Camden Summit Partnership 8-K Other Events

EXHIBIT 99.1

Item 6.Selected Financial Data

The following table sets forth selected consolidated financial and other information on a consolidated historical basis as of and for each of the years in the five-year period ended December 31, 2003. In accordance with Statement of Financial Accounting Standards (“SFAS”) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” which we adopted on January 1, 2002, income statement data for all years presented reflects the reclassification of the results of operations of all communities sold during 2003 and seven of the eight communities sold during 2002 to income from discontinued operations. The eighth community sold during 2002 was properly classified as held for sale prior to January 1, 2002 and its operations have remained in income from continuing operations. This table has also been updated to reflect the application of SFAS No. 144 for the disposition of eight communities during the nine months ended September 30, 2004 and the three communities considered held for sale as of September 30, 2004. These reclassifications have no effect on the reported net income or FFO (as defined below) in any prior period. This table should be read in conjunction with our consolidated financial statements and related notes which accompany this report, as well as the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of this report (amounts in thousands, except per share and property information).

SELECTED FINANCIAL DATA

SUMMIT PROPERTIES PARTNERSHIP, L.P.

	Year Ended December 31,
	2003			2002			2001			2000			1999
OPERATING INFORMATION:
Revenues:
Rental	$	104,973		$	93,034		$	102,691		$	99,133		$	92,741
Other property income		7,854			6,754			7,883			7,721			6,447
Management fees - third party communities		618			787			913			1,103			1,263
Total revenues		113,445			100,575			111,487			107,957			100,451
Expenses:
Property operating and maintenance expenses (exclusive
of items listed below)		24,659			22,183			22,574			20,779			20,969
Real estate taxes and insurance		13,343			9,550			9,714			10,211			8,992
Depreciation and amortization		30,462			24,230			23,302			21,677			20,352
General and administrative expense		6,941			5,937			6,940			4,752			3,876
Property management expenses		5,912			4,822			5,534			5,426			4,876
Total expenses		81,317			66,722			68,064			62,845			59,065
Operating Income		32,128			33,853			43,423			45,112			41,386
Interest and other income		2,643			2,716			2,922			2,871			2,306
Interest expense and deferred financing cost amortization		(29,112	)		(28,699	)		(32,209	)		(31,500	)		(30,125	)
Income from continuing operations before (loss) gain on
unconsolidated real estate joint ventures, gain on sale of
real estate assets and impairment loss on technology
investments		5,659			7,870			14,136			16,483			13,567
(Loss) gain on unconsolidated real estate joint ventures		(326	)		(49	)		(171	)		(399	)		104
Gain on sale of real estate assets		73			13,831			34,435			38,718			17,427
Gain on sale of real estate assets - joint ventures		-			4,955			271			-			-
Impairment loss on technology investments		-			-			(1,217	)		-			-
Income from continuing operations		5,406			26,607			47,454			54,802			31,098
Total discontinued operations		26,250			89,324			29,862			32,012			28,662
Net income	$	31,656		$	115,931		$	77,316		$	86,814		$	59,760
Income available to common unitholders	$	18,387		$	103,511		$	64,896		$	74,394		$	53,062

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	Year Ended December 31,
	2003		2002		2001		2000		1999
Per unit data - basic:
Income from continuing operations	$	0.17	$	0.86	$	1.54	$	1.79	$	0.97
Income from discontinued operations		0.84		2.89		0.97		1.04		0.89
Net income	$	1.02	$	3.75	$	2.51	$	2.83	$	1.86
Income available to common unitholders	$	0.59	$	3.35	$	2.11	$	2.42	$	1.65
Per unit data - diluted:
Income from continuing operations	$	0.17	$	0.86	$	1.53	$	1.77	$	0.97
Income from discontinued operations		0.84		2.87		0.96		1.04		0.89
Net income		1.01	$	3.73	$	2.49	$	2.81	$	1.86
Income available to common unitholders	$	0.59	$	3.33	$	2.09	$	2.41	$	1.65
Distributions per common unit	$	1.35	$	1.76	$	1.85	$	1.75	$	1.67
Weighted average common units outstanding - basic		31,119		30,937		30,796		30,697		32,135
Weighted average common units outstanding - diluted		31,268		31,107		31,106		30,897		32,206

BALANCE SHEET INFORMATION:
Real estate, before accumulated depreciation	$	1,493,670		$	1,410,195		$	1,407,979		$	1,425,367		$	1,286,869
Total assets		1,351,885			1,350,257			1,309,299			1,358,877			1,236,014
Total long-term debt		726,152			702,456			719,345			764,384			650,077
Redeemable perpetual preferred units		53,547			136,260			136,260			136,260			136,259
Partners’ equity		566,322			584,411			531,847			531,128			518,270
OTHER INFORMATION:
Cash flow provided by (used in):
Operating activities	$	62,826		$	73,318		$	77,892		$	86,604		$	62,653
Investing activities		(28,943	)		(8,075	)		5,845			(121,305	)		(36,841	)
Financing activities		(33,780	)		(64,903	)		(86,477	)		33,818			(24,675	)
Funds from Operations (1)	$	39,482		$	60,218		$	70,167		$	73,342		$	70,707
Total completed communities (at end of period) (2)		46			51			54			59			65
Total apartment homes developed (3)		958			866			1,157			1,696			1,650
Total apartment homes acquired		1,095			222			-			490			-
Total apartment homes (at end of period) (2)		14,098			15,428			16,739			17,273			16,765

(1)   Funds from Operations ("FFO"), as defined by the National Association of Real Estate Investment Trusts

("NAREIT"), represents net income (loss) excluding gains from sales of property and extraordinary items, plus depreciation of real estate assets, and after adjustments for unconsolidated partnerships and joint ventures, all determined on a consistent basis in accordance with accounting principles generally accepted in the United States of America ("GAAP").

Our methodology for computing FFO may differ from the methodologies utilized by other real estate companies and, accordingly, may not be comparable to other real estate companies. FFO should not be considered as an alternative to net income (determined in accordance with GAAP) as an indication of financial performance, nor is it indicative of funds available to fund our cash needs, including our ability to make dividend or distribution payments. We believe that FFO is helpful to investors as a measure of performance of a Real Estate Investment Trust (“REIT”) because it recognizes that historical cost accounting for real estate assets under GAAP assumes that the value of such real estate diminishes over time. Real estate values have historically risen or fallen with market conditions and, therefore, ma ny investors have considered presentation of operating results for a real estate company using historical cost accounting to be insufficient by itself. Thus, NAREIT created FFO as a supplemental measure of a REIT’s operating performance. By excluding such non-operating items as depreciation and gains on sales of real estate assets, among others, we believe that an investor can more easily compare the operating performance of our real estate assets between periods or compare our operating performance to our peers.

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Below is a reconciliation of income available to common unitholders to FFO for each of the years in the five-year period ended December 31, 2003.

	2003			2002			2001			2000			1999
Income available to common uniholders	$	18,387		$	103,511		$	64,896		$	74,394		$	53,062
Gain on sale of real estate assets		(18,893	)		(78,738	)		(34,435	)		(38,510	)		(17,427	)
Gain on sale of real estate assets - joint ventures		-			(4,955	)		(271	)		-			-
Gain on sale of real estate assets - Summit Management
Company		-			-			-			(238	)		-
Depreciation:
Real estate assets		39,225			39,281			38,746			36,413			34,324
Real estate joint venture		763			1,119			1,231			1,283			748
Funds from Operations	$	39,482		$	60,218		$	70,167		$	73,342		$	70,707

(2)	Represents the total number of completed communities and apartment homes in those completed communities owned at the end of the period (excludes joint venture communities).
(3)	Represents the total number of apartment homes in communities completed during the period and owned at the end of the period (excludes joint venture communities).

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Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operation

Unless the context otherwise requires, all references to “we,” “our” or “us” in this report refer collectively to Summit Properties Partnership, L.P., a Delaware limited partnership (the “Operating Partnership”) and its subsidiaries. All references to “Summit” in this report refer to Summit Properties Inc., a Maryland corporation and the sole general partner of the Operating Partnership.

Executive Summary

We focus on the operation, development and acquisition of luxury apartment communities in select neighborhoods throughout the Southeast and Mid-Atlantic United States. We focus our efforts in five markets which consist of Washington, D.C., Southeast Florida, Atlanta, Raleigh and Charlotte. As of December 31, 2003, our portfolio consisted of 46 completed communities comprising 14,098 apartment homes; four communities owned in a joint venture, comprised of 1,203 apartment homes; and five apartment communities with 1,687 apartment homes in various stages of development.

We have reclassified the historical financial statements for discontinued operations that have resulted from dispositions of real estate assets during the period from January 1, 2004 to September 30, 2004 as well as the classification of communities as held for sale in accordance with Statement of Financial Accounting Standard No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.”

Our income from continuing operations is generated primarily from operations of our apartment communities, specifically, property operating income. Property operating income is defined as rental and other property revenues less property operating and maintenance expense. See Note 8 to our accompanying consolidated financial statements for further discussion of our use of property operating income as a meaningful financial measure of each community’s performance. The changes in operating results from period to period reflect changes in existing community performance and changes in the number of apartment homes due to development, acquisition, or disposition of communities. To better understand our overall operating performance, our communities have been categorized in five “status” groups. A community that we have acquired is deemed “same-property” when we have owned it for one year or more as of the beginning of the current year. We consider a community to be "stabilized" when it has attained a physical occupancy level of at least 93%. A community that we have developed is deemed "same-property" when stabilized for at least one year as of the beginning of the current year. A community is deemed to be a "stabilized development" community when stabilized as of the beginning of the current year but not the entire prior year. A “lease-up” community is defined as one that has commenced rental operations but was not stabilized as of the beginning of the current year. As of December 31, 2003, we had 9,865 same-property apartment homes in 34 communities, 1,095 acquisition apartment homes in two communities, 1,820 stabilized development apartment homes in five communities and 1,774 lease-up apartment homes in seven communities.

In 2001, we began experiencing weakening apartment fundamentals due to the downturn of the national economy as well as declining economic conditions in our markets. As a result, local demand for apartment homes has declined due to lower job growth and/or job losses, primary drivers of apartment demand, which has led to lower rental rates in order to achieve increased occupancy rates. Additionally, the low interest rate environment has produced record home sales which, when combined with the slowing economy, has reduced the number of prospective residents. The low interest rate environment has also provided the opportunity for developers to continue to add to the supply of apartments in our markets.

During 2003, we developed and implemented a rent optimization software program. This program will help us manage revenue by allowing us to set daily rents on apartment homes as they become available for rental. Automating the balance between vacancy and rents provides a more efficient method to pricing and will be a valuable tool to ensure that our properties are being managed to their greatest rental revenue producing potential.

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Looking forward, we view the primary risk to our business as continued economic malaise in our markets. However, we believe that fundamentals in our markets have stabilized. Our markets produced 102,000 new jobs during the twelve months ended January 2004 which we expect will drive future demand. Among our five markets, the fundamentals in our Washington, D.C. and Southeast Florida markets are the strongest, and we expect pricing power to return to these markets first.  Fundamentals are not as strong in the Atlanta, Charlotte and Raleigh markets, and, accordingly, we expect it will take longer for pricing power to gain momentum in these markets.Additionally, permit issuance in 2003 was at a six-year low and we expect that this will result in a decreased supply of competitive apartment homes. We will continue to closely monitor and act upon key market dynamics by making disciplined strategic investments, sound operating decisions, and prudent financial measures.

Critical Accounting Policies

We prepare our financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”). A summary of our significant accounting policies is disclosed in Note 3 to our consolidated financial statements, which are included in this annual report. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. We consider critical accounting policies to be those policies that have the most impact on the reporting of our financial condition and those requiring significant judgments and estimates. Our critical accounting policies relate to cost capitalization and asset impairment evaluation.

Cost Capitalization

Expenditures directly related to the acquisition, development and improvement of real estate assets are capitalized at cost as land, buildings and improvements or furniture, fixtures and equipment in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 67, “Accounting for Costs and Initial Rental Operations of Real Estate Projects.” These amounts are depreciated over estimated useful lives determined by management. Determining whether expenditures meet the criteria for capitalization and the assignment of depreciable lives requires our management to exercise significant judgment. Improvements are categorized as either non-recurring or recurring capitalized expenditures.Non-recurring capitalized expenditures primarily consist of major renovations and upgrades of apartment homes. Recurring capitalized expenditures consist primarily of exterior painting, new appliances, vinyl flooring, blinds, tile, wallpaper and carpet.Repairs and maintenance, such as landscaping maintenance, interior painting and cleaning and supplies used in such activities, are expensed as incurred and we do not accrue for such costs in advance. In addition, we have a group of employees responsible for the supervision of our capital expenditure projects and capitalize a portion of their direct costs. The amounts capitalized depend on the level of such activities.

During the development and construction of a new community, we capitalize all direct and indirect costs, including interest related to apartment construction and certain operational costs for communities under construction and in lease-up. Included in these costs is management’s estimate of the portion of internal costs that are incremental and considered related to such development activities. The amounts capitalized depend on the timing of such activities. Interest costs are capitalized in accordance with SFAS No. 34, “Capitalization of Interest Cost,” based on the ratio of those units available for rental to the total number of units in the community and depreciated over the lives of the constructed assets. We capitalize the cost of our development department efforts to projects currently under construction, currently at a rate of 3.0% of such construction assets. Such costs are then depreciated over the lives of the constructed assets upon their completion. We treat each unit in an apartment community separately for capitalization and expense recognition purposes, resulting in a proration of interest and operational costs in a development community between costs that are capitalized or expensed. As units become available for their intended use, we cease capitalization of interest and operational costs on those units based on the ratio of those units available for rental to the total number of units in the community.

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Asset Impairment Evaluation

We record our real estate assets to be held and used at cost, less accumulated depreciation, unless considered impaired. If events or circumstances indicate that the carrying amount of a community may be impaired, we will assess its recoverability by estimating the undiscounted future cash flows of the community. If our recoverability assessment results in an indication of impairment for communities to be held and used, or if a community is considered to be held for sale, then we determine the community’s fair value. For communities classified as held for sale, the fair value represents the estimated sales price less cost to sell based on current or pending offers, when available, or based on estimates received from the broker. For communities to be held and used, fair value is determined by applying a capitalization rate to the community’s operating income. Applying capitalization rates to a community’s property operating income is a widely used measure of fair value and for determining the amount at which a community could be sold between willing parties. Determining appropriate capitalization rates requires significant judgment and is generally based on the prevailing rate for the submarket within the market in which the community is located. Capitalization rates can fluctuate due to changes in the general economy or within specific submarkets. If the actual capitalization rate for a community varies significantly from management’s estimate, the impairment evaluation may be significantly affected. For assets to be held and used, if the carrying amount exceeds the undiscounted future cash flows, we would recognize an impairment loss to the extent the carrying amount exceeds the estimated fair value of the community and such loss would be included in income fromcontinuing operations. Assets to be disposed of are recorded at the lower of carrying amount or fair value less cost to sell. An impairment loss will be recognized for any write-down to fair value less cost to sell and for assets recorded as discontinued operations reported in the discontinued operations section of the consolidated statements of earnings.

In accordance with SFAS No. 144, we present operating results of communities we consider held for sale, as well as those sold, in discontinued operations in our consolidated statements of earnings prospectively from the date of adoption, which was January 1, 2002. Although the adoption of SFAS No. 144 did not have a material impact on our financial position or results of operations for the year ended December 31, 2003, it did have a significant effect on the comparability of amounts presented from year to year on the consolidated statements of earnings. This Form 10-K has been updated to reflect the operating results of the communities sold during the nine months ended September 30, 2004 as well as the thre e communities considered as held for sale as of September 30, 2004 in discontinued operations for all periods.

Results of Operations for the Years Ended December 31, 2003, 2002 and 2001

Income available to common unitholders decreased to $18.4 million in 2003 from $103.5 million in 2002 primarily due to a decrease of $13.8 million in gain on sale of real estate assets in continuing operations, a decrease of $5.0 million in gain on sale of real estate assets - joint ventures and a decrease of $46.1 million in gain on disposition of discontinued operations. Income available to common unitholders increased to $103.5 million in 2002 from $64.9 million in 2001 primarily due to an increase in gain on disposition of discontinued operations of $64.9 million and an increase in gain on sale of real estate assets - joint ventures of $4.7 million offset by a decrease in gain on sale of real estate assets in continuing operations of $20.6 million.

Income from continuing operations before loss on unconsolidated real estate joint ventures, gain on sale of real estate assets and impairment loss on technology investments, decreased to $5.7 million in 2003 from $7.9 million in 2002. The primary factors causing this decrease are a $6.2 million increase in depreciation expense, a $1.0 million increase in general and administrative expenses, a $1.0 million increase in property management expenses and a $924,000 increase in amortization of deferred financing costs, all offset by a $6.8 million increase in property operating income from our communities in continuing operations. See the four sections entitled, “Operating Performance of our Same-Property, Acquisition, Stabilized Development and Lease-Up Communities” on pages 9 through 11 and the section ent itled, “Other Income and Expenses” on page 14 of this report for an explanation of these changes.

The same measure decreased to $7.9 million in 2002 from $14.1 million in 2001. The primary factors causing this decrease are a $10.2 million decrease in property operating income from continuing operations and an increase in depreciation expense of $928,000 due to depreciation on development and acquisition communities, offset by a decrease of $3.4 million in interest expense due to a decrease in average indebtedness outstanding and a decrease in our average interest rate.

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A community’s average physical occupancy is defined as the number of apartment homes occupied divided by the total number of apartment homes contained in the community, expressed as a percentage. Average physical occupancy has been calculated using the average of the occupancy that existed on Sunday during each week of the period. Average rent per occupied apartment home represents collected rent per occupied apartment home. Our methodology for calculating average physical occupancy and average rent per occupied apartment home may differ from the methodology used by other apartment companies and, accordingly, may not be comparable to other apartment companies.

A summary of our apartment homes (excluding joint ventures) for the years ended December 31, 2003, 2002 and 2001 is as follows:

	2003			2002			2001
Apartment homes at the beginning of the year		15,428			16,739			18,928
Acquisitions		1,095			222			-
Developments which were completed during the year		958			866			-
Sale of apartment homes		(2,927	)		(2,399	)		(2,189	)
Apartment homes at the end of the year		14,554			15,428			16,739

The operating performance of our communities (excluding joint venture communities) is summarized below (dollars in thousands). The operating results for communities which are considered held for sale are included in their current “status” group until they are sold at which time they will be reclassified as disposition communities.

	Year Ended December 31,							Year Ended December 31,
	2003		2002		% Change			2002		2001		% Change
Property revenues (1):
Same-property communities (2)	$	106,047	$	109,226		-2.9	%	$	127,201	$	133,824		-4.9	%
Acquisition communities		3,991		-		100.0	%		1,111		-		100.0	%
Stabilized development communities (3)		16,947		16,477		2.9	%		10,672		10,349		3.1	%
Lease-up communities		13,307		2,436		446.3	%		15,983		8,217		94.5	%
Disposition communities		20,033		45,340		-55.8	%		18,512		38,726		-52.2	%
Total property revenues		160,325		173,479		-7.6	%		173,479		191,116		-9.2	%
Property operating and maintenance expenses (1):
Same-property communities		35,131		34,358		2.2	%		42,048		40,656		3.4	%
Acquisition communities		1,866		-		100.0	%		488		-		100.0	%
Stabilized development communities		6,229		5,839		6.7	%		3,345		2,989		11.9	%
Lease-up communities		5,076		980		418.0	%		5,844		2,415		142.0	%
Disposition communities		8,447		16,384		-48.4	%		5,836		11,750		-50.3	%
Total property operating and maintenance expenses		56,749		57,561		-1.4	%		57,561		57,810		-0.4	%
Property operating income:
Same-property communities (2)		70,916		74,868		-5.3	%		85,153		93,168		-8.6	%
Acquisition communities		2,125		-		100.0	%		623		-		100.0	%
Stabilized development communities (3)		10,718		10,638		0.8	%		7,327		7,360		-0.4	%
Lease-up communities		8,231		1,456		465.3	%		10,139		5,802		74.8	%
Disposition communities		11,586		28,956		-60.0	%		12,676		26,976		-53.0	%
Property operating income	$	103,576	$	115,918		-10.6	%	$	115,918	$	133,306		-13.0	%

(1)   To determine the amounts of property revenue and property operating and maintenance expense which were contributed by communities classified in discontinued operations, see the table in the section entitled, “Communities Sold or Held for Sale on page 12 of this report.

(2)   Includes communities held for sale at December 31, 2004 with operating results reported in discontinued operations: Property revenue of $23.1 million, $24.0 million and $25.8 million for the years ended December 31, 2003, 2002 and 2001, respectively; property operating income of $15.3 million, $16.3 million and $18.5 million for the years ended December 31, 2003, 2002 and 2001.

(3)   Includes communities held for sale at September 30, 2004 with operating results reported in discontinued operations: Property revenue of $4.3 million, $5.1 million and $4.8 million for the years ended December 31, 2003, 2002 and 2001, respectively; property operating income of $1.9 million, $3.1 million and $2.8 million for the years ended December 31, 2003, 2002 and 2001, respectively..

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Operating Performance of our Same-Property Communities

The operating performance of our same-property communities is summarized below (dollars in thousands, except average monthly rental revenue). The comparison of 2003 to 2002 includes those communities and apartment homes that were considered same-property as of December 31, 2003. The comparison of 2002 to 2001 includes those communities and apartment homes that were considered same-property as of December 31, 2002. The change in number of communities and apartment homes is the result of the disposition of communities during 2003 as well as the movement of a community which would have been stabilized development or lease-up in a prior year to the same-property category.

	Year Ended December 31,									Year Ended December 31,
	2003			2002			% Change			2002			2001			% Change
Property revenues:
Rental	$	98,651		$	101,850			-3.1	%	$	118,546		$	124,670			-4.9	%
Other		7,396			7,376			0.3	%		8,655			9,154			-5.5	%
Total property revenues		106,047			109,226			-2.9	%		127,201			133,824			-4.9	%
Property operating expenses:
Personnel		8,667			8,290			4.5	%		9,679			9,024			7.3	%
Advertising and promotion		1,276			1,244			2.6	%		1,815			1,474			23.1	%
Utilities		5,224			5,151			1.4	%		5,860			6,145			-4.6	%
Building repairs and maintenance		4,820			5,003			-3.7	%		6,190			6,259			-1.1	%
Real estate taxes and insurance		13,591			12,928			5.1	%		16,543			15,600			6.0	%
Other operating expense		1,553			1,742			-10.8	%		1,961			2,154			-9.0	%
Total property operating expenses		35,131			34,358			2.2	%		42,048			40,656			3.4	%
Property operating income	$	70,916		$	74,868			-5.3	%	$	85,153		$	93,168			-8.6	%
Average physical occupancy		94.2	%		93.5	%		0.7	%		93.4	%		92.9	%		0.5	%
Average rent per occupied apartment home	$	889		$	926			-4.0	%	$	895		$	946			-5.4	%
Number of apartment homes		9,865			9,865						12,060			12,060
Number of apartment communities		34			34						40			40

Property revenues declined from 2002 to 2003 primarily due to continued weakening fundamentals in our markets, primarily driven by a decline in job growth and/or an increase in job losses, residents leaving our communities to purchase homes in the low interest rate environment and the new supply of apartment homes added to our markets by builders taking advantage of low interest rates. Concessions at our same-property communities increased by $1.6 million, or 11.5%, during the year ended December 31, 2003 when compared to the same period in 2002. We believe 2004 is a transition year where we will not experience any significant increase in pricing power.

Personnel costs increased by $377,000, or 4.5%, from 2002 to 2003 due to an increase in staffing levels in 2003 as compared to 2002. Excluding personnel costs, property operating and maintenance expenses increased by 1.5% in 2003 over the same period in 2002. Insurance costs increased by $448,000, or 29.2%, during 2003 when compared to 2002 due to an increase in insurance rates with our May 2003 renewal as well as obtaining terrorism insurance on certain of our communities. As a percentage of total property revenue, total property operating and maintenance expenses for our same-property communities increased to 33.1% in 2003 from 31.5% in 2002.

Property revenues decreased from 2001 to 2002 due to weakening fundamentals in our markets primarily driven by a decline in job growth and/or an increase in job losses, residents leaving our communities to purchase homes in the low interest rate environment and the new supply of apartment homes added to our markets by builders taking advantage of low interest rates. Concessions at our same-property communities increased by $8.2 million, or 49.5%, in 2002 when compared to 2001.

Property operating and maintenance expenses increased by 3.4% from 2001 to 2002 primarily due to an increase in advertising costs, personnel costs and insurance costs. The increase in advertising costs is primarily due to a 158% increase in fees paid to locator companies for assistance in referring residents to our communities. Personnel costs increased primarily due to an 11.7% increase in group insurance costs from 2001 to 2002. Insurance costs increased primarily due to an increase in property liability insurance costs of 64.8%. As a percentage of total property revenue, total property operating and maintenance expenses for our same-property communities increased to 33.0% in 2002 from 30.4% in 2001.

8

Operating Performance of our Acquisition Communities

On May 6, 2003, the Operating Partnership purchased certain assets of Brickell Grand, Inc. (“Brickell Grand”), including the community known as Summit Brickell and a note receivable from the developer, located in Miami, Florida for $59.4 million. Summit Brickell contains 405 apartment homes and approximately 18,000 square feet of retail space. On December 31, 2003, we purchased Summit Lansdowne, located in Loudon County, Virginia, for $99.2 million. Summit Lansdowne contains 690 apartment homes.

On July 1, 2002, we acquired Summit San Raphael which has 222 apartment homes (Summit San Raphael was sold during 2003). There were no community acquisitions during 2001. The operating performance of our acquisition communities is summarized below (dollars in thousands, except average monthly rental revenue):

	Year Ended December 31,					Year Ended December 31,
	2003			2002		2002			2001
Property revenues:
Rental	$	3,826		$	-	$	1,062		$	-
Other		165			-		49			-
Total property revenues		3,991			-		1,111			-
Property operating expenses		1,866			-		488			-
Property operating income	$	2,125		$	-	$	623		$	-
Average physical occupancy		80.3	%		-		93.2	%		-
Average rent per occupied apartment home	$	1,214		$	-	$	890		$	-
Number of apartment homes		1,095			-		222			-

Operating Performance of our Stabilized Development Communities

The comparison of the years ended December 2003 and 2002 represents five communities with a total of 1,820 apartment homes (Summit Crest, Summit Lenox, Summit Overlook, Summit Peachtree City and Summit Shiloh) which were stabilized during the entire year ended December 31, 2003, but were stabilized subsequent to January 1, 2002. Summit Lenox is an existing community with 431 apartment homes that has recently been undergoing major renovations. Its operating results are included in results of stabilized development communities as it has not yet reached stabilization after renovation.

The comparison of the years ended December 31, 2002 and 2001 represents two communities with a total of 857 apartment homes (Summit Russett and Summit Lenox).

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

	Year Ended December 31,						Year Ended December 31,
	2003			2002			2002			2001
Property revenues:
Rental	$	15,888		$	15,447		$	9,950		$	9,487
Other		1,059			1,030			722			862
Total property revenues		16,947			16,477			10,672			10,349
Property operating expenses		6,229			5,839			3,345			2,989
Property operating income	$	10,718		$	10,638		$	7,327		$	7,360
Average physical occupancy		92.7	%		84.6	%		93.5	%		88.3	%
Average rent per occupied apartment home	$	799		$	845		$	1,062		$	1,078
Number of apartment homes		1,820			1,820			857			857

9

Operating Performance of our Communities in Lease-Up

We had seven communities in lease-up during the year ended December 31, 2003. The following is a summary of the communities in lease-up during 2003 (dollars in thousands):

			Total		Actual/				Average			% Leased
	Number of		Actual/		Anticipated		Actual/		Physical			as of
	Apartment		Anticipated		Construction		Anticipated		Occupancy			December
Community and Market	Homes		Cost		Completion		Stabilization		2003			31, 2003
Summit Grand Parc - Washington, D.C. (1)		105	$	43,511		Q4 2002		Q3 2003		54.3	%		99.0	%
Summit Valleybrook - Philadelphia, PA		352		37,839		Q4 2002		Q3 2003		79.5	%		94.6	%
Summit Brookwood - Atlanta, GA		359		45,504		Q4 2002		Q4 2003		79.8	%		94.4	%
Summit Roosevelt - Washington, D.C.		198		46,254		Q2 2003		Q3 2003		55.0	%		100.0	%
Summit Stockbridge - Atlanta, GA		304		23,365		Q3 2003		Q2 2004		54.8	%		93.1	%
Summit Reunion Park II - Raleigh, NC		172		10,800		Q1 2004		Q3 2004		3.3	%		9.3	%
Summit Silo Creek - Washington, D.C.		284		41,700		Q2 2004		Q4 2004		14.7	%		32.7	%
		1,774	$	248,973

(1)   Summit Grand Parc was completed during the fourth quarter of 2002. Stabilization, occupancy and percent leased information in the table above represents data for the apartment homes only. The 12,500 square feet of commercial space at Summit Grand Parc was 85.6% leased and occupied as of December 31, 2003.

The actual stabilization dates for our communities in lease-up may be later than anticipated. The rental rates that we charge also may be less than expected.

We had eight communities with 2,289 apartment homes in lease-up during the year ended December 31, 2002 (Summit Brookwood, Summit Crest, Summit Grand Parc, Summit Grandview, Summit Overlook, Summit Peachtree City, Summit Shiloh II and Summit Valleybrook).

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

	Year Ended December 31,				Year Ended December 31,
	2003		2002		2002		2001
Property revenues:
Rental	$	12,292	$	2,191	$	15,069	$	7,698
Other		1,015		245		914		519
Total property revenues		13,307		2,436		15,983		8,217
Property operating expenses		5,076		980		5,844		2,415
Property operating income	$	8,231	$	1,456	$	10,139	$	5,802
Number of apartment homes		1,774		1,774		2,289		2,289

Operating Performance of our Disposition Communities

The 2003 disposition communities consist of the former Summit Fairways, Summit Turtle Rock, Summit Camino Real, Summit Buena Vista, Summit Belcourt, Summit Las Palmas, Summit Arboretum and Summit San Raphael (comprised of an aggregate of 2,927 apartment homes), all of which were sold during the year ended December 31, 2003. With the exception of Summit Fairways, all of the communities disposed of during 2003 are located in Texas and, therefore, their disposition completed our exit of the Texas market.

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

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

The 2001 disposition communities consist of the former Summit Palm Lake, Summit Arbors, Summit Radbourne, Summit Lofts, Summit Stony Point, Summit Gateway, Summit Deerfield, Summit Waterford and Summit Walk (an aggregate of 2,189 apartment homes), all of which were sold during the year ended December 31, 2001.

The operating performance of the disposition communities (excluding The Heights at Cheshire Bridge) is summarized below (dollars in thousands). Note that communities which are considered held for sale are not included in disposition communities’ results of operations until sold (i.e., such results remain in same-property, acquisition, stabilized development or lease-up communities results until sold).

	Year Ended December 31,				Year Ended December 31,
	2003		2002		2002		2001
Property revenues:
Rental	$	18,652	$	42,352	$	17,213	$	35,928
Other		1,381		2,988		1,299		2,798
Total property revenues		20,033		45,340		18,512		38,726
Property operating expenses		8,447		16,384		5,836		11,750
Property operating income	$	11,586	$	28,956	$	12,676	$	26,976
Number of apartment homes		2,927		5,326		2,399		4,588

Acquisitions and Dispositions

During the year ended December 31, 2003, we sold eight communities comprising 2,927 apartment homes for an aggregate sales price of $215.2 million, resulting in an aggregate gain on sale of $18.8 million for seven of the communities and an impairment charge of $0.8 million for one of the communities. The eight communities sold were the former Summit Fairways, Summit Turtle Rock, Summit Camino Real, Summit Buena Vista, Summit Arboretum, Summit Las Palmas, Summit San Raphael and Summit Belcourt. Net proceeds from four of the eight communities, equaling $51.5 million, were placed in escrow with a qualified intermediary in accordance with like-kind exchange income tax rules and regulations.

During the year ended December 31, 2003, we purchased two communities. On December 31, 2003, we purchased Summit Lansdowne, located in Loudon County, Virginia, for $99.2 million. Summit Lansdowne contains 690 apartment homes and was approximately 89.0% leased as of December 31, 2003. On May 6, 2003, the Operating Partnership purchased certain assets of Brickell Grand, including the community known as Summit Brickell and a note receivable from the developer, for $59.4 million. Summit Brickell is located in Miami, Florida and contains 405 apartment homes and approximately 18,000 square feet of retail space.

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

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

During the year ended December 31, 2002, we acquired a stabilized, luxury apartment community in the Galleria sub-market of Dallas, Texas (comprising 222 apartment homes) for $17.7 million. The community, known as Summit San Raphael, was sold during 2003.

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

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

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

Communities Sold or Held for Sale

In accordance with SFAS No. 144, net income and gain on disposition of real estate for communities sold or considered held for sale after December 31, 2001 are reflected in our statements of earnings as “discontinued operations” for all periods presented. Below is a summary of discontinued operations for all of the communities sold during 2003 and 2002, excluding Summit Breckenridge and joint venture communities, for the years ended December 31, 2003, 2002 and 2001 (in thousands). Summit Breckenridge was properly classified as held for sale prior to January 1, 2002 and, therefore, its operations prior to disposal are included in income from continuing operations. In addition, the summary below includes the eight communities sold during the nine months ended September 30, 2004 (Summit Square, Summit Hig hland, Summit Belmont, Summit Fair Oaks, Summit Crossing, Summit Norcroft, Summit Glen and Summit Reston) as well as the three communities held for sale as of September 30, 2004 (Summit Del Ray, Summit Lenox and Summit Brickell View).

	Year Ended December 31,
Property revenues:	2003			2002			2001
Rental	$	44,336		$	68,805		$	75,092
Other		3,162			4,886			5,450
Total property revenues		47,498			73,691			80,542
Property operating expenses		18,747			25,828			25,522
Depreciation		9,907			16,043			16,081
Interest and amortization		4,133			7,092			9,077
Income from discontinued operations before gain on disposition of
discontinued operations, impairment loss on discontinued operations,
and loss from early extinguishment of debt associated with assets sales		14,711			24,728			29,862
Net gain on disposition of discontinued operations		18,820			64,907			-
Impairment loss on discontinued operations		(759	)		-			-
Loss from early extinguishment of debt associated with asset sales		(6,522	)		(311	)		-
Total discontinued operations	$	26,250		$	89,324		$	29,862

12

Development Activity

Development communities in process as of December 31, 2003 are summarized as follows (dollars in thousands):

	Number of		Total				Estimated		Anticipated
	Apartment		Estimated		Cost To		Cost To		Construction
Community	Homes		Costs		Date		Complete		Completion
Summit Reunion Park II - Raleigh, NC		172	$	10,800	$	9,354	$	1,446		Q1 2004
Summit Silo Creek - Washington, D.C.		284		41,700		36,233		5,467		Q2 2004
Summit Brickell View - Miami, FL		323		74,000		64,931		9,069		Q4 2004
Summit Las Olas - Ft. Lauderdale, FL		420		73,700		66,889		6,811		Q4 2004
Summit Fairfax Corner - Washington, D.C.		488		74,500		20,452		54,048		Q4 2006
Total - communities under construction		1,687		274,700		197,859		76,841
Other development and construction costs (1)		-		-		12,454		-
		1,687	$	274,700	$	210,313	$	76,841

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

The estimated cost to complete the development communities listed above of $76.8 million represents substantially all of our material commitments for capital expenditures as of December 31, 2003.

Factors Affecting the Performance of Our Development Communities

As with any development project, there are uncertainties and risks associated with the development of the communities described above. While we have prepared development budgets and have estimated completion and stabilization target dates based on what we believe are reasonable assumptions in light of current conditions, there can be no assurance that actual costs will not exceed current budgets or that we will not experience construction delays due to the unavailability of materials, weather conditions or other events. We also may be unable to obtain, or experience delays in obtaining, all necessary zoning, land-use, building, occupancy, and other required governmental permits and authorizations. Similarly, market conditions at the time these communities become available for leasing will affect rental rates and the period of time necessary to achieve stabilization.

Other development risks include the possibility of incurring additional costs or liabilities resulting from increased costs for materials or labor or other unexpected costs or defects in construction material, and the possibility that financing may not be available on favorable terms, or at all, to pursue or complete development activities.

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

Other Income and Expenses

Interest income decreased by $422,000 to $1.9 million in 2003 compared to 2002, and increased by $228,000 to $2.3 million in 2002 compared to 2001, primarily due to a preferred return of $375,000 earned in 2002 on an equity investment.

Other income increased by $348,000 to $791,000 in 2003 compared to 2002, primarily due to an increase in water billing administration fees and water meter installation fees of $386,000. Other income decreased by $434,000 to $442,000 in 2002 compared to 2001 as a result of a $325,000 credit enhancement fee received in 2001 in connection with a community that was being developed by a third-party developer.

13

Depreciation and amortization for both continuing and discontinued operations remained stable at $40.3 million in 2003 and $40.2 million in 2002. Depreciation expense for both continuing and discontinued operations increased by $852,000 to $40.2 million in 2002 compared to 2001, primarily due to depreciation expense related to recently developed communities as well as depreciation on the community acquired during 2002.

Depreciation and amortization expense for continuing operations increased by $6.2 million to $30.5 million in 2003 compared to 2002 primarily due to depreciation recorded for recent development communities as well as for the community acquired in May of 2003. Depreciation and amortization expense for continuing operations increased by $928,000 million to $24.2 million in 2002 compared to 2001 primarily due to depreciation on development communities and one acquisition community during that year.

Interest expense for both continuing and discontinued operations decreased by $3.5 million to $31.0 million in 2003 when compared to 2002, primarily due to a $5.9 million decrease in our average indebtedness outstanding and a decrease in our average effective interest rate of 0.38% in 2003. Interest expense for both continuing and discontinued operations decreased by $5.4 million to $34.5 million in 2002 compared to 2001 primarily due to a $20.8 million decrease in our average indebtedness outstanding and a decrease in the average effective interest rate of 0.39%.

Deferred financing cost amortization increased by $924,000 to $2.2 million in 2003 compared to 2002 primarily due to a charge of $827,000 related to unamortized financing costs related to the termination of our prior unsecured credit facility in 2003, with no similar charge in 2002.

General and administrative expenses increased by $1.0 million to $6.9 million in 2003 when compared to 2002 primarily due to an increase of $1.0 million related to performance-based compensation. General and administrative expenses decreased by $1.0 million to $5.9 million in 2002 compared to 2001 primarily due to a 2001 charge of $1.8 million related to an increase in the costs of abandoned pursuit projects and severance costs associated with senior staff reductions in our organization during that year, offset by an increase in professional fees of $449,000 related to the increased cost of doing business as a public company and an increase in non-cash compensation of $304,000. As a percentage of total revenues, general and administrative expenses were 4.2% in 2003, 3.4% in 2002 and 3.6% in 2001.

Property management expenses for both owned and third-party communities increased by $1.0 million to $5.9 million in 2003 when compared to 2002 primarily due to a decrease in development activity at the Operating Partnership, causing a reduction of $583,000 of the capitalization of costs related to Summit Management Company (the “Management Company”) employee performance of development activities as well as an increase in legal and accounting professional fees of $141,000. Property management expenses for both owned and third-party communities decreased by $712,000 in 2002 when compared to 2001 primarily due to a reduction in personnel expenses of $769,000 resulting from staff reductions at the Management Company and Summit Apartment Builders, Inc. (the “Construction Company”).

The $18.8 million gain on disposition of discontinued operations in 2003 resulted from the disposition of seven communities. The seven communities sold were the former Summit Fairways, Summit Turtle Rock, Summit Camino Real, Summit Buena Vista, Summit Arboretum, Summit Las Palmas and Summit San Raphael.

The $73,000 gain on sale of real estate assets in continuing operations resulted from the sale of a parcel of land which was located at one of our existing communities. The impairment loss on discontinued operations of $759,000 was incurred upon the disposition of the former Summit Belcourt, located in Dallas, Texas.

The communities disposed of in 2003 were part of our plan to dispose of assets that no longer meet our growth objectives or to make desired changes in the number of apartment homes in each of our markets. The sale of the communities in Texas completed our previously announced intention to exit Texas.

The $78.7 million gain on sale of assets in 2002 resulted from the disposition of eight communities. The $34.4 million gain on sale of assets in 2001 resulted from the disposition of one parcel of land and nine communities.

14

Liquidity and Capital Resources

Liquidity

Net cash provided by operating activities decreased to $62.8 million for the year ended December 31, 2003 from $73.3 million for the year ended December 31, 2002, primarily due to a $2.2 million decrease in income from continuing operations before gain on sale of real estate assets, loss from early extinguishment of debt and impairment loss on technology investments, and a decrease of $7.2 million in cash used for accounts payable and accrued expenses.

Net cash used in investing activities increased to $28.9 million for the year ended December 31, 2003 from $8.1 million for the year ended December 31, 2002. The increase in cash used in investing activities is due to an increase of $137.3 million in cash used for the acquisition of real estate assets in 2003 when compared to 2002 offset by an increase of $110.1 million in proceeds from the sale of real estate assets and an increase of $7.9 million in contributions received from our historic tax credit joint venture partner. Current year cash proceeds from the sale of real estate assets include current year expenditures from qualified like-kind exchange escrows that relate to prior year sales.

Net cash used in financing activities decreased to $33.8 million for the year ended December 31, 2003 from $64.9 million for the year ended December 31, 2002. The decrease in cash used in financing activities during 2003 is primarily due to an increase in proceeds received from the issuance of mortgage debt of $137.0 million and an increase in the proceeds received from the issuance of stock of $100.2 million, all offset by an increase in cash used to redeem preferred units of $85.0 million, an increase in the amount of cash used for net repayments of the credit facility of $75.0 million and an increase in the amount of cash used to repay mortgages of $44.0 million.

As of January 1, 2003, we had $62.9 million of cash and cash equivalents (including restricted proceeds placed with a qualified intermediary in accordance with income tax rules and regulations) and $81.0 million available under our prior unsecured credit facility. After considering the transactions listed below and our cash provided by operating activities of $62.8 million during the year, as of December 31, 2003, we had $2.7 million of cash and cash equivalents and $70.0 million available under our secured credit facility. During the year ended December 31, 2003, we generated cash proceeds from various transactions, including:

·   We sold eight communities and one parcel of land for an aggregate sales price of $215.2 million, generating net cash proceeds of $189.7 million;

·   Issued $144.0 million in fixed-rate mortgages secured by four communities; and

·   Issued 4.3 million shares of our common stock for net proceeds of $97.3 million.

The proceeds were used primarily to:

·   Acquire two apartment communities for an aggregate purchase price of $158.8 million;

·   Construct development communities of $92.5 million;

·   Redeem all 3.4 million Series B Cumulative Redeemable Perpetual Preferred Units of $85.0 million;

·   Repay two public unsecured notes in the aggregate amount of $47.0 million which matured during the year;

·   Repay $26.8 million of mortgages associated with communities which were sold during the year;

·   Repay $25.0 million under our credit facility;

·   Make investments of $21.4 million in a consolidated joint venture which is developing a community;

·   Repurchase $15.2 million of common stock under our common stock repurchase program; and

·   Fund capital expenditures and other corporate additions and tenant improvements of $9.0 million.

15

Our outstanding indebtedness (excluding fair value adjustments of hedged debt instruments of $4.0 million) as of December 31, 2003 totaled $722.2 million. This amount includes $332.7 million in fixed rate conventional mortgages, $10.3 million of variable rate tax-exempt bonds, $220.0 million of unsecured notes, $6.9 million of variable rate mortgages, $33.3 million under a construction loan and $119.0 million under our secured credit facility. See the table in the section entitled “Market Risk” on page 19 of this report for a summary of the aggregate annual maturities of our debt as of December 31, 2003.

We expect that our primary uses of cash in 2004 will be to fund development spending (refer to the section entitled “Development Activity” on page 13 of this report), to fund debt maturities (refer to the “Schedule of Debt” on page 18 of this report), acquisition opportunities and the possible redemption of the Series C Cumulative Redeemable Perpetual Preferred Units (see the section entitled “Preferred Units” on page 17 of this report). Other uses of cash in 2004 will be to fund principal amortization of debt, to fund capital expenditures relating to maintaining our existing communities and to fund dividend and distribution payments.

We expect that the primary source of funds for these uses, in addition to our cash provided by operating activities, will be the proceeds from disposition of communities as we continue our capital recycling strategy of selling older communities and using those proceeds to fund development and/or acquisition investment opportunities. We also may issue fixed-rate mortgage debt or issue common or preferred equity. In addition, we have adequate borrowing capacity under our credit facility.

Credit Facilities

On July 28, 2003, we obtained a secured credit facility with a total current commitment of $200.0 million and current availability of $189.0 million. We have the ability to increase this commitment and availability pursuant to the terms of the credit agreement. The secured credit facility replaced our $225.0 million unsecured credit facility and provides funds for new development, acquisitions and general working capital purposes. This facility is secured by nine of our communities (Summit Fair Oaks, Summit Governor’s Village, Summit Grandview, Summit Lake, Summit Peachtree City, Summit Portofino, Summit Sedgebrook, Summit Shiloh and Summit Sweetwater) and matures in July 2008. As described in the credit agreement, loans under the credit facility are limited subject to debt service coverage and loan to valu e ratios and bear interest at the Reference Bill Index Rate (defined as the money market yield for the Reference Bills as established by the most recent Reference Bill auction conducted by Freddie Mac) plus 58 to 91 basis points depending on the level of debt service coverage. The outstanding balance of the credit facility was $119.0 million and the interest rate was 1.62% as of December 31, 2003.

On July 28, 2003, we obtained an unsecured letter of credit facility, which matures in July 2008 and has a total commitment of $20.0 million. The letters of credit issued under this facility will serve as collateral for performance on contracts and as credit guarantees to banks and insurers. As of December 31, 2003, there were $9.2 million of letters of credit outstanding under this facility.

Direct Placement of Common Stock

On December 29, 2003, Summit sold 2.0 million shares of its common stock to certain investment advisory clients of RREEF America L.L.C. at a price of $23.61 per share. Net proceeds from the sale of $47.2 million were used for general corporate purposes, including acquisition and development opportunities and repayment of outstanding indebtedness. On September 25, 2003, Summit sold 2.3 million shares of its common stock to certain advisory clients of Cohen & Steers Capital Management, Inc. at a price of $21.81 per share. The net proceeds from the sale of $50.1 million were used for general corporate purposes, including the redemption of preferred units, acquisition and development opportunities and debt reduction. These sales were made pursuant to Summit’s existing shelf registration statement previously filed with, and declared effective by, the SEC.

16

Preferred Units

On September 18, 2003, we redeemed all 3.4 million preferred units of limited partnership interest designated as 8.95% Series B Cumulative Redeemable Perpetual Preferred Units for cash in the amount of $25.20 per unit plus all unpaid distributions through the redemption date. These preferred units were redeemable for cash, or at Summit’s option, shares of Summit’s 8.95% Series B Cumulative Redeemable Perpetual Preferred Stock, or a combination of cash and shares of Summit’s 8.95% Series B Cumulative Redeemable Perpetual Preferred Stock. Holders of the Series B preferred units had the right to exchange these preferred units for shares of Summit’s Series B preferred stock on a one-for-one basis, subject to adjustment: (a) on or after April 29, 2009, (b) if full quarterly distributions were not made for six quarters, or (c) upon the occurrence of specified events related to our treatment or the treatment of the preferred units for federal income tax purposes.As a result of the redemption, the excess of the redemption amount over the carrying amount of the units, which totals approximately $3.0 million in the aggregate, has reduced income available to common unitholders for the year ended December 31, 2003. This is consistent with the SEC's staff announcement on July 31, 2003 that provided clarification to Emerging Issues Task Force ("EITF") Topic D-42, "The Effect on the Calculation of Earnings per Share for the Redemption or Induced Conversion of Preferred Stock." Distributions on the Series B preferred units were cumulative from the date of original issuance and were payable quarterly at the rate of 8.95% per year of the $25.00 original capital contribution. We made distributions to the holders of the Series B preferred units in the aggregate amount of $5.5 million during the year ended December 31, 2003 and $7.6 million during each of the years ended December 31, 2002 and 2001.

As of December 31, 2003, we had outstanding 2.2 million preferred units of limited partnership interest designated as 8.75% Series C Cumulative Redeemable Perpetual Preferred Units. The preferred units are redeemable on or after September 3, 2004 for cash at a redemption price equal to the holder’s capital account. The holder of the Series C preferred units has the right to exchange these preferred units for shares of Summit’s Series C preferred stock on a one-for-one basis, subject to adjustment: (a) on or after September 3, 2009, (b) if full quarterly distributions are not made for six quarters, (c) upon the occurrence of specified events related to our treatment or the treatment of the preferred units for federal income tax purposes, or (d) if the holdings in the Operating Partnership of the Series C unitholder exceed 18% of the total profits of or capital interest in the Operating Partnership for a taxable year. Distributions on the Series C preferred units are cumulative from the date of original issuance and are payable quarterly at the rate of 8.75% per year of the $25.00 original capital contribution. We made distributions to the holder of the Series C preferred units in the aggregate amount of $4.8 million during each of the years ended December 31, 2003, 2002 and 2001.

Impairment Loss on Technology Investments

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

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Schedule of Debt

The following table sets forth information regarding our debt financing (excluding fair value adjustments of hedged debt instruments) as of December 31, 2003 and 2002 (dollars in thousands):

	Interest					Principal Outstanding
	Rate as of			Maturity		December 31,
	December 31, 2003			Date (1)		2003		2002
Fixed Rate Debt
Mortgage Loan (2)		6.76	%		10/15/2008	$	132,989	$	133,909
Mortgage Loan (3)		8.00	%		9/1/2005		7,909		8,040
Mortgage Notes:
Summit Fair Lakes		7.82	%		7/1/2010		48,340		48,340
Summit Doral		5.17	%		4/1/2013		30,962		-
Summit Aventura		5.09	%		7/1/2013		39,480		-
Summit Overlook		4.70	%		8/1/2013		22,889		-
Summit Russett		4.17	%		12/31/2009		50,000		-
Mortgage notes repaid in 2003							-		77,982
Total Mortgage Debt							332,569		268,271
Unsecured Notes:
Medium Term Notes		8.04	%		11/17/2005		25,000		25,000
Medium Term Notes		7.04	%		5/9/2006		25,000		25,000
Medium Term Notes		7.59	%		3/16/2009		25,000		25,000
Medium Term Notes		8.50	%		7/19/2010		10,000		10,000
Medium Term Notes		7.70	%		5/9/2011		35,000		35,000
Notes		6.95	%		8/15/2004		50,000		50,000
Notes		7.20	%		8/15/2007		50,000		50,000
Unsecured notes repaid in 2003							-		47,000
Total Unsecured Notes							220,000		267,000
Total Fixed Rate Debt							552,569		535,271
Variable Rate Debt
Credit facility (4)		Ref Bill + 58 bps			7/27/2008		119,000		144,000
Construction loan - asset held for sale (5)		LIBOR + 207.5 bps			5/1/2004		33,345		-
Summit Foxcroft mortgage note		LIBOR + 170 bps			7/1/2005		6,900		6,900
Tax-Exempt Bonds:
Summit Belmont - asset held for sale (6)		2.75	%		4/1/2007		10,345		10,565
Total Variable Rate Debt							169,590		161,465
Total Outstanding Indebtedness						$	722,159	$	696,736

(1) All of the secured debt can be prepaid at any time. Prepayment of all secured debt is generally subject to penalty or premium.

(2) Mortgage loan secured by the following communities:

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

(3) Mortgage loan secured by:

Summit Simsbury Summit Touchstone

(4) On July 28, 2003, we obtained a secured credit facility which replaced our prior unsecured credit facility. The credit facility is secured by the following communities:

Summit Fair Oaks	Summit Lake	Summit Sedgebrook
Summit Governor’s Village	Summit Peachtree City	Summit Shiloh
Summit Grandview	Summit Portofino	Summit Sweetwater

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(5) Concurrent with the purchase of our joint venture partner’s equity interest in SZF, LLC in July 2003, we consolidated the construction loan related to the community that is being developed by such joint venture. We repaid the construction loan on January 30, 2004. The construction loan had a total commitment of $45.0 million, bore interest at LIBOR plus 207.5 basis points and was to mature in June 2004.

(6) The tax-exempt bond bears interest at various rates set by a remarketing agent at the demand note index plus 50 basis points, set weekly, or the lowest percentage of prime which allows the resale at a price of par. The bond is enhanced by a letter of credit from a financial institution, which will terminate prior to the maturity date of the related bond. In the event the credit enhancement is not renewed or replaced upon termination, the related loan obligation will be accelerated.

The one-month LIBOR rate as of December 31, 2003 was 1.12%.

Our outstanding indebtedness (excluding the construction loan which was repaid on January 30, 2004 and excluding our credit facility which matures in 2008) had an average maturity of 5.5 years as of December 31, 2003. Refer to the table in the section entitled, “Market Risk” below for a summary of the aggregate annual maturities of all outstanding debt as of December 31, 2003.

Market Risk

Our capital structure includes the use of variable rate and fixed rate debt and, therefore, we are exposed to the impact of changes in interest rates. We generally refinance maturing debt instruments at then-existing market interest rates and terms which may be more or less favorable than the interest rates and terms of the maturing debt. While we have historically had limited involvement with derivative financial instruments, we may utilize such instruments in certain situations to hedge interest rate exposure by modifying the interest rate characteristics of related balance sheet instruments and prospective financing transactions. We generally do not utilize derivative financial instruments for trading or speculative purposes.

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

On June 14, 2002, we entered into an interest rate swap with a notional amount of $50.0 million, relating to $50.0 million of 7.20% fixed rate notes issued under our MTN program. Under the interest rate swap agreement, through the maturity date of August 15, 2007, (a) we have agreed to pay to the counterparty the interest on a $50.0 million notional amount at a floating interest rate of three-month LIBOR plus 241.75 basis points, and (b) the counterparty has agreed to pay to us the interest on the same notional amount at the fixed rate of the underlying debt obligation. The floating rate as of December 31, 2003 was 3.5975%. The fair value of the interest rate swap was an asset of $4.0 million as of December 31, 2003. The swap has been designated as a fair value hedge of the underlying fixed rate debt obligation and has been recorded in “Other assets” in the accompanying balance sheets. We assume no ineffectiveness as the interest rate swap meets the short-cut method conditions required under SFAS No. 133 for fair value hedges of debt instruments. Accordingly, no gains or losses were recorded in income relative to our underlying debt and interest rate swap.

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The following table provides information about our interest rate swap and other financial instruments that are sensitive to changes in interest rates and should be read in conjunction with the accompanying consolidated financial statements and related notes. For debt, the table presents principal cash flows and related weighted average interest rates in effect as of December 31, 2003 by expected maturity dates. The weighted average interest rates presented in this table for the tax-exempt variable rate debt are inclusive of credit enhancement fees. For the interest rate swap, the table presents the notional amount and related weighted average pay rate by year of maturity (dollars in thousands):

	Expected Year of Maturity
	2004			2005			2006			2007			2008			Thereafter			2003 Total			2002 Total
Fixed Rate Debt:
Conventional fixed rate	$	1,479		$	9,691		$	2,026		$	2,180		$	135,261		$	181,932		$	332,569		$	268,271
Average interest rate		5.30	%		7.36	%		4.77	%		4.78	%		6.73	%		5.54	%		6.07	%		6.99	%
Unsecured fixed rate		50,000			25,000			25,000			50,000			—			70,000			220,000			267,000
Average interest rate		6.95	%		8.04	%		7.04	%		7.20	%		—			7.78	%		7.40	%		7.35	%
Total fixed rate debt		51,479			34,691			27,026			52,180			135,261			251,932			552,569			535,271
Average interest rate		6.90	%		7.85	%		6.87	%		7.10	%		6.73	%		6.16	%		6.60	%		7.17	%
Variable Rate Debt:
Tax-exempt variable rate		220			220			220			9,685			—			—			10,345			10,565
Average interest rate		2.75	%		2.75	%		2.75	%		2.75	%		—			—			2.75	%		3.05	%
Variable rate mortgage note		—			6,900			—			—			—			—			6,900			6,900
Average interest rate		—			2.86	%		—			—			—			—			2.86	%		3.08	%
Variable rate construction loan		33,345			—			—			—			—			—			33,345			—
Average interest rate		3.23	%		—			—			—			—			—			3.23	%		—
Variable rate credit facility		—			—			—			—			119,000			—			119,000			144,000
Average interest rate		—			—			—			—			1.62	%		—			1.62	%		2.69	%
Total variable rate debt		33,565			7,120			220			9,685			119,000			—			169,590			161,465
Average interest rate		3.23	%		2.86	%		2.75	%		2.75	%		1.62	%		—			2.06	%		2.73	%
Total debt	$	85,044		$	41,811		$	27,246		$	61,865		$	254,261		$	251,932		$	722,159		$	696,736
Average interest rate		5.45	%		7.00	%		6.84	%		6.42	%		6.73	%		6.16	%		5.53	%		6.14	%
Interest Rate Swap:
Pay variable/receive fixed										$	50,000								$	50,000		$	50,000
Average pay rate											3-month									3-month			3-month
											LIBOR									LIBOR			LIBOR
											+2.4175	%								+2.4175	%		+2.4175	%
Receive rate											7.20	%								7.20	%		7.20	%

We estimate that the fair value of the variable rate debt approximates carrying value based upon our effective borrowing rates for issuance of debt with similar terms and remaining maturities. Fixed rate mortgage debt and fixed rate unsecured notes with a carrying value of $552.6 million had an estimated aggregate fair value of $596.4 million as of December 31, 2003. Rates currently available to us for similar terms and maturities were used to estimate the fair value of this debt. The fair market value of long-term fixed rate debt is subject to changes in interest rates.

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Contractual Obligations

A summary of our future contractual obligations related to long-term debt, non-cancelable operating leases and other obligationsas of December 31, 2003 is as follows (in thousands):

	Payments Due by Period
	2004		2005-2006		2007-2008		Thereafter		Total
Long-term debt principal payments and maturities (1)	$	85,044	$	69,057	$	316,126	$	251,932	$	722,159
Interest payments on long-term debt (2)		36,799		64,597		53,512		34,108		189,016
Standby letters of credit (3)		7,799		1,402		-		-		9,201
Development expenditures (4)		36,497		40,344		-		-		76,841
Operating lease commitments (5)		199		314		295		212		1,020
Employment agreement payments (6)		400		800		800		1,200		3,200
Total	$	166,738	$	176,514	$	370,733	$	287,452	$	1,001,437

(1)	The amount for 2004 includes the variable rate construction loan which was repaid on January 30, 2004.
(2)	For variable rate debt, the interest obligations were computed by applying the average interest rate for the three months ended December 31, 2003 to the average balance outstanding for the three months ended December 31, 2003 for all periods presented.
(3)	As collateral for performance on contracts and as credit guarantees to banks and insurers, we were contingently liable under standby letters of credit in the aggregate amount of $9.2 million as of December 31, 2003.
(4)	The estimated cost to complete the five development projects currently under construction was $76.8 million as of December 31, 2003. Anticipated construction completion dates of the projects range from the first quarter of 2004 to the fourth quarter of 2006.
(5)	Includes operating leases related to rental of office space.
(6)	Summit has employment agreements with two of its former executive officers, both of whom resigned from such executive positions, but who remain as employees and have agreed to provide various services to Summit from time to time through December 31, 2011. Each employment agreement requires that Summit pay to the former officers a base salary aggregating up to $2.1 million over the period from July 1, 2001 to December 31, 2011 (beginning with calendar year 2002, up to $200,000 on an annual basis). Each employment agreement also requires that Summit provide participation in its life insurance plan, office space, information systems support and administrative support for the remainder of each employee’s life, and participation in its health and dental insurance plans until the last to die of the employee or su ch employee’s spouse. Either party can terminate the employment agreements, effective 20 business days after written notice is given. The full base salary amount due shall be payable through 2011 whether or not the agreements are terminated earlier in accordance with their terms.

We carry terrorism insurance on all communities. The terrorism insurance is subject to coverage limitations, which we believe are commercially reasonable. No assurance can be given that material losses in excess of insurance proceeds will not occur in the future, or that insurance coverage for acts of terrorism will be available in the future.

We are subject to a variety of claims and suits that arise in the ordinary course of business, including actions with respect to contracts and cases in which claims have been brought against us by current and former employees, residents, independent contractors and vendors. While the resolution of these matters cannot be predicted with certainty, we believe that the final outcome of such matters will not be material to our financial position or results of operations. If we determine that a loss is probable to occur, the estimated amount of that loss would be recorded in the financial statements.

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We are a party to a number of agreements and contracts pursuant to which we may be obligated to indemnify the other party with respect to certain matters. Typically, these obligations arise in contracts into which we enter, under which we customarily agree to hold the other party harmless against certain losses arising from breaches of representations, warranties and/or covenants related to such matters as, among others, title to assets, specified environmental matters, qualification to do business, due organization, non-compliance with restrictive covenants, laws, rules and regulations, maintenance of insurance and payment of tax bills due and owing. Additionally, with respect to retail and office lease agreements we enter into as landlord, we may also indemnify the other party against damages caused by our willfu l misconduct or negligence associated with the operation and management of the building. Although no assurances can be made, we believe that if we were to incur a loss in any of these matters, such loss should not have a material effect on our financial condition or results of operations. Historically, payments made with regard to these agreements have not had a material effect on our financial condition or results of operations.

Funds from Operations

Funds from Operations ("FFO"), as defined by the National Association of Real Estate Investment Trusts ("NAREIT"), represents net income (loss) excluding gains from sales of property and extraordinary items, plus depreciation of real estate assets, and after adjustments for unconsolidated partnerships and joint ventures, all determined on a consistent basis in accordance with accounting principles generally accepted in the United States of America ("GAAP"). Our methodology for computing FFO may differ from the methodologies utilized by other real estate companies and, accordingly, may not be comparable to other real estate companies. FFO should not be considered as an alternative to net income (determined in accordance with GAAP) as an indication of financial performance, nor is it indicative of funds available to fund our cash needs, including our ability to make dividend or distribution payments. We believe that FFO is helpful to investors as a measure of performance of a Real Estate Investment Trust (“REIT”) because it recognizes that historical cost accounting for real estate assets under GAAP assumes that the value of such real estate diminishes over time. Real estate values have historically risen or fallen with market conditions and, therefore, many investors have considered presentation of operating results for a real estate company using historical cost accounting to be insufficient by itself. Thus, NAREIT created FFO as a supplemental measure of a REIT’s operating performance. By excluding such non-operating items as depreciation and gains on sales of real estate assets, among others, we believe that an investor can more easily compare the operating performance of our real estate assets between periods or compareour operating performance to our peers. Funds from Operations are calculated as follows (dollars in thousands):

	2003			2002			2001
Income available to common unitholders	$	18,387		$	103,511		$	64,896
Gain on sale of real estate assets		(18,893	)		(78,738	)		(34,435	)
Gain on sale of real estate assets - joint ventures		-			(4,955	)		(271	)
Depreciation:
Real estate assets		39,225			39,281			38,746
Real estate joint venture		763			1,119			1,231
Funds from Operations	$	39,482		$	60,218		$	70,167
Net income per common unit - diluted	$	1.01		$	3.73		$	2.49
Funds from operations per common unit - diluted	$	1.26		$	1.94		$	2.26
Recurring capital expenditures (1)	$	6,376		$	4,530		$	4,889
Non-recurring capital expenditures (2)	$	1,516		$	1,088		$	3,943
Weighted average common units outstanding -- basic		31,118,929			30,936,881			30,795,910
Weighted average common units outstanding -- diluted		31,268,003			31,107,404			31,106,137

(1) Recurring capital expenditures consist primarily of exterior painting, new appliances, vinyl flooring, blinds, tile, wallpaper and carpet.

(2) Non-recurring capital expenditures consist primarily of major renovations and upgrades of apartment homes.

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Americans with Disabilities Act and Similar Laws

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

Inflation

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

Forward-Looking Statements

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. You can identify forward-looking statements by the use of the words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “may,” “assume” and other similar expressions which predict or indicate future events and trends and which do not relate solely to historical matters. In addition, information concerning the following are forward-looking statements:

·   the future operating performance of stabilized communities;

·   national economic conditions and economic conditions in our markets;

·   the proposed development, acquisition or disposition of communities;

·   anticipated construction commencement, completion, lease-up and stabilization dates; and

·   estimated development costs.

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

·   economic conditions generally and the real estate market specifically, including changes in occupancy rates, market rents and rental rate concessions and the failure of national and local economic conditions to rebound in a timely manner;

·   changes in job growth, household formation and population growth in our markets;

·   uncertainties associated with our development activities, including the failure to obtain zoning and other approvals, actual costs exceeding our budgets, construction material defects and increases in construction costs;

·   the failure of investments to yield expected results;

·   the failure to sell communities on favorable terms, in a timely manner or at all;

·   the failure to locate favorable investment opportunities in our markets;

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

·   potential environmental liabilities and related property damages, costs of investigation and remediation, and liability to third parties;

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

·   supply and demand for apartment communities in our current market areas;

·   availability and cost of financing and access to cost-effective capital;

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·   the inability to refinance existing indebtedness or to refinance existing indebtedness on favorable terms;

·   changes in interest rates;

·   changes in our debt ratings which could increase our cost of capital or impede our ability to raise debt financing;

·   legislative and regulatory changes, including changes to laws governing the taxation of REITs;

·   changes in GAAP, or policies and guidelines applicable to REITs; and

·   those factors discussed below and in the sections entitled “Results of Operations for the Years EndedDecember 31, 2003, 2002 and 2001” on page 6 of this report, “Operating Performance of Our Same-Property Communities” beginning on page 8 of this report, “Operating Performance of Our Communities in Lease-Up Communities” beginning on page 10 of this report, “Factors Affecting the Performance of Our Stabilized Development Communities” beginning on page 13 of this report and “Contractual Obligations” beginning on page 21 of this report.

You should consider these risks and uncertainties in evaluating forward-looking statements and you should not place undue reliance on forward-looking statements. These forward-looking statements represent our estimates and assumptions only as of the date of this report. We do not undertake to update these forward-looking statements. You should read this annual report on Form 10-K in its entirety in conjunction with our audited financial statements for the year ended December 31, 2003 and the related notes included in this report.

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Item 8. Financial Statements and Supplementary Data

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Unitholders of

Summit Properties Partnership, L.P.

We have audited the accompanying consolidated balance sheets of Summit Properties Partnership, L.P. (the “Operating Partnership”) as of December 31, 2003 and 2002, and the related consolidated statements of earnings, partners’ equity, and cash flows for each of the three years in the period ended December 31, 2003. Our audit for the year ended December 31, 2003 also included the financial statement schedule III listed in the Index to Financial Statements at Item 15. These financial statements and financial statement schedule are the responsibility of the Operating Partnership’s management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. 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 Operating Partnership as of December 31, 2003 and 2002, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2003 in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

As discussed in Note 3 to the consolidated financial statements, the Operating Partnership adopted Statement of Financial Accounting Standards No. 144,Accounting for the Impairment or Disposal of Long-Lived Assets, on January 1, 2002, the fair value recognition provisions of Statement of Financial Accounting Standards No. 123,Accounting for Stock-Based Compensation, on January 1, 2003, and Financial Accounting Standards Board Interpret ation No. 46,Consolidation of Variable Interest Entities, as amended by Financial Accounting Standards Board Interpretation No. 46 (revised December 2003) on July 1, 2003.

/S/ DELOITTE & TOUCHE LLP

Charlotte, North Carolina

March 4, 2004, except for Notes 3, 7, 8, 21 and financial statement schedule III, as to which the date is November 12, 2004

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SUMMIT PROPERTIES PARTNERSHIP, L.P.

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

	December 31,
	2003			2002
ASSETS
Real estate assets:
Land and land improvements	$	175,107		$	123,410
Buildings and improvements		843,127			674,119
Furniture, fixtures and equipment		65,083			55,148
Total operating real estate assets		1,083,317			852,677
Less: accumulated depreciation		(119,448	)		(89,738	)
Net operating real estate assets		963,869			762,939
Net real estate assets - assets held for sale		209,919			344,074
Construction in progress		145,382			139,263
Net real estate assets		1,319,170			1,246,276
Cash and cash equivalents		2,687			2,584
Restricted cash		1,198			62,775
Investments in real estate joint ventures		3,096			8,194
Deferred financing costs, net of accumulated amortization
of $7,108 in 2003 and $7,173 in 2002		7,694			6,008
Other assets		17,827			24,262
Other assets - assets held for sale		210			158
Total assets	$	1,351,882		$	1,350,257
LIABILITIES AND PARTNERS’ EQUITY
Liabilities:
Notes payable	$	682,463		$	613,909
Accrued interest payable		4,558			4,936
Accounts payable and accrued expenses		39,935			45,485
Distributions payable		11,724			10,456
Security deposits and prepaid rents		2,587			1,638
Notes payable and other liabilities - assets held for sale		44,293			89,422
Total liabilities		785,560			765,846
Partners’ common and preferred equity:
Series B preferred units - zero and 3,400,000 issued and outstanding		-			82,713
Series C preferred units - 2,200,000 issued and outstanding		53,547			53,547
Partnership common units issued and outstanding: 34,739,025 and 30,980,526
General partner - issued and outstanding: 347,390 and 309,805		5,857			5,213
Limited partners - issued and outstanding: 34,391,635 and 30,670,721		506,918			442,938
Total partners’ equity		566,322			584,411
Total liabilities and partners’ equity	$	1,351,882		$	1,350,257

See notes to consolidated financial statements.

26

SUMMIT PROPERTIES PARTNERSHIP, L.P.

CONSOLIDATED STATEMENTS OF EARNINGS

(Dollars in thousands, except per unit amounts)

	Year Ended December 31,
	2003			2002			2001
Revenues:
Rental	$	104,973		$	93,034		$	102,691
Other property income		7,854			6,754			7,883
Management fees - third party communities		618			787			913
Total revenues		113,445			100,575			111,487
Expenses:
Property operating and maintenance (exclusive of items listed below)		24,659			22,183			22,574
Real estate taxes and insurance		13,343			9,550			9,714
Depreciation and amortization		30,462			24,230			23,302
General and administrative		6,941			5,937			6,940
Property management - owned communities		5,271			4,297			4,931
Property management - third party communities		641			525			603
Total expenses		81,317			66,722			68,064
Operating income		32,128			33,853			43,423
Interest income		1,852			2,274			2,046
Other income		791			442			876
Interest expense		(26,914	)		(27,425	)		(30,809	)
Deferred financing cost amortization		(2,198	)		(1,274	)		(1,400	)
Income from continuing operations before loss on unconsolidated real
estate joint ventures, gain on sale of real estate assets and impairment
loss on technology investments		5,659			7,870			14,136
Loss on unconsolidated real estate joint ventures		(326	)		(49	)		(171	)
Gain on sale of real estate assets		73			13,831			34,435
Gain on sale of real estate assets - joint ventures		-			4,955			271
Impairment loss on technology investments		-			-			(1,217	)
Income from continuing operations		5,406			26,607			47,454
Income from discontinued operations		14,711			24,728			29,862
Gain on disposition of discontinued operations		18,820			64,907			-
Impairment loss on discontinued operations		(759	)		-			-
Loss from early extinguishment of debt associated with asset sales		(6,522	)		(311	)		-
Income from discontinued operations		26,250			89,324			29,862
Net income		31,656			115,931			77,316
Distributions to Series B preferred unitholders		(5,494	)		(7,608	)		(7,608	)
Excess of redemption amount over carrying amount of preferred units		(2,963	)		-			-
Distributions to Series C preferred unitholders		(4,812	)		(4,812	)		(4,812	)
Income available to common unitholders		18,387			103,511			64,896
Income available to common unitholders allocated to general partners		(184	)		(1,035	)		(649	)
Income available to common unitholders allocated to limited partners	$	18,203		$	102,476		$	64,247

27

SUMMIT PROPERTIES PARTNERSHIP, L.P.

CONSOLIDATED STATEMENTS OF EARNINGS - Continued

(Dollars in thousands, except per unit amounts)

	Year Ended December 31,
	2003			2002			2001
Per unit data - basic:
Income from continuing operations	$	0.17		$	0.86		$	1.54
Income from discontinued operations		0.84			2.89			0.97
Net income - basic		1.02			3.75			2.51
Distributions to Series B preferred unitholders		(0.18	)		(0.25	)		(0.25	)
Excess of redemption amount over carrying amount of preferred units		(0.10	)		-			-
Distributions to Series C preferred unitholders		(0.15	)		(0.16	)		(0.16	)
Income available to common unitholders	$	0.59		$	3.35		$	2.11
Per unit data - diluted:
Income from continuing operations	$	0.17		$	0.86		$	1.53
Income from discontinued operations		0.84			2.87			0.96
Net income - diluted		1.01			3.73			2.49
Distributions to Series B preferred unitholders		(0.18	)		(0.24	)		(0.24	)
Excess of redemption amount over carrying amount of preferred units		(0.09	)		-			-
Distributions to Series C preferred unitholders		(0.15	)		(0.15	)		(0.15	)
Income available to common unitholders	$	0.59		$	3.33		$	2.09
Distributions declared per common unit	$	1.35		$	1.76		$	1.85
Weighted average common units - basic		31,118,929			30,936,881			30,795,910
Weighted average common units - diluted		31,268,003			31,107,404			31,106,137

See notes to consolidated financial statements.

28

SUMMIT PROPERTIES PARTNERSHIP, L.P.

CONSOLIDATED STATEMENTS OF PARTNERS’ EQUITY

(Dollars in thousands)

	Series B			Series C
	Preferrred			Preferrred		General			Limited
	Units			Units		Partner			Partners			Total
Balance, December 31, 2000	$	82,713		$	53,547	$	4,680		$	390,188		$	531,128
Distributions to common unitholders		-			-		(569	)		(56,324	)		(56,893	)
Contributions from Summit Properties Inc. related to:
Proceeds from dividend and stock purchase plans		-			-		77			7,596			7,673
Exercise of stock options		-			-		10			1,004			1,014
Repurchase of common stock		-			-		(2	)		(195	)		(197	)
Issuance of restricted stock grants		-			-		(3	)		(262	)		(265	)
Amortization of restricted stock grants		-			-		8			740			748
Issuance of contingent stock grants		-			-		(5	)		(458	)		(463	)
Amortization of contingent stock grants		-			-		6			624			630
Issuance of employee notes receivable		-			-		(39	)		(3,901	)		(3,940	)
Repayments of employee notes receivable		-			-		32			3,149			3,181
Issuance of common units - purchase of communities		-			-		19			1,881			1,900
Redemption of common units - sale of communities		-			-		(176	)		(17,389	)		(17,565	)
Distributions to preferred unitholders		-			-		(124	)		(12,296	)		(12,420	)
Net income		-			-		773			76,543			77,316
Balance, December 31, 2001		82,713			53,547		4,687			390,900			531,847
Distributions to common unitholders		-			-		(546	)		(54,050	)		(54,596	)
Contributions from Summit Properties Inc. related to:
Proceeds from dividend and stock purchase plans		-			-		91			9,048			9,139
Exercise of stock options		-			-		19			1,837			1,856
Repurchase of common stock		-			-		(27	)		(2,639	)		(2,666	)
Netdown of restricted stock grants		-			-		(6	)		(613	)		(619	)
Issuance of restricted stock grants							-			22			22
Amortization of restricted stock grants		-			-		10			968			978
Issuance of employee notes receivable		-			-		(78	)		(7,735	)		(7,813	)
Repayments of employee notes receivable		-			-		28			2,727			2,755
Distributions to preferred unitholders		-			-		(124	)		(12,296	)		(12,420	)
Net income		-			-		1,159			114,769			115,928
Balance, December 31, 2002		82,713			53,547		5,213			442,938			584,411
Distributions to common unitholders		-			-		(433	)		(42,854	)		(43,287	)
Redemption of common units		-			-		(20	)		(1,956	)		(1,976	)
Contributions from Summit Properties Inc. related to:
Issuance of common stock		-			-		1,022			101,161			102,183
Exercise of stock options		-			-		19			1,899			1,918
Repurchase of common stock		-			-		(152	)		(15,041	)		(15,193	)
Netdown of restricted stock grants		-			-		(5	)		(455	)		(460	)
Issuance of unrestricted stock grants		-			-		7			653			660
Amortization of restricted and unrestricted stock grants		-			-		1			131			132
Dividend reinvestment plan		-			-		-			99			99
Interest earned on employee notes receivable		-			-		(10	)		(974	)		(984	)
Repayments of employee notes receivable		-			-		31			3,114			3,145
Redemption of Series B preferred units		(85,000	)		-		-			-			(85,000	)
Unamortized costs at redemption of Series B
preferred units		2,287			-		-			-			2,287
Distributions to preferred unitholders		-			-		(133	)		(13,136	)		(13,269	)
Net income		-			-		317			31,339			31,656
Balance, December 31, 2003	$	-		$	53,547	$	5,857		$	506,918		$	566,322

See notes to consolidated financial statements.

29

SUMMIT PROPERTIES PARTNERSHIP, L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

	Year Ended December 31,
	2003			2002			2001
Cash flows from operating activities:
Net income	$	31,656		$	115,931		$	77,316
Adjustments to reconcile net income to net cash
provided by operating activities:
Excess of redemption amount over carrying amount of preferred units		2,287			-			-
Loss on unconsolidated real estate joint ventures		326			49			171
Gain on sale of real estate assets - continuing operations		(73	)		(13,831	)		(34,435	)
Gain on sale of real estate assets - discontinued operations		(18,820	)		(64,907	)		-
Gain on sale of real estate assets - joint ventures		-			(4,955	)		(271	)
Impairment loss on discontinued operations		759			-			-
Impairment loss on technology investments		-			-			1,217
Loss on early extinguishment of debt associated with asset sales		6,522			311			-
Depreciation and amortization		42,667			42,514			42,155
Amortization of deferred settlement on interest rate swap		(965	)		(545	)		-
Issuance of unrestricted stock grants		683			-			-
Decrease (increase) in restricted cash		1,290			(814	)		(3,087	)
Decrease (increase) in other assets		2,410			1,473			(996	)
Decrease in accrued interest payable		(378	)		(2,097	)		(696	)
(Decrease) increase in accounts payable and accrued expenses		(6,170	)		1,019			(2,947	)
Increase (decrease) in security deposits and prepaid rents		632			(830	)		(535	)
Net cash provided by operating activities		62,826			73,318			77,892
Cash flows from investing activities:
Construction of real estate assets and land acquisitions		(92,547	)		(112,839	)		(117,080	)
Acquisition of real estate assets		(158,788	)		(17,866	)		-
Proceeds from sale of real estate assets		249,982			139,920			147,980
Proceeds from sale of real estate assets - joint ventures		-			11,202			-
Capitalized interest		(10,334	)		(10,360	)		(11,080	)
Investment in real estate joint venture		(21,415	)		(9,075	)		(4,285	)
Distribution from real estate joint venture		-			540			-
Contributions from historic tax credit venture partner		8,486			600			-
Recurring capital expenditures		(6,376	)		(4,530	)		(4,889	)
Non-recurring capital expenditures		(1,516	)		(1,088	)		(3,943	)
Corporate and other asset additions and office tenant improvements		(1,094	)		(4,647	)		(977	)
Decrease in notes receivable		4,659			68			119
Net cash (used in) provided by investing activities		(28,943	)		(8,075	)		5,845
Cash flows from financing activities:
Net (repayments of) borrowings on line of credit		(25,000	)		50,000			(47,500	)
Proceeds from issuance of mortgage debt		143,940			6,900			-
Repayments of mortgage debt		(55,950	)		(11,912	)		(5,436	)
Borrowings on construction loan		12,548			-			-
Borrowings on unsecured notes		-			-			60,000
Repayments of unsecured notes		(47,000	)		(41,000	)		(30,000	)
Repayments of tax-exempt bonds		(220	)		(340	)		(660	)
Loss on early extinguishment of debt associated with asset sales		(6,522	)		(311	)		-
Payment of deferred financing costs		(4,018	)		(549	)		(1,212	)
Redemption of Series B preferred units		(85,000	)		-			-
Distributions to Series B preferred unitholders		(5,494	)		(7,608	)		(7,608	)
Excess of redemption amount over carrying amount of preferred units		(2,963	)		-			-
Distributions to Series C preferred unitholders		(4,812	)		(4,812	)		(4,812	)
Proceeds from termination of interest rate swap		-			1,510			-
Net proceeds from dividend reinvestment and stock purchase plans		99			9,139			7,673
Dividends and distributions to unitholders		(42,021	)		(59,455	)		(56,252	)
Contributions from Summit Properties related to:
Proceeds from issuance of common stock		100,207			-			-
Proceeds from exercise of stock options		1,918			1,856			1,014
Netdown of restricted and unrestricted stock awards		(460	)		(597	)		(728	)
Repurchase of common stock		(15,193	)		(2,666	)		(197	)
Increase in employee notes receivable		-			(7,813	)		(3,940	)
Repayments of employee notes receivable		2,161			2,755			3,181
Net cash used in financing activities		(33,780	)		(64,903	)		(86,477	)

30

SUMMIT PROPERTIES PARTNERSHIP, L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS - Continued

(Dollars in thousands)

	Year Ended December 31,
	2003		2002		2001
Net increase (decrease) in cash and cash equivalents		103		340		(2,740	)
Cash and cash equivalents, beginning of year		2,584		2,244		4,984
Cash and cash equivalents, end of year	$	2,687	$	2,584	$	2,244
Supplemental disclosure of cash flow information:
Cash paid for interest, net of capitalized interest	$	31,408	$	36,589	$	40,550

See notes to consolidated financial statements.

31

SUMMIT PROPERTIES PARTNERSHIP, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Unless the context otherwise requires, all references to “we,” “our” or “us” in this report refer collectively to Summit Properties Partnership, L.P., a Delaware limited partnership (the “Operating Partnership”) and its subsidiaries. All references to “Summit” in this report refer to Summit Properties Inc., a Maryland corporation and the sole general partner of the Operating Partnership.

1.Organization and Formation

We were formed on January 14, 1994 to conduct the business of developing and operating multifamily apartment communities for Summit. On February 8, 1994, Summit completed an initial public offering of 10 million shares of common stock, par value $0.01 per share. In connection with the initial public offering, we consummated a business combination involving the partnerships which owned 27 communities and the affiliated entities which provided development, construction, management and leasing services to each of the communities prior to the initial public offering. A portion of the proceeds from the initial public offering was used by Summit to acquire an economic and voting interest in the Operating Partnership, which was formed to succeed to substantially all of the interests of the property partnerships in the communities and the operations of the Summit entities. Summit became our sole general partner and majority owner upon completion of the initial public offering. Summit is a self-administered and self-managed equity real estate investment trust (“REIT”).

Summit conducts all of its business through the Operating Partnership and its subsidiaries. As of December 31, 2003, Summit held 90.2% of our outstanding partnership interests, consisting of a 1.0% general partner interest and an 89.2% limited partner interest. Each common unit may be redeemed by the holder for cash equal to the fair value of a share of Summit’s common stock or, at our option, one share of common stock (subject to adjustment). We presently determine on a case-by-case basis whether we will cause Summit 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, Summit’s percentage ownership interest in the Operating Partnership will increase. Similarly, when Summit acquires a share of com mon stock under its common stock repurchase program or otherwise, it simultaneously disposes of one of our common units. In addition, whenever Summit issues shares of common stock for cash, Summit will contribute any resulting net proceeds to us and we will issue an equivalent number of common units to Summit.

2. Basis of Presentation

All significant intercompany accounts and transactions have been eliminated in consolidation. We own 1% of the voting stock and 99% of the non-voting stock of Summit Management Company (the “Management Company”). The remaining 99% of voting stock and 1% of non-voting stock are held by one of the Co-Chairmen of Summit’s Board of Directors. As a result of this stock ownership, we have a 99% economic interest and the Co-Chairman has a 1% economic interest in the Management Company. The Management Company is consolidated into our financial statements in accordance with Financial Accounting Standards Board (“FASB”) Interpretation No. 46, “Consolidation of Variable Interest Entities” (“FIN46”) (see Note 3).

3. Summary ofSignificantAccounting Policies

Real Estate Assets and Depreciation - We record our real estate assets at cost less accumulated depreciation and, if necessary, adjust carrying value in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,” by reviewing whether the sum of the estimated future net cash flows (undiscounted and without interest charges) from an asset to be held and used is less than the book value of the asset. Assets to be disposed of are recorded at the lower of carrying amount or fair value less costs to sell. No impairment existed as of December 31, 2003.

32

Expenditures directly related to the acquisition, development and improvement of real estate assets are capitalized at cost as land, buildings and improvements or furniture, fixtures and equipment. Improvements are categorized as either non-recurring or recurring capitalized expenditures. Non-recurring capitalized expenditures primarily consist of major renovations and upgrades of apartment homes. Recurring capitalized expenditures consist primarily of exterior painting, new appliances, vinyl flooring, blinds, tile, wallpaper and carpet. All of these expenditures are capitalized and depreciated over the estimated useful lives of the assets (land improvements - 15 years; buildings — 40 years; building improvements — 5 to 15 years; furniture, fixtures and equipment — 5 to 7 years).

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

Interest costs incurred during the construction period are capitalized and depreciated over the lives of the constructed assets. Interest capitalized was $10.3 million in 2003, $10.4 million in 2002 and $11.1 million in 2001.

We capitalize the cost of our development department to the projects currently under construction at a rate of 3.0% of such construction costs. Such costs are then depreciated over the lives of the constructed assets upon their completion. Such costs capitalized were $2.4 million in 2003, $3.4 million in 2002 and $4.9 million in 2001.

Asset Impairment Evaluation -We record our real estate assets to be held and used at cost, less accumulated depreciation, unless considered impaired. If events or circumstances indicate that the carrying amount of a community may be impaired, we will assess its recoverability by estimating the undiscounted future cash flows of the community. If our recoverability assessment results in an indication of impairment for communities to be held and used, or if a community is considered to be held for sale, then we determine the community’s fair value. For communities classifi ed as held for sale, the fair value represents the estimated sales price less cost to sell based on current or pending offers, when available, or based on estimates received from the broker. For communities to be held and used, fair value is determined by applying a capitalization rate to the community’s operating income. Applying capitalization rates to a community’s property operating income is a widely used measure of fair value and for determining the amount at which a community could be sold between willing parties. Determining appropriate capitalization rates requires significant judgment and is generally based on the prevailing rate for the submarket within the market in which the community is located. Capitalization rates can fluctuate due to changes in the general economy or within specific submarkets. If the actual capitalization rate for a community varies significantly from management’s estimate, the impairment evaluation may be significantly affected. For assets to be held and use d, if the carrying amount exceeds the undiscounted future cash flows, we would recognize an impairment loss to the extent the carrying amount exceeds the estimated fair value of the community and such loss would be included in income fromcontinuing operations. Assets to be disposed of are recorded at the lower of carrying amount or fair value less cost to sell. An impairment loss will be recognized for any write-down to fair value less cost to sell and reported in the discontinued operations section of the consolidated statements of earnings.

Allocation of the Cost of Communities Acquired - The cost of communities acquired is allocated to tangible and intangible assets and liabilities based on their relative fair values. We estimate the fair value of the acquired tangible assets, which generally consist of land, buildings and furniture and fixtures, and intangible assets and liabilities, which generally represent the value of above-market and below-market leases, in-place leases and tenant relationships of the community acquired and allocate the purchase price on a pro-rata basis to each component.

The fair value of tangible assets acquired is determined by valuing the community as if it were vacant, applying methods similar to those used by independent appraisers of income-producing property. The resulting value is then allocated to land, buildings and furniture, fixtures and equipment based on management’s determination of the relative fair value of these assets. The assumptions used in the allocation of fair values to assets acquired are based on management’s best estimates at the time of evaluation.

33

Fair value is assigned to above-market and below-market leases based on the difference between (a) the contractual amounts to be paid by the resident or retail tenant based on the existing lease and (b) management’s estimate of current market lease rates for the corresponding in-place leases, over the remaining terms of the in-place leases. Capitalized above-market lease amounts are included in “Other assets” in our consolidated balance sheets and amortized against rental revenue over the remaining terms of the respective leases. Capitalized below-market lease amounts are included in “Accounts payable and accrued expenses” in our consolidated balance sheets and are amortized as an increase to rental revenue over the remaining terms of the respective leases.

The fair value of acquired in-place leases is included in “Other assets” in our consolidated balance sheets and is amortized as a leasing cost over the remaining non-cancelable periods of the respective leases. If acquired in-place leases with terms of greater than twelve months are terminated early, all unamortized amounts relating to those leases would be written-off.

The fair value of tenant relationships represents the probability that existing tenants will renew their leases and, thus, reduces the amount of lost rental revenue from vacant apartments. Tenant relationships are included in “Other assets” in our consolidated balance sheets and are amortized as a leasing cost over the estimated lives of the tenant relationships.

Rental Revenue Recognition - We lease our residential properties under operating leases with terms of generally one year or less. Rental revenue is recognized on the accrual method of accounting as earned, which is not materially different from revenue recognition on a straight-line basis. Our allowance for uncollectible rent was approximately $75,000 at December 31, 2003 and is presented in “Other assets” in our consolidated balance sheets.

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

2004	$	648
2005		667
2006		556
2007		382
2008		98
Thereafter		179
	$	2,530

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

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

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

Advertising Costs - We expense advertising costs as incurred. Advertising expense was $2.8 million in both 2003 and 2002 and $2.4 million in 2001.

Investments - We consolidate investments, including joint ventures in which we have control, generally those in which we have a direct voting interest of more than 50%. We record investments in which we exercise significant influence under the equity method in accordance with Accounting Principals Board (“APB”) Opinion No. 18, “The Equity Method of Accounting for Common Stock,” and AICPA Statement of Position 78-9, “Accounting for Investments in Real Estate Ventures.”

34

Per Unit Data — Basic earnings per unit are computed based upon the weighted average number of units outstanding during the respective period. The difference between “basic” and “diluted” weighted average units is the dilutive effect of Summit’s stock-based compensation outstanding. The number of units added to weighted average units outstanding for the diluted calculation was 149,074 in 2003, 170,523 in 2002 and 310,227 in 2001. Dilution caused by these options had no effect on income available to common unitholders per unit in 2003 and decreased income available to common unitholders per unit by $0.02 in 2002 and 2001.

Stock-Based Compensation - Summit has a Stock Option and Incentive Plan (the “Option and Incentive Plan”) and an Employee Stock Purchase Plan (“ESPP”), which are described more fully in Note 12. Through December 31, 2002, we applied APB No. 25, “Accounting for Stock Issued to Employees” and related interpretations in accounting for Summit’s stock options and ESPP. No compensation cost was recognized for stock options granted under the Option and Incentive Plan or shares issued under the ESPP during the years ended December 31, 2002 and 2001 in accordance with APB No. 25. The ESPP was suspended effective July 2, 2002. Effective January 1, 2003, we adopted the fair value recognition provisions of SFAS No. 123, “Accounting for Stock-Based Compensation,” prospectively to all stock options granted, modified, or settled after January 1, 2003 as allowed by SFAS No. 148, “Accounting for Stock-Based Compensation - Transition and Disclosure.”

For the periods that we applied APB No. 25 and related interpretations, the following table reflects the effect on net income and earnings per unit had the fair value based method been applied to all options granted and ESPP shares issued in each year (in thousands, except per unit amounts):

	2003			2002			2001
Income available to common unitholders, as reported	$	18,387		$	103,511		$	64,896
Add: Stock-based compensation included in reportednet income		1,187			1,306			1,056
Deduct: Total stock-based compensation determinedunder fair value based method for all awards		(1,610	)		(2,758	)		(1,645	)
Pro forma income available to common unitholders	$	17,964		$	102,059		$	64,307
Income available to common unitholders per unit as reported - basic	$	0.59		$	3.35		$	2.11
Income available to common unitholders per unit as reported - diluted		0.59			3.33			2.09
Pro forma income available to common unitholders per unit - basic	$	0.57		$	3.30		$	2.09
Pro forma income available to common unitholders per unit - diluted		0.57			3.28			2.07

Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Recently Adopted and Issued Accounting Pronouncements - In November 2002, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 45,“Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others.”  This Interpretation elaborates on the disclosures to be made by a guarantor in its interim and annual financial statements about its obligations under certain guarantees that it has issued.  It also clarifies that a guarantor is required to recognize, at the inception of a guarantee entered into after January 1, 2003, a liability for the fair value of the obligation undertaken in issuing certain guarantees.  The disclosure requirements, initial recognition and initial measurement provisions of this Interpretation are currently effective and did not affect our financial position or results of operations for the year ended December 31, 2003.

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In December 2002, the FASB issued SFAS No. 148, “Accounting for Stock-Based Compensation - Transition and Disclosure.”  This statement amends SFAS No. 123, “Accounting for Stock-Based Compensation,” to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation.  In addition, this statement amends the disclosure requirements of SFAS No. 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. Effective January 1, 2003, we adopted the fair value recognition provisions of SFAS No. 123 prospectively to all stock options granted, modified, or settled after January 1, 2003, as allowed by SFAS No. 148. The adoption of SFAS No. 148 did not have a material effect on our financial position or results of operations.

In January 2003, the FASB issued FASB Interpretation No. 46, “Consolidation of Variable Interest Entities” (“FIN 46”). This interpretation was amended by FASB Interpretation No. 46 (revised December 2003), “Consolidation of Variable Interest Entities” (“FIN46R”). FIN 46 establishes consolidation criteria for entities for which “control” is not easily discernable under Accounting Research Bulletin 51, “Consolidated Financial Statements,” which is based on the premise that holders of the equity of an entity control the entity by virtue of voting rights. FIN 46 provides guidance for identifying the party with a controlling financial interest resulting from arrangements or financial interests rather than from voting interests. We adopted the provisions of F IN 46 on July 1, 2003 which resulted in the consolidation of Summit Management Company (the “Management Company”) and its wholly-owned subsidiary, Summit Apartment Builders, Inc. (the “Construction Company”), which provide construction activities for us and provide management and leasing activities for us as well as for communities owned by third parties and certain of our directors, for all periods presented. Prior to the adoption of FIN 46, the Management Company was accounted for under the equity method of accounting. Neither the adoption of FIN 46, nor the provisions of FIN46R, affected our results of operations for any of the years presented.

In April 2003, the FASB issued SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities.” SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” and SFAS No. 138, “Accounting for Certain Derivative Instruments and Certain Hedging Activities,” establish accounting and reporting standards for derivative instruments, including derivatives embedded in other contracts and for hedging activities. SFAS No. 149 amends SFAS No. 133 for certain decisions made by the FASB as part of the Derivatives Implementation Group process. This Statement also contains amendments relating to FASB Concepts Statement No. 7, “Using Cash Flow Information and Present Value in Accounting Measurements,” SFAS No. 65, “ Accounting for Certain Mortgage Banking Activities,” SFAS No. 91, “Accounting for Nonrefundable Fees and Costs Associated with Originating or Acquiring Loans and Initial Direct Costs of Leases,” SFAS No. 95, “Statement of Cash Flows,” and SFAS No. 126, “Exemption from Certain Required Disclosures about Financial Instruments for Certain Nonpublic Entities.” We adopted SFAS No. 149 on July 1, 2003 and its adoption did not have an effect on our financial position or results of operations.

In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity.” SFAS No. 150 establishes standards for classifying and measuring certain financial instruments with characteristics of both liabilities and equity and is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. In November 2003, the FASB issued Staff PositionNo. 150-3, “Effective Date, Disclosures, and Transition for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling In terests under FASB Statement No. 150,” which postponed the implementation of certain provisions of SFAS No. 150 indefinitely. We adopted SFAS No. 150 on July 1, 2003 and its adoption did not have an effect on our financial position or results of operations.

Reclassifications — Certain reclassifications have been made to the 2002 and 2001 financial statements to conform to the 2003 presentation.

We have also reclassified the historical financial statements for discontinued operations that have resulted from dispositions of real estate assets during the period from January 1, 2004 to September 30, 2004 as well as the classification of communities as held for sale in accordance with Statement of Financial Accounting Standard No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.”

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4. RealEstate Joint Ventures

We own a 25% equity interest in a joint venture named Station Hill, LLC (“Station Hill”), in which we and Hollow Creek, LLC, a subsidiary of a major financial services company, are members. We are entitled to 25% of the joint venture’s cash flow based on our equity interest. If certain benchmarks are achieved in the future, we would be entitled to a preferred return in excess of 25% of the cash flow. The operating agreement of the joint venture provides that we will be entitled to 25% of the net proceeds upon liquidation of Station Hill, although our interest in the residual value of the joint venture could increase above or decrease below 25%. Our interest in the residual value of the joint venture could decrease below 25% only if we receive more than 25% of cash flow at any time prior to liquida tion. Any such decrease would be limited to the extent of cash flow in excess of 25%. Station Hill currently owns four communities and is accounted for on the equity method of accounting and, therefore, our 25% equity interest is presented in “Loss on unconsolidated real estate joint ventures” in our consolidated statements of earnings.

The following are condensed balance sheets as of December 31, 2003 and 2002 and condensed statements of operations for the years ended December 31, 2003, 2002 and 2001 for Station Hill (in thousands).The balance sheets and statements of operations set forth below reflect the financial position and operations of Station Hill in its entirety, not just our interest in the joint venture.

	Balance Sheets
	2003		2002
Real estate assets, net	$	69,795	$	72,255
Cash and cash equivalents		690		370
Other assets		312		373
Total assets	$	70,797	$	72,998
Mortgages payable	$	57,870	$	58,731
Other liabilities		544		580
Partners' capital		12,383		13,687
Total liabilities and partners' capital	$	70,797	$	72,998

	Statements if Operations
	2003			2002			2001
Revenues	$	9,475		$	9,927		$	11,829
Expenses:
Property operating		3,787			3,757			4,260
Depreciation and amortization		3,088			2,965			3,071
Interest		3,904			3,960			4,338
Total expenses		10,779			10,682			11,669
Net (loss) income before gain on sale of real estate assets		(1,304	)		(755	)		160
Gain on sale of real estate assets		-			-			1,082
Net (loss) income	$	(1,304	)	$	(755	)	$	1,242

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Prior to July 3, 2003, we owned a 29.78% interest in a joint venture named SZF, LLC, which owns substantially all of the interests in Coral Way, LLC, a limited liability company that is developing, through a third-party contractor, an apartment community in Miami, Florida. On July 3, 2003, we purchased our joint venture partner’s 70.22% interest in SZF, LLC for $10.0 million in cash. The community will consist of 323 apartment homes and approximately 17,500 square feet of office/retail space. The limited liability company also owns an adjacent piece of land. The construction costs are being funded through the equity that the joint venture contributed to the limited liability company and by a loan to that company from an unrelated third party. As a result of construction costs exceeding the construction loan amount, SZF, LLC has agreed to advance to Coral Way, LLC the amount required to fund such costs in excess of the construction loan. Certain affiliates of the developer of the apartment community have guaranteed the reimbursement of those costs to Coral Way, LLC and SZF, LLC. These advances accrue a preferential return at the rate of eleven percent (11%) per year to be paid from the distributions from the joint venture. The preferred return will not be recognized until the community has earnings or gains to fund such a return. As of December 31, 2003, we had advanced $12.7 million to SZF, LLC which, in turn, advanced such amounts to Coral Way, LLC. Prior to July 3, 2003, this joint venture was accounted for under the equity method of accounting and its balance sheet and income statement information was not material to our consolidated financial statements taken as a whole. As a result of the purchase of our joint venture partners’ interest in SZF, LLC, the assets, liabilities and operating activities of this joint venture are now consolidated into our financial statements.

On August 12, 2003, we received notice of a suit filed by certain affiliates of Coral Way, LLC against us, Summit and the Management Company (see Part I, Item 3. “Legal Proceedings” included in this report). One of the remedies demanded in the suit is termination of the guarantee agreements to which reference is made above. We believe that the allegations made in this suit are not supported by the facts and we intend to vigorously defend against this suit. If we are successful, the guarantee agreements will remain in place and the guarantors will remain obligated to reimburse Coral Way, LLC and SZF, LLC for the costs in excess of the construction loan.

In 2002, we entered into two separate joint ventures with a major financial services institution (the “investor member”) to redevelop Summit Roosevelt and Summit Grand Parc, both located in Washington, D.C., in a manner to permit the use of federal rehabilitation income tax credits. The investor member contributed approximately $6.5 million for Summit Roosevelt and approximately $2.6 million for Summit Grand Parc in equity to fund a portion of the total estimated costs for the respective communities and will receive a preferred return on these capital investments and an annual asset management fee with respect to each community. The investor member’s interests in the joint ventures are subject to put/call rights during the sixth and seventh years after the respective communities are placed in serv ice. These joint ventures are consolidated into our financial statements.

We formerly owned a 50% interest in a joint venture that developed and operated an apartment community located in Atlanta, known as The Heights at Cheshire Bridge. This joint venture was accounted for under the equity method of accounting and its operating results are presented in “Loss on unconsolidated real estate joint ventures” in our consolidated statements of earnings. On September 27, 2002, the joint venture sold The Heights at Cheshire Bridge to an unrelated third party and the joint venture was dissolved. Upon dissolution, we recognized a gain of $5.0 million on the sale of the joint venture’s assets.

5. Property Management andRelated PartyTransactions

In conjunction with our formation, construction and operating activities were transferred to the Management Company and the Construction Company.

Third party apartment homes under management were 700 in 2003, 1,105 in 2002 and 1,004 in 2001. The decrease from 2002 to 2003 is due to our purchase of Summit Brickell (405 apartment homes) during 2003. Summit Brickell was a fee-managed property prior to our acquisition of such community. Property management fees from third parties were $618,000 in 2003, $787,000 in 2002 and $913,000 in 2001.

In addition, the Management Company provides management services to apartment communities held by partnerships in which certain of our directors are general partners. The Management Company received management fees of $275,000 in 2003, $252,000 in 2002 and $253,000 in 2001 for the performance of such services.

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6. Notes Payable

Notes payable consist of the following (in thousands):

			Interest
			Rate as of			Principal Outstanding
	Maturity		December 31,			December 31,
	Date		2003			2003		2002
Fixed rate debt:
Mortgage loan		10/15/2008		6.76	%	$	132,989	$	133,909
Mortgage loan		9/1/2005		8.00	%		7,909		8,040
Mortgage notes		12/31/2009 to 8/1/2013		4.17% to 7.82	%		191,671		48,340
Mortgage notes repaid in 2003							-		77,982
Total mortgage debt							332,569		268,271
Unsecured debt:
Medium-term notes		11/17/2005		8.04	%		25,000		25,000
Medium-term notes		5/9/2006		7.04	%		25,000		25,000
Medium-term notes		3/16/2009		7.59	%		25,000		25,000
Medium-term notes		7/19/2010		8.50	%		10,000		10,000
Medium-term notes		5/9/2011		7.70	%		35,000		35,000
Notes		8/15/2004		6.95	%		50,000		50,000
Notes		8/15/2007		7.20	%		50,000		50,000
Unsecured notes repaid in 2003							-		47,000
Total unsecured debt							220,000		267,000
Total fixed rate debt							552,569		535,271
Variable rate debt
Credit facility		7/27/2008		Ref Bill + 58 bps			119,000		144,000
Construction loan - asset held for sale		6/1/2004		LIBOR + 207.5 bps			33,345		-
Mortgage note		7/1/2005		LIBOR + 170 bps			6,900		6,900
Tax-exempt bond - asset held for sale		4/1/2007		2.75	%		10,345		10,565
Total variable rate debt							169,590		161,465
Total outstanding indebtedness before
hedge adjustments							722,159		696,736
Hedge adjustments							3,993		5,720
Total notes payable						$	726,152	$	702,456

The one-month London Interbank Offered Rate (LIBOR) as of December 31, 2003 was 1.12%.

Fixed Rate Mortgage Loans — The 6.76% mortgage loan requires monthly principal and interest payments on a 20-year, 8-month amortization schedule with a balloon payment due at maturity in October 2008. The 8.00% mortgage loan requires monthly principal and interest payments on a 30-year amortization schedule with a balloon payment due at maturity in September 2005.

Fixed Rate Mortgage Notes — The fixed rate mortgage notes bear interest at fixed rates ranging from 4.17% to 7.82% and require either monthly interest payments only or monthly interest and principal payments over the lives of the notes which have maturities that range from the year 2009 to 2013. The weighted average interest rate and debt maturity as of December 31, 2003 for these mortgage notes were 5.5% and 8.8 years.

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Medium-Term Notes — On April 20, 2000, we commenced a new program for the sale of up to $250.0 million aggregate principal amount of medium-term notes (“MTNs”), due nine months or more from the date of issuance. We had notes with an aggregate principal amount of $95.0 million outstanding in connection with this MTN program as of December 31, 2003.

On May 29, 1998, we established a program for the sale of up to $95.0 million aggregate principal amount of MTNs due nine months or more from the date of issuance. We had MTNs with an aggregate principal amount of $25.0 million outstanding in connection with this MTN program as of December 31, 2003. As a result of the commencement of the $250.0 million MTN program, we cannot issue any additional notes under the $95.0 million MTN program.

The MTNs require that we comply with certain affirmative, negative and financial covenants. We were in compliance with these covenants as of December 31, 2003.

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

Credit Facilities — On July 28, 2003, we obtained a secured credit facility with a total current commitment of $200.0 million and current availability of $189.0 million. We have the ability to increase this commitment and availability pursuant to the terms of the credit agreement. The secured credit facility replaced our then-existing $225.0 million unsecured credit facility and provides funds for new development, acquisitions and general working capital purposes. This facility is secured by nine of our communities (Summit Fair Oaks, Summit Governor’s Village, Summit Grandview, Summit Lake, Summit Peachtree City, Summit Portofino, Summit Sedgebrook, Summit Shiloh and Summit Sweetwater) a nd matures in July 2008. As described in the credit agreement, loans under the credit facility are limited subject to debt service coverage and loan to value ratios and bear interest at the Reference Bill Index Rate (defined as the money market yield for the Reference Bills as established by the most recent Reference Bill auction conducted by Freddie Mac) plus 58 to 91 basis points depending on the level of debt service coverage. The outstanding balance of the credit facility was $119.0 million and the interest rate was 1.62% as of December 31, 2003.

The credit facilities had an average interest rate of 1.99% in 2003, 2.69% in 2002 and 4.99% in 2001 and an average balance outstanding of $136.8 million in 2003, $135.9 million in 2002 and $113.5 million in 2001. In addition, the maximum outstanding principal amount was $185.2 million in 2003, $175.0 million in 2002 and $146.5 million in 2001. As of December 31, 2003, the outstanding balance of the credit facility was $119.0 million, leaving $70.0 million of remaining availability.

On July 28, 2003, we obtained an unsecured letter of credit facility, which matures in July 2008 and has a total commitment of $20.0 million. The letters of credit issued under this facility will serve as collateral for performance on contracts and as credit guarantees to banks and insurers. As of December 31, 2003, there were $9.2 million of letters of credit outstanding under this facility.

Construction Loan - Concurrent with the purchase of our joint venture partner’s equity interest in SZF, LLC in July 2003 (see Note 4), we consolidated the construction loan related to the community that is being developed by such joint venture. We repaid the construction loan on January 30, 2004. The construction loan had a total commitment of $45.0 million, bore interest at LIBOR plus 207.5 basis points and was to mature in June 2004.

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

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Variable Rate Tax-Exempt Bond — The average effective interest rate of the variable rate tax-exempt bond was 2.55% for the year ended December 31, 2003. This bond bears interest at various rates set by a remarketing agent at the demand note index plus 50 basis points, set weekly, or the lowest percentage of prime which allows the resale at a price of par. The bond contains covenants which require that we lease or hold for lease 20% of the apartment homes for moderate-income residents. The bond requires maintenance of a letter of credit or surety bond (credit enhancement) aggregating to $10.6 million as of December 31, 2003. The credit enhancement provides for a principal amortization schedule which approximates a 25-year term during the term of the credit enhancement.

Real estate assets of 27 communities with a net book value of $568.9 million serve as collateral for the various secured debt agreements.

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

			Fixed Rate		Variable		Tax-Exempt				Secured
	Fixed Rate		Unsecured		Rate Mortgage		Variable		Construction		Credit
	Mortgages		Notes		Note		Rate Bonds		Loan		Facility		Total
2004	$	1,479	$	50,000	$	-	$	220	$	33,345	$	-	$	85,044
2005		9,691		25,000		6,900		220		-		-		41,811
2006		2,026		25,000		-		220		-		-		27,246
2007		2,180		50,000		-		9,685		-		-		61,865
2008		135,261		-		-		-		-		119,000		254,261
Thereafter		181,932		70,000		-		-		-		-		251,932
	$	332,569	$	220,000	$	6,900	$	10,345	$	33,345	$	119,000	$	722,159

7. Acquisitions and Dispositions

During the year ended December 31, 2003, we purchased two communities. On December 31, 2003, we purchased Summit Lansdowne, located in Loudon County, Virginia for $99.2 million. Summit Lansdowne contains 690 apartment homes and was approximately 89% leased as of December 31, 2003. The purchase price has been preliminarily allocated based on estimated fair values at the date of acquisition, pending final determination of certain acquired balances. This preliminary allocation resulted in less than 3.0% of the total purchase price being allocated to the community’s intangible assets.

On May 6, 2003, the Operating Partnership purchased certain assets of Brickell Grand, Inc. (“Brickell Grand”), including the community known as Summit Brickell and a note receivable from the developer, for $59.4 million. Summit Brickell is located in Miami, Florida and contains 405 apartment homes and approximately 18,000 square feet of retail space. Summit Brickell’s apartment homes were 75% leased at the date of acquisition. The retail space was 56.6% leased. The purchase price has been preliminarily allocated based on estimated fair values at the date of acquisition, pending final determination of certain acquired balances. This preliminary allocation resulted in less than 2.0% of the total purchase price being allocated to the community’s intangible assets and liabilities.

The developer of Summit Brickell is entitled to receive bonus payments based on the operating performance of the community during any period of six months selected by the developer and ending no later than December 31, 2005. Such bonus payments will be applied to reduce amounts owed from the developer under the note receivable. Any unpaid amounts under the note receivable are due and payable on February 15, 2006.

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At the time of purchase, Summit Brickell was subject to a $4.1 million claim of construction lien filed by the general contractor, Bovis Lend Lease, Inc. (“Bovis”). Bovis sought to enforce this claim of lien against Brickell Grand in a suit filed on October 18, 2002 (see Part I, Item 3. “Legal Proceedings” included in this report). In addition, in mid-2003, two subcontractors of Bovis, Commercial Interior Contractors Corp. and RC Aluminum Industries, Inc., also filed separate suits against Brickell Grand and Bovis, among other named parties, to enforce claims of construction lien in the aggregate amount of approximately $300,000, which suits were either dismissed or settled during 2003. As the current owner of Summit Brickell, which property is subject to these claims of lien, we have taken s teps to defend against the claims of liens and related litigation. We have several potential counterclaims to challenge and defend against these suits which we intend to pursue vigorously. We currently have accrued an amount which is our best estimate at this date of what we believe we will be liable to pay based on the related contract as well as change orders. Any amount above or below this estimate would be treated as a cost of or a reduction of the acquisition amount of Summit Brickell.

The following summary of selected unaudited pro forma results of operations presents information as if the purchase of Summit Brickell and Summit Lansdowne 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):

	2003		2002
Total revenues	$	121,569	$	102,076
Income from continuing operations	$	6,375	$	23,052
Net income	$	32,625	$	88,133
Per common unit information:
Income from continuing operations - basic	$	0.20	$	0.75
Income from continuing operations - diluted	$	0.20	$	0.74
Net income -- basic	$	1.05	$	2.85
Net income -- diluted	$	1.04	$	2.83

During the year ended December 31, 2003, we sold eight communities comprising 2,927 apartment homes for an aggregate sales price of $215.2 million, resulting in an aggregate gain on sale of $18.8 million for seven of the communities and an impairment charge of $0.8 million for one of the communities. The aggregate carrying value of real estate assets sold was $192.7 million. Net proceeds from four of the eight communities, equaling $51.5 million, were placed in escrow with a qualified intermediary in accordance with like-kind exchange income tax rules and regulations. These proceeds have been fully reinvested in qualified like-kind property during the required time period. The eight communities sold were the former Summit Fairways, Summit Turtle Rock, Summit Arboretum, Summit Las Palmas, Summit Camino Real, Summit San Raphael, Summit Buena Vista and Summit Belcourt. All of these communities were located outside of our five markets. With the exception of Summit Fairways all of these communities were located in Texas and we have completed our exit of the Texas market.

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

During the year ended December 31, 2002, a joint venture in which we held a 50% interest, sold a community known as The Heights at Cheshire Bridge to an unrelated third party and the joint venture was dissolved (see Note 4).

During 2002, we acquired Summit San Raphael for $17.7 million. We sold Summit San Raphael during 2003 as part of our strategic exit of the Texas market.

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

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

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

In accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” net income and gain on disposition of real estate for communities sold or considered held for sale after December 31, 2001 are reflected in our consolidated statements of earnings as “discontinued operations” for all periods presented. In addition, we have separately reflected the assets and liabilities of these communities as “Net real estate assets - assets held for sale,” “Other assets - assets held for sale” and “Notes payable and other liabilities - assets held for sale” in our consolidated balance sheets for all periods presented.

Below is a summary of discontinued operations for the eight communities sold during 2003 and for seven of the eight communities sold during the year ended December 31, 2002 (in thousands). The eighth community sold during the year ended December 31, 2002 was considered held for sale prior to December 31, 2001 and, therefore, is included in income from continuing operations in accordance with SFAS No. 144.In addition, the summary below includes the eight communities sold during the nine months ended September 30, 2004 (Summit Square, Summit Highland, Summit Belmont, Summit Fair Oaks, Summit Crossing, Summit Norcroft, Summit Glen and Summit Reston) as well as the three communities held for sale as of Septemb er 30, 2004 (Summit Del Ray, Summit Lenox and Summit Brickell View).

	Year Ended December 31,
Property revenues:	2003			2002			2001
Rental	$	44,336		$	68,805		$	75,092
Other		3,162			4,886			5,450
Total property revenues		47,498			73,691			80,542
Property operating expenses		18,747			25,828			25,522
Depreciation		9,907			16,043			16,081
Interest and amortization		4,133			7,092			9,077
Income from discontinued operations before gain on disposition of
discontinued operations, impairment loss on discontinued operations and
loss from early extinguishment of debt associated with asset sales		14,711			24,728			29,862
Net gain on disposition of discontinued operations		18,820			64,907			-
Impairment loss on discontinued operations		(759	)		-			-
Loss from early extinguishment of debt associated with asset sales		(6,522	)		(311	)		-
Total discontinued operations	$	26,250		$	89,324		$	29,862

There were no communities being actively marketed for sale as of December 31, 2003.

Subsequent to December 31, 2003, we began marketing for sale an apartment community, Summit Square, located in Raleigh, North Carolina. The assets of Summit Square were recorded at the lower of cost or fair value less costs to sell, or $12.5 million, as of December 31, 2003. The net income from Summit Square represented 6.0% of our net income for the year ended December 31, 2003.

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8. SEGMENT REPORTING

We develop, acquire, and operate primarily luxury apartment communities. We evaluate the performance of each of our communities on an individual basis. However, due to the similarities of our communities and their similar economic characteristics as exhibited through similar long-term financial performance, our communities have been aggregated into one reportable segment as allowed in accordance with SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information.” In addition to GAAP measures included in our consolidated statements of earnings, our chief operating decision makers evaluate the financial performance of each community using a financial measure entitled property operating income. Each community’s performance is assessed based on growth of or decline of property ope rating income, which is defined as rental and other property revenues less property operating and maintenance expense.

Below is a reconciliation of property operating income to net income:

	Year Ended December 31,
	2003			2002			2001
Total property revenue	$	160,325		$	173,479		$	191,116
Property operating and maintenance expense
(inclusive of real estate taxes and insurance)		56,749			57,561			57,810
Property operating income		103,576			115,918			133,306
Depreciation and amortization expense (continuing
and discontinued operations)		40,370			40,272			39,383
Interest and amortization of deferred financing costs
(continuing and discontinued operations)		33,244			35,792			41,284
Gain on sale of real estate assets (continuing and
discontinued operations)		18,893			78,738			34,435
Impairment loss on discontinued operations		759			-			-
Subtotal - reportable segment		48,096			118,592			87,074
All other		(29,709	)		(15,081	)		(22,178	)
Income available to common unitholders	$	18,387		$	103,511		$	64,896

Below is a reconciliation of total reportable segment revenues and expenses to consolidated revenues and expenses:

	Year Ended December 31,
	2003			2002			2001
Total property revenue	$	160,325		$	173,479		$	191,116
Total property revenue included in discontinued operations		(47,498	)		(73,691	)		(80,542	)
Total property revenue included in continuing operations		112,827			99,788			110,574
Management fees - third party communities		618			787			913
Total revenues	$	113,445		$	100,575		$	111,487
Total property operating expenses	$	56,749		$	57,561		$	57,810
Total property operating expenses included in discontinued operations		(18,747	)		(25,828	)		(25,522	)
Total property operating expenses included in continuing operations		38,002			31,733			32,288
Depreciation and amortization		30,462			24,230			23,302
All other		12,853			10,759			12,474
Total expenses	$	81,317		$	66,722		$	68,064

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9. IncomeTaxes

In accordance with partnership taxation, each partner is responsible for reporting its share of taxable income or loss. Accordingly, no provision has been made for federal, state or local income taxes in the accompanying consolidated financial statements.

SFAS No. 109, “Accounting for Income Taxes,” requires a public enterprise to disclose the aggregate difference in the basis of its net assets for financial and tax reporting purposes. The carrying value reported in our consolidated financial statements exceeded the tax basis by $224.7 million as of December 31, 2003.

The Management Company is a Taxable REIT Subsidiary. The deferred tax assets and net operating loss have a full valuation allowance and are immaterial to the consolidated financial statements.

10. Notes Receivable fromEmployees

Summit’s Board of Directors believes that ownership of its common stock by its executive officers and certain other qualified employees aligns the interests of these officers and employees with the interests of our stockholders. To this end, our Board of Directors approved, and Summit instituted, a loan program. As a result of recent legislation, we are no longer permitted to make loans to Summit’s executive officers and, therefore, new issuances to its executive officers under the loan program have been terminated. Under the terms of the loan program, Summit lent amounts to certain of its executive officers and other qualified employees to (a) finance the purchase of 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 Summit’s common stock, or (c) finance the annual tax liability or other expenses of an executive officer related to the vesting of shares of common stock which constitute a portion of a restricted stock award granted to the executive officer. The relevant officer or employee has executed a promissory note and security agreement related to each loan extended. Each outstanding note bears interest at a rate established on the date of the note, is full recourse to the officers and employees and is collateralized by the shares of Summit’s common stock which are the subject of the loans. If the market price of Summit’s common stock falls materially below the price at which the shares of stock were purchased, the proceeds of the sale of the common stock may not be sufficient to repay the loan. As of December 31, 2003, Summit had employee loans receivable in the amount of $17.4 million which were collateralized by 812,292 shares of Summit’s common stock valued at $19.5 million. Summit had employee loans receivable in the amount of $19.5 million as of December 31, 2002.

11. Commitments and Contingencies

The estimated cost to complete the five development projects currently under construction was $76.8 million as of December 31, 2003. Anticipated construction completion dates of the projects range from the first quarter of 2004 to the fourth quarter of 2006.

As collateral for performance on contracts and as credit guarantees to banks and insurers, we were contingently liable under standby letters of credit in the aggregate amount of $9.2 million as of December 31, 2003.

We carry terrorism insurance on all communities. The terrorism insurance is subject to coverage limitations, which we believe are commercially reasonable. No assurance can be given that material losses in excess of insurance proceeds will not occur in the future, or that insurance coverage for acts of terrorism will be available in the future.

We are subject to a variety of claims and suits that arise in the ordinary course of business, including actions with respect to contracts and cases in which claims have been brought against us by current and former employees, residents, independent contractors and vendors. While the resolution of these matters cannot be predicted with certainty, we believe that the final outcome of such matters will not be material to our financial position or results of operations. If we determine that a loss is probable to occur, the estimated amount of that loss would be recorded in the financial statements.

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We are a party to a number of agreements and contracts pursuant to which we may be obligated to indemnify the other party with respect to certain matters. Typically, these obligations arise in contracts into which we enter, under which we customarily agree to hold the other party harmless against certain losses arising from breaches of representations, warranties and/or covenants related to such matters as, among others, title to assets, specified environmental matters, qualification to do business, due organization, non-compliance with restrictive covenants, laws, rules and regulations, maintenance of insurance and payment of tax bills due and owing. Additionally, with respect to retail and office lease agreements we enter into as landlord, we may also indemnify the other party against damages c aused by our willful misconduct or negligence associated with the operation and management of the building. Although no assurances can be made, we believe that if we were to incur a loss in any of these matters, such loss should not have a material effect on our financial condition or results of operations. Historically, payments made with regard to these agreements have not had a material effect on our financial condition or results of operations.

We rent office space in several locations. Rental expense amounted to $306,000 in 2003, $271,000 in 2002 and $108,000 in 2001. Future minimum rental payments to be made for those operating leases that have initial or remaining non-cancelable lease terms in excess of one year are as follows (in thousands):

Years Ending December 31,
2004	$	199
2005		154
2006		160
2007		161
2008		134
Thereafter		212
Total	$	1,020

Summit has employment agreements with two of its former executive officers, both of whom resigned from such executive positions, but who remain as employees and have agreed to provide various services to Summit from time to time through December 31, 2011. Each employment agreement requires that Summit pay to the former officers a base salary aggregating up to $2.1 million over the period from July 1, 2001 to December 31, 2011 (beginning with calendar year 2002, up to $200,000 on an annual basis). Each employment agreement also requires that Summit provide participation in its life insurance plan, office space, information systems support and administrative support for the remainder of each employee’s life, and participation in its health and dental insurance plans until the last to die of th e employee or such employee’s spouse. Either party can terminate the employment agreements, effective 20 business days after written notice is given. The full base salary amount due shall be payable through 2011 whether or not the agreements are terminated earlier in accordance with their terms.

Summit has employment agreements with all of its executive officers. The employment agreement for one of Summit’s executive officers provides for the payment of severance benefits which generally provides for the payment of the executive officer’s annual base salary for a period ending on the later of July 1, 2004 or the first anniversary of the termination date of such executive officer’s employment. In addition, most of the executive officers 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 that may be payable under applicable employment agreements.

Summit is obligated to redeem each common unit at the request of the holder for cash equal to the fair market value of one share of Summit’s common stock, except that we may elect to cause Summit to acquire each common unit presented for redemption for one share of Summit’s common stock (subject to adjustment).

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12. EmployeeBenefit Plans

Profit Sharing Plan

Summit has a defined contribution plan pursuant to Section 401(k) of the Internal Revenue Code. Employees are eligible to contribute to the plan beginning on the first day of the second calendar quarter after they are employed. Summit’s matching contributions begin on the same date as the employee’s contributions and are equal to one-half of each employee’s contribution up to a maximum of 3% of each employee’s compensation. Summit made aggregate contributions of $335,000 in 2003, $376,000 in 2002 and $329,000 in 2001.

Stock Option Plan

In 1994, Summit established the 1994 Stock Option and Incentive Plan under which 1.0 million shares of Summit’s common stock were reserved for issuance. The incentive plan was amended and restated in 1998 to, among other things, increase the number of shares reserved for issuance from 1.0 million to 3.0 million shares. The plan 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 Summit’s independent directors, which vest on the date of grant. Through December 31, 2002, we applied APB Opinion No. 25 and related interpretations in accounting for Summit’s stock options. Accordingly, no compensa tion cost has been recognized for Summit’s stock options granted during the years ended December 31, 2002 or 2001. Effective January 1, 2003, we adopted the fair value recognition provisions of SFAS No. 123 prospectively to all stock options granted after January 1, 2003 as allowed by SFAS No. 148 (see Note 3).

A summary of changes in Summit’s common stock options for the three years ended December 31, 2003 is as follows:

				Weighted Average
	Options			Exercise Price
Outstanding at December 31, 2000		1,268,721		$	18.24
Granted to employees and directors		270,000			24.51
Exercised		(63,414	)		17.86
Forfeited		(10,700	)		16.50
Outstanding at December 31, 2001		1,464,607			19.43
Granted to employees and directors		745,000			22.01
Exercised		(121,600	)		18.44
Forfeited		(69,075	)		19.15
Outstanding at December 31, 2002		2,018,932			20.45
Granted to employees and directors		35,000			20.45
Exercised		(167,132	)		20.18
Forfeited		(108,000	)		18.20
Outstanding at December 31, 2003		1,778,800		$	20.50

Exercise prices for options outstanding as of December 31, 2003 ranged from $16.50 to $24.56 per option. The weighted average remaining contractual life of those options is 6.8 years.

Options to purchase 1,165,050, 1,003,733 and 848,408 shares of common stock were exercisable as of December 31, 2003, 2002 and 2001, respectively. The weighted average exercise price for the shares exercisable as of December 31, 2003, 2002 and 2001 was $19.60, $19.11 and $18.82, respectively.

The fair value of options granted in 2003 was $1.05 per share and was estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions: dividend yield of 8.25%, expected volatility of 20.2%, risk free interest rate of 2.7% and expected lives of 6.1 years.

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

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

In addition, the stock option and incentive plan provides for the grant of stock, either restricted or unrestricted, to employees.

During the year ended December 31, 2003, Summit issued 33,342 shares of unrestricted stock valued at $660,000 to employees under its 1994 Stock Option and Incentive Plan. These shares were issued pursuant to stock award agreements entered into with certain employees dated February 6, 2002 (the “2002 Stock Grants”) and represent 15% of the total 222,270 shares of common stock that could have been received by these employees under the stock award agreements. The remaining shares will be issued based on the following schedule of dates and percentages: an additional 20% on each of March 1, 2004, 2005 and 2006 and the final 25% on March 1, 2007. As of December 31, 2003, following the issuance of the shares mentioned above and certain employee forfeitures, a total of 173,329 shares remained available for iss uance under the 2002 Stock Grants. The respective employee will receive the applicable number of shares on each date if he or she continues to be employed by Summit on such date, or earlier upon his or her death or disability or upon a “change of control” of Summit. Summit granted 1,068 shares of restricted stock under this plan in 2003. The market value of the restricted stock granted in 2003 was $23,000.

Employees surrendered 12,589 shares of stock during the year ended December 31, 2003 to satisfy the personal income tax liability related to the 2002 Stock Grants and an additional 14,763 shares during the year ended December 31, 2003 to satisfy the personal income tax liability related to shares of restricted stock granted prior to January 1, 2003 which vested during the current period.

Summit granted 1,773 shares of restricted stock under this plan in 2002. The market value of the restricted stock granted in 2002 totaled $35,000 and was recorded as unamortized restricted stock compensation. During 2002, 6,046 shares of restricted stock were surrendered by grantees to satisfy the income tax liability related to the stock grants. Summit granted 26,184 shares of restricted stock under the plan in 2001. The market value of the restricted stock granted in 2001 totaled $647,000. During 2001, there were 12,202 shares of restricted stock forfeited by employees no longer employed by a Summit entity and 14,933 shares of restricted stock surrendered to satisfy the income tax liability of the grantees related to the restricted stock grants. The aggregate market value of these forfeited and surrendered sha res was $503,000 in 2001.

On January 2, 2004, Summit issued 27,982 shares of restricted stock valued at $658,000 pursuant to its 2001 Performance Stock Award Plan. One-half of these shares, valued at $329,000, vested on January 2, 2004. The remaining shares will vest in two equal annual installments on January 2, 2005 and January 2, 2006.

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

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Employee Stock Purchase Plan

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

Total shares issued under the plan were 13,933 in 2002 and 8,695 in 2001. The market value of the shares issued was $341,000 in 2002 and $229,000 in 2001. Through December 31, 2002, we applied APB Opinion No. 25 and related interpretations in accounting for Summit’s stock options and ESPP. No compensation cost has been recognized for Summit’s stock options granted or shares issued under the ESPP during the years ended December 31, 2002 and 2001 in accordance with APB No. 25. Effective January 1, 2003, we adopted the fair value recognition provisions of SFAS No. 123 prospectively to all stock options granted, modified, or settled after January 1, 2003. Refer to the table in Note 3 which reflects the effect on income available to common unitholders and earnings per common unit had the fair value based me thod been applied to all options granted in each year.

13.Preferred Units

On September 18, 2003, we redeemed all 3.4 million preferred units of limited partnership interest designated as 8.95% Series B Cumulative Redeemable Perpetual Preferred Units for cash in the amount of $25.20 per unit plus all unpaid distributions through the redemption date. These preferred units were redeemable for cash, or at Summit’s option, shares of Summit’s 8.95% Series B Cumulative Redeemable Perpetual Preferred Stock, or a combination of cash and shares of Summit’s 8.95% Series B Cumulative Redeemable Perpetual Preferred Stock. Holders of the Series B preferred units had the right to exchange these preferred units for shares of Summit’s Series B preferred stock on a one-for-one basis, subject to adjustment: (a) on or after April 29, 2009, (b) if full quarterly distributions were not made for six quarters, or (c) upon the occurrence of specified events related to our treatment or the treatment of the preferred units for federal income tax purposes.As a result of the redemption, the excess of the redemption amount over the carrying amount of the units, which totals approximately $3.0 million in the aggregate, has reduced income available to common unitholders for the year ended December 31, 2003. This is consistent with the SEC's staff announcement on July 31, 2003 that provided clarification to Emerging Issues Task Force ("EITF") Topic D-42, "The Effect on the Calculation of Earnings per Share for the Redemption or Induced Conversion of Preferred Stock." Distributions on the Series B preferred units were cumulative from the date of original issuance and were payable quarterly at the rate of 8.95% per year of the $25.00 original capital contribution. We made distributions to the holders of the Series B preferred units in the aggregate amount of $5.5 million during the year ended December 31, 2003 and $7.6 million during each of the years ended December 31, 2002 and 2001.

As of December 31, 2003, we had outstanding 2.2 million preferred units of limited partnership interest designated as 8.75% Series C Cumulative Redeemable Perpetual Preferred Units. The preferred units are redeemable on or after September 3, 2004 for cash at a redemption price equal to the holder’s capital account. The holder of the Series C preferred units has the right to exchange these preferred units for shares of Summit’s Series C preferred stock on a one-for-one basis, subject to adjustment: (a) on or after September 3, 2009, (b) if full quarterly distributions are not made for six quarters, (c) upon the occurrence of specified events related to our treatment or the treatment of the preferred units for federal income tax purposes, or (d) if the holdings in the Operating Partnership of the Series C unitholder exceed 18% of the total profits of or capital interest in the Operating Partnership for a taxable year. Distributions on the Series C preferred units are cumulative from the date of original issuance and are payable quarterly at the rate of 8.75% per year of the $25.00 original capital contribution. We made distributions to the holder of the Series C preferred units in the aggregate amount of $4.8 million during each of the years ended December 31, 2003, 2002 and 2001.

14.Derivative Financial Instruments

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

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On June 14, 2002, we entered into an interest rate swap with a notional amount of $50.0 million, relating to $50.0 million of 7.20% fixed rate notes issued under our medium-term note program. Under the interest rate swap agreement, through the maturity date of August 15, 2007, (a) we have agreed to pay to the counterparty the interest on a $50.0 million notional amount at a floating interest rate of three-month LIBOR plus 241.75 basis points, and (b) the counterparty has agreed to pay to us the interest on the same notional amount at the fixed rate of the underlying debt obligation. The floating rate as of December 31, 2003 was 3.5975%. The fair value of the interest rate swap was an asset of approximately $4.0 million as of December 31, 2003. The swap has been designated as a fair value hedge of the underlying fixed rate debt obligation and has been recorded in “Other assets” in our consolidated balance sheets. We assume no ineffectiveness as the interest rate swap meets the short-cut method conditions required under SFAS No. 133 for fair value hedges of debt instruments. Accordingly, no gains or losses were recorded in income relative to our underlying debt and interest rate swap.

15.Common Stock Repurchase Program

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

The following is a summary of stock repurchases under Summit’s common stock repurchase program (dollars in thousands, except per share amounts):

	Number		Value		Average Price
	of Shares		of Shares		of Shares
	Repurchased		Repurchased		Repurchased
Year ended December 31, 2000		279,400	$	5,533	$	19.80
Year ended December 31, 2001		8,800		197		22.39
Year ended December 31, 2002		151,300		2,666		17.62
Year ended December 31, 2003		809,800		15,193		18.76
Total as of December 31, 2003		1,249,300	$	23,589	$	18.88

Summit had $32.4 million remaining for authorized repurchases under the program as of December 31, 2003.

16.Direct placement of common stock

On December 29, 2003, Summit sold 2.0 million shares of its common stock to certain investment advisory clients of RREEF America L.L.C. at a price of $23.61 per share. Net proceeds from the sale of $47.2 million were used for general corporate purposes, including acquisition and development opportunities and repayment of outstanding indebtedness. On September 25, 2003, Summit sold 2.3 million shares of its common stock to certain advisory clients of Cohen & Steers Capital Management, Inc. at a price of $21.81 per share. The net proceeds from the sale of $50.1 million were used for general corporate purposes, including the redemption of preferred units, acquisition and development opportunities and debt reduction. These sales were made pursuant to Summit’s existing shelf registration statement previously filed with, and declared effective by, the SEC.

17.Impairment Loss on technology investments

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

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18.Supplemental Cash Flow Information

Non-cash investing and financing activities for the years ended December 31, 2003, 2002 and 2001 are as follows:

A.	We sold eight communities during the year ended December 31, 2003. The purchaser of one of the communities assumed the related outstanding debt balance associated with such community of $23.7 million.
B.	We sold eight communities during the year ended December 31, 2002. The purchaser of one of the communities assumed the related outstanding debt balance associated with such community of $11.3 million.
C.	We sold nine communities during the year ended December 31, 2001. The respective purchasers of two of the communities assumed the related outstanding debt balances associated with such communities of $16.4 million in the aggregate. The respective purchaser of two of the communities redeemed 741,148 common units valued at $17.6 million as partial consideration in the transaction.
D.	Summit granted 34,410 shares of restricted and unrestricted stock valued at $683,000 during 2003. There were 27,352 shares of restricted and unrestricted stock valued at $460,000 surrendered to satisfy the income tax liability of grantees during 2003. Summit granted 1,773 shares of restricted stock valued at $35,000 during 2002. There were 6,046 shares of restricted stock surrendered to satisfy the income tax liability of grantees during 2002. Summit granted 26,184 shares of restricted stock valued at $647,000 during 2001. There were 12,202 shares of restricted stock forfeited and 14,933 shares of restricted stock surrendered to satisfy the income tax liability of the grantees during 2001. The aggregate value of shares forfeited and surrendered in 2001 was $503,000.
E.	Summit issued 140,581 shares of common stock in exchange for 140,581 common units during the year ended December 31, 2003. The value of these shares of common stock was $2.0 million. Summit issued 13,658 shares of common stock in exchange for 13,658 common units during the year ended December 31, 2002. The value of these shares of common stock was $285,000. Summit issued 150,679 shares of common stock in exchange for 150,679 common units during the year ended December 31, 2001. The value of these shares of common stock was $4.0 million.
F.	We accrued distributions payable of $11.7 million in 2003, $10.5 million as of December 31, 2002 and $14.2 million as of December 31, 2001.
G.	On September 18, 2003, we redeemed all 3.4 million preferred units of limited partnership interest designated as 8.95% Series B Cumulative Redeemable Perpetual Preferred Units for cash in the amount of $25.20 per unit plus all unpaid distributions through the redemption date. We recorded a non-cash charge of $2.3 million related to the excess of the redemption amount over the carrying amount of such preferred units.

19.Fair Value Disclosure of Financial Instruments

The following disclosures of estimated fair value were determined by management using available market information and appropriate valuation methodologies. However, considerable judgment is necessary to interpret market data and develop the related estimates of fair value. Accordingly, the estimates presented are not necessarily indicative of the amounts that could be realized upon disposition of the financial instruments. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. The fair value estimates presented are based on information available to management as of December 31, 2003 and 2002. Although management is not aware of any factors that would significantly affect the estimated fair value amounts, such amounts have not been c omprehensively re-valued for purposes of these financial statements since that date, and current estimates of fair value may differ significantly from the amounts presented.

Cash and cash equivalents, rents receivable, accounts payable, accrued expenses, security deposits, other liabilities, tax-exempt bond indebtedness and our credit facility are carried at amounts which reasonably approximate their fair values as of December 31, 2003 and 2002 due to either the short-term nature or variable interest rates associated with such balances.

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Fixed rate mortgage debt and fixed rate unsecured notes with a carrying value of $552.6 million had an estimated aggregate fair value of $596.4 million as of December 31, 2003. Fixed rate mortgage debt and fixed rate unsecured notes with a carrying value of $535.3 million had an estimated aggregate fair value of $587.1 million as of December 31, 2002. Rates currently available to us for debt with similar terms and maturities were used to estimate the fair value of this debt. The fair market value of long-term fixed rate debt is subject to changes in interest rates. Generally, the fair market value of fixed interest rate debt will increase as interest rates fall and decrease as interest rates rise.

The fair value of the interest rate swap described in Note 14, “Derivative Financial Instruments,” was $4.0 million as of December 31, 2003.

20.Geographic Concentration (Unaudited)

Our 46 completed communities are located in the following markets:

	Number of Apartment Homes		Percent of Total Revenues			Apartment Homes as a % of Portfolio
Market
Washington, D.C.		3,294		25.1	%		23.4	%
Atlanta, Georgia		3,579		23.1	%		25.4	%
Southeast Florida		2,120		18.9	%		15.0	%
Raleigh, North Carolina		2,582		15.3	%		18.3	%
Charlotte, North Carolina		1,901		12.9	%		13.5	%
Philadelphia, Pennsylvania		352		2.8	%		2.5	%
Orlando, Florida		270		1.9	%		1.9	%
		14,098		100.0	%		100.0	%

21.Quarterly Financial Information (Unaudited)

Quarterly financial information for the years 2003 and 2002 is as follows (in thousands, except per unit amounts):

	Year Ended December 31, 2003
	First		Second		Third			Fourth
Revenues	$	25,899	$	27,587	$	29,652		$	30,307
Income from continuing operations before loss on unconsolidated
real estate joint ventures, gain on sale of real estate assets and
impairment loss on technology investments		1,870		1,323		841			1,626
Income from discontinued operations before gain (impairment loss)
on disposition of discontinued operations and loss from early
extinguishment of debt associated with asset sales		4,049		3,532		3,517			3,613
Gain on sale of real estate assets		3,136		3,122		2,119			10,516
Impairment loss on discontinued operations		-		-		-			(759	)
Income (loss) available to common unitholders		5,865		3,287		(1,995	)		11,230
Income (loss) available to common unitholders per
per unit - basic and diluted (1)	$	0.19	$	0.11	$	(0.07	)	$	0.34

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	Year Ended December 31, 2002
	First		Second		Third		Fourth
Revenues	$	25,047	$	25,044	$	24,767	$	25,717
Income from continuing operations before loss on unconsolidated
real estate joint ventures, gain on sale of real estate assets and
impairment loss on technology investments		1,825		2,222		2,235		1,588
Income from discontinued operations before gain
on disposition of discontinued operations and loss from early
extinguishment of debt associated with asset sales		7,242		6,875		5,545		5,066
Gain on sale of real estate assets, including joint ventures		-		9,634		22,323		51,736
Income available to common unitholders		6,029		15,586		26,918		54,978
Income available to common unitholders per unit - basic (1)		0.20		0.50		0.87		1.77
Income available to common unitholders per unit - diluted (1)	$	0.19	$	0.50	$	0.86	$	1.76

(1) The total of the four quarterly amounts for these captions does not equal income available to common unitholders per unit for the year presented. The difference is due to the use of a weighted average to compute the number of units outstanding for each quarter and for the year.

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SCHEDULE III

SUMMIT PROPERTIES PARTNERSHIP, L.P.

REAL ESTATE AND ACCUMULATED DEPRECIATION

December 31, 2003

(Dollars in thousands)

				Initial Costs				Costs		Gross Amount at Which
								Capitalized		Carried at Close of Period
						Buildings		Subsequent				Buildings
	Related					and		to				and				Accumulated			Date of			Date
Apartments	Encumbrances			Land		Improvements(a)		Acquisition		Land		Improvements(a)		Total (b)		Depreciation			Construction			Acquired
Reunion Park by Summit	$	-		$	991	$	-	$	13,835	$	1,003	$	13,823	$	14,826	$	(1,571	)		6/99-9/00			4/99
Summit Ashburn Farm		-			2,438		-		12,499		2,438		12,499		14,937		(1,401	)		2/99-9/00			7/98
Summit Aventura		39,480			6,367		-		26,012		5,702		26,677		32,379		(7,223	)		6/94-12/95			12/93
Summit Ballantyne		(c	)		3,328		-		24,199		3,347		24,180		27,527		(4,875	)		7/96-12/98			12/95
Summit Belmont (i)		(d	)		974		-		12,313		984		12,303		13,287		(6,163	)		1/86-5/87			1/86
Summit Brickell		-			6,765		52,432		402		6,766		52,833		59,599		(991	)		2003(g	)		5/03
Summit Brookwood		-			10,600		-		34,904		15,344		30,160		45,504		(1,289	)		10/00-12/02			12/99
Summit Club at Dunwoody		(c	)		2,934		24,510		790		2,934		25,300		28,234		(4,445	)		1997(g	)		5/98
Summit Crest		-			1,211		-		31,428		2,532		30,177		32,639		(2,979	)		10/99-9/01			9/97
Summit Crossing (i)		-			768		5,174		979		768		6,153		6,921		(2,141	)		1985(g	)		5/95
Summit Deer Creek		-			3,537		-		19,010		3,846		18,701		22,547		(2,340	)		2/99-6/00			1/98
Summit Del Ray (j)		(c	)		3,120		-		16,015		5,402		13,733		19,135		(5,803	)		1/92-2/93			1/92
Summit Doral		30,963			3,099		-		20,773		3,136		20,736		23,872		(3,069	)		12/97-11/99			12/96
Summit Fair Lakes		48,340			9,521		-		38,813		9,557		38,777		48,334		(5,967	)		6/97-8/99			12/96
Summit Fair Oaks (i)		(e	)		4,356		17,215		1,439		4,356		18,654		23,010		(4,512	)		1990(g	)		12/97
Summit Fairview		-			404		-		6,402		537		6,269		6,806		(3,960	)		3/82-3/83			3/82
Summit Foxcroft		6,900			925		3,797		1,199		925		4,996		5,921		(1,975	)		1979(g	)		5/95
Summit Glen (i)		(c	)		3,652		-		14,199		3,693		14,158		17,851		(5,431	)		5/90-8/92			4/90
Summit Governor's Village		(e	)		1,622		-		15,674		1,643		15,653		17,296		(2,693	)		8/97-12/98			7/97
Summit Grandview		(e	)		2,527		-		48,739		2,684		48,582		51,266		(5,415	)		7/98-12/00			3/98
Summit Grand Parc		-			7,700		-		35,812		8,512		35,000		43,512		(1,182	)		4/00-12/02			6/99
Summit Highland (i)		-			1,374		-		6,868		1,374		6,868		8,242		(3,728	)		3/86-1/87			11/85
Summit Hunter's Creek		-			2,193		-		18,568		2,195		18,566		20,761		(2,299	)		3/99-3/00			11/98
Summit Lake		(e	)		1,712		-		29,079		2,511		28,280		30,791		(5,205	)		9/96-1/99			4/96
Summit Lansdowne		-			26,767		70,026		-		26,766		70,027		96,793		-			2002(g	)		12/03
Summit Largo		(c	)		3,074		-		15,412		3,077		15,409		18,486		(2,074	)		10/98-3/00			10/98
Summit Lenox (j)		-			10,800		22,997		10,940		11,157		33,580		44,737		(6,051	)		1965(g	)		7/98
Summit Norcroft (i)					1,453		-		11,455		1,634		11,274		12,908		(4,154	)		2/90-11/97			12/89
Summit on the River		(c	)		3,212		-		22,216		3,212		22,216		25,428		(5,329	)		8/95-6/97			10/94
Summit Overlook		22,889			2,376		-		26,374		4,074		24,676		28,750		(2,269	)		1/00-12/01			2/99
Summit Peachtree City		(e	)		3,453		-		29,828		4,476		28,805		33,281		(2,556	)		2/00-9/01			4/98
Summit Plantation		(c	)		7,440		18,485		18,476		7,440		36,961		44,401		(8,212	)		1/94-11/97			4/96
Summit Portofino		(e	)		3,864		24,504		1,135		3,864		25,639		29,503		(5,668	)		1995(g	)		1/97
Summit Reston (i)		-			5,434		26,255		2,736		6,110		28,315		34,425		(10,059	)		1987(g	)		4/94
Summit Roosevelt		-			10,100		-		36,153		13,546		32,707		46,253		(788	)		12/01-3/03			1/01
Summit Russett (h)		50,000			5,723		-		28,726		5,723		28,726		34,449		(5,024	)		7/95-6/00			11/94
Summit Sedgebrook		(e	)		2,392		-		22,236		2,478		22,150		24,628		(4,223	)		6/96-5/99			1/96

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				Initial Costs				Costs		Gross Amount at Which
								Capitalized		Carried at Close of Period
						Buildings		Subsequent				Buildings
	Related					And		To				And				Accumulated			Date of			Date
Apartments	Encumbrances			Land		Improvements(a)		Acquisition		Land		Improvements(a)		Total(b)		Depreciation			Construction			Acquired
Summit Shiloh (h)		(e	)		1,592		12,125		4,102		2,125		15,694		17,819		(1,710	)		10/99(g	)		8/00
Summit Simsbury		(f	)		650		4,570		859		650		5,429		6,079		(2,023	)		1985 (g	)		5/95
Summit Square (i)		-			2,757		-		16,768		3,775		15,750		19,525		(7,011	)		3/89-8/90			2/89
Summit St. Clair		(c	)		3,024		24,040		617		3,024		24,657		27,681		(4,626	)		1997 (g	)		3/98
Summit Stockbridge		-			1,800		-		21,564		4,185		19,179		23,364		(813	)		12/01-9/03			7/01
Summit Sweetwater		(e	)		3,013		18,627		480		3,012		19,108		22,120		(2,343	)		12/99(g	)		8/00
Summit Touchstone		(f	)		766		5,568		951		766		6,519		7,285		(2,321	)		1986 (g	)		5/95
Summit Valleybrook		-			7,300		-		30,539		8,959		28,880		37,839		(1,533	)		10/00-12/02			9/00
Summit Westwood		(c	)		1,989		-		22,863		2,042		22,810		24,852		(3,559	)		10/97-5/99			9/97
Total				$	191,097	$	330,325	$	754,381	$	214,284	$	1,061,519	$	1,275,803	$	(169,003	)

(a)	Includes buildings, building improvements, furniture, fixtures and equipment.
(b)	The aggregate cost for federal income tax purposes was $1.1 billion as of December 31, 2003. The amounts reflected above represent amounts for real estate communities only. Depreciable lives for the assets range from 5 to 40 years
(c)	Collateral for fixed rate mortgage which had a balance of $133.0 million as of December 31, 2003.
(d)	Collateral for $10.6 million of letters of credit which serve as collateral for $10.3 million in tax-exempt bonds as of December 31, 2003.
(e)	Collateral for our secured credit facility which had balance of $119.0 million as of December 31, 2003.
(f)	Collateral for a fixed rate mortgage which had a balance of $7.9 million as of December 31, 2003.
(g)	Property purchased; date reflects year construction was completed.
(h)	Community was presented in two phases in prior years. Date acquired represents date first phase was acquired. Date of construction represents range from start of the first phase to completion of the second phase
(i)	Community was sold during the nine months ended September 30, 2004.
(j)	Community was held for sale as of September 30, 2004.

55

SUMMIT PROPERTIES PARTNERSHIP, L.P.

REAL ESTATE AND ACCUMULATED DEPRECIATION

(Dollars in thousands)

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

	Year Ended December 31,
	2003			2002			2001
Real estate assets (a):
Balance at beginning of year	$	1,263,238		$	1,266,068		$	1,255,657
Acquisitions		155,215			17,866			-
Improvements		9,890			6,417			9,478
Developments		69,612			130,291			152,137
Disposition of property		(222,152	)		(157,404	)		(151,204	)
		12,565			(2,830	)		10,411
Balance at end of year	$	1,275,803		$	1,263,238		$	1,266,068
Accumulated depreciation (a):
Balance at beginning of year	$	159,536		$	155,242		$	145,500
Depreciation		38,503			39,282			38,746
Disposition of property		(29,036	)		(34,988	)		(29,004	)
Balance at end of year	$	169,003		$	159,536		$	155,242

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

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