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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934


For the fiscal year ended December 31,
2002                     Commission
file number 1-12792

SUMMIT PROPERTIES INC.

(Exact name of registrant as specified in its
charter)




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|                                                                                                                 |  |                                                   
|---------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------
|Maryland(State or other jurisdiction of
    incorporation or organization)                                       |  | 56-1857807(I.R.S. Employer
    Identification No.)
|                                                                                                                
|309 East 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)




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Securities registered pursuant to
Section 12(b) of the Act:

|                                                                                                |  |                                                                                                   
|----------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------
|Common Stock, par value $.01 per share
    Preferred Stock Purchase Rights(Title of each class) |  | New York Stock Exchange
    New York Stock Exchange(Name of each exchange on which
    registered)

Securities registered pursuant to
Section 12(g) of the Act: None

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

Indicate by check mark if disclosure of
delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be
contained, to the best of Registrants knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any
amendment to this
Form 10-K.     o

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

The aggregate market value of the
Registrants Common Stock, par value $.01 per share, held
by nonaffiliates of the Registrant, as of June 28, 2002 was
$604,836,848.

The number of shares of the Registrants
Common Stock, par value $.01 per share, outstanding as of
March 3, 2003 was 27,028,912.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement for the
Registrants 2003 Annual Meeting of Stockholders, to be
filed with the Securities and Exchange Commission within
120 days after the end of the year covered by this
Form 10-K, are incorporated by reference herein as portions
of Part III of this Form 10-K.



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TABLE OF CONTENTS

|         |  |                                                                                                    |  |      |    | 
|-------- |  | -------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|Item     |  |                                                                                                    |  | Page
|         |  |                                                                                                    |  |     
|PART I   |  |                                                                                                    |  |     
|        
|1.       |  | Business                                                                                           |  |      | 3  | 
|        
|2.       |  | Properties                                                                                         |  |      | 8  | 
|        
|3.       |  | Legal Proceedings                                                                                  |  |      | 12 | 
|        
|4.       |  | Submission of Matters to a Vote of Security
    Holders                                            |  |      | 12 | 
|PART II  |  |                                                                                                    |  |     
|        
|5.       |  | Market for Registrants Common Equity and
    Related Stockholder Matters                          |  |      | 13 | 
|        
|6.       |  | Selected Financial Data                                                                            |  |      | 15 | 
|        
|7.       |  | Managements Discussion and Analysis of
    Financial Condition and Results of Operations          |  |      | 17 | 
|        
|7A.      |  | Quantitative and Qualitative Disclosures about
    Market Risk                                     |  |      | 41 | 
|        
|8.       |  | Financial Statements and Supplementary Data                                                        |  |      | 41 | 
|        
|9.       |  | Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure           |  |      | 41 | 
|PART III |  |                                                                                                    |  |     
|        
|10.      |  | Directors and Executive Officers of Registrant                                                     |  |      | 42 | 
|        
|11.      |  | Executive Compensation                                                                             |  |      | 42 | 
|        
|12.      |  | Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters |  |      | 42 | 
|        
|13.      |  | Certain Relationships and Related Transactions                                                     |  |      | 42 | 
|        
|14.      |  | Controls and Procedures                                                                            |  |      | 42 | 
|PART IV  |  |                                                                                                    |  |     
|        
|15.      |  | Exhibits, Financial Statement Schedules and
    Reports on Form 8-K                                |  |      | 43 | 
|         |  | Signatures                                                                                         |  |      | 52 | 
|         |  | Certifications                                                                                     |  |      | 53 | 

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PART I

This Form 10-K 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. Our actual results
could differ materially from those set forth in the
forward-looking statements. Certain factors that might cause
such a difference are discussed in this report on
Form 10-K, including the section entitled
Forward-Looking Statements on page 17. Unless
the context otherwise requires, all references to
we, our or us in this report
refer collectively to Summit Properties Inc., a Maryland
corporation (Summit), and its subsidiaries,
including Summit Properties Partnership, L.P., a Delaware
limited partnership (the Operating Partnership),
considered as a single enterprise. Summit is the sole general
partner of the Operating Partnership.

Item 1.     Business

Our Company

Summit is a real estate investment trust that
focuses on the development, construction, acquisition, and
operation of luxury apartment communities. As of
December 31, 2002, we owned 51 completed communities
comprised of 15,428 apartment homes with an additional
1,206 apartment homes under construction in four new
communities. We also own a 25% interest in a joint venture
comprised of four completed communities with
1,203 apartment homes. We are a fully integrated
organization with multifamily development, construction,
acquisition and operation expertise. As of December 31,
2002, we had approximately 500 employees.

We operate throughout the Southeast and
Mid-Atlantic states and have chosen to focus our current efforts
in five core markets consisting of Atlanta, Charlotte, Raleigh,
Southeast Florida and Washington, D.C. While we currently
operate in Texas as well, we intend to exit our Texas markets
and use the sales proceeds from those communities to increase
our presence in the Washington, D.C. and Southeast Florida
markets. We have established city operating offices in all of
our core markets. These city offices have direct responsibility
for development, construction, and management of the communities
in their geographic markets. We believe that this decentralized
structure provides us with superior local knowledge and
experience in each market.

We conduct our business principally through the
Operating Partnership of which Summit is the sole general
partner and an 88.6% economic owner as of December 31,
2002. Our property management, certain construction, and other
businesses are conducted through our subsidiaries, Summit
Management Company, a Maryland corporation, and Summit Apartment
Builders, Inc., a Florida corporation. Throughout this report,
we refer to Summit Management Company as the Management
Company and to Summit Apartment Builders, Inc. as the
Construction Company.

Operating Philosophy

We view customer service as one of our key values
and seek to provide our residents with experienced, well-trained
and attentive management staffs. Utilizing a hiring process
known as Success By Selection, we select potential
candidates who believe in superior customer service. Once hired,
our associates enter into a comprehensive training program
called Ask for Action. This training program ensures
that our associates have a clear understanding of their job
responsibilities, the high standards of performance expected of
them, and the importance of excellent customer service. We have
also developed several classes focusing on excellence in
property management to provide on-going training for our
associates and to further enhance associate productivity. We
believe that this training regimen, along with the Success
by Selection hiring process, has provided a higher quality
management staff, evidenced by high resident satisfaction at our
communities. We are an unprecedented four-time recipient of the
CEL & Associates, Inc. Customer Service Award for
Excellence, (from 1998 to 2001). This award is based on
survey results of apartment residents throughout the country.

We have long stressed the importance of
developing strong customer relationships with our residents. Our
commitment to resident satisfaction is evidenced by our
Peak Services. Among the many Peak Services are:

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a Happiness Guarantee where residents can move
from one of our communities without early lease termination
charges if they are not satisfied with their home during the
first 30 days; Same Day Maintenance Service and Emergency
Maintenance available 24 hours a day; Business Services;
Package Acceptance and Delivery; Loaner Living Accessories where
we provide convenience tools for our residents use; No
Nonsense Transfer Policy where residents can easily move from
one Summit community to another without incurring many of the
additional fees normally associated with such a move; and a free
current run Video Library.


Business and Growth Strategies

In addition to superior customer service, we have
identified four other strategies to create long term value for
our stockholders: Disciplined Capital Management; Strategic
Market Selection; Decentralized, Fully Integrated Operating
Teams; and Sound Risk Management.

Disciplined Capital Management.We have determined that currently our
most efficient source of capital continues to be contained
within our existing portfolio of communities. By disposing of
older communities in less desirable locations, and redeploying
that capital in new communities in our core markets, we are able
to create value in two ways. First, we have historically
realized higher returns, on average, from the newer communities
where this Recycled Capital has been utilized as
compared to the older communities that have provided this
capital. Second, this Capital Recycling Program has reduced the
average age of the communities in our portfolio to approximately
six years. This reduction in average age has resulted in lower
maintenance and capital expenditure costs and has allowed us to
better adapt our product to constantly changing market demands.
Although we anticipate continuing this strategy of reinvesting
capital obtained from dispositions into the development of new
communities, there can be no assurance that we will be able to
complete our disposition strategy, that assets identified for
sale can be sold, or sold on satisfactory terms, or that we will
be able to locate favorable opportunities for investment in our
core markets.

Strategic Market Selection.Our goal is to be a market-leading
operator of luxury apartment homes in a carefully selected group
of core markets. We believe this strategy will improve our
financial performance by improving economies of scale,
concentrating market knowledge, and increasing brand awareness.
We believe employment growth is a critical economic factor which
affects apartment occupancy and rental rates. Based on a
historical comparison of employment growth in our five core
markets versus the U.S. average (excluding our core
markets), these markets have typically generated higher job
growth over an extended period of time and recovered from
economic downturns more quickly.

Decentralized, Fully Integrated Operating
Teams.We have integrated property
management, development, and construction on a local level
through our City TeamTM concept. Each of the City
Teams includes a developer employed by Summit adept at
visualizing market opportunities, construction personnel at the
Construction Company who specialize in building luxury apartment
communities, and management personnel at the Management Company
experienced in the marketing, leasing and maintenance of luxury
apartment communities. Working within well-understood corporate
guidelines under the direction of senior management at our
headquarters, these teams operate as autonomous units. We
believe this integrated approach will create premium quality
communities and increased customer satisfaction.

Sound Risk Management.We endeavor to practice sound risk
management with respect to our portfolio of communities.
Potential developments proposed by the City Teams are vigorously
reviewed by a panel of senior management at our headquarters
prior to the commitment of significant investment dollars. We
believe that this combination of locally generated development
opportunities, together with centralized review and assessment,
produces a premium quality community with manageable risk.

Development Program

Through our City Teams we maintain an active
development program which is appropriate for each market.
Focusing on development allows us to build premium quality
communities and provide returns which generally exceed those
achieved on acquired communities.

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Although we have historically focused on suburban
apartment communities, we have developed, or are currently
developing, several communities in downtown areas in our
Atlanta, Charlotte, Southeast Florida and Washington, D.C.
core markets. These urban-oriented communities will augment our
portfolio of primarily suburban communities.

During 2002, we curtailed, and may continue to
curtail, our development spending in an effort to increase our
financial flexibility in the current economic environment. In
2002, we completed development of four communities, adding
866 apartment homes to our portfolio. These four
communities represent a total investment of approximately
$129.6 million. The communities completed in 2002 are
Summit Shiloh II, Summit Valleybrook, Summit Brookwood and
Summit Grand Parc.

We utilize the Construction Company, in addition
to third-party general contractors, to build our new
communities. Of the 1,206 apartment homes under development
as of December 31, 2002, 65% are being built by the
Construction Company.

The following provides summary information
regarding the four communities under construction as of
December 31, 2002 (dollars in thousands):

|                                            |  |           |       |           |  |         |         |           |  |              |         |  |  |   |        |  |  |  |         | 
|------------------------------------------- |  | --------- | ----- | --------- |  | ------- | ------- | --------- |  | ------------ | ------- |  |  | - | ------ |  |  |  | ------- | 
|                                            |  |           |       | Total     |  |         |         | Estimated |  | Anticipated 
|                                            |  | Apartment |       | Estimated |  | Cost To |         | Cost To   |  | Construction
|Community                                   |  | Homes     |       | Costs     |  | Date    |         | Complete  |  | Completion  
|                                            |  |           |       |           |  |         |         |           |  |             
|Summit Roosevelt  Washington,
    D.C.     |  |           | 198   |           |  | $       | 49,600  |           |  | $            | 42,036  |  |  | $ | 7,564  |  |  |  | Q2 2003 | 
|Summit Stockbridge  Atlanta, GA            |  |           | 304   |           |  |         | 23,600  |           |  |              | 18,608  |  |  |   | 4,992  |  |  |  | Q3 2003 | 
|Summit Silo Creek  Washington,
    D.C.    |  |           | 284   |           |  |         | 41,700  |           |  |              | 17,430  |  |  |   | 24,270 |  |  |  | Q2 2004 | 
|Summit Las Olas  Ft. Lauderdale, FL        |  |           | 420   |           |  |         | 73,700  |           |  |              | 34,648  |  |  |   | 39,052 |  |  |  | Q3 2005 | 
|Other development and construction costs(1) |  |           |      |           |  |         |        |           |  |              | 26,541  |  |  |   |       |  |  |  |         | 
|                                            |  |           |       |           |  |         |         |           |  |              |         |  |  |   |        |  |  |  |         | 
|                                            |  |           | 1,206 |           |  | $       | 188,600 |           |  | $            | 139,263 |  |  | $ | 75,878 |  |  |  |         | 
|                                            |  |           |       |           |  |         |         |           |  |              |         |  |  |   |        |  |  |  |         | 



|    |                                                                                    
|--- | -----------------------------------------------------------------------------------
|(1) | Consists primarily of land held for development
    and other predevelopment costs.

As with any development project, there are
uncertainties and risks associated with the development of 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. Similarly, market
conditions at the time these communities become available for
leasing will affect rental rates and the period of time
necessary to achieve stabilization, and could result in
achieving stabilization later than currently anticipated. See
Managements Discussions and Analysis of Financial
Condition and Results of Operations  Development
Activity beginning on page 17 for a discussion of
uncertainties and risks associated with our development program.

Acquisition and Disposition Program

While we have emphasized development of new
apartment communities, we also have the expertise to capitalize
on acquisition opportunities that meet our investment criteria.
We believe our City Teams give us an advantage in identifying
and underwriting attractive acquisition opportunities. We have
acquired more than 9,200 apartment homes since our initial
public offering in 1994.

In 2002, elevated purchase prices for
acquisitions in the open market would have generally resulted in
economic performance for those assets that was unattractive when
compared to the potential economic performance of our
development program. As a result, we acquired only one community
during 2002, representing a total investment of
$17.1 million. However, this pricing dynamic also created
an opportunity for us to increase our disposition activity,
thereby enhancing our Capital Recycling Program, which is
dependent on the execution of attractively priced dispositions.

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During 2002, we disposed of eight communities for
an aggregate sales price of $211.8 million. For the most
part, these communities were located outside our core markets
and, as such, did not fit into our strategic market selection
strategy. The proceeds from certain of these dispositions
provided the basis for our Capital Recycling Program.

Company History

We were formed in 1993 to continue and expand the
multifamily development, construction, acquisition, operation,
management and leasing businesses of the predecessor entities
through which we historically conducted operations prior to our
initial public offering.

The predecessor entities were founded by one of
our Co-Chairmen of the Board, William B. McGuire, Jr., in
1972. In 1981, William F. Paulsen joined the predecessor entity
as Chief Executive Officer and shepherded the growth of its
multifamily development and management activities. We have
elected to be treated as a real estate investment trust
(REIT) for federal income tax purposes. We completed
our initial public offering of common stock on February 15,
1994.

We are a Maryland corporation and a
self-administered and self-managed REIT. Our common stock is
listed on the New York Stock Exchange (NYSE) under the
symbol SMT. Our executive offices are located at
309 East Morehead Street, Suite 200, Charlotte, North
Carolina 28202. Our telephone number is (704) 334-3000
and our facsimile number is (704) 333-8340. We also
maintain offices in Atlanta, Georgia; Austin, Texas; Bethesda,
Maryland; Ft. Lauderdale, Florida; and Raleigh, North Carolina.

2002 Significant Events

We have a common stock repurchase program,
approved by our Board of Directors, pursuant to which we are
authorized to purchase up to an aggregate of $56.0 million
of currently issued and outstanding shares of our common stock.
All repurchases have been, and will be, made on the open market
at prevailing prices or in privately negotiated transactions.
This authority may be exercised from time to time and in such
amounts as market conditions warrant. We repurchased
151,300 shares of our common stock for an aggregate
purchase price, including commissions, of $2.7 million, or
an average price of $17.62 per share during the year ended
December 31, 2002. We repurchased 8,800 shares of our
common stock for an aggregate purchase price, including
commissions, of $197,000, or an average price of $22.38 per
share during the year ended December 31, 2001. We
repurchased 279,400 shares of our common stock for an
aggregate purchase price, including commissions, of
$5.5 million, or an average price of $19.80 per share
during the year ended December 31, 2000. Subsequent to
December 31, 2002, we have repurchased 422,200 shares
of our common stock for an aggregate purchase price, including
commissions, of $7.5 million, or an average price of $17.70
per share. As of March 5, 2003, we had $40.1 million
remaining available for repurchases under the plan.

We have a non-qualified employee stock purchase
plan (ESPP) as well as a dividend reinvestment and
direct stock purchase plan (DRIP). Transactions
under the ESPP were suspended effective July 2, 2002.
Direct stock purchases under the DRIP were suspended effective
October 31, 2002 and dividend reinvestment under the DRIP
was suspended effective November 15, 2002. The employee
stock purchase plan allowed our employees to purchase up to
$25,000 per year of our common stock at a discount of 15%. The
dividend reinvestment and direct stock purchase plan provided
both new investors and existing holders of our stock with a
method to purchase shares of our common stock and the ability
for those stockholders to designate all, a portion or none of
the cash dividends on shares of our common stock for
reinvestment in more shares of our common stock.

In December 2002, we announced our intention
to take advantage of the strong sales market that we have been
experiencing by exiting our Texas markets, where, relative to
our other markets, we lack the size and penetration to operate
at maximum efficiency. We currently intend to use sales proceeds
from our Texas communities to increase our presence in the
Washington, D.C. and Southeast Florida markets.

In December 2002, our Board of Directors
approved a reduction of our annual dividend from $1.90 to $1.35
per share. This decision was made in order to bring the dividend
in line with the expected cash flow generated

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by our communities. We intend to continue to make
regular quarterly dividends to holders of shares of our common
stock. Future dividends will be declared at the discretion of
our Board of Directors and will depend on actual cash flow, our
financial condition, our capital requirements, the annual
distribution requirements under the REIT provisions of the
Internal Revenue Code, and such other factors as our Board of
Directors may deem relevant. Our Board of Directors may modify
our dividend policy from time to time.


The Operating Partnership

The Operating Partnership was formed on
January 14, 1994, and is the entity through which
principally all of our business is conducted. We control the
Operating Partnership as the sole general partner and as the
holder of 88.6% of the common units of limited partnership
interest in the Operating Partnership as of December 31,
2002. As of December 31, 2002, the Operating Partnership
also had outstanding 3.4 million Series B and
2.2 million Series C Cumulative Perpetual Preferred
Units. As the sole general partner of the Operating Partnership,
we have the exclusive power to manage and conduct the business
of the Operating Partnership, subject to certain voting rights
of holders of units of limited partnership interest. Subject to
the rights and preferences of the outstanding preferred units,
our general and limited partnership interests in the Operating
Partnership as of December 31, 2002, entitled us to share
in 88.6% of the cash distributions from, and in the profits and
losses of, the Operating Partnership.

Each common unit may be redeemed by the holder
for cash equal to the fair market value of a share of our common
stock or, at the election of the Operating Partnership, one
share of our common stock, subject to adjustment. The Operating
Partnership presently determines on a case-by-case basis whether
to cause us to issue shares of common stock in connection with a
redemption of common units rather than paying cash. With each
redemption of common units for common stock, our percentage
ownership interest in the Operating Partnership will increase.
Similarly, when we acquire a share of common stock under our
common stock repurchase program or otherwise, we simultaneously
dispose of one common unit of the Operating Partnership. In
addition, whenever we issue shares of common stock for cash, we
will contribute any resulting net proceeds to the Operating
Partnership and the Operating Partnership will issue an
equivalent number of common units to us.

The Operating Partnership cannot be terminated,
except in connection with a sale of all or substantially all of
our assets, for a period of 99 years from the date of
formation without a vote of the limited partners of the
Operating Partnership.

Competition

Within each market, our communities compete
directly with other rental apartments, condominiums and
single-family homes that are available for rent or sale. These
housing alternatives could adversely affect our ability to lease
apartment homes, and increase or maintain our rents. In
addition, various entities, including insurance companies,
pension and investment funds, partnerships, investment companies
and other multifamily REITs, compete with us for the acquisition
of existing communities and the development of new communities,
some of which may have greater resources than us. We compete
against these firms and other housing alternatives by stressing
customer service, market presence, product quality and
experience.

Environmental Matters

Under various federal, state and local
environmental laws, ordinances and regulations, a current or
previous owner or operator of real estate may be required, in
many instances regardless of knowledge or responsibility, to
investigate and remediate the effects of hazardous or toxic
substances or petroleum product releases at that property. The
owner or operator of real estate may be held liable to a
governmental entity or to third parties for property damage and
for investigation and remediation costs incurred by those
parties in connection with the contamination, which may be
substantial. The presence of these substances, or the failure to
properly remediate the contamination, may adversely affect the
owners ability to borrow against, sell or rent that
property. In addition, some environmental laws create a lien on
the contaminated site in favor of the government for damages and
costs it incurs in connection with the contamination. In
connection with the

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ownership, operation, management and development
of our communities and other real properties, we may be
potentially liable for these damages and costs.


Certain federal, state and local laws, ordinances
and regulations govern the removal, encapsulation and
disturbance of asbestos-containing materials (ACMs),
when these materials are in poor condition or in the event of
construction, remodeling, renovation or demolition of a
building. These laws, ordinances and regulations may impose
liability for release of ACMs and may provide for third parties
to seek recovery from owners or operators of real properties for
personal injury associated with ACMs. In connection with the
ownership, operation, management and development of our
communities and other real properties, we may be potentially
liable for these costs.

Finally, when excessive moisture accumulates in
buildings or on building materials, mold growth may occur,
particularly if the moisture problem remains undiscovered or is
not addressed. Concern about indoor exposure to mold has been
increasing as exposure to mold may cause a variety of health
effects and symptoms, including severe allergic or other
reactions. As a result, the presence of mold at one of our
communities could require us to undertake a costly remediation
program to contain or remove the mold from the affected
community. Such a remediation program could necessitate the
temporary relocation of some or all of the communitys
residents or the complete rehabilitation of the community. In
addition, the presence of significant mold could expose us to
liability from residents and others if property damage or health
concerns arise

Assessments of our communities have not revealed
any environmental liability that we believe would have a
material adverse effect on our business, assets, financial
condition or results of operations, nor are we aware of any
other environmental conditions which would have a material
adverse effect. It is possible, however, that our assessments do
not reveal all environmental liabilities or that there are
material environmental liabilities of which we are unaware.
Moreover, there can be no assurance that future laws, ordinances
or regulations will not impose any material environmental
liability, or that the current environmental condition of our
communities will not be affected by residents, the condition of
land or operations in the vicinity of the communities, such as
the presence of underground storage tanks, or third parties
unrelated to us. In addition, environmental liabilities could
develop at communities sold pursuant to our disposition strategy
for which we may have liability.

*     *     *     *     *


We maintain a website on the World Wide Web at
www.summitproperties.com. We make available, free of charge, on
our website our annual report on Form 10-K, quarterly
reports on Form 10-Q, current reports on Form 8-K and
amendments to those reports filed or furnished pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of
1934, as amended, as soon as reasonably practicable after such
reports are electronically filed with, or furnished to, the
Securities and Exchange Commission. Information contained on our
website does not constitute part of this report. Our reports
filed with, or furnished to, the SEC are also available on the
SECs website at www.sec.gov.

Item 2.     Properties

Our Communities

As of December 31, 2002, we owned, and
operated through the Operating Partnership, 51 completed
communities with 15,428 apartment homes. Forty two of the
communities were completed after January 1, 1990 and, as of
December 31, 2002, the average age of our completed
communities was approximately six years. All of our communities
target middle to upper income apartment renters as customers and
have amenities, apartment home sizes and mixes consistent with
the desires of this resident population. We have an additional
1,206 apartment homes under construction, which have not yet
begun lease-up. As of December 31, 2002, we also held an
ownership interest in four completed communities with 1,203
apartment homes through

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a joint venture. The following is a summary of
the 51 completed communities by market (the table below does not
include joint venture communities):


|                           |  |             |    |           |  |            |        |  |  |  |     |  
|-------------------------- |  | ----------- | -- | --------- |  | ---------- | ------ |  |  |  | --- | -
|                           |  |             |    | Number of |  |           
|                           |  | Number of   |    | Apartment |  | % of Total
|                           |  | Communities |    | Homes     |  | Revenues  
|                           |  |             |    |           |  |           
|Washington, D.C.           |  |             | 8  |           |  |            | 2,406  |  |  |  | 20  | %
|Atlanta, Georgia           |  |             | 11 |           |  |            | 3,275  |  |  |  | 19  | %
|Southeast Florida          |  |             | 5  |           |  |            | 1,715  |  |  |  | 15  | %
|Raleigh, North Carolina    |  |             | 8  |           |  |            | 2,582  |  |  |  | 14  | %
|Charlotte, North Carolina  |  |             | 9  |           |  |            | 1,901  |  |  |  | 12  | %
|Dallas, Texas              |  |             | 4  |           |  |            | 1,581  |  |  |  | 9   | %
|Austin, Texas              |  |             | 2  |           |  |            | 856    |  |  |  | 5   | %
|Orlando, Florida           |  |             | 2  |           |  |            | 510    |  |  |  | 3   | %
|San Antonio, Texas         |  |             | 1  |           |  |            | 250    |  |  |  | 2   | %
|Philadelphia, Pennsylvania |  |             | 1  |           |  |            | 352    |  |  |  | 1   | %
|                           |  |             |    |           |  |            |        |  |  |  |     |  
|                           |  |             | 51 |           |  |            | 15,428 |  |  |  | 100 | %
|                           |  |             |    |           |  |            |        |  |  |  |     |  

The following table highlights information
regarding these 51 completed communities:

|                                   |  |          |                    |            |  |           |     |           |  |           |       |           |  |         |       |         |  |                |      |  |  |  |       |  |  |   |       |  |  |   |       |  |  |   |       |  
|---------------------------------- |  | -------- | ------------------ | ---------- |  | --------- | --- | --------- |  | --------- | ----- | --------- |  | ------- | ----- | ------- |  | -------------- | ---- |  |  |  | ----- |  |  | - | ----- |  |  | - | ----- |  |  | - | ----- | -
|                                   |  |          |                    |            |  |           |     |           |  |           |       |           |  |         |       |         |  | Mortgage      
|                                   |  |          |                    |            |  |           |     |           |  |           |       |           |  | Average |       | Average |  | Notes         
|                                   |  |          |                    |            |  |           |     | Average   |  | Average   |       | Average   |  | Monthly |       | Monthly |  | Payable at    
|                                   |  |          |                    |            |  |           |     | Apartment |  | Physical  |       | Physical  |  | Rental  |       | Rental  |  | December 31,  
|                                   |  |          |                    | Number of  |  | Year      |     | Size      |  | Occupancy |       | Occupancy |  | Revenue |       | Revenue |  | 2002          
|Market Area/Community              |  | Location |                    | Apartments |  | Completed |     | (sq. ft.) |  | 2002(1)   |       | 2001(1)   |  | 2002(2) |       | 2001(2) |  | (in thousands)
|                                   |  |          |                    |            |  |           |     |           |  |           |       |           |  |         |       |         |  |               
|FULLY STABILIZED COMMUNITIES(3)    |  |          |                    |            |  |           |     |           |  |           |       |           |  |         |       |         |  |                |      |  |  |  |       |  |  |   |       |  |  |   |       | 
|ATLANTA                            |  |          |                    |            |  |           |     |           |  |           |       |           |  |         |       |         |  |                |      |  |  |  |       |  |  |   |       |  |  |   |       |  |  |   |       |  
|Summit Club at Dunwoody            |  |          | Atlanta, GA        |            |  |           | 324 |           |  |           | 1997  |           |  |         | 1,007 |         |  |                | 91.7 |  |  |  | 93.2  |  |  | $ | 895   |  |  | $ | 955   |  |  |   | (4    | )
|Summit Deer Creek                  |  |          | Atlanta, GA        |            |  |           | 292 |           |  |           | 2000  |           |  |         | 1,187 |         |  |                | 90.1 |  |  |  | 89.7  |  |  |   | 915   |  |  |   | 955   |  |  |   |      |  
|Summit Glen                        |  |          | Atlanta, GA        |            |  |           | 242 |           |  |           | 1992  |           |  |         | 983   |         |  |                | 93.6 |  |  |  | 94.9  |  |  |   | 905   |  |  |   | 981   |  |  |   | (4    | )
|Summit on the River                |  |          | Atlanta, GA        |            |  |           | 352 |           |  |           | 1997  |           |  |         | 1,103 |         |  |                | 94.3 |  |  |  | 88.5  |  |  |   | 841   |  |  |   | 890   |  |  |   | (4    | )
|Summit Shiloh                      |  |          | Atlanta, GA        |            |  |           | 182 |           |  |           | 2000  |           |  |         | 1,151 |         |  |                | 95.9 |  |  |  | 93.8  |  |  |   | 868   |  |  |   | 923   |  |  |   |      |  
|Summit St. Clair                   |  |          | Atlanta, GA        |            |  |           | 336 |           |  |           | 1997  |           |  |         | 969   |         |  |                | 93.1 |  |  |  | 92.8  |  |  |   | 994   |  |  |   | 1,045 |  |  |   | (4    | )
|Summit Sweetwater                  |  |          | Atlanta, GA        |            |  |           | 308 |           |  |           | 2000  |           |  |         | 1,151 |         |  |                | 93.6 |  |  |  | 92.2  |  |  |   | 790   |  |  |   | 867   |  |  |   |      |  
|                                   |  |          |                    |            |  |           |     |           |  |           |       |           |  |         |       |         |  |                |      |  |  |  |       |  |  |   |       |  |  |   |       |  |  |   |       |  
|ATLANTA WEIGHTED AVERAGE           |  |          | 2,036              |            |  |           |     |           |  |           | 1,075 |           |  |         | 93.0  |         |  |                | 91.9 |  |  |  | 888   |  |  |   | 946   |  |  |   |       | 
|CHARLOTTE                          |  |          |                    |            |  |           |     |           |  |           |       |           |  |         |       |         |  |                |      |  |  |  |       |  |  |   |       |  |  |   |       |  |  |   |       |  
|Summit Ballantyne                  |  |          | Charlotte, NC      |            |  |           | 400 |           |  |           | 1998  |           |  |         | 1,053 |         |  |                | 90.9 |  |  |  | 90.4  |  |  |   | 799   |  |  |   | 869   |  |  |   | (4    | )
|Summit Crossing                    |  |          | Charlotte, NC      |            |  |           | 128 |           |  |           | 1985  |           |  |         | 978   |         |  |                | 92.6 |  |  |  | 92.7  |  |  |   | 639   |  |  |   | 703   |  |  |   |      |  
|Summit Fairview                    |  |          | Charlotte, NC      |            |  |           | 135 |           |  |           | 1983  |           |  |         | 1,036 |         |  |                | 93.3 |  |  |  | 93.5  |  |  |   | 717   |  |  |   | 810   |  |  |   |      |  
|Summit Foxcroft(5)                 |  |          | Charlotte, NC      |            |  |           | 156 |           |  |           | 1979  |           |  |         | 940   |         |  |                | 93.6 |  |  |  | 92.5  |  |  |   | 643   |  |  |   | 695   |  |  | $ | 6,900 |  
|Summit Norcroft                    |  |          | Charlotte, NC      |            |  |           | 216 |           |  |           | 1997  |           |  |         | 1,126 |         |  |                | 94.8 |  |  |  | 94.6  |  |  |   | 745   |  |  |   | 781   |  |  |   |      |  
|Summit Sedgebrook                  |  |          | Charlotte, NC      |            |  |           | 368 |           |  |           | 1999  |           |  |         | 1,017 |         |  |                | 94.0 |  |  |  | 92.2  |  |  |   | 693   |  |  |   | 740   |  |  |   |      |  
|Summit Simsbury                    |  |          | Charlotte, NC      |            |  |           | 100 |           |  |           | 1985  |           |  |         | 874   |         |  |                | 94.6 |  |  |  | 92.9  |  |  |   | 717   |  |  |   | 769   |  |  |   | (6    | )
|Summit Touchstone                  |  |          | Charlotte, NC      |            |  |           | 132 |           |  |           | 1986  |           |  |         | 899   |         |  |                | 95.5 |  |  |  | 96.5  |  |  |   | 678   |  |  |   | 702   |  |  |   | (6    | )
|                                   |  |          |                    |            |  |           |     |           |  |           |       |           |  |         |       |         |  |                |      |  |  |  |       |  |  |   |       |  |  |   |       |  |  |   |       |  
|CHARLOTTE WEIGHTED AVERAGE         |  |          | 1,635              |            |  |           |     |           |  |           | 1,013 |           |  |         | 93.3  |         |  |                | 92.6 |  |  |  | 719   |  |  |   | 774   |  |  |   |       | 
|ORLANDO                            |  |          |                    |            |  |           |     |           |  |           |       |           |  |         |       |         |  |                |      |  |  |  |       |  |  |   |       |  |  |   |       |  |  |   |       |  
|Summit Fairways                    |  |          | Orlando, FL        |            |  |           | 240 |           |  |           | 1996  |           |  |         | 1,302 |         |  |                | 94.4 |  |  |  | 91.7  |  |  |   | 845   |  |  |   | 864   |  |  |   |      |  
|Summit Hunters Creek              |  |          | Orlando, FL        |            |  |           | 270 |           |  |           | 2000  |           |  |         | 1,082 |         |  |                | 94.7 |  |  |  | 94.2  |  |  |   | 812   |  |  |   | 838   |  |  |   |      |  
|                                   |  |          |                    |            |  |           |     |           |  |           |       |           |  |         |       |         |  |                |      |  |  |  |       |  |  |   |       |  |  |   |       |  |  |   |       |  
|ORLANDO WEIGHTED AVERAGE           |  |          | 510                |            |  |           |     |           |  |           | 1,186 |           |  |         | 94.6  |         |  |                | 93.1 |  |  |  | 827   |  |  |   | 850   |  |  |   |       | 
|RALEIGH                            |  |          |                    |            |  |           |     |           |  |           |       |           |  |         |       |         |  |                |      |  |  |  |       |  |  |   |       |  |  |   |       |  |  |   |       |  
|Reunion Park by Summit             |  |          | Raleigh, NC        |            |  |           | 248 |           |  |           | 2000  |           |  |         | 941   |         |  |                | 95.1 |  |  |  | 96.7  |  |  |   | 653   |  |  |   | 705   |  |  |   |      |  
|Summit Governors Village          |  |          | Raleigh, NC        |            |  |           | 242 |           |  |           | 1999  |           |  |         | 1,134 |         |  |                | 94.3 |  |  |  | 93.4  |  |  |   | 839   |  |  |   | 860   |  |  |   |      |  
|Summit Highland                    |  |          | Raleigh, NC        |            |  |           | 172 |           |  |           | 1987  |           |  |         | 986   |         |  |                | 95.5 |  |  |  | 95.2  |  |  |   | 656   |  |  |   | 706   |  |  |   |      |  
|Summit Lake                        |  |          | Raleigh, NC        |            |  |           | 446 |           |  |           | 1999  |           |  |         | 1,075 |         |  |                | 93.5 |  |  |  | 95.7  |  |  |   | 773   |  |  |   | 847   |  |  |   |      |  
|Summit Square                      |  |          | Raleigh, NC        |            |  |           | 362 |           |  |           | 1990  |           |  |         | 925   |         |  |                | 91.8 |  |  |  | 94.6  |  |  |   | 709   |  |  |   | 782   |  |  |   |      |  
|Summit Westwood                    |  |          | Raleigh, NC        |            |  |           | 354 |           |  |           | 1999  |           |  |         | 1,112 |         |  |                | 89.6 |  |  |  | 92.7  |  |  |   | 756   |  |  |   | 825   |  |  |   | (4    | )
|                                   |  |          |                    |            |  |           |     |           |  |           |       |           |  |         |       |         |  |                |      |  |  |  |       |  |  |   |       |  |  |   |       |  |  |   |       |  
|RALEIGH WEIGHTED AVERAGE           |  |          | 1,824              |            |  |           |     |           |  |           | 1,034 |           |  |         | 92.9  |         |  |                | 94.7 |  |  |  | 739   |  |  |   | 799   |  |  |   |       | 
|SOUTHEAST FLORIDA                  |  |          |                    |            |  |           |     |           |  |           |       |           |  |         |       |         |  |                |      |  |  |  |       |  |  |   |       |  |  |   |       |  |  |   |       |  
|Summit Aventura                    |  |          | Aventura, FL       |            |  |           | 379 |           |  |           | 1995  |           |  |         | 1,106 |         |  |                | 94.4 |  |  |  | 94.2  |  |  |   | 1,164 |  |  |   | 1,180 |  |  |   |      |  
|Summit Del Ray                     |  |          | Delray Beach, FL   |            |  |           | 252 |           |  |           | 1993  |           |  |         | 968   |         |  |                | 92.7 |  |  |  | 93.5  |  |  |   | 887   |  |  |   | 937   |  |  |   | (4    | )
|Summit Doral                       |  |          | Miami, FL          |            |  |           | 260 |           |  |           | 1999  |           |  |         | 1,172 |         |  |                | 96.5 |  |  |  | 97.6  |  |  |   | 1,264 |  |  |   | 1,230 |  |  |   |      |  
|Summit Plantation                  |  |          | Plantation, FL     |            |  |           | 502 |           |  |           | 1997  |           |  |         | 1,152 |         |  |                | 94.4 |  |  |  | 91.7  |  |  |   | 1,072 |  |  |   | 1,128 |  |  |   | (4    | )
|Summit Portofino                   |  |          | Broward County, FL |            |  |           | 322 |           |  |           | 1995  |           |  |         | 1,307 |         |  |                | 94.7 |  |  |  | 93.5  |  |  |   | 1,096 |  |  |   | 1,094 |  |  |   |      |  
|                                   |  |          |                    |            |  |           |     |           |  |           |       |           |  |         |       |         |  |                |      |  |  |  |       |  |  |   |       |  |  |   |       |  |  |   |       |  
|SOUTHEAST FLORIDA WEIGHTED AVERAGE |  |          | 1,715              |            |  |           |     |           |  |           | 1,147 |           |  |         | 94.6  |         |  |                | 93.8 |  |  |  | 1,099 |  |  |   | 1,121 |  |  |   |       | 

9



---



##### 



|                                                                          |  |          |                    |            |  |           |       |           |  |           |       |           |  |         |       |         |  |                |      |  |  |  |       |  |  |  |       |  |  |  |       |  |  |  |        |  
|------------------------------------------------------------------------- |  | -------- | ------------------ | ---------- |  | --------- | ----- | --------- |  | --------- | ----- | --------- |  | ------- | ----- | ------- |  | -------------- | ---- |  |  |  | ----- |  |  |  | ----- |  |  |  | ----- |  |  |  | ------ | -
|                                                                          |  |          |                    |            |  |           |       |           |  |           |       |           |  |         |       |         |  | Mortgage      
|                                                                          |  |          |                    |            |  |           |       |           |  |           |       |           |  | Average |       | Average |  | Notes         
|                                                                          |  |          |                    |            |  |           |       | Average   |  | Average   |       | Average   |  | Monthly |       | Monthly |  | Payable at    
|                                                                          |  |          |                    |            |  |           |       | Apartment |  | Physical  |       | Physical  |  | Rental  |       | Rental  |  | December 31,  
|                                                                          |  |          |                    | Number of  |  | Year      |       | Size      |  | Occupancy |       | Occupancy |  | Revenue |       | Revenue |  | 2002          
|Market Area/Community                                                     |  | Location |                    | Apartments |  | Completed |       | (sq. ft.) |  | 2002(1)   |       | 2001(1)   |  | 2002(2) |       | 2001(2) |  | (in thousands)
|                                                                          |  |          |                    |            |  |           |       |           |  |           |       |           |  |         |       |         |  |               
|WASHINGTON, D.C.                                                          |  |          |                    |            |  |           |       |           |  |           |       |           |  |         |       |         |  |                |      |  |  |  |       |  |  |  |       |  |  |  |       |  |  |  |        |  
|Summit Ashburn Farm                                                       |  |          | Loudon County, VA  |            |  |           | 162   |           |  |           | 2000  |           |  |         | 1,061 |         |  |                | 96.0 |  |  |  | 96.6  |  |  |  | 1147  |  |  |  | 1,234 |  |  |  |        |  
|Summit Belmont                                                            |  |          | Fredericksburg, VA |            |  |           | 300   |           |  |           | 1987  |           |  |         | 881   |         |  |                | 97.8 |  |  |  | 97.7  |  |  |  | 825   |  |  |  | 790   |  |  |  | (7     | )
|Summit Fair Lakes                                                         |  |          | Fairfax, VA        |            |  |           | 530   |           |  |           | 1999  |           |  |         | 996   |         |  |                | 93.5 |  |  |  | 94.7  |  |  |  | 1,300 |  |  |  | 1,381 |  |  |  | 48,340 |  
|Summit Fair Oaks                                                          |  |          | Fairfax, VA        |            |  |           | 246   |           |  |           | 1990  |           |  |         | 938   |         |  |                | 93.9 |  |  |  | 94.5  |  |  |  | 1,115 |  |  |  | 1,198 |  |  |  |       |  
|Summit Largo                                                              |  |          | Largo, MD          |            |  |           | 219   |           |  |           | 2000  |           |  |         | 1,042 |         |  |                | 95.6 |  |  |  | 96.0  |  |  |  | 1,257 |  |  |  | 1,195 |  |  |  | (4     | )
|Summit Reston                                                             |  |          | Reston, VA         |            |  |           | 418   |           |  |           | 1987  |           |  |         | 854   |         |  |                | 93.6 |  |  |  | 91.2  |  |  |  | 1,087 |  |  |  | 1,237 |  |  |  |       |  
|                                                                          |  |          |                    |            |  |           |       |           |  |           |       |           |  |         |       |         |  |                |      |  |  |  |       |  |  |  |       |  |  |  |       |  |  |  |        |  
|WASHINGTON, D.C. WEIGHTED AVERAGE                                         |  |          | 1,875              |            |  |           |       |           |  |           | 949   |           |  |         | 94.7  |         |  |                | 94.7 |  |  |  | 1,135 |  |  |  | 1,196 |  |  |  |       | 
|DALLAS                                                                    |  |          |                    |            |  |           |       |           |  |           |       |           |  |         |       |         |  |                |      |  |  |  |       |  |  |  |       |  |  |  |       |  |  |  |        |  
|Summit Belcourt                                                           |  |          | Dallas, TX         |            |  |           | 180   |           |  |           | 1994  |           |  |         | 875   |         |  |                | 96.1 |  |  |  | 91.3  |  |  |  | 1,025 |  |  |  | 1,088 |  |  |  | 9,018  |  
|Summit Buena Vista                                                        |  |          | Dallas, TX         |            |  |           | 467   |           |  |           | 1996  |           |  |         | 925   |         |  |                | 93.4 |  |  |  | 91.9  |  |  |  | 847   |  |  |  | 877   |  |  |  | 24,067 |  
|Summit Camino Real                                                        |  |          | Dallas, TX         |            |  |           | 712   |           |  |           | 1998  |           |  |         | 860   |         |  |                | 91.6 |  |  |  | 90.9  |  |  |  | 756   |  |  |  | 786   |  |  |  | 15,886 |  
|                                                                          |  |          |                    |            |  |           |       |           |  |           |       |           |  |         |       |         |  |                |      |  |  |  |       |  |  |  |       |  |  |  |       |  |  |  |        |  
|DALLAS WEIGHTED AVERAGE                                                   |  |          | 1,359              |            |  |           |       |           |  |           | 884   |           |  |         | 92.8  |         |  |                | 91.3 |  |  |  | 823   |  |  |  | 857   |  |  |  |       | 
|SAN ANTONIO                                                               |  |          |                    |            |  |           |       |           |  |           |       |           |  |         |       |         |  |                |      |  |  |  |       |  |  |  |       |  |  |  |       |  |  |  |        |  
|Summit Turtle Rock                                                        |  |          | San Antonio, TX    |            |  |           | 250   |           |  |           | 1995  |           |  |         | 857   |         |  |                | 94.9 |  |  |  | 91.8  |  |  |  | 769   |  |  |  | 798   |  |  |  | 10,214 |  
|AUSTIN                                                                    |  |          |                    |            |  |           |       |           |  |           |       |           |  |         |       |         |  |                |      |  |  |  |       |  |  |  |       |  |  |  |       |  |  |  |        |  
|Summit Arboretum                                                          |  |          | Austin, TX         |            |  |           | 408   |           |  |           | 1996  |           |  |         | 847   |         |  |                | 91.9 |  |  |  | 90.4  |  |  |  | 825   |  |  |  | 918   |  |  |  | 18,796 |  
|Summit Las Palmas                                                         |  |          | Austin, TX         |            |  |           | 448   |           |  |           | 1998  |           |  |         | 890   |         |  |                | 89.0 |  |  |  | 87.6  |  |  |  | 830   |  |  |  | 936   |  |  |  | (4     | )
|                                                                          |  |          |                    |            |  |           |       |           |  |           |       |           |  |         |       |         |  |                |      |  |  |  |       |  |  |  |       |  |  |  |       |  |  |  |        |  
|                                                                          |  |          |                    |            |  |           | 856   |           |  |           |       |           |  |         | 870   |         |  |                | 90.4 |  |  |  | 89.0  |  |  |  | 828   |  |  |  | 927   |  |  |  |        |  
|                                                                          |  |          |                    |            |  |           |       |           |  |           |       |           |  |         |       |         |  |                |      |  |  |  |       |  |  |  |       |  |  |  |       |  |  |  |        |  
|TOTAL WEIGHTED AVERAGE OF COMMUNITIES STABILIZED
    IN
    2002 AND 2001 |  |          | 12,060             |            |  |           |       |           |  |           | 977   |           |  |         | 93.4  |         |  |                | 92.9 |  |  |  | 895   |  |  |  | 946   |  |  |  |       | 
|                                                                          |  |          |                    |            |  |           |       |           |  |           |       |           |  |         |       |         |  |                |      |  |  |  |       |  |  |  |       |  |  |  |       | 
|STABILIZED DEVELOPMENT COMMUNITIES(8)                                     |  |          |                    |            |  |           |       |           |  |           |       |           |  |         |       |         |  |                |      |  |  |  |       |  |  |  |       |  |  |  |       | 
|Summit at Lenox                                                           |  |          | Atlanta, GA        |            |  |           | 431   |           |  |           | 1965  |           |  |         | 963   |         |  |                | 94.7 |  |  |  | 85.9  |  |  |  | 993   |  |  |  | 1,020 |  |  |  |       |  
|Summit Russett                                                            |  |          | Laurel, MD         |            |  |           | 426   |           |  |           | 2000  |           |  |         | 1,025 |         |  |                | 92.3 |  |  |  | 90.7  |  |  |  | 1,131 |  |  |  | 1,096 |  |  |  |       |  
|                                                                          |  |          |                    |            |  |           |       |           |  |           |       |           |  |         |       |         |  |                |      |  |  |  |       |  |  |  |       |  |  |  |       |  |  |  |        |  
|                                                                          |  |          |                    |            |  |           | 857   |           |  |           |       |           |  |         | 994   |         |  |                | 93.5 |  |  |  | 88.3  |  |  |  | 1,062 |  |  |  | 1,078 |  |  |  |        |  
|                                                                          |  |          |                    |            |  |           |       |           |  |           |       |           |  |         |       |         |  |                |      |  |  |  |       |  |  |  |       |  |  |  |       |  |  |  |        |  
|ACQUISITION COMMUNITY(9)                                                  |  |          |                    |            |  |           |       |           |  |           |       |           |  |         |       |         |  |                |      |  |  |  |       |  |  |  |       |  |  |  |       | 
|Summit San Raphael                                                        |  |          | Dallas, TX         |            |  |           | 222   |           |  |           | 1999  |           |  |         | 898   |         |  |                | 93.2 |  |  |  | N/A   |  |  |  | 890   |  |  |  | N/A   |  |  |  |       |  
|                                                                          |  |          |                    |            |  |           |       |           |  |           |       |           |  |         |       |         |  |                |      |  |  |  |       |  |  |  |       |  |  |  |       |  |  |  |        |  
|TOTAL WEIGHTED AVERAGE OF STABILIZED COMMUNITIES                          |  |          | 13,139             |            |  |           |       |           |  |           | 1,014 |           |  |         | 93.4  |         |  |                | 92.6 |  |  |  | 898   |  |  |  | 955   |  |  |  |       | 
|                                                                          |  |          |                    |            |  |           |       |           |  |           |       |           |  |         |       |         |  |                |      |  |  |  |       |  |  |  |       |  |  |  |       | 
|COMMUNITIES IN LEASE-UP(10)                                               |  |          |                    |            |  |           |       |           |  |           |       |           |  |         |       |         |  |                |      |  |  |  |       |  |  |  |       |  |  |  |       | 
|Summit Brookwood(11)                                                      |  |          | Atlanta, GA        |            |  |           | 359   |           |  |           | 2002  |           |  |         | 906   |         |  |                |     |  |  |  |      |  |  |  |      |  |  |  |      |  |  |  |       |  
|Summit Crest                                                              |  |          | Raleigh, NC        |            |  |           | 438   |           |  |           | 2001  |           |  |         | 1,129 |         |  |                |     |  |  |  |      |  |  |  |      |  |  |  |      |  |  |  |       |  
|Summit Grandview(12)                                                      |  |          | Charlotte, NC      |            |  |           | 266   |           |  |           | 2000  |           |  |         | 1,082 |         |  |                |     |  |  |  |      |  |  |  |      |  |  |  |      |  |  |  |       |  
|Summit Grand Parc(13)                                                     |  |          | Washington, D.C.   |            |  |           | 105   |           |  |           | 2002  |           |  |         | 904   |         |  |                |     |  |  |  |      |  |  |  |      |  |  |  |      |  |  |  |       |  
|Summit Overlook                                                           |  |          | Raleigh, NC        |            |  |           | 320   |           |  |           | 2001  |           |  |         | 1,056 |         |  |                |     |  |  |  |      |  |  |  |      |  |  |  |      |  |  |  |       |  
|Summit Peachtree City                                                     |  |          | Atlanta, GA        |            |  |           | 399   |           |  |           | 2001  |           |  |         | 1,026 |         |  |                |     |  |  |  |      |  |  |  |      |  |  |  |      |  |  |  |       |  
|Summit Shiloh II                                                          |  |          | Atlanta, GA        |            |  |           | 50    |           |  |           | 2002  |           |  |         | 1,151 |         |  |                |     |  |  |  |      |  |  |  |      |  |  |  |      |  |  |  |       |  
|Summit Valleybrook                                                        |  |          | Philadelphia, PA   |            |  |           | 352   |           |  |           | 2002  |           |  |         | 992   |         |  |                |     |  |  |  |      |  |  |  |      |  |  |  |      |  |  |  |       |  
|                                                                          |  |          |                    |            |  |           |       |           |  |           |       |           |  |         |       |         |  |                |      |  |  |  |       |  |  |  |       |  |  |  |       |  |  |  |        |  
|                                                                          |  |          |                    |            |  |           | 2,289 |           |  |           |       |           |  |         | 1,030 |         |  |                |      |  |  |  |       |  |  |  |       |  |  |  |       |  |  |  |        |  
|                                                                          |  |          |                    |            |  |           |       |           |  |           |       |           |  |         |       |         |  |                |      |  |  |  |       |  |  |  |       |  |  |  |       |  |  |  |        |  
|TOTAL COMMUNITIES                                                         |  |          | 15,428             |            |  |           |       |           |  |           | 1,017 |           |  |         |       |         |  |                |      |  |  |  |       |  |  |  |       |  |  |  |       | 
|                                                                          |  |          |                    |            |  |           |       |           |  |           |       |           |  |         |       |         |  |                |      |  |  |  |       |  |  |  |       |  |  |  |       | 



| |     |                                                                                                                                                                                                                                                                                                                                              
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | Average physical occupancy is defined as the
    number of apartment homes occupied divided by the total number
    of apartment homes contained in the communities, expressed as a
    percentage. Average physical occupancy has been calculated using
    the average occupancy that existed on Sunday during each week of
    the period.
|
| | (2) | Represents the average monthly net rental revenue
    per occupied apartment home. Average rental revenue is not shown
    for the periods during which a community was not stabilized.                                                                                                                                                      
|
| | (3) | Communities that reached stabilization (93%
    physical occupancy) at least one year prior to the beginning of
    the current year.                                                                                                                                                                                                        
|
| | (4) | Collateral for fixed rate mortgage of
    $133.9 million.                                                                                                                                                                                                                                                                                    
|
| | (5) | Summit Foxcroft is held by a partnership in which
    we are a 75% managing general partner.                                                                                                                                                                                                                                                 
|
| | (6) | Collateral for a fixed rate mortgage of
    $8.0 million.                                                                                                                                                                                                                                                                                    
|
| | (7) | Collateral for letters of credit in an aggregate
    amount of $10.8 million which serve as collateral for
    $10.6 million in tax exempt bonds.                                                                                                                                                                                            

10



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##### 





| |     |                                                                                                                                                        
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------
| | (8) | Communities that were stabilized in 2002 but did
    not stabilize at least one year prior to the beginning of the
    current year.                   
|
| | (9) | A community which we have acquired is not
    considered fully stabilized until owned for one year or more as
    of the beginning of the current year.



|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(10) | Communities that were in lease-up during 2002. As
    with any community in lease-up, there are uncertainties and
    risks. While we have estimated stabilization target dates and
    rental rates based on what we believe are reasonable assumptions
    in light of current conditions, there can be no assurance that
    actual rental rates will not be less than current budgets or
    that we will not experience delays in reaching stabilization of
    these communities. These communities are each in various stages
    of lease-up. For lease-up communities, average physical
    occupancy and average monthly rental revenue information is not
    meaningful and, therefore, is not presented.
|    
|(11) | Lessee as of December 31, 2002 under a land
    lease related to the land on which Summit Brookwood was
    constructed. We have exercised our purchase option under the
    land lease to purchase the related land for $10.6 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    
|(12) | The apartment homes at Summit Grandview
    stabilized during the fourth quarter of 2001. The information in
    the table represents data for the apartment homes only. The
    75,203 square feet of commercial space at Summit Grandview was
    74.7% occupied and leased as of December 31, 2002.                                                                                                                                                                                                                                                                                                                                                                                                               
|    
|(13) | Summit Grand Parc was completed during the fourth
    quarter of 2002. The information in the table represents data
    for the apartment homes only. The 13,790 square feet of
    commercial space at Summit Grand Parc was 71.0% occupied and
    leased as of December 31, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                 

Information with respect to total debt secured by
20 of our communities having an aggregate net book value of
$398.4 million as of December 31, 2002, is as follows
(dollars in thousands):

|                               |  |            |                |               |  |  |                |    
|------------------------------ |  | ---------- | -------------- | ------------- |  |  | -------------- | ---
|                               |  | Fixed Rate |                | Variable Rate
|                               |  |            |                |              
|Total principal                |  |            | $268,271       |               |  |  | $17,465        |    
|Interest rates range from      |  |            | 6.75% to 8.00% |               |  |  | 2.47% to 3.08% | (1)
|Weighted average interest rate |  |            | 6.98%          |               |  |  | 3.05%          | (1)
|Annual debt service(2)         |  |            | $ 24,047       |               |  |  | $  642         |    

The aggregate maturities for secured debt as of
December 31, 2002 are (in thousands):

|           |  |   |         | 
|---------- |  | - | ------- | 
|2003       |  | $ | 5,722   | 
|2004       |  |   | 6,105   | 
|2005       |  |   | 47,921  | 
|2006       |  |   | 28,422  | 
|2007       |  |   | 36,291  | 
|Thereafter |  |   | 161,275 | 
|           |  |   |         | 
|Total      |  | $ | 285,736 | 
|           |  |   |         | 



|    |                                                                                                                                                                                          
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Interest rates as of December 31, 2002.                                                                                                                                                  
|   
|(2) | Annual debt service includes interest and
    principal payments, and for variable rate loans represents 2002
    costs including letter of credit fees and other bond related
    costs.

Community Management

Our property management staff operates each of
our communities. The management team for each community includes
on-site management and maintenance personnel as well as
supervision by a regional vice-president and regional property
manager, and an off-site support staff. On-site community
management teams perform leasing and rent collection functions,
maintenance tasks and coordinate resident services. All
personnel are extensively trained and are encouraged to continue
their education through both internal and outside courses.

11



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##### 



Item 3.     Legal
Proceedings

We are not, nor are any of our communities,
presently subject to any material litigation nor, to our
knowledge, is any litigation threatened against us or any of our
communities, other than routine actions for negligence or other
claims and administrative proceedings arising in the ordinary
course of business, some of which are expected to be covered by
liability insurance and all of which collectively are not
expected to have a material adverse effect on our business,
financial condition or results of operations.

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

No matters were submitted to a vote of our
security holders during the fourth quarter of 2002.

12



---



##### 



PART II



|        |                                                                          
|------- | -------------------------------------------------------------------------
|Item 5. | Market for Registrants Common Equity
    and Related Stockholder Matters

Market Information and Stockholders

Our common stock began trading on the NYSE on
February 8, 1994 under the symbol SMT. The
following table sets forth the quarterly high and low sales
prices per share reported on the NYSE during 2002 and 2001:

|                              |  |      |       |      |  |      |       |     |  |   |       |  |  |   |       | 
|----------------------------- |  | ---- | ----- | ---- |  | ---- | ----- | --- |  | - | ----- |  |  | - | ----- | 
|                              |  |      |       |     
|                              |  | 2002 |       | 2001
|                              |  |      |       |     
|Quarter                       |  | High |       | Low  |  | High |       | Low
|                              |  |      |       |      |  |      |       |    
|January 1 through March 31    |  | $    | 25.23 |      |  | $    | 21.65 |     |  | $ | 25.88 |  |  | $ | 22.88 | 
|April 1 through June 30       |  |      | 25.85 |      |  |      | 22.23 |     |  |   | 26.83 |  |  |   | 23.42 | 
|July 1 through September 30   |  |      | 23.13 |      |  |      | 19.08 |     |  |   | 27.19 |  |  |   | 24.95 | 
|October 1 through December 31 |  |      | 19.38 |      |  |      | 16.72 |     |  |   | 26.27 |  |  |   | 22.42 | 

On March 3, 2003, the last reported sale
price of our common stock on the NYSE was $17.69 and there were
1,224 holders of record of 27,028,912 shares of our
common stock.

Dividends

We declared a dividend of $0.4750 per share of
common stock for each of the first through third quarters in
2002, which were paid on May 15, 2002 for the first
quarter, August 15, 2002 for the second quarter and
November 15, 2002 for the third quarter. We declared a
dividend of $0.3375 per share of common stock for the fourth
quarter of 2002, which was paid on February 14, 2003.

We declared a dividend of $0.4625 per share of
common stock for each of the four quarters in 2001, which were
paid on May 15, 2001 for the first quarter, August 15,
2001 for the second quarter, November 15, 2001 for the
third quarter and February 15, 2002 for the fourth quarter.

We intend to continue to make regular quarterly
dividends to holders of shares of our common stock. Future
dividends will be declared at the discretion of our Board of
Directors and will depend on actual cash flow, our financial
condition, our capital requirements, the annual distribution
requirements under the REIT provisions of the Internal Revenue
Code, and such other factors as our Board of Directors may deem
relevant. Our Board of Directors may modify our dividend policy
from time to time.

Securities Authorized for Issuance under
Equity Compensation Plans

The following table sets forth information
regarding securities authorized for issuance under Summits
equity compensation plans as of December 31, 2002:

Equity Compensation Plan Information

|                                                               |       |                        |           |                      |  |                           |       |       |  |  |        |        | 
|-------------------------------------------------------------- | ----- | ---------------------- | --------- | -------------------- |  | ------------------------- | ----- | ----- |  |  | ------ | ------ | 
|                                                               |       |                        |           |                      |  | Number of securities     
|                                                               |       | Number of securities   |           |                      |  | remaining available      
|                                                               |       | to be issued           |           | Weighted-average     |  | for future issuance under
|                                                               |       | upon exercise of       |           | exercise price of    |  | equity compensation plans
|                                                               |       | outstanding options,   |           | outstanding options, |  | (excluding securities    
|Plan category                                                  |       | warrants and rights(1) |           | warrants and rights  |  | reflected in column (a)) 
|                                                               |       |                        |           |                      |  |                          
|                                                               |       | (a)                    |           | (b)                  |  | (c)                      
|Equity compensation plans approved by security
    holders(2)  |       |                        | 2,340,197 | (3)                  |  | $                         | 20.45 | (4)   |  |  | 42,613 | (5)   
|Equity compensation plans not approved by
    security holders |       |                        |          |                      |  |                           |      |       |  |  |       |       
|                                                               |       |                        |           |                      |  |                           |       |       |  |  |        |       
|                                                               | Total |                        |           | 2,340,197            |  |                           | $     | 20.45 |  |  |        | 42,613 | 
|                                                               |       |                        |           |                      |  |                           |       |       |  |  |        |       






|    |                                                                                                                              
|--- | -----------------------------------------------------------------------------------------------------------------------------
|(1) | Does not include any restricted stock as such
    shares are already reflected in our outstanding shares of common
    stock.

13



---



##### 





|    |                                                                                                                                                                                                     
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Consists of our 1994 Stock Option and Incentive
    Plan. We also have a non-qualified employee stock purchase plan,
    but transactions under such plan were suspended effective
    July 2, 2002.
|   
|(3) | Includes:                                                                                                                                                                                           

|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 2,018,932 shares subject to stock options
    outstanding as of December 31, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | 227,450 shares that may be issued pursuant to
    stock award agreements dated February 6, 2002. Under the
    stock award agreements, certain employees were awarded the
    opportunity to earn shares of our common stock. The number of
    shares of common stock to be received by each respective
    employee is based on the following schedule of dates and
    percentages: 15% on March 1, 2003; an additional 20% on
    each of March 1, 2004, 2005 and 2006; and the final 25% on
    March 1, 2007. The respective employee will receive the
    applicable number of shares on each date if he or she continues
    to be employed by us on such date. If an employee is terminated
    for any reason other than death or disability, his or her right
    to receive the remaining unacquired shares will terminate. Upon
    the death or disability of the employee, or upon a change
    of control, such employee or his or her estate, as the
    case may be, will be entitled to immediately receive the
    remaining unacquired shares regardless of the schedule set forth
    above. The number of shares represents 100% of the shares of
    common stock that could be potentially issued under the stock
    award agreements.
| | 93,815 shares that may be issued pursuant to
    performance stock award agreements dated February 23, 2001.
    Under the performance stock award agreements, certain employees
    have the opportunity to earn up to 150% of a target number of
    performance shares based upon the average annual total return
    (share appreciation and distributions) of our common stock from
    January 1, 2001 to December 31, 2003 as compared to
    the average annual total returns of our peers included in the
    NAREIT All REIT Index for Apartments during the same period. The
    number of shares represents 100% of the shares of common stock
    that could be potentially issued under the performance stock
    award agreements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 



|    |                                                                                                                                                                                                                                                                                          
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(4) | Represents the weighted average exercise price of
    the outstanding stock options. Does not include information
    about shares which may be issued under the stock award
    agreements and performance stock award agreements because such
    shares do not have an exercise price.
|   
|(5) | Does not include 74,270 shares of common stock
    available for future issuance under our non-qualified employee
    stock purchase plan, as transactions under such plan were
    suspended effective July 2, 2002.                                                                    

14



---



##### 



Item 6.     Selected
Financial Data

The following table sets forth selected
consolidated financial and other information on a consolidated
historical basis as of and for each of the years in the
five-year period ended December 31, 2002. This table should
be read in conjunction with our consolidated financial
statements and related notes which accompany this report, as
well as the Managements Discussion and Analysis of
Financial Condition and Results of Operations section of
this report (amounts in thousands except per share and property
information).

SELECTED FINANCIAL DATA

SUMMIT PROPERTIES INC.


|                                                                                                                                                                                                                                                         |                    |                         |        |         |         |      |        |         |         |      |        |         |         |   |        |         |         |   |        |         |         | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------ | ----------------------- | ------ | ------- | ------- | ---- | ------ | ------- | ------- | ---- | ------ | ------- | ------- | - | ------ | ------- | ------- | - | ------ | ------- | ------- | 
|                                                                                                                                                                                                                                                         |                    |                        
|                                                                                                                                                                                                                                                         |                    | Year Ended December 31,
|                                                                                                                                                                                                                                                         |                    |                        
|                                                                                                                                                                                                                                                         |                    | 2002                    |        | 2001    |         | 2000 |        | 1999    |         | 1998
|                                                                                                                                                                                                                                                         |                    |                         |        |         |         |      |        |         |         |     
|Operating Information:                                                                                                                                                                                                                                   |                    |                         |        |         |         |      |        |         |         |      |        |         |         |   |        |         |         |   |        |        
|Revenue                                                                                                                                                                                                                                                  |                    |                         |        |         |         |      |        |         |         |      |        |         |         |   |        |         |         |   |        |        
|                                                                                                                                                                                                                                                         | Rental             |                         | $      | 143,791 |         |      | $      | 154,167 |         |      | $      | 149,855 |         |   | $      | 142,002 |         |   | $      | 119,060 |        
|                                                                                                                                                                                                                                                         | Interest and other |                         |        | 13,130  |         |      |        | 14,366  |         |      |        | 15,300  |         |   |        | 12,588  |         |   |        | 7,958   |        
|                                                                                                                                                                                                                                                         |                    |                         |        |         |         |      |        |         |         |      |        |         |         |   |        |         |         |   |        |        
|                                                                                                                                                                                                                                                         |                    | Total                   |        |         | 156,921 |      |        |         | 168,533 |      |        |         | 165,155 |   |        |         | 154,590 |   |        |         | 127,018 | 
|                                                                                                                                                                                                                                                         |                    |                         |        |         |         |      |        |         |         |      |        |         |         |   |        |         |         |   |        |        
|Property operating and maintenance expense
    (before depreciation and amortization)                                                                                                                                                                    |                    |                         | 55,660 |         |         |      | 55,078 |         |         |      | 51,580 |         |         |   | 50,262 |         |         |   | 44,911 |        
|Interest expense                                                                                                                                                                                                                                         |                    |                         | 33,315 |         |         |      | 38,301 |         |         |      | 36,880 |         |         |   | 35,594 |         |         |   | 30,771 |        
|Depreciation and amortization                                                                                                                                                                                                                            |                    |                         | 37,130 |         |         |      | 35,347 |         |         |      | 32,767 |         |         |   | 31,000 |         |         |   | 26,147 |        
|General and administrative expense                                                                                                                                                                                                                       |                    |                         | 6,032  |         |         |      | 6,599  |         |         |      | 4,752  |         |         |   | 3,876  |         |         |   | 3,861  |        
|Loss (income) from equity investments                                                                                                                                                                                                                    |                    |                         | 357    |         |         |      | (277   | )       |         |      | 1,178  |         |         |   | 615    |         |         |   | 328    |        
|                                                                                                                                                                                                                                                         |                    |                         |        |         |         |      |        |         |         |      |        |         |         |   |        |         |         |   |        |        
|                                                                                                                                                                                                                                                         |                    | Total                   |        |         | 132,494 |      |        |         | 135,048 |      |        |         | 127,157 |   |        |         | 121,347 |   |        |         | 106,018 | 
|                                                                                                                                                                                                                                                         |                    |                         |        |         |         |      |        |         |         |      |        |         |         |   |        |         |         |   |        |        
|Income from continuing operations before gain on
    sale of real estate assets, impairment loss, extraordinary
    items, minority interest of unitholders in Operating Partnership
    and dividends to preferred unitholders in Operating Partnership |                    |                         | 24,427 |         |         |      | 33,485 |         |         |      | 37,998 |         |         |   | 33,243 |         |         |   | 21,000 |        
|Gain on sale of real estate assets                                                                                                                                                                                                                       |                    |                         | 13,831 |         |         |      | 34,435 |         |         |      | 38,510 |         |         |   | 17,427 |         |         |   | 37,148 |        
|Gain on sale of real estate assets 
    joint ventures                                                                                                                                                                                                  |                    |                         | 4,955  |         |         |      | 271    |         |         |      |       |         |         |   |       |         |         |   |       |        
|Impairment loss on technology investments                                                                                                                                                                                                                |                    |                         |       |         |         |      | (1,217 | )       |         |      |       |         |         |   |       |         |         |   |       |        
|                                                                                                                                                                                                                                                         |                    |                         |        |         |         |      |        |         |         |      |        |         |         |   |        |         |         |   |        |        
|Income from continuing operations before
    extraordinary items, minority interest of unitholders in
    Operating Partnership and dividends to preferred unitholders in
    Operating Partnership                                                      |                    | $                       | 43,213 |         |         | $    | 66,974 |         |         | $    | 76,508 |         |         | $ | 50,670 |         |         | $ | 58,148 |        
|                                                                                                                                                                                                                                                         |                    |                         |        |         |         |      |        |         |         |      |        |         |         |   |        |         |         |   |        |        
|Net Income                                                                                                                                                                                                                                               |                    | $                       | 91,688 |         |         | $    | 56,537 |         |         | $    | 63,874 |         |         | $ | 45,745 |         |         | $ | 56,375 |        
|                                                                                                                                                                                                                                                         |                    |                         |        |         |         |      |        |         |         |      |        |         |         |   |        |         |         |   |        |        
|Income from continuing operations per
    share  basic                                                                                                                                                                                                  |                    | $                       | 0.99   |         |         | $    | 1.77   |         |         | $    | 2.09   |         |         | $ | 1.37   |         |         | $ | 1.97   |        
|                                                                                                                                                                                                                                                         |                    |                         |        |         |         |      |        |         |         |      |        |         |         |   |        |         |         |   |        |        
|Income from continuing operations per
    share  diluted                                                                                                                                                                                                |                    | $                       | 0.99   |         |         | $    | 1.75   |         |         | $    | 2.07   |         |         | $ | 1.37   |         |         | $ | 1.97   |        
|                                                                                                                                                                                                                                                         |                    |                         |        |         |         |      |        |         |         |      |        |         |         |   |        |         |         |   |        |        
|Income from discontinued operations per
    share  basic                                                                                                                                                                                                |                    | $                       | 2.36   |         |         | $    | 0.34   |         |         | $    | 0.34   |         |         | $ | 0.28   |         |         | $ | 0.26   |        
|                                                                                                                                                                                                                                                         |                    |                         |        |         |         |      |        |         |         |      |        |         |         |   |        |         |         |   |        |        
|Income from discontinued operations per
    share  diluted                                                                                                                                                                                              |                    | $                       | 2.34   |         |         | $    | 0.33   |         |         | $    | 0.33   |         |         | $ | 0.28   |         |         | $ | 0.26   |        
|                                                                                                                                                                                                                                                         |                    |                         |        |         |         |      |        |         |         |      |        |         |         |   |        |         |         |   |        |        

15



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##### 



|                                                            |                      |                         |           |         |   |      |           |         |   |      |           |          |   |   |           |         |   |   |           |          |  
|----------------------------------------------------------- | -------------------- | ----------------------- | --------- | ------- | - | ---- | --------- | ------- | - | ---- | --------- | -------- | - | - | --------- | ------- | - | - | --------- | -------- | -
|                                                            |                      |                        
|                                                            |                      | Year Ended December 31,
|                                                            |                      |                        
|                                                            |                      | 2002                    |           | 2001    |   | 2000 |           | 1999    |   | 1998
|                                                            |                      |                         |           |         |   |      |           |         |   |     
|Net income per share  basic                                |                      | $                       | 3.35      |         |   | $    | 2.11      |         |   | $    | 2.42      |          |   | $ | 1.65      |         |   | $ | 2.26      |         
|                                                            |                      |                         |           |         |   |      |           |         |   |      |           |          |   |   |           |         |   |   |           |         
|Net income per share  diluted                              |                      | $                       | 3.33      |         |   | $    | 2.09      |         |   | $    | 2.41      |          |   | $ | 1.65      |         |   | $ | 2.26      |         
|                                                            |                      |                         |           |         |   |      |           |         |   |      |           |          |   |   |           |         |   |   |           |         
|Dividends per share                                         |                      | $                       | 1.76      |         |   | $    | 1.85      |         |   | $    | 1.75      |          |   | $ | 1.67      |         |   | $ | 1.63      |         
|                                                            |                      |                         |           |         |   |      |           |         |   |      |           |          |   |   |           |         |   |   |           |         
|Weighted average shares outstanding 
    basic             |                      |                         | 27,385    |         |   |      | 26,789    |         |   |      | 26,341    |          |   |   | 27,698    |         |   |   | 24,935    |         
|                                                            |                      |                         |           |         |   |      |           |         |   |      |           |          |   |   |           |         |   |   |           |         
|Weighted average shares outstanding 
    diluted           |                      |                         | 27,556    |         |   |      | 27,099    |         |   |      | 26,542    |          |   |   | 27,769    |         |   |   | 24,944    |         
|                                                            |                      |                         |           |         |   |      |           |         |   |      |           |          |   |   |           |         |   |   |           |         
|Weighted average shares and units
    outstanding  basic   |                      |                         | 30,937    |         |   |      | 30,796    |         |   |      | 30,697    |          |   |   | 32,135    |         |   |   | 29,141    |         
|                                                            |                      |                         |           |         |   |      |           |         |   |      |           |          |   |   |           |         |   |   |           |         
|Weighted average shares and units
    outstanding  diluted |                      |                         | 31,107    |         |   |      | 31,106    |         |   |      | 30,897    |          |   |   | 32,206    |         |   |   | 29,150    |         
|                                                            |                      |                         |           |         |   |      |           |         |   |      |           |          |   |   |           |         |   |   |           |         
|Balance Sheet Information:                                  |                      |                         |           |         |   |      |           |         |   |      |           |          |   |   |           |         |   |   |           |         
|Real estate, before accumulated depreciation                |                      | $                       | 1,405,189 |         |   | $    | 1,410,339 |         |   | $    | 1,428,059 |          |   | $ | 1,284,818 |         |   | $ | 1,206,536 |         
|Total assets                                                |                      |                         | 1,337,016 |         |   |      | 1,297,442 |         |   |      | 1,340,636 |          |   |   | 1,217,858 |         |   |   | 1,198,664 |         
|Total long-term debt                                        |                      |                         | 702,456   |         |   |      | 719,345   |         |   |      | 764,384   |          |   |   | 650,077   |         |   |   | 726,103   |         
|Stockholders equity                                        |                      |                         | 396,878   |         |   |      | 349,600   |         |   |      | 338,677   |          |   |   | 327,335   |         |   |   | 358,925   |         
|Other Information:                                          |                      |                         |           |         |   |      |           |         |   |      |           |          |   |   |           |         |   |   |           |         
|Cash flow provided by (used in):                            |                      |                         |           |         |   |      |           |         |   |      |           |          |   |   |           |         |   |   |           |         
|                                                            | Operating activities |                         | $         | 58,301  |   |      | $         | 66,546  |   |      | $         | 70,968   |   |   | $         | 59,021  |   |   | $         | 63,808   |  
|                                                            | Investing activities |                         |           | (5,590  | ) |      |           | 6,177   |   |      |           | (118,197 | ) |   |           | (39,751 | ) |   |           | (219,170 | )
|                                                            | Financing activities |                         |           | (52,172 | ) |      |           | (74,057 | ) |      |           | 46,247   |   |   |           | (17,977 | ) |   |           | 154,636  |  
|Funds from Operations(1)                                    |                      | $                       | 60,526    |         |   | $    | 70,167    |         |   | $    | 73,342    |          |   | $ | 70,707    |         |   | $ | 58,242    |         
|Total completed communities (at end of period)(2)           |                      |                         | 51        |         |   |      | 54        |         |   |      | 59        |          |   |   | 65        |         |   |   | 66        |         
|Total apartment homes developed(3)                          |                      |                         | 866       |         |   |      | 1,157     |         |   |      | 1,696     |          |   |   | 1,650     |         |   |   | 973       |         
|Total apartment homes acquired                              |                      |                         | 222       |         |   |      |          |         |   |      | 490       |          |   |   |          |         |   |   | 3,557     |         
|Total apartment homes (at end of period)(2)                 |                      |                         | 15,428    |         |   |      | 16,739    |         |   |      | 17,273    |          |   |   | 16,765    |         |   |   | 16,631    |         
|Ratio of earnings to fixed charges(4)                       |                      |                         | 2.58      |         |   |      | 1.83      |         |   |      | 1.99      |          |   |   | 1.85      |         |   |   | 2.52      |         



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | 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 extraordinary
    items and 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 accounting principles
    generally accepted in the United States of America
    (GAAP). Our methodology for calculating FFO may
    differ from the methodology for calculating FFO utilized by
    other real estate companies, and accordingly, may not be
    comparable to other real estate companies.

We believe that FFO is helpful to investors as a
measure of the performance of an equity REIT because, along with
cash flows from operating activities, financing activities and
investing activities, it provides investors with an
understanding of our ability to incur and service debt and to
make capital expenditures. FFO should not be considered as an
alternative to net income (determined in accordance with GAAP)
as an indication of our financial performance or to cash flows
from operating activities (determined in accordance with GAAP)
as a measure of our liquidity, nor is it indicative of funds
available to fund our

16



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##### 



cash needs, including our ability to make
dividend or distribution payments. FFO is calculated as follows
(dollars in thousands):


|                                                                                                                                                   |  |                          |        |      |  |      |        |      |  |      |        |  |  |   |        |  |  |   |        | 
|-------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------ | ------ | ---- |  | ---- | ------ | ---- |  | ---- | ------ |  |  | - | ------ |  |  | - | ------ | 
|                                                                                                                                                   |  |                         
|                                                                                                                                                   |  | Years Ended December 31,
|                                                                                                                                                   |  |                         
|                                                                                                                                                   |  | 2002                     |        | 2001 |  | 2000 |        | 1999 |  | 1998
|                                                                                                                                                   |  |                          |        |      |  |      |        |      |  |     
|Income before gain on sale of real estate assets,
    minority interest of common unitholders in Operating Partnership
    and extraordinary items |  | $                        | 20,126 |      |  | $    | 30,190 |      |  | $    | 35,676 |  |  | $ | 35,635 |  |  | $ | 29,327 | 
|Real estate depreciation                                                                                                                           |  |                          | 40,400 |      |  |      | 39,977 |      |  |      | 37,666 |  |  |   | 35,072 |  |  |   | 28,915 | 
|                                                                                                                                                   |  |                          |        |      |  |      |        |      |  |      |        |  |  |   |        |  |  |   |        | 
|Funds from operations                                                                                                                              |  | $                        | 60,526 |      |  | $    | 70,167 |      |  | $    | 73,342 |  |  | $ | 70,707 |  |  | $ | 58,242 | 
|                                                                                                                                                   |  |                          |        |      |  |      |        |      |  |      |        |  |  |   |        |  |  |   |        | 



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Represents the total number of completed
    communities and apartment homes in those completed communities
    owned at the end of the period (excludes joint venture
    communities).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   
|(3) | Represents the total number of apartment homes in
    communities completed during the period and owned at the end of
    the period (excludes joint venture communities).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|(4) | The ratios of earnings to fixed charges were
    computed by dividing earnings by fixed charges. For this
    purpose, earnings consist of pre-tax income from continuing
    operations (including gains on sale of real estate) plus fixed
    charges (excluding capitalized interest). Fixed charges consist
    of interest expense (whether expensed or capitalized), dividends
    to preferred unitholders in the Operating Partnership, the
    estimated interest component of rent expense and the
    amortization of debt issuance costs. To date, we have not issued
    any preferred stock; therefore, the ratios of earnings to
    combined fixed charges and preferred stock dividend requirements
    are the same as the ratios of earnings to fixed charges
    presented.



|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 7. | 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 Inc., a
Maryland corporation (Summit), and its subsidiaries,
including Summit Properties Partnership, L.P., a Delaware
limited partnership (the Operating Partnership),
considered as a single enterprise. Summit is 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;                                                                                                                                          
| 
| | expected national and regional economic and real
    estate market conditions, including the market for sales of real
    estate assets;                                                                 
| 
| | the proposed development, acquisition or
    disposition of communities, including our strategy to exit our
    Texas markets and to increase our presence in Washington, D.C.
    and Southeast Florida;
| 
| | anticipated construction commencement,
    completion, lease-up and stabilization dates; and                                                                                                             
| 
| | estimated development costs.                                                                                                                                                                             

17



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



|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | economic conditions generally, and the real
    estate market specifically, including changes in occupancy
    rates, market rents and rental rate concessions, the continuing
    deceleration of economic conditions in our markets, and the
    failure of national and local economic conditions to rebound in
    a timely manner;                                                                                                                                                                                                                                                           
| 
| | changes in job growth, household formation and
    population growth in our markets;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| 
| | uncertainties associated with our development
    activities, including the failure to obtain zoning and other
    approvals, actual development costs exceeding our budgets, and
    construction material defects;                                                                                                                                                                                                                                                                                                                                                                              
| 
| | the failure of acquisition and development
    communities to yield expected results;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| 
| | the failure to sell communities marketed for
    sale, including our Texas communities, or to sell these
    communities in a timely manner or on favorable terms;                                                                                                                                                                                                                                                                                                                                                                                                                                
| 
| | the failure to locate favorable opportunities for
    investment in our core markets;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| 
| | construction delays due to the unavailability of
    materials, weather conditions or other delays;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| 
| | potential environmental liabilities and related
    property damages, costs of investigation and remediation and
    liability to third parties;                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| 
| | competition, which could limit our ability to
    secure attractive investment opportunities, lease apartment
    homes or increase or maintain rents;                                                                                                                                                                                                                                                                                                                                                                                                                                            
| 
| | supply of and demand for apartment communities in
    our current market areas, especially our core markets;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| 
| | availability and cost of financing and access to
    cost-effective capital;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| 
| | the inability to refinance existing indebtedness
    or to refinance existing indebtedness on favorable terms;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| 
| | changes in interest rates;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| 
| | legislative and regulatory changes, including
    changes to laws governing the taxation of real estate investment
    trusts (REITs);                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| 
| | changes in accounting principles generally
    accepted in the United States of America (GAAP), or
    policies and guidelines applicable to REITs; and                                                                                                                                                                                                                                                                                                                                                                                                                                         
| 
| | those factors discussed below and in the sections
    entitled Results of Operations for the Years Ended
    December 31, 2002, 2001 and 2000 beginning on
    page 20 of this report, Operating Performance of our
    Fully Stabilized Communities beginning on page 23 of
    this report, Operating Performance of our Communities in
    Lease Up beginning on page 25 of this report,
    Factors Affecting the Performance of Our Development
    Communities beginning on page 38 of this report, and
    Commitments and Contingencies beginning on
    page 39 of this report.

Our common unitholders could suffer adverse tax
consequences upon the sale of certain of our communities. We may
sometimes make strategic decisions that are advantageous
transactions for Summit, but may not be in the best interests of
our common unitholders, including certain directors.

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
consolidated financial statements and related notes which
accompany this report.

18



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##### 



Summit is a real estate operating company that
has elected REIT status and focuses on the operation,
development and acquisition of Class A luxury
apartment communities located throughout the Southeast and
Mid-Atlantic United States, as well as in Texas. We focus our
efforts in five core markets, with particular emphasis on
Washington, D.C., Southeast Florida and Atlanta, Georgia. Our
other core markets are Raleigh-Durham and Charlotte, North
Carolina. While we currently operate in Texas as well, we intend
to exit our Texas markets and use the sales proceeds from those
communities to increase our presence in the Washington, D.C. and
Southeast Florida markets. Because we focus on certain 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 this annual report. 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, developer
and acquirer of apartment communities, our critical accounting
policies are related to rental revenue recognition, cost
capitalization and asset impairment evaluation.

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

Expenditures directly related to the acquisition,
development and improvement of real estate assets are
capitalized at cost as land, buildings and improvements or
furniture, fixtures and equipment in accordance with Statement
of Financial Accounting Standards (SFAS)
No. 67, Accounting for Costs and Initial Rental
Operations of Real Estate Projects. Improvements are
categorized as either non-recurring or recurring capitalized
expenditures. Non-recurring capitalized expenditures primarily
consist of the cost of improvements such as new garages, water
submeters, gated security access and improvements made in
conjunction with renovations of apartment homes. Excluding
rehabilitations, recurring capitalized expenditures consist
primarily of floor coverings, furniture, appliances and
equipment, and exterior paint and carpentry. Repairs and
maintenance, such as landscaping maintenance, interior painting
and cleaning and supplies used in such activities, are expensed
as incurred and we do not accrue for such costs in advance.

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

19



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##### 



In accordance with SFAS No. 144, we present
operating results of communities we consider held for sale, as
well as those sold, in discontinued operations in our
consolidated statements of earnings prospectively from the date
of adoption, which was January 1, 2002. Although the
adoption of SFAS No. 144 did not have a material impact on
our financial position or results of operations for the year
ended December 31, 2002, it did have a significant effect
on the comparability of amounts presented from year to year on
the consolidated statements of earnings.

Historical Results of Operations

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

A community that we have acquired is deemed
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. We consider a
community to be stabilized when it has attained a
physical occupancy level of at least 93%. 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 Years Ended
    December 31, 2002, 2001 and 2000

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

Income from continuing operations before gain on
sale of real estate assets, impairment loss on investments in
technology companies, minority interest of common unitholders in
the Operating Partnership, dividends to preferred unitholders in
the Operating Partnership and extraordinary items decreased to
$24.4 million in 2002 from $33.5 million in 2001. The
primary factors causing this decrease are a $12.3 million
decrease in property operating income from continuing operations
and an increase in depreciation expense of $1.9 million due
to the initiation and increase of depreciation on recently
developed communities, as well as depreciation on the community
acquired during the second half of 2002, offset by the absence
of a full year of depreciation on communities sold during 2002
and 2001, all offset by a decrease in interest expense of
$5.0 million as a result of decreased average indebtedness
outstanding and a decreased average effective interest rate.
This same measure decreased to $33.5 million in 2001 from
$38.0 million in 2000 primarily due to a $2.2 million
increase in depreciation expense, a $2.2 million increase
in general and administrative costs primarily as a result of
$1.8 million of non-recurring charges related to an
increase in costs for abandoned pursuit projects and severance
costs associated with senior staff reductions and a
$1.4 million increase in interest expense as a

20



---



##### 



result of increased average indebtedness
outstanding, all offset by increased property operating income
of $1.3 million.


Operating Performance of our Portfolio of
Communities

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

A summary of our apartment homes (excluding joint
ventures) for the years ended December 31, 2002, 2001 and
2000 is as follows:

|                                                  |  |      |        |      |  |      |        |   |  |  |        |  
|------------------------------------------------- |  | ---- | ------ | ---- |  | ---- | ------ | - |  |  | ------ | -
|                                                  |  | 2002 |        | 2001 |  | 2000
|                                                  |  |      |        |      |  |     
|Apartment homes at the beginning of the year      |  |      | 16,739 |      |  |      | 18,928 |   |  |  | 17,673 |  
|Acquisitions                                      |  |      | 222    |      |  |      |       |   |  |  | 490    |  
|Developments which were completed during the year |  |      | 866    |      |  |      |       |   |  |  | 2,441  |  
|Sale of apartment homes                           |  |      | (2,399 | )    |  |      | (2,189 | ) |  |  | (1,676 | )
|                                                  |  |      |        |      |  |      |        |   |  |  |        |  
|Apartment homes at the end of the year            |  |      | 15,428 |      |  |      | 16,739 |   |  |  | 18,928 |  
|                                                  |  |      |        |      |  |      |        |   |  |  |        |  

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##### 



The operating performance of our communities
(excluding joint venture communities) is summarized below
(dollars in thousands):

|                                                                     |                                    |                         |         |                         |  |          |         |         |  |      |        |          |   |   |         |         |  |   |         |         |  |  |       |       |  
|-------------------------------------------------------------------- | ---------------------------------- | ----------------------- | ------- | ----------------------- |  | -------- | ------- | ------- |  | ---- | ------ | -------- | - | - | ------- | ------- |  | - | ------- | ------- |  |  | ----- | ----- | -
|                                                                     |                                    |                         |         |                        
|                                                                     |                                    | Year Ended December 31, |         | Year Ended December 31,
|                                                                     |                                    |                         |         |                        
|                                                                     |                                    | 2002                    |         | 2001                    |  | % Change |         | 2001    |  | 2000 |        | % Change
|                                                                     |                                    |                         |         |                         |  |          |         |         |  |      |        |         
|Property revenue:                                                    |                                    |                         |         |                         |  |          |         |         |  |      |        |          |   |   |         |         |  |   |         |         |  |  |       |      
|                                                                     | Fully stabilized communities       |                         | $       | 127,201                 |  |          | $       | 133,824 |  |      |        | -4.9     | % |   | $       | 104,697 |  |   | $       | 103,424 |  |  |       | 1.2   | %
|                                                                     | Acquisition communities            |                         |         | 1,111                   |  |          |         |        |  |      |        | 100.0    | % |   |         | 5,112   |  |   |         | 2,194   |  |  |       | 133.0 | %
|                                                                     | Stabilized development communities |                         |         | 10,672                  |  |          |         | 10,349  |  |      |        | 3.1      | % |   |         | 53,905  |  |   |         | 48,581  |  |  |       | 11.0  | %
|                                                                     | Communities in lease-up            |                         |         | 16,679                  |  |          |         | 8,271   |  |      |        | 101.7    | % |   |         | 14,562  |  |   |         | 4,797   |  |  |       | 203.6 | %
|                                                                     | Disposition communities            |                         |         | 18,511                  |  |          |         | 38,726  |  |      |        | -52.2    | % |   |         | 12,894  |  |   |         | 26,438  |  |  |       | -51.2 | %
|                                                                     |                                    |                         |         |                         |  |          |         |         |  |      |        |          |   |   |         |         |  |   |         |         |  |  |       |      
|Total property revenue                                               |                                    |                         | 174,174 |                         |  |          | 191,170 |         |  |      | -8.9   | %        |   |   | 191,170 |         |  |   | 185,434 |         |  |  | 3.1   | %    
|                                                                     |                                    |                         |         |                         |  |          |         |         |  |      |        |          |   |   |         |         |  |   |         |         |  |  |       |      
|Property operating and maintenance expense:                          |                                    |                         |         |                         |  |          |         |         |  |      |        |          |   |   |         |         |  |   |         |         |  |  |       |      
|                                                                     | Fully stabilized communities       |                         |         | 45,623                  |  |          |         | 44,423  |  |      |        | 2.7      | % |   |         | 35,254  |  |   |         | 33,710  |  |  |       | 4.6   | %
|                                                                     | Acquisition communities            |                         |         | 521                     |  |          |         |        |  |      |        | 100.0    | % |   |         | 1,773   |  |   |         | 687     |  |  |       | 158.1 | %
|                                                                     | Stabilized development communities |                         |         | 3,638                   |  |          |         | 3,273   |  |      |        | 11.2     | % |   |         | 16,748  |  |   |         | 14,018  |  |  |       | 19.5  | %
|                                                                     | Communities in lease-up            |                         |         | 6,530                   |  |          |         | 2,882   |  |      |        | 126.6    | % |   |         | 5,138   |  |   |         | 1,612   |  |  |       | 218.7 | %
|                                                                     | Disposition communities            |                         |         | 6,350                   |  |          |         | 12,875  |  |      |        | -50.7    | % |   |         | 4,540   |  |   |         | 9,060   |  |  |       | -49.9 | %
|                                                                     |                                    |                         |         |                         |  |          |         |         |  |      |        |          |   |   |         |         |  |   |         |         |  |  |       |      
|Total property operating and maintenance expense                     |                                    |                         | 62,662  |                         |  |          | 63,453  |         |  |      | -1.2   | %        |   |   | 63,453  |         |  |   | 59,087  |         |  |  | 7.4   | %    
|                                                                     |                                    |                         |         |                         |  |          |         |         |  |      |        |          |   |   |         |         |  |   |         |         |  |  |       |      
|Property operating income:                                           |                                    |                         |         |                         |  |          |         |         |  |      |        |          |   |   |         |         |  |   |         |         |  |  |       |      
|                                                                     | Fully stabilized communities       |                         |         | 81,578                  |  |          |         | 89,401  |  |      |        | -8.8     | % |   |         | 69,443  |  |   |         | 69,714  |  |  |       | -0.4  | %
|                                                                     | Acquisition communities            |                         |         | 590                     |  |          |         |        |  |      |        | 100.0    | % |   |         | 3,339   |  |   |         | 1,507   |  |  |       | 121.6 | %
|                                                                     | Stabilized development communities |                         |         | 7,034                   |  |          |         | 7,076   |  |      |        | -0.6     | % |   |         | 37,157  |  |   |         | 34,563  |  |  |       | 7.5   | %
|                                                                     | Communities in lease-up            |                         |         | 10,149                  |  |          |         | 5,389   |  |      |        | 88.3     | % |   |         | 9,424   |  |   |         | 3,185   |  |  |       | 195.9 | %
|                                                                     | Disposition communities            |                         |         | 12,161                  |  |          |         | 25,851  |  |      |        | -53.0    | % |   |         | 8,354   |  |   |         | 17,378  |  |  |       | -51.9 | %
|                                                                     |                                    |                         |         |                         |  |          |         |         |  |      |        |          |   |   |         |         |  |   |         |         |  |  |       |      
|Property operating income                                            |                                    | $                       | 111,512 |                         |  | $        | 127,717 |         |  |      | -12.7  | %        |   | $ | 127,717 |         |  | $ | 126,347 |         |  |  | 1.1   | %    
|Interest and other income                                            |                                    |                         | 3,049   |                         |  |          | 3,156   |         |  |      | -3.4   | %        |   |   | 3,156   |         |  |   | 4,210   |         |  |  | -25.0 | %    
|Depreciation expense                                                 |                                    |                         | (39,740 | )                       |  |          | (39,080 | )       |  |      | 1.7    | %        |   |   | (39,080 | )       |  |   | (36,602 | )       |  |  | 6.8   | %    
|Interest and amortization expense                                    |                                    |                         | (35,785 | )                       |  |          | (41,285 | )       |  |      | -13.3  | %        |   |   | (41,285 | )       |  |   | (39,722 | )       |  |  | 3.9   | %    
|General and administrative expense                                   |                                    |                         | (6,133  | )                       |  |          | (6,958  | )       |  |      | -11.9  | %        |   |   | (6,958  | )       |  |   | (4,752  | )       |  |  | 46.4  | %    
|(Loss) income on equity investments                                  |                                    |                         | (357    | )                       |  |          | 277     |         |  |      | -228.9 | %        |   |   | 277     |         |  |   | (1,178  | )       |  |  | 123.5 | %    
|Gain on sale of real estate assets                                   |                                    |                         | 83,693  |                         |  |          | 34,706  |         |  |      | 141.1  | %        |   |   | 34,706  |         |  |   | 38,510  |         |  |  | -9.9  | %    
|Impairment loss on technology investments                            |                                    |                         |        |                         |  |          | (1,217  | )       |  |      | -100.0 | %        |   |   | (1,217  | )       |  |   |        |         |  |  | 100.0 | %    
|Minority interest of common unitholders in
    Operating Partnership |                                    |                         | (11,856 | )                       |  |          | (8,359  | )       |  |      | 41.8   | %        |   |   | (8,359  | )       |  |   | (10,519 | )       |  |  | -20.5 | %    
|Dividends to preferred unitholders in Operating
    Partnership      |                                    |                         | (12,420 | )                       |  |          | (12,420 | )       |  |      | 0.0    | %        |   |   | (12,420 | )       |  |   | (12,420 | )       |  |  | 0.0   | %    
|Extraordinary items, net of minority interest                        |                                    |                         | (275    | )                       |  |          |        |         |  |      | 100.0  | %        |   |   |        |         |  |   |        |         |  |  | 0.0   | %    
|                                                                     |                                    |                         |         |                         |  |          |         |         |  |      |        |          |   |   |         |         |  |   |         |         |  |  |       |      
|Net income                                                           |                                    | $                       | 91,688  |                         |  | $        | 56,537  |         |  |      | 62.2   | %        |   | $ | 56,537  |         |  | $ | 63,874  |         |  |  | -11.5 | %    
|                                                                     |                                    |                         |         |                         |  |          |         |         |  |      |        |          |   |   |         |         |  |   |         |         |  |  |       |      

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Operating Performance of our Fully Stabilized
Communities

The operating performance of our fully stabilized
communities is summarized below (dollars in thousands, except
average monthly rental revenue):

|                                                 |                                  |                         |         |                         |  |          |         |         |  |      |      |          |   |   |         |        |  |   |         |        |  |  |      |       |  
|------------------------------------------------ | -------------------------------- | ----------------------- | ------- | ----------------------- |  | -------- | ------- | ------- |  | ---- | ---- | -------- | - | - | ------- | ------ |  | - | ------- | ------ |  |  | ---- | ----- | -
|                                                 |                                  |                         |         |                        
|                                                 |                                  | Year Ended December 31, |         | Year Ended December 31,
|                                                 |                                  |                         |         |                        
|                                                 |                                  | 2002                    |         | 2001                    |  | % Change |         | 2001    |  | 2000 |      | % Change
|                                                 |                                  |                         |         |                         |  |          |         |         |  |      |      |         
|Property revenue:                                |                                  |                         |         |                         |  |          |         |         |  |      |      |          |   |   |         |        |  |   |         |        |  |  |      |      
|                                                 | Rental                           |                         | $       | 118,546                 |  |          | $       | 124,670 |  |      |      | -4.9     | % |   | $       | 97,607 |  |   | $       | 96,583 |  |  |      | 1.1   | %
|                                                 | Other                            |                         |         | 8,655                   |  |          |         | 9,154   |  |      |      | -5.5     | % |   |         | 7,090  |  |   |         | 6,841  |  |  |      | 3.6   | %
|                                                 |                                  |                         |         |                         |  |          |         |         |  |      |      |          |   |   |         |        |  |   |         |        |  |  |      |      
|Total property revenue                           |                                  |                         | 127,201 |                         |  |          | 133,824 |         |  |      | -4.9 | %        |   |   | 104,697 |        |  |   | 103,424 |        |  |  | 1.2  | %    
|                                                 |                                  |                         |         |                         |  |          |         |         |  |      |      |          |   |   |         |        |  |   |         |        |  |  |      |      
|Property operating and maintenance expense:      |                                  |                         |         |                         |  |          |         |         |  |      |      |          |   |   |         |        |  |   |         |        |  |  |      |      
|                                                 | Personnel                        |                         |         | 9,679                   |  |          |         | 9,024   |  |      |      | 7.3      | % |   |         | 6,786  |  |   |         | 6,193  |  |  |      | 9.6   | %
|                                                 | Advertising and promotion        |                         |         | 1,815                   |  |          |         | 1,474   |  |      |      | 23.1     | % |   |         | 1,141  |  |   |         | 1,376  |  |  |      | -17.1 | %
|                                                 | Utilities                        |                         |         | 5,860                   |  |          |         | 6,145   |  |      |      | -4.6     | % |   |         | 4,740  |  |   |         | 4,481  |  |  |      | 5.8   | %
|                                                 | Building repairs and maintenance |                         |         | 6,190                   |  |          |         | 6,259   |  |      |      | -1.1     | % |   |         | 5,014  |  |   |         | 4,855  |  |  |      | 3.3   | %
|                                                 | Real estate taxes and insurance  |                         |         | 16,543                  |  |          |         | 15,600  |  |      |      | 6.0      | % |   |         | 12,820 |  |   |         | 12,192 |  |  |      | 5.2   | %
|                                                 | Property supervision             |                         |         | 3,575                   |  |          |         | 3,767   |  |      |      | -5.1     | % |   |         | 2,940  |  |   |         | 2,895  |  |  |      | 1.6   | %
|                                                 | Other operating expense          |                         |         | 1,961                   |  |          |         | 2,154   |  |      |      | -9.0     | % |   |         | 1,813  |  |   |         | 1,718  |  |  |      | 5.5   | %
|                                                 |                                  |                         |         |                         |  |          |         |         |  |      |      |          |   |   |         |        |  |   |         |        |  |  |      |      
|Total property operating and maintenance expense |                                  |                         | 45,623  |                         |  |          | 44,423  |         |  |      | 2.7  | %        |   |   | 35,254  |        |  |   | 33,710  |        |  |  | 4.6  | %    
|                                                 |                                  |                         |         |                         |  |          |         |         |  |      |      |          |   |   |         |        |  |   |         |        |  |  |      |      
|Property operating income                        |                                  | $                       | 81,578  |                         |  | $        | 89,401  |         |  |      | -8.8 | %        |   | $ | 69,443  |        |  | $ | 69,714  |        |  |  | -0.4 | %    
|                                                 |                                  |                         |         |                         |  |          |         |         |  |      |      |          |   |   |         |        |  |   |         |        |  |  |      |      
|Average physical occupancy                       |                                  |                         | 93.4    | %                       |  |          | 92.9    | %       |  |      | 0.5  | %        |   |   | 92.9    | %      |  |   | 94.5    | %      |  |  | -1.7 | %    
|                                                 |                                  |                         |         |                         |  |          |         |         |  |      |      |          |   |   |         |        |  |   |         |        |  |  |      |      
|Average monthly rental revenue                   |                                  | $                       | 895     |                         |  | $        | 946     |         |  |      | -5.4 | %        |   | $ | 931     |        |  | $ | 909     |        |  |  | 2.4  | %    
|                                                 |                                  |                         |         |                         |  |          |         |         |  |      |      |          |   |   |         |        |  |   |         |        |  |  |      |      
|Number of apartment homes                        |                                  |                         | 12,060  |                         |  |          | 12,060  |         |  |      |      |          |   |   | 9,615   |        |  |   | 9,615   |        |  |  |      |      
|                                                 |                                  |                         |         |                         |  |          |         |         |  |      |      |          |   |   |         |        |  |   |         |        |  |  |      |      
|Number of apartment communities                  |                                  |                         | 40      |                         |  |          | 40      |         |  |      |      |          |   |   | 37      |        |  |   | 37      |        |  |  |      |      
|                                                 |                                  |                         |         |                         |  |          |         |         |  |      |      |          |   |   |         |        |  |   |         |        |  |  |      |      

Rental and other revenue decreased from 2001 to
2002 due to weakening fundamentals in our markets primarily
driven by a decline in job growth and/or an increase in job
losses, residents leaving our communities to purchase homes in
the low interest rate environment, and the new supply of
apartment homes added to our core markets by builders taking
advantage of low interest rates. Concessions at our fully
stabilized communities increased by $9.4 million, or 81.7%,
in 2002 when compared to 2001. The current level of concessions
offered to residents in our markets ranges from one to three
months of free rent and we expect significant concessions to
continue in our core markets in 2003 as we try to maintain
elevated occupancy levels.

Property operating and maintenance expense
increased by 2.7% from 2001 to 2002 primarily due to an increase
in advertising costs, personnel costs and real estate taxes and
insurance costs. The increase in advertising costs is primarily
due to a 158% increase in fees paid to locator companies for
assistance in referring residents to our communities. Personnel
costs increased from 2001 to 2002 primarily due to an 11.7%
increase in group insurance costs. Real estate taxes and
insurance costs increased primarily due to an increase in
property liability insurance costs of 64.8%. As a percentage of
total property revenue, total property operating and maintenance
expenses for our fully stabilized communities increased to 35.9%
in 2002 from 33.2% in 2001. We expect that property operating
income for our fully stabilized communities will continue to
decline in 2003 based on what we believe to be reasonable
assumptions as to future economic conditions and the quantity of
competitive supply expected in our markets. However, there can
be no assurance that actual results will not differ from this
assumption, especially due to the unpredictable nature of the
current economy.

23



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##### 



Rental and other revenue increased by 1.2% from
2000 to 2001 primarily due to higher average rental rates and
increased revenue from sources other than rental income, such as
water sub-meter income, trash fees and redecorating fees.

Property operating and maintenance expense
increased by 4.6% from 2000 to 2001 primarily due to increased
personnel costs, utility costs and real estate taxes and
insurance, all offset by a decrease in advertising costs.
Personnel costs increased from 2000 to 2001 primarily due to a
one-time policy change which decreased discounts offered to
employees who rent apartment homes at our communities resulting
in commensurate increases in those employees salaries.
Utility costs increased from 2000 to 2001 primarily as a result
of rising gas prices, as well as an increase in vacant utility
costs driven by lower occupancy. Real estate tax costs increased
as a result of higher assessments for our communities in 2001
over 2000, primarily in Texas. The decrease in advertising costs
from 2000 to 2001 is primarily the result of a reduction in
media advertising and locator fees. As a percentage of total
property revenues, property operating and maintenance expense
increased to 33.7% in 2001 from 32.6% in 2000.

Operating Performance of our Acquisition
Communities

On July 1, 2002, we acquired a stabilized,
luxury apartment community in the Galleria sub-market of Dallas,
Texas for cash in the amount of $17.7 million. The
community, now known as Summit San Raphael, has 222 apartment
homes and was constructed in 1999. Acquisition communities for
the December 31, 2001 to 2000 comparison consist of Summit
Sweetwater and Summit Shiloh (representing a total of 490
apartment homes), both located in Atlanta, Georgia, in each of
which we acquired our joint venture partners 51% interest
on August 1, 2000. There were no community acquisitions
during 2001. The operating performance of our acquisition
communities is summarized below (dollars in thousands except
average monthly rental revenue):

|                                           |        |                         |       |                         |  |      |   |      |  |   |       |       |  |   |       |       | 
|------------------------------------------ | ------ | ----------------------- | ----- | ----------------------- |  | ---- | - | ---- |  | - | ----- | ----- |  | - | ----- | ----- | 
|                                           |        |                         |       |                        
|                                           |        | Year Ended December 31, |       | Year Ended December 31,
|                                           |        |                         |       |                        
|                                           |        | 2002                    |       | 2001                    |  | 2001 |   | 2000
|                                           |        |                         |       |                         |  |      |   |     
|Property revenue:                          |        |                         |       |                         |  |      |   |      |  |   |       |       |  |   |       |      
|                                           | Rental |                         | $     | 1,062                   |  |      | $ |     |  |   | $     | 4,726 |  |   | $     | 2,016 | 
|                                           | Other  |                         |       | 49                      |  |      |   |     |  |   |       | 386   |  |   |       | 178   | 
|                                           |        |                         |       |                         |  |      |   |      |  |   |       |       |  |   |       |      
|Total property revenue                     |        |                         | 1,111 |                         |  |      |  |      |  |   | 5,112 |       |  |   | 2,194 |      
|Property operating and maintenance expense |        |                         | 521   |                         |  |      |  |      |  |   | 1,773 |       |  |   | 687   |      
|                                           |        |                         |       |                         |  |      |   |      |  |   |       |       |  |   |       |      
|Property operating income                  |        | $                       | 590   |                         |  | $    |  |      |  | $ | 3,339 |       |  | $ | 1,507 |      
|                                           |        |                         |       |                         |  |      |   |      |  |   |       |       |  |   |       |      
|Average physical occupancy                 |        |                         | 93.2  | %                       |  |      |  |      |  |   | 92.8  | %     |  |   | 92.8  | %    
|                                           |        |                         |       |                         |  |      |   |      |  |   |       |       |  |   |       |      
|Average monthly rental revenue             |        | $                       | 890   |                         |  | $    |  |      |  | $ | 888   |       |  | $ | 914   |      
|                                           |        |                         |       |                         |  |      |   |      |  |   |       |       |  |   |       |      
|Number of apartment homes                  |        |                         | 222   |                         |  |      |  |      |  |   | 490   |       |  |   | 490   |      
|                                           |        |                         |       |                         |  |      |   |      |  |   |       |       |  |   |       |      

Operating Performance of our Stabilized
Development Communities

The comparison of the years ended
December 31, 2002 and 2001 represents two communities with
a total of 857 apartment homes (Summit Russett and Summit Lenox)
which were stabilized during the entire year ended
December 31, 2002, but were stabilized subsequent to
January 1, 2001. Summit Lenox is an existing community with
431 apartment homes that underwent major renovations during 2000
and 2001. Its operating results are included in results of
stabilized development communities as it reached stabilization
after renovation subsequent to January 1, 2001.

The comparison of the years ended
December 31, 2001 and 2000 represents 15 communities with a
total of 4,668 apartment homes (Summit Ballantyne, Summit Largo,
Summit Sedgebrook, Summit Governors Village, Summit Lake,
Summit Westwood, Summit New Albany, Summit Fair Lakes, Summit
Hunters

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##### 



Creek, Summit Russett I, Summit Doral,
Summit Ashburn Farm, Summit Deer Creek, Summit Reunion
Park I and Summit Fairview).


The operating performance of our stabilized
development communities is summarized below (dollars in
thousands except average monthly rental revenue):

|                                           |        |                         |        |                         |  |      |        |       |  |   |        |        |  |   |        |        | 
|------------------------------------------ | ------ | ----------------------- | ------ | ----------------------- |  | ---- | ------ | ----- |  | - | ------ | ------ |  | - | ------ | ------ | 
|                                           |        |                         |        |                        
|                                           |        | Year Ended December 31, |        | Year Ended December 31,
|                                           |        |                         |        |                        
|                                           |        | 2002                    |        | 2001                    |  | 2001 |        | 2000 
|                                           |        |                         |        |                         |  |      |        |      
|Property revenue:                          |        |                         |        |                         |  |      |        |       |  |   |        |        |  |   |        |       
|                                           | Rental |                         | $      | 9,950                   |  |      | $      | 9,487 |  |   | $      | 50,130 |  |   | $      | 45,079 | 
|                                           | Other  |                         |        | 722                     |  |      |        | 862   |  |   |        | 3,775  |  |   |        | 3,502  | 
|                                           |        |                         |        |                         |  |      |        |       |  |   |        |        |  |   |        |       
|Total property revenue                     |        |                         | 10,672 |                         |  |      | 10,349 |       |  |   | 53,905 |        |  |   | 48,581 |       
|Property operating and maintenance expense |        |                         | 3,638  |                         |  |      | 3,273  |       |  |   | 16,748 |        |  |   | 14,018 |       
|                                           |        |                         |        |                         |  |      |        |       |  |   |        |        |  |   |        |       
|Property operating income                  |        | $                       | 7,034  |                         |  | $    | 7,076  |       |  | $ | 37,157 |        |  | $ | 34,563 |       
|                                           |        |                         |        |                         |  |      |        |       |  |   |        |        |  |   |        |       
|Average physical occupancy                 |        |                         | 93.5   | %                       |  |      | 88.3   | %     |  |   | 93.9   | %      |  |   | 88.1   | %     
|                                           |        |                         |        |                         |  |      |        |       |  |   |        |        |  |   |        |       
|Average monthly rental revenue             |        | $                       | 1,062  |                         |  | $    | 1,078  |       |  | $ | 966    |        |  | $ | 897    |       
|                                           |        |                         |        |                         |  |      |        |       |  |   |        |        |  |   |        |       
|Number of apartment homes                  |        |                         | 857    |                         |  |      | 857    |       |  |   | 4,668  |        |  |   | 4,668  |       
|                                           |        |                         |        |                         |  |      |        |       |  |   |        |        |  |   |        |       

Operating Performance of our Communities in
Lease-Up

We had eight communities in lease-up during the
year ended December 31, 2002. The following is a summary of
the communities in lease-up during 2002 (dollars in thousands):

|                                        |  |           |       |        |  |              |         |               |  |           |         |              |  |  |         |  |  |  |      |   |  |  |       |  
|--------------------------------------- |  | --------- | ----- | ------ |  | ------------ | ------- | ------------- |  | --------- | ------- | ------------ |  |  | ------- |  |  |  | ---- | - |  |  | ----- | -
|                                        |  |           |       |        |  |              |         |               |  | Average   |         | % Leased    
|                                        |  | Number of |       | Total  |  | Actual       |         | Actual/       |  | Physical  |         | as of       
|                                        |  | Apartment |       | Actual |  | Construction |         | Anticipated   |  | Occupancy |         | December 31,
|Community                               |  | Homes     |       | Cost   |  | Completion   |         | Stabilization |  | 2002      |         | 2002        
|                                        |  |           |       |        |  |              |         |               |  |           |         |             
|Summit Brookwood  Atlanta, GA          |  |           | 359   |        |  | $            | 44,524  |               |  |           | Q4 2002 |              |  |  | Q3 2003 |  |  |  | 22.9 | % |  |  | 61.0  | %
|Summit Crest  Raleigh, NC              |  |           | 438   |        |  |              | 32,609  |               |  |           | Q3 2001 |              |  |  | Q3 2002 |  |  |  | 84.3 | % |  |  | 94.5  | %
|Summit Grand Parc  Washington, D.C.(1) |  |           | 105   |        |  |              | 43,508  |               |  |           | Q4 2002 |              |  |  | Q3 2003 |  |  |  | 0.0  | % |  |  | 1.9   | %
|Summit Grandview  Charlotte, NC(2)     |  |           | 266   |        |  |              | 51,261  |               |  |           | Q4 2000 |              |  |  | Q4 2001 |  |  |  | 90.6 | % |  |  | 91.7  | %
|Summit Overlook  Raleigh, NC           |  |           | 320   |        |  |              | 28,697  |               |  |           | Q4 2001 |              |  |  | Q3 2002 |  |  |  | 84.2 | % |  |  | 99.4  | %
|Summit Peachtree City  Atlanta, GA     |  |           | 399   |        |  |              | 33,231  |               |  |           | Q3 2001 |              |  |  | Q4 2002 |  |  |  | 70.1 | % |  |  | 77.7  | %
|Summit Shiloh II  Atlanta, GA          |  |           | 50    |        |  |              | 4,015   |               |  |           | Q1 2002 |              |  |  | Q2 2002 |  |  |  | 76.3 | % |  |  | 100.0 | %
|Summit Valleybrook  Philadelphia, PA   |  |           | 352   |        |  |              | 37,574  |               |  |           | Q4 2002 |              |  |  | Q3 2003 |  |  |  | 31.1 | % |  |  | 58.8  | %
|                                        |  |           |       |        |  |              |         |               |  |           |         |              |  |  |         |  |  |  |      |   |  |  |       |  
|                                        |  |           | 2,289 |        |  | $            | 275,419 |               |  |           |         |              |  |  |         |  |  |  |      |   |  |  |       |  
|                                        |  |           |       |        |  |              |         |               |  |           |         |              |  |  |         |  |  |  |      |   |  |  |       |  



|    |                                                                                                                                                                                                                                                                                                                                                         
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Summit Grand Parc was completed during the fourth
    quarter of 2002. Stabilization, occupancy and percent leased
    information in the table above represents data for the apartment
    homes only. The 13,790 square feet of commercial space at Summit
    Grand Parc was 71.0% occupied and leased as of December 31,
    2002.                  
|   
|(2) | 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 homes only. The 75,203 square
    feet of commercial space at Summit Grandview was 74.7% occupied
    and leased as of December 31, 2002.

The actual stabilization dates for our
communities in lease-up may be later than anticipated. The
rental rates that we charge also may be less than expected, and
we may need to offer rent concessions to the residents.

25



---



##### 



We had six communities with 1,966 apartment homes
in lease-up during the year ended December 31, 2001 (Summit
Crest, Summit Grandview, Summit Lenox, Summit Overlook, Summit
Peachtree City and Summit Russett II).

The operating performance of our lease-up
communities is summarized below (dollars in thousands):

|                                           |        |                         |        |                         |  |      |       |       |  |   |        |        |  |   |       |       | 
|------------------------------------------ | ------ | ----------------------- | ------ | ----------------------- |  | ---- | ----- | ----- |  | - | ------ | ------ |  | - | ----- | ----- | 
|                                           |        |                         |        |                        
|                                           |        | Year Ended December 31, |        | Year Ended December 31,
|                                           |        |                         |        |                        
|                                           |        | 2002                    |        | 2001                    |  | 2001 |       | 2000 
|                                           |        |                         |        |                         |  |      |       |      
|Property revenue:                          |        |                         |        |                         |  |      |       |       |  |   |        |        |  |   |       |      
|                                           | Rental |                         | $      | 15,765                  |  |      | $     | 7,752 |  |   | $      | 13,469 |  |   | $     | 4,459 | 
|                                           | Other  |                         |        | 914                     |  |      |       | 519   |  |   |        | 1,093  |  |   |       | 338   | 
|                                           |        |                         |        |                         |  |      |       |       |  |   |        |        |  |   |       |      
|Total property revenue                     |        |                         | 16,679 |                         |  |      | 8,271 |       |  |   | 14,562 |        |  |   | 4,797 |      
|Property operating and maintenance expense |        |                         | 6,530  |                         |  |      | 2,882 |       |  |   | 5,138  |        |  |   | 1,612 |      
|                                           |        |                         |        |                         |  |      |       |       |  |   |        |        |  |   |       |      
|Property operating income                  |        | $                       | 10,149 |                         |  | $    | 5,389 |       |  | $ | 9,424  |        |  | $ | 3,185 |      
|                                           |        |                         |        |                         |  |      |       |       |  |   |        |        |  |   |       |      
|Number of apartment homes                  |        |                         | 2,289  |                         |  |      | 2,289 |       |  |   | 1,966  |        |  |   | 1,966 |      
|                                           |        |                         |        |                         |  |      |       |       |  |   |        |        |  |   |       |      

Operating Performance of our Disposition
Communities

The 2002 disposition communities consist of the
former Summit Breckenridge, Summit New Albany, Summit Pike
Creek, Summit Stonefield, Summit Meadow, Summit Mayfaire, Summit
Sand Lake and Summit Windsor (an aggregate of 2,399 apartment
homes), all of which were sold during the year ended
December 31, 2002. The disposition of three of these eight
communities completed our exit of the Richmond, Virginia,
Columbus, Ohio and Newark, Delaware markets.

During the year ended December 31, 2002, a
joint venture in which we held a 50% ownership interest sold an
apartment community formerly known as The Heights at Cheshire
Bridge (318 apartment homes) located in Atlanta, Georgia.

The 2001 disposition communities consist of the
former Summit Palm Lake, Summit Arbors, Summit Radbourne, Summit
Lofts, Summit Stony Point, Summit Gateway, Summit Deerfield,
Summit Waterford and Summit Walk (an aggregate of 2,189
apartment homes), all of which were sold during the year ended
December 31, 2001. The 2000 disposition communities consist
of the former Summit Creekside, Summit Eastchester, Summit
Sherwood, Summit River Crossing, Summit Blue Ash, Summit Park
and Summit Village (an aggregate of 1,676 apartment homes), all
of which were sold during the year ended December 31, 2000.

The operating performance of the disposition
communities (excluding The Heights at Cheshire Bridge) is
summarized below (dollars in thousands):

|                                           |        |                         |        |                         |  |      |        |        |  |   |        |        |  |   |        |        | 
|------------------------------------------ | ------ | ----------------------- | ------ | ----------------------- |  | ---- | ------ | ------ |  | - | ------ | ------ |  | - | ------ | ------ | 
|                                           |        |                         |        |                        
|                                           |        | Year Ended December 31, |        | Year Ended December 31,
|                                           |        |                         |        |                        
|                                           |        | 2002                    |        | 2001                    |  | 2001 |        | 2000  
|                                           |        |                         |        |                         |  |      |        |       
|Property revenue:                          |        |                         |        |                         |  |      |        |        |  |   |        |        |  |   |        |       
|                                           | Rental |                         | $      | 17,212                  |  |      | $      | 35,928 |  |   | $      | 11,905 |  |   | $      | 24,503 | 
|                                           | Other  |                         |        | 1,299                   |  |      |        | 2,798  |  |   |        | 989    |  |   |        | 1,935  | 
|                                           |        |                         |        |                         |  |      |        |        |  |   |        |        |  |   |        |       
|Total property revenue                     |        |                         | 18,511 |                         |  |      | 38,726 |        |  |   | 12,894 |        |  |   | 26,438 |       
|Property operating and maintenance expense |        |                         | 6,350  |                         |  |      | 12,875 |        |  |   | 4,540  |        |  |   | 9,060  |       
|                                           |        |                         |        |                         |  |      |        |        |  |   |        |        |  |   |        |       
|Property operating income                  |        | $                       | 12,161 |                         |  | $    | 25,851 |        |  | $ | 8,354  |        |  | $ | 17,378 |       
|                                           |        |                         |        |                         |  |      |        |        |  |   |        |        |  |   |        |       
|Number of apartment homes                  |        |                         | 2,399  |                         |  |      | 4,588  |        |  |   | 2,189  |        |  |   | 3,865  |       
|                                           |        |                         |        |                         |  |      |        |        |  |   |        |        |  |   |        |       

On March 5, 2003, we sold Summit Fairways,
located in Orlando, Florida, for $18.8 million as part of
our strategy to exit our non-core markets. We expect to record a
gain on disposition of Summit Fairways.

26



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##### 



Operating Performance of Summit Management
Company

The Operating Partnership owns 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 our Board of Directors. As a result of this
stock ownership, the Operating Partnership has 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
on the equity method of accounting.

The operating performance of the Management
Company and its wholly owned subsidiary, Summit Apartment
Builders, Inc. (the Construction Company), is
summarized below (dollars in thousands):

|                                         |                                                  |                         |      |                         |  |          |     |        |  |      |        |          |   |   |     |        |  |   |      |        |  |  |       |        |  
|---------------------------------------- | ------------------------------------------------ | ----------------------- | ---- | ----------------------- |  | -------- | --- | ------ |  | ---- | ------ | -------- | - | - | --- | ------ |  | - | ---- | ------ |  |  | ----- | ------ | -
|                                         |                                                  |                         |      |                        
|                                         |                                                  | Year Ended December 31, |      | Year Ended December 31,
|                                         |                                                  |                         |      |                        
|                                         |                                                  | 2002                    |      | 2001                    |  | % Change |     | 2001   |  | 2000 |        | % Change
|                                         |                                                  |                         |      |                         |  |          |     |        |  |      |        |         
|Revenues:                                |                                                  |                         |      |                         |  |          |     |        |  |      |        |          |   |   |     |        |  |   |      |        |  |  |       |       
|                                         | Management fees charged to Operating Partnership |                         | $    | 6,022                   |  |          | $   | 6,473  |  |      |        | -7.0     | % |   | $   | 6,473  |  |   | $    | 5,735  |  |  |       | 12.9   | %
|                                         | Third party management fee revenue               |                         |      | 787                     |  |          |     | 913    |  |      |        | -13.8    | % |   |     | 913    |  |   |      | 1,103  |  |  |       | -17.2  | %
|                                         | Construction revenue                             |                         |      | 2,031                   |  |          |     | 2,701  |  |      |        | -24.8    | % |   |     | 2,701  |  |   |      | 2,494  |  |  |       | 8.3    | %
|                                         | Gain on sale of real estate assets               |                         |      |                        |  |          |     |       |  |      |        |         |   |   |     |       |  |   |      | 238    |  |  |       | -100.0 | %
|                                         | Other                                            |                         |      | 261                     |  |          |     | 455    |  |      |        | -42.6    | % |   |     | 455    |  |   |      | 372    |  |  |       | 22.3   | %
|                                         |                                                  |                         |      |                         |  |          |     |        |  |      |        |          |   |   |     |        |  |   |      |        |  |  |       |       
|                                         | Total revenues                                   |                         |      | 9,101                   |  |          |     | 10,542 |  |      |        | -13.7    | % |   |     | 10,542 |  |   |      | 9,942  |  |  |       | 6.0    | %
|                                         |                                                  |                         |      |                         |  |          |     |        |  |      |        |          |   |   |     |        |  |   |      |        |  |  |       |       
|Expenses:                                |                                                  |                         |      |                         |  |          |     |        |  |      |        |          |   |   |     |        |  |   |      |        |  |  |       |       
|                                         | Operating                                        |                         |      | 8,240                   |  |          |     | 9,177  |  |      |        | -10.2    | % |   |     | 9,177  |  |   |      | 9,398  |  |  |       | -2.4   | %
|                                         | Depreciation                                     |                         |      | 575                     |  |          |     | 319    |  |      |        | 80.3     | % |   |     | 319    |  |   |      | 313    |  |  |       | 1.9    | %
|                                         | Amortization                                     |                         |      | 294                     |  |          |     | 298    |  |      |        | -1.3     | % |   |     | 298    |  |   |      | 303    |  |  |       | -1.7   | %
|                                         | Interest                                         |                         |      | 300                     |  |          |     | 300    |  |      |        | 0.0      | % |   |     | 300    |  |   |      | 677    |  |  |       | -55.7  | %
|                                         |                                                  |                         |      |                         |  |          |     |        |  |      |        |          |   |   |     |        |  |   |      |        |  |  |       |       
|                                         | Total expenses                                   |                         |      | 9,409                   |  |          |     | 10,094 |  |      |        | -6.8     | % |   |     | 10,094 |  |   |      | 10,691 |  |  |       | -5.6   | %
|                                         |                                                  |                         |      |                         |  |          |     |        |  |      |        |          |   |   |     |        |  |   |      |        |  |  |       |       
|(Loss) income before extraordinary items |                                                  |                         | (308 | )                       |  |          | 448 |        |  |      | -168.8 | %        |   |   | 448 |        |  |   | (749 | )      |  |  | 159.8 | %     
|Extraordinary items                      |                                                  |                         |     |                         |  |          |    |        |  |      |       |          |   |   |    |        |  |   | (30  | )      |  |  | 100.0 | %     
|                                         |                                                  |                         |      |                         |  |          |     |        |  |      |        |          |   |   |     |        |  |   |      |        |  |  |       |       
|Net (loss) income                        |                                                  | $                       | (308 | )                       |  | $        | 448 |        |  |      | -168.8 | %        |   | $ | 448 |        |  | $ | (779 | )      |  |  | 157.5 | %     
|                                         |                                                  |                         |      |                         |  |          |     |        |  |      |        |          |   |   |     |        |  |   |      |        |  |  |       |       

The decrease in revenue from 2001 to 2002 is
primarily due to a 4.9% decline in collections from the
Operating Partnerships fully stabilized communities and a
$670,000 decrease in construction revenue. All of the
construction revenue during the years ended December 31,
2002, 2001 and 2000 was from contracts with the Operating
Partnership. Operating expenses decreased at the Management
Company primarily due to a reduction in personnel expenses of
$769,000 at the Management Company and Construction Company
during the year. The decrease in construction revenues and
reduction in personnel expenses at the Construction Company were
due to the fact that we have curtailed, and may continue to
curtail, our development efforts to increase our financial
flexibility in the current economic environment.

The increase in revenue from 2000 to 2001 was
primarily due to an increase in fees earned from managing our
lease-up communities. Operating expenses remained stable in 2001
as compared to 2000, decreasing by only $221,000. In addition,
interest expense decreased from 2000 to 2001 due to the
repayment of an intercompany loan during 2000.

Third party apartment homes under management were
1,105 in 2002, 1,004 in 2001 and 1,723 in 2000. Property
management fees from third parties as a percentage of total
property management revenues were 11.6% in 2002, 12.4% in 2001
and 16.1% in 2000.

27



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##### 



Other Income and Expenses

Interest income increased by $306,000 to
$2.6 million in 2002 compared to 2001, primarily due to a
preferred return of $375,000 earned on an equity investment in
2002. Interest income decreased by $1.3 million to
$2.3 million in 2001 compared to 2000, primarily due to a
$1.0 million decrease in interest earned on proceeds from
property sales placed in escrow in accordance with like-kind
exchange income tax regulations.

Other income decreased by $413,000 to $478,000 in
2002 compared to 2001, and increased by $273,000 to $891,000 in
2001 compared to 2000 primarily as a result of a $325,000 fee
received in 2001 in connection with a community that is being
developed by a third party developer.

Depreciation expense increased by
$1.9 million to $35.8 million in 2002 compared to
2001, primarily due to depreciation expense related to the
initiation and increase of depreciation expense related to
recently developed communities as well as depreciation on the
community acquired during 2002, offset by the absence of a full
year of depreciation for the communities sold during 2002 and
2001. Depreciation expense increased by $2.5 million to
$33.9 million in 2001 compared to 2000, primarily due to
depreciation expense related to the initiation of depreciation
on recently developed communities as well as a full year of
depreciation on communities acquired during the second half of
2000, partially offset by the absence of a full year of
depreciation on communities sold during 2000 and 2001.

Interest expense decreased by $5.0 million
to $33.3 million in 2002 compared to 2001 primarily due to
a $20.8 million decrease in our average indebtedness
outstanding and a decrease in the average effective interest
rate of 0.39% (6.62% to 6.23%) in 2002 as compared to 2001.
Interest expense increased by $1.4 million to
$38.3 million in 2001 compared to 2000 primarily due to an
increase of $45.9 million in our average indebtedness
outstanding, offset by a decrease in the average effective
interest rate of 0.34% (7.04% to 6.70%) in 2001 as compared to
2000.

General and administrative expenses decreased by
$825,000 to $6.1 million in 2002 compared to 2001 primarily
due to $1.8 million of non-recurring charges related to an
increase in the costs of abandoned pursuit projects and
severance costs associated with senior staff reductions in our
organization during 2001, offset by an increase in professional
fees of $449,000 related to the increased cost of doing business
as a public company in 2002 when compared to 2001 and an
increase in non-cash compensation of $304,000 recorded in 2002
as compared to 2001. Approximately $900,000 of the
$1.8 million non-recurring charges in 2001 is related to an
increase in the costs of abandoned pursuit projects and
approximately $900,000 is related to severance costs associated
with senior staff reductions in our organization. As a
percentage of total revenues, general and administrative
expenses before non-recurring charges were 3.5% in 2002, 3.6% in
2001, and 2.5% in 2000.

The $78.7 million gain on sale of assets in
2002 resulted from the disposition of eight communities. The
eight communities were (referred to below using former community
names):

|                    |  |                 
|------------------- |  | ----------------
|Community           |  | Market          
|                    |  |                 
|Summit Breckenridge |  | Richmond, VA    
|Summit Mayfaire     |  | Raleigh, NC     
|Summit Meadow       |  | Columbia, MD    
|Summit New Albany   |  | Columbus, OH    
|Summit Pike Creek   |  | Wilmington, DE  
|Summit Sand Lake    |  | Orlando, FL     
|Summit Stonefield   |  | Philadelphia, PA
|Summit Windsor      |  | Frederick, MD   

The communities disposed of in 2002 were part of
our plan to dispose of assets that no longer meet our growth
objectives or to make desired changes in the number of apartment
homes in each of our core markets. The sale of Summit
Breckenridge, Summit New Albany and Summit Pike Creek completed
our exit of Richmond, Virginia, Columbus, Ohio and Wilmington,
Delaware. We believe that by concentrating our efforts and
capital

28



---



##### 



in a limited number of core markets we will gain
a competitive advantage as we improve operational efficiencies,
build a more significant brand name and improve market
knowledge. Also, by disposing of assets that no longer meet our
long-term growth objectives, capital is provided to fund the
development and acquisition of new assets with higher growth
potential. In December 2002, we announced our intention to exit
our Texas markets and use the sale proceeds from those
communities primarily to increase our presence in the
Washington, D.C. and Southeast Florida markets. As a result, we
would reduce the number of core markets in which we operate from
seven to five. We currently own seven communities with a total
of 2,687 apartment homes located in Texas. There can be no
assurance that we will be able to sell our Texas communities in
a timely manner, on satisfactory terms or at all, or that we
will be able to find attractive investment opportunities in the
Washington, D.C. and Southeast Florida markets.


The $34.4 million gain on sale of assets in
2001 resulted from the disposition of one parcel of land and
nine communities. The $38.5 million gain on sale of assets
in 2000 resulted from the disposition of seven communities.

Liquidity and Capital Resources

Liquidity

Net cash provided by operating activities
decreased to $58.3 million for the year ended
December 31, 2002 from $66.5 million for the year
ended December 31, 2001, primarily due to a
$9.1 million decrease in income from continuing operations
before gain on sale of real estate assets, impairment loss on
technology investments, minority interest of common unitholders
in the Operating Partnership, dividends to preferred unitholders
in the Operating Partnership and extraordinary items.

Net cash used in investing activities was
$5.6 million for the year ended December 31, 2002. Net
cash provided by investing activities was $6.2 million for
the year ended December 31, 2001. The decrease in cash
provided by investing activities is due to an increase in cash
used for the acquisition of real estate assets in 2002 of
$17.9 million and a decrease in proceeds received from the
sale of our real estate assets of $8.1 million, partially
offset by an increase in proceeds received from the sale of
joint venture real estate assets of $11.2 million and a
decrease in cash used for the construction of real estate assets
and land purchases of $4.2 million. In addition to cash
proceeds received in connection with 2002 dispositions, proceeds
from the sale of communities represent funds expended from
like-kind exchange escrows. In the event that the proceeds from
these property sales are not fully invested in qualified
like-kind property during the required time period, a special
distribution may be made or company level tax may be incurred.

Net cash used in financing activities decreased
to $52.2 million for the year ended December 31, 2002
from $74.1 million for the year ended December 31,
2001. The decrease in cash used in financing activities during
2002 is primarily due to an increase in net borrowings from 2001
to 2002 of $97.5 million on our unsecured credit facility,
an increase in proceeds received from the issuance of mortgage
debt of $6.9 million and a decrease of cash used to repay
unsecured medium-term notes of $30.0 million, all offset by
a decrease in repayments of unsecured notes, unsecured
medium-term notes and mortgages in the aggregate amount of
$107.5 million, an increase in cash used for the repurchase
of common stock of $2.5 million and an increase in cash
used for dividends and distributions of $3.2 million.

The ratio of earnings to fixed charges was 2.58
to 1 for the year ended December 31, 2002 compared to 1.83
to 1 for the year ended December 31, 2001. The increase in
the ratio of earnings to fixed charges is primarily due to an
increase in gain on sale of real estate assets of
$49.0 million in 2002 when compared to 2001.

We have elected to be taxed as a REIT under
Sections 856 through 860 of the Internal Revenue Code of
1986, as amended. REITs are subject to a number of
organizational and operational requirements, including a
requirement that 90% of ordinary taxable income be distributed.
As a REIT, we generally will not be subject to federal income
tax on net income to the extent taxable income is distributed.

Our outstanding indebtedness (excluding fair
value adjustments of hedged debt instruments of
$5.7 million) as of December 31, 2002 totaled
$696.8 million. This amount includes $268.3 million in
fixed rate

29



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##### 



conventional mortgages, $10.6 million of
variable rate tax-exempt bonds, $267.0 million of unsecured
notes, $6.9 million of variable rate mortgages and
$144.0 million under our unsecured credit facility.


We expect to meet our short-term liquidity
requirements (i.e., liquidity requirements arising within
12 months) including recurring capital expenditures
relating to maintaining our existing properties, generally
through our working capital, net cash provided by operating
activities and borrowings under our unsecured credit facility.
We believe that our cash provided by operating activities will
be adequate to meet operating requirements and payments of
dividends and distributions during the next twelve months.

We expect to meet our long-term liquidity
requirements (i.e., liquidity requirements arising after
12 months), such as scheduled mortgage debt maturities,
property acquisitions, financing of construction and development
activities and other non-recurring capital improvements, through
the issuance of unsecured notes, equity securities and mortgage
debt, from undistributed funds from operations (see
page 40), from proceeds received from the disposition of
certain properties, and, in connection with the acquisition of
land or improved property, through the issuance of common units
by the Operating Partnership.



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

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

The credit facility had an average interest rate
of 2.69% in 2002, 4.99% in 2001 and 7.20% in 2000 and an average
balance outstanding of $135.9 million in 2002,
$113.5 million in 2001 and $119.8 million in 2000. In
addition, the maximum outstanding principal amount was
$175.0 million in 2002, $146.5 million in 2001 and
$174.0 million in 2000. As of December 31, 2002, the
outstanding balance of the credit facility was
$144.0 million, leaving $81.0 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 September 27, 2002, we entered into an
amendment to the credit agreement related to our unsecured line
of credit which modified certain definitions and financial
covenants that we are required to meet at the end of each fiscal
quarter. We were in compliance with these covenants and all
other covenants included in the credit agreement as of
December 31, 2002.



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

On April 20, 2000, we commenced a new
program for the sale by the Operating Partnership of up to
$250.0 million aggregate principal amount of medium-term
notes (MTNs), due nine months or more from the date
of issuance. We had notes with an aggregate principal amount of
$112.0 million outstanding in connection with this MTN
program as of December 31, 2002.

On May 29, 1998, we established a program
for the sale by the Operating Partnership of up to
$95.0 million aggregate principal amount of MTNs due nine
months or more from the date of issuance. We had notes with an
aggregate principal amount of $25.0 million outstanding in
connection with this MTN program as of December 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.

30



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##### 



The medium-term notes require that we comply with
certain affirmative, negative and financial covenants. We were
in compliance with these covenants as of December 31, 2002.



| |                
| | ---------------
| | Unsecured Notes

The unsecured notes consist of $30.0 million
of notes due 2003, $50.0 million of notes due 2004 and
$50.0 million of notes due 2007. The unsecured notes
require semi-annual interest payments until the end of the
respective terms. The unsecured notes require that we comply
with certain affirmative, negative and financial covenants. We
were in compliance with these covenants as of December 31,
2002.



| |                
| | ---------------
| | Preferred Units

As of December 31, 2002, the Operating
Partnership had outstanding 3.4 million preferred units of
limited partnership interest designated as 8.95% Series B
Cumulative Redeemable Perpetual Preferred Units. These preferred
units are redeemable by the Operating Partnership on or after
April 29, 2004 for cash at a redemption price equal to the
holders capital account or, at our option, shares of our
8.95% Series B Cumulative Redeemable Perpetual Preferred
Stock, or a combination of cash and shares of our 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 our 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 the
treatment of the Operating Partnership or the preferred units
for federal income tax purposes. Distributions on the
Series B preferred units are cumulative from the date of
original issuance and are payable quarterly at the rate of 8.95%
per year of the $25.00 original capital contribution. We made
distributions to the holders of the Series B preferred
units in the aggregate amount of $7.6 million during each
of the years ended December 31, 2002 and 2001.

As of December 31, 2002, the Operating
Partnership had outstanding 2.2 million preferred units of
limited partnership interest designated as 8.75% Series C
Cumulative Redeemable Perpetual Preferred Units. The preferred
units are redeemable by the Operating Partnership on or after
September 3, 2004 for cash at a redemption price equal to
the holders capital account. The holder of the
Series C preferred units has the right to exchange these
preferred units for shares of our 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 the treatment of the
Operating Partnership or the preferred units for federal income
tax purposes, or (d) if the holdings in the Operating
Partnership of the Series C unitholder exceed 18% of the
total profits of or capital interest in the Operating
Partnership for a taxable year. Distributions on the
Series C preferred units are cumulative from the date of
original issuance and are payable quarterly at the rate of 8.75%
per year of the $25.00 original capital contribution. We made
distributions to the holder of the Series C preferred units
in the aggregate amount of $4.8 million during each of the
years ended December 31, 2002 and 2001.



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

We have a common stock repurchase program,
originally approved by our Board of Directors in March of 2000,
pursuant to which we are authorized to purchase up to an
aggregate of $56.0 million of currently issued and
outstanding shares of our common stock. All repurchases have
been, and will be, made on the open market at prevailing prices
or in privately negotiated transactions. This authority may be
exercised from time

31



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##### 



to time and in such amounts as market conditions
warrant. The following is a summary of stock repurchases under
the common stock repurchase program (dollars in thousands,
except per share amounts):


|                                |                           |             |         |             |  |               |       |        |  |   |       |       | 
|------------------------------- | ------------------------- | ----------- | ------- | ----------- |  | ------------- | ----- | ------ |  | - | ----- | ----- | 
|                                |                           |             |         |             |  | Average Price
|                                |                           | Number of   |         | Value of    |  | per Share    
|                                |                           | Shares      |         | Shares      |  | of Shares    
|                                |                           | Repurchased |         | Repurchased |  | Repurchased  
|                                |                           |             |         |             |  |              
|Year ended December 31,         |                           |             |         |             |  |               |       |        |  |   |       |      
|2000                            |                           |             | 279,400 |             |  | $             | 5,533 |        |  | $ | 19.80 |      
|2001                            |                           |             | 8,800   |             |  |               | 197   |        |  |   | 22.38 |      
|2002                            |                           |             | 151,300 |             |  |               | 2,666 |        |  |   | 17.62 |      
|                                |                           |             |         |             |  |               |       |        |  |   |       |      
|Total as of December 31, 2002   |                           |             | 439,500 |             |  |               | 8,396 |        |  |   | 19.10 |      
|Subsequent to December 31, 2002 |                           |             | 422,200 |             |  |               | 7,472 |        |  |   | 17.70 |      
|                                |                           |             |         |             |  |               |       |        |  |   |       |      
|                                | Total as of March 5, 2003 |             |         | 861,700     |  |               | $     | 15,868 |  |   | $     | 18.41 | 
|                                |                           |             |         |             |  |               |       |        |  |   |       |      

We had $40.1 million of remaining
availability for repurchases under the program as of
March 5, 2003.



| |                                                         
| | --------------------------------------------------------
| | Dividend Reinvestment and Direct Stock
    Purchase Plan

We have a dividend reinvestment and direct stock
purchase plan (DRIP). Direct stock purchases under
the DRIP were suspended effective October 31, 2002 and
dividend reinvestment under the DRIP was suspended effective
November 15, 2002. The DRIP provided both new investors and
existing holders of our stock (including common stock and other
classes of stock which may be outstanding from time to time)
with a method to purchase shares of common stock under the Stock
Purchase Program component of the plan. The plan also permitted
stockholders to designate all, a portion or none of the cash
dividends on their newly purchased common stock and cash
dividends on their existing stock for reinvestment in more
shares of common stock through the Dividend Reinvestment Program
component of the plan. With respect to reinvested dividends and
optional cash payments, shares of common stock were purchased
for the plan at a discount ranging from 0% to 5% (established
from time to time) from the market price, as more fully
described in the prospectus relating to the plan. Common stock
was purchased by the plans agent (Wachovia Bank) directly
from us or in open market or privately negotiated transactions,
as determined from time to time, to fulfill requirements for the
plan.



| |                             
| | ----------------------------
| | Employee Stock Purchase Plan

In 1996, we established a non-qualified employee
stock purchase plan (ESPP) which allowed our
employees to purchase up to $25,000 of common stock per year.
The price of the shares of the common stock purchased was the
lesser of 85 percent of the closing price of such shares either
on (a) the first day of each six month purchase period, or
(b) the last day of each six month purchase period.
Transactions under the ESPP were suspended effective
July 2, 2002.



| |                      
| | ---------------------
| | Employee Loan Program

Our Board of Directors believes that ownership of
our common stock by our executive officers and certain other
qualified employees aligns the interests of these officers and
employees with the interests of our stockholders. To this end,
our Board of Directors approved, and we instituted, a loan
program. As a result of recent legislation, we are no longer
permitted to make loans to our executive officers and,
therefore, new issuances to our executive officers under the
loan program have been terminated. Under the terms of the loan
program, we lent amounts to certain of our executive officers
and other qualified employees to (a) finance the purchase
of our 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 our common
stock, or (c) finance the annual tax liability or other
expenses of an executive officer related to the vesting of
shares of common stock which constitute a portion of a
restricted stock award granted to the executive officer. The
relevant officer or employee has executed a promissory note and
security agreement related to each loan extended. Each

32



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##### 



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
our common stock which are the subject of the loans. If the
market price of Summits common stock falls materially
below the price at which the shares of stock were purchased, the
proceeds of the sale of the common stock may not be sufficient
to repay the loan. During the three months ended June 30,
2002, we issued $6.7 million of loans to six executive
officers. As of December 31, 2002, we had loans receivable
in the amount of $19.5 million which were collateralized by
939,586 shares of our common stock valued at
$16.7 million. The proceeds from the shares that serve as
collateral for the loans would not be sufficient to repay the
loans in full. However, since the loans are full recourse, we
have the right to collect any additional amount owed directly
from the officer or employee to the extent such officer or
employee is able to pay such amount. We had loans receivable in
the amount of $14.5 million as of December 31, 2001.




| |                
| | ---------------
| | Impairment Loss

Management considers events and circumstances
that may indicate impairment of an investment, including
operating performance and cash flow projections. In 2001,
management determined that our investments in BroadbandNOW!,
Inc. and YieldStar Technology LLC were impaired and that such
impairment was other than temporary. As a result, we recorded an
impairment loss in the aggregate amount of $1.2 million,
which represents our entire investment in these two technology
companies. We have no other technology company investments.



| |                 
| | ----------------
| | Schedule of Debt

The following table sets forth information
regarding our debt financing (excluding fair value adjustments
of hedged debt instruments) as of December 31, 2002 and
2001 (dollars in thousands):

|                |                  |                                         |                     |          |       |                       |  |            |           |  |   |         |        |         |   |         |        |         | 
|--------------- | ---------------- | --------------------------------------- | ------------------- | -------- | ----- | --------------------- |  | ---------- | --------- |  | - | ------- | ------ | ------- | - | ------- | ------ | ------- | 
|                |                  |                                         |                     |          |       |                      
|                |                  |                                         |                     |          |       | Principal Outstanding
|                |                  | Interest                                |                     |          |       | December 31,         
|                |                  | Rate as of                              |                     | Maturity |       |                      
|                |                  | December 31, 2002                       |                     | Date(1)  |       | 2002                  |  | 2001      
|                |                  |                                         |                     |          |       |                       |  |           
|Fixed Rate Debt |                  |                                         |                     |          |       |                       |  |            |           |  |   |         |        |         |   |        
|                | Mortgage Loan(2) |                                         |                     | 6.76%    |       |                       |  | 10/15/2008 |           |  | $ | 133,909 |        |         | $ | 137,321 |       
|                | Mortgage Loan(3) |                                         |                     | 8.00%    |       |                       |  | 9/1/2005   |           |  |   | 8,040   |        |         |   | 8,161   |       
|                | Mortgage Notes:  |                                         |                     |          |       |                       |  |            |           |  |   |         |        |         |   |         |       
|                |                  | Summit Fair Lakes                       |                     |          | 7.82% |                       |  |            | 7/1/2010  |  |   |         | 48,340 |         |   |         | 48,340 |        
|                |                  | Summit Buena Vista                      |                     |          | 6.75% |                       |  |            | 2/15/2007 |  |   |         | 24,067 |         |   |         | 24,539 |        
|                |                  | Summit Belcourt                         |                     |          | 6.75% |                       |  |            | 1/1/2006  |  |   |         | 9,018  |         |   |         | 9,209  |        
|                |                  | Summit Camino Real                      |                     |          | 6.75% |                       |  |            | 6/1/2006  |  |   |         | 15,886 |         |   |         | 16,213 |        
|                |                  | Summit Turtle Rock                      |                     |          | 6.75% |                       |  |            | 12/1/2005 |  |   |         | 10,215 |         |   |         | 10,431 |        
|                |                  | Summit Arboretum                        |                     |          | 6.75% |                       |  |            | 12/1/2005 |  |   |         | 18,796 |         |   |         | 19,194 |        
|                |                  | Mortgage notes repaid in 2002           |                     |          |       |                       |  |            |           |  |   |         |       |         |   |         | 16,041 |        
|                |                  | Tax exempt mortgage note repaid in 2002 |                     |          |       |                       |  |            |           |  |   |         |       |         |   |         | 3,918  |        
|                |                  |                                         |                     |          |       |                       |  |            |           |  |   |         |        |         |   |        
|                |                  |                                         | Total Mortgage Debt |          |       |                       |  |            |           |  |   |         |        | 268,271 |   |         |        | 293,367 | 
|                |                  |                                         |                     |          |       |                       |  |            |           |  |   |         |        |         |   |        

33



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##### 



|                               |                               |                                 |                          |                |       |                       |         |           |            |  |  |         |        |         |  |        |        |         | 
|------------------------------ | ----------------------------- | ------------------------------- | ------------------------ | -------------- | ----- | --------------------- | ------- | --------- | ---------- |  |  | ------- | ------ | ------- |  | ------ | ------ | ------- | 
|                               |                               |                                 |                          |                |       |                      
|                               |                               |                                 |                          |                |       | Principal Outstanding
|                               |                               | Interest                        |                          |                |       | December 31,         
|                               |                               | Rate as of                      |                          | Maturity       |       |                      
|                               |                               | December 31, 2002               |                          | Date(1)        |       | 2002                  |         | 2001     
|                               |                               |                                 |                          |                |       |                       |         |          
|                               | Unsecured Notes:              |                                 |                          |                |       |                       |         |           |            |  |  |         |        |         |  |        |       
|                               |                               | Medium-Term Notes due 2003      |                          |                | 7.87% |                       |         |           | 10/20/2003 |  |  |         | 17,000 |         |  |        | 17,000 |        
|                               |                               | Medium-Term Notes due 2005      |                          |                | 8.04% |                       |         |           | 11/17/2005 |  |  |         | 25,000 |         |  |        | 25,000 |        
|                               |                               | Medium-Term Notes due 2006      |                          |                | 7.04% |                       |         |           | 5/9/2006   |  |  |         | 25,000 |         |  |        | 25,000 |        
|                               |                               | Medium-Term Notes due 2009      |                          |                | 7.59% |                       |         |           | 3/16/2009  |  |  |         | 25,000 |         |  |        | 25,000 |        
|                               |                               | Medium-Term Notes due 2010      |                          |                | 8.50% |                       |         |           | 7/19/2010  |  |  |         | 10,000 |         |  |        | 10,000 |        
|                               |                               | Medium-Term Notes due 2011      |                          |                | 7.70% |                       |         |           | 5/9/2011   |  |  |         | 35,000 |         |  |        | 35,000 |        
|                               |                               | Notes due 2003                  |                          |                | 6.63% |                       |         |           | 12/15/2003 |  |  |         | 30,000 |         |  |        | 30,000 |        
|                               |                               | Notes due 2004                  |                          |                | 6.95% |                       |         |           | 8/15/2004  |  |  |         | 50,000 |         |  |        | 50,000 |        
|                               |                               | Notes due 2007                  |                          |                | 7.20% |                       |         |           | 8/15/2007  |  |  |         | 50,000 |         |  |        | 50,000 |        
|                               |                               | Unsecured notes repaid in 2002  |                          |                |       |                       |         |           |            |  |  |         |       |         |  |        | 41,000 |        
|                               |                               |                                 |                          |                |       |                       |         |           |            |  |  |         |        |         |  |       
|                               |                               |                                 | Total Unsecured Notes    |                |       |                       |         |           |            |  |  |         |        | 267,000 |  |        |        | 308,000 | 
|                               |                               |                                 |                          |                |       |                       |         |           |            |  |  |         |        |         |  |       
|                               |                               |                                 | Total Fixed Rate Debt    |                |       |                       |         |           |            |  |  |         |        | 535,271 |  |        |        | 601,367 | 
|                               |                               |                                 |                          |                |       |                       |         |           |            |  |  |         |        |         |  |       
|Variable Rate Debt             |                               |                                 |                          |                |       |                       |         |           |            |  |  |         |        |         |  |       
|                               | Unsecured credit facility     |                                 |                          | LIBOR + 100bps |       |                       |         | 9/26/2004 |            |  |  | 144,000 |        |         |  | 94,000 |       
|                               | Summit Foxcroft mortgage note |                                 |                          | LIBOR + 170bps |       |                       |         | 7/1/2005  |            |  |  | 6,900   |        |         |  |       |       
|                               | Tax Exempt Bonds:             |                                 |                          |                |       |                       |         |           |            |  |  |         |        |         |  |        |       
|                               |                               | Summit Belmont(4)               |                          |                | 3.05% |                       |         |           | 4/1/2007   |  |  |         | 10,565 |         |  |        | 10,785 |        
|                               |                               | Tax Exempt Bonds repaid in 2002 |                          |                |       |                       |         |           |            |  |  |         |       |         |  |        | 11,408 |        
|                               |                               |                                 |                          |                |       |                       |         |           |            |  |  |         |        |         |  |       
|                               |                               |                                 | Total Tax Exempt Bonds   |                |       |                       |         |           |            |  |  |         |        | 10,565  |  |        |        | 22,193  | 
|                               |                               |                                 |                          |                |       |                       |         |           |            |  |  |         |        |         |  |       
|                               |                               |                                 | Total Variable Rate Debt |                |       |                       |         |           |            |  |  |         |        | 161,465 |  |        |        | 116,193 | 
|                               |                               |                                 |                          |                |       |                       |         |           |            |  |  |         |        |         |  |       
|Total Outstanding Indebtedness |                               | $                               | 696,736                  |                |       | $                     | 717,560 |          
|                               |                               |                                 |                          |                |       |                       |         |          



|    |                                                                                                                                       
|--- | --------------------------------------------------------------------------------------------------------------------------------------
|(1) | All of the secured debt can be prepaid at any
    time. Prepayment of all secured debt is generally subject to
    penalty or premium.
|   
|(2) | Mortgage loan secured by the following
    communities:                                                                               

|                                                                                 |  |                                                                                  |  |                                     
|-------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------- |  | ------------------------------------
|Summit Ballantyne
    Summit Club at Dunwoody
    Summit Del Ray
    Summit Glen |  | Summit Largo
    Summit Las Palmas
    Summit on the River
    Summit Plantation |  | Summit St. Clair
    Summit Westwood



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(3) | Mortgage loan secured by Summit Simsbury and
    Summit Touchstone.                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   
|(4) | The tax exempt bond bears interest at various
    rates set by a remarketing agent at the demand note index plus
    0.50%, set weekly, or the lowest percentage of prime which
    allows the resale at a price of par. The bond is enhanced by a
    letter of credit from a financial institution, which will
    terminate prior to the maturity date of the related bond. In the
    event the credit enhancement is not renewed or replaced upon
    termination, the related loan obligation will be accelerated.

The one-month LIBOR rate as of December 31,
2002 was 1.38%.

Our outstanding indebtedness (excluding our
unsecured credit facility which matures in 2004) had an average
maturity of 4.6 years as of December 31, 2002. The
aggregate annual maturities of all outstanding debt as of

34



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##### 



December 31, 2002 (excluding our unsecured
credit facility which had an outstanding balance of
$144.0 million as of December 31, 2002) are as follows
(in thousands):


|           |       |   |         |         | 
|---------- | ----- | - | ------- | ------- | 
|2003       |       | $ | 52,722  |        
|2004       |       |   | 56,105  |        
|2005       |       |   | 72,920  |        
|2006       |       |   | 53,422  |        
|2007       |       |   | 86,292  |        
|Thereafter |       |   | 231,275 |        
|           |       |   |         |        
|           | Total |   | $       | 552,736 | 
|           |       |   |         |        



| |            
| | -----------
| | Market Risk

Our capital structure includes the use of
variable rate and fixed rate debt and, therefore, we are exposed
to the impact of changes in interest rates. We generally
refinance maturing debt instruments at then-existing market
interest rates and terms which may be more or less favorable
than the interest rates and terms of the maturing debt. While we
have historically had limited involvement with derivative
financial instruments, we may utilize such instruments in
certain situations to hedge interest rate exposure by modifying
the interest rate characteristics of related balance sheet
instruments and prospective financing transactions. 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 No. 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 consolidated balance sheet and measure those
instruments at fair value. The cumulative effect of adopting
SFAS No. 133 was not material to our financial statements.

On June 13, 2002, we terminated an interest
rate swap with a $30.0 million notional amount. Under SFAS
No. 133, as a result of the termination, we de-designated
the $30.0 million swap as a fair value hedge against
certain fixed rate debt. We will amortize as a reduction of
interest expense $1.5 million, which represents the
difference between the par value and carrying amount of the
fixed-rate debt obligation, over the remaining term of the debt
obligation, which matures on December 15, 2003. Interest
expense was reduced by $545,000 in 2002 as a result of
amortizing this difference.

On June 14, 2002, we entered into an
interest rate swap with a notional amount of $50.0 million,
relating to $50.0 million of 7.20% fixed rate notes issued
under our MTN program. Under the interest rate swap agreement,
through the maturity date of August 15, 2007, (a) we
have agreed to pay to the counterparty the interest on a
$50.0 million notional amount at a floating interest rate
of three-month LIBOR plus 241.75 basis points, and (b) the
counterparty has agreed to pay to us the interest on the same
notional amount at the fixed rate of the underlying debt
obligation. The floating rate as of December 31, 2002 was
3.8175%. The fair value of the interest rate swap was an asset
of $4.8 million as of December 31, 2002. The swap has
been designated as a fair value hedge of the underlying fixed
rate debt obligation and has been recorded in Other
assets in the accompanying balance sheets. We assume no
ineffectiveness as the interest rate swap meets the short-cut
method conditions required under SFAS No. 133 for fair
value hedges of debt instruments. Accordingly, no gains or
losses were recorded in income relative to our underlying debt
and interest rate swap.

The following table provides information about
our interest rate swap and other financial instruments that are
sensitive to changes in interest rates and should be read in
conjunction with the accompanying consolidated financial
statements and related notes. For debt, the table presents
principal cash flows and related weighted average interest rates
in effect as of December 31, 2002 by expected maturity
dates. The weighted average interest rates presented in this
table for the tax exempt variable rate debt are inclusive of
credit enhancement

35



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fees. For the interest rate swap, the table
presents the notional amount and related weighted average pay
rate by year of maturity (dollars in thousands):


Expected Year of Maturity

|                           |                               |                          |        |        |        |      |         |         |         |      |        |            |        |       |        |        |        |   |         |        |        |   |         |         |         |   |         |         |         |   |         |         |         |  
|-------------------------- | ----------------------------- | ------------------------ | ------ | ------ | ------ | ---- | ------- | ------- | ------- | ---- | ------ | ---------- | ------ | ----- | ------ | ------ | ------ | - | ------- | ------ | ------ | - | ------- | ------- | ------- | - | ------- | ------- | ------- | - | ------- | ------- | ------- | -
|                           |                               |                          |        |        |        |      |         |         |         |      |        |            |        | 2002  |        | 2001  
|                           |                               | 2003                     |        | 2004   |        | 2005 |         | 2006    |         | 2007 |        | Thereafter |        | Total |        | Total 
|                           |                               |                          |        |        |        |      |         |         |         |      |        |            |        |       |        |       
|Fixed Rate Debt:           |                               |                          |        |        |        |      |         |         |         |      |        |            |        |       |        |        |        |   |         |        |        |   |         |         |         |   |         |         |         |   |         |        
|                           | Conventional fixed rate       |                          | $      | 5,502  |        |      | $       | 5,885   |         |      | $      | 40,800     |        |       | $      | 28,202 |        |   | $       | 26,607 |        |   | $       | 161,275 |         |   | $       | 268,271 |         |   | $       | 289,449 |        
|                           | Average interest rate         |                          |        | 6.79   | %      |      |         | 6.79    | %       |      |        | 6.99       | %      |       |        | 6.75   | %      |   |         | 6.75   | %      |   |         | 7.08    | %       |   |         | 6.99    | %       |   |         | 7.03    | %      
|                           | Tax exempt fixed rate         |                          |        |       |        |      |         |        |         |      |        |           |        |       |        |       |        |   |         |       |        |   |         |        |         |   |         |        |         |   |         | 3,918   |        
|                           | Average interest rate         |                          |        |       |        |      |         |        |         |      |        |           |        |       |        |       |        |   |         |       |        |   |         |        |         |   |         |        |         |   |         | 6.95    | %      
|                           | Unsecured fixed rate          |                          |        | 47,000 |        |      |         | 50,000  |         |      |        | 25,000     |        |       |        | 25,000 |        |   |         | 50,000 |        |   |         | 70,000  |         |   |         | 267,000 |         |   |         | 308,000 |        
|                           | Average interest rate         |                          |        | 7.08   | %      |      |         | 6.95    | %       |      |        | 8.04       | %      |       |        | 7.04   | %      |   |         | 7.20   | %      |   |         | 7.78    | %       |   |         | 7.35    | %       |   |         | 7.33    | %      
|                           |                               |                          |        |        |        |      |         |         |         |      |        |            |        |       |        |        |        |   |         |        |        |   |         |         |         |   |         |         |         |   |         |        
|                           |                               | Total fixed rate debt    |        |        | 52,502 |      |         |         | 55,885  |      |        |            | 65,800 |       |        |        | 53,202 |   |         |        | 76,607 |   |         |         | 231,275 |   |         |         | 535,271 |   |         |         | 601,367 |  
|                           |                               | Average interest rate    |        |        | 7.05   | %    |         |         | 6.93    | %    |        |            | 7.39   | %     |        |        | 6.89   | % |         |        | 7.04   | % |         |         | 7.29    | % |         |         | 7.17    | % |         |         | 7.14    | %
|                           |                               |                          |        |        |        |      |         |         |         |      |        |            |        |       |        |        |        |   |         |        |        |   |         |         |         |   |         |         |         |   |         |        
|Variable Rate Debt:        |                               |                          |        |        |        |      |         |         |         |      |        |            |        |       |        |        |        |   |         |        |        |   |         |         |         |   |         |         |         |   |         |        
|                           | Tax exempt variable rate      |                          |        | 220    |        |      |         | 220     |         |      |        | 220        |        |       |        | 220    |        |   |         | 9,685  |        |   |         |        |         |   |         | 10,565  |         |   |         | 22,193  |        
|                           | Average interest rate         |                          |        | 3.05   | %      |      |         | 3.05    | %       |      |        | 3.05       | %      |       |        | 3.05   | %      |   |         | 3.05   | %      |   |         |        |         |   |         | 3.05    | %       |   |         | 4.21    | %      
|                           | Variable rate mortgage note   |                          |        |       |        |      |         |        |         |      |        | 6,900      |        |       |        |       |        |   |         |       |        |   |         |        |         |   |         | 6,900   |         |   |         |        |        
|                           | Average interest rate         |                          |        |       |        |      |         |        |         |      |        | 3.08       | %      |       |        |       |        |   |         |       |        |   |         |        |         |   |         | 3.08    | %       |   |         |        |        
|                           | Variable rate credit facility |                          |        |       |        |      |         | 144,000 |         |      |        |           |        |       |        |       |        |   |         |       |        |   |         |        |         |   |         | 144,000 |         |   |         | 94,000  |        
|                           | Average interest rate         |                          |        |       |        |      |         | 2.69    | %       |      |        |           |        |       |        |       |        |   |         |       |        |   |         |        |         |   |         | 2.69    | %       |   |         | 4.99    | %      
|                           |                               |                          |        |        |        |      |         |         |         |      |        |            |        |       |        |        |        |   |         |        |        |   |         |         |         |   |         |         |         |   |         |        
|                           |                               | Total variable rate debt |        |        | 220    |      |         |         | 144,220 |      |        |            | 7,120  |       |        |        | 220    |   |         |        | 9,685  |   |         |         |        |   |         |         | 161,465 |   |         |         | 116,193 |  
|                           |                               | Average interest rate    |        |        | 3.05   | %    |         |         | 2.69    | %    |        |            | 3.08   | %     |        |        | 3.05   | % |         |        | 3.05   | % |         |         |        |   |         |         | 2.73    | % |         |         | 4.84    | %
|                           |                               |                          |        |        |        |      |         |         |         |      |        |            |        |       |        |        |        |   |         |        |        |   |         |         |         |   |         |         |         |   |         |        
|Total debt                 |                               | $                        | 52,722 |        |        | $    | 200,105 |         |         | $    | 72,920 |            |        | $     | 53,422 |        |        | $ | 86,292  |        |        | $ | 231,275 |         |         | $ | 696,736 |         |         | $ | 717,560 |        
|Average interest rate      |                               |                          | 7.03   | %      |        |      | 3.88    | %       |         |      | 6.97   | %          |        |       | 6.87   | %      |        |   | 6.60    | %      |        |   | 7.29    | %       |         |   | 6.14    | %       |         |   | 6.72    | %      
|                           |                               |                          |        |        |        |      |         |         |         |      |        |            |        |       |        |        |        |   |         |        |        |   |         |         |         |   |         |         |         |   |         |        
|Interest Rate Swap:        |                               |                          |        |        |        |      |         |         |         |      |        |            |        |       |        |        |        |   |         |        |        |   |         |         |         |   |         |         |         |   |         |        
|Pay variable/receive fixed |                               |                          |        |        |        |      |         |         |         |      |        |            |        |       |        |        |        | $ | 50,000  |        |        |   |         |         |         | $ | 50,000  |         |         | $ | 30,000  |        
|Average pay rate           |                               |                          |        |        |        |      |         |         |         |      |        |            |        |       |        |        |        |   | 3-month |        |        |   |         |         |         |   | 3-month |         |         |   | 3-month |        
|                           |                               |                          |        |        |        |      |         |         |         |      |        |            |        |       |        |        |        |   | LIBOR   |        |        |   |         |         |         |   | LIBOR   |         |         |   | LIBOR   |        
|                           |                               |                          |        |        |        |      |         |         |         |      |        |            |        |       |        |        |        |   | +2.4175 | %      |        |   |         |         |         |   | +2.4175 | %       |         |   | +0.11   | %      
|Receive rate               |                               |                          |        |        |        |      |         |         |         |      |        |            |        |       |        |        |        |   | 7.20    | %      |        |   |         |         |         |   | 7.20    | %       |         |   | 6.625   | %      

We estimate that the fair value of the variable
rate debt approximates carrying value based upon our effective
borrowing rates for issuance of debt with similar terms and
remaining maturities. Fixed rate mortgage debt and fixed rate
unsecured notes with a carrying value of $535.3 million had
an estimated aggregate fair value of $587.1 million as of
December 31, 2002. Rates currently available to us for
similar terms and maturities were used to estimate the fair
value of this debt. The fair market value of long-term fixed
rate debt is subject to changes in interest rates.

Acquisitions and Dispositions

During the year ended December 31, 2002, we
sold eight communities comprising 2,399 apartment homes for an
aggregate sales price of $211.8 million, resulting in an
aggregate net gain on sale of $78.7 million. The eight
communities sold were the former Summit Breckenridge, Summit New
Albany, Summit Pike Creek, Summit Mayfaire, Summit Stonefield,
Summit Meadow, Summit Sand Lake and Summit Windsor. Net proceeds
from four of the eight communities, equaling
$107.4 million, were placed in escrow with a qualified
intermediary in accordance with like-kind exchange income tax
rules and regulations.

During the year ended December 31, 2002, a
joint venture in which we held a 50% interest, sold a community
known as The Heights at Cheshire Bridge (318 apartment homes) to
an unrelated third party and the joint venture was dissolved.
Upon dissolution, we recognized a gain of $5.0 million on
the sale of the joint ventures assets.

During the year ended December 31, 2002, we
acquired a stabilized, luxury apartment community in the
Galleria sub-market of Dallas, Texas for cash in the amount of
$17.7 million. The community, now known as Summit San
Raphael, has 222 apartment homes and was constructed in 1999.

During the year ended December 31, 2001, we
sold one parcel of land and nine communities comprising 2,189
apartment homes for an aggregate sales price of
$167.6 million, resulting in an aggregate net gain on sale
of

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$34.4 million. The parcel of land was
located in Richmond, Virginia and the nine communities sold were
the former Summit Palm Lake, Summit Arbors, Summit Radbourne,
Summit Lofts, Summit Gateway, Summit Stony Point, Summit
Deerfield, Summit Waterford and Summit Walk. Net proceeds from
three of the nine communities, equaling $31.7 million, were
placed in escrow with a qualified intermediary in accordance
with like-kind exchange income tax rules and regulations.


During the year ended December 31, 2001, a
joint venture in which we hold a 25% interest, sold a community,
the former Summit Station, for $11.9 million. This sale
resulted in the recognition by the joint venture of a gain of
$1.1 million, of which we recorded $271,000 based on our
equity interest.

We did not acquire any communities during the
year ended December 31, 2001.

During the year ended December 31, 2000, we
sold seven communities comprising 1,676 apartment homes for an
aggregate sales price of $103.9 million, resulting in a
gain on sale of $38.5 million. The communities sold were
the former Summit Creekside, Summit Eastchester, Summit
Sherwood, Summit Blue Ash, Summit Park, Summit River Crossing
and Summit Village. Net proceeds from six of the seven
communities, equaling $78.1 million, were placed in escrow
with a qualified intermediary in accordance with like-kind
exchange income tax rules and regulations.

On August 1, 2000, we exercised our option
to purchase our joint venture partners interest in each of
two communities, Summit Sweetwater and Summit Shiloh, both
located in Atlanta, Georgia. The acquisition of these two
communities added 490 apartment homes to our portfolio at an
aggregate purchase price of $36.0 million. The acquisitions
were financed with the issuance of 96,455 common units valued,
in the aggregate, at $2.2 million and the payment of
$33.8 million in cash.

Communities Sold or Held for Sale

Subsequent to December 31, 2002, we executed
a contract for the sale of an apartment community, Summit
Fairways, located in Orlando, Florida. The assets of Summit
Fairways were recorded at the lower of cost or fair value less
costs to sell, or $14.9 million, as of December 31,
2002. The net income from Summit Fairways represented 1.0% of
our net income for the year ended December 31, 2002. Summit
Fairways was sold on March 5, 2003 for $18.8 million
as part of our strategy to exit our non-core markets. We expect
to record a gain on sale resulting from the disposition of
Summit Fairways. We expect to use the proceeds from the sale of
Summit Fairways to fund future acquisition and development
activity.

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

Below is a summary of discontinued operations for
all of the communities sold during 2002 excluding Summit
Breckenridge and joint venture communities, and including Summit
Fairways, for the year ended December 31, 2002, 2001 and
2000 (in thousands). Summit Breckenridge was properly classified
as held for sale prior to January 1, 2002 and, therefore,
its operations are included in income from continuing operations.

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|                                                                                                  |                         |                         |        |        |  |      |        |        |  |   |        |        | 
|------------------------------------------------------------------------------------------------- | ----------------------- | ----------------------- | ------ | ------ |  | ---- | ------ | ------ |  | - | ------ | ------ | 
|                                                                                                  |                         |                        
|                                                                                                  |                         | Year Ended December 31,
|                                                                                                  |                         |                        
|                                                                                                  |                         | 2002                    |        | 2001   |  | 2000
|                                                                                                  |                         |                         |        |        |  |     
|Property revenues:                                                                                |                         |                         |        |        |  |      |        |        |  |   |        |       
|                                                                                                  | Rental revenues         |                         | $      | 18,744 |  |      | $      | 23,670 |  |   | $      | 22,784 | 
|                                                                                                  | Other property revenues |                         |        | 1,457  |  |      |        | 1,763  |  |   |        | 1,730  | 
|                                                                                                  |                         |                         |        |        |  |      |        |        |  |   |        |       
|Total property revenues                                                                           |                         |                         | 20,201 |        |  |      | 25,433 |        |  |   | 24,514 |       
|Property operating and maintenance expense                                                        |                         |                         | 7,002  |        |  |      | 8,375  |        |  |   | 7,533  |       
|Depreciation                                                                                      |                         |                         | 3,892  |        |  |      | 5,148  |        |  |   | 4,891  |       
|Interest and amortization                                                                         |                         |                         | 1,188  |        |  |      | 1,568  |        |  |   | 1,785  |       
|                                                                                                  |                         |                         |        |        |  |      |        |        |  |   |        |       
|Income from discontinued operations before net
    gain on disposition of discontinued operations |                         |                         | 8,119  |        |  |      | 10,342 |        |  |   | 10,305 |       
|Net gain on disposition of discontinued operations                                                |                         |                         | 64,907 |        |  |      |       |        |  |   |       |       
|                                                                                                  |                         |                         |        |        |  |      |        |        |  |   |        |       
|Income from discontinued operations before
    minority interest and extraordinary items          |                         |                         | 73,026 |        |  |      | 10,342 |        |  |   | 10,305 |       
|Extraordinary items                                                                               |                         |                         | (209   | )      |  |      |       |        |  |   |       |       
|Minority interest of discontinued operations                                                      |                         |                         | (8,314 | )      |  |      | (1,332 | )      |  |   | (1,457 | )     
|                                                                                                  |                         |                         |        |        |  |      |        |        |  |   |        |       
|Income from discontinued operations, net of
    minority interest                                 |                         | $                       | 64,503 |        |  | $    | 9,010  |        |  | $ | 8,848  |       
|                                                                                                  |                         |                         |        |        |  |      |        |        |  |   |        |       

Development Activity

Development communities in process as of
December 31, 2002 are summarized as follows (dollars in
thousands):

|                                            |  |           |       |           |  |         |         |           |  |              |         |  |  |   |        |  |  |  |         | 
|------------------------------------------- |  | --------- | ----- | --------- |  | ------- | ------- | --------- |  | ------------ | ------- |  |  | - | ------ |  |  |  | ------- | 
|                                            |  |           |       | Total     |  |         |         | Estimated |  | Anticipated 
|                                            |  | Apartment |       | Estimated |  | Cost To |         | Cost To   |  | Construction
|Community                                   |  | Homes     |       | Costs     |  | Date    |         | Complete  |  | Completion  
|                                            |  |           |       |           |  |         |         |           |  |             
|Summit Roosevelt  Washington,
    D.C.     |  |           | 198   |           |  | $       | 49,600  |           |  | $            | 42,036  |  |  | $ | 7,564  |  |  |  | Q2 2003 | 
|Summit Stockbridge  Atlanta, GA            |  |           | 304   |           |  |         | 23,600  |           |  |              | 18,608  |  |  |   | 4,992  |  |  |  | Q3 2003 | 
|Summit Silo Creek  Washington,
    D.C.    |  |           | 284   |           |  |         | 41,700  |           |  |              | 17,430  |  |  |   | 24,270 |  |  |  | Q2 2004 | 
|Summit Las Olas  Ft. Lauderdale, FL        |  |           | 420   |           |  |         | 73,700  |           |  |              | 34,648  |  |  |   | 39,052 |  |  |  | Q3 2005 | 
|Other development and construction costs(1) |  |           |      |           |  |         |        |           |  |              | 26,541  |  |  |   |       |  |  |  |         | 
|                                            |  |           |       |           |  |         |         |           |  |              |         |  |  |   |        |  |  |  |         | 
|                                            |  |           | 1,206 |           |  | $       | 188,600 |           |  | $            | 139,263 |  |  | $ | 75,878 |  |  |  |         | 
|                                            |  |           |       |           |  |         |         |           |  |              |         |  |  |   |        |  |  |  |         | 



|    |                                                                                     
|--- | ------------------------------------------------------------------------------------
|(1) | Consists primarily of land held for development
    and other pre-development costs.

The estimated cost to complete the development
communities listed above of $75.9 million, our commitment
to purchase Summit Brickell for an estimated price ranging from
$50.5 million to $60.0 million and our commitment to
purchase land for Summit Brookwood for $10.6 million (see
the section entitled Commitments and Contingencies
below), represent substantially all of our material commitments
for capital expenditures as of December 31, 2002.

Factors
Affecting the Performance of Our Development
Communities

As with any development community, there are
uncertainties and risks associated with the development of 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 five 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.

Americans with Disabilities Act and Similar
Laws

Under the Americans with Disabilities Act, all
places of public accommodation are required to meet federal
requirements related to access and use by disabled persons. We
believe that our communities are substantially in compliance
with present requirements of the Americans with Disabilities Act
as they apply to multifamily dwellings. A number of additional
federal, state and local laws exist or may be imposed which also
may require modifications to our communities or regulate certain
further renovations with respect to access by disabled persons.
The ultimate amount of the cost of compliance with the Americans
with Disabilities Act or related legislation is not currently
ascertainable, and while these costs are not expected to have a
material effect on us, they could be substantial. Limitations or
restrictions on the completion of renovations may limit
application of our investment strategy in particular instances
or reduce overall returns on our investments.

Inflation

Substantially all of the leases at our
communities are for a term of one year or less. The short-term
nature of these leases generally serves to reduce the risk of
the adverse effect of inflation.

Commitments and Contingencies

The estimated cost to complete the four
development projects currently under construction was
$75.9 million as of December 31, 2002. Anticipated
construction completion dates of the projects range from the
second quarter of 2003 to the third quarter of 2005.

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

In January 2000, the Operating Partnership
entered into a real estate purchase agreement with a third-party
real estate developer. Under the terms of the agreement, the
Operating Partnership has agreed to purchase upon completion a
Class A mixed-use community, which will be
called Summit Brickell, and is located in Miami, Florida. The
Operating Partnership will purchase Summit Brickell upon the
earlier of one year after construction completion or the
achievement of 80% occupancy. The Operating Partnership may
extend this closing obligation for six months after the initial
purchase period. The Operating Partnership expects to close on
the purchase of Summit Brickell 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

39



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for funding such overruns unless those overruns
result from design change orders which are requested by the
Operating Partnership; such change order 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 by the Operating Partnership is subject to
customary closing conditions. The Operating Partnership has
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, the Operating Partnership 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.


On May 25, 2001, we contributed
$4.2 million for a 29.78% interest in a joint venture named
SZF, LLC, which owns substantially all of the interests in a
limited liability company that is developing, through a
third-party contractor, an apartment community in Miami,
Florida. The community will consist of 323 apartment homes and
17,795 square feet of office/retail space. The limited liability
company has also acquired an adjacent piece of land. The
construction costs are being funded through the equity that the
joint venture contributed to the limited liability company and
by a loan to that company from an unrelated third party. In the
event that construction costs exceed the construction loan
amount, we have agreed to advance the amount required to fund
such costs in excess of the construction loan. This advance
accrues a preferential return at the rate of eleven percent
(11%) per year to be paid from the distributions from the joint
venture. As of December 31, 2002, we had advanced
$2.2 million to SZF, LLC. Subsequent to December 31,
2002, we have advanced an additional $6.1 million to SZF,
LLC.

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

We have employment agreements with two of our
former executive officers, both of whom resigned from such
executive positions, but who remain as employees and have agreed
to provide various services to us from time to time through
December 31, 2011. Each employment agreement requires that
we pay to the former officers a base salary aggregating up to
$2.1 million over the period from July 2, 2001 to
December 31, 2011 (beginning with calendar year 2002, up to
$200,000 on an annual basis). Each employment agreement also
requires that we provide participation in our life insurance
plan, office space, information systems support and
administrative support for the remainder of each officers
life, and participation in our health and dental insurance plans
until the last to die of the officer or such officers
spouse. Either party can terminate the employment agreements,
effective 20 business days after written notice is given. The
full base salary amount due shall be payable through 2011
whether or not the agreements are terminated earlier in
accordance with their terms.

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 and extraordinary items, plus
depreciation of real estate assets, and after adjustments for
unconsolidated partnerships and joint ventures, all determined
on a consistent basis in accordance with GAAP. Our methodology
for calculating FFO may differ from the methodology for
calculating FFO utilized by other real estate companies, and
accordingly, may not be comparable to other real estate
companies. FFO does not represent amounts available for
managements discretionary use because of needed capital
expenditures or expansion, debt service obligations, property
acquisitions, development, dividends and distributions or other
commitments and uncertainties. FFO should not be considered as
an alternative to net income (determined in accordance with
GAAP) as an indication of our financial performance or to cash
flows from operating activities (determined in accordance with
GAAP) as a measure of our liquidity, nor are they indicative of
funds available to fund our cash needs, including our ability to
pay dividends or make distributions. We believe FFO is helpful
to investors as a measure of our performance

40



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##### 



because, along with cash flows from operating
activities, financing activities and investing activities, it
provides investors with an understanding of our ability to incur
and service debt and make capital expenditures.


Funds from Operations is calculated as follows
(dollars in thousands):

|                                                            |                                                                      |      |            |         |   |      |            |         |   |   |            |          |  
|----------------------------------------------------------- | -------------------------------------------------------------------- | ---- | ---------- | ------- | - | ---- | ---------- | ------- | - | - | ---------- | -------- | -
|                                                            |                                                                      | 2002 |            | 2001    |   | 2000
|                                                            |                                                                      |      |            |         |   |     
|Net income                                                  |                                                                      | $    | 91,688     |         |   | $    | 56,537     |         |   | $ | 63,874     |         
|                                                            | Extraordinary items                                                  |      |            | 311     |   |      |            |        |   |   |            |         |  
|                                                            | Extraordinary items  Management Company                             |      |            |        |   |      |            |        |   |   |            | 30       |  
|                                                            | Minority interest of common unitholders in
    Operating Partnership |      |            | 11,820  |   |      |            | 8,359   |   |   |            | 10,520   |  
|                                                            | Gain on sale of real estate assets                                   |      |            | (78,738 | ) |      |            | (34,435 | ) |   |            | (38,510  | )
|                                                            | Gain on sale of real estate assets 
    joint ventures              |      |            | (4,955  | ) |      |            | (271    | ) |   |            |         |  
|                                                            | Gain on sale of real estate assets 
    Management Company          |      |            |        |   |      |            |        |   |   |            | (238     | )
|                                                            |                                                                      |      |            |         |   |      |            |         |   |   |            |         
|Adjusted net income                                         |                                                                      |      | 20,126     |         |   |      | 30,190     |         |   |   | 35,676     |         
|Depreciation:                                               |                                                                      |      |            |         |   |      |            |         |   |   |            |         
|                                                            | Real estate assets                                                   |      |            | 39,281  |   |      |            | 38,746  |   |   |            | 36,383   |  
|                                                            | Real estate joint venture                                            |      |            | 1,119   |   |      |            | 1,231   |   |   |            | 1,283    |  
|                                                            |                                                                      |      |            |         |   |      |            |         |   |   |            |         
|Funds from Operations                                       |                                                                      | $    | 60,526     |         |   | $    | 70,167     |         |   | $ | 73,342     |         
|                                                            |                                                                      |      |            |         |   |      |            |         |   |   |            |         
|Recurring capital expenditures(1)                           |                                                                      | $    | (4,530     | )       |   | $    | (4,889     | )       |   | $ | (5,371     | )       
|Non-recurring capital expenditures(2)                       |                                                                      |      | (1,088     | )       |   |      | (4,588     | )       |   |   | (2,965     | )       
|Cash flow provided by (used in):                            |                                                                      |      |            |         |   |      |            |         |   |   |            |         
|                                                            | Operating activities                                                 |      | $          | 58,301  |   |      | $          | 66,546  |   |   | $          | 70,968   |  
|                                                            | Investing activities                                                 |      |            | (5,590  | ) |      |            | 6,177   |   |   |            | (118,197 | )
|                                                            | Financing activities                                                 |      |            | (52,172 | ) |      |            | (74,057 | ) |   |            | 46,247   |  
|Weighted average shares and units
    outstanding  basic   |                                                                      |      | 30,936,881 |         |   |      | 30,795,910 |         |   |   | 30,696,729 |         
|                                                            |                                                                      |      |            |         |   |      |            |         |   |   |            |         
|Weighted average shares and units
    outstanding  diluted |                                                                      |      | 31,107,404 |         |   |      | 31,106,137 |         |   |   | 30,897,346 |         
|                                                            |                                                                      |      |            |         |   |      |            |         |   |   |            |         



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Recurring capital expenditures are expected to be
    funded from operations and consist primarily of exterior
    painting, new appliances, vinyl, blinds, tile, wallpaper and
    carpet. In contrast, non-recurring capital expenditures, such as
    major improvements, new garages and access gates, are expected
    to be funded by financing activities.                                                                                                         
|   
|(2) | Non-recurring capital expenditures for the years
    ended December 31, 2002 and 2001 primarily consisted of
    major renovations and upgrades of apartment homes in the amounts
    of $280,000 in 2002 and $749,000 in 2001; $11,000 in 2002 and
    $157,000 in 2001 for access gates and security fences; $797,000
    in 2002 and $1.7 million in 2001 in other revenue
    enhancement expenditures; and $1.3 million in alternative
    landscaping mulch in 2001.

Item 7A.     Quantitative
and Qualitative Disclosures about Market Risk

See Managements Discussion and
Analysis of Financial Condition and Results of
Operations  Market Risk beginning on
page 35 of this report.

Item 8.     Financial
Statements and Supplementary Data

Financial statements and supplementary data are
contained on the pages indicated on the Index to Financial
Statements on page 55 of this report.

Item 9.     Changes
in and Disagreements with Accountants on Accounting and
Financial Disclosure

Not applicable.

41



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##### 



PART III

Item 10.     Directors
and Executive Officers of Registrant

Incorporated herein by reference to our
definitive proxy statement to be filed with the Securities and
Exchange Commission within 120 days after the end of the
year covered by this Form 10-K with respect to our Annual
Meeting of Stockholders to be held on May 13, 2003.

Item 11.     Executive
Compensation

Incorporated herein by reference to our
definitive proxy statement to be filed with the Securities and
Exchange Commission within 120 days after the end of the
year covered by this Form 10-K with respect to our Annual
Meeting of Stockholders to be held on May 13, 2003.

Item 12.     Security
Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters

Incorporated herein by reference to our
definitive proxy statement to be filed with the Securities and
Exchange Commission within 120 days after the end of the
year covered by this Form 10-K with respect to our Annual
Meeting of Stockholders to be held on May 13, 2003.

Item 13.     Certain
Relationships and Related Transactions

Incorporated herein by reference to our
definitive proxy statement to be filed with the Securities and
Exchange Commission within 120 days after the end of the
year covered by this Form 10-K with respect to our Annual
Meeting of Stockholders to be held on May 13, 2003.

Item 14.     Controls and Procedures

(a) Evaluation of disclosure controls and
procedures.

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

(b) Changes in internal controls.

None

42



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##### 



PART IV

Item 15.     Exhibits, Financial Statement Schedules and Reports on
Form 8-K

(a) Financial Statements and Financial
Statement Schedule

The consolidated financial statements are listed
in the Index to Financial Statements on page 55 of this
Report.

(b) Reports on Form 8-K

On October 3, 2002, we filed a Current
Report on Form 8-K dated September 27, 2002, in
connection with an amendment to the Operating Partnerships
Amended and Restated Credit Agreement.

(c) Exhibits

As noted below, certain of the exhibits required
by Item 601 of Regulation S-K have been filed with
previous reports by the Company and are incorporated by
reference herein.

|            |       |             |  |                                                                                                                                                                                                                                                                                                                                                                                          
|----------- | ----- | ----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |       | Description
|            |       |            
|            | 3.1.1 |             |  | Articles of Incorporation of Summit (Incorporated
    by reference to Exhibit 3.1 to Summits Registration
    Statement on Form S-11, Registration No. 33-90706).                                                                                                                                                                                                                       
|            | 3.1.2 |             |  | Articles Supplementary to the Articles of
    Amendment and Restatement of Summit Properties Inc. designating
    8.95% Series B Cumulative Redeemable Perpetual Preferred Stock
    of Summit dated April 29, 1999 (Incorporated by reference
    to Exhibit 3.1 to Summits Quarterly Report on
    Form 10-Q for the quarterly period ended March 31,
    1999, File No. 001-12792).  
|            | 3.1.3 |             |  | Articles Supplementary to the Articles of
    Amendment and Restatement of Summit Properties Inc. designating
    8.75% Series C Cumulative Redeemable Perpetual Preferred Stock
    of Summit dated September 3, 1999 (Incorporated by
    reference to Exhibit 99.1 to the Operating
    Partnerships Current Report on Form 8-K filed on
    September 17, 1999, File No. 000-22411).
|            | 3.2.1 |             |  | Bylaws of Summit (Incorporated by reference to
    Exhibit 3.2 to Summits Registration Statement on
    Form S-11, Registration No. 33-90706).                                                                                                                                                                                                                                          
|            | 3.2.2 |             |  | First Amendment to Bylaws of Summit (Incorporated
    by reference to Exhibit 3.2 to Summits Quarterly
    Report on Form 10-Q for the quarterly period ended
    March 31, 2001, File No. 001-12792).                                                                                                                                                                                  
|            | 3.2.3 |             |  | Second Amendment to Bylaws of Summit
    (Incorporated by reference to Exhibit 3.3 to Summits
    Quarterly Report on Form 10-Q for the quarterly period
    ended March 31, 2001, File No. 001-12792).                                                                                                                                                                                 
|            | 4.1.1 |             |  | Indenture dated as of August 7, 1997 between
    the Operating Partnership and First Union National Bank,
    relating to the Operating Partnerships Senior Debt
    Securities (Incorporated by reference to Exhibit 4.1 to the
    Operating Partnerships Current Report on Form 8-K
    filed on August 11, 1997, File No. 000-22411).                                              
|            | 4.1.2 |             |  | Supplemental Indenture No. 1, dated as of
    August 12, 1997, between the Operating Partnership and
    First Union National Bank (Incorporated by reference to
    Exhibit 4.1 to the Operating Partnerships Amended
    Current Report on Form 8-K/ A-1 filed on August 18,
    1997, File No. 000-22411).                                                                           
|            | 4.1.3 |             |  | Supplemental Indenture No. 2, dated as of
    December 17, 1997, between the Operating Partnership and
    First Union National Bank (Incorporated by reference to
    Exhibit 4.1 to the Operating Partnerships Amended
    Current Report on Form 8-K/ A-1 filed on December 17,
    1997, File No. 000-22411).                                                                       

43



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##### 



|            |       |             |  |                                                                                                                                                                                                                                                                                                                                                                                                  
|----------- | ----- | ----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |       | Description
|            |       |            
|            | 4.1.4 |             |  | Supplemental Indenture No. 3, dated as of
    May 29, 1998, between the Operating Partnership and First
    Union National Bank (Incorporated by reference to
    Exhibit 4.2 to the Operating Partnerships Current
    Report on Form 8-K filed on June 2, 1998, File
    No. 000-22411).                                                                                                      
|            | 4.1.5 |             |  | Supplemental Indenture No. 4, dated as of
    April 20, 2000, between the Operating Partnership and First
    Union National Bank, including a form of Floating Rate
    Medium-Term Note and a form of Fixed Rate Medium-Term Note
    (Incorporated by reference to Exhibit 4.2 to the Operating
    Partnerships Current Report on Form 8-K filed on
    April 28, 2000, File No. 000-22411).
|            | 4.2.1 |             |  | The Operating Partnerships 6.95% Note due
    2004, dated August 12, 1997 (Incorporated by reference to
    Exhibit 4.3 to the Operating Partnerships Amended
    Current Report on Form 8-K/ A-1 filed on August 18,
    1997, File No. 000-22411).                                                                                                                                           
|            | 4.2.2 |             |  | The Operating Partnerships 7.20% Note due
    2007, dated August 12, 1997 (Incorporated by reference to
    Exhibit 4.4 to the Operating Partnerships Amended
    Current Report on Form 8-K/ A-1 filed on August 18,
    1997, File No. 000-22411).                                                                                                                                           
|            | 4.2.3 |             |  | The Operating Partnerships 6.63% Note due
    2003, dated December 17, 1997 (Incorporated by reference to
    Exhibit 4.2 to the Operating Partnerships Amended
    Current Report on Form 8-K/ A-1 filed on December 17,
    1997, File No. 000-22411).                                                                                                                                       
|            | 4.2.4 |             |  | 7.59% Medium-Term Note due 2009 in the principal
    amount of $25,000,000 issued by the Operating Partnership on
    March 18, 1999 (Incorporated by reference to
    Exhibit 4.1 to the Operating Partnerships Quarterly
    Report on Form 10-Q for the quarterly period ended
    March 31, 1999, File No. 000-22411).                                                                      
|            | 4.2.5 |             |  | 8.50% Medium-Term Note due 2010 in the principal
    amount of $10,000,000 issued by the Operating Partnership on
    July 19, 2000 (Incorporated by reference to
    Exhibit 10.2 to Summits Quarterly Report on
    Form 10-Q for the quarterly period ended September 30,
    2000, File No. 001-12792).                                                                                     
|            | 4.2.6 |             |  | 7.87% Medium-Term Note due 2003 in the principal
    amount of $17,000,000 issued by the Operating Partnership on
    October 20, 2000 (Incorporated by reference to
    Exhibit 4.2.8 to Summits Annual Report on
    Form 10-K for the fiscal year ended December 31, 2000,
    File No. 001-12792).                                                                                          
|            | 4.2.7 |             |  | 8.037% Medium-Term Note due 2005 in the principal
    amount of $25,000,000 issued by the Operating Partnership on
    November 17, 2000 (Incorporated by reference to
    Exhibit 4.2.9 to Summits Annual Report on
    Form 10-K for the fiscal year ended December 31, 2000,
    File No. 001-12792).                                                                                        
|            | 4.2.8 |             |  | 7.04% Medium-Term Note due 2006 in the principal
    amount of $25,000,000 issued by the Operating Partnership on
    May 9, 2001 (Incorporated by reference to Exhibit 10.2
    to Summits Quarterly Report on Form 10-Q for the
    quarterly period ended June 30, 2001, File
    No. 001-12792).                                                                                            
|            | 4.2.9 |             |  | 7.703% Medium-Term Note due 2011 in the principal
    amount of $35,000,000 issued by the Operating Partnership on
    May 9, 2001 (Incorporated by reference to Exhibit 10.3
    to Summits Quarterly Report on Form 10-Q for the
    quarterly period ended June 30, 2001, File
    No. 001-12792).                                                                                           
|            | 4.3   |             |  | Shareholder Rights Agreement, dated as of
    December 14, 1998, between Summit and First Union National
    Bank, as Rights Agent (Incorporated by reference to
    Exhibit 4.1 to Summits Registration Statement on
    Form 8-A, filed on December 16, 1998).                                                                                                                                
|            | 10.1  |             |  | Amended and Restated Agreement of Limited
    Partnership of the Operating Partnership, dated as of
    May 23, 2000 (Incorporated by reference to Exhibit 3.1
    to the Operating Partnerships Current Report on
    Form 8-K filed on May 30, 2000, File No. 000-22411).                                                                                                                     

44



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##### 



|            |        |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|----------- | ------ | ----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |        | Description
|            |        |            
|            | 10.2   |             |  | Assignment and Assumption Agreement, dated as of
    March 27, 2002, by and between Summit and the Operating
    Partnership (Incorporated by reference to Exhibit 3.2 to
    the Operating Partnerships Annual Report on Form 10-K
    for the fiscal year ended December 31, 2001, File
    No. 000-22411).                                                                                                                                                                       
|            | 10.3   |             |  | Articles of Incorporation of Summit Management
    Company (Incorporated by reference to Exhibit 10.2 to
    Summits Annual Report on Form 10-K for the fiscal
    year ended December 31, 1999, File No. 001-12792).                                                                                                                                                                                                                                                               
|            | 10.4   |             |  | Bylaws of Summit Management Company (Incorporated
    by reference to Exhibit 10.3 to Summits Annual Report
    on Form 10-K for the fiscal year ended December 31,
    1999, File No. 001-12792).                                                                                                                                                                                                                                                                                  
|            | 10.5   |             |  | Summits 1994 Stock Option and Incentive
    Plan, as amended and restated (Incorporated by reference to
    Exhibit 4.5 to Summits Registration Statement on
    Form S-8, Registration No. 333-79897).                                                                                                                                                                                                                                                                            
|            | 10.6.1 |             |  | Summits 1996 Non-Qualified Employee Stock
    Purchase Plan (Incorporated by reference to Exhibit 10.5 to
    Summits Registration Statement on Form S-8,
    Registration No. 333-00078).                                                                                                                                                                                                                                                                                         
|            | 10.6.2 |             |  | First Amendment to Summits 1996
    Non-Qualified Employee Stock Purchase Plan (Incorporated by
    reference to Exhibit 10.5.2 to Summits Annual Report
    on Form 10-K for the fiscal year ended December 31,
    1999, File No. 001-12792).                                                                                                                                                                                                                                    
|            | 10.6.3 |             |  | Second Amendment to Summits 1996
    Non-Qualified Employee Stock Purchase Plan (Incorporated by
    reference to Exhibit 10.5.3 to Summits Annual Report
    on Form 10-K for the fiscal year ended December 31,
    1999, File No. 001-12792).                                                                                                                                                                                                                                   
|            | 10.6.4 |             |  | Third Amendment to Summits 1996
    Non-Qualified Employee Stock Purchase Plan (Incorporated by
    reference to Exhibit 10.5.4 to Summits Annual Report
    on Form 10-K for the fiscal year ended December 31,
    1999, File No. 001-12792).                                                                                                                                                                                                                                    
|            | 10.7   |             |  | Indemnification Agreements, dated as of various
    dates, by and among Summit, the Operating Partnership, and each
    director and each of the following executive officers of Summit:
    Steven R. LeBlanc, Michael L. Schwarz, Randall M.
    Ell, Gregg D. Adzema, Douglas E. Brout 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).
|            | 10.8.1 |             |  | Employment Agreement dated February 15,
    1999, by and among William F. Paulsen, Summit and Summit
    Management Company, as restated on April 3, 2001
    (Incorporated by reference to Exhibit 10.1 to Summits
    Quarterly Report on Form 10-Q for the quarterly period
    ended June 30, 2001, File No. 000-12792).                                                                                                                                                        
|            | 10.8.2 |             |  | Employment Agreement, dated February 15,
    1999, by and among William B. McGuire, Jr. Summit and
    Summit Management Company, as restated on August 24, 2001
    (Incorporated by reference to Exhibit 10.1 to Summits
    Quarterly Report on Form 10-Q for the quarterly period
    ended September 30, 2001, File No. 001-12792).                                                                                                                                            
|            | 10.8.3 |             |  | Employment Agreement between Summit and Michael
    L. Schwarz (Incorporated by reference to Exhibit 10.7.10 to
    Summits Annual Report on Form 10-K for the fiscal
    year ended December 31, 1997, File No. 001-12792).                                                                                                                                                                                                                                                        
|            | 10.8.4 |             |  | Employment Agreement between Summit and Steven R.
    LeBlanc (Incorporated by reference to Exhibit 10.7.4 to
    Summits Annual Report on Form 10-K for the fiscal
    year ended December 31, 2000, File No. 001-12792).                                                                                                                                                                                                                                                          
|            | 10.8.5 |             |  | Employment Agreement between Summit Management
    Company and Randall M. Ell (Incorporated by reference to
    Exhibit 10.2 to Summits Quarterly Report on
    Form 10-Q for the quarterly period ended June 30,
    2000, File No. 001-12792).                                                                                                                                                                                                                                    

45



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|            |         |             |  |                                                                                                                                                                                                                                                                                               
|----------- | ------- | ----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |         | Description
|            |         |            
|            | 10.8.6  |             |  | Employment Agreement between Summit Management
    Company and Gregg D. Adzema (Incorporated by reference to
    Exhibit 10.7.7 to Summits Annual Report on
    Form 10-K for the fiscal year ended December 31, 2001,
    File No. 001-12792).                                              
|            | 10.8.7  |             |  | Employment Agreement between Summit Management
    Company and Douglas E. Brout (Incorporated by reference to
    Exhibit 10.7.8 to Summits Annual Report on
    Form 10-K for the fiscal year ended December 31, 2001,
    File No. 001-12792).                                             
|            | 10.8.8  |             |  | Addendum to Employment Agreement between Summit
    Management Company and Douglas E. Brout (filed herewith).                                                                                                                                                                                 
|            | 10.8.9  |             |  | Employment Agreement, dated February 24,
    1994, by and among Keith L. Downey, Summit 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).
|            | 10.9.1  |             |  | Noncompetition Agreement between Summit and
    William F. Paulsen (Incorporated by reference to
    Exhibit 10.5 to Summits Quarterly Report on
    Form 10-Q for the quarterly period ended March 31,
    2000, File No. 001-12792).                                                       
|            | 10.9.2  |             |  | Noncompetition Agreement between Summit and
    William B. McGuire, Jr. (Incorporated by reference to
    Exhibit 10.7 to Summits Quarterly Report on
    Form 10-Q for the quarterly period ended March 31,
    2000, File No. 001-12792).                                                  
|            | 10.9.3  |             |  | Noncompetition Agreement between Summit and
    Michael L. Schwarz (Incorporated by reference to
    Exhibit 10.8.10 to Summits Annual Report on
    Form 10-K for the fiscal year ended December 31, 1997,
    File No. 001-12792).                                                         
|            | 10.9.4  |             |  | Noncompetition Agreement between Summit and
    Steven R. LeBlanc (Incorporated by reference to
    Exhibit 10.8.11 to Summits Annual Report on
    Form 10-K for the fiscal year ended December 31, 1998,
    File No. 001-12792).                                                          
|            | 10.9.5  |             |  | Noncompetition Agreement by and among Summit,
    Summit Management Company and Randall M. Ell (Incorporated by
    reference to Exhibit 10.4 to Summits Quarterly Report
    on Form 10-Q for the quarterly period ended June 30,
    2000, File No. 001-12792).                            
|            | 10.10.1 |             |  | Executive Severance Agreement between Summit and
    Michael L. Schwarz (Incorporated by reference to
    Exhibit 10.9.3 to Summits Annual Report on
    Form 10-K for the fiscal year ended December 31, 1997,
    File No. 001-12792).                                                     
|            | 10.10.2 |             |  | Executive Severance Agreement between Summit and
    Steven R. LeBlanc (Incorporated by reference to
    Exhibit 10.9.6 to Summits Annual Report on
    Form 10-K for the fiscal year ended December 31, 1998,
    File No. 001-12792).                                                      
|            | 10.10.3 |             |  | Executive Severance Agreement between Summit and
    Randall M. Ell (Incorporated by reference to Exhibit 10.3
    to Summits Quarterly Report on Form 10-Q for the
    quarterly period ended June 30, 2000, File
    No. 001-12792).                                                       
|            | 10.10.4 |             |  | Amended Executive Severance Agreement between
    Summit and Gregg D. Adzema (Incorporated by reference to
    Exhibit 10.9.4 to Summits Annual Report on
    Form 10-K for the fiscal year ended December 31, 2001,
    File No. 001-12792).                                                
|            | 10.10.5 |             |  | Amended Executive Severance Agreement between
    Summit and Douglas E. Brout (Incorporated by reference to
    Exhibit 10.9.5 to Summits Annual Report on
    Form 10-K for the fiscal year ended December 31, 2001,
    File No. 001-12792).                                               
|            | 10.10.6 |             |  | 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).                

46



---



##### 



|            |          |             |  |                                                                                                                                                                                                                                                                                                                                                                                   
|----------- | -------- | ----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |          | Description
|            |          |            
|            | 10.11.1  |             |  | Form of Promissory Note and Security Agreement
    between Summit and the employees named in the Schedule thereto
    (Incorporated by reference to Exhibit 10.14.3 to
    Summits Annual Report on Form 10-K for the fiscal
    year ended December 31, 1997, File No. 001-12792).                                                                                              
|            | 10.11.2  |             |  | Promissory Note and Security Agreement, dated
    January 31, 2000, evidencing a loan of $499,814 to William
    B. McGuire, Jr. for the purpose of purchasing shares of
    common stock of Summit (Incorporated by reference to
    Exhibit 10.1 to Summits Quarterly Report on
    Form 10-Q for the quarterly period ended March 31,
    2000, File No. 001-12792).          
|            | 10.11.3  |             |  | Promissory Note and Security Agreement, dated
    January 31, 2000, evidencing a loan of $999,995 to William
    F. Paulsen for the purpose of purchasing shares of common stock
    of Summit (Incorporated by reference to Exhibit 10.2 to
    Summits Quarterly Report on Form 10-Q for the
    quarterly period ended March 31, 2000, File
    No. 001-12792).               
|            | 10.11.4  |             |  | Promissory Note and Security Agreement, dated
    August 5, 1998, evidencing a loan of $960,578 to Steven R.
    LeBlanc for the purpose of purchasing shares of common stock of
    Summit (Incorporated by reference to Exhibit 10.12.4 to
    Summits Annual Report on Form 10-K for the fiscal
    year ended December 31, 1998, File No. 001-12792).                        
|            | 10.11.5  |             |  | Promissory Note and Security Agreement, dated
    February 2, 1999, evidencing a loan of $1,000,487 to Steven
    R. LeBlanc for the purpose of purchasing shares of common stock
    of Summit (Incorporated by reference to Exhibit 10.12.10 to
    Summits Annual Report on Form 10-K for the fiscal
    year ended December 31, 1998, File No. 001-12792).                   
|            | 10.11.6  |             |  | Promissory Note and Security Agreement, dated
    January 31, 2000, evidencing a loan of $999,995 to Steven
    R. LeBlanc for the purpose of purchasing shares of common stock
    of Summit (Incorporated by reference to Exhibit 10.3 to
    Summits Quarterly Report on Form 10-Q for the
    quarterly period ended March 31, 2000, File
    No. 001-12792).                
|            | 10.11.7  |             |  | Promissory Note and Security Agreement, dated
    April 30, 2002, evidencing a loan of $2,649,940 to Steven
    R. LeBlanc for the purpose of purchasing shares of common stock
    of Summit (Incorporated by reference to Exhibit 10.3 to
    Summits Quarterly Report on Form 10-Q for the
    quarterly period ended June 30, 2002, File
    No. 001-12792).                 
|            | 10.11.8  |             |  | Promissory Note and Security Agreement, dated
    January 28, 1998, evidencing a loan of $42,258 to Michael
    L. Schwarz for the purpose of paying tax liability associated
    with a restricted stock award (Incorporated by reference to
    Exhibit 10.14.1 to Summits Annual Report on
    Form 10-K for the fiscal year ended December 31, 1997,
    File No. 001-12792).
|            | 10.11.9  |             |  | Promissory Note and Security Agreement, dated
    January 30, 1998, evidencing a loan of $361,785 to Michael
    L. Schwarz for the purpose of purchasing shares of common stock
    of Summit (Incorporated by reference to Exhibit 10.3 to
    Summits Quarterly Report on Form 10-Q for the
    quarterly period ended March 31, 1998, File
    No. 001-12792).               
|            | 10.11.10 |             |  | Promissory Notes and Security Agreements, dated
    various dates from July 29, 1998 to May 1, 2000,
    evidencing loans in the aggregate amount of $131,013 to Michael
    L. Schwarz (Incorporated by reference to Exhibit 10.11.9 to
    Summits Annual Report on Form 10-K for the fiscal
    year ended December 31, 2000, File No. 001-12792).                            
|            | 10.11.11 |             |  | Promissory Note and Security Agreement, dated
    February 2, 1999, evidencing a loan of $450,004 to Michael
    L. Schwarz for the purpose of purchasing shares of common stock
    of Summit (Incorporated by reference to Exhibit 10.12.11 to
    Summits Annual Report on Form 10-K for the fiscal
    year ended December 31, 1998, File No. 001-12792).                    
|            | 10.11.12 |             |  | Promissory Note and Security Agreement, dated
    January 31, 2000, evidencing a loan of $499,969 to Michael
    L. Schwarz for the purpose of purchasing shares of common stock
    of Summit (Incorporated by reference to Exhibit 10.4 to
    Summits Quarterly Report on Form 10-Q for the
    quarterly period ended March 31, 2000, File
    No. 001-12792).               

47



---



##### 



|            |          |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                 
|----------- | -------- | ----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |          | Description
|            |          |            
|            | 10.11.13 |             |  | Promissory Note and Security Agreement, dated
    August 1, 2000, evidencing a loan of $99,973 to Michael L.
    Schwarz for the purpose of purchasing shares of common stock of
    Summit (Incorporated by reference to Exhibit 10.3 to
    Summits Quarterly Report on Form 10-Q for the
    quarterly period ended September 30, 2000, File
    No. 001-12792).                                                            
|            | 10.11.14 |             |  | Promissory Note and Security Agreement, dated
    November 7, 2000, evidencing a loan of $91,843 to Michael
    L. Schwarz for the purpose of purchasing shares of common stock
    of Summit (Incorporated by reference to Exhibit 10.11.13 to
    Summits Annual Report on Form 10-K for the fiscal
    year ended December 31, 2000, File No. 001-12792).                                                                   
|            | 10.11.15 |             |  | Promissory Note and Security Agreement, dated
    April 30, 2002, evidencing a loan of $1,299,994 to Michael
    L. Schwarz for the purpose of purchasing shares of common stock
    of Summit (Incorporated by reference to Exhibit 10.1 to
    Summits Quarterly Report on Form 10-Q for the
    quarterly period ended June 30, 2002, File
    No. 001-12792).                                                              
|            | 10.11.16 |             |  | Promissory Notes and Security Agreements, dated
    various dates from April 1, 1998 through May 17, 2000,
    evidencing loans in the aggregate amount of $358,399 to Randall
    M. Ell for the purpose of purchasing shares of common stock of
    Summit (Incorporated by reference to Exhibit 10.6 to
    Summits Quarterly Report on Form 10-Q for the
    quarterly period ended June 30, 2000, File
    No. 001-12792).
|            | 10.11.17 |             |  | Promissory Note and Security Agreement, dated
    November 7, 2000, evidencing a loan of $499,160 to Randall
    M. Ell for the purpose of purchasing shares of common stock of
    Summit (Incorporated by reference to Exhibit 10.11.16 to
    Summits Annual Report on Form 10-K for the fiscal
    year ended December 31, 2000, File No. 001-12792).                                                                      
|            | 10.11.18 |             |  | Promissory Note and Security Agreement, dated
    February 6, 2001, evidencing a loan of $107,032 to Randall
    M. Ell for the purpose of purchasing shares of common stock of
    Summit (Incorporated by reference to Exhibit 10.1 to
    Summits Quarterly Report on Form 10-Q for the
    quarterly period ended March 31, 2001, File
    No. 001-12792).                                                                 
|            | 10.11.19 |             |  | Promissory Note and Security Agreement, dated
    April 30, 2002, evidencing a loan of $699,995 to Randall M.
    Ell for the purpose of purchasing shares of common stock of
    Summit (Incorporated by reference to Exhibit 10.5 to
    Summits Quarterly Report on Form 10-Q for the
    quarterly period ended June 30, 2002, File
    No. 001-12792).                                                                    
|            | 10.11.20 |             |  | Promissory Notes and Security Agreements, dated
    various dates from July 1998 to February 2001, evidencing loans
    in the aggregate amount of $476,004 to Gregg D. Adzema for the
    purpose of purchasing shares of common stock of Summit
    (Incorporated by reference to Exhibit 10.11.18 to
    Summits Annual Report on Form 10-K for the fiscal
    year ended December 31, 2001, File No. 001-12792).           
|            | 10.11.21 |             |  | Promissory Note and Security Agreement, dated
    April 30, 2002, evidencing a loan of $699,995 to Gregg D.
    Adzema for the purpose of purchasing shares of common stock of
    Summit (Incorporated by reference to Exhibit 10.2 to
    Summits Quarterly Report on Form 10-Q for the
    quarterly period ended June 30, 2002, File
    No. 001-12792).                                                                   
|            | 10.11.22 |             |  | Promissory Notes and Security Agreements, dated
    various dates from July 1999 to February 2001, evidencing loans
    in the aggregate amount of $965,043 to Douglas E. Brout for the
    purpose of purchasing shares of common stock of Summit
    (Incorporated by reference to Exhibit 10.11.19 to
    Summits Annual Report on Form 10-K for the fiscal
    year ended December 31, 2001, File No. 001-12792).          
|            | 10.11.23 |             |  | Promissory Note and Security Agreement, dated
    June 12, 2002, evidencing a loan of $699,995 to Douglas E.
    Brout for the purpose of purchasing shares of common stock of
    Summit (Incorporated by reference to Exhibit 10.6 to
    Summits Quarterly Report on Form 10-Q for the
    quarterly period ended June 30, 2002, File
    No. 001-12792).                                                                   

48



---



##### 



|            |          |             |  |                                                                                                                                                                                                                                                                                                                                                                                                        
|----------- | -------- | ----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |          | Description
|            |          |            
|            | 10.11.24 |             |  | 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).                                       
|            | 10.11.25 |             |  | Promissory Note and Security Agreement, dated
    April 30, 2002, evidencing a loan in the amount of $699,995
    to Keith L. Downey for the purpose of purchasing shares of
    common stock of Summit (Incorporated by reference to
    Exhibit 10.4 to Summits Quarterly Report on
    Form 10-Q for the quarterly period ended June 30,
    2002, File No. 001-12792).                            
|            | 10.11.26 |             |  | Amendment, dated December 29, 2000, to each
    of the Promissory Notes and Security Agreements dated prior to
    January 4, 2000 executed by William B. McGuire, Jr.,
    William F. Paulsen and the executive officers of Summit
    (Incorporated by reference to Exhibit 10.11.17 to
    Summits Annual Report on Form 10-K for the fiscal
    year ended December 31, 2000, File No. 001-12792).
|            | 10.11.27 |             |  | Second Amendment to Promissory Note and Security
    Agreement, dated May 16, 2002, by and between Summit and
    Steven R. LeBlanc related to the Promissory Note and Security
    Agreement dated August 5, 1998 (Incorporated by reference
    to Exhibit 10.13 to Summits Quarterly Report on
    Form 10-Q for the quarterly period ended June 30,
    2002, File No. 001-12792).                
|            | 10.11.28 |             |  | Second Amendment to Promissory Note and Security
    Agreement, dated May 16, 2002, by and between Summit and
    Steven R. LeBlanc related to the Promissory Note and Security
    Agreement dated February 2, 1999 (Incorporated by reference
    to Exhibit 10.14 to Summits Quarterly Report on
    Form 10-Q for the quarterly period ended June 30,
    2002, File No. 001-12792).              
|            | 10.11.29 |             |  | Second Amendment to Promissory Note and Security
    Agreement, dated May 16, 2002, by and between Summit and
    Michael L. Schwarz related to the Promissory Note and Security
    Agreement dated August 6, 1998 (Incorporated by reference
    to Exhibit 10.8 to Summits Quarterly Report on
    Form 10-Q for the quarterly period ended June 30,
    2002, File No. 001-12792).                
|            | 10.11.30 |             |  | Second Amendment to Promissory Note and Security
    Agreement, dated May 16, 2002, by and between Summit and
    Michael L. Schwarz related to the Promissory Note and Security
    Agreement dated February 2, 1999 (Incorporated by reference
    to Exhibit 10.9 to Summits Quarterly Report on
    Form 10-Q for the quarterly period ended June 30,
    2002, File No. 001-12792).              
|            | 10.11.31 |             |  | Second Amendment to Promissory Note and Security
    Agreement, dated May 16, 2002, by and between Summit and
    Michael L. Schwarz related to the Promissory Note and Security
    Agreement dated January 28, 1998 (Incorporated by reference
    to Exhibit 10.10 to Summits Quarterly Report on
    Form 10-Q for the quarterly period ended June 30,
    2002, File No. 001-12792).             
|            | 10.11.32 |             |  | Second Amendment to Promissory Note and Security
    Agreement, dated May 16, 2002, by and between Summit and
    Michael L. Schwarz related to the Promissory Note and Security
    Agreement dated January 30, 1998 (Incorporated by reference
    to Exhibit 10.11 to Summits Quarterly Report on
    Form 10-Q for the quarterly period ended June 30,
    2002, File No. 001-12792).             
|            | 10.11.33 |             |  | Second Amendment to Promissory Note and Security
    Agreement, dated May 16, 2002, by and between Summit and
    Michael L. Schwarz related to the Promissory Note and Security
    Agreement dated July 29, 1998 (Incorporated by reference to
    Exhibit 10.12 to Summits Quarterly Report on
    Form 10-Q for the quarterly period ended June 30,
    2002, File No. 001-12792).                

49



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##### 



|            |         |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|----------- | ------- | ----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |         | Description
|            |         |            
|            | 10.12.1 |             |  | Registration Rights Agreement, dated
    October 12, 1994, between Summit and
    PK Partners, L.P. (Incorporated by reference to
    Exhibit 10.15.1 to Summits Annual Report on
    Form 10-K for the fiscal year ended December 31, 1997,
    File No. 001-12792).                                                                                                                                                                                                                                    
|            | 10.12.2 |             |  | Registration Rights Agreement, dated
    February 8, 1994, by and among Summit and the Continuing
    Investors named therein (Incorporated by reference to
    Exhibit 10.13.2 to Summits Annual Report on
    Form 10-K for the fiscal year ended December 31, 1999,
    File No. 001-12792).                                                                                                                                                                                                          
|            | 10.12.3 |             |  | Registration Rights Agreement, dated
    December 11, 1995, between Summit and Bissell
    Ballantyne, LLC (Incorporated by reference to
    Exhibit 10.2 to Summits Registration Statement on
    Form S-3, Registration No. 333-24669).                                                                                                                                                                                                                                                                
|            | 10.12.4 |             |  | Registration Rights Agreement, dated
    January 10, 1996, by and among Summit, Joseph H. Call and
    Gary S. Cangelosi (Incorporated by reference to
    Exhibit 10.2 to Summits Registration Statement on
    Form S-3, Registration No. 333-24669).                                                                                                                                                                                                                                                  
|            | 10.12.5 |             |  | Registration Rights Agreement, dated
    February 20, 1997, by and among Summit, The Northwestern
    Mutual Life Insurance Company, J. Ronald Terwilliger, J. Ronald
    Terwilliger Grantor Trust, Crow Residential Realty
    Investors, L.P., Douglas A. Hoeksema, Randy J. Pace,
    Clifford A. Breining, TCF Residential Partnership, Ltd. and
    Trammell S. Crow (Incorporated by reference to Exhibit 10.2
    to Summits Registration Statement on Form S-3,
    Registration No. 333-24669).
|            | 10.12.6 |             |  | Registration Rights Agreement, dated May 16,
    1995, by and among Summit and the individuals named therein
    executed in connection with the Crosland Acquisition
    (Incorporated by reference to Exhibit 10.15.6 to
    Summits Annual Report on Form 10-K for the fiscal
    year ended December 31, 1997, File No. 001-12792).                                                                                                                                                                  
|            | 10.12.7 |             |  | Registration Rights and Lock-up Agreement, dated
    October 31, 1998, by and among Summit, the Operating
    Partnership, and the holders named therein executed in
    connection with the Ewing Acquisition (Incorporated by reference
    to Exhibit 99.1 to Summits Registration Statement on
    Form S-3, Registration No. 333-93923).                                                                                                                                                            
|            | 10.12.8 |             |  | Registration Rights and Lock-up Agreement, dated
    as of March 6, 1998, by and between Summit and
    St. Clair Associates, L.P. (Incorporated by reference
    to Exhibit 99.1 to Summits Registration Statement on
    Form S-3, Registration No. 333-75704).                                                                                                                                                                                                                                        
|            | 10.12.9 |             |  | Registration Rights and Lock-up Agreement, dated
    as of August 1, 2000, by and among Summit, Worthing
    Investors, LLC and Worthing Shiloh Investors, LLC
    (Incorporated by reference to Exhibit 99.2 to Summits
    Registration Statement on Form S-3, Registration
    No. 333-75704).                                                                                                                                                                                                        
|            | 10.13.1 |             |  | Amended and Restated Credit Agreement, dated as
    of September 26, 2000, by and among the Operating
    Partnership, Summit, the Banks listed therein, and First Union
    National Bank, as Administrative Agent (Incorporated by
    reference to Exhibit 10.1 to Summits Quarterly Report
    on Form 10-Q for the quarterly period ended
    September 30, 2000, File No. 001-12792).                                                                                                              
|            | 10.13.2 |             |  | Amendment No. 1 to Amended and Restated
    Credit Agreement, dated as of July 6, 2001, by and among
    the Operating Partnership, Summit and the lenders named therein
    (Incorporated by reference to Exhibit 10.4 to Summits
    Quarterly Report on Form 10-Q for the quarterly period
    ended June 30, 2001, File No. 001-12792).                                                                                                                                                              
|            | 10.13.3 |             |  | Amendment No. 2 to Amended and Restated
    Credit Agreement, dated as of September 27, 2002, by and
    among the Operating Partnership, Summit and the lenders named
    therein (Incorporated by reference to Exhibit 10.3 to the
    Operating Partnerships Current Report on Form 8-K
    filed October 3, 2002, File No. 000-22411).                                                                                                                                                               

50



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##### 



|            |         |             |  |                                                                                                                                                                                                                                                                                                                             
|----------- | ------- | ----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |         | Description
|            |         |            
|            | 10.14.1 |             |  | Distribution Agreement dated as of April 20,
    2000, by and among the Operating Partnership, Summit and the
    Agents listed therein (Incorporated by reference to the
    Operating Partnerships Current Report on Form 8-K
    filed on April 28, 2000, File No. 000-22411).                                          
|            | 10.14.2 |             |  | First Amendment to Distribution Agreement, dated
    as of May 8, 2001, by and among the Operating Partnership,
    Summit and the agents named therein (Incorporated by reference
    to Exhibit 10.2 to Summits Quarterly Report on
    Form 10-Q for the quarterly period ended March 31,
    2001, File No. 001-12792).
|            | 10.15   |             |  | Swap Transaction, dated June 17, 2002,
    between the Operating Partnership and Bank of America, N.A.
    (Incorporated by reference to Exhibit 10.7 to Summits
    Quarterly Report on Form 10-Q for the quarterly period
    ended June 30, 2002, File No. 001-12792).                                                  
|            | 12.1    |             |  | Statement Regarding Calculation of Ratios of
    Earnings to Fixed Charges for the Years Ended December 31,
    2002, 2001, 2000, 1999 and 1998 (filed herewith).                                                                                                                                                           
|            | 21.1    |             |  | Subsidiaries of Summit (filed herewith).                                                                                                                                                                                                                                                                                    
|            | 23.1    |             |  | Consent of Deloitte & Touche LLP (filed
    herewith).                                                                                                                                                                                                                                                                      

51



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##### 



SIGNATURES

Pursuant to the requirements of Section 13
or 15(d) of the Securities Exchange Act of 1934, Summit
Properties Inc. has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, in
Charlotte, North Carolina on March 14, 2003.



| |                       
| | ----------------------
| | SUMMIT PROPERTIES INC.
|
| | /s/ STEVEN R. LEBLANC 
| |                       

| |                                      
| | -------------------------------------
| | Steven R. LeBlanc                    
| | President and Chief Executive Officer

Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed by the
following persons on behalf of the registrant and in the
capacities and on the dates indicated.

|                                                   |  |                                                                                                                                 |  |      |                | 
|-------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------- |  | ---- | -------------- | 
|Signatures                                         |  | Title                                                                                                                           |  | Date
|                                                   |  |                                                                                                                                 |  |     
|/s/ WILLIAM B. MCGUIRE, JR.William B. McGuire, Jr. |  | Co-Chairman of the Board of Directors                                                                                           |  |      | March 14, 2003 | 
|/s/ WILLIAM F. PAULSENWilliam F. Paulsen           |  | Co-Chairman of the Board of Directors                                                                                           |  |      | March 14, 2003 | 
|                                                  
|/s/ STEVEN R. LEBLANCSteven R. LeBlanc             |  | President, Chief Executive
    Officer and Director
    (Principal Executive Officer)                                           |  |      | March 14, 2003 | 
|                                                  
|/s/ GREGG D. ADZEMAGregg D. Adzema                 |  | Executive Vice President and
    Chief Financial Officer
    (Principal Financial Officer and
    Principal Accounting Officer) |  |      | March 14, 2003 | 
|/s/ HENRY H. FISHKINDHenry H. Fishkind             |  | Director                                                                                                                        |  |      | March 14, 2003 | 
|/s/ JAMES H. HANCE, JRJames H. Hance, Jr.          |  | Director                                                                                                                        |  |      | March 14, 2003 | 
|/s/ NELSON SCHWAB, IIINelson Schwab, III           |  | Director                                                                                                                        |  |      | March 14, 2003 | 
|/s/ JAMES M. ALLWINJames M. Allwin                 |  | Director                                                                                                                        |  |      | March 14, 2003 | 
|/s/ WENDY RICHESWendy Riches                       |  | Director                                                                                                                        |  |      | March 14, 2003 | 

52



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##### 



CERTIFICATIONS

I, Steven R. LeBlanc, President and Chief
Executive Officer of Summit Properties Inc., certify that:



| |    |                                                                                                                                                                                                                                                                                                                                             
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. | I have reviewed this annual report on
    Form 10-K of Summit Properties Inc.;                                                                                                                                                                                                                                                              
|
| | 2. | Based on my knowledge, this annual report does
    not contain any untrue statement of a material fact or omit to
    state a material fact necessary to make the statements made, in
    light of the circumstances under which such statements were
    made, not misleading with respect to the period covered by this
    annual report;
|
| | 3. | Based on my knowledge, the financial statements,
    and other financial information included in this annual report,
    fairly present in all material respects the financial condition,
    results of operations and cash flows of the registrant as of,
    and for, the periods presented in this annual report;                       
|
| | 4. | The registrants other certifying officers
    and I are responsible for establishing and maintaining
    disclosure controls and procedures (as defined in Exchange Act
    Rules 13a-14 and 15d-14) for the registrant and have:                                                                                                          



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



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



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



| |    |                                                                                                                                                                                                                                                                                                                                                                                                        
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 6. | The registrants other certifying officers
    and I have indicated in this annual report whether there were
    significant changes in internal controls or in other factors
    that could significantly affect internal controls subsequent to
    the date of our most recent evaluation, including any corrective
    actions with regard to significant deficiencies and material
    weaknesses.



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

Date: March 14, 2003

53



---



##### 



CERTIFICATIONS

I, Gregg D. Adzema, Executive Vice President and
Chief Financial Officer of Summit Properties Inc., certify that:



| |    |                                                                                                                                                                                                                                                                                                                                             
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. | I have reviewed this annual report on
    Form 10-K of Summit Properties Inc.;                                                                                                                                                                                                                                                              
|
| | 2. | Based on my knowledge, this annual report does
    not contain any untrue statement of a material fact or omit to
    state a material fact necessary to make the statements made, in
    light of the circumstances under which such statements were
    made, not misleading with respect to the period covered by this
    annual report;
|
| | 3. | Based on my knowledge, the financial statements,
    and other financial information included in this annual report,
    fairly present in all material respects the financial condition,
    results of operations and cash flows of the registrant as of,
    and for, the periods presented in this annual report;                       
|
| | 4. | The registrants other certifying officers
    and I are responsible for establishing and maintaining
    disclosure controls and procedures (as defined in Exchange Act
    Rules 13a-14 and 15d-14) for the registrant and have:                                                                                                          



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



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



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



| |    |                                                                                                                                                                                                                                                                                                                                                                                                        
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 6. | The registrants other certifying officers
    and I have indicated in this annual report whether there were
    significant changes in internal controls or in other factors
    that could significantly affect internal controls subsequent to
    the date of our most recent evaluation, including any corrective
    actions with regard to significant deficiencies and material
    weaknesses.



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

Date: March 14, 2003

54



---



##### 



INDEX TO FINANCIAL STATEMENTS

The following financial statements required to be
included in Item 15(a)(1) are listed below:

SUMMIT PROPERTIES INC.

|                                                                                                                                                             |  |      |    | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ---- | -- | 
|                                                                                                                                                             |  | Page
|                                                                                                                                                             |  |     
|Independent Auditors Report                                                                                                                                 |  |      | 56 | 
|                                                                                                                                                            
|Consolidated Balance Sheets as of
    December 31, 2002 and 2001                                                                                             |  |      | 57 | 
|                                                                                                                                                            
|Consolidated Statements of Earnings for the Years
    Ended December 31, 2002, 2001 and 2000                                                                 |  |      | 58 | 
|                                                                                                                                                            
|Consolidated Statements of Stockholders
    Equity for the Years Ended December 31, 2002, 2001 and
    2000                                                 |  |      | 59 | 
|                                                                                                                                                            
|Consolidated Statements of Cash Flows for the
    Years Ended December 31, 2002, 2001 and 2000                                                               |  |      | 60 | 
|                                                                                                                                                            
|Notes to Consolidated Financial Statements                                                                                                                   |  |      | 61 | 
|                                                                                                                                                            
|The following financial statement schedule of
    supplementary data of Summit Properties Inc. required to be
    included in Item 15(a)(2) is listed below: |  |      |    | 
|                                                                                                                                                            
|Schedule III  Real Estate and
    Accumulated Depreciation                                                                                                  |  |      | 85 | 

All other schedules are omitted because they are
not applicable or not required.

55



---



##### 



INDEPENDENT AUDITORS REPORT

Board of Directors and Stockholders of

Summit Properties Inc.


We have audited the accompanying consolidated
balance sheets of Summit Properties Inc. (the
Company) as of December 31, 2002 and 2001, and
the related consolidated statements of earnings,
stockholders equity, and cash flows for each of the three
years in the period ended December 31, 2002. Our audit for
the year ended December 31, 2002 also included the
financial statement schedule listed in the Index to Financial
Statements at Item 15. These financial statements and
financial statement schedule are the responsibility of the
Companys management. Our responsibility is to express an
opinion on these financial statements and financial statement
schedule based on our audits.

We conducted our audits in accordance with
auditing standards generally accepted in the United States of
America. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, such consolidated financial
statements present fairly, in all material respects, the
financial position of the Company as of December 31, 2002
and 2001, and the results of its operations and its cash flows
for each of the three years in the period ended
December 31, 2002 in conformity with accounting principles
generally accepted in the United States of America. Also, in our
opinion, such financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as
a whole, presents fairly in all material respects the
information set forth therein.

As discussed in Note 3 to the consolidated
financial statements, the Company adopted Statement of Financial
Accounting Standards No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets, on
January 1, 2002.

DELOITTE & TOUCHE LLP

Charlotte, North Carolina

January 30, 2003, except for the eleventh
paragraph of Note 8 and Note 18, as to which the date
is March 5, 2003


56



---



##### 



SUMMIT PROPERTIES INC.

CONSOLIDATED BALANCE SHEETS


(Dollars in thousands)


|                                                                                                      |                                                                                                                                                                                                                      |                                  |           |          |           |   |           |          |           | 
|----------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------- | --------- | -------- | --------- | - | --------- | -------- | --------- | 
|                                                                                                      |                                                                                                                                                                                                                      |                                 
|                                                                                                      |                                                                                                                                                                                                                      | December 31,                    
|                                                                                                      |                                                                                                                                                                                                                      |                                 
|                                                                                                      |                                                                                                                                                                                                                      | 2002                             |           | 2001    
|                                                                                                      |                                                                                                                                                                                                                      |                                  |           |         
|ASSETS                                                                                                |                                                                                                                                                                                                                      |                                  |           |          |           |   |           |         
|Real estate assets:                                                                                   |                                                                                                                                                                                                                      |                                  |           |          |           |   |           |         
|                                                                                                      | Land and land improvements                                                                                                                                                                                           |                                  | $         | 191,456  |           |   | $         | 156,748  |          
|                                                                                                      | Buildings and improvements                                                                                                                                                                                           |                                  |           | 980,263  |           |   |           | 883,373  |          
|                                                                                                      | Furniture, fixtures and equipment                                                                                                                                                                                    |                                  |           | 75,797   |           |   |           | 66,250   |          
|                                                                                                      |                                                                                                                                                                                                                      |                                  |           |          |           |   |           |         
|                                                                                                      |                                                                                                                                                                                                                      |                                  | 1,247,516 |          |           |   | 1,106,371 |         
|                                                                                                      | Less: accumulated depreciation                                                                                                                                                                                       |                                  |           | (158,158 | )         |   |           | (128,539 | )        
|                                                                                                      |                                                                                                                                                                                                                      |                                  |           |          |           |   |           |         
|                                                                                                      |                                                                                                                                                                                                                      | Net operating real estate assets |           |          | 1,089,358 |   |           |          | 977,832   | 
|                                                                                                      | Net real estate assets  held for sale                                                                                                                                                                               |                                  |           | 14,914   |           |   |           | 133,256  |          
|                                                                                                      | Construction in progress                                                                                                                                                                                             |                                  |           | 139,263  |           |   |           | 137,474  |          
|                                                                                                      |                                                                                                                                                                                                                      |                                  |           |          |           |   |           |         
|                                                                                                      |                                                                                                                                                                                                                      | Net real estate assets           |           |          | 1,243,535 |   |           |          | 1,248,562 | 
|Cash and cash equivalents                                                                             |                                                                                                                                                                                                                      |                                  | 2,353     |          |           |   | 1,814     |         
|Restricted cash                                                                                       |                                                                                                                                                                                                                      |                                  | 62,933    |          |           |   | 21,046    |         
|Investments in Summit Management Company and real
    estate joint ventures                           |                                                                                                                                                                                                                      |                                  | 5,355     |          |           |   | 3,159     |         
|Deferred financing costs, net of accumulated
    amortization of $7,173 in 2002 and $6,914 in 2001.   |                                                                                                                                                                                                                      |                                  | 6,008     |          |           |   | 6,925     |         
|Other assets                                                                                          |                                                                                                                                                                                                                      |                                  | 16,777    |          |           |   | 14,445    |         
|Other assets  held for sale                                                                          |                                                                                                                                                                                                                      |                                  | 55        |          |           |   | 1,491     |         
|                                                                                                      |                                                                                                                                                                                                                      |                                  |           |          |           |   |           |         
|Total assets                                                                                          |                                                                                                                                                                                                                      | $                                | 1,337,016 |          |           | $ | 1,297,442 |         
|                                                                                                      |                                                                                                                                                                                                                      |                                  |           |          |           |   |           |         
|LIABILITIES AND STOCKHOLDERS
    EQUITY                                                              |                                                                                                                                                                                                                      |                                  |           |          |           |   |           |         
|Liabilities:                                                                                          |                                                                                                                                                                                                                      |                                  |           |          |           |   |           |         
|                                                                                                      | Notes payable                                                                                                                                                                                                        |                                  | $         | 702,456  |           |   | $         | 694,334  |          
|                                                                                                      | Note payable  assets held for sale                                                                                                                                                                                  |                                  |           |         |           |   |           | 25,011   |          
|                                                                                                      | Accrued interest payable                                                                                                                                                                                             |                                  |           | 4,936    |           |   |           | 7,000    |          
|                                                                                                      | Accounts payable and accrued expenses                                                                                                                                                                                |                                  |           | 33,280   |           |   |           | 21,525   |          
|                                                                                                      | Dividends and distributions payable                                                                                                                                                                                  |                                  |           | 10,456   |           |   |           | 14,156   |          
|                                                                                                      | Security deposits and prepaid rents                                                                                                                                                                                  |                                  |           | 2,464    |           |   |           | 3,213    |          
|                                                                                                      | Other liabilities  assets held for sale                                                                                                                                                                             |                                  |           | 21       |           |   |           | 850      |          
|                                                                                                      |                                                                                                                                                                                                                      |                                  |           |          |           |   |           |         
|                                                                                                      |                                                                                                                                                                                                                      | Total liabilities                |           |          | 753,613   |   |           |          | 766,089   | 
|                                                                                                      |                                                                                                                                                                                                                      |                                  |           |          |           |   |           |         
|Commitments and contingencies                                                                         |                                                                                                                                                                                                                      |                                  |           |          |           |   |           |         
|Minority interests of common unitholders in
    Operating Partnership and three operating communities |                                                                                                                                                                                                                      |                                  | 50,264    |          |           |   | 45,492    |         
|Minority interest of preferred unitholders in
    Operating Partnership                               |                                                                                                                                                                                                                      |                                  | 136,261   |          |           |   | 136,261   |         
|Stockholders equity:                                                                                 |                                                                                                                                                                                                                      |                                  |           |          |           |   |           |         
|                                                                                                      | Preferred stock, $0.01 par value 
    25,000,000 shares authorized, no shares issued and outstanding                                                                                                                |                                  |           |         |           |   |           |         |          
|                                                                                                      | Common stock, $0.01 par value 
    100,000,000 shares authorized, 27,436,060 shares issued and
    outstanding as of December 31, 2002 and
    27,050,221 shares issued and outstanding as of
    December 31, 2001 |                                  |           | 274      |           |   |           | 270      |          
|                                                                                                      | Additional paid-in capital                                                                                                                                                                                           |                                  |           | 429,003  |           |   |           | 420,988  |          
|                                                                                                      | Accumulated deficit                                                                                                                                                                                                  |                                  |           | (12,624  | )         |   |           | (55,976  | )        
|                                                                                                      | Unamortized restricted stock compensation                                                                                                                                                                            |                                  |           | (261     | )         |   |           | (1,226   | )        
|                                                                                                      | Employee notes receivable                                                                                                                                                                                            |                                  |           | (19,514  | )         |   |           | (14,456  | )        
|                                                                                                      |                                                                                                                                                                                                                      |                                  |           |          |           |   |           |         
|                                                                                                      |                                                                                                                                                                                                                      | Total stockholders equity       |           |          | 396,878   |   |           |          | 349,600   | 
|                                                                                                      |                                                                                                                                                                                                                      |                                  |           |          |           |   |           |         
|Total liabilities and stockholders equity                                                            |                                                                                                                                                                                                                      | $                                | 1,337,016 |          |           | $ | 1,297,442 |         
|                                                                                                      |                                                                                                                                                                                                                      |                                  |           |          |           |   |           |         

See notes to consolidated financial statements.

57



---



##### 



SUMMIT PROPERTIES INC.

CONSOLIDATED STATEMENTS OF EARNINGS


(Dollars in thousands, except per share
amounts)


|                                                                                                                                                                                                                                                                    |                                                                   |                                  |                                                   |            |        |         |         |            |        |         |         |            |        |         | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------- | -------------------------------- | ------------------------------------------------- | ---------- | ------ | ------- | ------- | ---------- | ------ | ------- | ------- | ---------- | ------ | ------- | 
|                                                                                                                                                                                                                                                                    |                                                                   |                                 
|                                                                                                                                                                                                                                                                    |                                                                   | Year Ended December 31,         
|                                                                                                                                                                                                                                                                    |                                                                   |                                 
|                                                                                                                                                                                                                                                                    |                                                                   | 2002                             |                                                   | 2001       |        | 2000   
|                                                                                                                                                                                                                                                                    |                                                                   |                                  |                                                   |            |        |        
|Revenues:                                                                                                                                                                                                                                                           |                                                                   |                                  |                                                   |            |        |         |         |            |        |         |         |           
|                                                                                                                                                                                                                                                                    | Rental                                                            |                                  | $                                                 | 143,791    |        |         | $       | 154,167    |        |         | $       | 149,855    |       
|                                                                                                                                                                                                                                                                    | Other property income                                             |                                  |                                                   | 10,182     |        |         |         | 11,569     |        |         |         | 11,090     |       
|                                                                                                                                                                                                                                                                    | Interest                                                          |                                  |                                                   | 2,571      |        |         |         | 2,265      |        |         |         | 3,592      |       
|                                                                                                                                                                                                                                                                    | Other income                                                      |                                  |                                                   | 478        |        |         |         | 891        |        |         |         | 618        |       
|                                                                                                                                                                                                                                                                    | Loss and interest income on compensation plans                    |                                  |                                                   | (101       | )      |         |         | (359       | )      |         |         |           |       
|                                                                                                                                                                                                                                                                    |                                                                   |                                  |                                                   |            |        |         |         |            |        |         |         |           
|                                                                                                                                                                                                                                                                    |                                                                   |                                  | Total revenues                                    |            |        | 156,921 |         |            |        | 168,533 |         |            |        | 165,155 | 
|                                                                                                                                                                                                                                                                    |                                                                   |                                  |                                                   |            |        |         |         |            |        |         |         |           
|Expenses:                                                                                                                                                                                                                                                           |                                                                   |                                  |                                                   |            |        |         |         |            |        |         |         |           
|                                                                                                                                                                                                                                                                    | Property operating and maintenance:                               |                                  |                                                   |            |        |         |         |            |        |         |         |            |       
|                                                                                                                                                                                                                                                                    |                                                                   | Personnel                        |                                                   |            | 11,948 |         |         |            | 11,703 |         |         |            | 10,508 |        
|                                                                                                                                                                                                                                                                    |                                                                   | Advertising and promotion        |                                                   |            | 2,604  |         |         |            | 2,141  |         |         |            | 2,452  |        
|                                                                                                                                                                                                                                                                    |                                                                   | Utilities                        |                                                   |            | 7,540  |         |         |            | 8,012  |         |         |            | 7,589  |        
|                                                                                                                                                                                                                                                                    |                                                                   | Building repairs and maintenance |                                                   |            | 7,384  |         |         |            | 7,418  |         |         |            | 7,187  |        
|                                                                                                                                                                                                                                                                    |                                                                   | Real estate taxes and insurance  |                                                   |            | 19,131 |         |         |            | 18,057 |         |         |            | 16,079 |        
|                                                                                                                                                                                                                                                                    |                                                                   | Depreciation                     |                                                   |            | 35,848 |         |         |            | 33,933 |         |         |            | 31,710 |        
|                                                                                                                                                                                                                                                                    |                                                                   | Property supervision             |                                                   |            | 4,541  |         |         |            | 4,943  |         |         |            | 5,025  |        
|                                                                                                                                                                                                                                                                    |                                                                   | Other operating expenses         |                                                   |            | 2,512  |         |         |            | 2,804  |         |         |            | 2,740  |        
|                                                                                                                                                                                                                                                                    |                                                                   |                                  |                                                   |            |        |         |         |            |        |         |         |           
|                                                                                                                                                                                                                                                                    |                                                                   |                                  | Total property operating and maintenance expenses |            |        | 91,508  |         |            |        | 89,011  |         |            |        | 83,290  | 
|                                                                                                                                                                                                                                                                    | Interest                                                          |                                  |                                                   | 33,315     |        |         |         | 38,301     |        |         |         | 36,880     |       
|                                                                                                                                                                                                                                                                    | Amortization                                                      |                                  |                                                   | 1,282      |        |         |         | 1,414      |        |         |         | 1,057      |       
|                                                                                                                                                                                                                                                                    | General and administrative                                        |                                  |                                                   | 6,133      |        |         |         | 6,958      |        |         |         | 4,752      |       
|                                                                                                                                                                                                                                                                    | Liability adjustment and expense on compensation
    plans        |                                  |                                                   | (101       | )      |         |         | (359       | )      |         |         |           |       
|                                                                                                                                                                                                                                                                    | Loss (income) on equity investments:                              |                                  |                                                   |            |        |         |         |            |        |         |         |            |       
|                                                                                                                                                                                                                                                                    |                                                                   | Summit Management Company        |                                                   |            | 308    |         |         |            | (448   | )       |         |            | 779    |        
|                                                                                                                                                                                                                                                                    |                                                                   | Real estate joint ventures       |                                                   |            | 49     |         |         |            | 171    |         |         |            | 399    |        
|                                                                                                                                                                                                                                                                    |                                                                   |                                  |                                                   |            |        |         |         |            |        |         |         |           
|                                                                                                                                                                                                                                                                    |                                                                   |                                  | Total expenses                                    |            |        | 132,494 |         |            |        | 135,048 |         |            |        | 127,157 | 
|                                                                                                                                                                                                                                                                    |                                                                   |                                  |                                                   |            |        |         |         |            |        |         |         |           
|Income from continuing operations before gain on
    sale of real estate assets, impairment loss, minority interest
    of common unitholders in Operating Partnership, dividends to
    preferred unitholders in Operating Partnership and extraordinary
    items |                                                                   |                                  | 24,427                                            |            |        |         | 33,485  |            |        |         | 37,998  |           
|Gain on sale of real estate assets                                                                                                                                                                                                                                  |                                                                   |                                  | 13,831                                            |            |        |         | 34,435  |            |        |         | 38,510  |           
|Gain on sale of real estate assets 
    joint ventures                                                                                                                                                                                                             |                                                                   |                                  | 4,955                                             |            |        |         | 271     |            |        |         |        |           
|Impairment loss on technology investments                                                                                                                                                                                                                           |                                                                   |                                  |                                                  |            |        |         | (1,217  | )          |        |         |        |           
|Minority interest of common unitholders in
    Operating Partnership                                                                                                                                                                                                |                                                                   |                                  | (3,517                                            | )          |        |         | (7,027  | )          |        |         | (9,062  | )         
|Dividends to preferred unitholders in Operating
    Partnership                                                                                                                                                                                                     |                                                                   |                                  | (12,420                                           | )          |        |         | (12,420 | )          |        |         | (12,420 | )         
|Extraordinary items, net of minority interest                                                                                                                                                                                                                       |                                                                   |                                  | (91                                               | )          |        |         |        |            |        |         |        |           
|                                                                                                                                                                                                                                                                    |                                                                   |                                  |                                                   |            |        |         |         |            |        |         |         |           
|Income from continuing operations                                                                                                                                                                                                                                   |                                                                   |                                  | 27,185                                            |            |        |         | 47,527  |            |        |         | 55,026  |           
|                                                                                                                                                                                                                                                                    |                                                                   |                                  |                                                   |            |        |         |         |            |        |         |         |           
|Income from discontinued operations                                                                                                                                                                                                                                 |                                                                   |                                  | 8,119                                             |            |        |         | 10,342  |            |        |         | 10,305  |           
|Extraordinary item  discontinued
    operations, net of minority interest                                                                                                                                                                                          |                                                                   |                                  | (184                                              | )          |        |         |        |            |        |         |        |           
|Minority interest, discontinued operations                                                                                                                                                                                                                          |                                                                   |                                  | (927                                              | )          |        |         | (1,332  | )          |        |         | (1,457  | )         
|                                                                                                                                                                                                                                                                    |                                                                   |                                  |                                                   |            |        |         |         |            |        |         |         |           
|                                                                                                                                                                                                                                                                    | Income from discontinued operations, net of
    minority interest |                                  |                                                   | 7,008      |        |         |         | 9,010      |        |         |         | 8,848      |       
|                                                                                                                                                                                                                                                                    |                                                                   |                                  |                                                   |            |        |         |         |            |        |         |         |           
|Net gain on disposition of discontinued operations                                                                                                                                                                                                                  |                                                                   |                                  | 64,907                                            |            |        |         |        |            |        |         |        |           
|Minority interest, gain on disposition of
    discontinued operations                                                                                                                                                                                               |                                                                   |                                  | (7,412                                            | )          |        |         |        |            |        |         |        |           
|                                                                                                                                                                                                                                                                    |                                                                   |                                  |                                                   |            |        |         |         |            |        |         |         |           
|                                                                                                                                                                                                                                                                    | Net gain on disposition of discontinued operations                |                                  |                                                   | 57,495     |        |         |         |           |        |         |         |           |       
|                                                                                                                                                                                                                                                                    |                                                                   |                                  |                                                   |            |        |         |         |            |        |         |         |           
|Net income from discontinued operations, net of
    minority interest                                                                                                                                                                                               |                                                                   |                                  | 64,503                                            |            |        |         | 9,010   |            |        |         | 8,848   |           
|                                                                                                                                                                                                                                                                    |                                                                   |                                  |                                                   |            |        |         |         |            |        |         |         |           
|Net income                                                                                                                                                                                                                                                          |                                                                   | $                                | 91,688                                            |            |        | $       | 56,537  |            |        | $       | 63,874  |           
|                                                                                                                                                                                                                                                                    |                                                                   |                                  |                                                   |            |        |         |         |            |        |         |         |           
|Per share data:                                                                                                                                                                                                                                                     |                                                                   |                                  |                                                   |            |        |         |         |            |        |         |         |           
|                                                                                                                                                                                                                                                                    | Income from continuing operations 
    basic                     |                                  | $                                                 | 0.99       |        |         | $       | 1.77       |        |         | $       | 2.09       |       
|                                                                                                                                                                                                                                                                    |                                                                   |                                  |                                                   |            |        |         |         |            |        |         |         |           
|                                                                                                                                                                                                                                                                    | Income from continuing operations 
    diluted                   |                                  | $                                                 | 0.99       |        |         | $       | 1.75       |        |         | $       | 2.07       |       
|                                                                                                                                                                                                                                                                    |                                                                   |                                  |                                                   |            |        |         |         |            |        |         |         |           
|                                                                                                                                                                                                                                                                    | Income from discontinued operations 
    basic                   |                                  | $                                                 | 2.36       |        |         | $       | 0.34       |        |         | $       | 0.34       |       
|                                                                                                                                                                                                                                                                    |                                                                   |                                  |                                                   |            |        |         |         |            |        |         |         |           
|                                                                                                                                                                                                                                                                    | Income from discontinued operations 
    diluted                 |                                  | $                                                 | 2.34       |        |         | $       | 0.33       |        |         | $       | 0.33       |       
|                                                                                                                                                                                                                                                                    |                                                                   |                                  |                                                   |            |        |         |         |            |        |         |         |           
|                                                                                                                                                                                                                                                                    | Net income  basic                                                |                                  | $                                                 | 3.35       |        |         | $       | 2.11       |        |         | $       | 2.42       |       
|                                                                                                                                                                                                                                                                    |                                                                   |                                  |                                                   |            |        |         |         |            |        |         |         |           
|                                                                                                                                                                                                                                                                    | Net income  diluted                                              |                                  | $                                                 | 3.33       |        |         | $       | 2.09       |        |         | $       | 2.41       |       
|                                                                                                                                                                                                                                                                    |                                                                   |                                  |                                                   |            |        |         |         |            |        |         |         |           
|                                                                                                                                                                                                                                                                    | Dividends declared                                                |                                  | $                                                 | 1.76       |        |         | $       | 1.85       |        |         | $       | 1.75       |       
|                                                                                                                                                                                                                                                                    |                                                                   |                                  |                                                   |            |        |         |         |            |        |         |         |           
|                                                                                                                                                                                                                                                                    | Weighted average shares  basic                                   |                                  |                                                   | 27,385,051 |        |         |         | 26,789,067 |        |         |         | 26,341,438 |       
|                                                                                                                                                                                                                                                                    |                                                                   |                                  |                                                   |            |        |         |         |            |        |         |         |           
|                                                                                                                                                                                                                                                                    | Weighted average shares  diluted                                 |                                  |                                                   | 27,555,574 |        |         |         | 27,099,294 |        |         |         | 26,542,056 |       
|                                                                                                                                                                                                                                                                    |                                                                   |                                  |                                                   |            |        |         |         |            |        |         |         |           

See notes to consolidated financial statements.


58



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##### 



SUMMIT PROPERTIES INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS
EQUITY


(Dollars in thousands)


|                           |                                                                                     |        |     |            |   |             |         |              |   |            |         |         |   |   |        |        |   |   |         |         |   |   |         |         |  
|-------------------------- | ----------------------------------------------------------------------------------- | ------ | --- | ---------- | - | ----------- | ------- | ------------ | - | ---------- | ------- | ------- | - | - | ------ | ------ | - | - | ------- | ------- | - | - | ------- | ------- | -
|                           |                                                                                     |        |     |            |   |             |         | Unamortized  |   |            |         |        
|                           |                                                                                     |        |     | Additional |   |             |         | Restricted   |   | Employee   |         |        
|                           |                                                                                     | Common |     | Paid-in    |   | Accumulated |         | Stock        |   | Notes      |         |        
|                           |                                                                                     | Stock  |     | Capital    |   | Deficit     |         | Compensation |   | Receivable |         | Total  
|                           |                                                                                     |        |     |            |   |             |         |              |   |            |         |        
|Balance, December 31, 1999 |                                                                                     | $      | 264 |            |   | $           | 412,874 |              |   | $          | (80,555 | )       |   | $ | (387   | )      |   | $ | (4,861  | )       |   | $ | 327,335 |        
|                           | Dividends                                                                           |        |     |           |   |             |         |             |   |            |         | (46,094 | ) |   |        |       |   |   |         |        |   |   |         | (46,094 | )
|                           | Proceeds from dividend reinvestment and stock
    purchase plans                    |        |     | 3          |   |             |         | 4,798        |   |            |         |        |   |   |        |       |   |   |         |        |   |   |         | 4,801   |  
|                           | Repurchase of common stock                                                          |        |     | (4         | ) |             |         | (8,020       | ) |            |         |        |   |   |        |       |   |   |         |        |   |   |         | (8,024  | )
|                           | Conversion of common units to shares                                                |        |     |           |   |             |         | 1,159        |   |            |         |        |   |   |        |       |   |   |         |        |   |   |         | 1,159   |  
|                           | Exercise of stock options                                                           |        |     | 1          |   |             |         | 2,085        |   |            |         |        |   |   |        |       |   |   |         |        |   |   |         | 2,086   |  
|                           | Issuance of restricted stock grants                                                 |        |     |           |   |             |         | 1,338        |   |            |         |        |   |   |        | (1,319 | ) |   |         |        |   |   |         | 19      |  
|                           | Netdown of restricted stock grants                                                  |        |     |           |   |             |         | (135         | ) |            |         |        |   |   |        |       |   |   |         |        |   |   |         | (135    | )
|                           | Amortization of restricted stock grants                                             |        |     |           |   |             |         |             |   |            |         |        |   |   |        | 764    |   |   |         |        |   |   |         | 764     |  
|                           | Accrual for issuance of contingent stock grants                                     |        |     |           |   |             |         | 1,171        |   |            |         |        |   |   |        |       |   |   |         |        |   |   |         | 1,171   |  
|                           | Adjustment for minority interest of common
    unitholders in Operating Partnership |        |     |           |   |             |         | 1,128        |   |            |         |        |   |   |        |       |   |   |         |        |   |   |         | 1,128   |  
|                           | Issuance of employee notes receivable                                               |        |     |           |   |             |         |             |   |            |         |        |   |   |        |       |   |   |         | (10,793 | ) |   |         | (10,793 | )
|                           | Repayment of employee notes through stock
    redemption                            |        |     |           |   |             |         | (571         | ) |            |         |        |   |   |        |       |   |   |         | 571     |   |   |         |        |  
|                           | Repayment of employee notes receivable                                              |        |     |           |   |             |         |             |   |            |         |        |   |   |        |       |   |   |         | 1,386   |   |   |         | 1,386   |  
|                           | Net income                                                                          |        |     |           |   |             |         |             |   |            |         | 63,874  |   |   |        |       |   |   |         |        |   |   |         | 63,874  |  
|                           |                                                                                     |        |     |            |   |             |         |              |   |            |         |         |   |   |        |        |   |   |         |         |   |   |         |        
|Balance, December 31, 2000 |                                                                                     |        | 264 |            |   |             | 415,827 |              |   |            | (62,775 | )       |   |   | (942   | )      |   |   | (13,697 | )       |   |   | 338,677 |        
|                           | Dividends                                                                           |        |     |           |   |             |         |             |   |            |         | (49,738 | ) |   |        |       |   |   |         |        |   |   |         | (49,738 | )
|                           | Proceeds from dividend reinvestment and stock
    purchase plans                    |        |     | 3          |   |             |         | 7,670        |   |            |         |        |   |   |        |       |   |   |         |        |   |   |         | 7,673   |  
|                           | Repurchase of common stock                                                          |        |     |           |   |             |         | (197         | ) |            |         |        |   |   |        |       |   |   |         |        |   |   |         | (197    | )
|                           | Conversion of common units to shares                                                |        |     | 1          |   |             |         | 4,020        |   |            |         |        |   |   |        |       |   |   |         |        |   |   |         | 4,021   |  
|                           | Exercise of stock options                                                           |        |     | 1          |   |             |         | 1,013        |   |            |         |        |   |   |        |       |   |   |         |        |   |   |         | 1,014   |  
|                           | Issuance of restricted stock grants                                                 |        |     | 1          |   |             |         | 1,665        |   |            |         |        |   |   |        | (1,662 | ) |   |         |        |   |   |         | 4       |  
|                           | Netdown of restricted stock grants                                                  |        |     |            |   |             |         | (732         | ) |            |         |        |   |   |        |       |   |   |         |        |   |   |         | (732    | )
|                           | Amortization of restricted stock grants                                             |        |     |           |   |             |         |             |   |            |         |         |   |   |        | 1,378  |   |   |         |        |   |   |         | 1,378   |  
|                           | Adjustment for minority interest of common
    unitholders in Operating Partnership |        |     |           |   |             |         | (8,278       | ) |            |         |        |   |   |        |       |   |   |         |        |   |   |         | (8,278  | )
|                           | Issuance of employee notes receivable                                               |        |     |           |   |             |         |             |   |            |         |        |   |   |        |       |   |   |         | (3,940  | ) |   |         | (3,940  | )
|                           | Repayment of employee notes receivable                                              |        |     |           |   |             |         |             |   |            |         |        |   |   |        |       |   |   |         | 3,181   |   |   |         | 3,181   |  
|                           | Net income                                                                          |        |     |           |   |             |         |             |   |            |         | 56,537  |   |   |        |       |   |   |         |         |   |   |         | 56,537  |  
|                           |                                                                                     |        |     |            |   |             |         |              |   |            |         |         |   |   |        |        |   |   |         |         |   |   |         |        
|Balance, December 31, 2001 |                                                                                     |        | 270 |            |   |             | 420,988 |              |   |            | (55,976 | )       |   |   | (1,226 | )      |   |   | (14,456 | )       |   |   | 349,600 |        
|                           | Dividends                                                                           |        |     |           |   |             |         |             |   |            |         | (48,336 | ) |   |        |       |   |   |         |        |   |   |         | (48,336 | )
|                           | Proceeds from dividend reinvestment and stock
    purchase plans                    |        |     | 4          |   |             |         | 9,135        |   |            |         |        |   |   |        |       |   |   |         |        |   |   |         | 9,139   |  
|                           | Repurchase of common stock                                                          |        |     | (1         | ) |             |         | (2,665       | ) |            |         |        |   |   |        |       |   |   |         |        |   |   |         | (2,666  | )
|                           | Conversion of common units to shares                                                |        |     |           |   |             |         | 285          |   |            |         |        |   |   |        |       |   |   |         |        |   |   |         | 285     |  
|                           | Exercise of stock options                                                           |        |     | 1          |   |             |         | 1,855        |   |            |         |        |   |   |        |       |   |   |         |        |   |   |         | 1,856   |  
|                           | Issuance of restricted stock grants                                                 |        |     |           |   |             |         | 35           |   |            |         |        |   |   |        | (13    | ) |   |         |        |   |   |         | 22      |  
|                           | Netdown of restricted stock grants                                                  |        |     |           |   |             |         | (619         | ) |            |         |        |   |   |        |       |   |   |         |        |   |   |         | (619    | )
|                           | Amortization of restricted stock grants                                             |        |     |           |   |             |         |             |   |            |         |        |   |   |        | 978    |   |   |         |        |   |   |         | 978     |  
|                           | Adjustment for minority interest of common
    unitholders in Operating Partnership |        |     |           |   |             |         | (11          | ) |            |         |        |   |   |        |       |   |   |         |        |   |   |         | (11     | )
|                           | Issuance of employee notes receivable                                               |        |     |           |   |             |         |             |   |            |         |        |   |   |        |       |   |   |         | (7,813  | ) |   |         | (7,813  | )
|                           | Repayment of employee notes receivable                                              |        |     |           |   |             |         |             |   |            |         |        |   |   |        |       |   |   |         | 2,755   |   |   |         | 2,755   |  
|                           | Net income                                                                          |        |     |           |   |             |         |             |   |            |         | 91,688  |   |   |        |       |   |   |         |        |   |   |         | 91,688  |  
|                           |                                                                                     |        |     |            |   |             |         |              |   |            |         |         |   |   |        |        |   |   |         |         |   |   |         |        
|Balance, December 31, 2002 |                                                                                     | $      | 274 |            |   | $           | 429,003 |              |   | $          | (12,624 | )       |   | $ | (261   | )      |   | $ | (19,514 | )       |   | $ | 396,878 |        
|                           |                                                                                     |        |     |            |   |             |         |              |   |            |         |         |   |   |        |        |   |   |         |         |   |   |         |        

See notes to consolidated financial statements.

59



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##### 



SUMMIT PROPERTIES INC.

CONSOLIDATED STATEMENTS OF CASH
FLOWS


(Dollars in thousands)


|                                                         |                                                                                       |                                                                      |                                                         |          |         |         |        |          |         |         |       |          |         |          |  
|-------------------------------------------------------- | ------------------------------------------------------------------------------------- | -------------------------------------------------------------------- | ------------------------------------------------------- | -------- | ------- | ------- | ------ | -------- | ------- | ------- | ----- | -------- | ------- | -------- | -
|                                                         |                                                                                       |                                                                     
|                                                         |                                                                                       | Year Ended December 31,                                             
|                                                         |                                                                                       |                                                                     
|                                                         |                                                                                       | 2002                                                                 |                                                         | 2001     |         | 2000   
|                                                         |                                                                                       |                                                                      |                                                         |          |         |        
|Cash flows from operating activities:                    |                                                                                       |                                                                      |                                                         |          |         |         |        |          |         |         |       |         
|                                                         | Net income                                                                            |                                                                      | $                                                       | 91,688   |         |         | $      | 56,537   |         |         | $     | 63,874   |        
|                                                         | Adjustments to reconcile net income to net cash
    provided by operating activities: |                                                                      |                                                         |          |         |         |        |          |         |         |       |          |        
|                                                         |                                                                                       | Minority interest of common unitholders in
    Operating Partnership |                                                         |          | 11,820  |         |        |          | 8,359   |         |       |          | 10,520  |         
|                                                         |                                                                                       | Loss (gain) on equity investments                                    |                                                         |          | 357     |         |        |          | (276    | )       |       |          | 1,178   |         
|                                                         |                                                                                       | Gain on sale of real estate assets 
    continuing operations       |                                                         |          | (13,831 | )       |        |          | (34,435 | )       |       |          | (38,510 | )       
|                                                         |                                                                                       | Net gain on sale of real estate
    assets  discontinued operations |                                                         |          | (64,907 | )       |        |          |        |         |       |          |        |         
|                                                         |                                                                                       | Gain on sale of real estate assets 
    joint ventures              |                                                         |          | (4,955  | )       |        |          | (271    | )       |       |          |        |         
|                                                         |                                                                                       | Impairment loss on technology investments                            |                                                         |          |        |         |        |          | 1,217   |         |       |          |        |         
|                                                         |                                                                                       | Accrual of vested stock awards                                       |                                                         |          |        |         |        |          |        |         |       |          | 1,171   |         
|                                                         |                                                                                       | Depreciation and amortization                                        |                                                         |          | 41,943  |         |        |          | 41,836  |         |       |          | 38,216  |         
|                                                         |                                                                                       | Amortization of deferred settlement on interest
    rate swap        |                                                         |          | (545    | )       |        |          |        |         |       |          |        |         
|                                                         |                                                                                       | Increase in restricted cash                                          |                                                         |          | (814    | )       |        |          | (3,087  | )       |       |          | (3,633  | )       
|                                                         |                                                                                       | Increase in other assets                                             |                                                         |          | (1,460  | )       |        |          | (996    | )       |       |          | (631    | )       
|                                                         |                                                                                       | (Decrease) increase in accrued interest payable                      |                                                         |          | (2,097  | )       |        |          | (696    | )       |       |          | 711     |         
|                                                         |                                                                                       | Increase (decrease) in accounts payable and
    accrued expenses     |                                                         |          | 1,932   |         |        |          | (1,107  | )       |       |          | (2,187  | )       
|                                                         |                                                                                       | (Decrease) increase in security deposits and
    prepaid rents       |                                                         |          | (830    | )       |        |          | (535    | )       |       |          | 259     |         
|                                                         |                                                                                       |                                                                      |                                                         |          |         |         |        |          |         |         |       |         
|                                                         |                                                                                       |                                                                      | Net cash provided by operating activities               |          |         | 58,301  |        |          |         | 66,546  |       |          |         | 70,968   |  
|                                                         |                                                                                       |                                                                      |                                                         |          |         |         |        |          |         |         |       |         
|Cash flows from investing activities:                    |                                                                                       |                                                                      |                                                         |          |         |         |        |          |         |         |       |         
|                                                         | Construction of real estate assets and land
    acquisitions                          |                                                                      |                                                         | (112,839 | )       |         |        | (117,080 | )       |         |       | (173,473 | )      
|                                                         | Acquisition of real estate assets                                                     |                                                                      |                                                         | (17,866  | )       |         |        |         |         |         |       | (33,373  | )      
|                                                         | Proceeds from sale of real estate assets                                              |                                                                      |                                                         | 139,920  |         |         |        | 147,980  |         |         |       | 105,131  |        
|                                                         | Proceeds from sale of real estate
    assets  joint ventures                         |                                                                      |                                                         | 11,202   |         |         |        |         |         |         |       |         |        
|                                                         | Capitalized interest                                                                  |                                                                      |                                                         | (10,360  | )       |         |        | (11,080  | )       |         |       | (11,117  | )      
|                                                         | Investment in real estate joint venture                                               |                                                                      |                                                         | (9,075   | )       |         |        | (4,285   | )       |         |       |         |        
|                                                         | Distribution from real estate joint venture                                           |                                                                      |                                                         | 540      |         |         |        |         |         |         |       |         |        
|                                                         | Contribution from historic tax credit venture
    partner                             |                                                                      |                                                         | 600      |         |         |        |         |         |         |       |         |        
|                                                         | Recurring capital expenditures, net of payables                                       |                                                                      |                                                         | (4,530   | )       |         |        | (4,889   | )       |         |       | (5,371   | )      
|                                                         | Non-recurring capital expenditures                                                    |                                                                      |                                                         | (1,088   | )       |         |        | (3,943   | )       |         |       | (2,526   | )      
|                                                         | Corporate and other asset additions and office
    tenant improvements                |                                                                      |                                                         | (2,162   | )       |         |        | (645     | )       |         |       | (439     | )      
|                                                         | Decrease in notes receivable                                                          |                                                                      |                                                         | 68       |         |         |        | 119      |         |         |       | 2,971    |        
|                                                         |                                                                                       |                                                                      |                                                         |          |         |         |        |          |         |         |       |         
|                                                         |                                                                                       |                                                                      | Net cash (used in) provided by investing
    activities |          |         | (5,590  | )      |          |         | 6,177   |       |          |         | (118,197 | )
|                                                         |                                                                                       |                                                                      |                                                         |          |         |         |        |          |         |         |       |         
|Cash flows from financing activities:                    |                                                                                       |                                                                      |                                                         |          |         |         |        |          |         |         |       |         
|                                                         | Net borrowings (repayments) on line of credit                                         |                                                                      |                                                         | 50,000   |         |         |        | (47,500  | )       |         |       | 63,500   |        
|                                                         | Proceeds from issuance of mortgage debt                                               |                                                                      |                                                         | 6,900    |         |         |        |         |         |         |       | 48,340   |        
|                                                         | Repayments of unsecured notes                                                         |                                                                      |                                                         | (41,000  | )       |         |        |         |         |         |       | (15,000  | )      
|                                                         | Borrowings on unsecured medium-term notes                                             |                                                                      |                                                         |         |         |         |        | 60,000   |         |         |       | 52,000   |        
|                                                         | Repayments on unsecured medium-term notes                                             |                                                                      |                                                         |         |         |         |        | (30,000  | )       |         |       | (25,000  | )      
|                                                         | Repayments of mortgage debt                                                           |                                                                      |                                                         | (11,912  | )       |         |        | (5,436   | )       |         |       | (8,548   | )      
|                                                         | Repayments of tax exempt bonds                                                        |                                                                      |                                                         | (340     | )       |         |        | (660     | )       |         |       | (1,025   | )      
|                                                         | Payment of deferred financing costs                                                   |                                                                      |                                                         | (549     | )       |         |        | (1,212   | )       |         |       | (2,481   | )      
|                                                         | Proceeds from termination of interest rate swap                                       |                                                                      |                                                         | 1,510    |         |         |        |         |         |         |       |         |        
|                                                         | Net proceeds from dividend reinvestment and stock
    purchase plans                  |                                                                      |                                                         | 9,139    |         |         |        | 7,673    |         |         |       | 4,801    |        
|                                                         | Dividends and distributions to unitholders                                            |                                                                      |                                                         | (59,455  | )       |         |        | (56,252  | )       |         |       | (53,259  | )      
|                                                         | Exercise of stock options                                                             |                                                                      |                                                         | 1,856    |         |         |        | 1,014    |         |         |       | 2,086    |        
|                                                         | Repurchase of common stock                                                            |                                                                      |                                                         | (2,666   | )       |         |        | (197     | )       |         |       | (8,020   | )      
|                                                         | Acquisition of minority interest                                                      |                                                                      |                                                         |         |         |         |        |         |         |         |       | (1,759   | )      
|                                                         | Issuance of restricted stock awards                                                   |                                                                      |                                                         | (597     | )       |         |        | (728     | )       |         |       | 19       |        
|                                                         | Repayments of employee notes receivable                                               |                                                                      |                                                         | 2,755    |         |         |        | 3,181    |         |         |       | 1,386    |        
|                                                         | Issuance of employee notes receivable                                                 |                                                                      |                                                         | (7,813   | )       |         |        | (3,940   | )       |         |       | (10,793  | )      
|                                                         |                                                                                       |                                                                      |                                                         |          |         |         |        |          |         |         |       |         
|                                                         |                                                                                       |                                                                      | Net cash (used in) provided by financing
    activities |          |         | (52,172 | )      |          |         | (74,057 | )     |          |         | 46,247   |  
|                                                         |                                                                                       |                                                                      |                                                         |          |         |         |        |          |         |         |       |         
|Net increase (decrease) in cash and cash
    equivalents |                                                                                       |                                                                      | 539                                                     |          |         |         | (1,334 | )        |         |         | (982  | )       
|Cash and cash equivalents, beginning of year             |                                                                                       |                                                                      | 1,814                                                   |          |         |         | 3,148  |          |         |         | 4,130 |         
|                                                         |                                                                                       |                                                                      |                                                         |          |         |         |        |          |         |         |       |         
|Cash and cash equivalents, end of year                   |                                                                                       | $                                                                    | 2,353                                                   |          |         | $       | 1,814  |          |         | $       | 3,148 |         
|                                                         |                                                                                       |                                                                      |                                                         |          |         |         |        |          |         |         |       |         
|Supplemental disclosure of cash flow information:        |                                                                                       |                                                                      |                                                         |          |         |         |        |          |         |         |       |         
|                                                         | Cash paid for interest, net of capitalized
    interest                               |                                                                      | $                                                       | 36,589   |         |         | $      | 40,550   |         |         | $     | 37,938   |        
|                                                         |                                                                                       |                                                                      |                                                         |          |         |         |        |          |         |         |       |         

See notes to consolidated financial statements.

60



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##### 



SUMMIT PROPERTIES INC.

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS


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

1. ORGANIZATION AND FORMATION

Summit Properties Inc. was initially organized as
a Maryland real estate investment trust on December 1, 1993
under the Maryland Real Estate Investment Trust Act. We became a
Maryland corporation under the General Corporation Law of
Maryland on January 13, 1994. On February 15, 1994, we
completed an initial public offering of 10 million shares
of common stock, par value $0.01 per share. In connection with
the initial public offering, we consummated a business
combination involving the partnerships which owned
27 communities and the affiliated entities which provided
development, construction, management and leasing services to
each of the communities prior to the initial public offering. A
portion of the proceeds from the initial public offering was
used to acquire an economic and voting interest in the Operating
Partnership, which was formed to succeed to substantially all of
the interests of the property partnerships in the communities
and the operations of the Summit entities. We became the sole
general partner and the majority owner of the Operating
Partnership upon completion of the initial public offering and,
accordingly, report our investment in the Operating Partnership
on a consolidated basis.

We focus on the development, construction,
acquisition and management of luxury apartment communities
throughout the Southeast and Mid-Atlantic states and have chosen
to focus our current efforts in five core markets consisting of
Atlanta, Charlotte, Raleigh, Southeast Florida and Washington,
D.C.

2. BASIS OF PRESENTATION

All significant intercompany accounts and
transactions have been eliminated in consolidation. The
financial statements have been adjusted for the minority
interest of holders of common units of limited partnership
interest in the Operating Partnership. Minority interest of
common unitholders in the Operating Partnership is calculated at
the balance sheet date based upon the percentage of common units
outstanding owned by partners other than Summit to the total
number of common units outstanding. Minority interest of common
unitholders in the Operating Partnership earnings is calculated
based on the weighted average common units outstanding during
the period. Common units can be exchanged by the holder for cash
in an amount equal to the fair market value of an equivalent
number of shares of Summit common stock, or the Operating
Partnership may elect to have us issue, shares of our common
stock in exchange for the common units on a one-for-one basis
(subject to adjustment). As of December 31, 2002, there
were 3,544,466 common units outstanding held by unitholders
other than Summit, and the closing market price of our common
stock was $17.80 per share.

3. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES

Real Estate Assets and
Depreciation We record
our real estate assets at cost less accumulated depreciation
and, if necessary, adjust carrying value in accordance with
Statement of Financial Accounting Standards (SFAS)
No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets and for Long-Lived Assets to be Disposed
Of, by reviewing whether the sum of the estimated future
net cash flows (undiscounted and without interest charges) from
an asset to be held and used is less than the book value of the
asset. Assets to be disposed of are recorded at the lower of
carrying amount or fair value less costs to sell. No impairment
existed as of December 31, 2002.

Expenditures directly related to the acquisition,
development and improvement of real estate assets are
capitalized at cost as land, buildings and improvements or
furniture, fixtures and equipment. 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

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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. All of these expenditures are capitalized and
depreciated over the estimated useful lives of the assets
(buildings  40 years; building
improvements  5 to 15 years; land
improvements  15 years; furniture, fixtures and
equipment  5 to 7 years).


Repairs and maintenance, such as landscaping
maintenance, interior painting and cleaning and supplies used in
such activities, are expensed as incurred. We record the cost of
all repairs and maintenance, including planned major maintenance
activities, recurring capital expenditures and non-recurring
capital expenditures as incurred and do not accrue for such
costs in advance.

Interest costs incurred during the construction
period are capitalized and depreciated over the lives of the
constructed assets. Interest capitalized was $10.4 million
in 2002, $11.1 million in 2001 and $11.1 million in
2000.

We capitalize the cost of our development
department to the projects currently under construction at a
rate of 3.0% of such construction costs. Such costs are then
depreciated over the lives of the constructed assets upon their
completion. Such costs capitalized were $3.4 million in
2002, $4.9 million in 2001 and $5.4 million in 2000.

Rental Revenue
Recognition 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. Our
allowance for uncollectible rent was $80,000 at
December 31, 2002 and is presented in Other
assets in our consolidated balance sheets.

We lease our office and retail space under
operating leases with terms ranging from two to ten years.
Rental revenue for office and retail spaces is recognized on a
straight-line basis over the lives of the respective leases.
Future minimum rental payments to be received under our current
office leases are as follows (in thousands):

|           |  |   |        | 
|---------- |  | - | ------ | 
|2003       |  | $ | 1,895  | 
|2004       |  |   | 1,899  | 
|2005       |  |   | 1,950  | 
|2006       |  |   | 1,882  | 
|2007       |  |   | 1,724  | 
|Thereafter |  |   | 5,682  | 
|           |  |   |        | 
|           |  | $ | 15,032 | 
|           |  |   |        | 

Of the amounts listed above, $6.1 million
represents amounts to be received from Summit Management Company
(the Management Company), which performs all
management and leasing activities for us, as well as management
and leasing activities for third parties.

Cash and Cash
Equivalents For
purposes of the statement of cash flows, we consider all highly
liquid investments purchased with an original maturity of three
months or less to be cash equivalents.

Restricted
Cash Restricted
cash is comprised primarily of proceeds from apartment community
sales deposited with a qualified intermediary in accordance with
like-kind exchange income tax rules and regulations. Restricted
cash also includes resident security deposits, bond repayment
escrows and replacement reserve escrows.

Deferred Financing
Costs Deferred
financing costs include fees and costs incurred in conjunction
with long-term financings and are amortized on the straight-line
method over the terms of the related debt, which approximates
the effective interest method.

Advertising
Costs We expense
advertising costs as incurred.

Equity Method
Investments We
consolidate investments, including joint ventures, in which we
have control, generally those in which we have a direct voting
interest of more than 50%. We record investments in which we
exercise significant influence under the equity method in
accordance with Accounting Principles

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Board (APB) Opinion No. 18,
The Equity Method of Accounting for Common Stock,
and AICPA Statement of Position 78-9, Accounting for
Investments in Real Estate Ventures.


Per Share
Data Basic
earnings per share are computed based upon the weighted average
number of shares outstanding during the respective period. The
difference between basic and diluted
weighted average shares is the dilutive effect of our stock
options outstanding. The number of shares added to weighted
average shares outstanding for the diluted calculation was
170,523 in 2002, 310,227 in 2001 and 200,618 in 2000. Dilution
caused by these options decreased net income per share by $0.02
in 2002 and 2001 and $0.01 in 2000.

Stock-Based
Compensation We
have a Stock Option and Incentive Plan and an Employee Stock
Purchase Plan (ESPP), which are described more fully
in Note 12. Through December 31, 2002, we applied APB
No. 25 and related interpretations in accounting for our
stock options and ESPP. Accordingly, no compensation cost has
been recognized for our stock options granted or shares issued
under the ESPP during the years ended December 31, 2002,
2001 and 2000. Effective January 1, 2003, we adopted the
fair value recognition provisions of SFAS No. 123,
Accounting for Stock-Based Compensation,
prospectively to all stock options granted, modified, or settled
after January 1, 2003 as allowed by SFAS No. 148,
Accounting for Stock-Based Compensation 
Transition and Disclosure. The ESPP was suspended
effective July 2, 2002. The following table reflects the
effect on net income and earnings per share had the fair value
based method been applied to all options granted in each year
(in thousands, except per share amounts):

|                                                                      |  |      |        |      |  |      |        |   |  |   |        |  
|--------------------------------------------------------------------- |  | ---- | ------ | ---- |  | ---- | ------ | - |  | - | ------ | -
|                                                                      |  | 2002 |        | 2001 |  | 2000
|                                                                      |  |      |        |      |  |     
|Net income as reported                                                |  | $    | 91,688 |      |  | $    | 56,537 |   |  | $ | 63,874 |  
|Stock-based compensation determined under fair
    value based method |  |      | (1,452 | )    |  |      | (589   | ) |  |   | (432   | )
|                                                                      |  |      |        |      |  |      |        |   |  |   |        |  
|Pro forma net income                                                  |  | $    | 90,236 |      |  | $    | 55,948 |   |  | $ | 63,442 |  
|                                                                      |  |      |        |      |  |      |        |   |  |   |        |  
|Net income per share as reported  basic                              |  | $    | 3.35   |      |  | $    | 2.11   |   |  | $ | 2.42   |  
|Net income per share as reported 
    diluted                        |  |      | 3.33   |      |  |      | 2.09   |   |  |   | 2.41   |  
|Pro forma net income per share  basic                                |  | $    | 3.30   |      |  | $    | 2.09   |   |  | $ | 2.41   |  
|Pro forma net income per share  diluted                              |  |      | 3.27   |      |  |      | 2.06   |   |  |   | 2.39   |  

Estimates The
preparation of financial statements in conformity with
accounting principles generally accepted in the United States of
America 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.

Recently Adopted and Issued Accounting
Pronouncements In
June 2001, the Financial Accounting Standards Board
(FASB) approved SFAS No. 142, Goodwill
and Other Intangible Assets. SFAS No. 142 requires
that upon 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. We
adopted SFAS No. 142 on January 1, 2002 and its
adoption had no effect on our financial position or results of
operations.

In August 2001, the FASB issued SFAS No. 144
which supersedes SFAS No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed of and amends 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. SFAS
No. 144 requires operating results of communities we
consider held for sale, as well as those sold, to be included in
discontinued operations in our consolidated statements of
earnings prospectively from the date of adoption, which was
January 1, 2002. Although the adoption of SFAS No. 144
did not have a material impact on our financial position or
results of operations for the year ended December 31, 2002,
it did

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have a significant effect on the comparability of
amounts presented from year to year on the consolidated
statements of earnings.


In April 2002, the FASB issued SFAS No. 145,
Rescission of FASB Statements No. 4, 44 and 64, and
Amendment of FASB Statement No. 13, and Technical
Corrections. This statement requires gains and losses from
the extinguishment of debt to be classified as extraordinary
only if they meet the criteria for extraordinary treatment set
forth in APB No. 30. The statement also amends SFAS
No. 13, Accounting For Leases, to require that
certain lease modifications that have economic effects similar
to sale-leaseback transactions be accounted for in the same
manner as such transactions. Finally, the statement makes
certain technical corrections, which the FASB deemed to be
non-substantive, to a number of existing accounting
pronouncements. The rescission of SFAS Nos. 4, 44 and 64 is
effective in 2003. The amendments to SFAS No. 13 are
effective for transactions occurring after May 15, 2002,
and all other provisions of the statement are effective for
financial statements issued on or after May 15, 2002. The
effect of adopting SFAS No. 145 for those items already
effective did not have a material impact on our financial
position or results of operations.

In December 2002, the FASB issued SFAS
No. 148. This statement amends SFAS No. 123 to provide
alternative methods of transition for a voluntary change to the
fair value based method of accounting for stock-based employee
compensation. In addition, this statement amends the disclosure
requirements of SFAS No. 123 to require prominent
disclosures in both annual and interim financial statements
about the method of accounting for stock-based employee
compensation and the effect of the method used on reported
results. Effective January 1, 2003, we adopted the fair
value recognition provisions of SFAS No. 123, prospectively
to all stock options granted, modified, or settled after
January 1, 2003 as allowed by SFAS No. 148. We
estimate that the resulting expense recognized in 2003 will not
be material to our financial position and results of operations.

In November 2002, the FASB issued FASB
Interpretation No. 45, Guarantors Accounting
and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others. This Interpretation
elaborates on the disclosures to be made by a guarantor in its
interim and annual financial statements about its obligations
under certain guarantees that it has issued. It also clarifies
that a guarantor is required to recognize, at the inception of a
guarantee, a liability for the fair value of the obligation
undertaken in issuing the guarantee. The disclosure requirements
of this Interpretation are currently effective and did not
affect our financial position and results of operations. The
initial recognition and initial measurement provisions of this
Interpretation are applicable on a prospective basis to
guarantees issued or modified after December 31, 2002.

In January 2003, the FASB issued FASB
Interpretation No. 46, Consolidation of Variable
Interest Entities (FIN 46). This
Interpretation requires that variable interest entities created
after January 31, 2003, and variable interest entities in
which an interest is obtained after that date, be evaluated for
consolidation into an entitys financial statements. This
interpretation also applies, beginning July 1, 2003 for us,
to all variable interest entities in which an enterprise holds
an interest that it acquired before February 1, 2003. We
are in the process of evaluating all of our investments and
other interests in entities under the provisions of FIN 46
and have not yet determined the effect of its adoption on our
financial position and results of operations.

Reclassifications Certain
reclassifications have been made to the 2001 and 2000 financial
statements to conform to the 2002 presentation.

4. 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 receive more than 25% of cash flow
at any time prior to liquidation. Any such decrease would be
limited to the extent of cash flow in excess of 25%. Station
Hill currently owns four communities and is accounted for on the
equity method

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of accounting and, therefore, our 25% equity
interest is presented in Loss (income) on equity
investments: Real estate joint ventures in our
consolidated statements of earnings.


The following are condensed balance sheets as of
December 31, 2002 and 2001 and condensed statements of
earnings for the years ended December 31, 2002 and 2001 for
Station Hill. The balance sheets and statements of earnings set
forth below reflect the financial position and operations of
Station Hill in its entirety, not just our interest in the joint
venture. Included in the statement of earnings information below
for the year ended December 31, 2001 are the results
through the date of disposition of a community formerly known as
Summit Station (230 apartment homes), which was sold by Station
Hill on August 1, 2001.

|                          |                                         |                |        |        |  |   |        |        | 
|------------------------- | --------------------------------------- | -------------- | ------ | ------ |  | - | ------ | ------ | 
|                          |                                         |               
|                          |                                         | Balance Sheets
|                          |                                         |               
|                          |                                         | 2002           |        | 2001  
|                          |                                         |                |        |       
|                          |                                         |               
|                          |                                         | (in thousands)
|Real estate assets, net   |                                         | $              | 72,255 |        |  | $ | 74,261 |       
|Cash and cash equivalents |                                         |                | 370    |        |  |   | 901    |       
|Other assets              |                                         |                | 373    |        |  |   | 283    |       
|                          |                                         |                |        |        |  |   |        |       
|                          | Total assets                            |                | $      | 72,998 |  |   | $      | 75,445 | 
|                          |                                         |                |        |        |  |   |        |       
|Mortgages payable         |                                         | $              | 58,731 |        |  | $ | 59,536 |       
|Other liabilities         |                                         |                | 580    |        |  |   | 575    |       
|Partners capital         |                                         |                | 13,687 |        |  |   | 15,334 |       
|                          |                                         |                |        |        |  |   |        |       
|                          | Total liabilities and partners capital |                | $      | 72,998 |  |   | $      | 75,445 | 
|                          |                                         |                |        |        |  |   |        |       

|                                                                |                               |                |       |       |        |   |        |       |        | 
|--------------------------------------------------------------- | ----------------------------- | -------------- | ----- | ----- | ------ | - | ------ | ----- | ------ | 
|                                                                |                               |               
|                                                                |                               | Statements of 
|                                                                |                               | Earnings      
|                                                                |                               |               
|                                                                |                               | 2002           |       | 2001 
|                                                                |                               |                |       |      
|                                                                |                               |               
|                                                                |                               | (in thousands)
|Revenues                                                        |                               | $              | 9,927 |       |        | $ | 11,829 |      
|Expenses:                                                       |                               |                |       |       |        |   |        |      
|                                                                | Property operating            |                |       | 3,757 |        |   |        | 4,260 |       
|                                                                | Depreciation and amortization |                |       | 2,965 |        |   |        | 3,071 |       
|                                                                | Interest                      |                |       | 3,960 |        |   |        | 4,338 |       
|                                                                |                               |                |       |       |        |   |        |      
|                                                                |                               | Total expenses |       |       | 10,682 |   |        |       | 11,669 | 
|Net (loss) income before gain on sale of
    real estate assets |                               |                | (755  | )     |        |   | 160    |      
|Gain on sale of real estate assets                              |                               |                |      |       |        |   | 1,082  |      
|                                                                |                               |                |       |       |        |   |        |      
|Net (loss) income                                               |                               | $              | (755  | )     |        | $ | 1,242  |      
|                                                                |                               |                |       |       |        |   |        |      

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

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On May 25, 2001, we contributed
$4.2 million for a 29.78% interest in a joint venture named
SZF, LLC, which owns substantially all of the interests in a
limited liability company that is developing, through a
third-party contractor, an apartment community in Miami,
Florida. The community will consist of 323 apartment homes
and 17,795 square feet of office/ retail space. The limited
liability company has also acquired an adjacent piece of land.
The construction costs are being funded through the equity that
the joint venture contributed to the limited liability company
and by a loan to that company from an unrelated third party. In
the event that construction costs exceed the construction loan
amount, we have agreed to advance the amount required to fund
such costs in excess of the construction loan. This advance
accrues a preferential return at the rate of eleven percent
(11%) per year to be paid from the distributions from the joint
venture. As of December 31, 2002, we had advanced
$2.2 million to SZF, LLC. Subsequent to December 31,
2002, we have advanced an additional $6.1 million to SZF,
LLC. Upon completion of construction, which is expected to occur
during 2004, 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 cure the defaults, keep the
construction loan in place and complete construction of the
community. We are serving as the managing member of the joint
venture, which owns substantially all of the limited liability
company, 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. The balance sheet and income statement information
of SZF, LLC is not material to our consolidated financial
statements taken as a whole.

On April 1, 2002, we entered into a joint
venture with a major financial services institution (the
investor member) to redevelop Summit Grand Parc in
Washington, D.C., formerly the United Mine Workers
Building, in a manner to permit the use of federal
rehabilitation income tax credits. The investor member will
contribute approximately $2.2 million in equity to fund a
portion of the total estimated costs for the project and will
receive a preferred return on this capital investment and an
annual asset management fee. As of December 31, 2002, the
investor member had contributed $200,000. The investor
members interest in the joint venture is subject to
put/call rights during the sixth and seventh years after Summit
Grand Parc is placed in service. The investor member is
obligated to fund the balance of its investment in the joint
venture after the completion of a cost certification process
which is scheduled to be completed during the first half of
2003. If the cost certification is not completed to the
satisfaction of the investor member, then the investor member
will be released from its obligations to fund its remaining
investment and would be entitled to a refund of any funds
previously invested, as well as an agreed upon return of such
previously invested funds. In such an event, we would expect to
replace this equity investment with funds from other financing
sources. This joint venture is consolidated into our financial
statements.

On July 24, 2002, we entered into a joint
venture with a major financial services institution (the
investor member) to redevelop Summit Roosevelt in
Washington, D.C., formerly the Hadleigh apartment hotel, in
a manner to permit the use of federal rehabilitation income tax
credits. The investor member will contribute approximately
$6.6 million in equity to fund a portion of the total
estimated costs for the project and will receive a preferred
return on this capital investment and an annual asset management
fee. As of December 31, 2002, the investor member had
contributed $400,000. The investor members interest in the
joint venture is subject to put/call rights during the sixth and
seventh years after Summit Roosevelt is placed in service. There
are some contingencies remaining (such as final completion of
the redevelopment and final certification of the historic
renovations by the National Park Service) before the investor
member is obligated to fund the balance of its investment in the
joint venture. If these contingencies are not met by the agreed
upon deadlines, then the investor member will be released from
its obligations to fund its remaining investment and would be
entitled to a refund of any funds previously invested, as well
as an agreed upon return of such previously invested funds. In
such an event, we would expect to replace this equity investment
with funds from other financing sources. This joint venture is
consolidated into our financial statements.



|   |                                                       
|-- | ------------------------------------------------------
|5. | PROPERTY MANAGEMENT AND RELATED PARTY
    TRANSACTIONS

In conjunction with our formation, construction,
management and leasing activities for third parties were
transferred to the Management Company and its wholly-owned
subsidiary, Summit Apartment Builders, Inc. (the
Construction Company).

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The Management Company also provides property
management services to our communities. Total fees for
management services provided to our communities were
$6.0 million in 2002, $6.5 million in 2001 and
$5.7 million in 2000.

Third party apartment homes under management were
1,105 in 2002, 1,004 in 2001 and 1,723 in 2000. Property
management fees from third parties as a percentage of total
property management revenues were 11.6% in 2002, 12.4% in 2001
and 16.1% in 2000.

In addition, the Management Company provides
management services to apartment communities held by
partnerships in which certain of our directors are general
partners. The Management Company received management fees of
$252,000 in 2002 and $253,000 in each of 2001 and 2000 for the
performance of such services.

Construction Company revenue consists of fees on
contracts with the Operating Partnership. Revenue from
construction contracts was $2.0 million in 2002,
$2.7 million in 2001 and $2.5 million in 2000. The
Construction Companys profits on these contracts are
eliminated in consolidation against our investment in real
estate. We had amounts payable to the Construction Company of
$3.0 million as of December 31, 2002 and
$7.0 million as of December 31, 2001. This amount is
included in Accounts payable and accrued expenses in
the accompanying consolidated balance sheets. Also included in
the accompanying consolidated balance sheets under the caption
Other assets is a receivable from the Construction
Company of $334,000 as of December 31, 2002 and
$3.0 million as of December 31, 2001 as a result of
construction advances.

Summit and the Management Company lease office
space from three of our communities. Scheduled rental payments
to be received from the Management Company by these three
communities through the respective lease expiration dates, the
latest of which is September 30, 2010, are
$6.1 million.

The Operating Partnership owns 1% of the voting
stock and 99% of the non-voting stock of the Management Company.
The remaining 99% of voting stock and 1% of non-voting stock are
held by one of the Co-Chairmen of our Board of Directors. As a
result of this stock ownership, the Operating Partnership has 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.

The consolidated statements of earnings of the
Management Company and the Construction Company are summarized
below (in thousands):

|          |                                                  |                |   |       |       |      |   |       |        |  |   |       |       | 
|--------- | ------------------------------------------------ | -------------- | - | ----- | ----- | ---- | - | ----- | ------ |  | - | ----- | ----- | 
|          |                                                  | 2002           |   | 2001  |       | 2000
|          |                                                  |                |   |       |       |     
|Revenues: |                                                  |                |   |       |       |      |   |       |        |  |   |      
|          | Management fees charged to Operating Partnership |                | $ | 6,022 |       |      | $ | 6,473 |        |  | $ | 5,735 |      
|          | Third party management fee revenue               |                |   | 787   |       |      |   | 913   |        |  |   | 1,103 |      
|          | Construction revenue                             |                |   | 2,031 |       |      |   | 2,701 |        |  |   | 2,494 |      
|          | Gain on sale of real estate assets               |                |   |      |       |      |   |      |        |  |   | 238   |      
|          | Other revenue                                    |                |   | 261   |       |      |   | 455   |        |  |   | 372   |      
|          |                                                  |                |   |       |       |      |   |       |        |  |   |      
|          |                                                  | Total revenues |   |       | 9,101 |      |   |       | 10,542 |  |   |       | 9,942 | 

67



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|                                         |              |                |      |       |       |      |     |       |        |   |      |       |        | 
|---------------------------------------- | ------------ | -------------- | ---- | ----- | ----- | ---- | --- | ----- | ------ | - | ---- | ----- | ------ | 
|                                         |              | 2002           |      | 2001  |       | 2000
|                                         |              |                |      |       |       |     
|                                         |              |                |      |       |       |      |     |       |        |   |      |      
|Expenses:                                |              |                |      |       |       |      |     |       |        |   |      |      
|                                         | Operating    |                |      | 8,240 |       |      |     | 9,177 |        |   |      | 9,398 |       
|                                         | Depreciation |                |      | 575   |       |      |     | 319   |        |   |      | 313   |       
|                                         | Amortization |                |      | 294   |       |      |     | 298   |        |   |      | 303   |       
|                                         | Interest     |                |      | 300   |       |      |     | 300   |        |   |      | 677   |       
|                                         |              |                |      |       |       |      |     |       |        |   |      |      
|                                         |              | Total expenses |      |       | 9,409 |      |     |       | 10,094 |   |      |       | 10,691 | 
|                                         |              |                |      |       |       |      |     |       |        |   |      |      
|(Loss) income before extraordinary items |              |                | (308 | )     |       |      | 448 |       |        |   | (749 | )    
|Extraordinary items                      |              |                |     |       |       |      |    |       |        |   | (30  | )    
|                                         |              |                |      |       |       |      |     |       |        |   |      |      
|Net (loss) income                        |              | $              | (308 | )     |       | $    | 448 |       |        | $ | (779 | )    
|                                         |              |                |      |       |       |      |     |       |        |   |      |      



|   |              
|-- | -------------
|6. | NOTES PAYABLE

Notes payable consist of the following (in
thousands):

|                |                                         |                                            |                       |                       |       |      |   |         |        |         |   |         |        |         | 
|--------------- | --------------------------------------- | ------------------------------------------ | --------------------- | --------------------- | ----- | ---- | - | ------- | ------ | ------- | - | ------- | ------ | ------- | 
|                |                                         |                                            |                       |                      
|                |                                         |                                            |                       | Principal Outstanding
|                |                                         | Interest                                   |                       | December 31,         
|                |                                         | Rate as of                                 |                       |                      
|                |                                         | December 31, 2002                          |                       | 2002                  |       | 2001
|                |                                         |                                            |                       |                       |       |     
|Fixed Rate Debt |                                         |                                            |                       |                       |       |      |   |         |        |         |   |        
|                | Mortgage Loan                           |                                            |                       | 6.76%                 |       |      | $ | 133,909 |        |         | $ | 137,321 |       
|                | Mortgage Loan                           |                                            |                       | 8.00%                 |       |      |   | 8,040   |        |         |   | 8,161   |       
|                | Mortgage Notes                          |                                            |                       | 6.75% to 7.82%        |       |      |   | 126,322 |        |         |   | 143,967 |       
|                | Tax Exempt Mortgage Note repaid in 2002 |                                            |                       | 6.95%                 |       |      |   |        |        |         |   | 3,918   |       
|                |                                         |                                            |                       |                       |       |      |   |         |        |         |   |        
|                |                                         |                                            | Total Mortgage Debt   |                       |       |      |   |         |        | 268,271 |   |         |        | 293,367 | 
|                |                                         |                                            |                       |                       |       |      |   |         |        |         |   |        
|                | Unsecured Debt:                         |                                            |                       |                       |       |      |   |         |        |         |   |         |       
|                |                                         | 7.87% Medium-Term Notes due December 2003  |                       |                       | 7.87% |      |   |         | 17,000 |         |   |         | 17,000 |        
|                |                                         | 8.037% Medium-Term Notes due November 2005 |                       |                       | 8.04% |      |   |         | 25,000 |         |   |         | 25,000 |        
|                |                                         | 7.04% Medium-Term Notes due May 2006       |                       |                       | 7.04% |      |   |         | 25,000 |         |   |         | 25,000 |        
|                |                                         | 7.59% Medium-Term Notes due March 2009     |                       |                       | 7.59% |      |   |         | 25,000 |         |   |         | 25,000 |        
|                |                                         | 8.50% Medium-Term Notes due July 2010      |                       |                       | 8.50% |      |   |         | 10,000 |         |   |         | 10,000 |        
|                |                                         | 7.703% Medium-Term Notes due May 2011      |                       |                       | 7.70% |      |   |         | 35,000 |         |   |         | 35,000 |        
|                |                                         | 6.63% Notes due October 2003               |                       |                       | 6.63% |      |   |         | 30,000 |         |   |         | 30,000 |        
|                |                                         | 6.95% Notes due August 2004                |                       |                       | 6.95% |      |   |         | 50,000 |         |   |         | 50,000 |        
|                |                                         | 7.20% Notes due August 2007                |                       |                       | 7.20% |      |   |         | 50,000 |         |   |         | 50,000 |        
|                |                                         | Unsecured notes repaid in 2002             |                       |                       | 7.21% |      |   |         |       |         |   |         | 41,000 |        
|                |                                         |                                            |                       |                       |       |      |   |         |        |         |   |        
|                |                                         |                                            | Total Unsecured Debt  |                       |       |      |   |         |        | 267,000 |   |         |        | 308,000 | 
|                |                                         |                                            |                       |                       |       |      |   |         |        |         |   |        
|                |                                         |                                            | Total Fixed Rate Debt |                       |       |      |   |         |        | 535,271 |   |         |        | 601,367 | 
|                |                                         |                                            |                       |                       |       |      |   |         |        |         |   |        

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|                   |                           |                                                             |  |                       |  |      |       |         |         |  |       |        |         | 
|------------------ | ------------------------- | ----------------------------------------------------------- |  | --------------------- |  | ---- | ----- | ------- | ------- |  | ----- | ------ | ------- | 
|                   |                           |                                                             |  |                      
|                   |                           |                                                             |  | Principal Outstanding
|                   |                           | Interest                                                    |  | December 31,         
|                   |                           | Rate as of                                                  |  |                      
|                   |                           | December 31, 2002                                           |  | 2002                  |  | 2001
|                   |                           |                                                             |  |                       |  |     
|Variable Rate Debt |                           |                                                             |  |                       |  |      |       |         |         |  |       |       
|                   | Unsecured Credit Facility |                                                             |  | LIBOR + 100 bps       |  |      |       | 144,000 |         |  |       | 94,000 |        
|                   | Mortgage Note             |                                                             |  | LIBOR + 170 bps       |  |      |       | 6,900   |         |  |       |       |        
|                   | Tax Exempt Bond           |                                                             |  | 3.05%                 |  |      |       | 10,565  |         |  |       | 22,193 |        
|                   |                           |                                                             |  |                       |  |      |       |         |         |  |       |       
|                   |                           | Total Variable Rate Debt                                    |  |                       |  |      |       |         | 161,465 |  |       |        | 116,193 | 
|                   |                           |                                                             |  |                       |  |      |       |         |         |  |       |       
|                   |                           | Total outstanding indebtedness before hedge
    adjustments |  |                       |  |      |       |         | 696,736 |  |       |        | 717,560 | 
|Hedge adjustments  |                           |                                                             |  |                       |  |      | 5,720 |         |         |  | 1,785 |       
|                   |                           |                                                             |  |                       |  |      |       |         |         |  |       |       
|                   |                           | Total Outstanding Indebtedness                              |  |                       |  |      |       | $       | 702,456 |  |       | $      | 719,345 | 
|                   |                           |                                                             |  |                       |  |      |       |         |         |  |       |       

The one-month London Interbank Offered Rate
(LIBOR) as of December 31, 2002 was 1.38%.

Mortgage
Loans The 6.76%
mortgage loan requires monthly principal and interest payments
on a 20-year, 8-month amortization schedule with a balloon
payment due at maturity in October 2008.

The 8.00% mortgage loan requires monthly
principal and interest payments on a 30-year amortization
schedule with a balloon payment due at maturity in September
2005.

Fixed Rate Mortgage
Notes The fixed
rate mortgage notes bear interest at fixed rates ranging from
6.75% to 7.82% and require either monthly interest payments only
or monthly interest and principal payments over the lives of the
notes which have maturities that range from the year 2005 to
2010. The weighted average interest rate and debt maturity as of
December 31, 2002 for these mortgage notes were 7.16% and
5.0 years.

Variable Rate Mortgage
Note The variable
rate mortgage note requires interest only payments until its
maturity on July 1, 2005. We have two one-year extension
options available to us under the variable rate mortgage note.

Medium-Term
Notes On
April 20, 2000, we commenced a new program for the sale by
the Operating Partnership of up to $250.0 million aggregate
principal amount of medium-term notes (MTNs), due
nine months or more from the date of issuance. We had notes with
an aggregate principal amount of $112.0 million outstanding
in connection with this MTN program as of December 31, 2002.

On May 29, 1998, we established a program
for the sale by the Operating Partnership of up to
$95.0 million aggregate principal amount of MTNs due nine
months or more from the date of issuance. We had notes with an
aggregate principal amount of $25.0 million outstanding in
connection with this MTN program as of December 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.

The medium-term notes require that we comply with
certain affirmative, negative and financial covenants. We were
in compliance with these covenants as of December 31, 2002.

Unsecured
Notes The
unsecured notes consist of $30.0 million of notes due 2003,
$50.0 million of notes due 2004 and $50.0 million of
notes due 2007. The unsecured notes require semi-annual interest
payments until the end of the respective terms. The unsecured
notes require that we comply with certain affirmative, negative
and financial covenants. We were in compliance with these
covenants as of December 31, 2002. The interest rate
reflected above for the unsecured notes repaid during 2002
represents the average interest rate of the unsecured notes
repaid.

Unsecured Credit
Facility We have
a syndicated unsecured line of credit in the amount of
$225.0 million which matures on September 26, 2004.
The credit facility provides funds for new development,
acquisitions and general working capital purposes. Loans under
the credit facility bear interest at LIBOR plus 100 basis
points. The spread component of the aggregate interest rate will
change in the event of an upgrade or downgrade of our unsecured
credit rating of BBB- by Standard & Poors Rating
Services and Baa3 by

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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.


The credit facility had an average interest rate
of 2.69% in 2002, 4.99% in 2001 and 7.20% in 2000 and an average
balance outstanding of $135.9 million in 2002,
$113.5 million in 2001 and $119.8 million in 2000. In
addition, the maximum outstanding principal amount was
$175.0 million in 2002, $146.5 million in 2001 and
$174.0 million in 2000. As of December 31, 2002, the
outstanding balance of the credit facility was
$144.0 million, leaving $81.0 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 September 27, 2002, we entered into an
amendment to the credit agreement related to our unsecured line
of credit which modified certain definitions and financial
covenants that we are required to meet at the end of each fiscal
quarter. We were in compliance with these covenants and all
other covenants included in the credit agreement as of
December 31, 2002.

Variable Rate Tax Exempt
Bond The average
effective interest rate of the variable rate tax exempt bond was
2.90% for the year ended December 31, 2002. This bond bears
interest at various rates set by a remarketing agent at the
demand note index plus 0.50%, set weekly, or the lowest
percentage of prime which allows the resale at a price of par.
The bond contains covenants which require that we lease or hold
for lease 20% of the apartment homes for moderate-income
residents. The bond requires maintenance of a letter of credit
or surety bond (credit enhancement) aggregating to
$10.8 million as of December 31, 2002. The credit
enhancement provides for a principal amortization schedule which
approximates a 25-year term during the term of the credit
enhancement.

Real estate assets of 20 communities with a
net book value of $398.4 million serve as collateral for
the various secured debt agreements.

Extraordinary
items The
extraordinary items during the year ended December 31, 2002
resulted from prepayment penalties incurred on two mortgages
that were repaid during the period. These items are shown in the
consolidated statement of earnings net of $36,000, which was
allocated to the minority interest of common unitholders in the
Operating Partnership. The extraordinary items represent $0.01
per share for the year ended December 31, 2002.

The aggregate maturities of all debt (excluding
fair value adjustments of hedged debt instruments) for each of
the years ending December 31 are as follows (in thousands):

|           |  |            |         |            |  |            |         |               |  |            |         |           |  |       |       |  |  |   |        |  |  |   |         |  |  |   |         | 
|---------- |  | ---------- | ------- | ---------- |  | ---------- | ------- | ------------- |  | ---------- | ------- | --------- |  | ----- | ----- |  |  | - | ------ |  |  | - | ------- |  |  | - | ------- | 
|           |  | Fixed Rate |         | Fixed Rate |  | Fixed Rate |         | Variable Rate |  | Tax Exempt |         | Unsecured |  |      
|           |  | Mortgage   |         | Mortgage   |  | Unsecured  |         | Mortgage      |  | Variable   |         | Credit    |  |      
|           |  | Loans      |         | Notes      |  | Notes      |         | Note          |  | Rate Bonds |         | Facility  |  | Total
|           |  |            |         |            |  |            |         |               |  |            |         |           |  |      
|2003       |  | $          | 3,780   |            |  | $          | 1,722   |               |  | $          | 47,000  |           |  | $     |      |  |  | $ | 220    |  |  | $ |        |  |  | $ | 52,722  | 
|2004       |  |            | 4,044   |            |  |            | 1,841   |               |  |            | 50,000  |           |  |       |      |  |  |   | 220    |  |  |   | 144,000 |  |  |   | 200,105 | 
|2005       |  |            | 11,944  |            |  |            | 28,856  |               |  |            | 25,000  |           |  |       | 6,900 |  |  |   | 220    |  |  |   |        |  |  |   | 72,920  | 
|2006       |  |            | 4,467   |            |  |            | 23,735  |               |  |            | 25,000  |           |  |       |      |  |  |   | 220    |  |  |   |        |  |  |   | 53,422  | 
|2007       |  |            | 4,779   |            |  |            | 21,828  |               |  |            | 50,000  |           |  |       |      |  |  |   | 9,685  |  |  |   |        |  |  |   | 86,292  | 
|Thereafter |  |            | 112,935 |            |  |            | 48,340  |               |  |            | 70,000  |           |  |       |      |  |  |   |       |  |  |   |        |  |  |   | 231,275 | 
|           |  |            |         |            |  |            |         |               |  |            |         |           |  |       |       |  |  |   |        |  |  |   |         |  |  |   |         | 
|           |  | $          | 141,949 |            |  | $          | 126,322 |               |  | $          | 267,000 |           |  | $     | 6,900 |  |  | $ | 10,565 |  |  | $ | 144,000 |  |  | $ | 696,736 | 
|           |  |            |         |            |  |            |         |               |  |            |         |           |  |       |       |  |  |   |        |  |  |   |         |  |  |   |         | 

70



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|   |                  
|-- | -----------------
|7. | MINORITY INTEREST

Minority interests of common unitholders consists
of the following as of December 31, 2002 and 2001 (in
thousands):

|                                                                     |  |      |        |      |  |   |        |  
|-------------------------------------------------------------------- |  | ---- | ------ | ---- |  | - | ------ | -
|                                                                     |  | 2002 |        | 2001
|                                                                     |  |      |        |     
|Minority interest of common unitholders in
    Operating Partnership |  | $    | 51,272 |      |  | $ | 45,986 |  
|Minority interest in three operating communities                     |  |      | (1,008 | )    |  |   | (494   | )
|                                                                     |  |      |        |      |  |   |        |  
|                                                                     |  | $    | 50,264 |      |  | $ | 45,492 |  
|                                                                     |  |      |        |      |  |   |        |  

As of December 31, 2002, there were
30,980,526 common units outstanding, of which 27,436,060, or
88.6%, were owned by Summit and 3,544,466, or 11.4%, were owned
by other partners (including certain of our directors).

Proceeds from common stock issued are contributed
to the Operating Partnership for an equivalent number of common
units. Total common stock issued and related proceeds
contributed to the Operating Partnership for an equivalent
number of common units was 531,000 shares valued at
$11.1 million ($20.91 per share average) for the year ended
December 31, 2002 and 406,000 shares valued at
$9.0 million ($22.15 per share average) for the year ended
December 31, 2001. No individual transaction significantly
changed our ownership percentage in the Operating Partnership.
Our ownership percentage in the Operating Partnership was 88.6%
as of December 31, 2002, 88.4% as of December 31, 2001
and 85.8% as of December 31, 2000.

Under certain circumstances, if the holders of
common units request redemption of their units, the Operating
Partnership may elect to have us issue shares of our common
stock in exchange for those common units on a one-for-one basis
(subject to adjustment), or we may purchase those common units
for cash. In addition to the amounts set forth in the preceding
paragraph, we issued 13,658 shares of common stock in
exchange for common units owned by other partners on a
one-for-one basis during 2002. The shares exchanged were valued
based upon the market price per share of our common stock and
had an aggregate value of $285,000. During the year ended
December 31, 2001, we exchanged 150,679 shares of
common stock valued at $4.0 million for an equivalent
number of common units. During the year ended December 31,
2000, we exchanged 55,677 shares of common stock valued at
$1.1 million for an equivalent number of common units and
exchanged 93,945 common units for cash of $1.8 million.

We issued 66,376 common units at a price of
$28.625 per unit as partial consideration for the purchase of a
building and parcel of land during the year ended
December 31, 2001. During the year ended December 31,
2001, the purchaser of the former Summit Radbourne and Summit
Arbors communities exchanged 741,148 common units valued at
$17.6 million as partial consideration for such purchase.

Common units issued for the purchase of
communities were valued based upon the market price per share of
our common stock, as the common units can be exchanged for
shares of our common stock on a one-for-one basis (subject to
adjustment). We issued 96,455 common units valued at
$2.2 million in connection with the purchase of our joint
venture partners interest in each of two communities
during August 2000.

8. ACQUISITIONS AND
DISPOSITIONS

During the year ended December 31, 2002, we
sold eight communities comprising 2,399 apartment homes for an
aggregate sales price of $211.8 million, resulting in an
aggregate net gain on sale of $78.7 million. The aggregate
carrying value of real estate assets sold was
$122.4 million. Net proceeds from four of the eight
communities, equaling $107.4 million, were placed in escrow
with a qualified intermediary in accordance with like-kind
exchange income tax rules and regulations. In the event that the
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. The eight communities sold were the former Summit
Breckenridge, Summit New Albany, Summit Pike Creek, Summit
Mayfaire, Summit Meadow, Summit Stonefield, Summit Sand Lake and
Summit Windsor. For the most part, these communities were
located outside of our core markets. The disposition of Summit
Breckenridge, Summit New Albany and Summit Pike Creek completed
our exit of the Richmond, Virginia, Columbus, Ohio and
Wilmington, Delaware markets.

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During the year ended December 31, 2002, a
joint venture in which we held a 50% interest, sold a community
known as The Heights at Cheshire Bridge to an unrelated third
party and the joint venture was dissolved.

On July 1, 2002, we acquired a stabilized,
luxury apartment community in the Galleria sub-market of Dallas,
Texas for cash in the amount of $17.7 million. The
community, now known as Summit San Raphael, has 222 apartment
homes and was constructed in 1999. The following summary of
selected unaudited pro forma results of operations presents
information as if the purchase of Summit San Raphael had
occurred at the beginning of each period presented. The pro
forma information is provided for informational purposes only
and is not indicative of results that would have occurred or
which may occur in the future (in thousands, except per share
amounts):

|                                             |         |                         |         |      |  |      |         |      |  |   |         |      | 
|-------------------------------------------- | ------- | ----------------------- | ------- | ---- |  | ---- | ------- | ---- |  | - | ------- | ---- | 
|                                             |         |                        
|                                             |         | Year Ended December 31,
|                                             |         |                        
|                                             |         | 2002                    |         | 2001 |  | 2000
|                                             |         |                         |         |      |  |     
|Total revenues                               |         | $                       | 158,095 |      |  | $    | 170,934 |      |  | $ | 167,344 |     
|Income from continuing operations            |         |                         | 27,414  |      |  |      | 48,438  |      |  |   | 55,630  |     
|Net income                                   |         |                         | 91,917  |      |  |      | 57,448  |      |  |   | 64,477  |     
|Income from continuing operations per share: |         |                         |         |      |  |      |         |      |  |   |         |     
|                                             | Basic   |                         | $       | 1.00 |  |      | $       | 1.81 |  |   | $       | 2.11 | 
|                                             | Diluted |                         |         | 0.99 |  |      |         | 1.79 |  |   |         | 2.10 | 
|Net income per share:                        |         |                         |         |      |  |      |         |      |  |   |         |     
|                                             | Basic   |                         |         | 3.36 |  |      |         | 2.14 |  |   |         | 2.45 | 
|                                             | Diluted |                         |         | 3.34 |  |      |         | 2.12 |  |   |         | 2.43 | 

During the year ended December 31, 2001, we
sold one parcel of land and nine communities comprising 2,189
apartment homes for an aggregate sales price of
$167.6 million, resulting in an aggregate net gain on sale
of $34.4 million. Net proceeds from three of the nine
communities, equaling $31.7 million, were placed in escrow
with a qualified intermediary in accordance with like-kind
exchange income tax rules and regulations and were fully
invested in qualified like-kind property during the required
time period. The parcel of land was located in Richmond,
Virginia and the nine communities sold were the former Summit
Palm Lake, Summit Arbors, Summit Radbourne, Summit Lofts, Summit
Gateway, Summit Stony Point, Summit Deerfield, Summit Walk and
Summit Waterford.

During the year ended December 31, 2001,
Station Hill, LLC, in which we own a 25% interest, sold a
community, the former Summit Station, for $11.9 million.
This sale resulted in the recognition of a gain on sale by the
joint venture of $1.1 million, of which we recorded
$271,000. The purchaser of Summit Station assumed an
$8.3 million mortgage and paid the balance of the purchase
price in cash.

We did not acquire any communities during the
year ended December 31, 2001.

During the year ended December 31, 2000, we
sold seven communities comprising 1,676 apartment homes for an
aggregate sales price of $103.9 million, resulting in a
gain on sale of $38.5 million. Net proceeds from six of the
seven disposition communities, equaling $78.1 million, were
placed in escrow with a qualified intermediary in accordance
with like-kind exchange income tax rules and regulations and
were fully invested in qualified like-kind property during the
required time period. The communities sold were the former
Summit Creekside, Summit Eastchester, Summit Sherwood, Summit
River Crossing, Summit Blue Ash, Summit Park and Summit Village.

On August 1, 2000, we purchased our joint
venture partners interest in each of two communities,
Summit Shiloh (182 apartment homes) and Summit Sweetwater (308
apartment homes), for an aggregate purchase price of
$36.0 million. We formerly owned a 49% interest in each of
two separate joint ventures that developed these communities.
The acquisitions were primarily financed with the issuance of
96,455 common units valued at $2.2 million and the payment
of $33.8 million in cash.

The following summary of selected unaudited pro
forma results of operations presents information as if the
purchase of our joint venture partners interest in each of
Summit Sweetwater and Summit Shiloh had

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##### 



occurred at the beginning of the year ended
December 31, 2000. The pro forma information is provided
for informational purposes only and is not indicative of results
that would have occurred or which may occur in the future (in
thousands, except per share amounts):


|                                          |         |      |         |      | 
|----------------------------------------- | ------- | ---- | ------- | ---- | 
|                                          |         | 2000
|                                          |         |     
|Total revenues from continuing operations |         | $    | 168,093 |     
|Income from continuing operations         |         |      | 54,370  |     
|Net income                                |         |      | 63,218  |     
|Net income per share:                     |         |      |         |     
|                                          | Basic   |      | $       | 2.40 | 
|                                          | Diluted |      |         | 2.38 | 

In accordance with SFAS No. 144, net income
and gain (loss) on disposition of real estate for communities
sold or considered held for sale after December 31, 2001
are reflected in our consolidated statements of earnings as
discontinued operations for all periods presented
and those communities sold or considered held for sale prior to
December 31, 2001 remain in continuing
operations. In addition, we have determined to separately
reflect the assets and liabilities of communities held for sale
or sold in the current period as Net real estate
assets  held for sale, Other
assets  held for sale, Note
payable  held for sale, and Other
liabilities  held for sale in the balance
sheets for all periods presented.

Subsequent to December 31, 2002, we executed
a contract for the sale of an apartment community, Summit
Fairways, located in Orlando, Florida. The assets of Summit
Fairways were recorded at the lower of cost or fair value less
costs to sell, or $14.9 million, as of December 31,
2002. The net income from Summit Fairways represented 1.0% of
our net income for the year ended December 31, 2002. Summit
Fairways was sold on March 5, 2003 for $18.8 million
as part of our strategy to exit our non-core markets. We expect
to use the proceeds from the sale of Summit Fairways to fund
future acquisition and development activity. We expect to record
a gain resulting from the sale of Summit Fairways.

Below is a summary of discontinued operations for
all communities sold during 2002 excluding Summit Breckenridge
an joint venture communities, and including Summit Fairways as
of December 31, 2002 (in thousands). Summit Breckenridge
was properly classified as held for sale prior to
January 1, 2002 and, therefore, its operations are included
in income from continuing operations.

|                                                                                                  |                        |                         |        |        |  |      |        |        |  |   |        |        | 
|------------------------------------------------------------------------------------------------- | ---------------------- | ----------------------- | ------ | ------ |  | ---- | ------ | ------ |  | - | ------ | ------ | 
|                                                                                                  |                        |                        
|                                                                                                  |                        | Year Ended December 31,
|                                                                                                  |                        |                        
|                                                                                                  |                        | 2002                    |        | 2001   |  | 2000
|                                                                                                  |                        |                         |        |        |  |     
|Property revenues:                                                                                |                        |                         |        |        |  |      |        |        |  |   |        |       
|                                                                                                  | Rental revenues        |                         | $      | 18,744 |  |      | $      | 23,670 |  |   | $      | 22,784 | 
|                                                                                                  | Other property revenue |                         |        | 1,457  |  |      |        | 1,763  |  |   |        | 1,730  | 
|                                                                                                  |                        |                         |        |        |  |      |        |        |  |   |        |       
|Total property revenues                                                                           |                        |                         | 20,201 |        |  |      | 25,433 |        |  |   | 24,514 |       
|Property operating and maintenance expense                                                        |                        |                         | 7,002  |        |  |      | 8,375  |        |  |   | 7,533  |       
|Depreciation                                                                                      |                        |                         | 3,892  |        |  |      | 5,148  |        |  |   | 4,891  |       
|Interest and amortization                                                                         |                        |                         | 1,188  |        |  |      | 1,568  |        |  |   | 1,785  |       
|                                                                                                  |                        |                         |        |        |  |      |        |        |  |   |        |       
|Income from discontinued operations before net
    gain on disposition of discontinued operations |                        |                         | 8,119  |        |  |      | 10,342 |        |  |   | 10,305 |       
|Net gain on disposition of discontinued operations                                                |                        |                         | 64,907 |        |  |      |       |        |  |   |       |       
|                                                                                                  |                        |                         |        |        |  |      |        |        |  |   |        |       
|Income from discontinued operations before
    minority interest and extraordinary items          |                        |                         | 73,026 |        |  |      | 10,342 |        |  |   | 10,305 |       
|Extraordinary items                                                                               |                        |                         | (209   | )      |  |      |       |        |  |   |       |       
|Minority interest of discontinued operations                                                      |                        |                         | (8,314 | )      |  |      | (1,332 | )      |  |   | (1,457 | )     
|                                                                                                  |                        |                         |        |        |  |      |        |        |  |   |        |       
|Income from discontinued operations, net of
    minority interest                                 |                        | $                       | 64,503 |        |  | $    | 9,010  |        |  | $ | 8,848  |       
|                                                                                                  |                        |                         |        |        |  |      |        |        |  |   |        |       

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9. INCOME TAXES

We have maintained, and intend to maintain, our
election to be taxed as a real estate investment trust
(REIT) under the Internal Revenue Code of 1986, as
amended. As a result, we generally will not be subject to
federal and state income taxation at the corporate level as long
as we distribute annually at least 90% of our taxable income,
excluding net capital gains, as defined in the Code, to our
stockholders and satisfy certain other requirements.
Accordingly, no provision has been made for federal and state
income taxes in the accompanying consolidated financial
statements.

SFAS No. 109, Accounting for Income
Taxes, requires a public enterprise to disclose the
aggregate difference in the basis of its net assets for
financial and tax reporting purposes. The carrying value
reported in our consolidated financial statements exceeded the
tax basis by $296.1 million as of December 31, 2002.

A reconciliation of net income as reported for
financial reporting purposes to taxable income available to
common stockholders for the year ended December 31, 2002 is
as follows:

|                                                                                                                                                                                |  |              |         |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ------- | -
|                                                                                                                                                                                |  | Year Ended  
|                                                                                                                                                                                |  | December 31,
|                                                                                                                                                                                |  | 2002        
|                                                                                                                                                                                |  |             
|Net income before minority interest of common
    unitholders in Operating Partnership, dividends to preferred
    unitholders in Operating Partnership and extraordinary items |  | $            | 116,239 |  
|Excess of financial reporting depreciation over
    tax depreciation                                                                                                            |  |              | 4,664   |  
|Excess of financial gain on sale of real estate
    assets over taxable gain                                                                                                    |  |              | (55,124 | )
|Other                                                                                                                                                                           |  |              | (9,400  | )
|                                                                                                                                                                                |  |              |         |  
|Taxable income of the Operating Partnership                                                                                                                                     |  |              | 56,379  |  
|Less: Taxable income allocated to preferred
    unitholders in Operating Partnership                                                                                            |  |              | (12,420 | )
|Less: Taxable income allocated to common
    unitholders in Operating Partnership                                                                                               |  |              | (5,033  | )
|                                                                                                                                                                                |  |              |         |  
|Operating Partnership income allocated to Summit                                                                                                                                |  |              | 38,926  |  
|Section 754 depreciation                                                                                                                                                        |  |              | (296    | )
|                                                                                                                                                                                |  |              |         |  
|Taxable income available to common stockholders                                                                                                                                 |  | $            | 38,630  |  
|                                                                                                                                                                                |  |              |         |  

A schedule of per share distributions paid to be
reported by stockholders is set forth in the following table:

|                            |                              |                         |      |            |  |        |      |            |   |        |      |            |  |  |      |       |   |   |      |      |  |  |      |       |  
|--------------------------- | ---------------------------- | ----------------------- | ---- | ---------- |  | ------ | ---- | ---------- | - | ------ | ---- | ---------- |  |  | ---- | ----- | - | - | ---- | ---- |  |  | ---- | ----- | -
|                            |                              |                        
|                            |                              | Year Ended December 31,
|                            |                              |                        
|                            |                              |                         |      |            |  |       
|                            |                              | 2002                    |      | 2001       |  | 2000  
|                            |                              |                         |      |            |  |       
|                            |                              | Amount                  |      | Percentage |  | Amount |      | Percentage |   | Amount |      | Percentage
|                            |                              |                         |      |            |  |        |      |            |   |        |      |           
|Ordinary income             |                              | $                       | 0.80 |            |  |        | 42.3 | %          |   | $      | 1.42 |            |  |  | 77.6 | %     |   | $ | 1.56 |      |  |  | 90.0 | %    
|20% Long-term capital gain  |                              |                         | 0.16 |            |  |        | 8.5  | %          |   |        | 0.30 |            |  |  | 16.4 | %     |   |   | 0.10 |      |  |  | 6.0  | %    
|Unrecaptured Sec. 1250 gain |                              |                         | 0.59 |            |  |        | 31.2 | %          |   |        | 0.11 |            |  |  | 6.0  | %     |   |   | 0.07 |      |  |  | 4.0  | %    
|Return of capital           |                              |                         | 0.34 |            |  |        | 18.0 | %          |   |        |     |            |  |  |     |       |   |   |     |      |  |  | 0.0  | %    
|                            |                              |                         |      |            |  |        |      |            |   |        |      |            |  |  |      |       |   |   |      |      |  |  |      |      
|                            | Total distribution per share |                         | $    | 1.89       |  |        |      | 100.0      | % |        | $    | 1.83       |  |  |      | 100.0 | % |   | $    | 1.73 |  |  |      | 100.0 | %
|                            |                              |                         |      |            |  |        |      |            |   |        |      |            |  |  |      |       |   |   |      |      |  |  |      |      

10. NOTES RECEIVABLE FROM
EMPLOYEES

Our Board of Directors believes that ownership of
our common stock by our executive officers and certain other
qualified employees aligns the interests of these officers and
employees with the interests of our stockholders. To this end,
our Board of Directors approved, and we instituted, a loan
program. As a result of recent legislation, we are no longer
permitted to make loans to our executive officers and,
therefore, new issuances to our executive officers under the
loan program have been terminated. Under the terms of the loan
program, we lent amounts to certain of our executive officers
and other qualified employees to (a) finance the purchase
of our 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 our common
stock, or (c) finance the

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annual tax liability or other expenses of an
executive officer related to the vesting of shares of common
stock which constitute a portion of a restricted stock award
granted to the executive officer. 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 our common stock which are the subject of the
loans. If the market price of Summits common stock falls
materially below the price at which the shares of stock were
purchased, the proceeds of the sale of the common stock may not
be sufficient to repay the loan. During the three months ended
June 30, 2002, we issued $6.7 million of loans to six
executive officers. As of December 31, 2002, we had loans
receivable in the amount of $19.5 million which were
collateralized by 939,586 shares of our common stock valued
at $16.7 million. The proceeds from the shares that serve
as collateral for the loans would not be sufficient to repay the
loans in full. However, since the loans are full recourse, we
have the right to collect any additional amount owed directly
from the officer or employee to the extent such officer or
employee is able to pay such amount. We had loans receivable in
the amount of $14.5 million as of December 31, 2001.


11. COMMITMENTS AND
CONTINGENCIES

The estimated cost to complete four development
projects currently under construction was $75.9 million as
of December 31, 2002. Anticipated construction completion
dates of the projects range from the second quarter of 2003 to
the third quarter of 2005.

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

We rent office space in several locations. Rental
expense amounted to $271,000 in 2002, $108,000 in 2001, and
$108,000 in 2000 ($871,000 in 2002, $882,000 in 2001 and
$848,000 in 2000 including amounts recorded by the Management
Company).

Future minimum rental payments to be made for
those operating leases (including those of the Management
Company) that have initial or remaining non-cancelable lease
terms in excess of one year are as follows (in thousands):

|                          |  |   |       | 
|------------------------- |  | - | ----- | 
|Years Ending December 31, |  |  
|                          |  |  
|2003                      |  | $ | 881   | 
|2004                      |  |   | 790   | 
|2005                      |  |   | 813   | 
|2006                      |  |   | 837   | 
|2007                      |  |   | 862   | 
|Thereafter                |  |   | 2,371 | 
|                          |  |   |       | 
|                          |  | $ | 6,554 | 
|                          |  |   |       | 

Of the amounts shown above, $6.1 million of
the total minimum rental payments are for the Management
Companys lease of office space in Summit Grandview,
$14,000 of the total minimum rental payments are for our Austin
City Teams lease of office space in Summit Las Palmas and
$4,000 of the total minimum rental payments are for our Raleigh
City Teams lease of office space in Summit Westwood.

In January 2000, the Operating Partnership
entered into a real estate purchase agreement with a third-party
real estate developer. Under the terms of the agreement, the
Operating Partnership has agreed to purchase upon completion a
Class A mixed-use community, which will be
called Summit Brickell, and is located in Miami, Florida. The
Operating Partnership will purchase Summit Brickell upon the
earlier of one year after construction completion or the
achievement of 80% occupancy. The Operating Partnership may
extend this

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closing obligation for six months after the
initial purchase period. The Operating Partnership expects to
close on the purchase of Summit Brickell 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 are requested by the Operating
Partnership; such change order 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 by the Operating Partnership is subject to customary
closing conditions. The Operating Partnership has 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, the Operating Partnership 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.


On May 25, 2001, we contributed
$4.2 million for a 29.78% interest in a joint venture named
SZF, LLC, which owns substantially all of the interests in a
limited liability company that is developing, through a
third-party contractor, an apartment community in Miami,
Florida. The community will consist of 323 apartment homes and
17,795 square feet of office/ retail space. The limited
liability company has also acquired an adjacent piece of land.
The construction costs are being funded through the equity that
the joint venture contributed to the limited liability company
and by a loan to that company from an unrelated third party. In
the event that construction costs exceed the construction loan
amount, we have agreed to advance the amount required to fund
such costs in excess of the construction loan. This advance
accrues a preferential return at the rate of eleven percent
(11%) per year to be paid from the distributions from the joint
venture. As of December 31, 2002, we had advanced
$2.2 million to SZF, LLC. Subsequent to December 31,
2002, we have advanced an additional $6.1 million to SZF,
LLC.

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

We have employment agreements with two of our
former executive officers, both of whom resigned from such
executive positions, but who remain as employees and have agreed
to provide various services to us from time to time through
December 31, 2011. Each employment agreement requires that
we pay to the former officers a base salary aggregating up to
$2.1 million over the period from July 2, 2001 to
December 31, 2011 (beginning with calendar year 2002, up to
$200,000 on an annual basis). Each employment agreement also
requires that we provide participation in our life insurance
plan, office space, information systems support and
administrative support for the remainder of each officers
life, and participation in our health and dental insurance plans
until the last to die of the officer or such officers
spouse. Either party can terminate the employment agreements,
effective 20 business days after written notice is given. The
full base salary amount due shall be payable through 2011
whether or not the agreements are terminated earlier in
accordance with their terms.

We have employment agreements with all of our
executive officers. The employment agreements for two of our
executive officers provide for the payment of severance benefits
in certain circumstances. For one executive officer, these
benefits generally provide for the payment of the executive
officers annual base salary for a period ending on the
later of July 1, 2004 or the first anniversary of the
termination date of such executive officers employment.
For the other executive officer, if such officers
employment is terminated without cause, the
executive officer will be entitled to receive an amount equal to
such officers monthly salary multiplied by the number of
years (pro rated for partial years) that such officer was
employed by us prior to such termination. In addition, most of
the executive officers have severance agreements that provide
for the payment of severance benefits of up to three times such
officers annual base salary and cash bonus in the event of
the termination of the officers employment under certain
circumstances following certain change in

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control or combination
transactions involving a consolidation or merger. The
benefits payable under the terms of the severance agreements are
subject to reduction by the amount of any severance benefits
that may be payable under applicable employment agreements.


We are obligated to redeem each common unit in
the Operating Partnership at the request of the holder for cash
equal to the fair market value of one share of common stock,
except that the Operating Partnership may elect to cause us to
acquire each common unit presented for redemption for one share
of common stock (subject to adjustment).

12. EMPLOYEE BENEFIT PLANS

Profit Sharing Plan

We have a defined contribution plan pursuant to
Section 401(k) of the Internal Revenue Code. Employees are
eligible to contribute to the plan beginning on the first day of
the second calendar quarter after they are employed. Our
matching contributions begin on the same date as the
employees contributions and are equal to one-half of each
employees contribution up to a maximum of 3% of each
employees compensation. We made aggregate contributions of
$376,000 in 2002, $329,000 in 2001 and $349,000 in 2000.

Stock Option Plan

In 1994, we established the 1994 Stock Option and
Incentive Plan under which 1,000,000 shares of our common
stock were reserved for issuance. The incentive plan was amended
and restated in 1998 to, among other things, increase the number
of shares reserved for issuance from 1,000,000 to 3,000,000
shares. The plan provides that the option price shall not be
less than the fair market value of the shares at the date of
grant. The options have ten-year lives and vest in three or five
annual installments on the anniversaries of the date of grant,
except for shares granted to our directors, which vest on the
date of grant. We apply APB Opinion No. 25 and related
interpretations in accounting for our stock options.
Accordingly, no compensation cost has been recognized for our
stock options.

A summary of changes in common stock options for
the three years ended December 31, 2002 is as follows:

|                                  |                                    |                                   |           |                  |           |   |       |       |       | 
|--------------------------------- | ---------------------------------- | --------------------------------- | --------- | ---------------- | --------- | - | ----- | ----- | ----- | 
|                                  |                                    |                                   |           | Weighted Average
|                                  |                                    | Options                           |           | Exercise Price  
|                                  |                                    |                                   |           |                 
|Outstanding at December 31, 1999. |                                    |                                   | 1,350,271 |                  |           | $ | 17.81 |      
|                                  | Granted to employees and directors |                                   |           | 241,000          |           |   |       | 20.02 |      
|                                  | Exercised                          |                                   |           | (136,500         | )         |   |       | 18.01 |      
|                                  | Forfeited                          |                                   |           | (186,050         | )         |   |       | 17.59 |      
|                                  |                                    |                                   |           |                  |           |   |       |      
|Outstanding at December 31, 2000. |                                    |                                   | 1,268,721 |                  |           |   | 18.24 |      
|                                  | Granted to employees and directors |                                   |           | 270,000          |           |   |       | 24.51 |      
|                                  | Exercised                          |                                   |           | (63,414          | )         |   |       | 17.86 |      
|                                  | Forfeited                          |                                   |           | (10,700          | )         |   |       | 16.50 |      
|                                  |                                    |                                   |           |                  |           |   |       |      
|Outstanding at December 31, 2001. |                                    |                                   | 1,464,607 |                  |           |   | 19.43 |      
|                                  | Granted to employees and directors |                                   |           | 745,000          |           |   |       | 22.01 |      
|                                  | Exercised                          |                                   |           | (121,600         | )         |   |       | 18.44 |      
|                                  | Forfeited                          |                                   |           | (69,075          | )         |   |       | 19.15 |      
|                                  |                                    |                                   |           |                  |           |   |       |      
|                                  |                                    | Outstanding at December 31, 2002. |           |                  | 2,018,932 |   |       |       | 20.45 | 
|                                  |                                    |                                   |           |                  |           |   |       |      

Exercise prices for options outstanding as of
December 31, 2002 ranged from $16.50 to $24.56. The
weighted average remaining contractual life of those options is
7.4 years.

Options to purchase 1,003,733, 848,408 and
635,221 shares of common stock were exercisable as of
December 31, 2002, 2001 and 2000. The weighted average
exercise price for the shares exercisable as of
December 31, 2002, 2001 and 2000 was $19.11, $18.82 and
$18.35.

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The fair value of options granted in 2002 was
$1.89 per share and was estimated on the date of grant using the
Black Scholes option-pricing model with the following
weighted-average assumptions: dividend yield of 7.51%, expected
volatility of 20.2%, risk free interest rate of 4.71% and
expected lives of 5.4 years.

The fair value of options granted in 2001 was
$2.06 per share and was estimated on the date of grant using the
Black Scholes option-pricing model with the following
weighted-average assumptions: dividend yield of 8.05%, expected
volatility of 20.6%, risk free interest rate of 5.03% and
expected lives of 4.8 years.

The fair value of options granted in 2000 was
$1.80 per share and was estimated on the date of grant using the
Black Scholes option-pricing model with the following
weighted-average assumptions: dividend yield of 8.98%, expected
volatility of 21.1%, risk free interest rate of 6.51% and
expected lives of 4.4 years.

In addition, the stock option and incentive plan
provides for the grant of stock to employees. We granted
1,773 shares of restricted stock under this plan in 2002.
The market value of the restricted stock granted in 2002 totaled
$35,000 and was recorded as unamortized restricted stock
compensation and is shown as a separate component of
stockholders equity. During 2002, 6,046 shares of
restricted stock were surrendered by grantees to satisfy the
income tax liability related to the stock grants. We granted
26,184 shares of restricted stock under the plan in 2001.
The market value of the restricted stock granted in 2001 totaled
$647,000. During 2001, there were 12,202 shares of
restricted stock forfeited by employees no longer employed by a
Summit entity and 14,933 shares of restricted stock
surrendered to satisfy the income tax liability of the grantees
related to the restricted stock grants. The aggregate market
value of these forfeited and surrendered shares was $503,000 in
2001. We granted 64,499 shares of restricted stock (net of
4,000 shares forfeited and 7,856 shares surrendered to
satisfy the income tax liability of grantees) valued at
$1.2 million under the plan in 2000. Unearned compensation
associated with the restricted stock is being amortized to
expense over the vesting periods, which range from three to five
years. We recognized expense relative to the stock grants of
$173,000 in 2002, $98,000 in 2001 and $300,000 in 2000.

During the year ended December 31, 2001, we
issued 94,818 shares of restricted stock valued at
$2.4 million pursuant to our Performance Stock Award Plan.
One-half of these shares, valued at $1.2 million, vested on
January 2, 2001, the date of grant, and was accrued and
recorded as a component of stockholders equity as of
December 31, 2000. The remaining balance of
$1.2 million was recorded as a component of
stockholders equity during 2001. Grantees surrendered
11,747 shares in 2002 and 18,263 shares in 2001 with a
market value of $295,000 during 2002 and $463,000 in 2001 to
satisfy their income tax liability associated with the shares
issued to them under the Performance Stock Award Plan. The
remaining shares vested in two equal annual installments on
January 2, 2002 and January 2, 2003.

Employee Stock Purchase Plan

In 1996, we established a non-qualified employee
stock purchase plan (ESPP) which allowed our
employees to purchase up to $25,000 of common stock per year.
The price of the shares of the common stock purchased was the
lesser of 85% of the closing price of such shares either on
(a) the first day of each six month purchase period, or
(b) the last day of each six month purchase period.
Transactions under the ESPP were suspended effective
July 2, 2002.

Total shares issued under the plan were 13,933 in
2002, 8,695 in 2001 and 88,848 in 2000. The market value of the
shares issued was $341,000 in 2002, $229,000 in 2001 and
$1.8 million in 2000. Through December 31, 2002, we
applied APB Opinion No. 25 and related interpretations in
accounting for our stock options and ESPP. Accordingly, no
compensation cost has been recognized for our stock options
granted or shares issued under the ESPP during the years ended
December 31, 2002, 2001 and 2000. Effective January 1,
2003, we adopted the fair value recognition provisions of SFAS
No. 123 prospectively to all stock options granted,
modified, or settled after January 1, 2003. Refer to the
table in Note 3 which reflects the effect on net income and
earnings per share had the fair value based method been applied
to all options granted in each year.

Effective January 1, 2003, we will begin to
recognize as an expense the fair value of all options granted on
or after January 1, 2003. We estimate that the resulting
expense recognized in 2003 will not be material to our financial
position or results of operations.

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13. DIVIDEND REINVESTMENT AND STOCK
PURCHASE PLAN

We have a dividend reinvestment and stock
purchase plan (DRIP). Direct stock purchases under
the DRIP were suspended effective October 31, 2002 and
dividend reinvestment under the DRIP was suspended effective
November 15, 2002. The DRIP provided both new investors and
existing holders of our stock (including common stock and other
classes of stock which may be outstanding from time to time)
with a method to purchase shares of common stock under the Stock
Purchase Program component of the plan. The plan also permitted
stockholders to designate all, a portion or none of the cash
dividends on their newly purchased common stock and cash
dividends on their existing stock for reinvestment in more
shares of common stock through the Dividend Reinvestment Program
component of the plan. With respect to reinvested dividends and
optional cash payments, shares of common stock were purchased
for the plan at a discount ranging from 0% to 5% (established
from time to time) from the market price, as more fully
described in the prospectus relating to the plan. Common stock
was purchased by the plans agent (Wachovia Bank) directly
from us or in open market or privately negotiated transactions,
as determined from time to time, to fulfill requirements for the
plan.

14. SHAREHOLDER RIGHTS
AGREEMENT

On December 14, 1998, our Board of Directors
adopted a shareholder rights agreement. In connection with the
adoption of the rights plan, our Board of Directors declared a
dividend distribution of one preferred stock purchase right for
each outstanding share of common stock to stockholders of record
as of the close of business on December 15, 1998.
Currently, these rights are not exercisable and trade with the
shares of our common stock. Under the rights plan, the rights
generally become exercisable if a person becomes an
acquiring person by acquiring 15% or more of our
common stock, or if a person commences a tender offer that would
result in that person owning 15% or more of our common stock. In
the event that a person becomes an acquiring person,
each holder of a right (other than the acquiring person) would
be entitled to acquire such number of units of preferred stock
(which are equivalent to shares of our common stock) having a
value of twice the exercise price of the right.

If we are acquired in a merger or other business
combination transaction after any such event, each holder of a
right would then be entitled to purchase, at the then-current
exercise price, shares of the acquiring companys common
stock having a value of twice the exercise price of the right.
The current exercise price per right is $45.00.

The rights will expire at the close of business
on December 14, 2008, unless we previously redeem or
exchange them as described below. The rights may be redeemed in
whole, but not in part, at a price of $0.01 per right (payable
in cash, shares of our common stock or other consideration
deemed appropriate by our Board of Directors) by our Board of
Directors only until the earlier of (a) the time at which
any person becomes an acquiring person or
(b) the expiration date. At any time after any person
becomes an acquiring person, our Board of Directors
may, at its option, exchange all or any part of the then
outstanding and exercisable rights for shares of our common
stock at an exchange ratio specified in the rights plan. Our
Board of Directors generally will not be empowered to effect
such exchange at any time after any person becomes the
beneficial owner of 50% or more of our common stock.

Until a right is exercised, the holder will have
no rights as a stockholder (beyond those as an existing
stockholder), including the right to vote or to receive
dividends.

In connection with the establishment of the
rights plan, our Board of Directors approved the creation of
preferred stock designated as Series A Junior Participating
Cumulative Preferred Stock with a par value of $0.01 per share.
Our Board also reserved 350,000 shares of preferred stock
for issuance upon exercise of the rights.

15. 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

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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, Disclosures
about Segments of an Enterprise and Related Information.


16. PREFERRED UNITS

As of December 31, 2002, the Operating
Partnership had outstanding 3.4 million preferred units of
limited partnership interest designated as 8.95% Series B
Cumulative Redeemable Perpetual Preferred Units. These preferred
units are redeemable by the Operating Partnership on or after
April 29, 2004 for cash at a redemption price equal to the
holders capital account, or at our option, shares of our
8.95% Series B Cumulative Redeemable Perpetual Preferred
Stock, or a combination of cash and shares of our 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 our 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 the
treatment of the Operating Partnership or the preferred units
for federal income tax purposes. Distributions on the
Series B preferred units are cumulative from the date of
original issuance and are payable quarterly at the rate of 8.95%
per year of the $25.00 original capital contribution. We made
distributions to the holders of the Series B preferred
units in the aggregate amount of $7.6 million during each
of the years ended December 31, 2002 and 2001.

As of December 31, 2002, the Operating
Partnership had outstanding 2.2 million preferred units of
limited partnership interest designated as 8.75% Series C
Cumulative Redeemable Perpetual Preferred Units. The preferred
units are redeemable by the Operating Partnership on or after
September 3, 2004 for cash at a redemption price equal to
the holders capital account. The holder of the
Series C preferred units has the right to exchange these
preferred units for shares of our 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 the treatment of the
Operating Partnership or the preferred units for federal income
tax purposes, or (d) if the holdings in the Operating
Partnership of the Series C unitholder exceed 18% of the
total profits of or capital interest in the Operating
Partnership for a taxable year. Distributions on the
Series C preferred units are cumulative from the date of
original issuance and are payable quarterly at the rate of 8.75%
per year of the $25.00 original capital contribution. We made
distributions to the holder of the Series C preferred units
in the aggregate amount of $4.8 million during each of the
years ended December 31, 2002 and 2001.

17. 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. On January 1, 2001, we
adopted SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities, as amended. SFAS
No. 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 consolidated balance sheet and
measure those instruments at fair value. The cumulative effect
of adopting SFAS No. 133 was not material to our financial
statements.

On June 13, 2002, we terminated an interest
rate swap with a $30.0 million notional amount. Under SFAS
No. 133, as a result of the termination, we de-designated
the $30.0 million swap as a fair value hedge against
certain fixed rate debt. We will amortize as a reduction of
interest expense $1.5 million, which represents the
difference between the par value and carrying amount of the
fixed-rate debt obligation, over the remaining

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term of the debt obligation, which matures on
December 15, 2003. Interest expense was reduced by $545,000
in 2002 as a result of amortizing this difference.


On June 14, 2002, we entered into an
interest rate swap with a notional amount of $50.0 million,
relating to $50.0 million of 7.20% fixed rate notes issued
under our MTN program. Under the interest rate swap agreement,
through the maturity date of August 15, 2007, (a) we
have agreed to pay to the counterparty the interest on a
$50.0 million notional amount at a floating interest rate
of three-month LIBOR plus 241.75 basis points, and (b) the
counterparty has agreed to pay to us the interest on the same
notional amount at the fixed rate of the underlying debt
obligation. The floating rate as of December 31, 2002 was
3.8175%. The fair value of the interest rate swap was an asset
of $4.8 million as of December 31, 2002. The swap has
been designated as a fair value hedge of the underlying fixed
rate debt obligation and has been recorded in Other
assets in the accompanying balance sheets. We assume no
ineffectiveness as the interest rate swap meets the short-cut
method conditions required under SFAS No. 133 for fair
value hedges of debt instruments. Accordingly, no gains or
losses were recorded in income relative to our underlying debt
and interest rate swap.

18. COMMON STOCK REPURCHASE
PROGRAM

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

|                                |                           |             |         |             |  |               |       |        |  |   |       |       | 
|------------------------------- | ------------------------- | ----------- | ------- | ----------- |  | ------------- | ----- | ------ |  | - | ----- | ----- | 
|                                |                           |             |         |             |  | Average Price
|                                |                           | Number of   |         | Value of    |  | per Share of 
|                                |                           | Shares      |         | Shares      |  | Shares       
|Year ended December 31,         |                           | Repurchased |         | Repurchased |  | Repurchased  
|                                |                           |             |         |             |  |              
|2000                            |                           |             | 279,400 |             |  | $             | 5,533 |        |  | $ | 19.80 |      
|2001                            |                           |             | 8,800   |             |  |               | 197   |        |  |   | 22.38 |      
|2002                            |                           |             | 151,300 |             |  |               | 2,666 |        |  |   | 17.62 |      
|                                |                           |             |         |             |  |               |       |        |  |   |       |      
|Total as of December 31, 2002   |                           |             | 439,500 |             |  |               | 8,396 |        |  |   | 19.10 |      
|Subsequent to December 31, 2002 |                           |             | 422,200 |             |  |               | 7,472 |        |  |   | 17.70 |      
|                                |                           |             |         |             |  |               |       |        |  |   |       |      
|                                | Total as of March 5, 2003 |             |         | 861,700     |  |               | $     | 15,868 |  |   | $     | 18.41 | 
|                                |                           |             |         |             |  |               |       |        |  |   |       |      

We had $40.1 million of remaining
availability for repurchases under the program as of
March 5, 2003.

19. IMPAIRMENT LOSS

Management considers events and circumstances
that may indicate impairment of an investment, including
operating performance and cash flow projections. In 2001,
management determined that our investments in BroadbandNOW!,
Inc. and YieldStar Technology LLC were impaired and that such
impairment was other than temporary. As a result, we recorded an
impairment loss in the amount of $1.2 million, which
represents our entire investment in these two technology
companies. We have no other technology company investments.

20. SUPPLEMENTAL CASH FLOW
INFORMATION

Non-cash investing and financing activities for
the years ended December 31, 2002, 2001 and 2000 are as
follows:



|   |  |                                                                                                                                                                                                                     
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|A. |  | We sold eight communities during the year ended
    December 31, 2002. The purchaser of one of the communities
    assumed the related outstanding debt balance associated with
    such community of $11.3 million.
|  
|B. |  | We sold nine communities during the year ended
    December 31, 2001. The respective purchasers of two of the
    communities assumed the related outstanding debt balances
    associated with such                

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|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |  | communities of $16.4 million in the
    aggregate. The respective purchaser of two of the communities
    redeemed 741,148 common units valued at $17.6 million as
    partial consideration in the transaction.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|  
|C. |  | We purchased our joint venture partners
    interest in each of two communities during the year ended
    December 31, 2000 at an aggregate purchase price of
    $36.0 million. The acquisitions were primarily financed
    with the issuance of 96,455 common units in the aggregate valued
    at $2.2 million as well as the payment of
    $33.8 million in cash in the aggregate.                                                                                                                                                                                                                                                                                                                                                                                         
|  
|D. |  | We granted 1,773 shares of restricted stock
    valued at $35,000 during 2002. There were 6,046 shares of
    restricted stock surrendered to satisfy the income tax liability
    of grantees during 2002. We granted 26,184 shares of
    restricted stock valued at $647,000 during 2001. There were
    12,202 shares of restricted stock forfeited and
    14,933 shares of restricted stock surrendered to satisfy
    the income tax liability of the grantees during 2001. The
    aggregate value of shares forfeited and surrendered in 2001 was
    $503,000. We granted 64,499 shares of restricted stock (net
    of 4,000 shares forfeited and 7,856 shares surrendered
    to satisfy the income tax liability of the grantees) valued at
    $1.2 million in 2000.
|  
|E. |  | We issued 13,658 shares of common stock in
    exchange for 13,658 common units during the year ended
    December 31, 2002. The value of these shares of common
    stock was $285,000. We issued 150,679 shares of common
    stock in exchange for 150,679 common units during the year ended
    December 31, 2001. The value of these shares of common
    stock was $4.0 million. We issued 55,677 shares of
    common stock in exchange for 55,677 common units during the year
    ended December 31, 2000. The value of these shares of
    common stock was $1.1 million.                                                                                                                                                                                              
|  
|F. |  | We accrued dividends and distributions payable of
    $10.5 million as of December 31, 2002,
    $14.2 million as of December 31, 2001 and
    $13.5 million as of December 31, 2000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

21. FAIR VALUE DISCLOSURE OF FINANCIAL
INSTRUMENTS

The following disclosures of estimated fair value
were determined by management using available market information
and appropriate valuation methodologies. However, considerable
judgment is necessary to interpret market data and develop the
related estimates of fair value. Accordingly, the estimates
presented are not necessarily indicative of the amounts that
could be realized upon disposition of the financial instruments.
The use of different market assumptions and/or estimation
methodologies may have a material effect on the estimated fair
value amounts. The fair value estimates presented are based on
information available to management as of December 31, 2002
and 2001. Although management is not aware of any factors that
would significantly affect the estimated fair value amounts,
such amounts have not been comprehensively re-valued for
purposes of these financial statements since that date, and
current estimates of fair value may differ significantly from
the amounts presented.

Cash and cash equivalents, rents receivable,
accounts payable, accrued expenses, security deposits, other
liabilities, tax exempt bond indebtedness and our credit
facility are carried at amounts which reasonably approximate
their fair values as of December 31, 2002 and 2001 due to
either the short-term nature or variable interest rates
associated with such balances.

Fixed rate mortgage debt and fixed rate unsecured
notes with a carrying value of $535.3 million had an
estimated aggregate fair value of $587.1 million as of
December 31, 2002. Fixed rate mortgage debt and fixed rate
unsecured notes with a carrying value of $601.4 million had
an estimated aggregate fair value of $625.2 million as of
December 31, 2001. Rates currently available to us for debt
with similar terms and maturities were used to estimate the fair
value of this debt. The fair market value of long-term fixed
rate debt is subject to changes in interest rates. Generally,
the fair market value of fixed interest rate debt will increase
as interest rates fall and decrease as interest rates rise.

The fair value of the interest rate swap
described in footnote 17, Derivative Financial
Instruments, was $4.8 million as of December 31,
2002.

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22. GEOGRAPHIC CONCENTRATION
(UNAUDITED)

Our 51 completed communities are located in the
following markets:

|                           |  |           |        |              |  |          |     |   |  |  |     |  
|-------------------------- |  | --------- | ------ | ------------ |  | -------- | --- | - |  |  | --- | -
|                           |  | Number of |        | Apartment    |  | 2002    
|                           |  | Apartment |        | Homes - %    |  | % of    
|Market                     |  | Homes     |        | of Portfolio |  | Revenues
|                           |  |           |        |              |  |         
|Washington, D.C            |  |           | 2,406  |              |  |          | 16  | % |  |  | 20  | %
|Atlanta, Georgia           |  |           | 3,275  |              |  |          | 21  | % |  |  | 19  | %
|Southeast Florida          |  |           | 1,715  |              |  |          | 11  | % |  |  | 15  | %
|Raleigh, North Carolina    |  |           | 2,582  |              |  |          | 17  | % |  |  | 14  | %
|Charlotte, North Carolina  |  |           | 1,901  |              |  |          | 12  | % |  |  | 12  | %
|Dallas, Texas              |  |           | 1,581  |              |  |          | 10  | % |  |  | 9   | %
|Austin, Texas              |  |           | 856    |              |  |          | 6   | % |  |  | 5   | %
|Orlando, Florida           |  |           | 510    |              |  |          | 3   | % |  |  | 3   | %
|San Antonio, Texas         |  |           | 250    |              |  |          | 2   | % |  |  | 2   | %
|Philadelphia, Pennsylvania |  |           | 352    |              |  |          | 2   | % |  |  | 1   | %
|                           |  |           |        |              |  |          |     |   |  |  |     |  
|                           |  |           | 15,428 |              |  |          | 100 | % |  |  | 100 | %
|                           |  |           |        |              |  |          |     |   |  |  |     |  

23. QUARTERLY FINANCIAL INFORMATION
(UNAUDITED)

Quarterly financial information for the years
2002 and 2001 is as follows (in thousands, except per share
amounts):

|                                                                                                                                                                                                                                               |  |                              |        |         |  |         |        |         |  |   |        |  |  |   |        | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------- | ------ | ------- |  | ------- | ------ | ------- |  | - | ------ |  |  | - | ------ | 
|                                                                                                                                                                                                                                               |  |                             
|                                                                                                                                                                                                                                               |  | Year Ended December 31, 2002
|                                                                                                                                                                                                                                               |  |                             
|                                                                                                                                                                                                                                               |  | First                        |        | Second  |  | Third   |        | Fourth 
|                                                                                                                                                                                                                                               |  | Quarter                      |        | Quarter |  | Quarter |        | Quarter
|                                                                                                                                                                                                                                               |  |                              |        |         |  |         |        |        
|Revenues                                                                                                                                                                                                                                       |  | $                            | 39,449 |         |  | $       | 39,113 |         |  | $ | 38,533 |  |  | $ | 39,826 | 
|Income from continuing operations before gain on
    sale of real estate assets, minority interest of common
    unitholders in Operating Partnership, dividends to preferred
    unitholders in Operating Partnership and extraordinary items |  |                              | 6,578  |         |  |         | 6,669  |         |  |   | 5,749  |  |  |   | 5,431  | 
|Income from discontinued operations before gain
    on sale of real estate assets, minority interest of common
    unitholders in Operating Partnership and extraordinary items                                                                |  |                              | 2,555  |         |  |         | 2,388  |         |  |   | 1,955  |  |  |   | 1,221  | 
|Gain on sale of real estate assets, including
    joint ventures                                                                                                                                                                               |  |                              |       |         |  |         | 9,634  |         |  |   | 22,323 |  |  |   | 51,736 | 
|Minority interest of common unitholders in
    Operating Partnership                                                                                                                                                                           |  |                              | 693    |         |  |         | 1,784  |         |  |   | 3,070  |  |  |   | 6,273  | 
|Dividends to preferred unitholders in Operating
    Partnership                                                                                                                                                                                |  |                              | 3,105  |         |  |         | 3,105  |         |  |   | 3,105  |  |  |   | 3,105  | 
|Net income                                                                                                                                                                                                                                     |  |                              | 5,336  |         |  |         | 13,802 |         |  |   | 23,848 |  |  |   | 48,702 | 
|Net income per share  basic (1)                                                                                                                                                                                                               |  |                              | 0.20   |         |  |         | 0.50   |         |  |   | 0.87   |  |  |   | 1.77   | 
|Net income per share  diluted (1)                                                                                                                                                                                                             |  |                              | 0.19   |         |  |         | 0.50   |         |  |   | 0.86   |  |  |   | 1.76   | 

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|                                                                                                                                                                                                                          |  |                              |        |         |  |         |        |         |  |   |        |  |  |   |        | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------- | ------ | ------- |  | ------- | ------ | ------- |  | - | ------ |  |  | - | ------ | 
|                                                                                                                                                                                                                          |  |                             
|                                                                                                                                                                                                                          |  | Year Ended December 31, 2001
|                                                                                                                                                                                                                          |  |                             
|                                                                                                                                                                                                                          |  | First                        |        | Second  |  | Third   |        | Fourth 
|                                                                                                                                                                                                                          |  | Quarter                      |        | Quarter |  | Quarter |        | Quarter
|                                                                                                                                                                                                                          |  |                              |        |         |  |         |        |        
|Revenues                                                                                                                                                                                                                  |  | $                            | 42,532 |         |  | $       | 43,545 |         |  | $ | 43,131 |  |  | $ | 39,325 | 
|Income from continuing operations before gain on
    sale of real estate assets, minority interest of common
    unitholders in Operating Partnership and dividends to preferred
    unitholders in Operating Partnership |  |                              | 9,949  |         |  |         | 9,768  |         |  |   | 8,860  |  |  |   | 4,908  | 
|Income from discontinued operations before gain
    on sale real estate assets and minority interest of common
    unitholders in Operating Partnership                                                                   |  |                              | 2,538  |         |  |         | 2,648  |         |  |   | 2,568  |  |  |   | 2,588  | 
|Gain on sale of real estate assets                                                                                                                                                                                        |  |                              |       |         |  |         | 10,782 |         |  |   | 2,788  |  |  |   | 20,865 | 
|Minority interest of common unitholders in
    Operating Partnership                                                                                                                                                      |  |                              | 1,327  |         |  |         | 2,658  |         |  |   | 1,296  |  |  |   | 3,078  | 
|Dividends to preferred unitholders in Operating
    Partnership                                                                                                                                                           |  |                              | 3,105  |         |  |         | 3,105  |         |  |   | 3,105  |  |  |   | 3,105  | 
|Net income                                                                                                                                                                                                                |  |                              | 8,055  |         |  |         | 16,217 |         |  |   | 10,087 |  |  |   | 22,178 | 
|Net income per share  basic                                                                                                                                                                                              |  |                              | 0.30   |         |  |         | 0.61   |         |  |   | 0.38   |  |  |   | 0.82   | 
|Net income per share  diluted (1)                                                                                                                                                                                        |  |                              | 0.30   |         |  |         | 0.60   |         |  |   | 0.37   |  |  |   | 0.81   | 



|    |                                                                                                                                                                                                                                                                             
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The total of the four quarterly amounts for these
    captions does not equal net income per share for the year
    presented. The difference is due to the use of a weighted
    average to compute the number of shares outstanding for each
    quarter and for the year.

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SCHEDULE III

SUMMIT PROPERTIES INC.

REAL ESTATE AND ACCUMULATED
DEPRECIATION


December 31, 2002


(Dollars in thousands)


|                          |  |              |        |               |  |                 |        |                            |  |      |        |                 |  |          |        |              |  |              |        |          |  |             |        |  |  |   |        |  |  |   |        |   |  |  |             |     |  |  |       |  |  |  |            | 
|------------------------- |  | ------------ | ------ | ------------- |  | --------------- | ------ | -------------------------- |  | ---- | ------ | --------------- |  | -------- | ------ | ------------ |  | ------------ | ------ | -------- |  | ----------- | ------ |  |  | - | ------ |  |  | - | ------ | - |  |  | ----------- | --- |  |  | ----- |  |  |  | ---------- | 
|                          |  |              |        |               |  |                 |        |                            |  |      |        |                 |  |          |        |              |  |             
|                          |  |              |        |               |  |                 |        | Gross Amount at Which      |  |      |        |                 |  |          |        |             
|                          |  |              |        | Initial Costs |  | Costs           |        | Carried at Close of Period |  |      |        |                 |  |          |        |             
|                          |  |              |        |               |  | Capitalized     |        |                            |  |      |        |                 |  |          |        |             
|                          |  |              |        |               |  | Buildings       |        | Subsequent                 |  |      |        | Buildings       |  |          |        |              |  |              |        |          |  | Depreciable
|                          |  | Related      |        |               |  | and             |        | to                         |  |      |        | and             |  |          |        | Accumulated  |  | Date of      |        | Date     |  | Lives in   
|Apartments                |  | Encumbrances |        | Land          |  | Improvements(6) |        | Acquisition                |  | Land |        | Improvements(6) |  | Total(1) |        | Depreciation |  | Construction |        | Acquired |  | Years      
|                          |  |              |        |               |  |                 |        |                            |  |      |        |                 |  |          |        |              |  |              |        |          |  |            
|Reunion Park by Summit    |  | $            |       |               |  | $               | 991    |                            |  | $    |       |                 |  | $        | 13,792 |              |  | $            | 997    |          |  | $           | 13,786 |  |  | $ | 14,783 |  |  | $ | (1,107 | ) |  |  | 6/99-9/00   |     |  |  | 4/99  |  |  |  | 5-40 years | 
|Summit Arboretum          |  |              | 18,796 |               |  |                 | 4,080  |                            |  |      | 24,403 |                 |  |          | 686    |              |  |              | 4,080  |          |  |             | 25,089 |  |  |   | 29,169 |  |  |   | (3,606 | ) |  |  | 1996        | (5) |  |  | 11/98 |  |  |  | 5-40 years | 
|Summit Ashburn Farm       |  |              |       |               |  |                 | 2,438  |                            |  |      |       |                 |  |          | 12,473 |              |  |              | 2,438  |          |  |             | 12,473 |  |  |   | 14,911 |  |  |   | (1,002 | ) |  |  | 2/99-9/00   |     |  |  | 7/98  |  |  |  | 5-40 years | 
|Summit Aventura           |  |              |       |               |  |                 | 6,367  |                            |  |      |       |                 |  |          | 26,451 |              |  |              | 6,368  |          |  |             | 26,450 |  |  |   | 32,818 |  |  |   | (6,383 | ) |  |  | 6/94-12/95  |     |  |  | 12/93 |  |  |  | 5-40 years | 
|Summit Ballantyne         |  |              | (2     | )             |  |                 | 3,328  |                            |  |      |       |                 |  |          | 23,953 |              |  |              | 3,347  |          |  |             | 23,934 |  |  |   | 27,281 |  |  |   | (3,953 | ) |  |  | 7/96-12/98  |     |  |  | 12/95 |  |  |  | 5-40 years | 
|Summit Belcourt           |  |              | 9,018  |               |  |                 | 3,600  |                            |  |      | 16,788 |                 |  |          | 629    |              |  |              | 3,600  |          |  |             | 17,417 |  |  |   | 21,017 |  |  |   | (2,362 | ) |  |  | 1994        | (5) |  |  | 11/98 |  |  |  | 5-40 years | 
|Summit Belmont            |  |              | (4     | )             |  |                 | 974    |                            |  |      |       |                 |  |          | 11,972 |              |  |              | 984    |          |  |             | 11,962 |  |  |   | 12,946 |  |  |   | (5,768 | ) |  |  | 1/86-5/87   |     |  |  | 1/86  |  |  |  | 5-40 years | 
|Summit Brookwood          |  |              |       |               |  |                 | 10,600 |                            |  |      |       |                 |  |          | 33,924 |              |  |              | 14,320 |          |  |             | 30,204 |  |  |   | 44,524 |  |  |   | (204   | ) |  |  | 10/00-12/02 |     |  |  | 12/99 |  |  |  | 5-40 years | 
|Summit Buena Vista        |  |              | 24,067 |               |  |                 | 4,670  |                            |  |      | 30,499 |                 |  |          | 934    |              |  |              | 4,670  |          |  |             | 31,433 |  |  |   | 36,103 |  |  |   | (4,216 | ) |  |  | 1996        | (5) |  |  | 11/98 |  |  |  | 5-40 years | 
|Summit Camino Real        |  |              | 15,886 |               |  |                 | 7,120  |                            |  |      | 41,985 |                 |  |          | 1,112  |              |  |              | 7,120  |          |  |             | 43,097 |  |  |   | 50,217 |  |  |   | (5,924 | ) |  |  | 1998        | (5) |  |  | 11/98 |  |  |  | 5-40 years | 
|Summit Club at Dunwoody   |  |              |       |               |  |                 | 2,934  |                            |  |      | 24,510 |                 |  |          | 493    |              |  |              | 2,934  |          |  |             | 25,003 |  |  |   | 27,937 |  |  |   | (3,582 | ) |  |  | 1997        | (5) |  |  | 5/98  |  |  |  | 5-40 years | 
|Summit Crest              |  |              |       |               |  |                 | 1,211  |                            |  |      |       |                 |  |          | 31,398 |              |  |              | 2,532  |          |  |             | 30,077 |  |  |   | 32,609 |  |  |   | (1,757 | ) |  |  | 10/99-9/01  |     |  |  | 9/97  |  |  |  | 5-40 years | 
|Summit Crossing           |  |              |       |               |  |                 | 768    |                            |  |      | 5,174  |                 |  |          | 802    |              |  |              | 768    |          |  |             | 5,976  |  |  |   | 6,744  |  |  |   | (1,874 | ) |  |  | 1985        | (5) |  |  | 5/95  |  |  |  | 5-40 years | 
|Summit Deer Creek         |  |              |       |               |  |                 | 3,537  |                            |  |      |       |                 |  |          | 18,814 |              |  |              | 3,846  |          |  |             | 18,505 |  |  |   | 22,351 |  |  |   | (1,693 | ) |  |  | 2/99-6/00   |     |  |  | 1/98  |  |  |  | 5-40 years | 
|Summit Del Ray            |  |              | (2     | )             |  |                 | 3,120  |                            |  |      |       |                 |  |          | 15,965 |              |  |              | 5,402  |          |  |             | 13,683 |  |  |   | 19,085 |  |  |   | (5,250 | ) |  |  | 1/92-2/93   |     |  |  | 1/92  |  |  |  | 5-40 years | 
|Summit Doral              |  |              |       |               |  |                 | 3,099  |                            |  |      |       |                 |  |          | 20,684 |              |  |              | 3,136  |          |  |             | 20,647 |  |  |   | 23,783 |  |  |   | (2,395 | ) |  |  | 12/97-11/99 |     |  |  | 12/96 |  |  |  | 5-40 years | 
|Summit Fair Lakes         |  |              | 48,340 |               |  |                 | 9,521  |                            |  |      |       |                 |  |          | 38,662 |              |  |              | 9,552  |          |  |             | 38,631 |  |  |   | 48,183 |  |  |   | (4,723 | ) |  |  | 6/97-8/99   |     |  |  | 12/96 |  |  |  | 5-40 years | 
|Summit Fair Oaks          |  |              |       |               |  |                 | 4,356  |                            |  |      | 17,215 |                 |  |          | 1,182  |              |  |              | 4,356  |          |  |             | 18,397 |  |  |   | 22,753 |  |  |   | (3,738 | ) |  |  | 1990        | (5) |  |  | 12/97 |  |  |  | 5-40 years | 
|Summit Fairview           |  |              |       |               |  |                 | 404    |                            |  |      |       |                 |  |          | 6,316  |              |  |              | 537    |          |  |             | 6,183  |  |  |   | 6,720  |  |  |   | (3,604 | ) |  |  | 3/82-3/83   |     |  |  | 3/82  |  |  |  | 5-40 years | 
|Summit Fairways           |  |              |       |               |  |                 | 2,819  |                            |  |      |       |                 |  |          | 15,591 |              |  |              | 2,819  |          |  |             | 15,591 |  |  |   | 18,410 |  |  |   | (3,496 | ) |  |  | 9/95-12/96  |     |  |  | 8/95  |  |  |  | 5-40 years | 
|Summit Foxcroft           |  |              | 6,900  |               |  |                 | 925    |                            |  |      | 3,797  |                 |  |          | 912    |              |  |              | 925    |          |  |             | 4,709  |  |  |   | 5,634  |  |  |   | (1,731 | ) |  |  | 1979        | (5) |  |  | 5/95  |  |  |  | 5-40 years | 
|Summit Glen               |  |              | (2     | )             |  |                 | 3,652  |                            |  |      |       |                 |  |          | 13,883 |              |  |              | 3,693  |          |  |             | 13,842 |  |  |   | 17,535 |  |  |   | (4,881 | ) |  |  | 5/90-8/92   |     |  |  | 4/90  |  |  |  | 5-40 years | 
|Summit Governors Village |  |              |       |               |  |                 | 1,622  |                            |  |      |       |                 |  |          | 15,568 |              |  |              | 1,643  |          |  |             | 15,547 |  |  |   | 17,190 |  |  |   | (2,151 | ) |  |  | 8/97-12/98  |     |  |  | 7/97  |  |  |  | 5-40 years | 
|Summit Grandview          |  |              |       |               |  |                 | 2,527  |                            |  |      |       |                 |  |          | 48,734 |              |  |              | 2,620  |          |  |             | 48,641 |  |  |   | 51,261 |  |  |   | (3,490 | ) |  |  | 7/98-12/00  |     |  |  | 3/98  |  |  |  | 5-40 years | 
|Summit Grand Parc         |  |              |       |               |  |                 | 7,700  |                            |  |      |       |                 |  |          | 35,808 |              |  |              | 8,512  |          |  |             | 34,996 |  |  |   | 43,508 |  |  |   | (43    | ) |  |  | 4/00-12/02  |     |  |  | 6/99  |  |  |  | 5-40 years | 
|Summit Highland           |  |              | (2     | )             |  |                 | 1,374  |                            |  |      |       |                 |  |          | 6,737  |              |  |              | 1,374  |          |  |             | 6,737  |  |  |   | 8,111  |  |  |   | (3,501 | ) |  |  | 3/86-1/87   |     |  |  | 11/85 |  |  |  | 5-40 years | 
|Summit Hunters Creek     |  |              |       |               |  |                 | 2,193  |                            |  |      |       |                 |  |          | 18,038 |              |  |              | 2,195  |          |  |             | 18,036 |  |  |   | 20,231 |  |  |   | (1,646 | ) |  |  | 3/99-3/00   |     |  |  | 11/98 |  |  |  | 5-40 years | 
|Summit Lake               |  |              |       |               |  |                 | 1,712  |                            |  |      |       |                 |  |          | 28,895 |              |  |              | 2,511  |          |  |             | 28,096 |  |  |   | 30,607 |  |  |   | (4,211 | ) |  |  | 9/96-1/99   |     |  |  | 4/96  |  |  |  | 5-40 years | 
|Summit Largo              |  |              |       |               |  |                 | 3,074  |                            |  |      |       |                 |  |          | 15,365 |              |  |              | 3,077  |          |  |             | 15,362 |  |  |   | 18,439 |  |  |   | (1,566 | ) |  |  | 10/98-3/00  |     |  |  | 10/98 |  |  |  | 5-40 years | 
|Summit Las Palmas         |  |              | (2     | )             |  |                 | 4,480  |                            |  |      | 25,504 |                 |  |          | 599    |              |  |              | 4,480  |          |  |             | 26,103 |  |  |   | 30,583 |  |  |   | (3,376 | ) |  |  | 1998        | (5) |  |  | 12/98 |  |  |  | 5-40 years | 
|Summit at Lenox           |  |              |       |               |  |                 | 10,800 |                            |  |      | 22,997 |                 |  |          | 10,626 |              |  |              | 11,157 |          |  |             | 33,266 |  |  |   | 44,423 |  |  |   | (4,691 | ) |  |  | 1965        | (5) |  |  | 7/98  |  |  |  | 5-40 years | 
|Summit Norcroft           |  |              | (2     | )             |  |                 | 1,453  |                            |  |      |       |                 |  |          | 11,194 |              |  |              | 1,634  |          |  |             | 11,013 |  |  |   | 12,647 |  |  |   | (3,717 | ) |  |  | 2/90-11/97  |     |  |  | 12/89 |  |  |  | 5-40 years | 
|Summit On the River       |  |              | (2     | )             |  |                 | 3,212  |                            |  |      |       |                 |  |          | 21,830 |              |  |              | 3,212  |          |  |             | 21,830 |  |  |   | 25,042 |  |  |   | (4,469 | ) |  |  | 8/95-6/97   |     |  |  | 10/94 |  |  |  | 5-40 years | 
|Summit Overlook           |  |              |       |               |  |                 | 2,376  |                            |  |      |       |                 |  |          | 26,321 |              |  |              | 4,074  |          |  |             | 24,623 |  |  |   | 28,697 |  |  |   | (1,258 | ) |  |  | 1/00-12/01  |     |  |  | 2/99  |  |  |  | 5-40 years | 
|Summit Peachtree          |  |              |       |               |  |                 | 3,453  |                            |  |      |       |                 |  |          | 29,778 |              |  |              | 4,476  |          |  |             | 28,755 |  |  |   | 33,231 |  |  |   | (1,458 | ) |  |  | 2/00-9/01   |     |  |  | 4/98  |  |  |  | 5-40 years | 
|Summit Plantation         |  |              | (2     | )             |  |                 | 7,440  |                            |  |      | 18,485 |                 |  |          | 18,246 |              |  |              | 7,440  |          |  |             | 36,731 |  |  |   | 44,171 |  |  |   | (7,026 | ) |  |  | 1/94-11/97  |     |  |  | 4/96  |  |  |  | 5-40 years | 
|Summit Portofino          |  |              |       |               |  |                 | 3,864  |                            |  |      | 24,504 |                 |  |          | 945    |              |  |              | 3,864  |          |  |             | 25,449 |  |  |   | 29,313 |  |  |   | (4,887 | ) |  |  | 1995        | (5) |  |  | 1/97  |  |  |  | 5-40 years | 
|Summit Reston             |  |              |       |               |  |                 | 5,434  |                            |  |      | 26,255 |                 |  |          | 2,367  |              |  |              | 6,088  |          |  |             | 27,968 |  |  |   | 34,056 |  |  |   | (8,972 | ) |  |  | 1987        | (5) |  |  | 4/94  |  |  |  | 5-40 years | 
|Summit Russett (7)        |  |              |       |               |  |                 | 5,723  |                            |  |      |       |                 |  |          | 28,627 |              |  |              | 5,723  |          |  |             | 28,627 |  |  |   | 34,350 |  |  |   | (4,059 | ) |  |  | 7/95-6/00   |     |  |  | 11/94 |  |  |  | 5-40 years | 
|Summit San Raphael        |  |              |       |               |  |                 | 2,442  |                            |  |      | 15,366 |                 |  |          | 185    |              |  |              | 2,442  |          |  |             | 15,551 |  |  |   | 17,993 |  |  |   | (285   | ) |  |  | 1999        | (5) |  |  | 7/02  |  |  |  | 5-40 years | 
|Summit Sedgebrook         |  |              |       |               |  |                 | 2,392  |                            |  |      |       |                 |  |          | 22,042 |              |  |              | 2,478  |          |  |             | 21,956 |  |  |   | 24,434 |  |  |   | (3,406 | ) |  |  | 6/96-5/99   |     |  |  | 1/96  |  |  |  | 5-40 years | 

85



---



##### 



|                   |       |              |        |               |  |                 |       |                            |  |      |        |                 |  |          |        |              |  |              |       |          |  |             |        |           |  |  |        |           |  |  |        |          |   |  |             |     |  |  |       |  |  |  |            |  | 
|------------------ | ----- | ------------ | ------ | ------------- |  | --------------- | ----- | -------------------------- |  | ---- | ------ | --------------- |  | -------- | ------ | ------------ |  | ------------ | ----- | -------- |  | ----------- | ------ | --------- |  |  | ------ | --------- |  |  | ------ | -------- | - |  | ----------- | --- |  |  | ----- |  |  |  | ---------- |  | 
|                   |       |              |        |               |  |                 |       |                            |  |      |        |                 |  |          |        |              |  |             
|                   |       |              |        |               |  |                 |       | Gross Amount at Which      |  |      |        |                 |  |          |        |             
|                   |       |              |        | Initial Costs |  | Costs           |       | Carried at Close of Period |  |      |        |                 |  |          |        |             
|                   |       |              |        |               |  | Capitalized     |       |                            |  |      |        |                 |  |          |        |             
|                   |       |              |        |               |  | Buildings       |       | Subsequent                 |  |      |        | Buildings       |  |          |        |              |  |              |       |          |  | Depreciable
|                   |       | Related      |        |               |  | and             |       | to                         |  |      |        | and             |  |          |        | Accumulated  |  | Date of      |       | Date     |  | Lives in   
|Apartments         |       | Encumbrances |        | Land          |  | Improvements(6) |       | Acquisition                |  | Land |        | Improvements(6) |  | Total(1) |        | Depreciation |  | Construction |       | Acquired |  | Years      
|                   |       |              |        |               |  |                 |       |                            |  |      |        |                 |  |          |        |              |  |              |       |          |  |            
|Summit Shiloh I    |       |              |       |               |  |                 | 1,592 |                            |  |      | 12,125 |                 |  |          | 253    |              |  |              | 1,591 |          |  |             | 12,379 |           |  |  | 13,970 |           |  |  | (1,038 | )        |   |  | 10/99       | (5) |  |  | 8/00  |  |  |  | 5-40 years | 
|Summit Shiloh II   |       |              |       |               |  |                 | 396   |                            |  |      |       |                 |  |          | 3,619  |              |  |              | 534   |          |  |             | 3,481  |           |  |  | 4,015  |           |  |  | (92    | )        |   |  | 6/01-3,02   |     |  |  | 11/00 |  |  |  | 5-40 years | 
|Summit Simsbury    |       |              | (3     | )             |  |                 | 650   |                            |  |      | 4,570  |                 |  |          | 727    |              |  |              | 650   |          |  |             | 5,297  |           |  |  | 5,947  |           |  |  | (1,785 | )        |   |  | 1985        | (5) |  |  | 5/95  |  |  |  | 5-40 years | 
|Summit Square      |       |              |       |               |  |                 | 2,757 |                            |  |      |       |                 |  |          | 16,607 |              |  |              | 3,775 |          |  |             | 15,589 |           |  |  | 19,364 |           |  |  | (6,427 | )        |   |  | 3/89-8/90   |     |  |  | 2/89  |  |  |  | 5-40 years | 
|Summit St. Clair   |       |              | (2     | )             |  |                 | 3,024 |                            |  |      | 24,040 |                 |  |          | 490    |              |  |              | 3,024 |          |  |             | 24,530 |           |  |  | 27,554 |           |  |  | (3,781 | )        |   |  | 1997        | (5) |  |  | 3/98  |  |  |  | 5-40 years | 
|Summit Sweetwater  |       |              |       |               |  |                 | 3,013 |                            |  |      | 18,627 |                 |  |          | 301    |              |  |              | 3,012 |          |  |             | 18,929 |           |  |  | 21,941 |           |  |  | (1,630 | )        |   |  | 12/99       | (5) |  |  | 8/00  |  |  |  | 5-40 years | 
|Summit Touchstone  |       |              | (3     | )             |  |                 | 766   |                            |  |      | 5,568  |                 |  |          | 864    |              |  |              | 766   |          |  |             | 6,432  |           |  |  | 7,198  |           |  |  | (2,030 | )        |   |  | 1986        | (5) |  |  | 5/95  |  |  |  | 5-40 years | 
|Summit Turtle Rock |       |              | 10,214 |               |  |                 | 2,500 |                            |  |      | 14,074 |                 |  |          | 525    |              |  |              | 2,500 |          |  |             | 14,599 |           |  |  | 17,099 |           |  |  | (2,096 | )        |   |  | 1995        | (5) |  |  | 11/98 |  |  |  | 5-40 years | 
|Summit Valleybrook |       |              |       |               |  |                 | 7,300 |                            |  |      |       |                 |  |          | 30,274 |              |  |              | 8,958 |          |  |             | 28,616 |           |  |  | 37,574 |           |  |  | (405   | )        |   |  | 10/00-12/02 |     |  |  | 9/00  |  |  |  | 5-40 years | 
|Summit Westwood    |       |              | (2     | )             |  |                 | 1,989 |                            |  |      |       |                 |  |          | 22,787 |              |  |              | 2,042 |          |  |             | 22,734 |           |  |  | 24,776 |           |  |  | (2,791 | )        |   |  | 10/97-5/99  |     |  |  | 9/97  |  |  |  | 5-40 years | 
|                   |       |              |        |               |  |                 |       |                            |  |      |        |                 |  |          |        |              |  |              |       |          |  |             |        |           |  |  |        |           |  |  |        |          |   |  |             |     |  |  |       |  |  |  |            | 
|                   | Total |              |        |               |  |                 | $     | 177,772                    |  |      | $      | 376,486         |  |          | $      | 708,980      |  |              | $     | 194,276  |  |             | $      | 1,068,962 |  |  | $      | 1,263,238 |  |  | $      | (159,536 | ) |  |             |     |  |  |       |  |  |  |            |  | 
|                   |       |              |        |               |  |                 |       |                            |  |      |        |                 |  |          |        |              |  |              |       |          |  |             |        |           |  |  |        |           |  |  |        |          |   |  |             |     |  |  |       |  |  |  |            | 



|    |                                                                                                                                                                                                                         
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The aggregate cost for federal income tax
    purposes at December 31, 2002 is $808.2 million. The
    amounts reflected above Represent amounts for real estate
    communities only.                                  
|   
|(2) | Encumbered by fixed rate mortgage of
    $133.9 million.                                                                                                                                                                
|   
|(3) | Encumbered by fixed rate mortgage of
    $8.0 million.                                                                                                                                                                  
|   
|(4) | Collateral for $10.8 million of letters of
    credit which serve as collateral for $10.6 million in
    tax-exempt bonds.                                                                                              
|   
|(5) | Property purchased; date reflects year
    construction was completed.                                                                                                                                                  
|   
|(6) | Includes buildings, building improvements,
    furniture, fixtures and equipment.                                                                                                                                       
|   
|(7) | Community was presented in two phases in prior
    years. Date acquired represents date first phase was acquired.
    Date of construction represents range from start of first phase
    to completion of second phase.

86



---



##### 



SUMMIT PROPERTIES INC.

REAL ESTATE AND ACCUMULATED
DEPRECIATION


(Dollars in thousands)


A summary of activity for real estate assets and
accumulated depreciation is as follows:

|                             |                              |                         |        |           |   |      |        |           |   |  |         |           |  
|---------------------------- | ---------------------------- | ----------------------- | ------ | --------- | - | ---- | ------ | --------- | - |  | ------- | --------- | -
|                             |                              |                        
|                             |                              | Year Ended December 31,
|                             |                              |                        
|                             |                              | 2002                    |        | 2001      |   | 2000
|                             |                              |                         |        |           |   |     
|REAL ESTATE ASSETS(1):       |                              |                         |        |           |   |      |        |           |   |  |         |          
|                             | Balance at beginning of year |                         | $      | 1,266,068 |   |      | $      | 1,255,657 |   |  | $       | 1,135,008 |  
|                             |                              |                         |        |           |   |      |        |           |   |  |         |          
|                             | Acquisitions                 |                         |        | 17,866    |   |      |        |          |   |  |         | 35,343    |  
|                             | Improvements                 |                         |        | 6,417     |   |      |        | 9,478     |   |  |         | 8,582     |  
|                             | Developments                 |                         |        | 130,291   |   |      |        | 152,137   |   |  |         | 158,180   |  
|                             | Disposition of property      |                         |        | (157,404  | ) |      |        | (151,204  | ) |  |         | (81,456   | )
|                             |                              |                         |        |           |   |      |        |           |   |  |         |          
|                             |                              |                         | (2,830 | )         |   |      | 10,411 |           |   |  | 120,649 |          
|                             |                              |                         |        |           |   |      |        |           |   |  |         |          
|                             | Balance at end of year       |                         | $      | 1,263,238 |   |      | $      | 1,266,068 |   |  | $       | 1,255,657 |  
|                             |                              |                         |        |           |   |      |        |           |   |  |         |          
|ACCUMULATED DEPRECIATION(1): |                              |                         |        |           |   |      |        |           |   |  |         |          
|                             | Balance at beginning of year |                         | $      | 155,242   |   |      | $      | 145,500   |   |  | $       | 127,803   |  
|                             | Depreciation                 |                         |        | 39,282    |   |      |        | 38,746    |   |  |         | 36,436    |  
|                             | Disposition of property      |                         |        | (34,988   | ) |      |        | (29,004   | ) |  |         | (18,739   | )
|                             |                              |                         |        |           |   |      |        |           |   |  |         |          
|                             | Balance at end of year       |                         | $      | 159,536   |   |      | $      | 155,242   |   |  | $       | 145,500   |  
|                             |                              |                         |        |           |   |      |        |           |   |  |         |          



|    |                                                                                                                                                                  
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes only apartment communities and does not
    include fixed assets used in property development, construction
    and management of apartment communities.

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