UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
COMMISSION FILE NUMBER 1-12792
SUMMIT PROPERTIES INC.
(Exact name of registrant as specified in its charter)
MARYLAND 56-1857807
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
309 E. MOREHEAD STREET
SUITE 200
CHARLOTTE, NORTH CAROLINA 28202
(Address of principal executive offices) (Zip code)
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(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.
SUMMIT PROPERTIES INC.
INDEX
PAGE NO.
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PART I FINANCIAL INFORMATION
Item 1 Financial Statements
Consolidated Balance Sheets as of June 30, 2001 and December
31, 2000 (Unaudited)...................................... 3
Consolidated Statements of Earnings for the three and six
months ended June 30, 2001 and 2000 (Unaudited)........... 4
Consolidated Statement of Stockholders' Equity for the six
months ended June 30, 2001 (Unaudited).................... 5
Consolidated Statements of Cash Flows for the six months
ended June 30, 2001 and 2000 (Unaudited).................. 6
Notes to Consolidated Financial Statements (Unaudited)...... 7
Item 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 14
Item 3 Quantitative and Qualitative Disclosures about Market
Risk...................................................... 27
PART II OTHER INFORMATION
Item 4 Submission of Matters to a Vote of Security Holders......... 28
Item 6 Exhibits and Reports on Form 8-K............................ 28
Signatures.................................................. 29
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SUMMIT PROPERTIES INC.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
JUNE 30, DECEMBER 31,
2001 2000
---------- ------------
ASSETS
Real estate assets:
Land and land improvements................................ $ 177,235 $ 184,494
Buildings and improvements................................ 970,036 1,001,183
Furniture, fixtures and equipment......................... 75,378 74,920
---------- ----------
Real estate assets before accumulated depreciation... 1,222,649 1,260,597
Less: accumulated depreciation............................ (156,965) (147,437)
---------- ----------
Operating real estate assets...................... 1,065,684 1,113,160
Construction in progress.................................. 232,185 167,462
---------- ----------
Net real estate assets............................ 1,297,869 1,280,622
Cash and cash equivalents................................... 2,504 3,148
Restricted cash............................................. 3,393 41,502
Investments in Summit Management Company and real estate
joint ventures............................................ 3,702 736
Deferred financing costs, net of accumulated amortization of
$6,436 and $5,792 in 2001 and 2000, respectively.......... 7,463 7,760
Other assets................................................ 6,925 6,383
---------- ----------
Total assets...................................... $1,321,856 $1,340,151
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Notes payable............................................. $ 757,369 $ 763,899
Accrued interest payable.................................. 8,049 7,729
Accounts payable and accrued expenses..................... 20,471 20,415
Dividends and distributions payable....................... 14,080 13,481
Security deposits and prepaid rents....................... 3,980 3,959
---------- ----------
Total liabilities................................. 803,949 809,483
---------- ----------
Commitments and contingencies:
Minority interest of common unitholders in Operating
Partnership............................................... 46,503 55,730
Minority interest of preferred unitholders in Operating
Partnership............................................... 136,261 136,261
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, 26,736,835 and 26,431,086 shares issued and
outstanding in 2001 and 2000, respectively............. 267 264
Additional paid-in capital................................ 415,174 415,827
Accumulated deficit....................................... (63,231) (62,775)
Unamortized restricted stock compensation................. (1,973) (942)
Employee notes receivable................................. (15,094) (13,697)
---------- ----------
Total stockholders' equity........................ 335,143 338,677
---------- ----------
Total liabilities and stockholders' equity.................. $1,321,856 $1,340,151
========== ==========
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See notes to consolidated financial statements.
SUMMIT PROPERTIES INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------- -------------------------
2001 2000 2001 2000
----------- ----------- ----------- -----------
Revenues:
Rental.............................................. $ 45,712 $ 42,362 $ 90,252 $ 83,604
Other property...................................... 3,432 3,236 6,753 6,113
Interest............................................ 506 664 1,265 1,738
Other............................................... 353 166 506 314
----------- ----------- ----------- -----------
Total revenues............................... 50,003 46,428 98,776 91,769
----------- ----------- ----------- -----------
Expenses:
Property operating and maintenance:
Personnel....................................... 3,319 3,263 6,678 6,119
Advertising and promotion....................... 634 641 1,251 1,248
Utilities....................................... 2,198 2,025 4,461 4,136
Building repairs and maintenance................ 2,120 2,161 4,066 4,112
Real estate taxes and insurance................. 5,348 4,562 10,760 9,303
Depreciation.................................... 10,039 9,384 19,515 18,284
Property supervision............................ 1,462 1,156 2,892 2,458
Other operating................................. 789 686 1,487 1,361
----------- ----------- ----------- -----------
25,909 23,878 51,110 47,021
Interest.............................................. 10,185 9,491 20,157 18,455
Amortization.......................................... 366 227 709 475
General and administrative............................ 1,140 1,022 2,344 1,962
(Income) loss on equity investments:
Summit Management Company....................... (134) 240 (485) 562
Real estate joint ventures...................... 122 195 39 149
----------- ----------- ----------- -----------
Total expenses............................... 37,588 35,053 73,874 68,624
----------- ----------- ----------- -----------
Income before gain on sale of real estate assets,
impairment loss, minority interest of common
unitholders in Operating Partnership and dividends
to preferred unitholders in Operating Partnership... 12,415 11,375 24,902 23,145
Gain on sale of real estate assets.................. 10,782 5,446 10,782 7,886
Impairment loss on investments in technology
companies......................................... (1,217) -- (1,217) --
----------- ----------- ----------- -----------
Income before minority interest of common unitholders
in Operating Partnership and dividends to preferred
unitholders in Operating Partnership................ 21,980 16,821 34,467 31,031
Minority interest of common unitholders in Operating
Partnership......................................... (2,658) (1,924) (3,984) (3,492)
Dividends to preferred unitholders in Operating
Partnership......................................... (3,105) (3,105) (6,210) (6,210)
----------- ----------- ----------- -----------
Net income............................................ $ 16,217 $ 11,792 $ 24,273 $ 21,329
=========== =========== =========== ===========
Per share data:
Net income -- basic................................. $ 0.61 $ 0.45 $ 0.91 $ 0.81
=========== =========== =========== ===========
Net income - diluted................................ $ 0.60 $ 0.45 $ 0.90 $ 0.81
=========== =========== =========== ===========
Dividends declared.................................. $ 0.4625 $ 0.4375 $ 0.9250 $ 0.8750
=========== =========== =========== ===========
Weighted average shares -- basic.................... 26,686,293 26,224,085 26,630,202 26,334,794
=========== =========== =========== ===========
Weighted average shares -- diluted.................. 27,008,902 26,389,051 26,935,990 26,453,637
=========== =========== =========== ===========
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See notes to consolidated financial statements.
SUMMIT PROPERTIES INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(DOLLARS IN THOUSANDS)
(UNAUDITED)
UNAMORTIZED
ADDITIONAL RESTRICTED EMPLOYEE
COMMON PAID-IN ACCUMULATED STOCK NOTES
STOCK CAPITAL DEFICIT COMPENSATION RECEIVABLE TOTAL
------ ---------- ----------- ------------ ---------- --------
Balance, December 31, 2000......... $264 $415,827 $(62,775) $ (942) $(13,697) $338,677
Dividends.......................... -- -- (24,729) -- -- (24,729)
Proceeds from dividend reinvestment
and stock purchase plans......... 2 4,089 -- -- -- 4,091
Conversion of common units to
shares........................... -- 96 -- -- -- 96
Exercise of stock options.......... -- 540 -- -- -- 540
Issuance of restricted stock
grants........................... 1 1,068 -- (1,769) -- (700)
Amortization of restricted stock
grants........................... -- -- -- 738 -- 738
Adjustment for minority interest of
common unitholders in Operating
Partnership...................... -- (6,446) -- -- -- (6,446)
Issuance of employee notes
receivable....................... -- -- -- -- (2,212) (2,212)
Repayments of employee notes
receivable....................... -- -- -- -- 815 815
Net income......................... -- -- 24,273 -- -- 24,273
---- -------- -------- ------- -------- --------
Balance, June 30, 2001............. $267 $415,174 $(63,231) $(1,973) $(15,094) $335,143
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See notes to consolidated financial statements.
SUMMIT PROPERTIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30,
-------------------
2001 2000
-------- --------
Cash flows from operating activities:
Net income.................................................. $ 24,273 $ 21,329
Adjustments to reconcile net income to net cash provided by
operating activities:
Minority interest of common unitholders in Operating
Partnership............................................ 3,984 3,492
(Income) loss on equity investments....................... (446) 711
Gain on sale of real estate assets........................ (10,782) (7,886)
Impairment loss on investments in technology companies.... 1,217 --
Depreciation and amortization............................. 20,959 19,198
Decrease (increase) in restricted cash.................... 207 (1,872)
Increase in other assets.................................. (1,213) (1,365)
Increase in accrued interest payable...................... 320 70
Decrease in accounts payable and accrued expenses......... (1,854) (871)
Increase in security deposits and prepaid rents........... 65 70
-------- --------
Net cash provided by operating activities................. 36,730 32,876
-------- --------
Cash flows from investing activities:
Construction of real estate assets and land acquisitions,
net of payables........................................ (53,744) (72,243)
Proceeds from sale of communities......................... 57,385 46,349
Capitalized interest...................................... (6,363) (4,643)
Investment in real estate joint venture................... (4,075) --
Recurring capital expenditures, net of payables........... (2,563) (2,515)
Non-recurring capital expenditures........................ (3,699) (1,338)
-------- --------
Net cash used in investing activities..................... (13,059) (34,390)
-------- --------
Cash flows from financing activities:
Net repayments on line of credit.......................... (55,062) (9)
Net repayments on unsecured bonds......................... -- (166)
Net borrowings on unsecured medium-term notes............. 59,537 --
Proceeds from issuance of mortgage debt................... -- 47,924
Repayments of mortgage debt............................... (2,737) (5,893)
Repayments of tax exempt bonds............................ (560) (745)
Net proceeds from dividend reinvestment and stock purchase
plans and exercise of stock options.................... 3,931 2,247
Dividends and distributions to unitholders................ (28,027) (26,408)
Repurchase of common stock................................ -- (6,947)
Acquisition of minority interest.......................... -- (1,761)
Repayments of employee notes receivable................... 815 531
Increase in employee notes receivable..................... (2,212) (8,438)
-------- --------
Net cash (used in) provided by financing activities....... (24,315) 335
-------- --------
Net decrease in cash and cash equivalents................... (644) (1,179)
Cash and cash equivalents, beginning of year................ 3,148 4,130
-------- --------
Cash and cash equivalents, end of period.................... $ 2,504 $ 2,951
======== ========
Supplemental disclosure of cash flow information -- Cash
paid for interest, net of capitalized interest............ $ 19,837 $ 18,385
======== ========
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See notes to consolidated financial statements.
SUMMIT PROPERTIES INC.
Unless the context otherwise requires, all references to "we", "our" or "us" in this report refer collectively to Summit Properties Inc., a Maryland corporation ("Summit"), and its subsidiaries, including Summit Properties Partnership, L.P. , a Delaware limited partnership (the "Operating Partnership"), considered as a single enterprise. Summit is the sole general partner of the Operating Partnership.
1. BASIS OF PRESENTATION
We have prepared the accompanying unaudited financial statements 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. We have included all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation. The results of operations for the six months ended June 30, 2001 are not necessarily indicative of the results that may be expected for the full year. You should read our December 31, 2000 audited financial statements and notes included in our Annual Report on Form 10-K in conjunction with these interim statements.
We conduct substantially all of our business through the Operating Partnership. Summit is the sole general partner and majority owner of the Operating Partnership.
RECENTLY ISSUED ACCOUNTING STANDARDS -- On June 29, 2001, the Financial Accounting Standards Board approved Statement of Financial Accounting Standards (SFAS) No. 141, "Business Combinations" and No. 142, "Goodwill and Other Intangible Assets". SFAS No. 141 will require that the purchase method of accounting be used for all business combinations initiated after June 30, 2001 and that the use of the pooling-of-interest method is no longer allowed. SFAS No. 142 requires that upon adoption, amortization of goodwill will cease and instead, the carrying value of goodwill will be evaluated for impairment on an annual basis. Identifiable intangible assets will continue to be amortized over their useful lives and reviewed for impairment in accordance with SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of". SFAS No. 142 is effective for fiscal years beginning after December 15, 2001. We are evaluating the impact of the adoption of these standards and have not yet determined the effect of adoption on our financial position and results of operations.
EARNINGS PER SHARE -- The only difference between "basic" and "diluted" weighted average shares is the dilutive effect of our outstanding stock options. There were 322,609 and 305,788 shares added to weighted average shares outstanding for the three and six months ended June 30, 2001, respectively, and 164,966 and 118,843 shares added to weighted average shares outstanding for the three and six months ended June 30, 2000, respectively.
RECLASSIFICATIONS -- Certain reclassifications have been made to the 2000 financial statements to conform to the 2001 presentation.
2. REAL ESTATE JOINT VENTURES
We own a 25% interest in a joint venture named Station Hill, LLC, in which we and Hollow Creek, LLC, a subsidiary of a major financial services company, are members. In exchange for our interest in Station Hill, we contributed one phase of each of two communities. We sold three communities and one phase of each of the two communities contributed to Station Hill to Hollow Creek and Hollow Creek concurrently contributed them to Station Hill for a 75% joint venture interest. The two phases contributed to Station Hill and the two phases sold to Hollow Creek are now considered two communities and, therefore, we currently own a 25% interest in five communities owned by Station Hill. Station Hill is accounted for on the equity method of accounting.
The following are condensed balance sheets and income statements for Station Hill as of and for the six months ended June 30, 2001 and 2000.
SUMMIT PROPERTIES INC.
The balance sheets and income statements below reflect the financial position and operations of Station Hill in its entirety, not only our 25% interest (amounts in thousands).
BALANCE SHEETS
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2001 2000
------- -------
Real estate assets, net..................................... $85,052 $88,049
Cash and cash equivalents................................... 1,668 2,051
Other assets................................................ 509 445
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Total assets...................................... $87,229 $90,545
======= =======
Mortgages payable........................................... $68,236 $69,066
Other liabilities........................................... 1,277 1,247
Partners' capital........................................... 17,716 20,232
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Total liabilities and partners' capital........... $87,229 $90,545
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INCOME STATEMENTS
------------------
2001 2000
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Revenues.................................................... $ 6,399 $ 6,110
Expenses:
Property operating........................................ 2,212 2,174
Interest.................................................. 2,292 2,340
Depreciation and amortization............................. 1,615 1,480
------- -------
Total expenses.................................... 6,119 5,994
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Net income.................................................. $ 280 $ 116
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We also own a 49% interest in a joint venture which is developing an apartment community in Atlanta, Georgia. This project is accounted for under the equity method of accounting and, therefore, its operating results are presented in "(Income) loss on equity investments: Real estate joint ventures" in our consolidated statements of earnings. The construction costs are being funded through a separate loan to the joint venture from an unrelated third party equal to 100% of the construction costs. During the construction period, rather than equity contributions to the joint venture, we have, under certain circumstances, subsequent to demand by the third party lender, agreed to make contributions which would reduce the construction loan 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 we would be required to contribute to the joint venture at the end of the construction and lease-up period. We have the option to purchase our joint venture partner's interest in the joint venture for a period of six months after the project becomes stabilized. The project had not reached stabilization as of June 30, 2001. If we do not exercise our option with respect to the joint venture, we will be required to make a capital contribution of 25% of the joint venture's total construction loan amount.
On May 25, 2001, we acquired a 29.78% interest in a joint venture that owns substantially all of the interest in a limited liability company that will develop an apartment community in Miami, Florida. Our equity contribution was $4.2 million. The community will consist of 323 apartment homes and 17,795 square feet of office/retail space. The construction costs are being funded through the equity which the joint venture contributed to the limited liability company and by a loan to that company from an unrelated third party. In the event that construction costs exceed the construction loan amount, we have agreed to lend to the joint venture, which will in turn advance to the limited liability company, the amount required to fund such cost overruns. This loan would accrue interest at the rate of 11% per year. Upon completion of construction, the joint venture will pay, or refinance, the construction loan. In the event the limited liability company defaults on the construction loan, we have the right, under certain circumstances, to cure the defaults, keep the loan in
SUMMIT PROPERTIES INC.
place and complete construction of the community. The joint venture has also acquired an adjacent piece of land. We are serving as the managing member of the joint venture, and Summit Management Company will be the property management company for the project. This project is accounted for on the equity method of accounting.
3. COMMUNITY DISPOSITIONS
On June 1, 2001, we sold an apartment community located in West Palm Beach, Florida, formerly known as Summit Palm Lake (304 apartment homes) for $20.0 million. The disposition of Summit Palm Lake resulted in the recognition of a gain on sale of $2.4 million. The net proceeds of $19.4 million were used to reduce amounts outstanding under our unsecured credit facility.
On June 27, 2001, we sold two apartment communities, both located in Charlotte, North Carolina, formerly known as Summit Arbors and Summit Radbourne (an aggregate of 345 apartment homes) for $26.3 million. The disposition of these communities resulted in the recognition of an aggregate gain on sale of $8.4 million. The purchaser of these two communities assumed $8.5 million in mortgages and exchanged 741,148 common units valued at $17.6 million as consideration in the transaction.
4. NOTES PAYABLE
We have a syndicated unsecured line of credit ("credit facility") in the amount of $225.0 million. The credit facility provides funds for new development, acquisitions and general working capital purposes. Loans under the credit facility bear interest at LIBOR plus 100 basis points. The spread component of the aggregate interest rate will be reduced in the event of an upgrade of our unsecured credit rating. The credit facility is repayable monthly on an interest only basis with principal due at maturity. The credit facility's initial three- year term was scheduled to expire on September 26, 2003. On July 6, 2001, we closed on a one-year extension option, subject to the satisfaction of certain conditions, under this credit facility. The new maturity date is September 26, 2004, and all other terms and covenants of the credit facility remain unchanged.
On April 20, 2000, we commenced a new program for the sale by the Operating Partnership of up to $250.0 million aggregate principal amount of medium-term notes due nine months or more from the date of issuance. During the six months ended June 30, 2001, the Operating Partnership issued medium-term notes with an aggregate principal amount of $60.0 million in connection with the new MTN program, including (a) $25.0 million of notes which are due on May 9, 2006 and bear interest at 7.04% per year and (b) $35.0 million of notes which are due on May 9, 2011 and bear interest at 7.703% per year. We had medium-term notes with an aggregate principal amount of $112.0 million outstanding in connection with the new MTN program at June 30, 2001.
On May 29, 1998, we established a program for the sale by the Operating Partnership of up to $95.0 million aggregate principal amount of medium-term notes due nine months or more from the date of issuance. We had medium-term notes with an aggregate principal amount of $55.0 million outstanding in connection with this MTN program at June 30, 2001. On July 30, 2001, one of the medium-term notes in the principal amount of $30.0 million matured and was repaid. As a result of the commencement of the $250.0 million MTN program, we cannot issue any additional notes under the $95.0 million MTN program.
5. DERIVATIVE FINANCIAL INSTRUMENTS
We are exposed to market risk, such as changes in interest rates. To manage the volatility relating to interest rate risk, we may enter into interest rate hedging arrangements from time to time. We do not utilize derivative financial instruments for trading or speculative purposes.
SUMMIT PROPERTIES INC.
On January 1, 2001, we adopted Statement of Financial Accounting Standard No. 133, "Accounting for Derivative Instruments and Hedging Activities," as amended. FAS 133 establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. It requires that entities recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. The cumulative effect of adopting FAS 133 was not material to our financial statements.
At June 30, 2001, we had one interest rate swap with a notional amount of $30.0 million, relating to $30.0 million of 6.625% fixed rate notes issued under our MTN program. Under the interest rate swap agreement, through the maturity date of December 15, 2003, (a) we have agreed to pay to the counterparty the interest on a $30.0 million notional amount at a floating interest rate of three-month LIBOR plus 11 basis points, and (b) the counterparty has agreed to pay to us the interest on the same notional amount at the fixed rate. The floating rate at June 30, 2001 was 4.00%. The fair value of the interest rate swap was $1.1 million at June 30, 2001. The swap has been designated as a fair value hedge of the underlying fixed rate debt obligation and has been recorded as a reduction of the related debt instrument. We assume no ineffectiveness as the interest rate swap meets the short-cut method conditions required under FAS 133 for fair value hedges of debt instruments. Accordingly, no gains or losses were recorded in income relative to our underlying debt and interest rate swap.
6. RESTRICTED STOCK
During the six months ended June 30, 2001, we granted 94,818 shares of restricted stock valued at $1.2 million pursuant to our Performance Stock Award Plan. One half of these shares vested on the date of grant, with the remaining shares vesting in two equal annual installments beginning on January 1, 2002. The value of the shares has been recorded as unamortized restricted stock compensation and is shown as a separate component of stockholders' equity in the accompanying balance sheet.
During the six months ended June 30, 2001 and 2000, we granted 21,018 and 72,805 shares, respectively, of restricted stock to employees under our 1994 Stock Option and Incentive Plan. The market value of the restricted stock grants awarded during these six months in 2001 and 2000 totaled $516,000 and $1.3 million, respectively, which has been recorded as unamortized restricted stock compensation and is shown as a separate component of stockholders' equity in the accompanying balance sheet. 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 six months ended June 30, 2001 and 2000 are as follows:
A. We accrued dividends and distributions payable in the amounts of $14.1 million and $13.3 million at June 30, 2001 and 2000, respectively.
B. We issued 21,018 and 72,805 shares of restricted stock valued at $516,000 and $1.3 million during the six months ended June 30, 2001 and 2000, respectively.
C. We issued 94,818 shares of restricted stock valued at $1.2 million during the six months ended June 30, 2001 in connection with our Performance Stock Award Plan. There were no such issuances of restricted stock in connection with the plan during the six months ended June 30, 2000.
D. We issued 4,012 and 35,045 shares of common stock in exchange for 4,012 and 35,045 common units of limited partnership interest in the Operating Partnership valued at $96,000 and $676,000 during the six months ended June 30, 2001 and 2000, respectively.
SUMMIT PROPERTIES INC.
E. The Operating Partnership issued 66,376 common units at a price of $28.625 per unit during the six months ended June 30, 2001 in connection with the purchase of a building and a parcel of land.
F. As partial consideration for the purchase of the former Summit Radbourne and Summit Arbors communities on June 27, 2001, the purchaser assumed mortgages with an aggregate balance of $8.5 million at the date of sale, and exchanged 741,148 common units valued at $17.6 million.
8. MINORITY INTEREST
Minority interest of common unitholders consists of the following at June 30, 2001 and December 31, 2000 (in thousands):
2001 2000
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Minority interest of common unitholders in Operating
Partnership............................................... $46,963 $56,190
Minority interest in one operating community................ (460) (460)
------- -------
$46,503 $55,730
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As of June 30, 2001, the Operating Partnership had 30,441,626 common units of limited partnership interest outstanding of which 26,736,835, or 87.8%, were owned by Summit and 3,704,791, or 12.2%, were owned by other partners, including certain of our officers and directors.
Proceeds from the issuance of shares of our common stock are contributed to the Operating Partnership for an equivalent number of common units. Total common stock issued, and the proceeds contributed to the Operating Partnership for an equivalent number of common units, was 216,000 and 129,000 shares valued at $4.7 million ($21.94 per share average) and $2.2 million ($17.44 per share average) for the six months ended June 30, 2001 and 2000, respectively. No individual transaction significantly changed our ownership percentage in the Operating Partnership, which was 87.8% and 85.9% as of June 30, 2001 and 2000, respectively.
Under certain circumstances, as required by the holders of common units, we may issue shares of common stock in exchange for common units owned by other partners on a one-for-one basis (subject to adjustment) 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 our common stock at the date of the exchange. During the six month period ended June 30, 2001, 4,012 common units valued a $96,000 were exchanged for shares of common stock. During the six month period ended June 30, 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 $1.8 million.
We issued 66,376 common units at a price of $28.625 per unit as partial consideration for the purchase of a building and a parcel of land during the six months ended June 30, 2001.
On June 27, 2001, the purchaser of the former Summit Radbourne and Summit Arbors communities exchanged 741,148 common units valued at $17.6 million as partial consideration for such purchase.
9. COMMITMENTS AND CONTINGENCIES
The estimated cost to complete eight development projects currently under construction was $74.8 million at June 30, 2001. Anticipated construction completion dates of the projects range from the third quarter of 2001 to the first quarter of 2003.
On January 19, 2000, we entered into a Real Estate Purchase Agreement with a third-party real estate developer. Under the terms of the agreement, we have agreed to purchase a "Class A" mixed-use community, which will be called Summit Brickell and will be located in Miami, Florida. We expect to close on the purchase of Summit Brickell during the second half of 2002 following its completion and achievement of 85%
SUMMIT PROPERTIES INC.
occupancy. The final purchase price will be determined based on actual construction costs plus a bonus to the developer based on the capitalized income of the property at the time of purchase. The purchase price is expected to range from $50.5 million to $60.0 million. The purchase of Summit Brickell is subject to customary closing conditions. We issued a letter of credit in the amount of $13.0 million, which serves as a credit enhancement to the developer's construction loan. In the event that the letter of credit is drawn upon, we will 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 18% per year.
We have an employment agreement with one of our former executive officers who resigned from such executive position but will remain as an employee, and has agreed to provide various services to us from time to time over the next ten years. The employment agreement requires that we pay this former officer a base salary aggregating up to $2.1 million over the period from July 1, 2001 to December 31, 2011. Either party can terminate the employment agreement, effective 20 business days after written notice is given. The full base salary amount shall be payable through 2011 whether or not the agreement is terminated earlier in accordance with its terms.
10. BUSINESS SEGMENTS
We are an established leader in the operation, development and acquisition of "Class A" luxury apartments located in the southeastern, southwestern and mid-atlantic United States. We develop apartments solely for our own use and do not perform development activities for third parties. We evaluate each community's performance individually. However, because of the similar economic characteristics and services provided to our residents at each community, our communities have been aggregated into one reportable segment, apartment operations. This segment generated 98.2% and 97.8% of our total revenues for the six months ended June 30, 2001 and 2000, respectively.
11. PREFERRED UNITS
As of June 30, 2001, the Operating Partnership had outstanding 3.4 million preferred units of limited partnership interest designated as 8.95% Series B Cumulative Redeemable Perpetual Preferred Units. These preferred units are redeemable by the Operating Partnership on or after April 29, 2004 for cash, or at our option, shares of our 8.95% Series B Cumulative Redeemable Perpetual Preferred Stock, or a combination of cash and stock. Holders of the Series B preferred units have the right to exchange these preferred units for shares of our Series B preferred stock on a one-for-one basis, subject to adjustment: (a) on or after April 29, 2009, (b) if full quarterly distributions are not made for six quarters, or (c) upon the occurrence of specified events related to the treatment of the Operating Partnership or the preferred units for federal income tax purposes. 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 year of the $25.00 original capital contribution. We made distributions to the holders of the Series B preferred units in the aggregate amount of $3.8 million during each of the six month periods ended June 30, 2001 and 2000.
As of June 30, 2001, the Operating Partnership had outstanding 2.2 million preferred units of limited partnership interest designated as 8.75% Series C Cumulative Redeemable Perpetual Preferred Units. The preferred units are redeemable by the Operating Partnership on or after September 3, 2004 for cash. Holders of the Series C preferred units have the right to exchange these preferred units for shares of our Series C preferred stock on a one-for-one basis, subject to adjustment: (a) on or after September 3, 2009, (b) if full quarterly distributions are not made for six quarters, (c) upon the occurrence of specified events related to the treatment of the Operating Partnership or the preferred units for federal income tax purposes, or (d) if the holdings in the Operating Partnership of the Series C unitholder exceed 18% of the total profits of or capital interest in the Operating Partnership for a taxable year. Distributions on the Series C preferred units are cumulative from the date of original issuance and are payable quarterly at the rate of 8.75% per year of the
SUMMIT PROPERTIES INC.
$25.00 original capital contribution. We made distributions to the holder of the Series C preferred units in the aggregate amount of $2.4 million during each of the six month periods ended June 30, 2001 and 2000.
12. COMMON STOCK REPURCHASE PROGRAM
On March 12, 2000, our Board of Directors authorized a common stock repurchase program pursuant to which we are authorized to purchase up to an aggregate of $25.0 million of currently issued and outstanding shares of our common stock. All repurchases have been, and will be, made on the open market at prevailing prices or in privately negotiated transactions. This authority may be exercised from time to time and in such amounts as market conditions warrant. We did not repurchase any shares of our common stock during the six months ended June 30, 2001. During the year ended December 31, 2000, we repurchased 279,400 shares of our common stock under the common stock repurchase program for an aggregate purchase price, including commissions, of $5.5 million, or an average price of $19.80 per share.
During 2000, we completed a common stock repurchase program pursuant to which we were authorized to purchase up to an aggregate of $50.0 million of our common stock. The total number of shares of our common stock repurchased under this program was 2.5 million shares for an aggregate purchase price, including commissions, of $50.0 million, or an average price of $19.63 per share.
13. IMPAIRMENT LOSS
Management considers events and circumstances that may indicate impairment of an investment, including operating performance and cash flow projections. Management determined during the three months ended June 30, 2001 that our investments in Broadband Now, Inc. and Yieldstar Technology LLC were impaired and that such impairment was other than temporary. As a result, we recorded an impairment loss during the period in the amount of $1.2 million, which represents our entire investments in these two technology companies. We have no other technology company investments.
14. SUBSEQUENT EVENTS
Subsequent to June 30, 2001, we sold an apartment community located in Palm Harbour, Florida formerly known as Summit Lofts (200 apartment homes) and one parcel of land located in Richmond, Virginia for $16.1 million in the aggregate. The disposition of this community and parcel of land resulted in the recognition of a gain on sale of $2.9 million in the aggregate. The net proceeds were used to repay amounts outstanding under our unsecured credit facility.
Subsequent to June 30, 2001, Station Hill sold an apartment community located in Tampa, Florida formerly known as Summit Station (240 apartment homes) for $11.9 million. The disposition of Summit Station resulted in the recognition of a gain on sale by Station Hill of $1.1 million. The purchaser of Summit Station assumed a mortgage of $8.3 million and paid the balance of the purchase price in cash.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including, without limitation, statements relating to the operating performance of fully stabilized communities, the development, acquisition or disposition of properties, anticipated construction commencement and 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 our control. These risks, uncertainties and other factors may cause our actual results, performance or achievements to be materially different from the anticipated future results, performance or achievements expressed or implied by the forward-looking statements. Factors that could have a material adverse effect on our operations and future prospects include, but are not limited to:
- economic conditions generally and the real estate market specifically, including changes in occupancy rates and rents;
- legislative/regulatory changes, including changes to laws governing the taxation of real estate investment trusts, ("REITS");
- availability of capital;
- changes in interest rates;
- uncertainties associated with our development activities, including the failure to obtain zoning and other approvals and increases in construction costs;
- the failure of acquisitions to yield expected results;
- the failure to sell communities marketed for sale, or to sell communities in a timely manner or on favorable terms;
- construction delays due to the unavailability of materials, weather conditions or other delays;
- competition, which could limit our ability to secure attractive investment opportunities, lease apartment homes or increase or maintain rents;
- supply and demand for apartment communities in our current and proposed market areas, especially our core markets described below;
- changes in generally accepted accounting principles, or policies and guidelines applicable to REITs; and
- those factors discussed in the section "Certain Factors Affecting the Performance of Development Communities," on page 25 of this report.
You should consider these risks and uncertainties when evaluating forward-looking statements and you should not place undue reliance on such statements. You should read the following discussion in conjunction with our consolidated financial statements and notes, which accompany this report.
Summit is a real estate operating company that has elected REIT status and focuses on the operation, development and acquisition of "Class A" luxury apartment communities located in the southeastern, southwestern and mid-atlantic United States. We focus our efforts in seven core markets with particular emphasis on the high growth areas of Washington, D.C., Southeast Florida and Atlanta. Our other core markets are Dallas and Austin, Texas and Raleigh and Charlotte, North Carolina. We have experienced weakness in our Atlanta, Georgia and Austin, Texas markets due to local economic conditions, which have negatively impacted occupancy rates and market rents. We anticipate that these conditions will continue throughout the year, particularly in Austin.
HISTORICAL RESULTS OF OPERATIONS
Our net income is generated primarily from operations of our apartment communities. The changes in operating results from period to period reflect changes in existing community performance and changes in the number of apartment homes due to development, acquisition, or disposition of communities. Where appropriate, comparisons are made on a "fully stabilized communities," "acquisition communities," "stabilized development communities," "communities in lease-up" and "disposition communities" basis in order to adjust for changes in the number of apartment homes. We consider a community to be "stabilized" when it has attained a physical occupancy level of at least 93%. A community that we have acquired is deemed "fully stabilized" when we have owned it for one year or more as of the beginning of the current year. A community that we have 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" community when stabilized as of the beginning of the current year but not the entire two prior years. A community's average physical occupancy is defined as the number of apartment homes occupied divided by the total number of apartment homes contained in the 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. Our 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 other apartment companies. All communities information is presented before real estate depreciation and amortization expense.
Results of Operations for the Three and Six Months Ended June 30, 2001 and 2000
For the three and six months ended June 30, 2001, income before gain on sale of real estate assets, impairment loss on investments in technology companies, minority interest of common unitholders in the Operating Partnership and dividends to preferred unitholders in the Operating Partnership increased $1.0 million to $12.4 million and $1.8 million to $24.9 million from the three and six month periods ended June 30, 2001 and 2000, respectively, primarily due to increased property operating income generated by our portfolio of communities, offset by increased interest costs primarily as a result of increased average indebtedness outstanding.
OPERATING PERFORMANCE OF OUR PORTFOLIO OF COMMUNITIES
The operating performance of our communities for the three and six months ended June 30, 2001 and 2000 is summarized below (dollars in thousands):
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
---------------------------- ----------------------------
2001 2000 % CHANGE 2001 2000 % CHANGE
------- ------- -------- ------- ------- --------
Property revenues:
Fully stabilized communities....... $29,873 $29,116 2.6% $59,521 $57,525 3.5%
Acquisition communities............ 1,298 -- 100.0% 2,568 -- 100.0%
Stabilized development
communities...................... 13,761 11,692 17.7% 27,021 22,109 22.2%
Communities in lease-up............ 3,700 942 292.8% 6,611 1,924 243.6%
Communities sold................... 512 3,848 -86.7% 1,284 8,159 -84.3%
------- ------- ------- -------
Total property revenues....... 49,144 45,598 7.8% 97,005 89,717 8.1%
------- ------- ------- -------
Property operating and maintenance
expense:
Fully stabilized communities....... 9,888 9,624 2.7% 19,680 18,855 4.4%
Acquisition communities............ 436 -- 100.0% 874 -- 100.0%
Stabilized development
communities...................... 4,087 3,053 33.9% 8,258 6,155 34.2%
Communities in lease-up............ 1,284 513 150.3% 2,347 1,028 128.3%
Communities sold................... 175 1,304 -86.6% 436 2,699 -83.8%
------- ------- ------- -------
Total property operating and
maintenance expense......... 15,870 14,494 9.5% 31,595 28,737 9.9%
------- ------- ------- -------
Property operating income............... $33,274 $31,104 7.0% $65,410 $60,980 7.3%
======= ======= ======= =======
Apartment homes, end of period.......... 18,279 18,365 1.4% 18,279 18,365 1.4%
======= ======= ======= =======
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A summary of our apartment homes (excluding joint ventures) for the six months ended June 30, 2001 and 2000 is as follows:
2001 2000
------ ------
Apartment homes at January 1 of the year.................... 18,928 17,673
Developments which began rental operations during the
period.................................................... -- 1,172
Sale of apartment homes..................................... (649) (480)
------ ------
Apartment homes at June 30 of the year...................... 18,279 18,365
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OPERATING PERFORMANCE OF FULLY STABILIZED COMMUNITIES
The operating performance of our communities stabilized prior to January 1, 1999 is summarized below (dollars in thousands except average monthly rental revenue):
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
---------------------------- ----------------------------
2001 2000 % CHANGE 2001 2000 % CHANGE
------- ------- -------- ------- ------- --------
Property revenues:
Rental................................ $27,799 $27,122 2.5% $55,503 $53,653 3.4%
Other................................. 2,074 1,994 4.0% 4,018 3,872 3.8%
------- ------- ------- -------
Total property revenues................. 29,873 29,116 2.6% 59,521 57,525 3.5%
------- ------- ------- -------
Property operating and maintenance
expense:
Personnel............................. 1,995 2,002 -0.3% 4,016 3,685 9.0%
Advertising and promotion............. 328 398 -17.6% 663 760 -12.8%
Utilities............................. 1,289 1,244 3.6% 2,628 2,509 4.7%
Building repairs and maintenance...... 1,403 1,443 -2.8% 2,665 2,708 -1.6%
Real estate taxes and insurance....... 3,518 3,353 4.9% 7,058 6,700 5.3%
Property supervision.................. 835 744 12.2% 1,660 1,604 3.5%
Other operating expense............... 520 440 18.2% 990 889 11.4%
------- ------- ------- -------
Total property operating and maintenance
expense............................... 9,888 9,624 2.7% 19,680 18,855 4.4%
------- ------- ------- -------
Property operating income............... $19,985 $19,492 2.5% $39,841 $38,670 3.0%
======= ======= ======= =======
Average physical occupancy.............. 93.2% 95.1% -2.0% 93.4% 94.2% -0.8%
======= ======= ======= =======
Average monthly rental revenue.......... $ 921 $ 886 4.0% $ 920 $ 885 4.0%
======= ======= ======= =======
Number of apartment homes (1)........... 11,002 11,002 11,002 11,002
======= ======= ======= =======
Number of apartment communities......... 39 39 39 39
======= ======= ======= =======
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(1) Includes the former Summit Arbors and Summit Radbourne communities.
The increase in property revenue from fully stabilized communities was primarily the result of increases in average rental rates as well as increased revenues from sources other than rental revenues, such as water sub-meter and cable revenues. The higher revenues were primarily generated in our Southeast Florida and Washington, D.C. markets. The increased revenues were offset by an increase of 4.4% in property operating expenses, primarily property taxes and personnel. As a percentage of total property revenue, total property operating and maintenance expenses remained stable at 33.1% for the three months ended June 30, 2001 and 2000, respectively, and increased to 33.1% for the six months ended June 30, 2001 from 32.8% for the six months ended June 30, 2000.
OPERATING PERFORMANCE OF ACQUISITION COMMUNITIES
Acquisition communities for the three and six months ended June 30, 2001 consist of Summit Sweetwater and Summit Shiloh, both located in Atlanta, Georgia, representing a total of 490 apartment homes, in each of which we acquired our joint venture partner's 51% interest on August 1, 2000. The operations of these two communities for the three and six months ended June 30, 2001 are summarized as follows (dollars in thousands except average monthly rental revenue):
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 2001 JUNE 30, 2001
------------------ ----------------
Property revenues:
Rental.......................................... $1,208 $2,392
Other........................................... 90 176
------ ------
Total property revenues........................... 1,298 2,568
Property operating and maintenance expense........ 436 874
------ ------
Property operating income......................... $ 862 $1,694
====== ======
Average physical occupancy........................ 91.7% 92.4%
====== ======
Average monthly rental revenue.................... $ 903 $ 904
====== ======
Number of apartment homes......................... 490 490
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OPERATING PERFORMANCE OF STABILIZED DEVELOPMENT COMMUNITIES
We had fifteen development communities (Summit Ballantyne, Summit Sedgebrook, Summit Governor's Village, Summit Lake, Summit Russett, Summit Westwood, Summit New Albany, Summit Fair Lakes, Summit Doral, Summit Largo, Summit Hunter's Creek, Summit Ashburn Farm, Summit Deer Creek, Summit Fairview and Reunion Park by Summit) which were stabilized during the entire six months ended June 30, 2001, but were stabilized subsequent to January 1, 1999. Summit Fairview is an existing community which underwent major renovations during 1999 and 2000. Its operating results are included in results of stabilized development communities as it reached stabilization after renovation subsequent to January 1, 1999. The operating performance of these fifteen communities for the three and six months ended June 30, 2001 and 2000 is summarized below (dollars in thousands except average monthly rental revenue):
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------ ------------------
2001 2000 2001 2000
------- ------- ------- -------
Property revenues:
Rental.................................... $12,800 $10,792 $25,163 $20,540
Other..................................... 961 900 1,858 1,568
------- ------- ------- -------
Total property revenues..................... 13,761 11,692 27,021 22,109
Property operating and maintenance
expense................................... 4,087 3,053 8,258 6,155
------- ------- ------- -------
Property operating income................... $ 9,674 $ 8,639 $18,763 $15,953
======= ======= ======= =======
Average physical occupancy.................. 95.2% 83.3% 94.1% 82.9%
======= ======= ======= =======
Average monthly rental revenue.............. $ 966 $ 884 $ 966 $ 849
======= ======= ======= =======
Number of apartment homes................... 4,668 4,668 4,668 4,668
======= ======= ======= =======
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The unleveraged yield on investment for the stabilized development communities, defined as property operating income for the three and six months ended June 30, 2001 on an annualized basis over total development cost, was 11.1% and 10.7%, respectively.
OPERATING PERFORMANCE OF COMMUNITIES IN LEASE-UP
We had seven communities in lease-up during the six months ended June 30, 2001. Six of the seven communities in lease-up are new developments and one of the communities in lease-up, Summit Lenox, is an existing community that underwent major renovations during 1999 and 2000. A community in lease-up is defined as one that 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 June 30, 2001 is as follows (dollars in thousands):
TOTAL ACTUAL/ % LEASED
NUMBER OF ACTUAL/ ANTICIPATED ACTUAL/ Q2 2001 AS OF
APARTMENT ESTIMATED CONSTRUCTION ANTICIPATED AVERAGE JUNE 30,
COMMUNITY HOMES COST COMPLETION STABILIZATION OCCUPANCY 2001
--------- --------- --------- ------------ ------------- --------- ---------
Summit Russett II -- Laurel, MD.......... 112 $ 10,700 Q4 2000 Q2 2001 88.8% 96.4%
Summit Grandview -- Charlotte, NC........ 266 51,700 Q4 2000 Q4 2001 75.4% 84.2%
Summit Deerfield -- Cincinnati, OH (1)
(2).................................... 498 44,500 Q3 2001 Q2 2002 40.8% 58.2%
Summit Overlook -- Raleigh, NC (2)....... 320 25,500 Q3 2001 Q1 2002 19.7% 39.7%
Summit Crest -- Raleigh, NC (2).......... 438 30,700 Q3 2001 Q2 2002 29.6% 60.0%
Summit Peachtree City -- Atlanta, GA
(2).................................... 399 31,500 Q3 2001 Q4 2002 16.1% 31.6%
----- --------
2,033 $194,600
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(1) Summit Deerfield is under contract for sale, expected during 2001, as part
of our strategy to exit the midwest markets. We do not expect to realize a
loss on sale of Summit Deerfield, which is subject to customary closing
conditions.
(2) The related assets of these properties are included in the "Construction in
progress" category at June 30, 2001.
In addition to the communities listed in the table above, Summit Lenox in Atlanta, Georgia is an existing community that underwent major renovations during 1999 and 2000. The renovations included 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 required certain apartment homes to be unavailable for rental over the course of the project. The operations of Summit Lenox are included in results of our lease-up communities due to the renovation work. The renovation work at Summit Lenox was complete at June 30, 2001, but the community had not yet reached stabilization after renovation. Summit Lenox was 89.6% occupied at June 30, 2001.
The operating performance of our lease-up communities for the three and six months ended June 30, 2001 and 2000 is summarized below (dollars in thousands):
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------ ----------------
2001 2000 2001 2000
------- ------- ------ ------
Property revenues:
Rental........................................ $3,429 $ 875 $6,004 $1,816
Other......................................... 271 67 607 108
------ ------ ------ ------
Total property revenues......................... 3,700 942 6,611 1,924
Property operating and maintenance expense...... 1,284 513 2,347 1,028
------ ------ ------ ------
Property operating income....................... $2,416 $ 429 $4,264 $ 896
====== ====== ====== ======
Number of apartment homes....................... 2,464 2,464 2,464 2,464
====== ====== ====== ======
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OPERATING PERFORMANCE OF DISPOSITION COMMUNITIES
We sold the former Summit Palm Lake community on June 1, 2001 (304 apartment units). The information in the table below represents operating results for the three and six months ended June 30, 2001 for the former Summit Palm Lake. The information in the table below represents operating results for the three and six months ended June 30, 2000 for the former Summit Palm Lake sold during 2001, as well as for the following communities sold during 2000 (referred to in this report using former community names): Summit Creekside, Summit Eastchester, Summit Sherwood, Summit Blue Ash, Summit Park, Summit River Crossing and Summit Village (dollars in thousands):
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------ ------------------
2001 2000 2001 2000
----- ------- ------ ------
Property revenues:
Rental..................................... $475 $3,573 $1,191 $7,595
Other...................................... 37 275 93 564
---- ------ ------ ------
Total property revenues...................... 512 3,848 1,284 8,159
Property operating and maintenance expense... 175 1,304 436 2,699
---- ------ ------ ------
Property operating income.................... $337 $2,544 $ 848 5,460
==== ====== ====== ======
Number of apartment homes.................... 304 1,980 304 1,980
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OPERATING PERFORMANCE OF SUMMIT MANAGEMENT COMPANY
The operating performance of Summit Management Company and its wholly-owned subsidiary, Summit Apartment Builders, Inc., for the three and six months ended June 30, 2001 and 2000 is summarized below (in thousands):
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
---------------------------- ----------------------------
2001 2000 % CHANGE 2001 2000 % CHANGE
------- ------- -------- ------- ------- --------
Revenues:
Management fees charged to
Operating Partnership........... $ 1,656 $ 1,347 22.9% $ 3,592 $ 2,815 27.6%
Third party management fee
revenue......................... 205 272 -24.6% 440 550 -20.0%
Construction revenue.............. 799 782 2.2% 1,554 1,590 -2.3%
Gain on sale of real estate
assets.......................... -- -- 0.0% -- 238 -100.0%
Other revenue..................... 177 63 181.0% 251 135 85.9%
------- ------- ------- -------
Total revenue................ 2,837 2,464 15.1% 5,837 5,328 9.6%
------- ------- ------- -------
Expenses:
Operating......................... 2,473 2,468 0.2% 4,893 5,039 -2.9%
Depreciation...................... 80 86 -7.0% 160 172 -7.0%
Amortization...................... 75 75 0.0% 149 151 -1.3%
Interest.......................... 75 75 0.0% 150 528 -71.6%
------- ------- ------- -------
Total expenses............... 2,703 2,704 0.0% 5,352 5,890 -9.1%
------- ------- ------- -------
Net income (loss)...................... $ 134 $ (240) 155.8% $ 485 $ (562) 186.3%
======= ======= ======= =======
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The increase in management fees charged to the Operating Partnership for the three and six-month periods in 2001 was primarily the result of 7.8% and 8.1% increases in property revenues at our communities for those periods over the previous year, as well as an increase in fees earned from managing our communities in lease-up. The decrease in operating expenses during the six-month period was a result of a decrease in the number of management personnel at Summit Management Company in 2001 as compared to 2000. In addition,
interest expense for the six month period decreased due to an inter-company loan, which was repaid during 2000.
Property management revenues included property management fees from third parties of $205,000 and $440,000 for the three and six months ended June 30, 2001 and $272,000 and $550,000 for the same periods in 2000. Property management fees from third parties as a percentage of total property management revenues were 11.0% and 10.9% for the three and six months ended June 30, 2001 and 16.8% and 16.3% for the same periods in 2000. We expect third party management revenues as a percentage of total property management revenues to continue to decline.
All of the construction revenue during the six-month periods ended June 30, 2001 and 2000 was from contracts with Summit.
OTHER INCOME AND EXPENSES
Interest expense increased by $694,000 and $1.7 million, or 7.3% and 9.2% for the three and six months ended June 30, 2001 compared with the same periods in 2000. This increase was primarily the result of an increase in our average indebtedness outstanding, which increased by $78.0 million, or 11.5%, for the three-month period and $68.5 million, or 9.7% for the six month period.
Depreciation expense increased $655,000 and $1.2 million, or 7.0% and 6.7%, for the three and six months ended June 30, 2001 as compared with the same periods in 2000, primarily due to the initiation of depreciation on recently developed communities as well as the depreciation of communities acquired during the second half of 2000.
General and administrative expenses increased $118,000 and $382,000, or 11.5% and 19.5%, for the three and six months ended June 30, 2001 as compared to the same periods in 2000. This increase was primarily the result of an increase in compensation costs of $199,000 due to performance stock grants which partially vested during the six months ended June 30, 2001, as well as an increase in the reserve for the costs of abandoned pursuit projects of $120,000. As a percentage of revenues, general and administrative expenses were 2.3% and 2.4% for the three and six months ended June 30, 2001 and 2.2% and 2.1% for the same periods in 2000.
Management considers events and circumstances that may indicate impairment of an investment, including operating performance and cash flow projections. Management determined during the three months ended June 30, 2001 that our investments in Broadband Now, Inc. and Yieldstar Technology LLC were impaired and that such impairment was other than temporary. As a result, we recorded an impairment loss during the period in the amount of $1.2 million, which represents our entire investments in these two technology companies. We have no other technology company investments.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity
Our net cash provided by operating activities increased from $32.9 million for the six months ended June 30, 2000 to $36.7 million for the same period in 2001, primarily due to a $4.4 million increase in property operating income.
Net cash used in investing activities decreased from $34.4 million for the six months ended June 30, 2000 to $13.1 million for the same period in 2001 due to an $11.0 million increase in proceeds from the sale of communities and a $14.4 million decrease in capital expenditures, construction and land acquisition activity, partially offset by an increase in investments in real estate joint ventures of $4.1 million. Property sale proceeds from six of seven communities sold during 2000 were placed in escrow in accordance with like-kind exchange income tax rules and regulations. In addition to the proceeds received in connection with the sale of the former Summit Palm Lake during the current period, proceeds from the sale of communities represent funds expended from these like-kind exchange escrows. In the event 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 $335,000 for the six months ended June 30, 2000. Net cash used in financing activities was $24.3 million for the six months ended June 30, 2001. The increase in cash used in financing activities is primarily due to a decrease in mortgage debt proceeds of $47.9 million and an increase in cash used for the payment of dividends and distributions of $1.6 million, offset by a decrease in cash used for the repurchase of common stock and common units in the aggregate of $8.7 million, a decrease in cash used for repayments of mortgage debt of $3.2 million, a decrease in cash used for employee notes receivable of $6.2 million and an increase in the net proceeds from borrowings on unsecured medium-term notes of $59.5 million which were used to repay amounts outstanding on our unsecured credit facility.
The ratio of earnings to fixed charges was 1.65 for the six months ended June 30, 2001 as compared to 1.67 for the six months ended June 30, 2000.
We have elected to be taxed as a real estate investment trust under Sections 856 through 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 90% of ordinary taxable income be distributed. As a REIT, we generally will not be subject to federal income tax on net income to the extent income is distributed.
Our outstanding indebtedness at June 30, 2001 totaled $757.4 million. This amount included $292.1 million of fixed rate conventional mortgages, $36.8 million of variable rate tax-exempt bonds, $338.0 million of fixed rate unsecured notes, $4.0 million of tax-exempt fixed rate mortgages, and $86.5 million under our unsecured credit facility.
We expect to meet our liquidity requirements over the next twelve months, including recurring capital expenditures relating to maintaining our existing communities, primarily through our working capital, net cash provided by operating activities and borrowings under our unsecured credit facility. We consider our cash provided by operating activities to be adequate to meet operating requirements and payments of dividends and distributions during the next twelve months. We expect to meet our long-term liquidity requirements, 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.
Credit Facility
We have a syndicated unsecured line of credit in the amount of $225.0 million. The unsecured credit facility provides funds for new development, acquisitions and general working capital purposes. Loans under the unsecured credit facility initially bear interest at LIBOR plus 100 basis points based upon our 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 of an upgrade of our unsecured credit rating. The unsecured credit facility also provides a bid option sub-facility equal to a maximum of 50% of the total facility ($112.5 million). This sub-facility provides us with the option to place borrowings in a fixed LIBOR contract up to 180 days. The credit facility's initial three-year term was scheduled to expire on September 26, 2003. On July 6, 2001, we closed on a one-year extension option, subject to the satisfaction of certain conditions, under the credit facility. The new maturity date is September 26, 2004. All other terms and covenants remain unchanged.
Medium-Term Notes
On April 20, 2000, we commenced a new program for the sale by the Operating Partnership of up to $250.0 million aggregate principal amount of medium-term notes due nine months or more from the date of issuance. During the six months ended June 30, 2001, the Operating Partnership issued medium-term notes with an aggregate principal amount of $60.0 million in connection with the new MTN program, including (a) $25.0 million of notes which are due on May 9, 2006 and bear interest at 7.04% per year and (b) $35.0 million of notes which are due on May 9, 2011 and bear interest at 7.703% per year. We had medium-term notes with an aggregate principal amount of $112.0 million outstanding in connection with the new MTN program at June 30, 2001.
On May 29, 1998, we established a program for the sale by the Operating Partnership of up to $95.0 million aggregate principal amount of medium-term notes due nine months or more from the date of issuance. We had medium-term notes with an aggregate principal amount of $55.0 million outstanding in connection with this MTN program at June 30, 2001. On July 30, 2001, one of the medium-term notes in the principal amount of $30 million matured and was repaid. As a result of the commencement of the $250.0 million MTN program, we cannot issue any additional notes under the $95.0 million MTN program.
Derivative Financial Instruments
We are exposed to market risk, such as changes in interest rates. To manage the volatility relating to interest rate risk, we may enter into interest rate hedging arrangements from time to time. We do not utilize derivative financial instruments for trading or speculative purposes.
On January 1, 2001, we adopted Statement of Financial Accounting Standard No. 133, "Accounting for Derivative Instruments and Hedging Activities," as amended. FAS 133 establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. It requires that entities recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. The cumulative effect of adopting FAS 133 was not material to our financial statements.
At June 30, 2001, we had one interest rate swap with a notional amount of $30.0 million, relating to $30.0 million of 6.625% fixed rate notes issued under our MTN Program. Under the interest rate swap agreement, through the maturity date of December 15, 2003, (a) we have agreed to pay to the counterparty the interest on a $30.0 million notional amount at a floating interest rate of three-month LIBOR plus 11 basis points, and (b) the counterparty has agreed to pay to us the interest on the same notional amount at the fixed rate. The floating rate at June 30, 2001 was 4.00%. The fair value of the interest rate swap was $1.1 million at June 30, 2001. The swap has been designated as a fair value hedge of the underlying fixed rate debt obligation and has been recorded as a reduction of the related debt instrument. We assume no ineffectiveness as the interest rate swap meets the short-cut method conditions required under FAS 133 for fair value hedges of debt instruments. Accordingly, no gains or losses were recorded in income relative to our underlying debt and interest rate swap.
Preferred Units
As of June 30, 2001, the Operating Partnership had outstanding 3.4 million preferred units of limited partnership interest designated as 8.95% Series B Cumulative Redeemable Perpetual Preferred Units. These preferred units are redeemable by the Operating Partnership on or after April 29, 2004 for cash, or at our option, shares of our 8.95% Series B Cumulative Redeemable Perpetual Preferred Stock, or a combination of cash and stock. Holders of the Series B preferred units have the right to exchange these preferred units for shares of our Series B preferred stock on a one-for-one basis, subject to adjustment: (a) on or after April 29, 2009, (b) if full quarterly distributions are not made for six quarters, or (c) upon the occurrence of specified events related to the treatment of the Operating Partnership or the preferred units for federal income tax purposes. 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 year of the $25.00 original capital contribution. We made distributions to the holders of the Series B preferred units in the aggregate amount of $3.8 million during each of the six month periods ended June 30, 2001 and 2000.
As of June 30, 2001, the Operating Partnership had outstanding 2.2 million preferred units of limited partnership interest designated as 8.75% Series C Cumulative Redeemable Perpetual Preferred Units. The preferred units are redeemable by the Operating Partnership on or after September 3, 2004 for cash. Holders of the Series C preferred units have the right to exchange these preferred units for shares of our Series C preferred stock on a one-for-one basis, subject to adjustment: (a) on or after September 3, 2009, (b) if full quarterly distributions are not made for six quarters, (c) upon the occurrence of specified events related to the treatment of the Operating Partnership or the preferred units for federal income tax purposes, or (d) if the holdings in the Operating Partnership of the Series C unitholder exceed 18% of the total profits of or capital
interest in the Operating Partnership for a taxable year. Distributions on the Series C preferred units are cumulative from the date of original issuance and are payable quarterly at the rate of 8.75% per year of the $25.00 original capital contribution. We made distributions to the holder of the Series C preferred units in the aggregate amount of $2.4 million during each of the six month periods ended June 30, 2001 and 2000.
Common Stock Repurchase Program
On March 12, 2000, our Board of Directors authorized a common stock repurchase program pursuant to which we are authorized to purchase up to an aggregate of $25.0 million of currently issued and outstanding shares of our common stock. All repurchases have been, and will be, made on the open market at prevailing prices or in privately negotiated transactions. This authority may be exercised from time to time and in such amounts as market conditions warrant. We did not repurchase any shares of our common stock during the six months ended June 30, 2001. During the year ended December 31, 2000, we repurchased 279,400 shares of our common stock under the common stock repurchase program for an aggregate purchase price, including commissions, of $5.5 million, or an average price of $19.80 per share.
During 2000, we completed a common stock repurchase program pursuant to which we were authorized to purchase up to an aggregate of $50.0 million of our common stock. The total number of shares of our common stock repurchased under this program was 2.5 million shares for an aggregate purchase price, including commissions, of $50.0 million, or an average price of $19.63 per share.
Employee Loan Program
Our Board of Directors believes that ownership of our common stock by our executive officers and certain other qualified employees will align the interests of these officers and employees with the interests of our stockholders. To this end, our Board of Directors approved, and we instituted, a loan program under which we may lend amounts to certain of our executive officers and other qualified employees to (a) finance the purchase of our common stock on the open market at then-current market prices, (b) finance the payment of the exercise price of one or more stock options to purchase shares of our common stock, or (c) finance the annual tax liability or other expenses of an executive officer related to the vesting of shares of common stock which constitute a portion of a restricted stock award granted to the executive officer. We have amended the terms of the loan program from time to time since its inception in 1997. The relevant officer or employee has executed a Promissory Note and Security Agreement related to each loan extended. These 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 our common stock which are the subject of the loans.
COMMUNITIES BEING MARKETED FOR SALE
At June 30, 2001, we had four apartment communities and one parcel of land under contract for sale as part of our strategy to exit our non-core markets. The net book value of these communities and land was $73.4 million at June 30, 2001. We anticipate recording a net gain upon the sale of this real estate. Proceeds from the sale of the communities are expected to be used to fund future development. The four apartment communities held for sale represented 4.1% of property operating income for all of our communities for the three and six months ended June 30, 2001. The sale of each of these communities and land is subject to customary closing conditions. We cannot assure you that these communities or other communities that we market for sale will be sold in a timely manner, on favorable terms or at all.
Station Hill had one community under contract for sale at June 30, 2001. The net book value of the community was $10.2 million at June 30, 2001 and it represented 14.3% and 14.2% of Station Hill's property operating income for the three and six months ended June 30, 2001, respectively. Station Hill does not expect to record a loss upon sale of this community.
DEVELOPMENT ACTIVITY
Our construction in progress at June 30, 2001 is summarized as follows (dollars in thousands):
TOTAL ESTIMATED ANTICIPATED
APARTMENT ESTIMATED COST TO COST TO CONSTRUCTION
COMMUNITY HOMES COSTS DATE COMPLETE COMPLETION
--------- --------- --------- -------- --------- ------------
Summit Deerfield -- Cincinnati, OH (1)
(2)....................................... 498 $ 44,500 $ 41,516 $ 2,984 Q3 2001
Summit Overlook -- Raleigh, NC (1).......... 320 25,500 23,035 2,465 Q3 2001
Summit Crest -- Raleigh, NC (1)............. 438 30,700 30,428 272 Q3 2001
Summit Peachtree City -- Atlanta, GA (1).... 399 31,500 31,410 90 Q3 2001
Summit Grand Parc -- Washington, DC......... 105 29,400 17,933 11,467 Q1 2002
Summit Shiloh II -- Atlanta, GA............. 50 3,900 766 3,134 Q2 2002
Summit Brookwood -- Atlanta, GA............. 359 41,500 10,759 30,741 Q4 2002
Summit Valley Brook -- Philadelphia, PA..... 352 37,000 13,338 23,662 Q1 2003
Other development and construction costs
(3)....................................... -- -- 63,000 --
----- -------- -------- -------
2,521 $244,000 $232,185 $74,815
===== ======== ======== =======
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(1) These communities were in lease-up at June 30, 2001.
(2) Summit Deerfield is under contract for sale, expected in 2001, as part of
our strategy to exit the midwest markets. We do not expect to realize a loss
upon sale of Summit Deerfield, which is subject to customary closing
conditions.
(3) Consists primarily of land held for development and other pre-development
costs.
Estimated costs to complete the development communities represent substantially all of our material commitments for capital expenditures at June 30, 2001.
Certain Factors Affecting the Performance of Development Communities
We are optimistic about the operating prospects of the communities under construction. However, as with any development effort, there are uncertainties and risks associated with the communities described above. While we have prepared development budgets and have estimated completion and stabilization target dates based on what we believe are reasonable assumptions in light of current conditions, there can be no assurance that actual costs will not exceed current budgets or that we will not experience construction delays due to the unavailability of materials, weather conditions or other events.
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, we are conducting feasibility and other pre-development work for nine communities. We could abandon the development of any one or more of these potential communities in the event that we determine that market conditions do not support development, financing is not available on favorable terms or other circumstances exist which may prevent development. Similarly, there can be no assurance that, if we do pursue one or more of these potential communities, we will be able to complete construction within the currently estimated development budgets or construction can be started at the time currently anticipated.
COMMITMENTS AND CONTINGENCIES
The estimated cost to complete eight development projects currently under construction was $74.8 million at June 30, 2001. Anticipated construction completion dates of the projects range from the third quarter of 2001 to the first quarter of 2003.
On January 19, 2000, we entered into a Real Estate Purchase Agreement with a third-party real estate developer. Under the terms of the agreement, we have agreed to purchase a "Class A" mixed-use community, which will be called Summit Brickell and will be located in Miami, Florida. We expect to close on the purchase of Summit Brickell during the second half of 2002 following its completion and achievement of 85% occupancy. The final purchase price will be determined based on actual construction costs plus a bonus to the developer based on the capitalized income of the property at the time of purchase. The purchase price is expected to range from $50.5 million to $60.0 million. The purchase price of Summit Brickell is subject to customary closing conditions. We issued a letter of credit in the amount of $13.0 million, which serves as a credit enhancement to the developer's construction loan. In the event that any amount under the letter of credit is drawn upon, we 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 18% per year.
We have an employment agreement with one of our former executive officers who resigned from such executive position but will remain as an employee, and has agreed to provide various services to us from time to time over the next ten years. The employment agreement requires that we pay this former officer a base salary aggregating up to $2.1 million over the period from July 1, 2001 to December 31, 2011. Either party can terminate the employment agreement, effective 20 business days after written notice is given. The full base salary amount shall be payable through 2011 whether or not the agreement is terminated earlier in accordance with its terms.
FUNDS FROM OPERATIONS
We consider funds from operations ("FFO") to be an appropriate measure of performance of an equity REIT. We compute 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). Our 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 our financial performance or to cash flows from operating activities (determined in accordance with GAAP) as a measure of our liquidity, nor are they indicative of funds available to fund our cash needs, including our ability to make dividend or distribution payments. We believe FFO and FAD are helpful to investors as measures of our performance because, along with cash flows from operating activities, financing activities and investing activities, they provide investors with an understanding of our ability to incur and service debt and make capital expenditures.
FFO and FAD for the three and six months ended June 30, 2001 and 2000 are calculated as follows (dollars in thousands):
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------- -------------------------
2001 2000 2001 2000
----------- ----------- ----------- -----------
Net income.................................. $ 16,217 $ 11,792 $ 24,273 $ 21,329
Minority interest of Unitholders in
Operating Partnership..................... 2,658 1,924 3,984 3,492
Gain on sale of real estate assets.......... (10,782) (5,446) (10,782) (7,886)
Gain on sale of real estate
assets -- Management Company.............. -- -- -- (238)
----------- ----------- ----------- -----------
Adjusted net income......................... 8,093 8,270 17,475 16,697
Depreciation:
Real estate assets........................ 9,961 9,326 19,347 18,178
Real estate joint venture................. 376 415 574 598
----------- ----------- ----------- -----------
Funds from Operations....................... 18,430 18,011 37,396 35,473
Recurring capital expenditures (1).......... (1,599) (1,563) (2,563) (2,515)
----------- ----------- ----------- -----------
Funds Available for Distribution............ $ 16,831 $ 16,448 $ 34,833 $ 32,958
=========== =========== =========== ===========
Non-recurring capital expenditures (2)...... $ 1,569 $ 395 $ 3,699 $ 1,338
=========== =========== =========== ===========
Cash Flow Provided By (Used In):
Operating Activities...................... $ 21,591 $ 21,344 $ 36,730 $ 32,876
Investing Activities...................... (7,770) (23,336) (13,059) (34,390)
Financing Activities...................... (13,757) 1,414 (24,315) 335
Weighted average shares and units
outstanding -- basic...................... 31,099,292 30,531,837 31,050,037 30,668,869
=========== =========== =========== ===========
Weighted average shares and units
outstanding - diluted..................... 31,421,902 30,696,803 31,355,825 30,787,712
=========== =========== =========== ===========
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(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 FAD.
(2) Non-recurring capital expenditures for the six months ended June 30, 2001
and 2000 primarily consist of: $542,000 and $1.1 million for major
renovations in 2001 and 2000, respectively; $115,000 and $53,000 for access
gates and security fences in 2001 and 2000, respectively; $1.4 million and
$80,000 in other revenue enhancement expenditures in 2001 and 2000,
respectively and $1.6 million in fixed asset additions including management
information systems expenditures and other property improvements during the
six months ended June 30, 2001.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There has been no material change in our market risk since the filing of our Annual Report on Form 10-K for the year ended December 31, 2000.
PART II
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On May 8, 2001, we held our 2001 annual meeting of stockholders. At the annual meeting, our stockholders were asked to consider a proposal to elect two Class I directors to serve until the 2004 annual meeting and until their respective successors are duly elected and qualified. James H. Hance, Jr. and Henry H. Fishkind were nominated by the Board of Directors to serve as Class I directors. Mr. Hance received 19,879,277 votes in favor of his election with 2,093,976 votes withheld; and Mr. Fishkind received 20,651,980 votes in favor of his election with 1,321,273 votes withheld. As a result, Messrs. Hance and Fishkind were elected as Class I directors to serve until the 2004 annual meeting and until their respective successors are duly elected and qualified.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
*10.1 Employment Agreement dated February 15, 1999, by and among
William F. Paulsen, Summit Properties Inc. and Summit
Management Company, as restated on April 3, 2001.
*10.2 7.04% Medium-Term Note due 2006 in the principal amount of
$25,000,000 issued by the Operating Partnership on May 9,
2001.
*10.3 7.703% Medium-Term Note due 2011 in the principal amount of
$35,000,000 issued by the Operating Partnership on May 9,
2001.
*10.4 Amendment No. 1 to Amended and Restated Credit Agreement
dated as of July 6, 2001, by and among the Operating
Partnership, Summit Properties Inc. and the lenders named
therein.
*12.1 Statement Regarding Calculation of Ratio of Earnings to
Fixed Charges for the six months ended June 30, 2001.
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* Filed herewith
(b) Reports on Form 8-K
We did not file any reports on Form 8-K during the second quarter of 2001.
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.
SUMMIT PROPERTIES INC.
August 9, 2001 /s/ STEVEN R. LEBLANC
-------------------------------------------- --------------------------------------------
(Date) Steven R. LeBlanc,
Chief Executive Officer
August 9, 2001 /s/ MICHAEL L. SCHWARZ
-------------------------------------------- --------------------------------------------
(Date) Michael L. Schwarz,
Executive Vice President -- Operations
and Chief Financial Officer
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Exhibit 10.1
EMPLOYMENT AGREEMENT
THE EMPLOYMENT AGREEMENT (the "Agreement"), made and entered into on this 15th day of February, 1999, by and between WILLIAM F. PAULSEN, 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," is hereby restated as follows this 3rd day of April, 2001;
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 as an officer of the Company in the capacity of Chief Executive Officer of Summit Properties Inc. and Vice President of 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. (the "Board") or as may otherwise be provided in such Bylaws. Through June 30, 2001 Executive shall devote 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. Effective July 1, 2001, Executive agrees to resign from all of his executive positions with the Company, but Executive shall remain an employee and shall provide such services as requested by the Board or the Chief Executive Officer of Summit Properties Inc. from time to time. The Company acknowledges that effective July 1, 2001, (i) Executive will not be required 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 dated as of February 15, 2000 (the "Noncompetition Agreement").
2.
Compensation; Expenses
2.1 Base Salary. Executive's current Base Salary is Four Hundred Forty Thousand dollars ($440,000.00) per annum and will remain at this level through June 30, 2001. Effective July 1, 2001, Executive's Base Salary shall be reduced to Two Hundred Twenty Thousand dollars ($220,000.00) per annum. Effective January 1, 2002 and for the balance of the Term, Executive's Base Salary shall be reduced to Two Hundred Thousand dollars ($200,000.00) per annum unless Executive ceases to be an employee member of the Board of Directors of the Company, in which case Executive's base salary shall be reduced to one hundred seventy five thousand dollars ($175,000) 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 Company provides for Executive, Executive is currently 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. Effective January 1, 2002, Executive shall no longer be eligible to participate in such plans for senior executive officers with respect to his service on and after January 1, 2002.
2.3 Stock Options. Executive shall at the discretion of the Board 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. So long as Executive remains a member of the Board, the Company shall use reasonable efforts in recommending to the Board the grant of options to Executive in such amounts and at such times as those options received by non-employee members of the Board. All existing equity based incentives held by Executive shall remain in place and continue with their current vesting schedule.
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.
2.6 Office Space and Secretarial and MIS Support. During the Term of this Agreement, Executive shall have the use of his current or comparable office space, comparable secretarial and comparable MIS support at the expense of the Company.
2.7 Vacation. In addition to Company holidays, Executive is currently entitled to 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. Effective January 1, 2002, Executive shall be subject to the vacation policies of the Company for employees who are not executive officers.
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 until December 31, 2001.
3.
Term of Employment
3.1 Term. The Term of this Agreement shall run until December 31, 2011. Subject to the provisions of Section 4 below, upon 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.
Compensation upon Termination of Employment
In the event Executive's employment with the Company is terminated; 1) by the Company or Executive for any reason prior to the expiration of the Term or, 2) upon expiration of the Term, Executive shall be entitled to receive the following:
(i) Base Salary. The Company shall continue to pay Executive's Base Salary for the remainder of the Term to the extent termination has occurred prior to the expiration of the Term.
(ii) Stock Options. All stock options and restricted stock held by Executive shall become fully vested upon his termination of employment, and subject to the terms of the Company's Amended and Restated 1994 Stock Option and Incentive Plan, all such stock options shall remain outstanding for the remainder of their original terms.
(iii) Stock Loans. Any loan from the Company to Executive pursuant to the Company's Employee Loan Plan shall continue in place for the remainder of its term.
(iv) Employee Benefit Plans. If termination occurs prior to the end of the Term, Executive and, if applicable, eligible dependents shall continue to participate in the Company's health, dental, disability, and life plans for the remainder of the Term on the same terms and conditions as an active employee. At the end of the Term, Executive may elect to continue in the Company's life insurance plan for his life, and Executive and eligible dependents may elect to continue in the Company's health and dental plans until the last to die of him and his spouse at a cost no greater than the group rates applicable to active employees in effect from time to time. Notwithstanding the foregoing, Executive's continuation in the foregoing plans is subject to the ability of the Company to make such coverage available on a commercially reasonable basis.
(v) Office Space and Secretarial and MIS Support. For the remainder of his life, Executive shall continue to have the use of his then current or comparable office space, comparable secretarial and comparable MIS support at the expense of the Company.
5.
Miscellaneous
5.1. 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.
5.2. Construction of Agreement. No provision of this Agreement or any related 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.
5.3. 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.
5.4. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of North Carolina.
5.5. 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.
5.6. 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.
5.7. 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 F. Paulsen 41 Rivermarsh Lane Kiawah Island, SC 29455
(b) If to the Company, addressed to:
Summit Properties Inc. 212 South Tryon Street, Suite 500 Charlotte, North Carolina 28281 Attn: Michael G. Malone
5.8. 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.
5.9. Entire Agreement. This Agreement, together with the Noncompetition Agreement, Indemnification Agreement, and Executive Severance Agreement, which said agreement shall terminate on June 30, 2001, constitute the entire agreement of the parties with respect to the subject matter hereof and upon the date first written above, 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.
SUMMIT MANAGEMENT COMPANY
By: /S/ STEVEN R. LeBLANC
---------------------
Name: Steven R. LeBlanc
Title: Vice President
|
Collectively, the "Company"
/S/ WILLIAM F. PAULSEN [SEAL] ---------------------------- William F. Paulsen |
"Executive"
Exhibit 10.2
[FACE OF NOTE]
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (THE "DEPOSITARY") (55 WATER STREET, NEW YORK, NEW YORK) TO THE ISSUER HEREOF OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY AND ANY PAYMENT IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN CERTIFICATED FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.
REGISTERED $25,000,000
No. FXR-07
CUSIP: 86623XAG8
SUMMIT PROPERTIES PARTNERSHIP, L.P.
MEDIUM-TERM NOTE
(Fixed Rate)
ORIGINAL ISSUE DATE: 5/9/2001 INTEREST RATE: 7.04% STATED MATURITY
INTEREST PAYMENT DEFAULT RATE: N/A DATE: 5/9/2006
DATE(S): 5/9 and 11/9
Other:
INITIAL REDEMPTION INITIAL REDEMPTION ANNUAL REDEMPTION
DATE: N/A PERCENTAGE: N/A PERCENTAGE
REDUCTION: N/A
OPTIONAL REPAYMENT [ ] CHECK IF AN
DATE(S): N/A ORIGINAL ISSUE
|
DISCOUNT NOTE Issue
Price: %
REPAYMENT PRICE: N/A
|
SPECIFIED CURRENCY: AUTHORIZED EXCHANGE RATE
[X] United States dollars DENOMINATION: AGENT: N/A
[ ] Other: [X] $1,000 and integral
multiples thereof
[ ] Other:
EXCHANGE RATE: ADDENDUM ATTACHED: OTHER/ADDITIONAL
U.S. $1.00 = _________ [ ] Yes PROVISIONS: N/A
[X] No
|
Summit Properties Partnership, L.P., a limited partnership duly organized and existing under the laws of Delaware (hereinafter referred to as the "Partnership," which term includes any successor entity under the Indenture hereinafter referred to), for value received, hereby promises to pay to CEDE & COMPANY, or registered assigns, the principal sum of $25,000,000, on the Stated Maturity Date specified above (or any Redemption Date or Repayment Date, each as defined on the reverse hereof) (each such Stated Maturity Date, Redemption Date or Repayment Date being hereinafter referred to as the "Maturity Date" with respect to the principal repayable on such date) and to pay interest thereon, at the Interest Rate per annum specified above, until the principal hereof is paid or duly made available for payment, and (to the extent that the payment of such interest shall be legally enforceable) at the Default Rate per annum specified above on any overdue principal, premium and/or interest, including any overdue sinking fund or redemption payment. The Partnership will pay interest in arrears on each Interest Payment Date, if any, specified above (each, an "Interest Payment Date"), commencing with the first Interest Payment Date next succeeding the Original Issue Date specified above, and on the Maturity Date; provided, however, that if the Original Issue Date occurs between a Record Date (as defined below) and the next succeeding Interest Payment Date, interest payments will commence on the second Interest Payment Date next succeeding the Original Issue Date to the holder of this Note on the Record Date with respect to such second Interest Payment Date. Interest on this Note will be computed on the basis of a 360-day year of twelve 30-day months.
Interest on this Note will accrue from, and including, the immediately preceding Interest Payment Date to which interest has been paid or duly provided for (or from, and including, the Original Issue Date if no interest has been paid or duly provided for) to, but excluding, the applicable Interest Payment Date or the Maturity Date, as the case may be (each, an "Interest Period"). The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, subject to certain exceptions described herein, be paid to the person in whose name this Note (or one or more predecessor Notes) is registered at the close of business on the fifteenth calendar day (whether or not a Business Day, as defined below) immediately preceding such Interest Payment Date (the "Record Date"); provided, however, that interest payable on the Maturity Date will be payable to the person to whom the principal hereof and premium, if any, hereon shall be payable. Any such interest not so punctually paid or duly provided for ("Defaulted Interest") will forthwith cease to be payable to the holder on any Record Date, and shall be paid to the person in whose name this Note is registered at the close of business on a special record date (the "Special Record Date") for the payment of such Defaulted Interest to be fixed by the Trustee hereinafter referred to, notice whereof shall be given to the holder of this Note by the Trustee not more than 15 days and not less than 10 days prior to such Special Record
Date or may be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which this Note may be listed, and upon such notice as may be required by such exchange, all as more fully provided for in the Indenture.
Payment of principal, premium, if any, and interest in respect of this Note due on the Maturity Date or any prior date on which the principal or an installment of principal of this Note becomes due and payable, whether by the declaration of acceleration or otherwise, will be made in immediately available funds upon presentation and surrender of this Note (and, with respect to any applicable repayment of this Note, upon presentation and surrender of this Note and a duly completed election form as contemplated on the reverse hereof) at the office or agency maintained by the Partnership for that purpose in the Borough of Manhattan, The City of New York, currently the office of the Trustee or the Designated Agent; provided, however, that if the Specified Currency specified above is other than United States dollars and such payment is to be made in the Specified Currency in accordance with the provisions set forth below, such payment may be made by wire transfer of immediately available funds to an account with a bank designated by the holder hereof at least 15 calendar days prior to the Maturity Date, provided that such bank has appropriate facilities therefor and that this Note (and, if applicable, a duly completed repayment election form) is presented and surrendered at the aforementioned office or agency maintained by the Partnership in time for the Trustee or the Designated Agent to make such payment in such funds in accordance with its normal procedures. Payment of interest due on any Interest Payment Date other than the Maturity Date will be made at the aforementioned office or agency maintained by the Partnership or, at the option of the Partnership, by check mailed to the address of the person entitled thereto as such address shall appear in the Security Register maintained by the Trustee or the Designated Agent; provided, however, that a holder of U.S. $10,000,000 (or, if the Specified Currency is other than United States dollars, the equivalent thereof in the Specified Currency) or more in aggregate principal amount of Notes (whether having identical or different terms and provisions) will be entitled to receive interest payments on any Interest Payment Date other than the Maturity Date by wire transfer of immediately available funds if appropriate wire transfer instructions have been received in writing by the Trustee or Designated Agent not less than 15 calendar days prior to such Interest Payment Date. Any such wire transfer instructions received by the Trustee or the Designated Agent shall remain in effect until revoked by such holder.
If any Interest Payment Date or the Maturity Date falls on a day that is not a Business Day, the required payment of principal, premium, if any, and/or interest shall be made on the next succeeding Business Day with the same force and effect as if made on the date such payment was due, and no interest shall accrue with respect to such payment for the period from and after such Interest Payment Date or the Maturity Date, as the case may be, to the date of such payment on the next succeeding Business Day.
As used herein, "Business Day" means any day, other than a Saturday or Sunday, that is neither a legal holiday nor a day on which banking institutions are authorized or required by law, regulation or executive order to close in The City of New York or Charlotte, North Carolina; provided, however, that if the Specified Currency is other than United States dollars, such day is also not a day on which banking institutions are authorized or required by law, regulation or executive order to close in the Principal Financial Center (as defined below) of the country issuing the Specified Currency (or, if the Specified Currency is European Currency Units
("ECU"), such day is not a day that appears as an ECU no-settlement day on the display designated as "ISDE" on the Reuter Monitor Money Rates Service (or a day so designated by the ECU Banking Association), or, if ECU non-settlement days do not appear on that page (and are not so designated), is not a day on which payments in ECU cannot be settled in the international interbank market). Principal Financial Center means the capital city of the country issuing the Specified Currency, except that with respect to United States dollars, Australian dollars, Deutsche marks, Dutch guilders, Italian lire, Portuguese escudos, South African rand and Swiss francs, the Principal Financial Center shall be The City of New York, Sydney, Toronto, Frankfurt, Amsterdam, Milan, London, Johannesburg and Zurich, respectively.
The Partnership is obligated to make payments of principal, premium, if any, and interest in respect of this Note in the Specified Currency (or, if the Specified Currency is not at the time of such payment legal tender for the payment of public and private debts, in such other coin or currency of the country which issued the Specified Currency as at the time of such payment is legal tender for the payment of such debts). If the Specified Currency is other than United States dollars, except as provided below, any such amounts so payable by the Partnership will be converted by the Exchange Rate Agent specified above into United States dollars for payment to the holder of this Note.
If the Specified Currency is other than United States dollars, the holder of this Note may elect to receive such amounts in such Specified Currency. If the holder of this Note shall not have duly made an election to receive all or a specified portion of any payment of principal, premium, if any, and/or interest in respect of this Note in the Specified Currency, any United States dollar amount to be received by the holder of this Note will be based on the highest bid quotation in The City of New York received by the Exchange Rate Agent at approximately 11:00 A.M., The City of New York time, on the second Business Day preceding the applicable payment date from three recognized foreign exchange dealers (one of whom may be the Exchange Rate Agent) selected by the Exchange Rate Agent and approved by the Partnership for the purchase by the quoting dealer of the Specified Currency for United States dollars for settlement on such payment date in the aggregate amount of such Specified Currency payable to all holders of Foreign Currency Notes scheduled to receive United States dollar payments and at which the applicable dealer commits to execute a contract. All currency exchange costs will be borne by the holder of this Note by deductions from such payments. If three such bid quotations are not available, payments on this Note will be made in the Specified Currency.
If the Specified Currency is other than United States dollars, the holder of this Note may elect to receive all or a specified portion of any payment of principal, premium, if any, and/or interest in respect of this Note in the Specified Currency by submitting a written request for such payment to the Trustee or the Designated Agent at its corporate trust office in The City of New York on or prior to the applicable Record Date or at least 15 calendar days prior to the Maturity Date, as the case may be. Such written request may be mailed or hand delivered or sent by cable, telex or other form of facsimile transmission. The holder of this Note may elect to receive all or a specified portion of all future payments in the Specified Currency in respect of such principal, premium, if any, and/or interest and need not file a separate election for each payment. Such election will remain in effect until revoked by written notice to the Trustee or the Designated Agent, but written notice of any such revocation must be received by the Trustee or the
Designated Agent on or prior to the applicable Record Date or at least 15 calendar days prior to the Maturity Date, as the case may be.
If the Specified Currency is other than United States dollars or a composite currency and the holder of this Note shall have duly made an election to receive all or a specified portion of any payment of principal, premium, if any, and/or interest in respect of this Note in the Specified Currency and if the Specified Currency is not available due to the imposition of exchange controls or other circumstances beyond the reasonable control of the Partnership, the Partnership will be entitled to satisfy its obligations to the holder of this Note by making such payment in United States dollars on the basis of the Market Exchange Rate (as defined below) on the second Business Day prior to such payment date or, if such Market Exchange Rate is not then available, on the basis of the most recently available Market Exchange Rate or as otherwise specified on the face hereof. The "Market Exchange Rate" for the Specified Currency means the noon dollar buying rate in The City of New York for cable transfers for such Specified Currency as certified for customs purposes by (or if not so certified, as otherwise determined by) the Federal Reserve Bank of New York. Any payment made under such circumstances in United States dollars will not constitute an Event of Default (as defined in the Indenture) with respect to this Note.
If the Specified Currency is a composite currency and the holder of this Note shall have duly made an election to receive all or a specified portion of any payment of principal, premium, if any, and/or interest in respect of this Note in the Specified Currency and if such composite currency is unavailable due to the imposition of exchange controls or other circumstances beyond the reasonable control of the Partnership, then the Partnership will be entitled to satisfy its obligations to the holder of this Note by making such payment in United States dollars. The amount of each payment in United States dollars shall be computed by the Exchange Rate Agent on the basis of the equivalent of the composite currency in United States dollars. The component currencies of the composite currency for this purpose (collectively, the "Component Currencies" and each, a "Component Currency") shall be the currency amounts that were components of the composite currency as of the last day on which the composite currency was used. The equivalent of the composite currency in United States dollars shall be calculated by aggregating the United States dollar equivalents of the Component Currencies. The United States dollar equivalent of each of the Component Currencies shall be determined by the Exchange Rate Agent on the basis of the most recently available Market Exchange Rate for each such Component Currency, or as otherwise specified on the face hereof.
If the official unit of any Component Currency is altered by way of combination or subdivision, the number of units of the currency as a Component Currency shall be divided or multiplied in the same proportion. If two or more Component Currencies are consolidated into a single currency, the amounts of those currencies as Component Currencies shall be replaced by an amount in such single currency equal to the sum of the amounts of the consolidated Component Currencies expressed in such single currency. If any Component Currency is divided into two or more currencies, the amount of the original Component Currency shall be replaced by the amounts of such two or more currencies, the sum of which shall be equal to the amount of the original Component Currency.
All determinations referred to above made by the Exchange Rate Agent shall be at its sole discretion and shall, in the absence of manifest error, be conclusive for all purposes and binding on the holder of this Note.
Reference is hereby made to the further provisions of this Note set forth on the reverse hereof and, if so specified above on the face hereof, in the Addendum hereto, which further provisions shall have the same force and effect as if set forth on the face hereof.
Notwithstanding any provisions to the contrary contained herein, if the face of this Note specifies that an Addendum is attached hereto or that "Other/Additional Provisions" apply to this Note, this Note shall be subject to the terms set forth in such Addendum or such "Other/Additional Provisions."
Unless the Certificate of Authentication hereon has been executed by the Trustee or its Authenticating Agent by manual signature, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, Summit Properties Partnership, L.P. has caused this Note to be duly executed under its seal.
Dated: May 9, 2001 SUMMIT PROPERTIES PARTNERSHIP, L.P.
By: Summit Properties Inc.,
its General Partner
By: /s/ Michael L. Schwarz
-----------------------------------
Michael L. Schwarz
Executive Vice President and
Chief Financial Officer
|
(SEAL)
Attest:
/s/ Michael G. Malone --------------------- Michael G. Malone Secretary |
TRUSTEE'S CERTIFICATE OF AUTHENTICATION:
This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.
Dated: May 9, 2001 FIRST UNION NATIONAL BANK,
as Trustee
By: /s/ Paul F. Anatrella
--------------------------------
Authorized Signatory
|
[REVERSE OF NOTE]
SUMMIT PROPERTIES PARTNERSHIP, L.P.
MEDIUM-TERM NOTE
(Fixed Rate)
This Note is one of a duly authorized series of Securities (the "Securities") of the Partnership issued and to be issued under an Indenture, dated as of August 7, 1997 as supplemented by Supplemental Indenture No. 4 dated as of April 20, 2000, as further amended, modified or supplemented from time to time (the "Indenture"), between the Partnership and First Union National Bank, as Trustee (the "Trustee," which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Partnership, the Trustee and the holders of the Securities, and of the terms upon which the Securities are, and are to be, authenticated and delivered. This Note is one of the series of Securities designated as "Medium-Term Notes Due Nine Months or More from Date of Issue" (the "Notes"). All terms used but not defined in this Note or in an Addendum hereto shall have the meanings assigned to such terms in the Indenture or on the face hereof, as the case may be.
This Note is issuable only in registered form without coupons in minimum denominations of U.S. $1,000 and integral multiples thereof or the minimum Authorized Denomination specified on the face hereof.
This Note will not be subject to any sinking fund and, unless otherwise specified on the face hereof in accordance with the provisions of the following two paragraphs, will not be redeemable or repayable prior to the Stated Maturity Date.
This Note will be subject to redemption at the option of the Partnership on any date on and after the Initial Redemption Date, if any, specified on the face hereof, in whole or from time to time in part in increments of U.S. $1,000 or the minimum Authorized Denomination (provided that any remaining principal amount hereof shall be at least U.S. $1,000 or such minimum Authorized Denomination), at the Redemption Price (as defined below), together with unpaid interest accrued thereon to the date fixed for redemption (each, a "Redemption Date"), on notice given not more than 60 nor less than 30 calendar days prior to the Redemption Date and in accordance with the provisions of the Indenture. The "Redemption Price" shall initially be the Initial Redemption Percentage specified on the face hereof multiplied by the unpaid principal amount of this Note to be redeemed. The Initial Redemption Percentage shall decline at each anniversary of the Initial Redemption Date by the Annual Redemption Percentage Reduction, if any, specified on the face hereof until the Redemption Price is 100% of the unpaid principal amount to be redeemed. In the event of redemption of this Note in part only, a new Note of like tenor for the unredeemed portion hereof and otherwise having the same terms as this Note shall be issued in the name of the holder hereof upon the presentation and surrender hereof.
This Note will be subject to repayment by the Partnership at the option of the holder hereof on the Optional Repayment Date(s), if any, specified on the face hereof, in whole or in part in increments of U.S. $1,000 or the minimum Authorized Denomination (provided that any remaining principal amount hereof shall be at least U.S. $1,000 or such minimum Authorized
Denomination), at a repayment price equal to 100% of the unpaid principal amount to be repaid, together with unpaid interest accrued thereon to the date fixed for repayment (each, a "Repayment Date"). For this Note to be repaid, the Trustee or the Designated Agent must receive at its office in the Borough of Manhattan, The City of New York, referred to on the face hereof, at least 30 days but not more than 60 days prior to the Repayment Date (i) this Note and the form hereon entitled "Option to Elect Repayment" duly completed or (ii) a telegram, telex, facsimile transmission, or a letter from a member of a national securities exchange or the National Association of Securities Dealers, Inc. or a commercial bank or trust company in the United States setting forth the name of the holder hereof, the principal amount of this Note, the principal amount of this Note to be repaid, the certificate number or a description of the tenor and terms of this Note, a statement that the option to elect repayment is being exercised thereby, and a guarantee that this Note, together with the form hereon entitled "Option to Elect Repayment" duly completed, will be received by the Trustee or the Designated Agent not later than the fifth Business Day after the date of such telegram, telex, facsimile transmission or letter, provided that such telegram, telex, facsimile transmission or letter shall only be effective if this Note and duly completed form are received by the Trustee or the Designated Agent by such fifth Business Day. Exercise of such repayment option by the holder hereof will be irrevocable. In the event of repayment of this Note in part only, a new Note of like tenor for the unrepaid portion hereof and otherwise having the same terms as this Note shall be issued in the name of the holder hereof upon the presentation and surrender hereof.
If this Note is an Original Issue Discount Note as specified on the
face hereof, the amount payable to the holder of this Note in the event of
redemption, repayment or acceleration of maturity of this Note will be equal to
the sum of (i) the Issue Price specified on the face hereof (increased by any
accruals of the Discount, as defined below) and, in the event of any redemption
of this Note (if applicable), multiplied by the Initial Redemption Percentage
(as adjusted by the Annual Redemption Percentage Reduction, if applicable) and
(ii) any unpaid interest on this Note accrued from the Original Issue Date to
the Redemption Date, Repayment Date or date of acceleration of maturity, as the
case may be. The difference between the Issue Price and 100% of the principal
amount of this Note is referred to herein as the "Discount."
For purposes of determining the amount of Discount that has accrued as of any Redemption Date, Repayment Date or date of acceleration of maturity of this Note, such Discount will be accrued using a constant yield method. The constant yield will be calculated using a 30-day month, 360-day year convention, a compounding period that, except for the Initial Period (as defined below), corresponds to the shortest period between Interest Payment Dates (with ratable accruals within a compounding period), a coupon rate equal to the initial coupon rate applicable to this Note and an assumption that the maturity of this Note will not be accelerated. If the period from the Original Issue Date to the initial Interest Payment Date (the "Initial Period") is shorter than the compounding period for this Note, a proportionate amount of the yield for an entire compounding period will be accrued. If the Initial Period is longer than the compounding period, then such period will be divided into a regular compounding period and a short period, with the short period being treated as provided in the preceding sentence.
If an Event of Default, as defined in the Indenture, shall occur and be continuing, the principal of the Notes may be declared due and payable in the manner and with the effect provided in the Indenture.
The Indenture contains provisions for defeasance of (i) the entire indebtedness of the Notes or (ii) certain covenants and Events of Default with respect to the Notes, in each case upon compliance with certain conditions set forth therein, which provisions apply to the Notes.
The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Partnership and the rights of the holders of the Securities at any time by the Partnership and the Trustee with the consent of the holders of not less than a majority of the aggregate principal amount of all Securities at the time outstanding and affected thereby. The Indenture also contains provisions permitting the holders of not less than a majority of the aggregate principal amount of the outstanding Securities of any series, on behalf of the holders of all such Securities, to waive compliance by the Partnership with certain provisions of the Indenture. Furthermore, provisions in the Indenture permit the holders of not less than a majority of the aggregate principal amount of the outstanding Securities of any series, in certain instances, to waive, on behalf of all of the holders of Securities of such series, certain past defaults under the Indenture and their consequences. Any such consent or waiver by the holder of this Note shall be conclusive and binding upon such holder and upon all future holders of this Note and other Notes issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof, whether or not notation of such consent or waiver is made upon this Note.
No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Partnership, which is absolute and unconditional, to pay principal, premium, if any, and interest in respect of this Note at the times, places and rate or formula, and in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein and herein set forth, the transfer of this Note is registrable in the Security Register of the Partnership upon surrender of this Note for registration of transfer at the office or agency of the Partnership in any place where the principal hereof and any premium or interest hereon are payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Partnership and the Security Registrar, duly executed by, the holder hereof or by his attorney duly authorized in writing, and thereupon one or more new Notes, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees.
As provided in the Indenture and subject to certain limitations therein and herein set forth, this Note is exchangeable for a like aggregate principal amount of Notes of different authorized denominations but otherwise having the same terms and conditions, as requested by the holder hereof surrendering the same.
No service charge shall be made for any such registration of transfer or exchange, but the Partnership may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer, the Partnership, the Trustee and any agent of the Partnership or the Trustee may treat the holder in whose name this Note is registered as the owner thereof for all purposes, whether or not this Note be overdue, and neither the Partnership, the Trustee nor any such agent shall be affected by notice to the contrary.
This Note and all documents, agreements, understandings and arrangements relating to any transaction contemplated hereby or thereby have been executed or entered into by the undersigned in his/her capacity as an officer of the sole general partner of the Partnership which has been formed as a Delaware limited partnership, and not individually, and neither the general partner, officers, employees or limited partners of the Partnership shall be bound or have any personal liability hereunder or thereunder. The holder of this Note by accepting this Note waives and releases all such liability. This waiver and release are part of the consideration for the issue of this Note. Each party hereto shall look solely to the assets of the Partnership for satisfaction of any liability of the Partnership in respect of this Note and all documents, agreements, understandings and arrangements relating to any transaction contemplated hereby or thereby and will not seek recourse or commence any action against any of the general partners, officers, employees or limited partners of the Partnership or any of their personal assets for the performance or payment of any obligation hereunder or thereunder. The foregoing shall also apply to any future documents, agreements, understandings, arrangements and transactions between the parties hereto.
The Indenture and this Note shall be governed by and construed in accordance with the laws of the State of New York without regard to its principles of conflicts of laws.
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this Note, shall be construed as though they were written out in full according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as tenants
in common UNIF GIFT MIN ACT-_____________ Custodian ______________
(Cust) (Minor)
Under Uniform Gifts to Minors Act ____________________________
(State)
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
(Please print or typewrite name and address including postal zip code of assignee) this Note and all rights thereunder hereby irrevocably constituting and appointing Attorney to transfer this Note on the books of the Trustee, with full power of substitution in the premises.
Dated:___________________________
NOTICE: The signature(s) on this Assignment must correspond with the name(s) as written upon the face of this Note in every particular, without alteration or enlargement or any change whatsoever.
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably request(s) and instruct(s) the Partnership to repay this Note (or portion hereof specified below) pursuant to its terms at a price equal to 100% of the principal amount to be repaid, together with unpaid interest accrued hereon to the Repayment Date, to the undersigned, at
(Please print or typewrite name and address of the undersigned)
For this Note to be repaid, the Trustee or the Designated Agent must receive at its corporate trust office in the Borough of Manhattan, The City of New York, this Note with this "Option to Elect Repayment" form duly completed.
If less than the entire principal amount of this Note is to be repaid, specify the portion hereof (which shall be increments of U.S. $1,000 (or, if the Specified Currency is other than United States dollars, the minimum Authorized Denomination specified on the face hereof)) which the holder elects to have repaid and specify the denomination or denominations (which shall be an Authorized Denomination) of the Notes to be issued to the holder for the portion of this Note not being repaid (in the absence of any such specification, one such Note will be issued for the portion not being repaid).
Principal Amount
to be Repaid: $
Date: Notice: The signature(s) on this Option to Elect
Repayment must correspond with the name(s) as written
upon the face of this Note in every particular,
without alteration or enlargement or any change
whatsoever.
|
Exhibit 10.3
[FACE OF NOTE]
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (THE "DEPOSITARY") (55 WATER STREET, NEW YORK, NEW YORK) TO THE ISSUER HEREOF OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY AND ANY PAYMENT IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN CERTIFICATED FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.
REGISTERED $35,000,000
No. FXR-08
CUSIP: 86623XAH6
SUMMIT PROPERTIES PARTNERSHIP, L.P.
MEDIUM-TERM NOTE
(Fixed Rate)
ORIGINAL ISSUE DATE: 5/9/2001 INTEREST RATE: 7.703% STATED MATURITY
INTEREST PAYMENT DEFAULT RATE: N/A DATE: 5/9/2011
DATE(S): 5/9 and 11/9
Other:
INITIAL REDEMPTION INITIAL REDEMPTION ANNUAL REDEMPTION
DATE: N/A PERCENTAGE: N/A PERCENTAGE
REDUCTION: N/A
OPTIONAL REPAYMENT [ ] CHECK IF AN
DATE(S): N/A ORIGINAL ISSUE
DISCOUNT NOTE Issue
Price: %
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REPAYMENT PRICE: N/A
SPECIFIED CURRENCY: AUTHORIZED EXCHANGE RATE
[X] United States dollars DENOMINATION: AGENT: N/A
[ ] Other: [X] $1,000 and integral
multiples thereof
[ ] Other:
EXCHANGE RATE: ADDENDUM ATTACHED: OTHER/ADDITIONAL
U.S. $1.00 = _________ [ ] Yes PROVISIONS: N/A
[X] No
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Summit Properties Partnership, L.P., a limited partnership duly organized and existing under the laws of Delaware (hereinafter referred to as the "Partnership," which term includes any successor entity under the Indenture hereinafter referred to), for value received, hereby promises to pay to CEDE & COMPANY, or registered assigns, the principal sum of $35,000,000, on the Stated Maturity Date specified above (or any Redemption Date or Repayment Date, each as defined on the reverse hereof) (each such Stated Maturity Date, Redemption Date or Repayment Date being hereinafter referred to as the "Maturity Date" with respect to the principal repayable on such date) and to pay interest thereon, at the Interest Rate per annum specified above, until the principal hereof is paid or duly made available for payment, and (to the extent that the payment of such interest shall be legally enforceable) at the Default Rate per annum specified above on any overdue principal, premium and/or interest, including any overdue sinking fund or redemption payment. The Partnership will pay interest in arrears on each Interest Payment Date, if any, specified above (each, an "Interest Payment Date"), commencing with the first Interest Payment Date next succeeding the Original Issue Date specified above, and on the Maturity Date; provided, however, that if the Original Issue Date occurs between a Record Date (as defined below) and the next succeeding Interest Payment Date, interest payments will commence on the second Interest Payment Date next succeeding the Original Issue Date to the holder of this Note on the Record Date with respect to such second Interest Payment Date. Interest on this Note will be computed on the basis of a 360-day year of twelve 30-day months.
Interest on this Note will accrue from, and including, the immediately preceding Interest Payment Date to which interest has been paid or duly provided for (or from, and including, the Original Issue Date if no interest has been paid or duly provided for) to, but excluding, the applicable Interest Payment Date or the Maturity Date, as the case may be (each, an "Interest Period"). The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, subject to certain exceptions described herein, be paid to the person in whose name this Note (or one or more predecessor Notes) is registered at the close of business on the fifteenth calendar day (whether or not a Business Day, as defined below) immediately preceding such Interest Payment Date (the "Record Date"); provided, however, that interest payable on the Maturity Date will be payable to the person to whom the principal hereof and premium, if any, hereon shall be payable. Any such interest not so punctually paid or duly provided for ("Defaulted Interest") will forthwith cease to be payable to the holder on any Record Date, and shall be paid to the person in whose name this Note is registered at the close of business on a special record date (the "Special Record Date") for the payment of such Defaulted Interest to be fixed by the Trustee hereinafter referred to, notice whereof shall be given to the holder of this Note by the Trustee not more than 15 days and not less than 10 days prior to such Special Record
Date or may be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which this Note may be listed, and upon such notice as may be required by such exchange, all as more fully provided for in the Indenture.
Payment of principal, premium, if any, and interest in respect of this Note due on the Maturity Date or any prior date on which the principal or an installment of principal of this Note becomes due and payable, whether by the declaration of acceleration or otherwise, will be made in immediately available funds upon presentation and surrender of this Note (and, with respect to any applicable repayment of this Note, upon presentation and surrender of this Note and a duly completed election form as contemplated on the reverse hereof) at the office or agency maintained by the Partnership for that purpose in the Borough of Manhattan, The City of New York, currently the office of the Trustee or the Designated Agent; provided, however, that if the Specified Currency specified above is other than United States dollars and such payment is to be made in the Specified Currency in accordance with the provisions set forth below, such payment may be made by wire transfer of immediately available funds to an account with a bank designated by the holder hereof at least 15 calendar days prior to the Maturity Date, provided that such bank has appropriate facilities therefor and that this Note (and, if applicable, a duly completed repayment election form) is presented and surrendered at the aforementioned office or agency maintained by the Partnership in time for the Trustee or the Designated Agent to make such payment in such funds in accordance with its normal procedures. Payment of interest due on any Interest Payment Date other than the Maturity Date will be made at the aforementioned office or agency maintained by the Partnership or, at the option of the Partnership, by check mailed to the address of the person entitled thereto as such address shall appear in the Security Register maintained by the Trustee or the Designated Agent; provided, however, that a holder of U.S. $10,000,000 (or, if the Specified Currency is other than United States dollars, the equivalent thereof in the Specified Currency) or more in aggregate principal amount of Notes (whether having identical or different terms and provisions) will be entitled to receive interest payments on any Interest Payment Date other than the Maturity Date by wire transfer of immediately available funds if appropriate wire transfer instructions have been received in writing by the Trustee or Designated Agent not less than 15 calendar days prior to such Interest Payment Date. Any such wire transfer instructions received by the Trustee or the Designated Agent shall remain in effect until revoked by such holder.
If any Interest Payment Date or the Maturity Date falls on a day that is not a Business Day, the required payment of principal, premium, if any, and/or interest shall be made on the next succeeding Business Day with the same force and effect as if made on the date such payment was due, and no interest shall accrue with respect to such payment for the period from and after such Interest Payment Date or the Maturity Date, as the case may be, to the date of such payment on the next succeeding Business Day.
As used herein, "Business Day" means any day, other than a Saturday or Sunday, that is neither a legal holiday nor a day on which banking institutions are authorized or required by law, regulation or executive order to close in The City of New York or Charlotte, North Carolina; provided, however, that if the Specified Currency is other than United States dollars, such day is also not a day on which banking institutions are authorized or required by law, regulation or executive order to close in the Principal Financial Center (as defined below) of the country issuing the Specified Currency (or, if the Specified Currency is European Currency Units
("ECU"), such day is not a day that appears as an ECU no-settlement day on the display designated as "ISDE" on the Reuter Monitor Money Rates Service (or a day so designated by the ECU Banking Association), or, if ECU non-settlement days do not appear on that page (and are not so designated), is not a day on which payments in ECU cannot be settled in the international interbank market). Principal Financial Center means the capital city of the country issuing the Specified Currency, except that with respect to United States dollars, Australian dollars, Deutsche marks, Dutch guilders, Italian lire, Portuguese escudos, South African rand and Swiss francs, the Principal Financial Center shall be The City of New York, Sydney, Toronto, Frankfurt, Amsterdam, Milan, London, Johannesburg and Zurich, respectively.
The Partnership is obligated to make payments of principal, premium, if any, and interest in respect of this Note in the Specified Currency (or, if the Specified Currency is not at the time of such payment legal tender for the payment of public and private debts, in such other coin or currency of the country which issued the Specified Currency as at the time of such payment is legal tender for the payment of such debts). If the Specified Currency is other than United States dollars, except as provided below, any such amounts so payable by the Partnership will be converted by the Exchange Rate Agent specified above into United States dollars for payment to the holder of this Note.
If the Specified Currency is other than United States dollars, the holder of this Note may elect to receive such amounts in such Specified Currency. If the holder of this Note shall not have duly made an election to receive all or a specified portion of any payment of principal, premium, if any, and/or interest in respect of this Note in the Specified Currency, any United States dollar amount to be received by the holder of this Note will be based on the highest bid quotation in The City of New York received by the Exchange Rate Agent at approximately 11:00 A.M., The City of New York time, on the second Business Day preceding the applicable payment date from three recognized foreign exchange dealers (one of whom may be the Exchange Rate Agent) selected by the Exchange Rate Agent and approved by the Partnership for the purchase by the quoting dealer of the Specified Currency for United States dollars for settlement on such payment date in the aggregate amount of such Specified Currency payable to all holders of Foreign Currency Notes scheduled to receive United States dollar payments and at which the applicable dealer commits to execute a contract. All currency exchange costs will be borne by the holder of this Note by deductions from such payments. If three such bid quotations are not available, payments on this Note will be made in the Specified Currency.
If the Specified Currency is other than United States dollars, the holder of this Note may elect to receive all or a specified portion of any payment of principal, premium, if any, and/or interest in respect of this Note in the Specified Currency by submitting a written request for such payment to the Trustee or the Designated Agent at its corporate trust office in The City of New York on or prior to the applicable Record Date or at least 15 calendar days prior to the Maturity Date, as the case may be. Such written request may be mailed or hand delivered or sent by cable, telex or other form of facsimile transmission. The holder of this Note may elect to receive all or a specified portion of all future payments in the Specified Currency in respect of such principal, premium, if any, and/or interest and need not file a separate election for each payment. Such election will remain in effect until revoked by written notice to the Trustee or the Designated Agent, but written notice of any such revocation must be received by the Trustee or the
Designated Agent on or prior to the applicable Record Date or at least 15 calendar days prior to the Maturity Date, as the case may be.
If the Specified Currency is other than United States dollars or a composite currency and the holder of this Note shall have duly made an election to receive all or a specified portion of any payment of principal, premium, if any, and/or interest in respect of this Note in the Specified Currency and if the Specified Currency is not available due to the imposition of exchange controls or other circumstances beyond the reasonable control of the Partnership, the Partnership will be entitled to satisfy its obligations to the holder of this Note by making such payment in United States dollars on the basis of the Market Exchange Rate (as defined below) on the second Business Day prior to such payment date or, if such Market Exchange Rate is not then available, on the basis of the most recently available Market Exchange Rate or as otherwise specified on the face hereof. The "Market Exchange Rate" for the Specified Currency means the noon dollar buying rate in The City of New York for cable transfers for such Specified Currency as certified for customs purposes by (or if not so certified, as otherwise determined by) the Federal Reserve Bank of New York. Any payment made under such circumstances in United States dollars will not constitute an Event of Default (as defined in the Indenture) with respect to this Note.
If the Specified Currency is a composite currency and the holder of this Note shall have duly made an election to receive all or a specified portion of any payment of principal, premium, if any, and/or interest in respect of this Note in the Specified Currency and if such composite currency is unavailable due to the imposition of exchange controls or other circumstances beyond the reasonable control of the Partnership, then the Partnership will be entitled to satisfy its obligations to the holder of this Note by making such payment in United States dollars. The amount of each payment in United States dollars shall be computed by the Exchange Rate Agent on the basis of the equivalent of the composite currency in United States dollars. The component currencies of the composite currency for this purpose (collectively, the "Component Currencies" and each, a "Component Currency") shall be the currency amounts that were components of the composite currency as of the last day on which the composite currency was used. The equivalent of the composite currency in United States dollars shall be calculated by aggregating the United States dollar equivalents of the Component Currencies. The United States dollar equivalent of each of the Component Currencies shall be determined by the Exchange Rate Agent on the basis of the most recently available Market Exchange Rate for each such Component Currency, or as otherwise specified on the face hereof.
If the official unit of any Component Currency is altered by way of combination or subdivision, the number of units of the currency as a Component Currency shall be divided or multiplied in the same proportion. If two or more Component Currencies are consolidated into a single currency, the amounts of those currencies as Component Currencies shall be replaced by an amount in such single currency equal to the sum of the amounts of the consolidated Component Currencies expressed in such single currency. If any Component Currency is divided into two or more currencies, the amount of the original Component Currency shall be replaced by the amounts of such two or more currencies, the sum of which shall be equal to the amount of the original Component Currency.
All determinations referred to above made by the Exchange Rate Agent shall be at its sole discretion and shall, in the absence of manifest error, be conclusive for all purposes and binding on the holder of this Note.
Reference is hereby made to the further provisions of this Note set forth on the reverse hereof and, if so specified above on the face hereof, in the Addendum hereto, which further provisions shall have the same force and effect as if set forth on the face hereof.
Notwithstanding any provisions to the contrary contained herein, if the face of this Note specifies that an Addendum is attached hereto or that "Other/Additional Provisions" apply to this Note, this Note shall be subject to the terms set forth in such Addendum or such "Other/Additional Provisions."
Unless the Certificate of Authentication hereon has been executed by the Trustee or its Authenticating Agent by manual signature, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, Summit Properties Partnership, L.P. has caused this Note to be duly executed under its seal.
Dated: May 9, 2001 SUMMIT PROPERTIES PARTNERSHIP, L.P.
By: Summit Properties Inc.,
its General Partner
By: /s/ Michael L. Schwarz
-----------------------------------
Michael L. Schwarz
Executive Vice President and
Chief Financial Officer
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(SEAL)
Attest:
/s/ Michael G. Malone --------------------- Michael G. Malone Secretary |
TRUSTEE'S CERTIFICATE OF AUTHENTICATION:
This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.
Dated: May 9, 2001 FIRST UNION NATIONAL BANK,
as Trustee
By: /s/ Paul F. Anatrella
------------------------
Authorized Signatory
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[REVERSE OF NOTE]
SUMMIT PROPERTIES PARTNERSHIP, L.P.
MEDIUM-TERM NOTE
(Fixed Rate)
This Note is one of a duly authorized series of Securities (the "Securities") of the Partnership issued and to be issued under an Indenture, dated as of August 7, 1997 as supplemented by Supplemental Indenture No. 4 dated as of April 20, 2000, as further amended, modified or supplemented from time to time (the "Indenture"), between the Partnership and First Union National Bank, as Trustee (the "Trustee," which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Partnership, the Trustee and the holders of the Securities, and of the terms upon which the Securities are, and are to be, authenticated and delivered. This Note is one of the series of Securities designated as "Medium-Term Notes Due Nine Months or More from Date of Issue" (the "Notes"). All terms used but not defined in this Note or in an Addendum hereto shall have the meanings assigned to such terms in the Indenture or on the face hereof, as the case may be.
This Note is issuable only in registered form without coupons in minimum denominations of U.S. $1,000 and integral multiples thereof or the minimum Authorized Denomination specified on the face hereof.
This Note will not be subject to any sinking fund and, unless otherwise specified on the face hereof in accordance with the provisions of the following two paragraphs, will not be redeemable or repayable prior to the Stated Maturity Date.
This Note will be subject to redemption at the option of the Partnership on any date on and after the Initial Redemption Date, if any, specified on the face hereof, in whole or from time to time in part in increments of U.S. $1,000 or the minimum Authorized Denomination (provided that any remaining principal amount hereof shall be at least U.S. $1,000 or such minimum Authorized Denomination), at the Redemption Price (as defined below), together with unpaid interest accrued thereon to the date fixed for redemption (each, a "Redemption Date"), on notice given not more than 60 nor less than 30 calendar days prior to the Redemption Date and in accordance with the provisions of the Indenture. The "Redemption Price" shall initially be the Initial Redemption Percentage specified on the face hereof multiplied by the unpaid principal amount of this Note to be redeemed. The Initial Redemption Percentage shall decline at each anniversary of the Initial Redemption Date by the Annual Redemption Percentage Reduction, if any, specified on the face hereof until the Redemption Price is 100% of the unpaid principal amount to be redeemed. In the event of redemption of this Note in part only, a new Note of like tenor for the unredeemed portion hereof and otherwise having the same terms as this Note shall be issued in the name of the holder hereof upon the presentation and surrender hereof.
This Note will be subject to repayment by the Partnership at the option of the holder hereof on the Optional Repayment Date(s), if any, specified on the face hereof, in whole or in part in increments of U.S. $1,000 or the minimum Authorized Denomination (provided that any remaining principal amount hereof shall be at least U.S. $1,000 or such minimum Authorized
Denomination), at a repayment price equal to 100% of the unpaid principal amount to be repaid, together with unpaid interest accrued thereon to the date fixed for repayment (each, a "Repayment Date"). For this Note to be repaid, the Trustee or the Designated Agent must receive at its office in the Borough of Manhattan, The City of New York, referred to on the face hereof, at least 30 days but not more than 60 days prior to the Repayment Date (i) this Note and the form hereon entitled "Option to Elect Repayment" duly completed or (ii) a telegram, telex, facsimile transmission, or a letter from a member of a national securities exchange or the National Association of Securities Dealers, Inc. or a commercial bank or trust company in the United States setting forth the name of the holder hereof, the principal amount of this Note, the principal amount of this Note to be repaid, the certificate number or a description of the tenor and terms of this Note, a statement that the option to elect repayment is being exercised thereby, and a guarantee that this Note, together with the form hereon entitled "Option to Elect Repayment" duly completed, will be received by the Trustee or the Designated Agent not later than the fifth Business Day after the date of such telegram, telex, facsimile transmission or letter, provided that such telegram, telex, facsimile transmission or letter shall only be effective if this Note and duly completed form are received by the Trustee or the Designated Agent by such fifth Business Day. Exercise of such repayment option by the holder hereof will be irrevocable. In the event of repayment of this Note in part only, a new Note of like tenor for the unrepaid portion hereof and otherwise having the same terms as this Note shall be issued in the name of the holder hereof upon the presentation and surrender hereof.
If this Note is an Original Issue Discount Note as specified on the
face hereof, the amount payable to the holder of this Note in the event of
redemption, repayment or acceleration of maturity of this Note will be equal to
the sum of (i) the Issue Price specified on the face hereof (increased by any
accruals of the Discount, as defined below) and, in the event of any redemption
of this Note (if applicable), multiplied by the Initial Redemption Percentage
(as adjusted by the Annual Redemption Percentage Reduction, if applicable) and
(ii) any unpaid interest on this Note accrued from the Original Issue Date to
the Redemption Date, Repayment Date or date of acceleration of maturity, as the
case may be. The difference between the Issue Price and 100% of the principal
amount of this Note is referred to herein as the "Discount."
For purposes of determining the amount of Discount that has accrued as of any Redemption Date, Repayment Date or date of acceleration of maturity of this Note, such Discount will be accrued using a constant yield method. The constant yield will be calculated using a 30-day month, 360-day year convention, a compounding period that, except for the Initial Period (as defined below), corresponds to the shortest period between Interest Payment Dates (with ratable accruals within a compounding period), a coupon rate equal to the initial coupon rate applicable to this Note and an assumption that the maturity of this Note will not be accelerated. If the period from the Original Issue Date to the initial Interest Payment Date (the "Initial Period") is shorter than the compounding period for this Note, a proportionate amount of the yield for an entire compounding period will be accrued. If the Initial Period is longer than the compounding period, then such period will be divided into a regular compounding period and a short period, with the short period being treated as provided in the preceding sentence.
If an Event of Default, as defined in the Indenture, shall occur and be continuing, the principal of the Notes may be declared due and payable in the manner and with the effect provided in the Indenture.
The Indenture contains provisions for defeasance of (i) the entire indebtedness of the Notes or (ii) certain covenants and Events of Default with respect to the Notes, in each case upon compliance with certain conditions set forth therein, which provisions apply to the Notes.
The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Partnership and the rights of the holders of the Securities at any time by the Partnership and the Trustee with the consent of the holders of not less than a majority of the aggregate principal amount of all Securities at the time outstanding and affected thereby. The Indenture also contains provisions permitting the holders of not less than a majority of the aggregate principal amount of the outstanding Securities of any series, on behalf of the holders of all such Securities, to waive compliance by the Partnership with certain provisions of the Indenture. Furthermore, provisions in the Indenture permit the holders of not less than a majority of the aggregate principal amount of the outstanding Securities of any series, in certain instances, to waive, on behalf of all of the holders of Securities of such series, certain past defaults under the Indenture and their consequences. Any such consent or waiver by the holder of this Note shall be conclusive and binding upon such holder and upon all future holders of this Note and other Notes issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof, whether or not notation of such consent or waiver is made upon this Note.
No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Partnership, which is absolute and unconditional, to pay principal, premium, if any, and interest in respect of this Note at the times, places and rate or formula, and in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein and herein set forth, the transfer of this Note is registrable in the Security Register of the Partnership upon surrender of this Note for registration of transfer at the office or agency of the Partnership in any place where the principal hereof and any premium or interest hereon are payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Partnership and the Security Registrar, duly executed by, the holder hereof or by his attorney duly authorized in writing, and thereupon one or more new Notes, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees.
As provided in the Indenture and subject to certain limitations therein and herein set forth, this Note is exchangeable for a like aggregate principal amount of Notes of different authorized denominations but otherwise having the same terms and conditions, as requested by the holder hereof surrendering the same.
No service charge shall be made for any such registration of transfer or exchange, but the Partnership may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer, the Partnership, the Trustee and any agent of the Partnership or the Trustee may treat the holder in whose name this Note is registered as the owner thereof for all purposes, whether or not this Note be overdue, and neither the Partnership, the Trustee nor any such agent shall be affected by notice to the contrary.
This Note and all documents, agreements, understandings and arrangements relating to any transaction contemplated hereby or thereby have been executed or entered into by the undersigned in his/her capacity as an officer of the sole general partner of the Partnership which has been formed as a Delaware limited partnership, and not individually, and neither the general partner, officers, employees or limited partners of the Partnership shall be bound or have any personal liability hereunder or thereunder. The holder of this Note by accepting this Note waives and releases all such liability. This waiver and release are part of the consideration for the issue of this Note. Each party hereto shall look solely to the assets of the Partnership for satisfaction of any liability of the Partnership in respect of this Note and all documents, agreements, understandings and arrangements relating to any transaction contemplated hereby or thereby and will not seek recourse or commence any action against any of the general partners, officers, employees or limited partners of the Partnership or any of their personal assets for the performance or payment of any obligation hereunder or thereunder. The foregoing shall also apply to any future documents, agreements, understandings, arrangements and transactions between the parties hereto.
The Indenture and this Note shall be governed by and construed in accordance with the laws of the State of New York without regard to its principles of conflicts of laws.
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this Note, shall be construed as though they were written out in full according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as tenants
in common UNIF GIFT MIN ACT-_____________ Custodian ______________
(Cust) (Minor)
Under Uniform Gifts to Minors Act ____________________________
(State)
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
(Please print or typewrite name and address including postal zip code of assignee) this Note and all rights thereunder hereby irrevocably constituting and appointing Attorney to transfer this Note on the books of the Trustee, with full power of substitution in the premises.
Dated:___________________________
NOTICE: The signature(s) on this Assignment must correspond with the name(s) as written upon the face of this Note in every particular, without alteration or enlargement or any change whatsoever.
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably request(s) and instruct(s) the Partnership to repay this Note (or portion hereof specified below) pursuant to its terms at a price equal to 100% of the principal amount to be repaid, together with unpaid interest accrued hereon to the Repayment Date, to the undersigned, at
(Please print or typewrite name and address of the undersigned)
For this Note to be repaid, the Trustee or the Designated Agent must receive at its corporate trust office in the Borough of Manhattan, The City of New York, this Note with this "Option to Elect Repayment" form duly completed.
If less than the entire principal amount of this Note is to be repaid, specify the portion hereof (which shall be increments of U.S. $1,000 (or, if the Specified Currency is other than United States dollars, the minimum Authorized Denomination specified on the face hereof)) which the holder elects to have repaid and specify the denomination or denominations (which shall be an Authorized Denomination) of the Notes to be issued to the holder for the portion of this Note not being repaid (in the absence of any such specification, one such Note will be issued for the portion not being repaid).
Principal Amount
to be Repaid: $
Date: Notice: The signature(s) on this Option to Elect
Repayment must correspond with the name(s) as written
upon the face of this Note in every particular,
without alteration or enlargement or any change
whatsoever.
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Exhibit 10.4
AMENDMENT NO. 1
to
Amended and Restated Credit Agreement
dated as of September 26, 2000
This AMENDMENT NO. 1 to Amended and Restated Credit Agreement is made and entered into as of July 6, 2001 (this "Amendment") by and among SUMMIT PROPERTIES PARTNERSHIP, L.P., a Delaware limited partnership (the "Borrower"), SUMMIT PROPERTIES, INC., a Maryland corporation (the "Parent Guarantor"), the financial institutions party to the Credit Agreement (hereinafter defined) from time to time (the "Lenders"), FIRST UNION NATIONAL BANK ("FUNB"), as Administrative Agent (in such capacity, the "Administrative Agent") for the Lenders, FIRST UNION SECURITIES, INC. ("FUSI"), as Sole Lead Arranger and Book Manager (in such capacity, the "Arranger"), WACHOVIA BANK, N.A. ("Wachovia"), as Syndication Agent for the Lenders (in such capacity, the "Syndication Agent"), and BANK OF AMERICA, N.A. ("Bank of America"), as Documentation Agent for the Lenders (in such capacity, the "Documentation Agent").
PRELIMINARY STATEMENT
The Borrower, the Parent Guarantor, the Lenders, the Administrative Agent, the Arranger, the Syndication Agent and the Documentation Agent are parties to an Amended and Restated Credit Agreement, dated as of September 26, 2000 (such Amended and Restated Credit Agreement, as from time to time amended, modified, supplemented or restated, being herein known as the "Credit Agreement").
In accordance with Section 2.3 of the Credit Agreement, the Borrower has requested that the Administrative Agent and the Lenders extend the Termination Date for a period of one year. All of the Lenders other than Commerzbank, A.G. New York and Grand Cayman Branches ("Commerzbank") have consented to such request, and certain of the Lenders together with an Eligible Assignee have agreed to assume all of the Commitments of Commerzbank concurrently with the execution of this Amendment.
NOW, THEREFORE, in consideration of the Credit Agreement, the Advances made by the Lenders and outstanding thereunder, the mutual promises hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
Section 1. Cross References and Definitions.
(a) Reference is made to the Credit Agreement. Upon and after the effectiveness of this Amendment as provided in Section 3 hereof, all references to the Credit Agreement in the Credit Agreement or in any other Loan Document shall mean the Credit Agreement as amended by this Amendment. Except as expressly provided in this Amendment, the execution and delivery of this Amendment does not, and will not, amend, modify or supplement any provision of or constitute a consent to or a waiver of any noncompliance with
the provisions of the Credit Agreement and, except as specifically provided in this Amendment, the Credit Agreement shall remain in full force and effect.
(b) Capitalized terms used in this Amendment without definition shall have the meanings ascribed to such terms in the Credit Agreement.
Section 2. Amendment to Credit Agreement. Section 1.2 of the Credit Agreement, Certain Definitions, is hereby amended by deleting from the defined term "Termination Date" the date "September 26, 2003" and by substituting in lieu thereof the date "September 26, 2004."
Section 3. Conditions to Effectiveness of Amendment. This Amendment shall become effective as of the date hereof on the date on which the Administrative Agent shall have received:
(a) counterparts of this Amendment in sufficient copies for each Lender and the Borrower, duly executed and delivered by all of the parties hereto;
(b) Lender Assignments executed by Commerzbank and each of the Lenders and the Eligible Assignee assuming the Commitments of Commerzbank;
(c) evidence satisfactory to the Administrative Agent that the Lenders and the Eligible Assignee assuming the Commitments of Commerzbank have made full and final payment therefor to Commerzbank;
(d) a Consent and Confirmation of Guarantors duly executed and delivered by each of the Subsidiary Guarantors;
(e) full and final payment of the processing and recording fee referred to in Section 12.7(a) of the Credit Agreement to be paid in connection with the Lender Assignments referred to in clause (b) of this Section 3;
(f) full and final payment by the Borrower of the extension fee referred to in Section 2.3(c) of the Credit Agreement; and
(g) such other documents and instruments as the Administrative Agent or the Lenders may reasonably request.
Section 4. Waiver. In respect of the Lender Assignment from Commerzbank to Chevy Chase Bank, the parties to this Amendment hereby waive compliance with the minimum assignment provision contained in Section 12.7(a) of the Credit Agreement.
Section 5. Representations and Warranties. Each Loan Party hereby makes the following representations and warranties to the Administrative Agent and the Lenders:
(a) After giving effect to this Amendment, each Loan Party is in compliance with all of the terms and provisions set forth in the Credit Agreement and in the other Loan Documents to be observed or performed by such Loan Party, and no Event of Default exists;
(b) The execution and delivery of this Amendment have been duly authorized by all necessary action of each Loan Party; and
(c) All of the representations and warranties made by each Loan Party in the Credit Agreement are true and correct on and as of the date hereof, except for (i) representations and warranties that speak as of a specified earlier date and which remain true and correct in all material respects as of such earlier date and (ii) changes in facts and circumstances permitted by the terms of the Credit Agreement.
Section 6. Expenses. The Loan Parties agree to pay or reimburse on demand all costs and expenses, including fees and disbursements of counsel, incurred by the Administrative Agent in connection with the negotiation, preparation, execution and delivery of this Amendment.
Section 7. Governing Law. This Amendment shall be construed in accordance with, and governed by, the laws of the State of North Carolina.
Section 8. Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and shall be binding upon all parties and their respective successors and assigns and all of which taken together shall constitute one and the same agreement. Delivery of an executed signature page of any party hereto by facsimile transmission shall be effective as delivery of a manually executed counterpart thereof.
[signatures on following pages]
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their duly authorized officers in several counterparts as of the date first above written.
BORROWER:
SUMMIT PROPERTIES PARTNERSHIP, L.P., doing
business in North Carolina as Summit
Properties Partnership, Limited Partnership,
as Borrower
By: SUMMIT PROPERTIES INC., doing
business in North Carolina as Summit
Properties Real Estate, Inc.
By:/s/ Gregg Adzema
----------------------------------
Name: Gregg Adzema
Title: Senior Vice President
|
PARENT GUARANTOR:
SUMMIT PROPERTIES, INC.
By:/s/ Gregg Adzema ----------------------------------------- Name: Gregg Adzema Title: Senior Vice President |
FIRST UNION NATIONAL BANK, as
Administrative Agent
By:/s/ Rex E. Rudy ----------------------------------------- Name: Rex E. Rudy Title: Director |
FIRST UNION SECURITIES, INC., as Arranger
By:/s/ David Blackman ----------------------------------------- Name: David Blackman Title: Director |
WACHOVIA BANK, N.A., as Syndication Agent
By:/s/ Wayne A. Osella
-----------------------------------------
Name: Wayne A. Osella
Title: Senior Vice President
|
BANK OF AMERICA, N.A., as Documentation Agent
By:/s/ Gregg Higson
------------------------------------------
Name: Gregg Higson
Title: Vice President
|
THE LENDERS:
FIRST UNION NATIONAL BANK
By:/s/ Rex E. Rudy
----------------------------------------
Name: Rex E. Rudy
Title: Director
|
THE LENDERS:
WACHOVIA BANK, N.A.
By:/s/ Wayne A. Osella
-----------------------------------------
Name: Wayne A. Osella
Title: Senior Vice President
|
THE LENDERS:
BANK OF AMERICA, N.A.
By:/s/ Gregg Higson
-------------------------------------------
Name: Gregg Higson
Title: Vice President
|
THE LENDERS:
AMSOUTH BANK
By:/s/ Lawrence Clark
-----------------------------------------
Name: Lawrence Clark
Title: Vice President
|
THE LENDERS:
CHEVY CHASE BANK, F.S.B.
By:/s/ J. Jordan O'Neill, III
------------------------------------------
Name: J. Jordan O'Neill, III
Title: Vice President
|
THE LENDERS:
SOUTHTRUST BANK
By:/s/ Sam Boroughs
-------------------------------------------
Name: Sam Boroughs
Title: Vice President
|
THE LENDERS:
CITIZENS BANK OF RHODE ISLAND
By:/s/ Craig E. Schermerhorn
------------------------------------------
Name: Craig E. Schermerhorn
Title: Vice President
|
THE LENDERS:
EASTERN BANK
By:/s/ Robert W. Kershaw
-----------------------------------------
Name: Robert W. Kershaw
Title: Assistant Vice President
|
EXHIBIT 12.1
SUMMIT PROPERTIES INC.
CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES
SIX MONTHS ENDED JUNE 30, 2001
(Dollars In thousands)
Earnings:
Income before minority interest of unitholders in
Operating Partnership and dividends to preferred
unitholders in Operating Partnership........................ $ 34,467
Interest:
Expense incurred............................................ 20,157
Amortization of deferred financing costs.................... 697
Rental fixed charges........................................ 169
--------
Total...................................................... $ 55,490
========
Fixed charges:
Interest expense.............................................. $20,157
Interest capitalized.......................................... 6,363
Dividends to preferred unitholders in
Operating Partnership....................................... 6,210
Rental fixed charges.......................................... 169
Amortization of deferred financing costs...................... 697
--------
Total...................................................... $ 33,596
========
Ratio of earnings to fixed charges................................... 1.65
-=======
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