REAL ESTATE ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS

3 Months Ended

Mar. 31, 2013

REAL ESTATE ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS

REAL ESTATE ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS

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 condensed consolidated balance sheets.  The real estate assets held for sale and the liabilities related to real estate assets held for sale as of March 31, 2013 and December 31, 2012, were as follows:

	Real Estate Assets Held for Sale
Land Parcels	3/31/13		12/31/12
Northridge Land	$	4,373,789	$	4,373,789
Peachtree Parkway Land	—		6,225,167
North Springs Land	11,000,000		11,000,000
Northridge Office Building	3,184,558		3,200,919
Commercial Site in Johns Creek	500,000		500,000
Total Real Estate Assets Held for Sale	$	19,058,347	$	25,299,875

	Liabilities Related to Real Estate Assets Held for Sale
Mortgage Notes and Land Loans	3/31/13		12/31/12
Northridge Land	$	2,000,000	$	2,000,000
Peachtree Parkway Land	—		7,000,200
Northridge Office Building	2,498,334		2,538,334
Total Loans for Real Estate Assets Held for Sale	$	4,498,334	$	11,538,534
Other Liabilities	63,849		65,909
Total Liabilities Related to Real Estate Assets
Held for Sale	$	4,562,183	$	11,604,443

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).  See Note 7 — Related Party Transactions.  Roberts Realty used $7,000,200 of the sale proceeds to repay the Peachtree Parkway loan.  Roberts Realty recorded a $1,214,192 gain on this sale.

On March 20, 2013, Roberts Realty sold the remaining 1.5 acres of the Peachtree Parkway land for $450,000.  Roberts Realty recorded a $39,741 gain on this sale.

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 condensed consolidated statements of operations as income or loss from discontinued operations.

On January 31, 2013, Roberts Realty listed the Northridge Office Building for sale and classified it as a real estate asset held for sale.  Accordingly, the operations of the Northridge Office Building have been accounted for as discontinued operations.

The following table summarizes the discontinued operations for the three months ended March 31, 2013 and 2012 (unaudited):

Discontinued Operations

	Three Months Ended March 31,
	2013			2012
	(Unaudited)			(Unaudited)
OPERATING REVENUES:
Rental operations	$	84,357		$	85,151
Other operating income	—			—
Total operating revenues	84,357			85,151
OPERATING EXPENSES:
Utilities	22,514			22,715
Repairs and maintenance	15,442			14,478
Real estate taxes	8,408			13,081
Marketing, insurance and other	7,289			7,481
General and administrative expenses	5,312			4,565
Depreciation and amortization expense	16,360			58,525
Total operating expenses	75,325			120,845
OTHER EXPENSE:
Interest expense	(28,329		)	(30,428		)
Amortization of deferred financing & leasing costs	(2,993		)	(2,993		)
Total other expense	(31,322		)	(33,421		)
LOSS FROM DISCONTINUED OPERATIONS	$	(22,290	)	$	(69,115	)