##### 









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 June 30, 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 June 30, 2003
    and December 31, 2002 (Unaudited)                         |  |          | 3  | 
|       
|        |  | Consolidated Statements of Earnings for the three
    and six months ended June 30, 2003 and 2002 (Unaudited) |  |          | 4  | 
|       
|        |  | Consolidated Statement of Partners Equity
    for the six months ended June 30, 2003 (Unaudited)             |  |          | 6  | 
|       
|        |  | Consolidated Statements of Cash Flows for the six
    months ended June 30, 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                     |  |          | 20 | 
|       
|Item 3  |  | Quantitative and Qualitative Disclosures about
    Market Risk                                                |  |          | 38 | 
|       
|Item 4  |  | Controls and Procedures                                                                                       |  |          | 38 | 
|       
|PART II |  | Other Information                                                                                             |  |          |    | 
|       
|Item 1  |  | Legal Proceedings                                                                                             |  |          | 40 | 
|       
|Item 2  |  | Changes in Securities                                                                                         |  |          | 40 | 
|       
|Item 6  |  | Exhibits and Reports on Form 8-K                                                                              |  |          | 41 | 
|       
|        |  | Signatures                                                                                                    |  |          | 42 | 

2



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##### 



PART I.     FINANCIAL
INFORMATION

ITEM I.     FINANCIAL
STATEMENTS

SUMMIT PROPERTIES PARTNERSHIP, L.P.

CONSOLIDATED BALANCE SHEETS


(Dollars in Thousands, except per unit
data)


(Unaudited)


|                                                                            |                                                                                |                                                               |                        |                                                    |         |         |           |          |         |         |           | 
|--------------------------------------------------------------------------- | ------------------------------------------------------------------------------ | ------------------------------------------------------------- | ---------------------- | -------------------------------------------------- | ------- | ------- | --------- | -------- | ------- | ------- | --------- | 
|                                                                            |                                                                                | June 30,                                                      |                        | December 31,                                      
|                                                                            |                                                                                | 2003                                                          |                        | 2002                                              
|                                                                            |                                                                                |                                                               |                        |                                                   
|ASSETS                                                                      |                                                                                |                                                               |                        |                                                    |         |         |           |         
|Real estate assets:                                                         |                                                                                |                                                               |                        |                                                    |         |         |           |         
|                                                                            | Land and land improvements                                                     |                                                               | $                      | 188,928                                            |         |         | $         | 168,606  |        
|                                                                            | Buildings and improvements                                                     |                                                               |                        | 931,830                                            |         |         |           | 848,473  |        
|                                                                            | Furniture, fixtures and equipment                                              |                                                               |                        | 71,160                                             |         |         |           | 67,266   |        
|                                                                            |                                                                                |                                                               |                        |                                                    |         |         |           |         
|                                                                            |                                                                                |                                                               |                        | Real estate assets before accumulated depreciation |         |         | 1,191,918 |          |         |         | 1,084,345 | 
|                                                                            | Less: accumulated depreciation                                                 |                                                               |                        | (156,493                                           | )       |         |           | (138,940 | )      
|                                                                            |                                                                                |                                                               |                        |                                                    |         |         |           |         
|                                                                            |                                                                                |                                                               |                        | Operating real estate assets                       |         |         | 1,035,425 |          |         |         | 945,405   | 
|                                                                            | Net real estate assets  assets held
    for sale                              |                                                               |                        | 127,367                                            |         |         |           | 158,867  |        
|                                                                            | Construction in progress                                                       |                                                               |                        | 134,322                                            |         |         |           | 139,263  |        
|                                                                            |                                                                                |                                                               |                        |                                                    |         |         |           |         
|                                                                            |                                                                                |                                                               |                        | Net real estate assets                             |         |         | 1,297,114 |          |         |         | 1,243,535 | 
|Cash and cash equivalents                                                   |                                                                                |                                                               | 2,660                  |                                                    |         |         | 2,353     |         
|Restricted cash                                                             |                                                                                |                                                               | 1,179                  |                                                    |         |         | 61,446    |         
|Investments in Summit Management Company and real
    estate joint ventures |                                                                                |                                                               | 15,357                 |                                                    |         |         | 3,161     |         
|Deferred financing costs, net                                               |                                                                                |                                                               | 6,396                  |                                                    |         |         | 6,008     |         
|Other assets                                                                |                                                                                |                                                               | 14,154                 |                                                    |         |         | 22,219    |         
|Other assets  assets held for sale                                         |                                                                                |                                                               | 783                    |                                                    |         |         | 1,763     |         
|                                                                            |                                                                                |                                                               |                        |                                                    |         |         |           |         
|Total assets                                                                |                                                                                | $                                                             | 1,337,643              |                                                    |         | $       | 1,340,485 |         
|                                                                            |                                                                                |                                                               |                        |                                                    |         |         |           |         
|LIABILITIES AND PARTNERS
    EQUITY                                        |                                                                                |                                                               |                        |                                                    |         |         |           |         
|Liabilities:                                                                |                                                                                |                                                               |                        |                                                    |         |         |           |         
|                                                                            | Notes payable                                                                  |                                                               | $                      | 669,452                                            |         |         | $         | 633,492  |        
|                                                                            | Accounts payable and accrued expenses                                          |                                                               |                        | 31,341                                             |         |         |           | 35,714   |        
|                                                                            | Distributions payable                                                          |                                                               |                        | 10,210                                             |         |         |           | 10,456   |        
|                                                                            | Accrued interest payable                                                       |                                                               |                        | 4,892                                              |         |         |           | 4,936    |        
|                                                                            | Security deposits and prepaid rents                                            |                                                               |                        | 2,352                                              |         |         |           | 2,128    |        
|                                                                            | Notes payable and other liabilities 
    assets held for sale                 |                                                               |                        | 58,408                                             |         |         |           | 69,348   |        
|                                                                            |                                                                                |                                                               |                        |                                                    |         |         |           |         
|                                                                            |                                                                                |                                                               |                        | Total liabilities                                  |         |         | 776,655   |          |         |         | 756,074   | 
|                                                                            |                                                                                |                                                               |                        |                                                    |         |         |           |         
|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 issued and outstanding
    30,231,438 and 30,980,526. |                                                               |                        |                                                    |         |         |           |          |        
|                                                                            |                                                                                | General partner  outstanding 302,314
    and 309,805.        |                        |                                                    | 4,980   |         |           |          | 5,213   |        
|                                                                            |                                                                                | Limited partners  outstanding
    29,929,124 and 30,670,721. |                        |                                                    | 419,748 |         |           |          | 442,938 |        
|                                                                            |                                                                                |                                                               |                        |                                                    |         |         |           |         
|                                                                            |                                                                                |                                                               | Total partners equity |                                                    |         | 560,988 |           |          |         | 584,411 |          
|                                                                            |                                                                                |                                                               |                        |                                                    |         |         |           |         
|Total liabilities and partners common and
    preferred equity             |                                                                                | $                                                             | 1,337,643              |                                                    |         | $       | 1,340,485 |         
|                                                                            |                                                                                |                                                               |                        |                                                    |         |         |           |         

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 June 30,      |                                                   | Six Months Ended June 30,
|                                                                                |                                                         |                                  |                                                   |                          
|                                                                                |                                                         | 2003                             |                                                   | 2002                      |       | 2003   |        | 2002  
|                                                                                |                                                         |                                  |                                                   |                           |       |        |        |       
|Revenues:                                                                       |                                                         |                                  |                                                   |                           |       |        |        |        |       |        |        |        |        |        |        |       
|                                                                                | Rental                                                  |                                  | $                                                 | 33,163                    |       |        | $      | 30,785 |       |        | $      | 65,137 |        |        | $      | 61,658 |       
|                                                                                | Other property income                                   |                                  |                                                   | 2,472                     |       |        |        | 2,235  |       |        |        | 4,526  |        |        |        | 4,537  |       
|                                                                                | Interest                                                |                                  |                                                   | 623                       |       |        |        | 610    |       |        |        | 1,340  |        |        |        | 1,116  |       
|                                                                                | Other income                                            |                                  |                                                   | 70                        |       |        |        | 73     |       |        |        | 360    |        |        |        | 205    |       
|                                                                                | Gain and interest income on compensation plans          |                                  |                                                   | 50                        |       |        |        | 46     |       |        |        | 238    |        |        |        | 224    |       
|                                                                                |                                                         |                                  |                                                   |                           |       |        |        |        |       |        |        |        |        |        |        |       
|                                                                                |                                                         |                                  | Total revenues                                    |                           |       | 36,378 |        |        |       | 33,749 |        |        |        | 71,601 |        |        |        | 67,740 | 
|                                                                                |                                                         |                                  |                                                   |                           |       |        |        |        |       |        |        |        |        |        |        |       
|Expenses:                                                                       |                                                         |                                  |                                                   |                           |       |        |        |        |       |        |        |        |        |        |        |       
|                                                                                | Property operating and maintenance:                     |                                  |                                                   |                           |       |        |        |        |       |        |        |        |        |        |        |        |       
|                                                                                |                                                         | Personnel                        |                                                   |                           | 2,895 |        |        |        | 2,428 |        |        |        | 5,625  |        |        |        | 5,008  |       
|                                                                                |                                                         | Advertising and promotion        |                                                   |                           | 556   |        |        |        | 509   |        |        |        | 1,119  |        |        |        | 953    |       
|                                                                                |                                                         | Utilities                        |                                                   |                           | 1,737 |        |        |        | 1,547 |        |        |        | 3,556  |        |        |        | 3,156  |       
|                                                                                |                                                         | Building repairs and maintenance |                                                   |                           | 1,709 |        |        |        | 1,531 |        |        |        | 3,225  |        |        |        | 2,893  |       
|                                                                                |                                                         | Real estate taxes and insurance  |                                                   |                           | 4,598 |        |        |        | 3,745 |        |        |        | 8,903  |        |        |        | 7,387  |       
|                                                                                |                                                         | Depreciation                     |                                                   |                           | 9,079 |        |        |        | 7,362 |        |        |        | 17,554 |        |        |        | 14,706 |       
|                                                                                |                                                         | Property supervision             |                                                   |                           | 1,189 |        |        |        | 997   |        |        |        | 2,338  |        |        |        | 1,970  |       
|                                                                                |                                                         | Other operating expenses         |                                                   |                           | 594   |        |        |        | 511   |        |        |        | 1,027  |        |        |        | 1,038  |       
|                                                                                |                                                         |                                  |                                                   |                           |       |        |        |        |       |        |        |        |        |        |        |       
|                                                                                |                                                         |                                  | Total property operating and maintenance expenses |                           |       | 22,357 |        |        |       | 18,630 |        |        |        | 43,347 |        |        |        | 37,111 | 
|                                                                                | Interest                                                |                                  |                                                   | 6,666                     |       |        |        | 7,622  |       |        |        | 13,252 |        |        |        | 15,162 |       
|                                                                                | Amortization                                            |                                  |                                                   | 538                       |       |        |        | 311    |       |        |        | 933    |        |        |        | 621    |       
|                                                                                | General and administrative                              |                                  |                                                   | 1,944                     |       |        |        | 1,388  |       |        |        | 3,545  |        |        |        | 3,147  |       
|                                                                                | Liability adjustment and gain on compensation
    plans |                                  |                                                   | 50                        |       |        |        | 46     |       |        |        | 238    |        |        |        | 224    |       
|                                                                                |                                                         |                                  |                                                   |                           |       |        |        |        |       |        |        |        |        |        |        |       
|                                                                                |                                                         |                                  | Total expenses                                    |                           |       | 31,555 |        |        |       | 27,997 |        |        |        | 61,315 |        |        |        | 56,265 | 
|Income from continuing operations before equity
    investments                 |                                                         |                                  | 4,823                                             |                           |       |        | 5,752  |        |       |        | 10,286 |        |        |        | 11,475 |       
|(Loss) income on equity investments:                                            |                                                         |                                  |                                                   |                           |       |        |        |        |       |        |        |        |        |        |        |       
|                                                                                | Summit Management Company                               |                                  |                                                   | (330                      | )     |        |        | 270    |       |        |        | (594   | )      |        |        | 291    |       
|                                                                                | Real estate joint ventures                              |                                  |                                                   | (75                       | )     |        |        | (41    | )     |        |        | (164   | )      |        |        | 23     |       
|                                                                                |                                                         |                                  |                                                   |                           |       |        |        |        |       |        |        |        |        |        |        |       
|                                                                                |                                                         |                                  | Total (loss) income on equity investments         |                           |       | (405   | )      |        |       | 229    |        |        |        | (758   | )      |        |        | 314    | 
|                                                                                |                                                         |                                  |                                                   |                           |       |        |        |        |       |        |        |        |        |        |        |       
|Income from continuing operations before gain on
    sale of real estate assets |                                                         |                                  | 4,418                                             |                           |       |        | 5,981  |        |       |        | 9,528  |        |        |        | 11,789 |       
|Gain on sale of real estate assets                                              |                                                         |                                  |                                                  |                           |       |        | 13,843 |        |       |        |       |        |        |        | 13,843 |       
|                                                                                |                                                         |                                  |                                                   |                           |       |        |        |        |       |        |        |        |        |        |        |       
|Income from continuing operations                                               |                                                         |                                  | 4,418                                             |                           |       |        | 19,824 |        |       |        | 9,528  |        |        |        | 25,632 |       

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 June 30,                |        | Six Months Ended June 30,
|                                                                         |                                                                         |                                            |        |                          
|                                                                         |                                                                         | 2003                                       |        | 2002                      |       | 2003 |        | 2002      
|                                                                         |                                                                         |                                            |        |                           |       |      |        |           
|Discontinued operations:                                                 |                                                                         |                                            |        |                           |       |      |        |            |        |   |        |            |       |   |        |           
|                                                                         | Income from discontinued operations                                     |                                            |        | 360                       |       |      |        | 3,076      |        |   |        | 1,084      |       |   |        | 6,403      |      
|                                                                         | Gain (loss) on disposition of discontinued
    operations               |                                            |        | 3,122                     |       |      |        | (4,209     | )      |   |        | 6,258      |       |   |        | (4,209     | )    
|Loss from early extinguishments of debt                                  |                                                                         |                                            | (1,508 | )                         |       |      |       |            |        |   | (1,508 | )          |       |   |       |           
|                                                                         |                                                                         |                                            |        |                           |       |      |        |            |        |   |        |            |       |   |        |           
|                                                                         |                                                                         | Income (loss) from discontinued operations |        |                           | 1,974 |      |        |            | (1,133 | ) |        |            | 5,834 |   |        |            | 2,194 | 
|                                                                         |                                                                         |                                            |        |                           |       |      |        |            |        |   |        |            |       |   |        |           
|Net income                                                               |                                                                         |                                            | 6,392  |                           |       |      | 18,691 |            |        |   | 15,362 |            |       |   | 27,826 |           
|Distributions to Series B preferred
    unitholders                      |                                                                         |                                            | (1,902 | )                         |       |      | (1,902 | )          |        |   | (3,804 | )          |       |   | (3,804 | )         
|Distributions to Series C preferred
    unitholders                      |                                                                         |                                            | (1,203 | )                         |       |      | (1,203 | )          |        |   | (2,406 | )          |       |   | (2,406 | )         
|                                                                         |                                                                         |                                            |        |                           |       |      |        |            |        |   |        |            |       |   |        |           
|Income available to common unitholders                                   |                                                                         |                                            | 3,287  |                           |       |      | 15,586 |            |        |   | 9,152  |            |       |   | 21,616 |           
|Income available to common unitholders allocated
    to general partner  |                                                                         |                                            | (33    | )                         |       |      | (156   | )          |        |   | (92    | )          |       |   | (216   | )         
|                                                                         |                                                                         |                                            |        |                           |       |      |        |            |        |   |        |            |       |   |        |           
|Income available to common unitholders allocated
    to limited partners |                                                                         | $                                          | 3,254  |                           |       | $    | 15,430 |            |        | $ | 9,060  |            |       | $ | 21,400 |           
|                                                                         |                                                                         |                                            |        |                           |       |      |        |            |        |   |        |            |       |   |        |           
|Per unit data:                                                           |                                                                         |                                            |        |                           |       |      |        |            |        |   |        |            |       |   |        |           
|                                                                         | Income from continuing operations 
    basic                           |                                            | $      | 0.15                      |       |      | $      | 0.64       |        |   | $      | 0.31       |       |   | $      | 0.83       |      
|                                                                         |                                                                         |                                            |        |                           |       |      |        |            |        |   |        |            |       |   |        |           
|                                                                         | Income from continuing operations 
    diluted                         |                                            | $      | 0.14                      |       |      | $      | 0.64       |        |   | $      | 0.31       |       |   | $      | 0.83       |      
|                                                                         |                                                                         |                                            |        |                           |       |      |        |            |        |   |        |            |       |   |        |           
|                                                                         | Income (loss) from discontinued
    operations  basic and diluted      |                                            | $      | 0.06                      |       |      | $      | (0.04      | )      |   | $      | 0.19       |       |   | $      | 0.07       |      
|                                                                         |                                                                         |                                            |        |                           |       |      |        |            |        |   |        |            |       |   |        |           
|                                                                         | Net income  basic                                                      |                                            | $      | 0.21                      |       |      | $      | 0.61       |        |   | $      | 0.50       |       |   | $      | 0.90       |      
|                                                                         |                                                                         |                                            |        |                           |       |      |        |            |        |   |        |            |       |   |        |           
|                                                                         | Net income  diluted                                                    |                                            | $      | 0.21                      |       |      | $      | 0.60       |        |   | $      | 0.50       |       |   | $      | 0.90       |      
|                                                                         |                                                                         |                                            |        |                           |       |      |        |            |        |   |        |            |       |   |        |           
|                                                                         | Distributions to Series B preferred
    unitholders  basic and diluted |                                            | $      | (0.06                     | )     |      | $      | (0.06      | )      |   | $      | (0.12      | )     |   | $      | (0.12      | )    
|                                                                         |                                                                         |                                            |        |                           |       |      |        |            |        |   |        |            |       |   |        |           
|                                                                         | Distributions to Series C preferred
    unitholders  basic and diluted |                                            | $      | (0.04                     | )     |      | $      | (0.04      | )      |   | $      | (0.08      | )     |   | $      | (0.08      | )    
|                                                                         |                                                                         |                                            |        |                           |       |      |        |            |        |   |        |            |       |   |        |           
|                                                                         | Income available to common
    unitholders  basic and diluted          |                                            | $      | 0.11                      |       |      | $      | 0.50       |        |   | $      | 0.30       |       |   | $      | 0.70       |      
|                                                                         |                                                                         |                                            |        |                           |       |      |        |            |        |   |        |            |       |   |        |           
|                                                                         | Distributions declared                                                  |                                            | $      | 0.34                      |       |      | $      | 0.48       |        |   | $      | 0.68       |       |   | $      | 0.95       |      
|                                                                         |                                                                         |                                            |        |                           |       |      |        |            |        |   |        |            |       |   |        |           
|                                                                         | Weighted average units  basic                                          |                                            |        | 30,436,755                |       |      |        | 30,888,338 |        |   |        | 30,595,312 |       |   |        | 30,785,909 |      
|                                                                         |                                                                         |                                            |        |                           |       |      |        |            |        |   |        |            |       |   |        |           
|                                                                         | Weighted average units  diluted                                        |                                            |        | 30,531,635                |       |      |        | 31,163,943 |        |   |        | 30,656,175 |       |   |        | 31,046,617 |      
|                                                                         |                                                                         |                                            |        |                           |       |      |        |            |        |   |        |            |       |   |        |           

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  |   |         |        |          |   |      
|                           |                                                  | Preferred                                               |        | Preferred |   | General |        | Limited  |   |      
|                           |                                                  | Units                                                   |        | Units     |   | Partner |        | Partners |   | Total
|                           |                                                  |                                                         |        |           |   |         |        |          |   |      
|Balance, December 31, 2002 |                                                  | $                                                       | 82,713 |           |   | $       | 53,547 |          |   | $     | 5,213 |      |      | $ | 442,938 |         |         | $ | 584,411 |        
|                           | Distributions to common unitholders              |                                                         |        |          |   |         |        |         |   |       |       | (205 | )    |   |         | (20,314 | )       |   |         | (20,519 | )      
|                           | Contributions from Summit Properties related to: |                                                         |        |           |   |         |        |          |   |       |       |      |      |   |         |         |         |   |         |         |        
|                           |                                                  | Repurchase of Summits common stock                     |        |           |  |         |        |          |  |       |       |      | (152 | ) |         |         | (15,041 | ) |         |         | (15,193 | )
|                           |                                                  | Issuance of unrestricted stock grants                   |        |           |  |         |        |          |  |       |       |      | 7    |   |         |         | 653     |   |         |         | 660     |  
|                           |                                                  | Netdown of restricted and unrestricted stock
    grants |        |           |  |         |        |          |  |       |       |      | (5   | ) |         |         | (455    | ) |         |         | (460    | )
|                           |                                                  | Exercise of common stock options                        |        |           |  |         |        |          |  |       |       |      | 10   |   |         |         | 947     |   |         |         | 957     |  
|                           |                                                  | Amortization of restricted stock grants                 |        |           |  |         |        |          |  |       |       |      | 1    |   |         |         | 70      |   |         |         | 71      |  
|                           | Repayment of employee notes receivable           |                                                         |        |          |   |         |        |         |   |       |       | 19   |      |   |         | 1,890   |         |   |         | 1,909   |        
|                           | Distributions to preferred unitholders           |                                                         |        |          |   |         |        |         |   |       |       | (62  | )    |   |         | (6,148  | )       |   |         | (6,210  | )      
|                           | Net income                                       |                                                         |        |          |   |         |        |         |   |       |       | 154  |      |   |         | 15,208  |         |   |         | 15,362  |        
|                           |                                                  |                                                         |        |           |   |         |        |          |   |       |       |      |      |   |         |         |         |   |         |        
|Balance, June 30, 2003     |                                                  | $                                                       | 82,713 |           |   | $       | 53,547 |          |   | $     | 4,980 |      |      | $ | 419,748 |         |         | $ | 560,988 |        
|                           |                                                  |                                                         |        |           |   |         |        |          |   |       |       |      |      |   |         |         |         |   |         |        

See notes to consolidated financial statements.

6



---



##### 



SUMMIT PROPERTIES PARTNERSHIP, L.P.

CONSOLIDATED STATEMENTS OF CASH
FLOWS


(Dollars in thousands)


(Unaudited)


|                                                                                                                                    |                                                                                                    |                                           |        |         |         |   |        |         |         |  
|----------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------- | ----------------------------------------- | ------ | ------- | ------- | - | ------ | ------- | ------- | -
|                                                                                                                                    |                                                                                                    |                                          
|                                                                                                                                    |                                                                                                    | Six Months Ended                         
|                                                                                                                                    |                                                                                                    | June 30,                                 
|                                                                                                                                    |                                                                                                    |                                          
|                                                                                                                                    |                                                                                                    | 2003                                      |        | 2002   
|                                                                                                                                    |                                                                                                    |                                           |        |        
|Cash flows from operating activities:                                                                                               |                                                                                                    |                                           |        |         |         |   |        |        
|Net income                                                                                                                          |                                                                                                    | $                                         | 15,362 |         |         | $ | 27,826 |        
|Adjustments to reconcile net income to net cash
    provided by operating activities
    Loss (income) on equity method investments |                                                                                                    |                                           | 758    |         |         |   | (314   | )      
|                                                                                                                                    | (Gain) loss on sale of real estate
    assets  discontinued operations                            |                                           |        | (6,258  | )       |   |        | 4,209   |        
|                                                                                                                                    | Gain on sale of real estate assets 
    continuing operations                                     |                                           |        |        |         |   |        | (13,843 | )      
|                                                                                                                                    | Loss on early extinguishment of debt                                                               |                                           |        | 1,508   |         |   |        |        |        
|                                                                                                                                    | Depreciation and amortization                                                                      |                                           |        | 20,651  |         |   |        | 20,810  |        
|                                                                                                                                    | Issuance of unrestricted stock grants                                                              |                                           |        | 660     |         |   |        |        |        
|                                                                                                                                    | Amortization of gain on interest rate swap hedge                                                   |                                           |        | (503    | )       |   |        | (42     | )      
|                                                                                                                                    | Decrease (increase) in restricted cash                                                             |                                           |        | 759     |         |   |        | (559    | )      
|                                                                                                                                    | Decrease (increase) in other assets                                                                |                                           |        | 190     |         |   |        | (1,965  | )      
|                                                                                                                                    | Decrease in accrued interest payable                                                               |                                           |        | (44     | )       |   |        | (31     | )      
|                                                                                                                                    | (Decrease) increase in accounts payable and
    accrued expenses                                   |                                           |        | (4,325  | )       |   |        | 1,464   |        
|                                                                                                                                    | Increase (decrease) in security deposits and
    prepaid rents                                     |                                           |        | 118     |         |   |        | (431    | )      
|                                                                                                                                    |                                                                                                    |                                           |        |         |         |   |        |        
|                                                                                                                                    |                                                                                                    | Net cash provided by operating activities |        |         | 28,876  |   |        |         | 37,124  |  
|                                                                                                                                    |                                                                                                    |                                           |        |         |         |   |        |        
|Cash flows from investing activities:                                                                                               |                                                                                                    |                                           |        |         |         |   |        |        
|                                                                                                                                    | Construction of real estate assets and land
    acquisitions                                       |                                           |        | (36,497 | )       |   |        | (57,702 | )      
|                                                                                                                                    | Acquisition of real estate assets                                                                  |                                           |        | (59,427 | )       |   |        |        |        
|                                                                                                                                    | Proceeds from sale of real estate assets                                                           |                                           |        | 85,827  |         |   |        | 48,444  |        
|                                                                                                                                    | Capitalized interest                                                                               |                                           |        | (5,433  | )       |   |        | (4,963  | )      
|                                                                                                                                    | Investment in real estate joint ventures                                                           |                                           |        | (10,403 | )       |   |        | (6,878  | )      
|                                                                                                                                    | Distribution from real estate joint venture                                                        |                                           |        |        |         |   |        | 737     |        
|                                                                                                                                    | Contribution from historic tax credit venture
    partner                                          |                                           |        | 6,657   |         |   |        | 200     |        
|                                                                                                                                    | Recurring capital expenditures                                                                     |                                           |        | (2,557  | )       |   |        | (1,911  | )      
|                                                                                                                                    | Non-recurring capital expenditures                                                                 |                                           |        | (1,141  | )       |   |        | (633    | )      
|                                                                                                                                    | Corporate and other asset additions and office
    tenant improvements                             |                                           |        | (161    | )       |   |        | (404    | )      
|                                                                                                                                    | Decrease in notes receivable                                                                       |                                           |        | 2,169   |         |   |        | 55      |        
|                                                                                                                                    |                                                                                                    |                                           |        |         |         |   |        |        
|                                                                                                                                    |                                                                                                    | Net cash used in investing activities     |        |         | (20,966 | ) |        |         | (23,055 | )
|                                                                                                                                    |                                                                                                    |                                           |        |         |         |   |        |        
|Cash flows from financing activities:                                                                                               |                                                                                                    |                                           |        |         |         |   |        |        
|                                                                                                                                    | Net (repayments) borrowings on line of credit                                                      |                                           |        | (34,000 | )       |   |        | 18,500  |        
|                                                                                                                                    | Proceeds from issuance of mortgage note                                                            |                                           |        | 70,940  |         |   |        |        |        
|                                                                                                                                    | Repayments of mortgage debt                                                                        |                                           |        | (1,852  | )       |   |        | (2,822  | )      
|                                                                                                                                    | Repayments of tax exempt bonds                                                                     |                                           |        | (220    | )       |   |        | (340    | )      
|                                                                                                                                    | Payment of deferred financing costs                                                                |                                           |        | (1,214  | )       |   |        | (63     | )      
|                                                                                                                                    | Payment for early extinguishment of debt                                                           |                                           |        | (1,508  | )       |   |        |        |        
|                                                                                                                                    | Proceeds on sale of interest rate swap                                                             |                                           |        |        |         |   |        | 1,510   |        
|                                                                                                                                    | Distributions to common unitholders                                                                |                                           |        | (20,752 | )       |   |        | (25,693 | )      
|                                                                                                                                    | Distributions to Series B preferred
    unitholders                                                |                                           |        | (3,804  | )       |   |        | (3,804  | )      
|                                                                                                                                    | Distributions to Series C preferred
    unitholders                                                |                                           |        | (2,406  | )       |   |        | (2,406  | )      
|                                                                                                                                    | Increase in employee notes receivable                                                              |                                           |        |        |         |   |        | (6,772  | )      
|                                                                                                                                    | Repayments of employee notes receivable                                                            |                                           |        | 1,909   |         |   |        | 601     |        
|                                                                                                                                    | Contributions from Summit Properties related to:                                                   |                                           |        |         |         |   |        |         |        
|                                                                                                                                    | Net proceeds from dividend reinvestment and stock
    purchase plans and exercise of stock options |                                           |        | 957     |         |   |        | 7,533   |        
|                                                                                                                                    | Netdown of restricted and unrestricted stock
    grants                                            |                                           |        | (460    | )       |   |        |        |        
|                                                                                                                                    | Repurchase of Summits common stock                                                                |                                           |        | (15,193 | )       |   |        |        |        
|                                                                                                                                    |                                                                                                    |                                           |        |         |         |   |        |        
|                                                                                                                                    |                                                                                                    | Net cash used in financing activities     |        |         | (7,603  | ) |        |         | (13,756 | )
|                                                                                                                                    |                                                                                                    |                                           |        |         |         |   |        |        
|Net increase in cash and cash equivalents                                                                                           |                                                                                                    |                                           | 307    |         |         |   | 313    |        
|Cash and cash equivalents, beginning of period                                                                                      |                                                                                                    |                                           | 2,353  |         |         |   | 1,814  |        
|                                                                                                                                    |                                                                                                    |                                           |        |         |         |   |        |        
|Cash and cash equivalents, end of period                                                                                            |                                                                                                    | $                                         | 2,660  |         |         | $ | 2,127  |        
|                                                                                                                                    |                                                                                                    |                                           |        |         |         |   |        |        
|Supplemental disclosure of cash flow information:                                                                                   |                                                                                                    |                                           |        |         |         |   |        |        
|                                                                                                                                    | Cash paid for interest, net of capitalized
    interest                                            |                                           | $      | 15,468  |         |   | $      | 18,228  |        
|                                                                                                                                    |                                                                                                    |                                           |        |         |         |   |        |        

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 June 30,
2003, Summit held 88.3% of our outstanding partnership
interests, consisting of a 1% general partner interest and an
87.3% 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 six
months ended June 30, 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
November 2002, the Financial Accounting Standards Board
(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
measurement provisions of this Interpretation are currently
effective and did not affect our financial position and results
of operations for the three and six months ended June 30,
2003.

In December 2002, the 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

8



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##### 



SUMMIT PROPERTIES PARTNERSHIP, L.P.


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




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 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, to all
variable interest entities in which we hold an interest that was
acquired before February 1, 2003. The adoption of FIN 46
did not affect our financial position or results of operations
for the three and six months ended June 30, 2003. Summit
Management Company (the Management Company) and its
subsidiary, Summit Apartment Builders, Inc. provide construction
activities for us and provide management and leasing activities
for us as well as for communities owned by third parties and
certain of our directors. The Management Company is now
accounted for under the equity method of accounting, but will be
consolidated into our financial statements in accordance with
FIN 46 beginning in July 2003. This consolidation is not
expected to have a material effect on our financial position and
results of operations.

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 SFAS
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 FASB 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, 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 adopted SFAS No. 149
on July 1, 2003 and its adoption did not have an effect on our
financial position and results of operations.

In May 2003, the FASB issued SFAS No. 150,
Accounting for Certain Financial Instruments with
Characteristics of Both Liabilities and Equity. SFAS
No. 150 establishes standards for classifying and measuring
certain financial instruments with characteristics of both
liabilities and equity. We adopted SFAS No. 150 on
July 1, 2003 and its adoption did not have an effect 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
94,880 and 275,605 common units added to basic weighted average
common units outstanding for the three months ended
June 30, 2003 and 2002, respectively, and 60,863 and
260,708 common units added to basic weighted average common
units outstanding for the six months ended June 30, 2003
and 2002, respectively. Dilution caused by this stock-based
compensation had no effect on net income per common unit for the
three and six months ended June 30, 2003 or the six months ended
June 30, 2002 and decreased net income per common unit by
$0.01 per common unit for the three months ended June 30,
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 was recognized for
Summits stock options granted or shares issued under

9



---



##### 



SUMMIT PROPERTIES PARTNERSHIP, L.P.


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




its ESPP during the three and six months ended
June 30, 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 of Summits stock options granted,
modified or settled after January 1, 2003, as allowed by
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 of Summits options granted and
to Summits ESPP for the three and six months ended
June 30, 2003 and 2002 (in thousands, expect per share
amounts):

|                                                                      |                                |                    |       |                  |  |      |        |      |  |   |        |      |  |   |        |      | 
|--------------------------------------------------------------------- | ------------------------------ | ------------------ | ----- | ---------------- |  | ---- | ------ | ---- |  | - | ------ | ---- |  | - | ------ | ---- | 
|                                                                      |                                |                    |       |                 
|                                                                      |                                | Three Months Ended |       | Six Months Ended
|                                                                      |                                | June 30,           |       | June 30,        
|                                                                      |                                |                    |       |                 
|                                                                      |                                | 2003               |       | 2002             |  | 2003 |        | 2002
|                                                                      |                                |                    |       |                  |  |      |        |     
|Net income as reported                                                |                                | $                  | 6,392 |                  |  | $    | 18,691 |      |  | $ | 15,362 |      |  | $ | 27,826 |     
|Stock-based compensation determined under fair
    value based method |                                |                    |      |                  |  |      | (71    | )    |  |   |       |      |  |   | (1,452 | )   
|                                                                      |                                |                    |       |                  |  |      |        |      |  |   |        |      |  |   |        |     
|Pro forma net income                                                  |                                | $                  | 6,392 |                  |  | $    | 18,620 |      |  | $ | 15,362 |      |  | $ | 26,374 |     
|                                                                      |                                |                    |       |                  |  |      |        |      |  |   |        |      |  |   |        |     
|Per common unit data:                                                 |                                |                    |       |                  |  |      |        |      |  |   |        |      |  |   |        |     
|                                                                      | Net income  basic             |                    | $     | 0.21             |  |      | $      | 0.61 |  |   | $      | 0.50 |  |   | $      | 0.90 | 
|                                                                      | Net income  diluted           |                    | $     | 0.21             |  |      | $      | 0.60 |  |   | $      | 0.50 |  |   | $      | 0.90 | 
|                                                                      | Pro forma net income  basic   |                    | $     | 0.21             |  |      | $      | 0.60 |  |   | $      | 0.50 |  |   | $      | 0.86 | 
|                                                                      | Pro forma net income  diluted |                    | $     | 0.21             |  |      | $      | 0.60 |  |   | $      | 0.50 |  |   | $      | 0.85 | 

Allocation of the Cost of Communities
Acquired The cost of
communities acquired is allocated to the tangible and intangible
assets and liabilities based on their relative fair values. We
estimate the fair value of the acquired tangible assets, which
generally consist of land, buildings and furniture and fixtures,
and identified intangible assets and liabilities, which
generally represent the value of above-market and below-market
leases, in-place leases and tenant relationships, of the
community acquired and allocate the purchase price on a pro-rata
basis to each component.

The fair value of tangible assets acquired is
determined by valuing the community as if it were vacant,
applying methods similar to those used by independent appraisers
of income-producing property. The resultant value is then
allocated to land, buildings and furniture, fixtures and
equipment based on managements determination of the
relative fair value of these assets. The assumptions used in the
allocation of fair values to assets acquired are based on
managements best estimates at the time of evaluation.

The value of acquired in-place leases is included
in Other assets in our consolidated balance sheets
and is amortized as a leasing cost over the remaining
non-cancelable periods of the respective leases. If acquired
in-place leases with terms greater than twelve months are
terminated early, all unamortized amounts relating to those
leases would be written-off.

Value is assigned to above-market and
below-market leases based on the difference between (a) the
contractual amounts to be paid by the resident or retail tenant
based on the existing lease and (b) managements
estimate of current market lease rates for the corresponding
in-place leases, over the remaining terms of the in-place
leases. Capitalized below-market lease amounts are included in
Accounts payable and accrued expenses in our
consolidated balance sheets and are amortized as an increase to
rental revenue over the remaining terms of the respective
leases. Capitalized above-market lease amounts would be included
in Other assets in our consolidated balance sheets
and amortized to rental revenue over the remaining terms of the
respective leases; we did not have any capitalized above-market
leases at June 30, 2003.

Tenant relationships represent an intangible
asset, reflecting the probability that existing tenants will
renew their leases and, thus, reduce the amount of lost rental
revenue from vacant apartments. The amount of the

10



---



##### 



SUMMIT PROPERTIES PARTNERSHIP, L.P.


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




purchase price allocated to tenant relationships
is included in Other assets in our consolidated
balance sheets and is amortized as a leasing cost over the
estimated life of the tenant relationships.



|   |                           
|-- | --------------------------
|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
June 30, 2003 and December 31, 2002 and statements of
earnings for the six months ended June 30, 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
|                          |                                         |               
|                          |                                         | June 30,       |        | December 31,
|                          |                                         | 2003           |        | 2002        
|                          |                                         |                |        |             
|Real estate assets, net   |                                         | $              | 70,966 |              |  | $ | 72,255 |       
|Cash and cash equivalents |                                         |                | 1,138  |              |  |   | 370    |       
|Other assets              |                                         |                | 409    |              |  |   | 373    |       
|                          |                                         |                |        |              |  |   |        |       
|                          | Total assets                            |                | $      | 72,513       |  |   | $      | 72,998 | 
|                          |                                         |                |        |              |  |   |        |       
|Mortgages payable         |                                         | $              | 58,307 |              |  | $ | 58,731 |       
|Other liabilities         |                                         |                | 1,165  |              |  |   | 580    |       
|Partners capital         |                                         |                | 13,041 |              |  |   | 13,687 |       
|                          |                                         |                |        |              |  |   |        |       
|                          | Total liabilities and partners capital |                | $      | 72,513       |  |   | $      | 72,998 | 
|                          |                                         |                |        |              |  |   |        |       

|          |                               |                  |       |       |       |   |       |       |       | 
|--------- | ----------------------------- | ---------------- | ----- | ----- | ----- | - | ----- | ----- | ----- | 
|          |                               |                 
|          |                               | Statements of   
|          |                               | Earnings        
|          |                               |                 
|          |                               |                 
|          |                               | Six Months Ended
|          |                               | June 30,        
|          |                               |                 
|          |                               | 2003             |       | 2002 
|          |                               |                  |       |      
|Revenues  |                               | $                | 4,761 |       |       | $ | 5,116 |      
|Expenses: |                               |                  |       |       |       |   |       |      
|          | Property operating            |                  |       | 1,914 |       |   |       | 1,854 |      
|          | Depreciation and amortization |                  |       | 1,535 |       |   |       | 1,471 |      
|          | Interest                      |                  |       | 1,959 |       |   |       | 1,987 |      
|          |                               |                  |       |       |       |   |       |      
|          |                               | Total expenses   |       |       | 5,408 |   |       |       | 5,312 | 
|          |                               |                  |       |       |       |   |       |      
|Net loss  |                               | $                | (647  | )     |       | $ | (196  | )    
|          |                               |                  |       |       |       |   |       |      

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 Coral Way, LLC, 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. As a result of construction costs exceeding the
construction loan amount, SZF, LLC

11



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##### 



SUMMIT PROPERTIES PARTNERSHIP, L.P.


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




has agreed to advance to Coral Way, LLC the
amount required to fund such costs in excess of the construction
loan. Certain affiliates of the developer of the apartment
community have guaranteed the reimbursement of those costs to
Coral Way, LLC and SZF, LLC. 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 June 30,
2003, we had advanced $12.5 million to SZF, LLC which in turn
advanced such amounts to Coral Way, LLC. These advances are
included in Investments in Summit Management Company and
real estate joint ventures in our consolidated balance
sheets. As of June 30, 2003, this joint venture was
accounted for under the equity method of accounting and its
balance sheet and income statement information was not material
to our consolidated financial statements taken as a whole. On
July 3, 2003, we purchased our joint venture partners
70.22% interest in SZF, LLC for $10.0 million in cash (see
Note 15). The assets, liabilities and operating activities
of this joint venture will be consolidated into our financial
statements beginning in July 2003.

On August 12, 2003, we received notice of a
suit filed by certain affiliates of Coral Way, LLC against us,
the Operating Partnership and the Management Company (see
Part II, Item 1. Legal Proceedings
included in this report). One of the remedies demanded in the
suit is termination of the guarantee agreements to which
reference is made above. We believe that the allegations made by
Brickell View and its affiliates are not supported by the facts
and we intend to vigorously defend against this suit. If we are
successful, the guarantee agreements will remain in place and
the guarantors will remain obligated to reimburse Coral Way, LLC
and SZF, LLC for the costs in excess of the construction loan.

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 June 30, 2003, the
investor member had contributed $5.3 million for Summit
Roosevelt and $2.0 million for Summit Grand Parc. The
investor member is obligated to fund the balance of its
investment in each joint venture after 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 on 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 members 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.

We formerly owned a 50% interest in a joint
venture that developed and operated an apartment community
located in Atlanta, 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
Income (loss) on equity investments: Real estate
joint ventures in our consolidated statements of earnings.
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.

12



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##### 



SUMMIT PROPERTIES PARTNERSHIP, L.P.


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




3. COMMUNITY ACQUISITION AND
DISPOSITIONS

On May 6, 2003, we purchased certain assets
of Brickell Grand, Inc., including the community known as Summit
Brickell and a note receivable from the developer, for
$59.4 million using a combination of proceeds from the sale
of communities that were held in escrow with a qualified
intermediary in accordance with like-kind exchange income tax
rules and regulations and borrowings under our credit facility.
Summit Brickell is located in Miami, Florida and contains 405
apartment homes and approximately 18,000 square feet of retail
space. Summit Brickells apartment homes were 75% leased at
the date of acquisition and the in-place leases had an average
remaining lease term of eight months. The retail space was
approximately 57% leased, with an average remaining lease term
of approximately 10 years. The purchase price has been
preliminarily allocated based on estimated fair values at the
date of acquisition, pending final determination of certain
acquired balances. This preliminary allocation resulted in less
than 2% of the total purchase price being allocated to the
communitys intangible assets and liabilities.

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 developer and
ending no later than December 31, 2005. Such bonus payments
will be applied to reduce amounts owed from the developer under
the note receivable. 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 $4.1 million claim
of lien 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 or at all. Once resolved, we expect to satisfy the
lien obligation using borrowings under our credit facility.

The following summary of selected unaudited pro
forma results of operations presents information as if the
purchase of Summit Brickell had occurred at the beginning of
each period presented. The pro forma information is provided for
informational purposes only and is not indicative of results
that would have occurred or which may occur in the future (in
thousands, expect per share amounts):

|                                  |                                                 |                    |        |                  |  |      |        |      |  |   |        |      |  |   |        |      | 
|--------------------------------- | ----------------------------------------------- | ------------------ | ------ | ---------------- |  | ---- | ------ | ---- |  | - | ------ | ---- |  | - | ------ | ---- | 
|                                  |                                                 |                    |        |                 
|                                  |                                                 | Three Months Ended |        | Six Months Ended
|                                  |                                                 | June 30,           |        | June 30,        
|                                  |                                                 |                    |        |                 
|                                  |                                                 | 2003               |        | 2002             |  | 2003 |        | 2002
|                                  |                                                 |                    |        |                  |  |      |        |     
|Total revenues                    |                                                 | $                  | 36,725 |                  |  | $    | 33,753 |      |  | $ | 72,778 |      |  | $ | 67,745 |     
|Income from continuing operations |                                                 |                    | 4,520  |                  |  |      | 19,740 |      |  |   | 9,468  |      |  |   | 25,445 |     
|Net income                        |                                                 |                    | 6,494  |                  |  |      | 18,607 |      |  |   | 15,302 |      |  |   | 27,639 |     
|Per unit information:             |                                                 |                    |        |                  |  |      |        |      |  |   |        |      |  |   |        |     
|                                  | Income from continuing operations 
    basic   |                    | $      | 0.15             |  |      | $      | 0.64 |  |   | $      | 0.31 |  |   | $      | 0.83 | 
|                                  |                                                 |                    |        |                  |  |      |        |      |  |   |        |      |  |   |        |     
|                                  | Income from continuing operations 
    diluted |                    | $      | 0.15             |  |      | $      | 0.63 |  |   | $      | 0.31 |  |   | $      | 0.82 | 
|                                  |                                                 |                    |        |                  |  |      |        |      |  |   |        |      |  |   |        |     
|                                  | Net income  basic                              |                    | $      | 0.21             |  |      | $      | 0.60 |  |   | $      | 0.50 |  |   | $      | 0.90 | 
|                                  |                                                 |                    |        |                  |  |      |        |      |  |   |        |      |  |   |        |     
|                                  | Net income  diluted                            |                    | $      | 0.21             |  |      | $      | 0.60 |  |   | $      | 0.50 |  |   | $      | 0.89 | 
|                                  |                                                 |                    |        |                  |  |      |        |      |  |   |        |      |  |   |        |     

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 Texas markets. The disposition of
Summit Turtle Rock resulted in the recognition of a gain on sale
of $2.7 million. The net proceeds of $8.0 million (net of a
loss on early extinguishment of debt of $1.5 million) were
placed into escrow in accordance with like-kind exchange rules
and regulations and were used to fund development and
acquisition activities.

13



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##### 



SUMMIT PROPERTIES PARTNERSHIP, L.P.


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




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.

During the three and six months ended
June 30, 2003, we recognized a gain on sale of real estate
assets in the amount of $311,000 related to a settlement
received in connection with a parcel of land which was sold in a
prior year.

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 and Notes payable and other
liabilities  assets held for sale, in our
consolidated balance sheets for all periods presented.

Below is a summary of discontinued operations for
Summit Fairways, Summit Turtle Rock and four other assets,
Summit Camino Real and Summit Buena Vista, both located in
Dallas, Texas, and Summit Arboretum and Summit Las Palmas, both
located in Austin, Texas, which qualify for held for sale
treatment under SFAS No. 144 as of June 30, 2003. The
information for 2002 below includes the six communities
mentioned 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      |        | Six Months Ended
|                                                                                                         |                        | June 30,                |        | June 30,        
|                                                                                                         |                        |                         |        |                 
|                                                                                                         |                        | 2003                    |        | 2002             |       | 2003 |        | 2002  
|                                                                                                         |                        |                         |        |                  |       |      |        |       
|Property revenues:                                                                                       |                        |                         |        |                  |       |      |        |        |        |   |        |       |        |   |        |       
|                                                                                                         | Rental revenues        |                         | $      | 4,230            |       |      | $      | 10,701 |        |   | $      | 9,361 |        |   | $      | 21,623 |       
|                                                                                                         | Other property revenue |                         |        | 319              |       |      |        | 769    |        |   |        | 757   |        |   |        | 1,537  |       
|                                                                                                         |                        |                         |        |                  |       |      |        |        |        |   |        |       |        |   |        |       
|                                                                                                         |                        | Total property revenues |        |                  | 4,549 |      |        |        | 11,470 |   |        |       | 10,118 |   |        |        | 23,160 | 
|Property operating and maintenance expenses                                                              |                        |                         | 2,049  |                  |       |      | 4,431  |        |        |   | 4,538  |       |        |   | 8,850  |       
|Depreciation                                                                                             |                        |                         | 1,129  |                  |       |      | 2,438  |        |        |   | 2,325  |       |        |   | 4,864  |       
|Interest and amortization                                                                                |                        |                         | 1,011  |                  |       |      | 1,525  |        |        |   | 2,171  |       |        |   | 3,043  |       
|                                                                                                         |                        |                         |        |                  |       |      |        |        |        |   |        |       |        |   |        |       
|Income from discontinued operations before net
    gain (loss) on disposition of discontinued operations |                        |                         | 360    |                  |       |      | 3,076  |        |        |   | 1,084  |       |        |   | 6,403  |       
|Gain (loss) on disposition of discontinued
    operations                                                |                        |                         | 3,122  |                  |       |      | (4,209 | )      |        |   | 6,258  |       |        |   | (4,209 | )     
|Loss on early extinguishment of debt                                                                     |                        |                         | (1,508 | )                |       |      |       |        |        |   | (1,508 | )     |        |   |       |       
|                                                                                                         |                        |                         |        |                  |       |      |        |        |        |   |        |       |        |   |        |       
|Income (loss) from discontinued operations                                                               |                        | $                       | 1,974  |                  |       | $    | (1,133 | )      |        | $ | 5,834  |       |        | $ | 2,194  |       
|                                                                                                         |                        |                         |        |                  |       |      |        |        |        |   |        |       |        |   |        |       

As of June 30, 2003, Summit Camino Real,
Summit Buena Vista, Summit Arboretum and Summit Las Palmas (a
total of 2,035 apartment homes in these four communities), were
considered held for sale. Summit Camino Real was sold on
July 31, 2003 (see Note 13). The revenues and net income
(excluding allocation of corporate overhead) of these four
communities represented 10.9% and 11.6% of total revenues and
net income, respectively, for the three months ended June 30,
2003 and 11.0% and 9.3% of total revenues and net income,
respectively, for the six months ended June 30, 2003.

14



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##### 



SUMMIT PROPERTIES PARTNERSHIP, L.P.


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




4. NOTES PAYABLE

As of June 30, 2003, the outstanding balance
of our $225.0 million unsecured credit facility was
$110.0 million. On July 28, 2003, we obtained a $200.0
million secured credit facility that replaced our
$225.0 million unsecured credit facility (see Note 13).

On June 13, 2003, we obtained a
$39.7 million mortgage note collateralized by Summit
Aventura. This mortgage note bears interest at a fixed rate of
5.09% until July 2012, at which time the rate moves to a
variable rate until maturity in July 2013. This loan requires
monthly principal and interest payments on a 30-year
amortization schedule with a balloon payment due at maturity.

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 in April 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. In
accordance with SFAS No. 133, 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 are
amortizing 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 medium-term note 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 June 30, 2003 was
3.7075%. The fair value of the interest rate swap was an asset
of $5.7 million as of June 30, 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 our consolidated 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. COMMITMENTS AND
CONTINGENCIES

During 2002, we completed the development of
Summit Brookwood, a 359-unit apartment community located in
Atlanta. As of June 30, 2003, we are the lessee under a
land lease related to one parcel of land on which Summit
Brookwood was constructed. We were previously the lessee under
two parcels of land related to Summit Brookwood; however, we
closed on the purchase of one parcel of land for
$5.3 million on June 20, 2003, leaving
$5.3 million remaining on the total $10.6 million
purchase commitment, which we expect to finalize in December
2003 using cash as consideration.

The estimated cost to complete the four
development projects currently under construction was
$43.0 million as of June 30, 2003. Anticipated
construction completion dates of the projects range from the
third quarter of 2003 to the third quarter of 2005.

15



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##### 



SUMMIT PROPERTIES PARTNERSHIP, L.P.


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




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 $7.2 million as of June 30, 2003.

We 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 owned a 29.78% interest (see Note 2). As of
June 30, 2003, we had funded $12.5 million to SZF,
LLC. On July 3, 2003, we purchased our joint venture
partners 70.22% interest in SZF, LLC for $10.0 million in
cash (see Note 13).

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.

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.
Although no assurances can be made, 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.

7. BUSINESS SEGMENTS

We develop, acquire, and operate 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

16



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##### 



SUMMIT PROPERTIES PARTNERSHIP, L.P.


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




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.

8. UNRESTRICTED AND RESTRICTED
STOCK

During the six months ended June 30, 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 employees dated
February 6, 2002 (the 2002 Stock Grants) and
represent 15% of the total 222,270 shares of common stock that
could have been 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. As of June 30, 2003, following
the issuance of the shares mentioned above and certain employee
forfeitures, a total of 175,329 shares remained available for
issuance under the 2002 Stock Grants. 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 six months ended June 30,
2003 to satisfy the personal income tax liability related to the
2002 Stock Grants and an additional 13,193 shares during the six
months ended June 30, 2003 to satisfy the personal income
tax liability related to shares of restricted stock granted
prior to January 1, 2003 which vested during the current
period.

9. SUPPLEMENTAL CASH FLOW
INFORMATION

Non-cash investing and financing activities for
the six months ended June 30, 2003 and 2002 were as follows:



| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | A. | We accrued distributions payable in the amounts
    of $10.2 million as of June 30, 2003 and
    $17.8 million as of June 30, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| | B. | Summit issued 33,342 shares of unrestricted stock
    valued at $660,000 under its 1994 Stock Option and Incentive
    Plan during the six months ended June 30, 2003. Summit
    issued 442 shares of restricted stock valued at $10,000 during
    the six months ended June 30, 2002 under this plan. During
    the six months ended June 30, 2003, employees surrendered
    25,782 shares valued at $460,000 to satisfy the personal income
    tax liability related to the issuance of unrestricted shares and
    the vesting of restricted stock. During the six months ended
    June 30, 2002, employees surrendered 15,954 shares valued
    at $326,000 to satisfy the personal 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 six
    months ended June 30, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

10. PREFERRED UNITS

As of June 30, 2003, we had outstanding
3.4 million preferred units of limited partnership interest
designated as 8.95% Series B Cumulative Redeemable
Perpetual Preferred Units. These preferred units are redeemable
on or after April 29, 2004 for cash at a redemption price
equal to the holders capital account, 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

17



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##### 



SUMMIT PROPERTIES PARTNERSHIP, L.P.


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




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 $3.8 million during each
of the six months ended June 30, 2003 and 2002.

As of June 30, 2003, we had outstanding
2.2 million preferred units of limited partnership interest
designated as 8.75% Series C Cumulative Redeemable
Perpetual Preferred Units. The preferred units are redeemable 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 $2.4 million during each of the
six months ended June 30, 2003 and 2002.

11. 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 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 Summits 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 |      
|Six months ended June 30, 2003 |                           |             | 809,800 |             |  |               | 15,194 |        |  |   | 18.76 |      
|                               |                           |             |         |             |  |               |        |        |  |   |       |      
|                               | Total as of June 30, 2003 |             |         | 1,249,300   |  |               | $      | 23,590 |  |   | $     | 18.88 | 
|                               |                           |             |         |             |  |               |        |        |  |   |       |      

Summit had $32.4 million of remaining
availability for repurchases under the program as of
June 30, 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 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, we are no longer permitted to make loans to our
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

18



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SUMMIT PROPERTIES PARTNERSHIP, L.P.


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




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
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. As of June 30, 2003, we had loans
receivable in the net amount of $17.6 million which were
collateralized by 855,000 shares of Summits common stock
valued at $17.7 million (based on the closing market price of
Summits common stock of $20.65 on that date).

13. SUBSEQUENT EVENTS

On July 31, 2003, we sold an apartment
community formerly known as Summit Camino Real (712 apartment
homes) located in Dallas, Texas for $46.3 million as part
of our strategy to exit our Texas markets. The net proceeds of
$27.1 million (net of a loss on early extinguishment of debt of
$2.5 million) were used to reduce amounts outstanding under
our credit facility. We expect to recognize a gain on the
disposition of Summit Camino Real.

On July 28, 2003, we obtained a secured line
of credit with a total current commitment of
$200.0 million. We have the ability to increase this
commitment pursuant to the terms of the credit agreement. This
facility is secured by nine of our communities (Summit Fair
Oaks, Summit Governors Village, Summit Grandview, Summit
Lake, Summit Peachtree City, Summit Portofino, Summit
Sedgebrook, Summit Shiloh and Summit Sweetwater) and matures in
July 2008. The secured credit facility replaced the
$225.0 million unsecured credit facility and provides funds
for new development, acquisitions and general working capital
purposes. As described in the credit agreement, loans under the
credit facility are subject to debt service coverage and loan to
value ratios and bear interest at the Reference Bill Index Rate
(defined as the money market yield for the Reference Bills as
established by the most recent Reference Bill auction conducted
by Freddie Mac) plus 58 to 91 basis points depending on the
level of debt service coverage.

Our senior unsecured debt ratings were lowered as
a result of obtaining a new secured credit facility to replace
our unsecured credit facility. On July 31, 2003, Standard
& Poors lowered our senior unsecured debt rating to
BB+ from BBB. At the same time, Standard & Poors
affirmed Summits corporate credit rating at BBB. On
August 3, 2003, Moodys Investor Service lowered our
senior unsecured debt rating to Ba1 from Baa3 and lowered
Summits preferred stock shelf rating to (P)Ba2 from (P)Ba1.

On July 28, 2003, we obtained an unsecured
letter of credit facility which matures in July 2008 and has a
total commitment of $20.0 million. The letters of credit
issued under this facility will serve as collateral for
performance on contracts and as credit guarantees to banks and
insurers.

On July 15, 2003, we obtained a
$23.0 million mortgage note collateralized by Summit
Overlook. This mortgage note bears interest at a fixed rate of
4.70% until July 2012, at which time the rate moves to a
variable rate until maturity in August 2013. This loan requires
monthly principal and interest payments on a 30-year
amortization schedule with a balloon payment due at maturity.

On July 3, 2003, we purchased our joint
venture partners 70.22% interest in SZF, LLC for
$10.0 million in cash. We formerly owned 29.78% of this
joint venture (see Note 2).

19



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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 solely to historical
matters. In addition, information concerning the following are
forward-looking statements:



|  |                                                                                                                                                                                                       
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | the future operating performance of stabilized
    communities;                                                                                                                                       
| 
| | national economic conditions and economic
    conditions in our markets;                                                                                                                              
| 
| | 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 on favorable
    terms, in a timely manner or at all, including communities in
    our Texas markets;                                                                                                                                                                                                 
| 
| | the failure to locate favorable investment
    opportunities in our markets, particularly Washington, D.C. and
    Southeast Florida;                                                                                                                                                                                                 
| 
| | 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;                                                                                                                                                                               

20



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|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | supply and demand for apartment communities in
    our current market areas, especially our markets described below;                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| 
| | 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;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| 
| | changes in our debt ratings which could increase
    our cost of capital or impede our ability to raise debt
    financing;                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| 
| | 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 and Six
    Months Ended June 30, 2003 and 2002 on page 23 of
    this report, Operating Performance of Our Same-Property
    Communities beginning on page 26 of this report,
    Operating Performance of Our Communities in Lease-up
    beginning on page 28 of this report, Factors Affecting the
    Performance of Our Development Communities beginning on
    page 31 of this report and Commitments and
    Contingencies beginning on page 36 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. We focus our efforts in five 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 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, purchase price allocation of acquisition
communities, 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 currently ranging
from two to eleven 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

21



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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 our
consolidated balance sheets for such items.


The cost of communities acquired is allocated to
the tangible and intangible assets and liabilities based on
their relative fair values. We estimate the fair value of the
acquired tangible assets, which generally consist of land,
buildings and furniture and fixtures, and identified intangible
assets and liabilities, which generally represent the value of
above-market and below-market leases, in-place leases and tenant
relationships, of the community acquired and allocate the
purchase price on a pro-rata basis to each component.

The fair value of tangible assets acquired is
determined by valuing the community as if it were vacant,
applying methods similar to those used by independent appraisers
of income-producing property. The resultant value is then
allocated to land, buildings and furniture, fixtures and
equipment based on managements determination of the
relative fair value of these assets. The assumptions used in the
allocation of fair values to assets acquired are based on
managements best estimates at the time of evaluation.

The value of acquired in-place leases is included
in Other assets in our consolidated balance sheets
and is amortized as a leasing cost over the remaining
non-cancelable periods of the respective leases. If acquired
in-place leases with terms greater than twelve months are
terminated early, all unamortized amounts relating to those
leases would be written-off.

Value is assigned to above-market and
below-market leases based on the difference between (a) the
contractual amounts to be paid by the resident or retail tenant
based on the existing lease and (b) managements
estimate of current market lease rates for the corresponding
in-place leases, over the remaining terms of the in-place
leases. Capitalized below-market lease amounts are included in
Accounts payable and accrued expenses in our
consolidated balance sheets and are amortized as an increase to
rental revenue over the remaining terms of the respective
leases. Capitalized above-market lease amounts would be included
in Other assets in our consolidated balance sheets
and amortized to rental revenue over the remaining terms of the
respective leases; we did not have any capitalized above-market
leases at June 30, 2003.

Tenant relationships represent an intangible
asset, reflecting the probability that existing tenants will
renew their leases and, thus, reduce the amount of lost rental
revenue from vacant apartments. The amount of the purchase price
allocated to tenant relationships is included in Other
assets in our consolidated balance sheets and is amortized
as a leasing cost over the estimated life of the tenant
relationships.

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 access and improvements
made in conjunction with renovations of apartment homes.
Excluding rehabilitations, recurring capitalized 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 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.

22



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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.

Results of
Operations for the Three and Six Months Ended June 30, 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 markets. 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 markets. Although the current
economic environment is unpredictable, we expect these trends to
continue throughout 2003.

Net income decreased to $15.4 million for
the six months ended June 30, 2003 from $27.8 million
for the six months ended June 30, 2002. Net income
decreased to $6.4 million for the three months ended
June 30, 2003 from $18.7 million for the three months ended
June 30, 2002. Income from continuing operations before
gain on sale of real estate assets decreased to
$9.5 million for the six months ended June 30, 2003
from $11.8 million for the six months ended June 30,
2002 and decreased to $4.4 million for the three months
ended June 30, 2003 from $6.0 million for the three
months ended June 30, 2002. The decrease for the six-month
period is primarily due to an increase in depreciation of
$2.8 million on assets classified as continuing

23



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##### 



operations in 2003 as compared to 2002 and an
increase in the (loss) income on equity investments of
$1.1 million in 2003 as compared to 2002, all offset by a
decrease in interest expense of $1.9 million in 2003 as
compared to 2002. The decrease for the three-month period is
primarily due to an increase in depreciation of
$1.7 million on assets classified as continuing operations
in 2003 as compared to 2002.


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. Property operating income does not include any
allocation of corporate overhead. 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 six months ended
June 30, 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                           |  |      | (490   | )    |  |  | (728   | )
|Apartment homes acquired during the period                       |  |      | 405    |      |  |  |       |  
|Developments which began rental operations during
    the period |  |      | 502    |      |  |  | 761    |  
|                                                                 |  |      |        |      |  |  |        |  
|Apartment homes at June 30 of the year                           |  |      | 15,845 |      |  |  | 16,772 |  
|                                                                 |  |      |        |      |  |  |        |  

The operating performance of our communities
(inclusive of continuing and discontinued operations and
excluding unconsolidated joint ventures) for the three and six
months ended June 30, 2003 and 2002 and a reconciliation of
property operating income to net income is summarized below
(dollars in thousands):

|                        |                                    |                             |        |                           |  |          |        |        |  |      |      |          |   |  |        |        |  |  |        |        |  |  |       |        |  
|----------------------- | ---------------------------------- | --------------------------- | ------ | ------------------------- |  | -------- | ------ | ------ |  | ---- | ---- | -------- | - |  | ------ | ------ |  |  | ------ | ------ |  |  | ----- | ------ | -
|                        |                                    |                             |        |                          
|                        |                                    | Three Months Ended June 30, |        | Six Months Ended June 30,
|                        |                                    |                             |        |                          
|                        |                                    | 2003                        |        | 2002                      |  | % Change |        | 2003   |  | 2002 |      | % Change
|                        |                                    |                             |        |                           |  |          |        |        |  |      |      |         
|Property revenues:      |                                    |                             |        |                           |  |          |        |        |  |      |      |          |   |  |        |        |  |  |        |        |  |  |       |       
|                        | Same-property communities          |                             | $      | 31,717                    |  |          | $      | 33,407 |  |      |      | -5.1     | % |  | $      | 63,473 |  |  | $      | 67,112 |  |  |       | -5.4   | %
|                        | Acquisition communities            |                             |        | 1,458                     |  |          |        |       |  |      |      | 100.0    | % |  |        | 2,043  |  |  |        |       |  |  |       | 100.0  | %
|                        | Stabilized development communities |                             |        | 4,179                     |  |          |        | 4,079  |  |      |      | 2.5      | % |  |        | 8,615  |  |  |        | 7,691  |  |  |       | 12.0   | %
|                        | Communities in lease-up            |                             |        | 2,738                     |  |          |        | 231    |  |      |      | 1085.3   | % |  |        | 4,560  |  |  |        | 271    |  |  |       | 1582.7 | %
|                        | Disposition communities            |                             |        | 92                        |  |          |        | 6,773  |  |      |      | -98.6    | % |  |        | 1,090  |  |  |        | 14,281 |  |  |       | -92.4  | %
|                        |                                    |                             |        |                           |  |          |        |        |  |      |      |          |   |  |        |        |  |  |        |        |  |  |       |       
|Total property revenues |                                    |                             | 40,184 |                           |  |          | 44,490 |        |  |      | -9.7 | %        |   |  | 79,781 |        |  |  | 89,355 |        |  |  | -10.7 | %     
|                        |                                    |                             |        |                           |  |          |        |        |  |      |      |          |   |  |        |        |  |  |        |        |  |  |       |       

24



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##### 



|                                                                                    |                                    |                             |         |                           |  |          |        |        |  |      |        |          |   |   |         |        |  |   |         |        |   |  |        |        |  
|----------------------------------------------------------------------------------- | ---------------------------------- | --------------------------- | ------- | ------------------------- |  | -------- | ------ | ------ |  | ---- | ------ | -------- | - | - | ------- | ------ |  | - | ------- | ------ | - |  | ------ | ------ | -
|                                                                                    |                                    |                             |         |                          
|                                                                                    |                                    | Three Months Ended June 30, |         | Six Months Ended June 30,
|                                                                                    |                                    |                             |         |                          
|                                                                                    |                                    | 2003                        |         | 2002                      |  | % Change |        | 2003   |  | 2002 |        | % Change
|                                                                                    |                                    |                             |         |                           |  |          |        |        |  |      |        |         
|Property operating and maintenance expenses:                                        |                                    |                             |         |                           |  |          |        |        |  |      |        |          |   |   |         |        |  |   |         |        |   |  |        |       
|                                                                                    | Same-property communities          |                             |         | 11,751                    |  |          |        | 11,415 |  |      |        | 2.9      | % |   |         | 23,655 |  |   |         | 22,742 |   |  |        | 4.0    | %
|                                                                                    | Acquisition communities            |                             |         | 650                       |  |          |        |       |  |      |        | 100.0    | % |   |         | 901    |  |   |         |       |   |  |        | 100.0  | %
|                                                                                    | Stabilized development communities |                             |         | 1,700                     |  |          |        | 1,615  |  |      |        | 5.3      | % |   |         | 3,333  |  |   |         | 3,137  |   |  |        | 6.2    | %
|                                                                                    | Communities in lease-up            |                             |         | 1,184                     |  |          |        | 215    |  |      |        | 450.7    | % |   |         | 1,972  |  |   |         | 304    |   |  |        | 548.7  | %
|                                                                                    | Disposition communities            |                             |         | 42                        |  |          |        | 2,454  |  |      |        | -98.3    | % |   |         | 470    |  |   |         | 5,072  |   |  |        | -90.7  | %
|                                                                                    |                                    |                             |         |                           |  |          |        |        |  |      |        |          |   |   |         |        |  |   |         |        |   |  |        |       
|Total property operating and maintenance expenses                                   |                                    |                             | 15,327  |                           |  |          | 15,699 |        |  |      | -2.4   | %        |   |   | 30,331  |        |  |   | 31,255  |        |   |  | -3.0   | %     
|                                                                                    |                                    |                             |         |                           |  |          |        |        |  |      |        |          |   |   |         |        |  |   |         |        |   |  |        |       
|Property operating income (loss):                                                   |                                    |                             |         |                           |  |          |        |        |  |      |        |          |   |   |         |        |  |   |         |        |   |  |        |       
|                                                                                    | Same-property communities          |                             |         | 19,966                    |  |          |        | 21,992 |  |      |        | -9.2     | % |   |         | 39,818 |  |   |         | 44,370 |   |  |        | -10.3  | %
|                                                                                    | Acquisition communities            |                             |         | 808                       |  |          |        |       |  |      |        | 100.0    | % |   |         | 1,142  |  |   |         |       |   |  |        | 100.0  | %
|                                                                                    | Stabilized development communities |                             |         | 2,479                     |  |          |        | 2,464  |  |      |        | 0.6      | % |   |         | 5,282  |  |   |         | 4,554  |   |  |        | 16.0   | %
|                                                                                    | Communities in lease-up            |                             |         | 1,554                     |  |          |        | 16     |  |      |        | 9612.5   | % |   |         | 2,588  |  |   |         | (33    | ) |  |        | 7942.4 | %
|                                                                                    | Disposition communities            |                             |         | 50                        |  |          |        | 4,319  |  |      |        | -98.8    | % |   |         | 620    |  |   |         | 9,209  |   |  |        | -93.3  | %
|                                                                                    |                                    |                             |         |                           |  |          |        |        |  |      |        |          |   |   |         |        |  |   |         |        |   |  |        |       
|Total property operating income                                                     |                                    |                             | 24,857  |                           |  |          | 28,791 |        |  |      | -13.7  | %        |   |   | 49,450  |        |  |   | 58,100  |        |   |  | -14.9  | %     
|Interest and other income                                                           |                                    |                             | 693     |                           |  |          | 683    |        |  |      | 1.5    | %        |   |   | 1,700   |        |  |   | 1,321   |        |   |  | 28.7   | %     
|Depreciation expense (continuing and discontinued
    operations)                   |                                    |                             | (10,208 | )                         |  |          | (9,800 | )      |  |      | 4.2    | %        |   |   | (19,879 | )      |  |   | (19,570 | )      |   |  | 1.6    | %     
|Interest and amortization expense (continuing and
    discontinued operations)      |                                    |                             | (8,215  | )                         |  |          | (9,458 | )      |  |      | -13.1  | %        |   |   | (16,356 | )      |  |   | (18,826 | )      |   |  | -13.1  | %     
|General and administrative expense                                                  |                                    |                             | (1,944  | )                         |  |          | (1,388 | )      |  |      | 40.1   | %        |   |   | (3,545  | )      |  |   | (3,147  | )      |   |  | 12.6   | %     
|(Loss) income on equity investments                                                 |                                    |                             | (405    | )                         |  |          | 229    |        |  |      | -276.9 | %        |   |   | (758    | )      |  |   | 314     |        |   |  | -341.4 | %     
|Net gain on sale of real estate assets
    (continuing and discontinued operations) |                                    |                             | 3,122   |                           |  |          | 9,634  |        |  |      | -67.6  | %        |   |   | 6,258   |        |  |   | 9,634   |        |   |  | -35.0  | %     
|Loss from early extinguishment of debt                                              |                                    |                             | (1,508  | )                         |  |          |       |        |  |      | -100.0 | %        |   |   | (1,508  | )      |  |   |        |        |   |  | -100.0 | %     
|                                                                                    |                                    |                             |         |                           |  |          |        |        |  |      |        |          |   |   |         |        |  |   |         |        |   |  |        |       
|Net income                                                                          |                                    | $                           | 6,392   |                           |  | $        | 18,691 |        |  |      | -65.8  | %        |   | $ | 15,362  |        |  | $ | 27,826  |        |   |  | -44.8  | %     
|                                                                                    |                                    |                             |         |                           |  |          |        |        |  |      |        |          |   |   |         |        |  |   |         |        |   |  |        |       

25



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##### 



Operating Performance of Our Same-Property
Communities

The operating performance of our same-property
communities for the three and six months ended June 30,
2003 and 2002 is summarized below (dollars in thousands, except
average rent per occupied apartment home):

|                                             |                                  |                                                   |        |                           |        |          |        |        |        |      |      |          |      |   |        |        |        |   |        |        |        |  |       |       |      |  
|-------------------------------------------- | -------------------------------- | ------------------------------------------------- | ------ | ------------------------- | ------ | -------- | ------ | ------ | ------ | ---- | ---- | -------- | ---- | - | ------ | ------ | ------ | - | ------ | ------ | ------ |  | ----- | ----- | ---- | -
|                                             |                                  |                                                   |        |                          
|                                             |                                  | Three Months Ended June 30,                       |        | Six Months Ended June 30,
|                                             |                                  |                                                   |        |                          
|                                             |                                  | 2003                                              |        | 2002                      |        | % Change |        | 2003   |        | 2002 |      | % Change
|                                             |                                  |                                                   |        |                           |        |          |        |        |        |      |      |         
|Property revenues:                           |                                  |                                                   |        |                           |        |          |        |        |        |      |      |          |      |   |        |        |        |   |        |        |        |  |       |      
|                                             | Rental                           |                                                   | $      | 29,514                    |        |          | $      | 31,182 |        |      |      | -5.3     | %    |   | $      | 59,243 |        |   | $      | 62,622 |        |  |       | -5.4  | %   
|                                             | Other                            |                                                   |        | 2,203                     |        |          |        | 2,225  |        |      |      | -0.9     | %    |   |        | 4,230  |        |   |        | 4,490  |        |  |       | -5.8  | %   
|                                             |                                  |                                                   |        |                           |        |          |        |        |        |      |      |          |      |   |        |        |        |   |        |        |        |  |       |      
|                                             |                                  | Total property revenues                           |        |                           | 31,717 |          |        |        | 33,407 |      |      |          | -5.1 | % |        |        | 63,473 |   |        |        | 67,112 |  |       |       | -5.4 | %
|                                             |                                  |                                                   |        |                           |        |          |        |        |        |      |      |          |      |   |        |        |        |   |        |        |        |  |       |      
|Property operating and maintenance expenses: |                                  |                                                   |        |                           |        |          |        |        |        |      |      |          |      |   |        |        |        |   |        |        |        |  |       |      
|                                             | Personnel                        |                                                   |        | 2,572                     |        |          |        | 2,317  |        |      |      | 11.0     | %    |   |        | 5,126  |        |   |        | 4,814  |        |  |       | 6.5   | %   
|                                             | Advertising and promotion        |                                                   |        | 424                       |        |          |        | 490    |        |      |      | -13.3    | %    |   |        | 853    |        |   |        | 896    |        |  |       | -4.8  | %   
|                                             | Utilities                        |                                                   |        | 1,397                     |        |          |        | 1,422  |        |      |      | -1.8     | %    |   |        | 2,949  |        |   |        | 2,899  |        |  |       | 1.7   | %   
|                                             | Building repairs and maintenance |                                                   |        | 1,571                     |        |          |        | 1,533  |        |      |      | 2.5      | %    |   |        | 3,080  |        |   |        | 2,917  |        |  |       | 5.6   | %   
|                                             | Real estate taxes and insurance  |                                                   |        | 4,294                     |        |          |        | 4,211  |        |      |      | 2.0      | %    |   |        | 8,687  |        |   |        | 8,317  |        |  |       | 4.4   | %   
|                                             | Property supervision             |                                                   |        | 1,030                     |        |          |        | 941    |        |      |      | 9.5      | %    |   |        | 2,052  |        |   |        | 1,883  |        |  |       | 9.0   | %   
|                                             | Other operating expense          |                                                   |        | 463                       |        |          |        | 501    |        |      |      | -7.6     | %    |   |        | 908    |        |   |        | 1,016  |        |  |       | -10.6 | %   
|                                             |                                  |                                                   |        |                           |        |          |        |        |        |      |      |          |      |   |        |        |        |   |        |        |        |  |       |      
|                                             |                                  | Total property operating and maintenance expenses |        |                           | 11,751 |          |        |        | 11,415 |      |      |          | 2.9  | % |        |        | 23,655 |   |        |        | 22,742 |  |       |       | 4.0  | %
|                                             |                                  |                                                   |        |                           |        |          |        |        |        |      |      |          |      |   |        |        |        |   |        |        |        |  |       |      
|Property operating income                    |                                  | $                                                 | 19,966 |                           |        | $        | 21,992 |        |        |      | -9.2 | %        |      | $ | 39,818 |        |        | $ | 44,370 |        |        |  | -10.3 | %    
|                                             |                                  |                                                   |        |                           |        |          |        |        |        |      |      |          |      |   |        |        |        |   |        |        |        |  |       |      
|Average physical occupancy                   |                                  |                                                   | 94.0   | %                         |        |          | 93.3   | %      |        |      | 0.7  | %        |      |   | 94.2   | %      |        |   | 93.3   | %      |        |  | 1.0   | %    
|                                             |                                  |                                                   |        |                           |        |          |        |        |        |      |      |          |      |   |        |        |        |   |        |        |        |  |       |      
|Average rent per occupied apartment home     |                                  | $                                                 | 888    |                           |        | $        | 939    |        |        |      | -5.4 | %        |      | $ | 890    |        |        | $ | 944    |        |        |  | -5.7  | %    
|                                             |                                  |                                                   |        |                           |        |          |        |        |        |      |      |          |      |   |        |        |        |   |        |        |        |  |       |      
|Number of apartment homes                    |                                  |                                                   | 12,080 |                           |        |          | 12,080 |        |        |      |      |          |      |   | 12,080 |        |        |   | 12,080 |        |        |  |       |      
|                                             |                                  |                                                   |        |                           |        |          |        |        |        |      |      |          |      |   |        |        |        |   |        |        |        |  |       |      
|Number of apartment communities              |                                  |                                                   | 39     |                           |        |          | 39     |        |        |      |      |          |      |   | 39     |        |        |   | 39     |        |        |  |       |      
|                                             |                                  |                                                   |        |                           |        |          |        |        |        |      |      |          |      |   |        |        |        |   |        |        |        |  |       |      

For the three- and six-month periods ended
June 30, 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) the new supply of apartment homes
added to our markets by builders benefiting from low interest
rates. Concessions at our same-property communities increased by
$1.7 million, or 22.5%, during the six months ended
June 30, 2003 when compared to the same period in 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.

Insurance costs increased by $145,000, or 32.7%,
during the three months ended June 30, 2003 when compared
to the same period in 2002 and increased by $402,000, or 54.9%,
during the six months ended June 30, 2003 when compared to
the same period in 2002 due to an increase in insurance rates
with our May 2003 renewal as well as obtaining terrorism
insurance on certain of our communities. Property supervision
costs increased by $89,000, or 9.5%, for the three months ended
June 30, 2003 when compared to the same period in 2002 and
increased by $169,000, or 9.0%, for the six months ended
June 30, 2003 when compared to the same period in 2002 due
to an increase in the amount charged by Summit Management
Company (the

26



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##### 



Management Company) for management
fees from 2.75% of community collections to the greater of 3.0%
of community collections or $25 per unit per month. Personnel
costs increased by $255,000, or 11.0%, and $312,000, or 6.5%,
for the three and six-month periods due to an increase in
staffing levels in 2003 as compared to 2002.


As a percentage of total property revenue, total
property operating and maintenance expenses increased to 37.0%
for the three months ended June 30, 2003 from 34.2% for the
same period in 2002 and increased to 37.3% for the six months
ended June 30, 2003 from 33.9% for same period in 2002.

We expect that property operating income for our
same-property pool of communities may continue to decline for
the remainder of 2003 when compared to the same period a year
ago, 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.

Operating Performance of Our Acquisition
Communities

On May 6, 2003, we purchased certain assets
of Brickell Grand, Inc. including the community known as Summit
Brickell and a note receivable from the developer, for
$59.4 million. Summit Brickell is located in Miami, Florida
and contains 405 apartment homes and approximately 18,000 square
feet of retail space. On July 1, 2002, we acquired a
stabilized, luxury apartment community known as Summit San
Raphael, in the Galleria sub-market of Dallas, Texas for cash in
the amount of $17.7 million. The operating performance of
Summit Brickell and Summit San Raphael for the three and six
months ended June 30, 2003 and 2002 is summarized below
(dollars in thousands, except average rent per occupied
apartment home):

|                                            |        |                         |       |                  |       |      |   |      |   |   |       |       |       |   |   |   |   | 
|------------------------------------------- | ------ | ----------------------- | ----- | ---------------- | ----- | ---- | - | ---- | - | - | ----- | ----- | ----- | - | - | - | - | 
|                                            |        |                         |       |                 
|                                            |        | Three Months            |       | Six Months Ended
|                                            |        | Ended June 30,          |       | June 30,        
|                                            |        |                         |       |                 
|                                            |        | 2003                    |       | 2002             |       | 2003 |   | 2002
|                                            |        |                         |       |                  |       |      |   |     
|Property revenues:                          |        |                         |       |                  |       |      |   |      |   |   |       |       |       |   |   |  
|                                            | Rental |                         | $     | 1,380            |       |      | $ |     |   |   | $     | 1,938 |       |   | $ |  |  
|                                            | Other  |                         |       | 78               |       |      |   |     |   |   |       | 105   |       |   |   |  |  
|                                            |        |                         |       |                  |       |      |   |      |   |   |       |       |       |   |   |  
|                                            |        | Total property revenues |       |                  | 1,458 |      |   |      |  |   |       |       | 2,043 |   |   | $ |  | 
|Property operating and maintenance expenses |        |                         | 650   |                  |       |      |  |      |   |   | 901   |       |       |   |  |  
|                                            |        |                         |       |                  |       |      |   |      |   |   |       |       |       |   |   |  
|Property operating income                   |        | $                       | 808   |                  |       | $    |  |      |   | $ | 1,142 |       |       | $ |  |  
|                                            |        |                         |       |                  |       |      |   |      |   |   |       |       |       |   |   |  
|Average physical occupancy                  |        |                         | 84.6  | %                |       |      |  |      |   |   | 77.9  | %     |       |   |  |  
|                                            |        |                         |       |                  |       |      |   |      |   |   |       |       |       |   |   |  
|Average rent per occupied apartment home    |        | $                       | 1,085 |                  |       |      |  |      |   | $ | 1,088 |       |       |   |  |  
|                                            |        |                         |       |                  |       |      |   |      |   |   |       |       |       |   |   |  
|Number of apartment homes                   |        |                         | 627   |                  |       |      |  |      |   |   | 627   |       |       |   |  |  
|                                            |        |                         |       |                  |       |      |   |      |   |   |       |       |       |   |   |  

Operating Performance of Our Stabilized
Development Communities

Summit Crest, Summit Overlook, Summit Peachtree,
Summit at Lenox and Summit Shiloh are considered stabilized
development communities as of June 30, 2003. Summit Lenox
is currently undergoing a renovation which has caused certain
apartment homes to be unavailable for rental over the course of
the project; therefore, its operating results are included in
the stabilized development category. The operating performance

27



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##### 



of these five communities for the three and six
months ended June 30, 2003 and 2002 is summarized below
(dollars in thousands, except average rent per occupied
apartment home):


|                                            |        |                         |       |                  |       |      |       |       |       |   |       |       |       |   |       |       |       | 
|------------------------------------------- | ------ | ----------------------- | ----- | ---------------- | ----- | ---- | ----- | ----- | ----- | - | ----- | ----- | ----- | - | ----- | ----- | ----- | 
|                                            |        |                         |       |                 
|                                            |        | Three Months            |       | Six Months Ended
|                                            |        | Ended June 30,          |       | June 30,        
|                                            |        |                         |       |                 
|                                            |        | 2003                    |       | 2002             |       | 2003 |       | 2002 
|                                            |        |                         |       |                  |       |      |       |      
|Property revenues:                          |        |                         |       |                  |       |      |       |       |       |   |       |       |       |   |       |      
|                                            | Rental |                         | $     | 3,914            |       |      | $     | 3,828 |       |   | $     | 8,102 |       |   | $     | 7,174 |      
|                                            | Other  |                         |       | 265              |       |      |       | 251   |       |   |       | 513   |       |   |       | 517   |      
|                                            |        |                         |       |                  |       |      |       |       |       |   |       |       |       |   |       |      
|                                            |        | Total property revenues |       |                  | 4,179 |      |       |       | 4,079 |   |       |       | 8,615 |   |       |       | 7,691 | 
|Property operating and maintenance expenses |        |                         | 1,700 |                  |       |      | 1,615 |       |       |   | 3,333 |       |       |   | 3,137 |      
|                                            |        |                         |       |                  |       |      |       |       |       |   |       |       |       |   |       |      
|Property operating income                   |        | $                       | 2,479 |                  |       | $    | 2,464 |       |       | $ | 5,282 |       |       | $ | 4,554 |      
|                                            |        |                         |       |                  |       |      |       |       |       |   |       |       |       |   |       |      
|Average physical occupancy                  |        |                         | 91.2  | %                |       |      | 82.8  | %     |       |   | 92.7  | %     |       |   | 76.6  | %    
|                                            |        |                         |       |                  |       |      |       |       |       |   |       |       |       |   |       |      
|Average rent per occupied apartment home    |        | $                       | 817   |                  |       | $    | 865   |       |       | $ | 820   |       |       | $ | 865   |      
|                                            |        |                         |       |                  |       |      |       |       |       |   |       |       |       |   |       |      
|Number of apartment homes                   |        |                         | 1,820 |                  |       |      | 1,820 |       |       |   | 1,820 |       |       |   | 1,820 |      
|                                            |        |                         |       |                  |       |      |       |       |       |   |       |       |       |   |       |      

Operating Performance of Our Communities in
Lease-up

A summary of the five communities in lease-up
during the three and six months ended June 30, 2003 is as
follows (dollars in thousands):

|                                            |  |           |       |           |  |              |         |               |  |           |         |          |  |  |         |  |  |  |      |   |  |  |      |  
|------------------------------------------- |  | --------- | ----- | --------- |  | ------------ | ------- | ------------- |  | --------- | ------- | -------- |  |  | ------- |  |  |  | ---- | - |  |  | ---- | -
|                                            |  |           |       |           |  |              |         |               |  | Second    |         |         
|                                            |  |           |       | Total     |  | Actual/      |         |               |  | Quarter   |         | % Leased
|                                            |  | Number of |       | Actual/   |  | Anticipated  |         | Actual/       |  | Average   |         | as of   
|                                            |  | Apartment |       | Estimated |  | Construction |         | Anticipated   |  | Physical  |         | June 30,
|Community                                   |  | Homes     |       | Cost      |  | Completion   |         | Stabilization |  | Occupancy |         | 2003    
|                                            |  |           |       |           |  |              |         |               |  |           |         |         
|Summit Brookwood  Atlanta, GA              |  |           | 359   |           |  | $            | 44,498  |               |  |           | Q4 2002 |          |  |  | Q3 2003 |  |  |  | 75.6 | % |  |  | 86.9 | %
|Summit Grand Parc 
    Washington, D.C.(1) |  |           | 105   |           |  |              | 43,508  |               |  |           | Q4 2002 |          |  |  | Q3 2003 |  |  |  | 33.3 | % |  |  | 66.7 | %
|Summit Valleybrook  Philadelphia, PA       |  |           | 352   |           |  |              | 37,582  |               |  |           | Q4 2002 |          |  |  | Q3 2003 |  |  |  | 73.9 | % |  |  | 86.9 | %
|Summit Roosevelt  Washington, D.C.         |  |           | 198   |           |  |              | 46,254  |               |  |           | Q2 2003 |          |  |  | Q1 2004 |  |  |  | 29.3 | % |  |  | 63.1 | %
|Summit Stockbridge  Atlanta, GA(2)         |  |           | 304   |           |  |              | 23,600  |               |  |           | Q3 2003 |          |  |  | Q2 2004 |  |  |  | 44.5 | % |  |  | 62.2 | %
|                                            |  |           |       |           |  |              |         |               |  |           |         |          |  |  |         |  |  |  |      |   |  |  |      |  
|                                            |  |           | 1,318 |           |  | $            | 195,442 |               |  |           |         |          |  |  |         |  |  |  |      |   |  |  |      |  
|                                            |  |           |       |           |  |              |         |               |  |           |         |          |  |  |         |  |  |  |      |   |  |  |      |  



---



|    |                                                                                                                                                                                                                                                                            
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Stabilization, occupancy and percent leased
    information in the table above represents data for Summit Grand
    Parcs apartment homes only. The 12,500 square feet of
    commercial space at Summit Grand Parc was 86.0% leased and
    occupied as of June 30, 2003.
|   
|(2) | The related assets of this property are included
    in Construction in progress in our consolidated
    balance sheets as of June 30, 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

28



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##### 



residents. The operating performance of our
lease-up communities for the three and six months ended
June 30, 2003 and 2002 is summarized below (dollars in
thousands):


|                                            |        |                         |       |                  |       |      |       |      |     |   |       |       |       |   |       |     |     | 
|------------------------------------------- | ------ | ----------------------- | ----- | ---------------- | ----- | ---- | ----- | ---- | --- | - | ----- | ----- | ----- | - | ----- | --- | --- | 
|                                            |        |                         |       |                 
|                                            |        | Three Months            |       | Six Months Ended
|                                            |        | Ended June 30,          |       | June 30,        
|                                            |        |                         |       |                 
|                                            |        | 2003                    |       | 2002             |       | 2003 |       | 2002
|                                            |        |                         |       |                  |       |      |       |     
|Property revenues:                          |        |                         |       |                  |       |      |       |      |     |   |       |       |       |   |       |    
|                                            | Rental |                         | $     | 2,505            |       |      | $     | 184  |     |   | $     | 4,214 |       |   | $     | 196 |    
|                                            | Other  |                         |       | 233              |       |      |       | 47   |     |   |       | 346   |       |   |       | 75  |    
|                                            |        |                         |       |                  |       |      |       |      |     |   |       |       |       |   |       |    
|                                            |        | Total property revenues |       |                  | 2,738 |      |       |      | 231 |   |       |       | 4,560 |   |       |     | 271 | 
|Property operating and maintenance expenses |        |                         | 1,184 |                  |       |      | 215   |      |     |   | 1,972 |       |       |   | 304   |    
|                                            |        |                         |       |                  |       |      |       |      |     |   |       |       |       |   |       |    
|Property operating income                   |        | $                       | 1,554 |                  |       | $    | 16    |      |     | $ | 2,588 |       |       | $ | (33   | )  
|                                            |        |                         |       |                  |       |      |       |      |     |   |       |       |       |   |       |    
|Number of apartment homes                   |        |                         | 1,318 |                  |       |      | 1,318 |      |     |   | 1,318 |       |       |   | 1,318 |    
|                                            |        |                         |       |                  |       |      |       |      |     |   |       |       |       |   |       |    

Operating Performance of Our Disposition
Communities

During the six months ended June 30, 2003,
we sold two apartment communities formerly known as Summit
Fairways (240 apartment homes) located in Orlando, Florida and
Summit Turtle Rock (250 apartment homes) located in San Antonio,
Texas. The information in the table below represents operating
results for the three and six months ended June 30, 2003
and 2002 for the former Summit Fairways and Summit Turtle Rock.
The information in the table below for the three and six months
ended June 30, 2002 also represents operating results for
the former Summit Breckenridge, Summit New Albany, Summit Pike
Creek, 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            |     | Six Months Ended
|                                            |                        | Ended June 30,          |     | June 30,        
|                                            |                        |                         |     |                 
|                                            |                        | 2003                    |     | 2002             |    | 2003 |       | 2002 
|                                            |                        |                         |     |                  |    |      |       |      
|Property revenues:                          |                        |                         |     |                  |    |      |       |       |       |   |     |       |       |   |       |       
|                                            | Rental revenues        |                         | $   | 81               |    |      | $     | 6,292 |       |   | $   | 1,000 |       |   | $     | 13,289 |       
|                                            | Other property revenue |                         |     | 11               |    |      |       | 481   |       |   |     | 90    |       |   |       | 992    |       
|                                            |                        |                         |     |                  |    |      |       |       |       |   |     |       |       |   |       |       
|                                            |                        | Total property revenues |     |                  | 92 |      |       |       | 6,773 |   |     |       | 1,090 |   |       |        | 14,281 | 
|Property operating and maintenance expenses |                        |                         | 42  |                  |    |      | 2,454 |       |       |   | 470 |       |       |   | 5,072 |       
|                                            |                        |                         |     |                  |    |      |       |       |       |   |     |       |       |   |       |       
|Property operating income                   |                        | $                       | 50  |                  |    | $    | 4,319 |       |       | $ | 620 |       |       | $ | 9,209 |       
|                                            |                        |                         |     |                  |    |      |       |       |       |   |     |       |       |   |       |       
|Number of apartment homes                   |                        |                         | 250 |                  |    |      | 2,889 |       |       |   | 490 |       |       |   | 2,889 |       
|                                            |                        |                         |     |                  |    |      |       |       |       |   |     |       |       |   |       |       

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 earnings as
discontinued operations for all periods presented.

Below is a summary of discontinued operations for
Summit Fairways, Summit Turtle Rock and four other assets,
Summit Camino Real and Summit Buena Vista, both located in
Dallas, Texas, and Summit Arboretum and Summit Las Palmas, both
located in Austin, Texas, which qualify for held for sale
treatment under SFAS No. 144 as of June 30, 2003. The
information for 2002 below includes the six communities to which
reference is made above as well as seven of the eight
communities sold during 2002 (in thousands). The

29



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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 |        | Six Months Ended
|                                                                                                         |                        | June 30,           |        | June 30,        
|                                                                                                         |                        |                    |        |                 
|                                                                                                         |                        | 2003               |        | 2002             |  | 2003 |        | 2002  
|                                                                                                         |                        |                    |        |                  |  |      |        |       
|Property revenues:                                                                                       |                        |                    |        |                  |  |      |        |        |  |   |        |       |  |   |        |       
|                                                                                                         | Rental revenues        |                    | $      | 4,230            |  |      | $      | 10,701 |  |   | $      | 9,361 |  |   | $      | 21,623 | 
|                                                                                                         | Other property revenue |                    |        | 319              |  |      |        | 769    |  |   |        | 757   |  |   |        | 1,537  | 
|                                                                                                         |                        |                    |        |                  |  |      |        |        |  |   |        |       |  |   |        |       
|Total property revenues                                                                                  |                        |                    | 4,549  |                  |  |      | 11,470 |        |  |   | 10,118 |       |  |   | 23,160 |       
|Property operating and maintenance expenses                                                              |                        |                    | 2,049  |                  |  |      | 4,431  |        |  |   | 4,538  |       |  |   | 8,850  |       
|Depreciation                                                                                             |                        |                    | 1,129  |                  |  |      | 2,438  |        |  |   | 2,325  |       |  |   | 4,864  |       
|Interest and amortization                                                                                |                        |                    | 1,011  |                  |  |      | 1,525  |        |  |   | 2,171  |       |  |   | 3,043  |       
|                                                                                                         |                        |                    |        |                  |  |      |        |        |  |   |        |       |  |   |        |       
|Income from discontinued operations before net
    gain (loss) on disposition of discontinued operations |                        |                    | 360    |                  |  |      | 3,076  |        |  |   | 1,084  |       |  |   | 6,403  |       
|Gain (loss) on disposition of discontinued
    operations                                                |                        |                    | 3,122  |                  |  |      | (4,209 | )      |  |   | 6,258  |       |  |   | (4,209 | )     
|Loss on early extinguishment of debt                                                                     |                        |                    | (1,508 | )                |  |      |       |        |  |   | (1,508 | )     |  |   |       |       
|                                                                                                         |                        |                    |        |                  |  |      |        |        |  |   |        |       |  |   |        |       
|Income (loss) from discontinued operations                                                               |                        | $                  | 1,974  |                  |  | $    | (1,133 | )      |  | $ | 5,834  |       |  | $ | 2,194  |       
|                                                                                                         |                        |                    |        |                  |  |      |        |        |  |   |        |       |  |   |        |       

As of June 30, 2003, Summit Camino Real,
Summit Buena Vista, Summit Arboretum and Summit Las Palmas were
considered held for sale. The revenues and net income (excluding
allocation of corporate overhead) of these four communities
represented 10.9% and 11.6% of total revenues and net income,
respectively, for the three months ended June 30, 2003. The
revenues and net income (excluding allocation of corporate
overhead) of these four communities represented 11.0% and 9.3%
of total revenues and net income, respectively, for the six
months ended June 30, 2003.

On July 31, 2003, we sold Summit Camino Real
(712 apartment homes) for $46.3 million as part of our strategy
to exit our Texas markets. The net proceeds of
$27.1 million (net of a loss on early extinguishment of
debt of $2.5 million) were used to reduce amounts
outstanding under our credit facility. We expect to recognize a
gain on the disposition of Summit Camino Real.

Development Activity

Our construction in progress as of June 30,
2003 is summarized as follows (dollars in thousands):

|                                            |  |           |       |           |  |         |         |           |  |              |         |  |  |   |        |  |  |  |         | 
|------------------------------------------- |  | --------- | ----- | --------- |  | ------- | ------- | --------- |  | ------------ | ------- |  |  | - | ------ |  |  |  | ------- | 
|                                            |  |           |       | Total     |  |         |         | Estimated |  | Anticipated 
|                                            |  | Apartment |       | Estimated |  | Cost To |         | Cost To   |  | Construction
|Community                                   |  | Homes     |       | Costs     |  | Date    |         | Complete  |  | Completion  
|                                            |  |           |       |           |  |         |         |           |  |             
|Summit Stockbridge 
    Atlanta, GA(1)     |  |           | 304   |           |  | $       | 23,600  |           |  | $            | 21,143  |  |  | $ | 2,457  |  |  |  | Q3 2003 | 
|Summit Silo Creek 
    Washington, D.C.    |  |           | 284   |           |  |         | 41,700  |           |  |              | 27,707  |  |  |   | 13,993 |  |  |  | Q2 2004 | 
|Reunion Park II by Summit  Raleigh, NC     |  |           | 172   |           |  |         | 10,800  |           |  |              | 4,398   |  |  |   | 6,402  |  |  |  | Q2 2004 | 
|Summit Las Olas 
    Ft. Lauderdale, FL    |  |           | 420   |           |  |         | 73,700  |           |  |              | 53,577  |  |  |   | 20,123 |  |  |  | Q3 2005 | 
|                                            |  |           |       |           |  |         |         |           |  |              |         |  |  |   |        |  |  |  |         | 
|Total  communities under construction      |  |           | 1,180 |           |  |         | 149,800 |           |  |              | 106,825 |  |  |   | 42,975 |  |  |  |         | 
|Other development and construction costs(2) |  |           |      |           |  |         |        |           |  |              | 27,497  |  |  |   |       |  |  |  |         | 
|                                            |  |           |       |           |  |         |         |           |  |              |         |  |  |   |        |  |  |  |         | 
|Total development communities               |  |           | 1,180 |           |  | $       | 149,800 |           |  | $            | 134,322 |  |  | $ | 42,975 |  |  |  |         | 
|                                            |  |           |       |           |  |         |         |           |  |              |         |  |  |   |        |  |  |  |         | 

30



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---



|    |                                                                                     
|--- | ------------------------------------------------------------------------------------
|(1) | This community was in lease-up as of
    June 30, 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 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 numerous 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.

Operating Performance of Summit Management
Company

We own 1% of the voting stock and 99% of the
non-voting stock of 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.

Beginning in July 2003, the Management Company
will be consolidated into our financial statements in accordance
with FASB Interpretation No. 46, Consolidation of
Variable Interest Entities. This consolidation is not
expected to have a material effect on our financial position or
results of operations.

31



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##### 



The operating performance of the Management
Company and its wholly-owned subsidiary, Summit Apartment
Builders, Inc., for the three and six months ended June 30,
2003 and 2002 is summarized below (in thousands):

|                  |                                                           |                             |      |                           |       |          |     |       |       |      |        |          |       |   |      |       |       |   |     |       |       |  |        |       |       |  
|----------------- | --------------------------------------------------------- | --------------------------- | ---- | ------------------------- | ----- | -------- | --- | ----- | ----- | ---- | ------ | -------- | ----- | - | ---- | ----- | ----- | - | --- | ----- | ----- |  | ------ | ----- | ----- | -
|                  |                                                           |                             |      |                          
|                  |                                                           | Three Months Ended June 30, |      | Six Months Ended June 30,
|                  |                                                           |                             |      |                          
|                  |                                                           | 2003                        |      | 2002                      |       | % Change |     | 2003  |       | 2002 |        | % Change
|                  |                                                           |                             |      |                           |       |          |     |       |       |      |        |         
|Revenues:         |                                                           |                             |      |                           |       |          |     |       |       |      |        |          |       |   |      |       |       |   |     |       |       |  |        |      
|                  | Management fees charged to Operating Partnership          |                             | $    | 1,337                     |       |          | $   | 1,711 |       |      |        | -21.9    | %     |   | $    | 2,727 |       |   | $   | 3,231 |       |  |        | -15.6 | %    
|                  | Third party management fee revenue                        |                             |      | 156                       |       |          |     | 253   |       |      |        | -38.3    | %     |   |      | 326   |       |   |     | 463   |       |  |        | -29.6 | %    
|                  | Construction revenue charged to Operating
    Partnership |                             |      | 344                       |       |          |     | 564   |       |      |        | -39.0    | %     |   |      | 786   |       |   |     | 1,066 |       |  |        | -26.3 | %    
|                  | Other revenue                                             |                             |      | 148                       |       |          |     | 66    |       |      |        | 124.2    | %     |   |      | 286   |       |   |     | 140   |       |  |        | 104.3 | %    
|                  |                                                           |                             |      |                           |       |          |     |       |       |      |        |          |       |   |      |       |       |   |     |       |       |  |        |      
|                  |                                                           | Total revenues              |      |                           | 1,985 |          |     |       | 2,594 |      |        |          | -23.5 | % |      |       | 4,125 |   |     |       | 4,900 |  |        |       | -15.8 | %
|                  |                                                           |                             |      |                           |       |          |     |       |       |      |        |          |       |   |      |       |       |   |     |       |       |  |        |      
|Expenses:         |                                                           |                             |      |                           |       |          |     |       |       |      |        |          |       |   |      |       |       |   |     |       |       |  |        |      
|                  | Operating                                                 |                             |      | 2,024                     |       |          |     | 2,099 |       |      |        | -3.6     | %     |   |      | 4,128 |       |   |     | 4,159 |       |  |        | -0.7  | %    
|                  | Depreciation                                              |                             |      | 153                       |       |          |     | 77    |       |      |        | 98.7     | %     |   |      | 316   |       |   |     | 154   |       |  |        | 105.2 | %    
|                  | Amortization                                              |                             |      | 63                        |       |          |     | 73    |       |      |        | -13.7    | %     |   |      | 125   |       |   |     | 146   |       |  |        | -14.4 | %    
|                  | Interest                                                  |                             |      | 75                        |       |          |     | 75    |       |      |        | 0.0      | %     |   |      | 150   |       |   |     | 150   |       |  |        | 0.0   | %    
|                  |                                                           |                             |      |                           |       |          |     |       |       |      |        |          |       |   |      |       |       |   |     |       |       |  |        |      
|                  |                                                           | Total expenses              |      |                           | 2,315 |          |     |       | 2,324 |      |        |          | -0.4  | % |      |       | 4,719 |   |     |       | 4,609 |  |        |       | 2.4   | %
|                  |                                                           |                             |      |                           |       |          |     |       |       |      |        |          |       |   |      |       |       |   |     |       |       |  |        |      
|Net (loss) income |                                                           | $                           | (330 | )                         |       | $        | 270 |       |       |      | -222.2 | %        |       | $ | (594 | )     |       | $ | 291 |       |       |  | -304.1 | %    
|                  |                                                           |                             |      |                           |       |          |     |       |       |      |        |          |       |   |      |       |       |   |     |       |       |  |        |      

The decrease in management fees charged to our
communities for the six month period is primarily due to the
absence in 2003 of management fees earned from communities
disposed during 2002 of $362,000 and a decrease in management
fees charged to communities in lease up of $400,000, all offset
by an increase in the management fees charged to our communities
from 2.75% of community collections to the greater of 3.0% of
community collections or $25 per unit per month, resulting in an
approximate $201,000 increase in management fees. The decrease
in management fees charged to our communities for the three
month period is primarily due to the absence in 2003 of
management fees earned from communities disposed during 2002 of
$187,000 and a decrease in management fees charged to
communities in lease up of $318,000, all offset by an increase
in the management fees charged to our communities from 2.75% of
community collections to the greater of 3.0% of community
collections or $25 per unit per month, resulting in an
approximate $91,000 increase in management fees.

All of the construction revenue during the three
and six months ended June 30, 2003 and 2002 was from
contracts with us. Construction revenue declined for the three
and six months ended June 30, 2003 when compared to the
same period in 2002 due to a reduction in our development
activity.

Property management fees from third parties as a
percentage of total property management revenues were 10.4% and
12.9% for the three months ended June 30, 2003 and 2002 and
were 10.7% and 12.5% for the six months ended June 30, 2003
and 2002. The decrease is due primarily to a decrease in the
number of third party apartment homes managed during the six
months ended June 30, 2003 when compared to the six months
ended June 30, 2002.

Other Income and Expenses

Interest income increased by $224,000, or 20.1%,
to $1.3 million for the six months ended June 30, 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.

32



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##### 



Other income increased by $155,000, or 75.6%, to
$360,000 for the six months ended June 30, 2003 when
compared to the same period in 2002, primarily due to a
settlement received in connection with a pursuit opportunity.

Interest expense decreased by $956,000, or 12.5%,
to $6.7 million for the three months ended June 30,
2003 when compared with the same period in 2002. This decrease
was primarily due to a decrease of 0.22% in our average interest
rate and a decrease of $44.1 million in average
indebtedness outstanding for the three months ended
June 30, 2003 when compared to the same period in 2002.
Interest expense decreased by $1.9 million, or 12.6%, to
$13.3 million for the six months ended June 30, 2003
when compared with the same period in 2002. This decrease was
primarily due to a decrease of 0.31% in our average interest
rate and a decrease of $33.1 million in average
indebtedness outstanding for the six months ended June 30,
2003 when compared to the same period in 2002.

General and administrative expenses increased by
$556,000, or 40.1%, to $1.9 million for the three months ended
June 30, 2003 as compared to the same period in 2002. The
increase was primarily the result of an increase of $349,000 in
the amount recorded for executive performance-based compensation
during the three months ended June 30, 2003 as compared to
the same period in 2002. The payment of this compensation is
contingent upon our operational success in 2003. In addition,
the amount recorded for abandoned pursuit projects was $95,000
higher during the three months ended June 30, 2003 when
compared to the same period in 2002 and the amount recorded for
directors and officers liability insurance increased $69,000
when compared to the same period in 2002. As a percentage of
revenues, general and administrative expenses were 4.8% and 3.1%
for the three months ended June 30, 2003 and 2002 and were
4.3% and 3.5% for the six months ended June 30, 2003 and
2002.

Liquidity and Capital Resources



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

Our net cash provided by operating activities
decreased to $28.9 million for the six months ended
June 30, 2003 from $37.1 million for the same period
in 2002, primarily due to a decrease in income from continuing
operations before gain on sale of real estate assets to
$9.5 million during the three months ended June 30,
2003 from $11.8 million for the same period of 2002 and a
decrease in income from discontinued operations to
$1.1 million for the three months ended June 30, 2003
from $6.4 million for the same period in 2002.

Net cash used in investing activities decreased
to $21.0 million during the six months ended June 30,
2003 from $23.1 million for the same period in 2002. The
decrease in cash used in investing activities is primarily due
to an increase in cash used for the acquisition of communities
of $59.4 million and an increase in the amount of cash
invested in real estate joint ventures of $3.5 million, offset
by an increase in proceeds from the sale of real estate
communities of $37.4 million, a decrease in cash used for
the construction of real estate assets and land acquisitions of
$21.2 million and an increase in cash contributed from our
historic tax credit venture partner of $6.5 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.

Net cash used in financing activities decreased
to $7.6 million for the six months ended June 30, 2003
from $13.8 million for the six months ended June 30,
2002. The decrease in cash used in financing activities is
primarily the result of a reduction in net borrowings on our
credit facility of $52.5 million and a $15.2 million
increase in cash used to repurchase shares of Summits
common stock, all offset by an increase in proceeds from the
issuance of mortgage debt of $70.9 million and a decrease
in dividends and distributions paid of $4.9 million.

33



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##### 



Our outstanding indebtedness as of June 30,
2003 totaled $727.5 million. This amount included
$327.2 million of fixed rate conventional mortgages, $267.0
million of fixed rate unsecured notes, $110.0 million under
our former unsecured credit facility, $10.3 million of
variable rate tax-exempt bonds, $6.9 million of variable
rate mortgages, and $6.1 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 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 mortgages and equity securities, from undistributed cash
flow, from borrowings under our 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

As of June 30, 2003, we had a syndicated
unsecured line of credit in the amount of $225.0 million,
which was to mature on September 26, 2004. The credit
facility provided funds for new development, acquisitions and
general working capital purposes. Loans under the credit
facility bore interest at LIBOR plus 100 basis points. Amounts
were borrowed for thirty, sixty or ninety day increments at the
applicable interest rates for such time period. Therefore,
amounts were borrowed and repaid within those thirty, sixty or
ninety day periods. As of June 30, 2003, the outstanding
balance of the credit facility was $110.0 million.

On July 28, 2003, we obtained a secured line
of credit with a total current commitment of
$200.0 million. We have the ability to increase this
commitment pursuant to the terms of the credit agreement. This
facility is secured by nine of our communities (Summit Fair
Oaks, Summit Governors Village, Summit Grandview, Summit
Lake, Summit Peachtree City, Summit Portofino, Summit
Sedgebrook, Summit Shiloh and Summit Sweetwater) and matures in
July 2008. The secured credit facility replaced the
$225.0 million unsecured credit facility and provides funds
for new development, acquisitions and general working capital
purposes. As described in the credit agreement, loans under the
credit facility are subject to debt service coverage and loan to
value ratios and bear interest at the Reference Bill Index Rate
(defined as the money market yield for the Reference Bills as
established by the most recent Reference Bill auction conducted
by Freddie Mac) plus 58 to 91 basis points depending on the
level of debt service coverage.

In connection with obtaining our secured credit
facility, we will expense approximately $730,000 of unamortized
financing costs attributable to the unsecured credit facility.

Our senior unsecured debt ratings were lowered as
a result of obtaining a new secured credit facility to replace
our unsecured credit facility. On July 31, 2003, Standard
& Poors lowered our senior unsecured debt rating to
BB+ from BBB-. At the same time, Standard & Poors
affirmed Summits corporate credit rating at BBB-. On
August 3, 2003, Moodys Investor Service lowered our
senior unsecured debt rating to Ba1 from Baa3 and lowered
Summits preferred stock shelf rating to (P)Ba2 from (P)Ba1.

On July 28, 2003, we obtained an unsecured
letter of credit facility which matures in July 2008 and has a
total commitment of $20.0 million. The letters of credit
issued under this facility will serve as collateral for
performance on contracts and as credit guarantees to banks and
insurers.



| |                  
| | -----------------
| | 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 June 30, 2003.

34



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##### 



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 June 30, 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.



| |              
| | -------------
| | New Mortgages

On July 15, 2003, we obtained a
$23.0 million mortgage note collateralized by Summit
Overlook. This mortgage note bears interest at a fixed rate of
4.70% until July 2012, at which time the rate moves to a
variable rate until maturity in August 2013. This loan requires
monthly principal and interest payments on a 30-year
amortization schedule with a balloon payment due at maturity.

On June 13, 2003, we obtained a
$39.7 million mortgage note collateralized by Summit
Aventura. This mortgage note bears interest at a fixed rate of
5.09% until June 2012, at which time the rate moves to a
variable rate until maturity in June 2013. This loan requires
monthly principal and interest payments on a 30-year
amortization schedule with a balloon payment due at maturity.

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 in April 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 are
amortizing 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 June 30, 2003 was
3.7075%. The fair value of the interest rate swap was an asset
of $5.7 million as of June 30, 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 our consolidated 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 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

35



---



##### 



to time and in such amounts as market conditions
warrant. The following is a summary of stock repurchases under
Summits 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 |      
|Six months ended June 30, 2003 |                           |             | 809,800 |             |  |               | 15,194 |        |  |   | 18.76 |      
|                               |                           |             |         |             |  |               |        |        |  |   |       |      
|                               | Total as of June 30, 2003 |             |         | 1,249,300   |  |               | $      | 23,590 |  |   | $     | 18.88 | 
|                               |                           |             |         |             |  |               |        |        |  |   |       |      

Summit had $32.4 million of remaining
availability for repurchases under the program as of
June 30, 2003.

Commitments and Contingencies

A summary of our future contractual obligations
related to long-term debt, non-cancelable operating leases and
other obligations as of June 30, 2003 is as follows (in
thousands):

|                                 |  |                        |        |           |  |           |         |            |  |       |         |  |  |   |         |  |  |   |         | 
|-------------------------------- |  | ---------------------- | ------ | --------- |  | --------- | ------- | ---------- |  | ----- | ------- |  |  | - | ------- |  |  | - | ------- | 
|                                 |  |                       
|                                 |  | Payments Due by Period
|                                 |  |                       
|                                 |  | 2003                   |        | 2004-2005 |  | 2006-2007 |         | Thereafter |  | Total
|                                 |  |                        |        |           |  |           |         |            |  |      
|Long-term debt maturities        |  | $                      | 48,393 |           |  | $         | 113,013 |            |  | $     | 132,703 |  |  | $ | 317,351 |  |  | $ | 611,460 | 
|Standby letters of credit(1)     |  |                        | 5,305  |           |  |           | 1,891   |            |  |       |        |  |  |   |        |  |  |   | 7,196   | 
|Development expenditures(2)      |  |                        | 27,120 |           |  |           | 15,855  |            |  |       |        |  |  |   |        |  |  |   | 42,975  | 
|Purchase obligations(3)          |  |                        | 5,300  |           |  |           |        |            |  |       |        |  |  |   |        |  |  |   | 5,300   | 
|Operating lease commitments(4)   |  |                        | 480    |           |  |           | 1,852   |            |  |       | 1,917   |  |  |   | 2,669   |  |  |   | 6,918   | 
|Employment agreement payments(5) |  |                        | 200    |           |  |           | 800     |            |  |       | 800     |  |  |   | 1,600   |  |  |   | 3,400   | 
|                                 |  |                        |        |           |  |           |         |            |  |       |         |  |  |   |         |  |  |   |         | 
|Total                            |  | $                      | 86,798 |           |  | $         | 133,411 |            |  | $     | 135,420 |  |  | $ | 321,620 |  |  | $ | 677,249 | 
|                                 |  |                        |        |           |  |           |         |            |  |       |         |  |  |   |         |  |  |   |         | 



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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 $7.2 million as of June 30, 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   
|(2) | The estimated cost to complete the four
    development projects currently under construction was
    $43.0 million as of June 30, 2003. Anticipated
    construction completion dates of the projects range from the
    third quarter of 2003 to the third quarter of 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|(3) | During 2002, we completed the development of
    Summit Brookwood, a 359-unit apartment community located in
    Atlanta, Georgia. As of June 30, 2003, we are the lessee
    under a land lease related to one parcel of land on which Summit
    Brookwood was constructed. We were previously the lessee under
    two parcels of land related to Summit Brookwood; however, we
    closed on the purchase of one parcel of land for
    $5.3 million on June 20, 2003, leaving
    $5.3 million remaining on the total $10.6 million
    purchase commitment, which we expect to finalize in December
    2003 using cash as consideration.                                                                                                                                                                                                                                                                                                                                                                 
|   
|(4) | Includes operating leases related to rental of
    office space.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   
|(5) | 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 its life insurance
    plan, office space, information systems support and
    administrative support for the remainder of each employees
    life, and participation in its 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

36



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##### 



| |                                                                                                                                                                                              
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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 June 30, 2003, we
had funded $12.5 million to SZF, LLC. On July 3, 2003,
we purchased our joint venture partners 70.22% interest in
SZF, LLC for $10.0 million in cash. The assets, liabilities
and operating activities of this joint venture will be
consolidated into our financial statements beginning with July
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.
Although no assurances can be made, 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.

Funds From Operations

Funds from Operations (FFO), as
defined by the National Association of Real Estate Investment
Trusts (NAREIT), represents net income
(loss) excluding gains or losses from sales of property and
extraordinary items, plus depreciation of real estate assets,
and after adjustments for unconsolidated partnerships and joint
ventures, all determined on a consistent basis in accordance
with accounting principles generally accepted in the United
States of America (GAAP). Debt extinguishment costs
which are recorded in discontinued operations because they were
incurred directly as a result of the sale of a community are not
specifically addressed by the NAREIT definition. Because of the
limitations of the NAREIT FFO definition, we have made an
interpretation in applying the definition to maintain consistent
treatment with previous years results. We include such
debt extinguishment costs as a component of the communitys
total gain or loss and, therefore, exclude them in the
calculation of FFO. These costs were $1.5 million for the
three and six months ended June 30, 2003. We believe that
this interpretation is consistent with NAREITs definition.
Our methodology for computing FFO may differ from the
methodologies utilized by other real estate companies and,
accordingly, may not be comparable to other real estate
companies.

FFO should not be considered as an alternative to
net income (determined in accordance with GAAP) as an indication
of financial performance or to cash flows from operating
activities (determined in accordance with GAAP) as a measure of
liquidity, nor is it indicative of funds available to fund our
cash needs, including our ability to make dividend or
distribution payments. We believe that FFO is helpful to
investors as a measure of the performance of an equity REIT
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

37



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##### 



debt and to make capital expenditures. The
denominator for net income per share is weighted average shares
outstanding and the denominator for FFO per share is diluted
weighted average shares and units outstanding.


FFO for the three and six months ended
June 30, 2003 and 2002 is calculated as follows (dollars in
thousands, except per share data):

|                                                            |                           |                             |            |                           |        |      |            |         |        |   |            |         |        |   |            |         |        | 
|----------------------------------------------------------- | ------------------------- | --------------------------- | ---------- | ------------------------- | ------ | ---- | ---------- | ------- | ------ | - | ---------- | ------- | ------ | - | ---------- | ------- | ------ | 
|                                                            |                           |                             |            |                          
|                                                            |                           | Three Months Ended June 30, |            | Six Months Ended June 30,
|                                                            |                           |                             |            |                          
|                                                            |                           | 2003                        |            | 2002                      |        | 2003 |            | 2002   
|                                                            |                           |                             |            |                           |        |      |            |        
|Income available to common unitholders                      |                           | $                           | 3,287      |                           |        | $    | 15,586     |         |        | $ | 9,152      |         |        | $ | 21,616     |        
|Gain on sale of real estate assets                          |                           |                             | (3,122     | )                         |        |      | (9,634     | )       |        |   | (6,258     | )       |        |   | (9,634     | )      
|Loss on early extinguishment of debt                        |                           |                             | 1,508      |                           |        |      |           |         |        |   | 1,508      |         |        |   |           |        
|Depreciation:                                               |                           |                             |            |                           |        |      |            |         |        |   |            |         |        |   |            |        
|                                                            | Real estate assets        |                             |            | 10,269                    |        |      |            | 9,747   |        |   |            | 19,844  |        |   |            | 19,464  |       
|                                                            | Real estate joint venture |                             |            | 190                       |        |      |            | 316     |        |   |            | 379     |        |   |            | 616     |       
|                                                            |                           |                             |            |                           |        |      |            |         |        |   |            |         |        |   |            |        
|                                                            |                           | Funds from Operations       |            | $                         | 12,132 |      |            | $       | 16,015 |   |            | $       | 24,625 |   |            | $       | 32,062 | 
|                                                            |                           |                             |            |                           |        |      |            |         |        |   |            |         |        |   |            |        
|Net income per share  diluted                              |                           | $                           | 0.21       |                           |        | $    | 0.60       |         |        | $ | 0.50       |         |        | $ | 0.90       |        
|                                                            |                           |                             |            |                           |        |      |            |         |        |   |            |         |        |   |            |        
|Funds from Operations per share 
    diluted               |                           | $                           | 0.40       |                           |        | $    | 0.51       |         |        | $ | 0.80       |         |        | $ | 1.03       |        
|                                                            |                           |                             |            |                           |        |      |            |         |        |   |            |         |        |   |            |        
|Recurring capital expenditures (1)                          |                           | $                           | 1,781      |                           |        | $    | 962        |         |        | $ | 2,557      |         |        | $ | 1,911      |        
|                                                            |                           |                             |            |                           |        |      |            |         |        |   |            |         |        |   |            |        
|Non-recurring capital expenditures (2)                      |                           | $                           | 932        |                           |        | $    | 295        |         |        | $ | 1,141      |         |        | $ | 633        |        
|                                                            |                           |                             |            |                           |        |      |            |         |        |   |            |         |        |   |            |        
|Cash Flow Provided By (Used In):                            |                           |                             |            |                           |        |      |            |         |        |   |            |         |        |   |            |        
|                                                            | Operating Activities      |                             | $          | 16,496                    |        |      | $          | 21,387  |        |   | $          | 28,876  |        |   | $          | 37,124  |       
|                                                            | Investing Activities      |                             |            | (23,946                   | )      |      |            | 3,317   |        |   |            | (20,966 | )      |   |            | (23,055 | )     
|                                                            | Financing Activities      |                             |            | 7,845                     |        |      |            | (24,838 | )      |   |            | (7,603  | )      |   |            | (13,756 | )     
|Weighted average shares and units
    outstanding  basic   |                           |                             | 30,436,755 |                           |        |      | 30,888,338 |         |        |   | 30,595,312 |         |        |   | 30,785,909 |        
|                                                            |                           |                             |            |                           |        |      |            |         |        |   |            |         |        |   |            |        
|Weighted average shares and units
    outstanding  diluted |                           |                             | 30,531,635 |                           |        |      | 31,163,943 |         |        |   | 30,656,175 |         |        |   | 31,046,617 |        
|                                                            |                           |                             |            |                           |        |      |            |         |        |   |            |         |        |   |            |        



---



|    |                                                                                                                                                                                                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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.                                                                            
|   
|(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

As required by Rule 13a-15 under the
Securities Exchange Act of 1934, 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 our disclosure
controls and procedures as of the end of the period covered by
this report. 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

38



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##### 



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, and may from
time to time make changes aimed at enhancing their effectiveness
and to ensure that our systems evolve with our business. There
was no change in our internal control over financial reporting
during the quarter ended June 30, 2003 that has materially
affected, or is reasonably likely to materially affect, our
internal control over financial reporting.


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PART II.     OTHER
INFORMATION

ITEM 1.     LEGAL
PROCEEDINGS

On May 25, 2001, through our joint venture
SZF, LLC, a Delaware limited liability company in which we owned
29.78% as of June 30, 2003 and in which we own 100%
beginning July 3, 2003, we entered into an agreement with
Brickell View, L.C. (Brickell View), a Florida
limited liability company, and certain of its affiliates
relating to the formation of Coral Way, LLC, a Delaware limited
liability company, to develop a new community in Miami, Florida.
Brickell View agreed to be the developer of that community and
certain of its affiliates signed guarantees obligating them to
pay certain costs relating to the development (see Note 2
to our unaudited consolidated financial statements, which
accompany this report). On August 12, 2003, we received
notice of a suit filed by Brickell View and certain of its
affiliates against SZF, LLC and certain Summit entities,
including us, Summit and Summit Management Company. The suit,
filed in Miami-Dade County Court, Florida, relates to the
business agreement among the parties in connection with the
development and construction of the community by Coral Way.
Brickell View and its affiliates allege breach of contract,
breach of implied covenant of good faith and fair dealing,
breach of fiduciary duties and constructive fraud on the part of
SZF, LLC and constructive fraud on the part of the Summit
entities, and seek both a declaratory judgment that the
guarantee agreements have been constructively terminated and
unspecified monetary damages. We intend to enforce our rights
under the joint venture agreements and, although we may
determine to terminate the development agreement based on
Brickell Views failure to perform its obligations in
accordance with the development agreement, we do not believe
that there is any basis for allowing Brickell View or its
affiliates to be released from their obligations under the
development agreement or the guarantees. We believe that the
allegations made by Brickell View and its affiliates are not
supported by the facts and we intend to vigorously defend
against this suit.

ITEM 2.     CHANGES
IN SECURITIES

During the three months ended June 30, 2003,
Summit issued 110,000 shares of common stock in connection with
stock options 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, 110,000 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.

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##### 



ITEM 6.     EXHIBITS
AND REPORTS ON FORM 8-K

(a) Exhibits

|       |  |                                                                                                                                                                                                                                                                 
|------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|*10.1  |  | Credit Agreement dated July 28, 2003 by and
    among the Operating Partnership, Summit Sweetwater, LLC, Summit
    Shiloh, LLC, Summit Grandview, LLC, Summit Portofino Place,
    LTD., and L.J. Melody & Company                                             
|*12.1  |  | Statement regarding calculation of Ratio of
    Earnings to Fixed Charges for the six months ended June 30,
    2003.                                                                                                                                           
|*31.1  |  | Certification by Chief Executive Officer pursuant
    to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                         
|*31.2  |  | Certification by Chief Financial Officer pursuant
    to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                         
|**32.1 |  | Certification by Chief Executive Officer pursuant
    to 18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                      
|**32.2 |  | Certification by Chief Financial Officer pursuant
    to 18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                      
|99.1   |  | Separation Agreement between Summit, Summit
    Management Company and Douglas E. Brout (incorporated by
    reference to Exhibit 99.1 to Summits quarterly report
    on Form 10-Q for the quarterly period ended June 30,
    2003, File No. 001-12792).     
|99.2   |  | Sales Consulting Agreement between Summit, the
    Operating Partnership and Douglas E. Brout (incorporated by
    reference to Exhibit 99.2 to Summits quarterly report
    on Form 10-Q for the quarterly period ended June 30,
    2003, File No. 001-12792)



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



|   |                                                                                                                                                                                                                                                                                                                           
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|** | Furnished herewith. This certification shall not
    be deemed filed for purposes of Section 18 of
    the Exchange Act, or otherwise subject to the liability of that
    section, nor shall it be deemed to be incorporated by reference
    into any filing under the Securities Act of 1933 or the Exchange
    Act.

(b) Reports on Form 8-K

On April 29, 2003, we furnished a Current
Report on Form 8-K in connection with a press release
announcing Summits financial results for the first quarter
of 2003.

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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
|               
|August 13, 2003 |  | /s/ STEVEN R. LEBLANC                                                                
|                |  |                                                                                      
|(Date)          |  | Steven R. LeBlanc,President and Chief Executive Officer                              
|               
|August 13, 2003 |  | /s/ GREGG D. ADZEMA                                                                  
|                |  |                                                                                      
|(Date)          |  | Gregg D. Adzema,Executive Vice President and
    Chief Financial Officer             

42