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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to ____________.
Commission file number 0-22411
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SUMMIT PROPERTIES PARTNERSHIP, L.P.
(Exact name of registrant as specified in its charter)
Delaware 56-1857809
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
212 S. Tryon Street, Suite 500, Charlotte, North Carolina 28281
(Address of principal executive offices - zip code)
(704) 334-9905
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes No X
------- -------
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SUMMIT PROPERTIES PARTNERSHIP, L.P.
INDEX
PART I FINANCIAL INFORMATION PAGE
Item 1 Financial Statements
Balance Sheets as of June 30, 1997
(Unaudited) and December 31, 1996 . . . . . . . . . . . . 3
Statements of Earnings for the three and
six months ended June 30, 1997 and 1996
(Unaudited) . . . . . . . . . . . . . . . . . . . . . . . 4
Statement of Partners' Equity (Unaudited) . . . . . . . . . 5
Statements of Cash Flows for the six
months ended June 30, 1997 and 1996
(Unaudited) . . . . . . . . . . . . . . . . . . . . . . . 6
Notes to Financial Statements . . . . . . . . . . . . . . . . 7
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . 10
PART II OTHER INFORMATION
Item 2 Changes in Securities . . . . . . . . . . . . . . . . . . . . 27
Item 4 Submission of Matters to a Vote of Security Holders . . . . . 27
Item 6 Exhibits Index and Reports on Form 8-K . . . . . . . . . . . 27
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SUMMIT PROPERTIES PARTNERSHIP, L.P.
BALANCE SHEETS
(Dollars in Thousands)
June 30, December 31,
1997 1996
--------- ---------
(Unaudited)
ASSETS
Real estate assets:
Land and land improvements $ 113,681 $ 102,605
Buildings and improvements 543,475 472,996
Furniture, fixtures and equipment 46,779 43,021
--------- ---------
703,935 618,622
Less: accumulated depreciation (93,936) (85,651)
--------- ---------
Operating real estate assets 609,999 532,971
Construction in progress 111,006 86,157
--------- ---------
Net real estate assets 721,005 619,128
Cash and cash equivalents 5,346 3,665
Restricted cash 14,052 4,121
Deferred financing costs, net 4,215 4,675
Other assets 4,699 3,775
--------- ---------
Total assets $ 749,317 $ 635,364
========= =========
LIABILITIES AND PARTNERS' EQUITY
Liabilities:
Notes payable $ 398,890 $ 309,933
Accrued interest payable 1,861 1,318
Accounts payable and accrued expenses 16,741 7,257
Distributions payable to unitholders 10,856 10,244
Security deposits and prepaid rents 3,581 3,196
--------- ---------
Total liabilities 431,929 331,948
--------- ---------
Commitments
Partners' equity
Partnership units issued and outstanding 27,309,726
and 26,434,920
General partner - outstanding 273,097 and 264,349 3,903 3,766
Limited partners - outstanding 27,036,629 and
26,170,571 313,485 299,650
--------- ---------
Total partners' equity 317,388 303,416
--------- ---------
Total liabilities and partners' equity $ 749,317 $ 635,364
========= =========
See notes to financial statements.
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SUMMIT PROPERTIES PARTNERSHIP, L.P.
STATEMENTS OF EARNINGS
(Dollars in Thousands except for Per Unit Data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------- -------------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
Revenues:
Rental $ 26,328 $ 21,764 $ 52,108 $ 41,954
Other property income 1,577 1,154 2,898 2,168
Interest 132 79 208 155
Other income 66 65 138 215
------------ ------------ ------------ ------------
Total revenues 28,103 23,062 55,352 44,492
------------ ------------ ------------ ------------
Expenses:
Property operating and maintenance:
Personnel 2,306 2,119 4,472 4,124
Advertising and promotion 442 295 822 581
Utilities 1,144 1,001 2,311 1,980
Building repairs and maintenance 2,113 1,884 4,056 3,434
Real estate taxes and insurance 2,843 2,309 5,538 4,486
Depreciation 5,430 4,437 10,611 8,567
Property supervision 678 552 1,340 1,056
Other operating expenses 758 630 1,559 1,253
------------ ------------ ------------ ------------
15,714 13,227 30,709 25,481
Interest 5,042 4,905 9,592 9,054
General and administrative 596 656 1,242 1,281
Loss (income) in equity investments:
Summit Management Company (105) (71) 25 95
Real estate joint venture -- -- -- (1)
------------ ------------ ------------ ------------
Total expenses 21,247 18,717 41,568 35,910
------------ ------------ ------------ ------------
Income before gain on sale of
real estate assets 6,856 4,345 13,784 8,582
Gain on sale of real estate assets 4,366 -- 4,366 --
------------ ------------ ------------ ------------
Net income 11,222 4,345 18,150 8,582
Net income allocated to general partner (112) (43) (181) (86)
------------ ------------ ------------ ------------
Net income allocated to limited partners $ 11,110 $ 4,302 $ 17,969 $ 8,496
============ ============ ============ ============
Per unit data:
Net income $ 0.41 $ 0.21 $ 0.67 $ 0.42
============ ============ ============ ============
Distributions declared $ 0.40 $ 0.39 $ 0.80 $ 0.78
============ ============ ============ ============
Weighted average units 27,333,968 20,624,614 27,192,559 20,618,684
============ ============ ============ ============
See notes to financial statements.
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SUMMIT PROPERTIES PARTNERSHIP, L.P.
STATEMENT OF PARTNERS' EQUITY
(Dollars in Thousands)
(Unaudited)
General Limited
Partner Partners Total
------- --------- ---------
Balance, December 31, 1996 $ 3,766 $ 299,650 $ 303,416
Distributions (218) (21,538) (21,756)
Contributions from Summit Properties related to:
Issuance of stock 117 11,629 11,746
Exercise of stock options 7 711 718
Amortization of restricted stock grants 1 150 151
Proceeds from Dividend Reinvestment
and Employee Stock Purchase Plans 12 1,185 1,197
Costs of shelf registrations (2) (171) (173)
Issuance of units related to property acquisitions 39 3,900 3,939
Net income 181 17,969 18,150
------- --------- ---------
Balance, June 30, 1997 $ 3,903 $ 313,485 $ 317,388
======= ========= =========
See notes to financial statements.
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SUMMIT PROPERTIES PARTNERSHIP, L.P.
STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
Six Months Ended
June 30,
1997 1996
-------- --------
Cash flows from operating activities:
Net income $ 18,150 $ 8,582
Adjustments to reconcile net income to net cash
provided by operating activities:
Loss on equity method investments 25 94
Gain on sale of real estate assets (4,366) --
Depreciation and amortization 11,130 9,075
Increase in restricted cash (660) (200)
Increase in other assets (773) (1,492)
Increase in accrued interest payable 526 127
Increase in accounts payable and accrued expenses 3,185 2,657
Increase (decrease) in security deposits and prepaid rents (56) 467
-------- --------
Net cash provided by operating activities 27,161 19,310
-------- --------
Cash flows from investing activities:
Construction of real estate assets, net of payables (39,562) (34,497)
Purchase of Communities (40,408) (6,360)
Capitalized interest (2,948) (1,927)
Recurring capital expenditures (1,471) (1,403)
Non-recurring capital expenditures (2,147) (1,839)
-------- --------
Net cash used in investing activities (86,536) (46,026)
-------- --------
Cash flows from financing activities:
Debt proceeds 76,429 44,442
Debt repayments (2,698) (1,716)
Distributions to unitholders (21,199) (15,726)
Payments of financing costs (31) (175)
Contributions from Summit Properties related to:
Issuance of stock 6,813 --
Exercise of stock options 718 --
Proceeds from Dividend Reinvestment and Employee Stock
Purchase Plans 1,197 289
Costs of shelf registrations (173) (138)
-------- --------
Net cash provided by financing activities 61,056 26,976
-------- --------
Net increase in cash and cash equivalents 1,681 260
Cash and cash equivalents, beginning of period 3,665 2,881
-------- --------
Cash and cash equivalents, end of period $ 5,346 $ 3,141
======== ========
Supplemental disclosure of cash flow
information - Cash paid for interest, net of capitalized interest $ 8,573 $ 8,390
======== ========
See notes to financial statements.
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SUMMIT PROPERTIES PARTNERSHIP, L.P.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared by
the management of Summit Properties Partnership, L.P., (the "Operating
Partnership") in accordance with generally accepted accounting
principles for interim financial information and in conformity with the
rules and regulations of the Securities and Exchange Commission.
Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting only of normal recurring adjustments) considered necessary
for a fair presentation have been included. The results of operations
for the six months ended June 30, 1997 are not necessarily indicative
of the results that may be expected for the full year. These financial
statements should be read in conjunction with the Operating
Partnership's December 31, 1996 audited financial statements and notes
thereto included in the Operating Partnership's Registration Statement
on Form 10 as amended.
The Operating Partnership conducts the business of developing,
acquiring and managing multi-family apartment communities for Summit
Properties Inc. ("Summit Properties"). Summit Properties is the sole
general partner and majority owner of the Operating Partnership. Summit
Properties is a self-administered and self-managed equity real estate
investment trust ("REIT").
The Financial Accounting Standards Board has issued Statement of
Financial Accounting Standard No. 128 (SFAS No. 128), "Earnings Per
Share," which will be effective at the Operating Partnership's 1997
fiscal year end. SFAS No. 128 will change the method for calculating
earnings per Unit. Had the Operating Partnership applied SFAS No. 128
for the three and six months ended June 30, 1997, the effect on
reported earnings per Unit would not be significant.
2. ACQUISITIONS AND DISPOSITIONS
During the first quarter of 1997, the Operating Partnership completed
the acquisition of three Communities: Summit Mayfaire, Summit Portofino
and Summit Sand Lake (the "1997 Acquisitions"). The 1997 Acquisitions
added a total of 882 apartment homes to the Operating Partnership's
portfolio at an aggregate purchase price of $64.5 million. The 1997
Acquisitions were primarily financed with the assumption of $15.2
million in debt, the issuance of 243,608 Units to Summit Properties in
exchange for Summit Properties issuing 243,608 shares of Common Stock
to the seller, the issuance of 194,495 Units directly to the seller,
and the payment of $40.4 million in cash.
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In addition, the Operating Partnership acquired its joint venture
partner's interest in Summit Plantation (formerly Plantation Cove)
apartment community on April 1, 1996. The Operating Partnership paid
$6.4 million in cash for the remaining 75% interest in this joint
venture, which is now owned entirely by the Operating Partnership.
The following summary of selected unaudited pro forma results of
operations presents information as if the 1997 Acquisitions and the
Summit Plantation acquisition had occurred at the beginning of each
period presented. The pro forma information for the six months ended
June 30, 1997 and 1996 is provided for informational purposes only and
is not indicative of results that would have occurred or which may
occur in the future (dollars in thousands, except per unit amounts):
SIX MONTHS ENDED
JUNE 30,
------------------------------
1997 1996
---------- -----------
Net Revenues $ 55,974 $ 47,277
========== ===========
Net income $ 18,159 $ 8,472
========== ===========
Net income per Unit $ 0.66 $ 0.40
========== ===========
Weighted average units 27,326,508 21,371,816
========== ===========
On May 14, 1997, the Operating Partnership sold a community located in
Charlotte, North Carolina known as Summit Charleston for $9.5 million.
A gain on the sale of $4.4 million was recognized. Proceeds from the
sale were used to partially fund the acquisition of an apartment home
community on July 18, 1997 (See Note 5).
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3. RESTRICTED STOCK
In the six months ended June 30, 1997 and 1996, Summit Properties
granted 26,278 and 56,041, respectively, shares of restricted stock to
employees of the Operating Partnership and subsidaries under Summit
Properties' 1994 Stock Option and Incentive Plan. The market value of
the restricted stock grants in 1997 and 1996 totaled $565,000 and $1.1
million, respectively. Unearned compensation is being amortized to
expense over the vesting period which ranges from three to five years.
4. SUPPLEMENTAL CASH FLOW INFORMATION
Non-cash investing and financing activities for the six months ended
June 30, 1997 and 1996 are as follows:
A. In the six months ended June 30, 1997, the Operating
Partnership purchased three communities (Summit Mayfaire,
Summit Portofino and Summit Sand Lake). The Operating
Partnership completed the purchase of the three Communities by
assuming debt, issuing 194,495 Units, issuing 243,608 Units to
Summit Properties in exchange for Summit Properties issuing
243,608 shares of Common Stock to the seller, assuming certain
liabilities and current assets, and the payment of cash. The
recording of the purchase is summarized as follows (in
thousands):
Fixed assets $ 65,170
Other assets 30
Debt assumed (15,226)
Current liabilities assumed (694)
Value of Operating Partnership Units issued (3,939)
Value of Common Stock issued (4,933)
--------
Cash invested $ 40,408
========
B. The Operating Partnership sold a community on May 14, 1997 for
net proceeds of approximately $9.3 million. The proceeds of
the sale were put in escrow to fund the acquisition of an
apartment home community on July 18, 1997 (See Note 5). The
escrow funds are shown in the balance sheet caption
"Restricted Cash".
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C. On April 1, 1996, the Operating Partnership acquired its joint
venture partner's interest in the Summit Plantation (formerly
Plantation Cove) apartment community. The Operating
Partnership paid $6.4 million in cash for the remaining 75%
interest in this joint venture, which is now owned entirely by
the Operating Partnership. The recording of the purchase is
summarized as follows (in thousands):
Fixed assets $ 21,913
Current assets 202
Deferred charges 95
Debt assumed (14,347)
Current liabilities assumed (288)
Equity investment (1,215)
---------
Net cash paid $ 6,360
=========
D. The Operating Partnership issued 106,330 Units (valued at $2.1
million) for the purchase of land during the six months ended
June 30, 1996.
E. The Operating Partnership accrued a distribution payable in
the amount of $10.9 million and $8.0 million at June 30, 1997
and 1996, respectively.
F. Summit Properties issued 26,278 and 56,041 shares of
restricted stock valued at $565,000 and $1.1 million during
the six months ended June 30, 1997 and 1996, respectively, to
employees of the Operating Partnership and subsidaries.
5. SUBSEQUENT EVENT
The Operating Partnership purchased an apartment home community to be
known as Summit Windsor II for $17.1 million in cash on July 18, 1997.
Summit Windsor II, which was developed by the Company in 1988, has 306
apartment homes and is located in Frederick, Maryland. The proceeds
from the sale of a community (See Note 2) and borrowings on the
Operating Partnership's line of credit were used to fund the purchase.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
This Form 10-Q contains forward-looking statements including, without
limitation, statements relating to the operating performance of stabilized
communities and development activities of the Operating Partnership within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934, as amended. Although the Operating Partnership
believes that the expectations reflected in such forward-looking statements are
based on reasonable assumptions, the Operating Partnership's actual results and
performance of stabilized and development communities could differ materially
from those set forth in the forward-looking statements. Certain factors that
might cause such a difference include general economic conditions, local real
estate market conditions, construction delays due to unavailability of
materials, weather conditions or other delays and those factors discussed in
the last paragraph under the heading entitled "Operating Performance of the
Operating Partnership's Stabilized Communities" and in the section entitled
"Development Activity--Certain Factors Affecting the Performance of Development
Communities" on pages 13 and 22, respectively, of this Form 10-Q.
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As of June 30, 1997, there were 27,309,726 Units outstanding of the Operating
Partnership, of which 23,144,614, or 84.7% were owned by Summit Properties and
4,165,112, or 15.3% were owned by other partners (including certain officers and
directors of Summit Properties).
The following discussion should be read in conjunction with the Financial
Statements of Summit Properties Partnership, L.P. and the Notes thereto
appearing elsewhere herein.
HISTORICAL RESULTS OF OPERATIONS
The Operating Partnership's net income is generated primarily from operations of
its apartment communities (the "Communities"). The changes in operating results
from period to period reflect changes in existing Community performance and
increases in the number of apartment homes due to development and acquisition of
new Communities. Where appropriate, comparisons are made on a "stabilized
Communities," "acquisition Communities," "stabilized development Communities"
and "Communities in lease-up" basis in order to adjust for changes in the number
of apartment homes. A Community is deemed to be "stabilized" when it has
attained either a physical occupancy level of at least 93% or when construction
has been completed for one year in each of the comparable periods presented. A
Community is deemed to be a "stabilized development" when stabilized in the
entire current period presented but was in lease-up in the prior period
presented.
Results of Operations for the Three and Six Months Ended June 30, 1997 and 1996
For the three and six months ended June 30, 1997, income before gain on sale of
real estate assets increased $2.5 million and $5.2 million, respectively, to
$6.9 million and $13.8 million, respectively, from the three and six months
ended June 30, 1996.
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OPERATING PERFORMANCE OF THE OPERATING PARTNERSHIP'S PORTFOLIO OF COMMUNITIES
The operating performance of the Communities for the three and six months ended
June 30, 1997 and 1996 is summarized below (dollars in thousands):
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------------------ ---------------------------------
1997 1996 % CHANGE 1997 1996 % CHANGE
---------- ---------- ----------- ---------- ---------- ------------
Property revenues:
Stabilized communities (1) $21,027 $20,677 1.7% $40,506 $39,674 2.1%
Acquisition communities (2) 2,205 0 100.0% 5,475 731 649.0%
Stabilized development communities 3,059 1,869 63.7% 6,127 2,995 104.6%
Communities in lease-up 1,451 22 6495.5% 2,379 22 10713.6%
Community sold 163 350 -53.4% 519 700 -25.9%
---------- --------- ---------- ----------
Total property revenues 27,905 22,918 21.8% 55,006 44,122 24.7%
---------- --------- ---------- ----------
Property operating and maintenance
expense (3):
Stabilized communities 7,915 7,875 0.5% 15,251 15,074 1.2%
Acquisition communities 742 0 100.0% 1,814 260 597.7%
Stabilized development communities 1,009 715 41.1% 1,932 1,238 56.1%
Communities in lease-up 543 47 1055.3% 890 47 1793.6%
Community sold 75 153 -51.0% 211 295 -28.5%
---------- --------- ---------- ----------
Total property operating and
maintenance expense 10,284 8,790 17.0% 20,098 16,914 18.8%
---------- --------- ---------- ----------
Property operating income $17,621 $14,128 24.7% $34,908 $27,208 28.3%
========== ========= ========== ==========
Apartment homes, end of period 14,072 11,900 18.3% 14,072 11,900 18.3%
========== ========= ========== ==========
(1) Includes Communities which were stabilized for each of the comparable
periods presented. Three month results include Summit Plantation which
was acquired April 1, 1996.
(2) Three month results include the 1997 Acquisition Communities. Six month
results include the 1997 Acquisition Communities and Summit Plantation
acquired April 1, 1996.
(3) Before real estate depreciation expense.
A summary of the Operating Partnership's apartment homes for the six months
ended June 30, 1997 and 1996 is as follows:
1997 1996
------- ------
Apartment homes at the beginning of period 12,454 11,286
Acquisitions 882 262
Developments which began rental
operations during the period 950 352
Sale of apartment home community (214) --
======= ======
Apartment homes at the end of the period 14,072 11,900
======= ======
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OPERATING PERFORMANCE OF THE OPERATING PARTNERSHIP'S STABILIZED COMMUNITIES
The operating performance of the 45 and 44 Communities stabilized during the
entire period in each of the three and six months ended June 30, 1997 and 1996,
respectively, are summarized below (dollars in thousands except average monthly
rental revenue):
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------------------------- ----------------------------------
1997 1996 % CHANGE 1997 1996 % CHANGE
--------- --------- ----------- --------- --------- ---------
Property revenues:
Rental $19,967 $19,667 1.5% $38,576 $37,780 2.1%
Other 1,060 1,010 5.0% 1,930 1,894 1.9%
--------- --------- --------- ----------
Total property revenues 21,027 20,677 1.7% 40,506 39,674 2.1%
--------- --------- --------- ----------
Property operating and maintenance
expense (1):
Personnel 1,815 1,900 -4.5% 3,457 3,703 -6.6%
Advertising and promotion 270 213 26.8% 491 391 25.6%
Utilities 890 917 -2.9% 1,773 1,778 -0.3%
Building repairs and maintenance 1,759 1,790 -1.7% 3,349 3,263 2.6%
Real estate taxes and insurance 2,090 1,998 4.6% 4,010 3,868 3.7%
Property supervision 529 520 1.7% 1,014 986 2.8%
Other operating expense 562 537 4.7% 1,157 1,085 6.6%
--------- --------- --------- ----------
Total property operating and
maintenance expense 7,915 7,875 0.5% 15,251 15,074 1.2%
--------- --------- --------- ----------
Property operating income $13,112 $12,802 2.4% $25,255 $24,600 2.7%
========= ========= ========= ==========
Average physical occupancy (2) 92.8% 92.8% 0.0% 93.0% 93.0% 0.0%
========= ========= ========= ==========
Average monthly rental revenue (3) $721 $707 2.0% $713 $697 2.3%
========= ========= ========= ==========
Number of apartment homes 10,134 10,134 9,872 9,872
========= ========= ========= ==========
(1) Before real estate depreciation expense.
(2) Average physical occupancy is defined as the number of apartment homes
occupied divided by the total number of apartment homes contained in
the Communities, expressed as a percentage. Average physical occupancy
has been calculated using the average of the midweek occupancy that
existed during each week of the period.
(3) Represents the average monthly net rental revenue per occupied
apartment home.
The increase in rental revenue from stabilized Communities for the second
quarter and the first six months of 1997 compared to 1996 was primarily the
result of increases in average rental rates. Property operating and maintenance
expense increases were due primarily to an increase in advertising and
promotion, real estate taxes and insurance offset by a decrease in personnel
expense. As a percentage of total property revenue, property operating and
maintenance expenses decreased for the three month period from 38.1% in 1996 to
37.6% in 1997 and for the six month period from 38.0% in 1996 to 37.7% in 1997.
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The 1.7% and 2.1% rates of growth in property revenues was lower than the 3.8%
and 4.4% rates of growth in property revenues achieved from the first quarter of
1995 compared to first quarter 1996 and the first six months of 1995 compared to
the first six months of 1996, respectively. The growth rate was lower primarily
as a result of a new supply of competing multi-family communities and the
increase in home affordability in some of the markets in which the Operating
Partnership operates. This lower growth rate was especially noticeable in the
Tampa and Atlanta markets. The Operating Partnership expects property growth
rates for the remainder of 1997 to be similar to the first six months of 1997
as the supply of new multi-family communities continues to increase balanced by
the continued strength of the local economies in which the Operating
Partnership operates. The Operating Partnership believes its expectations with
respect to property revenue growth are based on reasonable assumptions as to
future economic conditions and the quantity of competitive multi-family
communities in the markets in which the Operating Partnership does business.
There can be no assurance that actual results will not differ from these
assumptions.
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OPERATING PERFORMANCE OF THE OPERATING PARTNERSHIP'S ACQUISITION COMMUNITIES
Acquisition communities consist of the 1997 Acquisitions (882 apartment homes)
and Summit Plantation (262 apartment homes) acquired on April 1, 1996, for the
six month periods presented and the 1997 Acquisitions for the three month
periods presented. The operations of these Communities for the three and six
months ended June 30, 1997 are summarized as follows (dollars in thousands
except average monthly rental revenue):
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
------------------- --------------------
1997 1996 1997 1996
------ ---- ------ ----
Property revenues:
Rental revenues $2,048 $ 0 $5,149 $696
Other property revenue 157 0 326 35
------ --- ------ ----
Total property revenues 2,205 0 5,475 731
------ --- ------ ----
Property operating and maintenance
expense (1) 742 0 1,814 260
------ --- ------ ----
Property operating income $1,463 $ 0 $3,661 $471
====== === ====== ====
Average physical occupancy (2) 92.8% 0.0% 93.9% 90.2%
====== === ====== ====
Average monthly rental revenue (3) $ 848 $ 0 $ 892 $998
====== === ====== ====
Number of apartment homes 882 0 1,144 262
====== === ====== ====
(1) Before real estate depreciation expense.
(2) Average physical occupancy is defined as the number of apartment homes
occupied divided by the total number of apartment homes contained in
the communities, expressed as a percentage. Average physical occupancy
has been calculated using the average of the midweek occupancy that
existed during each week of the period.
(3) Represents the average monthly net rental revenue per occupied
apartment home. Average monthly rental revenue for the six months
ended June 30, 1997 for the 1997 Acquisitions was $846.
The unleveraged yield, defined as property operating income for the three and
six months ended June 30, 1997 for the acquisition communities, as defined
above, on an annualized basis over total acquisition cost, was 9.0% and 9.4%,
respectively. The unleveraged yield for the 1997 Acquisitions only for the six
months ended June 30, 1997, was 9.3%.
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OPERATING PERFORMANCE OF THE OPERATING PARTNERSHIP'S STABILIZED DEVELOPMENT
COMMUNITIES
The Operating Partnership had four development communities (Summit Aventura,
Summit Hill II, Summit Green, and Summit River Crossing), which were stabilized
during the entire three and six months ended June 30, 1997 but were still in
lease-up/construction in the three and six months ended June 30, 1996. The
operating performance of these four Communities for the three and six months
ended June 30, 1997 and 1996 is summarized below (dollars in thousands except
average monthly rental revenue):
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
------------------- --------------------
1997 1996 1997 1996
------ ------ ------ ------
Property revenues:
Rental revenues $2,878 $1,743 $5,802 $2,785
Other property revenue 181 126 325 210
------ ------ ------ ------
Total property revenues 3,059 1,869 6,127 2,995
------ ------ ------ ------
Property operating and maintenance
expense (1) 1,009 715 1,932 1,238
------ ------ ------ ------
Property operating income $2,050 $1,154 $4,195 $1,757
====== ====== ====== ======
Average physical occupancy (2) 91.7% 55.9% 92.3% 44.3%
====== ====== ====== ======
Average monthly rental revenue (3) $ 908 $ 878 $ 910 $ 890
====== ====== ====== ======
Number of apartment homes 1,200 1,200 1,200 1,200
====== ====== ====== ======
(1) Before real estate depreciation expense.
(2) Average physical occupancy is defined as the number of apartment homes
occupied divided by the total number of apartment homes contained in
the communities, expressed as a percentage. Average physical occupancy
has been calculated using the average of the midweek occupancy that
existed during each week of the period.
(3) Represents the average monthly net rental revenue per occupied
apartment home.
The unleveraged yield, defined as property operating income for the three and
six months ended June 30, 1997 on an annualized basis over total development
cost, was 10.2% and 10.4%, respectively.
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17
OPERATING PERFORMANCE OF THE OPERATING PARTNERSHIP'S COMMUNITIES IN LEASE-UP
The Operating Partnership had seven Communities in lease-up in the three and six
months ended June 30, 1997. A Community in lease-up is defined as one which has
commenced rental operations but has not reached stabilization. A summary of the
seven Communities in lease-up as of June 30, 1997 is as follows (dollars in
thousands):
TOTAL ACTUAL/ HOMES % LEASED
NUMBER OF ACTUAL/ ANTICIPATED COMPLETED Q2 1997 AS OF
APARTMENT ESTIMATED CONSTRUCTION ANTICIPATED AT JUNE 30, AVERAGE JUNE 30,
COMMUNITY HOMES COST COMPLETION STABILIZATION 1997 OCCUPANCY 1997
- --------------------- ------------ ----------- -------------- -------------- ------------ ------------ ----------
Summit Fairways 240 $ 17,900 Q4 1996 Q3 1997 240 76.30% 94.20%
Summit on the River 352 24,300 Q2 1997 Q3 1997 352 58.20% 76.40%
Summit Russett 314 23,100 Q3 1997 Q3 1997 250 42.50% 72.60%
Summit Stonefield 216 18,400 Q4 1997 Q1 1998 36 1.10% 19.90%
Summit Ballantyne I 246 16,800 Q4 1997 Q2 1998 42 1.50% 16.70%
Summit Sedgebrook I 248 15,600 Q4 1997 Q2 1998 32 0.60% 12.10%
Summit Plantation II 240 22,000 Q4 1997 Q2 1998 32 0.00% 15.00%
=========== ==========
1,856 $138,100
=========== ==========
Property operating income after interest expense was $117,000 and $67,000 for
the seven communities in lease-up for the three and six months ended June 30,
1997, respectively.
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OPERATING PERFORMANCE OF SUMMIT MANAGEMENT COMPANY
The operating performance of Summit Management Company (the "Management
Company") and its wholly-owned subsidiary, Summit Apartment Builders Inc. (the
"Construction Company"), for the three and six months ended June 30, 1997 and
1996 is summarized below (dollars in thousands):
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------ ---------------------
1997 1996 1997 1996
------ ------ ------- -------
Property management revenue $1,203 $1,166 $ 2,385 $ 2,298
Construction Company income 266 112 458 176
Other Management Company income 31 33 55 59
------ ------ ------- -------
Total revenue 1,500 1,311 2,898 2,533
Property management expenses:
Operating 1,042 997 2,073 2,149
Depreciation 48 28 96 56
Amortization 76 69 148 138
Interest 75 75 150 150
------ ------ ------- -------
Total property management expenses 1,241 1,169 2,467 2,493
Construction Company expenses 154 71 456 135
------ ------ ------- -------
Total expenses 1,395 1,240 2,923 2,628
------ ------ ------- -------
Net income (loss) of the
Management Company $ 105 $ 71 ($ 25) ($ 95)
====== ====== ======= =======
The increase in property management revenue was the result of higher revenues
for managing the Operating Partnership's Communities (which was due to an
increase in the number of Communities managed as a result of new developments
and acquisitions), offset by a reduction in the average number of communities
managed for third parties during 1997 compared to 1996. Total apartment homes
managed for third parties was 5,398 and 7,925 at June 30, 1997 and 1996,
respectively. The Operating Partnership expects third party management revenue
as a percentage of total property management revenues to continue to decline as
revenues from the Operating Partnership's communities continue to increase.
Property management fees include $432,000 and $568,000 of fees from third
parties for the three months ended June 30, 1997 and 1996, respectively, and
$906,000 and $1.1 million of fees from third parties for the six months ended
June 30, 1997 and 1996, respectively.
Construction Company revenues and expenses increased in 1997 compared to 1996
primarily due to the increased number of construction projects. The increase in
construction projects was a result of the Operating Partnership's decision to
expand its in-house construction operations in the state of Florida to cover the
entire geographic area in which the Operating Partnership operates. All of the
Construction Company's income is from contracts with the Operating Partnership.
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19
OTHER INCOME AND EXPENSES
Interest expense increased $137,000 and $538,000 or 2.8% and 5.9% for the three
and six months ended June 30, 1997, respectively, primarily due to interest on
debt related to the Communities acquired in 1997 and interest on Communities in
lease-up, offset by the Operating Partnership's repayment of debt in connection
with Summit Properties' public offering of 5.75 million shares of Common Stock
in August 1996 the proceeds of which were contributed to the Operating
Partnership.
Depreciation expense increased $993,000 and $2.0 million or 22.4% and 23.9% for
the three and six months ended June 30, 1997, respectively, primarily due to the
1997 and 1996 Acquisitions, increased depreciation on Communities that were in
construction in 1996, but completed by 1997 and Communities in lease-up in 1997.
General and administrative expense decreased $39,000 or 3.0% to $1.24 million
for the six months ended June 30, 1997 from $1.28 million for the same period in
1996 primarily due to decreased compensation costs.
LIQUIDITY AND CAPITAL RESOURCES
The Operating Partnership's working capital is primarily provided by operations
and an unsecured $150 million credit facility (the "Unsecured Credit Facility").
The Unsecured Credit Facility has a three year term and currently bears interest
at LIBOR + 110 basis points based upon the Operating Partnership's credit rating
of BBB- by Standard & Poors Rating Group. The interest rate can be reduced in
the event of an upgrade of the Operating Partnership's unsecured credit rating
as assigned by Standard & Poors Rating Group (which rating must be accompanied
by the comparable senior unsecured bond rating from one of Moody's, Duff &
Phelps or Fitch) as follows:
S & P CREDIT RATING RATE
------------------- ----
BBB-.................................... LIBOR + 110
BBB..................................... LIBOR + 95
BBB+.................................... LIBOR + 80
The Unsecured Credit Facility provides $25 million for general working capital
purposes with the remaining $125 million available to finance new development
and acquisitions.
The Operating Partnership's outstanding indebtedness at June 30, 1997 totaled
$398.9 million. This amount includes approximately $206.7 million in fixed rate
conventional mortgages, $53.1 million of variable rate tax-exempt bonds, $31.0
million of unsecured notes, $9.3 million of tax exempt fixed rate loans, and
$98.8 million under the variable rate Unsecured Credit Facility.
Summit Properties and the Operating Partnership have filed a Form S-3
Registration Statement under which Summit Properties can issue up to $250
million of common stock and preferred stock, and the Operating Partnership can
issue up to $250 million of debt securities.
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20
The Operating Partnership's net cash provided by operating activities increased
from $19.3 million for the six months ended June 30, 1996 to $27.2 million for
the same period in 1997 primarily due to a $7.7 million increase in property
operating income.
Net cash used in investing activities increased from $46.0 million for the six
months ended June 30, 1996 to $86.5 million for the same period in 1997
primarily due to an increase in the acquisition of Communities and an increase
in construction of real estate assets.
Net cash provided by financing activities increased from $27.0 million for the
six months ended June 30, 1996 to $61.1 million for the same period in 1997,
primarily due to an increase in debt proceeds and Summit Properties equity
offering proceeds contributed to the Operating Partnership, partially offset by
higher dividends and distributions to unitholders. The increase in debt proceeds
was primarily due to borrowings to finance the 1997 Acquisitions.
The Operating Partnership expects to meet its short-term liquidity requirements
(i.e., liquidity requirements arising within twelve months) generally through
its net cash provided by operations and borrowings under the Unsecured Credit
Facility. The Operating Partnership believes that its net cash provided by
operations will be adequate to meet its operating requirements and to satisfy
Summit Properties' applicable REIT dividend payment requirements in both the
short-term and in the long-term. Improvements and renovations at existing
Communities are expected to also be funded from property operations.
The Operating Partnership expects to meet its long-term liquidity requirements
(i.e., liquidity requirements arising after twelve months), such as current and
future developments, debt maturities, acquisitions, renovations and other
non-recurring capital expenditures, with borrowings under its Unsecured Credit
Facility, through the issuance of long-term secured and unsecured debt
securities and additional equity securities of Summit Properties which will be
contributed to the Operating Partnership, or in connection with the acquisition
of land or improved property, through the issuance of Units of the Operating
Partnership.
On May 14, 1997, the Operating Partnership sold a community in Charlotte, North
Carolina known as Summit Charleston for $9.5 million. A gain on the sale of
approximately $4.4 million was recognized.
The Operating Partnership purchased an apartment community to be known as Summit
Windsor II for $17.1 million in cash on July 18, 1997. Summit Windsor II, which
was developed by the Company in 1988, has 306 apartment homes and is located in
Frederick, Maryland. The proceeds from the sale of a community and borrowings on
the Unsecured Credit Facility were used to fund the purchase.
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21
The following table sets forth certain information regarding debt financing as
of June 30, 1997 and December 31, 1996:
PRINCIPAL OUTSTANDING
INTEREST -----------------------------
RATE AS OF MATURITY JUNE 30, DECEMBER 31,
JUNE 30, 1997 DATE 1997 1996
---------------- ---------- ------------- --------------
FIXED RATE DEBT (1)
MORTGAGE LOAN (2) (3) 5.88% 2/15/01 $121,673 $122,950
MORTGAGE LOAN (2) (3) 7.71% 12/15/05 29,434 29,653
MORTGAGE LOAN (4) 8.00% 09/1/05 8,598 8,638
MORTGAGE NOTES
Summit Hollow I 8.00% 11/1/18 2,265 2,286
Summit Hollow II 7.75% 1/1/29 2,577 2,587
Summit Creekside 8.00% 6/1/22 2,857 2,877
Summit Old Town 8.00% 9/1/20 3,073 3,097
Summit Eastchester 8.00% 5/1/21 3,843 3,872
Summit Foxcroft 8.00% 4/1/20 2,759 2,788
Summit Oak 7.75% 12/1/23 2,569 2,585
Summit Sherwood 7.88% 3/1/29 3,316 3,329
Summit Radbourne 9.80% 3/1/02 8,642 8,683
Summit Sand Lake 7.88% 2/15/06 15,128 -
TAX EXEMPT MORTGAGE NOTES
Summit Crossing 6.95% 11/1/25 4,188 4,213
Summit East Ridge 7.25% 12/1/26 5,129 5,156
------------- --------------
TOTAL MORTGAGE DEBT 216,051 202,714
------------- --------------
UNSECURED NOTES
Bank Note 7.85% 8/3/02 16,000 16,000
Bank Note 7.61% 8/3/00 15,000 15,000
------------- --------------
TOTAL UNSECURED NOTES 31,000 31,000
------------- --------------
TOTAL FIXED RATE DEBT 247,051 233,714
VARIABLE RATE DEBT
UNSECURED CREDIT FACILITY LIBOR + 110 9/30/99 98,786 22,357
TAX EXEMPT BONDS(5)
Summit Belmont 5.70% 4/1/07 11,650 11,850
Summit Hampton 5.70% 6/1/07 12,490 12,700
Summit Pike Creek 5.70% 8/15/20 13,143 13,262
Summit Gateway 5.70% 7/1/07 7,100 7,300
Summit Stony Point 5.70% 4/1/29 8,670 8,750
------------- --------------
TOTAL TAX EXEMPT BONDS 53,053 53,862
------------- --------------
TOTAL VARIABLE RATE DEBT 151,839 76,219
------------- --------------
TOTAL OUTSTANDING INDEBTEDNESS $398,890 $309,933
============= ==============
(1) With the exception of the Mortgage Loans referred to in Note 3 below,
all of the secured debt can be prepaid at any time. Prepayment of such
debt is generally subject to penalty or premium; however, the tax
exempt mortgage notes can be prepaid at any time without penalty or
premium.
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22
(2) Mortgage Loans are secured by the following Communities:
Summit Glen Summit Blue Ash Summit Heron's Run
Summit Park Summit Square Summit Perico
Summit Village Summit Waterford Summit Providence
Summit Highland Summit Del Ray Summit Meadow
Summit Norcroft Summit Palm Lake Summit Windsor
(3) The Operating Partnership may elect to extend the maturity of each of
these Mortgage Loans for a period of up to two years by providing six
months' written notice. These Mortgage Loans generally may not be
prepaid in whole or in part during their original term, but may be
prepaid in whole or in part at any time during applicable extension
periods, if any, without premium or penalty.
(4) Mortgage Loan secured by Summit Simsbury and Summit Touchstone
Communities.
(5) The tax exempt bonds (the "Bonds") are enhanced by letters of credit
from financial institutions (the "Credit Enhancements"), each of which
Credit Enhancement will terminate prior to the maturity dates of the
related Bonds. In the event such Credit Enhancements are not renewed or
replaced upon termination, the related loan obligations will be
accelerated.
The London Interbank Offered Rate (LIBOR) at June 30, 1997 was 5.69%
DEVELOPMENT ACTIVITY
The Operating Partnership's developments in process at June 30, 1997 are
summarized as follows (dollars in thousands):
TOTAL ESTIMATED ANTICIPATED
APARTMENT ESTIMATED COST TO COST TO CONSTRUCTION
COMMUNITY HOMES COSTS DATE COMPLETE COMPLETION
- ---------------------------------------- ------------ ----------- ----------- ----------- -------------
Summit Russett-Laurel, MD 314 $ 23,100 $ 22,005 $ 1,095
Summit Stonefield-Yardley, PA 216 18,400 13,817 4,583 Q4 1997
Summit Norcroft II-Charlotte, NC 54 3,750 1,704 2,046 Q4 1997
Summit Sedgebrook I-Charlotte, NC 248 15,600 10,950 4,650 Q4 1997
Summit Ballantyne I-Charlotte, NC 246 16,800 10,855 5,945 Q4 1997
Summit Plantation II-Plantation, FL 240 22,000 16,145 5,855 Q4 1997
Summit Lake I-Raleigh, NC 302 19,700 8,700 11,000 Q2 1998
Summit Fair Lakes I-Fairfax, VA 370 32,900 8,750 24,150 Q4 1998
Summit New Albany-Columbus, OH 301 22,600 4,507 18,093 Q1 1999
------------ ----------- ----------- -----------
2,291 174,850 97,433 77,417
Other development and construction - - 13,573 -
costs
------------ ----------- ----------- -----------
2,291 $ 174,850 $ 111,006 $ 77,417
============ =========== =========== ===========
In addition, the Operating Partnership has a commitment to purchase a community
(Summit St. Claire) currently under construction in Atlanta, Georgia for
approximately $27.5 million, subject to adjustment based on the percentage of
apartment homes leased as of the date of acquisition. The 336 apartment home
community is expected to be purchased, after reaching rental stabilization which
is currently expected in the fourth quarter of 1998.
Estimated costs to complete the development communities and the purchase
commitment for Summit St. Claire represent all of the Operating Partnership's
material commitments for capital expenditures.
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23
Certain Factors Affecting the Performance of Development Communities
The Operating Partnership is optimistic about the operating prospects of the
Communities under construction even with the increased supply of newly
constructed apartment homes of comparable quality in many of its markets. As
with any development community, there are uncertainties and risks associated
with the development of the Communities described above. While the Operating
Partnership has prepared development budgets and has estimated completion and
stabilization target dates based on what it believes are reasonable assumptions
in light of current conditions, there can be no assurance that actual costs will
not exceed current budgets or that the Operating Partnership will not experience
construction delays due to the unavailability of materials, weather conditions
or other events.
Other development risks include the possibility of incurring additional cost or
liability resulting from defects in construction material and the possibility
that financing may not be available on favorable terms, or at all, to pursue or
complete development activities. Similarly, market conditions at the time these
Communities become available for leasing will affect the rental rates that may
be charged and the period of time necessary to achieve stabilization, which
could make one or more of the development communities unprofitable or result in
achieving stabilization later than currently anticipated. In addition, the
Operating Partnership is conducting feasibility and other pre-development work
for eight Communities. The Operating Partnership could abandon the development
of any one or more of these potential Communities in the event that it
determines that market conditions do not support development, financing is not
available on favorable terms or other circumstances prevent development.
Similarly, there can be no assurance that if the Operating Partnership does
pursue one or more of these potential Communities that it will be able to
complete construction within the currently estimated development budgets or that
construction can be started at the time currently anticipated.
CAPITALIZATION OF FIXED ASSETS AND PROPERTY IMPROVEMENTS
The Operating Partnership has established a policy of capitalizing those
expenditures relating to acquiring new assets, materially enhancing the value of
an existing asset, or substantially extending the useful life of an existing
asset. All expenditures necessary to maintain a Community in ordinary operating
condition (including replacement carpets) are expensed as incurred.
The Operating Partnership has a capital expenditure replacement program whereby
various physical components are replaced as necessary to maintain the
Communities in normal operating condition. Certain physical components may be
replaced other than at regular inspection intervals when extraordinary wear has
occurred. The Operating Partnership also makes capital expenditures for new
physical components if these expenditures will produce sufficient revenue
enhancements as to achieve acceptable returns on invested capital. There are
currently no material commitments with respect to renovation or improvements at
existing facilities.
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24
Capitalized expenditures for the six months ended June 30, 1997 and 1996 are
summarized as follows (dollars in thousands):
SIX MONTHS ENDED
JUNE 30,
--------------------------
1997 1996
-------- -------
Acquisition of new Communities (1) $ 65,170 $21,913
Construction of new Communities (2) 44,950 37,617
Capitalized interest 2,948 1,927
Non-recurring capital expenditures:
Construction of garages 13 720
Access gates 68 65
New signage 76 52
Water meters 19 173
Washer/dryer units 18 58
Major improvements 1,949 758
Other 4 13
-------- -------
Total non-recurring capital expenditures 2,147 1,839
-------- -------
Recurring capital expenditures:
Exterior painting 558 465
Other community additions and improvements 852 935
Corporate additions 61 3
-------- -------
Total recurring capital expenditures 1,471 1,403
-------- -------
$116,686 $64,699
======== =======
(1) Includes the issuance of Units with a value of $8.9 million and
assumption of debt of $15.2 million in the six months ended June 30,
1997.
(2) Includes issuance of $2.1 million of Units for the acquisition of land
in 1996.
Construction of Communities was funded primarily by development loans, Summit
Properties equity offering proceeds contributed to the Operating Partnership and
borrowing under the Operating Partnership's credit facilities. Other additions
and improvements were funded primarily by Community operations and the Operating
Partnership's credit facilities.
INFLATION
Substantially all of the leases at the Communities are for a term of one year or
less, which, coupled with the relatively high occupancy rates, may enable the
Operating Partnership to seek increased rents upon renewal of existing leases or
commencement of new leases. The short-term nature of these leases generally
serves to reduce the risk to the Operating Partnership of the adverse effect of
inflation.
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25
FUNDS FROM OPERATIONS
The White Paper on Funds from Operations approved by the Board of Governors of
NAREIT in March 1995 defines Funds from Operations as net income (loss)
(computed in accordance with GAAP), excluding gains (or losses) from debt
restructuring and sales of property, plus real estate related depreciation and
amortization and after adjustments for unconsolidated partnerships and joint
ventures. The Operating Partnership computes Funds from Operations in accordance
with the standards established by the White Paper, which may differ from the
methodology for calculating Funds from Operations utilized by other equity
REITs, and, accordingly, may not be comparable to such other REITs. Funds
Available for Distribution is defined as Funds from Operations less capital
expenditures funded by operations (recurring capital expenditures). The
Operating Partnership's methodology for calculating Funds Available for
Distribution may differ from the methodology for calculating Funds Available for
Distribution utilized by other REITs, and accordingly, may not be comparable to
other REITs. Funds from Operations and Funds Available for Distribution do not
represent amounts available for management's discretionary use because of needed
capital replacement or expansion, debt service obligations, property
acquisitions, development, distributions or other commitments and uncertainties.
Funds from Operations and Funds Available for Distribution should not be
considered as an alternative to net income (determined in accordance with GAAP)
as an indication of the Operating Partnership's financial performance or to
cash flows from operating activities (determined in accordance with GAAP) as a
measure of the Operating Partnership's liquidity, nor are they indicative of
funds available to fund the Operating Partnership's cash needs, including its
ability to make distributions. The Operating Partnership believes Funds from
Operations and Funds Available for Distribution is helpful to investors as
measures of the performance of the Operating Partnership because, along with
cash flows from operating activities, financing activities and investing
activities, they provide investors with an understanding of the ability of the
Operating Partnership to incur and service debt and make capital expenditures.
25
26
Funds from Operations and Funds Available for Distribution for the three and six
months ended June 30, 1997 and 1996 are calculated as follows (dollars in
thousands):
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------------- -------------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
Net income $ 11,222 $ 4,345 $ 18,150 $ 8,582
Gain on sale of real estate assets (4,366) -- (4,366) --
Depreciation:
Operating Communities 5,421 4,428 10,593 8,549
Summit Plantation -- -- -- 33
------------ ------------ ------------ ------------
Funds from Operations 12,277 8,773 24,377 17,164
Recurring capital expenditures (1) (1,016) (842) (1,471) (1,403)
------------ ------------ ------------ ------------
Funds Available for Distribution $ 11,261 $ 7,931 $ 22,906 $ 15,761
============ ============ ============ ============
Weighted average shares and units
outstanding 27,333,968 20,624,614 27,192,559 20,618,684
============ ============ ============ ============
(1) Recurring capital expenditures are expected to be funded from
operations and consist primarily of exterior painting, new appliances,
vinyl, blinds, tile, and wallpaper. In contrast, non-recurring capital
expenditures, such as major improvements, new garages and access gates,
are expected to be funded by financing activities and are therefore not
included in the calculation of Funds Available for Distribution.
26
27
PART II. OTHER INFORMATION
ITEM 2 CHANGES IN SECURITIES
During the past three months ended June 30,1997 the Operating Partnership has
issued Units in private placements in reliance on the exemption from
registration under section 4(2) of the Securities Act in the amounts and for the
consideration set forth below:
A. Summit Properties has issued an aggregate of 7,208 shares of
Common Stock pursuant to its Dividend Reinvestment Plan.
Summit Properties has contributed the proceeds (approximately
$144,000) of these sales to the Operating Partnership in
consideration of an aggregate of 7,208 Units.
B. Summit Properties has issued an aggregate of 5,420 shares of
Common Stock in connection with restricted stock awards. Each
time a share of Common Stock is issued in connection with such
an award, the Operating Partnership issues a Unit to Summit
Properties; consequently, 5,420 Units have been issued to
Summit Properties to date.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On June 18, 1997, the Operating Partnership partners were asked to consider a
proposal (the "Proposal") to approve the Amendment No. 10 to the Limited
Partnership Agreement (the "Agreement") of the Operating Partnership, which
amendment modified certain provisions of the agreement applicable in certain
mergers, consolidations or asset transfers.
With respect to the Proposal, the partners of the Operating Partnership voted by
a vote of 27.3 million votes of Units of the Operating Partnership in favor of
the Proposal, in excess of a majority of eligible votes, with no votes against
Amendment No. 10 to the Limited Partnership Agreement of the Operating
Partnership.
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.1 Amendment No. 10 to the Limited Partnership Agreement of the
Operating Partnership
27.1 Financial Data Schedule
27
28
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SUMMIT PROPERTIES PARTNERSHIP, L.P.
July 29, 1997 /s/ William F. Paulsen
- --------------------------- --------------------------------------------
(Date) William F. Paulsen, President
and Chief Executive Officer
July 29, 1997 /s/ Michael L. Schwarz
- --------------------------- --------------------------------------------
(Date) Michael L. Schwarz, Executive
Vice President and Chief Financial Officer
28
29
EXHIBIT INDEX
3.1 Amendment No. 10 to the Limited Partnership Agreement of the Operating
Partnership
27.1 Financial Data Schedule
29