10-K 1 a2214152z10-k.htm 10-K

Use these links to rapidly review the document
Table of Contents
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
PART IV

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K


ý		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2012
OR
o		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: 001-13183

ROBERTS REALTY INVESTORS, INC.
(Exact name of registrant as specified in its charter)


Georgia (State or other jurisdiction of incorporation or organization)		58-2122873 (I.R.S. Employer Identification No.)
450 Northridge Parkway, Suite 302 Atlanta, Georgia (Address of principal executive offices)		30350 (Zip Code)

(770) 394-6000
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class		Name of each exchange on which registered
Common Stock, $.01 par value per share		NYSE MKT

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes [ ] No [ü]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.

Yes [ ] No [ü]

Indicate by check mark 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 [ü] No [ ]

Table of Contents

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes [ü] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer [ ]		Accelerated filer [ ]
Non-accelerated filer [ ] (Do not check if a smaller reporting company)		Smaller reporting company [ü]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes [ ] No [ü]

As of June 29, 2012, the last business day of the registrant's most recently completed second fiscal quarter, the aggregate market value of the registrant's common stock held by non-affiliates of the registrant was $9,670,534 based on the closing sale price of $1.38 per share as reported on the NYSE MKT exchange.

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

Class		Outstanding at March 20, 2013

Common Stock, $.01 par value per share		10,641,928 shares

DOCUMENTS INCORPORATED BY REFERENCE

Document		Parts into which incorporated

None		N/A

Table of Contents

TABLE OF CONTENTS

		PAGE

NOTE REGARDING FORWARD-LOOKING STATEMENTS		2
PART I		3
ITEM 1.	BUSINESS	3
ITEM 1A.	RISK FACTORS	14
ITEM 1B.	UNRESOLVED STAFF COMMENTS	23
ITEM 2.	PROPERTIES	24
ITEM 3.	LEGAL PROCEEDINGS	28
ITEM 4.	MINE SAFETY DISCLOSURES	28
PART II		29
ITEM 5.	MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	29
ITEM 6.	SELECTED FINANCIAL DATA	30
ITEM 7.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION	31
ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	41
ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	42
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	42
ITEM 9A.	CONTROLS AND PROCEDURES	42
ITEM 9B.	OTHER INFORMATION	43
PART III		44
ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	44
ITEM 11.	EXECUTIVE COMPENSATION	49
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	51
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	53
ITEM 14.	PRINCIPAL ACCOUNTING FEES AND SERVICES	60
PART IV		63
ITEM 15.	EXHIBITS, FINANCIAL STATEMENT SCHEDULES	63

Table of Contents

NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These statements relate to future economic performance, plans and objectives of management for future operations and projections of revenues and other financial items that are based on the beliefs of our management, as well as assumptions made by, and information currently available to, our management. The words "expect," "intend," "estimate," "anticipate," "believe," and similar expressions are intended to identify forward-looking statements. We make forward-looking statements in Items 1, 1A, 2, 5, and 7 of this report.

Some of the forward-looking statements relate to our intent, belief, or expectations regarding our strategies and business plan, including a possible business combination, development, and construction of new multifamily communities and the possible sale of properties, and the ways we may finance our future development and construction activities. Other forward-looking statements relate to loan extensions, trends affecting our financial condition and results of operations, our anticipated capital needs and expenditures, and how we may address these needs. These statements involve risks, uncertainties, and assumptions, including the financing environment for construction loans for new multifamily communities; our possible inability to negotiate extensions of our short-term loans; uncertainties with respect to the closing of the sale of our Northridge property, the sale of our Northridge Office Building and our evaluation of strategic alternatives; and other factors discussed in this report and in our other filings with the SEC. These forward-looking statements are not guarantees of future performance and involve risks and uncertainties. Actual results may differ materially from those that are anticipated in the forward-looking statements. See Item 1A, Risk Factors, for a description of some of the important factors that may affect actual outcomes.

For these forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You should not place undue reliance on the forward-looking statements, which speak only as of the date of this report. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

* * * * * * * *

Unless the context indicates otherwise, all references in this report to "Roberts Realty," "we," "us," "the company," and "our" refer to Roberts Realty Investors, Inc. and our subsidiary, Roberts Properties Residential, L.P., which we refer to as the operating partnership, except that in the discussion of our capital stock and related matters, these terms refer solely to Roberts Realty Investors, Inc. and not to the operating partnership. All references to the "the operating partnership" refer to Roberts Properties Residential, L.P. only.

Table of Contents

PART I

ITEM 1. BUSINESS.

General

Roberts Realty Investors, Inc. is a self-administered, self-managed equity real estate investment trust, or REIT. Our primary business is to develop, construct, own, and manage multifamily apartment communities. We currently own the following properties, all of which are located in metropolitan Atlanta, Georgia:

•: three tracts of land totaling 70 acres in various phases of development and construction that are zoned for 720 multifamily units, including a 10-acre tract zoned for 356 multifamily units that we are in the process of listing for sale;
•: two tracts of land totaling 12 acres held for sale, including an 11-acre tract zoned for 220 multifamily units which is under contract to be sold (these assets are classified as real estate assets held for sale in our consolidated balance sheets);
•: two retail shopping centers; and
•: an office building.

We intend to exit the retail business and focus exclusively on our primary business of developing, constructing, and managing high quality multifamily apartment communities for cash flow and long-term capital appreciation. We have significantly reduced our debt and our operating expenses during the past year, and we are continuing these efforts.

Recent Developments

Sale of Remaining 1.5 acres of the Peachtree Parkway Land

On March 20, 2013, we sold the remaining 1.5 acres of the Peachtree Parkway land to an unrelated third party for $450,000. We owned this parcel of land debt free and will use the sales proceeds for general corporate purposes.

Extension and Renewal of the Northridge Land Loan

On February 11, 2013, we extended the maturity date of our $2,000,000 Northridge land loan to May 22, 2013. The loan continues to bear interest at the rate of 12% per annum, and at closing, we paid the $60,000 in interest that will accrue during the extension period and a 1.0% extension fee. The loan documents provide another extension option to August 22, 2013 under substantially the same terms and conditions.

Sale of 20.6 acres of the Peachtree Parkway Land

As part of our strategy to address our needs for liquidity and capital resources, on February 7, 2013, we sold our 20.6-acre Peachtree Parkway land to Lennar Multifamily Investors, LLC for $7,590,000 ($7,090,000 net of a $500,000 payment required to release a restrictive covenant on the property). We used $7,000,200 of the sale proceeds to pay off our Peachtree Parkway land loan. This sale reduced our outstanding debt, decreased our operating expenses by approximately $475,000 per year and released our North Springs property, which served as additional collateral for the Peachtree Parkway loan. The North Springs property, which has a book value of $11,000,000 and an independent appraised value of $16,350,000, is now debt free.

Table of Contents

Exclusive Sales Listing Agreement for Northridge Office Building

As part of our 2013 business plan, on January 31, 2013 we retained CBRE, Inc., a global full service real estate firm, to sell our 37,864 square foot Northridge Office Building for a price of $5,750,000. We believe the market and demand for high quality office buildings has significantly improved, providing us with the opportunity to sell this non-core asset. If we sell this property as we intend, the sales proceeds will pay off our $2,498,334 loan secured by the Northridge Office Building and reduce our operating expenses by approximately $210,000 per year. At the closing of the sale, CBRE would be paid a commission of up to 5% of the sales price of the Northridge Office Building. The remaining proceeds from the sale would substantially increase the company's capital resources.

Extension and Renewal of Highway 20 Land Loan

On January 30, 2013, we renewed our $2,905,000 Highway 20 land loan and extended the maturity date to October 8, 2013. The loan modification was subject to the lender's review of a new appraisal of the Highway 20 property, which had an appraised value of $6,100,000 resulting in a loan to value ratio of 48%. As part of the loan extension and due to the increase in the appraised value of the Highway 20 property, the lender waived the scheduled requirement to make a one-time principal reduction in the amount of $300,000 by February 15, 2013. The loan continues to require fixed principal payments of $5,000 per month through the maturity date, and we established an $80,500 interest reserve to pay the monthly interest payments at the prime rate with a floor of 5.5% per annum.

Extension of Closing Date for the Sale of the Northridge Land

On January 28, 2013, the board of directors extended the closing date of the previously reported contract to sell the 11-acre Northridge property to Roberts Properties, Inc., which is wholly owned by Mr. Charles S. Roberts, the President and Chairman of the Board of Roberts Realty. The closing was scheduled to occur by January 31, 2013. Under the terms of the sales contract as amended, the purchase price remains $4,070,000, plus the reimbursement of $303,789 in development and construction expenses, and the closing is scheduled to occur on or before April 30, 2013. The sale would pay off our $2,000,000 Northridge land loan, and reduce our operating expenses by approximately $300,000 per year.

Pending Disposition of Spectrum at the Mall of Georgia Retail Center

We own Spectrum at the Mall of Georgia, a 30,050 square foot retail center located in Buford, Georgia that secures a $4,691,528 nonrecourse loan. As we have consistently stated in our annual and quarterly reports, our objective is to exit the retail shopping center business to focus exclusively on developing, constructing, and managing multifamily apartment communities. Given that objective and Spectrum's approximately $165,000 in annual negative cash flow, we elected not to make the debt service payment on that retail center in January 2013 and have allowed the loan to go into default. In February 2013, we notified the lender of our intent to transfer the Spectrum retail center to the lender in satisfaction of the $4,691,528 in debt secured by the property. Because the loan is non-recourse, we would have no further obligations to the lender for this loan. This transaction would reduce our debt by $4,691,528 and decrease our operating expenses by approximately $165,000 per year.

Sale of 2.937 acres of the Peachtree Parkway Land

On September 27, 2012, we sold 2.937 acres of our Peachtree Parkway property for $1,200,000. We also received the reimbursement of $515,530 of costs that were previously incurred to allow the Peachtree Parkway property to be rezoned to a commercial use. In conjunction with the closing, we made a $1,174,800 principal payment on our $8,175,000 Peachtree Parkway land loan. This principal payment reduced the outstanding balance of the loan to $7,000,200, and the maturity date of the loan

Table of Contents

was extended to April 30, 2013 on substantially the same terms and conditions. At the closing, we deposited with the lender $175,000 as an interest reserve to pay the monthly interest payments through the new maturity date. As noted above, we sold an additional 20.6 acres of our Peachtree Parkway property on February 7, 2013 and repaid the remaining outstanding principal balance of the loan in full.

Continuing Negative Operating Cash Flow and Maturing Short-Term Debt

Our primary liquidity requirements relate to (a) our continuing negative operating cash flow and (b) our maturing short-term debt. The primary reason for our negative operating cash flow is that we have five tracts of land totaling 82 acres that do not produce revenue but incur carrying costs of interest expense and real estate taxes. These five tracts of land have a combined carrying value of $23,881,789 and are encumbered with land loans totaling $7,895,000. We have substantial equity in these properties, which are an integral part of our multifamily community development and construction program. Because the performance of our retail centers and office building is insufficient to cover our operating expenses, including the carrying costs of our land, we expect to continue to generate negative operating cash flow and to operate at a loss until we raise the equity and obtain the construction loans needed to construct and lease up our planned Bradley Park and Highway 20 multifamily apartment communities as described in Business Plan below.

During the past year, we made substantial progress in reducing our debt, decreasing our operating expenses and improving our liquidity and capital resources, and we intend to continue to do so. As noted above, we sold 23.537 acres of the Peachtree Parkway property and used the $8,290,000 in proceeds to pay off the $8,175,000 loan secured by that property. This also reduced our operating expenses by more than $475,000 per year. We also recently sold the remaining 1.5 acres of the Peachtree Parkway property, which we owned debt free, for $450,000, and we will use the sales proceeds for general corporate purposes. Additionally, our North Springs property, which served as additional collateral for the Peachtree Parkway loan, is now owned debt free, and we are in the process of listing it for sale. The property has a book value of $11,000,000 and an independent appraised value of $16,350,000. The proceeds from this sale would substantially increase our liquidity and capital resources. We have listed our Northridge Office Building for a price of $5,750,000. This sale would pay off our $2,498,334 loan secured by the Northridge Office Building and reduce our operating expenses by approximately $210,000 per year. If we close the pending sale of our Northridge property, the proceeds of that sale would be approximately $4,335,400, which we would use to pay off our $2,000,000 loan secured by the property. We would use the remaining proceeds of $2,335,400 to provide additional capital resources to execute our business plan. The Northridge sale would also reduce our operating expenses by approximately $300,000 per year. We are also continuing to actively market for sale our one-acre Johns Creek commercial site, which has a book value of $500,000 and which we own debt free.

We had total debt of $17,500,808 as of March 20, 2013. We have four loans with a total principal balance of $10,393,334 that are scheduled to mature within the next 12 months: (a) the $2,000,000 Northridge loan that matures on May 22, 2013; (b) the $2,498,334 Northridge Office Building loan that matures on August 10, 2013; (c) the $2,895,000 Highway 20 loan that matures on October 8, 2013; and (d) the $3,000,000 Bradley Park loan that matures on October 31, 2013. If we are unable to renew these loans, we may repay all or part of these loans from the proceeds we expect to receive from the sale of the Northridge property and the sale of certain of our real estate assets or the funds we are seeking to raise, all as described in Business Plan below.

Table of Contents

Business Plan

Overview and Outlook

We intend to maximize shareholder value and to address our needs for liquidity and capital resources by executing our business plan. We plan to complete our exit from the retail business and focus exclusively on our primary business of developing, constructing, and managing high quality multifamily apartment communities for cash flow and long-term capital appreciation. During the past year, we have significantly reduced our debt and decreased our operating expenses, and we intend to continue these efforts. As explained above in Recent Developments, we (a) have sold all of our Peachtree Parkway property, (b) have listed our Northridge Office Building for sale, (c) have started the process of listing our North Springs property for sale, and (d) continue to actively market our Johns Creek commercial site for sale.

Our primary objective for 2013 is to continue to sell certain real estate assets to provide the equity to develop our Bradley Park and Highway 20 properties while continuing to reduce our debt and decrease our operating expenses. We explain below our strategies and plans for each property that we own.

We are in the process of listing for sale the North Springs property, which has a book value of $11,000,000 and an independent appraised value of $16,350,000. The North Springs property is a 10-acre site located on Peachtree Dunwoody Road across from the North Springs rail station in Sandy Springs. The North Springs property is zoned for 356 multifamily units, 210,000 square feet of office space and 56,000 square feet of retail space.

We currently hold two land parcels for sale:

1.: Northridge, an 11-acre site located close to the GA 400 and Northridge Road interchange in Sandy Springs zoned for 220 multifamily units. We have entered into a contract to sell Northridge to Roberts Properties for a total cash sales price of $4,070,000 (plus the reimbursement of $303,789 in development and construction expenses). The closing is scheduled to occur on or before April 30, 2013.
2.: Johns Creek, an approximately one-acre commercial site located in Johns Creek. We own this property debt free, and it has a book value of $500,000.

If we sell our Northridge property as anticipated, the proceeds of that sale would be approximately $4,335,400, which we would use to pay off our $2,000,000 loan secured by the property and to increase our capital resources. We will continue to market the Johns Creek commercial site for sale. We may raise private equity and are in discussions with possible joint venture participants such as pension funds, life insurance companies, hedge funds, foreign investors, and local investors. We may also form a new affiliate that would raise private equity for the specific purpose of funding the purchase of one of the remaining land parcels and constructing a multifamily apartment community. We may also sell one or more of our remaining land parcels to Roberts Properties as we have agreed to do with the Northridge land parcel.

Retail Centers and Office Building

We currently own two retail centers, which have the occupancy percentages provided below:

1.: Spectrum at the Mall of Georgia, a 30,050 square foot retail center located directly across from the Mall of Georgia in Gwinnett County that is 45.2% occupied. As

Table of Contents

previously explained, we are no longer making payments on the nonrecourse loan secured by this retail center, and we are seeking to transfer it to the lender as soon as possible in satisfaction of $4,691,528 principal amount of debt secured by the property.

2.: Bassett Shopping Center, a 19,949 square foot retail center located directly across from the Mall of Georgia in Gwinnett County that is 82.9% occupied. If we are ultimately unable to sell the Bassett retail center for a sales price at least equal to the debt, we may transfer the Bassett retail center to the lender in satisfaction of the debt. Because the loan is non-recourse, we would have no further obligations to the lender for this loan.

We currently hold an office building for sale:

•: Northridge Office Building, a 37,864 square foot building located in Sandy Springs that is 64.5% occupied. We occupy a portion of the building as our corporate headquarters.

We have retained a global full service real estate firm to sell our Northridge Office Building and believe that divesting the office building and the retail centers will make a sale, merger, or other business combination easier to consummate.

Development and Construction of Multifamily Communities

We are optimistic about the market for new apartments in the metro Atlanta submarkets where our land is located. We believe the economic climate for our business in these markets is strong for the following reasons:

•: Rents for the "Class A" or upscale apartment communities of the type that we build increased appreciably during 2012 and rental concessions continued to decrease. These positive trends are projected to continue throughout 2013.
•: Occupancy rates for Class A apartments in Atlanta continued to increase in 2012 and are forecasted to continue to increase in 2013.
•: The number of new apartments constructed in Atlanta was substantially lower in 2012 than in recent years and is forecast to remain low in 2013 by historical standards.
•: Employment in metro Atlanta is expected to grow, although at a lower rate when compared to historical levels.
•: Nationally, home ownership rates are declining, and we believe that this trend, coupled with larger required down payments for single-family home loans and the fact that the largest demographic group in the history of the United States is entering their peak renting years, will continue to lead to higher demand for apartments generally and in our market areas, specifically.

We believe that these favorable trends will increase the availability of debt and equity capital for the construction of new apartments in our market areas, particularly for companies like ours that have a long history of developing, constructing, leasing up, and selling upscale multifamily communities for substantial profits, and own tracts of land in areas we believe are well-suited for upscale apartments. For the reasons explained in Item 1A, Risk Factors, however, our beliefs and expectations about these favorable trends, or our ability to capitalize on them, may not prove to be accurate.

Table of Contents

We currently hold two land parcels for development and construction:

1.: Bradley Park, a 22-acre site located in Forsyth County zoned for 154 multifamily units. We have completed our development drawings and are ready to begin grading the site.
2.: Highway 20, a 38-acre site located in Cumming zoned for 210 multifamily units. We have started the necessary design and development work for this community.

We believe this is an opportune time to create new multifamily apartment communities and that we can create value for our shareholders as we have historically done through developing, constructing, managing, and selling high quality multifamily apartment communities for cash flow and long-term capital appreciation. We intend to move forward with the development and construction of our Bradley Park and Highway 20 multifamily apartment communities. We currently estimate that we will need approximately $37,425,000 in debt and equity to complete the construction of our Bradley Park and Highway 20 multifamily apartment communities.

We intend to use the proceeds from the sale of the North Springs property, the Northridge Office Building, the Northridge land and the other land parcel to provide the equity capital to develop and construct our Bradley Park and Highway 20 multifamily apartment communities.

Possible Sale, Merger, or Other Business Combination

We are continuing to explore numerous strategic alternatives in our efforts to maximize shareholder value. We have engaged in discussions with both private companies and individuals regarding a possible sale, merger, or other business combination. We have entered into mutual confidentiality agreements with 68 different entities, and discussions are ongoing with several of them. To date, we have not entered into any definitive agreement for such a transaction. Management continues to pursue and diligently work on any sale, merger, or other business combination that would reward shareholders and maximize their value.

Transactions with Charles S. Roberts and His Affiliates

Mr. Roberts has years of experience in developing multifamily communities, and we expect to continue to engage in transactions with Mr. Roberts, Roberts Properties, Roberts Properties Construction, Inc. ("Roberts Construction," which is owned by Mr. Roberts, and together with Roberts Properties, the "Roberts Companies") or other affiliates of Mr. Roberts. We describe all current agreements and arrangements with Mr. Roberts or the Roberts Companies in Item 13, Certain Relationships and Related Transactions, and Director Independence below.

We have paid fees to the Roberts Companies for various services and will continue to do so in the future. We have purchased properties from Roberts Properties, and we have retained the Roberts Companies for development services and construction services for some of our land parcels, as well as to renovate and reposition apartment communities that we have purchased. Roberts Realty, its predecessor limited partnerships, and other limited partnerships sponsored by Mr. Roberts have previously entered into agreements with Roberts Properties and Roberts Construction to provide these services for the

Table of Contents

following 23 apartment communities with a total of 4,648 units that were sold for a total sales price of $431,701,143. All of these communities were sold for a substantial profit.

		Name of Community			Sales Price		Sales Price Per Unit

+	*	Addison Place Townhomes (Phase I)	118	2008	$	20,000,000	$	169,492
+	*	Addison Place Apartments (Phase II)	285	2008		40,000,000		140,351
+	*	Ballantyne Place	319	2005		37,250,000		116,771
	*	St. Andrews at The Polo Club	200	2004		36,000,000		180,000
+	*	Preston Oaks (Phase I)	189	2004		23,762,500		125,728
+	*	Preston Oaks (Phase II)	24	2004		3,017,500		125,728
+	*	Bradford Creek	180	2004		18,070,000		100,389
+	*	Veranda Chase	250	2004		23,250,000		93,000
+	*	Plantation Trace (Phase I)	182	2004		16,866,400		92,673
+	*	Plantation Trace Townhomes (Phase II)	50	2004		4,633,600		92,673
+	*	River Oaks	216	2004		20,000,000		92,593
+	*	Highland Park	188	2003		17,988,143		95,682
+	*	Rosewood Plantation	152	2001		14,800,000		97,368
+	*	Crestmark Club (Phase I)	248	2001		18,562,874		74,850
+	*	Crestmark Club (Phase II)	86	2001		6,437,126		74,850
+	*	Ivey Brook	146	2000		14,550,000		99,658
+	*	Bentley Place	117	1999		8,273,000		70,709
	*	Windsong	232	1998		9,750,000		42,026
	*	Laurelwood	207	1997		10,601,000		51,213
+		Wynfield Trace	146	1995		10,865,000		74,418
+		Bridgewater	532	1995		39,535,000		74,314
+		Autumn Ridge	113	1995		7,750,000		68,584
+		Governor's Pointe	468	1986		29,739,000		63,545

		Total	4,648		$	431,701,143

+: The communities marked with a + were built on raw land that was purchased, zoned and developed by the Roberts Companies.
*: The communities marked with an * were designed, developed, constructed, renovated and managed by the Roberts Companies for Roberts Realty Investors, Inc.

Our board of directors has adopted a policy that all conflicting interest transactions must be authorized by a majority of the disinterested directors, but only if there are at least two directors who are disinterested with respect to the matter at issue. In addition, under the applicable rules of the NYSE MKT exchange, related party transactions are subject to appropriate review and oversight by the audit committee of our board of directors. In entering into transactions with the Roberts Companies related to the communities listed above, we complied with these policies.

Investment Policies

Our investment objectives are to achieve stable cash flow and, over time, to increase cash flow and portfolio value by continuing to develop multifamily communities. We may also acquire additional multifamily communities that we anticipate will produce additional cash flow, although we currently have no plans to do so. Our policy is to develop real estate projects where we believe favorable investment opportunities exist based on market conditions at the time of the investment. We expect to pursue our investment objectives primarily through the direct ownership of properties by the operating partnership,

Table of Contents

although, as discussed below, we may also pursue indirect property ownership opportunities. Our governing documents do not limit our future development or investment activities to any geographic area, product type, or specified percentage of our assets. We currently have no plans to invest in the securities of other issuers. We will not make any investments if the proposed investment would cause us to be an "investment company" under the Investment Company Act of 1940. We do not own any mortgages, and we do not intend to invest in mortgages or to engage in the originating, servicing, or warehousing of mortgages.

Financing Policies

Our organizational documents do not limit the amount of indebtedness we may incur. We have an informal policy that we will not incur indebtedness in excess of 75% of what the board of directors believes is the aggregate fair market value of our assets at any given time. We may re-evaluate our borrowing policies from time to time in light of then current economic conditions, relative costs of debt and equity capital, market value of the operating partnership's real estate assets, growth and acquisition opportunities, and other factors. Modification of this policy may adversely affect the interests of our shareholders.

To the extent that the board of directors determines the need to seek additional capital, we may raise capital through additional equity offerings, debt financings, or asset sales, or a combination of these methods. We will contribute the net proceeds of all equity capital we raise to the operating partnership in exchange for units or other interests in the operating partnership. We have not established any limit on the number or amount of mortgages on any single property or on the operating partnership's portfolio as a whole.

Other Policies

We have the authority to offer our securities and to repurchase and otherwise reacquire our securities, and we may engage in those activities in the future. Roberts Realty has adopted a policy that it will issue shares to unitholders who exercise their rights of redemption. In the future, we may make loans to joint ventures in which we participate to meet working capital needs. We have not engaged in trading, underwriting, agency distribution, or sale of securities of other issuers, and we do not intend to do so.

Under our stock repurchase program we are authorized to repurchase up to 540,362 shares of our outstanding common stock. Under the plan, we may repurchase shares from time to time by means of open market purchases and in solicited and unsolicited privately negotiated transactions, depending on availability, our cash position, and price. We do not expect to make any repurchases in the next 12 months.

Tax Structure

We have elected to be taxed as a REIT under the Internal Revenue Code. To continue to qualify as a REIT, we must continue to meet certain tests that, among other things, generally require that our assets consist primarily of real estate assets, our income be derived primarily from real estate assets, and that we distribute at least 90% of our REIT taxable income (other than net capital gains) to our stockholders annually. Provided we maintain our qualification as a REIT, we generally will not be subject to U.S. federal income taxes at the corporate level on our net income to the extent that we distribute that net income to our shareholders annually.

We intend to continue to qualify as a REIT unless, because of changing circumstances or changes in the Internal Revenue Code or in applicable regulations, our board of directors decides that it is no longer in our best interests to qualify as a REIT. In that event, we would be required under our articles of incorporation to obtain the consent of the holders of a majority of the outstanding shares of our common stock.

Table of Contents

The Operating Partnership

We conduct our business through Roberts Properties Residential, L.P., which either directly or through one of its wholly owned subsidiaries owns all of our properties and which we refer to as the operating partnership. The agreement of limited partnership of the operating partnership provides that it is not required to be dissolved until 2093. Roberts Realty is the sole general partner of the operating partnership and as of March 20, 2013 owned an 84.53% interest in the operating partnership. Our ownership interest in the operating partnership entitles us to share in cash distributions from, and in the profits and losses of, the operating partnership generally in proportion to our ownership percentage. In this report, we refer to units of limited partnership interest in the operating partnership as "units" and to the holders of units as "unitholders."

Unitholders generally have the right to require the operating partnership to redeem their units. A unitholder who submits units for redemption will receive, at our election, either (a) 1.647 shares for each unit submitted for redemption, or (b) cash for those units at their fair market value, based upon the then current trading price of the shares. We have adopted a policy of issuing shares in exchange for units. We also have the right, at our election, to issue shares in exchange for all outstanding units.

Our articles of incorporation limit ownership by any one shareholder to 3.7% of the outstanding shares of our common stock, with two exceptions. First, Mr. Roberts can beneficially own up to 35% of the outstanding shares. Second, any shareholder who beneficially owned more than 3.7% of our outstanding common shares on July 22, 2004, the date that we filed an amendment to our articles of incorporation revising the ownership limits, can retain indefinitely the shares the shareholder owned as of that date but cannot increase that ownership in the future (other than by exchanging the units the shareholder owned on that date for shares). Accordingly, a unitholder, including Mr. Roberts, cannot redeem units if upon their redemption he would hold more shares than permitted under the applicable percentage limit (subject to the exceptions as noted).

Shares issued for units are registered with the SEC and are freely transferable, other than by affiliates. Whenever we issue shares, we are obligated to contribute the net proceeds from that issuance to the operating partnership, and the operating partnership is obligated to issue units to us. The operating partnership agreement permits the operating partnership, without the consent of the unitholders, to sell additional units and add limited partners.

Competition

Multifamily Communities

The tracts of land on which we are developing or plan to develop new multifamily communities are located in developed areas that include other multifamily communities. The number of competitive multifamily communities in a particular area could have a material adverse effect on our rental rates and our ability to lease multifamily units at any newly developed or acquired community. We face competition from other real estate investors, including insurance companies, pension and investment funds, partnerships and investment companies, and other multifamily REITs, to acquire and develop multifamily communities and to acquire land for future development. As an owner of multifamily communities, we will face competition for prospective residents from other multifamily community owners whose communities may be perceived to offer a better location or better amenities, or whose rent may be perceived as a better value given the quality, location, and amenities that the prospective resident seeks. In addition, despite the adverse conditions in the single-family housing market, we may lose both current and prospective renters who see the current market as an opportunity to buy a single-family home at a reduced price.

Table of Contents

Office Building and Retail Centers

Our office building and retail centers face competition from similar office buildings and retail centers within their geographic areas to lease new space, renew leases, or re-lease spaces as leases expire. In addition, the recession compelled prospective office and retail tenants to curtail expansion plans, and some tenants have been forced to close their businesses or file bankruptcy. Other properties that compete with ours may be newer, better located, better capitalized, or have better tenants than our properties. Any new competitive properties that are developed within our local markets, or older competitive properties that have lost tenants, may result in increased competition for customer traffic and creditworthy tenants by way of lower rental rates or more attractive lease terms, especially in this weak economic environment. We may not be able to lease our properties, renew leases, or obtain new tenants to replace vacating tenants, and the terms of renewals or new leases (including the cost of required renovations or concessions to tenants) may be less favorable to us than current lease terms. Increased competition for tenants may require us to make capital improvements to properties that we would not have otherwise made. In addition, our retail centers face competition from alternate forms of retailing, including home shopping networks, mail order catalogues, and online shopping services, which may limit the number of retail tenants that desire to seek space in shopping centers generally.

Environmental and Other Regulatory Matters

Under various federal, state, and local laws and regulations, an owner of real estate is liable for the costs of removal or remediation of hazardous or toxic substances on its property. Those laws often impose liability without regard to whether the owner knew of, or was responsible for, the presence of the hazardous or toxic substances. The costs of remediation or removal of the substances may be substantial, and the presence of the substances, or the failure to remediate the substances promptly, may adversely affect the owner's ability to sell the real estate or to borrow using the real estate as collateral. In connection with the ownership and operation of our operating properties and other real estate assets, we may be potentially liable for remediation and removal costs and for damages to persons or property arising from the existence or maintenance of hazardous or toxic substances.

The preliminary environmental assessments of our operating properties and other real estate assets have not revealed any environmental liability that we believe would have a material adverse effect on our business, assets, or results of operations, nor are we aware of any liability of that type. Nevertheless, these assessments may not have revealed all environmental liabilities, and we may have material environmental liabilities that we do not know about. Future uses or conditions, including changes in applicable environmental laws and regulations, may cause us to have environmental liability.

Insurance

We carry comprehensive property, general liability, fire, extended coverage, environmental, and rental loss insurance on all of our existing properties, with policy specifications, insured limits, and deductibles customarily carried for similar properties. We carry similar insurance with respect to our properties under development or properties under construction, but with appropriate exceptions given the nature of these properties. We believe that our properties are adequately covered by insurance.

Segment Information

We currently have three reportable operating segments:

•: the retail/office segment consisting of two retail centers and one office building;
•: the land segment consisting of various tracts of land; and

Table of Contents

•: the corporate segment consisting primarily of operating cash and cash equivalents plus miscellaneous other assets.

For more detailed information about these segments, please see Note 6 – Segment Reporting, to the audited consolidated financial statements included in this report. For information about our properties, please see Item 2, Properties, below.

Corporate Information

Roberts Realty Investors, Inc. is a Georgia corporation formed in 1994. Our executive offices are located at 450 Northridge Parkway, Suite 302, Atlanta, Georgia 30350, and our telephone number is (770) 394-6000. We file annual, quarterly, and current reports, proxy statements, and other information with the SEC that is available to the public at the SEC's website at www.sec.gov. We have one full-time employee. Under the terms of a reimbursement arrangement for services provided by Roberts Properties, we reimburse Roberts Properties the cost of providing consulting services in an amount equal to an agreed-upon hourly billing rate for each employee multiplied by the number of hours that the employee provided services to us. The reimbursement arrangement allows us to obtain services from experienced and knowledgeable personnel without having to bear the cost of employing them on a full-time basis.

Table of Contents

ITEM 1A. RISK FACTORS

Investors or potential investors in Roberts Realty should carefully consider the risks described below. These risks are not the only ones we face. Additional risks of which we are presently unaware or that we currently consider immaterial may also impair our business operations and hinder our financial performance, including our ability to make distributions to our investors. We have organized our summary of these risks into five subsections:

•: financing risks;
•: real estate related risks;
•: tax risks;
•: environmental and other legal risks; and
•: risks for investors in our stock.

This section includes forward-looking statements.

Financing Risks

We face the maturity of our short-term debt, and we may be unable to repay, extend, or refinance this debt.

We have four loans with a total principal balance of $10,393,334 that are scheduled to mature within the next 12 months: (a) the $2,000,000 Northridge loan that matures on May 22, 2013; (b) the $2,498,334 Northridge Office Building loan that matures on August 10, 2013; (c) the $2,895,000 Highway 20 loan that matures on October 8, 2013; and (d) the $3,000,000 Bradley Park loan that matures on October 31, 2013. If we do not sell the Northridge property as we expect; or we are unable to extend or refinance our debt at maturity on acceptable terms, or at all; or we are unable to find alternative funding and raise additional capital for the development of the Bradley Park property; or we are unable to pursue successfully the strategies to reduce negative cash flow described elsewhere in this report, we might be compelled to dispose of one or more of our properties on disadvantageous terms, which could result in losses to us. Those losses could have a material adverse effect on our ability to pay amounts due on our debt and to pay distributions to our investors.

If we are unable to meet mortgage payments on any mortgaged property, the mortgage holder could foreclose upon the property and take other actions.

If we are unable to meet mortgage payments on any mortgaged property, the mortgage holder could foreclose upon the property, appoint a receiver, and receive an assignment of rents and leases, or pursue other remedies, all with a consequent loss of our revenues and asset value. (Both of our retail shopping center loans are nonrecourse.) Foreclosures could also create taxable income without accompanying cash proceeds, thereby hindering our ability to meet the REIT distribution requirements of the Internal Revenue Code.

We may not be able to obtain the debt and equity we need to carry out our planned development and construction program.

To start construction of our Bradley Park multifamily land parcel, we will need a substantial amount of additional debt and equity capital. We currently estimate that it would take approximately $37,425,000 to complete the construction of our Bradley Park and Highway 20 multifamily communities. We believe that the equity we need to fund the construction of a new multifamily property, in addition to a construction loan, would come from the proceeds of a sale of another property, the contributions of a joint venture partner, or from raising private equity. We are not able to provide any assurance that we

Table of Contents

will be able to raise the debt and equity needed to complete the construction of even one new multifamily community. If we are unable to obtain debt and equity on favorable terms, we will be unable to carry out our planned development and construction program, and our returns to investors will be reduced accordingly.

Rising interest rates could materially and adversely affect the cost of our indebtedness.

We have incurred and may again in the future incur debt that bears interest at a variable rate. As of March 20, 2013, we have $8,393,334 in loans that bear interest at a floating interest rate. Accordingly, increases in interest rates would increase our interest costs, which could materially and adversely affect our results of operations and our ability to pay amounts due on our debt and future distributions to our investors.

We face the normal risks associated with debt financing.

We are subject to the normal risks associated with debt financing, including the risks that our cash flow will be insufficient to meet required payments of principal and interest and that we will not be able to renew, repay, or refinance our debt when it matures or that the terms of any renewal or refinancing will not be as favorable as the existing terms of that debt. The payment terms contained in each mortgage note secured by one of our properties do not fully amortize the loan balance, and a balloon payment of the balance will be due upon its maturity. If we are unable to pay our obligations to our secured lenders, they could proceed against any or all of the collateral securing our indebtedness to them. In addition, a breach of the restrictions or covenants contained in our loan documents could cause an acceleration of our indebtedness. We may not have, or be able to obtain, sufficient funds to repay our indebtedness in full upon acceleration. If we are unable to refinance our debt upon acceleration or at scheduled maturity on acceptable terms or at all, we face the risks described in the first risk factor above.

Increased debt and leverage could affect our financial position and impair our ability to make distributions to our investors.

Our organizational documents do not limit the amount of debt that we may incur. We have an informal policy that we will not incur indebtedness in excess of 75% of what the board of directors believes is the fair market value of our assets at any given time. In the future, however, we may re-evaluate our borrowing policies in light of then current economic conditions, relative costs of debt and equity capital, market value of our real estate assets, growth and acquisition opportunities, and other factors. Modification of this policy may adversely affect the interests of our shareholders. Additional leverage may:

•: increase our vulnerability to general adverse economic and industry conditions;
•: limit our flexibility in planning for, or reacting to, changes in our business, which may place us at a competitive disadvantage compared to our competitors that have less debt; and
•: limit, along with the possible financial and other restrictive covenants in our indebtedness, our ability to borrow additional funds.

Any of the foregoing could materially and adversely affect our results of operations and our ability to pay amounts due on our debt and distributions to our investors.

We could be negatively affected by the condition of Fannie Mae or Freddie Mac.

Fannie Mae and Freddie Mac are a major source of financing for secured multifamily rental real estate. We and other multifamily companies depend heavily on Fannie Mae and Freddie Mac to finance

Table of Contents

growth by purchasing multifamily loans. A decision by the government to eliminate Fannie Mae or Freddie Mac or reduce government support for apartment mortgage loans may adversely affect interest rates, capital availability, development of multi-family communities and the value of multi-family residential real estate.

Real Estate-Related Risks

Our business currently operates at a loss.

Between 2003 and 2010, we sold nine multifamily communities for a total of $260,838,143. From the net proceeds of these sales, we have paid cash distributions totaling $43,836,983, or $6.02 per share/unit, to our shareholders and unitholders, as well as stock dividends of $4,693,415, or $1.25 per share, to shareholders. Having sold all of our apartment communities during this period, we currently do not have any multifamily communities in our portfolio. As a result, we have experienced and continue to experience negative operating cash flow. Because land does not generate revenue, a substantial portion of our negative cash flow is due to the carrying costs (interest expense and property taxes) on our land. In addition, the financial performance of our office building and our neighborhood retail centers continues to be challenged by the weakness in the national and local economy. For these reasons, we expect to continue to generate negative operating cash flow and to operate at a loss until we are able to construct and lease up our planned multifamily communities as described elsewhere in this report.

Real estate properties are illiquid and are difficult to sell in a poor market environment like the present.

Real estate investments are relatively illiquid, which limits our ability to react quickly to adverse changes in economic or other market conditions. Our ability to dispose of assets depends on prevailing economic and market conditions. We may be unable to sell our properties to repay debt, to raise capital we need to fund our planned development and construction program, or to fund distributions to investors. We have entered into a contract to sell our 11-acre Northridge property to Roberts Properties for a cash sales price of $4,070,000, plus the reimbursements of certain costs. Under the amended terms of the contract, the closing is scheduled to occur on or before April 30, 2013. We can provide no assurances that Roberts Properties will be able to close on the purchase of Northridge.

Construction risks inherent in the development and construction of new properties could negatively affect our financial performance.

We currently estimate that it would cost approximately $37,425,000 to complete construction of the Bradley Park and Highway 20 multifamily communities. Development and construction costs may exceed our original estimates due to events beyond our control, including:

•: increased costs for or any unavailability of materials or labor;
•: environmental impact studies by the government;
•: weather delays;
•: increased interest costs due to rising interest rates; and
•: any financial instability of the developer (Roberts Properties), general contractor (Roberts Construction) or any subcontractor.

We may also be unable to complete development or construction of a property on schedule, which could result in increased debt service expense or construction costs and loss of rents until the property is ready for occupancy. Additionally, the time required to recoup our development and construction costs and to realize a return, if any, on those costs can be prolonged and delayed. Further, we typically enter into construction contracts on a cost plus basis. Because these contracts do not provide

Table of Contents

for a guaranteed maximum price, we must bear the entire amount of any increase in costs above the amounts we initially estimate, and these costs may be material.

We face leasing risks in our planned development and construction program.

The success of a multifamily development project depends in part on leasing to residents with acceptable rental rates within the lease-up period. If the multifamily communities we build are not leased on schedule and at the expected rental rates, the yields, returns, and value creation on the communities could be adversely affected. Whether or not residents are willing to enter into leases on the terms and conditions we project and on the timetable we expect will depend on a large variety of factors, many of which are outside our control.

We are currently concentrated in metropolitan Atlanta, and adverse changes in economic or market conditions in Atlanta could negatively affect our financial performance and condition.

All our properties are located in metropolitan Atlanta, Georgia, and adverse changes in economic or market conditions in this area could negatively affect our performance. These factors include the following:

•: the failure of the employment rate to rebound to prior levels;
•: declining neighborhood values in the submarkets in which our properties are located;
•: additional zoning and other regulatory conditions;
•: competition from other properties;
•: increasing property taxes;
•: weather problems, including periods of prolonged drought;
•: limited future economic growth due to judicial or other governmental action that restricts withdrawals from Lake Lanier, Atlanta's primary water supply; and
•: price increases for materials or labor.

Deteriorating general economic or social conditions or any natural disasters in the metropolitan Atlanta area could materially and adversely affect the value of our portfolio, our results of operations, and our ability to pay amounts due on our debt and to make distributions to our investors.

We face conflicts of interest because of our business dealings with our Chief Executive Officer and his affiliates.

Our business practice is to retain Roberts Properties to develop our properties and Roberts Construction to construct our properties. Mr. Charles S. Roberts owns all of the equity interests in these two companies. We have in the past acquired properties from Mr. Roberts or his affiliates, and we have agreed to sell our Northridge property to Roberts Properties as described elsewhere in this report. One of our goals for 2013 is continue to sell properties to decrease our negative cash flow and increase our cash balances. We may sell one or more properties to Roberts Properties or an affiliate of Roberts Properties in addition to the Northridge property. Although each agreement between Roberts Realty or the operating partnership on one hand and Roberts Properties or its affiliates on the other hand must be approved by our audit committee and the independent members of our board of directors, conflicts of interest inherent in these business transactions could result in our paying more for property or services than we would pay an independent seller or provider (or receiving less than we would receive from an independent buyer). These agreements and transactions have not had and will not have the benefit of

Table of Contents

arm's-length negotiation of the type normally conducted between unrelated parties. These business relationships also expose us to the following risks, among others:

•: the possibility that the Roberts Companies might incur severe financial problems or even become bankrupt;
•: the possibility that the Roberts Companies may at any time have economic or business interests or goals that are or that become inconsistent with our business interests or goals; or
•: the possibility that the Roberts Companies may be in a position to take action contrary to our instructions or requests or contrary to our policies or objectives.

Further, Mr. Roberts may face conflicts of interest in dealing with lenders who have made loans both to us and to private entities he owns or controls.

We face substantial competition.

All of our properties are located in developed areas where we face substantial competition from other properties and from other real estate companies that own or may develop or renovate competing properties. The substantial number of competitive properties and real estate companies in our market areas could have a material adverse effect on our ability to maintain and increase occupancy levels and rental rates, and to attract creditworthy residents and commercial tenants. As a result, these factors could materially and adversely affect the value of our real estate portfolio, our results of operations, our ability to pay amounts due on our mortgage debt, and our ability to pay distributions to our investors.

The ability of our potential residents to buy single-family homes at depressed prices could adversely affect our revenues from the multifamily communities we develop and construct.

Our multifamily communities have historically competed with numerous housing alternatives in attracting residents, including other multifamily communities, single-family rental homes, as well as owner occupied single-family homes. The affordability of owner occupied single-family homes caused by low mortgage interest rates and historically high foreclosure rates may adversely affect our ability to retain our residents, lease multifamily units, and increase or maintain our rental rates. We expect the desire and ability of prospective residents to purchase a single-family home to continue to be a substantial competitive risk.

Changes in market or economic conditions may affect our business negatively.

General economic conditions and other factors beyond our control may adversely affect real property income and capital appreciation. The current economic climate leaves us vulnerable to adverse conditions beyond our control and has resulted in a weak real estate market in metropolitan Atlanta.

Our office and retail tenants may go bankrupt or be unable to make lease payments.

The operating revenues from our office and retail properties depend on entering into leases with and collecting rents from tenants. Economic conditions have adversely affected existing tenants as well as prospective tenants in our market and, accordingly, could affect their ability to pay rents and possibly to occupy their space. Tenants may be forced to file for bankruptcy protection, and the bankruptcy court may reject those leases or terminate them. If leases expire and are not renewed, replacement tenants may not be available under the same terms and conditions as the previous tenant. In addition, if market rental rates are lower than the previous contractual rates, our revenues, and cash flows could be adversely affected. As a result, if a significant number of our retail or office tenants fail to pay their rent

Table of Contents

due to bankruptcy, weakened financial condition, or otherwise, it would negatively affect our financial performance and cash flow.

Losses from natural catastrophes may exceed our insurance coverage.

We carry comprehensive liability, fire, flood, extended coverage, and rental loss insurance on our properties, which we believe is customary in amount and type for real property assets. We intend to obtain similar coverage for properties acquired in the future. Some losses of a catastrophic nature, such as losses from floods or high winds, may be subject to limitations. We may not be able to maintain our insurance at a reasonable cost or in sufficient amounts to protect us against potential losses. Further, our insurance costs could increase in future periods. If we suffer a substantial loss, our insurance coverage may not be sufficient to pay the full current market value of the lost investment. Inflation, changes in building codes and ordinances, environmental considerations, and other factors also might make it impractical to use insurance proceeds to replace a damaged or destroyed property.

Our business depends on key personnel.

Our success depends on our ability to attract and retain the services of executive officers and key personnel. We face substantial competition for qualified personnel in the real estate industry and the loss of our key personnel, particularly Mr. Roberts, could have an adverse effect on us. We do not carry key person insurance on any of our executive officers or other key employees.

If we are unable to increase our occupancy and rental rates at our office and retail properties, the performance of those properties will continue to suffer.

Our office building and our retail properties are not fully leased and occupied. If we are unable to lease the remaining vacant space of our properties as we intend, our financial performance will continue to suffer.

Our real estate assets may be subject to further impairment charges.

We have recorded non-cash impairment losses on a number of our assets, and we may have to record additional impairment losses in the future. Although we believe we have applied reasonable estimates and judgments in determining the proper classification of our real estate assets, these estimates require the use of estimated market values, which are currently difficult to assess. If changes in circumstances require us to adjust our valuation assumptions for our assets, we could be required to record additional impairment losses. Any future impairment could have a material adverse effect on our results of operations for the period in which we record the impairment losses.

Our exploration of potential strategic alternatives may be unsuccessful.

We continue to explore potential strategic alternatives for the company. These alternatives could include a sale, merger, other business combination, or recapitalization. We caution that there can be no assurance that the exploration of strategic alternatives will result in any transaction, or that, if completed, any transaction will be on attractive terms.

Table of Contents

Terrorism could impair our business.

Terrorist attacks and other acts of violence or war could have a material adverse effect on our business and operating results. Attacks that directly affect one or more of our properties could significantly affect our ability to operate those properties and impair our ability to achieve the results we expect. Our insurance coverage may not cover losses caused by a terrorist attack. In addition, the adverse effects that such violent acts and threats of future attacks could have on the U.S. economy could similarly have a material adverse effect on our business and results of operations.

Tax Risks

Our company may fail to qualify for REIT status under federal income tax laws.

Our qualification as a REIT for federal income tax purposes depends upon our ability to meet on a continuing basis, through actual annual operating results, distribution levels, diversity of stock ownership, various qualification tests, and organizational requirements for REITs under the Internal Revenue Code. We believe that we have qualified for taxation as a REIT for federal income tax purposes since our inception in 1994, and we plan to continue to meet the requirements to qualify as a REIT in the future. Many of these requirements, however, are highly technical and complex. We cannot guarantee, therefore, that we have qualified or will continue to qualify in the future as a REIT. The determination that we qualify as a REIT for federal income tax purposes requires an analysis of various factual matters that may not be totally within our control. Even a technical or inadvertent mistake could jeopardize our REIT status. Furthermore, Congress and the IRS might make changes to the tax laws and regulations, and the courts might issue new decisions that make it more difficult, or impossible, for us to remain qualified as a REIT.

If we fail to qualify for taxation as a REIT in any taxable year, and certain relief provisions of the Internal Revenue Code did not apply, we would be subject to tax (including any applicable alternative minimum tax) on our taxable income at regular corporate rates, leaving less money available for distributions to investors. In addition, distributions to shareholders in any year in which we failed to qualify would not be deductible for federal income tax purposes. Failing to qualify as a REIT would also eliminate our requirement to make distributions to shareholders. We would be disqualified from taxation as a REIT for the four taxable years following the year during which we ceased to qualify as a REIT, unless we were entitled to relief under specific statutory provisions. We cannot predict whether in all circumstances we would be entitled to such statutory relief. Our failure to qualify as a REIT likely would have a significant adverse effect on the value of our common stock.

Our operating partnership may fail to be treated as a partnership for federal income tax purposes.

Management believes that our operating partnership qualifies, and has qualified since its formation in 1994, as a partnership for federal income tax purposes and not as a publicly traded partnership taxable as a corporation. We can provide no assurance; however, that the IRS will not challenge the treatment of the operating partnership as a partnership for federal income tax purposes or that a court would not sustain such a challenge. If the IRS were successful in treating the operating partnership as a corporation for federal income tax purposes, then the taxable income of the operating partnership would be taxable at regular corporate income tax rates. In addition, the treatment of the operating partnership as a corporation could cause us to fail to qualify as a REIT.

Table of Contents

We may choose to pay dividends in our own stock, in which case shareholders may be required to pay tax in excess of the cash they receive.

We may declare and distribute taxable dividends that are payable in part in our stock, as we did in the December 2008 and January 2009. Taxable shareholders receiving those dividends will be required to include the full amount of the dividend as income to the extent of our current and accumulated earnings and profits for federal income tax purposes. As a result, a U.S. shareholder may be required to pay tax with respect to those dividends in excess of the cash received. If a U.S. shareholder sells the stock that the shareholder receives as a dividend to pay this tax, the sales proceeds may be less than the amount included in income with respect to the dividend, depending on the market price of our stock at the time of the sale. In addition, the trading price of our stock would experience downward pressure if a significant number of our shareholders sell shares of our stock to pay taxes owed on dividends.

A redemption of units is taxable.

Holders of units in the operating partnership should keep in mind that redemption of units will be treated as a sale of units for federal income tax purposes. The exchanging holder will generally recognize gain in an amount equal to the value of the common shares, plus the amount of liabilities of the operating partnership allocable to the units being redeemed, less the holder's tax basis in the units. It is possible that the amount of gain recognized or the resulting tax liability could exceed the value of the shares received in the redemption.

Environmental and Other Legal Risks

We may have liability under environmental laws.

Under federal, state, and local environmental laws, ordinances, and regulations, we may be required to investigate and clean up the effects of releases of hazardous or toxic substances or petroleum products at our properties, regardless of our knowledge or responsibility, simply because of our current or past ownership or operation of the real estate. Therefore, we may have liability with respect to properties we have already sold. If environmental problems arise, we may have to take extensive measures to remedy the problems, which could adversely affect our cash flow and our ability to pay distributions to our investors because:

•: we may have to pay for property damage and for investigation and clean-up costs incurred in connection with the contamination;
•: the law typically imposes clean-up responsibility and liability regardless of whether the owner or operator knew of or caused the contamination;
•: even if more than one person may be responsible for the contamination, each person who shares legal liability under the environmental laws may be held responsible for all of the clean-up costs; and
•: governmental entities or other third parties may sue the owner or operator of a contaminated site for damages and costs.

These costs could be substantial and in extreme cases could exceed the value of the contaminated property. The presence of hazardous or toxic substances or petroleum products and the failure to remediate that contamination properly may materially and adversely affect our ability to borrow against, sell, or lease an affected property. In addition, applicable environmental laws create liens on contaminated sites in favor of the government for damages and costs it incurs in connection with a contamination.

Table of Contents

We face risks in complying with Section 404 of the Sarbanes-Oxley Act of 2002.

Effective internal controls are necessary for us to provide reliable financial reports and effectively prevent fraud. If we cannot provide reliable financial reports or prevent fraud, we could be subject to regulatory action or other litigation, and our operating results could be adversely affected. Since 2007, we have been required to document and test our internal control procedures to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, which requires our management to assess annually the effectiveness of our internal control over financial reporting.

During the course of our testing, we may identify deficiencies that we may not be able to remediate in a timely manner. In addition, if we fail to maintain the adequacy of our internal accounting controls, as those standards are modified, supplemented, or amended from time to time, we may be unable to ensure that we can conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404. Failure to achieve and maintain an effective internal control environment could cause us to face regulatory action and also cause investors to lose confidence in our reported financial information, either of which could have an adverse effect on our stock price.

Failure to comply with the Americans with Disabilities Act or other similar laws could result in substantial costs.

A number of federal, state, and local laws and regulations (including the Americans with Disabilities Act) may require modifications to existing buildings or restrict certain renovations by requiring improved access to such buildings by disabled persons and may require other structural features that add to the cost of buildings under construction. Legislation or regulations adopted in the future may impose further burdens or restrictions on us with respect to improved access for disabled persons. The costs of compliance with these laws and regulations may be substantial, and restrictions on construction or completion of renovations may limit implementation of our investment strategy in certain instances or reduce overall returns on our investments, which could have a material adverse effect on us and our ability to pay distributions to investors and to pay our mortgage debt as required.

Risks for Investors in Our Stock

We do not pay regular quarterly dividends, and we do not anticipate making distributions to investors for the indefinite future, other than possibly to preserve our REIT status if so required.

Unlike other REITs that pay regular quarterly dividends, we have not paid a quarterly dividend since the third quarter of 2001, and we presently have no plans to resume paying regular quarterly dividends. Since 2001, we have paid distributions only from the net cash proceeds of property sales. In light of our negative cash flow from operations, we will pay distributions only (a) from the net cash proceeds of a property sale or (b) if we need to do so to maintain our status as a REIT for federal income tax purposes.

The market price of our stock is subject to fluctuation as a result of our operating results, the operating results of other REITs, and changes in the stock market in general.

The daily trading volume of our common stock on the NYSE MKT exchange has historically been relatively light, and the market price may not reflect the fair market value of our common stock (or our net asset value) at any particular moment. Prior sales data do not necessarily indicate the prices at which our common stock would trade in a more active market. The market value of our common stock may or may not reflect the market's perception of our operating results, the potential for growth in the value of our properties as we develop and construct multifamily communities, the potential for future

Table of Contents

cash dividends from property sales, and the real estate market value of our underlying assets. In addition, general market conditions or market conditions of real estate companies in general could adversely affect the value of our common stock.

Additional issuances of equity securities may dilute the investment of our current shareholders.

Issuing additional equity securities to finance future developments and acquisitions instead of incurring additional debt could dilute the interests of our existing shareholders. Our ability to execute our business plan depends on our access to an appropriate blend of capital, which could include a line of credit and other forms of secured and unsecured debt; equity financing; or joint ventures.

Restrictions on changes of control could prevent a beneficial takeover for investors.

A number of the provisions in our articles of incorporation and bylaws have or may have the effect of deterring a takeover of the company. In particular, to qualify as a REIT for federal income tax purposes, we must comply with various requirements and avoid various prohibited events. A company cannot be a REIT if, during the last half of a taxable year, more than 50% in value of its outstanding stock is owned by five or fewer individual shareholders, taking into account certain constructive ownership tests. To help the company comply with that test, our articles of incorporation provide in substance that (a) Mr. Roberts cannot own more than 35% of the outstanding shares of our common stock, and (b) no other person can own more than 3.7% of our outstanding common stock. These provisions, which are intended to limit the ownership of our common stock by five persons to no more than 49.8% of our outstanding shares, have or may have the effect of deterring a takeover of the company.

In addition, our articles of incorporation and bylaws have other provisions that have or may have the effect of deterring a takeover of the company, including:

•: our classified board of directors, which may render more difficult a change in control of the company or removal of incumbent management, because the term of office of only one-third of the directors expires in a given year;
•: the ability of our board of directors to issue preferred stock;
•: provisions in the articles of incorporation to the effect that no transaction of a fundamental nature, including mergers in which the company is not the survivor, share exchanges, consolidations, or sale of all or substantially all of the assets of the company, may be effectuated without the affirmative vote of at least three-quarters of the votes entitled to vote generally in any such matter;
•: provisions in the articles of incorporation to the effect that they may not be amended (except for certain limited matters) without the affirmative vote of at least three-quarters of the votes entitled to be voted generally in the election of directors;
•: provisions in the bylaws to the effect that they may be amended by either the affirmative vote of three-quarters of all shares outstanding and entitled to vote generally in the election of the directors, or the affirmative vote of a majority of the company's directors then holding office, unless the shareholders prescribed that any such bylaw may not be amended or repealed by the board of directors;
•: Georgia anti-takeover statutes under which the company may elect to be protected; and
•: provisions to the effect that directors elected by the holders of common stock may be removed only by the affirmative vote of shareholders holding at least 75% of all of the votes entitled to be cast for the election of directors.

ITEM 1B. UNRESOLVED STAFF COMMENTS.

Not applicable.

Table of Contents

ITEM 2. PROPERTIES.

General

We own the following properties, all of which are located in north metropolitan Atlanta, Georgia.

Retail and Office

The occupancy percentages shown for each property are as of March 20, 2013.

1.: Bassett Shopping Center, a 19,949 square foot retail center located directly across from the Mall of Georgia in Gwinnett County that is 82.9% occupied.
2.: Spectrum at the Mall of Georgia, a 30,050 square foot retail center located directly across from the Mall of Georgia in Gwinnett County that is 45.2% occupied. As explained in Item 1, Business, we are no longer making payments on the nonrecourse loan secured by this retail property, and we are seeking to transfer it to the lender in satisfaction of the loan.
3.: Northridge Office Building, a 37,864 square foot building located in Sandy Springs that is 64.5% occupied. We occupy a portion of the third floor of the building as our corporate headquarters, and we have entered into leases for the remaining space on the third floor with Roberts Properties and Roberts Construction. As explained in Item 1, Business, the office building was recently listed for sale.

Land

Land Parcels Held for Development and Construction

1.: Bradley Park, a 22-acre site located in Forsyth County zoned for 154 multifamily units.
2.: Highway 20, a 38-acre site located in Cumming zoned for 210 multifamily units.
3.: North Springs, a 10-acre site located on Peachtree Dunwoody Road in Sandy Springs zoned for 356 multifamily units, 210,000 square feet of office space, and 56,000 square feet of retail space. We are in the process of listing the North Springs property for sale.

Land Parcels Classified as Real Estate Assets Held for Sale

1.: Northridge, an 11-acre site located close to the GA 400 and Northridge Road interchange in Sandy Springs zoned for 220 multifamily units. We have entered into a contract to sell Northridge to Roberts Properties for a total cash sales price of $4,070,000 plus certain cost reimbursements. The closing is scheduled to occur on or before April 30, 2013.
2.: Johns Creek, an approximately one-acre commercial site located in Johns Creek, Georgia.

Table of Contents

Demographic Data

We believe the long-term demand for multifamily housing in Atlanta will continue to increase as Atlanta's population grows. We believe that the outlook for Atlanta's multifamily market is positive and the trends for the apartment industry as a whole are on the upswing. We believe that the projected long-term decrease in home ownership rates will result in more renters, which will in turn increase the demand for multifamily housing. The following information is based on statistical estimates published by the Atlanta Regional Commission, which we refer to as the ARC. The ARC is the regional planning and governmental coordination agency for the 10-county Atlanta Region, which is composed of Cherokee, Clayton, Cobb, DeKalb, Douglas, Fayette, Fulton, Gwinnett, Henry, and Rockdale counties. The population of the Atlanta Region increased by 21.9% from 3,429,379 persons in 2000 to 4,179,500 persons in 2012, making it one of the largest metropolitan areas in the country and the largest in the Southeast. Total housing units in the Atlanta Region increased by 378,181 units, or 28.4%, from 1,331,264 in 2000 to 1,709,445 in 2010. Multifamily homes in the Atlanta Region increased 34.3% from 384,740 units in 2000 to 516,594 units in 2009, the latest period for which such information is available from the ARC.

The following table provides information about our office and retail properties as of December 31, 2012.

Retail or Office Property	Location			Average Base Rent per Square Foot

Retail:
Bassett Center	Gwinnett County	2005	19,949	$	20.91	82.9%
Spectrum Center⁽²⁾	Gwinnett County	2005	30,050		24.71	45.2%

Total Retail			49,999	$	22.62	60.2%

Northridge Office Building⁽³⁾	Sandy Springs	2001	37,864	$	19.85	64.5%

(1): We acquired the retail properties listed in this table from unrelated sellers.
(2): As disclosed elsewhere in this report, the Spectrum Center loan is in default, and we are seeking to transfer the property securing the loan as soon as possible in satisfaction of the loan. The loan is nonrecourse, and we do not intend to make any further payments on the loan.
(3): Our corporate headquarters occupies 7,084 square feet of the Northridge Office Building. As disclosed elsewhere in this report, the Northridge Office Building was recently listed for sale.

Table of Contents

The following table provides information about the scheduled lease expirations in our office and retail properties:

Year				Expiring Annualized Base Rent

2013	3	8,722	18.4%	$	195,749	19.5%
2014	3	11,351	23.9%		228,495	22.8%
2015	2	16,200	34.1%		268,848	26.8%
2016	1	2,500	5.3%		66,250	6.6%
2017	5	7,429	15.7%		206,502	20.6%
Thereafter	1	1,250	2.6%		37,188	3.7%

Total	15	47,452	100.0%	$	1,003,032	100.0%

(1): Lease expiration table does not include option periods.

As described below, our operating properties and five tracts of land are located primarily along the Georgia 400 corridor in submarkets within Fulton, Gwinnett, and Forsyth counties. Each heading identifies the property or properties within the specified county and submarket. We obtained population and employment data for each Atlanta submarket from the ARC.

Fulton County

Fulton County is the largest county in the Atlanta region in terms of population, employment, housing units, and land area. Three of our eight properties are located in north Fulton County. From 2000 to 2012, Fulton County's population increased 14.7% from 816,006 to 936,100.

Perimeter Center/North Springs Area

The Perimeter Center/North Springs area offers convenient proximity and access to both urban and suburban employment bases and retail conveniences. Georgia 400 and I-285 provide direct access within minutes to major regional malls such as Perimeter Mall and North Point Mall. The Phipps Plaza/Lenox Mall/Buckhead area and downtown Atlanta's Central Business District are also readily accessible via Georgia 400, which connects to I-85 South near downtown Atlanta. The Perimeter Center submarket is one of the largest office, retail, and housing submarkets in the southeastern United States. It is Atlanta's largest employment center outside of Atlanta's Central Business District and includes approximately 32 million square feet of office and retail space.

North Springs. Our North Springs land parcel is a 10-acre mixed-use development located on Peachtree Dunwoody Road across the street from the North Springs rail station. The property is zoned for three individual buildings, which includes one building consisting of 236 multifamily units, a second building with 120 condominium units, and a third building consisting of 210,000 square feet of office space with 56,000 square feet of street-level retail space.

Northridge Office Building. Situated on 3.9 acres on Northridge Parkway in a heavily wooded, park-like setting, our three-story, 37,864 square foot office building serves as our corporate headquarters. We occupy 7,084 square feet on the third floor and lease 6,351 square feet on the third floor to Roberts Properties and Roberts Construction. We have two unaffiliated tenants occupying part of the first and second floors. At March 20, 2013, the property was 64.5% occupied. We recently retained a global full service real estate firm to sell our Northridge Office Building.

Table of Contents

Northridge Land Parcel Held for Sale. Our Northridge land parcel is an 11-acre site located close to the GA 400 and Northridge interchange in Sandy Springs. The property is zoned for 220 one and two-bedroom multifamily units. We have entered into a contract, as amended, to sell Northridge to Roberts Properties for $4,070,000 (plus, as previously agreed, the reimbursement of $303,789 in development and construction expenses), and the closing is scheduled to occur on or before April 30, 2013.

Gwinnett County

From 2000 to 2012, Gwinnett County's population increased 39.9% from 588,448 to 823,100. Gwinnett's strong transportation networks, excellent public education system, and affordable home prices have contributed to the county's growth, with its employment base of 293,327 jobs in 2009, the latest period for which that information is available.

Mall of Georgia Area

The Mall of Georgia is the largest mall in the Southeast at 2.2 million square feet. It is located in Buford, approximately 30 miles northeast of Atlanta. The Mall anchors a major retail area containing more than 3.0 million square feet of retail space.

Bassett Shopping Center. Our Bassett Shopping Center is a 19,949 square foot retail center located across from the Mall of Georgia. The property is anchored by Bassett Furniture, which occupies approximately 75% of the retail center. The property was 82.9% occupied at March 20, 2013.

Spectrum Shopping Center. Our Spectrum Shopping Center is a 30,050 square foot retail center located on Highway 20 directly across from the main entrance to the Mall of Georgia. The property was 45.2% occupied at March 20, 2013. As disclosed elsewhere in this report, we are seeking to transfer the Spectrum Center to the lender as soon as possible in satisfaction of the approximately $4,691,528 principal amount of debt secured by the property. Because the loan is nonrecourse, we would have no further obligations to the lender for this loan.

Forsyth County/Cumming

The city of Cumming is a rapidly growing area located north of Alpharetta approximately 30 miles north of Atlanta in Forsyth County near Georgia 400. Between 2000 and 2011, the population of Forsyth County increased 84.8% from 98,407 to 181,840.

Bradley Park. Our Bradley Park land parcel is a 22-acre site that is zoned for 154 multifamily units. The property is located at the intersection of Georgia Highway 9 and Old Atlanta Road in Forsyth County. This 154-unit community will be similar in size to Rosewood Plantation and Ivey Brook, two other 150-unit communities we previously developed and sold for a substantial return. We have completed our development drawings and we currently estimate the remaining construction costs to construct this community to be approximately $17,075,000.

Highway 20. Our Highway 20 land parcel is a 38.2-acre site that is zoned for 210 multifamily units. The property is located on Georgia Highway 20 at the intersection of Elm Street, just north of Cumming's town square and three blocks from the elementary, middle, and high schools. We currently estimate the cost to construct this community to be approximately $20,350,000.

Summary of Debt Secured by Our Properties

See Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operation – Liquidity and Capital Resources – Debt Summary Schedule, for an explanation of our

Table of Contents

current debt structure, including the following information for each loan: (a) principal balance at December 31, 2012, (b) principal balance at its scheduled maturity date, (c) interest rate, (d) maturity date, and (e) monthly principal and interest payment.

ITEM 3. LEGAL PROCEEDINGS.

None of Roberts Realty, the operating partnership, or our properties is presently subject to any material litigation nor, to our knowledge, is any material litigation threatened against any of them. Routine litigation arising in the ordinary course of business is not expected to result in any material losses to us or the operating partnership.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

Table of Contents

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Market Data for 2012 and 2011

Our common stock trades on the NYSE MKT exchange (formerly named the NYSE Amex Equities exchange) under the symbol "RPI." The following table provides the quarterly high and low sales prices per share reported on the NYSE MKT exchange during 2012 and 2011, as well as the dividends declared per share during each quarter.

Year	Quarter Ended	High		Low		Dividends Declared

2012	First Quarter	$	1.77	$	1.28	None
	Second Quarter		1.54		1.27	None
	Third Quarter		1.62		1.32	None
	Fourth Quarter		1.38		1.15	None
2011	First Quarter	$	2.20	$	1.43	None
	Second Quarter		2.40		1.66	None
	Third Quarter		2.44		1.52	None
	Fourth Quarter		1.80		1.25	None

Shareholder Data

As of March 20, 2013, there were approximately 226 holders of record of our common stock.

As of March 20, 2013, we had 10,641,928 shares outstanding. In addition, 1,947,259 shares are reserved for issuance to unitholders from time to time upon the exercise of their redemption rights as explained in Item 1, Business – The Operating Partnership. There is no established public trading market for the units. As of March 20, 2013, the operating partnership had 97 unitholders of record.

Distribution Policy

We depend upon distributions from the operating partnership to fund our distributions to shareholders. Distributions by the operating partnership, and thus distributions by us, will continue to be at the discretion of our board of directors.

We have not paid regular quarterly dividends since the third quarter of 2001. While we have in the past paid distributions from the net cash proceeds of property sales, we presently have no plans to pay a distribution or to resume paying regular quarterly dividends. We expect to distribute the net cash proceeds from any 2013 property sales to shareholders and unitholders only to the extent necessary to maintain our status as a REIT for federal income tax purposes. Any distributions beyond that amount will be at the sole discretion of our board of directors. To maintain our qualification as a REIT under the Internal Revenue Code, we must make annual distributions to shareholders of at least 90% of our taxable income, which does not include net capital gains. Under some circumstances, we may be required to make distributions in excess of cash available for distribution to meet IRS distribution requirements.

Table of Contents

Stock Repurchase Plan

Our board of directors has established a stock repurchase plan under which the company is authorized to repurchase shares of our outstanding common stock from time to time by means of open market purchases and in solicited and unsolicited privately negotiated transactions, depending on availability, our cash position, and price. We have purchased 59,638 shares and have the authority to repurchase an additional 540,362 shares under the plan. We repurchased no shares in the fourth quarter of 2012. The plan does not have an expiration date.

Sales of Unregistered Shares

In 2011 and 2012, we did not sell any shares of stock that were not registered under the Securities Act.

ITEM 6. SELECTED FINANCIAL DATA.

Not required for smaller reporting companies.

Table of Contents

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995. The statements in this report that are not historical facts are forward-looking statements that involve a number of known and unknown risks, uncertainties, and other factors, all of which are difficult or impossible to predict and many of which are beyond our control, that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by those forward-looking statements. These risks are detailed in Part I, Item 1A, Risk Factors, in this report and our other SEC filings. Please also see the cautionary statements included in the Note Regarding Forward-Looking Statements at the beginning of this report.

Overview

We are a self-administered, self-managed equity real estate investment trust, or REIT. Our primary business is to develop, construct, own, and manage multifamily apartment communities. The operating partnership, either directly or through one of its wholly owned subsidiaries, owns all of our properties. At December 31, 2012, we owned an 84.53% interest in the operating partnership and were its sole general partner. We expect to continue to conduct our business in this organizational structure. As of the filing date of this report, we own the following properties, all of which are located in metropolitan Atlanta, Georgia:

•: three tracts of land totaling 70 acres in various phases of development and construction that are zoned for 720 multifamily units, including a 10-acre tract zoned for 356 multifamily units that we are in the process of listing for sale;
•: two tracts of land totaling 12 acres held for sale, including an 11-acre tract zoned for 220 multifamily units that is under contract to be sold (these assets are classified as real estate assets held for sale in our consolidated balance sheets);
•: two retail shopping centers; and
•: an office building.

For the year ended December 31, 2012, we had a net loss of $8,325,130, which included $6,573,299 of non-cash charges consisting of $5,923,207 in non-cash impairment losses on real estate assets and $650,092 in non-cash depreciation and amortization expense. Additionally, since January 1, 2013, we have paid down $7,065,257 of debt and as of March 20, 2013, we held $907,208 in cash and cash equivalents.

Recent Developments

As described in detail in Item 1, Business – Recent Developments, we have recently:

•: sold the remaining 1.5 acres of the Peachtree Parkway land to an unrelated third party for $450,000; we owned this land debt free and will use the sales proceeds for general corporate purposes;
•: extended the maturity date of the $2,000,000 loan secured by the Northridge property to May 22, 2013;

Table of Contents

•: sold 20.6 acres of our Peachtree Parkway property for $7,590,000 ($7,090,000 net of a $500,000 payment required to release a restrictive covenant on the property) and used $7,000,200 of the sale proceeds to repay our Peachtree Parkway loan;
•: listed our Northridge Office Building for sale at a price of $5,750,000;
•: extended the maturity date of our Highway 20 loan to October 8, 2013;
•: extended the closing date for the sale of our Northridge property to April 30, 2013;
•: sold 2.937 acres of our Peachtree Parkway property for $1,200,000 plus the reimbursement of $515,530 of costs that were previously incurred to allow the Peachtree Parkway property to be rezoned to a commercial use and made a $1,174,800 principal payment on our Peachtree Parkway land loan.

Additionally, we are seeking to transfer the Spectrum at the Mall of Georgia retail center to the lender in satisfaction of the $4,691,528 principal amount of debt secured by the property. Because the loan is nonrecourse, we would have no further obligations to the lender for this loan. This transaction would reduce our debt by $4,691,528, and decrease our operating expenses by approximately $165,000 per year.

Continuing Negative Operating Cash Flow and Maturing Short-Term Debt

During the past year, we made substantial progress in reducing our debt, decreasing our operating expenses and improving our liquidity and capital resources, and we intend to continue to do so. As noted above, we sold 23.537 acres of the Peachtree Parkway property and used the $8,290,000 in proceeds to pay off the $8,175,000 loan secured by that property. This sale also reduced our operating expenses by more than $475,000 per year. We also recently sold the remaining 1.5 acres of the Peachtree Parkway property, which we owned debt free, for $450,000, and we will use the sales proceeds for general corporate purposes. Additionally, our North Springs property, which served as additional collateral for the Peachtree Parkway loan, is now owned debt free. We are in the process of listing for sale the North Springs property, which has a book value of $11,000,000 and an independent appraised value of $16,350,000. The proceeds from this sale would substantially increase our liquidity and capital resources. We have listed our Northridge Office Building for a price of $5,750,000. This sale would pay off our $2,498,334 loan secured by the Northridge Office Building and reduce our operating expenses by approximately $210,000 per year. If we close the pending sale of our Northridge property, the proceeds of that sale would be approximately $4,335,400, which we would use to pay off our $2,000,000 loan secured by the property. We would use the remaining proceeds of $2,335,400 to provide additional capital resources to execute our business plan. The Northridge sale would also reduce our operating expenses by approximately $300,000 per year. We are also continuing to actively market for sale our one-acre Johns Creek commercial site, which has a book value of $500,000, that we own debt free.

We had total debt of $17,500,808 as of March 20, 2013. We have four loans with a total principal balance of $10,393,334 that are scheduled to mature within the next 12 months: (a) the $2,000,000

Table of Contents

Northridge loan that matures on May 22, 2013; (b) the $2,498,334 Northridge Office Building loan that matures on August 10, 2013; (c) the $2,895,000 Highway 20 loan that matures on October 8, 2013; and (d) the $3,000,000 Bradley Park loan that matures on October 31, 2013. If we are unable to renew these loans, we may repay all or part of these loans from the proceeds we expect to receive from the sale of the Northridge property or the funds we are seeking to raise as described in Item 1, Business – Business Plan, beginning on page 6 above.

Results of Operations

Comparison of 2012 to 2011

The following table highlights our operating results and should be read with the audited consolidated financial statements and the accompanying notes included in this report.

	Years Ended December 31,

	Years Ended December 31,						Increase (Decrease)
	2012			2011			Increase (Decrease)
TOTAL OPERATING REVENUES	$	1,354,954		$	1,259,407		$	95,547

OPERATING EXPENSES:
Property operating expenses		617,818			615,430			2,388
General and administrative expenses		1,521,728			1,357,252			164,476
Impairment loss on real estate assets		5,923,207			9,500,744			(3,577,537	)
Gain on disposal of assets		—			(8,550	)		8,550
Depreciation and amortization expense		470,749			516,919			(46,170	)

Total operating expenses		8,533,502			11,981,795			(3,448,293	)

OTHER EXPENSE		(1,275,234	)		(1,346,560	)		(71,326	)

LOSS FROM CONTINUING OPERATIONS	$	(8,453,782	)	$	(12,068,948	)	$	(3,615,166	)

Loss from continuing operations decreased $3,615,166 in 2012 when compared to 2011. We recorded a non-cash impairment loss of $5,923,207 in 2012 compared to a non-cash impairment loss of $9,500,744 in 2011. This $3,577,537 difference in non-cash impairment loss was the primary reason for the decrease in loss from continuing operations for 2012. We explain below the major variances between 2012 and 2011.

Total operating revenues increased by $95,547 from $1,259,407 in 2011 to $1,354,954 in 2012, primarily as a result of an increase in other operating revenue from the settlement of a rental amount due from a former retail tenant that defaulted on its lease.

Property operating expenses – consisting of utilities, repairs and maintenance, real estate taxes, marketing, insurance, and other expenses – increased by $2,388 from $615,430 in 2011 to $617,818 in 2012.

During 2012, we recorded $5,923,207 in non-cash impairment losses consisting of:

•: a $2,100,000 non-cash impairment loss on our North Springs land;
•: a $984,341 non-cash impairment loss on our Spectrum retail center;
•: a $773,334 non-cash impairment loss on our Bradley Park land;
•: a $754,279 non-cash impairment loss on our Bassett retail center;
•: a $725,304 non-cash impairment loss on our Northridge Office Building;
•: a $375,949 non-cash impairment loss on our Johns Creek land parcel; and
•: a $210,000 non-cash impairment loss on our Highway 20 land.

Table of Contents

During 2011, we recorded $9,500,744 in non-cash impairment losses consisting of:

•: a $2,908,457 non-cash impairment loss on our Bradley Park land;
•: a $2,892,126 non-cash impairment loss on our Peachtree Parkway land;
•: a $2,376,480 non-cash impairment loss on our Northridge land; and
•: a $1,323,681 non-cash impairment loss on our Highway 20 land.

Other expense decreased by $71,326 from $1,346,560 in 2011 to $1,275,234 in 2012. This decrease was primarily due to a $397,181 gain on the sale of real estate assets, which was offset by an $81,502 increase in the amortization of deferred financing costs and a $235,050 increase in interest expense for the Northridge land loan, which we obtained in February 2012.

Liquidity and Capital Resources

Overview

At December 31, 2012, we had $42,440,028 in total assets, of which $401,018 was cash and cash equivalents. In addition, we held $764,777 in restricted cash. Of our restricted cash at December 31, 2012, $222,736 was reserved for the payment of interest and certain other costs on specific outstanding loans, and $483,043 was reserved for the payment of insurance, real estate taxes, replacement reserves, and tenant improvements for the retail centers. As of March 20, 2013, we held $907,208 in cash and cash equivalents and $630,510 in restricted cash. Of our restricted cash balance, $102,930 was reserved for the payment of interest and certain other costs on specific outstanding loans, and $493,418 was reserved for the payment of insurance, real estate taxes, replacement reserves, and tenant improvements for the retail centers.

We believe that the most important uses of our capital resources will be (a) to provide working capital to enable us to pay our operating expenses as we pursue our business plan and (b) to invest in the development of the Bradley Park and Highway 20 multifamily apartment communities to help us obtain the required debt and equity to construct that community. We currently estimate that we will need approximately $37,425,000 in debt and equity to complete the construction of the Bradley Park and Highway 20 communities. Our current cash resources are inadequate to meet these needs. We have described our plans to address these needs in Item 1, Business – Business Plan, beginning on page 6 above.

Our primary liquidity requirements relate to our continuing negative operating cash flow and our maturing short-term debt. We have four loans with a total principal balance of $10,393,334 that are scheduled to mature within the next 12 months, as listed in the following table in their order of maturity:

Property Securing Loan		Principal Payments Due Within 12 Months

Northridge	5/22/13	$	2,000,000
Northridge Office Building	8/10/13		2,498,334
Highway 20	10/08/13		2,895,000
Bradley Park	10/31/13		3,000,000

Total		$	10,393,334

Table of Contents

We are currently generating negative operating cash flow, and we expect to continue to generate negative operating cash flow and to operate at a loss in 2013. The three primary reasons for our negative operating cash flow are as follows:

•: We own five tracts of land totaling 82 acres with an aggregate carrying value of $23,881,789 that secure land loans totaling $7,895,000. Because land does not generate revenue, a substantial portion of our negative cash flow is a result of the carrying costs (interest expense and real estate taxes) on our land.
•: Due to their low occupancy rates, one of our retail centers and our office building are producing negative cash flow. Our other retail center is positively cash flowing.
•: Our general and administrative expenses were $1,521,728 for 2012; these expenses include the costs of being an SEC reporting company and having our shares listed on the NYSE MKT stock exchange. These costs also include accounting and related fees to our independent auditors as well as to another accounting firm required for our compliance with Section 404(a) of the Sarbanes-Oxley Act, legal fees, listing fees, director compensation, and directors and officers insurance premiums. We estimate that these additional costs related to being a public reporting company are approximately $615,000 per year.

Short-and Long-Term Liquidity Outlook

Our operating revenues are not adequate to provide short-term (12 months) liquidity for the payment of all direct rental operating expenses, interest, and scheduled amortization of principal on our mortgage debt. We are currently using our cash balance of $907,208 to meet our short-term liquidity requirements, including general and administrative expenses, principal reductions on our debt, and improvements at our existing properties. With respect to the $10,393,334 in debt that matures in the next 12 months, we intend to refinance these loans with the same lenders or with other lenders. If we are unable to renew these loans, we may repay all or part of these loans at their maturity. To fund such repayment, we may use cash from one or more of the following sources: our existing cash, net proceeds from the sale of certain of our real estate assets, contributions from a joint venture partner, or equity we raise in a private offering. (See Item 1, Business – Business Plan, beginning on page 6 above.) We expect to meet our long-term liquidity requirements, including future developments and debt maturities, from the proceeds of construction and permanent loans, the sale of properties, and the equity we raise in a private offering.

Comparison of 2012 to 2011

Cash and cash equivalents decreased $167,173 during 2012 compared to a decrease of $3,148,202 during 2011. The respective changes in cash are described below.

Net cash used in operating activities in 2012 was $2,249,577 compared to $2,194,450 used during 2011. This increase of $55,127 was primarily due to a $100,185 increase in cash provided by discontinued operations from the Grand Pavilion retail center, which the lender foreclosed on in October 2011; and a $155,312 increase in cash used by operating activities for continuing operations. Net cash provided by investing activities was $1,770,186 during 2012 compared to cash used in investing activities of $334,855 during 2011. This change was primarily due to:

•: proceeds of $1,200,000 from the sale of real estate assets held for sale;
•: a $515,530 reimbursement of expenses related to real estate assets held for sale;

Table of Contents

•: a $372,519 decrease in cash used for development and construction of real estate assets; and
•: a $124,709 increase in the change in restricted cash.

Net cash provided by financing activities was $312,218 for 2012 compared to cash used in investing activities of $618,897 during 2011. This change was primarily due to:

•: proceeds of $2,000,000 from the Northridge land loan; and
•: a decrease of $225,000 in principal repayments on land notes payable;

offset by

•: a $1,174,800 increase in principal repayment on liabilities related to real estate assets held for sale; and
•: an increase in the payment of loan costs of $118,877 for the Northridge land loan and the renewals of the Bradley Park, Highway 20, and Peachtree Parkway land loans.

Debt Summary

The table and accompanying footnotes on the following page explain our debt structure, including for each loan the principal balance at December 31, 2012 and at its scheduled maturity date, the interest rate, the amount of the monthly principal and interest payment, and the maturity date. For each loan, the operating partnership, or one of its wholly owned subsidiaries, is the borrower. Roberts Realty is a guarantor only on the land loans and the Northridge Office Building mortgage loan. The amount shown in the column titled "Balance at Maturity" assumes we make any required principal payments prior to maturity.

Table of Contents

ROBERTS REALTY INVESTORS, INC.
DEBT SUMMARY SCHEDULE
(Listed in order of maturity by type of loan)⁽¹⁾
As of December 31, 2012

	Interest Terms			Balance at Maturity		Monthly Payment⁽²⁾		Dec. 31, 2012 Balance

Permanent Mortgage Loans
Northridge Office Building⁽³⁾	LIBOR plus 300 b. p.	4.50%	08/10/13	$	2,445,000	$	23,169	$	2,538,334
Spectrum Shopping Center⁽⁵⁾	Fixed-rate permanent	5.68%	05/01/14		4,545,747		31,273		4,691,528
Bassett Shopping Center⁽⁴⁾	Fixed-rate permanent	8.47%	10/01/19		1,943,344		21,853		2,426,003

Subtotal				$	8,934,091	$	76,295	$	9,655,865

Land Loans
Northridge	Fixed-rate	12.00%	02/21/13	$	2,000,000	$	20,000	$	2,000,000
Highway 20⁽⁶⁾	Prime rate	5.50%	04/08/13	$	2,865,000		18,784		2,910,000
Bradley Park	LIBOR plus 350 b. p.	3.71%	10/31/13		3,000,000		9,594		3,000,000

Subtotal				$	7,865,000	$	48,378	$	7,910,000

Peachtree Parkway⁽⁷⁾	LIBOR plus 300 b. p.	5.00%	04/30/13		7,000,200		30,140		7,000,200

Grand Totals				$	23,799,291	$	154,813	$	24,566,065

(1): Since December 31, 2012, we have sold our Peachtree Parkway property and repaid that loan in full, extended the maturity date of the loan secured by our Northridge property to May 22, 2013, and extended the maturity date of the loan secured by our Highway 20 property to October 8, 2013.
(2): The interest rates and monthly payments are as of December 31, 2012.
(3): The Northridge Office Building loan has an interest rate floor of 4.50%, and the monthly payment on this loan consists of a fixed principal amount of $13,333 per month plus interest at the stated rate on the unpaid balance. As disclosed elsewhere in this report, we recently listed the Northridge Office Building for sale.
(4): The lender for each of the Spectrum and Bassett loans acts as trustee for the registered holders of commercial mortgage-backed securities. Each of the Spectrum and Bassett loans has a 30-year amortization schedule, and additional monthly payments are required to sustain escrow reserves.
(5): As disclosed elsewhere in this report, the Spectrum retail center loan is in default, and we are seeking to transfer the property securing the loan to the lender in satisfaction of the loan. The loan is nonrecourse and we do not intend to make any further payments on this loan.
(6): The Highway 20 loan bears interest at the prime rate with a floor of 5.50%.
(7): The Peachtree Parkway loan had an interest rate of LIBOR plus 3.00%, with a floor of 5.0%. We repaid the loan in full on February 7, 2013 when we sold our Peachtree Parkway property, which secured the loan.

Table of Contents

Debt Maturities

Our existing loans will be amortized with scheduled monthly payments, as well as balloon payments at maturity, through 2019 as summarized below:

Debt Maturity Schedule as of December 31, 2012

Year	Total Principal Payments Per Year		Principal Payments on Nonrecourse (CMBS) Loans			Principal Payments on Recourse Loans

2013	$	17,608,059	$	159,525		$	17,448,534	Peachtree Parkway⁽¹⁾,
								Northridge,
								Northridge Office,
								Highway 20,
								Bradley Park
2014		4,644,299		4,644,299	Spectrum⁽²⁾
2015		66,124		66,124
2016		71,471		71,471
2017		78,417		78,417
Thereafter		2,097,695		2,097,695	Bassett

Total	$	24,566,065	$	6,958,006

(1): We repaid the $7,000,200 Peachtree Parkway loan in full on February 7, 2013 when we sold our Peachtree Parkway property, which secured the loan.
(2): As disclosed elsewhere in this report, the Spectrum retail center loan is in default, and we are seeking to transfer the property securing the loan to the lender in satisfaction of the loan. The loan is nonrecourse, and we do not intend to make any further payments on this loan. The table above reflects the original May 1, 2014 maturity date of the Spectrum retail center loan. If this loan were shown as payable as of January 1, 2013, the principal payments in 2013 would increase by $4,583,597, while principal payments would decrease in 2014 by $4,583,597.

Short-Term Debt

We have a total of $10,393,334 in debt that matures on or before March 20, 2014. See Short-and Long-Term Liquidity Outlook above for how we intend to refinance or repay these loans.

Long-Term Debt

With respect to the debt that matures after March 20, 2014, we anticipate that we will refinance the principal balance of that debt at maturity and that we will not have funds on hand sufficient to repay it at maturity. See Short- and Long-Term Liquidity Outlook above for how we intend to refinance or repay these long-term loans when they mature.

Effect of Floating Rate Debt

We have three loans that bear interest at floating rates. These loans had an aggregate outstanding principal balance of $8,393,334 at March 20, 2013. One loan totaling $2,498,334 bears interest at 300 basis points over the 30-day LIBOR with an interest rate floor of 4.50%; a $3,000,000 loan

Table of Contents

bears interest at 350 points over the 30-day LIBOR with no interest rate floor; and a $2,895,000 loan bears interest at the prime rate with an interest rate floor of 5.50%. Changes in LIBOR and the prime rate that increase the interest rates on these loans above their respective interest rate floors will increase our interest expense. For example, a 1.0% increase in the interest rates on these loans above their respective interest rate floors would increase our interest expense by approximately $83,933 per year and reduce our liquidity and capital resources by that amount.

Contractual Commitments

Roberts Properties provides us with various development services that include market studies, business plans, design, finish selection, interior design, and construction administration. We enter into construction contracts in the normal course of business with Roberts Construction and currently have four ongoing construction contracts with Roberts Construction. The terms of the construction contracts are cost plus 10% (5% profit and 5% overhead).

No Quarterly Dividends

We have not paid regular quarterly dividends since the third quarter of 2001, and we have no plans to resume paying regular quarterly dividends for the foreseeable future. We will make distributions, however, to the extent required to maintain our status as a REIT for federal income tax purposes.

Critical Accounting Policies and Estimates

We prepare our financial statements in accordance with U.S. generally accepted accounting principles. See "Recent Accounting Pronouncements" below for a summary of recent accounting pronouncements and the expected impact on our financial statements. A critical accounting policy is one that requires significant judgment or difficult estimates, and is important to the presentation of our financial condition or results of operations. Because we are in the business of owning, operating, and developing multifamily communities, retail centers, and other commercial properties, our critical accounting policies relate to cost capitalization and asset impairment evaluation. The following is a summary of our overall accounting policy in these areas.

Cost Capitalization

We state our real estate assets at the lower of depreciated cost or fair value, if deemed impaired. We expense ordinary repairs and maintenance as incurred. We capitalize and depreciate major replacements and betterments over their estimated useful lives. Depreciation expense is computed on a straight-line basis over the estimated useful lives of 27.5 years for buildings and improvements, 15 years for land improvements, and five to seven years for furniture, fixtures, and equipment.

We capitalize direct costs associated with the development and construction of our real estate assets. We expense all internal costs associated with the acquisition and operation of these assets to general and administrative expense in the period we incur these costs. For our real estate assets, we capitalize interest on qualifying construction expenditures in accordance with FASB Accounting Standards Codification (ASC) Topic 835-20, Interest – Capitalization of Interest. During the development and construction of a property, we capitalize related interest costs, as well as other carrying costs such as real estate taxes and insurance. We begin to expense these items as the property becomes substantially complete and available for initial occupancy. During the lease-up period, as a property transitions from initial occupancy to stabilized occupancy, revenues are generally insufficient to cover interest, carrying costs and operating expenses, resulting in an operating deficit. The size and duration of this lease-up

Table of Contents

deficit depends on the rate at which construction is completed, the pace at which we lease the property, and what rent levels we achieve.

Asset Impairment Evaluation

We periodically evaluate our real estate assets, on a property-by-property basis, for impairment when events or changes in circumstances indicate the carrying amount of an asset may not be recoverable in accordance with FASB ASC Topic 360-10, Property, Plant, and Equipment – Overall.

FASB ASC Topic 360-10 requires impairment losses to be recorded on long-lived assets used in operations and land parcels held for use when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying amounts. The expected future cash flows depend on estimates made by management, including (1) changes in the national, regional, and/or local economic climates, (2) rental rates, (3) competition, (4) operating costs, (5) tenant occupancy, (6) holding period, and (7) an estimated construction budget. A change in the assumptions used to determine future economic events could result in an adverse change in the value of a property and cause an impairment to be recorded. Due to uncertainties in the estimation process, actual results could differ from those estimates. Our determination of fair value is based on a discounted future cash flow analysis, which incorporates available market information as well as other assumptions made by our management. Because the factors we use in generating these cash flows are difficult to predict and are subject to future events that may alter our assumptions, we may not achieve the discounted or undiscounted future operating and residual cash flows we estimate in our impairment analyses or those established by appraisals, and we may be required to recognize future impairment losses on our properties held for use.

Non-Cash Impairments on Operating Real Estate Assets. During 2012, we determined that the carrying amounts of the Bassett and Spectrum retail centers and the Northridge Office Building were not recoverable as a result of (a) a change in the occupancy at the Spectrum retail center, coupled with lower projected rental rates in the surrounding market area; and (b) lower projected renewal rental rates at the Bassett retail center and the Northridge Office Building resulting from lease negotiations with tenants whose leases will be expiring within the next twelve months. The determination of fair value was based on a discounted cash flow analysis and as a result of this analysis; we recorded fair value adjustments of $984,341 on the Spectrum retail center, $754,279 on the Bassett retail center, and $725,304 on the Northridge Office Building.

During 2011, we determined that the carrying amounts of our operating real estate assets were recoverable. Accordingly, we did not record an impairment loss on our operating assets during 2011.

Non-Cash Impairments on Land Parcels. During 2012, we determined that the carrying amounts for the North Springs land and the one-acre commercial site in Johns Creek that is held for sale were not recoverable. The determination of fair value for the North Springs land parcel and the one-acre commercial site was based on offers and expressions of interest from unrelated purchasers and market participants. As a result of this analysis, we recorded fair value adjustments of $2,100,000 on the North Springs land and $375,949 on the Johns Creek land parcel during 2012. The Johns Creek land parcel is classified on the audited consolidated balance sheets as real estate assets held for sale.

Also during 2012, we determined that the carrying amounts of the Bradley Park and Highway 20 land parcels were not recoverable due to current market conditions. The determination of fair value was based on a discounted cash flow analysis and the review of current market sales comparables for other land parcels. As a result of this analysis, we recorded fair value adjustments related to our land parcels of $773,334 on the Bradley Park land parcel and $210,000 on the Highway 20 land parcel. We determined that the carrying amounts of our other land parcels were recoverable at December 31, 2012.

Table of Contents

During 2011, we determined that the carrying amounts of the Bradley Park, Peachtree Parkway, and Highway 20 land parcels were not recoverable due to the current economic and market conditions. The determination of their fair values was based on a discounted cash flow analysis and the review of current market sales comparables for land. As a result of this analysis, we recorded fair value adjustments related to our land parcels of $2,908,457 on the Bradley Park property, $2,892,126 on the Peachtree Parkway property, and $1,323,681 on the Highway 20 property. Additionally in 2011, we determined that the carrying amount of the Northridge property was not recoverable, and the determination of fair value was based on the sales contract for the property and the appraised values of the property. As a result of this analysis, we recorded a fair value adjustment of $2,376,480 on the Northridge property, which is classified as real estate assets held for sale in the audited consolidated balance sheets included in this report.

Recent Accounting Pronouncements

Please refer to Note 2 – Summary of Significant Accounting Policies – Recent Accounting Pronouncements, to the notes to the audited consolidated financial statements included in this report for a discussion of other recent accounting standards and pronouncements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not required for smaller reporting companies.

Table of Contents

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Our financial statements are listed under Item 15(a) and are filed as part of this annual report on the pages indicated.


Report of Independent Registered Public Accounting Firm		F-1
Report of Independent Registered Public Accounting Firm		F-2
Consolidated Financial Statements as of December 31, 2012 and 2011 and for the Years Ended December 31, 2012 and 2011:
Consolidated Balance Sheets		F-3
Consolidated Statements of Operations		F-4
Consolidated Statements of Shareholders' Equity		F-5
Consolidated Statements of Cash Flows		F-6
Notes to Consolidated Financial Statements		F-8

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

Not applicable.

ITEM 9A. CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

Based on our management's evaluation, with the participation of our Chief Executive Officer and Chief Financial Officer, as of December 31, 2012, the end of the period covered by this report, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) were ineffective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC and is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Our Chief Executive Officer and Chief Financial Officer reached the conclusion expressed in the preceding paragraph because, as of December 31, 2012, we did not have an effective policy and procedure to govern how the audit committee should respond to and address any claims or communications by employees, vendors or others regarding our financial reporting or our SEC filings. The specific issue that led to this conclusion arose in October 2012 in connection with a communication by a contract consultant. Although we have concluded that the issue raised by the consultant was without merit and accordingly had no effect on our SEC filings or financial reporting, we have determined that we need to improve the policy and procedures by which this type of communication is handled.

We believe that this situation resulted from an inadequacy in our disclosure controls and procedures, which we have remediated and are remediating by improving our disclosure controls and procedures and implementing other remediation measures that include the following:

•: We have received input from our securities counsel and from our independent auditors regarding the appropriate steps to take, reporting procedures, and documentation to be provided in the event of any future communications of this nature.

Table of Contents

•: With the advice of counsel and our independent auditors, we are in the process of updating and expanding our policies to address the inadequacy in our disclosure controls and procedures, and we expect to complete these improvements in the near future.

Management's Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting and for the assessment of the effectiveness of internal control over financial reporting. Our internal control over financial reporting is a process designed, as defined in Rule 13a-15(f) under the Exchange Act, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In connection with the preparation of our annual consolidated financial statements, our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2012. Management based this assessment on the criteria established in Internal Control over Financial Reporting – Guidance for Smaller Public Companies issued by the Committee of Sponsoring Organizations of the Treadway Commission (which is sometimes referred to as the COSO Framework). Management's assessment included an evaluation of the design of our internal control over financial reporting and testing of the operational effectiveness of our internal control over financial reporting. Based on this assessment, our management has concluded that our internal control over financial reporting was effective as of December 31, 2012.

This annual report on Form 10-K does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Under applicable SEC rules, our management's report is not subject to attestation by our independent registered public accounting firm.

Changes in Internal Controls

There was no change in our internal control over financial reporting that occurred during the quarter ended December 31, 2012 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

The design of any system of controls and procedures is based in part upon certain assumptions about the likelihood of future events. There can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

ITEM 9B. OTHER INFORMATION.

None.

Table of Contents

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

Directors and Executive Officers

The following table provides information about our directors and executive officers as of the date of this report.

Name	Age	Term as Director Expires	Position

Charles S. Roberts	66	2015	Chairman of the Board, Chief Executive Officer, and President
John L. Davis	47	2013	Director, Chairman of the Compensation Committee and Member of Audit Committee and Nominating and Governance Committee
Charles R. Elliott	59	2015	Director, Chief Financial Officer, Secretary, and Treasurer
Weldon R. Humphries	75	2013	Director, Member of Audit Committee and Compensation Committee
Wm. Jarell Jones	64	2014	Director, Chairman of Audit Committee and Chairman of Nominating and Governance Committee, Member of Compensation Committee

Biographical Information

Charles S. Roberts has served as our Chairman of the Board, Chief Executive Officer, and President since he founded the company in 1994. Mr. Roberts owns, directly or indirectly, all of the outstanding stock of, and is the president and sole director of, each of the Roberts Companies.

In 1970, Mr. Roberts established Roberts Properties, Inc. to develop, construct, and manage multifamily residential communities. Mr. Roberts and Roberts Properties have won numerous local, regional, and national awards for the development of these communities. Mr. Roberts has been a national speaker on the topic of developing upscale multifamily housing and has been recognized as a leader in this industry. Roberts Properties Management, Inc. was recognized as the Property Management Company of the Year by the National Association of Home Builders. On a regional level, Roberts Properties has been awarded eight times the prestigious Southeast Builders Conference Aurora Award for the best rental apartment community. On a national level, Roberts Properties was twice awarded the prestigious Pillars of the Industry Award from the National Association of Home Builders for the best upscale apartments and was also awarded the coveted Golden Aurora Award for best overall development in the Southeast.

Mr. Roberts served as chairman of the board of directors of Big Trees Forest Preserve, a 30-acre urban forest in Sandy Springs, Georgia dedicated to conservation, preservation, and education, from 2006 to 2009. During this period, he personally donated over $100,000 to the Preserve in support of its mission. Additionally, in January 2012, Mr. Roberts was appointed to the City of Sandy Springs

Table of Contents

Economic Development Council and in October 2012, he was appointed to the City of Sandy Springs Design Review Board.

As a result of his experience in design, development, and construction, coupled with his knowledge of architectural history, Mr. Roberts was appointed as a commissioner to the Landmarks Preservation Commission of the historic Town of Palm Beach, Florida. He served as a Landmarks Preservation Commissioner from 2007 through 2010.

Mr. Roberts supports numerous charitable organizations and has participated in a wide variety of philanthropic endeavors. He has been actively involved with the Cystic Fibrosis Foundation for more than 20 years and served as Auction Chairman of the 2008 Sixty-Five Roses Ball, which raised more than $500,000. Mr. Roberts was a founding sponsor of the Fulton County "Beat the Odds" program, which provided college scholarships and other assistance to Fulton County high school students who triumphed over life's hardships to excel both academically and personally. As a lifelong supporter of the YMCA, Mr. Roberts donated $75,000 for the construction of an Aerobics Center at the Ed Isakson/Alpharetta Family YMCA in Alpharetta, Georgia. He is also a supporter of the Dana Farber Cancer Institute in Boston and the American Cancer Society.

The nominating and governance committee of our board of directors has concluded that Mr. Roberts should serve as a director because he is our founder and largest shareholder, he has served as our Chief Executive Officer since 1994, and he has more than 40 years of experience in real estate development, construction, and management, particularly with respect to multifamily communities.

John L. Davis, a director since November 2008, is the President of Bravo Realty Consulting, Inc., a company that he formed in 2007 to provide consulting services for small and middle market real estate companies looking for debt and equity. In 2011, he co-founded Spring Street Capital, LLC, a commercial real estate mortgage banking company. Mr. Davis has more than 20 years of experience in the commercial banking industry. From May 2005 to November 2007, he served as a Senior Director of Wrightwood Capital, a structured debt and equity provider. Prior to 2005, he was a Senior Vice President with Compass Bank for 10 years. Before he joined Compass Bank, he was a banker for seven years with Hibernia Bank in New Orleans. During his tenure with Compass Bank, Mr. Davis was our relationship manager and was involved in all facets of our business relationship with Compass Bank. Mr. Davis is also a principal in several entities that own and operate various healthcare businesses, primarily skilled nursing facilities.

The nominating and governance committee of our board of directors has concluded that Mr. Davis should serve as a director because he has extensive banking experience, particularly as a real estate lender. This experience is particularly valuable to us as we seek to extend our current financing and obtain new financing to construct new multifamily communities. The committee also values his extensive business experience and his substantial knowledge about our business and properties. The committee also took into account that he is "independent" under SEC Rule 10A-3 and under Section 803A of the NYSE MKT exchange listing standards and that his financial expertise qualifies him to serve on our audit committee.

Charles R. Elliott served as a director from October 1994 to February 1995 and became a director again in 2000. Effective May 31, 2006, Mr. Elliott again became our Chief Financial Officer, Secretary, and Treasurer. Previously, he was our Secretary and Treasurer from our inception until July 15, 2002, and our Chief Financial Officer from April 1995 until July 15, 2002, when he became our Senior Vice President – Real Estate. He left Roberts Realty as a full-time employee on August 30, 2002 and returned on a full-time basis from February 17, 2003 to September 30, 2003 as our Chief Operating Officer. Mr. Elliott joined Roberts Properties in August 1993 as Chief Financial Officer and served in

Table of Contents

that role until April 1995, when he joined Roberts Realty as our Chief Financial Officer. He worked for Hunneman Real Estate Corporation in Boston, Massachusetts from 1979 to 1993. He holds an undergraduate degree in Accounting and a master's degree in Finance.

The nominating and governance committee of our board of directors has concluded that Mr. Elliott should serve as a director because of his experience in serving as our Chief Financial Officer for much of our existence and his expertise in real estate finance, acquisitions, and dispositions, which we believe will continue to be particularly valuable to us.

Weldon R. Humphries, a director since December 2011, had a distinguished twenty-year career with Manor Care, Inc. and subsidiary companies (Choice Hotels International and SunBurst Hospitality Corp.) where he served as Senior Vice President of Real Estate and Development from 1978 – 1998. He was responsible for asset management, acquisitions, and development for all three companies. During his tenure, each company was listed on the New York Stock Exchange.

Mr. Humphries earned a BBA from the University of Houston, an MBA from the University of Hartford, and served as an officer in the United States Marine Corps before starting his career in the field of real estate and finance. He began his career in commercial mortgage lending at Connecticut General Life Insurance Company and later became Vice President and head of real estate for Arvida Corporation, one of Florida's largest land owners/developers. He was subsequently selected by Republic Mortgage Investors, a REIT, to head its real estate portfolio as Vice President of Investments before joining Manor Care. Mr. Humphries is also a licensed real estate broker, has taught real estate appraisal and mortgage banking courses, and has been a guest speaker at numerous real estate and investment seminars and at the National Association of Home Builders.

The nominating and governance committee of our board of directors has concluded that Mr. Humphries should serve as a director because of his extensive experience as a real estate investor and commercial mortgage banker. His commercial mortgage banking background is of particular value as we seek to extend our current financing and obtain new financing to construct new multifamily communities. The committee also took into account that Mr. Humphries is "independent" under SEC Rule 10A-3 and under Section 803A of the NYSE MKT exchange listing standards.

Wm. Jarell Jones, a director since October 1994, is an attorney in Atlanta, Georgia and has practiced law with the firm of Wm. Jarell Jones, P.C., in Georgia since November 1993, except that he practiced with Jones + Turner Law Offices LLP from August 2011 to July 2012. Mr. Jones is a former Certified Public Accountant, and in 1976 he formed the public accounting firm of Jones & Kolb in Atlanta, Georgia and served as Senior Tax Partner and Co-Managing Partner until December 1988. In 1990, Mr. Jones moved to Statesboro and practiced law with the firm of Edenfield, Stone & Cox until November 1992 and then with the firm of Jones & Rutledge from November 1992 until November 1993. Mr. Jones was formerly a director for six years and the Chairman for two years of the Downtown Statesboro Development Authority.

Mr. Jones is also the President and sole shareholder of Palmetto Realty Company, a real estate development and brokerage company primarily involved in the development of single-family residential lots in coastal South Carolina and Georgia. Mr. Jones was also a partner and investor in several real estate developments primarily involved in residential lot and home sales in coastal Georgia and South Carolina. Mr. Jones personally guaranteed the loans for these developments along with his other partners who were the real estate developers of these developments. With the collapse of the residential real estate market over the past several years, particularly in those areas, the developments were unable to generate sufficient cash flow to maintain the properties and keep the development/construction loans current. Additionally, the market value of all of these properties plummeted far below the amount of the

Table of Contents

debt and the real estate developers were unable to secure refinancing of any of these properties or work out any suitable modifications with the lenders. As a result of these difficulties and his personal guaranties of the loans, Mr. Jones personally filed a bankruptcy petition under Chapter 11 of the United States Bankruptcy Code on September 2, 2010 in the United States Bankruptcy Court for the Southern District of Georgia. This proceeding was converted to Chapter 7 on January 17, 2012.

The nominating and governance committee of our board of directors has concluded that Mr. Jones should serve as a director because of his legal and accounting expertise and his service as chairman of several committees of the board of directors, including the audit committee. The committee also took into account that Mr. Jones is "independent" under SEC Rule 10A-3 and under Section 803A of the NYSE MKT exchange listing standards and is an "audit committee financial expert."

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires Roberts Realty's directors, executive officers, and persons who own beneficially more than 10% of our outstanding common stock to file with the SEC initial reports of ownership and reports of changes in their ownership of our common stock. Directors, executive officers and greater than 10% shareholders are required by SEC regulations to furnish us with copies of the forms they file. To our knowledge, based solely on a review of the copies of such reports furnished to us, during the fiscal year ended December 31, 2012, our directors, executive officers and greater than 10% shareholders complied with all applicable Section 16(a) filing requirements, except that Wm. Jarell Jones, a director, filed a late Form 4 to report one sale of common stock that was not reported on a timely basis.

Code of Ethics and Business Conduct

Our board of directors has adopted a Code of Business Conduct and Ethics as required by the rules of the NYSE MKT exchange and the Sarbanes-Oxley Act. Our code is designed to deter wrongdoing and to promote:

•: honest and ethical conduct, including the ethical handling of corporate opportunities and actual or apparent conflicts of interest between personal and professional relationships;
•: full, fair, accurate, timely, and understandable disclosure in reports and documents that we file with, or submit to, the SEC and in other public communications we make;
•: compliance with applicable governmental laws, rules, and regulations;
•: confidentiality;
•: protection and proper use of company assets;
•: equal employment opportunities and prohibition of discrimination or harassment;
•: the prompt internal reporting of violations of the code to an appropriate person or persons identified in the code; and
•: accountability for adherence to the code.

We will provide a copy of the code of business conduct and ethics free of charge to any person who requests it in writing. Please direct your request to our Chief Financial Officer, 450 Northridge Parkway, Suite 302, Atlanta, Georgia 30350.

Audit Committee

The audit committee of our board of directors is composed of Mr. Jones, its chairman, Mr. Davis and Mr. Humphries. The board has determined that Mr. Jones is an "audit committee financial expert" as defined under applicable SEC rules and is "independent" under the listing standards of the NYSE MKT exchange, on which the shares of our common stock are listed.

Table of Contents

ITEM 11. EXECUTIVE COMPENSATION.

Compensation of Executive Officers

Our executive officers are Charles S. Roberts, our Chairman of the Board, Chief Executive Officer, and President, and Charles R. Elliott, our Chief Financial Officer, Secretary, and Treasurer. Biographical information for Mr. Roberts and Mr. Elliott is included in Item 10 above. Under applicable SEC rules, Mr. Roberts and Mr. Elliott are our "named executive officers." Neither of our executive officers has an employment agreement.

Summary Compensation Table for 2012 and 2011

Name and Principal Position

Charles S. Roberts,	2012	225,000⁽¹⁾	—	225,000
Chief Executive Officer, President, and Chairman of the Board	2011	225,000⁽¹⁾	—	225,000
Charles R. Elliott,	2012	18,000	—	18,000
Chief Financial Officer, Secretary, and Treasurer	2011	18,298⁽²⁾	—	18,298

(1): We do not compensate Mr. Roberts for his service as a director. Mr. Roberts has not received an increase in his annual salary since January 2007, and we have never provided him with any employee benefits such as medical and life insurance, retirement plan contributions, deferred compensation, vacations, or holidays. Mr. Roberts also does not receive any auto allowance or reimbursement for mileage.
(2): We pay Mr. Elliott $70 per hour for his service as our Chief Financial Officer, Secretary, and Treasurer. Mr. Elliott receives no employee benefits, such as medical and life insurance, retirement plan contributions, deferred compensation, vacation or holidays, and we pay him only for the actual number of hours he works. In addition, Mr. Elliott received our standard director fees of $18,000 during each of 2012 and 2011, which amounts are included in the salary amounts shown in the table.

Table of Contents

Compensation of Directors

The following table summarizes the compensation we paid to our non-employee directors in 2012. The table includes any person who served during 2012 as a director who was not a named executive officer.

Director Compensation for 2012

Name

John L. Davis	18,000	18,000
Wm. Jarell Jones	30,000	30,000
Weldon R. Humphries	18,000	18,000

During 2012, we paid our directors other than Mr. Roberts an annual fee of $18,000 for attendance, in person or by telephone, at meetings of the board of directors and its committees. We paid additional compensation of $1,000 per month to Mr. Jones for serving as the chairman of the audit committee and the nominating and governance committee, and, during his tenure in that role, the compensation committee. In addition, we reimburse our directors for reasonable travel expenses and out-of-pocket expenses incurred in connection with their activities on our behalf. These reimbursements are not reflected in the table above. Our directors hold no stock options or shares of restricted stock.

Table of Contents

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

Ownership of Common Stock and Units

The table on the following page describes the beneficial ownership of shares of our common stock as of March 20, 2013 for:

•: each person or entity known by us to be the beneficial owner of more than 5% of the outstanding shares of common stock;
•: each director and our named executive officers; and
•: our directors and executive officers as a group.

Except as noted in the footnotes, each person named in the following table directly owns all shares and units of partnership interest in Roberts Properties Residential, L.P., our operating partnership, and has sole voting and investment power. Mr. Roberts, the only person known by us to beneficially own more than 5% of our common stock, has an address in care of our principal office. The Number of Shares Beneficially Owned column in the table includes the shares owned by the persons named but does not include shares they may acquire by exchanging units for shares of common stock as explained in the following paragraphs. The Number of Shares Underlying Units Beneficially Owned column in the table reflects all shares that each person has the right to acquire by exchanging units for shares, subject to the limitations described in the following paragraphs. In the case of persons who own shares and units (and all directors and executive officers as a group), the percentages in the Percent of Class column are not equal to the number of shares then owned by the person divided by the number of outstanding shares. Instead, under SEC rules, the shares that the person or group can acquire in exchange for units are deemed to be outstanding and to be beneficially owned by the person or group holding those units when calculating the percentage ownership of that person or group, although shares that other persons can acquire in exchange for units are not treated as outstanding for purposes of that calculation.

Unitholders generally have the right to require the operating partnership to redeem their units. To preserve our qualification as a real estate investment trust, our articles of incorporation limit beneficial ownership by Mr. Roberts to 35% of the outstanding shares. Accordingly, Mr. Roberts cannot redeem units for shares if upon their redemption he would hold more than 35% of our outstanding shares.

Any unitholder who submits units for redemption will receive, at our election, either: (a) a number of shares equal to the number of units submitted for redemption multiplied by the applicable conversion factor, which is currently 1.647 shares for each unit submitted for redemption, or (b) cash equal to the average of the daily market prices of the common stock for the 10 consecutive trading days before the date of submission multiplied by the number of units submitted. Our policy is to issue shares in exchange for units submitted for redemption.

Table of Contents

Name of Beneficial Owner

Charles S. Roberts	3,337,209⁽²⁾	949,510⁽³⁾	4,286,719	37.0%
John L. Davis	27,852	—	27,852	*
Charles R. Elliott	46,200⁽⁴⁾	—	46,200	*
Weldon R. Humphries	62,029⁽⁵⁾	—	62,029	*
Wm. Jarell Jones	48,968	—	48,968	*
All directors and executive officers as a group: (5 persons)⁽³⁾	3,522,258	949,510	4,471,768	38.6%

*: Less than 1%.
(1): The total number of shares outstanding used in calculating this percentage is 11,591,438, which is the sum of (a) 10,641,928, the number of shares outstanding as of March 20, 2013, plus (b) 949,510, the number of shares underlying units beneficially owned as of March 20, 2013.
(2): Includes 108,705 shares of common stock owned by Mr. Roberts spouse; Mr. Roberts disclaims beneficial ownership of those shares.
(3): Reflects Mr. Roberts' beneficial ownership of 576,512 units, each of which is exchangeable for 1.647 shares of our common stock.
(4): Owned jointly with Mr. Elliott's spouse.
(5): Owned indirectly through The Humphries Living Trust.

Table of Contents

Equity Compensation Plan Information

The following table provides equity compensation plan information at December 31, 2012. At our annual shareholders meeting on August 21, 2006, our shareholders approved and adopted the 2006 Roberts Realty Investors, Inc. Restricted Stock Plan. The Plan provides for the grant of stock awards to our employees, directors, consultants, and advisors, including employees of Roberts Properties and Roberts Construction. The maximum number of shares of restricted stock that may be granted to any one individual during the term of the Plan may not exceed 20% of the aggregate number of shares of restricted stock that may be issued under the Plan. Under the Plan as amended on January 27, 2009, we could grant up to 654,000 shares of restricted common stock under the Plan, subject to the anti-dilution provisions of the Plan. Subsequent grants of restricted stock have reduced the number of shares available to be granted under the Plan to the number shown.

Equity Compensation Plan Information

Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)	Weighted- average exercise price of outstanding options, warrants and rights (b)	Number of securities remaining available for future issuances under equity compensation plans (excluding securities reflected in column (a)) (c)

Equity compensation plans approved by security holders	N/A	N/A	546,212
Equity compensation plans not approved by security holders	N/A	N/A	N/A

Total	—	—	546,212

Other than our restricted stock plan described above, we have no equity compensation plans under which we could issue stock, restricted stock or restricted stock units, phantom stock, stock options, SARs, stock options in tandem with SARs, warrants, convertible securities, performance units and performance shares, or similar instruments.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

General

Roberts Realty conducts its business through Roberts Properties Residential, L.P., which we refer to as the operating partnership. Roberts Realty owns an 84.53% interest in the operating partnership as of March 20, 2013 and is its sole general partner. Mr. Charles S. Roberts, our Chief Executive Officer, owns all of the outstanding shares of each of the Roberts Companies. As explained below, we have entered into transactions with the Roberts Companies and paid them to perform services for us.

Under applicable SEC rules, this Item 13 describes any transaction that has occurred since January 1, 2011, or any currently proposed transaction, in which we were or are to be a participant and the amount involved exceeds the lesser of $120,000 or one percent of our total assets at year end for the

Table of Contents

last two completed fiscal years, and in which our officers, directors, and certain other "related persons" as defined in the SEC rules had or will have a direct or indirect material interest. Notes 3 and 9 to our audited consolidated financial statements included in this report provide further detail regarding some of the transactions described in this section.

Transactions with the Roberts Companies

Overview. We have paid fees to the Roberts Companies for various services and will continue to do so in the future. We have purchased properties from Roberts Properties, we have entered into an agreement to sell a property to Roberts Properties, we reimburse Roberts Properties for the costs of certain services and personnel the Roberts Companies provide to us, and we have retained the Roberts Companies for development services and construction services for some of our land parcels, as well as to renovate and reposition apartment communities that we have purchased. Roberts Realty, its predecessor limited partnerships, and other limited partnerships sponsored by Mr. Roberts have previously entered into agreements with Roberts Properties and Roberts Construction to provide some of these services for the following 23 apartment communities with a total of 4,648 units that were sold for a total sales price of $431,701,143. All of these communities were sold for a substantial profit.

		Name of Community			Sales Price		Sales Price Per Unit

+	*	Addison Place Townhomes (Phase I)	118	2008	$	20,000,000	$	169,492
+	*	Addison Place Apartments (Phase II)	285	2008		40,000,000		140,351
+	*	Ballantyne Place	319	2005		37,250,000		116,771
	*	St. Andrews at The Polo Club	200	2004		36,000,000		180,000
+	*	Preston Oaks (Phase I)	189	2004		23,762,500		125,728
+	*	Preston Oaks (Phase II)	24	2004		3,017,500		125,728
+	*	Bradford Creek	180	2004		18,070,000		100,389
+	*	Veranda Chase	250	2004		23,250,000		93,000
+	*	Plantation Trace (Phase I)	182	2004		16,866,400		92,673
+	*	Plantation Trace Townhomes (Phase II)	50	2004		4,633,600		92,673
+	*	River Oaks	216	2004		20,000,000		92,593
+	*	Highland Park	188	2003		17,988,143		95,682
+	*	Rosewood Plantation	152	2001		14,800,000		97,368
+	*	Crestmark Club (Phase I)	248	2001		18,562,874		74,850
+	*	Crestmark Club (Phase II)	86	2001		6,437,126		74,850
+	*	Ivey Brook	146	2000		14,550,000		99,658
+	*	Bentley Place	117	1999		8,273,000		70,709
	*	Windsong	232	1998		9,750,000		42,026
	*	Laurelwood	207	1997		10,601,000		51,213
+		Wynfield Trace	146	1995		10,865,000		74,418
+		Bridgewater	532	1995		39,535,000		74,314
+		Autumn Ridge	113	1995		7,750,000		68,584
+		Governor's Pointe	468	1986		29,739,000		63,545

Total			4,648		$	431,701,143

+: The communities marked with a + were built on raw land that was purchased, zoned and developed by the Roberts Companies.
*: The communities marked with an * were designed, developed, constructed, renovated and managed by the Roberts Companies for Roberts Realty Investors, Inc.

Table of Contents

Lease of Office Space in Northridge Office Building. We own a three-story, 37,864 square foot building on Northridge Parkway in Sandy Springs, Georgia that serves as our corporate headquarters. We occupy a portion of the third floor in the building, and we lease the remaining space on that floor to the Roberts Companies. Roberts Properties leases 4,431 rentable square feet, and Roberts Construction leases 1,920 rentable square feet.

Effective as of January 1, 2011, we renewed our leases with the Roberts Companies. Both leases were for a one-year term with a rental rate of $17.50 per rentable square foot. The effective rental rate was consistent with an October 2009 lease agreement between us and an unrelated third party at the Northridge Office Building. Effective as of January 1, 2012, we renewed our leases with the Roberts Companies for a one-year term with a new rental rate of $17.50 per rentable square foot. Effective as of January 1, 2013, Roberts Realty again renewed its leases with the Roberts Companies for a one-year term with a new rental rate of $17.00 per rentable square foot. We recognized total rental income from Roberts Properties and Roberts Construction of $69,495 for the year ended December 31, 2011 and $90,342 for the year ended December 31, 2012.

Restrictive Covenant on Peachtree Parkway Land. When we purchased the Peachtree Parkway property in December 2004, we assumed and became bound by a pre-existing restrictive covenant on the property that was already recorded in the Gwinnett County, Georgia real estate records in favor of Roberts Construction. The restrictive covenant provided that if the owner of the Peachtree Parkway property developed it for residential use, Roberts Construction would be engaged as the general contractor for the project on a cost plus basis and would be paid the cost of constructing the project plus 5% profit and 5% overhead. (The restrictive covenant also provided that Roberts Properties, or any entity designated by Mr. Roberts, would be engaged as the development company for the project, but we have paid the development fees to Roberts Properties in full satisfaction of that part of the covenant.)

On October 9, 2012, we entered into a sales contract for the sale of its 20.6-acre Peachtree Parkway property to Lennar Multifamily Investors, LLC ("Lennar"), an unrelated third party, for $7,590,000. Lennar informed us and stated in its offer and in the sales contract that it would not use Roberts Construction as the general contractor. The sales contract provided that Lennar would not enter into the sales contract unless the restrictive covenant was terminated no later than the closing date at no cost to Lennar. After being advised by Lennar of this requirement, the audit committee of our board of directors negotiated with Roberts Construction for the release of the restrictive covenant. Roberts Construction agreed in the sales contract to give up its contractual rights to be the general contractor for the project and to release the restrictive covenant on the closing date for a payment of $500,000 from the purchase price to be paid by Lennar. At the closing on February 7, 2013, we sold the Peachtree Parkway property to Lennar, made the $500,000 payment to Roberts Construction, and the restrictive covenant was released.

Restrictive Covenant on North Springs Land Parcel. We own a 9.8-acre parcel of land in Fulton County that we refer to as North Springs. The North Springs property is zoned for 120 condominium units, 236 multifamily units, 210,000 square feet of office space and 56,000 square feet of retail space. In acquiring the North Springs property in January 2005, we assumed and became bound by a pre-existing restrictive covenant on the property that was already recorded in the Fulton County, Georgia real estate records in favor of Roberts Properties and Roberts Construction. The covenant has the same terms and conditions as the restrictive covenant related to the Peachtree Parkway land described above, except that the covenant expires on January 3, 2015. We have paid the development fees to Roberts Properties for the services they provided in full satisfaction of that part of the covenant.

Development Fees. Roberts Properties provides various development services that include market studies; business plans; assistance with permitting, land use and zoning issues, easements, and utility issues; as well as exterior design, finish selection, interior design, and construction administration.

Table of Contents

We have entered into a design and development agreement with Roberts Properties for the Highway 20 project for which we made payments to Roberts Properties in 2011 and 2012 as outlined in the following table:

	Total Contract Amount		Amounts Incurred in 2011		Amounts Incurred in 2012		Remaining Contractual Commitment

Highway 20	$	1,050,000	$	300,000	$	—	$	425,000

Construction Contracts. We have entered into cost plus contracts with Roberts Construction for the Bradley Park, Northridge, Peachtree Parkway, North Springs, and Highway 20 properties. Under these contracts, we will pay Roberts Construction the cost of constructing the project plus 5% for overhead and 5% for profit. We pay progress payments monthly to Roberts Construction based on the work that has been completed. (We will not make any further payments with respect to Peachtree Parkway, which we have sold, or Northridge, which is under contract to be sold.) The following table lists the amounts incurred on these contracts during 2012 and 2011.

	Amounts Incurred for Labor and Materials Costs for the Twelve Months Ended December 31,				Amounts Incurred for 5% Profit and 5% Overhead for the Twelve Months Ended December 31,

	2012		2011		2012		2011
Bradley Park	$	922	$	8,015	$	92	$	802
Northridge		145,085		201,517		14,508		20,152
Peachtree Parkway		1,126		27,115		113		2,711
North Springs		286		8,757		29		876
Highway 20		622		13,061		62		1,306

Totals	$	148,041	$	258,465	$	14,804	$	25,847

Other Payments to Roberts Construction and Roberts Properties. At our request, Roberts Construction performed repairs and maintenance, as well as tenant improvements for new leases, at our retail centers and office building. In 2012, we paid Roberts Construction $149,806 for labor and materials costs plus $14,981 (5% for profit and 5% for overhead). Additionally, Roberts Construction received cost reimbursements of $42,941 in 2012. In 2011, we paid Roberts Construction $93,493 for labor and materials costs plus $9,349 (5% for profit and 5% for overhead).

Other Reimbursements to Roberts Properties. We reimbursed Roberts Properties $7,221 in 2012 and $19,417 in 2011 for our operating costs and other expenses.

We entered into a reimbursement arrangement for services provided by Roberts Properties, effective February 4, 2008, as amended January 1, 2011. Under the terms of the arrangement, we reimburse Roberts Properties the cost of providing consulting services in an amount equal to an agreed-upon hourly billing rate for each employee multiplied by the number of hours that the employee provided services to us. The reimbursement arrangement allows us to obtain services from experienced and knowledgeable personnel without having to bear the cost of employing them on a full-time basis. Under this arrangement, we incurred $136,297 in 2012 and $211,707 in 2011.

Pending Sale of Northridge. On June 30, 2011, we entered into a contract to sell our 11-acre Northridge property to Roberts Properties, for $5,060,000, plus the reimbursement of $303,789 of certain development and construction expenses. Although the closing was originally scheduled to occur on

Table of Contents

October 31, 2011, Roberts Properties requested an extension of the closing date in October 2011 to have the necessary time to resolve certain site conditions, construction code compliance and permitting issues that were encountered during its normal due diligence period. Based on the complexity of these issues, we agreed to the extension, and the sales contract was amended to extend the closing date to December 30, 2011.

Due to the increased costs of construction for the project caused by the abnormal rock and grading conditions at the property, construction code compliance and permitting issues, in December 2011 Roberts Properties submitted to us a revised contract offer of $4,000,000. To obtain current market value information and to perform additional land value analysis on the sale transaction, our audit committee then obtained a third independent appraisal to supplement the two appraisals obtained in June 2011. After considering the three independent appraisals and their values for the Northridge property, other relevant facts, construction and site cost issues and engaging in further negotiations with Roberts Properties, on December 19, 2011 the audit committee approved an amendment to the sales contract for a sales price of $4,070,000 and extended the closing date to March 30, 2012.

In January 2012, Roberts Properties continued its meetings and due diligence efforts with the City of Sandy Springs (the "City"), the jurisdiction where the property is located, for the necessary approvals and permits to construct the Northridge apartment community. During these meetings, the City determined that there was an insufficient sight distance for motorists at the intersection of Northridge Parkway and the entrance to the proposed Northridge apartment community to accomplish adequate traffic control and vehicular safety on Northridge Parkway. In February and March 2012, Roberts Properties worked diligently with the City to seek to resolve this permitting issue and reach a solution that satisfied the City's requirements. After a detailed assessment of the Roberts Properties' due diligence efforts and to provide Roberts Properties sufficient time to resolve this issue, the audit committee approved an amendment to the contract on March 26, 2012 to extend the closing date to June 29, 2012.

On May 21, 2012, the City informed Roberts Properties that the proposed driveway location for the Northridge apartment community was acceptable and that the sight distance issue, described above, would be corrected by the City at the City's sole cost and expense. The City had previously stated that the owner of the property would have to pay these costs.

Based on the City's May 21, 2012 letter, on May 24, 2012, Roberts Properties filed a detailed Land Disturbance Permit Application with the City for its review and approval to obtain a land disturbance permit. The issuance of a land disturbance permit is a significant benefit to the owner of the Northridge property because it provides the owner and the property with the necessary approvals for its site plan, traffic controls, water quality and water detention facilities, grading of the property, and all other site and infrastructure work that any purchaser of the property would require. The land disturbance permit is a critical and essential entitlement for the property.

On June 11, 2012, Roberts Properties received from the City the "Building Division Permit Requirements" identifying required plan revisions for issuance of the land disturbance permit. The City requested 35 plan revisions through its various departments, as follows (the numbers represent the number of revisions requested by the respective department): (1) ADA (American Disabilities Act), (3) Arborist, (1) Fire, (22) Site Plan and, (8) Transportation. Several of the required revisions include enhancements for water quality, erosion and sediment control.

After a detailed review of Roberts Properties' due diligence and permitting efforts and to provide Roberts Properties adequate time to address the 35 plan revisions requested by the City and obtain the land disturbance permit, the audit committee agreed on June 25, 2012 to an amendment to

Table of Contents

the contract to extend the closing date to August 1, 2012, provided that Roberts Properties had the right to extend the closing date to October 30, 2012 if Roberts Properties obtained the land disturbance permit on or before August 1, 2012. Roberts Properties obtained the land disturbance permit from the City on July 23, 2012, and the closing date of the contract was extended to October 30, 2012 in accordance with its terms.

In October 2012, Roberts Properties requested an extension of the closing date to January 31, 2013. Based on Roberts Properties having obtained the land disturbance, water, and sewer permits for the Northridge land and that these entitlements enhance and benefit the Northridge land, on October 22, 2012, the sales contract was amended to extend the closing date to January 31, 2013. On January 28, 2013, the sales contract was further amended to extend the closing date from January 31, 2013 to April 30, 2013.

Determination of Director Independence

We have established an audit committee, a nominating and governance committee and a compensation committee. Our audit committee is composed of Mr. Jones (Chairman), Mr. Davis, and Mr. Humphries. Our board of directors has determined that each member of the audit committee is "independent" under SEC Rule 10A-3 and Section 803A of the NYSE MKT exchange listing standards. Our compensation committee is composed of Mr. Davis (Chairman), Mr. Jones, and Mr. Humphries, and our nominating and governance committee is composed of Mr. Jones (Chairman) and Mr. Davis. Our board of directors has determined that each of Mr. Davis, Mr. Jones, and Mr. Humphries is "independent" within the meaning of Section 803A of the NYSE MKT exchange listing standards. There were no transactions, relationships, or arrangements not disclosed in this Item 13 pursuant to Item 404(a) of Regulation S-K that our board considered in making the determinations of independence described in this paragraph.

Approval of Transactions with Related Persons

We have two types of policies and procedures for the review, approval, or ratification of any transaction we are required to report in the preceding portion of this Item 13. The first is our longstanding policy that conflicting interest transactions by directors as defined under Georgia law must be authorized by a majority of the disinterested directors, but only if there are at least two directors who are disinterested with respect to the matter at issue. The second is that under our Code of Business Conduct and Ethics, related party transactions are subject to appropriate review and oversight by the audit committee of our board of directors. We describe each of these policies in more detail below.

The board of directors is subject to provisions of Georgia law that are designed to eliminate or minimize potential conflicts of interest. Under Georgia law, a director may not misappropriate corporate opportunities that he learns of solely by serving as a member of the board of directors. In addition, under Georgia law, a transaction effected by us or any entity we control (including the operating partnership) in which a director, or specified related persons and entities of the director, have a conflicting interest of such financial significance that it would reasonably be expected to exert an influence on the director's judgment may not be enjoined, set aside, or give rise to damages on the grounds of that interest if either:

•: the transaction is approved, after disclosure of the interest, by the affirmative vote of a majority of the disinterested directors, or by the affirmative vote of a majority of the votes cast by disinterested shareholders; or
•: the transaction is established to have been fair to us.

Table of Contents

The board of directors has adopted a policy that all conflicting interest transactions must be authorized by a majority of the disinterested directors, but only if there are at least two directors who are disinterested with respect to the matter at issue. We have stated this policy in our annual reports on Form 10-K since we became required to file reports with the SEC. In addition, under the applicable rules of the NYSE MKT exchange, related party transactions are subject to appropriate review and oversight by the audit committee of our board of directors.

Under our Code of Business Conduct and Ethics, a "conflict of interest" occurs when an individual's private interest interferes or appears to interfere with the interests of the company. A conflict of interest can arise when a director or officer takes actions or has interests that may make it difficult to perform his or her work for us objectively and effectively. For example, a conflict of interest would arise if a director or officer, or a member or his or her family, receives improper personal benefits as a result of his or her position in the company.

Our Code of Business Conduct and Ethics provides that a conflict of interest situation involving directors or executive officers may include the following:

•: any significant ownership interest in any service provider;
•: any consulting or employment relationship with any service provider, supplier, or competitor;
•: any outside business activity that detracts from an individual's ability to devote appropriate time and attention to his or her responsibilities with the company;
•: the receipt of excessive entertainment or other than nominal gifts from any company with which the company has current or prospective business dealings;
•: being in the position of supervising, reviewing, or having any influence on the job evaluation, pay, or benefit of any immediate family member; and
•: selling anything to the company or buying anything from the company.

Anything that would present a conflict for a director, officer, or employee would likely also present a conflict if it were related to a member of his or her family. The Code of Business Conduct and Ethics provides that any conflict of interest situation, including those described above, should be discussed with the appropriate contact person. For officers and directors, that person is the chairman of the audit committee, Mr. Wm. Jarell Jones.

Under the Code of Business Conduct and Ethics, the approval of conflicting interest transactions is two-pronged. As noted above, our board of directors has adopted and has always followed a policy that all conflicting interest transactions must be authorized by a majority of the disinterested directors, but only if there are at least two directors who are disinterested with respect to the matter at issue. In addition, under the applicable rules of the NYSE MKT exchange, related party transactions are subject to appropriate review and oversight by the audit committee of our board of directors. The Code of Business Conduct and Ethics provides that any transaction or relationship that is approved as described in this paragraph is in compliance with the Code, and that approval as described in this paragraph is not to be regarded as a waiver of the Code.

The Code of Business Conduct and Ethics specifically provides that we may engage in transactions of various types with Mr. Roberts, the Roberts Companies and/or other affiliates of Mr. Roberts, including the development or acquisition of real estate, so long as the transaction or agreement complies with the policy described above. We followed these policies in approving the transactions and agreements with the Roberts Companies described in this Item 13.

Table of Contents

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.

In October 2012, we were informed by Reznick Group, P.C. ("Reznick Group"), our independent registered public accounting firm, that Reznick Group had entered into a business combination with J.H. Cohn, LLP ("J.H. Cohn"), another independent registered public accounting firm. In connection with the business combination, J.H. Cohn legally changed its name to CohnReznick LLP ("CohnReznick") and continues to be registered with the PCAOB. As a result of the business combination and in accordance with applicable SEC rules related to business combinations of independent registered public accounting firms, on November 5, 2012, Reznick Group resigned as our independent registered public accounting firm. The audit committee of our board of directors then appointed CohnReznick, the combined firm, as our independent registered public accounting firm effective November 5, 2012. Our audit engagement team did not change as a result of the business combination.

Audit Fees

For 2012

The aggregate fees billed by CohnReznick for professional services rendered for the audit of our annual financial statements for 2012 and for the review of the financial statements included in our quarterly reports on Form 10-Q during 2012 were $135,000.

For 2011

The aggregate fees billed by Reznick Group for professional services rendered for the audit of our annual financial statements for 2011 and for the review of the financial statements included in our quarterly reports on Form 10-Q during 2011 were $135,000.

Audit-Related Fees

For 2012

CohnReznick provided professional services in the amount of $2,300 that were reasonably related to the performance of the audit of our 2012 financial statements, but which are not reported under Audit Fees above.

Reznick Group provided professional services in the amount of $4,500 that were reasonably related to the performance of the audit of our 2012 financial statements, but which are not reported under Audit Fees above.

For 2011

Reznick Group provided professional services in the amount of $22,500 that were reasonably related to the performance of the audit of our 2011 financial statements, but which are not reported under Audit Fees above.

Table of Contents

Tax Fees

For 2012

The aggregate fees billed by CohnReznick for professional services rendered related to tax compliance, tax advice, and tax planning for 2012 were $18,000.

For 2011

The aggregate fees billed by Reznick Group for professional services rendered related to tax compliance, tax advice, and tax planning for 2011 were $18,000.

All Other Fees

For 2012

The aggregate fees billed by Reznick Group for real estate consulting services in 2012 were $7,500.

For 2011

The aggregate fees billed by Reznick Group for real estate consulting services in 2011 were $9,040.

Pre-Approval Policy

Our audit committee pre-approval guidelines with respect to pre-approval of audit and non-audit services are summarized below.

General. The audit committee is required to pre-approve the audit and non-audit services performed by the independent auditor in order to assure that the provision of such services does not impair the auditor's independence. Unless a type of service to be provided by the independent auditor has received general pre-approval, it will require specific pre-approval by the audit committee. Any proposed services exceeding pre-approved cost levels requires specific pre-approval by the audit committee.

Audit Services. The annual audit services engagement terms and fees are subject to the specific pre-approval of the audit committee. In addition to the annual audit services engagement specifically approved by the audit committee, the audit committee has granted general pre-approval for other audit services, which are those services that only the independent auditor reasonably can provide.

Audit-related Services. Audit-related services are assurance and related services that are reasonably related to the performance of the audit or review of our financial statements and that are traditionally performed by the independent auditor. The audit committee believes that the provision of audit-related services does not impair the independence of the auditor.

Tax Services. The audit committee believes that the independent auditor can provide tax services to us, such as tax compliance, tax planning and tax advice, without impairing the auditor's independence. The audit committee will not permit the retention of the independent auditor in connection with a transaction initially recommended by the independent auditor, the purpose of which may be tax avoidance and the tax treatment of which may not be supported in the Internal Revenue Code and related regulations.

Table of Contents

All Other Services. The audit committee has granted pre-approval to those permissible non-audit services classified as "all other services" that it believes are routine and recurring services, and would not impair the independence of the auditor.

Pre-Approval Fee Levels. To facilitate management's day-to-day conduct of our business, the audit committee deemed it advisable and in our best interests to permit certain routine, non-audit services without the necessity of pre-approval by the audit committee. Therefore, the audit committee expects to establish a pre-approval fee level per engagement. Any proposal for services exceeding this level will require specific pre-approval by the audit committee. Although management may engage non-audit services from our independent auditor within this limit, management cannot enter into any engagement that would violate the SEC's rules and regulations related to auditor independence. These non-audit service engagements are to be reported to the audit committee as promptly as practicable.

Table of Contents

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

(a): (1) and (2). Financial Statements and Schedules.

The financial statements listed below are filed as part of this annual report on the pages indicated.

INDEX TO FINANCIAL STATEMENTS

		Page


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM		F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM		F-2
CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2012 AND 2011 AND FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011:
Consolidated Balance Sheets		F-3
Consolidated Statements of Operations		F-4
Consolidated Statements of Shareholders' Equity		F-5
Consolidated Statements of Cash Flows		F-6
Notes to Consolidated Financial Statements		F-8

Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and
Shareholders of Roberts Realty Investors, Inc.:

We have audited the accompanying consolidated balance sheet of Roberts Realty Investors, Inc., a Georgia corporation, and its subsidiary (together, the "Company"), as of December 31, 2012, and the related consolidated statements of operations, shareholders' equity, and cash flows for the year ended December 31, 2012. Roberts Realty Investors, Inc's management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Roberts Realty Investors, Inc. and its subsidiary as of December 31, 2012, and the consolidated results of their operations and their cash flows for the year ended December 31, 2012, in conformity with accounting principles generally accepted in the United States of America.

/s/ CohnReznick LLP

Atlanta, Georgia
March 29, 2013

F-1

Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and
Shareholders of Roberts Realty Investors, Inc.:

We have audited the accompanying consolidated balance sheet of Roberts Realty Investors, Inc., a Georgia corporation, and its subsidiary (together, the "Company") as of December 31, 2011 and the related consolidated statements of operations, shareholders' equity, and cash flows for the year ended December 31, 2011. Roberts Realty Investors, Inc.'s management is responsible for these consolidated financial statements. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Roberts Realty Investors, Inc. and its subsidiary as of December 31, 2011, and the consolidated results of their operations and their cash flows for the year ended December 31, 2011 in conformity with accounting principles generally accepted in the United States of America.

/s/ Reznick Group, P.C.

Atlanta, Georgia
March 2, 2012

F-2

Table of Contents

ROBERTS REALTY INVESTORS, INC.
CONSOLIDATED BALANCE SHEETS

	December 31, 2012			December 31, 2011

ASSETS
REAL ESTATE ASSETS:
Land	$	5,272,376		$	5,272,376
Buildings and improvements		8,253,639			10,717,563
Furniture, fixtures and equipment		568,724			445,696

		14,094,739			16,435,635
Less: accumulated depreciation		(3,779,568	)		(3,383,321	)

Operating real estate assets		10,315,171			13,052,314
Construction in progress and real estate under development		19,008,000			22,088,000
Real estate assets held for sale		11,098,956			12,789,738

Net real estate assets		40,422,127			47,930,052
CASH AND CASH EQUIVALENTS		401,018			568,191
RESTRICTED CASH		764,777			1,014,989
DEFERRED FINANCING & LEASING COSTS – Net of accumulated amortization of $287,219 and $177,600 at December 31, 2012 and December 31, 2011, respectively		93,330			96,475
LEASE INTANGIBLES – Net of accumulated amortization of $441,952 and $386,996 at December 31, 2012 and December 31, 2011, respectively		11,221			66,177
DUE FROM AFFILIATES		403,182			242,182
OTHER ASSETS – Net		240,873			130,678
ASSETS RELATED TO DISCONTINUED OPERATIONS		103,500			7,553

	$	42,440,028		$	50,056,297

LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Mortgage notes payable	$	9,655,865		$	9,960,148
Land notes payable		5,910,000			5,955,000
Accounts payable and accrued expenses		464,997			306,523
Due to affiliates		37,542			27,420
Security deposits and prepaid rents		51,890			66,296
Liabilities related to real estate assets held for sale		9,032,145			8,204,521
Liabilities related to discontinued operations		–			7,665

Total liabilities		25,152,439			24,527,573

COMMITMENTS AND CONTINGENCIES (Note 10)
NONCONTROLLING INTEREST – OPERATING PARTNERSHIP		2,674,390			4,406,258

SHAREHOLDERS' EQUITY:
Preferred shares, $.01 par value, 20,000,000 shares authorized, no shares issued and outstanding
Common shares, $.01 par value, 100,000,000 shares authorized, 10,641,928 and 10,374,518 shares issued and outstanding at December 31, 2012 and December 31, 2011, respectively		106,419			103,745
Additional paid-in capital		31,813,622			31,397,390
Treasury shares, at cost		(71,332	)		(71,332	)
Accumulated deficit		(17,235,510	)		(10,307,337	)

Total shareholders' equity		14,613,199			21,122,466

	$	42,440,028		$	50,056,297

See notes to the consolidated financial statements.

F-3

Table of Contents

ROBERTS REALTY INVESTORS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS

	Years Ended December 31,

	2012			2011
OPERATING REVENUES:
Rental operations	$	1,057,701		$	1,084,601
Other operating income		297,253			174,806

Total operating revenues		1,354,954			1,259,407

OPERATING EXPENSES:
Utilities		130,503			126,543
Repairs and maintenance		158,141			169,884
Real estate taxes		272,940			273,825
Marketing, insurance and other		56,234			45,178
General and administrative expenses		1,521,728			1,357,252
Impairment loss on real estate assets		5,923,207			9,500,744
Gain on disposal of assets		–			(8,550	)
Depreciation and amortization expense		470,749			516,919

Total operating expenses		8,533,502			11,981,795

OTHER INCOME (EXPENSE):
Gain on sale of real estate assets		397,181			–
Interest income		3,693			12,996
Interest expense		(1,496,765	)		(1,261,715	)
Amortization of deferred financing and leasing costs		(179,343	)		(97,841	)

Total other expense		(1,275,234	)		(1,346,560	)

LOSS FROM CONTINUING OPERATIONS		(8,453,782	)		(12,068,948	)
INCOME FROM DISCONTINUED OPERATIONS		128,652			1,083,341

NET LOSS		(8,325,130	)		(10,985,607	)
LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST		(1,396,957	)		(1,910,397	)

NET LOSS AVAILABLE TO COMMON SHAREHOLDERS	$	(6,928,173	)	$	(9,075,210	)

LOSS PER COMMON SHARE—BASIC AND DILUTED (Note 5):
Loss from continuing operations – basic and diluted	$	(0.67	)	$	(0.96	)
Income from discontinued operations – basic and diluted		0.01			0.09

Net loss – basic and diluted	$	(0.66	)	$	(0.87	)

See notes to the consolidated financial statements.

F-4

Table of Contents

ROBERTS REALTY INVESTORS, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 2012 AND 2011

	Common Shares

	Number of Shares Issued		Amount		Additional Paid-In Capital			Treasury Shares			Accumulated Deficit			Total Shareholders' Equity
BALANCE AS OF DECEMBER 31, 2010		10,349,065	$	103,491	$	31,305,781		$	(71,332	)	$	(1,232,127	)	$	30,105,813

Net loss												(9,075,210	)		(9,075,210	)

Total comprehensive loss															(9,075,210	)

Share-based compensation expense						35,701									35,701
Redemption of operating partnership units for common shares		25,453		254		44,255									44,509
Adjustment for noncontrolling interest in the operating partnership						11,653									11,653

BALANCE AS OF DECEMBER 31, 2011		10,374,518	$	103,745	$	31,397,390		$	(71,332	)	$	(10,307,337	)	$	21,122,466

Net loss												(6,928,173	)		(6,928,173	)

Total comprehensive loss															(6,928,173	)

Restricted shares issued		50,000		500		(500	)								—
Share-based compensation expense						83,995									83,995
Redemption of operating partnership units for common shares		217,410		2,174		286,981									289,155
Adjustment for noncontrolling interest in the operating partnership						45,756									45,756

BALANCE AS OF DECEMBER 31, 2012		10,641,928	$	106,419	$	31,813,622		$	(71.332	)	$	(17,235,510	)	$	14,613,199

See notes to the consolidated financial statements.

F-5

Table of Contents

ROBERTS REALTY INVESTORS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

	Years Ended December 31,

	2012			2011
OPERATING ACTIVITIES:
Net loss	$	(8,325,130	)	$	(10,985,607	)
Adjustments to reconcile net loss to net cash used in operating activities:
Income from discontinued operations		(128,652	)		(1,083,341	)
Depreciation and amortization		650,092			614,760
Impairment loss on real estate assets		5,923,207			9,500,744
Gain on disposal of assets		–			(8,550	)
Gain on sale of real estate assets		(397,181	)		–
Amortization of deferred compensation		83,995			35,701
Amortization of above and below market leases		(12,536	)		(11,899	)
Increase in due from affiliates		(161,000	)		(242,182	)
(Increase) decrease in other assets		(46,170	)		78,800
Increase (decrease) in due to affiliates		9,517			(11,577	)
Increase (decrease) in accounts payable, accrued expenses and other liabilities relating to operations		129,241			(6,154	)

Net cash used in operating activities from continuing operations		(2,274,617	)		(2,119,305	)
Net cash provided by (used in) operating activities from discontinued operations		25,040			(75,145	)

Net cash used in operating activities		(2,249,577	)		(2,194,450	)

INVESTING ACTIVITIES:
Proceeds from sale of real estate assets held for sale		1,200,000			–
Proceeds from sale of furniture, fixtures and equipment		–			8,550
Payment of leasing costs		(12,500	)		–
Decrease in restricted cash		250,212			125,503
Increase in accounts payable, accrued expenses and other liabilities relating to investing activities		9,585			15,662
Reimbursement of expenses related to real estate assets held for sale		515,530			–
Increase in due to affiliates relating to investing activities		605			5,019
Development and construction of real estate assets		(193,246	)		(565,765	)

Net cash provided by (used in) investing activities from continuing operations		1,770,186			(411,031	)
Net cash provided by investing activities from discontinued operations		–			76,176

Net cash provided by (used in) investing activities		1,770,186			(334,855	)

FINANCING ACTIVITIES:
Principal repayments on mortgage notes payable		(304,283	)		(304,075	)
Principal repayments of land notes payable		(45,000	)		(270,000	)
Principal repayments on liabilities related to real estate assets held for sale		(1,174,800	)		–
Payment of loan costs		(163,699	)		(44,822	)
Proceeds from land notes payable related to real estate assets held for sale		2,000,000			–

Net cash provided by (used in) financing activities		312,218			(618,897	)

NET DECREASE IN CASH AND CASH EQUIVALENTS		(167,173	)		(3,148,202	)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	$	568,191		$	3,716,393

CASH AND CASH EQUIVALENTS, END OF PERIOD	$	401,018		$	568,191

See notes to the consolidated financial statements.

F-6

Table of Contents

ROBERTS REALTY INVESTORS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

	Years Ended December 31,

	2012		2011
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest, net of capitalized interest of $0 and $81,940 for the the twelve months ended December 31, 2012 and December 31, 2011, respectively	$	1,450,434	$	1,261,340

SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING ACTIVITIES AND FINANCING ACTIVITIES:
Redemption of operating partnership units for common shares	$	289,155	$	44,509

Adjustments to noncontrolling interest in the operating partnership	$	45,756	$	11,653

NON-CASH DISPOSITION OF REAL ESTATE ASSETS RELATED TO DISCONTINUED OPERATIONS:
Disposition of real estate assets related to discontinued operations	$	–	$	5,307,872

Decrease in assets related to discontinued operations	$	–	$	21,317

Extinguishment of liabilities related to discontinued operations	$	–	$	6,974,451

See notes to the consolidated financial statements.

F-7

Table of Contents

ROBERTS REALTY INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. BUSINESS AND ORGANIZATION

Roberts Realty Investors, Inc. ("Roberts Realty"), a Georgia corporation, was formed on July 22, 1994 to serve as a vehicle for investments in, and ownership of, a professionally managed real estate portfolio of multifamily apartment communities. Roberts Realty owns and manages its real estate assets as a self-administered, self-managed equity real estate investment trust ("REIT").

Roberts Realty conducts all of its operations and owns all of its assets in and through Roberts Properties Residential, L.P., a Georgia limited partnership (the "operating partnership"), or the operating partnership's three wholly owned subsidiaries, two of which are Delaware limited liability companies and one is a Georgia limited liability company. Roberts Realty controls the operating partnership as its sole general partner and had an 84.53% and an 82.74% ownership interest in the operating partnership at December 31, 2012 and December 31, 2011, respectively.

At December 31, 2012, Roberts Realty owned the following real estate assets, all of which are located in the north Atlanta metropolitan area:

•: three tracts of land totaling 70 acres in various phases of development and construction;
•: three tracts of land totaling 34 acres held for sale; one of these tracts totaling 11 acres is currently under contract to be sold and one tract totaling 22 acres was recently sold (see Management's Business Plan below, Note 9 – Related Party Transactions, and Note 11 – Subsequent Events);
•: two neighborhood retail centers totaling 49,999 square feet; and
•: one commercial office building totaling 37,864 square feet.

Management's Business Plan. During the last year, management has significantly reduced Roberts Realty's debt and decreased its ongoing operating expenses and intends to continue to focus on improving Roberts Realty's liquidity and balance sheet. Roberts Realty's primary liquidity requirements are related to its continuing negative operating cash flow and maturing short-term debt. Roberts Realty's negative operating cash flow is primarily due to its ownership of tracts of land that do not produce ongoing revenue but incur carrying costs of interest expense and real estate taxes, coupled with the low occupancy rates at its Spectrum retail center and Northridge Office Building. As of December 31, 2012, Roberts Realty has five loans with a total principal balance of $17,448,534 that are scheduled to mature within the next 12 months. One of these loans with a total principal balance of $7,000,200 was recently paid off. See Note 11 – Subsequent Events.

Management plans to repay the $2,000,000 Northridge land loan from the $4,373,789 of proceeds from the sale of the Northridge property, which is scheduled to occur by April 30, 2013. Management has listed its 37,864 square foot Northridge Office Building for sale at a price of $5,750,000 and plans to pay off the $2,538,334 Northridge Office Building loan from the sale proceeds. See Note 11 – Subsequent Events. Management is also listing for sale its North Springs property, which has a current independent appraised value of $16,350,000.

Management plans to either pay off the two remaining loans in the total amount of $5,910,000 with the remaining sales proceeds or renew the loans as they come due and extend their maturity dates at least 12 months. Management believes that its long history of operating and developing

F-8

Table of Contents

real estate, its current plans for developing some of its existing land and selling certain of its real estate assets will allow it to successfully extend these loans or find alternative funding.

Management's primary objectives for 2013 are to continue to sell certain real estate assets, which will provide the equity capital to develop its Bradley Park and Highway 20 properties while continuing to reduce the company's debt and decrease its operating expenses. Management's business plan outlining how it intends to accomplish these objectives is outlined below.

Sale of the North Springs Property. Roberts Realty is currently listing the North Springs property for sale. The North Springs property is a 10-acre site located on Peachtree Dunwoody Road across the street from the North Springs rail station in Sandy Springs. The North Springs property is zoned for a mixed-use development consisting of 356 multifamily units, 210,000 square feet of office space, and 56,000 square feet of retail space. The North Springs property is currently owned debt free and has a book value of $11,000,000 and a current independent appraised value of $16,350,000.

Sale of the Northridge Office Building. Roberts Realty has retained CBRE, Inc., a global full service real estate firm, to sell its 37,864 square foot Northridge Office Building for a price of $5,750,000. Roberts Realty believes the market and demand for high quality office buildings has significantly improved, providing it with the opportunity to sell this non-core asset. This sale would pay off the $2,538,334 loan secured by the Northridge Office Building and reduce Roberts Realty's ongoing operating expenses by approximately $210,000 per year.

Sale of the Northridge Land. As previously reported, Roberts Realty is selling its 11-acre Northridge land parcel. Under the terms of the sales contract as amended, the purchase price is $4,070,000, plus the reimbursement of $303,789 in development and construction expenses. The closing is scheduled to occur on or before April 30, 2013. This sale would pay off $2,000,000 in debt secured by the Northridge land and reduce Roberts Realty's operating expenses by approximately $300,000 per year.

Sale of Other Land Parcels. Roberts Realty also continues to actively market for sale a one-acre commercial site in Johns Creek that has a book value of $500,000, that it owns debt free. In addition, Roberts Realty intends to sell the remaining 1.5 acres of its Peachtree Parkway property that has a book value of $410,187. See Note 11 – Subsequent Events.

Disposition of the Retail Centers. As Roberts Realty has previously stated in its annual and quarterly reports, its objective is to exit the retail business to focus exclusively on developing, constructing, and managing multifamily apartment communities. Given that objective, in February 2013, Roberts Realty notified the lender of its intent to transfer the Spectrum retail center to the lender in satisfaction of the $4,691,528 in debt secured by the property. Because the loan is non-recourse, Roberts Realty would have no further obligations to the lender for this loan. This transaction would reduce Roberts Realty's debt by $4,691,528 and reduce its operating expenses by approximately $165,000 per year.

To complete its exit from the retail shopping center business, Roberts Realty also intends to sell the Bassett retail center, which has a current independent appraised value of $3,160,000 and is encumbered by a $2,426,003 loan. If Roberts Realty is ultimately unable to sell the Bassett retail center for a sales price at least equal to the debt, Roberts Realty may transfer the Bassett retail center to the lender in satisfaction of the debt. Because the loan is non-recourse, Roberts Realty would have no further obligations to the lender for this loan. Roberts Realty believes that

F-9

Table of Contents

divesting the retail centers and Northridge Office Building will make it easier to consummate a sale, merger, or other business combination.

Land Parcels Held for Development and Construction. Roberts Realty intends to move forward with the development and construction of its Bradley Park and Highway 20 multifamily apartment communities. Management believes this is an opportune time to create new multifamily assets and that Roberts Realty can create value for shareholders as it has historically done through developing, constructing, managing, and selling high quality multifamily apartment communities for cash flow and long-term capital appreciation.

Roberts Realty intends to use the sales proceeds from the sale of the North Springs property, the Northridge Office Building, the Northridge land and the other land parcels to provide the equity to develop and construct the Bradley Park and Highway 20 multifamily apartment communities. The Bradley Park land has a current independent appraised value of $4,500,000 and is encumbered by a $3,000,000 land loan. The Highway 20 land has a current independent appraised value of $6,100,000 and is encumbered by a $2,910,000 land loan.

Roberts Realty is also in discussions with possible joint venture participants such as pension funds, life insurance companies, hedge funds, foreign investors, and local investors. Roberts Realty may also form a new affiliate that would raise private equity for the specific purpose of purchasing these two remaining land parcels and constructing multifamily apartment communities. Roberts Realty may also sell one or both of these land parcels to Roberts Properties or to a newly formed affiliate of Roberts Properties as it has agreed to do with the Northridge land parcel.

Possible Sale, Merger, or Other Business Combination. As previously reported, in addition to the above transactions, Roberts Realty continues to work on numerous strategic alternatives that would maximize shareholder value through a sale, merger, or other business combination. Roberts Realty has engaged in discussions with both private companies and individuals regarding a possible sale, merger, or other business combination and has entered into mutual confidentiality agreements with 68 different entities. Roberts Realty remains in active discussions with several companies that want to go public. To date, Roberts Realty has not entered into any definitive agreement for such a transaction. Management continues to pursue and work diligently on any sale, merger, or other business combination that would reward shareholders and maximize their value.

The completion of Roberts Realty's planned property sales and the accomplishment of its 2013 business plan would further reduce the company's debt by $11,655,865, decrease its operating expenses by another $675,000, and significantly increase its capital resources. In addition, the completion of each of these transactions will make the company a more attractive merger candidate.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation. The accompanying consolidated financial statements include the consolidated accounts of Roberts Realty and the operating partnership. All significant inter-company accounts and transactions have been eliminated in consolidation. The financial statements of Roberts Realty have been adjusted for the noncontrolling interest of the unitholders in the operating partnership.

F-10

Table of Contents

Noncontrolling Interest – Operating Partnership. Holders of operating partnership units generally have the right to require the operating partnership to redeem their units for shares of Roberts Realty common stock. Upon submittal of units for redemption, the operating partnership has the option either (a) to acquire those units in exchange for shares, currently on the basis of 1.647 shares for each unit submitted for redemption, or (b) to pay cash for those units at their fair market value, based upon the then current trading price of the shares and using the same exchange ratio. Roberts Realty has adopted a policy of issuing shares in exchange for all units submitted for redemption.

The noncontrolling interest of the unitholders in the operating partnership on the accompanying balance sheets is calculated by multiplying the noncontrolling interest ownership percentage at the balance sheet date by the operating partnership's net assets (total assets less total liabilities). The noncontrolling interest ownership percentage is calculated at any point in time by dividing (x) (the number of units outstanding multiplied by 1.647) by (y) the total number of shares plus (the number of units outstanding multiplied by 1.647). The noncontrolling interest ownership percentage will change as additional shares and/or units are issued or as units are redeemed for shares of Roberts Realty common stock. The noncontrolling interest of the unitholders in the income or loss of the operating partnership on the accompanying statements of operations is calculated based on the weighted average percentage of units outstanding during the period, which was 16.78% for 2012 and 17.39% for 2011. There were 1,182,285 units outstanding as of December 31, 2012 and 1,314,285 units outstanding as of December 31, 2011. The noncontrolling interest of the unitholders was $2,674,390 at December 31, 2012 and $4,406,258 at December 31, 2011.

Under Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 810, Consolidation, Roberts Realty records noncontrolling interest in the operating partnership on its consolidated balance sheets at the greater of its carrying amount or redemption value at the end of each reporting period. Any changes in the value from period to period are charged to additional paid-in-capital in Roberts Realty's consolidated statements of shareholders' equity. The following table details the components of noncontrolling interest related to unitholders in the operating partnership for the twelve months ended December 31, 2012 and 2011 (See Note 5 – Shareholders' Equity – Earnings per Share):

	December 31,

	2012			2011
Beginning balance	$	4,406,258		$	6,372,817
Net loss attributable to noncontrolling interest		(1,396,957	)		(1,910,397	)
Redemptions of noncontrolling partnership units		(289,155	)		(44,509	)
Adjustments to noncontrolling interest in the operating partnership		(45,756	)		(11,653	)

Ending balance	$	2,674,390		$	4,406,258

Real Estate Assets and Depreciation. Real estate assets are recorded at depreciated cost less reductions for impairment, if any. Under FASB ASC Topic 820-10, Fair Value Measurements and Disclosures – Overall, Roberts Realty measures its non-financial assets and liabilities at fair value on a nonrecurring basis. Roberts Realty reviews its real estate assets for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If the real estate asset is considered to be impaired, the impairment to be recognized is measured at the

F-11

Table of Contents

amount by which the carrying amount exceeds the fair value as determined by an evaluation of appraisals, discounted cash flow analyses, and other applicable valuation techniques. The analysis conducted by Roberts Realty in determining impairment losses is described in Note 7 – Impairment Loss on Real Estate Assets.

The purchase price of acquired real estate assets is allocated to land, building and intangible assets in accordance with FASB ASC Topic 805, Business Combinations. Roberts Realty allocates the purchase price of an acquired asset based on the relative fair values of the land, building, and intangible assets. For tangible assets classified as real estate assets, the values are determined as though the land was undeveloped and the buildings were vacant. Intangible assets typically consist of above or below market leases and the value of in-place leases. The fair value of any above or below market leases is amortized into operating revenues over the terms of the respective leases. The combined fair value of above and below market leases acquired, net of accumulated amortization, was ($3,357) and ($15,894) at December 31, 2012 and 2011, respectively, and these amounts are included in other assets on the consolidated balance sheets. The value of in-place leases is amortized over the term of the respective lease. Intangible assets that are subject to amortization (a) are reviewed for potential impairment whenever events or circumstances indicate that their carrying amounts may not be recoverable and (b) are tested at least annually.

Expenditures directly related to the acquisition, development, construction, and improvement of real estate assets are capitalized, at cost, as land, buildings, and improvements. During the construction period, interest expense, real estate taxes, insurance, and other direct costs are capitalized. Interest expense is capitalized on qualifying assets during the construction period using a weighted average interest rate for all indebtedness. There was no interest expense capitalized in 2012 and $81,940 of interest expense was capitalized in 2011. Leasing costs, including commissions and legal costs, are capitalized and amortized over the term of the respective lease. Ordinary repairs and maintenance costs are expensed as incurred. Major replacements and betterments are capitalized and depreciated over their estimated useful lives; buildings are generally depreciated over 27.5 years; land improvements are depreciated over 15 years; and furniture, fixtures, and equipment are depreciated over 5 to 7 years. The amortization of the value of the in-place leases and any tenant improvement costs is included in the depreciation and amortization expense of the operating real estate depreciable assets on the consolidated statements of operations. Depreciation and amortization expense for these operating assets was $470,749 in 2012 and $516,919 in 2011.

Roberts Realty recognizes gains on the sales of assets in accordance with FASB ASC Topic 360-20, Property, Plant, and Equipment – Real Estate Sales. If any significant continuing obligation exists at the date of sale, Roberts Realty defers a portion of the gain attributable to the continuing obligation until the continuing obligation has expired or is removed. There were no such continuing obligations on the sales of any of Roberts Realty's assets as of December 31, 2012 and 2011.

Cash and Cash Equivalents. Roberts Realty considers all highly liquid investments with a maturity of three months or less at the time of purchase to be cash equivalents. Roberts Realty maintains cash and cash equivalent balances with financial institutions that may at times exceed the limits for insurance provided by the Federal Depository Insurance Corporation. Roberts Realty has not experienced any losses related to these excess balances and management believes its credit risk is minimal.

Restricted Cash. Restricted cash consists of retail and office tenant security deposits, lender escrows held by third parties and interest reserves held by lenders.

F-12

Table of Contents

Deferred Financing Costs. Deferred financing costs include fees and expenses incurred to obtain financing and are amortized using the straight-line method over the terms of the related debt. Although accounting principles generally accepted in the U.S. ("GAAP") require that the effective-yield method be used to amortize financing costs, the effect of using the straight-line method is not materially different from the results that would have been obtained using the effective-yield method. Amortization of deferred financing costs was $170,668 for 2012 and $84,293 for 2011.

Revenue Recognition. Roberts Realty leases its multifamily apartment communities under operating leases with terms generally one year or less. Roberts Realty does not currently own any multifamily communities and did not own any multifamily communities during 2012 or 2011. Commercial leases for Roberts Realty's retail and office properties generally have terms of three to five years, with options to renew for an additional three to five years. Roberts Realty recognizes revenue for reimbursements from retail tenants of operating expenses consisting primarily of real estate taxes, property insurance, and various common area expenses; such as, electricity, water, sewer, and trash removal. Rental income from multifamily apartment communities is recognized when collected which materially approximates revenue recognition on a straight-line basis. Rental income from retail and office properties is recognized on a straight-line basis. At December 31, 2012, future minimum rentals to be received by Roberts Realty under its retail and office leases, excluding reimbursements for operating expenses, are as follows:

Year	Amount

2013	$	952,295
2014		681,379
2015		367,716
2016		288,986
2017		159,401
Thereafter		9,297

Total	$	2,459,074

Income Taxes. Since its formation in 1994, Roberts Realty has elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended (the "Code"). As a result, Roberts Realty generally will not be subject to federal and state income taxation at the corporate level to the extent it distributes at least 90% of its taxable income, as defined in the Code, each year to its shareholders and satisfies certain other requirements. As long as Roberts Realty continues to maintain its qualification as a REIT, it generally will not be subject to federal and state income tax on distributed net income in the future. Accordingly, no provision has been made for federal and state income taxes in the accompanying consolidated financial statements. A reconciliation of

F-13

Table of Contents

Roberts Realty's net loss to its taxable loss for the years ending December 31, 2012 and 2011 is shown below.

	2012			2011

Net loss available to common shareholders	$	(6,928,173	)	$	(9,075,210	)
Adjustments to net loss:
Loss on disposition of real estate assets		–			(2,301,940	)
Gain on disposal of assets		(58,875	)		–
Depreciation		66,493			73,534
Prepaid and straight-line rents		21,093			72,132
Unearned compensation		11,902			29,492
Interest expense		–			(67,688	)
Bad debt		(70,482	)		(94,575	)
Meals and entertainment		522			923
Impairment loss on real estate assets		4,929,365			7,848,284
Charitable contribution carryover		–			826

Taxable (loss) income before net operating losses and dividends paid deduction	$	(2,028,155	)	$	(3,514,222	)

Dividends paid deduction		–			–
Net operating loss deduction		–			–

Taxable loss	$	(2,028,155	)	$	(3,514,222	)

Earnings Per Share. Basic earnings per share is calculated using the weighted average number of common shares outstanding during the periods presented. Diluted earnings per share is calculated to reflect the potential dilution of all instruments or securities that are convertible into shares of common stock. For Roberts Realty, this includes the shares that are issuable in exchange for units that are outstanding during the periods presented.

Use of Estimates. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Recent Accounting Pronouncements. ASU No. 2011-04; Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. In May 2011, the FASB issued Accounting Standards Update ("ASU") No. 2011-04. The objective of this ASU is to align fair value measurements and related disclosure requirements under GAAP and International Financial Reporting Standards ("IFRSs"), thus improving the comparability of fair value measurements presented and disclosed in financial statements prepared in accordance with U.S. GAAP and IFRSs. The guidance in this ASU requires retrospective application, and Roberts Realty implemented this ASU beginning January 1, 2012. The implementation of this pronouncement did not have a material effect on Roberts Realty's financial statements.

F-14

Table of Contents

ASU No. 2011-05; Amendments to Topic 220, Comprehensive Income. In June 2011, the FASB issued ASU No. 2011-05. Under the amendments in this ASU, an entity has the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. This ASU eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders' equity. The amendments in this ASU do not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. The guidance in this ASU requires retrospective application, and Roberts Realty implemented this ASU beginning January 1, 2012. The implementation of this pronouncement did not have a material effect on Roberts Realty's financial statements.

Reclassifications. Certain reclassifications of prior year's balances have been made to conform to the current format.

3. REAL ESTATE ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS

FASB ASC Topic 360-10, Property, Plant and Equipment – Overall requires a long-lived asset to be classified as "held for sale" in the period in which certain criteria are met. Roberts Realty classifies real estate assets as held for sale after the following conditions have been satisfied; (1) receipt of approval from its board of directors to sell the asset, (2) the initiation of an active program to sell the asset, and (3) the asset is available for immediate sale and it is probable that the sale of the asset will be completed within one year. When assets are classified as held for sale, they are recorded at the lower of the assets' carrying amount or fair value, less the estimated selling costs.

Roberts Realty periodically classifies real estate assets as held for sale, and these assets and their liabilities are stated separately on the accompanying consolidated balance sheets. The real estate

F-15

Table of Contents

assets held for sale and the liabilities related to real estate assets held for sale as of December 31, 2012 and December 31, 2011, were as follows:

	Real Estate Assets Held for Sale

Land Parcels	12/31/12		12/31/11
Northridge	$	4,373,789	$	4,373,789
Peachtree Parkway		6,225,167		7,540,000
Commercial Site in Johns Creek		500,000		875,949

Total Real Estate Assets Held for Sale	$	11,098,956	$	12,789,738

	Liabilities Related to Real Estate Assets Held for Sale

Land Loans	12/31/12		12/31/11
Northridge	$	2,000,000	$	–
Peachtree Parkway		7,000,200		8,175,000
Commercial Site in Johns Creek		–		–

Total Land Loans for Real Estate Assets Held for Sale	$	9,000,200	$	8,175,000
Other Liabilities		31,945		29,521

Total Liabilities Related to Real Estate Assets
Held for Sale	$	9,032,145	$	8,204,521

On September 27, 2012, Roberts Realty sold 2.937 acres of the Peachtree Parkway property for $1,200,000. In conjunction with the closing, Roberts Realty made a $1,174,800 principal payment on its $8,175,000 Peachtree Parkway land loan. This principal payment reduced the outstanding balance of the loan to $7,000,200. Roberts Realty also received the reimbursement of $515,530 in costs previously incurred to allow the Peachtree Parkway property to be rezoned to a commercial use. Roberts Realty recorded a gain on this sale in the amount $397,181. See Note 11 – Subsequent Events for information about Roberts Realty's subsequent sale of the Peachtree Parkway property.

Roberts Realty reports the results of operations and the gains or losses from operating properties that are sold in accordance with FASB ASC Topic 360-10, Property, Plant and Equipment – Overall. Gains and losses, the results of operations, interest expense and all expenses related to the retirement of debt from operating properties that are sold are included in discontinued operations in the period incurred and are shown separately in the consolidated statements of operations as income or loss from discontinued operations.

In July 2010, Roberts Realty elected to suspend debt service payments on the Grand Pavilion retail center and allowed the nonrecourse loan to go into default. On October 4, 2011, the lender foreclosed on the Grand Pavilion retail center, thereby extinguishing Roberts Realty's nonrecourse mortgage debt. Accordingly, the operations of the Grand Pavilion retail center have been accounted for as discontinued operations.

F-16

Table of Contents

Discontinued Operations

	December 31,

	2012			2011
OPERATING REVENUES:
Rental operations	$	–		$	110,542
Other operating income		132,000			26,533

Total operating revenues		132,000			137,075

OPERATING EXPENSES:
Personnel		–			313
Utilities		–			47,640
Repairs and maintenance		(816	)		78,280
Real estate taxes		–			75,353
Marketing, insurance and other		250			24,850
General and administrative expenses		3,914			31,000
Depreciation and amortization expense		–			78,080

Total operating expenses		3,348			335,516

OTHER INCOME (EXPENSE):
Gain on extinguishment of debt		–			1,559,348
Interest expense		–			(267,818	)
Amortization of deferred financing & leasing costs		–			(9,748	)

Total other income		–			1,281,782

INCOME FROM DISCONTINUED OPERATIONS	$	128,652		$	1,083,341

4. NOTES PAYABLE

Roberts Realty has two types of debt:

1. mortgage notes secured by its operating properties; and

2. land loans.

For the land loans and the Northridge Office Building loan, the operating partnership or one of its wholly owned subsidiaries is the borrower and Roberts Realty is the guarantor. The other two permanent mortgage notes are nonrecourse and a wholly owned subsidiary of the operating partnership is the borrower.

Mortgage Notes. The mortgage notes payable secured by Roberts Realty's operating properties at December 31, 2012 and December 31, 2011 were as follows (in order of maturity date):



				Principal Outstanding
Property Securing Mortgage	Maturity			12/31/12		12/31/11
Northridge Office Building		8/10/13	4.50%	$	2,538,334	$	2,698,333
Spectrum at the Mall of Georgia		5/01/14	5.68%		4,691,528		4,784,858
Bassett Retail Center		10/01/19	8.47%		2,426,003		2,476,957

Totals				$	9,655,865	$	9,960,148

F-17

Table of Contents

The Northridge Office Building mortgage note has monthly payments consisting of a fixed principal amount of $13,333 with interest at the 30-day LIBOR rate plus 300 basis points, with an interest rate floor of 4.50% per annum.

The Spectrum at the Mall of Georgia mortgage note is non-recourse and has monthly payments of principal and interest with a fixed interest rate of 5.68% and a 30-year amortization period. As Roberts Realty has previously stated in its annual and quarterly reports, it is exiting the retail shopping center business to focus exclusively on developing, constructing, and managing multifamily apartment communities. Given that objective and Spectrum's approximately $165,000 in annual negative cash flow, Roberts Realty has elected to stop making debt service and has allowed the loan to go into default. Roberts Realty is seeking to transfer the Spectrum at the Mall of Georgia retail center to the lender in satisfaction of the $4,691,528 principal amount of debt (plus associated fees and costs) secured by the property. Because the loan is nonrecourse, Roberts Realty would have no further obligations to the lender for this loan.

The Bassett Retail Center mortgage note is non-recourse and has monthly payments of principal and interest with a fixed interest rate of 8.47% and a 30-year amortization period.

Land Loans. The loans secured by Roberts Realty's land parcels at December 31, 2012 and December 31, 2011 were as follows (in order of maturity date):



Land Parcel Securing Loan				Principal Outstanding
Land Parcel Securing Loan	Maturity			12/31/12		12/31/11
Highway 20⁽¹⁾		04/08/13	5.50%	$	2,910,000	$	2,955,000
Bradley Park		10/31/13	3.71%		3,000,000		3,000,000

Total Land Loans					5,910,000		5,955,000

Peachtree Parkway⁽²⁾⁽³⁾		4/30/13	5.00%		7,000,200		8,175,000
Northridge⁽⁴⁾		02/21/13	12.00%		2,000,000		–

Total Loans for Real Estate Assets Held for Sale					9,000,200		8,175,000

Totals				$	14,910,200	$	14,130,000

(1): The maturity date of the Highway 20 loan has been extended to October 8, 2013. See Note 11 – Subsequent Events.
(2): The Peachtree Parkway and Northridge land loans are classified as liabilities related to real estate assets held for sale in the consolidated balance sheets.
(3): Roberts Realty has sold the Peachtree Parkway property. See Note 11 – Subsequent Events.
(4): The maturity date of the Northridge loan has been extended to May 22, 2013. See Note 11 – Subsequent Events.

On April 19, 2012, Roberts Realty renewed and extended its Highway 20 land loan to April 8, 2013. Roberts Realty established a $165,000 interest reserve to pay the monthly interest payments at the prime rate with a floor of 5.5% per annum. Roberts Realty agreed to make fixed principal payments of $5,000 per month, with a one-time principal reduction of $240,000 to be paid by October 15, 2012. On October 4, 2012, the Highway 20 land loan was modified to extend the due

F-18

Table of Contents

date of the one-time principal reduction from October 15, 2012 to February 15, 2013, and the amount of the one-time principal reduction would be $300,000. See Note 11 – Subsequent Events.

On February 28, 2012, Roberts Realty renewed and extended its Bradley Park land loan to October 31, 2013. The renewed loan requires monthly interest only payments at an interest rate equal to 350 basis points over the 30-day LIBOR.

On September 27, 2012, Roberts Realty made a $1,174,800 principal payment on its Peachtree Parkway land loan in conjunction with the sale of 2.937 acres of the Peachtree Parkway property. The principal payment reduced the outstanding balance of the loan to $7,000,200, and the maturity date of the loan was extended to April 30, 2013. Roberts Realty will make monthly payments of interest only at the 1-month LIBOR index rate plus 300 basis points, with an interest rate floor of 5.00% per annum. Roberts Realty deposited $175,000 with the lender as an interest reserve to pay the monthly interest payments. See Note 11 – Subsequent Events.

On February 21, 2012, Northridge Parkway, LLC, a wholly owned subsidiary of the operating partnership, closed a $2,000,000 loan secured by the Northridge land, which is under contract to be sold. The loan has a maturity date of February 21, 2013 and Roberts Realty established a $240,000 interest reserve to pay the monthly interest only payments at an interest rate of 12% per annum. See Note 11 – Subsequent Events.

The scheduled principal payments of all debt outstanding at December 31, 2012 are as follows:


2013	$	17,608,059
2014		4,644,299
2015		66,124
2016		71,471
2017		78,417
Thereafter		2,097,695

Total	$	24,566,065

At December 31, 2012, the weighted average interest rate on Roberts Realty's short-term debt was 5.78%. There was no interest expense capitalized in 2012 and $81,940 of interest expense was capitalized in 2011. Fixed rate mortgage debt with an aggregate carrying value of $7,117,531 at December 31, 2012 has an estimated approximate fair value of $7,764,274 based on interest rates available to Roberts Realty for debt with similar terms and maturities, excluding any adjustment for nonperformance risk. Real estate assets having a combined depreciated cost of $10,315,171 served as collateral for the outstanding mortgage notes at December 31, 2012.

5. SHAREHOLDERS' EQUITY

Exchanges of Units for Shares. In accordance with the conversion ratio explained in Note 2, a total of 132,000 units were exchanged for 217,410 shares during 2012 and 15,454 units were exchanged for 25,453 shares during 2011. Each redemption was reflected in the accompanying consolidated financial statements at the closing price of Roberts Realty's stock price on the date of conversion.

F-19

Table of Contents

Restricted Stock. Shareholders of Roberts Realty approved and adopted the 2006 Roberts Realty Investors, Inc. Restricted Stock Plan (the "Plan") in August 2006. The Plan provides for the grant of stock awards to employees, directors, consultants, and advisors, including employees of Roberts Properties, Inc. ("Roberts Properties") and Roberts Properties Construction, Inc. ("Roberts Construction," and together with Roberts Properties, the "Roberts Companies"). Mr. Charles S. Roberts, the President and Chairman of the Board of Roberts Realty, owns all of the outstanding stock of the Roberts Companies. Under the Plan as amended, Roberts Realty may grant up to 654,000 shares of restricted common stock, subject to the anti-dilution provisions of the Plan. The maximum number of shares of restricted stock that may be granted to any one individual during the term of the Plan may not exceed 20% of the aggregate number of shares of restricted stock that may be issued. The Plan is administered by the compensation committee of Roberts Realty's board of directors.

FASB ASC Topic 718, Compensation – Stock Compensation, requires share-based compensation cost to be measured at the date of grant based on the fair value of the award and to be recognized in the accompanying consolidated statements of operations as an expense on a straight line basis over the requisite service period, which is the vesting period.

There were 50,000 unvested shares of restricted stock outstanding at December 31, 2012 and December 31, 2011. During 2012, Roberts Realty granted 50,000 shares under the Plan to an employee of Roberts Properties. The grant includes a service based vesting period of one year. Compensation expense related to restricted stock was $83,995 and $35,701 in 2012 and 2011, respectively. The unearned compensation expense related to restricted stock that will be recognized in future periods was $18,630 and $34,625 as of December 31, 2012 and 2011, respectively.

The following table shows the restricted stock activity for 2012 and 2011:

			Weighted Grant Date Fair Value Per Share

Balance at December 31, 2010	50,000		$	1.43
Granted	–
Forfeited	–
Vested	–

Balance at December 31, 2011	50,000

Granted	50,000		$	1.36
Forfeited	–
Vested	(50,000	)

Balance at December 31, 2012	50,000

Treasury Stock. Roberts Realty has a stock repurchase plan under which it was authorized to repurchase up to 600,000 shares of its outstanding common stock. Under the plan, as of December 31, 2012, Roberts Realty had authority to repurchase up to 540,362 shares of its outstanding common stock. The stock repurchase plan does not have an expiration date. Roberts Realty did not repurchase any shares during 2012 or 2011.

F-20

Table of Contents

Earnings Per Share. The following table shows the reconciliations of loss available for common shareholders and the weighted average number of shares and units used in Roberts Realty's basic and diluted earnings per share computations.

	December 31,

	2012			2011
Loss from continuing operations available for common shareholders – basic	$	(7,035,237	)	$	(9,970,158	)
Loss from continuing operations attributable to noncontrolling interest		(1,418,545	)		(2,098,790	)

Loss from continuing operations – diluted	$	(8,453,782	)	$	(12,068,948	)

Income from discontinued operations for common shareholders – basic		107,064			894,948
Income from discontinued operations attributable to noncontrolling interest		21,588			188,393

Income from discontinued operations – diluted	$	128,652		$	1,083,341

Net loss – diluted	$	(8,325,130	)	$	(10,985,607	)

Weighted average number of shares – basic		10,465,506			10,358,252
Dilutive securities – weighted average number of units		2,110,019			2,180,935

Weighted average number of shares – diluted		12,575,525			12,539,187

6. SEGMENT REPORTING

FASB ASC Topic 280-10, Segment Reporting – Overall, established standards for reporting financial and descriptive information about operating segments in annual financial statements. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Roberts Realty's chief operating decision maker is Mr. Roberts, its President.

Roberts Realty develops, constructs, owns, and manages multifamily apartment communities; owns land; and owns and manages retail centers and one office building. Roberts Realty does not currently own any operating multifamily communities and did not own any operating multifamily communities in 2012 or 2011. All of Roberts Realty's properties are located in Atlanta, Georgia. Roberts Realty has three reportable operating segments:

1.: the retail/office segment, which consists of operating retail centers and an office building;
2.: the land segment, which consists of various tracts of land; and
3.: the corporate segment, which consists primarily of operating cash, cash equivalents, and miscellaneous other assets.

The following tables summarize the operating results of Roberts Realty's reportable segments for 2012 and 2011. The retail/office segment is composed of the Bassett and Spectrum at the Mall of Georgia retail centers, along with the Northridge Office Building. Roberts Realty's Grand

F-21

Table of Contents

Pavilion Shopping Center was foreclosed on by the lender on October 4, 2011 and is reflected as discontinued operations within the retail/office segment. The land segment is composed of three tracts of land totaling 70 acres that are in various phases of development and construction and three tracts of land held for sale totaling 34 acres. The corporate segment consists primarily of cash and cash equivalents, miscellaneous other assets, and general and administrative expenses.

Twelve Months Ended December 31, 2012

	Retail/Office			Land			Corporate			Total
Operating revenues – continuing	$	1,045,026		$	12,675		$	–		$	1,057,701
Other operating income		297,118			–			135			297,253

Total operating revenues from consolidated entities		1,342,144			12,675			135			1,354,954

Operating expenses – continuing		2,959,165			3,668,395			1,435,193			8,062,753
Depreciation and amortization expense		470,622			–			127			470,749

Total operating expenses from consolidated entities		3,429,787			3,668,395			1,435,320			8,533,502

Other (expense) income		(637,115	)		(641,678	)		3,559			(1,275,234	)

Consolidated loss from continuing operations		(2,724,758	)		(4,297,398	)		(1,431,626	)		(8,453,782	)
Consolidated income from discontinued operations (Note 3)		128,652			–			–			128,652

Consolidated net loss		(2,596,106	)		(4,297,398	)		(1,431,626	)		(8,325,130	)
Consolidated net loss attributable to noncontrolling interest		(435,627	)		(721,103	)		(240,227	)		(1,396,957	)

Consolidated net loss available for common shareholders	$	(2,160,479	)	$	(3,576,295	)	$	(1,191,399	)	$	(6,928,173	)

Total assets at December 31, 2012	$	10,636,727		$	30,592,074		$	1,211,227		$	42,440,028

Twelve Months Ended December 31, 2011

	Retail/Office			Land			Corporate			Total
Operating revenues – continuing	$	1,071,926		$	12,675		$	–		$	1,084,601
Other operating income		174,753			–			53			174,806

Total operating revenues from consolidated entities		1,246,679			12,675			53			1,259,407

Operating expenses – continuing		511,687			9,714,389			1,238,800			11,464,876
Depreciation and amortization expense		516,721			–			198			516,919

Total operating expenses from consolidated entities		1,028,408			9,714,389			1,238,998			11,981,795

Other (expense) income		(654,498	)		(705,011	)		12,949			(1,346,560	)

Consolidated loss from continuing operations		(436,227	)		(10,406,725	)		(1,225,996	)		(12,068,948	)
Consolidated income from discontinued operations (Note 3)		1,083,341			–			–			1,083,341

Consolidated net income (loss)		647,114			(10,406,725	)		(1,225,996	)		(10,985,607	)
Consolidated net income (loss) attributable to noncontrolling interest		112,533			(1,809,729	)		(213,201	)		(1,910,397	)

Consolidated net income (loss) available for common shareholders	$	534,581		$	(8,596,996	)	$	(1,012,795	)	$	(9,075,210	)

Total assets at December 31, 2011	$	13,595,513		$	34,273,299		$	2,187,485		$	50,056,297

7. IMPAIRMENT LOSS ON REAL ESTATE ASSETS

Roberts Realty periodically evaluates its real estate assets, on a property-by-property basis, for impairment when events or changes in circumstances indicate the carrying amount of an asset may not be recoverable in accordance with FASB ASC Topic 360-10, Property, Plant, and Equipment – Overall.

F-22

Table of Contents

FASB ASC Topic 360-10 requires impairment losses to be recorded on long-lived assets used in operations and land parcels when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying amounts. The expected future cash flows depend on estimates made by management, including (1) changes in the national, regional, and/or local economic climates, (2) rental rates, (3) competition, (4) operating costs, (5) tenant occupancy, (6) holding period, and (7) an estimated construction budget. A change in the assumptions used to determine future economic events could result in an adverse change in the value of a property and cause an impairment to be recorded. Due to uncertainties in the estimation process, actual results could differ materially from those estimates. Roberts Realty's determination of fair value is based on a discounted future cash flow analysis, which incorporates available market information as well as other assumptions made by Roberts Realty's management, evaluation of appraisals, and other applicable valuation techniques. Because the factors Roberts Realty's management uses in generating these cash flows are difficult to predict and are subject to future events that may alter its assumptions, Roberts Realty may not achieve the discounted or undiscounted future operating and residual cash flows it estimates in its impairment analyses or those established by appraisals, and Roberts Realty may be required to recognize future impairment losses on its properties held for use.

Non-Cash Impairments on Operating Real Estate Assets. During 2012, Roberts Realty determined that the carrying amounts of the Bassett and Spectrum retail centers and the Northridge Office Building were not recoverable as a result of (a) a change in the occupancy at the Spectrum retail center, coupled with lower projected rental rates in the surrounding market area; and (b) lower projected renewal rental rates at the Bassett retail center and the Northridge Office Building resulting from lease negotiations with tenants whose leases will be expiring within the next twelve months. The determination of fair value was based on a discounted future cash flow analysis and as a result of this analysis, Roberts Realty recorded fair value adjustments of $984,341 on the Spectrum retail center, $754,279 on the Bassett retail center, and $725,304 on the Northridge Office Building.

During 2011, Roberts Realty determined that the carrying amounts of its operating real estate assets were recoverable. Accordingly, Roberts Realty did not record an impairment loss on its operating assets during 2011.

Non-Cash Impairments on Land Parcels. During 2012, Roberts Realty determined that the carrying amounts for the North Springs land and the one-acre commercial site in Johns Creek that is held for sale were not recoverable. The determination of fair value for the North Springs land parcel and the one-acre commercial site was based on available market information, including offers and expressions of interest from unrelated purchasers and market participants. As a result of this analysis, Roberts Realty recorded fair value adjustments of $2,100,000 on the North Springs land and $375,949 on the one-acre commercial site in Johns Creek that is held for sale.

Roberts Realty also determined that the carrying amounts of the Bradley Park and Highway 20 land parcels were not recoverable due to the current market conditions. The determination of fair value was based on a discounted cash flow analysis and the review of current market sales comparables for other land parcels. As a result of this analysis, Roberts Realty recorded fair value adjustments related to its land parcels of $773,334 on the Bradley Park land parcel and $210,000 on the Highway 20 land parcel. Roberts Realty determined that the carrying amounts of its other land parcels were recoverable at December 31, 2012.

F-23

Table of Contents

During 2011, Roberts Realty determined that the carrying amounts of the Bradley Park, Peachtree Parkway, and Highway 20 land parcels were not recoverable due to the current economic and market conditions. The determination of their fair values was based on a discounted cash flow analysis and the review of current market sales comparables for land. As a result of this analysis, Roberts Realty recorded fair value adjustments related to its land parcels of $2,908,457 on the Bradley Park land parcel, $2,892,126 on the Peachtree Parkway property, and $1,323,681 on the Highway 20 land parcel.

Roberts Realty also determined that the carrying amount of the Northridge property was not recoverable, and the determination of fair value was based on the sales contract for the property and the appraised values of the property. As a result of this analysis, Roberts Realty recorded a fair value adjustment of $2,376,480 on the Northridge property. The Northridge and Peachtree Parkway properties are classified as real estate assets held for sale in the accompanying consolidated balance sheets.

8. FAIR VALUE MEASUREMENTS

FASB ASC Topic 820, Fair Value Measurement and Disclosures, defines fair value and establishes a framework for measuring fair value. The objective of fair value is to determine the price that would be received upon the sale of an asset. FASB ASC Topic 820 establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three levels:

•: Level 1 – quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities;
•: Level 2 – observable prices that are based on inputs not quoted in active markets, but corroborated by market data; and
•: Level 3 – unobservable inputs that are used when little or no market data is available.

The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs. In determining fair value, Roberts Realty uses valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. Considerable judgment is necessary to interpret Level 2 and 3 inputs in determining fair value of financial and non-financial assets and liabilities. Accordingly, the fair values presented in the financial statements may not reflect the amounts ultimately realized on a sale or other disposition of these assets.

Roberts Realty held no assets required to be measured at fair value on a recurring basis as of December 31, 2012 and December 31, 2011.

Assets measured at fair value on a nonrecurring basis consist of real estate assets that have incurred non-cash impairment losses so that their carrying value is equal to or less than their estimated fair value.

These real estate assets, including land held for sale, were valued using sales activity for similar assets, current offers and contracts and using inputs management believes are consistent with those that market participants would use. The fair values of these assets are determined using widely accepted valuation techniques, including (1) discounted cash flow analysis, which considers, among other things, sales assumptions, cost structure and discount rates and (2) comparable sales activity. The valuation technique and related inputs vary with the specific facts and circumstances of each real estate asset. The following tables provide the balances for

F-24

Table of Contents

only those assets for which fair value adjustments were made and which were required to be measured at fair value on a nonrecurring basis as of December 31, 2012 and December 31, 2011.

	Year Ended December 31, 2012

Description	Total		Level 1		Level 2		Level 3
Operating real estate assets	$	10,315,171		–		–	$	10,315,171
Real estate under development		19,008,000		–		–		19,008,000
Real estate assets held for sale		500,000		–		–		500,000

Total assets	$	29,823,171		–		–	$	29,823,171

	Year Ended December 31, 2011

Description	Total		Level 1		Level 2		Level 3
Real estate under development	$	8,988,000		–		–	$	8,988,000
Real estate assets held for sale		11,913,789		–		–		11,913,789
Assets related to discontinued operations		5,415,104		–		–		5,415,104

Total assets	$	26,316,893		–		–	$	26,316,893

9. RELATED PARTY TRANSACTIONS

Transactions with Mr. Charles S. Roberts and His Affiliates

Roberts Realty enters into contractual commitments in the normal course of business with the Roberts Companies. The contracts between Roberts Realty and the Roberts Companies relate to the development and construction of real estate assets, and from time to time, the acquisition or disposition of real estate. The board of directors has adopted a policy that all conflicting interest transactions must be authorized by a majority of the disinterested directors, but only if there are at least two directors who are disinterested with respect to the matter at issue. Under the charter for the audit committee of Roberts Realty's board of directors, related party transactions are also subject to review and oversight by the audit committee.

Roberts Realty, its predecessor limited partnerships, and other limited partnerships sponsored by Mr. Roberts have previously entered into agreements with Roberts Properties and Roberts Construction to provide these services for 22 apartment communities with a total of 4,648 units that were sold for a total sales price of $431,701,143. All of these communities were sold for a substantial profit.

Design and Development Agreements with Roberts Properties. Roberts Properties provides various development services that include market studies; business plans; assistance with permitting, land use and zoning issues, easements, and utility issues; as well as exterior design, finish selection, interior design, and construction administration. Roberts Realty has entered into

F-25

Table of Contents

a design and development agreement with Roberts Properties for the Highway 20 project, and the following table lists the amounts incurred on this contract in 2011 and 2012:

	Total Contract Amount		Amounts Incurred in 2011		Amounts Incurred in 2012		Remaining Contractual Commitment

Highway 20	$	1,050,000	$	300,000	$	0	$	425,000

Construction Contracts with Roberts Construction. Roberts Realty has entered into cost plus contracts with Roberts Construction for the Bradley Park, Northridge, Peachtree Parkway, North Springs and Highway 20 properties. Under these contracts, Roberts Realty will pay Roberts Construction the cost of constructing the project plus 5% for overhead and 5% for profit. Progress payments are paid monthly to Roberts Construction based on the work that has been completed. The following table lists the amounts incurred on these contracts in 2012 and 2011.

	Amounts Incurred for Labor and Materials Costs for the Twelve Months Ended December 31,				Amounts Incurred for 5% Overhead and 5% Profit for the Twelve Months Ended December 31,

	2012		2011		2012		2011
Bradley Park	$	922	$	8,015	$	92	$	802
Northridge		145,085		201,517		14,508		20,152
Peachtree Parkway		1,126		27,115		113		2,711
North Springs		286		8,757		29		876
Highway 20		622		13,061		62		1,306

Totals	$	148,041	$	258,465	$	14,804	$	25,847

Other Payments. At the request of Roberts Realty, Roberts Construction performed repairs and maintenance, as well as tenant improvements for new leases at the retail centers and office building. For the twelve months ended December 31, 2012, Roberts Realty paid Roberts Construction $149,806 for labor and materials costs plus $14,981 (5% for overhead and 5% for profit). For the twelve months ended December 31, 2011, Roberts Realty paid Roberts Construction $93,493 for labor and materials costs plus $9,349 (5% for overhead and 5% for profit). Additionally, Roberts Properties and Roberts Construction received cost reimbursements in the amount of $50,135 in 2012 and $19,417 in 2011. Roberts Realty entered into a reimbursement arrangement for services provided by Roberts Properties, effective February 4, 2008, as amended January 1, 2011. Under the terms of the arrangement, Roberts Realty reimburses Roberts Properties the cost of providing consulting services in an amount equal to an agreed-upon hourly billing rate for each employee multiplied by the number of hours that the employee provided services to Roberts Realty. Under this arrangement, Roberts Realty incurred costs of $136,297 in 2012 and $211,707 in 2011.

Office Leases. Roberts Realty leases office space in the Northridge Office Building to the Roberts Companies. Effective as of January 1, 2013, Roberts Realty renewed its leases with the Roberts Companies. Under the renewed leases, Roberts Properties leases 4,431 rentable square feet, and Roberts Construction leases 1,920 rentable square feet. Both leases are for a one-year term with a rental rate of $17.00 per rentable square foot. Roberts Realty recognized total rental income from

F-26

Table of Contents

Roberts Properties and Roberts Construction of $90,342 for the twelve months ended December 31, 2012 and $69,495 for the twelve months ended December 31, 2011.

Release of Restrictive Covenant on Peachtree Parkway Property. On October 9, 2012, Roberts Realty entered into an agreement to sell 20.6 acres of the Peachtree Parkway property to Lennar Multifamily Investors, LLC ("Lennar"), an unrelated third party, for $7,590,000. The closing of the sale is scheduled for February 7, 2013. When Roberts Realty purchased the Peachtree Parkway property in December 2004, it assumed and became bound by a pre-existing restrictive covenant on the property that was already recorded in the Gwinnett County, Georgia real estate records (the "Restrictive Covenant") in favor of Roberts Construction. The Restrictive Covenant provided that if the owner of the Peachtree Parkway property develops it for residential use, Roberts Construction will be engaged as the general contractor for the project on a cost plus basis and will be paid the cost of constructing the project plus 5% overhead and 5% profit. Lennar informed Roberts Realty that it would not use Roberts Construction as the general contractor. The sales contract stated that Lennar would not enter into the sales contract unless the Restrictive Covenant is terminated no later than the closing date at no cost to Lennar. After being advised by Lennar of this requirement, the audit committee of Roberts Realty's board of directors negotiated with Roberts Construction for the release of the Restrictive Covenant. Roberts Construction agreed in the sales contract to give up its contractual rights to be the general contractor for the project and to release the Restrictive Covenant on the closing date for a payment of $500,000 from the purchase price to be paid by Lennar. See Note 11 – Subsequent Events.

Sales Contract to Sell Northridge Property to Roberts Properties. On June 30, 2011, Roberts Realty entered into a contract to sell its 11-acre Northridge property to Roberts Properties. Under the terms of the sales contract as amended, the sales price is $4,070,000, plus the reimbursement of $303,789 of development and construction expenses incurred prior to June 30, 2011, with the closing scheduled to occur no later than October 30, 2012. In October 2012, Roberts Properties requested an extension of the closing date to January 31, 2013. Roberts Properties had obtained the land disturbance, water, and sewer permits for the Northridge land and these entitlements enhance and benefit the property. Based on this progress, on October 22, 2012, the sales contract was amended to extend the closing date to January 31, 2013. Additionally, Roberts Properties is obligated to reimburse Roberts Realty for any development and construction expenses incurred from June 30, 2011 until the closing date. These amounts are shown as Due from Affiliates on the accompanying consolidated balance sheets. See Note 11 – Subsequent Events.

10. COMMITMENTS AND CONTINGENCIES

Roberts Realty has entered into various contracts for the development and construction of its projects. The contracts with Roberts Properties and Roberts Construction are described in Note 9 – Related Party Transactions. The construction contracts require Roberts Realty to pay Roberts Construction the labor and materials costs plus 5% overhead and 5% profit.

Roberts Realty and the operating partnership are subject to various legal proceedings and claims that arise in the ordinary course of business. While the resolution of these matters cannot be predicted with certainty, management believes that the final outcome of these matters will not have a material adverse effect on Roberts Realty's financial position, results of operations or cash flows.

F-27

Table of Contents

As a result of the mergers of various predecessor limited partnerships into the operating partnership, the former partners of those predecessor limited partnerships received operating partnership units. Holders of units have the right to require the operating partnership to redeem their units for shares, subject to certain conditions. Upon submittal of units for redemption, the operating partnership will have the option either (a) to pay cash for those units at their fair market value, which will be based upon the then current trading price of the shares, or (b) to acquire those units in exchange for shares (on a 1.647-for-one basis). Roberts Realty has adopted a policy that it will issue shares in exchange for all future units submitted for redemption. At December 31, 2012, there were 1,182,285 units outstanding that could be exchanged for shares, subject to the conditions described above.

Under Roberts Realty's bylaws, it is obligated to indemnify its officers and directors for certain events or occurrences arising as a result of its officers and directors serving in these capacities. The maximum potential amount of future payments Roberts Realty could be required to make under this indemnification arrangement is unlimited. Roberts Realty currently has a directors and officers liability insurance policy that may limit its exposure and enable it to recover a portion of any future amounts paid. Because of the insurance policy coverage, Roberts Realty believes the estimated fair value of this indemnification arrangement is minimal, and accordingly, Roberts Realty has recorded no liabilities for this indemnification arrangement as of December 31, 2012.

Under various federal, state, and local environmental laws and regulations, Roberts Realty may be required to investigate and clean up the effects of hazardous or toxic substances at its properties, including properties that have previously been sold. The preliminary environmental assessments of Roberts Realty's operating properties and land have not revealed any environmental liability that Roberts Realty believes would have a material adverse effect on its business, assets, or results of operations, nor is Roberts Realty aware of any such environmental liability.

11. SUBSEQUENT EVENTS.

Sale of Remaining 1.5 acres of the Peachtree Parkway Land. On March 20, 2013, Roberts Realty sold the remaining 1.5 acres of the Peachtree Parkway land to an unrelated third party for $450,000. The property was owned debt free; Roberts Realty will use the sales proceeds for general corporate purposes.

Pending Disposition of Spectrum Retail Center. As Roberts Realty has previously stated in its annual and quarterly reports, its objective is to exit the retail business to focus exclusively on developing, constructing, and managing multifamily apartment communities. Given that objective, on February 15, 2013, Roberts Realty notified the lender of its intent to transfer the Spectrum retail center to the lender in satisfaction of the $4,691,528 in debt secured by the property. Because the loan is non-recourse, Roberts Realty would have no further obligations to the lender for this loan. This transaction would reduce Roberts Realty's debt by $4,691,528 and reduce its operating expenses by approximately $165,000 per year.

Extension and Renewal of the Northridge Land Loan. On February 11, 2013, Roberts Realty extended the maturity date of its $2,000,000 Northridge land loan to May 22, 2013. The loan continues to bear interest at the rate of 12% per annum, and Roberts Realty paid the $60,000 in interest that will accrue during the extension period and a 1.0% extension fee. The loan documents provide another extension option to August 22, 2013 under substantially the same terms and conditions.

F-28

Table of Contents

Sale of Peachtree Parkway Land. On February 7, 2013, Roberts Realty sold its 20.6-acre Peachtree Parkway land for $7,590,000 ($7,090,000 net of a $500,000 payment required to release a restrictive covenant on the property). Roberts Realty used $7,000,200 of the sale proceeds to repay the Peachtree Parkway loan. Roberts Realty's North Springs property, which has a book value of $11,000,000 and a current independent appraised value of $16,350,000, was released and is now debt free.

Exclusive Sales Listing Agreement for the Northridge Office Building. On January 31, 2013, Roberts Realty retained CBRE, Inc., a global full service real estate firm, to sell the 37,864 square foot Northridge Office Building for a price of $5,750,000. At the closing of the sale, CBRE would be paid a commission of up to 5% of the sales price of the Northridge Office Building.

Extension and Renewal of the Highway 20 Land Loan. On January 30, 2013, Roberts Realty renewed its $2,905,000 Highway 20 land loan and extended the maturity date to October 8, 2013. The loan modification was subject to the lender's review of a new appraisal of the Highway 20 property, which had an appraised value of $6,100,000, resulting in a loan to value ratio of 48%. As part of the loan extension and due to the increase in the appraised value of the Highway 20 property, the lender waived the scheduled requirement to make a one-time principal reduction in the amount of $300,000 by February 15, 2013. The loan continues to require fixed principal payments of $5,000 per month through the maturity date, and Roberts Realty established an $80,500 interest reserve to pay the monthly interest payments at the prime rate with a floor of 5.5% per annum.

Extension of Closing Date for the Sale of the Northridge Land. On January 28, 2013, Roberts Realty extended the closing date of the contract to sell the 11-acre Northridge property to April 30, 2013.

F-29

Table of Contents

(a)(3). Exhibits required by Item 601 of Regulation S-K.

We have filed some of the exhibits required by Item 601 of Regulation S-K with previous registration statements or reports. As specifically noted in the following Index to Exhibits, those previously filed exhibits are incorporated into this annual report on Form 10-K by reference. All exhibits contained in the following Index to Exhibits that are designated with an asterisk are incorporated into this annual report by reference in our initial Registration Statement on Form 10-SB filed with the SEC on March 22, 1996; the applicable exhibit number in that Registration Statement is provided beside the asterisk. The exhibits listed from Exhibit 10.1.1 through Exhibit 10.8.2 are management contracts or compensatory plans or arrangements (except for Exhibits 10.2.2 through 10.2.8 and Exhibits 10.3.6 through 10.3.10, which are the sales contracts for our land parcels and related amendments thereto, as applicable and described in more detail below).

We will provide a copy of any or all of the following exhibits to any shareholder who requests them, for a cost of ten cents per page.

Exhibit No.		Description

		Plan of Disposition:
2.1		Agreement for Deed In Lieu of Foreclosure by and between Compass Bank, Roberts Properties Residential, L.P. and Roberts Realty Investors, Inc. dated as of June 30, 2010 (Addison Place Shops and Westside). [Incorporated by reference to Item 2.1 in our current report on Form 8-K dated June 30, 2010.]
		Articles of Incorporation, Bylaws and Certificates and Articles of Merger:
3.1		Amended and Restated Articles of Incorporation of Roberts Realty Investors, Inc. filed with the Georgia Secretary of State on July 22, 2004. [Incorporated by reference to Exhibit 3.1 in our quarterly report on Form 10-Q for the quarter ended September 30, 2004.]
3.2		Amended and Restated Bylaws of Roberts Realty Investors, Inc. [Incorporated by reference to Exhibit 3.1 in our current report on Form 8-K dated February 4, 2008.]
4.1		Agreement of Limited Partnership of Roberts Properties Residential, L.P., dated October 4, 1994. [Incorporated by reference to Exhibit 4.1 in our quarterly report on Form 10-Q for the quarter ended June 30, 2011.]
4.1.1		First Amended and Restated Agreement of Limited Partnership of Roberts Properties Residential, L.P., dated as of October 4, 1994, as amended. [Incorporated by reference to Exhibit 4.1.1 in our quarterly report on Form 10-Q for the quarter ended June 30, 2011.]
4.1.2		Amendment #1 to First Amended and Restated Agreement of Limited Partnership of Roberts Properties Residential, L.P., dated as of October 13, 1994. [Incorporated by reference to Exhibit 4.1.2 in our quarterly report on Form 10-Q for the quarter ended June 30, 2011.]
4.1.3		Amendment #2 to First Amended and Restated Agreement of Limited Partnership of Roberts Properties Residential, L.P. [Incorporated by reference to Exhibit 10.1 in our Registration Statement on Form S-3 filed July 8, 1999, registration number 333-82453.]
4.2		Certificate of Limited Partnership of Roberts Properties Residential, L.P. filed with the Georgia Secretary of State on July 22, 1994. [Incorporated by reference to Exhibit 4.2 in our quarterly report on Form 10-Q for the quarter ended June 30, 2011.]

Table of Contents

Exhibit No.		Description

4.2.1		Certificate of Merger filed with the Georgia Secretary of State on October 13, 1994, merging Roberts Properties River Oaks, L.P.; Roberts Properties Rosewood Plantation, L.P.; Roberts Properties Preston Oaks, L.P.; and Roberts Properties Highland Park, L.P. with and into Roberts Properties Residential, L.P. (1994 Consolidation). [* 3.2.1]
4.2.2		Certificate of Merger filed with the Georgia Secretary of State on March 24, 1995, merging Roberts Properties Holcomb Bridge, L.P. with and into Roberts Properties Residential, L.P. (Holcomb Bridge Merger). [* 3.2.2]
4.2.3		Certificate of Merger filed with the Georgia Secretary of State on May 16, 1995, merging Roberts Properties Plantation Trace, L.P. with and into Roberts Properties Residential, L.P. (Plantation Trace Merger). [* 3.2.3]
4.2.4		Certificate of Merger filed with the Georgia Secretary of State on September 27, 1995, merging Roberts Properties-St. Simons, Ltd. with and into Roberts Properties Residential, L.P. (Windsong Merger). [* 3.2.4]
4.2.5		Certificate of Merger filed with the Georgia Secretary of State on March 21, 1996, merging Roberts Properties Bentley Place, L.P. with and into Roberts Properties Residential, L.P. (Bentley Place Merger). [Incorporated by reference to Exhibit 4.2.5 in our quarterly report on Form 10-QSB for the quarter ended June 30, 1996.]
4.2.6		Certificate of Merger filed with the Georgia Secretary of State on June 26, 1996, merging The Crestmark Club, L.P. with and into Roberts Properties Residential, L.P. (Crestmark Merger). [Incorporated by reference to Exhibit 4.2.6 in our quarterly report on Form 10-QSB for the quarter ended June 30, 1996.]
4.2.7		Certificate and Articles of Merger filed with the Georgia Secretary of State on April 1, 1997 merging Roberts Properties Management, L.L.C. with and into Roberts Properties Residential, L.P. [Incorporated by reference to Exhibit 4.2.7 in our current report on Form 8-K dated April 1, 1997.]
		Material Agreements with Affiliates:
		Corporate Office Building
10.1.1		Office Lease between Roberts Properties Residential, L.P. and Roberts Properties, Inc. dated March 27, 2006. [Incorporated by reference to Exhibit 10.4 in our quarterly report on Form 10-Q for the quarter ended March 31, 2006.]
10.1.2		Office Lease between Roberts Properties Residential, L.P. and Roberts Properties Construction, Inc. dated March 27, 2006. [Incorporated by reference to Exhibit 10.3 in our quarterly report on Form 10-Q for the quarter ended March 31, 2006.]
10.1.3		Lease renewal agreement by and between Roberts Properties Residential, L.P. and Roberts Properties Construction, Inc. dated March 21, 2007. [Incorporated by reference to Exhibit 10.1 in our quarterly report on Form 10-Q for the quarter ended March 31, 2007.]
10.1.4		Lease renewal agreement by and between Roberts Properties Residential, L.P. and Roberts Properties, Inc. dated March 21, 2007. [Incorporated by reference to Exhibit 10.2 in our quarterly report on Form 10-Q for the quarter ended March 31, 2007.]
10.1.5		Lease renewal agreement by and between Roberts Properties Residential, L.P. and Roberts Properties Construction, Inc. dated January 18, 2008. [Incorporated by reference to Exhibit 10.1.6 in our annual report on Form 10-K for the year ended December 31, 2007.]

Table of Contents

Exhibit No.		Description

10.1.6		Lease renewal agreement by and between Roberts Properties Residential, L.P. and Roberts Properties, Inc. dated January 18, 2008. [Incorporated by reference to Exhibit 10.1.7 in our annual report on Form 10-K for the year ended December 31, 2007.]
10.1.7		Lease renewal agreement by and between Roberts Properties Residential, L.P. and Roberts Properties, Inc. dated January 30, 2009. [Incorporated by reference to Exhibit 10.1.8 in our annual report on Form 10-K for the year ended December 31, 2008.]
10.1.8		Lease renewal agreement by and between Roberts Properties Residential, L.P. and Roberts Properties Construction, Inc. dated January 30, 2009. [Incorporated by reference to Exhibit 10.1.9 in our annual report on Form 10-K for the year ended December 31, 2008.]
10.1.9		First Amendment to Lease dated December 30, 2009 by and between Roberts Properties, Inc. and Roberts Properties Residential, L.P. [Incorporated by reference to Exhibit 10.1 in our current report on Form 8-K dated December 30, 2009.]
10.1.10		First Amendment to Lease dated December 30, 2009 by and between Roberts Properties Construction, Inc. and Roberts Properties Residential, L.P. [Incorporated by reference to Exhibit 10.2 in our current report on Form 8-K dated December 30, 2009.]
10.1.11		Amendment to Lease dated as of January 1, 2011 by and between Roberts Properties, Inc. and Roberts Properties Residential, L.P. [Incorporated by reference to Exhibit 10.1 in our current report on Form 8-K dated January 24, 2011.]
10.1.12		Amendment to Lease dated as of January 1, 2011 by and between Roberts Properties Construction, Inc. and Roberts Properties Residential, L.P. [Incorporated by reference to Exhibit 10.2 in our current report on Form 8-K dated January 24, 2011.]
10.1.13		Fourth Amendment to Lease dated as of January 1, 2012 by and between Roberts Properties, Inc. and Roberts Properties Residential, L.P. [Incorporated by reference to Exhibit 10.1 in our current report on Form 8-K dated December 19, 2011.]
10.1.14		Fourth Amendment to Lease dated as of January 1, 2012 by and between Roberts Properties Construction, Inc. and Roberts Properties Residential, L.P. [Incorporated by reference to Exhibit 10.2 in our current report on Form 8-K dated December 19, 2011.]
10.1.15		Fifth Amendment to Lease dated as of December 17, 2012 by and between Roberts Properties, Inc. and Roberts Properties Residential, L.P. [Incorporated by reference to Exhibit 10.1 in our current report on Form 8-K dated December 17, 2012.]
10.1.16		Fifth Amendment to Lease dated as of December 17, 2012 by and between Roberts Properties Construction, Inc. and Roberts Properties Residential, L.P. [Incorporated by reference to Exhibit 10.2 in our current report on Form 8-K dated December 17, 2012.]
		Northridge
10.2.1		Construction Agreement between Roberts Properties Residential, L.P. and Roberts Properties Construction, Inc. [Incorporated by reference to Exhibit 10.1.18 in our quarterly report on Form 10-Q for the quarter ended March 31, 2003.]
10.2.2		Sales Contract dated June 30, 2011 between Roberts Properties Residential, L.P. and Roberts Properties, Inc. [Incorporated by reference to Exhibit 10.1 in our current report on Form 8-K dated June 30, 2011.]
10.2.3		First Amendment to Sales Contract dated October 31, 2011 between Roberts Properties Residential, L.P. and Roberts Properties, Inc. [Incorporated by reference to Exhibit 10.1 in our current report on Form 8-K dated October 31, 2011.]

Table of Contents

Exhibit No.		Description

10.2.4		Second Amendment to Sales Contract dated December 19, 2011 between Roberts Properties Residential, L.P. and Roberts Properties, Inc. [Incorporated by reference to Exhibit 10.1 in our current report on Form 8-K dated December 19, 2011.]
10.2.5		Third Amendment to Sales Contract dated March 26, 2012 by and between Northridge Parkway, LLC and Roberts Properties, Inc. [Incorporated by reference to Exhibit 10.1 in our current report on Form 8-K dated March 26, 2012.]
10.2.6		Fourth Amendment to Sales Contract dated June 25, 2012 by and between Northridge Parkway, LLC and Roberts Properties, Inc. [Incorporated by reference to Exhibit 10.1 in our current report on Form 8-K dated June 25, 2012.]
10.2.7		Description of Extension of Contract to Sell Northridge Property to Roberts Properties, Inc. [Incorporated by reference to Item 1.01 of our current report on Form 8-K dated July 23, 2012.]
10.2.8		Fifth Amendment to Sales Contract dated October 22, 2012 by and between Northridge Parkway, LLC and Roberts Properties, Inc. [Incorporated by reference to Exhibit 10.1 in our current report on Form 8-K dated October 22, 2012.]
		Peachtree Parkway
10.3.1		Restrictive Covenant by Roberts Properties Peachtree Parkway, L.P., assumed by Roberts Properties Residential, L.P. on December 29, 2004. [Incorporated by reference to Exhibit 10.3 in our current report on Form 8-K dated January 5, 2005.]
10.3.2		Design and Development Agreement among Roberts Properties Residential, L.P., Georgianna Jean K. Valentino and Roberts Properties, Inc. for the Peachtree Parkway land parcel, dated as of April 14, 2005. [Incorporated by reference to Exhibit 10.1 in our current report on Form 8-K dated April 12, 2005.]
10.3.3		Amendment Number 1 to Design and Development Agreement between Roberts Properties Residential, L.P. and Roberts Properties, Inc. dated as of December 6, 2006 (Peachtree Parkway). [Incorporated by reference to Exhibit 10.1 in our current report on Form 8-K dated December 6, 2006.]
10.3.4		Construction Contract among Roberts Properties Residential, L.P., Georgianna Jean K. Valentino and Roberts Properties Construction, Inc. for the Peachtree Parkway land parcel, dated as of April 14, 2005. [Incorporated by reference to Exhibit 10.3 in our current report on Form 8-K dated April 12, 2005.]
10.3.5		Amendment Number 1 to Construction Contract between Roberts Properties Residential, L.P. and Roberts Properties Construction, Inc. dated as of December 6, 2006 (Peachtree Parkway). [Incorporated by reference to Exhibit 10.2 in our current report on Form 8-K dated December 6, 2006.]
10.3.6		Sales Contract dated December 17, 2009 between Peachtree Corners Circle, LLC and Roberts Properties Residential, L.P. (1.004-acre parcel on Peachtree Corners Circle). [Incorporated by reference to Exhibit 10.1 in our current report on Form 8-K dated December 17, 2009.]
10.3.7		Sales Contract dated December 17, 2009 between Peachtree Corners Circle, LLC and Roberts Properties Residential, L.P. (0.154-acre strip along Peachtree Corners Circle). [Incorporated by reference to Exhibit 10.2 in our current report on Form 8-K dated December 17, 2009.]

Table of Contents

Exhibit No.		Description

10.3.8		Sales Contract for the Sale of 2.937 Acres of Peachtree Parkway Property on September 27, 2012. [Incorporated by reference to Exhibit 10.3 of our quarterly report on Form 10-Q for the quarter ended September 30, 2012.]
10.3.9		Sales Contract dated October 9, 2012 by and between Roberts Properties Residential, L.P. and Lennar Multifamily Investors, LLC. [Incorporated by reference to Exhibit 10.1 in our current report on Form 8-K dated October 9, 2012.]
10.3.10		Description of Extensions of Contract to Sell Peachtree Parkway Property to Lennar Multifamily Investors, LLC as of November 30, 2012 and December 4, 2012. [Incorporated by reference to Item 1.01 of our current report on Form 8-K dated November 30, 2012.]
		North Springs (formerly Peachtree Dunwoody)
10.4.1		Restrictive Covenant by Roberts Properties Peachtree Dunwoody, LLC, assumed by Roberts Properties Residential, L.P. on January 20, 2005. [Incorporated by reference to Exhibit 10.2 in our current report on Form 8-K dated January 21, 2005.]
10.4.2		Design and Development Agreement between Roberts Properties Residential, L.P. and Roberts Properties, Inc. for the North Springs (formerly Peachtree Dunwoody) land parcel, dated as of April 14, 2005. [Incorporated by reference to Exhibit 10.2 in our current report on Form 8-K dated April 12, 2005.]
10.4.3		Construction Contract between Roberts Properties Residential, L.P. and Roberts Properties Construction, Inc. for the North Springs (formerly Peachtree Dunwoody) land parcel, dated as of April 14, 2005. [Incorporated by reference to Exhibit 10.4 in our current report on Form 8-K dated April 12, 2005.]
		Bradley Park
10.5.1		Design and Development Agreement between Roberts Properties Residential, L.P. and Roberts Properties, Inc. for the Bradley Park (formerly Sawmill) land parcel in Cumming, Georgia, dated as of August 4, 2005. [Incorporated by reference to Exhibit 10.1 in our current report on Form 8-K dated August 9, 2005.]
10.5.2		Construction Contract between Roberts Properties Residential, L.P. and Roberts Properties Construction, Inc. for the Bradley Park (formerly Sawmill) land parcel in Cumming, Georgia, dated as of August 4, 2005. [Incorporated by reference to Exhibit 10.2 in our current report on Form 8-K dated August 9, 2005.]
		Highway 20
10.6.1		Design and Development Agreement between Roberts Properties Residential, L.P. and Roberts Properties, Inc. for the Highway 20 land parcel in Cumming, Georgia, dated as of February 21, 2006. [Incorporated by reference to Exhibit 10.1 in our current report on Form 8-K dated February 21, 2006.]
10.6.2		Construction Contract between Roberts Properties Residential, L.P. and Roberts Properties Construction, Inc. for the Highway 20 land parcel in Cumming, Georgia, dated as of February 21, 2006. [Incorporated by reference to Exhibit 10.2 in our current report on Form 8-K dated February 21, 2006.]
		Compensation Agreements and Arrangements, and Restricted Stock Plan
10.7.1		Determination of compensation arrangements for the interim Chief Financial Officer of Roberts Realty Investors, Inc. [Incorporated by reference to Item 5.02 in our current report on Form 8-K dated May 31, 2006.]

Table of Contents

Exhibit No.		Description

10.7.2		2006 Roberts Realty Investors, Inc. Restricted Stock Plan, as amended effective January 27, 2009. [Incorporated by reference to Exhibit 4.1 in the company's post-effective amendment to its Registration Statement on Form S-8 filed with the SEC on January 29, 2009.]
10.7.3		Revised Form of Restricted Stock Award Agreement (supersedes the form of restricted stock award agreement attached as Exhibit A to Annex A to our proxy statement for our 2006 annual meeting filed with the SEC on July 20, 2006). [Incorporated by reference to Exhibit 10.3 in our quarterly report on Form 10-Q for the quarter ended March 31, 2007.]
10.7.4		Summary of Amended Reimbursement Arrangement Between Roberts Realty Investors, Inc. and Each of Roberts Properties, Inc. and Roberts Properties Construction, Inc. (effective January 1, 2011) [Incorporated by reference to Exhibit 10.3 in our current report on Form 8-K dated January 24, 2011.]
		Other Agreements with Affiliates
10.8.1		Reimbursement arrangement between Roberts Realty Investors, Inc. and Roberts Properties, Inc., effective February 8, 2008. [Incorporated by reference to Exhibit 10.1 in our current report on Form 8-K dated February 4, 2008.]
10.8.2		Reimbursement arrangement between Roberts Realty Investors, Inc. and Roberts Properties, Inc., effective January 1, 2011. [Incorporated by reference to Exhibit 10.3 in our current report on Form 8-K dated January 24, 2011.]
		Peachtree Parkway / North Springs (formerly Peachtree Dunwoody) / Highway 20 / Northridge Parkway Financing Documents:
10.9.1		Promissory Note in the principal amount of $8,175,000, dated December 6, 2006, executed by Roberts Properties Residential, L.P. in favor of Wachovia Bank, National Association (Peachtree Parkway). [Incorporated by reference to Exhibit 10.3 in our current report on Form 8-K dated December 6, 2006.]
10.9.2		Deed to Secure Debt and Assignment of Rents dated December 6, 2006, executed by Roberts Properties Residential, L.P. in favor of Wachovia Bank, National Association (Peachtree Parkway). [Incorporated by reference to Exhibit 10.4 in our current report on Form 8-K dated December 6, 2006.]
10.9.3		Unconditional Guaranty dated December 6, 2006, executed by Roberts Realty Investors, Inc. in favor of Wachovia Bank, National Association (Peachtree Parkway). [Incorporated by reference to Exhibit 10.5 in our current report on Form 8-K dated December 6, 2006.]
10.9.4		Second Consolidated Amendatory Agreement and Agreement Regarding Cross-Default and Cross-Collateralization of Loans dated April 28, 2008 by and between Roberts Properties Residential, L.P. and Wachovia Bank, National Association (Peachtree Parkway). [Incorporated by reference to Exhibit 10.1 in our current report on Form 8-K dated April 28, 2008.]
10.9.5		Deed to Secure Debt and Assignment of Rents dated April 28, 2008, executed by Roberts Properties Residential, L.P. in favor of Wachovia Bank, National Association (North Springs). [Incorporated by reference to Exhibit 10.3 in our current report on Form 8-K dated April 28, 2008.]
10.9.6		Letter Agreement from Wachovia Bank, N.A. dated April 27, 2009. [Incorporated by reference to Exhibit 10.1 in our current report on Form 8-K dated April 27, 2009.]

Table of Contents

Exhibit No.		Description

10.9.7		Third Consolidated Amendatory Agreement dated July 17, 2009 by and among Roberts Properties Residential, L.P., Roberts Realty Investors, Inc. and Wachovia Bank, National Association (Peachtree Parkway). [Incorporated by reference to Exhibit 10.1 in our current report on Form 8-K dated July 17, 2009.]
10.9.8		Second Amendment to Deed to Secure Debt and Assignment of Rents and Other Loan Documents dated July 17, 2009 by and between Roberts Properties Residential, L.P. and Wachovia Bank, National Association (Peachtree Parkway). [Incorporated by reference to Exhibit 10.2 in our current report on Form 8-K dated July 17, 2009.]
10.9.9		Fourth Consolidated Amendatory Agreement dated June 21, 2010 by and among Roberts Properties Residential, L.P., Roberts Realty Investors, Inc. and Wells Fargo Bank, National Association (Peachtree Parkway). [Incorporated by reference to Item 10.1 in our current report on Form 8-K dated June 21, 2010.]
10.9.10		Third Amendment to Deed to Secure Debt and Assignment of Rents and Other Loan Documents dated June 21, 2010 by and between Roberts Properties Residential, L.P. and Wells Fargo Bank, National Association (Peachtree Parkway). [Incorporated by reference to Item 10.2 in our current report on Form 8-K dated June 21, 2010.]
10.9.11		Fifth Consolidated Amendatory Agreement dated June 23, 2011 by and among Roberts Properties Residential, L.P., Roberts Realty Investors, Inc. and Wells Fargo Bank, National Association (Peachtree Parkway). [Incorporated by reference to Exhibit 10.1 in our current report on Form 8-K dated June 23, 2011.]
10.9.12		Fourth Amendment to Deed to Secure Debt and Assignment of Rents and Other Loan Documents dated June 23, 2011 by and between Roberts Properties Residential, L.P. and Wells Fargo Bank, National Association (Peachtree Parkway). [Incorporated by reference to Exhibit 10.2 in our current report on Form 8-K dated June 23, 2011.]
10.9.13		Loan Agreement dated February 21, 2012 by and between Northridge Parkway, LLC (a wholly owned subsidiary) and Paul J. A. van Hessen (Northridge Parkway). [Incorporated by reference to Exhibit 10.1 in our current report on Form 8-K dated February 21, 2012.]
10.9.14		Promissory Note in the principal amount of $2,000,000 dated February 21, 2012 by and between Northridge Parkway, LLC and Paul J. A. van Hessen (Northridge Parkway). [Incorporated by reference to Exhibit 10.2 in our current report on Form 8-K dated February 21, 2012.]
10.9.15		Deed to Secure Debt and Security Agreement dated February 21, 2012 by and between Northridge Parkway, LLC and Paul J. A. van Hessen (Northridge Parkway). [Incorporated by reference to Exhibit 10.3 in our current report on Form 8-K dated February 21, 2012.]
10.9.16		Guaranty dated February 21, 2012 by Roberts Properties Residential, L.P. and Roberts Realty Investors, Inc. in favor of Paul J. A. van Hessen (Northridge Parkway). [Incorporated by reference to Exhibit 10.4 in our current report on Form 8-K dated February 21, 2012.]
10.9.17		Letter Modification Agreement dated July 16, 2012 by and among Roberts Properties Residential, L.P., Roberts Realty Investors, Inc. and Wells Fargo Bank, N.A. (Peachtree Parkway). [Incorporated by reference to Exhibit 10.1 in our current report on Form 8-K dated July 16, 2012.]
		Other Exhibits:
21		Subsidiaries of Roberts Realty Investors, Inc.

Table of Contents

Exhibit No.		Description

23.1		Consent of Independent Registered Public Accounting Firm – CohnReznick LLP
23.2		Consent of Independent Registered Public Accounting Firm – Reznick Group, P.C.
24		Power of Attorney (contained on the signature page hereof).
31		Certifications of Charles S. Roberts and Charles R. Elliott pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32		Certifications of Charles S. Roberts and Charles R. Elliott pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. This exhibit is not "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 but is instead furnished as provided by applicable rules of the Securities and Exchange Commission.
101		The following materials from Roberts Realty's Annual Report on Form 10-K for the year ended December 31, 2012, formatted in eXtensible Business Reporting Language (XBRL): (a) Consolidated Balance Sheets at December 31, 2012 and December 31, 2011; (b) Consolidated Statements of Operations for each of the years ended December 31, 2012 and 2011; (c) Consolidated Statements of Shareholders' Equity for each of the years ended December 31, 2012 and 2011; (d) Consolidated Statements of Cash Flows for each of the years ended December 31, 2012 and 2011; and (e) Notes to Consolidated Financial Statements.*

*: Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

Table of Contents

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.


Date: March 29, 2013
	ROBERTS REALTY INVESTORS, INC.
	By:	/s/ Charles S. Roberts Charles S. Roberts, Chairman of the Board, Chief Executive Officer and President

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints jointly and severally, Charles S. Roberts and Charles R. Elliott, and each one of them, his attorneys-in-fact, each with the power of substitution, for him in any and all capacities, to sign any and all amendments to this Annual Report (Form 10-K) and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorneys-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date


/s/ Charles S. Roberts Charles S. Roberts	Chairman of the Board, Chief Executive Officer and President	March 29, 2013
/s/ Charles R. Elliott Charles R. Elliott	Secretary, Treasurer, Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) and Director	March 29, 2013
/s/ John L. Davis John L. Davis	Director	March 29, 2013
/s/ Wm. Jarell Jones Wm. Jarell Jones	Director	March 29, 2013
/s/ Weldon R. Humphries Weldon R. Humphries	Director	March 29, 2013