SUMMIT PROPERTIES INC, 10-Q, 2000-05-12

SUMMIT PROPERTIES INC
10-Q, 2000-05-12
REAL ESTATE INVESTMENT TRUSTS

Previous: PARAMARK ENTERPRISES INC, 10QSB, 2000-05-12

Next: MCWHORTER TECHNOLOGIES INC /DE/, SC 14D9, 2000-05-12

<PAGE> 1

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-Q

<TABLE>
<S> <C> <C>
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
</TABLE>

Commission file number 1-12792

SUMMIT PROPERTIES INC.
(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C>
MARYLAND 56-1857807
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
212 S. TRYON STREET
SUITE 500
CHARLOTTE, NORTH CAROLINA 28281
(Address of principal executive offices) (Zip code)
</TABLE>

(704) 334-3000
(Registrant's telephone number, including area code)

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

Indicate by check 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 [ ]

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.

26,227,355 shares outstanding as of May 8, 2000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2

SUMMIT PROPERTIES INC.
INDEX

<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
PART I FINANCIAL INFORMATION
Item 1 Financial Statements
Consolidated Balance Sheets as of March 31, 2000 and
December 31, 1999 (Unaudited)............................. 3
Consolidated Statements of Earnings for the three months
ended March 31, 2000 and 1999 (Unaudited)................. 4
Consolidated Statement of Stockholders' Equity for the three
months ended March 31, 2000 (Unaudited)................... 5
Consolidated Statements of Cash Flows for the three months
ended March 31, 2000 and 1999 (Unaudited)................. 6
Notes to Consolidated Financial Statements (Unaudited)...... 7
Item 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 13
Item 3 Quantitative and Qualitative Disclosure about Market Risk... 24

PART II OTHER INFORMATION
Item 2 Changes in Securities....................................... 25
Item 6 Exhibits and Reports on Form 8-K............................ 25
Signatures.................................................. 26
</TABLE>

2
<PAGE> 3

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SUMMIT PROPERTIES INC.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
(UNAUDITED)

<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
---------- ------------
<S> <C> <C>
ASSETS
Real estate assets:
Land and land improvements............................. $ 180,640 $ 174,615
Buildings and improvements............................. 928,860 893,179
Furniture, fixtures and equipment...................... 71,447 68,437
---------- ----------
1,180,947 1,136,231
Less: accumulated depreciation......................... (137,626) (129,620)
---------- ----------
Operating real estate assets...................... 1,043,321 1,006,611
Construction in progress............................... 132,914 148,587
---------- ----------
Net real estate assets............................ 1,176,235 1,155,198
Cash and cash equivalents................................... 3,529 4,130
Restricted cash............................................. 24,695 40,080
Investments in Summit Management Company, real estate joint
ventures and other investments............................ 1,314 583
Deferred financing costs, net............................... 6,372 6,657
Other assets................................................ 11,009 10,765
---------- ----------
Total assets................................................ $1,223,154 $1,217,413
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Notes payable.......................................... $ 674,958 $ 649,632
Accounts payable and accrued expenses.................. 23,922 25,626
Dividends and distributions payable.................... 13,369 12,984
Accrued interest payable............................... 4,327 7,018
Security deposits and prepaid rents.................... 3,857 3,850
---------- ----------
Total liabilities................................. 720,433 699,110
---------- ----------
Commitments and contingencies
Minority interest of common unitholders in Operating
Partnership............................................... 51,294 54,698
Minority interest of preferred unitholders in Operating
Partnership............................................... 136,269 136,270
Stockholders' equity:
Preferred stock, $.01 par value -- 25,000,000 shares
authorized, no shares issued and outstanding.......... -- --
Common stock, $.01 par value -- 100,000,000 shares
authorized, 26,249,061 and 26,374,446 shares issued
and outstanding in 2000 and 1999, respectively........ 262 264
Additional paid-in capital............................. 410,857 412,874
Accumulated deficit.................................... (82,620) (80,555)
Employee notes receivable.............................. (11,898) (4,861)
Unamortized restricted stock compensation.............. (1,443) (387)
---------- ----------
Total stockholders' equity........................ 315,158 327,335
---------- ----------
Total liabilities and stockholders' equity.................. $1,223,154 $1,217,413
========== ==========
</TABLE>

See notes to consolidated financial statements.

3
<PAGE> 4

SUMMIT PROPERTIES INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------------
2000 1999
----------- -----------
<S> <C> <C>
Revenues:
Rental................................................. $ 41,242 $ 39,813
Other property income.................................. 2,877 2,242
Interest............................................... 1,074 1,035
Other income........................................... 149 59
----------- -----------
Total revenues............................... 45,342 43,149
----------- -----------
Expenses:
Property operating and maintenance:
Personnel......................................... 2,856 3,074
Advertising and promotion......................... 606 607
Utilities......................................... 2,111 2,066
Building repairs and maintenance.................. 1,951 1,964
Real estate taxes and insurance................... 4,741 4,478
Depreciation...................................... 8,900 8,253
Property supervision.............................. 1,302 988
Other operating expenses.......................... 676 819
----------- -----------
23,143 22,249
Interest............................................... 9,212 10,497
General and administrative............................. 940 1,080
Loss (income) on equity investments:
Summit Management Company......................... 322 316
Real estate joint ventures........................ (46) 8
----------- -----------
Total expenses............................... 33,571 34,150
----------- -----------
Income before gain on sale of real estate assets, minority
interest of common unitholders in Operating Partnership
and dividends to preferred unitholders in Operating
Partnership............................................... 11,771 8,999
Gain on sale of real estate assets..................... 2,440 --
----------- -----------
Income before minority interest of common unitholders in
Operating Partnership and dividends to preferred
unitholders in Operating Partnership...................... 14,211 8,999
Minority interest of common unitholders in Operating
Partnership............................................... (1,567) (1,218)
Dividends to preferred unitholders in Operating
Partnership............................................... (3,105) --
----------- -----------
Net income.................................................. $ 9,539 $ 7,781
=========== ===========
Per share data:
Net income -- basic and diluted........................ $ 0.36 $ 0.27
=========== ===========
Dividends declared on common stock..................... $ 0.44 $ 0.42
=========== ===========
Weighted average shares -- basic....................... 26,447,699 28,327,194
=========== ===========
Weighted average shares -- diluted..................... 26,531,721 28,332,772
=========== ===========
</TABLE>

See notes to consolidated financial statements.

4
<PAGE> 5

SUMMIT PROPERTIES INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(DOLLARS IN THOUSANDS)
(UNAUDITED)

<TABLE>
<CAPTION>
UNAMORTIZED
ADDITIONAL RESTRICTED EMPLOYEE
COMMON PAID - IN ACCUMULATED STOCK NOTES
STOCK CAPITAL DEFICIT COMPENSATION RECEIVABLE TOTAL
-------- ---------- ----------- ------------ ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1999..... $ 264 $412,874 $(80,555) $ (387) $ (4,861) $327,335
Dividends.................... -- -- (11,604) -- -- (11,604)
Proceeds from dividend
reinvestment and stock
purchase plans............ 1 1,757 -- -- -- 1,758
Repurchase of common stock... (3) (6,330) -- -- -- (6,333)
Conversion of common units to
shares.................... -- 676 -- -- -- 676
Exercise of stock options.... -- 146 -- -- -- 146
Issuance of restricted stock
grants.................... -- 1,142 -- (1,142) -- --
Amortization of restricted
stock grants.............. -- -- -- 86 -- 86
Adjustment for minority
interest of common
unitholders in Operating
Partnership............... -- 592 -- -- -- 592
Issuance of employee notes
receivable................ -- -- -- -- (7,331) (7,331)
Repayment of employee notes
receivable................ -- -- -- -- 294 294
Net income................... -- -- 9,539 -- -- 9,539
-------- -------- -------- -------- -------- --------
Balance, March 31, 2000........ $ 262 $410,857 $(82,620) $ (1,443) $(11,898) $315,158
======== ======== ======== ======== ======== ========
</TABLE>

See notes to consolidated financial statements.

5
<PAGE> 6

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

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------
2000 1999
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income............................................. $ 9,539 $ 7,781
Adjustments to reconcile net income to net cash
provided by operating activities:
Minority interest of common unitholders in Operating
Partnership......................................... 1,567 1,218
Loss on equity investments........................... 276 324
Gain on sale of real estate assets................... (2,440) --
Depreciation and amortization........................ 9,211 8,720
(Increase) decrease in restricted cash............... (982) 625
Decrease in other assets............................. 26 534
Decrease in accrued interest payable................. (2,691) (1,863)
Decrease in accounts payable and accrued expenses.... (2,981) (3,217)
Increase in security deposits and prepaid rents...... 7 279
-------- --------
Net cash provided by operating activities......... 11,532 14,401
-------- --------
Cash flows from investing activities:
Construction of real estate assets and land
acquisitions, net of payables......................... (29,517) (33,483)
Proceeds from sale of Communities...................... 22,678 22,458
Capitalized interest................................... (2,320) (1,768)
Recurring capital expenditures......................... (952) (1,039)
Non-recurring capital expenditures, net of payables.... (943) (891)
-------- --------
Net cash used in investing activities............. (11,054) (14,723)
-------- --------
Cash flows from financing activities:
Net borrowings (repayments) on line of credit.......... 27,000 (7,500)
Net (repayments) borrowings on unsecured bonds......... (16) 24,749
Repayments of mortgage debt............................ (1,314) (1,277)
Repayments of tax exempt bonds......................... (360) (360)
Net proceeds from dividend reinvestment and stock
purchase plans and exercise of stock options.......... 1,904 9,889
Dividends and distributions to common unitholders...... (13,164) (12,911)
Decrease in advance proceeds from direct stock purchase
plan.................................................. -- (9,474)
Repurchase of common stock............................. (6,333) --
Repurchase of common units............................. (1,759) --
Increase in employee notes receivable.................. (7,037) (2,158)
-------- --------
Net cash (used in) provided by financing
activities....................................... (1,079) 958
-------- --------
Net (decrease) increase in cash and cash equivalents........ (601) 636
Cash and cash equivalents, beginning of period.............. 4,130 2,837
-------- --------
Cash and cash equivalents, end of period.................... $ 3,529 $ 3,473
======== ========
Supplemental disclosure of cash flow information - Cash paid
for interest, net of capitalized interest................. $ 11,655 $ 12,117
======== ========
</TABLE>

See notes to consolidated financial statements.

6
<PAGE> 7

SUMMIT PROPERTIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------

1. BASIS OF PRESENTATION

The accompanying unaudited financial statements have been prepared by the
management of Summit Properties Inc. (the "Company") 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 three months
ended March 31, 2000 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 Company's December 31, 1999 audited financial statements
and notes thereto included in the Company's Annual Report on Form 10-K.

The Company conducts substantially all of its business through Summit Properties
Partnership, L.P. (the "Operating Partnership"). The Company is sole general
partner and majority owner of the Operating Partnership.

COMPREHENSIVE INCOME -- Comprehensive income is the same as net income for all
periods presented.

DERIVATIVE INSTRUMENT AND HEDGING ACTIVITIES -- On January 1, 2001, the Company
is required to adopt Statement of Financial Accounting Standard No. 133,
"Accounting for Derivative Instruments and Hedging Activities" (SFAS 133). This
statement establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for other hedging activities. It requires that an entity
recognize all derivatives as either assets or liabilities in the statement of
financial position and measure these instruments at fair value. The Company is
currently assessing the impact, if any, that the adoption of SFAS 133 will have
on the Company's financial statements.

RECLASSIFICATIONS -- Certain reclassifications have been made to the 1999
financial statements to conform to the 2000 presentation.

2. REAL ESTATE JOINT VENTURES

The Company obtained a 25% interest in a joint venture named Station Hill, LLC,
a North Carolina limited liability company ("Station Hill"), the membership of
which is comprised of the Company and a wholly owned subsidiary of a major
financial services company, in exchange for the contribution of two communities
in December 1998. Station Hill also owns, and the Company thereby holds a 25%
interest in, five apartment communities that were previously 100% owned by the
Company. These five communities were sold by the Company to Hollow Creek, LLC on
December 16, 1998 and were concurrently contributed to Station Hill by Hollow
Creek, LLC for a 75% joint venture interest. The Company's initial investment in
Station Hill was reduced to zero when the Company eliminated the portion of the
gain on disposal related to the percentage of joint venture ownership interest
retained. Station Hill is accounted for on the equity method of accounting.

The Company owns a 49% interest in each of three joint ventures ("Construction
Projects"), each of which is developing an apartment community. The Company's
joint venture partner is the same for all three Construction Projects. One of
the Construction Projects is under construction and two are complete, but in
lease-up. The Construction Projects are accounted for under the equity method of
accounting and, therefore, the operating results of the two Construction
Communities in lease-up are presented in "Loss (income) on equity investments:
Real estate joint ventures" in the Company's consolidated statements of
earnings. The construction costs are being funded through separate loans to each
joint venture from unrelated third parties equal to 100% of the construction
costs. During the construction period, in lieu of equity contributions to each
of the respective joint ventures, the Company has under certain circumstances,
subsequent to demand by the third party lenders, agreed to make contributions
which would reduce the respective construction loans by an amount not to exceed
25% of the total construction loan amount. Any such contribution would be deemed
to be all or a portion of the equity required to be contributed by the Company
to the respective joint venture at the end of the construction and lease-

7
<PAGE> 8
SUMMIT PROPERTIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
- --------------------------------------------------------------------------------

up period. The Company has the right to purchase its joint venture partner's
interest in each of the joint ventures for a period of six months after the
applicable project becomes stabilized. None of the Construction Projects have
reached stabilization as of March 31, 2000 and the Company has not made a
determination about whether it will exercise any of its options. If the Company
does not exercise its option with respect to a joint venture, it will be
required to make a capital contribution of 25% of that joint venture's total
construction loan amount.

The following is a condensed balance sheet and income statement for Station Hill
as of and for the three months ended March 31, 2000 (in thousands). The balance
sheet and income statement set forth below reflect the financial position and
operations of Station Hill in its entirety, not only the Company's respective
interest therein. The balance sheet and income statement information for the
Construction Projects is not material.

<TABLE>
<CAPTION>
BALANCE SHEET
-----------------
MARCH 31,
-----------------
2000 1999
------- -------
<S> <C> <C>
Real estate assets, net..................................... $88,534 $90,914
Cash and cash equivalents................................... 2,041 2,172
Other assets................................................ 365 406
------- -------
Total assets...................................... $90,940 $93,492
======= =======
Mortgages payable........................................... $69,264 $70,028
Other liabilities........................................... 985 1,060
Partners' capital........................................... 20,691 22,404
------- -------
Total liabilities and partners' capital........... $90,940 $93,492
======= =======
</TABLE>

<TABLE>
<CAPTION>
INCOME STATEMENT
-------------------
THREE MONTHS ENDED
MARCH 31,
-------------------
2000 1999
-------- --------
<S> <C> <C>
Revenues.................................................... $ 3,029 $ 2,915
Expenses:
Property operating........................................ 1,058 1,009
Interest.................................................. 1,171 1,174
Depreciation and amortization............................. 735 744
------- -------
Total expenses.................................... 2,964 2,927
------- -------
Net income (loss)........................................... $ 65 $ (12)
======= =======
</TABLE>

3. COMMUNITY DISPOSITION

On March 28, 2000, the Company sold an apartment community located in Hickory,
North Carolina, formerly known as Summit Creekside (118 apartment homes) for
$5.8 million. The disposition of Summit Creekside resulted in the recognition of
a gain on sale of $2.0 million. The net proceeds of $5.8 million were placed
into escrow with a qualified intermediary in accordance with like-kind exchange
income tax rules and regulations and are expected to be used to fund future
development communities.

4. NOTES PAYABLE

8
<PAGE> 9
SUMMIT PROPERTIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
- --------------------------------------------------------------------------------

$30 million of notes which are due on July 30, 2001 and bear interest at 6.75%
per year; (ii) on October 5, 1998, the Operating Partnership sold $25 million of
notes which are due on October 5, 2000 and bear interest at 6.71% per year; and
(iii) on March 18, 1999, the Operating Partnership sold $25 million of notes
which are due on March 16, 2009 and bear interest at 7.59% per year.

5. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

While the Company has historically had limited involvement with derivative
financial instruments, the Company may utilize such instruments in certain
situations to hedge interest rate exposure by modifying the interest rate
characteristics of related balance sheet instruments and prospective financing
transactions. The Company does not utilize derivative financial instruments for
trading purposes. On September 16, 1999, the Company entered into an interest
rate swap agreement with a notional amount of $30 million, relating to $30
million of unsecured notes issued by the Operating Partnership which carry a
fixed interest rate of 6.625% per annum (the "Fixed Rate"). Under the interest
rate swap agreement, through the maturity date of such notes of December 15,
2003, (i) the Company has agreed to pay to the counterparty the interest that
would have been incurred on the $30 million principal amount of the notes at a
floating interest rate of LIBOR plus 11 basis points (the "Floating Rate"), and
(ii) the counterparty has agreed to pay to the Company the interest incurred on
the same principal amount at the Fixed Rate. The Floating Rate at March 31, 2000
was 6.26%.

6. RESTRICTED STOCK

During the three months ended March 31, 2000 and 1999, the Company granted
63,138 and 14,181 shares, respectively, of restricted stock to employees under
the Company's 1994 Stock Option and Incentive Plan. The market value of the
restricted stock grants awarded during these three months in 2000 and 1999
totaled approximately $1.1 million and $239,000, respectively, which has been
recorded as unamortized restricted stock compensation and is shown as a separate
component of stockholders' equity. Unearned compensation related to these
restricted stock grants is being amortized to expense over the vesting period
which ranges from three to five years.

7. SUPPLEMENTAL CASH FLOW INFORMATION

Non-cash investing and financing activities for the three months ended March 31,
2000 and 1999 are as follows:

A. The Company accrued dividends and distributions payable in the amounts
of $13.4 million and $13.7 million at March 31, 2000 and 1999,
respectively.

B. The Company issued 63,138 and 14,181 shares of restricted stock valued
at approximately $1.1 million and $239,000 during the three months ended
March 31, 2000 and 1999, respectively.

C. The Company issued 35,045 shares of Common Stock (as hereinafter
defined) for 35,045 Common Units (as hereinafter defined) during the
three months ended March 31, 2000. The value of these shares of Common
Stock was approximately $676,000.

8. MINORITY INTEREST

Minority interest of common unitholders consists of the following at March 31,
2000 and December 31, 1999 (in thousands):

<TABLE>
<CAPTION>
2000 1999
------- -------
<S> <C> <C>
Minority interest of common unitholders in Operating
Partnership............................................... $51,721 $55,065
Minority interest in one operating community................ (427) (367)
------- -------
$51,294 $54,698
======= =======
</TABLE>

9
<PAGE> 10
SUMMIT PROPERTIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
- --------------------------------------------------------------------------------

As of March 31, 2000, there were 30,556,813 common units of limited partnership
interest ("Common Units") outstanding of which 26,249,061, or 85.9%, were owned
by the Company and 4,307,752, or 14.1%, were owned by other partners (including
certain officers and directors of the Company).

Proceeds from shares of common stock, par value $.01 per share ("Common Stock"),
issued by the Company are contributed to the Operating Partnership for an
equivalent number of Common Units. Total Common Stock issued by the Company and
the proceeds therefrom contributed to the Operating Partnership for an
equivalent number of Common Units was 113,000 and 639,000 shares valued at $1.9
million ($16.92 per share average) and $10.9 million ($17.01 per share average)
for the three months ended March 31, 2000 and 1999, respectively. No individual
transaction significantly changed the Company's ownership percentage in the
Operating Partnership. The Company's ownership percentage in the Operating
Partnership was 85.9% and 86.5% as of March 31, 2000 and 1999, respectively.

Under certain circumstances, as required by the holders of Common Units, the
Company can issue shares of Common Stock in exchange for Common Units owned by
other partners on a one-for-one basis or may purchase Common Units for cash.
Shares of Common Stock exchanged for Common Units are valued based upon the
market price per share of the Company's Common Stock at the date of the
exchange. During the three month period ended March 31, 2000, 35,045 Common
Units valued at $676,000 were exchanged for shares of Common Stock and 93,945
Common Units were exchanged for cash of approximately $1.8 million. No Common
Units were exchanged for Common Stock or cash during the three month period
ended March 31, 1999.

9. COMMITMENTS

The estimated cost to complete ten development projects currently under
construction was approximately $145.8 million at March 31, 2000. Anticipated
construction completion dates of the projects range from the second quarter of
2000 to the first quarter of 2002.

10. EARNINGS PER SHARE

The only difference between "basic" and "diluted" weighted average shares is the
dilutive effect of the Company's stock options outstanding (84,022 and 5,578
shares added to weighted shares outstanding for the three months ended March 31,
2000 and 1999, respectively).

11. BUSINESS SEGMENTS

Effective December 31, 1998, the Company adopted Financial Accounting Standards
Board Statement No. 131, "Disclosures about Segments of an Enterprise and
Related Information" (SFAS 131). SFAS 131 establishes standards for the manner
in which public enterprises report information about operating segments in
financial statements. SFAS 131 also establishes standards for related
disclosures about products and services, geographic areas and major customers.
The adoption of SFAS 131 did not affect the Company's results of operations or
financial position.

The Company reports as a single business segment with activities related to the
operation, development and acquisition of "Class A" luxury apartments located
primarily in the southeastern, southwestern and mid-atlantic United States. The
Company develops apartments solely for its own use and does not perform
development activities for third parties.

12. PRIVATE PLACEMENT OF PREFERRED UNITS

10
<PAGE> 11
SUMMIT PROPERTIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
- --------------------------------------------------------------------------------

outstanding under the Company's unsecured credit facility. The Series B
Preferred Units may be exchanged by the holders into shares of 8.95% Series B
Cumulative Redeemable Perpetual Preferred Stock of the Company ("Series B
Preferred Shares") on a one-for-one basis. Holders of the Series B Preferred
Units may exercise their exchange right (a) at any time on or after April 29,
2009, (b) at any time if full quarterly distributions are not made for six
quarters, or (c) upon the occurrence of specified events related to the
treatment of the Operating Partnership or the Series B Preferred Units for
federal income tax purposes. The Operating Partnership may redeem the Series B
Preferred Units at any time on or after April 29, 2004 for cash at a redemption
price equal to the redeemed holder's capital account (initially $25.00 per
unit), plus all accumulated, accrued and unpaid distributions or dividends. In
lieu of cash, the Operating Partnership may elect to deliver Series B Preferred
Shares on a one-for-one basis, plus an amount equal to all accumulated, accrued
and unpaid distributions or dividends. The Series B Preferred Units have no
stated maturity, are not subject to any sinking fund or mandatory redemption and
are not convertible into any other securities of the Company or the Operating
Partnership. Distributions on the Series B Preferred Units are cumulative from
the date of original issuance and are payable quarterly at the rate of 8.95% per
annum of the $25.00 original capital contribution. The Operating Partnership
made distributions to the holders of the Series B Preferred Units in the
aggregate amount of approximately $5.1 million during 1999 and in the aggregate
amount of approximately $1.9 million during the three months ended March 31,
2000.

On September 3, 1999, the Operating Partnership completed a private placement of
2.2 million of its 8.75% Series C Cumulative Redeemable Perpetual Preferred
Units (the "Series C Preferred Units") to an institutional investor at a price
of $25.00 per unit. The net proceeds of approximately $54 million were used to
repay amounts outstanding under the Company's unsecured credit facility. The
Series C Preferred Units may be exchanged by the holder into shares of 8.75%
Series C Cumulative Redeemable Perpetual Preferred Stock of the Company ("Series
C Preferred Shares") on a one-for-one basis. The holder of the Series C
Preferred Units may exercise its exchange right (a) at any time on or after
September 3, 2009, (b) at any time if full quarterly distributions are not made
for six quarters, (c) upon the occurrence of specified events related to the
treatment of the Operating Partnership or the Series C Preferred Units for
federal income tax purposes, or (d) at any time that such institutional
investor's holdings in the Operating Partnership exceed 18% of the total profits
of or capital interests in the Operating Partnership for a taxable year. The
Operating Partnership may redeem the Series C Preferred Units at any time on or
after September 3, 2004 for cash at a redemption price equal to the redeemed
holder's capital account (initially $25.00 per unit), plus all accumulated,
accrued and unpaid distributions or dividends. The Series C Preferred Units have
no stated maturity, are not subject to any sinking fund or mandatory redemption
and are not convertible into any other securities of the Company or the
Operating Partnership. Distributions on the Series C Preferred Units are
cumulative from the date of original issuance and are payable quarterly at the
rate of 8.75% per annum of the $25.00 original capital contribution. The
Operating Partnership made distributions to the holder of the Series C Preferred
Units in the aggregate amount of approximately $1.5 million during 1999 and in
the aggregate amount of approximately $1.2 million during the three months ended
March 31, 2000.

13. COMMON STOCK REPURCHASE PROGRAM

On May 11, 1999, the Board of Directors of the Company authorized a common stock
repurchase program pursuant to which the Company was authorized to purchase up
to an aggregate of $50 million of currently issued and outstanding Common Stock
of the Company (the "$50 Million Program"). All repurchases have been made on
the open market at prevailing prices or in privately negotiated transactions.
During the three month period ended March 31, 2000, the Company completed the
$50 Million Program by repurchasing 131,900 shares of Common Stock for an
aggregate purchase price, including commissions, of approximately $2.5 million,
or an average price of $18.88 per share. This brings the total number of shares
of Common Stock repurchased under the $50 Million Program to 2.5 million for an
aggregate purchase price, including commissions, of approximately $50 million,
or an average price $19.63 per share.

11
<PAGE> 12
SUMMIT PROPERTIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
- --------------------------------------------------------------------------------

On March 12, 2000, the Board of Directors of the Company authorized a new common
stock repurchase program pursuant to which the Company is authorized to purchase
up to an aggregate of $25 million of currently issued and outstanding Common
Stock of the Company (the "$25 Million Program"). All repurchases have and will
be made on the open market at prevailing prices or in privately negotiated
transactions. This authority may be exercised from time to time and in such
amounts as market conditions warrant. During the three months ended March 31,
2000, the Company repurchased 198,300 shares of Common Stock under the $25
Million Program for an aggregate purchase price, including commissions, of
approximately $3.8 million, or an average price of $19.38 per share.

14. SUBSEQUENT EVENTS

On April 20, 2000, the Company commenced a new program for the sale by the
Operating Partnership of up to $250 million aggregate principal amount of
Medium-Term Notes due nine months or more from the date of issuance. The new
program was established under the Company's and the Operating Partnership's
existing shelf registration statement. The Medium-Term Notes may be issued by
the Operating Partnership from time to time in the future subject to market
conditions and other factors.

During April 2000, the Operating Partnership entered into a Real Estate Purchase
Agreement (the "Agreement") with a third-party real estate developer (the
"Developer"). Under the terms of the Agreement, the Operating Partnership has
agreed to purchase a class A mixed-use community, which will be called Summit
Brickell Grand, and will be located in Miami, Florida. The Operating Partnership
expects to close on the purchase of Summit Brickell Grand during the second half
of 2002. The final purchase price will be determined based on actual
construction costs adjusted for interim net income (as defined) at the time of
purchase. The purchase price is expected to be approximately $50.5 million. The
purchase of Summit Brickell Grand by the Operating Partnership is subject to
customary closing conditions. The Operating Partnership has issued a letter of
credit ("LOC") in the amount of approximately $13.0 million, which will serve as
a credit enhancement to the Developer's construction loan. In the event that any
amount under the LOC is drawn upon, the Operating Partnership shall be treated
as having issued a loan to the Developer in the amount of such draw. Any such
loan will accrue interest at a rate of eighteen percent (18%) per annum.

12
<PAGE> 13

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, and Section 21E of the
Securities Exchange Act of 1934, as amended, including, without limitation,
statements relating to the operating performance of fully stabilized
Communities, the development, acquisition or disposition of properties,
anticipated construction completion and lease-up dates, and estimated
development costs. You can identify forward-looking statements by the use of the
words "believe," "expect," "anticipate," "intend," "estimate," "assume" and
other similar expressions which predict or indicate future events and trends and
which do not relate to historical matters. You should not rely on
forward-looking statements, because they involve known and unknown risks,
uncertainties and other factors, some of which are beyond the control of the
Company. These risks, uncertainties and other factors may cause the actual
results, performance or achievements of the Company to be materially different
from the anticipated future results, performance or achievements expressed or
implied by the forward-looking statements. Factors which could have a material
adverse effect on the operations and future prospects of the Company include,
but are not limited to: 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, uncertainties associated with the Company's
development activities, the failure of acquisitions to yield expected results,
construction delays due to unavailability of materials, weather conditions or
other delays, competition, supply and demand for apartment communities in the
Company's current and proposed market areas, changes in generally accepted
accounting principles or policies and guidelines applicable to REITs, and those
factors discussed in the section entitled "Development Activity -- Certain
Factors Affecting the Performance of Development Communities" on page 22 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 Inc. and the Notes thereto appearing
elsewhere herein.

HISTORICAL RESULTS OF OPERATIONS

The Company'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
or the disposition of Communities. Where appropriate, comparisons are made on a
"fully stabilized Communities," "stabilized development Communities",
"Communities in lease-up" and "disposition Communities" 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 which the Company has acquired is deemed "fully stabilized" when owned
by the Company for one year or more as of the beginning of the current year. A
Community which the Company has developed 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. All
Communities information presented is before real estate depreciation and
amortization expense. Communities' average physical occupancy presented 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 occupancy that
existed on Sunday during each week of the period. Average monthly rental revenue
presented represents the average monthly net rental revenue per occupied
apartment home. The Company's methodology for calculating average physical
occupancy and average monthly rental revenue may differ from the methodology
used by other apartment companies and, accordingly, may not be comparable to
such other apartment companies.

Results of Operations for the Three Months Ended March 31, 2000 and 1999

For the three months ended March 31, 2000, income before gain on sale of real
estate assets, minority interest of common unitholders in Operating Partnership
and dividends to preferred unitholders in Operating Partnership
13
<PAGE> 14

increased $2.8 million to approximately $11.8 million from the three months
ended March 31, 1999 primarily due to increased property operating income
generated by the Company's portfolio of Communities, as well as decreased
interest costs attributable to decreased average indebtedness outstanding.

OPERATING PERFORMANCE OF THE COMPANY'S PORTFOLIO OF COMMUNITIES

The operating performance of the Communities for the three months ended March
31, 2000 and 1999 is summarized below (dollars in thousands):

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
----------------------------
2000 1999 % CHANGE
------- ------- --------
<S> <C> <C> <C>
Property revenues:
Fully stabilized communities (1)....................... $28,091 $27,333 2.8%
Stabilized development communities..................... 13,332 9,966 33.8%
Communities in lease-up................................ 2,492 1,503 65.8%
Communities sold....................................... 204 3,253 -93.7%
------- -------
Total property revenues........................ 44,119 42,055 4.9%
------- -------
Property operating and maintenance expense:
Fully stabilized communities (1)....................... 9,024 9,039 -0.2%
Stabilized development communities..................... 4,130 3,082 34.0%
Communities in lease-up................................ 1,026 584 75.7%
Communities sold....................................... 63 1,291 -95.1%
------- -------
Total property operating and maintenance
expense...................................... 14,243 13,996 1.8%
------- -------
Property operating income................................ $29,876 $28,059 6.5%
======= =======
Apartment homes, end of period........................... 17,965 18,283 -1.7%
======= =======
</TABLE>

- ---------------

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

A summary of the Company's apartment homes (excluding joint ventures) for the
three months ended March 31, 2000 and 1999 is as follows:

<TABLE>
<CAPTION>
2000 1999
------ ------
<S> <C> <C>
Apartment homes at January 1................................ 17,673 18,003
Developments which began rental operations during the
period.................................................... 410 280
Sale of apartment homes..................................... (118) --
------ ------
Apartment homes at March 31................................. 17,965 18,283
====== ======
</TABLE>

14
<PAGE> 15

OPERATING PERFORMANCE OF THE COMPANY'S FULLY STABILIZED COMMUNITIES

The operating performance of the Communities stabilized prior to January 1, 1998
is summarized below (dollars in thousands except average monthly rental
revenue):

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
----------------------------
2000 1999 % CHANGE
------- ------- --------
<S> <C> <C> <C>
Property revenues:
Rental................................................. $26,230 $25,893 1.3%
Other.................................................. 1,861 1,440 29.2%
------- -------
Total property revenues........................ 28,091 27,333 2.8%
------- -------
Property operating and maintenance expense:
Personnel.............................................. 1,684 1,942 -13.3%
Advertising and promotion.............................. 361 352 2.6%
Utilities.............................................. 1,268 1,213 4.5%
Building repairs and maintenance....................... 1,319 1,376 -4.1%
Real estate taxes and insurance........................ 3,083 2,933 5.1%
Property supervision................................... 856 679 26.1%
Other operating expense................................ 453 544 -16.7%
------- -------
Total property operating and maintenance
expense...................................... 9,024 9,039 -0.2%
------- -------
Property operating income................................ $19,067 $18,294 4.2%
======= =======
Average physical occupancy............................... 93.3% 95.1% -1.9%
======= =======
Average monthly rental revenue........................... $ 859 $ 844 1.8%
======= =======
Number of apartment homes................................ 11,194 11,194
======= =======
</TABLE>

The increase in property revenue from fully stabilized Communities was primarily
the result of increases in average rental rates as well as increased revenue
from sources other than rental revenue, such as telephone, cable and water
sub-meter revenue, partially offset by a decline in occupancy rates. The higher
revenues were primarily generated in the Company's Florida, Charlotte, North
Carolina, Washington, D.C. and Richmond, Virginia markets. The decline in
occupancy rates was generated primarily by the Company's Wilmington, Delaware,
Dallas, Texas and San Antonio, Texas markets. Property supervision costs
increased as a result of an increase in the property management fee charged by
the Management Company (as defined below) from 2.5% to 3.0%. This is the first
increase in the amount charged by the Management Company for its services since
the Company's initial public offering in 1994. The increase in property
supervision costs was offset by cost savings related primarily to personnel and
other operating expenses. As a percentage of total property revenue, total
property operating and maintenance expenses decreased for the three-month period
from 33.1% in 1999 to 32.1% in 2000.

15
<PAGE> 16

OPERATING PERFORMANCE OF THE COMPANY'S STABILIZED DEVELOPMENT COMMUNITIES

The Company had fourteen development Communities (Summit Ballantyne, Summit
Sedgebrook, Summit Governor's Village, Summit Lake, Summit Norcroft II, Summit
Stonefield, Summit Russett, Summit Westwood, Summit Plantation II, Summit New
Albany, Summit Fair Lakes, Summit Doral, Summit Las Palmas and Summit Camino
Real) which were stabilized during the entire three months ended March 31, 2000
but were stabilized subsequent to January 1, 1998. The operating performance of
these fourteen Communities for the three months ended March 31, 2000 and 1999 is
summarized below (dollars in thousands except average monthly rental revenue):

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------
2000 1999
-------- -------
<S> <C> <C>
Property revenues:
Rental.................................................... $12,477 $9,468
Other..................................................... 855 498
------- ------
Total property revenues..................................... 13,332 9,966
Property operating and maintenance expense.................. 4,130 3,082
------- ------
Property operating income................................... $ 9,202 $6,884
======= ======
Average physical occupancy.................................. 92.6% 75.4%
======= ======
Average monthly rental revenue.............................. $ 937 $ 801
======= ======
Number of apartment homes................................... 4,885 4,885
======= ======
</TABLE>

The unleveraged yield on investment for the stabilized development Communities,
defined as property operating income for the three months ended March 31, 2000
on an annualized basis over total development cost, was 10.07%.

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

The Company had eight Communities in lease-up during the three months ended
March 31, 2000. Six of the eight Communities in lease-up are new developments
and two of the Communities in lease-up are existing Communities that are
undergoing major renovations. 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 six new development Communities in lease-up
as of March 31, 2000 is as follows (dollars in thousands):

<TABLE>
<CAPTION>
TOTAL ACTUAL/ % LEASED
NUMBER OF ACTUAL/ ANTICIPATED ACTUAL/ Q1 2000 AS OF
APARTMENT ESTIMATED CONSTRUCTION ANTICIPATED AVERAGE MARCH 31,
COMMUNITY HOMES COST COMPLETION STABILIZATION OCCUPANCY 2000
- --------- --------- --------- ------------ ------------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Summit New Albany II -- Columbus, OH..... 127 $ 9,800 Q1 2000 Q3 2000 55.2% 78.7%
Summit Largo -- Largo, MD................ 219 18,000 Q1 2000 Q3 2000 88.6% 98.6%
Summit Hunter's Creek -- Orlando, FL..... 270 19,200 Q1 2000 Q4 2000 22.6% 49.6%
Summit Deer Creek -- Atlanta, GA (1)..... 292 22,200 Q2 2000 Q1 2001 22.5% 43.8%
Summit Ashburn Farm -- Loudon County, VA
(1).................................... 162 14,600 Q3 2000 Q1 2001 19.1% 54.3%
Reunion Park by Summit -- Raleigh, NC
(1).................................... 248 14,300 Q1 2001 Q3 2001 0.0% 6.0%
------- -------
1,318 $98,100
======= =======
</TABLE>

- ---------------

(1) The related assets of such communities are included in the Construction in
Progress category at March 31, 2000.

In addition to the Communities listed in the table above, Summit Fairview in
Charlotte, North Carolina (135 apartment homes) and Summit Lenox in Atlanta,
Georgia (433 apartment homes) are existing Communities of the Company which are
currently undergoing major renovations. The renovations include upgrades of the
interior of the apartment homes (new cabinets, fixtures and other interior
upgrades), upgrades to the parking lots and landscaping, as well as exterior
painting of buildings. The renovations will require certain apartment homes to
be

16
<PAGE> 17

unavailable for rental over the course of the projects. The operations of Summit
Fairview and Summit Lenox are included in lease-up Communities results due to
the renovation work. The renovation work at Summit Fairview is expected to be
completed by the end of the second quarter of 2000 and the renovation work at
Summit Lenox is expected to be completed by the end of the third quarter of
2000.

All Communities listed above were in lease-up during the three months ended
March 31, 2000. Only Summit Lenox and Summit Fairview had operating activity
during the three months ended March 31, 1999. The operating performance of these
Communities for the three months ended March 31, 2000 and 1999 is summarized
below (dollars in thousands):

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------
2000 1999
------ ------
<S> <C> <C>
Property revenues:
Rental.................................................... $2,343 $1,432
Other property............................................ 149 71
------ ------
Total property revenues..................................... 2,492 1,503
Property operating and maintenance expense.................. 1,026 584
------ ------
Property operating income................................... $1,466 $ 919
====== ======
Number of apartment homes................................... 1,886 568
====== ======
</TABLE>

OPERATING PERFORMANCE OF THE COMPANY'S DISPOSITION COMMUNITIES

During the first quarter of 2000, the Company disposed of the former Summit
Creekside community (the "2000 Disposition"). The information in the table below
for 1999 consists of the 2000 Disposition as well as the following communities
sold during 1999 (referred to herein using former community names): Summit
Hampton, Summit Oak, Summit Beacon Ridge, Summit McIntosh, Summit Perico, Summit
Heron's Run and Summit Eastridge. The operating performance of these communities
is summarized below (dollars in thousands):

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------
2000 1999
----- -------
<S> <C> <C>
Property revenues:
Rental.................................................... $193 $3,021
Other..................................................... 11 232
---- ------
Total property revenues..................................... 204 3,253
Property operating and maintenance expense.................. 63 1,291
---- ------
Property operating income................................... $141 $1,962
==== ======
Number of apartment homes................................... 118 1,636
==== ======
</TABLE>

17
<PAGE> 18

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 months ended March 31, 2000 and 1999 is
summarized below (in thousands):

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------
2000 1999
------ ------
<S> <C> <C>
Revenue:
Operating revenue......................................... $2,625 $1,832
Gain on sale of land...................................... 238 --
------ ------
Total revenue..................................... 2,863 1,832
------ ------
Expenses:
Operating.............................................. 2,571 1,927
Depreciation........................................... 86 73
Amortization........................................... 76 73
Interest............................................... 452 75
------ ------
Total expenses.................................... 3,185 2,148
------ ------
Net loss of Summit Management Company....................... $ (322) $ (316)
====== ======
</TABLE>

The increase in operating revenue for the three month period was primarily a
result of an increase in the management fee charged to the Company's Communities
from 2.5% to 3.0% and higher revenues from construction activity. The increase
in the management fee is the first increase since the Company's initial public
offering in 1994. The Management Company sold a parcel of land in Raleigh, North
Carolina on February 29, 2000 for $5.4 million that resulted in a gain on sale
of $238,000. The increase in operating expenses was a result of increased
construction activities and increased personnel at the Management Company in
order to better support the Company's growth objectives, including improving the
operating performance of its stabilized Communities. The increase in interest
expense resulted from an inter-company loan which was repaid during the first
quarter of 2000.

Property management revenues included $278,000 and $324,000 of property
management fees from third parties for the three months ended March 31, 2000 and
1999, respectively. Property management fees from third parties as a percentage
of total property management revenues were 15.9% and 22.2% for the three months
ended March 31, 2000 and 1999, respectively. The Company expects third party
management revenues as a percentage of total property management revenues to
continue to decline as revenues from the Company's Communities continue to
increase.

All of the Construction Company's revenues are from contracts with the Company.

OTHER INCOME AND EXPENSES

Interest expense, including amortization of deferred financing costs, decreased
by approximately $1.3 million for the three months ended March 31, 2000 compared
with the same period in 1999. This decrease was primarily the result of a
decrease in the Company's average indebtedness outstanding, which decreased by
$77.7 million. The decline was partially offset by an increase in the effective
interest rate from 6.50% to 6.75% for the three months ended March 31, 2000 as
compared to the same period in 1999.

Depreciation expense increased $647,000, or 7.8%, for the three months ended
March 31, 2000 compared with the similar period in 1999, primarily due to
depreciation on recently developed Communities offset by a reduction in
depreciation related to Communities sold.

General and administrative expenses decreased $140,000, or 13.0%, for the three
months ended March 31, 2000 as compared to the same period in 1999. This
decrease was the result of timing differences related to compensation costs
associated with the Company's Employee Stock Purchase Plan. As a percentage of
revenues,

18
<PAGE> 19

general and administrative expenses were 2.1% and 2.5% for the three months
ended March 31, 2000 and 1999, respectively.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity

The Company's net cash provided by operating activities decreased from $14.4
million for the three months ended March 31, 1999 to $11.5 million for the same
period in 2000, primarily due to a $1.6 million increase in restricted cash
($982,000 increase for the three months ended March 31, 2000 as compared to a
$625,000 decrease for the three months ended March 31, 1999), a $508,000
increase in other assets ($26,000 decrease for the three months ended March 31,
2000 as compared to a $534,000 decrease for the three months ended March 31,
1999) and a $462,000 decrease in interest paid. The increase in restricted cash
was due to deposits placed into mortgage reserve escrows as well as interest
income earned on all restricted cash accounts during the three months ended
March 31, 2000. The decrease in cash paid for interest is due to the decrease in
average indebtedness outstanding.

Net cash used in investing activities decreased from $14.7 million for the three
months ended March 31, 1999 to $11.1 million for the same period in 2000 due to
a decrease in construction activity during 2000. Property sale proceeds in 1999
were placed in escrow in accordance with like-kind exchange income tax rules and
regulations. Proceeds from the sale of Communities represent funds expended from
these like-kind exchange escrows. In the event the proceeds from these property
sales are not fully invested in qualified like-kind property during the required
time period, a special distribution may be made or company level tax may be
incurred.

Net cash provided by financing activities was $958,000 for the three months
ended March 31, 1999. Net cash used in financing activities was $1.1 million for
the same period in 2000, primarily due to net borrowings on notes payable of
$25.3 million during the three months ended March 31, 2000 as compared to $15.6
million in the same period in 1999, the repurchase during the three months ended
March 31, 2000 of Common Stock and Common Units for $6.3 million and $1.8
million, respectively, and the increase of employee notes receivable of $7.0
million in 2000 compared to $2.2 million in 1999.

The ratio of earnings to fixed charges was 1.60 for the three months ended March
31, 2000 as compared to 1.58 for the three months ended March 31, 1999.

The Company has elected to be taxed as a Real Estate Investment Trust ("REIT")
under Sections 856 and 860 of the Internal Revenue Code of 1986, as amended.
REITs are subject to a number of organizational and operational requirements,
including a requirement that they currently distribute 95% (90% effective for
tax years beginning after December 31, 2000) of their ordinary taxable income.
As a REIT, the Company generally will not be subject to federal income tax on
net income.

The Company's outstanding indebtedness at March 31, 2000 totaled $675.0 million.
This amount includes approximately $262.0 million of fixed rate conventional
mortgages, $38.0 million of variable rate tax-exempt bonds, $266.0 million of
unsecured notes, $4.0 million of tax-exempt fixed rate mortgages, and $105.0
million under the Unsecured Credit Facility (as defined below).

The Company expects to meet its short-term liquidity requirements (i.e.,
liquidity requirements arising within 12 months), including recurring capital
expenditures relating to maintaining its existing properties, generally through
its working capital, net cash provided by operating activities and borrowings
under its Unsecured Credit Facility (as defined below). The Company considers
its cash provided by operating activities to be adequate to meet operating
requirements and payments of dividends and distributions. The Company 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, from undistributed cash flow, from proceeds received from the
disposition of certain Communities and, in connection with the acquisition of
land or improved property, through the issuance of Common Units.

19
<PAGE> 20

Credit Facility

The Company has a syndicated unsecured line of credit (the "Unsecured Credit
Facility") in the amount of $200 million. 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
Company's current credit rating of BBB- by Standard & Poor's Rating Services and
Baa3 by Moody's Investors Service. The interest rate will be reduced in the
event an upgrade of the Company'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 ($100 million). This sub-facility
provides the Company with the option to place borrowings in a fixed LIBOR
contract up to 180 days.

Medium Term Notes

On May 29, 1998, the Company established a program for the sale by the Operating
Partnership 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"). The
Operating Partnership issued Medium-Term Notes with an aggregate principal
amount of $80 million in connection with the MTN Program as follows: (i) on July
28, 1998, the Company sold $30 million of notes which are due on July 30, 2001
and bear interest at 6.75% per year; (ii) on October 5, 1998, the Operating
Partnership sold $25 million of notes which are due on October 5, 2000 and bear
interest at 6.71% per year; and (iii) on March 18, 1999, the Operating
Partnership sold $25 million of notes which are due on March 16, 2009 and bear
interest at 7.59% per year.

Private Placement of Preferred Units

On April 29, 1999, the Operating Partnership completed a private placement of
3.4 million of its 8.95% Series B Cumulative Redeemable Perpetual Preferred
Units (the "Series B Preferred Units") to two institutional investors at a price
of $25.00 per unit. The net proceeds of approximately $83 million were used to
repay amounts outstanding under the Company's Unsecured Credit Facility. The
Series B Preferred Units may be exchanged by the holders into shares of 8.95%
Series B Cumulative Redeemable Perpetual Preferred Stock of the Company ("Series
B Preferred Shares") on a one-for-one basis. Holders of the Series B Preferred
Units may exercise their exchange right (a) at any time on or after April 29,
2009, (b) at any time if full quarterly distributions are not made for six
quarters, or (c) upon the occurrence of specified events related to the
treatment of the Operating Partnership or the Series B Preferred Units for
federal income tax purposes. The Operating Partnership may redeem the Series B
Preferred Units at any time on or after April 29, 2004 for cash at a redemption
price equal to the redeemed holder's capital account (initially $25.00 per
unit), plus all accumulated, accrued and unpaid distributions or dividends. In
lieu of cash, the Operating Partnership may elect to deliver Series B Preferred
Shares on a one-for-one basis, plus an amount equal to all accumulated, accrued
and unpaid distributions or dividends. The Series B Preferred Units have no
stated maturity, are not subject to any sinking fund or mandatory redemption and
are not convertible into any other securities of the Company or the Operating
Partnership. Distributions on the Series B Preferred Units are cumulative from
the date of original issuance and are payable quarterly at the rate of 8.95% per
annum of the $25.00 original capital contribution. The Operating Partnership
made distributions to the holders of the Series B Preferred Units in the
aggregate amount of approximately $5.1 million during 1999 and in the aggregate
amount of approximately $1.9 million during the three months ended March 31,
2000.

20
<PAGE> 21

the holder into shares of 8.75% Series C Cumulative Redeemable Perpetual
Preferred Stock of the Company ("Series C Preferred Shares") on a one-for-one
basis. The holder of the Series C Preferred Units may exercise its exchange
right (a) at any time on or after September 3, 2009, (b) at any time if full
quarterly distributions are not made for six quarters, (c) upon the occurrence
of specified events related to the treatment of the Operating Partnership or the
Series C Preferred Units for federal income tax purposes, or (d) at any time
that such institutional investor's holdings in the Operating Partnership exceed
18% of the total profits of or capital interests in the Operating Partnership
for a taxable year. The Operating Partnership may redeem the Series C Preferred
Units at any time on or after September 3, 2004 for cash at a redemption price
equal to the redeemed holder's capital account (initially $25.00 per unit), plus
all accumulated, accrued and unpaid distributions or dividends. The Series C
Preferred Units have no stated maturity, are not subject to any sinking fund or
mandatory redemption and are not convertible into any other securities of the
Company or the Operating Partnership. Distributions on the Series C Preferred
Units are cumulative from the date of original issuance and are payable
quarterly at the rate of 8.75% per annum of the $25.00 original capital
contribution. The Operating Partnership made distributions to the holder of the
Series C Preferred Units in the aggregate amount of approximately $1.5 million
during 1999 and in the aggregate amount of approximately $1.2 million during the
three months ended March 31, 2000.

Common Stock Repurchase Program

On May 11, 1999, the Board of Directors of the Company authorized a common stock
repurchase program pursuant to which the Company was authorized to purchase up
to an aggregate of $50 million of currently issued and outstanding Common Stock
of the Company (the "$50 Million Program"). All repurchases have been made on
the open market at prevailing prices or in privately negotiated transactions.
During the three month period ended March 31, 2000, the Company completed the
$50 Million Program by repurchasing 131,900 shares of Common Stock for an
aggregate purchase price, including commissions, of approximately $2.5 million,
or an average price of $18.88 per share. This brings the total number of shares
repurchased under the $50 Million Program to 2.5 million for an aggregate
purchase price, including commissions, of approximately $50 million, or an
average price of $19.63 per share.

Employee Loan Program

The Board of Directors of the Company believes that ownership of the Company's
Common Stock by executive officers and certain other qualified employees of the
Company and its subsidiaries will align the interests of such officers and
employees with the interests of the stockholders of the Company. To this end,
the Board of Directors approved and the Company instituted a loan program
whereby the Company may lend amounts to or on behalf of certain of the Company's
executive officers and key employees to (i) finance the purchase of Common Stock
on the open market at then-current market prices; (ii) finance an employee's
payment of the exercise price of one or more stock options to purchase shares of
Common Stock granted to such employee; or (iii) finance the annual tax liability
or other expenses of an executive officer related to the vesting of shares of
Common Stock which constitute a portion of a restricted stock award granted to
such executive officer. The Company has amended the terms of the loan program
from time to time since its inception in 1997. In December 1999, the Board of
Directors increased the maximum aggregate amounts that may be loaned to
executive officers and other key employees of the Company and its subsidiaries.
The $7.0 million increase in employee notes receivable from December 31, 1999 to
March 31, 2000 represents loans extended to certain executive officers and key
employees of the Company under the loan program. The relevant officer or
employee has executed a Promissory Note and

21
<PAGE> 22

Security Agreement ("Note") related to each loan extended by the Company during
the first quarter of 2000. Such ten-year Notes bear interest at the applicable
federal rate as established by the Internal Revenue Service, are full recourse
to the officers and employees and are collateralized by the shares of Common
Stock which are the subject of the loans.

COMMUNITY DISPOSITION

COMMUNITIES BEING MARKETED FOR SALE

At March 31, 2000, the Company had two apartment communities under contract for
sale with a net book value of approximately $10.0 million. The Company does not
anticipate incurring a loss on any individual apartment Community sale. Proceeds
from the sale of the Communities will be used to fund future development. The
two apartment communities held for sale represented approximately 1.5% of
property operating income for the Company for the three months ended March 31,
2000.

DEVELOPMENT ACTIVITY

The Company's construction in progress at March 31, 2000 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 Deer Creek -- Atlanta, GA (1)............... 292 $ 22,200 $ 20,607 $ 1,593 Q2 2000
Summit Russett II -- Laurel, MD.................... 112 9,900 5,183 4,717 Q3 2000
Summit Ashburn Farm -- Loudon County, VA (1)....... 162 14,600 11,195 3,405 Q3 2000
Summit Grandview -- Charlotte, NC.................. 266 45,500 26,107 19,393 Q4 2000
Reunion Park by Summit -- Raleigh , NC (1)......... 248 14,300 10,884 3,416 Q1 2001
Summit Deerfield -- Cincinnati, OH................. 498 41,500 19,076 22,424 Q3 2001
Summit Crest -- Raleigh, NC........................ 438 30,700 5,457 25,243 Q3 2001
Summit Overlook -- Raleigh, NC..................... 320 25,500 4,188 21,312 Q3 2001
Summit Peachtree City -- Atlanta, GA............... 399 31,500 7,357 24,143 Q4 2001
Summit Grand Parc -- Washington, D.C. ............. 105 29,400 9,230 20,170 Q1 2002
Other development and construction costs (2)....... -- -- 13,630 --
----- -------- -------- --------
2,840 $265,100 $132,914 $145,816
===== ======== ======== ========
</TABLE>

- ---------------

(1) These communities were in lease-up at March 31, 2000.
(2) Consists primarily of land held for development and other pre-development
costs.

Estimated costs to complete the development Communities represent substantially
all of the Company's material commitments for capital expenditures.

Certain Factors Affecting the Performance of Development Communities

The Company 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 Company 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 Company will not experience construction delays due to the
unavailability of materials, weather conditions or other events.

22
<PAGE> 23

Other development risks include the possibility of incurring additional costs or
liabilities 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 Company is conducting feasibility and other pre-development
work for nine Communities. The Company 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 arise which may prevent development.
Similarly, there can be no assurance that, if the Company 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.

FUNDS FROM OPERATIONS

The Company considers funds from operations ("FFO") to be an appropriate measure
of performance of an equity REIT. The Company computes FFO in accordance with
standards established by the National Association of Real Estate Investment
Trusts ("NAREIT"). FFO, as defined by NAREIT, represents net income (loss)
excluding gains or losses from sales of property, plus depreciation of real
estate assets, and after adjustments for unconsolidated partnerships and joint
ventures, all determined on a consistent basis in accordance with generally
accepted accounting principles ("GAAP"). Funds Available for Distribution
("FAD") is defined as FFO less capital expenditures funded by operations
(recurring capital expenditures). The Company's methodology for calculating FFO
and FAD may differ from the methodology for calculating FFO and FAD utilized by
other real estate companies, and accordingly, may not be comparable to other
real estate companies. FFO and FAD do not represent amounts available for
management's discretionary use because of needed capital expenditures or
expansion, debt service obligations, property acquisitions, development,
dividends and distributions or other commitments and uncertainties. FFO and FAD
should not be considered as alternatives to net income (determined in accordance
with GAAP) as an indication of the Company's financial performance or to cash
flows from operating activities (determined in accordance with GAAP) as a
measure of the Company's liquidity, nor are they indicative of funds available
to fund the Company's cash needs, including its ability to make
dividends/distributions payments. The Company believes FFO and FAD are helpful
to investors as measures of the performance of the Company because, along with
cash flows from operating activities, financing activities and investing
activities, they provide investors with an understanding of the ability of the
Company to incur and service debt and make capital expenditures.

23
<PAGE> 24

Funds from Operations and Funds Available for Distribution for the three months
ended March 31, 2000 and 1999 are calculated as follows (dollars in thousands):

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------------
2000 1999
----------- -----------
<S> <C> <C>
Net income.................................................. $ 9,539 $ 7,781
Minority interest of Common Unitholders In Operating
Partnership............................................... 1,567 1,218
Gain on sale of real estate assets.......................... (2,440) --
Gain on sale of real estate assets -- Management Company.... (238) --
----------- -----------
Adjusted net income....................................... 8,428 8,999
Depreciation:
Real estate assets........................................ 8,852 8,226
Real estate joint venture................................. 184 183
----------- -----------
Funds from Operations....................................... 17,464 17,408
Recurring capital expenditures (1)........................ (952) (1,039)
----------- -----------
Funds Available for Distribution............................ $ 16,512 $ 16,369
=========== ===========
Non-recurring capital expenditures (1) (2).................. $ (943) $ (891)
=========== ===========
Cash Flow Provided By (Used In):
Operating Activities...................................... $ 11,532 $ 14,401
Investing Activities...................................... (11,054) (14,723)
Financing Activities...................................... (1,079) 958
Weighted average shares and common units
outstanding -- diluted.................................... 30,889,711 32,769,514
=========== ===========
</TABLE>

- ---------------

(1) Recurring capital expenditures are expected to be funded from operations and
consist primarily of interior painting, carpets, new appliances, vinyl,
blinds, tile, and wallpaper. In contrast, non-recurring capital
expenditures, such as major improvements, new garages and access gates, are
expected to be funded by financing activities and, therefore, are not
included in the calculation of Funds Available for Distribution.
(2) Non-recurring capital expenditures for the three months ended March 31, 2000
and 1999 primarily consist of: $134,000 and $422,000 for major renovations
in 2000 and 1999, respectively; $41,000 and $166,000 for access gates and
security fences in 2000 and 1999, respectively; and $644,000 and $140,000 in
other revenue enhancement expenditures in 2000 and 1999, respectively.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

There has been no material change in the Company's market risk since the filing
of the Company's Annual Report on Form 10-K for the year ended December 31,
1999.

24
<PAGE> 25

PART II

ITEM 2. CHANGES IN SECURITIES

On March 10, 2000, the Company issued to a limited partner of the Operating
Partnership 13,374 shares of Common Stock in exchange for the corresponding
number of Common Units. Such shares of the Company's Common Stock were issued in
reliance on an exemption from registration under Section 4(2) of the Securities
Act of 1933, as amended, and the rules and regulations promulgated thereunder.
In light of the information obtained by the Company in connection with such
transaction, management of the Company believes that the Company may rely on
such exemption.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

<TABLE>
<S> <C>
*10.1 Promissory Note and Security Agreement, dated January 31,
2000, evidencing a loan of $499,813.88 to William B.
McGuire, Jr. for the purpose of purchasing shares of Common
Stock of the Company.
*10.2 Promissory Note and Security Agreement, dated January 31,
2000, evidencing a loan of $999,995.08 to William F. Paulsen
for the purpose of purchasing shares of Common Stock of the
Company.
*10.3 Promissory Note and Security Agreement, dated January 31,
2000, evidencing a loan of $999,995.08 to Steven R. LeBlanc
for the purpose of purchasing shares of Common Stock of the
Company.
*10.4 Promissory Note and Security Agreement, dated January 31,
2000, evidencing a loan of $499,969.08 to Michael L. Schwarz
for the purpose of purchasing shares of Common Stock of the
Company.
*10.5 Noncompetition Agreement, dated as of February 15, 2000, by
and among the Company, Summit Management Company and William
F. Paulsen.
*10.6 Employment Agreement by and among the Company, Summit
Management Company and William B. McGuire, Jr.
*10.7 Noncompetition Agreement, dated as of February 15, 2000, by
and among the Company, Summit Management Company and William
B. McGuire, Jr.
*12.1 Statement Regarding Calculation of Ratio of Earnings to
Fixed Charges for the Three Months ended March 31, 2000.
*27.1 Financial Data Schedule -- Three Months ended March 31, 2000
(for SEC use only).
</TABLE>

- ---------------

* Filed herewith

(b) Reports on Form 8-K

None.

25
<PAGE> 26

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 thereunto duly authorized.

<TABLE>
<S> <C>
SUMMIT PROPERTIES INC.

May 11, 2000 /s/ WILLIAM F. PAULSEN
- -------------------------------------------- --------------------------------------------
(Date) William F. Paulsen,
Chief Executive Officer

May 11, 2000 /s/ MICHAEL L. SCHWARZ
- -------------------------------------------- --------------------------------------------
(Date) Michael L. Schwarz,
Executive Vice President and
Chief Financial Officer
</TABLE>

<PAGE> 1

EXHIBIT 10.1

PROMISSORY NOTE AND SECURITY AGREEMENT

$499,813.88 JANUARY 31, 2000

FOR VALUE RECEIVED, WILLIAM B. MCGUIRE, JR., who resides at c/o Summit
Properties Inc., 212 South Tryon Street, 500, Charlotte, North Carolina 28281
(hereinafter referred to as the "Employee"), hereby promises to pay to the order
of Summit Properties Inc., a Maryland corporation with its principal place of
business at 212 South Tryon Street, Suite 500, Charlotte, North Carolina
(hereinafter referred to as the "Company"), the principal amount of $499,813.88
together with interest thereon as provided below subject to the terms and
conditions set forth herein.

1. Purpose and Authority. This Promissory Note and Security Agreement
(the "Note") is entered into for the purpose of financing the Employee's
purchase of shares of common stock, par value $0.01 per share, of the Company
("Common Stock") pursuant to and subject to the terms and conditions of (i) the
Company's Statement of Company Policy on Loans to Executive Officers and
Qualified Employees to Purchase the Company Stock as adopted by the Board of
Directors of the Company on September 8, 1997, as amended from time to time, and
(ii) the Company's 1994 Stock Option and Incentive Plan, as amended from time to
time.

2. Security. The Employee hereby grants the Company a security interest
in any and all shares of Common Stock purchased by the Employee with the
proceeds of this Note (hereinafter referred to as the "Collateral Stock") and in
any and all distributions and dividends which may from time to time be, paid or
payable on the Collateral Stock (each, a "Distribution"). Employee agrees to
take all such actions and execute all such documents as may from time to time be
reasonably requested by the Company to perfect and maintain the validity and
priority of any security interest granted to the Company pursuant to this Note.
Employee also agrees that a carbon, photographic or other reproduction of this
Promissory Note and Security Agreement may be filed as a financing statement to
the extent that the Company determines that such filing is necessary for the
Company to establish or maintain its security interest in the Collateral Stock.
The Employee shall cause the Collateral Stock to be delivered to the Company and
the Company may retain possession of the Collateral Stock until such time as the
Note has been paid in full.

3. Payment. All Distributions received by the Employee in cash shall be
applied toward repayment of this Note. The Employee agrees that the Company may
establish and institute any procedure that it deems necessary or advisable to
ensure that each such Distribution shall be applied toward repayment of this
Note, including without limitation, the placement of a restrictive legend on any
check representing a Distribution. Each such payment shall first be applied to
the payment of interest accrued as of the date of such payment and the remainder
thereof, if any, shall then be applied to the payment of outstanding principal.
The Note will bear interest at the rate provided in Section 4 hereof. The entire
principal balance and all accrued and unpaid interest and other charges as may
be due hereunder shall be due and payable on or before the tenth anniversary of
the date of this Note (the "Maturity Date").

<PAGE> 2

4. Interest. Interest on this Note will be computed on a simple
interest basis and will accrue on the unpaid principal balance due under the
Note until maturity, whether by reason of Default (as defined below) and
acceleration, lapse of time or otherwise ("Maturity"), at the rate of SIX AND
21/100 PERCENT (6.21%) per annum. Prior to Maturity interest shall be payable
solely from Distributions.

5. Prepayment. The Employee may prepay the whole or any part of the
principal amount of this Note from time to time without premium or penalty.

6. Default. (a) The occurrence of any of the following events shall
constitute a Default under this Note:

(i) the failure by the Employee to deliver or cause
to be delivered the Collateral Stock to the Company within three
business days after the purchase of any Collateral Stock;

(ii) retention by the Employee of any Distribution,
which retention continues for a period of ten (10) days;

(iii) the failure by the Employee to pay the entire
outstanding balance of this Note and all accrued interest within one
hundred and twenty (120) days after termination of the Employee's
employment with the Company; or

(iv) the failure by the Employee to pay the entire
outstanding balance of this Note and all accrued interest on or before
the Maturity Date.

(b) Upon the occurrence of a Default under this Note, the
outstanding principal balance hereof, together with all reasonable costs of
collection and/or enforcement of the Note, including reasonable attorney's fees,
shall at the option of the Company become immediately due and payable.

(c) If the Employee is in Default hereunder, the Company may,
except as otherwise provided herein, exercise the rights and remedies accorded a
secured party by the Uniform Commercial Code as enacted in the State of
Maryland.

7. Personal Liability. The obligations of the Employee to pay the
unpaid principal balance of this Note, plus accrued interest thereon and other
charges as may be due hereunder, shall be absolute and unconditional, and the
Company shall have full recourse against the Employee's assets (including, but
not limited to, the Collateral Stock) to recover such amounts.

8. Modification. Neither this Note nor any provision hereof may be
modified, altered, or amended in any manner or form except by an agreement in
writing, executed by a duly authorized officer of the Company and the Employee,
which writing shall make specific reference hereto.

<PAGE> 3

9. Transfer by Employee. Employee will not sell, assign, transfer or
otherwise dispose of, directly or indirectly, nor grant any option with respect
to, or pledge or grant any security interest in or otherwise encumber any of the
Collateral Stock or any interest therein, except for the security interest
provided for in this Note.

10. Severability. If for any reason any provision or provisions hereof
are determined to be invalid, unenforceable or contrary to any existing or
future law, such invalidity or unenforcability shall not impair the operation or
affect those portions of this Note which are valid.

11. Usury, etc. All agreements between the Employee and the Company are
hereby expressly limited so that in no contingency or event whatsoever, whether
by reason Maturity of the indebtedness or otherwise, shall the amount paid or
agreed to be paid to the holder for the use, forbearance or detention of the
indebtedness evidenced hereby exceed the maximum amount which the holder is
permitted to receive under applicable law. If, from any circumstances
whatsoever, fulfillment of any provision of this Note, at the time performance
of such provision shall be due, shall involve payments exceeding such amount,
then the obligation to be fulfilled shall automatically be reduced to the limit
of such maximum amount, and if from any circumstances the holder should ever
receive as interest an amount which would exceed such maximum amount, such
amount which would be excessive interest shall be applied to the reduction of
the principal balance evidenced hereby and not to the payment of interest. As
used herein, the term "applicable law" shall mean the law in effect as of the
date hereof; provided, however, that in the event that there is a change in the
law which results in a higher permissible rate of interest, then this Note shall
be governed by such new law as of its effective date. This provision shall
control every other provision of this Note.

12. Valuation: Manner of Disposition. Employee acknowledges and agrees
that the Company may not be able to effect a public sale of the Collateral Stock
and, accordingly, agrees that in the event of any sale, collection, realization
or other disposition of or upon the Collateral Stock by the Company, in lieu of
such public sale, the Company may transfer all or any portion of the Collateral
Stock to itself and apply the value of such shares (at a price per share equal
to the average of the daily high and low sales prices, computed to three decimal
places, of the Company's stock as reported on the NYSE for the ten (10) days on
which the NYSE is open and for which trades in the Company stock are reported
immediately preceding the date of such action by the Company or, if one or more
of such days is not a day on which the NYSE is open or the Company's stock is
not traded on the NYSE for the ten (10) days immediately preceding said action
for which the trades are reported) to the amounts due under or in connection
with this Note.

13. Governing Law. The execution, delivery and performance of this Note
shall be governed by, construed, and enforced in accordance with the laws of the
State of Maryland.

14. Waivers. The failure of the Company at any time to exercise any
option or right hereunder shall not constitute a waiver of the Company's right
to exercise such option or right at any other time.

<PAGE> 4

IN WITNESS WHEREOF, this Note has been executed and delivered as a
sealed instrument as of the date first set forth above.

/S/ William B. McGuire, Jr.
---------------------------
WILLIAM B. MCGUIRE, JR.

Executed, sealed and
delivered in the
presence of:

/s/ Cindy Tsumas
- -------------------------
Name of Witness:

<PAGE> 1

EXHIBIT 10.2
PROMISSORY NOTE AND SECURITY AGREEMENT

$999,995.08 JANUARY 31, 2000

FOR VALUE RECEIVED, WILLIAM F. PAULSEN, who resides at c/o Summit
Properties Inc., 212 South Tryon Street, 500, Charlotte, North Carolina 28281
(hereinafter referred to as the "Employee"), hereby promises to pay to the order
of Summit Properties Inc., a Maryland corporation with its principal place of
business at 212 South Tryon Street, Suite 500, Charlotte, North Carolina
(hereinafter referred to as the "Company"), the principal amount of $999,995.08
together with interest thereon as provided below subject to the terms and
conditions set forth herein.

<PAGE> 2

5. Prepayment. The Employee may prepay the whole or any part of the
principal amount of this Note from time to time without premium or penalty.

6. Default. (a) The occurrence of any of the following events shall
constitute a Default under this Note:

(i) the failure by the Employee to deliver or cause
to be delivered the Collateral Stock to the Company within three
business days after the purchase of any Collateral Stock;

(ii) retention by the Employee of any Distribution,
which retention continues for a period of ten (10) days;

(iv) the failure by the Employee to pay the entire
outstanding balance of this Note and all accrued interest on or before
the Maturity Date.

<PAGE> 3

13. Governing Law. The execution, delivery and performance of this Note
shall be governed by, construed, and enforced in accordance with the laws of the
State of Maryland.

14. Waivers. The failure of the Company at any time to exercise any
option or right hereunder shall not constitute a waiver of the Company's right
to exercise such option or right at any other time.

<PAGE> 4

IN WITNESS WHEREOF, this Note has been executed and delivered as a
sealed instrument as of the date first set forth above.

/S/ William F. Paulsen
-------------------------
WILLIAM F. PAULSEN

Executed, sealed and
delivered in the
presence of:

/s/ Judith M. Roller
- -------------------------
Name of Witness:

<PAGE> 1
EXHIBIT 10.3

PROMISSORY NOTE AND SECURITY AGREEMENT

$999,995.08 JANUARY 31, 2000

FOR VALUE RECEIVED, STEVEN R. LEBLANC, who resides at c/o Summit
Properties Inc., 212 South Tryon Street, 500, Charlotte, North Carolina 28281
(hereinafter referred to as the "Employee"), hereby promises to pay to the order
of Summit Properties Inc., a Maryland corporation with its principal place of
business at 212 South Tryon Street, Suite 500, Charlotte, North Carolina
(hereinafter referred to as the "Company"), the principal amount of $999,995.08
together with interest thereon as provided below subject to the terms and
conditions set forth herein.

<PAGE> 2

5. Prepayment. The Employee may prepay the whole or any part of the
principal amount of this Note from time to time without premium or penalty.

6. Default. (a) The occurrence of any of the following events shall
constitute a Default under this Note:

(i) the failure by the Employee to deliver or cause
to be delivered the Collateral Stock to the Company within three
business days after the purchase of any Collateral Stock;

(ii) retention by the Employee of any Distribution,
which retention continues for a period of ten (10) days;

(iv) the failure by the Employee to pay the entire
outstanding balance of this Note and all accrued interest on or before
the Maturity Date.

<PAGE> 3

13. Governing Law. The execution, delivery and performance of this Note
shall be governed by, construed, and enforced in accordance with the laws of the
State of Maryland.

14. Waivers. The failure of the Company at any time to exercise any
option or right hereunder shall not constitute a waiver of the Company's right
to exercise such option or right at any other time.

<PAGE> 4

IN WITNESS WHEREOF, this Note has been executed and delivered as a
sealed instrument as of the date first set forth above.

/s/ Steven R. LeBlanc
-------------------------
STEVEN R. LEBLANC

Executed, sealed and
delivered in the
presence of:

/s/ Candus Talafous
- -------------------------
Name of Witness:

<PAGE> 1
EXHIBIT 10.4

PROMISSORY NOTE AND SECURITY AGREEMENT

$499,969.08 JANUARY 31, 2000

FOR VALUE RECEIVED, MICHAEL L. SCHWARZ, who resides at c/o Summit
Properties Inc., 212 South Tryon Street, 500, Charlotte, North Carolina 28281
(hereinafter referred to as the "Employee"), hereby promises to pay to the order
of Summit Properties Inc., a Maryland corporation with its principal place of
business at 212 South Tryon Street, Suite 500, Charlotte, North Carolina
(hereinafter referred to as the "Company"), the principal amount of $499,969.08
together with interest thereon as provided below subject to the terms and
conditions set forth herein.

<PAGE> 2

5. Prepayment. The Employee may prepay the whole or any part of the
principal amount of this Note from time to time without premium or penalty.

6. Default. (a) The occurrence of any of the following events shall
constitute a Default under this Note:

(i) the failure by the Employee to deliver or cause
to be delivered the Collateral Stock to the Company within three
business days after the purchase of any Collateral Stock;

(ii) retention by the Employee of any Distribution,
which retention continues for a period of ten (10) days;

(iv) the failure by the Employee to pay the entire
outstanding balance of this Note and all accrued interest on or before
the Maturity Date.

<PAGE> 3

13. Governing Law. The execution, delivery and performance of this Note
shall be governed by, construed, and enforced in accordance with the laws of the
State of Maryland.

14. Waivers. The failure of the Company at any time to exercise any
option or right hereunder shall not constitute a waiver of the Company's right
to exercise such option or right at any other time.

<PAGE> 4

IN WITNESS WHEREOF, this Note has been executed and delivered as a
sealed instrument as of the date first set forth above.

/s/ Michael L. Schwarz
-------------------------
MICHAEL L. SCHWARZ

Executed, sealed and
delivered in the
presence of:

/s/ Susan Wilson
- -------------------------
Name of Witness:

<PAGE> 1

EXHIBIT 10.5

NONCOMPETITION AGREEMENT

THIS NONCOMPETITION AGREEMENT is entered into as of February 15, 2000
("Effective Date") by and between WILLIAM F. Paulsen ("Executive"), SUMMIT
PROPERTIES INC., a Maryland corporation, and SUMMIT MANAGEMENT COMPANY, a
Maryland corporation.

WHEREAS, on the date hereof, as a condition to the consummation of the
employment of Executive by the Company, the parties hereto desire to enter into
certain agreements restricting the activities of Executive in an effort to
eliminate potential conflicts of interest that may arise in the future, to
protect the Company's legitimate business interests, i.e., the value of its
business and its good will, and for other business purpose;

NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, the parties hereto agree as follows:

1. Definitions. Capitalized terms used herein shall have the
meanings set forth below:

"Affiliate" means (i) any entity directly or indirectly
controlling (including without limitation an entity for which Executive serves
as an officer, director, employee, consultant or other agent), controlled by, or
under common control with Executive, and (ii) each other entity in which
Executive, directly or indirectly, owns any controlling interest or of which
Executive serves as a general partner.

"Agreement" means this Noncompetition Agreement, including any
amendments hereto made in accordance with paragraph 8(d) hereof.

"Company" means (i) Summit Management Company, (ii) Summit
Properties Inc., (iii) any corporation, partnership or other business entity
that is, directly or indirectly, controlled by or under common control with
Summit Properties Inc. and (iv) their respective successors.

"Company Project" means any Multifamily Property that the
Company owns, operates or manages as of the date of Executive's termination of
employment with the Company or that the Company has in any manner taken steps to
acquire, develop, construct, operate, manage or lease (including without
limitation

<PAGE> 2

making market surveys of a site, talking to a owner or his agent concerning the
purchase or joint venture of a site, optioning or contracting to buy a site or
discussions with the owner or his agent regarding managing or leasing a
property) during the twelve (12) month period immediately preceding Executive's
termination of employment with the Company. Company agrees to provide Executive
with a list of all Company Projects within thirty (30) business day of
Executives termination of employment with the Company for any reason.

"Multifamily Property" means any real property on which
multifamily residential-use development has been constructed or is now or
hereafter proposed to be constructed (for example, and not by way of limitation,
a property of the type managed by the Company).

2. Executive's Obligations While Employed by the Company.

(a) Sole Employment. Subject to the provisions of paragraph 2(b) below,
Executive agrees to devote his full time during the customary business hours of
the Company and give his best efforts to the business of the Company and, during
the period of his employment by the Company, Executive shall not engage in any
manner, whether as an officer, employee, owner, partner, stockholder, director,
consultant or otherwise -- directly or indirectly -- in any business other than
on behalf of the Company without the prior written approval of the President of
Summit Properties Inc., and Executive shall not accept any other employment
whatsoever from any other person, firm, corporation or entity.

(b) Exceptions. Notwithstanding the provisions of paragraph 2(a) above
to the contrary, Executive may during the term of his employment by the Company
and at any time thereafter (i) acquire an interest in any corporation,
partnership, venture or other business entity so long as (A) any such interest
is a passive investment of Executive not exceeding ten percent (10%) of the
total ownership interest in such entity, (B) such entity does not afford
Executive the power to influence in any material fashion the decision making
processes of the entity in which such interest is held and (C) Executive is not
the sponsor, promoter or similar initiator of such entity.

3. Executive's Obligations Following Termination of Employment
with the Company.

2
<PAGE> 3

(a) Anti-Pirating of Employees. For a two (2) year
period immediately following the termination of Executive's employment with the
Company, Executive agrees not to hire, directly or indirectly, or entice or
participate in any efforts to entice to leave the Company's employ, any person
who was or is a "key employee" (as hereinafter defined) of the Company at any
time during the twelve (12) month period immediately preceding the termination
date of Executive's employment with the Company. For purposes of this Agreement,
"key employee" means an employee who has an annualized rate of base salary
equaling or exceeding fifty thousand dollars ($50,000).

(b) Anti-Pirating of Company Projects. For a period
of one (1) year immediately following the termination of Executive's employment
with the Company, Executive agrees not to engage in any manner, whether as an
officer, employee, owner, partner, stockholder, director, consultant or
otherwise -- directly or indirectly -- in any business which engages or attempts
to engage, directly or indirectly, in the acquisition, development,
construction, operation, management or leasing of any Company Project.

(c) Trade Secrets and Confidential Information.
Executive hereby agrees that he will hold in a fiduciary capacity for the
benefit of the Company, and shall not directly or indirectly use or disclose any
Trade Secret, as defined hereinafter, that Executive may have acquired during
the term of his employment by the Company for so long as such non-public
information remains a Trade Secret. The term "Trade Secret" as used in this
Agreement shall mean non-public information including, but not limited to,
technical or non-technical data, a formula, a pattern, a compilation, a program,
a device, a method, a technique, a drawing, a process, financial data, financial
plans, product plans, or a list of actual or potential customers or suppliers
which:

derives economic value, actual or potential from not being
generally known to, and not being readily ascertainable by
proper means by, other persons who can obtain economic value
from its disclosure or use; and is the subject of reasonable
efforts by the Company to maintain its secrecy.

In addition to the foregoing and not in limitation thereof,
Executive agrees that during the period of his employment by the Company and for
a period of one (1) year

3
<PAGE> 4

thereafter, he will hold in a fiduciary capacity for the benefit of the Company
and shall not directly or indirectly use or disclose, any Confidential or
Proprietary Information, as defined hereinafter, that Executive may have
acquired (whether or not developed or compiled by Executive and whether or not
Executive was authorized to have access to such Information) during the term of,
in the course of or as a result of his employment by the Company. The term
"Confidential or Proprietary Information" as used in this Agreement means any
secret, confidential or proprietary non-public information of the Company not
otherwise included in the definition of "Trade Secret" above. The term
"Confidential and Proprietary non-public Information" does not include
information that has become generally available to the public by the act of one
who has the right to disclose such information without violating any right of
the Company.

(d) Exceptions. Notwithstanding any provision of
paragraph 3(b) to the contrary, Executive shall not be restricted at any time
after his termination of employment with the Company from engaging in any
activities for which Executive would not be restricted from performing during
the term of his employment with the Company as set forth in paragraph 2(b)
above.

4. Reasonable and Necessary Restrictions. Executive
acknowledges that the restrictions, prohibitions and other provisions hereof,
including without limitation the various periods of restrictions set forth in
paragraphs 3(a), 3(b) and 3(c), are reasonable, fair and equitable in scope,
terms and duration, are necessary to protect the legitimate business interests
of the Company, and are a material inducement to the Company to enter into the
transactions contemplated in the recitals hereto.

5. Restrictions In Addition to Employment Agreement. Executive
acknowledges that the restrictions, prohibitions and other provisions hereof
shall be in addition to and not in substitution of the restrictions,
prohibitions and other provisions of that certain employment agreement between
Executive, Summit Properties Inc. and Summit Management Company of even date
herewith, as such agreement shall be amended and supplemented from time to time
(the "Employment Agreement").

4
<PAGE> 5

right to specific performance of the terms of this Agreement is essential to
protect the rights and interests of the Company. Accordingly, in addition to any
other remedies that the Company may have at law or in equity, the Company shall
have the right to have all obligations, covenants, agreements and other
provisions of this Agreement specifically performed by Executive, and the
Company shall have the right to obtain preliminary and permanent injunctive
relief to secure specific performance and to prevent a breach or contemplated
breach of this Agreement by Executive, and Executive submits to the jurisdiction
of the courts of the State of North Carolina for this purpose. Said permanent
injunctive relief shall have a term which coincides with the respective periods
of Executive's obligations pursuant to the covenants, agreements and other
provisions of this agreement.

7. Operations of Affiliates. Executive agrees that he will
refrain from (i) authorizing any Affiliate to perform or (ii) assisting in any
manner any Affiliate in performing any activities that would be prohibited by
the terms of this Agreement if they were performed by Executive. Notwithstanding
anything to the contrary contained in this paragraph 7 (or in any other
paragraph of this Agreement), Executive shall not be required by the terms of
this Agreement to violate any fiduciary or contractual duty he owes as a
director or officer of a corporation, as a partner of a partnership or as a
trustee of a trust, which position he holds not in violation of this Agreement
or the Employment Agreement.

8. Miscellaneous Provisions.

(a) Binding Effect. Subject to any provisions hereof
restricting assignment, all covenants and agreements in this Agreement by or on
behalf of any of the parties hereto shall bind and inure to the benefit of the
respective successors, assigns, heirs, and personal representatives. None of the
parties hereto may assign any of its rights under this Agreement or attempt to
have any other person or entity assume any of its obligations hereunder.

(b) Severability. If fulfillment of any provision of this
Agreement, at the time such fulfillment shall be due, shall transcend the limit
of validity prescribed by law, then the obligation to be fulfilled shall be
reduced to the limit of such validity; and if any clause or provision contained
in this Agreement operates or would operate to invalidate this Agreement, in
whole or in part, then such clause or provision only shall be held ineffective,
as though not herein contained, and the remain-

5
<PAGE> 6

der of this Agreement shall remain operative and in full force and effect.

(c) Governing Law. This Agreement, the rights and obligations
of the parties hereto, and any claims or disputes relating thereto shall be
governed by and construed in accordance with the laws of the State of North
Carolina, not including the choice-of-law rules thereof.

(d) Amendment; Waiver. Except as otherwise expressly provided
in this Agreement, no amendment, modification or discharge of this Agreement
shall be valid or binding unless set forth in writing and duly executed by each
of the parties hereto. Any waiver by any party or consent by any party to any
variation from any provision of this Agreement shall be valid only if in writing
and only in the specific instance in which it is given, and such waiver or
consent shall not be construed as a waiver of any other provision or as a
consent with respect to any similar instance or circumstance.

(e) Headings. Paragraph and subparagraph headings contained in
this Agreement are inserted for convenience of reference only, shall not be
deemed to be a part of this Agreement for any purpose, and shall not in any way
define or affect the meaning, construction or scope of any of the provisions
hereof.

(f) Pronouns. All pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine, neuter, singular or plural, as the
identity of the person or entity may require.

(g) Arbitration. Any dispute or controversy arising out of or
relating to this Agreement shall be settled finally and exclusively by
arbitration in Charlotte, North Carolina in accordance with the rules of the
American Arbitration Association then in effect. Such arbitration shall be
conducted by an arbitrator(s) appointed by the American Arbitration Association
in accordance with its rules and any finding by such arbitrator(s) shall be
final and binding upon the parties. Judgment upon any award rendered by the
arbitrator(s) may be entered in any court having jurisdiction thereof, and the
parties consent to the jurisdiction of the courts of the State of North Carolina
for this purpose. Nothing contained in this paragraph 8(g) shall be construed to
preclude the Company from obtaining injunctive or other equitable relief to
secure specific performance or to otherwise prevent a breach or contemplated

6
<PAGE> 7

breach of this Agreement by Executive as provided in paragraph 6 hereof.

(h) Execution in Counterparts. This Agreement may be executed
in two or more counterparts, none of which need contain the signatures of all
parties hereto and each of which shall be deemed an original.

IN WITNESS WHEREOF, each of the undersigned has executed this
Agreement, or caused this Agreement to be duly executed on its behalf, as of the
date first set forth above.

SUMMIT PROPERTIES INC.

By: /s/ Steven R. LeBlanc
-----------------------------
Name: Steven R. LeBlanc
Title: President

SUMMIT MANAGEMENT COMPANY

By: /s/ Steven R. LeBlanc
------------------------------
Name: Steven R. LeBlanc
Title: Vice President

/s/ William F. Paulsen [SEAL]
---------------------------

"Executive"

<PAGE> 1

EXHIBIT 10.6
EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (the "Agreement"), is made and entered into
as of the 15th day of February, 1999, ("Effective Date") by and between WILLIAM
B. MCGUIRE, JR., an individual resident of the State of North Carolina (the
"Executive"), SUMMIT PROPERTIES INC., a Maryland corporation, and SUMMIT
MANAGEMENT COMPANY, a Maryland corporation. Summit Properties Inc. and Summit
Management Company are referred to herein collectively as the "Company";

W I T N E S S E T H:

WHEREAS, the Company desires to employ Executive, and Executive desires
to be employed by the Company on the terms and conditions contained in this
Agreement;

NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties to this Agreement,
intending to be legally bound, hereby agree as follows:

1.
Employment

Subject to the terms of this Agreement, the Company hereby employs
Executive, and Executive hereby accepts such employment with the Company.
Executive shall serve in the capacity of Chairman of the Board of Directors of
Summit Properties Inc. and Summit Management Company and shall have the duties,
rights and responsibilities normally associated with such positions consistent
with the Bylaws of Summit Properties Inc. and Summit Management Company,
respectively, together with such other reasonable duties relating to the
operation of the business of the Company and its affiliates as may be assigned
to him from time to time by the Board of Directors of Summit Properties Inc. or
Summit Management Company (collectively, the "Board") or as may otherwise be
provided in such Bylaws. Executive shall devote a portion of his business time,
skills and efforts to rendering services on behalf of the Company and its
affiliates and shall exercise such care as is customarily required by executives
undertaking similar duties for entities similar to the Company. The Company
acknowledges that (i) Executive's duties have not required in the past and will
not require in the future Executive to devote his full-time during normal
business hours to the business and affairs of the Company, and that (ii)
Executive intends to pursue other business interests during the term of this
Agreement subject to the restrictions of a non-competition agreement between
Executive and the Company of even date herewith (the "Noncompetition
Agreement"). During the term of this Agreement, the Company shall provide
Executive at the Company's expense with full-time secretarial, receptionist and
other administrative support services, including use of telephone, copier,
facsimile, and other such office equipment. Executive shall have use of such
services and equipment notwithstanding that Executive is not a full-time
Executive of the Company or that Executive uses such services and equipment for
other business purposes not inconsistent with the

<PAGE> 2

Noncompetition Agreement. The Company shall also provide Executive with a
private area commensurate with Executive's title and duties.

2.
Compensation; Expenses

2.1 Base Salary. Commencing on January 1, 1999, the Company shall
pay Executive during the term of Executive's employment under
this Agreement, a base salary equal to One Hundred Fifty
Thousand and 00/100 Dollars ($150,000.00) per annum (the "Base
Salary"), which amount shall be subject to adjustment, if any,
in accordance with this ss. 2.1. The Compensation Committee of
the Board (the "Committee") shall review Executive's Base
Salary on an annual basis, and the Committee upon such review
and in its sole discretion, may increase or decrease
Executive's Base Salary by an amount which the Committee deems
appropriate in light of the Company's and Executive's
performance during the period covered by such review;
provided, however, that Executive's Base Salary shall not be
reduced below One Hundred Fifty Thousand and 00/100 Dollars
($150,000.00) per annum. The Base Salary, less all applicable
withholding taxes, shall be paid to Executive in accordance
with the payroll procedures in effect with respect to officers
of the Company.

2.2 Incentive Compensation. In addition to the Base Salary payable
to Executive pursuant to Paragraph 2.1 and any special
compensatory arrangements which the Committee provides for
Executive, effective as of the Effective Date, Executive shall
be entitled to participate in any incentive compensation plans
in effect with respect to senior executive officers of the
Company, with the criteria for Executive's participation in
such plans to be established by the Committee in its sole
discretion.

2.3 Stock Options. Executive shall be entitled to participate in
employee stock option plans from time to time established for
the benefit of employees of the Company in accordance with the
terms and conditions of such plans.

2.4 Expenses. Executive shall be reimbursed for all reasonable
business-related expenses incurred by Executive at the request
of or on behalf of the Company.

2.5 Participation in Employee Benefit Plans. Executive shall be
entitled to participate in such medical, dental, disability,
hospitalization, life insurance, profit sharing and other
benefit plans as the Company shall maintain from time to time
for the benefit of executive officers of the Company, on the
terms and subject to the conditions set forth in such plans.
In addition, during the term of this Agreement, Executive
shall be entitled to a comprehensive annual physical
performed, at the company's expense, by the physician or
medical group of Executive's choosing.

2.6 Compensation upon Termination of Employment. If Employee's
employment

2
<PAGE> 3

under this Agreement is terminated for any reason whatsoever,
Employee shall not thereafter be entitled to receive any Base
Salary for periods following such termination; provided,
however, that Employee shall be entitled to receive any Base
Salary which may be owed to Employee but is unpaid as of the
date on which Employee's employment is terminated. The
benefits, if any, payable to or on behalf of Employee upon
Employee's termination of employment from the Company under
any employee benefit plans and incentive compensation and
other compensatory arrangements shall be governed by the terms
and conditions for benefit payments set forth in such plans
and arrangements.

2.7 Vacation. In addition to Company holidays, Executive shall
receive such paid vacation time each year during the term of
this Agreement consistent with vacation policies of the
Company for its executive officers. Said paid vacation time
shall initially be twenty days. Any unused vacation days in
any year may not be carried over to subsequent years, and
Executive shall receive no additional compensation for any
unused vacation days.

2.8 Perquisites. Executive shall be entitled to receive such
individual perquisites as are consistent with the Company's
policies applicable to its executive officers.

3.
Term of Employment

3.1 Term. The employment relationship under the Agreement shall
commence as of the above written date (the "Effective Date")
and shall continue until the date twenty (20) business days
after written notice is given to the other party by either the
Company or Employee that the employment relationship shall
terminate. Such termination notice may be given by either
party without cause and for any or no reason.

4.
Miscellaneous

4.1. Binding Effect. This Agreement shall inure to the benefit of
and shall be binding upon Executive and his executor,
administrator, heirs, personal representative and assigns, and
the Company and its successors and assigns; provided, however,
that Executive shall not be entitled to assign or delegate any
of his rights or obligations hereunder without the prior
written consent of Company; and further provided that the
Company shall not be entitled to assign or delegate any of its
rights or obligations hereunder except to a corporation,
partnership or other business entity that is, directly or
indirectly, controlled by or under common control with Summit
Properties Inc.

4.2. Construction of Agreement. No provision of this Agreement or
any related

3
<PAGE> 4

document shall be construed against or interpreted to the
disadvantage or any party hereto by any court or other
governmental or judicial authority by reason of such party
having or being deemed to have structured or drafted such
provision.

4.3 Amendment; Waiver. Except as otherwise expressly provided in
this Agreement, no amendment, modification or discharge of
this Agreement shall be valid or binding unless set forth in
writing and duly executed by each of the parties hereto. Any
waiver by an party or consent by any party to any variation
from any provision of this Agreement shall be valid only if in
writing and only in the specific instance in which it is
given, and no such waiver or consent shall be construed as a
waiver of any other provision or as a consent with respect to
any similar instance or circumstance.

4.4 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of North
Carolina.

4.5. Survival of Agreements. All covenants and agreements made
herein shall survive the execution and delivery of this
Agreement and the termination of Executive's employment
hereunder for any reason.

4.6 Headings. The section and paragraph headings contained in this
Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.

4.7 Notices. All notices, requests, consents and other
communications hereunder shall be in writing and shall be
deemed to be given when delivered personally or mailed first
class, registered or certified mail, postage prepaid, in
either case, addressed as follows:

(a) If to Executive:
William B. McGuire, Jr.
At last known address as reflected
in the Company's records.

(b) If to the Company, addressed to:
Summit Properties Inc.
212 South Tryon Street, Suite 500
Charlotte, North Carolina 28281
Attn: Michael G. Malone

4.8 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original,
but all of which together shall constitute one and the same
instrument.

4
<PAGE> 5

4.9 Entire Agreement. This Agreement, together with the
Noncompetition Agreement, Indemnification Agreement, and
Executive Severance Agreement, constitute the entire agreement
of the parties with respect to the subject matter hereof and
upon the Effective Date, will supersede and replace all prior
agreements, written and oral, between the parties hereto or
with respect to the subject matter hereof. This Agreement may
be modified only by a written instrument signed by each of the
parties hereto.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.

SUMMIT PROPERTIES INC.

By: /s/ Steven R. LeBlanc
-------------------------------
Name: Steven R. LeBlanc
Title: President

SUMMIT MANAGEMENT COMPANY

By: /s/ Steven R. LeBlanc
-------------------------------
Name: Steven R. LeBlanc
Title: Vice President

Collectively, the "Company"

/s/ William B. McGuire, Jr. [SEAL]
------------------------------------
William B. McGuire, Jr.

"Executive"

<PAGE> 1

EXHIBIT 10.7

NONCOMPETITION AGREEMENT

THIS NONCOMPETITION AGREEMENT is entered into as of February 15, 2000
("Effective Date") by and between WILLIAM B. McGuire, Jr. ("Executive"), SUMMIT
PROPERTIES INC., a Maryland corporation, and SUMMIT MANAGEMENT COMPANY, a
Maryland corporation.

NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, the parties hereto agree as follows:

1. Definitions. Capitalized terms used herein shall have the
meanings set forth below:

"Agreement" means this Noncompetition Agreement, including any
amendments hereto made in accordance with paragraph 8(d) hereof.

<PAGE> 2

concerning the purchase or joint venture of a site, optioning or contracting to
buy a site or discussions with the owner or his agent regarding managing or
leasing a property) during the twelve (12) month period immediately preceding
Executive's termination of employment with the Company. Company agrees to
provide Executive with a list of all Company Projects within thirty (30)
business day of Executives termination of employment with the Company for any
reason.

2. Executive's Obligations While Employed by the Company.

(a) Part-Time Employment. Executive shall devote a portion of his
business time, skills and efforts to rendering services on behalf of the Company
and its affiliates and shall exercise such care as is customarily required by
executives undertaking similar duties for entities similar to the Company. The
Company acknowledges that (i) Executive's duties have not required in the past
and will not require in the future Executive to devote his full-time during
normal business hours to the business and affairs of the Company, and that (ii)
Executive intends to pursue other business interests during the term of his
employment by the Company.

(b) Exceptions. Executive may during the term of his employment by the
Company and at any time thereafter (i) acquire an interest in any corporation,
partnership, venture or other business entity so long as (A) any such interest
is a passive investment of Executive not exceeding ten percent (10%) of the
total ownership interest in such entity, (B) such entity does not afford
Executive the power to influence in any material fashion the decision making
processes of the entity in which such interest is held and (C) Executive is not
the sponsor, promoter or similar initiator of such entity.

3. Executive's Obligations Following Termination of Employment
with the Company.

(a) Anti-Pirating of Employees. For a two (2) year
period immediately following the termination of Executive's employment with the
Company, Executive agrees not to hire,

2
<PAGE> 3

directly or indirectly, or entice or participate in any efforts to entice to
leave the Company's employ, any person who was or is a "key employee" (as
hereinafter defined) of the Company at any time during the twelve (12) month
period immediately preceding the termination date of Executive's employment with
the Company. For purposes of this Agreement, "key employee" means an employee
who has an annualized rate of base salary equaling or exceeding fifty thousand
dollars ($50,000).

In addition to the foregoing and not in limitation thereof,
Executive agrees that during the period of his employment by the Company and for
a period of one (1) year thereafter, he will hold in a fiduciary capacity for
the benefit of the Company and shall not directly or indirectly use or disclose,
any Confidential or Proprietary Information, as defined

3
<PAGE> 4

hereinafter, that Executive may have acquired (whether or not developed or
compiled by Executive and whether or not Executive was authorized to have access
to such Information) during the term of, in the course of or as a result of his
employment by the Company. The term "Confidential or Proprietary Information" as
used in this Agreement means any secret, confidential or proprietary non-public
information of the Company not otherwise included in the definition of "Trade
Secret" above. The term "Confidential and Proprietary non-public Information"
does not include information that has become generally available to the public
by the act of one who has the right to disclose such information without
violating any right of the Company.

4. Reasonable and Necessary Restrictions. Executive acknowledges that
the restrictions, prohibitions and other provisions hereof, including without
limitation the various periods of restrictions set forth in paragraphs 3(a),
3(b) and 3(c), are reasonable, fair and equitable in scope, terms and duration,
are necessary to protect the legitimate business interests of the Company, and
are a material inducement to the Company to enter into the transactions
contemplated in the recitals hereto.

6. Specific Performance. Executive acknowledges that the obligations
undertaken by him pursuant to this Agreement are unique and that the Company
likely will have no adequate remedy at law if Executive shall fail to perform
any of his obligations hereunder, and Executive therefore confirms that the
Company's right to specific performance of the terms of this Agreement is
essential to protect the rights and interests of the Company. Accordingly, in
addition to any other remedies that the Company

4
<PAGE> 5

may have at law or in equity, the Company shall have the right to have all
obligations, covenants, agreements and other provisions of this Agreement
specifically performed by Executive, and the Company shall have the right to
obtain preliminary and permanent injunctive relief to secure specific
performance and to prevent a breach or contemplated breach of this Agreement by
Executive, and Executive submits to the jurisdiction of the courts of the State
of North Carolina for this purpose. Said permanent injunctive relief shall have
a term which coincides with the respective periods of Executive's obligations
pursuant to the covenants, agreements and other provisions of this agreement.

7. Operations of Affiliates. Executive agrees that he will refrain from
(i) authorizing any Affiliate to perform or (ii) assisting in any manner any
Affiliate in performing any activities that would be prohibited by the terms of
this Agreement if they were performed by Executive. Notwithstanding anything to
the contrary contained in this paragraph 7 (or in any other paragraph of this
Agreement), Executive shall not be required by the terms of this Agreement to
violate any fiduciary or contractual duty he owes as a director or officer of a
corporation, as a partner of a partnership or as a trustee of a trust, which
position he holds not in violation of this Agreement or the Employment
Agreement.

8. Miscellaneous Provisions.

(a) Binding Effect. Subject to any provisions hereof restricting
assignment, all covenants and agreements in this Agreement by or on behalf of
any of the parties hereto shall bind and inure to the benefit of the respective
successors, assigns, heirs, and personal representatives. None of the parties
hereto may assign any of its rights under this Agreement or attempt to have any
other person or entity assume any of its obligations hereunder.

(b) Severability. If fulfillment of any provision of this Agreement, at
the time such fulfillment shall be due, shall transcend the limit of validity
prescribed by law, then the obligation to be fulfilled shall be reduced to the
limit of such validity; and if any clause or provision contained in this
Agreement operates or would operate to invalidate this Agreement, in whole or in
part, then such clause or provision only shall be held ineffective, as though
not herein contained, and the remainder of this Agreement shall remain operative
and in full force and effect.

5
<PAGE> 6

(c) Governing Law. This Agreement, the rights and obligations of the
parties hereto, and any claims or disputes relating thereto shall be governed by
and construed in accordance with the laws of the State of North Carolina, not
including the choice-of-law rules thereof.

(d) Amendment; Waiver. Except as otherwise expressly provided in this
Agreement, no amendment, modification or discharge of this Agreement shall be
valid or binding unless set forth in writing and duly executed by each of the
parties hereto. Any waiver by any party or consent by any party to any variation
from any provision of this Agreement shall be valid only if in writing and only
in the specific instance in which it is given, and such waiver or consent shall
not be construed as a waiver of any other provision or as a consent with respect
to any similar instance or circumstance.

(e) Headings. Paragraph and subparagraph headings contained in this
Agreement are inserted for convenience of reference only, shall not be deemed to
be a part of this Agreement for any purpose, and shall not in any way define or
affect the meaning, construction or scope of any of the provisions hereof.

(f) Pronouns. All pronouns and any variations thereof shall be deemed
to refer to the masculine, feminine, neuter, singular or plural, as the identity
of the person or entity may require.

(g) Arbitration. Any dispute or controversy arising out of or relating
to this Agreement shall be settled finally and exclusively by arbitration in
Charlotte, North Carolina in accordance with the rules of the American
Arbitration Association then in effect. Such arbitration shall be conducted by
an arbitrator(s) appointed by the American Arbitration Association in accordance
with its rules and any finding by such arbitrator(s) shall be final and binding
upon the parties. Judgment upon any award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof, and the parties consent to the
jurisdiction of the courts of the State of North Carolina for this purpose.
Nothing contained in this paragraph 8(g) shall be construed to preclude the
Company from obtaining injunctive or other equitable relief to secure specific
performance or to otherwise prevent a breach or contemplated breach of this
Agreement by Executive as provided in paragraph 6 hereof.

6
<PAGE> 7

IN WITNESS WHEREOF, each of the undersigned has executed this
Agreement, or caused this Agreement to be duly executed on its behalf, as of the
date first set forth above.

SUMMIT PROPERTIES INC.

By: /s/ Steven R. LeBlanc
-----------------------------
Name: Steven R. LeBlanc
Title: President

SUMMIT MANAGEMENT COMPANY

By: /s/ Steven R. LeBlanc
-----------------------------
Name:
Title: Vice President

/s/ William B. McGuire, Jr. [SEAL]
----------------------------

"Executive"

<PAGE> 1

EXHIBIT 12.1

SUMMIT PROPERTIES INC.
CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES THREE MONTHS ENDED
MARCH 31, 2000
(Dollars In thousands)

<TABLE>
<S> <C>
Earnings:
Income before minority interest of unitholders in
Operating Partnership and dividends to preferred
unitholders in Operating Partnership.................. $14,211
Interest:
Expense incurred.................................. 8,964
Amortization of deferred financing costs.......... 248
Rental fixed charges.............................. 54
-------
Total............................................. $23,477
=======
Fixed charges:
Interest expense....................................... $ 8,964
Interest capitalized................................... 2,320
Dividends to preferred unitholders in Operating
Partnership........................................... 3,105
Rental fixed charges................................... 54
Amortization of deferred financing costs............... 248
-------
Total............................................. $14,691
=======
Ratio of earnings to fixed charges.......................... 1.60
=======
</TABLE>

<ARTICLE> 5
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 3,529
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 1,313,861
<DEPRECIATION> 137,626
<TOTAL-ASSETS> 1,223,154
<CURRENT-LIABILITIES> 0
<BONDS> 674,958
0
0
<COMMON> 262
<OTHER-SE> 366,190
<TOTAL-LIABILITY-AND-EQUITY> 1,223,154
<SALES> 44,119
<TOTAL-REVENUES> 45,342
<CGS> 0
<TOTAL-COSTS> 14,519
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,212
<INCOME-PRETAX> 9,539
<INCOME-TAX> 0
<INCOME-CONTINUING> 9,539
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,539
<EPS-BASIC> .36
<EPS-DILUTED> .36

</TABLE>