 (in thousands). The
eighth community was considered held for sale prior to
December 31, 2001 and, therefore, is included in income
from continuing operations in accordance with
SFAS No. 144.

|                                                                                                  |                        |                 |       |       |  |   |       |       | 
|------------------------------------------------------------------------------------------------- | ---------------------- | --------------- | ----- | ----- |  | - | ----- | ----- | 
|                                                                                                  |                        |                
|                                                                                                  |                        | Three Months   
|                                                                                                  |                        | Ended March 31,
|                                                                                                  |                        |                
|                                                                                                  |                        | 2003            |       | 2002 
|                                                                                                  |                        |                 |       |      
|Property revenues:                                                                                |                        |                 |       |       |  |   |       |      
|                                                                                                  | Rental revenues        |                 | $     | 3,318 |  |   | $     | 8,985 | 
|                                                                                                  | Other property revenue |                 |       | 206   |  |   |       | 609   | 
|                                                                                                  |                        |                 |       |       |  |   |       |      
|Total property revenues                                                                           |                        |                 | 3,524 |       |  |   | 9,594 |      
|Property operating and maintenance expense                                                        |                        |                 | 1,562 |       |  |   | 3,512 |      
|Depreciation                                                                                      |                        |                 | 752   |       |  |   | 1,983 |      
|Interest and amortization                                                                         |                        |                 | 844   |       |  |   | 1,195 |      
|                                                                                                  |                        |                 |       |       |  |   |       |      
|Income from discontinued operations before net
    gain on disposition of discontinued operations |                        |                 | 366   |       |  |   | 2,904 |      
|Gain on disposition of discontinued operations                                                    |                        |                 | 3,136 |       |  |   |      |      
|                                                                                                  |                        |                 |       |       |  |   |       |      
|Income from discontinued operations                                                               |                        | $               | 3,502 |       |  | $ | 2,904 |      
|                                                                                                  |                        |                 |       |       |  |   |       |      

As of March 31, 2003, three assets were
considered held for sale, Summit Turtle Rock, Summit Camino Real
and Summit Buena Vista (one of which, Summit Turtle Rock, was
sold on April 15, 2003). The revenues and net income
(excluding allocation of corporate overhead) of these three
communities represented 7.6% and 2.2%, respectively, of total
revenues and net income for the three months ended
March 31, 2003.

Development Activity

Our construction in progress as of March 31,
2003 is summarized as follows (dollars in thousands):

|                                            |  |           |       |           |  |         |         |           |  |              |         |  |  |   |        |  |  |  |         | 
|------------------------------------------- |  | --------- | ----- | --------- |  | ------- | ------- | --------- |  | ------------ | ------- |  |  | - | ------ |  |  |  | ------- | 
|                                            |  | Number of |       | Total     |  |         |         | Estimated |  | Anticipated 
|                                            |  | Apartment |       | Estimated |  | Cost To |         | Cost To   |  | Construction
|Community                                   |  | Homes     |       | Costs     |  | Date    |         | Complete  |  | Completion  
|                                            |  |           |       |           |  |         |         |           |  |             
|Summit Stockbridge  Atlanta, GA(1)         |  |           | 304   |           |  | $       | 23,600  |           |  | $            | 20,178  |  |  | $ | 3,422  |  |  |  | Q3 2003 | 
|Summit Silo Creek  Washington,
    D.C.    |  |           | 284   |           |  |         | 41,700  |           |  |              | 20,287  |  |  |   | 21,413 |  |  |  | Q2 2004 | 
|Reunion Park II by Summit 
    Raleigh, NC |  |           | 172   |           |  |         | 10,800  |           |  |              | 2,115   |  |  |   | 8,685  |  |  |  | Q2 2004 | 
|Summit Las Olas  Ft. Lauderdale,
    FL    |  |           | 420   |           |  |         | 73,700  |           |  |              | 43,635  |  |  |   | 30,065 |  |  |  | Q3 2005 | 
|                                            |  |           |       |           |  |         |         |           |  |              |         |  |  |   |        |  |  |  |         | 
|Total  communities under construction      |  |           | 1,180 |           |  |         | 149,800 |           |  |              | 86,215  |  |  |   | 63,585 |  |  |  |         | 
|Other development and construction costs(2) |  |           |      |           |  |         |        |           |  |              | 25,665  |  |  |   |       |  |  |  |         | 
|                                            |  |           |       |           |  |         |         |           |  |              |         |  |  |   |        |  |  |  |         | 
|Total development communities               |  |           | 1,180 |           |  | $       | 149,800 |           |  | $            | 111,880 |  |  | $ | 63,585 |  |  |  |         | 
|                                            |  |           |       |           |  |         |         |           |  |              |         |  |  |   |        |  |  |  |         | 



---



|    |                                                                                     
|--- | ------------------------------------------------------------------------------------
|(1) | This community was in lease-up as of
    March 31, 2003.                            
|   
|(2) | Consists primarily of land held for development
    and other pre-development costs.



| |                                                                     
| | --------------------------------------------------------------------
| | Factors Affecting the Performance of Our
    Development Communities

As with any development effort, there are
uncertainties and risks associated with the communities
described above. While we have prepared development budgets and
have estimated completion and stabilization target dates based
on what we believe are reasonable assumptions in light of
current conditions, there can be no

30



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##### 



assurance that actual costs will not exceed
current budgets or that we will not experience construction
delays due to the unavailability of materials, weather
conditions or other events. We also may be unable to obtain, or
experience delays in obtaining, all necessary zoning, land-use,
building, occupancy, and other required governmental permits and
authorizations.


Other development risks include the possibility
of incurring additional costs or liabilities resulting from
increased costs for materials or labor or other unexpected costs
or 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, we are conducting feasibility and
other pre-development work for four communities. We could
abandon the development of any one or more of these potential
communities in the event that we determine that market
conditions do not support development, financing is not
available on favorable terms or at all, we are unable to obtain
necessary permits and authorizations, or due to other
circumstances which may prevent development. There can be no
assurance that, if we do pursue one or more potential
communities, that we will be able to complete construction
within the currently estimated development budgets or that
construction can be started at the time currently anticipated.

Commitments and Contingencies

A summary of our future contractual obligations
related to long-term debt, non-cancelable operating leases and
other obligations as of March 31, 2003 are as follows (in
thousands):

|                                 |  |                        |         |           |  |           |         |            |  |       |         |  |  |   |         |  |  |   |         | 
|-------------------------------- |  | ---------------------- | ------- | --------- |  | --------- | ------- | ---------- |  | ----- | ------- |  |  | - | ------- |  |  | - | ------- | 
|                                 |  |                       
|                                 |  | Payments Due by Period
|                                 |  |                       
|                                 |  | 2003                   |         | 2004-2005 |  | 2006-2007 |         | Thereafter |  | Total
|                                 |  |                        |         |           |  |           |         |            |  |      
|Long-term debt maturities        |  | $                      | 48,708  |           |  | $         | 121,847 |            |  | $     | 131,472 |  |  | $ | 280,359 |  |  | $ | 582,386 | 
|Standby letters of credit(1)     |  |                        | 19,842  |           |  |           | 404     |            |  |       |        |  |  |   |        |  |  |   | 20,246  | 
|Development expenditures(2)      |  |                        | 32,168  |           |  |           | 31,417  |            |  |       |        |  |  |   |        |  |  |   | 63,585  | 
|Purchase obligations(3)(4)       |  |                        | 70,600  |           |  |           |        |            |  |       |        |  |  |   |        |  |  |   | 70,600  | 
|Operating lease commitments(5)   |  |                        | 661     |           |  |           | 1,603   |            |  |       | 1,698   |  |  |   | 2,371   |  |  |   | 6,333   | 
|Employment agreement payments(6) |  |                        | 300     |           |  |           | 800     |            |  |       | 800     |  |  |   | 1,600   |  |  |   | 3,500   | 
|                                 |  |                        |         |           |  |           |         |            |  |       |         |  |  |   |         |  |  |   |         | 
|Total                            |  | $                      | 172,279 |           |  | $         | 156,071 |            |  | $     | 133,970 |  |  | $ | 284,330 |  |  | $ | 746,650 | 
|                                 |  |                        |         |           |  |           |         |            |  |       |         |  |  |   |         |  |  |   |         | 



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | As collateral for performance on contracts and as
    credit guarantees to banks and insurers, we were contingently
    liable under standby letters of credit in the aggregate amount
    of $20.2 million as of March 31, 2003. Upon the
    purchase of Summit Brickell on May 6, 2003, the related
    $13.0 million letter of credit was released.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|(2) | The estimated cost to complete the four
    development projects currently under construction was
    $63.6 million as of March 31, 2003. Anticipated
    construction completion dates of the projects range from the
    third quarter of 2003 to the third quarter of 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   
|(3) | As of March 31, 2003, we were party to a
    real estate purchase agreement with a third-party real estate
    developer under which we agreed to purchase Summit Brickell for
    between $50.5 million and $60.0 million. The amount
    used in the table above represents the maximum amount of this
    range. On May 6, 2003, we purchased certain assets of
    Brickell Grand Inc. including the community known as Summit
    Brickell, certain real estate assets and a note receivable from
    the developer, for $59.4 million using a combination of
    proceeds from the sale of communities which were held in escrow
    with a qualified intermediary in accordance with like-kind
    exchange income tax rules and regulations, and borrowings under
    our unsecured credit facility. The developer is entitled to
    receive bonus payments based on the operating performance of the
    community during any period of six months selected by the seller
    and

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | ending no later than December 31, 2005. Such
    bonus payments will be applied to the note receivable and any
    unpaid amounts under the note receivable are due and payable on
    February 15, 2006. At the time of purchase, Summit Brickell
    was subject to a claim of lien in the amount of $4.1 million
    filed by the general contractor. Brickell Grand Inc. has
    assigned all of its potential counterclaims against the general
    contractor to us. We expect to negotiate a final settlement of
    the lien and any counterclaims with the general contractor. No
    assurance can be given that a resolution will be reached in a
    timely manner. Once resolved, we expect to satisfy the lien
    obligation, if any, using borrowings under our unsecured credit
    facility.



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(4) | During 2002, we completed the development of
    Summit Brookwood, a 359-unit apartment community located in
    Atlanta, Georgia. As of March 31, 2003, we are the lessee
    under a land lease related to the land on which Summit Brookwood
    was constructed. We have exercised our purchase option under the
    land lease to purchase the related land for $10.6 million.
    We expect to finalize the purchase of the land at Summit
    Brookwood during 2003 using cash as consideration.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   
|(5) | Includes operating leases related to rental of
    office space.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   
|(6) | Summit has employment agreements with two of its
    former executive officers, both of whom resigned from such
    executive positions, but who remain as employees and have agreed
    to provide various services to us from time to time through
    December 31, 2011. Each employment agreement requires that
    Summit pay to the former officers a base salary aggregating up
    to $2.1 million over the period from July 1, 2001 to
    December 31, 2011 (beginning with calendar year 2002, up to
    $200,000 on an annual basis). Each employment agreement also
    requires that Summit provide participation in Summits life
    insurance plan, office space, information systems support and
    administrative support for the remainder of each employees
    life, and participation in Summits health and dental
    insurance plans until the last to die of the employee or such
    employees spouse. Either party can terminate the
    employment agreements, effective 20 business days after written
    notice is given. The full base salary amount due shall be
    payable through 2011 whether or not the agreements are
    terminated earlier in accordance with their terms.

We have agreed to advance the amount required to
fund costs in excess of the construction loan related to the
community which is being developed by SZF, LLC, a joint venture
in which we own a 29.78% interest. As of March 31, 2003 we
had funded $8.4 million to SZF, LLC.

As of March 31, 2003, we carried terrorism
insurance on all communities that serve as collateral for
mortgage debt, as well as on two communities which do not serve
as collateral for mortgage debt, but which are located in
Washington, D.C. As of May 1, 2003, we carry terrorism
insurance on all communities. The terrorism insurance is subject
to coverage limitations, which we believe are commercially
reasonable. No assurance can be given that material losses in
excess of insurance proceeds will not occur in the future, or
that insurance coverage for acts of terrorism will be available
in the future.

We are subject to a variety of claims and suits
that arise in the ordinary course of business, including actions
with respect to contracts and cases in which claims have been
brought against us by current and former employees, residents,
independent contractors and vendors. While the resolution of
these matters cannot be predicted with certainty, we believe
that the final outcome of such matters will not be material to
our financial position or results of operations. If we determine
that a loss is probable to occur, the estimated amount of that
loss would be recorded in the financial statements.

We are a party to a number of agreements and
contracts to which we may be obligated to indemnify the other
party with respect to certain matters. Typically, these
obligations arise in contracts into which we enter, under which
we customarily agree to hold the other party harmless against
certain losses arising from breaches of representations,
warranties and/or covenants related to such matters as, among
others, title to assets, specified environmental matters,
qualification to do business, due organization, non-compliance
with restrictive covenants, laws, rules and regulations,
maintenance of insurance and payment of tax bills due and owing.
Additionally, with respect to retail and office lease agreements
we enter into as landlord, we may also indemnify the other party
against damages caused by our willful misconduct or negligence
associated with the operation and management of the building.
These indemnities are typical in the industry and are in
accordance with general customs. We believe that if we were to
incur a loss in any of these matters, such loss should not

32



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have a material effect on our financial condition
or results of operations. Historically, payments made with
regard to these agreements have not had a material effect on our
financial condition or results of operations.


Funds From Operations

We compute Funds from Operations
(FFO) in accordance with standards established by
the National Association of Real Estate Investment Trusts
(NAREIT). FFO, as defined by NAREIT, represents net
income (loss) excluding gains or losses from sales of property,
plus depreciation of real estate assets, and after adjustments
for unconsolidated partnerships and joint ventures, all
determined on a consistent basis in accordance with GAAP. Our
methodology for calculating FFO may differ from the methodology
for calculating FFO utilized by other real estate companies, and
accordingly, may not be comparable to other real estate
companies. FFO does not represent amounts available for
managements discretionary use because of needed capital
expenditures or expansion, debt service obligations, property
acquisitions, development, dividends and distributions or other
commitments and uncertainties. FFO should not be considered as
an alternative to net income (determined in accordance with
GAAP) as an indication of our financial performance or to cash
flows from operating activities (determined in accordance with
GAAP) as a measure of our liquidity, nor is it indicative of
funds available to fund our cash needs, including our ability to
make dividend or distribution payments. We believe FFO is
helpful to investors as a measure of our performance because,
along with cash flows from operating activities, financing
activities and investing activities, it provides investors with
an understanding of our ability to incur and service debt and
make capital expenditures.

FFO for the three months ended March 31,
2003 and 2002 is calculated as follows (dollars in thousands,
except per share data):

|                                                              |                            |                    |            |         |   |   |            |         |  
|------------------------------------------------------------- | -------------------------- | ------------------ | ---------- | ------- | - | - | ---------- | ------- | -
|                                                              |                            |                   
|                                                              |                            | Three Months Ended
|                                                              |                            | March 31,         
|                                                              |                            |                   
|                                                              |                            | 2003               |            | 2002   
|                                                              |                            |                    |            |        
|Income available to common unitholders                        |                            | $                  | 5,865      |         |   | $ | 6,030      |        
|Gain on disposition of real estate assets                     |                            |                    | (3,136     | )       |   |   |           |        
|Depreciation:                                                 |                            |                    |            |         |   |   |            |        
|                                                              | Real estate assets         |                    |            | 9,575   |   |   |            | 9,717   |  
|                                                              | Real estate joint ventures |                    |            | 189     |   |   |            | 300     |  
|                                                              |                            |                    |            |         |   |   |            |        
|Funds from Operations                                         |                            | $                  | 12,493     |         |   | $ | 16,047     |        
|                                                              |                            |                    |            |         |   |   |            |        
|Income available to common unitholders per
    unit  diluted |                            | $                  | 0.19       |         |   | $ | 0.19       |        
|                                                              |                            |                    |            |         |   |   |            |        
|Funds from Operations per unit  diluted                      |                            | $                  | 0.41       |         |   | $ | 0.52       |        
|                                                              |                            |                    |            |         |   |   |            |        
|Recurring capital expenditures(1)                             |                            | $                  | 799        |         |   | $ | 994        |        
|                                                              |                            |                    |            |         |   |   |            |        
|Non-recurring capital expenditures(2)                         |                            | $                  | 220        |         |   | $ | 754        |        
|                                                              |                            |                    |            |         |   |   |            |        
|Cash flow provided by (used in):                              |                            |                    |            |         |   |   |            |        
|                                                              | Operating activities       |                    | $          | 12,380  |   |   | $          | 15,737  |  
|                                                              | Investing activities       |                    |            | 2,980   |   |   |            | (26,372 | )
|                                                              | Financing activities       |                    |            | (15,448 | ) |   |            | 11,082  |  
|Weighted average common units
    outstanding  basic         |                            |                    | 30,755,631 |         |   |   | 30,681,527 |        
|                                                              |                            |                    |            |         |   |   |            |        
|Weighted average common units
    outstanding  diluted       |                            |                    | 30,777,361 |         |   |   | 30,948,671 |        
|                                                              |                            |                    |            |         |   |   |            |        



---



|    |                                                                                                                                                                                                                                                                                                                                                                           
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Recurring capital expenditures are expected to be
    funded from operations and consist primarily of floor coverings,
    furniture, appliances and equipment and exterior paint and
    carpentry. In contrast, non-recurring capital expenditures, such
    as major improvements, new garages and access gates, are
    expected to be funded by financing activities.

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##### 





|    |                                                                                                                                                                                                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Non-recurring capital expenditures consist
    primarily of improvements such as new garages, water submeters,
    gated security access and improvements made in conjunction with
    renovations of apartment homes and are expected to be funded by
    financing activities.

ITEM 3. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK

There have been no material changes in our
financial market risk since the filing of our Annual Report on
Form 10-K for the year ended December 31, 2002.

ITEM 4. CONTROLS AND
PROCEDURES

(a) Evaluation of disclosure controls and
procedures.

As required by Rule 13a-15 under the
Securities Exchange Act of 1934, within the 90 days prior
to the date of this report, we carried out an evaluation under
the supervision and with the participation of our management,
including Summits Chief Executive Officer and Chief
Financial Officer, of the effectiveness of the design and
operation of our disclosure controls and procedures. Based upon
that evaluation, Summits Chief Executive Officer and Chief
Financial Officer concluded that our disclosure controls and
procedures are reasonably effective to ensure that information
required to be disclosed by us in the reports we file or submit
under the Exchange Act is recorded, processed and summarized and
reported within the time periods specified in the Securities and
Exchange Commissions rules and forms. In connection with
the rules regarding disclosure controls and procedures, we
intend to continue to review and document our disclosure
controls and procedures, including our internal controls and
procedures for financial reporting, and may from time to time
make changes aimed at enhancing their effectiveness and to
ensure that our systems evolve with our business.

(b) Changes in internal controls.

There were no significant changes in our internal
controls subsequent to the date of evaluation.

34



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##### 



PART II.     OTHER
INFORMATION

ITEM 2.     CHANGES
IN SECURITIES

During the three months ended March 31,
2003, Summit issued 33,784 shares of common stock in
connection with stock awards under its 1994 Stock Option and
Incentive Plan. Each time a share of common stock is issued in
connection with a stock award, we issue a common unit to Summit
during the relevant period; consequently, 33,784 common units
were issued to Summit during the quarter. These common units
were issued in reliance on the exemption from registration under
Section 4(2) of the Securities Act of 1933, as amended. In
light of the circumstances under which these common units were
issued, management of Summit, in its capacity as our general
partner believes that we may rely on such exemption.

ITEM 6.     EXHIBITS
AND REPORTS ON FORM 8-K

(a) Exhibits

|      |  |                                                                                                                         
|----- |  | ------------------------------------------------------------------------------------------------------------------------
|*12.1 |  | Statement regarding calculation of Ratio of
    Earnings to Fixed Charges for the three months ended
    March 31, 2003.



---



|  |               
|- | --------------
|* | Filed herewith

(b) Reports on Form 8-K

None

35



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##### 



SIGNATURES

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

|                   |  |                                                                                                 
|------------------ |  | ------------------------------------------------------------------------------------------------
|                   |  | SUMMIT PROPERTIES PARTNERSHIP, L.P.By: Summit Properties Inc., as General
    Partner           
|                  
|May 14, 2003(Date) |  | /s/ STEVEN R. LEBLANC
    Steven R. LeBlanc,President and Chief Executive Officer               
|                  
|May 14, 2003(Date) |  | /s/ GREGG D. ADZEMA
    Gregg D. Adzema,Executive Vice President and
    Chief Financial Officer

36



---



##### 



CERTIFICATIONS

I, Steven R. LeBlanc, President and Chief
Executive Officer of Summit Properties Inc., the general partner
of Summit Properties Partnership, L.P., certify that:

1. I have reviewed this quarterly report on
Form 10-Q of Summit Properties Partnership, L.P.;



|   |                                                                                                                                                                                                                                                                                                                                                   
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2. | Based on my knowledge, this quarterly report does
    not contain any untrue statement of a material fact or omit to
    state a material fact necessary to make the statements made, in
    light of the circumstances under which such statements were
    made, not misleading with respect to the period covered by this
    quarterly report;
|  
|3. | Based on my knowledge, the financial statements,
    and other financial information included in this quarterly
    report, fairly present in all material respects the financial
    condition, results of operations and cash flows of the
    registrant as of, and for, the periods presented in this
    quarterly report;                   
|  
|4. | The registrants other certifying officers
    and I are responsible for establishing and maintaining
    disclosure controls and procedures (as defined in Exchange Act
    Rules 13a-14 and 15d-14) for the registrant and we have:                                                                                                             



| |    |                                                                                                                                                                                                                                                                                                                
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) | Designed such disclosure controls and procedures
    to ensure that material information relating to the registrant,
    including its consolidated subsidiaries, is made known to us by
    others within those entities, particularly during the period in
    which this quarterly report is being prepared;
|
| | b) | Evaluated the effectiveness of the
    registrants disclosure controls and procedures as of a
    date within 90 days prior to the filing date of this
    quarterly report (the Evaluation Date); and                                                                                                      
|
| | c) | Presented in this quarterly report our
    conclusions about the effectiveness of the disclosure controls
    and procedures based on our evaluation as of the Evaluation Date;                                                                                                                                



|   |                                                                                                                                                                                                                                                               
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|5. | The registrants other certifying officers
    and I have disclosed, based on our most recent evaluation, to
    the registrants auditors and the audit committee of
    registrants board of directors (or persons performing the
    equivalent function):



| |    |                                                                                                                                                                                                                                                                                                                   
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) | All significant deficiencies in the design or
    operation of internal controls which could adversely affect the
    registrants ability to record, process, summarize and
    report financial data and have identified for the
    registrants auditors any material weaknesses in internal
    controls; and
|
| | b) | Any fraud, whether or not material, that involves
    management or other employees who have a significant role in the
    registrants internal controls; and                                                                                                                                                    



|   |                                                                                                                                                                                                                                                                                                                                                                                                                  
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|6. | The registrants other certifying officers
    and I have indicated in this quarterly report whether or not
    there were significant changes in internal controls or in other
    factors that could significantly affect internal controls
    subsequent to the date of our most recent evaluation, including
    any corrective actions with regard to significant deficiencies
    and material weaknesses.



| |                        
| | -----------------------
| | /s/ STEVEN R. LEBLANC  
| |                        
| | Steven R. LeBlanc      
| | President and          
| | Chief Executive Officer

Date: May 14, 2003

37



---



##### 



CERTIFICATIONS

I, Gregg D. Adzema, Executive Vice President and
Chief Financial Officer of Summit Properties Inc., the General
Partner of Summit Properties Partnership, L.P., certify that:

1. I have reviewed this quarterly report on
Form 10-Q of Summit Properties Partnership, L.P.;



|   |                                                                                                                                                                                                                                                                                                                                                   
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2. | Based on my knowledge, this quarterly report does
    not contain any untrue statement of a material fact or omit to
    state a material fact necessary to make the statements made, in
    light of the circumstances under which such statements were
    made, not misleading with respect to the period covered by this
    quarterly report;
|  
|3. | Based on my knowledge, the financial statements,
    and other financial information included in this quarterly
    report, fairly present in all material respects the financial
    condition, results of operations and cash flows of the
    registrant as of, and for, the periods presented in this
    quarterly report;                   
|  
|4. | The registrants other certifying officers
    and I are responsible for establishing and maintaining
    disclosure controls and procedures (as defined in Exchange Act
    Rules 13a-14 and 15d-14) for the registrant and we have:                                                                                                             



| |    |                                                                                                                                                                                                                                                                                                                
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) | Designed such disclosure controls and procedures
    to ensure that material information relating to the registrant,
    including its consolidated subsidiaries, is made known to us by
    others within those entities, particularly during the period in
    which this quarterly report is being prepared;
|
| | b) | Evaluated the effectiveness of the
    registrants disclosure controls and procedures as of a
    date within 90 days prior to the filing date of this
    quarterly report (the Evaluation Date); and                                                                                                      
|
| | c) | Presented in this quarterly report our
    conclusions about the effectiveness of the disclosure controls
    and procedures based on our evaluation as of the Evaluation Date;                                                                                                                                



|   |                                                                                                                                                                                                                                                               
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|5. | The registrants other certifying officers
    and I have disclosed, based on our most recent evaluation, to
    the registrants auditors and the audit committee of
    registrants board of directors (or persons performing the
    equivalent function):



| |    |                                                                                                                                                                                                                                                                                                                   
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) | All significant deficiencies in the design or
    operation of internal controls which could adversely affect the
    registrants ability to record, process, summarize and
    report financial data and have identified for the
    registrants auditors any material weaknesses in internal
    controls; and
|
| | b) | Any fraud, whether or not material, that involves
    management or other employees who have a significant role in the
    registrants internal controls; and                                                                                                                                                    



|   |                                                                                                                                                                                                                                                                                                                                                                                                                  
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|6. | The registrants other certifying officers
    and I have indicated in this quarterly report whether or not
    there were significant changes in internal controls or in other
    factors that could significantly affect internal controls
    subsequent to the date of our most recent evaluation, including
    any corrective actions with regard to significant deficiencies
    and material weaknesses.



| |                             
| | ----------------------------
| | /s/ GREGG D. ADZEMA         
| |                             
| | Gregg D. Adzema             
| | Executive Vice President and
| | Chief Financial Officer     

Date: May 14, 2003

38