<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): NOVEMBER 4, 1998
----------------
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
November 13, 1998 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
Ewing Apartments
Combined Statement of Revenues and Certain Expenses
for the Year Ended December 31, 1997 and Independent Auditors'
Report and the Nine Months Ended September 30, 1998 (unaudited)
(b) Pro Forma Financial Information
Summit Properties Inc.
Pro Forma Condensed Combined Balance Sheet as of
September 30, 1998 (Unaudited)
Pro Forma Condensed Combined Statement of Earnings for
the Nine Months Ended September 30, 1998 (Unaudited)
Pro Forma Condensed Combined Statement of Earnings for
the Year Ended December 31, 1997 (Unaudited)
(c) Exhibits:
2.1 Agreement and Plan of Reorganization dated as of October 31,
1998 among Summit Properties Inc., affiliates of Summit
Properties Inc. (including Summit Properties Partnership,
L.P.), Ewing Industries, Inc. and affiliates of Ewing
Industries, Inc. (previously filed).
10.1 Amendment No. 13 to the Limited Partnership Agreement of
Summit Properties Partnership, L.P. (previously filed).
23.1 Consent of Deloitte & Touche LLP (filed herewith)
<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: December 1, 1998 By: /s/ William F. Paulsen
-----------------------------------------
William F. Paulsen
President and Chief Executive Officer
<PAGE> 4
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of
Summit Properties Inc.
We have audited the accompanying combined statement of revenues and certain
expenses (defined as being operating revenues less direct operating expenses) of
Belcourt, Turtle Rock, Turtle Cove, Buena Vista, Camino Real and Los Arboles I &
II Apartments (collectively the "Ewing Apartments") for the year ended December
31, 1997. This financial statement is the responsibility of the management of
Summit Properties Inc. Our responsibility is to express an opinion on this
statement 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 combined statement of revenues and certain expenses
is free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statement. 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.
The accompanying combined statement of revenues and certain expenses was
prepared for the purpose of complying with the rules and regulations of the
Securities and Exchange Commission for inclusion in the Form 8-K of Summit
Properties Inc. Material amounts, described in Note 1 to the combined statement
of revenues and certain expenses, that would not be comparable to those
resulting from the proposed future operations of the Ewing Apartments are
excluded and the statement is not intended to be a complete presentation of the
revenues and expenses of these apartments.
In our opinion, such combined statement of revenues and certain expenses
presents fairly, in all material respects, the revenues and certain expenses, as
defined above, of the Ewing Apartments for the year ended December 31, 1997, in
conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Dallas, Texas
November 20, 1998
<PAGE> 5
EWING APARTMENTS
COMBINED STATEMENT OF REVENUES AND CERTAIN EXPENSES
(In thousands)
<TABLE>
<CAPTION>
Nine Months Ended Year Ended
September 30, 1998 December 31, 1997
------------------ -----------------
(Unaudited)
<S> <C> <C>
Revenues
Rental Income $12,399 $14,322
Other property income, net 590 690
------- -------
Total revenues 12,989 15,012
Certain Expenses
Property operating and maintenance 3,088 3,911
Real estate taxes 2,159 2,362
Management fees 693 756
------- -------
Total expenses 5,940 7,029
------- -------
Revenues in excess of certain expenses $ 7,049 $ 7,983
======= =======
</TABLE>
See Notes to Combined Statement of Revenues and Certain Expenses
<PAGE> 6
EWING APARTMENTS
NOTES TO COMBINED STATEMENT OF REVENUES AND CERTAIN EXPENSES
YEAR ENDED DECEMBER 31, 1997
- --------------------------------------------------------------------------------
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION - The combined operating revenues and direct
operating expenses of the Belcourt, Turtle Rock, Turtle Cove, Buena
Vista, Camino Real and Los Arboles I & II Apartments (collectively the
"Ewing Apartments") described in Note 2 is presented on the accrual
basis of accounting. The accompanying financial statements are not
representative of the actual operations for the periods presented as
certain expenses, which may not be comparable to the proposed future
operations of the Ewing Apartments, have been excluded in accordance
with the Securities and Exchange Commission Regulation S-X, Rule 3-14.
Expenses excluded consist of interest, including interest related to
certain indebtedness assumed with a principal balance of $79,852,000
at September 30, 1998 (unaudited), depreciation and amortization,
professional fees and other costs not directly related to the future
operations of the Ewing Apartments.
INCOME RECOGNITION - Rental income is recorded when it is earned and
due from tenants. Apartment units are rented under lease agreements
with terms of one year or less.
INTERIM FINANCIAL DATA (UNAUDITED) - In the opinion of management, all
adjustments and eliminations consisting only of normal recurring
adjustments necessary to present fairly the combined statement of
revenues and certain expense of the Ewing Apartments for the nine
months ended September 30, 1998 have been included. The combined
results of operations for the nine months ended September 30, 1998 are
not necessarily indicative of the results for the full year.
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 revenues and expenses as of and for the reporting period.
Actual results could differ from those estimates.
<PAGE> 7
2. DESCRIPTION OF THE AUDITED ACQUISITION PROPERTIES
The following properties are included in the combined statement of
revenues and certain expenses:
<TABLE>
<CAPTION>
Property Location Number of Units
-------- -------- ---------------
<S> <C> <C>
Belcourt Dallas, Texas 180
Turtle Rock San Antonio, Texas 250
Turtle Cove Dallas, Texas 348
Buena Vista Dallas, Texas 467
Camino Real Dallas, Texas 364
Los Arboles I & II Austin, Texas 408
-----
2,017
=====
</TABLE>
The Camino Real Apartments were placed in service in July 1997. The
property was approximately 40% occupied at December 31, 1997 and 94%
occupied at September 30, 1998 (unaudited).
3. RELATED PARTY TRANSACTIONS
MANAGEMENT FEES - The Ewing Apartments had a management agreement with an
affiliated management company to maintain and manage the operations of
the apartment complexes. Management fees are based on 5% of total revenue
collected. Upon acquisition of the Ewing Apartments by Summit Properties,
such management contract was canceled, at which time Summit Properties
began to manage the Ewing Apartments.
DEVELOPMENT FEES - The Ewing Apartments entered into development
agreements with an affiliated company to provide development oversight
services for the properties. Development fees were capitalized as part of
the carrying basis of the properties by the Ewing Apartments when
incurred and therefore no amounts are reflected in this financial
statement related to this activity.
CONSTRUCTION FEES - The Ewing Apartments entered into construction
agreements with an affiliated company to provide general contractor
services during the development period for the properties. Construction
fees were capitalized as part of the carrying basis of the properties by
the Ewing Apartments when incurred and therefore no amounts are reflected
in this financial statement related to this activity. Construction fees
were based on a fixed percentage of each contract as defined in the
agreements.
* * * * * *
<PAGE> 8
SUMMIT PROPERTIES INC.
BASIS OF PRESENTATION TO PROFORMA CONDENSED
COMBINED BALANCE SHEET
AS OF SEPTEMBER 30, 1998
The Pro Forma Condensed Combined Balance Sheet gives effect to (i) the
acquisition of a portfolio of multifamily properties in Texas (the "Ewing
Acquisition") through a merger with Ewing Industries Inc. and affiliates thereof
("Ewing Industries") on November 4, 1998 and (ii) the sale of communities
formerly known as Summit Springs and Summit Old Town. The Ewing Acquisition was
funded through (i) the issuance to Ewing Industries of 489,622 shares of common
stock ("Shares") of Summit Properties Inc. (the "Company") and 141,921 units of
limited partnership interest ("Units") of Summit Properties Partnership,
L.P.(the "Operating Partnership") with the Shares and Units valued at the
Company's approximate market value of $18.00 on the consummation date, (ii) the
assumption of $79.9 million of debt, and (iii) the payment of $50.6 million in
cash. In addition, the Company has committed to issue 519,365 Shares as a
deposit for a property currently in lease-up, with respect to which payment of
the final consideration is contingent upon the property reaching stabilization
(the "Contingent Property"). The current estimate of additional consideration to
be paid at such time is (i) 1,030,009 Shares of common stock and 36,629 Units
(each Share and Unit valued at $18.00) and (ii) cash in the amount of
$1,314,144. The Ewing Acquisition, excluding the Contingent Property, and the
sale of Summit Springs and Summit Old Town have been presented as if the
transactions had occurred on September 30, 1998. The Pro Forma Condensed
Combined Balance Sheet gives effect to the acquisition under the purchase method
of accounting in accordance with Accounting Principles Board Opinion No. 16. In
the opinion of management, all significant adjustments necessary to reflect the
effects of the Ewing Acquisition have been made.
The Pro Forma Condensed Combined Balance Sheet is presented for comparative
purposes only and is not necessarily indicative of what the actual combined
financial position of Ewing Industries and the Company at September 30, 1998
would be, nor does it purport to represent the future combined financial
position of Ewing Industries and the Company. This Pro Forma Condensed Combined
Balance Sheet should be read in conjunction with, and is qualified in its
entirety by, the historical financial statements and notes thereto of the
Company as included in the Form 10-K for the year ended December 31, 1997 and
the Company's Form 10-Q for the nine months ended September 30, 1998.
<PAGE> 9
SUMMIT PROPERTIES INC.
PRO FORMA CONDENSED COMBINED BALANCE SHEET
SEPTEMBER 30, 1998
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
BALANCE
BEFORE EWING EWING PRO FORMA
HISTORICAL DISPOSITIONS ACQUISITION ACQUISITION COMBINED
---------- ------------ ------------ ----------- -----------
(A) (B) (C)
<S> <C> <C> <C> <C> <C>
Assets:
Real estate assets, net $ 964,476 ($ 15,904) $ 948,572 $147,692 $ 1,096,264
Cash 4,823 -- 4,823 -- 4,823
Restricted cash 7,702 24,046 31,748 -- 31,748
Other assets 12,580 (15) 12,565 1,713 14,278
--------- --------- --------- -------- -----------
Total assets $ 989,581 $ 8,127 $ 997,708 $149,405 $ 1,147,113
========= ========= ========= ======== ===========
Liabilities:
Notes payable $ 601,872 $ 601,872 $133,303 $ 735,175
Other liabilities 41,005 ($ 282) 40,723 4,734 45,457
--------- --------- --------- -------- -----------
Total liabilities 642,877 (282) 642,595 138,037 780,632
Minority interest of unitholders
in Operating Partnership (D) 49,746 1,221 50,967 2,600 53,567
Shareholders' equity:
Common stock (D) 254 -- 254 5 259
Additional paid-in capital (D) 399,781 -- 399,781 8,763 408,544
Dividends in excess of accumulated earnings (99,721) 7,188 (92,533) -- (92,533)
Unamortized restricted stock compensation (836) -- (836) -- (836)
--------- --------- --------- -------- -----------
299,478 7,188 306,666 8,768 315,434
Less employee receivable (2,520) -- (2,520) -- (2,520)
--------- --------- --------- -------- -----------
Total stockholders equity 296,958 7,188 304,146 8,768 312,914
--------- --------- --------- -------- -----------
Total liabilities and stockholders' equity $ 989,581 $ 8,127 $ 997,708 $149,405 $ 1,147,113
========= ========= ========= ======== ===========
</TABLE>
<PAGE> 10
SUMMIT PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED COMBINED BALANCE SHEET
SEPTEMBER 30, 1998
(UNAUDITED)
ADJUSTMENTS:
A. Reflects the Summit Properties Inc. Consolidated Balance Sheet as of
September 30, 1998.
B. Reflects the sale of Summit Springs and Summit Old Town on October 23,
1998 and November 12, 1998 respectively. The sales are summarized as
follows:
Net sales proceeds after disposition costs $24,046
Net book value of assets sold (15,904)
Cost of other assets sold (15)
Liabilities assumed by buyer 282
-------
Gain on sale $ 8,409
=======
Proceeds were put in escrow in accordance with Internal Revenue Service
like-kind exchange rules. Accordingly, proceeds are classified as
restricted cash.
C. Reflects the Ewing Acquisition. The acquisition is summarized as follows:
<TABLE>
<S> <C> <C>
Loan escrow acquired $ 1,713
Mortgage notes payable assumed ($79,852)
Borrowings on the Company's unsecured credit facility (50,575)
Adjustment to mortgage notes assumed to reflect estimated fair value (2,876) (133,303)
--------
Other net liabilities assumed (4,734)
Issuance of Shares to seller (489,622) (8,768)
Issuance of Units to seller (141,921) (2,600)
---------
Purchase price including acquisition costs ($147,692)
=========
</TABLE>
The effects of accounting policy differences are immaterial and have not
been adjusted in the unaudited Pro Forma Condensed Combined Balance
Sheet.
D. 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 14.52% minority interest (4,400,113 Units of 30,310,581 shares of
Common Stock and Units) is based upon pro forma shares and Units
outstanding as of September 30, 1998.
<PAGE> 11
SUMMIT PROPERTIES INC.
BASIS OF PRESENTATION TO PRO FORMA CONDENSED
COMBINED STATEMENTS OF EARNINGS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND
THE YEAR ENDED DECEMBER 31, 1997
The Pro Forma Condensed Combined Statements of Earnings for the nine months
ended September 30, 1998 and the year ended December 31, 1997 are presented as
if the following transactions had occurred on January 1, 1997:
(i) The acquisition of Ewing Industries, as further described in the Basis of
Presentation to the Pro Forma Combined Condensed Balance Sheet.
Adjustments related to the Contingent Property are not included in the
pro forma statements as it was in construction in 1997 and a portion of
1998 and its operations are not material to the Pro Forma Condensed
Combined Statements of Earnings. In addition, the Company has a cash flow
management contract with a surviving affiliate of Ewing Industries to
manage such property until the property reaches stabilization. In
consideration for managing the property, such affiliates retain all net
cash flows for the property. Certain of the properties acquired in the
Ewing Acquisition were in lease up in 1998 and/or 1997. The operations of
such lease-up properties are not reflective of fully stabilized
properties.
(ii) The sale of Summit Old Town, Summit Springs, Summit Providence and Summit
Charleston on November 12, 1998, October 23, 1998, May 18, 1998 and May
14, 1997, respectively.
(iii) The purchase of Summit Lenox on July 8, 1998. The purchase of Summit Club
at Dunwoody and Summit St. Clair on May 22, 1998 and March 1, 1998,
respectively, are shown as if they were acquired on January 1, 1998.
These two properties were under construction during 1997 and would not
have had a material effect on 1997 operations.
(iv) The purchase of Summit Fair Oaks, Summit Windsor II, Summit Sand Lake and
Summit Portofino ("1997 Acquisitions") on December 31, 1997, July 18,
1997, February 20, 1997 and January 6, 1997, respectively.
The Pro Forma Condensed Combined Statements of Earnings give effect to the
acquisitions under the purchase method of accounting in accordance with
Accounting Principles Board Opinion No. 16. In the opinion of management, all
significant adjustments necessary to reflect the effects of these transactions
have been made.
The Pro Forma Condensed Combined Statements of Earnings are presented for
comparative purposes only and are not necessarily indicative of what the actual
combined results of the above transactions and the Company for the nine months
ended September 30, 1998, and the year ended December 31, 1997 would be, nor do
they purport to be indicative of the results of operations in future periods.
The Pro Forma Condensed Combined Statements of Earnings should be read in
conjunction with, and are qualified in their entirety by, the historical
financial statements and notes thereto of the Company as included in the Form
10-K for the year ended December 31, 1997 and the Company's Form 10-Q for the
nine months ended September 30, 1998.
<PAGE> 12
SUMMIT PROPERTIES INC.
PRO FORMA CONDENSED COMBINED STATEMENT OF EARNINGS
NINE MONTHS ENDED SEPTEMBER 30, 1998
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
BALANCE EWING
OTHER BEFORE EWING EWING ACQUISITION PRO FORMA
HISTORICAL ACQUISITIONS DISPOSITIONS ACQUISITION ACQUISITION ADJUSTMENTS COMBINED
---------- ------------ ------------ ------------ ----------- ----------- ----------
(A) (B) (C) (D)
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Rental $ 99,047 $4,006 ($3,974) $ 99,079 $12,399 $111,478
Other property income 5,733 162 (221) 5,674 590 6,264
Interest and other 1,286 -- -- 1,286 -- 1,286
-------- ------ ------- -------- ------- ------- --------
Total revenues 106,066 4,168 (4,195) 106,039 12,989 119,028
-------- ------ ------- -------- ------- ------- --------
Expenses:
Property operating and maintenance 26,948 1,485 (1,283) 27,150 3,713 ($368)(E) 30,495
Real estate taxes and insurance 10,251 316 (392) 10,175 2,227 -- 12,402
Depreciation 20,774 885 (696) 20,963 -- 3,068 (F) 24,031
Interest 23,351 2,178 (1,878) 23,651 -- 7,166 (G) 30,817
General and administrative expenses 2,726 -- -- 2,726 -- -- 2,726
Loss on equity investments 95 -- -- 95 -- -- 95
-------- ------ ------- -------- ------- ------- --------
Total expenses 84,145 4,864 (4,249) 84,760 5,940 9,866 100,566
-------- ------ ------- -------- ------- ------- --------
Income before gain on sale of real
estate assets, minority interest of
unitholders in Operating
Partnership and extraordinary item 21,921 (696) 54 21,279 7,049 (9,866) 18,462
Gain on sale of real estate assets 8,731 -- (8,731) -- -- -- --
Minority interest of unitholders in
Operating Partnership (4,439) 101 1,257 (3,081) -- 321 (H) (2,760)
-------- ------ ------- -------- ------- ------- --------
Income before extraordinary item $ 26,213 ($595) ($7,420) $ 18,198 $ 7,049 ($9,545) $ 15,702
======== ====== ======= ======== ======= ======= ========
Per share data:
Income before extraordinary items -
basic and diluted (I) $1.06 $0.62
========== ==========
Weighted average shares - basic 24,635,658 25,125,280
========== ==========
Weighted average shares - diluted 24,652,423 25,142,045
========== ==========
</TABLE>
<PAGE> 13
SUMMIT PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED COMBINED STATEMENT OF EARNINGS
NINE MONTHS ENDED SEPTEMBER 30, 1998
(UNAUDITED)
ADJUSTMENTS:
A. Reflects the Summit Properties Inc. Consolidated Statement of Earnings
for the nine months ended September 30, 1998.
B. Reflects the operations of Summit St. Clair acquired effective March
1, 1998, Summit Club at Dunwoody acquired May 22, 1998 and Summit Lenox
acquired July 8, 1998, from January 1, 1998 to date of acquisition.
C. Reflects the operations of Summit Providence sold on May 18, 1998 from
January 1, 1998 to date of sale. Reflects Summit Springs and Summit Old
Town sold on October 23, 1998 and on November 12, 1998, respectively,
from January 1, 1998 to September 30, 1998. In addition, the gain on sale
of real estate assets has been eliminated for pro forma presentation.
D. Reflects the operations of the communities acquired in the Ewing
Acquisition for the nine months ended September 30, 1998. Pro forma
effects of the Contingent Property have not been included in the Pro
Forma Condensed Combined Statement of Earnings as such property was
substantially under construction for the period presented and, therefore,
its effect on pro forma earnings is not significant.
Final consideration related to the Contingent Property is issuable
contingent upon such property achieving stabilization in the future.
Management expects the potential impact of the Contingent Property on
future earnings of the Company to be insignificant.
The effects of accounting policy differences are immaterial and have not
been adjusted in the unaudited Pro Forma Condensed Combined Statement of
Earnings.
E. Adjustment represents property supervision costs adjusted to 2.5% of
revenues. The 2.5% estimate reflects the Company's historical costs of
property supervision. Such costs, as a percent of property revenues
should not change significantly as a result of the acquisitions and
dispositions.
F. Reflects depreciation on the Company's basis in the Ewing Acquisition.
Depreciation is computed on a straight-line basis over the estimated
useful lives of the properties (buildings - 37 to 40 years and furniture,
fixtures and equipment - 5 to 7 years).
G. Includes the interest costs on the mortgage debt assumed in conjunction
with the Ewing Acquisition and the incremental borrowings to finance the
acquisition of $50.6 million. The purchase was assumed to be financed
from the Company's credit facility at the weighted average interest rate
for the nine months ended September 30, 1998 of 6.76%.
H. Based upon 14.95% minority interest (4,417,770 Units weighted average of
the 29,543,050 Shares and Units weighted average) for the nine months
ended September 30, 1998.
I. Based upon 25,125,280 and 25,142,045 basic and diluted weighted average
Shares issued and outstanding, respectively.
<PAGE> 14
SUMMIT PROPERTIES INC.
PRO FORMA CONDENSED COMBINED STATEMENT OF EARNINGS
YEAR ENDED DECEMBER 31, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
BALANCE EWING
OTHER BEFORE EWING EWING ACQUISITION PRO FORMA
HISTORICAL ACQUISITIONS DISPOSITIONS ACQUISITION ACQUISITION ADJUSTMENTS COMBINED
---------- ------------ ------------ ------------ ----------- ----------- ----------
(A) (B) (C) (D)
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Rental $109,827 $8,517 ($7,084) $111,260 $14,322 $125,582
Other property income 6,179 364 (409) 6,134 690 6,824
Interest and other 671 -- - 671 -- 671
-------- ------ ------- -------- ------- -------- --------
Total revenues 116,677 8,881 (7,493) 118,065 15,012 133,077
-------- ------ ------- -------- ------- -------- --------
Expenses:
Property operating and maintenance 31,311 3,160 (2,282) 32,189 4,439 ($381)(E) 36,247
Real estate taxes and insurance 10,721 755 (758) 10,718 2,590 -- 13,308
Depreciation 22,652 1,934 (1,404) 23,182 -- 3,504 (F) 26,686
Interest 21,959 4,560 (3,725) 22,794 -- 8,234 (G) 31,028
General and administrative expenses 2,740 -- - 2,740 -- -- 2,740
Gain on equity investments (274) -- - (274) -- -- (274)
-------- ------ ------- -------- ------- -------- --------
Total expenses 89,109 10,409 (8,169) 91,349 7,029 11,357 109,735
-------- ------ ------- -------- ------- -------- --------
Income before gain on sale of real
estate assets, minority interest
of unitholders in Operating
Partnership 27,568 (1,528) 676 26,716 7,983 (11,357) 23,342
Gain on sale of real estate assets 4,366 -- (4,366) -- -- -- --
Minority interest of unitholders in
Operating Partnership (4,818) 231 557 (4,030) -- 456 (H) (3,574)
-------- ------ ------- -------- ------- -------- --------
Net income $ 27,116 ($1,297) ($3,133) $ 22,686 $ 7,983 ($10,901) $ 19,768
======== ====== ======= ======== ======= ======== ========
Per share data:
Net income - basic and diluted (I) $1.17 $0.83
========== ==========
Weighted average shares - basic 23,145,881 23,675,463
========== ==========
Weighted average shares - diluted 23,182,302 23,711,884
========== ==========
</TABLE>
<PAGE> 15
SUMMIT PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED COMBINED STATEMENT OF EARNINGS
YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
ADJUSTMENTS:
A. Reflects the Summit Properties Inc. Consolidated Statement of Earnings
for the year ended December 31, 1997.
B. Reflects the operations of the 1997 Acquisitions from January 1, 1997 to
date of acquisition. In addition, reflects the operations of Summit
Lenox, acquired July 8, 1998 for the year ended December 31, 1997. Does
not reflect the operations of Summit St. Clair and Summit Club at
Dunwoody acquired in 1998 as the properties were in construction in 1997
and their operations for the year ended December 31, 1997 were not
significant.
C. Reflects the operations for the year ended December 31, 1997 of Summit
Providence sold on May 18, 1998, Summit Springs sold on October 23, 1998
and Summit Old Town sold on November 12, 1998. Also reflects the
operations of Summit Charleston from January 1, 1997 to date of sale on
May 14, 1997. In addition, the gain on sale of real estate assets has
been eliminated for pro forma presentation.
D. Reflects the operations of the communities acquired in the Ewing
Acquisition for the year ended December 31, 1997. Pro forma effects of
the Contingent Property have not been included in the Pro Forma Condensed
Combined Statement of Earnings as such property was substantially under
construction for the period presented and, therefore, its effect on pro
forma earnings is not significant.
Final consideration related to the Contingent Property is issuable
contingent upon such property achieving stabilization in the future.
Management expects the potential impact of the Contingent Property on
future earnings of the Company to be insignificant.
The effects of accounting policy differences are immaterial and have not
been adjusted in the unaudited Pro Forma Condensed Combined Statement of
Earnings.
E. Adjustment represents property supervision costs adjusted to 2.5% of
revenues. The 2.5% estimate reflects the Company's historical costs of
property supervision. Such costs, as a percent of property revenues
should not change significantly as a result of the acquisitions and
dispositions.
F. Reflects depreciation on the Company's basis in the Ewing Acquisition.
Depreciation is computed on a straight-line basis over the estimated
useful lives of the properties (buildings - 37 to 40 years and furniture,
fixtures and equipment - 5 to 7 years).
G. Includes the interest costs on the mortgage debt assumed in conjunction
with the Ewing Acquisition and the incremental borrowings to finance the
acquisition of $30.4 million. The purchase was assumed to be financed
from the Company's credit facility at the weighted average interest rate
for the year ended December 31, 1997 of 6.73%.
H. Based upon 15.31% minority interest (4,280,690 Units weighted average of
the 27,956,153 Shares and Units weighted average) for the year ended
December 31, 1997.
I. Based upon 23,675,463 and 23,711,884 basic and diluted weighted average
Shares issued and outstanding, respectively.
<PAGE> 16
EXHIBIT INDEX
2.2 Agreement and Plan of Reorganization dated as of October 31, 1998
among Summit Properties Inc., affiliates of Summit Properties Inc.
(including Summit Properties Partnership, L.P.), Ewing Industries,
Inc. and affiliates of Ewing Industries, Inc. (previously filed).
10.1 Amendment No. 13 to the Limited Partnership Agreement of Summit
Properties Partnership, L.P. (previously filed).
23.1 Consent of Deloitte & Touche LLP (filed herewith)
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement Nos.
33-93540, 333-24669, 333-25575 and 333-51623 on Form S-3 and Registration
Statement Nos. 33-88202 and 333-78 on Form S-8 of Summit Properties Inc. of our
report dated November 20, 1998 with respect to the combined statement of
revenues and certain expenses of the Ewing Apartments for the year ended
December 31, 1997 appearing in this Current Report on Form 8-K/A-1 of Summit
Properties Inc.
DELOITTE & TOUCHE LLP
Charlotte, North Carolina
December 1, 1998
