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SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549




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FORM 10-Q

|     |  |                                                                                             
|---- |  | --------------------------------------------------------------------------------------------
|[X]  |  | QUARTERLY REPORT PURSUANT TO SECTION 13
    OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
|     |  | For the quarterly period ended March 31, 2002                                               
|     |  | 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



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



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SUMMIT PROPERTIES PARTNERSHIP, L.P.

INDEX


|        |  |                                                                                                          |  |          |    | 
|------- |  | -------------------------------------------------------------------------------------------------------- |  | -------- | -- | 
|        |  |                                                                                                          |  | Page No.
|        |  |                                                                                                          |  |         
|PART I  |  | Financial Information                                                                                    |  |          |    | 
|Item 1  |  | Financial Statements                                                                                     |  |          |    | 
|        |  | Consolidated Balance Sheets as of March 31,
    2002 and December 31, 2001 (Unaudited)                   |  |          | 3  | 
|        |  | Consolidated Statements of Earnings for the three
    months ended March 31, 2002 and 2001 (Unaudited)   |  |          | 4  | 
|        |  | Consolidated Statement of Partners Equity
    for the three months ended March 31, 2002 (Unaudited)     |  |          | 5  | 
|        |  | Consolidated Statements of Cash Flows for the
    three months ended March 31, 2002 and 2001 (Unaudited) |  |          | 6  | 
|        |  | Notes to Consolidated Financial Statements
    (Unaudited)                                               |  |          | 7  | 
|Item 2  |  | Managements Discussion and Analysis of
    Financial Condition and Results of Operations                |  |          | 15 | 
|Item 3  |  | Quantitative and Qualitative Disclosures about
    Market Risk                                           |  |          | 28 | 
|       
|PART II |  | Other Information                                                                                        |  |          |    | 
|Item 2  |  | Changes in Securities                                                                                    |  |          | 29 | 
|Item 6  |  | Exhibits and Reports on Form 8-K                                                                         |  |          | 29 | 
|        |  | Signatures                                                                                               |  |          | 30 | 

2



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##### 



PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SUMMIT PROPERTIES PARTNERSHIP, L.P.

CONSOLIDATED BALANCE SHEETS


(Dollars in thousands, except per unit
data)


(Unaudited)


|                                                                                                   |                                                                                               |                                                                              |                                                    |                              |         |           |           |           |         |           |           | 
|-------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------- | -------------------------------------------------- | ---------------------------- | ------- | --------- | --------- | --------- | ------- | --------- | --------- | 
|                                                                                                   |                                                                                               | March 31,                                                                    |                                                    | December 31,                
|                                                                                                   |                                                                                               | 2002                                                                         |                                                    | 2001                        
|                                                                                                   |                                                                                               |                                                                              |                                                    |                             
|ASSETS                                                                                             |                                                                                               |                                                                              |                                                    |                              |         |           |           |          
|Real estate assets:                                                                                |                                                                                               |                                                                              |                                                    |                              |         |           |           |          
|                                                                                                   | Land and land improvements                                                                    |                                                                              | $                                                  | 180,489                      |         |           | $         | 179,954   |        
|                                                                                                   | Buildings and improvements                                                                    |                                                                              |                                                    | 1,014,592                    |         |           |           | 1,010,460 |        
|                                                                                                   | Furniture, fixtures and equipment                                                             |                                                                              |                                                    | 78,818                       |         |           |           | 77,571    |        
|                                                                                                   |                                                                                               |                                                                              |                                                    |                              |         |           |           |          
|                                                                                                   |                                                                                               |                                                                              | Real estate assets before accumulated depreciation |                              |         | 1,273,899 |           |           |         | 1,267,985 |          
|                                                                                                   | Less: accumulated depreciation                                                                |                                                                              |                                                    | (166,668                     | )       |           |           | (156,897  | )      
|                                                                                                   |                                                                                               |                                                                              |                                                    |                              |         |           |           |          
|                                                                                                   |                                                                                               |                                                                              |                                                    | Operating real estate assets |         |           | 1,107,231 |           |         |           | 1,111,088 | 
|                                                                                                   | Construction in progress                                                                      |                                                                              |                                                    | 166,538                      |         |           |           | 142,354   |        
|                                                                                                   |                                                                                               |                                                                              |                                                    |                              |         |           |           |          
|                                                                                                   |                                                                                               |                                                                              |                                                    | Net real estate assets       |         |           | 1,273,769 |           |         |           | 1,253,442 | 
|Cash and cash equivalents                                                                          |                                                                                               |                                                                              | 2,261                                              |                              |         |           | 1,814     |          
|Restricted cash                                                                                    |                                                                                               |                                                                              | 11,448                                             |                              |         |           | 21,528    |          
|Investments in Summit Management Company and real
    estate joint ventures                        |                                                                                               |                                                                              | 9,766                                              |                              |         |           | 3,159     |          
|Deferred financing costs, net of accumulated
    amortization of $6,723 in 2002 and $7,016 in 2001 |                                                                                               |                                                                              | 6,832                                              |                              |         |           | 7,148     |          
|Other assets                                                                                       |                                                                                               |                                                                              | 6,313                                              |                              |         |           | 9,060     |          
|                                                                                                   |                                                                                               |                                                                              |                                                    |                              |         |           |           |          
|                                                                                                   |                                                                                               |                                                                              |                                                    | Total assets                 |         | $         | 1,310,389 |           |         | $         | 1,296,151 | 
|                                                                                                   |                                                                                               |                                                                              |                                                    |                              |         |           |           |          
|LIABILITIES AND PARTNERS
    EQUITY                                                               |                                                                                               |                                                                              |                                                    |                              |         |           |           |          
|Liabilities:                                                                                       |                                                                                               |                                                                              |                                                    |                              |         |           |           |          
|                                                                                                   | Notes payable                                                                                 |                                                                              | $                                                  | 742,853                      |         |           | $         | 717,560   |        
|                                                                                                   | Accounts payable and accrued expenses                                                         |                                                                              |                                                    | 17,243                       |         |           |           | 22,213    |        
|                                                                                                   | Distributions payable                                                                         |                                                                              |                                                    | 14,599                       |         |           |           | 14,156    |        
|                                                                                                   | Accrued interest payable                                                                      |                                                                              |                                                    | 6,114                        |         |           |           | 7,033     |        
|                                                                                                   | Security deposits and prepaid rents                                                           |                                                                              |                                                    | 3,109                        |         |           |           | 3,342     |        
|                                                                                                   |                                                                                               |                                                                              |                                                    |                              |         |           |           |          
|                                                                                                   |                                                                                               |                                                                              |                                                    | Total liabilities            |         |           | 783,918   |           |         |           | 764,304   | 
|                                                                                                   |                                                                                               |                                                                              |                                                    |                              |         |           |           |          
|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
    30,740,161 in 2002 and 30,608,345 in 2001 |                                                                              |                                                    |                              |         |           |           |           |        
|                                                                                                   |                                                                                               | General partner  outstanding 307,402
    in 2002 and 306,083 in 2001        |                                                    |                              | 4,634   |           |           |           | 4,687   |          
|                                                                                                   |                                                                                               | Limited partners  outstanding
    30,432,759 in 2002 and 30,302,262 in 2001 |                                                    |                              | 385,577 |           |           |           | 390,900 |          
|                                                                                                   |                                                                                               |                                                                              |                                                    |                              |         |           |           |          
|                                                                                                   |                                                                                               |                                                                              |                                                    | Total partners equity       |         |           | 526,471   |           |         |           | 531,847   | 
|                                                                                                   |                                                                                               |                                                                              |                                                    |                              |         |           |           |          
|Total liabilities and partners common and
    preferred equity                                    |                                                                                               | $                                                                            | 1,310,389                                          |                              |         | $         | 1,296,151 |          
|                                                                                                   |                                                                                               |                                                                              |                                                    |                              |         |           |           |          

See notes to consolidated financial statements.

3



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##### 



SUMMIT PROPERTIES PARTNERSHIP, L.P.

CONSOLIDATED STATEMENTS OF EARNINGS


(Dollars in thousands)


(Unaudited)


|                                                                         |                                             |                                  |                                                   |        |       |        |            |        |       |        | 
|------------------------------------------------------------------------ | ------------------------------------------- | -------------------------------- | ------------------------------------------------- | ------ | ----- | ------ | ---------- | ------ | ----- | ------ | 
|                                                                         |                                             |                                 
|                                                                         |                                             | Three Months Ended March 31,    
|                                                                         |                                             |                                 
|                                                                         |                                             | 2002                             |                                                   | 2001  
|                                                                         |                                             |                                  |                                                   |       
|Revenues:                                                                |                                             |                                  |                                                   |        |       |        |            |       
|                                                                         | Rental                                      |                                  | $                                                 | 41,795 |       |        | $          | 44,541 |      
|                                                                         | Other property income                       |                                  |                                                   | 3,070  |       |        |            | 3,327  |      
|                                                                         | Interest                                    |                                  |                                                   | 507    |       |        |            | 758    |      
|                                                                         | Other income                                |                                  |                                                   | 132    |       |        |            | 181    |      
|                                                                         | Unrealized gain (loss) on compensation plan |                                  |                                                   | 178    |       |        |            | (29    | )    
|                                                                         |                                             |                                  |                                                   |        |       |        |            |       
|                                                                         |                                             |                                  | Total revenues                                    |        |       | 45,682 |            |        |       | 48,778 | 
|                                                                         |                                             |                                  |                                                   |        |       |        |            |       
|Expenses:                                                                |                                             |                                  |                                                   |        |       |        |            |       
|                                                                         | Property operating and maintenance:         |                                  |                                                   |        |       |        |            |        |      
|                                                                         |                                             | Personnel                        |                                                   |        | 3,471 |        |            |        | 3,359 |       
|                                                                         |                                             | Advertising and promotion        |                                                   |        | 631   |        |            |        | 617   |       
|                                                                         |                                             | Utilities                        |                                                   |        | 2,134 |        |            |        | 2,262 |       
|                                                                         |                                             | Building repairs and maintenance |                                                   |        | 1,918 |        |            |        | 1,945 |       
|                                                                         |                                             | Real estate taxes and insurance  |                                                   |        | 5,413 |        |            |        | 5,413 |       
|                                                                         |                                             | Depreciation                     |                                                   |        | 9,777 |        |            |        | 9,476 |       
|                                                                         |                                             | Property supervision             |                                                   |        | 1,294 |        |            |        | 1,430 |       
|                                                                         |                                             | Other operating expenses         |                                                   |        | 695   |        |            |        | 705   |       
|                                                                         |                                             |                                  |                                                   |        |       |        |            |       
|                                                                         |                                             |                                  | Total property operating and maintenance expenses |        |       | 25,333 |            |        |       | 25,207 | 
|Interest                                                                 |                                             |                                  | 9,055                                             |        |       |        | 9,971      |       
|Amortization                                                             |                                             |                                  | 309                                               |        |       |        | 343        |       
|General and administrative                                               |                                             |                                  | 1,757                                             |        |       |        | 1,233      |       
|Adjustment to compensation plan liability                                |                                             |                                  | 178                                               |        |       |        | (29        | )     
|Income on equity investments:                                            |                                             |                                  |                                                   |        |       |        |            |       
|                                                                         | Summit Management Company                   |                                  |                                                   | (21    | )     |        |            | (352   | )    
|                                                                         | Real estate joint ventures                  |                                  |                                                   | (64    | )     |        |            | (82    | )    
|                                                                         |                                             |                                  |                                                   |        |       |        |            |       
|                                                                         |                                             |                                  | Total expenses                                    |        |       | 36,547 |            |        |       | 36,291 | 
|                                                                         |                                             |                                  |                                                   |        |       |        |            |       
|Net income                                                               |                                             |                                  | 9,135                                             |        |       |        | 12,487     |       
|Distributions to Series B preferred
    unitholders                      |                                             |                                  | (1,902                                            | )      |       |        | (1,902     | )     
|Distributions to Series C preferred
    unitholders                      |                                             |                                  | (1,203                                            | )      |       |        | (1,203     | )     
|                                                                         |                                             |                                  |                                                   |        |       |        |            |       
|Income available to common unitholders                                   |                                             |                                  | 6,030                                             |        |       |        | 9,382      |       
|Income available to common unitholders allocated
    to general partner  |                                             |                                  | (60                                               | )      |       |        | (94        | )     
|                                                                         |                                             |                                  |                                                   |        |       |        |            |       
|Income available to common unitholders allocated
    to limited partners |                                             | $                                | 5,970                                             |        |       | $      | 9,288      |       
|                                                                         |                                             |                                  |                                                   |        |       |        |            |       
|Per unit data:                                                           |                                             |                                  |                                                   |        |       |        |            |       
|Net income  basic and diluted                                           |                                             | $                                | 0.30                                              |        |       | $      | 0.40       |       
|                                                                         |                                             |                                  |                                                   |        |       |        |            |       
|Distributions to Series B preferred
    unitholders  basic and diluted  |                                             | $                                | (0.06                                             | )      |       | $      | (0.06      | )     
|                                                                         |                                             |                                  |                                                   |        |       |        |            |       
|Distributions to Series C preferred
    unitholders  basic and diluted  |                                             | $                                | (0.04                                             | )      |       | $      | (0.04      | )     
|                                                                         |                                             |                                  |                                                   |        |       |        |            |       
|Income available to common
    unitholders  basic                       |                                             | $                                | 0.20                                              |        |       | $      | 0.30       |       
|                                                                         |                                             |                                  |                                                   |        |       |        |            |       
|Income available to common
    unitholders  diluted                     |                                             | $                                | 0.19                                              |        |       | $      | 0.30       |       
|                                                                         |                                             |                                  |                                                   |        |       |        |            |       
|Distributions declared                                                   |                                             | $                                | 0.475                                             |        |       | $      | 0.463      |       
|                                                                         |                                             |                                  |                                                   |        |       |        |            |       
|Weighted average units  basic                                           |                                             |                                  | 30,681,527                                        |        |       |        | 30,998,481 |       
|                                                                         |                                             |                                  |                                                   |        |       |        |            |       
|Weighted average units  diluted                                         |                                             |                                  | 30,948,671                                        |        |       |        | 31,292,210 |       
|                                                                         |                                             |                                  |                                                   |        |       |        |            |       

See notes to consolidated financial statements.

4



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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, 2001 |                                                  | $                                               | 82,713 |           |   | $       | 53,547 |          |   | $     | 4,687 |      |    | $ | 390,900 |         |       | $ | 531,847 |        
|                           | Distributions to common unitholders              |                                                 |        |          |   |         |        |         |   |       |       | (145 | )  |   |         | (14,402 | )     |   |         | (14,547 | )    
|                           | Contributions from Summit Properties related to: |                                                 |        |           |   |         |        |          |   |       |       |      |    |   |         |         |       |   |         |         |      
|                           |                                                  | Proceeds from dividend and stock purchase plans |        |           |  |         |        |          |  |       |       |      | 29 |   |         |         | 2,916 |   |         |         | 2,945 |  
|                           |                                                  | Exercise of stock options                       |        |           |  |         |        |          |  |       |       |      | 0  |   |         |         | 20    |   |         |         | 20    |  
|                           |                                                  | Amortization of restricted stock grants         |        |           |  |         |        |          |  |       |       |      | 4  |   |         |         | 363   |   |         |         | 367   |  
|                           |                                                  | Netdown of restricted stock grants              |        |           |  |         |        |          |  |       |       |      | (3 | ) |         |         | (323  | ) |         |         | (326  | )
|                           | Issuance of employee notes receivable            |                                                 |        |          |   |         |        |         |   |       |       | (2   | )  |   |         | (225    | )     |   |         | (227    | )    
|                           | Repayments of employee notes receivable          |                                                 |        |          |   |         |        |         |   |       |       | 4    |    |   |         | 358     |       |   |         | 362     |      
|                           | Distributions to preferred unitholders           |                                                 |        |          |   |         |        |         |   |       |       | (31  | )  |   |         | (3,074  | )     |   |         | (3,105  | )    
|                           | Net income                                       |                                                 |        |          |   |         |        |         |   |       |       | 91   |    |   |         | 9,044   |       |   |         | 9,135   |      
|                           |                                                  |                                                 |        |           |   |         |        |          |   |       |       |      |    |   |         |         |       |   |         |        
|Balance, March 31, 2002    |                                                  | $                                               | 82,713 |           |   | $       | 53,547 |          |   | $     | 4,634 |      |    | $ | 385,577 |         |       | $ | 526,471 |        
|                           |                                                  |                                                 |        |           |   |         |        |          |   |       |       |      |    |   |         |         |       |   |         |        

See notes to consolidated financial statements.

5



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##### 



SUMMIT PROPERTIES PARTNERSHIP, L.P.

CONSOLIDATED STATEMENTS OF CASH
FLOWS


(Dollars in thousands)


(Unaudited)


|                                                                                                               |                                                                               |                                                                                                    |                                           |         |        |         |        |         |         |        |  
|-------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------- | ----------------------------------------- | ------- | ------ | ------- | ------ | ------- | ------- | ------ | -
|                                                                                                               |                                                                               |                                                                                                   
|                                                                                                               |                                                                               | Three Months Ended                                                                                
|                                                                                                               |                                                                               | March 31,                                                                                         
|                                                                                                               |                                                                               |                                                                                                   
|                                                                                                               |                                                                               | 2002                                                                                               |                                           | 2001   
|                                                                                                               |                                                                               |                                                                                                    |                                           |        
|Cash flows from operating activities:                                                                          |                                                                               |                                                                                                    |                                           |         |        |         |        |        
|Net income                                                                                                     |                                                                               | $                                                                                                  | 9,135                                     |         |        | $       | 12,487 |        
|Adjustments to reconcile net income to net cash
    provided by operating activities:                          |                                                                               |                                                                                                    |                                           |         |        |         |        |        
|                                                                                                               | Income on equity method investments                                           |                                                                                                    |                                           | (85     | )      |         |        | (434    | )      
|                                                                                                               | Depreciation and amortization                                                 |                                                                                                    |                                           | 10,437  |        |         |        | 10,258  |        
|                                                                                                               | Increase in restricted cash                                                   |                                                                                                    |                                           | (227    | )      |         |        | (898    | )      
|                                                                                                               | Decrease (increase) in other assets                                           |                                                                                                    |                                           | 669     |        |         |        | (220    | )      
|                                                                                                               | Decrease in accrued interest payable                                          |                                                                                                    |                                           | (919    | )      |         |        | (2,703  | )      
|                                                                                                               | Decrease in accounts payable and accrued expenses                             |                                                                                                    |                                           | (3,040  | )      |         |        | (339    | )      
|                                                                                                               | (Decrease) increase in security deposits and
    prepaid rents                |                                                                                                    |                                           | (233    | )      |         |        | 79      |        
|                                                                                                               |                                                                               |                                                                                                    |                                           |         |        |         |        |        
|                                                                                                               |                                                                               |                                                                                                    | Net cash provided by operating activities |         |        | 15,737  |        |         |         | 18,230 |  
|                                                                                                               |                                                                               |                                                                                                    |                                           |         |        |         |        |        
|Cash flows from investing activities:                                                                          |                                                                               |                                                                                                    |                                           |         |        |         |        |        
|                                                                                                               | Construction of real estate assets and land
    acquisitions, net of payables |                                                                                                    |                                           | (25,820 | )      |         |        | (38,609 | )      
|                                                                                                               | Proceeds from sale of Communities                                             |                                                                                                    |                                           | 10,307  |        |         |        | 39,742  |        
|                                                                                                               | Capitalized interest                                                          |                                                                                                    |                                           | (2,455  | )      |         |        | (3,290  | )      
|                                                                                                               | Investment in real estate joint venture                                       |                                                                                                    |                                           | (6,864  | )      |         |        |        |        
|                                                                                                               | Distribution from real estate joint venture                                   |                                                                                                    |                                           | 329     |        |         |        |        |        
|                                                                                                               | Recurring capital expenditures                                                |                                                                                                    |                                           | (994    | )      |         |        | (1,002  | )      
|                                                                                                               | Non-recurring capital expenditures                                            |                                                                                                    |                                           | (754    | )      |         |        | (1,121  | )      
|                                                                                                               | Property improvements other than capital
    expenditures                     |                                                                                                    |                                           | (151    | )      |         |        | (1,009  | )      
|                                                                                                               | Decrease in notes receivable                                                  |                                                                                                    |                                           | 30      |        |         |        | 14      |        
|                                                                                                               |                                                                               |                                                                                                    |                                           |         |        |         |        |        
|                                                                                                               |                                                                               |                                                                                                    | Net cash used in investing activities     |         |        | (26,372 | )      |         |         | (5,275 | )
|                                                                                                               |                                                                               |                                                                                                    |                                           |         |        |         |        |        
|Cash flows from financing activities:                                                                          |                                                                               |                                                                                                    |                                           |         |        |         |        |        
|                                                                                                               | Net borrowings on line of credit                                              |                                                                                                    |                                           | 27,000  |        |         |        | 3,000   |        
|                                                                                                               | Repayments of mortgage debt                                                   |                                                                                                    |                                           | (1,427  | )      |         |        | (1,405  | )      
|                                                                                                               | Repayments of tax exempt bonds                                                |                                                                                                    |                                           | (280    | )      |         |        | (360    | )      
|                                                                                                               | Increase in deferred financing costs                                          |                                                                                                    |                                           | (46     | )      |         |        | (85     | )      
|                                                                                                               | Distributions to common unitholders                                           |                                                                                                    |                                           | (14,162 | )      |         |        | (13,549 | )      
|                                                                                                               | Distributions to Series B preferred
    unitholders                           |                                                                                                    |                                           | (1,902  | )      |         |        | (1,902  | )      
|                                                                                                               | Distributions to Series C preferred
    unitholders                           |                                                                                                    |                                           | (1,203  | )      |         |        | (1,203  | )      
|                                                                                                               | Increase in employee notes receivable                                         |                                                                                                    |                                           | (227    | )      |         |        | (992    | )      
|                                                                                                               | Repayments of employee notes receivable                                       |                                                                                                    |                                           | 362     |        |         |        | 398     |        
|                                                                                                               | Contributions from Summit Properties related to:                              |                                                                                                    |                                           |         |        |         |        |         |        
|                                                                                                               |                                                                               | Net proceeds from dividend reinvestment and stock
    purchase plans and exercise of stock options |                                           |         | 2,967  |         |        |         | 2,435   |       
|                                                                                                               |                                                                               |                                                                                                    |                                           |         |        |         |        |        
|                                                                                                               |                                                                               | Net cash provided by (used in) financing
    activities                                            |                                           |         | 11,082 |         |        |         | (13,663 | )     
|                                                                                                               |                                                                               |                                                                                                    |                                           |         |        |         |        |        
|Net increase (decrease) in cash and cash
    equivalents                                                       |                                                                               |                                                                                                    | 447                                       |         |        |         | (708   | )      
|Cash and cash equivalents, beginning of year                                                                   |                                                                               |                                                                                                    | 1,814                                     |         |        |         | 3,148  |        
|                                                                                                               |                                                                               |                                                                                                    |                                           |         |        |         |        |        
|Cash and cash equivalents, end of period                                                                       |                                                                               | $                                                                                                  | 2,261                                     |         |        | $       | 2,440  |        
|                                                                                                               |                                                                               |                                                                                                    |                                           |         |        |         |        |        
|Supplemental disclosure of cash flow
    information  Cash paid for interest, net of
    capitalized interest |                                                                               | $                                                                                                  | 9,974                                     |         |        | $       | 12,674 |        
|                                                                                                               |                                                                               |                                                                                                    |                                           |         |        |         |        |        

See notes to consolidated financial statements.

6



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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

We have prepared the accompanying unaudited
financial statements in accordance with generally accepted
accounting principles for interim financial information and in
conformity with the rules and regulations of the Securities and
Exchange Commission. Accordingly, they do not include all of the
information and footnotes required by generally accepted
accounting principles for complete financial statements. We have
included all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation. The results of
operations for the three months ended March 31, 2002 are
not necessarily indicative of the results that may be expected
for the full year. You should read our December 31, 2001
audited financial statements and notes included in our Annual
Report on Form 10-K in conjunction with these interim
statements.

We conduct the business of operating, developing
and acquiring Class A luxury apartment
communities for Summit, which is a self-administered and
self-managed real estate investment trust (REIT). As
of March 31, 2002, Summit held 88.4% of our outstanding
partnership interests, consisting of a 1% general partner
interest and an 87.4% limited partner interest. We are obligated
to redeem each common unit of limited partnership interest at
the request of the holder for cash equal to the fair market
value of one share of Summits common stock, except that we
may elect to have Summit acquire each common unit presented for
redemption for one share of its common stock. With each
redemption of outstanding common units for common stock,
Summits percentage ownership interest in the Operating
Partnership will increase. In addition, whenever Summit issues
shares of common stock, Summit will contribute any resulting
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 own 1% of the voting stock and 99% of the
non-voting stock of Summit Management Company (the
Management Company). The remaining 99% of voting
stock and 1% of non-voting stock are held by one of the
Co-Chairmen of Summits Board of Directors. As a result of
this stock ownership, we have a 99% economic interest and the
Co-Chairman has a 1% economic interest in the Management
Company. Because of our ability to exercise significant
influence, the Management Company is accounted for under the
equity method of accounting. The Management Company is not
considered material to our consolidated financial statements
taken as a whole.

New Accounting
Pronouncements The
Financial Accounting Standards Board has approved Statement of
Financial Accounting Standard (SFAS) No. 143,
Accounting for Asset Retirement Obligations. SFAS
No. 143 addresses financial accounting and reporting for
obligations associated with the retirement of tangible
long-lived assets and the associated asset retirement costs,
including legal obligations that result from the acquisition,
construction, development and/or the normal operation of
long-lived assets. It requires that the fair value of a
liability for an asset retirement obligation be recognized in
the period in which it is incurred if a reasonable estimate of
fair value can be made. The associated asset retirement costs
are capitalized as part of the carrying amount of the long-lived
asset. SFAS No. 143 is effective for fiscal years beginning
after June 15, 2002. We are evaluating the impact of the
adoption of this standard and have not yet determined the effect
of adoption on our financial position and results of operations.

Recently Adopted Accounting
Pronouncements On
June 29, 2001, the Financial Accounting Standards Board
approved SFAS No. 142, Goodwill and Other Intangible
Assets. SFAS No. 142 requires that upon

7



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##### 



SUMMIT PROPERTIES PARTNERSHIP, L.P.


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




adoption, amortization of goodwill will cease and
instead, the carrying value of goodwill will be evaluated for
impairment on an annual basis. Identifiable intangible assets
will continue to be amortized over their useful lives and
reviewed for impairment in accordance with SFAS No. 144,
Accounting for the Impairment or Disposal of Long-Lived
Assets. We adopted SFAS No. 142 on January 1,
2002 and its adoption had no effect on our financial position
and results of operations.

The Financial Accounting Standards Board has
approved SFAS 144, Accounting for the Impairment or
Disposal of Long-Lived Assets. SFAS No. 144
supersedes SFAS No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed of and amends Accounting Principles Bulletin
(APB) No. 30, Reporting the Results of
Operations  Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and
Infrequently Occurring Events and Transactions. Along with
establishing a single accounting model, based on the framework
established in SFAS No. 121, for long-lived assets to be
disposed of by sale, this standard retains the basic provisions
of APB No. 30 for the presentation of discontinued
operations in the income statement but broadens that
presentation to include a component of an entity. We adopted
SFAS No. 144 on January 1, 2002 and its adoption did
not have a material impact on our financial position and results
of operations for the three months ended March 31, 2002.
SFAS No. 144 will require operating results of communities
we consider held for sale, as well as those sold, to be included
in discontinued operations in our statements of operations.

Per Unit
Data Basic earnings
per unit are computed based upon the weighted average number of
units outstanding during the respective period. The difference
between basic and diluted weighted
average units is the dilutive effect of Summits stock
options outstanding. The number of units added to weighted
average units outstanding for the diluted calculation for the
three months ended March 31, 2002 was 267,144 and for the
three months ended March 31, 2001 was 293,729. Dilution
caused by these options had no effect on net income per unit for
the three months ended March 31, 2002 or 2001.

Deferred Financing
Costs During the three
months ended March 31, 2002, we wrote off $601,000 of fully
amortized deferred financing costs.

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. We are entitled to 25% of the
joint ventures cash flow based on our equity interest. If
certain benchmarks are achieved in the future, we would be
entitled to a preferred return in excess of 25% of the cash
flow. The operating agreement of the joint venture provides that
we will be entitled to 25% of the net proceeds upon liquidation
of Station Hill, although our interest in the residual value of
the joint venture could increase above or decrease below 25%.
Our interest in the residual value of the joint venture could
decrease below 25% only if we had received a preferred return on
cash flow at any time prior to liquidation. Any such decrease
would be limited to the extent of the previous preferred return.
Station Hill owns four communities and is accounted for on the
equity method of accounting and, therefore, our 25% equity
interest is presented in Income on equity investments:
Real estate joint ventures in our consolidated statements
of earnings. On August 1, 2001, Station Hill sold an
apartment community located in Tampa, Florida formerly known as
Summit Station (230 apartment homes). The following are
condensed balance sheets as of March 31, 2002 and
December 31, 2001 and income statements for the three
months ended March 31, 2002 and 2001 for Station Hill. The
balance sheets and income statements 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).

8



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##### 



SUMMIT PROPERTIES PARTNERSHIP, L.P.


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




|                          |                                         |                |        |              |  |   |        |        | 
|------------------------- | --------------------------------------- | -------------- | ------ | ------------ |  | - | ------ | ------ | 
|                          |                                         |               
|                          |                                         | Balance Sheets
|                          |                                         |               
|                          |                                         | March 31,      |        | December 31,
|                          |                                         | 2002           |        | 2001        
|                          |                                         |                |        |             
|Real estate assets, net   |                                         | $              | 73,651 |              |  | $ | 74,261 |       
|Cash and cash equivalents |                                         |                | 1,076  |              |  |   | 901    |       
|Other assets              |                                         |                | 271    |              |  |   | 283    |       
|                          |                                         |                |        |              |  |   |        |       
|                          | Total assets                            |                | $      | 74,998       |  |   | $      | 75,445 | 
|                          |                                         |                |        |              |  |   |        |       
|Mortgages payable         |                                         | $              | 59,340 |              |  | $ | 59,536 |       
|Other liabilities         |                                         |                | 786    |              |  |   | 575    |       
|Partners capital         |                                         |                | 14,872 |              |  |   | 15,334 |       
|                          |                                         |                |        |              |  |   |        |       
|                          | Total liabilities and partners capital |                | $      | 74,998       |  |   | $      | 75,445 | 
|                          |                                         |                |        |              |  |   |        |       

|                  |                               |                    |       |      |       |   |       |       |       | 
|----------------- | ----------------------------- | ------------------ | ----- | ---- | ----- | - | ----- | ----- | ----- | 
|                  |                               |                   
|                  |                               | Income Statements 
|                  |                               |                   
|                  |                               |                   
|                  |                               | Three Months Ended
|                  |                               | March 31,         
|                  |                               |                   
|                  |                               | 2002               |       | 2001
|                  |                               |                    |       |     
|Revenues          |                               | $                  | 2,554 |      |       | $ | 3,180 |      
|Expenses:         |                               |                    |       |      |       |   |       |      
|                  | Property operating            |                    |       | 916  |       |   |       | 1,090 |      
|                  | Interest                      |                    |       | 995  |       |   |       | 1,148 |      
|                  | Depreciation and amortization |                    |       | 731  |       |   |       | 803   |      
|                  |                               |                    |       |      |       |   |       |      
|                  |                               | Total expenses     |       |      | 2,642 |   |       |       | 3,041 | 
|                  |                               |                    |       |      |       |   |       |      
|Net (loss) income |                               | $                  | (88   | )    |       | $ | 139   |      
|                  |                               |                    |       |      |       |   |       |      

We own a 49% interest in a joint venture which
developed and operates an apartment community located in
Atlanta, Georgia known as Summit Cheshire Bridge. This joint
venture is accounted for under the equity method of accounting
and its operating results are presented in Income on
equity investments: Real estate joint ventures in our
consolidated statements of earnings. The construction costs were
funded primarily through a construction loan to the joint
venture from an unrelated third party equal to 100% of the
construction costs. We had the right to purchase our joint
venture partners interest in the joint venture, but
decided subsequent to December 31, 2001 not to exercise
this option which expired on January 17, 2002. Due to our
decision not to purchase our joint venture partners
interest, we were required to make a capital contribution of
$6.8 million which represents 25% of the joint
ventures total construction loan amount. We made our
contribution on February 15, 2002. This contribution did
not change our equity interest in the joint venture. We will
receive a preferred return in the amount of 9% per year
compounded annually until our $6.8 million capital
contribution has been returned as a result of a sale,
refinancing or other capital transaction. We are entitled to 49%
of the cash flow based on our equity interest, after all
preferred return payments have been made. The balance sheet and
income statement information for the joint venture is not
material to our consolidated financial statements taken as a
whole.

On May 25, 2001, we contributed
$4.2 million for a 29.78% interest in a joint venture that
owns substantially all of the interests in a limited liability
company that will develop, through a third-party contractor, an
apartment community in Miami, Florida. The community will
consist of 323 apartment homes and 17,795 square feet
of office/ retail space. The construction costs are being funded
through the equity which the joint venture contributed to the
limited liability company and by a loan to that company from an
unrelated third party. In the event that construction costs
exceed the construction loan amount, we have agreed to lend to
the joint venture, which will in turn advance to the limited
liability company, the amount required to fund such cost
overruns. This loan would accrue interest at the rate of eleven
percent (11%) per year. Upon completion of construction, the
joint venture will pay, or refinance, the construction loan. In
the event the limited liability company defaults on the
construction loan, we have the right, under certain
circumstances, to

9



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##### 



SUMMIT PROPERTIES PARTNERSHIP, L.P.


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




cure the defaults, keep the construction loan in
place and complete construction of the community. The joint
venture has also acquired an adjacent piece of land. We are
serving as the managing member of the joint venture, and Summit
Management Company will be the property management company for
the project after construction is completed. This project is
accounted for on the equity method of accounting.

3. NOTES PAYABLE

We have a syndicated unsecured line of credit in
the amount of $225.0 million which matures on
September 26, 2004. The credit facility provides funds for
new development, acquisitions and general working capital
purposes. Loans under the credit facility bear interest at LIBOR
plus 100 basis points. The spread component of the
aggregate interest rate will change in the event of an upgrade
or downgrade of our unsecured credit rating of BBB- by
Standard & Poors Rating Services and Baa3 by
Moodys Investors Service. Amounts are borrowed for thirty,
sixty or ninety day increments at the appropriate interest rates
for such time period. Therefore, amounts are borrowed and repaid
within those thirty, sixty or ninety day periods. The credit
facility is repayable monthly on an interest only basis with
principal due at maturity of each thirty, sixty or ninety day
increment. As of March 31, 2002, the outstanding balance of
the credit facility was $121.0 million, leaving
$104.0 million of remaining availability on the
$225.0 million commitment.

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

On April 20, 2000, we commenced a program
for the sale of up to $250.0 million aggregate principal
amount of medium-term notes due nine months or more from the
date of issuance. We had medium-term notes with an aggregate
principal amount of $112.0 million outstanding in
connection with the MTN program as of March 31, 2002.

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 medium-term notes with an aggregate
principal amount of $25.0 million outstanding in connection
with this MTN program as of March 31, 2002. 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.

4. 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 January 1, 2001, we adopted SFAS No. 133,
Accounting for Derivative Instruments and Hedging
Activities, as amended. SFAS 133 establishes accounting
and reporting standards for derivative instruments, including
certain derivative instruments embedded in other contracts, and
for hedging activities. It requires that entities recognize all
derivatives as either assets or liabilities in the statement of
financial position and measure those instruments at fair value.
The cumulative effect of adopting SFAS 133 was not material
to our financial statements.

As of March 31, 2002, we had one interest
rate swap with a notional amount of $30.0 million, relating
to $30.0 million of 6.625% fixed rate notes issued under
our MTN program. Under the interest rate swap agreement, through
the maturity date of December 15, 2003, (a) we have
agreed to pay to the counterparty the interest on a
$30.0 million notional amount at a floating interest rate
of three-month LIBOR plus 11 basis points, and (b) the
counterparty has agreed to pay to us the interest on the same
notional amount at the fixed rate. The floating rate as of
March 31, 2002 was 2.11%. The fair value of the interest
rate swap was

10



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##### 



SUMMIT PROPERTIES PARTNERSHIP, L.P.


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




$1.9 million as of March 31, 2002. The
swap has been designated as a fair value hedge of the underlying
fixed rate debt obligation and has been recorded as a reduction
of the related debt instrument. We assume no ineffectiveness as
the interest rate swap meets the short-cut method conditions
required under FAS 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.

5. RESTRICTED STOCK

During the three months ended March 31,
2002, Summit granted 442 shares of restricted stock valued at
$10,000 to employees under its 1994 Stock Option and Incentive
Plan. During the three months ended March 31, 2001, Summit
granted 11,668 shares of restricted stock valued at $292,000
under this plan. The value of the restricted shares has been
recorded as unamortized restricted stock compensation and is
shown as a separate component of partners equity in the
accompanying balance sheets. Unearned compensation related to
these restricted stock grants is being amortized to expense over
the vesting periods which range from three to five years.

During the three months ended March 31,
2001, Summit granted 94,818 shares of restricted stock valued at
$1.2 million pursuant to its Performance Stock Award Plan.
One half of these shares vested on the date of grant, with the
remaining shares vesting in two equal annual installments
beginning on January 1, 2002. The value of the shares has
been recorded as unamortized restricted stock compensation.

During the three months ended March 31,
2002, employees surrendered 13,793 restricted shares valued at
$326,000 to satisfy the income tax liability related to the
vesting of restricted stock.

6. SUPPLEMENTAL CASH FLOW
INFORMATION

Non-cash investing and financing activities for
the three months ended March 31, 2002 and 2001 were as
follows:



| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | A. | We accrued distributions payable in the amounts
    of $14.6 million as of March 31, 2002 and
    $14.4 million as of March 31, 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| | B. | Summit issued 442 shares of restricted stock
    valued at $10,000 during the three months ended March 31,
    2002 under its 1994 Stock Option and Incentive Plan. Summit
    issued 11,668 shares of restricted stock valued at $292,000
    during the three months ended March 31, 2001 under this
    plan. Summit issued 94,818 shares of restricted stock
    valued at $1.2 million during the three months ended
    March 31, 2001 in connection with its Performance Stock
    Award Plan. There were no issuances of restricted stock in
    connection with this plan during the three months ended
    March 31, 2002. During the three months ended
    March 31, 2002, employees surrendered 13,793 restricted
    shares valued at $326,000 to satisfy the income tax liability
    related to restricted stock.
|
| | C. | Summit issued 2,842 shares of common stock in
    exchange for 2,842 common units valued at $62,000 during the
    three months ended March 31, 2002. Summit issued 4,012
    shares of common stock in exchange for 4,012 common units valued
    at $96,000 during the three months ended March 31, 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| | D. | We issued 66,376 common units at a price of
    $28.625 per unit during the three months ended March 31,
    2001 in connection with the purchase of a building and a parcel
    of land.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

11



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##### 



SUMMIT PROPERTIES PARTNERSHIP, L.P.


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




7. COMMITMENTS AND
CONTINGENCIES

The estimated cost to complete the five
development projects currently under construction was
$69.9 million as of March 31, 2002. Anticipated
construction completion dates of the projects range from the
third quarter of 2002 to the fourth quarter of 2003.

On January 19, 2000, we entered into a real
estate purchase agreement with a third-party real estate
developer. Under the terms of the agreement, we have agreed to
purchase upon completion a Class A mixed-use
community, which will be called Summit Brickell, and is located
in Miami, Florida. We will purchase Summit Brickell upon the
earlier of one year after construction completion or the
achievement of 80% occupancy. We may extend this closing
obligation for six months after the initial purchase period. We
expect to close on the purchase of Summit Brickell during late
2002 or in 2003. The final purchase price will be determined
based on budgeted construction costs plus a bonus to the
developer based on the capitalized income of the property at the
time of purchase. In the event there are net cost savings during
construction, a portion of such savings will be used to reduce
the purchase price and a portion will be paid as an incentive to
the developer pursuant to an agreed upon formula. In the event
there are net cost overruns during construction, the developer
will be responsible for funding such overruns unless those
overruns result from design change orders which we may request;
such overruns will be added to the purchase price. The purchase
price is expected to range from $50.5 million to
$60.0 million. The purchase of Summit Brickell is subject
to customary closing conditions. We have issued a letter of
credit in the amount of $13.0 million, which will serve as
a credit enhancement to the developers construction loan.
In the event that any amount under the letter of credit is drawn
upon, we shall be treated as having issued a loan to the
developer in the amount of such draw. Any such loan will accrue
interest at a rate of eighteen percent (18%) per year.

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 Summit from time to time over the
next ten years. 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. 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 obligated to redeem each common unit at
the request of the holder for cash equal to the fair market
value of one share of Summits common stock, except that we
may elect to have Summit acquire each common unit presented for
redemption for one share of common stock (subject to adjustment).

8. BUSINESS SEGMENTS

We develop, operate and acquire
Class A luxury apartment communities primarily
in markets with high growth potential. We develop apartments
solely for our own use and do not perform development activities
for third parties. 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 including
swimming pools, clubhouses, exercise rooms and Peak
Services. Peak Services include, but are not limited to,
Same Day Maintenance Service and Emergency Maintenance available
24 hours a day, business services, package acceptance and
delivery, a video library and loaner living accessories. All of
our communities market themselves through media advertising. Due
to the similarities of our communities and their similar
economic characteristics as exhibited through similar long-term
financial performance, our communities have been aggregated into
one reportable segment as allowed in accordance with SFAS
No. 131.

12



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##### 



SUMMIT PROPERTIES PARTNERSHIP, L.P.


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




9. PREFERRED UNITS

As of March 31, 2002, we had outstanding
3.4 million preferred units of limited partnership interest
designated as 8.95% Series B Cumulative Redeemable
Perpetual Preferred Units. We may redeem these preferred units
on or after April 29, 2004 for cash at a redemption price
equal to the holders capital account, or at Summits
option, shares of Summits 8.95% Series B Cumulative
Redeemable Perpetual Preferred Stock, or a combination of cash
and shares of Summits 8.95% Series B Cumulative
Redeemable Perpetual Preferred Stock. Holders of the
Series B preferred units have the right to exchange these
preferred units for shares of Summits Series B
preferred stock on a one-for-one basis, subject to adjustment:
(a) on or after April 29, 2009, (b) if full
quarterly distributions are not made for six quarters, or
(c) upon the occurrence of specified events related to our
treatment or the treatment of the preferred units for federal
income tax purposes. The Series B preferred units have no
stated maturity, are not subject to any sinking fund or
mandatory redemption, and are not convertible into any other
securities of Summit or the Operating Partnership. Distributions
on the Series B preferred units are cumulative from the
date of original issuance and are payable quarterly at the rate
of 8.95% per year of the $25.00 original capital contribution.
We made distributions to the holders of the Series B
preferred units in the aggregate amount of $1.9 million
during each of the three months ended March 31, 2002 and
2001.

As of March 31, 2002, we had outstanding
2.2 million preferred units of limited partnership interest
designated as 8.75% Series C Cumulative Redeemable
Perpetual Preferred Units. We may redeem the preferred units on
or after September 3, 2004 for cash at a redemption price
equal to the holders capital account. Holders 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. The Series C preferred
units have no stated maturity, are not subject to any sinking
fund or mandatory redemption, and are not convertible into any
other securities of Summit or the Operating Partnership.
Distributions on the Series C preferred units are
cumulative from the date of original issuance and are payable
quarterly at the rate of 8.75% per year of the $25.00 original
capital contribution. We made distributions to the holder of the
Series C preferred units in the aggregate amount of
$1.2 million during each of the three months ended
March 31, 2002 and 2001.

10. COMMON STOCK REPURCHASE
PROGRAM

On March 12, 2000, Summits Board of
Directors authorized a common stock repurchase program pursuant
to which Summit was authorized to purchase up to an aggregate of
$25.0 million of currently issued and outstanding shares of
its common stock. During 2001, Summits Board of Directors
increased the size of this common stock repurchase program to
$56.0 million. 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.
Summit did not repurchase any shares of its common stock during
the three months ended March 31, 2002 or 2001.

13



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##### 



SUMMIT PROPERTIES PARTNERSHIP, L.P.


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




11. SUBSEQUENT EVENTS

On April 11, 2002, we sold one apartment
community formerly known as Summit Breckenridge
(300 apartment homes) located in Richmond, Virginia for
$22.8 million. The disposition of Summit Breckenridge
resulted in the recognition of a gain on sale of
$13.8 million. Net proceeds of $22.5 million were
placed into escrow in accordance with like-kind exchange rules
and regulations and are expected to be used to fund development
activities. Summit Breckenridge was appropriately classified as
held for sale prior to the adoption of SFAS No. 144 and,
therefore, we have continued to reflect its operations in income
from continuing operations as allowed by APB No. 30.

14



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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, assume and
other similar expressions which predict or indicate future
events and trends and which do not relate to historical matters.
In addition, information concerning the following are
forward-looking statements:



|  |                                                                                                  
|- | -------------------------------------------------------------------------------------------------
| | the future operating performance of stabilized
    communities, including estimated growth rates;
| 
| | the proposed development, acquisition or
    disposition of communities;                         
| 
| | anticipated construction commencement and
    completion dates and lease-up 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, rental rate concessions and job growth, the
    continuing deceleration of economic conditions in our markets,
    and the failure of national and local economic conditions to
    rebound in a timely manner;
| 
| | uncertainties associated with our development
    activities, including the failure to obtain zoning and other
    approvals, actual costs exceeding our budgets and increases in
    construction costs;                                                                                                                                         
| 
| | the failure of acquisitions to yield expected
    results;                                                                                                                                                                                                                                                                                        
| 
| | the failure to sell communities marketed for
    sale, including properties currently under contract for sale
    which are subject to customary closing conditions, or to sell
    these communities in a timely manner or on favorable terms;                                                                                                   
| 
| | construction delays due to the unavailability of
    materials, weather conditions or other delays;                                                                                                                                                                                                                                               
| 
| | competition, which could limit our ability to
    secure attractive investment opportunities, lease apartment
    homes or increase or maintain rents;                                                                                                                                                                                            
| 
| | supply and demand for apartment communities in
    our current and proposed market areas, especially our core
    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;                                                                                                                                                                                                                                                                                                                        
| 
| | 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); and                                                                                                                                                                                                                                             

15



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##### 





|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | those factors discussed below and in the sections
    entitled Results of Operations for the Three Months Ended
    March 31, 2002 and 2001 on page 17 of this
    report, Operating Performance of Our Fully Stabilized
    Communities beginning on page 19 of this report,
    Operating Performance of Our Communities in Lease-up
    beginning on page 20 of this report and Factors
    Affecting the Performance of Our Development Communities
    beginning on page 26 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, 2001 and the related notes included in our
annual report on Form 10-K.

We conduct the business of operating, developing
and acquiring Class A luxury apartment
communities for Summit, which is a self-administered and
self-managed real estate investment trust (REIT). As
of March 31, 2002, Summit held 88.4% of our outstanding
partnership interests, consisting of a 1% general partner
interest and an 87.4% limited partner interest. We are obligated
to redeem each common unit of limited partnership interest at
the request of the holder for cash equal to the fair market
value of one share of Summits common stock, except that we
may elect to have Summit acquire each common unit presented for
redemption for one share of its common stock. With each
redemption of outstanding common units for common stock,
Summits percentage ownership interest in the Operating
Partnership will increase. In addition, whenever Summit issues
shares of common stock, Summit will contribute any resulting
proceeds to us and we will issue an equivalent number of common
units to Summit.

We are a real estate operating company that
focuses on the operation, development and acquisition of
Class A luxury apartment communities located
throughout the Southeast, Midwest and Mid-Atlantic United
States, as well as in Texas. We focus our efforts in seven core
markets, with particular emphasis on Washington, D.C.,
South Florida and Atlanta, Georgia. Our other core markets are
Dallas and Austin, Texas and Raleigh-Durham and Charlotte, North
Carolina. Because we focus on these seven core markets, changes
in local economic and market conditions in these markets may
significantly affect our current operations and future prospects.

CRITICAL ACCOUNTING POLICIES

We prepare our financial statements in accordance
with GAAP. A summary of our significant accounting policies is
disclosed in Note 3 to our consolidated financial
statements which are included in our annual report on
Form 10-K for the year ended December 31, 2001. The
preparation of financial statements in conformity with GAAP
requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could
differ from those estimates. As an owner, operator and developer
of apartment communities, our critical accounting policies are
related to rental revenue recognition, cost capitalization and
asset impairment evaluation.

We lease our residential properties under
operating leases with terms of generally one year or less.
Rental revenue is recognized on the accrual method of accounting
as earned, which is not materially different from revenue
recognition on a straight-line basis. We lease our office and
retail space under operating leases with terms ranging from two
to ten years. Rental revenue for office space is recognized on a
straight-line basis over the lives of the respective leases.

Expenditures directly related to the acquisition,
development and improvement of real estate assets are
capitalized at cost as land, buildings and improvements.
Improvements are categorized as either non-recurring or
recurring capitalized expenditures. Non-recurring capitalized
expenditures primarily consist of the cost of improvements such
as new garages, water submeters, gated security access and
improvements made in conjunction with major renovations of
apartment homes. Recurring capitalized expenditures consist
primarily of floor coverings, furniture, appliances and
equipment, and exterior paint and carpentry. Repairs and

16



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##### 



maintenance, such as landscaping maintenance,
interior painting and cleaning and supplies used in such
activities, are expensed as incurred and we do not accrue for
such costs in advance.


We capitalize interest, the cost of our
development efforts directly related to apartment construction,
and certain operational costs for communities under construction
and in lease-up. Interest costs are capitalized in accordance
with Statement of Financial Accounting Standard
(SFAS) No. 34 and depreciated over the lives of
the constructed assets based on the ratio of those units
available for rental to the total number of units in the
community. We capitalize the cost of our development department
efforts to the projects currently under construction 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 rental, we cease
capitalization of interest and operational costs on those units
based on the ratio of those available for rental to the total
number of units in the community.

We 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 net income 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
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. We consider a
community to be stabilized when it has attained a
physical occupancy level of at least 93%. A community that we
have acquired is deemed fully stabilized 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
fully stabilized 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. 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 monthly rental revenue presented represents the average
monthly net rental revenue per occupied apartment home. Our
methodology for calculating average physical occupancy and
average monthly rental revenue 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 Months Ended March 31, 2002 and
2001

Net income decreased to $9.1 million for the
three months ended March 31, 2002 from $12.5 million
for the three months ended March 31, 2001. The decrease is
primarily due to a reduction in property operating income of
$2.8 million from our portfolio of communities. 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

17



---



##### 



our financial performance or as an alternative to
cash flows form 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.


We have experienced weakening fundamentals,
primarily a decline in the demand for apartment homes, in all of
our markets during the past year and the three months ended
March 31, 2002. This weakness has been due to the downturn
in the national economy as well as declining economic conditions
in our core markets. Local demand for apartment homes has
declined due to lower job growth, a primary driver of apartment
demand, which has led to lower rental rates and higher
concessions. Additionally, the favorable interest rate
environment has encouraged residents to leave our communities to
purchase homes and has provided the opportunity for private
developers to continue to add to the supply of apartments in our
core markets. Although the current political and economic
environment is unpredictable, we expect these trends to continue
through the end of the 2002 fiscal year.

Operating Performance of Our Portfolio of
Communities

The operating performance of our communities for
the three months ended March 31, 2002 and 2001 is
summarized below (dollars in thousands).

|                                            |                                    |                                                  |        |        |        |          |        |        |        |  |       |         |       | 
|------------------------------------------- | ---------------------------------- | ------------------------------------------------ | ------ | ------ | ------ | -------- | ------ | ------ | ------ |  | ----- | ------- | ----- | 
|                                            |                                    |                                                 
|                                            |                                    | Three Months Ended March 31,                    
|                                            |                                    |                                                 
|                                            |                                    | 2002                                             |        | 2001   |        | % Change
|                                            |                                    |                                                  |        |        |        |         
|Property revenues:                          |                                    |                                                  |        |        |        |          |        |        |        |  |       |        
|                                            | Fully stabilized communities       |                                                  | $      | 39,140 |        |          | $      | 39,809 |        |  |       | -1.7%   |      
|                                            | Stabilized development communities |                                                  |        | 2,665  |        |          |        | 2,311  |        |  |       | 15.3%   |      
|                                            | Communities in lease-up            |                                                  |        | 3,060  |        |          |        | 1,162  |        |  |       | 163.3%  |      
|                                            | Communities sold                   |                                                  |        |       |        |          |        | 4,585  |        |  |       | -100.0% |      
|                                            |                                    |                                                  |        |        |        |          |        |        |        |  |       |        
|                                            |                                    | Total property revenues                          |        |        | 44,865 |          |        |        | 47,867 |  |       |         | -6.3% | 
|                                            |                                    |                                                  |        |        |        |          |        |        |        |  |       |        
|Property operating and maintenance expense: |                                    |                                                  |        |        |        |          |        |        |        |  |       |        
|                                            | Fully stabilized communities       |                                                  |        | 13,337 |        |          |        | 12,953 |        |  |       | 3.0%    |      
|                                            | Stabilized development communities |                                                  |        | 889    |        |          |        | 751    |        |  |       | 18.4%   |      
|                                            | Communities in lease-up            |                                                  |        | 1,330  |        |          |        | 478    |        |  |       | 177.9%  |      
|                                            | Communities sold                   |                                                  |        |       |        |          |        | 1,548  |        |  |       | -100.0% |      
|                                            |                                    |                                                  |        |        |        |          |        |        |        |  |       |        
|                                            |                                    | Total property operating and maintenance expense |        |        | 15,556 |          |        |        | 15,730 |  |       |         | -1.1% | 
|                                            |                                    |                                                  |        |        |        |          |        |        |        |  |       |        
|Property operating income                   |                                    | $                                                | 29,309 |        |        | $        | 32,137 |        |        |  | -8.8% |        
|                                            |                                    |                                                  |        |        |        |          |        |        |        |  |       |        
|Apartment homes, end of period              |                                    |                                                  | 17,500 |        |        |          | 18,928 |        |        |  | -7.5% |        
|                                            |                                    |                                                  |        |        |        |          |        |        |        |  |       |        

A summary of our apartment homes (excluding joint
ventures) for the three months ended March 31, 2002 and
2001 is as follows:

|                                                                 |  |      |        |      |  |  |        | 
|---------------------------------------------------------------- |  | ---- | ------ | ---- |  |  | ------ | 
|                                                                 |  | 2002 |        | 2001
|                                                                 |  |      |        |     
|Apartment homes at January 1 of the year                         |  |      | 16,739 |      |  |  | 18,928 | 
|Developments which began rental operations during
    the period |  |      | 761    |      |  |  |       | 
|                                                                 |  |      |        |      |  |  |        | 
|Apartment homes at March 31 of the year                          |  |      | 17,500 |      |  |  | 18,928 | 
|                                                                 |  |      |        |      |  |  |        | 

18



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##### 



Operating Performance of Our Fully Stabilized
Communities

The operating performance of our communities
stabilized prior to January 1, 2001 is summarized below
(dollars in thousands except average monthly rental revenue):

|                                            |                                  |                                                  |        |        |        |          |        |        |        |  |       |       |      | 
|------------------------------------------- | -------------------------------- | ------------------------------------------------ | ------ | ------ | ------ | -------- | ------ | ------ | ------ |  | ----- | ----- | ---- | 
|                                            |                                  |                                                 
|                                            |                                  | Three Months Ended March 31,                    
|                                            |                                  |                                                 
|                                            |                                  | 2002                                             |        | 2001   |        | % Change
|                                            |                                  |                                                  |        |        |        |         
|Property revenues:                          |                                  |                                                  |        |        |        |          |        |        |        |  |       |      
|                                            | Rental                           |                                                  | $      | 36,451 |        |          | $      | 37,186 |        |  |       | -2.0% |     
|                                            | Other                            |                                                  |        | 2,689  |        |          |        | 2,623  |        |  |       | 2.5%  |     
|                                            |                                  |                                                  |        |        |        |          |        |        |        |  |       |      
|Total property revenues                     |                                  |                                                  | 39,140 |        |        |          | 39,809 |        |        |  | -1.7% |      
|                                            |                                  |                                                  |        |        |        |          |        |        |        |  |       |      
|Property operating and maintenance expense: |                                  |                                                  |        |        |        |          |        |        |        |  |       |      
|                                            | Personnel                        |                                                  |        | 2,983  |        |          |        | 2,720  |        |  |       | 9.7%  |     
|                                            | Advertising and promotion        |                                                  |        | 466    |        |          |        | 426    |        |  |       | 9.4%  |     
|                                            | Utilities                        |                                                  |        | 1,742  |        |          |        | 1,785  |        |  |       | -2.4% |     
|                                            | Building repairs and maintenance |                                                  |        | 1,678  |        |          |        | 1,667  |        |  |       | -0.7% |     
|                                            | Real estate taxes and insurance  |                                                  |        | 4,812  |        |          |        | 4,675  |        |  |       | 2.9%  |     
|                                            | Property supervision             |                                                  |        | 1,090  |        |          |        | 1,112  |        |  |       | -2.0% |     
|                                            | Other operating expense          |                                                  |        | 566    |        |          |        | 568    |        |  |       | -0.4% |     
|                                            |                                  |                                                  |        |        |        |          |        |        |        |  |       |      
|                                            |                                  | Total property operating and maintenance expense |        |        | 13,337 |          |        |        | 12,953 |  |       |       | 3.0% | 
|                                            |                                  |                                                  |        |        |        |          |        |        |        |  |       |      
|Property operating income                   |                                  | $                                                | 25,803 |        |        | $        | 26,856 |        |        |  | -3.9% |      
|                                            |                                  |                                                  |        |        |        |          |        |        |        |  |       |      
|Average physical occupancy                  |                                  |                                                  | 93.6%  |        |        |          | 93.5%  |        |        |  | 0.1%  |      
|                                            |                                  |                                                  |        |        |        |          |        |        |        |  |       |      
|Average monthly rental revenue              |                                  | $                                                | 914    |        |        | $        | 940    |        |        |  | -2.8% |      
|                                            |                                  |                                                  |        |        |        |          |        |        |        |  |       |      
|Number of apartment homes                   |                                  |                                                  | 14,459 |        |        |          | 14,459 |        |        |  |       |      
|                                            |                                  |                                                  |        |        |        |          |        |        |        |  |       |      
|Number of apartment communities             |                                  |                                                  | 48     |        |        |          | 48     |        |        |  |       |      
|                                            |                                  |                                                  |        |        |        |          |        |        |        |  |       |      

For the three-month period, property revenues
declined due to weakening fundamentals in our markets primarily
driven by (a) a decline in job growth, (b) residents
leaving our communities to purchase homes in the low interest
rate environment, and (c) new supply of apartment homes
added to our core markets by builders enjoying the low interest
rates. The current level of concessions offered to residents in
our markets during the quarter ranged from one to three months,
an unusually high rate for us, and we expect concessions to
continue in our core markets. The increase in other property
revenues is the result of increases in such income items as
water sub-meter income, trash fees and redecorating fees. The
increase in advertising costs for the three-month period is
primarily due to an increase in fees paid to locator companies
for assistance in referring residents to our communities. As a
percentage of total property revenue, total property operating
and maintenance expenses increased to 34.1% for the three months
ended March 31, 2002 from 32.5% for the three months ended
March 31, 2001. We expect that property operating income
for our fully stabilized pool of communities will continue to
decline for the remainder of the fiscal year 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 Stabilized
Development Communities

Summit Lenox and Summit Russett are considered
stabilized development communities as of March 31, 2002.
Summit Lenox is an existing community which underwent major
renovations during 1999 and 2000. Its operating results are
included in results of stabilized development communities as it
reached stabilization after renovation subsequent to
January 1, 2001.

19



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##### 



The operating performance of these two
communities for the three months ended March 31, 2002 and
2001 is summarized below (dollars in thousands except average
monthly rental revenue):

|                                           |        |                         |       |       |       |   |       |       |       | 
|------------------------------------------ | ------ | ----------------------- | ----- | ----- | ----- | - | ----- | ----- | ----- | 
|                                           |        |                        
|                                           |        | Three Months Ended     
|                                           |        | March 31,              
|                                           |        |                        
|                                           |        | 2002                    |       | 2001 
|                                           |        |                         |       |      
|Property revenues:                         |        |                         |       |       |       |   |       |      
|                                           | Rental |                         | $     | 2,473 |       |   | $     | 2,121 |      
|                                           | Other  |                         |       | 192   |       |   |       | 190   |      
|                                           |        |                         |       |       |       |   |       |      
|                                           |        | Total property revenues |       |       | 2,665 |   |       |       | 2,311 | 
|Property operating and maintenance expense |        |                         | 889   |       |       |   | 751   |      
|                                           |        |                         |       |       |       |   |       |      
|Property operating income                  |        | $                       | 1,776 |       |       | $ | 1,560 |      
|                                           |        |                         |       |       |       |   |       |      
|Average physical occupancy                 |        |                         | 92.3% |       |       |   | 81.9% |      
|                                           |        |                         |       |       |       |   |       |      
|Average monthly rental revenue             |        | $                       | 1,067 |       |       | $ | 1,074 |      
|                                           |        |                         |       |       |       |   |       |      
|Number of apartment homes                  |        |                         | 857   |       |       |   | 857   |      
|                                           |        |                         |       |       |       |   |       |      

The unleveraged yield on those communities
considered stabilized development communities in 2002, defined
as property operating income as a percentage of total
development cost, was 11.9% for the three months ended
March 31, 2002.

Operating Performance of Our Communities in
Lease-up

A summary of the seven communities in lease-up
during the three months ended March 31, 2002 and 2001 is as
follows (dollars in thousands):

|                                              |  |           |       |           |  |              |         |               |  |           |         |           |  |  |         |  |  |  |       |  |  |  |       | 
|--------------------------------------------- |  | --------- | ----- | --------- |  | ------------ | ------- | ------------- |  | --------- | ------- | --------- |  |  | ------- |  |  |  | ----- |  |  |  | ----- | 
|                                              |  |           |       | Total     |  | Actual/      |         |               |  | Q1 2002   |         | % Leased 
|                                              |  | Number of |       | Actual/   |  | Anticipated  |         | Actual/       |  | Average   |         | as of    
|                                              |  | Apartment |       | Estimated |  | Construction |         | Anticipated   |  | Physical  |         | March 31,
|Community                                     |  | Homes     |       | Cost      |  | Completion   |         | Stabilization |  | Occupancy |         | 2002     
|                                              |  |           |       |           |  |              |         |               |  |           |         |          
|Summit Grandview 
    Charlotte, NC (1)      |  |           | 266   |           |  | $            | 51,404  |               |  |           | Q4 2000 |           |  |  | Q4 2001 |  |  |  | 92.9% |  |  |  | 97.0% | 
|Summit Crest  Raleigh, NC                    |  |           | 438   |           |  |              | 32,612  |               |  |           | Q3 2001 |           |  |  | Q3 2002 |  |  |  | 67.1% |  |  |  | 82.0% | 
|Summit Peachtree City 
    Atlanta, GA       |  |           | 399   |           |  |              | 33,591  |               |  |           | Q3 2001 |           |  |  | Q3 2002 |  |  |  | 47.9% |  |  |  | 59.9% | 
|Summit Overlook  Raleigh, NC                 |  |           | 320   |           |  |              | 28,376  |               |  |           | Q4 2001 |           |  |  | Q3 2002 |  |  |  | 63.2% |  |  |  | 82.8% | 
|Summit Shiloh II 
    Atlanta, GA            |  |           | 50    |           |  |              | 4,015   |               |  |           | Q1 2002 |           |  |  | Q2 2002 |  |  |  | 12.2% |  |  |  | 64.0% | 
|Summit Brookwood 
    Atlanta, GA (2)        |  |           | 359   |           |  |              | 41,500  |               |  |           | Q4 2002 |           |  |  | Q2 2003 |  |  |  | 0.6%  |  |  |  | 0.6%  | 
|Summit Valleybrook 
    Philadelphia, PA (2) |  |           | 352   |           |  |              | 37,000  |               |  |           | Q1 2003 |           |  |  | Q3 2003 |  |  |  | 4.0%  |  |  |  | 10.2% | 
|                                              |  |           |       |           |  |              |         |               |  |           |         |           |  |  |         |  |  |  |       |  |  |  |       | 
|                                              |  |           | 2,184 |           |  | $            | 228,498 |               |  |           |         |           |  |  |         |  |  |  |       |  |  |  |       | 
|                                              |  |           |       |           |  |              |         |               |  |           |         |           |  |  |         |  |  |  |       |  |  |  |       | 






|    |                                                                                                                                                                                                                                                                                                                                                            
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The apartment homes at Summit Grandview
    stabilized during the fourth quarter of 2001. Stabilization,
    occupancy and percent leased information in the table above
    represents data for the apartment units only. The 75,203 square
    feet of commercial space at Summit Grandview was 76.3% leased
    and 76.3% occupied as of March 31, 2002.
|(2) | The related assets of this property are included
    in the Construction in progress category as of
    March 31, 2002.                                                                                                                                                                                                                                  

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 offer
rent concessions to residents.

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The operating performance of our lease-up
communities for the three months ended March 31, 2002 and
2001 is summarized below (dollars in thousands):

|                                           |        |                         |       |       |       |   |       |     |       | 
|------------------------------------------ | ------ | ----------------------- | ----- | ----- | ----- | - | ----- | --- | ----- | 
|                                           |        |                        
|                                           |        | Three Months           
|                                           |        | Ended March 31,        
|                                           |        |                        
|                                           |        | 2002                    |       | 2001 
|                                           |        |                         |       |      
|Property revenues:                         |        |                         |       |       |       |   |       |    
|                                           | Rental |                         | $     | 2,871 |       |   | $     | 981 |      
|                                           | Other  |                         |       | 189   |       |   |       | 181 |      
|                                           |        |                         |       |       |       |   |       |    
|                                           |        | Total property revenues |       |       | 3,060 |   |       |     | 1,162 | 
|Property operating and maintenance expense |        |                         | 1,330 |       |       |   | 478   |    
|                                           |        |                         |       |       |       |   |       |    
|Property operating income                  |        | $                       | 1,730 |       |       | $ | 684   |    
|                                           |        |                         |       |       |       |   |       |    
|Number of apartment homes                  |        |                         | 2,184 |       |       |   | 1,423 |    
|                                           |        |                         |       |       |       |   |       |    

Operating Performance of Our Disposition
Communities

We did not dispose of any communities during the
three months ended March 31, 2002. The information in the
table below represents operating results for the three months
ended March 31, 2001 for the following communities sold
during 2001 (referred to in this report using former community
names): Summit Palm Lake, Summit Arbors, Summit Radbourne,
Summit Lofts, Summit Gateway, Summit Stony Point, Summit
Deerfield, Summit Waterford and Summit Walk (dollars in
thousands):

|                                           |        |                         |   |      |   |   |       |       |       | 
|------------------------------------------ | ------ | ----------------------- | - | ---- | - | - | ----- | ----- | ----- | 
|                                           |        |                        
|                                           |        | Three Months           
|                                           |        | Ended March 31,        
|                                           |        |                        
|                                           |        | 2002                    |   | 2001
|                                           |        |                         |   |     
|Property revenues:                         |        |                         |   |      |   |   |       |      
|                                           | Rental |                         | $ |     |   |   | $     | 4,253 |      
|                                           | Other  |                         |   |     |   |   |       | 332   |      
|                                           |        |                         |   |      |   |   |       |      
|                                           |        | Total property revenues |   |      |  |   |       |       | 4,585 | 
|Property operating and maintenance expense |        |                         |  |      |   |   | 1,548 |      
|                                           |        |                         |   |      |   |   |       |      
|Property operating income                  |        | $                       |  |      |   | $ | 3,037 |      
|                                           |        |                         |   |      |   |   |       |      
|Number of apartment homes                  |        |                         |  |      |   |   | 2,189 |      
|                                           |        |                         |   |      |   |   |       |      

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Operating Performance of Summit Management
Company

The operating performance of Summit Management
Company (the Management Company) and its
wholly-owned subsidiary, Summit Apartment Builders, Inc., for
the three months ended March 31, 2002 and 2001 is
summarized below (in thousands):

|           |                                                           |                              |    |       |       |          |     |       |       |  |        |        |        | 
|---------- | --------------------------------------------------------- | ---------------------------- | -- | ----- | ----- | -------- | --- | ----- | ----- |  | ------ | ------ | ------ | 
|           |                                                           |                             
|           |                                                           | Three Months Ended March 31,
|           |                                                           |                             
|           |                                                           | 2002                         |    | 2001  |       | % Change
|           |                                                           |                              |    |       |       |         
|Revenues:  |                                                           |                              |    |       |       |          |     |       |       |  |        |       
|           | Management fees charged to Operating Partnership          |                              | $  | 1,520 |       |          | $   | 1,936 |       |  |        | -21.5% |       
|           | Third party management fee revenue                        |                              |    | 210   |       |          |     | 234   |       |  |        | -10.3% |       
|           | Construction revenue charged to Operating
    Partnership |                              |    | 502   |       |          |     | 755   |       |  |        | -33.5% |       
|           | Other revenue                                             |                              |    | 75    |       |          |     | 77    |       |  |        | -2.6%  |       
|           |                                                           | Total revenue                |    |       | 2,307 |          |     |       | 3,002 |  |        |        | -23.2% | 
|           |                                                           |                              |    |       |       |          |     |       |       |  |        |       
|Expenses:  |                                                           |                              |    |       |       |          |     |       |       |  |        |       
|           | Operating                                                 |                              |    | 2,061 |       |          |     | 2,420 |       |  |        | -14.8% |       
|           | Depreciation                                              |                              |    | 77    |       |          |     | 80    |       |  |        | -3.8%  |       
|           | Amortization                                              |                              |    | 73    |       |          |     | 75    |       |  |        | -2.7%  |       
|           | Interest                                                  |                              |    | 75    |       |          |     | 75    |       |  |        | 0.0%   |       
|           |                                                           |                              |    |       |       |          |     |       |       |  |        |       
|           |                                                           | Total expenses               |    |       | 2,286 |          |     |       | 2,650 |  |        |        | -13.7% | 
|           |                                                           |                              |    |       |       |          |     |       |       |  |        |       
|Net income |                                                           | $                            | 21 |       |       | $        | 352 |       |       |  | -94.0% |       
|           |                                                           |                              |    |       |       |          |     |       |       |  |        |       

The decrease in management fees charged to us for
the three-month period is primarily due to a decrease of fees
earned from communities under development as a result of the
stage of development of such communities during the first
quarter of 2002 when compared to the first quarter of 2001.
Construction revenue declined by 33.5% due to a reduction in our
development activity. All of the construction revenue during the
three months ended March 31, 2002 and 2001 was from
contracts with us. We have curtailed, and may continue to
curtail, our development efforts to increase our financial
flexibility in the current economic environment. Operating
expenses decreased at the Management Company primarily due to a
reduction in staffing.

Property management revenues included property
management fees from third parties of $210,000 for the three
months ended March 31, 2002 and $234,000 for the three
months ended March 31, 2001. Property management fees from
third parties as a percentage of total property management
revenues were 12.1% for the three months ended March 31,
2002 and 10.8% for the three months ended March 31, 2001.

Other Income and Expenses

Interest income decreased by $251,000 to $507,000
for the three months ended March 31, 2002 when compared to
the same period in 2001, primarily due to a reduction of
$178,000 in interest earned on proceeds from property sales
placed in escrow in accordance with like-kind exchange income
tax regulations.

Interest expense decreased by $916,000, or 9.2%,
for the three months ended March 31, 2002 compared with the
same period in 2001 primarily due to a decrease in our average
interest rate from 2001 to 2002 of 0.58% and a decrease in our
average indebtedness outstanding from 2001 to 2002 of
$22.3 million.

General and administrative expenses increased
$524,000, or 42.5%, for the three months ended March 31,
2002 as compared to the same period in 2001. This increase was
primarily the result of an increase in compensation costs of
$43,000 due to stock grants which vested during the three months
ended March 31, 2002, an increase in compensation costs of
$38,000 related to the accrual of the value of a portion of
shares to be issued under Summits 2001 Performance Stock
Award Plan, as well as an increase in the amount accrued for the
costs of executive compensation of $250,000 during the three
months ended March 31, 2002. The shares to be issued under
the 2001 Performance Stock Award plan will be issued only if
Summit achieves certain benchmarks related to its average annual
total return to its stockholders over the period from
January 1, 2001 to December 31, 2003 in comparison to
the same measure for the same period of Summits

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##### 



peers. The executive compensation accrued during
the three months ended March 31, 2002 will be paid only if
certain performance objectives are met for the entire 2002
fiscal year by us and by the executives as defined in each
executives respective employment agreement. We also
increased our accounting and legal fee accruals by a total of
$105,000 during the three months ended March 31, 2002. As a
percentage of revenues, general and administrative expenses were
3.8% and 2.5% for the three months ended March 31, 2002 and
2001.


Liquidity and Capital Resources

Liquidity

Our net cash provided by operating activities
decreased from $18.2 million for the three months ended
March 31, 2001 to $15.7 million for the same period in
2002, primarily due to a $2.8 million decrease in property
operating income.

Net cash used in investing activities increased
to $26.4 million for the three months ended March 31,
2002 from $5.3 million for the same period in 2001 due to
an increase in cash used to invest in real estate joint ventures
of $6.5 million and a decrease in proceeds from the sale of
communities of $29.4 million, offset by a
$12.8 million decrease in construction spending. We have
curtailed, and may continue to curtail, our development spending
in an effort to increase our financial flexibility in the
current economic environment. Property sale proceeds from three
of nine communities sold during 2001 were 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 provided by financing activities was
$11.1 million for the three months ended March 31,
2002. Net cash used in financing activities was
$13.7 million for the three months ended March 31,
2001. The increase in cash provided by financing activities is
primarily due to an increase in net borrowings on our unsecured
credit facility of $24.0 million. The proceeds from the
credit facility borrowings were primarily used to fund
development activity.

The ratio of earnings to fixed charges was 1.24
for the three months ended March 31, 2002 compared to 1.36
for the three months ended March 31, 2001. The decrease in
the ratio of earnings to fixed charges is primarily due to a
$2.8 million decrease in property operating income.

Our outstanding indebtedness as of March 31,
2002 totaled $742.8 million. This amount included
$288.0 million of fixed rate conventional mortgages,
$21.9 million of variable rate tax-exempt bonds,
$308.0 million of fixed rate unsecured notes,
$3.9 million of tax-exempt fixed rate mortgages, and
$121.0 million under our unsecured credit facility.

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

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

Credit
Facility

We have a syndicated unsecured line of credit in
the amount of $225.0 million which matures on
September 26, 2004. The credit facility provides funds for
new development, acquisitions and general working

23



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##### 



capital purposes. Loans under the credit facility
bear interest at LIBOR plus 100 basis points. The spread
component of the aggregate interest rate will change in the
event of an upgrade or downgrade of our unsecured credit rating
of BBB- by Standard & Poors Rating Services and Baa3
by Moodys Investors Service. Amounts are borrowed for
thirty, sixty or ninety day increments at the appropriate
interest rates for such time period. Therefore, amounts are
borrowed and repaid within those thirty, sixty or ninety day
periods. The credit facility is repayable monthly on an interest
only basis with principal due at maturity of each thirty, sixty
or ninety day increment. As of March 31, 2002, the
outstanding balance of the credit facility was
$121.0 million, leaving $104.0 million of remaining
availability on the $225.0 million commitment.


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

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 due nine months or more from the
date of issuance. We had medium-term notes with an aggregate
principal amount of $112.0 million outstanding in
connection with the MTN program as of March 31, 2002.

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 medium-term notes with an aggregate
principal amount of $25.0 million outstanding in connection
with this MTN program as of March 31, 2002. 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.

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 January 1, 2001, we adopted Statement of
Financial Accounting Standard No. 133, Accounting for
Derivative Instruments and Hedging Activities, as amended.
FAS 133 establishes accounting and reporting standards for
derivative instruments, including certain derivative instruments
embedded in other contracts, and for hedging activities. It
requires that entities recognize all derivatives as either
assets or liabilities in the statement of financial position and
measure those instruments at fair value. The cumulative effect
of adopting FAS 133 was not material to our financial
statements.

As of March 31, 2002, we had one interest
rate swap with a notional amount of $30.0 million, relating
to $30.0 million of 6.625% fixed rate notes issued under
our MTN program. Under the interest rate swap agreement, through
the maturity date of December 15, 2003, (a) we have
agreed to pay to the counterparty the interest on a
$30.0 million notional amount at a floating interest rate
of three-month LIBOR plus 11 basis points, and (b) the
counterparty has agreed to pay to us the interest on the same
notional amount at the fixed rate. The floating rate as of
March 31, 2002 was 2.11%. The fair value of the interest
rate swap was $1.9 million as of March 31, 2002. The
swap has been designated as a fair value hedge of the underlying
fixed rate debt obligation and has been recorded as a reduction
of the related debt instrument. We assume no ineffectiveness as
the interest rate swap meets the short-cut method conditions
required under FAS 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.

Preferred
Units

As of March 31, 2002, we had outstanding
3.4 million preferred units of limited partnership interest
designated as 8.95% Series B Cumulative Redeemable
Perpetual Preferred Units. We may redeem these

24



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##### 



preferred units on or after April 29, 2004
for cash at a redemption price equal to the holders
capital account, or at Summits option, shares of
Summits 8.95% Series B Cumulative Redeemable
Perpetual Preferred Stock, or a combination of cash and shares
of Summits 8.95% Series B Cumulative Redeemable
Perpetual Preferred Stock. Holders of the Series B
preferred units have the right to exchange these preferred units
for shares of Summits Series B preferred stock on a
one-for-one basis, subject to adjustment: (a) on or after
April 29, 2009, (b) if full quarterly distributions
are not made for six quarters, or (c) upon the occurrence
of specified events related to our treatment or the treatment of
the preferred units for federal income tax purposes. The
Series B preferred units have no stated maturity, are not
subject to any sinking fund or mandatory redemption, and are not
convertible into any other securities of Summit or the Operating
Partnership. Distributions on the Series B preferred units
are cumulative from the date of original issuance and are
payable quarterly at the rate of 8.95% per year of the $25.00
original capital contribution. We made distributions to the
holders of the Series B preferred units in the aggregate
amount of $1.9 million during each of the three months
ended March 31, 2002 and 2001.


As of March 31, 2002, we had outstanding
2.2 million preferred units of limited partnership interest
designated as 8.75% Series C Cumulative Redeemable
Perpetual Preferred Units. We may redeem the preferred units on
or after September 3, 2004 for cash at a redemption price
equal to the holders capital account. Holders 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. The Series C preferred
units have no stated maturity, are not subject to any sinking
fund or mandatory redemption, and are not convertible into any
other securities of Summit or the Operating Partnership.
Distributions on the Series C preferred units are
cumulative from the date of original issuance and are payable
quarterly at the rate of 8.75% per year of the $25.00 original
capital contribution. We made distributions to the holder of the
Series C preferred units in the aggregate amount of
$1.2 million during each of the three months ended
March 31, 2002 and 2001.

Common Stock
Repurchase Program

On March 12, 2000, Summits Board of
Directors authorized a common stock repurchase program pursuant
to which Summit was authorized to purchase up to an aggregate of
$25.0 million of currently issued and outstanding shares of
its common stock. During 2001, Summits Board of Directors
increased the size of this common stock repurchase program to
$56.0 million. 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.
Summit did not repurchase any shares of its common stock during
the three months ended March 31, 2002 or 2001.

Employee Loan
Program

Summits Board of Directors believes that
ownership of common stock by its executive officers and certain
other qualified employees will align the interests of these
officers and employees with the interests of Summits
stockholders. To this end, Summits Board of Directors
approved, and Summit instituted, a loan program under which
Summit may lend 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 Summits common stock which
constitute a portion of a restricted stock award granted to the
executive officer. Summit has amended the terms of the loan
program from time to time since its inception in 1997. The
relevant officer or employee has executed a promissory note and
security agreement related to each loan extended. Each
outstanding note bears interest at a rate established on the
date of the note, is full recourse to the officers and employees
and is collateralized by the shares of Summits common
stock which are the subject of the loans.

25



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Communities Held for Sale

As of March 31, 2002, we had one community,
Summit Breckenridge located in Richmond, Virginia, under
contract for sale. On April 11, 2002, we sold Summit
Breckenridge (300 apartment homes) for $22.8 million. The
disposition of Summit Breckenridge resulted in the recognition
of a gain on sale of $13.8 million. Net proceeds of
$22.5 million were placed into escrow in accordance with
like-kind exchange rules and regulations and are expected to be
used to fund development activities. Summit Breckenridge was
appropriately classified as held for sale prior to the adoption
of SFAS No. 144 and, therefore, we have continued to
reflect its operations in income from continuing operations as
allowed by Accounting Principles Board No. 30.

Subsequent to March 31, 2002, we executed
separate contracts for the sale of two communities. The two
communities are Summit Belmont located in Fredericksburg,
Virginia (300 apartment homes) and Summit Stonefield located in
Philadelphia, Pennsylvania (216 apartment homes). The net book
value of the real estate assets of these communities was
$25.1 million as of March 31, 2002. Property operating
income of these two communities represented 4.1% of property
operating income for all of our communities for the three months
ended March 31, 2002 and 3.5% of property operating income
for all of our communities for the same period in 2001. We do
not expect to incur a loss upon sale of these communities either
individually or in the aggregate. Proceeds from the sale of
these communities are expected to be used to fund future
development. The closing of each of these community dispositions
is subject to customary closing conditions. We cannot assure you
that these two communities, or other communities that we market
for sale, will be sold in a timely manner, on favorable terms or
at all.

Development Activity

Our construction in progress as of March 31,
2002 is summarized as follows (dollars in thousands):

|                                              |  |           |       |           |  |         |         |           |  |              |         |  |  |   |        |  |  |  |         | 
|--------------------------------------------- |  | --------- | ----- | --------- |  | ------- | ------- | --------- |  | ------------ | ------- |  |  | - | ------ |  |  |  | ------- | 
|                                              |  |           |       | Total     |  |         |         | Estimated |  | Anticipated 
|                                              |  | Apartment |       | Estimated |  | Cost To |         | Cost To   |  | Construction
|Community                                     |  | Homes     |       | Costs     |  | Date    |         | Complete  |  | Completion  
|                                              |  |           |       |           |  |         |         |           |  |             
|Summit Valleybrook  Philadelphia,
    PA (1) |  |           | 352   |           |  | $       | 37,000  |           |  | $            | 29,725  |  |  | $ | 7,275  |  |  |  | Q1 2003 | 
|Summit Brookwood  Atlanta, GA (1)            |  |           | 359   |           |  |         | 41,500  |           |  |              | 27,640  |  |  |   | 13,860 |  |  |  | Q4 2002 | 
|Summit Grand Parc  Washington, D.C.          |  |           | 105   |           |  |         | 35,900  |           |  |              | 31,339  |  |  |   | 4,561  |  |  |  | Q3 2002 | 
|Summit Roosevelt  Washington, D.C.           |  |           | 198   |           |  |         | 49,600  |           |  |              | 24,541  |  |  |   | 25,059 |  |  |  | Q3 2003 | 
|Summit Stockbridge  Atlanta,
    GA          |  |           | 304   |           |  |         | 23,600  |           |  |              | 4,482   |  |  |   | 19,118 |  |  |  | Q4 2003 | 
|Other development and construction costs (2)  |  |           |      |           |  |         |        |           |  |              | 48,811  |  |  |   |       |  |  |  |         | 
|                                              |  |           |       |           |  |         |         |           |  |              |         |  |  |   |        |  |  |  |         | 
|                                              |  |           | 1,318 |           |  | $       | 187,600 |           |  | $            | 166,538 |  |  | $ | 69,873 |  |  |  |         | 
|                                              |  |           |       |           |  |         |         |           |  |              |         |  |  |   |        |  |  |  |         | 



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|    |                                                                                     
|--- | ------------------------------------------------------------------------------------
|(1) | These communities were in lease-up as of
    March 31, 2002.                        
|(2) | Consists primarily of land held for development
    and other pre-development costs.

Estimated costs to complete the development
communities listed above of $69.9 million, as well as our
commitment to purchase Summit Brickell for an estimated price
ranging from $50.5 million to $60.0 million (see
section entitled Commitments and Contingencies
below), represent substantially all of our material commitments
for capital expenditures as of March 31, 2002. We have
curtailed, and may continue to curtail, our development spending
in an effort to increase our financial flexibility in the
current economic environment.

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.

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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 six 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, or we are unable to
obtain necessary permits and authorizations, or due to other
circumstances which may prevent development. There can be no
assurance that, if we do pursue one or more potential
communities, that we will be able to complete construction
within the currently estimated development budgets or that
construction can be started at the time currently anticipated.

Commitments and Contingencies

The estimated cost to complete the five
development projects currently under construction was
$69.9 million as of March 31, 2002. Anticipated
construction completion dates of the projects range from the
third quarter of 2002 to the fourth quarter of 2003.

On January 19, 2000, we entered into a real
estate purchase agreement with a third-party real estate
developer. Under the terms of the agreement, we have agreed to
purchase upon completion a Class A mixed-use
community, which will be called Summit Brickell, and is located
in Miami, Florida. We will purchase Summit Brickell upon the
earlier of one year after construction completion or the
achievement of 80% occupancy. We may extend this closing
obligation for six months after the initial purchase
period. We expect to close on the purchase of Summit Brickell
during late 2002 or in 2003. The final purchase price will be
determined based on budgeted construction costs plus a bonus to
the developer based on the capitalized income of the property at
the time of purchase. In the event there are net cost savings
during construction, a portion of such savings will be used to
reduce the purchase price and a portion will be paid as an
incentive to the developer pursuant to an agreed upon formula.
In the event there are net cost overruns during construction,
the developer will be responsible for funding such overruns
unless those overruns result from design change orders which we
may request; such overruns will be added to the purchase price.
The purchase price is expected to range from $50.5 million
to $60.0 million. The purchase of Summit Brickell is
subject to customary closing conditions. We have issued a letter
of credit in the amount of $13.0 million, which will serve
as a credit enhancement to the developers construction
loan. In the event that any amount under the letter of credit is
drawn upon, we shall be treated as having issued a loan to the
developer in the amount of such draw. Any such loan will accrue
interest at a rate of eighteen percent (18%) per year.

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 Summit from time to time over the
next ten years. 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. 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.

Funds From Operations

We consider Funds From Operations
(FFO) to be an appropriate measure of performance of
an equity REIT. We compute FFO in accordance with standards
established by the National Association of Real Estate
Investment Trusts (NAREIT). FFO, as defined by
NAREIT, represents net income (loss) excluding gains or losses
from sales of property, plus depreciation of real estate assets,
and after adjustments for unconsolidated partnerships and joint
ventures, all determined on a consistent basis in accordance with

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GAAP. Funds Available for Distribution
(FAD) is defined as FFO less capital expenditures
funded by operations (recurring capital expenditures). Our
methodology for calculating FFO and FAD may differ from the
methodology for calculating FFO and FAD utilized by other real
estate companies, and accordingly, may not be comparable to
other real estate companies. FFO and FAD do not represent
amounts available for managements discretionary use
because of needed capital expenditures or expansion, debt
service obligations, property acquisitions, development,
dividends and distributions or other commitments and
uncertainties. FFO and FAD should not be considered as
alternatives to net income (determined in accordance with GAAP)
as an indication of our financial performance or to cash flows
from operating activities (determined in accordance with GAAP)
as a measure of our liquidity, nor are they indicative of funds
available to fund our cash needs, including our ability to make
dividend or distribution payments. We believe FFO and FAD are
helpful to investors as measures of our performance because,
along with cash flows from operating activities, financing
activities and investing activities, they provide investors with
an understanding of our ability to incur and service debt and
make capital expenditures.


FFO and FAD for the three months ended
March 31, 2002 and 2001 are calculated as follows (dollars
in thousands):

|                                                 |                            |                              |            |       |         |   |            |       |         |  
|------------------------------------------------ | -------------------------- | ---------------------------- | ---------- | ----- | ------- | - | ---------- | ----- | ------- | -
|                                                 |                            |                             
|                                                 |                            | Three Months Ended March 31,
|                                                 |                            |                             
|                                                 |                            | 2002                         |            | 2001 
|                                                 |                            |                              |            |      
|Income available to common unitholders           |                            | $                            | 6,030      |       |         | $ | 9,382      |      
|Depreciation:                                    |                            |                              |            |       |         |   |            |      
|                                                 | Real estate assets         |                              |            | 9,717 |         |   |            | 9,386 |        
|                                                 | Real estate joint ventures |                              |            | 300   |         |   |            | 198   |        
|                                                 |                            |                              |            |       |         |   |            |      
|Funds from Operations                            |                            |                              | 16,047     |       |         |   | 18,966     |      
|Recurring capital expenditures (1)               |                            |                              | (994       | )     |         |   | (1,002     | )    
|                                                 |                            |                              |            |       |         |   |            |      
|Funds Available for Distribution                 |                            | $                            | 15,053     |       |         | $ | 17,964     |      
|                                                 |                            |                              |            |       |         |   |            |      
|Non-recurring capital expenditures (1) (2)       |                            | $                            | 754        |       |         | $ | 1,121      |      
|                                                 |                            |                              |            |       |         |   |            |      
|Cash flow provided by (used in):                 |                            |                              |            |       |         |   |            |      
|                                                 |                            | Operating activities         |            | $     | 15,737  |   |            | $     | 18,230  |  
|                                                 |                            | Investing activities         |            |       | (26,372 | ) |            |       | (5,275  | )
|                                                 |                            | Financing activities         |            |       | 11,082  |   |            |       | (13,663 | )
|Weighted average units outstanding 
    basic   |                            |                              | 30,681,527 |       |         |   | 30,998,481 |      
|                                                 |                            |                              |            |       |         |   |            |      
|Weighted average units outstanding 
    diluted |                            |                              | 30,948,671 |       |         |   | 31,292,210 |      
|                                                 |                            |                              |            |       |         |   |            |      






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Recurring capital expenditures are expected to be
    funded from operations and consist primarily of floor coverings,
    furniture, appliances and equipment, and exterior paint and
    carpentry. In contrast, non-recurring capital expenditures, such
    as major improvements, new garages and access gates, are
    expected to be funded by financing activities and, therefore,
    are not included in the calculation of FAD.
|   
|(2) | Non-recurring capital expenditures for the three
    months ended March 31, 2002 and 2001 primarily consist of:
    $741,000 and $133,000 for major renovations in 2002 and 2001;
    $2,000 and $91,000 for access gates and security fences in 2002
    and 2001; and $11,000 and $892,000 in other revenue enhancement
    expenditures in 2002 and 2001.                                                                              



|        |                                                               
|------- | --------------------------------------------------------------
|ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
    MARKET RISK

There has been no material change in our market
risk since the filing of our Annual Report on Form 10-K for
the year ended December 31, 2001.

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PART II



|        |                      
|------- | ---------------------
|ITEM 2. | CHANGES IN SECURITIES

During the three months ended March 31,
2002, we issued common units in private placements in reliance
on the exemption from registration under Section 4(2) of
the Securities Act in the amounts and for the consideration set
forth below:



| |    |                                                                                                                                                                                                                                                                                                                                          
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | A. | Summit issued an aggregate of 134,112 shares of
    common stock pursuant to its Dividend Reinvestment and Stock
    Purchase Plans. Summit contributed the proceeds
    ($2.8 million) of these sales to us in consideration of an
    aggregate of 134,112 common units.                                                               
|
| | B. | Summit issued an aggregate of 442 shares of
    common stock in connection with restricted stock awards. Each
    time a share of common stock is issued in connection with a
    restricted stock award, we issue a common unit to Summit during
    the relevant period; consequently, 442 common units have been
    issued to Summit.
|
| | C. | Summit issued an aggregate of 1,000 shares of
    common stock pursuant to the exercise of stock options. Summit
    contributed the proceeds ($20,000) of these option exercises to
    us in consideration of an aggregate of 1,000 common units.                                                                                      
|
| | D. | Summit issued an aggregate of 9,828 shares of
    common stock pursuant to its Employee Stock Purchase Plan.
    Summit contributed the proceeds ($209,000) of these sales to us
    in consideration of an aggregate of 9,828 common units.                                                                                             

In light of the circumstances under which these
common units were issued, management of Summit, in its capacity
as our general partner, believes that we may rely on such
exemption.

ITEM 6. EXHIBITS AND REPORTS ON FORM
8-K

(a) Exhibits

|      |  |                                                                                                                                                                                                                                                                                                                                                                 
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.1  |  | Employment Agreement, dated February 24,
    1994, by and among Keith L. Downey, Summit Properties Inc.
    and Summit Management Company (incorporated by reference to
    Exhibit 10.1 to Summits quarterly report on
    Form 10-Q for the quarterly period ended March 31,
    2002, File No. 001-12792).                                                  
|10.2  |  | Executive Severance Agreement, dated
    December 17, 2001, by and between Summit and Keith L.
    Downey (incorporated by reference to Exhibit 10.2 to
    Summits quarterly report on Form 10-Q for the
    quarterly period ended March 31, 2002, File
    No. 001-12792).                                                                                  
|10.3  |  | Promissory Notes and Security Agreements, dated
    various dates from January 4, 1999 to November 7,
    2000, evidencing loans in the aggregate amount of $964,854 to
    Keith L. Downey (incorporated by reference to Exhibit 10.3
    to Summits quarterly report on Form 10-Q for the
    quarterly period ended March 31, 2002, File
    No. 001-12792).
|10.4  |  | Indemnification Agreement, dated July 5,
    2000, by and among Summit, the Operating Partnership and Keith
    L. Downey (incorporated by reference to Exhibit 10.3 to
    Summits quarterly report on Form 10-Q for the
    quarterly period ended June 30, 1999, File
    No. 001-12792).                                                                   
|*12.1 |  | Statement Regarding Calculation of Ratio of
    Earnings to Fixed Charges for the three months ended
    March 31, 2002.                                                                                                                                                                                                                                        






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

(b) Reports on Form 8-K

We did not file any reports on Form 8-K
during the first quarter of 2002.

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SIGNATURES

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

|                   |  |                                                                                                                                                
|------------------ |  | -----------------------------------------------------------------------------------------------------------------------------------------------
|                   |  | SUMMIT PROPERTIES PARTNERSHIP, L.P.By: Summit Properties Inc., as General
    Partner                                                          
|                  
|May 14, 2002(Date) |  | /s/ STEVEN R. LeBLANC
    ----------------------------------------------
    Steven R. LeBlanc,President and Chief Executive Officer           
|                  
|May 14, 2002(Date) |  | /s/ GREGG D. ADZEMA
    ----------------------------------------------
    Gregg D. Adzema,Executive Vice President and Chief Financial Officer

30