BUSINESS AND ORGANIZATION	9 Months Ended
Sep. 30, 2013
BUSINESS AND ORGANIZATION
BUSINESS AND ORGANIZATION	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 residential communities. Roberts Realty owns and manages its real estate assets as an 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 two wholly owned subsidiaries, one of which is a Delaware limited liability company and one is a Georgia limited liability company. Roberts Realty controls the operating partnership as its sole general partner and had an 80.01% ownership interest in the operating partnership at September 30, 2013 and an 82.81% ownership interest in the operating partnership at September 30, 2012. At September 30, 2013, Roberts Realty owned the following real estate assets, all of which are located in the north Atlanta metropolitan area: · two tracts of land totaling 60 acres in various phases of development and construction; · three tracts of land totaling 22 acres that are held for sale; · one neighborhood retail center totaling 19,949 square feet; and · one commercial office building totaling 37,864 square feet that is currently under contract to be sold (see Management’s Business Plan below and Note 11 — Subsequent Events). Management’s Business Plan. During the last year, management has significantly reduced Roberts Realty’s debt and decreased its ongoing operating expenses. Roberts Realty intends to continue to focus on increasing its liquidity through the sale of certain real estate assets and to complete its exit from the retail and office business. These steps will allow Roberts Realty to focus exclusively on its primary business of developing new, high-quality multifamily apartment communities. 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 rate at its Northridge Office Building, which is currently under contract to be sold. As of the filing date of this report, Roberts Realty has four loans with a total principal balance of $13,532,533 that are scheduled to mature within the next 12 months: (a) the $5,500,000 North Springs land loan that matures on July 17, 2014 (which Roberts Realty can extend to January 17, 2015 through two 3-month extensions by paying a 1.0% extension fee for each 3-month extension); (b) the $2,422,533 loan secured by the Northridge Office Building that matures on August 10, 2014; (c) the $3,000,000 Bradley Park land loan that matures on August 10, 2014; and (d) the $2,610,000 Highway 20 land loan that matures on October 8, 2014. Management is seeking to sell the transit-oriented, mixed-use North Springs property for a sales price of $16,600,000 and plans to pay off the $5,500,000 North Springs land loan from the sales proceeds. The 37,864 square foot Northridge Office Building is under contract to be sold for $5,280,000, and Roberts Realty plans to pay off the $2,422,533 loan from the sale proceeds. Management believes that Roberts Realty’s long history of operating and developing real estate, its current plans for developing some of its existing land, and the sale of certain of its real estate assets will allow it to successfully extend its loans as they mature or find alternative financing. Management’s primary objectives are to continue to seek to sell certain of its real estate assets as described above to provide the equity capital to develop the Bradley Park and Highway 20 multifamily apartment communities while continuing to reduce Roberts Realty’s debt and decrease its operating expenses. Management’s plans to accomplish these objectives are outlined below. Sale of the Northridge Office Building. The 37,864 square foot Northridge Office Building is under contract to be sold for $5,280,000, and the closing is scheduled to occur on or before October 30, 2013, provided that the buyer may extend the closing date to November 15, 2013. The Northridge Office Building has a carrying value of $3,184,558 and secures a $2,422,533 loan. This sale would pay off the $2,422,533 loan and reduce Roberts Realty’s ongoing operating expenses by approximately $210,000 per year. The sale of the Northridge Office Building would significantly increase Roberts Realty’s cash available for investment in the development and construction of the Bradley Park and Highway 20 multifamily apartment communities. Sale of the North Springs Property. Roberts Realty is seeking to sell the transit-oriented, mixed-use North Springs property for a sales price of $16,600,000. 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. Roberts Realty believes the current market and demand for a transit-oriented, mixed-use site like North Springs provides it with an excellent opportunity to sell this asset. This sale would pay off the $5,500,000 North Springs land loan and significantly increase Roberts Realty’s cash available for investment in the development and construction of the Bradley Park and Highway 20 multifamily apartment communities. Sale of the Northridge Land. Roberts Realty has listed its 11-acre Northridge land parcel for sale with Jones Lang LaSalle, a global full service real estate firm. The Northridge land parcel is located close to the Georgia 400 and Northridge Road interchange in Sandy Springs, Georgia. Georgia 400 is the primary artery connecting the affluent North Atlanta suburbs with Atlanta’s most dense employment, office, and retail cores of Perimeter Center, North Point, and Buckhead. The Northridge land, zoned for 220 multifamily units, has been cleared and graded, and Roberts Realty has obtained the appropriate municipal entitlements for the property. The Northridge land has a book value of $4,373,789 and is owned debt free. The sale of the Northridge land would significantly increase Roberts Realty’s cash available for investment in the development and construction of the Bradley Park and Highway 20 multifamily apartment communities. Sale of the Other Land Parcel. 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. Disposition of the Bassett Retail Center. As Roberts Realty has previously stated in its annual and quarterly reports, its objective is to exit the office and retail business to focus exclusively on developing, constructing, and managing multifamily apartment communities. To complete its exit from the office and retail business, in May 2013, Roberts Realty notified the lender of its intent to transfer the Bassett retail center to the lender in satisfaction of the $2,406,883 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. Roberts Realty believes that the disposition of the Bassett retail center and the sale of Northridge Office Building, which will in total reduce Roberts Realty’s debt by $4,829,416 or 30%, will make it easier to consummate a sale or merger of the company and to obtain equity and debt financing for the development and construction of new multifamily apartment communities. 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 capital appreciation. Roberts Realty intends to use the sales proceeds from the sale of the Northridge Office Building, the North Springs property, the Northridge land and the other land parcel 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 $2,610,000 land loan. Roberts Realty is also discussing with possible joint venture participants, such as pension funds, life insurance companies, hedge funds, foreign investors, and local investors, providing part of the equity needed to develop and construct the Bradley Park and Highway 20 multifamily apartment communities. Roberts Realty may also form a new affiliate that would raise private equity for the specific purpose of purchasing these two 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. Possible Sale, Merger, or Other Business Combination. As previously reported, in addition to the above transactions, Roberts Realty continues to pursue and work on strategic alternatives that would enhance 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 73 different entities. Roberts Realty remains in active discussions with several companies that have expressed a desire to become a public company through a transaction with Roberts Realty. As of the filing date of this report, Roberts Realty has not entered into any definitive agreement for such a transaction. Management intends to continue 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 dispositions would further reduce Roberts Realty’s debt by $10,329,416 or 65%, decrease its operating expenses by another $210,000, and significantly increase its capital resources available for investment in the development and construction of the Bradley Park and Highway 20 multifamily apartment communities. In addition, the completion of each of these transactions will make Roberts Realty a more attractive merger candidate and make it easier to obtain equity and debt financing for the development and construction of new multifamily apartment communities.

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 residential communities. Roberts Realty owns and manages its real estate assets as an 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 two wholly owned subsidiaries, one of which is a Delaware limited liability company and one is a Georgia limited liability company. Roberts Realty controls the operating partnership as its sole general partner and had an 80.01% ownership interest in the operating partnership at September 30, 2013 and an 82.81% ownership interest in the operating partnership at September 30, 2012.

At September 30, 2013, Roberts Realty owned the following real estate assets, all of which are located in the north Atlanta metropolitan area:

· two tracts of land totaling 60 acres in various phases of development and construction;

· three tracts of land totaling 22 acres that are held for sale;

· one neighborhood retail center totaling 19,949 square feet; and

· one commercial office building totaling 37,864 square feet that is currently under contract to be sold (see Management’s Business Plan below and Note 11 — Subsequent Events).

Management’s Business Plan. During the last year, management has significantly reduced Roberts Realty’s debt and decreased its ongoing operating expenses. Roberts Realty intends to continue to focus on increasing its liquidity through the sale of certain real estate assets and to complete its exit from the retail and office business. These steps will allow Roberts Realty to focus exclusively on its primary business of developing new, high-quality multifamily apartment communities. 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 rate at its Northridge Office Building, which is currently under contract to be sold. As of the filing date of this report, Roberts Realty has four loans with a total principal balance of $13,532,533 that are scheduled to mature within the next 12 months: (a) the $5,500,000 North Springs land loan that matures on July 17, 2014 (which Roberts Realty can extend to January 17, 2015 through two 3-month extensions by paying a 1.0% extension fee for each 3-month extension); (b) the $2,422,533 loan secured by the Northridge Office Building that matures on August 10, 2014; (c) the $3,000,000 Bradley Park land loan that matures on August 10, 2014; and (d) the $2,610,000 Highway 20 land loan that matures on October 8, 2014.

Management is seeking to sell the transit-oriented, mixed-use North Springs property for a sales price of $16,600,000 and plans to pay off the $5,500,000 North Springs land loan from the sales proceeds. The 37,864 square foot Northridge Office Building is under contract to be sold for $5,280,000, and Roberts Realty plans to pay off the $2,422,533 loan from the sale proceeds.

Management believes that Roberts Realty’s long history of operating and developing real estate, its current plans for developing some of its existing land, and the sale of certain of its real estate assets will allow it to successfully extend its loans as they mature or find alternative financing. Management’s primary objectives are to continue to seek to sell certain of its real estate assets as described above to provide the equity capital to develop the Bradley Park and Highway 20 multifamily apartment communities while continuing to reduce Roberts Realty’s debt and decrease its operating expenses. Management’s plans to accomplish these objectives are outlined below.

Sale of the Northridge Office Building. The 37,864 square foot Northridge Office Building is under contract to be sold for $5,280,000, and the closing is scheduled to occur on or before October 30, 2013, provided that the buyer may extend the closing date to November 15, 2013. The Northridge Office Building has a carrying value of $3,184,558 and secures a $2,422,533 loan. This sale would pay off the $2,422,533 loan and reduce Roberts Realty’s ongoing operating expenses by approximately $210,000 per year. The sale of the Northridge Office Building would significantly increase Roberts Realty’s cash available for investment in the development and construction of the Bradley Park and Highway 20 multifamily apartment communities.

Sale of the North Springs Property. Roberts Realty is seeking to sell the transit-oriented, mixed-use North Springs property for a sales price of $16,600,000. 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. Roberts Realty believes the current market and demand for a transit-oriented, mixed-use site like North Springs provides it with an excellent opportunity to sell this asset. This sale would pay off the $5,500,000 North Springs land loan and significantly increase Roberts Realty’s cash available for investment in the development and construction of the Bradley Park and Highway 20 multifamily apartment communities.

Sale of the Northridge Land. Roberts Realty has listed its 11-acre Northridge land parcel for sale with Jones Lang LaSalle, a global full service real estate firm. The Northridge land parcel is located close to the Georgia 400 and Northridge Road interchange in Sandy Springs, Georgia. Georgia 400 is the primary artery connecting the affluent North Atlanta suburbs with Atlanta’s most dense employment, office, and retail cores of Perimeter Center, North Point, and Buckhead. The Northridge land, zoned for 220 multifamily units, has been cleared and graded, and Roberts Realty has obtained the appropriate municipal entitlements for the property. The Northridge land has a book value of $4,373,789 and is owned debt free. The sale of the Northridge land would significantly increase Roberts Realty’s cash available for investment in the development and construction of the Bradley Park and Highway 20 multifamily apartment communities.

Sale of the Other Land Parcel. 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.

Disposition of the Bassett Retail Center. As Roberts Realty has previously stated in its annual and quarterly reports, its objective is to exit the office and retail business to focus exclusively on developing, constructing, and managing multifamily apartment communities. To complete its exit from the office and retail business, in May 2013, Roberts Realty notified the lender of its intent to transfer the Bassett retail center to the lender in satisfaction of the $2,406,883 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. Roberts Realty believes that the disposition of the Bassett retail center and the sale of Northridge Office Building, which will in total reduce Roberts Realty’s debt by $4,829,416 or 30%, will make it easier to consummate a sale or merger of the company and to obtain equity and debt financing for the development and construction of new multifamily apartment communities.

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 capital appreciation.

Roberts Realty intends to use the sales proceeds from the sale of the Northridge Office Building, the North Springs property, the Northridge land and the other land parcel 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 $2,610,000 land loan.

Roberts Realty is also discussing with possible joint venture participants, such as pension funds, life insurance companies, hedge funds, foreign investors, and local investors, providing part of the equity needed to develop and construct the Bradley Park and Highway 20 multifamily apartment communities. Roberts Realty may also form a new affiliate that would raise private equity for the specific purpose of purchasing these two 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.

Possible Sale, Merger, or Other Business Combination. As previously reported, in addition to the above transactions, Roberts Realty continues to pursue and work on strategic alternatives that would enhance 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 73 different entities. Roberts Realty remains in active discussions with several companies that have expressed a desire to become a public company through a transaction with Roberts Realty. As of the filing date of this report, Roberts Realty has not entered into any definitive agreement for such a transaction. Management intends to continue 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 dispositions would further reduce Roberts Realty’s debt by $10,329,416 or 65%, decrease its operating expenses by another $210,000, and significantly increase its capital resources available for investment in the development and construction of the Bradley Park and Highway 20 multifamily apartment communities. In addition, the completion of each of these transactions will make Roberts Realty a more attractive merger candidate and make it easier to obtain equity and debt financing for the development and construction of new multifamily apartment communities.