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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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

For the fiscal year ended December 31, 1997 Commission file number
0-22411

SUMMIT PROPERTIES PARTNERSHIP, L.P.
(Exact name of registrant as specified in its charter)

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DELAWARE 56-1857809
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

212 SOUTH 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)

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

SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:

UNITS OF LIMITED PARTNERSHIP INTEREST
(TITLE OF EACH CLASS)

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. ____

The aggregate market value of the units of limited partnership interest
("Units") held by nonaffiliates of the Registrant, as of March 4, 1998, was
$23,947,562, based on the last reported sale price of the common stock of Summit
Properties Inc, a Maryland corporation and the sole general partner of the
Registrant (the "Company"), into which Units are redeemable under certain
circumstances at the election of the Company.

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TABLE OF CONTENTS

ITEM PAGE
---- ----

PART I

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

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

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

4. Submission of Matters to a Vote of Security Holders......... 13

PART II

5. Market for Registrant's Common Equity and Related
Stockholder Matters....................................... 14

6. Selected Financial Data..................................... 16

7. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 18

8. Financial Statements and Supplementary Data................. 32

9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.................................. 32

PART III

10. Directors and Executive Officers of the Registrant.......... 33

11. Executive Compensation...................................... 35

12. Security Ownership of Certain Beneficial Owners and
Management................................................ 43

13. Certain Relationships and Related Transactions.............. 43

PART IV

14. Exhibits, Financial Statement Schedules and Reports on Form
8-K....................................................... 45

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PART I

ITEM 1. BUSINESS

THE COMPANY

Summit Properties Partnership, L.P. (the "Operating Partnership") is one of the
largest developers and operators of luxury garden apartment communities (the
"Communities") in the southeastern and mid-atlantic United States. The Operating
Partnership current portfolio consists of 61 apartment Communities with 14,462
apartment homes, including Summit Foxcroft in which the Operating Partnership
has a 75% managing general partner interest. The Operating Partnership also has
nine apartment Communities with 2,251 apartment homes under construction or in
lease-up.

The Communities are located in six states throughout the southeastern and
mid-atlantic United States, as well as in Delaware, Ohio, Pennsylvania and
Indiana. For the year ended December 31, 1997, the average physical occupancy
rate of the Operating Partnership's Communities that were stabilized in both
1996 and 1997 was 93.2%, and the average monthly rental revenue for these
Communities was $717 per apartment home. A Community is considered to be
stabilized at the earlier of its attainment of 93.0% physical occupancy or one
year from the completion of construction. In addition, the Operating Partnership
has acquisition Communities, stabilized development Communities (i.e.,
stabilized in 1997 but not in 1996) and Communities in lease-up. In 1997,
average physical occupancy rates were 92.4% and 92.0% and average monthly rental
revenue were $847 and $883 per apartment home for acquisition Communities and
stabilized development Communities, respectively. Yearly averages for
Communities in lease-up are not meaningful as the Communities were in various
stages of construction/lease-up during the year. The Operating Partnership also
manages approximately 4,000 apartment homes for unrelated third parties. The
Operating Partnership is a fully integrated organization with multifamily
development, construction, acquisition and management expertise which employs
approximately 550 individuals.

The sole general partner of the Operating Partnership is Summit Properties Inc.
("Summit Properties"), a fully integrated real estate investment trust ("REIT").
Summit Properties' common stock, par value $.01 per share (the "Common Stock")
is listed on the New York Stock Exchange (the "NYSE") under the symbol "SMT".
The Operating Partnership's third party management and certain construction and
other businesses are conducted through its subsidiaries, Summit Management
Company, a Maryland corporation (the "Management Company"), and Summit Apartment
Builders, Inc., a Florida corporation (the "Construction Company"). Except where
otherwise explicitly noted, the "Operating Partnership" shall mean Summit
Properties Partnership, L.P. and its subsidiaries on an aggregate basis.

The Operating Partnership has chosen to focus its efforts on the following ten
high growth core markets: Charlotte, North Carolina; Tampa/Sarasota, Florida;
Washington, D.C.; Raleigh/Central, North Carolina; South Florida; Atlanta,
Georgia; Richmond, Virginia; Orlando, Florida; Indianapolis, Indiana and
Columbus, Ohio. In keeping with this strategy, the Operating Partnership has
established city operating offices in Charlotte, North Carolina; Tampa, Florida;
Reston, Virginia; Atlanta, Georgia; Fort Lauderdale, Florida and Raleigh, North
Carolina. These city offices have direct responsibility for selecting and
overseeing new developments and for managing the Communities in their geographic
areas. This decentralized structure enables corporate management to maintain
tight controls and allows the Operating Partnership to compete effectively in
its core markets, while efficiently allocating development and acquisition
capital to those markets that will yield the highest risk-adjusted return.

OPERATING PHILOSOPHY

The Operating Partnership seeks to maximize the economic return from its
Communities by optimizing the trade-off between increasing rental rates and
maintaining high occupancy levels. Consistent with this strategy, the Operating
Partnership is among the rental rate leaders in its markets. Although this
strategy may result in slightly lower occupancy rates, the Operating Partnership
believes that the dynamic tension created by this balancing strategy maximizes
operating income at the property level and improves growth in the Operating

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Partnership's cash flow over the long term. Generally, the Operating Partnership
has found that it is not maximizing property operating income per apartment home
when occupancies are above 95%.

Historically, the Operating Partnership has been able to charge market leading
rents to its residents while maintaining high occupancy rates due to: the
upscale features of its Communities, the comprehensive service provided by its
on-site management and its favorable mix of apartment homes. The Operating
Partnership's geographic market focus and decentralized structure further
promote income growth.

GROWTH STRATEGIES

The Operating Partnership's objective is to create long term value through five
strategies: maximizing cash flow from existing Communities, targeting ten major
growth markets in the Southeast, Mid-Atlantic, and Midwest, development
activity, acquisitions of additional Communities and dedication to customer
service.

Maximizing Cash Flow From Existing Communities. The Operating Partnership seeks
to maximize the economic return from its Communities by optimizing the trade-off
between increasing rental rates and maintaining high occupancy levels.
Consistent with this strategy, the Operating Partnership is among the rental
rate leaders in its markets. The Operating Partnership's affluent resident
profile, well-trained property management staff and management information
systems support this strategy. For the year ended December 31, 1997, average
rent per apartment home for the Operating Partnership's Communities that were
stabilized during the comparable period in 1996 increased 2.1%, and property
operating income from these Communities increased 2.4% for the same period.
Average occupancy, rental revenue and property operating income levels for the
Operating Partnership's Communities that were stabilized during the comparable
periods are as follows for the years set forth below:

YEAR ENDED DECEMBER 31,
-----------------------
1997 1996 1995
----- ----- -----

Average Physical Occupancy(1)............................... 93.2% 93.1% 94.0%
Average Monthly Rental Revenue per Apartment Home(1)........ $717 $714 $682
Average Monthly Rental Revenue per Apartment Home Growth
Rate...................................................... 2.1% 3.8% 4.9%
Property Operating Income Growth Rate(2).................... 2.4% 3.1% 6.6%
Number of Communities(1).................................... 44 32 27

(1) The Operating Partnership also has six acquisition Communities, four
stabilized development Communities (i.e., stabilized in 1997 but not in
1996) and nine Communities in lease-up. In 1997, average physical occupancy
rates were 92.4% and 92.0% and average monthly rental revenue were $847 and
$883 per apartment home for acquisition Communities and stabilized
development Communities, respectively. Yearly averages for Communities in
lease-up are not meaningful as the Communities were in various stages of
construction/lease-up during the year.

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

The supply of new multifamily communities in the past several years has
increased nationwide and in the Operating Partnership's markets. This supply has
limited the Operating Partnership's ability to raise rental rates at the same
rate experienced in 1995.

Targeting Ten Major Growth Markets. The Operating Partnership's existing
portfolio and plans for growth focus on ten core markets that are expected to
generate new employment at a significantly faster rate than the national
average. The ten high growth core markets are as follows: Charlotte, North
Carolina; Tampa/ Sarasota, Florida; Washington, D.C.; Raleigh, North Carolina;
South Florida; Atlanta, Georgia; Richmond, Virginia; Orlando, Florida;
Indianapolis, Indiana and Columbus, Ohio. The Operating Partnership's strategy
provides geographic diversification that protects it against an economic
downturn in any one market, while at the same time benefiting from a tightly
targeted focus on a limited number of attractive markets. By focusing only on
these ten markets, the Operating Partnership gains better brand recognition,
builds local expertise and improves operating efficiencies.

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Within each market there are numerous housing alternatives that compete with the
Communities in attracting residents. The Communities compete directly with other
rental apartments, condominiums and single-family homes that are available for
rent or sale in the markets in which the Communities are located. In addition,
various entities, including insurance companies, pension and investment funds,
partnerships, investment companies and other multifamily REITs, compete with the
Operating Partnership for the acquisition of existing properties and development
of new properties, some of which may have greater resources than the Operating
Partnership. The Operating Partnership has not identified any dominant
competitor, nor is it currently the dominant competitor, in its markets.

Development. Since its initial public offering in 1994, the Operating
Partnership has increased the size of its property portfolio by almost 110% to
14,462 apartment homes. Development of new communities has been the foundation
of the Operating Partnership's growth. Of its 61 Communities, 40 have been
developed by the Operating Partnership or its predecessors. The Operating
Partnership attributes much of its historical cash flow growth to the quality of
the apartment Communities it has developed over the years.

The Operating Partnership maintains an active new-community development program
which provides it with a predictable and consistent stream of new revenues.
Focusing on new-community development allows the Operating Partnership to build
desirable properties that generate premium rents. It also provides returns which
generally exceed those achieved on acquisitions. The Operating Partnership's
development goal is to provide its residents with a community that feels like
single-family housing, with front yards, open floor plans, abundant square
footage, generous storage and both attached and detached garages. The Operating
Partnership enters into leases with its residents which include provisions which
are usual and customary for apartment leases, such as the payment of rent
monthly, advance notice in the event of a termination, provision of a security
deposit and the imposition by the Operating Partnership of a charge for rent
paid after the fifth day of the month. The leases are predominantly for a term
of one year.

The Operating Partnership employs a combination of local autonomy and
centralized oversight in its development process. Development officers live in
their respective markets, so that critical decision-making is kept local.
Regional development officers report to a corporate development executive, a
process that is designed to ensure consistency in design, building materials and
quality. The Operating Partnership utilizes the Construction Company in addition
to third-party general contractors. Of the 2,251 apartment homes in development
at December 31, 1997, 85.1% are being built by the Construction Company, which
has resulted in higher quality construction, improved timeliness and cost
savings.

In 1997, the Operating Partnership completed development of six Communities,
adding 1,454 apartment homes to the Operating Partnership's portfolio. These six
Communities represent a total investment of approximately $104.6 million. The
Communities completed in 1997 are Summit on the River, Summit Russett, Summit
Sedgebrook I, Summit Ballantyne I, Summit Plantation II and Summit Norcroft II.

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As of December 31, 1997, the Operating Partnership had nine apartment
Communities (two of which are also in lease-up) containing 2,251 apartment
homes, with a budgeted cost of $170.2 million, under construction. The following
provides summary information regarding the nine Communities under construction
as of December 31, 1997 (dollars in thousands):

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

Summit Stonefield -- Yardley, PA......... 216 $ 19,640 $18,324 $ 1,316 Q1 1998
Summit Lake I -- Raleigh, NC............. 302 19,700 17,380 2,320 Q2 1998
Summit Ballantyne II -- Charlotte, NC.... 154 10,100 2,792 7,308 Q3 1998
Summit Sedgebrook II -- Charlotte, NC.... 120 7,500 963 6,537 Q3 1998
Summit Doral -- Miami, Florida........... 192 17,000 3,186 13,814 Q1 1999
Summit Fair Lakes I -- Fairfax, VA....... 370 32,900 12,458 20,442 Q1 1999
Summit Governor's Village -- Chapel Hill,
NC..................................... 242 16,400 3,696 12,704 Q1 1999
Summit New Albany I -- Columbus, OH...... 301 22,600 10,223 12,377 Q1 1999
Summit Westwood -- Raleigh, NC........... 354 24,400 3,016 21,384 Q2 1999
Other development and construction
costs.................................. -- -- 10,294 --
-------- -------- ------- -------
2,251 $170,240 $82,332 $98,202
======== ======== ======= =======

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 project, 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. Similarly, market conditions at the time these Communities
become available for leasing will affect rental rates and the period of time
necessary to achieve stabilization and could result in achieving stabilization
later than currently anticipated.

The Operating Partnership is also conducting feasibility and other
pre-development work for eleven new Communities. The Operating Partnership
either owns or holds options to purchase the land for each of these potential
developments (dollars in millions):

ANTICIPATED
APARTMENT DEVELOPMENT CONSTRUCTION
COMMUNITIES IN PRE-DEVELOPMENT HOMES BUDGETS START
- ----------------------------------------------------- --------- ----------- ------------

Summit Lake II -- Raleigh, NC........................ 144 $ 10.0 1Q98
Summit Fair Lakes II -- Fairfax, VA.................. 160 14.2 2Q98
Summit Crest -- Raleigh, NC.......................... 378 25.5 3Q98
Summit Deep Run -- Richmond, VA...................... 304 22.7 3Q98
Summit Grandview -- Charlotte, NC.................... 217 25.2 3Q98
Summit New Albany II -- Columbus, OH................. 127 9.5 3Q98
Summit Pembroke -- Pembroke, FL...................... 328 28.2 3Q98
Summit Strathmoor -- Charlotte, NC................... 496 35.4 3Q98
Summit Devin -- Atlanta, GA.......................... 296 22.5 4Q98
Summit Largo -- Largo, MD............................ 217 17.6 4Q98
Summit Russett II -- Laurel, MD...................... 130 10.1 4Q98
-------- ---------
2,797 $ 220.9
======== =========

For each of these potential Communities, the Operating Partnership is only in
the pre-development phase, and there can be no assurance that all or any one of
these Communities will be completed. See "Management's

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Discussion and Analysis of Financial Condition and Results of
Operations -- Development Activity" for a discussion of uncertainties and risks
associated with the Operating Partnership's development activity.

Acquisitions and Disposition. While the Operating Partnership has emphasized
development of new apartment communities as one of its strategies for growth, it
also has successfully capitalized on expansion opportunities through the
strategic acquisition of properties that meet the Operating Partnership's
investment criteria. The Operating Partnership has acquired more than 4,800
apartment homes since its formation in 1994. These properties were successfully
acquired at prices below their replacement cost and cumulatively have achieved a
total unleveraged average yield of 9.8% in 1997. Acquisitions are concentrated
in the Operating Partnership's ten targeted core markets in order to further
strengthen brand identity and operational efficiencies. The Operating
Partnership's extensive local-market knowledge and development expertise give it
an advantage in identifying and underwriting acquisition opportunities which the
Operating Partnership believes will generate shareholder value. The Operating
Partnership has acquired the following Communities in 1997 (dollars in
thousands):

ACQUISITION APARTMENT PURCHASE YEAR
COMMUNITY DATE HOMES PRICE BUILT
- ------------------------------------------- ----------- --------- --------- -----

Summit Portofino -- Broward County, FL..... 1/6/97 322 $ 28,000 1995
Summit Mayfaire -- Raleigh, NC............. 1/15/97 144 9,650 1995
Summit Sand Lake -- Orlando, FL............ 2/20/97 416 26,798 1995
Summit Windsor II -- Frederick, MD......... 7/18/97 306 17,100 1988
Summit Fair Oaks -- Fairfax, VA............ 12/31/97 246 21,200 1990
------ ---------
1,434 $ 102,748
====== =========

Additionally, the Operating Partnership has commenced a disposition program
targeting those Communities within its portfolio which do not align with the
Operating Partnership's long term strategic plan and growth objectives. One such
Community was sold in 1997 for $9.5 million. Currently, one Community is subject
to a Sale and Purchase Agreement with a qualified buyer and the Operating
Partnership is in the initial stages of marketing another Community. The
Operating Partnership does not expect to incur any losses related to the sale of
these Communities.

Dedication to Customer Service. Proactive property management has allowed the
Operating Partnership to maximize cash flow from its portfolio by encouraging
local decision-making and rewarding performance, initiative and innovation. The
Operating Partnership's localized property-management system, with offices
strategically located in six key cities, gives the Operating Partnership a
distinct advantage in better responding to the needs of each market. The
Operating Partnership has long stressed the importance of developing strong
customer relationships with its residents. The Operating Partnership's total
commitment to resident satisfaction is further evidenced by its "Sundown Policy"
which mandates a response by the appropriate employee to any resident inquiry or
complaint no later than "sundown" of the day on which the inquiry or complaint
was received. The Operating Partnership has sought to provide its residents with
experienced, well-trained and attentive management staffs. Every Community
employee enters into a comprehensive training program when he or she is hired.
This training program ensures that employees have a clear understanding of their
job responsibilities, the high standards of performance expected of them and the
Operating Partnership's operating philosophies. On-going training following each
employee's initial employment period further enhances employee productivity. The
Operating Partnership believes that this training regimen along with a proven
hiring process has produced a higher quality management staff, evidenced by
higher resident satisfaction at the Communities and lower employee turnover.

OPERATING PARTNERSHIP

As the sole general partner of the Operating Partnership, Summit Properties has
the exclusive power to manage and conduct the business of the Operating
Partnership, subject to certain voting rights of holders (including Summit
Properties) of the units of limited partnership interest ("Units"), including
the consent of holders (including Summit Properties) of 85% of the Units in
connection with a sale, transfer or other disposition of all or substantially
all of the assets of the Operating Partnership, or any other transaction which
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would result in the recognition of a significant taxable gain to the holders of
Units. As of December 31, 1997, Summit Properties' general and limited
partnership interests in the Operating Partnership entitle it to share in 85.3%
of the cash distributions from, and in the profits and losses of, the Operating
Partnership.

Each Unit may be redeemed by the holder thereof for cash equal to the fair
market value of a share of Summit Properties Common Stock or, at the option of
Summit Properties, an equivalent number of shares of Common Stock. Summit
Properties presently anticipates that it will elect to issue shares of Common
Stock in connection with redemptions of Units rather than paying cash. With each
redemption of Units for Common Stock, Summit Properties percentage ownership
interest in the Operating Partnership will increase. In addition, whenever
Summit Properties issues shares of Common Stock for cash, Summit Properties will
contribute any net proceeds therefrom to the Operating Partnership and the
Operating Partnership will issue an equivalent number of Units to Summit
Properties.

The Operating Partnership cannot be terminated, except in connection with a sale
of all or substantially all of the assets of the Operating Partnership, for a
period of ninety-nine years without a vote of the limited partners of the
Operating Partnership.

OPERATING PARTNERSHIP HISTORY

The Operating Partnership, a Delaware limited partnership, was formed on January
14, 1994 to continue and expand the multifamily development, construction,
acquisition, operation, management and leasing businesses of the predecessor
entities through which the Operating Partnership historically conducted
operations prior to the Summit Properties' Initial Offering (as defined below)
(the "Summit Entities"). The Summit Entities were founded by William B. McGuire,
Jr. in 1972. In 1981, William F. Paulsen joined the predecessor to the Operating
Partnership as Chief Executive Officer and shepherded the growth of its
multifamily development and management activities.

Summit Properties organized itself as a real estate investment trust (a "REIT")
and completed its initial public offering (the "Initial Offering") of 10,000,000
shares of common stock, par value $0.01 per share (the "Common Stock"), on
February 15, 1994 and sold an additional 1,500,000 shares upon exercise of the
underwriters' over-allotment option on March 4, 1994. The proceeds from the
Initial Offering were used to acquire a controlling interest in the Operating
Partnership. On June 2, 1995, Summit Properties completed a follow-on public
offering (the "1995 Offering") of 4,000,000 shares of Common Stock. A second
follow-on public offering (the "1996 Offering") of 5,000,000 shares of Summit
Properties Common Stock was completed on August 7, 1996, with an additional
750,000 shares sold upon exercise of the underwriters' over-allotment option on
August 12, 1996. The proceeds of the 1995 and 1996 Offerings were contributed by
Summit Properties to the Operating Partnership in exchange for Units. On August
12, 1997, the Operating Partnership completed a $125 million senior unsecured
debt offering. On December 17, 1997, the Operating Partnership completed an
additional $30 million senior unsecured debt offering.

The executive offices of the Operating Partnership are located at 212 South
Tryon Street, Suite 500, Charlotte, North Carolina 28281. The Operating
Partnership's telephone number is (704) 334-9905 and its facsimile number is
(704) 333-8340. The Operating Partnership also maintains offices in Atlanta,
Georgia; Tampa, Florida; Reston, Virginia; Ft. Lauderdale, Florida and Raleigh,
North Carolina.

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ITEM 2. PROPERTIES

THE COMMUNITIES

The Operating Partnership owns and manages 61 completed Communities and two
Communities which are currently under construction and are in lease-up
consisting of 14,980 apartment homes. Thirty-five of the Communities have been
completed since January 1, 1990 and, as of December 31, 1997, the average age of
the completed Communities was approximately 7 1/2 years. The following is a
summary of Communities by market:

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

Charlotte, North Carolina............................ 14 2,498 16.7%
Tampa/Sarasota, Florida.............................. 9 2,248 15.0%
Washington, DC....................................... 8 2,173 14.5%
Raleigh/Central North Carolina....................... 11 2,143 14.3%
South Florida........................................ 6 1,759 11.7%
Other non core markets............................... 5 1,098 7.3%
Atlanta, Georgia..................................... 4 1,229 8.2%
Richmond, Virginia................................... 3 862 5.8%
Orlando, Florida..................................... 2 656 4.4%
Indianapolis, Indiana................................ 1 314 2.1%
---------- -------- ---------
63 14,980 100.0%
========== ======== =========

Other non-core markets consist of two Communities in Greenville, South Carolina,
two Communities in Cincinnati, Ohio and one Community in Yardley, Pennsylvania.

All of the Communities target middle to upper income apartment renters as
customers and have amenities, apartment home sizes and mixes consistent with the
desires of this resident population. The Communities are owned in fee simple and
are located in six states throughout the southeastern and mid-atlantic United
States (Florida, Georgia, Maryland, North Carolina, South Carolina and Virginia)
as well as in Delaware, Ohio, Indiana and Pennsylvania. The following table
highlights certain information regarding the Communities.

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AVERAGE AVERAGE
AVERAGE AVERAGE MONTHLY MONTHLY
AVERAGE PHYSICAL PHYSICAL RENTAL RENTAL
NUMBER OF YEAR APARTMENT OCCUPANCY OCCUPANCY REVENUE REVENUE
MARKET AREA/COMMUNITY LOCATION APARTMENTS COMPLETED SIZE 1997(1) 1996(1) 1997(2) 1996(2)
--------------------- ------------------- ---------- --------- --------- --------- --------- ------- -------

ATLANTA
Summit Glen................... Atlanta, GA 242 1992 983 92.8 91.9 $ 838 $ 847
Summit Springs................ Norcross, GA 312 1990 934 92.0 92.6 699 708
Summit Village................ Marietta, GA 323 1991 984 91.5 91.8 728 735
---------- --------- --------- --------- ------- -------
ATLANTA WEIGHTED AVERAGE........................... 877 966 92.0 92.1 748 756

CHARLOTTE
Summit Arbors................. Charlotte, NC 120 1986 944 94.7 94.8 790 748
Summit Creek.................. Charlotte, NC 260 1983 910 92.6 92.7 638 624
Summit Crossing............... Charlotte, NC 128 1985 978 93.5 96.3 664 649
Summit Fairview............... Charlotte, NC 135 1983 1,036 95.7 93.6 751 726
Summit Foxcroft(4)............ Charlotte, NC 156 1979 940 93.2 93.4 660 643
Summit Hollow................. Charlotte, NC 232 1978 949 94.1 94.5 684 656
Summit Norcroft I............. Charlotte, NC 162 1991 1,112 93.2 94.0 765 805
Summit Radbourne.............. Charlotte, NC 225 1991 1,006 93.3 92.0 773 786
Summit Simsbury............... Charlotte, NC 100 1985 874 94.0 93.6 743 734
Summit Touchstone............. Charlotte, NC 132 1986 899 92.3 94.0 700 677
---------- --------- --------- --------- ------- -------
CHARLOTTE WEIGHTED AVERAGE......................... 1,650 966 93.5 93.7 711 701

RALEIGH/CENTRAL NORTH CAROLINA
Summit Creekside.............. Hickory, NC 118 1981 1,006 95.7 96.2 596 566
Summit Eastchester............ High Point, NC 172 1981 947 93.7 96.1 593 559
Summit Highland............... Raleigh, NC 172 1987 986 93.8 94.5 708 703
Summit Hill I................. Chapel Hill, NC 204 1991 904 92.2 93.3 769 774
Summit Oak.................... Goldsboro, NC 100 1982 918 96.1 96.7 551 532
Summit Old Town............... Winston-Salem, NC 172 1979 954 92.4 90.9 572 542
Summit Sherwood............... Winston-Salem, NC 190 1968 1,028 94.9 95.2 561 526
Summit Square................. Durham, NC 362 1990 925 91.8 92.1 761 763
---------- --------- --------- --------- ------- -------
RALEIGH/CENTRAL NORTH CAROLINA
WEIGHTED AVERAGE.............. 1,490 954 93.4 93.9 662 647

RICHMOND
Summit Breckenridge........... Glen Allen, VA 300 1987 928 95.3 95.1 742 706
Summit Stony Point............ Richmond, VA 250 1986 1,045 95.7 93.2 760 724
Summit Waterford.............. Midlothian, VA 312 1990 995 93.7 91.4 705 685
---------- --------- --------- --------- ------- -------
RICHMOND WEIGHTED AVERAGE.......................... 862 986 94.8 93.2 734 704

SOUTH FLORIDA
Summit Del Ray................ Delray Beach, FL 252 1993 968 94.8 91.5 852 852
Summit Palm Lake.............. W. Palm Beach, FL 304 1992 919 95.2 96.7 764 743
---------- --------- --------- --------- ------- -------
SOUTH FLORIDA WEIGHTED
AVERAGE........................................... 556 941 95.0 94.3 804 792

TAMPA/SARASOTA
Summit Gateway................ St. Petersburg, FL 212 1987 828 95.6 93.7 644 626
Summit Hampton................ Bradenton, FL 352 1988 933 89.7 93.0 625 630
Summit Heron's Run............ Sarasota, FL 274 1990 863 90.7 92.5 674 653
Summit Lofts.................. Palm Harbour, FL 200 1990 1,045 93.2 90.8 689 690
Summit McIntosh............... Sarasota, FL 212 1990 855 89.5 93.9 696 684
Summit Perico................. Bradenton, FL 256 1990 911 89.2 93.5 671 657
Summit Providence............. Brandon, FL 444 1991 952 91.0 93.0 649 659
Summit Station................ Tampa, FL 230 1990 902 92.1 92.6 634 619
Summit Walk................... Tampa, FL 68 1993 1,614 94.5 95.9 1,098 1,052
---------- --------- --------- --------- ------- -------
TAMPA/SARASOTA WEIGHTED
AVERAGE........................................... 2,248 936 91.3 93.0 670 663
WASHINGTON, D.C
Summit Belmont................ Fredricksburg, VA 300 1987 881 94.9 90.2 633 622
Summit Meadow................. Columbia, MD 178 1990 1,020 95.4 93.6 900 864
Summit Pike Creek............. Newark, DE 264 1988 899 94.1 95.8 838 800
Summit Reston................. Reston, VA 418 1987 854 94.0 93.9 965 917
Summit Windsor I.............. Frederick, MD 147 1989 903 90.7 92.7 686 681
---------- --------- --------- --------- ------- -------
WASHINGTON, D.C. WEIGHTED
AVERAGE........................................... 1,307 897 94.0 93.2 823 792

MORTGAGE
NOTES
PAYABLE AT
DECEMBER 31,
1997
MARKET AREA/COMMUNITY (IN THOUSANDS)
--------------------- --------------

ATLANTA
Summit Glen................... (3)
Summit Springs................ (3)
Summit Village................ (3)
ATLANTA WEIGHTED AVERAGE......
CHARLOTTE
Summit Arbors................. --
Summit Creek.................. --
Summit Crossing............... $4,162
Summit Fairview............... --
Summit Foxcroft(4)............ 2,728
Summit Hollow................. 4,809
Summit Norcroft I............. (3)
Summit Radbourne.............. 8,599
Summit Simsbury............... (5)
Summit Touchstone............. (5)
CHARLOTTE WEIGHTED AVERAGE....
RALEIGH/CENTRAL NORTH CAROLINA
Summit Creekside.............. 2,837
Summit Eastchester............ 3,814
Summit Highland............... (3)
Summit Hill I................. --
Summit Oak.................... 2,553
Summit Old Town............... 3,048
Summit Sherwood............... 3,303
Summit Square................. (3)
RALEIGH/CENTRAL NORTH CAROLINA
WEIGHTED AVERAGE..............
RICHMOND
Summit Breckenridge........... --
Summit Stony Point............ (6)
Summit Waterford.............. (3)
RICHMOND WEIGHTED AVERAGE.....
SOUTH FLORIDA
Summit Del Ray................ (3)
Summit Palm Lake.............. (3)
SOUTH FLORIDA WEIGHTED
AVERAGE......................
TAMPA/SARASOTA
Summit Gateway................ (6)
Summit Hampton................ (6)
Summit Heron's Run............ (3)
Summit Lofts.................. --
Summit McIntosh............... --
Summit Perico................. (3)
Summit Providence............. (3)
Summit Station................ --
Summit Walk................... --
TAMPA/SARASOTA WEIGHTED
AVERAGE......................
WASHINGTON, D.C
Summit Belmont................ (6)
Summit Meadow................. (3)
Summit Pike Creek............. (6)
Summit Reston................. --
Summit Windsor I.............. (3)
WASHINGTON, D.C. WEIGHTED
AVERAGE......................

10
11

OTHER
Summit Blue Ash............... Blue Ash, OH 242 1992 1,158 94.8 95.6 827 769
Summit Park................... Forest Park, OH 316 1989 963 92.0 91.7 633 602
Summit Beacon Ridge........... Greenville, SC 144 1988 1,046 93.6 91.9 657 653
Summit East Ridge............. Greenville, SC 180 1986 959 95.1 92.0 565 568
---------- --------- --------- --------- ------- -------
OTHER WEIGHTED AVERAGE............................. 882 1,029 93.7 92.9 676 649
---------- --------- --------- --------- ------- -------

TOTAL WEIGHTED AVERAGE OF
COMMUNITIES STABILIZED IN
1997 AND 1996................ 9,872 954 93.2 93.3 717 702
========== ========= ========= ========= ======= =======
DEVELOPED COMMUNITIES (7)
Summit Aventura............... Aventura, FL 379 1995 1,106 91.7 78.8 1,083 1,033
Summit Green.................. Charlotte, NC 300 1996 997 90.9 60.1 777 825
Summit Hill II................ Chapel Hill, NC 207 1996 1,023 92.2 75.1 769 774
Summit River Crossing......... Indianapolis, IN 314 1996 1,060 93.3 48.8 817 781
---------- ---------
1,200 1,052
ACQUISITION COMMUNITIES
Summit Mayfaire(9)............ Raleigh, NC 144 1995 1,047 92.8 N/A 770 N/A
Summit Sand Lake(9)........... Orlando, FL 416 1995 1,035 93.8 N/A 775 N/A
Summit Plantation I(10)....... Plantation, FL 262 1995 1,283 91.7 93.1 1,034 993
Summit Portofino(9)........... Broward County, FL 322 1995 1,307 93.7 N/A 977 N/A
Summit Windsor II(9).......... Frederick, MD 306 1988 903 90.2 N/A 679 N/A
Summit Fair Oaks(9)........... Fairfax, VA 246 1990 938 N/A N/A N/A N/A
---------- ---------
1,696 1,088
---------- ---------
TOTAL WEIGHTED AVERAGE OF
COMPLETED COMMUNITIES............................. 12,768 981
COMMUNITIES IN LEASE -- UP(8)
Summit Fairways............... Orlando, FL 240 1996 1,302 81.3 11.1 891 834
Summit on the River........... Atlanta, GA 352 1997 1,103 71.2 14.7 792 801
Summit Russett I.............. Laurel, MD 314 1997 958 58.7 0.8 883 866
Summit Ballantyne I........... Charlotte, NC 246 1997 1,124 18.7 N/A 865 N/A
Summit Sedgebrook I........... Charlotte, NC 248 1997 1,017 16.7 N/A 717 N/A
Summit Plantation II.......... Plantation, FL 240 1997 1,173 19.5 N/A 1,036 N/A
Summit Norcroft II............ Charlotte, NC 54 1997 1,168 8.2 N/A 816 N/A
Summit Lake I................. Raleigh, NC 302 1998 1,048 4.7 N/A 735 N/A
Summit Stonefield............. Yardley, PA 216 1998 1,022 20.4 N/A 1,101 N/A
---------- ---------
2,212 1,090
---------- ---------
TOTAL COMMUNITIES.................................. 14,980 997
========== =========

MORTGAGE
NOTES
PAYABLE AT
DECEMBER 31,
1997
MARKET AREA/COMMUNITY (IN THOUSANDS)
--------------------- --------------

OTHER
Summit Blue Ash............... (3)
Summit Park................... --
Summit Beacon Ridge........... --
Summit East Ridge............. 5,100
OTHER WEIGHTED AVERAGE........
TOTAL WEIGHTED AVERAGE OF
COMMUNITIES STABILIZED IN
1997 AND 1996................
DEVELOPED COMMUNITIES (7)
Summit Aventura............... --
Summit Green.................. --
Summit Hill II................ --
Summit River Crossing......... --
ACQUISITION COMMUNITIES
Summit Mayfaire(9)............ --
Summit Sand Lake(9)........... 14,985
Summit Plantation I(10)....... --
Summit Portofino(9)........... --
Summit Windsor II(9).......... --
Summit Fair Oaks(9)........... --
TOTAL WEIGHTED AVERAGE OF
COMPLETED COMMUNITIES........
COMMUNITIES IN LEASE -- UP(8)
Summit Fairways............... --
Summit on the River........... --
Summit Russett I.............. --
Summit Ballantyne I........... --
Summit Sedgebrook I........... --
Summit Plantation II.......... --
Summit Norcroft II............ --
Summit Lake I................. --
Summit Stonefield............. --
TOTAL COMMUNITIES.............

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

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

(3) Collateral for fixed rate mortgages of $149.6 million.

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

(5) Collateral for a fixed rate mortgage of $8.6 million.

(6) Collateral for letters of credit in an aggregate amount of $54.1 million
which serve as collateral for $52.9 million in tax exempt bonds.

(7) Communities that were stabilized in 1997 but were not stabilized in 1996.

(8) Communities that were in lease-up during 1997. These Communities have been
and are leasing at a rate consistent with the Operating Partnership's
expectations. As with any community in lease-up, there are uncertainties
and risks associated with the Operating Partnership's communities in
lease-up. While the Operating Partnership has estimated completion and
stabilization budgets and target dates based on what it believes are
reasonable assumptions in light of current conditions, there can be no
assurance that

11
12

actual costs will not exceed current budgets or that the Operating
Partnership will not experience delays in reaching stabilization of such
communities.

(9) Community acquired in 1997. Summit Fair Oaks was acquired on December 31,
1997 and, accordingly, no average occupancy or average rent information is
available.

(10) Community acquired April 1, 1996.

Information with respect to total debt secured by thirty-three of the Operating
Partnership's communities having an aggregate net book value of $320.7 million
as of December 31, 1997, is as follows (in thousands):

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

Total principal........................... $ 214,088 $ 52,852
Interest rates range from................. 5.88% to 9.80% 5.65%(1)
Weighted average interest rate............ 6.69% 5.65%(1)
Annual debt service....................... $ 18,431 $ 3,703(2)

Scheduled annual maturities:

1998........................................................ $ 5,208
1999........................................................ 5,537
2000........................................................ 5,856
2001(3)..................................................... 114,648
2002........................................................ 11,248
Thereafter.................................................. 124,443
--------
Total....................................................... $266,940
========

(1) Interest rate as of December 31, 1997.

(2) Annual debt service for variable rate loans represents 1997 costs and
includes letter of credit fees and other bond related costs.

(3) Year 2001 maturities include a $111.4 million balloon payment on the 5.88%
fixed rate mortgage loan from The Northwestern Mutual Life Insurance
Company.

Each Community has many of the following features: swimming pools, tennis,
racquetball and volleyball courts, saunas, whirlpools, fitness facilities,
picnic areas, large clubhouses and convenient parking facilities. Most of the
apartment homes offer amenities that include spacious open living areas,
sunrooms, patios or balconies, sunken living rooms, fireplaces, built-in shelves
or entertainment centers, large storage areas or walk-in closets, vaulted
ceilings, ceiling fans and separate in-home laundry facilities or laundry
hook-ups. In addition to these physical amenities, each Community has its own
highly trained and experienced on-site management and maintenance staff to
ensure that courteous and responsive service is provided to its residents.

COMMUNITY MANAGEMENT

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

ITEM 3. LEGAL PROCEEDINGS

Neither the Operating Partnership nor any of the Communities is presently
subject to any material litigation nor, to the Operating Partnership's
knowledge, is any litigation threatened against the Operating Partnership or any
of the Communities, other than routine actions for negligence or other claims
and administrative proceedings arising in the ordinary course of business, some
of which are expected to be covered by liability

12
13

insurance and all of which collectively are not expected to have a material
adverse effect on the business or financial condition or results of operations
of the Operating Partnership.

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

NONE

13
14

PART II

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

There is no established public trading market for the Units. As of March 4,
1998, there were 101 holders of record of Units.

The Operating Partnership declared a distribution of $0.3975 per Unit for each
of the four quarters in 1997, which was paid on May 15, 1997 for the first
quarter, August 15, 1997 for the second quarter, November 17, 1997 for the third
quarter, and February 14, 1998 for the fourth quarter.

The Operating Partnership declared a distribution of $0.3875 per Unit for each
of the four quarters in 1996, which was paid on May 15, 1996 for the first
quarter, August 15, 1996 for the second quarter, November 15, 1996 for the third
quarter, and February 14, 1997 for the fourth quarter.

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

On August 12, 1997, the Operating Partnership completed a $125 million senior
unsecured debt offering comprised of three tranches underwritten by J.P. Morgan
& Co., Merrill Lynch & Co., Morgan Stanley Dean Witter, and First Union Capital
Markets Corp. The first tranche, $25 million of 6.80% Notes due on August 15,
2002 (the "2002 Notes"), was priced at 99.940% to yield 6.81%, or 73 basis
points over the rate on U.S. Treasury securities with a comparable maturity. The
second tranche, $50 million of 6.95% Notes due on August 15, 2004 (the "2004
Notes"), was priced at 99.764% to yield 6.99% or 81 basis points over the rate
on U. S. Treasury securities with a comparable maturity. The third tranche, $50
million of 7.20% Notes due on August 15, 2007 (the "2007 Notes" and, together
with the 2002 Notes and the 2004 Notes, the "August 1997 Notes"), was priced at
99.83% to yield 7.22% or 104 basis points over the rate on U. S. Treasury
securities with a comparable maturity. The approximately $123.6 million of net
proceeds from the offering of the August 1997 Notes were used to pay down the
Unsecured Credit Facility.

The price to the public for the 2002 Notes, 2004 Notes and 2007 Notes (i.e., the
aggregate principal amount less the applicable discount from par value set forth
above) was $24,985,000, $49,882,000 and $49,915,000, respectively. Underwriting
discounts and commissions for the 2002 Notes, 2004 Notes and 2007 Notes were
$150,000, $312,500 and $325,000, respectively. Offering expenses relating to the
offering of the August 1997 Notes, other than underwriting discounts and
commissions and discounts from par value, totaled $390,000.

On December 17, 1997, the Operating Partnership completed a $30 million senior
unsecured debt offering underwritten by J.P. Morgan & Co. The offering consisted
of one tranche of 6.625% Notes due on December 15, 2003 (the "2003 Notes" and,
together with the August 1997 Notes, the "Notes") and was priced at 99.79% to
yield 6.67%, or 95 basis points over the rate on U.S. Treasury securities with a
comparable maturity. The approximately $29.6 million of net proceeds from the
offering of the 2003 Notes were used to pay down the Unsecured Credit Facility.

The price to the public for the 2003 Notes (i.e., the aggregate principal amount
less the applicable discount from par value set forth above) was $29,935,800.
Underwriting discounts and commissions for the 2003 Notes were $187,500.
Offering expenses relating to the offering of the 2003 Notes, other than
underwriting discounts and commissions and discounts from par value, totaled
$136,000.

The Notes were sold pursuant to a Registration Statement on Form S-3 (File No.
333-25575), declared effective on July 15, 1997, relating to an indeterminate
amount of shares of Summit Properties' Common Stock and shares of preferred
stock of Summit Properties with an aggregate public offering price of up to

14
15

$250,000,000 and debt securities of the Operating Partnership with an aggregate
public offering price of up to $250,000,000.

During the three months ended December 31, 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 94,685 shares of
Common Stock pursuant to its Dividend Reinvestment Plan. Summit Properties
has contributed the proceeds (approximately $1.9 million) of these sales to
the Operating Partnership in consideration of an aggregate of 94,685 Units.

B. Summit Properties has issued an aggregate of 5,900 shares of Common
Stock pursuant to the exercise of stock options. Summit Properties has
contributed the proceeds (approximately $114,000) of these options to the
Operating Partnership in consideration of an aggregate 5,900 Units.

In light of the circumstances under which such Units were issued and information
obtained by the Operating Partnership in connection with such transactions,
management of Summit Properties, in its capacity as general partner of the
Operating Partnership, believes that the Operating Partnership may rely on such
exemption.

15
16

ITEM 6. SELECTED FINANCIAL DATA

The following table sets forth selected consolidated financial and other
information on a consolidated historical basis for the Operating Partnership and
its predecessors, the Summit Entities, as of and for each of the years in the
five-year period ended December 31, 1997. This table should be read in
conjunction with the Consolidated Financial Statements of Summit Properties
Partnership, L.P. and the Notes thereto included elsewhere herein.

SELECTED FINANCIAL DATA
SUMMIT PROPERTIES PARTNERSHIP (HISTORICAL)(1)

YEARS ENDED DECEMBER 31,
-------------------------------------------------------
1997 1996 1995 1994 1993
--------- --------- -------- --------- --------
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AND PROPERTY
INFORMATION)

OPERATING INFORMATION:
Revenue
Rental....................................... $ 109,827 $ 88,864 $ 70,773 $ 54,198 $ 45,561
Property management(2)....................... -- -- -- 536 4,102
Interest and other........................... 6,850 5,625 4,221 3,700 3,779
--------- --------- -------- --------- --------
Total................................. 116,677 94,489 74,994 58,434 53,442
--------- --------- -------- --------- --------
Property operating and maintenance expense
(before depreciation and amortization)....... 42,032 35,226 28,012 21,502 18,991
Property management expenses(2)................ -- -- -- 366 2,799
Interest expense............................... 21,959 17,138 14,802 14,067 26,400
Depreciation and amortization.................. 22,652 18,208 15,141 11,700 9,735
REIT formation costs........................... -- -- -- 457 --
General and administrative expense............. 2,740 2,557 1,949 1,756 1,375
(Income) loss from equity investments.......... (274) 173 39 59 --
--------- --------- -------- --------- --------
Total................................. 89,109 73,302 59,943 49,907 59,300
--------- --------- -------- --------- --------
Income (loss) before gain on sale of real
estate assets and extraordinary items........ 27,568 21,187 15,051 8,527 (5,858)
Gain on sale of real estate assets............. 4,366 -- -- -- --
--------- --------- -------- --------- --------
Income (loss) before extraordinary items....... $ 31,934 $ 21,187 $ 15,051 $ 8,527 $ (5,858)
========= ========= ======== ========= ========
Net income (loss).............................. $ 31,934 $ 20,561 $ 14,512 $ 17,093 $ (3,408)
========= ========= ======== ========= ========
Income per unit before extraordinary
items -- basic and diluted................... $ 1.17 $ .92 $ .83 $ .64 N/A
========= ========= ======== ========= ========
Net income per unit -- basic and diluted....... $ 1.17 $ .90 $ .80 $ 1.28 N/A
========= ========= ======== ========= ========
Distributions per units........................ $ 1.59 $ 1.55 $ 1.51 $ 1.29 N/A
========= ========= ======== ========= ========
Weighted average units outstanding -- basic.... 27,258 22,914 18,112 13,390 N/A
========= ========= ======== ========= ========
OTHER INFORMATION:
Cash flow provided by (used in):
Operating activities......................... $ 55,947 $ 41,176 $ 30,994 $ 17,525 $ 8,712
Investing activities......................... (175,907) (103,971) (63,734) (113,741) (2,092)
Financing activities......................... 119,858 63,579 34,440 88,993 (9,141)
Funds from Operations(3)....................... $ 50,201 $ 39,391 $ 30,148 $ 20,120 $ 3,777
Total completed communities (at end of
period)...................................... 61 51 46 32 27
Total apartment homes developed(4)............. 1,454 1,061 379 -- 320
Total apartment homes acquired................. 1,434 262 2,025 1,332 --
Total apartment homes (at end of period)(5).... 14,462 11,788 10,465 8,061 6,729
Ratio of earnings to fixed charges(6)(7)....... 1.93 1.78 1.65 1.52 0.77

16
17

BALANCE SHEET INFORMATION:
Real estate, before accumulated depreciation... $ 913,033 $ 704,779 $586,264 $ 439,025 $317,374
Total assets................................... 825,695 635,364 533,609 397,945 297,670
Total long-term debt........................... 474,673 309,933 297,010 249,009 315,847
Partners' equity (deficiency).................. 311,570 303,416 217,496 138,089 (38,127)

(1) For purposes of the Selected Financial Data, historical information is
presented both for the Operating Partnership and its predecessors, the
Summit Entities, provided that historical financial information for its
predecessors only includes information relating to the Communities held by
the Operating Partnership immediately following the Initial Offering and the
entities which provided property and general management services for those
Communities.

(2) Consists of revenues and expenses from property management services provided
to Communities owned by unrelated third parties and by certain predecessor
partnerships prior to the Initial Offering. Since the Initial Offering,
these services have been performed by the Management Company, which is
accounted for under the equity method of accounting.

(3) The White Paper on Funds from Operations approved by the Board of Governors
of the National Association of Real Estate Investment Trusts ("NAREIT") in
March 1995 (the "White Paper") defines Funds from Operations as net income
(loss) computed in accordance with generally accepted accounting principles
("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 believes Funds from Operations is helpful to investors
as a measure of the performance of an equity REIT because, along with cash
flows from operating activities, financing activities and investing
activities, it provides investors with an understanding of the ability of
the Operating Partnership to incur and service debt and make capital
expenditures. 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. Further, Funds from Operations does 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
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 is it indicative of funds available to fund the Operating
Partnership's cash needs, including its ability to make distributions. Funds
from Operations is calculated as follows (dollars in thousands):

YEARS ENDED DECEMBER 31,
-----------------------------------------------
1997 1996 1995 1994 1993
------- ------- ------- ------- -------

Income (loss) before gain on sale of real
estate assets and extraordinary
items.................................. $27,568 $21,187 $15,051 $ 8,527 $(5,858)
Real estate depreciation................. 22,633 18,204 15,097 11,593 9,635
------- ------- ------- ------- -------
Funds from Operations.................... $50,201 $39,391 $30,148 $20,120 $ 3,777
======= ======= ======= ======= =======

(4) Represents the total number of apartment homes in Communities completed and
owned by the Operating Partnership during the period.

(5) Represents the total number of apartment homes in Communities completed and
owned by the Operating Partnership at the end of the period.

(6) The ratios of earnings to fixed charges were computed by dividing earnings
by fixed charges. For this purpose, earnings consist of pre-tax income from
continuing operations plus fixed charges (excluding capitalized interest).
Fixed charges consist of interest expense (whether expensed or capitalized),
the

17
18

estimated interest component of rent expense, and the amortization of debt
issuance costs. To date, the Operating Partnership has not issued any
preferred stock; therefore, the ratios of earnings to combined fixed charges
and preferred stock dividend requirements are the same as the ratios of
earnings to fixed charges presented.

(7) Prior to the completion of the Initial Offering, the Operating Partnership
maintained a different capital structure. As a result, although the original
properties have historically generated positive net cash flow, the financial
statements of the Operating Partnership show net losses for the fiscal year
ended December 31, 1993. Consequently, the computation of the ratio of
earnings to fixed charges for such period indicates that earnings were
inadequate to cover fixed charges by approximately $6.0 million for the
fiscal year ended December 31, 1993.

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

This Form 10-K contains certain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended (the "Securities Act"),
and Section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), including without limitation statements relating to the
operating performance of stabilized communities and to development activities of
the Operating Partnership. The Operating Partnership intends such
forward-looking statements to be covered by the safe harbor provisions for
forward-looking statements contained in the Private Securities Reform Act of
1995, and is including this statement for purposes of complying with these safe
harbor provisions. Forward-looking statements, which are based on certain
assumptions and describe future plans, strategies and expectations of the
Operating Partnership are generally identifiable by use of the words "believe,"
"expect," "intend," "anticipate," "estimate," "project" or similar expressions.
The Operating Partnership's ability to predict results or the actual effect of
future plans or strategies is inherently uncertain. 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.
Factors which could have a material adverse effect on the operations and future
prospects of the Operating Partnership include, but are not limited to, changes
in: economic conditions generally and the real estate market specifically,
legislative/regulatory changes (including changes to laws governing the taxation
of real estate investment trusts ("REITs")), availability of capital, interest
rates, construction delays due to unavailability of materials, weather
conditions or other delays, competition, supply and demand for apartment
communities in the Operating Partnership's current and proposed market areas,
general accounting principles, policies and guidelines applicable to REITs, and
those factors discussed in the section entitled "Development Activity -- Certain
Factors Affecting the Performance of Development Communities" on page 29 of this
Form 10-K. These risks and uncertainties should be considered in evaluating
forward-looking statements and undue reliance should not be placed on such
statements.

As of December 31, 1997, there were 27,438,400 Units of the Operating
Partnership outstanding, of which 23,411,086 or 85.3% were owned by Summit
Properties and 4,027,314 or 14.7% were owned by other partners (including
certain officers and directors of the Summit Properties).

The following discussion should be read in conjunction with the Consolidated
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 the
operations of its Communities. The changes in operating results from period to
period reflect changes in existing community performance as well as increases in
the number of apartment homes due to the acquisition and development of
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" at the earlier of
when it has

18
19

attained 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 Years Ended December 31, 1997, 1996 and 1995

Income before gain on sale of real estate assets and extraordinary items
increased from 1995 ($15.1 million) to 1996 ($21.2 million) and from 1996 to
1997 ($27.6 million) primarily due to increased property operating income at
stabilized Communities, as well as new sources of income associated with
acquisition Communities and Communities in lease-up, partially offset by an
increase in depreciation and interest expense.

OPERATING PERFORMANCE OF THE OPERATING PARTNERSHIP'S PORTFOLIO OF COMMUNITIES

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

YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
----------------------------- ----------------------------
1997 1996 % CHANGE 1996 1995 % CHANGE
-------- ------- -------- ------- ------- --------

Property revenues:
Stabilized Communities(1)........ $ 81,668 $80,296 1.7% $65,553 $63,255 3.6%
Acquisition Communities(2)....... 12,467 2,250 454.1% 16,993 8,716 95.0%
Stabilized Development
Communities................... 12,375 8,762 41.2% 8,762 767 1042.4%
Communities in lease-up.......... 8,977 818 997.4% 818 -- 100.0%
Community sold................... 519 1,421 (63.5%) 1,421 1,391 2.2%
-------- ------- ------- -------
Total property revenues............ 116,006 93,547 24.0% 93,547 74,129 26.2%
-------- ------- ------- -------
Property operating and maintenance
expense(3):
Stabilized Communities........... 30,709 30,555 0.5% 24,717 23,687 4.3%
Acquisition Communities.......... 4,336 606 615.5% 6,444 3,492 84.5%
Stabilized Development
Communities................... 3,955 3,069 28.9% 3,069 275 1016.0%
Communities in lease-up.......... 2,821 411 586.4% 411 -- 100.0%
Community sold................... 211 585 (63.9%) 585 558 4.8%
-------- ------- ------- -------
Total property operating and
maintenance expense.............. 42,032 35,226 19.3% 35,226 28,012 25.8%
-------- ------- ------- -------
Property operating income.......... $ 73,974 $58,321 26.8% $58,321 $46,117 26.5%
======== ======= ======= =======
Apartment homes, end of period..... 14,980 12,454 20.3% 12,454 11,286 10.3%
======== ======= ======= =======

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

(2) The 1997 and 1996 comparison includes the Communities acquired in 1997 and
1996. The 1996 and 1995 comparison includes Communities acquired in 1996 and
1995.

(3) Before real estate depreciation and amortization expense.

A summary of the Operating Partnership's apartment homes for the years ended
December 31, 1997, 1996 and 1995 is as follows:

1997 1996 1995
------ ------ ------

Apartment homes at the beginning of the year................ 12,454 11,286 8,061
Acquisitions................................................ 1,434 262 2,025
Developments which began rental operations during the
year...................................................... 1,306 906 1,200
Sale of apartment homes..................................... (214) -- --
------ ------ ------
Apartment homes at the end of the year...................... 14,980 12,454 11,286
====== ====== ======

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20

OPERATING PERFORMANCE OF THE OPERATING PARTNERSHIP'S STABILIZED COMMUNITIES

The operating performance of the Communities stabilized during the entire period
in both of the comparable periods presented is summarized below (dollars in
thousands except average monthly rental revenue):

YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
---------------------------- ----------------------------
1997 1996 % CHANGE 1996 1995 % CHANGE
------- ------- -------- ------- ------- --------

Property revenues:
Rental................................ $77,788 $76,443 1.8% $62,177 $60,256 3.2%
Other................................. 3,880 3,853 0.7% 3,376 2,999 12.6%
------- ------- ------- -------
Total property revenues................. 81,668 80,296 1.7% 65,553 63,255 3.6%
------- ------- ------- -------
Property operating and maintenance
expense(1):
Personnel............................. 6,905 7,289 (5.3%) 5,723 5,420 5.6%
Advertising and promotion............. 1,085 866 25.3% 649 540 20.2%
Utilities............................. 3,657 3,567 2.5% 2,987 2,982 0.2%
Building repairs and maintenance...... 6,967 6,997 (0.4%) 5,484 5,121 7.1%
Real estate taxes and insurance....... 7,676 7,609 0.9% 6,501 6,166 5.4%
Property supervision.................. 2,043 2,001 2.1% 1,635 1,567 4.3%
Other operating expense............... 2,376 2,226 6.7% 1,738 1,891 (8.1%)
------- ------- ------- -------
Total property operating and maintenance
expense............................... 30,709 30,555 0.5% 24,717 23,687 4.3%
------- ------- ------- -------
Property operating income............... $50,959 $49,741 2.4% $40,836 $39,568 3.2%
======= ======= ======= =======
Average physical occupancy(2)........... 93.2% 93.3% (0.1%) 93.1% 94.2% (1.2%)
======= ======= ======= =======
Average monthly rental revenue(3)....... $ 717 $ 702 2.1% $ 720 $ 693 3.9%
======= ======= ======= =======
Number of apartment homes............... 9,872 9,872 7,847 7,847
======= ======= ======= =======
Number of apartment communities......... 44 44 31 31
======= ======= ======= =======

(1) Before real estate depreciation and amortization 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.

Rental and other revenue increased from 1996 to 1997 due to higher rental rates
partially offset by a decrease in occupancy. The 1.7% property revenue growth
rate was lower than the prior year rate of growth primarily as a result of a new
supply of competing multi-family communities in the markets in which the
Operating Partnership operates. In 1998 the Operating Partnership expects the
rate of growth to be similar to the growth rate in 1997 as the supply of new
multi-family Communities continues to increase somewhat balanced by the
continued strength of the local economies in which the Operating Partnership
operates. The lower growth rate was especially noticeable in the Tampa/Sarasota
and Atlanta markets. The Operating Partnership believes its expectations
relative to property revenue growth are based on reasonable assumptions as to
future economic conditions and the quantity of competitive multi-family
communities in the markets in which the Operating Partnership does business.
However, there can be no assurance that actual results will not differ from
these assumptions, which could result in a lower property revenue growth rate.

Property operating and maintenance expenses were relatively stable from 1996 to
1997. Increased advertising and promotion costs were offset by lower personnel
costs. The significant percentage increase in advertising and promotion was in
response to increased competition caused by the new supply of competing
multi-family communities. As a percentage of total property revenues, property
operating and maintenance expense decreased to 37.6% from 38.1% for the years
ended December 31, 1997 and 1996, respectively.

20
21

Rental and other revenue increased from 1995 to 1996 due to higher rental rates
offset by decreased occupancy. The increase in property operating and
maintenance expenses from 1995 to 1996 was primarily due to increased insurance
costs ($240,000 or a 40% increase), higher advertising costs and higher building
and repair costs. The increase in insurance expense was due to higher insurance
rates in the Operating Partnership's Florida markets, caused by the significant
storm damage expenses incurred in the past years by the insurance industry.
Included in the building repairs and maintenance costs was a $148,000 or a 14%
increase for replacement of carpets.

OPERATING PERFORMANCE OF THE OPERATING PARTNERSHIP'S ACQUISITION COMMUNITIES

Acquisition Communities consist of Summit Mayfaire, Summit Portofino, Summit
Sand Lake and Summit Windsor II acquired in 1997 (1,188 apartment homes), Summit
Plantation (262 apartment homes) acquired in 1996 and the twelve Communities and
a 75% interest in another Community, all of which were owned by the Crosland
Group, Inc. and its affiliates (2,025 apartment homes), acquired in 1995. Summit
Fair Oaks (246 apartment homes), was acquired on December 31, 1997 and
accordingly, its rental operations for 1997 are not reflected in the Company's
financial statements. The operations of these Communities are summarized as
follows (dollars in thousands except average monthly rental revenue):

YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
----------------------- -----------------------
1997 1996 1996 1995
--------- -------- --------- --------

Property revenues:
Rental....................................... $11,686 $2,134 $16,401 $8,467
Other........................................ 781 116 592 249
------- ------ ------- ------
Total property revenues........................ 12,467 2,250 16,993 8,716
Property operating and maintenance
expense(1)................................... 4,336 606 6,444 3,492
------- ------ ------- ------
Property operating income...................... $ 8,131 $1,644 $10,549 $5,224
======= ====== ======= ======
Average physical occupancy(2).................. 92.4% 93.1% 94.0% 96.1%
======= ====== ======= ======
Average monthly rental revenue(3).............. $ 847 $ 993 $ 672 $ 592
======= ====== ======= ======
Number of apartment homes:
1995 Acquisitions............................ -- -- 2,025 2,025
1996 Acquisitions............................ 262 262 262 --
1997 Acquisitions............................ 1,188 -- -- --
------- ------ ------- ------
Total number of apartment homes................ 1,450 262 2,287 2,025
======= ====== ======= ======

(1) Before real estate depreciation and amortization expense.

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

The decrease in the average monthly rental revenue for the year ended December
31, 1997 as compared to the corresponding period in 1996 is attributable to
lower average monthly rental revenue on the 1997 acquisition Communities in
comparison to the 1996 acquisition community. Average monthly rental revenue for
the year ended December 31, 1997 for the 1997 acquisitions alone was $806.

The unleveraged yield for the 1997 and 1996 acquisitions, defined as property
operating income on an annualized basis over total acquisition cost, for the
year ended December 31, 1997 was 9.0%. The unleveraged yield for the four
Communities acquired in 1997 only for the year ended December 31, 1997 was 8.9%.

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22

OPERATING PERFORMANCE OF THE OPERATING PARTNERSHIP'S STABILIZED DEVELOPMENT
COMMUNITIES

The Operating Partnership had four Communities with 1,200 apartment homes,
(Summit Aventura, Summit Hill II, Summit Green, and Summit River Crossing),
which were stabilized during the entire year ended December 31, 1997 but were
still in lease-up/construction in the year ended December 31, 1996. The
operating performance of these four stabilized development Communities is
summarized below (dollars in thousands except average monthly rental revenue):

YEAR ENDED
YEAR ENDED DECEMBER 31, DECEMBER 31,
----------------------- -------------------
1997 1996 1996 1995
--------- -------- ------ -----

Property revenues:
Rental....................................... $11,580 $8,183 $8,183 $693
Other........................................ 795 579 579 74
------- ------ ------ ----
Total property revenues........................ 12,375 8,762 8,762 767
Property operating and maintenance
expense(1)................................... 3,955 3,069 3,069 275
------- ------ ------ ----
Property operating income...................... $ 8,420 $5,693 $5,693 $492
======= ====== ====== ====
Average physical occupancy(2).................. 92.0% 65.6% 65.6% 9.1%
======= ====== ====== ====
Average monthly rental revenue(3).............. $ 883 $ 871 $ 871 $852
======= ====== ====== ====

(1) Before real estate depreciation expense.

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

The unleveraged yield on these four stabilized development Communities, defined
as property operating income over total development cost, for the year ended
December 31, 1997 was 10.5%.

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

The Operating Partnership had nine Communities in lease-up during the year ended
December 31, 1997. A Community in lease-up is defined as one which has commenced
rental operations but has not reached stabilization. The following is a summary
of the nine Communities in lease-up (dollars in thousands):

TOTAL ACTUAL/ % LEASED
NUMBER OF ACTUAL/ ANTICIPATED ACTUAL/ AVERAGE AS OF
APARTMENT ESTIMATED CONSTRUCTION ANTICIPATED OCCUPANCY DECEMBER 31,
COMMUNITY HOMES COST COMPLETION STABILIZATION 1997 1997
- -------------------------- --------- --------- ------------ ------------- --------- ------------

Summit Fairways........... 240 $ 17,775 Q4 1996 Q3 1997 81.27% 95.80%
Summit on the River....... 352 23,922 Q2 1997 Q4 1997 71.23% 96.60%
Summit Russett I.......... 314 23,203 Q3 1997 Q3 1997 58.71% 96.20%
Summit Stonefield......... 216 19,640 Q1 1998 Q1 1998 20.42% 88.90%
Summit Ballantyne I....... 246 16,400 Q4 1997 Q2 1998 18.69% 67.10%
Summit Sedgebrook I....... 248 16,400 Q4 1997 Q2 1998 16.71% 64.10%
Summit Plantation II...... 240 21,400 Q4 1997 Q2 1998 19.54% 79.60%
Summit Norcroft II........ 54 3,700 Q4 1997 Q1 1998 8.21% 85.20%
Summit Lake I............. 302 19,700 Q2 1998 Q3 1998 4.69% 37.40%
--------- --------
2,212 $162,140
========= ========

Property operating income (loss) after interest expense was $1.1 million and
($109,000) for the nine Communities in lease-up for the years ended December 31,
1997 and 1996, respectively. These nine Communities in lease-up had no 1995
operations.

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23

OPERATING PERFORMANCE OF SUMMIT MANAGEMENT COMPANY

The operating performance of the Management Company and its wholly-owned
subsidiary, the Construction Company, is summarized below (dollars in
thousands):

YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
-------------------------- --------------------------
1997 1996 % CHANGE 1996 1995 % CHANGE
------ ------ -------- ------ ------ --------

Revenue.............................. $6,102 $5,364 13.8% $5,364 $5,632 (4.8%)
Expenses:
Operating.......................... 5,039 4,849 3.9% 4,849 5,018 (3.4%)
Depreciation....................... 185 110 68.2% 110 120 (8.3%)
Amortization....................... 304 278 9.4% 278 274 1.5%
Interest........................... 300 300 0.0% 300 300 0.0%
------ ------ ------ ------
Total expenses..................... 5,828 5,537 5.3% 5,537 5,712 (3.1%)
------ ------ ------ ------
Net income (loss) of Summit
Management Company................. $ 274 ($ 173) 258.4% ($ 173) ($ 80) (116.3%)
====== ====== ====== ======

The change in revenue was a result of higher revenues from managing the
Operating Partnership's Communities and higher revenues from construction
activity, offset by lower revenues for managing third party Communities in each
of the years 1995 compared to 1996 and 1996 compared to 1997. The change in
operating expenses was a result of higher construction activity costs offset by
lower costs of managing the Communities in each of the years 1995 compared to
1996 and 1996 compared to 1997.

Total average third party apartment homes under management were 5,164, 7,919 and
10,927 during the years ended December 31, 1997, 1996 and 1995, respectively.
The decrease from 1996 to 1997 was primarily due to the termination of the
Management Company's contract to manage a portfolio of 1,422 apartment homes
effective December 31, 1996. The contract was terminated as a result of a change
in ownership of the apartment communities. The decrease from 1995 to 1996 was
primarily due to the termination of the Management Company's contract to manage
a portfolio of 4,050 apartment homes effective October 1, 1995. This contract
was terminated as a result of the owner's decision to provide its own property
management for these apartment homes.

Property management fees include $1.7 million, $2.3 million and $3.3 million of
fees from third parties for the years ended December 31, 1997, 1996 and 1995,
respectively. Property management fees from third parties as a percentage of
total property management revenues were 35.2%, 48.1% and 62.9% for the years
ended December 31, 1997, 1996 and 1995, 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.

Construction Company revenues and expenses increased in 1997 compared to 1996
and in 1996 compared to 1995 primarily as 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 for the years
ended December 31, 1997, 1996 and 1995 is from contracts with the Operating
Partnership, except for the contract to build Summit Plantation in 1995. The
Operating Partnership owned a 25% interest in the Summit Plantation joint
venture during construction. The Construction Company is currently building
85.1% of the Operating Partnership's Communities under construction. It is the
Operating Partnership's intention to increase this percentage over time in order
to lower construction costs and continuously improve the quality of its
apartment communities.

OTHER INCOME AND EXPENSES

Interest income decreased by $166,000 to $392,000 in 1997 compared to 1996,
primarily due to interest earned in 1996 on the proceeds from the 1996 Offering
prior to using the proceeds to fund development activity.

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24

Depreciation expense increased $4.4 million or 24.4% to $22.7 million in 1997
compared to 1996, primarily due to depreciation expense related to the Operating
Partnership's 1997 acquisitions and increased depreciation of Communities in
lease-up. Depreciation expense increased $3.1 million or 20.3% to $18.2 million
in 1996 compared to 1995 due to an increase in depreciation expense related to
the 1995 acquisitions and Communities in lease-up.

Interest expense increased $4.8 million, or 28.1%, in 1997 compared to 1996,
primarily due to financing the Operating Partnership's 1997 acquisitions and the
Communities in lease-up. Interest expense increased $2.3 million, or 15.8%, to
$17.1 million in 1996 compared to 1995, primarily due to interest on debt
related to the Operating Partnership's 1995 acquisitions and an increase in
interest expense related to the Communities in lease-up, partially offset by the
Operating Partnership's repayment of debt in connection with the 1995 and 1996
Offerings. The 1995 and 1996 Offerings together resulted in aggregate net
proceeds of approximately $163.0 million. Weighted average interest rates of all
debt for the years ended December 31, 1997, 1996 and 1995 were 6.68%, 6.44% and
6.18%, respectively.

General and administrative expense increased in 1997 compared to 1996 as a
result of the Operating Partnership's overall growth. The increase in 1996
compared to 1995 was primarily due to increased compensation costs and
professional fees. The increase in compensation in 1996 includes the cost of the
restricted stock grants and the cost of the employee stock purchase plan. The
Operating Partnership issues a Unit in the Operating Partnership to Summit
Properties for each share of Common Stock issued in conjunction with Summit
Properties' stock option plan and the employee stock purchase plan. As a
percentage of revenues, general and administrative expenses were 2.3%, 2.7% and
2.6% for the years ended December 31, 1997, 1996 and 1995, respectively.

The gain on sale of assets in 1997 resulted from the sale of a community
formerly known as Summit Charleston in May 1997.

The extraordinary items in 1996 and 1995 resulted primarily from the write-off
of deferred financing costs in conjunction with the repayment of debt with the
proceeds from the 1996 and 1995 Offerings and with the proceeds of the $31.0
million unsecured debt financing received in August 1996.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity

The Operating Partnership's net cash provided by operating activities increased
from $41.2 million for the year ended December 31, 1996 to $55.9 million for the
same period in 1997 primarily due to a $15.7 million increase in property
operating income, offset by a $1.5 million increase in interest cost paid.

Net cash used in investing activities increased from $104.0 million for the year
ended December 31, 1996 to $175.9 million for the same period in 1997 due to an
increase in the number of acquisition Communities, an increase in the
development of Communities and higher capital expenditures on existing
properties, partially offset by the proceeds from the sale of a Community.

Net cash provided by financing activities increased from $63.6 million for the
year ended December 31, 1996 to $119.9 million for the same period in 1997,
primarily due to an increase in net debt proceeds, partially offset by a
decrease in Summit Properties equity offering proceeds contributed to the
Operating Partnership and by higher distributions to unitholders.

The Operating Partnership's outstanding indebtedness at December 31, 1997
totaled $474.7 million. This amount includes approximately $204.8 million in
fixed rate conventional mortgages, $52.9 million of variable rate tax-exempt
bonds, $186.0 million of unsecured notes, $9.3 million of tax-exempt fixed rate
loans, and $21.7 million under the Unsecured Credit Facility (as hereinafter
defined).

The Operating Partnership expects to meet its short-term liquidity requirements
(i.e., liquidity requirements arising within 12 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

24
25

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 12 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, or in
connection with the acquisition of land or improved property, through the
issuance of Units of the Operating Partnership.

Lines of Credit

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 the London Interbank Offered Rate ("LIBOR") + 110 basis points based upon the
Operating Partnership's credit rating of BBB- by Standard & Poor's Rating
Services. The interest rate will be reduced in the event an upgrade of the
Operating Partnership's unsecured credit rating as assigned by Standard & Poor's
Rating Services (which rating must be accompanied by the comparable senior
unsecured bond rating from one of Moody's Investors Service, Duff & Phelps or
Fitch) is obtained.

The Operating Partnership and Summit Properties have a commitment for a new
syndicated unsecured line of credit (the "New Unsecured Credit Facility") in the
amount of $175 million which will replace the existing Unsecured Credit
Facility. The New Unsecured Credit Facility will provide funds for new
development, acquisitions and general working capital purposes and is expected
to close in March 1998. The New Unsecured Credit Facility will have a three year
term with two one-year extension options and will initially bear interest at
LIBOR + 90 basis points based upon the Company's current credit rating of BBB-
by Standard & Poor's Rating Services and Baa3 by Moody's Investors Service. The
interest rate will be reduced in the event an upgrade of the Operating
Partnership's unsecured credit rating is obtained. The New Unsecured Credit
Facility also provides a bid option sub-facility equal to a maximum of fifty
percent of the total facility ($87.5 million). This sub-facility provides the
Operating Partnership with the option to place borrowings in a fixed LIBOR
contract up to 180 days.

Senior Unsecured Debt Offerings

On August 12, 1997, the Operating Partnership completed a $125 million senior
unsecured debt offering comprised of three tranches. The first tranche, $25
million of 6.80% Notes due August 15, 2002, was priced at 99.940% to yield
6.81%, or 73 basis points over the rate on U.S. Treasury securities with a
comparable maturity (the "2002 Notes"). The second tranche, $50 million of 6.95%
Notes due August 15, 2004, was priced at 99.764% to yield 6.99% or 81 basis
points over the rate on U.S. Treasury securities with a comparable maturity (the
"2004 Notes"). The third tranche, $50 million of 7.20% Notes due August 15,
2007, was priced at 99.830% to yield 7.22% or 104 basis points over the rate on
U.S. Treasury securities with a comparable maturity (the "2007 Notes" and,
together with the 2002 Notes and the 2004 Notes, the "August 1997 Notes"). The
proceeds from the August 1997 Notes were used to pay down the Unsecured Credit
Facility.

On December 17, 1997, the Operating Partnership completed a $30 million senior
unsecured debt offering of 6.625% Notes due December 15, 2003. The Notes were
priced at 99.786% to yield 6.67%, or 95 basis points over the rate of U.S.
Treasury securities with a comparable maturity (the "December 1997 Notes"). The
proceeds of the December 1997 Notes were used to pay down the Unsecured Credit
Facility.

In August 1996, the Operating Partnership obtained $31.0 million of unsecured
debt financing from a bank consisting of a $15.0 million unsecured note with a
four-year term and a $16.0 million unsecured note with a six-year term, which
bear interest at 7.61% and 7.85%, respectively.

25
26

Common Stock Offering

In August 1996, Summit Properties completed the sale of an additional 5.75
million shares of Common Stock with net proceeds of $97.6 million. The
approximately $97.6 million of the aggregate proceeds from the issuance of
Common Stock, which was contributed to the Operating Partnership for Units, and
the $31 million unsecured bank debt financing were utilized to fully repay the
outstanding balance under the Unsecured Credit Facility and development loans.
The remaining $30.9 million of the proceeds were used to fund current
development.

Dividend Reinvestment and Direct Stock Purchase Plan

In November 1997, Summit Properties replaced its existing dividend reinvestment
plan with a new dividend reinvestment and direct stock purchase plan (the
"Plan"). The Plan provides that shares of Summit Properties' Common Stock can be
purchased directly from Summit Properties at a discount from the market price
(as defined in the Plan document) without brokerage commissions or service
charges. Purchases are generally limited to the reinvestment of Summit
Properties dividends and optional cash purchases of $100 to $10,000 (or any
greater amount approved by Summit Properties) per month. All proceeds from the
Plan are contributed to the Operating Partnership for Units. In December 1997,
the Operating Partnership received $6.5 million under the Plan for Units issued
January 2, 1998.

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27

Schedule of Debt

The following table sets forth certain information regarding debt financing as
of December 31, 1997 and 1996 (dollars in thousands):

PRINCIPAL OUTSTANDING
INTEREST DECEMBER 31,
RATE AS OF MATURITY ----------------------
DECEMBER 31, 1997 DATE(1) 1997 1996
----------------- -------- --------- ---------

FIXED RATE DEBT
- -----------------
MORTGAGE LOAN(2)(3)..................... 5.88% 2/15/01 $120,379 $122,950
MORTGAGE LOAN(2)(3)..................... 7.71% 12/15/05 29,214 29,653
MORTGAGE LOAN(4)........................ 8.00% 9/1/05 8,557 8,638
MORTGAGE NOTES
Summit Hollow I...................... 8.00% 11/1/18 2,243 2,286
Summit Hollow II..................... 7.75% 1/1/29 2,566 2,587
Summit Creekside..................... 8.00% 6/1/22 2,837 2,877
Summit Old Town...................... 8.00% 9/1/20 3,048 3,097
Summit Eastchester................... 8.00% 5/1/21 3,814 3,872
Summit Foxcroft...................... 8.00% 4/1/20 2,728 2,788
Summit Oak........................... 7.75% 12/1/23 2,553 2,585
Summit Sherwood...................... 7.88% 3/1/29 3,303 3,329
Summit Radbourne..................... 9.80% 3/1/02 8,599 8,683
Summit Sand Lake..................... 7.88% 2/15/06 14,985 --
TAX EXEMPT MORTGAGE NOTES
Summit Crossing...................... 6.95% 11/1/25 4,162 4,213
Summit East Ridge.................... 7.25% 12/1/26 5,100 5,156
-------- --------
TOTAL MORTGAGE DEBT............. 214,088 202,714
-------- --------
UNSECURED NOTES
6.80% Notes due 2002................. 6.80% 8/15/02 25,000 --
6.63% Notes due 2003................. 6.63% 12/15/03 30,000 --
6.95% Notes due 2004................. 6.95% 8/15/04 50,000 --
7.20% Notes due 2007................. 7.20% 8/15/07 50,000 --
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........... 186,000 31,000
-------- --------
TOTAL FIXED RATE DEBT........... 400,088 233,714
VARIABLE RATE DEBT
- ---------------------
UNSECURED CREDIT FACILITY............... LIBOR + 110 9/30/99 21,733 22,357
TAX EXEMPT BONDS(5)
Summit Belmont....................... 5.65% 4/1/07 11,650 11,850
Summit Hampton....................... 5.65% 6/1/07 12,490 12,700
Summit Pike Creek.................... 5.65% 8/15/20 13,022 13,262
Summit Gateway....................... 5.65% 7/1/07 7,100 7,300
Summit Stony Point................... 5.65% 4/1/29 8,590 8,750
-------- --------
TOTAL TAX EXEMPT BONDS............. 52,852 53,862
-------- --------
TOTAL VARIABLE RATE DEBT........... 74,585 76,219
-------- --------
TOTAL OUTSTANDING INDEBTEDNESS.. $474,673 $309,933
======== ========

(1) With the exception of the Mortgage Loans referred to in Note 3 below, all
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.

27
28

(2) Mortgage Loan secured by the following Communities:

Summit Glen Summit Blue Ash Summit Heron's Run
Summit Springs Summit Square Summit Perico
Summit Village Summit Waterford Summit Providence
Summit Highland Summit Del Ray Summit Meadow
Summit Norcroft Summit Palm Lake Summit Windsor I

(3) The Operating Partnership may elect to extend the maturity 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, with premium or
penalty.

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

(5) The tax exempt bonds (the "Bonds") bear interest at various rates set by a
remarketing agent at the demand note index plus 0.50%, set weekly, or the
lowest percentage of prime which allows the resale at a price of par. The
Bonds are enhanced by letters of credit from financial institutions (the
"Credit Enhancements"), each of which Credit Enhancements 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 LIBOR rate at December 31, 1997 was 5.69%.

The Operating Partnership's outstanding indebtedness had an average maturity of
8.0 years as of December 31, 1997. The aggregate maturities of all outstanding
debt as of December 31, 1997 for each of the years ended after December 31, 1997
are as follows (in thousands):

1998........................................................ $ 5,208
1999........................................................ 27,270
2000........................................................ 20,855
2001........................................................ 114,648
2002........................................................ 52,249
Thereafter.................................................. 254,443
--------
$474,673
========

Of the significant maturities in the above table, $21.7 million relates to the
expiration of the Unsecured Credit Facility in 1999; $15.0 million and $16.0
million relate to the unsecured bank notes that mature in 2000 and 2002,
respectively; $111.4 million relates to a mortgage loan balloon payment in 2001;
and $25 million relates to unsecured notes due in 2002.

ACQUISITIONS AND DISPOSITION

On January 6, 1997, the Operating Partnership purchased Summit Portofino
(formerly Portofino Place), a 322 apartment community located in Broward County,
Florida. Summit Portofino, built in 1995, was purchased for $28.0 million in
cash. Concurrently with the purchase, Summit Properties sold 315,029 shares of
Common Stock to the public for cash. Summit Properties contributed the proceeds
of the sale of Common Stock to the Operating Partnership in exchange for Units.
The proceeds were then used to fund a portion of the purchase price.

On January 15, 1997, the Operating Partnership purchased Summit Mayfaire
(formerly The Mayfaire), a 144 apartment community located in Raleigh, North
Carolina. Summit Mayfaire, built in 1995, was purchased for $9.65 million in
cash.

On February 20, 1997, the Operating Partnership purchased Summit Sand Lake
(formerly The Vining at Sand Lake), a 416 apartment community located in
Orlando, Florida. Summit Sand Lake, built in 1995, was purchased for $26.8
million. The Operating Partnership issued 194,495 Units to the seller, issued
243,608

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Units to Summit Properties in exchange for Summit Properties issuing 243,608
shares of Common Stock to the seller, assumed $15.2 million in debt and paid the
remaining $2.7 million balance in cash.

On July 18, 1997, the Operating Partnership purchased Summit Windsor II
(formerly Avalon Farms), a 306 apartment community located in Frederick,
Maryland. Summit Windsor II, which was developed by a predecessor entity of the
Operating Partnership in 1988, was purchased for $17.1 million in cash. The
Summit Windsor II purchase was partially funded by the proceeds from the sale of
the Summit Charleston Community in May 1997. Summit Charleston was sold for $9.5
million and a gain on the sale of approximately $4.4 million was recognized.

On December 31, 1997, the Operating Partnership purchased Summit Fair Oaks
(formerly Fair Oaks Gables), a 246 apartment community located in Fairfax,
Virginia. Summit Fair Oaks, built in 1990, was purchased for $21.2 million in
cash.

Effective March 1, 1998, the Operating Partnership purchased Summit St. Clair, a
336 apartment community located in Atlanta, Georgia. Summit St. Clair completed
construction in 1997 and reached rental stabilization prior to purchase. The
total purchase price was approximately $26.3 million.

DEVELOPMENT ACTIVITY

The Operating Partnership's developments in process at December 31, 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 Stonefield -- Yardley, PA............. 216 $ 19,640 $18,324 $ 1,316 Q1 1998
Summit Lake I -- Raleigh, NC................. 302 19,700 17,380 2,320 Q2 1998
Summit Ballantyne II -- Charlotte, NC........ 154 10,100 2,792 7,308 Q3 1998
Summit Sedgebrook II -- Charlotte, NC........ 120 7,500 963 6,537 Q3 1998
Summit Doral -- Miami, Florida............... 192 17,000 3,186 13,814 Q1 1999
Summit Fair Lakes I -- Fairfax, VA........... 370 32,900 12,458 20,442 Q1 1999
Summit Governor's Village -- Chapel Hill,
NC......................................... 242 16,400 3,696 12,704 Q1 1999
Summit New Albany I -- Columbus, OH.......... 301 22,600 10,223 12,377 Q1 1999
Summit Westwood -- Raleigh, NC............... 354 24,400 3,016 21,384 Q2 1999
Other development and construction costs..... -- -- 10,294 --
----- -------- ------- -------
2,251 $170,240 $82,332 $98,202
===== ======== ======= =======

Estimated cost to complete the development Communities represents substantially
all of the Operating Partnership's material commitments for capital expenditures
at December 31, 1997.

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 materials 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

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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 eleven 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 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 relative to renovation or improvements at existing
facilities.

Capitalized expenditures for the years ended December 31, 1997, 1996 and 1995
are summarized as follows (dollars in thousands):

YEAR ENDED DECEMBER 31,
------------------------------
1997 1996 1995
-------- -------- --------

Acquisition of Communities(1)............................... $104,469 $ 21,913 $ 82,935
Construction of Communities(2).............................. 95,909 88,064 58,104
Capitalized interest........................................ 5,873 4,266 3,110
Non-recurring capital expenditures.......................... 4,653 2,973 864
Recurring capital expenditures:
Exterior painting......................................... 1,556 1,131 810
Other..................................................... 3,030 2,160 1,370
-------- -------- --------
Total recurring capital expenditures...................... 4,586 3,291 2,180
-------- -------- --------
$215,490 $120,507 $147,193
======== ======== ========

(1) Includes the assumption of $15.2 million, $14.3 million and $52.6 million of
debt in 1997, 1996 and 1995, respectively. Includes the issuance of Units
with a value of $8.9 million in 1997. In addition, includes conversion of
equity investment into fixed assets of $1.2 million in conjunction with the
purchase of Summit Plantation in 1996 and the issuance of 1.5 million Units
of the Operating Partnership with a value of $26.2 million in 1995.

(2) Includes the issuance of $2.1 million and $896,000 of Units for the
acquisition of land in 1996 and 1995, respectively.

Construction of Communities was funded primarily by development loans, equity
offering proceeds and borrowings under the credit facilities. Other additions
and improvements were funded primarily by Community operations and the 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

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existing leases or commencement of new leases. The short-term nature of these
leases generally serves to reduce the risk to the Company of the adverse effect
of inflation.

YEAR 2000

The Year 2000 compliance issue concerns the inability of computerized
information systems to accurately calculate, store or use a date after 1999.
This could result in a system failure or miscalculations causing disruptions of
operations.

The Operating Partnership's primary uses of software systems are its corporate
accounting and property on site software. The Operating Partnership's corporate
accounting system is widely used in the real estate industry. A version upgrade,
scheduled to be installed in the second quarter of 1998, is designed to be Year
2000 compliant. The Operating Partnership is replacing its current property on
site software with a new software system designed to be Year 2000 compliant.
This new software is also widely used in the real estate industry. The
implementation of the new on site software system started in the first quarter
of 1998 and is expected to be completed by the fourth quarter of 1998. Both the
corporate accounting system upgrade and the new property on site system were
planned changes that would have been done regardless of Year 2000 compliance
issues. The Operating Partnership believes that the risk of Year 2000 compliance
issues having a material impact on its operations is not significant. The
primary cost of Year 2000 compliance will be the cost of the new property on
site software installation which is estimated to be approximately $300,000.
However, if the Operating Partnership's efforts to upgrade its corporate
accounting software and to replace its current property on site software are not
completed on time, or if the costs associated therewith exceed the Operating
Partnership's current estimates, the Year 2000 issue could have a material
impact on the Operating Partnership's ability to meet its financial and
reporting requirements and/or on its financial results. Further, no estimates
can be made as to any potential adverse impact resulting from the failure of
residents or third-party service providers and vendors to prepare for the Year
2000. The cost and timing of third-party Year 2000 compliance is not within the
Operating Partnership's control and no assurances can be given with respect to
the cost or timing of such efforts or the potential effects of any failure to
comply.

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 generally accepted accounting principles ("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. 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 alternatives 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 are 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.

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

1997 1996 1995
----------- ----------- -----------

Net income............................................ $ 31,934 $ 20,561 $ 14,512
Extraordinary items................................... -- 626 539
Net gain on sale of assets............................ (4,366) -- --
----------- ----------- -----------
Adjusted net income................................. 27,568 21,187 15,051
Depreciation:
Real estate assets.................................. 22,633 18,171 15,021
Summit Plantation................................... -- 33 76
----------- ----------- -----------
Funds from Operations................................. 50,201 39,391 30,148
Recurring capital expenditures (1) (3).............. (4,586) (3,291) (2,180)
----------- ----------- -----------
Funds Available for Distribution...................... $ 45,615 $ 36,100 $ 27,968
=========== =========== ===========
Non-recurring capital expenditures (2) (3)............ $ 4,653 $ 2,973 $ 864
=========== =========== ===========
Cash Flow Provided By (Used In):
Operating Activities................................ $ 55,947 $ 41,176 $ 30,994
Investing Activities................................ (175,907) (103,971) (63,734)
Financing Activities................................ 119,858 63,579 34,440
Weighted average units outstanding -- basic........... 27,257,637 22,914,068 18,112,009
=========== =========== ===========
Weighted average units outstanding -- diluted......... 27,294,058 22,940,998 18,116,664
=========== =========== ===========

(1) Recurring capital expenditures include exterior paint in the amount of $1.6
million, $1.1 million and $810,000 in 1997, 1996 and 1995, respectively.

(2) Non-recurring capital expenditures include major renovations, primarily at
eight Communities, in the amount of $4.0 million in 1997 and $1.7 million in
1996; additional garages in the amount of $250,000, $578,000 and $153,000 in
1997, 1996 and 1995, respectively; and access gates, water meters and
washer/dryers of $395,000 in 1997 and $413,000 in 1996. In addition, 1995
included $706,000 of improvements at acquisition Communities.

(3) 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 therefore are not included in the calculation of
Funds Available for Distribution.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Financial statements and supplementary data are contained on the pages indicated
on the Index to Financial Statements and Supplementary Data on page 51 of this
Report.

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

Not applicable.

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PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT

The Operating Partnership is managed by Summit Properties, in its capacity as
the general partner of the Operating Partnership. Consequently, the Operating
Partnership has no directors or executive officers. This Item 10 reflects
information with respect to the directors and executive officers of Summit
Properties.

Directors

WILLIAM F. PAULSEN. Mr. Paulsen is the President and Chief Executive Officer
and a director of Summit Properties, Vice President of Summit Management Company
and Vice President of Summit Apartment Builders Inc. He has held these positions
since 1994. Prior to the formation of Summit Properties, Mr. Paulsen was a
senior partner and the Chief Executive Officer of the predecessor to Summit
Properties and a general partner of each of the partnerships which transferred
Communities to the Operating Partnership when it was formed. Mr. Paulsen joined
the predecessor to Summit Properties in 1981. He was selected as North Carolina
Entrepreneur of the Year in 1990. In addition to his responsibilities with
Summit Properties, Mr. Paulsen is a full Member and Residential Council Member
of the Urban Land Institute. He is a Member of the Board of Directors of The
Beach Company, a real estate investment company specializing primarily in
commercial and resort development in the southeastern United States and is a
trustee of The Asheville School. Mr. Paulsen also served as a Vice President of
the Charlotte Apartment Association. He is 51 years old.

WILLIAM B. MCGUIRE, JR. Mr. McGuire has served as the Chairman of the Board of
Summit Properties since 1994. Prior to the formation of Summit Properties, Mr.
McGuire served as a senior partner of the predecessor to Summit Properties and
as a general partner of each of the partnerships which transferred Communities
to the Operating Partnership when it was formed. Mr. McGuire founded the
predecessor to Summit Properties in 1972. Mr. McGuire also founded McGuire
Properties, Inc., a real estate brokerage firm, in 1972. He has been active in
the following professional and community organizations: Residential, Multifamily
and Urban Development Mixed Use Councils of the Urban Land Institute; Charlotte
Advisory Board of NationsBank of North Carolina, N.A.; and The Charlotte City
Club, serving on its Board of Governors as President. He was a Trustee of the
North Carolina Nature Conservancy; a Founder and Director of Habitat for
Humanity of Charlotte; and the Founder and President of The Neighborhood Medical
Clinic. Mr. McGuire is 53 years old.

NELSON SCHWAB III. Mr. Schwab has been a director of Summit Properties since
1994. He has been a Managing Director of Carousel Capital, a merchant banking
firm based in Charlotte, North Carolina specializing in middle market
acquisitions since 1996. Mr. Schwab served as Chairman and Chief Executive
Officer of Paramount Parks from 1992 to 1995. Mr. Schwab is a Member of the
Board of Directors of First Union National Bank, Silver Dollar City, Inc.,
Griffin Corporation, Illum Elex Corp., MJD Communications Inc., Critical Care
Concepts and Burlington Industries. Mr. Schwab previously served as the Chairman
of the Carolinas Partnership and the Charlotte Chamber of Commerce. Mr. Schwab
is 53 years old.

JOHN CROSLAND, JR. Mr. Crosland has been a director of Summit Properties since
1995. He has been Chairman and Chief Executive Officer of The Crosland Group,
Inc., a fully diversified real estate development company, since 1971. Mr.
Crosland is a member of the Board of Directors of First Union National Bank,
Turnberry Homes and Crosland Patton Smith. He has been active in the
home-building industry holding office at local, state and national levels. From
1977 to 1989 he served as Chairman of the North Carolina Housing Finance Agency.
Among his diverse civic involvement, Mr. Crosland was a founder and first
Chairman of Charlotte's Habitat for Humanity; currently serves on the Habitat
for Humanity International Affiliates Advisory Committee; was 1996 Chairman of
the Davidson College Board of Visitors and is a member of the Davidson Board of
Trustees. Mr. Crosland was honored by the home building industry by being named
1985 Builder of the Year by Professional Builder Magazine and has been inducted
into both the National and North Carolina Housing Halls of Fame. Mr. Crosland is
69 years old.

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JAMES H. HANCE, JR. Mr. Hance has been a director of Summit Properties since
1994. Mr. Hance is a Vice Chairman and the Chief Financial Officer of
NationsBank Corporation, where he is responsible for NationsBanc Services
Company, which performs NationsBank Corporation's operations functions, the
Management Services Group, and NationsBank Corporation's finance group. He also
has responsibility for NationsBank's non-bank consumer and commercial credit
companies, NationsCredit Consumer Corporation and NationsCredit Commercial
Corporation, and serves as Managing Director of several of NationsBank's banks
and subsidiaries. Mr. Hance joined NationsBank Corporation in 1987. Mr. Hance is
a Member of the Board of Visitors of the Duke University Fuqua School of
Business and he is a Trustee of Washington University and a member of the
Washington University National Council for the John M. Olin School of Business.
He is on the Board of Directors of Caraustar Industries, Inc., Family Dollar
Stores, Inc. and Lance, Inc. Additionally, Mr. Hance is a certified public
accountant, a 1988 International Business Fellow, former Chairman of the
Charlotte Chamber of Commerce and is the vice chairman of the Board of Trustees
of the Charlotte Country Day School. Mr. Hance is 53 years old.

HENRY H. FISHKIND. Dr. Fishkind has been a director of Summit Properties since
1994. He is the President of Fishkind & Associates, Inc., a private economic and
financial consulting firm based in Orlando, Florida that he founded in 1987. Dr.
Fishkind is a member of the Board of Directors of Engle Homes. Dr. Fishkind
served on the Florida Governor's Economic Advisory Board from 1979 to 1981. He
is 48 years old.

Executive Officers Who Are Not Directors

RAYMOND V. JONES. Mr. Jones has served as Executive Vice President/Development
and Construction of Summit Properties since 1994; however, he has notified
Summit Properties that he will be terminating his employment with Summit
Properties on or about May 1, 1998. Prior to the formation of Summit Properties,
Mr. Jones served as regional partner for the Charlotte division of the
predecessor to Summit Properties, as well as a general partner of several of the
partnerships which transferred Communities to the Operating Partnership when it
was formed. Mr. Jones joined the predecessor of Summit Properties in 1984. Mr.
Jones is a member of the Board of Directors and Chairman of the Charlotte
Mecklenburg Housing Partnership, a non-profit venture organized to provide low
income housing. Additionally, he is a member of the Board of Directors of Golf
Trust of America, Inc. a recently formed real estate investment trust listed on
the American Stock Exchange. He also served as President of the Charlotte
Apartment Association and the Apartment Association of North Carolina. Mr. Jones
is 50 years old.

MICHAEL L. SCHWARZ. Mr. Schwarz is an Executive Vice President and Chief
Financial Officer of Summit Properties. Prior to joining Summit Properties in
1994, Mr. Schwarz was a co-founder and spent five years as the Senior Vice
President and Chief Financial Officer of Industrial Developments International,
Inc., a developer of industrial real estate. He is a certified public
accountant. Mr. Schwarz served as the Chairman of the Board of The Study Hall of
Emmaus House, a non-profit educational facility serving inner-city youths. Mr.
Schwarz is 37 years old.

WILLIAM B. HAMILTON. Mr. Hamilton is an Executive Vice President/Property
Management of Summit Properties and President of Summit Management Company,
Summit Properties' management subsidiary. Prior to joining Summit Properties in
December of 1996, Mr. Hamilton spent one year as a Senior Vice President with
Insignia Management Group in Atlanta, Georgia where he was responsible for
property and asset management for 50,000 multifamily apartments. For the four
years immediately prior thereto, Mr. Hamilton was the President of NPI Property
Management Corporation, where his management portfolio consisted of 31,000
multifamily apartments. Mr. Hamilton's experience in the property and asset
management field for multifamily apartments has spanned more than 20 years. Mr.
Hamilton has been designated a certified property manager by the Institute of
Real Estate Management and a Certified Apartment Supervisor by the National
Apartment Association. Mr. Hamilton is 49 years old.

DAVID F. TUFARO. Mr. Tufaro has served as Executive Vice President of Summit
Properties since 1994. From 1994 to 1996, Mr. Tufaro served as Chief Operating
Officer/Mid-Atlantic Region. Since then, Mr. Tufaro has assumed the position of
Chief Investment Officer. Prior to the formation of Summit Properties, Mr.
Tufaro served as regional partner for the Baltimore division of the predecessor
to Summit Properties, as well as a

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general partner of several of the partnerships which transferred Communities to
the Operating Partnership when it was formed. Mr. Tufaro joined the predecessor
of Summit Properties in 1984. Mr. Tufaro currently serves as President of the
Board of Directors of the Baltimore Corporation for Housing Partnerships, a non-
profit housing sponsor for low income families, and is President of the Board of
Directors of the Roland Park Community Foundation. Mr. Tufaro is 51 years old.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires the Summit Properties' executive
officers and directors, and persons who are beneficial owners of more than 10%
of a registered class of the Summit Properties' and/or the Operating
Partnership's equity securities to file reports of ownership and changes in
ownership with the Securities and Exchange Commission (the "SEC"). Officers,
directors and greater than 10% beneficial owners are required by SEC regulations
to furnish Summit Properties with copies of all Section 16(a) forms they file.

To Summit Properties' knowledge, based solely on a review of the copies of such
reports furnished to Summit Properties, the executive officers, directors and
greater than 10% beneficial owners, all Section 16(a) filing requirements were
satisfied, except that: (i) Mr. Schwarz inadvertently filed a Form 5 one week
late; (ii) Messrs. Crosland and Schwab each inadvertently filed a Form 5 one
month late; (iii) Mr. Moore inadvertently failed to report on Form 5 an
acquisition of Common Stock pursuant to Summit Properties' dividend reinvestment
plan; (iv) Messrs. Fishkind and Hance each inadvertently failed to report on
Form 5 a stock option grant; (v) Mr. Hamilton inadvertently filed a Form 3 to
report his ownership of shares of Common Stock instead of filing a Form 5 to
report two acquisitions of shares of Common Stock; (vi) Mr. Paulsen
inadvertently failed to report on Form 5 acquisitions of Common Stock, pursuant
to Summit Properties' dividend reinvestment plan for himself directly as well as
indirectly for the Katherine C. Paulsen Trust and the Caroline E. Paulsen Trust;
(vii) Mr. Paulsen inadvertently failed to file two Forms 4, one with respect to
an indirect acquisition of shares of Common Stock by each of the Katherine C.
Paulsen Trust and the Caroline E. Paulsen Trust and a second with respect to an
indirect disposition of shares of Common Stock by each of the Katherine C.
Paulsen Trust and the Caroline E. Paulsen Trust; and (viii) Mr. Tufaro
inadvertently failed to file a Form 4 with respect to an acquisition of shares
of Common Stock. Each of the above transactions was subsequently reported.

ITEM 11. EXECUTIVE COMPENSATION

The Operating Partnership is managed by Summit Properties, in its capacity as
the general partner of the Operating Partnership. Consequently, the Operating
Partnership has no directors or executive officers and pays no compensation. The
information provided in this Item 11 reflects compensation paid to the Directors
and executive officers of Summit Properties.

DIRECTOR COMPENSATION

Directors of Summit Properties who are also employees receive no additional
compensation for their services as directors. Non-employee directors of Summit
Properties (the "Independent Directors") received an annual director's fee of
$12,000 in 1997. Each Independent Director also receives $1,000 for each regular
meeting of the Board of Directors attended, $1,000 for each special meeting of
the Board of Directors attended, $250 for each committee meeting attended if
held concurrently with a Board of Directors regular or special meeting and $500
for each committee meeting attended if not held concurrently with a Board of
Directors regular or special meeting. Under the Summit Properties' 1994 Stock
Option Plan, following each annual meeting of stockholders, each Independent
Director also receives a non-qualified option to purchase 2,000 shares of Common
Stock at a price equal to the market price of the Common Stock on the date of
grant.

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EXECUTIVE COMPENSATION

Summary Compensation Table. The following table sets forth the cash and
non-cash compensation awarded to the Chief Executive Officer and each of the
other four most highly compensated executive officers of Summit Properties whose
compensation exceeded $100,000 during the fiscal year ended December 31, 1997
(together with the Chief Executive Officer, the "Named Executive Officers").

SUMMARY COMPENSATION TABLE

LONG-TERM
COMPENSATION
AWARDS
ANNUAL ---------------------------------------
COMPENSATION RESTRICTED SECURITIES
------------------------ STOCK UNDERLYING ALL OTHER
SALARY BONUS AWARDS OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($)(1) ($) ($) (#) ($)(2)
- --------------------------- ---- ------- ------- ---------- ---------- ------------

William F. Paulsen................... 1997 244,500 122,250 24,442(3) 0 4,750
President and Chief Executive 1996 232,875 0 228,150(4) 0 4,750
Officer 1995 232,875 72,491 0 0 4,620
Raymond V. Jones..................... 1997 173,000 86,000 0 0 4,750
Executive Vice President/ 1996 165,000 60,000 152,100(5) 0 4,750
Development and Construction 1995 155,250 100,359 0 0 4,620
Michael L. Schwarz................... 1997 173,000 86,500 196,775(6) 0 4,750
Executive Vice President and 1996 155,250 38,812 0 0 4,750
Chief Financial Officer 1995 155,250 63,414 0 30,000 0
David F. Tufaro...................... 1997 155,250 20,000 0 0 4,750
Executive Vice President and 1996 155,250 43,112 152,100(7) 0 4,750
Chief Investment Officer 1995 155,250 40,000 0 0 4,130
William B. Hamilton(8)............... 1997 173,000 43,250 179,375(9) 0 0
Executive Vice President/Property 1996 13,308 0 0 0 0
Management and President of
Summit Management Company

(1) Includes amounts deferred under Summit Properties' 401(k) plan. Under the
plan, employees generally are permitted to invest up to 17% of their salary
on a pre-tax basis, subject to a statutory maximum.

(2) Amounts represent matching contributions made by Summit Properties to the
Named Executive Officer's account under Summit Properties' 401(k) plan.

(3) Pursuant to a policy of Summit Properties which requires any cash bonus
earned in excess of 50% of base salary to be paid in the form of Common
Stock, Mr. Paulsen received an award of 1,157 shares of restricted stock on
January 1, 1998 under Summit Properties' 1994 Stock Option and Incentive
Plan that vests in two equal annual installments beginning in January 1999.
The value of the unvested shares of such restricted stock as of December 31,
1997 was $24,442. Dividends will be paid on the shares of restricted stock.

(4) Mr. Paulsen received an award of 11,700 shares of restricted stock on
January 12, 1996 under Summit Properties' 1994 Stock Option and Incentive
Plan that vests in five equal annual installments beginning in January 1996.
The value of vested and unvested shares of such restricted stock as of
December 31, 1997 was $247,163. Dividends will be paid on the shares of
restricted stock.

(5) Mr. Jones received an award of 7,800 shares of restricted stock on January
12, 1996 under Summit Properties' 1994 Stock Option and Incentive Plan that
vests in five equal annual installments beginning in January 1996. The value
of vested and unvested shares of such restricted stock as of December 31,
1997 was $164,775. Dividends will be paid on the shares of restricted stock.

(6) Mr. Schwarz received an award of 7,908 shares of restricted stock on January
2, 1997 under Summit Properties' 1994 Stock Option and Incentive Plan that
vests in four equal annual installments beginning in January 1998. The value
of vested and unvested shares of such restricted stock as of December 31,
1997 was $167,057. Pursuant to a policy of Summit Properties which requires
any cash bonus earned in

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excess of 50% of base salary to be paid in the form of Common Stock, Mr. Schwarz
received an award of 1,126 shares of restricted stock on January 1, 1998 under
Summit Properties' 1994 Stock Option and Incentive Plan that vests in two equal
annual installments beginning in January 1999. The value of the unvested
shares of such restricted stock as of December 31, 1997 was $23,787.
Dividends will be paid on the shares of restricted stock.

(7) Mr. Tufaro received an award of 7,800 shares of restricted stock on January
12, 1996 under Summit Properties' 1994 Stock Option and Incentive Plan that
vests in five equal annual installments beginning in January 1996. The value
of vested and unvested shares of such restricted stock as of December 31,
1997 was $164,775. Dividends will be paid on the shares of restricted stock.

(8) Mr. Hamilton began employment on December 5, 1996.

(9) Mr. Hamilton received an award of 8,200 shares of restricted stock on
January 2, 1997 under Summit Properties' 1994 Stock Option and Incentive
Plan that vests in four equal annual installments beginning in January 1998.
The value of vested and unvested shares of such restricted stock as of
December 31, 1997 was $173,225. Dividends will be paid on the shares of
restricted stock.

Option Grants in Fiscal Year 1997. No options have been or will be granted to
executive officers of Summit Properties with respect to the fiscal year ended
December 31, 1997.

Option Exercises and Year-End Holdings. The following table sets forth the
aggregated number of options to purchase shares of Common Stock exercised in
1996 and the value of options to purchase shares of Common Stock held on
December 31, 1997 by the Named Executive Officers.

AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1997 AND
FISCAL YEAR-END 1997 OPTION VALUES

NUMBER
OF SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS OPTIONS
SHARES AT FISCAL AT FISCAL
ACQUIRED ON YEAR-END(#) YEAR-END($)(1)
EXERCISE VALUE EXERCISABLE/ EXERCISABLE/
NAME (#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
- ---- ----------- ----------- ------------- --------------

William F. Paulsen...................... 0 0 40,000/0 125,000/0
Raymond V. Jones........................ 0 0 27,000/0 84,375/0
David F. Tufaro......................... 0 0 27,000/0 84,375/0
Michael L. Schwarz...................... 0 0 45,000/12,000 129,285/23,970
William B. Hamilton..................... 0 0 0/0 0/0

(1) Based on a closing price of $21.125 per share of Common Stock on December
31, 1997, the last 1997 trading day for Summit Properties' Common Stock.

EMPLOYMENT AND NONCOMPETITION AGREEMENTS

Summit Properties has entered into employment agreements (the "Employment
Agreements") with each of Messrs. Paulsen, Jones, Tufaro, Schwarz and Hamilton.
The agreements with Messrs. Paulsen, Jones, and Tufaro will expire on February
15, 1999 unless otherwise extended, although these officers can resign at any
time after giving 180 days' prior written notice, without breaching such
agreements. The agreement with Mr. Schwarz had an original term through February
16, 1996, and has been automatically extended until such time as terminated
pursuant to the terms of such agreement. Mr. Hamilton's agreement will expire on
December 5, 1998 unless otherwise extended pursuant to the terms of the
agreement. The Employment Agreements provide that the officers will be paid the
base salaries set forth next to their names in the Summary Compensation Table
above, which amounts may be increased or decreased (subject to certain
limitations) at the discretion of the Compensation Committee of the Board of
Directors of Summit Properties (the "Compensation Committee"), plus any other
amounts the Compensation Committee, in its discretion, determines to award. The
Employment Agreements also provide for certain severance benefits. If the
employment of Messrs. Paulsen, Jones or Tufaro is terminated by either Summit
Properties without "cause" or by the employee for "cause" (as defined in the
Employment Agreements) during the original term of the

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Employment Agreement, the terminated employee will be entitled to receive as
severance an amount equal to his base salary, as in effect on the date of
termination, through the remainder of his original term of employment under his
Employment Agreement, payable over time. If the employment of Mr. Hamilton is
terminated by Summit Properties without "cause" or by Mr. Hamilton for "cause"
(as defined in the Employment Agreements), Mr. Hamilton will be entitled to
receive as severance an amount equal to his base salary as in effect on the date
of termination for a period of twelve months, payable over time, if such
termination occurs during the original term of his Employment Agreement, or for
a period of six months, payable over time, if such termination occurs subsequent
to the original term of his Employment Agreement. Upon the termination of the
employment of Messrs. Paulsen, Jones or Tufaro by reason of death or disability,
his estate or he, as the case may be, will be entitled to receive a payment
equal to his base salary, as in effect on the date of termination, through the
remainder of his original term of employment under his Employment Agreement,
except that in the case of termination by reason of disability the amount of
such benefit shall be offset by the proceeds of any disability plan awards
provided by Summit Properties. Upon the termination of the employment of Mr.
Hamilton by reason of death or disability, his estate or he, as the case may be,
will be entitled to receive a payment equal to his base salary, as in effect on
the date of termination, for a period of twelve months, except that in the case
of termination by reason of disability the amount of such benefit shall be
offset by the proceeds of any disability plan awards provided by Summit
Properties. The Employment Agreements provide that if any of Messrs. Paulsen,
Jones, Tufaro or Hamilton are terminated by Summit Properties for "cause" or if
they voluntarily terminate their employment (as defined in the Employment
Agreements), no severance amount will be payable. If the employment of any of
Messrs. Paulsen, Jones, Schwarz, Hamilton or Tufaro is terminated for any reason
after the original term of his employment, no severance amount will be payable
other than as provided in the Severance Agreement (as defined below) of Messrs.
Paulsen, Jones, Schwarz and Hamilton.

Each of these officers also entered into noncompetition agreements (the
"Noncompetition Agreements") with Summit Properties. These agreements (except
for the agreements with Mr. Schwarz and Mr. Hamilton), subject to certain
limited exceptions, prohibit such individuals from engaging, directly or
indirectly, during the noncompetition period (the "Noncompetition Period") in
any business which engages or attempts to engage in, directly or indirectly, the
acquisition, development, construction, operation, management or leasing of any
multifamily apartment residential real estate property within a 30 mile radius
of any property that Summit Properties owns, operates or manages or that Summit
Properties has undertaken to acquire, develop, construct, operate, manage or
lease. The Noncompetition Period is the period beginning on the date of
termination of employment and ending on the latest of (i) one year from the
termination of their employment with Summit Properties or (ii) the date on which
the severance amounts described above cease. Prior to their termination of
employment, subject to certain limited exceptions, the Noncompetition Agreements
prohibit all of the executive officers from engaging in any businesses other
than those of Summit Properties without the prior written consent of the Board
of Directors (or in the case of Mr. Schwarz and Mr. Hamilton, without the prior
written consent of the President of Summit Properties Inc.). The Noncompetition
Agreements with each of the officers also prohibit such officers for certain
periods after their termination from Summit Properties from hiring certain key
employees of Summit Properties or participating in any efforts to persuade such
employees to leave Summit Properties and from engaging in any manner, directly
or indirectly, in any business which engages or attempts to engage in the
acquisition, development, construction, operation, management or leasing of any
of Summit Properties' then existing communities or development or acquisition
opportunities. Under the Noncompetition Agreements, such officers are prohibited
from disclosing trade secrets and, for certain periods, other confidential
information of Summit Properties. Mr. Jones has notified Summit Properties that
he will be terminating his employment with Summit Properties on or about May 1,
1998. Under the circumstances pursuant to which he has elected to terminate his
employment, Mr. Jones will not be entitled to any payments or benefits under his
Employment Agreement; however, Mr. Jones will be subject to the terms of a
Noncompetition Agreement.

SEVERANCE AGREEMENTS

On January 2, 1997, Summit Properties entered into Severance Agreements with
each of Messrs. Paulsen, Jones, Schwarz, Hamilton and McGuire (the "Severance
Agreements"). The Severance Agreements provide
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for the payment of severance benefits of up to three times such officer's annual
base salary and cash bonus in the event of the termination of the officer's
employment under certain circumstances following certain "change in control" or
"combination transactions" involving a consolidation or merger. The benefits
payable under the terms of the Severance Agreements are subject to reduction by
the amount of any severance benefits payable under applicable Employment
Agreements.

REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION

Responsibilities of the Compensation Committee. Summit Properties' Executive
Compensation Program is administered under the direction of the Compensation
Committee, which is composed of all four Independent Directors. The specific
responsibilities of the Compensation Committee are to:

1. Administer Summit Properties' Executive Compensation Program.

2. Review and approve compensation awarded to Summit Properties'
executive officers pursuant to the Executive Compensation Program.

3. Monitor the performance of Summit Properties in comparison to
performance by executive officers in conjunction with executive officer
compensation.

4. Monitor compensation awarded to executive officers of Summit
Properties in comparison to compensation received by executive officers of
Summit Properties' Comparative Compensation Peer Group, as defined below.

Compensation determinations pursuant to the Executive Compensation Program are
generally made at or shortly after the end of the fiscal year. At the end of the
fiscal year, incentive cash bonuses are calculated pursuant to FFO growth
criteria which was contained in the respective Summit Properties Incentive
Compensation Plan approved by the Compensation Committee prior to or at the
beginning of the fiscal year. Payment of a cash bonus is subject to audited
confirmation of Summit Properties' financial performance, which occurs
immediately after the end of the fiscal year. Also at the end of the fiscal
year, base salaries and grants of long-term equity based compensation under
Summit Properties' 1994 Stock Option Plan are set for the following fiscal year.

In fulfilling its responsibilities, the Compensation Committee takes into
account recommendations from management as well as the specific factors
enumerated herein for specific elements of compensation. The Compensation
Committee periodically reviews comparative compensation data which includes data
on Summit Properties' Comparative Compensation Peer Group as well as data from
other companies with attributes comparable to Summit Properties.

The Philosophy of the Compensation Committee. The philosophy of the
Compensation Committee as reflected in the specific compensation plans included
in the Executive Compensation Program is to:

1. Attract, retain and reward experienced, highly motivated executive
officers who are capable of effectively leading and continuing the growth
of Summit Properties.

2. Place more emphasis on short and long-term incentive compensation
which is dependent upon both Summit Properties and individual performance
rather than base salary.

3. Reward and encourage executive officer activity that results in
enhanced value for stockholders.

4. Link both short-term and long-term incentive compensation as much
as possible to the achievement of specific individual and Summit Properties
goals.

Elements of Compensation. It is the belief of the Compensation Committee that
the above philosophy can best be implemented through three separate components
of executive compensation with each component designed to reward different
performance goals, yet with all three components working together to satisfy the
ultimate goal of enhancing stockholder value. The three elements of executive
compensation are:

1. Salary, which compensates the executive for performing the basic
job description through the performance of routine designated tasks.
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2. Cash bonus, which rewards the executive for commendable performance
of specially designated tasks or outstanding performance of routine
designated tasks during the fiscal year.

3. Stock options and/or stock grants, which provide long-term rewards
to the executive in a manner directly related to the enhancement of
stockholder value through an appreciated stock price.

In administering each element of compensation, the Compensation Committee
considers the integration of that element not only with the other two elements
of compensation, but also with additional benefits available to the executive
such as Summit Properties' 1996 Non-Qualified Employee Stock Purchase Plan,
Summit Properties provided insurance benefits, and Summit Properties sponsored
retirement savings plans.

Base Salary. Base salaries for executive officers are set based on the
following factors:

1. Comparison to executive officer base salaries for the Comparative
Compensation Peer Group (as defined below) to the extent such data is
available.

2. Individual performance of the routine designated tasks assigned.

3. Overall experience of the executive officer.

4. Historical relationship with Summit Properties.

As a result of the Compensation Committee's philosophy of focusing the
compensation of Summit Properties' executive officers on performance-based
rewards, the base salaries of the executive officers are lower than the
Comparative Compensation Peer Group.

Base salary increases for executive officers are considered annually by the
Compensation Committee. The granting of salary increases is dependent upon:

1. The executive's performance in the following areas:

a. Accomplishing the routine designated tasks of the position.

b. Promoting Summit Properties' values.

c. Development and training of subordinate Summit Properties'
employees.

d. Leadership abilities and team member abilities.

e. The satisfaction of the executive officer's respective internal
or external customers.

2. Increased or revised job responsibilities.

3. Comparison to the Comparative Compensation Peer Group.

Based upon the above criteria, Messrs. Paulsen, Jones and Schwarz were each
awarded an increase in their 1997 base salary (as set forth in the above Summary
Compensation Table).

Cash bonuses. Summit Properties' 1997 Incentive Compensation Plan rewards
Summit Properties' executives with annual cash bonuses based on favorable
performance by both Summit Properties and the individual executive. This plan
was formulated to foster a team performance among the executive officers in
accomplishing goals for growth in FFO per share of Common Stock ("per share
FFO") while at the same time aligning executive annual cash incentive goals with
stockholder goals through the translation of per share FFO growth into an
appreciated share price. For 1997, 100% of Mr. Paulsen's cash bonus was
dependent upon growth in per share FFO over the previous fiscal year. Mr.
Schwarz's cash bonus was dependent in large part on per share FFO growth over
the prior fiscal year and a minority portion of his cash bonus was dependent
upon commendable performance of specially assigned tasks and outstanding
performance of routine duties. The majority of Mr. Hamilton's cash bonus for
1997 was dependent on the attainment of certain stabilized property operating
income goals. The remainder of Mr. Hamilton's cash bonus was dependent upon
commendable performance of specially assigned tasks and outstanding performance
of routine duties. For 1997, the majority of Mr. Jones' cash bonus was dependent
upon the success of new development projects and the achievement of targeted
financial returns in excess of Summit Properties' cost of capital. The remainder
of

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Mr. Jones' cash bonus was comprised of (i) an objective component based on the
achievement of certain property specific operating income and leasing goals and
(ii) a subjective component based on his performance in promoting team building
within Summit Properties. For 1997, Mr. Tufaro's cash bonus was dependent upon
his success in achieving specific results with respect to special projects
assigned to him.

Management has informed the Compensation Committee that to further promote
Summit Properties' philosophy of performance-based compensation for 1997,
certain non-executive senior level officers also have cash bonus elements of
compensation, wherein the majority of that cash bonus is dependent on per share
FFO growth over the prior fiscal year.

Summit Properties' 1997 Incentive Compensation Plan was approved by the
Compensation Committee in September of 1996, thereby establishing the specific
per share FFO growth criteria and requisite financial returns on development
communities upon which executive officers' cash bonuses were dependent. For
fiscal year 1997, the threshold per share FFO growth criteria was achieved. As a
result, Mr. Paulsen received a cash bonus and Mr. Schwarz received the majority
of his cash bonus, which was dependent on growth in per share FFO as well as
that portion of his cash bonus based upon commendable performance of specially
assigned tasks and outstanding fulfillment of routine duties. In fiscal year
1997, the required operating income growth goals for stabilized properties was
not achieved and therefore Mr. Hamilton did not receive that portion of his cash
bonus dependent upon such goals. Mr. Hamilton did, however, receive that portion
of his cash bonus dependent upon commendable performance of specially assigned
tasks and outstanding performance of routine duties. In fiscal year 1997, the
required financial returns for certain development projects were achieved and
Mr. Jones did receive a bonus relative to that performance. Furthermore,
operating income growth and lease-up thresholds for certain properties developed
by Mr. Jones were achieved and therefore he did receive that component of his
cash bonus. Mr. Tufaro did receive a cash bonus relative to his success on
certain special projects.

Stock Options and Stock Grants. The Compensation Committee believes that awards
of stock options or stock grants provide long-term incentive compensation to
executive officers that is aligned most directly with the achievement of
enhanced value for stockholders through an appreciating stock price. As such,
the Compensation Committee believes that awards of stock options or stock grants
should be made to executive officers in meaningful amounts on a regular basis.
When granting stock, it is the intention of the Compensation Committee to
utilize restricted stock grants subject to a three to five year vesting period,
other than in instances where stock is granted in lieu of cash compensation, in
which case the Compensation Committee may award unrestricted stock which is not
subject to vesting.

The number of stock options or stock grants awarded to an executive officer is
based on the following criteria:

1. Overall responsibility of the executive officer.

2. Overall ability to contribute to an increase in FFO.

3. Level of base salary component of compensation.

4. Level of incentive cash bonus, in that any fiscal year cash bonus
amounts in excess of 50% of the respective executive officer's base salary
will be paid to that executive in restricted stock of comparable value.

The Compensation Committee considers the awards of stock options or restricted
stock grants on a current basis only. The existing stockholdings of an
individual executive are not taken into consideration when awarding stock
options or restricted stock grants.

In 1997, no stock options were granted. However, effective January 1, 1997, the
cash bonuses of Messrs. Paulsen and Schwarz exceeded 50% of their respective
base salaries, and each such executive received restricted stock awards of
comparable value. The shares of such restricted stock will vest 50% on January
1, 1999, and the remaining 50% will vest on January 1, 2000. In addition,
effective January 1, 1997, Messrs. Schwarz and Hamilton received restricted
stock awards. The shares of such restricted stock vested 25% on January 1, 1998
and will vest 25% on January 1st of each of the next three years.

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Definition of Funds from Operations (FFO). As noted above, certain elements of
executive compensation are based on achieving specific goals in per share FFO
growth. FFO is defined as income or loss before minority interest of unitholders
of the Operating Partnership, extraordinary items and non-recurring formation
expenses and certain non-cash items, primarily depreciation. Industry analysts
consider FFO to be an appropriate measure of the performance of an equity REIT.

Compensation of the Chief Executive Officer. Mr. Paulsen's total compensation
for fiscal year 1997 consisted of base salary and a cash bonus. Based on per
share FFO growth performance for fiscal year 1997, Mr. Paulsen received a cash
bonus. The Compensation Committee believes that compared to the market, Mr.
Paulsen's base salary and potential maximum cash bonus based on per share FFO
growth of Summit Properties, are each respectively and when combined,
conservative in comparison to the Comparative Compensation Peer Group.

Comparative Compensation Peer Group. The Compensation Committee compares both
the individual components as well as total compensation of executive officers to
compensation practices in the comparative market by periodically reviewing data
on the Comparative Compensation Peer Group provided by management or outside
consultants. The Comparative Compensation Peer Group is primarily a sampling of
REITs with similar characteristics to Summit Properties as well as some similar
sized companies from other industries. Utilization of this comparative data
provides assurance to both executive officers and Summit Properties'
stockholders that executive officers are being compensated adequately yet
reasonably in the context of the overall market. While comparative market data
is valuable in providing assurance of reasonable compensation for executive
officers, Summit Properties' stated policy of emphasizing performance-based
compensation will result in base salaries for executive officers being below the
comparative norm.

The Compensation Committee believes that the equity REITs that comprise the
Comparative Compensation Peer Group are the most direct comparisons for Summit
Properties and its Executive Compensation Program.

Deduction Limit of $1 million Pursuant to Section 162(m). The Securities and
Exchange Commission (the "SEC") requires that this report comment upon Summit
Properties' policy with respect to Section 162(m) of the Internal Revenue Code
which limits the deductibility on Summit Properties' tax return of compensation
over $1 million to any of the Named Executive Officers unless, in general, the
compensation is paid pursuant to a plan which is performance related,
non-discretionary and has been approved by Summit Properties' stockholders. The
Compensation Committee's policy with respect to Section 162(m) is to make every
reasonable effort to insure that compensation is deductible to the extent
permitted, while simultaneously providing Summit Properties' executives with
appropriate awards for their performance. Summit Properties did not pay any
compensation during 1997 that would be subject to Section 162(m).

Submitted by the Compensation Committee:

Henry H. Fishkind
James H. Hance, Jr.
Nelson Schwab III
John Crosland, Jr.

The foregoing report should not be deemed incorporated by reference by any
general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act of 1933 or under the Securities Exchange Act of
1934, except to the extent that the Operating Partnership or Summit Properties
specifically incorporates this information by reference and shall not otherwise
be deemed filed under such Acts.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation Committee consists of Messrs. Fishkind, Hance, Schwab and
Crosland. None of these individuals has served as an officer of Summit
Properties. Messrs. Hance, Schwab and Crosland serve as officers and directors
of lending institutions that have provided financing and related services to the
Operating Partnership. James H. Hance, Jr. is a Vice Chairman and the Chief
Financial Officer of NationsBank Corporation ("NationsBank") and Nelson Schwab
III and John Crosland, Jr. are members of the Board of Directors of First Union
National Bank ("First Union"). NationsBank and First Union have provided the

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Operating Partnership with credit enhancements on certain of its Communities
financed with tax-exempt bonds. First Union is also the joint provider of the
Operating Partnership's $150 million unsecured credit facility.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

The following table sets forth the beneficial ownership of Units for (i)
Directors, the Named Executive Officers, (ii) the Directors and Named Executive
Officers of Summit Properties as a group and (iii) each limited partner of the
Operating Partnership that the Operating Partnership believes holds more than a
5% beneficial interest in the Operating Partnership. Unless otherwise indicated
in the footnotes, all of such interests are owned directly, and the indicated
person has sole voting and investment power. The information in the following
table was provided by the unitholders listed and reflects their beneficial
ownership known by the Operating Partnership and Summit Properties on December
31, 1997.

NUMBER
NAME AND OF UNITS PERCENT
BUSINESS ADDRESS BENEFICALLY OF ALL
OF BENEFICIAL OWNERS* OWNED UNITS
- --------------------- ----------- -------

DIRECTORS AND EXECUTIVE OFFICERS
William B. McGuire, Jr...................................... 620,313 2.3%
William F. Paulsen.......................................... 596,045 2.2%
Raymond V. Jones............................................ 274,526 1.0%
David F. Tufaro............................................. -- **
Michael L. Schwarz.......................................... -- **
William B. Hamilton......................................... -- **
Henry H. Fishkind........................................... -- **
James H. Hance, Jr.......................................... -- **
Nelson Schwab III........................................... -- **
John Crosland, Jr........................................... 1,152,723*** 4.2%
ALL DIRECTORS AND EXECUTIVE OFFICERS AS A GROUP (10
PERSONS).................................................. 2,849,995 10.4%
5% HOLDERS
Summit Properties Inc....................................... 23,411,086 85.3%

* The business address of each person is: c/o Summit Properties Inc., 212
South Tryon Street, Suite 500, Charlotte, NC, 28281.

** Less than one percent.

*** The indicated ownership includes (a) 307,311 Units owned by JMJ Associates
Limited Partnership, a limited partnership in which Mr. Crosland owns an
equity interest and indirectly serves as the general partner, (b) 387,646
Units owned by The Crosland Group, Inc., a corporation in which Mr. Crosland
owns an equity interest (the "Crosland Group"), (c) 51,101 Units owned by
Crosland-Erwin & Associates, No. VI, a general partnership in which the
Crosland Group owns an equity interest, (d) 108,554 Units, 86,125 Units and
91,162 Units owned by Westbury Place Associates, Westbury Woods Associates
and Westbury Park Associates, respectively, each a limited partnership with
respect to which Mr. Crosland serves as co-general partner, (e) 2,381 Units
owned by Crosland Investors, Inc., a corporation in which Mr. Crosland owns
an equity interest and (f) 11,566 shares owned by the John Crosland, Sr.
Trust, a trust with respect to which Mr. Crosland serves as co-trustee, as
to all of which Mr. Crosland disclaims beneficial interest. Mr. Crosland
owns 106,877 Units directly.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Operating Partnership is managed by Summit Properties, in its capacity as
the general partner of the Operating Partnership.

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As discussed above, Messrs. Hance and Schwab serve as officers and directors of
lending institutions that have provided financing and related services to the
Operating Partnership. James H. Hance, Jr. is a Vice Chairman and the Chief
Financial Officer of NationsBank, and Nelson Schwab III is a member of the Board
of Directors of First Union. Both NationsBank and First Union provided the
Operating Partnership with credit enhancements on certain of its Communities
financed with tax-exempt bonds. First Union is also the joint provider of the
Operating Partnership's $150 million unsecured credit facility.

LOANS TO OFFICERS AND EMPLOYEES.

The Board of Directors of Summit Properties, including the Compensation
Committee thereof, believes that ownership of Summit Properties' Common Stock by
executive officers and certain other qualified employees of Summit Properties
and its subsidiaries aligns the interest of such officers and employees with the
interest of the stockholders of Summit Properties in appreciating stock price.
To further such goal of aligning the interest of such officers and employees
with the interest of the stockholder of Summit Properties, the Board of
Directors on September 8, 1997 approved and Summit Properties instituted a loan
program under which Summit Properties may lend amounts to or on behalf of
certain of Summit Properties' executive officers and key employees (hereinafter,
a "Loan") for one or more of the following purposes: (i) to finance the purchase
of Common Stock by (A) certain executive officers on the open market at
then-current market prices and (B) other eligible employees through Summit
Properties' 1996 Non-Qualified Employee Stock Purchase Plan; (ii) to finance an
employee's payment of the exercise price of one or more stock options to
purchase shares of Common Stock granted to such employee under Summit
Properties' 1994 Stock Option and Incentive Plan (the "1994 Plan"); or (iii) to
finance the annual tax liability or other expenses of Messrs. Schwarz and
Hamilton related to the vesting of shares of Common Stock which constitute a
portion of a restricted stock award granted to such employee under the 1994
Plan. The maximum aggregate amount Summit Properties may loan to an executive
officer is $500,000 and the maximum aggregate amount Summit Properties may loan
to a qualified employee is $100,000. Currently, Messrs. Schwarz and Hamilton are
the only executive officers to whom loans have been extended for the purpose of
financing the purchase of Common Stock and the payment of the annual tax
liability related to the vesting of shares of Common Stock which constitute a
portion of a restricted stock award.

The relevant employee shall execute a Promissory Note and Security Agreement
(the "Note") related to each Loan made by Summit Properties. Each Note will bear
interest at the applicable federal rate, as established by the Internal Revenue
Service in effect on the date of the Note (the "Interest Rate") and such rate
shall be fixed and the Note shall become due and payable in full on the tenth
anniversary of the Note (the "Maturity Date"). Shares of Common Stock which are
the subject of a Loan serve as collateral (the "Collateral Stock") for the Note
until such time as the Note has been paid in full. Until the Maturity Date, the
employee to whom a Loan has been extended will only be required to repay such
Loan through the application to the outstanding Loan balance of all dividends
and distributions related to the Collateral Stock, first to interest, and the
remainder, if any, to outstanding principal. Such employee may repay the whole
or any part of the principal amount of the Loan from time to time without
premium or penalty. Summit Properties' recourse against an employee under a Note
for satisfaction of the Loan and all other amounts due is limited to Summit
Properties' rights to the Collateral Stock and 25% of the principal of the Note
for which the employee is personally liable in the event of any deficiency which
may arise upon a foreclosure and sale or other disposition of the Collateral
Stock.

As of February 28, 1998, Summit Properties had extended Loans totaling
$904,023.15 to its employees, including the amounts of $499,979.64 and
$404,043.51 which were extended to Messrs. Hamilton and Schwarz, respectively.
Loans to Mr. Hamilton in the amount of (i) $109,236.63 bear interest at 6.13%
per year (i.e., the Applicable Federal Rate for Loans made in January 1998) and
(ii) $390,743.01 bear interest at 5.93% per year (i.e., the Applicable Federal
Rate for Loans made in February 1998). Loans to Mr. Schwarz in the amount of (i)
$93,077.13 bear interest at 6.13% per year (i.e., the Applicable Federal Rate
for Loans made in January 1998) and (ii) $310,966.38 bear interest at 5.93% per
year (i.e., the Applicable Federal Rate for Loans made in February 1998).

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PART IV

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

(a) Financial Statements and Financial Statement Schedule

The consolidated financial statements and financial statement schedule of the
Operating Partnership are listed in the Index to Financial Statements and
Supplementary Data on page 51 of this Report.

(b) Reports on Form 8-K

On August 11, 1997, the Operating Partnership filed a Current Report on Form 8-K
relating to the Operating Partnership's $125 million senior unsecured debt
offering underwritten by J.P. Morgan & Co., Merrill Lynch & Co., Morgan Stanley
Dean Witter and First Union Capital Markets Corp., and a Form 8-K/A-1 was filed
on August 18, 1997 to amend such Form 8-K to include certain definitive
exhibits.

On December 16, 1997, the Operating Partnership filed a Current Report on Form
8-K relating to the Operating Partnership's $30 million senior unsecured debt
offering underwritten by J.P. Morgan & Co., and a Form 8-K/A-1 was filed on
December 17, 1997 to amend such Form 8-K to include certain definitive exhibits.

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

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

3.1.1 Agreement of Limited Partnership of the Operating
Partnership, as amended. (Incorporated by reference to
Exhibit 3.1 to the Operating Partnership's Registration
Statement on Form 10, dated April 21, 1997, filed pursuant
to the Securities Exchange Act of 1934, as amended, File No.
000-22411).
3.1.2 Tenth Amendment to the Agreement of Limited Partnership of
the Operating Partnership. (Incorporated by reference to
Exhibit 10.1 to the Summit Properties' Quarterly Report on
Form 10-Q for the fiscal quarter ended June 30, 1997, File
No. 001-12792).
4.1 Indenture dated as of August 7, 1997 between the Operating
Partnership and First Union National Bank, relating to the
Operating Partnership's Senior Debt Securities.
(Incorporated by reference to Exhibit 4.1 to the Operating
Partnership's Current Report on Form 8-K filed on August 11,
1997, File No. 000-22411).
4.2 Supplemental Indenture No. 1, dated as of August 12, 1997
between the Operating Partnership and First Union National
Bank. (Incorporated by reference to Exhibit 4.1 to the
Operating Partnership's Amended Current Report on Form
8-K/A-1 filed on August 18, 1997, File No. 000-22411).
4.3 Supplemental Indenture No. 2, dated as of December 17, 1997
between the Operating Partnership and First Union National
Bank. (Incorporated by reference to Exhibit 4.1 to the
Operating Partnership's Amended Current Report on Form
8-K/A-1 filed on December 17, 1997, File No. 000-22411).
4.4 The Operating Partnership's 6.80% Note due 2002, dated
August 12, 1997. (Incorporated by reference to Exhibit 4.2
to the Operating Partnership's Amended Current Report on
Form 8-K/A-1 filed on August 18, 1997, File No. 000-22411).
4.5 The Operating Partnership's 6.95% Note due 2004, dated
August 12, 1997. (Incorporated by reference to Exhibit 4.3
to the Operating Partnership's Amended Current Report on
Form 8-K/A-1 filed on August 18, 1997, File No. 000-22411).
4.6 The Operating Partnership's 7.20% Note due 2007, dated
August 12, 1997. (Incorporated by reference to Exhibit 4.4
to the Operating Partnership's Amended Current Report on
Form 8-K/A-1 filed on August 18, 1997, File No. 000-22411).

45
46

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

4.7 The Operating Partnership's 6% Note due 2003, dated December
17, 1997. (Incorporated by reference to Exhibit 4.2 to the
Operating Partnership's Amended Current Report on Form
8-K/A-1 filed on December 17, 1997, File No. 000-22411).
10.1.1 Articles of Incorporation of Summit Properties.
(Incorporated by reference to Exhibit 3.1 to Summit
Properties' Registration Statement on Form S-11,
Registration No. 33-90706).
10.1.2 Bylaws of Summit Properties. (Incorporated by reference to
Exhibit 3.2 to Summit Properties' Registration Statement on
Form S-11, Registration No. 33-90706).
10.2.1 Articles of Incorporation of Summit Management Company.
(Incorporated by reference to Exhibit 10.3 to the Summit
Properties' Annual Report on Form 10-K for the fiscal year
ended December 31, 1993, File No. 001-12792).
10.2.2 Bylaws of Summit Management Company. (Incorporated by
reference to Exhibit 10.4 to Summit Properties' Annual
Report on Form 10-K for the fiscal year ended December 31,
1993, File No. 001-12792).
10.3 Summit Properties Inc. 1994 Stock Option and Incentive Plan.
(Incorporated by reference to Exhibit 10.6 to Summit
Properties' Registration Statement on Form S-11,
Registration No. 33-90706).
10.4 Summit Properties Inc. 1996 Non-Qualified Employee Stock
Purchase Plan. (Incorporated by reference to Exhibit 10.5 to
Summit Properties' Registration Statement on Form S-8,
Registration No. 333-00078).
10.5 Indemnification Agreement, dated January 29, 1994, among
Summit Properties, the Operating Partnership and the
individuals named therein. (Incorporated by reference to
Exhibit 10.16 to Summit Properties' Annual Report on Form
10-K for the fiscal year ended December 31, 1993, File No.
001-12792).
10.7.1 Employment Agreement between Summit Properties and William
F. Paulsen. (Incorporated by reference to Exhibit 10.7.1 to
Summit Properties' Annual Report on Form 10-K for the fiscal
year ended December 31, 1997, File No. 001-12792).
10.7.2 Employment Agreement between Summit Properties and William
B. McGuire, Jr. (Incorporated by reference to Exhibit 10.7.2
to Summit Properties' Annual Report on Form 10-K for the
fiscal year ended December 31, 1997, File No. 001-12792).
10.7.3 Employment Agreement between Summit Properties and Raymond
V. Jones. (Incorporated by reference to Exhibit 10.7.3 to
Summit Properties' Annual Report on Form 10-K for the fiscal
year ended December 31, 1997, File No. 001-12792).
10.7.4 Employment Agreement between Summit Properties and David F.
Tufaro. (Incorporated by reference to Exhibit 10.7.4 to
Summit Properties' Annual Report on Form 10-K for the fiscal
year ended December 31, 1997, File No. 001-12792).
10.7.5 Employment Agreement between Summit Properties and John C.
Moore. (Incorporated by reference to Exhibit 10.7.5 to
Summit Properties' Annual Report on Form 10-K for the fiscal
year ended December 31, 1997, File No. 001-12792).
10.7.6 Employment Agreement between Summit Properties and Michael
G. Malone. (Incorporated by reference to Exhibit 10.7.6 to
Summit Properties' Annual Report on Form 10-K for the fiscal
year ended December 31, 1997, File No. 001-12792).
10.7.7 Employment Agreement between Summit Properties and Keith L.
Downey. (Incorporated by reference to Exhibit 10.12.3 to the
Summit Properties' Annual Report on Form 10-K for the fiscal
year ended December 31, 1993, File No. 001-12792).
10.7.8 Employment Agreement between Summit Properties and
Christopher A. Hughes. (Incorporated by reference to Exhibit
10.12.4 to Summit Properties' Annual Report on Form 10-K for
the fiscal year ended December 31, 1993, File No.
001-12792).
10.7.9 Employment Agreement between Summit Properties and William
B. Hamilton. (Incorporated by reference to Exhibit 10.7.9 to
Summit Properties' Annual Report on Form 10-K for the fiscal
year ended December 31, 1997, File No. 001-12792).

46
47

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

10.7.10 Employment Agreement between Summit Properties and Michael
L. Schwarz. (Incorporated by reference to Exhibit 10.7.10 to
Summit Properties' Annual Report on Form 10-K for the fiscal
year ended December 31, 1997, File No. 001-12792).
10.8.1 Noncompetition Agreement between Summit Properties and
William F. Paulsen. (Incorporated by reference to Exhibit
10.8.1 to Summit Properties' Annual Report on Form 10-K for
the fiscal year ended December 31, 1997, File No.
001-12792).
10.8.2 Noncompetition Agreement between Summit Properties and
William B. McGuire, Jr. (Incorporated by reference to
Exhibit 10.8.2 to Summit Properties' Annual Report on Form
10-K for the fiscal year ended December 31, 1997, File No.
001-12792).
10.8.3 Noncompetition Agreement between Summit Properties and
Raymond V. Jones. (Incorporated by reference to Exhibit
10.8.3 to Summit Properties' Annual Report on Form 10-K for
the fiscal year ended December 31, 1997, File No.
001-12792).
10.8.4 Noncompetition Agreement between Summit Properties and Keith
H. Kuhlman. (Incorporated by reference to Exhibit 10.8.4 to
Summit Properties' Annual Report on Form 10-K for the fiscal
year ended December 31, 1997, File No. 001-12792).
10.8.5 Noncompetition Agreement between Summit Properties and David
F. Tufaro. (Incorporated by reference to Exhibit 10.8.5 to
Summit Properties' Annual Report on Form 10-K for the fiscal
year ended December 31, 1997, File No. 001-12792).
10.8.6 Noncompetition Agreement between Summit Properties and John
T. Gray. (Incorporated by reference to Exhibit 10.8.6 to
Summit Properties' Annual Report on Form 10-K for the fiscal
year ended December 31, 1997, File No. 001-12792).
10.8.7 Noncompetition Agreement between Summit Properties and John
C. Moore. (Incorporated by reference to Exhibit 10.8.7 to
Summit Properties' Annual Report on Form 10-K for the fiscal
year ended December 31, 1997, File No. 001-12792).
10.8.8 Noncompetition Agreement between Summit Properties and
Michael G. Malone. (Incorporated by reference to Exhibit
10.8.8 to Summit Properties' Annual Report on Form 10-K for
the fiscal year ended December 31, 1997, File No.
001-12792).
10.8.9 Noncompetition Agreement between Summit Properties and
William B. Hamilton. (Incorporated by reference to Exhibit
10.8.9 to Summit Properties' Annual Report on Form 10-K for
the fiscal year ended December 31, 1997, File No.
001-12792).
10.8.10 Noncompetition Agreement between Summit Properties and
Michael L. Schwarz. (Incorporated by reference to Exhibit
10.8.10 to Summit Properties' Annual Report on Form 10-K for
the fiscal year ended December 31, 1997, File No.
001-12792).
10.9.1 Executive Severance Agreement between Summit Properties and
William F. Paulsen. (Incorporated by reference to Exhibit
10.9.1 to Summit Properties' Annual Report on Form 10-K for
the fiscal year ended December 31, 1997, File No.
001-12792).
10.9.2 Executive Severance Agreement between Summit Properties and
William B. McGuire, Jr. (Incorporated by reference to
Exhibit 10.9.2 to Summit Properties' Annual Report on Form
10-K for the fiscal year ended December 31, 1997, File No.
001-12792).
10.9.3 Executive Severance Agreement between Summit Properties and
Michael L. Schwarz. (Incorporated by reference to Exhibit
10.9.3 to Summit Properties' Annual Report on Form 10-K for
the fiscal year ended December 31, 1997, File No.
001-12792).
10.9.4 Executive Severance Agreement between Summit Properties and
Raymond V. Jones. (Incorporated by reference to Exhibit
10.9.4 to Summit Properties' Annual Report on Form 10-K for
the fiscal year ended December 31, 1997, File No.
001-12792).
10.9.5 Executive Severance Agreement between Summit Properties and
William B. Hamilton. (Incorporated by reference to Exhibit
10.9.5 to Summit Properties' Annual Report on Form 10-K for
the fiscal year ended December 31, 1997, File No.
001-12792).

47
48

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

10.10 $2,500,000 Promissory Note, dated February 15, 1994 and
maturing on February 15, 2004, between Summit Management
Company and Old Summit Management Company. (Incorporated by
reference to Exhibit 10.17 to Summit Properties' Annual
Report on Form 10-K for the fiscal year ended December 31,
1993, File No. 001-12792).
10.11.1 $125,000,000 Promissory Note, dated February 15, 1994 and
maturing on February 15, 2001, between the Company and The
Northwestern Mutual Life Insurance Company. (Incorporated by
reference to Exhibit 10.18.1 to Summit Properties' Annual
Report on Form 10-K for the fiscal year ended December 31,
1993, File No. 001-12792).
10.11.2 Mortgage and Security Agreement and Financing Statement,
dated February 15, 1994, between the Company and The
Northwestern Mutual Life Insurance Company. (Incorporated by
reference to Exhibit 10.18.2 to Summit Properties' Annual
Report on Form 10-K for the fiscal year ended December 31,
1993, File No. 001-12792).
10.11.3 $30,000,000 Promissory Note, dated December 21, 1995 between
the Operating Partnership and The Northwestern Mutual Life
Insurance Company. (Incorporated by reference to Exhibit
10.11.3 to Summit Properties' Annual Report on Form 10-K for
the fiscal year ended December 31, 1995, File No.
001-12792).
10.12 $31,000,000 Loan Agreement, dated July 31, 1996, between the
Operating Partnership and Wachovia Bank of North Carolina,
N.A. (Incorporated by reference to Exhibit 10.34 to Summit
Properties' Quarterly Report on Form 10-Q for the fiscal
quarter ended September 30, 1996, File No. 001-12792).
10.13.1 $150,000,000 Credit Agreement, dated November 18, 1996,
among the Operating Partnership, First Union National Bank
of North Carolina and Wachovia Bank of North Carolina, N.A.
(Incorporated by reference to Exhibit 10.35 to Summit
Properties' Annual Report on Form 10-K for the fiscal year
ended December 31, 1996, file No. 001-12792).
10.13.2 First Amendment to $150,000,000 Credit Agreement dated July
24, 1997, among the Operating Partnership, First Union
National Bank of North Carolina and Wachovia Bank of North
Carolina, N.A. (Incorporated by reference to the Operating
Partnership's Quarterly Report on Form 10-Q for the fiscal
quarter ended September 30, 1997, File No. 000-22411).
10.14.1 Promissory Note and Security Agreement, dated January 28,
1998 between Summit Properties and Michael L. Schwarz.
(Incorporated by reference to Exhibit 10.14.1 to Summit
Properties' Annual Report on Form 10-K for the fiscal year
ended December 31, 1997, File No. 001-12792).
10.14.2 Promissory Note and Security Agreement, dated January 28,
1998 between Summit Properties and William B. Hamilton.
(Incorporated by reference to Exhibit 10.14.2 to Summit
Properties' Annual Report on Form 10-K for the fiscal year
ended December 31, 1997, File No. 001-12792).
10.14.3 Form of Promissory Note and Security Agreement between
Summit Properties and the employees listed on the schedule
thereto. (Incorporated by reference to Exhibit 10.14.3 to
Summit Properties' Annual Report on Form 10-K for the fiscal
year ended December 31, 1997, File No. 001-12792).
10.15.1 Registration Rights Agreement, dated October 12, 1994
between Summit Properties and PK Partners, L.P.
(Incorporated by reference to Exhibit 10.15.1 to Summit
Properties' Annual Report on Form 10-K for the fiscal year
ended December 31, 1997, File No. 001-12792).
10.15.2 Registration Rights Agreement, dated February 8, 1994,
between Summit Properties and the Continuing Investors named
therein. (Incorporated by reference to Exhibit 10.2 to
Summit Properties' Annual Report on Form 10-K for the fiscal
year ended December 31, 1993, File No. 001-12792).
10.15.3 Registration Rights Agreement, dated December 11, 1995,
between Summit Properties and Bissell Ballantyne, LLC.
(Incorporated by reference to Exhibit 10.2 to Summit
Properties' Registration Statement on Form S-3, Registration
No. 333-24669).

48
49

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

10.15.4 Registration Rights Agreement, dated January 10, 1996, among
Summit Properties, Joseph H. Call and Gary S. Cangelosi.
(Incorporated by reference to Exhibit 10.2 to Summit
Properties' Registration Statement on Form S-3, Registration
No. 333-24669).
10.15.5 Registration Rights Agreement, dated February 20, 1997,
among Summit Properties, The Northwestern Mutual Life
Insurance Company, J. Ronald Terwilliger, J. Ronald
Terwilliger Grantor Trust, Crow Residential Realty
Investors, L.P., Douglas A. Hoeksema, Randy J. Pace,
Clifford A. Breining, TCF Residential Partnership, Ltd. and
Trammell S. Crow. (Incorporated by reference to Exhibit 10.2
to Summit Properties' Registration Statement on Form,
Registration No. 333-24669).
10.15.6 Registration Rights Agreement, dated May 16, 1995, between
Summit Properties and the individuals named therein executed
in connection with the Crosland Acquisition. (Incorporated
by reference to Exhibit 10.15.6 of Summit Properties' Annual
Report on Form 10-K for the fiscal year ended December 31,
1997, File No. 001-12792).
10.16 Agreement to Contribute, dated February 13, 1995, between
Summit Properties, the Operating Partnership and Crosland
Partnerships. (Incorporated by reference to Exhibit 2.1 to
Summit Properties' Current Report on Form 8-K dated May 16,
1995, File No. 001-12792).
12.1 Statement Regarding Calculation of Ratios of Earnings to
Fixed Charges for the Years Ended December 31, 1997, 1996,
1995, 1994 and 1993 (filed herewith).
21.1 Subsidiaries of the Operating Partnership (filed herewith).
23.1 Consent of Deloitte & Touche LLP. (Included in the
Independent Auditor's Report dated January 21, 1998 on page
of the Operating Partnership's Annual Report on Form 10-K
for the fiscal year ended December 31, 1997, File No.
0-22411).
27 Financial Data Schedule (filed herewith).

49
50

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, Summit Properties Partnership, L.P. certifies that it has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized, in Charlotte, North Carolina on March 18, 1998.

SUMMIT PROPERTIES PARTNERSHIP, L.P.
BY: Summit Properties Inc., as General
Partner

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

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons in the capacities and on the dates
indicated. Each person based below has signed this report as an officer or
director of Summit Properties Inc., in its capacity as general partner of Summit
Properties Partnership L.P.

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

/s/ WILLIAM B. MCGUIRE, JR. Chairman of the Board of March 18, 1998
- ----------------------------------------------------- Directors
William B. McGuire, Jr.

/s/ WILLIAM F. PAULSEN President, Chief Executive March 18, 1998
- ----------------------------------------------------- Officer and Director
William F. Paulsen (Principal Executive
Officer)

/s/ MICHAEL L. SCHWARZ Chief Financial Officer March 18, 1998
- ----------------------------------------------------- (Principal Financial
Michael L. Schwarz Officer and Principal
Accounting Officer)

/s/ JOHN CROSLAND, JR. Director March 18, 1998
- -----------------------------------------------------
John Crosland, Jr.

/s/ HENRY H. FISHKIND Director March 18, 1998
- -----------------------------------------------------
Henry H. Fishkind

/s/ JAMES H. HANCE, JR. Director March 18, 1998
- -----------------------------------------------------
James H. Hance, Jr.

/s/ NELSON SCHWAB, III Director March 18, 1998
- -----------------------------------------------------
Nelson Schwab, III

50
51

INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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

SUMMIT PROPERTIES PARTNERSHIP, L.P.

PAGE
----

Independent Auditors' Report................................ 52

Consolidated Balance Sheets as of December 31, 1997 and
1996...................................................... 53

Consolidated Statements of Earnings for the Years Ended
December 31, 1997, 1996 and 1995.......................... 54

Consolidated Statements of Partners' Equity for the Years
Ended December 31, 1997, 1996 and 1995.................... 55

Consolidated Statements of Cash Flows for the Years Ended
December 31, 1997, 1996 and 1995.......................... 56

Notes to Consolidated Financial Statements.................. 57

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

Schedule III -- Real Estate and Accumulated Depreciation.... 69

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

51
52

INDEPENDENT AUDITORS' REPORT

Partners
Summit Properties Partnership, L.P.
Charlotte, North Carolina

We have audited the accompanying consolidated balance sheets of Summit
Properties Partnership, L.P. (the Operating Partnership) as of December 31, 1997
and 1996, and the related consolidated statements of earnings, partners' equity,
and cash flows for each of the three years in the period ended December 31,
1997. Our audits also included the financial statement schedule listed in the
Index at Item 14. These financial statements and financial statement schedule
are the responsibility of the 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 generally accepted auditing
standards. 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, 1997 and 1996, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1997, in conformity
with generally accepted accounting principles. Also, in our opinion, such
financial statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.

We consent to the incorporation by reference of the above report in Registration
Statement No. 333-25575-01 on Form S-3 of Summit Properties Partnership, L.P.

DELOITTE & TOUCHE LLP

Charlotte, North Carolina
January 21, 1998
(March 6, 1998 as to Note 6)

52
53

SUMMIT PROPERTIES PARTNERSHIP, L.P.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)

DECEMBER 31,
--------------------
1997 1996
-------- --------

ASSETS
Real estate assets:
Land and land improvements................................ $133,316 $102,605
Buildings and improvements................................ 643,812 472,996
Furniture, fixtures and equipment......................... 53,573 43,021
-------- --------
830,701 618,622
Less: accumulated depreciation............................ (105,979) (85,651)
-------- --------
Operating real estate assets...................... 724,722 532,971
Construction in progress.................................. 82,332 86,157
-------- --------
Net real estate assets............................ 807,054 619,128
Cash and cash equivalents................................... 3,563 3,665
Restricted cash............................................. 3,180 4,121
Investment in Summit Management Company..................... 1,212 687
Deferred financing costs, net of accumulated amortization of
$3,495 and $2,441 in 1997 and 1996........................ 7,378 4,675
Other assets................................................ 3,308 3,088
-------- --------
Total assets................................................ $825,695 $635,364
======== ========
LIABILITIES AND PARTNERS' EQUITY
Liabilities:
Notes payable............................................. $474,673 $309,933
Accrued interest payable.................................. 4,916 1,318
Accounts payable and accrued expenses..................... 19,945 7,257
Distributions payable..................................... 11,030 10,244
Security deposits and prepaid rents....................... 3,561 3,196
-------- --------
Total liabilities................................. 514,125 331,948
-------- --------
Commitments
Partners' equity:
Operating units issued and outstanding 27,438,400 and
26,434,920
General partner -- outstanding 274,384 and 264,349........ 3,847 3,766
Limited partners -- outstanding 27,164,016 and
26,170,571............................................ 307,723 299,650
-------- --------
Total partners' equity............................ 311,570 303,416
-------- --------
Total liabilities and partners' equity...................... $825,695 $635,364
======== ========

See notes to consolidated financial statements.

53
54

SUMMIT PROPERTIES PARTNERSHIP, L.P.
CONSOLIDATED STATEMENTS OF EARNINGS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)

YEARS ENDED DECEMBER 31,
-----------------------------------------
1997 1996 1995
----------- ----------- -----------

Revenues:
Rental............................................ $ 109,827 $ 88,864 $ 70,773
Other property income............................. 6,179 4,683 3,356
Interest.......................................... 392 558 461
Other income...................................... 279 384 404
----------- ----------- -----------
Total revenues............................ 116,677 94,489 74,994
----------- ----------- -----------
Expenses:
Property operating and maintenance:
Personnel...................................... 9,278 8,368 6,640
Advertising and promotion...................... 2,095 1,417 698
Utilities...................................... 5,033 4,115 3,432
Building repairs and maintenance............... 8,790 7,547 6,116
Real estate taxes and insurance................ 10,721 8,823 6,965
Depreciation................................... 22,652 18,208 15,141
Property supervision........................... 2,783 2,240 1,848
Other operating expenses....................... 3,332 2,716 2,313
----------- ----------- -----------
64,684 53,434 43,153
Interest.......................................... 21,959 17,138 14,802
General and administrative........................ 2,740 2,557 1,949
Loss (income) on equity investments:
Summit Management Company...................... (274) 173 80
Real estate joint venture...................... -- -- (41)
----------- ----------- -----------
Total expenses............................ 89,109 73,302 59,943
----------- ----------- -----------
Income before gain on sale of real estate assets and
extraordinary items............................... 27,568 21,187 15,051
Gain on sale of real estate assets.................. 4,366 -- --
----------- ----------- -----------
Income before extraordinary items................... 31,934 21,187 15,051
Extraordinary items................................. -- (626) (539)
----------- ----------- -----------
Net income.......................................... 31,934 20,561 14,512
Net income allocated to general partner............. (319) (206) (145)
----------- ----------- -----------
Net income allocated to limited partners............ $ 31,615 $ 20,355 $ 14,367
=========== =========== ===========
Per unit data:
Income before extraordinary items -- basic and
diluted........................................ $ 1.17 $ 0.92 $ 0.83
=========== =========== ===========
Net income -- basic and diluted................... $ 1.17 $ 0.90 $ 0.80
=========== =========== ===========
Distributions declared............................ $ 1.59 $ 1.55 $ 1.51
=========== =========== ===========
Weighted average units -- basic................... 27,257,637 22,914,069 18,112,009
=========== =========== ===========
Weighted average units -- diluted................. 27,294,058 22,940,998 18,116,664
=========== =========== ===========

See notes to consolidated financial statements.

54
55

SUMMIT PROPERTIES PARTNERSHIP, L.P.
CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY
(DOLLARS IN THOUSANDS)

GENERAL LIMITED
PARTNER PARTNERS TOTAL
------- -------- --------

Balance, January 1, 1995.................................... $1,925 $136,164 $138,089
Distributions............................................. (284) (28,112) (28,396)
Contributions from Summit Properties related to:
Proceeds from public offering.......................... 659 65,278 65,937
Proceeds from dividend plan............................ 2 238 240
Issuance of stock grants............................... -- 28 28
Contributions related to property acquisitions............ 262 25,928 26,190
Contributions related to land acquisition................. 9 887 896
Net income................................................ 145 14,367 14,512
------ -------- --------
Balance, December 31, 1995.................................. 2,718 214,778 217,496
Distributions............................................. (365) (36,096) (36,461)
Contributions from Summit Properties related to:
Proceeds from public offering.......................... 976 96,658 97,634
Proceeds from dividend and stock purchase plans........ 16 1,581 1,597
Exercise of stock options.............................. 3 284 287
Amortization of restricted stock grants................ 2 200 202
Contributions related to land acquisition................. 210 1,890 2,100
Net income................................................ 206 20,355 20,561
------ -------- --------
Balance, December 31, 1996.................................. 3,766 299,650 303,416
Distributions
Contributions from Summit Properties related to:.......... (437) (43,223) (43,660)
Proceeds from public offering.......................... 68 6,744 6,812
Proceeds from dividend and stock purchase plans........ 36 3,571 3,607
Exercise of stock options.............................. 9 842 851
Costs of shelf registrations........................... (6) (610) (616)
Issuance of stock related to acquisitions.............. 49 4,884 4,933
Amortization of restricted stock grants................ 4 350 354
Contributions related to property acquisitions............ 39 3,900 3,939
Net income................................................ 319 31,615 31,934
------ -------- --------
Balance, December 31, 1997.................................. $3,847 $307,723 $311,570
====== ======== ========

See notes to consolidated financial statements.

55
56

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

YEARS ENDED DECEMBER 31,
--------------------------------
1997 1996 1995
--------- -------- ---------

Cash flows from operating activities:
Net income................................................ $ 31,934 $ 20,561 $ 14,512
Adjustments to reconcile net income to net cash provided
by operating activities:
Extraordinary items.................................... -- 626 539
(Gain) loss on equity method investments............... (274) 173 39
Gain on sale of real estate assets..................... (4,366) -- --
Depreciation and amortization.......................... 23,897 19,183 15,978
Decrease in restricted cash............................ 941 235 575
Increase in other assets............................... (162) (866) (992)
Increase (decrease) in accrued interest payable........ 3,581 333 (47)
Increase in accounts payable and accrued expenses...... 517 386 209
Increase (decrease) in security deposits and prepaid
rents................................................ (121) 545 181
--------- -------- ---------
Net cash provided by operating activities......... 55,947 41,176 30,994
--------- -------- ---------
Cash flows from investing activities:
Construction of real estate assets and land acquisitions,
net of payables........................................ (91,665) (87,081) (52,499)
Purchase of Communities................................... (78,870) (6,360) (5,081)
Proceeds from sale of Community........................... 9,209 -- --
Capitalized interest...................................... (5,873) (4,266) (3,110)
Recurring capital expenditures............................ (4,586) (3,291) (2,180)
Non-recurring capital expenditures, net of payables....... (4,122) (2,973) (864)
--------- -------- ---------
Net cash used in investing activities............. (175,907) (103,971) (63,734)
--------- -------- ---------
Cash flows from financing activities:
Debt proceeds............................................. 302,240 89,359 97,075
Debt repayments........................................... (156,533) (90,783) (101,650)
Dividends and distributions to unitholders................ (42,971) (34,000) (26,157)
Payment of financing costs................................ (32) (515) (1,033)
Contributions from Summit Properties related to:
Proceeds from public offering.......................... 6,812 97,634 65,937
Proceeds from dividend and stock purchase plans........ 3,607 1,597 268
Exercise of stock options.............................. 851 287 --
Costs of shelf registrations........................... (616) -- --
Advance proceeds of direct stock purchase plan............ 6,500 -- --
--------- -------- ---------
Net cash provided by financing activities......... 119,858 63,579 34,440
--------- -------- ---------
Net increase (decrease) in cash and cash equivalents........ (102) 784 1,700
Cash and cash equivalents, beginning of year................ 3,665 2,881 1,181
--------- -------- ---------
Cash and cash equivalents, end of year...................... $ 3,563 $ 3,665 $ 2,881
========= ======== =========
Supplemental disclosure of cash flow information -- Cash
paid for interest, net of capitalized interest............ $ 17,321 $ 15,780 $ 13,762
========= ======== =========

See notes to consolidated financial statements.

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SUMMIT PROPERTIES PARTNERSHIP, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND FORMATION OF THE COMPANY

Summit Properties Partnership, L.P. (the "Operating Partnership"), a Delaware
limited partnership, was formed on January 14, 1994 to conduct the business of
developing, leasing and managing multifamily apartment communities for Summit
Properties Inc. (Summit Properties"). On February 15, 1994, Summit Properties
completed an initial public offering ("Initial Offering"). In connection with
the Initial Offering, the Operating Partnership consummated a business
combination involving the partnerships (the "Property Partnerships") which owned
the 27 communities acquired in connection with the Initial Offering and the
affiliated entities which provided development, construction, management and
leasing services to each of those communities prior to the Initial Offering
(collectively, the "Summit Entities"). A portion of the proceeds from the
Initial Offering was used by Summit Properties 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 27
communities and the operations of the Summit Entities (the "Formation"). Summit
Properties became the sole general partner and the majority owner of the
Operating Partnership upon completion of the Initial Offering. Summit Properties
is a self-administered and self-managed equity real estate investment trust
("REIT").

In June 1995, Summit Properties completed the sale of 4 million shares of Common
Stock (the "1995 Offering"). In August 1996, Summit Properties completed the
sale of 5.75 million shares of Common Stock (the "1996 Offering"). The net
proceeds of $65.9 million and $97.6 million from the 1995 and 1996 Offerings,
respectively, were contributed to the Operating Partnership in exchange for
units of limited partnership interest in the Operating Partnership ("Units"),
and the Operating Partnership used the proceeds to repay mortgage debt and to
fund current development projects.

Summit Properties conducts all of its business through the Operating Partnership
and its subsidiaries. As of December 31, 1997, Summit Properties holds 85.3% of
the outstanding partnership interests of the Operating Partnership, consisting
of a 1% general partner interest and an 84.3% limited partner interest. The
Operating Partnership is obligated to redeem each Unit at the request of the
holder for cash equal to the fair market value of one share of Common Stock,
except that Summit Properties may elect to acquire each Unit presented for
redemption for cash or one share of Common Stock. Summit Properties has issued
Common Stock in connection with all redemptions to date. With each redemption of
outstanding Units for Summit Properties' Common Stock, Summit Properties'
percentage ownership interest in the Operating Partnership will increase. In
addition, whenever Summit Properties issues shares of Common Stock, Summit
Properties will contribute any net proceeds therefrom to the Operating
Partnership and the Operating Partnership will issue an equivalent number of
Units to Summit Properties.

Distributions to holders of Units are made to enable distributions to be made to
Summit Properties' shareholders under Summit Properties' dividend policy.
Federal income tax laws require Summit Properties, as a REIT, to distribute 95%
of its ordinary taxable income. The Operating Partnership makes distributions to
Summit Properties to enable it to satisfy this requirement.

2. BASIS OF PRESENTATION

In conjunction with the Initial Offering, construction, management and leasing
activities for third parties were transferred to Summit Management Company (the
"Management Company") and its wholly owned subsidiary Summit Apartment Builders
(the "Construction Company") The Operating Partnership has a 99% economic
interest in the Management Company but controls only 1% of the voting stock. The
remaining 99% of the voting stock is held by an executive officer of the
Operating Partnership, which stock is subject to certain restrictions on
transfer designed to ensure that the holder of the Management Company's voting
stock will have interests aligned with those of the Operating Partnership.
Because of the Operating Partnership's ability to exercise significant
influence, the Management Company is accounted for on the equity method of
accounting. Prior to the Initial Offering on February 15, 1994, these activities
were included in the Statement of Earnings on a combined basis.
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58

As a result of the Formation, the partners and owners of the entities comprising
the Summit Entities have either retained their existing ownership interests,
received shares of Common Stock of Summit Properties or received Units in the
Operating Partnership. Purchase accounting was applied to the acquisition of all
non-controlled interest in which cash consideration was paid. The acquisition of
all other interests was accounted for as a reorganization of entities under
common control and, accordingly, was reflected at historical cost in a manner
similar to that in pooling of interest accounting.

All significant intercompany accounts and transactions have been eliminated in
consolidation.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

REAL ESTATE ASSETS AND DEPRECIATION -- Real estate assets are stated at
depreciated cost reduced for any estimated impairment in value of which
management believes there is none at December 31, 1997 and 1996.

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

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

The Operating Partnership records its real estate assets at cost less
accumulated depreciation and adjusts carrying value in accordance with Statement
of Financial Accounting Standards ("SFAS") No. 121, "Accounting for the
Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of", which
the Operating Partnership adopted in 1996. SFAS No. 121 requires that long-lived
assets such as real estate assets be reviewed whenever events or changes in
circumstances indicate that the book value of the asset may not be recoverable.
If 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, an impairment loss must be recognized in the amount of the
difference between book value and fair value as opposed to the difference
between book value and net realizable value under the previous accounting
standard. For long-term assets like apartment communities, the determination of
whether there is an impairment loss is dependent primarily on the Operating
Partnership's estimates on occupancy, rent and expense increases, which involves
numerous assumptions and judgments as to future events over a period of many
years. Assets to be disposed of are reported at the lower of carrying value or
fair value less costs to sell. At December 31, 1997 the Operating Partnership
does not hold any assets that meet the impairment criteria of SFAS No. 121.

RENTAL REVENUE RECOGNITION -- The Operating Partnership leases its residential
properties under operating leases with terms generally one year or less. Rental
revenue is recognized on the accrual method of accounting as earned.

PROPERTY MANAGEMENT -- The Management Company provides property management
services for both Operating Partnership owned properties as well as properties
owned by third parties and recognizes revenue when earned, as the services are
provided.

CASH AND CASH EQUIVALENTS -- For purposes of the statement of cash flows, the
Operating Partnership considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents.

RESTRICTED CASH -- Restricted cash is comprised primarily of resident security
deposits, bond repayment escrows and replacement reserve escrows.

DEFERRED FINANCING COSTS -- Deferred financing costs include fees and costs
incurred in conjunction with long-term financings and are amortized on the
straight-line method over the terms of the related debt. Such amortization is
included in interest expense in the accompanying consolidated statements of
earnings.

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INTEREST AND REAL ESTATE TAXES -- Interest and real estate taxes incurred during
the construction period are capitalized and depreciated over the lives of the
constructed assets. Interest capitalized was $5.9 million, $4.3 million and $3.1
million for the years ended December 31, 1997, 1996 and 1995, respectively.

ADVERTISING COSTS -- The Operating Partnership expenses advertising costs as
incurred.

INCOME TAXES -- In accordance with partnership taxation, each partner is
responsible for reporting its share of taxable income or loss. Accordingly, no
provision has been made in the accompanying financial statements for federal,
state or local income taxes. A portion of the Operating Partnership's
distributions is deemed as return of capital for shareholder income tax
purposes. The percentage of distributions that was return of capital was 25%,
21% and 26% for each of the years ended December 31, 1997, 1996 and 1995,
respectively.

PER UNIT DATA -- Basic earnings per Unit with respect to the Operating
Partnership for the years ended December 31, 1997, 1996 and 1995 are computed
based upon the weighted average number of Units outstanding during the period.
In February 1997, The Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 128 "Earnings Per Share." This pronouncement
specifies the computation, presentation and disclosure requirements for earnings
per share. The new standard had no impact on the Operating Partnership's
financial statements as the "basic" and "diluted" earnings per Unit disclosure
required by the pronouncement were the same as "primary" earnings per Unit
previously required. The only difference in "basic" and "diluted" weighted
average Units is the dilutive effect of Summit Properties stock options
outstanding (36,421, 26,930 and 4,655 Units added to weighted Units outstanding
in 1997, 1996 and 1995, respectively).

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

4. PROPERTY MANAGEMENT AND RELATED PARTY TRANSACTIONS

In conjunction with the Formation, construction, management and leasing
activities for third parties were transferred to the Management Company and the
Construction Company, which is accounted for using the equity method of
accounting.

The Management Company provides management services to the Operating
Partnership. Total fees for management services were $3.1 million, $2.4 million
and $1.9 million for the years ended December 31, 1997, 1996 and 1995,
respectively.

In addition, the Management Company provides management services to apartment
communities in which executive officers and certain Directors of Summit Partners
are general partners. The Management Company received management fees of
approximately $214,000, $267,000 and $294,000 for the performance of such
services for the years ended December 31, 1997, 1996 and 1995, respectively.

Construction Company revenue consists of contracts with the Operating
Partnership. Revenue from contracts with the Operating Partnership was $1.1
million, $524,000 and $311,000 for the years ended December 31, 1997, 1996 and
1995, respectively. The Operating Partnership has a $4.6 million and $1.3
million construction contract payable to the Construction Company as of December
31, 1997 and 1996, respectively.

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60

The Operating Partnership's investment in the Management Company as of December
31, 1997 and 1996, reported on the equity method, includes the amounts shown
below. The Company's investment in the Management Company is not considered
material to the consolidated financial statements of the Operating Partnership
taken as a whole (in thousands):

1997 1996
------- -------

Equity investment........................................... $ 242 $ (32)
Note receivable............................................. 2,500 2,500
Deferred gain on sale of third party contract rights........ (1,530) (1,781)
------- -------
$ 1,212 $ 687
======= =======

5. NOTES PAYABLE

Notes payable consist of the following (in thousands):

INTEREST PRINCIPAL OUTSTANDING
RATE AS OF DECEMBER 31,
DECEMBER 31, ----------------------
1997 1997 1996
------------- --------- ---------

FIXED RATE DEBT
- -----------------
Mortgage Loan.................................. 5.88% $120,379 122,950
Mortgage Loan.................................. 7.71% 29,214 29,653
Mortgage Loan.................................. 8.00% 8,557 8,638
Mortgage Notes................................. 7.75% -- 9.80% 46,676 32,104
Tax Exempt Mortgage Notes...................... 6.95% -- 7.25% 9,262 9,369
-------- --------
Total Mortgage Debt.................... 214,088 202,714
Unsecured Debt:
6.80% Notes due 2002........................ 6.80% 25,000 --
6.63% Notes due 2003........................ 6.63% 30,000 --
6.95% Notes due 2004........................ 6.95% 50,000 --
7.20% Notes due 2007........................ 7.20% 50,000 --
Bank Note due 2002.......................... 7.85% 16,000 16,000
Bank Note due 2000.......................... 7.61% 15,000 15,000
-------- --------
Total Unsecured Debt........................ 186,000 31,000
-------- --------
Total Fixed Rate Debt....................... 400,088 233,714
VARIABLE RATE DEBT
- --------------------
Unsecured Credit Facility...................... LIBOR + 110 21,733 22,357
Tax Exempt Bonds............................... 5.65% 52,852 53,862
-------- --------
Total Variable Rate Debt............... 74,585 76,219
-------- --------
Total Outstanding Indebtedness................... $474,673 309,933
======== ========

The London Interbank Offered Rate (LIBOR) at December 31, 1997 was 5.69%.

MORTGAGE LOANS -- The 5.88% fixed rate Mortgage Loan requires monthly principal
and interest payments on a 24-year amortization schedule with a balloon payment
due at maturity in February, 2001. The Operating Partnership has an option to
extend the final maturity date for a period of up to two years at an interest
rate equal to the then current year treasury rate plus a predetermined spread.

The 7.71% fixed rate Mortgage Loan requires monthly principal and interest
payments on a 25-year amortization schedule with a balloon payment due at
maturity in December, 2005.

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.

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MORTGAGE NOTES -- The Mortgage Notes bear interest at fixed rates ranging from
7.75% to 9.80% and require monthly interest and principal payments over the life
of the notes which range from the year 2002 to 2029. The weighted average
interest rate and debt maturity at December 31, 1997 for these nine Mortgage
Notes were 8.26% and 15.9 years, respectively.

TAX EXEMPT MORTGAGE NOTES -- The Tax Exempt Mortgage Notes bear interest at
fixed rates ranging from 6.95% to 7.25% and require monthly interest and
principal payments over the life of the notes. The weighted average interest
rate and debt maturity at December 31, 1997 for these two mortgage notes were
7.12% and 28.5 years, respectively.

UNSECURED NOTES -- The unsecured notes consist of $25.0 million of notes due
2002, $30.0 million of notes due 2003, $50.0 million of notes due 2004 and $50.0
million of notes due 2007 (collectively, the "Unsecured Notes"). The Unsecured
Notes require semi-annual interest payments until the end of the respective
terms. UNSECURED BANK NOTES -- The unsecured bank debt financing consists of a
$16.0 million note due 2002 and a $15.0 million note due 2000 (collectively, the
"Unsecured Bank Notes"). The notes require quarterly interest only payments
until the end of the respective terms.

UNSECURED CREDIT FACILITY -- The $150 million unsecured credit facility
("Unsecured Credit Facility") had an original three-year term and currently
bears interest at LIBOR + 110 basis points. The interest rate can be reduced
based upon an upgrade in the Operating Partnership's unsecured credit rating.
The Unsecured Credit Facility provides $25 million for general working capital
purposes with the remainder available to finance development projects and
acquisitions. The Unsecured Credit Facility is repayable monthly on an
interest-only basis with the balance of all principal and accrued interest due
no later than September 30, 1999. The Unsecured Credit Facility had an average
interest rate of 6.73% and 6.46% and an average balance outstanding of $53.9
million and $9.4 million during the years ended December 31, 1997 and 1996,
respectively. In addition, the maximum outstanding during 1997 and 1996 was
$121.9 million and $22.4 million, respectively.

The Operating Partnership and Summit Properties have a commitment for a new
syndicated unsecured line of credit (the "New Unsecured Credit Facility") in the
amount of $175 million which will replace the existing Unsecured Credit
Facility. The New Unsecured Credit Facility will provide funds for new
development, acquisitions and general working capital purposes. The New
Unsecured Credit Facility will have a three year term with two one-year
extension options and will initially bear interest at LIBOR + 90 basis points
based upon the Operating Partnership's current credit rating of BBB- by Standard
& Poor's Rating Services and Baa3 by Moody's Investors Service. The interest
rate will be reduced in the event of an upgrade of the Operating Partnership's
unsecured credit rating. The New Unsecured Credit Facility is repayable monthly
on an interest only basis with principal due at maturity.

The New Unsecured Credit Facility also provides a bid option sub-facility equal
to a maximum of fifty percent of the total facility ($87.5 million). This
sub-facility provides the Operating Partnership with the option to place
borrowings in fixed LIBOR contract periods of thirty, sixty, ninety and one
hundred eighty days. The Operating Partnership may have up to seven fixed LIBOR
contracts outstanding at any one time. Upon proper notifications, all lenders in
the New Unsecured Credit Facility may, but are not obligated, to participate in
a competitive bid auction for these fixed LIBOR contracts.

The Unsecured Credit Facility and the Unsecured Notes require the Operating
Partnership to comply with certain affirmative and negative covenants including
the requirements: (i) that the Operating Partnership maintain its qualification
as a REIT; (ii) that the ratio of unencumbered assets to debt equal or exceed
150%; (iii) that the ratio of debt to assets not exceed 60%; (iv) that the
maximum secured debt not exceed $350 million or 40% of assets; (v) that the
Operating Partnership maintain a debt service ratio of not less than 1.75 to 1;
and (vi) that the Operating Partnership maintain a ratio of adjusted funds flow,
as defined, to debt of greater than .15 to 1.

VARIABLE RATE TAX EXEMPT BONDS -- The effective interest rate of the Variable
Rate Tax Exempt Bonds was 5.05% for the year ended December 31, 1997. These
bonds bear interest at various rates set by a remarketing agent at the demand
note index plus 0.50%, set weekly, or the lowest percentage of prime which
allows the resale at a price of par. The bonds contain covenants which require
that the Operating Partnership lease or
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hold for lease 20% (or 25% under certain state or local requirements) of the
apartment homes for moderate-income residents. The bonds require maintenance of
letters of credit or surety bonds (credit enhancements) aggregating $54.1
million. The credit enhancements on four of the five tax exempt bonds ($45.2
million of debt) provide for a principal amortization schedule which
approximates a 25-year term during the term of the credit enhancement.

Real estate assets with a net book value of $320.7 million serve as collateral
for the various debt agreements.

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

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

1998.................... $ 3,287 $ 866 $ 1,055 $ 5,208
1999.................... 3,497 935 1,105 $21,733 27,270
2000.................... 3,718 1,007 $ 15,000 1,130 -- 20,855
2001.................... 112,407 1,091 -- 1,150 -- 114,648
2002.................... 765 9,214 41,000 1,270 -- 52,249
Thereafter.............. 34,476 42,825 130,000 47,142 -- 254,443
-------- ------- -------- ---------- ------- --------
$158,150 $55,938 $186,000 $ 52,852 $21,733 $474,673
======== ======= ======== ========== ======= ========

EXTRAORDINARY ITEMS -- The 1996 extraordinary item resulted from the write-off
of deferred financing costs on development loans repaid with the proceeds from
the 1996 Offering and with the proceeds of the $31.0 million Unsecured Notes.

The 1995 extraordinary items resulted from the write-off of deferred financing
costs on variable rate mortgage debt repaid with the proceeds from the 1995
Offering and with the proceeds of the $30 million Mortgage Loan, and from the
write-off of deferred financing costs related to the refunding of two variable
rate tax exempt bonds.

6. ACQUISITIONS AND DISPOSITION

On April 1, 1996, the Operating Partnership acquired its joint venture partner's
interest in Summit Plantation (formerly Plantation Cove), a 262 apartment
community located in Plantation, Florida. The Operating Partnership paid $6.4
million in cash for the remaining 75% interest in the joint venture.

On January 6, 1997, the Operating Partnership purchased Summit Portofino
(formerly Portofino Place), a 322 apartment community located in Broward County,
Florida. Summit Portofino, built in 1995, was purchased for $28.0 million in
cash. Concurrently with the purchase, Summit Properties sold 315,029 shares of
Common Stock to the public for cash. Summit Properties contributed the proceeds
of the sale of Common Stock to the Operating Partnership in exchange for Units
of the Operating Partnership ("Units"). The proceeds were used to fund a portion
of the purchase price.

On February 20, 1997, the Company purchased Summit Sand Lake (formerly The
Vining at Sand Lake), a 416 apartment community located in Orlando, Florida.
Summit Sand Lake, built in 1995, was purchased for $26.8 million. The Operating
Partnership issued 194,495 Units to the seller, issued 243,608 Units to Summit
Properties in exchange for Summit Properties issuing 243,608 shares to the
seller, assumed $15.2 million in debt and paid the remaining $2.7 million
balance in cash.

On July 18, 1997, the Company purchased Summit Windsor II (formerly Avalon
Farms), a 306 apartment community located in Frederick, Maryland. Summit Windsor
II, which was developed by a predecessor entity of the Operating Partnership in
1988, was purchased for $17.1 million in cash. The Summit Windsor II

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purchase was partially funded by the proceeds from the sale of Summit Charleston
in May of 1997. Summit Charleston was sold for $9.5 million and a gain on the
sale of approximately $4.4 million was recognized.

The following summary of unaudited pro forma results of operations for the years
ended December 31, 1997 and 1996 presents information as if the Operating
Partnership's 1997 acquisitions and the 1996 acquisition had occurred at January
1, 1996. The pro forma information for the years ended December 31, 1997 and
1996 is provided for informational purposes only and is not indicative of
results which would have occurred or which may occur in the future.

YEAR ENDED
DECEMBER 31,
-------------------
1997 1996
-------- --------

Net revenues................................................ $121,208 $108,561
Income before extraordinary items........................... 26,709 16,911
Net income.................................................. 26,709 16,395
Earnings per unit -- basic:
Income before extraordinary items......................... 1.15 .87
Net income................................................ 1.15 .84

7. COMMITMENTS

The estimated cost to complete nine development projects currently under
construction was approximately $98.2 million at December 31, 1997. Anticipated
construction completion dates of the projects range from the first quarter of
1998 to the second quarter of 1999.

The Operating Partnership rents office space in several locations. Rental
expense for the years ended December 31, 1997, 1996 and 1995 amounted to
$101,000, $109,000 and $125,000, respectively, ($347,000 in 1997, $376,000 in
1996 and $405,000 in 1995 including amounts recorded at the Management Company).
Future minimum rental payments for the next five years for those operating
leases (including the Management Company) that have initial or remaining
non-cancelable lease terms in excess of one year are as follows (in thousands):

YEARS ENDED DECEMBER 31:
- ------------------------

1998........................................................ $ 431
1999........................................................ 432
2000........................................................ 145
2001........................................................ 72
2002........................................................ 2
------
$1,082
======

8. EMPLOYEE BENEFIT PLANS

PROFIT SHARING PLAN

The employees of Summit Properties, the Operating Partnership and its
subsidiaries (the "Summit Employees") are participants in Summit Properties'
defined contribution plan pursuant to Section 401(k) of the Internal Revenue
Code which covers all employees with one year or greater service. The Operating
Partnership's contributions are equal to one-half of each Summit employee's
contribution up to a maximum of

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3% of each employee's compensation. Aggregate contributions (including the
Management Company) of approximately $217,000, $223,000 and $191,000 were made
for the years ended December 31, 1997, 1996 and 1995, respectively.

STOCK OPTION PLAN

In 1994, Summit Properties established the 1994 Stock Option Plan in which the
Summit employee's participate. Under the plan, 1,000,000 shares of Summit
Properties' Common Stock were reserved for issuance. 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 vest in three or five annual installments on the
anniversaries of the date of grant except for shares granted to independent
directors of Summit Properties, which vest on the date of grant.

A summary of changes in common stock options for the three years ended December
31, 1997 is as follows:

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

Outstanding at January 1, 1995.............................. 429,900 $19.14
Year ended December 31, 1995
- ---------------------------------
Granted to employees...................................... 130,000 17.13
Forfeited................................................. (20,800) 19.72
-------
Outstanding at December 31, 1995....................... 539,100 18.64
Year ended December 31, 1996
- ---------------------------------
Granted to employees...................................... 28,000 19.30
Exercised................................................. (15,073) 19.04
Forfeited................................................. (53,381) 19.22
-------
Outstanding at December 31, 1996....................... 498,646 18.60
Year ended December 31, 1997
- ---------------------------------
Exercised................................................. (45,900) 18.55
Forfeited................................................. (36,350) 17.74
-------
Outstanding at December 31, 1997....................... 416,396 18.86
=======

Exercise prices for options outstanding as of December 31, 1997 ranged from
$17.13 to $20.75. The weighted average remaining contractual life of those
options is 6.5 years.

As of December 31, 1997, 1996 and 1995 options to purchase 359,218, 283,228 and
132,784 shares, respectively, of Common Stock were exercisable. The weighted
average exercise price for the shares exercisable as of December 31, 1997, 1996
and 1995 was $18.86, $18.36 and $19.03, respectively.

The estimated weighted average fair value of options granted were $2.10 per
share in 1996 and $1.61 per share in 1995 (none granted in 1997). Summit
Properties applies Accounting Principal Board Opinion No. 25 and related
interpretations in accounting for its stock options. Accordingly, no
compensation cost has been recognized for its stock options. Had compensation
cost for the Summit Properties stock options been determined based on the fair
value at the grant dates, consistent with the method of Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation", the
Operating Partnership's net income and net income per share for the years ended
December 31, 1996 and 1995 would have changed to the pro forma amounts indicated
below (dollars in thousands except per share amounts):

1996 1995
------- -------

Pro forma net income........................................ $20,501 $14,499
Pro forma net income per Unit -- basic and diluted.......... .89 .80

The fair value of options granted during 1996 and 1995 were estimated on the
date of grant using the Binomial option-pricing model with the following
weighted-average assumptions: dividend yields ranging from 7.80% to 8.82%,
expected volatility of 16%, risk free interest rate of 6.52%, and expected lives
of ten years.

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In addition, the plan provides for the issuance of stock grants to Summit
Employees. Summit Properties granted 26,528 shares of restricted stock grants
under the plan in 1997. The market value of the restricted stock grants totaled
$546,000, which was recorded as unamortized restricted stock compensation and is
shown as a separate component of stockholders' equity. Unearned compensation is
being amortized to expense over the five year vesting period. Restricted stock
grants of 56,046 shares with a market value of $1.0 million were granted in the
year ended December 31, 1996. The Operating Partnership recognized $292,000 and
$223,000 of expense in the statement of earnings in the years ended December 31,
1997 and 1996, respectively, relative to the stock grants.

EMPLOYEE STOCK PURCHASE PLAN

In 1996, Summit Properties established a non-qualified employee stock purchase
plan. The plan allows Summit Employees to purchase up to $100,000 per year of
Summit Properties Common Stock. The price of the shares of the Common Stock
purchased will be the lesser of 85 percent of the closing price of such shares
either on (a) the first day of each six month purchase period, or (b) the last
day of each six month purchase period. Total shares issued under the plan in
1997 and 1996 were 62,117 and 44,362 with a market value of $1.3 million and
$871,000, respectively. An additional 18,525 shares with a market value of
$391,000 were issued in January, 1998 under the plan. The Operating Partnership
recognized (including the Management Company) $265,000 and $151,000 of expense
in the statement of earnings in the years ended December 31, 1997 and 1996,
respectively, relative to the employee stock purchase plan.

9. DIVIDEND REINVESTMENT AND DIRECT STOCK PURCHASE PLAN

In November 1997, Summit Properties replaced its existing dividend reinvestment
plan with a new dividend reinvestment and direct stock purchase plan. The plan
provides that shares of Summit Properties Common Stock can be purchased directly
from Summit Properties at a discount from the market price (as defined in the
plan document) without brokerage commissions or service charges. Purchases are
generally limited to the reinvesting of Summit Properties dividends and optional
cash purchases of $100 to $10,000 (or any greater amount approved by Summit
Properties) per month. All proceeds from the plan are contributed to the
Operating Partnership for Units. In December, 1997, Summit Properties received
$6.5 million under the plan for Units issued January 2, 1998. These proceeds are
included in accounts payable and accrued expenses at December 31, 1997.

10. SUPPLEMENTAL CASH FLOW INFORMATION

Non-cash investing and financing activities for the years ended December 31,
1997, 1996 and 1995 are as follows:

A. In the year ended December 31, 1997, the Operating Partnership purchased
five Communities (Summit Mayfaire, Summit Portofino, Summit Sand Lake,
Summit Windsor II and Summit Fair Oaks). The Operating Partnership
completed the purchase of the five Communities by assuming debt, issuing
438,103 Units assuming certain liabilities and current assets, and the
payment of cash. The recording of the purchases is summarized as follows
(in thousands):

Fixed assets................................................ $104,469
Current assets.............................................. 30
Debt assumed................................................ (15,226)
Current liabilities assumed................................. (1,531)
Value of Units issued....................................... (8,872)
--------
Cash invested............................................. $ 78,870
========

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B. 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)
Minority interest........................................... (1,215)
--------
Net cash paid............................................... $ 6,360
========

C. In the second quarter of 1995, the Operating Partnership completed the
acquisition of twelve apartment Communities and 75% interest in another
Community. The Operating Partnership purchased the communities by
assuming debt, issuing approximately 1.5 million Units, assuming certain
liabilities and current assets, and the payment of cash. The recording
of the purchase is summarized as follows (in thousands):

Fixed assets................................................ $ 82,935
Restricted cash............................................. 1,427
Other assets................................................ 93
Debt assumed................................................ (52,576)
Current liabilities assumed................................. (996)
Minority interest........................................... 388
Value of Units issued....................................... (26,190)
--------
Net cash paid............................................... $ 5,081
========

D. Summit Properties issued 26,528 and 52,086 (net of 3,960 shares issued
but subsequently retired) of restricted stock grants in 1997 and 1996
valued at $546,000 and $1.0 million, respectively, to Summit Employees.

E. The Operating Partnership accrued distribution payable of $11.0 million,
$10.2 million and $7.7 million at December 31, 1997, 1996 and 1995,
respectively.

F. The Operating Partnership issued 106,330 Units, valued at $2.1 million
at issuance, for the purchase of land in 1996.

G. The Operating Partnership issued 45,359 Units, valued at $896,000 at
issuance, for the purchase of land in 1995.

11. FAIR VALUE DISCLOSURE OF FINANCIAL INSTRUMENTS

The following disclosures of estimated fair value were determined by management
using available market information and appropriate valuation methodologies.
However, considerable judgment is necessary to interpret market data and develop
the related estimates of fair value. Accordingly, the estimates presented herein
are not necessarily indicative of the amounts that could be realized upon
disposition of the financial instruments. The use of different market
assumptions and/or estimation methodologies may have a material effect on the
estimated fair value amounts.

Cash and cash equivalents, rents receivable, accounts payable, accrued expenses,
security deposits, other liabilities, tax-exempt bond indebtedness and the
credit facility are carried at amounts which reasonably approximate their fair
values at December 31, 1997.

Fixed rate mortgage debt and unsecured notes with a carrying value of $400
million have an estimated aggregate fair value of approximately $399.4 million
at December 31, 1997. Rates currently available to the

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Operating Partnership for debt with similar terms and maturities were used to
estimate the fair value of this debt.

The fair value estimates presented herein are based on information available to
management as of December 31, 1997. Although management is not aware of any
factors that would significantly affect the estimated fair value amounts, such
amounts have not been comprehensively re-valued for purposes of these financial
statements since that date, and current estimates of fair value may differ
significantly from the amounts presented herein.

12. GEOGRAPHIC CONCENTRATION

The Operating Partnership's completed Communities are concentrated in three
major regions as follows:

APARTMENT
HOMES --
NUMBER OF % OF % OF
MARKET APARTMENT HOMES PORTFOLIO 1997 REVENUES
- ------ --------------- ------------ -------------

I-85 Corridor (Raleigh, NC to Atlanta, GA)............. 5,892 41% 38%
Central/South Florida.................................. 4,663 33% 35%
Washington, DC/Virginia................................ 2,789 20% 20%
Other.................................................. 872 6% 7%
------ ---- ----
14,216 100% 100%
====== ==== ====

The above table does not include Summit Fair Oaks which was acquired on December
31, 1997.

13. INCOME TAXES

Financial Accounting Standard No. 109, "Accounting for Income Taxes" requires a
public enterprise to disclose the aggregate difference in the basis of its net
assets for financial and tax reporting purposes. The carrying value reported in
the Operating Partnership's financial statements exceeded the tax basis by
approximately $25.3 million and $24.1 million, as of December 31, 1997 and 1996,
respectively. The change between December 31, 1997 and 1996 was primarily due to
financial depreciation exceeding tax depreciation by approximately $6.2 million,
offset by the financial reporting basis exceeding the tax basis by $7.2 million
for the Company's 1997 acquisitions and certain property improvements.

A reconciliation of net income as reported for financial and tax reporting
purposes for the years ended December 31, 1997, 1996 and 1995 is as follows (in
thousands):

1997 1996 1995
------- ------- -------

Net income for financial reporting purposes................. $31,934 $20,561 $14,512
Excess of financial reporting depreciation over tax
depreciation.............................................. 6,122 5,749 5,384
Gain on sale of property.................................... (4,365) -- --
Basis difference in property improvements................... (957) 260 33
Other....................................................... (959) (426) (128)
------- ------- -------
Taxable income of the Operating Partnership................. $31,775 $26,144 $19,801
======= ======= =======

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14. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

Quarterly financial information for the years 1997 and 1996 are as follows (in
thousands):

YEAR ENDED DECEMBER 31, 1997
-------------------------------------
FIRST SECOND THIRD FOURTH
------- ------- ------- -------

Revenues.................................................. $27,249 $28,103 $30,068 $31,257
Income before gain on sale of real estate assets.......... 6,928 6,856 6,948 6,836
Gain on sale of real estate assets........................ -- 4,366 -- --
Net income................................................ 6,928 11,222 6,948 6,836
Net income per share -- basic and diluted................. 0.26 0.41 0.25 0.25

YEAR ENDED DECEMBER 31, 1996
-------------------------------------
FIRST SECOND THIRD FOURTH
------- ------- ------- -------

Revenues.................................................. $21,430 $23,062 $24,771 $25,226
Income before extraordinary items ........................ 4,237 4,345 5,740 6,865
Extraordinary items....................................... -- -- (626) --
Net income................................................ 4,237 4,345 5,114 6,865
Income per share:
Income before extraordinary items -- basic and
diluted.............................................. 0.21 0.21 0.24 0.26
Net income -- basic and diluted......................... 0.21 0.21 0.21 0.26

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SUMMIT PROPERTIES PARTNERSHIP, L.P.
REAL ESTATE AND ACCUMULATED DEPRECIATION SCHEDULE III
DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)

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

Summit Arbors............... $ 780 $ 5,066 $ 210 $ 780 $ 5,276 $ 6,056
Summit Aventura............. 6,367 25,075 6,368 25,074 31,442
Summit Ballantyne........... 2,060 14,171 2,060 14,171 16,231
Summit Beacon Ridge......... 1,053 5,839 1,154 5,738 6,892
Summit Belmont.............. (4) 974 11,107 984 11,097 12,081
Summit Blue Ash............. (2) 2,033 11,765 2,169 11,629 13,798
Summit Breckenridge......... 812 12,061 812 12,061 12,873
Summit Creek................ 1,430 9,125 258 1,430 9,383 10,813
Summit Creekside............ 2,837 414 3,614 382 414 3,996 4,410
Summit Crossing............. 4,162 768 5,174 206 768 5,380 6,148
Summit Del Ray.............. (2) 3,120 14,796 5,402 12,514 17,916
Summit East Ridge........... 5,100 900 6,303 267 910 6,560 7,470
Summit Eastchester.......... 3,814 912 4,699 168 912 4,867 5,779
Summit Fair Oaks............ 4,356 17,215 0 4,356 17,215 21,571
Summit Fairview............. 404 4,441 537 4,308 4,845
Summit Fairways............. 2,819 15,088 2,819 15,088 17,907
Summit Foxcroft............. 2,728 925 3,797 241 925 4,038 4,963
Summit Gateway.............. (4) 1,738 10,431 2,256 9,913 12,169
Summit Glen................. (2) 3,652 12,837 3,693 12,796 16,489
Summit Green................ 1,970 16,624 1,970 16,624 18,594
Summit Hampton.............. (4) 2,577 13,223 2,972 12,828 15,800
Summit Heron's Run.......... (2) 3,154 10,730 3,192 10,692 13,884
Summit Highland............. (2) 1,374 6,249 1,374 6,249 7,623
Summit Hill................. 2,698 8,500 10,014 2,698 18,514 21,212
Summit Hollow............... 4,809 1,470 7,463 442 1,472 7,903 9,375
Summit Lofts................ 1,800 7,337 667 1,800 8,004 9,804
Summit Mayfaire............. 936 8,897 4 936 8,901 9,837
Summit McIntosh............. 1,862 10,168 1,943 10,087 12,030
Summit Meadow............... (2) 2,313 8,483 2,539 8,257 10,796
Summit Norcroft............. (2) 1,072 7,083 1,253 6,902 8,155
Summit Norcroft II.......... 381 3,315 381 3,315 3,696
Summit Oak.................. 2,553 400 3,065 32 400 3,097 3,497
Summit Old Town............. 3,048 774 4,693 137 774 4,830 5,604

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

Summit Arbors............... $ (528) 1986(5) 5/95 5-40 years
Summit Aventura............. (1,791) 6/94-12/95 12/93 5-40 years
Summit Ballantyne........... (147) 7/96-12/97 12/95 5-40 years
Summit Beacon Ridge......... (1,882) 1/88-7/88 1/88 5-40 years
Summit Belmont.............. (3,947) 1/86-5/87 1/86 5-40 years
Summit Blue Ash............. (2,336) 1/92-5/92 1/91 5-40 years
Summit Breckenridge......... (4,346) 7/85-5/87 6/85 5-40 years
Summit Creek................ (1,402) 1983(5) 9/94 5-40 years
Summit Creekside............ (432) 1981(5) 5/95 5-40 years
Summit Crossing............. (566) 1985(5) 5/95 5-40 years
Summit Del Ray.............. (2,522) 1/92-2/93 1/92 5-40 years
Summit East Ridge........... (660) 1986(5) 6/95 5-40 years
Summit Eastchester.......... (593) 1981(5) 5/95 5-40 years
Summit Fair Oaks............ - 1990(5) 12/97 5-40 years
Summit Fairview............. (2,009) 3/82-3/83 3/82 5-40 years
Summit Fairways............. (626) 9/95-12/96 8/95 5-40 years
Summit Foxcroft............. (479) 1979(5) 5/95 5-40 years
Summit Gateway.............. (3,215) 1/86-1/87 12/85 5-40 years
Summit Glen................. (2,561) 5/90-8/92 4/90 5-40 years
Summit Green................ (991) 1/95-6/96 12/94 5-40 years
Summit Hampton.............. (4,524) 11/86-3/88 10/86 5-40 years
Summit Heron's Run.......... (2,817) 7/89-10/90 6/89 5-40 years
Summit Highland............. (2,451) 3/86-1/87 11/85 5-40 years
Summit Hill................. (1,883) 11/94-6/96 6/94 5-40 years
Summit Hollow............... (941) 1976(5) 5/95 5-40 years
Summit Lofts................ (1,270) 1990(5) 10/94 5-40 years
Summit Mayfaire............. (292) 1995(5) 1/97 5-40 years
Summit McIntosh............. (2,848) 7/89-6/90 1/89 5-40 years
Summit Meadow............... (2,317) 8/89-8/90 2/89 5-40 years
Summit Norcroft............. (1,841) 2/90-3/91 12/89 5-40 years
Summit Norcroft II.......... (15) 3/97-11/97 8/96 5-40 years
Summit Oak.................. (357) 1982(5) 5/95 5-40 years
Summit Old Town............. (576) 1979(5) 5/95 5-40 years

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Summit On the River......... 3,212 20,734 3,212 20,734 23,946
Summit Palm Lake............ (2) 4,949 16,868 5,084 16,733 21,817
Summit Park................. 1,680 11,078 1,921 10,837 12,758
Summit Perico............... (2) 1,588 11,939 2,174 11,353 13,527
Summit Pike Creek........... (4) 1,132 10,950 1,259 10,823 12,082
Summit Plantation........... 3,428 18,485 7 3,428 18,492 21,920
Summit Plantation II........ 4,012 17,292 4,012 17,292 21,304
Summit Portofino............ 3,864 24,504 15 3,864 24,519 28,383
Summit Providence........... (2) 3,043 17,362 3,391 17,014 20,405
Summit Radbourne............ 8,599 1,395 12,607 366 1,395 12,973 14,368
Summit Reston............... 5,434 26,255 499 5,434 26,754 32,188
Summit River Crossing....... 2,562 16,664 2,636 16,589 19,225
Summit Russett.............. 3,995 19,217 3,995 19,217 23,212
Summit Sand Lake............ 14,985 4,160 22,979 72 4,160 23,051 27,211
Summit Sedgebrook........... 1,696 14,559 1,696 14,559 16,255
Summit Sherwood............. 3,303 1,102 4,863 100 1,106 4,959 6,065
Summit Simsbury............. (3) 650 4,570 163 650 4,733 5,383
Summit Springs.............. (2) 2,575 12,297 2,667 12,205 14,872
Summit Square............... (2) 2,757 15,067 3,775 14,049 17,824
Summit Station.............. 1,688 10,294 1,988 9,994 11,982
Summit Stony Point.......... (4) 1,638 13,041 373 1,638 13,413 15,052
Summit Touchstone........... (3) 766 5,568 172 766 5,740 6,506
Summit Village.............. (2) 3,212 14,069 3,653 13,628 17,281
Summit Walk................. 568 237 5,462 983 5,284 6,267
Summit Waterford............ (2) 1,568 14,368 1,949 13,987 15,936
Summit Windsor.............. (2) 644 6,329 969 6,004 6,973
Summit Windsor II........... 3,060 14,497 9 3,060 14,506 17,566
-------- -------- -------- -------- -------- --------
Total $124,676 $242,554 $462,838 $133,315 $696,749 $830,068
======== ======== ======== ======== ======== ========

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

Summit On the River......... (687) 8/95-6/97 10/94 5-40 years
Summit Palm Lake............ (3,846) 3/90-2/92 1/90 5-40 years
Summit Park................. (3,317) 4/88-4/89 1/88 5-40 years
Summit Perico............... (3,069) 1/89-2/90 8/88 5-40 years
Summit Pike Creek........... (3,724) 11/86-2/88 4/86 5-40 years
Summit Plantation........... (1,036) 1/94-7/95 4/96 5-40 years
Summit Plantation II........ (153) 10/96-11/97 9/96 5-40 years
Summit Portofino............ (763) 1995(5) 1/97 5-40 years
Summit Providence........... (4,886) 9/88-2/91 4/88 5-40 years
Summit Radbourne............ (1,098) 1991(5) 5/95 5-40 years
Summit Reston............... (3,872) 1987(5) 4/94 5-40 years
Summit River Crossing....... (915) 3/95-9/96 10/94 5-40 years
Summit Russett.............. (393) 7/95-9/97 11/94 5-40 years
Summit Sand Lake............ (722) 1995(5) 2/97 5-40 years
Summit Sedgebrook........... (65) 6/96-12/97 1/96 5-40 years
Summit Sherwood............. (592) 1968(5) 5/95 5-40 years
Summit Simsbury............. (495) 1985(5) 5/95 5-40 years
Summit Springs.............. (3,607) 12/88-4/90 12/88 5-40 years
Summit Square............... (3,613) 3/89-8/90 2/89 5-40 years
Summit Station.............. (2,402) 10/89-9/90 9/89 5-40 years
Summit Stony Point.......... (2,154) 1986(5) 2/94 5-40 years
Summit Touchstone........... (594) 1986(5) 5/95 5-40 years
Summit Village.............. (3,413) 9/89-1/91 8/89 5-40 years
Summit Walk................. (852) 4/92-2/93 4/92 5-40 years
Summit Waterford............ (3,756) 1/89-6/90 11/88 5-40 years
Summit Windsor.............. (1,860) 8/88-8/89 3/95 5-40 years
Summit Windsor II........... (263) 1988(5) 7/97 5-40 years
---------
Total $(105,313)
=========

(1) The aggregate cost for federal income tax purposes at December 31, 1997 is
$765.6 million.
(2) Encumbered by fixed rate mortgages of $149.6 million.
(3) Encumbered by fixed rate mortgage of $8.6 million.
(4) Collateral for $54.1 million of letters of credit which serve as collateral
for $52.9 million in tax exempt bonds.
(5) Property purchased by Company. Date reflects date construction completed.
(6) Includes furniture, fixtures and equipment.

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SCHEDULE III

SUMMIT PROPERTIES 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,
--------------------------------
1997 1996 1995
-------- -------- --------

REAL ESTATE ASSETS(1):
Balance at beginning of year............................. $618,102 $524,772 $407,707
-------- -------- --------
Acquisitions............................................. 104,469 21,913 82,935
Improvements............................................. 9,823 4,780 2,560
Developments............................................. 104,897 66,637 31,570
Disposition of property.................................. (7,223) -- --
-------- -------- --------
211,966 93,330 117,065
-------- -------- --------
Balance at end of year................................... $830,068 $618,102 $524,772
======== ======== ========
ACCUMULATED DEPRECIATION(1):
Balance at beginning of year............................. $ 85,031 $ 66,978 $ 51,957
Depreciation............................................. 22,610 18,053 15,021
Disposition of property.................................. (2,328) -- --
-------- -------- --------
Balance at end of year................................... $105,313 $ 85,031 $ 66,978
======== ======== ========

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