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UNITED STATES
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 JUNE 30, 1998
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)
<TABLE>
<S> <C>
DELAWARE 56-1857809
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
</TABLE>
212 S. TRYON STREET, SUITE 500, CHARLOTTE, NORTH CAROLINA 28281
(Address of principal executive offices -- zip code)
(704) 334-9905
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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SUMMIT PROPERTIES PARTNERSHIP, L.P.
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C> <C>
PART I FINANCIAL INFORMATION
Item 1 Financial Statements
Consolidated Balance Sheets as of June 30, 1998 and December
31, 1997 (Unaudited)........................................ 3
Consolidated Statements of Earnings for the three and six
months ended June 30, 1998 and 1997 (Unaudited)............. 4
Consolidated Statement of Partners' Equity for the six
months ended June 30, 1998 (Unaudited)...................... 5
Consolidated Statements of Cash Flows for the six months
ended June 30, 1998 and 1997 (Unaudited).................... 6
Notes to Financial Statements............................... 7
Item 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations................................... 11
PART II OTHER INFORMATION
Item 2 Changes in Securities....................................... 23
Item 6 Exhibits Index and Reports on Form 8-K...................... 23
SIGNATURES.......................................................... 24
</TABLE>
2
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SUMMIT PROPERTIES PARTNERSHIP, L.P.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
-------- ------------
<S> <C> <C>
ASSETS
Real estate assets:
Land and land improvements................................ $141,143 $133,316
Buildings and improvements................................ 710,308 643,812
Furniture, fixtures and equipment......................... 58,214 53,573
-------- --------
909,665 830,701
Less: accumulated depreciation............................ (114,258) (105,979)
-------- --------
Operating real estate assets...................... 795,407 724,722
Construction in progress.................................. 102,086 82,332
-------- --------
Net real estate assets............................ 897,493 807,054
Cash and cash equivalents................................... 2,387 3,563
Restricted cash............................................. 9,597 3,180
Deferred financing costs, net............................... 7,490 7,378
Other assets................................................ 6,229 4,520
-------- --------
Total assets................................................ $923,196 $825,695
======== ========
LIABILITIES AND PARTNERS' EQUITY
Liabilities:
Notes payable............................................. $539,201 $474,673
Accrued interest payable.................................. 4,726 4,916
Accounts payable and accrued expenses..................... 23,964 19,945
Distributions payable..................................... 11,793 11,030
Security deposits and prepaid rents....................... 4,003 3,561
-------- --------
Total liabilities................................. 583,687 514,125
-------- --------
Commitments and contingencies
Partners' equity:
Partnership units issued and outstanding 28,938,737 and
27,438,400
General partner -- outstanding 289,377 and 274,384..... 4,104 3,847
Limited partners -- outstanding 28,649,360 and
27,164,016............................................ 335,405 307,723
-------- --------
Total partners' equity............................ 339,509 311,570
-------- --------
Total liabilities and partners' equity...................... $923,196 $825,695
======== ========
</TABLE>
See notes to consolidated financial statements (unaudited).
3
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SUMMIT PROPERTIES PARTNERSHIP, L.P.
CONSOLIDATED STATEMENTS OF EARNINGS
(DOLLARS IN THOUSANDS EXCEPT FOR PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------- -----------------------
1998 1997 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues:
Rental........................................ $ 32,423 $ 26,328 $ 63,796 $ 52,108
Other property income......................... 1,894 1,577 3,589 2,898
Interest...................................... 180 132 278 208
Other income.................................. 74 66 147 138
---------- ---------- ---------- ----------
Total revenues........................ 34,571 28,103 67,810 55,352
---------- ---------- ---------- ----------
Expenses:
Property operating and maintenance:
Personnel.................................. 2,681 2,306 5,110 4,472
Advertising and promotion.................. 595 442 1,106 822
Utilities.................................. 1,450 1,144 2,883 2,311
Building repairs and maintenance........... 2,408 2,113 4,478 4,056
Real estate taxes and insurance............ 3,401 2,843 6,870 5,538
Depreciation............................... 6,861 5,430 13,401 10,611
Property supervision....................... 842 678 1,641 1,340
Other operating expenses................... 915 758 1,840 1,559
---------- ---------- ---------- ----------
19,153 15,714 37,329 30,709
Interest...................................... 7,661 5,042 14,959 9,592
General and administrative.................... 735 596 1,536 1,242
Loss (income) in equity investments........... (115) (105) (43) 25
---------- ---------- ---------- ----------
Total expenses........................ 27,434 21,247 53,781 41,568
---------- ---------- ---------- ----------
Income before gain on sale of real estate assets
and extraordinary items....................... 7,137 6,856 14,029 13,784
Gain on real estate assets...................... 8,731 4,366 8,731 4,366
---------- ---------- ---------- ----------
Income before extraordinary items............... 15,868 11,222 22,760 18,150
Extraordinary items............................. -- -- (185) --
---------- ---------- ---------- ----------
Net income...................................... 15,868 11,222 22,575 18,150
Net income allocated to general partner......... (159) (112) (226) (181)
---------- ---------- ---------- ----------
Net income allocated to limited partners........ $ 15,709 $ 11,110 $ 22,349 $ 17,969
========== ========== ========== ==========
Per unit data:
Income before extraordinary items -- basic and
diluted.................................... $ 0.55 $ 0.41 $ 0.80 $ 0.67
========== ========== ========== ==========
Net income -- basic and diluted............... $ 0.55 $ 0.41 $ 0.79 $ 0.67
========== ========== ========== ==========
Distributions declared........................ $ 0.41 $ 0.40 $ 0.82 $ 0.80
========== ========== ========== ==========
Weighted average units -- basic............... 28,785,476 27,302,798 28,449,861 27,161,146
========== ========== ========== ==========
Weighted average units -- diluted............. 28,810,928 27,333,968 28,478,149 27,192,559
========== ========== ========== ==========
</TABLE>
See notes to consolidated financial statements (unaudited).
4
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SUMMIT PROPERTIES PARTNERSHIP, L.P.
CONSOLIDATED STATEMENT OF PARTNERS' EQUITY
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
GENERAL LIMITED
PARTNER PARTNER TOTAL
------- -------- --------
<S> <C> <C> <C>
Balance, January 1, 1998.................................... $3,847 $307,723 $311,570
Distributions............................................. (235) (23,233) (23,468)
Contributions from Summit Properties related to:
Proceeds from dividend reinvestment and stock purchase
plans................................................ 239 23,629 23,868
Exercise of stock options.............................. 50 449 499
Amortization of restricted stock grants................ 20 180 200
Issuance of units related to property acquisition......... 52 5,161 5,213
Issuance of employee notes receivable..................... (95) (853) (948)
Net income................................................ 226 22,349 22,575
------ -------- --------
Balance, June 30, 1998...................................... $4,104 $335,405 $339,509
====== ======== ========
</TABLE>
See notes to consolidated financial statements (unaudited).
5
<PAGE> 6
SUMMIT PROPERTIES PARTNERSHIP, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-----------------
1998 1997
------- -------
<S> <C> <C>
Cash flows from operating activities:
Net income................................................ $22,575 $18,150
Adjustments to reconcile net income to net cash provided
by operating activities:
Extraordinary items.................................... 185 --
(Gain) loss on equity method investments............... (43) 25
Gain on sale of real estate assets..................... (8,731) (4,366)
Depreciation and amortization.......................... 14,097 11,130
Increase in restricted cash............................ (104) (660)
Increase in other assets............................... (1,494) (773)
Increase (decrease) in accrued interest payable........ (190) 526
Increase in accounts payable and accrued expenses...... 3,428 3,185
Increase in security deposits and prepaid rents........ 361 (56)
------- -------
Net cash provided by operating activities......... 30,084 27,161
------- -------
Cash flows from investing activities:
Construction of real estate assets, net of payables....... (56,921) (39,562)
Purchase of Communities................................... (48,930) (40,408)
Proceeds from sale of a Community......................... 17,619 --
Capitalized interest...................................... (2,628) (2,948)
Recurring capital expenditures............................ (2,761) (1,471)
Non-recurring capital expenditures, net of payables....... (1,487) (2,147)
------- -------
Net cash used in investing activities............. (95,108) (86,536)
------- -------
Cash flows from financing activities:
Net borrowings on line of credit.......................... 78,575 76,424
Repayments of mortgage debt............................... (14,060) (1,888)
Repayments of tax exempt bonds............................ (840) (836)
Distributions to unitholders.............................. (22,746) (21,199)
Increase in employee notes................................ (948) --
Contributions from Summit Properties related to:
Net proceeds from dividend reinvestment and stock
purchase plans........................................ 23,368 1,024
Proceeds from public offerings......................... -- 6,813
Exercise of stock options.............................. 499 718
------- -------
Net cash provided by financing activities......... 63,848 61,056
------- -------
Net increase (decrease) in cash and cash equivalents........ (1,176) 1,681
Cash and cash equivalents, beginning of period.............. 3,563 3,665
------- -------
Cash and cash equivalents, end of period.................... $ 2,387 $ 5,346
======= =======
Supplemental disclosure of cash flow information -- Cash
paid for interest, net of capitalized interest............ $14,637 $ 8,573
======= =======
</TABLE>
See notes to consolidated financial statements (unaudited).
6
<PAGE> 7
SUMMIT PROPERTIES PARTNERSHIP, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared by the
management of Summit Properties Partnership, L.P. (the "Operating Partnership")
in accordance with generally accepted accounting principles for interim
financial information and in conformity with the rules and regulations of the
Securities and Exchange Commission. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
(consisting only of normal recurring adjustments) considered necessary for a
fair presentation have been included. The results of operations for the six
months ended June 30, 1998 are not necessarily indicative of the results that
may be expected for the full year. These financial statements should be read in
conjunction with the Operating Partnership's December 31, 1997 audited financial
statements and notes thereto included in the Operating Partnership's Annual
Report on Form 10-K.
The Operating Partnership conducts the business of developing, acquiring and
managing multi-family apartment communities for Summit Properties Inc. ("Summit
Properties"). Summit Properties is the sole general partner and majority owner
of the Operating Partnership. Summit Properties is a self-administered and
self-managed equity real estate investment trust ("REIT").
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 128 "Earnings Per Share." This pronouncement
specifies the computation, presentation and disclosure requirements for earnings
per share. The new standard had no impact on the Operating Partnership's
financial statements as the "basic" and "diluted" earnings per unit disclosure
required by the pronouncement were the same as "primary" earnings per unit
previously reported. The only difference in "basic" and "diluted" weighted
average units is the dilutive effect of Summit Properties' stock options
outstanding (25,452 and 31,170 units added to weighted units outstanding for the
three months ended June 30, 1998 and 1997, respectively, and 28,288 and 31,413
units added to weighted units outstanding for the six months ended June 30, 1998
and 1997, respectively).
2. ACQUISITIONS, DISPOSITIONS AND COMMITMENTS
The Operating Partnership completed the acquisition of two communities in 1998
located in Atlanta, Georgia: Summit St. Clair, purchased effective March 1,
1998, and Summit Club at Dunwoody, purchased on May 22, 1998 (the "1998
Acquisitions"). The 1998 Acquisitions added a total of 660 apartment homes to
the Operating Partnership's portfolio at an aggregate purchase price of $54.5
million.
The 1998 Acquisitions were financed with the issuance of 259,871 units of
limited partnership interest ("Units") valued at $5.2 million. The balance of
the purchase price was paid in cash.
The following summary of selected unaudited pro forma results of operations
presents information as if the 1998 Acquisitions had occurred as of January 1,
1998. Pro forma information for the six months ended June 30, 1997 has not been
presented as the 1998 Acquisitions were under construction during that period
and had insignificant rental operations. The pro forma information for the six
months ended June 30, 1998 is
7
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SUMMIT PROPERTIES PARTNERSHIP, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
provided for informational purposes only and is not indicative of results that
would have occurred or which may occur in the future (dollars in thousands,
except per share amounts).
<TABLE>
<S> <C>
Pro forma information for the six months ended June 30,
1998:
Net revenues................................................ $ 69,631
==========
Income before gain on sale of real estate assets and
extraordinary items....................................... $ 13,900
==========
Net income.................................................. $ 22,446
==========
Net income per unit -- basic and diluted.................... $ 0.78
==========
Weighted average units...................................... 28,604,626
==========
</TABLE>
On May 18, 1998, the Operating Partnership sold a community in Brandon, Florida
formerly known as Summit Providence for net proceeds of $23.9 million. A gain on
the sale of $8.7 million was recognized. Proceeds from the sale were used to
partially fund the acquisition of Summit Club at Dunwoody.
On July 8, 1998, the Operating Partnership purchased Summit at Lenox (formerly
Lenox Forest), a 432-apartment community located in Atlanta, Georgia. The
purchase price was approximately $32.7 million. The acquisition was financed by
the assumption of $8.8 of mortgage debt with the balance paid in cash.
The Operating Partnership has eight development projects currently under
construction with a total estimated cost of $147.2 million. The estimated cost
to complete the projects is $69.0 million.
3. NOTES PAYABLE
Line of Credit
The Operating Partnership obtained a new syndicated unsecured line of credit
(the "Unsecured Credit Facility") in the amount of $175 million in March 1998
which replaced the existing $150 million credit facility. The Unsecured Credit
Facility provides funds for new development, acquisitions and general working
capital purposes. The Unsecured Credit Facility has a three year term with two
one-year extension options and will initially bear interest at LIBOR + 90 basis
points based upon the Operating Partnership's current credit rating of BBB- by
Standard & Poor's Rating Services and Baa3 by Moody's Investors Service. The
interest rate will be reduced in the event an upgrade of the Operating
Partnership's unsecured credit rating is obtained. The Unsecured Credit Facility
also provides a bid option sub-facility equal to a maximum of fifty percent of
the total facility ($87.5 million). This sub-facility provides Operating
Partnership with the option to place borrowings in a fixed LIBOR contract up to
180 days.
Mortgage Notes
The Operating Partnership has a commitment to refinance two mortgage loans which
have a $148.0 million balance at June 30, 1998. The existing loans mature in
February 2001 ($119.0 million at 5.88%) and December 2005 ($29.0 million at
7.71%). The refinancing will combine the two mortgage loans into one loan at an
interest rate equal to the weighted average interest rate of the two previous
mortgage loans (6.24%) with a February 2001 maturity. At the 2001 maturity, the
lender has committed to a new loan that will mature in the second quarter of
2008 with an interest rate of 6.76%.
Medium-Term Notes
The Operating Partnership has established a program for the sale of up to $95
million aggregate principal amount of Medium-Term Notes due nine months or more
from the date of issuance (the "MTN Program"). On July 28, 1998, the Operating
Partnership sold $30 million of notes under the MTN Program. The notes are
8
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SUMMIT PROPERTIES PARTNERSHIP, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
due on July 30, 2001 and bear interest at 6.75% per year. Proceeds from the
notes were used to reduce the Unsecured Credit Facility.
4. RESTRICTED STOCK
In the six months ended June 30, 1998 and 1997, Summit Properties granted 5,092
and 26,278 shares, respectively, of restricted stock to employees of the
Operating Partnership and subsidiaries under Summit Properties' 1994 Stock
Option and Incentive Plan. The market value of the restricted stock grants in
1998 and 1997 totaled $106,000 and $565,000, respectively. Unearned compensation
is being amortized to expense over the vesting period which ranges from three to
five years.
5. SUPPLEMENTAL CASH FLOW INFORMATION
Non-cash investing and financing activities for the six months ended June 30,
1998 and 1997 are as follows:
A. The Operating Partnership purchased the 1998 Acquisitions by issuing 259,871
Units, assuming certain liabilities and the payment of cash. The recording of
the purchase is summarized as follows (in thousands):
<TABLE>
<S> <C>
Fixed assets................................................ $ 54,465
Current liabilities assumed................................. (322)
Value of Units issued....................................... (5,213)
--------
Cash invested..................................... $ 48,930
========
</TABLE>
B. The Operating Partnership sold a community on May 18, 1998 for net proceeds
of approximately $23.9 million. The proceeds of the sale were put in escrow
in accordance with like-kind exchange rules and regulations. On May 22, 1998,
$17.6 million of the escrow was used to fund the acquisition of an apartment
community (see Note 2). The remaining $6.3 million escrow funds are shown in
the balance sheet caption "Restricted Cash".
C. In the six months ended June 30, 1997, the Operating Partnership purchased
three communities (Summit Mayfaire, Summit Portofino and Summit Sand Lake).
The Operating Partnership completed the purchase of the three Communities by
assuming debt, issuing 194,495 units, issuing 243,608 units to Summit
Properties in exchange for Summit Properties issuing 243,608 shares of Common
Stock, assuming certain liabilities and current assets, and the payment of
cash. The recording of the purchase is summarized as follows (in thousands):
<TABLE>
<S> <C>
Fixed assets................................................ $ 65,170
Other assets................................................ 30
Debt assumed................................................ (15,226)
Current liabilities assumed................................. (694)
Value of Units issued....................................... (3,939)
Value of Common Stock issued................................ (4,933)
--------
Cash invested..................................... $ 40,408
========
</TABLE>
D. The Operating Partnership accrued a dividend and distribution payable in the
amount of $11.8 million and $10.9 million at June 30, 1998 and 1997,
respectively.
E. Summit Properties issued 5,092 and 26,278 shares of restricted stock valued
at $106,000 and $565,000 during the six months ended June 30, 1998 and 1997,
respectively, to employees of the Operating Partnership and subsidiaries.
9
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SUMMIT PROPERTIES PARTNERSHIP, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
6. NOTES RECEIVABLE FROM EMPLOYEES
On September 8, 1997, the Board of Directors of Summit Properties approved a
Statement of Company Policy, which has subsequently been amended and restated by
the Board, on loans to executive officers and certain key employees relating to
purchases of Summit Properties' Common Stock (the "Loan Program"). Pursuant to
the Loan Program, Summit Properties may lend amounts to certain executive
officers of Summit Properties and certain key employees of the Operating
Partnership and subsidiaries for one or more of the following purposes: (i) to
finance the purchase of Common Stock (a) by certain executive officers on the
open market at the then-current market prices and (b) by other eligible
employees through Summit Properties' 1996 Non-Qualified Employee Stock Purchase
Plan; (ii) to finance an executive officer's or key employee's payment of the
exercise price of one or more stock options to purchase shares of Common Stock
granted to such employees under Summit Properties' 1994 Stock Option Plan; or
(iii) to finance the annual tax liability of certain executive officers related
to the vesting of shares of Common Stock which constitute a portion of a
restricted stock award granted to such employees under the 1994 Stock Option
Plan. The maximum aggregate amount Summit Properties may loan to an executive
officer is determined on a case-by-case basis by the Board of Directors or the
Compensation Committee thereof, and the maximum aggregate amount Summit
Properties may loan to a qualified employee is $100,000. Shares of Common Stock
which are the subject of a loan serve as collateral for the note until the note
has been paid in full. Each note bears interest at the applicable federal rate,
as established by the Internal Revenue Service in effect on the date of the
note. The notes are payable through the application to the outstanding loan
balance of all dividends and distributions related to the collateral stock,
first to interest, with the remainder, if any, to outstanding principal. Each
note becomes due and payable in full on the tenth anniversary of the respective
note. As of June 30, 1998, Summit Properties had issued loans in the net amount
of $948,000.
7. EXTRAORDINARY ITEMS
The extraordinary items in the six months ended June 30, 1998 resulted from the
write-off of deferred financing cost in conjunction with the replacement by the
Operating Partnership of its prior credit facility with the Unsecured Credit
Facility and prepayment penalties on four mortgage notes which were repaid
during the period.
10
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PART II. OTHER INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
This Form 10-Q contains certain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended (the "Securities Act"),
and Section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), including without limitation statements relating to the
operating performance of stabilized communities and to development activities of
the Operating Partnership. The Operating Partnership intends such
forward-looking statements to be covered by the safe harbor provisions for
forward-looking statements contained in the Private Securities Reform Act of
1995, and is including this statement for purposes of complying with these safe
harbor provisions. Forward-looking statements, which are based on certain
assumptions and describe future plans, strategies and expectations of the
Operating Partnership are generally identifiable by use of the words "believe,"
"expect," "intend," "anticipate," "estimate," "project" or similar expressions.
The Operating Partnership's ability to predict results or the actual effect of
future plans or strategies is inherently uncertain. Although the Operating
Partnership believes that the expectations reflected in such forward-looking
statements are based on reasonable assumptions, the Operating Partnership's
actual results and performance of stabilized and development Communities could
differ materially from those set forth in the forward-looking statements.
Factors which could have a material adverse effect on the operations and future
prospects of the Operating Partnership include, but are not limited to, changes
in: economic conditions generally and the real estate market specifically,
legislative/regulatory changes (including changes to laws governing the taxation
of real estate investment trusts ("REITs")), availability of capital, interest
rates, construction delays due to unavailability of materials, weather
conditions or other delays, competition, supply and demand for apartment
communities in the Operating Partnership's current and proposed market areas,
generally accepted accounting principles, policies and guidelines applicable to
REITs, and those factors discussed in the last paragraph under the heading
"Operating Performance of the Operating Partnership's Fully Stabilized
Communities", the section entitled "Development Activity -- Certain Factors
Affecting the Performance of Development Communities" and the section "Year
2000" on pages 13, 19 and 20, respectively, of this Form 10-Q. These risks and
uncertainties should be considered in evaluating forward-looking statements and
undue reliance should not be placed on such statements.
The following discussion should be read in conjunction with the Consolidated
Financial Statements of Summit Properties Partnership, L.P. and the Notes
thereto appearing elsewhere herein.
HISTORICAL RESULTS OF OPERATIONS
The Operating Partnership's net income is generated primarily from operations of
its apartment communities (the "Communities"). The changes in operating results
from period to period reflect changes in existing Community performance and
increases in the number of apartment homes due to development and acquisition of
new Communities. Where appropriate, comparisons are made on a "fully stabilized
Communities," "acquisition Communities," "stabilized development Communities"
and "Communities in lease-up" basis in order to adjust for changes in the number
of apartment homes. A Community is deemed to be "stabilized" when it has
attained a physical occupancy level of at least 93%. A Community is deemed
"fully stabilized" when stabilized for the two prior years as of the beginning
of the current year. A Community is deemed to be a "stabilized development" when
stabilized as of the beginning of the current year but not the entire two prior
years.
Results of Operations for the Three and Six Months Ended June 30, 1998 and
1997
For the three and six months ended June 30, 1998, income before gain on sale of
real estate assets and extraordinary items increased $281,000 and $245,000,
respectively, to approximately $7.1 million and $14.0 million, respectively,
from the three and six months ended June 30, 1997.
11
<PAGE> 12
OPERATING PERFORMANCE OF THE OPERATING PARTNERSHIP'S PORTFOLIO OF COMMUNITIES
The operating performance of the Communities for the three and six months ended
June 30, 1998 and 1997 is summarized below (dollars in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------------- ----------------------------
1998 1997 % CHANGE 1998 1997 % CHANGE
------- ------- -------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Property revenues:
Stabilized communities.............. $20,812 $20,499 1.5% $41,576 $41,073 1.2%
Acquisition communities............. 4,498 1,908 135.7% 7,947 3,269 143.1%
Stabilized development
communities...................... 5,415 4,481 20.8% 10,837 8,477 27.8%
Communities in lease-up............. 3,108 29 10,617.2% 5,653 29 19,393.1%
Communities sold.................... 484 988 (51.0%) 1,372 2,158 (36.4%)
------- ------- ------- -------
Total property revenues............. 34,317 27,905 23.0% 67,385 55,006 22.5%
------- ------- ------- -------
Property operating and maintenance
expense:(1)
Stabilized communities.............. 7,778 7,698 1.0% 15,367 15,332 0.2%
Acquisition communities............. 1,444 624 131.4% 2,549 1,058 140.9%
Stabilized development
communities...................... 1,811 1,486 21.9% 3,562 2,753 29.4%
Communities in lease-up............. 1,063 65 1,535.4% 1,916 65 2,847.7%
Communities sold.................... 196 411 (52.3%) 534 890 (40.0%)
------- ------- ------- -------
Total property operating and
maintenance expense.............. 12,292 10,284 19.5% 23,928 20,098 19.1%
------- ------- ------- -------
Property operating income............. $22,025 $17,621 25.0% $43,457 $34,908 24.5%
======= ======= ======= =======
Apartment homes, end of period........ 16,263 14,072 15.6% 16,263 14,072 15.6%
======= ======= ======= =======
</TABLE>
- ---------------
(1) Before real estate depreciation expense.
A summary of the Operating Partnership's apartment homes for the six months
ended June 30, 1998 and 1997 is as follows:
<TABLE>
<CAPTION>
1998 1997
------ ------
<S> <C> <C>
Apartment homes at the beginning of period.................. 14,980 12,454
Acquisitions................................................ 660 882
Developments which began rental operations during the
period.................................................... 1,067 950
Sale of apartment homes..................................... (444) (214)
------ ------
Apartment homes at the end of the period.................... 16,263 14,072
====== ======
</TABLE>
12
<PAGE> 13
OPERATING PERFORMANCE OF THE OPERATING PARTNERSHIP'S FULLY STABILIZED
COMMUNITIES
The operating performance of the 46 Communities stabilized since January 1, 1996
in each of the three and six months ended June 30, 1998 and 1997, respectively,
are summarized below (dollars in thousands except average monthly rental
revenue):
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------------- ----------------------------
1998 1997 % CHANGE 1998 1997 % CHANGE
------- ------- -------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Property revenues:
Rental.............................. $19,745 $19,484 1.3% $39,491 $39,145 0.9%
Other............................... 1,067 1,015 5.1% 2,085 1,928 8.1%
------- ------- ------- -------
Total property revenues............... 20,812 20,499 1.5% 41,576 41,073 1.2%
------- ------- ------- -------
Property operating and maintenance
expense(1):
Personnel........................... 1,711 1,784 (4.1%) 3,314 3,498 (5.3%)
Advertising and promotion........... 323 273 18.3% 606 511 18.6%
Utilities........................... 919 857 7.2% 1,855 1,768 4.9%
Building repairs and maintenance.... 1,690 1,708 (1.1%) 3,220 3,319 (3.0%)
Real estate taxes and insurance..... 2,018 2,006 0.6% 4,114 4,031 2.1%
Property supervision................ 517 516 0.2% 1,031 1,030 0.1%
Other operating expense............. 600 554 8.3% 1,227 1,175 4.4%
------- ------- ------- -------
Total property operating and
maintenance expense................. 7,778 7,698 1.0% 15,367 15,332 0.2%
------- ------- ------- -------
Property operating income............. $13,034 $12,801 1.8% $26,209 $25,741 1.8%
======= ======= ======= =======
Average physical occupancy(2)......... 92.0% 93.0% (1.1%) 92.2% 93.1% (1.0%)
======= ======= ======= =======
Average monthly rental revenue(3)..... $ 750 $ 725 3.5% $ 747 $ 724 3.1%
======= ======= ======= =======
Number of apartment homes............. 9,834 9,834 9,834 9,834
======= ======= ======= =======
</TABLE>
- ---------------
(1) Before real estate depreciation expense.
(2) Average physical occupancy is defined as the number of apartment homes
occupied divided by the total number of apartment homes contained in the
Communities, expressed as a percentage. Average physical occupancy has been
calculated using the average of the midweek occupancy that existed during
each week of the period.
(3) Represents the average monthly net rental revenue per occupied apartment
home.
The increase in rental revenue from fully stabilized Communities for the second
quarter and first six months of 1998 compared to 1997 was primarily the result
of increases in average rental rates offset by a decline in average physical
occupancy. Property operating and maintenance expenses increased as a result of
increases in advertising and promotion and utilities, offset by a decrease in
personnel expense and building repair and maintenance expense. The increase in
advertising and promotion was primarily due to marketing efforts necessary to
compete with increased supply of multi-family apartment homes. The increase in
utilities was primarily due to rate increases and increased vacancy. The
decrease in building repair and maintenance expense was primarily due to prior
year capital expenditures which decreased repair and maintenance requirements in
the current year. As a percentage of total property revenue, property operating
and maintenance expenses decreased for the three month period from 37.6% in 1997
to 37.4% in 1998 and for the six month period from 37.3% in 1997 to 37.0% in
1998.
The 1.5% and 1.2% rates of growth in property revenues were lower than the 1.7%
and 2.1% rates of growth in property revenues achieved from the second quarter
of 1996 compared to second quarter 1997 and the first six months of 1996
compared to the first six months of 1997, respectively. The growth rates were
lower primarily as a result of a new supply of competing multi-family
communities and the increase in home affordability in
13
<PAGE> 14
some of the markets in which the Operating Partnership operates. This lower
growth rate was especially noticeable in the Sarasota, Florida and Southeast
Florida markets. The Operating Partnership expects property growth rates for the
remainder of 1998 to be similar to the first six months of 1998 as the supply of
new multi-family communities continues to increase, balanced by the continued
strength of the local economies in which the Operating Partnership operates. The
Operating Partnership believes its expectations with respect to property revenue
growth are based on reasonable assumptions as to future economic conditions and
the quantity of competitive multi-family communities in the markets in which the
Operating Partnership does business. However, there can be no assurance that
actual results will not differ from these assumptions, which could result in
lower property revenue.
OPERATING PERFORMANCE OF THE OPERATING PARTNERSHIP'S ACQUISITION COMMUNITIES
Acquisition Communities consist of Summit Fair Oaks, Summit Portofino, Summit
Sand Lake and Summit Windsor II acquired in 1997 (1,290 apartment homes) and
Summit St. Clair and Summit Club at Dunwoody acquired in 1998 (660 apartment
homes). Summit Portofino and Summit Sand Lake were acquired in the first quarter
of 1997 and Summit Windsor II and Summit Fair Oaks were acquired in the third
and fourth quarters of 1997, respectively. Summit St. Clair and Summit Club at
Dunwoody were acquired in the first and second quarters of 1998, respectively.
Summit Mayfaire was purchased effective January 1, 1997 and therefore is
included in stabilized Communities. The operations of these Communities for the
three and six months ended June 30, 1998 and 1997 are summarized as follows
(dollars in thousands except average monthly rental revenue):
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------ ----------------
1998 1997 1998 1997
------- ------- ------ ------
<S> <C> <C> <C> <C>
Property revenues:
Rental revenues....................................... $4,252 $1,761 $7,534 $3,043
Other property revenue................................ 246 147 413 226
------ ------ ------ ------
Total property revenues................................. 4,498 1,908 7,947 3,269
------ ------ ------ ------
Property operating and maintenance expense(1)........... 1,444 624 2,549 1,058
------ ------ ------ ------
Property operating income............................... $3,054 $1,284 $5,398 $2,211
====== ====== ====== ======
Average physical occupancy(2)........................... 94.1% 93.8% 94.4% 94.1%
====== ====== ====== ======
Average monthly rental revenue(3)....................... $ 869 $ 862 $ 863 $ 860
====== ====== ====== ======
Number of apartment homes............................... 1,950 738 1,950 738
====== ====== ====== ======
</TABLE>
- ---------------
(1) Before real estate depreciation expense.
(2) Average physical occupancy is defined as the number of apartment homes
occupied divided by the total number of apartment homes contained in the
Communities, expressed as a percentage. Average physical occupancy has been
calculated using the average of the midweek occupancy that existed during
each week of the period.
(3) Represents the average monthly net rental revenue per occupied apartment
home.
The unleveraged yield on investment for the acquisition Communities, defined as
property operating income for the three and six months ended June 30, 1998 on an
annualized basis over total acquisition cost, was 9.23% and 9.18%, respectively.
OPERATING PERFORMANCE OF THE OPERATING PARTNERSHIP'S STABILIZED DEVELOPMENT
COMMUNITIES
The Operating Partnership had seven development communities (Summit Aventura,
Summit Hill II, Summit Green, Summit River Crossing, Summit Fairways, Summit on
the River and Summit Russett) which were stabilized during the entire three and
six months ended June 30, 1998 but were stabilized subsequent to
14
<PAGE> 15
January 1, 1996. The operating performance of these seven Communities for the
three and six months ended June 30, 1998 and 1997 is summarized below (dollars
in thousands except average monthly rental revenue):
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------ -----------------
1998 1997 1998 1997
------- ------- ------- ------
<S> <C> <C> <C> <C>
Property revenues:
Rental revenues.................................... $5,068 $4,123 $10,162 $7,902
Other property revenue............................. 347 358 675 575
------ ------ ------- ------
Total property revenues.............................. 5,415 4,481 10,837 8,477
------ ------ ------- ------
Property operating and maintenance expense(1)........ 1,811 1,486 3,562 2,753
------ ------ ------- ------
Property operating income............................ $3,604 $2,995 $ 7,275 $5,724
====== ====== ======= ======
Average physical occupancy(2)........................ 91.9% 77.0% 92.1% 73.8%
====== ====== ======= ======
Average monthly rental revenue(3).................... $ 888 $ 866 $ 887 $ 864
====== ====== ======= ======
Number of apartment homes............................ 2,106 2,106 2,106 2,106
====== ====== ======= ======
</TABLE>
- ---------------
(1) Before real estate depreciation expense.
(2) Average physical occupancy is defined as the number of apartment homes
occupied divided by the total number of apartment homes contained in the
Communities, expressed as a percentage. Average physical occupancy has been
calculated using the average of the midweek occupancy that existed during
each week of the period.
(3) Represents the average monthly net rental revenue per occupied apartment
home.
The unleveraged yield on investment for the stabilized development Communities,
defined as property operating income for the three and six months ended June 30,
1998 on an annualized basis over total development cost, was 10.11% and 10.12%,
respectively.
OPERATING PERFORMANCE OF THE OPERATING PARTNERSHIP'S COMMUNITIES IN LEASE-UP
The Operating Partnership had ten Communities in lease-up during the six months
ended June 30, 1998. A Community in lease-up is defined as one which has
commenced rental operations but was not stabilized as of the beginning of the
current year. A summary of the ten Communities in lease-up as of June 30, 1998
is as follows (dollars in thousands):
<TABLE>
<CAPTION>
TOTAL ACTUAL/ HOMES % LEASED
NUMBER OF ACTUAL/ ANTICIPATED ACTUAL/ COMPLETED Q2 1998 AS OF
APARTMENT ESTIMATED CONSTRUCTION ANTICIPATED AT JUNE 30, AVERAGE JUNE 30,
COMMUNITY HOMES COST COMPLETION STABILIZATION 1998 OCCUPANCY 1998
- --------- --------- --------- ------------- ------------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Summit Stonefield........... 216 $ 19,660 Q1 1998 Q1 1998 216 98.95% 100.00%
Summit Ballantyne I......... 246 16,330 Q4 1997 Q2 1998 246 82.79% 95.10%
Summit Sedgebrook I......... 248 16,320 Q4 1997 Q3 1998 248 81.14% 91.50%
Summit Plantation II........ 240 21,264 Q4 1997 Q3 1998 240 80.10% 92.50%
Summit Norcroft II.......... 54 3,500 Q4 1997 Q1 1998 54 94.08% 96.80%
Summit Lake I............... 302 20,172 Q2 1998 Q3 1998 302 65.28% 76.80%
Summit Ballantyne II(1)..... 154 10,100 Q3 1998 Q1 1999 28 5.44% 9.70%
Summit Fair Lakes I(1)...... 370 32,900 Q1 1999 Q2 1999 28 2.83% 7.00%
Summit New Albany I(1)...... 301 22,600 Q1 1999 Q4 1999 38 5.33% 9.00%
Summit Governor's
Village(1)................ 242 16,400 Q1 1999 Q2 1999 70 2.22% 4.10%
----- --------
2,373 $179,246
===== ========
</TABLE>
- ---------------
(1) These properties are included in the Construction in Progress category at
June 30, 1998.
Property operating income after interest expense for the three and six months
ended June 30, 1998 was $351,000 and $545,000, respectively, for the ten
Communities in lease-up.
15
<PAGE> 16
OPERATING PERFORMANCE OF SUMMIT MANAGEMENT COMPANY
The operating performance of Summit Management Company (the "Management
Company") and its wholly-owned subsidiary, Summit Apartment Builders Inc. (the
"Construction Company"), for the three and six months ended June 30, 1998 and
1997 is summarized below (dollars in thousands):
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, JUNE 30,
--------------- ---------------
1998 1997 1998 1997
------ ------ ------ ------
<S> <C> <C> <C> <C>
Revenue..................................................... $1,597 $1,500 $3,055 $2,898
Expenses:
Operating................................................. 1,276 1,196 2,601 2,529
Depreciation.............................................. 59 48 118 96
Amortization.............................................. 72 76 143 148
Interest.................................................. 75 75 150 150
------ ------ ------ ------
Total expenses............................................ 1,482 1,395 3,012 2,923
------ ------ ------ ------
Net income (loss) of Summit Management Company.............. $ 115 $ 105 $ 43 $ (25)
====== ====== ====== ======
</TABLE>
The increase in revenue was a result of higher revenues from managing the
Operating Partnership's Communities and higher revenues from construction
activity, offset by lower revenues for managing third party communities.
Total average third party apartment homes under management were 3,000 and 5,398
at June 30, 1998 and 1997, respectively. The decrease was primarily due to the
termination of two of the Management Company's contracts which provided for the
management of six apartment communities. The contracts were terminated as a
result of a change in ownership of the apartment communities. Property
management fees include $357,000 and $432,000 of fees from third parties for the
three months ended June 30, 1998 and 1997, respectively, and $658,000 and
$906,000 of fees from third parties for the six months ended June 30, 1998 and
1997, respectively. Property management fees from third parties as a percentage
of total property management revenues were 21.2% and 28.8% for the three months
ended June 30, 1998 and 1997, respectively, and 21.0% and 31.3% for the six
months ended June 30, 1998 and 1997, respectively. The Operating Partnership
expects third party management revenue as a percentage of total property
management revenues to continue to decline as revenues from the Operating
Partnership's Communities continue to increase.
Construction Company revenues increased in 1998 compared to 1997 as a result of
the Operating Partnership's decision to expand its in-house construction
operations in the state of Florida to cover the entire geographic area in which
the Operating Partnership operates. All of the Construction Operating
Partnership's revenues are from contracts with the Operating Partnership.
OTHER INCOME AND EXPENSES
Interest expense, including amortization of deferred financing costs, increased
by $2.6 million and $5.4 million for the three and six months ended June 30,
1998, respectively. This increase was primarily the result of an increase in the
Operating Partnership's average indebtedness outstanding. Average indebtedness
outstanding and effective interest cost increased $148.6 million and .05% (6.68%
to 6.73%) for the three months ended June 30, 1998 and $143.5 million and .12%
(6.59% to 6.71%) for the six months ended June 30, 1998.
Depreciation expense increased $1.4 million and $2.8 million or 26.4% and 26.3%
for the three and six months ended June 30, 1998, respectively, primarily due to
depreciation on recently acquired or developed Communities.
General and administrative expenses increased $139,000 and $294,000 or 23.3% and
23.7% for the three and six months ended June 30, 1998, primarily due to
expenses related to the Operating Partnership's overall growth. As a percentage
of revenues, general and administrative expenses were 2.1% for both the three
months
16
<PAGE> 17
ended June 30, 1998 and 1997, and 2.3% and 2.2% for the six months ended June
30, 1998 and 1997, respectively.
EXTRAORDINARY ITEMS
The extraordinary items in the six months ended June 30, 1998 resulted from the
write-off of deferred financing cost in conjunction with the replacement by the
Operating Partnership of its prior credit facility with the Unsecured Credit
Facility (as hereafter defined) and prepayment penalties on four mortgage notes
which were repaid during the period.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity
The Operating Partnership's net cash provided by operating activities increased
from $27.2 million for the six months ended June 30, 1997 to $30.1 million for
the same period in 1998, primarily due to a $8.5 million increase in property
income offset by a $6.1 million increase in interest paid. The increase in
interest paid was primarily due to an increase in the average indebtedness
outstanding.
Net cash used in investing activities increased from $86.5 million for the six
months ended June 30, 1997 to $95.1 million for the same period in 1998 due to
an increase in the acquisition of Communities, an increase in the construction
of Communities and higher recurring capital expenditures, partially offset by
proceeds from the sale of a Community. In 1998 the Operating Partnership
acquired two apartment Communities containing 660 apartment homes for a total
cost of $54.4 million which included the issuance of $5.2 million of Units. In
addition, the Operating Partnership funded $59.5 million in development costs
and $4.2 million in capital improvements in 1998. The Operating Partnership also
received net cash proceeds of approximately $17.6 million of total net cash
proceeds of $23.9 million from the sale of an apartment community. The remaining
$6.3 million in proceeds from the sale were being held in escrow in accordance
with like-kind exchange rules and regulations.
Net cash provided by financing activities increased from $61.1 million for the
six months ended June 30, 1997 to $63.8 million for the same period in 1998,
primarily due to an increase in equity proceeds from Summit Properties' dividend
reinvestment and stock purchase plans offset by higher repayment of debt, the
issuance of notes receivable from employees, the payment of higher distributions
to unitholders and a decrease in stock issuance. Financing activities in 1998
included $78.6 million in net borrowings from the Operating Partnership's credit
facility and $23.4 million in net proceeds from Summit Properties' dividend
reinvestment and stock purchase plans. Dividend reinvestment and stock purchase
proceeds increased from 1997 primarily due to the dividend reinvestment plan
being revised to allow direct stock purchases. These cash inflows were offset by
$22.7 million of distributions and the repayment of mortgage debt of $14.1
million. Mortgage debt repayment included $11.9 million for the prepayment of
four mortgage notes.
The ratio of earnings to fixed charges was 2.14 for the six months ended June
30, 1998 compared to 2.02 for the six months ended June 30, 1997. The increase
is primarily due to an increase in the gain on real estate assets offset by
increased interest expense as discussed in "Historical Results of
Operations -- Other Income and Expenses" above.
The Operating Partnership's outstanding indebtedness at June 30, 1998 totaled
$539.2 million. This amount includes approximately $191.0 million in fixed rate
conventional mortgages, $52.0 million of variable rate tax-exempt bonds, $186.0
million of unsecured notes, $9.2 million of tax-exempt fixed rate loans, and
$101.0 million under the Unsecured Credit Facility (as hereinafter defined).
The Operating Partnership repaid four mortgage notes with a balance of $11.9
million during the first quarter of 1998. The mortgage notes had an 8% interest
rate and were repaid from the borrowings under the Operating Partnership's
credit facility.
The Operating Partnership expects to meet its short-term liquidity requirements
(i.e., liquidity requirements arising within 12 months) including capital
expenditures relating to maintaining its existing properties
17
<PAGE> 18
(recurring capital expenditures), generally through its working capital, net
cash provided by operating activities and borrowings under its line of credit.
The Operating Partnership considers its cash provided by operating activities to
be adequate to meet operating requirements and payments of Summit Properties
REIT dividend requirements. The Operating Partnership expects to meet its
long-term liquidity requirements (i.e., liquidity requirements arising after 12
months), such as scheduled mortgage debt maturities, property acquisitions,
financing of construction and development activities and other non-recurring
capital improvements, through the issuance of unsecured notes and equity
securities of Summit Properties, from undistributed Funds from Operations (see
page 21), from proceeds received from the disposition of certain properties, and
in connection with the acquisition of land or improved property, through the
issuance of units.
Line of Credit
The Operating Partnership obtained a new syndicated unsecured line of credit
(the "Unsecured Credit Facility") in the amount of $175 million in March 1998
which replaced the existing $150 million credit facility. The Unsecured Credit
Facility provides funds for new development, acquisitions and general working
capital purposes. The Unsecured Credit Facility has a three year term with two
one-year extension options and will initially bear interest at LIBOR + 90 basis
points based upon the Operating Partnership's current credit rating of BBB- by
Standard & Poor's Rating Services and Baa3 by Moody's Investors Service. The
interest rate will be reduced in the event an upgrade of the Operating
Partnership's unsecured credit rating is obtained. The Unsecured Credit Facility
also provides a bid option sub-facility equal to a maximum of fifty percent of
the total facility ($87.5 million). This sub-facility provides the Operating
Partnership with the option to place borrowings in a fixed LIBOR contract up to
180 days.
Mortgage Notes
The Operating Partnership has a commitment to refinance two mortgage loans which
have a $148.0 million balance at June 30, 1998. The original loans mature in
February 2001 ($119.0 million at 5.88%) and December 2005 ($29.0 million at
7.71%). The refinancing will combine the two mortgage loans into one loan at an
interest rate equal to the weighted average interest rate of the two previous
mortgage loans (6.24%) with a February 2001 maturity. At the 2001 maturity, the
lender has committed to a new loan that will mature in the second quarter of
2008 with an interest rate of 6.76%.
Medium-Term Notes
The Operating Partnership has established a program for the sale of up to $95
million aggregate principal amount of Medium-Term Notes due nine months or more
from the date of issuance (the "MTN Program"). On July 28, 1998, the Operating
Partnership sold $30 million of notes under the MTN Program. The notes are due
on July 30, 2001 and bear interest at 6.75% per year. Proceeds from the notes
were used to reduce the Unsecured Credit Facility.
ACQUISITIONS AND DISPOSITION
The Operating Partnership completed the acquisition of two communities located
in Atlanta, Georgia: Summit St. Clair, purchased effective March 1, 1998, and
Summit Club at Dunwoody, purchased on May 22, 1998 (the "1998 Acquisitions").
The 1998 Acquisitions added a total of 660 apartment homes to the Operating
Partnership's portfolio at an aggregate purchase price of $54.5 million.
The 1998 Acquisitions were financed with the issuance of 259,871 Units valued at
$5.2 million. The balance of the purchase price was paid in cash.
On May 18, 1998, the Operating Partnership sold a community in Brandon, Florida
formerly known as Summit Providence for net proceeds of $23.9 million. A gain on
the sale of $8.7 million was recognized. Proceeds from the sale were used to
partially fund the acquisition of Summit Club at Dunwoody.
18
<PAGE> 19
On July 8, 1998, the Operating Partnership purchased Summit at Lenox (formerly
Lenox Forest), a 432-apartment community located in Atlanta, Georgia. The
purchase price was approximately $32.7 million. The acquisition was financed by
the assumption of $8.8 of mortgage debt with the balance paid in cash.
DEVELOPMENT ACTIVITY
The Operating Partnership's construction in progress at June 30, 1998 is
summarized as follows (dollars in thousands):
<TABLE>
<CAPTION>
TOTAL ESTIMATED ANTICIPATED
APARTMENT ESTIMATED COST TO COST TO CONSTRUCTION
COMMUNITY HOMES COSTS DATE COMPLETE COMPLETION
- --------- --------- --------- -------- --------- ------------
<S> <C> <C> <C> <C> <C>
Summit Doral -- Miami, FL................................... 260 $ 22,800 $ 7,035 $15,765 Q1 1999
Summit Westwood -- Raleigh, NC.............................. 354 24,400 8,745 15,655 Q2 1999
Summit Fair Lakes I -- Fairfax, VA(2)....................... 370 32,900 21,571 11,329 Q1 1999
Summit New Albany I -- Columbus, OH(2)...................... 301 22,600 17,144 5,456 Q1 1999
Summit Governor's Village -- Chapel Hill, NC(2)............. 242 16,400 12,315 4,085 Q1 1999
Summit Ballantyne II -- Charlotte, NC(2).................... 154 10,100 8,376 1,724 Q3 1998
Summit Lake II -- Raleigh, NC............................... 144 10,200 1,897 8,303 Q2 1999
Summit Sedgebrook II -- Charlotte, NC....................... 120 7,800 1,133 6,667 Q3 1999
----- -------- -------- -------
1,945 $147,200 78,216 $68,984
===== ======== =======
Other development and construction costs(1)................. 23,870
--------
$102,086
========
</TABLE>
- ---------------
(1) Consists primarily of land held for development and other predevelopment
costs.
(2) These communities were in lease-up at June 30, 1998.
Estimated costs to complete the development communities represent all of the
Operating Partnership's material commitments for capital expenditures.
Certain Factors Affecting the Performance of Development Communities
The Operating Partnership is optimistic about the operating prospects of the
Communities under construction even with the increased supply of newly
constructed apartment homes of comparable quality in many of its markets. As
with any development community, there are uncertainties and risks associated
with the development of the Communities described above. While the Operating
Partnership has prepared development budgets and has estimated completion and
stabilization target dates based on what it believes are reasonable assumptions
in light of current conditions, there can be no assurance that actual costs will
not exceed current budgets or that the Operating Partnership will not experience
construction delays due to the unavailability of materials, weather conditions
or other events.
Other development risks include the possibility of incurring additional cost or
liability resulting from defects in construction material and the possibility
that financing may not be available on favorable terms, or at all, to pursue or
complete development activities. Similarly, market conditions at the time these
Communities become available for leasing will affect the rental rates that may
be charged and the period of time necessary to achieve stabilization, which
could make one or more of the development Communities unprofitable or result in
achieving stabilization later than currently anticipated. In addition, the
Operating Partnership is conducting feasibility and other pre-development work
for seven Communities. The Operating Partnership could abandon the development
of any one or more of these potential Communities in the event that it
determines that market conditions do not support development, financing is not
available on favorable terms or other circumstances prevent development.
Similarly, there can be no assurance that if the Operating Partnership does
pursue one or more of these potential Communities that it will be able to
complete construction within the currently estimated development budgets or that
construction can be started at the time currently anticipated.
19
<PAGE> 20
Year 2000
The Year 2000 compliance issue concerns the inability of computer systems to
accurately calculate, store or use a date after 1999. This could result in a
system failure or miscalculations causing disruptions of operations. The Year
2000 issue affects virtually all companies and all organizations.
The Operating Partnership has substantially completed an assessment of its core
computer information systems and is now taking the further necessary steps to
make such systems, in those situations in which the Operating Partnership is
required to do so, Year 2000 compliant. In addition, the Operating Partnership
is currently evaluating and assessing those computer systems that do not relate
to information technology (such as telecommunications, security, HVAC, elevator,
fire and safety systems, which typically include embedded technology such as
microcontrollers that may be harder to test, and may require complete
replacement because they cannot be repaired).
The Operating Partnership's primary uses of software systems are its corporate
accounting and property on-site software. The Operating Partnership's corporate
accounting system is widely used in the real estate industry. A version upgrade,
installed in the second quarter of 1998, is designed to be Year 2000 compliant.
The Operating Partnership is replacing its current property on-site software
with a new software system designed to be Year 2000 compliant. This new software
is also widely used in the real estate industry. The implementation of the new
on-site software system started in the first quarter of 1998 and is expected to
be completed by the fourth quarter of 1998. The Operating Partnership has
converted approximately 46 Communities to the new software. The replacement of
the current property on-site software is proceeding on schedule. The Operating
Partnership has received written notification from the vendor of each of the
corporate accounting system and on-site system that the relevant software is
Year 2000 compliant. The Operating Partnership had previously planned both the
upgrade of the corporate accounting system and implementation of the new
property on-site system, and such changes would have been undertaken without
regard to Year 2000 remediation issues. Accordingly, the Operating Partnership
has not deferred any planned information or software projects due to such Year
2000 projects.
Based on its review to date, the Operating Partnership believes that the primary
cost of Year 2000 compliance will be the cost of the installation of the new
property on-site software. The Operating Partnership currently expects that the
installation of the new property on-site software will cost approximately
$400,000, and as of June 30, 1998, the Operating Partnership had spent
approximately $150,000 in connection therewith. Because the Operating
Partnership's Year 2000 assessment is ongoing, the total cost of bringing all
internal systems, equipment and operations into Year 2000 compliance has not
been fully quantified. While these efforts involve additional costs, the
Operating Partnership believes, based on available information, that these costs
will not have a material adverse effect on its business, financial condition or
results of operations. While the Operating Partnership believes that it will be
Year 2000 compliant by December 31, 1999, if these efforts are not completed on
time, or if the costs associated with updating or replacing the Operating
Partnership's computer systems exceeds the Operating Partnership's current
estimates, the Year 2000 issue could have a material impact on the Operating
Partnership's ability to meet its financial and reporting requirements and/or on
its financial results.
The Operating Partnership rents apartments in its Communities to individuals and
does not have a single customer or group of customers who rents a significant
number of apartments. The Operating Partnership's primary purchases are
building-related products (e.g., carpets, paint and blinds) and services (e.g.,
lawn services), all of which are available from numerous suppliers. For the
foregoing reasons, the Operating Partnership does not believe that there is a
significant risk related to the failure of residents, vendors or third-party
service providers to prepare for the Year 2000; however, the costs and timing of
third-party Year 2000 compliance is not within the Operating Partnership's
control and no assurances can be given with respect to the cost or timing of
such efforts or the potential effects of any failure to comply.
20
<PAGE> 21
FUNDS FROM OPERATIONS
The White Paper on Funds from Operations approved by the Board of Governors of
NAREIT in March 1995 defines Funds from Operations as net income (loss)
(computed in accordance with generally accepted accounting principles ("GAAP")),
excluding gains (or losses) from debt restructuring and sales of property, plus
real estate related depreciation and amortization and after adjustments for
unconsolidated partnerships and joint ventures. The Operating Partnership
computes Funds from Operations in accordance with the standards established by
the White Paper, which may differ from the methodology for calculating Funds
from Operations utilized by other equity REITs, and, accordingly, may not be
comparable to such other REITs. Funds Available for Distribution is defined as
Funds from Operations less capital expenditures funded by operations (recurring
capital expenditures). The Operating Partnership's methodology for calculating
Funds Available for Distribution may differ from the methodology for calculating
Funds Available for Distribution utilized by other REITs, and accordingly, may
not be comparable to other REITs. Funds from Operations and Funds Available for
Distribution do not represent amounts available for management's discretionary
use because of needed capital replacement or expansion, debt service
obligations, property acquisitions, development, distributions or other
commitments and uncertainties. Funds from Operations and Funds Available for
Distribution should not be considered as alternatives to net income (determined
in accordance with GAAP) as an indication of the Operating Partnership's
financial performance or to cash flows from operating activities (determined in
accordance with GAAP) as a measure of the Operating Partnership's liquidity, nor
are they indicative of funds available to fund the Operating Partnership's cash
needs, including its ability to make distributions. The Operating Partnership
believes Funds from Operations and Funds Available for Distribution are helpful
to investors as measures of the performance of the Operating Partnership
because, along with cash flows from operating activities, financing activities
and investing activities, they provide investors with an understanding of the
ability of the Operating Partnership to incur and service debt and make capital
expenditures.
Funds from Operations and Funds Available for Distribution for the three and six
months ended June 30, 1998 and 1997 are calculated as follows (dollars in
thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE
----------------------- -----------------------
1998 1997 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Income before extraordinary items............... $ 15,868 $ 11,222 $ 22,760 $ 18,150
Gain on sale of real estate assets.............. (8,731) (4,366) (8,731) (4,366)
Depreciation from real estate assets............ 6,842 5,421 13,363 10,593
---------- ---------- ---------- ----------
Funds from Operations........................... 13,979 12,277 27,392 24,377
Recurring capital expenditures(1)............... (1,918) (1,016) (2,761) (1,471)
---------- ---------- ---------- ----------
Funds Available for Distribution................ $ 12,061 $ 11,261 $ 24,631 $ 22,906
========== ========== ========== ==========
Non-recurring Capital Expenditures(2)........... $ 724 $ 1,225 $ 1,487 $ 2,147
========== ========== ========== ==========
Cash Flow Provided By (Used In):
Operating Activities.......................... $ 15,924 $ 13,093 $ 30,084 $ 27,161
Investing Activities.......................... (40,797) (30,643) (95,108) (86,536)
Financing Activities.......................... $ 22,927 $ 19,518 $ 63,848 $ 61,056
Weighted average units outstanding -- basic..... 28,785,746 27,302,798 28,449,861 27,161,146
========== ========== ========== ==========
Weighted average units outstanding -- diluted... 28,810,928 27,333,968 28,478,149 27,192,559
========== ========== ========== ==========
</TABLE>
- ---------------
(1) Recurring capital expenditures are expected to be funded from operations and
consist primarily of exterior painting, new appliances, vinyl, blinds, tile,
and wallpaper. In contrast, non-recurring capital expenditures, such as
major improvements, new garages and access gates, are expected to be funded
by financing activities and are therefore not included in the calculation of
Funds Available for Distribution. The increase in recurring capital
expenditures for the six months ended June 30, 1998 compared to 1997
21
<PAGE> 22
was primarily due to the timing of capital improvement projects. The
Operating Partnership expects capital expenditures for the year 1998 on a
per unit basis to be equal to or less than 1997.
(2) Non-recurring capital expenditures include major renovations in the amount
of $364,000 in 1998 and $1.9 million in 1997; $484,000 and $19,000 in water
meters in 1998 and 1997, respectively; $239,000 and $76,000 in new signage
in 1998 and 1997, respectively; $207,000 of fitness center and key controls
in 1998; and $191,000 of improvements at Summit Norcroft I done in
conjunction with development of Summit Norcroft II in 1998.
22
<PAGE> 23
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
During the three months ended June 30, 1998, the Operating Partnership has
issued Units in private placements in reliance on the exemption from
registration under section 4(2) of the Securities Act in the amounts and for the
consideration set forth below:
A. Summit Properties Inc. ("Summit Properties") has issued an aggregate of
417,422 shares of Common Stock pursuant to its Dividend Reinvestment and
Stock Purchase Plan. Summit Properties has contributed the proceeds of these
sales (approximately $8.1 million) to the Operating Partnership in
consideration of an aggregate of 417,422 Units.
B. In connection with the purchase of Summit Club at Dunwoody in May 1998, the
Operating Partnership issued 140,871 shares (valued at approximately $2.8
million at the time of the acquisition) to the sellers of Summit Club at
Dunwoody in partial consideration of their interest in the property.
C. Summit Properties has issued an aggregate of 250 shares of Common Stock in
connection with restricted stock awards. Each time a share of Common Stock is
issued in connection with such an award, the Operating Partnership issues a
Unit to Summit Properties; consequently, 250 Units have been issued to Summit
Properties to date.
In light of the circumstances under which such Units were issued and information
obtained by the Operating Partnership in connection with such transactions,
management of Summit Properties, in its capacity as general partner of the
Operating Partnership, believes that the Operating Partnership may rely on such
exemption.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
<TABLE>
<C> <S>
3.1 Amendment No. 12 to the Limited Partnership Agreement of
Summit Properties Partnership, L.P. (filed herewith).
10.1 $8,730,000 Promissory Note, dated August 30, 1995, issued by
Summit Properties Partnership, L.P. to the Public Employee's
Retirement Association of Colorado (filed herewith).
10.2 6.75% Medium-Term Note due 2001 in principal amount of
$30,000,000 issued by Summit Properties Partnership, L.P.
(filed herewith).
12.1 Statement Regarding Calculation of Ratio of Earnings to
Fixed Charges for the Three and Six Months ended June 30,
1998 (filed herewith).
27.1 Financial Data Schedule -- Six Months ended June 30, 1998
(for SEC use only) (filed herewith).
</TABLE>
(B) REPORTS ON FORM 8-K
A Form 8-K was filed with the Securities and Exchange Commission on June 2, 1998
in connection with the commencement of Summit Properties Partnership, L.P.'s
Medium Term Note Program.
23
<PAGE> 24
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons in capacities and on the dates
indicated. Each of the persons set forth below has signed this report as an
officer of Summit Properties Inc., in its capacity as general partner of Summit
Properties Partnership, L.P.
SUMMIT PROPERTIES PARTNERSHIP, L.P.
<TABLE>
<S> <C>
August 13, 1998 /s/ WILLIAM F. PAULSEN
(Date) -----------------------------------------------------
William F. Paulsen, President
and Chief Executive Officer
August 13, 1998 /s/ MICHAEL L. SCHWARZ
(Date) -----------------------------------------------------
Michael L. Schwarz, Executive
Vice President and Chief
Financial Officer
</TABLE>
24
<PAGE> 25
EXHIBIT INDEX
<TABLE>
<C> <S>
3.1 Amendment No. 12 to the Limited Partnership Agreement of
Summit Properties Partnership, L.P. (filed herewith).
10.1 $8,730,000 Promissory Note, dated August 30, 1995, issued by
Summit Properties Partnership, L.P. to the Public Employee's
Retirement Association of Colorado (filed herewith).
10.2 6.75% Medium-Term Note due 2001 in principal amount of
$30,000,000 issued by Summit Properties Partnership, L.P.
(filed herewith).
12.1 Statement Regarding Calculation of Ratio of Earnings to
Fixed Charges for the Three and Six Months ended June 30,
1998 (filed herewith).
27.1 Financial Data Schedule -- Six Months ended June 30, 1998
(for SEC use only) (filed herewith).
</TABLE>
25
<PAGE> 1
EXHIBIT 3.1
TWELFTH AMENDMENT TO AGREEMENT OF LIMITED PARTNERSHIP
OF SUMMIT PROPERTIES PARTNERSHIP, L.P.
This TWELFTH AMENDMENT TO AGREEMENT OF LIMITED PARTNERSHIP OF SUMMIT
PROPERTIES PARTNERSHIP, L.P. (this "Amendment") dated as of May 22, 1998, is
entered into by and among Summit Properties Inc. (the "Company") and the Persons
whose names are set forth on Exhibit A or Exhibit B as attached hereto. All
capitalized terms contained herein and not otherwise defined herein shall have
the meaning attributed to them in the Agreement.
WHEREAS, the Company and the Persons whose names are set forth on
Exhibit A, other than certain of the New Partners (the "Existing Partners") are
partners of Summit Properties Partnership, L.P. (the "Partnership") pursuant to
an Agreement of Limited Partnership dated as of January 29, 1994, as previously
amended (as amended, the "Agreement"); and
WHEREAS, Summit is to receive a contribution of an undivided interest
in Legacy Square Apartments now held by TCR Legacy Square Limited Partnership
("Crow") in exchange for each of the Persons whose names are set forth on
Exhibit B (the "New Partners"), all of whom are partners in Crow, being admitted
to the Partnership as an Additional Limited Partner pursuant to Section 12.2 of
the Agreement (unless such person already is a partner of the Partnership) and
receiving the Partnership Units set forth opposite their names on Exhibit B
attached hereto; and
WHEREAS, the Company, the Existing Partners and the New Partners desire
to cause the Agreement to be amended to reflect the admission of the New
Partners and the issuance of the Partnership Units to the New Partners.
NOW, THEREFORE, in accordance with the provisions of Section 4.2,
Section 12.2 and Section 12.3 of the Agreement, the Agreement is hereby amended
(a) to admit as an Additional Limited Partner each of the New Partners who is
not currently a partner of the Partnership and (b) to substitute the Exhibit A
attached hereto for the Exhibit A attached to the Agreement. Except as expressly
amended by the provisions hereof or as may be necessary to effect the intent of
the parties as evidenced by this Amendment, all other terms and provisions of
the Agreement are hereby ratified and confirmed and remain in full force and
effect.
<PAGE> 2
IN WITNESS WHEROF, the parties hereto have executed this Amendment as
of the date first above written.
GENERAL PARTNER:
SUMMIT PROPERTIES INC.
By: /s/ Doug Brout
---------------------
Name: Doug Brout
---------------------
Title: Vice President
---------------------
EXISTING PARTNERS:
Those persons listed on Exhibit A
attached hereto other than persons
signing below as New Partners
By: Summit Properties Inc.,
their attorney-in-fact
By: /s/ Doug Brout
---------------------
Name: Doug Brout
---------------------
Title: Vice President
---------------------
<PAGE> 3
SUMMIT PROPERTIES PARTNERSHIP, L.P.
SIGNATURE PAGE
TO BE EXECUTED BY EACH ADDITIONAL LIMITED PARTNER
The undersigned hereby executes this Signature Page to the Agreement of
Limited Partnerships dated as of January 29, 1994, as subsequently amended (the
"Agreement") of Summit Properties Partnership, L.P., a Delaware limited
partnership, for the purpose of being admitted to said Limited Partnership, as a
Limited Partner, and the undersigned does further hereby adopt, accept, ratify,
confirm and agree to be bound by all of the terms and conditions of said
Agreement applicable to it as a Limited Partner, including, without limitation,
the provisions of Section 2.4 and any other provision of the Agreement
appointing the General Partner or the Liquidator (as those terms are defined in
the Agreement) as attorney-in-fact for the undersigned.
TCR LEGACY SQUARE LIMITED PARTNERSHIP
By: TCR Atlanta 1996, Inc.,
its general partner
By: /s/ Thomas J. Patterson
-------------------------------
Name: Thomas J. Patterson
-------------------------------
Title: Vice President
-------------------------------
<PAGE> 4
SUMMIT PROPERTIES PARTNERSHIP, L.P.
SIGNATURE PAGE
TO BE EXECUTED BY EACH ADDITIONAL LIMITED PARTNER
The undersigned hereby executes this Signature Page to the Agreement of
Limited Partnerships dated as of January 29, 1994, as subsequently amended (the
"Agreement") of Summit Properties Partnership, L.P., a Delaware limited
partnership, for the purpose of being admitted to said Limited Partnership, as a
Limited Partner, and the undersigned does further hereby adopt, accept, ratify,
confirm and agree to be bound by all of the terms and conditions of said
Agreement applicable to it as a Limited Partner, including, without limitation,
the provisions of Section 2.4 and any other provision of the Agreement
appointing the General Partner or the Liquidator (as those terms are defined in
the Agreement) as attorney-in-fact for the undersigned.
/s/ J. Ronald Terwilliger
-------------------------------
J. Ronald Terwilliger
<PAGE> 5
SUMMIT PROPERTIES PARTNERSHIP, L.P.
SIGNATURE PAGE
TO BE EXECUTED BY EACH ADDITIONAL LIMITED PARTNER
The undersigned hereby executes this Signature Page to the Agreement of
Limited Partnerships dated as of January 29, 1994, as subsequently amended (the
"Agreement") of Summit Properties Partnership, L.P., a Delaware limited
partnership, for the purpose of being admitted to said Limited Partnership, as a
Limited Partner, and the undersigned does further hereby adopt, accept, ratify,
confirm and agree to be bound by all of the terms and conditions of said
Agreement applicable to it as a Limited Partner, including, without limitation,
the provisions of Section 2.4 and any other provision of the Agreement
appointing the General Partner or the Liquidator (as those terms are defined in
the Agreement) as attorney-in-fact for the undersigned.
/s/ Randy J. Pace
-------------------------------
Randy J. Pace
<PAGE> 6
SUMMIT PROPERTIES PARTNERSHIP, L.P.
SIGNATURE PAGE
TO BE EXECUTED BY EACH ADDITIONAL LIMITED PARTNER
The undersigned hereby executes this Signature Page to the Agreement of
Limited Partnerships dated as of January 29, 1994, as subsequently amended (the
"Agreement") of Summit Properties Partnership, L.P., a Delaware limited
partnership, for the purpose of being admitted to said Limited Partnership, as a
Limited Partner, and the undersigned does further hereby adopt, accept, ratify,
confirm and agree to be bound by all of the terms and conditions of said
Agreement applicable to it as a Limited Partner, including, without limitation,
the provisions of Section 2.4 and any other provision of the Agreement
appointing the General Partner or the Liquidator (as those terms are defined in
the Agreement) as attorney-in-fact for the undersigned.
/s/ David J. Elwell
-------------------------------
David J. Elwell
<PAGE> 7
SUMMIT PROPERTIES PARTNERSHIP, L.P.
SIGNATURE PAGE
TO BE EXECUTED BY EACH ADDITIONAL LIMITED PARTNER
The undersigned hereby executes this Signature Page to the Agreement of
Limited Partnerships dated as of January 29, 1994, as subsequently amended (the
"Agreement") of Summit Properties Partnership, L.P., a Delaware limited
partnership, for the purpose of being admitted to said Limited Partnership, as a
Limited Partner, and the undersigned does further hereby adopt, accept, ratify,
confirm and agree to be bound by all of the terms and conditions of said
Agreement applicable to it as a Limited Partner, including, without limitation,
the provisions of Section 2.4 and any other provision of the Agreement
appointing the General Partner or the Liquidator (as those terms are defined in
the Agreement) as attorney-in-fact for the undersigned.
/s/ Leonard W. Wood
-------------------------------
Leonard W. Wood
<PAGE> 8
SUMMIT PROPERTIES PARTNERSHIP, L.P.
SIGNATURE PAGE
TO BE EXECUTED BY EACH ADDITIONAL LIMITED PARTNER
The undersigned hereby executes this Signature Page to the Agreement of
Limited Partnerships dated as of January 29, 1994, as subsequently amended (the
"Agreement") of Summit Properties Partnership, L.P., a Delaware limited
partnership, for the purpose of being admitted to said Limited Partnership, as a
Limited Partner, and the undersigned does further hereby adopt, accept, ratify,
confirm and agree to be bound by all of the terms and conditions of said
Agreement applicable to it as a Limited Partner, including, without limitation,
the provisions of Section 2.4 and any other provision of the Agreement
appointing the General Partner or the Liquidator (as those terms are defined in
the Agreement) as attorney-in-fact for the undersigned.
/s/ Harlan R. Crow
-------------------------------
Harlan R. Crow
<PAGE> 9
SUMMIT PROPERTIES PARTNERSHIP, L.P.
SIGNATURE PAGE
TO BE EXECUTED BY EACH ADDITIONAL LIMITED PARTNER
The undersigned hereby executes this Signature Page to the Agreement of
Limited Partnerships dated as of January 29, 1994, as subsequently amended (the
"Agreement") of Summit Properties Partnership, L.P., a Delaware limited
partnership, for the purpose of being admitted to said Limited Partnership, as a
Limited Partner, and the undersigned does further hereby adopt, accept, ratify,
confirm and agree to be bound by all of the terms and conditions of said
Agreement applicable to it as a Limited Partner, including, without limitation,
the provisions of Section 2.4 and any other provision of the Agreement
appointing the General Partner or the Liquidator (as those terms are defined in
the Agreement) as attorney-in-fact for the undersigned.
LEONARD W. WOOD FAMILY LIMITED PARTNERSHIP
By: /s/ Leonard W. Wood
-------------------------------
Leonard W. Wood, General Partner
<PAGE> 10
SUMMIT PROPERTIES PARTNERSHIP, L.P.
SIGNATURE PAGE
TO BE EXECUTED BY EACH ADDITIONAL LIMITED PARTNER
The undersigned hereby executes this Signature Page to the Agreement of
Limited Partnerships dated as of January 29, 1994, as subsequently amended (the
"Agreement") of Summit Properties Partnership, L.P., a Delaware limited
partnership, for the purpose of being admitted to said Limited Partnership, as a
Limited Partner, and the undersigned does further hereby adopt, accept, ratify,
confirm and agree to be bound by all of the terms and conditions of said
Agreement applicable to it as a Limited Partner, including, without limitation,
the provisions of Section 2.4 and any other provision of the Agreement
appointing the General Partner or the Liquidator (as those terms are defined in
the Agreement) as attorney-in-fact for the undersigned.
CFP RESIDENTIAL
By: Crow Family, Inc., its general partner
By: /s/ Sarah Puckett
-------------------------------
Name: Sarah Puckett
-------------------------------
Title: Vice President
-------------------------------
<PAGE> 1
EXHIBIT 10.1
PROMISSORY NOTE
$8,730,000.00 August 30, 1995
Charlotte, North Carolina
FOR VALUE RECEIVED, the undersigned, SUMMIT PROPERTIES PARTNERSHIP,
L.P., a Delaware limited partnership d/b/a SUMMIT PROPERTIES PARTNERSHIP,
LIMITED PARTNERSHIP ("Maker"), whose address is 212 South Tryon Street, Suite
500, Charlotte, North Carolina 28281, Attention: Michael Malone, promises to pay
to the order of Public Employee's Retirement Association of Colorado, an
instrumentality of the State of Colorado ("Holder", which term shall include any
subsequent holder of this Promissory Note), at its office at c/o Invesco Realty
Advisors, Inc., One Lincoln Centre, Suite 1200, 5400 LBJ Freeway/LB 1200,
Dallas, Texas 75240, Attention: Asset Management (or at such other place as
Holder shall designate in writing) in lawful money of the United States of
America, the principal sum of Eight Million Seven Hundred Thirty Thousand and
No/100 Dollars ($8,730,000.00), or so much thereof as remains unpaid from time
to time, and as same may be increased from time to time by the addition of
amounts thereto in accordance with the terms and provisions hereof and of the
other Loan Documents, as hereinafter defined, with interest from the date hereof
as hereinafter set forth.
1. Definitions. As used herein, the following terms shall have the
indicated meanings (definitions appear in alphabetical order and defined terms
used within definitions are defined either above or in the appropriate
alphabetical place within this Paragraph 1):
(a) "Advance" - Any sum advanced or expended by Holder
pursuant to the terms of any Loan Document.
(b) "Commitment" - That certain application/commitment letter
dated June 8, 1995, by and between Holder and Maker, setting forth,
among other things, the terms and conditions of the Loan.
(c) "Deed of Trust" - That certain Deed of Trust with
Assignment of Rents and Security agreement and Fixture Filing of even
date herewith from Maker for the use and benefit of Holder encumbering
the Property and securing payment of this Promissory Note, as the same
may be amended or replaced from time to time hereafter.
(d) "Default Interest Rate" - An interest rate, compounded
monthly, equal to the lesser of (i) the Interest Rate plus 5%, or (ii)
the maximum legal per annum rate of interest.
(e) "Disbursement Date" - The date of the initial disbursement
of the proceeds of the Loan, or any portion thereof.
<PAGE> 2
(f) "Due Date" - September 1, 2005.
(g) "Environmental Indemnity" - That certain Environmental
Indemnity Agreement of even date herewith from the Indemnitors relating
to environmental matters with respect to the Property, as the same may
be amended or replaced from time to time hereafter.
(h) "Improvements" - Collectively, all buildings and other
structures and improvements, landscaping and other site work, parking
areas, asphalt, striping, curbs, gutters, sidewalks and other
facilities now or hereafter located on or under the Land.
(i) "Indebtedness" - At any given time during the term of this
Promissory Note, the aggregate of (i) the then Outstanding Principal
Balance and all then accrued and unpaid interest hereunder at the
Interest Rate, and (ii) all other amounts payable hereunder and/or
otherwise evidenced hereby, including, without limitation, any
applicable Early Repayment Premium, as defined in Exhibit A attached
hereto and incorporated herein by this reference, and any accrued and
unpaid interest at the Default Interest Rate, and (iii) all other
amounts then due and payable under the terms of the Deed of Trust and
the other Loan Documents, including, without limitation, the
Environmental Indemnity.
(j) "Indemnitors" - Summit Properties Inc., a Maryland
corporation d/b/a Summit Properties Real Estate Inc., together with
Maker, are the Indemnitors under the Environmental Indemnity.
(k) "Interest Rate" - The rate at which interest is accruing
hereunder as set forth in Paragraph 2(a) hereof.
(l) "Land" - That certain real property located in the County
of Mecklenburg, State of North Carolina, and more particularly
described on Exhibit A attached to the Deed of Trust.
(m) "Loan" - The loan evidenced by this Promissory Note.
(n) "Loan Collateral" - At any given time during the term of
this Promissory Note, collectively, the Property and any and all other
collateral then securing payment of the Indebtedness and the proceeds,
rents, royalties, issues, profits, revenue and all other income, assets
and benefits arising therefrom or attributable thereto.
(o) "Loan Documents" - Collectively, all documents and
instruments now or hereafter evidencing, securing, guaranteeing and/or
relating to the Loan, as the same may be amended or replaced from time
to time hereafter, including, without limitation, the following:
2
<PAGE> 3
(1) The Commitment;
(2) This Promissory Note;
(3) The Deed of Trust;
(4) The Environmental Indemnity; and
(5) An Assignment of Leases and Rents, an Assignment
of Contracts, Warranties and Other Rights and a Security
Agreement and related Financing Statements with respect to,
among other things, general intangibles, accounts, equipment,
fixtures and furnishings which are part of the Loan
Collateral.
(p) "Opening Date for Permissible Early Repayment" - September
1, 2000.
(q) "Outstanding Principal Balance" - The principal sum
referred to in the first paragraph of this Promissory Note, less any
principal amounts repaid and increased by any Advances and any other
amounts added to the principal balance hereof pursuant to the terms of
the Loan Documents.
(r) "Property" - The Land, together with the Improvements, all
tangible personal property and fixtures owned by Maker and located in
or on the Land or the Improvements or used in connection therewith, all
of Maker's interest in all intangible personal property related to the
ownership, management and/or operation of the Land, the Improvements
and the above-referenced tangible personal property and fixtures, all
present and future leases, rents and other income with respect thereto
and all other items otherwise included in the definition of "Property"
in the Deed of Trust.
2. Interest.
(a) Interest Rate. From and after the date hereof until the
Due Date, interest shall accrue on the Outstanding Principal Balance (except
that portion, if any, accruing interest at the Default Interest Rate),
calculated pursuant to the method of calculation set forth in subparagraph (b)
below, at a fixed interest rate equal to 8% per annum.
(b) Calculation of Interest. All calculations of interest
hereunder shall be made with reference to the Interest Rate or the Default
Interest Rate, as applicable, and shall be computed (subject to any provisions
of applicable law which limit the maximum allowable interest) based on (i) a
360-day year consisting of twelve 30-day months for each full calendar month and
(ii) the actual number of days in the applicable period for which interest is
being calculated for any partial calendar month, assuming a 365-day year. As an
example of the foregoing calculation for a partial calendar month: If the
Disbursement Date is March 15, the Interest Rate is 10% and the amount accruing
interest at such rate is $1,000,000.00, then the amount of accrued interest that
would be payable on April 1 would be $4,657.53
3
<PAGE> 4
(($1,000,000.00 x 10%) + 365 x 17). In computing the number of days during which
interest accrues on any amount outstanding under this Promissory Note, the first
date from which such interest is stated to accrue hereunder shall be included
and, provided that the payment in question is received by Holder prior to 11:00
A.M., Central Time, the date of payment of such amount to Holder shall be
excluded.
(c) Default Interest and Charges. In the event that any
payment of principal and/or interest hereunder is not received by Holder within
fifteen (15) days after the due date thereof, Maker shall pay to Holder a late
charge in an amount equal to 4$ of the amount of such overdue payment (unless a
late charge in such amount is usurious or prohibited by applicable law, in which
event the highest non-usurious late charge permitted by applicable law shall be
used). In addition to the late charge referred to above, if any such payment is
not made when due or if the entire Outstanding Principal Balance and all accrued
but unpaid interest hereunder is not paid in full on the Due Date, or in the
event any other default occurs under any of the Loan Documents and such default
is not cured within any applicable cure period, then from and after the date
such default shall have occurred, the entire amount of the Indebtedness shall
bear interest, calculated pursuant to the method of calculation set forth in
subparagraph (b) above, at the Default Interest Rate (unless interest in such
amount is usurious or prohibited by the applicable law, in which event the
highest non-usurious interest rate permitted by applicable law shall be used).
The Default Interest Rate shall be in lieu of any other interest rate otherwise
applicable and shall commence, without notice, immediately upon and from the
occurrence of such default and shall continue until the entire amount of the
Indebtedness is paid in full. Notwithstanding the foregoing, nothing set forth
in this subparagraph shall imply any obligation on the part of Holder to accept
any payment not made within any applicable cure period. Maker acknowledges that
it would be extremely difficult or impracticable to determine Holder's actual
damages resulting from any late payment and the aforementioned late charge and
default interest are reasonable estimates of those damages.
3. Monthly Installments.
(a) If the Disbursement Date is other than the first day of a
calendar month, then, on the first day of the calendar month immediately
following the month in which the Disbursement Date occurs, interest only at the
Interest Rate, calculated pursuant to the method of calculation set forth in
Paragraph 2(b) hereof, shall be due and payable hereunder for the period from
the Disbursement Date to such payment date.
(b) Commencing on the first day of the second full calendar
month following the Disbursement Date (or the first day of the first full
calendar month following the Disbursement Date if the Disbursement Date is the
first day of a calendar month) and continuing on the first day of each calendar
month thereafter until the Due Date, equal monthly installments of principal and
interest, each in the amount of $64,057.65, shall be due and payable hereunder.
4
<PAGE> 5
4. Maturity Date. The maturity date of this Promissory Note shall be
the Due Date, at which time the entire Indebtedness shall be due and payable in
full.
5. Early Repayment.
(a) Repayment Prohibited. Maker is prohibited from repaying
any portion of the Outstanding Principal Balance prior to the Opening Date for
Permissible Early Repayment.
(b) Permissible Early Repayment with Premium. From and after
the Opening Date for Permissible Early Repayment to that date which is 90 days
prior to the Due Date, provided that Holder shall have received at least 60 days
prior written notice thereof, Maker may repay, in full only, the Indebtedness,
provided that such repayment is accompanied by an Early Repayment Premium, as
calculated in accordance with the provisions of Exhibit A hereto. Maker agrees
that Holder shall not be obligated to actually reinvest the amount repaid in any
treasury obligations as a condition precedent to receiving the Early Repayment
Premium.
(c) Permissible Early Repayment without Premium. From and
after that date which is 90 days prior to the Due Date until the Due Date,
provided that Holder shall have received at least 20 days prior written notice
thereof, Maker may repay, in full only, the Indebtedness without premium, fee or
penalty.
(d) Repayment on Condemnation or Casualty. Partial (or full)
repayments of the Outstanding Principal Balance are permitted when no default
exists hereunder or under the other Loan Documents is such repayment results
from the application of insurance or condemnation proceeds to reduce the
Outstanding Principal Balance as provided in the Deed of Trust, in which event
no repayment premium, fee or penalty shall be due. No notice of repayment shall
be required under the circumstance specified in the preceding sentence. Any such
partial repayments of principal shall be applied to the Outstanding Principal
Balance and the amount of the fixed monthly installments required to be paid
hereunder pursuant to Paragraph 3(b) above shall thereafter be adjusted to an
amount which would have been effect had the original principal amount of the
Loan been equal to (i) minus (ii), where (i) is the fact amount of this
Promissory Note and (ii) is the aggregate of all principal repayments, if any,
previously made under the circumstances specified in this subparagraph plus the
amount of the principal repayment then being made. No principal amount repaid
may be reborrowed.
(e) Premium Payable on Default. If the maturity date of this
Promissory Note is accelerated following an uncured default hereunder or under
the other Loan Documents and a repayment under this Promissory Note is made
thereafter, then, if such repayment takes place prior to that date which is 90
days prior to the Due Date, Holder shall be entitled to receive the Early
Repayment Premium calculated as of the date of such repayment and based on the
entire amount repaid. Furthermore, if such repayment takes place prior to the
Opening Date for Permissible Early Repayment, and results from non-payment of
any amounts due
5
<PAGE> 6
under the Loan Documents or from waste caused by or not repaired by Maker, the
same shall be presumed to be and conclusively deemed to constitute a deliberate
evasion of the provisions of this Paragraph 5 and shall constitute an
unpermitted early repayment entitling Holder to, inaddition to all of the other
Indebtedness, the Early Repayment Premium plus an additional premium in an
amount equal to 5% of the principal amount repaid.
6. Application of Payments. For so long as Maker is not in default
hereunder or under any of the other Loan Documents beyond any applicable cure
period, all payments received by Holder on this Promissory Note shall be applied
as follows, regardless of any designation elsewhere herein of such payments as
principal, interest or other charges: first, to the repayment of sums advanced
by Holder pursuant to the terms of any of the Loan Documents for the payment of
taxes, assessments, insurance premiums or other charges against the Property
(together with interest thereon from the date of advance until the date repaid
at the Default Interest Rate), then to the payment of any outstanding late
charges, then to the payment of accrued but unpaid interest which is then due
and payable, and finally, to reduction of the Outstanding Principal Balance and
any remaining Indebtedness. From and after a default hereunder or under any of
the other Loan Documents which has not been cured within any applicable cure
period, all payments received by Holder on this Promissory Note shall be applied
by Holder to the Indebtedness in such order as Holder shall determine in its
sole subjective discretion.
7. Default. Time is of the essence hereof. The occurrence of any of the
following events shall be a default hereunder and, if such default is not cured
within any applicable cure period specified herein, the payment of all principal
and interest due in accordance with the terms of this Promissory Note and all
other Indebtedness shall, at the option of Holder, be accelerated and such
principal, interest and other Indebtedness, together with any Early Repayment
Premium and any additional premium payable pursuant to the terms of Paragraph 5
hereof, shall be immediately due and payable without notice or demand, and
Holder shall have the option to foreclose or to require foreclosure of any or
all liens securing the payment hereof and/or to exercise any other rights and
remedies available to Holder hereunder or under the other Loan Documents:
(a) Failure to make any payment hereunder in full when due,
including, without limitation, failure to pay in full the Indebtedness
on the Due Date.
(b) Breach or violation by Maker of any other agreement or
covenant contained herein. Maker shall have 15 days after receipt of a
written notice from Holder specifying a default under this subparagraph
(b) within which to cure such default. If, however, such default is of
a nature that it cannot be cured within such 15- day period, Maker
shall have a reasonable period of time (not to exceed in any event 90
days after receipt of such notice from Holder) within which to cure
such default on the condition that Maker shall, immediately upon
receipt of such notice from Holder, commence diligent good faith
efforts to cure such default and demonstrate continuous
6
<PAGE> 7
diligent good faith efforts throughout such cure period to cure such
default in a manner satisfactory to Holder.
(c) Breach or violation of any covenant or agreement set forth
in any of the other Loan Documents or any other default thereunder
(unless such default is cured within any applicable cure period set
forth in the applicable Loan Document).
Any default hereunder which has not been cured within any applicable cure period
shall be a default under each of the other Loan Documents.
8. Character of Loan. Maker certifies that the Loan is obtained for
business or commercial purposes and that the proceeds thereof will not be used
primarily for personal, family, household or agricultural purposes.
9. Security and Due on Sale. The payment and performance of this
Promissory Note is secured by the Deed of Trust and the other security documents
which are a part of the Loan Documents. The Loan Documents contain, among other
things, a description of the properties encumbered and pledged as security for
payment of this Promissory Note, the nature and extent thereof and the rights of
Holder and Maker with respect thereto. In particular, Section 1.11 of the Deed
of Trust contains terms and provisions placing limitations and restrictions on
the sale, conveyance, disposition, alienation, hypothecation, leasing,
assignment, pledging, mortgaging, granting of security interests in and other
transferring or further encumbering of the Property and said terms and
provisions are incorporated herein by this reference.
10. GOVERNING LAW. MAKER AND HOLDER AGREE THAT THE TERMS AND PROVISIONS
OF THIS PROMISSORY NOTE AND THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH CAROLINA EXCEPT TO
THE EXTENT THAT ANY OF SUCH LAWS MAY NOT OR HEREAFTER BE PREEMPTED BY FEDERAL
LAW, IN WHICH CASE, SUCH FEDERAL LAW SHALL SO GOVERN AND BE CONTROLLING. MAKER
AND HOLDER EACH HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY STATE COURT
OF THE STATE OF NORTH CAROLINA OR FEDERAL COURT SITTING IN SUCH STATE IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS PROMISSORY NOTE OR THE
OTHER LOAN DOCUMENTS, AND MAKER AND HOLDER EACH HEREBY IRREVOCABLY AGREE THAT
ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED
IN SUCH STATE OR FEDERAL COURT. MAKER AND HOLDER AGREE THAT A FINAL JUDGMENT NOT
SUBJECT TO APPEAL, IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY
BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER
MANNER PROVIDED BY LAW.
7
<PAGE> 8
11. Remedies Cumulative; Waiver. The remedies of Holder provided herein
or in any of the other Loan Documents shall be cumulative and concurrent, may be
pursued singularly, successively or together, at the sole discretion of Holder,
and may be exercised as often as occasion therefor shall arise. No act of
omission or commission of Holder, including specifically any failure to exercise
any right, remedy or recourse, shall be deemed to be a waiver or release of any
provision of this Promissory Note by Holder, such waiver or release to be
effected only through a written document executed by Holder and then only to the
extent specifically recited therein. A waiver or release with reference to any
one event shall not be construed as continuing, as a bar to, or as a waiver or
release of any subsequent right, remedy or recourse as to a subsequent event.
Acceptance by Holder of any payment after the due date thereof shall not be
deemed to be a waiver of any default with respect to such payment or an
extension of the due date of any such payment or the due date of any other
payment. Furthermore, acceptance by Holder of any payment in an amount less than
the amount then due hereunder or under the other Loan Documents shall be an
acceptance on account only and shall not in any way affect the existence of a
default hereunder or under the other Loan Documents.
12. Notice. All notices, demands, requests or other communications to
be sent by one party to the other hereunder or under the other Loan Documents or
required by law shall be in writing and shall be deemed to have been validly
given or served by delivery of the same in person to the intended addressee, or
by depositing the same with FedEx or another reputable private courier service
for next business day delivery to the intended addressee at its address set
forth below or at such other address as may be designated by such party as
herein provided, or by depositing the same in the United States mail, postage
prepaid, registered or certified mail, return receipt requested, addressed to
the intended addressee at its address set forth below or at such other address
as may be designated by such party as herein provided. All notices, demands and
requests shall, for the purposes of this Promissory Note, be deemed received
upon such personal delivery, or one business day after being deposited with the
private courier service, or two business days after being deposited in the
United States mail as required above. By giving to the other party hereto at
least 15 days' prior written notice thereof in accordance with the provisions
hereof, the parties hereto shall have the right from time to time to change
their respective addresses and each shall have the right to specify as its
address any other address within the United States of America. The initial
addresses for the parties hereto shall be:
If to Holder: Public Employee's Retirement Association of Colorado,
an instrumentality of the State of Colorado
c/o Invesco Realty Advisors
One Lincoln Centre, Suite 1200
5400 LBJ Freeway/LB 1200
Dallas, Texas 75240
Attention: Asset Management
Telephone: 214-715-7400
Fax: 214-715-7474
8
<PAGE> 9
With copy to: Brownstain Hyatt Farber & Strickland, P.C.
410 17th Street, 22nd Floor
Denver, Colorado 80202-4437
Attention: Edward N. Barad, Esq.
If to Maker: Summit Properties Partnership, L.P.
d/b/a Summit Properties Partnership, Limited Partnership
212 South Tryon Street, Suite 500
Charlotte, North Carolina 28281
Attention: Michael Malone
With copy to: Kennedy Covington Lobdell & Hickman, L.L.P.
NationsBank Corporate Center
100 North Tryon Street, Suite 4200
Charlotte, North Carolina 28202-4006
Attention: David H. Jones, Esq.
13. Recourse.
(a) Except as otherwise set forth in this Paragraph 13, the
recourse of Holder under this Promissory Note and the other Loan Documents shall
be limited to the Loan Collateral.
(b) Notwithstanding the foregoing:
(1) nothing contain in this Paragraph 13 shall:
(i) preclude Holder from foreclosing the lien of
the Deed of Trust or from exercising and enforcing any of its
other rights or remedies provided for in the Deed of Trust or
in the other Loan Documents or at law or in equity, except as
expressly stated in this Paragraph 13;
(ii) constitute a waiver, release or impairment of
any of the Indebtedness or of any obligation set forth in this
Promissory Note, the Deed of Trust or any other Loan Document;
(iii) limit the right of Holder to name Maker or any
other person or entity as a party defendant in any action
brought under this Promissory Note, the Deed of Trust or any
other Loan Document so long as execution on any judgment is
limited to the Loan Collateral;
(iv) prohibit Holder from pursuing all of its rights
and remedies (A) against Maker, the general partner in Maker,
the Indemnitors or any other person or entity under the
Environmental Indemnity or under any
9
<PAGE> 10
other indemnity, certificate, affidavit, bond or other
document in which Holder's recourse is not expressly limited
to the Loan Collateral, or (B) against any guarantor or surety
of the obligations of Maker, whether or not such guarantor or
surety is a partner or otherwise owns any interest in Maker;
and
(2) Holder shall have full recourse against Maker and the
general partner in Maker, and Maker and such general partner, shall be
personally liable for and will promptly account to Holder for all loss,
damage, costs and expenses, including, without limitation, attorneys'
fees, sustained by Holder resulting from fraud or intentional
misrepresentation on the part of Maker or the general partner in Maker,
or waste committed on the Land or the Improvements or damages to the
Loan Collateral caused by the gross negligence or willful Loan
Collateral caused by the gross negligence or willful misconduct of
Maker or such general partner, or misappropriation or misapplication of
funds. (Examples of "misapplication of funds" are (without limiting the
application of such phrase to their actions): (A) rents, issues,
profits or other income with respect to the Loan Collateral that are
received by Maker or the general partner in Maker or any other person
or entity after the occurrence of a default under the Loan Documents
(unless such default is subsequently cured as allowed in the Loan
Documents or waived by Holder) and are not used to pay customary and
normal operating and maintenance expenses, real estate taxes or
assessments or reasonable capital expenditures with respect to the Loan
Collateral; (B) rents, issues, profits or other income payments with
respect to the Loan Collateral that are prepaid more than 30 days in
advance and not subsequently delivered to Holder, but only if such
prepayment results in a credit in favor of the applicable entity making
such payment as of the date of a default under any of the Loan
Documents; (C) security deposits or other funds or deposits that are
held by Maker or its agents pursuant to arrangements with tenants in
the Improvements and are not segregated and continuously held as trust
funds subject to the terms and provisions of the applicable leases; and
(D) casualty insurance or condemnation award proceeds that are released
to Maker and not applied as required in the Deed of Trust).
(3) Furthermore, Holder shall have full recourse against Maker
and the general partner in Maker, and Maker and such general partner,
shall have full personal liability for, the obligation to pay the
entire Indebtedness, and all of the nonrecourse provisions set forth in
this Paragraph 13 shall be completely ineffective, upon the institution
and during the continuance of any petition or proceeding in bankruptcy
or reorganization or any similar proceeding under any provisions of any
Federal or State bankruptcy or insolvency statute filed or instituted
by Maker and/or by such general partner. Furthermore, such recourse and
personal liability shall continue after the final termination or
dismissal of any such petition or proceeding described above to the
extent that such petition or proceeding causes or results in any loss
to Holder or any diminution in the value of the security afforded by
the Property or any of the other Loan Collateral.
10
<PAGE> 11
14. Principal Balance of this Promissory Note. Notwithstanding the
amount set forth on the face of this Promissory Note as the stated principal
amount, it is the intention of Maker and Holder that the principal balance of
this Promissory Note be increased by amounts, if any, which are added thereto
pursuant to the terms hereof and/or the terms of the Deed of Trust or the other
Loan Documents and, even though such additions may increase the principal
balance of this Promissory Note to an amount greater than said face amount, the
entire amount of the principal balance, including such additions, is intended to
be evidenced by this Promissory Note and secured by the Deed of Trust and the
other Loan Documents.
15. Miscellaneous.
(a) All payments made on this Promissory Note, including,
without limitation, payment in full on the Due Date, must be received by Holder
at Holder's office as described on the first page of this Promissory Note by
11:00 A.M., Central Time, in order to be credited as a payment received that
date. With respect to a payment in full of this Promissory Note, the same shall
be made by cash payment or wire transfer. With respect to any other payments
made hereunder, such payments may be made by cash, wire transfer or check, at
Maker's option. Any payments made by check shall be provisionally credited upon
receipt and in the event the check is dishonored, then any penalties or late
charges shall run from the appropriate due date. Notwithstanding the foregoing,
Holder may, at its option, at any time require that all payments be made
hereunder by wire transfer to an account designated by Holder.
(b) Each maker, endorser, cosigner and guarantor of this
Promissory Note hereby expressly grants to Holder the right to release or to
agree not to sue any other person, or to suspend the right to enforce this
Promissory Note against such other person or to otherwise discharge such person;
and each such maker, endorser, cosigner and guarantor hereby agrees that the
exercise of such rights by Holder shall have no effect on the liability of any
other person, primarily or secondarily liable hereunder. Each maker, endorser,
cosigner and guarantor of this Promissory note hereby waives demand for payment,
presentment for payment, protest, notice of protest, notice of dishonor, notice
of nonpayment, notice of intent to accelerate maturity, notice of acceleration
of maturity, diligence in taking any action to collect sums owing hereunder and
all duty or obligation of Holder to effect, protect, perfect, retain or enforce
any security for the payment of this Promissory Note or to proceed against any
collateral before otherwise enforcing this Promissory Note.
(c) Maker agrees to reimburse Holder for all costs, including,
without limitation, attorneys' fees, incurred from time to time to collect any
payment under this Promissory Note. Maker agrees that Holder may from time to
time extend the maturity date of this Promissory Note or the time any payment is
due under this Promissory Note and may accept further security or release
security for the payment of this Promissory Note, without in any way affecting
the obligation of Maker to Holder.
11
<PAGE> 12
(d) If any provision hereof or of any other Loan Document is,
for any reason and to any extent, invalid or unenforceable, then neither the
remainder of the document in which such provision is contained nor application
of the provision to other persons, entities or circumstances shall be affected
thereby, but instead shall be enforceable to the maximum extent permitted by
law.
(e) Each payment of principal and interest hereunder shall be
paid when due without deduction or setoff of any kind or nature or for any costs
whatsoever.
(f) The headings of the paragraphs and sections of this
Promissory Note are for convenience of reference only, are not to be considered
a part hereof and shall not limit or otherwise affect any of the terms hereof.
(g) This Promissory Note shall be binding upon Maker and its
successors and assigns.
(h) This Promissory Note may not be terminated or amended
orally, by only by a termination in writing signed by Holder or an amendment in
writing signed by Holder and Maker.
(i) When the context and construction so require, all words
used in the singular herein shall be deemed to have been used in the plural and
the masculine shall include the feminine and neuter and vica versa. The word
"person" as used herein shall include any individual, company, firm,
association, partnership, corporation, trust or other legal entity of any kind
whatsoever.
(j) In the event that at any time any payment received by
Holder hereunder shall be deemed by final order of a court of competent
jurisdiction to have been a voidable preference or fraudulent conveyance under
the bankruptcy or insolvency laws of the United States, or shall be deemed to be
otherwise due to any party other than Holder, then, in any such event, the
obligations to make such payment shall survive any cancellation of this
Promissory Note and/or return thereof to Maker, shall not be discharged or
satisfied by any prior payment thereof and/or cancellation of this Promissory
Note, but shall remain a valid and binding obligations enforceable in accordance
with the terms and provisions hereof, and the amount of such payment shall bear
interest at the Default Interest Rate from the date of such final order under
repaid hereunder.
(k) The provisions of this Promissory Note and of all
agreements between Maker and Holder, whether nor existing or hereafter arising
and whether written or oral, are hereby expressly limited so that in no
contingency or event whatsoever, whether by reason of demand or acceleration of
the maturity of this Promissory Note or otherwise, shall the amount paid or
agreed to be paid ("Interest") to Holder for the use, forebearance or retention
of the money to be loaned hereunder exceed the maximum amount permissible under
applicable law. If, from any circumstances whatsoever, Interest paid to Holder
in connection with the
12
<PAGE> 13
performance or fulfillment of any provision hereof or of any agreement between
Maker and Holder shall, at the time performance or fulfillment of such provision
shall be due, exceed the limit for Interest prescribed by law, then ispo facto
the Interest payable in connection with such obligation to be performed or
fulfilled shall be reduced to such limit and if, from any circumstance
whatsoever, Holder should ever receive as Interest an amount which would exceed
the highest lawful rate, the amount which would be excessive Interest shall be
applied to the reduction of the principal balance owing hereunder in the inverse
order of its maturity (whether or not then due) or at the option of Holder be
paid over the Maker, and not to the payment of Interest. All Interest (including
any amounts or payments deemed to be Interest) paid or agreed to be paid to
Holder shall, to the extent permitted by applicable law, be amortized, prorated,
allocated and spread throughout the full period until payment in full of the
principal balance of this Promissory Note (including the period of any renewal
or extension hereof) so that the Interest hereon for such full period will not
exceed the maximum amount permitted by applicable law. This paragraph will
control all agreements between Maker and Holder.
13
<PAGE> 14
IN WITNESS WHEREOF, Maker has executed this Promissory Note as of the
day and year first above written.
SUMMIT PROPERTIES PARTNERSHIP, L.P.,
d/b/a SUMMIT PROPERTIES PARTNERSHIP,
LIMITED PARTNERSHIP
By: SUMMIT PROPERTIES, INC.,
d/b/a SUMMIT PROPERTIES REAL ESTATE,
INC., its General Partner
By: /s/ Michael G. Malone
--------------------------------------
Name: Michael G. Malone
Title: Senior Vice President
ATTEST:
By: /s/ Judith M. Roller
----------------------------------
Name: Judith M. Roller
Title: Assistant Secretary
[Affix Corporate Seal]
STATE OF NORTH CAROLINA
COUNTY OF MECKLENBURG
I, Patricia A. Wood, a Notary Public of Mecklenburg county and state
aforesaid, certify Judith M. Roller personally came before me this day and
acknowledged (s)he is Assistant Secretary of SUMMIT PROPERTIES, INC., a Maryland
corporation d/b/a Summit Properties Real Estate Inc.; itself the general partner
of SUMMIT PROPERTIES PARTNERSHIP, L.P., a Delaware limited partnership d/b/a
Summit Properties Limited Partnership; and that, by authority duly given and as
the act of the corporation, the foregoing instrument was signed by the corporate
general partner's Senior Vice President, sealed with its corporate seal, and
attested by himself/herself as its Assistant Secretary, all as the act and deed
of SUMMIT PROPERTIES PARTNERSHIP, L.P., a Delaware limited partnership d/b/a
Summit Properties Limited Partnership.
Witness my hand and notarial seal, this 30th day of August, 1995.
/s/ Patricia A. Wood
--------------------------------------
Notary Public
My commission expires:
10-2-96
(Notary Seal)
14
<PAGE> 15
EXHIBIT A
EARLY REPAYMENT PREMIUM
The term "Early Repayment Premium" shall mean the greater of (a) an
amount equal to one percent of the entire outstanding principal balance of the
Note on the date repaid, or (b) an amount (the "Loss of Yield Amount"), if any,
calculated as provided below. As used in the following calculation, the term
"Treasury Yield" shall mean the sum of (i) the "ask" yield for the then most
recently issued United States Treasury obligations (excluding those commonly
known as "flower bonds") with a maturity date (month and year) as close as
possible to the Due Date (month and year) using the average of the yield rates
as most recently published in the Western Edition of the Wall Street Journal or,
if the Western Edition of the Wall Street Journal no longer publishes such
information, in another authoritative source selected by Holder, minus (ii) the
Basis Point Adjustment as computed in accordance with Exhibit A-1 attached
hereto. The term "Discount Rate" shall mean a rate which is equivalent to
one-twelfth of the Treasury Yield.
The "Loss of Yield Amount" shall be the result of, if a positive
number, (x) minus (y) where "(x)" is the aggregate amount of all scheduled
payments of principal and interest on this Promissory Note at the Interest Rate
from the date of such repayment to and including the Due Date, with reach such
payment discounted to present value on a monthly basis using a discount rate
equal to the Discount Rate, and "(y)" is the Outstanding Principal Balance as of
the early repayment date.
SEE ATTACHED EXAMPLE OF CALCULATION OF EARLY REPAYMENT PREMIUM.
A-1
<PAGE> 16
EXHIBIT A-1
BASIS POINT ADJUSTMENT TABLE
<TABLE>
<CAPTION>
U.S. Treasury Bonds Basic Point U.S. Treasury Bond Basis Point
or Note Yield Adjustment or Note Yield Adjustment
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
0 - 1.55 .0 14.25 - 14.41 .41
1.56 - 2.69 .01 14.41 - 14.59 .42
2.70 - 3.48 .02 14.60 - 14.77 .43
3.49 - 4.12 .03 14.78 - 14.84 .44
4.13 - 4.68 .04 14.95 - 15.11 .45
4.69 - 5.17 .05 15.12 - 15.28 .46
5.18 - 5.63 .06 15.29 - 15.44 .47
5.64 - 6.05 .07 15.45 - 15.61 .48
6.06 - 6.44 .08 15.62 - 15.77 .49
6.45 - 6.82 .09 15.78 - 15.94 .50
6.83 - 7.17 .10 15.95 - 16.10 .51
7.18 - 7.51 .11 16.11 - 16.26 .52
7.52 - 7.83 .12 16.27 - 16.41 .53
7.84 - 8.14 .13 16.42 - 16.57 .54
8.15 - 8.44 .14 16.58 - 16.73 .55
8.45 - 8.73 .15 16.74 - 16.88 .56
8.74 - 9.02 .16 16.89 - 17.03 .57
9.03 - 9.29 .17 17.04 - 17.18 .58
9.30 - 9.55 .18 17.19 - 17.33 .59
9.56 - 9.81 .19 17.34 - 17.48 .60
9.82 - 10.07 .20 17.49 - 17.63 .61
10.08 - 10.31 .21 17.64 - 17.78 .62
10.32 - 10.55 .22 17.79 - 17.92 .63
10.56 - 10.79 .23 17.93 - 18.01 .64
10.80 - 11.02 .24 18.08 - 18.21 .65
11.03 - 11.25 .25 18.22 - 18.35 .66
11.26 - 11.47 .26 18.36 - 18.49 .67
11.48 - 11.69 .27 18.50 - 18.63 .68
11.70 - 11.90 .28 18.64 - 18.77 .69
11.91 - 12.11 .29 18.78 - 18.91 .70
12.12 - 12.32 .20 18.92 - 19.05 .71
12.33 - 12.52 .31 19.06 - 19.18 .72
12.53 - 12.72 .32 19.19 - 19.32 .73
12.73 - 12.92 .33 19.33 - 19.45 .74
12.93 - 13.12 .34 19.46 - 19.59 .75
13.13 - 13.31 .35 19.60 - 19.72 .76
13.32 - 13.50 .36 19.73 - 19.85 .77
13.51 - 13.69 .37 19.86 - 19.99 .78
13.70 - 13.87 .38 20.00 - 20.12 .79
13.88 - 14.06 .39
14.07 - 14.24 .40
</TABLE>
A1-1
<PAGE> 17
EXAMPLE OF EARLY REPAYMENT PREMIUM CALCULATION
<TABLE>
<S> <C>
Original Loan Amount $8,730,000
Interest Rate - Per Annum 8.00%
Amortization Schedule 30 Years
Debt Service Constant - Per Annum 8.81%
Monthly Debt Service $64,058
Original Term 10 Years
Proposed Repayment Date 3rd Anniversary
Proposed Repayment Amount $8,492,557 *
</TABLE>
<TABLE>
<S> <C>
ASSUMED YIELD TO MATURITY OF TREASURY SECURITY 6.50%
LESS: BASIS POINT ADJUSTMENT ** 0.09%
TREASURY YIELD ** 6.41%
DISCOUNT RATE ** 0.5342%
</TABLE>
SCHEDULE OF REMAINING LOAN PAYMENTS
<TABLE>
<CAPTION>
Debt Service Balloon Total
------------ ------- -----
<S> <C> <C>
1 $ 64,058 $ 64,058
2 64,058 64,058
3 64,058 64,058
4 64,058 64,058
5 64,058 64,058
6 64,058 64,058
7 64,058 64,058
8 64,058 64,058
9 64,058 64,058
10 64,058 64,058
11 64,058 64,058
12 64,058 64,058
13 64,058 64,058
14 64,058 64,058
15 64,058 64,058
16 64,058 64,058
17 64,058 64,058
18 64,058 64,058
19 64,058 64,058
20 64,058 64,058
21 64,058 64,058
22 64,058 64,058
23 64,058 64,058
24 64,058
$8,299,598 * $8,363,656
GRAND TOTAL OF REMAINING PAYMENTS $9,836,990
NET PRESENT VALUE OF REMAINING PAYMENTS $8,742,786
PROPOSED REPAYMENT AMOUNT $8,492,557
----------
LOSS OF YIELD AMOUNT ** $250,229 ***
</TABLE>
* See attached amortization schedule.
** As defined in Exhibit A - Early Repayment Premium - to which this
example is attached.
*** Because the Loss of Yield Amount is greater than 1% of the entire
outstanding principal balance being repaid, the Early Retirement
Premium will be equal to the Loss of Yield Amount.
<PAGE> 18
AMORTIZATION SCHEDULE
<TABLE>
<S> <C>
INTEREST RATE: 8.00%
ORIGINAL MORTGAGE BALANCE: $8,730,000
AMORTIZATION SCHEDULE: 30 YEARS
TERM: 10 YEARS
MONTHLY DEBT SERVICE: $64,058
</TABLE>
<TABLE>
BEGINNING DEBT ENDING
- --------------------------------------------------------- --------------------------------------------
MO BALANCE SERVICE INT AMORT BALANCE
<S> <C> <C> <C> <C> <C>
1 8,730,000 64,058 58,200 5,858 8,724,142
2 8,724,142 64,058 58,161 5,897 7,718,246
3 7,718,246 64,058 58,122 5,936 8,712,310
4 8,712,310 64,058 58,082 5,976 8,706,334
5 8,706,334 64,058 58,042 5,015 8,700,319
6 8,700,319 64,058 58,002 5,056 8,694,263
7 8,694,263 64,058 57,962 5,096 8,688,167
8 8,688,167 64,058 57,921 6,137 8,682,031
9 8,682,031 64,058 57,880 6,177 8,675,853
10 8,675,853 64,058 57,839 6,219 8,669,635
11 8,669,635 64,058 57,798 6,260 8,663,375
12 8,663,375 64,058 57,756 6,302 8,657,073
13 8,657,073 64,058 57,714 6,344 8,650,729
14 8,650,729 64,058 57,672 6,386 8,644,343
15 8,644,343 64,058 57,629 6,429 8,637,914
16 8,637,914 64,058 57,586 6,472 8,631,443
17 8,631,443 64,058 57,543 6,515 8,624,928
18 8,624,928 64,058 57,500 6,558 8,618,370
19 8,618,370 64,058 57,456 6,602 8,611,768
20 8,611,768 64,058 57,412 6,646 8,605,122
21 8,605,122 64,058 57,367 6,690 8,598,432
22 8,598,432 64,058 57,323 6,735 8,591,697
23 8,591,697 64,058 57,278 6,780 8,584,917
24 8,584,917 64,058 57,233 6,825 8,578,093
25 8,578,093 64,058 57,187 6,870 8,571,222
26 8,571,222 64,058 57,141 6,916 8,564,306
27 8,564,306 64,058 57,095 6,962 8,557,344
28 8,557,344 64,058 57,049 7,009 8,550,335
29 8,550,335 64,058 57,002 7,055 8,543,280
30 8,543,280 64,058 56,955 7,102 8,536,177
31 8,536,177 64,058 56,908 7,150 8,529,027
32 8,529,027 64,058 56,860 7,197 8,521,830
33 8,521,830 64,058 56,812 7,245 8,514,583
34 8,514,583 64,058 56,764 7,294 8,507,291
35 8,507,291 64,058 56,715 7,342 8,499,948
36 8,499,948 64,058 56,666 7,391 8,492,557
37 8,492,557 64,058 56,617 7,441 8,485,116
38 8,485,116 64,058 56,567 7,490 8,477,626
39 8,477,626 64,058 56,518 7,540 8,470,086
40 8,470,086 64,058 56,467 7,590 8,462,496
41 8,462,496 64,058 56,417 7,641 8,454,855
42 8,454,855 64,058 56,366 7,692 8,447,163
43 8,447,163 64,058 56,314 7,743 8,439,419
44 8,439,419 64,058 56,263 7,795 8,431,625
</TABLE>
<PAGE> 19
<TABLE>
BEGINNING DEBT ENDING
- --------------------------------------------------------- --------------------------------------------
MO BALANCE SERVICE INT AMORT BALANCE
<S> <C> <C> <C> <C> <C>
45 8,431,625 64,058 56,211 7,847 8,423,778
46 8,423,778 64,058 56,159 7,899 8,415,879
47 8,415,879 64,058 56,106 7,952 8,407,927
48 8,407,927 64,058 56,053 8,005 8,399,922
49 8,399,922 64,058 55,999 8,058 8,391,864
50 8,391,864 64,058 55,946 8,112 8,383,752
51 8,383,752 64,058 55,892 8,166 8,375,586
52 8,375,586 64,058 55,837 8,220 8,367,366
53 8,367,366 64,058 55,782 8,275 8,359,090
54 8,359,090 64,058 55,727 8,330 8,350,760
55 8,350,760 64,058 55,672 8,386 8,342,374
56 8,342,374 64,058 55,616 8,442 8,333,392
57 8,333,392 64,058 55,560 8,498 8,325,434
58 8,325,434 64,058 55,503 8,555 8,316,879
59 8,316,879 64,058 55,446 8,612 8,308,268
60 8,308,268 64,058 55,388 8,669 8,299,598
</TABLE>
<PAGE> 1
Exhibit 10.2
[FACE OF NOTE]
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY (THE "DEPOSITARY") (55 WATER STREET, NEW YORK, NEW YORK) TO THE
ISSUER HEREOF OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME
AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY AND ANY PAYMENT
IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN CERTIFICATED
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR
ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.
REGISTERED $30,000,000
No. FXR-01
CUSIP: 86623XAA1
SUMMIT PROPERTIES PARTNERSHIP, L.P.
MEDIUM-TERM NOTE
(Fixed Rate)
ORIGINAL ISSUE DATE: 7/28/98 INTEREST RATE: 6.75% STATED MATURITY
INTEREST PAYMENT DATE(S): DEFAULT RATE: N/A DATE: 7/30/2001
1/30 AND 7/30
Other:
INITIAL REDEMPTION INITIAL REDEMPTION ANNUAL
DATE: N/A PERCENTAGE: N/A REDEMPTION
PERCENTAGE
REDUCTION: N/A
1
<PAGE> 2
OPTIONAL REPAYMENT [ ] CHECK IF AN
DATE(S): N/A ORIGINAL ISSUE
DISCOUNT NOTE
Issue Price: %
REPAYMENT PRICE: N/A
SPECIFIED CURRENCY: AUTHORIZED DENOMINATION: EXCHANGE RATE
[X] United States dollars [X] $1,000 and integral AGENT: N/A
[ ] Other: multiples thereof
[ ] Other:
EXCHANGE RATE: ADDENDUM ATTACHED: OTHER/ADDITIONAL
U.S. $1.00 = ________ [ ] Yes PROVISIONS: N/A
[X] No
Summit Properties Partnership, L.P., a limited partnership duly
organized and existing under the laws of Delaware (hereinafter referred to as
the "Partnership," which term includes any successor entity under the Indenture
hereinafter referred to), for value received, hereby promises to pay to CEDE &
CO., or registered assigns, the principal sum of $30,000,000, on the Stated
Maturity Date specified above (or any Redemption Date or Repayment Date, each as
defined on the reverse hereof) (each such Stated Maturity Date, Redemption Date
or Repayment Date being hereinafter referred to as the "Maturity Date" with
respect to the principal repayable on such date) and to pay interest thereon, at
the Interest Rate per annum specific above, until the principal hereof is paid
or duly made available for payment, and (to the extent that the payment of such
interest shall be legally enforceable) at the Default Rate per annum specified
above on any overdue principal, premium and/or interest, including any overdue
sinking fund or redemption payment. The Partnership will pay interest in arrears
on each Interest Payment Date, if any, specified above (each, an "Interest
Payment Date"), commencing with the first Interest Payment Date next succeeding
the Original Issue Date specified above, and on the Maturity Date; provided,
however, that if the Original Issue Date occurs between a Record Date (as
defined below) and the next succeeding Interest Payment Date, interest payments
will commence on the second Interest Payment Date next succeeding the Original
Issue Date to the holder of this Note on the Record Date with respect to such
second Interest Payment Date. Interest on this Note will be computed on the
basis of a 360-day year of twelve 30-day months.
Interest on this Note will accrue from, and including, the immediately
preceding Interest Payment Date to which interest has been paid or duly provided
for (or from, and including, the Original Issue Date if no interest has been
paid or duly provided for) to, but excluding, the applicable Interest Payment
Date or the Maturity Date, as the case may be (each, an "Interest Period"). The
interest so payable, and punctually paid or duly provided for,
2
<PAGE> 3
on any Interest Payment Date will, subject to certain exceptions described
herein, be paid to the person in whose name this Note (or one or more
predecessor Notes) is registered at the close of business on the fifteenth
calendar day (whether or not a Business Day, as defined below) immediately
preceding such Interest Payment Date (the "Record Date"); provided, however,
that interest payable on the Maturity Date will be payable to the person to whom
the principal hereto and premium, if any, hereon shall be payable. Any such
interest not so punctually paid or duly provided for ("Defaulted Interest") will
forthwith cease to be payable to the holder on any Record Date, and shall be
paid to the person in whose name this Note is registered at the close of
business on a special record date (the "Special Record Date") for the payment of
such Defaulted Interest to be fixed by the Trustee hereinafter referred to,
notice whereof shall be given to the holder of this Note by the Trustee not more
than 15 days and not less than 10 days prior to such Special Record Date or may
be paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which this Note may be listed, and
upon such notice as may be required by such exchange, all as more fully provided
for in the Indenture.
Payment of principal, premium, if any, and interest in respect of this
Note due on the Maturity Date or any prior date on which the principal or an
installment of principal of this Note becomes due and payable, whether by the
declaration of acceleration or otherwise, will be made in immediately available
funds upon presentation and surrender of this Note (and, with respect to any
applicable repayment of this Note, upon presentation and surrender of this Note
and a duly completed election form as contemplated on the reverse hereof) at the
office or agency maintained by the Partnership for that purpose in the Borough
of Manhattan, The City of New York, currently the office of the Trustee or the
Designated Agent; provided, however, that if the Specified Currency specified
above is other than United States dollars and such payment is to be made in the
Specified Currency in accordance with the provisions set forth below, such
payment may be made by wire transfer of immediately available funds to an
account with a bank designated by the holder hereof at least 15 calendar days
prior to the Maturity Date, provided that such bank has appropriate facilities
therefor and that this Note (and, if applicable, a duly completed repayment
election form) is presented and surrendered at the aforementioned office or
agency maintained by the Partnership in time for the Trustee or the Designated
Agent to make such payment in such funds in accordance with its normal
procedures. Payment of interest due on any Interest Payment Date other than the
Maturity Date will be made at the aforementioned office or agency maintained by
the Partnership or, at the option of the Partnership, by check mailed to the
address of the person entitled thereto as such address shall appear in the
Security Register maintained by the Trustee or the Designated Agent; provided,
however, that a holder of U.S. $10,000,000 (or, if the Specified Currency is
other than United States dollars, the equivalent thereof in the Specified
Currency) or more in aggregate principal amount of Notes (whether having
identical or different terms and pro- visions) will be entitled to receive
interest payments on any Interest Payment Date other than the Maturity Date by
wire transfer of immediately available funds if appropriate wire transfer
instructions have been received in writing by the Trustee or Designated Agent
not less than 15 calendar days prior to such Interest Payment Date. Any such
wire transfer instructions received by the Trustee or the Designated Agent shall
remain in effect until revoked by such holder.
3
<PAGE> 4
If any Interest Payment Date or the Maturity Date falls on a day that
is not a Business Day, the required payment of principal, premium, if any,
and/or interest shall be made on the next succeeding Business Day with the same
force and effect as if made on the date such payment was due, and no interest
shall accrue with respect to such payment for the period from and after such
Interest Payment Date or the Maturity Date, as the case may be, to the date of
such payment on the next succeeding Business Day.
As used herein, "Business Day" means any day, other than a Saturday or
Sunday, that is neither a legal holiday nor a day on which banking institutions
are authorized or required by law, regulation or executive order to close in The
City of New York, Chicago, or Charlotte, North Carolina; provided, however, that
if the Specified Currency is other than United States dollars, such day is also
not a day on which banking institutions are authorized or required by law,
regulation or executive order to close in the Principal Financial Center (as
defined below) of the country issuing the Specified Currency (or, if the
Specified Currency is European Currency Units ("ECU"), such day is not a day
that appears as an ECU no-settlement day on the display designated as "ISDE" on
the Reuter Monitor Money Rates Service (or a day so designated by the ECU
Banking Association), or, if ECU non-settlement days do not appear on that page
(and are not so designated), is not a day on which payments in ECU cannot be
settled in the international interbank market). Principal Financial Center means
the capital city of the country issuing the Specified Currency, except that with
respect to United States dollars, Australian dollars, Deutsche marks, Dutch
guilders, Italian lire, Swiss francs and ECU, the Principal Financial Center
shall be The City of New York, Sydney, Frankfurt, Amsterdam, Milan, Zurich and
Luxembourg, respectively.
The Partnership is obligated to make payments of principal, premium, if
any, and interest in respect of this Note in the Specified Currency (or, if the
Specified Currency is not at the time of such payment legal tender for the
payment of public and private debts, in such other coin or currency of the
country which issued the Specified Currency as at the time of such payment is
legal tender for the payment of such debts). If the Specified Currency is other
than United States dollars, except as provided below, any such amounts so
payable by the Partnership will be converted by the Exchange Rate Agent
specified above into United States dollars for payment to the holder of this
Note.
If the Specified Currency is other than United States dollars, the
holder of this Note may elect to receive such amounts in such Specified
Currency. If the holder of this Note shall not have duly made an election to
receive all or a specified portion of any payment of principal, premium, if any,
and/or interest in respect of this Note in the Specified Currency, any United
States dollar amount to be received by the holder of this Note will be based on
the highest bid quotation in The City of New York received by the Exchange Rate
Agent at approximately 11:00 A.M., New York City time, on the second Business
Day preceding the applicable payment date from three recognized foreign exchange
dealers (one of whom may be the Exchange Rate Agent) selected by the Exchange
Rate Agent and approved by the Partnership for the purchase by the quoting
dealer of the Specified Currency for United States dollars for settlement on
such payment date in the aggregate amount of such Specified
4
<PAGE> 5
Currency payable to all holders of Foreign Currency Notes scheduled to receive
United States dollar payments and at which the applicable dealer commits to
execute a contract. All currency exchange costs will be borne by the holder of
this Note by deductions from such payments. If three such bid quotations are not
available, payments on this Note will be made in the Specified Currency.
If the Specified Currency is other than United States dollars, the
holder of this Note may elect to receive all or a specified portion of any
payment of principal, premium, if any, and/or interest in respect of this Note
in the Specified Currency by submitting a written request for such payment to
the Trustee or the Designated Agent at its corporate trust Office in The City of
New York on or prior to the applicable Record Date or at least 15 calendar days
prior to the Maturity Date, as the case may be. Such written request may be
mailed or hand delivered or sent by cable, telex or other form of facsimile
transmission. The holder of this Note may elect to receive all or a specified
portion of all future payments in the Specified Currency in respect of such
principal, premium, if any, and/or interest and need not file a separate
election for each payment. Such election will remain in effect until revoked by
written notice to the Trustee or the Designated Agent, but written notice of any
such revocation must be received by the Trustee or the Designated Agent on or
prior to the applicable Record Date or at least 15 calendar days prior to the
Maturity Date, as the case may be.
If the Specified Currency is other than United States dollars or a
composite currency and the holder of this Note shall have duly made an election
to receive all or a specified portion of any payment of principal, premium, if
any, and/or interest in respect of this Note in the Specified Currency and if
the Specified Currency is not available due to the imposition of exchange
controls or other circumstances beyond the reasonable control of the
Partnership, the Partnership will be entitled to satisfy its obligations to the
holder of this Note by making such payment in United States dollars on the basis
of the Market Exchange Rate (as defined below) on the second Business Day prior
to such payment date or, if such Market Exchange Rate is not then available, on
the basis of the most recently available Market Exchange Rate or as otherwise
specified on the face hereof. The "Market Exchange Rate" for the Specified
Currency means the noon dollar buying rate in The City of New York for cable
transfers for such Specified Currency as certified for customs purposes by (or
if not so certified, as otherwise determined by) the Federal Reserve Bank of New
York. Any payment made under such circumstances in United States dollars will
not constitute an Event of Default (as defined in the Indenture) with respect to
this Note.
If the Specified Currency is a composite currency and the holder of
this Note shall have duly made an election to receive all or a specified portion
of any payment of principal, premium, if any, and/or interest in respect of this
Note in the Specified Currency and if such composite currency is unavailable due
to the imposition of exchange controls or other circumstances beyond the
reasonable control of the Partnership, then the Partnership will be entitled to
satisfy its obligations to the holder of this Note by making such payment in
United States dollars. The amount of each payment in United States dollars shall
be computed by the Exchange Rate Agent on the basis of the equivalent of the
composite currency in United States
5
<PAGE> 6
dollars. The component currencies of the composite currency for this purpose
(collectively, the "Component Currencies" and each, a "Component Currency")
shall be the currency amounts that were components of the composite currency as
of the last day on which the composite currency was used. The equivalent of the
composite currency in United States dollars shall be calculated by aggregating
the United States dollar equivalents of the Component Currencies. The United
States dollar equivalent of each of the Component Currencies shall be determined
by the Exchange Rate Agent on the basis of the most recently available Market
Exchange Rate for each such Component Currency, or as otherwise specified on the
face hereof.
If the official unit of any Component Currency is altered by way of
combination or subdivision, the number of units of the currency as a Component
Currency shall be divided or multiplied in the same proportion. If two or more
Component Currencies are consolidated into a single currency, the amounts of
those currencies as Component Currencies shall be replaced by an amount in such
single currency equal to the sum of the amounts of the consolidated Component
Currencies expressed in such single currency. If any Component Currency is
divided into two or more currencies, the amount of the original Component
Currency shall be replaced by the amounts of such two or more currencies, the
sum of which shall be equal to the amount of the original Component Currency.
All determinations referred to above made by the Exchange Rate Agent
shall be at its sole discretion and shall, in the absence of manifest error, be
conclusive for all purposes and binding on the holder of this Note.
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof and, if so specified above on the face hereof, in
the Addendum hereto, which further provisions shall have the same force and
effect as if set forth on the face hereof.
Notwithstanding any provisions to the contrary contained herein, if the
face of this Note specifies that an Addendum is attached hereto or that
"Other/Additional Provisions" apply to this Note, this Note shall be subject to
the terms set forth in such Addendum or such "Other/Additional Provisions."
Unless the Certificate of Authentication hereon has been executed by
the Trustee or its Authenticating Agent by manual signature, this Note shall not
be entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.
6
<PAGE> 7
IN WITNESS WHEREOF, Summit Properties Partnership, L.P. has caused this
Note to be duly executed under the facsimile corporate seal of its general
partner.
Dated: July 28, 1998 SUMMIT PROPERTIES PARTNERSHIP, L.P.
--------------------
By: Summit Properties Inc.,
its General Partner
By: /s/ Michael L. Schwarz
---------------------------------
Michael L. Schwarz
Executive Vice President and
Chief Financial Officer
(SEAL)
Attest:
/s/ Michael G. Malone
- -------------------------------
Michael G. Malone
Secretary
TRUSTEE'S CERTIFICATE OF AUTHENTICATION:
This is one of the Securities of the series designated therein referred
to in the within-mentioned Indenture.
Dated: July 28, 1998 FIRST UNION NATIONAL BANK,
--------------------
as Trustee
By: /s/ Terry Baker
---------------------------
Authorized Signatory
7
<PAGE> 8
[REVERSE OF NOTE]
SUMMIT PROPERTIES PARTNERSHIP, L.P.
MEDIUM-TERM NOTE
(Fixed Rate)
This Note is one of a duly authorized series of Securities (the
"Securities") of the Partnership issued and to be issued under an Indenture,
dated as of August 7, 1997 as supplemented by the Third Supplemental Indenture
dated as of May 29, 1998, as further amended, modified or supplemented from time
to time (the "Indenture"), between the Partnership and First Union National
Bank, as Trustee (the "Trustee," which term includes any successor trustee under
the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Partnership, the Trustee and
the holders of the Securities, and of the terms upon which the Securities are,
and are to be, authenticated and delivered. This Note is one of the series of
Securities designated as "Medium-Term Notes Due Nine Months or More from Date of
Issue" (the "Notes"). All terms used but not defined in this Note or in an
Addendum hereto shall have the meanings assigned to such terms in the Indenture
or on the face hereof, as the case may be.
This Note is issuable only in registered form without coupons in
minimum denominations of U.S. $1,000 and integral multiples thereof or the
minimum Authorized Denomination specified on the face hereof.
This Note will not be subject to any sinking fund and, unless otherwise
specified on the face hereof in accordance with the provisions of the following
two paragraphs, will not be redeemable or repayable prior to the Stated Maturity
Date.
This Note will be subject to redemption at the option of the
Partnership on any date on and after the Initial Redemption Date, if any,
specified on the face hereof, in whole or from time to time in part in
increments of U.S. $1,000 or the minimum Authorized Denomination (provided that
any remaining principal amount hereof shall be at least U.S. $1,000 or such
minimum Authorized Denomination), at the Redemption Price (as defined below),
together with unpaid interest accrued thereon to the date fixed for redemption
(each, a "Redemption Date"), on notice given not more than 60 nor less than 30
calendar days prior to the Redemption Date and in accordance with the provisions
of the Indenture. The "Redemption Price" shall initially be the Initial
Redemption Percentage specified on the face hereof multiplied by the unpaid
principal amount of this Note to be redeemed. The Initial Redemption Percentage
shall decline at each anniversary of the Initial Redemption Date by the Annual
Redemption Percentage Reduction, if any, specified on the face hereof until the
Redemption Price is 100% of the unpaid principal amount to be redeemed. In the
event of redemption of this Note in part only, a new Note of like tenor for the
unredeemed portion hereof and otherwise having the same terms as this Note shall
be issued in the name of the holder hereof upon the presentation and surrender
hereof.
8
<PAGE> 9
This Note will be subject to repayment by the Partnership at the option
of the holder hereof on the Optional Repayment Date(s), if any, specified on the
face hereof, in whole or in part in increments of U.S.$1,000 or the minimum
Authorized Denomination (provided that any remaining principal amount hereof
shall be at least U.S.$1,000 or such minimum Authorized Denomination), at a
repayment price equal to 100% of the unpaid principal amount to be repaid,
together with unpaid interest accrued thereon to the date fixed for repayment
(each, a "Repayment Date"). For this Note to be repaid, the Trustee or the
Designated Agent must receive at its office in the Borough of Manhattan, The
City of New York, referred to on the face hereof, at least 30 days but not more
than 60 days prior to the Repayment Date (i) this Note and the form hereon
entitled "Option to Elect Repayment" duly completed or (ii) a telegram, telex,
facsimile transmission, or a letter from a member of a national securities
exchange or the National Association of Securities Dealers, Inc. or a commercial
bank or trust company in the United States setting forth the name of the holder
hereof, the principal amount of this Note, the principal amount of this Note to
be repaid, the certificate number or a description of the tenor and terms of
this Note, a statement that the option to elect repayment is being exercised
thereby, and a guarantee that this Note, together with the form hereon entitled
"Option to Elect Repayment" duly completed, will be received by the Trustee or
the Designated Agent not later than the fifth Business Day after the date of
such telegram, telex, facsimile transmission or letter, provided that such
telegram, telex, facsimile transmission or letter shall only be effective if
this Note and duly completed form are received by the Trustee or the Designated
Agent by such fifth Business Day. Exercise of such repayment option by the
holder hereof will be irrevocable. In the event of repayment of this Note in
part only, a new Note of like tenor for the unrepaid portion hereof and
otherwise having the same terms as this Note shall be issued in the name of the
holder hereof upon the presentation and surrender hereof.
If this Note is an Original Issue Discount Note as specified on the
face hereof, the amount payable to the holder of this Note in the event of
redemption, repayment or acceleration of maturity of this Note will be equal to
the sum of (i) the Issue Price specified on the face hereof (increased by any
accruals of the Discount, as defined below) and, in the event of any redemption
of this Note (if applicable), multiplied by the Initial Redemption Percentage
(as adjusted by the Annual Redemption Percentage Reduction, if applicable) and
(ii) any unpaid interest on this Note accrued from the Original Issue Date to
the Redemption Date, Repayment Date or date of acceleration of maturity, as the
case may be. The difference between the Issue Price and 100% of the principal
amount of this Note is referred to herein as the "Discount."
For purposes of determining the amount of Discount that has accrued as
of any Redemption Date, Repayment Date or date of acceleration of maturity of
this Note, such Discount will be accrued using a constant yield method. The
constant yield will be calculated using a 30-day month, 360-day year convention,
a compounding period that, except for the Initial Period (as defined below),
corresponds to the shortest period between Interest Payment Dates (with ratable
accruals within a compounding period), a coupon rate equal to the initial coupon
rate applicable to this Note and an assumption that the maturity of this Note
will not be
9
<PAGE> 10
accelerated. If the period from the Original Issue Date to the initial Interest
Payment Date (the "Initial Period") is shorter than the compounding period for
this Note, a proportionate amount of the yield for an entire compounding-period
will be accrued. If the Initial Period is longer than the compounding period,
then such period will be divided into a regular compounding period and a short
period, with the short period being treated as provided in the preceding
sentence.
If an Event of Default, as defined in the Indenture, shall occur and be
continuing, the principal of the Notes may be declared due and payable in the
manner and with the effect provided in the Indenture.
The Indenture contains provisions for defeasance of (i) the entire
indebtedness of the Notes or (ii) certain covenants and Events of Default with
respect to the Notes, in each case upon compliance with certain conditions set
forth therein, which provisions apply to the Notes.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Partnership and the rights of the holders of the Securities at any time by the
Partnership and the Trustee with the consent of the holders of not less than a
majority of the aggregate principal amount of all Securities at the time
outstanding and affected thereby. The Indenture also contains provisions
permitting the holders of not less than a majority of the aggregate principal
amount of the outstanding Securities of any series, on behalf of the holders of
all such Securities, to waive compliance by the Partnership with certain
provisions of the Indenture. Furthermore, provisions in the Indenture permit the
holders of not less than a majority of the aggregate principal amount of the
outstanding Securities of any series, in certain instances, to waive, on behalf
of all of the holders of Securities of such series, certain past defaults under
the Indenture and their consequences. Any such consent or waiver by the holder
of this Note shall be conclusive and binding upon such holder and upon all
future holders of this Note and other Notes issued upon the registration of
transfer hereof or in exchange heretofore or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Note.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Partnership, which
is absolute and unconditional, to pay principal, premium, if any, and interest
in respect of this Note at the times, places and rate or formula, and in the
coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein
and herein set forth, the transfer of this Note is registrable in the Security
Register of the Partnership upon surrender of this Note for registration of
transfer at the office or agency of the Partnership in any place where the
principal hereof and any premium or interest hereon are payable, duly endorsed
by, or accompanied by a written instrument of transfer in form satisfactory to
the Partnership and the Security Registrar, duly executed by, the holder hereof
or by his attorney duly authorized in writing, and thereupon one or more new
Notes, of authorized denominations
10
<PAGE> 11
and for the same aggregate principal amount, will be issued to the designated
transferee or transferees.
As provided in the Indenture and subject to certain limitations therein
and herein set forth, this Note is exchangeable for a like aggregate principal
amount of Notes of different authorized denominations but otherwise having the
same terms and conditions, as requested by the holder hereof surrendering the
same.
No service charge shall be made for any such registration of transfer
or exchange, but the Partnership may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer, the
Partnership, the Trustee and any agent of the Partnership or the Trustee may
treat the holder in whose name this Note is registered as the owner thereof for
all purposes, whether or not this Note be overdue, and neither the Partnership,
the Trustee nor any such agent shall be affected by notice to the contrary.
This Note and all documents, agreements, understandings and
arrangements relating to any transaction contemplated hereby or thereby have
been executed or entered into by the undersigned in his/her capacity as an
officer of the sole general partner of the Partnership which has been formed as
a Delaware limited partnership, and not individually, and neither the general
partner, officers, employees or limited partners of the Partnership shall be
bound or have any personal liability hereunder or thereunder. The holder of this
Note by accepting this Note waives and releases all such liability. This waiver
and release are part of the consideration for the issue of this Note. Each party
hereto shall look solely to the assets of the Partnership for satisfaction of
any liability of the Partnership in respect of this Note and all documents,
agreements, understandings and arrangements relating to any transaction
contemplated hereby or thereby and will not seek recourse or commence any action
against any of the trustees, officers or shareholders of the Partnership or any
of their personal assets for the performance or payment of any obligation
hereunder or thereunder. The foregoing shall also apply to any future documents,
agreements, understandings, arrangements and transactions between the parties
hereto.
The Indenture and this Note shall be governed by and construed in
accordance with the laws of the State of New York without regard to its
principles of conflicts of laws.
11
<PAGE> 12
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this Note, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as tenants
in common
UNIF GIFT MIN ACT - _________Custodian_________________
(Cust) (Minor)
Under Uniform Gifts to Minors Act _____________________
(State)
Additional abbreviations may also be used though not in the above list.
12
<PAGE> 13
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
___________________________________________________________________________
___________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee) this Note and all rights thereunder hereby irrevocably constituting
and appointing Attorney to transfer this Note on the books of the Trustee, with
full power of substitution in the premises.
Dated:_____________________
NOTICE: The signature(s) on this Assignment must correspond with the
name(s) as written upon the face of this Note in every particular, without
alteration or enlargement or any change whatsoever.
13
<PAGE> 14
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably request(s) and instruct(s) the
Partnership to repay this Note (or portion hereof specified below) pursuant to
its terms at a price equal to 100% of the principal amount to be repaid,
together with unpaid interest accrued hereon to the Repayment Date, to the
undersigned, at
________________________________________________________________
(Please print or typewrite name and address of the undersigned)
For this Note to be repaid, the Trustee or the Designated Agent must
receive at its corporate trust office in the Borough of Manhattan, The City of
New York, this Note with this "Option to Elect Repayment" form duly completed.
If less than the entire principal amount of this Note is to be repaid,
specify the portion hereof (which shall be increments of U.S.$1,000 (or, if the
Specified Currency is other than United States dollars, the minimum Authorized
Denomination specified on the face hereof)) which the holder elects to have
repaid and specify the denomination or denominations (which shall be an
Authorized Denomination) of the Notes to be issued to the holder for the portion
of this Note not being repaid (in the absence of any such specification, one
such Note will be issued for the portion not being repaid).
Principal Amount
to be Repaid: $_______________
Date:_______________ ___________________________________
Notice: The signature(s) on this
Option to Elect Repayment must
correspond with the name(s) as
written upon the face of this Note
in every particular, without
alteration or enlargement or any
change whatsoever.
14
<PAGE> 1
EXHIBIT 12.1
SUMMIT PROPERTIES PARTNERSHIP, L.P.
CALCULATION OF RATIOS OF EARNINGS TO FIXED CHARGES
THREE AND SIX MONTHS ENDED JUNE 30, 1998
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, JUNE 30,
------------ ----------
<S> <C> <C>
Funds from operations before fixed charges:
Income (loss) before extraordinary items.................. $15,868 $22,760
Interest:
Expense incurred....................................... 7,458 14,446
Amortization of deferred financing costs............... 203 513
------- -------
Total............................................. $23,529 $37,719
======= =======
Fixed charges:
Interest expense.......................................... $ 7,458 $14,446
Interest capitalized...................................... 1,495 2,629
Rental fixed charges...................................... 34 73
Amortization of deferred financing costs.................. 203 513
------- -------
Total............................................. $ 9,190 $17,661
======= =======
Ratio of earnings to fixed charges.......................... 2.56 2.14
======= =======
</TABLE>
26
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 2,387
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 1,011,751
<DEPRECIATION> 114,258
<TOTAL-ASSETS> 923,196
<CURRENT-LIABILITIES> 0
<BONDS> 539,201
0
0
<COMMON> 0
<OTHER-SE> 339,509
<TOTAL-LIABILITY-AND-EQUITY> 923,196
<SALES> 67,385
<TOTAL-REVENUES> 67,810
<CGS> 0
<TOTAL-COSTS> 23,885
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,959
<INCOME-PRETAX> 22,760
<INCOME-TAX> 0
<INCOME-CONTINUING> 22,760
<DISCONTINUED> 185
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 22,575
<EPS-PRIMARY> .79
<EPS-DILUTED> .79
</TABLE>
