Edgar Filing: SUMMIT PROPERTIES INC

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2000 Commission file number
1-12792

SUMMIT PROPERTIES INC.
(Exact name of registrant as specified in its charter)

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MARYLAND 56-1857807
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

309 EAST MOREHEAD STREET
SUITE 200
CHARLOTTE, NORTH CAROLINA 28202
(Address of principal executive offices) (Zip Code)

(704) 334-3000
(Registrant's telephone number, including area code)

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SECURITIES REGISTERED PURSUANT TO SECTION 12(b) of the Act:

COMMON STOCK, PAR VALUE $.01 PER SHARE NEW YORK STOCK EXCHANGE
PREFERRED STOCK PURCHASE RIGHTS NEW YORK STOCK EXCHANGE
(Title of each class) (Name of each exchange on which registered)

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE

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

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. [ ]

The aggregate market value of the voting stock held by nonaffiliates of the
Registrant, as of February 27, 2001 was $590,743,788.

The number of shares of the Registrant's Common Stock, par value $.01 per
share, outstanding as of February 27, 2001 was 26,485,819.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the 2000 Proxy Statement for the Registrant's 2001 Annual
Meeting of Stockholders, to be filed with the Securities and Exchange Commission
within 120 days after the end of the year covered by this Form 10-K, are
incorporated by reference herein as portions of Part III of this Form 10-K.

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TABLE OF CONTENTS

ITEM PAGE
---- ----

PART I

1. Business.................................................... 3

2. Properties.................................................. 9

3. Legal Proceedings........................................... 12

4. Submission of Matters to a Vote of Security Holders......... 12

PART II

5. Market for Registrant's Common Equity and Related
Stockholder Matters....................................... 13

6. Selected Financial Data..................................... 14

7. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 17

7A. Quantitative and Qualitative Disclosures about Market
Risk...................................................... 37

8. Financial Statements and Supplementary Data................. 37

9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.................................. 37

PART III

10. Directors and Executive Officers of Registrant.............. 38

11. Executive Compensation...................................... 38

12. Security Ownership of Certain Beneficial Owners and
Management................................................ 38

13. Certain Relationships and Related Transactions.............. 38

PART IV

14. Exhibits, Financial Statement Schedules and Reports on Form
8-K....................................................... 39

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PART I

This Form 10-K contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. The Company's 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 the section entitled
"Forward-Looking Statements" on page 17 and elsewhere in this Form 10-K.

ITEM 1. BUSINESS

THE COMPANY

Summit Properties Inc. (the "Company") is an established leader in the
development, acquisition, and management of luxury apartment communities. It has
received numerous national awards including the "National Award for Customer
Service" from CEL & Associates in 1998, 1999 and 2000. As of December 31, 2000,
the Company owned or held an ownership interest in 64 completed Communities
comprised of 18,706 apartment homes with an additional 2,469 apartment homes
under construction in seven new Communities (collectively, the "Communities").
The Company is a fully integrated organization with multifamily development,
construction, acquisition and management expertise. As of December 31, 2000, the
Company had approximately 600 employees.

The Company's business is conducted principally through Summit Properties
Partnership, L.P., a Delaware limited partnership (the "Operating Partnership"),
of which the Company is the sole general partner and an 85.8% economic owner as
of December 31, 2000. The Company's property management, certain construction,
and other businesses are conducted through its subsidiaries, Summit Management
Company, a Maryland corporation (the "Management Company"), and Summit Apartment
Builders, Inc., a Florida corporation (the "Construction Company"). Except where
otherwise explicitly noted, the "Company" shall collectively hereinafter refer
to Summit Properties Inc. and its subsidiaries, including the Operating
Partnership, the Management Company and the Construction Company.

The Company, operating throughout the Southeast, Southwest, Midwest, and
Mid-Atlantic states, has chosen to focus its current efforts in its seven
largest core markets with a particular focus on the high growth areas of
Washington, DC, Southeast Florida and Atlanta. In keeping with this strategy,
the Company has established city operating offices in each of these high growth
markets. These city offices have direct responsibility for development,
construction, and management of the Communities in their geographic markets. The
Company believes that this decentralized structure provides it with superior
local knowledge and experience in each market.

OPERATING PHILOSOPHY

The Company views customer service as its driving force and seeks to provide its
residents with experienced, well-trained and attentive management staffs.
Utilizing a hiring process known as "Success By Selection", the Company distills
potential candidates down to those who believe in superior customer service.
Once hired, every associate enters into a comprehensive training program called
"Ask for Action". This training program ensures that all associates have a clear
understanding of their job responsibilities, the high standards of performance
expected of them, and the importance of excellent customer service. The Company
has also developed five classes focusing on excellence in property management to
provide on-going training and to further enhance associate productivity. The
Company believes that this training regimen, along with the "Success by
Selection" hiring process, is providing a higher quality management staff,
evidenced by higher resident satisfaction at the Communities and lower associate
turnover.

The Company has long stressed the importance of developing strong customer
relationships with its residents. The Company's commitment to resident
satisfaction is evidenced by its "Peak Services". Among the many Peak Services
are: a 30 Day Happiness Guarantee where residents can move from the Company's
property without early lease termination charges if they are not satisfied with
their home during the first 30 days; Same Day Maintenance Service and Emergency
Maintenance available 24 hours a day; Business Services; Package

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Acceptance and Delivery; Loaner Living Accessories where the Company provides
convenience tools for the residents' use; No Nonsense Transfer Policy where
residents can easily move from one Summit Community to another without incurring
many of the additional fees normally associated with such a move; and a free
current run Video Library.

The Company believes that this commitment to service excellence, in addition to
the upscale features of its Communities and premium locations in high growth
markets, has allowed the Company to charge market-leading rents to its residents
while maintaining high occupancy rates.

GROWTH STRATEGIES

In addition to Superior Customer Service, the Company has identified four other
strategies to create long term value for its stockholders: Efficient Capital
Management; Strategic Market Selection; Decentralized, Fully Integrated
Operating Teams; and Sound Risk Management.

Efficient Capital Management. The Company has determined that currently its
most efficient source of capital is contained within its existing portfolio of
properties. By disposing of older communities in less desirable locations, and
redeploying that capital in new communities in larger high growth markets, the
Company is able to create value in two ways. First, the Company has historically
realized higher cash flows, on average, from the newer communities where this
"recycled capital" has been utilized as compared to the older communities which
have provided the source of this capital. Secondly, this recycling has reduced
the average age of the Company's portfolio to approximately six years. This
reduction in average age of the Company's portfolio has resulted in lower
maintenance costs and has allowed the Company to better adapt its product to
constantly changing market demands in terms of both size and amenities. Although
the Company anticipates continuing this strategy of reinvesting capital obtained
from dispositions into the development of new communities, there can be no
assurance that the Company will be able to complete its disposition strategy or
that assets identified for sale can be sold on terms that are satisfactory to
the Company or at all.

Strategic Market Selection. The Company's strategy is to be the market-leading
operator of luxury apartment homes in a carefully selected group of markets. The
Company seeks to maximize growth by focusing its operations in a select number
of markets throughout the Southeast, Southwest, and Mid-Atlantic states with
particular emphasis on the large high growth markets of Washington, DC, South
Florida and Atlanta. These markets have typically experienced stronger upswings
and recovered from downturns more quickly. The Company believes that by
operating in these markets it has a better opportunity to maximize the economic
return from its Communities by optimizing the trade-off between increasing
rental rates and maintaining high occupancy levels. Consistent with this
strategy, the Company is typically among the rental rate leaders in its markets.
The Company's affluent resident profile, well-trained property management staff,
and management information systems support this strategy.

The Company is currently in the process of exiting its smaller markets and
reinvesting the sale proceeds into new communities in its larger core markets.
The Company believes this strategy will improve its financial performance by
improving economies of scale, concentrating market knowledge, and increasing
brand awareness.

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For the year ended December 31, 2000, average rent per occupied apartment home
for the Company's fully stabilized Communities increased 2.4%, and property
operating income from these Communities increased 5.5% for the same period.
Average occupancy, rental revenue, and property operating income levels for the
Company's fully stabilized Communities are as follows for the years set forth
below:

YEAR ENDED DECEMBER 31,
-----------------------
2000 1999 1998
----- ----- -----

Average Physical Occupancy(1)............................... 94.6% 93.9% 93.3%
Average Monthly Rental Revenue per Occupied Apartment Home
(1)....................................................... $886 $831 $763
Average Monthly Rental Revenue per Apartment Home Growth
Rate...................................................... 2.4% 2.2% 3.3%
Property Operating Income Growth Rate(2).................... 5.5% 6.0% 3.6%
Number of Communities(1).................................... 37 36 39

(1) The Company also has two acquisition Communities, fourteen stabilized
development Communities (i.e., stabilized after January 1, 1998) and
fourteen Communities in lease-up. In 2000, average physical occupancy rates
were 92.8% and 94.0% and average monthly rental revenue were $914 and $951
per occupied apartment home for acquisition Communities and stabilized
development Communities, respectively. Annual averages for Communities in
lease-up are not meaningful as the Communities were in various stages of
construction/lease-up during the year.

(2) Property Operating Income is defined as total rental and other property
revenues less property operating and maintenance expense (excluding
depreciation and amortization).

Decentralized, Fully Integrated Operating Teams. The Company has successfully
integrated property management, development, and construction on a local level
through its "City Team" concept. Each of the City Teams includes a developer
adept at visualizing market opportunities, construction personnel who specialize
in apartment buildings, and management personnel experienced in the marketing,
leasing and maintenance of high-end apartment communities. Working within well
understood corporate guidelines under the direction of senior management at the
Company's headquarters, these teams operate as autonomous units in each of our
major markets. As a result, the Company believes that it will be able to select
the best sites in its markets, build high quality communities both in terms of
architecture and construction techniques, and operate the communities to
generate market leading rents while maintaining high occupancies. The Company
believes this integrated approach will create premium quality communities with
increased customer satisfaction.

Sound Risk Management. The Company practices sound risk management with respect
to its portfolio of properties. Potential developments or acquisitions proposed
by the various City Teams are vigorously reviewed by a panel of senior
management of the Company prior to construction starting or an acquisition
occurring. Decisions are based on maintaining a diverse portfolio, whereby the
economic factors of the Company's aggregate property pool mitigate the risks of
placing too much of the Company's portfolio in one or two markets. The Company
believes that this combination of locally generated development opportunities,
together with centralized review and assessment relative to how these local
opportunities fit into the Company's overall growth strategies, produces
superior product with manageable risk.

DEVELOPMENT PROGRAM

Through its City Teams, the Company maintains an active development program
which provides a predictable and consistent stream of new revenues. Focusing on
development allows the Company to build desirable properties that generate
premium rents. It also provides returns which generally exceed those achieved on
acquisitions.

In 2000, the Company completed development of eight Communities, adding 1,696
apartment homes to the Company's portfolio. These eight Communities represent a
total investment of approximately $161.2 million. The Communities completed in
2000 are Summit New Albany II located in Columbus, Ohio; Summit Largo located in
Largo, Maryland; Summit Hunter's Creek located in Orlando, Florida; Summit Deer
Creek located in Atlanta, Georgia; Summit Ashburn Farm located in Loudon County,
Virginia; Summit Russett II located

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in Laurel, Maryland; Summit Grandview located in Charlotte, North Carolina and
Reunion Park by Summit located in Raleigh, North Carolina.

The Company utilizes the Construction Company in addition to third-party general
contractors to build its new Communities. Of the 2,469 apartment homes in
development at December 31, 2000, 95.8% are being built by the Construction
Company, which has resulted in higher quality construction, improved timeliness
and cost savings.

As of December 31, 2000, the Company had seven apartment Communities under
construction (four of which are also in lease-up) containing 2,469 apartment
homes, with a total budgeted cost of approximately $237.1 million.

The following provides summary information regarding the Communities under
construction as of December 31, 2000 (dollars in thousands):

TOTAL ESTIMATED ANTICIPATED
APARTMENT ESTIMATED COST TO COST TO CONSTRUCTION
COMMUNITY HOMES COSTS DATE COMPLETE COMPLETION
--------- --------- --------- -------- --------- ------------

Summit Deerfield -- Cincinnati,
OH(1)................................ 498 $ 41,500 $ 35,210 $ 6,290 Q3 2001
Summit Overlook -- Raleigh, NC......... 320 25,500 14,314 11,186 Q3 2001
Summit Crest -- Raleigh, NC............ 438 30,700 21,148 9,552 Q3 2001
Summit Peachtree City -- Atlanta, GA... 397 31,500 24,008 7,492 Q4 2001
Summit Grand Parc -- Washington, DC.... 105 29,400 13,038 16,362 Q1 2002
Summit Brookwood -- Atlanta, GA........ 359 41,500 2,208 39,292 Q4 2002
Summit Valley Brook -- Philadelphia,
PA................................... 352 37,000 9,507 27,493 Q1 2003
Other development and construction
costs(2)............................. -- -- 43,149 --
----- -------- -------- --------
2,469 $237,100 $162,582 $117,667
===== ======== ======== ========

(1) Summit Deerfield is under contract for sale expected in 2001 as part of the
Company's strategy to exit the Midwest markets. The Company does not expect
to realize a loss upon the sale of Summit Deerfield.

(2) Consists primarily of land held for development and other predevelopment
costs.

The Company is optimistic about the operating prospects of the Communities under
construction. However, as with any development project, there are uncertainties
and risks associated with the development of the Communities described above.
While the Company has prepared development budgets and has estimated completion
and stabilization target dates based on what it believes are reasonable
assumptions in light of current conditions, there can be no assurance that
actual costs will not exceed current budgets or that the Company will not
experience construction delays due to the unavailability of materials, weather
conditions or other events. Similarly, market conditions at the time these
Communities become available for leasing will affect rental rates and the period
of time necessary to achieve stabilization, and could result in achieving
stabilization later than currently anticipated. See "Management's Discussions
and Analysis of Financial Condition and Results of Operations -- Development
Activity" for a discussion of uncertainties and risks associated with the
Company and development activity.

ACQUISITION AND DISPOSITION PROGRAM

While the Company has emphasized development of new apartment communities as one
of its strategies for growth, it also has the expertise to capitalize on
expansion opportunities through the strategic acquisition of properties that
meet the Company's investment criteria. The Company has acquired more than 9,102
apartment homes since its formation in 1994. Acquisitions have generally been
concentrated in the Company's core markets in order to further strengthen brand
identity and operational efficiencies. The Company's extensive local-market
knowledge and development expertise give it an advantage in identifying and
underwriting acquisition opportunities which the Company believes will create
shareholder value. In 2000, elevated purchase prices for acquisitions in the
open market would have generally resulted in economic performance for those
assets that were unattractive when compared to the potential economic
performance of the Company's development program. As a result, the Company made
no such open market acquisitions in

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2000. However, this pricing dynamic also created an opportunity for the Company
to increase its disposition activity, thereby enhancing its Capital Recycling
Program, which is dependent on the execution of attractively priced
dispositions.

During 2000, the Company disposed of seven communities for an aggregate sales
price of approximately $104 million. For the most part, these communities were
located outside the Company's core markets and, as such, did not fit into the
Company's strategic market selection strategy. These proceeds provided the basis
for the Company's Capital Recycling Program.

Anticipating an increase in the pricing of open market acquisitions in some of
its core markets, the Company entered into separate joint ventures during 1998
with the sponsor of two apartment communities to be developed in Atlanta. The
Company owned a 49% interest in each of these two joint ventures. The terms of
these joint ventures afforded the Company the future opportunity to obtain full
ownership of each of these communities at attractive prices. On August 1, 2000,
the Company purchased its joint venture partner's interest in each of these two
communities, Summit Shiloh (182 apartment homes) and Summit Sweetwater (308
apartment homes), for an aggregate purchase price of approximately $36 million.

COMPANY HISTORY

The Company was formed in 1993 to continue and expand the multifamily
development, construction, acquisition, operation, management and leasing
businesses of the predecessor entities through which the Company historically
conducted operations prior to its initial public offering (the "Summit
Entities"). The Summit Entities were founded by the Company's Co-Chairman of the
Board, William B. McGuire, Jr., in 1972. In 1981, William F. Paulsen joined the
predecessor to the Company as Chief Executive Officer and shepherded the growth
of its multifamily development and management activities. The Company organized
itself as a real estate investment trust (a "REIT") and completed its initial
public offering of common stock on February 15, 1994.

The Company, a Maryland corporation, is a self-administered and self-managed
REIT. The Company's Common Stock is listed on the New York Stock Exchange (the
"NYSE") under the symbol "SMT". The executive offices of the Company are located
at 309 East Morehead Street, Suite 200, Charlotte, North Carolina 28202. The
Company's telephone number is (704) 334-3000 and its facsimile number is (704)
333-8340. The Company also maintains offices in Atlanta, Georgia; Bethesda,
Maryland; Ft. Lauderdale, Florida; Dallas, Texas and Raleigh, North Carolina.

2000 SIGNIFICANT EVENTS

On March 12, 2000, the Company adopted a new common stock repurchase program
pursuant to which the Company is authorized to purchase up to an aggregate of
$25 million of outstanding common stock, par value $.01 per share, of the
Company ("Common Stock"). During 2000, the Company repurchased 279,400 shares of
Common Stock under the repurchase program for an aggregate purchase price,
including commissions of approximately $5.5 million, or an average price of
$19.80 per share.

THE OPERATING PARTNERSHIP

The Operating Partnership was formed on January 14, 1994, and is the entity
through which principally all of the Company's business is conducted. The
Company controls the Operating Partnership as the sole general partner and as
the holder of 85.8% of the common units of limited partnership interest in the
Operating Partnership ("Common Units") as of December 31, 2000. As the sole
general partner of the Operating Partnership, the Company has the exclusive
power to manage and conduct the business of the Operating

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Partnership, subject to certain voting rights of holders of the preferred units
of limited partnership interest discussed below. Subject to the rights and
preferences of the outstanding preferred units, the Company's general and
limited partnership interests in the Operating Partnership as of December 31,
2000, entitle it to share in 85.8% of the cash distributions from, and in the
profits and losses of, the Operating Partnership.

Each Common Unit may be redeemed by the holder thereof for cash equal to the
fair market value of a share of the Company's Common Stock or, at the option of
the Company, an equivalent number of shares of Common Stock (subject to
adjustment). The Company presently determines on a case-by-case basis whether it
will elect to issue shares of Common Stock in connection with a redemption of
Common Units rather than paying cash. With each redemption of Common Units for
Common Stock, the Company's percentage ownership interest in the Operating
Partnership will increase. Similarly, when the Company acquires a share of
Common Stock under its common stock repurchase program or otherwise, it
simultaneously disposes of one Common Unit of the Operating Partnership. In
addition, whenever the Company issues shares of Common Stock for cash, the
Company will contribute any net proceeds therefrom to the Operating Partnership
and the Operating Partnership will issue an equivalent number of Common Units to
the Company.

During 1999, the Operating Partnership issued 3.4 million Series B and 2.2
million Series C Cumulative Perpetual Preferred Units.

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

COMPETITION

Within each market there are numerous housing alternatives that compete with the
Company's Communities in attracting residents. The Company's Communities compete
directly with other rental apartments, condominiums and single-family homes that
are available for rent or sale in the markets in which the Company's Communities
are located. In addition, various entities, including insurance companies,
pension and investment funds, partnerships, investment companies and other
multifamily REITs, compete with the Company for the acquisition of existing
properties and the development of new properties, some of which may have greater
resources than the Company. The Company competes against these firms and other
housing alternatives by stressing its customer service, market presence and
experience. Although the Company believes that it has certain competitive
advantages in its markets, competitive residential housing in a particular area
could adversely affect the Company's ability to lease apartment homes and to
increase or maintain its rents.

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 such 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 such
parties in connection with the contamination, which may be substantial. The
presence of such substances, or the failure to properly remediate the
contamination, may adversely affect the owner's ability to borrow against, sell
or rent such 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 the Company's Communities and other real
properties, the Company may be potentially liable for such damages and costs.

Certain federal, state and local laws, ordinances and regulations govern the
removal, encapsulation and disturbance of asbestos-containing materials, or
ACMs, when such materials are in poor condition or in the event of construction,
remodeling, renovation or demolition of a building. Such law, 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
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ownership, operation, management and development of the Company's Communities
and other real properties, the Company may be potentially liable for such costs.

The Company's assessments of its Communities have not revealed any environmental
liability that the Company believes would have a material adverse effect on its
business, assets, financial condition or results of operations, nor is the
Company aware of any other environmental conditions which would have such a
material adverse effect. It is possible, however, that the Company's assessments
do not reveal all environmental liabilities or that there are material
environmental liabilities of which the Company is 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
the Company's Communities will not be affected by tenants, the condition of land
or operations in the vicinity of the properties, such as the presence of
underground storage tanks, or third parties unrelated to the Company.

ITEM 2. PROPERTIES

THE COMMUNITIES

As of December 31, 2000, the Company owned, and operated through the Operating
Partnership, 59 completed Communities and four Communities which are currently
under construction and in lease-up, for a total of 18,926 apartment homes.
Forty-four of the Communities have been completed since January 1, 1990 and, as
of December 31, 2000, the average age of the completed Communities was
approximately 6 years. The following is a summary of Communities by market:

NUMBER OF % OF TOTAL
NUMBER OF APARTMENT APARTMENT
COMMUNITIES HOMES HOMES
----------- --------- ----------

Washington, DC.................................. 10 3,196 16.9%
Atlanta, Georgia................................ 9 2,864 15.1%
Raleigh, North Carolina......................... 9 2,726 14.4%
Charlotte, North Carolina....................... 11 2,246 11.9%
South Florida................................... 6 2,019 10.7%
Dallas, Texas................................... 3 1,359 7.2%
Orlando, Florida................................ 3 926 4.9%
Richmond, Virginia.............................. 3 862 4.6%
Austin, Texas................................... 2 856 4.5%
Cincinnati, Ohio................................ 1 498 2.6%
Tampa, Florida.................................. 3 480 2.5%
Columbus, Ohio.................................. 1 428 2.3%
San Antonio, Texas.............................. 1 250 1.3%
Philadelphia, Pennsylvania...................... 1 216 1.1%
----------- --------- ----------
63 18,926 100.0%
=========== ========= ==========

All of the Communities target middle to upper income apartment renters as
customers and have amenities, apartment home sizes and mixes consistent with the
desires of this resident population. The Communities are located throughout the
Southeastern, Southwestern, Mid-Western and Mid-Atlantic United States.

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The following table highlights certain information regarding the Communities:

AVERAGE AVERAGE
AVERAGE AVERAGE MONTHLY MONTHLY
AVERAGE PHYSICAL PHYSICAL RENTAL RENTAL
NUMBER OF YEAR APARTMENT OCCUPANCY OCCUPANCY REVENUE REVENUE
MARKET AREA/COMMUNITY LOCATION APARTMENTS COMPLETED SIZE 2000(1) 1999(1) 2000(2) 1999(2)
--------------------- ------------------ ---------- --------- --------- --------- --------- ------- -------

ATLANTA
Summit Club at Dunwoody...... Atlanta, GA 324 1997 1,007 95.3 94.4 $ 942 $ 926
Summit Glen.................. Atlanta, GA 242 1992 983 94.9 93.7 959 940
Summit on the River.......... Atlanta, GA 352 1997 1,103 93.0 93.5 895 866
Summit St. Clair............. Atlanta, GA 336 1997 969 92.8 90.5 1,028 1,022
------ ----- ---- ----- ------ ------
ATLANTA WEIGHTED AVERAGE......................... 1,254 1,019 93.9 93.0 955 938
CHARLOTTE
Summit Arbors................ Charlotte, NC 120 1986 944 96.4 94.6 921 890
Summit Crossing.............. Charlotte, NC 128 1985 978 93.8 93.1 715 707
Summit Foxcroft(4)........... Charlotte, NC 156 1979 940 94.1 90.5 707 702
Summit Norcroft.............. Charlotte, NC 162 1991 1,112 94.7 91.5 800 811
Summit Radbourne............. Charlotte, NC 225 1991 1,006 96.6 90.9 778 785
Summit Simsbury.............. Charlotte, NC 100 1985 874 95.2 90.1 788 793
Summit Touchstone............ Charlotte, NC 132 1986 899 94.7 90.6 703 714
------ ----- ---- ----- ------ ------
CHARLOTTE WEIGHTED AVERAGE....................... 1,023 975 95.2 91.5 771 771
ORLANDO
Summit Fairways.............. Orlando, FL 240 1996 1,302 95.2 94.1 886 894
Summit Sand Lake............. Orlando, FL 416 1995 1,035 94.1 92.8 807 828
------ ----- ---- ----- ------ ------
ORLANDO WEIGHTED AVERAGE......................... 656 1,133 94.5 93.3 836 852
RALEIGH
Summit Highland.............. Raleigh, NC 172 1987 986 95.4 95.0 719 723
Summit Mayfaire.............. Raleigh, NC 144 1995 1,047 95.4 95.4 781 773
Summit Square................ Durham, NC 362 1990 925 94.6 92.0 786 789
------ ----- ---- ----- ------ ------
RALEIGH WEIGHTED AVERAGE......................... 678 966 95.0 93.5 768 769
RICHMOND
Summit Breckenridge.......... Glen Allen, VA 300 1987 928 93.7 95.4 779 753
Summit Stony Point........... Richmond, VA 250 1986 1,045 94.0 94.3 828 799
Summit Waterford............. Midlothian, VA 312 1990 995 94.1 93.8 737 742
------ ----- ---- ----- ------ ------
RICHMOND WEIGHTED AVERAGE........................ 862 986 93.9 94.5 778 762
SOUTH FLORIDA
Summit Aventura.............. Aventura, FL 379 1995 1,106 95.4 95.5 1,122 1,077
Summit Del Ray............... Delray Beach, FL 252 1993 968 94.1 92.9 907 890
Summit Palm Lake............. W. Palm Beach, FL 304 1992 919 92.1 93.5 799 816
Summit Plantation I.......... Plantation, FL 262 1995 1,283 93.7 92.6 1,066 1,037
Summit Portofino............. Broward County, FL 322 1995 1,307 95.9 93.4 1,047 1,008
------ ----- ---- ----- ------ ------
SOUTH FLORIDA WEIGHTED AVERAGE................... 1,519 1,119 94.4 93.7 996 972
TAMPA
Summit Gateway............... St. Petersburg, FL 212 1987 828 96.2 96.7 708 683
Summit Lofts................. Palm Harbour, FL 200 1990 1,045 92.3 93.9 774 762
Summit Walk.................. Tampa, FL 68 1993 1,614 95.0 94.0 1,110 1,118
------ ----- ---- ----- ------ ------
TAMPA WEIGHTED AVERAGE........................... 480 1,030 94.4 95.1 792 778
WASHINGTON, D.C.
Summit Belmont............... Fredricksburg, VA 300 1987 881 97.1 95.5 739 700
Summit Fair Oaks............. Fairfax, VA 246 1990 938 96.0 98.2 1,142 1,012
Summit Meadow................ Columbia, MD 178 1990 1,020 94.1 94.7 1,003 971
Summit Reston................ Reston, VA 418 1987 854 96.9 97.1 1,173 1,044
Summit Windsor............... Frederick, MD 453 1989 903 93.8 92.7 800 763
------ ----- ---- ----- ------ ------
WASHINGTON, D.C. WEIGHTED AVERAGE................ 1,595 905 95.6 95.4 962 886
WILMINGTON/NEWARK, DE
Summit Pike Creek............ Newark, DE 264 1988 899 96.2 95.2 898 860
DALLAS
Summit Belcourt.............. Dallas, TX 180 1994 875 94.9 95.4 1,082 1,132
Summit Buena Vista........... Dallas, TX 467 1996 925 92.3 90.6 855 874
------ ----- ---- ----- ------ ------
DALLAS WEIGHTED AVERAGE.......................... 647 911 93.0 91.9 918 946
SAN ANTONIO
Summit Turtle Rock........... San Antonio, TX 250 1995 857 93.5 94.3 780 773
AUSTIN
Summit Arboretum............. Austin, TX 408 1996 847 96.1 92.9 882 834
------ ----- ---- ----- ------ ------
TOTAL WEIGHTED AVERAGE OF COMMUNITIES STABILIZED
IN 2000 AND 1999................................ 9,636 991 94.6 93.7 886 865
------ ----- ---- ----- ------ ------

MORTGAGE
NOTES
PAYABLE AT
DECEMBER 31,
2000
MARKET AREA/COMMUNITY (IN THOUSANDS)
--------------------- --------------

ATLANTA
Summit Club at Dunwoody...... --
Summit Glen.................. (3)
Summit on the River.......... (3)
Summit St. Clair............. (3)
ATLANTA WEIGHTED AVERAGE.....
CHARLOTTE
Summit Arbors................ --
Summit Crossing.............. 3,985
Summit Foxcroft(4)........... 2,519
Summit Norcroft.............. (3)
Summit Radbourne............. 8,294
Summit Simsbury.............. (5)
Summit Touchstone............ (5)
CHARLOTTE WEIGHTED AVERAGE...
ORLANDO
Summit Fairways.............. --
Summit Sand Lake............. 13,990
ORLANDO WEIGHTED AVERAGE.....
RALEIGH
Summit Highland.............. (3)
Summit Mayfaire.............. --
Summit Square................ --
RALEIGH WEIGHTED AVERAGE.....
RICHMOND
Summit Breckenridge.......... --
Summit Stony Point........... (6)
Summit Waterford............. --
RICHMOND WEIGHTED AVERAGE....
SOUTH FLORIDA
Summit Aventura.............. --
Summit Del Ray............... (3)
Summit Palm Lake............. --
Summit Plantation I.......... (3)
Summit Portofino............. --
SOUTH FLORIDA WEIGHTED AVERAG
TAMPA
Summit Gateway............... (6)
Summit Lofts................. --
Summit Walk.................. --
TAMPA WEIGHTED AVERAGE.......
WASHINGTON, D.C.
Summit Belmont............... (6)
Summit Fair Oaks............. --
Summit Meadow................ (3)
Summit Reston................ --
Summit Windsor............... (3)
WASHINGTON, D.C. WEIGHTED AVE
WILMINGTON/NEWARK, DE
Summit Pike Creek............ (6)
DALLAS
Summit Belcourt.............. 9,386
Summit Buena Vista........... 24,980
DALLAS WEIGHTED AVERAGE......
SAN ANTONIO
Summit Turtle Rock........... 10,634
AUSTIN
Summit Arboretum............. 19,567
TOTAL WEIGHTED AVERAGE OF COM
IN 2000 AND 1999............

10
11

STABILIZED DEVELOPMENT COMMUNITIES(7)
Summit Ballantyne............ Charlotte, NC 400 1998 1,053 93.2 90.5 886 882
Summit Camino Real........... Dallas, TX 712 1998 860 92.3 91.5 783 806
Summit Doral................. Miami, FL 260 1999 1,172 96.4 63.1 1,156 803
Summit Fair Lakes............ Fairfax, VA 530 1999 996 96.7 80.5 1,295 935
Summit Governor's Village.... Raleigh, NC 242 1999 1,134 92.6 83.7 872 857
Summit Lake.................. Raleigh, NC 446 1999 1,075 93.6 80.3 1,265 1,190
Summit Las Palmas............ Austin, TX 448 1998 890 94.2 93.1 897 858
Summit New Albany............ Columbus, OH 301 1998 1,235 94.5 83.2 844 806
Summit Norcroft II........... Charlotte, NC 54 1997 1,168 94.7 91.7 800 811
Summit Plantation II......... Plantation, FL 240 1997 1,173 93.6 92.5 1,118 1,087
Summit Russett............... Laurel, MD 314 1997 958 92.0 95.6 1,054 973
Summit Sedgebrook............ Charlotte, NC 368 1999 1,017 92.3 84.1 1,155 1,052
Summit Stonefield............ Yardley, PA 216 1998 1,022 96.4 98.0 1,290 1,183
Summit Westwood.............. Raleigh, NC 354 1999 1,112 95.4 68.3 814 644
------ ----- ---- ----- ------ ------
4,885 1,028 94.0 85.3 951 906
------ ----- ---- ----- ------ ------

ACQUISITION COMMUNITIES
Summit Shiloh................ Atlanta, GA 182 2000 1,151 92.3 N/A 921 N/A
Summit Sweetwater............ Atlanta, GA 308 2000 1,151 93.1 N/A 909 N/A
------ ----- ---- ------
490 1,151 92.8 914
------ ----- ---- ------

TOTAL WEIGHTED AVERAGE OF STABILIZED
COMMUNITIES..................................... 15,011 1,008 94.4 90.9 891 878
------ ----- ---- ----- ------ ------

COMMUNITIES IN LEASE-UP(8)
Reunion Park by Summit....... Raleigh, NC 248 2000 941 52.4 N/A 339 N/A
Summit Ashburn Farm.......... Loudon County, VA 162 2000 1,061 76.5 N/A 766 N/A
Summit Crest................. Raleigh, NC 438 2001 1,129 4.1 N/A 53 N/A
Summit Deer Creek............ Atlanta, GA 292 2000 1,187 66.5 3.7 774 242
Summit Deerfield............. Cincinnati, OH 498 2001 1,189 9.43 N/A 92 N/A
Summit Fairview.............. Charlotte, NC 135 1983 1,036 95.2 87.5 812 818
Summit Grandview............. Charlotte, NC 266 2000 1,082 9.9 N/A 186 N/A
Summit Hunter's Creek........ Orlando, FL 270 2000 1,082 61.6 3.0 769 95
Summit Largo................. Largo, MD 219 2000 1,042 95.7 29.4 1,117 563
Summit Lenox................. Atlanta, GA 431 1965 963 70.7 88.1 996 968
Summit New Albany II......... Columbus, OH 127 2000 1,235 81.3 14.9 786 228
Summit Overlook.............. Raleigh, NC 320 2001 1,056 0.3 N/A N/A N/A
Summit Peachtree City........ Atlanta, GA 397 2001 1,026 N/A N/A N/A N/A
Summit Russett II............ Laurel, MD 112 2000 1,025 22.9 N/A 809 N/A
------ -----
3,915 1,078
------ -----
TOTAL COMMUNITIES................................ 18,926 1,011
====== =====

MORTGAGE
NOTES
PAYABLE AT
DECEMBER 31,
2000
MARKET AREA/COMMUNITY (IN THOUSANDS)
--------------------- --------------

STABILIZED DEVELOPMENT COMMUN
Summit Ballantyne............ (3)
Summit Camino Real........... 16,519
Summit Doral................. --
Summit Fair Lakes............ 48,340
Summit Governor's Village.... --
Summit Lake.................. --
Summit Las Palmas............ (3)
Summit New Albany............ --
Summit Norcroft II........... (3)
Summit Plantation II......... (3)
Summit Russett............... --
Summit Sedgebrook............ --
Summit Stonefield............ --
Summit Westwood.............. --
ACQUISITION COMMUNITIES
Summit Shiloh................ --
Summit Sweetwater............ --
TOTAL WEIGHTED AVERAGE OF STA
COMMUNITIES.................
COMMUNITIES IN LEASE-UP(8)
Reunion Park by Summit....... --
Summit Ashburn Farm.......... --
Summit Crest................. --
Summit Deer Creek............ --
Summit Deerfield............. --
Summit Fairview.............. --
Summit Grandview............. --
Summit Hunter's Creek........ --
Summit Largo................. --
Summit Lenox................. --
Summit New Albany II......... --
Summit Overlook.............. --
Summit Peachtree City........ --
Summit Russett II............ --
TOTAL COMMUNITIES............

(1) Average physical occupancy is defined as the number of apartment homes
occupied divided by the total number of apartment homes contained in the
Communities, expressed as a percentage. Average physical occupancy has been
calculated using the average occupancy that existed on Sunday during each
week of the period.

(2) Represents the average monthly net rental revenue per occupied apartment
home.

(3) Collateral for fixed rate mortgage of $140.6 million.

(4) Summit Foxcroft is held by a partnership in which the Company is a 75%
managing general partner.

(5) Collateral for a fixed rate mortgage of $8.3 million.

(6) Collateral for letters of credit in an aggregate amount of $38.3 million
which serve as collateral for $37.4 million in tax exempt bonds.

(7) Communities that were stabilized in 2000 but were stabilized subsequent to
January 1, 1998.

11
12

(8) Communities that were in lease-up during 2000. These Communities have, and
are, leasing at a rate consistent with the Company's expectations. As with
any community in lease-up, there are uncertainties and risks associated with
the Company's communities in lease-up. While the Company has estimated
completion and stabilization budgets and target dates based on what it
believes are reasonable assumptions in light of current conditions, there
can be no assurance that actual costs will not exceed current budgets or
that the Company will not experience delays in reaching stabilization of
such Communities.

Information with respect to total debt secured by 29 of the Company's
Communities having an aggregate net book value of approximately $468.5 million
as of December 31, 2000, is as follows (in thousands):

FIXED RATE VARIABLE RATE
-------------- -------------

Total principal.................................. $ 307,036 $ 37,363
Interest rates range from........................ 6.24% to 9.80% 6.25%(1)
Weighted average interest rate................... 6.86% 6.25%(1)
Annual debt service.............................. $ 24,932 $ 3,128(2)

Aggregate maturities for secured debt:

2001........................................................ $ 6,663
2002........................................................ 15,148
2003........................................................ 7,384
2004........................................................ 7,813
2005........................................................ 42,785
Thereafter.................................................. 264,606
--------
Total....................................................... $344,399
========

(1) Interest rate as of December 31, 2000.

(2) Annual debt service for variable rate loans represents 2000 costs and
includes letter of credit fees and other bond related costs.

COMMUNITY MANAGEMENT

Each of the Communities is operated by the Company's property management staff.
The management team for each Community includes supervision by a regional
vice-president and regional property manager, as well as on-site management,
maintenance personnel and an off-site support staff. Community management teams
perform leasing and rent collection functions and coordinate resident services.
All personnel are extensively trained and experienced and are encouraged to
continue their education through both Company-designed and outside courses.

ITEM 3. LEGAL PROCEEDINGS

Neither the Company nor any of the Communities is presently subject to any
material litigation nor, to the Company's knowledge, is any litigation
threatened against the Company or any of the Communities, other than routine
actions for negligence or other claims and administrative proceedings arising in
the ordinary course of business, some of which are expected to be covered by
liability insurance and all of which collectively are not expected to have a
material adverse effect on the business, financial condition or results of
operations of the Company.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of the Company's security holders during the
fourth quarter of 2000.

12
13

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Company's Common Stock began trading on the NYSE on February 8, 1994 under
the symbol "SMT". The following table sets forth the quarterly high and low
sales prices per share reported on the NYSE:

2000 1999
--------------- ---------------
QUARTER HIGH LOW HIGH LOW
------- ------ ------ ------ ------

January 1 through March 31.................................. $19.75 $17.56 $18.50 $16.00
April 1 through June 30..................................... 22.00 19.00 20.25 16.50
July 1 through September 30................................. 24.69 21.19 20.63 18.94
October 1 through December 31............................... 26.13 22.00 19.94 16.50

On February 27, 2001, the last reported sale price of the Common Stock on the
NYSE was $23.31. On February 27, 2001, there were 1,444 holders of record of
26,485,819 shares of the Company's Common Stock.

The Company declared a dividend of $0.4375 per share of Common Stock for each of
the four quarters in 2000, which was paid on May 15, 2000 for the first quarter,
August 15, 2000 for the second quarter, November 15, 2000 for the third quarter
and February 15, 2001 for the fourth quarter.

The Company declared a dividend of $0.4175 per share of Common Stock for each of
the four quarters in 1999, which was paid on May 13, 1999 for the first quarter,
August 14, 1999 for the second quarter, November 12, 1999 for the third quarter,
and February 14, 2000 for the fourth quarter.

The Company intends to continue to make regular quarterly dividends to holders
of shares of Common Stock. Future dividends will be declared at the discretion
of the Board of Directors and will depend on actual cash flow of the Company,
its financial condition, capital requirements, the annual distribution
requirements under the REIT provisions of the Internal Revenue Code, and such
other factors as the Board of Directors may deem relevant. The Board of
Directors may modify the Company's dividend policy from time to time.

On October 10, 2000, the Company issued to a limited partner of the Operating
Partnership 12,132 shares of Common Stock in exchange for the corresponding
number of Common Units. Such shares of the Company's Common Stock were issued in
reliance on an exemption from registration under Section 4(2) of the Securities
Act of 1933, as amended, and the rules and regulations promulgated thereunder.
In light of the information obtained by the Company in connection with such
transaction, management of the Company believes that the Company may rely on
such exemption.

13
14

ITEM 6. SELECTED FINANCIAL DATA

The following table sets forth selected consolidated financial and other
information on a consolidated historical basis for the Company as of and for
each of the years in the five-year period ended December 31, 2000. This table
should be read in conjunction with the Consolidated Financial Statements of
Summit Properties Inc. and the Notes thereto included elsewhere herein (amounts
in thousands except per share and property information).

SELECTED FINANCIAL DATA
SUMMIT PROPERTIES INC. (HISTORICAL)

YEARS ENDED DECEMBER 31,
------------------------------------------------------------
2000 1999 1998 1997 1996
---------- ---------- ---------- --------- ---------

OPERATING INFORMATION:
Revenue
Rental.............................. $ 172,639 $ 162,859 $ 137,961 $ 110,105 $ 89,093
Interest and other.................. 17,005 13,989 9,608 6,572 5,396
---------- ---------- ---------- --------- ---------
Total....................... 189,644 176,848 147,569 116,677 94,489
---------- ---------- ---------- --------- ---------
Property operating and maintenance
expense (before depreciation)....... 59,087 57,318 51,550 42,032 35,226
Interest expense...................... 38,649 37,282 32,550 20,901 16,113
Depreciation and amortization......... 37,674 35,424 29,953 23,710 19,233
General and administrative expense.... 4,752 3,876 3,861 2,740 2,557
Loss (income) from equity
investments......................... 1,178 615 328 (274) 173
---------- ---------- ---------- --------- ---------
Total....................... 141,340 134,515 118,242 89,109 73,302
---------- ---------- ---------- --------- ---------
Income before gain on sale of real
estate assets, extraordinary items
and minority interest of unitholders
in Operating Partnership and
dividends to preferred unitholders
in Operating Partnership............ 48,304 42,333 29,327 27,568 21,187
Gain on sale of real estate assets.... 38,510 17,427 37,148 4,366 --
---------- ---------- ---------- --------- ---------
Income before extraordinary items,
minority interest of unitholders in
Operating Partnership and dividends
to preferred unitholders in
Operating Partnership............... $ 86,814 $ 59,760 $ 66,475 $ 31,934 $ 21,187
========== ========== ========== ========= =========
Net income............................ $ 63,874 $ 45,745 $ 56,375 $ 27,116 $ 16,948
========== ========== ========== ========= =========
Income per share before extraordinary
items -- basic...................... $ 2.42 $ 1.65 $ 2.28 $ 1.17 $ 0.92
========== ========== ========== ========= =========
Income per share before extraordinary
items -- diluted.................... $ 2.41 $ 1.65 $ 2.28 $ 1.17 $ 0.92
========== ========== ========== ========= =========
Net income per share -- basic......... $ 2.42 $ 1.65 $ 2.26 $ 1.17 $ 0.90
========== ========== ========== ========= =========
Net income per share -- diluted....... $ 2.41 $ 1.65 $ 2.26 $ 1.17 $ 0.90
========== ========== ========== ========= =========
Dividends per share................... $ 1.75 $ 1.67 $ 1.63 $ 1.59 $ 1.55
========== ========== ========== ========= =========

14
15

YEARS ENDED DECEMBER 31,
------------------------------------------------------------
2000 1999 1998 1997 1996
---------- ---------- ---------- --------- ---------

Weighted average shares outstanding --
basic............................... 26,341 27,698 24,935 23,146 18,888
========== ========== ========== ========= =========
Weighted average shares outstanding --
diluted............................. 26,542 27,769 24,944 23,182 18,915
========== ========== ========== ========= =========
Weighted average shares and units
outstanding -- basic................ 30,697 32,135 29,141 27,258 22,914
========== ========== ========== ========= =========
Weighted average shares and units
outstanding -- diluted.............. 30,897 32,206 29,150 27,294 22,941
========== ========== ========== ========= =========
BALANCE SHEET INFORMATION:
Real estate, before accumulated
depreciation........................ $1,423,179 $1,284,818 $1,206,536 $ 913,033 $ 704,779
Total assets.......................... 1,340,151 1,217,413 1,198,664 825,293 634,991
Total long-term debt.................. 763,899 649,632 726,103 474,673 309,933
Stockholders' equity.................. 338,677 327,335 358,925 265,839 257,214
OTHER INFORMATION:
Cash flow provided by (used in):
Operating activities................ $ 70,968 $ 59,021 $ 63,808 $ 55,947 $ 41,176
Investing activities................ (118,197) (39,751) (219,170) (175,907) (103,971)
Financing activities................ 46,247 (17,977) 154,636 119,858 63,579
Funds from operations(1).............. $ 73,342 $ 70,707 $ 58,242 $ 50,201 $ 39,391
Total completed communities (at end of
period)............................. 59 65 66 61 51
Total apartment homes developed(2).... 1,696 1,650 973 1,454 1,061
Total apartment homes acquired........ 490 -- 3,557 1,434 262
Total apartment homes (at end of
period)(3).......................... 17,273 16,765 16,631 14,462 11,788
Ratio of earnings to fixed
charges(4).......................... 1.99 1.85 2.52 1.93 1.79

(1) The Company considers funds from operations ("FFO") to be an appropriate
measure of performance of an equity REIT. The Company computes FFO in
accordance with standards established by the National Association of Real
Estate Investment Trusts ("NAREIT"). FFO, as defined by NAREIT, represents
net income (loss) excluding gains or losses from sales of property, plus
depreciation of real estate assets, and after adjustments for unconsolidated
partnerships and joint ventures, all determined on a consistent basis in
accordance with generally accepted accounting principles ("GAAP"). The
Company's methodology for calculating FFO may differ from the methodology
for calculating FFO utilized by other real estate companies, and
accordingly, may not be comparable to other real estate companies. The
Company believes that Funds from Operations is helpful to investors as a
measure of the performance of an equity REIT because, along with cash flows
from operating activities, financing activities and investing activities, it
provides investors with an understanding of the ability of the Company to
incur and service debt and to make capital expenditures. FFO should not be
considered as an alternative to net income (determined in accordance with
GAAP) as an indication of the Company's financial performance or to cash
flows from operating activities (determined in accordance with GAAP) as a
measure of the

15
16

Company's liquidity, nor is it indicative of funds available to fund the
Company's cash needs, including its ability to make dividend or distribution
payments. FFO is calculated as follows (dollars in thousands):

YEARS ENDED DECEMBER 31,
-----------------------------------------------
2000 1999 1998 1997 1996
------- ------- ------- ------- -------

Income before gain on sale of real estate
assets, minority interest of unitholders in
Operating Partnership and extraordinary
items...................................... $35,884 $35,635 $29,327 $27,568 $21,187
Management Company gain on sale.............. (208) -- -- -- --
Real estate depreciation..................... 37,666 35,072 28,915 22,633 18,204
------- ------- ------- ------- -------
Funds from Operations........................ $73,342 $70,707 $58,242 $50,201 $39,391
======= ======= ======= ======= =======

(2) Represents the total number of apartment homes in Communities completed and
owned by the Company during the period.

(3) Represents the total number of apartment homes in Communities completed and
owned by the Company at the end of the period.

(4) The ratios of earnings to fixed charges were computed by dividing earnings
by fixed charges. For this purpose, earnings consist of pre-tax income from
continuing operations (including gains on sale of real estate) plus fixed
charges (excluding capitalized interest). Fixed charges consist of interest
expense (whether expensed or capitalized), dividends to preferred
unitholders in the Operating Partnership, the estimated interest component
of rent expense, and the amortization of debt issuance costs. To date, the
Company has not issued any preferred stock; therefore, the ratios of
earnings to combined fixed charges and preferred stock dividend requirements
are the same as the ratios of earnings to fixed charges presented.

16
17

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

FORWARD-LOOKING STATEMENTS

This report contains certain 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, including, without limitation,
statements relating to the operating performance of fully stabilized
Communities, the development, acquisition or disposition of properties,
estimated net asset value, anticipated construction completion and lease-up
dates, and estimated development costs. You can identify forward-looking
statements by the use of the words "believe," "expect," "anticipate," "intend,"
"estimate," "assume" and other similar expressions which predict or indicate
future events and trends and which do not relate to historical matters. You
should not rely on forward-looking statements, because they involve known and
unknown risks, uncertainties and other factors, some of which are beyond the
control of the Company. These risks, uncertainties and other factors may cause
the actual results, performance or achievements of the Company 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 the operations and future prospects of the Company
include, but are not limited to: (1) economic conditions generally and the real
estate market specifically, including changes in occupancy rates and market
rents, (2) legislative/regulatory changes (including changes to laws governing
the taxation of real estate investment trusts ("REITs")), (3) availability of
capital, (4) interest rates, (5) uncertainties associated with the Company's
development activities, including the failure to obtain zoning and other
approvals and increases in construction costs, (6) the failure of acquisitions
to yield expected results, (7) the failure to sell Communities marketed for sale
or to sell such Communities in a timely manner or on favorable terms, (8)
construction delays due to the unavailability of materials, weather conditions
or other delays, (9) competition which could limit the Company's ability to
secure attractive investment opportunities, lease apartment homes or increase or
maintain rents, (10) supply and demand for apartment communities in the
Company's current and proposed market areas, especially the Company's core
markets, (11) changes in generally accepted accounting principles, or policies
and guidelines applicable to REITs, and (12) those factors discussed in the
section entitled "Operating Performance of the Company's Fully Stabilized
Communities," in the section entitled "Net Asset Value," and in the section
entitled "Certain Factors Affecting the Performance of Development Communities,"
on pages 19, 31 and 34, respectively, of this report. These risks and
uncertainties should be considered in evaluating forward-looking statements and
undue reliance should not be placed on such statements.

HISTORICAL RESULTS OF OPERATIONS

The Company's net income is generated primarily from operations of its
Communities. The changes in operating results from period to period reflect
changes in existing Community performance and changes in the number of apartment
homes due to development, acquisition and disposition of Communities. Where
appropriate, comparisons are made on a "fully stabilized Communities,"
"acquisition Communities," "stabilized development Communities", "Communities in
lease-up" and "disposition Communities" basis in order to adjust for changes in
the number of apartment homes. A Community is deemed to be "stabilized" when it
has attained a physical occupancy level of at least 93%. A Community that the
Company has acquired is deemed "fully stabilized" when owned by the Company for
one year or more as of the beginning of the year. A Community that the Company
has developed is deemed "Fully Stabilized" when stabilized for the two prior
years as of the beginning of the current year. A Community is deemed to be a
"stabilized development" when stabilized as of the beginning of the current year
but not the entire two prior years. All Communities information presented is
before real estate depreciation and amortization expense. Communities' average
physical occupancy presented 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 of the occupancy that existed on Sunday during each
week of the period. Average monthly rental revenue presented represents the
average monthly net rental revenue per occupied apartment home. The Company's
methodology for calculating average physical occupancy and

17
18

average monthly rental revenue may differ from the methodology used by other
apartment companies, and accordingly, may not be comparable to such other
apartment companies.

Effective January 1, 1999, the Company implemented prospectively a new
accounting policy whereby the cost of carpet replacements is capitalized and
depreciated over their estimated useful lives. Previously, the cost of carpet
replacement had been expensed. The Company believes that the newly adopted
accounting policy is preferable as it is consistent with standards and practices
utilized by the majority of the Company's peers and provides a better matching
of expenses with the related benefit of the expenditure. The change in
accounting policy is being treated prospectively as a change in accounting
principle inseparable from a change in accounting estimate. The effect of this
change for the years ended December 31, 2000 and 1999 was a net increase in net
income of $1.5 million and $1.4 million, respectively. Comparative property
operating information included in this section for the year ended December 31,
1998 has been adjusted to reflect the 1999 change in accounting policy. Carpet
replacement expenditures for the entire portfolio of communities for the years
ended December 31, 2000, 1999 and 1998 were $1.7 million, $1.8 million and $1.7
million, respectively.

Results of Operations for the Years Ended December 31, 2000, 1999 and 1998

Income before minority interest of common unitholders in the Operating
Partnership, gain on sale of real estate assets and extraordinary items
increased from 1998 ($29.3 million) to 1999 ($42.3 million) and from 1999 to
2000 ($48.3 million) primarily due to increased property operating income at
stabilized Communities, as well as the addition of property operating income
from Communities in lease-up, partially offset by a decrease in property income
due to the disposition of Communities.

OPERATING PERFORMANCE OF THE COMPANY'S PORTFOLIO OF COMMUNITIES

The operating performance of the Communities is summarized below (dollars in
thousands):

YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
------------------------------ ------------------------------
2000 1999 % CHANGE 1999 1998 % CHANGE
-------- -------- -------- -------- -------- --------

Property revenues:
Fully Stabilized Communities(1)... $101,235 $ 97,346 4.0% $ 85,499 $ 82,127 4.1%
Acquisition Communities(2)........ 2,194 -- 100.0% 36,038 10,873 231.4%
Stabilized Development
Communities.................... 55,269 46,914 17.8% 24,166 22,013 9.8%
Communities in lease-up........... 16,654 6,394 160.5% 19,711 3,482 466.1%
Communities sold.................. 10,082 22,875 -55.9% 8,115 27,161 -70.1%
-------- -------- -------- --------
Total property revenues............. 185,434 173,529 6.9% 173,529 145,656 19.1%
-------- -------- -------- --------
Property operating and maintenance
expense:
Fully Stabilized Communities...... 32,889 32,538 1.1% 28,216 28,096 0.4%
Acquisition Communities........... 687 -- 100.0% 12,873 3,256 295.4%
Stabilized Development
Communities.................... 16,891 14,187 19.1% 7,157 6,545 9.4%
Communities in lease-up........... 5,244 2,519 108.2% 5,758 1,337 330.7%
Communities sold.................. 3,376 8,074 -58.2% 3,314 10,572 -68.6%
-------- -------- -------- --------
Total property operating and
maintenance expense............... 59,087 57,318 3.1% 57,318 49,806 15.1%
-------- -------- -------- --------
Property operating income........... $126,347 $116,211 8.7% $116,211 $ 95,850 21.2%
======== ======== ======== ========
Apartment homes, end of period...... 18,926 17,673 7.1% 17,673 18,003 -1.8%
======== ======== ======== ========

(1) Includes Communities which were stabilized during the entire period for each
of the comparable periods presented.

(2) The 2000 and 1999 comparison includes the Communities acquired in 2000. The
1999 and 1998 comparison includes the Communities acquired in 1998. There
were no Communities acquired in 1999.

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19

A summary of the Company's apartment homes for the years ended December 31,
2000, 1999 and 1998 is as follows:

2000 1999 1998
------ ------ ------

Apartment homes at the beginning of the year................ 17,673 18,003 14,981
Acquisitions................................................ 490 -- 3,558
Developments which began rental operations during the
year...................................................... 2,439 1,188 1,825
Sale of apartment homes..................................... (1,676) (1,518) (2,361)
------ ------ ------
Apartment homes at the end of the year(1)................... 18,926 17,673 18,003
====== ====== ======

(1) The Company also owns a 25% interest in a joint venture which owns 1,433
apartment homes.

OPERATING PERFORMANCE OF THE COMPANY'S FULLY STABILIZED COMMUNITIES

The operating performance of the Fully Stabilized Communities is summarized
below (dollars in thousands except average monthly rental revenue):

YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
----------------------------- ----------------------------
2000 1999 % CHANGE 1999 1998 % CHANGE
-------- ------- -------- ------- ------- --------

Property revenues:
Rental............................... $ 94,501 $91,411 3.4% $80,163 $77,800 3.0%
Other................................ 6,734 5,935 13.5% 5,336 4,327 23.3%
-------- ------- ------- -------
Total property revenues................ 101,235 97,346 4.0% 85,499 82,127 4.1%
-------- ------- ------- -------
Property operating and maintenance
expense:
Personnel............................ 6,265 7,080 -11.5% 6,539 6,185 5.7%
Advertising and promotion............ 1,310 1,318 -0.6% 1,154 1,179 -2.1%
Utilities............................ 4,533 4,436 2.2% 3,976 3,919 1.5%
Building repairs and
maintenance(1).................... 5,060 5,141 -1.6% 4,877 4,780 2.0%
Real estate taxes and insurance...... 11,159 10,471 6.6% 8,117 8,495 -4.4%
Property supervision................. 2,831 2,415 17.2% 2,134 2,012 6.1%
Other operating expense.............. 1,731 1,677 3.2% 1,419 1,526 -7.0%
-------- ------- ------- -------
Total property operating and
maintenance expense.................. 32,889 32,538 1.1% 28,216 28,096 0.4%
-------- ------- ------- -------
Property operating income.............. $ 68,346 $64,808 5.5% $57,283 $54,031 6.0%
======== ======= ======= =======
Average physical occupancy............. 94.6% 93.7% 1.0% 93.9% 93.4% 0.5%
======== ======= ======= =======
Average monthly rental revenue......... $ 886 $ 865 2.4% $ 831 $ 813 2.2%
======== ======= ======= =======
Number of apartment homes.............. 9,636 9,636 8,755 8,755
======== ======= ======= =======
Number of apartment communities........ 37 37 36 36
======== ======= ======= =======

(1) Effective January 1, 1999, the Company implemented prospectively a new
accounting policy whereby expenditures for carpet replacement are
capitalized. Previously, the cost of carpet replacement had been expensed.
While the 1998 historical financial statements have not been restated to
reflect the change, for comparative purposes only, fully stabilized
Communities' building repairs and maintenance cost for the year ended
December 31, 1998 has been adjusted in the table above to reflect the new
policy. Carpet replacement costs for comparison of the years ended December
31, 2000 and 1999 were $1.3 million and $1.2 million, respectively. Carpet
replacement costs for comparison of the years ended December 31, 1999 and
1998 were $1.3 million and $1.1 million, respectively.

Rental and other revenue increased from 1999 to 2000 due to higher rental rates,
higher occupancy rates and increased revenue from sources other than rental
income such as telephone, cable and water submeter income. The 4.0% property
revenue growth rate was stable when compared to the prior year rate of growth.
The growth rate for 2000 was especially strong in the Washington, DC and Austin
markets. In 2001, the Company expects

19
20

the rate of growth to remain steady as permit issuances generally decline in the
markets where the Company operates. The Company believes its expectations
relative to property revenue growth are based on reasonable assumptions as to
future economic conditions and the quantity of competitive multi-family
apartment communities in the markets in which the Company does business.
However, there can be no assurance that actual results will not differ from
these assumptions.

Property operating and maintenance expenses increased by 1.1% from 1999 to 2000.
As a percentage of total property revenues, property operating and maintenance
expense decreased to 32.5% from 33.4% for the years ended December 31, 2000 and
1999, respectively. The Company expects the rate of operating expense growth to
increase in 2001 as a result of upward pressure on operating expenses,
particularly personnel costs and real estate taxes.

Rental and other revenue increased from 1998 to 1999 primarily due to higher
rental rates, higher occupancy rates and increased revenue from sources of
income such as water submeter, cable and telephone income. Property operating
and maintenance expenses were relatively stable from 1998 to 1999, increasing by
0.4%. As a percentage of total property revenues, property operating and
maintenance expenses decreased to 33.0% from 34.2% for the years ended December
31, 1999 and 1998, respectively.

OPERATING PERFORMANCE OF THE COMPANY'S ACQUISITION COMMUNITIES

Acquisition Communities for the year ended December 31, 2000 consist of Summit
Sweetwater and Summit Shiloh, (representing a total of 490 apartment homes) both
of which were acquired on August 1, 2000. Acquisition Communities used in the
comparison of the years ended December 31, 1999 and 1998 consist of the
following: Summit St. Clair, Summit Club at Dunwoody and Summit Lenox
(representing a total of 1,093 apartment homes) and seven communities
(representing a total of 2,465 apartment homes) which were acquired from Ewing
Industries and its affiliates in 1998 (the "Texas Acquisition Communities") (a
total of 3,558 apartment homes). Summit Las Palmas (448 apartment homes), one of
the Texas Acquisition Communities, was acquired effective December 31, 1998 and,
accordingly, its rental operations for 1998 are not reflected in the Company's
financial statements for such year. There were no Community acquisitions during
1999. The operations of these Communities are summarized as follows (dollars in
thousands except average monthly rental revenue):

YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
----------------------- ------------------------
2000 1999 1999 1998
------- -------- -------- --------

Property revenues:
Rental................................. $2,016 $ -- $34,116 $10,427
Other.................................. 178 -- 1,922 446
------ ------- ------- -------
Total property revenues.................. 2,194 -- 36,038 10,873
Property operating and maintenance
expense(1)............................. 687 -- 12,873 3,256
------ ------- ------- -------
Property operating income................ $1,507 $ -- $23,165 $ 7,617
====== ======= ======= =======
Average physical occupancy(2)............ 92.8% --% 91.9% 95.6%
====== ======= ======= =======
Average monthly rental revenue........... $ 914 $ -- $ 876 $ 936
====== ======= ======= =======
Number of apartment homes:
1998 Acquisitions...................... -- -- 3,558 3,558
2000 Acquisitions...................... 490 -- -- --
------ ------- ------- -------
Total number of apartment homes.......... 490 -- 3,558 3,558
====== ======= ======= =======

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21

replacement costs for the year ended December 31, 2000 were $8,000. Carpet
replacement costs for comparison of the years ended December 31, 1999 and
1998 were $217,000 and $3,000, respectively.

(2) Since the Ewing properties were acquired mid-fourth quarter 1998, their
impact on average monthly rental revenue for the year ended December 31,
1998 was minimal. Average monthly rental revenue for the years ended
December 31, 1999 and 1998 for Summit St. Clair, Summit Club at Dunwoody and
Summit Lenox were $967 and $936, respectively.

The unleveraged yield on investment for the Communities acquired during 2000,
defined as property operating income on an annualized basis divided by total
acquisition cost, for the year ended December 31, 2000 was 10.2%.

OPERATING PERFORMANCE OF THE COMPANY'S STABILIZED DEVELOPMENT COMMUNITIES

The Company had fourteen Communities with a total of 4,885 apartment homes
(Summit Ballantyne, Summit Norcroft II, Summit Sedgebrook, Summit Governor's
Village, Summit Lake, Summit Westwood, Summit New Albany I, Summit Fair Lakes,
Summit Stonefield, Summit Russett I, Summit Doral, Summit Plantation II, Summit
Las Palmas, and Summit Camino Real) which were stabilized during the entire year
ended December 31, 2000, but were stabilized subsequent to January 1, 1998. The
comparison of the years ended December 31, 1999 and 1998 represents a total of
2,212 apartment homes (Summit Ballantyne I, Summit Fairways, Summit Lake I,
Summit Norcroft II, Summit Plantation II, Summit on the River, Summit Russett I,
Summit Sedgebrook I and Summit Stonefield).

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

YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
------------------------ ------------------------
2000 1999 1999 1998
-------- -------- -------- --------

Property revenues:
Rental................................ $51,409 $44,073 $22,557 $20,722
Other................................. 3,860 2,841 1,609 1,291
------- ------- ------- -------
Total property revenues................. 55,269 46,914 24,166 22,013
Property operating and maintenance
expense (1)........................... 16,891 14,187 7,157 6,545
------- ------- ------- -------
Property operating income............... $38,378 $32,727 $17,009 $15,468
======= ======= ======= =======
Average physical occupancy.............. 94.0% 85.3% 93.6% 88.4%
======= ======= ======= =======
Average monthly rental revenue.......... $ 951 $ 906 $ 928 $ 903
======= ======= ======= =======
Number of apartment homes............... 4,885 4,885 2,212 2,212
======= ======= ======= =======

(1) Effective January 1, 1999, the Company implemented prospectively a new
accounting policy whereby expenditures for carpet replacement are
capitalized. Previously, the cost of carpet replacement had been expensed.
While the 1998 historical financial statements have not been restated to
reflect the change, for comparative purposes only, stabilized development
Communities' property operating and maintenance expense for the year ended
December 31, 1998 has been adjusted in the table above to reflect the new
policy. Carpet replacement costs for comparison of the years ended December
31, 2000 and 1999 were $343,000 and $174,000, respectively. Carpet
replacement costs for comparison of the years ended December 31, 1999 and
1998 were $167,000 and $79,000, respectively.

The unleveraged yield on those Communities considered stabilized development
Communities in 2000, defined as property operating income divided by total
development cost, for the year ended December 31, 2000 was 10.5%.

21
22

OPERATING PERFORMANCE OF THE COMPANY'S COMMUNITIES IN LEASE-UP

The Company had fourteen Communities in lease-up during the year ended December
31, 2000. A Community in lease-up is defined as one that has commenced rental
operations during the current year but was not stabilized as of the beginning of
the current year. The following is a summary of twelve of the fourteen
Communities in lease-up during 2000:

ACTUAL/ % LEASED
NUMBER OF ANTICIPATED ACTUAL/ AVERAGE AS OF
APARTMENT CONSTRUCTION ANTICIPATED OCCUPANCY DECEMBER 31,
COMMUNITY HOMES COMPLETION STABILIZATION 2000 2000
--------- ---------- ------------ ------------- --------- ------------

Summit New Albany II -- Columbus, OH(1)........... 127 Q1 2000 Q2 2000 81.3% 93.7%
Summit Largo -- Largo, MD(1)...................... 219 Q1 2000 Q1 2000 95.7% 99.1%
Summit Hunter's Creek -- Orlando, FL(1)........... 270 Q1 2000 Q3 2000 61.6% 91.9%
Summit Deer Creek -- Alpharetta, GA(1)............ 292 Q2 2000 Q3 2000 66.5% 95.5%
Summit Ashburn Farm -- Loudon County, VA(1)....... 162 Q3 2000 Q3 2000 76.5% 99.4%
Reunion Park by Summit -- Raleigh, NC(1).......... 248 Q3 2000 Q4 2000 52.4% 99.2%
Summit Russett II -- Laurel, MD................... 112 Q4 2000 Q1 2001 22.9% 52.7%
Summit Grandview -- Charlotte, NC................. 266 Q4 2000 Q4 2001 9.9% 54.9%
Summit Deerfield -- Cincinnati, OH(2)(3).......... 498 Q3 2001 Q2 2002 9.4% 22.1%
Summit Overlook -- Raleigh, NC(2)................. 320 Q3 2001 Q1 2001 0.3% 0.3%
Summit Crest -- Raleigh, NC(2).................... 438 Q3 2001 Q2 2002 4.1% 13.9%
Summit Peachtree City -- Atlanta, GA(2)........... 397 Q4 2001 Q4 2002 0.0% 1.5%
-------
3,349
=======

(1) These properties stabilized during 2000.

(2) These properties are included in the Construction in Progress category at
December 31, 2000.

(3) Summit Deerfield is under contract for sale expected during 2001 as part of
the Company's strategy to exit the Midwest markets. The Company does not
expect to incur a loss upon the sale of Summit Deerfield.

In addition to the Communities listed in the table above, Summit Fairview,
located in Charlotte, North Carolina, and Summit Lenox, located in Atlanta,
Georgia, are existing Communities of the Company which underwent major
renovations during 2000. The renovations included upgrades of the interior of
the apartment homes (new cabinets, fixtures and other interior upgrades), and
upgrades to the parking lots and landscaping, as well as exterior painting of
buildings. The renovations required certain apartment homes to be unavailable
for rental over the course of the projects. The operations of Summit Fairview
and Summit Lenox are included in lease-up Communities results due to the
renovation work. The renovation work at Summit Fairview was complete at December
31, 2000 and the renovation work at Summit Lenox was substantially complete at
December 31, 2000.

The Company had fourteen Communities with 3,148 apartment homes in lease up
during the year ended December 31, 1999 (Summit Ballantyne I, Summit New Albany
I, Summit Fair Lakes I, Summit Governor's Village, Summit Lake II, Summit
Westwood, Summit Sedgebrook II, Summit Fair Lakes II, Summit Doral, Summit New
Albany II, Summit Largo, Summit Hunter's Creek, Summit Deer Creek and Summit
Fairview).

22
23

The operating performance of the Company's lease-up Communities is summarized as
follows (dollars in thousands):

YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
----------------------- -----------------------
2000 1999 1999 1998
--------- -------- --------- --------

Property revenues:
Rental........................................ $15,327 $6,075 $18,507 $3,231
Other......................................... 1,327 319 1,204 251
------- ------ ------- ------
Total property revenues......................... 16,654 6,394 19,711 3,482
Property operating and maintenance expense(1)... 5,244 2,519 5,758 1,337
------- ------ ------- ------
Property operating income....................... $11,410 $3,875 $13,953 $2,145
======= ====== ======= ======
Number of apartment homes....................... 3,915 3,915 3,148 3,148
======= ====== ======= ======

(1) Effective January 1, 1999, the Company implemented prospectively a new
accounting policy whereby expenditures for carpet replacement are
capitalized. Previously, the cost of carpet replacement had been expensed.
While the 1998 historical financial statements have not been restated to
reflect the change, for comparative purposes only, lease-up Communities'
property operating and maintenance expense for the year ended December 31,
1998 has been adjusted in the table above to reflect the new policy. Carpet
replacement costs for comparison of the years ended December 31, 2000 and
1999 were $14,000 and $23,000, respectively. Carpet replacement costs for
comparison of the years ended December 31, 1999 and 1998 were $16,000 and
$21,000, respectively.

OPERATING PERFORMANCE OF THE COMPANY'S DISPOSITION COMMUNITIES

Disposition communities consist of the former Summit Creekside, Summit
Eastchester, Summit Sherwood, Summit River Crossing, Summit Blue Ash, Summit
Park and Summit Village, all of which were sold during the year ended December
31, 2000 (the "2000 Dispositions"). The 2000 Dispositions resulted in the
Company receiving net proceeds on sale of approximately $102.4 million. The 1999
disposition communities consist of the former Summit Hampton, Summit Oak, Summit
Beacon Ridge, Summit Heron's Run, Summit McIntosh, Summit Perico and Summit East
Ridge (the "1999 Dispositions"). The 1999 to 1998 comparison below consists of
the 2000 Dispositions, the 1999 Dispositions as well as the following
communities sold during 1998 (referred to herein using former community names):
Summit Providence, Summit Springs, Summit Old Town, Summit Creek, Summit Green,
Summit Hill, Summit Hollow and Summit Station. The operating performance of
these communities is summarized below (dollars in thousands):

YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
------------------------ -----------------------
2000 1999 1999 1998
--------- --------- -------- ---------

Property revenues:
Rental....................................... $ 9,386 $21,299 $7,518 $25,782
Other........................................ 696 1,576 597 1,379
------- ------- ------ -------
Total property revenues........................ 10,082 22,875 8,115 27,161
Property operating and maintenance
expense(1)................................... 3,376 8,074 3,314 10,572
------- ------- ------ -------
Property operating income...................... $ 6,706 $14,801 $4,801 $16,589
======= ======= ====== =======
Number of apartment homes...................... 1,676 3,194 1,518 3,879
======= ======= ====== =======

(1) Effective January 1, 1999, the Company implemented prospectively a new
accounting policy whereby expenditures for carpet replacement are
capitalized. Previously, the cost of carpet replacement had been expensed.
While the 1998 historical financial statements have not been restated to
reflect the change, for comparative purposes only, disposition Communities'
property operating and maintenance expense for the year ended December 31,
1998 has been adjusted in the table above to reflect the new policy. Carpet
replacement costs for comparison of the years ended December 31, 2000 and
1999 were $163,000 and $366,000, respectively. Carpet replacement costs for
comparison of the years ended December 31, 1999 and 1998 were $155,000 and
$504,000, respectively.

23
24

OPERATING PERFORMANCE OF SUMMIT MANAGEMENT COMPANY

The Management Company is accounted for under the equity method of accounting.
The operating performance of the Management Company and its wholly owned
subsidiary, the Construction Company, is summarized below (dollars in
thousands):

YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
--------------------------- --------------------------
2000 1999 % CHANGE 1999 1998 % CHANGE
------- ------ -------- ------ ------ --------

Revenues:
Management fees charged to Operating
Partnership.......................... $ 5,735 $4,972 15.3% $4,972 $3,884 28.0%
Third party management fee revenue...... 1,103 1,263 -12.7% 1,263 1,177 7.3%
Construction revenue.................... 2,494 1,774 40.6% 1,774 1,141 55.5%
Gain on sale of real estate assets...... 238 -- 100.0% -- -- 0.0%
Other revenue........................... 372 844 -55.9% 844 194 335.1%
------- ------ ------ ------
Total revenue........................... 9,942 8,853 12.3% 8,853 6,396 38.4%
------- ------ ------ ------
Expenses:
Operating............................... 9,398 8,699 8.0% 8,699 5,893 47.6%
Depreciation............................ 313 284 10.2% 284 244 16.4%
Amortization............................ 303 289 4.8% 289 286 1.0%
Interest................................ 677 300 125.7% 300 300 0.0%
------- ------ ------ ------
Total expenses.......................... 10,691 9,572 11.7% 9,572 6,723 42.4%
------- ------ ------ ------
Loss before extraordinary items........... (749) (719) 4.2% (719) (327) 119.9%
Extraordinary items....................... (30) -- 100.0% -- -- 0.0%
------- ------ ------ ------
Net loss.................................. $ (779) $ (719) 8.3% $ (719) $ (327) 119.9%
======= ====== ====== ======

The increase in operating revenue for the year ended 2000 over 1999 was
primarily the result of an increase in the management fee charged to the
Operating Partnership's Communities from 2.50% in 1999 to 2.75% in 2000 and
higher revenues from increased construction activity at the Construction
Company. The increase in management fee is the first increase since the
Company's initial public offering in 1994. The increase in interest expense
resulted from an inter-company loan made to the Management Company by the
Operating Partnership in late 1999 for the purpose of purchasing a parcel of
land in Raleigh, North Carolina. The Management Company sold such parcel of land
on February 29, 2000 resulting in a gain on sale of $238,000. The increase in
operating expenses for the year was a result of increased construction
activities and increased personnel at the Management Company in order to better
support the Company's growth objectives, including improving the operating
performance of its stabilized Communities.

Third party apartment homes under management were 1,723, 2,435 and 3,310 during
the years ended December 31, 2000, 1999 and 1998, respectively. Property
management fees included $1.1 million, $1.3 million and $1.2 million of fees
from third parties for the years ended December 31, 2000, 1999 and 1998,
respectively. Property management fees from third parties as a percentage of
total property management revenues were 16.1%, 20.3% and 23.3% for the years
ended December 31, 2000, 1999 and 1998, respectively. The Company expects third
party management revenue as a percentage of total property management revenue to
continue to decline.

All of the Construction Company's revenues are from contracts with the Company.

OTHER INCOME AND EXPENSES

Interest income increased by $562,000 to $3.6 million in 2000 compared to 1999,
primarily due to interest earned on notes receivable of approximately $809,000
as well as an increase of approximately $429,000 in interest earned on employee
stock loans over 1999, offset by a decrease in interest earned on proceeds from
property sales placed in escrow in accordance with like-kind exchange income tax
regulations of approximately $739,000. Interest income increased by $1.9 million
to $3.0 million in 1999 compared to 1998, primarily due to

24
25

interest earned in 1999 on the proceeds from property sales placed in escrow in
accordance with like-kind exchange income tax regulations.

Other income increased by $329,000 to $618,000 in 2000 compared to 1999,
primarily as a result of a credit enhancement fee earned in connection with a
property that is being developed for the Company by a third party, as well as
dividends earned on an equity investment. Other income decreased by $560,000 to
$289,000 in 1999 compared to 1998, primarily as a result of an incentive fee
earned in connection with a property that the Company had developed and managed
for a third party in 1998.

Depreciation expense increased by $2.2 million, or 6.3%, to $36.6 million in
2000 compared to 1999, primarily due to depreciation expense related to the
Company's 2000 acquisitions and increased depreciation of Communities in
lease-up. Depreciation expense increased by $5.4 million, or 18.7%, to $34.4
million in 1999 compared to 1998 due to an increase in depreciation expense
related to the 1998 acquisitions and Communities in lease-up.

Interest expense, including amortization of deferred financing costs, increased
by $1.4 million for the year ended December 31, 2000 compared to the year ended
December 31, 1999. The increase was primarily the result of an increase of $56.4
million in the Company's average indebtedness outstanding and an increase in the
effective interest rate of 0.39% (6.65% to 7.04%) in 2000 as compared to the
same period in 1999.

Interest expense, including amortization of deferred financing costs, increased
by $4.8 million during the year ended December 31, 1999 as compared to the year
ended December 31, 1998. The increase was primarily the result of an increase of
$104.7 million in the Company's average indebtedness outstanding offset by a
decrease in the effective interest rate of .07% (6.72% to 6.65%) in 1999 as
compared to the same period in 1998.

General and administrative expenses have remained relatively stable as a
percentage of total revenues. As a percentage of total revenues, general and
administrative expenses were 2.5%, 2.2% and 2.6% in 2000, 1999 and 1998,
respectively.

The $38.5 million gain on sale of assets in 2000 resulted from the disposition
of seven communities. The seven communities sold were:

COMMUNITY LOCATION
--------- --------

Summit Creekside Hickory, NC
Summit Sherwood Winston-Salem, NC
Summit Eastchester High Point, NC
Summit River Crossing Indianapolis, IN
Summit Blue Ash Blue Ash, OH
Summit Park Forest Park, OH
Summit Village Atlanta, GA

The Communities disposed of in 2000 were part of the Company's plan to dispose
of assets that no longer meet its growth objectives or to make desired changes
in the number of apartment homes in each of the Company's markets. The Company
believes that by concentrating its efforts and capital in a limited number of
large markets it will gain a competitive advantage as it improves operational
efficiencies, builds a more significant brand name and improves market
knowledge. Also, by disposing of assets that no longer meet the Company's
long-term growth objectives, capital is provided to fund the development of new,
higher growth assets. The $17.4 million gain on the sale of assets in 1999
resulted from the disposition of seven communities. The $37.1 million gain on
sale of assets in 1998 resulted from the sale of eight communities.

The extraordinary items in the year ended December 31, 1998 resulted from the
write-off of deferred financing costs in connection with the replacement by the
Company of a prior unsecured credit facility and prepayment penalties incurred
on six mortgage notes which were repaid during the period.

25
26

LIQUIDITY AND CAPITAL RESOURCES

Liquidity

The Company's net cash provided by operating activities increased from $59.0
million for the year ended December 31, 1999 to $71.0 million for the same
period in 2000, primarily due to a $5.8 million increase in property operating
income, a $1.2 million accrual of vested stock awards at December 31, 2000, a
$2.9 million increase in depreciation and amortization and a $4.8 million
decrease in cash used in accounts payable and accrued expenses.

Net cash used in investing activities increased from $39.8 million for the year
ended December 31, 1999 to $118.2 million for the same period in 2000 due to
approximately $33.1 million in cash expended for acquisition Communities during
2000 and an approximate $5.7 million decrease in proceeds from the sale of
Communities from 1999 to 2000. In addition, the Company funded approximately
$168.6 million of construction and land acquisition activity during 2000, a
$40.8 million increase over 1999. Proceeds from the sale of Communities during
2000 represent funds expended from like-kind exchange escrows. In the event that
the proceeds from these property sales are not fully invested in qualified
like-kind property during the required time period, a special distribution may
be made or company level tax may be incurred.

Net cash provided by financing activities was $46.2 million for the year ended
December 31, 2000. Net cash used in financing activities was $18.0 million for
the year ended December 31, 1999. The increase in cash provided by financing
activities during 2000 is primarily due to an increase in net borrowings from
1999 to 2000 of $137.6 million on the Company's unsecured credit facility,
proceeds received from issuance of mortgage debt and unsecured medium term notes
in the aggregate of $74.2 million, all offset by the repayments of an unsecured
bank note of $15.0 million and other secured mortgages and tax-exempt bonds in
the aggregate of $9.6 million. In addition, the value of stock repurchased
during 2000 was approximately $39.5 million less than in 1999, there were no
issuances of preferred units in 2000 ($136.3 million in 1999) and the proceeds
from the dividend reinvestment and stock purchase plans was approximately $10.5
million less in 2000 than in 1999.

The ratio of earnings to fixed charges was 1.99 to 1 for the year ended December
31, 2000 compared to 1.85 to 1 for the year ended December 31, 1999.

The Company has elected to be taxed as a Real Estate Investment Trust under
Sections 856 and 860 of the Internal Revenue Code of 1986, as amended. REITs are
subject to a number of organizational and operational requirements, including a
requirement that 95% (90% effective for tax years beginning after December 31,
2000) of ordinary taxable income be distributed (see "Recently Enacted
Legislation" on page 36). As a REIT, the Company generally will not be subject
to federal income tax on net income to the extent taxable income is distributed.

The Company's outstanding indebtedness at December 31, 2000 totaled $763.9
million. This amount includes approximately $303.0 million in fixed rate
conventional mortgages, $37.4 million of variable rate tax-exempt bonds, $278.0
million of unsecured notes, $4.0 million of tax-exempt fixed rate loans, and
$141.5 million under the Company's unsecured credit facility.

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

The Company expects to meet its long-term liquidity requirements (i.e.,
liquidity requirements arising after 12 months), such as scheduled mortgage debt
maturities, property acquisitions, financing of construction and development
activities and other non-recurring capital improvements, through the issuance of
unsecured notes and equity securities, from undistributed Funds from Operations
(see page 35), from proceeds received from the disposition of certain
properties, and, in connection with the acquisition of land or improved
property, through the issuance of Common Units.

26
27

Credit Facility

On September 26, 2000, the Company obtained a new unsecured line of credit (the
"Unsecured Credit Facility") in the amount of $225.0 million which replaced the
existing $200.0 million credit facility. The Unsecured Credit Facility provides
funds for new development, acquisitions and general working capital purposes.
The Unsecured Credit Facility has a three year term, expiring on September 26,
2003, with annual extension options and bears interest at LIBOR + 100 basis
points based upon the Company's current credit rating of BBB- by Standard &
Poor's Rating Services and Baa3 by Moody's Investors Service. The spread
component of the aggregate interest rate will be reduced in the event of an
upgrade of the Company's unsecured credit rating. The Unsecured Credit Facility
is repayable monthly on an interest only basis with principal due at maturity.
The Company's credit facility had an average interest rate and average balance
outstanding during the years ended December 31, 2000, 1999 and 1998 of 7.20%,
6.06% and 6.67% and $119.8 million, $99.2 million and $98.0 million,
respectively. In addition, the maximum outstanding principal amount during 2000,
1999 and 1998 was $174.0 million, $176.0 million and $175.0 million,
respectively.

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

The Unsecured Credit Facility requires the Company to comply with certain
affirmative and negative covenants, including the following requirements: (i)
the Company maintain its qualification as a REIT; (ii) the Company maintain a
ratio of EBITDA (as defined therein) to fixed charges (as defined therein) of
not less that 1.75 to 1; (iii) dividends not exceed 90% of funds from operations
(as defined therein); (iv) the Company maintain a ratio of total funded debt (as
defined therein) to implied capitalization value (as defined therein) of less
than .55 to 1; and (v) the Company maintain a ratio of unencumbered asset value
(as defined therein) to unsecured debt of less than 1.75 to 1. In addition, the
Unsecured Notes and the Unsecured Bank Notes require the Company to comply with
certain affirmative and negative covenants, including the following
requirements: (i) the ratio of unencumbered assets (as defined therein) to
unsecured debt equal or exceed 175%; (ii) the ratio of total construction in
progress (as defined therein) to implied capitalization value not exceed 0.25%
and (iii) secured debt not exceed 40% of implied capitalization value (as
defined therein). The Company was in compliance with these covenants at December
31, 2000.

Medium-Term Notes

On May 29, 1998, the Company established a program for the sale by the Operating
Partnership of up to $95 million aggregate principal amount of Medium-Term Notes
due nine months or more from the date of issuance (the "MTN Program"). The
Operating Partnership issued Medium-Term Notes with an aggregate principal
amount of $80 million in connection with the MTN Program as follows: (i) on July
28, 1998, the Operating Partnership sold $30 million of notes which are due on
July 30, 2001 and bear interest at 6.75% per year; (ii) on October 5, 1998, the
Operating Partnership sold $25 million of 6.71% notes which were due and repaid
on October 5, 2000; and (iii) on March 18, 1999, the Operating Partnership sold
$25 million of notes which are due on March 16, 2009 and bear interest at 7.59%
per year.

On April 20, 2000, the Company commenced a new program for the sale by the
Operating Partnership of up to $250 million aggregate principal amount of
Medium-Term Notes due nine months or more from the date of issuance. The new
program was established under the Company's and the Operating Partnership's
existing shelf registration statement. During 2000, the Operating Partnership
issued Medium-Term Notes with an aggregate principal amount of $52.0 million in
connection with the new MTN Program as follows: (i) on July 19, 2000 the
Operating Partnership sold $10.0 million of notes which are due on July 19, 2010
and bear interest at 8.50% per year; (ii) on October 20, 2000, the Operating
Partnership sold $17.0 million of notes which are due on October 20, 2003 and
bear interest at 7.87% per year; and (iii) on November 17, 2000, the Operating
Partnership sold $25.0 million of notes which are due on November 17, 2005 and
bear interest at 8.037% per year.

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28

Private Placement of Preferred Units

On April 29, 1999, the Operating Partnership completed a private placement of
3.4 million of its 8.95% Series B Cumulative Redeemable Perpetual Preferred
Units (the "Series B Preferred Units") to two institutional investors at a price
of $25.00 per unit. The net proceeds of approximately $83.0 million were used to
repay amounts outstanding under the Company's unsecured credit facility. The
Series B Preferred Units may be exchanged by the holders into shares of 8.95%
Series B Cumulative Redeemable Perpetual Preferred Stock of the Company ("Series
B Preferred Shares") on a one-for-one basis (subject to adjustment). Holders of
the Series B Preferred Units may exercise their exchange right (a) at any time
on or after April 29, 2009, (b) at any time if full quarterly distributions are
not made for six quarters, or (c) upon the occurrence of specified events
related to the treatment of the Operating Partnership or the Series B Preferred
Units for federal income tax purposes. The Operating Partnership may redeem the
Series B Preferred Units at any time on or after April 29, 2004 for cash at a
redemption price equal to the redeemed holder's capital account (initially
$25.00 per unit), plus all accumulated, accrued and unpaid distributions or
dividends. In lieu of cash, the Operating Partnership may elect to deliver
Series B Preferred Shares on a one-for-one basis (subject to adjustment), plus
an amount equal to all accumulated, accrued and unpaid distributions or
dividends. The Series B Preferred Units have no stated maturity, are not subject
to any sinking fund or mandatory redemption and are not convertible into any
other securities of the Company or the Operating Partnership. Distributions on
the Series B Preferred Units are cumulative from the date of original issuance
and are payable quarterly at the rate of 8.95% per annum of the $25.00 original
capital contribution. Holders of the Series B Preferred Units received
distributions in the aggregate amount of approximately $7.6 million and $5.1
million during 2000 and 1999, respectively.

On September 3, 1999, the Operating Partnership completed a private placement of
2.2 million of its 8.75% Series C Cumulative Redeemable Perpetual Preferred
Units (the "Series C Preferred Units") to an institutional investor at a price
of $25.00 per unit. The net proceeds of approximately $54.0 million were used to
repay amounts outstanding under the Company's unsecured credit facility. The
Series C Preferred Units may be exchanged by the holder into shares of 8.75%
Series C Cumulative Redeemable Perpetual Preferred Stock of the Company ("Series
C Preferred Shares") on a one-for-one basis (subject to adjustment). The holder
of the Series C Preferred Units may exercise its exchange right (a) at any time
on or after September 3, 2009, (b) at any time if full quarterly distributions
are not made for six quarters, (c) upon the occurrence of specified events
related to the treatment of the Operating Partnership or the Series C Preferred
Units for federal income tax purposes, or (d) at any time that such
institutional investor's holdings in the Operating Partnership exceed 18% of the
total profits of or capital interests in the Operating Partnership for a taxable
year. The Operating Partnership may redeem the Series C Preferred Units at any
time on or after September 3, 2004 for cash at a redemption price equal to the
redeemed holder's capital account (initially $25.00 per unit), plus all
accumulated, accrued and unpaid distributions or dividends. The Series C
Preferred Units have no stated maturity, are not subject to any sinking fund or
mandatory redemption and are not convertible into any other securities of the
Company or the Operating Partnership. Distributions on the Series C Preferred
Units are cumulative from the date of original issuance and are payable
quarterly at the rate of 8.75% per annum of the $25.00 original capital
contribution. The holder of the Series C Preferred Units received distributions
in the aggregate amount of approximately $4.9 million and $1.5 million during
2000 and 1999, respectively.

Common Stock Repurchase Program

On May 11, 1999, the Board of Directors of the Company authorized a common stock
repurchase program pursuant to which the Company was authorized to purchase up
to an aggregate of $50 million of outstanding Common Stock (the "$50 Million
Program"). All repurchases were made on the open market at prevailing prices or
in privately negotiated transactions. During the year ended December 31, 2000,
the Company completed the $50 Million Program by repurchasing 131,900 shares of
Common Stock for an aggregate purchase price, including commissions, of
approximately $2.5 million, or an average price of $18.88 per share. In total,
the Company repurchased 2.5 million shares of Common Stock under the $50 Million
Program for an aggregate purchase price, including commissions, of approximately
$50 million, or an average price of $19.63 per share.

28
29

On March 12, 2000, the Board of Directors of the Company authorized a new common
stock repurchase program pursuant to which the Company is authorized to purchase
up to an aggregate of $25 million of outstanding Common Stock (the "$25 Million
Program"). All repurchases have been and will be made on the open market at
prevailing prices or in privately negotiated transactions. This authority may be
exercised from time to time and in such amounts as market conditions warrant.
During the year ended December 31, 2000, the Company repurchased 279,400 shares
of Common Stock under the $25 Million Program for an aggregate purchase price,
including commissions, of approximately $5.5 million or an average price of
$19.80 per share.

Market Risk

The Company's capital structure includes the use of variable rate and fixed rate
debt and, therefore, the Company is exposed to the impact of changes in interest
rates. While the Company has historically had limited involvement with
derivative financial instruments, it 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. The Company generally does not utilize derivative financial
instruments for trading or speculative purposes. The Company generally
refinances maturing debt instruments at then-existing market interest rates and
terms which may be more or less favorable than the interest rates and terms on
the maturing debt.

The following table provides information about the Company's 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 notes thereto. For debt, the table presents principal cash flows
and related weighted average interest rates in effect at December 31, 2000 by
expected maturity dates. The weighted average interest rates presented in this
table are 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.

EXPECTED YEAR OF MATURITY

2000 1999
2001 2002 2003 2004 2005 THEREAFTER TOTAL TOTAL
------ ------ ------- ------ ------ ---------- ------- -------

FIXED RATE DEBT:
Conventional fixed rate....................... 5,436 13,817 6,047 6,473 41,438 229,840 303,051 263,196
Average interest rate......................... 6.64% 8.48% 6.57% 6.57% 6.95% 6.77% 6.86% 6.69%
Tax-exempt fixed rate......................... 67 71 76 80 87 3,604 3,985 4,048
Average interest rate......................... 6.95% 6.95% 6.95% 6.95% 6.95% 6.95% 6.95% 7.11%
Unsecured fixed rate.......................... 30,000 41,000 47,000 50,000 25,000 85,000 278,000 266,000
Average interest rate......................... 6.75% 7.21% 7.08% 6.95% 8.04% 7.47% 7.25% 7.12%
----------------------------------------------------------------------------
Total fixed rate debt....................... 35,503 54,888 53,123 56,553 66,525 318,444 585,036 533,244
Average interest rate....................... 6.73% 7.53% 7.02% 6.91% 7.36% 7.08% 7.12% 6.91%
----------------------------------------------------------------------------
VARIABLE RATE DEBT:
Tax-exempt variable rate...................... 1,160 1,260 1,260 1,260 1,260 31,163 37,363 38,388
Average interest rate......................... 5.65% 5.65% 5.65% 5.65% 5.65% 5.65% 5.65% 4.85%
Variable rate Credit Facility................. -- -- 141,500 -- -- -- 141,500 78,000
Average interest rate......................... -- -- 7.20% -- -- -- 7.20% 6.06%
----------------------------------------------------------------------------
Total variable rate debt.................... 1,160 1,260 142,760 1,260 1,260 31,163 178,863 116,388
Average interest rate....................... 5.65% 5.65% 7.19% 5.65% 5.65% 5.65% 6.88% 7.19%
----------------------------------------------------------------------------
Total Debt.................................... 36,663 56,148 195,883 57,813 67,785 349,607 763,899 649,632
Average interest rate......................... 6.70% 7.49% 7.14% 6.88% 7.33% 6.84% 7.01% 6.55%
============================================================================
INTEREST RATE SWAP:
Pay variable/Receive fixed.................... 30,000 30,000 30,000
Average pay rate.............................. 3-month 3-month 3-month
LIBOR LIBOR LIBOR
+0.11% +0.11% +0.11%
Receive rate.................................. 6.625% 6.625% 6.625%

At December 31, 2000 and 1999, the fair values of the Company's interest rate
swap were $485,000 and $445,000, respectively. The Company estimates that the
fair value of the debt approximates carrying value based upon its effective
borrowing rates for issuance of debt with similar terms and remaining
maturities.

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30

Schedule of Debt

The following table sets forth certain information regarding debt financing as
of December 31, 2000 and 1999 (dollars in thousands):

PRINCIPAL OUTSTANDING
INTEREST DECEMBER 31,
RATE AS OF MATURITY ----------------------
DECEMBER 31, 2000 DATE(1) 2000 1999
----------------- -------- --------- ---------

FIXED RATE DEBT
MORTGAGE LOAN(2)........................ 6.24% 10/15/08 $140,550 $143,740
MORTGAGE LOAN(3)........................ 8.00% 9/1/05 8,272 8,375
MORTGAGE NOTES
Summit Foxcroft...................... 8.00% 4/1/20 2,519 2,594
Summit Radbourne..................... 9.80% 3/1/02 8,294 8,405
Summit Sand Lake..................... 7.88% 2/15/06 13,990 14,348
Summit Fair Lakes.................... 7.82% 7/1/10 48,340 --
Summit Buena Vista................... 6.75% 2/15/07 24,980 25,393
Summit Belcourt...................... 6.75% 1/1/06 9,386 9,552
Summit Camino Real................... 6.75% 6/1/06 16,519 16,806
Summit Turtle Rock................... 6.75% 12/1/05 10,634 10,824
Summit Los Arboles................... 6.75% 12/1/05 19,567 19,915
Mortgage Notes paid in 2000.......... -- 3,244
TAX EXEMPT MORTGAGE NOTES
Summit Crossing...................... 6.95% 11/1/25 3,985 4,048
-------- --------
TOTAL MORTGAGE DEBT............. 307,036 267,244
-------- --------
UNSECURED NOTES
6.75% Medium-Term Notes due 2001..... 6.75% 7/30/01 30,000 30,000
7.87% Medium-Term Notes due 2003..... 7.87% 10/20/03 17,000 --
8.037% Medium-Term Notes due 2005.... 8.04% 11/17/05 25,000 --
7.59% Medium-Term Notes due 2009..... 7.59% 3/16/09 25,000 25,000
8.50% Medium-Term Notes due 2010..... 8.50% 7/19/10 10,000 --
6.80% Notes due 2002................. 6.80% 8/15/02 25,000 25,000
6.63% Notes due 2003................. 6.63% 12/15/03 30,000 30,000
6.95% Notes due 2004................. 6.95% 8/15/04 50,000 50,000
7.20% Notes due 2007................. 7.20% 8/15/07 50,000 50,000
Bank Note Due 2002................... 7.85% 8/3/02 16,000 16,000
Unsecured Notes paid in 2000......... -- 40,000
-------- --------
TOTAL UNSECURED NOTES........... 278,000 266,000
-------- --------
TOTAL FIXED RATE DEBT........... 585,036 533,244
-------- --------
VARIABLE RATE DEBT
UNSECURED CREDIT FACILITY............... LIBOR + 100 9/26/03 141,500 78,000
TAX EXEMPT BONDS(4)
Summit Belmont....................... 6.25% 4/1/07 11,005 11,225
Summit Pike Creek.................... 6.25% 8/15/20 11,648 12,208
Summit Gateway....................... 6.25% 7/1/07 6,500 6,700
Summit Stony Point................... 6.25% 4/1/29 8,210 8,255
-------- --------
TOTAL TAX EXEMPT BONDS.......... 37,363 38,388
-------- --------
TOTAL VARIABLE RATE DEBT........ 178,863 116,388
-------- --------
TOTAL OUTSTANDING INDEBTEDNESS................................. $763,899 $649,632
======== ========

(1) With the exception of the Mortgage Loan referred to in Note 2 below, which
has a $140.6 million balance at December 31, 2000, all the secured debt can
be prepaid at any time. Such Mortgage Loan can be

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31

prepaid after February 15, 2001. Prepayment of all such secured debt is
generally subject to penalty or premium; however, the tax exempt mortgage
notes can be prepaid at any time without penalty or premium.

(2) Mortgage Loan secured by the following Communities:

Summit Glen Summit Las Palmas Summit St. Clair
Summit Ballantyne Summit Meadow Summit Highland
Summit Del Ray Summit Windsor Summit Norcroft
Summit Plantation Summit on the River

(3) Mortgage Loan secured by Summit Simsbury and Summit Touchstone Communities.

(4) The tax exempt bonds (the "Bonds") bear interest at various rates set by a
remarketing agent at the demand note index plus 0.50%, set weekly, or the
lowest percentage of prime which allows the resale at a price of par. The
Bonds are enhanced by letters of credit from a financial institution (the
"Credit Enhancements"), each of which Credit Enhancement will terminate
prior to the maturity dates of the related Bonds. In the event such Credit
Enhancements are not renewed or replaced upon termination, the related loan
obligations will be accelerated.

The one-month LIBOR rate at December 31, 2000 was 6.56%.

The Company's outstanding indebtedness (excluding the Unsecured Credit Facility)
had an average maturity of 6.4 years as of December 31, 2000. The aggregate
maturities of all outstanding debt (excluding the Unsecured Credit Facility) as
of December 31, 2000 for each of the years ended after December 31, 2000 are as
follows (in thousands):

2001...................................................... $ 36,663
2002...................................................... 56,148
2003...................................................... 54,383
2004...................................................... 57,813
2005...................................................... 67,785
Thereafter................................................ 349,607
--------
Total................................................ $622,399
========

Of the significant maturities in the above table, $30.0 million relates to
unsecured notes due in 2001; $16.0 million relates to the unsecured bank notes
that mature in 2002; $25.0 million relates to unsecured medium-term notes due in
2002; $30.0 million relates to unsecured Notes due in 2003; and $17.0 million
relates to unsecured medium-term notes due in 2003.

Net Asset Value

The Company's estimate of net asset value is based on the sum of: 1) the
estimated fair market value of stabilized properties determined by applying
current market capitalization rates (for recent purchases and sales of
comparable properties) to projected cash flows, 2) the cost of any properties
acquired during the period under consideration, 3) construction in progress
adjusted to estimated fair market value, 4) the implied value of any below
market debt (assumable under certain terms and conditions) and 5) other assets
including cash and cash equivalents, less total liabilities divided by the
weighted average number of common shares and Common Units outstanding during the
period under consideration. Using this methodology, management's current
estimate of net asset value was $28.48 and $24.61 per share as of December 31,
2000 and 1999, respectively. As described above, the Company's determination of
net asset value is based on estimates and assumptions, including estimates of
the fair market value of stabilized properties and construction projects, and
thus is inherently uncertain. There can be no assurance that the Company's
estimate of net asset value is accurate or that the estimates used in the
calculation of net asset value accurately reflect the values at which the
properties could be sold. The Company's estimate of net asset value also will
vary depending on current market conditions.

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ACQUISITIONS AND DISPOSITIONS

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

On August 1, 2000, the Company exercised its option to purchase its joint
venture partner's interest in each of two Communities, Summit Sweetwater and
Summit Shiloh, both located in Atlanta, Georgia. The acquisition of these two
communities added 490 apartment homes to the Company's portfolio at an aggregate
purchase price of $36.0 million. The acquisitions were financed with the
issuance of 96,455 Common Units valued, in the aggregate, at $2.2 million and
the payment of approximately $33.7 million in cash.

During the year ended December 31, 1999, the Company sold seven communities
comprising 1,518 apartment homes for approximately $76.0 million, resulting in a
gain on sale of approximately $17.4 million. Net proceeds of $54.4 million, were
placed in escrow with a qualified intermediary in accordance with like-kind
exchange income tax rules and regulations. The communities sold were the former
Summit Hampton, Summit Oak, Summit Beacon Ridge, Summit Perico, Summit McIntosh,
Summit Heron's Run and Summit East Ridge.

During the year ended December 31, 1999, the Company acquired no communities.

In individual property transactions, the Company sold three communities for
$48.9 million (formerly known as Summit Providence on May 8, 1998, Summit
Springs on October 23, 1998 and Summit Old Town on November 2, 1998). The total
gain on sale recognized for these three disposition transactions was $17.0
million.

On December 16, 1998, the Company (i) sold five communities (the "Sold
Communities") to Hollow Creek, LLC., a newly-formed North Carolina limited
liability company for approximately $68.0 million and (ii) contributed two
communities with an approximate value of $22.0 million (together with the Sold
Communities, the "Joint Venture Communities") to Station Hill, LLC., a
newly-formed North Carolina limited liability company ("Station Hill"). On the
same date, Hollow Creek, LLC contributed the Sold Communities to Station Hill.
Station Hill is a joint venture limited liability company, the membership of
which is comprised of the Company and a wholly owned subsidiary of a major
financial services company (the "Joint Venture Member"). The disposition was
effected pursuant to a Real Estate Sale Agreement dated November 20, 1998
between the Operating Partnership and the Joint Venture Member and pursuant to
the Operating Agreement of Station Hill, also dated November 20, 1998. The
Company's contribution to Station Hill (approximately $5.6 million) represents a
25 percent equity interest in Station Hill. In addition, the Company is the
managing member of Station Hill and will also retain management of the Joint
Venture Communities through a management agreement with Station Hill. The cash
flow of Station Hill will be distributed pro rata to each member based on its
equity contribution until certain economic benchmarks are achieved, at which
point the Company will receive an escalated portion of the cash flow and
residual interest. Station Hill has obtained five separate mortgages from Fannie
Mae, the aggregate balance of which was approximately $68.7 million at December
31, 2000. These mortgages have a ten-year maturity and a 6.70% interest rate.
The proceeds of the mortgages were distributed on a pro rata basis to Station
Hill's two members. The Joint Venture Communities involved in the transaction
were Summit Green, Summit Hollow I and II and Summit Creek in Charlotte, North
Carolina; Summit Hill I and II in Raleigh, North Carolina; and Summit Station in
Tampa, Florida. The Joint Venture Communities include 1,433 apartment homes. The
Company recognized a gain of approximately $20.2 million on the disposition. The
gain is net of $5.6 million elimination of gain relative to the Company's
retained portion of the joint venture. The elimination of the gain reduced the
Company's investment in the joint venture to zero at the initial joint venture
formation date.

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33

Proceeds from the sale of Summit Springs, Summit Old Town and the Sold
Communities of approximately $93.2 million were put in escrow with a qualified
intermediary in accordance with like-kind exchange income tax rules and
regulations. These proceeds were used to fund future developments.

The Company completed the acquisition of three communities located in Atlanta,
Georgia in 1998: Summit St. Clair, purchased effective March 1, 1998; Summit
Club at Dunwoody; purchased effective May 22, 1998, and Summit Lenox, purchased
effective July 8, 1998 (the "Atlanta Acquisitions"). The Atlanta Acquisitions
added a total of 1,093 apartment homes to the Company's portfolio at an
aggregate purchase price of $88.3 million. The Atlanta Acquisitions were
financed with the issuance of 259,871 Common Units valued at $5.2 million and
the assumption of approximately $8.8 million of mortgage debt. The balance of
the purchase price was paid in cash.

On November 4, 1998, the Company acquired a portfolio of multifamily properties
in Texas (the "Ewing Portfolio") through a merger with Ewing Industries, a
private developer of luxury apartment homes. The Ewing Portfolio consists of
2,465 apartment homes in seven communities located in Dallas, Austin and San
Antonio. The acquisition of the Ewing Portfolio was effected pursuant to an
Agreement and Plan of Reorganization dated as of October 31, 1998 (the "Merger
Agreement") among the Company, affiliates of the Company including the Operating
Partnership, Ewing Industries, Inc., an Ohio corporation ("Ewing Industries"),
affiliates of Ewing, and their respective partners, shareholders and members
(together with Ewing Industries, "Ewing"). Pursuant to the Merger Agreement, the
acquisition was funded through (i) the issuance to Ewing of 1,008,988 shares of
Common Stock of the Company and 141,921 Common Units, valued at $20.7 million in
the aggregate, (ii) the assumption of $84.0 million in long-term fixed-rate
mortgage indebtedness, (iii) the payment of $50.6 million in cash and (iv)
receipt of $3.8 million of credit for customary prorations and reserves. A
portion of the consideration was deferred until stabilization of one community
(Summit Las Palmas) which was in lease-up at the time of the acquisition of the
Ewing Portfolio. The Summit Las Palmas purchase closed on December 31, 1998 with
the additional consideration of (i) 1,027,771 shares of Common Stock and 36,124
Common Units valued at $29.2 million in the aggregate and (ii) cash in the
amount of approximately $600,000.

At December 31, 2000, the Company had one apartment community, Summit Deerfield,
under contract for sale during 2001. Summit Deerfield is under construction and
in lease up and is expected to yield a total estimated cost of approximately
$41.5 million upon completion. The property operating income from Summit
Deerfield represented less than one percent of property operating income for the
Company for the year ended December 31, 2000. Proceeds from the sale of Summit
Deerfield are expected to be used to fund future development.

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34

DEVELOPMENT ACTIVITY

The Company's developments in process at December 31, 2000 are summarized as
follows (dollars in thousands):

TOTAL ESTIMATED ANTICIPATED
APARTMENT ESTIMATED COST TO COST TO CONSTRUCTION
COMMUNITY HOMES COSTS DATE COMPLETE COMPLETION
--------- --------- --------- -------- --------- ------------

Summit Deerfield -- Cincinnati, OH(1)(3)... 498 $ 41,500 $ 35,210 $ 6,290 Q3 2001
Summit Overlook -- Raleigh, NC(1).......... 320 25,500 14,314 11,186 Q3 2001
Summit Crest -- Raleigh, NC(1)............. 438 30,700 21,148 9,552 Q3 2001
Summit Peachtree City -- Atlanta, GA(1).... 397 31,500 24,008 7,492 Q4 2001
Summit Grand Parc -- Washington, DC........ 105 29,400 13,038 16,362 Q1 2002
Summit Brookwood -- Atlanta, GA............ 359 41,500 2,208 39,292 Q4 2002
Summit Valley Brook -- Philadelphia, PA.... 352 37,000 9,507 27,493 Q1 2003
Other development and construction
costs(2)................................. -- -- 43,149 --
----- -------- -------- --------
2,469 $237,100 $162,582 $117,667
===== ======== ======== ========

(1) These communities were in lease-up at December 31, 2000.

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

(3) Summit Deerfield is under contract for sale expected in 2001 as a part of
the Company's strategy to exit the Midwest market. The Company does not
expect to incur a loss upon the sale of Summit Deerfield.

Estimated cost to complete the development Communities of approximately $117.7
million represents substantially all of the Company's material commitments for
capital expenditures at December 31, 2000.

Certain Factors Affecting the Performance of Development Communities

The Company is optimistic about the operating prospects of the Communities under
construction. As with any development community, there are uncertainties and
risks associated with the development of the Communities described above. While
the Company has prepared development budgets and has estimated completion and
stabilization target dates based on what it believes are reasonable assumptions
in light of current conditions, there can be no assurance that actual costs will
not exceed current budgets or that the Company will not experience construction
delays due to the unavailability of materials, weather conditions or other
events.

Other development risks include the possibility of incurring additional costs or
liabilities resulting from increased costs for materials or labor or other
unexpected costs or defects in construction material, and the possibility that
financing may not be available on favorable terms, or at all, to pursue or
complete development activities. Similarly, market conditions at the time these
Communities become available for leasing will affect the rental rates that may
be charged and the period of time necessary to achieve stabilization, which
could make one or more of the development Communities unprofitable or result in
achieving stabilization later than currently anticipated.

In addition, the Company is conducting feasibility and other pre-development
work for ten Communities. The Company could abandon the development of any one
or more of these potential Communities in the event that it determines that
market conditions do not support development, financing is not available on
favorable terms, or it is unable to obtain necessary permits and authorizations,
or due to other circumstances which may prevent development. Similarly, there
can be no assurance that, if the Company does pursue one or more of these
potential Communities, that it will be able to complete construction within the
currently estimated development budgets or that construction can be started at
the time currently anticipated.

AMERICANS WITH DISABILITIES ACT AND SIMILAR LAWS

Under the Americans with Disabilities Act, all places of public accommodation
are required to meet federal requirements related to access and use by disabled
persons. The Company believes that its Communities are

34
35

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 the Company's 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 the Company, they could be substantial.
Limitations or restrictions on the completion of certain renovations may limit
application of the Company's investment strategy in particular instances or
reduce overall returns on its investments.

INFLATION

Substantially all of the leases at the Communities are for a term of one year or
less, which may enable the Company to seek increased rents upon renewal of
existing leases or commencement of new leases. The short-term nature of these
leases generally serves to reduce the risk to the Company of the adverse effect
of inflation.

FUNDS FROM OPERATIONS

The Company considers funds from operations ("FFO") to be an appropriate measure
of performance of an equity REIT. The Company computes FFO in accordance with
standards established by the National Association of Real Estate Investment
Trusts ("NAREIT"). FFO, as defined by NAREIT, represents net income (loss)
excluding gains or losses from sales of property, plus depreciation of real
estate assets, and after adjustments for unconsolidated partnerships and joint
ventures, all determined on a consistent basis in accordance with generally
accepted accounting principles ("GAAP"). Funds Available for Distribution
("FAD") is defined as FFO less capital expenditures funded by operations
(recurring capital expenditures). The Company's methodology for calculating FFO
and FAD may differ from the methodology for calculating FFO and FAD utilized by
other real estate companies, and accordingly, may not be comparable to other
real estate companies. FFO and FAD do not represent amounts available for
management's discretionary use because of needed capital expenditures or
expansion, debt service obligations, property acquisitions, development,
dividends and distributions or other commitments and uncertainties. FFO and FAD
should not be considered as alternatives to net income (determined in accordance
with GAAP) as an indication of the Company's financial performance or to cash
flows from operating activities (determined in accordance with GAAP) as a
measure of the Company's liquidity, nor are they indicative of funds available
to fund the Company's cash needs, including its ability to make
dividends/distributions. The Company believes FFO and FAD are helpful to
investors as measures of the performance of the Company because, along with cash
flows from operating activities, financing activities and investing activities,
they provide investors with an understanding of the ability of the Company to
incur and service debt and make capital expenditures.

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36

Funds from Operations and Funds Available for Distribution are calculated as
follows (dollars in thousands):

2000 1999 1998
----------- ----------- -----------

Net income.............................................. $ 63,874 $ 45,745 $ 56,375
Extraordinary items, net of minority interest........... -- -- 508
Extraordinary items -- Management Company............... 30 -- --
Minority interest of Unitholders in Operating
Partnership........................................... 10,520 7,317 9,592
Gain on sale of real estate assets...................... (38,510) (17,427) (37,148)
Gain on sale of real estate assets -- Management
Company............................................... (238) -- --
----------- ----------- -----------
Adjusted net income................................... 35,676 35,635 29,327
Depreciation:
Real estate assets.................................... 36,383 34,324 28,890
Real estate joint ventures............................ 1,283 748 25
----------- ----------- -----------
Funds from Operations................................... 73,342 70,707 58,242
Recurring capital expenditures(1)..................... (5,371) (6,357) (4,607)
----------- ----------- -----------
Funds Available for Distribution........................ $ 67,971 $ 64,350 $ 53,635
=========== =========== ===========
Non-recurring capital expenditures(2)................... $ (2,965) $ (5,348) $ (4,978)
=========== =========== ===========
Cash Flow Provided By (Used In):
Operating Activities.................................. $ 70,968 $ 59,021 $ 63,808
Investing Activities.................................. (118,197) (39,751) (219,170)
Financing Activities.................................. 46,247 (17,977) 154,636
Weighted average shares and units
outstanding -- basic.................................. 30,696,729 32,134,646 29,140,931
=========== =========== ===========
Weighted average shares and units
outstanding -- diluted................................ 30,897,346 32,205,637 29,150,315
=========== =========== ===========

(1) Recurring capital expenditures are expected to be funded from operations and
consist primarily of exterior painting, , new appliances, vinyl, blinds,
tile, wallpaper and carpets in 2000 and 1999. In contrast, non-recurring
capital expenditures, such as major improvements, new garages and access
gates, are expected to be funded by financing activities and are, therefore,
not included in the calculation of Funds Available for Distribution. The
increase in recurring capital expenditures for the year ended December 31,
1999 was primarily due to the Company's change in accounting policy to
capitalize carpets starting January 1, 1999. Without carpet, recurring
capital expenditures for the years ended December 31, 2000 and 1999 would
have been $3.7 million and $4.6 million, respectively. Recurring capital
expenditures for 1998 have not been restated for the change in accounting
policy.

(2) Non-recurring capital expenditures for the years ended December 31, 2000 and
1999 primarily consisted of major renovations in the amounts of $643,000 in
2000 and $3.5 million in 1999, respectively; $74,000 and $740,000 for access
gates and security fences in 2000 and 1999, respectively; $10,000 for water
meters in 1999; and $1.7 million and $1.0 million in other revenue
enhancement expenditures in 2000 and 1999, respectively.

RECENTLY ENACTED LEGISLATION

The Company has elected to be taxed as a Real Estate Investment Trust under
Sections 856 and 860 of the Internal Revenue Code of 1986, as amended. Recently
enacted tax legislation alters the requirements for qualification as a REIT.
Effective for tax years beginning after December 31, 2000, a REIT may own the
securities of a "taxable REIT subsidiary" without limitation on the REIT's
voting control over the subsidiary, provided that not more than 20% of the value
of the REIT's total assets is represented by securities of one or more taxable
REIT subsidiaries. A taxable REIT subsidiary would include a corporation in
which the Company directly or indirectly owns stock and which has elected to be
treated as a taxable REIT subsidiary. In 2001, the Management Company will elect
to become a taxable REIT subsidiary in accordance with the new legislation. As a
result of this election, the Company's investment in the Management Company will
be recorded on a consolidated basis.

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37

In addition, effective for tax years beginning after December 31, 2000, the
recently enacted tax legislation reduces the percent of real estate investment
trust taxable income that must be distributed by the Company to its stockholders
from 95% to 90%, exclusive of net capital gains. Historically, the Company has
made distributions that exceeded taxable income.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

See "Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Market Risk".

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 46 of this Report.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

Not applicable.

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38

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT

Incorporated herein by reference to the Company's definitive proxy statement to
be filed with the Securities and Exchange Commission within 120 days after the
end of the year covered by this Form 10-K with respect to the Company's Annual
Meeting of Stockholders to be held on May 8, 2001.

ITEM 11. EXECUTIVE COMPENSATION

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

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39

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) Financial Statements and Financial Statement Schedule

The consolidated financial statements of the Company are listed in the Index to
Financial Statements on page 46 of this Report.

(b) Reports on Form 8-K

No reports on Form 8-K were filed by the Company in the fourth quarter of 2000.

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

EXHIBIT NO. DESCRIPTION
----------- -----------

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

39
40

EXHIBIT NO. DESCRIPTION
----------- -----------

4.1.5 Supplemental Indenture No. 4, dated as of April 20, 2000,
between the Operating Partnership and First Union National
Bank, including a form of Floating Rate Medium-Term Note and
a form of Fixed Rate Medium-Term Note (Incorporated by
reference to Exhibit 4.2 to the Operating Partnership's
Current Report on Form 8-K filed on April 28, 2000, File No.
000-22411).
4.2.1 The Operating Partnership's 6.80% Note due 2002, dated
August 12, 1997 (Incorporated by reference to Exhibit 4.2 to
the Operating Partnership's Amended Current Report on Form
8-K/A-1 filed on August 18, 1997, File No. 000-22411).
4.2.2 The Operating Partnership's 6.95% Note due 2004, dated
August 12, 1997 (Incorporated by reference to Exhibit 4.3 to
the Operating Partnership's Amended Current Report on Form
8-K/A-1 filed on August 18, 1997, File No. 000-22411).
4.2.3 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).
4.2.4 The Operating Partnership's 6.63% Note due 2003, dated
December 17, 1997 (Incorporated by reference to Exhibit 4.2
to the Operating Partnership's Amended Current Report on
Form 8-K/A-1 filed on December 17, 1997, File No.
000-22411).
4.2.5 6.75% Medium-Term Note due 2001 in principal amount of
$30,000,000 issued by the Operating Partnership on July 28,
1998 (Incorporated by reference to Exhibit 10.2 to the
Operating Partnership's Quarterly Report on Form 10-Q for
the quarterly period ended June 30, 1998, File No.
000-22411).
4.2.6 7.59% Medium-Term Note due 2009 in 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).
4.2.7 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 the
Company's Quarterly Report on Form 10-Q for the quarterly
period ended September 30, 2000, File No. 001-12792).
4.2.8 7.87% Medium-Term Note due 2003 in the principal amount of
$17,000,000 issued by the Operating Partnership on October
20, 2000 (filed herewith).
4.2.9 8.037% Medium-Term Note due 2005 in the principal amount of
$25,000,000 issued by the Operating Partnership on November
17, 2000 (filed herewith).
4.3 Shareholder Rights Agreement, dated as of December 14, 1998,
between the Company and First Union National Bank, as Rights
Agent (Incorporated by reference to Exhibit 4.1 to the
Company's Registration Statement on Form 8-A, filed on
December 16, 1998).
10.1 Amended and Restated Agreement of Limited Partnership of the
Operating Partnership, dated as of May 23, 2000
(Incorporated by reference to Exhibit 3.1 to the Operating
Partnership's Current Report on Form 8-K filed on May 30,
2000, File No. 000-22411).
10.2 Articles of Incorporation of Summit Management Company
(Incorporated by reference to Exhibit 10.2 to the Company's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1999, File No. 001-12792).
10.3 Bylaws of Summit Management Company (Incorporated by
reference to Exhibit 10.3 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1999, File
No. 001-12792).
10.4 The Company's 1994 Stock Option and Incentive Plan as
amended and restated (Incorporated by reference to Exhibit
4.5 to the Company's Registration Statement on Form S-8,
Registration No. 333-79897).

40
41

EXHIBIT NO. DESCRIPTION
----------- -----------

10.5.1 The Company's 1996 Non-Qualified Employee Stock Purchase
Plan (Incorporated by reference to Exhibit 10.5 to the
Company's Registration Statement on Form S-8, Registration
No. 333-00078).
10.5.2 First Amendment to Non-Qualified Employee Stock Purchase
Plan (Incorporated by reference to Exhibit 10.5.2 to the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1999, File No. 001-12792).
10.5.3 Second Amendment to Non-Qualified Employee Stock Purchase
Plan (Incorporated by reference to Exhibit 10.5.3 to the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1999, File No. 001-12792).
10.5.4 Third Amendment to Non-Qualified Employee Stock Purchase
Plan (Incorporated by reference to Exhibit 10.5.4 to the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1999, File No. 001-12792).
10.6 Indemnification Agreements, dated as of various dates, by
and among the Company, the Operating Partnership, and each
director and executive officer of the Company (Incorporated
by reference to Exhibit 10.3 to the Company's Quarterly
Report on Form 10-Q for the quarterly period ended June 30,
1999, Exhibit 10.5 to the Company's Quarterly Report on Form
10-Q for the quarterly period ended June 30, 2000 and
Exhibit 10.7 to the Company's Quarterly Report on Form 10-Q
for the quarterly period ended September 30, 2000, File No.
001-12792).
10.7.1 Employment Agreement between the Company and William F.
Paulsen (Incorporated by reference to Exhibit 10.7.1 to the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1999, File No. 001-12792).
10.7.2 Employment Agreement between the Company and William B.
McGuire, Jr. (Incorporated by reference to Exhibit 10.6 to
the Company's Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 2000, File No. 001-12792).
10.7.3 Employment Agreement between the Company and Michael L.
Schwarz (Incorporated by reference to Exhibit 10.7.10 to the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997, File No. 001-12792).
10.7.4 Employment Agreement between the Company and Steven R.
LeBlanc (filed herewith).
10.7.5 Employment Agreement between Summit Management Company and
Randall M. Ell (Incorporated by reference to Exhibit 10.2 to
the Company's Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 2000, File No. 001-12792).
10.7.6 Employment Agreement between the Company and Robert R.
Kilroy (Incorporated by reference to Exhibit 10.4 to the
Company's Quarterly Report on Form 10-Q for the quarterly
period ended September 30, 2000, File No. 001-12792).
10.8.1 Noncompetition Agreement between the Company and William F.
Paulsen (Incorporated by reference to Exhibit 10.5 to the
Company's Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 2000, File No. 001-12792).
10.8.2 Noncompetition Agreement between the Company and William B.
McGuire, Jr. (Incorporated by reference to Exhibit 10.7 to
the Company's Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 2000, File No. 001-12792).
10.8.3 Noncompetition Agreement between the Company and Michael L.
Schwarz (Incorporated by reference to Exhibit 10.8.10 to the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997, File No. 001-12792).
10.8.4 Noncompetition Agreement between the Company and Steven R.
LeBlanc (Incorporated by reference to Exhibit 10.8.11 to the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998, File No. 001-12792).

41
42

EXHIBIT NO. DESCRIPTION
----------- -----------

10.8.5 Noncompetition Agreement by and among the Company, Summit
Management Company and Randall M. Ell (Incorporated by
reference to Exhibit 10.4 to the Company's Quarterly Report
on Form 10-Q for the quarterly period ended June 30, 2000,
File No. 001-12792).
10.8.6 Noncompetition Agreement by and among the Company, Summit
Management Company and Robert R. Kilroy (Incorporated by
reference to Exhibit 10.6 to the Company's Quarterly Report
on Form 10-Q for the quarterly period ended September 30,
2000, File No. 001-12792).
10.9.1 Executive Severance Agreement between the Company and
William F. Paulsen (Incorporated by reference to Exhibit
10.9.1 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1997, File No. 001-12792).
10.9.2 Executive Severance Agreement between the Company and
William B. McGuire, Jr. (Incorporated by reference to
Exhibit 10.9.2 to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1997, File No.
001-12792).
10.9.3 Executive Severance Agreement between the Company and
Michael L. Schwarz (Incorporated by reference to Exhibit
10.9.3 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1997, File No. 001-12792).
10.9.4 Executive Severance Agreement between the Company and Steven
R. LeBlanc (Incorporated by reference to Exhibit 10.9.6 to
the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998, File No. 001-12792).
10.9.5 Executive Severance Agreement between the Company and
Randall M. Ell (Incorporated by reference to Exhibit 10.3 to
the Company's Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 2000, File No. 001-12792).
10.9.6 Executive Severance Agreement between the Company and Robert
R. Kilroy (Incorporated by reference to Exhibit 10.5 to the
Company's Quarterly Report on Form 10-Q for the quarterly
period ended September 30, 2000, File No. 001-12792).
10.10 $31,000,000 Loan Agreement, dated July 31, 1996, between the
Operating Partnership and Wachovia Bank of North Carolina,
N.A. (Incorporated by reference to Exhibit 10.34 to the
Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended September 30, 1996, File No. 001-12792).
10.11.1 Form of Promissory Note and Security Agreement between the
Company and the employees named in the Schedule thereto
(Incorporated by reference to Exhibit 10.14.3 to the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997, File No. 001-12792).
10.11.2 Promissory Note and Security Agreement, dated January 31,
2000, evidencing a loan of $499,814 to William B. McGuire,
Jr. for the purpose of purchasing shares of Common Stock of
the Company (Incorporated herein by reference to Exhibit
10.1 to the Company's Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 2000, File No. 001-12792).
10.11.3 Promissory Note and Security Agreement, dated January 31,
2000, evidencing a loan of $999,995 to William F. Paulsen
for the purpose of purchasing shares of Common Stock of the
Company (Incorporated herein by reference to Exhibit 10.2 to
the Company's Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 2000, File No. 001-12792).
10.11.4 Promissory Note and Security Agreement, dated August 5,
1998, evidencing a loan of $960,578 to Steven R. LeBlanc for
the purpose of purchasing shares of Common Stock of the
Company (Incorporated herein by reference to Exhibit 10.12.4
to the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1998, File No. 001-12792).

42
43

EXHIBIT NO. DESCRIPTION
----------- -----------

10.11.5 Promissory Note, dated February 2, 1999, evidencing a loan
of $1,000,487 to Steven R. LeBlanc for the purpose of
purchasing shares of Common Stock of the Company
(Incorporated herein by reference to Exhibit 10.12.10 to the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998, File No. 001-12792).
10.11.6 Promissory Note and Security Agreement, dated January 31,
2000, evidencing a loan of $999,995 to Steven R. LeBlanc for
the purpose of purchasing shares of Common Stock of the
Company (Incorporated herein by reference to Exhibit 10.3 to
the Company's Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 2000, File No. 001-12792).
10.11.7 Promissory Note and Security Agreement, dated January 28,
1998, evidencing a loan of $42,258 to Michael L. Schwarz for
the purpose of paying tax liability associated with
Restricted Stock Award (Incorporated by reference to Exhibit
10.14.1 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1997, File No. 001-12792).
10.11.8 Promissory Note and Security Agreement, dated January 30,
1998, evidencing a loan of $361,785 to Michael L. Schwarz
for the purpose of purchasing shares of Common Stock of the
Company (Incorporated herein by reference to Exhibit 10.3 to
the Company's Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 1998, File No. 001-12792).
10.11.9 Promissory Notes and Security Agreements, dated various
dates from July 29, 1998 to May 1, 2000, evidencing loans in
the aggregate amount of $131,013 to Michael L. Schwarz
(filed herewith).
10.11.10 Promissory Note, dated February 2, 1999, evidencing a loan
of $450,004 to Michael L. Schwarz for the purpose of
purchasing shares of Common Stock of the Company
(Incorporated herein by reference to Exhibit 10.12.11 to the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998, File No. 001-12792).
10.11.11 Promissory Note and Security Agreement, dated January 31,
2000, evidencing a loan of $499,969 to Michael L. Schwarz
for the purpose of purchasing shares of Common Stock of the
Company (Incorporated herein by reference to Exhibit 10.4 to
the Company's Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 2000, File No. 001-12792).
10.11.12 Promissory Note and Security Agreement, dated August 1,
2000, evidencing a loan of $99,973 to Michael L. Schwarz for
the purpose of purchasing shares of Common Stock of the
Company (Incorporated herein by reference to Exhibit 10.3 to
the Company's Quarterly Report on Form 10-Q for the
quarterly period ended September 30, 2000, File No.
001-12792).
10.11.13 Promissory Note and Security Agreement, dated November 7,
2000, evidencing a loan of $91,843 to Michael L. Schwarz for
the purpose of purchasing shares of Common Stock of the
Company (filed herewith).
10.11.14 Promissory Notes and Security Agreements, dated various
dates from May 17, 2000 through August 1, 2000, evidencing
loans in the aggregate amount of $949,820 to Robert R.
Kilroy for the purpose of purchasing shares of Common Stock
of the Company (Incorporated herein by reference to Exhibit
10.8 to the Company's Quarterly Report on Form 10-Q for the
quarterly period ended September 30, 2000, File No.
001-12792).
10.11.15 Promissory Notes and Security Agreements, dated various
dates from April 1, 1998 through May 17, 2000, evidencing
loans in the aggregate amount of $358,399 to Randall M. Ell
for the purpose of purchasing shares of Common Stock of the
Company (Incorporated herein by reference to Exhibit 10.6 to
the Company's Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 2000, File No. 001-12792).
10.11.16 Promissory Note and Security Agreement, dated November 7,
2000, evidencing a loan of $499,160 to Randall M. Ell for
the purpose of purchasing shares of Common Stock of the
Company (filed herewith).

43
44

EXHIBIT NO. DESCRIPTION
----------- -----------

10.11.17 Form of Amendment, dated December 29, 2000 to each of the
Promissory Notes and Security Agreements executed by William
B. McGuire, Jr. and the executive officers of the Company
prior to January 4, 2000, including a listing of those notes
amended (filed herewith).
10.12.1 Registration Rights Agreement, dated October 12, 1994,
between the Company and PK Partners, L.P. (Incorporated by
reference to Exhibit 10.15.1 to the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1997,
File No. 001-12792).
10.12.2 Registration Rights Agreement, dated February 8, 1994,
between the Company and the Continuing Investors named
therein (Incorporated by reference to Exhibit 10.13.2 to the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1999, File No. 001-12792).
10.12.3 Registration Rights Agreement, dated December 11, 1995,
between the Company and Bissell Ballantyne, LLC
(Incorporated by reference to Exhibit 10.2 to the Company's
Registration Statement on Form S-3, Registration No.
333-24669).
10.12.4 Registration Rights Agreement, dated January 10, 1996, among
the Company, Joseph H. Call and Gary S. Cangelosi
(Incorporated by reference to Exhibit 10.2 to the Company's
Registration Statement on Form S-3, Registration No.
333-24669).
10.12.5 Registration Rights Agreement, dated February 20, 1997,
among the Company, The Northwestern Mutual Life Insurance
Company, J. Ronald Terwilliger, J. Ronald Terwilliger
Grantor Trust, Crow Residential Realty Investors, L.P.,
Douglas A. Hoeksema, Randy J. Pace, Clifford A. Breining,
TCF Residential Partnership, Ltd. and Trammell S. Crow
(Incorporated by reference to Exhibit 10.2 to the Company's
Registration Statement on Form S-3, Registration No.
333-24669).
10.12.6 Registration Rights Agreement, dated May 16, 1995, between
the Company and the individuals named therein executed in
connection with the Crosland Acquisition (Incorporated by
reference to Exhibit 10.15.6 to the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1997,
File No. 001-12792).
10.12.7 Registration Rights and Lock-up Agreement, dated October 31,
1998, by and between the Company, the Operating Partnership,
and the holders named therein executed in connection with
the Ewing Acquisition (Incorporated by reference to Exhibit
99.1 to the Company's Registration Statement on Form S-3,
Registration No. 333-93923).
10.13 Amended and Restated Credit Agreement, dated as of September
26, 2000, by and among the Operating Partnership, the
Company, the Banks listed therein, and First Union National
Bank, as Administrative Agent (Incorporated by reference to
Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q
for the quarterly period ended September 30, 2000, File No.
001-12792).
10.14 Distribution Agreement among the Operating Partnership, the
Company and the Agents listed therein, dated April 20, 2000
(Incorporated by reference to the Operating Partnership's
Current Report on Form 8-K filed on April 28, 2000, File No.
000-22411).
10.15 Swap Transaction, dated as of September 15, 1999, between
the Operating Partnership and Morgan Guaranty Trust Company
of New York (filed herewith).
12.1 Statement Regarding Calculation of Ratios of Earnings to
Fixed Charges for the Years Ended December 31, 2000, 1999,
1998, 1997 and 1996 (filed herewith).
21.1 Subsidiaries of the Company (filed herewith).
23.1 Consent of Deloitte & Touche LLP (filed herewith).

44
45

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, Summit Properties Inc. certifies that it has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized,
in Charlotte, North Carolina on March 12, 2001.

SUMMIT PROPERTIES INC.

/s/ WILLIAM F. PAULSEN
--------------------------------------
William F. Paulsen,
Chief Executive Officer

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

SIGNATURES TITLE DATE
---------- ----- ----

/s/ WILLIAM B. MCGUIRE, JR. Co-Chairman of the Board of March 12, 2001
----------------------------------------------------- Directors
William B. McGuire, Jr.

/s/ WILLIAM F. PAULSEN Co-Chairman of the Board of March 12, 2001
----------------------------------------------------- Directors and Chief Executive
William F. Paulsen Officer (Principal Executive
Officer)

/s/ STEVEN R. LEBLANC President, Chief Operating March 12, 2001
----------------------------------------------------- Officer and Director
Steven R. LeBlanc (Principal Operating Officer)

/s/ MICHAEL L. SCHWARZ Executive Vice President -- March 12, 2001
----------------------------------------------------- Operations and Chief
Michael L. Schwarz Financial Officer (Principal
Financial Officer and
Principal Accounting Officer)

/s/ HENRY H. FISHKIND Director March 12, 2001
-----------------------------------------------------
Henry H. Fishkind

/s/ JAMES H. HANCE, JR. Director March 12, 2001
-----------------------------------------------------
James H. Hance, Jr.

/s/ NELSON SCHWAB, III Director March 12, 2001
-----------------------------------------------------
Nelson Schwab, III

/s/ JAMES M. ALLWIN Director March 12, 2001
-----------------------------------------------------
James M. Allwin

45
46

INDEX TO FINANCIAL STATEMENTS

The following financial statements of the Company required to be included in
Item 14(a)(1) are listed below:

SUMMIT PROPERTIES INC.

PAGE
----

Independent Auditors' Report................................ 47

Consolidated Balance Sheets as of December 31, 2000 and
1999...................................................... 48

Consolidated Statements of Earnings for the Years Ended
December 31, 2000, 1999 and 1998.......................... 49

Consolidated Statements of Stockholders' Equity for the
Years Ended December 31, 2000,
1999 and 1998............................................. 50

Consolidated Statements of Cash Flows for the Years Ended
December 31, 2000, 1999 and 1998.......................... 51

Notes to Consolidated Financial Statements.................. 52

The following financial statement supplementary data of the
Company required to be included in Item 14(a)(2) is listed
below:

Schedule III -- Real Estate and Accumulated Depreciation.... 71

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

46
47

INDEPENDENT AUDITORS' REPORT

Board of Directors and Stockholders
Summit Properties Inc.
Charlotte, North Carolina

We have audited the accompanying consolidated balance sheets of Summit
Properties Inc. (the "Company") as of December 31, 2000 and 1999, and the
related consolidated statements of earnings, stockholders' equity, and cash
flows for each of the three years in the period ended December 31, 2000. Our
audit for the year ended December 31, 2000 also included the financial statement
schedule listed in the Index at Item 14. These financial statements and
financial statement schedule are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements and
financial statement schedule based on our audits.

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

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of the Company as of December 31, 2000
and 1999, and the results of its operations and its cash flows for each of the
three years in the period ended December 31, 2000 in conformity with accounting
principles generally accepted in the United States of America. Also, in our
opinion, such financial statement schedule, when considered in relation to the
basic consolidated financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.

As discussed in Note 3 to the consolidated financial statements, in 1999 the
Company changed its method of accounting for carpet replacements.

DELOITTE & TOUCHE LLP

Charlotte, North Carolina
January 22, 2001

47
48

SUMMIT PROPERTIES INC.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)

DECEMBER 31,
-----------------------
2000 1999
---------- ----------

ASSETS
Real estate assets:
Land and land improvements................................ $ 184,494 $ 174,615
Buildings and improvements................................ 1,001,183 893,179
Furniture, fixtures and equipment......................... 74,920 68,437
---------- ----------
1,260,597 1,136,231
Less: accumulated depreciation............................ (147,437) (129,620)
---------- ----------
Operating real estate assets...................... 1,113,160 1,006,611
Construction in progress.................................. 162,582 148,587
---------- ----------
Net real estate assets............................ 1,275,742 1,155,198
Cash and cash equivalents................................... 3,148 4,130
Restricted cash............................................. 41,502 40,080
Investments in Summit Management Company and real estate
joint ventures............................................ 736 583
Deferred financing costs, net of accumulated amortization of
$5,792 and $5,153 in 2000 and 1999, respectively.......... 7,760 6,657
Notes receivable............................................ 5,176 3,268
Other assets................................................ 6,087 7,497
---------- ----------
Total assets................................................ $1,340,151 $1,217,413
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Notes payable............................................. $ 763,899 $ 649,632
Accrued interest payable.................................. 7,729 7,018
Accounts payable and accrued expenses..................... 20,415 25,626
Dividends and distributions payable....................... 13,481 12,984
Security deposits and prepaid rents....................... 3,959 3,850
---------- ----------
Total liabilities................................. 809,483 699,110
---------- ----------
Commitments and contingencies
Minority interest of common unitholders in Operating
Partnership............................................... 55,730 54,698
Minority interest of preferred unitholders in Operating
Partnership............................................... 136,261 136,270
Stockholders' equity:
Preferred stock, $.01 par value -- 25,000,000 shares
authorized, no shares issued and outstanding........... -- --
Common stock, $.01 par value -- 100,000,000 shares
authorized, 26,431,086 and 26,374,446 shares issued and
outstanding in 2000 and 1999, respectively............. 264 264
Additional paid-in capital................................ 415,827 412,874
Accumulated deficit....................................... (62,775) (80,555)
Unamortized restricted stock compensation................. (942) (387)
Employee notes receivable................................. (13,697) (4,861)
---------- ----------
Total stockholders' equity.................................. 338,677 327,335
---------- ----------
Total liabilities and stockholders' equity.................. $1,340,151 $1,217,413
========== ==========

See notes to consolidated financial statements.

48
49

SUMMIT PROPERTIES INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

YEAR ENDED DECEMBER 31,
---------------------------------------
2000 1999 1998
----------- ----------- -----------

Revenues:
Rental.................................................... $ 172,639 $ 162,859 $ 137,961
Other property income..................................... 12,795 10,670 7,695
Interest.................................................. 3,592 3,030 1,064
Other income.............................................. 618 289 849
----------- ----------- -----------
Total revenues..................................... 189,644 176,848 147,569
----------- ----------- -----------
Expenses:
Property operating and maintenance:
Personnel............................................... 12,036 12,796 11,350
Advertising and promotion............................... 2,718 2,630 2,419
Utilities............................................... 8,654 8,544 7,541
Building repairs and maintenance........................ 8,434 8,609 9,893
Real estate taxes and insurance......................... 19,248 17,684 14,063
Depreciation............................................ 36,602 34,432 28,997
Property supervision.................................... 4,970 4,175 3,531
Other operating expenses................................ 3,027 2,880 2,753
----------- ----------- -----------
Total property operating and maintenance........... 95,689 91,750 80,547
Interest.................................................. 38,649 37,282 32,550
Amortization.............................................. 1,072 992 956
General and administrative................................ 4,752 3,876 3,861
Loss (income) on equity investments:
Summit Management Company............................... 779 719 327
Real estate joint ventures.............................. 399 (104) 1
----------- ----------- -----------
Total expenses..................................... 141,340 134,515 118,242
----------- ----------- -----------
Income before gain on sale of real estate assets, minority
interest of common unitholders in Operating Partnership,
dividends to preferred unitholders in Operating
Partnership and extraordinary items....................... 48,304 42,333 29,327
Gain on sale of real estate assets........................ 38,510 17,427 37,148
----------- ----------- -----------
Income before minority interest of unitholders in Operating
Partnership, dividends to preferred unitholders in
Operating Partnership and extraordinary items............. 86,814 59,760 66,475
Minority interest of common unitholders in Operating
Partnership............................................... (10,520) (7,317) (9,592)
Dividends to preferred unitholders in Operating
Partnership............................................... (12,420) (6,698) --
----------- ----------- -----------
Income before extraordinary items........................... 63,874 45,745 56,883
Extraordinary items, net of minority interest of common
unitholders in Operating Partnership...................... -- -- (508)
----------- ----------- -----------
Net income.................................................. $ 63,874 $ 45,745 $ 56,375
=========== =========== ===========
Per share data:
Income before extraordinary items -- basic................ $ 2.42 $ 1.65 $ 2.28
=========== =========== ===========
Income before extraordinary items -- diluted.............. $ 2.41 $ 1.65 $ 2.28
=========== =========== ===========
Extraordinary items -- basic and diluted.................. $ -- $ -- $ (0.02)
=========== =========== ===========
Net income -- basic....................................... $ 2.42 $ 1.65 $ 2.26
=========== =========== ===========
Net income -- diluted..................................... $ 2.41 $ 1.65 $ 2.26
=========== =========== ===========
Dividends declared........................................ $ 1.75 $ 1.67 $ 1.63
=========== =========== ===========
Weighted average shares -- basic.......................... 26,341,438 27,697,904 24,934,618
=========== =========== ===========
Weighted average shares -- diluted........................ 26,542,056 27,768,895 24,944,002
=========== =========== ===========

See notes to consolidated financial statements.

49
50

SUMMIT PROPERTIES INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(DOLLARS IN THOUSANDS)

UNAMORTIZED
ADDITIONAL RESTRICTED EMPLOYEE
COMMON PAID IN ACCUMULATED STOCK NOTES
STOCK CAPITAL DEFICIT COMPENSATION RECEIVABLE TOTAL
------ ---------- ----------- ------------ ---------- --------

Balance, December 31, 1997............. $234 $361,731 $(95,120) $(1,006) -- $265,839
Dividends............................ -- -- (41,536) -- -- (41,536)
Issuance of stock.................... 21 37,322 -- -- -- 37,343
Proceeds from dividend and stock
purchase plans..................... 22 42,891 -- -- -- 42,913
Conversion of common units to
shares............................. -- 555 -- -- -- 555
Exercise of stock options............ 1 840 -- -- -- 841
Issuance of restricted stock
grants............................. -- 162 -- (162) -- --
Amortization of restricted stock
grants............................. -- -- -- 440 -- 440
Adjustment for minority interest of
common unitholders in Operating
Partnership........................ -- (1,369) -- -- -- (1,369)
Issuance of employee notes
receivable......................... $ (2,476) (2,476)
Net income........................... -- -- 56,375 -- -- 56,375
---- -------- -------- ------- -------- --------
Balance, December 31, 1998............. 278 442,132 (80,281) (728) (2,476) 358,925
Dividends............................ -- -- (46,019) -- -- (46,019)
Proceeds from dividend and stock
purchase plans..................... 10 15,331 -- -- -- 15,341
Repurchase of common stock........... (24) (47,502) -- -- -- (47,526)
Exercise of stock options............ -- 182 -- -- -- 182
Issuance of restricted stock
grants............................. -- 304 -- (304) -- --
Amortization of restricted stock
grants............................. -- -- -- 645 -- 645
Adjustment for minority interest of
common unitholders in Operating
Partnership........................ -- 2,427 -- -- -- 2,427
Issuance of employee notes
receivable......................... -- -- -- -- (3,144) (3,144)
Repayment of employee notes
receivable......................... -- -- -- -- 759 759
Net income........................... -- -- 45,745 -- -- 45,745
---- -------- -------- ------- -------- --------
Balance, December 31, 1999............. 264 412,874 (80,555) (387) (4,861) 327,335
Dividends............................ -- -- (46,094) -- -- (46,094)
Proceeds from dividend and stock
purchase plans..................... 3 4,798 -- -- -- 4,801
Repurchase of common stock........... (4) (8,020) -- -- -- (8,024)
Conversion of units to shares........ -- 1,159 -- -- -- 1,159
Exercise of stock options............ 1 2,085 -- -- -- 2,086
Issuance of restricted stock
grants............................. -- 1,203 -- (1,319) -- (116)
Amortization of restricted stock
grants............................. -- -- -- 764 -- 764
Accrual of vested stock awards....... -- 1,171 -- -- -- 1,171
Adjustment for minority interest of
common unitholders in Operating
Partnership........................ -- 1,128 -- -- -- 1,128
Issuance of employee notes
receivable......................... -- -- -- -- (10,793) (10,793)
Repayment of employee notes through
stock redemption................... -- (571) -- -- 571 --
Repayment of employee notes
receivable......................... -- -- -- -- 1,386 1,386
Net income........................... -- -- 63,874 -- -- 63,874
---- -------- -------- ------- -------- --------
Balance, December 31, 2000............. $264 $415,827 $(62,775) $ (942) $(13,697) $338,677
==== ======== ======== ======= ======== ========

See notes to consolidated financial statements.

50
51

SUMMIT PROPERTIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)

YEARS ENDED DECEMBER 31,
-----------------------------------
2000 1999 1998
--------- --------- ---------

Cash flows from operating activities:
Net income................................................ $ 63,874 $ 45,745 $ 56,375
Adjustments to reconcile net income to net cash provided
by operating activities:
Minority interest of common unitholders in Operating
Partnership........................................... 10,520 7,317 9,592
Extraordinary items..................................... -- -- 508
Loss on equity investments.............................. 1,178 615 328
Gain on sale of real estate assets...................... (38,510) (17,427) (37,148)
Depreciation and amortization........................... 38,216 35,304 30,163
Accrual of vested stock awards.......................... 1,171 -- --
Increase in restricted cash............................. (3,633) (4,722) (777)
Increase in other assets................................ (631) (685) (504)
Increase in accrued interest payable.................... 711 212 1,444
(Decrease) increase in accounts payable and accrued
expenses.............................................. (2,187) (7,000) 3,823
Increase (decrease) in security deposits and prepaid
rents................................................. 259 (338) 4
--------- --------- ---------
Net cash provided by operating activities.......... 70,968 59,021 63,808
--------- --------- ---------
Cash flows from investing activities:
Construction of real estate assets and land acquisitions,
net of payables......................................... (168,593) (127,764) (122,842)
Purchase of Communities................................... (33,373) -- (124,846)
Proceeds from sale of Communities......................... 105,131 110,873 44,245
Capitalized interest...................................... (11,117) (7,888) (6,142)
Recurring capital expenditures, net of payables........... (5,371) (6,357) (4,607)
Non-recurring capital expenditures........................ (2,965) (5,348) (4,978)
Increase in notes receivable.............................. (1,909) (3,267) --
--------- --------- ---------
Net cash used in investing activities.............. (118,197) (39,751) (219,170)
--------- --------- ---------
Cash flows from financing activities:
Net borrowings (repayments) on line of credit............. 62,138 (75,508) 131,252
Net borrowings on unsecured bonds......................... -- 24,600 54,392
Proceeds from issuance of mortgage debt................... 47,922 -- --
Repayments of unsecured notes............................. (15,000) -- --
Net borrowings on unsecured medium term notes............. 26,299 -- --
Repayments of mortgage debt............................... (8,548) (5,136) (27,391)
Repayments of tax exempt bonds............................ (1,025) (1,155) (1,050)
Net proceeds from dividend reinvestment and stock purchase
plans................................................... 4,801 15,341 42,913
Dividends and distributions to unitholders................ (53,259) (53,186) (46,819)
Exercise of stock options................................. 2,086 182 841
Decrease in advance proceeds from direct stock purchase
plan.................................................... -- (9,474) 2,974
Issuance of preferred units in Operating Partnership...... -- 136,270 --
Repurchase of common stock................................ (8,020) (47,526) --
Acquisition of minority interest.......................... (1,759) -- --
Issuance of restricted stock awards....................... 19 -- --
Repayments of employee notes receivable................... 1,386 -- --
Increase in employee notes receivable..................... (10,793) (2,385) (2,476)
--------- --------- ---------
Net cash provided by (used in) financing
activities....................................... 46,247 (17,977) 154,636
--------- --------- ---------
Net (decrease) increase in cash and cash equivalents........ (982) 1,293 (726)
Cash and cash equivalents, beginning of year................ 4,130 2,837 3,563
--------- --------- ---------
Cash and cash equivalents, end of year...................... $ 3,148 $ 4,130 $ 2,837
========= ========= =========
Supplemental disclosure of cash flow information -- Cash
paid for interest, net of capitalized interest............ $ 37,938 $ 37,070 $ 31,106
========= ========= =========

See notes to consolidated financial statements.

51
52

SUMMIT PROPERTIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND FORMATION OF THE COMPANY

Summit Properties Inc. (the "Company") was initially organized as a Maryland
real estate investment trust on December 1, 1993 under the Maryland Real Estate
Investment Trust Act. The Company became a Maryland corporation under the
General Corporation Law of Maryland on January 13, 1994. On February 15, 1994,
the Company completed an Initial Public Offering ("Initial Offering") of 10
million shares of common stock, par value $0.01 per share ("Common Stock"). In
connection with the Initial Offering, the Company consummated a business
combination involving the partnerships (the "Property Partnerships") which owned
the 27 communities (together with all communities acquired and developed since
the Initial Offering, the "Communities") and the affiliated entities which
provided development, construction, management and leasing services to each of
the Communities prior to the Initial Offering (collectively, the "Summit
Entities"). A portion of the proceeds from the Initial Offering was used to
acquire an economic and voting interest in Summit Properties Partnership, L.P.
(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. The Company became the sole general partner
and the majority owner of the Operating Partnership upon completion of the
Initial Offering and, accordingly, reports its investment in the Operating
Partnership on a consolidated basis.

2. BASIS OF PRESENTATION

All significant intercompany accounts and transactions have been eliminated in
consolidation. The financial statements of the Company have been adjusted for
the minority interest of holders of common units of limited partnership interest
("Common Units") in the Operating Partnership. Minority interest of unitholders
in the Operating Partnership is calculated at the balance sheet date based upon
the percentage of Common Units outstanding owned by partners other than the
Company to the total number of Common Units outstanding. Minority interest of
unitholders in Operating Partnership earnings is calculated based on the
weighted average Units outstanding during the period. Common Units can be
exchanged for cash, or at the option of the Company, for shares of Common Stock
on a one-for-one basis (subject to adjustment).

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

REAL ESTATE ASSETS AND DEPRECIATION -- The Company records its real estate
assets at cost less accumulated depreciation and, if necessary, adjusts carrying
value in accordance with Statement of Financial Accounting Standards ("SFAS")
No. 121, "Accounting for the Impairment of Long-Lived Assets and 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. No impairment existed at
December 31, 2000.

Expenditures directly related to the acquisition, development and improvement of
real estate assets are capitalized at cost as land, buildings and improvements.
Improvements are categorized as either recurring capital expenditures or
non-recurring capital expenditures. Non-recurring capital expenditures primarily
consist of the cost of improvements such as new garages, water submeters and
improvements made in conjunction with acquisitions and major renovations. All
other improvements are deemed as recurring capital expenditures.

Ordinary repairs and maintenance, including interior painting, are expensed as
incurred; major replacements and betterments are capitalized and depreciated
over their estimated useful lives. Depreciation is computed on a straight-line
basis over the estimated useful lives of the assets (buildings -- 40 years;
building improvements -- 5 to 15 years; land improvements -- 15 years;
furniture, fixtures and equipment -- 5 to 7 years).

Effective January 1, 1999, the Company implemented prospectively a new
accounting policy whereby expenditures for carpet replacement are capitalized
and depreciated over their estimated useful lives.
52
53

Previously, the cost of carpet replacements had been expensed. The Company
believes that the newly adopted accounting policy is preferable as it is
consistent with the standards and practices utilized by the majority of the
Company's peers and provides a better matching of expenses with the related
benefit of the expenditure. The change in accounting policy was treated as a
change in accounting principle inseparable from a change in accounting estimate.
The effect of this change for the year ended December 31, 2000 was a net
increase in net income of $1.5 million, or $0.06 per basic and diluted share.
The effect of this change for the year ended December 31, 1999 was a net
increase in net income of $1.4 million, or $0.05 per basic and diluted share.

Interest costs incurred during the construction period are capitalized and
depreciated over the lives of the constructed assets. Interest capitalized was
$11.1 million, $7.9 million and $6.1 million for the years ended December 31,
2000, 1999 and 1998, respectively.

The Company capitalizes the cost of its development department to the projects
currently under construction at a rate of 2.5% to 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 approximately $5.4 million,
$4.5 million and $3.0 million for the years ended December 31, 2000, 1999 and
1998, respectively.

RENTAL REVENUE RECOGNITION -- The Company leases its residential properties
under operating leases with terms generally one year or less. Rental revenue is
recognized on the accrual method of accounting as earned. The Company leases its
office and retail space under operating leases with terms ranging from three to
ten years. Rental revenue for office and retail spaces is recognized on a
straight line basis over the lives of the respective leases. Future minimum
rental payments to be received by the Company under its current office leases
are as follows (in thousands):

2001........................................................ $ 979
2002........................................................ 1,030
2003........................................................ 1,057
2004........................................................ 1,078
2005........................................................ 1,111
Thereafter.................................................. 4,479
------
$9,734
======

Of the amounts listed above, $7.5 million represents amounts to be received from
the Company's wholly-owned subsidiary, Summit Management Company (the
"Management Company") which performs all management and leasing activities for
the Company and third parties.

PROPERTY MANAGEMENT -- The Management Company provides property management
services for both Company-owned properties as well as properties owned by third
parties. Revenue is recognized when earned, as the services are provided.

CASH AND CASH EQUIVALENTS -- For purposes of the statement of cash flows, the
Company considers 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 resident security
deposits, bond repayment escrows, replacement reserve escrows, and proceeds from
apartment community sales deposited with a qualified intermediary in accordance
with like-kind exchange income tax rules and regulations.

DEFERRED FINANCING COSTS -- Deferred financing costs include fees and costs
incurred in conjunction with long-term financings and are amortized on the
straight-line method over the terms of the related debt.

ADVERTISING COSTS -- The Company expenses advertising costs as incurred.

INCOME TAXES -- The Company has maintained and intends to maintain its election
to be taxed as a real estate investment trust ("REIT") under the Internal
Revenue Code of 1986, as amended (the "Code"). As a result, the Company
generally will not be subject to federal and state income taxation at the
corporate level as long as it distributes annually at least 95% (90% effective
for tax years beginning after December 31, 2000) of its taxable income,
excluding net capital gains, as defined in the Code, to its stockholders and
satisfies certain

53
54

other requirements. Accordingly, no provision has been made for federal and
state income taxes in the accompanying consolidated financial statements.

Financial Accounting Standard 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
the Company's consolidated financial statements exceeded the tax basis by
approximately $122.8 million and $90.6 million as of December 31, 2000 and 1999,
respectively.

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

YEAR ENDED DECEMBER 31,
------------------------
2000 1999 1998
------ ------ ------

Ordinary income............................................. $1.56 $1.40 $1.34
20% Long-term capital gain.................................. 0.10 0.10 --
Unrecaptured Sec. 1250 Gain................................. 0.07 0.07 --
Return of Capital........................................... -- 0.10 0.29
----- ----- -----
Total Distribution per share...................... $1.73 $1.67 $1.63
===== ===== =====

PER SHARE DATA -- Basic earnings per share with respect to the Company for the
years ended December 31, 2000, 1999 and 1998 are computed based upon the
weighted average number of shares outstanding during the period. The difference
between "basic" and "diluted" weighted average shares is the dilutive effect of
the Company's stock options outstanding (200,618, 70,991 and 9,384 shares added
to weighted shares outstanding in 2000, 1999 and 1998, respectively). Dilution
caused by these options affected earnings per share by $0.01 in 2000 and had no
effect on earnings per share in 1999 or 1998.

ESTIMATES -- The preparation of financial statements in conformity with
generally accepted accounting principles 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.

NEW ACCOUNTING PRONOUNCEMENTS -- On January 1, 2001, the Company adopted
Statement of Financial Accounting Standard No. 133, "Accounting for Derivative
Instruments and Hedging Activities" (FAS 133). This statement establishes
accounting and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts, and for hedging activities.
It requires that entities recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those instruments
at fair value. The Company believes that the provisions of FAS 133, as amended,
will have an immaterial impact on the Company's financial statements.

RECLASSIFICATIONS -- Certain reclassifications have been made to the 1999 and
1998 financial statements to conform to the 2000 presentation.

4. REAL ESTATE JOINT VENTURES

The Company obtained a 25% interest in a joint venture named Station Hill, LLC,
a North Carolina limited liability company ("Station Hill"), the membership of
which is comprised of the Company and a wholly owned subsidiary of a major
financial services company, in exchange for the contribution of two communities
in December 1998. Station Hill also owns, and the Company thereby holds a 25%
interest in, five apartment communities that were previously 100% owned by the
Company. These five communities were sold by the Company to Hollow Creek, LLC on
December 16, 1998 and were concurrently contributed to Station Hill by Hollow
Creek, LLC for a 75% joint venture interest (See Acquisitions and
Dispositions -- Note 8). The seven communities are Summit Green, Summit Hill I &
II, Summit Creek, Summit Hollow I & II and Summit Station. The Company's initial
investment in Station Hill was reduced to zero when the Company eliminated the
portion of the gain on disposal related to the percentage of joint venture
ownership interest retained. Station Hill is accounted for on the equity method
of accounting.

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The following is a condensed balance sheet and income statement for Station Hill
as of and for the year ended December 31, 2000 and 1999 . The balance sheet and
income statement set forth below reflects the financial position and operations
of Station Hill in its entirety, not only the Company's respective interest
therein.

BALANCE SHEET
-----------------
2000 1999
------- -------
(IN THOUSANDS)

Cash and cash equivalents................................... $ 1,988 $ 1,764
Real estate assets, net..................................... 86,873 89,214
Other assets................................................ 362 399
------- -------
Total assets...................................... $89,223 $91,377
======= =======
Mortgages payable........................................... $68,657 $69,460
Other liabilities........................................... 1,245 784
Partners' capital........................................... 19,321 21,133
------- -------
Total liabilities and partners' capital........... $89,223 $91,377
======= =======

INCOME STATEMENT
-----------------
2000 1999
------- -------
(IN THOUSANDS)

Revenues.................................................... $12,404 $11,919
Expenses
Property operating........................................ 4,422 4,323
Depreciation and amortization............................. 3,013 3,031
Interest.................................................. 4,625 4,677
------- -------
Total expenses.................................... 12,060 12,031
------- -------
Net income (loss)........................................... $ 344 $ (112)
======= =======

The Company owns a 49% interest in a joint venture ("Construction Project"),
which is developing an apartment community. The Construction Project is
accounted for under the equity method of accounting and, therefore, its
operating results are presented in "Loss (income) on equity investments: Real
estate joint ventures" in the consolidated statements of earnings. The
construction costs are being funded primarily through a construction loan to the
joint venture from an unrelated third party equal to 100% of the construction
costs. During the construction period, in lieu of equity contribution to the
joint venture, the Company has under certain circumstances, subsequent to demand
by the third party lenders, agreed to make contributions which would reduce the
respective construction loan by an amount not to exceed 25% of the total
construction loan amount. Any such contribution would be deemed to be all or a
portion of the equity required to be contributed by the Company to the joint
venture at the end of the construction and lease up period. The Company has the
right to purchase its joint venture partner's interest in the joint venture for
a period of six months after the project becomes stabilized. The Construction
Project had not reached stabilization as of December 31, 2000 and the Company
has not made a determination about whether it will exercise its option. If the
Company does not exercise the option with respect to the joint venture, it will
be required to make a capital contribution of 25% of the joint venture's total
construction loan amount. The balance sheet and income statement information for
the Construction Project is not material.

5. PROPERTY MANAGEMENT AND RELATED PARTY TRANSACTIONS

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

The Management Company also provides property management services to the
Company's Communities. Total fees for management services provided to the
Company's Communities were $5.7 million, $5.0 million and $3.9 million for the
years ended December 31, 2000, 1999 and 1998, respectively.

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In addition, the Management Company provides management services to apartment
communities in which executive officers and certain directors of the Company are
general partners. The Management Company received management fees of
approximately $253,000, $239,000 and $233,000 for the performance of such
services for the years ended December 31, 2000, 1999 and 1998, respectively.

Construction Company revenue consists of fees on contracts with the Company.
Revenue from construction contracts with the Company was $2.5 million, $1.8
million and $1.1 million for the years ended December 31, 2000, 1999 and 1998,
respectively. The Construction Company's profits on these contracts are
eliminated in consolidation against the Company's investment in real estate. The
Company had $9.0 million and $13.3 million payable to the Construction Company
as of December 31, 2000 and 1999, respectively. This amount is included in
"Accounts payable and accrued expenses" in the accompanying consolidated balance
sheets. Also included in the accompanying consolidated balance sheets under the
caption "Other assets" is a receivable from the Construction Company of $2.1
million and $3.3 million as a result of construction advances at December 31,
2000 and 1999, respectively.

The Management Company leases office space from one of its Communities, Summit
Grandview. Scheduled rental payments to be received by Summit Grandview from the
Management Company through the lease expiration of September 30, 2010 are
approximately $7.5 million.

The Company's investment in the Management Company is reported on the equity
method and is not considered material to the consolidated financial statements
of the Company taken as a whole.

The consolidated statement of earnings of the Management Company and its wholly
owned subsidiary, the Construction Company, are summarized below (in thousands):

2000 1999 1998
------- ------ ------

Revenues:
Management fees charged to Operating Partnership.......... $ 5,735 $4,972 $3,884
Third party management fee revenue........................ 1,103 1,263 1,177
Construction revenue...................................... 2,494 1,774 1,141
Gain on sale of real estate assets........................ 238 -- --
Other revenue............................................. 372 844 194
------- ------ ------
Total revenue............................................. 9,942 8,853 6,396
------- ------ ------
Expenses:
Operating................................................. 9,398 8,699 5,893
Depreciation.............................................. 313 284 244
Amortization.............................................. 303 289 286
Interest.................................................. 677 300 300
------- ------ ------
Total expenses............................................ 10,691 9,572 6,723
------- ------ ------
Loss before extraordinary items............................. (749) (719) (327)
Extraordinary items......................................... (30) -- --
------- ------ ------
Net loss.................................................... $ (779) $ (719) $ (327)
======= ====== ======

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6. NOTES PAYABLE

Notes payable consist of the following (in thousands):

INTEREST PRINCIPAL OUTSTANDING
RATE AS OF DECEMBER 31,
DECEMBER 31, ---------------------
2000 2000 1999
------------ --------- ---------

FIXED RATE DEBT
Mortgage Loan........................................... 6.24% $140,550 $143,740
Mortgage Loan........................................... 8.00% 8,272 8,375
6.75% -
Mortgage Notes.......................................... 9.80% 154,229 111,081
Tax-exempt Mortgage Note................................ 6.95% 3,985 4,048
-------- --------
Total Mortgage Debt............................. 307,036 267,244
Unsecured Debt:
6.71% Medium-Term Notes paid in 2000................. 6.71% -- 25,000
6.75% Medium-Term Notes due 2001..................... 6.75% 30,000 30,000
7.87% Medium-Term Notes due 2003..................... 7.87% 17,000 --
8.037% Medium-Term Notes due 2005.................... 8.04% 25,000 --
7.59% Medium-Term Notes due 2009..................... 7.59% 25,000 25,000
8.50% Medium-Term Notes due 2010..................... 8.50% 10,000 --
6.80% Notes due 2002................................. 6.80% 25,000 25,000
6.63% Notes due 2003................................. 6.63% 30,000 30,000
6.95% Notes due 2004................................. 6.95% 50,000 50,000
7.20% Notes due 2007................................. 7.20% 50,000 50,000
Bank Note paid in 2000............................... 7.61% -- 15,000
Bank Note due 2002................................... 7.85% 16,000 16,000
-------- --------
Total Unsecured Debt................................. 278,000 266,000
-------- --------
Total Fixed Rate Debt................................ 585,036 533,244
VARIABLE RATE DEBT
Unsecured Credit Facility............................... LIBOR + 100 141,500 78,000
Tax Exempt Bonds........................................ 6.25% 37,363 38,388
-------- --------
Total Variable Rate Debt........................ 178,863 116,388
-------- --------
Total Outstanding Indebtedness.......................... $763,899 $649,632
======== ========

The one-month London Interbank Offered Rate (LIBOR) at December 31, 2000 was
6.56%.

MORTGAGE LOANS -- On September 23, 1998, the Company consolidated and renewed
two mortgage loans which had a $147.2 million balance. The original loans
matured in February 2001 ($118.3 million at 5.88%) and December 2005 ($28.9
million at 7.71%). The consolidation and renewal combined the two mortgage loans
into one loan at an interest rate equal to the existing weighted average
interest rate of the two previous mortgage loans (6.24%) up to February 2001. As
of February 2001, the rate of interest on the loan will increase to 6.76% until
the loan matures in October of 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.

MORTGAGE NOTES -- The Mortgage Notes bear interest at fixed rates ranging from
6.75% to 9.80% and require either monthly interest payments only or monthly
interest and principal payments over the lives of the notes which range from the
year 2002 to 2020. The weighted average interest rate and debt maturity at
December 31, 2000 for these nine Mortgage Notes were 7.37% and 6.7 years,
respectively.

TAX EXEMPT MORTGAGE NOTE -- The Tax Exempt Mortgage Note bears interest at a
fixed rate of 6.95% and requires monthly interest and principal payments over
the life of the note which matures November 2025.

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MEDIUM-TERM NOTES -- On May 29, 1998, the Company established a program for the
sale by the Operating Partnership of up to $95.0 million aggregate principal
amount of Medium-Term Notes due nine months or more from the date of issuance
(the "MTN Program"). The Operating Partnership issued Medium-Term Notes with an
aggregate principal amount of $80.0 million in connection with the MTN Program
as follows: (i) on July 28, 1998, the Company sold $30.0 million of notes which
are due on July 30, 2001 and bear interest at 6.75% per year; (ii) on October 5,
1998, the Operating Partnership sold $25.0 million of 6.71% notes which were due
and repaid on October 5, 2000; and (iii) on March 18, 1999, the Operating
Partnership sold $25.0 million of notes which are due on March 16, 2009 and bear
interest at 7.59% per year.

On April 20, 2000, the Company commenced a new program for the sale by the
Operating Partnership of up to $250.0 million aggregate principal amount of
Medium-Term Notes due nine months or more from the date of issuance. The new
program was established under the Company's and the Operating Partnership's
existing shelf registration statement. During 2000, the Operating Partnership
issued Medium-Term Notes with an aggregate principal amount of $52.0 million in
connection with the new MTN Program as follows: (i) on July 19, 2000 the
Operating Partnership sold $10.0 million of notes which are due on July 19, 2010
and bear interest at 8.50% per year; (ii) on October 20, 2000, the Operating
Partnership sold $17.0 million of notes which are due on October 20, 2003 and
bear interest at 7.87% per year and (iii) on November 17, 2000, the Operating
Partnership sold $25.0 million of notes which are due on November 17, 2005 and
bear interest at 8.037% per year.

UNSECURED NOTES -- The unsecured notes consist of $25.0 million of notes due
2002, $30.0 million of notes due 2003, $50.0 million of notes due 2004 and $50.0
million of notes due 2007 (collectively, the "Unsecured Notes"). The Unsecured
Notes require semi-annual interest payments until the end of the respective
terms.

UNSECURED BANK NOTE -- The unsecured bank note represents a $16.0 million note
due 2002. The unsecured bank note requires quarterly interest only payments
until the end of the term.

UNSECURED CREDIT FACILITY -- On September 26, 2000, the Company obtained a new
syndicated unsecured line of credit (the "Unsecured Credit Facility") in the
amount of $225 million which replaced its existing $200 million credit facility.
The Unsecured Credit Facility provides funds for new development, acquisitions
and general working capital purposes. The Unsecured Credit Facility has a three
year term, expiring on September 26, 2003, with annual extension options and
bears interest at LIBOR + 100 basis points based upon the Company's current
credit rating of BBB- by Standard & Poor's Rating Services and Baa3 by Moody's
Investors Service. The spread component of the aggregate interest rate will be
reduced in the event of an upgrade of the Company's unsecured credit rating. The
Unsecured Credit Facility is repayable monthly on an interest only basis with
principal due at maturity. The Company's credit facility had an average interest
rate and average balance outstanding during the years ended December 31, 2000,
1999 and 1998 of 7.20%, 6.06% and 6.67% and $119.8 million, $99.2 million and
$98.0 million, respectively. In addition, the maximum outstanding principal
amount during 2000, 1999 and 1998 was $174.0 million, $176.0 million and $175.0
million, respectively.

requirements: (i) the ratio of unencumbered assets (as defined therein) to
unsecured debt equal or exceed 175%; (ii) the ratio of total construction in
progress (as defined therein) to implied capitalization value not exceed 0.25%;
and (iii) secured debt not exceed 40% of implied capitalization value (as
defined therein). The Company was in compliance with these covenants at December
31, 2000.

VARIABLE RATE TAX EXEMPT BONDS -- The average effective interest rate of the
Variable Rate Tax Exempt Bonds was 5.65% for the year ended December 31, 2000.
These bonds bear interest at various rates set by a remarketing agent at the
demand note index plus 0.50%, set weekly, or the lowest percentage of prime
which allows the resale at a price of par. The bonds contain covenants which
require that the Company lease or hold for lease 20% (or 25% under certain state
or local requirements) of the apartment homes for moderate-income residents. The
bonds require maintenance of letters of credit or surety bonds (credit
enhancements) aggregating to $38.3 million at December 31, 2000. The credit
enhancements on three of the four tax exempt bonds ($29.2 million of debt and
$29.8 million of letters of credit) provide for a principal amortization
schedule which approximates a 25-year term during the term of the credit
enhancement.

Real estate assets with a net book value of approximately $468.5 million serve
as collateral for the various debt agreements.

The aggregate maturities of all debt for each of the years ending December 31
are as follows (in thousands):

FIXED RATE FIXED RATE FIXED RATE TAX EXEMPT UNSECURED
MORTGAGE MORTGAGE UNSECURED VARIABLE CREDIT
LOANS NOTES NOTES RATE BONDS FACILITY TOTAL
---------- ---------- ---------- ---------- --------- --------

2001.............................. $ 3,340 $ 2,163 $ 30,000 $ 1,160 $ -- $ 36,663
2002.............................. 3,531 10,357 41,000 1,260 -- 56,148
2003.............................. 3,779 2,344 47,000 1,260 141,500 195,883
2004.............................. 4,043 2,510 50,000 1,260 -- 57,813
2005.............................. 11,948 29,577 25,000 1,260 -- 67,785
Thereafter........................ 122,181 111,263 85,000 31,163 -- 349,607
-------- -------- -------- ------- -------- --------
$148,822 $158,214 $278,000 $37,363 $141,500 $763,899
======== ======== ======== ======= ======== ========

EXTRAORDINARY ITEMS -- The extraordinary items in the year ended December 31,
1998 resulted from the write-off of deferred financing cost in connection with
the replacement by the Company of a prior credit facility and prepayment
penalties on six mortgage notes which were repaid during the period. The
extraordinary items are net of $86,000 which was allocated to the minority
interest of the common unitholders in the Operating Partnership, calculated on
the weighted average number of Common Units outstanding in 1998.

7. MINORITY INTEREST

Minority interest of common unitholders consists of the following at December
31, 2000 and 1999 (in thousands):

2000 1999
------- -------

Minority interest of common unitholders in Operating
Partnership............................................... $56,190 $55,065
Minority interest in one operating community................ (460) (367)
------- -------
$55,730 $54,698
======= =======

As of December 31, 2000, there were 30,814,661 Common Units outstanding, of
which 26,431,086 or 85.8% were owned by the Company and 4,383,575 or 14.2% were
owned by other partners (including certain officers and directors of the
Company).

Proceeds from Common Stock issued by the Company are contributed to the
Operating Partnership for an equivalent number of Common Units. Total Common
Stock issued by the Company and contributed to the Operating Partnership for an
equivalent number of Common Units was 468,000 and 945,000 shares valued at $8.1
million ($17.28 per share average) and $16.4 million ($17.35 per share average)
for the years ended

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December 31, 2000 and 1999, respectively. No individual transaction
significantly changed the Company's ownership percentage in the Operating
Partnership. The Company's ownership percentage in the Operating Partnership was
85.8%, 85.6% and 86.2% as of December 31, 2000, 1999 and 1998, respectively.

Under certain circumstances, as required by the holders of Common Units, the
Company can issue shares of Common Stock in exchange for Common Units owned by
other partners on a one-for-one basis or may purchase Common Units for cash. In
addition to the amounts set forth in the preceding paragraph, the Company issued
shares of Common Stock in exchange for Common Units owned by other partners on a
one-for-one basis (subject to adjustment) during 2000. An aggregate of 55,677
shares were issued for Common Units during 2000. The shares exchanged were
valued based upon the Company's market price per share and had an aggregate
value of $1.2 million. During the year ended December 31, 2000, the Company
exchanged 93,945 Common Units for cash of approximately $1.8 million.

Common Units issued for the purchase of Communities were valued based upon the
Company's market price per share of Common Stock as the Common Units can be
exchanged for shares on a one-for-one basis. The Company issued 96,455 Common
Units valued at approximately $2.2 million in connection with the purchase by
the Company of its joint venture partner's interest in each of two Communities
during August 2000. Of the 2,253,165 Common Units issued for the 1998 purchase
of apartment Communities, 2,074,615 were issued to the Company in exchange for
2,074,615 shares of common stock to the sellers of the Communities.

8. ACQUISITIONS AND DISPOSITIONS

During the year ended December 31, 2000, the Company sold seven communities
comprising 1,676 apartment homes for approximately $103.9 million, resulting in
a gain on sale of approximately $38.5 million. Net proceeds of six of the seven
disposition communities of $78.1 million were placed in escrow with a qualified
intermediary in accordance with like-kind exchange income tax rules and
regulations. The communities sold were the former Summit Creekside, Summit
Eastchester, Summit Sherwood, Summit River Crossing, Summit Blue Ash, Summit
Park and Summit Village. In the event that the proceeds from these property
sales are not fully invested in qualified like-kind property during the required
time period, a special distribution may be made or company level tax may be
incurred.

On August 1, 2000, the Company purchased its joint venture partner's interest in
each of two communities, Summit Shiloh (182 apartment homes) and Summit
Sweetwater (308 apartment homes), for an aggregate purchase price of
approximately $36.0 million. The Company formerly owned a 49% interest in
separate joint ventures that developed such communities. The acquisitions were
primarily financed with the issuance of 96,455 Common Units valued at
approximately $2.2 million and the payment of approximately $33.7 million in
cash. The following summary of selected unaudited pro forma results of
operations presents information as if the purchase of the Company's joint
venture partner's interest in Summit Sweetwater and Summit Shiloh had occurred
at the beginning of each period presented.

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

YEAR ENDED DECEMBER 31,
-----------------------
2000 1999
---------- ----------

Total revenues.............................................. $192,582 $178,112
======== ========
Net income.................................................. $ 63,218 $ 46,020
======== ========
Net income
Basic..................................................... $ 2.40 $ 1.66
======== ========
Diluted................................................... $ 2.38 $ 1.66
======== ========

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exchange income tax rules and regulations. The communities sold were the former
Summit Hampton, Summit Oak, Summit Beacon Ridge, Summit Perico, Summit McIntosh,
Summit Heron's Run and Summit East Ridge. In the event that the proceeds from
these property sales are not fully invested in qualified like-kind property
during the required time period, a special distribution may be made or company
level tax may be incurred.

During the year ended December 31, 1999 the Company acquired no communities.

The Company completed the acquisition of three communities located in Atlanta,
Georgia in 1998: Summit St. Clair, purchased effective March 1, 1998; Summit
Club at Dunwoody, purchased effective May 22, 1998; and Summit Lenox, purchased
effective July 8, 1998 (the "Atlanta Acquisitions"). The Atlanta Acquisitions
added a total of 1,093 apartment homes to the Company's portfolio at an
aggregate purchase price of $88.3 million. The Atlanta Acquisitions were
financed with the issuance of 259,871 Common Units valued at $5.2 million and
the assumption of approximately $8.8 million of mortgage debt. The balance of
the purchase price was paid in cash.

On December 16, 1998, the Company (i) sold five communities (the "Sold
Communities") to Hollow Creek, LLC., a newly-formed North Carolina limited
liability company for approximately $68.0 million and (ii) contributed two
communities with an approximate value of $22.0 million (together with the Sold
Communities, the "Joint Venture Communities") to Station Hill, LLC., a
newly-formed North Carolina limited liability company ("Station Hill"). On the
same date, Hollow Creek, LLC contributed the Sold Communities to Station Hill.
Station Hill is a joint venture limited liability company, the membership of
which is comprised of the Company and a wholly owned subsidiary of a major
financial services company (the "Joint Venture Member"). The disposition was
effected pursuant to a Real Estate Sale Agreement dated November 20, 1998
between the Operating Partnership and the Joint Venture Member and pursuant to
the Operating Agreement of Station Hill, also dated November 20, 1998. The
Company's net contribution to the LLC (approximately $5.6 million) represents a
25 percent equity interest in Station Hill. In addition, the Company is the
managing member of Station Hill and will also retain management of the Joint
Venture Communities through a management agreement with Station Hill. The cash
flow of Station Hill will be distributed pro rata to each member based on its
equity contribution until certain economic benchmarks are achieved, at which
point the Company will receive an escalated portion of the cash flow and
residual interest. Station Hill has obtained five separate mortgages from Fannie
Mae, the aggregate balance of which was $68.7 million at December 31, 2000.
These mortgages have a ten-year maturity and a 6.70% interest rate. The proceeds
of the mortgages were distributed on a pro rata basis to Station Hill's two
members. The Joint Venture Communities involved in the transaction were Summit
Green, Summit Hollow I and II and Summit Creek in Charlotte, North Carolina;
Summit Hill I and II in Raleigh, North Carolina, and Summit Station in Tampa,
Florida. The Joint Venture Communities include 1,433 apartment homes. The
Company recognized a gain of approximately $20.2 million on the disposition. The
gain is net of $5.6 million elimination of gain relative to the Company's
retained portion of the joint venture. The elimination of the gain reduced the
Company's investment in the joint venture to zero at the initial joint venture
formation date.

Industries"), affiliates of Ewing, and their respective partners, shareholders
and members (together with Ewing Industries, "Ewing"). Pursuant to the Merger
Agreement, the acquisition was funded through (i) the issuance to Ewing of
1,008,988 shares of Common Stock of the Company and 141,921 Common Units, valued
at $20.7 million in the aggregate, (ii) the assumption of $84.0 million in
long-term fixed-rate mortgage indebtedness, (iii) the payment of $50.6 million
in cash and (iv) receipt of $3.8 million of credit for customary prorations and
reserves. A portion of the consideration was deferred until stabilization of one
community (Summit Las Palmas) which was in lease-up at the time of the
acquisition of the Ewing Portfolio. The Summit Las Palmas purchase closed on
December 31, 1998 with the additional consideration of (i) 1,027,771 shares of
Common Stock and 36,124 Common Units valued at $29.2 million in the aggregate
and (ii) cash in the amount of approximately $600,000.

The following summary of selected unaudited pro forma results of operations
presents information as if the Atlanta Acquisitions and the Ewing Portfolio
purchase (except Summit Las Palmas) had occurred as of January 1, 1998. The pro
forma information for 1998 excludes Las Palmas as it was in construction and
lease-up and had insignificant operations. The pro forma information for the
year ended December 31, 1998 is provided for informational purposes only and is
not indicative of results that would have occurred or which may occur in the
future (dollars in thousands except per share amounts):

Net revenues................................................ $166,308
========
Income before extraordinary items........................... $ 53,457
========
Net income.................................................. $ 52,949
========
Earnings per share:
Income before extraordinary items......................... $ 2.11
========
Net income................................................ $ 2.09
========

9. NOTES RECEIVABLE FROM EMPLOYEEs

On September 8, 1997, the Board of Directors approved a Statement of Company
Policy, which has subsequently been amended and restated by the Board from time
to time, on loans to executive officers and certain key employees relating to
purchases of Common Stock (as amended through December 31, 1999, the "Loan
Program"). Pursuant to the Loan Program, the Company may lend amounts to certain
of the Company's executive officers and certain of its key employees for one or
more of the following purposes: (i) to finance the purchase of Common Stock of
the Company on the open market at the then-current market prices; (ii) to
finance an executive officer's or key employee's payment of the exercise price
of one or more stock options to purchase shares of Common Stock granted to such
employees under the Company's 1994 Stock Option and Incentive Plan, as amended
and restated (the "1994 Stock Plan"); or (iii) to finance the annual tax
liability of certain executive officers related to the vesting of shares of
Common Stock which constitute a portion of a restricted stock award granted to
such employees under the 1994 Stock Option Plan. Unless otherwise determined on
a case-by-case basis by the Board of Directors or the compensation Committee
thereof, the maximum aggregate amount the Company may loan to an executive
officer is $500,000, and the maximum aggregate amount the Company may loan to a
qualified employee other than an executive officer is $200,000. Shares of Common
Stock which are the subject of a loan serve as collateral for the notes until
the notes have been paid in full. Each note bears interest at the applicable
federal rate, as established by the Internal Revenue Service, in effect on the
date of the note. The notes are payable through the application to the
outstanding loan balance of all dividends and distributions related to the
collateral stock,

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first to interest, with the remainder, if any, to outstanding principal. Each
note becomes due and payable in full on the tenth anniversary of the respective
note. As of December 31, 2000, the Company had loans receivable in the net
amount of $13.7 million.

10. COMMITMENTS AND CONTINGENCIES

The estimated cost to complete seven development projects currently under
construction was approximately $117.7 million at December 31, 2000. Anticipated
construction completion dates of the projects range from the third quarter of
2001 to the first quarter of 2003.

The Company rents office space in several locations. Rental expense for the
years ended December 31, 2000, 1999 and 1998 amounted to $108,000, $170,000 and
$121,000, respectively ($848,000 in 2000, $481,000 in 1999 and $406,000 in 1998
including amounts recorded by the Management Company).

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

YEARS ENDING DECEMBER 31:
-------------------------

2001........................................................ $ 992
2002........................................................ 880
2003........................................................ 840
2004........................................................ 739
2005........................................................ 761
Thereafter.................................................. 3,934
------
$8,146
======

Of the amounts shown above, $7.5 million of the total minimum rental payments
are for the Management Company's lease of office space in Summit Grandview.

On January 19, 2000, the Operating Partnership entered into a Real Estate
Purchase Agreement (the "Agreement") with a third-party real estate developer
(the "Developer"). Under the terms of the Agreement, the Operating Partnership
has agreed to purchase upon completion a "Class A" mixed-use community, which
will be called Summit Brickell, and will be located in Miami, Florida. The
Operating Partnership expects to close on the purchase of Summit Brickell during
the second half of 2002 following its completion and lease up. The final
purchase price will be determined based on actual construction costs plus a
bonus to the Developer based on the capitalized income of the property at the
time of purchase. The purchase price is expected to be approximately $50.5
million. The purchase price of Summit Brickell by the Operating Partnership is
subject to customary closing conditions. The Operating Partnership has issued a
letter of credit ("LOC") in the amount of approximately $13.0 million, which
will serve as a credit enhancement to the Developer's construction loan. In the
event that any amount under the LOC is drawn upon, the Operating Partnership
shall be treated as having issued a loan to the Developer in the amount of such
draw. Any such loan will accrue interest at a rate of eighteen percent (18%) per
annum.

The Company has employment agreements (the "Employment Agreements") with the
Co-Chairman of the Board of Directors and all executive officers. The Employment
Agreements for two executive officers provide for the payment of severance
benefits in certain circumstances. Generally, these benefits provide for the
payment of the executive officer's salary for a period of up to the remaining
term of the Employment Agreement. In addition, most of the executive officers
have severance agreements that provide for the payment of severance benefits of
up to three times such officer's annual base salary and cash bonus in the event
of the termination of the officer's employment under certain circumstances
following certain "change in control" or "combination transactions" involving a
consolidation or merger. The benefits payable under the terms of the severance
agreements are subject to reduction by the amount of any severance benefits
payable under applicable Employment Agreements.

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The Company is obligated to redeem each Common Unit in the Operating Partnership
at the request of the holder thereof for cash equal to the fair market value of
one share of Common Stock, except that the Company may elect to acquire each
Common Unit presented for redemption for one share of Common Stock (subject to
adjustment).

11. EMPLOYEE BENEFIT PLANS

PROFIT SHARING PLAN

The Company has a defined contribution plan pursuant to Section 401(k) of the
Internal Revenue Code which covers all employees with one year or greater
service. The Company's contributions are equal to one-half of each employee's
contribution up to a maximum of 3% of each employee's compensation. Aggregate
contributions of approximately $349,000, $306,000 and $242,000 were made for the
years ended December 31, 2000, 1999 and 1998, respectively.

STOCK OPTION PLAN

In 1994, the Company established the 1994 Stock Option and Incentive Plan (as
amended, the "Incentive Plan") under which 1,000,000 shares of the Company'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 thereunder from 1,000,000 to 3,000,000 shares. The plan provides
that the option price shall not be less than the fair market value of the shares
at the date of grant. The options have ten-year lives and vest in three or five
annual installments on the anniversaries of the date of grant, except for shares
granted to independent directors of the Company, which vest on the date of
grant. The Company applies Accounting Principles Board Opinion No. 25 and
related interpretations in accounting for its stock options. Accordingly, no
compensation cost has been recognized for its stock options.

A summary of changes in common stock options for the three years ended December
31, 2000 is as follows:

WEIGHTED AVERAGE
OPTIONS EXERCISE PRICE
--------- ----------------

Outstanding at December 31, 1997............................ 416,396 $18.86
Year ended December 31, 1998
Granted to employees and directors........................ 191,000 19.19
Exercised................................................. (45,000) 19.00
Forfeited................................................. (15,000) 19.03
---------
Outstanding at December 31, 1998....................... 547,396 18.80
Year ended December 31, 1999
Granted to employees and directors........................ 841,000 17.12
Exercised................................................. (10,625) 17.91
Forfeited................................................. (27,500) 16.62
---------
Outstanding at December 31, 1999....................... 1,350,271 17.81
Year ended December 31, 2000
Granted to employees and directors........................ 241,000 20.02
Exercised................................................. (136,500) 18.01
Forfeited................................................. (186,050) 17.59
---------
Outstanding at December 31, 2000....................... 1,268,721 18.24
=========

Exercise prices for options outstanding as of December 31, 2000 ranged from
$16.50 to $21.50. The weighted average remaining contractual life of those
options is 7.8 years.

As of December 31, 2000, 1999 and 1998 options to purchase 635,221, 556,979 and
369,528 shares, respectively, of Common Stock were exercisable. The weighted
average exercise price for the shares exercisable as of December 31, 2000, 1999
and 1998 was $18.35, $18.33 and $18.84, respectively.

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The estimated weighted average fair value of options granted was $4.66 per share
in 2000, $1.83 per share in 1999 and $2.18 per share in 1998.

The fair value of options granted in 2000 was estimated on the date of grant
using the Binomial option-pricing model with the following weighted-average
assumptions: dividend yields ranging from 7.28% to 7.38%, expected volatility of
20%, risk free interest rate of 5.75% and expected lives of ten years.

The fair value of options granted in 1999 was estimated on the date of grant
using the Binomial option-pricing model with the following weighted-average
assumptions: dividend yields ranging from 8.39% to 10.10%, expected volatility
of 20%, risk free interest rates ranging from 4.7% to 6.1%, and expected lives
of ten years.

The fair value of options granted during 1998 was estimated on the date of grant
using the Binomial option-pricing model with the following weighted average
assumptions: dividend yield of 9.3%, expected volatility of 20%, risk free
interest rate of 6.0%, and expected lives of ten years.

In addition, the Incentive Plan provides for the grant of stock to employees.
The Company granted 64,499 shares of restricted stock under the plan in 2000.
The market value of the restricted stock granted in 2000 totaled $1.2 million
and was recorded as unamortized restricted stock compensation and is shown as a
separate component of stockholders' equity. Unearned compensation is being
amortized to expense over the vesting periods which range from three to five
years. Restricted stock of 17,669 shares with a market value of $304,000 was
granted during the year ended December 31, 1999. Restricted stock of 8,372
shares with a market value of $162,000 was granted in the year ended December
31, 1998. The Company recognized $300,000, $365,000 and $314,000 of expense in
the statement of earnings in the years ended December 31, 2000, 1999 and 1998,
respectively, relative to the stock grants.

PERFORMANCE STOCK AWARD PLAN

In January 1998, the Company agreed to award key employees of the Company
certain amounts of Common Stock under the Company's Performance Stock Award
Plan. The amount of Common Stock to be granted to the key employees was based
upon the Company's average annual return (share appreciation and distributions)
from the date of the award to the third anniversary of the award (January 2001)
(the "appreciation period"). The number of shares to be granted under the
Performance Stock Award Plan ranged from none (in the event the Company achieved
less than a 11% average annual return) to 147,713 (in the event the Company
achieved a 15% or greater annual return). The starting Common Stock price for
the purposes of calculating appreciation was $21.375 ($19.87 for one key
employee) and represents fair market value at the date of award. Over the
appreciation period, the Company's average annual total return exceeded 14
percent, resulting in 93,678 shares being awarded on January 2, 2001. One half
of the shares granted under the Performance Stock Award Plan vested on January
2, 2001, 25% will vest on January 2, 2002 and the remaining 25% will vest on
January 2, 2003. Approximately $1.2 million was accrued and recorded as a
component of stockholder's equity at December 31, 2000, reflecting the
obligation to issue shares related to the awards.

EMPLOYEE STOCK PURCHASE PLAN

In 1996, the Company established a non-qualified employee stock purchase plan.
From 1996 through 1999, the plan allowed Company employees to purchase up to
$100,000 per year of the Company's Common Stock. In December 1999, the plan was
amended to decrease the maximum annual purchase amount by a participant from
$100,000 to $25,000. The price of the shares of the Common Stock purchased will
be the lesser of 85 percent of the closing price of such shares either on (a)
the first day of each six month purchase period, or (b) the last day of each six
month purchase period.

Total shares issued under the plan in 2000, 1999 and 1998 were 88,848, 144,513
and 65,541 with a market value of $1.8 million, $2.7 million and $1.3 million,
respectively. The Company applies APB Opinion 25 and related Interpretations in
accounting for its Employee Stock Purchase Plan and, accordingly, no
compensation cost is required to be recognized for such plan. An additional
5,190 shares with a market value of $135,000 were issued in January 2001 under
the plan.

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Had compensation cost for the Company's stock options and Employee Stock
Purchase Plan been determined based on the fair value at the grant dates,
consistent with the method of Statement of Financial Accounting Standards No.
123, "Accounting for Stock-Based Compensation", the Company's net income and net
income per share for the years ended December 31, 2000, 1999 and 1998 would have
been as follows (dollars in thousands except per share amounts):

2000 1999 1998
------- ------- -------

Net income as reported...................................... $63,874 $45,745 $56,375
Net income per share -- basic............................... 2.42 1.65 2.26
Net income per share -- diluted............................. 2.41 1.65 2.26
Pro forma net income........................................ 62,504 43,943 55,958
Pro forma net income per share -- basic..................... 2.37 1.59 2.24
Pro forma net income per share -- diluted................... 2.35 1.58 2.24

12. DIVIDEND REINVESTMENT AND DIRECT STOCK PURCHASE PLAN

In November 1997, the Company replaced its existing dividend reinvestment plan
with a new dividend reinvestment and direct stock purchase plan (the "Plan").
The Plan provides both new investors and existing shareholders of the Company's
stock (including Common Stock and other classes of outstanding stock) with a
method to purchase shares of Common Stock under the Stock Purchase Program of
the Plan. The Plan also permits shareholders to designate all, a portion or none
of the cash dividends on their newly purchased Common Stock and cash dividends
on their existing stock for reinvestment in more shares of Common Stock through
the Dividend Reinvestment Program of the Plan. With respect to reinvested
dividends and optional cash payments, shares of Common Stock will be purchased
for the Plan at a discount ranging from 0% to 5% (established by the Company
from time to time) from the market price, as more fully described in the
Prospectus relating to the Plan. Common Stock will be purchased by the Plan's
Agent (First Union National Bank) directly from the Company or in open market or
privately negotiated transactions, as determined from time to time by the
Company, to fulfill requirements for the Plan. At present, the Company expects
that shares usually will be purchased directly from the Company.

13. SHAREHOLDER RIGHTS AGREEMENT

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

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

The Rights will expire at the close of business on December 14, 2008 (the
"Expiration Date"), unless previously redeemed or exchanged by the Company as
described below. The Rights may be redeemed in whole, but not in part, at a
price of $0.01 per Right (payable in cash, shares of the Company's Common Stock
or other consideration deemed appropriate by the Board of Directors) by the
Board of Directors only until the earlier of (i) the time at which any person
becomes an "acquiring person" or (ii) the Expiration Date. At any time after any
person becomes an "acquiring person," the Board of Directors may, at its option,
exchange all

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or any part of the then outstanding and exercisable Rights for shares of the
Company's Common Stock at an exchange ratio specified in the Rights Plan.
Notwithstanding the foregoing, the Board of Directors generally will not be
empowered to effect such exchange at any time after any person becomes the
beneficial owner of 50% or more of the Company's Common Stock.

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

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

14. BUSINESS SEGMENTS

The Company reports as a single business segment with activities related to the
operation, development and acquisition of "Class A" luxury apartments primarily
in the southeastern, southwestern, midwestern and mid-atlantic United States.
The Company develops apartments solely for its own use and does not perform
development activities for third parties.

15. PRIVATE PLACEMENT OF PREFERRED UNITS

On April 29, 1999, the Operating Partnership completed a private placement of
3.4 million of its 8.95% Series B Cumulative Redeemable Perpetual Preferred
Units (the "Series B Preferred Units") to two institutional investors at a price
of $25.00 per unit. The net proceeds of approximately $83 million were used to
repay amounts outstanding under the Company's unsecured credit facility. The
Series B Preferred Units may be exchanged by the holders into shares of 8.95%
Series B Cumulative Redeemable Perpetual Preferred Stock of the Company ("Series
B Preferred Shares") on a one-for-one basis (subject to adjustment). Holders of
the Series B Preferred Units may exercise their exchange right (a) at any time
on or after April 29, 2009, (b) at any time if full quarterly distributions are
not made for six quarters, or (c) upon the occurrence of specified events
related to the treatment of the Operating Partnership or the Series B Preferred
Units for federal income tax purposes. The Operating Partnership may redeem the
Series B Preferred Units at any time on or after April 29, 2004 for cash at a
redemption price equal to the redeemed holder's capital account (initially
$25.00 per unit), plus all accumulated, accrued and unpaid distributions or
dividends. In lieu of cash, the Operating Partnership may elect to deliver
Series B Preferred Shares on a one-for-one basis (subject to adjustment), plus
an amount equal to all accumulated, accrued and unpaid distributions or
dividends. The Series B Preferred Units have no stated maturity, are not subject
to any sinking fund or mandatory redemption and are not convertible into any
other securities of the Company or the Operating Partnership. Distributions on
the Series B Preferred Units are cumulative from the date of original issuance
and are payable quarterly at the rate of 8.95% per annum of the $25.00 original
capital contribution. The Company paid holders of the Series B Preferred Units
distributions in the aggregate amount of approximately $7.6 million and $5.1
million during 2000 and 1999, respectively.

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September 3, 2004 for cash at a redemption price equal to the redeemed holder's
capital account (initially $25.00 per unit), plus all accumulated, accrued and
unpaid distributions or dividends. The Series C Preferred Units have no stated
maturity, are not subject to any sinking fund or mandatory redemption and are
not convertible into any other securities of the Company or the Operating
Partnership. Distributions on the Series C Preferred Units are cumulative from
the date of original issuance and are payable quarterly at the rate of 8.75% per
annum of the $25.00 original capital contribution. The Company paid the holder
of the Series C Preferred Units distributions in the aggregate amount of
approximately $4.9 million and $1.5 million during 2000 and 1999, respectively.

16. COMMON STOCK REPURCHASE PROGRAM

On May 11, 1999, the Board of Directors of the Company authorized a common stock
repurchase program pursuant to which the Company was authorized to purchase up
to an aggregate of $50 million of outstanding Common Stock (the "$50 Million
Program"). All repurchases were made on the open market at prevailing prices or
in privately negotiated transactions. During the year ended December 31, 2000,
the Company completed the $50 Million Program by repurchasing 131,900 shares of
Common Stock for an aggregate purchase price, including commissions, of
approximately $2.5 million, or an average price of $18.88 per share. In total,
the Company repurchased 2.5 million shares of common stock under the $50 Million
Program for an aggregate purchase price, including commissions, of approximately
$50 million, or an average price of $19.63 per share.

17. SUPPLEMENTAL CASH INFORMATION

Non-cash investing and financing activities for the years ended December 31,
2000, 1999 and 1998 are as follows:

A. The Company purchased its joint venture partner's interest in each of
two communities during the year ended December 31, 2000 at an aggregate
purchase price of approximately $36.0 million. The acquisitions were
primarily financed with the issuance of 96,455 Common Units in the
aggregate valued at approximately $2.2 million as well as the payment of
approximately $33.7 million in cash in the aggregate.

B. The Company sold seven communities during the year ended December 31,
1999. The respective purchasers of three of the communities assumed the
related outstanding debt balances associated with such communities of
$19.7 million.

C. The Company purchased the Atlanta Acquisitions and the Ewing Portfolio
by issuing 438,421 Common Units, issuing 2,074,615 shares of Common
Stock, assuming mortgage notes, assuming certain liabilities and the
payment of cash. The recording of the purchases is summarized as follows
(in thousands):

Fixed Assets................................................ $267,991
Restricted Cash............................................. 1,713
Current liabilities assumed................................. (6,327)
Mortgage notes assumed...................................... (92,761)
Value of Operating Partnership Units issued................. (8,427)
Value of Common Stock issued................................ (37,343)
--------
Cash invested............................................... $124,846
========

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D. The Company granted 64,499 (net of 4,000 shares forfeited), 17,669 (net
of 6,828 shares forfeited), and 8,372 shares of restricted stock in
2000, 1999 and 1998 valued at $1.2 million, $304,000 and $162,000,
respectively.

E. The Company issued 55,677 shares of Common Stock in exchange for 55,677
Common Units during the year ended December 31, 2000. The value of these
shares of Common Stock was approximately $1.1 million.

F. The Company accrued a dividend and distribution payable of $13.5
million, $13.0 million and $12.7 million at December 31, 2000, 1999 and
1998, respectively.

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 herein
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 herein are
based on information available to management as of December 31, 2000 and 1999.
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 herein.

Cash and cash equivalents, rents receivable, accounts payable, accrued expenses,
security deposits, other liabilities, tax-exempt bond indebtedness and the
Company's credit facility are carried at amounts which reasonably approximate
their fair values at December 31, 2000 and 1999 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
$585.0 million had an estimated aggregate fair value of approximately $583.3
million at December 31, 2000. Fixed rate mortgage debt and unsecured notes with
a carrying value of $533.2 million had an estimated aggregate fair value of
approximately $501.3 million at December 31, 1999. Rates currently available to
the Company 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. Fair
values were determined from quoted market prices, where available, and from
information received from investment advisors using current interest rates
considering credit ratings and remaining terms to maturity.

While the Company has historically had limited involvement with derivative
financial instruments, the Company 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. The Company generally does not utilize derivative financial
instruments for trading or speculative purposes. On September 16, 1999, the
Company entered into an interest rate swap agreement with a notional amount of
$30 million, relating to $30 million of notes issued by the Operating
Partnership under the MTN Program which carry a fixed interest rate of 6.625%
per annum (the "Fixed Rate"). Under the interest rate swap agreement, through
the maturity date of such notes of December 15, 2003, (i) the Company has agreed
to pay to the counterparty the interest on a $30 million notional amount at a
floating interest rate of 3-month LIBOR plus 11 basis points (the "Floating
Rate"), and (ii) the counterparty has agreed to pay to the Company the interest
on the same notional amount at the Fixed Rate. The Floating Rate at December 31,
2000 was 6.69%. Under the interest rate swap agreement, an increase in 3-month
LIBOR will increase the amount of interest that the Company will be required to
pay, and a decrease in 3-month LIBOR will decrease the amount of interest that
the Company will be required to pay. The fair value of the interest rate swap
was approximately $485,000 at December 31, 2000.

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19. GEOGRAPHIC CONCENTRATION (UNAUDITED)

The Company's Communities are concentrated in seven major markets as follows:

NUMBER
OF APARTMENT 2000
APARTMENT HOMES -- % % OF
MARKET HOMES OF PORTFOLIO REVENUES
------ --------- ------------- --------

Washington, DC.............................................. 3,196 19% 17%
Atlanta, GA................................................. 2,864 12% 15%
Raleigh, NC................................................. 2,726 9% 14%
Charlotte, NC............................................... 2,246 11% 12%
South Florida............................................... 2,019 13% 11%
Dallas, TX.................................................. 1,359 7% 7%
Austin, TX.................................................. 856 5% 5%
Other....................................................... 3,660 24% 19%
------ --- ---
18,926 100% 100%
====== === ===

20. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

Quarterly financial information for the years 2000 and 1999 is as follows (in
thousands except per share data):

YEAR ENDED DECEMBER 31, 2000
-------------------------------------
FIRST SECOND THIRD FOURTH
------- ------- ------- -------

Revenues................................................ $45,342 $46,428 $48,915 $48,959
Income before gain on sale of real estate assets,
minority interest of unitholders in Operating
Partnership and dividends to preferred unitholders in
Operating Partnership................................. 11,771 11,375 11,719 13,439
Gain on sale of real estate assets...................... 2,440 5,446 21,235 9,389
Minority interest of common unitholders in Operating
Partnership........................................... 1,567 1,924 4,211 2,818
Dividends to preferred unitholders in Operating
Partnership........................................... 3,105 3,105 3,105 3,105
Net income.............................................. 9,539 11,792 25,638 16,905
Net income -- basic..................................... 0.36 0.45 0.97 0.64
Net income -- diluted................................... 0.36 0.45 0.97 0.63

YEAR ENDED DECEMBER 31, 1999
-------------------------------------
FIRST SECOND THIRD FOURTH
------- ------- ------- -------

Revenues................................................ $43,149 $44,557 $45,010 $44,132
Income before gain on sale of real estate assets,
minority interest of common unitholders in Operating
Partnership and dividends to preferred unitholders in
Operating Partnership................................. 8,999 10,200 11,112 12,022
Gain on sale of real estate assets...................... -- 6,307 2,487 8,633
Minority interest of unitholders in Operating
Partnership........................................... (1,218) (2,051) (1,571) (2,477)
Dividends to preferred unitholders in Operating
Partnership........................................... -- (1,317) (2,276) (3,105)
Net income.............................................. 7,781 13,139 9,752 15,073
Net income -- basic and diluted......................... 0.27 0.46 0.35 0.57

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SCHEDULE III
SUMMIT PROPERTIES INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2000
(DOLLARS IN THOUSANDS)

GROSS AMOUNT AT WHICH
INITIAL COSTS COSTS CARRIED AT CLOSE OF PERIOD
-------------------------- CAPITALIZED ---------------------------------------
BUILDINGS SUBSEQUENT BUILDINGS
RELATED AND TO AND
APARTMENTS ENCUMBRANCES LAND IMPROVEMENTS(6) ACQUISITION LAND IMPROVEMENTS(6) TOTAL(1)
---------- ------------ -------- --------------- ----------- -------- --------------- ----------

Reunion Park by Summit..... $ -- $ 991 $ -- $ 13,613 $ 997 $ 13,607 $ 14,604
Summit Arboretum........... 19,567 4,080 24,403 447 4,080 24,850 28,930
Summit Arbors.............. -- 780 5,066 662 780 5,728 6,508
Summit Ashburn Farm........ -- 2,438 -- 12,392 2,438 12,392 14,830
Summit Aventura............ -- 6,367 -- 25,824 6,368 25,823 32,191
Summit Ballantyne.......... (2) 3,328 -- 23,548 3,347 23,529 26,876
Summit Belcourt............ 9,386 3,600 16,788 146 3,600 16,934 20,534
Summit Belmont............. (4) 974 -- 11,492 984 11,482 12,466
Summit Breckenridge........ -- 812 -- 12,810 812 12,810 13,622
Summit Buena Vista......... 24,980 4,670 30,499 425 4,670 30,924 35,594
Summit Camino Real......... 16,519 7,120 41,985 606 7,120 42,591 49,711
Summit Club at Dunwoody.... -- 2,934 24,510 170 2,934 24,680 27,614
Summit Crossing............ 3,985 768 5,174 476 768 5,650 6,418
Summit Deer Creek.......... -- 3,537 -- 18,561 3,845 18,253 22,098
Summit Del Ray............. (2) 3,120 -- 15,722 5,402 13,440 18,842
Summit Doral............... -- 3,099 -- 20,465 3,133 20,431 23,564
Summit Fair Lakes.......... 48,340 9,521 -- 38,439 9,552 38,408 47,960
Summit Fair Oaks........... -- 4,356 17,215 714 4,356 17,929 22,285
Summit Fairview............ -- 404 -- 6,087 537 5,954 6,491
Summit Fairways............ -- 2,819 -- 15,291 2,819 15,291 18,110
Summit Foxcroft............ 2,519 925 3,797 747 925 4,544 5,469
Summit Gateway............. (4) 1,738 -- 11,223 2,256 10,705 12,961
Summit Glen................ (2) 3,652 -- 13,438 3,693 13,397 17,090
Summit Governor's
Village.................. -- 1,622 -- 15,354 1,643 15,333 16,976
Summit Grandview........... -- 2,527 -- 45,497 2,620 45,404 48,024
Summit Highland............ (2) 1,374 -- 6,473 1,374 6,473 7,847
Summit Hunter's Creek...... -- 2,193 -- 17,855 2,195 17,853 20,048
Summit Lake................ -- 1,712 -- 28,621 2,511 27,822 30,333
Summit Largo............... -- 3,074 -- 15,301 3,077 15,298 18,375
Summit Las Palmas.......... (2) 4,480 25,504 277 4,480 25,781 30,261
Summit at Lenox............ -- 10,800 22,997 313 10,800 23,310 34,110
Summit Lofts............... -- 1,800 7,337 996 1,800 8,333 10,133
Summit Mayfaire............ -- 936 8,897 195 936 9,092 10,028
Summit Meadow.............. (2) 2,313 -- 8,873 2,539 8,647 11,186
Summit New Albany I........ -- 2,693 -- 21,293 2,715 21,271 23,986
Summit New Albany II....... -- 1,163 -- 8,247 1,173 8,237 9,410

DEPRECIABLE
ACCUMULATED DATE OF DATE LIVES
APARTMENTS DEPRECIATION CONSTRUCTION ACQUIRED YEARS
---------- ------------ ------------ -------- -----------

Reunion Park by Summit..... $ (203) 6/99-9/00 4/99 5-40 years
Summit Arboretum........... (1,785) 1996(5) 11/98 5-40 years
Summit Arbors.............. (1,330) 1986(5) 5/95 5-40 years
Summit Ashburn Farm........ (213) 299-9/00 7/98 5-40 years
Summit Aventura............ (4,440) 6/94-12/95 12/93 5-40 years
Summit Ballantyne.......... (2,193) 7/96-12/98 12/95 5-40 years
Summit Belcourt............ (1,167) 1994(5) 11/98 5-40 years
Summit Belmont............. (4,992) 1/86-5/87 1/86 5-40 years
Summit Breckenridge........ (5,562) 7/85-5/87 6/85 5-40 years
Summit Buena Vista......... (2,131) 1996(5) 11/98 5-40 years
Summit Camino Real......... (2,960) 1998(5) 11/98 5-40 years
Summit Club at Dunwoody.... (1,971) 1997(5) 5/98 5-40 years
Summit Crossing............ (1,348) 1985(5) 5/95 5-40 years
Summit Deer Creek.......... (454) 2/99-6/00 1/98 5-40 years
Summit Del Ray............. (4,130) 1/92-2/93 1/92 5-40 years
Summit Doral............... (1,081) 12/97-11/99 12/96 5-40 years
Summit Fair Lakes.......... (2,295) 6/97-8/99 12/96 5-40 years
Summit Fair Oaks........... (2,108) 1990(5) 12/97 5-40 years
Summit Fairview............ (2,806) 3/82-3/83 3/82 5-40 years
Summit Fairways............ (2,279) 9/95-12/96 8/95 5-40 years
Summit Foxcroft............ (1,211) 1979(5) 5/95 5-40 years
Summit Gateway............. (4,505) 1/86-1/87 12/85 5-40 years
Summit Glen................ (3,844) 5/90-8/92 4/90 5-40 years
Summit Governor's
Village.................. (1,104) 8/97-12/98 7/97 5-40 years
Summit Grandview........... (149) 7/98-12/00 3/98 5-40 years
Summit Highland............ (3,051) 3/86-1/87 11/85 5-40 years
Summit Hunter's Creek...... (466) 3/99-3/00 11/98 5-40 years
Summit Lake................ (2,282) 9/96-1/99 4/96 5-40 years
Summit Largo............... (500) 10/98-3/00 10/98 5-40 years
Summit Las Palmas.......... (1,641) 1998(5) 12/98 5-40 years
Summit at Lenox............ (2,276) 1965(5) 7/98 5-40 years
Summit Lofts............... (2,487) 1990(5) 10/94 5-40 years
Summit Mayfaire............ (1,186) 1995(5) 1/97 5-40 years
Summit Meadow.............. (3,156) 8/89-8/90 2/89 5-40 years
Summit New Albany I........ (1,510) 5/97-12/98 11/96 5-40 years
Summit New Albany II....... (260) 12/98-3/00 2/98 5-40 years

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Summit Norcroft I.......... (2) 1,072 -- 8,208 1,226 8,054 9,280
Summit Norcroft II......... (2) 381 -- 2,713 409 2,685 3,094
Summit On the River........ (2) 3,212 -- 21,440 3,212 21,440 24,652
Summit Palm Lake........... -- 4,949 -- 17,501 5,084 17,366 22,450
Summit Pike Creek.......... (4) 1,132 -- 13,286 1,259 13,159 14,418
Summit Plantation I........ (2) 3,428 18,485 252 3,794 18,371 22,165
Summit Plantation II....... (2) 4,012 -- 17,284 3,645 17,651 21,296
Summit Portofino........... -- 3,864 24,504 472 3,864 24,976 28,840
Summit Radbourne........... 8,294 1,395 12,607 1,111 1,395 13,718 15,113
Summit Reston.............. -- 5,434 26,255 1,411 5,434 27,666 33,100
Summit Russett I........... -- 3,995 -- 19,353 3,995 19,353 23,348
Summit Russett II.......... -- 1,728 -- 8,779 1,728 8,779 10,507
Summit Sand Lake........... 13,990 4,160 22,979 559 4,160 23,538 27,698
Summit Sedgebrook.......... -- 2,392 -- 21,680 2,475 21,597 24,072
Summit Shiloh.............. -- 1,592 12,125 19 1,591 12,145 13,736
Summit Simsbury............ (3) 650 4,570 599 650 5,169 5,819
Summit Square.............. -- 2,757 -- 16,243 3,775 15,225 19,000
Summit St. Clair........... (2) 3,024 24,040 214 3,024 24,254 27,278
Summit Stonefield.......... -- 3,541 -- 16,491 3,576 16,456 20,032
Summit Stony Point......... (4) 1,638 13,041 852 1,638 13,893 15,531
Summit Sweetwater.......... -- 3,013 18,627 25 3,012 18,653 21,665
Summit Touchstone.......... (3) 766 5,568 654 766 6,222 6,988
Summit Turtle Rock......... 10,634 2,500 14,074 147 2,500 14,221 16,721
Summit Walk................ -- 568 237 5,705 983 5,527 6,510
Summit Waterford........... -- 1,568 -- 15,202 1,949 14,821 16,770
Summit Westwood............ -- 1,989 -- 22,549 2,042 22,496 24,538
Summit Windsor............. (2) 3,704 14,497 7,350 4,029 21,522 25,551
-------- -------- -------- -------- ---------- ----------
Total.............. $177,184 $445,781 $632,692 $184,494 $1,071,163 $1,255,657
======== ======== ======== ======== ========== ==========

DEPRECIABLE
ACCUMULATED DATE OF DATE LIVES
APARTMENTS DEPRECIATION CONSTRUCTION ACQUIRED YEARS
---------- ------------ ------------ -------- -----------

Summit Norcroft I.......... (2,136) 2/90-3/91 12/89 5-40 years
Summit Norcroft II......... (712) 3/97-11/97 8/96 5-40 years
Summit On the River........ (2,834) 8/95-6/97 10/94 5-40 years
Summit Palm Lake........... (5,414) 3/90-2/92 1/90 5-40 years
Summit Pike Creek.......... (5,000) 11/86-2/88 4/86 5-40 years
Summit Plantation I........ (2,339) 1/94-7/95 4/96 5-40 years
Summit Plantation II....... (2,247) 10/96-11/97 9/96 5-40 years
Summit Portofino........... (3,218) 1995(5) 1/97 5-40 years
Summit Radbourne........... (2,600) 1991(5) 5/95 5-40 years
Summit Reston.............. (6,875) 1987(5) 4/94 5-40 years
Summit Russett I........... (2,283) 7/95-9/97 11/94 5-40 years
Summit Russett II.......... (21) 6/99-6/00 12/98 5-40 years
Summit Sand Lake........... (3,393) 1995(5) 2/97 5-40 years
Summit Sedgebrook.......... (1,880) 6/96-5/99 1/96 5-40 years
Summit Shiloh.............. (173) 10/99(5) 8/00 5-40 years
Summit Simsbury............ (1,258) 1985(5) 5/95 5-40 years
Summit Square.............. (5,152) 3/89-8/90 2/89 5-40 years
Summit St. Clair........... (2,149) 1997(5) 3/98 5-40 years
Summit Stonefield.......... (1,682) 6/96-3/98 3/96 5-40 years
Summit Stony Point......... (3,759) 1986(5) 2/94 5-40 years
Summit Sweetwater.......... (272) 12/99(5) 8/00 5-40 years
Summit Touchstone.......... (1,398) 1986(5) 5/95 5-40 years
Summit Turtle Rock......... (1,053) 1995(5) 11/98 5-40 years
Summit Walk................ (1,454) 4/92-2/93 4/92 5-40 years
Summit Waterford........... (5,175) 1/89-6/90 11/88 5-40 years
Summit Westwood............ (1,291) 10/97-5/99 9/97 5-40 years
Summit Windsor............. (4,656) 8/88-8/89 3/95 5-40 years
---------
Total.............. $(145,500)
=========

(1) The aggregate cost for federal income tax purposes at December 31, 2000 is
$990.4 million.

(2) Encumbered by fixed rate mortgages of $140.6 million.

(3) Encumbered by fixed rate mortgage of $8.3 million.

(4) Collateral for $38.3 million of letters of credit which serve as collateral
for $37.4 million in tax-exempt bonds.

(5) Property purchased by Company. Date reflects date construction completed.

(6) Includes furniture, fixtures and equipment.

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SCHEDULE III

SUMMIT PROPERTIES INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION
(DOLLARS IN THOUSANDS)

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

YEAR ENDED DECEMBER 31,
------------------------------------
2000 1999 1998
---------- ---------- ----------

REAL ESTATE ASSETS(1):
Balance at beginning of year............................. $1,135,008 $1,068,435 $ 830,068
---------- ---------- ----------
Acquisitions............................................. 35,343 -- 267,991
Improvements............................................. 8,582 10,565 9,804
Developments............................................. 158,180 130,433 74,559
Disposition of property.................................. (81,456) (74,425) (113,987)
---------- ---------- ----------
120,649 66,573 238,367
---------- ---------- ----------
Balance at end of year................................... $1,255,657 $1,135,008 $1,068,435
========== ========== ==========
ACCUMULATED DEPRECATION(1):
Balance at beginning of year............................. $ 127,803 $ 114,196 $ 105,313
Depreciation............................................. 36,436 33,547 28,733
Disposition of property.................................. (18,739) (19,940) (19,850)
---------- ---------- ----------
Balance at end of year................................... $ 145,500 $ 127,803 $ 114,196
========== ========== ==========

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