<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM 8-K/A-1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
----------
Date of Report (Date of earliest event reported): March 6, 1997
-------------
SUMMIT PROPERTIES INC.
(Exact name of Registrant as specified in charter)
Maryland 1-12792 56-1857807
- - ---------------------------- ------------------------ -------------------
(State or other jurisdiction (Commission File Number) (IRS employer
of incorporation) identification no.)
212 South Tryon Street, Suite 500, Charlotte, NC 28281
------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(704) 334-9905
----------------------------------------------------
(Registrant's telephone number, including area code)
<PAGE> 2
The Form 8-K of Summit Properties Inc. (the "Company") filed on
March 6, 1997 is hereby amended to include financial statements, pro forma
financial information and certain exhibits.
Item 7. Financial Statements and Exhibits
(a) Financial Statements under Rule 3-14 of Regulation S-X
(i) Portofino Place, Ltd. (currently Summit Portofino)
Financial Statements and Independent Auditors' Report
December 31,1996 and 1995
(ii) Summit Mayfaire Apartments
Historical Summary of Revenues and Direct Operating
Expenses for the Year Ended December 31, 1996 and
Independent Auditors' Report
(iii) Sand Lake Joint Venture (currently Summit Sand Lake)
Financial Statements as of December 31, 1996, Together with
Report of Independent Certified Public Accountants
(iv) Summit American Associates (currently Summit Plantation)
Financial Statements and Independent Auditors' Report
December 31, 1995. (While Summit American Associates is
deemed a related party under Rule 3-14 of Regulation S-X,
Financial Statements are filed only for the year ended
December 31, 1995, as such year was the first year of
operations.)
(b) Pro Forma Financial Information
(i) Summit Properties Inc.
Pro Forma Condensed Consolidated Balance Sheet as of
December 31, 1996 (Unaudited)
Pro Forma Condensed Consolidated Statement of Earnings for
the Year Ended December 31, 1996 (Unaudited)
(c) Exhibits:
23.1 Consent of Reznick, Fedder & Silverman
23.2 Consent of Deloitte & Touche LLP
23.3 Consent of Arthur Andersen LLP
23.4 Consent of Reznick, Fedder & Silverman
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SUMMIT PROPERTIES INC.
Date: May 1, 1997 By: /s/ William F. Paulsen
---------------------------------------
William F. Paulsen
President and Chief Executive Officer
<PAGE> 4
FINANCIAL STATEMENTS AND
INDEPENDENT AUDITORS' REPORT
PORTOFINO PLACE, LTD.
DECEMBER 31, 1996 AND 1995
<PAGE> 5
Portofino Place, Ltd.
TABLE OF CONTENTS
PAGE
INDEPENDENT AUDITORS' REPORT 3
FINANCIAL STATEMENTS
BALANCE SHEETS 4
STATEMENTS OF OPERATIONS 5
STATEMENTS OF PARTNERS' EQUITY 6
STATEMENTS OF CASH FLOWS 7
NOTES TO FINANCIAL STATEMENTS 8
<PAGE> 6
INDEPENDENT AUDITORS' REPORT
To the Partners
Portofino Place, Ltd.
We have audited the accompanying statements of financial position
of Portofino Place, Ltd. as of December 31, 1996 and 1995, and the related
statements of operations, partners' equity and cash flows for the years then
ended. These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audits
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Portofino Place,
Ltd. as of December 31, 1996 and 1995, and the results of its operations,
changes in partners' equity, and cash flows for the years then ended in
conformity with generally accepted accounting principles.
REZNICK FEDDER & SILVERMAN
Bethesda, Maryland
March 3, 1997
- 3 -
<PAGE> 7
Portofino Place, Ltd.
BALANCE SHEETS
December 31,
<TABLE>
<CAPTION>
ASSETS
1996 1995
----------- -----------
<S> <C> <C>
ASSETS
Rental property, less accumulated depreciation $18,919,008 $19,746,437
Cash 438,663 597,867
Construction escrow 12,869 32,869
Cash held for tenant security deposits 240,587 206,878
Accounts receivable
Tenant 11,715 18,872
Other 15,762 10,241
Prepaid expenses and deposits 16,049 19,472
Deferred financing and organization costs less
accumulated amortization of $186,631 and $124,421 17,472 79,682
----------- -----------
TOTAL ASSETS $19,672,125 $20,712,318
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES
Construction loans payable $16,554,000 $16,790,516
Retainage payable -- 20,000
Accounts payable
Trade 45,895 40,086
Related party 26,980 27,472
Interest 31,531 119,906
Unearned rental income 18,912 40,799
Tenant security deposits 236,297 241,762
----------- -----------
TOTAL LIABILITIES 16,913,615 17,280,541
PARTNERS' EQUITY 2,758,510 3,431,777
----------- -----------
TOTAL LIABILITIES AND PARTNERS'
EQUITY $19,672,125 $20,712,318
=========== ===========
</TABLE>
See notes to financial statements
- 4 -
<PAGE> 8
Portofino Place, Ltd.
STATEMENTS OF OPERATIONS
For the year ended December 31,
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Revenue
Rental $3,582,912 $3,266,692
Interest 39,410 50,698
Other 154,741 172,209
---------- ----------
Total revenue 3,777,063 3,489,599
---------- ----------
Expenses
Advertising and promotional 84,220 80,653
Office operations 30,932 44,813
Administrative 173,644 158,512
Utilities 143,090 118,617
Repairs and maintenance 223,711 144,773
Grounds maintenance 49,516 47,590
Real estate taxes 290,114 333,079
Insurance and taxes 119,765 84,740
Management fees 146,966 151,763
Interest 1,402,089 1,357,610
Bad debt 13,215 --
Depreciation 901,501 852,841
Amortization 62,210 62,210
Partnership expenses 7,841 --
---------- ----------
Total expenses 3,648,814 3,437,201
---------- ----------
NET INCOME $ 128,249 $ 52,398
========== ==========
</TABLE>
See notes to financial statements
- 5 -
<PAGE> 9
Portofino Place, Ltd.
STATEMENTS OF PARTNERS' EQUITY
For the years ended December 31, 1996 and 1995
<TABLE>
<CAPTION>
General Limited
partner partners Total
------- ----------- -----------
<S> <C> <C> <C>
Partners' equity,
December 31, 1994 $ 2,425 $ 4,449,503 $ 4,451,928
Distributions to partners (5,878) (1,066,671) (1,072,549)
Net income 1,048 51,350 52,398
------- ----------- -----------
Partners' equity (deficit),
December 31, 1995 (2,405) 3,434,182 3,431,777
Distributions to partners (3,594) (797,922) (801,516)
Net income 2,467 125,782 128,249
------- ----------- -----------
Partners' equity (deficit),
December 31, 1996 $(3,532) $ 2,762,042 $ 2,758,510
======= =========== ===========
</TABLE>
See notes to financial statements
- 6 -
<PAGE> 10
Portofino Place, Ltd.
STATEMENTS OF CASH FLOWS
For the year ended December 31,
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Cash flows from operating activities
Net income $ 128,249 $ 52,398
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization 963,711 915,051
Changes in assets and liabilities that provided (used) cash
Accounts receivable 1,636 (2,225)
Prepaid expenses and deposits 3,423 (16,092)
Accounts payable (83,058) (18,938)
Retainage payable (20,000) --
Accrued liabilities -- 52,232
Unearned rental income (21,887) 4,129
Tenant security deposits - net (39,174) 78,546
----------- -----------
Net cash provided by operating activities 932,900 1,065,101
----------- -----------
Cash flows from investing activities
Increase in rental property (74,072) (4,404,642)
Construction escrow 20,000 (32,869)
----------- -----------
Net cash used in investing activities (54,072) (4,437,511)
----------- -----------
Cash flows from financing activities
Increase (decrease) in construction loans payable (236,516) 4,780,687
Distributions to partners (801,516) (1,072,549)
----------- -----------
Net cash provided by (used in)
financing activities (1,038,032) 3,708,138
----------- -----------
NET INCREASE (DECREASE) IN CASH (159,204) 335,728
----------- -----------
Cash, beginning of year 597,867 262,139
----------- -----------
Cash, end of year $ 438,663 $ 597,867
=========== ===========
Supplemental disclosure of cash flow information
Cash paid during the year for interest,
net of interest capitalized $ 1,490,464 $ 1,277,567
=========== ===========
</TABLE>
See notes to financial statements
- 7 -
<PAGE> 11
Portofino Place, Ltd.
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
The partnership was formed as a limited partnership under the laws of the
State of Florida on December 21, 1993, for the purpose of developing and
operating 322 rental housing units located in Broward County, Florida. The
project is comprised of sixteen, two and three story buildings and related
facilities. The partnership will continue until December 21, 2018, unless
dissolved earlier in accordance with the provisions of the partnership
agreement.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those estimates.
Rental Property
Rental property is carried at cost. Depreciation is provided for in amounts
sufficient to relate the cost of depreciable assets to operations using
accelerated methods over their estimated service lives.
Income Taxes
No provision or benefit for income taxes has been included in these
financial statements since taxable income or loss passes through to, and is
reportable by, the partners individually.
Rental Income
Rental income is recognized as rentals become due. Rental payments received
in advance are deferred until earned. All leases between the partnership and
the tenants of the property are operating leases.
- 8 -
<PAGE> 12
Portofino Place, Ltd.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1996
NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (Continued)
Amortization
Organization and financing costs represent charges incurred in connection
with the formation of the partnership and obtaining construction loans.
These costs are amortized on a straight-line basis over 25 and 3 years, the
term of the partnership agreement and the term of the related loan,
respectively.
Allocation of Profit and Loss
The partnership agreement calls for the net loss of the partnership to be
allocated first to the general partner and limited partners until their
capital accounts are reduced to zero; second, to the investor limited
partners until their capital accounts are reduced to zero; and finally, 50%
to the general and limited partners and 50% to the investor limited
partners. Net income shall be allocated to the partners in proportion to and
to the extent of the aggregate net loss from prior years. Any remaining
income is distributed according to the priority distributions as described
in the partnership agreement.
NOTE B - RENTAL PROPERTY
The rental property, at cost, consists of the following at December 31,:
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Land $ 2,750,000 $ 2,750,000
Land improvement 798,565 783,840
Buildings 16,066,844 16,066,844
Furniture and fixtures 1,167,763 1,108,416
----------- -----------
20,783,172 20,709,100
Less accumulated depreciation 1,864,164 962,663
----------- -----------
Total rental property, net $18,919,008 $19,746,437
=========== ===========
</TABLE>
- 9 -
<PAGE> 13
Portofino Place, Ltd.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1996
NOTE C - CONSTRUCTION LOANS PAYABLE
The project was financed by initial partner capital contributions and
construction loans. The partnership's available borrowing limits are
$12,250,000 and $5,250,000 from two separate lending institutions. The
loans' initial maturity date was December 28, 1995 with a one-year extension
option. On December 27, 1995, the borrower and lenders agreed to extend the
maturity date to December 28, 1996 subject to the terms in the Construction
Loan Agreement. On November 15, 1996, the lender agreed to an additional
extension of the maturities to February 28, 1997. The partnership incurred a
non-refundable extension fee equal to 0.25% of the outstanding loan balance
on the initial maturity date.
The agreement requires monthly payments of principal and interest. The
interest rate is based on the Eurodollar rate or the prime rate, selected at
the option of the partnership.
The construction loans are collateralized by the rental property, an
assignment of leases and rents, and guarantees by the general partner and a
limited partner.
Construction loans payable at December 31, 1996 and 1995 consist of the
following:
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Note payable - bank: with interest due $11,983,560 $11,753,191
monthly at the Eurodollar rate on the
agreement date, plus 2.5% (7.88% and 8.44%
at December 31, 1996 and 1995), principal
due and payable in full on February 28, 1997
Note payable - bank: with interest due monthly at 4,970,440 5,037,325
the Eurodollar rate on the agreement date, plus
2.5% (7.88% and 8.44% at December 31, 1996 and
1995), principal due and payable in full on
February 28, 1997
</TABLE>
Total interest costs incurred on borrowings totaled $1,389,209 and
$1,432,288 for the years ended December 31, 1996 and 1995, of which $74,678
has been capitalized as part of rental property in 1995. The remaining
$1,389,209 and $1,357,610 were expensed during 1996 and 1995.
- 10 -
<PAGE> 14
Portofino Place, Ltd.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1996
NOTE D - DISTRIBUTIONS TO PARTNERS
Under the partnership agreement, the partners are entitled to receive a
return on their capital contributions equal to 10% per annum. The return is
considered a preferential payment of a return on capital and is not
guaranteed by the partnership or any of the partners. The return accrues on
a daily basis and is distributed monthly to the extent there are available
cash flows, as defined. To the extent there are not sufficient available
cash flows, all such unpaid amounts shall accrue and be deferred until cash
flows are available. The returns distributed to partners totaled $801,516
and $1,072,549 for the years ended December 31, 1996 and 1995.
NOTE E - RELATED PARTY TRANSACTIONS
Pursuant to a management agreement, Altman Management Company ("AMC"), an
affiliate of Portofino Place, Ltd. through common ownership, is employed as
the management agent for conducting the rental operations of the
partnership. The management agreement expires December 31, 1997 and is then
automatically renewable on a calendar year basis unless terminated by either
party upon 30 days notice. Management fees were calculated at 4% of
collected rental income in 1996. AMC earned management fees of $146,966 and
$136,763 in 1996 and 1995, of which $11,980 and $12,472 remained payable at
December 31, 1996 and 1995. Upon achievement of certain rental occupancy
requirements, as described in the management agreement, AMC was entitled to
receive up to $15,000 as incentive management fees. These fees were accrued
at December 31, 1995 and were included in accounts payable - related party,
and as of December 31, 1996, remain unpaid.
AMC also functions as the paying agent for the insurance costs of the
partnership. Insurance expense is allocated based on the relative value of
the participating properties insured under a single insurance contract.
The partnership has a development fee agreement with Altman Development
Corporation ("ADC"), the general partner, to oversee, monitor and manage the
development of the project for a fixed fee. The development fees of $790,000
are payable from the construction loan draws. Development fees totaled
$60,676 during 1995. ADC also received a monthly site supervision fee of
$7,512. Such fees were $15,025 in 1995.
- 11 -
<PAGE> 15
Portofino Place, Ltd.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1996
NOTE F - CONCENTRATION OF CREDIT RISK
The partnership maintains its cash balances in three banks. The balances are
insured by the Federal Deposit Insurance Corporation up to $100,000 by each
bank. As of December 31, 1996, the uninsured portion of the cash balances
held at two of the banks was $536,966 (which included $300,517 of
outstanding checks and deposits).
NOTE G - SUBSEQUENT EVENT
On January 6, 1997, the partners of the partnership sold their partnership
interests.
- 12 -
<PAGE> 16
--------------------------------------------
SUMMIT MAYFAIRE APARTMENTS
Historical Summary of Revenues and Direct
Operating Expenses for the Year Ended
December 31, 1996
<PAGE> 17
INDEPENDENT AUDITORS' REPORT
Board of Directors
Summit Properties Inc.
Charlotte, North Carolina
We have audited the accompanying Historical Summary of Revenues and Direct
Operating Expenses (the Historical Summary) of Summit Mayfaire Apartments,
formerly The Mayfaire, for the year ended December 31, 1996. This Historical
Summary is the responsibility of Summit Properties Inc.'s management. Our
responsibility is to express an opinion on the Historical Summary based on our
audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the Historical Summary is free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the Historical Summary. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall presentation of the Historical Summary. We believe
that our audit provides a reasonable basis for our opinion.
The accompanying Historical Summary was prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission (for
inclusion in Form 8-K of Summit Properties Inc.) as described in Note 2 to the
Historical Summary and is not intended to be a complete presentation of Summit
Mayfaire's revenues and expenses.
In our opinion, such Historical Summary presents fairly, in all material
respects, the revenues and direct operating expenses described in Note 2 to the
Historical Summary of Summit Mayfaire Apartments for the year ended December 31,
1996 in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
March 31, 1997
<PAGE> 18
SUMMIT MAYFAIRE APARTMENTS
HISTORICAL SUMMARY OF REVENUES AND DIRECT OPERATING EXPENSES (NOTE 2)
YEAR ENDED DECEMBER 31, 1996
- - --------------------------------------------------------------------------------
<TABLE>
<S> <C>
REVENUES:
Rental income $1,129,527
Other real estate income 31,455
----------
Total revenues 1,160,982
----------
DIRECT OPERATING EXPENSES:
Personnel 140,807
Utilities 41,879
Repairs and maintenance 53,251
Real estate taxes 73,473
Insurance 10,228
Cleaning and decorating 25,122
Advertising 14,536
Administration 23,401
----------
Total direct operating expenses 382,697
----------
OPERATING INCOME, EXCLUSIVE OF CERTAIN EXPENSES (Note 2) $ 778,285
==========
</TABLE>
See notes to historical summary.
<PAGE> 19
SUMMIT MAYFAIRE APARTMENTS
NOTES TO HISTORICAL SUMMARY OF REVENUES AND DIRECT OPERATING EXPENSES
YEAR ENDED DECEMBER 31, 1996
- - --------------------------------------------------------------------------------
1. OPERATING PROPERTY
Summit Mayfaire Apartments (the Apartments) is a 144-unit multifamily
residential property located in Raleigh, North Carolina, which was
acquired by Summit Properties Inc. on January 15, 1997.
2. BASIS OF PRESENTATION
The Historical Summary of Revenues and Direct Operating Expenses was
prepared for the purpose of complying with the Rules and Regulations of
the Securities and Exchange Commission (for inclusion in Form 8-K of
Summit Properties Inc.) and has been prepared on the accrual basis of
accounting.
The Historical Summary of Revenues and Direct Operating Expenses of the
Apartments exclude the following expenses which would not be comparable to
the proposed future operations of the Apartments:
a) Depreciation of the building and improvements
b) Interest expense
c) Management fee expense
d) Income taxes
Rental income is recognized on the accrual method as earned. Apartment
units are rented under lease agreements with terms of one year or less.
3. MANAGEMENT FEES
Management fees totaling $45,397 were charged by Summit Management Company
(SMC), which functioned as the property manager prior to the acquisition
of the property by SMC's parent, Summit Properties Inc. These expenses
were based on the sum of 2% of cash collections plus 2.9% of net operating
income as defined in the Property Management and Leasing Agreement. SMC
will continue to manage the Apartments in the future. However, this
arrangement will not be governed by a separate management agreement and
the basis of the fees charged will be changed. Accordingly, these expenses
have been excluded from the Historical Summary.
**********
<PAGE> 20
SAND LAKE JOINT VENTURE
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1996,
TOGETHER WITH REPORT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
<PAGE> 21
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Partners of
Sand Lake Joint Venture:
We have audited the accompanying balance sheet of Sand Lake Joint Venture (a
Florida general partnership) as of December 31, 1996, and the related statements
of income, partners' capital and cash flows for the year then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Sand Lake Joint Venture as of
December 31, 1996, and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Orlando, Florida,
April 11, 1997
<PAGE> 22
SAND LAKE JOINT VENTURE
BALANCE SHEET -- DECEMBER 31, 1996
<TABLE>
<CAPTION>
ASSETS
<S> <C>
CASH $ 395,961
CASH HELD IN ESCROW (Note 2) 301,903
ACCOUNTS RECEIVABLE, net of allowance of $3,340 3,247
PREPAID INSURANCE 18,689
------------
LAND, BUILDINGS AND EQUIPMENT (Note 2):
Land 3,422,073
Buildings 16,080,971
Furniture and equipment 816,245
------------
20,319,289
Less-Accumulated depreciation (1,074,884)
------------
19,244,405
------------
DEFERRED LOAN COSTS, net (Note 2) 257,207
------------
$ 20,221,412
============
LIABILITIES AND PARTNERS' CAPITAL
ACCOUNTS PAYABLE AND ACCRUED EXPENSES $ 36,187
INTEREST PAYABLE 56,981
TENANTS' SECURITY DEPOSITS (Note 2) 190,186
NOTE PAYABLE TO RELATED PARTY (Note 4) 15,267,949
------------
15,551,303
------------
PARTNERS' CAPITAL (Notes 1 and 3):
The Northwestern Mutual Life Insurance Company 3,855,830
TCR Sand Lake Limited Partnership 814,279
------------
Total partners' capital 4,670,109
------------
$ 20,221,412
============
</TABLE>
The accompanying notes are an integral part of this balance sheet.
<PAGE> 23
SAND LAKE JOINT VENTURE
STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<S> <C>
REVENUES (Note 2):
Rental $3,386,316
Other 195,874
Interest income 5,451
----------
Total revenues 3,587,641
----------
OPERATING EXPENSES:
Payroll 281,010
Landscaping 73,593
Utilities 227,673
Maintenance and redecorating 100,153
Selling, general and administrative 73,471
Depreciation and amortization 512,164
Property taxes (Note 2) 341,810
Management fees (Note 4) 136,151
Insurance 46,105
Other 16,664
----------
Total operating expenses 1,808,794
----------
OPERATING INCOME 1,778,847
INTEREST EXPENSE (Note 4) 1,218,545
----------
NET INCOME $ 560,302
==========
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE> 24
SAND LAKE JOINT VENTURE
STATEMENT OF PARTNERS' CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
The
TCR Northwestern
Sand Lake Mutual Life
Limited Insurance
Partnership Company Total
----------- ------------- ------------
<S> <C> <C> <C>
PARTNERS' CAPITAL, December 31, 1995 $ 668,775 $ 4,225,775 $ 4,894,550
Net income 280,151 280,151 560,302
Distributions (134,647) (650,096) (784,743)
--------- ----------- -----------
PARTNERS' CAPITAL, December 31, 1996 $ 814,279 $ 3,855,830 $ 4,670,109
========= =========== ===========
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE> 25
SAND LAKE JOINT VENTURE
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 560,302
-----------
Adjustments to reconcile net income to net cash provided by operating activities-
Depreciation and amortization 512,164
Changes in assets and liabilities-
Increase in cash held in escrow (90,241)
Decrease in accounts receivable, net 4,421
Decrease in accrued rental revenue 40,218
Increase in prepaid insurance (18,689)
Increase in accounts payable and accrued expenses 1,761
Increase in tenants' security deposits 11,104
-----------
Total adjustments 460,738
-----------
Net cash provided by operating activities 1,021,040
-----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (1,928)
Proceeds from sale of furniture and equipment 6,740
-----------
Net cash provided by investing activities 4,812
-----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings from related party 20,000
Payments on note payable to related party (261,868)
Partner distributions (784,743)
-----------
Net cash used in financing activities (1,026,611)
-----------
NET DECREASE IN CASH (759)
CASH, beginning of year 396,720
-----------
CASH, end of year $ 395,961
===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest $ 1,218,545
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE> 26
SAND LAKE JOINT VENTURE
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
1. ORGANIZATION AND NATURE OF BUSINESS:
Sand Lake Joint Venture (the Partnership), a Florida general partnership, was
formed on December 28, 1993, between The Northwestern Mutual Life Insurance
Company (NML) and TCR Sand Lake Limited Partnership (TCR) (collectively, the
Partners). The primary purpose of the Partnership is to acquire, construct, own,
manage and operate a 416-unit apartment community (the Property) located in
Orlando, Florida. Construction of the Property was completed in December 1994.
The Partnership extends through December 31, 2023, unless terminated sooner as
provided in the Agreement.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Accounting
The Partnership's accounts are presented on the accrual basis of accounting in
accordance with generally accepted accounting principles.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Fair Value of Financial Instruments
The carrying amounts of the Partnership's current financial assets and
liabilities, including cash and cash held in escrow, accounts receivable,
accounts payable and interest payable, at December 31, 1996, approximate their
fair value due to the short maturity of these instruments. Based on the
borrowing rates currently available to the Partnership for loans with similar
terms and maturities, the fair value of the note payable to related party at
December 31, 1996, is estimated at $14,534,825.
<PAGE> 27
-2-
Cash Held in Escrow
The Partnership receives deposits from tenants upon entering into a lease
agreement. These amounts are held in an escrow account, with an offsetting
liability recorded as tenants' security deposits. Additionally, the Partnership
pays a monthly amount to NML for property taxes, which is maintained in an
escrow account until paid by NML.
Land, Buildings, and Furniture and Equipment
The Partnership provides for depreciation on the buildings, furniture and
equipment on a straight-line basis over their estimated useful lives, which
range from 10 to 40 years. In 1996, total depreciation expense was $483,988.
Maintenance and repairs to buildings and equipment which do not extend the
useful life are expensed when incurred. In 1996, total maintenance and
redecorating expense was $100,153.
Interest and property taxes of $265,000 and $37,171, respectively, incurred
while the property was under construction, have been capitalized as a cost of
the property. These costs are being amortized over 40 years, the estimated
useful life of the building.
Deferred Loan Costs
Deferred loan costs are being amortized over the term of the loan. In 1996,
total amortization expense was $28,176.
Revenue Recognition
Rental revenue is recognized ratably on a straight-line basis over the term of
the lease. Accordingly, rental revenues are accrued for certain leases during
the months of the lease that provide for free or discounted rentals.
Income Taxes
Income taxes have not been recorded in the accompanying financial statements
because they are obligations of the Partners. The tax returns, the qualification
of the Partnership, as such, for tax purposes, and the amount of distributable
partnership income or loss are subject to examination by taxing authorities. If
such examinations result in changes with respect to the Partnership's
qualification or in changes with respect to the income or loss, the tax
liability of the Partners would be changed accordingly.
<PAGE> 28
-3-
Allocations of Profit and Loss
The Agreement provides that profits and losses, for financial reporting
purposes, are to be determined in accordance with generally accepted accounting
principles and allocated equally between the Partners.
Long-lived Assets
Effective January 1, 1996, the Partnership adopted Statement of Financial
Accounting Standards No. 121, "Accounting for Impairment of Long-Lived Assets
and Long-Lived Assets to be Disposed Of" (SFAS 121). SFAS 121 requires entities
to review the recoverability of long-lived assets whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. The implementation of SFAS 121 did not have a material effect on
the accompanying financial statements.
3. PARTNERSHIP MATTERS:
Capital Contributions
Upon execution of the Joint Venture Agreement (the Agreement), the Partners made
an initial capital contribution of $4,417,000 and $860,000, respectively.
Additional contributions, as defined, are required if additional cash in excess
of distributable cash, as defined, is required in order to fund operations, pay
debts and obligations as they mature, or fund the costs of maintenance, repairs
and replacements necessary to keep the Property in the same condition as existed
upon final completion. In accordance with the Agreement, each Partner shall make
equal additional capital contributions if required. No additional capital
contributions were made by the Partners during 1996.
Capital Transaction and Cash Flow Distributions
The Agreement provides that distributable cash, as defined, shall be distributed
as follows: 83.70 percent to NML and 16.30 percent to TCR until each Partner has
received an amount equal to a 9 percent annual noncumulative return on his
initial capital contribution, then to the Partners in accordance with their
respective interests, as defined. The Agreement also provides that all capital
transaction proceeds, as defined, shall be distributed as follows: to repay
principal, interest and other amounts due on the loan, then 83.70 percent to NML
and 16.30 percent to TCR, until each has received an amount equal to its initial
capital contribution, then to the Partners in accordance with their respective
interests, as defined. There were capital transactions and cash flow
distributions in 1996 of $0 and $784,743, respectively. Cash flow distributions
relating to 1996 were recorded and distributed in 1997 in the amount of $166,003
to NML and $151,292 to TCR, in accordance with the Agreement.
<PAGE> 29
-4-
4. RELATED PARTY TRANSACTIONS:
The Partnership has a promissory note agreement with NML which accrues interest
at 7.875 percent, payable monthly, maturing on February 15, 2006. As of December
31, 1996, the amount outstanding under this agreement totaled $15,267,949.
Monthly principal and interest payments in the amount of approximately $123,000
commenced in July 1995. The note is collateralized by a mortgage on the
Property. In 1996, the Partnership incurred interest expense of approximately
$1,213,000 on this note.
At December 31, 1996, annual maturities were as follows:
<TABLE>
<CAPTION>
Year Ending
December 31, Amount
------------ ------
<S> <C>
1997 $ 283,000
1998 305,941
1999 330,924
2000 357,693
2001 387,298
Thereafter 13,603,093
-----------
$15,267,949
===========
</TABLE>
The Partnership has entered into a management agreement with Florida RS, Inc.
(the Project Manager), an affiliate of TCR, to manage the Property for a fee
based on 4 percent of the gross income of the Property. The Partnership incurred
management fees of $136,151 during 1996.
5. SUBSEQUENT EVENT:
On February 20, 1997, Summit Properties, Inc. (Summit) purchased all of the
joint venture interests in the Partnership from the Partners for $26,800,000,
including the assumption of the mortgage debt of approximately $15,300,000.
<PAGE> 30
FINANCIAL STATEMENTS
AND INDEPENDENT AUDITORS' REPORT
SUMMIT AMERICAN ASSOCIATES
DECEMBER 31, 1995
<PAGE> 31
Summit American Associates
TABLE OF CONTENTS
PAGE
INDEPENDENT AUDITORS' REPORT 3
FINANCIAL STATEMENTS
BALANCE SHEET 4
STATEMENT OF EARNINGS 5
STATEMENT OF PARTNERS' EQUITY 6
STATEMENT OF CASH FLOWS 7
NOTES TO FINANCIAL STATEMENTS 8
<PAGE> 32
INDEPENDENT AUDITORS' REPORT
To the Partners
Summit American Associates
We have audited the accompanying balance sheet of Summit
American Associates (a Florida General Partnership), as of December 31, 1995,
and the related statements earnings, of partners' equity and cash flows for the
year ended December 31, 1995. These financial statements are the responsibility
of the project's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of Summit
American Associates as of December 31, 1995, and the results of its operations,
and its cash flows for the year ended December 31, 1995, in conformity with
generally accepted accounting principles.
REZNICK FEDDER & SILVERMAN
Charlotte, North Carolina
January 15, 1996
3
<PAGE> 33
Summit American Associates
BALANCE SHEET
December 31, 1995
ASSETS
<TABLE>
<CAPTION>
<S> <C>
Rental property:
Land and land improvements $ 3,023,728
Building and improvements 15,322,556
Furniture, fixtures and equipment 987,049
------------
19,333,333
Less: accumulated depreciation (284,072)
------------
Total rental property 19,049,261
Cash 16,954
Restricted cash - tenants
security deposits 88,486
Prepaid Expenses 145
Other assets
Organization cost, less accumulated
amortization of $7,455 141,626
Financing fees, less accumulated
amortization of $10,227 105,670
------------
Total assets $ 19,402,142
============
LIABILITIES AND PARTNERS' EQUITY
Liabilities:
Construction and term loan $ 14,392,143
Accrued interest 94,204
Accounts payable and accrued expenses 42,362
Security deposits 88,486
------------
Total liabilities 14,617,195
Partners' equity 4,784,947
------------
Total liabilities and partners' equity $ 19,402,142
============
</TABLE>
See Notes to Financial Statements.
4
<PAGE> 34
Summit American Associates
STATEMENT OF EARNINGS
Year Ended December 31, 1995
<TABLE>
<S> <C>
Revenues:
Rental $1,502,395
Other property income 88,033
Interest income 1,007
----------
$1,591,435
----------
Expenses
Personnel 162,405
Advertising and promotion 31,374
Utilities 74,545
Building repairs and maintenance 86,883
Real estate taxes 38,923
Insurance 8,882
Management fees 81,951
Asset Management fee 7,942
Depreciation 284,072
Amortization 17,682
Administrative expense 37,710
Legal/Professional fees 7,708
Interest expense 592,974
----------
Total Expenses 1,433,051
----------
Net Income $ 158,384
==========
</TABLE>
See Notes to Financial Statements.
5
<PAGE> 35
Summit American Associates
STATEMENT OF PARTNERS' EQUITY
For the Year Ended December 31, 1995
<TABLE>
<CAPTION>
Jacaranda
Cove
Associates Summit
Ltd. Properties LP Total
----------- ----------- -----------
<S> <C> <C> <C>
Balance at
December 31, 1994 $ 3,626,751 $ 1,207,933 $ 4,834,684
Distributions (156,109) (52,012) (208,121)
Net Income 118,788 39,596 158,384
----------- ----------- -----------
Balance at
December 31, 1995 $ 3,589,430 $ 1,195,517 $ 4,784,947
=========== =========== ===========
</TABLE>
See Notes to Financial Statements.
6
<PAGE> 36
Summit American Associates
STATEMENT OF CASH FLOWS
For the Year Ended December 31, 1995
<TABLE>
<S> <C>
Cash flow from operating activities:
Net Income $ 158,384
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 284,072
Amortization 17,682
Increase in restricted cash (88,486)
Increase in prepaid expenses (145)
Increase in accounts payable 19,140
Increase in accrued expenses 15,280
Increase in asset management fee 7,942
Increase in security deposit liability 88,486
Increase in accrued interest 94,204
-----------
Net cash used by operating activities 596,559
-----------
Cash flows from investing activities:
Construction of real estate, net of payable (9,887,762)
Decrease in accounts receivable - related party 67,219
-----------
Net cash used in investing activities (9,820,543)
-----------
Cash flows from financing activities:
Proceeds from construction and term loan 9,394,783
Partners' capital distributions (208,121)
Payment of construction and term loans (45,000)
-----------
Net cash provided by financing activities 9,141,662
-----------
NET DECREASE IN CASH (82,322)
Cash, beginning 99,276
-----------
Cash, ending $ 16,854
===========
Supplemental disclosure of cash flow information
Cash paid during the year for interest, net
of amount capitalized $ 421,866
===========
</TABLE>
See Notes to Financial Statements.
7
<PAGE> 37
Summit American Associates
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Summit American Associate is a joint venture ("Joint Venture") organized
to construct and operate a 262 unit apartment complex located in
Plantation, Florida. The Joint Venture was organized as a Florida General
Partnership.
A summary of the Partnership's significant policies applied in the
preparation of the accompanying financial statements is as follows:
Basis of presentation
The accompanying financial statements have been prepared in accordance
with the accrual method of accounting. Revenues are recognized when earned
and expenses are charged to operations when incurred.
Cash and cash equivalents
For purposes of the statement of cash flows, the Partnership considers all
highly liquid instruments purchased with an original maturity of three
months or less to be cash equivalents.
Income taxes
Partnerships are generally not taxable entities under federal and state
laws. Accordingly, the Joint Venture has not provided for federal or state
income taxes.
Each partner reports his share of the profits and losses of the
Partnership, and federal and state income taxes are computed on each
partner's total income from all sources. The Partnership's income tax
returns are subject to examination by federal and state taxing
authorities. If any such examination results in changes to taxable income,
the income tax liability of the partners for such years could be changed.
8
<PAGE> 38
Summit American Associates
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Interest and real estate taxes
Interest and real estate taxes incurred during the construction period are
capitalized and depreciated over the lives of the constructed assets.
Interest and property taxes capitalized in the year ended December 31,
1995 were $391,890 and $20,244, respectively.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenue and expenses
during the reporting period. Actual results could differ from those
estimates.
NOTE B - JOINT VENTURE ORGANIZATION
Each partner is to receive from available cash flow a preferred
distribution equal to their respective capital contributions times the
prime rate plus one-half percent. To the extent the preferred
distributions are not made in any fiscal year, the amount in arrears goes
forward until paid. After payment of the preferred distributions and any
preferred distribution in arrears, non-sale distributions are allocated 40
percent to Summit Properties Partnership L.P. (SPPLP) and 60 percent to
Jacaranda Cove Associates, Ltd. The Joint Venture's profit/loss is
allocated in a manner similar to its cash distributions.
9
<PAGE> 39
Summit American Associates
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
NOTE C - CONSTRUCTION AND TERM LOAN
The construction and term loan bears interest at a variable rate equal to
the adjusted thirty day CD base rate, London Interbank Offered Rate
(LIBOR), or the prime rate. The partnership elected the CD rate, which is
the banks certificate of deposit rate plus 1.75 percent. The interest rate
as of December 31, 1995 was 7.60%. The loan was payable on March 31, 1995,
with the Joint Venture having the right to extend the maturity date to
June 30, 1998. Management has chosen to exercise their rights to extend
the maturity date to June 30, 1998. Principal payment of $15,000 and
interest at the CD rate are payable monthly. The loan is collateralized by
all assets of the Joint Venture and guaranteed by SPPLP.
The aggregate principal payments of the construction and term loan for
each of the next five years are as follows:
<TABLE>
<S> <C>
1996 $ 180,000
1997 180,000
1998 14,032,143
1999 -
2000 -
</TABLE>
The carrying amount of the projects long-term debt approximates fair
value.
The loan agreement provides for maximum interest rate during the loan as
follows:
<TABLE>
<S> <C>
April 1, 1995 - October 31, 1995 7.20%
November 1, 1995 - October 31, 1996 7.95%
November 1, 1996 - October 31, 1997 8.70%
November 1, 1997 - June 30, 1998 9.45%
</TABLE>
10
<PAGE> 40
Summit American Associates
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
NOTE D - RELATED PARTY TRANSACTIONS
Related party transactions for the year ended December 31, 1995 are as
follows:
<TABLE>
<S> <C>
Construction contract payments
to Summit Apartments Builders,
Inc. (an affiliate of SPPLP)
December 31, 1995 (total for project
$13,382,876) $8,047,136
Credit enhancement fee to SPPLP 246,248
Advance received and repaid to SPPLP from
Summit American 200,000
Management fee to Summit Management Company 81,951
Development fees paid to SPPLP 39,375
Development fees paid to American
Land Management (an affiliate of
Jacaranda Cove Associates, Ltd.) 39,375
Interest on advance paid to SPPLP from
Summit American 7,616
Asset Management fee to SPPLP of which
$3,971 is payable at December 31, 1995 3,971
Asset Management fee to American Land
Management of which $3,971 is payable at
December 31, 1995 3,971
</TABLE>
11
<PAGE> 41
SUMMIT PROPERTIES INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1996
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Acquisition Pro Forma
Historical Adjustments Consolidated
--------- ----------- ------------
(A) (B)
<S> <C> <C> <C>
Assets:
Real estate assets, net $ 619,128 $65,170 $ 684,298
Cash and cash equivalents 3,665 -- 3,665
Other assets 12,198 30 12,228
--------- ------- ---------
Total assets $ 634,991 $65,200 $ 700,191
========= ======= =========
Liabilities:
Notes payable $ 309,933 $48,821 $ 358,754
Other liabilities 22,015 694 22,709
--------- ------- ---------
Total liabilities 331,948 49,515 381,463
Minority interest of unitholders
in Operating Partnership 45,829 3,640 (C) 49,469
Stockholders' equity:
Common stock 224 5 229
Additional paid-in capital 342,872 12,040 (C) 354,912
Accumulated deficit (85,068) -- (85,068)
Unamortized restricted stock
compensation (814) -- (814)
--------- ------- ---------
Total stockholders' equity 257,214 12,045 269,259
--------- ------- ---------
Total liabilities and
stockholders' equity $ 634,991 $65,200 $ 700,191
========= ======= =========
</TABLE>
<PAGE> 42
SUMMIT PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED
BALANCE SHEETS
DECEMBER 31, 1996
(Unaudited)
Adjustments:
A. Reflects the Summit Properties Inc. Consolidated Balance Sheet as of
December 31, 1996.
B. Reflects the purchase of the Acquisition Communities. The purchase is
summarized as follows:
<TABLE>
<S> <C>
Purchase price, acquisition costs
and improvements accrual $65,170,000
Net liabilities assumed (664,000)
Issuance of common stock to public to
partially fund Summit Portofino (315,029 shares) (6,813,000)
Issuance of common stock to seller to
partially fund Summit Sand Lake (243,608 shares) (4,933,000)
Issuance of Operating Partnership Units to seller to
partially fund Summit Sand Lake (194,495 shares) (3,939,000)
Assumption of mortgage note at Summit Sand Lake (15,226,000)
===========
Borrowing on the Company's Unsecured Credit Facility $33,595,000
===========
</TABLE>
C. Units of the Operating Partnership can be exchanged for cash or, at the
option of the Company, for shares of Common Stock on a one-for-one basis. The
15.52% minority interest (4,219,777 Units of 27,188,052 shares of Common
Stock and Units) is based upon shares and Units outstanding as of December
31, 1996.
<PAGE> 43
SUMMIT PROPERTIES INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
YEAR ENDED DECEMBER 31, 1996
(Dollars in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Acquisition Pro Forma
Historical Adjustments Consolidated
---------- ----------- ------------
(A) (B)
<S> <C> <C> <C>
Revenues:
Rental $ 88,864 $ 8,830 $ 97,694
Other property income 4,683 468 5,151
Interest and other 942 (72)(F) 870
---------- ------- ----------
Total revenues 94,489 9,226 103,715
Expenses:
Property operating and maintenance 26,403 2,188 (C) 28,591
Real estate taxes and insurance 8,823 972 9,795
Depreciation 18,208 2,082 (D) 20,290
Interest 17,138 4,203 (E),(F) 21,341
General and administrative 2,557 -- 2,557
Loss in equity investments 173 -- (G) 173
---------- ------- ----------
Total expenses 73,302 9,445 82,747
---------- ------- ----------
Income before minority interest of unitholders
in Operating Partnership and extraordinary items 21,187 (219) 20,968
Minority interest of unitholders in Operating
Partnership (3,723) (12) (H) (3,735)
---------- ------- ----------
Income before extraordinary items 17,464 (231) 17,233
Extraordinary items, net of minority interest of
unitholders in Operating Partnership (516) -- (516)
---------- ------- ----------
Net income $ 16,948 ($ 231) $ 16,717
========== ======= ==========
Per share data:
Income before extraordinary items (I) $ 0.92 $ 0.88
========== ==========
Net income (I) $ 0.90 $ 0.86
========== ==========
Weighted average shares 18,914,674 19,473,311
========== ==========
</TABLE>
<PAGE> 44
SUMMIT PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF EARNINGS
YEAR ENDED DECEMBER 31, 1996
(Unaudited)
Adjustments:
A. Reflects the Summit Properties Inc. Consolidated Statement of Earnings for
the year ended December 31, 1996.
B. Represents the operations of the Acquisition Communities for the year ended
December 31, 1996 except for Summit Plantation. Represents the operations of
Summit Plantation for the period January 1, 1996 to March 31, 1996 as Summit
Plantation was acquired April 1, 1996.
C. Includes $232,000 of property supervision costs, which was estimated at 2.5%
of revenues.
D. Includes additional depreciation related to the increase in basis from the
purchases of $536,000.
E. Includes the interest costs on the Sand Lake debt assumed in conjunction with
the purchase and the incremental borrowings to finance the acquisitions of
$2.7 million. The purchase of Summit Plantation was assumed to be financed
from the Company's credit facility at a 6.6% interest rate. All other
incremental borrowings were assumed to be at the then current 10 year
treasury rate plus 100 basis points or 7.8%.
F. Includes a reduction of $72,000 in other income and interest expense for
credit enhancement fees charged by the Company to Summit Plantation from
January 1, 1996 to March 31, 1996.
G. The Company's equity earnings in the Summit Plantation joint venture from
January 1, 1996 to March 31, 1996 was less than $1,000.
H. Based upon 17.81% minority interest (4,220,819 Units weighted average of the
23,694,130 shares of Common Stock and Units weighted average) for the year
ended December 31, 1996.
I. Based upon 19,473,311 weighted average shares of Common Stock issued and
outstanding.
<PAGE> 45
EXHIBIT INDEX
23.1 Consent of Reznick, Fedder & Silverman
23.2 Consent of Deloitte & Touche LLP
23.3 Consent of Arthur Andersen LLP
23.4 Consent of Reznick, Fedder & Silverman
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statements of
Summit Properties Inc. on Form S-3 (File Nos. 33-90704, 33-90706, 33-93540,
333-24669 and 333-25575) and Form S-8 (File Nos. 33-88202 and 333-78) of our
report dated March 3, 1997, on our audit of the financial statements of
Portofino Place, Ltd. for the years ended December 31, 1996 and 1995, which
reports are included in this Form 8-K/A-1.
REZNICK FEDDER & SILVERMAN
Charlotte, North Carolina
May 1, 1997
<PAGE> 1
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the Registration Statements of
Summit Properties Inc. on Form S-3 (File Nos. 33-90704, 33-90706, 33-93540,
333-24669 and 333-25575) and Form S-8 (File Nos. 33-88202 and 333-78) of our
report dated March 31, 1997 on our audit of the Historical Summary of Revenues
and Direct Operating Expenses of Summit Mayfaire Apartments for the year ended
December 31, 1996, which report is included in this Form 8-K/A-1.
Deloitte & Touche LLP
Charlotte, North Carolina
May 1, 1997
<PAGE> 1
EXHIBIT 23.3
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent certified public accountants, we hereby consent to the
incorporation by reference of our report included in this Form 8-K/A-1, into the
previously filed Registration Statements of Summit Properties, Inc. on Form S-3
(File Nos. 33-90704, 33-90706, 33-93540, 333-24669 and 333-25575) and Form S-8
(File Nos. 33-88202 and 333-78).
Arthur Andersen LLP
May 1, 1997
Orlando, Florida
<PAGE> 1
EXHIBIT 23.4
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statements of
Summit Properties Inc. on Form S-3 (File Nos. 33-90704, 33-90706, 33-93540,
333-24669 and 333-25575) and Form S-8 (File Nos. 33-88202 and 333-78) of our
report dated January 15, 1996, on our audit of the financial statements of
Summit American Associates for the year ended December 31, 1995, which report
is included in this Form 8-K/A-1.
REZNICK FEDDER & SILVERMAN
Charlotte, North Carolina
May 1, 1997
