Edgar Filing: SUMMIT PROPERTIES INC

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-Q

(MARK ONE)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2001

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

COMMISSION FILE NUMBER 1-12792

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

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

309 E. 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)

N/A
(Former name, former address and former fiscal year, if changed since last
report)

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

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.

26,784,750 shares of common stock, par value $.01 per share, outstanding as of
August 6, 2001
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SUMMIT PROPERTIES INC.
INDEX

PAGE NO.
--------

PART I FINANCIAL INFORMATION
Item 1 Financial Statements
Consolidated Balance Sheets as of June 30, 2001 and December
31, 2000 (Unaudited)...................................... 3
Consolidated Statements of Earnings for the three and six
months ended June 30, 2001 and 2000 (Unaudited)........... 4
Consolidated Statement of Stockholders' Equity for the six
months ended June 30, 2001 (Unaudited).................... 5
Consolidated Statements of Cash Flows for the six months
ended June 30, 2001 and 2000 (Unaudited).................. 6
Notes to Consolidated Financial Statements (Unaudited)...... 7
Item 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 14
Item 3 Quantitative and Qualitative Disclosures about Market
Risk...................................................... 27

PART II OTHER INFORMATION
Item 4 Submission of Matters to a Vote of Security Holders......... 28
Item 6 Exhibits and Reports on Form 8-K............................ 28
Signatures.................................................. 29

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SUMMIT PROPERTIES INC.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)

JUNE 30, DECEMBER 31,
2001 2000
---------- ------------

ASSETS
Real estate assets:
Land and land improvements................................ $ 177,235 $ 184,494
Buildings and improvements................................ 970,036 1,001,183
Furniture, fixtures and equipment......................... 75,378 74,920
---------- ----------
Real estate assets before accumulated depreciation... 1,222,649 1,260,597
Less: accumulated depreciation............................ (156,965) (147,437)
---------- ----------
Operating real estate assets...................... 1,065,684 1,113,160
Construction in progress.................................. 232,185 167,462
---------- ----------
Net real estate assets............................ 1,297,869 1,280,622
Cash and cash equivalents................................... 2,504 3,148
Restricted cash............................................. 3,393 41,502
Investments in Summit Management Company and real estate
joint ventures............................................ 3,702 736
Deferred financing costs, net of accumulated amortization of
$6,436 and $5,792 in 2001 and 2000, respectively.......... 7,463 7,760
Other assets................................................ 6,925 6,383
---------- ----------
Total assets...................................... $1,321,856 $1,340,151
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Notes payable............................................. $ 757,369 $ 763,899
Accrued interest payable.................................. 8,049 7,729
Accounts payable and accrued expenses..................... 20,471 20,415
Dividends and distributions payable....................... 14,080 13,481
Security deposits and prepaid rents....................... 3,980 3,959
---------- ----------
Total liabilities................................. 803,949 809,483
---------- ----------
Commitments and contingencies:
Minority interest of common unitholders in Operating
Partnership............................................... 46,503 55,730
Minority interest of preferred unitholders in Operating
Partnership............................................... 136,261 136,261
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, 26,736,835 and 26,431,086 shares issued and
outstanding in 2001 and 2000, respectively............. 267 264
Additional paid-in capital................................ 415,174 415,827
Accumulated deficit....................................... (63,231) (62,775)
Unamortized restricted stock compensation................. (1,973) (942)
Employee notes receivable................................. (15,094) (13,697)
---------- ----------
Total stockholders' equity........................ 335,143 338,677
---------- ----------
Total liabilities and stockholders' equity.................. $1,321,856 $1,340,151
========== ==========

See notes to consolidated financial statements.

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

THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------- -------------------------
2001 2000 2001 2000
----------- ----------- ----------- -----------

Revenues:
Rental.............................................. $ 45,712 $ 42,362 $ 90,252 $ 83,604
Other property...................................... 3,432 3,236 6,753 6,113
Interest............................................ 506 664 1,265 1,738
Other............................................... 353 166 506 314
----------- ----------- ----------- -----------
Total revenues............................... 50,003 46,428 98,776 91,769
----------- ----------- ----------- -----------
Expenses:
Property operating and maintenance:
Personnel....................................... 3,319 3,263 6,678 6,119
Advertising and promotion....................... 634 641 1,251 1,248
Utilities....................................... 2,198 2,025 4,461 4,136
Building repairs and maintenance................ 2,120 2,161 4,066 4,112
Real estate taxes and insurance................. 5,348 4,562 10,760 9,303
Depreciation.................................... 10,039 9,384 19,515 18,284
Property supervision............................ 1,462 1,156 2,892 2,458
Other operating................................. 789 686 1,487 1,361
----------- ----------- ----------- -----------
25,909 23,878 51,110 47,021
Interest.............................................. 10,185 9,491 20,157 18,455
Amortization.......................................... 366 227 709 475
General and administrative............................ 1,140 1,022 2,344 1,962
(Income) loss on equity investments:
Summit Management Company....................... (134) 240 (485) 562
Real estate joint ventures...................... 122 195 39 149
----------- ----------- ----------- -----------
Total expenses............................... 37,588 35,053 73,874 68,624
----------- ----------- ----------- -----------
Income before gain on sale of real estate assets,
impairment loss, minority interest of common
unitholders in Operating Partnership and dividends
to preferred unitholders in Operating Partnership... 12,415 11,375 24,902 23,145
Gain on sale of real estate assets.................. 10,782 5,446 10,782 7,886
Impairment loss on investments in technology
companies......................................... (1,217) -- (1,217) --
----------- ----------- ----------- -----------
Income before minority interest of common unitholders
in Operating Partnership and dividends to preferred
unitholders in Operating Partnership................ 21,980 16,821 34,467 31,031
Minority interest of common unitholders in Operating
Partnership......................................... (2,658) (1,924) (3,984) (3,492)
Dividends to preferred unitholders in Operating
Partnership......................................... (3,105) (3,105) (6,210) (6,210)
----------- ----------- ----------- -----------
Net income............................................ $ 16,217 $ 11,792 $ 24,273 $ 21,329
=========== =========== =========== ===========
Per share data:
Net income -- basic................................. $ 0.61 $ 0.45 $ 0.91 $ 0.81
=========== =========== =========== ===========
Net income - diluted................................ $ 0.60 $ 0.45 $ 0.90 $ 0.81
=========== =========== =========== ===========
Dividends declared.................................. $ 0.4625 $ 0.4375 $ 0.9250 $ 0.8750
=========== =========== =========== ===========
Weighted average shares -- basic.................... 26,686,293 26,224,085 26,630,202 26,334,794
=========== =========== =========== ===========
Weighted average shares -- diluted.................. 27,008,902 26,389,051 26,935,990 26,453,637
=========== =========== =========== ===========

See notes to consolidated financial statements.

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

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

Balance, December 31, 2000......... $264 $415,827 $(62,775) $ (942) $(13,697) $338,677
Dividends.......................... -- -- (24,729) -- -- (24,729)
Proceeds from dividend reinvestment
and stock purchase plans......... 2 4,089 -- -- -- 4,091
Conversion of common units to
shares........................... -- 96 -- -- -- 96
Exercise of stock options.......... -- 540 -- -- -- 540
Issuance of restricted stock
grants........................... 1 1,068 -- (1,769) -- (700)
Amortization of restricted stock
grants........................... -- -- -- 738 -- 738
Adjustment for minority interest of
common unitholders in Operating
Partnership...................... -- (6,446) -- -- -- (6,446)
Issuance of employee notes
receivable....................... -- -- -- -- (2,212) (2,212)
Repayments of employee notes
receivable....................... -- -- -- -- 815 815
Net income......................... -- -- 24,273 -- -- 24,273
---- -------- -------- ------- -------- --------
Balance, June 30, 2001............. $267 $415,174 $(63,231) $(1,973) $(15,094) $335,143
==== ======== ======== ======= ======== ========

See notes to consolidated financial statements.

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

SIX MONTHS ENDED
JUNE 30,
-------------------
2001 2000
-------- --------

Cash flows from operating activities:
Net income.................................................. $ 24,273 $ 21,329
Adjustments to reconcile net income to net cash provided by
operating activities:
Minority interest of common unitholders in Operating
Partnership............................................ 3,984 3,492
(Income) loss on equity investments....................... (446) 711
Gain on sale of real estate assets........................ (10,782) (7,886)
Impairment loss on investments in technology companies.... 1,217 --
Depreciation and amortization............................. 20,959 19,198
Decrease (increase) in restricted cash.................... 207 (1,872)
Increase in other assets.................................. (1,213) (1,365)
Increase in accrued interest payable...................... 320 70
Decrease in accounts payable and accrued expenses......... (1,854) (871)
Increase in security deposits and prepaid rents........... 65 70
-------- --------
Net cash provided by operating activities................. 36,730 32,876
-------- --------
Cash flows from investing activities:
Construction of real estate assets and land acquisitions,
net of payables........................................ (53,744) (72,243)
Proceeds from sale of communities......................... 57,385 46,349
Capitalized interest...................................... (6,363) (4,643)
Investment in real estate joint venture................... (4,075) --
Recurring capital expenditures, net of payables........... (2,563) (2,515)
Non-recurring capital expenditures........................ (3,699) (1,338)
-------- --------
Net cash used in investing activities..................... (13,059) (34,390)
-------- --------
Cash flows from financing activities:
Net repayments on line of credit.......................... (55,062) (9)
Net repayments on unsecured bonds......................... -- (166)
Net borrowings on unsecured medium-term notes............. 59,537 --
Proceeds from issuance of mortgage debt................... -- 47,924
Repayments of mortgage debt............................... (2,737) (5,893)
Repayments of tax exempt bonds............................ (560) (745)
Net proceeds from dividend reinvestment and stock purchase
plans and exercise of stock options.................... 3,931 2,247
Dividends and distributions to unitholders................ (28,027) (26,408)
Repurchase of common stock................................ -- (6,947)
Acquisition of minority interest.......................... -- (1,761)
Repayments of employee notes receivable................... 815 531
Increase in employee notes receivable..................... (2,212) (8,438)
-------- --------
Net cash (used in) provided by financing activities....... (24,315) 335
-------- --------
Net decrease in cash and cash equivalents................... (644) (1,179)
Cash and cash equivalents, beginning of year................ 3,148 4,130
-------- --------
Cash and cash equivalents, end of period.................... $ 2,504 $ 2,951
======== ========
Supplemental disclosure of cash flow information -- Cash
paid for interest, net of capitalized interest............ $ 19,837 $ 18,385
======== ========

See notes to consolidated financial statements.

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SUMMIT PROPERTIES INC.

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

1. BASIS OF PRESENTATION

We have prepared the accompanying unaudited financial statements in accordance
with generally accepted accounting principles for interim financial information
and in conformity with the rules and regulations of the Securities and Exchange
Commission. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. We have included all adjustments (consisting only of
normal recurring adjustments) necessary for a fair presentation. The results of
operations for the six months ended June 30, 2001 are not necessarily indicative
of the results that may be expected for the full year. You should read our
December 31, 2000 audited financial statements and notes included in our Annual
Report on Form 10-K in conjunction with these interim statements.

We conduct substantially all of our business through the Operating Partnership.
Summit is the sole general partner and majority owner of the Operating
Partnership.

RECENTLY ISSUED ACCOUNTING STANDARDS -- On June 29, 2001, the Financial
Accounting Standards Board approved Statement of Financial Accounting Standards
(SFAS) No. 141, "Business Combinations" and No. 142, "Goodwill and Other
Intangible Assets". SFAS No. 141 will require that the purchase method of
accounting be used for all business combinations initiated after June 30, 2001
and that the use of the pooling-of-interest method is no longer allowed. SFAS
No. 142 requires that upon adoption, amortization of goodwill will cease and
instead, the carrying value of goodwill will be evaluated for impairment on an
annual basis. Identifiable intangible assets will continue to be amortized over
their useful lives and reviewed for impairment in accordance with SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of". SFAS No. 142 is effective for fiscal years beginning after
December 15, 2001. We are evaluating the impact of the adoption of these
standards and have not yet determined the effect of adoption on our financial
position and results of operations.

EARNINGS PER SHARE -- The only difference between "basic" and "diluted" weighted
average shares is the dilutive effect of our outstanding stock options. There
were 322,609 and 305,788 shares added to weighted average shares outstanding for
the three and six months ended June 30, 2001, respectively, and 164,966 and
118,843 shares added to weighted average shares outstanding for the three and
six months ended June 30, 2000, respectively.

RECLASSIFICATIONS -- Certain reclassifications have been made to the 2000
financial statements to conform to the 2001 presentation.

2. REAL ESTATE JOINT VENTURES

We own a 25% interest in a joint venture named Station Hill, LLC, in which we
and Hollow Creek, LLC, a subsidiary of a major financial services company, are
members. In exchange for our interest in Station Hill, we contributed one phase
of each of two communities. We sold three communities and one phase of each of
the two communities contributed to Station Hill to Hollow Creek and Hollow Creek
concurrently contributed them to Station Hill for a 75% joint venture interest.
The two phases contributed to Station Hill and the two phases sold to Hollow
Creek are now considered two communities and, therefore, we currently own a 25%
interest in five communities owned by Station Hill. Station Hill is accounted
for on the equity method of accounting.

The following are condensed balance sheets and income statements for Station
Hill as of and for the six months ended June 30, 2001 and 2000.

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SUMMIT PROPERTIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
--------------------------------------------------------------------------------

The balance sheets and income statements below reflect the financial position
and operations of Station Hill in its entirety, not only our 25% interest
(amounts in thousands).

BALANCE SHEETS
------------------
2001 2000
------- -------

Real estate assets, net..................................... $85,052 $88,049
Cash and cash equivalents................................... 1,668 2,051
Other assets................................................ 509 445
------- -------
Total assets...................................... $87,229 $90,545
======= =======
Mortgages payable........................................... $68,236 $69,066
Other liabilities........................................... 1,277 1,247
Partners' capital........................................... 17,716 20,232
------- -------
Total liabilities and partners' capital........... $87,229 $90,545
======= =======

INCOME STATEMENTS
------------------
2001 2000
------- -------

Revenues.................................................... $ 6,399 $ 6,110
Expenses:
Property operating........................................ 2,212 2,174
Interest.................................................. 2,292 2,340
Depreciation and amortization............................. 1,615 1,480
------- -------
Total expenses.................................... 6,119 5,994
------- -------
Net income.................................................. $ 280 $ 116
======= =======

We also own a 49% interest in a joint venture which is developing an apartment
community in Atlanta, Georgia. This project is accounted for under the equity
method of accounting and, therefore, its operating results are presented in
"(Income) loss on equity investments: Real estate joint ventures" in our
consolidated statements of earnings. The construction costs are being funded
through a separate loan to the joint venture from an unrelated third party equal
to 100% of the construction costs. During the construction period, rather than
equity contributions to the joint venture, we have, under certain circumstances,
subsequent to demand by the third party lender, agreed to make contributions
which would reduce the 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 we would be required to contribute to the joint
venture at the end of the construction and lease-up period. We have the option
to purchase our joint venture partner's interest in the joint venture for a
period of six months after the project becomes stabilized. The project had not
reached stabilization as of June 30, 2001. If we do not exercise our option with
respect to the joint venture, we will be required to make a capital contribution
of 25% of the joint venture's total construction loan amount.

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

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SUMMIT PROPERTIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
--------------------------------------------------------------------------------

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

3. COMMUNITY DISPOSITIONS

On June 1, 2001, we sold an apartment community located in West Palm Beach,
Florida, formerly known as Summit Palm Lake (304 apartment homes) for $20.0
million. The disposition of Summit Palm Lake resulted in the recognition of a
gain on sale of $2.4 million. The net proceeds of $19.4 million were used to
reduce amounts outstanding under our unsecured credit facility.

On June 27, 2001, we sold two apartment communities, both located in Charlotte,
North Carolina, formerly known as Summit Arbors and Summit Radbourne (an
aggregate of 345 apartment homes) for $26.3 million. The disposition of these
communities resulted in the recognition of an aggregate gain on sale of $8.4
million. The purchaser of these two communities assumed $8.5 million in
mortgages and exchanged 741,148 common units valued at $17.6 million as
consideration in the transaction.

4. NOTES PAYABLE

We have a syndicated unsecured line of credit ("credit facility") in the amount
of $225.0 million. The credit facility provides funds for new development,
acquisitions and general working capital purposes. Loans under the credit
facility bear interest at LIBOR plus 100 basis points. The spread component of
the aggregate interest rate will be reduced in the event of an upgrade of our
unsecured credit rating. The credit facility is repayable monthly on an interest
only basis with principal due at maturity. The credit facility's initial three-
year term was scheduled to expire on September 26, 2003. On July 6, 2001, we
closed on a one-year extension option, subject to the satisfaction of certain
conditions, under this credit facility. The new maturity date is September 26,
2004, and all other terms and covenants of the credit facility remain unchanged.

On April 20, 2000, we commenced a new program for the sale by the Operating
Partnership of up to $250.0 million aggregate principal amount of medium-term
notes due nine months or more from the date of issuance. During the six months
ended June 30, 2001, the Operating Partnership issued medium-term notes with an
aggregate principal amount of $60.0 million in connection with the new MTN
program, including (a) $25.0 million of notes which are due on May 9, 2006 and
bear interest at 7.04% per year and (b) $35.0 million of notes which are due on
May 9, 2011 and bear interest at 7.703% per year. We had medium-term notes with
an aggregate principal amount of $112.0 million outstanding in connection with
the new MTN program at June 30, 2001.

On May 29, 1998, we established a program for the sale by the Operating
Partnership of up to $95.0 million aggregate principal amount of medium-term
notes due nine months or more from the date of issuance. We had medium-term
notes with an aggregate principal amount of $55.0 million outstanding in
connection with this MTN program at June 30, 2001. On July 30, 2001, one of the
medium-term notes in the principal amount of $30.0 million matured and was
repaid. As a result of the commencement of the $250.0 million MTN program, we
cannot issue any additional notes under the $95.0 million MTN program.

5. DERIVATIVE FINANCIAL INSTRUMENTS

We are exposed to market risk, such as changes in interest rates. To manage the
volatility relating to interest rate risk, we may enter into interest rate
hedging arrangements from time to time. We do not utilize derivative financial
instruments for trading or speculative purposes.

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SUMMIT PROPERTIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
--------------------------------------------------------------------------------

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

At June 30, 2001, we had one interest rate swap with a notional amount of $30.0
million, relating to $30.0 million of 6.625% fixed rate notes issued under our
MTN program. Under the interest rate swap agreement, through the maturity date
of December 15, 2003, (a) we have agreed to pay to the counterparty the interest
on a $30.0 million notional amount at a floating interest rate of three-month
LIBOR plus 11 basis points, and (b) the counterparty has agreed to pay to us the
interest on the same notional amount at the fixed rate. The floating rate at
June 30, 2001 was 4.00%. The fair value of the interest rate swap was $1.1
million at June 30, 2001. The swap has been designated as a fair value hedge of
the underlying fixed rate debt obligation and has been recorded as a reduction
of the related debt instrument. We assume no ineffectiveness as the interest
rate swap meets the short-cut method conditions required under FAS 133 for fair
value hedges of debt instruments. Accordingly, no gains or losses were recorded
in income relative to our underlying debt and interest rate swap.

6. RESTRICTED STOCK

During the six months ended June 30, 2001, we granted 94,818 shares of
restricted stock valued at $1.2 million pursuant to our Performance Stock Award
Plan. One half of these shares vested on the date of grant, with the remaining
shares vesting in two equal annual installments beginning on January 1, 2002.
The value of the shares has been recorded as unamortized restricted stock
compensation and is shown as a separate component of stockholders' equity in the
accompanying balance sheet.

During the six months ended June 30, 2001 and 2000, we granted 21,018 and 72,805
shares, respectively, of restricted stock to employees under our 1994 Stock
Option and Incentive Plan. The market value of the restricted stock grants
awarded during these six months in 2001 and 2000 totaled $516,000 and $1.3
million, respectively, which has been recorded as unamortized restricted stock
compensation and is shown as a separate component of stockholders' equity in the
accompanying balance sheet. Unearned compensation related to these restricted
stock grants is being amortized to expense over the vesting period which ranges
from three to five years.

7. SUPPLEMENTAL CASH FLOW INFORMATION

Non-cash investing and financing activities for the six months ended June 30,
2001 and 2000 are as follows:

A. We accrued dividends and distributions payable in the amounts of $14.1
million and $13.3 million at June 30, 2001 and 2000, respectively.

B. We issued 21,018 and 72,805 shares of restricted stock valued at
$516,000 and $1.3 million during the six months ended June 30, 2001 and
2000, respectively.

C. We issued 94,818 shares of restricted stock valued at $1.2 million
during the six months ended June 30, 2001 in connection with our
Performance Stock Award Plan. There were no such issuances of restricted
stock in connection with the plan during the six months ended June 30,
2000.

D. We issued 4,012 and 35,045 shares of common stock in exchange for 4,012
and 35,045 common units of limited partnership interest in the Operating
Partnership valued at $96,000 and $676,000 during the six months ended
June 30, 2001 and 2000, respectively.

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SUMMIT PROPERTIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
--------------------------------------------------------------------------------

E. The Operating Partnership issued 66,376 common units at a price of
$28.625 per unit during the six months ended June 30, 2001 in connection
with the purchase of a building and a parcel of land.

F. As partial consideration for the purchase of the former Summit Radbourne
and Summit Arbors communities on June 27, 2001, the purchaser assumed
mortgages with an aggregate balance of $8.5 million at the date of sale,
and exchanged 741,148 common units valued at $17.6 million.

8. MINORITY INTEREST

Minority interest of common unitholders consists of the following at June 30,
2001 and December 31, 2000 (in thousands):

2001 2000
------- -------

Minority interest of common unitholders in Operating
Partnership............................................... $46,963 $56,190
Minority interest in one operating community................ (460) (460)
------- -------
$46,503 $55,730
======= =======

As of June 30, 2001, the Operating Partnership had 30,441,626 common units of
limited partnership interest outstanding of which 26,736,835, or 87.8%, were
owned by Summit and 3,704,791, or 12.2%, were owned by other partners, including
certain of our officers and directors.

Proceeds from the issuance of shares of our common stock are contributed to the
Operating Partnership for an equivalent number of common units. Total common
stock issued, and the proceeds contributed to the Operating Partnership for an
equivalent number of common units, was 216,000 and 129,000 shares valued at $4.7
million ($21.94 per share average) and $2.2 million ($17.44 per share average)
for the six months ended June 30, 2001 and 2000, respectively. No individual
transaction significantly changed our ownership percentage in the Operating
Partnership, which was 87.8% and 85.9% as of June 30, 2001 and 2000,
respectively.

Under certain circumstances, as required by the holders of common units, we may
issue shares of common stock in exchange for common units owned by other
partners on a one-for-one basis (subject to adjustment) or may purchase common
units for cash. Shares of common stock exchanged for common units are valued
based upon the market price per share of our common stock at the date of the
exchange. During the six month period ended June 30, 2001, 4,012 common units
valued a $96,000 were exchanged for shares of common stock. During the six month
period ended June 30, 2000, 35,045 common units valued at $676,000 were
exchanged for shares of common stock and 93,945 common units were exchanged for
cash of $1.8 million.

We issued 66,376 common units at a price of $28.625 per unit as partial
consideration for the purchase of a building and a parcel of land during the six
months ended June 30, 2001.

On June 27, 2001, the purchaser of the former Summit Radbourne and Summit Arbors
communities exchanged 741,148 common units valued at $17.6 million as partial
consideration for such purchase.

9. COMMITMENTS AND CONTINGENCIES

The estimated cost to complete eight development projects currently under
construction was $74.8 million at June 30, 2001. Anticipated construction
completion dates of the projects range from the third quarter of 2001 to the
first quarter of 2003.

11
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SUMMIT PROPERTIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
--------------------------------------------------------------------------------

occupancy. 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 range
from $50.5 million to $60.0 million. The purchase of Summit Brickell is subject
to customary closing conditions. We issued a letter of credit in the amount of
$13.0 million, which serves as a credit enhancement to the developer's
construction loan. In the event that the letter of credit is drawn upon, we will
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 18% per year.

We have an employment agreement with one of our former executive officers who
resigned from such executive position but will remain as an employee, and has
agreed to provide various services to us from time to time over the next ten
years. The employment agreement requires that we pay this former officer a base
salary aggregating up to $2.1 million over the period from July 1, 2001 to
December 31, 2011. Either party can terminate the employment agreement,
effective 20 business days after written notice is given. The full base salary
amount shall be payable through 2011 whether or not the agreement is terminated
earlier in accordance with its terms.

10. BUSINESS SEGMENTS

We are an established leader in the operation, development and acquisition of
"Class A" luxury apartments located in the southeastern, southwestern and
mid-atlantic United States. We develop apartments solely for our own use and do
not perform development activities for third parties. We evaluate each
community's performance individually. However, because of the similar economic
characteristics and services provided to our residents at each community, our
communities have been aggregated into one reportable segment, apartment
operations. This segment generated 98.2% and 97.8% of our total revenues for the
six months ended June 30, 2001 and 2000, respectively.

11. PREFERRED UNITS

As of June 30, 2001, the Operating Partnership had outstanding 3.4 million
preferred units of limited partnership interest designated as 8.95% Series B
Cumulative Redeemable Perpetual Preferred Units. These preferred units are
redeemable by the Operating Partnership on or after April 29, 2004 for cash, or
at our option, shares of our 8.95% Series B Cumulative Redeemable Perpetual
Preferred Stock, or a combination of cash and stock. Holders of the Series B
preferred units have the right to exchange these preferred units for shares of
our Series B preferred stock on a one-for-one basis, subject to adjustment: (a)
on or after April 29, 2009, (b) if full quarterly distributions are not made for
six quarters, or (c) upon the occurrence of specified events related to the
treatment of the Operating Partnership or the preferred units for federal income
tax purposes. Distributions on the Series B preferred units are cumulative from
the date of original issuance and are payable quarterly at the rate of 8.95% per
year of the $25.00 original capital contribution. We made distributions to the
holders of the Series B preferred units in the aggregate amount of $3.8 million
during each of the six month periods ended June 30, 2001 and 2000.

As of June 30, 2001, the Operating Partnership had outstanding 2.2 million
preferred units of limited partnership interest designated as 8.75% Series C
Cumulative Redeemable Perpetual Preferred Units. The preferred units are
redeemable by the Operating Partnership on or after September 3, 2004 for cash.
Holders of the Series C preferred units have the right to exchange these
preferred units for shares of our Series C preferred stock on a one-for-one
basis, subject to adjustment: (a) on or after September 3, 2009, (b) if full
quarterly distributions are not made for six quarters, (c) upon the occurrence
of specified events related to the treatment of the Operating Partnership or the
preferred units for federal income tax purposes, or (d) if the holdings in the
Operating Partnership of the Series C unitholder exceed 18% of the total profits
of or capital interest in the Operating Partnership for a taxable year.
Distributions on the Series C preferred units are cumulative from the date of
original issuance and are payable quarterly at the rate of 8.75% per year of the

12
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SUMMIT PROPERTIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
--------------------------------------------------------------------------------

$25.00 original capital contribution. We made distributions to the holder of the
Series C preferred units in the aggregate amount of $2.4 million during each of
the six month periods ended June 30, 2001 and 2000.

12. COMMON STOCK REPURCHASE PROGRAM

On March 12, 2000, our Board of Directors authorized a common stock repurchase
program pursuant to which we are authorized to purchase up to an aggregate of
$25.0 million of currently issued and outstanding shares of our common stock.
All repurchases have been, and will be, made on the open market at prevailing
prices or in privately negotiated transactions. This authority may be exercised
from time to time and in such amounts as market conditions warrant. We did not
repurchase any shares of our common stock during the six months ended June 30,
2001. During the year ended December 31, 2000, we repurchased 279,400 shares of
our common stock under the common stock repurchase program for an aggregate
purchase price, including commissions, of $5.5 million, or an average price of
$19.80 per share.

During 2000, we completed a common stock repurchase program pursuant to which we
were authorized to purchase up to an aggregate of $50.0 million of our common
stock. The total number of shares of our common stock repurchased under this
program was 2.5 million shares for an aggregate purchase price, including
commissions, of $50.0 million, or an average price of $19.63 per share.

13. IMPAIRMENT LOSS

Management considers events and circumstances that may indicate impairment of an
investment, including operating performance and cash flow projections.
Management determined during the three months ended June 30, 2001 that our
investments in Broadband Now, Inc. and Yieldstar Technology LLC were impaired
and that such impairment was other than temporary. As a result, we recorded an
impairment loss during the period in the amount of $1.2 million, which
represents our entire investments in these two technology companies. We have no
other technology company investments.

14. SUBSEQUENT EVENTS

Subsequent to June 30, 2001, we sold an apartment community located in Palm
Harbour, Florida formerly known as Summit Lofts (200 apartment homes) and one
parcel of land located in Richmond, Virginia for $16.1 million in the aggregate.
The disposition of this community and parcel of land resulted in the recognition
of a gain on sale of $2.9 million in the aggregate. The net proceeds were used
to repay amounts outstanding under our unsecured credit facility.

Subsequent to June 30, 2001, Station Hill sold an apartment community located in
Tampa, Florida formerly known as Summit Station (240 apartment homes) for $11.9
million. The disposition of Summit Station resulted in the recognition of a gain
on sale by Station Hill of $1.1 million. The purchaser of Summit Station assumed
a mortgage of $8.3 million and paid the balance of the purchase price in cash.

13
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

This report contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended, including, without limitation, statements
relating to the operating performance of fully stabilized communities, the
development, acquisition or disposition of properties, anticipated construction
commencement and 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 our control. These risks, uncertainties and other
factors may cause our actual results, performance or achievements to be
materially different from the anticipated future results, performance or
achievements expressed or implied by the forward-looking statements. Factors
that could have a material adverse effect on our operations and future prospects
include, but are not limited to:

- economic conditions generally and the real estate market specifically,
including changes in occupancy rates and rents;

- legislative/regulatory changes, including changes to laws governing the
taxation of real estate investment trusts, ("REITS");

- availability of capital;

- changes in interest rates;

- uncertainties associated with our development activities, including the
failure to obtain zoning and other approvals and increases in construction
costs;

- the failure of acquisitions to yield expected results;

- the failure to sell communities marketed for sale, or to sell communities in a
timely manner or on favorable terms;

- construction delays due to the unavailability of materials, weather conditions
or other delays;

- competition, which could limit our ability to secure attractive investment
opportunities, lease apartment homes or increase or maintain rents;

- supply and demand for apartment communities in our current and proposed market
areas, especially our core markets described below;

- changes in generally accepted accounting principles, or policies and
guidelines applicable to REITs; and

- those factors discussed in the section "Certain Factors Affecting the
Performance of Development Communities," on page 25 of this report.

You should consider these risks and uncertainties when evaluating
forward-looking statements and you should not place undue reliance on such
statements. You should read the following discussion in conjunction with our
consolidated financial statements and notes, which accompany this report.

Summit is a real estate operating company that has elected REIT status and
focuses on the operation, development and acquisition of "Class A" luxury
apartment communities located in the southeastern, southwestern and mid-atlantic
United States. We focus our efforts in seven core markets with particular
emphasis on the high growth areas of Washington, D.C., Southeast Florida and
Atlanta. Our other core markets are Dallas and Austin, Texas and Raleigh and
Charlotte, North Carolina. We have experienced weakness in our Atlanta, Georgia
and Austin, Texas markets due to local economic conditions, which have
negatively impacted occupancy rates and market rents. We anticipate that these
conditions will continue throughout the year, particularly in Austin.

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15

HISTORICAL RESULTS OF OPERATIONS

Our net income is generated primarily from operations of our apartment
communities. The changes in operating results from period to period reflect
changes in existing community performance and changes in the number of apartment
homes due to development, acquisition, or disposition of communities. Where
appropriate, comparisons are made on a "fully stabilized communities,"
"acquisition communities," "stabilized development communities," "communities in
lease-up" and "disposition communities" basis in order to adjust for changes in
the number of apartment homes. We consider a community to be "stabilized" when
it has attained a physical occupancy level of at least 93%. A community that we
have acquired is deemed "fully stabilized" when we have owned it for one year or
more as of the beginning of the current year. A community that we have developed
is deemed "fully stabilized" when stabilized for the two prior years as of the
beginning of the current year. A community is deemed to be a "stabilized
development" community when stabilized as of the beginning of the current year
but not the entire two prior years. A community's average physical occupancy is
defined as the number of apartment homes occupied divided by the total number of
apartment homes contained in the 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. Our methodology for calculating average physical occupancy and
average monthly rental revenue may differ from the methodology used by other
apartment companies and, accordingly, may not be comparable to other apartment
companies. All communities information is presented before real estate
depreciation and amortization expense.

Results of Operations for the Three and Six Months Ended June 30, 2001 and
2000

For the three and six months ended June 30, 2001, income before gain on sale of
real estate assets, impairment loss on investments in technology companies,
minority interest of common unitholders in the Operating Partnership and
dividends to preferred unitholders in the Operating Partnership increased $1.0
million to $12.4 million and $1.8 million to $24.9 million from the three and
six month periods ended June 30, 2001 and 2000, respectively, primarily due to
increased property operating income generated by our portfolio of communities,
offset by increased interest costs primarily as a result of increased average
indebtedness outstanding.

15
16

OPERATING PERFORMANCE OF OUR PORTFOLIO OF COMMUNITIES

The operating performance of our communities for the three and six months ended
June 30, 2001 and 2000 is summarized below (dollars in thousands):

THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
---------------------------- ----------------------------
2001 2000 % CHANGE 2001 2000 % CHANGE
------- ------- -------- ------- ------- --------

Property revenues:
Fully stabilized communities....... $29,873 $29,116 2.6% $59,521 $57,525 3.5%
Acquisition communities............ 1,298 -- 100.0% 2,568 -- 100.0%
Stabilized development
communities...................... 13,761 11,692 17.7% 27,021 22,109 22.2%
Communities in lease-up............ 3,700 942 292.8% 6,611 1,924 243.6%
Communities sold................... 512 3,848 -86.7% 1,284 8,159 -84.3%
------- ------- ------- -------
Total property revenues....... 49,144 45,598 7.8% 97,005 89,717 8.1%
------- ------- ------- -------
Property operating and maintenance
expense:
Fully stabilized communities....... 9,888 9,624 2.7% 19,680 18,855 4.4%
Acquisition communities............ 436 -- 100.0% 874 -- 100.0%
Stabilized development
communities...................... 4,087 3,053 33.9% 8,258 6,155 34.2%
Communities in lease-up............ 1,284 513 150.3% 2,347 1,028 128.3%
Communities sold................... 175 1,304 -86.6% 436 2,699 -83.8%
------- ------- ------- -------
Total property operating and
maintenance expense......... 15,870 14,494 9.5% 31,595 28,737 9.9%
------- ------- ------- -------
Property operating income............... $33,274 $31,104 7.0% $65,410 $60,980 7.3%
======= ======= ======= =======
Apartment homes, end of period.......... 18,279 18,365 1.4% 18,279 18,365 1.4%
======= ======= ======= =======

A summary of our apartment homes (excluding joint ventures) for the six months
ended June 30, 2001 and 2000 is as follows:

2001 2000
------ ------

Apartment homes at January 1 of the year.................... 18,928 17,673
Developments which began rental operations during the
period.................................................... -- 1,172
Sale of apartment homes..................................... (649) (480)
------ ------
Apartment homes at June 30 of the year...................... 18,279 18,365
====== ======

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17

OPERATING PERFORMANCE OF FULLY STABILIZED COMMUNITIES

The operating performance of our communities stabilized prior to January 1, 1999
is summarized below (dollars in thousands except average monthly rental
revenue):

THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
---------------------------- ----------------------------
2001 2000 % CHANGE 2001 2000 % CHANGE
------- ------- -------- ------- ------- --------

Property revenues:
Rental................................ $27,799 $27,122 2.5% $55,503 $53,653 3.4%
Other................................. 2,074 1,994 4.0% 4,018 3,872 3.8%
------- ------- ------- -------
Total property revenues................. 29,873 29,116 2.6% 59,521 57,525 3.5%
------- ------- ------- -------
Property operating and maintenance
expense:
Personnel............................. 1,995 2,002 -0.3% 4,016 3,685 9.0%
Advertising and promotion............. 328 398 -17.6% 663 760 -12.8%
Utilities............................. 1,289 1,244 3.6% 2,628 2,509 4.7%
Building repairs and maintenance...... 1,403 1,443 -2.8% 2,665 2,708 -1.6%
Real estate taxes and insurance....... 3,518 3,353 4.9% 7,058 6,700 5.3%
Property supervision.................. 835 744 12.2% 1,660 1,604 3.5%
Other operating expense............... 520 440 18.2% 990 889 11.4%
------- ------- ------- -------
Total property operating and maintenance
expense............................... 9,888 9,624 2.7% 19,680 18,855 4.4%
------- ------- ------- -------
Property operating income............... $19,985 $19,492 2.5% $39,841 $38,670 3.0%
======= ======= ======= =======
Average physical occupancy.............. 93.2% 95.1% -2.0% 93.4% 94.2% -0.8%
======= ======= ======= =======
Average monthly rental revenue.......... $ 921 $ 886 4.0% $ 920 $ 885 4.0%
======= ======= ======= =======
Number of apartment homes (1)........... 11,002 11,002 11,002 11,002
======= ======= ======= =======
Number of apartment communities......... 39 39 39 39
======= ======= ======= =======

---------------

(1) Includes the former Summit Arbors and Summit Radbourne communities.

The increase in property revenue from fully stabilized communities was primarily
the result of increases in average rental rates as well as increased revenues
from sources other than rental revenues, such as water sub-meter and cable
revenues. The higher revenues were primarily generated in our Southeast Florida
and Washington, D.C. markets. The increased revenues were offset by an increase
of 4.4% in property operating expenses, primarily property taxes and personnel.
As a percentage of total property revenue, total property operating and
maintenance expenses remained stable at 33.1% for the three months ended June
30, 2001 and 2000, respectively, and increased to 33.1% for the six months ended
June 30, 2001 from 32.8% for the six months ended June 30, 2000.

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18

OPERATING PERFORMANCE OF ACQUISITION COMMUNITIES

Acquisition communities for the three and six months ended June 30, 2001 consist
of Summit Sweetwater and Summit Shiloh, both located in Atlanta, Georgia,
representing a total of 490 apartment homes, in each of which we acquired our
joint venture partner's 51% interest on August 1, 2000. The operations of these
two communities for the three and six months ended June 30, 2001 are summarized
as follows (dollars in thousands except average monthly rental revenue):

THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 2001 JUNE 30, 2001
------------------ ----------------

Property revenues:
Rental.......................................... $1,208 $2,392
Other........................................... 90 176
------ ------
Total property revenues........................... 1,298 2,568
Property operating and maintenance expense........ 436 874
------ ------
Property operating income......................... $ 862 $1,694
====== ======
Average physical occupancy........................ 91.7% 92.4%
====== ======
Average monthly rental revenue.................... $ 903 $ 904
====== ======
Number of apartment homes......................... 490 490
====== ======

OPERATING PERFORMANCE OF STABILIZED DEVELOPMENT COMMUNITIES

We had fifteen development communities (Summit Ballantyne, Summit Sedgebrook,
Summit Governor's Village, Summit Lake, Summit Russett, Summit Westwood, Summit
New Albany, Summit Fair Lakes, Summit Doral, Summit Largo, Summit Hunter's
Creek, Summit Ashburn Farm, Summit Deer Creek, Summit Fairview and Reunion Park
by Summit) which were stabilized during the entire six months ended June 30,
2001, but were stabilized subsequent to January 1, 1999. Summit Fairview is an
existing community which underwent major renovations during 1999 and 2000. Its
operating results are included in results of stabilized development communities
as it reached stabilization after renovation subsequent to January 1, 1999. The
operating performance of these fifteen communities for the three and six months
ended June 30, 2001 and 2000 is summarized below (dollars in thousands except
average monthly rental revenue):

THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------ ------------------
2001 2000 2001 2000
------- ------- ------- -------

Property revenues:
Rental.................................... $12,800 $10,792 $25,163 $20,540
Other..................................... 961 900 1,858 1,568
------- ------- ------- -------
Total property revenues..................... 13,761 11,692 27,021 22,109
Property operating and maintenance
expense................................... 4,087 3,053 8,258 6,155
------- ------- ------- -------
Property operating income................... $ 9,674 $ 8,639 $18,763 $15,953
======= ======= ======= =======
Average physical occupancy.................. 95.2% 83.3% 94.1% 82.9%
======= ======= ======= =======
Average monthly rental revenue.............. $ 966 $ 884 $ 966 $ 849
======= ======= ======= =======
Number of apartment homes................... 4,668 4,668 4,668 4,668
======= ======= ======= =======

The unleveraged yield on investment for the stabilized development communities,
defined as property operating income for the three and six months ended June 30,
2001 on an annualized basis over total development cost, was 11.1% and 10.7%,
respectively.

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19

OPERATING PERFORMANCE OF COMMUNITIES IN LEASE-UP

We had seven communities in lease-up during the six months ended June 30, 2001.
Six of the seven communities in lease-up are new developments and one of the
communities in lease-up, Summit Lenox, is an existing community that underwent
major renovations during 1999 and 2000. A community in lease-up is defined as
one that has commenced rental operations but was not stabilized as of the
beginning of the current year. A summary of the six new development communities
in lease-up as of June 30, 2001 is as follows (dollars in thousands):

TOTAL ACTUAL/ % LEASED
NUMBER OF ACTUAL/ ANTICIPATED ACTUAL/ Q2 2001 AS OF
APARTMENT ESTIMATED CONSTRUCTION ANTICIPATED AVERAGE JUNE 30,
COMMUNITY HOMES COST COMPLETION STABILIZATION OCCUPANCY 2001
--------- --------- --------- ------------ ------------- --------- ---------

Summit Russett II -- Laurel, MD.......... 112 $ 10,700 Q4 2000 Q2 2001 88.8% 96.4%
Summit Grandview -- Charlotte, NC........ 266 51,700 Q4 2000 Q4 2001 75.4% 84.2%
Summit Deerfield -- Cincinnati, OH (1)
(2).................................... 498 44,500 Q3 2001 Q2 2002 40.8% 58.2%
Summit Overlook -- Raleigh, NC (2)....... 320 25,500 Q3 2001 Q1 2002 19.7% 39.7%
Summit Crest -- Raleigh, NC (2).......... 438 30,700 Q3 2001 Q2 2002 29.6% 60.0%
Summit Peachtree City -- Atlanta, GA
(2).................................... 399 31,500 Q3 2001 Q4 2002 16.1% 31.6%
----- --------
2,033 $194,600
===== ========

---------------

(1) Summit Deerfield is under contract for sale, expected during 2001, as part
of our strategy to exit the midwest markets. We do not expect to realize a
loss on sale of Summit Deerfield, which is subject to customary closing
conditions.
(2) The related assets of these properties are included in the "Construction in
progress" category at June 30, 2001.

In addition to the communities listed in the table above, Summit Lenox in
Atlanta, Georgia is an existing community that underwent major renovations
during 1999 and 2000. The renovations included upgrades of the interior of the
apartment homes (new cabinets, fixtures and other interior upgrades), 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 project. The operations of Summit Lenox are included in
results of our lease-up communities due to the renovation work. The renovation
work at Summit Lenox was complete at June 30, 2001, but the community had not
yet reached stabilization after renovation. Summit Lenox was 89.6% occupied at
June 30, 2001.

The operating performance of our lease-up communities for the three and six
months ended June 30, 2001 and 2000 is summarized below (dollars in thousands):

THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------ ----------------
2001 2000 2001 2000
------- ------- ------ ------

Property revenues:
Rental........................................ $3,429 $ 875 $6,004 $1,816
Other......................................... 271 67 607 108
------ ------ ------ ------
Total property revenues......................... 3,700 942 6,611 1,924
Property operating and maintenance expense...... 1,284 513 2,347 1,028
------ ------ ------ ------
Property operating income....................... $2,416 $ 429 $4,264 $ 896
====== ====== ====== ======
Number of apartment homes....................... 2,464 2,464 2,464 2,464
====== ====== ====== ======

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20

OPERATING PERFORMANCE OF DISPOSITION COMMUNITIES

We sold the former Summit Palm Lake community on June 1, 2001 (304 apartment
units). The information in the table below represents operating results for the
three and six months ended June 30, 2001 for the former Summit Palm Lake. The
information in the table below represents operating results for the three and
six months ended June 30, 2000 for the former Summit Palm Lake sold during 2001,
as well as for the following communities sold during 2000 (referred to in this
report using former community names): Summit Creekside, Summit Eastchester,
Summit Sherwood, Summit Blue Ash, Summit Park, Summit River Crossing and Summit
Village (dollars in thousands):

THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------ ------------------
2001 2000 2001 2000
----- ------- ------ ------

Property revenues:
Rental..................................... $475 $3,573 $1,191 $7,595
Other...................................... 37 275 93 564
---- ------ ------ ------
Total property revenues...................... 512 3,848 1,284 8,159
Property operating and maintenance expense... 175 1,304 436 2,699
---- ------ ------ ------
Property operating income.................... $337 $2,544 $ 848 5,460
==== ====== ====== ======
Number of apartment homes.................... 304 1,980 304 1,980
==== ====== ====== ======

OPERATING PERFORMANCE OF SUMMIT MANAGEMENT COMPANY

The operating performance of Summit Management Company and its wholly-owned
subsidiary, Summit Apartment Builders, Inc., for the three and six months ended
June 30, 2001 and 2000 is summarized below (in thousands):

THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
---------------------------- ----------------------------
2001 2000 % CHANGE 2001 2000 % CHANGE
------- ------- -------- ------- ------- --------

Revenues:
Management fees charged to
Operating Partnership........... $ 1,656 $ 1,347 22.9% $ 3,592 $ 2,815 27.6%
Third party management fee
revenue......................... 205 272 -24.6% 440 550 -20.0%
Construction revenue.............. 799 782 2.2% 1,554 1,590 -2.3%
Gain on sale of real estate
assets.......................... -- -- 0.0% -- 238 -100.0%
Other revenue..................... 177 63 181.0% 251 135 85.9%
------- ------- ------- -------
Total revenue................ 2,837 2,464 15.1% 5,837 5,328 9.6%
------- ------- ------- -------
Expenses:
Operating......................... 2,473 2,468 0.2% 4,893 5,039 -2.9%
Depreciation...................... 80 86 -7.0% 160 172 -7.0%
Amortization...................... 75 75 0.0% 149 151 -1.3%
Interest.......................... 75 75 0.0% 150 528 -71.6%
------- ------- ------- -------
Total expenses............... 2,703 2,704 0.0% 5,352 5,890 -9.1%
------- ------- ------- -------
Net income (loss)...................... $ 134 $ (240) 155.8% $ 485 $ (562) 186.3%
======= ======= ======= =======

The increase in management fees charged to the Operating Partnership for the
three and six-month periods in 2001 was primarily the result of 7.8% and 8.1%
increases in property revenues at our communities for those periods over the
previous year, as well as an increase in fees earned from managing our
communities in lease-up. The decrease in operating expenses during the six-month
period was a result of a decrease in the number of management personnel at
Summit Management Company in 2001 as compared to 2000. In addition,

20
21

interest expense for the six month period decreased due to an inter-company
loan, which was repaid during 2000.

Property management revenues included property management fees from third
parties of $205,000 and $440,000 for the three and six months ended June 30,
2001 and $272,000 and $550,000 for the same periods in 2000. Property management
fees from third parties as a percentage of total property management revenues
were 11.0% and 10.9% for the three and six months ended June 30, 2001 and 16.8%
and 16.3% for the same periods in 2000. We expect third party management
revenues as a percentage of total property management revenues to continue to
decline.

All of the construction revenue during the six-month periods ended June 30, 2001
and 2000 was from contracts with Summit.

OTHER INCOME AND EXPENSES

Interest expense increased by $694,000 and $1.7 million, or 7.3% and 9.2% for
the three and six months ended June 30, 2001 compared with the same periods in
2000. This increase was primarily the result of an increase in our average
indebtedness outstanding, which increased by $78.0 million, or 11.5%, for the
three-month period and $68.5 million, or 9.7% for the six month period.

Depreciation expense increased $655,000 and $1.2 million, or 7.0% and 6.7%, for
the three and six months ended June 30, 2001 as compared with the same periods
in 2000, primarily due to the initiation of depreciation on recently developed
communities as well as the depreciation of communities acquired during the
second half of 2000.

General and administrative expenses increased $118,000 and $382,000, or 11.5%
and 19.5%, for the three and six months ended June 30, 2001 as compared to the
same periods in 2000. This increase was primarily the result of an increase in
compensation costs of $199,000 due to performance stock grants which partially
vested during the six months ended June 30, 2001, as well as an increase in the
reserve for the costs of abandoned pursuit projects of $120,000. As a percentage
of revenues, general and administrative expenses were 2.3% and 2.4% for the
three and six months ended June 30, 2001 and 2.2% and 2.1% for the same periods
in 2000.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity

Our net cash provided by operating activities increased from $32.9 million for
the six months ended June 30, 2000 to $36.7 million for the same period in 2001,
primarily due to a $4.4 million increase in property operating income.

Net cash used in investing activities decreased from $34.4 million for the six
months ended June 30, 2000 to $13.1 million for the same period in 2001 due to
an $11.0 million increase in proceeds from the sale of communities and a $14.4
million decrease in capital expenditures, construction and land acquisition
activity, partially offset by an increase in investments in real estate joint
ventures of $4.1 million. Property sale proceeds from six of seven communities
sold during 2000 were placed in escrow in accordance with like-kind exchange
income tax rules and regulations. In addition to the proceeds received in
connection with the sale of the former Summit Palm Lake during the current
period, proceeds from the sale of communities represent funds expended from
these like-kind exchange escrows. In the event proceeds from these property
sales are not fully invested in qualified like-kind property during the required
time period, a special distribution may be made or company level tax may be
incurred.

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Net cash provided by financing activities was $335,000 for the six months ended
June 30, 2000. Net cash used in financing activities was $24.3 million for the
six months ended June 30, 2001. The increase in cash used in financing
activities is primarily due to a decrease in mortgage debt proceeds of $47.9
million and an increase in cash used for the payment of dividends and
distributions of $1.6 million, offset by a decrease in cash used for the
repurchase of common stock and common units in the aggregate of $8.7 million, a
decrease in cash used for repayments of mortgage debt of $3.2 million, a
decrease in cash used for employee notes receivable of $6.2 million and an
increase in the net proceeds from borrowings on unsecured medium-term notes of
$59.5 million which were used to repay amounts outstanding on our unsecured
credit facility.

The ratio of earnings to fixed charges was 1.65 for the six months ended June
30, 2001 as compared to 1.67 for the six months ended June 30, 2000.

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

Our outstanding indebtedness at June 30, 2001 totaled $757.4 million. This
amount included $292.1 million of fixed rate conventional mortgages, $36.8
million of variable rate tax-exempt bonds, $338.0 million of fixed rate
unsecured notes, $4.0 million of tax-exempt fixed rate mortgages, and $86.5
million under our unsecured credit facility.

We expect to meet our liquidity requirements over the next twelve months,
including recurring capital expenditures relating to maintaining our existing
communities, primarily through our working capital, net cash provided by
operating activities and borrowings under our unsecured credit facility. We
consider our cash provided by operating activities to be adequate to meet
operating requirements and payments of dividends and distributions during the
next twelve months. We expect to meet our long-term liquidity requirements, such
as scheduled mortgage debt maturities, property acquisitions, financing of
construction and development activities and other non-recurring capital
improvements, through the issuance of unsecured notes and equity securities,
from undistributed cash flow, from proceeds received from the disposition of
certain communities and, in connection with the acquisition of land or improved
property, through the issuance of common units.

Credit Facility

We have a syndicated unsecured line of credit in the amount of $225.0 million.
The unsecured credit facility provides funds for new development, acquisitions
and general working capital purposes. Loans under the unsecured credit facility
initially bear interest at LIBOR plus 100 basis points based upon our current
credit rating of BBB- by Standard & Poor's Rating Services and Baa3 by Moody's
Investors Service. The interest rate will be reduced in the event of an upgrade
of our unsecured credit rating. The unsecured credit facility also provides a
bid option sub-facility equal to a maximum of 50% of the total facility ($112.5
million). This sub-facility provides us with the option to place borrowings in a
fixed LIBOR contract up to 180 days. The credit facility's initial three-year
term was scheduled to expire on September 26, 2003. On July 6, 2001, we closed
on a one-year extension option, subject to the satisfaction of certain
conditions, under the credit facility. The new maturity date is September 26,
2004. All other terms and covenants remain unchanged.

Medium-Term Notes

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On May 29, 1998, we established a program for the sale by the Operating
Partnership of up to $95.0 million aggregate principal amount of medium-term
notes due nine months or more from the date of issuance. We had medium-term
notes with an aggregate principal amount of $55.0 million outstanding in
connection with this MTN program at June 30, 2001. On July 30, 2001, one of the
medium-term notes in the principal amount of $30 million matured and was repaid.
As a result of the commencement of the $250.0 million MTN program, we cannot
issue any additional notes under the $95.0 million MTN program.

Derivative Financial Instruments

At June 30, 2001, we had one interest rate swap with a notional amount of $30.0
million, relating to $30.0 million of 6.625% fixed rate notes issued under our
MTN Program. Under the interest rate swap agreement, through the maturity date
of December 15, 2003, (a) we have agreed to pay to the counterparty the interest
on a $30.0 million notional amount at a floating interest rate of three-month
LIBOR plus 11 basis points, and (b) the counterparty has agreed to pay to us the
interest on the same notional amount at the fixed rate. The floating rate at
June 30, 2001 was 4.00%. The fair value of the interest rate swap was $1.1
million at June 30, 2001. The swap has been designated as a fair value hedge of
the underlying fixed rate debt obligation and has been recorded as a reduction
of the related debt instrument. We assume no ineffectiveness as the interest
rate swap meets the short-cut method conditions required under FAS 133 for fair
value hedges of debt instruments. Accordingly, no gains or losses were recorded
in income relative to our underlying debt and interest rate swap.

Preferred Units

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interest in the Operating Partnership for a taxable year. Distributions on the
Series C preferred units are cumulative from the date of original issuance and
are payable quarterly at the rate of 8.75% per year of the $25.00 original
capital contribution. We made distributions to the holder of the Series C
preferred units in the aggregate amount of $2.4 million during each of the six
month periods ended June 30, 2001 and 2000.

Common Stock Repurchase Program

Employee Loan Program

Our Board of Directors believes that ownership of our common stock by our
executive officers and certain other qualified employees will align the
interests of these officers and employees with the interests of our
stockholders. To this end, our Board of Directors approved, and we instituted, a
loan program under which we may lend amounts to certain of our executive
officers and other qualified employees to (a) finance the purchase of our common
stock on the open market at then-current market prices, (b) finance the payment
of the exercise price of one or more stock options to purchase shares of our
common stock, or (c) finance the annual tax liability or other expenses of an
executive officer related to the vesting of shares of common stock which
constitute a portion of a restricted stock award granted to the executive
officer. We have amended the terms of the loan program from time to time since
its inception in 1997. The relevant officer or employee has executed a
Promissory Note and Security Agreement related to each loan extended. These
notes bear interest at the applicable federal rate as established by the
Internal Revenue Service, are full recourse to the officers and employees and
are collateralized by the shares of our common stock which are the subject of
the loans.

COMMUNITIES BEING MARKETED FOR SALE

At June 30, 2001, we had four apartment communities and one parcel of land under
contract for sale as part of our strategy to exit our non-core markets. The net
book value of these communities and land was $73.4 million at June 30, 2001. We
anticipate recording a net gain upon the sale of this real estate. Proceeds from
the sale of the communities are expected to be used to fund future development.
The four apartment communities held for sale represented 4.1% of property
operating income for all of our communities for the three and six months ended
June 30, 2001. The sale of each of these communities and land is subject to
customary closing conditions. We cannot assure you that these communities or
other communities that we market for sale will be sold in a timely manner, on
favorable terms or at all.

Station Hill had one community under contract for sale at June 30, 2001. The net
book value of the community was $10.2 million at June 30, 2001 and it
represented 14.3% and 14.2% of Station Hill's property operating income for the
three and six months ended June 30, 2001, respectively. Station Hill does not
expect to record a loss upon sale of this community.

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DEVELOPMENT ACTIVITY

Our construction in progress at June 30, 2001 is 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)
(2)....................................... 498 $ 44,500 $ 41,516 $ 2,984 Q3 2001
Summit Overlook -- Raleigh, NC (1).......... 320 25,500 23,035 2,465 Q3 2001
Summit Crest -- Raleigh, NC (1)............. 438 30,700 30,428 272 Q3 2001
Summit Peachtree City -- Atlanta, GA (1).... 399 31,500 31,410 90 Q3 2001
Summit Grand Parc -- Washington, DC......... 105 29,400 17,933 11,467 Q1 2002
Summit Shiloh II -- Atlanta, GA............. 50 3,900 766 3,134 Q2 2002
Summit Brookwood -- Atlanta, GA............. 359 41,500 10,759 30,741 Q4 2002
Summit Valley Brook -- Philadelphia, PA..... 352 37,000 13,338 23,662 Q1 2003
Other development and construction costs
(3)....................................... -- -- 63,000 --
----- -------- -------- -------
2,521 $244,000 $232,185 $74,815
===== ======== ======== =======

---------------

(1) These communities were in lease-up at June 30, 2001.
(2) Summit Deerfield is under contract for sale, expected in 2001, as part of
our strategy to exit the midwest markets. We do not expect to realize a loss
upon sale of Summit Deerfield, which is subject to customary closing
conditions.
(3) Consists primarily of land held for development and other pre-development
costs.

Estimated costs to complete the development communities represent substantially
all of our material commitments for capital expenditures at June 30, 2001.

Certain Factors Affecting the Performance of Development Communities

We are optimistic about the operating prospects of the communities under
construction. However, as with any development effort, there are uncertainties
and risks associated with the communities described above. While we have
prepared development budgets and have estimated completion and stabilization
target dates based on what we believe are reasonable assumptions in light of
current conditions, there can be no assurance that actual costs will not exceed
current budgets or that we will not experience construction delays due to the
unavailability of materials, weather conditions or other events.

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

In addition, we are conducting feasibility and other pre-development work for
nine communities. We could abandon the development of any one or more of these
potential communities in the event that we determine that market conditions do
not support development, financing is not available on favorable terms or other
circumstances exist which may prevent development. Similarly, there can be no
assurance that, if we do pursue one or more of these potential communities, we
will be able to complete construction within the currently estimated development
budgets or construction can be started at the time currently anticipated.

COMMITMENTS AND CONTINGENCIES

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On January 19, 2000, we entered into a Real Estate Purchase Agreement with a
third-party real estate developer. Under the terms of the agreement, we have
agreed to purchase a "Class A" mixed-use community, which will be called Summit
Brickell and will be located in Miami, Florida. We expect to close on the
purchase of Summit Brickell during the second half of 2002 following its
completion and achievement of 85% occupancy. 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 range from $50.5 million to $60.0 million. The
purchase price of Summit Brickell is subject to customary closing conditions. We
issued a letter of credit in the amount of $13.0 million, which serves as a
credit enhancement to the developer's construction loan. In the event that any
amount under the letter of credit is drawn upon, we shall be treated as having
issued a loan to the developer in the amount of such draw. Any such loan will
accrue interest at a rate of 18% per year.

FUNDS FROM OPERATIONS

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

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FFO and FAD for the three and six months ended June 30, 2001 and 2000 are
calculated as follows (dollars in thousands):

THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------- -------------------------
2001 2000 2001 2000
----------- ----------- ----------- -----------

Net income.................................. $ 16,217 $ 11,792 $ 24,273 $ 21,329
Minority interest of Unitholders in
Operating Partnership..................... 2,658 1,924 3,984 3,492
Gain on sale of real estate assets.......... (10,782) (5,446) (10,782) (7,886)
Gain on sale of real estate
assets -- Management Company.............. -- -- -- (238)
----------- ----------- ----------- -----------
Adjusted net income......................... 8,093 8,270 17,475 16,697
Depreciation:
Real estate assets........................ 9,961 9,326 19,347 18,178
Real estate joint venture................. 376 415 574 598
----------- ----------- ----------- -----------
Funds from Operations....................... 18,430 18,011 37,396 35,473
Recurring capital expenditures (1).......... (1,599) (1,563) (2,563) (2,515)
----------- ----------- ----------- -----------
Funds Available for Distribution............ $ 16,831 $ 16,448 $ 34,833 $ 32,958
=========== =========== =========== ===========
Non-recurring capital expenditures (2)...... $ 1,569 $ 395 $ 3,699 $ 1,338
=========== =========== =========== ===========
Cash Flow Provided By (Used In):
Operating Activities...................... $ 21,591 $ 21,344 $ 36,730 $ 32,876
Investing Activities...................... (7,770) (23,336) (13,059) (34,390)
Financing Activities...................... (13,757) 1,414 (24,315) 335
Weighted average shares and units
outstanding -- basic...................... 31,099,292 30,531,837 31,050,037 30,668,869
=========== =========== =========== ===========
Weighted average shares and units
outstanding - diluted..................... 31,421,902 30,696,803 31,355,825 30,787,712
=========== =========== =========== ===========

---------------

(1) Recurring capital expenditures are expected to be funded from operations and
consist primarily of interior painting, carpets, new appliances, vinyl,
blinds, tile, and wallpaper. In contrast, non-recurring capital
expenditures, such as major improvements, new garages and access gates, are
expected to be funded by financing activities and, therefore, are not
included in the calculation of FAD.
(2) Non-recurring capital expenditures for the six months ended June 30, 2001
and 2000 primarily consist of: $542,000 and $1.1 million for major
renovations in 2001 and 2000, respectively; $115,000 and $53,000 for access
gates and security fences in 2001 and 2000, respectively; $1.4 million and
$80,000 in other revenue enhancement expenditures in 2001 and 2000,
respectively and $1.6 million in fixed asset additions including management
information systems expenditures and other property improvements during the
six months ended June 30, 2001.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There has been no material change in our market risk since the filing of our
Annual Report on Form 10-K for the year ended December 31, 2000.

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PART II

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

On May 8, 2001, we held our 2001 annual meeting of stockholders. At the annual
meeting, our stockholders were asked to consider a proposal to elect two Class I
directors to serve until the 2004 annual meeting and until their respective
successors are duly elected and qualified. James H. Hance, Jr. and Henry H.
Fishkind were nominated by the Board of Directors to serve as Class I directors.
Mr. Hance received 19,879,277 votes in favor of his election with 2,093,976
votes withheld; and Mr. Fishkind received 20,651,980 votes in favor of his
election with 1,321,273 votes withheld. As a result, Messrs. Hance and Fishkind
were elected as Class I directors to serve until the 2004 annual meeting and
until their respective successors are duly elected and qualified.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

*10.1 Employment Agreement dated February 15, 1999, by and among
William F. Paulsen, Summit Properties Inc. and Summit
Management Company, as restated on April 3, 2001.
*10.2 7.04% Medium-Term Note due 2006 in the principal amount of
$25,000,000 issued by the Operating Partnership on May 9,
2001.
*10.3 7.703% Medium-Term Note due 2011 in the principal amount of
$35,000,000 issued by the Operating Partnership on May 9,
2001.
*10.4 Amendment No. 1 to Amended and Restated Credit Agreement
dated as of July 6, 2001, by and among the Operating
Partnership, Summit Properties Inc. and the lenders named
therein.
*12.1 Statement Regarding Calculation of Ratio of Earnings to
Fixed Charges for the six months ended June 30, 2001.

---------------

* Filed herewith

(b) Reports on Form 8-K

We did not file any reports on Form 8-K during the second quarter of 2001.

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SIGNATURES

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

SUMMIT PROPERTIES INC.

August 9, 2001 /s/ STEVEN R. LEBLANC
-------------------------------------------- --------------------------------------------
(Date) Steven R. LeBlanc,
Chief Executive Officer

August 9, 2001 /s/ MICHAEL L. SCHWARZ
-------------------------------------------- --------------------------------------------
(Date) Michael L. Schwarz,
Executive Vice President -- Operations
and Chief Financial Officer