**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, 2004 Commission file number 0-22411
 
 **CAMDEN
SUMMIT PARTNERSHIP, L.P.**
 (Exact
name of registrant as specified in its charter)
 _______________
 
 **Delaware**
    **56-1857809**(State
      or other jurisdiction of
    (I.R.S.
      Employerincorporation
      or organization)
    Identification
      No.)**3
      Greenway Plaza****Suite
      1300****Houston,
      Texas 77046**(Address
      of principal executive offices)
 
 **(713)
354-2500**
 (Registrant’s
telephone number, including area code)
 _______________
 
 **Securities
registered pursuant to Section 12(b) of the Act: None**
 
 **Securities
registered pursuant to Section 12(g) of the Act:**
 
 **Common
Units of Limited Partnership Interest**
 
 Indicate
by check mark whether the registrant: (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes x No  ̈
 
 Indicate
by check mark 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.  ̈
 
 Indicate
by check mark whether the registrant is an accelerated filer (as defined in Rule
12b-2 of the Act).
 Yes  ̈ No x
 
 The
aggregate market value of common units of limited partnership interest (“Units”)
held by nonaffiliates of the Registrant as of June 30, 2004 was $54,596,483
based on the last reported sale price on that date of the common stock of Summit
Properties Inc., a Maryland corporation, which as of such date was the sole
general partner of the Registrant, into which Units were redeemable under
certain circumstances at the election of the Registrant.
 
   
   
 **TABLE
OF CONTENTS**
 **Item**
    ****
    **Page****PART
      I**1.
    Business
    32.
    Properties
    53.
    Legal
      Proceedings
    94.
    Submission
      of Matters to a Vote of Security Holders
    12**PART
      II**5.
    Market
      for Registrant’s Common Equity and Related Stockholder
    Matters
    126.
    Selected
      Financial Data
    137.
    Management’s
      Discussion and Analysis of Financial Condition and Results ofOperation
    167A.
    Quantitative
      and Qualitative Disclosures about Market Risk
    398.
    Financial
      Statements and Supplementary Data
    399.
    Changes
      in and Disagreements with Accountants on Accounting and FinancialDisclosure
    399A.
    Controls
      and Procedures
    39**PART
      III**10.
    Directors
      and Executive Officers of the Registrant
    4011.
    Executive
      Compensation
    4012.
    Security
      Ownership of Certain Beneficial Owners and Management
    4013.
    Certain
      Relationships and Related Transactions
    4014.
    Principal
      Accounting Fees and Services
    40**PART
      IV**15.
    Exhibits,
      Financial Statement Schedules and Reports on Form 8-K
    41Signatures
    46
  2
  
 **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 37. Unless
the context otherwise requires, all references to “we,” “our” or “us” in this
report refer collectively to Camden Summit Partnership, L.P. (formerly known as
Summit Properties Partnership, L.P.), a Delaware limited partnership (the
“Operating Partnership”) and its subsidiaries. All references to “Summit” in
this report refer to Summit Properties Inc., a Maryland corporation, which was
the sole general partner of the Operating Partnership prior to the merger (the
“Merger”) of Summit with and into Camden Summit, Inc., a Delaware corporation
(“Camden Summit”) and a wholly-owned subsidiary of Camden Property Trust, a
Texas real estate investment trust (“Camden”).*
 
 **Item
1.** ***Business***
 
 **Our
Company**
 
 On
February 28, 2005, Summit was merged with and into Camden Summit pursuant to an
Agreement and Plan of Merger dated as of October 4, 2004 (the "Merger
Agreement"), as amended. Prior to the effective time of the Merger, Summit was
the sole general partner of the Operating Partnership, and at the effective
time, Camden Summit became the sole general partner of the Operating
Partnership.
 
 Under the
terms of the Merger Agreement, Summit stockholders had the right to elect, on a
share-by-share basis, to receive either $31.20 in cash or 0.6687 of a Camden
common share at the closing of the Merger. These elections were subject to
reallocation so that the aggregate amount of cash issued in the Merger to
Summit's stockholders equaled approximately $436.3 million. In the Merger,
Camden issued approximately 11.8 million common shares to Summit stockholders.
The limited partners in the Operating Partnership were offered, on a
unit-by-unit basis, the opportunity to redeem their partnership units for $31.20
in cash per unit or to remain in the Operating Partnership following the Merger
at a unit valuation equal to 0.6687 of a Camden common share. The limited
partner elections resulted in the redemption of 0.7 million partnership units
for cash, for an aggregate of $21.7 million, and issuing 1.8 million partnership
units.
 
 We are a
real estate operating company that focuses on the development, construction,
acquisition and operation of luxury apartment communities. As of December 31,
2004, we owned 44 completed communities comprised of 13,799 apartment homes with
an additional 1,834 apartment homes under construction in five 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 multi-family development, construction, acquisition, operation, portfolio
management and capital markets expertise. As of December 31, 2004, we had 480
employees.
 
 We
operate throughout the Southeast and Mid-Atlantic states and have chosen to
focus our efforts in five markets consisting of Washington, D.C., Southeast
Florida, Atlanta, Raleigh and Charlotte. We have established city operating
offices in all of our 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.
 
 Our sole
general partner is Camden Summit, a wholly-owned subsidiary of Camden, a real
estate investment trust (“REIT”). Camden’s common shares, par value $0.01 per
share, are listed on the New York Stock Exchange under the symbol “CPT.” 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.”
  3
  **The
Operating Partnership**
 
 We are a
Delaware limited partnership which was formed on January 14, 1994 to continue
and expand the multifamily businesses through which we historically conducted
operations prior to the initial public offering of Summit.
 
 Our
general partner has the exclusive power to manage and conduct our business,
subject to certain voting rights of holders of our units of limited partnership
interest. Subject to the rights and preferences of the outstanding preferred
units, Summit’s general and limited partnership interests as of December 31,
2004 entitled it to share in 90.4% of our cash distributions and profits and
losses. As of December 31, 2004, we had outstanding 2.2 million Series C
Cumulative Perpetual Preferred Units, which were redeemed on January 21, 2005 at
$25.00 per unit.
 
 Each
common unit may be redeemed by the holder for cash equal to the fair market
value of a Camden common share or, at our option, one Camden common share,
subject to adjustment. We presently determine on a case-by-case basis whether to
cause Camden to issue common shares in connection with a redemption of common
units rather than paying cash.
 
 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.
 
 Our
executive offices are located at 3 Greenway Plaza, Suite 1300, Houston, Texas
77046. Our telephone number is (713) 354-2500. We also maintain offices in
Charlotte, North Carolina, McLean, Virginia, Ft. Lauderdale, Florida, Atlanta,
Georgia and Raleigh, North Carolina.
 
 **Competition**
 
 Within
each market, our communities compete directly with other rental apartments,
condominiums, townhomes and detached single-family homes that are available for
rent or sale. These housing alternatives could adversely affect our ability to
increase or maintain our rents and occupancy. 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 as well as excellence
in product location, design and quality.
  4
  **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 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 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 any 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 for which we may
have liability.
 
 Camden
maintains a website at *www.camdenliving.com* .
Camden will make available, free of charge, on its website our annual
report on Form 10-K, and exhibits and amendments to that report as soon as
reasonably practicable after such reports are electronically filed with, or
furnished to, the Securities Exchange Commission. 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, 2004, we owned 44 completed communities with 13,799 apartment
homes. The average age of our completed communities is approximately six years.
All of our communities target middle to upper income apartment residents as
customers and have amenities consistent with the desires of this resident
population. We have an additional 1,834 apartment homes under construction in
five communities. As of December 31, 2004, we also held a 25% ownership interest
in four completed communities with 1,203 apartment homes through a joint
venture.
  5
  The
following is a summary of the 44 completed communities by market (the table
below does not include joint venture communities):
 
 Number
      ofNumber
      of
    
    Apartment
    
    %
      of TotalCommunities
    
    Homes
    
    RevenuesWashington,
      D.C.
    9
    
    2,882
    
    27.5%Atlanta,
      Georgia
    11
    
    3,633
    
    22.6%Southeast
      Florida
    6
    
    2,100
    
    19.3%Charlotte,
      North Carolina
    10
    
    2,342
    
    13.4%Raleigh,
      North Carolina
    6
    
    2,220
    
    12.2%Philadelphia,
      Pennsylvania
    1
    
    352
    
    3.2%Orlando,
      Florida
    1
    
    270
    
    1.8%Totals
    44
    
    13,799
    
    100.0%
 
  6
  The
following table highlights information regarding these 44 completed communities
as of December 31, 2004 (note that Reunion Park by Summit is presented in two
phases in the table below):
 
 Average
    Average
    MortgageAverage
    Average
    Rent
      per
    Rent
      per
    NotesPhysical
    Physical
    Occupied
    Occupied
    Payable
      atAverage
    Occupancy
    Occupancy
    Apartment
    Apartment
    December
      31,Number
      of
    Year
    Apartment
    (%)
    (%)
    Home
    Home
    2004**Market
      Area/Community**
    **Location**
    Apartments
    Completed
    Size
      (sq. ft.)
    2004
      (a)
    2003
      (a)
    2004
      (b)
    2003
      (b)
    (in
      thousands)**SAME-PROPERTY
      COMMUNITIES (c)****ATLANTA**Summit
      Club at Dunwoody
    Atlanta,
      GA
    324
    1997
    1,007
    94.0
    93.2
    $
      801
    $
      804
    (d)Summit
      Deer Creek
    Atlanta,
      GA
    292
    2000
    1,187
    90.4
    88.0
    801
    829
    -Summit
      on the River
    Atlanta,
      GA
    352
    1997
    1,103
    92.0
    92.6
    782
    789
    (d)Summit
      Peachtree City
    Atlanta,
      GA
    399
    2001
    1,026
    91.9
    93.5
    734
    734
    (e)Summit
      Shiloh
    Atlanta,
      GA
    232
    2002
    1,151
    92.9
    95.6
    778
    799
    (e)Summit
      St. Clair
    Atlanta,
      GA
    336
    1997
    969
    92.4
    92.2
    859
    915
    (d)Summit
      Sweetwater
    Atlanta,
      GA
    308
    2000
    1,151
    93.0
    93.6
    716
    717
    (e)Total
      / weighted average
    2,243
    
    1,078
    92.4
    92.6
    781
    797**CHARLOTTE**Summit
      Ballantyne
    Charlotte,
      NC
    400
    1998
    1,053
    91.4
    92.9
    756
    754
    (d)Summit
      Fairview
    Charlotte,
      NC
    135
    1983
    1,036
    93.9
    94.2
    657
    673
    -Summit
      Foxcroft (f)
    Charlotte,
      NC
    156
    1979
    940
    95.2
    94.5
    605
    608
    $
      6,900Summit
      Grandview (g)
    Charlotte,
      NC
    266
    2000
    1,145
    93.8
    93.6
    1,089
    1,127
    (e)Summit
      Sedgebrook
    Charlotte,
      NC
    368
    1999
    1,017
    96.9
    96.2
    681
    669
    (e)Summit
      Simsbury
    Charlotte,
      NC
    100
    1985
    874
    96.7
    94.4
    665
    670
    (h)Summit
      Touchstone
    Charlotte,
      NC
    132
    1986
    899
    95.5
    97.7
    615
    625
    (h)Total
      / weighted average
    1,557
    
    1,023
    94.4
    94.6
    754
    760**ORLANDO**Summit
      Hunter’s Creek
    Orlando,
      FL
    270
    2000
    1,082
    97.3
    96.1
    798
    784
    -Total
      / weighted average
    270
    
    1,082
    97.3
    96.1
    798
    784**RALEIGH**Summit
      Crest
    Raleigh,
      NC
    438
    2001
    1,129
    90.3
    92.4
    726
    753
    27,500Summit
      Governor’s Village
    Raleigh,
      NC
    242
    1999
    1,134
    92.6
    93.0
    784
    796
    (e)Summit
      Lake
    Raleigh,
      NC
    446
    1999
    1,075
    92.7
    94.0
    688
    709
    (e)Summit
      Overlook
    Raleigh,
      NC
    320
    2001
    1,056
    92.5
    93.5
    803
    809
    22,543Summit
      Westwood
    Raleigh,
      NC
    354
    1999
    1,112
    94.5
    95.3
    682
    682
    (d)Total
      / weighted average
    1,800
    
    1,100
    92.4
    93.6
    730
    744**SOUTHEAST
      FLORIDA**Summit
      Aventura
    Aventura,
      FL
    379
    1995
    1,106
    95.6
    95.2
    1,164
    1,146
    38,927Summit
      Doral
    Miami,
      FL
    260
    1999
    1,172
    96.5
    96.0
    1,224
    1,259
    30,528Summit
      Plantation
    Plantation,
      FL
    502
    1997
    1,152
    96.2
    95.4
    1,087
    1,075
    (d)Summit
      Portofino
    Broward
      County, FL
    322
    1995
    1,307
    96.3
    96.1
    1,068
    1,036
    (e)Total
      / weighted average
    1,463
    
    1,178
    96.1
    95.6
    1,127
    1,118**WASHINGTON,
      D.C.**Summit
      Ashburn Farm
    Loudon
      County, VA
    162
    2000
    1,061
    94.4
    96.5
    1,113
    1,101
    16,477Summit
      Fair Lakes
    Fairfax,
      VA
    530
    1999
    996
    94.2
    93.3
    1,280
    1,257
    48,340Summit
      Largo
    Largo,
      MD
    219
    2000
    1,042
    94.9
    95.9
    1,305
    1,285
    (d)Summit
      Russett
    Laurel,
      MD
    426
    2000
    1,025
    93.8
    94.6
    1,163
    1,144
    50,000Total
      / weighted average
    1,337
    
    1,021
    94.2
    94.5
    1,226
    1,207
 
 **Total
      / weighted average of same-property communities**
    8,670
    
    1,081
    93.8
    94.1
    893
    896
  7
  
 Average
    Average
    MortgageAverage
    Average
    Rent
      per
    Rent
      per
    NotesPhysical
    Physical
    Occupied
    Occupied
    Payable
      atAverage
    Occupancy
    Occupancy
    Apartment
    Apartment
    December
      31,Number
      of
    Year
    Apartment
    (%)
    (%)
    Home
    Home
    2004**Market
      Area/Community**
    Apartments
    Completed
    Size
      (sq. ft.)
    2004
      (a)
    2003
      (a)
    2004
      (b)
    2003
      (b)
    (in
      thousands)**STABILIZED
      DEVELOPMENT COMMUNITIES
      (i)****Location**Reunion
      Park by Summit
    Raleigh,
      NC
    248
    2000
    941
    91.0
    92.4
    579
    617
    -Summit
      Brookwood
    Atlanta,
      GA
    359
    2002
    906
    93.5
    79.8
    907
    885
    (e)Summit
      Grand Parc (j)
    Washington,
      D.C.
    105
    2002
    904
    97.1
    54.3
    1,878
    1,259
    -Summit
      Lenox (k)
    Atlanta,
      GA
    431
    1965
    963
    91.0
    90.0
    806
    896
    -Summit
      Roosevelt
    Washington,
      D.C.
    198
    2003
    856
    96.1
    55.0
    1,797
    1,661
    -Summit
      Stockbridge
    Atlanta,
      GA
    304
    2003
    1,009
    90.3
    54.8
    741
    554
    (e)Summit
      Valleybrook
    Philadelphia,
      PA
    352
    2002
    992
    93.1
    79.5
    1,122
    1,010
    -Total
      / weighted average
    
    1,997
    
    948
    92.5
    75.9
    996
    922**ACQUISITION
      COMMUNITIES (l)**Charlotte
      Cotton Mills
    Charlotte,
      NC
    180
    2002
    906
    96.1
    -
    1,092
    -
    -Summit
      Brickell (m)
    Miami,
      FL
    405
    2003
    937
    94.8
    80.3
    1,249
    1,214
    -Summit
      Doral Villas
    Miami,
      FL
    232
    2000
    1,253
    95.3
    -
    1,344
    -
    22,047Summit
      Fallsgrove
    Washington,
      D.C.
    268
    2004
    996
    70.5
    -
    1,261
    -
    -Summit
      Lansdowne (n)
    Washington,
      D.C.
    690
    2002
    1,006
    93.5
    -
    1,170
    -
    (e)Summit
      Midtown (o)
    Atlanta,
      GA
    296
    2002
    953
    82.1
    -
    959
    -
    -Summit
      South End Square
    Charlotte,
      NC
    299
    2003
    883
    91.0
    -
    929
    -
    25,242Summit
      Stonecrest
    Charlotte,
      NC
    306
    2001
    1,169
    92.8
    -
    771
    -
    19,620Total
      / weighted average
    
    2,676
    
    1,008**COMMUNITIES
      IN LEASE-UP (p)**Reunion
      Park by Summit II
    Raleigh,
      NC
    172
    2004
    1,016Summit
      Silo Creek
    Washington,
      D.C.
    284
    2003
    971Total
      / weighted average
    
    456
    
    988**TOTAL
      COMMUNITIES**
    
    13,799
    
    1,047
 
 (a)
    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.(b)
    Represents
      the average monthly net rental revenue per occupied home. Average rental
      revenue is not shown for the periods during which a community was not
      stabilized.(c)
    Communities
      that reached stabilization (93% physical occupancy) at least one year
      prior to the beginning of the current year.(d)
    Collateral
      for two fixed rate mortgages which had an aggregate balance of $173.0
      million as of December 31, 2004.(e)
    Collateral
      for variable rate secured credit facility which had a balance of $95.9
      million as of December 31, 2004.(f)
    Summit
      Foxcroft is held by a partnership in which we are the 75% managing general
      partner.(g)
    The
      information in the table for Summit Grandview represents data for the
      apartment homes only. The 75,203 square feet of commercial space at Summit
      Grandview was 87.6% leased and occupied (including the 19,725 square feet
      occupied by Summit’s corporate and leasing offices) as of December 31,
      2004.(h)
    Collateral
      for a fixed rate mortgage which had a balance of $7.8 million as of
      December 31, 2004.(i)
    Communities
      that were stabilized in 2004 but did not stabilize at least one year prior
      to the beginning of the current year.(j)
    The
      information in the table for Summit Grand Parc represents data for the
      apartment homes only. The 12,500 square feet of commercial space at Summit
      Grand Parc was 85.6% leased and occupied as of December 31,
      2004.
 
  8
  
 (k)
    Summit
      Lenox is an existing community with 431 apartment homes which recently
      underwent major renovations. Its operating results are included in results
      of stabilized development communities as it reached stabilization after
      renovation during the year ended December 31, 2004.(l)
    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. The
      occupancy and average rent information in the table for the six
      communities acquired during the year ended December 31, 2004 (Charlotte
      Cotton Mills, Summit Doral Villas, Summit Fallsgrove, Summit Midtown,
      Summit South End Square and Summit Stonecrest) represents the occupancy
      percentage during the last week of 2004 and the average rent for the month
      of December 2004. Average occupancy and average rent information for these
      six communities is not relevant for 2003.(m)
    Summit
      Brickell was purchased on May 6, 2003. The information in the table
      represents data for the apartment homes only. The 18,334 square feet of
      commercial space at Summit Brickell was 69.7% leased and 51.1% occupied as
      of December 31, 2004.(n)
    Summit
      Lansdowne was purchased on December 31, 2003. As a result, average
      physical occupancy and average monthly rental revenue information is not
      applicable for 2003.(o)
    We
      acquired Summit Midtown in September 2004. The information in the table
      represents data for the apartment homes only. The 17,616 square feet of
      commercial space at Summit Midtown was 100.0% occupied as of December 31,
      2004.(p)
    Communities
      that were in lease-up during 2004. 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.
 
 **Item
3.** ***Legal
Proceedings***
 
 On
October 6, 2004, a purported class action complaint was filed in the General
Court of Justice, Superior Court Division, of the State of North Carolina,
County of Mecklenburg, by an alleged Summit stockholder. This complaint names as
defendants Camden, Summit and each member of the board of directors of Summit
and principally alleges that the Merger and the acts of the Summit directors
constitute a breach of the Summit defendants' fiduciary duties to Summit
stockholders. The plaintiff in the lawsuit seeks, among other things (1) a
declaration that each defendant has committed or aided and abetted a breach of
fiduciary duty to the Summit stockholders, (2) to preliminarily and permanently
enjoin the Merger, (3) to rescind the Merger in the event that it is consummated
(4) an order to permit a stockholders' committee to ensure an unspecified "fair
procedure, adequate procedural safe-guards and independent input by plaintiff"
in connection with any transaction for Summit shares, (5) unspecified
compensatory damages and (6) attorneys' fees. On November 3, 2004, Camden
removed the lawsuit to the United States District Court for the Western District
of North Carolina, Charlotte Division, and filed an Answer and Counterclaim for
declaratory judgment denying the plaintiff's allegations of
wrongdoing.
 
 On March
10, 2005, the parties to the action agreed on and executed a binding memorandum
of understanding setting forth the terms of a settlement of the litigation. The
parties also agreed, subject to the conditions described below, to enter into a
stipulation of settlement and use best efforts to gain approval of the
settlement by the court. Under the terms of the settlement, the defendants admit
to no wrongdoing or fault. The memorandum of understanding for the proposed
settlement of the litigation contemplates a dismissal of all claims with
prejudice and a release in favor of all defendants of any and all claims related
to the Merger that have been or could have been asserted by the plaintiffs or
any members of the putative class. In connection with negotiations relating to
the memorandum of understanding, the parties agreed to include, and have
included, in the joint proxy statement/prospectus relating to the Merger
additional disclosures regarding the merger.
  9
  Subject
to the completion of certain confirmatory discovery by counsel to the
plaintiffs, the memorandum of understanding contemplates that the parties will
enter into a settlement agreement. The memorandum and the settlement will be
subject to the customary conditions including, final court approval of the
settlement. If the conditions are satisfied, subject to final court approval of
the settlement and dismissal of the action by the court with prejudice, the
plaintiff’s counsel will seek and Camden, as successor to Summit, will pay an
amount not to exceed in the aggregate $383,000 in settlement of this action for
attorneys’ fees and expenses, Subject to any order of the court, any attorneys’
fees and expenses awarded by the court to plaintiff’s counsel will be paid by
Camden, as successor to Summit, on behalf of all defendants within five business
days after final court approval of the settlement.
 
 The
defendants vigorously deny all liability with respect to the facts and claims
alleged in this action, and specifically deny that any further supplemental
disclosure was required under any applicable rule, statute, regulation, or law.
However, the defendants considered it desirable that these actions be settled to
avoid the substantial burden, expense, risk, inconvenience and distraction of
continued litigation and to fully and finally resolve the settled
claims.
 
 On May
25, 2001, through our joint venture SZF, LLC, a Delaware limited liability
company in which we owned 29.78% until July 3, 2003, on which date we purchased
our joint venture partner’s 70.22% interest, we entered into an agreement with
Brickell View, L..C. (“Brickell View”), a Florida limited liability company, and
certain of its affiliates relating to the formation of Coral Way, LLC, a
Delaware limited liability company, to develop a new community in Miami,
Florida. Brickell View agreed to be the developer of that community and certain
of its affiliates signed guarantees obligating them to pay certain costs
relating to the development. On August 12, 2003, we received notice of two suits
filed by Brickell View and certain of its affiliates against SZF, LLC and
certain Summit entities, including us, Summit and Summit Management Company. The
suits were originally filed in the Miami-Dade Circuit Court and were
subsequently removed to the U.S. District Court for the Southern District of
Florida. One of the suits was remanded to the Miami-Dade Circuit Court, while
the other remains pending in the U.S. District Court. These suits relate to the
business agreement among the parties in connection with the development and
construction of the community by Coral Way. Brickell View and its affiliates
allege breach of contract, breach of implied covenant of good faith and fair
dealing, breach of fiduciary duties and constructive fraud on the part of SZF,
LLC and constructive fraud on the part of the Summit entities, and seek both a
declaratory judgment that the guarantee agreements have been constructively
terminated and unspecified monetary damages. We intend to enforce our rights
under the joint venture agreements. Although we may determine to terminate the
development agreement based on Brickell View’s failure to perform its
obligations in accordance with the development agreement, we do not believe that
there is any basis for allowing Brickell View or its affiliates to be released
from their obligations under the development agreement or the guarantees. We
believe that the allegations made by Brickell View and its affiliates are not
supported by the facts and we intend to vigorously defend against these suits.
On December 19, 2003, we received notice of a demand for arbitration asserted by
Bermello, Ajamil & Partners, Inc. against Coral Way, LLC for unpaid
architectural fees. In this demand, Bermello, Ajamil & Partners, Inc. allege
that they are entitled to an increased architectural fee as a result of an
increase in the cost of the project. We believe that the allegations made by
Bermello, Ajamil & Partners, Inc. are not supported by the facts, and we
will vigorously defend against this claim. Additionally, we have asserted a
cross-claim against Bermello, Ajamil & Partners, Inc. for damages related to
the cost to correct certain structural and other design defects.
  10
  On May 6,
2003, we purchased certain assets of Brickell Grand, Inc. (“Brickell Grand”),
including the community known as Summit Brickell. At the time of purchase,
Summit Brickell was subject to a $4.1 million claim of construction lien filed
by the general contractor, Bovis Lend Lease, Inc. (“Bovis”), due to Brickell
Grand’s alleged failure to pay the full amount of the construction costs. Bovis
sought to enforce this claim of lien against Brickell Grand in a suit filed on
October 18, 2002 in Miami-Dade Circuit Court, Florida. In mid-2003, litigation
with Bovis was temporarily stayed pending mediation. In September 2003, Bovis
filed an amended complaint seeking to enforce an increased claim of lien of $4.6
million. Mediation with Bovis ended unsuccessfully in November 2003. The
litigation is proceeding in the Miami-Dade Circuit Court. As the current owner
of Summit Brickell, which property is subject to the claim of lien, we are
vigorously defending against these claims of lien and related litigation. As a
result of several items claimed by Bovis in their amended claim of lien, we are
asserting a counterclaim for a fraudulent mechanic’s lien, as well as
counterclaims for breach of contract and breach of warranties. In early 2004,
three subcontractors of Bovis, Gulf Plumbing, Inc., Big Bear Plastering, Inc.,
and Kone, Inc., filed separate suits in Miami-Dade Circuit Court against
Brickell Grand, Bovis, the Operating Partnership, and other named parties to
enforce claims of construction lien and/or claims against the contractor’s bond
in an aggregate amount of approximately $600,000 filed due to the defendants’
alleged failure to pay the full amount of the construction cost. All of these
claims have been voluntarily dismissed. In January 2005, Brickell Grand, Inc.
filed suit in Miami-Dade Circuit Court, Florida, asserting claims for breach of
contract and fraud in the inducement, alleging that Summit has an obligation to
indemnify Brickell Grand, Inc. in the Bovis lawsuit and that Summit had failed
to properly market the apartments, increasing Brickell Grand Inc.’s cost overrun
obligations. Brickell Grand, Inc. also claims that Summit misappropriated its
identity by filing eviction actions in its name. We believe that these
allegations made by Brickell Grand, Inc. are not supported by the facts, and
intend to vigorously defend against these claims.
  11
  
 **Item
4.** ***Submission
of Matters to a Vote of Security Holders***
 
 There
were no matters submitted to a vote of security holders during the three months
ended December 31, 2004.
 
 **PART
II**
 
 **Item
5.** ***Market
for Registrant’s Common Equity and Related Stockholder
Matters***
 
 **Market
Information and Stockholders**
 
 There is
no established public trading market for the common units. As of February 27,
2005, the day before the Merger, there were 99 holders of record of common
units. As of March 23, 2005, there were 64 holders of record of common
units.
 
 **Distributions**
 
 We
declared a distribution of $0.3375 per common unit for each of the four quarters
in 2004, which were paid on May 14, 2004 for the first quarter, August 13, 2004
for the second quarter, November 15, 2004 for the third quarter and January 17,
2005 for the fourth quarter.
 
 We
declared a distribution of $0.3375 per common unit for each of the four quarters
in 2003, which were paid on May 15, 2003 for the first quarter, August 15, 2003
for the second quarter, November 14, 2003 for the third quarter and February 16,
2004 for the fourth quarter.
  12
  
 **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, 2004. In accordance with Statement of
Financial Accounting Standards (“SFAS”) No. 144, “Accounting for the Impairment
or Disposal of Long-Lived Assets,” which we adopted on January 1, 2002, income
statement data for all years presented reflects the reclassification of the
results of operations of all communities sold during 2004 and 2003 and seven of
the eight communities sold during 2002 to income from discontinued operations.
The eighth community sold during 2002 was properly classified as held for sale
prior to January 1, 2002 and its operations have remained in income from
continuing operations. These reclassifications have no effect on the reported
net income or FFO (as defined below) in any prior period. 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 unit and property
information).
 
 **SELECTED
FINANCIAL DATA**
 **CAMDEN
SUMMIT PARTNERSHIP, L.P.**
 
 **Year
      Ended December 31,****2004**
    
    **2003**
    
    **2002**
    
    **2001**
    
    **2000****OPERATING
      INFORMATION:**Revenues:Rental
    
    $
    131,882
    
    $
    104,973
    
    $
    93,034
    
    $
    102,691
    
    $
    99,133Other property income
    
    
    11,004
    
    
    7,854
    
    
    6,754
    
    
    7,883
    
    
    7,721Management
      fees - third party communities
    
    
    586
    
    
    618
    
    
    787
    
    
    913
    
    
    1,103Total
      revenues
    
    
    143,472
    
    
    113,445
    
    
    100,575
    
    
    111,487
    
    
    107,957Expenses:Property
      operating and maintenance expenses (exclusiveof
      items listed below)
    
    
    28,518
    
    
    24,659
    
    
    22,183
    
    
    22,574
    
    
    20,779Real
      estate taxes and insurance
    
    
    18,775
    
    
    13,343
    
    
    9,550
    
    
    9,714
    
    
    10,211Depreciation
      and amortization
    
    
    42,705
    
    
    30,462
    
    
    24,230
    
    
    23,302
    
    
    21,677General
      and administrative expense
    
    
    12,967
    
    
    6,941
    
    
    5,937
    
    
    6,940
    
    
    4,752Property
      management expenses
    
    
    6,954
    
    
    5,912
    
    
    4,822
    
    
    5,534
    
    
    5,426Merger-related
      costs
    
    
    11,484
    
    
    -
    
    
    -
    
    
    -
    
    
    -Total
      expenses
    
    
    121,403
    
    
    81,317
    
    
    66,722
    
    
    68,064
    
    
    62,845Operating
      income
    
    
    22,069
    
    
    32,128
    
    
    33,853
    
    
    43,423
    
    
    45,112Interest
      and other income
    
    
    1,984
    
    
    2,643
    
    
    2,716
    
    
    2,922
    
    
    2,871Interest
      expense and deferred financing cost amortization
    
    
    (32,932
    )
    
    (29,112
    )
    
    (28,699
    )
    
    (32,209
    )
    
    (31,500
    )Income
      (loss) from continuing operations before losson
      unconsolidated real estate joint ventures, gain onsale
      of real estate assets and impairment loss ontechnology
      investments
    
    
    (8,879
    )
    
    5,659
    
    
    7,870
    
    
    14,136
    
    
    16,483Loss
      on unconsolidated real estate joint ventures
    
    
    (380
    )
    
    (326
    )
    
    (49
    )
    
    (171
    )
    
    (399
    )Gain
      on sale of real estate assets
    
    
    -
    
    
    73
    
    
    13,831
    
    
    34,435
    
    
    38,718Gain
      on sale of real estate assets - joint ventures
    
    
    -
    
    
    -
    
    
    4,955
    
    
    271
    
    
    -Impairment
      loss on technology investments
    
    
    -
    
    
    -
    
    
    -
    
    
    (1,217
    )
    
    -Income
      (loss) from continuing operations
    
    
    (9,259
    )
    
    5,406
    
    
    26,607
    
    
    47,454
    
    
    54,802Total
      discontinued operations
    
    
    168,992
    
    
    26,250
    
    
    89,324
    
    
    29,862
    
    
    32,012Net
      income
    
    $
    159,733
    
    $
    31,656
    
    $
    115,931
    
    $
    77,316
    
    $
    86,814Income
      available to common unitholders
    
    $
    153,468
    
    $
    18,387
    
    $
    103,511
    
    $
    64,896
    
    $
    74,394
 
  13
  
 **Year
      Ended December 31,****2004**
    
    **2003**
    
    **2002**
    
    **2001**
    
    **2000**Per
      unit data - basic:Income
      (loss) from continuing operations
    
    $
    (0.27
    )
    $
    0.17
    
    $
    0.86
    
    $
    1.54
    
    $
    1.79Income
      from discontinued operations
    
    
    4.86
    
    
    0.84
    
    
    2.89
    
    
    0.97
    
    
    1.04Net
      income
    
    $
    4.59
    
    $
    1.02
    
    $
    3.75
    
    $
    2.51
    
    $
    2.83Income
      available to common unitholders
    
    $
    4.41
    
    $
    0.59
    
    $
    3.35
    
    $
    2.11
    
    $
    2.42Per
      unit data - diluted:Income
      (loss) from continuing operations
    
    $
    (0.27
    )
    $
    0.17
    
    $
    0.86
    
    $
    1.53
    
    $
    1.77Income
      from discontinued operations
    
    
    4.86
    
    
    0.84
    
    
    2.87
    
    
    0.96
    
    
    1.04Net
      income
    
    $
    4.59
    
    $
    1.01
    
    $
    3.73
    
    $
    2.49
    
    $
    2.81Income
      available to common unitholders
    
    $
    4.41
    
    $
    0.59
    
    $
    3.33
    
    $
    2.09
    
    $
    2.41Distributions
      per common unit
    
    $
    1.35
    
    $
    1.35
    
    $
    1.76
    
    $
    1.85
    
    $
    1.75Weighted
      average common units outstanding - basic
    
    
    34,806
    
    
    31,119
    
    
    30,937
    
    
    30,796
    
    
    30,697Weighted
      average common units outstanding - diluted
    
    
    34,806
    
    
    31,268
    
    
    31,107
    
    
    31,106
    
    
    30,897
 
 **BALANCE
      SHEET INFORMATION:**Real
      estate assets, before accumulated depreciation
    
    $
    1,403,913
    
    $
    1,493,670
    
    $
    1,410,195
    
    $
    1,407,979
    
    $
    1,425,367Total
      assets
    
    
    1,493,081
    
    
    1,351,882
    
    
    1,350,257
    
    
    1,309,299
    
    
    1,358,877Total
      long-term debt
    
    
    758,748
    
    
    726,152
    
    
    702,456
    
    
    719,345
    
    
    764,384Redeemable
      perpetual preferred units (1)
    
    
    -
    
    
    53,547
    
    
    136,260
    
    
    136,260
    
    
    136,260Partners’
      equity
    
    
    617,024
    
    
    566,322
    
    
    584,411
    
    
    531,847
    
    
    531,128**OTHER
      INFORMATION:**Cash
      flow provided by (used in):Operating
      activities
    
    $
    59,348
    
    $
    62,826
    
    $
    73,318
    
    $
    77,892
    
    $
    86,604Investing
      activities
    
    
    11,663
    
    
    (28,943
    )
    
    (8,075
    )
    
    5,845
    
    
    (121,305
    )Financing
      activities
    
    
    (67,187
    )
    
    (33,780
    )
    
    (64,903
    )
    
    (86,477
    )
    
    33,818Funds
      from Operations (2)
    
    $
    32,779
    
    $
    39,482
    
    $
    60,218
    
    $
    70,167
    
    $
    73,342Total
      completed communities (at end of period) (3)
    
    
    44
    
    
    46
    
    
    51
    
    
    54
    
    
    59Total
      apartment homes developed (4)
    
    
    743
    
    
    958
    
    
    866
    
    
    1,157
    
    
    1,696Total
      apartment homes acquired
    
    
    1,581
    
    
    1,095
    
    
    222
    
    
    -
    
    
    490Total
      apartment homes (at end of period) (3)
    
    
    13,799
    
    
    14,098
    
    
    15,428
    
    
    16,739
    
    
    17,273
 
 (1)
    On
      December 22, 2004, we notified the Series C Preferred Unitholder of our
      intent to redeem all outstanding 2.2 million units at $25.00 plus all
      accrued but unpaid distributions on the redemption date. Our notice was
      irrevocable and, therefore the Series C Preferred Units have been included
      in liabilities in our consolidated balance sheet as of December 31,
      2004.(2)
    Funds
      from Operations ("FFO"), as defined by the National Association of Real
      Estate Investment Trusts ("NAREIT"), represents income available to common
      unitholders (loss) excluding gains from sales of property and
      extraordinary items, plus depreciation of real estate assets, and after
      adjustments for unconsolidated partnerships and joint ventures, all
      determined on a consistent basis in accordance with accounting principles
      generally accepted in the United States of America
    ("GAAP").Our
      methodology for computing FFO may differ from the methodologies utilized
      by other real estate companies and, accordingly, may not be comparable to
      other real estate companies. FFO should not be considered as an
      alternative to net income (determined in accordance with GAAP) as an
      indication of financial performance, nor is it indicative of funds
      available to fund our cash needs, including our ability to make dividend
      or distribution payments. We believe that FFO is helpful to investors as a
      measure of performance of a Real Estate Investment Trust (“REIT”) because
      it recognizes that historical cost accounting for real estate assets under
      GAAP assumes that the value of such real estate diminishes over time. Real
      estate values have historically risen or fallen with market conditions
      and, therefore, many investors have considered presentation of operating
      results for a real estate company using historical cost accounting to be
      insufficient by itself. Thus, NAREIT created FFO as a supplemental measure
      of a REIT’s operating performance. By excluding such non-operating items
      as depreciation and gains on sales of real estate assets, among others, we
      believe that an investor can more easily compare the operating performance
      of our real estate assets between periods or compare our operating
      performance to our peers.
  14
  Below is
a reconciliation of income available to common unitholders to FFO for each of
the years in the five-year period ended December 31, 2004.
 
 **2004**
    
    **2003**
    
    **2002**
    
    **2001**
    
    **2000**Income
      available to common unitholders
    
    $
    153,468
    
    $
    18,387
    
    $
    103,511
    
    $
    64,896
    
    $
    74,394Gain
      on sale of real estate assets
    
    
    (166,633
    )
    
    (18,893
    )
    
    (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 - SummitManagement
      Company
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    (238
    )Depreciation:Real
      estate assets
    
    
    45,177
    
    
    39,225
    
    
    39,281
    
    
    38,746
    
    
    36,413Real
      estate joint venture
    
    
    767
    
    
    763
    
    
    1,119
    
    
    1,231
    
    
    1,283Funds
      from Operations
    
    $
    32,779
    
    $
    39,482
    
    $
    60,218
    
    $
    70,167
    
    $
    73,342
 
 (3)
    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).(4)
    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).
 
  15
  **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 Camden Summit Partnership, L.P. (formerly known as
Summit Properties Partnership, L.P)., a Delaware limited partnership (the
“Operating Partnership”) and its subsidiaries. All references to “Summit” in
this report refer to Summit Properties Inc., a Maryland corporation, which was
the sole general partner of the Operating Partnership prior to the merger (the
“Merger”) of Summit with and into Camden Summit, Inc., a Delaware corporation
(“Camden Summit”) and a wholly-owned subsidiary of Camden Property Trust, a
Texas real estate investment trust (“Camden”).*
 
 **Merger
with Camden**
 
 On
February 28, 2005, Summit was merged with and into Camden Summit Inc. pursuant
to an Agreement and Plan of Merger dated as of October 4, 2004 (the "Merger
Agreement"), as amended. Prior to the effective time of the Merger, Summit was
the sole general partner of the Operating Partnership, and at the effective
time, Camden Summit became the sole general partner of the Operating
Partnership.
 
 Under the
terms of the Merger Agreement, Summit stockholders had the right to elect, on a
share-by-share basis, to receive either $31.20 in cash or 0.6687 of a Camden
common share at the closing of the Merger. These elections were subject to
reallocation so that the aggregate amount of cash issued in the Merger to
Summit's stockholders equaled approximately $436.3 million. In the Merger,
Camden issued approximately 11.8 million common shares to Summit stockholders.
The limited partners in the Operating Partnership were offered, on a
unit-by-unit basis, the opportunity to redeem their partnership units for $31.20
in cash per unit or to remain in the Operating Partnership following the Merger
at a unit valuation equal to 0.6687 of a Camden common share. The limited
partner elections resulted in the redemption of 0.7 million partnership units
for cash, for an aggregate of $21.7 million, and issuing 1.8 million partnership
units.
 
 **Executive
Summary**
 
 We focus
on the operation, development and acquisition of luxury apartment communities in
select neighborhoods throughout the Southeast and Mid-Atlantic United States. We
focus our efforts in five markets which consist of Washington, D.C., Southeast
Florida, Atlanta, Raleigh and Charlotte. As of December 31, 2004, our portfolio
consisted of 44 completed communities comprising 13,799 apartment homes; four
communities owned in a joint venture, comprised of 1,203 apartment homes; and
five apartment communities with 1,834 apartment homes in various stages of
development.
 
 We have
reclassified the historical financial statements for discontinued operations
that have resulted from dispositions of real estate assets during the year ended
December 31, 2004 as well as the classification of the community considered held
for sale as of that date in accordance with Statement of Financial Accounting
Standard No. 144, “Accounting for the Impairment or Disposal of Long-Lived
Assets.”
  16
  Our
income or loss from continuing operations is generated primarily from operations
of our apartment communities, specifically, property operating income. Property
operating income is defined as rental and other property revenues less property
operating and maintenance expense. See Note 8 to our accompanying consolidated
financial statements for further discussion of our use of property operating
income as a meaningful financial measure of each community’s performance. 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. To better understand
our overall operating performance, our communities have been categorized in five
“status” groups. A community that we have acquired is deemed “same-property”
when we have owned it for one year or more as of the beginning of the current
year. We consider a community to be "stabilized" when it has attained a physical
occupancy level of at least 93%. A community that we have developed is deemed
"same-property" when it has been stabilized for at least one year as of the
beginning of the current year. A community is deemed to be a "stabilized
development" community when stabilized as of the beginning of the current year
but not the entire prior year. A “lease-up” community is defined as one that has
commenced rental operations but was not stabilized as of the beginning of the
current year. As of December 31, 2004, we had 8,670 same-property apartment
homes in 28 communities, 2,676 acquisition apartment homes in eight communities,
1,997 stabilized development apartment homes in seven communities and 876
lease-up apartment homes in three communities (one of these communities with 420
apartment homes was not complete as of December 31, 2004). Note that Reunion
Park by Summit phase I (248 apartment homes) is included in stabilized
development communities and Reunion Park by Summit phase II (172 apartment
homes) is included in lease-up communities in the status groups
above.
 
 During
2003, we developed and implemented a rent optimization software program. This
program helps us manage revenue by allowing us to set daily rents on apartment
homes as they become available for rental. Automating the information concerning
the balance between vacancy and rents provides a more efficient method to
pricing and is a valuable tool to help us manage our properties at their
greatest rental revenue producing potential.
 
 Fundamentals
in our markets, which had been weak in 2003 and 2002, began to improve during
2004. Our markets produced 165,000 jobs during the year ended December 31, 2004,
which we expect will drive future demand for our apartment homes. Additionally,
permit issuance for the construction of new apartment homes has declined and we
expect that this will result in a decreased supply of new apartment homes as we
enter 2005. Among our five markets, the fundamentals in our Washington, D.C. and
Southeast Florida markets are the strongest, and the ability to raise rents has
returned to these markets.  Fundamentals in our Atlanta and Charlotte
markets are improving and are allowing us to begin raising rents. Fundamentals
in our Raleigh market remain relatively weak and, accordingly, we expect it will
take longer to raise rents in Raleigh.  We will
continue to closely monitor and act upon key market dynamics by making
disciplined strategic investments, sound operating decisions, and utilizing
prudent financial measures.
 
 **Critical
Accounting Policies**
 
 We
prepare our financial statements in accordance with accounting principles
generally accepted in the United States of America (“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.
We consider critical accounting policies to be those policies that have the most
impact on the reporting of our financial condition and those requiring
significant judgments and estimates. Our critical accounting policies relate to
cost capitalization and asset impairment evaluation.
  17
  *Cost
Capitalization*
 
 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.” These amounts are depreciated over estimated useful
lives determined by management. Determining whether expenditures meet the
criteria for capitalization and the assignment of depreciable lives requires our
management to exercise significant judgment. Improvements are categorized as
either non-recurring or recurring capitalized expenditures. Non-recurring
capitalized expenditures primarily consist of major renovations and upgrades of
apartment homes. Recurring capitalized expenditures consist primarily of
exterior painting, new appliances, vinyl flooring, blinds, tile, wallpaper and
carpet. 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. In addition, we have a group of employees
responsible for the supervision of our capital expenditure projects and
capitalize a portion of their direct costs. The amounts capitalized depend on
the level of such activities.
 
 During
the development and construction of a new community, we capitalize all direct
and indirect costs, including interest related to apartment construction and
certain operational costs for communities under construction and in lease-up.
Included in these costs is management’s estimate of the portion of internal
costs that are incremental and considered related to such development
activities. The amounts capitalized depend on the timing of such activities.
Interest costs are capitalized in accordance with SFAS No. 34, “Capitalization
of Interest Cost,” 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.
 
 *Asset
Impairment Evaluation*
 
 We record
our real estate assets to be held and used at cost, less accumulated
depreciation, unless considered impaired. If events or circumstances indicate
that the carrying amount of a community may be impaired we will assess its
recoverability by estimating the undiscounted future cash flows of the
community. If our recoverability assessment results in an indication of
impairment for communities to be held and used, or if a community is considered
to be held for sale, then we determine the community’s fair value. For
communities classified as held for sale, the fair value represents the estimated
sales price less cost to sell based on current or pending offers, estimates
received from a broker or by applying a capitalization rate to the community’s
property operating income. For communities to be held and used, fair value is
determined by applying a capitalization rate to the community’s operating
income. Applying capitalization rates to a community’s property operating income
is a widely used measure of fair value and for determining the amount at which a
community could be sold between willing parties. Determining appropriate
capitalization rates requires significant judgment and is generally based on the
prevailing rate for the submarket within the market in which the community is
located. Capitalization rates can fluctuate due to changes in the general
economy or within specific submarkets. If the actual capitalization rate for a
community varies significantly from management’s estimate, the impairment
evaluation may be significantly affected. For assets to be held and used, if the
carrying amount exceeds the undiscounted future cash flows, we would recognize
an impairment loss to the extent the carrying amount exceeds the estimated fair
value of the community and such loss would be charged against income from continuing
operations. Assets to be disposed of are recorded at the lower of carrying
amount or fair value less cost to sell. An impairment loss will be recognized
for any write-down on assets related to discontinued operations and will be
reported in the discontinued operations section of the consolidated statements
of earnings.
 
 During
the year ended December 31, 2004, we recorded a $6.8 million impairment charge
on Summit Lenox, which was considered held for sale as of December 31, 2004.
Summit Lenox is reflected in discontinued operations in the accompanying
consolidated financial statements.
  18
  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.
 
 **Results
of Operations for the Years Ended December 31, 2004, 2003 and
2002**
 
 Income
available to common unitholders increased to $153.5 million in 2004 from $18.4
million in 2003 primarily due to an increase of $147.8 million in gain on
disposition of discontinued operations partially offset by $11.5 million of
merger-related costs. Income available to common unitholders decreased to $18.4
million in 2003 from $103.5 million in 2002 primarily due to a decrease of $13.8
million in gain on sale of real estate assets in continuing operations, a
decrease of $5.0 million in gain on sale of real estate assets - joint ventures
and a decrease of $46.1 million in gain on disposition of discontinued
operations.
 
 Loss from
continuing operations before loss on unconsolidated real estate joint ventures
and gain on sale of real estate assets was $8.9 million in 2004. Income from
continuing operations before loss on unconsolidated real estate joint ventures
and gain on sale of real estate assets was $5.7 million in 2003. The decrease is
primarily due to an increase of $12.2 million in depreciation and amortization
related to communities acquired in 2004 and 2003 as well as depreciation and
amortization on communities in lease-up; merger-related costs of $11.5 million
and an increase of $6.0 million in general and administrative costs, primarily
driven by increased executive compensation costs, all offset by an increase in
property operating income for those communities in continuing operations as the
result of improving fundamentals in our markets and the addition of acquisition
communities during 2004 and 2003.
 
 Income
from continuing operations before loss on unconsolidated real estate joint
ventures and gain on sale of real estate assets decreased to $5.7 million in
2003 from $7.9 million in 2002. The primary factors causing this decrease are a
$6.2 million increase in depreciation and amortization, a $924,000 million
increase in amortization of deferred financing costs, a $1.0 million increase in
general and administrative expenses and a $974,000 increase in property
management expenses, all offset by a $6.8 million increase in property operating
income from our communities in continuing operations. See the four sections
entitled, “Operating Performance of our Same-Property, Acquisition, Stabilized
Development and Lease-Up Communities” on pages 21 through 23 and the section
entitled, “Other Income and Expenses” on page 26 of this report for an
explanation of these changes.
 
 A
community’s average physical occupancy is defined as the number of apartment
homes occupied divided by the total number of apartment homes contained in the
community, expressed as a percentage. Average physical occupancy has been
calculated using the average of the occupancy that existed on Sunday during each
week of the period. Average rent per occupied apartment home represents
collected rent per occupied apartment home. Our methodology for calculating
average physical occupancy and average rent per occupied apartment home may
differ from the methodology used by other apartment companies and, accordingly,
may not be comparable to other apartment companies.
 
 A summary
of our apartment homes (excluding joint venture communities and including Summit
Las Olas (420 apartment homes) which was in lease up but not yet complete) for
the years ended December 31, 2004, 2003 and 2002 is as follows:
 
 **2004**
    
    **2003**
    
    **2002**Apartment
      homes at the beginning of the year
    
    
    14,554
    
    
    15,428
    
    
    16,739Acquisitions
    
    
    1,581
    
    
    1,095
    
    
    222Developments
      which were completed during the year
    
    
    743
    
    
    958
    
    
    866Sale
      of apartment homes
    
    
    (2,659
    )
    
    (2,927
    )
    
    (2,399
    )Apartment
      homes at the end of the year
    
    
    14,219
    
    
    14,554
    
    
    15,428
 
  19
  The
operating performance of our communities (excluding joint venture communities)
is summarized below (in thousands). The operating results for communities which
are considered held for sale are included in their current “status” group until
they are sold, at which time they will be reclassified to the disposition
communities status group.
 
 **Year
      Ended December 31,**
    
    **Year
      Ended December 31,****2004**
    
    **2003**
    
    **%
      Change**
    
    **2003**
    
    **2002**
    
    **%
      Change**Property
      revenue(1):Same-property
      communities
    
    $
    94,761
    
    $
    93,699
    
    
    1.1
    %
    $
    106,047
    
    $
    109,226
    
    
    -2.9
    %Acquisition
      communities
    
    
    22,329
    
    
    3,991
    
    
    459.5
    %
    
    3,991
    
    
    -
    
    
    100.0
    %Stabilized
      development communities(2)
    
    
    24,899
    
    
    19,169
    
    
    29.9
    %
    
    16,947
    
    
    16,477
    
    
    2.9
    %Lease-up
      communities
    
    
    5,224
    
    
    308
    
    
    1596.1
    %
    
    13,307
    
    
    2,436
    
    
    446.3
    %Disposition
      communities
    
    
    17,592
    
    
    43,158
    
    
    -59.2
    %
    
    20,033
    
    
    45,340
    
    
    -55.8
    %Total
      property revenue
    
    
    164,805
    
    
    160,325
    
    
    2.8
    %
    
    160,325
    
    
    173,479
    
    
    -7.6
    %Property
      operating and maintenanceexpense(1):Same-property
      communities
    
    
    30,755
    
    
    30,506
    
    
    0.8
    %
    
    35,131
    
    
    34,358
    
    
    2.2
    %Acquisition
      communities
    
    
    7,556
    
    
    1,866
    
    
    304.9
    %
    
    1,866
    
    
    -
    
    
    100.0
    %Stabilized
      development communities(2)
    
    
    9,696
    
    
    7,874
    
    
    23.1
    %
    
    6,229
    
    
    5,839
    
    
    6.7
    %Lease-up
      communities
    
    
    2,041
    
    
    184
    
    
    1009.2
    %
    
    5,076
    
    
    980
    
    
    418.0
    %Disposition
      communities
    
    
    6,149
    
    
    16,319
    
    
    -62.3
    %
    
    8,447
    
    
    16,384
    
    
    -48.4
    %Total
      property operating andmaintenance
      expense
    
    
    56,197
    
    
    56,749
    
    
    -1.0
    %
    
    56,749
    
    
    57,561
    
    
    -1.4
    %Property
      operating income:Same-property
      communities
    
    
    64,006
    
    
    63,193
    
    
    1.3
    %
    
    70,916
    
    
    74,868
    
    
    -5.3
    %Acquisition
      communities
    
    
    14,773
    
    
    2,125
    
    
    595.2
    %
    
    2,125
    
    
    -
    
    
    100.0
    %Stabilized
      development communities(2)
    
    
    15,203
    
    
    11,295
    
    
    34.6
    %
    
    10,718
    
    
    10,638
    
    
    0.8
    %Lease-up
      communities
    
    
    3,183
    
    
    124
    
    
    2466.9
    %
    
    8,231
    
    
    1,456
    
    
    465.3
    %Disposition
      communities
    
    
    11,443
    
    
    26,839
    
    
    -57.4
    %
    
    11,586
    
    
    28,956
    
    
    -60.0
    %Property
      operating income
    
    $
    108,608
    
    $
    103,576
    
    
    4.9
    %
    $
    103,576
    
    $
    115,918
    
    
    -10.6
    %
 
 (1)
    To
      determine the amounts of property revenue and property operating and
      maintenance expense which were contributed by communities classified in
      discontinued operations, see the table in the section entitled,
      “Discontinued Operations” on page 25 of this
report.
 (2)
    Includes
      communities held for sale at December 31, 2004 with operating results
      reported in discontinued operations: Property revenue of $4.3 million,
      $4.3 million and $5.1 million for the years ended December 31, 2004, 2003
      and 2002 respectively; property operating income of $1.7 million, $1.9
      million and $3.1 million for the years ended December 31, 2004, 2003 and
      2002, respectfully.
  20
  **Operating
Performance of our Same-Property Communities**
 
 The
operating performance of our same-property communities is summarized below
(dollars in thousands, except average monthly rental revenue). The comparison of
2004 to 2003 includes those communities and apartment homes that were considered
same-property as of December 31, 2004. The comparison of 2003 to 2002 includes
those communities and apartment homes that were considered same-property as of
December 31, 2003. The change in number of communities and apartment homes is
the result of the disposition of communities during 2003 as well as the movement
of a community which would have been an acquisition, stabilized development or
lease-up community in a prior year to the same-property category.
 
 **Year
      Ended December 31,**
    
    **Year
      Ended December 31,****2004**
    
    **2003**
    
    **%
      Change**
    
    **2003**
    
    **2002**
    
    **%
      Change**Property
      revenues:Rental
    
    $
    87,237
    
    $
    87,157
    
    
    0.1
    %
    $
    98,651
    
    $
    101,850
    
    
    -3.1
    %Other
    
    
    7,524
    
    
    6,542
    
    
    15.0
    %
    
    7,396
    
    
    7,376
    
    
    0.3
    %Total
      property revenues
    
    
    94,761
    
    
    93,699
    
    
    1.1
    %
    
    106,047
    
    
    109,226
    
    
    -2.9
    %Property
      operating and maintenanceexpenses:Personnel
    
    
    7,857
    
    
    7,436
    
    
    5.7
    %
    
    8,667
    
    
    8,290
    
    
    4.5
    %Advertising
      and promotion
    
    
    1,255
    
    
    1,148
    
    
    9.3
    %
    
    1,276
    
    
    1,244
    
    
    2.6
    %Utilities
    
    
    4,835
    
    
    4,569
    
    
    5.8
    %
    
    5,224
    
    
    5,151
    
    
    1.4
    %Building
      repairs and maintenance
    
    
    3,587
    
    
    4,163
    
    
    -13.8
    %
    
    4,820
    
    
    5,003
    
    
    -3.7
    %Real
      estate taxes and insurance
    
    
    11,807
    
    
    11,772
    
    
    0.3
    %
    
    13,591
    
    
    12,928
    
    
    5.1
    %Other
      operating expense
    
    
    1,414
    
    
    1,418
    
    
    -0.3
    %
    
    1,553
    
    
    1,742
    
    
    -10.8
    %Total
      property operating expense
    
    
    30,755
    
    
    30,506
    
    
    0.8
    %
    
    35,131
    
    
    34,358
    
    
    2.2
    %Property
      operating income
    
    $
    64,006
    
    $
    63,193
    
    
    1.3
    %
    $
    70,916
    
    $
    74,868
    
    
    -5.3
    %Average
      physical occupancy
    
    
    93.8
    %
    
    94.1
    %
    
    -0.3
    %
    
    94.2
    %
    
    93.5
    %
    
    0.7
    %Average
      rent per occupied apartment home
    
    $
    893
    
    $
    896
    
    
    -0.3
    %
    $
    889
    
    $
    926
    
    
    -4.0
    %Number
      of apartment homes
    
    
    8,670
    
    
    8,670
    
    
    
    
    
    9,865
    
    
    9,865Number
      of apartment communities
    
    
    28
    
    
    28
    
    
    
    
    
    34
    
    
    34
 
 Property
revenues remained stable from 2003 to 2004 primarily due to improving
fundamentals in our markets, primarily driven by an increase in job growth
and/or a decrease in job losses. Other property revenues increased by 15.0% from
2003 to 2004 due to increases in fees such as water, trash, termination,
parking, storage, application and pet fees as well as income earned from
security deposit forfeitures.
 
 Property
operating and maintenance expenses remained stable from 2003 to 2004, increasing
by only 0.7%. Building repairs and maintenance expense decreased by 13.8% from
2003 to 2004 due to the fact that our maintenance personnel are completing more
painting and other repair work in-house rather than hiring third-party vendors
to perform such tasks. As a percentage of total property revenue, total property
operating and maintenance expenses for our same-property communities decreased
to 32.4% in 2004 from 32.6% in 2003.
 
 Property
revenues declined from 2002 to 2003 primarily due to continued 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 markets by builders taking advantage of low interest rates. Concessions
at our same-property communities increased by $1.6 million, or 11.5%, during the
year ended December 31, 2003 when compared to the same period in 2002.
 
 Personnel
costs increased by $377,000, or 4.5%, from 2002 to 2003 due to an increase in
staffing levels in 2003 as compared to 2002. Excluding personnel costs, property
operating and maintenance expenses increased by 1.5% in 2003 over the same
period in 2002. Insurance costs increased by $448,000, or 29.2%, during 2003
when compared to 2002 due to an increase in insurance rates with our May 2003
renewal as well as obtaining terrorism insurance on certain of our communities.
As a percentage of total property revenue, total property operating and
maintenance expenses for our same-property communities increased to 33.1% in
2003 from 31.5% in 2002.
  21
  **Operating
Performance of our Acquisition Communities**
 
 Acquisition
communities for the 2004 period includes eight communities with a total of 2,676
apartment homes (Summit Brickell, Summit Lansdowne, Summit Stonecrest, Summit
South End Square, Summit Doral Villas, Summit Midtown, Summit Fallsgrove and
Charlotte Cotton Mills). The acquisition communities for the 2003 period include
only Summit Brickell and Summit Lansdowne.
 
 On May
27, 2004, we acquired Summit Stonecrest (306 apartment homes), located in
Charlotte, North Carolina for $28.0 million. Consideration paid for this
community was cash of $9.6 million and the assumption of a $19.7 million
mortgage (which had a fair market value of $18.4 million on the date of
purchase) . On June
14, 2004, we purchased Summit South End Square (299 apartment homes), also
located in Charlotte, for $33.5 million in cash. On
September 2, 2004, we acquired Summit Doral Villas, located in Miami, Florida
(232 apartment homes), for $43.5 million. Consideration paid for Summit Doral
Villas was cash of $18.6 million and the assumption of a $22.1 million mortgage
(which had a fair value of $24.9 million on the date of acquisition). On
September 30, 2004, we acquired Summit Midtown, located in Atlanta, Georgia (296
apartment homes), for $44.8 million in cash. On October 14, 2004, we acquired
Summit Fallsgrove, located in Rockville, Maryland (268 apartment homes) for
$54.5 million in cash. On November 28, 2004, we acquired Charlotte Cotton Mills,
located in Charlotte, North Carolina (180 apartment homes) for $23.8 million in
cash.
 
 On May 6,
2003, we purchased certain assets of Brickell Grand, Inc. (“Brickell Grand”),
including the community known as Summit Brickell and a note receivable from the
developer, located in Miami, Florida for $59.4 million. Summit Brickell contains
405 apartment homes and approximately 18,000 square feet of retail space. On
December 31, 2003, we purchased Summit Lansdowne, located in Loudon County,
Virginia, for $99.2 million. Summit Lansdowne contains 690 apartment homes.
 
 The
operating performance of our acquisition communities is summarized below
(dollars in thousands, except average monthly rental revenue). The average rent
per occupied apartment home for the 2004 and 2003 periods represents the average
for the month of December only. The average physical occupancy for the 2004 and
2003 periods represents the average during the last week of December. There was
one community acquired during 2002, but it was subsequently sold in 2003;
therefore, its operating results are included in disposition communities
below.
 
 **Year
      Ended December 31,****2004**
    
    **2003**Property
      revenues:Rental
    
    $
    21,022
    
    $
    3,826Other
    
    
    1,307
    
    
    165Total
      property revenues
    
    
    22,329
    
    
    3,991Property
      operating expenses
    
    
    7,556
    
    
    1,866Property
      operating income
    
    $
    14,773
    
    $
    2,125Average
      physical occupancy
    
    
    90.1
    %
    
    95.3
    %Average
      rent per occupied apartment home
    
    $
    1,105
    
    $
    1,269Number
      of apartment homes
    
    
    2,676
    
    
    1,095
 
 **Operating
Performance of our Stabilized Development Communities**
 
 The
comparison of the years ended December 31, 2004 and 2003 represents seven
communities with a total of 1,997 apartment homes (Reunion Park by Summit I,
Summit Brookwood, Summit Grand Parc, Summit Lenox, Summit Roosevelt, Summit
Stockbridge and Summit Valleybrook) which were stabilized during the entire year
ended December 31, 2004, but were stabilized subsequent to January 1, 2003. The
comparison of the years ended December 2003 and 2002 represents five communities
with a total of 1,820 apartment homes (Summit Crest, Summit Lenox, Summit
Overlook, Summit Peachtree City and Summit Shiloh) which were stabilized during
the entire year ended December 31, 2003, but were stabilized subsequent to
January 1, 2002. Summit Lenox is an existing community with 431 apartment homes
which recently underwent major renovations. Its operating results are included
in results of stabilized development communities as it reached stabilization
after renovation during the year ended December 31, 2004. Summit Lenox is
recorded as held for sale as of December 31, 2004.
  22
  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,****2004**
    
    **2003**
    
    **2003**
    
    **2002**Property
      revenues:Rental
    
    $
    22,739
    
    $
    17,720
    
    $
    15,888
    
    $
    15,447Other
    
    
    2,160
    
    
    1,449
    
    
    1,059
    
    
    1,030Total
      property revenues
    
    
    24,899
    
    
    19,169
    
    
    16,947
    
    
    16,477Property
      operating expenses
    
    
    9,696
    
    
    7,874
    
    
    6,229
    
    
    5,839Property
      operating income
    
    $
    15,203
    
    $
    11,295
    
    $
    10,718
    
    $
    10,638Average
      physical occupancy
    
    
    92.5
    %
    
    76.0
    %
    
    92.7
    %
    
    84.6
    %Average
      rent per occupied apartment home
    
    $
    996
    
    $
    915
    
    $
    799
    
    $
    845Number
      of apartment homes
    
    
    1,997
    
    
    1,997
    
    
    1,820
    
    
    1,820
 
 **Operating
Performance of our Communities in Lease-Up**
 
 The
following is a summary of the three communities in lease-up during the year
ended December 31, 2004 (dollars in thousands):
 
 **Total**
    
    **Actual/**
    
    
    
    **Average**
    
    **%
      Leased****Number
      of**
    
    **Actual/**
    
    **Anticipated**
    
    **Actual/**
    
    **Physical**
    
    **as
      of****Apartment**
    
    **Anticipated**
    
    **Construction**
    
    **Anticipated**
    
    **Occupancy**
    
    **December****Community
      and Market**
    
    **Homes**
    
    **Cost**
    
    **Completion**
    
    **Stabilization**
    
    **2004**
    
    **31,
      2004**Reunion
      Park by Summit II - Raleigh, NC
    
    
    172
    
    $
    10,273
    
    
    Q1
      2004
    
    
    Q3
      2004
    
    
    45.6
    %
    
    94.8
    %Summit
      Silo Creek - Washington, D.C.
    
    
    284
    
    
    39,040
    
    
    Q2
      2004
    
    
    Q4
      2004
    
    
    69.3
    %
    
    95.1
    %Summit
      Las Olas - Ft. Lauderdale, FL
    
    
    420
    
    
    73,700
    
    
    Q1
      2005
    
    
    Q3
      2005
    
    
    20.4
    %
    
    71.9
    %876
    
    $
    123,013
 
 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.
 
 We had
seven communities with 1,774 apartment homes in lease-up during the year ended
December 31, 2003 (Summit Brookwood, Summit Roosevelt, Summit Grand Parc, Summit
Stockbridge, Reunion Park by Summit II, Summit Silo Creek and Summit
Valleybrook).
 
 The
operating performance of our lease-up communities is summarized below (dollars
in thousands):
 
 **Year
      Ended December 31,**
    
    **Year
      Ended December 31,****2004**
    
    **2003**
    
    **2003**
    
    **2002**Property
      revenues:Rental
    
    $
    4,648
    
    $
    267
    
    $
    12,292
    
    $
    2,191Other
    
    
    576
    
    
    41
    
    
    1,015
    
    
    245Total
      property revenues
    
    
    5,224
    
    
    308
    
    
    13,307
    
    
    2,436Property
      operating expenses
    
    
    2,041
    
    
    184
    
    
    5,076
    
    
    980Property
      operating income
    
    $
    3,183
    
    $
    124
    
    $
    8,231
    
    $
    1,456Number
      of apartment homes
    
    
    876
    
    
    876
    
    
    1,774
    
    
    1,774
 
 **Operating
Performance of our Disposition Communities**
 
 The 2004
disposition communities consist of the former Summit Belmont, Summit Brickell
View, Summit Crossing, Summit Del Ray, Summit Fair Oaks, Summit Glen, Summit
Highland, Summit Norcroft, Summit Reston and Summit Square (an aggregate of
2,659 apartment homes), all of which were sold during the year ended December
31, 2004.
  23
  The 2003
disposition communities consist of the former Summit Fairways, Summit Turtle
Rock, Summit Camino Real, Summit Buena Vista, Summit Belcourt, Summit Las
Palmas, Summit Arboretum and Summit San Raphael (comprised of an aggregate of
2,927 apartment homes), all of which were sold during the year ended December
31, 2003. With the exception of Summit Fairways, all of the communities disposed
of during 2003 are located in Texas and, therefore, their disposition completed
our exit of the Texas market.
 
 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 (comprised of 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 located in Atlanta, Georgia.
 
 The
operating performance of the disposition communities (excluding The Heights at
Cheshire Bridge) is summarized below (dollars in thousands). Note that
communities which are considered held for sale are not included in disposition
communities’ results of operations until sold (i.e., such results remain in
same-property, acquisition, stabilized development or lease-up communities
results until sold).
 
 **Year
      Ended December 31,**
    
    **Year
      Ended December 31,****2004**
    
    **2003**
    
    **2003**
    
    **2002**Property
      revenues:Rental
    
    $
    16,256
    
    $
    40,338
    
    $
    18,652
    
    $
    42,352Other
    
    
    1,336
    
    
    2,820
    
    
    1,381
    
    
    2,988Total
      property revenues
    
    
    17,592
    
    
    43,158
    
    
    20,033
    
    
    45,340Property
      operating expenses
    
    
    6,149
    
    
    16,319
    
    
    8,447
    
    
    16,384Property
      operating income
    
    $
    11,443
    
    $
    26,839
    
    $
    11,586
    
    $
    28,956Number
      of apartment homes
    
    
    2,659
    
    
    5,586
    
    
    2,927
    
    
    5,326
 
 **Acquisitions
and Dispositions**
 
 During
the year ended December 31, 2004, we purchased six communities (see the section,
“Operating Performance of our Acquisition Communities” on page 22).
 
 During
the year ended December 31, 2004, we sold ten communities comprising 2,659
apartment homes for an aggregate sales price of $349.4 million, resulting in an
aggregate gain on sale of $164.5 million. The ten communities sold were the
former Summit Fair Oaks, Summit Highland, Summit Square, Summit Belmont, Summit
Reston, Summit Glen, Summit Del Ray, Summit Brickell View, Summit Crossing and
Summit Norcroft. Net proceeds from eight of the ten communities, equaling $242.1
million, were placed in escrow with a qualified intermediary in accordance with
like-kind exchange income tax rules and regulations and were used to construct
or purchase real estate assets during 2004. We also sold one parcel of land
during 2004 for approximately $94,000. This land was located at the community
formerly known as Summit Square.
 
 During
the year ended December 31, 2003, we purchased two communities. On December 31,
2003, we purchased Summit Lansdowne, located in Loudon County, Virginia, for
$99.2 million. Summit Lansdowne contains 690 apartment homes and was
approximately 89.0% leased as of December 31, 2003. On May 6, 2003, the
Operating Partnership purchased certain assets of Brickell Grand, including the
community known as Summit Brickell and a note receivable from the developer, for
$59.4 million. Summit Brickell is located in Miami, Florida and contains 405
apartment homes and approximately 18,000 square feet of retail space.
  24
  During
the year ended December 31, 2003, we sold eight communities comprising 2,927
apartment homes for an aggregate sales price of $215.2 million, resulting in an
aggregate gain on sale of $18.8 million for seven of the communities and an
impairment charge of $0.8 million for one of the communities. The eight
communities sold were the former Summit Fairways, Summit Turtle Rock, Summit
Camino Real, Summit Buena Vista, Summit Arboretum, Summit Las Palmas, Summit San
Raphael and Summit Belcourt. Net proceeds from four of the eight communities,
equaling $51.5 million, were placed in escrow with a qualified intermediary in
accordance with like-kind exchange income tax rules and regulations and were
used to construct or purchase real estate assets during 2004.
 
 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 and were used to construct or purchase
real estate assets during 2004.
 
 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 (comprising
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 (comprising 222 apartment
homes) for $17.7 million. The community, known as Summit San Raphael, was sold
during 2003.
 
 **Discontinued
Operations**
 
 In
accordance with SFAS No. 144, net income and gain on disposition of real estate
for communities sold and considered held for sale after December 31, 2001 are
reflected in our statements of earnings as “discontinued operations” for all
periods presented. Below is a summary of discontinued operations for all of the
communities sold during 2004, 2003 and 2002, excluding Summit Breckenridge and
joint venture communities, for the years ended December 31, 2004, 2003 and 2002
(in thousands). Summit Breckenridge was properly classified as held for sale
prior to January 1, 2002 and, therefore, its operations prior to disposal are
included in income from continuing operations. The summary below also includes
Summit Lenox which was considered held for sale as of December 31,
2004.
 
 **Year
      Ended December 31,**Property
      revenues:
    
    **2004**
    
    **2003**
    
    **2002**Rental
      revenues
    
    $
    20,020
    
    $
    44,336
    
    $
    68,805Other
      property revenue
    
    
    1,899
    
    
    3,162
    
    
    4,886Total
      property revenues
    
    
    21,919
    
    
    47,498
    
    
    73,691Property
      operating expenses
    
    
    8,904
    
    
    18,747
    
    
    25,828Depreciation
    
    
    3,549
    
    
    9,907
    
    
    16,043Interest
      and amortization
    
    
    300
    
    
    4,133
    
    
    7,092Income
      from discontinued operations before gain on disposition ofdiscontinued
      operations and impairment loss on discontinued operations
    
    
    9,166
    
    
    14,711
    
    
    24,728Net
      gain on disposition of discontinued operations
    
    
    166,633
    
    
    18,820
    
    
    64,907Impairment
      loss on discontinued operations
    
    
    (6,807
    )
    
    (759
    )
    
    -Loss
      from early extinguishment of debt associated with asset
    sales
    
    
    -
    
    
    (6,522
    )
    
    (311
    )Total
      discontinued operations
    
    $
    168,992
    
    $
    26,250
    
    $
    89,324
  25
  **Development
Activity**
 
 Development
communities in process as of December 31, 2004 are summarized as follows
(dollars in thousands):
 
 **Number
      of**
    
    **Total**
    
    
    
    **Estimated**
    
    **Anticipated****Apartment**
    
    **Estimated**
    
    **Cost
      To**
    
    **Cost
      To**
    
    **Construction****Community
      / Market Area**
    
    **Homes**
    
    **Costs**
    
    **Date**
    
    **Complete**
    
    **Completion**Summit
      Las Olas - Ft. Lauderdale, FL
    
    
    420
    
    $
    73,700
    
    $
    70,285
    
    $
    3,415
    
    
    Q1
      2005Summit
      Clearbrook - Washington, D.C.
    
    
    297
    
    
    34,800
    
    
    5,559
    
    
    29,241
    
    
    Q2
      2006Summit
      Dilworth - Charlotte, NC
    
    
    145
    
    
    19,300
    
    
    4,582
    
    
    14,718
    
    
    Q2
      2006Summit
      Fairfax Corner - Washington, D.C.
    
    
    488
    
    
    74,500
    
    
    37,759
    
    
    36,741
    
    
    Q4
      2006Summit
      Manor Park - Raleigh, NC
    
    
    484
    
    
    46,300
    
    
    14,451
    
    
    31,849
    
    
    Q4
      2006Total
      - communities under construction
    
    
    1,834
    
    
    248,600
    
    
    132,636
    
    
    115,964Other
      development and construction costs (1)
    
    
    -
    
    
    -
    
    
    86,501
    
    
    -Total
      development communities in process
    
    
    1,834
    
    $
    248,600
    
    $
    219,137
    
    $
    115,964
 
 (1)  Consists
primarily of land held for development and other pre-development
costs.
 
 The
estimated cost to complete the development communities listed above of $116.0
million represents substantially all of our material commitments for capital
expenditures as of December 31, 2004.
 
 *Factors
Affecting the Performance of Our Development Communities*
 
 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. 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. 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.
 
 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.
 
 In
addition, we are conducting feasibility and other pre-development work for other
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.
 
 **Other
Income and Expenses**
 
 Interest
income decreased by $685,000 to $1.2 million in 2004 compared to 2003 due to a
decrease of $323,000 of interest earned on notes receivable which were repaid in
2003, a reduction of $146,000 in interest earned on proceeds placed with
qualified intermediaries in accordance with like-kind exchange rules and
regulations and a reduction of interest earned on employee notes receivable of
$101,000. Interest income decreased by $422,000 to $1.9 million in 2003 compared
to 2002, primarily due to a preferred return of $375,000 earned in 2002 on an
equity investment.
 
  26
  Depreciation
and amortization expense for continuing operations increased by $12.2 million to
$42.7 million in 2004 compared to 2003 primarily due to depreciation recorded
for recent development communities as well as for the six communities acquired
during 2004 and the community acquired on December 31, 2003. Depreciation and
amortization expense for continuing operations increased by $6.2 million to
$30.5 million in 2003 compared to 2002 primarily due to depreciation on
development communities and one of the acquisition communities during that
year.
 
 Interest
expense for continuing operations increased by $4.5 million to $31.4 million in
2004 when compared to 2003. This increase is primarily due to a $57.2 million
increase in our average indebtedness outstanding in 2004 when compared to 2003
as the result of our issuance of $109.4 million in fixed rate mortgages during
the year. Interest expense for continuing operations decreased by $511,000 to
$26.9 million in 2003 compared to 2002.
 
 Deferred
financing cost amortization decreased by $688,000 to $1.5 million in 2004
compared to 2003 and increased by $924,000 to $2.2 million in 2003 compared to
2002, primarily due to a charge of $827,000 related to unamortized financing
costs related to the termination of our prior unsecured credit facility in 2003,
with no similar charges in 2004 or 2002.
 
 General
and administrative expenses increased by $6.0 million to $13.0 million in 2004
when compared to 2003 primarily due to an increase of $1.6 million in
performance-based compensation, $1.6 million recorded for the value of
post-retirement benefits to be paid to two former executive officers and an
increase of $1.4 million for long-term incentive compensation either paid out or
accrued. General and administrative expenses increased by $1.0 million to $6.9
million in 2003 when compared to 2002 primarily due to an increase of $1.0
million related to performance-based compensation. As a percentage of total
revenues, general and administrative expenses were 9.0% in 2004, 6.1% in 2003
and 5.9% in 2002.
 
 Merger-related
costs of $11.5 million consist primarily of the accelerated cash payout of
certain Section 16 executive officer bonuses, stock options and restricted stock
grants of $6.9 million. Legal, accounting and other professional fees included
in this amount are $4.1 million. In addition, this amount includes $483,000
which is made up of a class action suit settlement of $383,000 and $100,000 of
legal and postage costs related to such suit.
 
 The
$166.6 million gain on disposition of discontinued operations in 2004 is made up
of $164.5 million as the result of the disposition of ten communities during
2004 (the former Summit Fair Oaks, Summit Highland, Summit Square, Summit
Belmont, Summit Reston, Summit Glen, Summit Del Ray, Summit Brickell View,
Summit Crossing and Summit Norcroft) and $2.1 million as the result of
adjustments to the gains on sale of communities sold prior to 2004.
 
 The $18.8
million gain on disposition of discontinued operations in 2003 resulted from the
disposition of eight communities. The seven communities sold were the former
Summit Fairways, Summit Turtle Rock, Summit Camino Real, Summit Buena Vista,
Summit Arboretum, Summit Las Palmas and Summit San Raphael.
 
 The
$73,000 gain on sale of real estate assets in continuing operations resulted
from the sale of a parcel of land which was located at one of our existing
communities. The impairment loss on discontinued operations of $759,000 was
incurred upon the disposition of the former Summit Belcourt, located in Dallas,
Texas.
 
 The
communities disposed of in 2003 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 markets. The sale of the communities in Texas
completed our previously announced intention to exit Texas.
 
 The $78.7
million gain on sale of assets in 2002 resulted from the disposition of eight
communities.
  27
   
 **Liquidity
and Capital Resources**
 
 *Liquidity*
 
 Net cash
provided by operating activities decreased to $59.3 million for the year ended
December 31, 2004 from $62.8 million for the year ended December 31, 2003,
primarily due to a $20.1 million decrease in net income (loss) before loss on
unconsolidated real estate joint ventures, gain on sale of real estate assets,
impairment loss on discontinued operations and loss from early extinguishment of
debt associated with asset sales and an increase of $14.1 million in accounts
payable and accrued expenses in 2004 when compared to 2003.
 
 Net cash
provided by investing activities was $11.7 million for the year ended December
31, 2004 and cash used in investing activities was $28.9 million for the year
ended December 31, 2003. The increase in cash provided by investing activities
is due to an increase of $96.6 million in proceeds received for the sale of real
estate assets and a decrease of $21.4 million in cash used for the investment in
real estate joint ventures, offset by increases of $36.2 million and $27.4
million in cash used for the construction of real estate assets and cash used
for the acquisition of real estate assets, respectively, in 2004 when compared
to 2003, a decrease of $8.5 million in cash received from our historic tax
credit venture partner and decrease of $4.7 million of proceeds received from
the repayment of notes receivable. Current year cash proceeds from the sale of
real estate assets include current year expenditures from qualified like-kind
exchange escrows that relate to prior year sales.
 
 Net cash
used in financing activities increased to $67.2 million for the year ended
December 31, 2004 from $33.8 million for the year ended December 31, 2003. The
increase in cash used in financing activities during 2004 is primarily due to a
decrease of $100.2 million in cash proceeds received from the direct placement
of common stock during 2003 (see the “Direct Placement of Common Stock” section
below) and $15.1 million of cash used to settle stock options and restricted
stock grants in 2004, partially offset by a decrease of $85.0 million in cash
used to redeem the Series B preferred units during 2003 (see the section,
“Preferred Units” below).
 
 As of
January 1, 2004, we had $2.7 million of cash and cash equivalents (including
restricted proceeds placed with a qualified intermediary in accordance with
income tax rules and regulations) and $70.0 million available under our secured
credit facility. After considering the transactions listed below and our cash
provided by operating activities of $59.3 million during the year, as of
December 31, 2004, we had $6.5 million of cash and cash equivalents and $194.1
million available under our secured credit facility. During the year ended
December 31, 2004, we generated cash proceeds from various transactions,
including:
 
 ·
    We
      sold ten communities and one parcel of land for an aggregate sales price
      of $349.5 million,
 generating
net cash proceeds of $346.6 million; and
 ·
    Issued
      $109.4 million in fixed-rate mortgages secured by ten
      communities.
 
 The
proceeds were used primarily to:
 
 ·
    Acquire
      six apartment communities requiring cash payment of $186.2
      million;
 ·
    Construct
      development communities of $128.7 million;
 ·
    Repay
      one public unsecured note in the amount of $50.0 million which matured
      during the year;
 ·
    Repay
      a $10.3 million tax-exempt bond associated with a community which was sold
      during the year;
 ·
    Repay
      the construction loan of $35.3 million;
 ·
    Fund
      the cash settlement of certain bonuses, stock options and restricted stock
      grant compensation of $15.1 million;
 ·
    Fund
      capital expenditures and other corporate additions and tenant improvements
      of $10.6 million; and
 ·
    Fund
      distributions to common unitholders of $47.0
million.
  28
  During
the year ended December 31, 2003, we generated cash proceeds from various
transactions, including:
 
 ·
    We
      sold eight communities and one parcel of land for an aggregate sales price
      of $215.2 million, generating net cash proceeds of $189.7
      million;
 ·
    We
      issued $144.0 million in fixed-rate mortgages secured by four communities;
      and
 ·
    Summit
      issued 4.3 million shares of its common stock and contributed the net
      proceeds of $97.3 million to us.
 
 The
proceeds in 2003 were used primarily to:
 
 ·
    Acquire
      two apartment communities for an aggregate purchase price of $158.8
      million;
 ·
    Construct
      development communities of $92.5 million;
 ·
    Redeem
      all 3.4 million Series B Cumulative Redeemable Perpetual Preferred Units
      of $85.0 million;
 ·
    Repay
      two public unsecured notes in the aggregate amount of $47.0 million which
      matured during the year;
 ·
    Repay
      $26.8 million of mortgages associated with communities which were sold
      during the year;
 ·
    Repay
      $25.0 million under our credit facility;
 ·
    Make
      investment of $21.4 million in a consolidated joint venture which is
      developing a community;
 ·
    Repurchase
      $15.2 million of common stock under our common stock repurchase program;
      and
 ·
    Fund
      capital expenditures and other corporate additions and tenant improvements
      of $9.0 million.
 
 Our
outstanding indebtedness on notes payable (excluding fair value adjustments of
hedged debt instruments of $2.5 million) as of December 31, 2004 totaled $756.2
million. This amount includes $483.4 million in fixed rate conventional
mortgages, $170.0 million of unsecured notes, $6.9 million of variable rate
mortgages, and $95.9 million under our secured credit facility. See the table in
the section entitled “Market Risk” on page 33 of this report for a summary of
the aggregate annual maturities of our debt as of December 31, 2004.
 
 The
primary uses of cash in 2005 through February 28, 2005, the date of the Merger,
was to fund development spending (refer to the section entitled “Development
Activity” on page 26 of this report), to fund capital expenditures relating to
maintaining the existing communities, to fund principal amortization payments on
debt, to fund dividend payments and the redemption of the Series C Cumulative
Redeemable Perpetual Preferred Units on January 21, 2005 (see the section
entitled “Preferred Units” on page 30 of this report).
 
 The
primary source of funds for these uses, in addition to our cash provided by
operating activities, was the borrowing capacity under our credit
facility.
 
 In
connection with the Merger, we repaid our secured credit facility, which had an
outstanding balance of $188.5 million at the date of repayment, using proceeds
received from a $500 million intercompany line of credit from Camden Summit.
This line of credit bears interest at 6%, has a ten-year term and is secured by
the same eleven properties which secured the credit facility.  Additional
amounts funded by this intercompany line of credit in connection with the merger
were $28.0 million of compensation costs paid to employees of Summit, the
Management Company and the Construction Company (consisting primarily of
retention bonuses, severance payments, and amounts due under the 2004 long-term
incentive compensation program), $9.6 million paid to a financial services
institution which acted as our financial advisor with respect to the Merger
transaction and $2.5 million paid as a prepayment penalty under the secured
credit facility.
  29
  *Credit
Facilities*
 
 On July
28, 2003, we obtained a secured credit facility with a total commitment of
$200.0 million. On June 25, 2004, we increased this commitment to $290.0
million. The availability increased from $189.0 million to $290.0 million. We
have the ability to further increase this commitment and availability pursuant
to the terms of the credit agreement. The secured credit facility replaced our
$225.0 million unsecured credit facility and provides funds for new development,
acquisitions and general working capital purposes. This facility is secured by
eleven of our communities (Summit Brookwood, Summit Governor’s Village, Summit
Grandview, Summit Lake, Summit Lansdowne, Summit Peachtree City, Summit
Portofino, Summit Sedgebrook, Summit Shiloh, Summit Stockbridge and Summit
Sweetwater) and matures in July 2008. As described in the credit agreement,
loans under the credit facility are limited subject to debt service coverage and
loan to value ratios and bear interest at the Reference Bill Index Rate (defined
as the money market yield for the Reference Bills as established by the most
recent Reference Bill auction conducted by Freddie Mac) plus 58 to 91 basis
points depending on the level of debt service coverage. The outstanding balance
of the credit facility was $95.9 million and the interest rate was 2.85% as of
December 31, 2004. In connection with the Merger, we repaid our secured credit
facility. See the discussion of such repayment in the “Liquidity” section
above.
 
 On July
28, 2003, we obtained an unsecured letter of credit facility, which matures in
July 2008 and has a total commitment of $20.0 million. The letters of credit
issued under this facility will serve as collateral for performance on contracts
and as credit guarantees to banks and insurers. As of December 31, 2004, there
were $9.0 million of letters of credit outstanding under this
facility.
 
 *Direct
Placement of Common Stock*
  On
December 29, 2003, Summit sold 2.0 million shares of its common stock to certain
investment advisory clients of RREEF America L.L.C. at a price of $23.61 per
share. Net proceeds from the sale of $47.2 million were used for general
corporate purposes, including acquisition and development opportunities and
repayment of outstanding indebtedness. On September 25, 2003, Summit sold 2.3
million shares of its common stock to certain advisory clients of Cohen &
Steers Capital Management, Inc. at a price of $21.81 per share. The net proceeds
from the sale of $50.1 million were used for general corporate purposes,
including the redemption of preferred units, acquisition and development
opportunities and debt reduction. These sales were made pursuant to Summit’s
existing shelf registration statement previously filed with, and declared
effective by, the Securities Exchange Commission.
  *Preferred
Units*
 
 On
September 18, 2003, we redeemed all 3.4 million preferred units of limited
partnership interest designated as 8.95% Series B Cumulative Redeemable
Perpetual Preferred Units for cash in the amount of $25.20 per unit plus all
unpaid distributions through the redemption date. These preferred units were
redeemable for cash, or at Summit’s option, shares of Summit’s 8.95% Series B
Cumulative Redeemable Perpetual Preferred Stock, or a combination of cash and
shares of Summit’s 8.95% Series B Cumulative Redeemable Perpetual Preferred
Stock. Holders of the Series B preferred units had the right to exchange these
preferred units for shares of Summit’s Series B preferred stock on a one-for-one
basis, subject to adjustment: (a) on or after April 29, 2009, (b) if full
quarterly distributions were not made for six quarters, or (c) upon the
occurrence of specified events related to our treatment or the treatment of the
preferred units for federal income tax purposes.  As a
result of the redemption, the excess of the redemption amount over the carrying
amount of the units, which totals approximately $3.0 million in the aggregate,
has reduced income available to common unitholders for the year ended December
31, 2003. This is consistent with the SEC's staff announcement on July 31, 2003
that provided clarification to Emerging Issues Task Force ("EITF") Topic D-42,
"The Effect on the Calculation of Earnings per Share for the Redemption or
Induced Conversion of Preferred Stock." Distributions on the Series B preferred
units were cumulative from the date of original issuance and were 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 $5.5 million during the year ended December 31,
2003 and $7.6 million the year ended December 31, 2002.
  30
  As of
December 31, 2004, we had outstanding 2.2 million preferred units of limited
partnership interest designated as 8.75% Series C Cumulative Redeemable
Perpetual Preferred Units. The preferred units were redeemable for cash at a
redemption price equal to the holder’s capital account. The holder of the Series
C preferred units had the right to exchange these preferred units for shares of
Summit’s Series C preferred stock on a one-for-one basis, subject to adjustment:
(a) on or after September 3, 2009, (b) if full quarterly distributions are not
made for six quarters, (c) upon the occurrence of specified events related to
our treatment or the treatment of the preferred units for federal income tax
purposes, or (d) if the holdings in the Operating Partnership of the Series C
unitholder exceed 18% of the total profits of or capital interest in the
Operating Partnership for a taxable year. Distributions on the Series C
preferred units are cumulative from the date of original issuance and are
payable quarterly at the rate of 8.75% per year of the $25.00 original capital
contribution. We made distributions to the holder of the Series C preferred
units in the aggregate amount of $4.8 million during each of the years ended
December 31, 2004, 2003, and 2002. On December 22, 2004 we notified the Series C
unitholder of our intention to redeem all 2.2 million of the preferred units.
Our notice was irrevocable and, therefore, the Series C Preferred units have
been included as a liability in our consolidated balanced sheet as of December
31, 2004. As a result of the redemption commitment in December, the excess of
the redemption amount over the carrying amount of the units, which totals $1.5
million, reduced income available to common unitholders for the year ended
December 31, 2004. On January 21, 2005, we redeemed all 2.2 million of the
Series C preferred units for $25.00 per unit plus all accrued distributions as
of that date.
  31
  *Schedule
of Debt*
 
 The
following table sets forth information regarding our debt financing (excluding
fair value adjustments of hedged debt instruments and mortgages assumed at
acquisition of communities) as of December 31, 2004 and 2003 (dollars in
thousands):
 
 **Interest**
    
    
    
    **Principal
      Outstanding****Rate
      as of**
    
    **Maturity**
    
    **December
      31,****Fixed
      Rate Debt**
    
    **December
      31, 2004**
    
    **Date
      (1)**
    
    **2004**
    
    **2003****Mortgage
      Loan (2)**
    
    
    6.76
    %
    
    10/15/2008
    
    $
    132,989
    
    $
    132,989**Mortgage
      Loan (2)**
    
    
    4.86
    %
    
    10/15/2008
    
    
    40,000
    
    
    -**Mortgage
      Loan (3)**
    
    
    8.00
    %
    
    9/1/2005
    
    
    7,771
    
    
    7,909**Mortgage
      Notes:**Summit
      Fair Lakes
    
    
    7.82
    %
    
    7/1/2010
    
    
    48,340
    
    
    48,340Summit
      Doral
    
    
    5.17
    %
    
    4/1/2013
    
    
    30,528
    
    
    30,962Summit
      Aventura
    
    
    5.09
    %
    
    7/1/2013
    
    
    38,927
    
    
    39,480Summit
      Overlook
    
    
    4.70
    %
    
    8/1/2013
    
    
    22,543
    
    
    22,889Summit
      Russett
    
    
    4.17
    %
    
    12/31/2009
    
    
    50,000
    
    
    50,000Summit
      Ashburn Farm
    
    
    4.69
    %
    
    4/1/2011
    
    
    16,477
    
    
    -Summit
      Crest
    
    
    4.63
    %
    
    4/1/2011
    
    
    27,500
    
    
    -Summit
      South End Square
    
    
    4.91
    %
    
    10/1/2010
    
    
    25,242
    
    
    -Summit
      Stonecrest
    
    
    4.18
    %
    
    9/1/2012
    
    
    19,620
    
    
    -Summit
      Doral Villas
    
    
    6.82
    %
    
    1/1/2011
    
    
    22,047
    
    
    -**Total
      Mortgage Debt**
    
    
    
    
    
    
    
    
    481,984
    
    
    332,569**Unsecured
      Notes:**Medium
      Term Notes
    
    
    8.04
    %
    
    11/17/2005
    
    
    25,000
    
    
    25,000Medium
      Term Notes
    
    
    7.04
    %
    
    5/9/2006
    
    
    25,000
    
    
    25,000Medium
      Term Notes
    
    
    7.59
    %
    
    3/16/2009
    
    
    25,000
    
    
    25,000Medium
      Term Notes
    
    
    8.50
    %
    
    7/19/2010
    
    
    10,000
    
    
    10,000Medium
      Term Notes
    
    
    7.70
    %
    
    5/9/2011
    
    
    35,000
    
    
    35,000Notes
    
    
    7.20
    %
    
    8/15/2007
    
    
    50,000
    
    
    50,000Unsecured
      notes repaid in 2004
    
    
    
    
    
    
    
    
    -
    
    
    50,000**Total
      Unsecured Notes**
    
    
    
    
    
    
    
    
    170,000
    
    
    220,000**Total
      Fixed Rate Debt**
    
    
    
    
    
    
    
    
    651,984
    
    
    552,569**Variable
      Rate Debt**Credit
      facility (4)
    
    
    Ref
      Bill + 58 bps
    
    
    7/27/2008
    
    
    95,900
    
    
    119,000Construction
      loan (5)
    
    
    LIBOR
      + 207.5 bps
    
    
    5/1/2004
    
    
    -
    
    
    33,345Summit
      Foxcroft mortgage note
    
    
    LIBOR
      + 170 bps
    
    
    7/1/2005
    
    
    6,900
    
    
    6,900Tax-exempt
      bonds repaid in 2004
    
    
    
    
    
    
    
    
    -
    
    
    10,345**Total
      Variable Rate Debt**
    
    
    
    
    
    
    
    
    102,800
    
    
    169,590**Total
      Outstanding Indebtedness on notes payable**
    
    
    
    
    
    
    
    $
    754,784
    
    $
    722,159
 
 (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
      on the River
    Summit
      WestwoodSummit
      Club at Dunwoody
    Summit
      PlantationSummit
      Largo
    Summit
      St. Clair
 
 (3)
    Mortgage
      loan secured by:
 
 Summit
      Simsbury
    Summit
      Touchstone
 
  32
  
 (4)
    On
      July 28, 2003, we obtained a secured credit facility which replaced our
      prior unsecured credit facility. The credit facility is secured by the
      following communities:
 
 Summit Brookwood
    Summit
      Lake
    Summit
      Portofino
    Summit
      StockbridgeSummit
      Governor’s Village
    Summit
      Lansdowne
    Summit
      Sedgebrook
    Summit
      SweetwaterSummit Grandview
    Summit
      Peachtree City
    Summit
      Shiloh
 
 (5)
    Concurrent
      with the purchase of our joint venture partner’s equity interest in SZF,
      LLC in July 2003, we consolidated the construction loan related to the
      community that is being developed by such joint venture. We repaid the
      construction loan on January 30, 2004. The construction loan had a total
      commitment of $45.0 million, bore interest at LIBOR plus 207.5 basis
      points and was to mature in June 2004.
 
 Our
outstanding indebtedness (excluding our credit facility which matures in 2008)
had an average maturity of 5.2 years as of December 31, 2004. Refer to the table
in the section entitled “Market Risk” below for a summary of the aggregate
annual maturities of all outstanding debt as of December 31, 2004.
 
 *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 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, 2004 was 4.7075%. The fair
value of the interest rate swap was an asset of $2.5 million as of December 31,
2004. 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.
  33
  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, 2004 by expected
maturity dates. The weighted average interest rate presented in this table for
the tax-exempt variable rate debt outstanding in 2003 is inclusive of credit
enhancement 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******
      ****
    
    ****
      **2005**
    
    ****
      **2006**
    
    ****
      **2007**
    
    ****
      **2008**
    
    ****
      **2009**
    
    ****
      **Thereafter**
    
    **2004**
      **Total**
    
    **2003**
      **Total****Fixed
      Rate Debt:**Conventional
      fixed rate
    
    $
    11,205
    
    $
    3,723
    
    $
    3,963
    
    $
    177,129
    
    $
    51,356
    
    $
    234,608
    
    $
    481,984
    
    $
    332,569Average
      interest rate
    
    
    7.06
    %
    
    4.93
    %
    
    4.93
    %
    
    6.29
    %
    
    4.66
    %
    
    5.62
    %
    
    5.79
    %
    
    6.07
    %Unsecured
      fixed rate
    
    
    25,000
    
    
    25,000
    
    
    50,000
    
    
    —
    
    
    25,000
    
    
    45,000
    
    
    170,000
    
    
    220,000Average
      interest rate
    
    
    8.04
    %
    
    7.04
    %
    
    7.20
    %
    
    —
    
    
    7.59
    %
    
    7.88
    %
    
    7.54
    %
    
    7.40
    %Total
      fixed rate debt
    
    
    36,205
    
    
    28,723
    
    
    53,963
    
    
    177,129
    
    
    76,356
    
    
    279,608
    
    
    651,984
    
    
    552,569Average
      interest rate
    
    
    7.73
    %
    
    6.77
    %
    
    7.04
    %
    
    6.29
    %
    
    5.62
    %
    
    5.99
    %
    
    6.24
    %
    
    6.60
    %**Variable
      Rate Debt:**Tax-exempt
      variable rate
    
    
    —
    
    
    —
    
    
    —
    
    
    —
    
    
    —
    
    
    —
    
    
    —
    
    
    10,345Average
      interest rate
    
    
    —
    
    
    —
    
    
    —
    
    
    —
    
    
    —
    
    
    —
    
    
    —
    
    
    2.75
    %Variable
      rate mortgage note
    
    
    6,900
    
    
    —
    
    
    —
    
    
    —
    
    
    —
    
    
    —
    
    
    6,900
    
    
    6,900Average
      interest rate
    
    
    3.38
    %
    
    —
    
    
    —
    
    
    —
    
    
    —
    
    
    —
    
    
    3.38
    %
    
    2.86
    %Variable
      rate construction loan
    
    
    —
    
    
    —
    
    
    —
    
    
    —
    
    
    —
    
    
    —
    
    
    —
    
    
    33,345Average
      interest rate
    
    
    —
    
    
    —
    
    
    —
    
    
    —
    
    
    —
    
    
    —
    
    
    —
    
    
    3.23
    %Variable
      rate credit facility (1)
    
    
    —
    
    
    —
    
    
    —
    
    
    —
    
    
    —
    
    
    95,900
    
    
    95,900
    
    
    119,000Average
      interest rate
    
    
    —
    
    
    —
    
    
    —
    
    
    —
    
    
    —
    
    
    1.70
    %
    
    1.70
    %
    
    1.62
    %Total
      variable rate debt
    
    
    6,900
    
    
    —
    
    
    —
    
    
    —
    
    
    —
    
    
    95,900
    
    
    102,800
    
    
    169,590Average
      interest rate
    
    
    3.38
    %
    
    —
    
    
    —
    
    
    —
    
    
    —
    
    
    1.70
    %
    
    1.81
    %
    
    2.06
    %Total
      debt
    
    $
    43,105
    
    $
    28,723
    
    $
    53,963
    
    $
    177,129
    
    $
    76,356
    
    $
    375,508
    
    $
    754,784
    
    $
    722,159Average
      interest rate
    
    
    7.04
    %
    
    6.77
    %
    
    7.04
    %
    
    6.29
    %
    
    5.62
    %
    
    4.89
    %
    
    5.53
    %
    
    5.53
    %**Interest
      Rate Swap:**Pay
      variable/receive fixed
    
    
    
    
    
    
    
    $
    50,000
    
    
    
    
    
    
    
    
    
    
    $
    50,000
    
    $
    50,000Average
      pay rate
    
    
    
    
    
    
    
    
    3-month
    
    
    
    
    
    
    
    
    
    
    
    3-month
    
    
    3-monthLIBOR
    
    
    
    
    
    
    
    
    
    
    
    LIBOR
    
    
    LIBOR+2.4175
    %
    
    
    
    
    
    
    
    
    
    
    +2.4175
    %
    
    +2.4175
    %Receive
      rate
    
    
    
    
    
    
    
    
    7.20
    %
    
    
    
    
    
    
    
    
    
    
    7.20
    %
    
    7.20
    %
 
 (1)
    In
      connection with the Merger, we repaid our secured credit facility, which
      was to mature in 2008, using proceeds received from a $500 million
      intercompany line of credit from Camden Summit. This line of credit bears
      interest at 6%, is secured by the same eleven communities which secured
      the credit facility, and has a ten-year term. Therefore,
      it has been included in the “thereafter” column above given its 2015
      maturity date.
 
 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 $652.0 million had an estimated
aggregate fair value of $676.3 million as of December 31, 2004. Rates currently
available to us for similar terms and maturities were used to estimate the fair
value of this debt. The fair value of long-term fixed rate debt is subject to
changes in interest rates.
  34
  **Contractual
Obligations**
 
 A summary
of our future contractual obligations related to long-term debt, non-cancelable
operating leases and other obligations **** as of
December 31, 2004 is as follows (in thousands):
 
 **Payments
      Due by Period****2005**
    
    **2006-2007**
    
    **2008-2009**
    
    **Thereafter**
    
    **Total**Long-term
      debt principal payments and maturities
    
    $
    43,105
    
    $
    82,686
    
    $
    253,485
    
    $
    375,508
    
    $
    754,784Interest
      payments on long-term debt (1)
    
    
    30,942
    
    
    52,998
    
    
    43,228
    
    
    26,695
    
    
    153,863Development
      expenditures (2)
    
    
    73,510
    
    
    42,454
    
    
    -
    
    
    -
    
    
    115,964Redemption
      of preferred units (3)
    
    
    55,000
    
    
    -
    
    
    -
    
    
    -
    
    
    55,000Standby
      letters of credit (4)
    
    
    8,722
    
    
    317
    
    
    -
    
    
    -
    
    
    9,039Operating
      lease commitments (5)
    
    
    154
    
    
    311
    
    
    230
    
    
    59
    
    
    754Employment
      agreement payments (6)
    
    
    570
    
    
    1,140
    
    
    1,140
    
    
    3,146
    
    
    5,996Total
    
    $
    212,003
    
    $
    179,906
    
    $
    298,083
    
    $
    405,408
    
    $
    1,095,400
 
 (1)
    
    For
      variable rate debt, the interest obligations were computed by applying the
      average interest rate for the three months ended December 31, 2004 to the
      average balance outstanding for the three months ended December 31, 2004
      for all periods presented.(2)
    
    The
      estimated cost to complete the five development projects currently under
      construction was $116.0 million as of December 31, 2004. Anticipated
      construction completion dates of the projects range from the first quarter
      of 2005 to the fourth quarter of 2006.(3)
    
    On
      December 22, 2004, the Operating Partnership gave notice to the holder of
      its Series C Perpetual Preferred Units of its intention to redeem all 2.2
      million of the units on or about January 21, 2005. The Operating
      Partnership redeemed the preferred units on that date for $25.00 per unit
      plus accrued distributions as of that date.(4)
    
    As
      collateral for performance on contracts and as credit guarantees to banks
      and insurers, we were contingently liable under standby letters of credit
      in the aggregate amount of $9.0 million as of December 31,
      2004.(5)
    
    Includes
      operating leases related to rental of office space.(6)
    
    Summit
      had employment agreements (which were assumed by Camden in the Merger)
      with two of its former executive officers, both of whom resigned from such
      executive positions, but who remain as employees and have agreed to
      provide various services to us from time to time through December 31,
      2011. Each employment agreement entitles the former officers a base salary
      aggregating up to $2.1 million over the period from July 1, 2001 to
      December 31, 2011 (beginning with calendar year 2002, up to $200,000 on an
      annual basis). Each employment agreement provided each former officer with
      the right to participate in our life insurance plan as well as office
      space, information systems support and administrative support for the
      remainder of each employee’s life, and participation in our health and
      dental insurance plans until the last to die of the employee or such
      employee’s spouse. Either party can terminate the employment agreements
      effective 20 business days after written notice is given. The full base
      salary amount due shall be payable through 2011 whether or not the
      agreements are terminated earlier in accordance with their terms. Summit
      amended the employment agreements, effective July 1, 2004. The amendments
      provide for additional payments to the former executives and eliminate the
      provision to provide office space, information systems support and
      administrative support. The additional annual payments are $100,000 for
      one of the former executive officers and $70,000 to the other former
      executive officer and each is subject to a yearly increase based on the
      Consumer Price Index. In the table above, the “Thereafter” amount
      represents salary and the additional payments described above through 2011
      as well as the amount to be paid for office space, information systems
      support and administrative support after the employment terms end in
      2011.
 
  35
  Currently,
we are the developer for one apartment community which is owned by a third
party. Under our development and other related agreements, we have guaranteed
certain aspects relating to the construction, lease-up and management of that
apartment community. We have also committed to fund certain development cost
overruns, if any, and lease-up losses. We have evaluated our commitments and
obligations under these agreements and determined that an accrual or charge is
not necessary as the overall development economics are profitable. We began
marketing and leasing activities in the first quarter of 2005 and believe that
the construction will be completed during the second quarter of 2005. 
Additionally, a former executive officer responsible for the development of this
community entered into a personal guarantee related to the due, prompt and
complete performance of certain specific obligations related to the
development of this property.
 
 We carry
terrorism insurance on all communities. The terrorism insurance is subject to
coverage limitations, which we believe are commercially reasonable. No assurance
can be given that material losses in excess of insurance proceeds will not occur
in the future, or that insurance coverage for acts of terrorism will be
available in the future.
 
 We are
subject to a variety of claims and suits that arise in the ordinary course of
business, including actions with respect to contracts and cases in which claims
have been brought against us by current and former employees, residents,
independent contractors and vendors. While the resolution of these matters
cannot be predicted with certainty, we believe that the final outcome of such
matters will not be material to our financial position or results of operations.
If we determine that a loss is probable to occur, the estimated amount of that
loss would be recorded in the financial statements.
 
 We are a
party to a number of agreements and contracts pursuant to which we may be
obligated to indemnify the other party with respect to certain matters.
Typically, these obligations arise in contracts into which we enter, under which
we customarily agree to hold the other party harmless against certain losses
arising from breaches of representations, warranties and/or covenants related to
such matters as, among others, title to assets, specified environmental matters,
qualification to do business, due organization, non-compliance with restrictive
covenants, laws, rules and regulations, maintenance of insurance and payment of
tax bills due and owing. Additionally, with respect to retail and office lease
agreements we enter into as landlord, we may also indemnify the other party
against damages caused by our willful misconduct or negligence associated with
the operation and management of the building. Although no assurances can be
made, we believe that if we were to incur a loss in any of these matters, such
loss should not have a material effect on our financial condition or results of
operations. Historically, payments made with regard to these agreements have not
had a material effect on our financial condition or results of
operations.
 
 **Funds
from Operations**
 
 Funds
from Operations ("FFO"), as defined by the National Association of Real Estate
Investment Trusts ("NAREIT"), represents income available to common unitholders
excluding gains from sales of property and extraordinary items, plus
depreciation of real estate assets, and after adjustments for unconsolidated
partnerships and joint ventures, all determined on a consistent basis in
accordance with accounting principles generally accepted in the United States of
America ("GAAP"). Our methodology for computing FFO may differ from the
methodologies utilized by other real estate companies and, accordingly, may not
be comparable to other real estate companies. FFO should not be considered as an
alternative to net income (determined in accordance with GAAP) as an indication
of financial performance, nor is it indicative of funds available to fund our
cash needs, including our ability to make distribution payments. We believe that
FFO is helpful to investors as a measure of performance of a Real Estate
Investment Trust (“REIT”) because it recognizes that historical cost accounting
for real estate assets under GAAP assumes that the value of such real estate
diminishes over time. Real estate values have historically risen or fallen with
market conditions and, therefore, many investors have considered presentation of
operating results for a real estate company using historical cost accounting to
be insufficient by itself. Thus, NAREIT created FFO as a supplemental measure of
a REIT’s operating performance. By excluding such non-operating items as
depreciation and gains on sales of real estate assets, among others, we believe
that an investor can more easily compare the operating performance of our real
estate assets between periods or compare  our
operating performance to our peers.
 
  36
  Funds
from Operations are calculated as follows (dollars in thousands):
 
 **2004**
    
    **2003**
    
    **2002**Income
      available to common unitholders
    
    $
    153,468
    
    $
    18,387
    
    $
    103,511Gain
      on sale of real estate assets
    
    
    (166,633
    )
    
    (18,893
    )
    
    (78,738
    )Gain
      on sale of real estate assets - joint ventures
    
    
    -
    
    
    -
    
    
    (4,955
    )Depreciation:Real
      estate assets
    
    
    45,177
    
    
    39,225
    
    
    39,281Real
      estate joint venture
    
    
    767
    
    
    763
    
    
    1,119Funds
      from Operations
    
    $
    32,779
    
    $
    39,482
    
    $
    60,218Income
      available to common unitholders per unit - diluted
    
    $
    4.41
    
    $
    0.59
    
    $
    3.33Funds
      from operations per unit - diluted
    
    $
    0.94
    
    $
    1.26
    
    $
    1.94Recurring
      capital expenditures (1)
    
    $
    7,104
    
    $
    6,376
    
    $
    4,530Non-recurring
      capital expenditures (2)
    
    $
    2,689
    
    $
    1,516
    
    $
    1,088Weighted
      average common units outstanding -- basic
    
    
    34,806,233
    
    
    31,118,929
    
    
    30,936,881Weighted
      average common units outstanding -- diluted
    
    
    34,939,697
    
    
    31,268,003
    
    
    31,107,404
 
 (1)
    Recurring
      capital expenditures consist primarily of exterior painting, new
      appliances, vinyl flooring, blinds, tile, wallpaper and carpet.(2)
    Non-recurring
      capital expenditures consist primarily of major renovations and upgrades
      of apartment homes.
 
 **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 resident 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.
 
 **Forward-Looking
Statements**
 
 This
report contains forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. You can identify forward-looking statements by
the use of the words “believe,” “expect,” “anticipate,” “intend,” “estimate,”
“may,” “assume” and other similar expressions which predict or indicate future
events and trends and which do not relate solely to historical matters. In
addition, information concerning the following are forward-looking
statements:
 
 ·
    the
      future operating performance of stabilized
communities;
 ·
    national
      economic conditions and economic conditions in our
  markets;
 ·
    the
      proposed development of communities;
 ·
    anticipated
      construction commencement, completion, lease-up and stabilization dates;
      and
 ·
    estimated
      development costs.
  37
  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 and
      the failure of national and local economic conditions to rebound in a
      timely manner;
 ·
    changes
      in job growth, household formation and population growth in our
      markets;
 ·
    uncertainties
      associated with our development activities, including the failure to
      obtain zoning and other approvals, actual costs exceeding our budgets,
      construction material defects and increases in construction
      costs;
 ·
    the
      failure of investments to yield expected
results;
 ·
    construction
      delays due to the unavailability of materials, weather conditions or other
      delays;
 ·
    potential
      environmental liabilities and related property damages, costs of
      investigation and remediation, and liability to third
    parties;
 ·
    competition,
      which could limit our ability to secure attractive investment
      opportunities, lease apartment homes, or increase or maintain
      rents;
 ·
    supply
      and demand for apartment communities in our current market
      areas;
 ·
    changes
      in interest rates;
 ·
    changes
      in our debt ratings which could increase our cost of capital or impede our
      ability to raise debt financing;
 ·
    legislative
      and regulatory changes, including changes to laws governing the taxation
      of REITs;
 ·
    changes
      in 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, 2004, 2003 and 2002” on page 19 of this report, “Operating Performance of
Our Same-Property Communities” beginning on page 21 of this report, “Operating
Performance of Our Communities in Lease-Up Communities” beginning on page 23 of
this report, “Factors Affecting the Performance of Our Development Communities”
beginning on page 26 of this report and “Contractual Obligations” beginning on
page 35 of this report.
 
 You
should consider these risks and uncertainties in evaluating forward-looking
statements and you should not place undue reliance on forward-looking
statements. These forward-looking statements represent our estimates and
assumptions only as of the date of this report. We do not undertake to update
these forward-looking statements. You should read this annual report on Form
10-K in its entirety in conjunction with our audited financial statements for
the year ended December 31, 2004 and the related notes included in this report.
  38
   **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 33 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 47 of this report.
 
 **Item
9.** ***Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure***
 
 None.
 
 **Item
9A.** ***Controls
and Procedures*** ****
 
 (a)  *Evaluation
of Disclosure Controls and Procedures* . As
required by Rule 13a-15 under the Securities Exchange Act of 1934, as of the end
of the period covered by this report, our general partner carried out an
evaluation under the supervision and with the participation of management,
including Camden’s Chief Executive Officer and Chief Financial Officer, of the
effectiveness of the design and operation of our disclosure controls and
procedures. Based upon that evaluation, the Chief Executive Officer and Chief
Financial Officer concluded that our disclosure controls and procedures are
effective to ensure that information required to be disclosed in the reports we
file or submit under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the Securities and Exchange
Commission’s rules and forms. We continue to review and document our disclosure
controls and procedures, including our internal control over 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 Control over Financial Reporting* . There
was no change in our internal control over financial reporting that occurred
during the fourth quarter of the period covered by this Annual Report on Form
10-K that has materially affected, or is reasonably likely to materially affect,
our internal control over financial reporting.
  39
  **PART
III**
 
 **Item
10.** ***Directors
and Executive Officers of the Registrant***
 
 Information
with respect to this Item 10 is incorporated by reference from Camden’s Proxy
Statement, which Camden intends to file on or before March 30, 2005 in
connection with the annual meeting of its shareholders to be held May 6,
2005.
 
 **Item
11.** ***Executive
Compensation***
 
 Information
with respect to this Item 11 is incorporated by reference from Camden’s Proxy
Statement, which Camden intends to file on or before March 30, 2005 in
connection with the annual meeting of its shareholders to be held May 6,
2005.
 
 **Item
12.** ***Security
Ownership of Certain Beneficial Owners and Management***
 
 Information
with respect to this Item 12 is incorporated by reference from Camden’s Proxy
Statement, which Camden intends to file on or before March 30, 2005 in
connection with the annual meeting of its shareholders to be held May 6,
2005.
 
 **Item
13.** ***Certain
Relationships and Related Transactions***
 
 Information
with respect to this Item 13 is incorporated by reference from Camden’s Proxy
Statement, which Camden intends to file on or before March 30, 2005 in
connection with the annual meeting of its shareholders to be held May 6,
2005.
 
 **Item
14.** ***Principal
Accounting Fees and Services***
 
 **Independent
Registered Public Accounting Firm**
 
 Summit’s
Audit Committee selected the accounting firm of Deloitte & Touche LLP
as its principal independent accountant for fiscal year 2004. Deloitte &
Touche LLP has served as Summit’s and its predecessors’ independent accountant
since August 15, 1993.
 
 *Audit
Fees* . The
aggregate fees billed by Deloitte & Touche LLP for the audit of Summit’s
annual financial statements for the fiscal years ended December 31, 2004 and
2003 and for the review of the financial statements in Summit’s Quarterly
Reports on Form 10-Q were approximately $ 1.2
million and $380,00 0,
respectively.
 
 *Audit-Related
Fees* . The
aggregate fees billed by Deloitte & Touche LLP for audit-related services
were approximately $218,000 for the fiscal year 2004 and $99,000 for
fiscal year 2003 .
Audit-related services generally included fees for accounting consultations,
employee benefit plan audits and agreed-upon procedures for fiscal years 2004
and 2003, and Sarbanes-Oxley Section 404 consultations for fiscal year
2003.
 
 *Tax
Fees* . The
aggregate fees billed by Deloitte Tax LLP for tax preparation and compliance
services were approximately $224,000 for fiscal year 2004 and $265,000 for
fiscal year 2003. The aggregate fees billed by Deloitte & Touche LLP for
other tax fees were approximately $599,000 for fiscal year 2004 $402,000 for
fiscal year 2003. These other fees related to tax advice (consisting primarily
of REIT qualification monitoring, merger-related issues and advice with respect
to property acquisitions and dispositions and financing transactions) and
property tax services.
 
 *All
other fees* . There
were no other fees billed or any other professional services rendered by
Deloitte & Touche LLP during the fiscal years 2004 and 2003.
 
 All of
the services described in the preceding four paragraphs were approved by
Summit’s Audit Committee.
  40
  
 *Audit
Committee Pre-Approval of Audit and Permissible Non-Audit Services of
Independent Public Accountant* .
Summit’s Audit Committee preapproved, and after the Merger Camden’s Audit
Committee, pre-approves all audit and permissible non-audit services provided to
Summit or Camden, as the case may be, and the Operating Partnership by the
independent public accountant except that the pre-approval requirement is waived
with respect to the provision of certain non-audit services if the “de minimis”
provisions of the Exchange Act are satisfied. These services may include audit
services, audit-related services, tax services and other services.
 
 **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 47 of this Report.
 
 (b)  Reports
on Form 8-K
 
 (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.
 
 3.1
    Form
      of Second Amended and Restated Agreement of Limited Partnership of Camden
      Summit Partnership, L.P. among Camden Summit, Inc., as general partner,
      and the persons whose names are set forth on Exhibit A thereto
      (Incorporated by reference from Exhibit 10.4 to Camden Property Trust’s
      Form S-4 filed on November 24, 2004, File No.
  333-120733).3.2
    Assignment
      and Assumption Agreement, dated as of March 27, 2002, by and between the
      Operating Partnership and Summit (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).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).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).
 
  41
  
 4.2.1
    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).4.2.2
    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).4.2.3
    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).4.2.4
    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).4.2.5
    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).4.2.6
    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).4.2.7
    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).10.1.1
    Amended
      and Restated Declaration of Trust of Camden Property Trust (Incorporated
      by reference from Exhibit 3.1 to Camden Property Trust’s Form 10-K for the
      year ended December 31, 1993, File No. 1-12110).10.1.2
    Amendment
      to the Amended and Restated Declaration of Trust of Camden Property Trust
      (Incorporated by reference from Exhibit 3.1 to Camden Property Trust's
      Form 10-Q for the quarter ended June 30, 1997, File No.
      1-12110).10.1.3
    Second
      Amended and Restated Bylaws of Camden Property Trust (Incorporated by
      reference from Exhibit 3.3 to Camden Property Trust's Form 10-K for the
      year ended December 31, 1997, File No. 1-12110).10.2.1
    Agreement
      and Plan of Merger, dated as of October 4, 2004, among Camden Property
      Trust, Camden Summit, Inc. and Summit (Incorporated by reference from
      Exhibit 2.1 to Camden Property Trust’s Current Report on Form 8-K filed on
      October 5, 2004, File No. 1-12110).10.2.2
    Amendment
      No. 1 to Agreement and Plan of Merger, dated October 6, 2004, among Camden
      Property Trust, Camden Summit, Inc. and Summit (Incorporated by reference
      from Exhibit 2.1 to Camden Property Trust’s Form 8-K filed on October 6,
      2004, File No. 1-12110).10.2.3
    Amendment
      No. 2 to Agreement and Plan of Merger, dated as of January 24, 2005, among
      Camden Property Trust, Camden Summit, Inc. and Summit (Incorporated by
      reference from Exhibit 2.1 to Camden Property Trust’s Form 8-K filed on
      January 25, 2005, File No. 1-12110).
 
  42
  
 10.3.1
    Indenture
      dated as of February 15, 1996 between Camden Property Trust and the U.S.
      Trust Company of Texas, N.A., as Trustee )Incorporated by reference from
      Exhibit 4.1 to Camden Property Trust’s Form 8-K filed on February 15,
      1996,File No. 1-12110).10.3.2
    First
      Supplemental Indenture dated as of February 15, 1996 between Camden
      Property Trust and U.S. Trust Company of Texas N.A., as trustee
      (Incorporated by reference from Exhibit 4.2 to Camden Property Trust’s
      Form 8-K filed on February 15, 1996, File No. 1-12110).10.3.3
    Form
      of Indenture for Senior Debt Securities dated as of February 11, 2003
      between Camden Property Trust and SunTrust Bank, as trustee (Incorporated
      by reference from Exhibit 4.1 to Camden Property Trust’s Registration
      Statement on Form S-3 filed on February 12, 2003, File No.
      333-103119).10.4
    Form
      of Indemnification Agreement by and between Camden Property Trust and
      certain of its trust managers and executive officers (Incorporated by
      reference from Exhibit 10.18 to Amendment No. 1 of Camden Property Trust’s
      Registration Statement on Form S-11 filed on July 9, 1993, File No.
      33-63588).10.5.1
    Second
      Amended and Restated Employment Agreement dated July 11, 2003 by and
      between Camden Property Trust and Richard J. Campo (Incorporated by
      reference from Exhibit 10.1 to Camden Property Trust’s Form 10-Q for the
      quarter ended June 30, 2003, File No. 1-12110).10.5.2
    Second
      Amended and Restated Employment Agreement dated July 11, 2003 by and
      between Camden Property Trust and D. Keith Oden (Incorporated by reference
      from Exhibit 10.2 to Camden Property Trust’s Form 10-Q for the quarter
      ended June 30, 2003, File No. 1-12110).10.5.3
    Form
      of Employment Agreement by and between Camden Property Trust and certain
      senior executive officers (Incorporated by reference from Exhibit 10.13 to
      Camden Property Trust’s Form 10-K for the year ended December 31, 1996,
      File No. 1-12110).10.5.4
    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 Form 10-Q for the quarter ended
      June 30, 2001, File No. 000-12792).10.5.5
    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 Form 10-Q for the
      quarter ended September 30, 2001, File No. 001-12792).10.5.6
    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).10.5.7
    Noncompetition
      Agreement between Summit and William B. McGuire, Jr. (Incorporated by
      reference to Exhibit 10.7 to Summit’s Form 10-Q for the quarter ended
      March 31, 2000, File No. 001-12792).10.5.8
    Amendment
      Agreement, dated as of June 19, 2004, among William B. McGuire, Jr.,
      Summit and Summit Management Company (Incorporated by reference to Exhibit
      10.8.2 to Summit’s Form 10-Q for the quarter ended June 30, 2004, File No.
      001-12792).10.5.9
    Amendment
      Agreement, dated as of June 19, 2004, among William F. Paulsen, Summit and
      Summit Management Company (Incorporated by reference to Exhibit 10.8.1 to
      Summit’s Form 10-Q for the quarter ended June 30, 2004, File No.
      001-12792).
 
  43
  
 10.6.1
    Camden
      Property Trust Key Employee Share Option Plan (Incorporated by reference
      from Exhibit 10.14 to Camden Property Trust’s Form 10-K for the year ended
      December 31, 1996, File No. 1-12110).10.6.2
    Form
      of Amended and Restated Master Exchange Agreement between Camden Property
      Trust and certain key employees (Incorporated by reference from Exhibit
      10.7 to Camden Property Trust’s Form 10-K for the year ended December 31,
      2003, File No. 1-12110).10.6.3
    Form
      of Amended and Restated Master Exchange Agreement between Camden Property
      Trust and certain trust managers (Incorporated by reference from Exhibit
      10.8 to Camden Property Trust’s Form 10-K for the year ended December 31,
      2003, File No. 1-12110).10.6.4
    Form
      of Master Exchange Agreement between Camden Property Trust and certain key
      employees (Incorporated by reference from Exhibit 10.9 to Camden Property
      Trust’s Form 10-K for the year ended December 31, 2003, File No.
      1-12110).10.6.5
    Form
      of Master Exchange Agreement between Camden Property Trust and certain
      trust managers (Incorporated by reference from Exhibit 10.10 to Camden
      Property Trust’s Form 10-K for the year ended December 31, 2003, File No.
      1-12110).10.6.6
    Amended
      and Restated 1993 Share Incentive Plan of Camden Property Trust
      (Incorporated by reference from Exhibit 10.18 to Camden Property Trust’s
      Form 10-K for the year ended December 31, 1999, File No.
      1-12110).10.6.7
    Camden
      Property Trust 1999 Employee Share Purchase Plan (Incorporated by
      reference from Exhibit 10.19 to Camden Property Trust’s Form 10-K for the
      year ended December 31, 1999, File No. 1-12110).10.6.8
    Amended
      and Restated 2002 Share Incentive Plan of Camden Property Trust
      (Incorporated by reference from Exhibit 10.1 to Camden Property Trust’s
      Form 10-Q for the quarter ended March 31, 2002, File No.
      1-12110).10.6.9
    Camden
      Property Trust Short Term Incentive Plan (Incorporated by reference from
      Exhibit 10.2 to Camden Property Trust’s Form 10-Q for the quarter ended
      March 31, 2002, File No. 1-12110).10.6.10
    Summit’s
      1994 Stock Option and Incentive Plan, as amended and restated
      (Incorporated by reference to Exhibit 4.5 to Summit’s Form S-8
      (Registration No. 333-79897).10.7.1
    Form
      of Credit Agreement dated August 15, 2002 between Camden Property Trust
      and Bank of America, N.A (Incorporated by reference from Exhibit 99.1 to
      Camden Property Trust’s Form 8-K filed on August 21, 2002, File No.
      1-12110).10.7.2
    Form
      of Credit Agreement dated January 19, 2005 among Camden Property Trust,
      Bank of America, N.A., as administrative agent, the Lenders named therein
      and the Banc of America Securities LLC, as sole lead manager (Incorporated
      by reference from Exhibit 99.1 to Camden Property Trust’s Form 8-K filed
      on January 20, 2005, File No. 1-12110).10.7.3
    Form
      of Amended and Restated Credit Agreement dated January 14, 2005 among
      Camden Property Trust, Bank of America, N.A., as administrative agent,
      J.P. Morgan Chase Bank, N.A., as syndication agent, Wachovia Bank, N.A.
      and Wells Fargo Bank, N.A., as the documentation agents, and the Lenders
      (Incorporated by reference from Exhibit 99.1 to Camden Property Trust’s
      Form 8-K filed on January 18, 2005, File No.
1-12110).
 
  44
  
 10.7.4
    Credit
      Agreement dated July 28, 2003 by and among the Operating Partnership,
      Summit Sweetwater, LLC, Summit Shiloh, LLC, Summit Grandview, LLC, Summit
      Portofino Place, LTD., and L.J. Melody & Company (Incorporated by
      reference to Exhibit 10.1 to the Operating Partnership’s Form 10-Q for the
      quarter ended June 30, 2003, File No. 000-22411).10.7.5
    Credit
      Agreement dated July 28, 2003 by and among the Operating Partnership,
      Summit Sweetwater, LLC, Summit Shiloh, LLC, Summit Grandview, LLC, Summit
      Portofino Place, LTD., and L.J. Melody & Company (Incorporated by
      reference to Exhibit 10.1 to the Operating Partnership’s Quarterly Report
      on Form 10-Q for the quarterly period ended June 30, 2003, File No.
      000-22411).10.8
    Form
      of Registration Rights Agreement between Camden Property Trust and the
      holders named therein (Incorporated by reference from Exhibit 4.2 to
      Camden Property Trust’s Form S-4 filed on November 24, 2004, File No.
      333-120733).10.9
    Form
      of Tax, Asset and Income Support Agreement among Camden Property Trust,
      Camden Summit, Inc., the Operating Partnership and each of the limited
      partners who has executed a signature page thereto (Incorporated by
      reference from Exhibit 10.5 to Camden Property Trust’s Form S-4 filed on
      November 24, 2004, File No. 333-120733).10.10.1
    Distribution
      Agreement dated March 20, 1997 among Camden Property Trust and the Agents
      listed therein relating to the issuance of Medium Term Notes (Incorporated
      by reference from Exhibit 1.1 to Camden Property Trust’s Form 8-K filed on
      March 21, 1997, File No. 1-12110).10.10.2
    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).10.10.3
    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).10.11
    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, 2004, 2003, 2002, 2001 and 2000 (filed
      herewith).21.1
    Subsidiaries
      of the Operating Partnership (filed herewith).23.1
    Consent
      of Deloitte & Touche LLP (filed herewith).31.1
    Certification
      by Chief Executive Officer pursuant to Rule 13a-14(a) or 15-14(a), as
      adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed
      herewith).31.2
    Certification
      by Chief Financial Officer pursuant to Rule 13a-14(a) or 15-14(a), as
      adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed
      herewith).32.1
    Certification
      by Chief Executive Officer pursuant to Rule 18 U.S.C. Section 1350, as
      adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
      (furnished herewith).32.2
    Certification
      by Chief Financial Officer pursuant to Rule 18 U.S.C. Section 1350, as
      adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
      (furnished herewith).
 
  45
  
 
 **SIGNATURES**
 
 Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
  CAMDEN
      SUMMIT PARTNERSHIP, L.P.By:
      Camden Summit, Inc., its general partnerMarch
      31, 2005
    By:/S/
      DENNIS M. STEENDennis
      M. SteenChief
      Financial Officer, Sr. Vice President -Finance
      and Secretary
 Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated. Each person has signed this report as an
officer or director of Camden Summit Inc., in its capacity as general partner of
Camden Summit Partnership, L.P.
 
 **Signatures**
    **Title**
    **Date**/s/
      RICHARD J. CAMPO
    Chairman
      of the Board of Directors and Chief Executive
    March
      31, 2005Richard
      J. Campo
    Officer
      (Principal Executive Officer)/s/
      D. KEITH ODEN
    President,
      Chief Operating Officer and Director
    March
      31, 2005D.
      Keith Oden/s/
      DENNIS M. STEEN
    Chief
      Financial Officer, Senior Vice President -
    March
      31, 2005Dennis
      M. Steen
    Finance
      and Secretary (Principal Financial Officer)
  46
  
 **INDEX
TO FINANCIAL STATEMENTS**
 
 The
following financial statements required to be included in Item 15(a)(1) are
listed below:
 
 **CAMDEN
SUMMIT PARTNERSHIP, L.P.**
 
 ****
    **Page**Report
      of Independent Registered Public Accounting Firm
    48Consolidated
      Balance Sheets as of December 31, 2004 and 2003
    49Consolidated
      Statements of Earnings for the Years Ended December 31, 2004, 2003 and
      2002
    50Consolidated
      Statements of Partners’ Equity for the Years Ended December 31, 2004, 2003
      and 2002
    52Consolidated
      Statements of Cash Flows for the Years Ended December 31, 2004, 2003 and
      2002
    53Notes
      to Consolidated Financial Statements
    55The
      following financial statement schedule of supplementary data of Camden
      Summit Partnership, L.P. required to be included in Item 15(a)(2) is
      listed below:Schedule
      III — Real Estate and Accumulated Depreciation
    78
 
 All other
schedules are omitted because they are not applicable or not
required.
 
 
  47
  
 **REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
 
 Board of
Trust Managers of Camden Property Trust and Unitholders of
 Camden
Summit Partnership, L.P.
 
 We have
audited the accompanying consolidated balance sheets of Camden Summit
Partnership, L.P., formerly known as Summit Properties Partnership, L.P. (the
“Operating Partnership”), as of December 31, 2004 and 2003, and the related
consolidated statements of earnings, partners’ equity, and cash flows for each
of the three years in the period ended December 31, 2004. Our audit for the year
ended December 31, 2004 also included the financial statement schedule listed in
the Index to the Financial Statements at Item 15. These financial statements and
financial statement schedule are the responsibility of the Operating
Partnership’s management. Our responsibility is to express an opinion on the
financial statements and financial statement schedule based on our
audits.
 
 We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Operating Partnership is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. **** Our
audits included consideration of internal control over financial reporting as a
basis for designing audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the
Operating Partnership’s internal control over financial reporting. Accordingly,
we express no such opinion. An audit also includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
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 Operating Partnership as of December 31,
2004 and 2003, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 2004, 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, present fairly
in all material respects the information set forth therein.
 
 As
discussed in Note 3 to the consolidated financial statements, the Operating
Partnership adopted Statement of Financial Accounting Standards No. 144, *Accounting
for the Impairment or Disposal of Long-Lived Assets* , on
January 1, 2002, the fair value recognition provisions of Statement of Financial
Accounting Standards No. 123, *Accounting
for Stock-Based Compensation* , on
January 1, 2003, and Financial Accounting Standards Board Interpretation No. 46, *Consolidation
of Variable Interest Entities* , as
amended by Financial Accounting Standards Board Interpretation No. 46 (revised
December 2003) on July 1, 2003.
 
 
 Charlotte,
North Carolina
 March 30,
2005
 
 
  48
  **CAMDEN
SUMMIT PARTNERSHIP, L.P.**
 **CONSOLIDATED
BALANCE SHEETS**
 **(Dollars
in thousands)**
 
 
 **December
      31,****2004**
    
    **2003****ASSETS**Real
      estate assets:Land
      and land improvements
    
    $
    248,018
    
    $
    175,107Buildings
      and improvements
    
    
    1,037,458
    
    
    843,127Furniture,
      fixtures and equipment
    
    
    80,050
    
    
    65,083Total
      real estate assets
    
    
    1,365,526
    
    
    1,083,317Less:
      accumulated depreciation
    
    
    (156,913
    )
    
    (119,448
    )Net
      operating real estate assets
    
    
    1,208,613
    
    
    963,869Net
      real estate assets - assets held for sale
    
    
    31,348
    
    
    209,919Construction
      in progress
    
    
    219,137
    
    
    145,382Net
      real estate assets
    
    
    1,459,098
    
    
    1,319,170Cash
      and cash equivalents
    
    
    6,511
    
    
    2,687Restricted
      cash
    
    
    1,480
    
    
    1,198Investments
      in real estate joint ventures
    
    
    2,716
    
    
    3,096Deferred
      financing costs, net of accumulated amortizationof
      $7,474 in 2004 and $7,108 in 2003
    
    
    8,378
    
    
    7,694Other
      assets
    
    
    14,853
    
    
    17,827Other
      assets - assets held for sale
    
    
    45
    
    
    210Total
      assets
    
    $
    1,493,081
    
    $
    1,351,882**LIABILITIES
      AND PARTNERS' EQUITY**Liabilities:Notes
      payable
    
    $
    758,748
    
    $
    682,463Accrued
      interest payable
    
    
    4,019
    
    
    4,558Accounts
      payable and accrued expenses
    
    
    42,415
    
    
    39,935Series
      C preferred units redeemed in 2005
    
    
    55,000
    
    
    -Dividends
      and distributions payable
    
    
    11,777
    
    
    11,724Security
      deposits and prepaid rents
    
    
    4,035
    
    
    2,587Notes
      payable and other liabilities - assets held for sale
    
    
    63
    
    
    44,293Total
      liabilities
    
    
    876,057
    
    
    785,560Partners'
      common and preferred equity:Series
      C preferred units - 2,200,000 issued and outstanding
    
    
    -
    
    
    53,547Partnership
      common units issued and outstanding:34,890,686
      in 2004 and 34,739,025 in 2003General
      partner - 348,907 in 2004 and 347,390 in 2003
    
    
    6,900
    
    
    5,857Limited
      partners - 34,541,779 in 2004 and 34,391,635 in 2003
    
    
    610,124
    
    
    506,918Total
      partners' equity
    
    
    617,024
    
    
    566,322Total
      liabilities and partners' equity
    
    $
    1,493,081
    
    $
    1,351,882
 
 See notes
to consolidated financial statements.
  49
  **CAMDEN
SUMMIT PARTNERSHIP, L.P.**
 **CONSOLIDATED
STATEMENTS OF EARNINGS**
 **(Dollars
in thousands, except per unit amounts)**
 
 **Year
      Ended December 31,****2004**
    
    **2003**
    
    **2002**Revenues:Rental
    
    $
    131,882
    
    $
    104,973
    
    $
    93,034Other
      property income
    
    
    11,004
    
    
    7,854
    
    
    6,754Management
      fees - third party communities
    
    
    586
    
    
    618
    
    
    787Total
      revenues
    
    
    143,472
    
    
    113,445
    
    
    100,575Expenses:Property
      operating and maintenance (exclusive of items listed
below)
    
    
    28,518
    
    
    24,659
    
    
    22,183Real
      estate taxes and insurance
    
    
    18,775
    
    
    13,343
    
    
    9,550Depreciation
      and amortization
    
    
    42,705
    
    
    30,462
    
    
    24,230General
      and administrative
    
    
    12,967
    
    
    6,941
    
    
    5,937Property
      management - owned communities
    
    
    6,203
    
    
    5,271
    
    
    4,297Property
      management - third party communities
    
    
    751
    
    
    641
    
    
    525Merger-related
      costs
    
    
    11,484
    
    
    -
    
    
    -Total
      expenses
    
    
    121,403
    
    
    81,317
    
    
    66,722Operating
      income
    
    
    22,069
    
    
    32,128
    
    
    33,853Interest
      income
    
    
    1,167
    
    
    1,852
    
    
    2,274Other
      income
    
    
    817
    
    
    791
    
    
    442Interest
      expense
    
    
    (31,422
    )
    
    (26,914
    )
    
    (27,425
    )Deferred
      financing cost amortization
    
    
    (1,510
    )
    
    (2,198
    )
    
    (1,274
    )Income
      (loss) from continuing operations before loss on unconsolidatedreal
      estate joint ventures and gain on sale of real estate assets
    
    
    (8,879
    )
    
    5,659
    
    
    7,870Loss
      on unconsolidated real estate joint ventures
    
    
    (380
    )
    
    (326
    )
    
    (49
    )Gain
      on sale of real estate assets
    
    
    -
    
    
    73
    
    
    13,831Gain
      on sale of real estate assets - joint ventures
    
    
    -
    
    
    -
    
    
    4,955Income
      (loss) from continuing operations
    
    
    (9,259
    )
    
    5,406
    
    
    26,607Income
      from discontinued operations
    
    
    9,166
    
    
    14,711
    
    
    24,728Gain
      on disposition of discontinued operations
    
    
    166,633
    
    
    18,820
    
    
    64,907Impairment
      loss on discontinued operations
    
    
    (6,807
    )
    
    (759
    )
    
    -Loss
      from early extinguishment of debt associated with asset
    sales
    
    
    -
    
    
    (6,522
    )
    
    (311
    )Income
      from discontinued operations
    
    
    168,992
    
    
    26,250
    
    
    89,324Net
      income
    
    
    159,733
    
    
    31,656
    
    
    115,931Distributions
      to Series B preferred unitholders
    
    
    -
    
    
    (5,494
    )
    
    (7,608
    )Excess
      of redemption amount over carrying amount of preferred
    units
    
    
    (1,453
    )
    
    (2,963
    )
    
    -Distributions
      to Series C preferred unitholders
    
    
    (4,812
    )
    
    (4,812
    )
    
    (4,812
    )Income
      available to common unitholders
    
    
    153,468
    
    
    18,387
    
    
    103,511Income
      available to common unitholders allocated to general
    partners
    
    
    (1,535
    )
    
    (184
    )
    
    (1,035
    )Income
      available to common unitholders allocated to limited
    partners
    
    $
    151,933
    
    $
    18,203
    
    $
    102,476
 
  50
  **CAMDEN
SUMMIT PARTNERSHIP, L.P.**
 **CONSOLIDATED
STATEMENTS OF EARNINGS - Continued**
 **(Dollars
in thousands, except per unit amounts)**
 
 
 
 **Year
      Ended December 31,****2004**
    
    **2003**
    
    **2002**Per
      unit data - basic:Income
      (loss) from continuing operations
    
    $
    (0.27
    )
    $
    0.17
    
    $
    0.86Income
      from discontinued operations
    
    
    4.86
    
    
    0.84
    
    
    2.89Net
      income
    
    
    4.59
    
    
    1.02
    
    
    3.75Distributions
      to Series B preferred unitholders
    
    
    -
    
    
    (0.18
    )
    
    (0.25
    )Excess
      of redemption amount over carrying amount of preferred
    units
    
    
    (0.04
    )
    
    (0.10
    )
    
    -Distributions
      to Series C preferred unitholders
    
    
    (0.14
    )
    
    (0.15
    )
    
    (0.16
    )Income
      available to common unitholders
    
    $
    4.41
    
    $
    0.59
    
    $
    3.35Per
      unit data - diluted:Income
      (loss) from continuing operations
    
    $
    (0.27
    )
    $
    0.17
    
    $
    0.86Income
      from discontinued operations
    
    
    4.86
    
    
    0.84
    
    
    2.87Net
      income
    
    
    4.59
    
    
    1.01
    
    
    3.73Distributions
      to Series B preferred unitholders
    
    
    -
    
    
    (0.18
    )
    
    (0.24
    )Excess
      of redemption amount over carrying amount of preferred
    units
    
    
    (0.04
    )
    
    (0.09
    )
    
    -Distributions
      to Series C preferred unitholders
    
    
    (0.14
    )
    
    (0.15
    )
    
    (0.15
    )Income
      available to common unitholders
    
    $
    4.41
    
    $
    0.59
    
    $
    3.33Distributions
      declared per common unit
    
    $
    1.35
    
    $
    1.35
    
    $
    1.76Weighted
      average common units - basic
    
    
    34,806,233
    
    
    31,118,929
    
    
    30,936,881Weighted
      average common units - diluted
    
    
    34,806,233
    
    
    31,268,003
    
    
    31,107,404
 
 See notes
to consolidated financial statements.
 51
   **CAMDEN
SUMMIT PARTNERSHIP, L.P.**
 **CONSOLIDATED
STATEMENTS OF PARTNERS’ EQUITY**
 **(Dollars
in thousands)**
 
 **Series
      B**
    
    **Series
      C****Preferred**
    
    **Preferred**
    
    **General**
    
    **Limited****Units**
    
    **Units**
    
    **Partner**
    
    **Partners**
    
    **Total**Balance,
      December 31, 2001
    
    $
    82,713
    
    $
    53,547
    
    $
    4,687
    
    $
    390,900
    
    $
    531,847Distributions
      to common unitholders
    
    
    -
    
    
    -
    
    
    (546
    )
    
    (54,050
    )
    
    (54,596
    )Contributions
      (distributions) from SummitProperties
      Inc. related to:Proceeds
      from dividend and stock purchase plans
    
    
    -
    
    
    -
    
    
    91
    
    
    9,048
    
    
    9,139Exercise
      of stock options
    
    
    -
    
    
    -
    
    
    19
    
    
    1,837
    
    
    1,856Repurchase
      of common stock
    
    
    -
    
    
    -
    
    
    (27
    )
    
    (2,639
    )
    
    (2,666
    )Netdown
      of restricted stock grants
    
    
    -
    
    
    -
    
    
    (6
    )
    
    (613
    )
    
    (619
    )Issuance
      of restricted stock grants
    
    
    -
    
    
    -
    
    
    -
    
    
    22
    
    
    22Amortization
      of restricted stock grants
    
    
    -
    
    
    -
    
    
    10
    
    
    968
    
    
    978Issuance
      of employee notes receivable
    
    
    -
    
    
    -
    
    
    (78
    )
    
    (7,735
    )
    
    (7,813
    )Repayments
      of employee notes receivable
    
    
    -
    
    
    -
    
    
    28
    
    
    2,727
    
    
    2,755Distributions
      to preferred unitholders
    
    
    -
    
    
    -
    
    
    (124
    )
    
    (12,296
    )
    
    (12,420
    )Net
      income
    
    
    -
    
    
    -
    
    
    1,159
    
    
    114,769
    
    
    115,928Balance,
      December 31, 2002
    
    
    82,713
    
    
    53,547
    
    
    5,213
    
    
    442,938
    
    
    584,411Distributions
      to common unitholders
    
    
    -
    
    
    -
    
    
    (433
    )
    
    (42,854
    )
    
    (43,287
    )Redemption
      of common units
    
    
    -
    
    
    -
    
    
    (20
    )
    
    (1,956
    )
    
    (1,976
    )Contributions
      (distributions) from SummitProperties
      Inc. related to:Issuance
      of common stock
    
    
    -
    
    
    -
    
    
    1,022
    
    
    101,161
    
    
    102,183Exercise
      of stock options
    
    
    -
    
    
    -
    
    
    19
    
    
    1,899
    
    
    1,918Repurchase
      of common stock
    
    
    -
    
    
    -
    
    
    (152
    )
    
    (15,041
    )
    
    (15,193
    )Netdown
      of restricted stock grants
    
    
    -
    
    
    -
    
    
    (5
    )
    
    (455
    )
    
    (460
    )Issuance
      of unrestricted stock grants
    
    
    -
    
    
    -
    
    
    7
    
    
    653
    
    
    660Amortization
      of restricted and unrestrictedstock
      grants
    
    
    -
    
    
    -
    
    
    1
    
    
    131
    
    
    132Dividend
      reinvestment plan
    
    
    -
    
    
    -
    
    
    -
    
    
    99
    
    
    99Interest
      earned on employee notes receivable
    
    
    -
    
    
    -
    
    
    (10
    )
    
    (974
    )
    
    (984
    )Repayments
      of employee notes receivable
    
    
    -
    
    
    -
    
    
    31
    
    
    3,114
    
    
    3,145Redemption
      of Series B preferred units
    
    
    (85,000
    )
    
    -
    
    
    -
    
    
    -
    
    
    (85,000
    )Unamortized
      costs at redemption of Series Bpreferred
      units
    
    
    2,287
    
    
    -
    
    
    (23
    )
    
    (2,264
    )
    
    -Distributions
      and premium paid to preferred unitholders
    
    
    -
    
    
    -
    
    
    (110
    )
    
    (10,872
    )
    
    (10,982
    )Net
      income
    
    
    -
    
    
    -
    
    
    317
    
    
    31,339
    
    
    31,656Balance,
      December 31, 2003
    
    
    -
    
    
    53,547
    
    
    5,857
    
    
    506,918
    
    
    566,322Distributions
      to common unitholders
    
    
    -
    
    
    -
    
    
    (470
    )
    
    (46,569
    )
    
    (47,039
    )Redemption
      of common units
    
    
    -
    
    
    -
    
    
    (9
    )
    
    (876
    )
    
    (885
    )Contributions
      (distributions) from SummitProperties
      Inc. related to:Issuance
      of common stock
    
    
    -
    
    
    -
    
    
    9
    
    
    876
    
    
    885Exercise
      of stock options
    
    
    -
    
    
    -
    
    
    25
    
    
    2,466
    
    
    2,491Cash
      settlement of common stock options andstock
      grants
    
    
    -
    
    
    -
    
    
    (151
    )
    
    (14,950
    )
    
    (15,101
    )Issuance
      of unrestricted stock grants
    
    
    -
    
    
    -
    
    
    10
    
    
    949
    
    
    959Netdown
      of restricted and unrestricted stock grants
    
    
    -
    
    
    -
    
    
    (6
    )
    
    (647
    )
    
    (653
    )Amortization
      of restricted and unrestrictedstock
      grants
    
    
    -
    
    
    -
    
    
    6
    
    
    623
    
    
    629Dividend
      reinvestment plan
    
    
    -
    
    
    -
    
    
    1
    
    
    128
    
    
    129Interest
      earned on employee notes receivable
    
    
    -
    
    
    -
    
    
    (9
    )
    
    (922
    )
    
    (931
    )Repayments
      of employee notes receivable
    
    
    -
    
    
    -
    
    
    103
    
    
    10,194
    
    
    10,297Series
      C preferred units redeemed in 2005
    
    
    -
    
    
    (55,000
    )
    
    -
    
    
    -
    
    
    (55,000
    )Unamortized
      costs of Series C preferred units
    
    
    -
    
    
    1,453
    
    
    (15
    )
    
    (1,438
    )
    
    -Distributions
      to preferred unitholders
    
    
    -
    
    
    -
    
    
    (48
    )
    
    (4,764
    )
    
    (4,812
    )Net
      income
    
    
    -
    
    
    -
    
    
    1,597
    
    
    158,136
    
    
    159,733Balance,
      December 31, 2004
    
    $
    -
    
    $
    -
    
    $
    6,900
    
    $
    610,124
    
    $
    617,024
  See notes
to consolidated financial statements.
  52
  
 **CAMDEN
SUMMIT PARTNERSHIP, L.P.**
 **CONSOLIDATED
STATEMENTS OF CASH FLOWS**
 **(Dollars
in thousands)**
 
 **Year
      Ended December 31,****2004**
    
    **2003**
    
    **2002**Cash
      flows from operating activities:Net
      income
    
    $
    159,733
    
    $
    31,656
    
    $
    115,931Adjustments
      to reconcile net income to net cashprovided
      by operating activities:Unamortized
      costs at redemption of preferred units
    
    
    -
    
    
    2,287
    
    
    -Postretirement
      benefits for former executive officers
    
    
    1,577
    
    
    -
    
    
    -Loss
      on equity method investments
    
    
    380
    
    
    326
    
    
    49Gain
      on sale of real estate assets - continuing operations
    
    
    -
    
    
    (73
    )
    
    (13,831
    )Gain
      on sale of real estate assets - discontinued operations
    
    
    (166,633
    )
    
    (18,820
    )
    
    (64,907
    )Gain
      on sale of real estate assets - joint ventures
    
    
    -
    
    
    -
    
    
    (4,955
    )Impairment
      loss on discontinued operations
    
    
    6,807
    
    
    759
    
    
    -Loss
      on early extinguishment of debt associated with asset
sales
    
    
    -
    
    
    6,522
    
    
    311Depreciation
      and amortization
    
    
    48,557
    
    
    42,667
    
    
    42,514Amortization
      of deferred settlement on interest rate swap
    
    
    -
    
    
    (965
    )
    
    (545
    )Issuance
      of unrestricted stock grants
    
    
    959
    
    
    683
    
    
    -(Increase)
      decrease in restricted cash
    
    
    (283
    )
    
    1,290
    
    
    (814
    )(Increase)
      decrease in other assets
    
    
    (41
    )
    
    2,410
    
    
    1,473Decrease
      in accrued interest payable
    
    
    (539
    )
    
    (378
    )
    
    (2,097
    )Increase
      (decrease) in accounts payable and accrued expenses
    
    
    7,925
    
    
    (6,170
    )
    
    1,019Increase
      (decrease) in security deposits and prepaid rents
    
    
    906
    
    
    632
    
    
    (830
    )Net
      cash provided by operating activities
    
    
    59,348
    
    
    62,826
    
    
    73,318Cash
      flows from investing activities:Construction
      of real estate assets and land acquisitions
    
    
    (128,726
    )
    
    (92,547
    )
    
    (112,839
    )Acquisition
      of real estate assets
    
    
    (186,189
    )
    
    (158,788
    )
    
    (17,866
    )Proceeds
      from sale of real estate assets
    
    
    346,556
    
    
    249,982
    
    
    139,920Proceeds
      from sale of real estate assets - joint ventures
    
    
    -
    
    
    -
    
    
    11,202Capitalized
      interest
    
    
    (9,376
    )
    
    (10,334
    )
    
    (10,360
    )Investment
      in real estate joint ventures
    
    
    -
    
    
    (21,415
    )
    
    (9,075
    )Distribution
      from real estate joint ventures
    
    
    -
    
    
    -
    
    
    540Contribution
      from historic tax credit venture partner
    
    
    -
    
    
    8,486
    
    
    600Recurring
      capital expenditures
    
    
    (7,104
    )
    
    (6,376
    )
    
    (4,530
    )Non-recurring
      capital expenditures
    
    
    (2,689
    )
    
    (1,516
    )
    
    (1,088
    )Corporate and other asset additions and office tenant
      improvements
    
    
    (809
    )
    
    (1,094
    )
    
    (4,647
    )Decrease in notes receivable
    
    
    -
    
    
    4,659
    
    
    68Net
      cash provided by (used in) investing activities
    
    
    11,663
    
    
    (28,943
    )
    
    (8,075
    )
 
  53
  **CAMDEN
SUMMIT PARTNERSHIP, L.P.**
 **CONSOLIDATED
STATEMENTS OF CASH FLOWS - Continued**
 **(Dollars
in thousands)**
 
 
 
 **Year
      Ended December 31,****2004**
    
    **2003**
    
    **2002**Cash
      flows from financing activities:Net
      (repayments) borrowings on line of credit
    
    
    (23,100
    )
    
    (25,000
    )
    
    50,000Proceeds
      from issuance of mortgage notes
    
    
    109,440
    
    
    143,940
    
    
    6,900Repayments
      of mortgage debt
    
    
    (1,842
    )
    
    (55,950
    )
    
    (11,912
    )Borrowings
      on construction loan
    
    
    1,956
    
    
    12,548
    
    
    -Repayment
      of construction loan
    
    
    (35,300
    )
    
    -
    
    
    -Repayments
      of unsecured notes
    
    
    (50,000
    )
    
    (47,000
    )
    
    (41,000
    )Repayments
      of tax exempt bonds
    
    
    (10,345
    )
    
    (220
    )
    
    (340
    )Payment
      of deferred financing costs
    
    
    (2,437
    )
    
    (4,018
    )
    
    (549
    )Loss
      from early extinguishment of debt associated with asset
    sales
    
    
    -
    
    
    (6,522
    )
    
    (311
    )Proceeds
      on sale of interest rate swap
    
    
    -
    
    
    -
    
    
    1,510Distributions
      to common unitholders
    
    
    (46,979
    )
    
    (42,021
    )
    
    (59,455
    )Redemption
      of Series B preferred units
    
    
    -
    
    
    (85,000
    )
    
    -Distributions
      to Series B preferred unitholders
    
    
    -
    
    
    (5,494
    )
    
    (7,608
    )Excess
      of redemption amount over carrying amount of preferred
    units
    
    
    -
    
    
    (2,963
    )
    
    -Distributions
      to Series C preferred unitholders
    
    
    (4,812
    )
    
    (4,812
    )
    
    (4,812
    )Cash
      settlement of stock options and restricted stock grants
    
    
    (15,101
    )
    
    -
    
    
    -Increase
      in employee notes receivable
    
    
    -
    
    
    -
    
    
    (7,813
    )Repayments
      of employee notes receivable
    
    
    9,366
    
    
    2,161
    
    
    2,755Contributions
      (Distributions) from Summit Properties Inc. related to:Issuance
      of common stock
    
    
    -
    
    
    100,207
    
    
    -Net
      proceeds from dividend reinvestment and stock purchase
    plansand
      exercise of stock options
    
    
    2,620
    
    
    2,017
    
    
    10,995Netdown
      of restricted and unrestricted stock grants
    
    
    (653
    )
    
    (460
    )
    
    (597
    )Repurchase
      of Summit's common stock
    
    
    -
    
    
    (15,193
    )
    
    (2,666
    )Net
      cash used in financing activities
    
    
    (67,187
    )
    
    (33,780
    )
    
    (64,903
    )Net
      increase in cash and cash equivalents
    
    
    3,824
    
    
    103
    
    
    340Cash
      and cash equivalents, beginning of period
    
    
    2,687
    
    
    2,584
    
    
    2,244Cash
      and cash equivalents, end of period
    
    $
    6,511
    
    $
    2,687
    
    $
    2,584Supplemental
      disclosure of cash flow information:Cash
      paid for interest, net of capitalized interest
    
    $
    32,221
    
    $
    31,408
    
    $
    36,589
 
 See notes
to consolidated financial statements.
  54
   **CAMDEN
SUMMIT PARTNERSHIP, L.P.**
 **NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 *Unless
the context otherwise requires, all references to “we,” “our” or “us” in this
report refer collectively to Camden Summit Partnership, L.P. (formerly known as
Summit Properties Partnership, L.P.), a Delaware limited partnership (the
“Operating Partnership”) and its subsidiaries. All references to “Summit” in
this report refer to Summit Properties Inc., a Maryland corporation, which was
the sole general partner of the Operating Partnership prior to the merger (the
“Merger”) of Summit with and into Camden Summit, Inc. (the Merger was completed
on February 28, 2005), a Delaware corporation (“Camden Summit”) and a
wholly-owned subsidiary of Camden Property Trust, a Texas real estate investment
trust (“Camden”).*
 
 
 **1.** **ORGANIZATION
AND FORMATION**
 
 We were
formed on January 14, 1994 to conduct the business of developing and operating
multifamily apartment communities for Summit. On February 8, 1994, Summit
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 by Summit 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. Summit became our sole general partner and majority
owner upon completion of the initial public offering. Summit was a
self-administered and self-managed equity real estate investment trust
(“REIT”).
 
 Summit
conducted all of its business through the Operating Partnership and its
subsidiaries. As of December 31, 2004, Summit held 90.4% of our outstanding
partnership interests, consisting of a 1.0% general partner interest and an
89.4% limited partner interest. Each common unit may be redeemed by the holder
for cash equal to the fair value of a Camden common share or, at our option, one
share of Camden common stock (subject to adjustment). Prior to the merger,
common units were redeemable for cash equal to the fair value of a Summit common
share or, at our option, one share of Summit common stock. We presently
determine on a case-by-case basis whether we will cause Camden to issue common
shares in connection with a redemption of common units rather than paying cash.
With each redemption of common units for common stock, the general partner’s
percentage ownership interest in the Operating Partnership will
increase.
 
 **2.
BASIS OF PRESENTATION**
 
 All
significant intercompany accounts and transactions have been eliminated in
consolidation. We own 1% of the voting stock and 99% of the non-voting stock of
Summit Management Company (the “Management Company”). As of December 31, 2004,
the remaining 99% of voting stock and 1% of non-voting stock are held by one of
the then Co-Chairmen of Summit’s Board of Directors. As a result of this stock
ownership, we had a 99% economic interest and the Co-Chairman had a 1% economic
interest in the Management Company. The Management Company is consolidated into
our financial statements in accordance with Financial Accounting Standards Board
(“FASB”) Interpretation No. 46, “Consolidation of Variable Interest Entities”
(“FIN 46”).
 
 **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. See Note 7.
  55
  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 major renovations and upgrades of apartment homes.
Recurring capitalized expenditures consist primarily of exterior painting, new
appliances, vinyl flooring, blinds, tile, wallpaper and carpet. All of these
expenditures are capitalized and depreciated over the estimated useful lives of
the assets (land improvements - 15 years; buildings — 40 years; building
improvements — 5 to 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 $9.4 million
in 2004, $10.3 million in 2003 and $10.4 million in 2002.
 
 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 $3.6 million in 2004, $2.4 million in 2003 and $3.4
million in 2002.
 
 ***Asset
Impairment Evaluation*** **-** We record
our real estate assets to be held and used at cost, less accumulated
depreciation, unless considered impaired. If events or circumstances indicate
that the carrying amount of a community may be impaired, we will assess its
recoverability by estimating the undiscounted future cash flows of the
community. If our recoverability assessment results in an indication of
impairment for communities to be held and used, or if a community is considered
to be held for sale, then we determine the community’s fair value. For
communities classified as held for sale, the fair value represents the estimated
sales price less cost to sell based on current or pending offers, based on
estimates received from the broker or applying a capitalization rate to the
community’s property operating income. For communities to be held and used, fair
value is determined by applying a capitalization rate to the community’s
operating income. Applying capitalization rates to a community’s property
operating income is a widely used measure of fair value and for determining the
amount at which a community could be sold between willing parties. Determining
appropriate capitalization rates requires significant judgment and is generally
based on the prevailing rate for the submarket within the market in which the
community is located. Capitalization rates can fluctuate due to changes in the
general economy or within specific submarkets. If the actual capitalization rate
for a community varies significantly from management’s estimate, the impairment
evaluation may be significantly affected. For assets to be held and used, if the
carrying amount exceeds the undiscounted future cash flows, we would recognize
an impairment loss to the extent the carrying amount exceeds the estimated fair
value of the community and such loss would be included in income from continuing
operations. Assets to be disposed of are recorded at the lower of carrying
amount or fair value less cost to sell. An impairment loss will be recognized
for any write-down to fair value less cost to sell and reported in the
discontinued operations section of the consolidated statements of
earnings.
 
 ***Allocation
of the Cost of Communities Acquired*** - The
cost of communities acquired is allocated to tangible and intangible assets and
liabilities based on their relative fair values. We estimate the fair value of
the acquired tangible assets, which generally consist of land, buildings and
furniture and fixtures, and intangible assets and liabilities, which generally
represent the value of above-market and below-market leases, in-place leases and
tenant relationships of the community acquired and allocate the purchase price
on a pro-rata basis to each component.
 
 The fair
value of tangible assets acquired is determined by valuing the community as if
it were vacant, applying methods similar to those used by independent appraisers
of income-producing property. The resulting value is then allocated to land,
buildings and furniture, fixtures and equipment based on management’s
determination of the relative fair value of these assets. The assumptions used
in the allocation of fair values to assets acquired are based on management’s
best estimates at the time of evaluation.
  56
  Fair
value is assigned to above-market and below-market leases based on the
difference between (a) the contractual amounts to be paid by the resident or
retail tenant based on the existing lease and (b) management’s estimate of
current market lease rates for the corresponding in-place leases, over the
remaining terms of the in-place leases. Capitalized above-market lease amounts
are included in “Other assets” in our consolidated balance sheets and amortized
against rental revenue over the remaining terms of the respective leases.
Capitalized below-market lease amounts are included in “Accounts payable and
accrued expenses” in our consolidated balance sheets and are amortized as an
increase to rental revenue over the remaining terms of the respective
leases.
 
 The fair
value of acquired in-place leases is included in “Other assets” in our
consolidated balance sheets and is amortized as a leasing cost over the
remaining non-cancelable periods of the respective leases. If acquired in-place
leases with terms of greater than twelve months are terminated early, all
unamortized amounts relating to those leases would be written-off.
 
 The fair
value of tenant relationships represents the probability that existing tenants
will renew their leases and, thus, reduces the amount of lost rental revenue
from vacant apartments. Tenant relationships are included in “Other assets” in
our consolidated balance sheets and are amortized as a leasing cost over the
estimated lives of the tenant relationships.
 
 ***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 approximately
$101,000 at December 31, 2004 and $75,000 at December 31, 2003 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 eleven 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 and retail leases are as
follows (in thousands):
 
 2005
    
    $
    2,2952006
    
    
    2,2132007
    
    
    1,9452008
    
    
    1,5162009
    
    
    1,548Thereafter
    
    
    4,672$
    14,189
 
 ***Cash
and Cash Equivalents*** - For
purposes of the statements 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 over the terms of the related debt using
the straight-line method, which approximates the effective interest
method.
 
 ***Advertising
Costs*** - We
expense advertising costs as incurred. Advertising expense was $2.7 million in
2004 and $2.8 million in both 2003 and 2002.
 
 ***Investments*** - We
consolidate investments, including joint ventures in which we have control, in
which we have a direct voting interest of more than 50% or for which we are the
primary beneficiary of a related variable interest entity. We record investments
in which we exercise significant influence under the equity method in accordance
with Accounting Principals 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.”
  57
  ***Per
Unit Data*** — Basic
earnings per unit are computed based upon the weighted average number of units
outstanding during the respective period. The difference between “basic” and
“diluted” weighted average units is the dilutive effect of Summit’s stock-based
compensation outstanding. Due to the loss from continuing operations for the
year ended December 31, 2004, we have excluded the diluted effect of Summit’s
stock-based compensation outstanding for the per unit calculations (133,464
units in 2004). The number of units added to weighted average units outstanding
for the diluted calculation was 149,074 in 2003 and 170,523 in 2002. Dilution
caused by these options had no effect on income available to common unitholders
per unit in 2003 and decreased income available to common unitholders per unit
by $0.02 in 2002.
 
 ***Stock-Based
Compensation -*** Summit
had a Stock Option and Incentive Plan (the “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, “Accounting for Stock
Issued to Employees,” and related interpretations in accounting for Summit’s
stock options and ESPP. No compensation cost was recognized for stock options
granted under the Option and Incentive Plan or shares issued under the ESPP
during the years ended December 31, 2002 and 2001 in accordance with APB No. 25.
The ESPP was suspended effective July 2, 2002. 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
following table reflects the effect on net income and earnings per unit had the
fair value based method been applied to all options granted and ESPP shares
issued in each year (in thousands, except per unit amounts):
 
 **2004**
    
    **2003**
    
    **2002**Income
      available to common unitholders, as reported
    
    $
    153,468
    
    $
    18,387
    
    $
    103,511Add:
      Stock-based compensation included in reportedincome
      available to common unitholders
    
    
    3,007
    
    
    1,187
    
    
    1,306Deduct:
      Total stock-based compensation determinedunder
      fair value based method for all awards
    
    
    (4,051
    )
    
    (1,610
    )
    
    (2,758
    )Pro
      forma income available to common unitholders
    
    $
    152,424
    
    $
    17,964
    
    $
    102,059Income
      available to common unitholders per unit as reported -
    basic
    
    $
    4.41
    
    $
    0.59
    
    $
    3.35Income
      available to common unitholders per unit as reported -
    diluted
    
    
    4.41
    
    
    0.59
    
    
    3.33Pro
      forma income available to common unitholders per unit -
    basic
    
    $
    4.38
    
    $
    0.58
    
    $
    3.30Pro
      forma income available to common unitholders per unit -
      diluted
    
    
    4.38
    
    
    0.57
    
    
    3.28
 
 On
December 17, 2004, Summit’s Board of Directors approved several types of
compensation to be paid to the Section 16 executive officers. This compensation
was paid on December 22, 2004 and consisted of (i) $5.1 million under the
long-term incentive compensation plan, (ii) $3.0 million which represented 2004
annual bonus payments, (iii) $2.0 million which represented a discretionary
bonus paid to certain executives based on each executive’s effort to execute the
Merger, (iv) $2.0 million for unvested stock options and stock grant
compensation and (v) $180,000 for vested stock options and stock grant
compensation, all of which are included as either general and administrative
expenses or merger-related costs in the accompanying statements of earnings, and
(i) $9.6 million representing vested stock options and (ii) $5.7 million
representing unvested stock options and stock grants, both of which are included
in partners’ equity in the accompanying consolidated balance
sheets.
 
 As part
of the approval mentioned above, the Summit’s Board approved (i) the
acceleration of the vesting of certain stock options held by certain of Summit’s
then executive officers and (ii) the right to receive either shares of Summit
common stock or a lump sum cash payment in exchange for the cancellation of
certain vested stock options held by such executive officers. All executive
officers elected to receive cash. The unvested options would have become
otherwise fully exercisable in connection with the closing of the Merger with
Camden. Summit paid $14.2 million to settle 1,161,075 stock options. The cash
settlement price per option paid was $32.89 less the exercise price of the
option. The cash settlement price was based on a formula specified in the
related Camden merger agreement. The closing price of Summit’s common stock on
the day of cash settlement was $32.45. In accordance with SFAS 123, $179,000 of
additional compensation cost was recognized and included in the stock-based
compensation included in 2004 reported income available to common unitholders
discussed above. This amount was determined based on the cash settlement price
in excess of the value of the options that were cancelled. There was no
remaining unrecognized compensation cost related to the unvested
options.
  58
   
 As part
of the approval mentioned above, Summit’s Board approved (i) the acceleration of
the vesting of certain shares of restricted stock and performance based stock
awards described above and (ii) the right to receive a lump sum cash payment in
exchange for the cancellation of certain of those shares by certain Summit
executive officers. The unvested restricted stock and performance based stock
awards would have become otherwise fully vested in connection with the closing
of the Merger. The amount of the cash payout related to the 99,811 shares of
restricted stock and performance based stock awards was $3.3 million. For these
unvested awards, a portion of the total compensation cost based on the original
intrinsic value had already been recorded in the statements of earnings through
the cash payment date of December 22, 2004. The remaining previously
unrecognized compensation cost was recognized at the settlement date.
Additionally, in accordance with SFAS 123, the excess of the cash paid over the
stock price at the cash settlement date, or $0.44 per share, was paid to settle
the shares of restricted stock and performance based stock awards and was also
recorded as additional compensation cost in 2004. The total amount of
compensation cost recorded upon the acceleration and cash settlement of the
restricted stock and performance-based stock awards was $1.9 million (included
in the stock-based compensation included in reported income available to common
unitholders above) and is included in merger-related costs in the consolidated
statements of earnings.
 
 Total
stock-based compensation included in reported income available to common
unitholders shown in the table above also includes $967,000 of restricted stock
and performance based stock award amortization and $96,000 which represents the
fair value of stock options granted to non-employee directors during
2004.
 
 ***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
December 2004, the FASB issued SFAS No. 123 (R), “Share-Based Payment” (“SFAS
123(R)”), which revised SFAS No. 123. SFAS 123(R) supersedes APB No. 25. It
requires that all share-based payments to employees be recognized in the income
statement based on their fair values; pro forma disclosure is not an option any
longer. This statement is effective for interim or annual periods beginning
after June 15, 2005 and applies to all awards granted after the effective date
and to awards modified, repurchased or cancelled after that date. We are still
evaluating the impact that SFAS 123 (R) will have on our financial position and
results of operations.
 
 ***Reclassifications*** — We
have reclassified the historical financial statements for discontinued
operations that have resulted from dispositions of real estate assets during the
year ended December 31, 2004 as well as the classification of the community
classified as held for sale as of December 31, 2004 in accordance with SFAS
144.
  59
  **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 of accounting and, therefore, our 25% equity
interest is presented in “Loss on unconsolidated real estate joint ventures” in
our consolidated statements of earnings.
 
 The
following are condensed balance sheets as of December 31, 2004 and 2003 and
condensed statements of operations for the years ended December 31, 2004, 2003
and 2002 for Station Hill (in thousands). The
balance sheets and statements of operations set forth below reflect the
financial position and operations of Station Hill in its entirety, not just our
interest in the joint venture .
 
 **Balance
      Sheets****2004**
    
    **2003**Real
      estate assets, net
    
    $
    67,533
    
    $
    69,795Cash
      and cash equivalents
    
    
    631
    
    
    690Other
      assets
    
    
    250
    
    
    312Total
      assets
    
    $
    68,414
    
    $
    70,797Mortgages
      payable
    
    $
    56,949
    
    $
    57,870Other
      liabilities
    
    
    601
    
    
    544Partners'
      capital
    
    
    10,864
    
    
    12,383Total
      liabilities and partners' capital
    
    $
    68,414
    
    $
    70,797
 
  **Statements
      of Operations****2004**
    
    **2003**
    
    **2002**Revenues
    
    $
    9,165
    
    $
    9,475
    
    $
    9,927Expenses:Property
      operating
    
    
    3,737
    
    
    3,787
    
    
    3,757Depreciation
      and amortization
    
    
    3,103
    
    
    3,088
    
    
    2,965Interest
    
    
    3,844
    
    
    3,904
    
    
    3,960Total
      expenses
    
    
    10,684
    
    
    10,779
    
    
    10,682Net
      loss
    
    $
    (1,519
    )
    $
    (1,304
    )
    $
    (755
    )
 
  60
  Prior to
July 3, 2003, we owned a 29.78% interest in a joint venture named SZF, LLC,
which owns substantially all of the interests in Coral Way, LLC, a limited
liability company that is developing, through a third-party contractor, an
apartment community in Miami, Florida. On July 3, 2003, we purchased our joint
venture partner’s 70.22% interest in SZF, LLC for $10.0 million in cash. The
community consists of 323 apartment homes and approximately 17,500 square feet
of office/retail space. The limited liability company also owns an adjacent
piece of land. The construction costs are being funded through the equity that
the joint venture contributed to the limited liability company and by a loan to
that company from an unrelated third party. As a result of construction costs
exceeding the construction loan amount, SZF, LLC has agreed to advance to Coral
Way, LLC the amount required to fund such costs in excess of the construction
loan. Certain affiliates of the developer of the apartment community have
guaranteed the reimbursement of those costs to Coral Way, LLC and SZF, LLC.
These advances accrue a preferential return at the rate of eleven percent (11%)
per year to be paid from the distributions from the joint venture. The preferred
return will not be recognized until the community has earnings or gains to fund
such a return. As of December 31, 2004, we had advanced $12.7 million to SZF,
LLC which, in turn, advanced such amounts to Coral Way, LLC. Prior to July 3,
2003, this joint venture was accounted for under the equity method of accounting
and its balance sheet and income statement information was not material to our
consolidated financial statements taken as a whole. As a result of the purchase
of our joint venture partners’ interest in SZF, LLC, the assets, liabilities and
operating activities of this joint venture became consolidated into our
financial statements. The community being developed by Coral Way, LLC, known as
Summit Brickell View, was sold on December 21, 2004.
 
 On August
12, 2003, we received notice of a suit filed by certain affiliates of Coral Way,
LLC against us, Summit and the Management Company. One of the remedies demanded
in the suit is termination of the guarantee agreements to which reference is
made above. We believe that the allegations made in this suit are not supported
by the facts and we intend to vigorously defend against this suit. If we are
successful, the guarantee agreements will remain in place and the guarantors
will remain obligated to reimburse Coral Way, LLC and SZF, LLC for the costs in
excess of the construction loan.
 
 In 2002,
we entered into two separate joint ventures with a major financial services
institution (the “investor member”) to redevelop Summit Roosevelt and Summit
Grand Parc, both located in Washington, D.C., in a manner to permit the use of
federal rehabilitation income tax credits. The investor member contributed
approximately $6.5 million for Summit Roosevelt and approximately $2.6 million
for Summit Grand Parc in equity to fund a portion of the total estimated costs
for the respective communities and will receive a preferred return on these
capital investments and an annual asset management fee with respect to each
community. The investor member’s interests in the joint ventures are subject to
put/call rights during the sixth and seventh years after the respective
communities are placed in service. These joint ventures are consolidated into
our financial statements.
 
 We
formerly owned a 50% interest in a joint venture that developed and operated an
apartment community located in Atlanta, known as The Heights at Cheshire Bridge.
This joint venture was accounted for under the equity method of accounting and
its operating results are presented in “Loss on unconsolidated real estate joint
ventures” in our consolidated statements of earnings. On September 27, 2002, the
joint venture sold The Heights at Cheshire Bridge to an unrelated third party
and the joint venture was dissolved. Upon dissolution, we recognized a gain of
$5.0 million on the sale of the joint venture’s assets.
 
 **5.
PROPERTY MANAGEMENT AND RELATED PARTY TRANSACTIONS**
 
 In
conjunction with our formation, construction and operating activities were
transferred to Summit Management Company (the “Management Company”) and Summit
Apartment Builders, Inc. (the “Construction Company”).
 
 Third
party apartment homes under management were 1,903 in 2004 and 2003 and 2,308 in
2002. The decrease from 2002 to 2003 is due to our purchase of Summit Brickell
(405 apartment homes) during 2003. Summit Brickell was a fee-managed property
prior to our acquisition of such community. Property management fees from third
parties were $586,000 in 2004, $618,000 in 2003 and $787,000 in
2002.
  61
  In
addition, the Management Company provided management services to apartment
communities held by partnerships in which certain of Summit’s directors are
general partners. The Management Company received management fees of $287,000 in
2004, $275,000 in 2003 and $252,000 in 2002 for the performance of such
services.
 
 **6.
NOTES PAYABLE**
 
 Notes
payable, excluding fair value adjustments of hedged debt instruments and fair
value adjustments of mortgages acquired during 2004, consist of the following
(in thousands):
 
 **Interest**
    
    
    
    **Principal
      Outstanding****Rate
      as of**
    
    **Maturity**
    
    **December
      31,****December
      31, 2004**
    
    **Date**
    
    **2004**
    
    **2003****Fixed
      Rate Debt****Mortgage
      Debt**Mortgage
      Loan
    
    
    6.76
    %
    
    10/15/2008
    
    $
    132,989
    
    $
    132,989Mortgage
      Loan
    
    
    4.86
    %
    
    10/15/2008
    
    
    40,000
    
    
    -Mortgage
      Loan
    
    
    8.00
    %
    
    9/1/2005
    
    
    7,771
    
    
    7,909Mortgage
      Notes:Summit
      Fair Lakes
    
    
    7.82
    %
    
    7/1/2010
    
    
    48,340
    
    
    48,340Summit
      Doral
    
    
    5.17
    %
    
    4/1/2013
    
    
    30,528
    
    
    30,962Summit
      Aventura
    
    
    5.09
    %
    
    7/1/2013
    
    
    38,927
    
    
    39,480Summit
      Overlook
    
    
    4.70
    %
    
    8/1/2013
    
    
    22,543
    
    
    22,889Summit
      Russett
    
    
    4.17
    %
    
    12/31/2009
    
    
    50,000
    
    
    50,000Summit
      Ashburn Farm
    
    
    4.69
    %
    
    4/1/2011
    
    
    16,477
    
    
    -Summit
      Crest
    
    
    4.63
    %
    
    4/1/2011
    
    
    27,500
    
    
    -Summit
      South End Square
    
    
    4.91
    %
    
    10/1/2010
    
    
    25,242
    
    
    -Summit
      Stonecrest
    
    
    4.18
    %
    
    9/1/2012
    
    
    19,620
    
    
    -Summit
      Doral Villas
    
    
    6.82
    %
    
    1/1/2011
    
    
    22,047
    
    
    -**Total
      Mortgage Debt**
    
    
    
    
    
    
    
    
    481,984
    
    
    332,569**Unsecured
      Notes:**Medium-Term
      Notes
    
    
    8.04
    %
    
    11/17/2005
    
    
    25,000
    
    
    25,000Medium-Term
      Notes
    
    
    7.04
    %
    
    5/9/2006
    
    
    25,000
    
    
    25,000Medium-Term
      Notes
    
    
    7.59
    %
    
    3/16/2009
    
    
    25,000
    
    
    25,000Medium-Term
      Notes
    
    
    8.50
    %
    
    7/19/2010
    
    
    10,000
    
    
    10,000Medium-Term
      Notes
    
    
    7.70
    %
    
    5/9/2011
    
    
    35,000
    
    
    35,000Notes
    
    
    7.20
    %
    
    8/15/2007
    
    
    50,000
    
    
    50,000Unsecured
      notes repaid in 2003
    
    
    
    
    
    
    
    
    -
    
    
    50,000**Total
      Unsecured Notes**
    
    
    
    
    
    
    
    
    170,000
    
    
    220,000**Total
      Fixed Rate Debt**
    
    
    
    
    
    
    
    
    651,984
    
    
    552,569**Variable
      Rate Debt**Credit
      facility
    
    
    Ref
      Bill + 58 bps
    
    
    7/27/2008
    
    
    95,900
    
    
    119,000Construction loan
    
    
    LIBOR
      + 207.5 bps
    
    
    5/1/2004
    
    
    -
    
    
    33,345Summit
      Foxcroft mortgage note
    
    
    LIBOR
      + 170 bps
    
    
    7/1/2005
    
    
    6,900
    
    
    6,900Tax-exempt
      bonds paid in 2004
    
    
    
    
    
    
    
    
    -
    
    
    10,345**Total
      Variable Rate Debt**
    
    
    
    
    
    
    
    
    102,800
    
    
    169,590**Total
      Outstanding Indebtedness on notes payable**
    
    
    
    
    
    
    
    $
    754,784
    
    $
    722,159
 
 ***Fixed
Rate Mortgage Loans*** — The
6.76% mortgage loan requires monthly interest payments only with a balloon
payment due at maturity in October 2008. The 4.86% mortgage loan requires
monthly interest payments only 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 4.17% to
7.82% and require either monthly interest only payments or monthly interest and
principal payments over the lives of the notes which have maturities that range
from the year 2009 to 2013. The weighted average interest rate and debt maturity
as of December 31, 2004 for these mortgage notes were 5.36% and 7.3
years.
  62
  ***Medium-Term
Notes*** — On
April 20, 2000, we commenced a new program for the sale 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 $95.0 million outstanding in connection with this MTN program as of December
31, 2004.
 
 On May
29, 1998, we established a program for the sale of up to $95.0 million aggregate
principal amount of MTNs due nine months or more from the date of issuance. We
had MTNs with an aggregate principal amount of $25.0 million outstanding in
connection with this MTN program as of December 31, 2004. 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 MTNs
require that we comply with certain affirmative, negative and financial
covenants. We were in compliance with these covenants as of December 31,
2004.
 
 ***Unsecured
Notes*** — The
unsecured notes consist of $50.0 million of notes due in 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, 2004.
 
 All of
the medium-term notes and unsecured notes require quarterly interest-only
payments.
 
 ***Credit
Facilities*** — On
July 28, 2003, we obtained a secured credit facility with a total current
commitment $290.0 million. We have the ability to increase this commitment and
availability pursuant to the terms of the credit agreement. The secured credit
facility replaced our then-existing $225.0 million unsecured credit facility and
provides funds for new development, acquisitions and general working capital
purposes. This facility is secured by eleven of our communities (Summit
Brookwood, Summit Governor’s Village, Summit Grandview, Summit Lake, Summit
Lansdowne, Summit Peachtree City, Summit Portofino, Summit Sedgebrook, Summit
Shiloh, Summit Stockbridge and Summit Sweetwater) and matures in July 2008. As
described in the credit agreement, loans under the credit facility are limited
subject to debt service coverage and loan to value ratios and bear interest at
the Reference Bill Index Rate (defined as the money market yield for the
Reference Bills as established by the most recent Reference Bill auction
conducted by Freddie Mac) plus 58 to 91 basis points depending on the level of
debt service coverage. The outstanding balance of the credit facility was $95.9
million and the interest rate was 2.85% as of December 31, 2004. There was
$194.1 million available under this facility as of December 31, 2004. The
secured credit facility was repaid by Camden Summit in connection with the
Merger (see note 21).
 
 The
credit facilities had an average interest rate of 1.90% in 2004, 1.99% in 2003
and 2.69% in 2002 and an average balance outstanding of $165.4 million in 2004,
$136.8 million in 2003 and $135.9 million in 2002. In addition, the maximum
outstanding principal amount was $249.9 million in 2004, $185.2 million in 2003
and $175.0 million in 2002.
 
 On July
28, 2003, we obtained an unsecured letter of credit facility, which matures in
July 2008 and has a total commitment of $20.0 million. The letters of credit
issued under this facility will serve as collateral for performance on contracts
and as credit guarantees to banks and insurers. As of December 31, 2004, there
were $9.0 million of letters of credit outstanding under this
facility.
 
 ***Construction
Loan*** -
Concurrent with the purchase of our joint venture partner’s equity interest in
SZF, LLC in July 2003 (see Note 4), we consolidated the construction loan
related to the community that is being developed by such joint venture. We
repaid the construction loan on January 30, 2004. The construction loan had a
total commitment of $45.0 million, bore interest at LIBOR plus 207.5 basis
points and was to mature in June 2004.
 
 ***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.
 
 Real
estate assets of 31 communities with a net book value of $804.4 million serve as
collateral for the various secured debt agreements.
  63
  The
aggregate maturities of all debt (excluding fair value adjustments of
communities acquired and hedged debt instruments) for each of the years ending
December 31 are as follows (in thousands):
 
 **Fixed
      Rate**
    
    **Variable**
    
    **Secured****Fixed
      Rate**
    
    **Unsecured**
    
    **Rate
      Mortgage**
    
    **Credit****Mortgages**
    
    **Notes**
    
    **Note**
    
    **Facility**
    
    **Total**2005
    
    $
    11,205
    
    $
    25,000
    
    $
    6,900
    
    $
    -
    
    $
    43,1052006
    
    
    3,723
    
    
    25,000
    
    
    -
    
    
    -
    
    
    28,7232007
    
    
    3,963
    
    
    50,000
    
    
    -
    
    
    -
    
    
    53,9632008
    
    
    177,129
    
    
    -
    
    
    -
    
    
    -
    
    
    177,1292009
    
    
    51,356
    
    
    25,000
    
    
    -
    
    
    -
    
    
    76,356Thereafter
    
    
    234,608
    
    
    45,000
    
    
    -
    
    
    95,900
    
    
    375,508$
    481,984
    
    $
    170,000
    
    $
    6,900
    
    $
    95,900
    
    $
    754,784
 
 In
connection with the Merger, we repaid our secured credit facility (which was to
mature in 2008) using proceeds received from a $500 million intercompany line of
credit from Camden Summit. This line of credit bears interest at 6%, is secured
by the same eleven communities which secured the credit facility and has a
ten-year term.  Therefore it has been included in the “thereafter” column
above given its 2015 maturity date.
 
 **7.
ACQUISITIONS AND DISPOSITIONS**
  During
the year ended December 31, 2004, we acquired six communities with a total of
1,581 apartment homes (Summit Stonecrest, Summit South End Square, Summit Doral
Villas, Summit Midtown, Summit Fallsgrove and Charlotte Cotton Mills). On May
27, 2004, we acquired Summit Stonecrest, located in Charlotte, North Carolina
(306 apartment homes), for $28.0 million. Consideration paid for this community
was cash of $9.6 million and the assumption of a $19.7 million mortgage (which
had a fair market value of $18.4 million on the date of purchase) . On June
14, 2004, we purchased Summit South End Square (299 apartment homes), also
located in Charlotte, for $33.5 million in cash. On
September 2, 2004, we acquired Summit Doral Villas, located in Miami, Florida
(232 apartment homes), for $43.3 million. Consideration paid for Summit Doral
Villas was cash of $18.4 million and the assumption of a $22.1 million mortgage
(which had a fair value of $24.9 million on the date of acquisition). On
September 30, 2004, we acquired Summit Midtown, located in Atlanta, Georgia (296
apartment homes), for $44.8 million in cash. On October 14, 2004, we acquired
Summit Fallsgrove, located in Rockville, Maryland (268 apartment homes) for
$54.5 million in cash. On November 28, 2004, we acquired Charlotte Cotton Mills,
located in Charlotte, North Carolina (180 apartment homes) for $23.8 million in
cash. The purchase prices have been allocated based on estimated fair values at
the date of acquisition. This allocation resulted in less than 2.5% of the total
purchase price being allocated to each of the community’s intangible
assets.
 
 During
the year ended December 31, 2004, we sold ten communities comprising 2,659
apartment homes for an aggregate sales price of $349.4 million, resulting in an
aggregate gain on sale of $164.5 million. The ten communities sold were the
former Summit Fair Oaks, Summit Highland, Summit Square, Summit Belmont, Summit
Reston, Summit Glen, Summit Del Ray, Summit Brickell View, Summit Crossing and
Summit Norcroft. Net proceeds from eight of the ten communities, equaling $242.1
million were placed in escrow with a qualified intermediary in accordance with
like-kind exchange income tax rules and regulations. The disposition of these
ten communities was the result of our capital-recycling strategy to sell older
communities in certain non-core neighborhoods in our markets and redeploy the
resulting proceeds into newer communities in select neighborhoods within our
markets. We also sold one parcel of land during 2004 for $94,000. This land was
located at the community formerly known as Summit Square.
 
 During
the year ended December 31, 2003, we purchased two communities. On December 31,
2003, we purchased Summit Lansdowne, located in Loudon County, Virginia for
$99.2 million. Summit Lansdowne contains 690 apartment homes and was
approximately 89% leased as of December 31, 2003. The purchase price has been
allocated based on estimated fair values at the date of acquisition. This
allocation resulted in less than 3.0% of the total purchase price being
allocated to the community’s intangible assets.
  64
  On May 6,
2003, the Operating Partnership purchased certain assets of Brickell Grand, Inc.
(“Brickell Grand”), including the community known as Summit Brickell and a note
receivable from the developer, for $59.4 million. Summit Brickell is located in
Miami, Florida and contains 405 apartment homes and approximately 18,000 square
feet of retail space. Summit Brickell’s apartment homes were 75% leased at the
date of acquisition. The retail space was 56.6% leased. The purchase price has
been allocated based on estimated fair values at the date of acquisition. This
allocation resulted in less than 2.0% of the total purchase price being
allocated to the community’s intangible assets and liabilities.
 
 The
developer of Summit Brickell is entitled to receive bonus payments based on the
operating performance of the community during any period of six months selected
by the developer and ending no later than December 31, 2005. Such bonus payments
will be applied to reduce amounts owed from the developer under the note
receivable. Any unpaid amounts under the note receivable are due and payable on
February 15, 2006.
 
 At the
time of purchase, Summit Brickell was subject to a $4.1 million claim of
construction lien filed by the general contractor, Bovis Lend Lease, Inc.
(“Bovis”). Bovis sought to enforce this claim of lien against Brickell Grand in
a suit filed on October 18, 2002. In addition, in mid-2003, two subcontractors
of Bovis, Commercial Interior Contractors Corp. and RC Aluminum Industries,
Inc., also filed separate suits against Brickell Grand and Bovis, among other
named parties, to enforce claims of construction lien in the aggregate amount of
approximately $300,000, which suits were either dismissed or settled during
2003. As the current owner of Summit Brickell, which property is subject to
these claims of lien, we have taken steps to defend against the claims of liens
and related litigation. We have several potential counterclaims to challenge and
defend against these suits which we intend to pursue vigorously. We currently
have accrued an amount which is our best estimate as of December 31, 2004 of
what we believe we will be liable to pay based on the related contract as well
as change orders. Any amount above or below this estimate would be treated as a
cost of or a reduction of the acquisition amount of Summit Brickell.
 
 The
following summary of selected unaudited pro forma results of operations presents
information as if the purchase of all communities acquired during 2004 and 2003
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):
 
 **2004**
    
    **2003**
    
    **2002**Total
      revenues
    
    $
    154,134
    
    $
    134,789
    
    $
    102,076Income
      (loss) from continuing operations
    
    $
    (12,726
    )
    $
    1,987
    
    $
    23,052Net
      income
    
    $
    156,266
    
    $
    28,237
    
    $
    112,376Per
      common unit information:Income
      (loss) from continuing operations - basic
    
    $
    (0.37
    )
    $
    0.06
    
    $
    0.75Income
      (loss) from continuing operations -diluted
    
    $
    (0.37
    )
    $
    0.06
    
    $
    0.74Net
      income -- basic
    
    $
    4.49
    
    $
    0.91
    
    $
    3.63Net
      income -- diluted
    
    $
    4.49
    
    $
    0.90
    
    $
    3.61
 
 During
the year ended December 31, 2003, we sold eight communities comprising 2,927
apartment homes for an aggregate sales price of $215.2 million, resulting in an
aggregate gain on sale of $18.8 million for seven of the communities and an
impairment charge of $0.8 million for one of the communities. The aggregate
carrying value of real estate assets sold was $192.7 million. Net proceeds from
four of the eight communities, equaling $51.5 million, were placed in escrow
with a qualified intermediary in accordance with like-kind exchange income tax
rules and regulations. These proceeds have been fully reinvested in qualified
like-kind property during the required time period. The eight communities sold
were the former Summit Fairways, Summit Turtle Rock, Summit Arboretum, Summit
Las Palmas, Summit Camino Real, Summit San Raphael, Summit Buena Vista and
Summit Belcourt. All of these communities were located outside of our five
markets. With the exception of Summit Fairways, all of these communities were
located in Texas and we have completed our exit of the Texas
market.
  65
  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. These proceeds were fully reinvested in qualified like-kind
property during the required time period. 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 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.
 
 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 (see Note
4).
 
 During
2002, we acquired Summit San Raphael for $17.7 million. We sold Summit San
Raphael during 2003 as part of our strategic exit of the Texas
market.
 
 In
accordance with SFAS 144, net income and gain on disposition of real estate for
communities sold or considered held for sale after December 31, 2001 are
reflected in our consolidated statements of earnings as “discontinued
operations” for all periods presented. In addition, we have separately reflected
the assets and liabilities of these communities as “Net real estate assets -
assets held for sale,” “Other assets - assets held for sale” and “Notes payable
and other liabilities - assets held for sale” in our consolidated balance sheets
for all periods presented.
 
 Below is
a summary of discontinued operations for the ten communities sold during 2004,
the eight communities sold during 2003 and for seven of the eight communities
sold during the year ended December 31, 2002 (in thousands). The eighth
community sold during the year ended December 31, 2002 was considered held for
sale prior to December 31, 2001 and, therefore, is included in income from
continuing operations in accordance with SFAS No. 144. In
addition, the summary below includes Summit Lenox, which was considered held for
sale as of December 31, 2004.
 
 **Year
      Ended December 31,**Property
      revenues:
    
    **2004**
    
    **2003**
    
    **2002**Rental
      revenues
    
    $
    20,020
    
    $
    44,336
    
    $
    68,805Other
      property revenue
    
    
    1,899
    
    
    3,162
    
    
    4,886Total
      property revenues
    
    
    21,919
    
    
    47,498
    
    
    73,691Property
      operating expenses
    
    
    8,904
    
    
    18,747
    
    
    25,828Depreciation
    
    
    3,549
    
    
    9,907
    
    
    16,043Interest
      and amortization
    
    
    300
    
    
    4,133
    
    
    7,092Income
      from discontinued operations before gain on disposition ofdiscontinued
      operations, impairment loss on discontinued operationsAnd
      loss from early extinguishment of debt associated with asset
      sales
    
    
    9,166
    
    
    14,711
    
    
    24,728Gain
      on disposition of discontinued operations
    
    
    166,633
    
    
    18,820
    
    
    64,907Impairment
      loss on discontinued operations
    
    
    (6,807
    )
    
    (759
    )
    
    -Loss
      from early extinguishment of debt associated with asset
    sales
    
    
    -
    
    
    (6,522
    )
    
    (311
    )Total
      discontinued operations
    
    $
    168,992
    
    $
    26,250
    
    $
    89,324
 
 During
the year ended December 31, 2004, we recorded a $6.8 million impairment charge
on Summit Lenox, which was considered held for sale as of December 31, 2004.
Summit Lenox is reflected in discontinued operations as of December 31, 2004.
  66
  **8.
SEGMENT REPORTING**
 
 We
develop, acquire, and operate primarily luxury apartment communities. We
evaluate the performance of each of our communities on an individual basis.
However, 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.” In addition to GAAP measures included in our consolidated
statements of earnings, our chief operating decision makers evaluate the
financial performance of each community using a financial measure entitled
property operating income. Each community’s performance is assessed based on
growth of or decline of property operating income, which is defined as rental
and other property revenues less property operating and maintenance expense.
 
 Below is
a reconciliation of property operating income to income available to common
unitholders:
 
 **Year
      Ended December 31,****2004**
    
    **2003**
    
    **2002**Total
      property revenue
    
    $
    164,805
    
    $
    160,325
    
    $
    173,479Property
      operating and maintenance expense(inclusive
      of real estate taxes and insurance)
    
    
    56,197
    
    
    56,749
    
    
    57,561Property
      operating income
    
    
    108,608
    
    
    103,576
    
    
    115,918Depreciation
      and amortization expense (continuingand
      discontinued operations)
    
    
    46,254
    
    
    40,369
    
    
    40,273Interest
      and amortization of deferred financing costs(continuing
      and discontinued operations)
    
    
    33,232
    
    
    33,245
    
    
    35,791Gain
      on sale of real estate assets (continuing anddiscontinued
      operations)
    
    
    166,633
    
    
    18,893
    
    
    78,738Impairment
      loss on discontinued operations
    
    
    6,807
    
    
    759
    
    
    -Subtotal
      - reportable segment
    
    
    188,948
    
    
    48,096
    
    
    118,592All
      other
    
    
    (35,480
    )
    
    (29,709
    )
    
    (15,081
    )Income
      available to common unitholders
    
    $
    153,468
    
    $
    18,387
    
    $
    103,511
 
 Below is
a reconciliation of total reportable segment revenues and expenses to
consolidated revenues and expenses:
 
 **Year
      Ended December 31,****2004**
    
    **2003**
    
    **2002**Total
      property revenue
    
    $
    164,805
    
    $
    160,325
    
    $
    173,479Total
      property revenue included in discontinued operations
    
    
    (21,919
    )
    
    (47,498
    )
    
    (73,691
    )Total
      property revenue included in continuing operations
    
    
    142,886
    
    
    112,827
    
    
    99,788Management
      fees - third party communities
    
    
    586
    
    
    618
    
    
    787Total
      revenues
    
    $
    143,472
    
    $
    113,445
    
    $
    100,575Total
      property operating expenses
    
    $
    56,197
    
    $
    56,749
    
    $
    57,561Total
      property operating expenses included in discontinued
      operations
    
    
    (8,904
    )
    
    (18,747
    )
    
    (25,828
    )Total
      property operating expenses included in continuing
    operations
    
    
    47,293
    
    
    38,002
    
    
    31,733Depreciation
      and amortization
    
    
    42,705
    
    
    30,462
    
    
    24,230All
      other
    
    
    31,405
    
    
    12,853
    
    
    10,759Total
      expenses
    
    $
    121,403
    
    $
    81,317
    
    $
    66,722
 
  67
  
 **9.
INCOME TAXES**
 
 In
accordance with partnership taxation, each partner is responsible for reporting
its share of taxable income or loss. Accordingly, no provision has been made for
federal, state or local 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 $414.5 million as of December 31, 2004.
 
 The
Management Company is a Taxable REIT Subsidiary. The deferred tax assets and net
operating loss have a full valuation allowance and are immaterial to the
consolidated financial statements.
 
 **10.
NOTES RECEIVABLE FROM EMPLOYEES**
 
 Summit’s
Board of Directors approved, and Summit instituted, a loan program. Issuances of
new loans was terminated as a result of recent legislation. Under the terms of
the loan program, Summit lent amounts to certain of its executive officers and
other qualified employees to (a) finance the purchase of Summit common stock on
the open market at then-current market prices, (b) finance the payment of the
exercise price of one or more stock options to purchase shares of Summit 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 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 common stock which are the
subject of the loans. If the market price of the 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. As of December
31, 2004, Summit had employee loans receivable in the amount of $8.0 million
which are included in Partners' equity in the accompanying consolidated
balance sheets.  These loans were collateralized by 382,661 shares of
Summit’s common stock valued at $12.5 million. Summit had employee loans
receivable in the amount of $17.4 million as of December 31, 2003.
 
 **11.
COMMITMENTS AND CONTINGENCIES**
 
 The
estimated cost to complete the five development projects currently under
construction was $116.0 million as of December 31, 2004. Anticipated
construction completion dates of the projects range from the first quarter of
2005 to the fourth quarter of 2006.
 
 As
collateral for performance on contracts and as credit guarantees to banks and
insurers, we were contingently liable under standby letters of credit in the
aggregate amount of $9.0 million as of December 31, 2004.
 
 On
December 22, 2004, we gave notice to the holder of its Series C Perpetual
Preferred Units of its intention to redeem all 2.2 million of the units on or
about January 21, 2005 for cash of $25.00 per unit. Our notice was irrevocable
and, therefore, the Series C preferred units have been included as a liability
in our consolidated balance sheet as of December 31, 2004. We redeemed the
preferred units on January 21, 2005.
 
 Currently,
we are the developer for one apartment community which is owned by a third
party. Under our development and other related agreements, we have guaranteed
certain aspects relating to the construction, lease-up and management of that
apartment community. We have also committed to fund certain development cost
overruns, if any, and lease-up losses. We have evaluated our commitments and
obligations under these agreements and determined that an accrual or charge is
not necessary as the overall development economics are profitable. We began
marketing and leasing activities in the first quarter of 2005 and believe that
the construction will be completed during the second quarter of 2005. 
Additionally, a former executive officer responsible for the development of this
community entered into a personal guarantee related to the due, prompt and
complete performance of certain specific obligations related to the
development of this property.
  68
  We carry
terrorism insurance on all communities. The terrorism insurance is subject to
coverage limitations, which we believe are commercially reasonable. No assurance
can be given that material losses in excess of insurance proceeds will not occur
in the future, or that insurance coverage for acts of terrorism will be
available in the future.
 
 We are
subject to a variety of claims and suits that arise in the ordinary course of
business, including actions with respect to contracts and cases in which claims
have been brought against us by current and former employees, residents,
independent contractors and vendors. While the resolution of these matters
cannot be predicted with certainty, we believe that the final outcome of such
matters will not be material to our financial position or results of operations.
If we determine that a loss is probable to occur, the estimated amount of that
loss would be recorded in the financial statements.
 
 On
October 6, 2004, a purported class action complaint was filed by an alleged
Summit Stockholder. The defendants named were Camden, Summit and each member of
the board of directors of Summit and alleged that the Merger and the acts of the
Summit directors constituted a breach of the Summit Defendants’ fiduciary duties
to Summit. On March 10, 2005, the parties to the action agreed on and executed a
binding memorandum of understanding setting forth the terms of a settlement of
the litigation under which the defendants admit to no wrongdoing or fault. The
memorandum of understanding contemplates a dismissal of all claims with
prejudice and a release in favor of all defendants of any and all claims related
to the Merger. The memorandum and the settlement will be subject to customary
conditions including, final court approval of the settlement. If conditions are
satisfied, subject to final court approval, the plaintiff’s counsel will seek
and Camden, as successor to Summit, will pay an amount not to exceed in the
aggregate $383,000.
 
 We are a
party to a number of agreements and contracts pursuant to which we may be
obligated to indemnify the other party with respect to certain matters.
Typically, these obligations arise in contracts into which we enter, under which
we customarily agree to hold the other party harmless against certain losses
arising from breaches of representations, warranties and/or covenants related to
such matters as, among others, title to assets, specified environmental matters,
qualification to do business, due organization, non-compliance with restrictive
covenants, laws, rules and regulations, maintenance of insurance and payment of
tax bills due and owing. Additionally, with respect to retail and office lease
agreements we enter into as landlord, we may also indemnify the other party
against damages caused by our willful misconduct or negligence associated with
the operation and management of the building. Although no assurances can be
made, we believe that if we were to incur a loss in any of these matters, such
loss should not have a material effect on our financial condition or results of
operations. Historically, payments made with regard to these agreements have not
had a material effect on our financial condition or results of
operations.
 
 We rent
office space in several locations. Rental expense amounted to $199,000 in 2004,
$306,000 in 2003 and $271,000 in 2002. Future minimum rental payments to be made
for those operating leases that have initial or remaining non-cancelable lease
terms in excess of one year are as follows (in thousands):
 
 
 **Years
      Ending December 31,**
    
    ****2005
    
    $
    1542006
    
    
    1552007
    
    
    1562008
    
    
    1292009
    
    
    101Thereafter
    
    
    59Total
    
    $
    754
 
  69
  Summit
had employment agreements (which were assumed by Camden in the Merger) with two
of its former executive officers, both of whom resigned from such executive
positions, but who remain as employees and have agreed to provide various
services to us from time to time through December 31, 2011. Each employment
agreement entitles the former officers a base salary aggregating up to $2.1
million over the period from July 1, 2001 to December 31, 2011 (beginning with
calendar year 2002, up to $200,000 on an annual basis). Each employment
agreement provided each former officer with the right to participate in our life
insurance plan as well as office space, information systems support and
administrative support for the remainder of each employee’s life, and
participation in our health and dental insurance plans until the last to die of
the employee or such employee’s spouse. Either party can terminate the
employment agreements effective 20 business days after written notice is given.
The full base salary amount due shall be payable through 2011 whether or not the
agreements are terminated earlier in accordance with their terms. Summit amended
the employment agreements, effective July 1, 2004. The amendments provide for
additional payments to the former executives and eliminate the provision to
provide office space, information systems support and administrative support.
The additional annual payments are $100,000 for one of the former executive
officers and $70,000 to the other former executive officer and each is subject
to a yearly increase based on the Consumer Price Index. We have recorded a
one-time non-cash charge of $1.5 million in our results for the year ended
December 31, 2004 which represents the net present value of the additional
payments described above which will be provided to the former executive officers
after their employment term in the agreements.
 
 Summit
had employment agreements with all of its executive officers. The employment
agreement for one of Summit’s executive officers provided for the payment of
severance benefits which generally provided 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. In addition, most of the executive officers had severance agreements
that provided 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 control” or “combination transactions” involving a consolidation or merger.
The benefits payable under the terms of the severance agreements were subject to
reduction by the amount of any severance benefits that may be payable under
applicable employment agreements. All such severance amounts were paid in
connection with the Merger (see Note 21).
 
 Summit
was obligated to redeem each common unit at the request of the holder for cash
equal to the fair market value of one share of Summit’s common stock, except
that we may elect to cause Summit to acquire each common unit presented for
redemption for one share of Summit’s common stock (subject to
adjustment).
 
 **12.
EMPLOYEE BENEFIT PLANS**
 
 ***Profit
Sharing Plan***
 
 Summit
had a defined contribution plan pursuant to Section 401(k) of the Internal
Revenue Code. Employees were eligible to contribute to the plan beginning on the
first day of the second calendar quarter after they are employed. Summit’s
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. Summit made aggregate contributions of $390,000
in 2004, $335,000 in 2003 and $376,000 in 2002.
 
 ***Stock
Option Plan***
 
 In 1994,
Summit established the 1994 Stock Option and Incentive Plan under which 1.0
million shares of Summit’s 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 1.0 million to 3.0 million
shares. The plan provided that the option price shall not be less than the fair
market value of the shares at the date of grant. The options had ten-year lives
and vested in three or five annual installments on the anniversaries of the date
of grant, except for shares granted to Summit’s independent directors, which
vested on the date of grant. Through December 31, 2002, we applied APB Opinion
No. 25 and related interpretations in accounting for Summit’s stock options.
Accordingly, no compensation cost has been recognized for Summit’s stock options
granted during the year ended December 31, 2002. Effective January 1, 2003, we
adopted the fair value recognition provisions of SFAS No. 123 prospectively to
all stock options granted after January 1, 2003 as allowed by SFAS No. 148 (see
Note 3).
  70
  A summary
of changes in Summit’s common stock options for the three years ended December
31, 2004 is as follows:
 
 **Weighted
      Average****Options**
    
    **Exercise
      Price**Outstanding
      at December 31, 2001
    
    
    1,464,607
    
    $
    19.43Granted
      to employees and directors
    
    
    745,000
    
    
    22.01Exercised
    
    
    (121,600
    )
    
    18.44Forfeited
    
    
    (69,075
    )
    
    19.15Outstanding
      at December 31, 2002
    
    
    2,018,932
    
    
    20.45Granted
      to employees and directors
    
    
    35,000
    
    
    20.45Exercised
    
    
    (167,132
    )
    
    20.18Forfeited
    
    
    (108,000
    )
    
    18.20Outstanding
      at December 31, 2003
    
    
    1,778,800
    
    
    20.50Granted
      to employees and directors
    
    
    48,000
    
    
    23.31Exercised
    
    
    (137,083
    )
    
    21.54Forfeited
    
    
    (61,900
    )
    
    24.32Cash
      settled
    
    
    (1,161,072
    )
    
    20.68Outstanding
      at December 31, 2004
    
    
    466,745
    
    $
    19.54
 
 Exercise
prices for options outstanding as of December 31, 2004 ranged from $16.50 to
$24.56 per option. The weighted average remaining contractual life of those
options is 5.6 years.
 
 Options
to purchase 446,000, 1,165,050 and 1,003,733 shares of common stock were
exercisable as of December 31, 2004, 2003 and 2002, respectively. The weighted
average exercise price for the shares exercisable as of December 31, 2004, 2003
and 2002 was $19.30, $19.60 and $19.11, respectively.
 
 The fair
value of options granted in 2004 was $2.76 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 6.53%, expected volatility of
25.0%, risk-free interest rate of 3.45% and expected lives of 5.9
years.
 
 The fair
value of options granted in 2003 was $1.05 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 8.25%, expected volatility of
20.2%, risk-free interest rate of 2.7% and expected lives of 6.1
years.
 
 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.
 
 On
December 17, 2004, Summit’s Board of Directors approved (i) the acceleration of
the vesting of certain stock options held by certain of our executive officers
and (ii) the right to receive a lump sum cash payment in exchange for the
cancellation of certain vested and unvested stock options held by such executive
officers. The unvested options would have become otherwise fully exercisable in
connection with the closing of the Merger with Camden. The cash settlement of
these options was $14.2 million. See the “Stock-Based Compensation” section of
Note 3 above for further information.
 
  71
  In
addition, the stock option and incentive plan provided for the grant of stock,
either restricted or unrestricted, to employees. During the year ended December
31, 2004, Summit issued 40,063 shares of unrestricted stock valued at $881,000
to employees under Summit’s 1994 Stock Option and Incentive Plan. These shares
were issued pursuant to stock award agreements entered into with certain
employees dated February 6, 2002 (the “2002 Stock Grants”) and represent 20% of
the total shares of common stock that could have been received by these
employees under the stock award agreements. During the year ended December 31,
2003, Summit issued 33,342 shares of unrestricted stock valued at $660,000 to
employees under the 2002 Stock Grants. These shares represent 15% of the total
shares of common stock that could have been received by these employees under
the stock award agreements. The remaining shares became fully vested on February
28, 2005 in connection with the Camden merger. All grantees were given the
option to elect to receive cash or a combination of cash or Camden stock in
connection with the accelerated vesting of the 2002 Grants. Summit granted an
additional 12,000 shares of restricted stock to one executive officer under this
plan in 2004. The market value of the restricted stock granted was $275,000, of
which 9,600 shares valued at $250,000 were cash settled in connection with the
merger. Summit granted 1,068 shares of restricted stock under this plan in 2003.
The market value of the restricted stock granted in 2003 was $23,000. Summit
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.
 
 Employees
surrendered 32,549 shares of stock during the year ended December 31, 2004 to
satisfy the personal income tax liability related to stock grants. 
Employees surrendered 12,589 shares of stock during the year ended December 31,
2003 to satisfy the personal income tax liability related to the 2002 Stock
Grants and an additional 14,763 shares during the year ended December 31, 2003
to satisfy the personal income tax liability related to shares of restricted
stock granted prior to January 1, 2003 which vested during the current period.
During 2002, 6,046 shares of restricted stock were surrendered by grantees to
satisfy the income tax liability related to the stock grants.
 On
January 2, 2004, Summit issued 27,982 shares of restricted stock valued at
$658,000 pursuant to its 2001 Performance Stock Award Plan. One-half of these
shares, valued at $329,000, vested on January 2, 2004. One-half of the remaining
shares vested on January 2, 2005 and the remaining one-half of the shares became
exercisable on February 28, 2005, the date of the closing of the Merger. The
grantees were given the option of receiving either cash or a combination of cash
and Camden common shares.
 
 On
December 17, 2004, Summit’s Board of Directors approved (i) the acceleration of
the vesting of certain shares of restricted stock and performance-based stock
awards described above and (ii) the right to receive a lump sum cash payment in
exchange for the cancellation of certain of those shares by certain Summit
executive officers. The unvested restricted stock and performance-based stock
awards would have become otherwise fully vested in connection with the closing
of the Merger. The amount of the cash payout related to these shares of
restricted stock and performance-based stock awards was $3.3 million. See the
“Stock-Based Compensation” section of Note 3 above for further
information.
 
 ***Employee
Stock Purchase Plan***
 
 In 1996,
Summit established a non-qualified employee stock purchase plan (“ESPP”), which
allowed its 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.
 
 There
were 13,933 shares issued under the plan in 2002. The market value of these
shares was $341,000. Through December 31, 2002, we applied APB Opinion No. 25
and related interpretations in accounting for Summit’s stock options and ESPP.
No compensation cost has been recognized for Summit’s stock options granted or
shares issued under the ESPP during the year ended December 31, 2002 in
accordance with APB No. 25. 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 income available to common unitholders and
earnings per common unit had the fair value based method been applied to all
options granted in each year.
  72
  **13.** **PREFERRED
UNITS**
 
 On
September 18, 2003, we redeemed all 3.4 million preferred units of limited
partnership interest designated as 8.95% Series B Cumulative Redeemable
Perpetual Preferred Units for cash in the amount of $25.20 per unit plus all
unpaid distributions through the redemption date. These preferred units were
redeemable for cash, or at Summit’s option, shares of Summit’s 8.95% Series B
Cumulative Redeemable Perpetual Preferred Stock, or a combination of cash and
shares of Summit’s 8.95% Series B Cumulative Redeemable Perpetual Preferred
Stock. Holders of the Series B preferred units had the right to exchange these
preferred units for shares of Summit’s Series B preferred stock on a one-for-one
basis, subject to adjustment: (a) on or after April 29, 2009, (b) if full
quarterly distributions were not made for six quarters, or (c) upon the
occurrence of specified events related to our treatment or the treatment of the
preferred units for federal income tax purposes.  As a
result of the redemption, the excess of the redemption amount over the carrying
amount of the units, which totals approximately $3.0 million in the aggregate,
has reduced income available to common unitholders for the year ended December
31, 2003. This is consistent with the SEC's staff announcement on July 31, 2003
that provided clarification to Emerging Issues Task Force ("EITF") Topic D-42,
"The Effect on the Calculation of Earnings per Share for the Redemption or
Induced Conversion of Preferred Stock." Distributions on the Series B preferred
units were cumulative from the date of original issuance and were 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 $5.5 million during the year ended December 31,
2003 and $7.6 million during the year ended December 31, 2002.
 
 As of
December 31, 2004, we had outstanding 2.2 million preferred units of limited
partnership interest designated as 8.75% Series C Cumulative Redeemable
Perpetual Preferred Units. The preferred units were redeemable for cash at a
redemption price equal to the holder’s capital account. The holder of the Series
C preferred units had the right to exchange these preferred units for shares of
Summit’s Series C preferred stock on a one-for-one basis, subject to adjustment:
(a) on or after September 3, 2009, (b) if full quarterly distributions are not
made for six quarters, (c) upon the occurrence of specified events related to
our treatment or the treatment of the preferred units for federal income tax
purposes, or (d) if the holdings in the Operating Partnership of the Series C
unitholder exceed 18% of the total profits of or capital interest in the
Operating Partnership for a taxable year. Distributions on the Series C
preferred units are cumulative from the date of original issuance and are
payable quarterly at the rate of 8.75% per year of the $25.00 original capital
contribution. We made distributions to the holder of the Series C preferred
units in the aggregate amount of $4.8 million during each of the years ended
December 31, 2004, 2003, and 2002. On December 22, 2004 we notified the Series C
unitholder of our intention to redeem all 2.2 million of the preferred units.
Our notice was irrevocable and, therefore, the Series C Preferred units have
been included as a liability in our consolidated balanced sheet as of December
31, 2004. As a result of the redemption commitment in December, the excess of
the redemption amount over the carrying amount of the units, which totals $1.5
million, reduced income available to common unitholders for the year ended
December 31, 2004. On January 21, 2005, we redeemed all 2.2 million of the
Series C preferred units for $25.00 per unit plus all accrued distributions as
of that date.
 
 **14.** **DERIVATIVE
FINANCIAL INSTRUMENTS**
 
 We are
exposed to capital market risk, such as changes in interest rates. To manage the
volatility relating to interest rate risk, we may enter into interest rate
hedging arrangements from time to time. We generally do not utilize derivative
financial instruments for trading or speculative purposes.
 
 On June
14, 2002, we entered into an interest rate swap with a notional amount of $50.0
million, relating to $50.0 million of 7.20% fixed rate notes issued under our
medium-term note program. Under the interest rate swap agreement, through the
maturity date of August 15, 2007, (a) we have agreed to pay to the counterparty
the interest on a $50.0 million notional amount at a floating interest rate of
three-month LIBOR plus 241.75 basis points, and (b) the counterparty has agreed
to pay to us the interest on the same notional amount at the fixed rate of the
underlying debt obligation. The floating rate as of December 31, 2004 was
4.7075%. The fair value of the interest rate swap was an asset of approximately
$2.5 million as of December 31, 2004. The swap has been designated as a fair
value hedge of the underlying fixed rate debt obligation and has been recorded
in “Other assets” in our consolidated balance sheets. We assume no
ineffectiveness as the interest rate swap meets the short-cut method conditions
required under SFAS No. 133 for fair value hedges of debt instruments.
Accordingly, no gains or losses were recorded in income relative to our
underlying debt and interest rate swap.
  73
  **15.** **COMMON
STOCK REPURCHASE PROGRAM**
 
 Summit
had a common stock repurchase program, originally approved by its Board of
Directors in March 2000, pursuant to which Summit was authorized to purchase up
to an aggregate of $56.0 million of currently issued and outstanding shares of
its common stock. All repurchases have been made on the open market at
prevailing prices or in privately negotiated transactions.
 
 Summit
did not repurchase any shares of its common stock during the year ended December
31, 2004. The following is a summary of stock repurchases under Summit’s common
stock repurchase program (dollars in thousands, except per share amounts):
 
 Number
    
    Value
    
    Average
      Priceof
      Shares
    
    of
      Shares
    
    of
      SharesRepurchased
    
    Repurchased
    
    RepurchasedYear
      ended December 31, 2000
    
    
    279,400
    
    $
    5,533
    
    $
    19.80Year
      ended December 31, 2001
    
    
    8,800
    
    
    197
    
    
    22.39Year
      ended December 31, 2002
    
    
    151,300
    
    
    2,666
    
    
    17.62Year
      ended December 31, 2003
    
    
    809,800
    
    
    15,193
    
    
    18.76Total
      as of December 31, 2003
    
    
    1,249,300
    
    $
    23,589
    
    $
    18.88
 
 Summit
had $32.4 million remaining for authorized repurchases under the program as of
December 31, 2004.
 
 **16.** **DIRECT
PLACEMENT OF COMMON STOCK**
 
 On
December 29, 2003, Summit sold 2.0 million shares of its common stock to certain
investment advisory clients of RREEF America L.L.C. at a price of $23.61 per
share. Net proceeds from the sale of $47.2 million were used for general
corporate purposes, including acquisition and development opportunities and
repayment of outstanding indebtedness. On September 25, 2003, Summit sold 2.3
million shares of its common stock to certain advisory clients of Cohen &
Steers Capital Management, Inc. at a price of $21.81 per share. The net proceeds
from the sale of $50.1 million were used for general corporate purposes,
including the redemption of preferred units, acquisition and development
opportunities and debt reduction. These sales were made pursuant to Summit’s
existing shelf registration statement previously filed with, and declared
effective by, the SEC.
 
 **17.** **SUPPLEMENTAL
CASH FLOW INFORMATION**
 
 Non-cash
investing and financing activities for the years ended December 31, 2004, 2003
and 2002 are as follows:
 
 A.
    On
      May 27, 2004, we acquired Summit Stonecrest by paying $9.6 million in cash
      and assuming a $19.7 million mortgage (which had a fair market value of
      $18.4 million on the date of purchase). On September 2, 2004, we acquired
      Summit Doral Villas by paying $18.6 million in cash and assuming a $22.1
      million mortgage (which had a fair market value of $24.9 million on the
      date of purchase).B.
    We
      sold eight communities during the year ended December 31, 2003. The
      purchaser of one of the communities assumed the related outstanding debt
      balance associated with such community of $23.7 million.C.
    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.D.
    Summit
      granted 74,996 shares of restricted and unrestricted stock valued at $1.8
      million during 2004. There were 32,549 shares of restricted and
      unrestricted stock valued at $622,000 surrendered to satisfy the income
      tax liability of grantees during 2004. Summit granted 34,410 shares of
      restricted and unrestricted stock valued at $683,000 during 2003. There
      were 27,352 shares of restricted and unrestricted stock valued at $460,000
      surrendered to satisfy the income tax liability of grantees during 2003.
      Summit 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.
 
  74
  
 E.
    Summit
      issued 60,881 shares of common stock in exchange for 60,881 common units
      during the year ended December 31, 2004. The value of these shares of
      common stock was $885,000. Summit issued 140,581 shares of common stock in
      exchange for 140,581 common units during the year ended December 31, 2003.
      The value of these shares of common stock was $2.0 million. Summit 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.F.
    We
      accrued distributions payable of $11.8 million as of December 31, 2004,
      $11.7 million as of December 31, 2003 and $10.5 million as of December 31,
      2002.
 
 **18.** **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, 2004 and 2003. 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, 2004 and 2003 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
$652.0 million had an estimated aggregate fair value of $676.3 million as of
December 31, 2004. Fixed rate mortgage debt and fixed rate unsecured notes with
a carrying value of $552.6 million had an estimated aggregate fair value of
$596.4 million as of December 31, 2003. 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 Note 14, “Derivative Financial
Instruments,” was $2.5 million as of December 31, 2004.
  75
  **19.** **GEOGRAPHIC
CONCENTRATION (UNAUDITED)**
 
 Our 44
completed communities (excluding joint venture communities) are located in the
following markets:
 
 **Number
      of**
    
    **Percent**
    
    **Apartment****Apartment**
    
    **of
      Total**
    
    **Homes
      as a %****Market**
    
    **Homes**
    
    **Revenues**
    
    **of
      Portfolio**Washington,
      D.C.
    
    2,882
    
    27.5%
    
    20.9%Atlanta,
      Georgia
    
    3,633
    
    22.6%
    
    26.3%Southeast
      Florida
    
    2,100
    
    19.3%
    
    15.2%Raleigh,
      North Carolina
    
    2,220
    
    12.2%
    
    16.1%Charlotte,
      North Carolina
    
    2,342
    
    13.4%
    
    17.0%Philadelphia,
      Pennsylvania
    
    352
    
    3.2%
    
    2.6%Orlando,
      Florida
    
    270
    
    1.8%
    
    1.9%Total
    
    13,799
    
    100.0%
    
    100.0%
 
 **20.** **QUARTERLY
FINANCIAL INFORMATION (UNAUDITED)**
 
 Quarterly
financial information for the years 2004 and 2003 is as follows (in thousands,
except per unit amounts):
 
 **Year
      Ended December 31, 2004****First**
    
    **Second**
    
    **Third**
    
    **Fourth**Revenues
    
    $
    32,943
    
    $
    34,193
    
    $
    36,689
    
    $
    39,647Income
      (loss) from continuing operations before loss onunconsolidated
      real estate joint ventures
    
    
    1,573
    
    
    1,628
    
    
    957
    
    
    (13,037
    )Income
      from discontinued operations before gain(impairment
      loss) on disposition of discontinuedoperations
    
    
    2,225
    
    
    3,130
    
    
    2,635
    
    
    1,176Gain
      on sale of real estate assets
    
    
    47
    
    
    9,993
    
    
    127,442
    
    
    29,151Impairment
      loss on discontinued operations
    
    
    -
    
    
    -
    
    
    (6,807
    )
    
    -Income
      available to common unitholders
    
    
    2,548
    
    
    13,469
    
    
    122,922
    
    
    14,529Income
      available to common unitholders per unit - basic
    
    
    0.07
    
    
    0.39
    
    
    3.53
    
    
    0.42Income
      available to common unitholders per unit - diluted
    
    
    0.07
    
    
    0.38
    
    
    3.49
    
    
    0.42
 
 **Year
      Ended December 31, 2003****First**
    
    **Second**
    
    **Third**
    
    **Fourth**Revenues
    
    $
    25,899
    
    $
    27,587
    
    $
    29,652
    
    $
    30,307Income
      from continuing operations before loss onunconsolidated
      real estate joint ventures, gain onsale of real estate
      assets and impairment losson discontinued
      operations
    
    
    1,870
    
    
    1,323
    
    
    841
    
    
    1,626Income
      from discontinued operations before gain(impairment
      loss) on disposition of discontinuedoperations and loss
      from early extinguishmentof debt associated with asset sales
    
    
    4,049
    
    
    3,532
    
    
    3,517
    
    
    3,613Gain
      on sale of real estate assets
    
    
    3,136
    
    
    3,122
    
    
    2,119
    
    
    10,516Impairment
      loss on discontinued operations
    
    
    -
    
    
    -
    
    
    -
    
    
    (759
    )Income
      (loss) available to common unitholders
    
    
    5,865
    
    
    3,287
    
    
    (1,995
    )
    
    11,230Income
      (loss) available to common unitholders perper
      unit - basic and diluted (1)
    
    
    0.19
    
    
    0.11
    
    
    (0.07
    )
    
    0.34
 (1) The
total of the four quarterly amounts for these captions does not equal income
available to common unitholders per unit for the year presented. The difference
is due to the use of a weighted average to compute the number of units
outstanding for each quarter and for the year.
  76
 ****
  **21. 
SUBSEQUENT EVENTS**
 
 On
February 28, 2005, Summit was merged with and into Camden Summit Inc. pursuant
to an Agreement and Plan of Merger dated as of October 4, 2004 (the "Merger
Agreement"), as amended. Prior to the effective time of the Merger, Summit was
the sole general partner of the Operating Partnership, and at the effective
time, Camden Summit became the sole general partner of the Operating
Partnership.
 
 Under the
terms of the Merger Agreement, Summit stockholders had the right to elect, on a
share-by-share basis, to receive either $31.20 in cash or 0.6687 of a Camden
common share at the closing of the Merger. These elections were subject to
reallocation so that the aggregate amount of cash issued in the Merger to
Summit's stockholders equaled approximately $436.3 million. In the Merger,
Camden issued approximately 11.8 million common shares to Summit stockholders.
The limited partners in the Operating Partnership were offered, on a
unit-by-unit basis, the opportunity to redeem their partnership units for $31.20
in cash per unit or to remain in the Operating Partnership following the Merger
at a unit valuation equal to 0.6687 of a Camden common share. The limited
partner elections resulted in the redemption of 0.7 million partnership units
for cash, for an aggregate of $21.7 million, and issuing 1.8 million partnership
units.
 
 Further
effective on February 28, 2005, the Second Amended and Restated Limited
Partnership Agreement of the Operating Partnership (the "Amended Partnership
Agreement"), was approved and adopted and an Amendment to the Certificate of
Limited Partnership of the Operating Partnership was filed with the Secretary of
State of the State of Delaware changing the name of the Operating Partnership to
"Camden Summit Partnership, L.P." The rights of holders of units of limited
partnership interest remain unchanged in a number of respects as a result of the
Merger and the approval and adoption of the Amended Partnership Agreement.
However, certain rights relating to such units were modified.
 
 The
consummation of the Merger effected a change in control of the Operating
Partnership. Prior to the effective time of Merger, Summit was the general
partner of the Operating Partnership and held 348,086 general partner units,
representing a 1% general partnership interest, and 31,117,541 limited partner
units, representing an 89.4% limited partnership interest. The remaining
3,343,004 limited partner units were held by the outside limited partners. After
the Merger, Camden Summit is the general partner of the Operating Partnership
and holds 232,765.108 general partner units, representing a 1% general
partnership interest, and 20,808,299.667 limited partner units, representing a
91.2% limited partnership interest. The remaining 1,769,281 units, representing
a 7.8% limited partner interest, are held by the outside limited
partners.
 
 In
connection with the Merger, we repaid our secured credit facility, which had an
outstanding balance of $188.5 million at the date of repayment, using proceeds
received from a $500 million intercompany line of credit from Camden Summit.
This line of credit bears interest at 6%, has a ten-year term and is secured by
the same eleven communities which secured the credit facility. Additional
amounts funded by this intercompany line of credit in connection with the merger
were $28.0 million of compensation costs paid to employees of Summit, the
Management Company and the Construction Company (consisting primarily of
retention bonuses, severance payments, and amounts due under the 2004 long-term
incentive compensation program), $9.6 million paid to a financial services
institution which acted as our financial advisor with respect to the Merger
transaction and $2.5 million paid as a prepayment penalty under the secured
credit facility.
 
 On
January 21, 2005, we redeemed all 2.2 million of our Series C Cumulative
Redeemable Perpetual Preferred Units for $25.00 per unit plus accrued
distributions as of that date (see Note 13).
 
 
   77
   
 **SCHEDULE
III**
 
 **CAMDEN
SUMMIT PARTNERSHIP, L.P.**
 **REAL
ESTATE AND ACCUMULATED DEPRECIATION**
 **December
31, 2004**
 **(Dollars
in thousands)**
 
 Initial
      Costs
    Costs
    Gross
      Amount at WhichCapitalized
    Carried
      at Close of PeriodBuildings
    Subsequent
    
    BuildingsRelated
    
    and
    to
    
    and
    
    Accumulated
    Date
      of
    DateApartments
    Encumbrances
    Land
    Improvements(a)
    Acquisition
    Land
    Improvements(a)
    Total
      (b)
    Depreciation
    Construction
    AcquiredCharlotte
      Cotton Mills
    $            
      -
    $
      3,028
    $       
      19,946
    $            
       330
    $         
       3,028
    $       
       20,276
    $      
       23,304
    $ 
       (50)
    2002
      (g)
    11/04Reunion
      Park by Summit I
    -
    991
    -
    13,893
    1,003
    13,881
    14,884
    (2,044)
    6/99-9/00
    4/99Reunion
      Park by Summit II
    -
    618
    -
    9,657
    1,383
    8,892
    10,275
    (327)
    12/02-6/04
    4/99Summit
      Ashburn Farm
    16,477
    2,438
    -
    12,552
    2,438
    12,552
    14,990
    (1,807)
    2/99-9/00
    7/98Summit
      Aventura
    38,927
    6,367
    -
    26,187
    5,702
    26,852
    32,554
    (8,071)
    6/94-12/95
    12/93Summit
      Ballantyne
    (c)
    3,328
    -
    24,377
    3,347
    24,358
    27,705
    (5,804)
    7/96-12/98
    12/95Summit
      Brickell
    -
    6,765
    52,432
    1,471
    6,766
    53,902
    60,668
    (2,725)
    2003
      (g)
    5/03Summit
      Brookwood
    (e)
    10,600
    -
    34,936
    15,344
    30,192
    45,536
    (2,379)
    10/00-12/02
    12/99Summit
      Club at Dunwoody
    (c)
    2,934
    24,510
    790
    2,934
    25,501
    28,435
    (5,354)
    1997
      (g)
    5/98Summit
      Crest
    27,500
    1,211
    -
    31,438
    2,532
    30,117
    32,649
    (4,208)
    10/99-9/01
    9/97Summit
      Deer Creek
    -
    3,537
    -
    19,250
    3,846
    18,941
    22,787
    (3,034)
    2/99-6/00
    1/98Summit
      Doral
    30,528
    3,099
    -
    21,046
    3,136
    21,009
    24,145
    (3,775)
    12/97-11/99
    12/96Summit
      Doral Villas
    22,047
    10,357
    32,468
    95
    10,357
    32,563
    42,920
    (320)
    2000
      (g)
    9/04Summit
      Fair Lakes
    48,340
    9,521
    -
    38,943
    9,557
    38,907
    48,464
    (7,239)
    6/97-8/99
    12/96Summit
      Fairview
    -
    404
    -
    6,639
    537
    6,506
    7,043
    (4,292)
    3/82-3/83
    3/82Summit
      Fallsgrove
    -
    22,616
    31,023
    31
    22,616
    31,054
    53,670
    (222)
    2004
      (g)
    10/04Summit
      Foxcroft
    6,900
    925
    3,797
    1,393
    925
    5,190
    6,115
    (2,246)
    1979
      (g)
    5/95Summit
      Governor's Village
    (e)
    1,622
    -
    15,884
    1,643
    15,863
    17,506
    (3,263)
    8/97-12/98
    7/97Summit
      Grandview
    (e)
    2,527
    -
    48,926
    2,684
    48,769
    51,453
    (7,409)
    7/98-12/00
    3/98Summit
      Grand Parc
    -
    7,700
    -
    37,128
    8,512
    36,316
    44,828
    (2,360)
    4/00-12/02
    6/99Summit
      Hunter's Creek
    -
    2,193
    -
    18,806
    2,195
    18,804
    20,999
    (3,035)
    3/99-3/00
    11/98Summit
      Lake
    (e)
    1,712
    -
    29,571
    2,511
    28,772
    31,283
    (6,256)
    9/96-1/99
    4/96Summit
      Lansdowne
    (e)
    26,767
    70,026
    407
    26,766
    70,434
    97,200
    (2,153)
    2002
      (g)
    12/03Summit
      Largo
    (c)
    3,074
    -
    15,513
    3,077
    15,510
    18,587
    (2,596)
    10/98-3/00
    10/98Summit
      Lenox (h)
    -
    10,800
    22,997
    4,592
    11,157
    27,232
    38,389
    (7,038)
    1965
      (g)
    7/98Summit
      Midtown
    -
    9,253
    34,796
    107
    10,113
    34,043
    44,156
    (262)
    2002
      (g)
    9/04Summit
      on the River
    (c)
    3,212
    -
    22,595
    3,212
    22,595
    25,807
    (6,080)
    8/95-6/97
    10/94Summit
      Overlook
    22,543
    2,376
    -
    26,507
    4,091
    24,792
    28,883
    (3,294)
    1/00-12/01
    2/99Summit
      Peachtree City
    (e)
    3,453
    -
    29,914
    4,476
    28,891
    33,367
    (3,668)
    2/00-9/01
    4/98Summit
      Plantation
    (c)
    7,440
    18,485
    18,765
    7,440
    37,250
    44,690
    (9,407)
    1/94-11/97
    4/96Summit
      Portofino
    (e)
    3,864
    24,504
    1,533
    3,864
    26,037
    29,901
    (6,480)
    1995
      (g)
    1/97Summit
      Roosevelt
    -
    10,100
    -
    36,176
    13,546
    32,730
    46,276
    (1,695)
    12/01-3/03
    1/01Summit
      Russett (i)
    50,000
    5,723
    -
    29,076
    5,723
    29,076
    34,799
    (5,940)
    7/95-6/00
    11/94Summit
      Sedgebrook
    (e)
    2,392
    -
    22,558
    2,478
    22,472
    24,950
    (5,041)
    6/96-5/99
    1/96
 
  78
  
 **SCHEDULE
III - Continued**
 
 **CAMDEN
SUMMIT PARTNERSHIP, L.P.**
 **REAL
ESTATE AND ACCUMULATED DEPRECIATION**
 **December
31, 2004**
 **(Dollars
in thousands)**
 
 Initial
      Costs
    Costs
    Gross
      Amount at WhichCapitalized
    Carried
      at Close of PeriodBuildings
    Subsequent
    
    BuildingsRelated
    
    And
    To
    
    And
    
    Accumulated
    Date
      of
    DateApartments
    Encumbrances
    Land
    Improvements(a)
    Acquisition
    Land
    Improvements(a)
    Total(b)
    Depreciation
    Construction
    AcquiredSummit
      Shiloh (i)
    (e)
    1,592
    12,125
    4,192
    2,125
    15,784
    17,909
    (2,306)
    10/99(g)
    8/00Summit
      Silo Creek
    -
    10,500
    -
    28,547
    13,801
    25,246
    39,047
    (1,149)
    5/02-3/04
    12/01Summit
      Simsbury
    (f)
    650
    4,570
    1,075
    650
    5,645
    6,295
    (2,263)
    1985
      (g)
    5/95Summit
      South End Square
    25,242
    6,957
    25,968
    183
    6,957
    26,151
    33,108
    (368)
    2003
      (g)
    6/04Summit
      St. Clair
    (c)
    3,024
    24,040
    1,235
    3,024
    25,275
    28,299
    (5,528)
    1997
      (g)
    3/98Summit
      Stockbridge
    -
    1,800
    -
    19,703
    4,185
    17,318
    21,503
    (2,291)
    12/01-9/03
    7/01Summit
      Stonecrest
    19,620
    4,529
    22,923
    105
    4,529
    23,028
    27,557
    (335)
    2001
      (g)
    5/04Summit
      Sweetwater
    (e)
    3,013
    18,627
    796
    3,012
    19,424
    22,436
    (3,101)
    12/99(g)
    8/00Summit
      Touchstone
    (f)
    766
    5,568
    1,096
    766
    6,664
    7,430
    (2,616)
    1986
      (g)
    5/95Summit
      Valleybrook
    -
    7,300
    -
    30,693
    8979
    29,014
    37,993
    (2,675)
    10/00-12/02
    9/00Summit
      Westwood
    (c)
    1,989
    -
    23,012
    2,042
    22,959
    25,001
    (4,344)
    10/97-5/99
    9/97Total
    
    $       
      235,067
    $      
       448,805
    $        
      711,924
    $       
      259,009
    $    
      1,136,787
    $    
      1,395,796
    $
      (156,850)
 
 (a)
    Includes
      buildings, building improvements, furniture, fixtures and
      equipment.(b)
    The
      aggregate cost for federal income tax purposes was $826.3 million as of
      December 31, 2004. The amounts reflected above represent amounts for real
      estate communities only. Depreciable lives for the assets range from 5 to
      40 years(c)
    Collateral
      for two fixed rate mortgages which had an aggregate balance of $173.0
      million as of December 31, 2004.(d)
    Community
      was held for sale as of December 31, 2004.(e)
    Collateral
      for our secured credit facility which had balance of $95.9 million as of
      December 31, 2004.(f)
    Collateral
      for a fixed rate mortgage which had a balance of $7.8 million as of
      December 31, 2004.(g)
    Property
      purchased; date reflects year construction was
  completed.(h)
    Included
      in the costs capitalized subsequent to acquisition column for Summit Lenox
      is an impairment charge of $6.8 million
      which
      was recorded during 2004.(i)
    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 the first phase to completion of the second
phase
 
 
   79
   
 **CAMDEN
      SUMMIT PARTNERSHIP, L.P.****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,****2004**
    
    **2003**
    
    **2002**Real
      estate assets (a):Balance
      at beginning of year
    
    $
    1,275,803
    
    $
    1,263,238
    
    $
    1,266,068Acquisitions
    
    
    224,186
    
    
    155,215
    
    
    17,866Improvements
    
    
    10,041
    
    
    9,890
    
    
    6,417Developments
    
    
    49,152
    
    
    69,612
    
    
    130,291Impairment
      of asset held for sale
    
    
    (6,807
    )
    
    -
    
    
    -Disposition
      of property
    
    
    (156,579
    )
    
    (222,152
    )
    
    (157,404
    )119,993
    
    
    12,565
    
    
    (2,830
    )Balance
      at end of year
    
    $
    1,395,796
    
    $
    1,275,803
    
    $
    1,263,238Accumulated
      depreciation (a):Balance
      at beginning of year
    
    $
    169,003
    
    $
    159,536
    
    $
    155,242Depreciation
    
    
    39,409
    
    
    38,503
    
    
    39,282Disposition
      of property
    
    
    (51,562
    )
    
    (29,036
    )
    
    (34,988
    )Balance
      at end of year
    
    $
    156,850
    
    $
    169,003
    
    $
    159,536
 
 (a)  Includes
only apartment communities and does not include fixed assets used in property
development, construction and management
 of
apartment communities.
 
 80