SECURITIES AND EXCHANGE COMMISSION 

WASHINGTON, DC 20549 

FORM 10-Q 

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE 

SECURITIES EXCHANGE ACT OF 1934 

For the quarterly period ended SeptemberJune 30, 20032004 

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE 

SECURITIES EXCHANGE ACT OF 1934 

For the transition period from ____ to ____ 

Commission file number 0-22411 

SUMMIT PROPERTIES PARTNERSHIP, L.P. 

(Exact name of registrant as specified in its charter) 


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

309 E. Morehead Street
Suite 200
Charlotte, North Carolina	28202
(Address of principal executive offices)	(Zip code)

(704) 334-3000 

(Registrant's telephone number, including area code) 

N/A

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

Indicate by check 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 whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2 of the Exchange Act). [ ] Yes [X] No 

SUMMITTABLE PROPERTIESOF PARTNERSHIP,CONTENTS L.P. 

INDEX

		Page



PART I	Financial Information

Item 1	Financial Statements
	Consolidated Balance Sheets as of June 30, 2004 and December 31, 2003 (Unaudited)	3
	Consolidated Statements of Earnings for the three and six months ended June 30, 2004 and 2003 (Unaudited)	4
	Consolidated Statement of Partners’ Equity for the six months ended June 30, 2004 (Unaudited)	6
	Consolidated Statements of Cash Flows for the six months ended June 30, 2004 and 2003 (as Revised)(Unaudited)	7
	Notes to Unaudited Consolidated Financial Statements	8
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3	Quantitative and Qualitative Disclosures about Market Risk	31
Item 4	Controls and Procedures	31

PART II	Other Information

Item 1	Legal Proceedings	33
Item 2	Changes in Securities	34
Item 3	Defaults Upon Senior Securities	34
Item 4	Submission of Matters to a Vote of Security Holders	34
Item 5	Other Information	34
Item 6	Exhibits and Reports on Form 8-K	34
	Signatures	36

		Page No.
PART I	Financial Information
Item 1	Financial Statements
	Consolidated Balance Sheets as of September 30, 2003 and December 31, 2002 (Unaudited)	3
	Consolidated Statements of Operations for the three and nine months ended September 30, 2003 and 2002 (Unaudited)	4
	Consolidated Statement of Partners’ Equity for the nine months ended September 30, 2003 (Unaudited)	6
	Consolidated Statements of Cash Flows for the nine months ended September 30, 2003 and 2002 (Unaudited)	7
	Notes to Consolidated Financial Statements (Unaudited)	9
Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3	Quantitative and Qualitative Disclosures about Market Risk	36
Item 4	Controls and Procedures	36
PART II	Other Information
Item 1	Legal Proceedings	37
Item 2	Changes in Securities	37
Item 3	Defaults Upon Senior Securities	38
Item 4	Submission of Matters to a Vote of Security Holders	38
Item 5	Other Information	38
Item 6	Exhibits and Reports on Form 8-K	38
	Signatures	39


	2

PART I.    FINANCIAL INFORMATION 

ITEMItem 1.     Financial FINANCIALStatements STATEMENTS 

SUMMIT PROPERTIES PARTNERSHIP, L.P.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except unit data)
(Unaudited)
	September 30,			December 31,
	2003			2002
ASSETS
Real estate assets:
Land and land improvements	$	186,487		$	162,641
Buildings and building improvements		918,800			817,061
Furniture, fixtures and equipment		78,385			70,638
Total real estate assets		1,183,672			1,050,340
Less: Accumulated depreciation		(164,982	)		(138,557	)
Net operating real estate assets		1,018,690			911,783
Net real estate assets - assets held for sale		119,083			195,230
Construction in progress		189,292			139,263
Net real estate assets		1,327,065			1,246,276
Cash and cash equivalents		2,108			2,584
Restricted cash		2,167			62,933
Investments in real estate joint ventures		3,153			8,194
Deferred financing costs, net of accumulated amortization
of $6,783 in 2003 and $7,173 in 2002		7,669			6,008
Other assets		19,771			23,545
Other assets - assets held for sale		393			717
Total assets	$	1,362,326		$	1,350,257
LIABILITIES AND PARTNERS’ EQUITY
Liabilities:
Notes payable	$	719,994		$	624,474
Accrued interest payable		6,017			4,936
Accounts payable and accrued expenses		52,219			45,485
Dividends and distributions payable		11,042			10,456
Security deposits and prepaid rents		2,529			2,040
Notes payable and other liabilities - assets held for sale		51,308			78,455
Total liabilities		843,190			765,846
Partners’ common and preferred equity:
Series B preferred units – issued and outstanding zero and 3,400,000		-			82,713
Series C preferred units – 2,200,000 issued and outstanding		53,547			53,547
Partnership common units issued and outstanding 32,718,425 and 30, 980,526
General partner – issued and outstanding, 327,184 and 309,805		5,388			5,213
Limited partners – issued and outstanding, 32,391,241 and 30,670,721		460,282			442,938
Total partners’ equity		519,217			584,411
Total liabilities and partners’ equity	$	1,362,326		$	1,350,257

SUMMIT PROPERTIES PARTNERSHIP, L.P. 

CONSOLIDATED BALANCE SHEETS 

(Dollars in thousands) 

(Unaudited) 

	June 30,			December 31,
	2004			2003

ASSETS
Real estate assets:
Land and land improvements	$	218,343		$	191,665
Buildings and improvements		962,777			886,264
Furniture, fixtures and equipment		78,080			69,258

Total operating real estate assets		1,259,200			1,147,187
Less: Accumulated depreciation		(149,874	)		(131,301	)

Net operating real estate assets		1,109,326			1,015,886
Net real estate assets - assets held for sale		79,738			92,971
Construction in progress		215,726			210,313

Net real estate assets		1,404,790			1,319,170
Cash and cash equivalents		2,380			2,687
Restricted cash		1,458			1,249
Investments in real estate joint ventures		2,923			3,096
Deferred financing costs, net of accumulated amortization
of $7,385 in 2004 and $7,108 in 2003		8,156			7,694
Other assets		16,261			15,797
Other assets - assets held for sale		174			159

Total assets	$	1,436,142		$	1,349,852


LIABILITIES AND PARTNERS’ EQUITY
Liabilities:
Notes payable	$	804,986		$	715,807
Accrued interest payable		4,911			4,558
Accounts payable and accrued expenses		40,000			37,905
Distributions payable		11,748			11,724
Security deposits and prepaid rents		3,356			2,838
Notes payable and other liabilities - assets held for sale		10,431			10,698

Total liabilities		875,432			783,530


Partners’ common and preferred equity:
Series C preferred units – 2,200,000 issued and outstanding		53,547			53,547
Partnership common units issued and outstanding: 34,739,025 and 30,980,526
General partner – issued and outstanding, 347,390 and 309,805		5,802			5,857
Limited partners – issued and outstanding, 34,391,635 and 30,670,721		501,361			506,918

Total partners’ equity		560,710			566,322


Total liabilities and partners’ equity	$	1,436,142		$	1,349,852

See notes to consolidated financial statements. 


	3

SUMMIT PROPERTIES PARTNERSHIP, L.P. 

CONSOLIDATED STATEMENTS OF OPERATIONSEARNINGS 

(Dollars in thousands, except per unitshare dataamounts) 

(Unaudited) 

	Three Months Ended September 30,						Nine Months Ended September 30,
	Three Months Ended June 30,						Six Months Ended June 30,
	2003			2002			2003			2002
	2004			2003			2004			2003
Revenues:
Rental	$	33,~~730~~010		$	2927,~~488~~052		$	9665,~~386~~007		$	8952,~~732~~880
Other property		2,604			2,126			7,035			6,606
Other property revenue		2,852			2,089			5,359			3,817
Management fees - third party communities		145			164			471			627
Interest income		263			549			498			1,079
Interest		320			462			1,512			1,434
Management fees - third party communities		146			156			293			326
Other		242			193			751			389
Other income		148			148			282			620
Gain (loss) and interest income on compensation plans		283			(156	)		521			69
Gain and interest income on compensation plans		138			50			418			238
Total revenues		3736,~~324~~557			3230,~~277~~044			~~106~~71,~~676~~857			9858,~~857~~960
Expenses:
Property operating and maintenance (exclusive of items shown separately below).		8,178			6,873			22,263			19,667
Property operating and maintenance (exclusive of items listed below)		7,306			6,228			14,568			11,957
Real estate taxes and insurance		4,~~649~~980			3,~~742~~836			1310,~~171~~051			107,~~975~~321
Depreciation and amortization		910,~~362~~763			78,~~697~~036			2620,~~781~~992			2215,~~245~~340
Interest		7,~~227~~578			6,~~771~~450			2014,~~176~~496			2112,~~624~~821
Deferred financing cost amortization		~~1,236~~338			~~321~~333			~~2,015~~662			~~965~~713
General and administrative		12,~~747~~112			~~991~~1,765			54,~~232~~002			43,~~077~~322
Property management - owned communities		1,~~207~~337			~~912~~1,504			32,~~885~~831			2,~~853~~824
Property management - third party communities		~~148~~162			~~112~~182			~~475~~343			~~349~~342
Liability adjustment and gain (loss) on compensation plans		283			(156	)		521			69
Liability adjustment and expense on compensation plans		138			50			418			238
Total expenses		34,~~037~~714			2728,~~263~~384			9468,~~519~~363			8254,~~824~~878
Income from continuing operations before loss on real estate joint ventures,
Income from continuing operations before loss on unconsolidated
gain on sale of real estate assets and premium and excess of redemption
real estate joint ventures		1,843			1,660			3,494			4,082
amount over carrying amount of preferred units		3,287			5,014			12,157			16,033
Loss on unconsolidated real estate joint ventures		(80	)		(75	)		(173	)		(164	)
Loss on real estate joint ventures		(105	)		(76	)		(269	)		(53	)
Income from continuing operations		1,763			1,585			3,321			3,918
Gain on sale of real estate assets		-			-			-			13,839
Income from discontinued operations		2,914			3,193			5,060			6,694
Gain on sale of real estate assets - joint venture		-			5,423			-			5,423
Gain on disposition of discontinued operations		9,993			3,122			10,040			6,258
Income from continuing operations		3,182			10,361			11,888			35,242
Loss from early extinguishment of debt		-			(1,508	)		-			(1,508	)
Discontinued operations:
Income from discontinued operations		12,907			4,807			15,100			11,444
Income from discontinued operations		1,071			2,762			2,977			9,914
Net income		14,670			6,392			18,421			15,362
Gain on disposition of discontinued operations		2,119			16,900			8,377			12,691
Distributions to Series B preferred unitholders		-			(1,902	)		-			(3,804	)
Loss from early extinguishment of debt		(2,510	)		-			(4,018	)		-
Distributions to Series C preferred unitholders		(1,203	)		(1,203	)		(2,406	)		(2,406	)
Total discontinued operations		680			19,662			7,336			22,605
Income available to common unitholders		13,467			3,287			16,015			9,152
Net income		3,862			30,023			19,224			57,847
Income available to common unitholders allocated to general partner		(135	)		(33	)		(160	)		(92	)
Distributions to Series B preferred unitholders		(1,691	)		(1,902	)		(5,495	)		(5,706	)
Income available to common unitholders allocated to limited partners	$	13,332		$	3,254		$	15,855		$	9,060
Distributions to Series C preferred unitholder		(1,203	)		(1,203	)		(3,609	)		(3,609	)
Excess of redemption amount over carrying amount of
preferred units		(2,963	)		-			(2,963	)		-
Income (loss) available to common unitholders		(1,995	)		26,918			7,157			48,532
Income (loss) available to common unitholders allocated to general partner		20			(269	)		(72	)		(485	)
Income (loss) available to common unitholders allocated to limited partners	$	(1,975	)	$	26,649		$	7,085		$	48,047


	4

SUMMIT PROPERTIES PARTNERSHIP, L.P. 

CONSOLIDATED STATEMENTS OF OPERATIONSEARNINGS, –continued (Continued) 

(Dollars in thousands, except per unitshare dataamounts) 

(Unaudited) 

	Three Months Ended September 30,						Nine Months Ended September 30,
	Three Months Ended June 30,						Six Months Ended June 30,
	2003			2002			2003			2002
	2004			2003			2004			2003
Per unit data - basic:
Per unit data – basic:
Income from continuing operations	$	0.1005		$	0.3305		$	0.3910		$	10.1413
Total discontinued operations		0.02			0.63			0.24			0.73
Income from discontinued operations		0.37			0.16			0.43			0.37
Net income		0.1342			0.9721			0.6353			10.8750
Distributions to Series B preferred unitholders		~~(0.06~~-	)		(0.06	)		~~(0.18~~-	)		(0.1812	)
Distributions to Series C preferred unitholder		(0.04	)		(0.04	)		(0.12	)		(0.12	)
Distributions to Series C preferred unitholders		(0.03	)		(0.04	)		(0.07	)		(0.08	)
Excess of redemption amount over carrying amount
Income available to common unitholders	$	0.39		$	0.11		$	0.46		$	0.30
of preferred units		(0.10	)		-			(0.10	)		-
Income (loss) available to common unitholders	$	(0.07	)	$	0.87		$	0.23		$	1.57
Per unit data - diluted:
Income from continuing operations	$	0.1005		$	0.3305		$	0.3909		$	10.13
Total discontinued operations		0.02			0.63			0.24			0.73
Income from discontinued operations		0.37			0.16			0.43			0.37
Net income		0.1342			0.9621			0.6353			10.8650
Distributions to Series B preferred unitholders		~~(0.06~~-	)		(0.06	)		~~(0.18~~-	)		(0.1812	)
Distributions to Series C preferred unitholder		(0.04	)		(0.04	)		(0.12	)		(0.12	)
Distributions to Series C preferred unitholders		(0.03	)		(0.04	)		(0.07	)		(0.08	)
Excess of redemption amount over carrying amount
Income available to common unitholders	$	0.38		$	0.11		$	0.46		$	0.30
of preferred units		(0.10	)		-			(0.10	)		-
Distributions declared	$	0.34		$	0.34		$	0.68		$	0.68
Income (loss) available to common unitholders	$	(0.07	)	$	0.86		$	0.23		$	1.56
Weighted average units - basic		34,809,293			30,436,755			34,800,676			30,595,312
Common distributions declared	$	0.34		$	0.48		$	1.01		$	1.43
Weighted average units - diluted		35,031,815			30,531,635			35,024,708			30,656,175
Weighted average units – basic		30,498,918			31,047,380			30,562,828			30,873,231
Weighted average units – diluted		30,667,972			31,178,281			30,669,541			31,097,274

See notes to consolidated financial statements. 


	5

SUMMIT PROPERTIES PARTNERSHIP, L.P. 

CONSOLIDATED STATEMENT OF PARTNERS’' EQUITY 

(Dollars in thousands) 

(Unaudited) 

	Series B			Series C
	Series C
	Preferred			~~Preferred~~General			~~General~~Limited			~~Limited~~
	Units			~~Units~~Partner			~~Partner~~Partners			~~Partners~~Total			~~Total~~
Balance, December 31, 2002	$	82,713		$	53,547		$	5,213		$	442,938		$	584,411
Balance, December 31, 2003	$	53,547		$	5,857		$	506,918		$	566,322
Distributions to common unitholders		-			-(234	)		(~~316~~23,276	)		(3123,~~245~~510	)		~~(31,561~~	)
Redemption of common units		-			-(8	)		(31816	)		(~~3,085~~824	)		~~(3,116~~	)
Contributions (distributions) from Summit Properties related to:
Contributions from Summit Properties related to:
Issuance of common stock		-			-8			~~562~~816			~~55,614~~824			~~56,176~~
Repurchase of common stock		-			-			(152	)		(15,041	)		(15,193	)
Exercise of common stock options		-			4			380			384
Exercise of common stock options		-			-			16			1,605			1,621
Issuance of unrestricted stock grants		-			12			1,168			1,180
Issuance of unrestricted stock grants		-			-			7			653			660
Netdown of restricted and unrestricted stock grants		-			(6	)		(616	)		(622	)
Netdown of restricted and unrestricted stock grants		-			-			(5	)		(455	)		(460	)
Amortization of restricted and unrestricted stock grants		-			2			204			206
Amortization of restricted and unrestricted stock grants		-			-			1			103			104
Dividend reinvestment and stock purchase plan		-			-			90			90
Dividend reinvestment and stock purchase plan		-			-			-			5			5
Interest earned on employee notes receivable		-			(5	)		(514	)		(519	)
Interest earned on employee notes receivable		-			-			(7	)		(738	)		(745	)
Repayment of employee notes receivable		-			12			1,152			1,164
Repayment of employee notes receivable		-			-			29			2,842			2,871
Distributions to preferred unitholders		-			(24	)		(2,382	)		(2,406	)
Redemption of Series B Preferred Units		(85,000	)		-			-			-			(85,000	)
Net income		-			184			18,237			18,421
Unamortized costs at redemption of Series B preferred units		2,287			-			-			-			2,287
Balance, June 30, 2004	$	53,547		$	5,802		$	501,361		$	560,710
Distributions to preferred unitholders		-			-			(121	)		(11,946	)		(12,067	)
Net income		-			-			192			19,032			19,224
Balance, September 30, 2003	$	-		$	53,547		$	5,388		$	460,282		$	519,217

See notes to consolidated financial statements. 


	6

SUMMIT PROPERTIES PARTNERSHIP, L.P. 

CONSOLIDATED STATEMENTS OF CASH FLOWS 

(Dollars in thousands) 

(Unaudited) 

	Nine Months Ended September 30,
	Six Months Ended June 30,
	2003			2002
	2004			2003
				(as revised,
				see Note 13)
Cash flows from operating activities:
Net income	$	1918,~~224~~421		$	5715,~~847~~362
Adjustments to reconcile net income to net cash
provided by operating activities:
Unamortized costs at redemption of preferred units		2,287			-
Loss on real estate joint ventures		173			164
Loss on equity method investments		269			53
Gain on sale of real estate assets - discontinued operations		(10,040	)		(6,258	)
Gain on sale of real estate assets - discontinued operations		(8,377	)		(12,691	)
Loss on early extinguishment of debt		-			1,508
Gain on sale of real estate assets - continuing operations		-			(13,839	)
Depreciation and amortization		23,537			20,957
Gain on sale of real estate assets - joint ventures		-			(5,423	)
Amortization of deferred settlement on interest rate swap		-			(503	)
Loss on early extinguishment of debt		4,018			-
Issuance of unrestricted stock grants		1,150			660
Depreciation and amortization		32,372			31,231
(Increase) decrease in restricted cash		(225	)		759
Issuance of unrestricted stock grants		660			-
Increase in other assets		(745	)		(252)
Amortization of gain on interest rate swap hedge		(755	)		(294	)
Increase (decrease) in accrued interest payable		353			(44	)
Decrease (increase) in restricted cash		531			(941	)
Increase in accounts payable and accrued expenses		7,182			2,447
Decrease (increase) in other assets		336			(3,949	)
Increase in security deposits and prepaid rents		471			118
Increase (decrease) in accrued interest payable		1,081			(1,061	)
Net cash provided by operating activities		40,277			34,918
(Decrease) increase in accounts payable and accrued expenses		(1,678	)		5,152
Increase (decrease) in security deposits and prepaid rents		240			(628	)
Net cash provided by operating activities		50,208			55,457
Cash flows from investing activities:
Construction of real estate assets and land acquisitions		(6254,~~660~~770	)		(9042,~~604~~206	)
Acquisition of real estate assets		(59,427	)		(17,866	)
Acquisition of communities		(43,253	)		(59,427	)
Proceeds from sale of real estate assets		142,240			87,695
Proceeds from sale of real estate assets, net		22,190			85,827
Capitalized interest		(75,~~926~~045	)		(75,~~680~~433	)
Investment in real estate joint ventures		(21,415	)		(6,915	)
Investment in real estate joint venture		-			(10,403	)
Proceeds from sale of real estate assets - joint ventures		-			11,202
Contribution from historic tax credit venture partner		-			6,657
Distribution from real estate joint venture		-			936
Recurring capital expenditures		(3,091	)		(2,557	)
Contributions from historic tax credit venture partner		8,486			600
Non-recurring capital expenditures		(1,101	)		(1,141	)
Recurring capital expenditures		(4,875	)		(3,159	)
Corporate and other asset additions and office tenant improvements		(664	)		(191	)
Non-recurring capital expenditures		(1,749	)		(1,056	)
Decrease in notes receivable		-			2,169
Corporate and other asset additions and office tenant improvements		(496	)		(2,932	)
Net cash used in investing activities		(85,734	)		(26,705	)
Decrease in notes receivable		2,183			63
Net cash used in investing activities		(5,639	)		(29,716	)
Cash flows from financing activities:
Net (repayments of) borrowings on line of credit		(22,500	)		62,500
Net borrowings on (repayments of) line of credit		62,000			(34,000	)
Proceeds from issuance of mortgage notes		93,940			6,900
Proceeds from issuance of mortgage debt		44,140			70,940
Repayments of mortgage notes		(28,240	)		(6,614	)
Repayments of mortgage debt		(764	)		(1,852	)
Borrowings on construction loan		6,475			-
Proceeds from construction loan		1,956			-
Repayments of unsecured notes		-			(41,000	)
Repayment of construction loan		(35,300	)		-
Repayments of tax exempt bonds		(220	)		(340	)
Repayments of tax-exempt bonds		(220	)		(220	)
Payment of deferred financing costs		(31,~~614~~238	)		(~~393~~1,214	)
Loss from early extinguishment of debt		(4,018	)		-
Loss on early extinguishment of debt		-			(1,508	)
Proceeds on sale of interest rate swap		-			1,510
Distributions to common unitholders		(23,547	)		(20,752	)
Distributions to common unitholders		(30,960	)		(43,507	)
Distributions to Series B preferred unitholders		-			(3,804	)
Redemption of Series B preferred units		(85,000	)		-
Distributions to Series C preferred unitholders		(2,406	)		(2,406	)
Distributions to Series B preferred unitholders		(5,495	)		(5,706	)
Repayments of employee notes receivable		645			1,909
Excess of redemption amount over carrying amount of preferred units		(2,963	)		-
Contributions from Summit related to:
Distributions to Series C preferred unitholders		(3,609	)		(3,609	)
Increase in employee notes receivable		-			(7,522	)
Repayments of employee notes receivable		2,126			1,916
Contributions from Summit Properties Inc. related to:
Issuance of common stock		53,060			-
Net proceeds from dividend reinvestment and stock purchase plans
and exercise of stock options		~~1,626~~377			~~11,003~~957
Netdown of restricted and unrestricted stock grants		(460	)		(326	)
Repurchase of Summit’s common stock		-			(15,193	)
Repurchase of Summit's common stock		(15,193	)		-
Netdown of restricted and unrestricted stock grants		(493	)		(460	)
Net cash used in financing activities		(45,045	)		(25,188	)
Net cash provided by (used in) financing activities		45,150			(7,603	)
Net (decrease) increase in cash and cash equivalents		(307	)		610
Cash and cash equivalents, beginning of year		2,687			2,584
Cash and cash equivalents, end of period	$	2,380		$	3,194
Supplemental disclosure of cash flow information:
Cash paid for interest, net of capitalized interest	$	14,266		$	15,468

See notes to consolidated financial statements. 


	7

SUMMIT PROPERTIES PARTNERSHIP, L.P. 

CONSOLIDATEDNOTES STATEMENTSTO OFUNAUDITED CASHCONSOLIDATED FLOWSFINANCIAL –STATEMENTS (Continued) 

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

(Unaudited)1. Basis of Presentation 

	Nine Months Ended September 30,
	2003			2002
Net (decrease) increase in cash and cash equivalents		(476	)		553
Cash and cash equivalents, beginning of period		2,584			2,244
Cash and cash equivalents, end of period	$	2,108		$	2,797
Supplemental disclosure of cash flow information:
Cash paid for interest, net of capitalized interest	$	22,520		$	27,560

Summit conducts substantially all of its business through the Operating Partnership and its subsidiaries. As of June 30, 2004, Summit held 90.4% of our outstanding partnership interests, consisting of a 1.0% general partner and an 89.4% limited partner interest. Each common unit may be redeemed by the holder for cash equal to the fair value of a share of Summit’s common stock or, at our option, one share of common stock (subject to adjustment). We presently determine on a case-by-case basis whether we will cause Summit to issue shares of common stock in connection with a redemption of common units rather than paying cash. With each redemption of common units for common stock, Summit’s percentage ownership interest in the Operating Partnership will increase. Similarly, when Summit acquires a share of common stock under its common stock repurchase program or otherwise, it simultaneously disposes of one of our common units. In addition, whenever Summit issues shares of common stock for cash, Summit will contribute any resulting net proceeds to us and we will issue an equivalent number of common units to Summit. 

SeeDistributions notesto holders of common units are made to consolidatedenable financialdistributions statementsto be made to Summit stockholders under Summit’s dividend policy. Federal income tax laws require Summit, as a Real Estate Investment Trust, to distribute 90% of its ordinary taxable income. We make distributions to Summit to enable it to satisfy this requirement. 

We focus on the operation, development and acquisition of luxury apartment communities in select neighborhoods throughout the Southeast and Mid-Atlantic United States. We focus our efforts in five markets which consist of Washington, D.C., Southeast Florida, Atlanta, Raleigh and Charlotte. As of June 30, 2004, our portfolio consisted of 48 completed communities comprising 14,797 apartment homes; four communities owned in a joint venture, comprised of 1,203 apartment homes; and four apartment communities with 1,715 apartment homes in various stages of development. 

We have prepared the accompanying unaudited consolidated financial statements in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and in conformity with the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. We have included all material adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation. The results of operations for the six months ended June 30, 2004 are not necessarily indicative of the results that may be expected for the full year. You should read our December 31, 2003 audited financial statements and notes included in our Annual Report on Form 10-K in conjunction with these interim statements. Certain reclassifications have been made to the 2003 financial statements to conform to the 2004 presentation. 

Per Unit Data - Basic earnings per unit are computed based upon the weighted average number of units outstanding during the respective period. The difference between "basic" and "diluted" weighted average units is the dilutive effect of Summit’s stock-based compensation outstanding. The number of units added to the weighted average units outstanding for the diluted calculation was 222,522 for the three months ended June 30, 2004 and 224,032 for the six months ended June 30, 2004. The number of units added to the weighted average units outstanding for the diluted calculation was 94,879 for the three months ended June 30, 2003 and 60,862 for the six months ended June 30, 2003. Dilution caused by these options had a $0.01 effect on net income per unit for the three months ended June 30, 2004 and no effect on net income per unit for the six months ended June 30, 2004 and for the three and six months ended June 30, 2003. 


	8

SUMMITStock-Based PROPERTIESCompensation PARTNERSHIP– Summit has a Stock Option and Incentive Plan (the "Option and Incentive Plan") and an Employee Stock Purchase Plan ("ESPP"). Effective January 1, L2003, we adopted the fair value recognition provisions of Statement of Financial Accounting Standards ("SFAS") No.P 123, "Accounting for Stock-Based Compensation," prospectively to all stock options granted, modified, or settled after January 1, 2003 as allowed by SFAS No. 148, "Accounting for Stock-Based Compensation – Transition and Disclosure." 

NOTESBusiness TOSegments CONSOLIDATED- FINANCIALWe STATEMENTSdevelop, (UNAUDITED)acquire, and operate primarily luxury apartment communities. Due to the similarities of our communities and their similar economic characteristics as exhibited through similar long-term financial performance, our communities have been aggregated into one reportable segment in accordance with SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information." 

UnlessAllocation of the contextCost otherwiseof requires,Communities allAcquired references– toThe "we,"cost "our"of orcommunities "us"acquired inis thisallocated reportto refertangible collectivelyand tointangible Summitassets Propertiesand Partnership,liabilities Lbased on their relative fair values.P., aWe Delawareestimate limitedthe partnershipfair (value of the "Operatingacquired Partnership")tangible assets, andwhich itsgenerally subsidiaries.consist Allof referencesland, tobuildings "Summit"and infurniture thisand reportfixtures, referand tointangible Summitassets Propertiesand Inc.liabilities, awhich Marylandgenerally Corporationrepresent the value of above-market and thebelow-market soleleases, generalin-place partnerleases and tenant relationships, of the Operatingcommunity Partnershipacquired and allocate the purchase price on a pro-rata basis to each component. 

1. BASIS OF PRESENTATION

Summit conducts all of its business through the Operating Partnership and its subsidiaries. As of September 30, 2003, Summit held 88.6% of our outstanding partnership interests, consisting of a 1.0% general partner interest and an 87.6% limited partner interest. Each common unit may be redeemed by the holder for cash equal to the fair value of a share of Summit’s common stock or, at our option, one share of common stock (subject to adjustment). We presently determine on a case-by-case basis whether we will cause Summit to issue shares of common stock in connection with a redemption of common units rather than paying cash. With each redemption of common units for common stock, Summit’s percentage ownership interest in the Operating Partnership will increase. Similarly, when Summit acquires a share of common stock under its common stock repurchase program or otherwise, it simultaneously disposes of one of our common units. In addition, whenever Summit issues shares of common stock for cash, Summit will contribute any resulting net proceeds to us and we will issue an equivalent number of common units to Summit.

Distributions to holders of common units are made to enable distributions to be made to Summit stockholders under Summit’s dividend policy. Federal income tax laws require Summit, as a REIT, to distribute 90% of its ordinary taxable income. We make distributions to Summit to enable it to satisfy this requirement.

We have prepared the accompanying unaudited consolidated financial statements in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and in conformity with the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. We have included all material adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation. The results of operations for the nine months ended September 30, 2003 are not necessarily indicative of the results that may be expected for the full year. You should read our December 31, 2002 audited financial statements and notes included in our Annual Report on Form 10-K in conjunction with these interim statements. Certain reclassifications have been made to the 2002 financial statements to conform to the 2003 presentation.

Recently Adopted Accounting Pronouncements – In November 2002, the Financial Accounting Standards Board ("FASB") issued FASB Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others." This Interpretation elaborates on the disclosures to be made by a guarantor in its interim and annual financial statements about its obligations under certain guarantees that it has issued. It also clarifies that a guarantor is required to recognize, at the inception of a guarantee entered into after January 1, 2003, a liability for the fair value of the obligation undertaken in issuing certain guarantees. The disclosure requirements, initial recognition and initial measurement provisions of this Interpretation are currently effective and did not affect our financial position or results of operations for the three and nine months ended September 30, 2003.

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

In January 2003, the FASB issued FASB Interpretation No. 46, "Consolidation of Variable Interest Entities" ("FIN 46"). This Interpretation requires that variable interest entities created after January 31, 2003, and variable interest entities in which an interest is obtained after that date, be evaluated for consolidation into an entity’s financial statements. For variable interest entities acquired prior to January 31, 2003, the provisions of FIN 46 must be applied for the first interim period or annual period ending after December 15, 2003. We have chosen to early-adopt the provisions of FIN 46. Therefore, Summit Management Company (the "Management Company") and its subsidiary, Summit Apartment Builders, Inc., which provide construction activities for us and provide management and leasing activities for us as well as for communities owned by third parties and certain of our directors, has been consolidated in accordance with FIN 46. Prior to the adoption of FIN 46, the Management Company was accounted for under the equity method of accounting. The Management Company is now consolidated into our financial statements in accordance with FIN 46. The adoption of FIN 46 did not affect our results of operations for the three and nine months ended September 30, 2003.

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

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

Per Unit Data - Basic earnings per unit is computed based upon the weighted average number of units outstanding during the respective period. The difference between "basic" and "diluted" weighted average units is the dilutive effect of Summit’s stock-based compensation outstanding. There were 169,054 and 130,901 units added to basic weighted average units outstanding for the three months ended September 30, 2003 and 2002 and 106,714 and 224,042 units added to basic weighted average units outstanding for the nine months ended September 30, 2003 and 2002. Dilution caused by this stock-based compensation had no effect on net income per share for the three and nine months ended September 30, 2003 and had $0.01 per share effect on net income for the three and nine months ended September 30, 2002.

Stock-Based Compensation – Summit has a Stock Option and Incentive Plan and an Employee Stock Purchase Plan ("ESPP"), which are described more fully in Note 11 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2002. Through December 31, 2002, we applied Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," and related interpretations in accounting for Summit’s stock options and ESPP. Accordingly, no compensation cost was recognized for Summit’s stock options granted or shares issued under the ESPP during the three and nine months ended September 30, 2002. The ESPP was suspended effective July 2, 2002. Effective January 1, 2003, we adopted the fair value recognition provisions of SFAS No. 123, prospectively to all of Summit’s stock options granted, modified or settled after January 1, 2003, as allowed by SFAS No. 148.

The following table reflects the effect on net income and earnings per share had the fair value based method been applied to all of Summit’s options granted and to the ESPP for the three and nine months ended September 30, 2003 and 2002 (in thousands, expect per share amounts):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
		2003		2002		2003		2002
Net income as reported	$	3,862	$	30,023	$	19,224	$	57,847
Stock-based compensation determined under fair value based method		-		-		-		(1,452	)
Pro forma net income	$	3 ,862	$	30,023	$	19,224	$	56,395
Net income per unit as reported - basic	$	0.13	$	0.97	$	0.63	$	1.87
Net income per unit as reported - diluted	$	0.13	$	0.96	$	0.63	$	1.86
Pro forma net income per unit - basic	$	0.13	$	0.97	$	0.63	$	1.83
Pro forma net income per unit - diluted	$	0.13	$	0.96	$	0.63	$	1.81

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

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

Fair value is assigned to above-market and below-market leases based on the difference between (a) the contractual amounts to be paid by the resident or retail tenant based on the existing lease and (b) management’s estimate of current market lease rates for the corresponding in-place leases, over the remaining terms of the in-place leases. Capitalized above-market lease amounts wouldare be included in "Other assets" in our consolidated balance sheets and amortized toagainst rental revenue over the remaining terms of the respective leases; however, we did not have any capitalized above-market leases at September 30, 2003. Capitalized below-market lease amounts are included in "Accounts payable and accrued expenses" in our consolidated balance sheets and are amortized as an increase to rental revenue over the remaining terms of the respective leases. 

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

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

BusinessRecently SegmentsAdopted Accounting Pronouncements- WeIn developJanuary 2003, acquirethe FASB issued FASB Interpretation No. 46, and"Consolidation operateof primarilyVariable Interest Entities"Class A("FIN luxury46"). apartmentThis communitiesinterpretation was amended by FASB Interpretation No. Due46 to(revised theDecember similarities2003), "Consolidation of ourVariable communitiesInterest andEntities" their("FIN46R"). similarFIN economic46 characteristicsestablishes asconsolidation exhibitedcriteria throughfor similarentities long-termfor financialwhich performance"control" is not easily discernable under Accounting Research Bulletin 51, our"Consolidated communitiesFinancial haveStatements," beenwhich aggregatedis intobased oneon reportablethe segmentpremise asthat allowedholders inof accordancethe equity of an entity control the entity by virtue of voting rights. FIN 46 provides guidance for identifying the party with SFASa Nocontrolling financial interest resulting from arrangements or financial interests rather than from voting interests. 131We adopted the provisions of FIN 46 on July 1, "Disclosures2003 aboutwhich Segmentsresulted in the consolidation of anSummit EnterpriseManagement Company (the "Management Company") and Relatedits Informationwholly-owned subsidiary, Summit Apartment Builders, Inc. (the "Construction Company"), which provide construction activities for us and provide management and leasing activities for us as well as for communities owned by third parties and certain of our directors, for all periods presented. Prior to the adoption of FIN 46, the Management Company was accounted for under the equity method of accounting. Neither the adoption of FIN 46, nor the provisions of FIN46R, affected our results of operations for any of the years presented. 
 

2Estimates - The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. REALActual ESTATEresults JOINTcould VENTURESdiffer from those estimates. 

We own a 25% equity interest in a joint venture named Station Hill, LLC ("Station Hill"), in which we and Hollow Creek, LLC, a subsidiary of a major financial services company, are members2. StationReal HillEstate currentlyJoint ownsVentures four communities and is accounted for under the equity method of accounting and, therefore, our 25% equity interest is presented in "Loss on real estate joint ventures" in our consolidated statements of operations. 

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


	9

The following are condensed balance sheets as of June 30, 2004 and December 31, 2003 and condensed statements of operations for the six months ended June 30, 2004 and 2003 for Station Hill (in thousands). The balance sheets and statements of operations set forth below reflect the financial position and operations of Station Hill in its entirety, not just our interest in the joint venture . 

	Balance Sheets

	June 30,		December 31,
	2004		2003

Real estate assets, net	$	68,578	$	69,795
Cash and cash equivalents		1,187		690
Other assets		335		312

Total assets	$	70,100	$	70,797


Mortgages payable	$	57,417	$	57,870
Other liabilities		994		544
Partners' capital		11,689		12,383

Total liabilities and partners' capital	$	70,100	$	70,797

 
Statements of Operations 

Three Months Ended June 30, 

Six Months Ended June 30, 

2004 

2003 

2004 

2003 

Revenues 

$

2,326 

$

2,392 

$

4,624 

$

4,761 

Expenses: 

Property Operating 

914 

961 

1,853 

1,914 

Depreciation and amortization 

770 

770 

1,535 

1,535 

Interest 

963 

978 

1,930 

1,959 

Total expenses 

2,647 

2,709 

5,318 

5,408 

Net loss 

$ 

(321 

) 

$ 

(317 

) 

$ 

(694 

) 

$ 

(647 

)

Prior to July 3, 2003, we owned a 29.78% interest in a joint venture named SZF, LLC, which owns substantially all of the interests in Coral Way, LLC, a limited liability company that is developing, through a third-party contractor, an apartment community in Miami, Florida. On July 3, 2003, we purchased our joint venture partner’s 70.22% interest in SZF, LLC for $10.0 million in cash. The community will consist of 323 apartment homes and approximately 17,500 square feet of office/retail space. The limited liability company also owns an adjacent piece of land. The construction costs are being funded through the equity that the joint venture contributed to the limited liability company and by a loan to that company from an unrelated third party. We repaid the construction loan on January 30, 2004. As a result of construction costs exceeding the construction loan amount, SZF, LLC has agreed to advance to Coral Way, LLC the amount required to fund such costs in excess of the construction loan. Certain affiliates of the developer of the apartment community have guaranteed the reimbursement of those costs to Coral Way, LLC and SZF, LLC. These advances accrue a preferential return at the rate of eleven percent (11%) per year to be paid from the distributions from the joint venture. The preferred return will not be recognized until the community has earnings or gains to fund such a return. As of June 30, 2004, we had advanced $12.7 million to SZF, LLC which, in turn, advanced such amounts to Coral Way, LLC. Prior to July 3, 2003, this joint venture was accounted for under the equity method of accounting and its balance sheet and income statement information was not material to our consolidated financial statements taken as a whole. As a result of the purchase of our joint venture partners’ interest in SZF, LLC, the assets, liabilities and operating activities of this joint venture are now consolidated into our financial statements. 

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


	10

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

3. Notes Payable 

New Mortgages – In connection with the acquisition of Summit Stonecrest on May 27, 2004 (see Note 4 below), we assumed a mortgage note with a principal balance of $19.7 million. This mortgage bears interest at a fixed rate of 4.18%, matures on September 1, 2012 and requires interest only payments through August 2004 and then principal and interest payments on a 30-year amortization schedule with a balloon payment due at maturity. This mortgage note is recorded in our financial statements at fair value, which was determined to be $18.4 million at the date of acquisition. The interest rate currently available to us for debt with similar terms and maturity was used to estimate fair value of this mortgage. 

On March 30, 2004, we issued a $16.6 million mortgage note collateralized by Summit Ashburn Farm. This mortgage bears interest at a fixed rate of 4.69% until its maturity on April 1, 2011. The mortgage requires monthly principal and interest payments on a 30-year amortization schedule with a balloon payment due at maturity. 

On March 30, 2004, we issued a $27.5 million mortgage note collateralized by Summit Crest. This mortgage bears interest at a fixed rate of 4.63% until its maturity on April 1, 2011. The mortgage requires monthly interest payments only during the first year of the mortgage and requires monthly principal and interest payments on a 30-year amortization schedule starting with the second year of the mortgage with a balloon payment due at maturity. 

Medium-Term Notes — On April 20, 2000, we commenced a new program for the sale of up to $250.0 million aggregate principal amount of medium-term notes ("MTNs"), due nine months or more from the date of issuance. We had notes with an aggregate principal amount of $95.0 million outstanding in connection with this MTN program as of June 30, 2004. 

On May 29, 1998, we established a program for the sale of up to $95.0 million aggregate principal amount of MTNs due nine months or more from the date of issuance. We had MTNs with an aggregate principal amount of $25.0 million outstanding in connection with this MTN program as of June 30, 2004. As a result of the commencement of the $250.0 million MTN program, we cannot issue any additional notes under the $95.0 million MTN program. 

The MTNs require that we comply with certain affirmative, negative and financial covenants. We were in compliance with these covenants as of June 30, 2004. 

Unsecured Notes — The unsecured notes consist of $50.0 million of notes due on August 15, 2004 and $50.0 million of notes due in 2007. The unsecured notes require that we comply with certain affirmative, negative and financial covenants. We were in compliance with these covenants as of June 30, 2004. 

Credit Facilities — On July 28, 2003, we obtained a secured credit facility with a total commitment of $200.0 million. On June 25, 2004, we increased this commitment to $290.0 million. The availability increased from $189.0 million to $290.0 million. We have the ability to further increase this commitment and availability pursuant to the terms of the credit agreement. The secured credit facility provides funds for new development, acquisitions and general working capital purposes. This facility is secured by twelve of our communities (Summit Brookwood, Summit Fair Oaks, Summit Governor’s Village, Summit Grandview, Summit Lake, Summit Lansdowne, Summit Peachtree City, Summit Portofino, Summit Sedgebrook, Summit Shiloh, Summit Stockbridge and Summit Sweetwater) and matures in July 2008. As described in the credit agreement, loans under the credit facility are subject to debt service coverage and loan to value ratios and bear interest at the Reference Bill Index Rate (defined as the money market yield for the Reference Bills as established by the most recent Reference Bill auction conducted by Freddie Mac) plus 58 to 91 basis points depending on the level of debt service coverage. As of June 30, 2004, the outstanding balance of the credit facility was $181.0 million and the interest rate was 1.7026%. 


	11

TheOn followingJuly are28, condensed2003, balancewe sheetsobtained asan unsecured letter of Septembercredit 30facility, 2003which andmatures Decemberin 31,July 20022008 and statementshas ofa operationstotal forcommitment theof nine$20.0 monthsmillion. endedThe Septemberletters 30,of 2003credit andissued 2002under forthis Stationfacility Hill.serve Theas balancecollateral sheetsfor andperformance statementson ofcontracts operationsand setas forthcredit belowguarantees reflectto thebanks financial position and operationsinsurers. As of StationJune Hill30, in2004, itsthere entirety,were not$7.8 justmillion ourof interestletters inof thecredit jointoutstanding ventureunder (inthis thousands)facility. 

	Balance Sheets
	September 30,			December 31,
	2003			2002
Real estate assets, net	$	70,444		$	72,255
Cash and cash equivalents		1,257			370
Other assets		351			373
Total assets	$	72,052		$	72,998
Mortgages payable	$	58,090		$	58,731
Other liabilities		1,320			580
Partners' capital		12,642			13,687
Total liabilities and partners' capital	$	72,052		$	72,998
	Statements of Operations
	Nine Months Ended
	September 30,
	2003			2002
Revenues	$	7,124		$	7,517
Expenses:
Property operating		2,922			2,838
Depreciation and amortization		2,314			2,222
Interest		2,933			2,975
Total expenses		8,169			8,035
Net loss	$	(1,045	)	$	(518	)

Construction Loan – Concurrent with the purchase of our joint venture partner’s equity interest in SZF, LLC in July 2003 (see Note 2), we consolidated the construction loan related to the community that is being developed by such joint venture. We repaid the construction loan on January 30, 2004. 

Prior to July 3, 2003, we owned a 294.78% interestCommunities in a joint venture named SZFAcquired, LLC,Sold which owns substantially all of the interests in Coral Way, LLC, a limited liability company that is developing, through a third-party contractor, an apartment community in Miami, Florida. On July 3, 2003, we purchased our joint venture partner’s 70.22% interest in SZF, LLC for $10.0 million in cash. The community will consist of 323 apartment homes and approximatelyHeld 17,500 square feet of office/retail space. The limited liability company has also acquired an adjacent piece of land. The construction costs are being funded through the equity that the joint venture contributed to the limited liability company and by a loan to that company from an unrelated third party. As a result of construction costs exceeding the construction loan amount, SZF, LLC has agreed to advance to Coral Way, LLC the amount required to fund such costs in excess of the construction loan. Certain affiliates of the developer of the apartment community have guaranteed the reimbursement of those costs to Coral Way, LLC and SZF, LLC. These advances accrue a preferential return at the rate of eleven percent (11%) per year to be paid from the distributions from the joint venture. The preferred return will not be recognized until the community has earnings or gains to fund such a return. As of September 30, 2003, we had advanced $12.7 million to SZF, LLC which, in turn, advanced such amounts to Coral Way, LLC. Prior to July 3, 2003, this joint venture was accounted for underSale the equity method of accounting and its balance sheet and income statement information was not material to our consolidated financial statements taken as a whole. As a result of the purchase of our joint venture partners’ interest in SZF, LLC, the assets, liabilities and operating activities of this joint venture are now consolidated into our financial statements. 

OnDuring Augustthe 12six months ended June 30, 20032004, we receivedacquired noticetwo ofcommunities, aboth suitof filedwhich byare certainlocated affiliatesin ofCharlotte, CoralNorth Way,Carolina. LLCOn againstMay us27, Summit2004, andwe theacquired ManagementSummit CompanyStonecrest (see306 Partapartment II,homes) Itemfor 1$28.0 "Legalmillion. Proceedings"Consideration includedpaid infor this report).community Onewas cash of $9.6 million and the remediesassumption demandedof ina the$19.7 suitmillion ismortgage termination(which had a fair market value of the$18.4 guaranteemillion agreementson tothe whichdate referenceof ispurchase) made(see Note 3 above). WeOn believeJune that14, the2004, allegationswe madeacquired Summit South End Square (299 apartment homes) for $33.5 million in thiscash. suitThe areacquisition notprice supportedof bythese thetwo factscommunities andhas webeen intendpreliminarily toallocated vigorouslybased defendon againstestimated thisfair suit.values Ifat wethe aredate successfulof acquisition, thepending guaranteefinal agreementsdetermination willof remaincertain acquired balances. This preliminary allocation resulted in placeless andthan 2.0% of the guarantorstotal willpurchase remainprice obligatedbeing allocated to reimburseSummit CoralSouth Way,End LLCSquare’s intangible assets and SZF,less LLCthan for2.5% of the coststotal inpurchase excessprice ofbeing theallocated constructionto loanSummit Stonecrest’s intangible assets. 

During the six months ended June 30, 2004, we sold one community, the community formerly known as Summit Square located in Raleigh, North Carolina, and a parcel of land located at the community formerly known as Summit Square for an aggregate sales price of $22.5 million. We recognized a gain on sale of approximately $10.0 million related to the community. 

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

We have seven apartment communities which were considered held for sale as of June 30, 2004: 

Community	Location
Summit Belmont	Fredericksburg, Virginia
Summit Crossing	Charlotte, North Carolina
Summit Fair Oaks	Fairfax, Virginia
Summit Glen	Atlanta, Georgia
Summit Highland	Raleigh, North Carolina
Summit Norcroft	Charlotte, North Carolina
Summit Reston	Reston, Virginia

The real estate assets of these seven communities were recorded at the lower of cost or fair value less costs to sell, or $79.7 million in the aggregate, as of June 30, 2004. The revenues from these seven communities represented 11.0% of our revenues for the six months ended June 30, 2004. 


	12

InBelow 2002,is we entered into two separate joint ventures with a majorsummary financialof servicesdiscontinued institutionoperations (for the "investorthree member") to redevelop Summit Roosevelt and Summitsix Grandmonths Parc,ended bothJune located in Washington30, D.C.,2004 infor athe mannercommunity tosold permitduring the usesix ofmonths federalended rehabilitationJune income30, tax2004 credits.and Thefor investorthe memberseven contributedcommunities approximatelyconsidered $6.5held million for Summitsale Rooseveltas andof approximatelythat $2date.6 millionFor forthe Summitthree Grandand Parcsix inmonths equityended toJune fund30, a2003, portion of the totalsummary estimatedbelow costsincludes for the respectiveeight communities and will receive a preferred return on these capital investments and an annual asset management fee with respect to eachwhich community.reference Theis investormade member’s interests in the jointpreceding venturessentence, areas subjectwell toas put/call rights during the sixtheight and seventh years after the respective communities aresold placedduring 2003 (in servicethousands). These joint ventures are consolidated into our financial statements. 

We formerly owned a 50% interest in a joint venture that developed and operated an apartment community located in Atlanta, known as The Heights at Cheshire Bridge. This joint venture was accounted for under the equity method of accounting and its operating results are presented in "Loss on real estate joint ventures" in our consolidated statements of operations. On September 27, 2002, the joint venture sold The Heights at Cheshire Bridge to an unrelated third party and the joint venture was dissolved. Upon dissolution, we recognized a gain of $5.4 million on the sale of the joint venture’s assets.

	Three Months Ended June 30,					Six Months Ended June 30,

	2004		2003			2004		2003

Property revenues:
Rental revenues	$	4,470	$	10,163		$	9,280	$	21,261
Other property revenue		345		701			661		1,466

Total property revenues		4,815		10,864			9,941		22,727
Property operating expenses		1,506		3,927			3,251		8,382
Depreciation		330		2,515			1,502		5,044
Interest and amortization		65		1,229			128		2,607

Income from discontinued operations before gain on disposition of
discontinued operations and loss on early extinguishment of debt		2,914		3,193			5,060		6,694
Gain on disposition of discontinued operations		9,993		3,122			10,040		6,258
Loss on early extinguishment of debt		-		(1,508	)		-		(1,508	)

Income from discontinued operations	$	12,907	$	4,807		$	15,100	$	11,444

35. COMMUNITYNotes ACQUISITIONReceivable ANDfrom DISPOSITIONSEmployees 

OnSummit’s MayBoard 6,of 2003,Directors webelieves purchasedthat ownership of its common stock by its executive officers and certain assetsother qualified employees aligns the interests of Brickellthese Grand,officers Incand employees with the interests of Summit’s stockholders. To this end, ("BrickellSummit’s Grand")Board includingof Directors approved, and Summit instituted, a loan program. As a result of the communitySarbanes-Oxley knownAct asof 2002, Summit Brickellis no longer permitted to make loans to its executive officers and, atherefore, notenew receivableissuances fromto its executive officers under the developer,loan forprogram $59.4have millionbeen terminated. SummitUnder Brickellthe isterms locatedof inthe Miamiloan program, FloridaSummit andlent containsamounts 405to apartmentcertain homesof its executive officers and approximatelyother 18,000qualified squareemployees feetto of(a) retailfinance space.the Summitpurchase Brickellof Summit’s apartmentcommon homesstock wereon 75%the leasedopen market at then-current market prices, (b) finance the datepayment of acquisitionthe andexercise price of one or more stock options to purchase shares of Summit’s common stock, or (c) finance the in-placeannual leasestax hadliability or other expenses of an averageexecutive remainingofficer leaserelated termto the vesting of eightshares monthsof common stock which constitute a portion of a restricted stock award granted to the executive officer. The retailrelevant spaceofficer wasor 56employee has executed a promissory note and security agreement related to each loan extended.6% leasedEach outstanding note bears interest at a rate established on the date of the note, withis anfull averagerecourse remainingto leasethe termofficers and employees and is collateralized by the shares of approximatelySummit’s 10common yearsstock which are the subject of the loans. TheIf purchasethe market price hasof beenSummit’s preliminarilycommon allocatedstock basedfalls onmaterially estimatedbelow fairthe valuesprice at which the dateshares of acquisitionstock were purchased, pendingthe finalproceeds determinationof the sale of certainthe acquiredcommon balancesstock held as collateral may not be sufficient to repay the loan. ThisAs preliminaryof allocationJune resulted30, 2004, Summit had employee loans receivable in lessthe thanamount 2%of $16.7 million which were collateralized by 788,465 shares of theits totalcommon purchasestock pricevalued beingat allocated$20.2 tomillion. Summit had employee loans receivable in the community’samount intangibleof assets$17.4 andmillion liabilitiesas of December 31, 2003. 

The developer is entitled to receive bonus payments based on the operating performance of the community during any period of six months selected by the developer and ending no later than December 31, 20056. SuchCommitments bonus payments will be applied to reduce amounts owed from the developer under the note receivable. Any unpaid amounts under the note receivable are due and payableContingencies on February 15, 2006. 

At        The estimated thecost time of purchase, Summit Brickell was subject to acomplete $4.1 million claim of construction lien filed by the generalfour contractor,development Bovisprojects Lendcurrently Lease,under Inc.construction ("Bovis").was Bovis sought to enforce this claim of lien against Brickell Grand in a suit filed on October 18, 2002 (see Part II, Item 1$94.8 "Legalmillion Proceedings"as included in this report). In addition, in mid-2003, two subcontractors of Bovis,June Commercial Interior Contractors Corp. and RC Aluminum Industries30, Inc2004., alsoAnticipated filedconstruction separatecompletion suitsdates against Brickell Grand and Bovis, among other named parties, to enforce claims of construction lien in the aggregateprojects amountrange offrom approximately $300,000. As the currentfourth ownerquarter of Summit2004 Brickell, which property is subject to these claims of lien, we have taken steps to defend against the claimsfourth quarter of liens and related litigation2006. We have several potential counterclaims to challenge and defend against these suits which we intend to pursue vigorously. 

The        As collateral followingfor summaryperformance ofon selectedcontracts unauditedand proas formacredit resultsguarantees ofto operationsbanks presentsand informationinsurers, aswe ifwere thecontingently purchaseliable ofunder Summitstandby Brickellletters hadof occurredcredit atin the beginningaggregate amount of each period presented$7.8 Themillion proas forma information is provided for informational purposes only and is not indicative of resultsJune that would have occurred or which may occur in the future (in thousands30, except2004. per share amounts): 

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2003		2002		2003		2002
Total revenues	$	37,324	$	32,281	$	107,853	$	98,866
Income from continuing operations		3,182		10,233		11,828		34,927
Net income		3,862		29,895		19,164		57,532
Per unit information:
Income from continuing operations – basic	$	0.10	$	0.33	$	0.39	$	1.13
Income from continuing operations – diluted	$	0.10	$	0.33	$	0.39	$	1.12
Net income – basic	$	0.13	$	0.96	$	0.63	$	1.86
Net income – diluted	$	0.13	$	0.96	$	0.62	$	1.85

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


	13

OnWe Julyare 31,subject 2003,to wea soldvariety anof apartmentclaims communityand formerlysuits knownthat asarise Summitin Caminothe Realordinary (712course apartmentof homes)business, locatedincluding actions with respect to contracts and cases in Dallas,which Texasclaims forhave $46.3been millionbrought asagainst partus ofby ourcurrent strategyand toformer exitemployees, ourresidents, Texasindependent marketscontractors and vendors. TheWhile dispositionthe resolution of Summitthese Caminomatters Realcannot resultedbe inpredicted with certainty, we believe that the recognitionfinal outcome of asuch gainmatters onwill salenot ofbe $1.8material million.to Theour netfinancial proceedsposition or results of $27operations.1 millionIf (netwe ofdetermine that a loss onis earlyprobable extinguishmentto ofoccur, debtthe ofestimated $2.5amount million)of werethat usedloss towould reducebe amountsrecorded outstandingin underthe ourfinancial credit facilitystatements. 

OnWe Aprilare 15a party to a number of agreements and contracts pursuant to which we may be obligated to indemnify the other party with respect to certain matters. Typically, 2003these obligations arise in contracts into which we enter, under which we soldcustomarily anagree apartmentto communityhold formerlythe knownother party harmless against certain losses arising from breaches of representations, warranties and/or covenants related to such matters as, Summitamong Turtleothers, Rocktitle (250to apartmentassets, homes)specified locatedenvironmental inmatters, Sanqualification Antonioto do business, Texasdue fororganization, $18.3non-compliance millionwith asrestrictive partcovenants, laws, rules and regulations, maintenance of ourinsurance strategyand topayment exitof ourtax Texasbills marketsdue and owing. TheAdditionally, dispositionwith ofrespect Summitto Turtleretail Rockand resultedoffice inlease agreements we enter into as landlord, we may also indemnify the recognitionother ofparty aagainst gaindamages oncaused saleby ofour $2.7willful million.misconduct Theor netnegligence proceedsassociated with the operation and management of $8the building.0 millionAlthough (netno ofassurances can be made, we believe that if we were to incur a loss in any of these matters, such loss should not have a material effect on earlyour extinguishmentfinancial ofcondition debtor results of $1operations.5 million)Historically, werepayments placedmade intowith escrowregard into accordancethese withagreements like-kindhave exchangenot ruleshad anda regulationsmaterial andeffect wereon usedour tofinancial fundcondition developmentor andresults acquisitionof activitiesoperations. 

OnSummit Marchhas 5,employment 2003agreements with two of its former executive officers, weboth soldof anwhom apartmentresigned communityfrom formerlysuch knownexecutive positions, but who remain as employees and have agreed to provide various services to Summit Fairwaysfrom (240time apartmentto homes)time locatedthrough inDecember Orlando31, Florida2011. forEach employment agreement requires that Summit pay to the former officers a base salary aggregating up to $182.81 million asover partthe ofperiod ourfrom strategyJuly 1, 2001 to exitDecember our31, non-core2011 markets(beginning with calendar year 2002, up to $200,000 on an annual basis). TheEach dispositionemployment ofagreement also requires that Summit Fairwaysprovide resultedparticipation in its life insurance plan as well as office space, information systems support and administrative support for the recognitionremainder of aeach gainemployee’s onlife, saleand participation in its health and dental insurance plans until the last to die of $3the employee or such employee’s spouse.0 millionEither party can terminate the employment agreements effective 20 business days after written notice is given. The netfull proceedsbase salary amount due shall be payable through 2011 whether or not the agreements are terminated earlier in accordance with their terms. Summit has amended the employment agreements, effective July 1, 2004. The amendments provide for annual payments by Summit to the former executives in lieu of $18providing such office space, information systems support and administrative support.3 millionThe wereannual usedpayments are $100,000 for one of the former executive officers and $70,000 for the other former executive officer and each are subject to reducea yearly increase based on the Consumer Price Index. These amounts outstandingrepresent underwhat ourwe unsecuredhave creditdetermined facilityto be the fair market value of such services. 

During7. theRestricted three and nineUnrestricted months ended September 30, 2003, we recognized a net gain on sale of real estate assets in the aggregate amount of $331,000 and $885,000, respectively related to settlements received in connection with a parcel of land which was sold in a prior year as well as post-closing adjustments related to certain prior year disposition communities. Stock

InOn accordanceJanuary with2, SFAS No. 1442004, "AccountingSummit forissued the Impairment or Disposal of Long-Lived Assets27,"982 netshares income and gain on disposition of realrestricted estatestock forvalued communitiesat sold$658,000 orpursuant consideredto heldits for sale after December 31, 2001 arePerformance reflectedStock inAward ourPlan. consolidatedOne-half statements of operationsthese asshares, "discontinuedvalued operations"at for$329,000, allvested periodson presented.January In addition2, we2004. haveThe separatelyremaining reflectedshares thewill assetsvest andin liabilitiestwo ofequal theseannual communitiesinstallments ason "NetJanuary real estate assets – assets held for sale2," "Other2005 assets – assets held for sale" and "NotesJanuary payable and other liabilities – assets held for sale2," in our consolidated balance sheets for all periods presented2006. 

BelowDuring isthe asix summarymonths ofended discontinuedJune operations30, for2004, Summit Fairwaysissued 40,063 Summitshares Turtleof Rock,unrestricted Summitstock Camino(representing Real20% andof fivethe othertotal communities200,315 Summitshares Buenaof Vista,common Summitstock Belcourtthat andcould Summithave Sanbeen Raphael,received allby locatedemployees inat Dallas,the Texasdate of issuance) valued at $881,000 andto Summitemployees Arboretumunder its 1994 Stock Option and Incentive Plan. During the six months ended June 30, 2003, Summit Lasissued Palmas33,342 bothshares locatedof inunrestricted Austinstock (representing 15% of the total 222,270 Texasshares of common stock that could have been received by employees at the date of issuance) valued at $660,000 whichto qualifyemployees asunder heldthe forsame saleplan. inThese accordanceshares were issued pursuant to stock award agreements entered into with SFAScertain Noemployees dated February 6, 2002 (the "2002 Stock Grants"). 144The asremaining shares will be issued based on the following schedule of Septemberdates 30and percentages: an additional 20% on each of March 1, 20032005 and 2006 and the final 25% on March 1, 2007. The informationrespective foremployee 2002will belowreceive includes the eightapplicable communitiesnumber mentionedof aboveshares on each date if he or she continues to be employed by Summit on such date, asor wellearlier asupon sevenhis or her death or disability or upon a "change of control" of Summit. Employees surrendered 14,760 shares of stock during the eightsix communitiesmonths soldended June 30, 2004 and surrendered 12,589 shares during the yearsix months ended DecemberJune 3130, 2003 to satisfy the personal income tax liability related to the 2002 (inStock thousands).Grants Theand eighthan communityadditional sold13,016 shares during the yearsix months ended DecemberJune 3130, 20022004 wasand considered13,193 heldshares forduring salethe six months ended June 30, 2003 to satisfy the personal income tax liability related to shares of restricted stock granted prior to DecemberJanuary 311, 20012004 which vested during the six months ended June 30, 2004 and 2003, thereforerespectively. As of June 30, is2004, includedfollowing inthe incomeissuance fromof continuingthe operationsshares inmentioned accordanceabove withand SFAScertain No.employee 144forfeitures, a total of 124,030 shares remained available for issuance under the 2002 Stock Grants. 

	Three Months Ended September 30,					Nine Months Ended September 30,
	2003			2002		2003			2002
Property revenues:
Rental	$	4,358		$	10,098	$	15,844		$	32,790
Other		289			733		1,141			2,327
Total property revenues		4,647			10,831		16,985			35,117
Property operating expenses		1,953			4,117		7,006			12,730
Depreciation		672			2,330		3,576			7,498
Interest and amortization		951			1,622		3,426			4,975
Income from discontinued operations before net gain on disposition of
discontinued operations and loss on early extinguishment of debt		1,071			2,762		2,977			9,914
Gain on disposition of discontinued operations		2,119			16,900		8,377			12,691
Loss on early extinguishment of debt		(2,510	)		-		(4,018	)		-
Net income from discontinued operations	$	680		$	19,662	$	7,336		$	22,605

As of September 30, 2003, Summit Buena Vista, Summit Arboretum, Summit Las Palmas, Summit Belcourt and Summit San Raphael were considered held for sale. Summit Buena Vista was sold on October 7, 2003 (see Note 13). The revenues and net income (excluding allocation of corporate overhead) of these five communities represented $4.2 million and $922,000, respectively, for the three months ended September 30, 2003 and $12.6 million and $1.9 million, respectively, for the nine months ended September 30, 2003.


	14

48. NOTESPreferred PAYABLEUnits 

ConcurrentOn withSeptember the18, purchase2003, we redeemed all 3.4 million of our jointpreferred ventureunits partner’sof equitylimited partnership interest indesignated SZF,as LLC8.95% inSeries JulyB 2003Cumulative (seeRedeemable NotePerpetual 2),Preferred weUnits consolidatedfor thecash constructionin loanthe relatedamount toof the$25.20 communityper thatunit isplus beingall developedunpaid bydistributions suchthrough jointthe ventureredemption date. TheDistributions constructionon loanthe hasSeries aB totalpreferred commitmentunits ofwere $45.0cumulative million,from maturesthe indate Juneof 2004original issuance and bearswere interestpayable quarterly at LIBORthe plusrate 207of 8.595% basisper pointsyear of the $25.00 Theoriginal outstandingcapital balancecontribution. ofWe made distributions to the constructionholders loanof wasthe $27.3Series millionB andpreferred units in the interestaggregate rateamount wasof $3.195%8 asmillion ofduring Septemberthe six months ended June 30, 2003. 

OnAs Julyof 28June 30, 20032004, we obtainedhad aoutstanding secured2.2 creditmillion facilitypreferred withunits aof totallimited currentpartnership commitmentinterest ofdesignated $200as 8.075% millionSeries C Cumulative Redeemable Perpetual Preferred Units. WeThese havepreferred theunits abilityare toredeemable increaseon thisor commitmentafter pursuantSeptember to3, the2004 termsfor ofcash at a redemption price equal to the creditholder’s agreementcapital account. The securedholder creditof facilitythe replacedSeries ourC $225.0preferred millionunits unsecuredhas creditthe facilityright andto providesexchange fundsthese preferred units for newshares development,of acquisitionsSummit’s andSeries generalC workingpreferred capitalstock purposes.on Thisa facilityone-for-one isbasis, securedsubject byto nineadjustment: of(a) ouron communitiesor (Summitafter FairSeptember Oaks3, Summit2009, Governor’s(b) Village,if Summitfull Grandview,quarterly Summitdistributions Lake,are Summitnot Peachtreemade City,for Summitsix Portofinoquarters, Summit(c) Sedgebrook,upon Summitthe Shilohoccurrence andof Summitspecified Sweetwater)events andrelated maturesto inour Julytreatment 2008.or Asthe describedtreatment inof the creditpreferred agreementunits for federal income tax purposes, loansor under(d) if the creditholdings facilityin arethe limitedOperating subjectPartnership toof debtthe serviceSeries coverageC andunitholder loanexceed to18% valueof ratiosthe andtotal bearprofits of or capital interest atin the ReferenceOperating BillPartnership Indexfor Ratea (definedtaxable asyear. Distributions on the moneySeries marketC yieldpreferred forunits are cumulative from the Referencedate Billsof asoriginal establishedissuance byand theare mostpayable recentquarterly Referenceat Billthe auctionrate conductedof by8.75% Freddieper Mac)year plusof 58the to$25.00 91original basiscapital pointscontribution. dependingWe onmade distributions to the levelholder of debtthe serviceSeries coverage.C Thepreferred outstandingunits balancein of the creditaggregate facilityamount wasof $1212.54 million andduring theeach interestof ratethe wassix 1.594%months asended ofJune September 30, 2004 and 2003. 

Our senior unsecured debt ratings were lowered as a result of obtaining our new secured credit facility to replace our unsecured credit facility9. OnDerivative JulyFinancial 31,Instruments 2003, Standard & Poor’s lowered our senior unsecured debt rating to BB+ from BBB-. At the same time, Standard & Poor’s affirmed Summit’s corporate credit rating at BBB-. On August 3, 2003, Moody’s Investor Service lowered our senior unsecured debt rating to Ba1 from Baa3 and lowered Summit’s preferred stock shelf rating to (P)Ba2 from (P)Ba1. 

On July 28, 2003, we obtained an unsecured letter of credit facility, which matures in July 2008 and has a total commitment of $20.0 million. The letters of credit issued under this facility will serve as collateral for performance on contracts and as credit guarantees to banks and insurers. As of September 30, 2003, there were $7.2 million of letters of credit outstanding under this facility.

On July 15, 2003, we obtained a $23.0 million mortgage note collateralized by Summit Overlook. This mortgage note bears interest at a fixed rate of 4.70% until July 2012, at which time the rate moves to a variable rate until maturity in August 2013. This loan requires monthly principal and interest payments on a 30-year amortization schedule with a balloon payment due at maturity.

On June 13, 2003, we obtained a $39.7 million mortgage note collateralized by Summit Aventura. This mortgage note bears interest at a fixed rate of 5.09% until July 2012, at which time the rate moves to a variable rate until maturity in July 2013. This loan requires monthly principal and interest payments on a 30-year amortization schedule with a balloon payment due at maturity.

On March 31, 2003, we obtained a $31.2 million fixed rate mortgage note collateralized by Summit Doral. This mortgage note bears interest at 5.17% and matures in April 2013. This loan requires monthly principal and interest payments on a 30-year amortization schedule with a balloon payment due at maturity.

The aggregate maturities of all debt (excluding fair value adjustments of hedged debt instruments) for the three-month period ending December 31, 2003 and the years ended December 31, 2004 – 2013 are as follows (in thousands):

		Fixed Rate		Variable Rate	Secured
	Fixed Rate	Unsecured	Variable Rate	Tax-Exempt	Credit	Construction
	Mortgages	Notes	Mortgage	Bonds	Facility	Loan	Total
2003	$ 796	$ 47,000	$ -	$ -	$ -	$ -	$ 47,796
2004	2,695	50,000	-	220	-	27,272	80,187
2005	27,910	25,000	6,900	220	-	-	60,030
2006	10,427	25,000	-	220	-	-	35,647
2007	23,400	50,000	-	9,685	-	-	83,085
Thereafter	268,744	70,000	-	-	121,500	-	460,244
Total	$ 333,972	$ 267,000	$ 6,900	$ 10,345	$ 121,500	$ 27,272	$ 766,989

5. DERIVATIVE FINANCIAL INSTRUMENTS

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

On June 14, 2002, we entered into an interest rate swap with a notional amount of $50.0 million, relating to $50.0 million of 7.20% fixed rate notes issued under our medium-term note program. Under the interest rate swap agreement, through the maturity date of August 15, 2007, (a) we have agreed to pay to the counterparty the interest on a $50.0 million notional amount at a floating interest rate of three-month LIBOR plus 241.75 basis points, and (b) the counterparty has agreed to pay to us the interest on the same notional amount at the fixed rate of the underlying debt obligation. The floating rate as of SeptemberJune 30, 20032004 was 3.54756675%. The fair value of the interest rate swap was an asset of approximately $32.87 million as of SeptemberJune 30, 20032004. The swap has been designated as a fair value hedge of the underlying fixed rate debt obligation and has been recorded in "Other assets" in our consolidated balance sheets. We assume no ineffectiveness as the interest rate swap meets the short-cut method conditions required under SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," for fair value hedges of debt instruments. Accordingly, no gains or losses were recorded in income relative to our underlying debt and interest rate swap. 

610. COMMITMENTSCommon ANDStock CONTINGENCIESRepurchase Program 

DuringSummit 2002,has wea completedcommon thestock developmentrepurchase ofprogram, Summitoriginally Brookwood,approved aby 359-unitits apartmentBoard communityof locatedDirectors in Atlanta.March As of September 302000, 2003,pursuant weto arewhich theSummit lesseeis underauthorized ato landpurchase leaseup related to onean parcelaggregate of land$56.0 onmillion whichof Summitcurrently Brookwoodissued wasand constructed.outstanding Weshares wereof previouslyits thecommon lesseestock. underAll tworepurchases parcelshave ofbeen, landand relatedwill to Summit Brookwood; howeverbe, wemade closed on the purchaseopen ofmarket oneat parcelprevailing ofprices landor forin $5.3privately millionnegotiated on June 20, 2003, leaving $5transactions.3 millionThis remainingauthority onmay thebe totalexercised $10.6from milliontime purchase commitment, which we expect to finalizetime and in Decembersuch 2003amounts usingas cashmarket asconditions considerationwarrant. 

TheSummit estimatedmade costno tostock completerepurchases during the foursix developmentmonths projectsended currentlyJune under30, construction2004. wasAs $40of June 30, 2004, Summit had repurchased 1.92 million asshares of Septemberits 30,common 2003stock valued at $23.6 Anticipatedmillion construction(an completionaverage datesprice per share of the$18.88) projectsunder rangethis fromplan. theSummit firsthad quarter$32.4 ofmillion 2004remaining tofor authorized repurchases under the fourthprogram quarteras of June 30, 2004. 

As collateral for performance on contracts and as credit guarantees to banks and insurers, we were contingently liable under standby letters of credit in the aggregate amount of $7.2 million as of September 30, 2003. 15

We carry terrorism insurance on all communities11. TheSupplemental terrorismCash insuranceFlow isInformation subject to coverage limitations, which we believe are commercially reasonable. No assurance can be given that material losses in excess of insurance proceeds will not occur in the future, or that insurance coverage for acts of terrorism will be available in the future. 

SummitNon-cash hasinvesting employment agreements with two of its former executive officers, both of whom resigned from such executive positions, but who remain as employees and havefinancing agreedactivities to provide various services to us from time to time over the next ten years through December 31, 2011. Each employment agreement requires that Summit pay to the former officers a base salary aggregating up to $2.1 million over the period from July 1, 2001 to December 31, 2011 (beginning with calendar year 2002, up to $200,000 on an annual basis). Each employment agreement also requires that Summit provide participation in Summit’s life insurance plan, office space, information systems support and administrative support for the remaindersix ofmonths eachended employee’sJune life30, and2004 participation in Summit’s health and dental2003 insurance plans until the last to die of the employee or such employee’s spouse. Either party can terminate the employment agreements, effective 20 business days after written notice is given. The full base salary amount due shall be payable through 2011 whether or not the agreements are terminatedas earlierfollows: in accordance with their terms. 

A. We ~~are~~accrued ~~subject~~distributions topayable aof ~~variety~~$11.8 million as of ~~claims~~June 30, 2004 and ~~suits~~$11.7 ~~that~~million ~~arise~~as inof ~~the~~December ~~ordinary~~31, ~~course~~2003. B. Summit granted 40,063 shares of ~~business~~unrestricted stock valued at $881,000 ~~including~~during ~~actions~~the ~~with~~six ~~respect~~months toended ~~contracts~~June ~~and~~30, ~~cases~~2004. inThere ~~which~~were ~~claims~~14,760 ~~have~~shares ~~been~~of ~~brought~~stock ~~against~~valued usat by$325,000 ~~current~~surrendered ~~and~~to ~~former~~satisfy ~~employees~~the income tax liability of grantees during the same period. C. Summit granted 33,342 ~~residents~~shares of unrestricted stock valued at $660,000 ~~independent~~during ~~contractors~~the ~~and~~six ~~vendors~~months ended June 30, 2003. ~~While~~There ~~the~~were ~~resolution~~25,361 shares of ~~these~~stock ~~matters~~valued ~~cannot~~at be$460,000 ~~predicted~~surrendered ~~with~~to ~~certainty,~~satisfy wethe ~~believe~~income ~~that~~tax liability of grantees during the ~~final~~same ~~outcome~~period. D. On January 2, 2004, Summit issued 27,982 shares of ~~such~~restricted ~~matters~~stock ~~will~~valued ~~not~~at be$658,000 ~~material~~pursuant to ~~our~~its ~~financial~~2001 ~~position~~Performance orStock ~~results~~Award Plan. One-half of ~~operations~~these shares, valued at $329,000, vested on January 2, 2004. IfThe weremaining ~~determine~~shares ~~that~~will avest ~~loss~~in istwo ~~probable~~equal toannual ~~occur~~installments on January 2, 2005 and January 2, 2006. E. Summit issued 56,456 shares of common stock in exchange for 56,456 common units during the ~~estimated~~six ~~amount~~months ended June 30, 2004. The value of ~~that~~these ~~loss~~shares ~~would~~of becommon ~~recorded~~stock was $823,000. F. On May 27, 2004, we acquired Summit Stonecrest by paying $9.6 million in ~~the~~cash ~~financial~~and ~~statements~~assuming a $19.7 million mortgage (which had a fair market value of $18.4 million on the date of purchase).

12. Subsequent Events 

Subsequent to June 30, 2004, we executed separate contracts for the purchase of three communities for an aggregate purchase price of $140.0 million. We expect that these communities will be acquired during the third quarter of 2004 and expect to fund these acquisitions primarily using proceeds from community sales during that period. 

13. Revision to Consolidated Statement of Cash Flows 

Subsequent to the issuance of our consolidated financial statements for the three and six months ended June 30, 2003, we determined that the cash outflows related to the purchase of certain real estate assets were incorrectly classified as cash flows from operating activities as opposed to cash flows from investing activities in our statement of cash flows. As a result, the accompanying consolidated statement of cash flows for the six months ended June 30, 2003 has been revised from amounts previously reported. 
 
As required by FIN 46, we began consolidation of the Management Company for the third quarter ended September 30, 2003. As recommended by FIN 46, we have elected to restate previously reported amounts as a result of the consolidation of the Management Company and as such, certain previously reported amounts related to the consolidated statement of cash flows have changed due to this consolidation. 

The following shows the effect of the revision and the consolidation of the Management Company to the consolidated statement of cash flows for the six months ended June 30, 2003: 

Net cash provided by operating activities, as previously reported 

$ 

28,876 

Revisions related to certain real estate cash outflows 

5,703 

Net cash provided by operating activities, after revisions related to certain real estate cash outflows 

34,579 

Consolidation of the Management Company 

339 

Net cash provided by operating activities, as revised 

$ 

34,918 

Net cash used in investing activities, as previously reported 

$ 

(20,966 

) 

Revisions related to certain real estate cash outflows 

(5,703 

) 

Net cash used in investing activities, after revisions related to certain real estate cash outflows 

(26,669 

) 

Consolidation of the Management Company 

(36 

) 

Net cash used in investing activities, as revised 

$ 

(26,705 

)


	16

WeItem are a party to a number of agreements and contracts pursuant to which we may be obligated to indemnify the other party with respect to certain matters2. Typically,Management’s theseDiscussion obligations arise in contracts into which we enter, under which we customarily agree to hold the other party harmless against certain losses arising from breaches of representations, warranties and/or covenantsAnalysis related to such matters as, among others, title to assets, specified environmental matters, qualification to do business, due organization, non-compliance with restrictive covenants, laws, rules and regulations, maintenance of insuranceFinancial andCondition payment of tax bills due and owing.Results Additionally, with respect to retail and office lease agreements we enter into as landlord, we may also indemnify the other party against damages caused by our willful misconduct or negligence associated with the operation and management of theOperations building. Although no assurances can be made, we believe that if we were to incur a loss in any of these matters, such loss should not have a material effect on our financial condition or results of operations. Historically, payments made with regard to these agreements have not had a material effect on our financial condition or results of operations. 

7Unless the context otherwise requires, all references to "we," "our" or "us" in this report refer collectively to Summit Properties Partnership, L.P., COMMONa STOCKDelaware OFFERINGlimited partnership (the "Operating Partnership").All references to "Summit" in this report refer to Summit Properties Inc., a Maryland corporation and the sole general partner of the Operating Partnership. 

OnAs Septemberdiscussed 25,in 2003,Note Summit13 sold 2.3 million shares of its common stock to certainthe advisoryconsolidated clientsfinancial of Cohen & Steers Capital Managementstatements, Inc.our atstatement a price of $21.81cash perflows share.for Thisthe pricesix representsmonths aended 1.76%June discount30, to2003 Summit’shas closingbeen common stock price on September 18, 2003revised. The saleaccompanying was made pursuant to Summitmanagement’s existingdiscussion shelf registration statement previously filed with, and declaredanalysis effectivegives by,effect theto Securitiesthat and Exchange Commissionrevision. The net proceeds from the sale of $50.1 million will be used for general corporate purposes, including the redemption of preferred units, acquisition and development opportunities and debt reduction. 
 

8.Executive UNRESTRICTEDSummary AND RESTRICTED STOCK 

DuringWe thefocus nineon monthsthe ended September 30operation, 2003,development Summitand issuedacquisition 33,342 shares of unrestrictedluxury stockapartment valuedcommunities atin $660,000select toneighborhoods employeesthroughout underthe itsSoutheast 1994 Stock Option and IncentiveMid-Atlantic PlanUnited States. TheseWe sharesfocus wereour issuedefforts pursuantin tofive stockmarkets awardwhich agreementsconsist entered into with certain employees dated February 6, 2002 (the "2002 Stock Grants") and represent 15% of the total 222Washington,270 shares of common stock that could have been received by these employees under the stock award agreementsD.C., TheSoutheast remaining shares will be issued based on the following schedule of dates and percentages: an additional 20% on each of March 1Florida, 2004Atlanta, 2005Raleigh and 2006 and the final 25% on March 1, 2007Charlotte. As of SeptemberJune 30, 20032004, followingour theportfolio issuanceconsisted of the48 sharescompleted mentionedcommunities abovecomprising and certain employee forfeitures14,797 aapartment totalhomes; offour 175,329communities sharesowned remainedin available for issuance under the 2002 Stock Grants. The respective employee will receive the applicable number of shares on each date if he or she continues to be employed by us on such date, or earlier upon his or her death or disability or upon a "changejoint of control" of Summit. Employees surrendered 12venture,589 sharescomprised of stock during the nine months ended September 301,203 2003apartment tohomes; satisfy the personal income tax liability related to the 2002 Stock Grants and anfour additionalapartment 16,081communities shareswith during the nine months ended September 301,715 2003apartment tohomes satisfyin thevarious personalstages income tax liability related to shares of restricted stock granted prior to January 1, 2003 which vested during the current perioddevelopment. 

9Our income from continuing operations is generated primarily from operations of our apartment communities. SUPPLEMENTALThe CASHchanges FLOWin INFORMATIONoperating results from period to period reflect changes in existing community performance and changes in the number of apartment homes due to development, acquisition, or disposition of communities. To better understand our overall operating performance, our communities have been categorized in five "status" groups. We consider a community to be "stabilized" when it has attained a physical occupancy level of at least 93%. A community that we have developed is deemed "same-property" when stabilized for at least one year as of the beginning of the current year. A community that we have acquired remains an "acquisition" community until deemed "same-property" when we have owned it for one year or more as of the beginning of the current year. A community is deemed to be a "stabilized development" community when stabilized as of the beginning of the current year but not the entire prior year. A "lease-up" community is defined as one that has commenced rental operations but was not stabilized as of the beginning of the current year. A "disposition" community is one which we have sold in current or prior years. As of June 30, 2004, we had 10,644 same-property apartment homes in 36 communities, 1,700 acquisition apartment homes in four communities, 1,997 stabilized development apartment homes in seven communities and 1,199 lease-up apartment homes in four communities (two of which communities comprising 743 apartment homes are not yet complete). 

Non-cashDuring investing2003, we developed and financingimplemented activitiesa rent optimization software program. This program helps us manage revenue by allowing us to set daily rents on apartment homes as they become available for rental. Automating the ninebalance monthsbetween endedvacancy Septemberand 30,rents 2003provides a more efficient method to pricing and 2002is werea asvaluable follows:tool to help us manage our properties at their greatest rental revenue producing potential. 

A. We accruedhave distributionsbeen payableexperiencing inweakening apartment fundamentals over the amountspast several years due to the downturn of $11.0the millionnational economy as ofwell Septemberas 30declining economic conditions in our markets. As a result, 2003local demand for apartment homes has declined due to lower job growth and/or $14.8job millionlosses, asprimary drivers of Septemberapartment 30demand, 2002which has led to lower rental rates in order to maintain desired occupancy rates. Additionally, the low interest rate environment has produced record home sales which, when combined with the slowing economy, has reduced the number of prospective residents. The low interest rate environment has also provided the opportunity for developers to continue to add to the supply of apartments in our markets. 

B.Looking Summit issued 33forward,342 shareswe ofbelieve unrestrictedthat stockfundamentals valuedin atour $660,000markets underare itsimproving. 1994Our Stockcore Optionmarkets andproduced Incentive166,000 Plannew jobs during the ninetwelve months ended SeptemberJune 302004, 2003.which Summitwe issuedexpect 1will drive future demand. Additionally,773 sharespermit ofissuance restrictedin stock2003 valuedwas at $35,000a duringsix-year thelow nineand monthswe endedexpect Septemberthat 30,this 2002will underresult thisin plan.a Duringdecreased thesupply nineof monthscompetitive endedapartment Septemberhomes 30,during 2003,2004. employeesAmong surrenderedour 28five markets,670 sharesthe valuedfundamentals atin $336our Washington,000 toD.C. satisfyand theSoutheast personalFlorida incomemarkets taxare liabilitythe relatedstrongest, toand the issuanceability ofto unrestrictedraise sharesrents andhas thereturned vestingto ofthese restricted stockmarkets.  Fundamentals Duringare not as strong in the nineAtlanta, monthsCharlotte endedand SeptemberRaleigh 30markets, 2002and, employeesaccordingly, surrenderedwe 17,143expect sharesit valuedwill attake $326,000longer for the ability to satisfyraise therents personalto incomegain taxmomentum liabilityin relatedthese markets. We will continue to theclosely vestingmonitor ofand restrictedact stockupon key market dynamics by making disciplined strategic investments, sound operating decisions, and utilizing prudent financial measures. 

C. Summit issued 140,581 shares of common stock in exchange for 140,581 common units of limited partnership interest in the Operating Partnership valued at $3.1 million during the nine months ended September 30, 2003. Summit issued 13,658 shares of common stock in exchange for 13,658 common units of limited partnership interest in the Operating Partnership valued at $285,000 during the nine months ended September 30, 2002.


	17

10.Critical PREFERREDAccounting UNITSPolicies 

OnWe Septemberprepare 18, 2003, we redeemed all 3.4 million of our preferredfinancial unitsstatements ofin limitedaccordance partnershipwith interestaccounting designatedprinciples asgenerally 8.95%accepted Series B Cumulative Redeemable Perpetual Preferred Units for cash in the amountUnited ofStates $25.20 per unit plus all unpaid distributions through the redemption date. These preferred units were redeemable for cash, or at our option, shares of Summit’sAmerica 8("GAAP").95% SeriesA Bsummary Cumulative Redeemable Perpetual Preferred Stock, or a combination of cashour andsignificant sharesaccounting ofpolicies Summit’sis 8.95%disclosed Seriesin BNote Cumulative3 Redeemable Perpetual Preferred Stock. Holders of the Series B preferred units had the right to exchangeour theseconsolidated preferredfinancial unitsstatements forincluded sharesin ofour Summit’sAnnual SeriesReport B preferred stock on aForm one10-K for-one basis,the subjectyear toended adjustment:December (a) on or after April 2931, 2009,2003. (b)The ifpreparation fullof quarterlyfinancial distributionsstatements werein notconformity madewith forGAAP sixrequires quarters,management or (c) upon the occurrence of specified events related to ourmake treatmentestimates orand theassumptions treatmentthat ofaffect the preferredreported unitsamounts forof federalassets incomeand taxliabilities purposes.and Asdisclosure a result of thecontingent redemption,assets theand excessliabilities ofat the redemptiondate amount over the carrying amount of the units,financial whichstatements totalsand approximately $3.0 million in the aggregate,reported hasamounts reducedof netrevenues income for the three and nineexpenses monthsduring endedthe Septemberreporting 30, 2003period. ThisActual isresults consistentcould withdiffer thefrom SEC'sthose staffestimates. announcementWe onconsider Julycritical 31,accounting 2003policies that provided clarification to Emergingbe Issuesthose Taskpolicies Forcethat ("EITF")have Topicthe D-42,most "Theimpact Effect on the Calculationreporting of Earningsour perfinancial Sharecondition forand thethose Redemptionrequiring orsignificant Inducedjudgments Conversion of Preferred Stock." Distributions on the Series B preferred units were cumulative from the date of original issuance and were payable quarterly at the rate of 8estimates.95% perOur yearcritical ofaccounting thepolicies $25.00relate original capital contribution. We made distributions to thecost holderscapitalization of the Series B preferred units in the aggregate amount of $5.5 million during the nine months ended September 30, 2003 and $5.7asset millionimpairment during the nine months ended September 30, 2002evaluation. 

AsCost ofCapitalization September 30, 2003, we had outstanding 2.2 million preferred units of limited partnership interest designated as 8.75% Series C Cumulative Redeemable Perpetual Preferred Units. The preferred units are redeemable on or after September 3, 2004 for cash at a redemption price equal to the holder’s capital account. The holder of the Series C preferred units has the right to exchange these preferred units for shares of Summit’s Series C preferred stock on a one-for-one basis, subject to adjustment: (a) on or after September 3, 2009, (b) if full quarterly distributions are not made for six quarters, (c) upon the occurrence of specified events related to our treatment or the treatment of the preferred units for federal income tax purposes, or (d) if the holdings in the Operating Partnership of the Series C unitholder exceed 18% of the total profits or capital interest in the Operating Partnership for a taxable year. Distributions on the Series C preferred units are cumulative from the date of original issuance and are payable quarterly at the rate of 8.75% per year of the $25.00 original capital contribution. We made distributions to the holder of the Series C preferred units in the aggregate amount of $3.6 million during each of the nine months ended September 30, 2003 and 2002. 

11Expenditures directly related to the acquisition, development and improvement of real estate assets are capitalized at cost as land, buildings and improvements or furniture, fixtures and equipment in accordance with Statement of Financial Accounting Standards ("SFAS") No. COMMON67, STOCK"Accounting REPURCHASEfor PROGRAMCosts and Initial Rental Operations of Real Estate Projects." These amounts are depreciated over estimated useful lives determined by management. Determining whether expenditures meet the criteria for capitalization and the assignment of depreciable lives requires our management to exercise significant judgment. Improvements are categorized as either non-recurring or recurring capitalized expenditures. Non-recurring capitalized expenditures primarily consist of major renovations and upgrades of apartment homes. Recurring capitalized expenditures consist primarily of exterior painting, new appliances, vinyl flooring, blinds, tile, wallpaper and carpet. Repairs and maintenance, such as landscaping maintenance, interior painting and cleaning and supplies used in such activities, are expensed as incurred and we do not accrue for such costs in advance. In addition, we have a group of employees responsible for the supervision of our capital expenditure projects and capitalize a portion of their direct costs. The amounts capitalized depend on the level of such activities. 

SummitDuring hasthe development and construction of a commonnew stockcommunity, repurchasewe programcapitalize all direct and indirect costs, originallyincluding approvedinterest byrelated itsto Boardapartment ofconstruction Directorsand incertain Marchoperational 2000,costs pursuantfor tocommunities whichunder Summitconstruction and in lease-up. Included in these costs is authorizedmanagement’s toestimate purchaseof upthe portion of internal costs that are incremental and considered related to ansuch aggregatedevelopment activities. The amounts capitalized depend on the timing of $56such activities.0 millionInterest costs are capitalized in accordance with SFAS No. 34, "Capitalization of currentlyInterest issuedCost," and outstandingdepreciated sharesover the lives of itsthe commonconstructed stockassets. AllWe repurchasescapitalize havethe been,cost andof willour bedevelopment department efforts to projects currently under construction, madecurrently onat a rate of 3.0% of such construction assets. Such costs are then depreciated over the openlives marketof atthe prevailingconstructed pricesassets orupon their completion. We treat each unit in privatelyan negotiatedapartment transactions.community Thisseparately authorityfor maycapitalization beand exercisedexpense fromrecognition timepurposes, toresulting timein a proration of interest and operational costs in sucha amountsdevelopment ascommunity marketbetween conditionscosts warrantthat are capitalized or expensed. TheAs followingunits isbecome aavailable summaryfor their intended use, we cease capitalization of stockinterest repurchasesand underoperational costs on those units based on the commonratio stockof repurchasethose programunits (dollarsavailable infor thousands,rental exceptto perthe sharetotal amounts):number of units in the community. 

	Number		Value		Average Price
	of Shares		of Shares		of Shares
	Repurchased		Repurchased		Repurchased
Year ended December 31, 2000		279,400	$	5,533	$	19.80
Year ended December 31, 2001		8,800		197		22.39
Year ended December 31, 2002		151,300		2,666		17.62
Nine months ended September 30, 2003		809,800		15,193		18.76
Total as of September 30, 2003		1,249,300	$	23,589	$	18.88

Asset Impairment Evaluation 

SummitWe hadrecord $32our real estate assets to be held and used at cost, less accumulated depreciation, unless considered impaired.4 millionIf remainingevents or circumstances indicate that the carrying amount of a community may be impaired, we will assess its recoverability by estimating the undiscounted future cash flows of the community. If our recoverability assessment results in an indication of impairment for authorizedcommunities repurchasesto underbe held and used, or if a community is considered to be held for sale, then we determine the programcommunity’s asfair value. Applying capitalization rates to a community’s property operating income is a widely used measure of Septemberfair 30value. Determining appropriate capitalization rates requires significant judgment and is generally based on the prevailing rate for the submarket within the market in which the community is located. Capitalization rates can fluctuate due to changes in the general economy or within specific submarkets. If the actual capitalization rate for a community varies significantly from management’s estimate, 2003the impairment evaluation may be significantly affected. For assets to be held and used, if the carrying amount exceeds the undiscounted future cash flows, we would recognize an impairment loss to the extent the carrying amount exceeds the estimated fair value of the community and such loss would be included in income from continuing operations. Assets to be disposed of are recorded at the lower of carrying amount or fair value less cost to sell. An impairment loss will be recognized for any write-down to fair value less cost to sell and reported in the discontinued operations section of the consolidated statements of earnings. 


	18

12In accordance with SFAS No. EMPLOYEE144, LOAN"Accounting PROGRAMfor the Impairment or Disposal of Long-Lived Assets," we present operating results of communities we consider held for sale, as well as those sold, in discontinued operations in our consolidated statements of earnings. 

SummitResults has a loan program under which its loaned amounts to certain of itsOperations executivefor officers and other qualified employees to (a) finance the purchaseThree of Summit’s common stock on the open market at then-current market prices, (b) finance the payment of the exercise price of one or more stock options to purchase shares of Summit’s common stock, or (c) finance the annual tax liability or other expenses of an executive officer related to the vesting of shares of common stock which constitute a portion of a restricted stock award granted to the executive officer. As a result of recent legislation, Summit is no longer permitted to make loans to its executive officers and, therefore,Six newMonths issuancesEnded underJune the loan program have been terminated. The relevant officer or employee has executed a promissory note and security agreement related to each loan extended. Each outstanding note bears interest at a rate established on the date of the note30, is2004 full recourse to the respective officer or employee and is collateralized by the shares of Summit’s common stock, which are the subject of the loans. If the market price of Summit’s common stock falls below the price at which the shares of stock were purchased, the proceeds of the sale of the common stock may not be sufficient to repay the loan. As of September 30, 2003, we had loans receivable in the net amount of $17.4 million, which were collateralized by 845,000 shares of Summit’s common stock valued at $19.2 million (based on the closing market price of Summit’s common stock of $22.72 on that date). 

13Net income increased to $18.4 SUBSEQUENTmillion EVENTSfor the six months ended June 30, 2004 from $15.4 million for the same period in 2003 primarily due to an increase of $3.8 million in gain on disposition of discontinued operations. Net income increased to $14.7 million for the three months ended June 30, 2004 from $6.4 million for the same period in 2003 primarily due to an increase of $6.9 million in gain on disposition of discontinued operations. 

OnIncome Octoberfrom 7,continuing 2003,operations webefore soldloss anon apartmentunconsolidated communityreal formerlyestate knownjoint asventures Summitdecreased Buena Vista (467 apartment homes) located in Dallas, Texas for $32.4 million as part of our strategy to exit our Texas markets. The net proceeds of $83.95 million (netfor of the relatedsix mortgagemonths debtended whichJune was assumed by the buyer30, the2004 balancefrom of which was $234.01 million onfor the datesame ofperiod sale)2003. wereThe placedsame intomeasure escrowincreased with a qualified intermediary in accordance with like-kind exchange income tax rules and regulations and are expected to be used to fund future development and/or acquisition activities$1.8 Inmillion for the eventthree proceedsmonths fromended SummitJune Buena Vista are not fully invested in qualified like-kind property during the required time period30, a2004 specialfrom distribution may be made or company-level tax may be incurred$1.7 Wemillion expectfor to recognize a gain on the dispositionsame ofperiod Summitin Buena Vista2003. 

OnWe Octoberevaluate 8,community 2003performance based on growth of property operating income, wewhich repaidis $26defined as rental and other property revenues less property operating and maintenance expense.8 millionWe ofbelieve mortgagesthat associatedproperty withoperating twoincome Texasis communitiesa inmeaningful anticipationmeasure for an investor’s analysis of community performance as it represents the salemost ofconsistent, suchcomparable operating performance among our communities. WeDepreciation incurredis $3a fixed cost not controllable by our property management staff and not all communities are encumbered by financing instruments.5 millionTherefore, all property operating and maintenance expense amounts in this Management’s Discussion and Analysis section are presented before depreciation, interest and amortization. Property operating income does not include any allocation of pre-paymentcorporate penaltiesoverhead. associatedYou should not consider property operating income as an alternative to net income (determined in accordance with theGAAP) earlyas extinguishmentan indication of theseour mortgagesfinancial performance or as an alternative to cash flows from operating activities (determined in accordance with GAAP), as a measure of our liquidity. Our calculation of property operating income may differ from the methodology and definition used by other apartment companies, and, accordingly, may not be comparable to similarly entitled measures used by other apartment companies. 

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

A summary of our apartment homes (excluding joint ventures) for the six months ended June 30, 2004 and 2003 is as follows: 

	2004	2003

Apartment homes at January 1 of the year	14,554	15,428
Developments which began rental operations during the period	743	502
Apartment homes acquired during the period	605	405
Sale of apartment homes	(362)	(490)

Apartment homes at June 30 of the year	15,540	15,845


	19

ITEMThe 2.property MANAGEMENT'Soperating DISCUSSIONincome ANDof ANALYSISour OFcommunities FINANCIAL(excluding CONDITIONjoint ANDventure RESULTScommunities) OFand OPERATIONSa reconciliation to net income is summarized below (dollars in thousands): 

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

	Three Months Ended June 30,									Six Months Ended June 30,

	2004			2003			% Change			2004			2003			% Change

Property revenue:
Same-property communities	$	28,900		$	28,510			1.4	%	$	57,490		$	57,067			0.7	%
Acquisition communities		4,341			894			385.6	%		8,113			894			807.5	%
Stabilized development communities		6,235			4,259			46.4	%		12,434			7,737			60.7	%
Lease-up communities		893			-			100.0	%		1,328			-			100.0	%
Disposition communities		308			6,342			-95.1	%		942			13,728			-93.1	%

Total property revenue (1)		40,677			40,005			1.7	%		80,307			79,426			1.1	%


Property operating and maintenance expense:
Same-property communities		9,020			9,251			-2.5	%		18,635			18,584			0.3	%
Acquisition communities		1,632			391			317.4	%		3,021			392			670.7	%
Stabilized development communities		2,397			1,796			33.5	%		4,959			3,143			57.8	%
Lease-up communities		596			12			4866.7	%		857			14			6021.4	%
Disposition communities		147			2,541			-94.2	%		398			5,529			-92.8	%

Total property operating and
maintenance expense (1)		13,792			13,991			-1.4	%		27,870			27,662			0.8	%


Property operating income:
Same-property communities		19,880			19,259			3.2	%		38,855			38,483			1.0	%
Acquisition communities		2,709			503			438.6	%		5,092			502			914.3	%
Stabilized development communities		3,838			2,463			55.8	%		7,475			4,594			62.7	%
Lease-up communities		297			(12	)		2575.0	%		471			(14	)		3464.3	%
Disposition communities		161			3,801			-95.8	%		544			8,199			-93.4	%

Property operating income		26,885			26,014			3.3	%		52,437			51,764			1.3	%

Interest and other income		411			697			-41.0	%		780			1,699			-54.1	%
Management fees - third party communities		146			156			-6.4	%		293			326			-10.1	%
Depreciation and amortization expense (continuing
and discontinued operations)		(11,092	)		(10,551	)		5.1	%		(22,492	)		(20,384	)		10.3	%
Interest and amortization of deferred financing costs
(continuing and discontinued operations)		(7,982	)		(8,012	)		-0.4	%		(15,288	)		(16,141	)		-5.3	%
General and administrative expense		(2,112	)		(1,765	)		19.7	%		(4,002	)		(3,322	)		20.5	%
Property management - owned communities		(1,337	)		(1,504	)		-11.1	%		(2,831	)		(2,824	)		0.2	%
Property management - third party communities		(162	)		(182	)		-11.0	%		(343	)		(342	)		0.3	%
Loss on unconsolidated real estate joint ventures		(80	)		(75	)		6.7	%		(173	)		(164	)		5.5	%
Gain on sale of real estate assets (continuing and
discontinued operations)		9,993			3,122			220.1	%		10,040			6,258			60.4	%
Dividends to preferred unitholders in
Operating Partnership		(1,203	)		(3,105	)		-61.3	%		(2,406	)		(6,210	)		-61.3	%
Loss on early extinguishment of debt		-			(1,508	)		-100.0	%		-			(1,508	)		-100.0	%

Income available to common unitholders	$	13,467		$	3,287			309.7	%	$	16,015		$	9,152			75.0	%

To determine the amounts of property revenue and property operating and maintenance expense which were contributed by communities classified in discontinued operations, see the table in the section entitled, "Communities Sold or Held for Sale" on page 23 of this report.

FORWARD-LOOKING STATEMENTS

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

· the future operating performance of stabilized communities;

· national economic conditions and economic conditions in our markets;

· the proposed development, acquisition or disposition of communities, including our strategy to exit our Texas markets;

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

· estimated development costs.

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

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

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

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

· the failure of investments to yield expected results;

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

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

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

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

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

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

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

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

· changes in interest rates;

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

· legislative and regulatory changes, including changes to laws governing the taxation of real estate investment trusts ("REITs");

· changes in accounting principles generally accepted in the United States of America ("GAAP"), or policies and guidelines applicable to REITs; and

· those factors discussed below and in the sections entitled "Results of Operations for the Three and Nine Months Ended September 30, 2003 and 2002" on page 23 of this report, "Operating Performance of Our Same-Property Communities" beginning on page 25 of this report, "Operating Performance of Our Communities in Lease-up" beginning on page 27 of this report, "Factors Affecting the Performance of Our Development Communities" beginning on page 29 of this report and "Commitments and Contingencies" beginning on page 33 of this report.


	20

YouOperating shouldPerformance considerof these risks and uncertainties in evaluating forward-looking statements and you should not place undue reliance on forward-looking statements. These forward-looking statements represent our estimates and assumptions only as of the date of this report. We do not undertake to update these forwardSame-lookingProperty statements.Communities 

YouThe shouldoperating readperformance theof followingour discussionsame-property incommunities conjunctionis withsummarized ourbelow unaudited(dollars consolidatedin financial statements and notesthousands, whichexcept accompanyaverage thisrent report,per andoccupied ourapartment auditedhome). financialThe statementscomparison forbelow includes the year36 endedcommunities Decembercontaining 3110,644 2002apartment andhomes thethat relatedwere notesconsidered includedsame-property induring ourthe Annualsix Reportmonths onended FormJune 10-K30, 2004. 

We focus on the operation, development and acquisition of primarily "Class A" luxury apartment communities located throughout the Southeast and Mid-Atlantic United States. We focus our efforts in five markets consisting of Atlanta, Charlotte, Raleigh, Southeast Florida and Washington, D.C. While we currently operate in Texas as well, we intend to exit our Texas markets and use the sales proceeds from those communities primarily to increase our presence in our five markets. Because we focus on five markets, changes in local economic and market conditions in these markets may significantly affect our current operations and future prospects.

	Three Months Ended June 30,									Six Months Ended June 30,

	2004			2003			% Change			2004			2003			% Change

Property revenues:
Rental	$	26,649		$	26,530			0.4	%	$	53,186		$	53,330			-0.3	%
Other		2,251			1,980			13.7	%		4,304			3,737			15.2	%

Total property revenues		28,900			28,510			1.4	%		57,490			57,067			0.7	%


Property operating expenses:
Personnel		2,299			2,289			0.4	%		4,814			4,596			4.7	%
Advertising and promotion		374			337			11.0	%		762			681			11.9	%
Utilities		1,390			1,317			5.5	%		2,885			2,808			2.7	%
Building repairs and maintenance		1,047			1,341			-21.9	%		2,068			2,602			-20.5	%
Real estate taxes and insurance		3,510			3,551			-1.2	%		7,312			7,071			3.4	%
Other operating expense		400			416			-3.8	%		794			826			-3.9	%

Total property operating expense		9,020			9,251			-2.5	%		18,635			18,584			0.3	%

Property operating income	$	19,880		$	19,259			3.2	%	$	38,855		$	38,483			1.0	%

Average physical occupancy		94.2	%		93.8	%		0.4	%		94.3	%		94.2	%		0.1	%

Average rent per occupied apartment home	$	884		$	893			-1.0	%	$	882		$	895			-1.5	%

CRITICALProperty ACCOUNTINGrental POLICIESrevenues remained stable at $53.2 million for the six months ended June 30, 2004 and $53.3 million for the same period in 2003 and $26.6 million for the three months ended June 30, 2004 and $26.5 million for the same period in 2003. Other property revenues increased for both the three-month and six-month periods due to an increase in fees such as application fees, pet fees, administration fees and water fees paid by our residents. Real estate taxes and insurance decreased for the three-month period due to our insurance renewal which was effective on May 1, 2004 and which resulted in a 6% reduction of insurance costs as well as many property tax assessments which are lower than prior year and lower than our expectations. Repairs and maintenance expense decreased for both the three- and six- month periods due to the fact that our maintenance personnel are completing more in-house painting and other repair work rather than having third-party vendors complete such tasks. Furthermore, our purchase-to-pay system is fully implemented, enabling us to achieve more efficient buying and increasing our purchasing power, thus reducing costs. 

WeOperating preparePerformance our financial statements in accordance with GAAP. A summary of our significantAcquisition accountingCommunities policies is disclosed in Note 3 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2002. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. As an owner, operator and developer of apartment communities, our critical accounting policies are related to rental revenue recognition, purchase price allocation of acquisition communities, cost capitalization and asset impairment evaluation. 

WeOn leaseMay our27, residential2004, propertieswe underacquired operatingSummit leasesStonecrest with(306 termsapartment ofhomes) generallyfor one$28.0 yearmillion. orConsideration less.paid Rentalfor revenuethis iscommunity recognizedwas oncash theof accrual$9.6 methodmillion and the assumption of accountinga as$19.7 earned,million mortgage (which ishad nota materiallyfair differentmarket fromvalue revenueof recognition$18.4 million on athe straight-linedate basisof purchase) . WeOn leaseJune our14, office2004, andwe retailpurchased spaceSummit underSouth operatingEnd leasesSquare with(299 termsapartment currentlyhomes), rangingalso fromlocated twoin toCharlotte, elevenfor years$33.5 Rentalmillion. revenueOn forDecember office31, and2003, retailwe spacepurchased isSummit recognizedLansdowne on(690 aapartment straight-linehomes), basislocated overin theLoudon livesCounty, ofVirginia, thefor respective$99.2 leasesmillion. ItOn isMay our6, policy2003, towe reducepurchased rentalcertain revenueassets byof theBrickell amountGrand, ofInc., rentincluding receivablethe fromcommunity thoseknown residentsas whoseSummit paymentsBrickell areand morea thannote 30receivable daysfrom pastthe duedeveloper, followinglocated move-out.in WeMiami, haveFlorida recordedfor an allowanceaggregate forof uncollectible$59.4 rentmillion. inSummit ourBrickell consolidatedcontains balance405 sheetsapartment forhomes suchand itemsapproximately 18,000 square feet of retail space. 

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

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

Fair value is assigned to above-market and below-market leases based on the difference between (a) the contractual amounts to be paid by the resident or retail tenant based on the existing lease and (b) management’s estimate of current market lease rates for the corresponding in-place leases, over the remaining terms of the in-place leases. Capitalized above-market lease amounts would be included in "Other assets" in our consolidated balance sheets and amortized to rental revenue over the remaining terms of the respective leases; however, we did not have any capitalized above-market leases at September 30, 2003. Capitalized below-market lease amounts are included in "Accounts payable and accrued expenses" in our consolidated balance sheets and are amortized as an increase to rental revenue over the remaining terms of the respective leases.

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

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


	21

ExpendituresThe directlyoperating relatedperformance toof theour acquisition, developmentcommunities andis improvementsummarized ofbelow real(dollars estatein assets are capitalized at cost as landthousands, buildingsexcept andaverage improvements.rent Improvementsper areoccupied categorized as either non-recurring or recurring capitalized expenditures. Non-recurring capitalized expenditures primarily consist of the cost of improvements such as new garages, water submeters, gated access and improvements made in conjunction with renovations of apartment homeshome). ExcludingNote rehabilitations,that recurringaverage capitalizedoccupancy expenditures consist primarily of floor coverings, furniture, appliances and equipment,rent andinformation exterioris paintfor andSummit carpentry.Brickell Repairs and maintenance,Summit suchLansdowne only as landscapingthere maintenance,was interiornot paintinga andfull cleaningquarter’s anddata suppliesto usedcalculate in such activities,amounts arefor expensedSummit asStonecrest incurred and weSummit doSouth notEnd accrue for such costs in advanceSquare. 

We capitalize interest, the cost of our development efforts directly related to apartment construction, and certain operational costs for communities under construction and in lease-up. Interest costs are capitalized in accordance with Statement of Financial Accounting Standards) ("SFAS") No. 34, "Capitalization of Interest Cost," based on the ratio of those units available for rental to the total number of units in the community and depreciated over the lives of the constructed assets. We capitalize the cost of our development department efforts to projects currently under construction, currently at a rate of 3.0% of such construction assets. Such costs are then depreciated over the lives of the constructed assets upon their completion. We treat each unit in an apartment community separately for capitalization and expense recognition purposes. This results in a proration of interest and operational costs in a development community between costs that are capitalized or expensed. As units become available for their intended use, we cease capitalization of interest and operational costs on those units based on the ratio of those available for rental to the total number of units in the community.

	Three Months Ended June 30,						Six Months Ended June 30,

	2004			2003			2004			2003

Property revenues:
Rental	$	4,100		$	842		$	7,681		$	842
Other		241			52			432			52

Total property revenues		4,341			894			8,113			894
Property operating expenses		1,632			391			3,021			392

Property operating income	$	2,709		$	503		$	5,092		$	502

Average physical occupancy		94.6	%		78.0	%		93.7	%		67.1	%

Average rent per occupied apartment home	$	1,200		$	1,208		$	1,197		$	1,208


Number of apartment homes		1,700			405			1,700			405

WeOperating capitalizePerformance pre-development costs incurred in pursuit of development opportunities. These costs primarily include legal and design fees and related overhead costs. In the event that our teamStabilized ofDevelopment executiveCommunities officers comprising the Asset Allocation Committee determines that it is not probable that we will proceed with the pursuit of a particular development project, we record a charge to expense to write down the project to its estimated recoverable amount, if any. 

WeStabilized recorddevelopment ourcommunities realinclude estateseven assetscommunities atwith costa lesstotal accumulatedof depreciation1,997 andapartment homes (Summit Valleybrook, ifSummit thereBrookwood, areSummit indicationsGrand thatParc, impairmentSummit existsRoosevelt, adjustSummit theStockbridge, carryingSummit valueLenox ofand thoseSummit assetsReunion inPark accordanceI). Summit at Lenox is an existing community with SFAS431 Noapartment homes that has recently been undergoing major renovations. 144,Its "Accountingoperating forresults are included in results of stabilized development communities as it has not yet reached stabilization after renovation. With the Impairmentexception orof DisposalSummit Lenox, the communities considered stabilized development were in the early stages of Longlease-Livedup Assets(i."e., Assetshad tonot beyet disposedstabilized) ofduring are2003 recordedand, attherefore, the lowerlevels of carryingproperty amountoperating orincome fairand valueaverage lessphysical costoccupancy are lower in 2003 when compared to sell2004. The operating performance of our stabilized development communities is summarized below (dollars in thousands, except average rent per occupied apartment home): 

HISTORICAL RESULTS OF OPERATIONS

	Three Months Ended June 30,						Six Months Ended June 30,

	2004			2003			2004			2003

Property revenues:
Rental	$	5,694		$	3,907		$	11,409		$	7,163
Other		541			352			1,025			574

Total property revenues		6,235			4,259			12,434			7,737
Property operating expenses		2,397			1,796			4,959			3,143

Property operating income	$	3,838		$	2,463		$	7,475		$	4,594

Average physical occupancy		92.4	%		68.3	%		92.5	%		63.3	%

OurOperating incomePerformance from continuing operations is generated primarily from operations of our apartmentCommunities communities. The changes in operating results from period to period reflect changes in existing community performance and changes in the number of apartment homes due to development, acquisition, or disposition of communities. Where appropriate, comparisons are made on a "sameLease-propertyUp communities" (which we formerly referred to as "fully stabilized communities"), "acquisition communities," "stabilized development communities," "lease-up communities" and "disposition communities" basis in order to adjust for changes in the number of apartment homes. 

AThe communitytable thatbelow wesummarizes have acquired is deemed "same-property" when we have owned it for one year or more as of the beginningfour ofcommunities thein current year. A community that we have developed is deemed "samelease-property"up whenduring stabilized for at least one year as of the beginningsix of the current year. A community is deemed to be a "stabilized development" community when stabilized as of the beginning of the current year but not the entire prior year. We consider a community to be "stabilized" when it has attained a physical occupancy level of at least 93%. An "acquisition" community is one that was acquired less than twelve months beforeended theJune beginning30, of2004 the(dollars currentin year.thousands): A "lease-up" community is defined as one that has commenced rental operations but was not stabilized as of the beginning of the current year. 

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

					Average
					Physical
		Total	Actual/		Occupancy	% Leased
	Number of	Actual/	Anticipated	Actual/	Three Months	as of
	Apartment	Anticipated	Construction	Anticipated	Ended June	June 30,
Community	Homes	Cost	Completion	Stabilization	30, 2004	2004


Summit Silo Creek - Washington, D.C.	284	$ 39,040	Q1 2004	Q4 2004	56.9%	81.3%
Summit Reunion Park II - Raleigh, NC	172	10,274	Q2 2004	Q4 2004	32.2%	55.2%
Summit Brickell View - Miami, FL (1)	323	74,000	Q4 2004	Q2 2005	5.2%	29.4%
Summit Las Olas - Ft. Lauderdale, FL (1)	420	73,700	Q4 2004	Q3 2005	2.9%	18.3%

	1,199	$ 197,014

(1)

Stabilization, occupancy and percent leased information in the table above represents data for apartment homes only. Summit Brickell View’s approximately 17,500 square feet of office/retail space was 0.0% leased as of June 30, 2004. The approximately 4,000 square feet of office/retail space at Summit Las Olas was 100.0% leased as of June 30, 2004. 


	22

ResultsThe ofactual Operationsstabilization dates for theour Threecommunities andin Ninelease-up Monthsmay Endedbe Septemberlater than anticipated. The operating performance of our lease-up communities is summarized below (dollars in thousands). None of the communities in lease-up at June 30, 20032004 andhad 2002begun leasing activity as of June 30, 2003. 

Net income decreased to $3.9 million for the three months ended September 30, 2003 from $30.0 million for the three months ended September 30, 2002. Our three-month results include net gains on asset sales of $2.1 million compared to gains on asset sales of $22.3 million for the same period in 2002. In addition, our three-month results for 2003 include a charge of $827,000 related to the early termination of our prior unsecured credit facility and a charge of $2.5 million for the early extinguishment of debt associated with an asset sale.

	Three Months Ended June 30,					Six Months Ended June 30,

	2004		2003			2004		2003

Property revenues:
Rental	$	764	$	-		$	1,147	$	-
Other		129		-			181		-

Total property revenues		893		-			1,328		-
Property operating expenses		596		12			857		14

Property operating income	$	297	$	(12	)	$	471	$	(14	)

NetOperating incomePerformance decreased to $19.2 million for the nine months ended September 30, 2003 from $57.8 million for the nine months ended September 30, 2002. Our nine-month 2003 results include gains on asset sales of $8.4 million compared to $31.9 million during the same period in 2002. In addition, our nine-monthDisposition 2003Communities results include a charge of $827,000 related to the early termination of our prior unsecured credit facility and a charge of $4.0 million for the loss from the early extinguishments of debt associated with asset sales. 

PropertyThe operating2004 incomedisposition community is definedSummit asSquare rental(362 andapartment other property revenues less property operating expenseshomes). WeThe believe2003 thatdisposition propertycommunities operatingconsist income is a meaningful measure for an investor’s analysis of community performance as it represents the mostformer consistentSummit Square, comparablewhich operatingwas performancesold amongin our2004, communities. Depreciation is a fixed cost not controllable by our property management staff and notSummit allFairways, communitiesSummit areTurtle encumberedRock, bySummit financingCamino instruments. ThereforeReal, allSummit propertyBuena operatingVista, expenseSummit amountsBelcourt, inSummit thisLas Management’s Discussion and Analysis section are presented before depreciationPalmas, interestSummit Arboretum and amortization.Summit PropertySan operatingRaphael income(comprised does not include any allocation of corporate overhead. You should not consider property operating income as an alternativeaggregate toof net2,927 incomeapartment (determined in accordance with GAAPhomes), asall an indication of ourwhich financialwere performancesold orduring asthe anyear alternativeended toDecember cash31, flows2003. fromWith operatingthe activitiesexception (determinedof inSummit accordanceFairways, withall GAAP) as a measure of ourthe liquidity.communities Ourdisposed calculation of propertyduring operating2003 incomewere maylocated differin fromTexas the methodology and, definitiontherefore, usedcompleted byour otherexit apartmentof companiesthe and,Texas accordingly,market. mayThe notoperating beperformance comparableof tothe similarlydisposition entitledcommunities measuresis usedsummarized bybelow other(dollars apartmentin companies.thousands): 

We have experienced weakening apartment fundamentals due to the downturn in the national economy as well as declining economic conditions in our markets during the first nine months of the year. Demand for apartment homes has deteriorated due to lower job growth and/or job losses, primary drivers of apartment demand. This decrease in demand has led to lower rental rates and higher concessions. Additionally, the favorable interest rate environment has produced record home sales which, when combined with the slowing economy, has depleted the number of prospective residents. The favorable interest rate environment has also provided the opportunity for developers to continue to add to the supply of apartments in our markets. However, we experienced positive job growth in our core markets during the third quarter and produced the first year-over-year increase in property operating income since the second quarter of 2001. As the economy continues to recover, we expect operating fundamentals will improve.

	Three Months Ended June 30,				Six Months Ended June 30,

	2004		2003		2004		2003

Property revenues:
Rental	$	273	$	5,935	$	864	$	12,807
Other		35		407		78		921

Total property revenues		308		6,342		942		13,728
Property operating expenses		147		2,541		398		5,529

Property operating income	$	161	$	3,801	$	544	$	8,199

Number of apartment homes		362		3,289		362		3,289

Operating Performance of Our Portfolio of Communities

A summary of our apartment homes (excluding unconsolidated joint ventures) for the nine months ended September 30, 2003 and 2002 is as follows:

	2003			2002
Apartment homes at January 1		15,428			16,739
Apartment homes sold during the period		(1,202	)		(1,136	)
Apartment homes acquired during the period		405			222
Developments which began rental operations during the period		786			761
Apartment homes at September 30		15,417			16,586

The operating performance of our communities (inclusive of continuing and discontinued operations and excluding unconsolidated joint ventures) for the three and nine months ended September 30, 2003 and 2002 and a reconciliation of property operating income to net income (loss) is summarized below (dollars in thousands):

	Three Months Ended September 30,									Nine Months Ended September 30,
	2003			2002			% Change			2003			2002			% Change
Property revenues:
Same-property communities	$	30,269		$	30,155			0.4	%	$	90,549		$	93,810			-3.5	%
Acquisition communities		2,061			528			290.3	%		4,104			528			677.3	%
Stabilized development communities		4,247			4,345			-2.3	%		12,861			12,036			6.9	%
Lease-up communities		3,946			712			454.2	%		8,506			984			764.4	%
Disposition communities		458			6,704			-93.2	%		4,385			24,097			-81.8	%
Total property revenues		40,981			42,444			-3.4	%		120,405			131,455			-8.4	%
Property operating expenses:
Same-property communities		10,521			10,446			0.7	%		30,876			30,056			2.7	%
Acquisition communities		918			256			258.6	%		1,761			256			587.9	%
Stabilized development communities		1,581			1,455			8.7	%		4,635			4,313			7.5	%
Lease-up communities		1,537			210			631.9	%		3,262			461			607.6	%
Disposition communities		223			2,364			-90.6	%		1,905			8,286			-77.0	%
Total property operating expenses		14,780			14,731			0.3	%		42,439			43,372			-2.2	%
Property operating income:
Same-property communities		19,748			19,709			0.2	%		59,673			63,754			-6.4	%
Acquisition communities		1,143			272			320.2	%		2,343			272			761.4	%
Stabilized development communities		2,666			2,890			-7.8	%		8,226			7,723			6.5	%
Lease-up communities		2,409			502			379.9	%		5,244			523			-902.7	%
Disposition communities		235			4,340			-94.6	%		2,480			15,811			-84.3	%
Total property operating income		26,201			27,713			-5.5	%		77,966			88,083			-11.5	%
Interest and other income		562			655			-14.2	%		2,263			1,823			24.1	%
Management fees – third party communities		145			164			-11.6	%		471			627			-24.9	%
Depreciation and amortization expense (continuing and discontinued operations)		(9,803	)		(10,027	)		-2.2	%		(29,973	)		(29,743	)		0.8	%
Interest and amortization of deferred financing costs (continuing and discontinued operations)		(9,645	)		(8,714	)		10.7	%		(26,001	)		(27,564	)		-5.7	%
General and administrative expense		(1,747	)		(991	)		76.3	%		(5,232	)		(4,077	)		28.3	%
Property management – owned communities		(1,207	)		(912	)		32.3	%		(3,885	)		(2,853	)		36.2	%
Property management – third party communities		(148	)		(112	)		32.1	%		(475	)		(349	)		36.1	%
Loss on real estate joint ventures		(105	)		(76	)		38.2	%		(269	)		(53	)		407.5	%
Gain on sale of real estate assets (continuing and discontinued operations)		2,119			16,900			-87.5	%		8,377			26,530			-68.4	%
Gain on sale of real estate assets – joint ventures		-			5,423			-100.0	%		-			5,423			-100.0	%
Loss from early extinguishment of debt		(2,510	)		-			-100.0	%		(4,018	)		-			-100.0	%
Net income	$	3,862		$	30,023			-87.1	%	$	19,224		$	57,847			-66.8	%

Operating Performance of Our Same-Property Communities

The operating performance of our same-property communities for the three and nine months ended September 30, 2003 and 2002 is summarized below (dollars in thousands, except average rent per occupied apartment home):

	Three Months Ended September 30,									Nine Months Ended September 30,
	2003			2002			% Change			2003			2002			% Change
Property revenues:
Rental	$	28,073		$	28,107			-0.1	%	$	84,281		$	87,459			-3.6	%
Other		2,196			2,048			7.2	%		6,268			6,351			-1.3	%
Total property revenues		30,269			30,155			0.4	%		90,549			93,810			-3.5	%
Property operating expenses:
Personnel		2,534			2,360			7.4	%		7,387			6,932			6.6	%
Advertising and promotion		392			403			-2.7	%		1,161			1,203			-3.5	%
Utilities		1,512			1,514			-0.1	%		4,513			4,365			3.4	%
Building repairs and maintenance		1,475			1,550			-4.8	%		4,169			4,177			-0.2	%
Real estate taxes and insurance		4,126			4,128			0.0	%		12,303			11,921			3.2	%
Other operating expense		482			491			-1.8	%		1,343			1,458			-7.8	%
Total property operating expenses		10,521			10,446			0.7	%		30,876			30,056			2.7	%
Property operating income	$	19,748		$	19,709			0.2	%	$	59,673		$	63,754			-6.4	%
Average physical occupancy		94.8	%		91.8	%		3.0	%		94.5	%		92.9	%		1.6	%
Average rent per occupied apartment home	$	884		$	923			-4.2	%	$	892		$	941			-5.2	%
Number of apartment homes		11,368			11,368			0.0	%		11,368			11,368			0.0	%
Number of apartment communities		38			38			0.0	%		38			38			0.0	%

For the three-month period ended September 30, 2003, property revenues remained flat, increasing by 0.4% over the same period in 2002. For the nine-month period ended September 30, 2003, property revenues declined due to weakening fundamentals in our markets, primarily driven by (a) a decline in job growth and/or an increase in job losses, (b) the growth of the single family home market in the low interest rate environment which has made for-sale housing more affordable, causing apartments to re-price at lower rates to remain competitive, and (c) the new supply of apartment homes added to our markets by builders benefiting from low interest rates.

Personnel costs increased by $174,000, or 7.4%, and $455,000, or 6.6%, for the three and nine-month periods due to an increase in staffing levels in 2003 as compared to 2002. Excluding personnel costs, property operating expenses for the three-month period decreased by 1.2% over the same period in 2002. Insurance costs increased by $422,000, or 35.1%, during the nine months ended September 30, 2003 when compared to the same period in 2002 due to an increase in insurance rates with our May 2002 renewal as well as obtaining terrorism insurance on certain of our communities.

As a percentage of total property revenue, total property operating and maintenance expenses increased to 34.8% for the three months ended September 30, 2003 from 34.6% for the same period in 2002 and increased to 34.1% for the nine months ended September 30, 2003 from 32.0% for same period in 2002.

We expect that property operating income for our same-property pool of communities will remain at current levels until job growth in our markets increases and the affordability of single family homes decreases. This expectation is based on what we believe to be reasonable assumptions as to future economic conditions and the quantity of competitive supply expected in our markets. However, there can be no assurance that actual results will not differ from this assumption, especially due to the unpredictable nature of the current economy. In addition, property operating income may be negatively impacted by property tax expense due to the uncertainty of property valuations performed by certain municipalities.

Operating Performance of Our Acquisition Communities

On May 6, 2003, the Operating Partnership purchased certain assets of Brickell Grand, Inc. including the community known as Summit Brickell and a note receivable from the developer, for $59.4 million. Summit Brickell is located in Miami, Florida and contains 405 apartment homes and approximately 18,000 square feet of retail space. The apartment homes at Summit Brickell were 97.3% leased and the retail space was 56.6% leased as of September 30, 2003. On July 1, 2002, we acquired a stabilized apartment community known as Summit San Raphael in the Galleria sub-market of Dallas, Texas for $17.7 million. The operating performance of Summit Brickell and Summit San Raphael for the three and nine months ended September 30, 2003 and 2002 is summarized below (dollars in thousands, except average rent per occupied apartment home):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2003			2002			2003			2002
Property revenues:
Rental	$	1,975		$	507		$	3,914		$	507
Other		86			21			190			21
Total property revenues		2,061			528			4,104			528
Property operating expenses		918			256			1,761			256
Property operating income	$	1,143		$	272		$	2,343		$	272
Average physical occupancy		93.1	%		86.8	%		83.0	%		86.8	%
Average rent per occupied apartment home	$	1,129		$	917		$	1,085		$	917
Number of apartment homes		627			222			627			222

Operating Performance of Our Stabilized Development Communities

Summit Crest, Summit Overlook, Summit Peachtree, Summit Shiloh and Summit at Lenox are considered stabilized development communities as of September 30, 2003. Summit Lenox, which had previously been considered a same-property community, is currently undergoing a renovation which has caused certain apartment homes to be unavailable for rental over the course of the project; therefore, its operating results are included in the stabilized development category. The operating performance of these five communities for the three and nine months ended September 30, 2003 and 2002 is summarized below (dollars in thousands, except average rent per occupied apartment home):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2003			2002			2003			2002
Property revenues:
Rental	$	3,994		$	4,099		$	12,096		$	11,273
Other		253			246			765			763
Total property revenues		4,247			4,345			12,861			12,036
Property operating expenses		1,581			1,455			4,635			4,313
Property operating income	$	2,666		$	2,890		$	8,226		$	7,723
Average physical occupancy		94.0	%		90.5	%		93.1	%		81.2	%
Average rent per occupied apartment home	$	795		$	849		$	812		$	858
Number of apartment homes		1,820			1,820			1,820			1,820

Operating Performance of Our Lease-up Communities

A summary of the six lease-up communities during the three and nine months ended September 30, 2003 is as follows (dollars in thousands):

									Third
			Total		Actual/				Quarter			% Leased
	Number of		Actual/		Anticipated		Actual/		Average			as of
	Apartment		Estimated		Construction		Anticipated		Physical			September 30,
Community	Homes		Cost		Completion		Stabilization		Occupancy			2003
Summit Grand Parc - Washington, D.C. (1)		105	$	43,527		Q4 2002		Q3 2003		75.3	%		93.3	%
Summit Valleybrook - Philadelphia, PA		352		37,756		Q4 2002		Q3 2003		89.8	%		95.2	%
Summit Brookwood - Atlanta, GA		359		44,504		Q4 2002		Q4 2003		87.8	%		95.5	%
Summit Roosevelt - Washington, D.C.		198		46,268		Q2 2003		Q3 2003		78.7	%		98.0	%
Summit Stockbridge - Atlanta, GA		304		23,362		Q3 2003		Q2 2004		70.2	%		88.5	%
Summit Silo Creek - Washington, D.C. (2)		284		41,700		Q2 2004		Q4 2004		5.5	%		16.2	%
		1,602	$	237,117

(1) Stabilization, occupancy and percent leased information in the table above represents data for Summit Grand Parc’s apartment homes only. The 12,500 square feet of commercial space at Summit Grand Parc was 86.0% leased and occupied as of September 30, 2003.

(2) The related assets of this property are included in "Construction in progress" in our consolidated balance sheets as of September 30, 2003.

The actual stabilization dates for our communities in lease-up may be later than anticipated. The rental rates that we charge may also be less than expected. The operating performance of our lease-up communities for the three and nine months ended September 30, 2003 and 2002 is summarized below (dollars in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2003		2002		2003		2002
Property revenues:
Rental	$	3,624	$	645	$	7,839	$	842
Other		322		67		667		142
Total property revenues		3,946		712		8,506		984
Property operating expenses		1,537		210		3,262		461
Property operating income	$	2,409	$	502	$	5,244	$	523
Number of apartment homes		1,602		1,602		1,602		1,602

Operating Performance of Our Disposition Communities

During the nine months ended September 30, 2003, we sold three apartment communities formerly known as Summit Fairways (240 apartment homes) located in Orlando, Florida, Summit Turtle Rock (250 apartment homes) located in San Antonio, Texas and Summit Camino Real (712 apartment homes) located in Dallas, Texas. The information in the table below represents operating results for the three and nine months ended September 30, 2003 and 2002 for the former Summit Fairways, Summit Turtle Rock and Summit Camino Real. The information in the table below for the three and nine months ended September 30, 2002 also represents operating results for the former Summit Breckenridge, Summit New Albany, Summit Pike Creek, Summit Mayfaire, Summit Stonefield, Summit Meadow, Summit Sand Lake and Summit Windsor communities, all of which were sold during 2002 (dollars in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
Property revenues:		2003		2002		2003		2002
Rental	$	421	$	6,227	$	4,099	$	22,440
Other		37		477		286		1,657
Total property revenues		458		6,704		4,385		24,097
Property operating expenses		223		2,364		1,905		8,286
Property operating income	$	235	$	4,340	$	2,480	$	15,811
Number of apartment homes		712		3,601		1,202		3,601

Communities Sold or Held for Sale 

InDuring accordancethe withsix SFASmonths No.ended 144June 30, net2004, incomewe andsold gainone (loss)community, onformerly dispositionknown ofas realSummit estateSquare for(362 communitiesapartment sold or considered held for sale after December 31homes), 2001located are reflected in ourRaleigh, statementsNorth ofCarolina, operations as "discontinued operations" for all$22.5 periods presentedmillion. BelowWe isrecognized a summarygain ofon discontinuedsale operationsof for$10.0 Summitmillion Fairways,related Summitto Turtlethe Rock,sale Summitof Camino Real and five other assets, Summit BuenaSquare. Vista,We Summitalso Belcourtsold andone Summitparcel Sanof Raphael,land allfor located in Dallas$88,000 Texas,during andthe Summitsix Arboretummonths andended SummitJune Las Palmas30, both located in Austin, Texas, which qualify for held for sale treatment under SFAS No2004. 144This asland ofwas Septemberlocated 30,at 2003.Summit TheSquare informationand forwas 2002sold belowto includes the eightmunicipality communitiesin to which referenceit is madelocated above as wellan aseasement sevenfor ofhighway the eight communities sold during 2002 (in thousands)construction. TheWe eighthrecognized communitya soldgain duringon thesale yearof ended December 31$47,000 2002related was considered held for sale prior to Decemberthis 31, 2001 and, therefore, is included in income from continuing operations in accordance with SFAS Noland. 144. 

	Three Months Ended September 30,					Nine Months Ended September 30,
		2003			2002		2003			2002
Property revenues:
Rental	$	4,358		$	10,098	$	15,844		$	32,790
Other		289			733		1,141			2,327
Total property revenues		4,647			10,831		16,985			35,117
Property operating expenses		1,953			4,117		7,006			12,730
Depreciation		672			2,330		3,576			7,498
Interest and amortization		951			1,622		3,426			4,975
Income from discontinued operations before net gain on disposition of
discontinued operations and loss on early extinguishment of discontinued
operations		1,071			2,762		2,977			9,914
Gain on disposition of discontinued operations		2,119			16,900		8,377			12,691
Loss on early extinguishment of debt		(2,510	)		-		(4,018	)		-
Income from discontinued operations	$	680		$	19,662	$	7,336		$	22,605

During the six months ended June 30, 2003, we sold two communities, Summit Fairways (240 apartment homes) and Summit Turtle Rock (250 apartment homes) for an aggregate sales price of $37.1 million, resulting in an aggregate gain on sale of $6.3 million. 

As of September 30, 2003, Summit Buena Vista, Summit Arboretum, Summit Las Palmas, Summit Belcourt and Summit San Raphael were considered held for sale. The revenues and net income (excluding allocation of corporate overhead) of these five communities represented $4.2 million and $922,000, respectively, for the three months ended September 30, 2003 and $12.6 million and $1.9 million, respectively, for the nine months ended September 30, 2003. 23

OnIn Octoberaccordance 7,with 2003,SFAS weNo. sold144, annet apartmentincome communityand formerlygain knownon asdisposition Summitof Buenareal Vistaestate (467for apartmentcommunities homes)sold locatedor inconsidered Dallas,held Texas for $32.4sale millionare asreflected partin of our strategystatements toof exitearnings ouras Texas"discontinued markets.operations" Thefor netall proceedsperiods of $8presented.9 millionBelow (netis ofa thesummary relatedof mortgagediscontinued debtoperations whichfor was assumed by the buyer,three theand balancesix ofmonths whichended wasJune $23.030, million2004 onfor the datecommunity ofsold sale)during werethe placedsix intomonths escrowended withJune a30, qualified2004 intermediary in accordance with like-kind exchange income tax rules and regulationsfor andthe areseven expectedcommunities toconsidered beheld usedfor tosale fundas futureof developmentthat date, and/or acquisitionfor activities. In the eventeight proceedscommunities frommentioned Summitabove Buenaas Vistawell areas notthe fullyeight investedcommunities insold qualifiedduring like-kind2003 propertyfor during the requiredthree timeand period,six amonths specialended distributionJune may30, be2003 made(in or company-level tax may be incurredthousands). We expect to recognize a gain on the disposition of the former Summit Buena Vista. 

	Three Months Ended June 30,					Six Months Ended June 30,

Property revenues:	2004		2003			2004		2003

Rental	$	4,470	$	10,163		$	9,280	$	21,261
Other		345		701			661		1,466

Total property revenues		4,815		10,864			9,941		22,727
Property operating expenses		1,506		3,927			3,251		8,382
Depreciation		330		2,515			1,502		5,044
Interest and amortization		65		1,229			128		2,607

Income from discontinued operations before gain on discontinued
Operations and loss on early extinguishment of debt		2,914		3,193			5,060		6,694
Gain on disposition of discontinued operations		9,993		3,122			10,040		6,258
Loss on early extinguishment of debt		-		(1,508	)		-		(1,508	)

Income from discontinued operations	$	12,907	$	4,807		$	15,100	$	11,444

Development Activity 

OurDevelopment constructioncommunities in progressprocess as of SeptemberJune 30, 20032004 isare summarized as follows (dollars in thousands): 

			Total				Estimated		Anticipated
	Number of		Total				Estimated		Anticipated
	Apartment		Estimated		Cost Toto		Cost Toto		Construction
Community	Homes		Costs		Date		Complete		Completion
Summit Reunion Park II – Raleigh, NC		172	$	10,800	$	7,538	$	3,262		Q1 2004
Summit Brickell View - Miami, FL		323	$	74,000	$	69,096	$	4,904		Q4 2004
Summit Silo Creek – Washington, D.C. (1)		284		41,700		33,331		8,369		Q2 2004
Summit Las Olas - Ft. Lauderdale, FL		420		73,700		68,239		5,461		Q4 2004
Summit Brickell View – Miami, FL		323		75,000		58,364		16,636		Q4 2004
Summit Fairfax Corner - Washington, D.C.		488		74,500		27,045		47,455		Q4 2006
Summit Las Olas – Ft. Lauderdale, FL		420		73,700		61,104		12,596		Q4 2004
Summit Manor Park – Raleigh, NC		484		46,300		9,316		36,984		Q4 2006
Total - communities under construction		1,~~199~~715		~~201~~268,~~200~~500		~~160~~173,~~337~~696	$	4094,~~863~~804
Other development and construction costs (2)		-		-		28,955
Other development and construction costs (1)		-		-		42,030
Total development communities		1,199	$	201,200	$	189,292
		1,715	$	268,500	$	215,726

(1)  This Consists communityprimarily wasof inland lease-upheld asfor ofdevelopment Septemberand 30,other 2003pre-development costs. 

(2)  ConsistsThe primarilyestimated ofcost landto heldcomplete for the development andcommunities otherlisted pre-developmentabove costsof $94.8 million represents substantially all of our material commitments for capital expenditures as of June 30, 2004. 

Factors Affecting the Performance of Our Development Communities 

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

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

In addition, we are conducting feasibility and other pre-development work for numerous communities. We could abandon the development of any one or more of these potential communities in the event that we determine that market conditions do not support development, financing is not available on favorable terms or at all, we are unable to obtain necessary permits and authorizations, or due to other circumstances which may prevent development. There can be no assurance that, if we do pursue one or more potential communities, that we will be able to complete construction within the currently estimated development budgets or that construction can be started at the time currently anticipated. 24

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

Other Income and Expenses 

Interest income decreased by $142581,000, or 30.7%, to $320498,000 forduring the threesix months ended SeptemberJune 30, 20032004 when compared to the same period in 2002,2003 primarily due to a decreasereduction in interest earned on notes receivable of $61283,000 andof a decrease in interest earned on cashproceeds balancesplaced held with qualified intermediaries in accordance with like-kind exchange income tax rules and regulations and a reduction of $53265,000 in interest earned on notes receivable which were repaid in 2003. Interest income increaseddecreased by $78286,000, or 5.4%, to $1.5263,000 millionduring for the ninethree months ended SeptemberJune 30, 20032004 when compared to the same period in 2002,2003 primarily due to ana increasereduction of $149,000 in interest earned on cashnotes balancesreceivable heldwhich withwere qualifiedrepaid intermediariesin 2003 as well as a reduction of $7637,000 of interest earned on proceeds placed with qualified intermediaries in accordance with like-kind exchange rules and regulations. 

Other income increaseddecreased by $49338,000, or 25.4%, to $242282,000 forduring the threesix months ended SeptemberJune 30, 20032004 when compared to the same period in 2002,2003 primarily due to an increase in water billing administration fees and fees earned for water meter installation for third party communities of $196222,000 offset by a decrease in settlement proceeds ofreceived $136,000 in 2002 from an easement sale associated with one of our communities. Other income increased by $362,000, or 93.1%, to $751,000 for the nine months ended September 30, 2003 whenrelated compared to thea samepursuit periodproject inwhich 2002,did primarilynot duecome to anfruition increasewith inno watersimilar billingfee administrationearned and meter installation fees of $399,000 offset by a decrease in proceeds of $136,000 in 2002 from an easement sale associated with one of our communities2004. 

29Depreciation and amortization for both continuing and discontinued operations increased to $22.5 million for the six months ended June 30, 2004 from $20.4 million for the same period in 2003 primarily due to $2.2 million of amortization related to the intangible assets acquired with the 2004 and 2003 acquisition communities. This same measure increased to $11.1 million during the three months ended June 30, 2004 from $10.6 million for the same period in 2003 primarily due to the addition of depreciation recorded for recently developed communities as well as for the communities acquired during 2004 and 2003. 

InterestDepreciation and amortization expense for continuing and discontinued operations decreasedincreased by $215,000, or 25.6%,7 million to $821.20 million forduring the threesix months ended SeptemberJune 30, 20032004 when compared withto the same period in 2002,2003 primarily due to$2.2 amillion decrease of 0.34%amortization inrelated ourto averagethe interestintangible rateassets acquired with the 2004 and a2003 decreaseacquisition communities as well as the addition of $7.3depreciation millionrecorded infor ourrecently averagedeveloped indebtednesscommunities outstandingas well as for the communities acquired during 2004 and 2003. InterestDepreciation and amortization expense decreasedfor continuing operations increased by $32.07 million, or 11.3%, to $2310.68 million forduring the ninethree months ended SeptemberJune 30, 20032004 when compared withto the same period in 2002,2003 primarily due to a$1.1 decreasemillion of 0.35%amortization inrelated ourto averagethe interestintangible rateassets andacquired awith decreasethe of2004 $16.4and million2003 inacquisition average indebtedness outstandingcommunities. 

GeneralInterest expense for both continuing and administrativediscontinued expensesoperations increaseddecreased by $756804,000, or 76.3%, to $114.76 million for the threesix months ended SeptemberJune 30, 20032004 aswhen compared to the same period in 20022003, primarily due to ana increasedecrease of $523,000 in the amount recorded for executive performance-based compensation. The payment of this compensation is contingent upon our operationalaverage successeffective ininterest 2003.rate In addition, the amount recorded for directors and officers liability insurance increased $72,000 and the cost of abandoned pursuit projects was $47,000 higher during the three months ended September 30, 2003 when compared to the5.41% same period in 2002.2004 Asfrom a percentage of revenues, general and administrative expenses were 46.203% andin 2.3% for the three months ended September 30, 2003 and 2002. 

General and administrative expenses increased by $1.2 million680,000 or 28.3%, to $54.20 million for the ninesix months ended SeptemberJune 30, 20032004 aswhen compared to the same period in 2002,2003 primarily due to an increase of $673623,000 inrelated theto amount recorded for executive performance-based compensation. Theand paymentincreased ofcosts thisassociated compensationwith isour contingentSarbanes-Oxley uponimplementation ourefforts. operationalGeneral successand inadministrative 2003.expenses Inincreased additionby $347,000 theto amount$2.1 recordedmillion for directorsthe andthree officersmonths liabilityended insuranceJune increased $26430,000 and2004 when compared to the costsame ofperiod abandonedin pursuit2003 projectsprimarily wasdue $21,000to higheran duringincrease theof nine$241,000 monthsrelated endedto Septemberperformance-based 30,compensation 2003and whenincreased comparedcosts related to theour sameSarbanes-Oxley periodimplementation in 2002efforts. As a percentage of revenuestotal undepreciated assets, general and administrative expenses were 40.225% for the six months ended June 30, 2004 and 3.0.22% for the ninesix months ended SeptemberJune 30, 2003 and 2002. 

PropertyThe management$10.0 expensesmillion increasedgain byon $331,000,disposition orof 32.3%,discontinued tooperations $1.4during million for the threesix months ended SeptemberJune 30, 20032004 asresulted comparedfrom to the samedisposition periodof inone 2002community, primarilyformerly dueknown toas Summit Square, and a reductionparcel of costsland capitalizedat by the Managementcommunity Companyformerly forknown theiras servicesSummit providedSquare. toThe development communities of $207,0006.3 asmillion again resulton disposition of fewerdiscontinued developmentoperations activities.during Propertythe managementsix expensesmonths increasedended byJune $1.2 million30, or2003 36.2%,resulted tofrom $4.4the milliondisposition forof thetwo ninecommunities, monthsSummit endedFairways Septemberand 30,Summit 2003Turtle asRock. comparedAll toof thethese samecommunities periodwere insold 2002,as primarilypart dueof toour aplan reductionto indispose costsof capitalizedassets bythat theno Managementlonger Companymeet forour theirgrowth servicesobjectives providedor to developmentmake communitiesdesired changes in the number of $771,000apartment ashomes ain resulteach of fewerour development activitiesmarkets. 


	25

Liquidity and Capital Resources 

Liquidity 

OurNet net cash provided by operating activities decreasedincreased to $5040.23 million for the ninesix months ended SeptemberJune 30, 20032004 from $5534.59 million for the samesix periodmonths inended 2002June 30, 2003 primarily due to aan decreaseincrease of $114.07 million in income from continuing and discontinued operations before gain on sale of real estate assets, minority interest of common unitholders in theaccounts Operatingpayable Partnership, dividends to preferred unitholders in the Operating Partnership and lossaccrued on early extinguishments of debtexpenses.   

Net cash used in investing activities decreasedincreased to $585.67 million duringfor the ninesix months ended SeptemberJune 30, 20032004 from $2926.7 million for the samesix periodmonths inended 2002June 30, 2003. The decreaseincrease in cash used in investing activities is primarily due to ana increasedecrease in proceeds from the sale of real estate assets of $5463.56 million, a decrease in cashproceeds usedfrom forthe constructionsale of real estate assets of $27.9 million and an increase in cash2004 contributedwhen fromcompared ourto historic tax credit venture partner of $72003.9 million,Prior allyear offset by an increase in cash used for the acquisition of communities of $41.6 million and an increase in cash invested in real estate joint ventures of $14.5 million and a decrease in proceeds from the sale of jointreal ventureestate interestassets ofincluded $11.2prior million.year Saleexpenditures proceeds from certainqualified communities sold are placed in escrow in accordance with like-kind exchange incomeescrows taxthat rulesrelated andto regulations.2002 Proceedssales from the sale of communities represent funds expended from these like-kind exchange escrows as well as cash proceeds received infrom connection with 2003 disposition communities which were not placed in escrow in accordance with like-kind exchange income tax rules and regulations. In the eventsale proceedsof fromone thesecommunity property sales are not fully invested in qualified like-kind property during the requiredsix timemonths period,ended aJune special30, distribution may be made or company-level tax may be incurred2003. 

Net cash usedprovided inby financing activities increasedwas to $45.02 million for the ninesix months ended SeptemberJune 30, 20032004. fromNet cash used in financing activities was $257.26 million for the ninesix months ended SeptemberJune 30, 2002 2003. The increase in cash usedprovided inby financing activities during 2004 is primarily thedue resultto ofan aincrease reduction in net borrowings on ourthe credit facility of $8596.0 million, anand increasea indecrease cash used to redeem Series B preferred units of $85.0 million, an increase in repayments of mortgage debt of $21.6 million, and a $15.2 million increase in cash used to repurchase sharesour of Summit’s common stock, all offset by ana increasedecrease in proceeds received from the issuance of mortgage debt of $8726.08 million, anand increase in proceeds from the issuance of Summit’s common stock of $53.1 million, a decrease in repaymentsthe ofamount unsecured notes of $41.0cash millionused andto arepay decreasethe inconstruction dividendsloan and distributions paid of $1235.53 million. 

As of January 1, 2004, we had $2.7 million of cash and cash equivalents and $70.0 million available under our credit facility. As of June 30, 2004, after considering the transactions listed below and our cash provided by operating activities of $40.3 million during the period, we had $2.4 million of cash and cash equivalents and $109.0 million available under our secured credit facility. During the six months ended June 30, 2004, we generated cash proceeds from various transactions, including: 

~~Our~~Issued ~~outstanding indebtedness as of September 30, 2003 totaled~~ $~~771~~44.01 million. ~~This~~in ~~amount included $334.0 million of~~ fixed rate ~~conventional~~ mortgages, ~~$267.0~~collateralized ~~million~~by oftwo fixed rate unsecured notes, $121.5 million under our secured credit facility, $27.3 million under our construction loan, $10.3 million of variable rate tax-exempt bonds, $6.9 million of variable rate mortgages and $4.0 million of fair value adjustments of hedged debt instruments. communities;
WeSold ~~expect~~one tocommunity ~~meet~~for ~~our~~an ~~liquidity~~aggregate ~~requirements~~sales ~~over~~price ~~the next twelve months, including payments~~ of ~~dividends~~$22.5 million and ~~distributions as well as recurring capital expenditures relating to maintaining our existing communities, primarily through net~~ cash ~~provided by operating activities,~~ proceeds ~~from the disposition~~ of ~~certain~~$22.2 ~~communities~~million; and ~~borrowings under our credit facility.~~
WeBorrowed ~~expect~~$62.0 tomillion meet our long-term liquidity requirements, such as scheduled mortgage debt maturities, property acquisitions, financing of development activities and other non-recurring capital improvements, through net cash provided by operating activities, the issuance of debt and equity securities, in connection with the acquisition of land or improved property, the issuance of common units, proceeds received from the disposition of certain communities and borrowings under our credit facility. ~~We believe that we have adequate borrowing capacity and accessibility to attractive disposition opportunities to fund our long-term liquidity requirements.~~

CreditThe Facilityproceeds were used primarily to: 

OnConstruct July 28, 2003, we obtained a secured credit facility with a total current commitment of $200.0 million. We have the ability to increase this commitment pursuant to the terms of the credit agreement. The secured credit facility replaced our $225.0 million unsecured credit facility and provides funds for new development, ~~acquisitions and general working capital purposes. This facility is secured by nine of our~~ communities ~~(Summit Fair Oaks, Summit Governor’s Village, Summit Grandview, Summit Lake, Summit Peachtree City, Summit Portofino, Summit Sedgebrook, Summit Shiloh~~ and ~~Summit~~acquire ~~Sweetwater)~~land and matures in July 2008. As described in the credit agreement, loans under the credit facility are limited subject to debt service coverage and loan to value ratios and bear interest at the Reference Bill Index Rate (defined as the money market yield for the Reference Bills as established by the most recent Reference Bill auction conducted by Freddie Mac) plus 58 to 91 basis points depending on the level of debt service coverage. The outstanding balance of the credit facility was $~~121~~54.58 million ~~and the interest rate was 1.594% as of September 30, 2003.~~ ;
OnAcquire ~~July~~two ~~28,~~communities ~~2003,~~for ~~we obtained~~ an ~~unsecured~~aggregate ~~letter~~purchase ofprice ~~credit facility which matures in July 2008 and has a total commitment~~ of $2062.08 million., ~~The~~requiring ~~letters~~a ofcash ~~credit~~payment ~~issued under this facility will serve as collateral for performance on contracts and as credit guarantees to banks and insurers. As~~ of ~~September 30, 2003, there were~~ $743.2 million ofin ~~letters~~the ~~of credit under this facility.~~ aggregate;
~~Medium-Term~~Repay ~~Notes~~$35.3 million under the construction loan; and
OnFund ~~April~~capital ~~20,~~expenditures ~~2000,~~and weother ~~commenced~~corporate aadditions ~~program~~and ~~for~~tenant ~~the~~improvements ~~sale~~ of ~~up to~~ $~~250~~4.09 million ~~aggregate principal amount of medium-term notes (MTN) due nine months or more from the date of issuance~~. ~~We had MTNs with an aggregate principal amount of $112.0 million outstanding in connection with the MTN program as of September 30, 2003.~~

OnOur Mayoutstanding 29,indebtedness 1998,(excluding wefair establishedvalue aadjustments programof forhedged thedebt saleinstruments of up to $952.07 million) aggregateas principal amount of MTNsJune due30, nine2004 monthstotaled or$812.4 more from the date of issuancemillion. WeThis had MTNs with an aggregate principal amount ofincludes $25394.04 million outstanding in connectionfixed withrate thisconventional MTN program as of September 30mortgages, 2003 $10.1 Asmillion a result of thevariable commencementrate oftax-exempt thebonds, $250220.0 million MTNof program,fixed werate cannotunsecured issuenotes, any$6.9 additionalmillion notesof undervariable therate mortgages and $95181.0 million MTNunder programour secured credit facility. 

ConstructionWe Loanexpect that our primary uses of cash in 2004 will be to fund development spending (refer to the section entitled "Development Activity" on page 24 of this report), to fund debt maturities, acquisition opportunities and the possible redemption of the Series C Cumulative Redeemable Perpetual Preferred Units (see the section entitled "Preferred Units" below). Any decision to redeem the Series C Cumulative Redeemable Perpetual Preferred Units in the future will be made in our discretion, based on our evaluation of financial and other relevant factors at such time. Other uses of cash in 2004 will include funding principal amortization of debt, funding capital expenditures relating to maintaining our existing communities and to fund dividend and distribution payments. 

Concurrent with the purchase of our joint venture partner’s equity interest in SZF, LLC in July 2003 (see Note 2), we consolidated the construction loan related to the community that is being developed by such joint venture. The construction loan has a total commitment of $45.0 million, matures in June 2004 and bears interest at LIBOR plus 207.5 basis points. The outstanding balance of the construction loan was $27.3 million and the interest rate was 3.195% as of September 30, 2003. 26

We expect that the primary source of funds for these uses, in addition to our cash provided by operating activities, will be the proceeds from the disposition of communities as we continue our capital recycling strategy of selling older communities and using those proceeds to fund development and/or acquisition investment opportunities. We also may issue additional fixed rate mortgage debt or issue common or preferred equity, subject to market conditions. There can be no assurance that we will be able to effect any such financing transactions on favorable terms. In addition, we have adequate borrowing capacity under our credit facility. 

Credit Facilities 

On July 28, 2003, we obtained a secured credit facility with a total commitment of $200.0 million. On June 25, 2004, we increased this commitment to $290.0 million. The availability increased from $189.0 million to $290.0 million. We have the ability to further increase this commitment and availability pursuant to the terms of the credit agreement. The secured credit facility provides funds for new development, acquisitions and general working capital purposes. This facility is secured by twelve of our communities (Summit Brookwood, Summit Fair Oaks, Summit Governor’s Village, Summit Grandview, Summit Lake, Summit Lansdowne, Summit Peachtree City, Summit Portofino, Summit Sedgebrook, Summit Shiloh, Summit Stockbridge and Summit Sweetwater) and matures in July 2008. As described in the credit agreement, loans under the credit facility are subject to debt service coverage and loan to value ratios and bear interest at the Reference Bill Index Rate (defined as the money market yield for the Reference Bills as established by the most recent Reference Bill auction conducted by Freddie Mac) plus 58 to 91 basis points depending on the level of debt service coverage. As of June 30, 2004, the outstanding balance of the credit facility was $181.0 million and the interest rate was 1.7026%. 

On July 28, 2003, we obtained an unsecured letter of credit facility, which matures in July 2008 and has a total commitment of $20.0 million. The letters of credit issued under this facility serve as collateral for performance on contracts and as credit guarantees to banks and insurers. As of June 30, 2004, there were $7.8 million of letters of credit outstanding under this facility. 

New Mortgages 

OnIn Julyconnection 15with the acquisition of Summit Stonecrest on May 27, 20032004, we obtainedassumed a $23.0 million mortgage note collateralizedwith bya Summitprincipal Overlookbalance of $19.7 million. This mortgage note bears interest at a fixed rate of 4.7018% until July 2012, atmatures whichon timeSeptember the1, rate2012 movesand torequires ainterest variableonly ratepayments untilthrough maturity in August 2013.2004 Thisand loanthen requires monthly principal and interest payments on a 30-year amortization schedule with a balloon payment due at maturity. This mortgage note is recorded in our financial statements at fair value, which was determined to be $18.4 million at the date of acquisition. The interest rate currently available to us for debt with similar terms and maturity was used to estimate fair value of this mortgage. 

On JuneMarch 1330, 20032004, we obtainedissued a $3916.76 million mortgage note collateralized by Summit AventuraAshburn Farm. This mortgage note bears interest at a fixed rate of 54.0969% until Julyits 2012, at which time the rate moves to a variable rate until maturity inon JulyApril 20131, 2011. ThisThe loanmortgage requires monthly principal and interest payments on a 30-year amortization schedule with a balloon payment due at maturity. 

31On March 30, 2004, we issued a $27.5 million mortgage note collateralized by Summit Crest. This mortgage bears interest at a fixed rate of 4.63% until its maturity on April 1, 2011. The mortgage requires monthly interest payments only during the first year of the mortgage and requires monthly principal and interest payments on a 30-year amortization schedule starting with the second year of the mortgage with a balloon payment due at maturity. 

Preferred Units 

On September 18, 2003, we redeemed all 3.4 million of our preferred units of limited partnership interest designated as 8.95% Series B Cumulative Redeemable Perpetual Preferred Units for cash in the amount of $25.20 per unit plus all unpaid distributions through the redemption date. These preferred units were redeemable for cash, or at our option, shares of Summit’s 8.95% Series B Cumulative Redeemable Perpetual Preferred Stock, or a combination of cash and shares of Summit’s 8.95% Series B Cumulative Redeemable Perpetual Preferred Stock. Holders of the Series B preferred units had the right to exchange these preferred units for shares of Summit’s Series B preferred stock on a one-for-one basis, subject to adjustment: (a) on or after April 29, 2009, (b) if full quarterly distributions were not made for six quarters, or (c) upon the occurrence of specified events related to our treatment or the treatment of the preferred units for federal income tax purposes. As a result of the redemption, the excess of the redemption amount over the carrying amount of the units, which totals approximately $3.0 million in the aggregate, has reduced net income for the three and nine months ended September 30, 2003. This is consistent with the SEC's staff announcement on July 31, 2003 that provided clarification to Emerging Issues Task Force ("EITF") Topic D-42, "The Effect on the Calculation of Earnings per Share for the Redemption or Induced Conversion of Preferred Stock." Distributions on the Series B preferred units were cumulative from the date of original issuance and were payable quarterly at the rate of 8.95% per year of the $25.00 original capital contribution. We made distributions to the holders of the Series B preferred units in the aggregate amount of $53.58 million during the ninesix months ended SeptemberJune 30, 2003 and $5.7 million during the nine months ended September 30, 2002. 

As of September 30, 2003, we had outstanding 2.2 million preferred units of limited partnership interest designated as 8.75% Series C Cumulative Redeemable Perpetual Preferred Units. The preferred units are redeemable on or after September 3, 2004 for cash at a redemption price equal to the holder’s capital account. The holder of the Series C preferred units has the right to exchange these preferred units for shares of Summit’s Series C preferred stock on a one-for-one basis, subject to adjustment: (a) on or after September 3, 2009, (b) if full quarterly distributions are not made for six quarters, (c) upon the occurrence of specified events related to our treatment or the treatment of the preferred units for federal income tax purposes, or (d) if the holdings in the Operating Partnership of the Series C unitholder exceed 18% of the total profits or capital interest in the Operating Partnership for a taxable year. Distributions on the Series C preferred units are cumulative from the date of original issuance and are payable quarterly at the rate of 8.75% per year of the $25.00 original capital contribution. We made distributions to the holder of the Series C preferred units in the aggregate amount of $3.6 million during each of the nine months ended September 30, 2003 and 2002. 27

As of June 30, 2004, we had outstanding 2.2 million preferred units of limited partnership interest designated as 8.75% Series C Cumulative Redeemable Perpetual Preferred Units. These preferred units are redeemable on or after September 3, 2004 for cash at a redemption price equal to the holder’s capital account. The holder of the Series C preferred units has the right to exchange these preferred units for shares of Summit’s Series C preferred stock on a one-for-one basis, subject to adjustment: (a) on or after September 3, 2009, (b) if full quarterly distributions are not made for six quarters, (c) upon the occurrence of specified events related to our treatment or the treatment of the preferred units for federal income tax purposes, or (d) if the holdings in the Operating Partnership of the Series C unitholder exceed 18% of the total profits of or capital interest in the Operating Partnership for a taxable year. Distributions on the Series C preferred units are cumulative from the date of original issuance and are payable quarterly at the rate of 8.75% per year of the $25.00 original capital contribution. We made distributions to the holder of the Series C preferred units in the aggregate amount of $2.4 million during each of the six months ended June 30, 2004 and 2003. 

Derivative Financial Instruments 

WeOur arecapital exposedstructure toincludes capitalthe marketuse riskof variable rate and fixed rate debt and, suchtherefore, aswe are exposed to the impact of changes in interest rates. ToWe managegenerally therefinance volatilitymaturing relatingdebt toinstruments at then-existing market interest raterates riskand terms which may be more or less favorable than the interest rates and terms of the maturing debt. While we have historically had limited involvement with derivative financial instruments, we may enterutilize intosuch instruments in certain situations to hedge interest rate hedgingexposure arrangementsby frommodifying timethe tointerest timerate characteristics of related balance sheet instruments and prospective financing transactions. We generally do not utilize derivative financial instruments for trading or speculative purposes. 

OnWe Juneare 14,party 2002,to we entered into an interest rate swap with a notional amount of $50.0 million, relating to $50.0 million of 7.20% fixed rate notes issued under our medium-term note ("MTN") program. Under the interest rate swap agreement, through the maturity date of August 15, 2007, (a) we have agreed to pay to the counterparty the interest on a $50.0 million notional amount at a floating interest rate of three-month LIBOR plus 241.75 basis points, and (b) the counterparty has agreed to pay to us the interest on the same notional amount at the fixed rate of the underlying debt obligation. The floating rate as of SeptemberJune 30, 20032004 was 3.54756675%. The fair value of the interest rate swap was an asset of $32.87 million as of SeptemberJune 30, 20032004. The swap has been designated as a fair value hedge of the underlying fixed rate debt obligation and has been recorded in "Other assets" in ourthe consolidatedaccompanying balance sheets. We assume no ineffectiveness as the interest rate swap meets the short-cut method conditions required under SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," for fair value hedges of debt instruments. Accordingly, no gains or losses were recorded in income relative to our underlying debt and interest rate swap. 

32Contractual Obligations 

CommonA Stocksummary Repurchaseof Programour future contractual obligations related to long-term debt, non-cancelable operating leases and other obligations as of June 30, 2004 is as follows (in thousands): 

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

	Payments Due by Period

	2004		2005-2006		2007-2008		Thereafter		Total

Long-term debt principal payments and maturities	$	50,940	$	71,017	$	380,381	$	311,333	$	813,671
Standby letters of credit (1)		6,253		1,567		-		-		7,820
Development expenditures (2)		37,137		57,667		-		-		94,804
Operating lease commitments (3)		100		314		295		212		921
Employment agreement payments (4) (5)		285		1,140		1,140		1,200		3,765

Total	$	94,715	$	131,705	$	381,816	$	312,745	$	920,981

	Number		Value		Average Price
(1)	As collateral for performance on contracts and as credit guarantees to banks and insurers, we were contingently liable under standby letters of credit in the aggregate amount of $7.8 million as of June 30, 2004.
	of Shares		of Shares		of Shares
(2)	The estimated cost to complete the four development projects currently under construction was $94.8 million as of June 30, 2004. Anticipated construction completion dates of the projects range from the fourth quarter of 2004 to the fourth quarter of 2006.
	Repurchased		Repurchased		Repurchased
(3)	Includes operating leases related to rental of office space.
Year ended December 31, 2000		279,400	$	5,533	$	19.80
Year ended December 31, 2001		8,800		197		22.39
Year ended December 31, 2002		151,300		2,666		17.62
Nine months ended September 30, 2003		809,800		15,193		18.76
Total as of September 30, 2003		1,249,300	$	23,589	$	18.88

~~Summit had $32.4 million remaining for authorized repurchases under the program as of September 30, 2003.~~ 28

~~Commitments~~(4) Summit has employment agreements with two of its former executive officers, both of whom resigned from such executive positions, but who remain as employees and ~~Contingencies~~have agreed to provide various services to Summit from time to time through December 31, 2011. Each employment agreement requires that Summit pay to the former officers a base salary aggregating up to $2.1 million over the period from July 1, 2001 to December 31, 2011 (beginning with calendar year 2002, up to $200,000 on an annual basis). Each employment agreement also requires that Summit provide participation in its life insurance plan as well as office space, information systems support and administrative support for the remainder of each employee’s life, and participation in its health and dental insurance plans until the last to die of the employee or such employee’s spouse. Either party can terminate the employment agreements effective 20 business days after written notice is given. The full base salary amount due shall be payable through 2011 whether or not the agreements are terminated earlier in accordance with their terms. Summit has amended the employment agreements, effective July 1, 2004. The amendments provide for annual payments by Summit to the former executives in lieu of providing such office space, information systems support and administrative support. The annual payments are $100,000 for one of the former executives and $70,000 for the other former executive and each are subject to a yearly increase based on the Consumer Price Index. These amounts represent what we have determined to be the fair market value of such services. In the table above, we have assumed annual payments of $170,000 per executive for years 2004 through 2008. Amounts for these annual payments are not included under "Thereafter" and "Total" because the amount of payments depends on the lifespan of the executive and is therefore indeterminable at this time.

A summary of our future contractual obligations related to long-term debt, non-cancelable operating leases and other obligations as of September 30, 2003 is as follows (in thousands):

	Payments Due by Period
	2003		2004-2005		2006-2007		Thereafter		Total
Long-term debt principal payments and maturities	$	47,796	$	140,217	$	118,732	$	338,744	$	645,489
Standby letters of credit (1)		2,975		4,221		-		-		7,196
Development expenditures (2)		21,834		19,029		-		-		40,863
Purchase obligations (3)		5,300		-		-		-		5,300
Operating lease commitments (4)		59		374		326		326		1,085
Employment agreement payments (5)		100		800		800		1,600		3,300
Total	$	78,064	$	164,641	$	119,858	$	340,670	$	703,233

(1)		As collateral for performance on contracts and as credit guarantees to banks and insurers, we were contingently liable under standby letters of credit in the aggregate amount of $7.2 million as of September 30, 2003.
(2)		The estimated cost to complete the four development projects currently under construction was $40.9 million as of September 30, 2003. Anticipated construction completion dates of the projects range from the second quarter of 2004 to the fourth quarter of 2004.
(3)		During 2002, we completed the development of Summit Brookwood, a 359-unit apartment community located in Atlanta, Georgia. As of September 30, 2003, we are the lessee under a land lease related to one parcel of land on which Summit Brookwood was constructed. We were previously the lessee under two parcels of land related to Summit Brookwood; however, we closed on the purchase of one parcel of land for $5.3 million on June 20, 2003, leaving $5.3 million remaining on the total $10.6 million purchase commitment, which we expect to finalize in December 2003 using cash as consideration.
(4)		Includes operating leases related to rental of office space.
(5)		Summit has employment agreements with two of its former executive officers, both of whom resigned from such executive positions, but who remain as employees and have agreed to provide various services to Summit from time to time through December 31, 2011. Each employment agreement requires that Summit pay to the former officers a base salary aggregating up to $2.1 million over the period from July 1, 2001 to December 31, 2011 (beginning with calendar year 2002, up to $200,000 on an annual basis). Each employment agreement also requires that Summit provide participation in our life insurance plan, office space, information systems support and administrative support for the remainder of each employee’s life, and participation in Summit’s health and dental insurance plans until the last to die of the employee or such employee’s spouse. Either party can terminate the employment agreements, effective 20 business days after written notice is given. The full base salary amount due shall be payable through 2011 whether or not the agreements are terminated earlier in accordance with their terms.

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

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

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

Subsequent to June 30, 2004, we executed separate contracts for the purchase of three communities for an aggregate purchase price of $140.0 million. We expect that these communities will be acquired during the third quarter of 2004 and expect to fund these acquisitions primarily using proceeds from community sales during that period. 


	29

Funds from Operations 

Funds from Operations ("FFO"), as defined by the National Association of Real Estate Investment Trusts ("NAREIT"), represents net income (loss) excluding gains or losses from sales of property and extraordinary items, plus depreciation and amortization of real estate assets, and after adjustments for unconsolidated partnerships and joint ventures, all determined on a consistent basis in accordance with GAAP. Effective January 1, 2003, we no longer add back impairment losses when calculating FFO pursuant to NAREIT’s clarified FFO definition. Debt extinguishment costs which are recorded in discontinued operations because they were incurred directly as a result of the sale of a community and included in discontinued operations are not specifically addressed by the NAREIT definition. Because of the limitations of the NAREIT FFO definition, we have made an interpretation in applying the definition to maintain consistent treatment with previous years’' results. We include such debt extinguishment costs as a component of the community’'s total gain or loss and, therefore, exclude them in the calculation of FFO. These costs were $2.5 million for the three months ended September 30, 2003 and $4.0 million for the nine months ended September 30, 2003. We believe that this interpretation is consistent with NAREIT’'s definition. Our methodology for computing FFO may differ from the methodologies utilized by other real estate companies and, accordingly, may not be comparable to other real estate companies. 

Our methodology for computing FFO shouldmay notdiffer befrom consideredthe asmethodologies anutilized alternativeby toother netreal incomeestate (determinedcompanies inand, accordanceaccordingly, withmay GAAP)not asbe ancomparable indicationto ofother financialreal performanceestate orcompanies. toFFO cashshould flowsnot frombe operatingconsidered activitiesas an alternative to net income (determined in accordance with GAAP) as aan measureindication of liquidityfinancial performance, nor is it indicative of funds available to fund our cash needs, including our ability to make dividend or distribution payments. We believe that FFO is helpful to investors as a supplemental 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 our ability to incur and service debt and to make capital expenditures. TheFunds denominatorfrom forOperations netare incomecalculated peras sharefollows is(dollars weightedin averagethousands, sharesexcept outstandingper andshare theamounts). The denominator for FFO per share is diluted weighted average shares and units outstanding. 

	Three Months Ended June 30,						Six Months Ended June 30,

	2004			2003			2004			2003

Income available to common unitholders	$	13,467		$	3,287		$	16,015		$	9,152
Gain on sale of real estate assets		(9,993	)		(3,122	)		(10,040	)		(6,258	)
Loss on early extinguishment of debt		-			1,508			-			1,508
Depreciation:
Real estate assets		10,878			10,269			22,058			19,844
Real estate joint venture		190			190			379			379

Funds from Operations	$	14,542		$	12,132		$	28,412		$	24,625


Income available to common unitholders - diluted	$	0.38		$	0.11		$	0.46		$	0.30

Funds from operations per common unit - diluted	$	0.42		$	0.40		$	0.81		$	0.80


Recurring capital expenditures (1)	$	1,762		$	1,781		$	3,091		$	2,557

Non-recurring capital expenditures (2)	$	779		$	932		$	1,247		$	1,141


Weighted average units outstanding - basic		34,809,293			30,436,755			34,800,676			30,595,312

Weighted average units outstanding - diluted		35,031,815			30,531,635			35,024,708			30,656,175

FFO(1) Recurring forcapital theexpenditures threeconsist andprimarily nineof monthsexterior endedpainting, Septembernew 30appliances, 2003vinyl andflooring, 2002blinds, is calculated as follows (dollars in thousandstile, exceptwallpaper perand sharecarpet. data): 

	Three Months Ended September 30,						Nine Months Ended September 30,
	2003			2002			2003			2002
Income (loss) available to common unitholders	$	(1,995	)	$	26,918		$	7,157		$	48,532
Gain on sale of real estate assets		(2,119	)		(16,900	)		(8,377	)		(26,530	)
Gain on sale of real estate assets – joint ventures		-			(5,423	)		-			(5,423	)
Loss on early extinguishment of debt		2,510			-			4,018			-
Depreciation and amortization:
Real estate assets		9,800			9,916			29,644			29,376
Real estate joint ventures		193			306			572			922
Funds from Operations	$	8,389		$	14,817		$	33,014		$	46,877
Net income per unit – diluted	$	0.13		$	0.96		$	0.63		$	1.86
Funds from Operations per unit – diluted	$	0.27		$	0.48		$	1.08		$	1.51
Recurring capital expenditures (1)	$	2,405		$	1,248		$	4,875		$	3,159
Non-recurring capital expenditures (2)	$	725		$	424		$	1,749		$	1,056
Weighted average shares and units outstanding - basic		30,498,918			31,047,380			30,562,828			30,873,231
Weighted average shares and units outstanding - diluted		30,498,918			31,178,281			30,562,828			31,097,274

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

(1)  RecurringForward-Looking capitalStatements expenditures are expected to be funded from operations and consist primarily of floor coverings, furniture, appliances and equipment and exterior paint and carpentry. 

(2)  NonThis report contains forward-recurringlooking capitalstatements expenditureswithin consistthe primarilymeaning of improvementsSection such27A of the Securities Act of 1933, as newamended, garagesand Section 21E of the Securities Exchange Act of 1934, wateras submetersamended. You can identify forward-looking statements by the use of the words "believe," gated"expect," security"anticipate," access"intend," "estimate," "may," "assume" and improvementsother madesimilar inexpressions conjunctionwhich withpredict renovationsor ofindicate apartmentfuture homesevents and aretrends expectedand towhich bedo fundednot byrelate financingsolely activitiesto historical matters. In addition, information concerning the following are forward-looking statements: 

35the future operating performance of stabilized communities;
~~ITEM~~national 3.economic ~~QUANTITATIVE~~conditions ~~AND~~and ~~QUALITATIVE~~economic ~~DISCLOSURES~~conditions ~~ABOUT~~in ~~MARKET~~our ~~RISK~~ markets;
~~There~~the ~~have~~proposed ~~been~~development, noacquisition ~~material~~or ~~changes~~disposition ~~in our financial market risk since the filing~~ of ~~our Annual Report on Form 10-K for the year ended December 31, 2002.~~ communities;
~~ITEM~~anticipated 4.construction ~~CONTROLS~~commencement, ~~AND~~completion, ~~PROCEDURES~~lease-up and stabilization dates; and
Asestimated ~~required~~development by Rule 13a-15 under the Securities Exchange Act of 1934, we carried out an evaluation under the supervision and with the participation of our management, including Summit’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this reportcosts. Based upon that evaluation, Summit’s Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are reasonably effective to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed and summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. In connection with the rules regarding disclosure controls and procedures, we intend to continue to review and document our disclosure controls and procedures, and may from time to time make changes aimed at enhancing their effectiveness and to ensure that our systems evolve with our business. There was no change in our internal control over financial reporting during the quarter ended September 30, 2003 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

3630

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

economic conditions generally and the real estate market specifically, including changes in occupancy rates, market rents and rental rate concessions and the failure of national and local economic conditions to rebound in a timely manner;
changes in job growth, household formation and population growth in our markets;
uncertainties associated with our development activities, including the failure to obtain zoning and other approvals, actual costs exceeding our budgets, construction material defects and increases in construction costs;
the failure of investments to yield expected results;
the failure to sell communities on favorable terms, in a timely manner or at all;
the failure to locate favorable investment opportunities in our markets;
construction delays due to the unavailability of materials, weather conditions or other delays;
potential environmental liabilities and related property damages, costs of investigation and remediation, and liability to third parties;
competition, which could limit our ability to secure attractive investment opportunities, lease apartment homes, or increase or maintain rents;
supply and demand for apartment communities in our current market areas;
availability and cost of financing and access to cost-effective capital;
the inability to refinance existing indebtedness or to refinance existing indebtedness on favorable terms;
changes in interest rates;
changes in our debt ratings which could increase our cost of capital or impede our ability to raise debt financing;
legislative and regulatory changes, including changes to laws governing the taxation of REITs;
changes in GAAP, or policies and guidelines applicable to REITs; and
those factors discussed below and in the sections entitled "Results of Operations for the Three and Six Months Ended June 30, 2004 and 2003" on page 19 of this report, "Operating Performance of Our Same-Property Communities" beginning on page 21 of this report, "Factors Affecting the Performance of Our Stabilized Development Communities" beginning on page 22 of this report, "Operating Performance of Our Communities in Lease-Up" beginning on page 22 of this report and "Contractual Obligations" beginning on page 28 of this report.

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

Item 3. Quantitative and Qualitative Disclosures about Market Risk 

There have been no material changes in our financial market risk since the filing of our Annual Report on Form 10-K for the year ended December 31, 2003. 

Item 4. Controls and Procedures 

(a)    Evaluation of Disclosure Controls and Procedures . As required by Rule 13a-15 under the Securities Exchange Act of 1934, as of the end of the period covered by this report, we carried out an evaluation under the supervision and with the participation of Summit’s management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. We continue to review and document our disclosure controls and procedures, including our relevant internal control over financial reporting, and may from time to time make changes aimed at enhancing their effectiveness and to ensure that our systems evolve with our business. 

During the fourth quarter of 2003, we implemented additional review procedures over the financial reporting process in order to enhance controls around presentation of financial information including classification of cash flows.  Management believes these enhancements to internal controls are adequate to prevent recurrence of the matter discussed in Note 13 to this Form 10-Q. 

(b)    Changes in Internal Control Over Financial Reporting . There was no change in our internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. 


	31

PART II. OTHER INFORMATION 

ITEMItem 1. LEGALLegal PROCEEDINGSProceedings 

On May 25, 2001, through our joint venture SZF, LLC, a Delaware limited liability company in which we owned 29.78% until July 3, 2003, on which date we purchased our joint venture partner’s 70.22% interest, we entered into an agreement with Brickell View, L.L.C. ("Brickell View"), a Florida limited liability company, and certain of its affiliates relating to the formation of Coral Way, LLC, a Delaware limited liability company, to develop a new community in Miami, Florida.   Brickell View agreed to be the developer of that community and certain of its affiliates signed guarantees obligating them to pay certain costs relating to the development (see Note 2 to our unaudited consolidated financial statements, which accompany this report). On August 12, 2003, we received notice of a suit filed by Brickell View and certain of its affiliates against SZF, LLC and certain Summit entities, including us, Summit and Summit Management Company.   The suit, was originally filed in the Miami- Dade CountyCircuit Court, but has been removed to the U.S. District Court for the Southern District of Florida,. The suit relates to the business agreement among the parties in connection with the development and construction of the community by Coral Way.   Brickell View and its affiliates allege breach of contract, breach of implied covenant of good faith and fair dealing, breach of fiduciary duties and constructive fraud on the part of SZF, LLC and constructive fraud on the part of the Summit entities, and seek both a declaratory judgment that the guarantee agreements have been constructively terminated and unspecified monetary damages.   We intend to enforce our rights under the joint venture agreements. Although we may determine to terminate the development agreement based on Brickell View'’s failure to perform its obligations in accordance with the development agreement, we do not believe that there is any basis for allowing Brickell View or its affiliates to be released from their obligations under the development agreement or the guarantees.   We believe that the allegations made by Brickell View and its affiliates are not supported by the facts and we intend to vigorously defend against this suit. On December 19, 2003, we received notice of a demand for arbitration asserted by Bermello, Ajamil & Partners, Inc. against Coral Way, LLC for unpaid architectural fees. In this demand, Bermello, Ajamil & Partners, Inc. allege that they are entitled to an increased architectural fee as a result of an increase in the cost of the project. We believe that the allegations made by Bermello, Ajamil & Partners, Inc. are not supported by the facts, and we will vigorously defend against this claim. Additionally, we have asserted a cross-claim against Bermello, Ajamil & Partners, Inc. for damages related to the cost to correct certain structural and other design defects. 

On May 6, 2003, we purchased certain assets of Brickell Grand, Inc. ("Brickell Grand"), including the community known as Summit Brickell (see Note 3 to our unaudited consolidated financial statements, which accompany this report). At the time of purchase, Summit Brickell was subject to a $4.1 million claim of construction lien filed by the general contractor, Bovis Lend Lease, Inc. ("Bovis"), due to Brickell Grand’s alleged failure to pay the full amount of the construction costs. Bovis sought to enforce this claim of lien against Brickell Grand in a suit filed onan October 18, 2002 in Miami-Dade CountyCircuit Court, Florida. We have met with Bovis to discuss the validity of its claim and have requested access to its backup and documentation; however, Bovis, to date, has failed to honor this request. In mid-2003, litigation with Bovis was temporarily stayed pending mediation. In September 2003, Bovis filed an amended complaint seeking to enforce an increased claim of lien of $4.6 million. Mediation with Bovis ended unsuccessfully in November 2003. andThe welitigation anticipateis thatproceeding litigationin willthe goMiami-Dade forwardCircuit immediatelyCourt. InAs mid-2003,the twocurrent subcontractorsowner of BovisSummit Brickell, Commercialwhich Interiorproperty Contractorsis Corp.subject ("Commercialto Interior")the andclaim RCof Aluminum Industrieslien, Inc.we ("RCare Aluminum"),vigorously alsodefending filedagainst separatethese suitsclaims inof Miami-Dadelien Countyand Court,related Floridalitigation. againstAs Brickella Grandresult andof Bovis,several amongitems otherclaimed namedby parties,Bovis toin enforcetheir claimsamended claim of construction lien, inwe theare aggregateasserting amounta ofcounterclaim approximatelyfor $300,000a filedfraudulent due to the defendantsmechanic’s allegedlien, failureas towell payas thecounterclaims fullfor amountbreach of thecontract constructionand costs.breach Aof motionwarranties. toIn dismissearly filed2004, bythree Brickellsubcontractors Grandof isBovis, currentlyGulf pendingPlumbing, inInc., theBig CommercialBear InteriorPlastering, litigationInc., and Kone, to dateInc., nofiled mediationseparate orsuits arbitrationin hasMiami-Dade beenCircuit scheduled.Court Theagainst RCBrickell AluminumGrand, litigationBovis, hasSummit beenProperties temporarilyPartnership, stayedL.P., pendingand mediationother schedulednamed forparties Decemberto 8,enforce 2003.claims Asof theconstruction currentlien ownerand/or ofclaims Summitagainst Brickell,the whichcontractor’s propertybond isin subjectan toaggregate theamount claims of lienapproximately $600,000 wefiled havedue takento stepsthe defendants’ alleged failure to defendpay againstthe thesefull claimsamount of lienthe andconstruction related litigationcost. WeThese haveclaims severalshould potentialbe counterclaimssubject to challengedismissal andbased defendon againstthe thesecontractor’s suitsbond, whichas wewell intendas toother pursuedefenses, and we are vigorously defending against these claims. 

~~ITEM 2. CHANGES IN SECURITIES~~ 32

DuringItem the2. threeChanges months ended September 30, 2003, we issued common 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: 

OnDuring Augustthe 1,three 2003months andended SeptemberJune 930, 20032004, Summitwe issued an aggregate of 148,372 shares of common stockunits pursuantin toprivate itsplacements dividendin reinvestmentreliance andon direct stock purchase plan. Summit contributed the proceedsexemption ($3.0from millionregistration inunder theSection aggregate4(2) of thesethe salesSecurities toAct us in considerationthe ofamounts anand aggregatefor ofthe 148,372consideration sharesset offorth commonbelow: units. 

On August 15, 2003, Summit issued 1,000 shares of common stock pursuant to its 1994 Stock Option and Incentive Plan. Summit contributed the proceeds of $21,000 to us in consideration of an aggregate of 1,000 common units.

A.	On May 25, 2004, Summit issued 27 shares of common stock pursuant to its 1994 Stock Option and Incentive Plan. Summit contributed the proceeds of $610 to us in consideration of 27 common units.
B.	On April 1, 2004, May 3, 2004, May 14, 2004 and June 1, 2004, Summit issued an aggregate of 2,092 shares of common stock pursuant to its dividend reinvestment and stock purchase plan. Summit contributed the aggregate of $47,000 to us in consideration of an aggregate of 2,092 common units.

OnItem July 2, 2003, July 9, 2003, August 14, 2003, August 19, 2003, August 28, 2003, September 2, 2003, September 3, 2003 and September 11, 2003, Summit issued an aggregate of 40,633 shares of common stock pursuant to the exercise of stock options under its 1994 Stock Option and Incentive Plan. SummitDefaults contributedUpon theSenior proceedsSecurities ($704,000 in the aggregate) of these option exercises to us in consideration of an aggregate of 36,300 shares of common units. 

On September 25, 2003, Summit issued 2.3 million shares of common stock in a direct placement to certain advisory clients of Cohen & Steers Capital Management, Inc. Summit contributed the proceeds ($50.1 million) of this sale to us in consideration of an aggregate of 2.3 million common units.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

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

None 

ITEMItem 54. OTHERSubmission INFORMATIONof Matters to a Vote of Security Holders 

None 

ITEMItem 65. EXHIBITSOther ANDInformation REPORTS ON FORM 8-K 

(a)None Exhibits 

10.1		Credit Agreement dated July 28, 2003 by and among the Operating partnership, Summit Sweetwater, LLC, Summit Shiloh, LLC, Summit Grandview, LLC, Summit Portofino Place, LTD., and L.J. Melody & Company (incorporated by reference to Exhibit 10.1 to the Operating Partnership’s quarterly report on Form 10-Q for the quarterly period ended June 30, 2003, File No. 0-22411)
* 12.1		Statement regarding calculation of Ratio of Earnings to Fixed Charges for the nine months ended September 30, 2003.
* 31.1		Certification by Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
* 31.2		Certification by Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
**32.1		Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
**32.2		Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.1		Purchase Agreement dated as of September 18, 2003 by and among the Company, Cohen & Steers Capital Management, Inc. and certain Purchasers named therein (incorporated by reference to Summit’s Current Report on Form 8-K filed on September 25, 2003, File No. 001-12792).

Item 6. Exhibits and Reports on Form 8-K 

* Filed herewith

(a)	Exhibits

*10.1	First Amendment to Credit Agreement and Joinder to Loan Documents.
10.8.1	Employment Agreement dated February 15, 1999, by and among William F. Paulsen, Summit and Summit Management Company, as restated on April 3, 2001 and June 25, 2004 (incorporated by reference to Exhibit 10.8.1 to Summit’s quarterly report on Form 10-Q for the quarterly period ended June 30, 2004, File No. 1-12792).
10.8.2	Employment Agreement dated February 15, 1999, by and among William B. McGuire, Jr., Summit and Summit Management Company, as restated on August 24, 2001 and June 10, 2004 (incorporated by reference to Exhibit 10.8.2 to Summit’s quarterly report on Form 10-Q for the quarterly period ended June 30, 2004, File No. 1-12792).
10.8.3	Retention Bonus Agreement dated May 26, 2004, between Summit and Michael L. Schwarz (incorporated by reference to Exhibit 10.8.3 to Summit’s quarterly report on Form 10-Q for the quarterly period ended June 30, 2004, File No. 1-12792).
10.8.4	Retention Bonus Agreement dated May 26, 2004, between Summit and Gregg D. Adzema (incorporated by reference to Exhibit 10.8.4 to Summit’s quarterly report on Form 10-Q for the quarterly period ended June 30, 2004, File No. 1-12792).
10.8.5	Retention Bonus Agreement dated May 26, 2004, between Summit and Steven R. LeBlanc (incorporated by reference to Exhibit 10.8.5 to Summit’s quarterly report on Form 10-Q for the quarterly period ended June 30, 2004, File No. 1-12792).
* 12.1	Statement regarding calculation of Ratio of Earnings to Fixed Charges for the six months ended June 30, 2004.
* 31.1	Certification by Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
* 31.2	Certification by Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
**32.1	Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
**32.2	Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*	Filed herewith.
**	Furnished herewith. This certification shall not be deemed "filed" for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall it be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act.

(b)	Reports on Form 8-K

	On May 7, 2004, we filed a Current Report on Form 8-K in connection with providing additional information regarding the tax fees that we paid to our independent auditors, Deloitte & Touche, LLP.

** Furnished herewith. This certification shall not be deemed "filed" for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall it be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act. 33

(b) Reports on Form 8-K

On July 25, 2003, we furnished a Current Report on Form 8-K in connection with a press release announcing Summit’s financial results for the second quarter of 2003.

On September 22, 2003, we furnished a Current Report on Form 8-K in connection with the redemption of all of our 3.4 million 8.95% Series B Cumulative Redeemable Perpetual Preferred Units.

On September 25, 2003, we furnished a Current Report on Form 8-K in connection with the sale of 2.3 million shares of Summit’s common stock.

SIGNATURES 

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

	SUMMIT PROPERTIES PARTNERSHIP, L.P.
	By: Summit Properties Inc., its General Partner
November 13, 2003	/S/ Steven R. LeBlanc
August 9, 2004	/S/ STEVEN R. L E BLANC
	Steven R. LeBlanc,
	Steven R. LeBlanc
	President and Chief Executive Officer
November 13, 2003	/S/ Gregg D. Adzema
August 9, 2004	/S/ GREGG D. ADZEMA
	Gregg D. Adzema,
	Gregg D. Adzema
	Executive Vice President and Chief Financial Officer


Net cash provided by operating activities, as previously reported	$	28,876
Revisions related to certain real estate cash outflows		5,703

Net cash provided by operating activities, after revisions related to certain real estate cash outflows		34,579
Consolidation of the Management Company		339

Net cash provided by operating activities, as revised	$	34,918


Net cash used in investing activities, as previously reported	$	(20,966	)
Revisions related to certain real estate cash outflows		(5,703	)

Net cash used in investing activities, after revisions related to certain real estate cash outflows		(26,669	)
Consolidation of the Management Company		(36	)

Net cash used in investing activities, as revised	$	(26,705	)

Filing Compare · Camden Summit Partnership, L.P.